SSS Employee Asso.

v CA 175 SCRA 686 (July 28,

1989)
Facts: The petitioners went on strike after the SSS failed to act upon the unions demands
concerning the implementation of their CBA. SSS filed before the court action for damages with
prayer for writ of preliminary injunction against petitioners for staging an illegal strike. The court
issued a temporary restraining order pending the resolution of the application for preliminary
injunction while petitioners filed a motion to dismiss alleging the courts lack of jurisdiction over
the subject matter. Petitioners contend that the court made reversible error in taking cognizance
on the subject matter since the jurisdiction lies on the DOLE or the National Labor Relations
Commission as the case involves a labor dispute. The SSS contends on one hand that the
petitioners are covered by the Civil Service laws, rules and regulation thus have no right to
strike. They are not covered by the NLRC or DOLE therefore the court may enjoin the
petitioners from striking.
Issue: Whether or not SSS employers have the right to strike
Whether or not the CA erred in taking jurisdiction over the subject matter.
Held: The Constitutional provisions enshrined on Human Rights and Social Justice provides
guarantee among workers with the right to organize and conduct peaceful concerted activities
such as strikes. On one hand, Section 14 of E.O No. 180 provides that the Civil Service law
and rules governing concerted activities and strikes in the government service shall be
observed,
subject to any legislation that may be enacted by Congress referring to Memorandum Circular
No. 6, s. 1987 of the Civil Service Commission which states that prior to the enactment by
Congress of applicable laws concerning strike by government employees enjoins under pain of
administrative sanctions, all government officers and employees from staging strikes,
demonstrations, mass leaves,walk-outs and other forms of mass action which will result in
temporary stoppage or disruption of public service. Therefore in the absence of any legislation
allowing govt. employees to strike they are prohibited from doing so.
In Sec. 1 of E.O. No. 180 the employees in the civil service are denominated as
government employees and that the SSS is one such government-controlled corporation
with an original charter, having been created under R.A. No. 1161, its employees are part of
the civil service and are covered by the Civil Service Commissions memorandum
prohibiting strikes.
Neither the DOLE nor the NLRC has jurisdiction over the subject matter but instead it is the
Public Sector Labor-Management Council which is not granted by law authority to issue writ of
injunction in labor disputes within its jurisdiction thus the resort of SSS before the general court
for the issuance of a writ of injunction to enjoin the strike is appropriate.

DELIA BANGALISAN, LUCILIN CABALFIN, EMILIA DE GUZMAN,

CORAZON GOMEZ, CORAZON GREGORIO, LOURDES LAREDO,
RODOLFO
MARIANO,
WILFREDO
MERCADO,
LIGAYA
MONTANCES and CORAZON PAGPAGUITAN, petitioners, vs.
HON. COURT OF APPEALS, THE CIVIL SERVICE COMMISSION

and THE SECRETARY OF THE DEPARTMENT OF EDUCATION,

CULTURE AND SPORTS, respondents.
DECISION
REGALADO, J.:

This is an appeal by certiorari from the judgment of the Court of Appeals in CA-G.R.
SP No. 38316, which affirmed several resolutions of the Civil Service Commission
finding petitioners guilty of conduct prejudicial to the best interest of the service, as well
as its resolution of April 12, 1996 denying petitioners motion for reconsideration.
[1]

Petitioners, except Rodolfo Mariano, were among the 800 public school teachers
who staged mass actions on September 17 to 19, 1990 to dramatize their grievances
concerning, in the main, the alleged failure of the public authorities to implement in a
just and correct manner certain laws and measures intended for their material benefit.
On September 17, 1990, the Secretary of the Department of Education, Culture and
Sports (DECS) issued a Return-to-Work Order. Petitioners failed to comply with said
order, hence they were charged by the Secretary with grave misconduct; gross neglect
of duty; gross violation of Civil Service law, rules and regulations and reasonable office
regulations; refusal to perform official duty; gross insubordination; conduct prejudicial to
the best interest of the service; and absence without official leave in violation of PD 807,
otherwise known as the Civil Service Decree of the Philippines. They were
simultaneously placed under preventive suspension.
Despite due notice, petitioners failed to submit their answer to the complaint. On
October 30, 1990, the DECS Secretary rendered a decision finding petitioners guilty as
charged and dismissing them from the service effective immediately.
Acting on the motions for reconsideration filed by petitioners Bangalisan, Gregorio,
Cabalfin, Mercado, Montances and Pagpaguitan, the Secretary subsequently modified
the penalty of dismissal to suspension for nine months without pay.
Petitioner Gomez likewise moved for reconsideration with the DECS and then
appealed to the Merit Systems Protection Board (MSPB). The other petitioners also filed
individual appeals to the MSPB, but all of their appeals were dismissed for lack of merit.
Not satisfied with the aforestated adjudication of their respective cases, petitioners
appealed to the Civil Service Commission (CSC). The appeals of petitioners Cabalfin,
Montances and Pagpaguitan were dismissed for having been filed out of time. On
motion for reconsideration, however, the CSC decided to rule on the merits of their
appeal in the interest of justice.

Thereafter, the CSC issued Resolution No. 94-1765 finding Cabalfin guilty of
conduct prejudicial to the best interest of the service and imposing on him a penalty of
six months suspension without pay. The CSC also issued Resolutions Nos. 94-2806
and 94-2384 affirming the penalty of nine months suspension without pay theretofore
imposed on petitioners Montances and Pagpaguitan.
With respect to the appeals of the other petitioners, the CSC also found them guilty
of conduct prejudicial to the best interest of the service. It, however, modified the
penalty of nine months suspension previously meted to them to six months suspension
with automatic reinstatement in the service but without payment of back wages.
All the petitioners moved for reconsideration of the CSC resolutions but these were
all denied, except that of petitioner Rodolfo Mariano who was found guilty only of a
violation of reasonable office rules and regulations because of his failure to inform the
school of his intended absence and to file an application for leave therefor. This
petitioner was accordingly given only a reprimand.
[2]

[3]

Petitioners then filed a petition for certiorari with this Court but, on August 29, 1995,
their petition was referred to the Court of Appeals pursuant to Revised Administrative
Circular No. 1-95.
[4]

On October 20, 1995, the Court of Appeals dismissed the petition for lack of merit.
Petitioners motion for reconsideration was also denied by respondent court, hence
the instant petition alleging that the Court of Appeals committed grave abuse of
discretion when it upheld the resolutions of the CSC (1) that penalized petitioners
whose only offense was to exercise their constitutional right to peaceably assemble and
petition the government for redress of grievances; (2) that penalized petitioner Mariano
even after respondent commission found out that the specific basis of the charges that
former Secretary Cario filed against him was a falsehood; and (3) that denied petitioners
their right to back wages covering the period when they were illegally not allowed to
teach.
[5]

[6]

[7]

It is the settled rule in this jurisdiction that employees in the public service may not
engage in strikes. While the Constitution recognizes the right of government employees
to organize, they are prohibited from staging strikes, demonstrations, mass leaves,
walk-outs and other forms of mass action which will result in temporary stoppage or
disruption of public services. The right of government employees to organize is limited
only to the formation of unions or associations, without including the right to strike.
[8]

Petitioners contend, however, that they were not on strike but were merely
exercising their constitutional right peaceably to assemble and petition the government
for redress of grievances. We find such pretension devoid of merit.

The issue of whether or not the mass action launched by the public school teachers
during the period from September up to the first half of October, 1990 was a strike has
been decided by this Court in a resolution, dated December 18, 1990, in the herein cited
case of Manila Public School Teachers Association, et al. vs. Laguio, Jr., supra. It was
there held that from the pleaded and admitted facts, these mass actions were to all
intents and purposes a strike; they constituted a concerted and unauthorized stoppage
of, or absence from, work which it was the teachers duty to perform, undertaken for
essentially economic reasons.
It is an undisputed fact that there was a work stoppage and that petitioners purpose
was to realize their demands by withholding their services. The fact that the
conventional term strike was not used by the striking employees to describe their
common course of action is inconsequential, since the substance of the situation, and
not its appearance, will be deemed to be controlling.
[9]

The ability to strike is not essential to the right of association. In the absence of
statute, public employees do not have the right to engage in concerted work stoppages
for any purpose.
[10]

Further, herein petitioners, except Mariano, are being penalized not because they
exercised their right of peaceable assembly and petition for redress of grievances but
because of their successive unauthorized and unilateral absences which produced
adverse effects upon their students for whose education they are responsible. The
actuations of petitioners definitely constituted conduct prejudicial to the best interest of
the service, punishable under the Civil Service law, rules and regulations.
As aptly stated by the Solicitor General, It is not the exercise by the petitioners of
their constitutional right to peaceably assemble that was punished, but the manner in
which they exercised such right which resulted in the temporary stoppage or disruption
of public service and classes in various public schools in Metro Manila. For, indeed,
there are efficient but non-disruptive avenues, other than the mass actions in question,
whereby petitioners could petition the government for redress of grievances.
[11]

It bears stressing that suspension of public services, however temporary, will

inevitably derail services to the public, which is one of the reasons why the right to strike
is denied government employees. It may be conceded that the petitioners had valid
grievances and noble intentions in staging the mass actions, but that will not justify their
absences to the prejudice of innocent school children. Their righteous indignation does
not legalize an illegal work stoppage.
[12]

As expounded by this Court in its aforementioned resolution of December 18, 1990,

in the Manila Public School Teachers Association case, ante:

It is, of course, entirely possible that petitioners and their member-teachers had and
have some legitimate grievances. This much may be conceded. After all, and for one
thing, even the employees of the Court have found reason to complain about the
manner in which the provisions of the salary standardization law on pay adjustments
and position classification have been, or are being, implemented. Nonetheless, what
needs to be borne in mind, trite though it may be, is that one wrong cannot be righted
by another, and that redress, for even the most justifiable complaints, should not be
sought through proscribed or illegal means. The belief in the righteousness of their
cause, no matter how deeply and fervently held, gives the teachers concerned no
license to abandon their duties, engage in unlawful activity, defy constituted authority
and set a bad example to their students.
Petitioners also assail the constitutionality of Memorandum Circular No. 6 issued by
the Civil Service Commission. The resolution of the said issue is not really necessary in
the case at bar. The argument of petitioners that the said circular was the basis of their
liability is off tangent.
As a general rule, even in the absence of express statutory prohibition like
Memorandum Circular No. 6, public employees are denied the right to strike or engage
in a work stoppage against a public employer. The right of the sovereign to prohibit
strikes or work stoppages by public employees was clearly recognized at common
law. Indeed, it is frequently declared that modern rules which prohibit such strikes, either
by statute or by judicial decision, simply incorporate or reassert the common law rule.
[13]

[14]

To grant employees of the public sector the right to strike, there must be a clear and
direct legislative authority therefor. In the absence of any express legislation allowing
government employees to strike, recognizing their right to do so, or regulating the
exercise of the right, employees in the public service may not engage in strikes,
walkouts and temporary work stoppages like workers in the private sector.
[15]

[16]

On the issue of back wages, petitioners claim is premised on the allegation that
their preventive suspension, as well as the immediate execution of the decision
dismissing or suspending them, are illegal. These submissions are incorrect.
Section 51 of Executive Order No. 292 provides that (t)he proper disciplining
authority may preventively suspend any subordinate officer or employee under his
authority pending an investigation, if the charge against such officer or employee
involves dishonesty, oppression or grave misconduct, or neglect in the performance of
duty, or if there are reasons to believe that the respondent is guilty of charges which
would warrant his removal from the service.

Under the aforesaid provision, it is the nature of the charge against an officer or
employee which determines whether he may be placed under preventive suspension. In
the instant case, herein petitioners were charged by the Secretary of the DECS with
grave misconduct, gross neglect of duty, gross violation of Civil Service law, rules and
regulations, and reasonable office regulations, refusal to perform official duty, gross
insubordination, conduct prejudicial to the best interest of the service and absence
without official leave (AWOL), for joining the teachers mass actions held at Liwasang
Bonifacio on September 17 to 21, 1990. Hence, on the basis of the charges against
them, it was within the competence of the Secretary to place herein petitioners under
preventive suspension.
As to the immediate execution of the decision of the Secretary against petitioners,
the same is authorized by Section 47, paragraph (2), of Executive Order No. 292, thus:
The Secretaries and heads of agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their jurisdiction. Their
decisions shall be final in case the penalty imposed is suspension for not more than
thirty days or fine in an amount not exceeding thirty days salary. In case the decision
rendered by a bureau or office head is appealable to the Commission, the same shall
be executory except when the penalty is removal, in which case the same shall be
executory only after confirmation by the Secretary concerned.
Petitioners claim of denial of due process must also fail. The records of this case
clearly show that they were given opportunity to refute the charges against them but
they failed to avail themselves of the same. The essence of due process is simply an
opportunity to be heard or, as applied to administrative proceedings, an opportunity to
seek reconsideration of the action or ruling complained of. For as long as the parties
were given the opportunity to be heard before judgment was rendered, the demands of
due process were sufficiently met.
[17]

[18]

Having ruled that the preventive suspension of petitioners and the immediate
execution of the DECS decision are in accordance with law, the next query is whether or
not petitioners may be entitled to back wages.
The issue regarding payment of back salaries during the period of suspension of a
member of the civil service who is subsequently ordered reinstated, is already settled in
our jurisdiction. Such payment of salaries corresponding to the period when an
employee is not allowed to work may be decreed if he is found innocent of the charges
which caused the suspension and when the suspension is unjustified.
[19]

With respect to petitioner Rodolfo Mariano, payment of his back wages is in order. A
reading of the resolution of the Civil Service Commission will show that he was
exonerated of the charges which formed the basis for his suspension. The Secretary of

the DECS charged him with and he was later found guilty of grave misconduct, gross
neglect of duty, gross violation of the Civil Service Law, rules and regulations and
reasonable office regulations, refusal to perform official duty, gross insubordination,
conduct prejudicial to the best interest of the service, and absence without official leave,
for his participation in the mass actions on September 18, 20 and 21, 1990. It was his
alleged participation in the mass actions that was the basis of his preventive suspension
and, later, his dismissal from the service.
However, the Civil Service Commission, in the questioned resolution, made a
finding that Mariano was not involved in the mass actions but was absent because he
was in Ilocos Sur to attend the wake and interment of his grandmother. Although the
CSC imposed upon him the penalty of reprimand, the same was for his violation of
reasonable office rules and regulations because he failed to inform the school of his
intended absence and neither did he file an application for leave covering such
absences.
[20]

Under Section 23 of the Rules Implementing Book V of Executive Order No. 292
and other pertinent civil service laws, in violations of reasonable office rules and
regulations, the first offense is punishable by reprimand. To deny petitioner Mariano his
back wages during his suspension would be tantamount to punishing him after his
exoneration from the charges which caused his dismissal from the service.
[21]

However, with regard to the other petitioners, the payment of their back wages must
be denied. Although the penalty imposed on them was only suspension, they were not
completely exonerated of the charges against them. The CSC made specific findings
that, unlike petitioner Mariano, they indeed participated in the mass actions. It will be
noted that it was their participation in the mass actions that was the very basis of the
charges against them and their subsequent suspension.
The denial of salary to an employee during the period of his suspension, if he
should later be found guilty, is proper because he had given ground for his
suspension. It does not impair his constitutional rights because the Constitution itself
allows suspension for cause as provided by law and the law provides that an employee
may be suspended pending an investigation or by way of penalty.
[22]

Moreover, the general proposition is that a public official is not entitled to any
compensation if he has not rendered any service. As he works, he shall earn. Since
petitioners did not work during the period for which they are now claiming salaries, there
can be no legal or equitable basis to order the payment of such salaries.
[23]

It is also noteworthy that in its resolutions, the Civil Service Commission expressly
denied petitioners right to back wages. In the case of Yacia vs. City of Baguio, the
decision of the Commissioner of Civil Service ordering the dismissal of a government
[24]

employee on the ground of dishonesty was immediately executed pending appeal, but,
on appeal, the Civil Service Board of Appeals modified that penalty to a fine equivalent
to six months pay. We ruled that the claim of an employee for back wages, for the
period during which he was not allowed to work because of the execution of the
decision of the Commissioner, should be denied.
The appeal boards modified decision did not exonerate the employee nor did it
affect the validity of his dismissal or separation from work pending appeal, as ordered
by the Civil Service Commissioner. Such separation from work pending his appeal
remained valid and effective until it was set aside and modified with the imposition of the
lesser penalty by the appeals board. If the Civil Service Appeals Board had intended to
grant him back salaries and to reduce his penalty to six months fine deductible from
such unearned back salaries, the board could and should have so expressly stated in its
decision.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED, but with
the MODIFICATION that petitioner Rodolfo Mariano shall be given back wages without
deduction or qualification from the time he was suspended until his actual reinstatement
which, under prevailing jurisprudence, should not exceed five years.
SO ORDERED.
National Federation of Sugar Workers
vs.
OvejeraG.R. No. L-59743 May 31 1982EN BANC, PLANA,
J:
Facts:
National Federation of Sugar Workers (NFSW) has been the bargaining agent of
CENTRALAZUCARERA DE LA CARLOTA (CAC) rank and file employees and has
concluded with CAC acollective bargaining agreement stipulating a provision regarding
the grant of bonuses.On November 28, 1981, NFSW struck allegedly to compel the
payment of the 13th month payunder PD 851,
in addition
to
the Christmas, milling and amelioration bonuses being enjoyed byCAC workers.To
settle the strike, a compromise agreement was concluded between CAC and NFSW
onNovember stipulating that the parties agree to abide by the final decision of the
Supreme Courtin any case involving the 13th Month Pay Law if it is clearly held that the
employer is liable topay a 13th month pay separate and distinct from the bonuses
already given.Meanwhile, a motion for reconsideration on the case of Marcopper Mining
Corp. vs. Blas Opleet. al. (G.R. No. 51254) for the payment of 13th month pay under PD
851 was denied and anentry of judgment was made in favor of the Union. After the
Marcopper

decision had becomefinal, NFSW renewed its demand that CAC give the 13th month
pay. CAC refused. A notice of strike was filed with the Ministry of Labor and
Employment and was subsequently commencedbased on the non-payment of the 13th
month pay.
Issue:
Whether under PD 851, CAC is obliged to give its workers a 13th month salary in
addition toChristmas, milling and amelioration bonuses stipulated in a collective
bargaining agreementamounting to more than a month's pay.
Held:
The evident intention of the law, as revealed by the law itself, was to grant an additional
incomein the form of a 13th month pay to employees not already receiving the same.
Otherwise put,the intention was to grant some relief not to all workers but only to
the unfortunate onesnot actually paid a 13th month salary or what amounts to it, by
whatever name called; but it wasnot envisioned that a double burden would be imposed
on the employer already paying hisemployees a 13th month pay or its equivalent
whether out of pure generosity or on the basisof a binding agreement and, in the latter
ease, regardless of the conditional character of thegrant (such as making the payment
dependent on profit), so long as there is actual payment.Otherwise, what was conceived
to be a 13th month salary would in effect become a 14th or possibly 15th month pay.
This view is justified by the law itself which makes no distinction in thegrant of
exemption: "Employers
already paying
their employees a
13th month pay or itsequivalent
are not covered by this Decree." (P.D. 851.)
Gold City Integrated Port Service v. NLRC, 245 SCRA 627(1995)
Note: A strike can only happen when there is a labor dispute.I n t h i s c a s e a s t r i k e
o c c u r r e d . I t w a s a n i l l e g a l s t r i k e f o r n o t complying with formal requisites.A
STRIKE, considered as the most effective weapon of l a b o r i s d e f i n e d
a s a n y t e m p o r a r y s t o p p a g e o f w o r k b y t h e concerted action of employees
as a result of an industrial orlabor
dispute.A l a b o r d i s p u t e i n c l u d e s a n y c o n t r o v e r s y o r m a t t e r concerning
terms or conditions of employment of the associationor representation of persons in
negotiating, fixing, maintaining,changing or arrangingthe terms and conditions of
employment, regardless of
whethero r n o t t h e d i s p u t a n t s s t a n d i n t h e p r o x i m a t e r e l a t i o n o f e
mployers and employees.P r i v a t e r e s p o n d e n t s a n d t h e i r c o w o r k e r s s t o p p e d working and held the mass action to press for their
wages andother benefits. What transpired then was clearly a strike, for thec e s s a t i o n
of work b y concerted action resulted from a
l a b o r dispute.4 . T yp e s o f l a b o r d i s p u t e a . r i g h t s d i s p u t e b . i n t e r e s t
dispute
Requirements of Willful Disobedience as a Ground for Termination
The Court has set the guidelines for the dismissal based on disobedience.

In Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, 21 September 1990, the
Court explained that willful disobedience of the employers lawful orders, as a just cause for
dismissal of an employee, envisages the concurrence of at least two requisites:
1.

the employees assailed conduct must have been willful or intentional, the willfulness
being characterized by a wrongful and perverse attitude; and
2.
the order violated must have been reasonable, lawful, made known to the employee
and must pertain to the duties which he had been engaged to discharge.

G.R. No. 86000 September 21, 1990

GOLD CITY INTEGRATED PORT SERVICES, INC. (INPORT), petitioner,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (NLRC) and JOSE L.
BACALSO,respondents.
Jerry M. Pacuribot for petitioner.
Francisco D. Alas for private respondent.

FELICIANO, J.:
Private respondent Jose Bacalso was employed as an admeasurer by the petitioner Gold City
Integrated Port Services, Inc. ("Gold City"). He was suspected by management of under measuring
cargo. Hence, on 23 January 1987, the cargo control officer ordered two (2) other admeasurers to
re-measure three (3) pallets of bananas which had already been measured by private
respondent. 1 The re-measurement revealed that respondent had under-measured the bananas by 1.427
cubic meters. 2
Private respondent felt insulted by the re-measurement and so the next day he went to the office of
the Chief Admeasurer, Rolando Guanaco, and there confronted Nigel Mabalacad, one of the two (2)
admeasurers who had re-checked his work, regarding the matter. Private respondent quarreled with
Mabalacad in the presence of Guanaco, their immediate superior, inside the latter's office. Guanaco
directed private respondent to stop provoking Mabalacad and told both that being in his office, they
should behave properly. Private respondent ignored this oral directive and a fistfight erupted then
and there between him and Mabalacad. Both were eventually pacified by their co-workers. 3
Private respondent Bacalso was then charged with assaulting a co-employee and falsifying reports
and records of the company relative to the performance of his duties, and was preventively
suspended pending investigation of his case by the union-management grievance committee. 4 In a
letter dated 20 March 1987, the grievance committee referred the disposition of the matter to
management in view of the objections of the aggrieved parties to the proposal that private respondent be
meted out a penalty of forty-five (45) days suspension. 5 Apparently, Guangco and Mabalacad did not
consider suspension an adequate sanction considering private respondent's alleged inability to get along
with the other admeasurers and with the company's customers. On 11 April 1987, private respondent
received a notice of termination of services upon the grounds of assaulting a co-employee and of
insubordination. 6

Private respondent Bacalso filed a complaint for illegal dismissal with the Regional Arbitration
Branch No. 10 of the Department of Labor and Employment on 25 May 1987. He controverted the
finding of insubordination, contending that there was no evidence he had wilfully disobeyed any
order given by his superior during the incident. He admitted assaulting his co-employee but claimed
that that did not constitute just cause for his dismissal under Article 282 (d) of the Labor Code
because that act was not an offense committed against his employer's duly authorized
representative. He prayed for reinstatement with backwages and damages. 7
Petitioner Gold City in its answer argued that Bacalso's failure to heed Guangco's order to stop
provoking Mabalacad constituted insubordination or disrespect towards a superior officer punishable
by dismissal under the Schedule of disciplinary sanctions and norms of conduct, incorporated in the
existing Collective Bargaining Agreement ("CBA") with the union. 8
The Labor Arbiter rendered an award in favor of private respondent Bacalso holding that the
dismissal was illegal because there was no evidence to support the charge of insubordination, and
that assault on a co-employee was punishable only with fifteen (15) days suspension under the
CBA's Schedule of penalties. In view of the strained relations between the parties, however, the
Labor Arbiter did not order reinstatement and awarded Bacalso separation pay and attorney's fees
instead. 9
Both parties appealed to the National Labor Relations Commission ("NLRC").
The NLRC, in a decision dated 30 August 1988, held that only Bacalso's appeal was meritorious. It
declined to characterize the assailed conduct of Bacalso as insubordination under Article 282 (a) of
the Labor Code because Guangco's order was "not connected with" Bacalso's work, and did not
amount to wilful or gross disrespect. The NLRC modified the Labor Arbiter's decision by ordering
private respondent Bacalso's reinstatement with backwages. 10
Petitioner, having moved for reconsideration without success, is before this Court on certiorari. On
20 February 1989, the Court issued a temporary restraining order enjoining execution of the NLRC's
decision pending resolution of this Petition, effective upon petitioner's posting of a cash or surety
bond in the amount of P60,000.00. 11 Petitioner Gold City posted a cash deposit in the required
amount. 12
In its Petition, Gold City emphasizes management's prerogative to promulgate rules of discipline and
to enforce the Schedule of disciplinary sanctions providing for dismissal of an employee who
commits gross disrespect of a superior officer. 13
In his Comment on the Petition, private respondent Bacalso alleged that he was apprised of the
charge of insubordination only in his notice of termination, and that he was thereby denied an
opportunity to be heard on this charge before being dismissed, in violation of Sections 2 and 5 of
Rule 14 of the Omnibus Rules Implementing the Labor Code. 14
Two (2) issues are posed for resolution in this case; (a) whether private respondent was denied due
process in the course of his dismissal; and (b) whether private respondent was dismissed for a just
cause.
In respect of the first issue, it must be noted that petitioner did not properly inform private respondent
of all the infractions of company regulations which subsequently became the justification for his
dismissal. After being preventively suspended, he was charged with assaulting a co-employee and
falsifying reports and records of the company relating to the performance of his duties.
Consequently, throughout the investigation conducted at the company level, private respondent's

explanations in defense were shaped to meet only those charges. Petitioner discovered it could not
sustain the charge of falsification of company records against private respondent. Since assault
upon a co-employee, the charge admitted by private respondent, is punishable only with fifteen (15)
days suspension under the CBA's Schedule of penalties, it in effect became necessary for petitioner
to characterize said assault as an act of "insubordination or disrespect towards a superior officer", an
offense punishable with dismissal under the Schedule. 15 So it came to pass that when private
respondent received his notice of termination, the causes therefor were stated as assault on a coemployee and insubordination.
The Court considers that there was here at least a partial deprivation of private respondent's right to
procedural due process. He could not be expected adequately to defend himself as he was not fully
or correctly informed of the charges against him which management intended to prove. It is less than
fair for management to charge an employee with one offense and then to dismiss him for having
committed another offense with which he had not been charged and against which he was therefore
unable adequately to defend himself. Correct specification of private respondent's alleged
wrongdoing was obviously important here, since the penalty that could appropriately be meted out
depended upon what offense was charged and proven. It has been stressed by the Court that the
right of an employee to procedural due process consists of the twin rights of notice and
hearing. 16 The purpose of the requirement of notice is obviously to enable the employee to defend
himself against the charge preferred against him by presenting and substantiating his version of the facts.
Since Gold City here in effect charged private respondent with a second offense other than falsification of
company records, it was incumbent upon petitioner employer to have given private respondent additional
time and opportunity to meet the new charge against him of insubordination. Gold City failed to do that
here. In so failing, Gold City failed to accord to private respondent the full measure of his right to
procedural due process. The fact that in the proceedings before the Labor Arbiter the conduct of private
respondent that petitioner regarded as insubordination was substantiated, does not militate against this
conclusion.
Coming to the second issue, Article 282 of the Labor Code provides in part:
Art. 282. Termination by Employer.-An employer may terminate an employment for
any of the following causes: a) Serious misconduct or wilful disobedience by the
employee of the lawful orders of his employer or representative in connection with
his work.
xxx xxx xxx
(Emphasis supplied)
Wilful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee,
envisages the concurrence of at least two (2) requisites: the employee's assailed conduct must have
been wilful or intentional, the wilfulness being characterized by a "wrongful and perverse attitude";
and the order violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge. 17 Both requisites are present in the
instant case.
By private respondent Bacalso's own admission, he felt insulted by the re-measurement of the cargo
he had already measured. He was apparently much offended by the implication he perceived that
management was uncertain either about his honesty or his competence or possibly both. He
determined to lose his temper, became very angry and picked a fight with one of the co-workers who
had been instructed by their common superior to carry out the re-measurement of private
respondent's pallets of bananas. In the process, private respondent Bacalso completely disregarded
the courtesy and respect due from a subordinate to his superior. Indeed, he may have been,

consciously or otherwise, precisely sending a signal to his superior officer in whose presence he
provoked and then engaged in physical violence with his co-worker. Prior to the fistfight, Guangco
had warned Bacalso to desist from further provoking his co-worker with insulting language. This
warning constituted an order from private respondent's immediate superior not to breach the peace
and order of the Surveyors'(Admeasurers') Division; Guangco was obviously attempting to maintain
basic employee discipline in the workplace.
It is thus not easy to understand how public respondent NLRC could have reasonably concluded that
Guangco's order and warning were "not connected" with private respondent's work. We believe and
so hold that private respondent's act constituted wilful disobedience to a lawful order of petitioner's
representative obviously connected with private respondent's work.
It does not follow, however, that private respondent Bacalso's services were lawfully terminated
either under Article 282 (a) of the Labor Code or under the CBA Schedule of penalties. We believe
that not every case of insubordination or wilful disobedience by an employee of a lawful workconnected order of the employer or its representative is reasonably penalized with dismissal. For
one thing, Article 282 (a) refers to "serious misconduct or wilful disobedience". There must be
reasonable proportionality between, on the one hand, the wilful disobedience by the employee and,
on the other hand, the penalty imposed therefor. Examination of the circumstances surrounding
private respondent's assault upon his co-employee shows that no serious or substantial danger had
been posed by that fistfight to the well-being of his other co-employees or of the general public doing
business with petitioner employer; and neither did such behavior threaten substantial prejudice for
the business of his employer. The fistfight occurred inside the offices of the Surveyors' Division,
more particularly, Mr. Guangco's office, away from the view of petitioner's customers or of the
general public. In Lausa v. National Labor Relations Commission, 18 petitioner Lausa exhibited
disorderly and pugnacious behavior in the course of an argument with his immediate superior, in the
presence of passengers and other crewmen on board the inter-island vessel of which Lausa was a crewmember. In that case, the Court sustained the dismissal of petitioner Reynaldo Lausa considering that his
"behavior could easily have provoked or triggered off a brawl and mindless panic on board the vessel,
and endangered the safety of people and crew-members, and under certain conditions, the safety of the
vessel itself." In Wenphil Corporation v. National Labor Relations Commission, 19 the Court also sustained
the dismissal of private respondent Roberto Mallare who, while tending the salad bar of a fast food
restaurant, engaged in an altercation a co-worker slapping the latter on the head, stepping on his foot,
brandishing an ice scooper against him and refusing to be pacified, right in front and in plain sight of
customers dining in the restaurant, thus posing a substantial threat of disorder in the restaurant. In the
instant case, private respondent Bacalso's disorderly behavior did not present a comparable threat to the
safety or peace of mind of his co-workers or that of the customers of Gold City.
Considering that private respondent Bacalso's unruly temper did not become an effective threat to
his co-workers or the safety of the customers dealing with his employer, or to the goodwill of his
employer, and considering further that he had been quite candid in admitting that he had been at
fault as soon as the investigation began in the company level, we agree with the NLRC that
termination of his services was a disproportionately heavy penalty. We believe that suspension
without pay for three (3) months would be an adequate penalty for the assault on a co-worker and
act of insubordination that private respondent Bacalso actually committed.
It follows that private respondent Bacalso is entitled to reinstatement. 20 Should reinstatement to his
previous position not be feasible because of his relationship or lack of relationship with his fellow
admeasurers, he should be reinstated to a substantially equivalent position in another division of the
company. If that is not possible or feasible either, then in lieu of such reinstatement, petitioner shall pay
private respondent separation pay equivalent to one-month's pay for every year of service. 21 Private
respondent is also entitled to his backwages; however, an amount equivalent to his three (3) months pay
shall be deducted from such backwages. The award of attorney's fees stays.

WHEREFORE, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Decision
dated 30 August 1988 of public respondent NLRC is hereby AFFIRMED with the modifications that:
(1) from private respondent's backwages, there shall be deducted an amount equivalent to his threemonth's pay corresponding to the penalty properly imposable upon him; and (2) should
reinstatement to private respondent Bacalso's former position, or to a substantially equivalent
position in another division of petitioner Gold City, not be feasible, petitioner shall pay private
respondent Bacalso, in lieu of such reinstatement, separation pay equivalent to one-month's pay for
every year of service. The temporary restraining order dated 20 February 1989 is hereby LIFTED.
No pronouncement as to costs.

UNION OF FILIPRO EMPLOYEES vs. NLRC and NESTLE

PHILIPPINES, INC.
G.R. No. 91025 : December 19, 1990.
FACTS: On June 22, 1988, the petitioner Union of the Filipro Employees, the
sole and exclusive bargaining agent of all rank-and-file employees of Nestle
Philippines, (private respondent) filed a Notice of Strike at the DOLE raising
the issues of CBA deadlock and unfair labor practice. Private respondent
assailed the legal personality of the proponents of the said notice of strike to
represent the Nestle employees, before the NCMB. This notwithstanding, the
NCMB proceeded to invite the parties to attend the conciliation meetings and
to which private respondent failed to attend contending that it will deal only
with a negotiating panel duly constituted and mandated in accordance with
the UFE Constitution and By-laws. Thereafter, Company terminated from
employment all UFE Union officers, and all the members of the negotiating
panel for instigating and knowingly participating in a strike staged at the
Makati, Alabang, Cabuyao and Cagayan de Oro on September 11, 1987 without
any notice of strike filed and a strike vote obtained for the purpose. The union
filed a complaint for illegal dismissal. LA upheld the validity of the dismissal;
NLRC en banc affirmed. Subsequently, company concluded separate CBAs
with the general membership of the union at Cebu/Davao and Cagayan de Oro
units; Assailing the validity of these agreements, the union filed a case of ULP
against the company with the NLRC-NCR Arbitration Branch Efforts to
resolve the dispute amicably were taken by the NCMB but yielded negative
result. Petitioner filed a motion asking the Secretary of Labor to assume
jurisdiction over the dispute of deadlock in collective bargaining between the
parties. On October 28, 1988, Labor Secretary Franklin Drilon certified to
the NLRC the said dispute between the UFE and Nestle, Philippines.. which
reads as follows: xxx The NLRC is further directed to call all the parties
immediately and resolve the CBA deadlock within twenty (20) days from
submission of the case for resolution. Second Division of the NLRC
promulgated a resolution granting wage increase and other benefits to Nestles
employees, ruling on non-economic issues, as well as absolving the private
respondent of the Unfair Labor Practice charge. Petitioner finds said

resolution to be inadequate and accordingly, does not agree therewith. It filed

a motion for reconsideration, denied. Hence, this petition. ISSUE: (relative to
the topic) WON WHETHER OR NOT THE SECOND DIVISION OF THE
NLRC ACTED WITHOUT JURISDICTION IN RENDERING THE ASSAILED
RESOLUTION, THE SAME BEING RENDERED ONLY BY A DIVISION OF
THE PUBLIC RESPONDENT AND NOT BY EN BANC; HELD: This case was
certified on October 28, 1988 when existing rules prescribed that, it is
incumbent upon the Commission en banc to decide or resolve a certified
dispute. However, R.A. 6715 took effect during the pendency of this case.
Aside from vesting upon each division the power to adjudicate cases filed
before the Commission, said Act further provides that the divisions of the
Commission shall have exclusive appellate jurisdiction over cases within their
respective territorial jurisdiction. Section 5 of RA 6715 provides as follows:
xxxx The Commission may sit en banc or in five (5) divisions, each composed
of three (3) members. The Commission shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing and disposition of
cases before any of its divisions and regional branches and formulating
policies affecting its administration and operations. The Commission shall
exercise its adjudicatory and all other powers, functions and duties through its
divisions. xxxx In view of the enactment of Republic Act 6715, the
aforementioned rules requiring the Commission en banc to decide or resolve a
certified dispute have accordingly been repealed. Confirmed in Administrative
Order No. 36 (Series of 1989) promulgated by the Secretary under his
delegated rule-making power. Moreover, it is to be emphasized and it is a
matter of judicial notice that since the effectivity of R.A. 6715, many cases have
already been decided by the 5 divisions of the NLRC. We find no legal
justification in entertaining petitioners claim considering that the clear intent
of the amendatory provision is to expedite the disposition of labor cases filed
before the Commission. To rule otherwise would not be congruous to the
proper administration of justice. ACCORDINGLY, PREMISES CONSIDERED,
the petition is DISMISSED. The Resolutions of the NLRC, dated June 5, 1989
and August 8, 1989 are AFFIRMED, except insofar as the ruling absolving the
private respondent of unfair labor practice which is declared SET ASIDE.:-

FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR
ARBITER VOLTAIRE A. BALITAAN, FELIPE LOTERTE and DE
LIMA TRADING & GENERAL SERVICES, respondents.
SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR STANDARDS; LABORONLY CONTRACTING; ELEMENTS THEREOF; NOT PRESENT IN
CASE AT BAR. We agree that there is sufficient evidence to show that
private respondent DE LIMA is an independent job contractor, not a mere
labor-only contractor. Under the Labor Code, two (2) elements must exist
for a finding of labor-only contracting: (a) the person supplying workers to
an employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and (b) the
workers recruited and placed by such persons are performing activities
directly related to the principal business of such employer. These two (2)
elements do not exist in the instant case. As pointed out by petitioner,
private respondent DE LIMA is a going concern duly registered with the
Securities and Exchange Commission with substantial capitalization of
P1,600,000.00, P400,000.00 of which is actually subscribed. Hence, it
cannot be considered as engaged in labor-only contracting being a highly
capitalized venture. Moreover, while the janitorial services performed by
Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA
may be considered directly related to the principal business of FILSYN
which is the manufacture of polyester fiber, nevertheless, they are not
necessary in its operation. On the contrary, they are merely incidental
thereto, as opposed to being integral, without which production and
company sales will not suffer. Judicial notice has already been taken of the
general practice in private as well as in government institutions and
industries of hiring janitorial services on an independent contractor
basis. Consequently, DE LIMA being an independent job contractor, no
direct employer-employee relationship exists between petitioner FILSYN
and private respondent Felipe Loterte.
2. ID.; ID.; INDIRECT EMPLOYER JOINT AND SEVERALLY LIABLE WITH
THE DIRECT EMPLOYER; CASE AT BAR. With respect to FILSYNs
liability, petitioner cannot totally exculpate itself from the fact that
respondent DE LIMA is an independent job contractor. We agree with the
Solicitor General that notwithstanding the lack of a direct employeremployee relationship between FILSYN and Felipe Loterte, the former is
still jointly and severally liable with respondent DE LIMA for Lotertes
monetary claims under Art. 109 of the Labor Code.
APPEARANCES OF COUNSEL
Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
Benedicto Palacol for De Lima Trading & General Services.

DECISION

BELLOSILLO, J.:

Filipinas Synthetic Fiber Corporation (FILSYN) assails the decision of the

National Labor Relations Commission (NLRC) of 16 September
1993 upholding the ruling of the Labor Arbiter that there exists an employeremployee relationship between FILSYN and private respondent Felipe
Loterte.
1

On 4 April 1991 FILSYN. a domestic corporation engaged in the

manufacture of polyester fiber, contracted with De Lima Trading and General
Services (DE LIMA) for the performance of specific janitorial services at the
former's plant in Brgy. Don Jose, Sta. Rosa, Laguna. Pursuant to the
agreement Felipe Loterte, among others, was deployed at FILSYN to take
care of the plants and maintain general cleanliness around the premises.
3

On 24 February 1992 Loterte sued FILSYN and DE LIMA as alternative

defendants for illegal dismissal, underpayment of wages, non-payment of
legal holiday pay, service incentive leave pay and 13th month pay alleging
that he was first assigned to perform janitorial work at FILSYN in 1981 by the
La Saga General Services; that the La Saga was changed to DE LIMA on
August 1991; that when a movement to demand increased wages and 13th
month pay arose among the workers on December 1991 he was accused by a
certain Dodie La Flores of having posted in the bulletin board at FILSYN an
article attributing to management a secret understanding to block the demand;
and, for denying responsibility, his gate pass was unceremoniously cancelled
on 6 February 1992 and he was subsequently dismissed.
4

The Labor Arbiter ruled in favor of Loterte. He was classified as a regular

employee on the ground that he performed tasks usually necessary or
desirable in the main business of FILSYN for more than ten (10) years or
since 1981 under the ruling in Guarin v. NLRC. FILSYN was declared to be
the real employer of Loterte and DE LIMA as a mere labor contractor. Hence,
FILSYN was adjudged liable for Loterte's reinstatement, payment of salary
differentials and back wages from 6 February 1992 up to the date of
judgment, in addition to his unpaid legal holiday pay, service incentive leave
pay and 13th month pay in the total amount of P56,394.90.
6

FILSYN appealed to the NLRC contending that the application of

the Guarin ruling was misplaced since the contractor in said case was not
able to prove that it had substantial capital, hence the reason for its being
declared as a labor-only contractor. In the case of DE LIMA, however,
sufficient evidence existed consisting of its Certificate of Registration issued
by the Securities & Exchange Commission (SEC) and Articles of Incorporation

and By-Laws to prove that it had substantial capitalization, hence, could not
be considered as a mere labor contractor.
The NLRC debunked the claim of FILSYN and affirmed the Labor Arbiter
in finding DE LIMA as a labor-only contractor. When a motion for
reconsideration proved futile, FILSYN filed the instant petition.
On 23 February 1994 a temporary restraining order to stay the execution
of the NLRC decision was issued by the Court upon approval of a bond in the
amount of P56,000.00 to be effective during the pendency of this petition.
8

Petitioner contends that the NLRC committed grave abuse of discretion in

holding DE LIMA as a labor-only contractor with no substantial capital or
investment. Petitioner insists that the evidence it presented shows DE LIMA
to be a corporation duly registered with the SEC with substantial capitalization
of P1,600,000.00, P400,000.00 of which is actually subscribed. Hence, DE
LIMA cannot possibly be considered as without substantial capital. But,
assuming arguendo that DE LIMA is without substantial capital or investment,
petitioner contends that it cannot still be considered as the real employer of
Loterte since his work is not necessary in the principal business of FILSYN
which is the manufacture of polyester, and that present jurisprudence holds
that the performance of janitorial services, although directly related to the
principal business of the alleged employer, is nonetheless unnecessary since
non-performance thereof will not cause production and company sales to
suffer.
9

10

In his Comment the Solicitor General agrees with petitioner that DE LIMA
is not a labor-only contractor. However, while he concedes that no employeremployee relationship exists between FILSYN and Loterte, the Solicitor
General opines that the former is still liable solidarily with DE LIMA, its
contractor, for the satisfaction of the Labor Arbiter's awards in favor of Loterte
as an indirect employer under Art. 106 of the Labor Code.
11

In its Consolidated Reply FILSYN contends that Art. 106 of the Labor
Code cited by the Solicitor General applies only in cases where there is failure
to pay wages, not in cases where the employee was illegally dismissed, as in
the case of Loterte.
We agree that there is sufficient evidence to show that private respondent
DE LIMA is an independent job contractor, not a mere labor-only contractor.
Under the Labor Code, two (2) elements must exist for a finding of labor-only
contracting: (a) the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries,
work premises, among others, and (b) the workers recruited and placed by

such persons are performing activities directly related to the principal business
of such employer.
12

These two (2) elements do not exist in the instant case. As pointed out by
petitioner, private respondent DE LIMA is a going concern duly registered with
the Securities and Exchange Commission with substantial capitalization of
P1,600,000.00, P400,000.00 of which is actually subscribed. Hence, it
cannot be considered as engaged in labor-only contracting being a highly
capitalized venture. Moreover, while the janitorial services performed by
Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA may
be considered directly related to the principal business of FILSYN which is the
manufacture of polyester fiber, nevertheless, they are not necessary in its
operation. On the contrary, they are merely incidental thereto, as opposed to
being integral, without which production and company sales will not
suffer.16 Judicial notice has already been taken of the general practice in
private as well as in government institutions and industries of hiring janitorial
services on an independent contractor basis. Consequently, DE LIMA being
an independent job contractor, no direct employer- employee relationship
exists between petitioner FILSYN and private respondent Felipe Loterte.
13

14

15

17

18

With respect to its liability, however, petitioner cannot totally exculpate

itself from the fact that respondent DE LIMA is an independent job contractor.
We agree with the Solicitor General that notwithstanding the lack of a direct
employer-employee relationship between FILSYN and Felipe Loterte, the
former is still jointly and severally liable with respondent DE LIMA for Loterte's
monetary claims under Art. 109 of the Labor Code which explicitly provides
19

The provisions of existing laws to the contrary notwithstanding, every employer or

indirect employer shall be held responsible with his contractor or subcontractor
for any violation of any provision of this Code. For purposes of determining the extent
of their civil liability under this Chapter, they shall be considered as direct employers
(Italics supplied).
However, a reduction of the Labor Arbiter's awards is in order. In his
decision of 31 May 1993, the Labor Arbiter in computing the 13th month pay
and service incentive leave pay due Loterte erroneously included the period
starting June 1989 to the date of his decision. From the admission of Loterte
himself, he started working for DE LIMA only in August 1991 and that
the Agreement between FILSYN and DE LIMA is dated 4 April
1991. Consequently, the joint and several liability of FILSYN and DE LIMA
could not have covered the period before said date. Thus, without prejudice to
the right of petitioner to seek reimbursement from DE LIMA for whatever
20

21

amount it will have to pay Loterte, we determine their joint and several liability
on the basis of the computation of the Labor Arbiter, affirmed by the NLRC
(which is not disputed by petitioner except only as to the awards for the period
prior to August 1991), as follows
A. Underpayment:

From August 1991 to 5 Feb. 1992

(P113.00 x 314 = P35,482.00)
(P35,482.00 12 = P2,956.83)
P2,956.83 x 6 mos. & 5 days = P18,233.78
Less: Amount received
(P104 x 314 = P32,656.00)
(P32,656.00 12 = P2,721.33)
P2,721.33 x 6mos. & 5 days = 16,781.54
Total underpayment due = P1,452.24
B. 13th Month Pay:
From Aug. to Dec. 1991
(P113.00 x 314 = P35,482.00)
(P35,482.00 12 = P2,956.83)
(P2,956.83 x 5 mos. = P14,784.15)
P14,784.15 12 = P1,232.01
C. Service Incentive Leave Pay:
1991 (P113.00 x 5 days) = P565.00
D. Backwages:
From 6 Feb. 1992 to 31 May 1993
(P113.00 x 314 = P35,482.00)
(P35,482.00 12= P2,956.83)
(P2,956.83 x 15 mos. & 25 days = P46,816.47
1992 13th month pay = 2,956.83
1992 service incentive leave pay = 565.00
Total back wages due = P50,338.30
WHEREFORE, the questioned decision of respondent National Labor
Relations Commission affirming that of the Labor Arbiter as well as its
resolution denying petitioner's motion for reconsideration is REVERSED and
SET ASIDE and a new one entered:
1. Declaring the relationship between petitioner Filipinas Synthetic Fiber
Corporation (FILSYN) and private respondent De Lima Trading and General
Services (DE LIMA) as one of job contractorship;

2. Ordering private respondent De Lima Trading and General Services

(DE LIMA) to reinstate private respondent FELIPE LOTERTE to his former
position or its equivalent without loss of seniority rights; and
3. Ordering private respondent De Lima Trading and General Services
(DE LIMA) jointly and severally with petitioner Filipinas Synthetic Fiber
Corporation (FILSYN) to pay private respondent FELIPE LOTERTE the
following amounts: P1,452.24 for salary differentials, P1,232.01 for 13th
month pay, P565.00 for service incentive leave pay, and P50,338.30 for
backwages, or a total of P53,587.55 due and payable, without prejudice to
FILSYN seeking reimbursement from DE LIMA for whatever amount the
former may pay or have paid the latter by virtue hereof.
SO ORDERED.
PHILIPPINE AIRLINES, INC., petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT, FRANKLIN M. DRILON, and PHILIPPINE
AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.
Ricardo V. Puno, Jr., Caesar R. Dulay, Solon, R. Garcia, Rene B. Gorospe & Bienvenido T.
Jamoralinz, Jr. for petitioner.
E.N.A. Cruz, Entero & Associates for PALEA.

GRIO-AQUINO, J.:
In issue in this case is the authority of the Secretary of Labor to order the petitioner Philippine
Airlines, Inc. to reinstate officers and members of the union who participated in an illegal strike and
to desist from taking any disciplinary or retaliatory action against them.
The 1986-1989 Collective Bargaining Agreement (CBA) between the Philippine Airlines (PAL) and
the Philippine Airlines Employees Association (PALEA) provided for pay increases for various
categories of employees in Section 1, Article V entitled "PAY SCALE." Besides the pay increases,
the CBA also provided for the formation of a PAL/PALEA Payscale Panel
(f) . . . to undertake the study, review, correction, updating, complete overhaul, reclassification or re-grouping of positions as may be required of the payscale and position
classification to evolve updated payscales as soon as possible. (p. 76, Rollo.)
and that
(iii) . . . the Payscale Panel shall exert all reasonable efforts to complete its studies so as to
evolve new updated payscale and position classification by January 01, 1988, (p. 76, Rollo.)

As agreed by the parties, the PAL/PALEA Payscale Panel was formed in due time and went to work.
By July, 1988, the Job Evaluation Committee of the panel had finished the reconciliation and initial
evaluation of positions in all departments within PAL.
In November, 1988, the PALEA members of the panel proposed the amount of PHP 3,349 as the
minimum salary entry level for the lowest job classification (Job Grade 1), while the PAL panel
members proposed PHP 2,310 and a PHP 200 across-the-board increase for employees who could
not avail of the payscale adjustments. The panel conferences continued but there was no meeting of
minds. PALEA would not accept less than the amount it proposed, while the PAL panel members
alleged that they had no authority to offer more.
PALEA accused PAL of bargaining in bad faith.
On December 29, 1988, PALEA filed with the National Conciliation and Mediation Board (NCMB) a
notice of strike on account of: (1) bargaining deadlock; and (2) unfair labor practice by bargaining in
bad faith.
On January 3, 1989, PAL filed with the NCMB a motion to dismiss PALEA's notice of strike for being
premature as the issues raised were not strikeable since there still existed a PAL-PALEA CBA which
would not yet expire until September 30, 1989 or with nine (9) more months to run.
During the conciliation meeting, the following evolved as the real issues:
1. determination of the minimum entry rate
2. wage adjustment due to payscale study
3. retroactive pay as a consequence of the upgraded payscale or goodwill bonus. (p.
38, Rollo.)
On January 6, 1989, Attorney Jesus C. Sebastian, NCMB-NCR Executive Conciliator/Mediator,
advised PALEA president, George Pulido, that the issues raised in the notice of strike were
"appropriate only for preventive mediation," hence, not valid grounds for a lawful strike. However,
when subsequently a representative of NCMB supervised the conduct of PALEA'S strike vote, PAL's
counsel was baffled for it was inconsistent with the NCMB order treating the strike notice
as preventive mediation case No. PM-01-007-89. PAL's counsel sought clarification from NCMB'S
Sebastian. He assured PAL that the NCMB representatives could not certify the strike vote.
On January 12, 1989, PALEA submitted the strike vote results to the NCMB. The next day, January
13, 1989, PAL petitioned Secretary of Labor Franklin Drilon to immediately assume jurisdiction over
the dispute in order to avert the impending strike. The reasons for PAL's petition were, as stated by
the Secretary himself:
The Philippine Airlines, Inc. is a corporation where the government has substantial equity
holding. It is engaged in an industry imbued with national interest. It is the flag carrier of the
Republic of the Philippines. Being the sole airline that services domestic routes, a prolonged
work stoppage will push back the national economic recovery program of the government
and consequently result to enormous damage to the economy of the country. Hundreds of
thousands of people directly and indirectly dependent on the continued operations of the firm
including the huge work force of the company will likewise be prejudiced. The viability of the
firm will also be endangered. These considerations have in the past guided this Office in

consistently exercising its powers under Article 263(g) of the Labor Code, as amended, in
handling labor disputes in the Company. The current situation is no exception to this rule.
This Office is of the view that the present work stoppage at Philippine Airlines, Inc. will
adversely affect the national interest. Thus, this Office hereby assumes jurisdiction over the
instant dispute. (pp. 38-39, Rollo.)
Inexplicably, the Secretary failed to act promptly on PAL's petition for his assumption of jurisdiction.
Seven (7) days passed with no reaction from Secretary Drilon. On January 20, 1989, PALEA
declared a strike paralyzing PAL's entire operations the next day, January 21, 1989, and resulting in
serious inconvenience to thousands of passengers who were stranded in 43 airports throughout the
country, and the loss of millions of pesos in unearned revenue for PAL. Late in the day, at 7:50 P.M.,
Secretary Drilon issued an order assuming jurisdiction over the labor dispute which had already
exploded into a full-blown strike, ordering the strikers to lift their pickets and return to work, directing
management to accept all returning employees, and resolving the issues subject of the strike, by
awarding the following monetary benefits to the strikers, while prohibiting the company from taking
retaliatory action against them:
. . . to resolve the impasse between the herein parties, this Office finds the following award
just and reasonable:
1. As far as the issue of minimum entry level is concerned, the company is directed to adjust
the same to P2,500.00 from its present level effective January 1, 1989.
2. The company is ordered to grant the amount of P3.3 million per month to cover acrossthe-board increases of covered regular employees subject to the distribution of the union as
embodied in their proposed scheme but in no instance should the lowest adjustment be less
than P300.00. In line with this, the scheme proposed by the union and submitted to NCMB
on January 20,1989 is herein adopted.
It is understood, however, that in items 1 and 2 above, the amount which is higher should be
granted.
3. A goodwill bonus in the amount of P3,000.00 to be paid in four equal pay period
installments beginning February 15 and up to March 31, 1989 is hereby awarded. (p.
39, Rollo.)
Declaring the strike valid, the Secretary stated:
Except for the fact that the Union's notice of strike was treated as a preventive mediation
case (at the instance of NCMB), it should be noted that the Union complied with all the
requirements for a valid strike. It observed the cooling-off periods required and submitted the
necessary strike vote. If ever there is any ground to discipline the Union officers for noncompliance with the law, it would be based on the "non-filing" of the strike notice, which "nonfiling" was a consequence of the NCMB'S efforts to create the appropriate atmosphere to
resolve the dispute by treating the notice of strike as a preventive mediation case. Otherwise
put, the strike would have been legal in all respects had not the NCMB, in its good faith effort
to settle the dispute, treated the notice of strike as a case for preventive mediation. Under
these circumstances, and in the interest of industrial peace and the promotion of the concept
of preventive mediation, the parties are directed to desist from committing any retaliatory act
as a result of the work stoppage. The UNION, however, is hereby warned that in the future

this office will not tolerate such conduct and will apply the full force of the law. (pp. 34, Rollo.)
The petitioner filed a motion for reconsideration. The Secretary denied it in a minute resolution on
May 8, 1989 or three months later.
In this petition for review, PAL avers that the Secretary of Labor gravely abused his discretion
amounting to excess or lack of jurisdiction:
1. in ruling on the legality of the strike;
2. in directing PAL to desist from taking retaliatory action against the officers and members of
the Union responsible for the illegal strike; and
3. in failing to seasonably exercise his authority to avert the illegal strike and protect the
rights and interests of PAL whose business is affected with public interest.
Under Art. 263 of the Labor Code, the Labor Secretary's authority to resolve a labor dispute within 30
days from the date of assumption of jurisdiction, encompasses only the issues in the dispute, not the
legality or illegality of any strike that may have been resorted to in the meantine (Binamira vs. OganOccena, 148 SCRA 677, 685 [1987]). Indeed, as found by the Labor Secretary in his Order of
January 21, 1989, the only issues involved in the dispute were:
1. determination of the minimum entry rate
2. wage adjustment due to payscale study
3. retroactive pay as a consequence of the upgraded payscale or goodwill bonus.
The legality or illegality of the strike was not submitted to the Secretary of Labor for resolution.
The jurisdiction to decide the legality of strikes and lock-outs is vested in Labor Arbiters, not in the
Secretary of Labor. Art. 217, par. a, subpar. 5 of the Labor Code 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 within thirty (30) working days after submission of the case by the parties for decision,
the following cases involving all workers, whether agricultural or non- agricultural.
xxx

xxx

xxx

5. Cases arising from any violation of Article 265 of this code, including questions involving
the legality of strikes and lock-outs. (Emphasis supplied.)
In ruling on the legality of the PALEA strike, the Secretary of Labor acted without or in excess of his
jurisdiction.

There is merit in PAL's contention that the Labor Secretary erred in declaring the strike valid and in
prohibiting PAL from taking retaliatory or disciplinary action against the strikers for the damages
suffered by the Airline as a result of the illegal work stoppage.
PALEA's strike on January 20, 1989 was illegal for three (3) reasons:
1. It was premature for there was an existing CBA which still had nine (9) months to run, i.e.,
up to September 30, 1989. The law expressly provides that neither party to a collective
bargaining agreement shall terminate nor modify such agreement during its lifetime. While
either party can serve a written notice to terminate or modify the agreement at least sixty
(60) days prior to its expiration date (known as the "freedom period") it shall nevertheless 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 freedom period and/or until a new
agreement is reached by them (Art. 253, Labor Code).
2. It violated the no-strike provision of the CBA, to wit:
The Association agrees that there shall be no strikes, walk outs, stoppage, or
slowdown of work, or any other form of interference with any of the operations of the
Company during the period between the signing of the Agreement up to September
30, 1989. (Emphasis supplied, p-118, Rollo.)
3. The NCMB had declared the notice of strike as "appropriate for preventive mediation." The
effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to
drop the case from the docket of notice of strikes, as provided in Rule 41 of the NCMB
Rules, as if there was no notice of strike. During the pendency of preventive mediation
proceedings no strike could be legally declared. The Secretary must have thought so too,
that is why he failed to act, for a period of seven (7) days, on PAL's petition for him to
assume jurisdiction over the labor dispute. The strike which the union mounted, while
preventive mediation proceedings were ongoing, was aptly described by the petitioner as "an
ambush" (p. 2, Rollo).
Since the strike was illegal, the company has a right to take disciplinary action against the union
officers who participated in it, and against any union members who committed illegal acts during the
strike, Art. 264 of the Labor Code provides:
Art. 264. Prohibited activities.. . .
xxx

xxx

xxx

Any worker whose employment has been terminated as a consequence of an unlawful

lockout shall be entitled to reinstatement with full back wages. Any union officer who
knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during 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.)
The Labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary action
against its guilty employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin
is the holding of the strike, but not the company's right to take action against union officers who

participated in the illegal strike and committed illegal acts. The prohibition which the Secretary issued
to PAL constitutes an unlawful deprivation of property and denial of due process for it prevents PAL
from seeking redress for the huge property losses that it suffered as a result of the union's illegal
mass action.
The Secretary may have realized that he was partly to blame for PAL's damages because of his
failure to act promptly and use his authority to avert the illegal strike under Article 263(g) of the Labor
Code.
Nevertheless, the Secretary's delay does not excuse the reckless and irresponsible action of the
union in declaring the illegal strike. The liability of the union for that is primary and exclusive.
WHEREFORE, the petition for certiorari is granted. The orders dated January 21, 1989 and May 8,
1989 of the Secretary of Labor in NCMB NCR Case No. PM-01-007-89 are set aside and nullified
insofar as the said orders declare valid the PALEA strike of January 20-21, 1989 and restrain the
petitioner from taking appropriate legal action against PALEA's officers who led the illegal strike, and
any union members who may have committed illegal acts during said strike. The monetary benefits
awarded to the union in the said orders are, however, affirmed. Costs against respondent PALEA.
SO ORDERED.

SAN

MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD
NG MANGGAGAWA (IBM), respondents.
DECISION

AZCUNA, J.:

Before us is a petition for certiorari and prohibition seeking to set aside the
decision of the Second Division of the National Labor Relations Commission
(NLRC) in Injunction Case No. 00468-94 dated November 29, 1994, and its
resolution dated February 1, 1995 denying petitioners motion for
reconsideration.
[1]

[2]

Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod

ng Manggagawa (IBM), exclusive bargaining agent of petitioners daily-paid
rank and file employees, executed a Collective Bargaining Agreement (CBA)
under which they agreed to submit all disputes to grievance and arbitration
proceedings. The CBA also included a mutually enforceable no-strike nolockout agreement. The pertinent provisions of the said CBA are quoted
hereunder:
ARTICLE IV
GRIEVANCE MACHINERY
Section 1. - The parties hereto agree on the principle that all disputes between labor
and management may be solved through friendly negotiation;. . . that an open conflict

in any form involves losses to the parties, and that, therefore, every effort shall be
exerted to avoid such an open conflict. In furtherance of the foregoing principle, the
parties hereto have agreed to establish a procedure for the adjustment of grievances so
as to (1) provide an opportunity for discussion of any request or complaint and (2)
establish procedure for the processing and settlement of grievances.
xxx xxx xxx
ARTICLE V
ARBITRATION
Section 1. Any and all disputes, disagreements and controversies of any kind between
the COMPANY and the UNION and/or the workers involving or relating to wages,
hours of work, conditions of employment and/or employer-employee relations arising
during the effectivity of this Agreement or any renewal thereof, shall be settled by
arbitration through a Committee in accordance with the procedure established in this
Article. No dispute, disagreement or controversy which may be submitted to the
grievance procedure in Article IV shall be presented for arbitration until all the steps
of the grievance procedure are exhausted.
xxx xxx xxx
ARTICLE VI
STRIKES AND WORK STOPPAGES
Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or
slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise,
picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other
interference with any of the operations of the COMPANY during the term of this
Agreement.
Section 2. The COMPANY agrees that there shall be no lockout during the term of
this Agreement so long as the procedure outlined in Article IV hereof is followed by
the UNION.
[3]

On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed
with the National Conciliation and Mediation Board (NCMB) a notice of strike,
docketed as NCMB-NCR-NS-04-180-94, against petitioner for allegedly
committing: (1) illegal dismissal of union members, (2) illegal transfer, (3)
violation of CBA, (4) contracting out of jobs being performed by union
members, (5) labor-only contracting, (6) harassment of union officers and
members, (7) non-recognition of duly-elected union officers, and (8) other acts
of unfair labor practice.
[4]

The next day, IBM filed another notice of strike, this time through its
president Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2)
labor-only contracting, (3) violation of CBA, (4) dismissal of union officers and
members, and (5) other acts of unfair labor practice. This was docketed as
NCMB-NCR-NS-04-182-94.
[5]

The Galvez group subsequently requested the NCMB to consolidate its

notice of strike with that of the Colomeda group, to which the latter opposed,
alleging Galvezs lack of authority in filing the same.
[6]

[7]

Petitioner thereafter filed a Motion for Severance of Notices of Strike with

Motion to Dismiss, on the grounds that the notices raised non-strikeable
issues and that they affected four corporations which are separate and distinct
from each other.
[8]

After several conciliation meetings, NCMB Director Reynaldo Ubaldo

found that the real issues involved are non-strikeable. Hence on May 2, 1994,
he issued separate letter-orders to both union groups, converting their notices
of strike into preventive mediation. The said letter-orders, in part, read:
During the conciliation meetings, it was clearly established that the real issues
involved are illegal dismissal, labor only contracting and internal union disputes,
which affect not only the interest of the San Miguel Corporation but also the interests
of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS, INC.,
and the SAN MIGUEL JUICES, INC.
Considering that San Miguel Corporation is the only impleaded employer-respondent,
and considering further that the aforesaid companies are separate and distinct
corporate entities, we deemed it wise to reduce and treat your Notice of Strike as
Preventive Mediation case for the four (4) different companies in order to evolve
voluntary settlement of the disputes. . . . (Emphasis supplied)
[9]

On May 16, 1994, while separate preventive mediation conferences were

ongoing, the Colomeda group filed with the NCMB a notice of holding a strike
vote. Petitioner opposed by filing a Manifestation and Motion to Declare
Notice of Strike Vote Illegal, invoking the case of PAL v. Drilon, which held
that no strike could be legally declared during the pendency of preventive
mediation. NCMB Director Ubaldo in response issued another letter to the
Colomeda Group reiterating the conversion of the notice of strike into a case
of preventive mediation and emphasizing the findings that the grounds raised
center only on an intra-union conflict, which is not strikeable, thus:
[10]

xxx xxx xxx

[11]

A perusal of the records of the case clearly shows that the basic point to be resolved
entails the question of as to who between the two (2) groups shall represent the
workers for collective bargaining purposes, which has been the subject of a Petition
for Interpleader case pending resolution before the Office of the Secretary of Labor
and Employment. Similarly, the other issues raised which have been discussed by the
parties at the plant level, are ancillary issues to the main question, that is, the union
leadership... (Emphasis supplied)
[12]

Meanwhile, on May 23, 1994, the Galvez group filed its second notice of
strike against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional
grounds were set forth therein, including discrimination, coercion of
employees, illegal lockout and illegal closure. The NCMB however found
these grounds to be mere amplifications of those alleged in the first notice that
the group filed. It therefore ordered the consolidation of the second notice with
the preceding one that was earlier reduced to preventive mediation. On the
same date, the group likewise notified the NCMB of its intention to hold a
strike vote on May 27, 1994.
[13]

[14]

On May 27, 1994, the Colomeda group notified the NCMB of the results of
their strike vote, which favored the holding of a strike. In reply, NCMB issued
a letter again advising them that by virtue of the PAL v. Drilon ruling, their
notice of strike is deemed not to have been filed, consequently invalidating
any subsequent strike for lack of compliance with the notice requirement.
Despite this and the pendency of the preventive mediation proceedings, on
June 4, 1994, IBM went on strike. The strike paralyzed the operations of
petitioner, causing it losses allegedly worth P29.98 million in daily lost
production.
[15]

[16]

[17]

Two days after the declaration of strike, or on June 6, 1994, petitioner filed
with public respondent NLRC an amended Petition for Injunction with Prayer
for the Issuance of Temporary Restraining Order, Free Ingress and Egress
Order and Deputization Order. After due hearing and ocular inspection, the
NLRC on June 13, 1994 resolved to issue a temporary restraining order
(TRO) directing free ingress to and egress from petitioners plants, without
prejudice to the unions right to peaceful picketing and continuous hearings on
the injunction case.
[18]

[19]

To minimize further damage to itself, petitioner on June 16, 1994, entered

into a Memorandum of Agreement (MOA) with the respondent-union, calling
for a lifting of the picket lines and resumption of work in exchange of good
faith talks between the management and the labor management committees.
The MOA, signed in the presence of Department of Labor and Employment
(DOLE) officials, expressly stated that cases filed in relation to their dispute

will continue and will not be affected in any manner whatsoever by the
agreement. The picket lines ended and work was then resumed.
[20]

Respondent thereafter moved to reconsider the issuance of the TRO, and

sought to dismiss the injunction case in view of the cessation of its picketing
activities as a result of the signed MOA. It argued that the case had become
moot and academic there being no more prohibited activities to restrain, be
they actual or threatened. Petitioner, however, opposed and submitted
copies of flyers being circulated by IBM, as proof of the unions alleged threat
to revive the strike. The NLRC did not rule on the opposition to the TRO and
allowed it to lapse.
[21]

[22]

On November 29, 1994, the NLRC issued the challenged decision,

denying the petition for injunction for lack of factual basis. It found that the
circumstances at the time did not constitute or no longer constituted an actual
or threatened commission of unlawful acts. It likewise denied petitioners
motion for reconsideration in its resolution dated February 1, 1995.
[23]

[24]

Hence, this petition.

Aggrieved by public respondents denial of a permanent injunction,
petitioner contends that:
A.

THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO

ENFORCE, BY INJUNCTION, THE PARTIES RECIPROCAL OBLIGATIONS TO
SUBMIT TO ARBITRATION AND NOT TO STRIKE.
B.

THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING

INJUNCTION WHICH IS THE ONLY IMMEDIATE AND EFFECTIVE
SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT
ARBITRATION IS DESIGNED TO AVOID.
C.

THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO

TO LAPSE WITHOUT RESOLVING THE PRAYER FOR INJUNCTION,
DENYING INJUNCTION WITHOUT EXPRESSING THE FACTS AND THE LAW
ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER
THE LAPSE OF THE TRO.
[25]

We find for the petitioner.

Article 254 of the Labor Code provides that no temporary or permanent

injunction or restraining order in any case involving or growing out of labor
disputes shall be issued by any court or other entity except as otherwise
provided in Articles 218 and 264 of the Labor Code. Under the first exception,
Article 218 (e) of the Labor Code expressly confers upon the NLRC the power
to enjoin or restrain actual and threatened commission of any or all prohibited
or unlawful acts, or to require the performance of a particular act in any labor
dispute which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any decision in favor of
such party x x x. The second exception, on the other hand, is when the labor
organization or the employer engages in any of the prohibited activities
enumerated in Article 264.
Pursuant to Article 218 (e), the coercive measure of injunction may also be
used to restrain an actual or threatened unlawful strike. In the case of San
Miguel Corporation v. NLRC, where the same issue of NLRCs duty to enjoin
an unlawful strike was raised, we ruled that the NLRC committed grave abuse
of discretion when it denied the petition for injunction to restrain the union from
declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC,
we held that it is the legal duty and obligation of the NLRC to enjoin a partial
strike staged in violation of the law. Failure promptly to issue an injunction by
the public respondent was likewise held therein to be an abuse of discretion.
[26]

[27]

In the case at bar, petitioner sought a permanent injunction to enjoin the

respondents strike. A strike is considered as the most effective weapon in
protecting the rights of the employees to improve the terms and conditions of
their employment. However, to be valid, a strike must be pursued within legal
bounds. One of the procedural requisites that Article 263 of the Labor Code
and its Implementing Rules prescribe is the filing of a valid notice of strike with
the NCMB. Imposed for the purpose of encouraging the voluntary settlement
of disputes, this requirement has been held to be mandatory, the lack of
which shall render a strike illegal.
[28]

[29]

[30]

In the present case, NCMB converted IBMs notices into preventive

mediation as it found that the real issues raised are non-strikeable. Such order
is in pursuance of the NCMBs duty to exert all efforts at mediation and
conciliation to enable the parties to settle the dispute amicably, and in line
with the state policy of favoring voluntary modes of settling labor disputes. In
accordance with the Implementing Rules of the Labor Code, the said
conversion has the effect of dismissing the notices of strike filed by
respondent. A case in point is PAL v. Drilon, where we declared a strike
illegal for lack of a valid notice of strike, in view of the NCMBs conversion of
the notice therein into a preventive mediation case. We ruled, thus:
[31]

[32]

[33]

[34]

The NCMB had declared the notice of strike as appropriate for preventive
mediation. The effect of that declaration (which PALEA did not ask to be
reconsidered or set aside) was to drop the case from the docket of notice of strikes, as
provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During
the pendency of preventive mediation proceedings no strike could be legally
declared... The strike which the union mounted, while preventive mediation
proceedings were ongoing, was aptly described by the petitioner as an ambush.
(Emphasis supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when
the NCMB ordered the preventive mediation on May 2, 1994, respondent had
thereupon lost the notices of strike it had filed. Subsequently, however, it still
defiantly proceeded with the strike while mediation was ongoing, and
notwithstanding the letter-advisories of NCMB warning it of its lack of notice of
strike. In the case of NUWHRAIN v. NLRC, where the petitioner-union
therein similarly defied a prohibition by the NCMB, we said:
[35]

Petitioners should have complied with the prohibition to strike ordered by the NCMB
when the latter dismissed the notices of strike after finding that the alleged acts of
discrimination of the hotel were not ULP, hence not strikeable. The refusal of the
petitioners to heed said proscription of the NCMB is reflective of bad faith.
Such disregard of the mediation proceedings was a blatant violation of the
Implementing Rules, which explicitly oblige the parties to bargain
collectively in good faith and prohibit them from impeding or disrupting the
proceedings.
[36]

The NCMB having no coercive powers of injunction, petitioner sought

recourse from the public respondent. The NLRC issued a TRO only for free
ingress to and egress from petitioners plants, but did not enjoin the unlawful
strike itself. It ignored the fatal lack of notice of strike, and five months after
came out with a decision summarily rejecting petitioners cited jurisprudence in
this wise:
Complainants scholarly and impressive arguments, formidably supported by a long
line of jurisprudence cannot however be appropriately considered in the favorable
resolution of the instant case for the complainant. The cited jurisprudence do not
squarely cover and apply in this case, as they are not similarly situated and the remedy
sought for were different.
[37]

Unfortunately, the NLRC decision stated no reason to substantiate the above

conclusion.

Public respondent, in its decision, moreover ruled that there was a lack of
factual basis in issuing the injunction. Contrary to the NLRCs finding, we find
that at the time the injunction was being sought, there existed a threat to
revive the unlawful strike as evidenced by the flyers then being circulated by
the IBM-NCR Council which led the union. These flyers categorically
declared: Ipaalala nyo sa management na hindi iniaatras ang ating Notice of
Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line.
These flyers were not denied by respondent, and were dated June 19, 1994,
just a day after the unions manifestation with the NLRC that there existed no
threat of commission of prohibited activities.
[38]

Moreover, it bears stressing that Article 264(a) of the Labor

Code explicitly states that a declaration of strike without first having filed the
required notice is a prohibited activity, which may be prevented through an
injunction in accordance with Article 254. Clearly, public respondent should
have granted the injunctive relief to prevent the grave damage brought about
by the unlawful strike.
[39]

Also noteworthy is public respondents disregard of petitioners argument

pointing out the unions failure to observe the CBA provisions on grievance
and arbitration. In the case of San Miguel Corp. v. NLRC, we ruled that the
union therein violated the mandatory provisions of the CBA when it filed a
notice of strike without availing of the remedies prescribed therein. Thus we
held:
[40]

x x x For failing to exhaust all steps in the grievance machinery and arbitration
proceedings provided in the Collective Bargaining Agreement, the notice of strike
should have been dismissed by the NLRC and private respondent union ordered to
proceed with the grievance and arbitration proceedings. In the case of Liberal Labor
Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for
not complying with the grievance procedure provided in the collective bargaining
agreement. . . (Citations omitted)
As in the abovecited case, petitioner herein evinced its willingness to
negotiate with the union by seeking for an order from the NLRC to compel
observance of the grievance and arbitration proceedings. Respondent
however resorted to force without exhausting all available means within its
reach. Such infringement of the aforecited CBA provisions constitutes further
justification for the issuance of an injunction against the strike. As we said long
ago: Strikes held in violation of the terms contained in a collective bargaining
agreement are illegal especially when they provide for conclusive arbitration

clauses. These agreements must be strictly adhered to and respected if their

ends have to be achieved.
[41]

As to petitioners allegation of violation of the no-strike provision in the

CBA, jurisprudence has enunciated that such clauses only bar strikes which
are economic in nature, but not strikes grounded on unfair labor practices.
The notices filed in the case at bar alleged unfair labor practices, the initial
determination of which would entail fact-finding that is best left for the labor
arbiters. Nevertheless, our finding herein of the invalidity of the notices of
strike dispenses with the need to discuss this issue.
[42]

We cannot sanction the respondent-unions brazen disregard of legal

requirements imposed purposely to carry out the state policy of promoting
voluntary modes of settling disputes. The states commitment
to enforce mutual compliance therewith to foster industrial peace is affirmed
by no less than our Constitution. Trade unionism and strikes are legitimate
weapons of labor granted by our statutes. But misuse of these instruments
can be the subject of judicial intervention to forestall grave injury to a business
enterprise.
[43]

[44]

WHEREFORE, the instant petition is hereby GRANTED. The decision and

resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and
SET ASIDE. Petitioner and private respondent are hereby directed to submit
the issues raised in the dismissed notices of strike to grievance procedure and
proceed with arbitration proceedings as prescribed in their CBA, if necessary.
No pronouncement as to costs.
SO ORDERED.
PEPSI-COLA LABOR UNION-BFLU-TUPAS LOCAL CHAPTER NO. 896, Petitioner, v. NATIONAL
LABOR RELATIONS COMMISSION AND PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES,
INC., NAGA PLANT, Respondents.
SYNOPSIS
In a certification election conducted at the Pepsi Cola Bottling Co.s (PEPSI) plant in Naga City, the petitioner
Union received a majority of the votes cast therein. Thereafter, it filed a notice of strike with the Ministry of
Labor and Employments Regional Office in Legaspi City on the ground that PEPSI refused to bargain. PEPSI
countered that it was merely awaiting the final decision in the appeal of the labor group that contested the
results of the election. The Med-Arbiter ruled that the Notice of Strike filed was premature. This
notwithstanding, the petitioner Union staged a strike. After a return-to-work order was obtained, PEPSI filed
a complaint for unfair labor practice and illegal strike. Judgment was rendered declaring the strike illegal
resulting in the loss of employment status of all of the Unions officers and its members, with a few
exceptions. The Union filed a "Motion for Reconsideration or Appeal" to the NLRC. PEPSI moved to dismiss
on the ground that the Union failed to furnish it with a copy thereof a fatal omission amounting to nonperfection of the appeal. The NLRC granted the motion to dismiss, hence the petition for review.
The Supreme Court held that the NLRC cannot be faulted in dismissing the Unions appeal for its action was
in accordance with both the law and regulations: The evidence clearly showed that it failed to served/furnish
a copy of its appeal on PEPSI, the adverse party, a requirement embodied in Art. 223 of the Labor Code and
Sec. 9, Rule XIII, Book V of the Implementing Rules and Regulation cited in the resolution of the NLRC. It

was held however, that although the strike was declared illegal, there was absence of proof that the rank
and file members of the Union who participated therein deserve their loss of employment. Their sole
membership in the union or their given authority to it to strike, believing in good faith that it was their sole
bargaining representative, did not make them liable if they did not actually participate therein. The officers
of the Union who staged the strike in defiance of the Med-Arbiters ruling should be held solely responsible.
Petition granted. Private respondent ordered to reinstate persons whose names appear in Annex "A" of the
decision of the Executive Arbiter, except for the officers of the Union.

SYLLABUS

1. LABOR LAWS; LABOR DISPUTES; APPEAL FROM A DECISION OF THE LABOR ARBITER; FAILURE TO
FURNISH ADVERSE PARTY OF A COPY OF THE APPEAL, FATAL; CASE AT BAR. We are bound by the finding
of the NLRC that, "A careful scrutiny of the appeal shows that the respondents-appellants failed to
serve/furnish a copy thereof on the adverse party which fact has further been ascertained thru the positive
asseveration of the complainant-appellee in its motion to dismiss the appeal." This being the case, NLRC
cannot be faulted in dismissing the UNIONs appeal for its action was in accordance with both the law and
regulations.
2. ID.; STRIKES; MEMBERS OF STRIKING UNION LIABLE FOR ILLEGAL STRIKE ONLY IF THEY ACTUALLY
PARTICIPATED THEREIN; SETTLED RULE. It is now settled "that a strike does not automatically carry the
stigma of illegality even if no unfair labor practice were committed by the employer. It suffices if such a
belief in good faith is entertained by labor as the inducing factor for staging a strike." (Maria Cristina
Fertilizer Plant Employees, Assn. v. Tandayag, G.R. No. L-292l7, May 31, 1966, 17 SCRA 332; Norton &
Harrison Co. & Jackbuilt Concrete Blocks Co. Labor Union v. Norton Harrison Co. & Jackbuilt Concrete Blocks
Co., Inc., G.R. No. L-1846l, Feb. 10, 1967, 19 SCRA 310.) And it had also been held that the members of a
union cannot be held responsible for an illegal strike on the sole basis of such membership or even on
account of their affirmative vote authorizing the same. They become liable only if they actually participated
therein. (ESSO Philippines. Inc. vs Malayang Manggagawa sa Esso (MME), G.R. No. L-36545, January 26,
1977, 75 SCRA 73).
3. ID.; ID.; ID.; ONLY OFFICERS OF THE UNION RESPONSIBLE IN CASE AT BAR. In the case at bar,
although the strike was indeed illegal, We cannot discount the presence of good faith on the part of the rank
and file members of the UNION considering that in the certification election the UNION obtained 128 out of
the 131 votes cast so that they could justifiably consider it as their sole bargaining representative. Moreover,
there is no proof that the members of the UNION all participated in the illegal strike. The ones who deserve
what Justice Barredo calls "capital punishment" in the Esso Philippines case, are the officers of the UNION
who staged the strike in defiance of the ruling of the Med-Arbiter.

DECISION

ABAD SANTOS, J.:

This is a petition to review the proceedings in Case No. 82-80 both before the Arbitration Branch, Regional
Office No. V, of the Ministry of Labor and Employment (MOLE) and the National Labor Relations Commission
(NLRC), 3rd Division.
In a resolution filed on August 17, 1981, by the NLRC, the appeal of Pepsi-Cola Labor Union, BFLU-Tupas,
Local Chapter No. 896 (UNION) in NLRC Case No. 82-80 was dismissed. The resolution reads as follows:

jgc:chanroble s.com.ph

"For Our consideration is an appeal filed by the respondents from the Decision, dated November 20, 1980 of
the Labor Arbiter below and a motion to dismiss the appeal filed by the complainant company.
"A careful scrutiny of the appeal shows that the respondents-appellants failed to serve/furnish a copy
thereof on the adverse party which fact has further been ascertained thru the positive asseveration of the
complainant-appellee in its motion to dismiss the appeal.

"The failure to serve/furnish a copy of the appeal is a fatal error, as it is in clear violation of Article 223 of
the Labor Code and Section 9, Rule XIII Book V of the Rules and Regulations Implementing the Labor Code,
as well as Section 3, Rule IX of the Rules of this Commission.
"By analogous application, the failure to serve a copy of the appeal on the adverse party stands on the same
footing as an appeal filed outside the reglementary period (Broco, Et Al., v. CIR, Et Al., G.R. No. L-12367,
October 29, 1959) and that there is no decision of the Labor Arbiter that the respondents-appellants can
bring to this Commission for review. (NDC v. CIR No. L-15422, November 30, 1963). The dismissal of the
appeal, therefore, is in order.
"WHEREFORE, let the appeal be, as it is hereby DISMISSED, for lack of merit."

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The petitioner UNION now claims that the above-quoted resolution (a) is contrary to the facts, (b) is
contrary to the law, (c) was issued under highly anomalous and suspicious circumstances, and (d)
constitutes a grave abuse of discretion.
The factual background is as follows:

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On December 11, 1979, a certification election was held at the Pepsi-Cola Bottling Companys (PEPSI) plant
in Naga City. Out of 131 votes which were cast, the UNION got 128 so it regarded itself as the sole and
exclusive bargaining unit. The losing labor group contested the election at various levels but it was
unsuccessful. Its petition for review was dismissed by this Court in a resolution dated June 11, 1980 (G.R.
No. 51893, Pepsi-Cola Employees and Workers Union [UOEF] Et. Al. v. Bureau of Labor Relations, etc.).
Meanwhile, on April 1, 1980, the UNION filed a notice of strike with MOLEs Regional Office in Legaspi City on
the ground that PEPSI refused to bargain. PEPSI countered that it was willing to bargain but there was yet
no final decision on the appeal of the other labor union. On April 25, 1980, Med-Arbiter Antonio B. Caayao
issued a resolution with following dispositive portion:
jgc:chanroble s.com.ph

"WHEREFORE, conformably with the foregoing, the Notice of Strike under consideration, being premature, is
illegal and should, therefore, be dismissed. Consequently, any strike staged by virtue of this Notice of Strike
shall, likewise, be deemed illegal."
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In disregard of the resolution, the UNION staged a strike on May 7, 1980. There are conflicting claims on the
duration of the strike. The UNION claims that it was only a one-day strike; PEPSI says the strike lasted for
three days. At any rate, a return to work order was issued on May 9, 1980.
On May 15, 1980, PEPSI filed a complaint for unfair labor practice and illegal strike. It was docketed as Case
No. 82-80. On November 20, 1980, Executive Labor Arbiter Lolito C. Fulleros rendered a decision which
reads in part as follows:
chanrobles virtualawlibrary chanroble s.com :chanrobles.com .ph

"On a question of law, the sole issue to be resolved is the legality of the respondents strike. Like in the
Mead Johnson Phil., Inc. case, the complainant submits that the larger question to be answered is how, in
such a sensitive and volatile area of national life as labor relations, the Government should react to naked
defiance of its authority. That the strike has been declared by the respondent union, its officers and
members as listed in Annex "A" of the complaint has been indubitably and substantially established as
shown in those supporting documentary evidence submitted marked as Annex "M" which is xerox copy of
the letter of Mr. Amadeo S. Diaz, Acting President, Pepsi-Cola Labor Union-BFLU-TUPAS dated May 7, 1980
to Col. Alejandro Aguirre, Provincial Commander, Province of Camarines Sur; Annex "N", which is the xerox
copy of the pleading filed by the respondents in Case No. 1204-80 pending before this Office more
particularly paragraph 4 thereof which show respondents admission of the strike they stage; Annex "O"
which is the xerox copy of the return to work order of Med-Arbiter Antonio Caayao; Annex "P" which is the
xerox copy of the affidavit of Joseph Abiada, a member of the striking union; Annex "Q" which is the xerox
copy of the joint affidavits of Messrs. Ireneo Sta. Romana and Rodolfo Bagar; Annex "R" which is the
affidavit of Ismael Teves, Plant Manager of complainant firm in Naga City. The complainant contends that the
strike staged and declared by the respondents on May 7, 8 and 9, 1980 is patently illegal, citing the
provisions pertinent to the case at bar, Article 264 and 266 of the Labor Code. The petitioner apparently
making references to the Mead Johnson Phil., Inc. case argued that on the day following the proclamation of
Martial Law in this country, the President of the Philippines, in order to restore the tranquility and stability of
the nation in the quickest possible manner, and to avoid occasions and actions that would cause hysteria or
panic among the populace, or would incense the people against their legitimate government, or would

generate sympathy for the radical and lawless elements, or would aggravate the already critical political and
social turmoil ... prevailing throughout the land, issued General Order No. 5 which strictly prohibited all
rallies, demonstrations and other forms of group actions by persons within the geographical limits of the
Philippines, including strikes and picketing. That for a considerable time after the issuance of General Order
No. 5, the prevailing general impression was that strikes were banned in all industries vital or not, so that,
with the exception of sporadic and abortive groups actions in certain industrial establishments, practically no
strike was staged anywhere in the country. It was perhaps as an immediate reaction to sporadic and
abortive group actions in some industrial establishments and for other purposes intended to further stabilize
industrial peace in the country, that Presidential Decree No. 823 was promulgated which is now embodied as
Article 264, 265, 266 and 267 of the Labor Code. That the ultimate aim of PD 823 is not different from that
of General Order No. 5. Thus, the decrees preamble speaks among other things of the need for stabilizing
labor-management relations and industrial peace of factors essential to national security and to the
purposeful pursuit of economic development and social justice for all our people, as well as to protect the
gains of the new society. PD 823 therefore is important for the preservation no less of our institutions. It is
an expression of the States desire to protect itself to sustain the momentum of reform that it has launch for
the general welfare, to preserve the gain it has so far won and to prevent the recurrence of the chaotic
situation that made imperative in the first place the declaration of Martial Law as an act of self-defense on
the part of the state. There could be no doubt that strikes are allowed in non-vital industries, but only on the
grounds of unresolved economic issues in collective bargaining and after having filed in the Bureau of Labor
Relations a notice of strike at least 30 days before its intended date, and there is no question that in this
instant case a notice of strike was filed on April 1, 1980, however, there could be no denying that the
respondents strike in the complainants firm is one that is prohibited by PD No. 823 as amended. That at the
time the strike was declared on May 7, 8 and 9, 1980, there was no collective bargaining negotiations
between the parties. There could have been therefore no unresolved economic issues in collective bargaining
in the real sense and without bargaining there could be no deadlock. And there was no bargaining precisely
because there was a pending case relative to representation. The Ministry of Labor has not yet certified who
will represent the employees as the bargaining agent. Respondents have miserably failed to show any iota of
proof that they have been certified as the bargaining agent of the complainants employees. The insistence
that what respondents perpetuated on said dates was merely a walkout and/or demonstration is such
gratuitous and specious argument. In deed, there is no dispute as to the fact that the respondent acting in
concert, stopped their work in the morning of May 7, 1980 and picketed the companys premises and only
tried to report upon receipt of the return to work order of Med-Arbiter Antonio Caayao. Complainants argued
that no amount of hair-splitting can change the fact that respondents walkout was in fact a strike. Article
255 of the Labor Code defines the term strike as comprising not only concerted work stoppage, but also
showdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities,
and similar activities. It even cited the law governing labor relations, Republic Act No. 875, which defines
strike as any temporary stoppage of work by the concerted action of employees as a result of industrial
dispute. Indeed, whatever name respondent may call are concerted activity against the complainant for on
May 7, 8 and 9, 1980 was, under the eyes of the law, a strike just the same. Complainant further submitted
that the strike in question was not the result of a spur of the moment, but was planned by the respondent
unions officers and members. The strikers thus knew beforehand that they would be risking the
consequences, including but not limited to lost of employee status, by striking. That the strike therefore,
was the result of mature deliberations among the officers and members of the respondent union and was
accordingly carried out by all the participating strikers, and that respondent union and its members having
precipitately immersed themselves into the course of action they have chosen to pursue, an illegal strike,
they have none but themselves to blame and they must and should therefore suffer the consequences of
their misadventure.
"It is essential to add that the complainant union (sic) was not really free to enter into a collective
agreement negotiations with the respondent union or to recognize it as the exclusive collective bargaining
representative since there is an intervenor in this case which is the UOEF affiliated to the Beverage Industry
National Union which is one of the contending unions for recognition in whose instance a petition
for certiorari was filed and pending action with the Supreme Court on November 16, 1979 docketed as G.R.
51893. This issue of non-recognition of the union and the alleged refusal of the petitioner to negotiate a CBA
with the respondents are so embodied in the resolution dated April 25, 1980 of Med-Arbiter Antonio Caayao.
In the same resolution, it is expressed that the petitioner was willing to recognize and negotiate a
bargaining agreement with whomsoever is certified by competent authority as the sole and exclusive
bargaining agent of the rank and file employees within the bargaining union of the respondent-company.
However, until such time that either of the competing unions is certified as such, respondent-company is not
willing to recognize and negotiate a bargaining agreement. Under the situation, the Commission in the case
of PLUM versus Union Carbide Phil., Inc., NLRC Case No. 4690-ULP, held that strike declared by a
contending union to compel recognition when there is another union seeking also the right to be recognized

is illegal and consequently subject participating members to loss of employment status. There is no doubt,
to our mind, that the strike was called knowingly and in violation of an existing order. The striking union and
its members have been fairly and justly reminded by Med-Arbiter Antonio Caayao in its resolution after
denying the notice of strike filed by the union and its members it being premature and therefore illegal and
that any strike staged by virtue of said notice shall likewise deemed illegal. Whether or not this ruling has a
binding effect compliance and respect of the order should have been considered by the union and its striking
members by not taking the law into their own hands. Strike and other coersive acts are justified only when
peaceful alternatives have proven unfruitful in settling the dispute. Striking for recognition maybe recognized
but certainly not while the union members were expressly warned by the proper government entity not to
pursue such course of action for reasons made known to them. Indeed, the Mead Johnson Philippines, Inc.,
versus Mead Johnson Philippines, Inc. Employees Union, Et. Al. well illustrates the instant case presenting
certain facts and circumstances with striking similarity. From this, the petitioner did expound in propping up
and strengthening its claim that the strike staged by the respondents herein was beyond doubt illegal. We
feel convinced with the argument of the petitioner that the issue in the instant case does no merely rest on
the legality of the strike but how the government should react to the naked defiance of its authority.
"The Commission speaking through Commissioner Diego P. Atienza in the aforecited case, with seeming
eloquence, said:
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It is common knowledge that PD 823 has been violated many times. The government has so far been
leaning over backward in a spirit of accommodation. Perhaps the Decree has not been understood well
enough by those to whom its prescriptions are addressed; perhaps these strikes have been brought about
by the heady, if mistaken, feeling that the right to strike has been fully restored; perhaps these strikes,
although many of them were manifestly illegal, were well-meant and designed to achieve legitimate ends so
that in another time, under a different situation, they would have been perfectly legal. The Government, in
any case, has been very liberal in dealing with them. An unhealthy condition in industrial relations is
developing as a result. It is now time to blow the whistle. It is time to uphold the rule of law..
"Commissioner Cleto T. Villatuya of the NLRC in his concurring and dissenting opinion in the case cited above
eloquently stated, referring to the respondent, that they did not, and this act amounts to an open defiance
to the government authority for which the respondents should not be permitted to defy with impunity. They
have all chosen to be collectively or solidarily liable for the group action and for which they should be held
responsible for the consequences of their illegal acts.
"Commissioner Geronimo B. Quadra of the said Commission in his similar concurring opinion in the same
case, despite his being the representative for the labor sector in the said commission wisely stated:
Respondent union and its members having precipitately immersed themselves into the course of action they
have chosen to pursue, they have none but themselves to blame, they must and should therefore suffer the
consequences of their misadventure.
"It should be noted that at the time the notice of strike was filed with the district office in Naga City, the
union has not been recognized yet as the certified bargaining representative. If ever there was, such was
precisely being questioned and pursued through legal means by the complainant company and that was
precisely why the Med-Arbiter denied or rather dismissed their notice of strike as premature because of the
pending case between two contending union. It was not after the Supreme Court, First Division, resolved to
dismiss the petition for certiorari for lack of merit, dated June 30, 1980 that BLR Director Carmelo C. Noriel
finally certified PCLU-BFLU-TUPAS as the exclusive bargaining representative of the employees of Pepsi-Cola
Bottling Co., Naga City per his order dated July 19, 1980. Mutual understanding and harmonious relationship
as vital ingredients are not difficult to achieve by both management and labor thru legal means. These the
government encourages for otherwise it will risk becoming the contributing factor for those who suffer the
illusion of imagined invulnerability from a wrong and who ride on the erroneous impression of
indispensability as employees by sheltering themselves under the protective mantle of the constitutional as
well as the labor code provisions. Respondents herein ultimately employed with defiance ways and means
which did not justify the ends to be achieved to thrust themselves beyond the latter if not the spirit of the
law. If only to serve as a deterent and an example to other similarly situated it is indeed the opportune time
for us to blow the whistle.
"WHEREFORE, after serious and meticulous study of the evidence of both parties in this case and anchored
on the above-cited cases, we feel very strongly that the strike staged by the respondent union and its
members on May 7, 8 and 9, 1980 in the premises of the petitioner Pepsi-Cola Bottling Co. of the
Philippines, Inc. (Naga Plant) Naga City was ILLEGAL and uncalled for and therefore all the officers and
members of the Union whose names and positions appear on Annex "A" of the complaint except Romulo Cal,

Nilo Bariso and Mauro Nieto be considered to have lost their employment status effective May 7, 1980.
Those employees excepted should be allowed to return to work by the petitioning company under the same
terms and conditions of employment existing prior to May 7, 1980."
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On December 8, 1980, the UNION filed a "MOTION FOR RECONSIDERATION OR APPEAL TO THE NLRC"
alleging that there was grave abuse of discretion, lack of jurisdiction, and contrary to the law and the facts.
PEPSI moved to dismiss on the ground that the UNION failed to furnish it a copy of the motion for
reconsideration or appeal - a fatal omission amounting to non-perfection of the appeal.
We are bound by the finding of the NLRC that, "A careful scrutiny of the appeal shows that the respondentsappellants failed to serve/furnish a copy thereof on the adverse party which fact has further been
ascertained thru the positive asseveration of the complainant-appellee in its motion to dismiss the appeal."
This being the case, NLRC cannot be faulted in dismissing the UNIONs appeal for its action was in
accordance with both the law and regulations. (See Art. 223 of the Labor Code and Sec. 9, Rule XIII, Book V
of the Implementing Rules and Regulations cited in the resolution of the NLRC.)
However, We go deeper than sustaining the action of the NLRC in dismissing the appeal because We have
been asked to review not only the actuation of that agency but also that of the Labor Arbitrator who
declared in his decision that, "all the officers and members of the union whose names and positions appear
on Annex "A" of the complaint except Romulo Cal, Nilo Bariso and Mauro Nieto be considered to have lost
their employment status effective May 7, 1980."
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It is now settled "that a strike does not automatically carry the stigma of illegality even if no unfair labor
practice were committed by the employer. It suffices if such a belief in good faith is entertained by labor as
the inducing factor for staging a strike." (Maria Cristina Fertilizer Plant Employees, Assn. v. Tandayag, G.R.
No. L-29217, May 11, 1978, 83 SCRA 56, 72. See also Ferrer v. CIR, G.R. No. L-24267, May 31, 1966, 17
SCRA 352; Norton & Harrison Co. & Jackbuilt Concrete Blocks Co., Inc., G.R. No. L-18461, Feb. 10, 1967, 19
SCRA 310.) And it has also been held that the members of a union cannot be held responsible for an illegal
strike on the sole basis of such membership or even on account of their affirmative vote authorizing the
same. They become liable only if they actually participated therein. (ESSO Philippines, Inc. v. Malayang
Manggagawa sa ESSO (MME), G.R. No. L-36545, January 26, 1977, 75 SCRA 73.)
In the case at bar, although the strike was indeed illegal, We cannot discount the presence of good faith on
the part of the rank and file members of the UNION considering that in the certification election the UNION
obtained 128 out of the 131 votes cast so that they could justifiably consider it as their sole bargaining
representative. Moreover, there is no proof that the members of the UNION all participated in the illegal
strike. The ones who deserve what Justice Barredo calls "capital punishment" in the Esso Philippines case,
supra, are the officers of the UNION who staged the strike in defiance of the ruling of Med-Arbiter Caayao.

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WHEREFORE, the petition is granted; the private respondent is hereby ordered to reinstate all of those
persons whose names and positions appear in Annex "A" which is mentioned in the decision of the Executive
Labor Arbiter dated November 20, 1980, under the same terms and conditions of employment existing prior
to May 7, 1980, except for the officers of the UNION. No costs.
SO ORDERED.

MARIO TIU and JONATHAN HAYUHAY, petitioner, vs. NATIONAL

LABOR COMMISSION and REPUBLIC BROADCASTING
SYSTEM, INC. (CHANNEL 7),respondent.
DECISION
PADILLA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court to annul
and set aside the resolution of the National Labor Relations Commission
(NLRC) dated 28 November 1994 in NCR Case No. 00-08-0453-91 which

affirmed the decision of labor arbiter Edgardo Madriaga dated 18 February

1994 holding the strike held by GMA Channel 7 Employees Union (GMAEU)
on 2 August 1991 as illegal and declaring the fourteen (14) GMAEU union
officers who knowingly participated in the illegal strike to have lost their
employment status.
The records show that of the fourteen (14) GMAEU officers involved in the
strike, ten (10) officers did not appeal the labor arbiters decision and opted to
avail of the optional retirement benefits under the collective bargaining
agreement with private respondent Republic Broadcasting System Inc.
(RBS). The remaining four (4) union officers, namely: Mario Tiu, Nani
Hayuhay, Bong Cerezo and Virgilio Santoyo, appealed to the NLRC.
From the NLRC decision, Virgilio Santoyo filed a separate petition
for certiorari before this Court, docketed as G.R. No. 122613. In a resolution
dated 31 January 1996, the Court dismissed Santoyos petition for failure to
sufficiently show that the respondent Commission (NLRC) had committed a
grave abuse of discretion in rendering the questioned judgment.
Considering that Santoyo and herein petitioners were dismissed under the
same factual circumstance, the Court reviewed the records of G.R. No.
122613 to determine whether the ruling laid therein applies in the case at
bar. The Court notes that the issues raised by Santoyo in his petition were
procedural in character. Santoyo alleged that he was never represented by
counsel in the proceedings both before the labor arbiter and the NLRC and
was denied the opportunity to present his evidence. This allegation, however,
had no factual basis as the records showed that he was represented by
counsel during the entire proceedings below. In contrast, the present petition
raised substantive issues concerning the legality or illegality of the strike
conducted by GMAEU on 2 August 1991.
The Court required both public and private respondents to file their
comment on the petition. Private respondent RBS filed its comment on 23
April 1996 and public respondent NLRC filed its own comment on 9 December
1996. Petitioners filed a reply to both comments on 4 March 1997. Since the
parties have exhaustively argued their position in their respective pleadings,
the Court dispensed with the filing of memoranda and considered this case
submitted for resolution.
The material and relevant facts are as follows:
RBS had a collective bargaining agreement with GMAEU which took effect
on 2 July 1989. After the first quarter of 1991, RBS management noted the
huge amount of overtime expense it incurred during the said period, which

averaged to P363,085.26 monthly. To streamline its operations, the president

of RBS created a committee to formulate guidelines on the availment of
leaves and rendering of overtime work.
On 11 June 1991, RBS, through its personnel department, furnished
GMAEU a copy of the new guidelines and requested the latter to comment
thereon. The union did not file any comment. On 25 June 1991, RBS officially
issued the implementing guidelines on the availment of leaves and rendering
of overtime services. The following day, GMAEU sent a letter to the president
of RBS wherein it argued that:
1. The union was not consulted in the formulation of said guidelines which was clear
violation under Sec. 3(c) of the collective bargaining agreement;
2. The guidelines would render nugatory the collective bargaining agreement
provisions on the same subject;
3. The diminution of benefits being enjoyed by all employees with respect to the midyear bonuses (from 2-1/2 months to 1-1/2 months constitutes a withdrawal of an
existing company policy).

Thereafter, RBS management and GMAEU officials met on 3 July 1991

and on 10 July 1991 to thresh out the issues raised by GMAEU in its 26 June
1991 letter. Both talks, however, were short lived as the union refused to hold
further talks with RBS.
On 12 July 1991, GMAEU filed a Notice of Strike with the National
Conciliation and Mediation Board (NCMB) based on unfair labor practices
allegedly committed by RBS, as follows:
1. Gross violation of the existing collective bargaining agreement;
2. Employees (members and officers) coercion;
3. Union interference; and
4. Discrimination.

The NCMB set a conciliation meeting on 19 July 1991, but as early as 16

July 1991 the Union held a strike vote among its members and submitted the
results thereof to the NCMB on 18 July 1991 which showed that majority of
the union members voted to go on strike.
During the conciliation meeting held on 19 July 1991, RBS, through
counsel, informed GMAEUs officers that RBS did not violate any provision in
the collective bargaining agreement since the issuance of the guidelines was
a management prerogative duly recognized in their agreement. As regards
GMAEUs charges of coercion, union interference and discrimination, RBS
argued that these alleged unfair labor practices were neither raised by the
union in its 26 June 1991 letter nor during their 3 July and 10 July 1991 talks.

RBS counsel requested GMAEUs officers to name the persons or officers of

RBS involved in the alleged unfair labor practices and to state the specific act
or acts complained of so that RBS management could adequately refute said
allegations or impose appropriate disciplinary actions against its erring
officers. GMAEUs officers, however, ignored both RBS and the labor
conciliators requests for a bill of particulars.
In a second conciliation meeting held on 25 July 1991, RBS reiterated its
request to GMAEUs officers to furnish RBS the details of the alleged unfair
practices committed by RBS officers. Again, the Union denied RBS request
and refused to hold any further talks with RBS management. On the same
day, RBS filed a motion to dismiss GMAEUs notice of strike and forewarned
the Union about the consequences of an illegal strike.
On 2 August 1991, the union struck. On the same day, RBS filed a
complaint for illegal strike and unfair labor practice against GMAEU and its
fourteen (14) officers (hereafter, illegal strike case). The case was docketed as
NLRC Case 00-08-04531-91. Meanwhile, the Secretary of Labor immediately
assumed jurisdiction over the case, issued a return-to-work order, and
certified the case to the NLRC for compulsory arbitration (hereafter, certified
case). The case was docketed as NCMB-NCR-050-7-488-91.
In the certified case, the labor arbiter found no factual and legal ground to
hold RBS guilty of unfair labor practices against the Union. On appeal
(docketed as NLRC-NCR CC No 00076-01), the NLRC affirmed the labor
arbiters decision in a resolution dated 31 July 1992.
Meanwhile, the labor arbiter continued to hear the illegal strike case filed
by RBS against GMAEU. On 18 February 1994, the labor arbiter rendered
judgment declaring the strike illegal and the union officers who knowingly
participated in the illegal strike to have validly lost their employment status
based on the following reasons:
a. The notice of strike did not specifically charge the company (RBS) of
unfair labor practices, only pro forma allegations of gross violation of the
collective bargaining agreement, employees coercion, union interference, and
discrimination. It is defective as it consisted of vague and general charges
which could not be substantiated and which the company could not properly
defend itself against.
b. The absence of evidence on record that the mandatory cooling-off
period and strike vote under the law were complied which renders the strike
staged by the respondents illegal per se on technical grounds.

c. On the merits x x x there are no strikeable grounds as there was no

bargaining deadlock between the parties. The alleged gross violation of the
collective bargaining agreement cannot constitute an unfair labor practice
because said charges were bereft of factual and legal basis. There being no
unfair labor practice, it follows that there is no strikeable issue to support the
strike conducted by herein respondents (the Union).
d. The union violated the no strike-no lockout clause of the CBA with RBS;
thus rendering the strike held on 2 August 1991 illegal. As aforementioned,
the NLRC affirmed the labor arbiters decision in a resolution dated 28
November 1994.
In their petition, petitioner raised six (6) alleged NLRC errors which
ultimately narrow down to one issueWHETHER OR NOT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT UPHELD THE LABOR ARBITERS DECISION THAT
PETITIONERS STAGED AN ILLEGAL STRIKE ON 2 AUGUST 1991.
Petitioners argue that any defect in their pro-forma notice of strike was
cured when the NCMB took cognizance of the case and conducted
conciliation proceedings on 19 July and 25 July 1991. In addition, upon
assumption by the Secretary of Labor of jurisdiction over the dispute and
certification of the same for compulsory arbitration, it is presumed that the
union had complied with the procedural requirements under the labor code for
a valid notice of strike.
Anent the alleged unfair labor practices committed by RBS, petitioners
assert that this issue was thoroughly discussed with sufficient particularity in
their position papers filed in the certified case and in the illegal strike case;
hence, there notice of strike was sufficient in form and in substance.
Petitioners further argue that they believed in good faith that RBS had
committed acts of unfair labor practice which induced them to proceed with
the strike on 2 August 1991. Since it was an unfair labor practice strike, the
no-strike clause in the collective bargaining agreement with RBS does not
apply. They also showed good faith by their immediate compliance with the
return-to-work order issued by the Secretary of Labor upon assuming
jurisdiction over the case.
Private respondent RBS refutes these arguments and asserts that the
factual findings of the labor arbiter and the NLRC, being supported by
substantial evidence, should be upheld by this Court. This means that
petitioners cannot invoke the protective mantle of the good faith strike doctrine
because the alleged issues in the notice of strike were never substantiated by

the union either before or during the conciliation proceedings. The union
violated the no strike clause under the collective bargaining agreement and
should be held accountable for their acts by considering them validly
dismissed from their employment with RBS.
We find no merit in the petition at bar.
The notice of strike filed by the union before the NCMB on 12 July 1991
contained general allegations that RBS management committed unfair labor
practices by its gross violation of the economic provisions in their collective
bargaining agreement and by alleged acts of coercion, union interference and
discrimination which amounted to union busting. It is the union, therefore, who
had the burden of proof to present substantial evidence to support these
allegations.
It is not disputed that prior to 12 July 1991, the union treated RBS
issuance of the guidelines on the availment of leaves and rendering of
overtime services as gross violations of the existing collective bargaining
agreement. In its talks with the union, RBS painstakingly explained that the
said allegation was unfounded because the issuance of said guidelines was
RBS management prerogative. Up to that point, the union never raised the
issue of unfair labor practices allegedly committed by RBS official under
Article 248 of the Labor Code. But in its notice of strike filed two days later, the
union raised issues of coercion, discrimination, and union interference for the
first time.
Significantly, the union had two (2) conciliatory meetings arranged by the
NCMB at which
it
could
have
substantiated
these
additional
allegations. However, the fact that it had submitted the results of the strike
vote even ahead of the conciliatory meetings, and continuously refused to
substantiate its allegations in its notice of strike thereafter, lends credence to
the NLRCs observation that these charges were indiscriminately hurled
against RBS to give a semblance of validity to its notice of strike.
Under Rule XIII Sec. 4 Book V of the Implementing Rules of the Labor
Code
x x x x. In cases of unfair labor practices, the notice of strike shall as far as
practicable, state the acts complained of and he efforts to resolve the dispute amicably.
Upon the other hand, Rule III Sec. 6 provides that
xxx xxx xxx

During the (conciliation) proceeding, the parties shall not do any act which may
disrupt or impede the early settlement of the 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. (emphasis
supplied)
Petitioners plead that their contemporaneous acts, reckoned from their
June 1991 letter to RBS up to the actual strike held on 2 August 1991, were
justified based on its honest belief that RBS was committing unfair labor
practices. Stated otherwise, the presumption of legality (of the strike) prevails
even if the allegations of unfair labor practices are subsequently found out to
be untrue. (citing Master Iron Labor Union v. NLRC, 219 SCRA 47)
The Court is not unmindful of this rule, but in the case at bar the facts and
the evidence did not establish even at least a rational basis why the union
would wield a strike based on alleged unfair labor practices it did not even
bother to substantiate during the conciliation proceedings. It is not enough that
the union believed that the employer committed acts of unfair labor practice
when the circumstances clearly negate even a prima facie showing to warrant
such a belief.
The Court affirms the factual finding of the labor arbiter and the NLRC that
there was no strikeable issue to support respondents (the Union) subject
strike. The evidence show that the union anchored its position on alleged
unfair labor practices in order to evade not only the grievance machinery but
also the no strike clause in their collective bargaining agreement with RBS.
RBS did not issue is implementing guidelines dated 24 June 1991
concerning the availment of leaves and rendering of overtime services in an
arbitrary manner. The union was promptly informed that RBS decision was
based on its management prerogative to regulate all aspects of employment,
subject of course to well-defined limitations imposed by law or by contract.
Even assuming arguendo that in the issuance of said guidelines RBS may
have violated some provisions in the collective bargaining agreement, there
was no palpable showing that the same was a flagrant and/or malicious
refusal to comply with its economic provisions. (Book V Implementing Rules of
the Labor Code, Rule XIII, Section 1) Hence, the law mandates that said
violation shall not be considered unfair labor practice and shall not be
strikeable.
The bottom line is that the union should have immediately resorted to the
grievance machinery established in their agreement with RBS. In disregarding
said procedure the union leaders who knowingly participated in the illegal

strike have acted unreasonably, and, as such, the law cannot interpose its
hand to protect them from the consequences of their behavior.(National labor
Union v. Philippine Match Factory, 70 Phil. 300; United Seamens Union v.
Davao Shipowners Association, 20 SCRA 1226)
WHEREFORE, premises considered, the petition is hereby DISMISSED,
there being no substantial evidence of grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the NLRC.
SO ORDERED.