[G.R. NO.
178647 : February 13, 2009] their right to self-organization, led to the Union's demise or that their group was singled out by the company.
GENERAL SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS, Petitioner, v. COCA-COLA
BOTTLERS PHILS., INC. (GENERAL SANTOS CITY), THE COURT OF APPEALS and THE NATIONAL
LABOR RELATIONS COMMISSION, Respondents.
RESOLUTION
NACHURA, J.:
In this Petition for Review on Certiorari under Rule 45 of the Revised Rules on Civil Procedure, petitioner General Santos
Coca-Cola Plant Free Workers Union-Tupas (Union) is seeking the reversal of the April 18, 2006 Decision1 and May 30,
2007 Resolution2 of the Court of Appeals in CA-G.R. SP No. 80916. The CA affirmed the January 31, 2003 and August
29, 2003 Resolutions3 of the National Labor Relations Commission (NLRC) in favor of respondent Coca-Cola Bottlers
Phil., Inc. (CCBPI).
Sometime in the late 1990s, CCBPI experienced a significant decline in profitability due to the Asian economic crisis,
decrease in sales, and tougher competition. To curb the negative effects on the company, it implemented three (3) waves of
an Early Retirement Program.4 Meanwhile, there was an inter-office memorandum sent to all of CCBPI's Plant Human
Resources Managers/Personnel Officers, including those of the CCBPI General Santos Plant (CCBPI Gen San) mandating
them to put on hold "all requests for hiring to fill in vacancies in both regular and temporary positions in [the] Head
Office and in the Plants." Because several employees availed of the early retirement program, vacancies were created in
some departments, including the production department of CCBPI Gen San, where members of petitioner Union worked.
This prompted petitioner to negotiate with the Labor Management Committee for filling up the vacancies with permanent
employees. No resolution was reached on the matter.5
Faced with the "freeze hiring" directive, CCBPI Gen San engaged the services of JLBP Services Corporation (JLBP), a
company in the business of providing labor and manpower services, including janitorial services, messengers, and office
workers to various private and government offices.6
On January 21, 2002, petitioner filed with the National Conciliation and Mediation Board (NCMB), Regional Branch 12, a
Notice of Strike on the ground of alleged unfair labor practice committed by CCBPI Gen San for contracting-out services
regularly performed by union members ("union busting"). After conciliation and mediation proceedings before the NCMB,
the parties failed to come to an amicable settlement. On July 3, 2002, CCBPI filed a Petition for Assumption of Jurisdiction
with the Office of the Secretary of Labor and Employment. On July 26, 2002, the Secretary of Labor issued an Order
enjoining the threatened strike and certifying the dispute to the NLRC for compulsory arbitration.7 ςηαñrοblεš
νιr†υαl lαω lιbrαrÿ
In a Resolution8 dated January 31, 2003, the NLRC ruled that CCBPI was not guilty of unfair labor practice for
contracting out jobs to JLBP. The NLRC anchored its ruling on the validity of the "Going-to-the-Market" (GTM) system
implemented by the company, which called for restructuring its selling and distribution system, leading to the closure of
certain sales offices and the elimination of conventional sales routes. The NLRC held that petitioner failed to prove by
substantial evidence that the system was meant to curtail the right to self-organization of petitioner's members. Petitioner
filed a motion for reconsideration, which the NLRC denied in a Resolution9 dated August 29, 2003. Hence, petitioner filed
a Petition for Certiorari before the CA.
The CA issued the assailed Decision10 on April 18, 2006 upholding the NLRC's finding that CCBPI was not guilty of
unfair labor practice. The CA based its decision on the validity of CCBPI's contracting out of jobs in its production
department. It held that the contract between CCBPI and JLBP did not amount to labor-only contracting. It found that
JLBP was an independent contractor and that the decision to contract out jobs was a valid exercise of management
prerogative to meet exigent circumstances. On the other hand, petitioner failed to adduce evidence to prove that
contracting out of jobs by the company resulted in the dismissal of petitioner's members, prevented them from exercising
Consequently, the CA declared that CCBPI was not guilty of unfair labor practice.
Its motion for reconsideration having been denied,11 petitioner now comes to this Court seeking the reversal of the CA
Decision.
The petition is bereft of merit. Hence, we deny the Petition.
Under Rule 45 of the Revised Rules on Civil Procedure, only questions of law may be raised in a Petition for Review on
Certiorari.12
There is a question of law if the issue raised is capable of being resolved without need of reviewing the probative value of
the evidence. The resolution of the issue must rest solely on what the law provides on a given set of circumstances. Once it
is clear that the issue invites a review of the evidence presented, the question posed is one of fact. If the query requires a
re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation
to one another, the issue in that query is factual.13
An examination of the issues raised by petitioner reveals that they are questions of fact. The issues raised, i.e., whether
JLBP is an independent contractor, whether CCBPI's contracting-out of jobs to JLBP amounted to unfair labor practice,
and whether such action was a valid exercise of management prerogative, call for a re-examination of evidence, which is
not within the ambit of this Court's jurisdiction.
Moreover, factual findings of the NLRC, an administrative agency deemed to have acquired expertise in matters within its
jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the
CA.14
Furthermore, we find no reversible error in the assailed Decision.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
It is true that the NLRC erroneously concluded that the contracting - out of jobs in CCBPI Gen San was due to the GTM
system, which actually affected CCBPI's sales and marketing departments, and had nothing to do with petitioner's
complaint. However, this does not diminish the NLRC's finding that JLBP was a legitimate, independent contractor and
that CCBPI Gen San engaged the services of JLBP to meet business exigencies created by the freeze-hiring directive of the
CCBPI Head Office.
On the other hand, the CA squarely addressed the issue of job contracting in its assailed Decision and Resolution. The CA
itself examined the facts and evidence of the parties15 and found that, based on the evidence, CCBPI did not engage in
labor-only contracting and, therefore, was not guilty of unfair labor practice.
The NLRC found - and the same was sustained by the CA - that the company's action to contract-out the services and
functions performed by Union members did not constitute unfair labor practice as this was not directed at the members'
right to self-organization.
Article 248 of the Labor Code provides:
ART. 248. UNFAIR LABOR PRACTICE OF EMPLOYERS. - It shall be unlawful for an employer to commit any of the
following unfair labor practices:
xxx
(c) To contract out services or functions being performed by union members when such will interfere with, restrain or
coerce employees in the exercise of their right to self-organization;
1
xxx
Unfair labor practice refers to "acts that violate the workers' right to organize." The prohibited acts are related to the
workers' right to self-organization and to the observance of a CBA. Without that element, the acts, even if unfair, are not
unfair labor practices.16
Both the NLRC and the CA found that petitioner was unable to prove its charge of unfair labor practice. It was the Union
that had the burden of adducing substantial evidence to support its allegations of unfair labor practice,17 which burden it
failed to discharge.
WHEREFORE, the foregoing premises considered, the Petition is DENIED. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 80916 are AFFIRMED.
SO ORDERED.
G.R. No. L-67158, 67159, 67160, 67161, & 67162 May 30, 1988
CLLC E.G. GOCHANGCO WORKERS UNION, CORNELIO L. PANGILINAN, LEO TROPACIO, OLIMPIO
GUMIN, JUANITO SUBA, ROLANDO SANTOS, RUBEN BUELA, ODILON LISING, REYNALDO DAYRIT,
ROGELIO MANGUERRA, ORLANDO NACU, DIOSILINO PERDON, ERNESTO GALANG, ORLANDO
PANGILINAN, JESUS SEMBRANO, RENATO CASTANEDA, EDILBERTO BINGCANG, ERNESTO CAPIO,
RUFO A. BUGAYONG, RICARDO S. DOMINGO, TERESITO CULLARIN, ISRAEL VINO, ERNESTO
RAMIREZ, ROMEO S. GINA, ARNEL CALILUNG, PEDRO A. SANTOS, RODOLFO CAPITLY,
BUENAVENTURA B. PUNO, EDILBERTO QUIAMBAO, FERNANDO LISING, ERNESTO M. TUAZON,
MARCELO LANGUNSAD, MARCELINO VALERIO, SERAFIN PAWA, JESUS S. DAQUIGAN, and ISMAEL
CAYANAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), and e.g. GOCHANGCO, INC., respondents.
Navarro, Angeles, Anero & Falcon Law Notice for petitioners.
The Solicitor General, Isagani M. Jungco, and Bernardo P. Fernandez for respondents.
SARMIENTO, J.:
The cases before the Court pit labor against management, in which, on not a few occasions, it is labor that has cause for
complaint.
The Solicitor General states the facts as follows:
xxx xxx xxx
1. Petitioner union is a local chapter of the Central Luzon Labor Congress (CLLC), a legitimate labor federation
duly registered with the Ministry of Labor and Employment (MOLE), while the individual petitioners are former
employees of private respondent who were officers and members of the petitioner union.
2. Private respondent is a corporation engaged in packing and crating, general hauling, warehousing, sea van and
freight forwarding,
3. Sometime in January 1980, the majority of the rank and file employees of respondent firm organized the e.g.
Gochangco Workers Union as an affiliate of the CLLC. On January 23, 1980, the union filed a petition for certification
election under R03-LRD (MA) Case No. 178-80. The MOLE Region 111 office set the hearing for the petition on
February 27,1980.
4. On February 7,1980, the CLLC national president wrote the general manager of respondent firm informing him
of the organization of the union and requesting for a labor management conference to normalize employer-employee
relations (Annex "D," Case 486-80).
5. On February 26,1980, the, union sent a written notice to respondent firm requesting permission for certain
member officers and members of the union to attend the hearing of the petition for certification election. The management
refused to acknowledge receipt of said notice (Annex "E," Case 486-80).
6. On February 28, 1980, private respondent preventively suspended the union officers and members who attended
the hearing namely: Cornelio Pangilinan, president; Leo Tropics, vice- president; Olimpio Gumin, treasurer; Buenaventura
Puno, director; Reynaldo Dayrit, sgt-at-arms; Ernesto Ramirez; Ernesto Galang; Odilon Lising; Jesus Daquigan; and
Edilberto Quiambao. The common ground alleged by private respondent for its action was "abandonment of work on
February 27, 1980." On the same date, all the gate passes of all the above-mentioned employees to Clark Air Base were
confiscated by a Base guard.
7. Claiming that private respondent instigated the confiscation of their gate passes to prevent them from
performing their duties and that respondent firm did not pay them their overtime pay, 13th month pay and other benefits,
petitioner union and its members filed a complaint for constructive lockout and unfair labor practice against private
respondent, docketed as R03-AB Case No. 486-80 on March 10, 1980.
8. On March 12, 1980, private respondent filed an application for clearance to dismiss Cornelio Pangilinan, Leo
Tropics, Olimpio Gumin, Reynaldo Dayrit, Odilon Lising, Edilberto Quiambao; Ernesto Ramirez, Ernesto Galang,
Buenaventura Puno, Arnel Calilung, Romeo Guina, docketed as R03-AB Case No. 556-80. Subsequently private
respondent filed another clearance to dismiss Jesus Daquigan, Serafin Pawa and Rufo Bugayong, docketed as R03-A-B
Case No. 55780.
9. On April 22,1980, petitioner Ricardo Dormingo who was preventively suspended on April 17, 1980 filed a complaint for
unfair labor practice against the latter, docketed as R03-AB Case No. 55880.
10. On April 30, 1980, the services of nine (9) more union members, namely: Ernesto Tuason, Israel Vino, Pedro
Santos, Juanita Suba, Edilberto Sarmiento, Diosalino Pandan, Antonio Razon, Benjamin Capiz and Jesus Sembrano, were
terminated by private respondent on the ground that its contract with the U.S. Air Force had expired. The rune employees
filed a complaint for illegal dismissal against private respondents on June 2, 1980. docketed as R03-AB Case No. 663-80.
11. On May 9, 1980, private respondent filed with MOLE, Region III, a Notice of Termination of Contract together with a
list of employees affected by the expiration of the contract, among them, the 39 individual petitioners herein.
12. All the aforementioned cases were consolidated and assigned to Labor Arbiter Andres Palumbarit.
13. After heating, Labor Arbiter Federico S. Bernardo who took over the cases from Arbiter Palumbarit rendered a
decision dated July 2, 1982, the dispositive portion of which reads:
WHEREFORE, In view of all the foregoing, the instant complaint of complainants is hereby granted and the respondent's
application for clearance is hereby denied.
The respondent is hereby ordered:
2
1. To reinstate all the suspended/dismissed employees to their former positions without loss of seniority rights and other 5. Buenaventura Puno
privileges, with full backwages including cost of emergency living allowance from the date of their suspension/dismissal
up to the supposed date of actual reinstatement, as follows: 11,266.00

NAME 7,738.00

BACK- 19,004.00

ECOLA 6. Ernesto Galang

TOTAL 11,266.00

7,738.00

WAGES 19,004.00

7. Ernesto Ramirez

11,266.00

1.Cornelio Pangilinan 7,738.00

P 11,266.00 19,004.00

P 7,738.00 8. Edilberto Quiambao

P 19,004.00 11,266.00

2. Leo Tropico 7,738.00

11,266.00 19,004.00

7,738.00 9 Jesus Daquigan

19,004.00 11,266.00

3. Olimpio Gumin 7,738.00

11,266.00 19,004.00

7,738.00 10. Renato Castaneda

19,004.00 11,134.00

4. Reynaldo Dayrit 7,633.00

11,266.00 19,004.00

7,738.00 11. Edilberto Bingcang

19,004.00 11,134.00

3
7,663.00 18. Eduardo Alegado

18,767.00 11,134.00

12. Benedicto Capio 7,663.00

11,134.00 18,767.00

7,663.00 19. Teresito Cullarin

18,767.00 11,134.00

13. Orlando Nacu 7,663.00

11,134.00 18,767.00

7,633.00 20. Rogelio Manguerra

18,767.00 11,134.00

14. Rodolfo Capitly 7,663.00

11,134.00 18,767.00

7,663.00 21. Ruben Buela

18,767.00 11,134.00

15. Arnel Calilung 7,663.00

11,134.00 18,767.00

7,663.00 22. Rolando Santos

18,767.00 11,134 00

16. Romeo Gina 7,663.00

11,134.00 18,767.00

7,663.00 23. Ricardo Domingo

18,767.00 11,134.00

17. Orlando Pangilinan 7,663.00

11,134.00 18,767.00

7,663.00 24. Serafin Pawa

18,767.00 11,134.00

4
7,663.00 31. Israel Vino

18,767.00 10,618.00

25. Rufo Bugayong 7,225.00

11,134.00 17,843.00

7,663.00 32. Pedro Santos

18,767.00 10,618.00

26. Ernesto Santos 7,225.00

11,134.00 17,843.00

7,663.00 33. Juanita Suba

18,767.00 10,618.00

27. Ismael Cayanan 7,225.00

11,134.00 17,843.00

7,663.00 34. Edilberto Sarmiento

18,767.00 10,618.00

28. Marcelo Lagansad 7,225.00

11,134.00 17,843.00

7,663.00 35. Diosalino Pendon

18,767.00 10,618.00

29. Marcelino Valerio 7,225.00

11,134.00 17,843.00

7,663.00 36. Antonio Razon

18,767.00 10,618.00

30. Ernesto M. Tuazon 7,225.00

10,618.00 17,843.00

7,225.00 37. Benjamin Capiz

18,767.00 10,618.00

5
7,225.00
III.
17,843.00
THAT PUBLIC RESPONDENT NLRC COMMITTED AN ERROR IN NOT AWARDING BACK WAGES TO THE
38. Jesus Sembrano INDIVIDUAL PETITIONERS FOR REFUSAL OF PRIVATE RESPONDENT TO REINSTATE THEM AFTER
RENDERING OF THE DECISION OF LABOR ARBITER FEDERICO S. BERNARDO AND AFTER SAID LABOR
10,618.00 ARBITER ORDERED PRIVATE RESPONDENT TO REINSTATE THEM. 2

7,225.00
17,843.00
GRAND TOTAL
P 419,636.00
P 706,973.00
P267,337.00
2. To restore transportation privilege as being extended before the filing of the instant case; and
3. If their reinstatement is no longer possible due to closure of the establishment, in addition to the payment of their full
backwages and cost of living allowance, to pay their respective separation pay as provided for under the Labor Code.
14. Private respondent appealed to the NLRC which rendered the questioned decision on May 31, 1983 as follows:
WHEREFORE, in the light of foregoing premises, the appealed decision is hereby set aside and another one issued
dismissing the above-entitled cases filed by the complainants-appellees for lack of merit and granting the application for
clearance to terminate the services of individual complainants-appellees filed by respondent-appellant.
15. Petitioners moved for a reconsideration of the above decision on July 12, 1983 which NLRC denied in a resolution
dated December 6,1983.
16. Hence, this petition. 1
xxx xxx xxx
The petitioners assign three errors in support of their petition:
I.
THAT PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION AND SERIOUSLY COMMITTED
ERRORS IN LAW IN CONSIDERING PRIVATE RESPONDENTS EVIDENCE INTRODUCED FOR THE FIRST
TIME ON APPEAL, AND PUBLIC RESPONDENT NLRC HAS SERIOUSLY COMMITTED ERRORS IN GIVING
DUE COURSE TO PRIVATE RESPONDENT APPEAL FROM THE DECISION OF LABOR ARBITER FEDERICO
S. BERNARDO, ALTHOUGH SAID APPEAL WAS NOT VALIDLY PERFECTED ON TIME;
II.
THAT PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERRORS IN LAW IN RENDERING A DECISION
THAT IS CONTRARY TO THE EVIDENCE ON RECORD(S); and
On the first issue, the petitioners submit that the motion for reconsideration, treated subsequently as an appeal, 3 of the
private respondent had been filed beyond the ten-day period prescribed by the Labor Code, in the absence of any statement
thereon as to material dates. The respondent Commission ruled that it was, on the strength of receipts in possession of the
Labor Department disclosing such dates and showing that said appeal had been seasonably filed. As a matter of practice,
and in connection with ordinary civil cases, this Court has assumed a stance of liberality towards the application of the
material data rule, if it in be otherwise verified from other evidence that the appeal had been perfected within the time
prescribed. 4 We see no reason why we should hold otherwise as far as labor cases are concerned. Accordingly, we yield to
the respondent Commission's finding that the e.g. Gochangco, Inc. had filed its appeal on time. It may be further noted
that the petitioners themselves can offer no proof, other than vague inferences from circumstances, of the belated appeal
they allege.
This is not to say, however, that such an appeal has judgment. The Solicitor General himself urges that we grant that,
petition and hence, reverse the respondent Commission. But apart from such urgings, the records themselves show that a
reversal is in order.
We are convinced that the respondent company is indeed guilty of an unfair labor practice. It is no coincidence that at the
time said respondent issued its suspension and termination orders, the petitioners were in the midst of a certification
election preliminary to a labor management conference, purportedly, "to normalize employer-employee relations." 5 It was
within the legal right of the petitioners to do so, 6 the exercise of which was their sole prerogative, 7 and in which
management may not as a rule interfere. 8 In this connection, the respondent company deserves our strongest
condemnation for ignoring the petitioners' request for permission for some time out to attend to the hearing of their
petition before the med-arbiter. It is not only an act of arrogance, but a brazen interference as well with the employees
right to self-organization, contrary to the prohibition of the Labor Code against unfair labor practices. 9
But as if to add insult to injury, the company suspended the petitioners on the ground of "abandonment of work" 10 on
February 27, 1980, the date on which, apparently, the pre-election conference had been scheduled. (The petitioners sought
permission on February 26, 1980 while the suspension order was issued on February 28, 1980.) What unfolds here is a
clear effort by management to punish the petitioners for their union activities.
As a consequence of such a suspension, the Clark Air Base guards confiscated the employees' gate passes, and banned them
from the base premises. We cannot be befooled by the company's pretenses that "[t]he subsequent confiscation by the
Americans of the complainants' passes is beyond the powers of management." To start with, those passes would not have
been confiscated had not management ordered the suspension. As put by the Solicitor General, "the U.S. Air Force
authorities could not have known who were supposed to report for work on February 27, 1980," 12and who were under
suspension. Conversely, in the absence of such a suspension order, there was no ground to seize such gate passes. Base
guards, by themselves, cannot bar legitimate employees without the 'proper sanction of such employees'employers.
What disturbs us even more, however, is the perplexing gullibility with which the respondent National Labor Relations
Commission would fall for such an indefensible position. Said the Commission: "So, with their gate passes confiscated, even
if management will reinstate them, without the gate passes, they cannot enter the US Clark Airforce Base and perform
their jobs, for the gate pass is a pre-requisite for their entrance for employment." 13 For surely, and as we stated, the
petitioners were dispossessed of those gate passes precisely because of the suspension meted out against them. It is not the
other way around, as the Commission would have us behave, for the confiscation of such passes would not furnish a

6
ground for suspension. Reinstatement then would have deprived the base gullibility guards any right to hold on to such
passes any further. In the absence of superior orders, mere base guards are bereft of any discretion to act on such matters. Packer

In finding the petitioners' suspension illegal, with more reason do we hold their subsequent dismissal to be illegal. We are 7. Odilon Lising
not persuaded by the respondent firm's argument that final termination should be effected as the contract has expired." 14
What impresses us is the Solicitor General's submission that the petitioners were regular employees and as such, their May 1975
tenure did not end with the expiration of the contract. We quote:
Packer
The records show that petitioners were do so, 6 The ar employees whose employment did not terminate with the
expiration of private respondent's contract with the U.S. Air Force. In their position paper in the arbitration proceedings, 8. Reynaldo Dayrit
they averred that been employer employed by private respondent for six (6) months or more before they were terminated
as follows: May 1976

NAMES Packer

DATE EMPLOYED 9. Rogelio Manguerra

POSITION Mar. 1977

1. Cornelio Pangilinan Packer

Jan. 1976 10. Orlando Nacu

Driver May 1977

2. Leo Tropico Packer

Mar. 1977 11. Diosalino Perdon

Driver May 1977

3. Olimpio Gumin Packer

Jan. 1977 12. Ernesto Galang

Driver June 1977

4. Juanita Suba Packer

June l976 13. Orlando Pangilinan

Driver June l977

5. Rolando Santos Packer

Oct. 1978 14. Jesus Sembrano

Driver May 1977

6. Ruben Buela Packer

Jan. 1975 15. Renato Castaneda

7
May 1976 24. Ricardo S. Domingo

Packer Dec. 1978

16. Edilberto Sarmiento Packer

Aug. 1977 25. Teresito Cullarin

Packer Mar. 1978

17, Eduardo Alegado Packer

Dec. 1977 26. Israel Vino

Packer May 1979

18. Benjamin Capiz Packer

June l978 27. Ernesto Ramirez

Packer Mar. 1979

19. Antonio Razon Packer

Nov. 1978 28. Romeo S. Gina

Packer Sept. 1979

20. Edilberto Bingcang Packer

May 1978 29. Arnel Calflung

Packer Sept. 1979

21. Ernesto Santos Packer

June 1978 30. Pedro A. Santos

Packer May 1979

22. Benedicto Capio Packer

Oct. 1978 31. Rodolfo Capitly

Packer Nov. 1978

23. Rufo Bugayong Packer

May 1977 32. Buenaventura B. Puno

Packer Sept. 1979

8
Packer We find none here. What we find, instead, are flimsy attempts by the respondent company to discredit the person of the
petitioners' counsel, or their officers, and other resorts to argumenta ad hominem. 17
33. Edilberto Quiambao
There is no merit in the claim that the petitioners' terms were coterminous with the duration of the contract. There is
Nov. 1978 nothing in the records that would show that the petitioners were parties to that contract. It appears furthermore that the
petitioners 18 were in the employ of the respondent company long before that contract was concluded. They were not
Packer contract workers whose work terms are tied to the agreement, but were, rather, regular employees of their employer who
entered into that contract.
34. Fernando Lising
But even if dismissal were warranted, the same nonetheless faces our disapproval in the absence of a proper clearance then
Jan. 1975 required under the Labor Code.19 It is true that efforts were undertaken to seek such a clearance, yet there is no showing
that it was issued. That still taints the dismissal with the vice of illegality.
Checker
The Court likewise rejects the claims of an alleged waiver by the petitioners of their economic demands, in the light of an
35. Ernesto M. Tuazon alleged order issued by Labor Arbiter Luciano Aquino in connection with another case(s) involving the same parties. (It
was Labor Arbiter Federico Bernardo who penned the unfair labor practice/illegal dismissal case.) The Honorable
Feb. 1975 Aquino's disposition reads:

Mechanic The records show that a "Waiver of Claims, Rights and Interest" was filed by above-named petitioners stating, among
other things, that said petitioners are waiving their claims, rights and interests against the respondents.
36. Marcelo Lagansad
ACCORDINGLY, let the above-entitled cases be DISMISSED in view of the waiver made by the petitioners. 20
Jan. 1963
Acting on these allegations, the respondent Commission, baring its clear bias for management, ruled that the petitioners
Mechanic had waived their claims. Thus:

37. Marcelino Valerio xxx xxx xxx

May 1979 With respect to the second issue, that is, whether or not the waiver of rights and interests executed by Fernando do so, 6
The G Lising, Odilon do so, 6 The G Lising, Jose C. Tiamzon, Ernesto Tuazon, Pedro Santos, Ruben Buela, Eduardo
Mechanic Alegado, Estrael Vino, Rogelio Manguerra, Edilberto Bingcang, Olimpio Gumin, Leo Tropico, Orlando Nacu, Rodolfo T.
Capitly and Juanito Suba, are valid, the alleged president of complainant-appellee union Benigno Navarro, Sr., contends
38. Serafin Pawa that Id Atty. Solomon has no authority to appear floor and in behalf of individual complainants-appellees who waived their
rights and interests in these cases since there was no authority from him. Records, however, disclose that said Atty.
Feb. 1979 Solomon had been the attorney of record for complainants-appellees since the inception of these cases, and, therefore, is
authority to represent them cannot be questioned- not even by Ministry. Navarro who allegedly took over the presidency
Packer of complainant-appellee union after the disappearance of the former president, Mr. Ficardo Alconga, Sr. And besides, the
waiver of rights and interests were personally executed by the signatories therein and all that Atty. Solomon did was to
39. Jesus S. Daquigan assist them. 21

May 1977 xxx xxx xxx

Packer We find this puzzling for clearly, Labor Arbiter Aquino's resolution refers to other cases22 and not the instant unfair labor
practice controversy. The Commission cannot feign simple mistake for such a lapse. Wittingly or unwittingly, it had made
40. Ismael Cayanan itself a Dawn of the respondent corporation or otherwise had yielded to its influence. The Court rebukes Atty. Isagani M.
Jungco counsel for the respondent company, for his unbecoming act and the individual members of the Commission itself,
May 1978 for besmirching the integrity of the Commission.

Packer 15 In any event, we have held that unfair labor practice cases are not, in view of the public interest involved, subject to
compromises. 23 Furthermore, these alleged waivers do not appear to have been presented in the first instance. They
As regular employees, the petitioners' tenure are secure, and their dismissal must be premised on a just cause. 16 cannot be introduced for the first time on appeal.

9
We come, finally, to the respondent company's liability for backwages and for emergency cost of living allowances
(ECOLA). In its appeal, the company denies any liability, pointing to "[r]epresentative samples of the documents
evidencing payment was likewise submitted due to the voluminous records which cannot be all produced." 24 The
Commission accepted this argument, noting that 'these xerox copies of payment of allowances, were never spurned by
complainants-appellees." 25 The Solicitor General observes, on the other hand, that these alleged documents were never
presented at the hearing but surfaced only on appeal. 26 Indeed, there is no reference in the Labor Arbiter's decision to
these documents, and apparently, the respondent firm entered the same in evidence at the appeal level only. As we have
declared, a party is barred from introducing fresh matters at the appellate stage. Besides, and as the Solicitor General
points out, "the ECOLA awarded to petitioners in the decision of the Labor Arbiter include only those that pertain to them
from the time of their dismissal up to July 1, 1982 " 27 the date the Labor Arbiter ordered their reinstatement. 28
Accordingly, we rule the respondent corporation liable for such unpaid claims.
Before Batas Blg. 70 29 was enacted into law, unfair labor practices were considered administrative offenses, 30 and have
been held akin to tort, 31 wherein damages are payable. We therefore not only order herein the reinstatement of the
petitioners and the payment of backwages (including cost-of-living allowances) to them, but impose as well moral and
exemplary damages. With respect to backwages, we hold the respondent e.g. Gochangco, Inc. liable, in line with the
recommendation of the Solicitor General and in accordance with accepted practice, for backwages equivalent to three (3)
years without qualification or deduction. 32
As for moral damages, we hold the said respondent liable therefor under the provisions of Article 2220 of the Civil Code
providing for damages for "breaches of contract where the defendant acted fraudulently or in bad faith." We deem just and
proper the sum of P5,000.00 each in favor of the terminated workers, in the concept of such damages.
We likewise grant unto said workers another P5,000.00 each to answer for exemplary damages based on the provisions of
Articles 2229 and 2231 and/or 2232 of the Civil Code. For "act[ing] in gross and evident bad faith in refusing to satisfy
the [petitioners'] plainly valid, just and demandable claim[s] " 33 the respondent firm is further condemned to pay
attorney's fees. The Court considers the total sum of P20,000.00 fair and reasonable.
If only for emphasis, the new Constitution considers "labor as a primary social economic force." 34 As the conscience of
the government, it is this Court's sworn duty to ensure that none trifles with labor rights.
WHEREFORE, the petition is GRANTED. The decision of the public respondent, the National Labor Relations
Commission, is REVERSED and SET ASIDE. Judgment is hereby rendered:
1. Ordering the private respondent, e.g. Gochangco, Inc., to REINSTATE the terminated workers;
2. Ordering the private respondent to PAY them backwages equivalent to three (3) years without qualification or
deduction;
3. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH, as and for moral damages;
4. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH, as and for exemplary damages;
and
5. Ordering it to PAY them the sum of TWENTY THOUSAND (P20,000.00) PESOS as and for attorney's fees.
This Decision is IMMEDIATELY EXECUTORY.
Costs against the private respondent.
IT IS SO ORDERED.
Yap, C.J., Melencio-Herrera, Paras and Padilla, JJ., concur.
G.R. No. L-39140 & 39145 May 17, 1980
ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC., petitioner,
vs.
ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC. EMPLOYEES' UNION
(AFP-MBAI-EU), LUCIA LAURENTE, EMERENCIANA AGULTO, LUNINGNING SANTOS, AMPARO
VICENTE, FE M. JACINTO, TEODULFA FLORENDO, CLARITA B. ASPIRAS, EDNA CUBILLO, CESAR
SAEZ, MARIETA BERMUDO, ESTELITA J. SANTOS, PRIMA S.J. NAFRADA, FLORA E. CINCO, JUANITA
V. MONTERO, LYDIA PADIERNOS, and THE COURT OF INDUSTRIAL RELATIONS, respondents;
ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC. EMPLOYEES' UNION
(AFP-MBAI-EU), VICTORIA I. ALVAREZ, EDILBERTO B. BALLECER, DELIA B. REBULTAN, WARLITO Q.
MADAMBA, ROLANDO O. SANTIAGO, ALFONSO JOVES, THELMA D. ESPINA, SUSAN MARANON,
FELICIANO C. FERNANDEZ, TERESITA DE LOS REYES, MAGDALENA S. DAZO, DOMINADOR M. LAMSEN,
BALTAZAR, V. VILLARUZ, ROGELIO L. CORDERO, LOURDES R. POBLADOR, CARMELITA ARAGON,
MODESTA CAOILE, JOSEFINA BAUTISTA and AVELINA E. ANTONIO, petitioners,
vs.
ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC. (AFP-MBAI) and COURT OF
INDUSTRIAL RELATIONS (CIR), respondents.
GUERRERO, J.:ñé+.£ªwph!1
The two petitions before Us assail the validity of the Court of Industrial Relations' Resolution dated July 16, 1974 denying
two motions for partial reconsideration separately filed by the Armed Forces of the Philippines Mutual Benefit
Association, Inc. (AFP-MB Assn., for short) in G.R. No. L-39140 and the Armed Forces of the Philippines Mutual Benefit
Association, Inc. Employees' Union (Union for short) in G. R. No. L-39145.
In Our Resolution dated November 25, 1974, after giving due course to the petitions, the two cases were ordered
consolidated.
These petitions arose from Case No. 5525-ULP filed in the Court of Industrial Relations on December 1, 1970 by the
Court Prosecutor in behalf of the Union and thirty-four (34) of its officers members for unfair labor practice against the
AFP-MB Assn., its then General Manager, Maximo Jante and its Assistant General Manager, Esmeraldo Acorda for the
alleged illegal and discriminatory dismissals on June 30, 1970 of the said thirty-four (34) individual complainants.
The complaint alleges that the individual complainants are employees of the AFP-MB Assn. and at the same time
members of the Union; that some of them became active in campaigning for more members of the Union and have worked
for their benefit by sending economic demands to the AFP-MB Assn.; that conferences on these demands were held
resulting into a collective bargaining agreement between the Association and the Union made on June 30, 1970; that on
July 1, 1970, all individual complainants were handed letters of dismissal by respondents for no other reason than their
being members of the Union and active in connection therewith; that only members of the Union were dismissed and that
on July 1, 1970, as a result of such unfair labor practice acts, complainants were compelled to declare a strike.
10
The AFP-MB Assn. in its Answer alleged that the dismissal of the complainants were due to lawful and justified causes;
that as early as September, 1969, complainants were already aware of the contemplated reduction of personnel by reason
of suspension and/or abolition of some of its operations; that some of the individual complainants have already
acknowledged or ratified the validity of their dismissals and have waived whatever rights to reinstatement and/or other
benefits that may accrue to them as a result of the filing of the instant case; that most of the individual complainants have
already obtained substantially the same or equivalent employment in other companies; that the strike declared by the
Union was illegal and that the Court of Industrial Relations has no jurisdiction over the subject matter of the complaint,
considering that the AFP-MB Assn. is a benevolent association and is not engaged in business or organized for profit.
The Hearing Examiner duly commissioned by the CIR to hear and receive evidence in this case found that prior to the
execution of the bargaining agreement and sometime in September, 1969 the Office of the Insurance Commissioner
recommended to the Board of Directors of the Association the stoppage of the grant of Home Appliances Loans, Salary
Loans, Car Insurance Loans and Educational Loans as being illegal and unlawful (Exhs. "2" and "27-A"). The general
manager of the Association undertook a feasibility study of the investment capability of the company and came up with a
prepared study on June 11, 1970 which among others, recommended the retention of seventy (70) personnel, provided that
26 out of the 70 retained will be phased out within a period of two years. About a year thereafter or on June 17, 1970, the
New Minimum Wage Law increased the daily wages of industrial workers from P6.00 to P8.00 a day.

On August 19, 1971, the AFP-MB Assn. filed a "Motion to Dismiss" the case insofar as the following complainants are Pursuant to the order of the CIR dated March 16, 1971 the Chief of the Examining Division of that Court examined the
concerned: têñ.£îhqw⣠books of accounts and other pertinent papers of the Association. The Examiner submitted a report which showed that the
standard current capital working ratio is 2 to 1 which means that the current assets should be at least two times the
1. Victorina Alvarez current liabilities; that there should be at least P2.00 worth of current assets with which to pay P1.00 worth of current
debts or obligations. The Association had as of December 31, 1969 P2.62 worth of current assets to meet or pay P1.00
2. Edilberto B. Ballecer worth of current debts. The Association had, therefore, excess assets to meet or pay its debts within the operating business
cycle of one year.
3. Delia B. Rebultan
The Examiner also found out that the Association's "Plantilla" for 1971 showed that the salaries of the officers and other
4. Warlito Q. Madamba personnel were increased. He also pointed out that the individual complainants were terminated or dismissed allegedly due
to losses incurred by the Association.
5. Rolando O. Santiago
The Hearing Examiner thereupon submitted the following recommendations: têñ.£îhqwâ£
6. Alfonso Joves
1. Dismissing this complaint insofar as complainants Victoria Alvarez, Edilberto B. Ballecer, Delia B. Rebultan, Warlito Q.
7. Thelma D. Espina Madamba, Rolando Santiago, Alfonso Joves, Thelma D. Espina, Susan Marañ;on, Magdaleno S. Dazo, Dominador Lamsen,
Baltazar V. Villaruz, Carmelita Aragon, Modesta Caoile, Feliciano C. Fernandez, Teresita de los Reyes, Josefina Bautista
8. Susan Maranon and Avelina E. Antonio are concerned;

9. Feliciano C. Fernandez 2. Declaring respondent Association as within the coverage of the Industrial Peace Act;

10. Teresita de los Reyes 3. Declaring respondents guilty of unfair labor practice for having dismissed on June 30, 1970 the remaining individual
complainants and ordering them to cease and desist from further committing the same unfair labor practice acts;
11. Magdaleno S. Dazo
4. Ordering the respondents to reinstate complainants Lucia S. Laurente, Emerenciana C. Agulto, Luningning Z. Santos,
12. Dominador Lamsen Fe M. Jacinto, Teodulfar R. Florendo, Clariba B. Aspiras, Edna Cublido, Cesar B. Saez, Marieta P. Bermudo, Estelita J.
Santos, Prima S.J. Nifrada, Flora E. Cinco, Juanita V. Montero, Lydia Padiernos to their former positions with backwages
13. Baltazar V. Villaruz from July 1, 1970 until actually reinstated, with all the rights and privileges formerly appertaining thereto, less whatever
earnings elsewhere they had during the period of their dismissal and
14. Rogelio L. Cordero
5. Ordering respondents to reinstate Amparo Vicente to her former position with only half of her backwages from the time
15. Lourdes R. Poblador of her dismissal on June 30, 1970 until she is actually reinstated, with all the rights and privileges formerly appertaining to
her position less her earnings elsewhere if any, during the period of her dismissal.
16. Carmelita Aragon
In a decision dated April 15, 1974, the Court of Industrial Relations adopted in fun the recommendation of the Hearing
17. Modesta Caoile Examiner, the dispositive portion of which reads: têñ.£îhqwâ£

18. Josefina Bautista WHEREFORE, all of the foregoing considered, and as so recommended, the respondents should be, as they are hereby,
declared guilty of having committed the unfair labor practice acts complained of, for having dismissed the individual
19. Avelina E. Antonio complainants on June 30, 1970 by reason of their union affiliation and activities and are therefore ordered to cease and
desist from committing the same or similar unfair labor practice acts, and to reinstate complainants Lucila Laurente,
on the ground that they voluntarily withdrew from this case by freely executing under oath quitclaim papers. Emerenciana Agulto, Luningning Z. Santos, Amparo Vicente, Fe M. Jacinto, Teodulfa Florendo, Clarita B. Aspiras, Edna
Cubildo, Cesar B. Saez, Marieta P. Bermudo Estelita J. Santos, Prima S.J. Nifrada, Flora E. Cinco, Juanita V. Montero, and

11
Lydia Padiernos to their former or substantially equivalent positions with backwages from July 1, 1970 until actually
reinstated, with all the rights and privileges formerly appertaining thereto, including seniority, less whatever earnings
they have made elsewhere during the period of their dismissal, except in the case of complainant Amparo Vicente who
should be paid by respondents only one-half of her backwages from the time of her dismissal on June 30, 1970 until she is
actually reinstated.
The above-entitled case should, however, be as it is hereby ordered dismissed insofar as complainants Victoria Alvarez,
Edilberto V. Ballecer, Delia B. Rebultan, Warlito Q. Madamba, Rolando Santiago, Alfonso Joves, Thelma D. Espina, Susan
Maranon, Magdalena S. Dazo, Dominador Lamsen, Baltazar, V. Villaruz, Rogelio L. Cordero, Lourdes R. Poblador,
Carmelita Aragon, Modesta Caoile, Feliciano C. Fernandez, Teresita de los Reyes, Josefina Bautista and Avelina E.
Antonio are concerned.
SO ORDERED.
The AFP-MB Assn. and the individual complainants filed separate motions for reconsideration of the above order.
Complainants anchored the motion on the ground that receipt of separation pay and quitclaims cannot absolve the
Association from the consequences of the unfair labor practice, whereas the Association maintained that individual
complainants are not entitled to reinstatement nor backwages as ordered by the Court.
The CIR en banc denied both motions, finding no justification in altering or modifying the questioned decision.
Both parties come to Us on certiorari, assigning the following as errors committed by the Court of Industrial Relations:
têñ.£îhqwâ£
In G. R. No. 39140
1. The Court of Industrial Relations erred in declaring petitioner Association guilty of unfair labor practice for
having dismissed its thirty four (34) employees on June 30, 1970.
2. The Court of Industrial Relations erred in ordering the reinstatement of the fifteen (15) individual respondents to their
former or substantially equivalent positions.
3. The Court of Industrial Relations erred in ordering the payment to the fifteen (15) individual respondents of
backwages from the date of their dismissal until their actual reinstatement.
In G. R. No. 39145
1. Having found their dismissal to be violative both of the collective bargaining agreement and Section 4 (2) of Republic
Act No. 875, it is error for respondent court to order the dismissal of the complaint with respect to herein individual
petitioners.
2. It is error for the trial court to absolve the respondent Corporation from the consequences of its unfair labor
practice acts by petitioners' execution of quitclaims in its favor.
These assignments of errors can be capsule into two main issues, namely: têñ.£îhqwâ£
1. Whether or not the AFP-MB Assn. is guilty of unfair labor practice for dismissing thirty four (34) of its employees by
reason of the suspension and/or abolition of some of its operations; and
2. Whether or not the trial court erred in dismissing the complaint against individual complainants who executed
"Quitclaim and Complete Release.
On the first issue, the Association contends that the dismissal of thirty four (34) employees of petitioner is due to just and
legitimate causes and the CIR committed an error of law in declaring petitioner Association guilty of unfair labor practice
since the cessation of the four (4) major lending operations of the Association granting Home Appliances Loans, Salary
Loans, Car Insurance Loans and Educational Loans was ordered by the Office of the Insurance Commissioner being in
violation of the law and must stop immediately, thereby rendering the dismissal of the said thirty four (34) employees on
June 30, 1970 as necessary and imperative.
It is quite true, as the Association argues, that the Supreme Court in a number of cases has recognized and affirmed the
right of the employer to lay-off or dismiss employees because of lack of work caused by a considerable reduction in its
business, or that their continued employment will only result in farther losses in the operation of its business (Phil.
American Embroideries Inc. vs. Embroidery & Garment Workers Union, 26 SCRA 634, 643; Northern Luzon
Transportation Co. vs. CIR, 73 Phil. 41), due to lack of work (Union of Philippine Education Employees vs. Phil.
Education Co., Inc. L-7161, May 19, 1955, 97 Phil. 953), and considerable reduction in the volume of his business
(Gregorio Araneta Employees Union vs. Arsenio Roldan, 97 Phil. 304). We have held that such acts of dismissal do not
constitute unfair labor practice. Under the law, an employer may close his business provided the same is done in good faith
and is due to causes beyond his control. To rule otherwise would be oppressive and inhuman. (Tio Kinh vs. CIR, 90 Phil.
564, 568; LVN Pictures Employees and Workers Association (NLU) vs. LVN Pictures, Inc., L-23495, Sept. 30, 1970; LVN
Pictures Checkers' Union (NLU) vs. LVN Pictures, Inc., L-26432, September 30, 1970, 35 SCRA 147).
In the case at bar, however, it appears that the books of accounts and other pertinent papers of the Association were
ordered examined by the Chief of the Examining Division of the Court in order that the latter may be fully informed and
guided as to the financial status of the Association, and his Report submitted on March 31, 1971 shows that the current or
working capital ratio of the respondent Association is more than the standard or average ratio. The alleged financial losses
or poor financial condition as a consequence of the implementation of the New Minimum Wage Law on June 17,1970 and
the cessation of the four aspects of its operation are belied by the fact that in their Plantilla for 1971, salaries of the officers
and other personnel were increased, which was implemented thereafter.
While a collective bargaining agreement was entered and executed between the Association and the Union on June 10,
1970, and signed on June 13, 1970 and ratified or acknowledged on June 18, 1970 for a term or duration of two (2) years,
and providing among others guaranteed security of tenure of employment, there is evidence which is substantial that the
Association, in entering into said collective bargaining contract, did not have the honest intention of complying with all
the provisions thereof. The Board of Directors of the Association knew as early as September, 1969 that the Office of the
Insurance Commissioner would stop the grant of the Home Appliances Loans, Salary Loans, Car Insurance Loans and
Educational Loans, said investments being unlawful and in direct violation of Section 1628-G of the Revised
Administrative Code, as amended by Act No. 3612. Moreover, the feasibility study on the investment capability of the
Association dated June 11, 1970, submitted by the General Manager to the Board of Directors of the Corporation, which
was before the signing of the collective bargaining agreement, recommended among others: "Retain 70 personnel;
provided that 26 personnel out of the 70 personnel retained will be phased out within a period of two years." Upon these
facts already known to the Association prior to the signing on June 13, 1970 and acknowledgment of the collective
bargaining contract on June 18, 1970, the conclusion of the trial court which was affirmed by the CIR en banc being fully
supported by substantial evidence is correct in holding that the Association in so entering into said collective bargaining
contract did not have the honest intention of complying with all the provisions thereof.
The fact that the Association actually terminated the services of the individual complainants on June 30, 1970 or only 12
days after the acknowledgment of the contract by the parties without referring the matter of phasing out or lay-off to the
proper labor management committee, as well as the fact that the supposed guidelines containing the criteria in the
selection of those who were to be terminated was not presented to the court despite requests therefor, are not disputed by
the Association.
In the light of the evidence presented and recited above, We find that the termination of employment of the individual
complaints constitutes unfair labor practice as concluded by the Trial Judge, Associate Judge Alberto S. Veloso and
12
affirmed en banc by the Court of Industrial Relations, which conclusion is supported by substantial evidence. Hence, We
find no abuse of discretion or excess of jurisdiction on the part of the respondent court.
It needs no further emphasis in re-stating the rule that the factual findings of the Court of Industrial Relations are
conclusive upon the Supreme Court. As the Supreme Court said in Philippine Engineering Corp. vs. Court of Industrial
Relations, 41 SCRA 89 — têñ.£îhqwâ£
It is a settled doctrine of this Court that matters touching on the weight and sufficiency of evidence and on the credibility
of witnesses involve questions of fact, and the findings of the CIR on such matters are conclusive upon this Court. It
cannot be said that the CIR abused its discretion when it did not consider petitioner's evidence credible and sufficient. We
find that the testimonies of the petitioner's witnesses regarding the losses were not given credit by the CIR because they
failed to state specifically the amount of the alleged losses in 1965 or 1964, and in prior years. The corporation, according
to the CIR, did not present its books of account and its statements of profit and loss which could clearly demonstrate the
alleged financial losses, nor did petitioner present its accountant or auditor to testify on that matter. The failure of
petitioner to present the best evidence in its possession, concluded the CIR, gives rise to the presumption that there was
suppressing on its part of evidence unfavorable to its interests. This Court has ruled that the matters regarding the
financial condition of a company to justify the closing of its business and whether a company is losing in its operations are
questions of fact.
It is not necessary to support a finding that a particular discharge constitutes an unfair labor practice to demonstrate that
the dismissal was entirely and exclusively motivated by the employee's union activities or affiliations. It is enough to
denounce the discharge if it established that the discrimination motive was a contributing factor. This Court has also said
that if it can be established that the true and basic inspiration for the employer's act is derived from the employee's union
affiliation or activities, the assignment by the employer of another reason, whatever its semblance of validity, is unavailing:
The decision assailed makes special mention of the cases of complainants Amparo Vicente and Lucia Laurente who, like
the other complainants, were dismissed on the "... result of the implementation of the New Minimum Wage Law and the
present financial condition of the Association, as approved by the Board of Directors reducing the personnel ..." as alleged
by the Association but which complainants deny for they were dismissed " ... for no other reason that their being members
of the Union and active in connection therewith." (paragraph 8, Complaint).
In the case of Lucia Laurente, she was an accounting clerk in respondent Association from May 9, 1966, and Auditor of the
complainant Union. She was awarded a diploma of merit as a Model Employee by the respondent Association. In January,
1970, she was appointed a member of a working committee to study or investigate the financial conditions of the
respondent Association in relation to the economic provisions of the collective bargaining agreement. During the
negotiation for a collective bargaining agreement, she uttered remarks unfavorable to the management which prompted
the General Manager to demand an explanation from her which was found to be unsatisfactory. She was dismissed on June
30, 1970 according to the General Manager because she seemed to be discourteous and had made a statement that the
Association had two sets of books like Chinese business firms and that it was a committee that decided her lay-off. Her
testimony that during the negotiation for a collective bargaining agreement in 1970, the Assistant Manager of the
Association told them that they "better dissolve the Union, anyway the management can grant benefits to us without the
Union" which is not refuted nor denied, clearly manifests the intent and motive of the Association in her dismissal and the
other members of the Union.
The same is true with complainant Amparo Vicente, who was the Chief of the Credit and Collection Section of the
Association while also a member of the complainant Union's Board of Directors and from 1968 acted as Treasurer until
she was dismissed on June 30, 1970.
She was cited for her exemplary performance as an Outstanding Employee of the Association and was also the recipient of
a letter of commendation by the General Manager as well as an awardee of a certificate of merit (Second Honorable
Mention) in recognition of her meritorious service as Section Chief in December, 1968. Her alleged tardiness for three
times in March, 1970 and failure to register on the daily time register book appears to be the reason for her dismissal,
notwithstanding the fact that her explanations for said violations were simply noted by the management. Her Union
activities were, however, known to the management for she had campaigned for membership in the Union from 1966 to
1970, telling them about the advantage and disadvantages about labor unions and the benefit of paying Union dues, and
considering that those who resigned from the Union after the signing of the collective bargaining agreement and during
the strike were not terminated from their employment, unlike in her case where despite her qualifications, competence,
aptitude and proven merit, she did not qualify for retention after an appraisal of her records which were not shown or
produced before the court, the ruling of the Court of Industrial Relations that her dismissal was similarly an unfair labor
practice cannot be disturbed, reviewed or reversed by Us. We, therefore, affirm that the Association is guilty of unfair
labor practice for dismissing thirty four (34) of its employees by reason of the suspension and/or abolition of some of its
operations.
On the second issue, there is no dispute that the 19 complainants, namely Victoria Alvarez, Edilberto V. Ballecer, Delia B.
Rebultan, Warlito Q. Madamba, Rolando Santiago, Alfonso Joves, Thelma D. Espina, Susan Marañ;on, Magdalena S.
Dazo, Dominador Lamsen, Baltazar V. Villaruz, Rogelio L. Cordero, Lourdes R. Poblador, Carmelita Aragon, Modesta
Caoile, Feliciano C. Fernandez, Teresita de los Reyes, Josefina Bautista and Avelina E. Antonio executed, signed and
subscribed under oath documents entitled "Quitclaim and Complete Release" (Exhibits "4" to "22") which, among others
provide: têñ.£îhqwâ£
1. I have this____ day of_________ 197___, tendered my irrevocable resignation as an employee of the AFP
Mutual Benefit Association, Incorporation;
2. I hereby acknowledge receipt of the sum of_________ (check) No.______ dated_____•__ 197___ to my full and
complete satisfaction, representing my separation/termination pay as an employee of the said MBAI;
3. I hereby acknowledge that I have no other and further money claims from the said MBAI, and I now release forever the
said MBAI, fully and completely from any and all claims whatsoever arising from my employment therewith;
4. I also hereby withdraw/desist as party litigant in the unfair labor practice suits brought by the Armed Forces of the
Philippines Mutual Benefit Association, Incorporated Employees Union ... against the AFP-MBAI and/or any of its
officials before the Court of Industrial Relations ...; waiving forever whatever right to reinstatement and/or other such
benefits that may accrue as a result of the said above-mentioned cases.
Thereafter, the above-enumerated complainants received, in different amounts based on their length of service, their
separation benefits without protest and reservation, as attested by the respondents' General Vouchers marked as Ex-
exhibits "4-A", "5-A", "6-A", "6-B", "7-A", "8-A", "9-A", "10-A", "11-A", "12-A", "13-A", "13-B", "14-A", "15-A", "16-A",
"17-A", "18-A", "19-A", "20-A", "21-A", "22-A", and "22-B", which were duly signed and acknowledged by the aforesaid
individual complainants.
The Trial Judge, the Honorable Alberto S. Veloso, in his decision dismissing the complaint against the above-enumerated
complainants insofar as they are concerned rationalized the dismissal this wise: têñ.£îhqwâ£
It should be emphasized that the afore-enumerated complaints irrevocably resigned from their employment; they likewise
received to their full and complete satisfaction their separation pay without protest and reservation; they acknowledged
that they have no more claims against the respondent herein and thereby released them forever from any claim arising
from their employment; and above all, they withdrew/desisted as party litigant in this case. It should further be stressed
that none of the said individual complainants was presented in rebuttal to disprove the free and voluntary execution of said
"Quitclaim and Complete Release" and "General Voucher", nor was there evidence adduced by the complaints that these
were imposed upon them and that they were compelled by necessity to sign and accept them. On the other hand,
respondents presented evidence that these complaints voluntarily applied for their separation pay, and likewise freely
accepted their checks without any protest or reservation.
13
Under this situation, it is believed that the said individual complainants freely and voluntarily desisted and withdrew their
case against the respondents. And, this being the case, the Court has no other alternative but to dismiss this complaint
against the respondents insofar as they are concerned. [Sec. 5 (c), Republic Act 875]
In labor jurisprudence, it is well-established that quitclaims and/or complete releases executed by the employees do not
estop them from pursuing their claims arising from the unfair labor practice of the employer. The basic reason for this is
that such quitclaims and/or complete releases are against public policy and, therefore, null and void. The acceptance of
termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. (Cariñ;o vs.
ACCFA, L-19808, Sept. 29, 1966, 18 SCRA 183; Philippine Sugar Institute, vs. CIR, L-13475, Sept. 29, 1960, 109 Phil.
452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA 694, 704).
In the Cariñ;o case, supra, the Supreme Court, speaking thru Justice Sanchez, said: têñ.£îhqwâ£
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not
stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money.
Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money
proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent their
claim. They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur.
Likewise, in Firestone Filipinas Employees Association vs. Firestone Tire and Rubber Co. of the Philippines, L-37952,
December 10, 1974, 61 SCRA 340, 345, where petitioners therein were given separation pay in consideration of which they
executed releases and quitclaims releasing the respondent company, the Supreme Court, in the words of then Justice now
Chief Justice Enrique M. Fernando, held: têñ.£îhqwâ£
... What weakens the case for private respondent even more is that as a matter of law the acceptance of the terms of the
alleged compromise including the benefits attributed to it did not automatically negate the assertion of whatever rights
may be possessed by virtue of the Industrial Peace Act. Mention has just been made on the length of time that had elapsed
since the strike began. The financial plight of the petitioner is thus obvious. They are the people who without work would
find it difficult to know how their basic needs can be met. They are likely to be family men, appalled by the thought that
they cannot even provide sufficiently for their young ones. It is precisely the reaction of their lot is far from enviable that
led to this highly relevant excerpt from the opinion announced in Philippine Sugar Institute vs. Court of Industrial
Relations (109 Phil. 452), "By accepting the benefits of their separation the petitioner argues that they are in estoppel. The
separation thrust upon them and the acceptance of benefits thereof cannot constitute estoppel." So was it made clear in the
opinion of Justice Padilla, a jurist with the solid reputation for soundness and competence, who was ever careful never to
go further than the law allows in the recognition of the claims of the workingman. The then Justice, now Chief Justice
Makalintal had occasion to reiterate such doctrine in Urgelio vs. Osmeñ;a (L-14908, February 28, 1964, 10 SCRA 253) in
these words: "Contrary to respondents' theory, the fact that petitioners received their terminal pay cannot be considered as
a waiver of the right to question the termination of their services." That was so under the 1935 Constitution. The present
Constitution as already noted, is much more liberal in its recognition of labor's dependence on governmental efforts to
assure that its welfare be truly promoted. It would be to blunt the force then of the decision referred to earlier,
promulgated after the approval of the Charter now in force, if the defense of the petitioners having executed releases and
quitclaims will be given the seal of approval. This Court is not disposed to take that step.
The Association's argument that it is not the receipt of separation pay and the execution of quitclaim documents by the
individual petitioners which compelled the Court of Industrial Relations to dismiss the complaint insofar as they are
concerned but rather their voluntary desistance and withdrawal from the case as party litigants which gave the Court of
Industrial Relations no other alternative but to dismiss the complaint, is untenable. In the first place, the finding of the
Court of Industrial Relations that the Association was guilty of unfair labor practice for having dismissed on June 30, 1970
the thirty-four (34) individual complainants from their employment by reason of their Union activities is correct, as well as
its Order for the reinstatement of the fifteen (15) complainants who did not execute quitclaims and/or complete releases,
which We affirm. But the dismissal of the complaint insofar as the other nineteen (19) complainants are concerned on the
ground that they have voluntarily desisted and withdrawn from the case is not warranted because their desistance or
withdrawal is not only voluntary but also illegal, being contrary to public policy. And since the dismissal of the employees
constitutes an unfair labor practice, it is immaterial whether some have executed quitclaims and releases or not.
Secondly, under Section 5 (2) of the Industrial Peace Act, Republic Act 875, which provides: têñ.£îhqwâ£
(a) The Court shall have jurisdiction over the prevention of unfair labor practices and is empowered to prevent any person
from engaging in any unfair labor practice. This power shall be exclusive and shall not be affected by any other means of
adjustment or prevention that has been or may be established by an agreement, code, law, or otherwise,
We can clearly and positively declare, without hesitancy or doubt, that unfair labor practice acts are beyond and outside
the sphere of compromises such as quitclaims, release and settlements.
All the individual complainants are entitled to reinstatement to their former employment at current rates paid by the
Association to employees occupying the same or similar position without loss of seniority and privileges. They are
furthermore entitled to three years backpay following the rule laid down in the case of Mercury Drug Co. vs. CIR, L-
23357, April 30, 1974, 56 SCRA 694, and reiterated in Feati University Faculty Club vs. Feati University, L-31503,
August 15, 1974, 58 SCRA 395; Luzon Stevedoring Corporation and B. H. Tenefrancia vs. CIR, L-34300, November 22,
1974, 61 SCRA 154; Insular Life Assurance Co., Ltd Employees' Association-NATU vs. Insular Life Assurance Company,
L-25291, March 10, 1977, 76 SCRA 50; Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills Inc., L-33987, May
31, 1979, 90 SCRA 391, without requiring the parties to submit proof of compensation received from other sources from
the time of the illegal dismissal on June 30, 1970 until actual reinstatement.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the decision of the Court of Industrial Relations is hereby
modified. The Armed Forces of the Philippines Mutual Benefit Association, Inc. is hereby ordered:
a. To immediately reinstate all the individual complainants to their former employment at current rates paid by said
Armed Forces of the Philippines Mutual Benefit Association Inc. to employees occupying the same or similar positions,
without loss of seniority and privileges, within thirty (30) days from notice of this decision; and
b. To pay complainants the equivalent of three (3) years backwages at the rates actually received by them before their
dismissal on June 30, 1970 without deduction or qualification.
Costs against the Armed Forces of the Philippines Mutual Benefit Association, Inc.
In view of the length of time that complainants' right to reinstatement during the pendency of the dispute and to accrued
backwages has been pending enforcement, this decision shall be immediately executory upon its promulgation.
SO ORDERED.
Makasiar, Fernandez, De Castro and Melencio-Herrera, JJ., concur.1äwphï1.ñët
Teehankee (Chairman), concurs in the result.
G.R. No. 120482 January 27, 1997
REFORMIST UNION OF R.B. LINER, INC., HEVER DETROS, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, R.B. LINER, INC., BERNITA DEJERO, FELIPE DEJERO,
RODELIO DEJERO, ANA TERESA DEJERO, and RODELIO RYAN DEJERO, respondents.
DAVIDE, JR., J.:
14
This is a special civil action for certiorari Rule 65 of the Rules of Court seeking to set aside the decision1 of the National
Labor Relations Commission (NLRC) in NLRC NCR CA No. 004115-92, which affirmed the decision2 of the Labor
Arbiter in the consolidated cases NLRC NCR Case Nos.00-03-01392-90 and 00-04-02088 -90, and the resolution of the
former denying the motion for the reconsideration of its decision.3
Petitioner Reformist Union of R.B. Liner, Inc. (hereinafter Reformist), with Hever Detros as its president, is composed of
drivers, conductors, and mechanics of private respondent R.B. Liner, Inc. Private respondents Bernita, Felipe, Rodelio,
Ana Teresa, and Rodelio Ryan, all surnamed Dejero, are the incorporators of R.B. Liner, Inc.
From the record and the pleadings filed by the parties, we cull the following material facts in this case:
Petitioner union was organized in May 1989 "by affiliating itself with Lakas Manggagawa sa Pilipinas (hereinafter
Lakas)."4 Lakas filed a notice of strike on 13 November 1989 because of alleged acts of unfair labor practice committed by
the private respondents.5 Despite conciliation hearings held on 4 and 6 December 1989, the parties failed to reach an
agreement. Later, another act of unfair labor practice allegedly committed by the private respondents impelled Reformist,
with the authorization of Lakas, to go on strike on 13 December 1989 even as conciliation proceedings continued.6
On 21 December 1989, R.B. Liner, Inc. petitioned then Secretary Franklin Drilon of the Department of Labor and
Employment (DOLE) to assume jurisdiction over the ongoing dispute or certify it to the NLRC.7 Secretary Drilon
determined that "[t]he ongoing work stoppage in the company . . . adversely affects an industry indispensable to the
national interest;" thus on 28 December 1989, he certified the dispute to the NLRC for compulsory arbitration and issued a
return-to-work order.8
The certified case (NLRC Certified Case No. 0542, entitled in Re: Labor Dispute at RB Liner, Inc.) was dismissed on 13
February 19909 after the union and the company reached an agreement10 on 19 January 1990 providing, among other
matters, for the holding of a certification election.
On 31 January 1990, a certification election was held were Lakas won as the collective bargaining agent of the rank-and-
file employees.11 On 13 February 1990, Lakas presented a proposal for a collective bargaining agreement to Bernita and
Rodelia Dejero,12 but they refused to bargain.13 Meanwhile, as admitted by private respondents' witness Arcile
Tanjuatco, Jr., eight R.B. Liner buses were "converted" to Sultran Lines, one "became MCL," and another "became SST
Liner."14
The petitioners filed NLRC NCR Case No. NCR-00-03-01392-90 charging the private respondents with unfair labor
practice, i.e., illegal lock-out. The private respondents countered with NLRC Case No. NCR-00-04-02088-90, which
sought to declare as illegal the union's 13 December 1989 strike, as well as other "work stoppages/boycotts" staged by the
petitioners. The two cases were consolidated and simultaneously tried.15
In his decision of 27 October 1992, Labor Arbiter Ricardo Nora ruled that the evidence, e.g., the private respondents' proof
of payment of percentage taxes for 1990 and Conductors/Inspectors Daily Reports, "indicate[d] against an illegal
lockout," while finding that Reformist staged an illegal strike for the following reasons:
1. The Reformist failed to show that they observed the legal requirements of a legal strike, like the following:
First, the Reformist failed to show and present evidence that the approval of majority vote of its members were obtained
by the secret ballot before the strike; Second, they failed to show that they submitted the strike vote to the department of
Labor at least seven (7) days prior to the intended strike; and Third, all members of the Reformist Union struck even
before the certification election, when there was no definitive bargaining unit duly recognized and while the conciliation
process was still on-going and in progress. Exh. 7-D is clear which states the following: "The Union object[s] with [sic]
the position of Management for the reason that considering that they are on strike such election is moot and academic. All
employees as per union allegation participate[d] in that concerted action.
2. The Reformist engaged in illegal, prohibited activities by obstructing the free ingress and egress to and from the
R.B. liner's garage premises where the trucks were parked; (Exhs. "8" "8-A to "8-D").
3. The Reformist failed to present clear evidence . . . rebutting respondents' claim that the Reformist blatantly
defied the Secretary's return to work Order dated December 28, 1989. The evidence adduced particularly Exhibit "12" (the
minutes of the conference on January 19, 1990 in Office of the NLRC Commissioner Diokno) includes the following: "That
the Union assured to cause the return within five (5) days or January 24, of all employees who have not reported for work
and management agreed to accept them." This clearly indicates an admission by the Reformist that its members did not
comply with the Return-to-work order of the Secretary of Labor. It may be noted though that some members complied
with the Order as per testimony of respondents' witness, however, the same workers had earlier participated in prohibited
and illegal activities like illegal picketing that characterized an illegal strike.16
The Labor Arbiter then disposed as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
1. Dismissing the complaint of Reformist in NLRC-NCR-Case No. 00-03-01392-90 for Unfair Labor Practice
(Illegal lockout) for lack of merit;
2. Declaring the December 13, 1989 Strike by the Reformist as Illegal in NLRC-NCR-Case No. 00-04-02088-90;
3. Declaring all the Offices and Members of the Reformist to have lost their employment status for participating in
an Illegal Strike. They are named as follows
xxx xxx xxx
All other issues are Dismissed for lack of merit.17
On appeal, the NLRC affirmed the Labor Arbiter's finding that Reformist held an illegal strike, reasoning as follows:
It [Reformist] disputes the holding that an illegal strike was staged on December 13, 1989 on the ground that previous
thereto, conciliation and mediation conferences were conducted and which thus constituted . . . evidence that there was a
notice of strike filed consequent to a strike vote had among the members of the union. This, assuming for the sake of
argument is true, did not out rightly put a stamp of validity for such concerted action as the fact remains that no
certification election was conducted previous to the strike. Hence, the union could not have validly claimed that it was the
exclusive bargaining agent to the workers in petitioners' premises when is staged the subject strike. Nevertheless, such
flaw, as correctly assumed by the appellants, could have been corrected by the Return to Work Order of then Secretary of
Labor Franklin Drilon. The finding that this Order was defied is contested by the appellants alleging that the logbook
which contains an entry of all those who reported for work was never presented by management, thus constituting
suppression of evidence. This could have been true had the said logbook constituted as the sole evidence in support of
petitioners' assertion as to appellants' failure to comply with the return to work order. However, the minutes of the
January 19, 1990 conference before then Commissioner Diokno establishes such fact on the strength of the Union's
admission when it undertook to assure "the return within five (5) days or January 24 of all employees who have not
reported for work . . ."18 Further, it was also established that the strikers were guilty of committing illegal activities,
particularly the obstruction of free ingress and egress to and from the Liner's garage premises as shown by the pictures
taken thereat. All told, the foregoing established circumstances yield no other conclusion except to declare the strike
staged by the union as a illegal.19
Anent the illegal lockout, the NLRC deemed R.B. Liner, Inc's conversion of some of its buses into those of other bus
companies as sufficient reason for the petitioners to believe, in good faith, that the private respondents were committing an
act of unfair labor practice. The NLRC ruled that this circumstance:
15

[M]itigate[d] the liability of the striking union as well as its members not only in considering the propriety of
administering the avowed principle of equity in labor case[s] but likewise on the strength to the pronouncements of the
Supreme Court in aline of cases where it was held that a strike undertaken on account of what the workers perceived to be
unfair labor practices acts on the part to the employer should not be outrightly taken as illegal even if the allegations of
unfair labor practice acts are subsequently to be untrue.20
Thus, the NLRC affirmed the decision of the Labor Arbiter but allowed reinstatement of the dismissed employees:
Accordingly, as a measure of social justice, resumption of employment relations between the parties shall be decreed
without however granting any monetary relief considering that both parties had, to a certain extent, engaged in the
commission of acts which rendered them underserving of their prayer for damages and other concomitant reliefs akin to
their causes of action.21
Reformist and its members moved to consider the NLRC decision, which was, however, denied on 31, March 1995.22 The
petitioners then came to us with this special civil action for certiorari, citing the following in support thereof:
1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
FAILING TO GIVE WEIGHT TO THE OVERWHELMING EVIDENCE OF THE PETITIONERS SHOWING
[AN] ILLEGAL LOCKOUT COMMITTED BY THE RESPONDENTS.
2. RESPONDENTS NLRC DENIED SUBSTANTIAL JUSTICE TO THE PETITIONERS BY NOT AWARDING
THEM THE MONETARY RELIEFS PRAYED FOR.
3. RESPONDENTS NLRC ERRONEOUSLY INTERPRETED THE LAW ENUNCIATED BY THE HON.
SUPREME COURT GIVING SEPARATION PAY PLUS BACKWAGES TO EMPLOYEES WHOSE
REINSTATEMENT TO THEIR FORMER POSITIONS HAVE BEEN RENDERED IMPOSSIBLE BY THE
RESPONDENTS.
The private respondents insist that the petitioners-employees were validity dismissed for serious misconduct and
violations of labor laws and lawful orders of the Labor Secretary, hence not entitled to reinstatement nor separation pay in
lieu of reinstatement.
This petition must be granted, albeit not on the grounds advocated by the petitioners.
The private respondents can no longer contest the legality of the strike held by the petitioners on 13 December 1989, as
the private respondents themselves sought compulsory arbitration in order to resolve that very issue hence their letter to
the Labor Secretary read, in part:
This is to request your good office to certify for compulsory arbitration or to assume jurisdiction over the labor dispute
(strike continuing) between R.B. Liner, Inc. . . . and the Lakas Manggagawa sa Pilipinas.
The current strike by Lakas which started on December 13, 1989 even before Certification Election could be held not be
resolved by the NCR Conciliation-Mediation Division after six meetings/conferences between the parties.23
The dispute or strike was settled when the company and the union entered into an agreement on 19 January 1990 where
the private respondents agreed to accept all employees who, by then, had not yet returned to work. By acceding to the
peaceful settlement brooked by the NLRC, the private respondents waived the issue of the illegality of the strike.
The very nature of compulsory arbitration makes the settlement binding upon the private respondents, for compulsory
arbitration has been defined both as "the process of settlement of labor disputes by a government agency which has the
authority to investigate and to make an award which is binding on all the parties,"24 and as mode of arbitration where the
parties are "compelled to accept the resolution of their dispute through arbitration by the a third party."25 Clearly then,
the legality of the strike could no longer be reviewed by the Labor Arbiter, much less by the NLRC, as this had already
been resolved. It was the sole issue submitted for compulsory arbitration by the private respondents, as is obvious from the
portion of their letter quoted above. The case certified by the Labor Secretary to the NLRC was dismissed after the union
and the company drew up the agreement mentioned earlier. This conclusively disposed of the strike issue.
The Labor Code provides that the decision in compulsory arbitration proceedings "shall be final and executory ten (10)
calendar days after receipt thereof by the parties."26 The parties were informed of the dismissal of the case in a letter dated
14 February 1990, and while nothing in the record indicates when the said letter was received by the parties, it is
reasonable to infer that more than ten days elapsed — hence, the NLRC decision had already become final and executory
— before the private respondents filed their complaint with the Labor Arbiter on 13 July 1990.27 A final judgment is no
longer susceptible to change, revision, amendment, or reversal.28 Neither the Labor Arbiter nor the NLRC, therefore,
could review the same issue passed upon in NLRC Certified Case No. 0542, and their decisions to the contrary have been
rendered in grave abuse of discretion amounting to excess of jurisdiction.
The agreement entered into by the company and the union, moreover, was in the nature of a compromise agreement, i.e.
"an agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their difficulties by
mutual consent in the manner which they agree on, and which everyone of them prefers to the hope of gaining, balanced
by the danger of losing."29 Thus in the agreement, each party made concessions in favor of the other to avoid a protracted
litigation. While we do not abandon the rule that "unfair labor practice acts are beyond and outside the sphere of
compromises."30 the agreement herein was voluntarily entered into and represents a reasonable settlement, thus it binds
the parties.31 On this score, the Labor Code bestows finality to unvitiated compromise agreements:
Art. 227 Compromise agreements — Any compromise settlement, including those involving labor standard laws,
voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor,
shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that
the settlement was obtained through fraud, misrepresentation or coercion.
The agreement in this case complies with the above requisites, forged as it was under authority of the Labor Secretary,
with representatives from both the union and the company signing the handwritten agreement to signify their consent
thereto. The private respondents never alleged in their answer32 to the petitioners' complaint before the Labor Arbiter,
nor in their complaint,33 that the petitioners did not comply with the agreement. The binding effect of the agreement on
the private respondents in thus unimpaired.
The private respondents' cause likewise fails in light of Article 2037 of the Civil Code, which gives compromise
agreements "the effect and authority of res judicata" upon the parties to the same, even when effected without judicial
approval.34 The Labor Arbiter and the NLRC therefore erroneously reviewed an issue which had already been laid to rest
by the parties themselves and which, applying the principle of res judicata, they could no longer re-litigate.35
The only barrier then to the petitioners-employees' reinstatement is their defiance of the Labor Secretary's return-to-work
order, which the private respondents claim as one reason to validly dismiss the petitioners-employees. We disagree,
however, with the finding that Lakas/Reformist violated the said order.
It is upon the private respondents to substantiate the aforesaid defiance, as the burden of proving just and valid cause for
dismissing employees from employment rests on the employer, and the latter's failure to do so results in a finding that the
dismissal was unfounded.36 The private respondents fell short of discharging this burden.
Contrary to the Labor Arbiter's and the NLRC's view, the union's undertaking to cause absentee employees to return to
work was not an admission that its members defied the Labor Secretary's order. Those who did not report for work after
the issuance of the Labor Secretary's order may not have been informed of such order, or they may have been too few so as
to conclude that they deliberately defied the order. The private respondents failed to eliminate these probabilities.
16
The most conclusive piece of evidence that the union members did not report for work would be the company's logbook
which records the employees' attendance.37 The private respondents' own witness, Administrative Manager Rita Erni,
admitted that the logbook would show who among the employees reported for work.38 The logbook was supposed to be
marked as Exhibit "14" for the private respondents, but was withdrawn,39 then the private respondents' counsel, Atty.
Godofredo Q. Asuncion, later intimated that the said logbook was "stolen or lost."40
We are not prepared to conclude that the private respondents willfully suppressed this particular piece of evidence, in
which case the same would be presumed adverse to them if produced.41 However, other evidence indicate that the
petitioners-employees complied with the Labor Secretary's return-to-work order, namely, the private respondents'
Exhibits "11" to "11-E."42 These are Conductors/Inspectors Daily Reports which detail the bus trips made by a particular
conductor-driver tandem, as well as the numbers of the bus tickets used during each trip, and these reports are all dated 30
December 1989 — merely two days after Secretary Drilon issued his order — indicating that a number of employees did
report for work in compliance with the Secretary's order. Moreover, the said exhibits were executed by some of the
employees ordered dismissed by the Labor Arbiter.43
The private respondents intended the exhibits to prove that only a handful of employees reported for work following the
issuance of the Labor Secretary's order, but they never established that these exhibits were the only reports filed on 30
December 1989, thus, there may have been employees other than those named in the said exhibits who reported for work
in obeisance to the Labor Secretary. Certainly, the Daily Reports accomplished by drivers and conductors would not
reflect the attendance of mechanics. Besides, it was not shown by the private respondents that their employees were
required to the file the Conductors/Inspectors Daily Reports such that those who did not file would be instantly deemed
absent.
The private respondents thus failed to satisfactorily establish any violation of the Labor Secretary's return-to-work order,
and consequently, the Labor Arbiter's and the NLRC's contrary finding is not anchored on substantial evidence. Grave
abuse of discretion was thus committed once more.
As regards the illegal lockout alleged by the petitioners, we agree with the NLRC's finding that the petitioners had
sufficient basis to believe in good faith that the private respondents were culpable. The NLRC found this circumstance to
justify the petitioners-employees' reinstatement; we add that since there was, in fact, no defiance of the Labor Secretary's
return-to-work order, and no cause to decree the petitioners-employees' dismissal in the first instance, reinstatement of the
dismissed employees can be the only outcome in this case.
The possibility of reinstatement is a question of fact, and where a factual determination is indispensable to the complete
resolution of the case, this Court usually remands the case to the NLRC.44 In view, however, of both parties' assertion that
reinstatement has become impossible because, as claimed by the petitioners, "the buses were already disposed of"; or as
claimed by the private respondents, R.B. Liner, Inc., had "ceased operations" because "its Certificate of Public Convenience
had expired and was denied renewal," and further, of "closure of the company" due to "lack of operational trucks and buses
and high costs of units,"45 there is no need to remand this case to the NLRC. Due to the infeasiblity of reinstatement, the
petitioners' prayer for separation pay must be granted. Separation pay, equivalent to one month's salary for every year of
service, is awarded as an alternative to reinstatement when the latter is no longer an option,46 and is computed from the
commencement of employment up to the time of termination, including the period of imputed service for which the
employee is entitled to back wages. The salary rate prevailing at the end of the period of putative service should be the
basis for computation.47
The petitioners are also entitled to back wages. The payment of back wages "is a form of relief that restores the income
that was lost by reason of unlawful dismissal."48 The petitioners' dismissal being unwarranted as aforestated, with the
employees dismissed after R.A. No. 671549 took effect, then, pursuant to the said law and the latest rule on the matter laid
down in the Resolution of 28 November 1996 of this Court, sitting en banc, in Bustamante vs. National Labor Relations
Commission,50 the petitioners-employees are entitled to payment of full back wages from the date of their dismissal up to
the time when reinstatement was still possible, i.e., in this instance, up to the expiration of the franchise of R.B. Liner, Inc.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in
NLRC NCR CA No. 004115-92, as well as that of the Labor Arbiter in the consolidated cases of NLRC NCR Case Nos.
00-03-01392-90 and 00-04-02088-90 are SET ASIDE Petitioners-employees are hereby awarded full back wages and
separation pay to be determined by the Labor Arbiter as prescribed above within thirty (30) days from notice of this
judgment.
SO ORDERED.
G.R. No. L-18334 August 31, 1963
FILEMON DIONELA, ANACLETO CANDELARIA, ANGEL BALICAO,
RAMON CARTOJANO, ELISEO TERANTE, AMADO MACATO, MARIANO MADRONA,
JOSE VALENCIA, FELIX TRINIDAD, PEDRO TUGON, ELEUTERIO RIOJA,
JULIO LUMONTAD, PEDRO BAKARIL, CRESENCIO CORTE, JOSE BACAOCO,
ROMEO DE JESUS, ANASTACIO AVILES, PILAR QUEVEDO,
ESPERANZA RELOS, MARCIANO MAGALONG, JESUS REFAREAL,
ANGEL LEBRUN, MONICO LUCAS and DEMETRIO BALAURE, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS, E. R. SQUIBB AND SONS (PHIL.)
Salvador H. Laurel for respondent E. R. Squibb & and CARLETON ASHLEY, respondents.
Cipriano Cid and Israel Bocobo for petitioners.
Salvador H. Laurel for respondent E. R. Squibb and Sons (Phil.).
Pascual Reyes for respondent Court of Industrial Relations.
CONCEPCION, J.:
Appeal by certiorari from a decision of the Court of Industrial Relations dismissing this case and directing respondent E.R.
Squibb and Sons (Phil.) — hereafter referred to as the Corporation — "to pay the agreed three (3) months separation pay
to all claimants herein who have not as yet received the same."
Prior to the institution of the case at bar, or on February 2, 1955, the Gas and Chemical Free Workers — a labor
organization affiliated with the Federation of Free Workers and hereafter referred to as the Union — and its members,
Mariano Argamusa, Bienvenido Jose and Benigno Sabas, filed, with the Court of Industrial Relations, a pleading, which
was docketed as Case No. 598-ULP thereof, charging the Corporation and its vice-president and general manager,
Carleton Ashley, with unfair labor practices allegedly committed against its employees and members of the Union, said
Mariano Argamusa, Bienvenido Jose and Benigno Sabas, by interfering, restraining and coercing them in the exercise of
their rights to self-organization, and by discriminating against them by reason of their union activities. Soon thereafter, or
on February 21, 1955, the corresponding complaint for unfair labor practice was filed by an acting prosecutor of said court,
who, likewise filed, on March 18, 1955, a supplemental complaint, alleging that respondents had dismissed its above-
named employees owing to the aforementioned charges preferred by them, thereby committing an additional act of unfair
labor practice, and praying, accordingly, that said employees be reinstated, with back pay.
While said Case No. 598-ULP was pending, or on March 22, 1955, the Union — including petitioners herein, who were
members thereof — declared a strike again the aforementioned Corporation. On March 31, 1955, the same filed with said
Court a verified complaint — with supporting affidavits — which was docketed as Case No. 6-Inj., praying for an
injunction against the Union owing to the violence allegedly resorted to by its members in connection with said strike.
After a preliminary hearing, held on the same date, the Court issued on April 2, 1955, a temporary restraining order,
which, after appropriate proceedings, was, on December 21, 1955, made permanent, upon the ground that the strikers had
committed "acts of violence, threats of violence and/or intimidation" and used "abusive language" in "the pickets". Soon
17
thereafter, the Union and the Corporation reached an agreement for the "amicable settlement of all differences, disputes
and/or controversies between them, "subject to the condition, among others, that the Corporation "should pay the sum
equivalent to three months separation pay to each striking Squibb employee."
Not satisfied with the terms of this agreement, on December 28, 1955, Filomeno Dionela, vice-president of the Union, and
twenty-seven (27) other employees of the company and members of the Union — hereinafter referred to as "Dionela, et
al." — filed in Case No. 598-ULP a "Motion to Disauthorize" its counsel of record and the Union to act, represent and/or
prosecute the case, insofar as said movants were concerned, on account of alleged loss of faith and confidence in both.
However, a motion to withdraw the complaints in said case, signed by the president of the Union and the three employees
against whom the acts of unfair labor practice charged in the aforementioned complaints had allegedly been committed
(Mariano Argasuma, Bienvenido Jose and Benigno Sabas), as well as by their common counsel, was filed on January 17,
1956. Moreover, the Acting Prosecutor who had subscribed said complaints expressed his conformity to this motion.
Accordingly, by an order dated February 13, 1956, the Court dismissed said complaints. "Dionela, et al." moved for a
reconsideration of this order, but the motion was dismissed on account of the movants' failure to file their arguments in
support thereof.1äwphï1.ñët
Hence, on February 17, 1956, Dionela and 23 of former 27 co-movants in the aforementioned Motion to Withdraw —
hereafter referred to as petitioners — instituted the present proceedings, Case No. 895-ULP of the Court of Industrial
Relations, for unfair labor practice of the Corporation and its general manager, Carleton Ashley both of whom are
hereafter referred to as respondents. On May 9, 1956, an Acting Prosecutor of the Court of Industrial Relations filed the
corresponding complaint for unfair labor practices allegedly committed by respondents. It is alleged in the complaint, as
amended on June 11, 1956, that petitioners and other members of the Union went on strike on March 22, 1955, because of
discriminatory acts committed by respondents against the aforementioned Mariano Argasuma, Bienvenido Jose and
Benigno Sabas due to their union activities; that when the members of the Union were on December 28, 1955, advised of
the compromise agreement proposed by respondents, herein petitioners objected thereto and moved to disauthorize their
counsel of record and the Union from representing them in Case No 598-ULP; that said objection and motion were
overrule by the Union; that after the dismissal of said case No. 598-ULP, owing to the withdrawal of the complaints
therein, petitioners herein requested the corporation to reinstate them, but the corporation refused and still refuses to do
so despite repeated demands; and that such refusal to reinstate the petitioners constitutes an unfair labor practice.
In a suppletory complaint filed on February 7, 1957, it was alleged, moreover, that, from October 1954 to April 1955,
respondents had acquired from petitioners herein about their union membership and asked them to resign from the Union;
that petitioners herein had taken part in the strike called on March 22, 1955, on account of discriminatory acts of said
respondents against them; that respondents had "resorted to coercion, threats and employed strike breakers to put down
the strike"; that Monico Lucas and Demetrio Balauro were dismissed by respondents on March 22, 1955 and March 22,
1956, respectively, without any justifiable cause and because union membership and activities; and that said Monico Lucas
and Demetrio Balauro had not so far found any substantial or equivalent employment for themselves.
In due course, the lower court rendered the decision above mentioned. Motions for reconsideration filed by both parties
having been denied by a majority of the Court sitting en banc, petitioners interposed the present appeal by certiorari.
The main question for determination in this case is whether the compromise agreement pursuant to which the complaint
in Case No. 598-ULP had, inter alia, been withdrawn and then dismissed is binding upon petitioners herein. The latter
maintain that it is not, but the lower court held otherwise, upon the ground that "it is an accepted rule under our laws that
the will of the majority should prevail over the minority" citing Betting Ushers Union (PLUM) vs. Jai-Alai, L-933O, June
29, 1957 and Jesalva, et al. vs. Bautista, L-11928 to L-11930, March 24, 1959 — and that the action taken by petitioners
herein as minority members of the Union "is contrary to the policy of the Magna Carta of Labor, which promotes the
settlement of differences between management and labor by mutual agreement," and that if said action were tolerated, "no
employer would ever enter into any compromise agreement for the minority members of the Union will always dishonor
the terms of the agreement and demand for better terms." The view thus taken by the lower court is correct. Indeed,
otherwise, even collective bargaining agreements would cease to promote industrial peace and the purpose of Republic Act
No. 875 would thus be defeated.
It is urged that the complaints filed at the behest of petitioners herein involved additional acts allegedly constituting unfair
labor practice against them and against Monico Lucas and Demetrio Balauro, which were not included in the charges
preferred in Case No. 598-ULP, and should not be deemed covered by the order of dismissal therein issued. Upon a review
of the record we find, however, that petitioners herein have not introduced any evidence in support of their new
allegations in the suppletory complaint. Moreover, said new allegations — except the alleged dismissal of Demetrio
Balauro — refer to events that are said to have taken place before the compromise agreement above mentioned and should
be deemed included, therefore, in the settlement therein stipulated. Then, too, when a labor union accuses an employer of
acts of unfair labor practice allegedly committed during a given period of time, the charges should include all acts of unfair
labor practice committed against any and all members of the Union during that period. The Union should not, upon the
dismissal of the charges first preferred, be allowed to split its cause of action and harass the employer with subsequent
charges. based upon acts committed during the same period of time.
WHEREFORE, the decision appealed from is hereby affirmed, with the costs of this instance against petitioners herein.
G.R. No. L-25291 January 30, 1971
THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU, FGU INSURANCE
GROUP WORKERS and EMPLOYEES ASSOCIATION-NATU, and INSULAR LIFE BUILDING EMPLOYEES
ASSOCIATION-NATU, petitioners,
vs.
THE INSULAR LIFE ASSURANCE CO., LTD., FGU INSURANCE GROUP, JOSE M. OLBES and COURT OF
INDUSTRIAL RELATIONS, respondents.
Lacsina, Lontok and Perez and Luis F. Aquino for petitioners.
Francisco de los Reyes for respondent Court of Industrial Relations.
Araneta, Mendoza and Papa for other respondents.
CASTRO, J.:
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.
18
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.
19
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
20
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.lâwphî1.ñèt Then the respondents brought against the
picketers criminal charges, only three of which were not dismissed, and these three only for slight misdemeanors. As a
result of these criminal actions, the respondents were able 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.)
21
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
22
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 Daño, Vicente Alsol and Hermenigildo Ramirez, opined the lower court,
were constructively dismissed by non-readmission allegedly because they not only prevented Ramon Garcia, assistant
corporate secretary, and Vicente Abella, chief of the personnel records section of the Companies, from entering the
Companies' premises on May 21, 1958, but they also caused bruises and abrasions on Garcia's chest and forehead — acts
considered inimical to the interest of the respondents. The Unions, upon the other hand, insist that there is complete lack
of evidence that Ner took part in pushing Garcia; that it was Garcia who elbowed his way through the picket lines and
therefore Ner shouted "Close up," which the picketers did; and that Garcia tossed Paulino Bugay's placard and a fight
ensued between them in which both suffered injuries. But despite these conflicting versions of what actually happened on
May 21, 1958, there are grounds to believe that the picketers are not responsible for what happened.lâwphî1.ñèt The
picketing on May 21, 1958, as reported in the police blotter, was peaceful (see Police blotter report, exh. 3 in CA-G.R. No.
25991-R of the Court of Appeals, where Ner was acquitted). Moreover, although the Companies during the strike were
holding offices at the Botica Boie building at Escolta, Manila; Tuason Building at San Vicente Street, Manila; and Ayala,
Inc. offices at Makati, Rizal, Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records
section, reported for work at the Insular Life Building. There is therefore a reasonable suggestion that they were sent to
work at the latter building to create such an incident and have a basis for filing criminal charges against the petitioners in
the fiscal's office and applying for injunction from the court of first instance. Besides, under the circumstances the picketers
were not legally bound to yield their grounds and withdraw from the picket lines. Being where the law expects them to be
in the legitimate exercise of their rights, they had every reason to defend themselves and their rights from any assault or
unlawful transgression. Yet the police blotter, about adverted to, attests that they did not resort to violence.
The heated altercations and occasional blows exchanged on the picket line do not affect or diminish the right to strike.
Persuasive on this point is the following commentary: .
We think it must be conceded that some disorder is unfortunately quite usual in any extensive or long drawn out strike. A
strike is essentially a battle waged with economic weapons. Engaged in it are human beings whose feelings are stirred to
the depths. Rising passions call forth hot words. Hot words lead to blows on the picket line. The transformation from
economic to physical combat by those engaged in the contest is difficult to prevent even when cool heads direct the fight.
Violence of this nature, however much it is to be regretted, must have been in the contemplation of the Congress when it
provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing therein should be construed so as to interfere with or impede or
diminish in any way the right to strike. If this were not so, the rights afforded to employees by the Act would indeed be
illusory. We accordingly recently held that it was not intended by the Act that minor disorders of this nature would
deprive a striker of the possibility of reinstatement. (Republic Steel Corp. v. N. L. R. B., 107 F2d 472, cited in Mathews,
Labor Relations and the Law, p. 378)
Hence the incident that occurred between Ner, et al. and Ramon Garcia was but a necessary incident of the strike and
should not be considered as a bar to reinstatement. Thus it has been held that:
Fist-fighting between union and non-union employees in the midst of a strike is no bar to reinstatement. (Teller, Labor
Disputes and Collective Bargaining, Vol. II, p. 855 citing Stackpole Carbon, Co. 6 NLRB 171, enforced 105 F2d 167.)
Furthermore, assuming that the acts committed by the strikers were transgressions of law, they amount only to mere
ordinary misdemeanors and are not a bar to reinstatement.
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,
23
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: .
24

... 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.
G.R. No. 149440 January 28, 2003
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA,
petitioners,
vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents.
PANGANIBAN, J.:
Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove
that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers
have served them for several years already. Hence, they are regular — not seasonal — employees.
The Case
Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001
Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads:
"WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED." 2
On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA, disposed in this wise:
25
"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new
one entered declaring complainants to have been illegally dismissed. Respondents are hereby ORDERED to reinstate
complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay
full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered
to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4
The Facts
The facts are summarized in the NLRC Decision as follows:
'1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred
to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers;
'2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a
Memorandum of Agreement entered into by and between the parties last January 4, 1990;
'3. That herein parties can use other employment references in support of their respective claims whether or not any or all
of the listed 36 union members are employees or hacienda workers or not as the case may be;

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were
choosy in the kind of jobs they wanted to perform, the records is replete with complainants' persistence and dogged
determination in going back to work.
"Indeed, it would appear that respondents did not look with favor workers' having organized themselves into a union.
Thus, when complainant union was certified as the collective bargaining representative in the certification elections,
respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering
into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for
more than one month. In protest, complainants staged a strike which was however settled upon the signing of a
Memorandum of Agreement which stipulated among others that:
'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to
conclude the same within thirty (30) days.
'4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject
of this agreement herein parties further agree to submit the same to voluntary arbitration;
'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three
representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda
workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)"
"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:
'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th
month pay. The following are deemed not considered employees:
1. Luisa Rombo

'b) The management will give priority to the women workers who are members of the union in case work relative . . . or 2. Ramona Rombo
amount[ing] to gahit and [dipol] arises.
3. Bobong Abrega
'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.
4. Boboy Silva
'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual
strike will be given priority. However, in case the said workforce would not be enough, the management can hire
additional workers to supplement them. 'The name Orencio Rombo shall be verified in the 1990 payroll.

'e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; 'The following employees shall be reinstated immediately upon availability of work:
and
1. Jose Dagle
'f) The union will immediately lift the picket upon signing of this agreement.'
7. Alejandro Tejares
"However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit
down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to 2. Rico Dagle
prevent the organizers from entering the premises.
8. Gaudioso Rombo
"Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing
the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of 3. Ricardo Dagle
Agreement was signed by the complainants and respondents which provides:
9. Martin Alas-as Jr.
'Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union
officials and members; 4. Jesus Silva

'Whereas parties to the present dispute agree to settle the case amicably once and for all; 10. Cresensio Abrega

'Now therefore, in the interest of both labor and management, parties herein agree as follows: 5. Fernando Silva

26
11. Ariston Eruela Sr.
6. Ernesto Tejares
12. Ariston Eruela Jr.'
"When respondents again reneged on its commitment; complainants filed the present complaint.
"But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds,
complainants in an ironic twist of fate now find themselves being accused of 'refusing to work and being choosy in the kind
of work they have to perform'." 5 (Citations omitted)
Ruling of the Court of Appeals
The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave
during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure.
Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.
The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers themselves who
refused to or were choosy in their work." As found by the NLRC, the record of this case is "replete with complainants'
persistence and dogged determination in going back to work." 6
The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice.
Hence this Petition. 7
Issues
Petitioners raise the following issues for the Court's consideration:
"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular
employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal
employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which
refers exclusively to casual employees who have served for at least one year.
"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead on rulings which
are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, . . .
"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's conclusion
that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union
be awarded moral and exemplary damages." 8
Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first issue and Item C
as the second.
The Court's Ruling
The Petition has no merit.
First Issue:
Regular Employment
At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on
certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of facts and, in labor cases,
this doctrine applies with greater force. 11 Factual questions are for labor tribunals to resolve. 12 In the present case,
these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court.
Contrary to petitioners' contention, the CA did not err when it held that respondents were regular employees.
Article 280 of the Labor Code, as amended, states:
"Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or services to
be performed is seasonal in nature and the employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his employment shall continue while such
activity exist." (Italics supplied)
For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or
services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence
proves the existence of the first, but not of the second, condition. The fact that respondents — with the exception of Luisa
Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva — repeatedly worked as sugarcane workers for petitioners for
several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore,
the general rule of regular employment is applicable.
In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:
"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this
Court held:
"The primary standard, therefore, of determining regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined
by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity
if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect
to such activity and while such activity exists.
xxx xxx xxx
". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the . . .
season does not detract from considering them in regular employment since in a litany of cases this Court has already
settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are
not separated from service in said period, but merely considered on leave until re-employed." 14
27
The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the earlier case, the
workers were required to perform phases of agricultural work for a definite period of time, after which their services would
be available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural
work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks
for petitioners every season for several years, are considered the latter's regular employees for their respective tasks.
Petitioners' eventual refusal to use their services — even if they were ready, able and willing to perform their usual duties
whenever these were available — and hiring of other workers to perform the tasks originally assigned to respondents
amounted to illegal dismissal of the latter.
The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise of a management
prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately
after respondents had organized themselves into a union and started demanding collective bargaining. Those who were
union members were effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of
respondents, in violation of the Labor Code.
"Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter
a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized
cause." 16 In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed
above, are regular employees.
Second Issue:
Unfair Labor Practice
The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:
"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the promotion of those
who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union
officials and members, one cannot but conclude that respondents did not want a union in their hacienda—a clear
interference in the right of the workers to self-organization." 17
We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even
finality. Their findings are binding on the Supreme Court. 18 Verily, their conclusions are accorded great weight upon
appeal, especially when supported by substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the
accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational
basis." 20
The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages." 21
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 125195 July 17, 1997
SAMAHAN NG MGA MANGGAGAWA SA BANDOLINO-LMLC (represented by Lauro de Leon, President) and
ROMEO REYES, LAURO DE LEON, JAIME SIBUG, ROLANDO RAMOS, FREDDIE ACAMPADO,
REYNALDO DE LA PAZ, ELIAS CABRIA, JOHNNY FLORENCIO, EMELITA BATOON, CORAZON REYES,
DANIEL MARISCOTES, REGOLITO BANAGA, JOSELITO TAPAR, JOSE TUGAY, MARCIAL B. FRANCO,
SALVADOR LLABRES, LIGAYA FRANCO, AUREA B. BONON, ADORACION C. BROZO, CAMILA TUGA,
ROMULO G. ALMONITE, JACINTO RODRIGUEZ, JR., ROSALINDA FLORENCIO, and EMMA BROZO,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BANDOLINO SHOE CORPORATION and/or GERMAN
ALCANTARA, AIDA ALCANTARA, and MIMI ALCANTARA, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision of the National Labor Relations Commission (NLRC), dated May
31, 1995, which reversed the decision of the labor arbiter, dated July 22, 1992, finding petitioners to have been illegally
dismissed and consequently ordering their reinstatement and the payment to them of their monetary claims.
The facts are as follows:
Petitioners are former employees of private respondent Bandolino Shoe Corporation and members of petitioner union,
Samahan ng Manggagawa sa Bandolino-LMLC. Private respondents German Alcantara, Aida Alcantara, and Mimi
Alcantara are the owners and officers of Bandolino Shoe Corporation.
On June 4, 1990, petitioners Marcial Franco, Johnny Florencio, and Romeo Reyes were directed to take a two-week leave
because of a strike at the Shoemart, Bandolino's biggest customer. Apparently, the strike adversely affected private
respondents' business. Petitioners were told by management that, should the circumstances improve, they would be
recalled to work after two weeks.
Later that day, petitioner Marcial Franco and his wife were called to the personnel manager's office and told that Ligaya
Franco had been dismissed. Marcial Franco pleaded with German Alcantara not to terminate his wife from employment,
but his entreaties were rejected, allegedly because of his refusal to divulge the names of the organizers and members of the
petitioner union. Three other relatives, namely Emma Brozo, Adoracion Brozo, and Aurea Bonon, were subsequently
dismissed.
On June 9, 1990, the other petitioners were likewise informed by the personnel manager of the termination of their
employment and asked to turn in their identification cards.
The petitioners tried to return to work after two weeks on June 11, 1990, but they were refused entry into the company
premises. Subsequent efforts to return to work were likewise thwarted. The management refused to allow them to return
to work allegedly to prevent any untoward incident between the petitioner union and the Bandolino Shoes Independent
Labor Union.
On June 11, 1990, petitioners filed a notice of strike. A conciliation conference was held but it was unsuccessful. Although
petitioners did not strike, they stage a picket for one hour each on two successive Saturdays to protest their dismissal.
On August 22, 1990, they filed a complaint for illegal dismissal, unfair labor practice, underpayment, overtime pay, and
holiday pay. At the initial conference, the labor arbiter issued a return to work order to the private respondents based on
the private respondents' claim that they had not dismissed petitioners. But petitioners were not allowed to work by private
respondents. The labor arbiter's efforts to get the parties to settle their dispute amicably proved unavailing, as the private
respondents imposed conditions unacceptable to petitioners. As private respondents themselves stated in their position
paper date November 27, 1990, "management was willing to allow complainants to report for work immediately . . . if
complainants were willing to forego their strike and Petition for Certification and to recognize the majority representation
status of the existing Union (then uncertified)," but they were not.
On July 22, 1992, the Labor Arbiter, Potenciano S. Cañizares, Jr., decided the case in favor of petitioners. He found that
petitioners had been illegally dismissed because of their union activities and that private respondents had committed unfair
28
labor practice. Although private respondents claimed to have merely placed petitioners on "rotation" because of the 14. ROLANDO RAMOS 44,772.60
Shoermart strike, the labor arbiter found that even after the end of the strike, petitioners were still not allowed to return
to work. Referring to private respondents' position paper, the labor arbiter found that private respondents had imposed 15. CORAZON REYES 58,868.46
illegal conditions on petitioners reinstatement by requiring them to forego their intended strike, withdraw their petition
for certification election, and instead recognize the existing union. On the basis and noting that during the hearings 16. ROMEO REYES 56,779.27
private respondents' counsel subjected the petitioners to a barrage of questioning regarding their union activities, the
labor arbiter concluded that private respondents were guilty of unfair labor practice for having restrained the petitioners' 17. JACINTO RODRIGUEZ, JR. 37,674.12
exercise of the right to self-organization. Accordingly, the labor arbiter ordered:
18. CAROLINA SANTIAGO 35,257.14
WHEREFORE, judgment is hereby rendered:
19. JAIME SIBUG 32,453.72
1. Declaring the respondents guilty of unfair labor practice and ordering the respondents to cease and desist from
further committing the ULP acts as charged; 20. MARITA SORIANO 37,900.72

2. Ordering the respondents to reinstate the complainants in their previous jobs and to pay them backwages for 21. CAMILA TUGAY 39,046.68
one (1) year without qualifications or deductions for earning elsewhere during their illegal dismissal.
The claim for overtime pay is hereby dismissed for lack of sufficient evidence.
The aspect of reinstatement, either in the job or payroll at the option of the respondents, pursuant to Article 223 of the
Labor Code, being immediately executory, the respondents are hereby directed to reinstate the complainants either way Pursuant to the decision of the labor arbiter, private respondents sent telegrams, dated August 29, 1992, to the petitioners
upon their presentation of themselves for work. ordering them to —

3. Ordering the respondents to pay the complainants salary differential and legal holiday pay. REPORT TO WORK IMMEDIATELY AT 131 LOPEZ JAENA ST. JESUS DELA PEÑA, MARIKINA. FAILURE TO
DO SO WITHIN TEN (10) DAYS SHALL BE INTERPRETED THAT YOU ARE NO LONGER TO INTERESTED
The following are the monetary awards as computed by Ma. Cristina T. Paraoan of the Commission's Research and TO WORK HERE.1
Information Unit:
In a letter dated September 3, 1992, petitioners responded, thus:
1. ROMULO ALMONTE P 43,087.76
While all the complainants are ready and willing to return to work at the soonest time possible and while we do not in any
2. REGOLITO BAÑAGA 53,953.93 way reject the scheduled reinstatement, it may not be possible within the time frame stated by you in the telegram.

3. EMELITA BATOON 43,533.46 Inasmuch as there are more than four members of the union, in fact more than twenty (20), who are entitled to
reinstatement; and inasmuch as there are other aspects of the decision of the labor arbiter covering the above-stated case
4. ELIAS ECABRIA 42,229.72 which have to be discussed, we hereby propose that a conference be held between the arbiter, the union leaders and
managements' representatives in order that all concerned will be able to thresh out these matters and prepare for a smooth
5. LAURO DE LEON 45,499.32 and amicable implementation of the decision in the above-mentioned case.

6. NILDA DELGADO 32,625.72 In this connection, a motion for immediate execution of the decision of the arbiter has been filed in behalf of the
complainant and a conference on the basis of this motion will be set by Arbiter Cañizares to be held before him at the
7. JOHNNY FLORENCIO 45,499.72 NLRC. A copy of the motion has been sent you and your office will be notified of the date of the conference.2

8. MARCIAL FRANCO 43,147.72 In response, private respondents wrote:

9. SALVADOR LLABRES 44,915.32 We are of the considered opinion that, since you have already admitted in behalf of the complainants that they are ready
and willing to report for work and do not reject the scheduled reinstatement, there is no justifiable reason why they should
10. ROSALINA FLORENCIO 37,564.85 not immediately return to work and cause unnecessary delay.

11. DANIEL MARISCOTES 44,639.72 xxx xxx xxx

12. ROLANDO MATRE 44,713.52 Considering that both parties have already appealed the decision and that respondent has already posted a surety bond,
nothing is left then to be done but to follow the legitimate order of Bandolino's management for the return of the
13. VIRGINIA PEDRACIO 54,498.96 complainants. The request for a conference, to be mediated by the Honorable Arbiter Cañizares is not necessary since once
an order has been appealed, the Honorable Arbiter loses his jurisdiction.

29

And, considering further, that two (2) months have already lapsed from the time the decision was promulgated and more
than a month from the time the telegram was sent individually, the interest and desire to return to work by your clients is
surely doubtful and highly questionable.3
Private respondents appealed to the NLRC, contending that the "rotation" of petitioners was not a termination of
employment; that petitioners did not report for work although they had been reinstated; and that the labor arbiter's
finding that the company imposed illegal conditions was based upon an "off the record" offer which was privileged in
nature and therefore could not be used in evidence against private respondents. According to private respondents,
petitioners' lay off because of the "rotation" scheme could not be considered union busting because it was adopted in 1989,
before the registration of petitioner union as an affiliate of Lakas ng Manggagawa Labor Center (LMLC) on November 7,
1990. They contended that the monetary awards had no basis.
In its decision dated May 31, 1995, the NLRC revised the labor arbiter. It ruled that except for Jaime Sibug, petitioners
were all piece-rate-workers entitled only to 13th month pay for three years. It held further that there was no evidence
showing specific instances of coercion or restraint committed by the private respondents to justify finding of ULP. The
NLRC gave credence instead to private respondents' claim that, at the time the "rotation scheme" was implemented, they
did not know that petitioner union was registered or that the petitioners were the organizers; and that petitioners
misrepresented that their union was a member of the LMLC, when in fact it was only on November 7, 1990 that they
affiliated with the LMLC. The NLRC found that petitioners organized a union only after the implementation of the 1990
"rotation scheme." The NLRC agreed with the private respondents' claim that the "off the record" offer made by them
constitutes privileged communication and that under Art. 233 of the Labor Code it cannot be taken in evidence against
them. The NLRC therefore ruled that "There being no other evidence to support the claim of ULP, such finding must be
overturned." Hence, this petition.
Petitioners contend that the NLRC acted with grave abuse of discretion in reversing the labor arbiter's findings. They
contend that the labor arbiter's decision finding that they had been illegally dismissed is supported by other evidence and
not only the conditions attached to the offer, namely (1) that petitioners' non-reinstatement even after the end of the
Shoemart strike contradicts the claim of private respondents that petitioners were merely put on "rotation" because
business was poor on account of the Shoemart strike and (2) that the order to petitioners to turn in their ID cards implied
termination of their employment. Petitioners also maintain that the offer of reinstatement made by private respondents at
the hearing was properly used as evidence of ULP because private respondents themselves adverted to the offer in their
position paper and therefore took the conditions attached to their offer out of the ambit of privileged communication. They
contend finally that it was error for the NLRC to rule that private respondents did not commit unfair labor practice
because, at that time, there was yet no union of petitioners. Petitioners contend that under the ruling in Judric Canning
Corp. vs. Inciong,4 restraint or coercion may be employed even prior to the registration of a union.
While generally speaking factual findings of administrative agencies are not subject to review by this Court, it is equally
established that the Court will not uphold erroneous conclusions which are contrary to the evidence because then the
agency would be guilty of a grave abuse of discretion. Nor is this Court bound by conclusions which are not supported by
substantial evidence.5
The substantial evidence rule does not authorize any finding to be made just as long as there is any evidence to support it.
It does not excuse administrative agencies from considering contrary evidence which fairly detracts from the evidence
supporting a finding. In this case, the labor arbiter's finding of illegal dismissal was based not only upon the private
respondents' "off the record" offer containing illegal conditions but also on facts of record found by the arbiter which the
NLRC disregarded. These are: (1) that following the order for "rotation," some of the petitioners were made to surrender
their ID's and (2) that although the "rotation scheme" was ostensibly implemented because of the Shoemart strike, even
after the strike had ended, petitioners' attempts to return to work were thwarted. In truth, private respondents' claim that
petitioners, who were regular employees, were put on rotation while the casual workers were not because petitioners were
skilled and it was much easier for them to find new jobs only succeeds in revealing their real intention. Would it be
necessary for petitioners to look for new jobs if the "rotation" was merely temporary? The NLRC plainly ignored these
facts which amply supported the labor arbiter's decision.
It is untenable for the Solicitor General to contend,6 that petitioners were dismissed for their refusal to return to work.
Petitioners did not refuse to work. They responded promptly to private respondents' telegrams and expressed their
intention to resume work immediately. This is clear from their letter to the management on September 3, 19927 as quoted
above. Moreover, it has been ruled that mere failure to report for work after notice to return does not constitute
abandonment or bar reinstatement.8 Thus, petitioners may even be considered dismissed without cause as a result of
private respondents' refusal to accept them, in addition to having been earlier dismissed by being put on "rotation."
To repeat, even disregarding evidence of the illegal conditions imposed by private respondents for petitioners' return to
work, there was substantial evidence remaining in the record to sustain the labor arbiter's decision that private
respondents were guilty of ULP. There was evidence to the effect that Marcial Franco had been asked to disclose the
names of the members of the union and that the management had shown interest in the unionizing activities of the
petitioners. This evidence has remained unchallenged.9 What is more, it appears that only alleged members of the
petitioner union were put on "rotation".10 The labor arbiter's observation during the hearing that the private respondents
had shown hostility towards petitioners for their union activities is a determination of fact which is based on the totality of
private respondents' conduct, indicating anti-union bias.11 Nor is it disputed that private respondents opposed petitioners'
petition for certification election when this matter should be the sole concern of the workers. 12 Private respondents'
interest belies their claim that they were not aware of petitioners' organizational and union activities prior to the union's
registration. An employer may be guilty of ULP in interfering with the right to self-organization even before the union
has been registered.13
We therefore proceed to petitioners' prayer for monetary awards. Petitioners do not dispute the NLRC's finding that,
except for Jaime Sibug, the rest of petitioners are piece-rate workers. Consequently, all petitioners are entitled to minimum
wage and 13th-month pay, but only Jaime Sibug is entitled to an additional award of holiday pay. All of the petitioners are
entitled to salary differentials, as found by the labor arbiter, and to 13th-month pay, as ruled by the NLRC. Pursuant to
Art. 279 of the Labor Code, as amended by Republic Act No. 6715, and our ruling in Bustamante v. National Labor
Relations Commission, 14 the petitioners are entitled to full backwages from the time their compensation was withheld up
to the time of their actual reinstatement or, where reinstatement is no longer possible, to full backwages up to the time of
finality of this decision.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated May 31, 1995 is set aside and the decision of the
labor arbiter dated July 22, 1992 is reinstated, with the modification that only Jaime Sibug should be given holiday pay,
while all petitioners should be given 13th-month pay and full backwages.
SO ORDERED.
G.R. No. 75704 July 19, 1989
RUBBERWORLD (PHILS.), INC. and ELPIDIO HIDALGO, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and NESTOR MALABANAN,
respondents.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision of the
respondent National Labor Relations Commission dated June 17, 1986 (p. 23, Rollo) in NLRC NCR Case No. 6-2158-84
entitled "Nestor Malabanan and Jonathan Transmil, Complainants, versus Rubberworld (Phils.), Inc. and Elpidio Hidalgo,
30
Respondents," reversing the decision of the Labor Arbiter which dismissed the complaint for illegal dismissal for lack of
merit.
The antecedent facts are as follows:
Respondent Malabanan was employed by petitioner Rubberworld (Phils.), Inc. on September 25,1978 as an ordinary clerk.
In May, 1980, he was promoted to the position of production scheduler with a corresponding salary increase. He was again
transferred to the Inventory Control Section as stock clerk on September 1, 1983.
On April 6,1984, Elpidio Hidalgo, the Plant I General Manager of petitioner company, received a copy of the Financial
Audit Report from the Internal Audit Department of the company showing a significant material variance between the
year-end actual inventory and that of the Cards (SC)/EDP Control Records. As a result thereof, Noel Santiago, Section
Head of the Inventory Control Section, where respondent Malabanan was assigned, conducted an investigation of the
reported discrepancies in the stock cards upon the request of the Plant General Manager. Santiago then submitted his
report to the general manager recommending the dismissal of respondent Malabanan.
Consequently, Malabanan's case was endorsed to the Human Resources Division of petitioner company, which conducted a
reinvestigation on the matter and which affirmed the recommendation of the Inventory Control Section Head for the
termination of employment of respondent Malabanan.
On June 6, 1984, respondent Malabanan was dismissed by petitioner company.
On June 16, 1984, respondent Malabanan, along with another complainant named Jonathan Transmit, filed a complaint for
unfair labor practice and illegal dismissal against petitioner company alleging that they (respondent Malabanan and
complainant Transmil) were members of the monthly salaried employees' union affiliated with TUPAS; that petitioner
company forced them to disaffiliate from the union; and that due to their refusal to resign from the union, they were
ultimately dismissed from employment by petitioner company.
Petitioner company on the other hand, denied complainants' allegations and averred that respondent Malabanan's
dismissal was due to gross and habitual neglect of his duty and not due to his union affiliation.
During the hearing of the case, the other complainant, Jonathan Transmil withdrew from the case since he already found
another employment abroad.
On January 30, 1985, the Labor Arbiter rendered a decision (pp. 17- 22, Rollo), the dispositive portion of which reads:
WHEREFORE, premises considered, this case should be, as it is hereby, DISMISSED, for lack of merit.
SO ORDERED.
Respondent Malabanan appealed from the adverse decision to the respondent Commission. On June 17, 1986, respondent
Commission reversed the appealed decision of the Labor Arbiter and stated, inter alia:
Confronted with this factual backgrounds, we find ourselves inclined to the view that the appealed decision merits a
reversal.
xxx
WHEREFORE, premises considered, the appealed decision should be, as it is hereby REVERSED. Consequently, the
respondents are directed to reinstate complainant Nestor Malabanan to his former position as production scheduler, with
full backwages from the time he was illegally terminated up to actual reinstatement, without loss of seniority rights and
benefits appurtenant thereto.
SO ORDERED. (pp. 23-27, Rollo)
The petitioner company moved for a reconsideration on the ground that the respondent Commission's decision is not in
accordance with facts and evidence on record. On July 23, 1986, the said motion for reconsideration was denied.
On September 3, 1986, petitioner filed the instant petition contending that the respondent Commission committed grave
abuse of discretion amounting to lack of jurisdiction in reversing the Labor Arbiter's decision.
The two issues to be resolved in the instant case are: (1) whether or not the dismissal of respondent Malabanan is tainted
with unfair labor practice; and (2) whether or not a just and valid cause exists for the dismissal of private respondent
Malabanan.
Petitioner alleges that the National Labor Relations Commission gravely erred in concluding that the demotion of
Malabanan from production scheduler to a stock clerk at the Stock and Inventory Section was intended to discourage
Malabanan from union membership. It argued that the Labor Arbiter was correct in finding that the private respondent
had not shown ample proof to the effect that he was a member of a labor organization prior to his transfer to another
position.
We believe that the foregoing contentions are impressed with merit. Art. 248 of the Labor Code, PD No. 442, as amended,
provides:
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;
xxx
The question of whether an employee was dismissed because of his union activities is essentially a question of fact as to
which the findings of the administrative agency concerned are conclusive and binding if supported by substantial evidence.
Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. It means such evidence which affords a substantial basis from which the fact in issue can be reasonably inferred
(Philippine Metal Foundries, Inc. v. Court of Industrial Relations, et. al., No. L- 34948-49, May 15, 1979, 90 SCRA 135).
The findings of the Labor Arbiter on the non-existence of unfair labor practice on the part of the company are more in
accord and supported by the evidence submitted by the parties in the instant case, to wit:
Complainant had stated that he was a member of the monthly salaried employees union affiliated with TUPAS. He,
however, offered no proof to support his allegation. In fact, no evidence was presented to prove the existence of such
union. We (note] from the records that, as the usual practice, in cases like this one, complainant is usually supported by
the union of which he is a member. And ordinarily, the union itself is impleaded as a co- complainant. Such circumstances,
surprisingly, [are] not present in this case. In fact, complainant categorically alleged that he had solicited the services of
the PAFLU Labor Union in filing this case. It is, indeed, surprising that complainant had to solicit the help of a labor
union (PAFLU) of which he was not a member instead of soliciting the aid of the labor union (TUPAS) of which he was
allegedly a member. These circumstances alone [destroy] the credibility of complainant's allegations. (p. 21, Rollo).
Nowhere in the records can We find that the company actually performed positive acts to restrain the union participation
of private respondent. For one, it is doubtful whether Malabanan was really engaged in the organization of a labor union
affiliated with the federation TUPAS. The only evidence presented by him to prove this contention is his affidavit and that
of his father. It is therefore, not in accordance with ordinary experience and common practice that the private respondent
pursued his battle alone, without the aid and support of his co-members in the union and his federation especially in a case
of serious nature as this one involving company intervention with union activity.
31

As a rule, it is the prerogative of the company to promote, transfer or even demote its employees to other positions when
the interests of the company reasonably demand it. Unless there are instances which directly point to interference by the
company with the employees' right to self-organization, the transfer of private respondent should be considered as within
the bounds allowed by law. Furthermore, although private respondent was transferred to a lower position, his original
rank and salary remained undiminished, which fact was not refuted or questioned by private respondent.
In view of the foregoing conclusions of the Labor Arbiter, We are compelled to agree with the latter that the petitioner
company did not commit any unfair labor practice in transferring and thereafter dismissing private respondent.
The remaining issue to be resolved on this point is whether the dismissal of respondent Malabanan was for a just and
lawful cause. Article 282 of the Labor Code, as amended, provides:
Article 282. Termination by employer. — An employer may terminate an employment for any of the following just causes:
xxx
b) Gross and habitual neglect by the employee of his duties;
x x x.
Petitioner contends that private respondent Malabanan was guilty of gross negligence when he caused the posting of
incorrect entries in the stock card without counter checking the actual movement status of the items at the warehouse,
thereby resulting into unmanageable inaccuracies in the data posted in the stock cards. The respondent Commission
correctly ruled:
Penultimately, even assuming for the sake of argument that herein complainant 'posted entries in the stock card without
counter checking the actual movement status of the items at the warehouse, thereby resulting in an inaccurate posting of
data on the stock cards," to our impression does not constitute as a just cause for dismissal. Records show that he was only
transferred to the Inventory Control Section on September 1, 1983 and was not so familiar and experienced as a stock
clerk, and prior to his transfer, the record shows no derogatory records in terms of his performance. His failure to carry
out efficiently his duties as a stock clerk is not so gross and habitual. In other words he was not notoriously negligent to
warrant his severance from the service. Considering that there is nothing on record that shows that he wilfully defied
instructions of his superior with regards to his duties and that he gained personal benefit of the discrepancy, his dismissal
is unwarranted. (p. 26, Rollo).
It does not appear that private respondent Malabanan is an incorrigible offender or that what he did inflicted serious
damage to the company so much so that his continuance in the service would be patently inimical to the employer's
interest. Assuming, in gratia argumenti that the private respondent had indeed committed the said mistakes in the posting
of accurate data, this was only his first infraction with regard to his duties. It would thus be cruel and unjust to mete out
the drastic penalty of dismissal, for it is not proportionate to the gravity of the misdeed.
In fact, the promotion of the private respondent from the position of ordinary clerk to production scheduler establishes the
presumption that his performance of his work is acceptable to the company. The petitioner even admitted that it was due
to heavy financial and business reverses that the company assigned the private respondent to the position of Stock Clerk
and not because of his unsatisfactory performance as production scheduler (p. 6, Rollo). It has been held that there must be
fair and reasonable criteria to be used in selecting employees to be dismissed (Asiaworld Publishing House, Inc. v. Ople,
No. L-56398, July 23, 1987, 152 SCRA 219).
It is worthy to note that the prerogative of management to dismiss or lay-off an employee must be done without abuse of
discretion, for what is at stake is not only petitioner's position, but also his means of livelihood. This is so because the
preservation of the lives of the citizens is a basic duty of the State, more vital than the peservation of corporate profits
(Euro-Linea, Phils., Inc. v. NLRC, L-75782, December 1, 1987,156 SCRA 79).
The law regards the worker with compassion. Our society is a compassionate one. Where a penalty less punitive would
suffice, whatever missteps may be committed by the worker should not be visited by the supreme penalty of dismissal.
This is not only because of the law's concern for the working man. There is in addition, his family to consider. After all,
labor determinations should not only be secundum rationem but also secundum caritatem (Almira, et al., v. BF Goodrich
Philippines, Inc., et al., G.R. No. L-34974, July 25, 1974, 58 SCRA 120).
ACCORDINGLY, the petition is DISMISSED for lack of merit. However, the decision of the public respondent is hereby
MODIFIED to the effect that petitioner company is ordered to reinstate private respondent Nestor Malabanan to the
position of stock clerk or substantially equivalent position, with the same rank and salary he is enjoying at the time of his
termination, with three years backwages and without loss of seniority rights and benefits appurtenant thereto.
Should the reinstatement of the private respondent as herein ordered be rendered impossible by the supervention of
circumstances which prevent the same, the petitioner is further ordered to pay private respondent separation pay
equivalent to one (1) month's salary for every year of service rendered, computed at his last rate of salary.
SO ORDERED.
G.R. No. 171664 March 6, 2013
BANKARD, INC., Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO BUENCONSEJO,BANKARD
EMPLOYEES UNION-AWATU, Respondents.
DECISION
MENDOZA, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to review, reverse and set aside the
October 20, 2005 Decision1 and the February 21, 2006 Resolution2 of the Court of Appeals {CA), in CA-G.R. SP No.
68303, which affirmed the May 31, 2001 Resolution3 and the September 24, 2001 Order4 of the National Labor Relations
Commission (NLRC) in Certified Cases No. 000-185-00 and 000-191-00.
The Facts
On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed before the National Conciliation and
Mediation Board (NCMB) its first Notice of Strike (NOS), docketed as NS-06-225-00,5 alleging commission of unfair labor
practices by petitioner Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2) outsourcing/contracting-out jobs; 3)
manpower rationalizing program; and 4) discrimination.
On July 3, 2000, the initial conference was held where the Union clarified the issues cited in the NOS. On July 5, 2000, the
Union held its strike vote balloting where the members voted in favor of a strike. On July 10, 2000, Bankard asked the
Office of the Secretary of Labor to assume jurisdiction over the labor dispute or to certify the same to the NLRC for
compulsory arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor Secretary) of the Department of Labor
and Employment (DOLE) issued the order certifying the labor dispute to the NLRC.6
On July 25, 2000, the Union declared a CBA bargaining deadlock. The following day, the Union filed its second NOS,
docketed as NS-07-265-00,7 alleging bargaining in bad faith on the part of Bankard. Bankard then again asked the Office
32
of the Secretary of Labor to assume jurisdiction, which was granted. Thus, the Order, dated August 9, 2000, certifying the
labor dispute to the NLRC, was issued.8
The Union, despite the two certification orders issued by the Labor Secretary enjoining them from conducting a strike or
lockout and from committing any act that would exacerbate the situation, went on strike on August 11, 2000.9
During the conciliatory conferences, the parties failed to amicably settle their dispute. Consequently, they were asked to
submit their respective position papers. Both agreed to the following issues:
1. Whether job contractualization or outsourcing or contracting-out is an unfair labor practice on the part of the
management.
2. Whether there was bad faith on the part of the management when it bargained with the Union.10
As regards the first issue, it was Bankard’s position that job contractualization or outsourcing or contracting-out of jobs
was a legitimate exercise of management prerogative and did not constitute unfair labor practice. It had to implement new
policies and programs, one of which was the Manpower Rationalization Program (MRP) in December 1999, to further
enhance its efficiency and be more competitive in the credit card industry. The MRP was an invitation to the employees to
tender their voluntary resignation, with entitlement to separation pay equivalent to at least two (2) months salary for
every year of service. Those eligible under the company’s retirement plan would still receive additional pay. Thereafter,
majority of the Phone Center and the Service Fulfilment Division availed of the MRP. Thus, Bankard contracted an
independent agency to handle its call center needs.11
As to the second issue, Bankard denied that there was bad faith on its part in bargaining with the Union. It came up with
counter-offers to the Union’s proposals, but the latter’s demands were far beyond what management could give.
Nonetheless, Bankard continued to negotiate in good faith until the Memorandum of Agreement (MOA) re-negotiating
the provisions of the 1997-2002, Collective Bargaining Agreement (CBA) was entered into between Bankard and the
Union. The CBA was overwhelmingly ratified by the Union members. For said reason, Bankard contended that the issue
of bad faith in bargaining had become moot and academic.12
On the other hand, the Union alleged that contractualization started in Bankard in 1995 in the Records Communications
Management Division, particularly in the mailing unit, which was composed of two (2) employees and fourteen (14)
messengers. They were hired as contractual workers to perform the functions of the regular employees who had earlier
resigned and availed of the MRP.13 According to the Union, there were other departments in Bankard utilizing
messengers to perform work load considered for regular employees, like the Marketing Department, Voice
Authorizational Department, Computer Services Department, and Records Retention Department. The Union contended
that the number of regular employees had been reduced substantially through the management scheme of freeze-hiring
policy on positions vacated by regular employees on the basis of cost-cutting measures and the introduction of a more
drastic formula of streamlining its regular employees through the MRP.14
With regard to the second issue, the Union averred that Bankard’s proposals were way below their demands, showing that
the management had no intention of reaching an agreement. It was a scheme calculated to force the Union to declare a
bargaining deadlock.15
On May 31, 2001, the NLRC issued its Resolution16 declaring that the management committed acts considered as unfair
labor practice (ULP) under Article 248(c) of the Labor Code. It ruled that:
The act of management of reducing its number of employees thru application of the Manpower Rationalization Program
and subsequently contracting the same to other contractual employees defeats the purpose or reason for streamlining the
employees. The ultimate effect is to reduce the number of union members and increasing the number of contractual
employees who could never be members of the union for lack of qualification. Consequently, the union was effectively
restrained in their movements as a union on their rights to self-organization. Management had successfully limited and
prevented the growth of the Union and the acts are clear violation of the provisions of the Labor Code and could be
considered as Unfair Labor Practice in the light of the provisions of Article 248 paragraph (c) of the Labor Code.17
The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was rendered moot and academic by
virtue of the finalization and signing of the CBA between the management and the Union.18
Unsatisfied, both parties filed their respective motions for partial reconsideration.1âwphi1 Bankard assailed the NLRC's
finding of acts of ULP on its part. The Union, on the other hand, assailed the NLRC ruling on the issue of bad faith
bargaining.
On September 24, 2001, the NLRC issued the Order19 denying both parties' motions for lack of merit.
On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with the CA arguing that the NLRC gravely
abused its discretion amounting to lack or excess of jurisdiction when:
1. It issued the Resolution, dated May 31, 2001, particularly in finding that Bankard committed acts of unfair labor
practice; and,
2. It issued the Order dated September 24, 2001 denying Bankard's partial motion for reconsideration.20
The Union filed two (2) comments, dated January 22, 2002, through its NCR Director, Cornelio Santiago, and another,
dated February 6, 2002, through its President, Paulo Buenconsejo, both praying for the dismissal of the petition and
insisting that Bankard's resort to contractualization or outsourcing of contracts constituted ULP. It further alleged that
Bankard committed ULP when it conducted CBA negotiations in bad faith with the Union.
Ruling of the Court of Appeals
The CA dismissed the petition, finding that the NLRC ruling was supported by substantial evidence.
The CA agreed with Bankard that job contracting, outsourcing and/or contracting out of jobs did not per se constitute
ULP, especially when made in good faith and for valid purposes. Despite Bankard's claim of good faith in resorting to job
contractualization for purposes of cost-efficient operations and its non-interference with the employees' right to self-
organization, the CA agreed with the NLRC that Bankard's acts impaired the employees right to self-organization and
should be struck down as illegal and invalid pursuant to Article 248(c)21 of the Labor Code. The CA thus, ruled in this
wise:
We cannot agree more with public respondent. Incontrovertible is the fact that petitioner's acts, particularly its promotion
of the program enticing employees to tender their voluntary resignation in exchange for financial packages, resulted to a
union dramatically reduced in numbers. Coupled with the management's policy of "freeze-hiring" of regular employees and
contracting out jobs to contractual workers, petitioner was able to limit and prevent the growth of the Union, an act that
clearly constituted unfair labor practice.22
In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the September 24, 2001 Order of the NLRC.
Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently denied it for being a mere repetition of the
grounds previously raised. Hence, the present petition bringing up this lone issue:
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD, INC. COMMITTED ACTS
OF UNFAIR LABOR PRACTICE WHEN IT DISMISSED THE PETITION FOR CERTIORARI AND DENIED
THE MOTION FOR RECONSIDERATION FILED BY PETITIONER.23
Ruling of the Court
33

The Court finds merit in the petition.
Well-settled is the rule that "factual findings of labor officials, who are deemed to have acquired expertise in matters
within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by
substantial evidence."24 Furthermore, the factual findings of the NLRC, when affirmed by the CA, are generally
conclusive on this Court.25 When the petitioner, however, persuasively alleges that there is insufficient or insubstantial
evidence on record to support the factual findings of the tribunal or court a quo, then the Court, exceptionally, may review
factual issues raised in a petition under Rule 45 in the exercise of its discretionary appellate jurisdiction.26
This case involves determination of whether or not Bankard committed acts considered as ULP. The underlying concept
of ULP is found in Article 247 of the Labor Code, to wit:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate the
constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management
relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate to the workers’ right to self-organization and to the
observance of a CBA. It refers to "acts that violate the workers’ right to organize."27 Without that element, the acts, even
if unfair, are not ULP.28 Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts
affect in whatever manner the right of his employees to self-organize.29
In this case, the Union claims that Bankard, in implementing its MRP which eventually reduced the number of employees,
clearly violated Article 248(c) of the Labor Code which states that:
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the following unfair
labor practice:
xxxx
(c) To contract out services or functions being performed by union members when such will interfere with, restrain or
coerce employees in the exercise of their rights to self-organization;
xxxx
Because of said reduction, Bankard subsequently contracted out the jobs held by former employees to other contractual
employees. The Union specifically alleges that there were other departments in Bankard, Inc. which utilized messengers to
perform work load considered for regular employees like the Marketing Department, Voice Authorizational Department,
Computer Services Department, and Records Retention Department.30 As a result, the number of union members was
reduced, and the number of contractual employees, who were never eligible for union membership for lack of qualification,
increased.
The general principle is that the one who makes an allegation has the burden of proving it.1avvphi1 While there are
exceptions to this general rule, in ULP cases, the alleging party has the burden of proving the ULP;31 and in order to
show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim.32
Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal sanctions.33
Aside from the bare allegations of the Union, nothing in the records strongly proves that Bankard intended its program,
the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings and conclusions of
both the NLRC and the CA, there was no proof that the program was meant to encourage the employees to disassociate
themselves from the Union or to restrain them from joining any union or organization. There was no showing that it was
intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in any way singled out the
union members who had availed of the retirement package under the MRP. True, the program might have affected the
number of union membership because of the employees’ voluntary resignation and availment of the package, but it does
not necessarily follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was
implemented as a valid cost-cutting measure, well within the ambit of the so-called management prerogatives. Bankard
contracted an independent agency to meet business exigencies. In the absence of any showing that Bankard was motivated
by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organize, it cannot be
said to have committed an act of unfair labor practice.34
"Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine
otherwise."35 Unfortunately, the Union, which had the burden of adducing substantial evidence to support its allegations
of ULP, failed to discharge such burden.36
The employer’s right to conduct the affairs of its business, according to its own discretion and judgment, is well-
recognized.37 Management has a wide latitude to conduct its own affairs in accordance with the necessities of its
business.38 As the Court once said:
The Court has always respected a company's exercise of its prerogative to devise means to improve its operations. Thus,
we have held that management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, supervision and transfer of employees, working methods, time, place and
manner of work.
This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right to
prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable operation
of their business.39
Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that
management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer.40Furthermore, bear in mind that ULP is punishable with both civil and/or criminal sanctions.41 As such, the
party so alleging must necessarily prove it by substantial evidence. The Union, as earlier noted, failed to do this. Bankard
merely validly exercised its management prerogative. Not shown to have acted maliciously or arbitrarily, no act of ULP
can be imputed against it.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 68303, dated
October 20, 2005, and its Resolution, dated February 21, 2006, are REVERSED and SET ASIDE. Petitioner Bankard, Inc.
is hereby declared as not having committed any act constituting Unfair Labor Practice under Article 248 of the Labor
Code.
SO ORDERED.
[G.R. No. 127598. January 27, 1999]
MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE SECRETARY OF LABOR LEONARDO
QUISUMBING AND MERALCO EMPLOYEES AND WORKERS ASSOCIATION
(MEWA), respondents.
MARTINEZ, J.:
In this petition for certiorari, the Manila Electric Company (MERALCO) seeks to annul the orders of the Secretary of
labor dated August 19, 1996 and December 28, 1996, wherein the Secretary required MERALCO and its rank and file union-
34
the Meralco Workers Association (MEWA) to execute a collective bargaining agreement (CBA) for the remainder of the Longevity Increase- the present longevity bonus is maintained but the bonus shall be incorporated into the new CBA.
parties 1992-1997 CBA cycle, and to incorporate in this new CBA the Secretarys dispositions on the disputed economic and
non-economic issues. Sick Leave- MEWAs demand for upgrading is denied; the companys present policy is maintained. However, those who have
MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. not used the sick leave benefit during a particular year shall be entitled to a one-day sick leave incentive.

On September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their
existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years starting from
December 1, 1995 to November 30, 1997.[1] MERALCO signified its willingness to re-negotiate through its letter dated
October 17, 1995[2] and formed a CBA negotiating panel for the purpose. On November 10, 1995, MEWA submitted its
proposal[3] to MERALCO, which, in turn, presented a counter-proposal. Thereafter, collective bargaining negotiations
proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties
failed to arrive at terms and conditions acceptable to both of them.
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National
Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was docketed as
NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices. The NCMB then conducted
a series of conciliation meetings but the parties failed to reach an amicable settlement. Faced with the imminence of a strike,
MERALCO on May 2, 1996, filed an Urgent Petition[4] with the Department of Labor and Employment which was docketed
as OS-AJ No. 0503[1]96 praying that the Secretary assume jurisdiction over the labor dispute and to enjoin the striking
employees to go back to work.
Sick leave reserve- the present reserve of 25 days shall be reduced to 15 days; the employee has the option either to convert
the excess of 10 days to cash or let it remain as long as he wants. In case he opts to let it remain, he may later on convert it
to cash at his retirement or separation.
Vacation Leave - MEWAs demand for upgrading denied & the companys present policy is maintained which must be
incorporated into the new CBA but scheduled vacation leave may be rounded off to one full day at a time in case of a benefit
involving a fraction of a day.
Union Leave- of MEWAs officers, directors or stewards assigned to perform union duties or legitimate union activity is
increased from 30 to 40 Mondays per month.
Maternity, Paternity and Funeral leaves- the existing policy is to be maintained and must be incorporated in the new CBA
unless a new law granting paternity leave benefit is enacted which is superior to what the company has already granted.

The Labor Secretary granted the petition through its Order[5] of May 8, 1996, the dispositive portion of which reads:
Birthday Leave - unions demand is granted. If birthday falls on the employees rest day or on a non-working holiday, the
worker shall be entitled to go on leave with pay on the next working day.
WHEREFORE, premises considered, this Office now assumes jurisdiction over the labor dispute obtaining between the
parties pursuant to Article 263 (g) of the Labor Code. Accordingly, the parties are here enjoined from committing any act
Group Hospitalization & Surgical Insurance Plan (GHSIP) and Health Maintenance Plan (HMP)- present policy is
that may exacerbate the situation. To speed up the resolution of the dispute, the parties are also directed to submit their
maintained insofar as the cost sharing is concerned- 70% for the Company and 30% for MEWA.
respective Position Papers within ten (10) days from receipt.

Health Maintenance Plan (HMP) for dependents - subsidized dependents increased from three to five dependents.
Undersecretary Jose M. Espanol, Jr. is deputized to conduct conciliation conferences between the parties to bridge their
differences and eventually hammer out a solution that is mutually acceptable. He shall be assisted by the Legal Service.
Longevity Bonus- is increased from P140.00 to P200.00 for every year of service to be received by the employee after serving
the Company for 5 years.
SO ORDERED.

Christmas Bonus and Special Christmas Grant- MEWAs demand of one month salary as Christmas Bonus and two months
Thereafter, the parties submitted their respective memoranda and on August 19, 1996, the Secretary resolved the
salary as Special Christmas Grant is granted and to be incorporated in the new CBA.
labor dispute through an Order,[6] containing the following awards:

Midyear Bonus- one months pay to be included in the CBA.

ECONOMIC DEMANDS

Anniversary Bonus - unions demand is denied.

Wage increase - P2,300.00 for the first year covering the
period from December 1, 1995 to November 30, 1996
- P2,200.00 for the second year covering Christmas Gift Certificate - company has the discretion as to whether it will give it to its employees.
the period December 1, 1996 to November 30, 1997.
Retirement Benefits:
Red Circle Rate (RCR) Allowance- all RCR allowances (promotional increases that go beyond the maximum range of a job
classification salary) shall be integrated into the basic salary of employees effective December 1, 1995. a. Full retirement-present policy is maintained;

Longevity Allowance- the integration of the longevity allowance into the basic wage is denied; the present policy is b. one cavan of rice per month is granted to retirees;
maintained.

35
c. special retirement leave and allowance-present policy is maintained;
d. HMP coverage for retirees- HMP coverage is granted to retirees who have not reached the age of 70, with
MERALCO subsidizing 100% of the monthly premium; those over 70 are entitled to not more than 30
days of hospitalization at the J.F. Cotton Hospital with the company shouldering the entire cost.
e. HMP coverage for retirees dependents is denied
f. Monthly pension of P3,000.00 for each retiree is denied.
g. Death benefit for retirees beneficiaries is denied.
Optional retirement - unions demand is denied; present policy is maintained; employee is eligible for optional retirement if
he has rendered at least 18 years of service.
Dental, Medical and Hospitalization Benefits- grant of all the allowable medical, surgical, dental and annual physical
examination benefits, including free medicine whenever the same is not available at the JFCH.
Resignation benefits- unions demand is denied.
Night work- union demand is denied but present policy must be incorporated in CBA.
Shortswing- work in another shift within the same day shall be considered as the employees work for the following day and
the employee shall be given additional four (4) hours straight time and the applicable excess time premium if he works
beyond 8 hours in the other shift.
High Voltage allowance- is increased from P45.00 to P55.00 to be given to any employee authorized by the Safety Division
to perform work on or near energized bare lines & bus including stockman drivers & crane operators and other crew
members on ground.
High Pole Allowance- is increased from P30.00 to P40.00 to be given to those authorized to climb poles up to at least 60 ft.
from the ground. Members of the team including stockman drivers, crane operators and other crew members on the ground,
are entitled to this benefit.
Towing Allowance- where stockmen drive tow trailers with long poles and equipment on board, they shall be entitled to a
towing allowance of P20.00 whether they perform the job on regular shift or on overtime.
Employees Cooperative- a loan of P3 M seed money is granted to the proposed establishment of a cooperative, payable in
twenty (20) years starting one year from the start of operations.
Holdup Allowance- the union demand is denied; the present policy shall be maintained.
Meal and Lodging Allowance- shall be increased effective December 1, 1995 as follows:
Breakfast - from P25.00 to P35.00
Lunch - from P35.00 to P45.00
Dinner - from P35.00 to P45.00
Lodging - from P135.00 to P180.00 a night in all MERALCO franchise areas
Payroll Treatment for Accident while on Duty- an employee shall be paid his salary and allowance if any is due plus average
excess time for the past 12 months from the time of the accident up to the time of full recovery and placing of the employee
back to normal duty or an allowance of P2,000.00, whichever is higher.
Housing and Equity Assistance Loan- is increased to P60,000.00; those who have already availed of the privilege shall be
allowed to get the difference.
Benefits for Collectors:
a. Company shall reduce proportionately the quota and monthly average product level (MAPL) in terms of
equivalent bill assignment when an employee is on sick leave and paid vacation leave.
b. When required to work on Saturdays, Sundays and holidays, an employee shall receive P60.00 lunch allowance
and applicable transportation allowance as determined by the Company and shall also receive an
additional compensation to one day fixed portion in addition to lunch and transportation allowance.
c. The collector shall be entitled to an incentive pay of P25.00 for every delinquent account disconnected.
d. When a collector voluntarily performs other work on regular shift or overtime, he shall be entitled to
remuneration based on his computed hourly compensation and the reimbursement of actually incurred
transportation expenses.
e. Collectors shall be provided with bobcat belt bags every year
f. Collectors cash bond shall be deposited under his capital contribution to MESALA.
g. Collectors quota and MAPL shall be proportionately reduced during typhoons, floods, earthquakes and other
similar force majeure events when it is impossible for a collector to perform collection work.
Political Demands:
a. Scope of the collective bargaining unit- the collective bargaining unit shall be composed of all regular rank-
and-file employees hired by the company in all its offices and operative centers throughout its franchise
area and those it may employ by reason of expansion, reorganization or as a result of operational
exigencies.
b. Union recognition and security -
i. The union shall be recognized by the Company as sole and exclusive bargaining representative of the
rank-and-file employees included in the bargaining unit. The Company shall agree to meet only with
Union officers and its authorized representatives on all matters involving the Union and all issues
arising from the implementation and interpretation of the new CBA.
36
 ii. The union shall meet with the newly regularized employees for a period not to exceed four (4) hours,
on company time, to acquaint the new regular employees of the rights, duties and benefits of Union
membership.
iii. The right of all rank-and-file employees to join the union shall be recognized in accordance with the
maintenance of membership principle as a form of union security.
c. Transfer of assignment and job security-
i. No transfer of an employee from one position to another shall be made if motivated by considerations of
sex, race, creed, political and religious belief, seniority or union activity.
ii. If the transfer is due to the reorganization or decentralization, the distance from the employees residence
shall be considered unless the transfer is accepted by the employee. If the transfer is extremely
necessary, the transfer shall be made within the offices in the same district.
iii. Personnel hired through agencies or contractors to perform the work done by covered employees shall
not exceed one month. If extension is necessary, the union shall be informed. But the Company shall
not permanently contract out regular or permanent positions that are necessary in the normal
operation of the Company.
d. Check off Union Dues- where the union increases its dues as approved by the Board of Directors, the Company
shall check off such increase from the salaries of union members after the union submits check off
authorizations signed by majority of the members. The Company shall honor only those individual
authorizations signed by the majority of the union members and collectively submitted by the union to
the Companys Salary Administration.
e. Payroll Reinstatement- shall be in accordance with Article 223, p. 3 of the Labor Code.
f. Union Representation in Committees- the union is allowed to participate in policy formulation and in the
decision-making process on matters affecting their rights and welfare, particularly in the Uniform
Committee, the Safety Committee and other committees that may be formed in the future.
Signing Bonus- P4,000.00 per member of the bargaining unit for the conclusion of the CBA
Existing benefits already granted by the Company but which are not expressly or impliedly repealed in the new agreement
shall remain subsisting and shall be included in the new agreement to be signed by the parties effective December 1, 1995.
On August 30, 1996, MERALCO filed a motion for reconsideration[7] alleging that the Secretary of Labor committed
grave abuse of discretion amounting to lack or excess of jurisdiction:
1. in awarding to MEWA a package that would cost at least P1.142 billion, a package that is grossly excessive and
exorbitant, would not be affordable to MERALCO and would imperil its viability as a public utility affected with
national interest.
2. in ordering the grant of a P4,500.00 wage increase, as well as a new and improved fringe benefits, under the
remaining two (2) years of the CBA for the rank-and-file employees.
3. in ordering the incorporation into the CBA of all existing employee benefits, on the one hand, and those that
MERALCO has unilaterally granted to its employees by virtue of voluntary company policy or practice, on the other
hand.
4. in granting certain political demands presented by the union.
5. in ordering the CBA to be effective December 1995 instead of August 19, 1996 when he resolved the dispute.
MERALCO filed a supplement to the motion for reconsideration on September 18, 1995, alleging that the Secretary
of Labor did not properly appreciate the effect of the awarded wages and benefits on MERALCOs financial viability.
MEWA likewise filed a motion asking the Secretary of Labor to reconsider its Order on the wage increase, leaves,
decentralized filing of paternity and maternity leaves, bonuses, retirement benefits, optional retirement, medical, dental and
hospitalization benefits, short swing and payroll treatment. On its political demands, MEWA asked the Secretary to rule its
proposal to institute a Code of Discipline for its members and the unions representation in the administration of the Pension
Fund.
On December 28, 1996, the Secretary issued an Order [8] resolving the parties separate motions, the modifications of
the August 19, 1996 Order being highlighted hereunder:
1) Effectivity of Agreement - December 1, 1995 to November 30, 1997.
Economic Demands
2) Wage Increase:
First year - P2,200.00 per month;
Second year - P2,200.00 per month.
3) Integration of Red Circle Rate (RCR) and Longevity Allowance into Basic Salary -the RCR allowance shall be integrated
into the basic salary of employees as of August 19, 1996 (the date of the disputed Order).
4) Longevity Bonus - P170 per year of service starting from 10 years of continuous service.
5) Vacation Leave - The status quo shall be maintained as to the number of vacation leave but employees scheduled
vacation may be taken one day at a time in the manner that this has been provided in the supervisory CBA.
6) Sick Leave Reserve - is reduced to 15 days, with any excess payable at the end of the year. The employee has the option
to avail of this cash conversion or to accumulate his sick leave credits up to 25 days for conversion to cash at retirement or
separation from the service.
7) Birthday Leave - the grant of a day off when an employees birthday falls on a non-working day is deleted.
8) Retirement Benefits for Retirees - The benefits granted shall be effective on August 19, 1996, the date of the disputed
order up to November 30, 1997, which is the date the CBA expires and shall apply to those who are members of the
bargaining unit at the time the award is made.
37
One sack of rice per quarter of the year shall be given to those retiring between August 19, 1996 and November 30,
1997.
On HMP Coverage for Retirees- The parties maintain the status quo, that is, with the Company complying with the present
arrangement and the obligations to retirees as is.
9) Medical, Dental and Hospitalization Benefits - The cost of medicine unavailable at the J.F. Cotton Hospital shall be in
accordance with MERALCOs Memorandum dated September 14, 1976.
10) GHSIP and HMP for Dependents - The number of dependents to be subsidized shall be reduced from 5 to 4 provided
that their premiums are proportionately increased.
11) Employees Cooperative - The original award of P3 million pesos as seed money for the proposed Cooperative is
reduced to P1.5 million pesos.
If a board resolution is submitted, the Company shall deduct union dues from all union members after a majority of the union
members have submitted their individual written authorizations. Only those check-off authorizations submitted by the union
shall be honored by the Company.
With respect to special assessments, attorneys fees, negotiation fees or any other extraordinary fees, individual
authorizations shall be necessary before the company may so deduct the same.
19) Union Representation in Committees - The union is granted representation in the Safety Committee, the Uniform
Committee and other committees of a similar nature and purpose involving personnel welfare, rights and benefits as well as
duties.
Dissatisfied, petitioner filed this petition contending that the Secretary of Labor gravely abused his discretion:
1). . . in awarding wage increases of P2,200.00 for 1996 and P2,200.00 for 1997;

12) Shortswing - the original award is deleted. 2) . . . in awarding the following economic benefits:

13) Payroll Treatment for Accident on Duty - Company ordered to continue its present practice on payroll treatment for a. Two months Christmas bonus;
accident on duty without need to pay the excess time the Union demanded. b. Rice Subsidy and retirement benefits for retirees;
c. Loan for the employees cooperative;
d. Social benefits such as GHSIP and HMP for dependents, employees cooperative and housing equity
Political Demands:
assistance loan;
e. Signing bonus;
14) Scope of the collective bargaining unit - The bargaining unit shall be composed of all rank and file employees hired by f. Integration of the Red Circle Rate Allowance
the Company in accordance with the original Order. g. Sick leave reserve of 15 days
h. The 40-day union leave;
15) Union recognition and security - The incorporation of a closed shop form of union security in the CBA; the i. High pole/high voltage and towing allowance;
Company is prohibited from entertaining individuals or groups of individuals only on matters that are exclusively within and
the domain of the union; the Company shall furnish the union with a complete list of newly regularized employees within a j. Benefits for collectors
week from regularization so that the Union can meet these employees on the Unions and the employees own time.
3) . . . in expanding the scope of the bargaining unit to all regular rank and file employees hired by the company in all its
16) Transfer of assignment and job security - Transfer is a prerogative of the Company but the transfer must be for a offices and operating centers and those it may employ by reason of expansion, reorganization or as a result of operational
valid business reason, made in good faith and must be reasonably exercised. The CBA shall provide that No transfer of an exigencies;
employee from one position to another, without the employees written consent, shall be made if motivated by considerations
of sex, race, creed, political and religious belief, age or union activity. 4) . . . in ordering for a closed shop when his original order for a maintenance of membership arrangement was not questioned
by the parties;
17) Contracting Out - The Company has the prerogative to contract out services provided that this move is based on valid
business reasons in accordance with law, is made in good faith, is reasonably exercised and, provided further that if the 5) . . . in ordering that Meralco should consult the union before any contracting out for more than six months;
contracting out involves more than six months, the Union must be consulted before its implementation.
6) . . . in decreeing that the union be allowed to have representation in policy and decision making into matters affecting
18) Check off of union dues personnel welfare, rights and benefits as well as duties;

In any increase of union dues or contributions for mandatory activities, the union must submit to the Company a copy of its 7) . . . in ruling for the inclusion of all terms and conditions of employment in the collective bargaining agreement;
board resolution increasing the union dues or authorizing such contributions;
8) . . . in exercising discretion in determining the retroactivity of the CBA;

38
 Both MEWA and the Solicitor General; on behalf of the Secretary of Labor, filed their comments to the petition.While
the case was also set for oral argument on Feb 10, 1997, this hearing was cancelled due to MERALCO not having received
the comment of the opposing parties. The parties were instead required to submit written memoranda, which they
did. Subsequently, both petitioner and private respondent MEWA also filed replies to the opposing parties Memoranda, all
of which We took into account in the resolution of this case.
The union disputes the allegation of MERALCO that the Secretary abused his discretion in issuing the assailed orders
arguing that he acted within the scope of the powers granted him by law and by the Constitution. The union contends that
any judicial review is limited to an examination of the Secretarys decision-making/discretion - exercising process to
determine if this process was attended by some capricious or whimsical act that constitutes grave abuse; in the absence of
such abuse, his findings - considering that he has both jurisdiction and expertise to make them - are valid.
The unions position is anchored on two premises:
First, no reviewable abuse of discretion could have attended the Secretarys arbitral award because the Secretary
complied with constitutional norms in rendering the dispute award. The union posits that the yardstick for comparison and
for the determination of the validity of the Secretarys actions should be the specific standards laid down by the Constitution
itself. To the union, these standards include the State policy on the promotion of workers welfare, [9] the principle of
distributive justice,[10] the right of the State to regulate the use of property,[11] the obligation of the State to protect workers,
both organized and unorganized, and insure their enjoyment of humane conditions of work and a living wage, and the right
of labor to a just share in the fruits of production.[12]
Second, no reversible abuse of discretion attended the Secretarys decision because the Secretary took all the relevant
evidence into account, judiciously weighed them, and rendered a decision based on the facts and law. Also, the arbitral award
should not be reversed given the Secretarys expertise in his field and the general rule that findings of fact based on such
expertise is generally binding on this Court.
To put matters in proper perspective, we go back to basic principles. The Secretary of Labors statutory power under
Art. 263 (g) of the Labor Code to assume jurisdiction over a labor dispute in an industry indispensable to the national
interest, and, to render an award on compulsory arbitration, does not exempt the exercise of this power from the judicial
review that Sec. 1, Art. 8 of the Constitution mandates. This constitutional provision states:
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of the government.
Under this constitutional mandate, every legal power of the Secretary of Labor under the Labor Code, or, for that
matter, any act of the Executive, that is attended by grave abuse of discretion is subject to review by this Court in an
appropriate proceeding. To be sure, the existence of an executive power alone - whether granted by statute or by the
Constitution - cannot exempt the executive action from judicial oversight, interference or reversal when grave abuse of
discretion is, or is alleged to be, present. This is particularly true when constitutional norms are cited as the applicable
yardsticks since this Court is the final interpreter of the meaning and intent of the Constitution.[13]
The extent of judicial review over the Secretary of Labors arbitral award is not limited to a determination of grave
abuse in the manner of the secretarys exercise of his statutory powers. This Court is entitled to, and must - in the exercise
of its judicial power - review the substance of the Secretarys award when grave abuse of discretion is alleged to exist in the
award, i.e., in the appreciation of and the conclusions the Secretary drew from the evidence presented.
The natural and ever present limitation on the Secretarys acts is, of course, the Constitution. And we recognize that
indeed the constitutional provisions the union cited are State policies on labor and social justice that can serve as standards
in assessing the validity of a Secretary of Labors actions. However, we note that these provisions do not provide clear, precise
and objective standards of conduct that lend themselves to easy application. We likewise recognize that the Constitution is
not a lopsided document that only recognizes the interests of the working man; it too protects the interests of the property
owner and employer as well.[14]
For these reasons - and more importantly because a ruling on the breadth and scope of the suggested constitutional
yardsticks is not absolutely necessary in the disposition of this case - we shall not use these yardsticks in accordance with
the time-honored practice of avoiding constitutional interpretations when a decision can be reached using non-constitutional
standards. We have repeatedly held that one of the essential requisites for a successful judicial inquiry into constitutional
questions is that the resolution of the constitutional question must be necessary in deciding the case. [15]
In this case we believe that the more appropriate and available standard - and one does not require a constitutional
interpretation - is simply the standard of reasonableness. In laymans terms, reasonableness implies the absence of
arbitrariness;[16] in legal parlance, this translates into the exercise of proper discretion and to the observance of due
process. Thus, the question we have to answer in deciding this case is whether the Secretarys actions have been reasonable
in light of the parties positions and the evidence they presented.
MEWAs second premise - i.e., that the Secretary duly considered the evidence presented - is the main issue that we
shall discuss at length below. Additionally, MEWA implied that we should take great care before reading an abuse of
discretion on the part of the Secretary because of his expertise on labor issues and because his findings of fact deserve the
highest respect from this Court.
This Court has recognized the Secretary of Labors distinct expertise in the study and settlement of labor disputes
falling under his power of compulsory arbitration.[17] It is also well-settled that factual findings of labor administrative
officials, if supported by substantial evidence, are entitled not only to great respect but even to finality. [18] We, therefore,
have no difficulty in accepting the unions caveat on how to handle a Secretary of Labors arbitral award.
But at the same time, we also recognize the possibility that abuse of discretion may attend the exercise of the Secretarys
arbitral functions; his findings in an arbitration case are usually based on position papers and their supporting documents
(as they are in the present case), and not on the thorough examination of the parties contending claims that may be present
in a court trial and in the face-to-face adversarial process that better insures the proper presentation and appreciation of
evidence.[19] There may also be grave abuse of discretion where the board, tribunal or officer exercising judicial function
fails to consider evidence adduced by the parties.[20] Given the parties positions on the justiciability of the issues before us,
the question we have to answer is one that goes into the substance of the Secretarys disputed orders:Did the Secretary
properly consider and appreciate the evidence presented before him?
We find, based on our consideration of the parties positions and the evidence on record, that the Secretary of Labor
disregarded and misappreciated evidence, particularly with respect to the wage award. The Secretary of Labor apparently
also acted arbitrarily and even whimsically in considering a number of legal points; even the Solicitor General himself
considered that the Secretary gravely abused his discretion on at least three major points: (a) on the signing bonus issue; (b)
on the inclusion of confidential employees in the rank and file bargaining unit, and (c) in mandating a union security closed-
shop regime in the bargaining unit.
We begin with a discussion on the wages issue. The focal point in the consideration of the wage award is the projected
net income for 1996 which became the basis for the 1996 wage award, which in turn - by extrapolation - became the basis
for the (2nd Year) 1997 award. MERALCO projected that the net operating income for 1996 was 14.7% above the 1999 level
or a total net operating income of 4.171 Billion, while the union placed the 1996 net operating income at 5.795 Billion.
MERALCO based its projection on the increase of the income for the first 6 months of 1996 over the same period in
1995. The union, on the other hand, projected that the 1996 income would increase by 29% to 35% because the consumption
of electric power is at its highest during the last two quarters with the advent of the Yuletide season. The union likewise
relied heavily on a newspaper report citing an estimate by an all Asia capital financial analyst that the net operating income
would amount to 5.795 Billion.[21]
Based essentially on these considerations, the Secretary made the following computations and ordered his disputed
wage award:
39
 Projected net operating decision maker must always take into account the public interest aspects of the case; MERALCOs income and the amount
Income for 1996 5,795,000,000 of money available for operating expenses - including labor costs - are subject to State regulation.We must also keep in mind
that high operating costs will certainly and eventually be passed on to the consuming public as MERALCO has bluntly
Principals and interests 1,426,571,703 warned in its pleadings.
Dividends at 1995 rate 1,636,949,000 We take note of the middle ground approach employed by the Secretary in this case which we do not necessarily find
Net amount left with the Company 2,729,479,297 to be the best method of resolving a wage dispute. Merely finding the midway point between the demands of the company
and the union, and splitting the difference is a simplistic solution that fails to recognize that the parties may already be at
Add: Tax credit equivalent to 35% of labor cost 231,804,940 the limits of the wage levels they can afford. It may lead to the danger too that neither of the parties will engage in principled
bargaining; the company may keep its position artificially low while the union presents an artificially high position, on the
Companys net operating income 2,961,284,237 fear that a Solomonic solution cannot be avoided. Thus, rather than encourage agreement, a middle ground approach instead
promotes a play safe attitude that leads to more deadlocks than to successfully negotiated CBAs.
For 1997, the projected income is P7,613,612 which can easily absorb the incremental increase of P2,200 per month or a After considering the various factors the parties cited, we believe that the interests of both labor and management are
total of P4,500 during the last year of the CBA period. best served by a wage increase of P1,900.00 per month for the first year and another P1,900.00 per month for the second
year of the two-year CBA term. Our reason for this is that these increases sufficiently protects the interest of the worker as
xxxxxxxxx they are roughly 15% of the monthly average salary of P11,600.00.[26] They likewise sufficiently consider the employers
costs and its overall wage structure, while at the same time, being within the range that will not disrupt the wage trends in
An overriding aim is to estimate the amount that is left with the Company after the awarded wages and benefits and the Philippine industries.
companys customary obligations are paid. This amount can be the source of an item not found in the above computations The records shows that MERALCO, throughout its long years of existence, was never remiss in its obligation towards
but which the Company must provide for, that is - the amount the company can use for expansion. its employees. In fact, as a manifestation of its strong commitment to the promotion of the welfare and well-being of its
employees, it has consistently improved their compensation package. For instance, MERALCO has granted salary
Considering the expansion plans stated in the Companys Supplement that calls for capital expenditures of 6 billion, 6.263 increases[27] through the collective bargaining agreement the amount of which since 1980 for both rank-and-file and
billion and 5.802 billion for 1996, 1997 and 1998 respectively, We conclude that our original award of P2,300 per month for supervisory employees were as follows:
the first year and P2,200 for the second year will still leave much by way of retained income that can be used for
expansion.[22] (Underscoring ours.) AMOUNT OF CBA INCREASES DIFFERENCE
CBA COVERAGE RANK-AND-FILE SUPERVISORY AMOUNT PERCENT
We find after considering the records that the Secretary gravely abused his discretion in making this wage award 1980 230.00 342.50 112.50 48.91%
because he disregarded evidence on record. Where he considered MERALCOs evidence at all, he apparently misappreciated 1981 210.00 322.50 112.50 53.57
this evidence in favor of claims that do not have evidentiary support. To our mind, the MERALCO projection had every 1982 200.00 312.50 112.50 56.25
reason to be reliable because it was based on actual and undisputed figures for the first six months of 1996.[23] On the other TOTAL 640.00 977.50 337.50 52.73
hand, the union projection was based on a speculation of Yuletide consumption that the union failed to substantiate. In fact, 1983 320.00 432.50 112.50 35.16
as against the unions unsubstantiated Yuletide consumption claim, MERALCO adduced evidence in the form of historical 1984 350.00 462.50 112.50 32.14
consumption data showing that a lengthy consumption does not tend to rise during the Christmas period. [24] Additionally, 1985 370.00 482.50 112.50 30.41
the All-Asia Capital Report was nothing more than a newspaper report that did not show any specific breakdown or TOTAL 1,040.00 1,377.50 337.50 32.45
computations. While the union claimed that its cited figure is based on MERALCOs 10-year income stream,[25] no data or 1986 860.00 972.50 112.50 13.08
computation of this 10-year stream appear in the record. 1987 640.00 752.50 112.50 17.58
While the Secretary is not expected to accept the company-offered figures wholesale in determining a wage award, we 1988 600.00 712.50 112.50 18.75
find it a grave abuse of discretion to completely disregard data that is based on actual and undisputed record of financial TOTAL 2,100.00 2,437.50 337.50 16.07
performance in favor of the third-hand and unfounded claims the Secretary eventually relied upon. At the very least, the 1989 1,100.00 1,212.50 112.50 10.23
Secretary should have properly justified his disregard of the company figures. The Secretary should have also reasonably 1990 1,200.00 1,312.50 112.50 9.38
insured that the figure that served as the starting point for his computation had some substantial basis. 1991 1,300.00 1,412.50 112.50 8.65
TOTAL 3,600.00 3,937.50 337.50 9.38
Both parties extensely discussed the factors that the decision maker should consider in making a wage award. While 1992 1,400.00 1,742.50 342.50 24.46
We do not seek to enumerate in this decision the factors that should affect wage determination, we must emphasize that a
1993 1,350.00 1,682.50 332.50 24.63
collective bargaining dispute such as this one requires due consideration and proper balancing of the interests of the
parties to the dispute and of those who might be affected by the dispute. To our mind, the best way in approaching 1994 1,150.00 1,442.50 292.50 25.43
this task holistically is to consider the available objective facts, including, where applicable, factors such as the bargaining TOTAL 3,900.00 4,867.50 967.50 24.81
history of the company, the trends and amounts of arbitrated and agreed wage awards and the companys previous CBAs,
Based on the above-quoted table, specifically under the column RANK-AND-FILE, it is easily discernible that the
and industry trends in general. As a rule, affordability or capacity to pay should be taken into account but cannot be the sole
total wage increase of P3,800.00 for 1996 to 1997 which we are granting in the instant case is significantly higher than the
yardstick in determining the wage award, especially in a public utility like MERALCO. In considering a public utility, the

40
total increases given in 1992 to 1994, or a span of three (3) years, which is only P3,900.00 a month. Thus, the Secretarys
grant of P2,200.00 monthly wage increase in the assailed order is unreasonably high a burden for MERALCO to shoulder.
We now go to the economic issues.
1. CHRISTMAS BONUS
MERALCO questions the Secretarys award of Christmas bonuses on the ground that what it had given its employees
were special bonuses to mark or celebrate special occasions, such as when the Asia Money Magazine recognized MERALCO
as the best managed company in Asia. These grants were given on or about Christmas time, and the timing of the grant
apparently led the Secretary to the conclusion that what were given were Christmas bonuses given by way of a company
practice on top of the legally required 13th month pay.
The Secretary in granting the two-month bonus, considered the following factual finding, to wit:
We note that each of the grant mentioned in the commonly adopted table of grants has a special description. Christmas
bonuses were given in 1988 and 1989. However, the amounts of bonuses given differed. In 1988, it was P1,500. In 1989, it
was month salary. The use of Christmas bonus title stopped after 1989. In 1990, what was given was a cash gift of months
salary. The grants thereafter bore different titles and were for varying amounts. Significantly, the Company explained the
reason for the 1995 bonuses and this explanation was not substantially contradicted by the Union.
What comes out from all these is that while the Company has consistently given some amount by way of bonuses since 1988,
these awards were not given uniformly as Christmas bonuses or special Christmas grants although they may have been
given at or about Christmas time.
xxxxxxxxx
The Company is not therefore correct in its position that there is not established practice of giving Christmas bonuses that
has ripened to the status of being a term and condition of employment. Regardless of its nomenclature and purpose, the act
of giving this bonus in the spirit of Christmas has ripened into a Company practice.[28]
It is MERALCOs position that the Secretary erred when he recognized that there was an established practice of giving
a two-month Christmas bonus based on the fact that bonuses were given on or about Christmas time. It points out that the
established practice attributed to MERALCO was neither for a considerable period of time nor identical in either amount or
purpose. The purpose and title of the grants were never the same except for the Christmas bonuses of 1988 and 1989, and
were not in the same amounts.
We do not agree.
As a rule, a bonus is not a demandable and enforceable obligation;[29] it may nevertheless be granted on equitable
consideration[30] as when the giving of such bonus has been the companys long and regular practice.[31] To be
considered a regular practice, the giving of the bonus should have been done over a long period of time, and must be shown
to have been consistent and deliberate.[32] Thus we have ruled in National Sugar Refineries Corporation vs. NLRC:[33]
The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue
giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.
In the case at bar, the record shows the MERALCO, aside from complying with the regular 13 th month bonus, has
further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988. While the special
bonuses differed in amount and bore different titles, it can not be denied that these were given voluntarily and continuously
on or about Christmas time. The considerable length of time MERALCO has been giving the special grants to its employees
indicates a unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not required
by law.
Indeed, a company practice favorable to the employees has been established and the payments made by MERALCO
pursuant thereto ripened into benefits enjoyed by the employees. Consequently, the giving of the special bonus can no longer
be withdrawn by the company as this would amount to a diminution of the employees existing benefits. [34]
We can not, however, affirm the Secretarys award of a two-month special Christmas bonus to the employees since
there was no recognized company practice of giving a two-month special grant. The two-month special bonus was given
only in 1995 in recognition of the employees prompt and efficient response during the calamities. Instead, a one-month
special bonus, We believe, is sufficient, this being merely a generous act on the part of MERALCO.
2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES
It appears that the Secretary of Labor originally ordered the increase of the retirement pay, rice subsidy and medical
benefits of MERALCO retirees. This ruling was reconsidered based on the position that retirees are no longer employees of
the company and therefore are no longer bargaining members who can benefit from a compulsory arbitration award.The
Secretary, however, ruled that all members of the bargaining unit who retire between August 19, 1996 and November 30,
1997 (i.e., the term of the disputed CBA under the Secretarys disputed orders) are entitled to receive an additional rice
subsidy.
The question squarely brought in this petition is whether the Secretary can issue an order that binds the retirement
fund. The company alleges that a separate and independent trust fund is the source of retirement benefits for MERALCO
retirees, while the union maintains that MERALCO controls these funds and may therefore be compelled to improve this
benefit in an arbitral award.
The issue requires a finding of fact on the legal personality of the retirement fund. In the absence of any evidence on
record indicating the nature of the retirement funds legal personality, we rule that the issue should be remanded to the
Secretary for reception of evidence as whether or not the MERALCO retirement fund is a separate and independent trust
fund. The existence of a separate and independent juridical entity which controls an irrevocable retirement trust fund means
that these retirement funds are beyond the scope of collective bargaining: they are administered by an entity not a party to
the collective bargaining and the funds may not be touched without the trustees conformity.
On the other hand, MERALCO control over these funds means that MERALCO may be compelled in the compulsory
arbitration of a CBA deadlock where it is the employer, to improve retirement benefits since retirement is a term or condition
of employment that is a mandatory subject of bargaining.
3. EMPLOYEES COOPERATIVE
The Secretarys disputed ruling requires MERALCO to provide the employees covered by the bargaining unit with a
loan of 1.5 Million as seed money for the employees formation of a cooperative under the Cooperative Law, R.A. 6938.We
see nothing in this law - whether expressed or implied - that requires employers to provide funds, by loan or otherwise, that
employees can use to form a cooperative. The formation of a cooperative is a purely voluntary act under this law, and no
party in any context or relationship is required by law to set up a cooperative or to provide the funds therefor. In the absence
of such legal requirement, the Secretary has no basis to order the grant of a 1.5 million loan to MERALCO employees for
the formation of a cooperative. Furthermore, we do not see the formation of an employees cooperative, in the absence of an
agreement by the collective bargaining parties that this is a bargainable term or condition of employment, to be a term or
condition of employment that can be imposed on the parties on compulsory arbitration.
4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING EQUITY LOAN
MERALCO contends that it is not bound to bargain on these benefits because these do not relate to wages, hours of
work and other terms and conditions of employment hence, the denial of these demands cannot result in a bargaining
impasse.
41
 The GHSIP, HMP benefits for dependents and the housing equity loan have been the subject of bargaining and arbitral
awards in the past. We do not see any reason why MERALCO should not now bargain on these benefits. Thus, we agree
with the Secretarys ruling:
x x x Additionally and more importantly, GHSIP and HMP, aside from being contributory plans, have been the subject of
previous rulings from this Office as bargainable matters. At this point, we cannot do any less and must recognize that GHSIP
and HMP are matters where the union can demand and negotiate for improvements within the framework of the collective
bargaining system.[35]
Moreover, MERALCO have long been extending these benefits to the employees and their dependents that they now
become part of the terms and conditions of employment. In fact, MERALCO even pledged to continue giving these
benefits. Hence, these benefits should be incorporated in the new CBA.
With regard to the increase of the housing equity grant, we find P60,000.00 reasonable considering the prevailing
economic crisis.
5. SIGNING BONUS
On the signing bonus issue, we agree with the positions commonly taken by MERALCO and by the Office of the
Solicitor General that the signing bonus is a grant motivated by the goodwill generated when a CBA is successfully
negotiated and signed between the employer and the union. In the present case, this goodwill does not exist. In the words
of the Solicitor General:
When negotiations for the last two years of the 1992-1997 CBA broke down and the parties sought the assistance of the
NCMB, but which failed to reconcile their differences, and when petitioner MERALCO bluntly invoked the jurisdiction of
the Secretary of Labor in the resolution of the labor dispute, whatever goodwill existed between petitioner MERALCOand
respondent union disappeared. xxx.[36]
In contractual terms, a signing bonus is justified by and is the consideration paid for the goodwill that existed in the
negotiations that culminated in the signing of a CBA. Without the goodwill, the payment of a signing bonus cannot be
justified and any order for such payment, to our mind, constitutes grave abuse of discretion. This is more so where the
signing bonus is in the not insignificant total amount of P16 Million.
6. RED-CIRCLE-RATE ALLOWANCE
An RCR allowance is an amount, not included in the basic salary, that is granted by the company to an employee who
is promoted to a higher position grade but whose actual basic salary at the time of the promotion already exceeds the
maximum salary for the position to which he or she is promoted. As an allowance, it applies only to specifics individuals
whose salary levels are unique with respect to their new and higher positions. It is for these reasons that MERALCO prays
that it be allowed to maintain the RCR allowance as a separate benefit and not be integrated in the basic salary.
The integration of the RCR allowance in the basic salary of the employees had consistently been raised in the past
CBAs (1989 and 1992) and in those cases, the Secretary decreed the integration of the RCR allowance in the basic salary.We
do not see any reason why it should not be included in the present CBA. In fact, in the 1995 CBA between MERALCO and
the supervisory union (FLAMES), the integration of the RCR allowance was recognized. Thus, Sec. 4 of the CBA provides:
All Red-Circle-Rate Allowance as of December 1, 1995 shall be integrated in the basic salary of the covered employees who
as of such date are receiving such allowance. Thereafter, the company rules on RCR allowance shall continue to be
observed/applied.[37]
For purposes of uniformity, we affirm the Secretarys order on the integration of the RCR allowance in the basic salary
of the employees.
7. SICK LEAVE RESERVE OF 15 DAYS
MERALCO assails the Secretarys reduction of the sick leave reserve benefit from 25 days to 15 days, contending that
the sick leave reserve of 15 days has reached the lowest safe level that should be maintained to give employees sufficient
buffer in the event they fall ill.
We find no compelling reason to deviate from the Secretarys ruling that the sick leave reserve is reduced to 15 days,
with any excess convertible to cash at the end of the year. The employee has the option to avail of this cash conversion or to
accumulate his sick leave credits up to 25 days for conversion to cash at his retirement or separation from the service.This
arrangement is, in fact, beneficial to MERALCO. The latter admits that the diminution of this reserve does not seriously
affect MERALCO because whatever is in reserve are sick leave credits that are payable to the employee upon separation
from service. In fact, it may be to MERALCOs financial interest to pay these leave credits now under present salary levels
than pay them at future higher salary levels.[38]
8. 40-DAY UNION LEAVE
MERALCO objects to the demand increase in union leave because the union leave granted to the union is already
substantial. It argues that the union has not demonstrated any real need for additional union leave.
The thirty (30) days union leave granted by the Secretary, to our mind, constitute sufficient time within which the
union can carry out its union activities such as but not limited to the election of union officers, selection or election of
appropriate bargaining agents, conduct referendum on union matters and other union-related matters in furtherance of
union objectives. Furthermore, the union already enjoys a special union leave with pay for union authorized representatives
to attend work education seminars, meetings, conventions and conferences where union representation is required or
necessary, and Paid-Time-off for union officers, stewards and representatives for purpose of handling or processing
grievances.
9. HIGH VOLTAGE/HIGH POLE/TOWING ALLOWANCE
MERALCO argues that there is no justification for the increase of these allowances. The personnel concerned will not
receive any additional risk during the life of the current CBA that would justify the increase demanded by the union.In the
absence of such risk, then these personnel deserve only the same salary increase that all other members of the bargaining
unit will get as a result of the disputed CBA. MERALCO likewise assails the grant of the high voltage/high pole allowance
to members of the team who are not exposed to the high voltage/high pole risks. The risks that justify the higher salary
and the added allowance are personal to those who are exposed to those risks. They are not granted to a team because some
members of the team are exposed to the given risks.
The increase in the high-voltage allowance (from P45.00 to P55.00), high-pole allowance (from P30.00 to P40.00), and
towing allowance is justified considering the heavy risk the employees concerned are exposed to. The high-voltage
allowance is granted to an employee who is authorized by the company to actually perform work on or near energized bare
lines and bus, while the high-pole allowance is given to those authorized to climb poles on a height of at least 60 feet from
the ground to work thereat. The towing allowance, on the other hand, is granted to the stockman drivers who tow trailers
with long poles and equipment on board. Based on the nature of the job of these concerned employees, it is imperative to
give them these additional allowances for taking additional risks. These increases are not even commensurate to the danger
the employees concerned are subjected to. Besides, no increase has been given by the company since 1992.[39]
We do not, however, subscribe to the Secretarys order granting these allowances to the members of the team who are
not exposed to the given risks. The reason is obvious- no risk, no pay. To award them the said allowances would be
manifestly unfair for the company and even to those who are exposed to the risks, as well as to the other members of the
bargaining unit who do not receive the said allowances.
10. BENEFITS FOR COLLECTORS
42
 MERALCO opposes the Secretarys grant of benefits for collectors on the ground that this is grossly unreasonable
both in scope and on the premise it is founded.
We have considered the arguments of the opposing parties regarding these benefits and find the Secretarys ruling on
the (a) lunch allowance; (b) disconnection fee for delinquent accounts; (c) voluntary performance of other work at the instance
of the Company; (d) bobcat belt bags; and (e) reduction of quota and MAPL during typhoons and other force majeure events,
reasonable considering the risks taken by the company personnel involved, the nature of the employees functions and
responsibilities and the prevailing standard of living. We do not however subscribe to the Secretarys award on the following:
(a) Reduction of quota and MAPL when the collector is on sick leave because the previous CBA has already provided
for a reduction of this demand. There is no need to further reduce this.
(b) Deposit of cash bond at MESALA because this is no longer necessary in view of the fact that collectors are no
longer required to post a bond.
We shall now resolve the non-economic issues.
1. SCOPE OF THE BARGAINING UNIT
The Secretarys ruling on this issue states that:
a. Scope of the collective bargaining unit. The union is demanding that the collective bargaining unit shall be composed of
all regular rank and file employees hired by the company in all its offices and operating centers through its franchise and
those it may employ by reason of expansion, reorganization or as a result of operational exigencies. The law is that only
managerial employees are excluded from any collective bargaining unit and supervisors are now allowed to form their own
union (Art. 254 of the Labor Code as amended by R.A. 6715). We grant the union demand.
Both MERALCO and the Office of the Solicitor General dispute this ruling because if disregards the rule We have
established on the exclusion of confidential employee from the rank and file bargaining unit.
In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores Union,[40] we ruled that:
Put another way, the confidential employee does not share in the same community of interest that might otherwise make
him eligible to join his rank and file co-workers, precisely because of a conflict in those interests.
Thus, in Metrolab Industries vs. Roldan-Confesor,[41] We ruled:
..that the Secretarys order should exclude the confidential employees from the regular rank and file employees qualified to
become members of the MEWA bargaining unit.
From the foregoing disquisition, it is clear that employees holding a confidential position are prohibited from joining
the union of the rank and file employees.
2. ISSUE OF UNION SECURITY
The Secretary in his Order of August 19, 1996,[42] ruled that:
b. Union recognition and security. The union is proposing that it be recognized by the Company as sole and exclusive
bargaining representative of the rank and file employees included in the bargaining unit for the purpose of collective
bargaining regarding rates of pay, wages, hours of work and other terms and conditions of employment. For this reason, the
Company shall agree to meet only with the Union officers and its authorized representatives on all matters involving the
Union as an organization and all issues arising from the implementation and interpretation of the new CBA. Towards this
end, the Company shall not entertain any individual or group of individuals on matters within the exclusive domain of the
Union.
Additionally, the Union is demanding that the right of all rank and file employees to join the Union shall be recognized by
the Company. Accordingly, all rank and file employees shall join the union.
xxxxxxxxx
These demands are fairly reasonable. We grant the same in accordance with the maintenance of membership principle as a
form of union security."
The Secretary reconsidered this portion of his original order when he said in his December 28, 1996 order that:
x x x. when we decreed that all rank and file employees shall join the Union, we were actually decreeing the incorporation
of a closed shop form of union security in the CBA between the parties. In Ferrer v. NLRC, 224 SCRA 410, the Supreme
Court ruled that a CBA provision for a closed shop is a valid form of union security and is not a restriction on the right or
freedom of association guaranteed by the Constitution, citing Lirag v. Blanco, 109 SCRA 87.
MERALCO objected to this ruling on the grounds that: (a) it was never questioned by the parties; (b) there is no
evidence presented that would justify the restriction on employee's union membership; and (c) the Secretary cannot rule on
the union security demand because this is not a mandatory subject for collective bargaining agreement.
We agree with MERALCOs contention.
An examination of the records of the case shows that the union did not ask for a closed shop security regime; the
Secretary in the first instance expressly stated that a maintenance of membership clause should govern; neither MERALCO
nor MEWA raised the issue of union security in their respective motions for reconsideration of the Secretarys first disputed
order; and that despite the parties clear acceptance of the Secretarys first ruling, the Secretary motu proprio reconsidered his
maintenance of membership ruling in favor of the more stringent union shop regime.
Under these circumstances, it is indubitably clear that the Secretary gravely abused his discretion when he ordered a
union shop in his order of December 28, 1996. The distinctions between a maintenance of membership regime from a closed
shop and their consequences in the relationship between the union and the company are well established and need no further
elaboration.
Consequently, We rule that the maintenance of membership regime should govern at MERALCO in accordance with
the Secretarys order of August 19, 1996 which neither party disputed.
3. THE CONTRACTING OUT ISSUE
This issue is limited to the validity of the requirement that the union be consulted before the implementation of any
contracting out that would last for 6 months or more. Proceeding from our ruling in San Miguel Employees Union-
PTGWO vs Bersamina,[43] (where we recognized that contracting out of work is a proprietary right of the employer in
the exercise of an inherent management prerogative) the issue we see is whether the Secretarys consultation requirement is
reasonable or unduly restrictive of the companys management prerogative. We note that the Secretary himself has
considered that management should not be hampered in the operations of its business when he said that:
We feel that the limitations imposed by the union advocates are too specific and may not be applicable to the situations that
the company and the union may face in the future. To our mind, the greater risk with this type of limitation is that it will
43
tend to curtail rather than allow the business growth that the company and the union must aspire for. Hence, we are for the
general limitations we have stated above because they will allow a calibrated response to specific future situations the
company and the union may face.[44]
Additionally, We recognize that contracting out is not unlimited; rather, it is a prerogative that management enjoys
subject to well-defined legal limitations. As we have previously held, the company can determine in its best business
judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by
good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of
malicious or arbitrary action.[45] The Labor Code and its implementing rules also contain specific rules governing
contracting out (Department of Labor Order No. 10, May 30, 1997, Sections. 1-25).
Given these realities, we recognize that a balance already exist in the parties relationship with respect to contracting
out; MERALCO has its legally defined and protected management prerogatives while workers are guaranteed their own
protection through specific labor provisions and the recognition of limits to the exercise of management prerogatives.From
these premises, we can only conclude that the Secretarys added requirement only introduces an imbalance in the parties
collective bargaining relationship on a matter that the law already sufficiently regulates. Hence, we rule that the Secretarys
added requirement, being unreasonable, restrictive and potentially disruptive should be struck down.
4. UNION REPRESENTATION IN COMMITTEES
As regards this issue, We quote with approval the holding of the Secretary in his Order of December 28, 1996, to wit:
We see no convincing reason to modify our original Order on union representation in committees. It reiterates what the
Article 211 (A)(g) of the Labor Codes provides: To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare. Denying this opportunity to the Union is to lay the claim that only
management has the monopoly of ideas that may improve management strategies in enhancing the Companys growth.What
every company should remember is that there might be one among the Union members who may offer productive and viable
ideas on expanding the Companys business horizons. The unions participation in such committees might just be the
opportune time for dormant ideas to come forward. So, the Company must welcome this development (see also PAL v.
NLRC, et. al., G.R. 85985, August 13, 1995). It must be understood, however, that the committees referred to here are the
Safety Committee, the Uniform Committee and other committees of a similar nature and purpose involving personnel
welfare, rights and benefits as well as duties.
We do not find merit in MERALCOs contention that the above-quoted ruling of the Secretary is an intrusion into the
management prerogatives of MERALCO. It is worthwhile to note that all the Union demands and what the Secretarys order
granted is that the Union be allowed to participate in policy formulation and decision-making process on matters affecting
the Union members right, duties and welfare as required in Article 211 (A)(g) of the Labor Code. And this can only
be done when the Union is allowed to have representatives in the Safety Committee, Uniform Committee and other
committees of a similar nature. Certainly, such participation by the Union in the said committees is not in the nature of a co-
management control of the business of MERALCO. What is granted by the Secretary
is participation and representation. Thus, there is no impairment of management prerogatives.
5. INCLUSION OF ALL TERMS AND CONDITIONS IN THE CBA
MERALCO also decries the Secretarys ruling in both the assailed Orders that-
All other benefits being enjoyed by the companys employees but which are not expressly or impliedly repealed in this new
agreement shall remain subsisting and shall likewise be included in the new collective bargaining agreement to be signed
by the parties effective December 1, 1995.[46]
claiming that the above-quoted ruling intruded into the employers freedom to contract by ordering the inclusion in the new
CBA all other benefits presently enjoyed by the employees even if they are not incorporated in the new CBA. This matter
of inclusion, MERALCO argues, was never discussed and agreed upon in the negotiations; nor presented as issues before
the Secretary; nor were part of the previous CBAs between the parties.
We agree with MERALCO.
The Secretary acted in excess of the discretion allowed him by law when he ordered the inclusion of benefits, terms
and conditions that the law and the parties did not intend to be reflected in their CBA.
To avoid the possible problems that the disputed orders may bring, we are constrained to rule that only the terms and
conditions already existing in the current CBA and was granted by the Secretary (subject to the modifications decreed in
this decision) should be incorporated in the CBA, and that the Secretarys disputed orders should accordingly be modified.
6. RETROACTIVITY OF THE CBA
Finally, MERALCO also assails the Secretarys order that the effectivity of the new CBA shall retroact to December
1, 1995, the date of the commencement of the last two years of the effectivity of the existing CBA. This retroactive date,
MERALCO argues, is contrary to the ruling of this Court in Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-
Confessor[47] which mandates that the effective date of the new CBA should be the date the Secretary of Labor has resolved
the labor disputes.
On the other hand, MEWA supports the ruling of the Secretary on the theory that he has plenary power and discretion
to fix the date of effectivity of his arbitral award citing our ruling in St. Lukes Medical Center, Inc. vs. Torres.[48] MEWA
also contends that if the arbitral award takes effect on the date of the Secretary Labors ruling on the parties motion for
reconsideration (i.e., on December 28, 1996), an anomaly situation will result when CBA would be more than the 5-year
term mandated by Article 253-A of the Labor Code.
However, neither party took into account the factors necessary for a proper resolution of this aspect. Pier 8, for
instance, does not involve a mid-term negotiation similar to this case, while St. Lukes does not take the hold over principle
into account, i.e., the rule that although a CBA has expired, it continues to have legal effects as between the parties until a
new CBA has been entered into.[49]
Article 253-A serves as the guide in determining when the effectivity of the CBA at bar is to take effect. It provides
that the representation aspect of the CBA is to be for a term of 5 years, while
x x x [A]ll other provisions of the Collective Bargaining Agreement shall be re-negotiated not later than 3 years after its
execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within 6 months
from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement shall retroact
to the day immediately following such date. If such agreement is entered into beyond 6 months, the parties shall agree on
the duration of the effectivity thereof. x x x.
Under these terms, it is clear that the 5-year term requirement is specific to the representation aspect. What the law
additionally requires is that a CBA must be re-negotiated within 3 years after its execution. It is in this re-negotiation that
gives rise to the present CBA deadlock.
If no agreement is reached within 6 months from the expiry date of the 3 years that follow the CBA execution, the law
expressly gives the parties - not anybody else - the discretion to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the situation where 6 months have elapsed but no agreement has been
reached with respect to effectivity. In this eventuality, we hold that any provision of law should then apply for the law abhors
a vacuum.[50]
44
 One such provision is the principle of hold over, i.e., that in the absence of a new CBA, the parties must maintain
the status quo and must continue in full force and effect the terms and conditions of the existing agreement until a new
agreement is reached.[51] In this manner, the law prevents the existence of a gap in the relationship between the collective
bargaining parties. Another legal principle that should apply is that in the absence of an agreement between the parties,
then, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it operates and may be executed only
respectively unless there are legal justifications for its retroactive application.
Consequently, we find no sufficient legal ground on the other justification for the retroactive application of the disputed
CBA, and therefore hold that the CBA should be effective for a term of 2 years counted from December 28, 1996 (the date
of the Secretary of Labors disputed order on the parties motion for reconsideration) up to December 27, 1999.
WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August 19, 1996
and December 28, 1996 are set aside to the extent set forth above. The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in the unaffected portions of the Secretary of Labors order of
August 19, 1996 and December 28, 1996, and the modifications set forth above. The retirement fund issue is remanded to
the Secretary of Labor for reception of evidence and determination of the legal personality of the MERALCO retirement
fund.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Melo, Kapunan, and Pardo, JJ., concur.
[ G.R. No. L-18364, February 28, 1963 ]
PHILIPPINE AMERICAN CIGAR & CIGARETTE FACTORY WORKERS INDEPENDENT UNION (NLU),
PETITIONERS, VS. PHILIPPINE AMERICAN CIGAR & CIGARETTE MANUFACTURING CO., INC.,
RESPONDENT.
Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers Independent Union (NLU), from a
decision of the Court of Industrial Relations dismissing a complaint of said petitioner for unfair labor, practice, and ordering
respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. to reinstate Apolonio San Jose, within five (5)
days from notice of said decision, without backpay. The pertinent facts are set forth in said decision from which we quote:
"Paragraph 3, sub-paragraph (a) of the complaint states:—
'a. That sometime on October 23, 1958, Apolonio San Jose's brother, Francisco San Jose, who is also a regular worker of the
respondent and a member of the complainant union, filed a charge for unfair labor practice against herein respondent
docketed as Case No. 1857—ULP of this Court, which case is still pending.
'b. That subsequent to the filing of the said charge, or on about November 29, 1958 and also on or about December 11, 1958,
the respondent herein, by its manager Chue Yiong, summoned and advised union president Lazaro Peralta that if Francisco
San Jose will not withdraw his charge against the company (Case No. 1857-ULP), the company will also dismiss his brother
Apolonio San Jose, to which the union president replied that should not be the attitude of the company because Apolonio
has nothing to do with his brother's case.
'c. That on or about January 24, 1959, respondent, by its officers and agents, did dismiss Apolonio San Jose without just and
valid cause and in gross violation of the operative collective bargaining agreement between the complainant union and
respondent corporation,'
"The allegations in said sub-paragraph (a), (b) and (c) of the complaint were substantiated by the oral testimony of
complainants' witnesses, but the Court finds that such allegations do not constitute unfair labor practice acts on the part of
respondent. In sub-paragraphs (a) and (b), the Court finds no interference, coercion and restraint against the employees in
the exercise of their guaranteed rights to self-organization and discrimination against complainant Apolonio San Jose in
regard to hire or tenure of his employment. In short, the complainants' charge is that if Francisco San Jose would not
withdraw his unfair labor practice charge against respondent company, the manager of the latter would dismiss Apolonio
San Jose, the brother cf Francisco. In fact, said manager dismissed Apolonio San Jose. This may be an illegal or improper
dismissal, but certainly, it does not constitute an unfair labor practice.
"The Court further finds that in sub-paragraph (c), complainants allege that the dismissal of Apolonio San Jose was in gross
violation of the collective bargaining agreement between complainant union and respondent corporation."
The Court of Industrial Relations found "that the moving cause of Apolonio's dismissal was the refusal of his brother
Francisco San Jose, to withdraw his charge of unfair labor practice against the company. But "—it added—" be that is it
may, it cannot constitute an actionable offense under the Act". Seemingly believing that, since the one dismissed by reason
of said charge of unfair labor practice was, not the complainant therein, Francisco San Jose, but his brother Apolonio San
Jose, the latter's dismissal does not constitute another unfair labor practice under Section 4 (a) (5) of Republic Act No. 875,
which provides that:
"(a) It shall be unfair labor practice for an employer:
*******
"(5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having filed charges or for having
given or being about to give testimony under this Act."
the lower court concluded that it had no jurisdiction to entertain the claim of petitioner herein. This conclusion is untenable.
Although subdivision (5) of paragraph (a) of said Section 4 would seem to refer only to the discharge of the one who preferred
charges against the company as constituting unfair labor practice, the aforementioned subdivision (5) should be construed
in line with the spirit and purpose of said Section 4 and of the legislation of which it forms part— namely, to assure absolute
freedom of the employees and laborers to establish labor organizations and unions, as well as to prefer charges before the
proper organs of the Government for violations of our labor laws. Now, then, if the dismissal of an employee due to the filing
by him of said charges would be and is an undue restraint upon said freedom, the dismissal of his brother owing to the non-
withdrawal of the charges of the former, would be and constitute as much a restraint upon the same freedom. In fact, it may
be greater and more effective restraint thereto. Indeed, a complainant may be willing to risk the hazards of a possible and
even probable retaliatory action by the employer in the form of a dismissal or another discriminatory act against him
personally, considering that nobody is perfect, that everybody commits mistakes and that there is always a possibility that
the employer may find in the records of any employee, particularly if he has long been in the service, some act or omission
constituting a fault or negligence which may be an excuse for such dismissal or discrimination. Yet, such complainant may
not withstand the pressure that would result if his brother or another member of his immediate family were threatened with
such action unless the charges in question were withdrawn.
In fact, it is a well settled rule of law that what is prohibited to be done directly shall not be allowed to be accomplished
indirectly. Thus in the Matter of Quidnick Dye Works Inc. and Federation of Dyers, Finishers, Printers and Bleachers of
America (2 NLRB 963) it was held that the dismissal of a laborer on account of union activities of his brother constituted an
unfair labor practice. To the same effect, substantially, are the decisions In the Matter of the Fashion Piece Dye Works Inc.
and Federation of Silk and Rayon Dyers and Finishers of America, 6 NLRB p. 274, In the Matter of Ford Motor Company
and H.C. McGarity, 26 NLRB, p. 322 which refers to the union activities of the wife of the discharged employee), and Union
Asbestos & Rubber Co. and United Textile Workers of America, AFL, 98 NLRB p. 1055 (involving the dismissal of a female
employee, due to the union activities of her husband). Hence, Teller in his work on Labor Disputes and Collective Bargaining
(Vol. 2, p. 859), says:
45
"The discharge of relatives of an employee who has himself been discriminately discharged, for no other reason than the
relation, is itself a discriminatory discharge, in violation of Sec. 8(3). of the Act. An illustration is Memphis Furniture Co. (3 exclusive bargaining agent of the Clubs rank-and-file employees. In April 1996, respondents Christopher Pizarro, Michael
NLRB 26 [1937], enforced 2 F2d 1018 [CCA 6, 1938], cert. den. 305 US 627, 59 S Ct 91, 83 L. Ed. 402 [1938]) where the
evidence indicated that the sole reason for the dismissal of a female employee was that she was the wife of an employee who Braza, and Nolasco Castueras were elected Union President, Vice-President, and Treasurer, respectively.
has been discharged. It was held that the discharge under the circumstances was discriminatory and a violation of the Act,
even though discharged female employee was not herself a member of any union. The Board said: 'The respondent thus
made union membership and activities bar to the employment not only of the union member himself but of members of his On June 21, 1999, the Club and the Union entered into a Collective Bargaining Agreement (CBA), which provided for a
family as well. A more effective mode of discouraging of union affiliation could hardly be found than the knowledge that
such activities put not merely the union member's employment but that of those closely related to him in jeopardy. The Union shop and maintenance of membership shop.
direct cause of Mrs. Barmer's discharge was tho fact that her husband had been discharged, but the indirect and antecedent
cause was discrimination against union members in regard to hire and tenure of employment with intent to discourage
membership in the Union'. So also fhe Board has held that the discharge of discriminatingly discharged employees' wives
for the reason that the employer did not desire the employees to continue to live in the employer's house, which they would The pertinent parts of the CBA included in Article II on Union Security read, as follows:
do so long as their wives remained employed, in itself a discrimination discharge in violation of the Act. (Mexia Textile ARTICLE II
Mills, 11 NLRB 1167 [1939], enforced 110 F2d 565 [CCA 5, 1940]). In Mansfield Mills, Inc. (3 NLRB 901 [1937] the UNION SECURITY
respondent alleged that the wife of an employee who had been discharged allegedly in violation of the Act was herself
discharged in consequence of a company rule requiring the dismissal of all members of the family when the head of the family SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file employees, who
is discharged. The Board saicl: 'Assuming thisi as the reason for Mrs. Sutton's discharge, we would necessarily find that she are members or subsequently become members of the UNION shall maintain their membership in good
was the victim of discrimination in violation of the Act, if we determined that Sutton was discharged as the result of his standing as a condition for their continued employment by the CLUB during the lifetime of this
union affiliation.' Agreement or any extension thereof.

SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW REGULAR RANK-

"In the usual case, It is the wife who is the sufferer because of the husband's union affiliation. In I. Youlin and Company (22 AND-FILE EMPLOYEES
NLRB No. 65 [1940], the husband was discharged for failure to secure his wife's resignation from the union. This was held
violative of Section 8(3) of the Act." a) New regular rank-and-file employees of the Club shall join the UNION within five (5) days from
the date of their appointment as regular employees as a condition for their continued employment
In addition to violating Section 4(a) (5) of Republic Act. No. 875, the discharge of Apolonio San Jose is, therefore, an unfair during the lifetime of this Agreement, otherwise, their failure to do so shall be a ground for dismissal
labor practice under subdivision (4) of said Section 4(a), which is the counterpart of Section 8(3) of the National Labor from the CLUB upon demand by the UNION.
Relations Act (Wagner Act) of the United States. b) The Club agrees to furnish the UNION the names of all new probationary and regular employees
covered by this Agreement not later than three (3) days from the date of regular appointment
showing the positions and dates of hiring.
Wherefore, the decision appealed from is hereby reversed, insofar as it dismisses the complaint of petitioner herein, and
another one shall be entered finding respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. guilty of xxxx
unfair labor practice and ordering said respondent to reinstate Apolonio San Jose, immediately after this decision shall have
become final, with backpay. It is so ordered. SECTION 4. TERMINATION UPON UNION DEMAND. Upon written demand of
the UNION and after observing due process, the Club shall dismiss a regular rank-and-file employee on
Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Regala, and Makalintal, JJ., concur.a any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time of regularization;
ALABANG COUNTRY CLUB, INC., G.R. No. 170287 (b) Resignation from the UNION, except within the period allowed by law;
- versus - (c) Conviction of a crime involving moral turpitude;
NATIONAL LABOR RELATIONS COMMISSION, ALABANG (d) Non-payment of UNION dues, fees, and assessments;
COUNTRY CLUB INDEPENDENT EMPLOYEES UNION, (e) Joining another UNION except within the period allowed by law;
CHRISTOPHER PIZARRO, MICHAEL BRAZA, and (f) Malversation of union funds;
NOLASCO CASTUERAS (g) Actively campaigning to discourage membership in the UNION; and
(h) Inflicting harm or injury to any member or officer of the UNION.
February 14, 2008
It is understood that the UNION shall hold the CLUB free and harmless [sic] from any
Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit corporation with principal office at Country Club liability or damage whatsoever which may be imposed upon it by any competent judicial or quasi-judicial
authority as a result of such dismissal and the UNION shall reimburse the CLUB for any and all liability
Drive, Ayala Alabang, Muntinlupa City. Respondent Alabang Country Club Independent Employees Union (Union) is the or damage it may be adjudged.[1] (Emphasis supplied.)

46
 Subsequently, in July 2001, an election was held and a new set of officers was elected. Soon thereafter, the new Despite their explanations, respondents Pizarro, Braza, and Castueras were expelled from the Union, and, on

officers conducted an audit of the Union funds. They discovered some irregularly recorded entries, unaccounted expenses October 16, 2001, were furnished individual letters of expulsion for malversation of Union funds. [6] Attached to the letters

and disbursements, and uncollected loans from the Union funds. The Union notified respondents Pizarro, Braza, and were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63 Union members and officers, and a Board of

Castueras of the audit results and asked them to explain the discrepancies in writing.[2] Directors Resolution[7] expelling them from the Union.

In a letter dated October 18, 2001, the Union, invoking the Security Clause of the CBA, demanded that the Club dismiss

Thereafter, on October 6, 2001, in a meeting called by the Union, respondents Pizarro, Braza, and Castueras respondents Pizarro, Braza, and Castueras in view of their expulsion from the Union.[8] The Club required the three

explained their side. Braza denied any wrongdoing and instead asked that the investigation be addressed to Castueras, who respondents to show cause in writing within 48 hours from notice why they should not be dismissed. Pizarro and Castueras

was the Union Treasurer at that time. With regard to his unpaid loans, Braza claimed he had been paying through monthly submitted their respective written explanations on October 20, 2001, while Braza submitted his explanation the following

salary deductions and said the Union could continue to deduct from his salary until full payment of his loans, provided he day.

would be reimbursed should the result of the initial audit be proven wrong by a licensed auditor. With regard to the Union

expenses which were without receipts, Braza explained that these were legitimate expenses for which receipts were not

issued, e.g. transportation fares, food purchases from small eateries, and food and transportation allowances given to Union

members with pending complaints with the Department of Labor and Employment, the National Labor Relations During the last week of October 2001, the Clubs general manager called respondents Pizarro, Braza, and Castueras for an

Commission (NLRC), and the fiscals office. He explained that though there were no receipts for these expenses, these were informal conference inquiring about the charges against them. Said respondents gave their explanation and asserted that

supported by vouchers and itemized as expenses. Regarding his unpaid and unliquidated cash advances amounting to almost the Union funds allegedly malversed by them were even over the total amount collected during their tenure as Union

PhP 20,000, Braza explained that these were not actual cash advances but payments to a certain Ricardo Ricafrente who had officersPhP 120,000 for Braza, PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total collection from

loaned PhP 200,000 to the Union.[3] April 1996 to December 2001 of only PhP 102,000. They claimed the charges are baseless. The general manager announced
he would conduct a formal investigation.

Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan and cash advances. He claimed his

salaries were regularly deducted to pay his loan and he did not know why these remained unpaid in the records. Nonetheless, Nonetheless, after weighing the verbal and written explanations of the three respondents, the Club concluded that said

he likewise agreed to continuous salary deductions until all his accountabilities were paid. [4] respondents failed to refute the validity of their expulsion from the Union. Thus, it was constrained to terminate the

employment of said respondents. On December 26, 2001, said respondents received their notices of termination from the

Castueras also denied any wrongdoing and claimed that the irregular entries in the records were unintentional Club.[9]

and were due to inadvertence because of his voluminous work load. He offered that his unpaid personal loan of PhP 27,500

also be deducted from his salary until the loans were fully paid. Without admitting any fault on his part, Castueras suggested Respondents Pizarro, Braza, and Castueras challenged their dismissal from the Club in an illegal dismissal complaint

that his salary be deducted until the unaccounted difference between the loans and the amount collected amounting to a total docketed as NLRC-NCR Case No. 30-01-00130-02 filed with the NLRC, National Capital Region Arbitration Branch. In his
of PhP 22,000 is paid.[5] January 27, 2003 Decision,[10] the Labor Arbiter ruled in favor of the Club, and found that there was justifiable cause in

terminating said respondents. He dismissed the complaint for lack of merit.

47
On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal docketed as NLRC NCR CA No. 034601-
03 with the NLRC.
On February 26, 2004, the NLRC rendered a Decision[11] granting the appeal, the fallo of which reads:
WHEREFORE, finding merit in the Appeal, judgment is hereby rendered declaring the dismissal of the
complainants illegal. x x x Alabang Country Club, Inc. and Alabang Country Club Independent Union
are hereby ordered to reinstate complainants Christopher Pizarro, Nolasco Castueras and Michael Braza
to their former positions without loss of seniority rights and other privileges with full backwages from
the time they were dismissed up to their actual reinstatement.
SO ORDERED.
The NLRC ruled that there was no justifiable cause for the termination of respondents Pizarro, Braza, and Castueras. The
commissioners relied heavily on Section 2, Rule XVIII of the Rules Implementing Book V of the Labor Code. Sec. 2 provides:
SEC. 2. Actions arising from Article 241 of the Code. Any action arising from the
administration or accounting of union funds shall be filed and disposed of as an intra-union dispute in
accordance with Rule XIV of this Book.
In case of violation, the Regional or Bureau Director shall order the responsible officer to
render an accounting of funds before the general membership and may, where circumstances warrant,
mete the appropriate penalty to the erring officer/s, including suspension or expulsion from the
union.[12]
According to the NLRC, said respondents expulsion from the Union was illegal since the DOLE had not yet made any
definitive ruling on their liability regarding the administration of the Unions funds.
The Club then filed a motion for reconsideration which the NLRC denied in its June 20, 2004 Resolution.[13]
Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition for Certiorari which was docketed as CA-
G.R. SP No. 86171 with the Court of Appeals (CA).
The CA Upheld the NLRC Ruling
that the Three Respondents were Deprived Due Process
On July 5, 2005, the appellate court rendered a Decision,[14] denying the petition and upholding the Decision of the NLRC.
The CAs Decision focused mainly on the Clubs perceived failure to afford due process to the three respondents. It found that
said respondents were not given the opportunity to be heard in a separate hearing as required by Sec. 2(b), Rule XXIII, Book
V of the Omnibus Rules Implementing the Labor Code, as follows:
SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment,
the following standards of due process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Code:
xxxx
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him.
The CA also said the dismissal of the three respondents was contrary to the doctrine laid down in Malayang Samahan ng mga
Manggagawa sa M. Greenfield v. Ramos (Malayang Samahan), where this Court ruled that even on the assumption that the
union had valid grounds to expel the local union officers, due process requires that the union officers be accorded a separate
hearing by the employer company.[15]
In a Resolution[16] dated October 20, 2005, the CA denied the Clubs motion for reconsideration.
The Club now comes before this Court with these issues for our resolution, summarized as follows:
1. Whether there was just cause to dismiss private respondents, and whether they were
afforded due process in accordance with the standards provided for by the Labor Code and its
Implementing Rules.
2. Whether or not the CA erred in not finding that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it ruled that respondents Pizarro,
Braza, and Castueras were illegally expelled from the Union.
3. Whether the case of Agabon vs. NLRC[17] should be applied to this case.
4. Whether that in the absence of bad faith and malice on the part of the Club, the Union is
solely liable for the termination from employment of said respondents.
The main issue is whether the three respondents were illegally dismissed and whether they were afforded due process.
48
The Club avers that the dismissal of the three respondents was in accordance with the Union security provisions in their
CBA. The Club also claims that the three respondents were afforded due process, since the Club conducted an investigation
separate and independent from that conducted by the Union.
Respondents Pizarro, Braza, and Castueras, on the other hand, contend that the Club failed to conduct a separate hearing as
prescribed by Sec. 2(b), Rule XXIII, Book V of the implementing rules of the Code.
First, we resolve the legality of the three respondents dismissal from the Club.
Valid Grounds for Termination
Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Art. 282; (2)
authorized causes under Art. 283; (3) termination due to disease under Art. 284; and (4) termination by the employee or
resignation under Art. 285.
Another cause for termination is dismissal from employment due to the enforcement of the union security clause
in the CBA. Here, Art. II of the CBA on Union security contains the provisions on the Union shop and maintenance of
membership shop. There is union shop when all new regular employees are required to join the union within a certain period
as a condition for their continued employment. There is maintenance of membership shop when employees who are union
members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as
a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is
terminated.[18] Termination of employment by virtue of a union security clause embodied in a CBA is recognized and
accepted in our jurisdiction.[19] This practice strengthens the union and prevents disunity in the bargaining unit within the
duration of the CBA. By preventing member disaffiliation with the threat of expulsion from the union and the consequent
termination of employment, the authorized bargaining representative gains more numbers and strengthens its position as
against other unions which may want to claim majority representation.
In terminating the employment of an employee by enforcing the union security clause, the employer needs only to
determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the
union security provision in the CBA; and (3) there is sufficient evidence to support the unions decision to expel the employee
from the union. These requisites constitute just cause for terminating an employee based on the CBAs union security
provision.
The language of Art. II of the CBA that the Union members must maintain their membership in good standing as
a condition sine qua non for their continued employment with the Club is unequivocal. It is also clear that upon demand by
the Union and after due process, the Club shall terminate the employment of a regular rank-and-file employee who may be
found liable for a number of offenses, one of which is malversation of Union funds. [20]
Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing them of their termination:
On October 18, 2001, the Club received a letter from the Board of Directors of the Alabang
Country Club Independent Employees Union (Union) demanding your dismissal from service by reason
of your alleged commission of act of dishonesty, specifically malversation of union funds. In support
thereof, the Club was furnished copies of the following documents:
1. A letter under the subject Result of Audit dated September 14, 2001 (receipt of which
was duly acknowledged from your end), which required you to explain in writing the
charges against you (copy attached);
2. The Unions Board of Directors Resolution dated October 2, 2001, which explained that
the Union afforded you an opportunity to explain your side to the charges;
3. Minutes of the meeting of the Unions Board of Directors wherein an administrative
investigation of the case was conducted last October 6, 2001; and
4. The Unions Board of Directors Resolution dated October 15, 2001 which resolved your
expulsion from the Union for acts of dishonesty and malversation of union funds, which
was duly approved by the general membership.
After a careful evaluation of the evidence on hand vis--vis a thorough assessment of your defenses
presented in your letter-explanation dated October 6, 2001 of which you also expressed that you waived
your right to be present during the administrative investigation conducted by the Unions Board of
Directors on October 6, 2001, Management has reached the conclusion that there are overwhelming
reasons to consider that you have violated Section 4(f) of the CBA, particularly on the grounds of
malversation of union funds. The Club has determined that you were sufficiently afforded due process
under the circumstances.
Inasmuch as the Club is duty-bound to comply with its obligation under Section 4(f) of the CBA, it is
unfortunate that Management is left with no other recourse but to consider your termination from
49
 service effective upon your receipt thereof. We wish to thank you for your services during your
employment with the Company. It would be more prudent that we just move on independently if only
to maintain industrial peace in the workplace.
Be guided accordingly.[21]
Gleaned from the above, the three respondents were expelled from and by the Union after due investigation for
acts of dishonesty and malversation of Union funds. In accordance with the CBA, the Union properly requested the Club,
through the October 18, 2001 letter[22] signed by Mario Orense, the Union President, and addressed to Cynthia Figueroa,
the Clubs HRD Manager, to enforce the Union security provision in their CBA and terminate said respondents. Then, in
compliance with the Unions request, the Club reviewed the documents submitted by the Union, requested said respondents
to submit written explanations, and thereafter afforded them reasonable opportunity to present their side. After it had
determined that there was sufficient evidence that said respondents malversed Union funds, the Club dismissed them from
their employment conformably with Sec. 4(f) of the CBA.
Considering the foregoing circumstances, we are constrained to rule that there is sufficient cause for the three respondents
termination from employment.
Were respondents Pizarro, Braza, and Castueras accorded due process before their employments were terminated?
We rule that the Club substantially complied with the due process requirements before it dismissed the three
respondents.
The three respondents aver that the Club violated their rights to due process as enunciated in Malayang
Samahan,[23] when it failed to conduct an independent and separate hearing before they were dismissed from service.
The CA, in dismissing the Clubs petition and affirming the Decision of the NLRC, also relied on the same case. We explained
in Malayang Samahan:
x x x Although this Court has ruled that union security clauses embodied in the collective
bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be
valid, this does not erode the fundamental requirements of due process. The reason behind the
enforcement of union security clauses which is the sanctity and inviolability of contracts cannot override
ones right to due process.[24]
In the above case, we pronounced that while the company, under a maintenance of membership provision of the
CBA, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should
not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of
a hearing.[25] We cautioned in the same case that the power to dismiss is a normal prerogative of the employer; however,
this power has a limitation. The employer is bound to exercise caution in terminating the services of the employees especially
so when it is made upon the request of a labor union pursuant to the CBA. Dismissals must not be arbitrary and capricious.
Due process must be observed in dismissing employees because the dismissal affects not only their positions but also their
means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor. [26]
The CA and the three respondents err in relying on Malayang Samahan, as its ruling has no application to this
case. In Malayang Samahan, the union members were expelled from the union and were immediately dismissed from the
company without any semblance of due process. Both the union and the company did not conduct administrative hearings
to give the employees a chance to explain themselves. In the present case, the Club has substantially complied with due
process. The three respondents were notified that their dismissal was being requested by the Union, and their explanations
were heard. Then, the Club, through its President, conferred with said respondents during the last week of October
2001. The three respondents were dismissed only after the Club reviewed and considered the documents submitted by the
Union vis--vis the written explanations submitted by said respondents. Under these circumstances, we find that the Club
had afforded the three respondents a reasonable opportunity to be heard and defend themselves.
On the applicability of Agabon, the Club points out that the CA ruled that the three respondents were illegally
dismissed primarily because they were not afforded due process. We are not unaware of the doctrine enunciated
in Agabon that when there is just cause for the dismissal of an employee, the lack of statutory due process should not nullify
the dismissal, or render it illegal or ineffectual, and the employer should indemnify the employee for the violation of his
statutory rights.[27] However, we find that we could not apply Agabon to this case as we have found that the three
respondents were validly dismissed and were actually afforded due process.
Finally, the issue that since there was no bad faith on the part of the Club, the Union is solely liable for the
termination from employment of the three respondents, has been mooted by our finding that their dismissal is valid.
50

WHEREFORE, premises considered, the Decision dated July 5, 2005 of the CA and the Decision dated February
26, 2004 of the NLRC are hereby REVERSED andSET ASIDE. The Decision dated January 27, 2003 of the Labor Arbiter
in NLRC-NCR Case No. 30-01-00130-02 is hereby REINSTATED.
No costs. SO ORDERED.
[G.R. NO. 113907. FEBRUARY 28, 2000]
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD, V. RAMOS ET. AL., G.R. NO.
113907, FEBRUARY 28, 2000
PURISIMA , J .:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the National Labor
Relations Commission in an unfair labor practice case instituted by a local union against its employer company and the
officers of its national federation.
The Petitioner, Malayang Samahan ng mga Manggagawa SA Greenfield, Inc., (B) (MSMG), hereinafter referred to as the
"local union", is an affiliate of the private respondent, United Lumber and General Workers of the Philippines ( ULGWP),
referred to as the "federation". The collective bargaining agreement between MSMG and M. Greenfield, Inc. names the
parties as follows:
"This agreement made and entered into by and between:
M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the
Republic of the Philippines with office address at Km 14, Merville Road, Paraaque, Metro
Manila, represented in this act by its General Manager, Mr. Carlos T. Javelosa, hereinafter
referred to as the Company;
-and-
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B)
(MSMG) / UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES
(ULGWP), a legitimate labor organization with address at Suite 404, Trinity Building, TM
Kalaw Street, Manila, represented in this act by a Negotiating Committee headed by its
National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement as the UNION.
" [1]
The CBA includes, among others, the following pertinent provisions:
Article II-Union Security
Section 1. Coverage and Scope . All employees who are covered by this Agreement and presently
members of the UNION shall remain members of the UNION for the duration of this Agreement as a
condition precedent to continued employment with the COMPANY.
xxx xxx
Section 4. Dismissal. Any such employee mentioned in Section 2 hereof, who fails to maintain his
membership in the UNION for non-payment of UNION dues, for resignation and for violation of
UNIONS Constitution and By-Laws and any new employee as defined in Section 2 of this Article
UNLIMITED UNCERTAINTY OF UNSUPERED REPRESENTATION OF THE
COMPANY; provided, however, that the UNION shall hold the COMPANY free and blameless from
any and all liabilities that may arise should the dismissed employee question, in any manner, his
dismissal; provided, that the matter of the employees dismissal under this Article may be submitted to a
grievance under Article XIII and, provided, finally,
Article IX
Section 4. Program Fund - The Company shall provide the amount of P10, 000.00 a month for a
continuing labor education program which shall be remitted to the Federation x x x. " [2]
On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the aqui petitioner, Beda
Magdalena Villanueva, and the other union officers were proclaimed as winners. Minutes of the said election were duly filed
with the Bureau of Labor Relations on September 29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the defeated candidates
in the aforementioned election.
On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not yield any unfavorable
results and the local union officers were cleared of the charges of anomaly in the custody, handling and disposition of the
union funds.
The 14 defeated candidates filed with the Petition for Impeachment / Expulsion of the local union officers with the DOLE
NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was dismissed on March 2, 1988, by
Med-Arbiter Renato Parungo for failure to substantiate the charges and to present evidence in support of the allegations.
On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in Pasig. Several union
members failed to attend the meeting, prompting the Executive Board to create a committee tasked to investigate the non-
attendance of several union members in the said assembly, pursuant to Sections 4 and 5, Article V of the Constitution and
By-Laws of the union, which read:
" Seksyon 4. Ang mga kinukusang hindi pagdalo or hindi paglahok sa lahat ng hakbangin ng unyon ng
sinumang kasapi or pinuno ay maaaring maging sanhi ng pagtitiwalag or pagpapataw ng fine ng hindi
hihigit sa P50.00 sa bawat araw na nagkulang.
Seksyon 5 . Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na pagliban at
maparusahan ito ng alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. But mang kasapi or
pisyales na mahuli and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00
51
 at babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng pagdating ng huli
ay ituturing na pagliban. [3]
On June 27, 1988, the local union wrote respondent company to letter requesting it to deduct the union ends from the wages
/ salaries of those union members who failed to attend the general membership meeting. A portion of the said letter stated:
"xxx xxx xxx
In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please deduct
the amount of P50.00 from each of the union members named in said annexes on the payroll of July 2-8,
1988 as fine for their failure to attend said general membership meeting. " [4]
In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo Paceo, Jr. disapproved
the resolution of the local union imposing the P50.00 fine. The union officers protested such action by the Federation in a
Reply dated July 4, 1988.
On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct the fifty-peso fine
from the salaries of the union members requesting that:
"xxx any and all future representations by MSMG affecting a number of members be first cleared from
the federation before corresponding action by the Company." [5]
The following day, respondent company sent to reply to petitioner unions request in a letter, stating that it can not deduct
ends from the salary without going against certain laws. The company suggested that the union refer to the matter to the
appropriate government office for resolution in order to avoid placing the company in the middle of the issue.
The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and the local union
culminating in the latters declaration of general autonomy from the former through Resolution No. 10 passed by the local
executive board and ratified by the general membership on July 16, 1988.
In retaliation, the national federation respondent company to stop the remittance of the local unions share in the education
funds effective August 1988. This was objected to by the local union which demanded that the education fund be remitted
to it in full.
The company was thus constrained to file a Complaint for Interpleader with a Petition for Declaratory Relief with the Med-
Arbitration Branch of the Department of Labor and Employment, docketed as Case No. OD-M-8-435-88. This was resolved
on October 28, 1988, by Med-Arbiter Anastacio Bactin in an Order, disposing thus:
"WHEREFORE, local considered, it is hereby ordered:
1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local union
officers shall administer the collective bargaining agreement (CBA).
2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to the
ULGWP subject to the condition that it shall use the said amount for its intended purpose.
3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the
amount of P50.00 as penalty for their failure to attend the general membership assembly on April 17,
1988.
However, if the MSMG Officers could present the individual written authorizations of the 356 union
members, then the company is obliged to deduct from the salaries of the 356 union members of the
P50.00 fine. " [6]
On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in part the earlier
disposition, to wit:
"WHEREFORE, the property considered, the appealed portion is hereby modified to the extent that the
company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00 monthly labor
education program fund to ULGWP and the other P5,000.00 to MSMG, both unions to use the same
for their intended purpose. " [7]
Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph International, General
Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of the federation and education funds of
ULGWP which was granted by Med-Arbiter Rasidali Abdullah on December 25, 1988 in an Order which directed the audit
and examination of the books of account of ULGWP.
On September 30, 1988, the officials of ULGWP called the Special National Executive Board Meeting at Nasipit, Agusan
del Norte, where a resolution was passed placing the MSMG under trusteeship and appointing respondent Cesar Clarete as
administrator.
On October 27, 1988, the said administrator wrote the respondent company informing the latter of its designation of a
certain Alfredo Kalingking as local union president and "disauthorizing" the incumbent union officers from representing the
employees. This action by the national federation was protested by the petitioners in a letter to respondent company dated
November 11, 1988.
On November 13, 1988, the petitioner union officers received identical letters from the administrator requiring them to
explain within 72 hours why they should be removed from their office and expelled from union membership.
On November 26, 1988, petitioners replied:
(a) Questioning the validity of the alleged National Executive Board Resolution placing their union
under trusteeship;
(b) Justifying the action of their union in declaring to general autonomy from ULGWP due to the
latitude inability to give proper education, organizational and legal services to its affiliates and the
pendency of the audit of the federation funds;
(c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of
ULGWP;
(d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of coercion,
intimidation and harrassment. [8]
52
However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination letter read:
"Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND
GENERAL WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and / or
acts inimical to the interest and violative to the Constitution and by-laws of your federation .
You failed and / or refused to offer an explanation of the time granted to you.
Since you are no longer a member of good standing, ULGWP is constrained to recommend for your
termination from your employment, and provided in Article II Section 4, known as UNION SECURITY,
in the Collective Bargaining agreement. " [9]
On the same day, the federation respondent company of the expulsion of the 30 union officers and demanded their separation
from employment to the Union Security Clause in their collective bargaining agreement. This demand was reiterated twice,
through letters dated February 21 and March 4, 1989, respectively, to respondent company.
Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to compel the
company to effect the immediate termination of the expelled union officers.
On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30 union officers from
employment, serving them identical copies of the termination letter reproduced below:
We received a demand letter dated November 21, 1988 from the United Lumber and General Workers
of the Philippines (ULGWP) demanding your dismissal from employment pursuant to Article II, Section
4 of the existing Collective Bargaining Agreement (CBA). In the said demand letter, ULGWP informed
us that as of November 21, 1988, you were expelled from the said federation "for committing acts of
disloyalty and / or acts inimical to the interest of ULGWP and violative to its Constitution and By-laws
particularly Article V, Section 6, 9, and 12, Article XIII, Section 8. "
In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for your
dismissal, pointing out that notwithstanding your expulsion from the federation, you have continued in
your employment with the company in violation of Sec. 1 and 4 of Article II of our CBA, and of existing
provisions of law.
In view thereof, we are left with no alternative but to comply with the provisions of the Union Security
Clause of our CBA. Accordingly, we hereby serve notice upon you that we are dismissing you from your
employment with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA effective
immediately. " [10]
On that same day, the expelled union officers assigned in the first shift were physically or physically brought out of the
company premises by the companys security guards. Likewise, those assigned to the second shift were not allowed to report
for work. This provoked some of the members of the local union to demonstrate their protest for the dismissal of the said
union officers. Some union members left their work posts and walked out of the company premises.
On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed with the NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as Case No. NCMB-
NCR-NS-03-216-89, alleging the following grounds for the strike:
(a) Discrimination
(b) Interference in union activities
(c) Mass dismissal of union officers and stewards
(d) Threats, coercion and intimidation
(e) Union busting
The following day, March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union members who cast their
votes, 2,086 members voted to declare a strike.
On March 10, 1989, the thirty (30) dismissed union officials filed an urgent petition, docketed as Case No. NCMB-NCR-NS-
03-216-89, with the Office of the Secretary of the Department of Labor and Employment praying for the suspension of the
effects of their termination from employment. However, the petition was dismissed by then Secretary Franklin Drilon on
April 11, 1989, the pertinent portion of which stated as follows:
"At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No
mass lay-off is evident as the terminations have been limited to those allegedly leading the secessionist
group leaving MSMG-ULGWP to form a union under the KMU xxx
xxx xxx xxx
WHEREFORE, finding non-sufficient jurisdiction to warrant the exercise of our extraordinary
authority under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby
DISMISSED for lack of merit.
SO ORDERED. " [11]
On March 13 and 14, 1989, a total of 78 union stewards were placed under preventive suspension by respondent
company. This prompted the union members to go back and forth in the official declaration of strike at around 3:30 in the
afternoon of March 14, 1989. The strike was attended with violence, force and intimidation on both sides resulting to
physical injuries to several employees, both striking and non-striking, and damage to company properties.
The employees who participated in the strike and allegedly figured in the violent incident were placed under preventive
suspension by respondent company. The company also sent return-to-work notices to the home addresses of the striking
employees thrice successively, on March 27, April 8 and April 31, 1989, respectively. However, respondent company
admitted that only 261 employees were eventually accepted back to work. Those who did not respond to the return-to-work
notice were sent termination letters dated May 17, 1989, reproduced below:
M. Greenfield Inc., (B)
53
 Km. 14, Merville Rd., Paraaque, MM
May 17, 1989
xxx
On March 14, 1989, without justifiable cause and without notice, you left your work at the prejudice of
the Companys operations. On March 27, April 11, and April 21, 1989, we felt you report to the
Company. Inspite of your receipt of said notices, we have not heard from you up to this date.
Accordingly, for your failure to report, it is construed that you have effectively abandoned your
employment and the Company is, therefore, constrained to dismiss you for said cause.
Very truly yours,
M. GREENFIELD, INC., (B)
By:
WENZEL STEPHEN LIGOT
Asst. HRD Manager " [12]
On August 7, 1989, the petitioners filed a complaint with the Arbitration Branch, National Capital Region, DOLE, Manila,
docketed as Case No. NCR-00-09-04199-89, charging private respondents of unfair labor practice which consists of union
busting, illegal dismissal, illegal suspension, interference in union activities, discrimination, threats, intimidation, coercion,
violence, and oppresion.
After the filing of the complaint, the lease contracts on the respondent company office and factory at Merville Subdivision,
Paraaque expired and were not renewed. Upon demand of the owners of the premises, the company was compelled to vacate
its office and factory.
Thereafter, the company transferred its administration and account / client servicing department at AFP-RSBS Industrial
Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for relocation of its factory and
manufacturing operations, the company was constrained to move the said departments to Tacloban, Leyte. Hence, on April
16, 1990, respondent company accordingly notified its employees of a temporary shutdown. in operations Employees who
were interested in relocating to Tacloban were advised to enlist on or before April 23, 1990.
The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was thereafter reassigned to
Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from acting on the case.
On December 15, 1992, finding the termination to be valid in compliance with the union security clause of the collective
bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint.
Petitioners then appealed to the NLRC. During his pendency, Commissioner Romeo Putong retired from the service, leaving
only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman Bartolome Carale in the First
Division. When Commissioner Veloso inhibited himself from the case, Commissioner Joaquin Tanodra of the Third Division
was temporarily designated to sit in the First Division for the proper disposition of the case.
The First Division affirmed the Labor Arbiters disposition. With the denial of their motion for reconsideration on January
28, 1994, petitioners elevated the case to this Court, attributing serious abuse of discretion to public respondent NLRC in:
I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY
AS VALID;
II. HOLDING THAT THE STRIKE STAGED BYTHE PETITIONERS AS ILLEGAL;
III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE
ABANDONED THEIR WORK AND HENCE, VALIDLY DISMISSED BY RESPONDENT
COMPANY; AND
IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS
GUILTY OF ACTS OF UNFAIR LABOR PRACTICE.
Notwithstanding the several issues raised by the petitioners and respondents in the voluminous pleadings presented before
the NLRC and this Court, they revolve around and proceed from the issue of whether or not respondent company was
justified in dismissing petitioner's employees merely upon the labor federations demand for the enforcement of the union
security clause embodied in their collective bargaining agreement.
Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be resolved.
Petitioners contend that the decision by the First Division of the NLRC is not valid because Commissioner Tanodra, who
is from the Third Division, did not have any lawful authority to sit, much less write the paper , on a case pending before the
First Division . It is claimed that a commissioner from one division of the NLRC can not be assigned or temporarily
designated for another division because each division is assigned to particular territorial jurisdiction. Thus, the decision did
not have any legal effect at all for being irregularly issued.
Petitioners argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the Chairman of the National
Labor Relations Commission provides that:
"The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a
judgment or resolution. Whenever the required membership in a division is not complete and the
concurrence of two (2) commissioners to arrive at a judgment or resolution can not be obtained, the
Chairman shall designate such number of additional Commissioners from the other divisions as may be
necessary. "
It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the three
commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and Commissioner Vicente
Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case because the counsel for the petitioners was
his former classmate in law school. The First Division was that left with only one commissioner. Since the law requires the
concurrence of two commisioners to arrive at a judgment or resolution, the Commission was constrained to temporarily
appoint a commissioner from another division to complete the First Division. There is nothing irregular at all in such a
temporary designation for the law empowers the Chairman to make temporary assignments whenever the required
concurrence is not met. The law does not say that a commissioner from the first division can not be temporarily assigned to
54
the second or third division to fill the gap or vice versa. The territorial divisions do not confer exclusive jurisdiction to each
division and are merely designed for administrative efficiency.
Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the petitioners against
respondent company which charges union busting, illegal dismissal, illegal suspension, interference in union activities,
discrimination, threats, intimidation, coercion, violence , and oppression actually proceeds from one main issue which is the
termination of several employees by respondent company upon the demand of the labor federation pursuant to the union
security clause embodied in their collective bargaining agreement.
Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and illegal manner because
it was undertaken by the respondent company without any prior administrative investigation; that, had respondent company
conducted prior independent investigation would have found that their expulsion from the union was unlawful similarly for
lack of prior administrative investigation; that the federation can not recommend the dismissal of the union officers because
it was not the main party to the collective bargaining agreement between the company and the union; That public
respondents acted with serious abuse of discretion when they declared petitioners dismissed as valid and the union strike as
illegal and in declaring that they were guilty of unfair labor practice.
Private respondents, on the other hand, maintain that the thirty dismissed employees who were former officers of the
federation have no cause of action against the company, the termination of their employment having been made upon the
demand of the federation pursuant to the union security clause of the CBA; The expelled officers of the local union were
accorded due process of law prior to their expulsion from their federation; that the strike conducted by the petitioners was
illegal for noncompliance with the requirements; That the employees who participated in the illegal strike and in the
commission of the violence were validly terminated from work; that petitioners were deemed to have abandoned their
employment when they did not respond to the three return to work notices sent to them; that petitioner labor union has no
legal personality to file and prosecute the case for and on behalf of the individual employees as the right to do so is personal
to the latter; and that, the officers of the respondent company can not be liable because they deserve corporate officers, they
acted within the scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and legally terminated
because of the dismissal was effected in compliance with the union security clause of the CBA which is the law between the
parties. And this was affimed by the Commission on appeal. Moreover, the Labor Arbiter stated that there is no lack of a
prior administrative investigation by respondent company, under the union security clause provision in the CBA, the
company can not look into the legality or illegality of the recommendation to dismiss by the union dismiss is ministerial on
the part of the company. [13]
This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied in the collective
bargaining agreement may be validly enforced and that dismissals pursuant to thereto may likewise be valid, this does not
include the fundamental requirement of due process. The reason behind the enforcement of union security clauses which is
the sanctity and inviolability of contracts [14] can not override ones right to due process.
In the case of Cario vs. National Labor Relations Commission, [15] this Court stated that while the company, under a
maintenance of membership provision of the collective bargaining agreement, is bound to dismiss any employee expelled by
the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company
acts in bad faith in dismissing a worker without giving him the benefit of a hearing.
"The power to dismiss is a normal prerogative of the employer." The employer is bound to exercise
caution in terminating the services of his employees especially when it is made upon the request of a
labor union pursuant to The Collective Bargaining Agreement, xxx.Dismissals must not be arbitrary
and capricious Due process must be observed in dismissing an employee because it affects not only his
position but also his means of livelihood. include the right to labor. "
In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly committing acts of
disloyalty and / or inimical to the interest of ULGWP and in violation of its Constitution and By-laws. Upon demand of the
federation, the company terminated the petitioners without conducting a separate and independent
investigation. Respondent company did not inquire into the cause of the expulsion and whether or not the federation had
sufficient grounds to effect the same. Relying upon the federations allegations, respondent company terminated petitioners
from employment when a separate inquiry could have been filed if the federation had acted arbitrarily and capriciously in
expelling the union officers.immediatelyeffective
As held in the aforecited case of Cario, "the right of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own union is not wiped away by a union
security clause or a union shop clause in a collective bargaining agreement An employee is entitled to be protected not only
from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation
of swift and arbitrary expulsion from membership and mere dismissal from his job. "
While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security
clause of the collective bargaining agreement on the recommendation by the union, this dismissal should not be done hastily
and summarily that the employees right to due process, self -organization and security of tenure. The enforcement of union
security clauses is authorized by law and is not characterized by arbitrariness, and always with due process. [16] Even on the
assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers
be accorded to separate hearing by respondent company.
In its decision, public respondent also stated that if complainants (herein petitioners) have any recourse in law, their right
of action is against the federation and not against the company or its officers, relying on the findings of the Labor Secretary
that the issue of expulsion of petitioner union officers by the federation is a purely intra-union matter.
Again, such a contention is untenable. While it is true that the issue of expulsion of the local union officers is between the
local union and the federation, hence, intra-union in character, the issue was later on without the benefit of a separate notice
and hearing. As a matter of fact, the records show that the termination was effective on the same day that the termination
was served on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. [17] , the Court held the company liable
for the payment of back-wages for having acted in bad faith in effecting the dismissal of the employees.
"xxx Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner
workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must
assume solidary liability, since it was apparently chosen to summarily dismiss the workers at the unions
instance secure in the unions contractual that the union would hold it free from any liability arising from
such dismissal. "
Thus, notwithstanding the fact that the dismissal was at the instance of the federation and that it was undertook to hold the
company free from any liability resulting from such a dismissal, the company may still be held liable if it was remiss in its
duty to accord the would-be dismissed employees their right to be heard on the matter.
Anent petitioners contention that the federation was not a main party to the collective bargaining agreement between the
company and the union, suffice it to say that the matter was already ruled upon in the Interpleader case filed by respondent
company. Med-Arbiter Anastacio Bactin thus ruled:
55
 After a careful examination of the facts and evidences presented by the parties, this Officer hereby
renders its decision as follows:
1.) It appears on record that in the Collective Bargaining Agreement (CBA) which took effect on July 1,
1986, the contracting parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga Manggagawa
SA Greenfield, Inc. . (B) (MSMG) / United Lumber and General Workers of the Philippines
(ULGWP). However, MSMG was not yet a registered labor organization at the time of the signing of
the CBA. Hence, the union referred to in the CBA is the ULGWP. " [18]
Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:
It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all the
regular rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the records).
It has been established also that the company and ULGWP signed a 3-year collective bargaining
agreement effective July 1, 1986 up to June 30, 1989. [19]
Although the issue of whether or not the federation had reasonable grounds to expel the petitioner union officers is properly
within the original and exclusive jurisdiction of the Bureau of Labor Relations, being an intra-union conflict, this Court
deems it justifiable that such a case be nonetheless ruled upon, as the Labor Arbiter did, for remand the same to the Bureau
of Labor Relations would be tolerably delay the case.
The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for committing acts of
disloyalty when it "undertook to disaffiliate from the federation by charging ULGWP with failure to provide any legal,
educational or organizational support to the local. Where they prohibit the federation from interfering in any internal and
external affairs of the local union. " [twenty]
It is well-settled that findings of the NLRC are entitled to great respect and are binding on this Court, but it is equally well-
settled that the Court will not uphold erroneous conclusions of the NLRC when the Court finds insufficient or insubstantial
evidence on record to support those factual findings. The same holds true when it is perceived as too much, is inferred or
inferred from the bare or incomplete facts appearing of record. [twenty-one]
In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by the local union was
part of its "plan to take over the respondent federation." This is purely conjecture and speculation on the part of public
respondent, totally unsupported by the evidence.
A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union, being a separate and
voluntary association, is free to serve the interests of all its members including the freedom to disaffiliate or declare its
autonomy from the federation to which it belongs when circumstances warrant, in accordance with the constitutional
guarantee of freedom of association [22]
The purpose of affiliation by a local union with a mother union or a federation
"xxx is to increase by collective action the bargaining power in respect of the terms and conditions of
labor, yet the locals remained the basic units of the association, free to serve their own and the common
interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and
also free to renounce the affiliation for mutual welfare under the terms laid down in the agreement which
brought it into existence. " [2. 3]
Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and such disaffiliation
can not be considered disloyalty. In the absence of specific provisions in the federations constitution prohibiting disaffiliation
or the declaration of autonomy of a local union, a local may dissociate with its parent union. [24]
The evidence on hand does not show that there is such a provision in ULGWPs constitution. Respondents reliance upon
Article V, Section 6, of the federations constitution is not right because said section, in fact, bolsters the petitioner unions
claim of its right to declare autonomy:
Section 6. The autonomy of a local union affiliated with ULGWP shall be respected as insofar as it
pertains to its internal affairs, except as provided elsewhere in this Constitution.
There is no disloyalty to speak of, neither is there any violation of the federations constitution because there is nothing in
the said constitution which specifically prohibits disaffiliation or declaration of autonomy. Here, there can be no valid
dismissal because Article II, Section 4 of the union security clause in the CBA limits the dismissal to only three (3) grounds,
to wit: failure to maintain membership in the union (1) for non-payment of union dues, (2) for resignation; and (3) for
violation of the unions Constitution and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989, the petitioners
declared that they were holding the positions of ULGWP, filled these vacancies through an election and filed a petition for
the registration of UWP as a national federation It should be pointed out, however, that these occurred after the federation
had already expelled the union officers. The expulsion was effective November 21, 1988. Therefore, the act of establishing a
different federation, completely separate from the federation which expelled them, is but a normal retaliatory reaction to
their expulsion.
With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike was illegal for the
following reasons: (1) it was based on an intra-union dispute which can not be the subject of a strike, the right to strike being
limited to cases of bargaining deadlocks and unfair labor practice (2) it was made in violation of the "no strike, no lock-out"
clause in the CBA, and (3) it was attended with violence, force and intimidation upon the persons of the company officials,
other employees reporting for work and third persons having legitimate business with the company, resulting to serious
physical injuries to several employees and damage to company property.
On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the intra-union conflict
between the federation and the local union, it bears reiterating that when respondent company dismissed the union officers,
the issue was transformed into a termination dispute and brought respondent company into the picture. Petitioners believed
in good faith that in dismissing them upon request by the federation, respondent company was guilty of unfair labor pratice
in that it violated the petitioners right to self-organization. The strike was staged to protest respondent companys act of
dismissing the union officers. Even if the allegations of unfair labor practice are subsequently found to be untrue, the
presumption of legality of the strike prevails. [25]
Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike no lockout provision
in the CBA. Again, such a ruling is erroneous. A strike, no lock out provision can only be invoked when the strike is economic
in nature, ie to force wage or other concessions from the employer which is not required by law to grant. [26] Such a provision
can not be used to assail the legality of a strike which is grounded on unfair labor practice, as was the honest belief of herein
petitioners. Again, whether or not there was indeed an unfair labor practice does not affect the strike.
On the allegation of violence committed in the course of the strike, it must be remembered that the Labor Arbiter and the
Commission found that "the parties agreed to that were violent incidents, resulting in injuries to both sides, the union and
management." [27] The evidence on record show that the violence can not be attributed to the striking employees alone for
56
the company itself employed hired men to pacify the strikers. With violence committed on both sides, the management and
the employees, such violence can not be ground for declaring the strike as illegal.
With respect to the dismissal of individual petitioners, the Labor Arbiter stated that they were refusal to heed respondents
recall to work notice is a clear indication that they were not longer interested in their employment and considered
abandonment. It is admitted that three return to work were sent by respondent company to the striking employees on March
27, April 11, and April 21, 1989 and that 261 employees who responded to the notice were admitted back to work.
However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the employee must have failed
to report for work or must have absent without valid or justifiable reason; and (2) that there must have been a clear intention
to sever the employer-employee relationship manifested by some overt acts. [28] Deliberate and unjustified refusal on the
part of the employee to go back to his work post amd summarize his employment must be established. Absence must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. [29] And
the burden of proof to show that there was unjustified refusal to go back to work rests on the employer.
In the present case, respondents failed to prove that there was a clear intention on the part of the striking employees to sever
their employer-employee relationship. Although admittedly the company sent three return to work notices to them, it has
not been substantially proven that these notices were actually sent and received by the employees. As a matter of fact, some
employees deny that they have received such notices. Others alleged that they were refused entry to the company by the
security guards and were advised to secure from ULGWP and to sign a waiver. Some employees who responded to the
notice were allegedly told to wait for further notice from respondent company as there was a lack of work.
Furthermore, this Court has ruled that an employee who took steps to protest his lay-off. [30] The filing of a complaint for
illegal dismissal is inconsistent with the allegation of abandonment. In the case under consideration, the petitioners did, in
fact, file a complaint when they were refused reinstatement by respondent company.
Anent public respondents finding that there was no unfair labor practice on the part of respondent company and federation
officers, the Court sustains the same. As previously discussed, union security clauses in collective bargaining agreements, if
freely and voluntarily entered into, are valid and binding. Corrolarily, dismissals pursuant to union security clauses are valid
and legal subject only to the requirement of due process, that is, notice and hearing prior to dismissal. Thus, the dismissal
of an employee by the company pursuant to labor unions demand in accordance with a union security agreement does not
constitute an unfair labor practice. [31]
However, the dismissal was invalidated in this case because of respondent companys failure to accord petitioners with due
process, that is, notice and hearing prior to their termination. Also, said dismissal was invalidated because of the reason
relied upon by respondent Federation was not valid. Nonetheless, the dismissal still does not constitute unfair work practice.
Lastly, the Court is of the opinion, and so holds, that respondent company officials can not be held personally liable for
damages on account of the employees dismissal because the corporation has a personality separate and distinct from its
officers who merely acted as its agents.
It has come to the attention of this Court that the 30-day prior notice requirement for the dismissal of employees has been
repeatedly violated and sanctioned for such violation enunciated in Wenphil Corporation. NLRC [32] has become ineffective
deterrent. Thus, the Court recently promulgated a decision to reinforce and make more effective the requirement of notice
and hearing, a procedure that must be observed before termination of employment can be legally effected.
In Ruben Serrano Vs. NLRC and Isetann Department Store (GR No. 117040, January 27, 2000), the Court ruled that an
employee who is dismissed, whether or not for just or authorized cause but without prior notice of his termination, is entitled
to full backwages from the time he was terminated until the decision in his case becomes final, when the dismissal was for
cause; and in case the dismissal was without just or valid cause, the backwages shall be computed from the time of his
dismissal until his current reinstatement. In the case at bar, where the requirement of notice and hearing was not complied
with, the aforecited doctrine laid down in the Serrano case applies.
WHEREFORE , the Petition is GRANTED; the decision of the National Labor Relations Commission in case No. NCR-
00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to immediately reinstate
the petitioners to their respective positions. Should reinstatement be not feasible, respondent company will pay separation
pay of one month salary for every year of service. Since petitioners were terminated without the requirement written at least
30 days prior to their termination, following the ruling in the case of Ruben Serrano vs. National Labor Relations Commission
and Isetann Department Store, the respondent company is hereby ordered to pay full backwages to petitioner-employees while
the Federation is also ordered to pay full backwages to petitioner-union officers who were dismissed upon their
instigation. Since the dismissal of petitioners was without cause, backwages shall be computed from the time the petitioner
employees and union officers were dismissed until their current reinstatement. Should reinstatement be not feasible, their
backwages shall be computed from the time petitioners were terminated until the finality of this decision. Costs against the
respondent company.
SO ORDERED.
Gonzaga-Reyes, J., concur.
Melo, J., (Chairman), in the result.
Vitug, and Panganiban, JJ., Reiterate separate opinion in
Serrano vs. NLRC, GR 117040 Jan. 27, 2000.
[ G.R. No. 118506, April 18, 1997 ]
NORMA MABEZA, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL
SUPREME, RESPONDENTS.
DECISION
KAPUNAN, J.:
This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated April
28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally enshrined rights of
the working class. Without the protection accorded by our laws and the tempering of courts, the natural and historical
inclination of capital to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the Hotel Supreme
57
in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with cashier, Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial leave of
minimum wage and other labor standard provisions of law.[1] The instrument provides:[2] absence. Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a complaint for
illegal dismissal before the Arbitration Branch of the National Labor Relations Commission - CAR Baguio City. In addition
JOINT AFFIDAVIT to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service incentive
leave pay, 13th month pay, night differential and other benefits. The complaint was docketed as NLRC Case No. RAB-CAR-
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA NONOG, 05-0198-91 and assigned to Labor Arbiter Felipe P. Pati.
NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos and residents of Baguio City,
under oath, depose and say: Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent Peter Ng
alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the management" [6] and
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay Ave., Baguio City; that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and
other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees.[7] Pointing to the
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant; Affidavit of May 7, 1991, the private respondent asserted that his employees actually have no problems with management.
In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal was filed, private
3. That we are all (8) employees in the hotel and assigned in each respective shifts; respondent raised a new ground, loss of confidence, which was supported by a criminal complaint for Qualified Theft he filed
before the prosecutor's office of the City of Baguio against petitioner on July 4, 1991.[8]
4. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and that we are treated well.
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of
5. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of informing the confidence. His disquisitions in support of his conclusion read as follows:
authorities concerned and to dispute the alleged report of the Labor Inspector of the Department of Labor and Employment
conducted on the said establishment on February 2, 1991. It appears from the evidence of respondent that complainant carted away or stole one (1) blanket, 1 piece bedsheet, 1 piece
thermos, 2 pieces towel (Exhibits '9', '9-A,' '9-B,' '9-C' and '10' pages 12-14 TSN, December 1, 1992).
IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City, Philippines.
In fact, this was the reason why respondent Peter Ng lodged a criminal complaint against complainant for qualified theft
(Sgd.) (Sgd.) (Sgd.) and perjury. The fiscal's office finding a prima facie evidence that complainant committed the crime of qualified theft issued
a resolution for its filing in court but dismissing the charge of perjury (Exhibit '4' for respondent and Exhibit 'B-7' for
SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY complainant). As a consequence, complainant was charged in court for the said crime (Exhibit '5' for respondent and Exhibit
'B-6' for the complainant).
(Sgd) (Sgd.) (Sgd.)
With these pieces of evidence, complainant committed serious misconduct against her employer which is one of the just and
MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA valid grounds for an employer to terminate an employee (Article 282 of the Labor Code as amended). [9]

(Sgd) (Sgd.)
On April 28, 1994, respondent NLRC promulgated its assailed Resolution[10] affirming the Labor Arbiter's decision. The
JONATHAN PICART JOSE DIZON resolution substantially incorporated the findings of the Labor Arbiter.[11] Unsatisfied, petitioner instituted the instant
special civil action for certiorari under Rule 65 of the Rules of Court on the following grounds:[12]
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines. 1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION
COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ITS
Asst. City Prosecutor FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN
AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY,
Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT;
affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of
the Department of Labor and Employment in Baguio City. 2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION
COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN
As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the Labor ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES
Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse to the private AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED
respondent.[3] BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS
AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS;
After she refused to proceed to the City Prosecutor's Office - on the same day the affidavit was submitted to the Cordillera
Regional Office of DOLE - petitioner avers that she was ordered by the hotel management to turn over the keys to her 3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION
living quarters and to remove her belongings from the hotel premises.[4] According to her, respondent strongly chided her COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN
for refusing to proceed to the City Prosecutor's Office to attest to the affidavit.[5] She thereafter reluctantly filed a leave of FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING
absence from her job which was denied by management. When she attempted to return to work on May 10, 1991, the hotel's UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT.
58
The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's principal To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why
claims and defenses and urges this Court to set aside the public respondent's assailed resolution. [13] he was employed in the first place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must
enjoy that trust and confidence in some measure if only because he is the one who opens the office in the morning and closes
We agree. it at night and in this sense is entrusted with the care or protection of the employer's property. The keys he holds are the
symbol of that trust and confidence.
It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause, the
failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement. [14] By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer, whose
property he is safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and protection.
In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to return to
work on May 8, 1991. Additionally, in order to strengthen his contention that there existed sufficient cause for the Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The
termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this with charges that employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's
petitioner had stolen a blanket, a bedsheet and two towels from the hotel.[15] Appended to his last complaint was a suit for words, 'with the duties of safekeeping and safeguarding company policies, management instructions, and company secrets
qualified theft filed with the Baguio City prosecutor's office. such as operation devices.' He is not privy to these confidential matters, which are shared only in the higher echelons of
management. It is the persons on such levels who, because they discharge these sensitive duties, may be considered holding
From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his claim positions of trust and confidence. The security guard does not belong in such category.[21]
that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her services More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would
under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two things: 1) lack of intention otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are
to work;[16] and 2) the presence of overt acts signifying the employee's intention not to work. [17] illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith."[22]
In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she learned that
the hotel management was displeased with her refusal to attest to the affidavit. The fact that she made this attempt clearly In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner long after
indicates not an intention to abandon but an intention to return to work after the period of her leave of absence, had it been the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of filing illegal
granted, shall have expired. dismissal charges against the private respondent would hardly warrant serious consideration of loss of confidence as a valid
ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the public respondent and has
Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances, mere absence observed that:
of one or two days would not be enough to sustain such a claim. The overt act (absence) ought to unerringly point to the
fact that the employee has nointention to return to work,[18] which is patently not the case here. In fact, several days after If petitioner had really committed the acts charged against her by private respondents (stealing supplies of respondent hotel),
she had been advised to take an informal leave, petitioner tried to resume working with the hotel, to no avail. It was only private respondents should have confronted her before dismissing her on that ground. Private respondents did not do so. In
after she had been repeatedly rebuffed that she filed a case for illegal dismissal. These acts militate against the private fact, private respondent Ng did not raise the matter when petitioner went to see him on May 9, 1991, and handed him her
respondent's claim that petitioner abandoned her job. As the Solicitor General in his manifestation observed: application for leave. It took private respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal
complaint against petitioner, in an obvious attempt to build a case against her.
Petitioner's absence on that day should not be construed as abandonment of her job. She did not report because the cashier
told her not to report anymore, and that private respondent Ng did not want to see her in the hotel premises. But two days The manipulations of private respondents should not be countenanced.[23]
later or on the 10th of May, after realizing that she had to clarify her employment status, she again reported for work. Clearly, the efforts to justify petitioner's dismissal - on top of the private respondent's scheme of inducing his employees to
However, she was prevented from working by private respondents.[19] sign an affidavit absolving him from possible violations of the Labor Code - taints with evident bad faith and deliberate
We now come to the second cause raised by private respondent to support his contention that petitioner was validly malice petitioner's summary termination from employment.
dismissed from her job.
Having said this, we turn to the important question of whether or not the dismissal by the private respondent of petitioner
Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating constitutes an unfair labor practice.
their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by
this Court, could readily reduce to barren form the words of the constitutional guarantee of security of tenure. Having this The answer in this case must inevitably be in the affirmative.
in mind, loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence
or to those situations where the employee is routinely charged with the care and custody of the employer's money or The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the
property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an
recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those instrument indicating that the employer observed labor standards provisions of law when he might have not, together with
who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice.
Evidently, an ordinary chambermaid who has to sign out for linen and other hotel property from the property custodian The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through
each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift concerted action.
would not fall under any of these two classes of employees for which loss of confidence, if ably supported by evidence, would
normally apply. Illustrating this distinction, this Court, in Marina Port Services, Inc. vs. NLRC,[20] has stated that: We agree with the Solicitor General's observation in his manifestation that "[t]his actuation... is analogous to the situation
envisaged in paragraph (f) of Article 248 of the Labor Code"[24]which distinctly makes it an unfair labor practice "to dismiss,
59
discharge or otherwise prejudice or discriminate against an employee for having given or being about to give relationship to three (3) years from the time the cause of action accrues.[32]
testimony"[25]under the Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved
not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and We depart from the settled rule that an employee who is unjustly dismissed from work normally should be reinstated without
conditions of employment. loss of seniority rights and other privileges. Owing to the strained relations between petitioner and private respondent,
allowing the former to return to her job would only subject her to possible harassment and future embarrassment. In the
For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the instant case, separation pay equivalent to one month's salary for every year of continuous service with the private respondent
hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of would be proper, starting with her job at the Belfront Hotel.
petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be
deprived of their means of livelihood, but also possibly, their personal liberty. In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision in Osmalik Bustamante, et al.
vs. National Labor Relations Commission,[33] petitioner is entitled to full backwages from the time of her illegal dismissal
This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably supported up to the date of promulgation of this decision without qualification or deduction.
by the evidence on record. However, where such conclusions are based on a misperception of facts or where they patently
fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going into the issue of petitioner's Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to be terminated from
money claims, we find one more salient reason in this case to set things right: the labor arbiter's evaluation of the money employment with two written notices before the same may be legally effected. The first is a written notice containing a
claims in this case incredibly ignores existing law and jurisprudence on the matter. Its blatant one-sidedness simply raises statement of the cause(s) for dismissal; the second is a notice informing the employee of the employer's decision to terminate
the suspicion that something more than the facts, the law and jurisprudence may have influenced the decision at the level of him stating the basis of the dismissal. During the process leading to the second notice, the employer must give the employee
the Arbiter. ample opportunity to be heard and defend himself, with the assistance of counsel if he so desires.

Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary benefits Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is noteworthy that the private
received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the respondent never even bothered to inform petitioner of the charges against her. Neither was petitioner given the opportunity
meals, lodging, electric consumption and water she received during the period in her computations.[26] Granting that meals to explain the loss of the articles. It was only almost two months after petitioner had filed a complaint for illegal dismissal,
and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer as an afterthought, that the loss was reported to the police and added as a supplemental answer to petitioner's complaint.
complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct Clearly, the dismissal of petitioner without the benefit of notice and hearing prior to her termination violated her
the value from the employee's wages. First, proof must be shown that such facilities are customarily furnished by the trade. constitutional right to due process. Under the circumstances, an award of One Thousand Pesos (P1,000.00) on top of
Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must payment of the deficiency in wages and benefits for the period aforestated would be proper.
be charged at fair and reasonable value.[27]
WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission dated April 24,
These requirements were not met in the instant case. Private respondent "failed to present any company policy or guideline 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits due the petitioner are hereby
to show that the meal and lodging . . . (are) part of the salary;"[28] he failed to provide proof of the employee's written summarized as follows:
authorization; and, he failed to show how he arrived at the valuations.[29] 1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's illegal dismissal;

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures furnished by 2) Service incentive leave pay; night differential pay and 13th month pay for the same period;
the private respondent's own accountant, without corroborative evidence. On the pretext that records prior to the July 16,
1990 earthquake were lost or destroyed, respondent failed to produce payroll records, receipts and other relevant documents, 3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private respondent
where he could have, as has been pointed out in the Solicitor General's manifestation, "secured certified copies thereof from starting with her job at the Belfront Hotel;
the nearest regional office of the Department of Labor, the SSS or the BIR." [30]
4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up to the date of
More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC. [34]
supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion
in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. [31] Considering, 5) P1.000.00.
therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their SO ORDERED.
ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel.
Padilla, Bellosillo and Vitug, JJ., concur.
It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the full wage Hermosisima, Jr., J., on leave.
applicable from May 13, 1988 up to the date of her illegal dismissal.

Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living allowance, night
differential pay, and 13th month pay for the periods alleged by the petitioner as the private respondent has never been able
to adduce proof that petitioner was paid the aforestated benefits.

However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are barred by G.R. No. 144315 July 17, 2006
prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of employer-employee

60
 PHILCOM EMPLOYEES UNION, petitioner,
vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for
review1to annul the Decision2 dated 31 July 2000 of the Court of Appeals in CA-G.R. SP No. 53989.
The Court of Appeals affirmed the assailed portions of the 2 October 1998 and 27 November 1998 Orders of the Secretary
of Labor and Employment in OS-AJ-0022-97.
The Facts
The facts, as summarized by the Court of Appeals, are as follows:
Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner Philcom Employees Union
(PEU or union, for brevity) and private respondent Philippine Global Communications, Inc. (Philcom, Inc.) on
June 30, 1997, the parties started negotiations for the renewal of their CBA in July 1997. While negotiations were
ongoing, PEU filed on October 21, 1997 with the National Conciliation and Mediation Board (NCMB) – National
Capital Region, a Notice of Strike, docketed as NCMB-NCR-NS No. 10-435-97, due to perceived unfair labor
practice committed by the company (Annex "1", Comment, p. 565, ibid.). In view of the filing of the Notice of
Strike, the company suspended negotiations on the CBA which moved the union to file on November 4, 1997
another Notice of Strike, docketed as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining deadlock
(Annex "2", Comment, p. 566, ibid.)
On November 11, 1997, at a conciliation conference held at the NCMB-NCR office, the parties agreed to
consolidate the two (2) Notices of Strike filed by the union and to maintain the status quo during the pendency of
the proceedings (Annex "3", Comment, p. 567, ibid.).
On November 17, 1997, however, while the union and the company officers and representatives were meeting, the
remaining union officers and members staged a strike at the company premises, barricading the entrances and
egresses thereof and setting up a stationary picket at the main entrance of the building. The following day, the
company immediately filed a petition for the Secretary of Labor and Employment to assume jurisdiction over the
labor dispute in accordance with Article 263(g) of the Labor Code.
On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued an Order assuming
jurisdiction over the dispute, enjoining any strike or lockout, whether threatened or actual, directing the parties
to cease and desist from committing any act that may exacerbate the situation, directing the striking workers to
return to work within twenty-four (24) hours from receipt of the Secretary's Order and for management to resume
normal operations, as well as accept the workers back under the same terms and conditions prior to the strike. The
parties were likewise required to submit their respective position papers and evidence within ten (10) days from
receipt of said order (Annex "4", Comment, pp. 610-611, ibid.). On November 28, 1997, a second order was issued
reiterating the previous directive to all striking employees to return to work immediately.
On November 27, 1997, the union filed a Motion for Reconsideration assailing, among others, the authority of
then Acting Secretary Trajano to assume jurisdiction over the labor dispute. Said motion was denied in an Order
dated January 7, 1998.
As directed, the parties submitted their respective position papers. In its position paper, the union raised the issue
of the alleged unfair labor practice of the company hereunder enumerated as follows:
"(a) PABX transfer and contractualization of PABX service and position;
"(b) Massive contractualization;
"(c) Flexible labor and additional work/function;
"(d) Disallowance of union leave intended for union seminar;
"(e) Misimplementation and/or non-implementation of employees' benefits like shoe allowance,
rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle
award and full-time physician;
"(f) Non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time
and staff meetings;
"(g) Economic inducement by promotion during CBA negotiation;
"(h) Disinformation scheme, surveillance and interference with union affairs;
"(i) Issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies; and
"(j) Inadequate transportation allowance, water and facilities."
(Annex A, Petition; pp. 110-182, ibid.)
The company, on the other hand, raised in its position paper the sole issue of the illegality of the strike staged by
the union (Annex B, Petition; pp. 302-320, ibid.).
On the premise that public respondent Labor Secretary cannot rule on the issue of the strike since there was no
petition to declare the same illegal, petitioner union filed on March 4, 1998 a Manifestation/Motion to Strike Out
Portions of & Attachments in Philcom's Position Paper for being irrelevant, immaterial and impertinent to the
issues assumed for resolution (Annex C, Petition; pp. 330-333, ibid.).
In opposition to PEU's Manifestation/Motion, the company argued that it was precisely due to the strike suddenly
staged by the union on November 17, 1997 that the dispute was assumed by the Labor Secretary. Hence, the case
would necessarily include the issue of the legality of the strike (Opposition to PEU'S Motion to Strike Out; Annex
F, Petition; pp. 389-393, ibid.).3
61
On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first assailed order. The pertinent parts
of the Order read:
Going now to the first issue at hand, a reading of the complaints charged by the Union as unfair labor practices
would reveal that these are not so within the legal connotation of Article 248 of the Labor Code. On the contrary,
these complaints are actually mere grievances which should have been processed through the grievance machinery
or voluntary arbitration outlined under the CBA. The issues of flexible labor and additional functions,
misimplementation or non-implementation of employee benefits, non-payment of overtime and other monetary
claims and inadequate transportation allowance, are all a matter of implementation or interpretation of the
economic provisions of the CBA subject to the grievance procedure.
Neither do these complaints amount to gross violations which, thus, may be treated as unfair labor practices
outside of the coverage of Article 261. The Union failed to convincingly show that there is flagrant and/or
malicious refusal by the Company to comply with the economic provisions stipulated in the CBA.
With respect to the charges of contractualization and economic inducement, this Office is convinced that the acts
of said company qualify as a valid exercise of management prerogative. The act of the Company in contracting out
work or certain services being performed by Union members should not be seen as an unfair labor practice act per
se. First, the charge of massive contractualization has not been substantiated while the contractualization of the
position of PABX operator is an isolated instance. Secondly, in the latter case, there was no proof that such
contracting out interfered with, restrained or coerced the employees in the exercise of their right to self-
organization. Thus, it is not unfair labor practice to contract out work for reason of reduction of labor cost through
the acquisition of automatic machines.
Likewise, the promotion of certain employees, who are incidentally members of the Union, to managerial positions
is a prerogative of management. A promotion which is manifestly beneficial to an employee should not give rise
to a gratuitous speculation that such a promotion was made simply to deprive the union of the membership of the
promoted employee (Bulletin Publishing Co. v. Sanchez, et. al., G.R. No. 74425, October 7, 1986).
There remains the issue on bargaining deadlock. The Company has denied the existence of any impasse in its CBA
negotiations with the Union and instead maintains that it has been negotiating with the latter in good faith until
the strike was initiated. The Union, on the other hand, contends otherwise and further prays that the remaining
CBA proposals of the Union be declared reasonable and equitable and thus be ordered incorporated in the new
CBA to be executed.
As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the parties during the CBA
negotiations even before these were suspended. Prior to this Office's assumption over the case, the Company
furnished the Union its improved CBA counter-proposal on the matter of promotional and wage increases which
however was rejected by the Union as divisive. Even as the Union has submitted its remaining CBA proposals for
resolution, the Company remains silent on the matter. In the absence of any basis, other than the Union's position
paper, on which this Office may make its determination of the reasonableness and equitableness of these remaining
CBA proposals, this Office finds it proper to defer deciding on the matter and first allow the Company to submit
its position thereon.
We now come to the question of whether or not the strike staged by the Union on November 17, 1997 is illegal.
The Company claims it is, having been held on grounds which are non-strikeable, during the pendency of
preventive mediation proceedings in the NCMB, after this Office has assumed jurisdiction over the dispute, and
with the strikers committing prohibited and illegal acts. The Company further prays for the termination of some
20 Union officers who were positively identified to have initiated the alleged illegal strike. The Union, on the other
hand, refuses to submit this issue for resolution.
Considering the precipitous nature of the sanctions sought by the Company, i.e., declaration of illegality of the
strike and the corresponding termination of the errant Union officers, this Office deems it wise to defer the
summary resolution of the same until both parties have been afforded due process. The non-compliance of the
strikers with the return-to-work orders, while it may warrant dismissal, is not by itself conclusive to hold the
strikers liable. Moreover, the Union's position on the alleged commission of illegal acts by the strikers during the
strike is still to be heard. Only after a full-blown hearing may the respective liabilities of Union officers and
members be determined. The case of Telefunken Semiconductors Employees Union-FFW v. Secretary of Labor
and Employment and Temic Telefunken Micro-Electronics (Phils.), Inc. (G.R. No. 122743 and 127215, December
12, 1997) is instructive on this point:
It may be true that the workers struck after the Secretary of Labor and Employment had assumed
jurisdiction over the case and that they may have failed to immediately return to work even after the
issuance of a return-to-work order, making their continued strike illegal. For, a return-to-work order is
immediately effective and executory notwithstanding the filing of a motion for reconsideration. But, the
liability of each of the union officers and the workers, if any, has yet to be determined. xxx xxx xxx.4
The dispositive portion of the Order reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
The Union's Manifestation/Motion to Implead Philcom Corporation is hereby granted. Let summons be issued to
respondent Philcom Corporation to appear before any hearing that may hereafter be scheduled and to submit its
position paper as may be required.
The Union's Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position Paper is
hereby denied for lack of merit.
The Union's charges of unfair labor practice against the Company are hereby dismissed.
Pending resolution of the issues of illegal strike and bargaining deadlock which are yet to be heard, all the striking
workers are directed to return to work within twenty-four (24) hours from receipt of this Order and Philcom
and/or Philcom Corporation are hereby directed to unconditionally accept back to work all striking Union officers
and members under the same terms and conditions prior to the strike. The parties are directed to cease and desist
from committing any acts that may aggravate the situation.
Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is hereby designated as the Hearing
Officer to hear and receive evidence on all matters and issues arising from the present labor dispute and, thereafter,
to submit a report/recommendation within twenty (20) days from the termination of the proceedings.
The parties are further directed to file their respective position papers with Atty. Lita V. Aglibut within ten (10)
days from receipt of this Order.
SO ORDERED.5
62
Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for reconsideration of the Order
impleading it as party-litigant in the present case and directing it to accept back to work unconditionally all the officers and
members of the union who participated in the strike.6 Philcom also filed a Motion to Certify Labor Dispute to the National
Labor Relations Commission for Compulsory Arbitration.7
For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration. PEU asked the Secretary to
"partially reconsider" the 2 October 1998 Order insofar as it dismissed the unfair labor practices charges against Philcom
and included the illegal strike issue in the labor dispute.8
The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed Order of 27 November 1998. The
pertinent parts of the Order read:
The question of whether or not Philcom Corporation should be impleaded has been properly disposed of in the
assailed Order. We reiterate that neither the Company herein nor its predecessor was able to convincingly
establish that each is a separate entity in the absence of any proof that there was indeed an actual closure and
cessation of the operations of the predecessor-company. We would have accommodated the Company for a hearing
on the matter had it been willing and prepared to submit evidence to controvert the finding that there was a mere
merger. As it now stands, nothing on record would prove that the two (2) companies are separate and distinct
from each other.
Having established that what took place was a mere merger, we correspondingly conclude that the employer-
employee relations between the Company and the Union officers and members was never severed. And in merger,
the employees of the merged companies or entities are deemed absorbed by the new company (Filipinas Port
Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991). Considering that the Company failed miserably
to adduce any evidence to provide a basis for a contrary ruling, allegations to the effect that employer-employee
relations and positions previously occupied by the workers no longer exist remain just that — mere allegations.
Consequently, the Company cannot now exempt itself from compliance with the Order. Neither can it successfully
argue that the employees were validly dismissed. As held in Telefunken Semiconductor Employees Union-FFW
v. Secretary of Labor and Employment (G.R. Nos. 122743 and 122715, December 12, 1997), to exclude the workers
without first ascertaining the extent of their individual participation in the strike or non-compliance with the
return-to-work orders will be tantamount to dismissal without due process of law.
With respect to the unfair labor practice charges against the Company, we have carefully reviewed the records
and found no reason to depart from the findings previously rendered. The issues now being raised by the Union
are the same issues discussed and passed upon in our earlier Order.
Finally, it is our determination that the issue of the legality of the strike is well within the jurisdiction of this
Office. The same has been properly submitted and assumed jurisdiction by the Office for resolution.9
The dispositive portion of the Order reads:
WHEREFORE, there being no merit in the remaining Motions for Reconsideration filed by both parties, the same
are hereby DENIED. Our 2 October 1998 Order STANDS. To expedite the resolution of the Motion to Certify
Labor Dispute to the NLRC for Compulsory Arbitration, Philcom Employees Union is hereby directed to submit
its Opposition thereto within ten (10) days from receipt of the copy of this Order.
SO ORDERED.10
PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court assailing the
Secretary's Orders of 2 October 1998 and 27 November 1998. This Court, in accordance with its Decision of 10 March 1999
in G.R. No. 123426 entitled National Federation of Labor (NFL) vs. Hon. Bienvenido E. Laguesma, Undersecretary of the
Department of Labor and Employment, and Alliance of Nationalist Genuine Labor Organization, Kilusang Mayo Uno (ANGLO-
KMU),11 referred the case to the Court of Appeals.12
The Ruling of the Court of Appeals
On 31 July 2000, the Court of Appeals rendered judgment as follows:
WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed portions of the
Orders of the Secretary of Labor and Employment dated October 2, 1998 and November 27, 1998 are AFFIRMED.
SO ORDERED.13
The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take cognizance of an issue, even only
incidental to the labor dispute, provided the issue must be involved in the labor dispute itself or otherwise submitted to him
for resolution.
The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor dispute upon Philcom's petition as
a consequence of the strike that PEU had declared and not because of the notices of strike that PEU filed with the National
Conciliation and Mediation Board (NCMB).
The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction over the labor dispute was the
staging of the strike. Consequently, any issue regarding the strike is not merely incidental to the labor dispute between PEU
and Philcom, but also part of the labor dispute itself. Thus, the Court of Appeals held that it was proper for the Secretary to
take cognizance of the issue on the legality of the strike.
The Court of Appeals also ruled that for an employee to claim an unfair labor practice by the employer, the employee must
show that the act charged as unfair labor practice falls under Article 248 of the Labor Code. The Court of Appeals held that
the acts enumerated in Article 248 relate to the workers' right to self-organization. The Court of Appeals stated that if the
act complained of has nothing to do with the acts enumerated in Article 248, there is no unfair labor practice.
The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor practices, were not in any way
related to the workers' right to self-organization under Article 248 of the Labor Code. The Court of Appeals held that PEU's
complaint constitutes an enumeration of mere grievances which should have been threshed out through the grievance
machinery or voluntary arbitration outlined in the Collective Bargaining Agreement (CBA).
The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the provisions of the CBA, still those
acts do not constitute unfair labor practices under Article 248 of the Labor Code. The Court of Appeals held that PEU failed
to show that those violations were gross or that there was flagrant or malicious refusal on the part of Philcom to comply
with the economic provisions of the CBA.
The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC, 14 violations of CBAs will no longer be
deemed unfair labor practices, except those gross in character. Violations of CBAs, except those gross in character, are mere
grievances resolvable through the appropriate grievance machinery or voluntary arbitration as provided in the CBAs.
63
Hence, this petition.
The Issues
In assailing the Decision of the Court of Appeals, petitioner contends that:
1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions of the Supreme Court when it
affirmed the order/resolution of the Secretary of Labor denying the Union's Manifestation/Motion to Strike Out
Portions of & Attachments in Philcom's Position Paper and including the issue of illegal strike notwithstanding
the absence of any petition to declare the strike illegal.
2. The Honorable Court of Appeals has decided a question of substance in a way not in accord with law and
jurisprudence when it affirmed the order/resolution of the Secretary of Labor dismissing the Union's charges of
unfair labor practices.
3. The Honorable Court of Appeals has departed from the edict of applicable law and jurisprudence when it failed
to issue such order mandating/directing the issuance of a writ of execution directing the Company to
unconditionally accept back to work the Union officers and members under the same terms and conditions prior
to the strike and as well as to pay their salaries/backwages and the monetary equivalent of their other benefits
from October 6, 1998 to date.15
The Ruling of the Court
The petition must fail.
PEU contends that the Secretary should not have taken cognizance of the issue on the alleged illegal strike because it was
not properly submitted to the Secretary for resolution. PEU asserts that after Philcom submitted its position paper where
it raised the issue of the legality of the strike, PEU immediately opposed the same by filing its Manifestation/Motion to Strike
Out Portions of and Attachments in Philcom's Position Paper. PEU asserts that it stated in its Manifestation/Motion that certain
portions of Philcom's position paper and some of its attachments were "irrelevant, immaterial and impertinent to the issues
assumed for resolution." Thus, PEU asserts that the Court of Appeals should not have affirmed the Secretary's order denying
PEU's Manifestation/Motion.
PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's assumption of jurisdiction over the
labor dispute was based on the two notices of strike that PEU filed with the NCMB. PEU asserts that only the issues on
unfair labor practice and bargaining deadlock should be resolved in the present case.
PEU insists that to include the issue on the legality of the strike despite its opposition would convert the case into a petition
to declare the strike illegal.
PEU's contentions are untenable.
The Secretary properly took cognizance of the issue on the legality of the strike. As the Court of Appeals correctly pointed
out, since the very reason of the Secretary's assumption of jurisdiction was PEU's declaration of the strike, any issue
regarding the strike is not merely incidental to, but is essentially involved in, the labor dispute itself.
Article 263(g) of the Labor Code provides:
When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified
in the assumption or certification order. If one has already taken place at the time of assumption or certification,
all striking or locked out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout.
The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies
to ensure the compliance with this provision as well as with such orders as he may issue to enforce the same.
x x x x.
The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as an exercise of the
police power of the State, with the aim of promoting public good.16 When the Secretary exercises these powers, he is granted
"great breadth of discretion" in order to find a solution to a labor dispute. The most obvious of these powers is the
automatic enjoining of an impending strike or lockout or its lifting if one has already taken place.17
In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry indispensable to the national
interest. As noted by the Secretary.
[T]he Company has been a vital part of the telecommunications industry for 73 years. It is particularly noted for
its expertise and dominance in the area of international telecommunications. Thus, it performs a vital role in
providing critical services indispensable to the national interest. It is for this very reason that this Office strongly
opines that any concerted action, particularly a prolonged work stoppage is fraught with dire consequences. Surely,
the on-going strike will adversely affect not only the livelihood of workers and their dependents, but also the
company's suppliers and dealers, both in the public and private sectors who depend on the company's facilities in
the day-to-day operations of their businesses and commercial transactions. The operational viability of the
company is likewise adversely affected, especially its expansion program for which it has incurred debts in the
approximate amount of P2 Billion. Any prolonged work stoppage will also bring about substantial losses in terms
of lost tax revenue for the government and would surely pose a serious set back in the company's modernization
program.
At this critical time when government is working to sustain the economic gains already achieved, it is the
paramount concern of this Office to avert any unnecessary work stoppage and, if one has already occurred, to
minimize its deleterious effect on the workers, the company, the industry and national economy as a whole. 18
It is of no moment that PEU never acquiesced to the submission for resolution of the issue on the legality of the strike. PEU
cannot prevent resolution of the legality of the strike by merely refusing to submit the issue for resolution. It is also
immaterial that this issue, as PEU asserts, was not properly submitted for resolution of the Secretary.
The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to national interest includes and extends to all questions and controversies arising from such
labor dispute. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose
of the dispute.19
Besides, it was upon Philcom's petition that the Secretary immediately assumed jurisdiction over the labor dispute on 19
November 1997.20 If petitioner's notices of strike filed on 21 October and 4 November 1997 were what prompted the
assumption of jurisdiction, the Secretary would have issued the assumption order as early as those dates.
64
Moreover, after an examination of the position paper 21 Philcom submitted to the Secretary, we see no reason to strike out
those portions which PEU seek to expunge from the records. A careful study of all the facts alleged, issues raised, and
arguments presented in the position paper leads us to hold that the portions PEU seek to expunge are necessary in the
resolution of the present case.
On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-22 inclusive22 which deal with
the supposed consolidation of Philippine Global Communications, Inc. and Philcom Corporation, we find the other annexes
relevant and material in the resolution of the issues that have emerged in this case.
PEU also claims that Philcom has committed several unfair labor practices. PEU asserts that there are "factual and
evidentiary bases" for the charge of unfair labor practices against Philcom.
On unfair labor practices of employers, Article 248 of the Labor Code provides:
Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair
labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(b) To require as a condition of employment that a person or an employee shall not join a labor organization or
shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when such will interfere with, restrain
or coerce employees in the exercise of their rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization. x x x
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being
about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the settlement of any issue
in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the workers'
right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not
unfair labor practices.23 The only exception is Article 248(f), which in any case is not one of the acts specified in PEU's
charge of unfair labor practice.
A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not fall under any of the
prohibited acts defined and enumerated in Article 248 of the Labor Code. The issues of misimplementation or non-
implementation of employee benefits, non-payment of overtime and other monetary claims, inadequate transportation
allowance, water, and other facilities, are all a matter of implementation or interpretation of the economic provisions of the
CBA between Philcom and PEU subject to the grievance procedure.
We find it pertinent to quote certain portions of the assailed Decision, thus —
A reading of private respondent's justification for the acts complained of would reveal that they were actually
legitimate reasons and not in anyway related to union busting. Hence, as to compelling employees to render
flexible labor and additional work without additional compensation, it is the company's explanation that the
employees themselves voluntarily took on work pertaining to other assignments but closely related to their job
description when there was slack in the business which caused them to be idle. This was the case of the
International Telephone Operators who tried telemarketing when they found themselves with so much free time
due to the slowdown in the demand for international line services. With respect to the Senior Combination
Technician at the Cebu branch who was allegedly made to do all around work, the same happened only once when
the lineman was absent and the lineman's duty was his ultimate concern. Moreover, the new assignment of the
technicians at CTSS who were promoted to QCE were based on the job description of QCE, while those of the
other technicians were merely temporary due to the promotion of several technicians to QCE (pars. 9-12, Philcom's
Reply to PEU's Position Paper; Annex "E", Petition; pp. 350-351, ibid.).
On the alleged misimplementation and/or non-implementation of employees' benefits, such as shoe allowance,
rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle award and
full-time physician, the company gave the following explanation which this Court finds plausible, to wit:
16. The employees at CTSS were given One Thousand Pesos (P1,000.00) cash or its equivalent in
purchase orders because it was their own demand that they be given the option to buy the pair of leather
boots they want. For the Cebu branch, the employees themselves failed to include these benefits in the
list of their demands during the preparation of the budget for the year 1997 despite the instruction given
to them by the branch manager. According to the employees, they were not aware that they were entitled
to these benefits. They thought that because they have been provided with two vans to get to their
respective assignments, these benefits are available only to collectors, messengers and technicians in
motorcycles.
17. The P450.00 monthly allowance was provided by the CBA to be given to counter clerks. However,
the position of counter clerks had been abolished in accordance with the reorganization plan undertaken
by the company in April 1995, with the full knowledge of the Union membership. As a result of the
abolition of the position of counter clerks, there was no more reason for granting the subject allowance.
18. The company more than satisfied the provision in the CBA to engage the services of a physician and
provided adequate medical services. Aside from a part time physician who reports for duty everyday, the
company has secured the services of Prolab Diagnostics, which has complete medical facilities and
personnel, to serve the medical needs of the employees. x x x
19. The Union demands that a full-time physician to be assigned at the Head Office. This practice, is not
provided in the CBA and, moreover is too costly to maintain. The medical services offered by Prolab
[D]iagnostics are even better and more comprehensive than any full time physician can give. It places
at the employees' disposal numerous specialists in various fields of medicine. It is beyond understanding
65
 why the Union would insist on having a full-time physician when they could avail of better services from
Prolab Diagnostics.
(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)
On the issue of non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time
and staff meeting allowance, suffice it to state that there is nothing on record to prove the same. Petitioner did not
present evidence substantial enough to support its claim.
As to the alleged inadequate transportation allowance and facilities, the company posits that:
30. The transportation allowances given to the Dasmarinas and Pinugay employees are more than
adequate to defray their daily transportation cost. Hence, there is absolutely no justification for an
increase in the said allowance. In fact, said employees at Dasmarinas and Pinugay, who are only residing
in areas near their place of work, are more privileged as they receive transportation expenses while the
rest of the company workers do not.
31. As to the demand for clean drinking water, the company has installed sufficient and potable water
inside the Head Office even before the strike was staged by the Union. Any person who visits the Makati
Head Office can attest to this fact.
(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)
Anent the allegation of PABX transfer and contractualization of PABX service and position, these were done in
anticipation of the company to switch to an automatic PABX machine which requires no operator. This cannot be
treated as ULP since management is at liberty, absent any malice on its part, to abolish positions which it deems
no longer necessary (Arrieta vs. National Labor Relations Commission, 279 SCRA 326, 332). Besides, at the time
the company hired a temporary employee to man the machine during daytime, the subject position was vacant
while the assumption of the function by the company guard during nighttime was only for a brief period.
With respect to the perceived massive contractualization of the company, said charge cannot be considered as ULP
since the hiring of contractual workers did not threaten the security of tenure of regular employees or union
members. That only 160 employees out of 400 employees in the company's payroll were considered rank and file
does not of itself indicate unfair labor practice since this is but a company prerogative in connection with its
business concerns.
Likewise, the offer or promotions to a few union members is neither unlawful nor an economic inducement. These
offers were made in accordance with the legitimate need of the company for the services of these employees to fill
positions left vacant by either retirement or resignation of other employees. Besides, a promotion is part of the
career growth of employees found competent in their work. Thus, in Bulletin Publishing Corporation vs. Sanchez (144
SCRA 628, 641), the Supreme Court held that "(T)he promotion of employees to managerial or executive positions
rests upon the discretion of management. Managerial positions are offices which can only be held by persons who
have the trust of the corporation and its officers. It is the prerogative of management to promote any individual
working within the company to a higher position. It should not be inhibited or prevented from doing so. A
promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation that such
a promotion was made simply to deprive the union of the membership of the promoted employee, who after all
appears to have accepted his promotion."
That the promotions were made near or around the time when CBA negotiations were about to be held does not
make the company's action an unfair labor practice. As explained by the company, these promotions were based
on the availability of the position and the qualification of the employees promoted (p. 6, Annex "4", Philcom's
Reply to PEU's Position Paper; p. 380, ibid.)
On the union's charge that management disallowed leave of union officers and members to attend union seminar,
this is belied by the evidence submitted by the union itself. In a letter to PEU's President, the company granted
the leave of several union officers and members to attend a seminar notwithstanding that its request to be given
more details about the affair was left unheeded by the union (Annex "Y", PEU's Position Paper; p. 222, ibid.).
Those who were denied leave were urgently needed for the operation of the company.
On the ULP issue of disinformation scheme, surveillance and interference with union affairs, these are mere
allegations unsupported by facts. The charge of "black propaganda" allegedly committed by the company when it
supposedly posted two (2) letters addressed to the Union President is totally baseless. Petitioner presents no proof
that it was the company which was behind the incident. On the purported disallowance of union members to
observe the July 27, 1997 CBA meeting, the company explained that it only allowed one (1) employee from ITTO,
instead of two (2), as it would adversely affect the operation of the group. It also took into consideration the fact
that ITTO members represent only 20% of the union. Other union members from other departments of the
company should have equal representation (Annex "L", Position Paper for the Union; pp. 205-206, ibid.). As to the
alleged surveillance of the company guards during a union seminar, We find the idea of sending guards to spy on
a mere union seminar quite preposterous. It is thus not likely for the company which can gain nothing from it to
waste its resources in such a scheme.
On the issuance of memorandum/notice to employees without giving copy to union, change in work schedule at
Traffic Records Section and ITTO policies, the company has sufficiently rebutted the same, thus:
27. The Union also whines about the failure of the company to furnish copies of memoranda or notices
sent to employees and change of work schedules at the Traffic Records Section and ITTO policies. The
CBA, however, does not obligate the Company to give the Union a copy of each and every memorandum
or notice sent to employees. This would be unreasonable and impractical. Neither did the Union demand
that they be furnished copies of the same. This is clearly a non-issue as copies of all memoranda or notices
issued by management are readily available upon request by any employee or the Union.
28. Contrary to the allegations of the Union, the rationale and mechanics for the abolishment of the
midnight schedule at the Traffic Record Services had been thoroughly and adequately discussed with
the Union's President, Robert Benosa, and the staff of Traffic Record Services in the meeting held on
May 9, 1997. The midnight services were abolished for purely economic reasons. The company realized
that the midnight work can be handled in the morning without hampering normal operations. At the
same time, the company will be able to save on cost. For this objective, the employees concerned agreed
to create a manning and shifting schedule starting at 6:00 a.m. up to 10:00 p.m., with each employee
rendering only eight hours of work every day without violating any provision of the labor laws or the
CBA.24
The Court has always respected a company's exercise of its prerogative to devise means to improve its operations. Thus, we
have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, supervision and transfer of employees, working methods, time, place and manner of
work.25
66
This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right to
prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable operation
of their business.26
Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no showing that the same was a
flagrant or malicious refusal to comply with its economic provisions. The law mandates that such violations should not be
treated as unfair labor practices.27
PEU also asserts that the Court of Appeals should have issued an order directing the issuance of a writ of execution ordering
Philcom to accept back to work unconditionally the striking union officers and members under the same terms and conditions
prevailing before the strike. PEU asserts that the union officers and members should be paid their salaries or backwages and
monetary equivalent of other benefits beginning 6 October 1998 when PEU received a copy of the Secretary's 2 October
1998 return-to-work order.
PEU claims that even if the "issue of illegal strike can be included in the assailed orders and that the union officers and
members have been terminated as a result of the alleged illegal strike, still, the Secretary has to rule on the illegality of the
strike and the liability of each striker." PEU asserts that the union officers and members should first be accepted back to
work because a return-to-work order is immediately executory.28
We rule on the legality of the strike if only to put an end to this protracted labor dispute. The facts necessary to resolve the
legality of the strike are not in dispute.
The strike and the strike activities that PEU had undertaken were patently illegal for the following reasons:
1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD 823), as amended by Presidential
Decree No. 849, from strikes and lockouts. PD 823, as amended, provides:
Sec. 1. It is the policy of the State to encourage free trade unionism and free collective bargaining within the
framework of compulsory and voluntary arbitration. Therefore, all forms of strikes, picketings and lockouts are
hereby strictly prohibited in vital industries, such as in public utilities, including transportation
and communications, x x x. (Emphasis supplied)
Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:
For the guidance of workers and employers, some of whom have been led into filing notices of strikes and lockouts
even in vital industries, you are hereby instructed to consider the following as vital industries and companies or
firms under PD 823 as amended:
1. Public Utilities:
xxxx
B. Communications:
1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable
companies or firms; (Emphasis supplied)
xxxx
It is therefore clear that the striking employees violated the no-strike policy of the State in regard to vital industries.
2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the return-to-work orders
dated 19 November and 28 November 1997, the striking employees failed to return to work and continued with
their strike.
Regardless of their motives, or the validity of their claims, the striking employees should have ceased or desisted from all
acts that would undermine the authority given the Secretary under Article 263(g) of the Labor Code. They could not defy
the return-to-work orders by citing Philcom's alleged unfair labor practices to justify such defiance.29
PEU could not have validly anchored its defiance to the return-to-work orders on the motion for reconsideration that it had
filed on the assumption of jurisdiction order. A return-to-work order is immediately effective and executory despite
the filing of a motion for reconsideration. It must be strictly complied with even during the pendency of any petition
questioning its validity.30
The records show that on 22 November 1997, Philcom published in the Philippine Daily Inquirer a notice to striking
employees to return to work.31 These employees did not report back to work but continued their mass action. In fact, they
lifted their picket lines only on 22 December 1997.32 Philcom formally notified twice these employees to explain in writing
why they should not be dismissed for defying the return-to-work order.33 Philcom held administrative hearings on these
disciplinary cases.34 Thereafter, Philcom dismissed these employees for abandonment of work in defiance of the return-to-
work order.35
A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. While the
workers may choose not to obey, they do so at the risk of severing their relationship with their employer. 36
The following provision of the Labor Code governs the effects of defying a return-to-work order:
ART. 264. Prohibited activities. ─ (a) x x x x
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Ministeror
after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of
cases involving the same grounds for the strike or lockout x x x x
Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike, shall not constitute sufficient ground for
termination of his employment, even if a replacement had been hired by the employer during such lawful strike.
(Emphasis supplied)
A strike undertaken despite the Secretary's issuance of an assumption or certification order becomes a prohibited activity,
and thus, illegal, under Article 264(a) of the Labor Code. The union officers who knowingly participate in the illegal strike
are deemed to have lost their employment status. The union members, including union officers, who commit specific illegal
acts or who knowingly defy a return-to-work order are also deemed to have lost their employment status.37 Otherwise, the
workers will simply refuse to return to their work and cause a standstill in the company operations while retaining the
positions they refuse to discharge and preventing management to fill up their positions. 38
67
Hence, the failure of PEU's officers and members to comply immediately with the return-to-work orders dated 19 November
and 28 November 1997 cannot be condoned. Defiance of the return-to-work orders of the Secretary constitutes a valid
ground for dismissal.39
3. PEU staged the strike using unlawful means and methods.
Even if the strike in the present case was not illegal per se, the strike activities that PEU had undertaken, especially the
establishment of human barricades at all entrances to and egresses from the company premises and the use of coercive
methods to prevent company officials and other personnel from leaving the company premises, were definitely illegal.40 PEU
is deemed to have admitted that its officers and members had committed these illegal acts, as it never disputed Philcom's
assertions of PEU's unlawful strike activities in all the pleadings that PEU submitted to the Secretary and to this Court.
PEU's picketing officers and members prohibited other tenants at the Philcom building from entering and leaving the
premises. Leonida S. Rabe, Country Manager of Societe Internationale De Telecommunications Aeronautiques(SITA), a tenant at
the Philcom building, wrote two letters addressed to PEU President Roberto B. Benosa. She told Benosa that PEU's act of
obstructing the free ingress to and egress from the company premises "has badly disrupted normal operations of their
organization."41
The right to strike, while constitutionally recognized, is not without legal constrictions. Article 264(e) of the Labor Code,
on prohibited activities, provides:
No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.
The Labor Code is emphatic against the use of violence, coercion, and intimidation during a strike and to this end prohibits
the obstruction of free passage to and from the employer's premises for lawful purposes. A picketing labor union has no right
to prevent employees of another company from getting in and out of its rented premises, otherwise, it will be held liable for
damages for its acts against an innocent by-stander.42
The sanction provided in Article 264(a) is so severe that any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status.43
By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the resumption of
company operations, the striking employees have forfeited their right to be readmitted. 44
4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB.
On 17 November 1997, while a conciliation meeting was being held at the NCMB in NCMB-NCR-NS 10-435-97, PEU went
on strike. It should be noted that in their meeting on 11 November 1997, both Philcom and PEU were even "advised to
maintain the status quo."45 Such disregard of the mediation proceedings was a blatant violation of Section 6, Book V, Rule
XXII of the Omnibus Rules Implementing the Labor Code, which explicitly obliges the parties to bargain collectively in
good faith and prohibits them from impeding or disrupting the proceedings. 46 The relevant provision of the Implementing
Rules provides:
Section 6. Conciliation. ─ x x x x
During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of
dispute. They are obliged, as part of their duty, to bargain collectively in good faith, to participate fully and
promptly in the conciliation meetings called by the regional branch of the Board. x x x x
Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike "during the pendency of cases
involving the same grounds for the same strike."
Lamentably, PEU defiantly proceeded with their strike during the pendency of the conciliation proceedings.
5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA.
By PEU's own admission, "the Union's complaints to the management began in June 1997 even before the start of the 1997
CBA renegotiations."47 Their CBA expired on 30 June 1997.48 PEU could have just taken up their grievances in their
negotiations for the new CBA. This is what a Philcom officer had suggested to the Dasmariñas staff when the latter requested
on 16 June 1997 for an increase in transportation allowance.49 In fact, when PEU declared the strike, Philcom and PEU had
already agreed on 37 items in their negotiations for the new CBA.50
The bottom line is that PEU should have immediately resorted to the grievance machinery provided for in the CBA.51 In
disregarding this procedure, the union leaders who knowingly participated in the strike have acted unreasonably. The law
cannot interpose its hand to protect them from the consequences of their illegal acts. 52
A strike declared on the basis of grievances which have not been submitted to the grievance committee as stipulated in the
CBA of the parties is premature and illegal.53
Having held the strike illegal and having found that PEU's officers and members have committed illegal acts during the
strike, we hold that no writ of execution should issue for the return to work of PEU officers who participated in the illegal
strike, and PEU members who committed illegal acts or who defied the return-to-work orders that the Secretary issued on
19 November 1997 and 28 November 1997. The issue of who participated in the illegal strike, committed illegal acts, or
defied the return-to-work orders is a question of fact that must be resolved in the appropriate proceedings before the
Secretary of Labor.
WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 53989,
with the MODIFICATION that the Secretary of Labor is directed to determine who among the Philcom Employees Union
officers participated in the illegal strike, and who among the union members committed illegal acts or defied the return-to-
work orders of 19 November 1997 and 28 November 1997. No pronouncement as to costs.
SO ORDERED.
Quisumbing, Chairman, Carpio-Morales, Tinga, Velasco, Jr., J.J., concur.
G.R. NO. 121315
COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION V. NLRC,
G.R. NO. 121315
68
DECISION
KAPUNAN, J.:
These consolidated cases filed by Complex Electronics Employees Association (G.R. No. 121315) and Complex
Electronics Corporation (G.R. No. 122136) assail the Decision of the NLRC dated March 10, 1995 which set aside the
Decision of the Labor Arbiter dated April 30, 1993.
The antecedents of the present petitions are as follows:
Complex Electronics Corporation (Complex) was engaged in the manufacture of electronic products. It was actually a
subcontractor of electronic products where its customers gave their job orders, sent their own materials and consigned their
equipment to it. The customers were foreign-based companies with different product lines and specifications requiring the
employment of workers with specific skills for each product line. Thus, there was the AMS Line for the Adaptive Micro
System, Inc., the Heril Line for Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co., etc.
The rank and file workers of Complex were organized into a union known as the Complex Electronics Employees
Association, herein referred to as the Union.
On March 4, 1992, Complex received a facsimile message from Lite-On Philippines Electronics Co., requiring it to
lower its price by 10%. The full text reads as follows:
This is to inform your office that Taiwan required you to reduce your assembly cost since it is higher by 50 % and no longer
competitive with that of mainland China. It is further instructed that Complex Price be patterned with that of other sources,
which is 10% lower.
Please consider and give us your revised rates soon.[1]
Consequently, on March 9, 1992, a meeting was held between Complex and the personnel of the Lite-On Production
Line. Complex informed its Lite-On personnel that such request of lowering their selling price by 10% was not feasible as
they were already incurring losses at the present prices of their products. Under such circumstances, Complex regretfully
informed the employees that it was left with no alternative but to close down the operations of the Lite-On Line. The
company, however, promised that:
1) Complex will follow the law by giving the people to be retrenched the necessary 1 month notice. Hence,
retrenchment will not take place until after 1) month from March 09, 1992.
2) The Company will try to prolong the work for as many people as possible for as long as it can by looking for
job slots for them in another line if workload so allows and if their skills are compatible with the line
requirement.
3) The company will give the employees to be retrenched a retrenchment pay as provided for by law i.e. half a
month for every year of service in accordance with Article 283 of the Labor Code of Philippines. [2]
The Union, on the other hand, pushed for a retrenchment pay equivalent to one (1) month salary for every year of
service, which Complex refused.
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the Department of Labor and
Employment (DOLE) and the retrenchment of the ninety-seven (97) affected employees.[3]
On March 25, 1993, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which resulted in a "yes" vote.
In the evening of April 6, 1992, the machinery, equipment and materials being used for production at Complex were
pulled-out from the company premises and transferred to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao,
Laguna. The following day, a total closure of company operation was effected at Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair labor practice, illegal
closure/illegal lockout, money claims for vacation leave, sick leave, unpaid wages, 13th month pay, damages and attorney's
fees. The Union alleged that the pull-out of the machinery, equipment and materials from the company premises, which
resulted to the sudden closure of the company was in violation of Section 3 and 8, Rule XIII, Book V of the Labor Code of
the Philippines[4] and the existing CBA. Ionics was impleaded as a party defendant because the officers and management
personnel of Complex were also holding office at Ionics with Lawrence Qua as the President of both companies.
Complex, on the other hand, averred that since the time the Union filed its notice of strike, there was a significant
decline in the quantity and quality of the products in all of the production lines. The delivery schedules were not met
prompting the customers to lodge complaints against them. Fearful that the machinery, equipment and materials would be
rendered inoperative and unproductive due to the impending strike of the workers, the customers ordered their pull-out and
transfer to Ionics. Thus, Complex was compelled to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and had been in existence since July 5, 1984
or eight (8) years before the labor dispute arose at Complex. Like Complex, it was also engaged in the semi-conductor
business where the machinery, equipment and materials were consigned to them by their customers. While admitting that
Lawrence Qua, the President of Complex was also the President of Ionics, the latter denied having Qua as their owner since
he had no recorded subscription of P1,200,000.00 in Ionics as claimed by the Union. Ionics further argued that the hiring of
some displaced workers of Complex was an exercise of management prerogatives. Likewise, the transfer of the machinery,
equipment and materials from Complex was the decision of the owners who were common customers of Complex and Ionics.
On April 30, 1993, the Labor Arbiter rendered a decision the dispositive portion of which reads:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent Complex
Electronics Corporation and/or Ionics Circuit Incorporated and/or Lawrence Qua, to reinstate the 531 above-listed
employees to their former position with all the rights, privileges and benefits appertaining thereto, and to pay said
complainants-employees the aggregate backwages amounting P26,949,891.80 as of April 6, 1993 and to such further
backwages until their actual reinstatement. In the event reinstatement is no longer feasible for reasons not attributable to
the complainants, said respondents are also liable to pay complainants-employees their separation pay to be computed at the
rate of one (1) month pay for every year of service, a fraction of at least six (6) months to be considered as one whole year.
Further, the aforenamed three (3) respondents are hereby ordered to pay jointly and solidarily the complainants-employees
an aggregate moral damages in the amount of P1,062,000.00 and exemplary damages in the aggregate sum of P531,000.00.
And finally, said respondents are ordered to pay attorney's fees equivalent to ten percent (10%) of whatever has been
adjudicated herein in favor of the complainants.
The charge of slowdown strike filed by respondent Complex against the union is hereby dismissed for lack of merit.
SO ORDERED.[5]
Separate appeals were filed by Complex, Ionics and Lawrence Qua before the respondent NLRC which rendered the
questioned decision on March 10, 1995, the decretal portion of which states:
WHEREFORE, premises considered, the assailed decision is hereby ordered vacated and set aside, and a new one entered
ordering respondent Complex Electronics Corporation to pay 531 complainants equivalent to one month pay in lieu of notice
69
and separation pay equivalent to one month pay for every year of service and a fraction of six months considered as one
whole year.
Respondents Ionics Circuit Incorporated and Lawrence Qua are hereby ordered excluded as parties solidarily liable with
Complex Electronics Corporation.
The award of moral damages is likewise deleted for lack of merit.
Respondent Complex, however, is hereby ordered to pay attorney's fees equivalent to ten (10%) percent of the total amount
of award granted the complainants.
SO ORDERED.[6]
Complex, Ionics and the Union filed their motions for reconsideration of the above decision which were denied by the
respondent NLRC in an Order dated July 11, 1995.[7]
Hence these petitions.
In G.R. No. 121315, petitioner Complex Electronics Employees Association asseverates that the respondent NLRC
erred when it:
I The Union claimed that the said clipping showed that both corporations, Ionics and Complex are one and the same.
SET ASIDE THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.
II
EXCLUDED PRIVATE RESPONDENTS IONICS CIRCUITS, INCORPORATED AND LAWRENCE QUA AS
PARTIES SOLIDARILY LIABLE WITH COMPLEX ELECTRONICS CORPORATION.
III
FOUND THAT COMPLEX ELECTRONICS CORPORATION WAS NOT GUILTY OF ILLEGAL CLOSURE AND
ILLEGAL DISMISSAL OF THE PETITIONERS.
IV
REMOVED THE AWARD FOR BACKWAGES, REINSTATEMENT AND DAMAGES IN THE DECISION DATED
APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.[8]
On the other hand, in G.R. No. 122136, petitioner Complex Electronics Corporation raised the following issues, to
wit:
I A runaway shop is defined as an industrial plant moved by its owners from one location to another to escape union
PUBLIC RESPONDENT NLRC ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN
EXCESS OF JURISDICTION IN PROMULGATING ITS DECISION AND ORDER DATED 10 MARCH 1995, AND
11 JULY 1995, RESPECTIVELY, THE SAME BEING IN CONTRAVENTION OF THE EXPRESS MANDATE OF
THE LAW GOVERNING THE PAYMENT OF ONE MONTH PAY IN LIEU OF NOTICE, SEPARATION PAY AND
ATTORNEY'S FEES.
II
THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE
OF LAW.[9]
On December 23, 1996, the Union filed a motion for consolidation of G.R. No. 122136 with G.R. No. 121315. [10] The
motion was granted by this Court in a Resolution dated June 23, 1997.[11]
On November 10, 1997, the Union presented additional documentary evidence which consisted of a newspaper clipping
in the Manila Bulletin, dated August 18, 1997 bearing the picture of Lawrence Qua with the following inscription:
RECERTIFICATION. The Cabuyao (Laguna) operation of Ionic Circuits, Inc. consisting of plants 2, 3, 4 and 5 was
recertified to ISO 9002 as electronics contract manufacturer by the TUV, a rating firm with headquarters in Munich,
Germany. Lawrence Qua, Ionics president and chief executive officer, holds the plaque of recertification presented by
Gunther Theisz (3rd from left), regional manager of TUV Products Services Asia during ceremonies held at Sta. Elena Golf
Club. This is the first of its kind in the country that four plants were certified at the same time. [12]
In answer to this allegation, Ionics explained that the photo which appeared at the Manila Bulletin issue of August 18,
1997 pertained only to respondent Ionics recertification of ISO 9002. There was no mention about Complex Electronics
Corporation. Ionics claimed that a mere photo is insufficient to conclude that Ionics and Complex are one and the same.[13]
We shall first delve on the issues raised by the petitioner Union.
The Union anchors its position on the fact that Lawrence Qua is both the president of Complex and Ionics and that
both companies have the same set of Board of Directors. It claims that business has not ceased at Complex but was merely
transferred to Ionics, a runaway shop. To prove that Ionics was just a runaway shop, petitioner asserts that out of the 80,000
shares comprising the increased capital stock of Ionics, it was Complex that owns majority of said shares with P1,200,000.00
as its capital subscription and P448,000.00 as its paid up investment, compared to P800,000.00 subscription and P324,560.00
paid-up owing to the other stockholders, combined. Thus, according to the Union, there is a clear ground to pierce the veil
of corporate fiction.
The Union further posits that there was an illegal lockout/illegal dismissal considering that as of March 11, 1992, the
company had a gross sales of P61,967,559 from a capitalization of P1,500,000.00.It even ranked number thirty among the
top fifty corporations in Muntinlupa. Complex, therefore, cannot claim that it was losing in its business which necessitated
its closure.
With regards to Lawrence Qua, petitioner maintains that he should be made personally liable to the Union since he
was the principal player in the closure of the company, not to mention the clandestine and surreptitious manner in which
such closure was carried out, without regard to their right to due process.
The Union's contentions are untenable.
labor regulations or state laws, but the term is also used to describe a plant removed to a new location in order to discriminate
against employees at the old plant because of their union activities.[14] It is one wherein the employer moves its business to
another location or it temporarily closes its business for anti-union purposes.[15] A runaway shop in this sense, is a relocation
motivated by anti-union animus rather than for business reasons. In this case, however, Ionics was not set up merely for the
70
purpose of transferring the business of Complex. At the time the labor dispute arose at Complex, Ionics was already existing
as an independent company. As earlier mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be said
that the temporary closure in Complex and its subsequent transfer of business to Ionics was for anti-union purposes. The
Union failed to show that the primary reason for the closure of the establishment was due to the union activities of the
employees.
The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not a
sufficient ground for disregarding separate corporate personalities. Thus, in Indophil Textile Mill Workers Union vs.
Calica,[16] we ruled that:
[I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the
corporation is a devise to evade the application of the CBA between petitioner Union and private respondent company. While
we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we
inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private
respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and
providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the
same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of
Acrylic.
Likewise, in Del Rosario vs. National Labor Relations Commission,[17] the Court stated that substantial identity of the
incorporators of two corporations does not necessarily imply that there was fraud committed to justify piercing the veil of
corporate fiction.
In the recent case of Santos vs. National Labor Relations Commission,[18] we also ruled that:
The basic rule is still that which can be deduced from the Courts pronouncement in Sunio vs. National Labor Relations
Commission, thus:
xxx.. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself sufficient ground for disregarding the separate corporate personality.
Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason to pierce the
veil of corporate fiction of the corporation. Well-settled is the rule that a corporation has a personality separate and distinct
from that of its officers and stockholders. This fiction of corporate entity can only be disregarded in certain cases such as
when it is used to defeat public convenience, justify wrong, protect fraud, or defend crime.[19] To disregard said separate
juridical personality of a corporation, the wrongdoing must be clearly and convincingly established. [20]
As to the additional documentary evidence which consisted of a newspaper clipping filed by petitioner Union, we agree
with respondent Ionics that the photo/newspaper clipping itself does not prove that Ionics and Complex are one and the
same entity. The photo/newspaper clipping merely showed that some plants of Ionics were recertified to ISO 9002 and does
not show that there is a relation between Complex and Ionics except for the fact that Lawrence Qua was also the president
of Ionics. However, as we have stated above, the mere fact that both of the corporations have the same president is not in
itself sufficient to pierce the veil of corporate fiction of the two corporations.
We, likewise, disagree with the Union that there was in this case an illegal lockout/illegal dismissal. Lockout is the
temporary refusal of employer to furnish work as a result of an industrial or labor dispute. [21] It may be manifested by the
employer's act of excluding employees who are union members.[22] In the present case, there was a complete cessation of
the business operations at Complex not because of the labor dispute. It should be recalled that, before the labor dispute,
Complex had already informed the employees that they would be closing the Lite-On Line. The employees, however,
demanded for a separation pay equivalent to one (1) month salary for every year of service which Complex refused to
give. When Complex filed a notice of closure of its Lite-On Line, the employees filed a notice of strike which greatly alarmed
the customers of Complex and this led to the pull-out of their equipment, machinery and materials from Complex. Thus,
without the much needed equipment, Complex was unable to continue its business. It was left with no other choice except
to shut down the entire business. The closure, therefore, was not motivated by the union activities of the employees, but
rather by necessity since it can no longer engage in production without the much needed materials, equipment and
machinery. We quote with approval the findings of the respondent NLRC on this matter:
At first glance after reading the decision a quo, it would seem that the closure of respondent's operation is not
justified. However, a deeper examination of the records along with the evidence, would show that the closure, although it
was done abruptly as there was no compliance with the 30-day prior notice requirement, said closure was not intended to
circumvent the provisions of the Labor Code on termination of employment. The closure of operation by Complex on April
7, 1992 was not without valid reasons. Customers of respondent alarmed by the pending labor dispute and the imminent
strike to be foisted by the union, as shown by their strike vote, directed respondent Complex to pull-out its equipment,
machinery and materials to other safe bonded warehouse. Respondent being mere consignees of the equipment, machinery
and materials were without any recourse but to oblige the customers' directive. The pull-out was effected on April 6,
1992. We can see here that Complex's action, standing alone, will not result in illegal closure that would cause the illegal
dismissal of the complainant workers. Hence, the Labor Arbiter's conclusion that since there were only two (2) of
respondent's customers who have expressed pull-out of business from respondent Complex while most of the customer's
have not and, therefore, it is not justified to close operation cannot be upheld. The determination to cease operation is a
prerogative of management that is usually not interfered with by the State as no employer can be required to continue
operating at a loss simply to maintain the workers in employment. That would be taking of property without due process of
law which the employer has the right to resist. (Columbia Development Corp. vs. Minister of Labor and Employment, 146
SCRA 42)
As to the claim of petitioner Union that Complex was gaining profit, the financial statements for the years 1990, 1991
and 1992 issued by the auditing and accounting firm Sycip, Gorres and Velayo readily show that Complex was indeed
continuously experiencing deficit and losses.[23] Nonetheless, whether or not Complex was incurring great losses, it is still
one of the managements prerogative to close down its business as long as it is done in good faith. Thus, in Catatista et al., vs.
NLRC and Victorias Milling Co., Inc.[24] we ruled:
In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking
even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination
pay in the amount corresponding to their length of service. It would indeed, be stretching the intent and spirit of the law if
we were to unjustly interfere in managements prerogative to close or cease its business operations just because said business
operations or undertaking is not suffering from any loss.
Going now to the issue of personal liability of Lawrence Qua, it is settled that in the absence of malice or bad faith, a
stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities.[25] In the present case,
while it may be true that the equipment, materials and machinery were pulled-out of Complex and transferred to Ionics
during the night, their action was sufficiently explained by Lawrence Qua in his Comment to the petition filed by the
Union. We quote:
The fact that the pull-out of the machinery, equipment and materials was effected during nighttime is not per se an indicia of
bad faith on the part of respondent Qua since he had no other recourse, and the same was dictated by the prevailing mood
of unrest as the laborers were already vandalizing the equipment, bent on picketing the company premises and threats to
lock out the company officers were being made. Such acts of respondent Qua were, in fact, made pursuant to the demands of
Complex's customers who were already alarmed by the pending labor dispute and imminent strike to be stage by the laborers,
to have their equipment, machinery and materials pull out of Complex. As such, these acts were merely done pursuant to his
official functions and were not, in any way, made with evident bad faith.[26]
71
 We perceive no intention on the part of Lawrence Qua and the other officers of Complex to defraud the employees and
the Union. They were compelled to act upon the instructions of their customers who were the real owners of the equipment,
materials and machinery. The prevailing labor unrest permeating within the premises of Complex left the officers with no
other choice but to pull them out of Complex at night to prevent their destruction. Thus, we see no reason to declare
Lawrence Qua personally liable to the Union.
Anent the award of damages, we are inclined to agree with the NLRC that there is no basis for such award. We again
quote the respondent NLRC with favor:
By and large, we cannot hold respondents guilty of unfair labor practice as found by the Labor Arbiter since the closure of
operation of Complex was not established by strong evidence that the purpose of said closure was to interfere with the
employees' right to self-organization and collective bargaining. As very clearly established, the closure was triggered by the
customers' pull-out of their equipment, machinery and materials, who were alarmed by the pending labor dispute and the
imminent strike by the union, and as a protection to their interest pulled-out of business from Complex who had no recourse
but to cease operation to prevent further losses. The indiscretion committed by the Union in filing the notice of strike, which
to our mind is not the proper remedy to question the amount of benefits due the complainants who will be retrenched at the
closure of the Lite-On Line, gave a wrong signal to customers of Complex, which consequently resulted in the loss of
employment of not only a few but to all the of the workers. It may be worth saying that the right to strike should only be a
remedy of last resort and must not be used as a show of force against the employer. [27]
We shall now go to the issues raised by Complex in G.R. No. 122136.
Complex claims that the respondent NLRC erred in ordering them to pay the Union one (1) month pay as indemnity
for failure to give notice to its employees at least thirty (30) days before such closure since it was quite clear that the
employees were notified of the impending closure of the Lite-On Line as early as March 9, 1992. Moreover, the abrupt
cessation of operations was brought about by the sudden pull-out of the customers which rendered it impossible for Complex
to observe the required thirty (30) days notice.
Article 283 of the Labor Code provides that:
ART. 283. Closure of establishment and reduction of personnel.-- The employer may also terminate the employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. x x x. (Underlining ours.)
The purpose of the notice requirement is to enable the proper authorities to determine after hearing whether such
closure is being done in good faith, i.e., for bona fide business reasons, or whether, to the contrary, the closure is being
resorted to as a means of evading compliance with the just obligations of the employer to the employees affected.[28]
While the law acknowledges the management prerogative of closing the business, it does not, however, allow the
business establishment to disregard the requirements of the law. The case of Magnolia Dairy Products v. NLRC[29] is quite
emphatic about this:
The law authorizes an employer, like the herein petitioners, to terminate the employment of any employee due to the
installation of labor saving devices. The installation of these devices is a management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of management,
as in this case. Nonetheless, this did not excuse petitioner from complying with the required written notice to the employee
and to the Department of Labor and Employment (DOLE) at least one month before the intended date of termination. This
procedure enables an employee to contest the reality or good faith character of the asserted ground for the termination of
his services before the DOLE.
The failure of petitioner to serve the written notice to private respondent and to the DOLE, however, does not ipso facto make
private respondent's termination from service illegal so as to entitle her to reinstatement and payment of backwages. If at
all, her termination from service is merely defective because it was not tainted with bad faith or arbitrariness and was due
to a valid cause.
The well settled rule is that the employer shall be sanctioned for non-compliance with the requirements of, or for failure to
observe due process in terminating from service its employee. In Wenphil Corp. v. NLRC, we sanctioned the employer for
this failure by ordering it to indemnify the employee the amount of P1,000.00. Similarly, we imposed the same amount as
indemnification in Rubberworld (Phils.), Inc. v. NLRC, and, Aurelio v. NLRC and Alhambra Industries, Inc. v.
NLRC. Subsequently, the sum of P5,000.00 was awarded to an employee in Worldwide Papermills, Inc. v. NLRC, and
P2,000.00 in Sebuguero, et al., v. NLRC, et al. Recently, the sum of P5,000.00 was again imposed as indemnify against the
employer. We see no valid and cogent reason why petitioner should not be likewise sanctioned for its failure to serve the
mandatory written notice. Under the attendant facts, we find the amount of P5,000.00, to be just and reasonable.
We, therefore, find no grave abuse of discretion on the part of the NLRC in ordering Complex to pay one (1) month
salary by way of indemnity. It must be borne in mind that what is at stake is the means of livelihood of the workers so they
are at least entitled to be formally informed of the management decisions regarding their employment. [30]
Complex, likewise, maintains that it is not liable for the payment of separation pay since Article 283 of the Labor Code
awards separation pay only in cases of closure not due to serious business reversals. In this case, the closure of Complex was
brought about by the losses being suffered by the corporation.
We disagree.
Article 283 further provides:
x x x. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in case of cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
It is settled that in case of closures or cessation of operation of business establishments not due to serious business
losses or financial reverses,[31] the employees are always given separation benefits.
In the instant case, notwithstanding the financial losses suffered by Complex, such was, however, not the main reason
for its closure. Complex admitted in its petition that the main reason for the cessation of the operations was the pull-out of
the materials, equipment and machinery from the premises of the corporation as dictated by its customers. It was actually
still capable of continuing the business but opted to close down to prevent further losses. Under the facts and circumstances
of the case, we find no grave abuse of discretion on the part of the public respondent in awarding the employees one (1)
month pay for every year of service as termination pay.
WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Melo, Pardo, and Ynares-Santiago, JJ., concur.
(19) G.R. Nos. 158930-31 March 3, 2008
72
 UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS - KILUSANG
MAYO UNO (UFE-DFA-KMU), petitioner,
vs.
NESTLÉ PHILIPPINES, INCORPORATED, respondent.
x------------------------------------------x
G.R. Nos. 158944-45 March 3, 2008
NESTLÉ PHILIPPINES, INCORPORATED, petitioner,
vs.
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS - KILUSANG
MAYO UNO (UFE-DFA-KMU), respondent.
RESOLUTION
CHICO-NAZARIO, J.:
On 22 August 2006, this Court promulgated its Decision1 in the above-entitled cases, the dispositive part of which reads –
WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestlé be declared to
have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition
in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of
Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her
discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA
negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the
collective bargaining negotiations between UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are
directed to resume negotiations respecting the Retirement Plan and to take action consistent with the
discussions hereinabove set forth. No costs.
Subsequent thereto, Nestlé Philippines, Incorporated (Nestlé) filed a Motion for Clarification 2 on 20 September 2006;
while Union of Filipro Employees – Drug, Food and Allied Industries Union – Kilusang Mayo Uno (UFE-DFA-KMU),
on 21 September 2006, filed a Motion for Partial Reconsideration3 of the foregoing Decision.
The material facts of the case, as determined by this Court in its Decision, may be summarized as follows:
UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file employees of Nestlé belonging to the
latter’s Alabang and Cabuyao plants. On 4 April 2001, as the existing collective bargaining agreement (CBA) between
Nestlé and UFE-DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and Cabuyao Divisions of UFE-
DFA-KMU informed Nestlé of their intent to "open [our] new Collective Bargaining Negotiation for the year 2001-2004
x x x as early as June 2001."6 In response thereto, Nestlé informed them that it was also preparing its own counter-
proposal and proposed ground rules to govern the impending conduct of the CBA negotiations.
On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only)7, Nestlé reiterated its stance that
"unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the
Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom."8
Dialogue between the company and the union thereafter ensued.
On 14 August 2001, however, Nestlé requested9 the National Conciliation and Mediation Board (NCMB), Regional Office
No. IV, Imus, Cavite, to conduct preventive mediation proceedings between it and UFE-DFA-KMU owing to an alleged
impasse in said dialogue; i.e., that despite fifteen (15) meetings between them, the parties failed to reach any agreement on
the proposed CBA.
Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed a Notice of Strike10
on 31 October 2001
with the NCMB, complaining, in essence, of a bargaining deadlock pertaining to economic issues, i.e., "retirement (plan),
panel composition, costs and attendance, and CBA".11 On 07 November 2001, another Notice of Strike12 was filed by the
union, this time predicated on Nestlé’s alleged unfair labor practices, that is, bargaining in bad faith by setting pre-
conditions in the ground rules and/or refusing to include the issue of the Retirement Plan in the CBA negotiations. The
result of a strike vote conducted by the members of UFE-DFA-KMU yielded an overwhelming approval of the decision to
hold a strike.13
On 26 November 2001, prior to holding the strike, Nestlé filed with the DOLE a Petition for Assumption of
Jurisdiction,14 praying for the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, to assume jurisdiction over the current
labor dispute in order to effectively enjoin any impending strike by the members of the UFE-DFA-KMU at the Nestlé’s
Cabuyao Plant in Laguna.
On 29 November 2001, Sec. Sto. Tomas issued an Order 15 assuming jurisdiction over the subject labor dispute. The fallo of
said Order states that:
CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the labor dispute at the
Nestlé Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, any strike or lockout is hereby enjoined. The parties are directed to cease and desist from
committing any act that might lead to the further deterioration of the current labor relations situation.
The parties are further directed to meet and convene for the discussion of the union proposals and company
counter-proposals before the National Conciliation and Mediation Board (NCMB) who is hereby designated as
the delegate/facilitator of this Office for this purpose. The NCMB shall report to this Office the results of this
attempt at conciliation and delimitation of the issues within thirty (30) days from the parties’ receipt of this
Order, in no case later than December 31, 2001. If no settlement of all the issues is reached, this Office shall
thereafter define the outstanding issues and order the filing of position papers for a ruling on the merits.
UFE-DFA-KMU sought reconsideration16 of the above but nonetheless moved for additional time to file its position paper
as directed by the Assumption of Jurisdiction Order.
On 14 January 2002, Sec. Sto. Tomas denied said motion for reconsideration.
On 15 January 2002, despite the order enjoining the conduct of any strike or lockout and conciliation efforts by the
NCMB, the employee members of UFE-DFA-KMU at Nestlé’s Cabuyao Plant went on strike.
In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1) the members of UFE-DFA-
KMU to return-to-work within twenty-four (24) hours from receipt of such Order; (2) Nestlé to accept back all returning
workers under the same terms and conditions existing preceding to the strike; (3) both parties to cease and desist from
committing acts inimical to the on-going conciliation proceedings leading to the further deterioration of the situation; and
(4) the submission of their respective position papers within ten (10) days from receipt thereof. But notwithstanding the Return-
to-Work Order, the members of UFE-DFA-KMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the
assistance of the Philippine National Police (PNP) for the enforcement of said order.
On 7 February 2002, Nestlé and UFE-DFA-KMU filed their respective position papers. Nestlé addressed several issues
concerning economic provisions of the CBA as well as the non-inclusion of the issue of the Retirement Plan in the
collective bargaining negotiations. On the other hand, UFE-DFA-KMU limited itself to the issue of whether or not the
retirement plan was a mandatory subject in its CBA negotiations.
On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its stand on the other issues raised
by Nestlé but not covered by its initial position paper by way of a Supplemental Position Paper.
73
UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings, one of which was
a Manifestation with Motion for Reconsideration of the Order dated February 11, 2002 assailing the Order of February 11, 2002
for supposedly being contrary to law, jurisprudence and the evidence on record. The union posited that Sec. Sto. Tomas
"could only assume jurisdiction over the issues mentioned in the notice of strike subject of the current dispute," 17 and that
the Amended Notice of Strike it filed did not cite, as one of the grounds, the CBA deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-KMU.
Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals, alleging that Sec. Sto. Tomas
committed grave abuse of discretion amounting to lack or excess of jurisdiction when she issued the Orders of 11 February
2002 and 8 March 2002.
In the interim, in an attempt to finally resolve the crippling labor dispute between the parties, then Acting Secretary of the
DOLE, Hon. Arturo D. Brion, came out with an Order19 dated 02 April 2002, ruling that:
a. we hereby recognize that the present Retirement Plan at the Nestlé Cabuyao Plant is a unilateral grant that
the parties have expressly so recognized subsequent to the Supreme Court’s ruling in Nestlé, Phils. Inc. vs. NLRC,
G.R. No. 90231, February 4, 1991, and is therefore not a mandatory subject for bargaining;
b. the Union’s charge of unfair labor practice against the Company is hereby dismissed for lack of merit;
c. the parties are directed to secure the best applicable terms of the recently concluded CBSs between Nestlé
Phils. Inc. and it eight (8) other bargaining units, and to adopt these as the terms and conditions of the Nestlé
Cabuyao Plant CBA;
d. all union demands that are not covered by the provisions of the CBAs of the other eight (8) bargaining units in
the Company are hereby denied;
e. all existing provisions of the expired Nestlé Cabuyao Plant CBA without any counterpart in the CBAs of the
other eight bargaining units in the Company are hereby ordered maintained as part of the new Nestlé Cabuyao
Plant CBA;
f. the parties shall execute their CBA within thirty (30) days from receipt of this Order, furnishing this Office a
copy of the signed Agreement;
g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all other provisions shall
be renegotiated not later than three (3) years after its effective date which shall be December 5, 2001 (or on the
first day six months after the expiration on June 4, 2001 of the superceded CBA).
UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently denied on 6 May 2002.
For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition for Certiorari seeking to annul
the Orders of 02 April 2002 and 06 May 2002 of the Secretary of the DOLE, having been issued in grave abuse of
discretion amounting to lack or excess of jurisdiction.
On 27 February 2003, the appellate court promulgated its Decision on the twin petitions for certiorari, ruling entirely in
favor of UFE-DFA-KMU, the dispositive part thereof stating –
WHEREFORE, in view of the foregoing, there being grave abuse on the part of the public respondent in issuing
all the assailed Orders, both petitions are hereby GRANTED. The assailed Orders dated February 11, 2001, and
March 8, 2001 (CA-G.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP
No. 71540) of the Secretary of Labor and Employment in the case entitled: "IN RE: LABOR DISPUTE AT
NESTLE PHILIPPINES INC. (CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-
035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMB-RBIV-LAG-NS-11-10-039—01) are hereby ANNULLED
and SET ASIDE. Private respondent is hereby directed to resume the CBA negotiations with the petitioner. 20
Both parties appealed the aforequoted ruling. Nestlé essentially assailed that part of the decision finding the DOLE
Secretary to have gravely abused her discretion amounting to lack or excess of jurisdiction when she ruled that the
Retirement Plan was not a valid issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in contrast,
questioned the appellate court’s decision finding Nestlé free and clear of any unfair labor practice.
Since the motions for reconsideration of both parties were denied by the Court of Appeals in a joint Resolution dated 27
June 2003, UFE-DFA-KMU and Nestlé separately filed the instant Petitions for Review on Certiorari under Rule 45 of the
Rules of Court, as amended.
G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestlé seeking to reverse the Court of Appeals Decision insofar
as the appellate court’s failure to find Nestlé guilty of unfair labor practice was concerned; while G.R. No. 158944-45 was
instituted by Nestlé against UFE-DFA-KMU likewise looking to annul and set aside the part of the Court of Appeals
Decision declaring that: 1) the Retirement Plan was a valid collective bargaining issue; and 2) the scope of the power of the
Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the labor dispute between
UFE-DFA-KMU and Nestlé was limited to the resolution of questions and matters pertaining merely to the ground rules
of the collective bargaining negotiations to be conducted between the parties.
On 29 March 2004, this Court resolved21 to consolidate the two petitions inasmuch as they (1) involved the same set of
parties; (2) arose from the same set of circumstances, i.e., from several Orders issued by then DOLE Secretary, Hon.
Patricia A. Sto. Tomas, respecting her assumption of jurisdiction over the labor dispute between Nestlé and UFE-DFA-
KMU, Alabang and Cabuyao Divisions;22 and (3) similarly assailed the same Decision and Resolution of the Court of
Appeals.
After giving due course to the instant consolidated petitions, this Court promulgated on 22 August 2006 its Decision, now
subject of UFE-DFA-KMU’s Motion for Partial Reconsideration and Nestlé’s Motion for Clarification.
In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court address and discuss anew points or
arguments that have basically been passed upon in this Court’s 22 August 2006 Decision. Firstly, it questions this Court’s
finding that Nestlé was not guilty of unfair labor practice, considering that the transaction speaks for itself, i.e, res ipsa
loquitor. And made an issue again is the question of whether or not the DOLE Secretary can take cognizance of matters
beyond the amended Notice of Strike.
As to Nestlé’s prayer for clarification, the corporation seeks elucidation respecting the dispositive part of this Court’s
Decision directing herein parties to resume negotiations on the retirement compensation package of the concerned
employees. It posits that "[i]n directing the parties to negotiate the Retirement Plan, the Honorable Court x x x might
have overlooked the fact that here, the Secretary of Labor had already assumed jurisdiction over the entire 2001-2004 CBA
controversy x x x."
As to the charge of unfair labor practice:
The motion does not put forward new arguments to substantiate the prayer for reconsideration of this Court’s Decision
except for the sole contention that the transaction speaks for itself, i.e., res ipsa loquitor. Nonetheless, even a perusal of the
arguments of UFE-DFA-KMU in its petition and memorandum in consideration of the point heretofore raised will not
convince us to change our disposition of the question of unfair labor practice. UFE-DFA-KMU argues therein that
Nestlé’s "refusal to bargain on a very important CBA economic provision constitutes unfair labor practice." 23 It explains
that Nestlé set as a precondition for the holding of collective bargaining negotiations the non-inclusion of the issue of
Retirement Plan. In its words, "respondent Nestlé Phils., Inc. insisted that the Union should first agree that the retirement
plan is not a bargaining issue before respondent Nestlé would agree to discuss other issues in the CBA."24 It then
concluded that "the Court of Appeals committed a legal error in not ruling that respondent company is guilty of unfair
74
labor practice. It also committed a legal error in failing to award damages to the petitioner for the ULP committed by the
respondent."25
We are unconvinced still.
The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code, as amended, which state –
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively means the performance of
a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement with respect to wages, hours, of work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty does not compel any party to agree to
a proposal or to make any concession.
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. – When there is a
collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall
terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both
parties to keep the status quo and to continue in full force and effect the terms of conditions of the existing
agreement during the 60-day period and/or until a new agreement is reached by the parties.
Obviously, the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the
parties; but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a
lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The
duty to bargain does not include the obligation to reach an agreement.
The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in good faith typically
turns on the facts of the individual case. As we have said, there is no per se test of good faith in bargaining. Good faith or
bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of
credibility. The effect of an employer’s or a union’s individual actions is not the test of good-faith bargaining, but the
impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may
offer a basis for the finding of the NLRC.26
For a charge of unfair labor practice to prosper, it must be shown that Nestlé was motivated by ill will, "bad faith, or fraud,
or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings, or grave anxiety resulted x x x"27 in disclaiming unilateral grants as proper subjects
in their collective bargaining negotiations. While the law makes it an obligation for the employer and the employees to
bargain collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to
the proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and
make reasonable effort to reach a common ground of agreement.
Herein, the union merely bases its claim of refusal to bargain on a letter 28 dated 29 May 2001 written by Nestlé where the
latter laid down its position that "unilateral grants, one-time company grants, company-initiated policies and programs, which
include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature
not proper subjects of CBA negotiations and therefore shall be excluded therefrom." But as we have stated in this Court’s Decision,
said letter is not tantamount to refusal to bargain. In thinking to exclude the issue of Retirement Plan from the CBA
negotiations, Nestlé, cannot be faulted for considering the same benefit as unilaterally granted, considering that eight out
of nine bargaining units have allegedly agreed to treat the Retirement Plan as a unilaterally granted benefit. This is not a
case where the employer exhibited an indifferent attitude towards collective bargaining, because the negotiations were not
the unilateral activity of the bargaining representative. Nestlé’s desire to settle the dispute and proceed with the
negotiation being evident in its cry for compulsory arbitration is proof enough of its exertion of reasonable effort at good-
faith bargaining.
In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU. The corporation simply wanted to
exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such was in
the nature of a unilaterally granted benefit. An employer’s steadfast insistence to exclude a particular substantive provision
is no different from a bargaining representative’s perseverance to include one that they deem of absolute necessity. Indeed,
an adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad
faith.[fn24 p.10] It is but natural that at negotiations, management and labor adopt positions or make demands and offer
proposals and counter-proposals. On account of the importance of the economic issue proposed by UFE-DFA-KMU,
Nestle could have refused to bargain with the former – but it did not. And the management’s firm stand against the issue
of the Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to the point
of stalemate.
The foregoing things considered, this Court replicates below its clear disposition of the issue:
The concept of "unfair labor practice" is defined by the Labor Code as:
ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR PROSECUTION
THEREOF. – Unfair labor practices violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-management relations.
x x x x.
The same code likewise provides the acts constituting unfair labor practices committed by employers, to wit:
ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. – It shall be unlawful for an employer to
commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when such will interfere
with, restrain or coerce employees in the exercise of their right to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any
labor organization, including the giving of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. Nothing in this Code or in
any other law shall stop the parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who are already members of another
union at the time of the signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid
by members of the recognized collective bargaining agent, if such non-union members accept the
benefits under the collective agreement. Provided, That the individual authorization required under
Article 242, paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective
bargaining agent; [The article referred to is 241, not 242. – CAA]
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given
or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement
of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
75
 The provisions of the preceding paragraph notwithstanding, only the officers and agents of
corporations associations or partnerships who have actually participated, authorized or ratified unfair
labor practices shall be held criminally liable. (Emphasis supplied.)
Herein, Nestlé is accused of violating its duty to bargain collectively when it purportedly imposed a pre-
condition to its agreement to discuss and engage in collective bargaining negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases at bar shows that, of the two notices of strike filed
by UFE-DFA-KMU before the NCMB, it was only on the second that the ground of unfair labor practice was
alleged. Worse, the 7 November 2001 Notice of Strike merely contained a general allegation that Nestlé
committed unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition in the ground
rules (Retirement issue)." (Notice of Strike of 7 November 2001; Annex "C" of UFE-DFA-KMU Position Paper;
DOLE original records, p. 146.) In contrast, Nestlé, in its Position Paper, did not confine itself to the issue of the
non-inclusion of the Retirement Plan but extensively discussed its stance on other economic matters pertaining
to the CBA. It is UFE-DFA-KMU, therefore, who had the burden of proof to present substantial evidence to
support the allegation of unfair labor practice.
A perusal of the allegations and arguments raised by UFE-DFA-KMU in the Memorandum (in G.R. Nos.
158930-31) will readily disclose the need for the presentation of evidence other than its bare contention of unfair
labor practice in order to make certain the propriety or impropriety of the ULP charge hurled against Nestlé.
Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code:
x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable, state the
acts complained of and the efforts to resolve the dispute amicably." (Emphasis supplied.)
In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither the second Notice of Strike nor
the records of these cases substantiate a finding of unfair labor practice. It is not enough that the union believed
that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima
facie showing to warrant such a belief. (Tiu v. National Labor Relations Commission, G.R. No. 123276, 18 August
1997, 277 SCRA 681, 688.)
Employers are accorded rights and privileges to assure their self-determination and independence and
reasonable return of capital. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470
SCRA 125, 136.) This mass of privileges comprises the so-called management prerogatives. (Capitol Medical
Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) In this connection, the rule is
that good faith is always presumed. As long as the company’s exercise of the same is in good faith to advance its
interest and not for purpose of defeating or circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September
2005, 470 SCRA 125, 136.)
There is no per se test of good faith in bargaining. (Hongkong Shanghai Banking Corporation Employees Union v.
National Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Good faith or bad
faith is an inference to be drawn from the facts. (Hongkong Shanghai Banking Corporation Employees Union v.
National Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Herein, no proof
was presented to exemplify bad faith on the part of Nestlé apart from mere allegation. Construing arguendo that
the content of the aforequoted letter of 29 May 2001 laid down a pre-condition to its agreement to bargain with
UFE-DFA-KMU, Nestlé’s inclusion in its Position Paper of its proposals affecting other matters covered by the
CBA negates the claim of refusal to bargain or bargaining in bad faith. Accordingly, since UFE-DFA-KMU
failed to proffer substantial evidence that would overcome the legal presumption of good faith on the part of
Nestlé, the award of moral and exemplary damages is unavailing.
As to the jurisdiction of the DOLE Secretary under the amended Notice of Strike:
This Court is not convinced by the argument raised by UFE-DFA-KMU that the DOLE Secretary should not have gone
beyond the disagreement on the ground rules of the CBA negotiations. The union doggedly asserts that the entire labor
dispute between herein parties concerns only the ground rules.
Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining deadlock as the basis for the filing of its
Notice of Strike; and at the time of the filing of the first Notice of Strike, several conciliation conferences had already been
undertaken where both parties had already exchanged with each other their respective CBA proposals. In fact, during the
conciliation meetings before the NCMB, but prior to the filing of the notices of strike, the parties had already delved into
matters affecting the meat of the collective bargaining agreement.
The Secretary of the DOLE simply relied on the Notices of Strike that were filed by UFE-DFA-KMU as stated in her
Order of 08 March 2002, to wit:
x x x The records disclose that the Union filed two Notices of Strike. The First is dated October 31, 2001 whose
grounds are cited verbatim hereunder:
"A. Bargaining Deadlock
1. Economic issues (specify)
1. Retirement
2. Panel Composition
3. Costs and Attendance
4. CBA"
The second Notice of Strike is dated November 7, 2001 and the cited ground is like quoted verbatim below:
"B. Unfair Labor Practices (specify)
Bargaining in bad faith –
Setting pre-condition in the ground rules (Retirement issue)"
Nowhere in the second Notice of Strike is it indicated that this Notice is an amendment to and took the place of the first
Notice of Strike. In fact, our Assumption of Jurisdiction Order dated November 29, 2001 specifically cited the two (2)
Notices of Strike without any objection on the part of the Union x x x. 29
Had the parties not been at the stage where the substantive provisions of the proposed CBA had been put in issue, the
union would not have based thereon its initial notice to strike. This Court maintains its original position in the Decision
that, based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the DOLE rightly decided on matters of
substance. That the union later on changed its mind is of no moment because to give premium to such would make the
legally mandated discretionary power of the Dole Secretary subservient to the whims of the parties.
As to the point of clarification on the resumption of negotiations respecting the Retirement Plan:
As for the supposed confusion or uncertainty of the dispositive part of this Court’s Decision, Nestle moves for clarification
of the statement – "The parties are directed to resume negotiations respecting the Retirement Plan and to take action
consistent with the discussion hereinabove set forth. No costs." The entire fallo of this Court’s Decision reads:
76
 WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestlé be declared to
have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition
in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of
Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her
discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA
negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the
collective bargaining negotiations between UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are
directed to resume negotiations respecting the Retirement Plan and to take action consistent with the
discussions hereinabove set forth. No costs.
Nestle interprets the foregoing as an order for the parties to resume negotiations by themselves respecting the issue of
retirement benefits due the employees of the Cabuyao Plant. Otherwise stated, Nestle posits that the dispositive part of the
Decision directs the parties to submit to a voluntary mode of dispute settlement.
A read-through of this Court’s Decision reveals that the ambiguity is more ostensible than real. This Court’s Decision of
22 August 2006 designated marked boundaries as to the implications of the assailed Orders of the Secretary of the DOLE.
We said therein that 1) the Retirement Plan is still a valid issue for herein parties’ collective bargaining negotiations; 2)
the Court of Appeals committed reversible error in limiting to the issue of the ground rules the scope of the power of the
Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3) Nestlé is not guilty of unfair labor practice.
Nowhere in our Decision did we require parties to submit to negotiate by themselves the tenor of the retirement benefits
of the concerned employees of Nestlé, precisely because the Secretary of the DOLE had already assumed jurisdiction over
the labor dispute subject of herein petitions. Again, we spell out what encompass the Secretary’s assumption of jurisdiction
power. The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, and decide the same accordingly. And, as a matter of necessity, it includes questions incidental to the
labor dispute; that is, issues that are necessarily involved in the dispute itself, and not just to that ascribed in the Notice of
Strike or otherwise submitted to him for resolution. In the case at bar, the issue of retirement benefits was specifically
what was presented before the Secretary of the DOLE; hence, We reject Nestlé’s interpretation. Our decision is crystal and
cannot be interpreted any other way. The Secretary having already assumed jurisdiction over the labor dispute subject of
these consolidated petitions, the issue concerning the retirement benefits of the concerned employees must be remanded
back to him for proper disposition.
All told, in consideration of the points afore-discussed and the fact that no substantial arguments have been raised by
either party, this Court remains unconvinced that it should modify or reverse in any way its disposition of herein cases in
its earlier Decision. The labor dispute between the Nestle and UFE-DFA-KMU has dragged on long enough. As no other
issues are availing, let this Resolution write an ending to the protracted labor dispute between Nestlé and UFE-DFA-
KMU (Cabuyao Division).
WHEREFORE, premises considered, the basic issues of the case having been passed upon and there being no new
arguments availing, the Motion for Partial Reconsideration is hereby DENIED WITH FINALITY for lack of merit. Let
these cases be remanded to the Secretary of the Department of Labor and Employment for proper disposition, consistent
with the discussions in this Court’s Decision of 22 August 2006 and as hereinabove set forth. No costs.
SO ORDERED.
(20) G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ PHILIPPINES, INC.
(formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor in
the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations
Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its
monthly paid employees for holiday pay in the light of the Court's decision in Chartered Bank Employees Association
v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and
appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the
exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in
the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen,
sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel)
from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night
differential, vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their
sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall
retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales
personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days'
holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two
motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case
to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases
pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by
Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he
had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
77
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and
whether or not the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and
sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The
respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agritultural
employees who regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined
with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come
back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working
hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m.
prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to report for work at the
office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined
in the Code but an exercise of purely management prerogative of providing administrative control over
such personnel. This does not in any manner provide a reasonable level of determination on the actual
field work of the employees which can be reasonably ascertained. The theoretical analysis that
salesmen and other similarly-situated workers regularly report for work at 8:00 a.m. and return to
their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is
surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow their field
itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The
period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or
scope and result of which are subject to their individual capacity and industry and which "cannot be
determined with reasonable certainty." This is the reason why effective supervision over field work of
salesmen and medical representatives, truck drivers and merchandisers is practically a physical
impossibility. Consequently, they are excluded from the ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must
be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . .
(Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless
attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the
company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company
circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to
the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer"
did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines
field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly
supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and
performance are supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the office
not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an
employee through the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their
performance is proof that their actual hours of work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good
collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal
market returns; and (6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in
measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual
hours of field work which are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the
nature of the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater
extent, works individually. There are no restrictions respecting the time he shall work and he can earn
as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he
ordinarily receives commissions as extra compensation. He works away from his employer's place of
78
 business, is not subject to the personal supervision of his employer, and his employer has no way of
knowing the number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their
exclusion as field personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the
divisor should be changed from 251 to 261 days to include the additional 10 holidays and the employees should reimburse
the amounts overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or
accelerates the basis of conversion and computation by ten days. With the inclusion of ten holidays as
paid days, the divisor is no longer 251 but 261 or 262 if election day is counted. This is indeed an
extremely difficult legal question of interpretation which accounts for what is claimed as falling within
the concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there was a consequent need to
abandon that 251 divisor. To maintain it would create an impossible situation where the employees
would benefit with additional ten days with pay but would simultaneously enjoy higher benefits by
discarding the same ten days for purposes of computing overtime and night time services and
considering sick and vacation leave credits. Therefore, reimbursement of such overpayment with the
use of 251 as divisor arises concomitant with the award of ten holidays with pay. (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid
employee's salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank
Employees Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the rules and in the policy instruction, the
company practice indicates that the monthly salaries of the employees are so computed as to include
the holiday pay provided by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in
computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251
working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays
from the total number of calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months
———————————
251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates
that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the
purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily,
the daily rate should also be the same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is
violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same
daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should
correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the
employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of
10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by
261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime
and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate,
since the daily rate is still the same before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in
light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980,
when the company was on a 6-day working schedule, the divisor used by the company was 303, indicating that the 10
holidays were likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance
to rectify its error, if ever there was one but did not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This
ruling was not questioned by the petitioner union as obviously said decision was favorable to it. Technically, therefore,
respondent Nestle should have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court
has ruled that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the
judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has
also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the issues so
that the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court
resolved to take up the matter of effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered
Bank decision, promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the
Labor Code. Although the Court does not entirely agree with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as
the IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No.
9, issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded
monthly paid employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of
clarifying the Labor Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction
amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added the
"divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the
presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case
on October 23, 1984 was in compliance with these presumably valid rule and policy instruction.
79
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a
legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or
executive act must have been in force and had to be complied with. This is so as until after the
judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties
may have acted under it and may have changed their positions. What could be more fitting than that in
a subsequent litigation regard be had to what has been done while such legislative or executive act was
in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its
being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the government organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have elapsed before it can exercise the
power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no recognition of what had transpired prior to such
adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to
such a determination of [unconstitutionality], is an operative fact and may have consequences which
cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of
the subsequent ruling as to invalidity may have to be considered in various aspects, — with respect to
particular relations, individual and corporate, and particular conduct, private and official." (Chicot
County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been
quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision
in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of
Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp.
434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting
unfairness must be avoided. It is now almost the end of 1991. To require various companies to reach back to 1975 now and
nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of
the implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give
holiday pay benefits to its monthly paid employees, may have been moved to grant other concessions to its employees,
especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's
employees are among the highest paid in the industry. With this consideration, it would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's
fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered
Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of
the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in computing holiday
pay shall be 251 days. The holiday pay as above directed shall be computed from October 23, 1984. In all other respects,
the order of the respondent arbitrator is hereby AFFIRMED.
SO ORDERED.
(21) [G.R. No. 146728. February 11, 2004]
GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, GENERAL MILLING
CORPORATION INDEPENDENT LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision[1] dated July 19, 2000, of the Court of Appeals in CA-G.R.
SP No. 50383, which earlier reversed the decision[2] dated January 30, 1998 of the National Labor Relations Commission
(NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation (GMC) employed
190 workers. They were all members of private respondent General Milling Corporation Independent Labor Union (union,
for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which included the issue
of representation effective for a term of three years. The CBA was effective for three years retroactive to December 1, 1988.
Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with a request
that a counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and individual letters from workers who stated that
they had withdrawn from their union membership, on grounds of religious affiliation and personal differences. Believing
that the union no longer had standing to negotiate a CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and Victor Lastimoso. The letter
stated that it felt there was no basis to negotiate with a union which no longer existed, but that management was nonetheless
always willing to dialogue with them on matters of common concern and was open to suggestions on how the company may
improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive disaffiliation or
resignation from the union and submitted a manifesto, signed by its members, stating that they had not withdrawn from the
union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union
protested and requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC, however, advised
the union to refer to our letter dated December 16, 1991.[3]
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division, Cebu City. The
complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain collectively; (2) interference with the
right to self-organization; and (3) discrimination. The labor arbiter dismissed the case with the recommendation that a
petition for certification election be held to determine if the union still enjoyed the support of the workers.
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253-A of the Labor Code, as
amended by Rep. Act No. 6715,[4] which fixed the terms of a collective bargaining agreement, the NLRC ordered GMC to
abide by the CBA draft that the union proposed for a period of two (2) years beginning December 1, 1991, the date when the
original CBA ended, to November 30, 1993. The NLRC also ordered GMC to pay the attorneys fees.[5]
80
 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 Article 252 of the Labor Code elucidates the meaning of the phrase duty to bargain collectively, thus:
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;
...
ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement....
We have held that the crucial question whether or not a party has met his statutory duty to bargain in good faith
typically turn$ on the facts of the individual case.[8] There is no per se test of good faith in bargaining.[9] Good faith or bad
faith is an inference to be drawn from the facts.[10] The effect of an employers or a unions actions individually is not the test
of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole. [11]
Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement. The union lived up to this obligation
when it presented proposals for a new CBA to GMC within three (3) years from the effectivity of the original CBA. But
GMC failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the
union and the status of its membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the basic
interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The following procedures shall be observed in collective bargaining:
81
(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,[13] we found that petitioner therein, Sweden Ice Cream Plant, refused to submit any counter
proposal to the CBA proposed by its employees certified bargaining agent. We ruled that the former had thereby lost its
right to bargain the terms and conditions of the CBA. Thus, we did not hesitate to impose on the erring company the CBA
proposed by its employees union - lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case,
to wit:
petitioner Companys approach and attitude stalling the negotiation by a series of postponements, non-appearance at the
hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is
unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or
willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its objection
thereto.[14]
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,[15] petitioner therein, Divine
Word University of Tacloban, refused to perform its duty to bargain collectively. Thus, we upheld the unilateral imposition
on the university of the CBA proposed by the Divine Word University Employees Union. We said further:
That being the said case, the petitioner may not validly assert that its consent should be a primordial consideration in the
bargaining process. By its acts, no less than its action which bespeak its insincerity, it has forfeited whatever rights it could
have asserted as an employer.[16]
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and its members if the
terms and conditions contained in the old CBA would continue to be imposed on GMCs employees for the remaining two
(2) years of the CBAs duration. We are not inclined to gratify GMC with an extended term of the old CBA after it resorted
to delaying tactics to prevent negotiations.Since it was GMC which violated the duty to bargain collectively, based on Kiok
Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms and conditions
of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was no pre-existing CBA
between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper to apply in this case
the rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or
agree to the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning
negotiations by going through empty gestures.[17] Thus, by imposing on GMC the provisions of the draft CBA proposed
by the union, in our view, the interests of equity and fair play were properly served and both parties regained equal footing,
which was lost when GMC thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft CBA proposed by
the union should not be disturbed since they are supported by substantial evidence.On this score, we see no cogent reason
to rule otherwise. Hence, we hold that the Court of Appeals did not commit grave abuse of discretion amounting to lack or
excess of jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the
union for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social justice are best served
in this case by sustaining the appellate courts decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the resolution dated
October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.
SO ORDERED.
(22) ST. JOHN COLLEGES, INC., G.R. No. 167892
Petitioner,
Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
ST. JOHN ACADEMY FACULTY
AND EMPLOYEES UNION, Promulgated:
82
Respondent.
October 27, 2006
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the April 22, 2004 Decision[1] of the Court of Appeals in CA-G.R. SP
No. 74519, which affirmed with modifications the June 28, 2002 Resolution[2] of the National Labor Relations Commission
(NLRC) in NLRC CN RAB IV 5-10035-98-1, and its April 15, 2005 Resolution[3] denying petitioners motion for
reconsideration.
Petitioner St. John Colleges, Inc. (SJCI) is a domestic corporation which owns and operates the St.
Johns Academy (later renamed St. John Colleges) in Calamba, Laguna. Prior to 1998, the Academy offered a secondary
course only. The high school then employed about 80 teaching and non-teaching personnel who were members of the St.
John Academy Faculty & Employees Union (Union).
The Collective Bargaining Agreement (CBA) between SJCI and the Union was set to expire on May 31,
1997. During the ensuing collective bargaining negotiations, SJCI rejected all the proposals of the Union for an increase in
workers benefits. This resulted to a bargaining deadlock which led to the holding of a valid strike by the Union on November
10, 1997. In order to end the strike, on November 27, 1997, SJCI and the Union, through the efforts of the National
Conciliation and Mediation Board (NCMB), agreed to refer the labor dispute to the Secretary of Labor and Employment
(SOLE) for assumption of jurisdiction:
AGREEMENT AND JOINT PETITION FOR ASSUMPTION OF JURISDICTION
Both parties agree as follows:
1. That the issue raised by the Union shall be referred to the Honorable Secretary of Labor by way of
Assumption of Jurisdiction. Note this will serve as a joint petition for Assumption of
Jurisdiction.
2. Parties shall submit their respective position paper within 10 days upon the signing of this agreement
and to be decided within two months.
3. That management shall grant the employees cash advance of P1,800.00 each to be given on or
before December 5, 1997 deductible after two months payable in two installments
starting January 31, 1998. The decision re: assumption [of] jurisdiction has not been resolved.
4. Union shall lift the picket immediately and remove all obstruction and return to work on Monday,
December 1, 1997.
5. No retaliatory action shall be undertaken by either party against each other in relation to the strike.[4]
After which, the strike ended and classes resumed. Subsequently, the SOLE issued an Order dated January 19,
1998 assuming jurisdiction over the labor dispute pursuant to Article 263 of the Labor Code. The parties were required to
submit their respective position papers within ten (10) days from receipt of said Order.
Pending resolution of the labor dispute before the SOLE, the Board of Directors of SJCI approved on February
22, 1998 a resolution recommending the closure of the high school which was approved by the stockholders on even
date. The Minutes[5] of the stockholders meeting stated the reasons therefor, to wit:
98-3 CLOSURE OF THE SCHOOL
The President, Mr. Rivera, informed the stockholders that the Board at its meeting
on February 15, 1998 unanimously approved to recommend to the stockholders the closure of the school
because of the irreconcilable differences between the school management and the
Academys Union particularly the safety of our students and the financial aspect of the ongoing CBA
negotiations.
After due deliberations, and upon motion of Dr. Jose O. Juliano seconded by Miss Eva
Escalano, it was unanimously resolved, as it is hereby resolved, that the Board of St. John Colleges, Inc.
be authorized to decide on the terms and conditions of closure, if such decision is made, to the best
interest of the stockholders, parents and students.[6]
Thereafter, SJCI informed the Department of Labor and Employment (DOLE), Department of Education, Culture and
Sports (DECS), parents, students and the Union of the impending closure of the high school which took effect on March 31,
1998.
Subsequently, some teaching and non-teaching personnel of the high school agreed to the closure. On April 2, 1998, SJCI
informed the DOLE that as of March 31, 1998, 51 employees had received their separation compensation package while 25
employees refused to accept the same.
On May 4, 1998, the aforementioned 25 employees conducted a protest action within the perimeter of the high
school. The Union filed a notice of strike with the NCMB only on May 7, 1998.
On May 19, 1998, SJCI filed a petition to declare the strike illegal before the NLRC which was docketed as NLRC
Case No. RAB-IV-5-10035-98-L. It claimed that the strike was conducted in violation of the procedural requirements for
holding a valid strike under the Labor Code.
On May 21, 1998, the 25 employees filed a complaint for unfair labor practice (ULP), illegal dismissal and non-
payment of monetary benefits against SJCI before the NLRC which was docketed as RAB-IV-5-10039-98-L. The Union
members alleged that the closure of the high school was done in bad faith in order to get rid of the Union and render useless
any decision of the SOLE on the CBA deadlocked issues.
These two cases were then consolidated. On January 8, 1999, Labor Arbiter Antonio R. Macam rendered a
Decision[7] dismissing the Unions complaint for ULP and illegal dismissal while granting SJCIs petition to declare the strike
illegal coupled with a declaration of loss of employment status of the 25 Union members involved in the strike.
Meanwhile, in the proceedings before the SOLE, the Union filed a manifestation[8] to maintain the status
quo on March 30, 1998 praying that SJCI be enjoined from closing the high school. It claimed that the decision of SJCI to
close the high school violated the SOLEs assumption order and the agreement of the parties not to take any retaliatory
action against the other. For its part, SJCI filed a motion to dismiss with entry of appearance[9] on October 14, 1998 claiming
that the closure of the high school rendered the CBA deadlocked issues moot. Upon receipt of the Labor Arbiters decision
in the aforesaid consolidated cases, SJCI filed a second motion to dismiss[10] on February 1, 1999 arguing that the case had
already been resolved.
Moreover, after the favorable decision of the Labor Arbiter, SJCI resolved to reopen the high school for school
year 1999-2000. However, it did not restore the high school teaching and non-teaching employees it earlier terminated. That
same school year SJCI opened an elementary and college department.
83

On July 23, 1999, the SOLE denied SJCIs motions to dismiss and certified the CBA deadlock case to the NLRC. It
ordered the consolidation of the CBA deadlock case with the ULP, illegal dismissal, and illegal strike cases which were then
pending appeal before the NLRC.
On June 28, 2002, the NLRC rendered judgment reversing the decision of the Labor Arbiter. It found SJCI guilty
of ULP and illegal dismissal and ordered it to reinstate the 25 employees to their former positions without loss of seniority
rights and other benefits, and with full backwages. It also required SJCI to pay moral and exemplary damages, attorneys
fees, and two (2) months summer/vacation pay. Moreover, it ruled that the mass actions conducted by the 25 employees
on May 4, 1998 could not be considered as a strike since, by then, the employer-employee relationship had already been
terminated due to the closure of the high school. Finally, it dismissed, without prejudice, the certified case on the CBA
deadlocked issues for failure of the parties to substantiate their respective positions.
On appeal, the Court of Appeals, in its Decision dated April 22, 2004, affirmed with modification the decision of
the NLRC:
WHEREFORE, in light of the preceding discussions, the decision subject of the instant
petition is hereby affirmed with a modification that in the computation of backwages, the two month
unworked summer vacation should excluded.
SO ORDERED.[11]
With the denial of its motion for reconsideration, SJCI interposed the instant petition essentially raising two issues:
(1) whether it is liable for ULP and illegal dismissal when it closed down the high school on March 31, 1998 and (2) whether
the Union is liable for illegal strike due to the protest actions which its 25 members undertook within the high schools
perimeter on May 4, 1998.
The petition lacks merit.
Under Article 283 of the Labor Code, the following requisites must concur for a valid closure of the business: (1)
serving a written notice on the workers at least one (1) month before the intended date thereof; (2) serving a notice with the
DOLE one month before the taking effect of the closure; (3) payment of separation pay equivalent to one (1) month or at
least one half (1/2) month pay for every year of service, whichever is higher, with a fraction of at least six (6) months to be
considered as a whole year; and (4) cessation of the operation must be bona fide.[12] It is not disputed that the first two
requisites were satisfied. The third requisite would have been satisfied were it not for the refusal of the herein private
respondents to accept the separation compensation package. The instant case, thus, revolves around the fourth requisite, i.e.,
whether SJCI closed the high school in good faith.
Whether or not the closure of the high school was done in good faith is a question of fact and is not reviewable by
this Court in a petition for review on certiorari save for exceptional circumstances. In fine, the finding of the NLRC, which
was affirmed by the Court of Appeals, that SJCI closed the high school in bad faith is supported by substantial evidence and
is, thus, binding on this Court. Consequently, SJCI is liable for ULP and illegal dismissal.
The determination of whether SJCI acted in bad faith depends on the particular facts as established by the evidence
on record. Bad faith is, after all, an inference which must be drawn from the peculiar circumstances of a case. The two decisive
factors in determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the closure of the high school,
and (2) the timing of, and the reasons for the subsequent opening of a college and elementary department, and, ultimately,
the reopening of the high school department by SJCI after only one year from its closure.
Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to the SOLE for assumption
of jurisdiction under Article 263 of the Labor Code. As a result, the strike ended and classes resumed. After the SOLE
assumed jurisdiction, it required the parties to submit their respective position papers. However, instead of filing its position
paper, SJCI closed its high school, allegedly because of the irreconcilable differences between the school management and
the Academys Union particularly the safety of our students and the financial aspect of the ongoing CBA
negotiations. Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE contending that it had become
moot because of the closure. Nevertheless, a year after said closure, SJCI reopened its high school and did not rehire the
previously terminated employees.
Under these circumstances, it is not difficult to discern that the closure was done to defeat the parties agreement to refer the
labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision of the SOLE; and
to circumvent the Unions right to collective bargaining and its members right to security of tenure. By admitting that the
closure was due to irreconcilable differences between the Union and school management, specifically, the financial aspect of
the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the bargaining deadlock and eliminate the
problem of dealing with the demands of the Union. This is precisely what the Labor Code abhors and punishes as unfair
labor practice since the net effect is to defeat the Unions right to collective bargaining.
However, SJCI contends that these circumstances do not establish its bad faith in closing down the high
school. Rather, it claims that it was forced to close down the high school due to alleged difficult labor problems that it
encountered while dealing with the Union since 1995, specifically, the Unions illegal demands in violation of R.A. 6728 or
the Government Assistance to Students and Teachers in Private Education Act. Under R.A. 6728, the income from tuition
fee increase is to be used as follows: (a) 70% of the tuition fee shall go to the payment of salaries, wages, allowances, and
other benefits of teaching and non-teaching personnel, and (b) 20% of the tuition fee increase shall go to the improvement
or modernization of the buildings, equipment, and other facilities as well as payment of the cost of operations. However,
sometime in 1995, SJCI claims that it was forced to give-in to the demands of the Union by allocating 100% of the tuition
fee increase for teachers benefits even though the same was in violation of R.A. 6728 in order to end the on-going strike of
the Union and avoid prolonged disturbances of classes. Subsequently or during the school year 1996-1997, SJCI claims that
it obtained an approval from the DECS for a 30% tuition fee increase, however, only 10% was implemented. Despite this,
the Union persisted in making illegal demands by filing a complaint before the DOLE claiming that they were entitled to
the unimplemented 20% tuition fee increase. Finally, during the collective bargaining negotiations in 1997, the Union again
made economic demands in excess of the 70% of the tuition fee increase under R.A. 6728. As a result, SJCI claims it had no
choice but to refuse the Unions demands which thereafter led to the holding of a strike on November 10, 1998. It argues
that the Unions alleged illegal demands was a valid justification for the closure of the high school considering that it was
financially incapable of meeting said demands and that it would violate R.A. 6728 if it gave in to said demands which carried
corresponding penalties to be imposed by the DECS.
We are not persuaded.
These alleged difficult labor problems merely show that SJCI and the Union had disagreements regarding workers
benefits which is normal in any business establishment. That SJCI agreed to appropriate 100% of the tuition fee increase to
the workers benefits sometime in 1995 does not mean that it was helpless in the face of the Unions demands because neither
party is obligated to precipitately give in to the proposal of the other party during collective bargaining. [13]If SJCI found
the Unions demands excessive, its remedy under the law is to refer the matter for voluntary or compulsory dispute
resolution. Besides, this incident which occurred in 1995, could hardly establish the good faith of SJCI or justify the high
schools closure in 1998.
Anent the Unions claim for the unimplemented 20% tuition fee increase in 1996, suffice it to say that it is erroneous
to rule on said issue since the same was submitted before the Voluntary Arbitrator [14] and is not on appeal before this
Court.[15] Besides, by referring the labor dispute to the Voluntary Arbitrator, the parties themselves acknowledged that
there is a sufficient mechanism to resolve the said dispute. Again, we fail to see how this alleged labor problem in 1996 shows
the good faith of SJCI in closing the high school in 1998.
With respect to SJCIs claim that during the 1997 CBA negotiations the Union made illegal demands because they
exceeded the 70% limitation set by R.A. No. 6728, it is important to note that the alleged illegality or excessiveness of the
Unions demands were the issues to be resolved by the SOLE after the parties agreed to refer the said labor dispute to the
84
latter for assumption of jurisdiction. As previously mentioned, the SOLE certified the case to the NLRC, which on June 28,
2002, rendered a decision finding that there was insufficient evidence to determine the reasonableness of the Unions
proposals. The NLRC found that SJCI failed to establish that the Unions demands were illegal or excessive. A review of the
records clearly shows that the Unionsubmitted a position paper detailing its demands in actual monetary terms. However,
SJCI failed to establish how and why these demands were in excess of the limitation set by R.A. 6728. Up to this point in
the proceedings, it has merely relied on its self-serving statements that the Unions demands were illegal and
excessive. There is no basis, therefore, to hold that the Union ever made illegal or excessive demands.
At any rate, even assuming that the Unions demands were illegal or excessive, the important and crucial point is
that these alleged illegal or excessive demands did not justify the closure of the high school and do not, in any way, establish SJCIs good
faith. The employer cannot unilaterally close its establishment on the pretext that the demands of its employees are
excessive. As already discussed, neither party is obliged to give-in to the others excessive or unreasonable demands during
collective bargaining, and the remedy in such case is to refer the dispute to the proper tribunal for resolution. This was what
SJCI and the Union did when they referred the 1997 CBA bargaining deadlock to the SOLE; however, SJCI pre-empted the
resolution of the dispute by closing the high school. SJCI disregarded the whole dispute resolution mechanism and undermined
the Unions right to collective bargaining when it closed down the high school while the dispute was still pending with the SOLE.
The Labor Code does not authorize the employer to close down the establishment on the ground of illegal or
excessive demands of the Union. Instead, aside from the remedy of submitting the dispute for voluntary or compulsory
arbitration, the employer may file a complaint for ULP against the Union for bargaining in bad faith. If found guilty, this
gives rise to civil and criminal liabilities and allows the employer to implement a lock out, but not the closure of the
establishment resulting to the permanent loss of employment of the whole workforce.
In fine, SJCI undermined the Labor Codes system of dispute resolution by closing down the high school while the
1997 CBA negotiations deadlock issues were pending resolution before the SOLE. The closure was done in bad faith for the
purpose of defeating the Unions right to collective bargaining. Besides, as found by the NLRC, the alleged illegality and
excessiveness of the Unions demands were not sufficiently proved by SJCI. Even on the assumption that the Unions
demands were illegal or excessive, SJCIs remedy was to await the resolution by the SOLE and to file a ULP case against
the Union. However, SJCI did not have the power to take matters into its own hands by closing down the school in order to
get rid of the Union.
SJCI next argues that the Union unduly endangered the safety and well-being of the students who joined the valid
strike held on November 10, 1997, thus it closed down the high school on March 31, 1998. It claims that the Union coerced
the students to join the protest actions to pressure SJCI to give-in to the demands of the Union.
However, SJCI provided no evidence to substantiate these claims except for its self-serving statements in its
position paper before the Labor Arbiter and pictures belatedly attached to the instant petition before this Court. However,
the pictures were never authenticated and, on its face, only show that some students watched the Union members while they
conducted their protest actions. More importantly, it is not true, as SJCI claims, that the Union admitted that it coerced the
students to join the protest actions and recklessly placed the students in harms way. In its Reply[16] to SJCIs position paper
before the Labor Arbiter, the Union categorically denied that it put the students in harms way or pressured them to join the
protest actions. Given this denial by the Union, it was incumbent upon SJCI to prove that the students were actually harmed
or put in harms way and that the Union coerced them to join the protest actions. The reason for this is that the employer carries
the burden of proof to establish that the closure of the business was done in good faith. In the instant case, SJCI had the burden of
proving that, indeed, the closure of the school was necessary to uphold the safety and well-being of the students.
SJCI presented no evidence to show that the protest actions turned violent; that the parents did not give their
consent to their children who allegedly joined the protest actions; that the Union did not take the necessary steps to protect
some of the students who allegedly joined the same; or that the Union forced or pressured the said students to join the
protest actions. Moreover, if the problem was the endangerment of the students well-being due to the protest actions by
the Union, then the natural response would have been to immediately go after the Union members who allegedly coerced
the students to join the protest actions and thereby endangered the students safety. But no such action appears to have been
undertaken by SJCI. There is even no showing that it prohibited its students from joining the protest actions or informed
the parents of the activities of the students who allegedly joined the protest actions. This raises serious doubts as to whether
SJCI was really looking after the welfare of its students or merely using them as a scapegoat to justify the closure of the
school and thereby get rid of the Union.
Even assuming arguendo that the safety and well-being of some of the students who allegedly joined the protest
actions were compromised, still, the closure was done in bad faith because it was done long after the strike had ended. Thus,
there is no more danger to the students well-being posed by the strike to speak of. It bears stressing that the closure was
implemented on March 31, 1998 but the risk to the safety of the students had long ceased to exist as early as November 28,
1997 when the parties agreed to refer the labor dispute to the SOLE, thus, betraying SJCIs claim that it wanted to safeguard
the interest of the students.
Furthermore, if SJCI was after the interests of the students, then it should not have closed the school because the parents
and the students were vehemently opposed to the same, as shown by the letter dated March 9, 1998 written by Mr. Teofilo
G. Mamplata, President of the Parents Association, and addressed to the Secretary of DECS, to wit:
As per letters sent recently by the school Management to the teachers and parents, notifying of its
closure on March 31, 1998, as decided upon by its Board of Trustees and Stockholders on February 22,
1998 no reasons were stated to justify said decision and action which will definitely affect adversely and to the
detriment of the plight of parents, teachers, students and other personnel of the school.
In this connection and due to the urgency of the matter, we hereby reiterate our appeal with our prayer
that the management and Board of Trustees of St. John Academy of Calamba, Laguna, be stopped from
pursuing their most sudden, unfair, unfavorable and detrimental decision and action, and if warranted,
sanctions be imposed against the erring party.[17] (Italics supplied)
Along the same vein, the parents voiced out their strong objections to the proposed closure of the school, to wit:
PAHAYAG NG PAGTUTOL
Kami, mga magulang, mag-aaral, guro, propesyonal, manggagawa at iba pang sector ng pamayanan sa
bayan ng Calamba, Laguna ay nagpapahayag ng pagtutol sa hindi makatarungang pagsasara ng
paaralang SAINT JOHN ACADEMY. Ang kagyat na pagsasara nito ay nagdulot ng malaking suliranin
sa 2,300 estudyante (incoming 2nd year 4th year), kagaya ng mga sumusunod:
1. Kakaunti ang bilang ng paaralan sa Calamba;
2. Walang paaralan na basta tatanggap sa 700 incoming third year at 800 incoming
fourth year;
3. Ang lahat ng HONOR STUDENTS ay mababaliwala ang kanilang
pinagsikapan;
4. Negatibo ang epekto sa moral ng mga batang estudyante ang pagkakaroon ng
physical and moral displacement dahil sa biglaang pagsasara nito;
5. Hindi lahat ng magulang ay kakayaning bumayad ng mataas na tuition fee sa
ibang paaralan;
6. Ang mataas na kalidad ng turo ng mga guro sa paaralang ito ay mahirap
pantayan; at
7. HIGIT NA LIGTAS SA SAKUNA ANG AMING MGA ANAK sa nasabing
paaralan.
Bilang pagtutol sa pagsasara ng SAINT JOHN ACADEMY ay inilalagda namin ang aming
pangalan sa libis nito. (56 signatures follow)[18] [Italics supplied]
85
 Worth noting is the belief of the parents that the safety of their children was properly secured in said high
school. This was obviously in response to the claim of SJCI that the school was being closed, inter alia, for the safety and
well-being of the students. As correctly observed by the CA:
The petitioner urges this Court to believe that they closed down the school out of their sheer
concern for the students, some of whom have started to sympathize and participate in the unions cause.
nila sa aming mga magulang at anak na nag-aaral sa paaralang ito dahil lamang sa panggigipit sa mga
gurong walang tanging hangarin kundi bayaran sila ng naaayon sa itinakda ng batas.
Sa taong 1999-2000 ay muling binuksan ang paaralang ito na sabi nila ay sa kahilingan ng PTA. Alin
kayang PTA ang tinutukoy nila. Paanong magkakaroon ng PTA samantalang ito ay nakasara at kami
ang PTA bago ito isinara.

As intimated by the private respondent, however, the petitioner itself said that the closing
down of the school was, inter alia, because of irreconcilable differences between the school management
and the Academys Union. Indeed, this translates into an admission that the cessation of business was neither due
to any patrician nor noble objective of protecting the studentry but because the administration no longer wished to
deal with respondent Union.
Kaya po pinaabot naming sa inyong kaalaman na kaming PTA ng paaralang (St. John Academy) ito ay hindi
kailanman humiling sa kanila na pamuling buksan ito.[21] (Italics supplied)
Finally, when SJCI reopened its high school, it did not rehire the Union members. Evidently, the closure had achieved its
purpose, that is, to get rid of the Union members.

We are further tempted to doubt the verity of the petitioners claim that in deciding to shut Clearly, these pieces of evidence regarding the subsequent reopening of the high school after only one year from
down the school, it only had the welfare of its students in mind. There is evidence on record which hints its closure further show that the high schools closure was done in bad faith.
otherwise. Apparently, the parents of the students were vehemently against the idea of closing down the academy as
this would be, as it later did prove, more detrimental to the studentry. No less than Mr. Teofilo Mamplata, Lastly, SJCI asserts that the strike conducted by the 25 employees on May 4, 1998 was illegal for failure to take the necessary
President of St. John Academy Parents Association of Calamba expressed the groups aversion against strike vote and give a notice of strike. However, we agree with the findings of the NLRC and CA that the protest actions of
such move and even wrote a letter to the then Secretary of the Department of Education seeking the Union cannot be considered a strike because, by then, the employer-employee relationship has long ceased to exist
immediate intervention to enjoin the school from closing. This is an indication that the parents were because of the previous closure of the high school on March 31, 1998.
unanimous in their sentiment that the shutdown would result in inconvenience and displacement of the students
who had already been halfway through elementary school and high school. It turned out some were even forced to In sum, the timing of, and the reasons for the closure of the high school and its reopening after only one year from the time
pay higher tuition fees just so they would be admitted in other academies.[19] (Italics supplied) it was closed down, show that the closure was done in bad faith for the purpose of circumventing the Unions right to
collective bargaining and its members right to security of tenure. Consequently, SJCI is liable for ULP and illegal dismissal.
To recapitulate, there is insufficient evidence to hold that the safety and well-being of the students were WHEREFORE, the petition is DENIED. The April 22, 2004 Decision and April 15, 2005Resolution of the Court
endangered and/or compromised, and that the Union was responsible therefor. Even assuming arguendo that the students Appeals in CA-G.R. SP No. 74519 are AFFIRMED.
safety and well-being were jeopardized by the said protest actions, the alleged threat to the students safety and well-being SO ORDERED.
had long ceased by the time the high school was closed. Moreover, the parents were vehemently opposed to the closure of
the school because there was no basis to claim that the students safety was at risk. Taken together, these circumstances lead
to the inescapable conclusion that SJCI merely used the alleged safety and well-being of the students as a subterfuge to (23) EMPLOYEES UNION OF BAYER PHILS., FFW G.R. No. 162943
justify its actions. and JUANITO S. FACUNDO, in his capacity as President, Present:
Petitioners,
SJCI next contends that the subsequent reopening of the high school after only one year from its closure did not CARPIO MORALES, J.,
show that the previous decision to close the high school was tainted with bad faith because the reopening was done due to Chairperson,
the clamor of the high schools former students and their parents. It claims that its former students complained about the - versus - BRION,
cramped classrooms in the schools where they transferred. BERSAMIN,
VILLARAMA, JR., and
The contention is untenable. SERENO, JJ.

First, the fact that after one year from the time it closed its high school, SJCI opened a college and elementary BAYER PHILIPPINES, INC., DIETER J. LONISHEN
department, and reopened its high school department showed that it never intended to cease operating as an educational (President), ASUNCION AMISTOSO (HRD Manager), Promulgated:
institution. Second, there is evidence on record contesting the alleged reason of SJCI for reopening the high school, i.e., that AVELINA REMIGIO AND ANASTACIA
its former students and their parents allegedly clamored for the reopening of the high school. In a letter[20] dated December VILLAREAL, December 6, 2010
15, 2000 addressed to the NLRC, which has never been rebutted by SJCI, Mr. Mamplata, stated that Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Para po sa inyong kabatiran xxx isinara nila ang paaralang ito dahil sa mga nag-alsang guro.
DECISION
Sa ganitong kalagayan kaming pamunuan at kasapi ng PTA ay nakipag-usap sa pamunuan ng paaralang
ito na huwag naming isara dahil malaking epekto ito sa aming mga anak dahil noon ay kalagitnaan pa VILLARAMA, JR., J.:
lamang ng pasukan. Sa kabila ng pakiusap naming ito ay hindi kami pinakinggan at sa halip ay tuluyang This petition for review on certiorari assails the Decision[1] dated December 15, 2003 and Resolution[2] dated March 23,
isinara. Sa kanilang ginawang ito marami sa mga bata ang hindi nakapasok sa ibang paaralan at ang iba 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73813.
naman ay nadoble ang pinagbayaran sa matrikula. Sa kabuuan nito ay malaking paghirap ang ginawa
86
Petitioner Employees Union of Bayer Philippines[3] (EUBP) is the exclusive bargaining agent of all rank-and-file employees
of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP, headed by its
president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining agreement (CBA).
During the negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in a bargaining deadlock.
Subsequently, EUBP staged a strike, prompting the Secretary of the Department of Labor and Employment (DOLE) to
assume jurisdiction over the dispute.
In November 1997, pending the resolution of the dispute, respondent Avelina Remigio (Remigio) and 27 other union
members, without any authority from their union leaders, accepted Bayers wage-increase proposal. EUBPs grievance
committee questioned Remigios action and reprimanded Remigio and her allies. On January 7, 1998, the DOLE Secretary
issued an arbitral award ordering EUBP and Bayer to execute a CBA retroactive to January 1, 1997 and to be made effective
until December 31, 2001. The said CBA[4] was registered on July 8, 1998 with the Industrial Relations Division of the
DOLE-National Capital Region (NCR).[5]
Meanwhile, the rift between Facundos leadership and Remigios group broadened. On August 3, 1998, barely six months
from the signing of the new CBA, during a company-sponsored seminar,[6] Remigio solicited signatures from union members
in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union as
Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4)
abolish all existing officer positions in the union and elect a new set of interim officers, and (5) authorize REUBP to
administer the CBA between EUBP and Bayer.[7] The said resolution was signed by 147 of the 257 local union members. A
subsequent resolution was also issued affirming the first resolution.[8]
A tug-of-war then ensued between the two rival groups, with both seeking recognition from Bayer and demanding
remittance of the union dues collected from its rank-and-file members. On September 8, 1998, Remigios splinter group wrote
Facundo, FFW and Bayer informing them of the decision of the majority of the union members to disaffiliate from
FFW.[9] This was followed by another letter informing Facundo, FFW and Bayer that an interim set of REUBP executive
officers and board of directors had been appointed, and demanding the remittance of all union dues to REUBP. Remigio also
asked Bayer to desist from further transacting with EUBP. Facundo, meanwhile, sent similar requests to
Bayer[10] requesting for the remittance of union dues in favor of EUBP and accusing the company of interfering with purely
union matters.[11] Bayer responded by deciding not to deal with either of the two groups, and by placing the union dues
collected in a trust account until the conflict between the two groups is resolved.[12]
On September 15, 1998, EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-
remittance of union dues. The case was docketed as NLRC-NCR-Case No. 00-09-07564-98.[13]
EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance conference.[14]The meeting was conducted
by the management on November 11, 1998, with all REUBP officers including their lawyers present. Facundo did not attend
the meeting, but sent two EUBP officers to inform REUBP and the management that a preventive mediation conference
between the two groups has been scheduled on November 12, 1998 before the National Conciliation and Mediation Board
(NCMB).[15]
Apparently, the two groups failed to settle their issues as Facundo again sent respondent Dieter J. Lonishen two more
letters, dated January 14, 1999[16] and September 2, 1999,[17] asking for a grievance meeting with the management to discuss
the failure of the latter to comply with the terms of their CBA. Both requests remained unheeded.
On February 9, 1999, while the first ULP case was still pending and despite EUBPs repeated request for a grievance
conference, Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia Villareal,
Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a complaint [18] on March 4, 1999 against Remigios group before the
Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of acts that threaten the
life of the union.
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction.[19] The
Arbiter explained that the root cause for Bayers failure to remit the collected union dues can be traced to the intra-union
conflict between EUBP and Remigios group[20] and that the charges imputed against Bayer should have been submitted
instead to voluntary arbitration.[21] EUBP did not appeal the said decision.[22]
On December 14, 1999, petitioners filed a second ULP complaint against herein respondents docketed as NLRC-RAB-IV
Case No. 12-11813-99-L. Three days later, petitioners amended the complaint charging the respondents with unfair labor
practice committed by organizing a company union, gross violation of the CBA and violation of their duty to
bargain.[23] Petitioners complained that Bayer refused to remit the collected union dues to EUBP despite several demands
sent to the management.[24] They also alleged that notwithstanding the requests sent to Bayer for a renegotiation of the last
two years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate instead with Remigios group. [25]
On even date, REUBP and Bayer agreed to sign a new CBA. Remigio immediately informed her allies of the managements
decision.[26]
In response, petitioners immediately filed an urgent motion for the issuance of a restraining order/injunction [27] before the
National Labor Relations Commission (NLRC) and the Labor Arbiter against respondents. Petitioners asserted their
authority as the exclusive bargaining representative of all rank-and-file employees of Bayer and asked that a temporary
restraining order be issued against Remigios group and Bayer to prevent the employees from ratifying the new CBA. Later,
petitioners filed a second amended complaint[28] to include in its complaint the issue of gross violation of the CBA for
violation of the contract bar rule following Bayers decision to negotiate and sign a new CBA with Remigios group.
Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations Division of DOLE issued a decision
dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within the union
and ordering the conduct of a referendum to determine which of the two groups should be recognized as union
officers.[29] EUBP seasonably appealed the said decision to the Bureau of Labor Relations (BLR). [30] On June 16, 2000, the
BLR reversed the Regional Directors ruling and ordered the management of Bayer to respect the authority of the duly-
elected officers of EUBP in the administration of the prevailing CBA.[31]
Unfortunately, the said BLR ruling came late since Bayer had already signed a new CBA [32] with REUBP on February 21,
2000. The said CBA was eventually ratified by majority of the bargaining unit.[33]
On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP complaint for lack of
jurisdiction.[34] The Labor Arbiter explained the dismissal as follows:
All told, were it not for the fact that there were two (2) [groups] of employees, the Union led by its
President Juanito Facundo and the members who decided to disaffiliate led by Ms. Avelina Remigio,
87
 claiming to be the rightful representative of the rank and file employees, the Company would not have
acted the way it did and the Union would not have filed the instant case.
Clearly then, as the case involves intra-union disputes, this Office is bereft of any jurisdiction pursuant
to Article 226 of the Labor Code, as amended, which provides pertinently in part, thus:
Bureau of Labor Relations The Bureau of Labor Relations and the Labor Relations
Divisions in the regional offices of the Department of Labor and Employment shall
have original and exclusive authority to act, at their own initiative or upon request
of either or both parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-management relations in all
workplaces whether agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining agreements which shall be
the subject of grievance procedure and/or voluntary arbitration.
Specifically, with respect to the union dues, the authority is the case of Cebu Seamens Association[,] Inc.
vs. Ferrer-Calleja, (212 SCRA 51), where the Supreme Court held that when the issue calls for the
determination of which between the two groups within a union is entitled to the union dues, the same
cannot be taken cognizance of by the NLRC.
xxxx
WHEREFORE, premises considered, the instant complaint is hereby DISMISSED on the ground of
lack of jurisdiction.
SO ORDERED.[35]
On June 28, 2000, the NLRC resolved to dismiss[36] petitioners motion for a restraining order and/or injunction stating that
the subject matter involved an intra-union dispute, over which the said Commission has no jurisdiction.[37]
Aggrieved by the Labor Arbiters decision to dismiss the second ULP complaint, petitioners appealed the said decision, but
the NLRC denied the appeal.[38] EUBPs motion for reconsideration was likewise denied.[39]
Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the CA sustained both the Labor Arbiter and
the NLRCs rulings. The appellate court explained,
A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo, p[p]. 166-167);
the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and the Second Amended Complaint dated March 8,
2000 (Vol. II, Rollo, pp. 219-225) will readily show that the instant case was brought about by the action
of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP under the tutelage
of REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves purely an (sic) inter-
union and intra-union conflicts or disputes between EUBP-FFW and REUBP which issue should have
been resolved by the Bureau of Labor Relations under Article 226 of the Labor Code. However, since no
less than petitioners who admitted that respondents committed gross violations of the CBA, then the
BLR is divested of jurisdiction over the case and the issue should have been referred to the Grievance
Machinery and Voluntary Arbitrator and not to the Labor Arbiter as what petitioners did in the case at
bar. x x x
xxxx
Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life span of only five years
and after the said period, the employees have all the right to change their bargaining unit who will
represent them. If there exist[s] two opposing unions in the same company, the remedy is not to declare
that such act is considered unfair labor practice but rather they should conduct a certification election
provided [that] it should be conducted within 60 days of the so[-]called freedom period before the
expiration of the CBA.
WHEREFORE, premises considered, this Petition is DENIED and the assailed Decision dated
September 27, 2001 as well as the Order dated June 21, 2002, denying the motion for reconsideration,
by the National Labor Relations Commission, First Division, in NLRC Case No. RAB-IV-12-11813-
99-L, are hereby AFFIRMED in toto. Costs against petitioners.
SO ORDERED.[40]
Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the said petition was denied for having been
filed out of time and for failure to comply with the requirements provided in the 1997 Rules of Civil Procedure, as
amended.[41] Upon petitioners motion, however, we decided to reinstate their appeal.
The following are the issues raised by petitioners, to wit:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE
DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION
PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE WITH
LAW AND JURISPRUDENCE; AND
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE
DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION
PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN ITS
FINDINGS AND CONCLUSION THAT:
THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF
ANOTHER UNION, NEGOTIATING OR BARGAINING WITH SUCH
UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE BARGAINING
AGENT, VIOLATING THE DUTY TO BARGAIN COLLECTIVELY,
REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE GRIEVANCE
MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND
EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR
TANTAMOUNT TO UNFAIR LABOR PRACTICE.[42]
Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as follows:
I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS, THE NLRC
AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE COURT;
II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE JURISDICTION OVER
THE INSTANT CASE;
88
 III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION DISPUTE; (d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO
COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND (f) validity/invalidity of acceptance/non-acceptance for union membership;
(g) validity/invalidity of impeachment/expulsion of union and workers association
V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND ACADEMIC.[43] officers and members;
(h) validity/invalidity of voluntary recognition;
Essentially, the issue in this petition is whether the act of the management of Bayer in dealing and negotiating with Remigios
splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice and, if so, whether EUBP (i) opposition to application for union and CBA registration;
is entitled to any relief. (j) violations of or disagreements over any provision in a union or workers association
constitution and by-laws;
Petitioners argue that the subject matter of their complaint, as well as the subsequent amendments thereto, pertain to the (k) disagreements over chartering or registration of labor organizations and collective
unfair labor practice act of respondents Bayer, Lonishen and Amistoso in dealing with Remigios splinter union. They bargaining agreements;
contend that (1) the acts of abetting or assisting in the creation of another union is among those considered by the Labor
Code, as amended, specifically under Article 248 (d)[44] thereof, as unfair labor practice; (2) the act of negotiating with such (l) violations of the rights and conditions of union or workers association membership;
union constitutes a violation of Bayers duty to bargain collectively; and (3) Bayers unjustified refusal to process EUBPs (m) violations of the rights of legitimate labor organizations, except interpretation of
grievances and to recognize the said union as the sole and exclusive bargaining agent are tantamount to unfair labor collective bargaining agreements;
practice.[45]
(n) such other disputes or conflicts involving the rights to self-organization, union
membership and collective bargaining
Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that there can be no unfair labor practice on their
part since the requisites for unfair labor practice i.e., that the violation of the CBA should be gross, and that it should involve (1) between and among legitimate labor organizations;
violation in the economic provisions of the CBA were not satisfied. Moreover, they cite the ruling of the Labor Arbiter that (2) between and among members of a union or workers association.
the issues raised in the complaint should have been ventilated and threshed out before the voluntary arbitrators as provided
in Article 261 of the Labor Code, as amended.[46] Respondents Remigio and Villareal, meanwhile, point out that the case
SECTION 2. Coverage. Other related labor relations disputes shall include any conflict
should be dismissed as against them since they are not real parties in interest in the ULP complaint against Bayer, [47] and
between a labor union and the employer or any individual, entity or group that is not a labor organization
since there are no specific or material acts imputed against them in the complaint.[48]
or workers association. This includes: (1) cancellation of registration of unions and workers associations;
and (2) a petition for interpleader.
The petition is partly meritorious.

An intra-union dispute refers to any conflict between and among union members, including grievances arising from any
violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions
constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. [49] Sections 1 and 2, Rule XI of
Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union
disputes, viz:
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES
It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned
circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of whether
it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers. Instead, the issue
raised pertained only to the validity of the acts of management in light of the fact that it still has an existing CBA with
EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor practice, which
issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was therefore erroneous.
However, as to respondents Remigio and Villareal, we find that petitioners complaint was validly dismissed.

SECTION 1. Coverage. - Inter/intra-union disputes shall include: Petitioners ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue, as
against them, essentially involves an intra-union dispute based on Section 1 (n) of DOLE Department Order No. 40-03. To
(a) cancellation of registration of a labor organization filed by its members or by another rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues respecting
labor organization; the propriety of their disaffiliation and the legality of the establishment of REUBP issues that are outside the scope of their
jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with respect to these two respondents.
(b) conduct of election of union and workers association officers/nullification of election
of union and workers association officers;
(c) audit/accounts examination of union or workers association funds; But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence
supports an answer in the affirmative.
89
 It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between
labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining agent
it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate reason for doing
so and without first following the proper procedure. If such behavior would be tolerated, bargaining and negotiations
between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations
will ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. Where there is a
collective bargaining agreement, the duty to bargain collectively shall also mean that neither
party shall terminate or modify such agreement during its lifetime. However, either party can serve
a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date.
It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day period and/or until a new agreement is
reached by the parties. (Emphasis supplied.)
This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that has
been duly certified as the exclusive bargaining representative and the employer becomes the law between them. Additionally,
in the Certificate of Registration[50]issued by the DOLE, it is specified that the registered CBA serves as the covenant
between the parties and has the force and effect of law between them during the period of its duration. Compliance with the
terms and conditions of the CBA is mandated by express policy of the law primarily to afford protection to labor[51] and to
promote industrial peace. Thus, when a valid and binding CBA had been entered into by the workers and the employer, the
latter is behooved to observe the terms and conditions thereof bearing on union dues and representation. [52] If the employer
grossly violates its CBA with the duly recognized union, the former may be held administratively and criminally liable for
unfair labor practice.[53]
Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute unfair labor practice as the same did
not involve gross violations in the economic provisions of the CBA, citing the provisions of Articles 248 (1) and 261 [54] of
the Labor Code, as amended.[55] Their argument is, however, misplaced.
Indeed, in Silva v. National Labor Relations Commission,[56] we explained the correlations of Article 248 (1) and
Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to
exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the concurrence of two things,
namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic provisions of the CBA. [57]
This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can be
considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what happened
in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the
duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates
the entire CBA.
Respondents cannot claim good faith to justify their acts. They knew that Facundos group represented the duly-elected
officers of EUBP. Moreover, they were cognizant of the fact that even the DOLE Secretary himself had recognized the
legitimacy of EUBPs mandate by rendering an arbitral award ordering the signing of the 1997-2001 CBA between Bayer
and EUBP. Respondents were likewise well-aware of the pendency of the intra-union dispute case, yet they still proceeded
to turn over the collected union dues to REUBP and to effusively deal with Remigio. The totality of respondents conduct,
therefore, reeks with anti-EUBP animus.
Bayer, Lonishen and Amistoso argue that the case is already moot and academic following the lapse of the 1997-
2001 CBA and their renegotiation with EUBP for the 2006-2007 CBA. They also reason that the act of the company in
negotiating with EUBP for the 2006-2007 CBA is an obvious recognition on their part that EUBP is now the certified
collective bargaining agent of its rank-and-file employees.[58]
We do not agree. First, a legitimate labor organization cannot be construed to have abandoned its pending claim
against the management/employer by returning to the negotiating table to fulfill its duty to represent the interest of its
members, except when the pending claim has been expressly waived or compromised in its subsequent negotiations with
the management. To hold otherwise would be tantamount to subjecting industrial peace to the precondition that previous
claims that labor may have against capital must first be waived or abandoned before negotiations between them may resume.
Undoubtedly, this would be against public policy of affording protection to labor and will encourage scheming employers to
commit unlawful acts without fear of being sanctioned in the future.
Second, that the management of Bayer decided to recognize EUBP as the certified collective bargaining agent of
its rank-and-file employees for purposes of its 2006-2007 CBA negotiations is of no moment. It did not obliterate the fact
that the management of Bayer had withdrawn its recognition of EUBP and supported REUBP during the tumultuous
implementation of the 1997-2001 CBA. Such act of interference which is violative of the existing CBA with EUBP led to the
filing of the subject complaint.
On the matter of damages prayed for by the petitioners, we have held that as a general rule, a corporation cannot
suffer nor be entitled to moral damages. A corporation, and by analogy a labor organization, being an artificial person and
having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical
suffering and mental anguish. Mental suffering can be experienced only by one having a nervous system and it flows from
real ills, sorrows, and griefs of life all of which cannot be suffered by an artificial, juridical person. [59] A fortiori, the prayer
for exemplary damages must also be denied.[60] Nevertheless, we find it in order to award (1) nominal damages in the amount
of P250,000.00 on the basis of our ruling in De La Salle University v. De La Salle University Employees Association (DLSUEA-
NAFTEU)[61] and Article 2221,[62] and (2) attorneys fees equivalent to 10% of the monetary award. The remittance to
petitioners of the collected union dues previously turned over to Remigio and Villareal is likewise in order.
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision dated December 15,
2003 and the Resolution dated March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813 are MODIFIED as
follows:
1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are found LIABLE for Unfair Labor
Practice, and are hereby ORDERED to remit to petitioners the amount of P254,857.15 representing the
collected union dues previously turned over to Avelina Remigio and Anastacia Villareal. They are
likewise ORDERED to pay petitioners nominal damages in the amount of P250,000.00 and attorneys fees
equivalent to 10% of the monetary award; and
2) The complaint, as against respondents Remigio and Villareal. is DISMISSED due to the lack of
jurisdiction of the Labor Arbiter and the NLRC, the complaint being in the nature of an intra-union dispute.
No pronouncement as to costs. SO ORDERED.
(24) UST FACULTY UNION, G.R. No. 180892
Petitioner,
- versus -
UNIVERSITY OF SANTO TOMAS,
90
REV. FR. ROLANDO DE LA ROSA,
REV. FR. RODELIO ALIGAN, Promulgated:
DOMINGO LEGASPI, and
MERCEDES HINAYON,
Respondents. April 7, 2009
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the June 14, 2007 Decision [1] and
November 26, 2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 92236. The CA Decision affirmed the
November 28, 2003[3] and July 29, 2005[4] Resolutions of the Third Division of the National Labor Relations Commission
(NLRC) in NLRC CA No. 037320-03. These Resolutions, in turn, affirmed the August 15, 2003 Decision of Labor Arbiter
Edgardo M. Madriaga in NLRC NCR Case No. 10-06255-96. Entitled University of Santo Tomas Faculty
Union v. University of Santo Tomas, Rev. Fr. Rolando De La Rosa, Rev. Fr. Rodelio Aligan, Domingo Legaspi, and Mercedes
Hinayon, these decisions and resolutions were all in favor of respondents that were found not guilty of Unfair Labor Practice
(ULP).
The Facts
On September 21, 1996, the University of Santo Tomas Faculty Union (USTFU) wrote a letter [5] to all its
members informing them of a General Assembly (GA) that was to be held on October 5, 1996. The letter contained an
agenda for the GA which included an election of officers. The then incumbent president of the USTFU was Atty. Eduardo
J. Mario, Jr.
On October 2, 1996, Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a Memorandum [6] allowing the
request of the Faculty Clubs of the university to hold a convocation on October 4, 1996.
Members of the faculties of the university attended the convocation, including members of the USTFU, without
the participation of the members of the UST administration. Also during the convocation, an election for the officers of the
USTFU was conducted by a group called the Reformist Alliance. Upon learning that the convocation was intended to be an
election, members of the USTFU walked out. Meanwhile, an election was conducted among those present, and Gil Gamilla
and other faculty members (Gamilla Group) were elected as the president and officers, respectively, of the union. Such
election was communicated to the UST administration in a letter dated October 4, 1996.[7] Thus, there were two (2) groups
claiming to be the USTFU: the Gamilla Group and the group led by Atty. Mario, Jr. (Mario Group).
On October 8, 1996, the Mario Group filed a complaint for ULP against the UST with the Arbitration Branch of
the NLRC, docketed as NLRC NCR Case No. 10-06255-96. It also filed on October 11, 1996 a complaint with the Office of
the Med-Arbiter of the Department of Labor and Employment (DOLE), praying for the nullification of the election of the
Gamilla Group as officers of the USTFU. The complaint was docketed as Case No. NCR-OD-M-9610-016 and entitled UST
Faulty Union, Gil Y. Gamilla, Corazon Qui, et al., v. Eduardo J. Mario, Jr., Ma. Melvyn Alamis, Norma Collantes, et al.
On December 3, 1996, a Collective Bargaining Agreement[8] (CBA) was entered into by the Gamilla Group and
the UST. The CBA superseded an existing CBA entered into by the UST and USTFU which was intended for the period of
June 1, 1993 to May 31, 1998.[9]
On January 27, 1997, Gamilla, accompanied by the barangay captain in the area, Dupont E. Aseron, and Justino
Cardenas, Chief Security Officer of the UST, padlocked the office of the USTFU. Afterwards, an armed security guard of the
UST was posted in front of the USTFU office.
On February 11, 1997, the med-arbiter issued a Resolution, declaring the election of the Gamilla group as null and
void and ordering that this group cease and desist from performing the duties and responsibilities of USTFU officers. This
Resolution was appealed to the Director of the Bureau of Labor Relations (BLR), docketed as BLR Case No. A-8-49-97 and
entitled UST Faulty Union, Gil Y. Gamilla, Corazon Qui, et al. v. Med-Arbiter Tomas F. Falconitin of the National Capital Region,
Department of Labor and Employment (DOLE), Eduardo J. Mario, Jr., et al. Later, the director issued a Resolution dated August
15, 1997 affirming the Resolution of the med-arbiter. His Resolution was then appealed to this Court which rendered its
November 16, 1999 Decision[10] in G.R. No. 131235 upholding the ruling of the BLR.
Thus, on January 21, 2000, USTFU filed a Manifestation[11] with the Arbitration Branch of the NLRC in NLRC
Case No. 10-06255-96, informing it of the Decision of the Court. Thereafter, on August 15, 2003, the Arbitration Branch of
the NLRC issued a Decision[12] dismissing the complaint for lack of merit.
The complaint was dismissed on the ground that USTFU failed to establish with clear and convincing evidence
that indeed UST was guilty of ULP. The acts of UST which USTFU complained of as ULP were the following: (1) allegedly
calling for a convocation of faculty members which turned out to be an election of officers for the faculty union; (2)
subsequently dealing with the Gamilla Group in establishing a new CBA; and (3) the assistance to the Gamilla Group in
padlocking the USTFU office.
In his Decision, the labor arbiter explained that the alleged Memorandum dated October 2, 1996 merely granted
the request of faculty members to hold such convocation. Moreover, by USTFUs own admission, no member of the UST
administration attended or participated in the convocation.
As to the CBA, the labor arbiter ruled that when the new CBA was entered into, (1) the Gamilla Group presented
more than sufficient evidence to establish that they had been duly elected as officers of the USTFU; and (2) the ruling of the
med-arbiter that the election of the Gamilla Group was null and void was not yet final and executory. Thus, UST was
justified in dealing with and entering into a CBA with the Gamilla Group, including helping the Gamilla Group in securing
the USTFU office.
The USTFU appealed the labor arbiters Decision to the Third Division of the NLRC which rendered a Resolution
dated November 28, 2003 affirming the Decision of the labor arbiter. USTFUs Motion for Reconsideration of the NLRCs
November 28, 2003 Resolution was denied in a Resolution dated July 29, 2005.
The case was then elevated to the CA which rendered the assailed Decision affirming the Resolutions of the NLRC.
The CA also denied the Motion for Reconsideration of USTFU in the assailed resolution.
Hence, we have this petition.
The Issues
1. The Honorable Court of Appeals committed serious and reversible error when it
dismissed the Petition for Certiorari in CA-G.R. SP No. 92236 and sustained the National Labor
Relations Commissions ruling that the herein respondents are not guilty of Unfair Labor Practice despite
abundance of evidence showing that Unfair Labor Practices were indeed committed.
2. The Honorable Court of Appeals committed serious and reversible error when it
manifestly overlooked relevant facts not disputed by the parties which, if properly considered, would
justify a different conclusion and in rendering a judgment that is based on a misapprehension of facts.[13]
The Courts Ruling
The petition must be denied.
UST Is Not Guilty of ULP
91
 Petitioner claims that given the factual circumstances attendant to the instant case, the labor arbiter, NLRC, and
CA should have found that UST is guilty of ULP. Petitioner enumerates the acts constituting ULP as follows: (1) Atty.
Domingo Legaspi, the legal counsel for the UST, conducted a faculty meeting in his office, supplying derogatory information
about the Mario Group; (2) respondents provided the Gamilla Group with the facilities and forum to conduct elections, in
the guise of a convocation; and (3) respondents transacted business with the Gamilla Group such as the processing of
educational and hospital benefits, deducting USTFU dues from the faculty members without turning over the dues to the
Mario Group, and entering into a CBA with them.
Additionally, petitioner claims that the CA, NLRC, and labor arbiter ignored vital pieces of evidence. These were the
Affidavit dated January 21, 2000 of Edgar Yu, the Certification dated January 27, 1997 of Alexander Sibug, and the picture
of a security guard posted outside the USTFU office purportedly to prevent entry into and exit from the union office.
The concept of ULP is contained in Article 247 of the Labor Code which states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof.Unfair labor
practices violate the constitutional right of workers and employees to self-organization, are
inimical to the legitimate interests of both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-management relations. (Emphasis
supplied.)
Notably, petitioner claims that respondents violated paragraphs (a) and (d) of Art. 248 of the Code which provide:
Article 248. Unfair labor practices of employers.It shall be unlawful for an employer to commit
any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
xxxx
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of
any labor organization, including the giving of financial or other support to it or its organizers or
supporters.
The general principle is that one who makes an allegation has the burden of proving it. While there are exceptions
to this general rule, in the case of ULP, the alleging party has the burden of proving such ULP.
Thus, we ruled in De Paul/King Philip Customs Tailor v. NLRC that a party alleging a critical fact must support
his allegation with substantial evidence. Any decision based on unsubstantiated allegation cannot stand as it will offend due
process.[14]
While in the more recent and more apt case of Standard Chartered Bank Employees Union (NUBE) v. Confesor, this
Court enunciated:
In order to show that the employer committed ULP under the Labor Code, substantial
evidence is required to support the claim. Substantial evidence has been defined as such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.[15] (Emphasis supplied.)
In other words, whether the employee or employer alleges that the other party committed ULP, it is the burden
of the alleging party to prove such allegation with substantial evidence. Such principle finds justification in the fact that
ULP is punishable with both civil and/or criminal sanctions.[16]
Given the above rulings of this Court, we shall now examine the acts of respondents which allegedly constitute
ULP.
With regard to the alleged derogatory remarks of Atty. Legaspi, the three tribunals correctly ruled that there was
no evidence to support such allegation. The alleged evidence to support petitioners claim, the Affidavit dated January 21,
2000 of Yu, is unacceptable. In the Affidavit it is stated that: 6. That in the said meeting, Atty. Legaspi gave the participants
information that are derogatory to the officers of the UST Faculty Union. [17]
It may be observed that the information allegedly provided during the meeting as derogatory is a conclusion of
law and not of fact. What may be derogatory to Yu may not be punishable under the law. There was, therefore, no fact that
was established by the Affidavit. Hence, petitioner failed to present evidence in support of its claim that respondents
committed ULP through alleged remarks of Atty. Legaspi.
As to the convocation, petitioner avers that: Indeed, Respondents, under the guise of a faculty convocation, ordered
the suspension of classes and required the faculty members to attend the supposed faculty convocation which was to be held
at the Education Auditorium of the University of Santo Tomas.[18] An examination of the Memorandum dated October 2,
1996[19]would, however, rebut such allegation. It stated:
MEMORANDUM TO
THE DEANS, REGENTS, PRINCIPALS
AND HEADS OF DEPARTMENTS
Re: Convocation of Faculty Club
As per request of the Faculty Clubs of the different Faculties, Colleges, Schools and Institutes
in the University through their Presidents, we are allowing them to hold a convocation on Friday,
October 4, 1996 at 9:00 in the morning to 12:00 noon at the Education Auditorium.
The officers and members of said faculty clubs are, therefore, excused from their classes on
Friday from 9:00 to 12:00 noon to allow them to attend.
Regular classes shall resume at 1:00 in the afternoon. Please be guided accordingly.
Thank you.
FR. RODEL ALIGAN, O.P. (Sgd.)
Secretary General
In no way can the contents of this memorandum be interpreted to mean that faculty members were required to
attend the convocation. Not one coercive term was used in the memorandum to show that the faculty club members were
compelled to attend such convocation. And the phrase we are allowing them to hold a convocation negates any idea that the
UST would participate in the proceedings.
Moreover, the CA ruled properly:
More importantly, USTFU itself even admitted that during the October [4], 1996
convocation/election, not a single University Official was present. And the Faculty Convocation was
held without the overt participation of any UST Administrator or Official.[20]
In other words, the Memorandum dated October 2, 1996 does not support a claim that UST organized the
convocation in connivance with the Gamilla Group.
92
 Anent USTs dealing with the Gamilla Group, including the processing of faculty members educational and
hospitalization benefits, the labor arbiter ruled that:
Neither are We persuaded by complainants stand that respondents acquiescence to bargain
with USTFU, through Gamillas group, constitutes unfair labor practice. x x x Such conduct alone,
uncorroborated by other overt acts leading to the commission of ULP, does not conclusively show and
establish the commission of such unlawful acts.[21]
The fact of the matter is, the Gamilla Group represented itself to respondents as the duly elected officials of the
USTFU.[22] As such, respondents were bound to deal with them.
Art. 248(g) of the Labor Code provides that:
ART. 248. Unfair labor practices of employers.It shall be unlawful for an employer to commit any
of the following unfair labor practice:
(g) To violate the duty to bargain collectively as prescribed by this Code.
Correlatively, Art. 250(a) of the Code provides:
ART. 250. Procedure in collective bargaining.The following procedures shall be observed in
collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the
other party with a statement of its proposals. The other party shall make a reply thereto not later than
ten (10) calendar days from receipt of such notice;
Moreover, Art. 252 of the Code defines the duty to bargain collectively as:
ART. 252. Meaning of duty to bargain collectively.The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other
terms and conditions of employment including proposals for adjusting any grievances or questions
arising under such agreement and executing a contract incorporating such agreements if requested by
either party but such duty does not compel any party to agree to a proposal or to make any concession.
(Emphasis ours.)
In the instant case, until our Decision in G.R. No. 131235 that the Gamilla Group was not validly elected into
office, there was no reason to believe that the members of the Gamilla Group were not the validly elected officers and
directors of USTFU. To reiterate, the Gamilla Group submitted a Letter dated October 4, 1996 whereby it informed Fr.
Rolando De La Rosa that its members were the newly elected officers and directors of USTFU. In the Letter, every officer
allegedly elected was identified with the Letter signed by the alleged newly elected Secretary General and President, Ma.
Lourdes Medina and Gamilla, respectively.
More important though is the fact that the records are bereft of any evidence to show that the Mario Group
informed the UST of their objections to the election of the Gamilla Group. In fact, there is even no evidence to show that
the scheduled elections on October 5, 1996 that was supposed to be presided over by the Mario Group ever pushed through.
Instead, petitioner filed a complaint with the med-arbiter on October 11, 1996 praying for the nullification of the election of
the Gamilla Group.
As such, there was no reason not to recognize the Gamilla Group as the new officers and directors of USTFU.
And as stated in the above-quoted provisions of the Labor Code, the UST was obligated to deal with the USTFU, as the
recognized representative of the bargaining unit, through the Gamilla Group. USTs failure to negotiate with the USTFU
would have constituted ULP.
It is not the duty or obligation of respondents to inquire into the validity of the election of the Gamilla Group.
Such issue is properly an intra-union controversy subject to the jurisdiction of the med-arbiter of the DOLE. Respondents
could not have been expected to stop dealing with the Gamilla Group on the mere accusation of the Mario Group that the
former was not validly elected into office.
The subsequent ruling of this Court in G.R. No. 131235 that the Gamilla Group was not validly elected into office
cannot support petitioners allegation of ULP. Had respondents dealt with the Gamilla Group after our ruling in G.R. No.
131235 had become final and executory, it would have been a different story. As the CA ruled correctly, until the validity of
the election of the Gamilla Group is resolved with finality, respondents could not be faulted for negotiating with said group.
Petitioner further alleges that respondents are guilty of ULP when on January 27, 1997, Justino Cardenas,
Detachment Commander of the security agency contracted by the UST to provide security services to the university, led a
group of persons, including Dr. Gil Gamilla, who padlocked the door leading to the USTFU. [23] Petitioner claims that
Gamilla who was and is still being favored by the employer, had no right whatsoever to padlock the union office. And, yet
the Administrators of the University of Santo Tomas aided him in performing an unlawful act. Petitioner adds that an armed
security guard was posted at the USTFU office in order to prevent the Mario Group from performing its duties.[24] To
support such contention, petitioner provides as evidence a Certification dated January 27, 1997 [25] of Sibug, a messenger of
the USTFU, and a photograph[26] of a security guard standing before the USTFU office.
These pieces of evidence fail to support petitioners conclusions.
As to the padlocking of the USTFU office, it must be emphasized that based on the Certification of
Sibug, Cardenas was merely present, with Brgy. Captain Aseron of Brgy. 470, Zone 46, at the padlocking of the USTFU
office. The Certification also stated that Sibug himself also padlocked the USTFU office and that he was neither harassed
nor coerced by the padlocking group. Clearly, Cardenas mere presence cannot be equated to a positive act of aiding the
Gamilla Group in securing the USTFU office.
With regard to the photograph, while it evidences that there was indeed a guard posted at the USTFU office, such
cannot be used to claim that the guard prevented the Mario Group from performing its duties.
Petitioner again failed to present evidence to support its contention that UST committed acts amounting to ULP.
In any event, it bears stressing that at the time of these events, the legitimacy of the Gamilla Group as the valid
officers and directors of the USTFU was already submitted to the med-arbiter and no decision had yet been reached on the
matter. Having been shown evidence to support the legitimacy of the Gamilla Group with no counter-evidence from the
Mario Group, UST had to recognize the Gamilla Group and negotiate with it. Thus, the acts of UST in support of the
USTFU as the legitimate representative of the bargaining unit, albeit through the Gamilla Group, cannot be considered as
ULP.
Finally, petitioner claims that despite the ruling of this Honorable Court, the University of Santo Tomas still
entertains the interlopers whose claim to the leadership of the USTFU has been rejected by the [DOLE] and the Highest
Tribunal.[27] Petitioner, however, fails to enumerate such objectionable actions of the UST. Again, petitioner fails to present
substantial evidence in support of its claim.
In sum, petitioner makes several allegations that UST committed ULP. The onus probandifalls on the shoulders of
petitioner to establish or substantiate such claims by the requisite quantum of evidence. In labor cases as in other
administrative proceedings, substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient
to support a conclusion is required. In the petition at bar, petitioner miserably failed to adduce substantial evidence as basis
for the grant of relief.
WHEREFORE, the petition is hereby DENIED. The June 14, 2007 Decision and November 26, 2007 Resolution
of the CA in CA-G.R. SP No. 92236 are hereby AFFIRMED.
No costs.
93
SO ORDERED.
(25) G.R. No. 76989 September 29, 1987
MANILA MANDARIN EMPLOYEES UNION, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and MELBA C. BELONCIO, respondents
GUTIERREZ, JR., J.:
This is a petition to review on certiorari the National Labor Relations Commission's (NLRC) decision which modified the
Labor Arbiter's decision and ordered the Manila Mandarin Employees Union to pay the wages and fringe benefits of
Melba C. Beloncio from the time she was placed on forced leave until she is actually reinstated, plus ten percent (10%)
thereof as attorney's fees. Manila Mandarin Hotel was ordered to reinstate Beloncio and to pay her whatever service
charges may be due her during that period, which amount would be held in escrow by the hotel.
The petition was filed on January 19, 1987. The private respondent filed her comment on March 7, 1987 while the
Solicitor General filed a comment on June 1, 1987 followed by the petitioner's reply on August 22, 1987. We treat the
comment as answer and decide the case on its merits.
The facts of the case are undisputed.
Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel since 1976 and at the time of her
dismissal, assistant head waitress at the hotel's coffee shop, was expelled from the petitioner Manila Mandarin Employees
Union for acts allegedly inimical to the interests of the union. The union demanded the dismissal from employment of
Beloncio on the basis of the union security clause of their collective bargaining agreement and the Hotel acceded by
placing Beloncio on forced leave effective August 10, 1984.
The union security clause of the collective bargaining agreement provides:
Section 2. Dismissals.
xxx xxx xxx
b) Members of the Union who cease to be such members and/or who fail to maintain their membership
in good standing therein by reason of their resignation from the Union and/or by reason of their expulsion
from the Union in accordance with the Constitution and By-Laws of the Union, for non-payment of union
dues and other assessment for organizing, joining or forming another labor organization shall, upon written
notice of such cessation of membership or failure to maintain membership in the Union and upon
written demand to the company by the Union, be dismissed from employment by the Company after
complying with the requisite due process requirement; ... (Emphasis supplied) (Rollo, p. 114)
Two days before the effective date of her forced leave or on August 8, 1984, Beloncio filed a complaint for unfair labor
practice and illegal dismissal against herein petitioner-union and Manila Mandarin Hotel Inc. before the NLRC,
Arbitration Branch.
Petitioner-union filed a motion to dismiss on grounds that the complainant had no cause of action against it and the NLRC
had no jurisdiction over the subject matter of the complaint.
This motion was denied by the Labor Arbiter.
After the hearings that ensued and the submission of the parties' respective position papers, the Labor Arbiter held that
the union was guilty of unfair labor practice when it demanded the separation of Beloncio. The union was then ordered to
pay all the wages and fringe benefits due to Beloncio from the time she was on forced leave until actual reinstatement, and
to pay P30,000.00 as exemplary damages and P10,000.00 as attorney's fees. The charge against the hotel was dismissed.
The Union then appealed to the respondent NLRC which modified the Labor Arbiter's decision as earlier stated.
A subsequent motion for reconsideration and a second motion for reconsideration were denied.
Hence, this present petition.
The petitioner raises the following assignment of errors:
I
THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT THE PRESENT
CONTROVERSY INVOLVED INTRA-UNION CONFLICTS AND THEREFOR IT HAS NO
JURISDICTION OVER THE SUBJECT-MATTER THEREOF.
II
THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING PETITIONER LIABLE FOR
THE PAYMENT OF PRIVATE RESPONDENT'S SALARY AND FRINGE BENEFITS, AND
AWARD OF 10% ATTORNEY'S FEES, AFTER FINDING AS UNMERITORIOUS HER
PRETENDED CLAIMS OR COMPLAINTS FOR UNFAIR LABOR PRACTICE, ILLEGAL
DISMISSAL, AND DAMAGES. (Rollo, pp. 6-9)
On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of discretion in the NLRC conclusion
that the dispute is not purely intra-union but involves an interpretation of the collective bargaining agreement (CBA)
provisions and whether or not there was an illegal dismissal. Under the CBA, membership in the union may be lost
through expulsion only if there is non-payment of dues or a member organizes, joins, or forms another labor organization. The
charge of disloyalty against Beloncio arose from her emotional remark to a waitress who happened to be a union steward,
"Wala akong tiwala sa Union ninyo." The remark was made in the course of a heated discussion regarding Beloncio's
efforts to make a lazy and recalcitrant waiter adopt a better attitude towards his work.
We agree with the Solicitor General when he noted that:
... The Labor Arbiter explained correctly that "(I)f the only question is the legality of the expulsion of
Beloncio from the Union undoubtedly, the question is one cognizable by the BLR (Bureau of Labor
Relations). But, the question extended to the dismissal of Beloncio or steps leading thereto.
Necessarily, when the hotel decides the recommended dismissal, its acts would be subject to scrutiny.
Particularly, it will be asked whether it violates or not the existing CBA. Certainly, violations of the
CBA would be unfair labor practice."
Article 250 of the Labor Code provides the following:
Art. 250. Unfair labor practices of labor organizations. — It shall be unfair labor
practice for a labor organization, its officers, agents or representatives:
94
 xxx xxx xxx
(b) To cause or attempt to cause an employer to discriminate against an employee,
including discrimination against an employee with respect to whom membership in
such organization has been denied or to terminate an employee on any ground other
than the usual terms and conditions under which membership or continuation of
membership is made available to other members. (Emphasis supplied)
Article 217 of the Labor Code also provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission — (a) The Labor Arbiters
shall have the original and exclusive jurisdiction to hear and decide ... the following
cases involving all workers, whether agricultural or nonagricultural;
(1) Unfair labor practice cases;
xxx xxx xxx
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters. (Rollo, pp. 155-157.)
The petitioner also questions the factual findings of the public respondent on the reasons for Beloncio's dismissal and,
especially, on the argument that she was on forced leave; she was never dismissed; and not having worked, she deserved no
pay.
The Court finds nothing in the records that indicates reversible error, much less grave abuse of discretion, in the NLRC's
findings of facts.
It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect but at times even finality
if such findings are supported by substantial evidence. (Akay Printing Press vs. Minister of Labor and Employment, 140
SCRA 381; Alba Patio de Makati vs. Alba Patio de Makati Employees Association, 128 SCRA 253; Dangan vs. National
Labor Relations Commission, 127 SCRA 706; De la Concepcion vs. Mindanao Portland Cement Corporation, 127 SCRA
647).
The petitioner now questions the decision of the National Labor Relations Commission ordering the reinstatement of the
private respondent and directing the Union to pay the wages and fringe benefits which she failed to receive as a result of
her forced leave and to pay attorney's fees.
We find no error in the questioned decision.
The Hotel would not have compelled Beloncio to go on forced leave were it not for the union's insistence and demand to
the extent that because of the failure of the hotel to dismiss Beloncio as requested, the union filed a notice of strike with
the Ministry of Labor and Employment on August 17, 1984 on the issue of unfair labor practice. The hotel was then
compelled to put Beloncio on forced leave and to stop payment of her salary from September 1, 1984.
Furthermore, as provided for in the collective bargaining agreement between the petitioner-the Union and the Manila
Mandarin Hotel "the Union shall hold the Company free and blameless from any and all liabilities that may arise" should
the employee question the dismissal, as has happened in the case at bar.
It is natural for a union to desire that all workers in a particular company should be its dues-paying members. Since it
would be difficult to insure 100 percent membership on a purely voluntary basis and practically impossible that such total
membership would continuously be maintained purely on the merits of belonging to the union, the labor movement has
evolved the system whereby the employer is asked, on the strength of collective action, to enter into what are now
familiarly known as "union security" agreements.
The collective bargaining agreement in this case contains a union security clause — a closed-shop agreement.
A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting
union who must continue to remain members in good standing to keep their jobs. It is "the most prized achievement of
unionism." It adds membership and compulsory dues. By holding out to loyal members a promise of employment in the
closed-shop, it welds group solidarity. (National Labor Union vs. Aguinaldo's Echague, Inc., 97 Phil. 184). It is a very
effective form of union security agreement.
This Court has held that a closed-shop is a valid form of union security, and such a provision in a collective bargaining
agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. (Lirag Textile Mills,
Inc. vs. Blanco, 109 SCRA 87; Manalang vs. Artex Development Company, Inc., 21 SCRA 561).
The Court stresses, however, that union security clauses are also governed by law and by principles of justice, fair play,
and legality. Union security clauses cannot be used by union officials against an employer, much less their own members,
except with a high sense of responsibility, fairness, prudence, and judiciousness.
A union member may not be expelled from her union, and consequently from her job, for personal or impetuous reasons or
for causes foreign to the closed-shop agreement and in a manner characterized by arbitrariness and whimsicality.
This is particularly true in this case where Ms. Beloncio was trying her best to make a hotel bus boy do his work promptly
and courteously so as to serve hotel customers in the coffee shop expeditiously and cheerfully. Union membership does not
entitle waiters, janitors, and other workers to be sloppy in their work, inattentive to customers, and disrespectful to
supervisors. The Union should have disciplined its erring and troublesome members instead of causing so much hardship
to a member who was only doing her work for the best interests of the employer, all its employees, and the general public
whom they serve.
WHEREFORE, the petition is hereby DISMISSED. The questioned decision of the National Labor Relations Commission
is AFFIRMED. Costs against the petitioner.
SO ORDERED.
(26) [G.R. No. 114974. June 16, 2004]
STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner, vs. The Honorable MA. NIEVES R.
CONFESOR, in her capacity as SECRETARY OF LABOR AND EMPLOYMENT; and the STANDARD
CHARTERED BANK, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard Chartered Bank Employees
Union, seeking the nullification of the October 29, 1993 Order [1] of then Secretary of Labor and Employment Nieves R.
Confesor and her resolutions dated December 16, 1993 and February 10, 1994.
The Antecedents
95
 Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in Dental and all others -- No change from the original demand.[18]
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 the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not make the necessary
In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement (CBA) with a provision revisions on its counter-proposal, it would be best to seek a third party assistance.[19] After the break, the Bank presented
to renegotiate the terms thereof on the third year. Prior to the expiration of the three-year period[2] but within the sixty- its revised counter-proposal[20] as follows:
day freedom period, the Union initiated the negotiations. On February 18, 1993, the Union, through its President, Eddie L.
Divinagracia, sent a letter[3] containing its proposals[4]covering political provisions[5] and thirty-four (34) economic
provisions.[6] Included therein was a list of the names of the members of the Unions negotiating panel.[7] Wage Increase : 1st Year from P1,000 to P1,050.00
2nd Year P800.00 no change
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took note of the Unions
proposals. The Bank attached its counter-proposal to the non-economic provisions proposed by the Union.[8] The Bank
Group Hospitalization Insurance
posited that it would be in a better position to present its counter-proposals on the economic items after the Union had
From: P35,000.00 per illness
presented its justifications for the economic proposals.[9] The Bank, likewise, listed the members of its negotiating
To : P35,000.00 per illness per year
panel.[10] The parties agreed to set meetings to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Banks Human Death Assistance For employee
Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank lawyers should be excluded from the From: P20,000.00
negotiating team. The Bank acceded.[11] Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President To : P25,000.00
of the National Union of Bank Employees (NUBE), the federation to which the Union was affiliated, be excluded from
the Unions negotiating panel.[12] However, Umali was retained as a member thereof.
Dental Retainer Original offer remains the same[21]
On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno suggested that the
negotiation be kept a family affair. The proposed non-economic provisions of the CBA were discussed first.[13] Even during The Union, for its part, made the following counter-proposal:
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. Wage Increase: 1st Year - 40%
Both parties agreed to place the notation DEFERRED/DEADLOCKED.[14] 2nd Year - 19.5%

On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the basis of the Unions Group Hospitalization Insurance
economic proposals was made. The next meeting, the Bank made a similar presentation. Towards the end of the Banks From: P60,000.00 per year
presentation, Umali requested the Bank to validate the Unions guestimates, especially the figures for the rank and file To : P50,000.00 per year
staff.[15] In the succeeding meetings, Umali chided the Bank for the insufficiency of its counter-proposal on the provisions
on salary increase, group hospitalization, death assistance and dental benefits. He reminded the Bank, how the Union got
what it wanted in 1987, and stated that if need be, the Union would go through the same route to get what it wanted.[16] Dental:
Temporary Filling/ P150.00
Upon the Banks insistence, the parties agreed to tackle the economic package item by item. Upon the Unions Tooth Extraction
suggestion, the Bank indicated which provisions it would accept, reject, retain and agree to discuss.[17] The Bank suggested Permanent Filling 200.00
that the Union prioritize its economic proposals, considering that many of such economic provisions remained Prophylaxis 250.00
unresolved. The Union, however, demanded that the Bank make a revised itemized proposal. Root Canal From P2,000 per tooth
To: 1,800.00 per tooth
In the succeeding meetings, the Union made the following proposals:
Death Assistance:
Wage Increase: For Employees: From P45,000.00 to P40,000.00
1st Year Reduced from 45% to 40% For Immediate Family Member: From P25,000.00 to P20,000.00.[22]
2nd Year - Retain at 20%
Total = 60%
The Unions original proposals, aside from the above-quoted, remained the same.
Group Hospitalization Insurance: Another set of counter-offer followed:
Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually
Management Union
Death Assistance: Wage Increase
For the employee -- Reduced from P50,000.00 to P45,000.00 1st Year P1,050.00 40%
For Immediate Family Member -- Reduced from P30,000.00 to P25,000.00 2nd Year - 850.00 19.0%[23]
96
 Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what it wanted to 2. Group Insurance
be included in the total economic package. Umali replied that it was impossible to do so because the Banks counter-proposal a) Hospitalization : P45,000.00
was unacceptable. He furthered asserted that it would have been easier to bargain if the atmosphere was the same as before, where b) Life : P130,000.00
both panels trusted each other.Diokno requested the Union panel to refrain from involving personalities and to instead focus c) Accident : P130,000.00
on the negotiations.[24] He suggested that in order to break the impasse, the Union should prioritize the items it wanted to
iron out. Divinagracia stated that the Bank should make the first move and make a list of items it wanted to be included in 3. Medicine Allowance
the economic package. Except for the provisions on signing bonus and uniforms, the Union and the Bank failed to agree on Fourth year : P5,500.00
the remaining economic provisions of the CBA. The Union declared a deadlock[25] and filed a Notice of Strike before the Fifth year : P6,000.00
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 4. Dental Benefits
Branch of the National Labor Relations Commission (NLRC) in Manila, docketed as NLRC Case No. 00-06-04191-93 against Provision of dental retainer as proposed by the Bank, but without diminishing existing benefits
the Union on June 28, 1993. The Bank alleged that the Union violated its duty to bargain, as it did not bargain in good
faith. It contended that the Union demanded sky high economic demands, indicative of blue-sky bargaining.[27] Further, 5. Optical Allowance
the Union violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that the filing Fourth year: P2,000.00
of notice of strike was an illegal act, the Union officers should be dismissed. Finally, the Bank alleged that as a consequence Fifth year : P2,500.00
of the illegal act, the Bank suffered nominal and actual damages and was forced to litigate and hire the services of the
lawyer.[28]
6. Death Assistance
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, pursuant to Article 263(g) of a) Employee : P30,000.00
the Labor Code, issued an Order assuming jurisdiction over the labor dispute at the Bank. The complaint for ULP filed by b) Immediate Family Member : P5,000.00
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
7. Emergency Leave Five (5) days for each contingency
is herein quoted:

8. Loans
WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union NUBE are hereby
a) Car Loan : P200,000.00
ordered to execute a collective bargaining agreement incorporating the dispositions contained herein. The CBA shall be
b) Housing Loan : It cannot be denied that the costs attendant to having ones own home have
retroactive to 01 April 1993 and shall remain effective for two years thereafter, or until such time as a new CBA has
tremendously gone up. The need, therefore, to improve on this benefit cannot be
superseded it. All provisions in the expired CBA not expressly modified or not passed upon herein are deemed retained
overemphasized. Thus, the management is urged to increase the existing and allowable housing
while all new provisions which are being demanded by either party are deemed denied, but without prejudice to such
loan that the Bank extends to its employees to an amount that will give meaning and substance
agreements as the parties may have arrived at in the meantime.
to this CBA benefit.[30]

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

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

b) Additional fixed amount: On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of Procedure alleging as
Fourth year : P600.00 per month follows:
Fifth year : P400.00 per month
A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE UNIONS CHARGE OF UNFAIR
97
 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[36] and Harley Davidson Motor Co., Inc., AMF,[37] the Unionclaims that
interference in the choice of the Unions bargaining panel is tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the employers violation of Section 8(a)(1) and (5) of the National
Labor Relations Act (NLRA),[38] which pertain to the interference, restraint or coercion of the employer in the employees
exercise of their rights to self-organization and to bargain collectively through representatives of their own choosing; and
the refusal of the employer to bargain collectively with the employees representatives. In both cases, the National Labor
Relations Board held that upon the employers refusal to engage in negotiations with the Union for collective-bargaining
contract when the Union includes a person who is not an employee, or one who is a member or an official of other labor
organizations, such employer is engaged in unfair labor practice under Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association NATU vs. Insular Life Assurance
Co., Ltd.,[39] wherein this Court said that the test of whether an employer has interfered with and coerced employees in the
exercise of their right to self-organization within the meaning of subsection (a)(1) is whether the employer has engaged in
conduct which it may reasonably be said, tends to interfere with the free exercise of employees rights under Section 3 of the
Act.[40]Further, it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by
statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an
adverse effect on self-organization and collective bargaining.[41]
Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF ASSOCIATION AND
PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a signatory, workers and employers, without
distinction whatsoever, shall have the right to establish and, subject only to the rules of the organization concerned, to job
organizations of their own choosing without previous authorization. [42] Workers and employers organizations shall have
the right to draw up their constitutions and rules, to elect their representatives in full freedom to organize their
administration and activities and to formulate their programs.[43] Article 2 of ILO Convention No. 98 pertaining to the
Right to Organize and Collective Bargaining, provides:
Article 2
1. Workers and employers organizations shall enjoy adequate protection against any acts or interference by each
other or each others agents or members in their establishment, functioning or administration.
2. In particular, acts which are designed to promote the establishment of workers organizations under the
domination of employers or employers organizations or to support workers organizations by financial or
other means, with the object of placing such organizations under the control of employers or employers
organizations within the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243 thereof, which provides:
ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELF-ORGANIZATION. All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical or educational institutions whether operating
98
for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own
choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor organizations for their mutual aid and protection.
and Articles 248 and 249 respecting ULP of employers and labor organizations.
The said ILO Conventions were ratified on December 29, 1953. However, even as early as the 1935
Constitution,[44] the State had already expressly bestowed protection to labor as part of the general provisions. The 1973
Constitution,[45] on the other hand, declared it as a policy of the state to afford protection to labor, specifying that the
workers rights to self-organization, collective bargaining, security of tenure, and just and humane conditions of work would
be assured. For its part, the 1987 Constitution, aside from making it a policy to protect the rights of workers and promote
their welfare,[46] devotes an entire section, emphasizing its mandate to afford protection to labor, and highlights the principle
of shared responsibility between workers and employers to promote industrial peace.[47]
Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes, restrains or coerces
employees in the exercise of their right to self-organization or the right to form association. The right to self-organization
necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to exclude from its
panel of negotiators a representative of the Union, and if it can be inferred that the employer adopted the said act to yield
adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees,
ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support
the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.[48] In the case at bar, the Union bases its claim of interference on the alleged suggestions of Diokno
to exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that the suggestion made by Diokno to
Divinagracia is an anti-union conduct from which it can be inferred that the Bank consciously adopted such act to yield
adverse effects on the free exercise of the right to self-organization and collective bargaining of the employees, especially
considering that such was undertaken previous to the commencement of the negotiation and simultaneously with
Divinagracias suggestion that the bank lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process, with the inclusion of Umali in
the Unions negotiating panel, the negotiations pushed through. The complaint was made only on August 16, 1993 after a
deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation occurred after the arguments and
differences over the economic provisions became heated and the parties had become frustrated. It happened after the parties
started to involve personalities. As the public respondent noted, passions may rise, and as a result, suggestions given under
less adversarial situations may be colored with unintended meanings.[49] Such is what appears to have happened in this case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal relations and
innocent communications, which are all part of the friendly relations between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article 248(g) when it
engaged in surface bargaining. It alleged that the Bank just went through the motions of bargaining without any intent of
reaching an agreement, as evident in the Banks counter-proposals. It explained that of the 34 economic provisions it made,
the Bank only made 6 economic counterproposals.Further, as borne by the minutes of the meetings, the Bank, after indicating
the economic provisions it had rejected, accepted, retained or were open for discussion, refused to make a list of items it
agreed to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating without any legal intent to reach an
agreement.[50] The resolution of surface bargaining allegations never presents an easy issue. The determination of whether
a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the
intent of the party in question, and usually such intent can only be inferred from the totality of the challenged partys conduct
both at and away from the bargaining table.[51] It involves the question of whether an employers conduct demonstrates an
unwillingness to bargain in good faith or is merely hard bargaining. [52]
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any intention of
violating its duty to bargain with the Union. Records show that after the Union sent its proposal to the Bank on February
17, 1993, the latter replied with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set for the
settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged economic
and non-economic proposals and counter-proposals.
The Union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which
tend to show that it did not want to reach an agreement with the Union or to settle the differences between it and
the Union. Admittedly, the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the
duty to bargain does not compel either party to agree to a proposal or require the making of a concession.[53] Hence, the
parties failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The inference that respondents did not refuse to
bargain collectively with the complaining union because they accepted some of the demands while they refused the others
even leaving open other demands for future discussion is correct, especially so when those demands were discussed at a
meeting called by respondents themselves precisely in view of the letter sent by the union on April 29, 1960 [54]
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad faith provisions
has no leg to stand on. The records show that the Banks counter-proposals on the non-economic provisions or political
provisions did not put up for grabs the entire work of the Union and its predecessors. As can be gleaned from the Banks
counter-proposal, there were many provisions which it proposed to be retained. The revisions on the other provisions were
made after the parties had come to an agreement. Far from buttressing the Unions claim that the Bank made bad-faith
proposals on the non-economic provisions, all these, on the contrary, disprove such allegations.
We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish the information it
needed.
While the refusal to furnish requested information is in itself an unfair labor practice, and also supports the inference
of surface bargaining,[55] in the case at bar, Umali, in a meeting dated May 18, 1993, requested the Bank to validate
its guestimates on the data of the rank and file. However, Umali failed to put his request in writing as provided for in Article
242(c) of the Labor Code:
Article 242. Rights of Legitimate Labor Organization
(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
99
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal, board, or officer exercising judicial or quasi-
judicial functions has acted without or in excess of jurisdiction and there is no appeal or any plain, speedy, and adequate
remedy in the ordinary course of law for the purpose of annulling the proceeding.[56] Grave abuse of discretion implies such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility which must be so patent and gross as to amount to
an invasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.Mere
abuse of discretion is not enough.[57]
While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to prosper, it cannot
be said that the public respondent acted in capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction
or excess thereof. Neither was it shown that the public respondent exercised its power in an arbitrary and despotic manner
by reason of passion or personal hostility.
Estoppel not Applicable
In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it signed the new
CBA.
Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied
or disproved as against the person relying thereon.

A person, who by his deed or conduct has induced another to act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that thereby causes loss or injury to another. [58]
In the case, however, the approval of the CBA and the release of signing bonus do not necessarily mean that
the Union waived its ULP claim against the Bank during the past negotiations. After all, the conclusion of the CBA was
included in the order of the SOLE, while the signing bonus was included in the CBA itself. Moreover, the Union twice filed
a motion for reconsideration respecting its ULP charges against the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or making exaggerated
or unreasonable proposals.[59] The Bank failed to show that the economic demands made by the Union were exaggerated or
unreasonable. The minutes of the meeting show that the Union based its economic proposals on data of rank and file
employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the
Philippines and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued the questioned order and resolutions. While the approval of the CBA and the release of the signing
bonus did not estop the Union from pursuing its claims of ULP against the Bank, we find that the latter did not engage in
ULP. We, likewise, hold that the Union is not guilty of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and February 10,
1994 Resolutions of then Secretary of Labor Nieves R. Confesor are AFFIRMED. The Petition is hereby DISMISSED.
SO ORDERED.

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