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G.R. No.

165381 February 9, 2011

NELSON A. CULILI, Petitioner,


vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON
(President and Chief Executive Officer), EMILIANO JURADO (Chairman of
the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA
(Assistant Vice President), Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari1 of the February 5, 2004


Decision2 and September 13, 2004 Resolution3 of the Court of Appeals in CA-
G.R. SP No. 75001, wherein the Court of Appeals set aside the March 1, 2002
Decision4 and September 24, 2002 Resolution5 of the National Labor Relations
Commission (NLRC), which affirmed the Labor Arbiter’s Decision6 dated April 30,
2001.

Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a


telecommunications company engaged mainly in the business of establishing
commercial telecommunications systems and leasing of international datalines or
circuits that pass through the international gateway facility (IGF).7 The other
respondents are ETPI’s officers: Salvador Hizon, President and Chief Executive
Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President;
and Stella Garcia, Assistant Vice President.

Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its


Field Operations Department on January 27, 1981. On December 12, 1996, Culili
was promoted to Senior Technician in the Customer Premises Equipment
Management Unit of the Service Quality Department and his basic salary was
increased.8

As a telecommunications company and an authorized IGF operator, ETPI was


required, under Republic Act. No. 7925 and Executive Order No. 109, to
establish landlines in Metro Manila and certain provinces.9 However, due to
interconnection problems with the Philippine Long Distance Telephone Company
(PLDT), poor subscription and cancellation of subscriptions, and other business
difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine
thousand (129,000) landlines already allocated to a number of its employees.10
In 1998, due to business troubles and losses, ETPI was compelled to implement
a Right-Sizing Program which consisted of two phases: the first phase involved
the reduction of ETPI’s workforce to only those employees that were necessary
and which ETPI could sustain; the second phase entailed a company-wide
reorganization which would result in the transfer, merger, absorption or abolition
of certain departments of ETPI.11

As part of the first phase, ETPI, on December 10, 1998, offered to its employees
who had rendered at least fifteen years of service, the Special Retirement
Program, which consisted of the option to voluntarily retire at an earlier age and a
retirement package equivalent to two and a half (2½) months’ salary for every
year of service.12 This offer was initially rejected by the Eastern
Telecommunications Employees’ Union (ETEU), ETPI’s duly recognized
bargaining agent, which threatened to stage a strike. ETPI explained to ETEU
the exact details of the Right-Sizing Program and the Special Retirement
Program and after consultations with ETEU’s members, ETEU agreed to the
implementation of both programs.13 Thus, on February 8, 1999, ETPI re-offered
the Special Retirement Program and the corresponding retirement package to
the one hundred two (102) employees who qualified for the program.14 Of all the
employees who qualified to avail of the program, only Culili rejected the offer.15

After the successful implementation of the first phase of the Right-Sizing


Program, ETPI, on March 1, 1999 proceeded with the second phase which
necessitated the abolition, transfer and merger of a number of ETPI’s
departments.16

Among the departments abolished was the Service Quality Department. The
functions of the Customer Premises Equipment Management Unit, Culili’s unit,
were absorbed by the Business and Consumer Accounts Department. The
abolition of the Service Quality Department rendered the specialized functions of
a Senior Technician unnecessary. As a result, Culili’s position was abolished due
to redundancy and his functions were absorbed by Andre Andrada, another
employee already with the Business and Consumer Accounts Department.17

On March 5, 1999, Culili discovered that his name was omitted in ETPI’s New
Table of Organization. Culili, along with three of his co-employees who were
similarly situated, wrote their union president to protest such omission.18

In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella
Garcia, informed Culili of his termination from employment effective April 8, 1999.
The letter reads:

March 8, 1999
To: N. Culili

Thru: S. Dobbin/G. Ebue

From: AVP-HRD

------------------------------------------------------------------------------------------

As you are aware, the current economic crisis has adversely affected our
operations and undermined our earlier plans to put in place major work programs
and activities. Because of this, we have to implement a Rightsizing Program in
order to cut administrative/operating costs and to avoid losses. In line with this
program, your employment with the company shall terminate effective at the
close of business hours on April 08, 1999. However, to give you ample time to
look for other employment, provided you have amply turned over your pending
work and settled your accountabilities, you are no longer required to report to
work starting tomorrow. You will be considered on paid leave until April 08, 1999.

You will likewise be paid separation pay in compliance with legal requirements
(see attached), as well as other benefits accruing to you under the law, and the
CBA. We take this opportunity to thank you for your services and wish you well in
your future endeavors.

(Signed)
Stella J. Garcia19

This letter was similar to the memo shown to Culili by the union president weeks
before Culili was dismissed. The memo was dated December 7, 1998, and was
advising him of his dismissal effective January 4, 1999 due to the Right-Sizing
Program ETPI was going to implement to cut costs and avoid losses.20

Culili alleged that neither he nor the Department of Labor and Employment
(DOLE) were formally notified of his termination. Culili claimed that he only found
out about it sometime in March 1999 when Vice President Virgilio Garcia handed
him a copy of the March 8, 1999 letter, after he was barred from entering ETPI’s
premises by its armed security personnel when he tried to report for work.21 Culili
believed that ETPI had already decided to dismiss him even prior to the March 8,
1999 letter as evidenced by the December 7, 1998 version of that letter.
Moreover, Culili asserted that ETPI had contracted out the services he used to
perform to a labor-only contractor which not only proved that his functions had
not become unnecessary, but which also violated their Collective Bargaining
Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that
he was discriminated against when ETPI offered some of his co-employees an
additional benefit in the form of motorcycles to induce them to avail of the Special
Retirement Program, while he was not.22

ETPI denied singling Culili out for termination. ETPI claimed that while it is true
that they offered the Special Retirement Package to reduce their workforce to a
sustainable level, this was only the first phase of the Right-Sizing Program to
which ETEU agreed. The second phase intended to simplify and streamline the
functions of the departments and employees of ETPI. The abolition of Culili’s
department - the Service Quality Department - and the absorption of its functions
by the Business and Consumer Accounts Department were in line with the
program’s goals as the Business and Consumer Accounts Department was more
economical and versatile and it was flexible enough to handle the limited
functions of the Service Quality Department. ETPI averred that since Culili did
not avail of the Special Retirement Program and his position was subsequently
declared redundant, it had no choice but to terminate Culili.23 Culili, however,
continued to report for work. ETPI said that because there was no more work for
Culili, it was constrained to serve a final notice of termination24 to Culili, which
Culili ignored. ETPI alleged that Culili informed his superiors that he would agree
to his termination if ETPI would give him certain special work tools in addition to
the benefits he was already offered. ETPI claimed that Culili’s counter-offer was
unacceptable as the work tools Culili wanted were worth almost a million pesos.
Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of Eight
Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos (₱859,033.99)
consisting of his basic salary, leaves, 13th month pay and separation pay.25 ETPI
claimed that Culili refused to accept his termination and continued to report for
work.26 ETPI denied hiring outside contractors to perform Culili’s work and denied
offering added incentives to its employees to induce them to retire early. ETPI
also explained that the December 7, 1998 letter was never given to Culili in an
official capacity. ETPI claimed that it really needed to reduce its workforce at that
time and that it had to prepare several letters in advance in the event that none of
the employees avail of the Special Retirement Program. However, ETPI decided
to wait for a favorable response from its employees regarding the Special
Retirement Program instead of terminating them.27

On February 8, 2000, Culili filed a complaint against ETPI and its officers for
illegal dismissal, unfair labor practice, and money claims before the Labor
Arbiter.

On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of
illegal dismissal and unfair labor practice, to wit:

WHEREFORE, decision is hereby rendered declaring the dismissal of


complainant Nelson A. Culili illegal for having been made through an arbitrary
and malicious declaration of redundancy of his position and for having been done
without due process for failure of the respondent to give complainant and the
DOLE written notice of such termination prior to the effectivity thereof.

In view of the foregoing, respondents Eastern Telecommunications Philippines


and the individual respondents are hereby found guilty of unfair labor
practice/discrimination and illegal dismissal and ordered to pay complainant
backwages and such other benefits due him if he were not illegally dismissed,
including moral and exemplary damages and 10% attorney’s fees. Complainant
likewise is to be reinstated to his former position or to a substantially equivalent
position in accordance with the pertinent provisions of the Labor Code as
interpreted in the case of Pioneer texturing [Pioneer Texturizing Corp. v. National
Labor Relations Commission], G.R. No. 11865[1], 16 October 1997. Hence,
Complainant must be paid the total amount of TWO MILLION SEVEN
HUNDRED FORTY[-]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-]
NINE and 41/100 (₱2,744,379.41), computed as follows:

I. Backwages (from 16 March 1999 to 16 March 2001)


a. Basic Salary (₱29,030 x 24 mos.) ₱696,720.96
b. 13th Month Pay (₱692,720.96/12) 58,060.88
c. Leave Benefits
1. Vacation Leave (30 days/annum) ₱1,116.54 x 60
66,992.40
days
2. Sick Leave (30 days/annum) ₱1,116.54 x 60 days 66,992.40
3. Birthday Leave (1 day/annum) ₱1,116.54 x 2
2,233.08
days
d. Rice and Meal Subsidy 16 March – 31 July 1999
(₱1,750 x 4.5 mos. = ₱7,875.00)
01 August 1991 – 31 July 2000
(₱1,850 x 12 mos = ₱22,200.00)
01 August 2000 – 16 March 2001
44,700.00
(₱1,950 x 7.5 mos. = ₱14,625.00)
e. Uniform Allowance
₱7,000/annum x 2 years 14,000.00

₱949,699.72
II. Damages
a. Moral………… ₱500,000.00
b. Exemplary…… ₱250,000.00
III. Attorney’s Fees (10% of award) 94,969.97

GRAND TOTAL: ₱2,744,379.4128

The Labor Arbiter believed Culili’s claim that ETPI intended to dismiss him even
before his position was declared redundant. He found the December 7, 1998
letter to be a telling sign of this intention. The Labor Arbiter held that a reading of
the termination letter shows that the ground ETPI was actually invoking was
retrenchment and not redundancy, but ETPI stuck to redundancy because it was
easier to prove than retrenchment. He also did not believe that Culili’s functions
were as limited as ETPI made it appear to be, and held that ETPI failed to
present any reasonable criteria to justify the declaration of Culili’s position as
redundant. On the issue of unfair labor practice, the Labor Arbiter agreed that the
contracting out of Culili’s functions to non-union members violated Culili’s rights
as a union member. Moreover, the Labor Arbiter said that ETPI was not able to
dispute Culili’s claims of discrimination and subcontracting, hence, ETPI was
guilty of unfair labor practice.

On appeal, the NLRC affirmed the Labor Arbiter’s decision but modified the
amount of moral and exemplary damages awarded, viz:

WHEREFORE, the Decision appealed from is AFFIRMED granting complainant


the money claims prayed for including full backwages, allowances and other
benefits or their monetary equivalent computed from the time of his illegal
dismissal on 16 March 1999 up to his actual reinstatement except the award of
moral and exemplary damages which is modified to ₱200,000.00 for moral and
₱100,000.00 for exemplary damages. For this purpose, this case is REMANDED
to the Labor Arbiter for computation of backwages and other monetary awards to
complainant.29

ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure
before the Court of Appeals on the ground of grave abuse of discretion. ETPI
prayed that a Temporary Restraining Order be issued against the NLRC from
implementing its decision and that the NLRC decision and resolution be set
aside.
The Court of Appeals, on February 5, 2004, partially granted ETPI’s petition. The
dispositive portion of the decision reads as follows:

WHEREFORE, all the foregoing considered, the petition is PARTIALLY


GRANTED. The assailed Decision of public respondent National Labor Relations
Commission is MODIFIED in that petitioner Eastern Telecommunications
Philippines Inc. (ETPI) is hereby ORDERED to pay respondent Nelson Culili full
backwages from the time his salaries were not paid until the finality of this
Decision plus separation pay in an amount equivalent to one (1) month salary for
every year of service. The awards for moral and exemplary damages are
DELETED. The Writ of Execution issued by the Labor Arbiter dated September
8, 2003 is DISSOLVED.30

The Court of Appeals found that Culili’s position was validly abolished due to
redundancy. The Court of Appeals said that ETPI had been very candid with its
employees in implementing its Right-Sizing Program, and that it was highly
unlikely that ETPI would effect a company-wide reorganization simply for the
purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot
be held guilty of unfair labor practice as mere contracting out of services being
performed by union members does not per se amount to unfair labor practice
unless it interferes with the employees’ right to self-organization. The Court of
Appeals further held that ETPI’s officers cannot be held liable absent a showing
of bad faith or malice. However, the Court of Appeals found that ETPI failed to
observe the standards of due process as required by our laws when it failed to
properly notify both Culili and the DOLE of Culili’s termination. The Court of
Appeals maintained its position in its September 13, 2004 Resolution when it
denied Culili’s Motion for Reconsideration and Urgent Motion to Reinstate the
Writ of Execution issued by the Labor Arbiter, and ETPI’s Motion for Partial
Reconsideration.

Culili is now before this Court praying for the reversal of the Court of Appeals’
decision and the reinstatement of the NLRC’s decision based on the following
grounds:

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN


ACCORD WITH THE APPLICABLE LAW AND JURISPRUDENCE WHEN IT
REVERSED THE DECISIONS OF THE NLRC AND THE LABOR ARBITER
HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN THAT:
A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS,
RESPONDENTS’ CHARACTERIZATION OF PETITIONER’S POSITION AS
REDUNDANT WAS TAINTED BY BAD FAITH.

B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE


PETITIONER’S POSITION AS REDUNDANT.

II

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN


ACCORD WITH LAW AND JURISPRUDENCE IN FINDING THAT NO UNFAIR
LABOR PRACTICE ACTS WERE COMMITTED AGAINST THE PETITIONER.

III

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN


ACCORD WITH LAW AND JURISPRUDENCE IN DELETING THE AWARD OF
MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES IN FAVOR
OF PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION DATED 8
SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER.

IV

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN


ACCORD WITH LAW AND JURISPRUDENCE IN ABSOLVING THE
INDIVIDUAL RESPONDENTS OF PERSONAL LIABILITY.

CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF


APPEALS, IN A CERTIORARI PROCEEDING, REVIEWED THE FACTUAL
FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF THE LABOR ARBITER
AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI REVERSING THE
DECISIONS OF THE NLRC AND THE LABOR ARBITER EVEN IN THE
ABSENCE OF GRAVE ABUSE OF DISCRETION.31

Procedural Issue: Court of Appeals'


Power to Review Facts in a Petition
For Certiorari under Rule 65

Culili argued that the Court of Appeals acted in contravention of applicable law
and jurisprudence when it reexamined the facts in this case and reversed the
factual findings of the Labor Arbiter and the NLRC in a special civil action
for certiorari.

This Court has already confirmed the power of the Court of Appeals, even on a
Petition for Certiorari under Rule 65,32 to review the evidence on record, when
necessary, to resolve factual issues:

The power of the Court of Appeals to review NLRC decisions via Rule 65 or
Petition for Certiorari has been settled as early as in our decision in St. Martin
Funeral Home v. National Labor Relations Commission. This Court held that the
proper vehicle for such review was a Special Civil Action for Certiorari under Rule
65 of the Rules of Court, and that this action should be filed in the Court of
Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover,
it is already settled that under Section 9 of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the
Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa
Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the
Court of Appeals — pursuant to the exercise of its original jurisdiction over
Petitions for Certiorari — is specifically given the power to pass upon the
evidence, if and when necessary, to resolve factual issues.33

While it is true that factual findings made by quasi-judicial and administrative


tribunals, if supported by substantial evidence, are accorded great respect and
even finality by the courts, this general rule admits of exceptions. When there is a
showing that a palpable and demonstrable mistake that needs rectification has
been committed34 or when the factual findings were arrived at arbitrarily or in
disregard of the evidence on record, these findings may be examined by the
courts.35

In the case at bench, the Court of Appeals found itself unable to completely
sustain the findings of the NLRC thus, it was compelled to review the facts and
evidence and not limit itself to the issue of grave abuse of discretion.

With the conflicting findings of facts by the tribunals below now before us, it
behooves this Court to make an independent evaluation of the facts in this case.

Main Issue: Legality of Dismissal

Culili asserted that he was illegally dismissed because there was no valid cause
to terminate his employment. He claimed that ETPI failed to prove that his
position had become redundant and that ETPI was indeed incurring losses. Culili
further alleged that his functions as a Senior Technician could not be considered
a superfluity because his tasks were crucial and critical to ETPI’s business.
Under our laws, an employee may be terminated for reasons involving measures
taken by the employer due to business necessities. Article 283 of the Labor Code
provides:

Art. 283. Closure of establishment and reduction of personnel. - The employer


may also terminate the employment of any employee due to the installation of
labor saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a
written notice on the workers and the Department of Labor and Employment at
least one (1) month before the intended date thereof. In case of termination due
to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1)
month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one
(1) whole year.

There is redundancy when the service capability of the workforce is greater than
what is reasonably required to meet the demands of the business enterprise. A
position becomes redundant when it is rendered superfluous by any number of
factors such as over-hiring of workers, decrease in volume of business, or
dropping a particular product line or service activity previously manufactured or
undertaken by the enterprise.36

This Court has been consistent in holding that the determination of whether or
not an employee’s services are still needed or sustainable properly belongs to
the employer. Provided there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act, the soundness or
wisdom of this exercise of business judgment is not subject to the discretionary
review of the Labor Arbiter and the NLRC.37

However, an employer cannot simply declare that it has become overmanned


and dismiss its employees without producing adequate proof to sustain its claim
of redundancy.38 Among the requisites of a valid redundancy program are: (1) the
good faith of the employer in abolishing the redundant position; and (2) fair and
reasonable criteria in ascertaining what positions are to be declared
redundant,39 such as but not limited to: preferred status, efficiency, and
seniority.40
This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability
of the newly created positions, job description and the approval by the
management of the restructuring.41

In the case at bar, ETPI was upfront with its employees about its plan to
implement a Right-Sizing Program. Even in the face of initial opposition from and
rejection of the said program by ETEU, ETPI patiently negotiated with ETEU’s
officers to make them understand ETPI’s business dilemma and its need to
reduce its workforce and streamline its organization. This evidently rules out bad
faith on the part of ETPI.

In deciding which positions to retain and which to abolish, ETPI chose on the
basis of efficiency, economy, versatility and flexibility. It needed to reduce its
workforce to a sustainable level while maintaining functions necessary to keep it
operating. The records show that ETPI had sufficiently established not only its
need to reduce its workforce and streamline its organization, but also the
existence of redundancy in the position of a Senior Technician. ETPI explained
how it failed to meet its business targets and the factors that caused this, and
how this necessitated it to reduce its workforce and streamline its organization.
ETPI also submitted its old and new tables of organization and sufficiently
described how limited the functions of the abolished position of a Senior
Technician were and how it decided on whom to absorb these functions.

In his affidavit dated April 10, 2000,42 Mr. Arnel D. Reyel, the Head of both the
Business Services Department and the Finance Department of ETPI, described
how ETPI went about in reorganizing its departments. Mr. Reyel said that in the
course of ETPI’s reorganization, new departments were created, some were
transferred, and two were abolished. Among the departments abolished was the
Service Quality Department. Mr. Reyel said that ETPI felt that the functions of the
Service Quality Department, which catered to both corporate and small and
medium-sized clients, overlapped and were too large for a single department,
thus, the functions of this department were split and simplified into two smaller
but more focused and efficient departments. In arriving at the decision to abolish
the position of Senior Technician, Mr. Reyel explained:

11.3. Thus, in accordance with the reorganization of the different departments of


ETPI, the Service Quality Department was abolished and its functions were
absorbed by the Business and Consumer Accounts Department and the
Corporate and Major Accounts Department.

11.4. With the abolition and resulting simplification of the Service Quality
Department, one of the units thereunder, the Customer Premises Equipment
Maintenance ("CPEM") unit was transferred to the Business and Consumer
Accounts Department. Since the Business and Consumer Accounts Department
had to remain economical and focused yet versatile enough to meet all the needs
of its small and medium sized clients, it was decided that, in the judgment of
ETPI management, the specialized functions of a Senior Technician in the CPEM
unit whose sole function was essentially the repair and servicing of ETPI’s
telecommunications equipment was no longer needed since the Business and
Consumer [Accounts] Department had to remain economical and focused yet
versatile enough to meet all the multifarious needs of its small and medium sized
clients.

11.5. The business reason for the abolition of the position of Senior Technician
was because in ETPI’s judgment, what was needed in the Business and
Consumer Accounts Department was a versatile, yet economical position with
functions which were not limited to the mere repair and servicing of
telecommunications equipment. It was determined that what was called for was a
position that could also perform varying functions such as the actual installation
of telecommunications products for medium and small scale clients, handle
telecommunications equipment inventory monitoring, evaluation of
telecommunications equipment purchased and the preparation of reports on the
daily and monthly activation of telecommunications equipment by these small
and medium scale clients.

11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior
Technician was to be abolished due to redundancy. The functions of a Senior
Technician was to be abolished due to redundancy. The functions of a Senior
Technician would then be absorbed by an employee assigned to the Business
and Consumer Accounts Department who was already performing the functions
of actual installation of telecommunications products in the field and handling
telecommunications equipment inventory monitoring, evaluation of
telecommunications equipment purchased and the preparation of reports on the
daily and monthly activation of telecommunications equipment. This employee
would then simply add to his many other functions the duty of repairing and
servicing telecommunications equipment which had been previously performed
by a Senior Technician.43

In the new table of organization that the management approved, one hundred
twelve (112) employees were redeployed and nine (9) positions were declared
redundant.44 It is inconceivable that ETPI would effect a company-wide
reorganization of this scale for the mere purpose of singling out Culili and
terminating him. If Culili’s position were indeed indispensable to ETPI, then it
would be absurd for ETPI, which was then trying to save its operations, to abolish
that one position which it needed the most. Contrary to Culili’s assertions that
ETPI could not do away with his functions as long as it is in the
telecommunications industry, ETPI did not abolish the functions performed by
Culili as a Senior Technician. What ETPI did was to abolish the position itself for
being too specialized and limited. The functions of that position were then added
to another employee whose functions were broad enough to absorb the tasks of
a Senior Technician.

Culili maintains that ETPI had already decided to dismiss him even before the
second phase of the Right-Sizing Program was implemented as evidenced by
the December 7, 1998 letter.

The December 7, 1998 termination letter signed by ETPI’s AVP Stella Garcia
hardly suffices to prove bad faith on the part of the company. The fact remains
that the said letter was never officially transmitted and Culili was not terminated
at the end of the first phase of ETPI’s Right-Sizing Program. ETPI had given an
adequate explanation for the existence of the letter and considering that it had
been transparent with its employees, through their union ETEU, so much so that
ETPI even gave ETEU this unofficial letter, there is no reason to speculate and
attach malice to such act. That Culili would be subsequently terminated during
the second phase of the Right-Sizing Program is not evidence of undue
discrimination or "singling out" since not only Culili’s position, but his entire unit
was abolished and absorbed by another department.

Unfair Labor Practice

Culili also alleged that ETPI is guilty of unfair labor practice for violating Article
248(c) and (e) of the Labor Code, to wit:

Art. 248. Unfair labor practices of employers. - It shall be unlawful for an


employer to commit any of the following unfair labor practice:

xxxx

c. To contract out services or functions being performed by union members when


such will interfere with, restrain or coerce employees in the exercise of their
rights to self-organization;

xxxx

e. To discriminate in regard to wages, hours of work, and other terms and


conditions of employment in order to encourage or discourage membership in
any labor organization. Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining agent as
a condition for employment, except those employees who are already members
of another union at the time of the signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining unit who are not members of
the recognized collective bargaining agent may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of the recognized
collective bargaining agent, if such non-union members accept the benefits under
the collective agreement: Provided, that the individual authorization required
under Article 242, paragraph (o) of this Code shall not apply to the non-members
of the recognized collective bargaining agent.

Culili asserted that ETPI is guilty of unfair labor practice because his functions
were sourced out to labor-only contractors and he was discriminated against
when his co-employees were treated differently when they were each offered an
additional motorcycle to induce them to avail of the Special Retirement Program.
ETPI denied hiring outside contractors and averred that the motorcycles were not
given to his co-employees but were purchased by them pursuant to their
Collective Bargaining Agreement, which allowed a retiring employee to purchase
the motorcycle he was assigned during his employment.

The concept of unfair labor practice is provided in Article 247 of the Labor Code
which states:

Article 247. Concept of unfair labor practice and procedure for prosecution
thereof. -- Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate interest of both labor
and management, including their right to bargain collectively and otherwise deal
with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-
management relations.

In the past, we have ruled that "unfair labor practice refers to ‘acts that violate the
workers' right to organize.’ The prohibited acts are related to the workers' right to
self-organization and to the observance of a CBA."45 We have likewise declared
that "there should be no dispute that all the prohibited acts constituting unfair
labor practice in essence relate to the workers' right to self-organization."46 Thus,
an employer may only be held liable for unfair labor practice if it can be shown
that his acts affect in whatever manner the right of his employees to self-
organize.47

There is no showing that ETPI, in implementing its Right-Sizing Program, was


motivated by ill will, bad faith or malice, or that it was aimed at interfering with its
employees’ right to self-organize. In fact, ETPI negotiated and consulted with
ETEU before implementing its Right-Sizing Program.
Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor practice
because of its failure to dispute Culili’s allegations.

According to jurisprudence, "basic is the principle that good faith is presumed


and he who alleges bad faith has the duty to prove the same."48 By imputing bad
faith to the actuations of ETPI, Culili has the burden of proof to present
substantial evidence to support the allegation of unfair labor practice. Culili failed
to discharge this burden and his bare allegations deserve no credit.

Observance of Procedural Due Process

Although the Court finds Culili’s dismissal was for a lawful cause and not an act
of unfair labor practice, ETPI, however, was remiss in its duty to observe
procedural due process in effecting the termination of Culili.

We have previously held that "there are two aspects which characterize the
concept of due process under the Labor Code: one is substantive — whether the
termination of employment was based on the provision of the Labor Code or in
accordance with the prevailing jurisprudence; the other is procedural — the
manner in which the dismissal was effected."49

Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code
provides:

(d) In all cases of termination of employment, the following standards of due


process shall be substantially observed:

xxxx

For termination of employment as defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed complied with upon service of a
written notice to the employee and the appropriate Regional Office of the
Department of Labor and Employment at least thirty days before effectivity of the
termination, specifying the ground or grounds for termination.

In Mayon Hotel & Restaurant v. Adana,50 we observed:

The requirement of law mandating the giving of notices was intended not only to
enable the employees to look for another employment and therefore ease the
impact of the loss of their jobs and the corresponding income, but more
importantly, to give the Department of Labor and Employment (DOLE) the
opportunity to ascertain the verity of the alleged authorized cause of
termination.51
ETPI does not deny its failure to provide DOLE with a written notice regarding
Culili’s termination. It, however, insists that it has complied with the requirement
to serve a written notice to Culili as evidenced by his admission of having
received it and forwarding it to his union president.

In Serrano v. National Labor Relations Commission,52 we noted that "a job is


more than the salary that it carries." There is a psychological effect or a stigma in
immediately finding one’s self laid off from work.53 This is exactly why our labor
laws have provided for mandating procedural due process clauses. Our laws,
while recognizing the right of employers to terminate employees it cannot
sustain, also recognize the employee’s right to be properly informed of the
impending severance of his ties with the company he is working for. In the case
at bar, ETPI, in effecting Culili’s termination, simply asked one of its guards to
serve the required written notice on Culili. Culili, on one hand, claims in his
petition that this was handed to him by ETPI’s vice president, but previously
testified before the Labor Arbiter that this was left on his table.54 Regardless of
how this notice was served on Culili, this Court believes that ETPI failed to
properly notify Culili about his termination. Aside from the manner the written
notice was served, a reading of that notice shows that ETPI failed to properly
inform Culili of the grounds for his termination.

The Court of Appeals, in finding that Culili was not afforded procedural due
process, held that Culili’s dismissal was ineffectual, and required ETPI to pay
Culili full backwages in accordance with our decision in Serrano v. National Labor
Relations Commission.55 Over the years, this Court has had the opportunity to
reexamine the sanctions imposed upon employers who fail to comply with the
procedural due process requirements in terminating its employees. In Agabon v.
National Labor Relations Commission,56 this Court reverted back to the doctrine
in Wenphil Corporation v. National Labor Relations Commission57 and held that
where the dismissal is due to a just or authorized cause, but without observance
of the due process requirements, the dismissal may be upheld but the employer
must pay an indemnity to the employee. The sanctions to be imposed however,
must be stiffer than those imposed in Wenphil to achieve a result fair to both the
employers and the employees.58

In Jaka Food Processing Corporation v. Pacot,59 this Court, taking a cue from
Agabon, held that since there is a clear-cut distinction between a dismissal due
to a just cause and a dismissal due to an authorized cause, the legal implications
for employers who fail to comply with the notice requirements must also be
treated differently:

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause
under Article 282 but the employer failed to comply with the notice requirement,
the sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee; and (2) if
the dismissal is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement, the sanction should be
stiffer because the dismissal process was initiated by the employer's exercise of
his management prerogative.60

Hence, since it has been established that Culili’s termination was due to an
authorized cause and cannot be considered unfair labor practice on the part of
ETPI, his dismissal is valid. However, in view of ETPI’s failure to comply with the
notice requirements under the Labor Code, Culili is entitled to nominal damages
in addition to his separation pay.1avvphi 1

Personal Liability of ETPI’s Officers


And Award of Damages

Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado,
Virgilio Garcia, and Stella Garcia, as ETPI’s officers, should be held personally
liable for the acts of ETPI which were tainted with bad faith and arbitrariness.
Furthermore, Culili insists that he is entitled to damages because of the
sufferings he had to endure and the malicious manner he was terminated.

As a general rule, a corporate officer cannot be held liable for acts done in his
official capacity because a corporation, by legal fiction, has a personality
separate and distinct from its officers, stockholders, and members. To pierce this
fictional veil, it must be shown that the corporate personality was used to
perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse
a legitimate issue. In illegal dismissal cases, corporate officers may be held
solidarily liable with the corporation if the termination was done with malice or
bad faith. 61

In illegal dismissal cases, moral damages are awarded only where the dismissal
was attended by bad faith or fraud, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public
policy.62 Exemplary damages may avail if the dismissal was effected in a wanton,
oppressive or malevolent manner to warrant an award for exemplary damages.63

It is our considered view that Culili has failed to prove that his dismissal was
orchestrated by the individual respondents herein for the mere purpose of getting
rid of him. In fact, most of them have not even dealt with Culili personally.
Moreover, it has been established that his termination was for an authorized
cause, and that there was no bad faith on the part of ETPI in implementing its
Right-Sizing Program, which involved abolishing certain positions and
departments for redundancy. It is not enough that ETPI failed to comply with the
due process requirements to warrant an award of damages, there being no
showing that the company’s and its officers’ acts were attended with bad faith or
were done oppressively.

WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004
Decision and September 13, 2004 Resolution of the Court of Appeals in CA-G.R.
SP No. 75001 are AFFIRMED with the MODIFICATION that petitioner Nelson A.
Culili’s dismissal is declared valid but respondent Eastern Telecommunications
Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of Fifty
Thousand Pesos (₱50,000.00) representing nominal damages for non-
compliance with statutory due process, in addition to the mandatory separation
pay required under Article 283 of the Labor Code.
G.R. No. 165757 October 17, 2006

GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), EDUARDO


FLORES, BONIFACIO LABACO, SALVADOR VERDEFLOR, PAULITO
NIEVES, NILO AMENAZOR, BENJAMIN BEDUYA, EUTIQUIO MENESES,
CENON LABACO, DANILO MARANAN, ELISEO LASTIMOSO, JAMES
MADERAS, EFREN LABACO, CESARIO BOLSICO, DARIO DECALAIN,
SAMMY CEDENO, PRUDENCIO DELA CRUZ, EDGARDO PASTRANA,
DANILO BERMUDEZ, BILLY BLASCO, ROBERTO PEPINO, RUBEN
TENOSO, ORLANDO TUDILLA, JESSIE SACE, JUNE DALAYAT, FRANCISO
LABACO, EDIN DEMAYO, WILFREDO CHENG, JAIME GANDO, JOSELITO
GUANZON, VICTOR DELMUNDO, NATHANIEL PEROY, ROBERTO
VIRTUDAZO, RICARDO HILAGA, RODRIGO FIRMANEZ, RENE VILLA,
VERGELIO ICO, NOLITO PANUNCIA, ALDRONICO BAHILLO, FLORENCIO
LANZADEROS, ROLLY ROTIL, BENJAMIN ESCANO, DOMINADOR
ABAINCIA, ROMEO LITANG, NELSON PETALIO, MARIO VILLAMOR,
AGUSTIN CONSTANTINO, HERMINIO AGUSTIN, VICTORIO NEMENZO,
MABINI YARCIA, PERCY ZOSIMO, ANGELITO DELOS REYES, ADVINCULA
ELMEDULAN, GORGONIO BOLORAN, ALAN MONIN, JESSIE
PACALINGGA, and MICHAEL DACLAG, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL
CORPORATION and RICARDO CHENG, respondents.

DECISION

CARPIO MORALES, J.:

Assailed via petition for review are issuances of the Court of Appeals in CA-G.R.
SP No. 68669, to wit: Decision1dated March 26, 2004 denying petitioners’ petition
for certiorari and upholding the decision of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 026956-00, and Resolution dated
October 19, 2004 denying petitioners’ motion for reconsideration of the decision.

Respondent Galaxie Steel Corporation (Galaxie) is a corporation engaged in the


business of manufacturing and sale of re-bars and steel billets which are used
primarily in the construction of high-rise buildings. On account of serious
business losses which occurred in 1997 up to mid-1999 totaling
around P127,000,000.00,2 Galaxie decided to close down its business
operations.

Galaxie thus filed on July 30, 1999 a written notice with the Department of Labor
and Employment (DOLE) informing the latter of its intended closure and the
consequent termination of its employees effective August 31, 1999.3 And it
posted the notice of closure on the corporate bulletin board.4

On September 8, 1999, petitioners Galaxie Steel Workers Union and Galaxie


employees filed a complaint for illegal dismissal, unfair labor practice, and money
claims against Galaxie.

The Labor Arbiter, by Decision of October 30, 2000, declared valid Galaxie’s
closure of business but nevertheless ordered it to pay petitioner-employees
separation pay, pro-rata 13th month pay, and vacation and sick leave credits. The
dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered ordering Respondents to pay


complainants separation pay, pro-rata 13th month pay, and vacation leave
and sick leave credits in the following computed amounts:

xxxx

Respondents are further ordered to pay complainants their tax refund for
1999 and to pay 10% attorney’s fees based on the total withheld labor
standard benefits.

The complaint for unfair labor practice, illegal lockout, wage differentials,
and other money claims are hereby disallowed for lack of merit.

SO ORDERED.5

On appeal, the NLRC upheld the Labor Arbiter’s decision but reversed the award
of pro-rata 13th month pay and vacation and sick leave credits, the same not
being among petitioners’ causes of action as in fact they were not even
mentioned in their pleadings.6 And it reversed too the award for separation pay,
the closure of Galaxie’s business being due to serious business losses.
Nevertheless, the NLRC directed Galaxie to grant petitioners, by way of financial
assistance, the same amount given to the employees who had executed
quitclaims. Thus the dispositive portion of the NLRC decision read:
WHEREFORE, the decision appealed from is hereby SET ASIDE. The
complaint for unfair labor practice and illegal dismissal is DISMISSED for
lack of merit. The respondent Galaxie Steel Corporation is hereby ordered
to extend as any by way of financial assistance the equivalent of ten (10)
day’s (sic) salary for every year of service to each of the following:
Eduardo Flores, Bonifacio Labaco, Salvador Verdeeflor, Paulito Nieves,
Nilo Amenazor, Benjamin Beduya, Eutiquio Meneses, Cenon Labaco,
Danilo Maranan, Eliseo Lastimoso, James Maderas, Efren Labaco,
Cesario Bolsico, Dario Cecalain, Sammy Cedeno, Prudencio dela Cruz,
Edgardo Pastrana, Danilo Bermudez, Billy Blasco, Roberto Pepino, Ruben
Tenoso, Orlando Dudilla, Jessie Sace, June Dalayat, Francisco Labaco,
Edwin Demayo, Wilfredo Cheng, Jaime Gando, Joselito Guanzon, Victor
Delmundo, Nathaniel Peroy, Roberto Virtudazo, Ricardo Hilaga, Rodrigo
Firnanez, Rene Villa, Vergelio Ico, Nolito Panuncio, Aldronico Bahillo,
Florencio Lanzaderos, Rolly Rotil, Benjamin Escano, Dominador Abaincia,
Romeo Litang, Nelson Petalio, Mario Villamor, Agustin Constantino,
Herminio Agustin, Victorio Nemenzo, Mabini Yarcia, Percy Zosimo,
Angelito delos Reyes, Advincula Elmedulan, Gorgonio Boloran, Alan
Monin, Jessie Pacalingga and Michael Daclag.

All other claims are DISMISSED for lack of merit.

SO ORDERED.7

Their motion for reconsideration having been denied, petitioners filed a petition
for certiorari with the Court of Appeals, arguing that the NLRC acted with grave
abuse of discretion in not finding Galaxie guilty of unfair labor practice and of
violating petitioners’ right to notice of closure, and in deleting the award of
separation pay.

In the assailed decision,8 the Court of Appeals upheld the NLRC decision and
accordingly denied petitioners’ petition for certiorari as it did their motion for
reconsideration.

Hence, the present petition for review which raises the following issues:

1. Whether or not [Galaxie] is guilty of unfair labor practice in closing its


business operations shortly after petitioner union filed for certification
election.

2. Whether or not petitioners are entitled to separation pay.


3. Whether or not the written notice posted by [Galaxie] on the company
bulletin board sufficiently complies with the notice requirement under
Article 283 of the Labor Code.

Petitioners contend that the Court of Appeals erred in not finding that Galaxie’s
closure of business operations was motivated not by serious business losses but
by their anti-union stance.

It is settled that this Court is not a trier of facts, a rule which applies with greater
force in labor cases where the findings of fact of the NLRC are accorded respect
and even finality, as long as they are supported by substantial evidence from
which an independent evaluation of the facts may be made.9 In this case, the
Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in ruling that
Galaxie’s closure or cessation of business operations was due to serious
business losses or financial reverses, and not because of any alleged anti-union
position. This Court finds no reason to modify such finding.

In any event, petitioners contend that Galaxie did not serve written notices of the
closure of business operations upon its employees, it having merely posted a
notice on the company bulletin board. Hence, petitioners conclude, following the
doctrine in Serrano v. National Labor Relations Commission,10 Galaxie should be
liable for backwages from the date of dismissal until finality of the decision in the
case.

Further, petitioners contend that the appellate court’s upholding of the deletion by
the NLRC of separation pay is contrary to the ruling in Banco Filipino Savings
and Mortgage Bank v. National Labor Relations Commission11 which held that
separation pay is proper in cases where closure or cessation of business
operations is due to serious business losses or financial reverses.

Indeed, Galaxie’s documentary evidence shows that it had been experiencing


serious financial losses at the time it closed business operations. As aptly found
by the Court of Appeals:

The NLRC’s finding on the legality of the closure should be upheld for it
is supported by substantial evidence consisting of the audited financial
statements showing that Galaxie continuously incurred losses from 1997
up to mid-1999, to wit: P65,753,480.65 in 1997, P48,429,785.89 in 1998,
and P13,204,389.97 in 1999; and of the various demand notices of
payments from creditor banks. Besides, the petitioners had not presented
evidence to the contrary; nor did they establish that the closure was
motivated by Galaxie’s anti-union stance. True, the union was seeking the
holding of a certification election at the time that Galaxie closed its
business operation, but that, without more, was not sufficient to attribute
anti-unionism against Galaxie. (Underscoring supplied)

Upon the other hand, petitioners failed to present concrete evidence supporting
their claim of unfair labor practice. Unfair labor practice refers to acts that violate
the workers’ right to organize,12 and are defined in Articles 248 and 261 of the
Labor Code. The prohibited acts relate to the workers’ right to self-organization
and to the observance of Collective Bargaining Agreement without which relation
the acts, no matter how unfair, are not deemed unfair labor practices.13

Respecting petitioners’ claim for separation pay, Article 283 of the Labor Code
provides:

Art. 283. Closure of establishment and reduction of personnel. — The


employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service , whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or under taking not due to serious
business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.

In North Davao Mining Corporation v. National Labor Relations


Commission,14 this Court held that Article 283 governs the grant of separation
benefits "in case of closures or cessation of operation" of business
establishments "NOT due to serious business losses or financial reverses . . ."
Where, the closure then is due to serious business losses, the Labor Code does
not impose any obligation upon the employer to pay separation benefits.15

Explaining the policy distinction in Article 283 of the Labor Code, this Court,
in Cama v. Joni’s Food Services, Inc., declared:16

The Constitution, while affording full protection to labor, nonetheless,


recognizes "the right of enterprises to reasonable returns on investments,
and to expansion and growth." In line with this protection afforded to
business by the fundamental law, Article 283 of the Labor Code clearly
makes a policy distinction. It is only in instances of "retrenchment to
prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses" that employees whose employment has been
terminated as a result are entitled to separation pay. In other words,
Article 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious losses. To
require an employer to be generous when it is no longer in a position
to do so, in our view, would be unduly oppressive, unjust, and unfair
to the employer. Ours is a system of laws, and the law in protecting
the rights of the working man, authorizes neither the oppression nor
the self-destruction of the employer. x x x (Emphasis supplied)

The denial of petitioners’ claim for separation pay was thus in order.

Finally, with regard to the notice requirement, the Labor Arbiter found, and it was
upheld by the NLRC and the Court of Appeals, that the written notice of closure
or cessation of Galaxie’s business operations was posted on the company
bulletin board one month prior to its effectivity. The mere posting on the company
bulletin board does not, however, meet the requirement under Article 283 of
"serving a written notice on the workers." The purpose of the written notice is to
inform the employees of the specific date of termination or closure of business
operations, and must be served upon them at least one month before the date of
effectivity to give them sufficient time to make the necessary arrangements.17 In
order to meet the foregoing purpose, service of the written notice must be
made individually upon each and every employee of the company.

Nevertheless, the validity of termination of services can exist independently of


the procedural infirmity in the dismissal. In Agabon v. National Labor Relations
Commission,18 the Court deemed it best to revisit the doctrine in Serrano,19 which
was cited by petitioners, in relation to Wenphil Corp. v. National Labor Relations
Commission.20After analyzing the consequences of the divergent doctrines on
employment termination, the Court held that in cases involving dismissals for
cause, but without observance of statutory due process, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by declaring that the
dismissal was for cause but imposing sanctions on the employer. By so doing,
dispensing justice not just to employees but to employers as well is achieved.21

In Business Services of the Future Today, Inc. v. Court of Appeals,22 which


reiterated the ruling in Agabon v. National Labor Relations Commission,23 this
Court held that where the dismissal is for an authorized cause, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee, in the form of
nominal damages, for the violation of his right to statutory due process.

Ultimately, however, the amount of damages to be awarded the employee is


addressed to the sound discretion of the Court, taking into account the relevant
circumstances.24

Under the facts and circumstances attendant to the case, this Court finds the
amount of P20,000 in nominal damages sufficient to vindicate each petitioner’s
right to due process.

WHEREFORE, the assailed Decision dated March 26, 2004 and Resolution
dated October 19, 2004 issued by the Court of Appeals in CA-G.R. SP No.
68669 are AFFIRMED with the MODIFICATION that respondent Galaxie Steel
Corporation is ORDERED to PAY each of the individual petitioners the amount
of P20,000.00 as nominal damages for non-compliance with statutory due
process.
G.R. No. L-19187 February 28, 1963

STERLING PRODUCTS INTERNATIONAL, INC. and V. SAN


PEDRO, petitioners,
vs.
LORETA C. SOL and COURT OF INDUSTRIAL RELATIONS, respondents.

Chuidian Law Office for petitioners.


Gregorio E. Fajardo for respondent Loreta C. Sol.
Mariano B. Tuason for respondent Court of Industrial Relations.

LABRADOR, J.:

This is a petition to review on certiorari the resolution of the Court of Industrial


Relations, dated June 23, 1961 in Case No. 2292-ULP, ordering the herein
petitioners to reinstate complainant-respondent Loreta C. Sol, with back wages
from the date of her dismissal until her reinstatement.

Loreta C. Sol charged the herein petitioners Sterling Products International and
its Radio Director V. San Pedro with having committed an unfair labor practice
act. In her complaint she alleged among others that she has been a regular
Radio Monitor of respondents-petitioners; that on January 8, 1960, she filed a
complaint against the said firm for underpayment, money equivalent of her
vacation leave from 1952 to 1959, and Christmas bonus for 1959, equivalent to
one month salary. The complaint resulted in her dismissal, without just cause, on
December 16, 1960.

In their answer petitioners herein denied the charges and by way of affirmative
defenses, alleged that complainant is an independent contractor whose services
were retained by petitioners to submit reports of radio monitoring work performed
outside of their (petitioners') office; that petitioners no longer required
complainant's services and therefore, it gave her notice of termination, as it did in
fact terminate her services, as an independent contractor; that petitioners
terminated the services of complainant-respondent for good and justifiable
reasons and in accordance with business requirements; that the complaint states
no cause of action and that petitioners did not and are not engaged in unfair
labor practice acts against the complainant within the meaning of Sec. 4(a),
subsection 5 of the Industrial Peace Act.

Judge Tabigne of the Court of Industrial Relations in a decision dated October 8,


1960 held that the complainant is not an employee of the respondent firm but
only an independent contractor and that respondent firm was justified in
dismissing the complainant due to economic reasons.
Complainant filed a motion to reconsider the decision, raising the question as to
whether she is an employee or an independent contractor. The lower court
reversed the decision of Judge Tabigne, ruling that complainant was an
employee and not an independent contractor, and ordered her reinstatement with
back wages. The lower court further ruled that respondent firm was guilty of
unfair labor practice. In arriving at this ruling it considered the following
circumstances: (1) Complainant was given an identification card stating that
"Bearer Loreta C. Sol is a bona fide employee of this Company;" (2) when she
applied for purchase of a lot from the PHHC, she was given a certificate to show
that she was indeed an employee of the respondent company for the last five
years or six years; and (3) as such employee, she enjoyed the privilege of
borrowing money from the Employees Loan Association of the firm.

The court further found that the company's control over respondent's work is
shown by the fact that she can not listen to broadcasts other than those that were
contained in the schedule given to her by the company. Supervision and control
of her work could be done by checking or verifying the contents of her reports on
said broadcasts, said the court.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts.1äw phï1.ñët

Further discussing the question the court states:

In the case at bar, the company not only hired and fired Mrs. Sol, without
third party intervention, but also reserved to itself, possessed and
exercised its right to control 'the end' to be achieved and 'the means' to be
used in reaching such end, namely, the schedule and other instructions by
which the monitor shall be guided, and the reports with specifications by
which the company observes and verifies the performance of her work.

In consequence the court held that the respondent was an employee. It also
found that the petitioners herein are guilty of unfair labor practice, so it ordered
petitioners to reinstate respondent Loreta C. Sol, with back wages from the date
of her dismissal until her reinstatement. Two judges dissented to this decision.

In the petition now brought to Us by certiorari it is urged that respondent Sol was
an independent contractor because in the performance of her work, the elements
of control and direction are lacking, hence, no relationship of employer and
employee must have existed, citing in support of this contention Section 3, 35
Am. Jur. 445-446; and that since respondent was employed to work according to
her own methods and without being subject to control except as to its final result,
she may not be considered as an employee. (Ibid.) We cannot accept this
argument. Respondent Sol was directed to listen to certain broadcasts, directing
her, in the instructions given her, when to listen and what to listen, petitioners
herein naming the stations to be listened to, the hours of broadcasts, and the
days when listening was to be done. Respondent Sol had to follow these
directions. The mere fact that while performing the duties assigned to her she
was not under the supervision of the petitioners does not render her a contractor,
because what she has to do, the hours that she has to work and the report that
she has to submit all — these are according to instructions given by the
employer. It is not correct to say, therefore, that she was an independent
contractor, for an independent contractor is one who does not receive
instructions as to what to do, how to do, without specific instructions.

Finally, the very act of respondent Sol in demanding vacation leave, Christmas
bonus and additional wages shows that she considered herself an employee. A
contractor is not entitled to a vacation leave or to a bonus nor to a minimum
wage. This act of hers in demanding these privileges are inconsistent with the
claim that she was an independent contractor.

The next point at issue is whether or not the petitioners herein are guilty of unfair
labor practice. Petitioners claim that under the decision rendered by Us in the
case of Royal Interocean Lines, et al. vs. Court of Industrial Relations, et al., G.R.
No. L-11745, Oct. 31, 1960, as respondent Sol was merely an employee and
was not connected with any labor union, the company cannot be considered as
having committed acts constituting unfair labor practice as defined in the
Industrial Peace Act, Rep. Act 875. We find this contention to be well-founded.
The term unfair labor practice has been defined as any of those acts listed in
See. 4 of the Act. The respondent Sol has never been found to commit any of the
acts mentioned in paragraph (a) of Sec. 4. Respondent Sol was not connected
with any labor organization, nor has she ever attempted to join a labor
organization, or to assist, or contribute to a labor organization. The company
cannot, therefore, be considered as having committed an unfair labor practice.

The court below found that there is an employment contract (Exhibit "3") between
petitioners and respondent Sol in which it was expressly agreed that Sol could be
dismissed upon fifteen days' advance notice, if petitioners herein desire.
Respondent Sol was dismissed on January 13, 1959 and therefore the dismissal
should be governed by the provisions of Republic Act 1787, which took effect on
June 21, 1957. Section 1 of the Act provides:

SECTION 1. In cases of employment, without a definite period, in a


commercial, industrial, or agricultural establishment or enterprise, the
employer or the employee may terminate at any time the employment with
just cause; or without just cause in the case of an employee by serving
written notice on the employer at least one month in advance, or in the
case of an employer, by serving such notice to the employee at least one
month in advance or one-half month for every year of service of the
employee, whichever is longer, a fraction of at least six months being
considered as one whole year.

The employer upon whom no such notice was served in case of


termination of employment without just cause may hold the employee
liable for damages.

xxx xxx xxx

The following are just causes for terminating an employment without a


definite period:

1. By the employer —

a. The closing or cessation of operation of the establishment or


enterprise, unless the closing is for the purpose of defeating the
intention of this law.

The contract between the petitioners and the respondent Sol providing that the
respondent Sol can be dismissed upon fifteen days' notice is therefore null and
void. Inasmuch as respondent Sol was employed since the year 1952 and was in
the employment of the petitioners from that time up to 1959, or a period of seven
years, she is entitled to three and one-half months pay in accordance with the
above quoted section 1 of the Act.

WHEREFORE, that portion of the decision finding the petitioners herein guilty of
unfair labor practice and sentencing petitioners to reinstate respondent Sol in her
former work is hereby set aside, and the petitioners are sentenced to pay, as
separation pay, three and one-half months' pay to respondent Sol. In all other
respects the decision is affirmed. No costs.
G.R. No. 186605 November 17, 2010

CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEU-NFL],


represented by its President, PABLITO SAGURAN, Petitioner,
vs.
CENTRAL AZUCARERA DE BAIS, INC. [CAB], represented by its President,
ANTONIO STEVEN L. CHAN,Respondent.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules
of Court filed by petitioner Central Azucarera De Bais Employees Union-National
Federation of Labor (CABEU-NFL) seeking to reverse and set aside: (1) the
September 26, 2008 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No.
03238, which reversed the July 18, 2007 Decision2 and September 28, 2007
Resolution3 of the National Labor Relations
Commission (NLRC)and reinstated the July 13, 2006 Decision4 of the Labor
Arbiter (LA); and (2) its January 21, 2009 Resolution5denying the Motion for
Reconsideration of CABEU-NFL.

THE FACTS

Respondent Central Azucarera De Bais, Inc. (CAB) is a corporation duly


organized and existing under the laws of the Philippines. It is represented by its
President, Antonio Steven L. Chan (Chan), in this proceeding.

CABEU-NFL is a duly registered labor union and a certified bargaining agent of


the CAB rank-and-file employees, represented by its President, Pablito
Saguran (Saguran).

On January 19, 2004, CABEU-NFL sent CAB a proposed Collective Bargaining


Agreement (CBA)6 seeking increases in the daily wage and vacation and sick
leave benefits of the monthly employees and the grant of leave benefits and 13th
month pay to seasonal workers.

On March 27, 2004, CAB responded with a counter-proposal7 to the effect that
the production bonus incentive and special production bonus and incentives be
maintained. In addition, respondent CAB agreed to execute a pro-rated increase
of wages every time the government would mandate an increase in the minimum
wage. CAB, however, did not agree to grant additional and separate Christmas
bonuses.
On May 21, 2004, CAB received an Amended Union Proposal8 sent by CABEU-
NFL reducing its previous demand regarding wages and bonuses. CAB,
however, maintained its position on the matter. Thus, the collective bargaining
negotiations resulted in a deadlock.

On account of the impasse, "CABEU-NFL filed a Notice of Strike with the


National Conciliation and Mediation Board (NCMB). The NCMB then assumed
conciliatory-mediation jurisdiction and summoned the parties to conciliation
conferences."9

In its June 2, 2005 Letter sent to CAB10 (letter-request), CABEU-NFL requested


copies of CAB’s annual financial statements from 2001 to 2004 and asked for the
resumption of conciliation meetings.

CAB replied through its June 14, 2005 Letter11 (letter-response) to NCMB
Regional Director of Dumaguete City Isidro Cepeda, which reads:

At the outset, it observed that the letter signed by Mr. Pablito Saguran who is no
longer an employee of the Central for he was one of those lawfully terminated
due to an authorized cause x x x.

More importantly, the declared purpose of the requested conciliation meeting has
already been rendered moot and academic because: (1) the Union which Mr.
Saguran purportedly represents has already lost its majority status by reason of
the disauthorization and withdrawal of support thereto by more than 90% of the
rank and file employees in the bargaining unit of Central sometime in January,
2005, and (2) the workers themselves, acting as principal, after disauthorizing the
previous agent CABEU-NFL have organized themselves into a new Union known
as Central Azucarera de Bais Employees Labor Association (CABELA) and after
obtaining their registration certificate and making due representation that it is a
duly organized union representing almost all the rank and file workers in the
Central, had concluded a new collective bargaining agreement with the Central
on April 21, 2005 in Dumaguete City. The aforesaid CBA had been duly ratified
by the rank and file workers constituting 91% of the collective bargaining unit x x
x.

Clearly, therefore, the request for further conciliation conference will serve no
lawful and practical purpose. In view of the foregoing, and for the sake of
continued industrial peace prevailing in the Central, we beseech the Honorable
Office to disregard the aforesaid request.

It appears that the NCMB failed to act on the letter-response of CAB. Neither did
it convene CAB and CABEU-NFL to continue the negotiations between them.
Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for
Unfair Labor Practice12 for the former’s refusal to bargain with it.

On July 13, 2006, the LA dismissed the complaint.13 Pertinent portions of the LA
decision read:

The procedure in the discharge of the duty to bargain collectively is provided for
in Article 250 of the Labor Code: (1) the party who desires to negotiate an
agreement shall serve a written notice upon the other party with a statement of
proposals; (2) the other party shall make a reply thereto not later than ten (10)
days from receipt of notice; (3) if the dispute is unsettled resulting in a deadlock,
the NCMB shall intervene upon the request or at its own initiative and call the
parties to conciliation Meeting x x x (4) if the NCMB fails to effect an agreement,
the Board shall exert all efforts to settle disputes amicably and encourage the
parties to submit their case to a voluntary arbitrator; (5) the parties may also go
on strike or declare a lockout as the case may be after complying with legal
requirements. Subject, of course, to the plenary power of the Secretary of Labor
and Employment to assume jurisdiction over the dispute or to certify the same to
the NLRC for compulsory arbitration.

In the case at bar, the record shows that respondent CAB replied to the
complainant Union’s CBA proposals with its own set of counterproposals x x x.
Likewise, respondent CAB responded to the Union’s subsequent
counterproposals x x x. Record further shows that respondent CAB participated
in a series of CBA negotiations conducted by the parties at the plant level as well
as in the conciliation/mediation proceedings conducted by the NCMB.
Unfortunately, both exercises resulted in a deadlock.

At this juncture it cannot be said, therefore, that respondent CAB refused to


negotiate or that it violated its duty to bargain collectively in light of its active
participation in the past CBA negotiations at the plant level as well as in the
NCMB. x x x

xxx xxx xxx

We do not agree that respondent CAB committed an unfair labor practice act in
questioning the capacity of Mr. Pablito Saguran to represent complainant union
in the CBA negotiations because Mr. Pablito Saguran was no longer an
employee of respondent CAB at that time having been separated from
employment on the ground of redundancy and having received the
corresponding separation benefits. x x x.
So also, we do not find respondent CAB guilty of unfair labor practice by its act of
writing the NCMB Director in a letter dated June 24, 2005, stating its legal
position on complainant’s request for further conciliation to the effect that since
almost [all] of the rank and file employees, the principals in a principal-agent
relationship, have withdrawn their support to the complainant union and that in
fact they have already organized themselves into a DOLE-registered labor union
known as CABELA, any further conciliation will serve no lawful and practical
purpose. x x x.

At this juncture, it was incumbent upon the NCMB to make a ruling on the
request of the complainant union as well as upon the corresponding comment of
respondent CAB. If the NCMB chose not to pursue further negotiation between
the parties, respondent CAB should not be faulted therefor. x x x.

Under the facts obtaining, when the conciliation/mediation by the NCMB has not
been officially concluded, we find the instant complaint for unfair labor practice
not only without merit but also premature.

WHEREFORE, foregoing considered, the case is hereby DISMISSED for lack of


merit.

SO ORDERED.

On appeal, the NLRC in its July 18, 2007 Decision14 reversed the LA’s decision
and found CAB guilty of unfair labor practice. The NLRC explained:

The issue to be resolved is whether or not respondent company committed an


unfair labor practice for violation of its duty to bargain collectively in good faith.

xxx xxx xxx

The important event to discuss in the instant case is respondent’s act of


concluding a CBA with CABELA. As gleaned from respondent’s letter to NCMB
dated June 14, 2005, it concluded a CBA with CABELA because they opined that
complainant lost its majority status in January 2005 when 90% of the rank-and-
file employees disauthorized and withdrew their support to complainant. These
rank-and-file employees who withdrew their support, organized and formed
CABELA. In fine, respondent believed that CABELA enjoyed the majority status
of CABELA since it was supported by 90% of all employees in the bargaining
unit.

In resolving the issue of whether respondent’s act of concluding a CBA with


CABELA is warranted under the circumstances is to examine the validity of such
act. The mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely: 1) possession of the
status of majority representation of the employees’ representative in accordance
with any of the means of selection and designation provided for by the Labor
Code, 2) proof of majority representation, and 3) a demand to bargain under
Article 250, par. (a) of the Labor Code x x x.

In the instant case, it is undeniable that complainant is the certified collective


bargaining agent of the regular workers and seasonal employees of respondent.
Its status as such was determined in a certification election conducted by the
Department of Labor and Employment (DOLE). As such, there was no reason for
respondent to deal and negotiate with CABELA since the latter does not have
such status of majority representation. x x x.

X x x. Based on this premise, respondent violated its duty to bargain with


complainant when during the pendency of the conciliation proceedings before the
NCMB it concluded a CBA with another union as a consequence, it refused to
resume negotiation with complainant upon the latter’s demand. 1avvphi1

With respect to respondent’s observation that the request for conciliation meeting
was signed by one who is not eligible and authorized to represent any union with
the company since he is no longer an employee, suffice it to state that at the time
the request was made, such employee has questioned the validity of his
dismissal with then NLRC. X x x.

Respondent’s failure to act on the request of the complainant to resume


negotiation for no valid reason constitutes unfair labor practice. Consequently,
the proposed CBA as amended should be imposed to respondent.

WHEREFORE, premises considered, the appealed Decision is REVERSED and


SET ASIDE. Another one is entered declaring that respondent Central Azucarera
de Bais is guilty of unfair labor practice. As such, the proposed CBA of
complainant, as amended is imposed to respondent Central Azucarera de Bais.

SO ORDERED.

CAB moved for a reconsideration but the motion was denied by the NLRC in its
resolution dated September 28, 2007.15

Unsatisfied, CAB elevated the matter to the CA by way of a petition for certiorari
under Rule 65 alleging grave abuse of discretion on the part of the NLRC in
reversing the LA decision and issuing the questioned resolution.
On September 26, 2008, the CA found CAB’s petition meritorious and reversed
the NLRC decision and resolution. The CA pointed out:

xxx xxx xxx

First. This Court has acquired jurisdiction over the person of private respondent
CABEU-NFL. Through its counsel of record, CABEU-NFL already filed its
extensive comment on the instant petition. Hence, it is now useless to contend
that it was denied notice of the same and the opportunity to be heard on it. x x x.

xxx xxx xxx

Second. Petitioner CAB was not shown to have violated the rule requiring parties
to certify in their initiatory pleadings against forum shopping. Private respondent
CABEU-NFL alleges in its comment that the two cases are pending before this
Court: CA-G.R. No. 03132 and CA-G.R. No. 03017 involving the same parties as
in the case at bar. Unfortunately, CABEU-NFL did not explain how the issues in
those pending cases are related to or similar to those involved in this proceeding.
x x x.

xxx xxx xxx

Third. x x x xxx xxx

In the case at bar, private respondent CABEU-NFL failed in its burden of proof to
present substantial evidence to support the allegation of unfair labor practice.
The assailed Decision and Resolution of public respondent referred merely to
two (2) circumstances which allegedly support the conclusion that the
presumption of good faith had been rebutted and that bad faith was extant in
petitioner’s actions. To recall, these circumstances are: (a) the execution of a
supposed collective bargaining agreement with another labor union, CABELA;
and (b) CAB’s sending of the letter dated June 14, 2005 to NCMB seeking to call
off the collective bargaining negotiations. These, however, are not enough to
ascribe the very serious offense of unfair labor practice upon petitioner. x x x.

xxx xxx xxx

x x x petitioner CAB was not scuttling the ongoing negotiations towards a new
collective bargaining agreement. It was simply propounding a position to the
NCMB for the latter to rule on. That the negotiations did not push through was
not the result of CAB management’s intransigence because there was none – at
least so far as the case record confirms. There is nothing that establishes
petitioner’s predetermined resolve not to budge from an initial position – perhaps
stubbornness of some ambiguous sort but not the absence of good faith to
pursue collective bargaining. x x x.

xxx xxx xxx

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated


July 18, 2007 and Resolution dated September 28, 2007 of public respondent
National Labor Relations Commission in NLRC Case No. V-000002-07
are REVERSED and SET ASIDE. The Decision dated July 13, 2006 in NLRC
RAB VII Case No. 07-0104-2005-D entitled ‘Central Azucarera de Bais
Employees Union-NFL (CABEU-NFL), represented by Pablito Saguran,
complainant, versus, (CAB) and/or Steven Chan as Owner and Roberto de la
Rosa as Manager, respondents’ of Labor Arbiter Fructuoso T. Villarin IV
is REINSTATED and AFFIRMED IN TOTO. Costs of suit de oficio.

SO ORDERED.

CABEU-NFL moved for a reconsideration but its motion was denied by the CA in
its Resolution dated January 21, 2009.16

Hence this petition.

In its Memorandum,17 CABEU-NFL raised the following:

ISSUES

I) WHETHER OF NOT THE COURT OF APPEALS VIOLATED THE


CONSTITUTIONAL RIGHTS OF PETITIONER WHEN THE HONORABLE
COURT OF APPEALS REVERSED THE FINDINGS OF THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC) WHICH HELD
RESPONDENT GUILTY OF UNFAIR LABOR PRACTICE.18

II) WHETHER OR NOT THE COURT OF APPEALS VIOLATED THE


CONSTITUTIONAL RIGHTS OF THE PETITIONER WHEN IT GAVE DUE
COURSE TO RESPONDENT’S PETITION FOR CERTIORARI WITHOUT
COMPLYING WITH THE JURISDICTIONAL REQUIREMENTS UNDER
RULE 65, SECTION 1 AND SUPREME COURT CIRCULAR NO. 04-94,
ON CERTIFICATION ON NON-FORUM SHOPPING.19

In sum, the petition raises three (3) issues for the Court’s consideration which are
whether or not the CA erred: (1) in giving due course to the petition
for certiorari despite service of the copy of the petition to CABEU-NFL’s counsel
and not to itself ; (2) in giving due course to the petition for certiorari despite the
failure of CAB to indicate the address of CABEU-NFL in the petition; and (3) in
absolving CAB of unfair labor practice.

CABEU-NFL insists that the CA erred in giving due course to the petition
for certiorari because respondent CAB served a copy of its CA petition to
CABEU-NFL’s counsel and not to CABEU-NFL itself. CABEU-NFL, likewise,
harps on the failure of CAB to indicate CABEU-NFL’s full address in the said
petition as required in petitions for certiorari, citing Section 1, Rule 6520 in relation
to Section 3, Rule 46.21

Ultimately, CABEU-NFL aggressively asserts that CAB is guilty of unfair labor


practice on the ground of its refusal to bargain collectively. CABEU-NFL claims to
be the duly certified bargaining agent of the CAB rank-and-file employees such
that it requested to bargain through a letter-request which was subsequently
turned down by CAB in its letter-response. Anchored on the admission in the
CAB letter-response of a supposed CBA with CABELA, CABEU-NFL charges
that such act constitutes a violation of CAB’s duty to bargain collectively under
Article 253 of the Labor Code22 and consequently an act of unfair labor practice
prohibited under Article 248 (g) of the Labor Code.23 CABEU-NFL also submits
that CAB violated the prohibition against forum shopping when it filed its petition
in the CA. CABEU-NFL claims that the failure of CAB’s counsel to disclose to the
CA the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No.
03017 constituted forum shopping, a sufficient ground to dismiss the said
petition.

In its Memorandum,24 CAB claims that service of the copy of the petition
for certiorari to CABEU-NFL’s counsel was sufficient. It vehemently denies its
alleged failure to indicate CABEU-NFL’s name and address in its petition. CAB
also stresses that CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 "were
initiated exclusively by members of CABEU and by CABEU itself, respectively,
and not by CAB."25 CAB further argues that there was no identity of issues or
causes of action between the two abovementioned cases and this case.

On the issue of unfair labor practice, CAB counters that in view of the
disassociation of more than 90% of rank-and-file workers from CABEU-NFL, it
was constrained to negotiate and conclude in good faith a new CBA with
CABELA, the newly established union by workers who disassociated from
CABEU-NFL. CAB emphasizes that it declined further negotiations with CABEU-
NFL in good faith because to continue with it would serve no practical purpose.
Considering that the NCMB has yet to resolve CAB’s query in its letter-response,
CAB was left without any choice but accede to the demands of CABELA. In
concluding a CBA with CABELA, CAB claims that it acted in the best interest of
the rank-and-file workers which belied bad faith.
THE COURT’S RULING

The petition lacks merit.

On the technical issues, CABEU-NFL’s insistence that service of the copy of the
CA petition should have been made to it, rather than to its counsel, is unavailing.

On the matter of service, Section 1, Rule 65 in relation to Section 3, Rule 46 of


the Rules of Court, clearly provides that in a petition filed originally in the CA, the
petitioner is required to serve a copy of the petition on the adverse party before
its filing. If the adverse party appears by counsel, service shall be made on such
counsel pursuant to Section 2, Rule 13.26

With respect to the alleged failure of CAB to indicate the address of CABEU-NFL
in the CA petition, it appears that CABEU-NFL is misleading the Court. A perusal
of the petition27 filed before the CA reveals that CAB indeed indicated both the
name28 and address29 of CABEU-NFL. Moreover, the indication in said petition by
CAB that CABEU-NFL could be served with court processes through its counsel
was substantial compliance with the Rules.30

The Court, likewise, cannot sustain CABEU-NFL’s contention on forum shopping


against CAB.

By forum shopping, a party initiates two or more actions in separate tribunals,


grounded on the same cause, hoping that one or the other tribunal would
favorably dispose of the matter. The elements of forum shopping are: (1) identity
of parties, or at least such parties as would represent the same interest in both
actions; (2) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (3) identity of the two preceding particulars such
that any judgment rendered in the other action will, regardless of which party is
successful, amount to resjudicata in the action under consideration.31

In the case at bench, CABEU-NFL merely raised the fact of the pendency of CA-
G.R. SP No. 033132 and CA-G.R. SP No. 03017 in its comment on the petition
for certiorari32 filed before the CA without demonstrating any similarity in the
causes of action between the said cases and the present case. The CA, citing
the ruling in T’boli Agro-Industrial Development, Inc. v. Solilapsi33 as authority,
points out that:

This Court cannot take judicial notice of what CA-G.R. No. 03132 and CA-G.R.
No. 03017 involve because:
"As a general rule, courts are not authorized to take judicial notice in the
adjudication of cases pending before them of the contents of other cases even
when such cases have been tried or are pending in the same court and
notwithstanding the fact that both cases may have been tried or are actually
pending before the same judge. Courts may be required to take judicial notice of
the decisions of the appellate courts but not of the decisions of the coordinate
trial courts, or even of a decision or the facts involved in another case tried by the
same court itself, unless the parties introduce the same in evidence or the court,
as a matter of convenience, decides to do so. Besides, judicial notice of matters
which ought to be known to judges because of their judicial functions is only
discretionary upon the court. It is not mandatory."

In the absence of evidence to show that the issues involved in these cases are
the same, this Court cannot give credence to private respondent’s claim of forum
shopping.

The Court now proceeds to determine whether or not respondent CAB was guilty
of acts constituting unfair labor practice by refusing to bargain collectively.

The Court rules in the negative.

CAB is being accused of violating its duty to bargain collectively supposedly


because of its act in concluding a CBA with CABELA, another union in the
bargaining unit, and its failure to resume negotiations with CABEU-NFL.

The concept of unfair labor practice is provided in Article 247 of the Labor Code
which states:

Article 247. Concept of Unfair Labor Practice and Procedure for Prosecution
thereof. -- Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate interests of both
labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-
management relations.

xxx xxx xxx

The Labor Code, likewise, enumerates the acts constituting unfair labor practices
of the employer, thus:

Article 248. Unfair Labor Practices of Employers.––It shall be unlawful for an


employer to commit any of the following unfair labor practice:
xxx xxx xxx

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

For a charge of unfair labor practice to prosper, it must be shown that CAB was
motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings or grave anxiety resulted x x x" in
suspending negotiations with CABEU-NFL. Notably, CAB believed that CABEU-
NFL was no longer the representative of the workers.34 It just wanted to foster
industrial peace by bowing to the wishes of the overwhelming majority of its rank
and file workers and by negotiating and concluding in good faith a CBA with
CABELA."35 Such actions of CAB are nowhere tantamount to anti-unionism, the
evil sought to be punished in cases of unfair labor practices.

Furthermore, basic is the principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same. By imputing bad faith to the
actuations of CAB, CABEU-NFL has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice.36 Apparently, CABEU-
NFL refers only to the circumstances mentioned in the letter-response, namely,
the execution of the supposed CBA between CAB and CABELA and the request
to suspend the negotiations, to conclude that bad faith attended CAB’s actions.
The Court is of the view that CABEU-NFL, in simply relying on the said letter-
response, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith.

Moreover, as correctly determined by the LA, the filing of the complaint for unfair
labor practice was premature inasmuch as the issue of collective bargaining
is still pending before the NCMB.

In the resolution of labor cases, this Court has always been guided by the State
policy enshrined in the Constitution that the rights of workers and the promotion
of their welfare shall be protected. The Court is, likewise, guided by the goal of
attaining industrial peace by the proper application of the law. Thus, it cannot
favor one party, be it labor or management, in arriving at a just solution to a
controversy if the party has no valid support to its claims. It is not within this
Court’s power to rule beyond the ambit of the law.
G.R. Nos. L-30632-33 April 11, 1972

CALTEX FILIPINO MANAGERS AND SUPERVISORS


ASSOCIATION petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, CALTEX (PHILIPPINES), INC., W.E.
MENEFEE and B.F. EDWARDS, respondents.

Domingo E. de Lara and Associates for petitioner.

Siguion Reyna, Montecillo, Belo and Ongsiako for private respondent.

VILLAMOR, J.:p
This is an appeal by the Caltex Filipino Managers and Supervisors' Association from the resolution en banc dated May 16, 1969 of the Court
of Industrial Relations affirming the decision dated February 26, 1969 of Associate Judge Emiliano C. Tabigne, Associate Judge Ansberto P.
Paredes dissented from the resolution of the majority on the ground that the Industrial Court in a representation case cannot take cognizance
of the issue of illegality of a strike and proceed to declare the loss of the employee status of employees inasmuch as that matter ought to be
processed as an unfair labor practice case. Judge Tabigne's decision covers two cases, namely, Case No. 1484-MC (1) in which he declared
the strike staged on April 22, 1965 by the Association as illegal with the consequent forfeiture of the employee status of three employees
(Jose J. Mapa, President of the Association; Dominador Mangalino, Vice-President and Herminigildo Mandanas) and Case No. 4344-ULP
against Caltex (Philippines), Inc., Ben F. Edwards W.E. Menefee which Judge Tabigne dismissed for lack of merit and substantial evidence.

The following proceedings gave rise to the present appeal:

The Caltex Filipino Managers and Supervisors' Association is a labor


organization of Filipino managers supervisors in Caltex (Philippines), Inc.,
respondent Company in this proceeding. After the Association was registered as
a labor organization it sent a letter to the Company on January 21, 1965
informing the latter of the former's registration; the Company replied inquiring on
the position titles of the employees which the Association sought to represent.
On February 8, 1965 the Association sent a set of proposals to the Company
wherein one of the demands was the recognition of the Association as the duly
authorized bargaining agency for managers and supervisors in the Company. To
this the Company countered stating that a distinction exists between
representatives of management and individuals employed as supervisors and
that it is Company's belief that managerial employees are not qualified for
membership in a labor organization; hence, it is digested that the Association
institute a certification proceeding so as to remove any question with regard to
position titles that should be included in the bargaining unit. The Association felt
disinclined to follow the suggestion of the Company1 and so on February 22,
1965 the Company initiated a certification proceeding docketed as Case 1484-
MC.
On March 8, 1965 the Association filed notice to strike giving the following
reasons:

Refusal to bargain in good faith and to act on demands, a copy of


which is enclosed; resort to union-busting tactics in order to
discourage the activities of the undersigned association and its
members, including discrimination and intimidation of officers and
members of the association and circulation of promises of immediate
benefits to be given by the company to its employees, officers and
members of this association or those intending to join the same, if
the employees concerned in due course will vote against the
selection of this association as the exclusive collective bargaining
unit for managers and supervisors of the Company in the petition for
certification the latter filed. (Annex "A" of Annex "A", Petition).

On March 29, 1965, during the hearing of the certification proceedings, Judge
Tabigne cautioned the parties to maintain the status quo; he specifically advised
the employees not to go on strike, making it clear, however, that in the presence
of unfair labor practices they could go on strike even without any notice.2

On the basis of the strike notice filed on March 8, 1965 and in view of acts
committed by the Company which the Association considered as constituting
unfair labor practice, the Association struck on April 22, 1965, after the efforts
exerted by the Bureau of Labor Relations to settle the differences between the
parties failed. Then, through an "Urgent Petition" dated April 26, 1965 filed as
Case No. 1484-MC(1), or as an incident of the certification election proceedings
(Case No. 1484-MC), the Company prayed as follows:

WHEREFORE, petitioner respectfully prays this Honorable Court


that:

1. The strike of respondent Caltex Filipino Managers and


Supervisors Association be declared illegal;

2. The officers and members of respondent association who have


instigated, declared, encouraged and/or participated in the illegal
strike be held and punished for contempt of this Honorable Court
and be declared to have lost their employee status;

3. Pending hearing on the merits and upon the filing of a bond in an


amount to be fixed by this Honorable Court, a temporary injunction
be issued restraining respondent association, its officers, members
and representatives acting for and on their behalf from committing,
causing or directing the commission of the unlawful acts complained
of, particularly obstructing and preventing petitioner, its customers,
officers and non-striking employees from entering and going out of
its various offices, in its refinery, installations, depots and terminals
and the use or threat of violence and intimidation;

4. After trial, said injunction be made permanent;

5. The damages that petitioner has suffered and will suffer up to the
trial of this action be ascertained and judgment be rendered against
respondent association, its officers, members and representatives
jointly and severally for the amount thereof.

Petitioner prays for such other and further relief as this Honorable
Court may deem just and equitable in the premises. (Annex "D",
Petition)

Such urgent petition was frontally met by the Association with a motion to dismiss
questioning the jurisdiction of the industrial court. The motion to dismiss was
opposed by the Company and on May 17, 1965 the trial court denied the same.
Not satisfied with the order of May 17, 1965, the Association moved for its
reconsideration before respondent court en banc.

Because of the settlement between the parties on May 30, 1965 of some of their
disputes, the Association filed with respondent court under date of June 3, 1965
a manifestation (to which was attached a copy of the return-to-work agreement
signed by the parties on May 30, 1965), to the effect that the issues in Case No.
1484-MC (1) had become moot and academic. Under date of June 15, 1965 the
Company filed a counter-manifestation disputing the representations of the
Association on the effect of the return-to-work agreement. On the basis of the
manifestation and counter-manifestation, respondent court en banc issued a
resolution on August 24, 1965 allowing the withdrawal of the Association's motion
for reconsideration against the order of May 17, 1965, on the theory that there
was justification for such withdrawal.

Relative to the resolution of August 24, 1965 the Company filed a motion for
clarification which the Association opposed on September 22, 1965, for it
contended that such motion was in reality a motion for reconsideration and as
such filed out of time. But respondent court brushed aside the Association's
opposition and proceeded to clarify the resolution of August 24, 1965 to mean
that the Company was not barred from continuing with Case No. 1484-MC(1).
At the hearing on September 1, 1965 of Case No. 1484-MC(1) the Association
insisted that the incident had become moot and academic and must be
considered dismissed and, at the same time, it offered to present evidence, if still
necessary, in order to support its contention. Respondent court thereupon
decided to secure evidence from the parties to enlighten it on the interpretation of
the provisions of the return-to-work agreement relied upon by the Association as
rendering the issues raised in Case No. 1484-MC(1) already moot and academic.
Evidence having been received, the trial court ruled in its order of February 15,
1966 that under the return-to-work agreement the Company had reserved its
rights to prosecute Case No. 1484-MC(1) and, accordingly, directed that the case
be set for hearing covering the alleged illegality of the strike. Within the
prescribed period the Association filed a motion for reconsideration of the
February 15, 1966 order to which motion the Company filed its opposition and, in
due course, respondent court en banc issued its resolution dated March 28, 1966
affirming the order. Appeal from the interlocutory order was elevated by the
Association to this Court in G.R. No. L-25955, but the corresponding petition for
review was summarily "DISMISSED for being premature" under this court's
resolution of May 13, 1966.

After a protracted preliminary investigation, the Association's charge for unfair


labor practices against the Company and its officials docketed in a separate
proceeding was given due course through the filing by the prosecution division of
respondent court of the corresponding complaint dated September 10, 1965, in
Case No. 4344-ULP against Caltex (Philippines), Inc., W. E. Menefee and B.F.
Edwards. As noted by respondent court in its decision under review, Case No.
4344-ULP was filed by the Association because, according to the latter, the
Company and some of its officials, including B.F. Edwards, inquired into the
organization of the Association and he manifested his antagonism to it and its
President; that another Company official, W.E. Menefee issued a statement of
policy designed to discourage employees and supervisors from joining labor
organizations; that the Company refused to bargain although the Association
commands majority representation; that due to the steps taken by the Company
to destroy the Association or discourage its members from continuing their union
membership, the Association was forced to file a strike notice; that on April 22,
1965 it declared a strike; and that during the strike the Company and its officers
continued their efforts to weaken the Association as well as its picket lines. The
Company in its answer filed with respondent court denied the charges of unfair
labor practice.

Considering the interrelation of the issues involved in the two cases and by
agreement of the parties, the two cases were heard jointly. This explains why
only one decision was rendered by respondent court covering both Case No.
1484-MC(1), relating to the illegality of the strike as contended by the Company,
and Case No. 4344-ULP, referring to the unfair labor practice case filed by the
Association against the Company, W.E. Menefee and B.F. Edwards.

The Association assigned the following errors allegedly committed by respondent


court:

RESPONDENT COURT ERRED IN ASSUMING JURISDICTION


OVER CASE NO. 1484-MC(1).

II

ASSUMING THAT RESPONDENT COURT HAS JURISDICTION


OVER CASE NO. 1484-MC(1), IT ERRED IN NOT HOLDING THAT
THE SAME ALREADY BECAME MOOT WITH THE SIGNING OF
THE RETURN TO WORK AGREEMENT ON MAY 30, 1965.

III

ASSUMING LIKEWISE THAT RESPONDENT COURT HAS


JURISDICTION OVER CASE NO. 1484-MC(1), IT ERRED IN
HOLDING THAT CAFIMSA'S STRIKE WAS STAGED FOR NO
OTHER REASON THAN TO COERCE THE COMPANY INTO
RECOGNIZING THE CAFIMSA AND THAT SUCH STRIKE WAS
UNJUSTIFIED, UNLAWFUL AND UNWARRANTED.

IV

RESPONDENT COURT ERRED IN AFFIRMING THE TRIAL


COURT'S CONCLUSION THAT CAFIMSA'S STRIKE WAS
DECLARED IN OPEN DEFIANCE OF THE MARCH 29, 1965
ORDER IN CERTIFICATION CASE NO. 1484-MC.

RESPONDENT COURT ERRED IN AFFIRMING THE TRIAL


COURT'S FINDING, DESPITE THE SUBSTANTIAL CONTRARY
EVIDENCE ON RECORD, THAT THE STRIKERS RESORTED TO
MEANS BEYOND THE PALE OF THE LAW IN THE
PROSECUTION OF THE STRIKE AND IN DISREGARDING THE
CONSIDERATION THAT THE STRIKERS MERELY EMPLOYED
LAWFUL ACTS OF SELF-PRESERVATION AND SELF-DEFENSE.
VI

RESPONDENT COURT ERRED IN AFFIRMING THE DISMISSAL


BY THE TRIAL COURT OF J.J. MAPA, CAFIMSA'S PRESIDENT,
AND OTHERS, OR IN OTHERWISE PENALIZING THE STRIKERS.

VII

ASSUMING ARGUENDO THAT THE FACTS FOUND BY THE


TRIAL COURT SHOULD BE ACCEPTED, IN DISREGARD OF THE
EVIDENCE PRESENTED BY THE COMPANY DAMAGING TO ITS
CAUSE, OR ALTHOUGH THE TRIAL COURT DISREGARDED THE
SUBSTANTIAL INCRIMINATORY EVIDENCE AGAINST THE
COMPANY, RESPONDENT COURT ERRED IN NOT APPLYING
THE PRINCIPLE OF IN PARI DELICTO.

VIII

RESPONDENT COURT ERRED IN FAILING TO HOLD THAT THE


COMPANY IS BARRED UNDER SECTION 9(e) OF THE
REPUBLIC ACT NO. 875 FROM SEEKING THE RELIEF PRAYED
FOR IN CASE NO. 1484-MC(1).

IX

RESPONDENT COURT ERRED IN ENTIRELY ABSOLVING THE


COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE
AND IN DISREGARDING THE SUBSTANTIAL INCRIMINATORY
EVIDENCE RELATIVE THERETO AGAINST THE COMPANY.

RESPONDENT COURT ERRED IN RENDERING JUDGEMENT


FOR THE CAFIMSA IN CASE NO. 4344-ULP AND IN NOT
ORDERING THE COMPANY TO PAY BACK WAGE AND
ATTORNEY'S FEES.

XI

RESPONDENT COURT ERRED IN PREMATURELY


IMPLEMENTING THE TRIAL COURT'S DISMISSAL OF J.J. MAPA
AND DOMINADOR MANGALINO (Brief for the Petitioner, pp. 1-4).
To our mind the issues raised in this appeal may be narrowed down to the
following:

1. whether or not the Court of Industrial Relations has jurisdiction over Case No.
1484-MC(1);

2. Whether or not the strike staged by the Association on April 22, 1965 is illegal
and, incident thereto, whether respondent court correctly terminated the
employee status of Jose Mapa, Dominador Mangalino and Herminigildo
Mandanas and reprimanded and admonished the other officers of the
Association; and

3. Whether or not respondent court correctly absolved the respondents in Case


No. 4344-ULP from the unfair labor practice charge.

Respondent's court's jurisdiction over Case No. 1484-MC(1) has to be tested by


the allegations of the "Urgent Petition" dated April 26, 1965 filed by the Company
in relation to the applicable provisions of law. A reading of said pleading shows
that the same is for injunctive relief under Section 9(d) of Republic Act No. 875
(Magna Carta of Labor); for contempt, obviously pursuant to See, 6 of
Commonwealth Act No. 103 in conjunction with Sec. 3 (b) of Rule 71 of the Rules
of Court; and for forfeiture of the employee status of the strikers by virtue of their
participation in what the Company considered as an "illegal strike."

It is well known that the scheme in Republic Act No. 875 for achieving industrial
peace rests essentially on a free and private agreement between the employer
and his employees as to the terms and conditions under which the employer is to
give work and the employees are to furnish labor, unhampered as far as possible
by judicial or administrative intervention. On this premise the lawmaking body
has virtually prohibited the issuance of injunctive relief involving or growing out of
labor disputes.

The prohibition to issue labor injunctions is designed to give labor a comparable


bargaining power with capital and must be liberally construed to that end (U.S.
vs. Brotherhood of Locomotive Engineers, 79 F. Supp. 485, Certioraridenied, 69
S. Ct. 137, 335 U.S. 867, cause remanded on other grounds, 174 F. 2nd 160, 85
U.S. App. D.C., certiorari denied 70 S. Ct. 140, 338 U.S. 872, 94 L. Ed. 535). It is
said that the prohibition creates substantive and not purely procedural law.
(Oregon Shipbuilding Corporation vs. National Labor Relations Board, 49 F.
Supp. 886). Within the purview of our ruling, speaking through Justice Labrador,
in Social Security Employees Association (PAFLU), et al. vs. The Hon. Edilberto
Soriano, et al. (G.R. No. L-20100, July 16, 1964, 11 SCRA 518, 520), there can
be no injunction issued against any strike except in only one instance, that is,
when a labor dispute arises in an industry indispensable to the national interest
and such dispute is certified by the President of the Philippines to the Court of
Industrial Relations in compliance with Sec. 10 of Republic Act No. 875. As a
corollary to this, an injunction in an uncertified case must be based on the strict
requirement See. 9 (d) of Republic Act No. 875; the purpose of such injunction is
not to enjoin the strike itself, but only unlawful activities. To the extent, then, that
the Company sought injunctive relief under Sec. 9(d) of Republic Act No.875,
respondent court had jurisdiction over the Company's "Urgent Petition" dated
April 26, 1965.

As to the "contempt aspect" of Case No. 1484-MC(1), the jurisdiction of


respondent court over it cannot be seriously questioned it appearing that Judge
Tabigne in good faith thought that his "advice" to the Association during the
hearing on March 29, 1965 not to strike amounted a valid order. This is not to
say, however, that respond court did not err in finding that the advice given by
Judgre Tabigne during the hearing on March 29, 1965 really constituted an order
which can be the basis of a contempt proceeding. For, in our opinion, what Judge
Tabigne statement during said hearing should be construed what actually was —
an advice. To say that it was an order would be to concede that respondent court
could validly enjoin strike, especially one which is not certified in accord with Sec.
10 of Republic Act No. 875. To adopt the view of respondent court would not only
set at naught the policy of the law as embodied in the said statute against
issuance of injunctions, but also remove from the hands of labor unions and
aggrieved employees an effective lawful weapon to either secure favorable
action on their economic demand or to stop unfair labor practices on the part of
their employer.

With respect to the alleged "illegality of the strike," as claimed by the Company,
and the consequent forfeiture of the employee status of the strikers, we believe
these matters which are neither pertinent to nor connected with a certification
case as opined by Judge Paredes, to which we agree. Respondent court,
therefore, initially erred in entertaining this issue in Case No. 1484-MC(1). No
prejudice, however, has resulted since, as correctly pointed out by respondent
court, the illegality for the strike was squarely raised by the Company as a
defense in Case No. 4344-ULP and, in any event, we observe that the
Association was given all the opportunity to put forward its evidence.

We now come to the important issue as to whether the strike staged by the
Association on April 22, 1965 is illegal. From an examination of the records, we
believe that the lower court erred in its findings in this regard.

To begin with, we view the return-to-work agreement of May 30, 1965 as in the
nature of a partial compromise between the parties and, more important, a labor
contract; consequently, in the latter aspect the same "must yield to the common
good" (Art. 1700, Civil Code of the Philippines) and "(I)n case of doubt ... shall be
construed in favor of the safety and decent living for the laborer" (Art. 1702, ibid).
To our mind when the Company unqualifiedly bound itself in the return-to-work
agreement that all employees will be taken back "with the same employee status
prior to April 22, 1965," the Company thereby made manifest its intention and
conformity not to proceed with Case No. 1484-MC, (c) relating the illegality of the
strike incident. For while it is true that there is a reservation in the return-to-work
agreement as follows:

6. The parties agree that all Court cases now pending shall continue,
including CIR Case No. 1484-MC.

we think the same is to be construed bearing in mind the conduct and intention of
the parties. The failure to mention Case No. 1484-MC(1) while specifically
mentioning Case No. 1484-MC, in our opinion, bars the Company from
proceeding with the former especially in the light of the additional specific
stipulation that the strikers would be taken back with the same employee status
prior to the strike on April 22, 1965. The records disclose further that, according
to Atty. Domingo E. de Lara when he testified on October 9, 1965, and this is not
seriously disputed by private respondents, the purpose of Paragraph 10 of the
return-to-work agreement was, to quote in part from this witness, "to secure the
tenure of employees after the return-to-work agreement considering that as I
understand there were demotions and suspensions of one or two employees
during the strike and, moreover, there was this incident Case No. 1484-MC(1)"
(see Brief for the Petition pp. 41-42). To borrow the language of Justice J.B.L.
Reyes in Citizens Labor Union Pandacan Chapter vs. Standard Vacuum Oil
Company (G.R. No. L-7478, May 6, 1955), in so far as the illegality of the strike is
concerned in this proceeding and in the light of the records.

... the matter had become moot. The parties had both abandoned
their original positions and come to a virtual compromise and agreed
to resume unconditionally their former relations. To proceed with the
declaration of illegality would not only breach this understanding,
freely arrived at, but to unnecessarily revive animosities to the
prejudice of industrial peace. (Emphasis supplied)

Conceding arguendo that the illegality incident had not become moot and
academic, we find ourselves unable to agree with respondent court to the effect
that the strike staged by the Association on April 22, 1965 was unjustified,
unreasonable and unwarranted that it was declared in open defiance of an order
in Case No. 1484-MC not to strike; and that the Association resorted to means
beyond the pale of the law in the prosecution of the strike. As adverted to above,
the Association filed its notice to strike on March 8, 1965, giving reasons therefor
any one of which is a valid ground for a strike.

In addition, from the voluminous evidence presented by the Association, it is


clear that the strike of the Association was declared not just for the purpose of
gaining recognition as concluded by respondent court, but also for bargaining in
bad faith on the part of the Company and by reason of unfair labor practices
committed by its officials. But even if the strike were really declared for the
purpose of recognition, the concerted activities of the officers and members of
the Association in this regard cannot be said to be unlawful nor the purpose
thereof be regarded as trivial. Significantly, in the voluntary return-to-work
agreement entered into between the Company and the Association, thereby
ending the strike, the Company agreed to recognize for membership in the
Association the position titles mentioned in Annex "B" of said agreement.3 This
goes to show that striking for recognition is productive of good result in so far as
a union is concerned.

Besides, one of the important rights recognized by the Magna Carta of Labor is
the right to self-organization and we do not hesitate to say that is the cornerstone
of this monumental piece of labor legislation. Indeed, because of occasional
delays incident to a certification proceeding usually attributable to dilatory tactics
employed by the employer, to a certain extent a union may be justified in
resorting to a strike. We should not be understood here as advocating a strike in
order to secure recognition of a union by the employer. On the whole we are
satisfied from the records that it is incorrect to say that the strike of the
Association was mainly for the purpose of securing recognition as bargaining
agent.

As will be discussed hereinbelow, the charge of unfair labor practice against the
Company is well-taken. It is, therefore, clear error on the part of the Association
is unjust, unreasonable and unwarranted.

We said earlier that the advice of Judge Tabigne to maintain the status
quo cannot be considered as a lawful order within the contemplation of the
Magna Carta of Labor, particularly Section 10 thereof; to so regard it as an order
would be to grant respondent court authority to forbid a strike in an uncertified
case which it is not empowered to do. The fact that the strike was not staged until
April 22, 1965 is eloquent proof enough of the desire of the Association and its
officers and members to respect the advice of Judge Tabigne. However, as
shown in this case during the pendency of the certification proceedings unfair
labor practices were committed by the Company; hence, the Association was
justified in staging a strike and certainly this is not in violation of the advice of
Judge Tabigne on March 29, 1965.
Respondent court picked out a number of incidents, taking place during the
strike, to support its conclusion that the strikers resorted to means beyond the
pale of the law in the prosecution of a strike. Thus, it made mention of the
blocking by a banca manned by two striking supervisors by the name of
Dominador Mangalino and one Bonecillo of the Caltex M/V Estrella when it was
about to depart; the blocking at the refinery of the Company in Bauan, Batangas
of the LSCO WARA, the Hills Bros Pinatubo, and the Mobil Visayas so that they
could not dock; the blocking by the strikers of incoming vehicles, non-striking
supervisors, and rank-and-file workers to prevent them from entering the refinery
gate in Bauan, Batangas, at the Poro Terminal, at the Company's Padre Faura
office in Manila, and at the Pandacan Terminal; that at the Legaspi and
Mambulao Bulk Depots the striking supervisors refused to surrender to their
superiors the keys to the depots and storage tanks; and that also at the Legaspi
Depot the truck ignition keys were mixed up or thrown at the seats of the trucks
in violation of the Company regulations in order to create confusion and thus
prevent the trucks from being used.4 To refute these and similar findings of
respondent court the Association, drawing chiefly and abundantly from the
Company's own evidence,5 called attention to the exculpatory declarations of the
Company's own witnesses6 either establishing or tending to establish that the
picketing the strikers was generally peaceful and orderly. We find that such,
indeed, was the real situation during the strike and it would be the height of
injustice to rule otherwise in the face of the records before us.

In ignoring strong evidence coming from the witnesses of the Company


damaging to its case as well as that adduced by the Association also damaging
to the Company's case, we believe that respondent court clearly and gravely
abused its discretion thereby justifying us to review or alter its factual findings
(see Philippine Educational Institution vs. MLQSEA Faculty Association, 26
SCRA 272, 278).7 There is thus here, to employ the language of Justice J.B.L.
Reyes in Lakas ng Pagkakaisa sa Peter Paul vs. Court of Industrial Relations, 96
Phil., 63, "an infringement of cardinal primary rights of petitioner, and justified the
interposition of the corrective powers of this Court (Ang Tibay vs. Court of
Industrial Relations and National Labor Union, 69 Phil., 635):

(2) Not only must the party be given an opportunity to present his
case and to adduce evidence tending to establish the rights which
he asserts but the tribunal must consider the evidence presented.
(Chief Justice Hughes in Morgan vs. U.S., 298 U.S. 468, 56 S. Ct.
906, 80 Law Ed. 1288.) In the language of this Court in Edwards vs.
McCoy, 22 Phil., 598, "the right to adduce evidence, without the
corresponding duty on the part of the board to consider it, is vain.
Such right is conspicuously futile if the person or persons to whom
the evidence is presented can thrust it aside without notice or
consideration." (Ibid., p. 67)8

We are convinced from the records that on the whole the means employed by
the strikers during the strike, taking into account the activities of the Company
and the non-striking employees on the same occasion, cannot be labeled as
unlawful; in other words, the Company itself through the provocative, if not
unlawful, acts of the non-striking employees9 is not entirely blameless for the
isolated incidents relied upon by respondent court as tainting the picketing of the
strikers with illegality. As we said through Justice Fernando in Shell Oil Workers'
Union vs. Shell Company of the Philippines, Ltd.,
L-28607, May 31, 1971, 39 SCRA 276:

6. Respondent court was likewise impelled to consider the strike


illegal because of the violence that attended it. What is clearly within
the law is the concerted activity of cessation of work in order that a
union's economic demands may be granted or that an employer
cease and desist from the unfair labor practice. That the law
recognizes as a right. There is though a disapproval of the utilization
of force to attain such an objective. For implicit in the very concept of
a legal order is the maintenance of peaceful ways. A strike otherwise
valid, if violent, in character, be placed beyond the pale. Care is to
be taken, however, especially where an unfair labor practice is
involved, to avoid stamping it with illegality just because it is tainted
by such acts. To avoid rendering illusory the recognition of the right
to strike, responsibility in such a case should be individual not
collective. A different conclusion would be called for, of course, if the
existence of force while the strike lasts is pervasive and widespread,
consistently and deliberately resorted to as a matter of policy. It
could be reasonably concluded then that even if justified as to end, it
becomes illegal because of means employed. (Ibid., p. 292;
emphasis supplied).

In the same case we further observed:

... Barely four months ago, in Insular Life Assurance Co., Ltd.
Employees' Association vs. Insular Life Assurance Co., Ltd., there is
the recognition by this Court, speaking through Justice Castro, of
picketing as such being "inherently explosive". It is thus clear that
not every form of violence suffices to affix the seal of illegality on a
strike or to cause the loss of employment of the guilty party. (Ibid.,
pp. 293-294; emphasis supplied)
In the cited case of Insular Life Assurance Co., Employees' Association-NATO,
FGU Insurance Group Workers & Employees Association-NATU and Insular Life
Building Employees Association-NATU vs. The Insular Life insurance Co., Ltd.,
FGU Insurance Group, et al., L-25291, January 30, 1971, 37 SCRA 244, we held
through Justice Castro, and this is here applicable to the contention of
theAssociation, as follows:

... Besides, under the circumstances the picketers not legally bound
to yield their grounds and withdraw from the picket lines. Being
where the law expects them to be in the legitimate exercise of their
rights, they had every reason to defend themselves and their rights
from any assault or unlawful transgression. ... (Ibid., p. 271)

In this cited case, by the way, we reversed and set aside the decision of the
Court of Industrial Relations and ordered the Company to reinstate the dismissed
workers backwages.

Let us now examine the charge of unfair labor practice which respondent court
dismissed for lack of merit and substantial evidence.

Under Sec. 14(c) of Republic Act No. 875, the parties themselves are required
"to participate fully and promptly in such meetings and conferences as the
(Conciliation) Service may undertake." In this case, the parties agreed to meet on
April 21, 1965 and yet, notwithstanding this definite agreement, the Company
sent no representatives. The Company's claim to bargaining in good faith cannot
be given credence in the face of the fact that W.E. Menefee the Company's
Managing Director, conveniently left Manila for Davao on April 17 or 18, 1965, as
admitted by W.E. Wilmarth. 10

Nowhere is there serious claim on the part of the Company that it entertains real
doubt as to the majority representation of the Association. Consider further that
admittedly the certification election proceeding for the Cebu Supervisors Union in
the Company had been pending for six (6) years already. From all appearances,
therefore, and bearing in mind the deliberate failure of the Company to attend the
conciliation meetings on April 19 and 21, 1965, it is clear that the Company
employed dilatory tactics doubtless to discredit CAFIMSA before the eyes of its
own members and prospective members as an effective bargaining agent,
postpone eventual recognition of the Association, and frustrate its efforts towards
securing favorable action on its economic demands.

It is likewise not disputed that on March 4, 1965, the Company issued its
statement of policy (Exh. B). At that time the Association was seeking recognition
as bargaining agent and has presented economic demands for the improvement
of the terms and conditions of employment of supervisors. The statement of
policy conveyed in unequivocal terms to all employees the following message:

We sincerely believe that good employee relations can be


maintained and essential employee needs fulfilled through sound
management administration without the necessity of employee
organization and representations. We respect an employee's right to
present his grievances, regardless of whether or not he is
represented by a labor organization. (Emphasis supplied)

An employee reading the foregoing would at once gain impression that there was
no need to join the Association. For he is free to present his grievances
regardless of whether or not he is represented by a labor organization.

The guilty conduct of the Company before, during after the strike of April 22,
1965 cannot escape the Court's attention. It will suffice to mention typical
instances by way of illustration. Long prior to the strike, the Company had
interferred with the Cebu Supervisors' Union by enticing Mapa into leaving the
Union under the guise of promotion in Manila; shortly before the strike, B.R.
Edwards, Manager-Operations, had inquired into the formation and organization
of the petitioner Association in this case. During the strike, in addition to the
culpable acts of the Company already narrated above, due significance must be
given to the inclusion initially of J.J. Mapa and A. Buenaventura, the
Association's President and Vice-President respectively, in 1965, in two coercion
cases filed at that time and their subsequent elimination from the charges the
initiative of the Company after the settlement of strike; 11 the cutting off of
telephone facilities extended Association members in the refinery; and the use of
a member of the Association to spy for the company. 12 The discriminatory acts
practiced by the Company against active unionists after the strike furnish further
evidence that Company committed unfair labor practices as charged. 13 Victims of
discrimination are J.J. Mapa, A.E. Buenaventura, E.F. Grey, Eulogio
Manaay,14 Pete Beltran, Jose Dizon, Cipriano Cruz, F.S. Miranda and many
others. The discrimination consisted in the Company's preferring non-members
of the Association in promotions to higher positions and humiliating active
unionists by either promoting junior supervisors over them or by reduction of their
authority compared to that assigned to them before the strike, or otherwise
downgrading their positions. 15

Then, effective July 1, 1969, the Company terminated the employment of J.J.
Mapa and Dominador Mangalino, President and Vice-President, respectively, of
the Association at that time. And this the Company did not hesitate to do
notwithstanding the Association's seasonable appeal from respondent court's
decision. We perceive in this particular action of the Company its anti-union
posture and attitude. In this connection, we find merit in the claim of petitioner
that the dismissal of Mapa and Mangalino was premature considering that
respondent court did not expressly provide that such dismissal might be effected
immediately despite the pendency of the appeal timely taken by the Association.
The situation would have been different had respondent court ordered the
dismissal of Mapa and Mangalino immediately. As the decision is silent on this
matter the dismissal of said officers of the Association ought to have been done
only upon the finality of the judgment. Because appeal was timely taken, the
Company's action is patently premature and is furthermore evidence of its desire
to punish said active unionists.

Verily, substantial, credible and convincing evidence appear on record


establishing beyond doubt the charge of unfair labor practices in violation of Sec.
4 (a), Nos. (1), (3), (4), (5) and (6), of Republic Act No. 875. And pursuant to the
mandate of Art. 24 of the Civil Code of the Philippines that courts must be vigilant
for the protection of one at a disadvantage — and here the Association appears
to be at a disadvantage in its relations with the Company as the records show —
adequate affirmative relief, including backwages, must be awarded to the
strikers. It is high-time and imperative that in order to attain the laudable
objectives of Republic Act 875 calculated to safeguard the rights of employees,
the provisions thereof should be liberally construed in favor of employees and
strictly against employer, unless otherwise intended by or patent from language
of the statute itself.

The Court takes judicial notice of the considerable efforts exerted by both parties
in the prosecution of respective cases and the incidents thereof both before lower
court and this Court since 1965 to date. Under the circumstances and in
conformity with Art. 2208, No. 11, the Civil Code of the Philippines, it is but just,
fair and equitable that the Association be permitted to recover attorney's fees as
claimed in its tenth assignment of error.

WHEREFORE, respondent court's resolution en banc dated May 16, 1969,


together with the decision dated February 26, 1969, is reversed and judgment is
hereby rendered as follows:

1. In Case No. 1484-MC(1), the Court declares the strike of the Caltex Filipino
Managers and Supervisors' Association as legal in all respects and,
consequently, the forfeit of the employee status of J.J. Mapa, Dominador
Mangalino and Herminigildo Mandanas is set aside. The Company is hereby
ordered to reinstate J.J. Mapa and Dominador Mangalino to their former
positions without loss of seniority and privileges, with backwages from the time of
dismissal on July 1, 1969. Since Herminigildo Mandanas appears to have
voluntarily left the Company, no reinstatement is ordered as to him.
2. In Case No. 4344-ULP, the Court finds the Company B.F. Edwards and W.E.
Menefee guilty of unfair labor practices and they are therefore ordered to cease
and desist from the same. In this connection, the Company is furthermore
directed to pay backwages to the striking employees from April 22, 1965 to May
30, 1965 and to pay attorney's fees which are hereby fixed at P20,000.00.
G.R. No. L-20303 September 27, 1967

REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,


vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN
JARA, FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S.
MENDIOLA, TEODORO DE LA CRUZ, NARCISO MACARAEG and MAURO A.
ROVILLOS, respondents.

Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.


G. E. Fajardo for respondents.

CASTRO, J.:

The vital issue in this case is whether the dismissal of the eight (8) respondent
employees by the petitioner Republic Bank (hereinafter referred to as the Bank)
constituted an unfair labor practice within the meaning and intendment of the
Industrial Peace Act (Republic Act 875). The Court of Industrial Relations (CIR)
found it did and its decision is now on appeal before us. The Bank maintains that
the discharge was for cause.

The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin
Jara, Florencio Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la
Cruz, Narciso Macaraeg and Mauro A. Rovillos. On July 12, 1958 it discharged
Jola and, a few days after (July 18, 1958), the rest of respondents, for having
written and published "a patently libelous letter . . . tending to cause the dishonor,
discredit or contempt not only of officers and employees of this bank, but also of
your employer, the bank itself."

The letter referred to was a letter-charge which the respondents had written to
the bank president, demanding his resignation on the grounds of immorality,
nepotism in the appointment and favoritism as well as discrimination in the
promotion of bank employees. The letter, dated July 9, 1958, is hereunder
reproduced in full:

Mr. Ramon Racelis


President, Republic Savings Bank
Manila

"Dear Mr. President:


We, the undersigned, on behalf of all our members and
employees of the Republic Savings Bank, who have in our
hearts only the most honest and sincere motive to conserve
and protect the interest of the institution and its 200,000
depositors, do hereby, demand the much needed resignation
of His Excellency, Mr. Ramon Racelis as President and
Member of the Board of Directors of the Bank.

Mr. President, you have already, in so many occasions,


placed the Bank on the verge of danger, that now we deem it
right and justifiable for you to leave this Bank and let other
more capable presidents continue the work you have not well
accomplished.

In the above instance, we are presenting charges which in our


humble contention properly justifies incapacity on your part to
continue and assume the position as top executive of the huge
institution:

(1) That you Mr. President, have tolerated and practiced


immorality in this Bank. We have been expecting you to
do something about this malpractice which is very
disgraceful and affects the morale of the hundreds of
your employees. But so far, Mr. President, you have just
let this thing passed through. As a matter of fact, you
have even promoted these women like Misses Pacita
Mato and Edita Castro. These women are of
questionable characters, Mr. President, and should
have had no place in the Bank as managers or even as
mere employees. We know Mr. President, because it is
an open secret in the Bank, that you have illicit relations
with one of them — Miss Edita Castro. As top officer
and as father of the employees of the Bank, you have
shown this bad example to your employees. Mr.
President, we are really ashamed of you.

(2) That you have allowed the practice of nepotism in


this Bank. You have employed relatives of yours like
Honorio Ravida; Bienvenido Ravida; Antonio Racelis;
Jesus Antonio; and Argentina Racelis. Not only that Mr.
President. You have also given those nieces and
nephews of yours good positions at the expense of the
more capable employees. Mr. President, if we have to
mention all of them, one page will not be enough.

(3) With regards to promotion, you have given more


preferences to your close relatives. When the Bank
advocated the sending of pensionados to States, you
have only limited your choice among your nieces,
nephews, and querida, namely, Miss Argentina Racelis,
Mr. Jesus Antonio, Miss Edita Castro, and her brother-
in-law, Mr. Pedro Garcia, Jr. In doing this, Mr. President,
you have only lowered the reputation and standing of
the Republic Savings Bank. There is really no sense in
sending high school and B.S.E. graduates to States to
study advanced banking. Because of this silly decision,
it took one pensionado six months and cost the Bank a
total of P10,000.00 just to study Christmas savings.
That subject is very simple; one need not go to States to
study savings; that you know full well, Mr. President.
The reason why you sent Miss Castro to States was
because you were also there. Are we not right?

(4) That you Mr. President, tolerated and still tolerating


grave dishonesty in this Bank as evidenced by the
following irregularities and anomalies;

(a) In one of our branches, around P200,000.00


was mulcted and embezzled by a certain Maximo
Donado by doctoring the ledgers and records of
that particular office. To the present, the amount
is still increasing and some more are being dug
up from the records everyday ever since its
discovery in February 1957. In this case you
dismissed Mr. M. Donado, immediately. But this
was all that you did. If you have to go back to the
history of the case, you will find out that your
beloved nieces and nephews are also involved
having been managers of that particular office.
Another nephew, the Vice President-Operations,
then Vice President, Personnel, was also involved
for valid reasons that he did not even shift this
particular employee to other branches or
departments since the beginning when it has
been the policy of the Bank to reshuffle its
personnel. If you want to know why your good
nephew did not transfer this employee, we will tell
you. "Your good nephew has eaten too many
baskets of delicious alimango." Mr. President, if
there is someone to be blamed in this particular
case, it is your good nephews and nieces for their
gross negligence.

(b) Aside from the one mentioned above, we have


also Mr. Rodolfo Francisco, who in April 1955,
maliciously withdraw (sic) P970.00 in two
withdrawal slips from the account of one
depositor in one of our provincial offices, inserting
his name as co-depositor in the savings account
ledger.

(c) In January 1958, Mr. Jose de los Santos


expended and approved representation expense
in the amount of P300.00 in one of our provincial
offices.

(d) Mr. Federico M. Dabu, the ex-cashier and now


Personnel Manager, incurred a shortage in the
amount of P1,240.00 in the course of the audit on
August 3, 1954.

(e) Mr. Jose S. Guevara, Vice-President on


Personnel have (sic) been accepting bribe
moneys. One of these amounts to P4,000.00
which was delivered by a messenger sometime
during the last quarter of 1957.

Mr. President, the anomalies are only a partial list of the


irregularities which so far you have not acted upon. This type
of people should have been fired out from the Bank; yet on the
contrary, you promoted them to higher and responsible
positions, thus, resulting in the demoralization of the more
capable employees.

Mr. President, we hope that you have still a little sense of


decency and propriety left. So, for goodsake and for the
welfare of the Bank, DO RESIGN NOW as President and as
Member of the Board of Directors of the Republic Savings
Bank.

Very respectfully yours,

(Sgd.) Rosendo T. Resuello


President, RSB Supervisors' Union (FFW),

(Sgd.) Benjamin Jara


Vice-President RSB Supervisors' Union (FFW)

(Sgd.) Florencio Allasas


Treasurer, RSB Supervisors' Union (FFW)

(Sdg) Domingo B. Jola


Chairman, Executive Committee, RSB Employees'
Union (FFW)

(Sgd.) Diosdado S. Mendiola


Vice-President, RSB Employees Union (FFW)

(Sgd.) Teodoro de la Cruz


Member, Executive Committee, RSB Employees'
Union (FFW)

(Sgd.) Angelino Quiambao


President, RSB Security Guard Union (FFW)

(Sgd.) Narciso Macaraeg


Vice-President, RSB Security Guard Union (FFW)

(Sgd.) Alfredo Bautista


Treasurer, RSB Security Guard Union (FFW)

(Sgd.) Pacifico A. Argao


PRO, RSB Employees' Union (FFW)

(Sgd.) Toribio B. Garcia


Secretary, RSB Security Guard Union (FFW)

(Sgd.) Mauro A. Rovillos


Member, Executive Committee, RSB Supervisors'
Union (FFW)
Copies of this letter were admittedly given to the chairman of the board of
directors of the Bank, and the Governor of the Central Bank.

At the instance of the respondents, prosecutor A. Tirona filed a complaint in the


CIR on September 15, 1958, alleging that the Bank's conduct violated section
4(a) (5) of the Industrial Peace Act which makes it an unfair labor practice for an
employer "to dismiss, discharge or otherwise prejudice or discriminate against an
employee for having filed charges or for having given or being about to give
testimony under this Act."

The Bank moved for the dismissal of the complaint, contending that respondents
were discharged not for union activities but for having written and published a
libelous letter against the bank president. The court denied the motion on the
basis of its decision in another case1 in which it ruled that section 4(a) (5) applies
to cases in which an employee is dismissed or discriminated against for having
filed "any charges against his employer." Whereupon the case was heard.

In 1960, however, this Court overruled the decision of the CIR in the Royal
Interocean case and held that "the charge, the filing of which is the cause of the
dismissal of the employee, must be related to his right to self-organization in
order to give rise to unfair labor practice on the part of the employer," because
"under subsection 5 of section 4(a), the employee's (1) having filed charges or
(2) having given testimony or (3) being about to give testimony, are modified by
'under this Act' appearing after the last item."2The Bank therefore renewed its
motion to dismiss, but the court held the motion in abeyance and proceeded with
the hearing.

On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair
labor practice and ordering it to reinstate the respondents, with full back wages
and without loss of seniority and other privileges. This decision was affirmed by
the court en banc on August 9, 1962.

Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter
Paul v. CIR,4 the Bank argues that the court should have dismissed the complaint
because the discharge of the respondents had nothing to do with their union
activities as the latter in fact admitted at the hearing that the writing of the letter-
charge was not a "union action" but merely their "individual" act.

It will avail the Bank none to gloat over this admission of the respondents.
Assuming that the latter acted in their individual capacities when they wrote the
letter-charge they were nonetheless protected for they were engaged in
concerted activity, in the exercise of their right of self-organization that includes
concerted activity for mutual aid and protection,5 interference with which
constitutes an unfair labor practice under section 4(a)(1). This is the view of
some members of this Court. For, as has been aptly stated, the joining in
protests or demands, even by a small group of employees, if in furtherance of
their interests as such, is a concerted activity protected by the Industrial Peace
Act. It is not necessary that union activity be involved or that collective bargaining
be contemplated.6

Indeed, when the respondents complained against nepotism, favoritism and


other management practices, they were acting within an area marked out by the
Act as a proper sphere of collective bargaining. Even the reference to immorality
was not irrelevant as it was made to support the respondents' other charge that
the bank president had failed to provide wholesome working conditions, let alone
a good moral example, for the employees by practicing discrimination and
favoritism in the appointment and promotion of certain employees on the basis of
illicit relations or blood relationship with them.

In many respects, the case at bar is similar to National Labor Relations Board v.
Phoenix Mutual Life Insurance Co.7 The issue in that case was whether an
insurance company was guilty of an unfair labor practice in interfering with this
right of concerted activity by discharging two agents employed in a branch office.
The cashier of that office had resigned. The ten agents employed there held a
meeting and agreed to join in a letter to the home office objecting to the transfer
to their branch office of a cashier from another branch office to fill the position.
They discussed also the question whether to recommend the promotion of the
assistant cashier of their office as the proper alternative. They then chose one of
their number to compose a draft of the letter and submit it to them for further
discussion, approval and signature. The agent selected to write the letter and
another were discharged for their activities in this respect as being, so their
notices stated, completely unpleasant and far beyond the periphery of their
responsibility. In holding the company liable for unfair labor practice, the Circuit
Court of Appeals said:

A proper construction is that the employees shall have the right to engage
in concerted activities for their mutual aid or protection even though no
union activity be involved, for collective bargaining be contemplated. Here
Davis and Johnson and other salesmen were properly concerned with the
identity and capability of the new cashier. Conceding they had no authority
to appoint a new cashier or even recommend anyone for the appointment,
they had a legitimate interest in acting concertedly in making known their
views to management without being discharged for that interest. The
moderate conduct of Davis and Johnson and the others bore a reasonable
relation to conditions of their employment. It was therefore an unfair labor
practice for respondent to interfere with the exercise of the right of Davis
and Johnson and the other salesmen to engage in concerted activities for
their mutual aid or protection.

Other members of this Court agreed with the CIR that the Bank's conduct
violated section 4(a) (5) which makes it an unfair labor practice for an employer
to dismiss an employee for having filed charges under the Act.

Some other members of this Court believe, without necessarily expressing


approval of the way the respondents expressed their grievances, that what the
Bank should have done was to refer the letter-charge to the grievance
committee. This was its duty, failing which it committed an unfair labor practice
under section 4(a) (6). For collective bargaining does not end with the execution
of an agreement. It is a continuous process. The duty to bargain imposes on the
parties during the term of their agreement the mutual obligation "to meet and
confer promptly and expeditiously and in good faith . . . for the purpose of
adjusting any grievances or question arising under such agreement"8 and a
violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair labor
practice.9 As Professors Cox and Dunlop point out:

Collective bargaining . . . normally takes the form of negotiations when


major conditions of employment to be written into an agreement are under
consideration and of grievance committee meetings and arbitration when
questions arising in the administration of an agreement are at stake.10

Instead of stifling criticism, the Bank should have allowed the respondents to air
their grievances. Good faith bargaining required of the Bank an open mind and a
sincere desire to negotiate over grievances.11 The grievance committee, created
in the collective bargaining agreements, would have been an appropriate forum
for such negotiation. Indeed, the grievance procedure is a part of the continuous
process of collective bargaining.12 It is intended to promote, as it were, a friendly
dialogue between labor and management as a means of maintaining industrial
peace.

The Bank defends its action by invoking its right to discipline for what it calls the
respondents' libel in giving undue publicity to their letter-charge. To be sure, the
right of self-organization of employees is not unlimited,13 as the right of an
employer to discharge for cause14 is undenied. The Industrial Peace Act does not
touch the normal exercise of the right of an employer to select his employees or
to discharge them. It is directed solely against the abuse of that right by
interfering with the countervailing right of self-organization.15 But the difficulty
arises in determining whether in fact the discharges are made because of such a
separable cause or because of some other activities engaged in by employees
for the purpose of collective bargaining.16
It is for the CIR, in the first instance, to make the determination, "to weigh the
employer's expressed motive in determining the effect on the employees of
management's otherwise equivocal act."17 For the Act does not undertake the
impossible task of specifying in precise and unmistakable language each incident
which constitutes an unfair labor practice. Rather, it leaves to the court the work
of applying the Act's general prohibitory language in the light of infinite
combinations of events which may be charged as violative of its terms. 18 As the
Circuit Court of Appeals puts it:

Determining the legality of a dismissal necessarily involves an appraisal of


the employer's motives. In these cases motivations are seldom expressly
avowed and avowals are not always candid. There thus must be a
measure of reliance on the administrative agency knowledgeable in labor-
management relations and on the Trial Examiner who receives the
evidence firsthand and is therefore in a unique position to determine the
credibility of the witnesses. Where Examiner and Board are in agreement
there is an increased presumption in favor of their resolution of the issue.19

What we have just essayed underscores at once the difference between Royal
Interocean and Lakas ng Pagkakaisa on the one hand and this case on the
other. In Royal Interocean, the employee's letter to the home office, for writing
which she was dismissed, complained of the local manager's "inconsiderate and
untactful attitude"20 — a grievance which, the court found, "had nothing to do with
or did not arise from her union activities." Nor did the court find evidence of
discriminatory discharge in Lakas ng Pagkakaisa as the letter, which the
employee wrote to the mother company in violation of the local company's rule,
denounced "wastage of company funds." In contrast, the express finding of the
court in this case was that the dismissal of the respondents was made on
account of the letter they had written, in which they demanded the resignation of
the bank president for a number of reasons touching labor-management relations
— reasons which not even the Bank's judgment that the respondents had
committed libel could excuse it for making summary discharges21 in disregard of
its duty to bargain collectively.

In final sum and substance, this Court is in unanimity that the Bank's conduct,
identified as an interference with the employees' right of self-organization, or as a
retaliatory action, and/or as a refusal to bargain collectively, constituted an unfair
labor practice within the meaning and intendment of section 4(a) of the Industrial
Peace Act.

ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9,


1962 of the Court of Industrial Relations are affirmed, at petitioner's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and
Angeles, JJ., concur.
Bengzon, J.P., J., took no part.

Separate Opinions

FERNANDO, J., concurring:

The opinion of the Court in this highly significant unfair labor practice case, one
of first impression, easily commends itself for approval. The relevant facts are set
forth in all fullness and with due care. The position of the Court united as it is on
an unfair labor practice having been committed, but not quite fully agreed as to
which particular subsection of the legal provision was violated, is delineated with
precision. With the explicit acknowledgement there made that some members of
the Court are of the belief that what was done by the Republic Bank here
amounted to "interference" and with the writer being of the persuasion that it
could be categorized in line with the statute as "interference, restraint or
coercion," a few words as to why this view is entertained may not be
inappropriate.

No one can doubt that we are in the process of evolving an indigenous labor
jurisprudence. Notwithstanding the clearly American background of the Industrial
Peace Act, based as it is mainly on the Wagner Act,1 labor relations in the
Philippines with their peculiar problems and the ingenuity of Filipino lawyers have
resulted in a growing body of decisions notable for their suitability to local
condition and their distinctly local flavor. This is as it should be.

The present case affords one such instance. The wealth of adjudication by both
judicial and administrative agencies in the United States notwithstanding the
diligent and earnest search for a ruling based on a similar fact-situation yielded
no case precisely in point. What does it signify? At the very least, it may indicate
that while the problem posed could have arisen there, this particular response of
labor was quite unique. On the assumption which I have here hypothetically
made that there was indeed a valid cause for grievance, a more diplomatic
approach could have been attempted. Or at the very least the procedure
indicated for the adjustment of a grievance could have been followed. That was
not done. What respondents did was to issue an ultimatum.
Collective bargaining whether in its formative stage preparatory to a labor
contract or in the adjustment of a labor problem in accordance with the procedure
set forth in an existing agreement presupposes the give-and-take of discussion.
No party adopts, at least in its initial stages, a hard-line position, from which there
can be no retreat. That was not the situation here. Respondents as labor leaders
appeared adamantine in their attitude to terminate the services of the then
president of the Republic Savings Bank. Nor did they mince words in describing
his alleged misdeeds. They were quite certain that he had offended most
grievously. They wanted him out. There was no room for discussion.

That for me is not bargaining as traditionally and commonly understood. It is for


that reason that I find it difficult to agree fully with the view that their dismissal
could be construed as a refusal to bargain collectively. Moreover, they did not as
adverted to in the opinion of the Court, follow the procedure set forth for adjusting
grievances. Nor considering the explicit language of the Industrial Peace Act may
such dismissal fall within the prohibition against dismissing employees for having
filed charges or about to give testimony "under the Act." As a matter of fact, if the
letter were indeed libelous, their dismissal would not have been unjustified. There
was an admission as noted in the opinion "that the writing of the letter charged
was not a 'union' action but merely their 'individual' act."

Nonetheless, concurrence with the decision arrived at by the Court is called for in
view of their mass dismissal. Under the circumstances, the supervisors union,
the Republic Savings Bank employees union, the Republic Savings Bank
security guards union, and the Republic Savings Bank supervisors union were
left leaderless. For collective bargaining to be meaningful, there must be two
parties, one representing management and the other representing the union. Nor
could management select who would represent the latter or with whom to deal,
otherwise in effect there would be only one party. Obviously there would then be
no bargaining. 1aw phîl.nèt

It is my view therefore that the dismissal amounted to "interference, restraint or


coercion" as prohibited in the Industrial Peace Act. To repeat, this Section 4(a),
with the exception of subsection (2), was taken from the Wagner Act. There is as
stated by Bufford in his treatise for the Wagner Act "an overlap" as this particular
subsection deals "with additional labor practice besides containing incidental
provisions concerning related matters."2 As noted further by such commentator:
"As expressed by the Senate Committee: 'The four succeeding unfair labor
practices are designed not to impose limitations or restrictions upon the general
guarantees of the first, but rather to spell out with particularity some of the
practices that have been most prevalent and most troublesome.'"
Teller is in agreement. This subsection according to him "involves the widest
varieties of activities." The other unfair labor practices condemned fall within its
terms. Thus: "That the Board has taken this position is evidenced both by the
Board decisions and by express statement to such effect contained in its first
annual report, the language of which in this connection is as follows: 'At the
outset it should be explained that the Board has held that a violation by an
employer of any of the other four subdivisions of Section 8 of the act is, by the
same token, a violation of Section 8(1). Such a conclusion is too obvious to
require explanation. In fact, almost all of the cases in which the Board has found
a violation of Section 8(1) are cases in which the principal offense charged fell
within some other subdivision of Section 8. The explanation for this is,
apparently, that even though an employer may be engaging in anti-union
activities in violation of Section 8(1), unions do not seek protection of the act until
such activities take such drastic form as bring them within the provisions of some
other subdivisions, as, for example, the discriminatory discharge of union
members (which comes within subdivision [3]), the domination of or interference
with the formation or administration of a labor organization (which comes within
subdivision [2]). or a refusal to bargain collectively (which comes within
subdivision [5]."3

In the Philippines as in the United States then, the first subsection on


"interference, restraint or coercion" covering as it does such a broad range of
undesirable practices on the part of employers could easily be seized upon,
where a borderline case, inimical to the right of self-organization or to collective
bargaining, presents itself as justifying a finding of an unfair labor practice.
G.R. No. 149440 January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and


CRISTINE SEGURA, petitioners,
vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND
GENERAL TRADE, respondents.

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was
seasonal in nature, they failed to prove that the latter worked only for the duration
of one particular season. In fact, petitioners do not deny that these workers have
served them for several years already. Hence, they are regular — not seasonal
— employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the February 20, 2001 Decision of the Court of
Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision
reads:

"WHEREFORE, premises considered, the instant special civil action for


certiorari is hereby DENIED." 2

On the other hand, the National Labor Relations Commission (NLRC)


Decision, 3 upheld by the CA, disposed in this wise:

"WHEREFORE, premises considered, the decision of the Labor Arbiter is


hereby SET ASIDE and VACATED and a new one entered declaring
complainants to have been illegally dismissed. Respondents are hereby
ORDERED to reinstate complainants except Luisa Rombo, Ramona
Rombo, Bobong Abriga and Boboy Silva to their previous position and to
pay full backwages from September 1991 until reinstated. Respondents
being guilty of unfair labor practice are further ordered to pay complainant
union the sum of P10,000.00 as moral damages and P5,000.00 as
exemplary damages." 4

The Facts

The facts are summarized in the NLRC Decision as follows:


"Contrary to the findings of the Labor Arbiter that complainants [herein
respondents] refused to work and/or were choosy in the kind of jobs they
wanted to perform, the records is replete with complainants' persistence
and dogged determination in going back to work.

"Indeed, it would appear that respondents did not look with favor workers'
having organized themselves into a union. Thus, when complainant union
was certified as the collective bargaining representative in the certification
elections, respondents under the pretext that the result was on appeal,
refused to sit down with the union for the purpose of entering into a
collective bargaining agreement. Moreover, the workers including
complainants herein were not given work for more than one month. In
protest, complainants staged a strike which was however settled upon the
signing of a Memorandum of Agreement which stipulated among others
that:

'a) The parties will initially meet for CBA negotiations on the 11th day
of January 1991 and will endeavor to conclude the same within thirty
(30) days.

'b) The management will give priority to the women workers who are
members of the union in case work relative . . . or amount[ing] to
gahit and [dipol] arises.

'c) Ariston Eruela Jr. will be given back his normal work load which is
six (6) days in a week.

'd) The management will provide fifteen (15) wagons for the workers
and that existing workforce prior to the actual strike will be given
priority. However, in case the said workforce would not be enough,
the management can hire additional workers to supplement them.

'e) The management will not anymore allow the scabs, numbering
about eighteen (18) workers[,] to work in the hacienda; and

'f) The union will immediately lift the picket upon signing of this
agreement.'

"However, alleging that complainants failed to load the fifteen wagons,


respondents reneged on its commitment to sit down and bargain
collectively. Instead, respondent employed all means including the use of
private armed guards to prevent the organizers from entering the
premises.
"Moreover, starting September 1991, respondents did not any more give
work assignments to the complainants forcing the union to stage a strike
on January 2, 1992. But due to the conciliation efforts by the DOLE,
another Memorandum of Agreement was signed by the complainants and
respondents which provides:

'Whereas the union staged a strike against management on January 2,


1992 grounded on the dismissal of the union officials and members;

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

'Now therefore, in the interest of both labor and management,


parties herein agree as follows:

'1. That the list of the names of affected union members hereto
attached and made part of this agreement shall be referred to the
Hacienda payroll of 1990 and determine whether or not this
concerned Union members are hacienda workers;

'2. That in addition to the payroll of 1990 as reference, herein parties


will use as guide the subjects of a Memorandum of Agreement
entered into by and between the parties last January 4, 1990;

'3. That herein parties can use other employment references in


support of their respective claims whether or not any or all of the
listed 36 union members are employees or hacienda workers or not
as the case may be;

'4. That in case conflict or disagreement arises in the determination


of the status of the particular hacienda workers subject of this
agreement herein parties further agree to submit the same to
voluntary arbitration;

'5. To effect the above, a Committee to be chaired by Rose


Mengaling is hereby created to be composed of three
representatives each and is given five working days starting Jan. 23,
1992 to resolve the status of the subject 36 hacienda workers.
(Union representatives: Bernardo Torres, Martin Alas-as, Ariston
Arulea Jr.)"

"Pursuant thereto, the parties subsequently met and the Minutes of the
Conciliation Meeting showed as follows:
'The meeting started at 10:00 A.M. A list of employees was
submitted by Atty. Tayko based on who received their 13th month
pay. The following are deemed not considered employees:

1. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. Boboy Silva

'The name Orencio Rombo shall be verified in the 1990 payroll.

'The following employees shall be reinstated immediately upon


availability of work:

1. Jose Dagle 7. Alejandro


Tejares
2. Rico Dagle 8. Gaudioso
Rombo
3. Ricardo Dagle 9. Martin Alas-as
Jr.
4. Jesus Silva 10. Cresensio
Abrega
5. Fernando Silva 11. Ariston Eruela
Sr.
6. Ernesto Tejares 12. Ariston Eruela
Jr.'

"When respondents again reneged on its commitment; complainants filed


the present complaint.

"But for all their persistence, the risk they had to undergo in conducting a
strike in the face of overwhelming odds, complainants in an ironic twist of
fate now find themselves being accused of 'refusing to work and being
choosy in the kind of work they have to perform'." 5 (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they
were considered to be merely on leave during the off-season and were therefore
still employed by petitioners. Moreover, the workers enjoyed security of tenure.
Any infringement upon this right was deemed by the CA to be tantamount to
illegal dismissal.

The appellate court found neither "rhyme nor reason in petitioner's argument that
it was the workers themselves who refused to or were choosy in their work." As
found by the NLRC, the record of this case is "replete with complainants'
persistence and dogged determination in going back to work." 6

The CA likewise concurred with the NLRC's finding that petitioners were guilty of
unfair labor practice.

Hence this Petition. 7

Issues

Petitioners raise the following issues for the Court's consideration:

"A. Whether or not the Court of Appeals erred in holding that respondents,
admittedly seasonal workers, were regular employees, contrary to the
clear provisions of Article 280 of the Labor Code, which categorically state
that seasonal employees are not covered by the definition of regular
employees under paragraph 1, nor covered under paragraph 2 which
refers exclusively to casual employees who have served for at least one
year.

"B. Whether or not the Court of Appeals erred in rejecting the ruling in
Mercado, . . . and relying instead on rulings which are not directly
applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia,
and Gaco, . . .

"C Whether or not the Court of Appeals committed grave abuse of


discretion in upholding the NLRC's conclusion that private respondents
were illegally dismissed, that petitioner[s were] guilty of unfair labor
practice, and that the union be awarded moral and exemplary damages." 8

Consistent with the discussion in petitioners' Memorandum, we shall take up


Items A and B as the first issue and Item C as the second.

The Court's Ruling

The Petition has no merit.

First Issue:
Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by
this Court in petitions for review on certiorari of CA decisions. 9 Questions of fact
are not entertained. 10 The Court is not a trier of facts and, in labor cases, this
doctrine applies with greater force. 11 Factual questions are for labor tribunals to
resolve. 12 In the present case, these have already been threshed out by the
NLRC. Its findings were affirmed by the appellate court.

Contrary to petitioners' contention, the CA did not err when it held that
respondents were regular employees.

Article 280 of the Labor Code, as amended, states:

"Art. 280. Regular and Casual Employment. — The provisions of written


agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the


preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity
exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is


not enough that they perform work or services that are seasonal in nature. They
must have also been employed only for the duration of one season. The
evidence proves the existence of the first, but not of the second, condition. The
fact that respondents — with the exception of Luisa Rombo, Ramona Rombo,
Bobong Abriga and Boboy Silva — repeatedly worked as sugarcane workers for
petitioners for several years is not denied by the latter. Evidently, petitioners
employed respondents for more than one season. Therefore, the general rule of
regular employment is applicable.
In Abasolo v. National Labor Relations Commission, 13
the Court issued this
clarification:

"[T]he test of whether or not an employee is a regular employee has been


laid down in De Leon v. NLRC, in which this Court held:

"The primary standard, therefore, of determining regular employment is the


reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual
trade or business of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such activity
and while such activity exists.

xxx xxx xxx

". . . [T]he fact that [respondents] do not work continuously for one whole
year but only for the duration of the . . . season does not detract from
considering them in regular employment since in a litany of cases this
Court has already settled that seasonal workers who are called to work
from time to time and are temporarily laid off during off-season are not
separated from service in said period, but merely considered on leave until
re-employed." 14

The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to
the case at bar. In the earlier case, the workers were required to perform phases
of agricultural work for a definite period of time, after which their services would
be available to any other farm owner. They were not hired regularly and
repeatedly for the same phase/s of agricultural work, but on and off for any single
phase thereof. On the other hand, herein respondents, having performed the
same tasks for petitioners every season for several years, are considered the
latter's regular employees for their respective tasks. Petitioners' eventual refusal
to use their services — even if they were ready, able and willing to perform their
usual duties whenever these were available — and hiring of other workers to
perform the tasks originally assigned to respondents amounted to illegal
dismissal of the latter.
The Court finds no reason to disturb the CA's dismissal of what petitioners claim
was their valid exercise of a management prerogative. The sudden changes in
work assignments reeked of bad faith. These changes were implemented
immediately after respondents had organized themselves into a union and
started demanding collective bargaining. Those who were union members were
effectively deprived of their jobs. Petitioners' move actually amounted to
unjustified dismissal of respondents, in violation of the Labor Code.

"Where there is no showing of clear, valid and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the
burden is on the employer to prove that the termination was for a valid and
authorized cause." 16 In the case at bar, petitioners failed to prove any such
cause for the dismissal of respondents who, as discussed above, are regular
employees.

Second Issue:

Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as
follows:

"Indeed, from respondents' refusal to bargain, to their acts of economic


inducements resulting in the promotion of those who withdrew from the
union, the use of armed guards to prevent the organizers to come in, and
the dismissal of union officials and members, one cannot but conclude that
respondents did not want a union in their hacienda—a clear interference in
the right of the workers to self-organization." 17

We uphold the CA's affirmation of the above findings. Indeed, factual findings of
labor officials, who are deemed to have acquired expertise in matters within their
respective jurisdictions, are generally accorded not only respect but even finality.
Their findings are binding on the Supreme Court. 18 Verily, their conclusions are
accorded great weight upon appeal, especially when supported by substantial
evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy
of their factual findings, in the absence of a clear showing that these were
arbitrary and bereft of any rational basis." 20

The finding of unfair labor practice done in bad faith carries with it the sanction of
moral and exemplary damages." 21

WHEREFORE, the Petition is hereby DENIED and the assailed


Decision AFFIRMED. Costs against petitioners.
G.R. No. L-25291 January 30, 1971

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


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

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

Francisco de los Reyes for respondent Court of Industrial Relations.

Araneta, Mendoza and Papa for other respondents.

CASTRO, J.:

Appeal, by certiorari to review a decision and a resolution en banc of the Court of


Industrial Relations dated August 17, 1965 and October 20, 1965, respectively, in
Case 1698-ULP.

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


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

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

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

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

Thereafter, in the months of September and October 1957 negotiations were


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

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

Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without


increase in salary nor in responsibility while negotiations were going on in the
Department of Labor after the notice to strike was served on the Companies.
These employees resigned from the Unions.

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

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

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


picketing.

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


you may:

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


to do so.

2. Take your meals within the office.

3. Make a choice whether to go home at the end of the day or to


sleep nights at the office where comfortable cots have been
prepared.

4. Enjoy free coffee and occasional movies.

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

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

The decision to make is yours — whether you still believe in the


motives of the strike or in the fairness of the Management.

The Unions, however, continued on strike, with the exception of a few unionists
who were convinced to desist by the aforesaid letter of May 21, 1958.

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

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

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

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

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

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

If you are still interested in continuing in the employ of the Group


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

Before, the decisions was yours to make.

So it is now.

Incidentally, all of the more than 120 criminal charges filed against the members
of the Unions, except three (3), were dismissed by the fiscal's office and by the
courts. These three cases involved "slight physical injuries" against one striker
and "light coercion" against two others.
At any rate, because of the issuance of the writ of preliminary injunction against
them as well as the ultimatum of the Companies giving them until June 2, 1958 to
return to their jobs or else be replaced, the striking employees decided to call off
their strike and to report back to work on June 2, 1958.

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

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

On August 4, 1958 the Companies filed their answer denying all the material
allegations of the complaint, stating special defenses therein, and asking for the
dismissal of the complaint.
After trial on the merits, the Court of Industrial Relations, through Presiding
Judge Arsenio Martinez, rendered on August 17, 1965 a decision dismissing the
Unions' complaint for lack of merit. On August 31, 1965 the Unions seasonably
filed their motion for reconsideration of the said decision, and their supporting
memorandum on September 10, 1965. This was denied by the Court of Industrial
Relations en banc in a resolution promulgated on October 20, 1965.

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

1. In not finding the Companies guilty of unfair labor practice in


sending out individually to the strikers the letters marked Exhibits A
and B;

2. In not finding the Companies guilty of unfair labor practice for


discriminating against the striking members of the Unions in the
matter of readmission of employees after the strike;

3. In not finding the Companies guilty of unfair labor practice for


dismissing officials and members of the Unions without giving them
the benefit of investigation and the opportunity to present their side
in regard to activities undertaken by them in the legitimate exercise
of their right to strike; and

4. In not ordering the reinstatement of officials and members of the


Unions, with full back wages, from June 2, 1958 to the date of their
actual reinstatement to their usual employment.

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

The act of an employer in notifying absent employees individually


during a strike following unproductive efforts at collective bargaining
that the plant would be operated the next day and that their jobs
were open for them should they want to come in has been held to be
an unfair labor practice, as an active interference with the right of
collective bargaining through dealing with the employees individually
instead of through their collective bargaining representatives. (31
Am. Jur. 563, citing NLRB v. Montgomery Ward & Co. [CA 9th] 133
F2d 676, 146 ALR 1045)
Indeed, it is an unfair labor practice for an employer operating under a collective
bargaining agreement to negotiate or to attempt to negotiate with his employees
individually in connection with changes in the agreement. And the basis of the
prohibition regarding individual bargaining with the strikers is that although the
union is on strike, the employer is still under obligation to bargain with the union
as the employees' bargaining representative (Melo Photo Supply Corporation vs.
National Labor Relations Board, 321 U.S. 332).

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

Moreover, since exhibit A is a letter containing promises of benefits to the


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

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

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

The test of whether an employer has interfered with and coerced


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

Besides, the letters, exhibits A and B, should not be considered by themselves


alone but should be read in the light of the preceding and subsequent
circumstances surrounding them. The letters should be interpreted according to
the "totality of conduct doctrine,"

... whereby the culpability of an employer's remarks were to be


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

It must be recalled that previous to the petitioners' submission of proposals for an


amended renewal of their respective collective bargaining agreements to the
respondents, the latter hired Felipe Enage and Ramon Garcia, former legal
counsels of the petitioners, as personnel manager and assistant corporate
secretary, respectively, with attractive compensations. After the notice to strike
was served on the Companies and negotiations were in progress in the
Department of Labor, the respondents reclassified 87 employees as supervisors
without increase in salary or in responsibility, in effect compelling these
employees to resign from their unions. And during the negotiations in the
Department of Labor, despite the fact that the petitioners granted the
respondents' demand that the former drop their demand for union shop and in
spite of urgings by the conciliators of the Department of Labor, the respondents
adamantly refused to answer the Unions' demands en toto. Incidentally, Enage
was the chairman of the negotiating panel for the Companies in the collective
bargaining between the former and the Unions. After the petitioners went to
strike, the strikers were individually sent copies of exhibit A, enticing them to
abandon their strike by inducing them to return to work upon promise of special
privileges. Two days later, the respondents, thru their president and manager,
respondent Jose M. Olbes, brought three truckloads of non-strikers and others,
escorted by armed men, who, despite the presence of eight entrances to the
three buildings occupied by the Companies, entered thru only one gate less than
two meters wide and in the process, crashed thru the picket line posted in front of
the premises of the Insular Life Building. This resulted in injuries on the part of
the picketers and the strike-breakers. Then the respondents brought against the
lâw phî1.ñèt

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

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

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

TO: BUREAU OF LABOR RELATIONS


DEPARTMENT OF LABOR
MANILA

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

THE FGU INSURANCE GROUP


Plaza Moraga, Manila

INSULAR LIFE BUILDING ADMINISTRATION


Plaza Moraga, Manila .

for the following reason: DEADLOCK IN COLLECTIVE


BARGAINING...

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

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

The strike took place nearly four months from the date the said notice of strike
was filed. And the actual and main reason for the strike was, "When it became
crystal clear the management double crossed or will not negotiate in good faith, it
is tantamount to refusal collectively and considering the unfair labor practice in
the meantime being committed by the management such as the sudden
resignation of some unionists and [who] became supervisors without increase in
salary or change in responsibility, such as the coercion of employees, decided to
declare the strike." (tsn., Oct. 14, 1958, p. 14.) The truth of this assertion is amply
proved by the following circumstances: (1) it took the respondents six (6) months
to consider the petitioners' proposals, their only excuse being that they could not
go on with the negotiations if the petitioners did not drop the demand for union
shop (exh. 7, respondents' letter dated April 7, 1958); (2) when the petitioners
dropped the demand for union shop, the respondents did not have a counter-
offer to the petitioners' demands. Sec. 14 of Rep. Act 875 required the
respondents to make a reply to the petitioners' demands within ten days from
receipt thereof, but instead they asked the petitioners to give a "well reasoned,
workable formula which takes into account the financial position of the group
companies." (tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26, 1969, p. 49.)
II. Exhibit H imposed three conditions for readmission of the strikers, namely: (1)
the employee must be interested in continuing his work with the group
companies; (2) there must be no criminal charges against him; and (3) he must
report for work on June 2, 1958, otherwise he would be replaced. Since the
evidence shows that all the employees reported back to work at the respondents'
head office on June 2, 1953, they must be considered as having complied with
the first and third conditions.

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

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

So is there an unfair labor practice where the employer, although


authorized by the Court of Industrial Relations to dismiss the
employees who participated in an illegal strike, dismissed only the
leaders of the strikers, such dismissal being evidence of
discrimination against those dismissed and constituting a waiver of
the employer's right to dismiss the striking employees and a
condonation of the fault committed by them." (Carlos and Fernando,
Labor and Social Legislation, p. 62, citing Phil. Air Lines, Inc. v. Phil.
Air Lines Emloyees Association, L-8197, Oct. 31, 1958.)
It is noteworthy that — perhaps in an anticipatory effort to exculpate themselves
from charges of discrimination in the readmission of strikers returning to work —
the respondents delegated the power to readmit to a committee. But the
respondent Olbes had chosen Vicente Abella, chief of the personnel records
section, and Ramon Garcia, assistant corporate secretary, to screen the
unionists reporting back to work. It is not difficult to imagine that these two
employees — having been involved in unpleasant incidents with the picketers
during the strike — were hostile to the strikers. Needless to say, the mere act of
placing in the hands of employees hostile to the strikers the power of
reinstatement, is a form of discrimination in rehiring.

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


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

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

Of course, the respondents — through Ramon Garcia — tried to explain the


basis for such discrimination by testifying that strikers whose participation in any
alleged misconduct during the picketing was not serious in nature were
readmissible, while those whose participation was serious were not. (tsn., Aug. 4,
1961, pp. 48-49, 56). But even this distinction between acts of slight misconduct
and acts of serious misconduct which the respondents contend was the basis for
either reinstatement or discharge, is completely shattered upon a cursory
examination of the evidence on record. For with the exception of Pascual
Esquillo whose dismissal sent to the other strikers cited the alleged commission
by them of simple "acts of misconduct."
III. Anent the third assignment of error, the record shows that not a single
dismissed striker was given the opportunity to defend himself against the
supposed charges against him. As earlier mentioned, when the striking
employees reported back for work on June 2, 1958, the respondents refused to
readmit them unless they first secured the necessary clearances; but when all,
except three, were able to secure and subsequently present the required
clearances, the respondents still refused to take them back. Instead, several of
them later received letters from the respondents in the following stereotyped
tenor:

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

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

Kindly acknowledge receipt of the check we are sending herewith.

Very truly yours,

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

The respondents, however, admitted that the alleged "acts of misconduct"


attributed to the dismissed strikers were the same acts with which the said
strikers were charged before the fiscal's office and the courts. But all these
charges except three were dropped or dismissed.

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

Emiliano Tabasondra, vice-president of the petitioner FGU Insurance Group


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

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

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

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

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

Free speech on both sides and for every faction on any side of the
labor relation is to me a constitutional and useful right. Labor is free
... to turn its publicity on any labor oppression, substandard wages,
employer unfairness, or objectionable working conditions. The
employer, too, should be free to answer and to turn publicity on the
records of the leaders of the unions which seek the confidence of his
men ... (Concurring opinion of Justice Jackson in Thomas v. Collins,
323 U.S. 516, 547, 65 Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor
Relations and the Law, p. 591.)

The respondents also allege that in revealing certain confidential information,


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

Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Daño, Vicente Alsol and
Hermenigildo Ramirez, opined the lower court, were constructively dismissed by
non-readmission allegedly because they not only prevented Ramon Garcia,
assistant corporate secretary, and Vicente Abella, chief of the personnel records
section of the Companies, from entering the Companies' premises on May 21,
1958, but they also caused bruises and abrasions on Garcia's chest and
forehead — acts considered inimical to the interest of the respondents. The
Unions, upon the other hand, insist that there is complete lack of evidence that
Ner took part in pushing Garcia; that it was Garcia who elbowed his way through
the picket lines and therefore Ner shouted "Close up," which the picketers did;
and that Garcia tossed Paulino Bugay's placard and a fight ensued between
them in which both suffered injuries. But despite these conflicting versions of
what actually happened on May 21, 1958, there are grounds to believe that the
picketers are not responsible for what happened. The picketing on May 21,
lâw phî1.ñèt

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

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

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

Fist-fighting between union and non-union employees in the midst of a strike is


no bar to reinstatement. (Teller, Labor Disputes and Collective Bargaining, Vol. II,
p. 855 citing Stackpole Carbon, Co. 6 NLRB 171, enforced 105 F2d 167.)

Furthermore, assuming that the acts committed by the strikers were


transgressions of law, they amount only to mere ordinary misdemeanors and are
not a bar to reinstatement.

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

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

[W]here the misconduct, whether in reinstating persons equally guilty


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

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

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


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

... "Nothing is more calculated to interfere with, restrain and coerce


employees in the exercise of their right to self-organization than such
activity even where no discharges result. The information obtained
by means of espionage is in valuable to the employer and can be
used in a variety of cases to break a union." The unfair labor practice
is committed whether the espionage is carried on by a professional
labor spy or detective, by officials or supervisory employees of the
employer, or by fellow employees acting at the request or direction
of the employer, or an ex-employee..." (Teller, Labor Disputes and
Collective Bargaining, Vol. II, pp. 765-766, and cases cited.) .

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

[W]here the strike was induced and provoked by improper conduct


on the part of an employer amounting to an 'unfair labor practice,'
the strikers are entitled to reinstatement with back pay. (Rothenberg
on Labor Relations, p. 418.)

[A]n employee who has been dismissed in violation of the provisions


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

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

[W]here the employers' "unfair labor practice" caused or contributed


to the strike or where the 'lock-out' by the employer constitutes an
"unfair labor practice," the employer cannot successfully urge as a
defense that the striking or lock-out employees position has been
filled by replacement. Under such circumstances, if no job
sufficiently and satisfactorily comparable to that previously held by
the aggrieved employee can be found, the employer must discharge
the replacement employee, if necessary, to restore the striking or
locked-out worker to his old or comparable position ... If the
employer's improper conduct was an initial cause of the strike, all the
strikers are entitled to reinstatement and the dismissal of
replacement employees wherever necessary; ... . (Id., p. 422 and
cases cited.)

A corollary issue to which we now address ourselves is, from what date should
the backpay payable to the unionists be computed? It is now a settled doctrine
that strikers who are entitled to reinstatement are not entitled to back pay during
the period of the strike, even though it is caused by an unfair labor practice.
However, if they offer to return to work under the same conditions just before the
strike, the refusal to re-employ or the imposition of conditions amounting to unfair
labor practice is a violation of section 4(a) (4) of the Industrial Peace Act and the
employer is liable for backpay from the date of the offer (Cromwell Commercial
Employees and Laborers Union vs. Court of Industrial Relations, L-19778,
Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion for
reconsideration, 13 SCRA 258; see also Mathews, Labor Relations and the Law,
p. 730 and the cited cases). We have likewise ruled that discriminatorily
dismissed employees must receive backpay from the date of the act of
discrimination, that is, from the date of their discharge (Cromwell Commercial
Employees and Laborers Union vs. Court of Industrial Relations, supra).

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

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

... While Republic Act No. 1052 authorizes a commercial


establishment to terminate the employment of its employee by
serving notice on him one month in advance, or, in the absence
thereof, by paying him one month compensation from the date of the
termination of his employment, such Act does not give to the
employer a blanket authority to terminate the employment regardless
of the cause or purpose behind such termination. Certainly, it cannot
be made use of as a cloak to circumvent a final order of the court or
a scheme to trample upon the right of an employee who has been
the victim of an unfair labor practice. (Yu Ki Lam, et al. v. Nena
Micaller, et al., 99 Phil. 904 [1956].)

Finally, we do not share the respondents' view that the findings of fact of the
Court of Industrial Relations are supported by substantial and credible proof. This
Court is not therefore precluded from digging deeper into the factual milieu of the
case (Union of Philippine Education Employees v. Philippine Education
Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v. Philippine-Land-Air-Sea
Labor Union, 11 SCRA 134 [1964]).

V. The petitioners (15 of them) ask this Court to cite for contempt the respondent
Presiding Judge Arsenio Martinez of the Court of Industrial Relations and the
counsels for the private respondents, on the ground that the former wrote the
following in his decision subject of the instant petition for certiorari, while the
latter quoted the same on pages 90-91 of the respondents' brief: .

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

In a proceeding for unfair labor practice, involving a


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

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

Differently as regard the dismissal of Orlando Aquino and Carmelito


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

In the herein case, it appears to us that for an employee to publish


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

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

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

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

Happily for the respondent Judge and the respondents' counsels, there was no
substantial change in the thrust of this Court's particular ruling which they cited. It
is our view, nonetheless, that for their mistake, they should be, as they are
hereby, admonished to be more careful when citing jurisprudence in the future.
ACCORDINGLY, the decision of the Court of Industrial Relations dated August
17, 1965 is reversed and set aside, and another is entered, ordering the
respondents to reinstate the dismissed members of the petitioning Unions to their
former or comparatively similar positions, with backwages from June 2, 1958 up
to the dates of their actual reinstatements. Costs against the respondents.
G.R. No. L-20303 September 27, 1967

REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,


vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN
JARA, FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S.
MENDIOLA, TEODORO DE LA CRUZ, NARCISO MACARAEG and MAURO A.
ROVILLOS, respondents.

Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.


G. E. Fajardo for respondents.

CASTRO, J.:

The vital issue in this case is whether the dismissal of the eight (8) respondent
employees by the petitioner Republic Bank (hereinafter referred to as the Bank)
constituted an unfair labor practice within the meaning and intendment of the
Industrial Peace Act (Republic Act 875). The Court of Industrial Relations (CIR)
found it did and its decision is now on appeal before us. The Bank maintains that
the discharge was for cause.

The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin
Jara, Florencio Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la
Cruz, Narciso Macaraeg and Mauro A. Rovillos. On July 12, 1958 it discharged
Jola and, a few days after (July 18, 1958), the rest of respondents, for having
written and published "a patently libelous letter . . . tending to cause the dishonor,
discredit or contempt not only of officers and employees of this bank, but also of
your employer, the bank itself."

The letter referred to was a letter-charge which the respondents had written to
the bank president, demanding his resignation on the grounds of immorality,
nepotism in the appointment and favoritism as well as discrimination in the
promotion of bank employees. The letter, dated July 9, 1958, is hereunder
reproduced in full:

Mr. Ramon Racelis


President, Republic Savings Bank
Manila

"Dear Mr. President:


We, the undersigned, on behalf of all our members and
employees of the Republic Savings Bank, who have in our
hearts only the most honest and sincere motive to conserve
and protect the interest of the institution and its 200,000
depositors, do hereby, demand the much needed resignation
of His Excellency, Mr. Ramon Racelis as President and
Member of the Board of Directors of the Bank.

Mr. President, you have already, in so many occasions,


placed the Bank on the verge of danger, that now we deem it
right and justifiable for you to leave this Bank and let other
more capable presidents continue the work you have not well
accomplished.

In the above instance, we are presenting charges which in our


humble contention properly justifies incapacity on your part to
continue and assume the position as top executive of the huge
institution:

(1) That you Mr. President, have tolerated and practiced


immorality in this Bank. We have been expecting you to
do something about this malpractice which is very
disgraceful and affects the morale of the hundreds of
your employees. But so far, Mr. President, you have just
let this thing passed through. As a matter of fact, you
have even promoted these women like Misses Pacita
Mato and Edita Castro. These women are of
questionable characters, Mr. President, and should
have had no place in the Bank as managers or even as
mere employees. We know Mr. President, because it is
an open secret in the Bank, that you have illicit relations
with one of them — Miss Edita Castro. As top officer
and as father of the employees of the Bank, you have
shown this bad example to your employees. Mr.
President, we are really ashamed of you.

(2) That you have allowed the practice of nepotism in


this Bank. You have employed relatives of yours like
Honorio Ravida; Bienvenido Ravida; Antonio Racelis;
Jesus Antonio; and Argentina Racelis. Not only that Mr.
President. You have also given those nieces and
nephews of yours good positions at the expense of the
more capable employees. Mr. President, if we have to
mention all of them, one page will not be enough.

(3) With regards to promotion, you have given more


preferences to your close relatives. When the Bank
advocated the sending of pensionados to States, you
have only limited your choice among your nieces,
nephews, and querida, namely, Miss Argentina Racelis,
Mr. Jesus Antonio, Miss Edita Castro, and her brother-
in-law, Mr. Pedro Garcia, Jr. In doing this, Mr. President,
you have only lowered the reputation and standing of
the Republic Savings Bank. There is really no sense in
sending high school and B.S.E. graduates to States to
study advanced banking. Because of this silly decision,
it took one pensionado six months and cost the Bank a
total of P10,000.00 just to study Christmas savings.
That subject is very simple; one need not go to States to
study savings; that you know full well, Mr. President.
The reason why you sent Miss Castro to States was
because you were also there. Are we not right?

(4) That you Mr. President, tolerated and still tolerating


grave dishonesty in this Bank as evidenced by the
following irregularities and anomalies;

(a) In one of our branches, around P200,000.00


was mulcted and embezzled by a certain Maximo
Donado by doctoring the ledgers and records of
that particular office. To the present, the amount
is still increasing and some more are being dug
up from the records everyday ever since its
discovery in February 1957. In this case you
dismissed Mr. M. Donado, immediately. But this
was all that you did. If you have to go back to the
history of the case, you will find out that your
beloved nieces and nephews are also involved
having been managers of that particular office.
Another nephew, the Vice President-Operations,
then Vice President, Personnel, was also involved
for valid reasons that he did not even shift this
particular employee to other branches or
departments since the beginning when it has
been the policy of the Bank to reshuffle its
personnel. If you want to know why your good
nephew did not transfer this employee, we will tell
you. "Your good nephew has eaten too many
baskets of delicious alimango." Mr. President, if
there is someone to be blamed in this particular
case, it is your good nephews and nieces for their
gross negligence.

(b) Aside from the one mentioned above, we have


also Mr. Rodolfo Francisco, who in April 1955,
maliciously withdraw (sic) P970.00 in two
withdrawal slips from the account of one
depositor in one of our provincial offices, inserting
his name as co-depositor in the savings account
ledger.

(c) In January 1958, Mr. Jose de los Santos


expended and approved representation expense
in the amount of P300.00 in one of our provincial
offices.

(d) Mr. Federico M. Dabu, the ex-cashier and now


Personnel Manager, incurred a shortage in the
amount of P1,240.00 in the course of the audit on
August 3, 1954.

(e) Mr. Jose S. Guevara, Vice-President on


Personnel have (sic) been accepting bribe
moneys. One of these amounts to P4,000.00
which was delivered by a messenger sometime
during the last quarter of 1957.

Mr. President, the anomalies are only a partial list of the


irregularities which so far you have not acted upon. This type
of people should have been fired out from the Bank; yet on the
contrary, you promoted them to higher and responsible
positions, thus, resulting in the demoralization of the more
capable employees.

Mr. President, we hope that you have still a little sense of


decency and propriety left. So, for goodsake and for the
welfare of the Bank, DO RESIGN NOW as President and as
Member of the Board of Directors of the Republic Savings
Bank.

Very respectfully yours,

(Sgd.) Rosendo T. Resuello


President, RSB Supervisors' Union (FFW),

(Sgd.) Benjamin Jara


Vice-President RSB Supervisors' Union (FFW)

(Sgd.) Florencio Allasas


Treasurer, RSB Supervisors' Union (FFW)

(Sdg) Domingo B. Jola


Chairman, Executive Committee, RSB Employees'
Union (FFW)

(Sgd.) Diosdado S. Mendiola


Vice-President, RSB Employees Union (FFW)

(Sgd.) Teodoro de la Cruz


Member, Executive Committee, RSB Employees'
Union (FFW)

(Sgd.) Angelino Quiambao


President, RSB Security Guard Union (FFW)

(Sgd.) Narciso Macaraeg


Vice-President, RSB Security Guard Union (FFW)

(Sgd.) Alfredo Bautista


Treasurer, RSB Security Guard Union (FFW)

(Sgd.) Pacifico A. Argao


PRO, RSB Employees' Union (FFW)

(Sgd.) Toribio B. Garcia


Secretary, RSB Security Guard Union (FFW)

(Sgd.) Mauro A. Rovillos


Member, Executive Committee, RSB Supervisors'
Union (FFW)
Copies of this letter were admittedly given to the chairman of the board of
directors of the Bank, and the Governor of the Central Bank.

At the instance of the respondents, prosecutor A. Tirona filed a complaint in the


CIR on September 15, 1958, alleging that the Bank's conduct violated section
4(a) (5) of the Industrial Peace Act which makes it an unfair labor practice for an
employer "to dismiss, discharge or otherwise prejudice or discriminate against an
employee for having filed charges or for having given or being about to give
testimony under this Act."

The Bank moved for the dismissal of the complaint, contending that respondents
were discharged not for union activities but for having written and published a
libelous letter against the bank president. The court denied the motion on the
basis of its decision in another case1 in which it ruled that section 4(a) (5) applies
to cases in which an employee is dismissed or discriminated against for having
filed "any charges against his employer." Whereupon the case was heard.

In 1960, however, this Court overruled the decision of the CIR in the Royal
Interocean case and held that "the charge, the filing of which is the cause of the
dismissal of the employee, must be related to his right to self-organization in
order to give rise to unfair labor practice on the part of the employer," because
"under subsection 5 of section 4(a), the employee's (1) having filed charges or
(2) having given testimony or (3) being about to give testimony, are modified by
'under this Act' appearing after the last item."2The Bank therefore renewed its
motion to dismiss, but the court held the motion in abeyance and proceeded with
the hearing.

On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair
labor practice and ordering it to reinstate the respondents, with full back wages
and without loss of seniority and other privileges. This decision was affirmed by
the court en banc on August 9, 1962.

Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter
Paul v. CIR,4 the Bank argues that the court should have dismissed the complaint
because the discharge of the respondents had nothing to do with their union
activities as the latter in fact admitted at the hearing that the writing of the letter-
charge was not a "union action" but merely their "individual" act.

It will avail the Bank none to gloat over this admission of the respondents.
Assuming that the latter acted in their individual capacities when they wrote the
letter-charge they were nonetheless protected for they were engaged in
concerted activity, in the exercise of their right of self-organization that includes
concerted activity for mutual aid and protection,5 interference with which
constitutes an unfair labor practice under section 4(a)(1). This is the view of
some members of this Court. For, as has been aptly stated, the joining in
protests or demands, even by a small group of employees, if in furtherance of
their interests as such, is a concerted activity protected by the Industrial Peace
Act. It is not necessary that union activity be involved or that collective bargaining
be contemplated.6

Indeed, when the respondents complained against nepotism, favoritism and


other management practices, they were acting within an area marked out by the
Act as a proper sphere of collective bargaining. Even the reference to immorality
was not irrelevant as it was made to support the respondents' other charge that
the bank president had failed to provide wholesome working conditions, let alone
a good moral example, for the employees by practicing discrimination and
favoritism in the appointment and promotion of certain employees on the basis of
illicit relations or blood relationship with them.

In many respects, the case at bar is similar to National Labor Relations Board v.
Phoenix Mutual Life Insurance Co.7 The issue in that case was whether an
insurance company was guilty of an unfair labor practice in interfering with this
right of concerted activity by discharging two agents employed in a branch office.
The cashier of that office had resigned. The ten agents employed there held a
meeting and agreed to join in a letter to the home office objecting to the transfer
to their branch office of a cashier from another branch office to fill the position.
They discussed also the question whether to recommend the promotion of the
assistant cashier of their office as the proper alternative. They then chose one of
their number to compose a draft of the letter and submit it to them for further
discussion, approval and signature. The agent selected to write the letter and
another were discharged for their activities in this respect as being, so their
notices stated, completely unpleasant and far beyond the periphery of their
responsibility. In holding the company liable for unfair labor practice, the Circuit
Court of Appeals said:

A proper construction is that the employees shall have the right to engage
in concerted activities for their mutual aid or protection even though no
union activity be involved, for collective bargaining be contemplated. Here
Davis and Johnson and other salesmen were properly concerned with the
identity and capability of the new cashier. Conceding they had no authority
to appoint a new cashier or even recommend anyone for the appointment,
they had a legitimate interest in acting concertedly in making known their
views to management without being discharged for that interest. The
moderate conduct of Davis and Johnson and the others bore a reasonable
relation to conditions of their employment. It was therefore an unfair labor
practice for respondent to interfere with the exercise of the right of Davis
and Johnson and the other salesmen to engage in concerted activities for
their mutual aid or protection.

Other members of this Court agreed with the CIR that the Bank's conduct
violated section 4(a) (5) which makes it an unfair labor practice for an employer
to dismiss an employee for having filed charges under the Act.

Some other members of this Court believe, without necessarily expressing


approval of the way the respondents expressed their grievances, that what the
Bank should have done was to refer the letter-charge to the grievance
committee. This was its duty, failing which it committed an unfair labor practice
under section 4(a) (6). For collective bargaining does not end with the execution
of an agreement. It is a continuous process. The duty to bargain imposes on the
parties during the term of their agreement the mutual obligation "to meet and
confer promptly and expeditiously and in good faith . . . for the purpose of
adjusting any grievances or question arising under such agreement"8 and a
violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair labor
practice.9 As Professors Cox and Dunlop point out:

Collective bargaining . . . normally takes the form of negotiations when


major conditions of employment to be written into an agreement are under
consideration and of grievance committee meetings and arbitration when
questions arising in the administration of an agreement are at stake.10

Instead of stifling criticism, the Bank should have allowed the respondents to air
their grievances. Good faith bargaining required of the Bank an open mind and a
sincere desire to negotiate over grievances.11 The grievance committee, created
in the collective bargaining agreements, would have been an appropriate forum
for such negotiation. Indeed, the grievance procedure is a part of the continuous
process of collective bargaining.12 It is intended to promote, as it were, a friendly
dialogue between labor and management as a means of maintaining industrial
peace.

The Bank defends its action by invoking its right to discipline for what it calls the
respondents' libel in giving undue publicity to their letter-charge. To be sure, the
right of self-organization of employees is not unlimited,13 as the right of an
employer to discharge for cause14 is undenied. The Industrial Peace Act does not
touch the normal exercise of the right of an employer to select his employees or
to discharge them. It is directed solely against the abuse of that right by
interfering with the countervailing right of self-organization.15 But the difficulty
arises in determining whether in fact the discharges are made because of such a
separable cause or because of some other activities engaged in by employees
for the purpose of collective bargaining.16
It is for the CIR, in the first instance, to make the determination, "to weigh the
employer's expressed motive in determining the effect on the employees of
management's otherwise equivocal act."17 For the Act does not undertake the
impossible task of specifying in precise and unmistakable language each incident
which constitutes an unfair labor practice. Rather, it leaves to the court the work
of applying the Act's general prohibitory language in the light of infinite
combinations of events which may be charged as violative of its terms. 18 As the
Circuit Court of Appeals puts it:

Determining the legality of a dismissal necessarily involves an appraisal of


the employer's motives. In these cases motivations are seldom expressly
avowed and avowals are not always candid. There thus must be a
measure of reliance on the administrative agency knowledgeable in labor-
management relations and on the Trial Examiner who receives the
evidence firsthand and is therefore in a unique position to determine the
credibility of the witnesses. Where Examiner and Board are in agreement
there is an increased presumption in favor of their resolution of the issue.19

What we have just essayed underscores at once the difference between Royal
Interocean and Lakas ng Pagkakaisa on the one hand and this case on the
other. In Royal Interocean, the employee's letter to the home office, for writing
which she was dismissed, complained of the local manager's "inconsiderate and
untactful attitude"20 — a grievance which, the court found, "had nothing to do with
or did not arise from her union activities." Nor did the court find evidence of
discriminatory discharge in Lakas ng Pagkakaisa as the letter, which the
employee wrote to the mother company in violation of the local company's rule,
denounced "wastage of company funds." In contrast, the express finding of the
court in this case was that the dismissal of the respondents was made on
account of the letter they had written, in which they demanded the resignation of
the bank president for a number of reasons touching labor-management relations
— reasons which not even the Bank's judgment that the respondents had
committed libel could excuse it for making summary discharges21 in disregard of
its duty to bargain collectively.

In final sum and substance, this Court is in unanimity that the Bank's conduct,
identified as an interference with the employees' right of self-organization, or as a
retaliatory action, and/or as a refusal to bargain collectively, constituted an unfair
labor practice within the meaning and intendment of section 4(a) of the Industrial
Peace Act.

ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9,


1962 of the Court of Industrial Relations are affirmed, at petitioner's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and
Angeles, JJ., concur.
Bengzon, J.P., J., took no part.

Separate Opinions

FERNANDO, J., concurring:

The opinion of the Court in this highly significant unfair labor practice case, one
of first impression, easily commends itself for approval. The relevant facts are set
forth in all fullness and with due care. The position of the Court united as it is on
an unfair labor practice having been committed, but not quite fully agreed as to
which particular subsection of the legal provision was violated, is delineated with
precision. With the explicit acknowledgement there made that some members of
the Court are of the belief that what was done by the Republic Bank here
amounted to "interference" and with the writer being of the persuasion that it
could be categorized in line with the statute as "interference, restraint or
coercion," a few words as to why this view is entertained may not be
inappropriate.

No one can doubt that we are in the process of evolving an indigenous labor
jurisprudence. Notwithstanding the clearly American background of the Industrial
Peace Act, based as it is mainly on the Wagner Act,1 labor relations in the
Philippines with their peculiar problems and the ingenuity of Filipino lawyers have
resulted in a growing body of decisions notable for their suitability to local
condition and their distinctly local flavor. This is as it should be.

The present case affords one such instance. The wealth of adjudication by both
judicial and administrative agencies in the United States notwithstanding the
diligent and earnest search for a ruling based on a similar fact-situation yielded
no case precisely in point. What does it signify? At the very least, it may indicate
that while the problem posed could have arisen there, this particular response of
labor was quite unique. On the assumption which I have here hypothetically
made that there was indeed a valid cause for grievance, a more diplomatic
approach could have been attempted. Or at the very least the procedure
indicated for the adjustment of a grievance could have been followed. That was
not done. What respondents did was to issue an ultimatum.
Collective bargaining whether in its formative stage preparatory to a labor
contract or in the adjustment of a labor problem in accordance with the procedure
set forth in an existing agreement presupposes the give-and-take of discussion.
No party adopts, at least in its initial stages, a hard-line position, from which there
can be no retreat. That was not the situation here. Respondents as labor leaders
appeared adamantine in their attitude to terminate the services of the then
president of the Republic Savings Bank. Nor did they mince words in describing
his alleged misdeeds. They were quite certain that he had offended most
grievously. They wanted him out. There was no room for discussion.

That for me is not bargaining as traditionally and commonly understood. It is for


that reason that I find it difficult to agree fully with the view that their dismissal
could be construed as a refusal to bargain collectively. Moreover, they did not as
adverted to in the opinion of the Court, follow the procedure set forth for adjusting
grievances. Nor considering the explicit language of the Industrial Peace Act may
such dismissal fall within the prohibition against dismissing employees for having
filed charges or about to give testimony "under the Act." As a matter of fact, if the
letter were indeed libelous, their dismissal would not have been unjustified. There
was an admission as noted in the opinion "that the writing of the letter charged
was not a 'union' action but merely their 'individual' act."

Nonetheless, concurrence with the decision arrived at by the Court is called for in
view of their mass dismissal. Under the circumstances, the supervisors union,
the Republic Savings Bank employees union, the Republic Savings Bank
security guards union, and the Republic Savings Bank supervisors union were
left leaderless. For collective bargaining to be meaningful, there must be two
parties, one representing management and the other representing the union. Nor
could management select who would represent the latter or with whom to deal,
otherwise in effect there would be only one party. Obviously there would then be
no bargaining. 1aw phîl.nèt

It is my view therefore that the dismissal amounted to "interference, restraint or


coercion" as prohibited in the Industrial Peace Act. To repeat, this Section 4(a),
with the exception of subsection (2), was taken from the Wagner Act. There is as
stated by Bufford in his treatise for the Wagner Act "an overlap" as this particular
subsection deals "with additional labor practice besides containing incidental
provisions concerning related matters."2 As noted further by such commentator:
"As expressed by the Senate Committee: 'The four succeeding unfair labor
practices are designed not to impose limitations or restrictions upon the general
guarantees of the first, but rather to spell out with particularity some of the
practices that have been most prevalent and most troublesome.'"
Teller is in agreement. This subsection according to him "involves the widest
varieties of activities." The other unfair labor practices condemned fall within its
terms. Thus: "That the Board has taken this position is evidenced both by the
Board decisions and by express statement to such effect contained in its first
annual report, the language of which in this connection is as follows: 'At the
outset it should be explained that the Board has held that a violation by an
employer of any of the other four subdivisions of Section 8 of the act is, by the
same token, a violation of Section 8(1). Such a conclusion is too obvious to
require explanation. In fact, almost all of the cases in which the Board has found
a violation of Section 8(1) are cases in which the principal offense charged fell
within some other subdivision of Section 8. The explanation for this is,
apparently, that even though an employer may be engaging in anti-union
activities in violation of Section 8(1), unions do not seek protection of the act until
such activities take such drastic form as bring them within the provisions of some
other subdivisions, as, for example, the discriminatory discharge of union
members (which comes within subdivision [3]), the domination of or interference
with the formation or administration of a labor organization (which comes within
subdivision [2]). or a refusal to bargain collectively (which comes within
subdivision [5]."3

In the Philippines as in the United States then, the first subsection on


"interference, restraint or coercion" covering as it does such a broad range of
undesirable practices on the part of employers could easily be seized upon,
where a borderline case, inimical to the right of self-organization or to collective
bargaining, presents itself as justifying a finding of an unfair labor practice.
G.R. No. 171664 March 6, 2013

BANKARD, INC., Petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO
BUENCONSEJO,BANKARD EMPLOYEES UNION-AWATU, Respondents.

DECISION

MENDOZA, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks
to review, reverse and set aside the October 20, 2005 Decision1 and the
February 21, 2006 Resolution2 of the Court of Appeals {CA), in CA-G.R. SP No.
68303, which affirmed the May 31, 2001 Resolution3 and the September 24,
2001 Order4 of the National Labor Relations Commission (NLRC) in Certified
Cases No. 000-185-00 and 000-191-00.

The Facts

On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed


before the National Conciliation and Mediation Board (NCMB) its first Notice of
Strike (NOS), docketed as NS-06-225-00,5 alleging commission of unfair labor
practices by petitioner Bankard, Inc. (Bankard), to wit: 1) job contractualization;
2) outsourcing/contracting-out jobs; 3) manpower rationalizing program; and 4)
discrimination.

On July 3, 2000, the initial conference was held where the Union clarified the
issues cited in the NOS. On July 5, 2000, the Union held its strike vote balloting
where the members voted in favor of a strike. On July 10, 2000, Bankard asked
the Office of the Secretary of Labor to assume jurisdiction over the labor dispute
or to certify the same to the NLRC for compulsory arbitration. On July 12, 2000,
Secretary Bienvenido Laguesma (Labor Secretary) of the Department of Labor
and Employment (DOLE) issued the order certifying the labor dispute to the
NLRC.6

On July 25, 2000, the Union declared a CBA bargaining deadlock. The following
day, the Union filed its second NOS, docketed as NS-07-265-00,7 alleging
bargaining in bad faith on the part of Bankard. Bankard then again asked the
Office of the Secretary of Labor to assume jurisdiction, which was granted. Thus,
the Order, dated August 9, 2000, certifying the labor dispute to the NLRC, was
issued.8
The Union, despite the two certification orders issued by the Labor Secretary
enjoining them from conducting a strike or lockout and from committing any act
that would exacerbate the situation, went on strike on August 11, 2000.9

During the conciliatory conferences, the parties failed to amicably settle their
dispute. Consequently, they were asked to submit their respective position
papers. Both agreed to the following issues:

1. Whether job contractualization or outsourcing or contracting-out is an


unfair labor practice on the part of the management.

2. Whether there was bad faith on the part of the management when it
bargained with the Union.10

As regards the first issue, it was Bankard’s position that job contractualization or
outsourcing or contracting-out of jobs was a legitimate exercise of management
prerogative and did not constitute unfair labor practice. It had to implement new
policies and programs, one of which was the Manpower Rationalization Program
(MRP) in December 1999, to further enhance its efficiency and be more
competitive in the credit card industry. The MRP was an invitation to the
employees to tender their voluntary resignation, with entitlement to separation
pay equivalent to at least two (2) months salary for every year of service. Those
eligible under the company’s retirement plan would still receive additional pay.
Thereafter, majority of the Phone Center and the Service Fulfilment Division
availed of the MRP. Thus, Bankard contracted an independent agency to handle
its call center needs.11

As to the second issue, Bankard denied that there was bad faith on its part in
bargaining with the Union. It came up with counter-offers to the Union’s
proposals, but the latter’s demands were far beyond what management could
give. Nonetheless, Bankard continued to negotiate in good faith until the
Memorandum of Agreement (MOA) re-negotiating the provisions of the 1997-
2002, Collective Bargaining Agreement (CBA) was entered into between
Bankard and the Union. The CBA was overwhelmingly ratified by the Union
members. For said reason, Bankard contended that the issue of bad faith in
bargaining had become moot and academic.12

On the other hand, the Union alleged that contractualization started in Bankard in
1995 in the Records Communications Management Division, particularly in the
mailing unit, which was composed of two (2) employees and fourteen (14)
messengers. They were hired as contractual workers to perform the functions of
the regular employees who had earlier resigned and availed of the
MRP.13 According to the Union, there were other departments in Bankard utilizing
messengers to perform work load considered for regular employees, like the
Marketing Department, Voice Authorizational Department, Computer Services
Department, and Records Retention Department. The Union contended that the
number of regular employees had been reduced substantially through the
management scheme of freeze-hiring policy on positions vacated by regular
employees on the basis of cost-cutting measures and the introduction of a more
drastic formula of streamlining its regular employees through the MRP.14

With regard to the second issue, the Union averred that Bankard’s proposals
were way below their demands, showing that the management had no intention
of reaching an agreement. It was a scheme calculated to force the Union to
declare a bargaining deadlock.15

On May 31, 2001, the NLRC issued its Resolution16 declaring that the
management committed acts considered as unfair labor practice (ULP) under
Article 248(c) of the Labor Code. It ruled that:

The act of management of reducing its number of employees thru application of


the Manpower Rationalization Program and subsequently contracting the same
to other contractual employees defeats the purpose or reason for streamlining
the employees. The ultimate effect is to reduce the number of union members
and increasing the number of contractual employees who could never be
members of the union for lack of qualification. Consequently, the union was
effectively restrained in their movements as a union on their rights to self-
organization. Management had successfully limited and prevented the growth of
the Union and the acts are clear violation of the provisions of the Labor Code and
could be considered as Unfair Labor Practice in the light of the provisions of
Article 248 paragraph (c) of the Labor Code.17

The NLRC, however, agreed with Bankard that the issue of bargaining in bad
faith was rendered moot and academic by virtue of the finalization and signing of
the CBA between the management and the Union.18

Unsatisfied, both parties filed their respective motions for partial


reconsideration. Bankard assailed the NLRC's finding of acts of ULP on its part.
1âw phi 1

The Union, on the other hand, assailed the NLRC ruling on the issue of bad faith
bargaining.

On September 24, 2001, the NLRC issued the Order19 denying both parties'
motions for lack of merit.
On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with
the CA arguing that the NLRC gravely abused its discretion amounting to lack or
excess of jurisdiction when:

1. It issued the Resolution, dated May 31, 2001, particularly in finding that
Bankard committed acts of unfair labor practice; and,

2. It issued the Order dated September 24, 2001 denying Bankard's partial
motion for reconsideration.20

The Union filed two (2) comments, dated January 22, 2002, through its NCR
Director, Cornelio Santiago, and another, dated February 6, 2002, through its
President, Paulo Buenconsejo, both praying for the dismissal of the petition and
insisting that Bankard's resort to contractualization or outsourcing of contracts
constituted ULP. It further alleged that Bankard committed ULP when it
conducted CBA negotiations in bad faith with the Union.

Ruling of the Court of Appeals

The CA dismissed the petition, finding that the NLRC ruling was supported by
substantial evidence.

The CA agreed with Bankard that job contracting, outsourcing and/or contracting
out of jobs did not per se constitute ULP, especially when made in good faith and
for valid purposes. Despite Bankard's claim of good faith in resorting to job
contractualization for purposes of cost-efficient operations and its non-
interference with the employees' right to self-organization, the CA agreed with the
NLRC that Bankard's acts impaired the employees right to self-organization and
should be struck down as illegal and invalid pursuant to Article 248(c)21 of the
Labor Code. The CA thus, ruled in this wise:

We cannot agree more with public respondent. Incontrovertible is the fact that
petitioner's acts, particularly its promotion of the program enticing employees to
tender their voluntary resignation in exchange for financial packages, resulted to
a union dramatically reduced in numbers. Coupled with the management's policy
of "freeze-hiring" of regular employees and contracting out jobs to contractual
workers, petitioner was able to limit and prevent the growth of the Union, an act
that clearly constituted unfair labor practice.22

In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the
September 24, 2001 Order of the NLRC.
Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently
denied it for being a mere repetition of the grounds previously raised. Hence, the
present petition bringing up this lone issue:

THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER


BANKARD, INC. COMMITTED ACTS OF UNFAIR LABOR PRACTICE WHEN IT
DISMISSED THE PETITION FOR CERTIORARI AND DENIED THE MOTION
FOR RECONSIDERATION FILED BY PETITIONER.23

Ruling of the Court

The Court finds merit in the petition.

Well-settled is the rule that "factual findings of labor officials, who are deemed to
have acquired expertise in matters within their jurisdiction, are generally
accorded not only respect but even finality by the courts when supported by
substantial evidence."24 Furthermore, the factual findings of the NLRC, when
affirmed by the CA, are generally conclusive on this Court.25 When the petitioner,
however, persuasively alleges that there is insufficient or insubstantial evidence
on record to support the factual findings of the tribunal or court a quo, then the
Court, exceptionally, may review factual issues raised in a petition under Rule 45
in the exercise of its discretionary appellate jurisdiction.26

This case involves determination of whether or not Bankard committed acts


considered as ULP. The underlying concept of ULP is found in Article 247 of the
Labor Code, to wit:

Article 247. Concept of unfair labor practice and procedure for prosecution
thereof. -- Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate interests of both
labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-
management relations. x x x

The Court has ruled that the prohibited acts considered as ULP relate to the
workers’ right to self-organization and to the observance of a CBA. It refers to
"acts that violate the workers’ right to organize."27 Without that element, the acts,
even if unfair, are not ULP.28 Thus, an employer may only be held liable for unfair
labor practice if it can be shown that his acts affect in whatever manner the right
of his employees to self-organize.29
In this case, the Union claims that Bankard, in implementing its MRP which
eventually reduced the number of employees, clearly violated Article 248(c) of
the Labor Code which states that:

Art. 248. Unfair labor practices of employers. – It shall be unlawful for an


employer to commit any of the following unfair labor practice:

xxxx

(c) To contract out services or functions being performed by union members


when such will interfere with, restrain or coerce employees in the exercise of their
rights to self-organization;

xxxx

Because of said reduction, Bankard subsequently contracted out the jobs held by
former employees to other contractual employees. The Union specifically alleges
that there were other departments in Bankard, Inc. which utilized messengers to
perform work load considered for regular employees like the Marketing
Department, Voice Authorizational Department, Computer Services Department,
and Records Retention Department.30 As a result, the number of union members
was reduced, and the number of contractual employees, who were never eligible
for union membership for lack of qualification, increased.

The general principle is that the one who makes an allegation has the burden of
proving it. While there are exceptions to this general rule, in ULP cases, the
1avv phi1

alleging party has the burden of proving the ULP;31 and in order to show that the
employer committed ULP under the Labor Code, substantial evidence is required
to support the claim.32 Such principle finds justification in the fact that ULP is
punishable with both civil and/or criminal sanctions.33

Aside from the bare allegations of the Union, nothing in the records strongly
proves that Bankard intended its program, the MRP, as a tool to drastically and
deliberately reduce union membership. Contrary to the findings and conclusions
of both the NLRC and the CA, there was no proof that the program was meant to
encourage the employees to disassociate themselves from the Union or to
restrain them from joining any union or organization. There was no showing that
it was intentionally implemented to stunt the growth of the Union or that Bankard
discriminated, or in any way singled out the union members who had availed of
the retirement package under the MRP. True, the program might have affected
the number of union membership because of the employees’ voluntary
resignation and availment of the package, but it does not necessarily follow that
Bankard indeed purposely sought such result. It must be recalled that the MRP
was implemented as a valid cost-cutting measure, well within the ambit of the so-
called management prerogatives. Bankard contracted an independent agency to
meet business exigencies. In the absence of any showing that Bankard was
motivated by ill will, bad faith or malice, or that it was aimed at interfering with its
employees’ right to self-organize, it cannot be said to have committed an act of
unfair labor practice.34

"Substantial evidence is more than a mere scintilla of evidence. It means such


relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds equally reasonable might conceivably opine
otherwise."35 Unfortunately, the Union, which had the burden of adducing
substantial evidence to support its allegations of ULP, failed to discharge such
burden.36

The employer’s right to conduct the affairs of its business, according to its own
discretion and judgment, is well-recognized.37 Management has a wide latitude to
conduct its own affairs in accordance with the necessities of its business.38 As the
Court once said:

The Court has always respected a company's exercise of its prerogative to


devise means to improve its operations. Thus, we have held that management is
free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, supervision and transfer of
employees, working methods, time, place and manner of work.

This is so because the law on unfair labor practices is not intended to deprive
employers of their fundamental right to prescribe and enforce such rules as they
honestly believe to be necessary to the proper, productive and profitable
operation of their business.39

Contracting out of services is an exercise of business judgment or management


prerogative. Absent any proof that management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an
employer.40Furthermore, bear in mind that ULP is punishable with both civil
and/or criminal sanctions.41 As such, the party so alleging must necessarily prove
it by substantial evidence. The Union, as earlier noted, failed to do this. Bankard
merely validly exercised its management prerogative. Not shown to have acted
maliciously or arbitrarily, no act of ULP can be imputed against it.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals


in CA-G.R. SP No. 68303, dated October 20, 2005, and its Resolution, dated
February 21, 2006, are REVERSED and SET ASIDE. Petitioner Bankard, Inc. is
hereby declared as not having committed any act constituting Unfair Labor
Practice under Article 248 of the Labor Code.
G.R. No. 170287 February 14, 2008

ALABANG COUNTRY CLUB, INC., petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION, ALABANG COUNTRY CLUB
INDEPENDENT EMPLOYEES UNION, CHRISTOPHER PIZARRO, MICHAEL
BRAZA, and NOLASCO CASTUERAS, respondents.

DECISION

VELASCO, JR., J.:

Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit corporation


with principal office at Country Club Drive, Ayala Alabang, Muntinlupa City.
Respondent Alabang Country Club Independent Employees Union (Union) is the
exclusive bargaining agent of the Club's rank-and-file employees. In April 1996,
respondents Christopher Pizarro, Michael Braza, and Nolasco Castueras were
elected Union President, Vice-President, and Treasurer, respectively.

On June 21, 1999, the Club and the Union entered into a Collective Bargaining
Agreement (CBA), which provided for a Union shop and maintenance of
membership shop.

The pertinent parts of the CBA included in Article II on Union Security read, as
follows:

ARTICLE II

UNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file


employees, who are members or subsequently become members of the
UNION shall maintain their membership in good standing as a condition for
their continued employment by the CLUB during the lifetime of this
Agreement or any extension thereof.

SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW


REGULAR RANK-AND-FILE EMPLOYEES

a) New regular rank-and-file employees of the Club shall join the UNION
within five (5) days from the date of their appointment as regular
employees as a condition for their continued employment during the
lifetime of this Agreement, otherwise, their failure to do so shall be a
ground for dismissal from the CLUB upon demand by the UNION.
b) The Club agrees to furnish the UNION the names of all new
probationary and regular employees covered by this Agreement not later
than three (3) days from the date of regular appointment showing the
positions and dates of hiring.

xxxx

SECTION 4. TERMINATION UPON UNION DEMAND. Upon written


demand of the UNION and after observing due process, the Club shall
dismiss a regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time of
regularization;

(b) Resignation from the UNION, except within the period allowed by
law;

(c) Conviction of a crime involving moral turpitude;

(d) Non-payment of UNION dues, fees, and assessments;

(e) Joining another UNION except within the period allowed by law;

(f) Malversation of union funds;

(g) Actively campaigning to discourage membership in the UNION;


and

(h) Inflicting harm or injury to any member or officer of the UNION.

It is understood that the UNION shall hold the CLUB free and harmless
[sic] from any liability or damage whatsoever which may be imposed upon
it by any competent judicial or quasi-judicial authority as a result of such
dismissal and the UNION shall reimburse the CLUB for any and all liability
or damage it may be adjudged.1 (Emphasis supplied.)

Subsequently, in July 2001, an election was held and a new set of officers was
elected. Soon thereafter, the new officers conducted an audit of the Union funds.
They discovered some irregularly recorded entries, unaccounted expenses and
disbursements, and uncollected loans from the Union funds. The Union notified
respondents Pizarro, Braza, and Castueras of the audit results and asked them
to explain the discrepancies in writing.2
Thereafter, on October 6, 2001, in a meeting called by the Union, respondents
Pizarro, Braza, and Castueras explained their side. Braza denied any
wrongdoing and instead asked that the investigation be addressed to Castueras,
who was the Union Treasurer at that time. With regard to his unpaid loans, Braza
claimed he had been paying through monthly salary deductions and said the
Union could continue to deduct from his salary until full payment of his loans,
provided he would be reimbursed should the result of the initial audit be proven
wrong by a licensed auditor. With regard to the Union expenses which were
without receipts, Braza explained that these were legitimate expenses for which
receipts were not issued, e.g. transportation fares, food purchases from small
eateries, and food and transportation allowances given to Union members with
pending complaints with the Department of Labor and Employment, the National
Labor Relations Commission (NLRC), and the fiscal's office. He explained that
though there were no receipts for these expenses, these were supported by
vouchers and itemized as expenses. Regarding his unpaid and unliquidated cash
advances amounting to almost PhP 20,000, Braza explained that these were not
actual cash advances but payments to a certain Ricardo Ricafrente who had
loaned PhP 200,000 to the Union.3

Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan and
cash advances. He claimed his salaries were regularly deducted to pay his loan
and he did not know why these remained unpaid in the records. Nonetheless, he
likewise agreed to continuous salary deductions until all his accountabilities were
paid.4

Castueras also denied any wrongdoing and claimed that the irregular entries in
the records were unintentional and were due to inadvertence because of his
voluminous work load. He offered that his unpaid personal loan of PhP 27,500
also be deducted from his salary until the loans were fully paid. Without admitting
any fault on his part, Castueras suggested that his salary be deducted until the
unaccounted difference between the loans and the amount collected amounting
to a total of PhP 22,000 is paid.5

Despite their explanations, respondents Pizarro, Braza, and Castueras were


expelled from the Union, and, on October 16, 2001, were furnished individual
letters of expulsion for malversation of Union funds.6 Attached to the letters were
copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63
Union members and officers, and a Board of Directors' Resolution7 expelling
them from the Union.

In a letter dated October 18, 2001, the Union, invoking the Security Clause of the
CBA, demanded that the Club dismiss respondents Pizarro, Braza, and
Castueras in view of their expulsion from the Union.8 The Club required the three
respondents to show cause in writing within 48 hours from notice why they
should not be dismissed. Pizarro and Castueras submitted their respective
written explanations on October 20, 2001, while Braza submitted his explanation
the following day.

During the last week of October 2001, the Club's general manager called
respondents Pizarro, Braza, and Castueras for an informal conference inquiring
about the charges against them. Said respondents gave their explanation and
asserted that the Union funds allegedly malversed by them were even over the
total amount collected during their tenure as Union officers-PhP 120,000 for
Braza, PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the
total collection from April 1996 to December 2001 of only PhP 102,000. They
claimed the charges are baseless. The general manager announced he would
conduct a formal investigation.

Nonetheless, after weighing the verbal and written explanations of the three
respondents, the Club concluded that said respondents failed to refute the
validity of their expulsion from the Union. Thus, it was constrained to terminate
the employment of said respondents. On December 26, 2001, said respondents
received their notices of termination from the Club.9

Respondents Pizarro, Braza, and Castueras challenged their dismissal from the
Club in an illegal dismissal complaint docketed as NLRC-NCR Case No. 30-01-
00130-02 filed with the NLRC, National Capital Region Arbitration Branch. In his
January 27, 2003 Decision,10 the Labor Arbiter ruled in favor of the Club, and
found that there was justifiable cause in terminating said respondents. He
dismissed the complaint for lack of merit.

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an


Appeal docketed as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision11 granting the appeal,
the fallo of which reads:

WHEREFORE, finding merit in the Appeal, judgment is hereby rendered


declaring the dismissal of the complainants illegal. x x x Alabang Country
Club, Inc. and Alabang Country Club Independent Union are hereby
ordered to reinstate complainants Christopher Pizarro, Nolasco Castueras
and Michael Braza to their former positions without loss of seniority rights
and other privileges with full backwages from the time they were dismissed
up to their actual reinstatement.

SO ORDERED.
The NLRC ruled that there was no justifiable cause for the termination of
respondents Pizarro, Braza, and Castueras. The commissioners relied heavily on
Section 2, Rule XVIII of the Rules Implementing Book V of the Labor Code. Sec.
2 provides:

SEC. 2. Actions arising from Article 241 of the Code. - Any action arising
from the administration or accounting of union funds shall be filed and
disposed of as an intra-union dispute in accordance with Rule XIV of this
Book.

In case of violation, the Regional or Bureau Director shall order the


responsible officer to render an accounting of funds before the general
membership and may, where circumstances warrant, mete the appropriate
penalty to the erring officer/s, including suspension or expulsion from the
union.12

According to the NLRC, said respondents' expulsion from the Union was illegal
since the DOLE had not yet made any definitive ruling on their liability regarding
the administration of the Union's funds.

The Club then filed a motion for reconsideration which the NLRC denied in its
June 20, 2004 Resolution.13

Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition
for Certiorari which was docketed as CA-G.R. SP No. 86171 with the Court of
Appeals (CA).

The CA Upheld the NLRC Ruling


that the Three Respondents were Deprived Due Process

On July 5, 2005, the appellate court rendered a Decision,14 denying the petition
and upholding the Decision of the NLRC. The CA's Decision focused mainly on
the Club's perceived failure to afford due process to the three respondents. It
found that said respondents were not given the opportunity to be heard in a
separate hearing as required by Sec. 2(b), Rule XXIII, Book V of the Omnibus
Rules Implementing the Labor Code, as follows:

SEC. 2. Standards of due process; requirements of notice.-In all cases


of termination of employment, the following standards of due process shall
be substantially observed:

For termination of employment based on just causes as defined in


Article 282 of the Code:
xxxx

(b) A hearing or conference during which the employee concerned, with


the assistance of counsel if the employee so desires, is given opportunity
to respond to the charge, present his evidence or rebut the evidence
presented against him.

The CA also said the dismissal of the three respondents was contrary to the
doctrine laid down in Malayang Samahan ng mga Manggagawa sa M. Greenfield
v. Ramos (Malayang Samahan), where this Court ruled that even on the
assumption that the union had valid grounds to expel the local union officers, due
process requires that the union officers be accorded a separate hearing by the
employer company.15

In a Resolution16 dated October 20, 2005, the CA denied the Club's motion for
reconsideration.

The Club now comes before this Court with these issues for our resolution,
summarized as follows:

1. Whether there was just cause to dismiss private respondents, and


whether they were afforded due process in accordance with the standards
provided for by the Labor Code and its Implementing Rules.

2. Whether or not the CA erred in not finding that the NLRC committed
grave abuse of discretion amounting to lack or excess of jurisdiction when
it ruled that respondents Pizarro, Braza, and Castueras were illegally
expelled from the Union.

3. Whether the case of Agabon vs. NLRC17 should be applied to this case.

4. Whether that in the absence of bad faith and malice on the part of the
Club, the Union is solely liable for the termination from employment of said
respondents.

The main issue is whether the three respondents were illegally dismissed and
whether they were afforded due process.

The Club avers that the dismissal of the three respondents was in accordance
with the Union security provisions in their CBA. The Club also claims that the
three respondents were afforded due process, since the Club conducted an
investigation separate and independent from that conducted by the Union.
Respondents Pizarro, Braza, and Castueras, on the other hand, contend that the
Club failed to conduct a separate hearing as prescribed by Sec. 2(b), Rule XXIII,
Book V of the implementing rules of the Code.

First, we resolve the legality of the three respondents' dismissal from the Club.

Valid Grounds for Termination

Under the Labor Code, an employee may be validly terminated on the following
grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3)
termination due to disease under Art. 284; and (4) termination by the employee
or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the


enforcement of the union security clause in the CBA. Here, Art. II of the CBA on
Union security contains the provisions on the Union shop and maintenance of
membership shop. There is union shop when all new regular employees are
required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees who
are union members as of the effective date of the agreement, or who thereafter
become members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit or
the agreement is terminated.18 Termination of employment by virtue of a union
security clause embodied in a CBA is recognized and accepted in our
jurisdiction.19 This practice strengthens the union and prevents disunity in the
bargaining unit within the duration of the CBA. By preventing member
disaffiliation with the threat of expulsion from the union and the consequent
termination of employment, the authorized bargaining representative gains more
numbers and strengthens its position as against other unions which may want to
claim majority representation.

In terminating the employment of an employee by enforcing the union security


clause, the employer needs only to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of
the union security provision in the CBA; and (3) there is sufficient evidence to
support the union's decision to expel the employee from the union. These
requisites constitute just cause for terminating an employee based on the CBA's
union security provision.

The language of Art. II of the CBA that the Union members must maintain their
membership in good standing as a condition sine qua non for their continued
employment with the Club is unequivocal. It is also clear that upon demand by
the Union and after due process, the Club shall terminate the employment of a
regular rank-and-file employee who may be found liable for a number of
offenses, one of which is malversation of Union funds.20

Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing
them of their termination:

On October 18, 2001, the Club received a letter from the Board of
Directors of the Alabang Country Club Independent Employees' Union
("Union") demanding your dismissal from service by reason of your alleged
commission of act of dishonesty, specifically malversation of union funds.
In support thereof, the Club was furnished copies of the following
documents:

1. A letter under the subject "Result of Audit" dated September 14,


2001 (receipt of which was duly acknowledged from your end),
which required you to explain in writing the charges against you
(copy attached);

2. The Union's Board of Directors' Resolution dated October 2, 2001,


which explained that the Union afforded you an opportunity to
explain your side to the charges;

3. Minutes of the meeting of the Union's Board of Directors wherein


an administrative investigation of the case was conducted last
October 6, 2001; and

4. The Union's Board of Directors' Resolution dated October 15,


2001 which resolved your expulsion from the Union for acts of
dishonesty and malversation of union funds, which was duly
approved by the general membership.

After a careful evaluation of the evidence on hand vis-à-vis a thorough


assessment of your defenses presented in your letter-explanation dated
October 6, 2001 of which you also expressed that you waived your right to
be present during the administrative investigation conducted by the Union's
Board of Directors on October 6, 2001, Management has reached the
conclusion that there are overwhelming reasons to consider that you have
violated Section 4(f) of the CBA, particularly on the grounds of
malversation of union funds. The Club has determined that you were
sufficiently afforded due process under the circumstances.

Inasmuch as the Club is duty-bound to comply with its obligation


under Section 4(f) of the CBA, it is unfortunate that Management is left
with no other recourse but to consider your termination from service
effective upon your receipt thereof. We wish to thank you for your services
during your employment with the Company. It would be more prudent that
we just move on independently if only to maintain industrial peace in the
workplace.

Be guided accordingly.21

Gleaned from the above, the three respondents were expelled from and by the
Union after due investigation for acts of dishonesty and malversation of Union
funds. In accordance with the CBA, the Union properly requested the Club,
through the October 18, 2001 letter22 signed by Mario Orense, the Union
President, and addressed to Cynthia Figueroa, the Club's HRD Manager, to
enforce the Union security provision in their CBA and terminate said
respondents. Then, in compliance with the Union's request, the Club reviewed
the documents submitted by the Union, requested said respondents to submit
written explanations, and thereafter afforded them reasonable opportunity to
present their side. After it had determined that there was sufficient evidence that
said respondents malversed Union funds, the Club dismissed them from their
employment conformably with Sec. 4(f) of the CBA.

Considering the foregoing circumstances, we are constrained to rule that there is


sufficient cause for the three respondents' termination from employment.

Were respondents Pizarro, Braza, and Castueras accorded due process before
their employments were terminated?

We rule that the Club substantially complied with the due process requirements
before it dismissed the three respondents.

The three respondents aver that the Club violated their rights to due process as
enunciated in Malayang Samahan,23 when it failed to conduct an independent
and separate hearing before they were dismissed from service.

The CA, in dismissing the Club's petition and affirming the Decision of the NLRC,
also relied on the same case. We explained in Malayang Samahan:

x x x Although this Court has ruled that union security clauses embodied in
the collective bargaining agreement may be validly enforced and that
dismissals pursuant thereto may likewise be valid, this does not erode the
fundamental requirements of due process. The reason behind the
enforcement of union security clauses which is the sanctity and inviolability
of contracts cannot override one's right to due process.24
In the above case, we pronounced that while the company, under a maintenance
of membership provision of the CBA, is bound to dismiss any employee expelled
by the union for disloyalty upon its written request, this undertaking should not be
done hastily and summarily. The company acts in bad faith in dismissing a
worker without giving him the benefit of a hearing.25 We cautioned in the same
case that the power to dismiss is a normal prerogative of the employer; however,
this power has a limitation. The employer is bound to exercise caution in
terminating the services of the employees especially so when it is made upon the
request of a labor union pursuant to the CBA. Dismissals must not be arbitrary
and capricious. Due process must be observed in dismissing employees
because the dismissal affects not only their positions but also their means of
livelihood. Employers should respect and protect the rights of their employees,
which include the right to labor.26

The CA and the three respondents err in relying on Malayang Samahan, as its
ruling has no application to this case. In Malayang Samahan, the union members
were expelled from the union and were immediately dismissed from the company
without any semblance of due process. Both the union and the company did not
conduct administrative hearings to give the employees a chance to explain
themselves. In the present case, the Club has substantially complied with due
process. The three respondents were notified that their dismissal was being
requested by the Union, and their explanations were heard. Then, the Club,
through its President, conferred with said respondents during the last week of
October 2001. The three respondents were dismissed only after the Club
reviewed and considered the documents submitted by the Union vis-à-vis the
written explanations submitted by said respondents. Under these circumstances,
we find that the Club had afforded the three respondents a reasonable
opportunity to be heard and defend themselves.

On the applicability of Agabon, the Club points out that the CA ruled that the
three respondents were illegally dismissed primarily because they were not
afforded due process. We are not unaware of the doctrine enunciated
in Agabon that when there is just cause for the dismissal of an employee, the
lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual, and the employer should indemnify the employee for the violation of
his statutory rights.27 However, we find that we could not apply Agabon to this
case as we have found that the three respondents were validly dismissed and
were actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the Club, the
Union is solely liable for the termination from employment of the three
respondents, has been mooted by our finding that their dismissal is valid.
WHEREFORE, premises considered, the Decision dated July 5, 2005 of the CA
and the Decision dated February 26, 2004 of the NLRC are
hereby REVERSED and SET ASIDE. The Decision dated January 27, 2003 of
the Labor Arbiter in NLRC-NCR Case No. 30-01-00130-02 is
hereby REINSTATED.
G.R. No. 158620 October 11, 2006

DEL MONTE PHILIPPINES, INC. and WARFREDO C.


BALANDRA, petitioners,
vs.
MARIANO SALDIVAR, NENA TIMBAL, VIRGINIO VICERA, ALFREDO
AMONCIO and NAZARIO S. COLASTE, respondents.

DECISION

TINGA, J.:

The main issue for resolution herein is whether there was sufficient cause for the
dismissal of a rank-and-file employee effectuated through the enforcement of a
closed-shop provision in the Collective Bargaining Agreement (CBA) between the
employer and the union.

The operative facts are uncomplicated.

The Associated Labor Union (ALU) is the exclusive bargaining agent of


plantation workers of petitioner Del Monte Philippines, Inc. (Del Monte) in
Bukidnon. Respondent Nena Timbal (Timbal), as a rank-and-file employee of Del
Monte plantation in Bukidnon, is also a member of ALU. Del Monte and ALU
entered into a Collective Bargaining Agreement (CBA) with an effective term of
five (5) years from 1 September 1988 to 31 August 1993.1

Timbal, along with four other employees (collectively, co-employees), were


charged by ALU for disloyalty to the union, particularly for encouraging defections
to a rival union, the National Federation of Labor (NFL). The charge was
contained in a Complaint dated 25 March 1993, which specifically alleged, in
relation to Timbal: "That on July 13, 1991 and the period prior or after thereto,
said Nena Timbal personally recruited other bonafide members of the ALU to
attend NFL seminars and has actually attended these seminars together with the
other ALU members."2 The matter was referred to a body within the ALU
organization, ominously named "Disloyalty Board."

The charge against Timbal was supported by an affidavit executed on 23 March


1993 by Gemma Artajo (Artajo), also an employee of Del Monte. Artajo alleged
that she was personally informed by Timbal on 13 July 1991 that a seminar was
to be conducted by the NFL on the following day. When Artajo demurred from
attending, Timbal assured her that she would be given honorarium in the amount
of P500.00 if she were to attend the NFL meeting and bring new recruits. Artajo
admitted having attended the NFL meeting together with her own recruits,
including Paz Piquero (Piquero). Artajo stated that after the meeting she was
given P500.00 by Timbal.3

Timbal filed an Answer before the Disloyalty Board, denying the allegations in the
complaint and the averments in Artajo's Affidavit. She further alleged that her
husband, Modesto Timbal, had filed a complaint against Artajo for collection of a
sum of money on 17 March 1993, or just six (6) days before Artajo executed her
affidavit. She noted that the allegations against her were purportedly committed
nearly two (2) years earlier, and that Artajo's act was motivated by hate and
revenge owing to the filing of the aforementioned civil action.4

Nevertheless, the ALU Disloyalty Board concluded that Timbal was guilty of acts
or conduct inimical to the interests of ALU, through a Resolution dated 7 May
1993.5 It found that the acts imputed to Timbal were partisan activities, prohibited
since the "freedom period" had not yet commenced as of that time. Thus, the
Disloyalty Board recommended the expulsion of Timbal from membership in
ALU, and likewise her dismissal from Del Monte in accordance with the Union
Security Clause in the existing CBA between ALU and Del Monte. The Disloyalty
Board also reached the same conclusions as to the co-employees, expressed in
separate resolutions also recommending their expulsion from ALU.6

On 21 May 1993, the Regional Vice President of ALU adopted the


recommendations of the Disloyalty Board and expelled Timbal7 and her co-
employees from ALU.8 The ALU National President affirmed the expulsion.9 On
17 June 1993, Del Monte terminated Timbal and her co-employees effective 19
June 1993, noting that the termination was "upon demand of [ALU] pursuant to
Sections 4 and 5 of Article III of the current Collective Bargaining Agreement."10

Timbal and her co-employees filed separate complaints against Del Monte and/or
its Personnel Manager Warfredo C. Balandra and ALU with the Regional
Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC) for
illegal dismissal, unfair labor practice and damages.11 The complaints were
consolidated and heard before Labor Arbiter Irving Pedilla. The Labor Arbiter
affirmed that all five (5) were illegally dismissed and ordered Del Monte to
reinstate complainants, including Timbal, to their former positions and to pay their
full backwages and other allowances, though the other claims and charges were
dismissed for want of basis.12
Only Del Monte interposed an appeal with the NLRC.13 The NLRC reversed the
Labor Arbiter and ruled that all the complainants were validly dismissed.14 On
review, the Court of Appeals ruled that only Timbal was illegally dismissed.15 At
the same time, the appellate court found that Del Monte had failed to observe
procedural due process in dismissing the co-employees, and thus ordered the
company to pay P30,000.00 to each of the co-employees as penalties. The co-
employees sought to file a Petition for Review16 with this Court assailing the
ruling of the Court of Appeals affirming their dismissal, but the petition was
denied because it was not timely filed.17

On the other hand, Del Monte, through the instant petition, assails the Court of
Appeals decision insofar as it ruled that Timbal was illegally dismissed. Notably,
Del Monte does not assail in this petition the award of P30,000.00 to each of the
co-employees, and the ruling of the Court of Appeals in that regard should now
be considered final.

The reason offered by the Court of Appeals in exculpating Timbal revolves


around the problematic relationship between her and Artajo, the complaining
witness against her. As explained by the appellate court:

However, the NLRC should have considered in a different light the


situation of petitioner Nena Timbal. Timbal asserted before the NLRC, and
reiterates in this petition, that the statements of Gemma Artajo, ALU's sole
witness against her, should not be given weight because Artajo had an
ax[e] to grind at the time when she made the adverse statements against
her. Respondents never disputed the claim of Timbal that in the two (2)
collection suits initiated by Timbal and her husband, Artajo testified for the
defendant in the first case and she was even the defendant in the second
case which was won by Timbal. We find it hard to believe that Timbal
would so willingly render herself vulnerable to expulsion from the Union by
revealing to an estranged colleague her desire to shift loyalty. The strained
relationship between Timbal and Artajo renders doubtful the charge
against the former that she attempted to recruit Artajo to join a rival union.
Inasmuch as the respondents failed to justify the termination of Timbal's
employment, We hold that her reinstatement to her former position in
accordance with the September 27, 1996 decision of the Labor Arbiter is
appropriate.18

The Labor Arbiter, in his favorable ruling to the dismissed employees, had noted
that "complainant Timbal['s] x x x accuser has an axe to grind against her for an
unpaid debt so that her testimony cannot be given credit."19 The NLRC, in
reversing the Labor Arbiter, did not see it fit to mention the circumstances of the
apparent feud between Timbal and Artajo, except in the course of narrating
Timbal's allegations.

However, in the present petition, Del Monte utilizes a new line of argument in
justifying Timbal's dismissal. While it does not refute the contemporaneous ill-will
between Timbal and Artajo, it nonetheless alleges that there was a second
witness, Paz Piquero, who testified against Timbal before the Disloyalty
Board.20 Piquero had allegedly corroborated Artajo's allegations and positively
identified Timbal as among those present during the seminar of the NFL
conducted on 14 July 1992 and as having given her transportation money after
the seminar was finished. Del Monte asserts that Piquero was a disinterested
witness against Timbal.21

Del Monte also submits two (2) other grounds for review. It argues that the
decision of the Labor Arbiter, which awarded Timbal full backwages and other
allowances, was inconsistent with jurisprudence which held that an employer
who acted in good faith in dismissing employees on the basis of a closed-shop
provision is not liable to pay full backwages.22 Finally, Del Monte asserts that it
had, from the incipience of these proceedings consistently prayed that in the
event that it were found with finality that the dismissal of Timbal and the others is
illegal, ALU should be made liable to Del Monte pursuant to the CBA. The Court
of Appeals is faulted for failing to rule upon such claim.

For her part, Timbal observes that Piquero's name was mentioned for the first
time in Del Monte's Motion for Partial Reconsideration of the decision of the
Court of Appeals.23 She claims that both Piquero and Artajo were not in good
terms with her after she had won a civil suit for the collection of a sum of money
against their immediate superior, one Virgie Condeza.24

The legality of Timbal's dismissal is obviously the key issue in this case. We are
particularly called upon to determine whether at this late stage, the Court may
still give credence to the purported testimony of Piquero and justify Timbal's
dismissal based on such testimony.

It bears elaboration that Timbal's dismissal is not predicated on any of the just or
authorized causes for dismissal under Book Six, Title I of the Labor Code,25 but
on the union security clause in the CBA between Del Monte and ALU.
Stipulations in the CBA authorizing the dismissal of employees are of equal
import as the statutory provisions on dismissal under the Labor Code, since "[a]
CBA is the law between the company and the union and compliance therewith is
mandated by the express policy to give protection to labor."26 The CBA, which
covers all regular hourly paid employees at the pineapple plantation in
Bukidnon,27 stipulates that all present and subsequent employees shall be
required to become a member of ALU as a condition of continued employment.
Sections 4 and 5, Article II of the CBA further state:

ARTICLE II

Section 4. Loss of membership in the UNION shall not be a ground for


dismissal by the Company except where loss of membership is due to:

1. Voluntary resignation from [ALU] earlier than the expiry date of


this [CBA];

2. Non-payment of duly approved and ratified union dues and fees;


and

3. Disloyalty to [ALU] in accordance with its Constitution and By-


Laws as duly registered with the Department of Labor and
Employment.

Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its
service in accordance with law, any member of the bargaining unit who
loses his membership in [ALU] pursuant to the provisions of the preceding
section. [ALU] assumes full responsibility for any such termination and
hereby agrees to hold [Del Monte] free from any liability by judgment of a
competent authority for claims arising out of dismissals made upon
demand of [ALU], and [the] latter shall reimburse the former of such sums
as it shall have paid therefor. Such reimbursement shall be deducted from
union dues and agency fees until duly paid.28

The CBA obviously adopts a closed-shop policy which mandates, as a condition


of employment, membership in the exclusive bargaining agent. A "closed-shop"
may be defined as an enterprise in which, by agreement between the employer
and his employees or their representatives, no person may be employed in any
or certain agreed departments of the enterprise unless he or she is, becomes,
and, for the duration of the agreement, remains a member in good standing of a
union entirely comprised of or of which the employees in interest are a part.29 A
CBA provision for a closed-shop is a valid form of union security and it is not a
restriction on the right or freedom of association guaranteed by the Constitution.30

Timbal's expulsion from ALU was premised on the ground of disloyalty to the
union, which under Section 4(3), Article II of the CBA, also stands as a ground for
her dismissal from Del Monte. Indeed, Section 5, Article II of the CBA enjoins Del
Monte to dismiss from employment those employees expelled from ALU for
disloyalty, albeit with the qualification "in accordance with law."
Article 279 of the Labor Code ordains that "in cases of regular employment, the
employer shall not terminate the services of an employee except for a just cause
or when authorized by [Title I, Book Six of the Labor Code]." Admittedly, the
enforcement of a closed-shop or union security provision in the CBA as a ground
for termination finds no extension within any of the provisions under Title I, Book
Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: "It is
State policy to promote unionism to enable workers to negotiate with
management on an even playing field and with more persuasiveness than if they
were to individually and separately bargain with the employer. For this reason,
the law has allowed stipulations for 'union shop' and 'closed shop' as means of
encouraging workers to join and support the union of their choice in the
protection of their rights and interests vis-a-vis the employer."31

It might be suggested that since Timbal was expelled from ALU on the ground of
disloyalty, Del Monte had no choice but to implement the CBA provisions and
cause her dismissal. Similarly, it might be posited that any tribunal reviewing
such dismissal is precluded from looking beyond the provisions of the CBA in
ascertaining whether such dismissal was valid. Yet deciding the problem from
such a closed perspective would virtually guarantee unmitigated discretion on the
part of the union in terminating the employment status of an individual employee.
What the Constitution does recognize is that all workers, whether union members
or not, are "entitled to security of tenure."32The guarantee of security of tenure
itself is implemented through legislation, which lays down the proper standards in
determining whether such right was violated.33

Agabon v. NLRC34 did qualify that constitutional due process or security of tenure
did not shield from dismissal an employee found guilty of a just cause for
termination even if the employer failed to render the statutory notice and hearing
requirement. At the same time, it should be understood that in the matter of
determining whether cause exists for termination, whether under Book Six, Title I
of the Labor Code or under a valid CBA, substantive due process must be
observed as a means of ensuring that security of tenure is not infringed.

Agabon observed that due process under the Labor Code comprised of two
aspects: "substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of
dismissal."35 No serious dispute arose in Agabon over the observance of
substantive due process in that case, or with the conclusion that the petitioners
therein were guilty of abandonment of work, one of the just causes for dismissal
under the Labor Code. The controversy in Agabon centered on whether the
failure to observe procedural due process, through the non-observance of the
two-notice rule, should lead to the invalidation of the dismissals. The Court ruled,
over the dissents of some Justices, that the failure by the employer to observe
procedural due process did not invalidate the dismissals for just cause of the
petitioners therein. However, Agabon did not do away with the requirement of
substantive due process, which is essentially the existence of just cause
provided by law for a valid dismissal. Thus, Agabon cannot be invoked to validate
a dismissal wherein substantive due process, or the proper determination of just
cause, was not observed.

Even if the dismissal of an employee is conditioned not on the grounds for


termination under the Labor Code, but pursuant to the provisions of a CBA, it still
is necessary to observe substantive due process in order to validate the
dismissal. As applied to the Labor Code, adherence to substantive due process
is a requisite for a valid determination that just or authorized causes existed to
justify the dismissal.36 As applied to the dismissals grounded on violations of the
CBA, observance of substantial due process is indispensable in establishing the
presence of the cause or causes for dismissal as provided for in the CBA.

Substantive due process, as it applies to all forms of dismissals, encompasses


the proper presentation and appreciation of evidence to establish that cause
under law exists for the dismissal of an employee. This holds true even if the
dismissal is predicated on particular causes for dismissal established not by the
Labor Code, but by the CBA. Further, in order that any CBA-mandated dismissal
may receive the warrant of the courts and labor tribunals, the causes for
dismissal as provided for in the CBA must satisfy to the evidentiary threshold of
the NLRC and the courts.

It is necessary to emphasize these principles since the immutable truth under our
constitutional and labor laws is that no employee can be dismissed without
cause. Agabon may have tempered the procedural due process requirements if
just cause for dismissal existed, but in no way did it eliminate the existence of a
legally prescribed cause as a requisite for any dismissal. The fact that a CBA
may provide for additional grounds for dismissal other than those established
under the Labor Code does not detract from the necessity to duly establish the
existence of such grounds before the dismissal may be validated. And even if the
employer or, in this case, the collective bargaining agent, is satisfied that cause
has been established to warrant the dismissal, such satisfaction will be of no
consequence if, upon legal challenge, they are unable to establish before the
NLRC or the courts the presence of such causes.

In the matter at bar, the Labor Arbiter—the proximate trier of facts—and the
Court of Appeals both duly appreciated that the testimony of Artajo against
Timbal could not be given credence, especially in proving Timbal's disloyalty to
ALU. This is due to the prior animosity between the two engendered by the
pending civil complaint filed by Timbal's husband against Artajo. Considering that
the civil complaint was filed just six (6) days prior to the execution of Artajo's
affidavit against Timbal, it would be plainly injudicious to presume that Artajo
possessed an unbiased state of mind as she executed that affidavit. Such
circumstance was considered by the Labor Arbiter, and especially the Court of
Appeals, as they rendered a favorable ruling to Timbal. The NLRC may have
decided against Artajo, but in doing so, it failed to provide any basis as to why
Artajo's testimony should be believed, instead of disbelieved. No credible
disputation was offered by the NLRC to the claim that Artajo was biased against
Timbal; hence, we should adjudge the findings of the Labor Arbiter and the Court
of Appeals as more cogent on that point.

Before this Court, Del Monte does not even present any serious argument that
Artajo's testimony against Timbal was free from prejudice. Instead, it posits that
Piquero's alleged testimony against Timbal before the Disloyalty Board should be
given credence, and that taken with Artajo's testimony, should sufficiently
establish the ground of disloyalty for which Timbal should be dismissed.

The Court sees the danger to jurisprudence and the rights of workers in acceding
to Del Monte's position. The dismissal for cause of employees must be justified
by substantial evidence, as appreciated by an impartial trier of facts. None of the
trier of facts below—the Labor Arbiter, the NLRC and the Court of Appeals—saw
fit to accord credence to Piquero's testimony, even assuming that such testimony
was properly contained in the record. Even the NLRC decision, which was
adverse to Timbal, made no reference at all to Piquero's alleged testimony.

Del Monte is able to point to only one instance wherein Piquero's name and
testimony appears on the record. It appears that among the several attachments
to the position paper submitted by the ALU before the NLRC-RAB was a copy of
the raw stenographic notes transcribed, apparently on 17 April 1993, during a
hearing before the Disloyalty Board. The transcription is not wholly legible, but
there appears to be references therein to the name "Paz Piquero," and her
apparent testimony before the Disloyalty Board. We are unable to reproduce with
accuracy, based on the handwritten stenographic notes, the contents of this
seeming testimony of Piquero, although Del Monte claims before this Court that
Piquero had corroborated Artajo's claims during such testimony, "positively
identified [Timbal's] presence in the NFL seminar on 14 July 1992," and
"confirmed that Timbal gave Artajo P500.00 for recruiting participants in the NFL
seminar."37

There are evident problems on our part, at this late stage, in appreciating these
raw stenographic notes adverting to the purported testimony of Piquero,
especially as a means of definitively concluding that Timbal was guilty of
disloyalty. Certainly, these notes cannot be appreciated as entries in the official
record, which are presumed prima facie evidence of the facts therein stated,38 as
such records can only be made by a public officer of the Philippines or by a
person in the performance of a duty specially enjoined by law. These transcripts
were not taken during a hearing conducted by any public office in the Philippines,
but they were committed in the course of an internal disciplinary mechanism
devised by a privately organized labor union. Unless the authenticity of these
notes is duly proven before, and appreciated by the triers of fact, we cannot
accord them any presumptive or conclusive value.

Moreover, despite the fact that the apparent record of Piquero's testimony was
appended to ALU's position paper, the position paper itself does not make any
reference to such testimony, or even to Piquero's name for that matter. The
position paper observes that "[t]his testimony of [Artajo] was directly corroborated
by her actual attendance on July 14, 1992 at the agreed [venue]," but no mention
is made that such testimony was also "directly corroborated" by Piquero. Then
again, it was only Artajo, and not Piquero, who executed an affidavit recounting
the allegations against Timbal.

Indeed, we are inclined to agree with Timbal's observation in her Comment on


the present petition that from the time the complaint was filed with the NLRC-
RAB, Piquero's name and testimony were invoked for the first time only in Del
Monte's motion for reconsideration before the Court of Appeals. Other than the
handwritten reference made in the raw stenographic notes attached to ALU's
position paper before the NLRC-RAB, Piquero's name or testimony was not
mentioned either by ALU or Del Monte before any of the pleadings filed before
the NLRC-RAB, the NLRC, and even with those submitted to the Court of
Appeals prior to that court's decision.

In order for the Court to be able to appreciate Piquero's testimony as basis for
finding Timbal guilty of disloyalty, it is necessary that the fact of such testimony
must have been duly established before the NLRC-RAB, the NLRC, or at the
very least, even before the Court of Appeals. It is only after the fact of such
testimony has been established that the triers of fact can come to any conclusion
as to the veracity of the allegations in the testimony.

It should be mentioned that the Disloyalty Board, in its Resolution finding Timbal
guilty of disloyalty, did mention that Artajo's testimony "was corroborated by Paz
Piquero who positively identified and testified that Nena Timbal was engaged in
recruitment of ALU members at [Del Monte] to attend NFL seminars."39

The Disloyalty Board may have appreciated Piquero's testimony in its own finding
that Timbal was guilty, yet the said board cannot be considered as a wholly
neutral or dispassionate tribunal since it was constituted by the very organization
that stood as the offended party in the disloyalty charge. Without impugning the
integrity of ALU and the mechanisms it has employed for the internal discipline of
its members, we nonetheless hold that in order that the dismissal of an employee
may be validated by this Court, it is necessary that the grounds for dismissal are
justified by substantial evidence as duly appreciated by an impartial trier of
facts.40 The existence of Piquero's testimony was appreciated only by the
Disloyalty Board, but not by any of the impartial tribunals which heard Timbal's
case. The appreciation of such testimony by the Disloyalty Board without any
similar affirmation or concurrence by the NLRC-RAB, the NLRC, or the Court of
Appeals, cannot satisfy the substantive due process requirement as a means of
upholding Timbal's dismissal.

All told, we see no error on the part of the Court of Appeals when it held that
Timbal was illegally dismissed.

We now turn to the second issue raised, whether the Labor Arbiter correctly
awarded full backwages to Timbal.

Del Monte cites a jurisprudential rule that an employer who acted in good faith in
dismissing employees on the basis of a closed- shop provision may not be
penalized even if the dismissal were illegal. Such a doctrine is admittedly
supported by the early case of National Labor Union v. Zip Venetian Blind41 and
the later decision in 1989 of Soriano v. Atienza,42 wherein the Court affirmed the
disallowance of backwages or "financial assistance" in dismissals under the
aforementioned circumstance.

However, the Court now recognizes that this doctrine is inconsistent with Article
279 of the Labor Code, as amended by Republic Act No. 6715, which took effect
just five (5) days after Soriano was promulgated. It is now provided in the Labor
Code that "[a]n employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up
to the time of his actual reinstatement." Thus, where reinstatement is adjudged,
the award of backwages and other benefits continues beyond the date of the
labor arbiter's decision ordering reinstatement and extends up to the time said
order of reinstatement is actually carried out.43

Rep. Act No. 6715 effectively mitigated previous jurisprudence which had limited
the extent to which illegally dismissed employees could claim for backwages. We
explained in Ferrer v. NLRC:44
With the passage of Republic Act No. 6715 which took effect on March 21,
1989, Article 279 of the Labor Code was amended to read as follows:

Security of Tenure. — In cases of regular employment, the employer


shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.

and as implemented by Section 3, Rule 8 of the 1990 New Rules of


Procedure of the National Labor Relations Commission, it would seem that
the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of Industrial
Relations, 56 SCRA 694 [1974]) which limited the award of back wages of
illegally dismissed workers to three (3) years "without deduction or
qualification" to obviate the need for further proceedings in the course of
execution, is no longer applicable.

A legally dismissed employee may now be paid his back wages,


allowances, and other benefits for the entire period he was out of work
subject to the rule enunciated before the Mercury Drug Rule, which is that
the employer may, however, deduct any amount which the employee may
have earned during the period of his illegal termination (East Asiatic
Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521 [1971]).
Computation of full back wages and presentation of proof as to income
earned elsewhere by the illegally dismissed employee after his termination
and before actual reinstatement should be ventilated in the execution
proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of
the 1990 New Rules of Procedure of the National Labor Relations
Commission.

Inasmuch as we have ascertained in the text of this discourse that the


OFC whimsically dismissed petitioners without proper hearing and has
thus opened OFC to a charge of unfair labor practice, it ineluctably follows
that petitioners can receive their back wages computed from the moment
their compensation was withheld after their dismissal in 1989 up to the
date of actual reinstatement. In such a scenario, the award of back wages
can extend beyond the 3-year period fixed by the Mercury Drug Rule
depending, of course, on when the employer will reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic
Act No. 6715, has made the employer bear a heavier burden than that
pronounced in the Mercury Drug Rule, but perhaps Republic Act No. 6715
was enacted precisely for the employer to realize that the
employee must be immediately restored to his former position, and to
impress the idea that immediate reinstatement is tantamount to a cost-
saving measure in terms of overhead expense plus incremental
productivity to the company which lies in the hands of the employer.45

The Labor Arbiter's ruling, which entitled Timbal to claim full backwages and
other allowances, "without qualifications and diminutions, computed from the time
[she was] illegally dismisse[d] up to the time [she] will be actually reinstated,"
conforms to Article 279 of the Labor Code. Hence, the Court of Appeals was
correct in affirming the Labor Arbiter insofar as Timbal was concerned.

Finally, we address the claim that the Court of Appeals erred when it did not rule
on Del Monte's claim for reimbursement against ALU. We do observe that
Section 5 of the CBA stipulated that "[ALU] assumes full responsibility of any
such termination [of any member of the bargaining unit who loses his
membership in ALU] and hereby agrees to hold [Del Monte] free from any liability
by judgment of a competent authority for claims arising out of dismissals made
upon demand of [ALU], and latter shall reimburse the former of such sums as it
shall have paid therefore."46

This stipulation does present a cause of action in Del Monte's favor should it be
held financially liable for the dismissal of an employee by reason of expulsion
from ALU. Nothing in this decision should preclude the operation of this provision
in the CBA. At the same time, we are unable to agree with Del Monte that the
Court of Appeals, or this Court, can implement this provision of the CBA and
accordingly directly condemn ALU to answer for the financial remuneration due
Timbal.

Before the Labor Arbiter, Del Monte had presented its cross-claim against ALU
for reimbursement should it be made liable for illegal dismissal or unfair labor
practice, pursuant to the CBA. The Labor Arbiter had actually passed upon this
claim for reimbursement, stating that "[as] for the cross-claims of respondent
DMPI and Tabusuares against the respondent ALU-TUCP, this Branch cannot
validly entertain the same in the absence of employer-employee relationship
between the former and the latter."47 We have examined Article 217 of the Labor
Code,48 which sets forth the original jurisdiction of the Labor Arbiters. Article
217(c) states:
Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements. [Emphasis
supplied.]

In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary
Arbitrator or panel of Voluntary Arbitrators the "original and exclusive jurisdiction
to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement."49 Among those areas of
conflict traditionally within the jurisdiction of Voluntary Arbitrators are contract-
interpretation and contract-implementation,50the questions precisely involved in
Del Monte's claim seeking enforcement of the CBA provision mandating
restitution by ALU should the company be held financially liable for dismissals
pursuant to the union security clause.

In reconciling the grants of jurisdiction vested under Articles 261 and 217 of the
Labor Code, the Court has pronounced that "the original and exclusive
jurisdiction of the Labor Arbiter under Article 217(c) for money claims is limited
only to those arising from statutes or contracts other than a Collective Bargaining
Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have
original and exclusive jurisdiction over money claims 'arising from the
interpretation or implementation of the Collective Bargaining Agreement and,
those arising from the interpretation or enforcement of company personnel
policies', under Article 261."51

Our conclusion that the Labor Arbiter in the instant case could not properly pass
judgment on the cross-claim is further strengthened by the fact that Del Monte
and ALU expressly recognized the jurisdiction of Voluntary Arbitrators in the
CBA. Section 2, Article XXXI of the CBA provides:

Section 2. In the event a dispute arises concerning the application of, or


interpretation of this Agreement which cannot be settled pursuant to the
[grievance procedure set forth in the] preceding Section, the dispute shall
be submitted to an arbitrator agreed to by [Del Monte] and [ALU].

Should the parties fail to agree on the arbitrator, the same shall be drawn
by lottery from a list of arbitrators furnished by the Bureau of Labor
Relations of the Department of Labor and Employment.

xxxx
Thus, as the law indubitably precludes the Labor Arbiter from enforcing money
claims arising from the implementation of the CBA, the CBA herein
complementarily recognizes that it is the Voluntary Arbitrators which have
jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise
jurisdiction over Del Monte's cross-claim, and the Court of Appeals would have
no basis had it acted differently. At the same time, even as we affirm the award
of backwages against Del Monte, our ruling should not operate to prejudice in
any way whatever causes of action Del Monte may have against ALU, in
accordance with the CBA.

WHEREFORE, the instant petition is DENIED. The assailed Decision of the


Court of Appeals dated 26 August 2002 is AFFIRMED. Costs against petitioner.
G.R. No. 164301 August 10, 2010

BANK OF THE PHILIPPINE ISLANDS, Petitioner,


vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN
BPI UNIBANK, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

May a corporation invoke its merger with another corporation as a valid ground to
exempt its "absorbed employees" from the coverage of a union shop clause
contained in its existing Collective Bargaining Agreement (CBA) with its own
certified labor union? That is the question we shall endeavor to answer in this
petition for review filed by an employer after the Court of Appeals decided in
favor of respondent union, which is the employees’ recognized collective
bargaining representative.

At the outset, we should call to mind the spirit and the letter of the Labor Code
provisions on union security clauses, specifically Article 248 (e), which states, "x
x x Nothing in this Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another
union at the time of the signing of the collective bargaining agreement."1 This
case which involves the application of a collective bargaining agreement with a
union shop clause should be resolved principally from the standpoint of the clear
provisions of our labor laws, and the express terms of the CBA in question, and
not by inference from the general consequence of the merger of corporations
under the Corporation Code, which obviously does not deal with and, therefore,
is silent on the terms and conditions of employment in corporations or juridical
entities.

This issue must be resolved NOW, instead of postponing it to a future time when
the CBA is renegotiated as suggested by the Honorable Justice Arturo D. Brion
because the same issue may still be resurrected in the renegotiation if the
absorbed employees insist on their privileged status of being exempt from any
union shop clause or any variant thereof.

We find it significant to note that it is only the employer, Bank of the Philippine
Islands (BPI), that brought the case up to this Court via the instant petition for
review; while the employees actually involved in the case did not pursue the
same relief, but had instead chosen in effect to acquiesce to the decision of the
Court of Appeals which effectively required them to comply with the union shop
clause under the existing CBA at the time of the merger of BPI with Far East
Bank and Trust Company (FEBTC), which decision had already become final
and executory as to the aforesaid employees. By not appealing the decision of
the Court of Appeals, the aforesaid employees are bound by the said Court of
Appeals’ decision to join BPI’s duly certified labor union. In view of the apparent
acquiescence of the affected FEBTC employees in the Court of Appeals’
decision, BPI should not have pursued this petition for review. However, even
assuming that BPI may do so, the same still cannot prosper.

What is before us now is a petition for review under Rule 45 of the Rules of Court
of the Decision2 dated September 30, 2003 of the Court of Appeals, as reiterated
in its Resolution3 of June 9, 2004, reversing and setting aside the Decision4 dated
November 23, 2001 of Voluntary Arbitrator Rosalina Letrondo-Montejo, in CA-
G.R. SP No. 70445, entitled BPI Employees Union-Davao Chapter-Federation of
Unions in BPI Unibank v. Bank of the Philippine Islands, et al.

The antecedent facts are as follows:

On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of
Merger executed on January 20, 2000 by and between BPI, herein petitioner,
and FEBTC.5 This Article and Plan of Merger was approved by the Securities and
Exchange Commission on April 7, 2000.6

Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC
were transferred to and absorbed by BPI as the surviving corporation. FEBTC
employees, including those in its different branches across the country, were
hired by petitioner as its own employees, with their status and tenure recognized
and salaries and benefits maintained.

Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI


Unibank (hereinafter the "Union," for brevity) is the exclusive bargaining agent of
BPI’s rank and file employees in Davao City. The former FEBTC rank-and-file
employees in Davao City did not belong to any labor union at the time of the
merger. Prior to the effectivity of the merger, or on March 31, 2000, respondent
Union invited said FEBTC employees to a meeting regarding the Union Shop
Clause (Article II, Section 2) of the existing CBA between petitioner BPI and
respondent Union.7

The parties both advert to certain provisions of the existing CBA, which are
quoted below:

ARTICLE I
Section 1. Recognition and Bargaining Unit – The BANK recognizes the UNION
as the sole and exclusive collective bargaining representative of all the regular
rank and file employees of the Bank offices in Davao City.

Section 2. Exclusions

Section 3. Additional Exclusions

Section 4. Copy of Contract

ARTICLE II

Section 1. Maintenance of Membership – All employees within the bargaining


unit who are members of the Union on the date of the effectivity of this
Agreement as well as employees within the bargaining unit who subsequently
join or become members of the Union during the lifetime of this Agreement shall
as a condition of their continued employment with the Bank, maintain their
membership in the Union in good standing.

Section 2. Union Shop - New employees falling within the bargaining unit as
defined in Article I of this Agreement, who may hereafter be regularly
employed by the Bank shall, within thirty (30) days after they become regular
employees, join the Union as a condition of their continued employment. It is
understood that membership in good standing in the Union is a condition of their
continued employment with the Bank.8 (Emphases supplied.)

After the meeting called by the Union, some of the former FEBTC employees
joined the Union, while others refused. Later, however, some of those who
initially joined retracted their membership.9

Respondent Union then sent notices to the former FEBTC employees who
refused to join, as well as those who retracted their membership, and called them
to a hearing regarding the matter. When these former FEBTC employees refused
to attend the hearing, the president of the Union requested BPI to implement the
Union Shop Clause of the CBA and to terminate their employment pursuant
thereto.10

After two months of management inaction on the request, respondent Union


informed petitioner BPI of its decision to refer the issue of the implementation of
the Union Shop Clause of the CBA to the Grievance Committee. However, the
issue remained unresolved at this level and so it was subsequently submitted for
voluntary arbitration by the parties.11
Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision12 dated November
23, 2001, ruled in favor of petitioner BPI’s interpretation that the former FEBTC
employees were not covered by the Union Security Clause of the CBA between
the Union and the Bank on the ground that the said employees were not new
employees who were hired and subsequently regularized, but were absorbed
employees "by operation of law" because the "former employees of FEBTC can
be considered assets and liabilities of the absorbed corporation." The
Voluntary Arbitrator concluded that the former FEBTC employees could not be
compelled to join the Union, as it was their constitutional right to join or not to join
any organization.

Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator
denied the same in an Order dated March 25, 2002.13

Dissatisfied, respondent then appealed the Voluntary Arbitrator’s decision to the


Court of Appeals. In the herein assailed Decision dated September 30, 2003, the
Court of Appeals reversed and set aside the Decision of the Voluntary
Arbitrator.14 Likewise, the Court of Appeals denied herein petitioner’s Motion for
Reconsideration in a Resolution dated June 9, 2004.

The Court of Appeals pertinently ruled in its Decision:

A union-shop clause has been defined as a form of union security provision


wherein non-members may be hired, but to retain employment must become
union members after a certain period.

There is no question as to the existence of the union-shop clause in the CBA


between the petitioner-union and the company. The controversy lies in its
application to the "absorbed" employees.

This Court agrees with the voluntary arbitrator that the ABSORBED employees
are distinct and different from NEW employees BUT only in so far as their
employment service is concerned. The distinction ends there. In the case at bar,
the absorbed employees’ length of service from its former employer is tacked
with their employment with BPI. Otherwise stated, the absorbed employees
service is continuous and there is no gap in their service record.

This Court is persuaded that the similarities of "new" and "absorbed" employees
far outweighs the distinction between them. The similarities lies on the following,
to wit: (a) they have a new employer; (b) new working conditions; (c) new terms
of employment and; (d) new company policy to follow. As such, they should be
considered as "new" employees for purposes of applying the provisions of the
CBA regarding the "union-shop" clause.
To rule otherwise would definitely result to a very awkward and unfair situation
wherein the "absorbed" employees shall be in a different if not, better situation
than the existing BPI employees. The existing BPI employees by virtue of the
"union-shop" clause are required to pay the monthly union dues, remain as
members in good standing of the union otherwise, they shall be terminated from
the company, and other union-related obligations. On the other hand, the
"absorbed" employees shall enjoy the "fruits of labor" of the petitioner-union and
its members for nothing in exchange. Certainly, this would disturb industrial
peace in the company which is the paramount reason for the existence of the
CBA and the union.

The voluntary arbitrator’s interpretation of the provisions of the CBA concerning


the coverage of the "union-shop" clause is at war with the spirit and the rationale
why the Labor Code itself allows the existence of such provision.

The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC
(G.R. No. 76989, September 29, 1987) rule, to quote:

"This Court has held that a valid form of union security, and such a provision in a
collective bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution.

A closed-shop agreement is an agreement whereby an employer binds himself to


hire only members of the contracting union who must continue to remain
members in good standing to keep their jobs. It is "THE MOST PRIZED
ACHIEVEMENT OF UNIONISM." IT ADDS MEMBERSHIP AND
COMPULSORY DUES. By holding out to loyal members a promise of
employment in the closed-shop, it wields group solidarity." (Emphasis supplied)

Hence, the voluntary arbitrator erred in construing the CBA literally at the
expense of industrial peace in the company.

With the foregoing ruling from this Court, necessarily, the alternative prayer of the
petitioner to require the individual respondents to become members or if they
refuse, for this Court to direct respondent BPI to dismiss them, follows.15

Hence, petitioner’s present recourse, raising the following issues:

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN


RULING THAT THE FORMER FEBTC EMPLOYEES SHOULD BE
CONSIDERED ‘NEW’ EMPLOYEES OF BPI FOR PURPOSES OF
APPLYING THE UNION SHOP CLAUSE OF THE CBA

II

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN


FINDING THAT THE VOLUNTARY ARBITRATOR’S INTERPRETATION
OF THE COVERAGE OF THE UNION SHOP CLAUSE IS "AT WAR WITH
THE SPIRIT AND THE RATIONALE WHY THE LABOR CODE ITSELF
ALLOWS THE EXISTENCE OF SUCH PROVISION"16

In essence, the sole issue in this case is whether or not the former FEBTC
employees that were absorbed by petitioner upon the merger between FEBTC
and BPI should be covered by the Union Shop Clause found in the existing CBA
between petitioner and respondent Union.

Petitioner is of the position that the former FEBTC employees are not new
employees of BPI for purposes of applying the Union Shop Clause of the CBA,
on this note, petitioner points to Section 2, Article II of the CBA, which provides:

New employees falling within the bargaining unit as defined in Article I of this
Agreement, who may hereafter be regularly employed by the Bank shall, within
thirty (30) days after they become regular employees, join the Union as a
condition of their continued employment. It is understood that membership in
good standing in the Union is a condition of their continued employment with the
Bank.17 (Emphases supplied.)

Petitioner argues that the term "new employees" in the Union Shop Clause of the
CBA is qualified by the phrases "who may hereafter be regularly employed" and
"after they become regular employees" which led petitioner to conclude that the
"new employees" referred to in, and contemplated by, the Union Shop Clause of
the CBA were only those employees who were "new" to BPI, on account of
having been hired initially on a temporary or probationary status for possible
regular employment at some future date. BPI argues that the FEBTC employees
absorbed by BPI cannot be considered as "new employees" of BPI for purposes
of applying the Union Shop Clause of the CBA.18

According to petitioner, the contrary interpretation made by the Court of Appeals


of this particular CBA provision ignores, or even defies, what petitioner assumes
as its clear meaning and scope which allegedly contradicts the Court’s strict and
restrictive enforcement of union security agreements.

We do not agree.
Section 2, Article II of the CBA is silent as to how one becomes a "regular
employee" of the BPI for the first time. There is nothing in the said provision
which requires that a "new" regular employee first undergo a temporary or
probationary status before being deemed as such under the union shop clause of
the CBA.

"Union security" is a generic term which is applied to and comprehends "closed


shop," "union shop," "maintenance of membership" or any other form of
agreement which imposes upon employees the obligation to acquire or retain
union membership as a condition affecting employment. There is union shop
when all new regular employees are required to join the union within a certain
period for their continued employment. There is maintenance of membership
shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit or the agreement is terminated. A closed-
shop, on the other hand, may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the enterprise unless
he or she is, becomes, and, for the duration of the agreement, remains a
member in good standing of a union entirely comprised of or of which the
employees in interest are a part.19

In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,20 we ruled
that:

It is the policy of the State to promote unionism to enable the workers to


negotiate with management on the same level and with more
persuasiveness than if they were to individually and independently bargain
for the improvement of their respective conditions. To this end, the
Constitution guarantees to them the rights "to self-organization, collective
bargaining and negotiations and peaceful concerted actions including the right to
strike in accordance with law." There is no question that these purposes could be
thwarted if every worker were to choose to go his own separate way instead of
joining his co-employees in planning collective action and presenting a united
front when they sit down to bargain with their employers. It is for this reason that
the law has sanctioned stipulations for the union shop and the closed shop as a
means of encouraging the workers to join and support the labor union of their
own choice as their representative in the negotiation of their demands and the
protection of their interest vis-à-vis the employer. (Emphasis ours.)
In other words, the purpose of a union shop or other union security arrangement
is to guarantee the continued existence of the union through enforced
membership for the benefit of the workers.

All employees in the bargaining unit covered by a Union Shop Clause in their
CBA with management are subject to its terms. However, under law and
jurisprudence, the following kinds of employees are exempted from its
coverage, namely, employees who at the time the union shop agreement takes
effect are bona fide members of a religious organization which prohibits its
members from joining labor unions on religious grounds;21 employees already in
the service and already members of a union other than the majority at the
time the union shop agreement took effect;22 confidential employees who are
excluded from the rank and file bargaining unit;23 and employees excluded from
the union shop by express terms of the agreement.

When certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of Union Security Clauses, this condition is
a valid restriction of the freedom or right not to join any labor organization
because it is in favor of unionism. This Court, on occasion, has even held that a
union security clause in a CBA is not a restriction of the right of freedom of
association guaranteed by the Constitution.24

Moreover, a closed shop agreement is an agreement whereby an employer binds


himself to hire only members of the contracting union who must continue to
remain members in good standing to keep their jobs. It is "the most prized
achievement of unionism." It adds membership and compulsory dues. By
holding out to loyal members a promise of employment in the closed shop, it
wields group solidarity.25

Indeed, the situation of the former FEBTC employees in this case clearly does
not fall within the first three exceptions to the application of the Union Shop
Clause discussed earlier. No allegation or evidence of religious exemption or
prior membership in another union or engagement as a confidential employee
was presented by both parties. The sole category therefore in which petitioner
may prove its claim is the fourth recognized exception or whether the former
FEBTC employees are excluded by the express terms of the existing CBA
between petitioner and respondent.

To reiterate, petitioner insists that the term "new employees," as the same is
used in the Union Shop Clause of the CBA at issue, refers only to employees
hired by BPI as non-regular employees who later qualify for regular employment
and become regular employees, and not those who, as a legal consequence of a
merger, are allegedly automatically deemed regular employees of BPI. However,
the CBA does not make a distinction as to how a regular employee attains such a
status. Moreover, there is nothing in the Corporation Law and the merger
agreement mandating the automatic employment as regular employees by the
surviving corporation in the merger.

It is apparent that petitioner hinges its argument that the former FEBTC
employees were absorbed by BPI merely as a legal consequence of a merger
based on the characterization by the Voluntary Arbiter of these absorbed
employees as included in the "assets and liabilities" of the dissolved corporation -
assets because they help the Bank in its operation and liabilities because
redundant employees may be terminated and company benefits will be paid to
them, thus reducing the Bank’s financial status. Based on this ratiocination, she
ruled that the same are not new employees of BPI as contemplated by the CBA
at issue, noting that the Certificate of Filing of the Articles of Merger and Plan of
Merger between FEBTC and BPI stated that "x x x the entire assets and liabilities
of FAR EASTERN BANK & TRUST COMPANY will be transferred to
and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining
supplied)."26 In sum, the Voluntary Arbiter upheld the reasoning of petitioner that
the FEBTC employees became BPI employees by "operation of law" because
they are included in the term "assets and liabilities."

Absorbed FEBTC Employees are Neither Assets nor Liabilities

In legal parlance, however, human beings are never embraced in the term
"assets and liabilities." Moreover, BPI’s absorption of former FEBTC employees
was neither by operation of law nor by legal consequence of contract. There was
no government regulation or law that compelled the merger of the two banks or
the absorption of the employees of the dissolved corporation by the surviving
corporation. Had there been such law or regulation, the absorption of employees
of the non-surviving entities of the merger would have been mandatory on the
surviving corporation.27 In the present case, the merger was voluntarily entered
into by both banks presumably for some mutually acceptable consideration. In
fact, the Corporation Code does not also mandate the absorption of the
employees of the non-surviving corporation by the surviving corporation in the
case of a merger. Section 80 of the Corporation Code provides:

SEC. 80. Effects of merger or consolidation. – The merger or consolidation, as


provided in the preceding sections shall have the following effects:

1. The constituent corporations shall become a single corporation which, in


case of merger, shall be the surviving corporation designated in the plan of
merger; and, in case of consolidation, shall be the consolidated corporation
designated in the plan of consolidation;
2. The separate existence of the constituent corporations shall cease,
except that of the surviving or the consolidated corporation;

3. The surviving or the consolidated corporation shall possess all the


rights, privileges, immunities and powers and shall be subject to all the
duties and liabilities of a corporation organized under this Code;

4. The surviving or the consolidated corporation shall thereupon and


thereafter possess all the rights, privileges, immunities and franchises of
each of the constituent corporations; and all property, real or personal, and
all receivables due on whatever account, including subscriptions to shares
and other choses in action, and all and every other interest of, or belonging
to, or due to each constituent corporation, shall be taken and deemed to
be transferred to and vested in such surviving or consolidated corporation
without further act or deed; and

5. The surviving or the consolidated corporation shall be responsible and


liable for all the liabilities and obligations of each of the constituent
corporations in the same manner as if such surviving or consolidated
corporation had itself incurred such liabilities or obligations; and any claim,
action or proceeding pending by or against any of such constituent
corporations may be prosecuted by or against the surviving or
consolidated corporation, as the case may be. Neither the rights of
creditors nor any lien upon the property of any of such constituent
corporations shall be impaired by such merger or consolidated.

Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000
did not contain any specific stipulation with respect to the employment contracts
of existing personnel of the non-surviving entity which is FEBTC. Unlike the
Voluntary Arbitrator, this Court cannot uphold the reasoning that the general
stipulation regarding transfer of FEBTC assets and liabilities to BPI as set forth in
the Articles of Merger necessarily includes the transfer of all FEBTC employees
into the employ of BPI and neither BPI nor the FEBTC employees allegedly could
do anything about it. Even if it is so, it does not follow that the absorbed
employees should not be subject to the terms and conditions of
employment obtaining in the surviving corporation.

The rule is that unless expressly assumed, labor contracts such as employment
contracts and collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only
between the parties. A labor contract merely creates an action in personam and
does not create any real right which should be respected by third parties. This
conclusion draws its force from the right of an employer to select his employees
and to decide when to engage them as protected under our Constitution, and the
same can only be restricted by law through the exercise of the police power.28

Furthermore, this Court believes that it is contrary to public policy to declare the
former FEBTC employees as forming part of the assets or liabilities of FEBTC
that were transferred and absorbed by BPI in the Articles of Merger. Assets and
liabilities, in this instance, should be deemed to refer only to property rights and
obligations of FEBTC and do not include the employment contracts of its
personnel. A corporation cannot unilaterally transfer its employees to another
employer like chattel. Certainly, if BPI as an employer had the right to choose
who to retain among FEBTC’s employees, FEBTC employees had the
concomitant right to choose not to be absorbed by BPI. Even though FEBTC
employees had no choice or control over the merger of their employer with BPI,
they had a choice whether or not they would allow themselves to be absorbed by
BPI. Certainly nothing prevented the FEBTC’s employees from resigning or
retiring and seeking employment elsewhere instead of going along with the
proposed absorption.

Employment is a personal consensual contract and absorption by BPI of a former


FEBTC employee without the consent of the employee is in violation of an
individual’s freedom to contract. It would have been a different matter if there was
an express provision in the articles of merger that as a condition for the merger,
BPI was being required to assume all the employment contracts of all existing
FEBTC employees with the conformity of the employees. In the absence of such
a provision in the articles of merger, then BPI clearly had the business
management decision as to whether or not employ FEBTC’s employees. FEBTC
employees likewise retained the prerogative to allow themselves to be absorbed
or not; otherwise, that would be tantamount to involuntary servitude.

There appears to be no dispute that with respect to FEBTC employees that BPI
chose not to employ or FEBTC employees who chose to retire or be separated
from employment instead of "being absorbed," BPI’s assumed liability to these
employees pursuant to the merger is FEBTC’s liability to them in terms of
separation pay,29retirement pay30 or other benefits that may be due them
depending on the circumstances.

Legal Consequences of Mergers

Although not binding on this Court, American jurisprudence on the consequences


of voluntary mergers on the right to employment and seniority rights is
persuasive and illuminating. We quote the following pertinent discussion from the
American Law Reports:
Several cases have involved the situation where as a result of mergers,
consolidations, or shutdowns, one group of employees, who had accumulated
seniority at one plant or for one employer, finds that their jobs have been
discontinued except to the extent that they are offered employment at the place
or by the employer where the work is to be carried on in the future. Such cases
have involved the question whether such transferring employees should be
entitled to carry with them their accumulated seniority or whether they are to be
compelled to start over at the bottom of the seniority list in the "new" job. It has
been recognized in some cases that the accumulated seniority does not survive
and cannot be transferred to the "new" job.

In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of three
formerly separate railroad corporations, which had previously operated separate
facilities, was consolidated in the shops of one of the roads. Displaced
employees of the other two roads were given preference for the new jobs created
in the shops of the railroad which took over the work. A controversy arose
between the employees as to whether the displaced employees were entitled to
carry with them to the new jobs the seniority rights they had accumulated with
their prior employers, that is, whether the rosters of the three corporations, for
seniority purposes, should be "dovetailed" or whether the transferring employees
should go to the bottom of the roster of their new employer. Labor
representatives of the various systems involved attempted to work out an
agreement which, in effect, preserved the seniority status obtained in the prior
employment on other roads, and the action was for specific performance of this
agreement against a demurring group of the original employees of the railroad
which was operating the consolidated shops. The relief sought was denied, the
court saying that, absent some specific contract provision otherwise, seniority
rights were ordinarily limited to the employment in which they were earned, and
concluding that the contract for which specific performance was sought was not
such a completed and binding agreement as would support such equitable relief,
since the railroad, whose concurrence in the arrangements made was essential
to their effectuation, was not a party to the agreement.

Where the provisions of a labor contract provided that in the event that a
trucker absorbed the business of another private contractor or common carrier,
or was a party to a merger of lines, the seniority of the employees absorbedor
affected thereby should be determined by mutual agreement between the trucker
and the unions involved, it was held in Moore v International Brotherhood of
Teamsters, etc. (1962, Ky) 356 SW2d 241, that the trucker was not required to
absorb the affected employees as well as the business, the court saying that they
could find no such meaning in the above clause, stating that it dealt only with
seniority, and not with initial employment. Unless and until the absorbing
company agreed to take the employees of the company whose business was
being absorbed, no seniority problem was created, said the court, hence the
provision of the contract could have no application. Furthermore, said the court, it
did not require that the absorbing company take these employees, but only that if
it did take them the question of seniority between the old
and new employees would be worked out by agreement or else be submitted to
the grievance procedure.31 (Emphasis ours.)

Indeed, from the tenor of local and foreign authorities, in voluntary mergers,
absorption of the dissolved corporation’s employees or the recognition of the
absorbed employees’ service with their previous employer may be demanded
from the surviving corporation if required by provision of law or contract. The
dissent of Justice Arturo D. Brion tries to make a distinction as to the terms and
conditions of employment of the absorbed employees in the case of a corporate
merger or consolidation which will, in effect, take away from corporate
management the prerogative to make purely business decisions on the hiring of
employees or will give it an excuse not to apply the CBA in force to the prejudice
of its own employees and their recognized collective bargaining agent. In this
regard, we disagree with Justice Brion.

Justice Brion takes the position that because the surviving corporation continues
the personality of the dissolved corporation and acquires all the latter’s rights and
obligations, it is duty-bound to absorb the dissolved corporation’s employees,
even in the absence of a stipulation in the plan of merger. He proposes that this
interpretation would provide the necessary protection to labor as it spares
workers from being "left in legal limbo."

However, there are instances where an employer can validly discontinue or


terminate the employment of an employee without violating his right to security of
tenure. Among others, in case of redundancy, for example, superfluous
employees may be terminated and such termination would be authorized under
Article 283 of the Labor Code.32

Moreover, assuming for the sake of argument that there is an obligation to hire or
absorb all employees of the non-surviving corporation, there is still no basis to
conclude that the terms and conditions of employment under a valid collective
bargaining agreement in force in the surviving corporation should not be made to
apply to the absorbed employees.

The Corporation Code and the Subject Merger Agreement are Silent on Efficacy,
Terms and Conditions of Employment Contracts

The lack of a provision in the plan of merger regarding the transfer of


employment contracts to the surviving corporation could have very well been
deliberate on the part of the parties to the merger, in order to grant the surviving
corporation the freedom to choose who among the dissolved corporation’s
employees to retain, in accordance with the surviving corporation’s business
needs. If terminations, for instance due to redundancy or labor-saving devices or
to prevent losses, are done in good faith, they would be valid. The surviving
corporation too is duty-bound to protect the rights of its own employees who may
be affected by the merger in terms of seniority and other conditions of their
employment due to the merger. Thus, we are not convinced that in the absence
of a stipulation in the merger plan the surviving corporation was compelled, or
may be judicially compelled, to absorb all employees under the same terms and
conditions obtaining in the dissolved corporation as the surviving corporation
should also take into consideration the state of its business and its obligations to
its own employees, and to their certified collective bargaining agent or labor
union.

Even assuming we accept Justice Brion’s theory that in a merger situation the
surviving corporation should be compelled to absorb the dissolved corporation’s
employees as a legal consequence of the merger and as a social justice
consideration, it bears to emphasize his dissent also recognizes that the
employee may choose to end his employment at any time by voluntarily
resigning. For the employee to be "absorbed" by BPI, it requires the employees’
implied or express consent. It is because of this human element in employment
contracts and the personal, consensual nature thereof that we cannot agree that,
in a merger situation, employment contracts are automatically transferable from
one entity to another in the same manner that a contract pertaining to purely
proprietary rights – such as a promissory note or a deed of sale of property – is
perfectly and automatically transferable to the surviving corporation.

That BPI is the same entity as FEBTC after the merger is but a legal fiction
intended as a tool to adjudicate rights and obligations between and among the
merged corporations and the persons that deal with them. Although in a merger it
is as if there is no change in the personality of the employer, there is in reality a
change in the situation of the employee. Once an FEBTC employee is absorbed,
there are presumably changes in his condition of employment even if his
previous tenure and salary rate is recognized by BPI. It is reasonable to assume
that BPI would have different rules and regulations and company practices than
FEBTC and it is incumbent upon the former FEBTC employees to obey these
new rules and adapt to their new environment. Not the least of the changes in
employment condition that the absorbed FEBTC employees must face is the fact
that prior to the merger they were employees of an unorganized establishment
and after the merger they became employees of a unionized company that had
an existing collective bargaining agreement with the certified union. This
presupposes that the union who is party to the collective bargaining agreement is
the certified union that has, in the appropriate certification election, been shown
to represent a majority of the members of the bargaining unit.

Likewise, with respect to FEBTC employees that BPI chose to employ and who
also chose to be absorbed, then due to BPI’s blanket assumption of liabilities and
obligations under the articles of merger, BPI was bound to respect the years of
service of these FEBTC employees and to pay the same, or commensurate
salaries and other benefits that these employees previously enjoyed with FEBTC.

As the Union likewise pointed out in its pleadings, there were benefits under
the CBA that the former FEBTC employees did not enjoy with their
previous employer. As BPI employees, they will enjoy all these CBA benefits
upon their "absorption." Thus, although in a sense BPI is continuing FEBTC’s
employment of these absorbed employees, BPI’s employment of these absorbed
employees was not under exactly the same terms and conditions as stated in the
latter’s employment contracts with FEBTC. This further strengthens the view that
BPI and the former FEBTC employees voluntarily contracted with each other for
their employment in the surviving corporation.

Proper Appreciation of the Term "New Employees" Under the CBA

In any event, it is of no moment that the former FEBTC employees retained the
regular status that they possessed while working for their former employer upon
their absorption by petitioner. This fact would not remove them from the scope of
the phrase "new employees" as contemplated in the Union Shop Clause of the
CBA, contrary to petitioner’s insistence that the term "new employees" only refers
to those who are initially hired as non-regular employees for possible regular
employment.

The Union Shop Clause in the CBA simply states that "new employees" who
during the effectivity of the CBA "may be regularly employed" by the Bank must
join the union within thirty (30) days from their regularization. There is nothing in
the said clause that limits its application to only new employees who possess
non-regular status, meaning probationary status, at the start of their employment.
Petitioner likewise failed to point to any provision in the CBA expressly excluding
from the Union Shop Clause new employees who are "absorbed" as regular
employees from the beginning of their employment. What is indubitable from the
Union Shop Clause is that upon the effectivity of the CBA, petitioner’s new
regular employees (regardless of the manner by which they became employees
of BPI) are required to join the Union as a condition of their continued
employment.
The dissenting opinion of Justice Brion dovetails with Justice Carpio’s view only
in their restrictive interpretation of who are "new employees" under the CBA. To
our dissenting colleagues, the phrase "new employees" (who are covered by the
union shop clause) should only include new employees who were hired as
probationary during the life of the CBA and were later granted regular status.
They propose that the former FEBTC employees who were deemed regular
employees from the beginning of their employment with BPI should be treated as
a special class of employees and be excluded from the union shop clause.

Justice Brion himself points out that there is no clear, categorical definition of
"new employee" in the CBA. In other words, the term "new employee" as used in
the union shop clause is used broadly without any qualification or distinction.
However, the Court should not uphold an interpretation of the term "new
employee" based on the general and extraneous provisions of the Corporation
Code on merger that would defeat, rather than fulfill, the purpose of the union
shop clause. To reiterate, the provision of the Article 248(e) of the Labor Code in
point mandates that nothing in the said Code or any other law should stop the
parties from requiring membership in a recognized collective bargaining agent as
a condition of employment.

Significantly, petitioner BPI never stretches its arguments so far as to state that
the absorbed employees should be deemed "old employees" who are not
covered by the Union Shop Clause. This is not surprising.

By law and jurisprudence, a merger only becomes effective upon approval by the
Securities and Exchange Commission (SEC) of the articles of merger. In
Associated Bank v. Court of Appeals,33 we held:

The procedure to be followed is prescribed under the Corporation Code. Section


79 of said Code requires the approval by the Securities and Exchange
Commission (SEC) of the articles of merger which, in turn, must have been duly
approved by a majority of the respective stockholders of the constituent
corporations. The same provision further states that the merger shall be effective
only upon the issuance by the SEC of a certificate of merger. The effectivity date
of the merger is crucial for determining when the merged or absorbed corporation
ceases to exist; and when its rights, privileges, properties as well as liabilities
pass on to the surviving corporation. (Emphasis ours.)

In other words, even though BPI steps into the shoes of FEBTC as the surviving
corporation, BPI does so at a particular point in time, i.e., the effectivity of the
merger upon the SEC’s issuance of a certificate of merger. In fact, the articles of
merger themselves provided that both BPI and FEBTC will continue their
respective business operations until the SEC issues the certificate of merger and
in the event SEC does not issue such a certificate, they agree to hold each other
blameless for the non-consummation of the merger.

Considering the foregoing principle, BPI could have only become the employer of
the FEBTC employees it absorbed after the approval by the SEC of the merger.
If the SEC did not approve the merger, BPI would not be in the position to absorb
the employees of FEBTC at all. Indeed, there is evidence on record that BPI
made the assignments of its absorbed employees in BPI effective April 10, 2000,
or after the SEC’s approval of the merger.34 In other words, BPI became the
employer of the absorbed employees only at some point after the effectivity of
the merger, notwithstanding the fact that the absorbed employees’ years of
service with FEBTC were voluntarily recognized by BPI.

Even assuming for the sake of argument that we consider the absorbed FEBTC
employees as "old employees" of BPI who are not members of any union (i.e., it
is their date of hiring by FEBTC and not the date of their absorption that is
considered), this does not necessarily exclude them from the union security
clause in the CBA. The CBA subject of this case was effective from April 1, 1996
until March 31, 2001. Based on the allegations of the former FEBTC employees
themselves, there were former FEBTC employees who were hired by FEBTC
after April 1, 1996 and if their date of hiring by FEBTC is considered as their
date of hiring by BPI, they would undeniably be considered "new employees" of
BPI within the contemplation of the Union Shop Clause of the said CBA.
Otherwise, it would lead to the absurd situation that we would discriminate not
only between new BPI employees (hired during the life of the CBA) and former
FEBTC employees (absorbed during the life of the CBA) but also among the
former FEBTC employees themselves. In other words, we would be treating
employees who are exactly similarly situated (i.e., the group of absorbed FEBTC
employees) differently. This hardly satisfies the demands of equality and justice.

Petitioner limited itself to the argument that its absorbed employees do not fall
within the term "new employees" contemplated under the Union Shop Clause
with the apparent objective of excluding all, and not just some, of the former
FEBTC employees from the application of the Union Shop Clause.

However, in law or even under the express terms of the CBA, there is no special
class of employees called "absorbed employees." In order for the Court to apply
or not apply the Union Shop Clause, we can only classify the former FEBTC
employees as either "old" or "new." If they are not "old" employees, they are
necessarily "new" employees. If they are new employees, the Union Shop
Clause did not distinguish between new employees who are non-regular at their
hiring but who subsequently become regular and new employees who are
"absorbed" as regular and permanent from the beginning of their employment.
The Union Shop Clause did not so distinguish, and so neither must we.

No Substantial Distinction Under the CBA Between Regular Employees


Hired After Probationary Status and Regular Employees Hired After the
Merger

Verily, we agree with the Court of Appeals that there are no substantial
differences between a newly hired non-regular employee who was regularized
weeks or months after his hiring and a new employee who was absorbed from
another bank as a regular employee pursuant to a merger, for purposes of
applying the Union Shop Clause. Both employees were hired/employed only after
the CBA was signed. At the time they are being required to join the Union, they
are both already regular rank and file employees of BPI. They belong to the
same bargaining unit being represented by the Union. They both enjoy benefits
that the Union was able to secure for them under the CBA. When they both
entered the employ of BPI, the CBA and the Union Shop Clause therein were
already in effect and neither of them had the opportunity to express their
preference for unionism or not. We see no cogent reason why the Union Shop
Clause should not be applied equally to these two types of new employees, for
they are undeniably similarly situated.

The effect or consequence of BPI’s so-called "absorption" of former FEBTC


employees should be limited to what they actually agreed to, i.e. recognition of
the FEBTC employees’ years of service, salary rate and other benefits with their
previous employer. The effect should not be stretched so far as to exempt former
FEBTC employees from the existing CBA terms, company policies and rules
which apply to employees similarly situated. If the Union Shop Clause is valid as
to other new regular BPI employees, there is no reason why the same clause
would be a violation of the "absorbed" employees’ freedom of association.

Non-Application of Union Shop Clause Contrary to the Policy of the Labor


Code and Inimical to Industrial Peace

It is but fair that similarly situated employees who enjoy the same privileges of a
CBA should be likewise subject to the same obligations the CBA imposes upon
them. A contrary interpretation of the Union Shop Clause will be inimical to
industrial peace and workers’ solidarity. This unfavorable situation will not be
sufficiently addressed by asking the former FEBTC employees to simply pay
agency fees to the Union in lieu of union membership, as the dissent of Justice
Carpio suggests. The fact remains that other new regular employees, to whom
the "absorbed employees" should be compared, do not have the option to simply
pay the agency fees and they must join the Union or face termination.
Petitioner’s restrictive reading of the Union Shop Clause could also inadvertently
open an avenue, which an employer could readily use, in order to dilute the
membership base of the certified union in the collective bargaining unit (CBU). By
entering into a voluntary merger with a non-unionized company that employs
more workers, an employer could get rid of its existing union by the simple
expedient of arguing that the "absorbed employees" are not new employees, as
are commonly understood to be covered by a CBA’s union security clause. This
could then lead to a new majority within the CBU that could potentially threaten
the majority status of the existing union and, ultimately, spell its demise as the
CBU’s bargaining representative. Such a dreaded but not entirely far-fetched
scenario is no different from the ingenious and creative "union-busting" schemes
that corporations have fomented throughout the years, which this Court has
foiled time and again in order to preserve and protect the valued place of labor in
this jurisdiction consistent with the Constitution’s mandate of insuring social
justice.

There is nothing in the Labor Code and other applicable laws or the CBA
provision at issue that requires that a new employee has to be of probationary or
non-regular status at the beginning of the employment relationship. An employer
may confer upon a new employee the status of regular employment even at the
onset of his engagement. Moreover, no law prohibits an employer from
voluntarily recognizing the length of service of a new employee with a previous
employer in relation to computation of benefits or seniority but it should not
unduly be interpreted to exclude them from the coverage of the CBA which is a
binding contractual obligation of the employer and employees.

Indeed, a union security clause in a CBA should be interpreted to give meaning


and effect to its purpose, which is to afford protection to the certified bargaining
agent and ensure that the employer is dealing with a union that represents the
interests of the legally mandated percentage of the members of the bargaining
unit.

The union shop clause offers protection to the certified bargaining agent by
ensuring that future regular employees who (a) enter the employ of the company
during the life of the CBA; (b) are deemed part of the collective bargaining unit;
and (c) whose number will affect the number of members of the collective
bargaining unit will be compelled to join the union. Such compulsion has legal
effect, precisely because the employer by voluntarily entering in to a union shop
clause in a CBA with the certified bargaining agent takes on the responsibility of
dismissing the new regular employee who does not join the union.

Without the union shop clause or with the restrictive interpretation thereof as
proposed in the dissenting opinions, the company can jeopardize the majority
status of the certified union by excluding from union membership all new regular
employees whom the Company will "absorb" in future mergers and all new
regular employees whom the Company hires as regular from the beginning of
their employment without undergoing a probationary period. In this manner, the
Company can increase the number of members of the collective bargaining unit
and if this increase is not accompanied by a corresponding increase in union
membership, the certified union may lose its majority status and render it
vulnerable to attack by another union who wishes to represent the same
bargaining unit.35

Or worse, a certified union whose membership falls below twenty percent (20%)
of the total members of the collective bargaining unit may lose its status as a
legitimate labor organization altogether, even in a situation where there is no
competing union.36 In such a case, an interested party may file for the
cancellation of the union’s certificate of registration with the Bureau of Labor
Relations.37

Plainly, the restrictive interpretation of the union shop clause would place the
certified union’s very existence at the mercy and control of the
employer. Relevantly, only BPI, the employer appears to be interested in
pursuing this case. The former FEBTC employees have not joined BPI in this
appeal.

For the foregoing reasons, Justice Carpio’s proposal to simply require the former
FEBTC to pay agency fees is wholly inadequate to compensate the certified
union for the loss of additional membership supposedly guaranteed by
compliance with the union shop clause. This is apart from the fact that treating
these "absorbed employees" as a special class of new employees does not
encourage worker solidarity in the company since another class of new
employees (i.e. those whose were hired as probationary and later regularized
during the life of the CBA) would not have the option of substituting union
membership with payment of agency fees.

Justice Brion, on the other hand, appears to recognize the inherent unfairness of
perpetually excluding the "absorbed" employees from the ambit of the union shop
clause. He proposes that this matter be left to negotiation by the parties in the
next CBA. To our mind, however, this proposal does not sufficiently address the
issue. With BPI already taking the position that employees "absorbed" pursuant
to its voluntary mergers with other banks are exempt from the union shop clause,
the chances of the said bank ever agreeing to the inclusion of such employees in
a future CBA is next to nil – more so, if BPI’s narrow interpretation of the union
shop clause is sustained by this Court.
Right of an Employee not to Join a Union is not Absolute and Must Give Way to
the Collective Good of All Members of the Bargaining Unit

The dissenting opinions place a premium on the fact that even if the former
FEBTC employees are not old employees, they nonetheless were employed as
regular and permanent employees without a gap in their service. However, an
employee’s permanent and regular employment status in itself does not
necessarily exempt him from the coverage of a union shop clause.

In the past this Court has upheld even the more stringent type of union security
clause, i.e., the closed shop provision, and held that it can be made applicable to
old employees who are already regular and permanent but have chosen not to
join a union. In the early case of Juat v. Court of Industrial Relations,38 the Court
held that an old employee who had no union may be compelled to join the union
even if the collective bargaining agreement (CBA) imposing the closed shop
provision was only entered into seven years after of the hiring of the said
employee. To quote from that decision:

A closed-shop agreement has been considered as one form of union security


whereby only union members can be hired and workers must remain union
members as a condition of continued employment. The requirement for
employees or workers to become members of a union as a condition for
employment redounds to the benefit and advantage of said employees because
by holding out to loyal members a promise of employment in the closed-shop the
union wields group solidarity. In fact, it is said that "the closed-shop contract is
the most prized achievement of unionism."

xxxx

This Court had categorically held in the case of Freeman Shirt Manufacturing
Co., Inc., et al. vs. Court of Industrial Relations, et al., G.R. No. L-16561, Jan. 28,
1961, that the closed-shop proviso of a collective bargaining agreement entered
into between an employer and a duly authorized labor union is applicable not
only to the employees or laborers that are employed after the collective
bargaining agreement had been entered into but also to old employees who are
not members of any labor union at the time the said collective bargaining
agreement was entered into. In other words, if an employee or laborer is already
a member of a labor union different from the union that entered into a collective
bargaining agreement with the employer providing for a closed-shop, said
employee or worker cannot be obliged to become a member of that union which
had entered into a collective bargaining agreement with the employer as a
condition for his continued employment. (Emphasis and underscoring supplied.)
Although the present case does not involve a closed shop provision that included
even old employees, the Juat example is but one of the cases that laid down the
doctrine that the right not to join a union is not absolute. Theoretically, there is
nothing in law or jurisprudence to prevent an employer and a union from
stipulating that existing employees (who already attained regular and permanent
status but who are not members of any union) are to be included in the coverage
of a union security clause. Even Article 248(e) of the Labor Code only expressly
exempts old employees who already have a union from inclusion in a union
security clause.39

Contrary to the assertion in the dissent of Justice Carpio, Juat has not been
overturned by Victoriano v. Elizalde Rope Workers’ Union40 nor by Reyes v.
Trajano.41 The factual milieus of these three cases are vastly different.

In Victoriano, the issue that confronted the Court was whether or not employees
who were members of the Iglesia ni Kristo (INK) sect could be compelled to join
the union under a closed shop provision, despite the fact that their religious
beliefs prohibited them from joining a union. In that case, the Court was asked to
balance the constitutional right to religious freedom against a host of other
constitutional provisions including the freedom of association, the non-
establishment clause, the non-impairment of contracts clause, the equal
protection clause, and the social justice provision. In the end, the Court held that
"religious freedom, although not unlimited, is a fundamental personal right and
liberty, and has a preferred position in the hierarchy of values."42

However, Victoriano is consistent with Juat since they both affirm that the right to
refrain from joining a union is not absolute. The relevant portion of Victoriano is
quoted below:

The right to refrain from joining labor organizations recognized by Section 3 of


the Industrial Peace Act is, however, limited. The legal protection granted to such
right to refrain from joining is withdrawn by operation of law, where a labor union
and an employer have agreed on a closed shop, by virtue of which the employer
may employ only member of the collective bargaining union, and the employees
must continue to be members of the union for the duration of the contract in order
to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be an
unfair labor practice for an employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage
membership in any labor organization" the employer is, however, not precluded
"from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative
of the employees." By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must become a
member of the collective bargaining union. Hence, the right of said employee not
to join the labor union is curtailed and withdrawn.43 (Emphases supplied.)

If Juat exemplified an exception to the rule that a person has the right not to join
a union, Victoriano merely created an exception to the exception on the ground
of religious freedom.

Reyes, on the other hand, did not involve the interpretation of any union security
clause. In that case, there was no certified bargaining agent yet since the
controversy arose during a certification election. In Reyes, the Court highlighted
the idea that the freedom of association included the right not to associate or join
a union in resolving the issue whether or not the votes of members of the INK
sect who were part of the bargaining unit could be excluded in the results of a
certification election, simply because they were not members of the two
contesting unions and were expected to have voted for "NO UNION" in view of
their religious affiliation. The Court upheld the inclusion of the votes of the INK
members since in the previous case of Victoriano we held that INK members
may not be compelled to join a union on the ground of religious freedom and
even without Victoriano every employee has the right to vote "no union" in a
certification election as part of his freedom of association. However, Reyes is not
authority for Justice Carpio’s proposition that an employee who is not a member
of any union may claim an exemption from an existing union security clause
because he already has regular and permanent status but simply prefers not to
join a union.

The other cases cited in Justice Carpio’s dissent on this point are likewise
inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas,44 Anucension v. National Labor Union,45 and Gonzales
v. Central Azucarera de Tarlac Labor Union46 all involved members of the INK. In
line with Victoriano, these cases upheld the INK members’ claimed exemption
from the union security clause on religious grounds. In the present case, the
former FEBTC employees never claimed any religious grounds for their
exemption from the Union Shop Clause. As for Philips Industrial Development,
Inc. v. National Labor Relations Corporation47 and Knitjoy Manufacturing, Inc. v.
Ferrer-Calleja,48 the employees who were exempted from joining the respondent
union or who were excluded from participating in the certification election were
found to be not members of the bargaining unit represented by respondent union
and were free to form/join their own union. In the case at bar, it is undisputed that
the former FEBTC employees were part of the bargaining unit that the Union
represented. Thus, the rulings in Philips and Knitjoy have no relevance to the
issues at hand.
Time and again, this Court has ruled that the individual employee’s right not to
join a union may be validly restricted by a union security clause in a CBA49 and
such union security clause is not a violation of the employee’s constitutional right
to freedom of association.50

It is unsurprising that significant provisions on labor protection of the 1987


Constitution are found in Article XIII on Social Justice. The constitutional
guarantee given the right to form unions51 and the State policy to promote
unionism52 have social justice considerations. In People’s Industrial and
Commercial Employees and Workers Organization v. People’s Industrial and
Commercial Corporation,53 we recognized that "[l]abor, being the weaker in
economic power and resources than capital, deserve protection that is actually
substantial and material."

The rationale for upholding the validity of union shop clauses in a CBA, even if
they impinge upon the individual employee’s right or freedom of association, is
not to protect the union for the union’s sake. Laws and jurisprudence promote
unionism and afford certain protections to the certified bargaining agent in a
unionized company because a strong and effective union presumably benefits all
employees in the bargaining unit since such a union would be in a better position
to demand improved benefits and conditions of work from the employer. This is
the rationale behind the State policy to promote unionism declared in the
Constitution, which was elucidated in the above-cited case of Liberty Flour Mills
Employees v. Liberty Flour Mills, Inc.54

In the case at bar, since the former FEBTC employees are deemed covered by
the Union Shop Clause, they are required to join the certified bargaining agent,
which supposedly has gathered the support of the majority of workers within the
bargaining unit in the appropriate certification proceeding. Their joining the
certified union would, in fact, be in the best interests of the former FEBTC
employees for it unites their interests with the majority of employees in the
bargaining unit. It encourages employee solidarity and affords sufficient
protection to the majority status of the union during the life of the CBA which are
the precisely the objectives of union security clauses, such as the Union Shop
Clause involved herein. We are indeed not being called to balance the interests
of individual employees as against the State policy of promoting unionism, since
the employees, who were parties in the court below, no longer contested the
adverse Court of Appeals’ decision. Nonetheless, settled jurisprudence has
already swung the balance in favor of unionism, in recognition that ultimately the
individual employee will be benefited by that policy. In the hierarchy of
constitutional values, this Court has repeatedly held that the right to abstain from
joining a labor organization is subordinate to the policy of encouraging unionism
as an instrument of social justice.
Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire
consequences to the former FEBTC employees who refuse to join the union is
the forfeiture of their retirement benefits. This is clearly not the case precisely
because BPI expressly recognized under the merger the length of service of the
absorbed employees with FEBTC. Should some refuse to become members of
the union, they may still opt to retire if they are qualified under the law, the
applicable retirement plan, or the CBA, based on their combined length of service
with FEBTC and BPI. Certainly, there is nothing in the union shop clause that
should be read as to curtail an employee’s eligibility to apply for retirement if
qualified under the law, the existing retirement plan, or the CBA as the case may
be.

In sum, this Court finds it reasonable and just to conclude that the Union Shop
Clause of the CBA covers the former FEBTC employees who were
hired/employed by BPI during the effectivity of the CBA in a manner which
petitioner describes as "absorption." A contrary appreciation of the facts of this
case would, undoubtedly, lead to an inequitable and very volatile labor situation
which this Court has consistently ruled against.1av vphi1

In the case of former FEBTC employees who initially joined the union but later
withdrew their membership, there is even greater reason for the union to request
their dismissal from the employer since the CBA also contained a Maintenance of
Membership Clause.

A final point in relation to procedural due process, the Court is not unmindful that
the former FEBTC employees’ refusal to join the union and BPI’s refusal to
enforce the Union Shop Clause in this instance may have been based on the
honest belief that the former FEBTC employees were not covered by said clause.
In the interest of fairness, we believe the former FEBTC employees should be
given a fresh thirty (30) days from notice of finality of this decision to join the
union before the union demands BPI to terminate their employment under the
Union Shop Clause, assuming said clause has been carried over in the present
CBA and there has been no material change in the situation of the parties.

WHEREFORE, the petition is hereby DENIED, and the Decision dated


September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty
(30) day notice requirement imposed herein. Former FEBTC employees who opt
not to become union members but who qualify for retirement shall receive their
retirement benefits in accordance with law, the applicable retirement plan, or the
CBA, as the case may be.
G.R. No. 164301 October 19, 2011

BANK OF THE PHILIPPINE ISLANDS, Petitioner,


vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN
BPI UNIBANK, Respondent.

RESOLUTION

LEONARDO-DE CASTRO, J.:

In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for
reconsideration1 of our Decision dated August 10, 2010, holding that former
employees of the Far East Bank and Trust Company (FEBTC) "absorbed" by BPI
pursuant to the two banks’ merger in 2000 were covered by the Union Shop
Clause in the then existing collective bargaining agreement (CBA)2 of BPI with
respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank (the Union).

To recall, the Union Shop Clause involved in this long standing controversy
provided, thus:

ARTICLE II

xxxx

Section 2. Union Shop - New employees falling within the bargaining unit as
defined in Article I of this Agreement, who may hereafter be regularly employed
by the Bank shall, within thirty (30) days after they become regular employees,
join the Union as a condition of their continued employment. It is understood that
membership in good standing in the Union is a condition of their continued
employment with the Bank.3 (Emphases supplied.)

The bone of contention between the parties was whether or not the "absorbed"
FEBTC employees fell within the definition of "new employees" under the Union
Shop Clause, such that they may be required to join respondent union and if they
fail to do so, the Union may request BPI to terminate their employment, as the
Union in fact did in the present case. Needless to state, BPI refused to accede to
the Union’s request. Although BPI won the initial battle at the Voluntary Arbitrator
level, BPI’s position was rejected by the Court of Appeals which ruled that the
Voluntary Arbitrator’s interpretation of the Union Shop Clause was at war with the
spirit and rationale why the Labor Code allows the existence of such provision.
On review with this Court, we upheld the appellate court’s ruling and disposed of
the case as follows:

WHEREFORE, the petition is hereby DENIED, and the Decision dated


September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty
(30) day notice requirement imposed herein. Former FEBTC employees who opt
not to become union members but who qualify for retirement shall receive their
retirement benefits in accordance with law, the applicable retirement plan, or the
CBA, as the case may be.4

Notwithstanding our affirmation of the applicability of the Union Shop Clause to


former FEBTC employees, for reasons already extensively discussed in the
August 10, 2010 Decision, even now BPI continues to protest the inclusion of
said employees in the Union Shop Clause.

In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the
parties to the CBA clearly intended to limit the application of the Union Shop
Clause only to new employees who were hired as non-regular employees but
later attained regular status at some point after hiring. FEBTC employees cannot
be considered new employees as BPI merely stepped into the shoes of FEBTC
as an employer purely as a consequence of the merger.5

Petitioner likewise relies heavily on the dissenting opinions of our respected


colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From both
dissenting opinions, petitioner derives its contention that "the situation of
absorbed employees can be likened to old employees of BPI, insofar as their full
tenure with FEBTC was recognized by BPI and their salaries were maintained
and safeguarded from diminution" but such absorbed employees "cannot and
should not be treated in exactly the same way as old BPI employees for there are
substantial differences between them."6 Although petitioner admits that there are
similarities between absorbed and new employees, they insist there are marked
differences between them as well. Thus, adopting Justice Brion’s stance,
petitioner contends that the absorbed FEBTC employees should be considered
"a sui generis group of employees whose classification will not be duplicated until
BPI has another merger where it would be the surviving corporation."7 Apparently
borrowing from Justice Carpio, petitioner propounds that the Union Shop Clause
should be strictly construed since it purportedly curtails the right of the absorbed
employees to abstain from joining labor organizations.8

Pursuant to our directive, the Union filed its Comment9 on the Motion for
Reconsideration. In opposition to petitioner’s arguments, the Union, in turn,
adverts to our discussion in the August 10, 2010 Decision regarding the voluntary
nature of the merger between BPI and FEBTC, the lack of an express stipulation
in the Articles of Merger regarding the transfer of employment contracts to the
surviving corporation, and the consensual nature of employment contracts as
valid bases for the conclusion that former FEBTC employees should be deemed
new employees.10 The Union argues that the creation of employment relations
between former FEBTC employees and BPI (i.e., BPI’s selection and
engagement of former FEBTC employees, its payment of their wages, power of
dismissal and of control over the employees’ conduct) occurred after the merger,
or to be more precise, after the Securities and Exchange Commission’s (SEC)
approval of the merger.11 The Union likewise points out that BPI failed to offer
any counterargument to the Court’s reasoning that:

The rationale for upholding the validity of union shop clauses in a CBA, even if
they impinge upon the individual employee's right or freedom of association, is
not to protect the union for the union's sake. Laws and jurisprudence promote
unionism and afford certain protections to the certified bargaining agent in a
unionized company because a strong and effective union presumably benefits all
employees in the bargaining unit since such a union would be in a better position
to demand improved benefits and conditions of work from the employer. x x x.

x x x Nonetheless, settled jurisprudence has already swung the balance in favor


of unionism, in recognition that ultimately the individual employee will be
benefited by that policy. In the hierarchy of constitutional values, this Court has
repeatedly held that the right to abstain from joining a labor organization is
subordinate to the policy of encouraging unionism as an instrument of social
justice.12

While most of the arguments offered by BPI have already been thoroughly
addressed in the August 10, 2010 Decision, we find that a qualification of our
ruling is in order only with respect to the interpretation of the provisions of the
Articles of Merger and its implications on the former FEBTC employees’ security
of tenure.

Taking a second look on this point, we have come to agree with Justice Brion’s
view that it is more in keeping with the dictates of social justice and the State
policy of according full protection to labor to deem employment contracts as
automatically assumed by the surviving corporation in a merger, even in the
absence of an express stipulation in the articles of merger or the merger plan. In
his dissenting opinion, Justice Brion reasoned that:

To my mind, due consideration of Section 80 of the Corporation Code, the


constitutionally declared policies on work, labor and employment, and the
specific FEBTC-BPI situation — i.e., a merger with complete "body and soul"
transfer of all that FEBTC embodied and possessed and where both participating
banks were willing (albeit by deed, not by their written agreement) to provide for
the affected human resources by recognizing continuity of employment — should
point this Court to a declaration that in a complete merger situation where there
is total takeover by one corporation over another and there is silence in the
merger agreement on what the fate of the human resource complement shall be,
the latter should not be left in legal limbo and should be properly provided for, by
compelling the surviving entity to absorb these employees. This is what Section
80 of the Corporation Code commands, as the surviving corporation has the legal
obligation to assume all the obligations and liabilities of the merged constituent
corporation.

Not to be forgotten is that the affected employees managed, operated and


worked on the transferred assets and properties as their means of livelihood;
they constituted a basic component of their corporation during its existence. In a
merger and consolidation situation, they cannot be treated without consideration
of the applicable constitutional declarations and directives, or, worse, be simply
disregarded. If they are so treated, it is up to this Court to read and interpret the
law so that they are treated in accordance with the legal requirements of mergers
and consolidation, read in light of the social justice, economic and social
provisions of our Constitution. Hence, there is a need for the surviving
corporation to take responsibility for the affected employees and to absorb them
into its workforce where no appropriate provision for the merged corporation's
human resources component is made in the Merger Plan.13

By upholding the automatic assumption of the non-surviving corporation’s


existing employment contracts by the surviving corporation in a merger, the Court
strengthens judicial protection of the right to security of tenure of employees
affected by a merger and avoids confusion regarding the status of their various
benefits which were among the chief objections of our dissenting colleagues.
However, nothing in this Resolution shall impair the right of an employer to
terminate the employment of the absorbed employees for a lawful or authorized
cause or the right of such an employee to resign, retire or otherwise sever his
employment, whether before or after the merger, subject to existing contractual
obligations. In this manner, Justice Brion’s theory of automatic assumption may
be reconciled with the majority’s concerns with the successor employer’s
prerogative to choose its employees and the prohibition against involuntary
servitude.1avv phi1

Notwithstanding this concession, we find no reason to reverse our previous


pronouncement that the absorbed FEBTC employees are covered by the Union
Shop Clause.
Even in our August 10, 2010 Decision, we already observed that the legal fiction
in the law on mergers (that the surviving corporation continues the corporate
existence of the non-surviving corporation) is mainly a tool to adjudicate the
rights and obligations between and among the merged corporations and the
persons that deal with them.14 Such a legal fiction cannot be unduly extended to
an interpretation of a Union Shop Clause so as to defeat its purpose under labor
law. Hence, we stated in the Decision that:

In any event, it is of no moment that the former FEBTC employees retained the
regular status that they possessed while working for their former employer upon
their absorption by petitioner. This fact would not remove them from the scope of
the phrase "new employees" as contemplated in the Union Shop Clause of the
CBA, contrary to petitioner's insistence that the term "new employees" only refers
to those who are initially hired as non-regular employees for possible regular
employment.

The Union Shop Clause in the CBA simply states that "new employees" who
during the effectivity of the CBA "may be regularly employed" by the Bank must
join the union within thirty (30) days from their regularization. There is nothing in
the said clause that limits its application to only new employees who possess
non-regular status, meaning probationary status, at the start of their employment.
Petitioner likewise failed to point to any provision in the CBA expressly excluding
from the Union Shop Clause new employees who are "absorbed" as regular
employees from the beginning of their employment. What is indubitable from the
Union Shop Clause is that upon the effectivity of the CBA, petitioner's new
regular employees (regardless of the manner by which they became employees
of BPI) are required to join the Union as a condition of their continued
employment.15

Although by virtue of the merger BPI steps into the shoes of FEBTC as a
successor employer as if the former had been the employer of the latter’s
employees from the beginning it must be emphasized that, in reality, the legal
consequences of the merger only occur at a specific date, i.e., upon its effectivity
which is the date of approval of the merger by the SEC. Thus, we observed in the
Decision that BPI and FEBTC stipulated in the Articles of Merger that they will
both continue their respective business operations until the SEC issues the
certificate of merger and in the event no such certificate is issued, they shall hold
each other blameless for the non-consummation of the merger.16We likewise
previously noted that BPI made its assignments of the former FEBTC employees
effective on April 10, 2000, or after the SEC approved the merger.17 In other
words, the obligation of BPI to pay the salaries and benefits of the former FEBTC
employees and its right of discipline and control over them only arose with the
effectivity of the merger. Concomitantly, the obligation of former FEBTC
employees to render service to BPI and their right to receive benefits from the
latter also arose upon the effectivity of the merger. What is material is that all of
these legal consequences of the merger took place during the life of an existing
and valid CBA between BPI and the Union wherein they have mutually
consented to include a Union Shop Clause.

From the plain, ordinary meaning of the terms of the Union Shop Clause, it
covers employees who (a) enter the employ of BPI during the term of the CBA;
(b) are part of the bargaining unit (defined in the CBA as comprised of BPI’s rank
and file employees); and (c) become regular employees without distinguishing as
to the manner they acquire their regular status. Consequently, the number of
such employees may adversely affect the majority status of the Union and even
its existence itself, as already amply explained in the Decision.

Indeed, there are differences between (a) new employees who are hired as
probationary or temporary but later regularized, and (b) new employees who, by
virtue of a merger, are absorbed from another company as regular and
permanent from the beginning of their employment with the surviving corporation.
It bears reiterating here that these differences are too insubstantial to warrant the
exclusion of the absorbed employees from the application of the Union Shop
Clause. In the Decision, we noted that:

Verily, we agree with the Court of Appeals that there are no substantial
differences between a newly hired non-regular employee who was regularized
weeks or months after his hiring and a new employee who was absorbed from
another bank as a regular employee pursuant to a merger, for purposes of
applying the Union Shop Clause. Both employees were hired/employed only after
the CBA was signed. At the time they are being required to join the Union, they
are both already regular rank and file employees of BPI. They belong to the
same bargaining unit being represented by the Union. They both enjoy benefits
that the Union was able to secure for them under the CBA. When they both
entered the employ of BPI, the CBA and the Union Shop Clause therein were
already in effect and neither of them had the opportunity to express their
preference for unionism or not. We see no cogent reason why the Union Shop
Clause should not be applied equally to these two types of new employees, for
they are undeniably similarly situated.18

Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop


Clause would dilute its efficacy and put the certified union that is supposedly
being protected thereby at the mercy of management. For if the former FEBTC
employees had no say in the merger of its former employer with another bank, as
petitioner BPI repeatedly decries on their behalf, the Union likewise could not
prevent BPI from proceeding with the merger which undisputedly affected the
number of employees in the bargaining unit that the Union represents and may
negatively impact on the Union’s majority status. In this instance, we should be
guided by the principle that courts must place a practical and realistic
construction upon a CBA, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.19

We now come to the question: Does our affirmance of our ruling that former
FEBTC employees absorbed by BPI are covered by the Union Shop Clause
violate their right to security of tenure which we expressly upheld in this
Resolution? We answer in the negative.

In Rance v. National Labor Relations Commission,20 we held that:

It is the policy of the state to assure the right of workers to "security of tenure"
(Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973
Constitution). The guarantee is an act of social justice. When a person has no
property, his job may possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary deprivation of his job.
Article 280 of the Labor Code has construed security of tenure as meaning
that "the employer shall not terminate the services of an employee except
for a just cause or when authorized by" the Code. x x x (Emphasis supplied.)

We have also previously held that the fundamental guarantee of security of


tenure and due process dictates that no worker shall be dismissed except for a
just and authorized cause provided by law and after due process is
observed.21 Even as we now recognize the right to continuous, unbroken
employment of workers who are absorbed into a new company pursuant to a
merger, it is but logical that their employment may be terminated for any causes
provided for under the law or in jurisprudence without violating their right to
security of tenure. As Justice Carpio discussed in his dissenting opinion, it is
well-settled that termination of employment by virtue of a union security clause
embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines,
Inc. v. Saldivar,23 we explained the rationale for this policy in this wise:

Article 279 of the Labor Code ordains that "in cases of regular employment, the
employer shall not terminate the services of an employee except for a just cause
or when authorized by [Title I, Book Six of the Labor Code]." Admittedly, the
enforcement of a closed-shop or union security provision in the CBA as a
ground for termination finds no extension within any of the provisions
under Title I, Book Six of the Labor Code. Yet jurisprudence has
consistently recognized, thus: "It is State policy to promote unionism to
enable workers to negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and separately bargain with
the employer. For this reason, the law has allowed stipulations for 'union shop'
and 'closed shop' as means of encouraging workers to join and support the union
of their choice in the protection of their rights and interests vis-a-vis the
employer."24 (Emphasis supplied.)

Although it is accepted that non-compliance with a union security clause is a


valid ground for an employee’s dismissal, jurisprudence dictates that such a
dismissal must still be done in accordance with due process. This much we
decreed in General Milling Corporation v. Casio,25 to wit:

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M.


Greenfield v. Ramos that:

While respondent company may validly dismiss the employees expelled by the
union for disloyalty under the union security clause of the collective bargaining
agreement upon the recommendation by the union, this dismissal should not be
done hastily and summarily thereby eroding the employees' right to due process,
self-organization and security of tenure. The enforcement of union security
clauses is authorized by law provided such enforcement is not characterized by
arbitrariness, and always with due process. Even on the assumption that the
federation had valid grounds to expel the union officers, due process requires
that these union officers be accorded a separate hearing by respondent
company.

The twin requirements of notice and hearing constitute the essential elements of
procedural due process. The law requires the employer to furnish the employee
sought to be dismissed with two written notices before termination of employment
can be legally effected: (1) a written notice apprising the employee of the
particular acts or omissions for which his dismissal is sought in order to afford
him an opportunity to be heard and to defend himself with the assistance of
counsel, if he desires, and (2) a subsequent notice informing the employee of the
employer's decision to dismiss him. This procedure is mandatory and its absence
taints the dismissal with illegality.

Irrefragably, GMC cannot dispense with the requirements of notice and hearing
before dismissing Casio, et al. even when said dismissal is pursuant to the
closed shop provision in the CBA. The rights of an employee to be informed of
the charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own union are not wiped away by a
union security clause or a union shop clause in a collective bargaining
agreement. x x x26 (Emphases supplied.)
In light of the foregoing, we find it appropriate to state that, apart from the fresh
thirty (30)-day period from notice of finality of the Decision given to the affected
FEBTC employees to join the Union before the latter can request petitioner to
terminate the former’s employment, petitioner must still accord said employees
the twin requirements of notice and hearing on the possibility that they may have
other justifications for not joining the Union. Similar to our August 10, 2010
Decision, we reiterate that our ruling presupposes there has been no material
change in the situation of the parties in the interim.

WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated


August 10, 2010 is AFFIRMED, subject to the qualifications that:

(a) Petitioner is deemed to have assumed the employment contracts of the


Far East Bank and Trust Company (FEBTC) employees upon effectivity of
the merger without break in the continuity of their employment, even
without express stipulation in the Articles of Merger; and

(b) Aside from the thirty (30) days, counted from notice of finality of the
August 10, 2010 Decision, given to former FEBTC employees to join the
respondent, said employees shall be accorded full procedural due process
before their employment may be terminated.
G.R. No. 170112 April 30, 2008

DEL PILAR ACADEMY, EDUARDO ESPEJO and ELISEO OCAMPO,


JR., petitioners,
vs.
DEL PILAR ACADEMY EMPLOYEES UNION, respondents.

DECISION

NACHURA, J.:

Before this Court is a petition for review on certiorari assailing the July 19, 2005
Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 86868, and its
September 28, 2005 Resolution2 denying the motion for reconsideration.

Following are the factual antecedents.

Respondent Del Pilar Academy Employees Union (the UNION) is the certified
collective bargaining representative of teaching and non-teaching personnel of
petitioner Del Pilar Academy (DEL PILAR), an educational institution operating in
Imus, Cavite.

On September 15, 1994, the UNION and DEL PILAR entered into a Collective
Bargaining Agreement (CBA)3granting salary increase and other benefits to the
teaching and non-teaching staff. Among the salient provisions of the CBA are:

ARTICLE V

SALARY INCREASE

SECTION 1. Basic Pay – the ACADEMY and the UNION agreed to


maintain the wage increase in absolute amount as programmed in the
computation prepared by the ACADEMY and dated 30 June 1994 initialed
by the members of the bargaining panel of both parties, taking into account
increases in tuition fees, if any.

SECTION 2. The teaching load of teachers shall only be Twenty-Three


(23) hours per week effective this school year and any excess thereon
shall be considered as overload with pay.

SECTION 3. Overloadpay (sic) will be based on the Teachers’ Basic


Monthly Rate.
SECTION 4. The ACADEMY agrees to grant longevity pay as
follows: P100.00 for every 5 years of continuous service. The longevity
shall be integrated in the basic salary within three (3) years from the
effectivity of this agreement.

ARTICLE VI

VACATION LEAVE WITH PAY

SECTION 1. Every faculty member who has rendered at least six (6)
consecutive academic semester of service shall be entitled to the
11th month and 12th month pay as summer vacation leave with pay. They
may, however, be required to report [and] undergo briefings or seminars in
connection with their teaching assignments for the ensuing school year.

SECTION 2. Non-teaching employees who shall have rendered at least


one (1) year of service shall be entitled to fifteen days leave with pay.

The UNION then assessed agency fees from non-union employees, and
requested DEL PILAR to deduct said assessment from the employees’ salaries
and wages. DEL PILAR, however, refused to effect deductions claiming that the
non-union employees were not amenable to it.

In September 1997, the UNION negotiated for the renewal of the CBA. DEL
PILAR, however, refused to renew the same unless the provision regarding
entitlement to two (2) months summer vacation leave with pay will be amended
by limiting the same to teachers, who have rendered at least three (3)
consecutive academic years of satisfactory service. The UNION objected to the
proposal claiming diminution of benefits. DEL PILAR refused to sign the CBA,
resulting in a deadlock. The UNION requested DEL PILAR to submit the case for
voluntary arbitration, but the latter allegedly refused, prompting the UNION to file
a case for unfair labor practice with the Labor Arbiter against DEL PILAR;
Eduardo Espejo, its president; and Eliseo Ocampo, Jr., chairman of the Board of
Trustees.

Traversing the complaint, DEL PILAR denied committing unfair labor practices
against the UNION. It justified the non-deduction of the agency fees by the
absence of individual check off authorization from the non-union employees. As
regards the proposal to amend the provision on summer vacation leave with pay,
DEL PILAR alleged that the proposal cannot be considered unfair for it was done
to make the provision of the CBA conformable to the DECS’ Manual of
Regulations for Private Schools.4
On October 2, 1998, Labor Arbiter Nieves V. De Castro rendered a
Decision, viz.:

Reviewing the records of this case and the law relative to the issues at
hand, we came to the conclusion that it was an error on [the] part of [DEL
PILAR] not to have collected agency fee due other workers who are non-
union members but are included in the bargaining unit being represented
by [the UNION]. True enough as was correctly quoted by [the UNION] Art.
248, to wit:

Employees of an appropriate collective bargaining unit who are not


members of the recognized collective bargaining agency may be
assessed a reasonable fee equivalent to the dues and other fees
paid by members of the recognized collective bargaining agreement:
Provided, that the individual authorization required under Article
[241], paragraph (o) of this Code shall not apply to the non-members
of the recognized collective bargaining agent.

As it is, [DEL PILAR’s] unwarranted fear re-individual dues [without]


authorization for non-union members has no basis in fact or in law. For
receipt of CBA benefits brought about by the CBA negotiated with
[petitioners], they are duty bound to pay agency fees which may lawfully be
deducted sans individual check-off authorization. Being [recipients] of said
benefits, they should share and be made to pay the same considerations
imposed upon the union members. [DEL PILAR], therefore, was in error in
refusing to deduct corresponding agency fees which lawfully belongs to the
union.

Anent the proposal to decrease the coverage of the 11th and 12th month
vacation with pay, we do not believe that such was done in bad faith but
rather in an honest attempt to make perfect procession following the
DECS’ Manuals. Moreso, it is of judicial notice that in the course of
negotiation, almost all provisions are up for grabs, amendments or change.
This is something normal in the course of a negotiation and does not
necessarily connote bad faith as each every one (sic) has the right to
negotiate reward or totally amend the provisions of the
contract/agreement.

All told while there was error on [the] part of [DEL PILAR] for the first issue,
[it] came through in the second. But as it is, we do not believe that a finding
of unfair labor practice can be had considering the lack of evidence on
record that said acts were done to undermine the union or stifle the
member’s right to self organization or that the [petitioners] were in bad
faith. If at all, it’s (sic) error may have been the result of a mistaken notion
that individual check-off authorization is needed for it to be able to validly
and legally deduct assessment especially after individual[s] concerned
registered their objection. On the other hand, it is not error to negotiate for
a better term in the CBA. So long as [the] parties will agree. It must be
noted that a CBA is a contract between labor and management and is not
simply a litany of benefits for labor. Moreso, for unfair labor practice to
prosper, there must be a clear showing of acts aimed at stifling the
worker’s right to self-organization. Mere allegations and mistake notions
would not suffice.

ACCORDINGLY, premises considered, the charge of unfair labor practice


is hereby Dismissed for want of basis.

SO ORDERED.5

On appeal, the National Labor Relations Commission (NLRC) affirmed the


Arbiter’s ruling. In gist, it upheld the UNION’s right to agency fee, but did not
consider DEL PILAR’s failure to deduct the same an unfair labor practice.6

The UNION’s motion for reconsideration having been denied,7 it then went to the
CA via certiorari. On July 19, 2005, the CA rendered the assailed decision,
affirming with modification the resolutions of the NLRC. Like the Arbiter and the
NLRC, the CA upheld the UNION’s right to collect agency fees from non-union
employees, but did not adjudge DEL PILAR liable for unfair labor practice.
However, it ordered DEL PILAR to deduct agency fees from the salaries of non-
union employees.

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the petition is PARTIALLY


GRANTED. The assailed resolution of the NLRC dated April 30, 2004 is
hereby MODIFIED. Private respondent Del Pilar Academy is ordered to
deduct the agency fees from non-union members who are recipients of the
collective bargaining agreement benefits. The agency fees shall be
equivalent to the dues and other fees paid by the union members.

SO ORDERED.8

DEL PILAR filed a motion for reconsideration of the decision, but the CA denied
the same on September 28, 2005.9

Before us, DEL PILAR impugns the CA Decision on the following grounds:
I. IN PROMULGATING THE CHALLENGED DECISION AND
RESOLUTION, THE HON. COURT OF APPEALS DISREGARDED THE
FACT THAT THE ANNUAL INCREASE IN THE SALARIES OF THE
EMPLOYEES WAS NOT A BENEFIT ARISING FROM A COLLECTIVE
BARGAINING AGREEMENT, BUT WAS MANDATED BY THE
DIRECTIVE OF A GOVERNMENTAL DEPARTMENT; and

II. CONSIDERING THE ANNUAL SALARY INCREASE OF NON-UNION


MEMBERS WAS NOT A BENEFIT ARISING FROM THE CBA, THEIR
INDIVIDUAL WRITTEN AUTHORIZATIONS ARE STILL REQUIRED TO
ALLOW PETITIONER ACADEMY TO LEGALLY DEDUCT THE SAME
FROM THEIR RESPECTIVE SALARY.10

The issue here boils down to whether or not the UNION is entitled to collect
agency fees from non-union members, and if so, whether an individual written
authorization is necessary for a valid check off.

The collection of agency fees in an amount equivalent to union dues and fees,
from employees who are not union members, is recognized by Article 248(e) of
the Labor Code, thus:

Employees of an appropriate collective bargaining unit who are not


members of the recognized collective bargaining agent may be assessed
reasonable fees equivalent to the dues and other fees paid by the
recognized collective bargaining agent, if such non-union members accept
the benefits under the collective bargaining agreement. Provided, That the
individual authorization required under Article 241, paragraph (o) of this
Code shall not apply to the non-members of recognized collective
bargaining agent.

When so stipulated in a collective bargaining agreement or authorized in writing


by the employees concerned, the Labor Code and its Implementing Rules
recognize it to be the duty of the employer to deduct the sum equivalent to the
amount of union dues, as agency fees, from the employees' wages for direct
remittance to the union. The system is referred to as check off.11 No requirement
of written authorization from the non-union employees is necessary if the non-
union employees accept the benefits resulting from the CBA.12

DEL PILAR admitted its failure to deduct the agency fees from the salaries of
non-union employees, but justifies the non-deduction by the absence of
individual written authorization. It posits that Article 248(e) is inapplicable
considering that its employees derived no benefits from the CBA. The annual
salary increase of its employee is a benefit mandated by law, and not derived
from the CBA. According to DEL PILAR, the Department of Education, Culture
and Sports (DECS) required all educational institutions to allocate at least 70% of
tuition fee increases for the salaries and other benefits of teaching and non-
teaching personnel; that even prior to the execution of the CBA in September
1994, DEL PILAR was already granting annual salary increases to its employees.
Besides, the non-union employees objected to the deduction; hence, a written
authorization is indispensable to effect a valid check off. DEL PILAR urges this
Court to reverse the CA ruling insofar as it ordered the deduction of agency fees
from the salaries of non-union employees, arguing that such conclusion proceeds
from a misplaced premise that the salary increase arose from the CBA.

The argument cannot be sustained.

Contrary to what DEL PILAR wants to portray, the grant of annual salary
increase is not the only provision in the CBA that benefited the non-union
employees. The UNION negotiated for other benefits, namely, limitations on
teaching assignments to 23 hours per week, additional compensation for
overload units or teaching assignments in excess of the 23 hour per week limit,
and payment of longevity pay. It also negotiated for entitlement to summer
vacation leave with pay for two (2) months for teaching staff who have rendered
six (6) consecutive semesters of service. For the non-teaching personnel, the
UNION worked for their entitlement to fifteen (15) days leave with pay.13 These
provisions in the CBA surely benefited the non-union employees, justifying the
collection of, and the UNION’s entitlement to, agency fees.

Accordingly, no requirement of written authorization from the non-union


employees is needed to effect a valid check off. Article 248(e) makes it explicit
that Article 241, paragraph (o),14 requiring written authorization is inapplicable to
non-union members, especially in this case where the non-union employees
receive several benefits under the CBA.

As explained by this Court in Holy Cross of Davao College, Inc. v. Hon.


Joaquin15 viz.:

The employee's acceptance of benefits resulting from a collective


bargaining agreement justifies the deduction of agency fees from his pay
and the union's entitlement thereto. In this aspect, the legal basis of the
union's right to agency fees is neither contractual nor statutory, but quasi-
contractual, deriving from the established principle that non-union
employees may not unjustly enrich themselves by benefiting from
employment conditions negotiated by the bargaining union.
By this jurisprudential yardstick, this Court finds that the CA did not err in
upholding the UNION’s right to collect agency fees.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 86868, are AFFIRMED.
G.R. No. 118506 April 18, 1997

NORMA MABEZA, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL
SUPREME, respondents.

KAPUNAN, J.:

This petition seeking the nullification of a resolution of public respondent National


Labor Relations Commission dated April 28, 1994 vividly illustrates why courts
should be ever vigilant in the preservation of the constitutionally enshrined rights
of the working class. Without the protection accorded by our laws and the
tempering of courts, the natural and historical inclination of capital to ride
roughshod over the rights of labor would run unabated.

The facts of the case at bar, culled from the conflicting versions of petitioner and
private respondent, are illustrative.

Petitioner Norma Mabeza contends that around the first week of May, 1991, she
and her co-employees at the Hotel Supreme in Baguio City were asked by the
hotel's management to sign an instrument attesting to the latter's compliance with
minimum wage and other labor standard provisions of law. 1 The instrument
provides: 2

JOINT AFFIDAVIT

We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY,


MACARIA JUGUETA, ADELAIDA NONOG, NORMA MABEZA,
JONATHAN PICART and JOSE DIZON, all of legal ages (sic),
Filipinos and residents of Baguio City, under oath, depose and say:

1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme


situated at No. 416 Magsaysay Ave., Baguio City.

2. That the said Hotel is separately operated from the Ivy's Grill and
Restaurant;

3. That we are all (8) employees in the hotel and assigned in each
respective shifts;
4. That we have no complaints against the management of the Hotel
Supreme as we are paid accordingly and that we are treated well.

5. That we are executing this affidavit voluntarily without any force or


intimidation and for the purpose of informing the authorities
concerned and to dispute the alleged report of the Labor Inspector of
the Department of Labor and Employment conducted on the said
establishment on February 2, 1991.

IN WITNESS WHEREOF, we have hereunto set our hands this 7th


day of May, 1991 at Baguio City, Philippines.

(Sgd.) (Sgd.) (Sgd.)


SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY

(Sgd.) (Sgd.) (Sgd.)


MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.

(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON

SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio
City, Philippines.

Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to
swear to the veracity and contents of the affidavit as instructed by management.
The affidavit was nevertheless submitted on the same day to the Regional Office
of the Department of Labor and Employment in Baguio City.

As gleaned from the affidavit, the same was drawn by management for the sole
purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of
respondent's establishment on February 2, 1991) apparently adverse to the
private respondent. 3

After she refused to proceed to the City Prosecutor's Office — on the same day
the affidavit was submitted to the Cordillera Regional Office of DOLE —
petitioner avers that she was ordered by the hotel management to turn over the
keys to her living quarters and to remove her belongings from the hotel
premises. 4 According to her, respondent strongly chided her for refusing to
proceed to the City Prosecutor's Office to attest to the affidavit. 5 She thereafter
reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the hotel's
cashier, Margarita Choy, informed her that she should not report to work and,
instead, continue with her unofficial leave of absence. Consequently, on May 13,
1991, three days after her attempt to return to work, petitioner filed a complaint
for illegal dismissal before the Arbitration Branch of the National Labor Relations
Commission — CAR Baguio City. In addition to her complaint for illegal
dismissal, she alleged underpayment of wages, non-payment of holiday pay,
service incentive leave pay, 13th month pay, night differential and other benefits.
The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91 and
assigned to Labor Arbiter Felipe P. Pati.

Responding to the allegations made in support of petitioner's complaint for illegal


dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati that
petitioner "surreptitiously left (her job) without notice to the management" 6 and
that she actually abandoned her work. He maintained that there was no basis for
the money claims for underpayment and other benefits as these were paid in the
form of facilities to petitioner and the hotel's other employee. 7 Pointing to the
Affidavit of May 7, 1991, the private respondent asserted that his employees
actually have no problems with management. In a supplemental answer
submitted eleven (11) months after the original complaint for illegal dismissal was
filed, private respondent raised a new ground, loss of confidence, which was
supported by a criminal complaint for Qualified Theft he filed before the
prosecutor's office of the City of Baguio against petitioner on July 4, 1991. 8

On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's
complaint on the ground of loss of confidence. His disquisitions in support of his
conclusion read as follows:

It appears from the evidence of respondent that complainant carted


away or stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2
pieces towel (Exhibits "9", "9-A," "9-B," "9-C" and "10" pages 12-14
TSN, December 1, 1992).

In fact, this was the reason why respondent Peter Ng lodged a


criminal complaint against complainant for qualified theft and perjury.
The fiscal's office finding a prima facie evidence that complainant
committed the crime of qualified theft issued a resolution for its filing
in court but dismissing the charge of perjury (Exhibit "4" for
respondent and Exhibit "B-7" for complainant). As a consequence,
complainant was charged in court for the said crime (Exhibit "5" for
respondent and Exhibit "B-6" for the complainant).
With these pieces of evidence, complainant committed serious
misconduct against her employer which is one of the just and valid
grounds for an employer to terminate an employee (Article 282 of
the Labor Code as amended). 9

On April 28, 1994, respondent NLRC promulgated its assailed


Resolution 10 — affirming the Labor Arbiter's decision. The resolution substantially
incorporated the findings of the Labor Arbiter. 11 Unsatisfied, petitioner instituted
the instant special civil action for certiorari under Rule 65 of the Rules of Court on
the following grounds: 12

1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL


LABOR RELATIONS COMMISSION COMMITTED A PATENT AND
PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF
DISCRETION IN ITS FAILURE TO CONSIDER THAT THE
ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN
AFTERTHOUGHT ON THE PART OF THE RESPONDENT-
EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL
OF THE COMPLAINANT FROM HER EMPLOYMENT;

2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL


LABOR RELATIONS COMMISSION COMMITTED A PATENT AND
PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF
DISCRETION IN ADOPTING THE RULING OF THE LABOR
ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES
AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED
SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY
RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS
TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE
PAYMENT OF WAGES AND BENEFITS;

3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL


LABOR RELATIONS COMMISSION COMMITTED A PATENT AND
PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF
DISCRETION IN FAILING TO CONSIDER THE EVIDENCE
ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING
UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT.

The Solicitor General, in a Manifestation in lieu of Comment dated August 8,


1995 rejects private respondent's principal claims and defenses and urges this
Court to set aside the public respondent's assailed resolution. 13

We agree.
It is settled that in termination cases the employer bears the burden of proof to
show that the dismissal is for just cause, the failure of which would mean that the
dismissal is not justified and the employee is entitled to reinstatement. 14

In the case at bar, the private respondent initially claimed that petitioner
abandoned her job when she failed to return to work on May 8, 1991.
Additionally, in order to strengthen his contention that there existed sufficient
cause for the termination of petitioner, he belatedly included a complaint for loss
of confidence, supporting this with charges that petitioner had stolen a blanket, a
bedsheet and two towels from the hotel. 15 Appended to his last complaint was a
suit for qualified theft filed with the Baguio City prosecutor's office.

From the evidence on record, it is crystal clear that the circumstances upon
which private respondent anchored his claim that petitioner "abandoned" her job
were not enough to constitute just cause to sanction the termination of her
services under Article 283 of the Labor Code. For abandonment to arise, there
must be concurrence of two things: 1) lack of intention to work; 16 and 2) the
presence of overt acts signifying the employee's intention not to work. 17

In the instant case, respondent does not dispute the fact that petitioner tried to
file a leave of absence when she learned that the hotel management was
displeased with her refusal to attest to the affidavit. The fact that she made this
attempt clearly indicates not an intention to abandon but an intention to return to
work after the period of her leave of absence, had it been granted, shall have
expired.

Furthermore, while absence from work for a prolonged period may suggest
abandonment in certain instances, mere absence of one or two days would not
be enough to sustain such a claim. The overt act (absence) ought
to unerringly point to the fact that the employee has no intention to return to
work, 18 which is patently not the case here. In fact, several days after she had
been advised to take an informal leave, petitioner tried to resume working with
the hotel, to no avail. It was only after she had been repeatedly rebuffed that she
filed a case for illegal dismissal. These acts militate against the private
respondent's claim that petitioner abandoned her job. As the Solicitor General in
his manifestation observed:

Petitioner's absence on that day should not be construed as


abandonment of her job. She did not report because the cashier told
her not to report anymore, and that private respondent Ng did not
want to see her in the hotel premises. But two days later or on the
10th of May, after realizing that she had to clarify her employment
status, she again reported for work. However, she was prevented
from working by private respondents. 19

We now come to the second cause raised by private respondent to support his
contention that petitioner was validly dismissed from her job.

Loss of confidence as a just cause for dismissal was never intended to provide
employers with a blank check for terminating their employees. Such a vague, all-
encompassing pretext as loss of confidence, if unqualifiedly given the seal of
approval by this Court, could readily reduce to barren form the words of the
constitutional guarantee of security of tenure. Having this in mind, loss of
confidence should ideally apply only to cases involving employees occupying
positions of trust and confidence or to those situations where the employee is
routinely charged with the care and custody of the employer's money or property.
To the first class belong managerial employees, i.e., those vested with the
powers or prerogatives to lay down management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine
exercise of their functions, regularly handle significant amounts of money or
property. Evidently, an ordinary chambermaid who has to sign out for linen and
other hotel property from the property custodian each day and who has to
account for each and every towel or bedsheet utilized by the hotel's guests at the
end of her shift would not fall under any of these two classes of employees for
which loss of confidence, if ably supported by evidence, would normally apply.
Illustrating this distinction, this Court in Marina Port Services,
Inc. vs. NLRC, 20 has stated that:

To be sure, every employee must enjoy some degree of trust and


confidence from the employer as that is one reason why he was
employed in the first place. One certainly does not employ a person
he distrusts. Indeed, even the lowly janitor must enjoy that trust and
confidence in some measure if only because he is the one who
opens the office in the morning and closes it at night and in this
sense is entrusted with the care or protection of the employer's
property. The keys he holds are the symbol of that trust and
confidence.

By the same token, the security guard must also be considered as


enjoying the trust and confidence of his employer, whose property
he is safeguarding. Like the janitor, he has access to this property.
He too, is charged with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with
the physical task of protecting that property. The employer's trust
and confidence in him is limited to that ministerial function. He is not
entrusted, in the Labor Arbiter's words, with the duties of
safekeeping and safeguarding company policies, management
instructions, and company secrets such as operation devices. He is
not privy to these confidential matters, which are shared only in the
higher echelons of management. It is the persons on such levels
who, because they discharge these sensitive duties, may be
considered holding positions of trust and confidence. The security
guard does not belong in such category. 21

More importantly, we have repeatedly held that loss of confidence should not be
simulated in order to justify what would otherwise be, under the provisions of law,
an illegal dismissal. "It should not be used as a subterfuge for causes which are
illegal, improper and unjustified. It must be genuine, not a mere afterthought to
justify an earlier action taken in bad faith." 22

In the case at bar, the suspicious delay in private respondent's filing of qualified
theft charges against petitioner long after the latter exposed the hotel's scheme
(to avoid its obligations as employer under the Labor Code) by her act of filing
illegal dismissal charges against the private respondent would hardly warrant
serious consideration of loss of confidence as a valid ground for dismissal.
Notably, the Solicitor General has himself taken a position opposite the public
respondent and has observed that:

If petitioner had really committed the acts charged against her by


private respondents (stealing supplies of respondent hotel), private
respondents should have confronted her before dismissing her on
that ground. Private respondents did not do so. In fact, private
respondent Ng did not raise the matter when petitioner went to see
him on May 9, 1991, and handed him her application for leave. It
took private respondents 52 days or up to July 4, 1991 before finally
deciding to file a criminal complaint against petitioner, in an obvious
attempt to build a case against her.

The manipulations of private respondents should not be


countenanced. 23

Clearly, the efforts to justify petitioner's dismissal — on top of the private


respondent's scheme of inducing his employees to sign an affidavit absolving him
from possible violations of the Labor Code — taints with evident bad faith and
deliberate malice petitioner's summary termination from employment.
Having said this, we turn to the important question of whether or not the
dismissal by the private respondent of petitioner constitutes an unfair labor
practice.

The answer in this case must inevitably be in the affirmative.

The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in the
form of restraint, interference or coercion, against his employee's right to institute
concerted action for better terms and conditions of employment. Without doubt,
the act of compelling employees to sign an instrument indicating that the
employer observed labor standards provisions of law when he might have not,
together with the act of terminating or coercing those who refuse to cooperate
with the employer's scheme constitutes unfair labor practice. The first act clearly
preempts the right of the hotel's workers to seek better terms and conditions of
employment through concerted action.

We agree with the Solicitor General's observation in his manifestation that "[t]his
actuation . . . is analogous to the situation envisaged in paragraph (f) of Article
248 of the Labor Code" 24 which distinctly makes it an unfair labor practice "to
dismiss, discharge or otherwise prejudice or discriminate against an employee
for having given or being about to give testimony" 25 under the Labor Code. For in
not giving positive testimony in favor of her employer, petitioner had reserved not
only her right to dispute the claim and proffer evidence in support thereof but also
to work for better terms and conditions of employment.

For refusing to cooperate with the private respondent's scheme, petitioner was
obviously held up as an example to all of the hotel's employees, that they could
only cause trouble to management at great personal inconvenience. Implicit in
the act of petitioner's termination and the subsequent filing of charges against her
was the warning that they would not only be deprived of their means of livelihood,
but also possibly, their personal liberty.

This Court does not normally overturn findings and conclusions of quasi-judicial
agencies when the same are ably supported by the evidence on record.
However, where such conclusions are based on a misperception of facts or
where they patently fly in the face of reason and logic, we will not hesitate to set
aside those conclusions. Going into the issue of petitioner's money claims, we
find one more salient reason in this case to set things right: the labor arbiter's
evaluation of the money claims in this case incredibly ignores existing law and
jurisprudence on the matter. Its blatant one-sidedness simply raises the
suspicion that something more than the facts, the law and jurisprudence may
have influenced the decision at the level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare
claim that the reason the monetary benefits received by petitioner between 1981
to 1987 were less than minimum wage was because petitioner did not factor in
the meals, lodging, electric consumption and water she received during the
period in her computations. 26Granting that meals and lodging were provided and
indeed constituted facilities, such facilities could not be deducted without the
employer complying first with certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the value from the employee's
ages. First, proof must be shown that such facilities are customarily furnished by
the trade. Second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee. Finally, facilities must be charged at fair and
reasonable value. 27

These requirements were not met in the instant case. Private respondent "failed
to present any company policy or guideline to show that the meal and lodging . . .
(are) part of the salary;" 28 he failed to provide proof of the employee's written
authorization; and, he failed to show how he arrived at the valuations. 29

Curiously, in the case at bench, the only valuations relied upon by the labor
arbiter in his decision were figures furnished by the private respondent's own
accountant, without corroborative evidence. On the pretext that records prior to
the July 16, 1990 earthquake were lost or destroyed, respondent failed to
produce payroll records, receipts and other relevant documents, where he could
have, as has been pointed out in the Solicitor General's manifestation, "secured
certified copies thereof from the nearest regional office of the Department of
Labor, the SSS or the BIR." 30

More significantly, the food and lodging, or the electricity and water consumed by
the petitioner were not facilities but supplements. A benefit or privilege granted to
an employee for the convenience of the employer is not a facility. The criterion in
making a distinction between the two not so much lies in the kind (food, lodging)
but the purpose. 31Considering, therefore, that hotel workers are required to work
different shifts and are expected to be available at various odd hours, their ready
availability is a necessary matter in the operations of a small hotel, such as the
private respondent's hotel.

It is therefore evident that petitioner is entitled to the payment of the deficiency in


her wages equivalent to the fullwage applicable from May 13, 1988 up to the date
of her illegal dismissal.

Additionally, petitioner is entitled to payment of service incentive leave pay,


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

However, the claims covering the period of October 1987 up to the time of filing
the case on May 13, 1988 are barred by prescription as P.D. 442 (as amended)
and its implementing rules limit all money claims arising out of employer-
employee relationship to three (3) years from the time the cause of action
accrues. 32

We depart from the settled rule that an employee who is unjustly dismissed from
work normally should be reinstated without loss of seniority rights and other
privileges. Owing to the strained relations between petitioner and private
respondent, allowing the former to return to her job would only subject her to
possible harassment and future embarrassment. In the instant case, separation
pay equivalent to one month's salary for every year of continuous service with the
private respondent would be proper, starting with her job at the Belfront Hotel.

In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and
our decision in Osmalik Bustamante, et al. vs. National Labor Relations
Commission, 33 petitioner is entitled to full backwages from the time of her illegal
dismissal up to the date of promulgation of this decision without qualification or
deduction.

Finally, in dismissal cases, the law requires that the employer must furnish the
employee sought to be terminated from employment with two written notices
before the same may be legally effected. The first is a written notice containing a
statement of the cause(s) for dismissal; the second is a notice informing the
employee of the employer's decision to terminate him stating the basis of the
dismissal. During the process leading to the second notice, the employer must
give the employee ample opportunity to be heard and defend himself, with the
assistance of counsel if he so desires.

Given the seriousness of the second cause (qualified theft) of the petitioner's
dismissal, it is noteworthy that the private respondent never even bothered to
inform petitioner of the charges against her. Neither was petitioner given the
opportunity to explain the loss of the articles. It was only almost two months after
petitioner had filed a complaint for illegal dismissal, as an afterthought, that the
loss was reported to the police and added as a supplemental answer to
petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of
notice and hearing prior to her termination violated her constitutional right to due
process. Under the circumstance an award of One Thousand Pesos (P1,000.00)
on top of payment of the deficiency in wages and benefits for the period
aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of the National Labor
Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE, with
costs. For clarity, the economic benefits due the petitioner are hereby
summarized as follows:

1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the
date of petitioner's illegal dismissal;

2) Service incentive leave pay; night differential pay and 13th month pay for the
same period;

3) Separation pay equal to one month's salary for every year of petitioner's
continuous service with the private respondent starting with her job at the
Belfront Hotel;

4) Full backwages, without qualification or deduction, from the date of petitioner's


illegal dismissal up to the date of promulgation of this decision pursuant to our
ruling in Bustamante vs. NLRC. 34

5) P1,000.00.
G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L.


BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET
AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF
BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and
Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled
"San Miguel Corporation vs. SMCEU-PTGWO, et als."

Petitioners' plea is that said Writ was issued without or in excess of jurisdiction
and with grave abuse of discretion, a labor dispute being involved. Private
respondent San Miguel Corporation (SanMig. for short), for its part, defends the
Writ on the ground of absence of any employer-employee relationship between it
and the contractual workers employed by the companies Lipercon Services, Inc.
(Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the
Union is bereft of personality to represent said workers for purposes of collective
bargaining. The Solicitor General agrees with the position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig entered into contracts for merchandising
services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment,
respectively). These companies are independent contractors duly licensed by the
Department of Labor and Employment (DOLE). SanMig entered into those
contracts to maintain its competitive position and in keeping with the imperatives
of efficiency, business expansion and diversity of its operation. In said contracts,
it was expressly understood and agreed that the workers employed by the
contractors were to be paid by the latter and that none of them were to be
deemed employees or agents of SanMig. There was to be no employer-
employee relation between the contractors and/or its workers, on the one hand,
and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for
brevity) is the duly authorized representative of the monthly paid rank-and-file
employees of SanMig with whom the latter executed a Collective Bargaining
Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's
Comment). Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from the
bargaining unit and, therefore, outside the scope of this Agreement."

In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised


SanMig that some Lipercon and D'Rite workers had signed up for union
membership and sought the regularization of their employment with SMC. The
Union alleged that this group of employees, while appearing to be contractual
workers supposedly independent contractors, have been continuously working
for SanMig for a period ranging from six (6) months to fifteen (15) years and that
their work is neither casual nor seasonal as they are performing work or activities
necessary or desirable in the usual business or trade of SanMig. Thus, it was
contended that there exists a "labor-only" contracting situation. It was then
demanded that the employment status of these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable
response from SanMig, the Union filed a notice of strike for unfair labor practice,
CBA violations, and union busting (Annex D, Petition).

On 30 January 1989, the Union again filed a second notice of strike for unfair
labor practice (Annex F, Petition).

As in the first notice of strike. Conciliatory meetings were held on the second
notice. Subsequently, the two (2) notices of strike were consolidated and several
conciliation conferences were held to settle the dispute before the National
Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition).

Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by
Lipercon and D'Rite workers in various SMC plants and offices.

On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages
before respondent Court to enjoin the Union from:

a. representing and/or acting for and in behalf of the employees of


LIPERCON and/or D'RITE for the purposes of collective bargaining;

b. calling for and holding a strike vote, to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of
LIPERCON and D'RITE to demonstrate and/or picket at the plants
and offices of plaintiff within the bargaining unit referred to in the
CBA,...;

d. staging a strike to compel plaintiff to hire the employees or


workers of LIPERCON and D'RITE;

e. using the employees or workers of LIPERCON AND D'RITE to


man the strike area and/or picket lines and/or barricades which the
defendants may set up at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA ...;

f. intimidating, threatening with bodily harm and/or molesting the


other employees and/or contract workers of plaintiff, as well as those
persons lawfully transacting business with plaintiff at the work places
within the bargaining unit referred to in the CBA, ..., to compel
plaintiff to hire the employees or workers of LIPERCON and D'RITE;

g. blocking, preventing, prohibiting, obstructing and/or impeding the


free ingress to, and egress from, the work places within the
bargaining unit referred to in the CBA .., to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE;

h. preventing and/or disrupting the peaceful and normal operation of


plaintiff at the work places within the bargaining unit referred to in
the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE. (Annex H, Petition)

Respondent Court found the Complaint sufficient in form and substance and
issued a Temporary Restraining Order for the purpose of maintaining the status
quo, and set the application for Injunction for hearing.

In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss


SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of
the action, which motion was opposed by SanMig. That Motion was denied by
respondent Judge in an Order dated 11 April 1989.

After several hearings on SanMig's application for injunctive relief, where the
parties presented both testimonial and documentary evidence on 25 March 1989,
respondent Court issued the questioned Order (Annex A, Petition) granting the
application and enjoining the Union from Committing the acts complained
of, supra. Accordingly, on 29 March 1989, respondent Court issued the
corresponding Writ of Preliminary Injunction after SanMig had posted the
required bond of P100,000.00 to answer for whatever damages petitioners may
sustain by reason thereof.

In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the


existence of labor dispute. Verily, this court has jurisdiction to take
cognizance of plaintiff's grievance.

The evidence so far presented indicates that plaintiff has contracts


for services with Lipercon and D'Rite. The application and contract
for employment of the defendants' witnesses are either with Lipercon
or D'Rite. What could be discerned is that there is no employer-
employee relationship between plaintiff and the contractual workers
employed by Lipercon and D'Rite. This, however, does not mean
that a final determination regarding the question of the existence of
employer-employee relationship has already been made. To finally
resolve this dispute, the court must extensively consider and delve
into the manner of selection and engagement of the putative
employee; the mode of payment of wages; the presence or absence
of a power of dismissal; and the Presence or absence of a power to
control the putative employee's conduct. This necessitates a full-
blown trial. If the acts complained of are not restrained, plaintiff
would, undoubtedly, suffer irreparable damages. Upon the other
hand, a writ of injunction does not necessarily expose defendants to
irreparable damages.

Evidently, plaintiff has established its right to the relief demanded. (p.
21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before us seeking


nullification of the challenged Writ. On 24 April 1989, we issued a Temporary
Restraining Order enjoining the implementation of the Injunction issued by
respondent Court. The Union construed this to mean that "we can now strike,"
which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24
May 1989, we required the parties to "RESTORE the status quo ante declaration
of strike" (p. 2,62 Rollo).

In the meantime, however, or on 2 May 1989, the Union went on strike.


Apparently, some of the contractual workers of Lipercon and D'Rite had been laid
off. The strike adversely affected thirteen (13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called
the parties to conciliation. The Union stated that it would lift the strike if the thirty
(30) Lipercon and D'Rite employees were recalled, and discussion on their other
demands, such as wage distortion and appointment of coordinators, were made.
Effected eventually was a Memorandum of Agreement between SanMig and the
Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and
Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled
effective 8 May 1989 to their former jobs or equivalent positions under the same
terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the
Union would immediately lift the pickets and return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course
to the Petition and required the parties to submit their memoranda
simultaneously, the last of which was filed on 9 January 1990.

The focal issue for determination is whether or not respondent Court correctly
assumed jurisdiction over the present controversy and properly issued the Writ of
Preliminary Injunction to the resolution of that question, is the matter of whether,
or not the case at bar involves, or is in connection with, or relates to a labor
dispute. An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.

Petitioners take the position that 'it is beyond dispute that the controversy in the
court a quo involves or arose out of a labor dispute and is directly connected or
interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the
ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the
mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question"
(pp. 6-7, Petitioners' Memo).

On the other hand, SanMig denies the existence of any employer-employee


relationship and consequently of any labor dispute between itself and the Union.
SanMig submits, in particular, that "respondent Court is vested with jurisdiction
and judicial competence to enjoin the specific type of strike staged by petitioner
union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit


cannot strike to compel the employer to hire and thereby create an
employment relationship with contractual workers, especially were
the contractual workers were recognized by the union, under the
governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining
representative only in the event of a deadlock in a labor dispute over
'wages, hours of work and all other and of the employment' of the
employees in the unit. The union leaders cannot instigate a strike to
compel the employer, especially on the eve of certification elections,
to hire strangers or workers outside the unit, in the hope the latter
will help re-elect them.

C. Civil courts have the jurisdiction to enjoin the above because this
specie of strike does not arise out of a labor dispute, is an abuse of
right, and violates the employer's constitutional liberty to hire or not
to hire. (SanMig's Memorandum, pp. 475-476, Rollo).

We find the Petition of a meritorious character.

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any
controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and
employee."

While it is SanMig's submission that no employer-employee relationship exists


between itself, on the one hand, and the contractual workers of Lipercon and
D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether
the disputants stand in the proximate relationship of employer and employee"
(Article 212 [1], Labor Code, supra) provided the controversy concerns, among
others, the terms and conditions of employment or a "change" or "arrangement"
thereof (ibid). Put differently, and as defined by law, the existence of a labor
dispute is not negative by the fact that the plaintiffs and defendants do not stand
in the proximate relation of employer and employee.

That a labor dispute, as defined by the law, does exist herein is evident. At
bottom, what the Union seeks is to regularize the status of the employees
contracted by Lipercon and D'Rite in effect, that they be absorbed into the
working unit of SanMig. This matter definitely dwells on the working relationship
between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the
matter within the purview of a labor dispute. Further, the Union also seeks to
represent those workers, who have signed up for Union membership, for the
purpose of collective bargaining. SanMig, for its part, resists that Union demand
on the ground that there is no employer-employee relationship between it and
those workers and because the demand violates the terms of their CBA. Obvious
then is that representation and association, for the purpose of negotiating the
conditions of employment are also involved. In fact, the injunction sought by
SanMig was precisely also to prevent such representation. Again, the matter of
representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already
taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB
NCR NS-01-093-83).

Whether or not the Union demands are valid; whether or not SanMig's contracts
with Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a
regular employer-employee relationship may, in fact, be said to exist; whether or
not the Union can lawfully represent the workers of Lipercon and D'Rite in their
demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself legal when it was allegedly
instigated to compel the employer to hire strangers outside the working unit; —
those are issues the resolution of which call for the application of labor laws, and
SanMig's cause's of action in the Court below are inextricably linked with those
issues.

The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13
SCRA 738) relied upon by SanMig is not controlling as in that case there was no
controversy over terms, tenure or conditions, of employment or the
representation of employees that called for the application of labor laws. In that
case, what the petitioning union demanded was not a change in working terms
and conditions, or the representation of the employees, but that its members be
hired as stevedores in the place of the members of a rival union, which
petitioners wanted discharged notwithstanding the existing contract of the
arrastre company with the latter union. Hence, the ruling therein, on the basis of
those facts unique to that case, that such a demand could hardly be considered a
labor dispute.

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the
labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to
its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was
instituted on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction
to hear and decide the following cases involving all workers including "1. unfair
labor practice cases; 2. those that workers may file involving wages, hours of
work and other terms and conditions of employment; ... and 5. cases arising from
any violation of Article 265 of this Code, including questions involving the legality
of striker and lockouts. ..." Article 217 lays down the plain command of the law.

The claim of SanMig that the action below is for damages under Articles 19, 20
and 21 of the Civil Code would not suffice to keep the case within the
jurisdictional boundaries of regular Courts. That claim for damages is interwoven
with a labor dispute existing between the parties and would have to be ventilated
before the administrative machinery established for the expeditious settlement of
those disputes. To allow the action filed below to prosper would bring about "split
jurisdiction" which is obnoxious to the orderly administration of justice (Philippine
Communications, Electronics and Electricity Workers Federation vs. Hon.
Nolasco, L-24984, 29 July 1968, 24 SCRA 321).

We recognize the proprietary right of SanMig to exercise an inherent


management prerogative and its best business judgment to determine whether it
should contract out the performance of some of its work to independent
contractors. However, the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right
to strike in accordance with law (Section 3, Article XIII, 1987 Constitution) equally
call for recognition and protection. Those contending interests must be placed in
proper perspective and equilibrium.

WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent


Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of
Prohibition is GRANTED and respondent Judge is enjoined from taking any
further action in Civil Case No. 57055 except for the purpose of dismissing it.
The status quo ante declaration of strike ordered by the Court on 24 May 1989
shall be observed pending the proceedings in the National Conciliation Mediation
Board-Department of Labor and Employment, docketed as NCMB-NCR-NS-01-
02189 and NCMB-NCR-NS-01-093-83. No costs.
G.R. No. 146728 February 11, 2004

GENERAL MILLING CORPORATION, petitioner,


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

DECISION

QUISUMBING, J.:

Before us is a petition for certiorari assailing the decision1 dated July 19, 2000, of
the Court of Appeals in CA-G.R. SP No. 50383, which earlier reversed the
decision2 dated January 30, 1998 of the National Labor Relations Commission
(NLRC) in NLRC Case No. V-0112-94.

The antecedent facts are as follows:

In its two plants located at Cebu City and Lapu-Lapu City, petitioner
General Milling Corporation (GMC) employed 190 workers. They were all
members of private respondent General Milling Corporation Independent
Labor Union (union, for brevity), a duly certified bargaining agent.

On April 28, 1989, GMC and the union concluded a collective bargaining
agreement (CBA) which included the issue of representation effective for a
term of three years. The CBA was effective for three years retroactive to
December 1, 1988. Hence, it would expire on November 30, 1991.

On November 29, 1991, a day before the expiration of the CBA, the union
sent GMC a proposed CBA, with a request that a counter-proposal be
submitted within ten (10) days.

As early as October 1991, however, GMC had received collective and


individual letters from workers who stated that they had withdrawn from
their union membership, on grounds of religious affiliation and personal
differences. Believing that the union no longer had standing to negotiate a
CBA, GMC did not send any counter-proposal.

On December 16, 1991, GMC wrote a letter to the union’s officers, Rito
Mangubat and Victor Lastimoso. The letter stated that it felt there was no
basis to negotiate with a union which no longer existed, but that
management was nonetheless always willing to dialogue with them on
matters of common concern and was open to suggestions on how the
company may improve its operations.

In answer, the union officers wrote a letter dated December 19, 1991
disclaiming any massive disaffiliation or resignation from the union and
submitted a manifesto, signed by its members, stating that they had not
withdrawn from the union.

On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member,


on the ground of incompetence. The union protested and requested GMC
to submit the matter to the grievance procedure provided in the CBA.
GMC, however, advised the union to "refer to our letter dated December
16, 1991."3

Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC,
Arbitration Division, Cebu City. The complaint alleged unfair labor practice on the
part of GMC for: (1) refusal to bargain collectively; (2) interference with the right
to self-organization; and (3) discrimination. The labor arbiter dismissed the case
with the recommendation that a petition for certification election be held to
determine if the union still enjoyed the support of the workers.law phi 1.nêt

The union appealed to the NLRC.

On January 30, 1998, the NLRC set aside the labor arbiter’s decision. Citing
Article 253-A of the Labor Code, as amended by Rep. Act No. 6715,4 which fixed
the terms of a collective bargaining agreement, the NLRC ordered GMC to abide
by the CBA draft that the union proposed for a period of two (2) years beginning
December 1, 1991, the date when the original CBA ended, to November 30,
1993. The NLRC also ordered GMC to pay the attorney’s fees.5

In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No.
6715, the duration of a CBA, insofar as the representation aspect is concerned,
is five (5) years which, in the case of GMC-Independent Labor Union was from
December 1, 1988 to November 30, 1993. All other provisions of the CBA are to
be renegotiated not later than three (3) years after its execution. Thus, the NLRC
held that respondent union remained as the exclusive bargaining agent with the
right to renegotiate the economic provisions of the CBA. Consequently, it was
unfair labor practice for GMC not to enter into negotiation with the union.

The NLRC likewise held that the individual letters of withdrawal from the union
submitted by 13 of its members from February to June 1993 confirmed the
pressure exerted by GMC on its employees to resign from the union. Thus, the
NLRC also found GMC guilty of unfair labor practice for interfering with the right
of its employees to self-organization.

With respect to the union’s claim of discrimination, the NLRC found the claim
unsupported by substantial evidence.

On GMC’s motion for reconsideration, the NLRC set aside its decision of January
30, 1998, through a resolution dated October 6, 1998. It found GMC’s doubts as
to the status of the union justified and the allegation of coercion exerted by GMC
on the union’s members to resign unfounded. Hence, the union filed a petition
for certiorari before the Court of Appeals. For failure of the union to attach the
required copies of pleadings and other documents and material portions of the
record to support the allegations in its petition, the CA dismissed the petition on
February 9, 1999. The same petition was subsequently filed by the union, this
time with the necessary documents. In its resolution dated April 26, 1999, the
appellate court treated the refiled petition as a motion for reconsideration and
gave the petition due course.

On July 19, 2000, the appellate court rendered a decision the dispositive portion
of which reads:

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


October 6, 1998 is hereby SET ASIDE, and its decision of January 30,
1998 is, except with respect to the award of attorney’s fees which is hereby
deleted, REINSTATED.6

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


dated October 26, 2000, the CA denied it for lack of merit.

Hence, the instant petition for certiorari alleging that:

THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL


RULE THAT NO DECISION SHALL BE RENDERED BY ANY COURT
WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS
AND THE LAW ON WHICH IT IS BASED.

II

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN


REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL
ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION.

III

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT


APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO DETERMINE
THE TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING
AGREEMENT.7

Thus, in the instant case, the principal issue for our determination is whether or
not the Court of Appeals acted with grave abuse of discretion amounting to lack
or excess of jurisdiction in (1) finding GMC guilty of unfair labor practice for
violating the duty to bargain collectively and/or interfering with the right of its
employees to self-organization, and (2) imposing upon GMC the draft CBA
proposed by the union for two years to begin from the expiration of the original
CBA. law phi1.nêt

On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No.
6715, states:

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


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

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

ART. 248. Unfair labor practices of employers. – It shall be unlawful for


an employer to commit any of the following unfair labor practice:

...

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


Code;

...

Article 252 of the Labor Code elucidates the meaning of the phrase "duty
to bargain collectively," thus:

ART. 252. Meaning of duty to bargain collectively. – The duty to


bargain collectively means the performance of a mutual obligation to
meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement....

We have held that the crucial question whether or not a party has met his
statutory duty to bargain in good faith typically turn$ on the facts of the
individual case.8 There is no per se test of good faith in bargaining.9Good
faith or bad faith is an inference to be drawn from the facts.10 The effect of
an employer’s or a union’s actions individually is not the test of good-faith
bargaining, but the impact of all such occasions or actions, considered as
a whole.11

Under Article 252 abovecited, both parties are required to perform their mutual
obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. The union lived up to this obligation when
it presented proposals for a new CBA to GMC within three (3) years from the
effectivity of the original CBA. But GMC failed in its duty under Article 252. What
it did was to devise a flimsy excuse, by questioning the existence of the union
and the status of its membership to prevent any negotiation.

It bears stressing that the procedure in collective bargaining prescribed by the


Code is mandatory because of the basic interest of the state in ensuring lasting
industrial peace. Thus:

ART. 250. Procedure in collective bargaining. – The following


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

GMC’s failure to make a timely reply to the proposals presented by the union is
indicative of its utter lack of interest in bargaining with the union. Its excuse that it
felt the union no longer represented the workers, was mainly dilatory as it turned
out to be utterly baseless.

We hold that GMC’s refusal to make a counter-proposal to the union’s proposal


for CBA negotiation is an indication of its bad faith. Where the employer did not
even bother to submit an answer to the bargaining proposals of the union, there
is a clear evasion of the duty to bargain collectively.12

Failing to comply with the mandatory obligation to submit a reply to the union’s
proposals, GMC violated its duty to bargain collectively, making it liable for unfair
labor practice. Perforce, the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in finding that GMC is,
under the circumstances, guilty of unfair labor practice.

Did GMC interfere with the employees’ right to self-organization? The CA found
that the letters between February to June 1993 by 13 union members signifying
their resignation from the union clearly indicated that GMC exerted pressure on
its employees. The records show that GMC presented these letters to prove that
the union no longer enjoyed the support of the workers. The fact that the
resignations of the union members occurred during the pendency of the case
before the labor arbiter shows GMC’s desperate attempts to cast doubt on the
legitimate status of the union. We agree with the CA’s conclusion that the ill-
timed letters of resignation from the union members indicate that GMC had
interfered with the right of its employees to self-organization. Thus, we hold that
the appellate court did not commit grave abuse of discretion in finding GMC guilty
of unfair labor practice for interfering with the right of its employees to self-
organization.

Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft
CBA proposed by the union for two years commencing from the expiration of the
original CBA?

The Code provides:

ART. 253. Duty to bargain collectively when there exists a collective


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

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

In Kiok Loy vs. NLRC,13 we found that petitioner therein, Sweden Ice Cream
Plant, refused to submit any counter proposal to the CBA proposed by its
employees’ certified bargaining agent. We ruled that the former had thereby lost
its right to bargain the terms and conditions of the CBA. Thus, we did not hesitate
to impose on the erring company the CBA proposed by its employees’ union -
lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the
present case, to wit:

… petitioner Company’s approach and attitude – stalling the negotiation by


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

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


Employment,15 petitioner therein, Divine Word University of Tacloban, refused to
perform its duty to bargain collectively. Thus, we upheld the unilateral imposition
on the university of the CBA proposed by the Divine Word University Employees
Union. We said further:

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

Applying the principle in the foregoing cases to the instant case, it would be
unfair to the union and its members if the terms and conditions contained in the
old CBA would continue to be imposed on GMC’s employees for the remaining
two (2) years of the CBA’s duration. We are not inclined to gratify GMC with an
extended term of the old CBA after it resorted to delaying tactics to prevent
negotiations. Since it was GMC which violated the duty to bargain collectively,
based on Kiok Loy and Divine Word University of Tacloban, it had lost its
statutory right to negotiate or renegotiate the terms and conditions of the draft
CBA proposed by the union.

We carefully note, however, that as strictly distinguished from the facts of this
case, there was no pre-existing CBA between the parties in Kiok Loy and Divine
Word University of Tacloban. Nonetheless, we deem it proper to apply in this
case the rationale of the doctrine in the said two cases. To rule otherwise would
be to allow GMC to have its cake and eat it too.

Under ordinary circumstances, it is not obligatory upon either side of a labor


controversy to precipitately accept or agree to the proposals of the other. But an
erring party should not be allowed to resort with impunity to schemes feigning
negotiations by going through empty gestures.17 Thus, by imposing on GMC the
provisions of the draft CBA proposed by the union, in our view, the interests of
equity and fair play were properly served and both parties regained equal footing,
which was lost when GMC thwarted the negotiations for new economic terms of
the CBA.

The findings of fact by the CA, affirming those of the NLRC as to the
reasonableness of the draft CBA proposed by the union should not be disturbed
since they are supported by substantial evidence. On this score, we see no
cogent reason to rule otherwise. Hence, we hold that the Court of Appeals did
not commit grave abuse of discretion amounting to lack or excess of jurisdiction
when it imposed on GMC, after it had committed unfair labor practice, the draft
CBA proposed by the union for the remaining two (2) years of the duration of the
original CBA. Fairness, equity, and social justice are best served in this case by
sustaining the appellate court’s decision on this issue.

WHEREFORE, the petition is DISMISSED and the assailed decision dated July
19, 2000, and the resolution dated October 26, 2000, of the Court of Appeals in
CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.
G.R. No. 186605 November 17, 2010

CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEU-NFL],


represented by its President, PABLITO SAGURAN, Petitioner,
vs.
CENTRAL AZUCARERA DE BAIS, INC. [CAB], represented by its President,
ANTONIO STEVEN L. CHAN,Respondent.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules
of Court filed by petitioner Central Azucarera De Bais Employees Union-National
Federation of Labor (CABEU-NFL) seeking to reverse and set aside: (1) the
September 26, 2008 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No.
03238, which reversed the July 18, 2007 Decision2 and September 28, 2007
Resolution3 of the National Labor Relations
Commission (NLRC)and reinstated the July 13, 2006 Decision4 of the Labor
Arbiter (LA); and (2) its January 21, 2009 Resolution5denying the Motion for
Reconsideration of CABEU-NFL.

THE FACTS

Respondent Central Azucarera De Bais, Inc. (CAB) is a corporation duly


organized and existing under the laws of the Philippines. It is represented by its
President, Antonio Steven L. Chan (Chan), in this proceeding.

CABEU-NFL is a duly registered labor union and a certified bargaining agent of


the CAB rank-and-file employees, represented by its President, Pablito
Saguran (Saguran).

On January 19, 2004, CABEU-NFL sent CAB a proposed Collective Bargaining


Agreement (CBA)6 seeking increases in the daily wage and vacation and sick
leave benefits of the monthly employees and the grant of leave benefits and 13th
month pay to seasonal workers.

On March 27, 2004, CAB responded with a counter-proposal7 to the effect that
the production bonus incentive and special production bonus and incentives be
maintained. In addition, respondent CAB agreed to execute a pro-rated increase
of wages every time the government would mandate an increase in the minimum
wage. CAB, however, did not agree to grant additional and separate Christmas
bonuses.
On May 21, 2004, CAB received an Amended Union Proposal8 sent by CABEU-
NFL reducing its previous demand regarding wages and bonuses. CAB,
however, maintained its position on the matter. Thus, the collective bargaining
negotiations resulted in a deadlock.

On account of the impasse, "CABEU-NFL filed a Notice of Strike with the


National Conciliation and Mediation Board (NCMB). The NCMB then assumed
conciliatory-mediation jurisdiction and summoned the parties to conciliation
conferences."9

In its June 2, 2005 Letter sent to CAB10 (letter-request), CABEU-NFL requested


copies of CAB’s annual financial statements from 2001 to 2004 and asked for the
resumption of conciliation meetings.

CAB replied through its June 14, 2005 Letter11 (letter-response) to NCMB
Regional Director of Dumaguete City Isidro Cepeda, which reads:

At the outset, it observed that the letter signed by Mr. Pablito Saguran who is no
longer an employee of the Central for he was one of those lawfully terminated
due to an authorized cause x x x.

More importantly, the declared purpose of the requested conciliation meeting has
already been rendered moot and academic because: (1) the Union which Mr.
Saguran purportedly represents has already lost its majority status by reason of
the disauthorization and withdrawal of support thereto by more than 90% of the
rank and file employees in the bargaining unit of Central sometime in January,
2005, and (2) the workers themselves, acting as principal, after disauthorizing the
previous agent CABEU-NFL have organized themselves into a new Union known
as Central Azucarera de Bais Employees Labor Association (CABELA) and after
obtaining their registration certificate and making due representation that it is a
duly organized union representing almost all the rank and file workers in the
Central, had concluded a new collective bargaining agreement with the Central
on April 21, 2005 in Dumaguete City. The aforesaid CBA had been duly ratified
by the rank and file workers constituting 91% of the collective bargaining unit x x
x.

Clearly, therefore, the request for further conciliation conference will serve no
lawful and practical purpose. In view of the foregoing, and for the sake of
continued industrial peace prevailing in the Central, we beseech the Honorable
Office to disregard the aforesaid request.

It appears that the NCMB failed to act on the letter-response of CAB. Neither did
it convene CAB and CABEU-NFL to continue the negotiations between them.
Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for
Unfair Labor Practice12 for the former’s refusal to bargain with it.

On July 13, 2006, the LA dismissed the complaint.13 Pertinent portions of the LA
decision read:

The procedure in the discharge of the duty to bargain collectively is provided for
in Article 250 of the Labor Code: (1) the party who desires to negotiate an
agreement shall serve a written notice upon the other party with a statement of
proposals; (2) the other party shall make a reply thereto not later than ten (10)
days from receipt of notice; (3) if the dispute is unsettled resulting in a deadlock,
the NCMB shall intervene upon the request or at its own initiative and call the
parties to conciliation Meeting x x x (4) if the NCMB fails to effect an agreement,
the Board shall exert all efforts to settle disputes amicably and encourage the
parties to submit their case to a voluntary arbitrator; (5) the parties may also go
on strike or declare a lockout as the case may be after complying with legal
requirements. Subject, of course, to the plenary power of the Secretary of Labor
and Employment to assume jurisdiction over the dispute or to certify the same to
the NLRC for compulsory arbitration.

In the case at bar, the record shows that respondent CAB replied to the
complainant Union’s CBA proposals with its own set of counterproposals x x x.
Likewise, respondent CAB responded to the Union’s subsequent
counterproposals x x x. Record further shows that respondent CAB participated
in a series of CBA negotiations conducted by the parties at the plant level as well
as in the conciliation/mediation proceedings conducted by the NCMB.
Unfortunately, both exercises resulted in a deadlock.

At this juncture it cannot be said, therefore, that respondent CAB refused to


negotiate or that it violated its duty to bargain collectively in light of its active
participation in the past CBA negotiations at the plant level as well as in the
NCMB. x x x

xxx xxx xxx

We do not agree that respondent CAB committed an unfair labor practice act in
questioning the capacity of Mr. Pablito Saguran to represent complainant union
in the CBA negotiations because Mr. Pablito Saguran was no longer an
employee of respondent CAB at that time having been separated from
employment on the ground of redundancy and having received the
corresponding separation benefits. x x x.
So also, we do not find respondent CAB guilty of unfair labor practice by its act of
writing the NCMB Director in a letter dated June 24, 2005, stating its legal
position on complainant’s request for further conciliation to the effect that since
almost [all] of the rank and file employees, the principals in a principal-agent
relationship, have withdrawn their support to the complainant union and that in
fact they have already organized themselves into a DOLE-registered labor union
known as CABELA, any further conciliation will serve no lawful and practical
purpose. x x x.

At this juncture, it was incumbent upon the NCMB to make a ruling on the
request of the complainant union as well as upon the corresponding comment of
respondent CAB. If the NCMB chose not to pursue further negotiation between
the parties, respondent CAB should not be faulted therefor. x x x.

Under the facts obtaining, when the conciliation/mediation by the NCMB has not
been officially concluded, we find the instant complaint for unfair labor practice
not only without merit but also premature.

WHEREFORE, foregoing considered, the case is hereby DISMISSED for lack of


merit.

SO ORDERED.

On appeal, the NLRC in its July 18, 2007 Decision14 reversed the LA’s decision
and found CAB guilty of unfair labor practice. The NLRC explained:

The issue to be resolved is whether or not respondent company committed an


unfair labor practice for violation of its duty to bargain collectively in good faith.

xxx xxx xxx

The important event to discuss in the instant case is respondent’s act of


concluding a CBA with CABELA. As gleaned from respondent’s letter to NCMB
dated June 14, 2005, it concluded a CBA with CABELA because they opined that
complainant lost its majority status in January 2005 when 90% of the rank-and-
file employees disauthorized and withdrew their support to complainant. These
rank-and-file employees who withdrew their support, organized and formed
CABELA. In fine, respondent believed that CABELA enjoyed the majority status
of CABELA since it was supported by 90% of all employees in the bargaining
unit.

In resolving the issue of whether respondent’s act of concluding a CBA with


CABELA is warranted under the circumstances is to examine the validity of such
act. The mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely: 1) possession of the
status of majority representation of the employees’ representative in accordance
with any of the means of selection and designation provided for by the Labor
Code, 2) proof of majority representation, and 3) a demand to bargain under
Article 250, par. (a) of the Labor Code x x x.

In the instant case, it is undeniable that complainant is the certified collective


bargaining agent of the regular workers and seasonal employees of respondent.
Its status as such was determined in a certification election conducted by the
Department of Labor and Employment (DOLE). As such, there was no reason for
respondent to deal and negotiate with CABELA since the latter does not have
such status of majority representation. x x x.

X x x. Based on this premise, respondent violated its duty to bargain with


complainant when during the pendency of the conciliation proceedings before the
NCMB it concluded a CBA with another union as a consequence, it refused to
resume negotiation with complainant upon the latter’s demand. 1avvphi1

With respect to respondent’s observation that the request for conciliation meeting
was signed by one who is not eligible and authorized to represent any union with
the company since he is no longer an employee, suffice it to state that at the time
the request was made, such employee has questioned the validity of his
dismissal with then NLRC. X x x.

Respondent’s failure to act on the request of the complainant to resume


negotiation for no valid reason constitutes unfair labor practice. Consequently,
the proposed CBA as amended should be imposed to respondent.

WHEREFORE, premises considered, the appealed Decision is REVERSED and


SET ASIDE. Another one is entered declaring that respondent Central Azucarera
de Bais is guilty of unfair labor practice. As such, the proposed CBA of
complainant, as amended is imposed to respondent Central Azucarera de Bais.

SO ORDERED.

CAB moved for a reconsideration but the motion was denied by the NLRC in its
resolution dated September 28, 2007.15

Unsatisfied, CAB elevated the matter to the CA by way of a petition for certiorari
under Rule 65 alleging grave abuse of discretion on the part of the NLRC in
reversing the LA decision and issuing the questioned resolution.
On September 26, 2008, the CA found CAB’s petition meritorious and reversed
the NLRC decision and resolution. The CA pointed out:

xxx xxx xxx

First. This Court has acquired jurisdiction over the person of private respondent
CABEU-NFL. Through its counsel of record, CABEU-NFL already filed its
extensive comment on the instant petition. Hence, it is now useless to contend
that it was denied notice of the same and the opportunity to be heard on it. x x x.

xxx xxx xxx

Second. Petitioner CAB was not shown to have violated the rule requiring parties
to certify in their initiatory pleadings against forum shopping. Private respondent
CABEU-NFL alleges in its comment that the two cases are pending before this
Court: CA-G.R. No. 03132 and CA-G.R. No. 03017 involving the same parties as
in the case at bar. Unfortunately, CABEU-NFL did not explain how the issues in
those pending cases are related to or similar to those involved in this proceeding.
x x x.

xxx xxx xxx

Third. x x x xxx xxx

In the case at bar, private respondent CABEU-NFL failed in its burden of proof to
present substantial evidence to support the allegation of unfair labor practice.
The assailed Decision and Resolution of public respondent referred merely to
two (2) circumstances which allegedly support the conclusion that the
presumption of good faith had been rebutted and that bad faith was extant in
petitioner’s actions. To recall, these circumstances are: (a) the execution of a
supposed collective bargaining agreement with another labor union, CABELA;
and (b) CAB’s sending of the letter dated June 14, 2005 to NCMB seeking to call
off the collective bargaining negotiations. These, however, are not enough to
ascribe the very serious offense of unfair labor practice upon petitioner. x x x.

xxx xxx xxx

x x x petitioner CAB was not scuttling the ongoing negotiations towards a new
collective bargaining agreement. It was simply propounding a position to the
NCMB for the latter to rule on. That the negotiations did not push through was
not the result of CAB management’s intransigence because there was none – at
least so far as the case record confirms. There is nothing that establishes
petitioner’s predetermined resolve not to budge from an initial position – perhaps
stubbornness of some ambiguous sort but not the absence of good faith to
pursue collective bargaining. x x x.

xxx xxx xxx

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated


July 18, 2007 and Resolution dated September 28, 2007 of public respondent
National Labor Relations Commission in NLRC Case No. V-000002-07
are REVERSED and SET ASIDE. The Decision dated July 13, 2006 in NLRC
RAB VII Case No. 07-0104-2005-D entitled ‘Central Azucarera de Bais
Employees Union-NFL (CABEU-NFL), represented by Pablito Saguran,
complainant, versus, (CAB) and/or Steven Chan as Owner and Roberto de la
Rosa as Manager, respondents’ of Labor Arbiter Fructuoso T. Villarin IV
is REINSTATED and AFFIRMED IN TOTO. Costs of suit de oficio.

SO ORDERED.

CABEU-NFL moved for a reconsideration but its motion was denied by the CA in
its Resolution dated January 21, 2009.16

Hence this petition.

In its Memorandum,17 CABEU-NFL raised the following:

ISSUES

I) WHETHER OF NOT THE COURT OF APPEALS VIOLATED THE


CONSTITUTIONAL RIGHTS OF PETITIONER WHEN THE HONORABLE
COURT OF APPEALS REVERSED THE FINDINGS OF THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC) WHICH HELD
RESPONDENT GUILTY OF UNFAIR LABOR PRACTICE.18

II) WHETHER OR NOT THE COURT OF APPEALS VIOLATED THE


CONSTITUTIONAL RIGHTS OF THE PETITIONER WHEN IT GAVE DUE
COURSE TO RESPONDENT’S PETITION FOR CERTIORARI WITHOUT
COMPLYING WITH THE JURISDICTIONAL REQUIREMENTS UNDER
RULE 65, SECTION 1 AND SUPREME COURT CIRCULAR NO. 04-94,
ON CERTIFICATION ON NON-FORUM SHOPPING.19

In sum, the petition raises three (3) issues for the Court’s consideration which are
whether or not the CA erred: (1) in giving due course to the petition
for certiorari despite service of the copy of the petition to CABEU-NFL’s counsel
and not to itself ; (2) in giving due course to the petition for certiorari despite the
failure of CAB to indicate the address of CABEU-NFL in the petition; and (3) in
absolving CAB of unfair labor practice.

CABEU-NFL insists that the CA erred in giving due course to the petition
for certiorari because respondent CAB served a copy of its CA petition to
CABEU-NFL’s counsel and not to CABEU-NFL itself. CABEU-NFL, likewise,
harps on the failure of CAB to indicate CABEU-NFL’s full address in the said
petition as required in petitions for certiorari, citing Section 1, Rule 6520 in relation
to Section 3, Rule 46.21

Ultimately, CABEU-NFL aggressively asserts that CAB is guilty of unfair labor


practice on the ground of its refusal to bargain collectively. CABEU-NFL claims to
be the duly certified bargaining agent of the CAB rank-and-file employees such
that it requested to bargain through a letter-request which was subsequently
turned down by CAB in its letter-response. Anchored on the admission in the
CAB letter-response of a supposed CBA with CABELA, CABEU-NFL charges
that such act constitutes a violation of CAB’s duty to bargain collectively under
Article 253 of the Labor Code22 and consequently an act of unfair labor practice
prohibited under Article 248 (g) of the Labor Code.23 CABEU-NFL also submits
that CAB violated the prohibition against forum shopping when it filed its petition
in the CA. CABEU-NFL claims that the failure of CAB’s counsel to disclose to the
CA the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No.
03017 constituted forum shopping, a sufficient ground to dismiss the said
petition.

In its Memorandum,24 CAB claims that service of the copy of the petition
for certiorari to CABEU-NFL’s counsel was sufficient. It vehemently denies its
alleged failure to indicate CABEU-NFL’s name and address in its petition. CAB
also stresses that CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 "were
initiated exclusively by members of CABEU and by CABEU itself, respectively,
and not by CAB."25 CAB further argues that there was no identity of issues or
causes of action between the two abovementioned cases and this case.

On the issue of unfair labor practice, CAB counters that in view of the
disassociation of more than 90% of rank-and-file workers from CABEU-NFL, it
was constrained to negotiate and conclude in good faith a new CBA with
CABELA, the newly established union by workers who disassociated from
CABEU-NFL. CAB emphasizes that it declined further negotiations with CABEU-
NFL in good faith because to continue with it would serve no practical purpose.
Considering that the NCMB has yet to resolve CAB’s query in its letter-response,
CAB was left without any choice but accede to the demands of CABELA. In
concluding a CBA with CABELA, CAB claims that it acted in the best interest of
the rank-and-file workers which belied bad faith.
THE COURT’S RULING

The petition lacks merit.

On the technical issues, CABEU-NFL’s insistence that service of the copy of the
CA petition should have been made to it, rather than to its counsel, is unavailing.

On the matter of service, Section 1, Rule 65 in relation to Section 3, Rule 46 of


the Rules of Court, clearly provides that in a petition filed originally in the CA, the
petitioner is required to serve a copy of the petition on the adverse party before
its filing. If the adverse party appears by counsel, service shall be made on such
counsel pursuant to Section 2, Rule 13.26

With respect to the alleged failure of CAB to indicate the address of CABEU-NFL
in the CA petition, it appears that CABEU-NFL is misleading the Court. A perusal
of the petition27 filed before the CA reveals that CAB indeed indicated both the
name28 and address29 of CABEU-NFL. Moreover, the indication in said petition by
CAB that CABEU-NFL could be served with court processes through its counsel
was substantial compliance with the Rules.30

The Court, likewise, cannot sustain CABEU-NFL’s contention on forum shopping


against CAB.

By forum shopping, a party initiates two or more actions in separate tribunals,


grounded on the same cause, hoping that one or the other tribunal would
favorably dispose of the matter. The elements of forum shopping are: (1) identity
of parties, or at least such parties as would represent the same interest in both
actions; (2) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (3) identity of the two preceding particulars such
that any judgment rendered in the other action will, regardless of which party is
successful, amount to resjudicata in the action under consideration.31

In the case at bench, CABEU-NFL merely raised the fact of the pendency of CA-
G.R. SP No. 033132 and CA-G.R. SP No. 03017 in its comment on the petition
for certiorari32 filed before the CA without demonstrating any similarity in the
causes of action between the said cases and the present case. The CA, citing
the ruling in T’boli Agro-Industrial Development, Inc. v. Solilapsi33 as authority,
points out that:

This Court cannot take judicial notice of what CA-G.R. No. 03132 and CA-G.R.
No. 03017 involve because:
"As a general rule, courts are not authorized to take judicial notice in the
adjudication of cases pending before them of the contents of other cases even
when such cases have been tried or are pending in the same court and
notwithstanding the fact that both cases may have been tried or are actually
pending before the same judge. Courts may be required to take judicial notice of
the decisions of the appellate courts but not of the decisions of the coordinate
trial courts, or even of a decision or the facts involved in another case tried by the
same court itself, unless the parties introduce the same in evidence or the court,
as a matter of convenience, decides to do so. Besides, judicial notice of matters
which ought to be known to judges because of their judicial functions is only
discretionary upon the court. It is not mandatory."

In the absence of evidence to show that the issues involved in these cases are
the same, this Court cannot give credence to private respondent’s claim of forum
shopping.

The Court now proceeds to determine whether or not respondent CAB was guilty
of acts constituting unfair labor practice by refusing to bargain collectively.

The Court rules in the negative.

CAB is being accused of violating its duty to bargain collectively supposedly


because of its act in concluding a CBA with CABELA, another union in the
bargaining unit, and its failure to resume negotiations with CABEU-NFL.

The concept of unfair labor practice is provided in Article 247 of the Labor Code
which states:

Article 247. Concept of Unfair Labor Practice and Procedure for Prosecution
thereof. -- Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate interests of both
labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-
management relations.

xxx xxx xxx

The Labor Code, likewise, enumerates the acts constituting unfair labor practices
of the employer, thus:

Article 248. Unfair Labor Practices of Employers.––It shall be unlawful for an


employer to commit any of the following unfair labor practice:
xxx xxx xxx

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

For a charge of unfair labor practice to prosper, it must be shown that CAB was
motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings or grave anxiety resulted x x x" in
suspending negotiations with CABEU-NFL. Notably, CAB believed that CABEU-
NFL was no longer the representative of the workers.34 It just wanted to foster
industrial peace by bowing to the wishes of the overwhelming majority of its rank
and file workers and by negotiating and concluding in good faith a CBA with
CABELA."35 Such actions of CAB are nowhere tantamount to anti-unionism, the
evil sought to be punished in cases of unfair labor practices.

Furthermore, basic is the principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same. By imputing bad faith to the
actuations of CAB, CABEU-NFL has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice.36 Apparently, CABEU-
NFL refers only to the circumstances mentioned in the letter-response, namely,
the execution of the supposed CBA between CAB and CABELA and the request
to suspend the negotiations, to conclude that bad faith attended CAB’s actions.
The Court is of the view that CABEU-NFL, in simply relying on the said letter-
response, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith.

Moreover, as correctly determined by the LA, the filing of the complaint for unfair
labor practice was premature inasmuch as the issue of collective bargaining
is still pending before the NCMB.

In the resolution of labor cases, this Court has always been guided by the State
policy enshrined in the Constitution that the rights of workers and the promotion
of their welfare shall be protected. The Court is, likewise, guided by the goal of
attaining industrial peace by the proper application of the law. Thus, it cannot
favor one party, be it labor or management, in arriving at a just solution to a
controversy if the party has no valid support to its claims. It is not within this
Court’s power to rule beyond the ambit of the law.
G.R. No. 167892 October 27, 2006

ST. JOHN COLLEGES, INC., petitioner,


vs.
ST. JOHN ACADEMY FACULTY AND EMPLOYEES UNION, respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the April 22, 2004 Decision1 of the
Court of Appeals in CA-G.R. SP No. 74519, which affirmed with modifications the
June 28, 2002 Resolution2 of the National Labor Relations Commission (NLRC)
in NLRC CN RAB IV 5-10035-98-1, and its April 15, 2005 Resolution3 denying
petitioner’s motion for reconsideration.

Petitioner St. John Colleges, Inc. (SJCI) is a domestic corporation which owns
and operates the St. John’s Academy (later renamed St. John Colleges) in
Calamba, Laguna. Prior to 1998, the Academy offered a secondary course only.
The high school then employed about 80 teaching and non-teaching personnel
who were members of the St. John Academy Faculty & Employees Union
(Union).

The Collective Bargaining Agreement (CBA) between SJCI and the Union was
set to expire on May 31, 1997. During the ensuing collective bargaining
negotiations, SJCI rejected all the proposals of the Union for an increase in
worker’s benefits. This resulted to a bargaining deadlock which led to the holding
of a valid strike by the Union on November 10, 1997. In order to end the strike,
on November 27, 1997, SJCI and the Union, through the efforts of the National
Conciliation and Mediation Board (NCMB), agreed to refer the labor dispute to
the Secretary of Labor and Employment (SOLE) for assumption of jurisdiction:

AGREEMENT AND JOINT PETITION FOR ASSUMPTION OF


JURISDICTION

Both parties agree as follows:


1. That the issue raised by the Union shall be referred to the Honorable
Secretary of Labor by way of Assumption of Jurisdiction. Note this will
serve as a joint petition for Assumption of Jurisdiction.

2. Parties shall submit their respective position paper within 10 days upon
the signing of this agreement and to be decided within two months.

3. That management shall grant the employees cash advance of


P1,800.00 each to be given on or before December 5, 1997 deductible
after two months payable in two installments starting January 31, 1998.
The decision re: assumption [of] jurisdiction has not been resolved.

4. Union shall lift the picket immediately and remove all obstruction and
return to work on Monday, December 1, 1997.

5. No retaliatory action shall be undertaken by either party against each


other in relation to the strike.4

After which, the strike ended and classes resumed. Subsequently, the SOLE
issued an Order dated January 19, 1998 assuming jurisdiction over the labor
dispute pursuant to Article 263 of the Labor Code. The parties were required to
submit their respective position papers within ten (10) days from receipt of said
Order.

Pending resolution of the labor dispute before the SOLE, the Board of Directors
of SJCI approved on February 22, 1998 a resolution recommending the closure
of the high school which was approved by the stockholders on even date. The
Minutes5 of the stockholders’ meeting stated the reasons therefor, to wit:

98-3 CLOSURE OF THE SCHOOL

The President, Mr. Rivera, informed the stockholders that the Board at its
meeting on February 15, 1998 unanimously approved to recommend to the
stockholders the closure of the school because of the irreconcilable
differences between the school management and the Academy’s Union
particularly the safety of our students and the financial aspect of the
ongoing CBA negotiations.

After due deliberations, and upon motion of Dr. Jose O. Juliano seconded
by Miss Eva Escalano, it was unanimously resolved, as it is hereby
resolved, that the Board of St. John Colleges, Inc. be authorized to decide
on the terms and conditions of closure, if such decision is made, to the
best interest of the stockholders, parents and students.6
Thereafter, SJCI informed the Department of Labor and Employment (DOLE),
Department of Education, Culture and Sports (DECS), parents, students and the
Union of the impending closure of the high school which took effect on March 31,
1998.

Subsequently, some teaching and non-teaching personnel of the high school


agreed to the closure. On April 2, 1998, SJCI informed the DOLE that as of
March 31, 1998, 51 employees had received their separation compensation
package while 25 employees refused to accept the same.

On May 4, 1998, the aforementioned 25 employees conducted a protest action


within the perimeter of the high school. The Union filed a notice of strike with the
NCMB only on May 7, 1998.

On May 19, 1998, SJCI filed a petition to declare the strike illegal before the
NLRC which was docketed as NLRC Case No. RAB-IV-5-10035-98-L. It claimed
that the strike was conducted in violation of the procedural requirements for
holding a valid strike under the Labor Code.

On May 21, 1998, the 25 employees filed a complaint for unfair labor practice
(ULP), illegal dismissal and non-payment of monetary benefits against SJCI
before the NLRC which was docketed as RAB-IV-5-10039-98-L. The Union
members alleged that the closure of the high school was done in bad faith in
order to get rid of the Union and render useless any decision of the SOLE on the
CBA deadlocked issues.

These two cases were then consolidated. On January 8, 1999, Labor Arbiter
Antonio R. Macam rendered a Decision7 dismissing the Union’s complaint for
ULP and illegal dismissal while granting SJCI’s petition to declare the strike
illegal coupled with a declaration of loss of employment status of the 25 Union
members involved in the strike.

Meanwhile, in the proceedings before the SOLE, the Union filed a


manifestation8 to maintain the status quo on March 30, 1998 praying that SJCI be
enjoined from closing the high school. It claimed that the decision of SJCI to
close the high school violated the SOLE’s assumption order and the agreement
of the parties not to take any retaliatory action against the other. For its part,
SJCI filed a motion to dismiss with entry of appearance9 on October 14, 1998
claiming that the closure of the high school rendered the CBA deadlocked issues
moot. Upon receipt of the Labor Arbiter’s decision in the aforesaid consolidated
cases, SJCI filed a second motion to dismiss10 on February 1, 1999 arguing that
the case had already been resolved.
Moreover, after the favorable decision of the Labor Arbiter, SJCI resolved to
reopen the high school for school year 1999-2000. However, it did not restore the
high school teaching and non-teaching employees it earlier terminated. That
same school year SJCI opened an elementary and college department.

On July 23, 1999, the SOLE denied SJCI’s motions to dismiss and certified the
CBA deadlock case to the NLRC. It ordered the consolidation of the CBA
deadlock case with the ULP, illegal dismissal, and illegal strike cases which were
then pending appeal before the NLRC.

On June 28, 2002, the NLRC rendered judgment reversing the decision of the
Labor Arbiter. It found SJCI guilty of ULP and illegal dismissal and ordered it to
reinstate the 25 employees to their former positions without loss of seniority
rights and other benefits, and with full backwages. It also required SJCI to pay
moral and exemplary damages, attorney’s fees, and two (2) months
summer/vacation pay. Moreover, it ruled that the mass actions conducted by the
25 employees on May 4, 1998 could not be considered as a strike since, by then,
the employer-employee relationship had already been terminated due to the
closure of the high school. Finally, it dismissed, without prejudice, the certified
case on the CBA deadlocked issues for failure of the parties to substantiate their
respective positions.

On appeal, the Court of Appeals, in its Decision dated April 22, 2004, affirmed
with modification the decision of the NLRC:

WHEREFORE, in light of the preceding discussions, the decision subject


of the instant petition is hereby affirmed with a modification that in the
computation of backwages, the two month unworked summer vacation
should excluded.

SO ORDERED.11

With the denial of its motion for reconsideration, SJCI interposed the instant
petition essentially raising two issues: (1) whether it is liable for ULP and illegal
dismissal when it closed down the high school on March 31, 1998 and (2)
whether the Union is liable for illegal strike due to the protest actions which its 25
members undertook within the high school’s perimeter on May 4, 1998.

The petition lacks merit.

Under Article 283 of the Labor Code, the following requisites must concur for a
valid closure of the business: (1) serving a written notice on the workers at least
one (1) month before the intended date thereof; (2) serving a notice with the
DOLE one month before the taking effect of the closure; (3) payment of
separation pay equivalent to one (1) month or at least one half (1/2) month pay
for every year of service, whichever is higher, with a fraction of at least six (6)
months to be considered as a whole year; and (4) cessation of the operation
must be bona fide.12 It is not disputed that the first two requisites were satisfied.
The third requisite would have been satisfied were it not for the refusal of the
herein private respondents to accept the separation compensation package. The
instant case, thus, revolves around the fourth requisite, i.e., whether SJCI closed
the high school in good faith.

Whether or not the closure of the high school was done in good faith is a
question of fact and is not reviewable by this Court in a petition for review
on certiorari save for exceptional circumstances. In fine, the finding of the NLRC,
which was affirmed by the Court of Appeals, that SJCI closed the high school in
bad faith is supported by substantial evidence and is, thus, binding on this Court.
Consequently, SJCI is liable for ULP and illegal dismissal.

The determination of whether SJCI acted in bad faith depends on the particular
facts as established by the evidence on record. Bad faith is, after all, an inference
which must be drawn from the peculiar circumstances of a case. The two
decisive factors in determining whether SJCI acted in bad faith are (1) the timing
of, and reasons for the closure of the high school, and (2) the timing of, and the
reasons for the subsequent opening of a college and elementary department,
and, ultimately, the reopening of the high school department by SJCI after only
one year from its closure.

Prior to the closure of the high school by SJCI, the parties agreed to refer the
1997 CBA deadlock to the SOLE for assumption of jurisdiction under Article 263
of the Labor Code. As a result, the strike ended and classes resumed. After the
SOLE assumed jurisdiction, it required the parties to submit their respective
position papers. However, instead of filing its position paper, SJCI closed its high
school, allegedly because of the "irreconcilable differences between the school
management and the Academy’s Union particularly the safety of our students
and the financial aspect of the ongoing CBA negotiations." Thereafter, SJCI
moved to dismiss the pending labor dispute with the SOLE contending that it had
become moot because of the closure. Nevertheless, a year after said closure,
SJCI reopened its high school and did not rehire the previously terminated
employees.

Under these circumstances, it is not difficult to discern that the closure was done
to defeat the parties’ agreement to refer the labor dispute to the SOLE; to
unilaterally end the bargaining deadlock; to render nugatory any decision of the
SOLE; and to circumvent the Union’s right to collective bargaining and its
members’ right to security of tenure. By admitting that the closure was due to
irreconcilable differences between the Union and school management,
specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect
admitted that it wanted to end the bargaining deadlock and eliminate the problem
of dealing with the demands of the Union. This is precisely what the Labor
Code abhors and punishes as unfair labor practice since the net effect is to
defeat the Union’s right to collective bargaining.

However, SJCI contends that these circumstances do not establish its bad faith
in closing down the high school. Rather, it claims that it was forced to close down
the high school due to alleged difficult labor problems that it encountered while
dealing with the Union since 1995, specifically, the Union’s illegal demands in
violation of R.A. 6728 or the "Government Assistance to Students and Teachers
in Private Education Act." Under R.A. 6728, the income from tuition fee increase
is to be used as follows: (a) 70% of the tuition fee shall go to the payment of
salaries, wages, allowances, and other benefits of teaching and non-teaching
personnel, and (b) 20% of the tuition fee increase shall go to the improvement or
modernization of the buildings, equipment, and other facilities as well as payment
of the cost of operations. However, sometime in 1995, SJCI claims that it was
forced to give-in to the demands of the Union by allocating 100% of the tuition
fee increase for teachers’ benefits even though the same was in violation of R.A.
6728 in order to end the on-going strike of the Union and avoid prolonged
disturbances of classes. Subsequently or during the school year 1996-1997,
SJCI claims that it obtained an approval from the DECS for a 30% tuition fee
increase, however, only 10% was implemented. Despite this, the Union persisted
in making illegal demands by filing a complaint before the DOLE claiming that
they were entitled to the unimplemented 20% tuition fee increase. Finally, during
the collective bargaining negotiations in 1997, the Union again made economic
demands in excess of the 70% of the tuition fee increase under R.A. 6728. As a
result, SJCI claims it had no choice but to refuse the Union’s demands which
thereafter led to the holding of a strike on November 10, 1998. It argues that the
Union’s alleged illegal demands was a valid justification for the closure of the
high school considering that it was financially incapable of meeting said demands
and that it would violate R.A. 6728 if it gave in to said demands which carried
corresponding penalties to be imposed by the DECS.

We are not persuaded.

These alleged difficult labor problems merely show that SJCI and the Union had
disagreements regarding workers’ benefits which is normal in any business
establishment. That SJCI agreed to appropriate 100% of the tuition fee increase
to the workers’ benefits sometime in 1995 does not mean that it was helpless in
the face of the Union’s demands because neither party is obligated to
precipitately give in to the proposal of the other party during collective
bargaining.13 If SJCI found the Union’s demands excessive, its remedy under the
law is to refer the matter for voluntary or compulsory dispute resolution. Besides,
this incident which occurred in 1995, could hardly establish the good faith of SJCI
or justify the high school’s closure in 1998.

Anent the Union’s claim for the unimplemented 20% tuition fee increase in 1996,
suffice it to say that it is erroneous to rule on said issue since the same was
submitted before the Voluntary Arbitrator14 and is not on appeal before this
Court.15 Besides, by referring the labor dispute to the Voluntary Arbitrator, the
parties themselves acknowledged that there is a sufficient mechanism to resolve
the said dispute. Again, we fail to see how this alleged labor problem in 1996
shows the good faith of SJCI in closing the high school in 1998.

With respect to SJCI’s claim that during the 1997 CBA negotiations the Union
made illegal demands because they exceeded the 70% limitation set by R.A. No.
6728, it is important to note that the alleged illegality or excessiveness of the
Union’s demands were the issues to be resolved by the SOLE after the parties
agreed to refer the said labor dispute to the latter for assumption of jurisdiction.
As previously mentioned, the SOLE certified the case to the NLRC, which on
June 28, 2002, rendered a decision finding that there was insufficient
evidence to determine the reasonableness of the Union’s proposals. The NLRC
found that SJCI failed to establish that the Union’s demands were illegal or
excessive. A review of the records clearly shows that the Union submitted a
position paper detailing its demands in actual monetary terms. However, SJCI
failed to establish how and why these demands were in excess of the limitation
set by R.A. 6728. Up to this point in the proceedings, it has merely relied on its
self-serving statements that the Union’s demands were illegal and excessive.
There is no basis, therefore, to hold that the Union ever made illegal or excessive
demands.

At any rate, even assuming that the Union’s demands were illegal or excessive,
the important and crucial point is that these alleged illegal or excessive demands
did not justify the closure of the high school and do not, in any way, establish
SJCI’s good faith. The employer cannot unilaterally close its establishment on the
pretext that the demands of its employees are excessive. As already discussed,
neither party is obliged to give-in to the other’s excessive or unreasonable
demands during collective bargaining, and the remedy in such case is to refer the
dispute to the proper tribunal for resolution. This was what SJCI and the Union
did when they referred the 1997 CBA bargaining deadlock to the SOLE;
however, SJCI pre-empted the resolution of the dispute by closing the high
school. SJCI disregarded the whole dispute resolution mechanism and
undermined the Union’s right to collective bargaining when it closed down the
high school while the dispute was still pending with the SOLE.

The Labor Code does not authorize the employer to close down the
establishment on the ground of illegal or excessive demands of the Union.
Instead, aside from the remedy of submitting the dispute for voluntary or
compulsory arbitration, the employer may file a complaint for ULP against the
Union for bargaining in bad faith. If found guilty, this gives rise to civil and
criminal liabilities and allows the employer to implement a lock out, but not the
closure of the establishment resulting to the permanent loss of employment of
the whole workforce.

In fine, SJCI undermined the Labor Code’s system of dispute resolution by


closing down the high school while the 1997 CBA negotiations deadlock issues
were pending resolution before the SOLE. The closure was done in bad faith for
the purpose of defeating the Union’s right to collective bargaining. Besides, as
found by the NLRC, the alleged illegality and excessiveness of the Union’s
demands were not sufficiently proved by SJCI. Even on the assumption that the
Union’s demands were illegal or excessive, SJCI’s remedy was to await the
resolution by the SOLE and to file a ULP case against the Union. However, SJCI
did not have the power to take matters into its own hands by closing down the
school in order to get rid of the Union.

SJCI next argues that the Union unduly endangered the safety and well-being of
the students who joined the valid strike held on November 10, 1997, thus it
closed down the high school on March 31, 1998. It claims that the Union coerced
the students to join the protest actions to pressure SJCI to give-in to the
demands of the Union.

However, SJCI provided no evidence to substantiate these claims except for its
self-serving statements in its position paper before the Labor Arbiter and pictures
belatedly attached to the instant petition before this Court. However, the pictures
were never authenticated and, on its face, only show that some students
watched the Union members while they conducted their protest actions. More
importantly, it is not true, as SJCI claims, that the Union admitted that it coerced
the students to join the protest actions and recklessly placed the students in
harm’s way. In its Reply16 to SJCI’s position paper before the Labor Arbiter, the
Union categorically denied that it put the students in harm’s way or pressured
them to join the protest actions. Given this denial by the Union, it was incumbent
upon SJCI to prove that the students were actually harmed or put in harm’s way
and that the Union coerced them to join the protest actions. The reason for this is
that the employer carries the burden of proof to establish that the closure of the
business was done in good faith. In the instant case, SJCI had the burden of
proving that, indeed, the closure of the school was necessary to uphold the
safety and well-being of the students.

SJCI presented no evidence to show that the protest actions turned violent; that
the parents did not give their consent to their children who allegedly joined the
protest actions; that the Union did not take the necessary steps to protect some
of the students who allegedly joined the same; or that the Union forced or
pressured the said students to join the protest actions. Moreover, if the problem
was the endangerment of the students’ well-being due to the protest actions by
the Union, then the natural response would have been to immediately go after
the Union members who allegedly coerced the students to join the protest
actions and thereby endangered the students’ safety. But no such action appears
to have been undertaken by SJCI. There is even no showing that it prohibited its
students from joining the protest actions or informed the parents of the activities
of the students who allegedly joined the protest actions. This raises serious
doubts as to whether SJCI was really looking after the welfare of its students or
merely using them as a scapegoat to justify the closure of the school and thereby
get rid of the Union.

Even assuming arguendo that the safety and well-being of some of the students
who allegedly joined the protest actions were compromised, still, the closure was
done in bad faith because it was done long after the strike had ended. Thus,
there is no more danger to the students’ well-being posed by the strike to speak
of. It bears stressing that the closure was implemented on March 31, 1998 but
the risk to the safety of the students had long ceased to exist as early as
November 28, 1997 when the parties agreed to refer the labor dispute to the
SOLE, thus, betraying SJCI’s claim that it wanted to safeguard the interest of the
students.

Furthermore, if SJCI was after the interests of the students, then it should not
have closed the school because the parents and the students were vehemently
opposed to the same, as shown by the letter dated March 9, 1998 written by Mr.
Teofilo G. Mamplata, President of the Parents’ Association, and addressed to the
Secretary of DECS, to wit:

As per letters sent recently by the school Management to the teachers and
parents, notifying of its closure on March 31, 1998, as decided upon by its
Board of Trustees and Stockholders on February 22, 1998 no reasons
were stated to justify said decision and action which will definitely affect
adversely and to the detriment of the plight of parents, teachers, students
and other personnel of the school.
In this connection and due to the urgency of the matter, we hereby
reiterate our appeal with our prayer that the management and Board of
Trustees of St. John Academy of Calamba, Laguna, be stopped from
pursuing their most sudden, unfair, unfavorable and detrimental decision
and action, and if warranted, sanctions be imposed against the erring
party.17 (Italics supplied)

Along the same vein, the parents voiced out their strong objections to the
proposed closure of the school, to wit:

PAHAYAG NG PAGTUTOL

Kami, mga magulang, mag-aaral, guro, propesyonal, manggagawa at iba


pang sector ng pamayanan sa bayan ng Calamba, Laguna ay
nagpapahayag ng pagtutol sa hindi makatarungang pagsasara ng
paaralang SAINT JOHN ACADEMY. Ang kagyat na pagsasara nito ay
nagdulot ng malaking suliranin sa 2,300 estudyante (incoming 2nd year –
4th year), kagaya ng mga sumusunod:

1. Kakaunti ang bilang ng paaralan sa Calamba;

2. Walang paaralan na basta tatanggap sa 700 incoming third year at 800


incoming fourth year;

3. Ang lahat ng "HONOR STUDENTS" ay mababaliwala ang kanilang


pinagsikapan;

4. Negatibo ang epekto sa moral ng mga batang estudyante ang


pagkakaroon ng physical and moral displacement dahil sa biglaang
pagsasara nito;

5. Hindi lahat ng magulang ay kakayaning bumayad ng mataas na tuition


fee sa ibang paaralan;

6. Ang mataas na kalidad ng turo ng mga guro sa paaralang ito ay mahirap


pantayan; at

7. HIGIT NA LIGTAS SA SAKUNA ANG AMING MGA ANAK sa nasabing


paaralan.

Bilang pagtutol sa pagsasara ng SAINT JOHN ACADEMY ay inilalagda


namin ang aming pangalan sa libis nito. (56 signatures follow)18 [Italics
supplied]
Worth noting is the belief of the parents that the safety of their children was
properly secured in said high school. This was obviously in response to the claim
of SJCI that the school was being closed, inter alia, for the safety and well-being
of the students. As correctly observed by the CA:

The petitioner urges this Court to believe that they closed down the school
out of their sheer concern for the students, some of whom have started to
sympathize and participate in the union’s cause.

As intimated by the private respondent, however, the petitioner itself said


that the closing down of the school was, inter alia, "because of
irreconcilable differences between the school management and the
Academy’s Union." Indeed, this translates into an admission that the
cessation of business was neither due to any patrician nor noble objective
of protecting the studentry but because the administration no longer
wished to deal with respondent Union.

We are further tempted to doubt the verity of the petitioner’s claim that in
deciding to shut down the school, it only had the welfare of its students in
mind. There is evidence on record which hints otherwise. Apparently, the
parents of the students were vehemently against the idea of closing down
the academy as this would be, as it later did prove, more detrimental to the
studentry. No less than Mr. Teofilo Mamplata, President of St. John
Academy Parents Association of Calamba expressed the groups’ aversion
against such move and even wrote a letter to the then Secretary of the
Department of Education seeking immediate intervention to enjoin the
school from closing. This is an indication that the parents were unanimous
in their sentiment that the shutdown would result in inconvenience and
displacement of the students who had already been halfway through
elementary school and high school. It turned out some were even forced to
pay higher tuition fees just so they would be admitted in other
academies.19 (Italics supplied)

To recapitulate, there is insufficient evidence to hold that the safety and well-
being of the students were endangered and/or compromised, and that the Union
was responsible therefor. Even assuming arguendo that the students’ safety and
well-being were jeopardized by the said protest actions, the alleged threat to the
students’ safety and well-being had long ceased by the time the high school was
closed. Moreover, the parents were vehemently opposed to the closure of the
school because there was no basis to claim that the students’ safety was at risk.
Taken together, these circumstances lead to the inescapable conclusion that
SJCI merely used the alleged safety and well-being of the students as a
subterfuge to justify its actions.
SJCI next contends that the subsequent reopening of the high school after only
one year from its closure did not show that the previous decision to close the
high school was tainted with bad faith because the reopening was done due to
the clamor of the high school’s former students and their parents. It claims that its
former students complained about the cramped classrooms in the schools where
they transferred.

The contention is untenable.

First, the fact that after one year from the time it closed its high school, SJCI
opened a college and elementary department, and reopened its high school
department showed that it never intended to cease operating as an educational
institution. Second, there is evidence on record contesting the alleged reason of
SJCI for reopening the high school, i.e., that its former students and their parents
allegedly clamored for the reopening of the high school. In a letter20 dated
December 15, 2000 addressed to the NLRC, which has never been rebutted by
SJCI, Mr. Mamplata, stated that –

Para po sa inyong kabatiran xxx isinara nila ang paaralang ito dahil sa
mga nag-alsang guro.

Sa ganitong kalagayan kaming pamunuan at kasapi ng PTA ay nakipag-


usap sa pamunuan ng paaralang ito na huwag naming isara dahil
malaking epekto ito sa aming mga anak dahil noon ay kalagitnaan pa
lamang ng pasukan. Sa kabila ng pakiusap naming ito ay hindi kami
pinakinggan at sa halip ay tuluyang isinara. Sa kanilang ginawang ito
marami sa mga bata ang hindi nakapasok sa ibang paaralan at ang iba
naman ay nadoble ang pinagbayaran sa matrikula. Sa kabuuan nito ay
malaking paghirap ang ginawa nila sa aming mga magulang at anak na
nag-aaral sa paaralang ito dahil lamang sa panggigipit sa mga gurong
walang tanging hangarin kundi bayaran sila ng naaayon sa itinakda ng
batas.

Sa taong 1999-2000 ay muling binuksan ang paaralang ito na sabi nila ay


sa kahilingan ng PTA. Alin kayang PTA ang tinutukoy nila. Paanong
magkakaroon ng PTA samantalang ito ay nakasara at kami ang PTA bago
ito isinara.

Kaya po pinaabot naming sa inyong kaalaman na kaming PTA ng


paaralang (St. John Academy) ito ay hindi kailanman humiling sa kanila na
pamuling buksan ito.21 (Italics supplied)
Finally, when SJCI reopened its high school, it did not rehire the Union members.
Evidently, the closure had achieved its purpose, that is, to get rid of the Union
members.

Clearly, these pieces of evidence regarding the subsequent reopening of the high
school after only one year from its closure further show that the high school’s
closure was done in bad faith.

Lastly, SJCI asserts that the strike conducted by the 25 employees on May 4,
1998 was illegal for failure to take the necessary strike vote and give a notice of
strike. However, we agree with the findings of the NLRC and CA that the protest
actions of the Union cannot be considered a strike because, by then, the
employer-employee relationship has long ceased to exist because of the
previous closure of the high school on March 31, 1998.

In sum, the timing of, and the reasons for the closure of the high school and its
reopening after only one year from the time it was closed down, show that the
closure was done in bad faith for the purpose of circumventing the Union’s right
to collective bargaining and its members’ right to security of tenure.
Consequently, SJCI is liable for ULP and illegal dismissal.

WHEREFORE, the petition is DENIED. The April 22, 2004 Decision and April 15,
2005 Resolution of the Court Appeals in CA-G.R. SP No. 74519 are AFFIRMED.
G.R. No. 139940 September 19, 2006

ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, CARLOS C.


A. RIVAS, JR., SIMEON B. INOCENCIO, ROMULO D. JACOB, NYMIA M.
PINEDA, BENEDICTO I. NIETO, JR., LUIS JACINTO, MILBERT MORA,
MONICO CALMA, CONSTANCIO BAYHONAN, BERNARDO SABLE,
NESTOR BRINOSA, NANJI MACARAMPAT, EDUARDO FLORAGUE and
DIONY S. LUMANTA, petitioners,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, and
ARELLANO UNIVERSITY, INC.,respondents.

DECISION

CARPIO MORALES, J.:

Subject of the present petition for certiorari are the Court of Appeals Resolution
of April 13, 19991 and Resolution of September 3, 19992 which dismissed
petitioners’ petition for certiorari for having been filed six days beyond the
reglementary period under Section 4, Rule 65 of the 1997 Rules of Civil
Procedure, as amended by Supreme Court En Banc Resolution dated July 21,
1998 reading:

If the petitioner had filed a motion for new trial or reconsideration in due
time after notice of said judgment, order or resolution, the period herein
fixed shall be interrupted. If the motion is denied, the aggrieved party
may file the petition within the remaining period, but which shall not be less
than five (5) days in any event, reckoned from notice of such denial. No
extension of time to file the petition shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days. (Emphasis
and underscoring supplied)

Petitioners, in the main, plead for the application of substantial justice over
procedural lapses, conformably to this Court’s pronouncements in several cases,
and a liberal construction of the Rules in order to promote its objective of
securing a just disposition of every action or proceeding.3

The record shows that the September 3, 1999 Resolution of the Court of Appeals
denying petitioners’ motion for reconsideration was received by them on
September 13, 1999. On September 27, 1999, petitioners filed a motion for 30-
day extension of time to file petition which this Court granted.4 On October 28,
1999, petitioners filed the present petition for certiorari.5 Doubtless, petitioners
could not have availed of such petition as a mere substitute for lost
appeal,6 hence, this Court treats it as one for review under Rule 45.

Indeed, Section 4 of Rule 65 of the 1997 Rules of Civil Procedure was amended
by the July 21, 1998 Resolution of this Court En Banc by adding to it as second
paragraph the above-quoted amendment.

The same Section was, however, subsequently amended by this Court’s En


Banc Resolution in A.M. No. 00-2-03-SC which took effect on September 1, 2000
providing for a 60-day period to file petition under Rule 65 from denial of a motion
for reconsideration or new trial. As thus further amended, Section 4 of Rule 65
now reads:

SEC. 4. When and where petition filed. – The petition shall be filed not
later than sixty (60) days from notice of the judgment, order or resolution.
In case a motion for reconsideration or new trial is timely filed, whether
such motion is required or not, the sixty (60) day period shall
be counted from notice of the denial of said motion. (Emphasis and
underscoring supplied)

The rule is settled that remedial statutes or modes of procedure, which do not
create new rights or take away vested rights but only operate in furtherance of
the remedy or confirmation of rights already existing, do not come within the
purview of the general rule against the retroactive operation of statutes. They are
construed to be applicable to actions pending and undetermined at the time of
their passage, and are deemed retroactive in that sense and to that extent.
Hence, in a long line of cases,7 the new period under Section 4 of Rule 65 was
given retroactive application. Of course at the time the assailed Resolutions of
the appellate court were issued in 1999, Section 4 of Rule 65 had not yet been
amended by this Court’s Resolution in A.M. No. 00-2-03-SC.

There being no reason why Section 4 of Rule 65, as amended in 2000 by this
Court, may not be given retroactive application to petitioners’ petition, it now
gives said application. While, normally, a remand of the case to the appellate
court for further proceedings is done,8 this Court now opts to decide the petition
on the merits to forestall further delay in its disposition.

On December 12, 1997, the Arellano University Employees and Workers Union
(the Union), the exclusive bargaining representative of about 380 rank-and-file
employees of Arellano University, Inc. (the University), filed with the National
Conciliation and Mediation Board (NCMB) a Notice of Strike charging the
University with Unfair Labor Practice (ULP) as follows:
1. Interfering in union activities;

2. Union Busting – violation of CBA’s Article IV, Section 2;9

3. Union Busting – disregarding the union’s request to deduct penalties


from its members who were absent and without justifiable reasons during
union meetings; and

4. Contracting Workout – the management is contracting out services and


functions being performed by Union members.10

The Notice of Strike was docketed as NCMB-NCR-NS-12-520-97.

Subsequently or on December 17, 1997, a majority of the members of the Union


filed a December 15, 1997 petition for audit11 of union funds before the Office of
the National Capital Region Director of the Department of Labor and Employment
(DOLE) against the officers of the Union.

On March 11, 1998, the Regional Director of DOLE-NCR directed the Union
officers to call a general membership meeting to, among other things, render an
accounting of union funds amounting to P481,117.28 which were remitted per the
check-off statement.12

Also on March 11, 1998, then DOLE Secretary Cresenciano B. Trajano certified
the Notice of Strike for compulsory arbitration to the National Labor Relations
Commission (NLRC) which the latter assigned to Labor Arbiter Cristeta D.
Tamayo. The Labor Arbiter set the dispute for hearing/conference on July 3,
1998, July 17, 1998, and August 11, 1998. No settlement was reached by the
parties, however.13

On July 28, 1998, the University moved for the consolidation with the ULP charge
(NCMB-NCR-NS-12-520-97) the Interpleader14 it filed against the Union and
some of its members, docketed as NLRC NCR Case No. 00-02-02036-98 and
pending before Labor Arbiter Felipe T. Garduque II, and the Complaint the Union
filed for underpayment of wages arising from the change in the manner of
computation of salary of employees and non-payment of Sunday pay, docketed
as NLRC NCR Case No. 00-02-01422-98 and pending before Labor Arbiter
Ramon Valentin T. Reyes, both of which involve the same parties.15

Before the NLRC could act on the University’s motion for consolidation, DOLE
Secretary Bienvenido E. Laguesma, by Order16 of August 5, 1998, certified for
compulsory arbitration to the NLRC a second Notice of Strike filed by the Union
on July 16, 1998, docketed as NCMB-NCR-NS-07-277-98, charging the
University with the following:

a. Violation of Collective Bargaining Agreement (CBA), Art. V – withholding


of union and death benefits;

b. Violation of CBA, Art. VI – non-granting of ten (10%) percent salary


increase to some union members;

c. Illegal/unauthorized deductions in the payroll;

d. Union interference – circulating letters against the union; and

e. Non-implementation of the retirement plan as approved by the BIR.17

A strike was in fact staged on August 5, 1998.

By the same Order of August 5, 1998, the DOLE Secretary directed the strikers
to return to work within twenty-four (24) hours. The order was served upon the
Union on August 6, 1998, and the following day, August 7, 1998, at about 3:00
p.m., the Union lifted its strike.18

The strike staged by the Union on August 5-7, 1998 prompted the University to
file on August 24, 1998 a petition to declare the same illegal, docketed as NLRC-
NCR Case No. 00-08-06897-98, which was also consolidated with the other
cases.

Resolving the consolidated cases, the NLRC, by Decision19 of October 12, 1998,
disposed as follows:

WHEREFORE, judgment is hereby rendered declaring:

1. That the Union’s two notices of strike docketed as NCMB-NCR-


NS-12-520-97 and NCMB-NCR-NS-07-277-98 were, to the extent as
they concern the issues herein resolved, without merit;

2. That as a consequence, the University is absolved from the


charges of Unfair Labor Practicecontained in said notices of strike;

3. The loss of employment status of all the individual


respondents in NLRC-NCR-Case No. 00-08-06897-98; and

4. That there is no diminution of workers’ benefits in NLRC-NCR


Case No. 00-02-01422-98, because apart from the Union’s failure to
prove it, the University, based on existing laws, is correct in using
314 days as divisor in computing the daily wage of its daily paid
employees.

SO ORDERED.20 (Emphasis and underscoring supplied)

The NLRC found that what triggered the strike was the Union’s suspicion that the
petition for audit of union funds was initiated by the University. The NLRC, citing
an Order of March 11, 1998 issued by the DOLE Regional Director, found the
therein petitioners to have initiated, out of their own volition, the filing of the
petition. It thus concluded that there was no factual basis to hold the University
guilty of interference in union activities.21

On the allegation of union busting, the NLRC ruled that the refusal of the
University to deduct penalties from the salaries of members of the Union who
failed to attend meetings was based on Article IV, Section 222 of the CBA vis-á-
vis Section 123 of the same Article which requires as condition for a valid checkoff
prior submission to the management of individual checkoff authorizations, a
requirement which was not met by the Union.24 Besides, the NLRC held, the law
mandates that the Union should not be "arbitrary, excessive or oppressive" in
imposing a fine.25

On the claim that the University had been contracting out work, the NLRC held
that the same was never raised during the conciliation meetings at the NCMB
level.26

Respecting the second Notice of Strike, the NLRC found that only the charges of
violation of the CBA for withholding union dues and death benefits, and the non-
implementation of the retirement plan, as approved by the BIR, were left for
resolution as the Union dropped the other issues raised therein after the NCMB
hearings on July 21, 1998 and July 28, 1998.27

Crediting the explanation of the University that its withholding of union dues and
death aid benefits was upon the written request of several union members
themselves, the NLRC held that no ULP was committed.

On the charge of non-implementation of the retirement plan by the University, the


NLRC found that the same was baseless and it was in fact not ventilated before
the NCMB.28

In NLRC NCR Case No. 00-02-02036-98, the NLRC ruled that the University
may not be held guilty of ULP for refusal to heed the demand of the Union that
salaries of its members be deducted for their failure to attend union meetings:
firstly, because the Union itself failed to meet the requirements provided for in
Sections 1 and 2, Article IV of the CBA; and secondly, an interpleader had been
filed by the University for the parties to litigate their claims before the
NLRC.29 The NLRC also ruled that the resolution calling for such deduction was
not valid as it was not even signed by the majority of Union officers and
circulated to the members.30

In NLRC NCR Case No. 00-08-06897-98 (the University’s petition to declare the
strike staged by the Union on August 5-7, 1998 illegal), the NLRC granted the
petition and declared the loss of employment status of all thestrikers for
knowingly defying the Return-to-Work Order of the DOLE Secretary dated
August 5, 1998, said Order having been served upon the union on August 6,
1998 but it was only on August 7, 1998, at about 3:00 p.m., that the strike was
lifted.31

In NLRC NCR Case No. 00-02-01422-98, the NLRC ruled that the University was
correct in using 314 days as divisor, instead of 365 days, in computing the
"equivalent daily rate"32 of pay of a worker.

The Union et al. (hereafter petitioners) filed a motion for reconsideration of the
NLRC decision which was denied by Resolution33 of January 20, 1999. Hence,
they elevated the decision to the Court of Appeals via petition for certiorari which
was, as stated early on, dismissed.

In the present petition, petitioners insist that the University violated the CBA by
withholding union dues and death benefits. The University counters that on the
request of Union members in light of their gripes against the Union and its
officers, it did withhold said dues and benefits which they deposited with the
DOLE where the parties could settle the issues among themselves.

The then prevailing Rules Implementing the Labor Code, Book V34, Rule XVIII
provided that

Section 1. Right of union to collect dues. – The right of the incumbent


bargaining representative to check off and to collect dues resulting
therefrom shall not be affected by the pendency of a representation case
or an intra-union dispute.35 (Emphasis supplied)

To constitute ULP, however, violations of the CBA must be gross. Gross violation
of the CBA, under Article 261 of the Labor Code, means flagrant and/or malicious
refusal to comply with the economic provisions thereof. Evidently, the University
can not be faulted for ULP as it in good faith merely heeded the above-said
request of Union members.
On the NLRC’s declaration of loss of employment status of the strikers, the
pertinent provision of Article 264 of the Labor Code provides:

Article 264.

xxxx

… 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… (Emphasis and underscoring supplied)

Under the immediately quoted provision, an ordinary striking worker may not be
declared to have lost his employment status by mere participation in an illegal
strike. There must be proof that he knowingly participated in the commission of
illegal acts during the strike. While the University adduced photographs36 showing
strikers picketing outside the university premises, it failed to identify who they
were. It thus failed to meet the "substantiality of evidence test"37 applicable in
dismissal cases.

Petitioner-union members must thus be reinstated to their former


position, without backwages. If reinstatement is no longer possible, they should
receive separation pay of One (1) Month for every year of service in accordance
with existing jurisprudence.38

With respect to the union officers, as already discussed, their mere participation
in the illegal strike warrants their dismissal.

As for petitioners’ claim of substantial diminution of their salary on account of the


divisor used by the University in its computation – 314 days, instead of 365 days,
this Court finds nothing wrong therewith. Sundays being un-worked and
considered unpaid rest days, while regular holidays as well as special holidays
considered as paid days,39 the factor used by the University merely complies with
the basic rule in this jurisdiction of "no work, no pay." The right to be paid for un-
worked days is generally limited to the ten legal holidays in a year.40

WHEREFORE, the Court of Appeals Resolution of April 13, 1999 and Resolution
of September 3, 1999 are SET ASIDE.

The NLRC Decision of October 12, 1998 and Resolution of January 20, 1999
are AFFIRMED, with the MODIFICATION that the dismissal of petitioner-union
members MONICO CALMA, CONSTANCIO BAYHONAN, BERNARDO SABLE,
NESTOR BRINOSA, NANJI MACARAMPAT, EDUARDO FLORAGUE and
DIONY S. LUMANTA is SET ASIDE, and they are thus ordered REINSTATED
WITHOUT BACKWAGES. If their reinstatement is no longer possible, however,
they should be given SEPARATION PAY at the rate of One (1) Month pay for
every year of service.
G.R. No. L-39040 June 6, 1990

ROYAL UNDERGARMENT CORPORATION OF THE PHILIPPINES, petitioner,


vs.
COURT OF INDUSTRIAL RELATIONS, ROYAL UNDERGARMENT
WORKERS UNION (PTGWO) and ANTONIO CRUZ, respondents.

Tanada, Vivo & Tan for petitioner.

Carlos E. Santiago for Antonio Cruz.

MEDIALDEA, J.:
This is a petition for review on certiorari seeking the reversal of the decision rendered by the defunct Court of Industrial Relations on January
21, 1974 adjudging the petitioner corporation guilty of unfair labor practice and ordering the reinstatement of and payment of backwages to
respondent Antonio Cruz.

The antecedent facts as found by the industrial court are as follows:

Respondent Antonio Cruz was employed by petitioner corporation in 1957 as an


electrician. Sometime in December, 1961, he was elected president of the Royal
Undergarment Workers Union (RUWU for brevity), a legitimate labor organization
which became affiliated with the Philippine Transport and General Workers
Organization (PTGWO for brevity).

On December 14, 1961, the RUWU-PTGWO, represented by the National


Secretary of PTGWO and respondent Cruz as RUWU President, sent proposals
to petitioner corporation for the purpose of collective bargaining.

On the following day, December 15, 1961, petitioner corporation, thru its
personnel manager, terminated the services of respondent Cruz allegedly on the
basis of the latter's "record and after careful analysis and deliberation."
Respondent's wife, Felicidad Cruz, who was also an employee of petitioner, was
likewise terminated. Thus, RUWU called a strike sometime during the first week
of January, 1962.

On January 10, 1962, RUWU-PTGWO and petitioner corporation entered into a


Return-to-Work Agreement thru the conciliation efforts of the Department of
Labor. The agreement contained the following provision:

xxx xxx xxx


Regarding the two (2) employees, Mr. Antonio Cruz and Mrs. Cruz,
the union entrusts the settlement of its complaint for decision to the
Management, which shall be reinstatement for both employees when
the Royal Undergarment Workers Union- PTGWO shall have been
chosen as the collective bargaining agent for the workers at the
consent election to be held in the company premises;

.... (pp. 39-40, Rollo)

The records do not disclose the results of the consent election. Subsequently
however, respondent Cruz and his wife were both re-employed and reinstated by
petitioner corporation, thereby indicating the victory of RUWU-PTGWO in the
consent election.

On March 31, 1962, RUWU-PTGWO and petitioner corporation entered into a


collective bargaining agreement which contained a grievance procedure for the
settlement of disputes. Such grievance procedure was applied on several
occasions involving suspensions of union members-employees through the help
and active participation of respondent Cruz as union president.

Sometime in November, 1962, the PTGWO urged its member-unions to stage a


nationwide strike. Thus, respondent Cruz campaigned among the members of
RUWU to join the strike.

On November 28, 1962 at around 11:00 p.m., within the company premises,
respondent Cruz approached three co-employees who are supervisors of the
company, namely, Camaguin, Dayadante and Gaspar. These persons contended
that respondent Cruz, who was under the influence of liquor, uttered the following
remarks to them: "Ikaw, Ikaw, Ikaw-mga hayop kayo. Bibigyan ko kayo ng isang
linggong taning sa buhay ninyo ipapapatay ko kayo." They also claim that
respondent Cruz had challenged another co-employee. Respondent and his
witnesses denied this charge and claimed that what the respondent actually said
to the three employees was: "Ikaw, Ikaw, Ikaw pare, alam kong matitigas kayo
rito sa compania, kayat ako'y nakikiusap, kung maaari pag-natuloy ang
nationwide strike bukas, makiisa kayo at gamitin ang tigas ninyo." Immediately
thereafter, the three employees went to the personnel officer of petitioner
corporation. On November 29, 1962, they executed an affidavit regarding the
incident.

The following day, on November 30, 1962, the general manager of petitioner
corporation placed respondent Cruz on preventive suspension effective
December 3, 1962 for threatening "the lives of four (4) employees" and for having
'been reported under the influence of liquor," both acts being "contrary to rules
and regulations."

Upon the request of respondent Cruz and PTGWO, the petitioner corporation
conducted a conference which was in the nature of an investigation of the
incident.

On December 13, 1962, petitioner corporation dismissed respondent Cruz for


being under the influence of liquor on November 28, 1962 and for having
threatened the lives of four of his co-employees.

Respondent Cruz filed a complaint for unfair labor practice against petitioner
corporation with the Court of Industrial Relations. On January 21, 1974, the
respondent industrial court, while affirming the findings of the healing examiner,
rendered a decision, the dispositive portion of which, reads as follows:

WHEREFORE, respondent is hereby declared guilty of unfair labor


practice and is ordered to cease and desist from further committing
the same. Respondent is further directed to reinstate complainant
Antonio Cruz to his former or equivalent position without loss of
seniority and other privileges and to pay him backwages including all
benefits attached to his position, from the date he was dismissed up
to November 17, 1969.

SO ORDERED. (pp. 43-44, Rollo)

Hence, this petition for review on certiorari with the petitioner assigning the
following errors:

RESPONDENT CIR COMMITTED A GRAVE MISAPPREHENSION


OF FACT IN HOLDING IN ITS DECISION THAT IT WAS
RESPONDENT CRUZ' UNION ACTIVITIES WHICH CAUSED HIS
DISMISSAL BY PETITIONER.

II

RESPONDENT CIR LIKEWISE COMMITTED A GRAVE


MISAPPREHENSION OF FACT IN NOT HOLDING IN ITS
DECISION THAT THE DISMISSAL OF RESPONDENT CRUZ WAS
FOR CAUSE AS PROVIDED FOR IN THE TERMINATION PAY
LAW AND IN ACCORDANCE WITH MANAGEMENT
PREROGATIVE.

III

ASSUMING ARGUENDO THAT PETITIONER IS GUILTY OF


UNFAIR LABOR PRACTICE, RESPONDENT CIR ERRED IN
AWARDING RESPONDENT CRUZ FULL BACKWAGES WITHOUT
DEDUCTING THEREFROM THE INCOME HE EARNED DURING
SAID PERIOD. (pp. 9-10, Rollo)

Anent the first and second assigned errors, petitioner submits that the records of
the case, particularly the testimonies of respondent Cruz himself and his
witnesses, show that petitioner corporation did not interfere with or prevent the
union activities of its employees; that the former has even allowed or abetted
active unionism within the company; that the dismissal of respondent Cruz was
not impelled by reason of union participation of respondent Cruz but solely by his
infraction of company rules and regulations, specifically, serious threats against
the lives of three co-employees, challenging another to a fight and intoxication
while on duty, all of which clearly amounted to a dismissal for cause under the
Termination Pay Law, Rep. Act No. 1052, as amended.

On the other hand, the Court of Industrial Relations found from the surrounding
circumstances of the case, a valid and sufficient basis for the charge of unfair
labor practice against petitioner company. Said the respondent court:

There is no question as to the union activities of the complainant.


Starting from the time he was elected president of the RUWU, he
had engaged himself actively in union affairs. He had in behalf of
others pursued assiduously the employee relationships of the
membership. And on a higher plane, he urged the members to join
the nation-wide strike being planned by the PTGWO.

On the part of respondent there appears to be an attitude of


antipathy towards the complainant. Going back to the time, when the
RUWU sent collective bargaining proposals represented then by the
complainant, the latter and his wife were dismissed one day after the
same was received by respondent company. The record does not
show the specific reasons or bases for this action except the general
proposition that this (complainant's) record was supposedly carefully
analyzed. And yet, why include his wife in the dismissal? In the
Return-to-Work Agreement of January, 1962 which followed, a
peculiar and strange arrangement was made. The reinstatement of
complainant and his wife was made to depend on a contingency-the
victory of RUWU in the consent election. The main consideration
therefore of complainant's reinstatement, as well as that of his wife,
is, he gets back to work if his union wins; he stays out, if his union
loses. Should one's employment be made to depend on his union
affiliation or Identity? This aspect only projects the animosity
harbored by the respondent against the complainant.

Then, in the space of eleven months, complainant once again was


dismissed from respondents' employ, e.g. in December of the same
year he was reinstated. Respondents based its dismissal of
complainant on the ground that he was obviously under the
influence of liquor and he threatened the lives of four co-employees.
The evidence of being obviously under the influence of liquor' is
based on the supposed observation of the three witnesses whose
lives were allegedly threatened, coming as it is from a biased
source. None of these witnesses have ever supplied, much less
hinted on the motivation why complainant threatened their lives. On
the contrary, they claimed that they were on friendly terms with the
complainant with no previous background of misunderstanding
between them. None of them ever filed criminal charges against the
complainant for the supposed threat on their lives indicating that
whatever has transpired is not as serious as pictured by the
respondent. The incident was simply blown into such proportion so
as to provide a supposed valid cause for complainant's dismissal. In
the light of the initial attitude of respondent earlier discussed, the
inducing cause directly contributing to complainant's dismissal is the
respondent's antipathy to complainant's union activity and not his
misconduct. (pp. 42-43, Rollo)

We accord respect to the findings of the industrial court. Section 3 of Republic


Act No. 875, known as the The Industrial Peace Act, as amended, provides that
employees shall have the right to self-organization and to form, join or assist
labor organizations of their own choosing for the purpose of collective bargaining
through representatives of their own choosing and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid or
protection. Hence, it shall be unfair labor practice for an employer to discriminate
in regard to tenure of employment or any term or condition of employment to
encourage or discourage membership in any labor organization (Section 4 (a)
(4), R.A. No. 875).

We have perused the record and found that the totality of evidence as found by
respondent court supports the conclusion that respondent Cruz has been unjustly
dismissed by reason of his union activities. The charge by petitioner against
respondent Cruz for being under the influence of liquor on a certain date and for
having threatened the lives of his co-employees is too flimsy to merit serious
consideration. We have on record the undisputed facts that private respondent,
as president of RUWU, was known for his aggressive and militant union
activities; that he and his wife had been previously dismissed on the ground of
active participation in union affairs; that they were reemployed only pursuant to
the express terms of the Return-to-Work Agreement executed by petitioner
corporation and RUWU when the latter won in the consent election; that
respondent Cruz was dismissed again for the second time in the course of his
campaign among RUWU members to join the nationwide strike of PTGWO in
which RUWU is a member union.

It has previously been indicated that an employer may treat freely with an
employee and is not obliged to support his actions with a reason or purpose.
However, where the attendant circumstances, the history of the employer's past
conduct and like considerations, coupled with an intimate connection between
the employer's action and the union affiliations or activities of the particular
employee or employees taken as a whole raise a suspicion as to the motivation
for the employer's action, the failure of the employer to ascribe a valid reason
therefor may justify an inference that his unexplained conduct in respect of the
particular employee or employees was inspired by the latter's union membership
or activities (Rothenbergon Labor Relations, pp. 401-402, cited in San Miguel
Brewery, Inc., et al. v. Santos, et al., No. L-12682, August 31, 1961, 2 SCRA
1081).

Further, factual findings of the Court of Industrial Relations are conclusive in the
absence of a showing that the same have no support in the evidence on record.
This Court will not review said court's factual findings as long as the same are
supported by evidence. This is so because the industrial court is governed by the
rule of substantial evidence rather than by the rule of preponderance of evidence
as in ordinary civil cases (Sanchez v. Court of Industrial Relations, L-19000, July
31, 1963, 8 SCRA 654; Industrial Commercial Agricultural Workers Organization
v. Bautista, L-15639, April 30, 1963, 7 SCRA 907).

Anent the third assigned error, it is the judicial trend to fix a reasonable period for
the payment of backwages to avoid protracted delay in post judgment hearings to
prove earnings of the worker elsewhere during the period that he had not been
reinstated to his employment. In consonance with the rulings in many cases, and
in view of the circumstances and equity of the instant case, respondent Cruz
should be reinstated and granted backwages corresponding to a period of three
(3) years from the time he was dismissed on December 13, 1962, without
deduction for his earnings elsewhere during his lay-off and without qualification of
his backwages as thus fixed, that is, unqualified by any wage increases
(Bachrach Motor Co., Inc. v. Court of Industrial Relations, L-26136, October 30,
1978, 86 SCRA 27; L.R. Aguinaldo & Co., Inc. v. Court of Industrial Relations,
No. L-31909, April 5, 1978, 82 SCRA 309; Davao Free Workers Front v. Court of
Industrial Relations, L-29356, October 27, 1975, 67 SCRA 418).

ACCORDINGLY, the petition is hereby DENIED and the decision of the Court of
Industrial Relations dated January 21, 1974 is AFFIRMED with MODIFICATION
that petitioner is directed to reinstate respondent Antonio Cruz without loss of
seniority rights and with backwages for three (3) years from the time of dismissal,
without deduction and qualification. If reinstatement is no longer possible,
respondent Antonio Cruz should be awarded separation pay of one (1) month for
every year of service. With costs against petitioner.
G.R. No. L-31276 September 9, 1982

NATIONAL LABOR UNION, petitioner,


vs.
COURT OF INDUSTRIAL RELATIONS, EVERLASTING MANUFACTURING,
ANG WO LONG and BENITO S. ESTANISLAO, respondents.

Eulogio R. Lerum for petitioner.

Jose J. Ferrer and Jose C. Magat for respondents.

GUTIERREZ, JR., J:

The petitioner asks for the review of the Court of Industrial Relations' Order dated
September 14, 1968 and the Resolution of the court en banc dated March 7,
1969 in Case No. 3849-ULP entitled National Labor Union, complainant vs.
Everlasting Manufacturing and Ang Wo Long respondents.

The antecedent facts leading to the instant petition are:

Acting upon a charge filed by counsel for complainant union, the


Acting Prosecutor of this Court filed a formal complaint with this
Court on August 10, 1963, charging respondent Everlasting
Manufacturing of unfair labor practice within the meaning of Section
4(a), sub-paragraphs 1, 4 and 6 in relation to Sections 13, 14 and 15
of Republic Act 875. The pertinent allegations of the complaint are
quoted hereunder, to wit:

That following the conclusions of the collective


bargaining agreement by and between complainant
union and respondent company through its general
manager Benito Estanislao Alias Cha Wa began hiring
24 new workers;

That in order to avoid the implementation of the


aforecited collective bargaining contract, to bust
complainant union, to discourage membership with
complainant union, on the pretext of selling and closing
its business, and without any justifiable reason
respondent company, by its general manager Benito
Estanislao and proprietor Ang Wo Long, dismissed
and/or locked out all the members of complainant union
on July 8, 1963, namely:

1. Federico Reyes

2. Angelino Ureta

3. Joaquin Tapalla

4. Hermenegildo Ignacio

5. Carlito Belarmino

6. Aniano Molina

7. Nolasco de Pedro

8. Urbano Bernaba

9. Isidoro Belarmino

10. Antonio Abella

11. Placido Reyes

12. Eugenio Lingo

13. Mateo Andrade

14. Angel Abella

15. Vicente Valentin

16. Arthur Agustin

17. Segundino Agustin

18. Virgilio Gapac

19. Calino Diaz

20. Rolando Lisondra

21. Ireneo Diaz


That on the same date adverted to in paragraph 4
above, and continuously thereafter, respondent
company continued with its business operations by
availing of the services of the above-mentioned 24 new
workers who are non-union members, using the same
premises, business name, machineries, tool and
implements, same officials and supervisors, including its
assistant manager Tan Hoc;

That notwithstanding representations made by


complaint union for and in behalf of its members,
respondent failed and refused and continues to fail and
refuse to reinstate them to their jobs.

That since their mass dismissals and/or lock out on July


8, 1963, the above mentioned dismissed employees
have not found any substantial and/or equivalent
employment for themselves, in spite of diligent efforts to
that effect.

On August 28, 1963, upon being summoned, respondent, through


counsel, filed its answer denying the material allegations of the
complaint. As affirmative defenses, it is claimed substantially that
respondent establishment is no longer owned by Benito Estanislao
but by Ang Wo Long who purchased the same from the former for
valuable consideration and that the new owner is not duty bound to
respect whatever agreement has been entered into by the former
owner and the workers; that there has never been any employer-
employee relationship between the new owner and the complaining
workers so that the latter could not have been dismissed or locked
out. Respondent prays that the complaint be dismissed.

Several hearings were had and when the case was pending
decision, a 'Motion to Include Ang Wo Long as Party Respondent'
was filed on September 11, 1964, by counsel for petitioner union,
which motion was granted by this Court in its Order dated November
6, 1964. Upon being summoned, respondent Ang Wo Long, through
counsel, filed on January 13, 1965, his Answer which is substantially
similar to the one filed by respondent Everlasting Manufacturing.
After farther hearing, this case was submitted by the parties for
decision. (Decision, CIR, March 22, 1966, pp. 61-63, rollo).
On March 22, 1966, the respondent court through Associate Judge Amando C.
Bugayong rendered a decision the dispositive portion of which reads:

ALL THE FOREGOING CONSIDERED, respondents are hereby


found guilty of unfair labor practice and they are hereby ordered:

1. To cease and desist from committing further acts of unfair labor


practice; and

2. To reinstate the twenty-one complaining workers to their positions


with back wages from July 8, 1963, until they are actually reinstated.

The Examining Division of this Court is hereby directed to compute


the amount of back wages due to the workers based on the Payrolls
Marked as exhibits in the records of this case and, upon completion
thereof, to submit to the Court immediately a report for further
disposition. (pp. 68-69, rollo)

Acting on a motion for reconsideration of the afore-stated decision filed by the


respondents and a motion to dismiss thereto filed by the petitioner union, the
respondent court, after conducting a hearing issued a Resolution en banc dated
November 7, 1966 ordering the reopening of the case and to include Benito
Estanislao as party respondent to determine his liability under the complaint.
Considering the different opinions of the members of the respondent court the
March 22, 1966 decision was set aside.

Pursuant to the November 7, 1966 Resolution, Benito Estanislao was issued


summons at his last known address requiring him to answer the complaint. The
summons was, however, returned by the counsel for respondent Ang Wo Long
on the ground that Benito Estanislao did not reside and was not found at the
premises of the former. Hence, the respondent court issued an order to the effect
that Estanislao be issued summons by publication. Despite summons by
publication, however, Estanislao did not answer the complaint. Neither did
Estanislao appear in court. The respondent court, therefore, conducted hearings
of the case without the presence and representation of Estanislao.

On September 14, 1968, the respondent court issued an Order the dispositive
portion of which reads:

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the Court


finds Benito Estanislao guilty of unfair labor practice and he is
hereby ordered to pay backwages to the twenty-one (21)
complaining workers during the full duration of the collective
bargaining contract.

The case is dismissed insofar as it concerns respondent Ang Wo


Long. (pp. 85-86, rollo)

On March 7, 1969, the respondent court issued a Resolution en banc denying a


motion for reconsideration of the September 14, 1968 Order filed by the
complainant union.

Hence, the instant petition.

The main issue before Us is focused on the respondent court's exoneration of


respondent Ang Wo Long from any liability to the twenty-one(21) complaining
workers of the petitioner union under the May 3, 1963 collective bargaining
agreement executed between the petitioner union represented by its officers on
one hand and respondent Everlasting Manufacturing represented by Benito
Estanislao as general manager.

There is no dispute over the circumstances of the dismissal of the twenty- one
(21) complaining workers from the respondent business establishment.

The twenty-one (21) complaining workers were members of the National Labor
Union, a legitimate labor organization. They were employed at the respondent
Everlasting Manufacturing, a business establishment which manufactured paper
cups, water cups, and other allied products. They were hired by Benito Sy
Estanislao who owned the said establishment.

On April 29, 1963, Benito Estanislao sold by Everlasting Manufacturing to Ang


Wo Long as evidenced by a Deed of Sale (Exhibit "6") "absolutely free from lien
encumbrances or liability of whatsoever kind and nature.

On May 3, 1963, after a series of negotiations, a collective bargaining agreement


(Exhibit "B") was entered into between the Everlasting Employees Union (NLU)
represented by its officers and the respondent business establishment
represented by Benito Estanislao who signed himself manager. Both parties
were represented by their respective counsel. The collective bargaining
agreement was supposed to be "for a period of not less than two (2) years or
until March 3, 1965 and thereafter for an additional twelve (12) months, unless
written notice of intended change is served by either party thereto, sixty (60) days
prior to March 31, 1965."
In the meantime, on April 21, 1963, Ang Wo Long filed with the Bureau of
Commerce an application for the registration of Everlasting Manufacturing as a
firm name or business name. The corresponding certificate registration was
issued by the Bureau of Commerce on May 3, 1963, the same day that the
collective bargaining agreement (Exhibit "A", supra) was entered into.

On July 8, 1963, the Office of the Mayor, Caloocan City issued a business permit
to Ang Wo Long to operate the Everlasting Manufacturing.

On July 10, 1963, Ang Wo Long sent individual letters to the twenty-one (21)
complaining workers, with similar contents, quoted hereunder:

This is to inform you that the Everlasting Manufacturing is now under


new management. I am now the owner of this establishment which I
bought from the previous owner last month.

In view of the above and in order to give the management a free


hand in operating the establishment, it is advised that the firm win be
closed for business temporarily.

You will be notified if your services will again be needed. (See Exh.
"B").

On July 17, 1963, the petitioner union representing the twenty-one (21)
dismissed workers charged the respondent business establishment with unfair
labor practice before the respondent court on August 10, 1963 On July 20, 1963,
Ang Wo Long employed twenty-four (24) new workers in the Everlasting
Manufacturing.

On August 10, 1963, the acting prosecutor of the respondent court formally filed
a complaint on the alleged discriminatory dismissal of the twenty-one (21)
complaining workers against the Everlasting Manufacturing.

Petitioner union wants Us to set aside the questioned Order and Resolution en
banc dated September 14, 1968 and March 7, 1969 respectively and to reinstate
the March 22, 1966 decision finding Everlasting Manufacturing and Ang Wo Long
guilty of unfair labor practice. The petitioner states that the findings and
conclusions of the respondent court in the March 22, 1966 decision were
founded on substantial evidence whereas the findings and conclusions of the
respondent court in the later order and resolution were not founded upon
substantial evidence. Furthermore, no reason was given by the respondent court
for the March 22, 1966 decision's reversal according to the petitioner.
The respondent court in its March 22, 1966 decision found Everlasting
Manufacturing and Ang Wo Long guilty of unfair labor practice in the following
manner:

It is puzzling, to say the least that while the respondent


establishment was already sold to respondent Ang Wo Long on April
29, 1963, the collective bargaining contract with the union was
entered into by the vendor, Benito S. Estanislao, four days after the
sale. Was Ang Wo Long really unaware of this contract as claimed
by him? The evidence on record shows that as early as April 21,
1963, or some eight days before the sale, Ang Wo Long filed with
the Bureau of Commerce an application for the registration of
'Everlasting Manufacturing' as a firm name or business name and
that the corresponding certificate of registration was issued to him by
said office on May 3, 1963, the same day that the collective
bargaining contract with the union was executed (Exh. "9"). On the
same date that the document of sale was executed, a sworn
statement of the sale in favor of Ang Wo Long was filed in the
Bureau of Commerce under the Bulk Sales Law, Act No. 3942 (Exh.
"8"). All these would indicate that, contrary to his claim, respondent
Ang Wo Long was already taking an active hand in the operation of
the business establishment after it was sold to him, and that the 21
complaining employees since then were already working for him as
new owner. Thus, it will be noted that when the collective contract
was entered into Benito Sy Estanislao four days after the said sale,
he signed in his capacity as "General Manager" and not any more as
owner. Under the circumstances, it is difficult to believe that Ang Wo
Long was ignorant, as he claims, of the contract entered into by
Estanislao in his representative capacity. To sustain the
protestations of Ang Wo Long that he was unaware of this contract
entered into when he was already the owner of the establishment, in
the face of an these known facts, would be tantamount to
sanctioning a deception and conspiracy to defraud the workers of
their rights already obtained in the contract.

The evidence adduced by respondents, more specifically the


testimony of Ang Wo Long, subjected to a closer scrutiny, is full of
glaring inconsistencies on many material and important points. Thus,
while admitting on the stand that he became the owner of
"Everlasting Manufacturing" on April 29, 1963, by virtue of the dead
of sale executed by Estanislao in his favor (t.s.n., pp. 8-9. hearing of
Jan. 29, 1964), yet he stated in his letter to the laborers (Exh. "B")
dated July 10, 1963, that he bought the said establishment only 'last
month', meaning June, 1963. While in the same letter Ang Wo Long
stated 'that the firm win be closed for business temporarily' he
admitted in his testimony that he did not actually temporarily close
the establishment inasmuch as Estanislao had other contracts which
were not finished (t.s.n., p. 7, Han. 29, 1964). Admittedly, Ang Wo
Long employed 24 new workers about July 20, 1963, because it is
claimed that the members of petitioner never applied to him although
he had been waiting for them for sometime (t.s.n., pp. 22-23, Jan.
27, 1964). In his letter, however, (Exhibit "B") to the 21 complaining
workers, he stated that the laborers 'will be duly notified if your
services will again be needed.' The evidence is very clear that the
workers involved had never been notified that their services were
needed. On the contrary, the principal argument of respondents'
counsel is that Ang Wo Long, being a new owner, has that absolute
right to employ workers whom he may choose, and he had in fact
chosen to dispense with the complaining workers and hire new ones
to replace them.

Respondent Ang Wo Long has not shown any just cause for
dispensing with the services of the twenty-one workers on July 8,
1963. From the circumstances, the conclusion becomes inescapable
that he dismissed the complainants in order to break the union and
do away with the existing collective bargaining contract which it has
obtained only after a strike and bargaining negotiations. (pp. 66-68,
rollo)

The foregoing findings and conclusions were completely superseded by a


different set of findings and conclusions of the respondent court on the main
issue in the questioned September 14, 1968 Order. In exonerating Everlasting
Manufacturing and Ang Wo Long from any liability against the twenty-one
complaining workers of the petitioner union, the respondent court said:

There is no question that the twenty-one (21) complaining workers


were hired by Benito Estanislao before he sold his business to Ang
Wo Long. Ang Wo Long did not operate the business until after he
has secured the necessary business permits from the proper
authorities, and it was only on July 8, 1963, after securing those
permits, that he started to operate the business. There is no
evidence on record that Ang Wo Long had knowledge of the
existence of the National Labor Union and the affiliation thereto of
the twenty-one (21) workers who are complainants in this case.
Neither is there evidence that Ang Wo Long had knowledge of the
collective bargaining contract which was still in force when the
twenty-one complainants were dismissed. Under the circumstances,
the Court finds no basis to hold respondent Ang Wo Long as having
been motivated by his desire to discriminate against these twenty-
one workers because of their union affiliation.

The negotiation and subsequent execution of the collective


bargaining contract undertaken by respondent Benito Estanislao
was without the knowledge of Ang Wo Long. The evidence shows
that Benito Estanislao who signed the contract was not clothed with
the proper authority from Ang Wo Long when the former entered into
such contract. From this alone, it is clear that the whole responsibility
for entering into the contract in question should rest with Estanislao.
The Court is convinced that Benito Estanislao is a transferrer in bad
faith and, as such, he may be held liable to the employees
discharged in violation of the Industrial Peace Act (Valentin A.
Fernando vs. Angat Labor Union, G.R. No. L-17896, May 30, 1962).
(pp. 84-85, rollo)

It can be readily seen that the respondent court's March 22, 'L966 decision was
based mainly on respondent Ang Wo Long's inconsistent testimony and the
circumstances surrounding his acquisition of respondent Everlasting
Manufacturing which according to the respondent court tended to show Ang Wo
Long's knowledge of the existence of the May 3, 1963 collective bargaining
contract.

On the other hand, the respondent court in the September 4, 1968 Order found
the same circumstances to be merely preparatory acts of Ang Wo Long before
he could begin to operate the respondent Everlasting Manufacturing and that
'here was no evidence on record which proved his knowledge of the May 3, 1963
collective bargaining contract. The Order was silent however, on the March 22,
1966 decision as regards the inconsistent testimony of Ang Wo Long.

The issue before Us boils down to whether or not the respondent court was
justified in completely over-turning its March 22, 1966 ruling on the liability of Ang
Wo Long under the May 3, 1963 collective bargaining contract.

A careful consideration of the facts and circumstances of this case constrains Us


to grant the petition and to set aside the questioned order and resolution of the
respondent court.

The respondent court modified its decision and absolved Ang Wo Long of
responsibility for and liability under the May 3, 1963 collective bargaining contract
because of its finding that there was a lack of evidence which would show
knowledge not only of the CBA but of the existence of the union itself on the part
of Mr. Ang Wo Long.

Appreciation of facts and conclusions drawn from facts must be such as would
be acceptable to a reasonable mind. The reconsidered conclusions of the
respondent court not only fly against the dictates of reason and common sense
but are out of touch with the grounds of public policy implicit in the Industrial
Peace Act and in the constitutional mandate on protection to labor.

Knowledge or awareness of what is going on refers to a mental and inner state of


consciousness, cognizance, and information. Whether or not Mr. Ang Wo Long
knew the labor problems of the firm he purchased, the existence of a union, the
on-going — CBA negotiations, and the efforts of the employees he later
dismissed to reach an agreement with management on the terms and conditions
of their employment can be determined only from an admission of Mr. Ang
himself or from the surrounding facts and circumstances indicative of knowledge.
or awareness.

Under the facts are circumstances of this case, it is irrational if not specious to
assume that Mr. Ang bought a business lock, stock, and barrel without inquiring
into its labor-management situation and that his dismissal of all the union
members without retaining a few experienced workers and their replacement with
a completely new set of employees who were strangers to the company was
anything other than an attempt to rid the firm of unwanted union activity.

There is substantial evidence to sustain a finding of Mr. Ang's knowledge of the


bargaining negotiations and the resulting CBA and, consequently, of unfair labor
practice on his part.

The former owner, Benito Estanislao alias Cha Wa, sold Everlasting
Manufacturing to Ang Wo Long on April 29, 1963 while CBA negotiations were
going on and about to be concluded. The firm had a recent history of labor
problems and the bargaining negotiations came about only after a strike.

According to the respondent court, the acts of Ang Wo Long — his filing an
application for registration with the Bureau of Commerce on April 21, 1963, his
securing the mayor's permit, and his other acts of management — were only acts
preparatory to taking over the firm and not acts indicating knowledge of union
activity and the CBA negotiations. We rule otherwise. Precisely because Mr. Ang
performed acts indicative of normal care and caution on the part of a man buying
a manufacturing firm, We rule that the same care and caution was also extended
to a more sensitive aspect of the business, one attracting the greatest degree of
concern and attention of any new owner, which was the relationship of the
workers to management, their willingness to cooperate with the owner, and their
productivity arising from harmonious relations. Benito Estanislao signed the CBA
no longer as owner but as "general manager." The new owner used the same
premises, the same business name, machineries, tools and implements and the
same officials and supervisors including the assistant manager, Mr. Tan Hoc The
only change was the replacement of the 21 union member with a completely new
set of employees hired from outside the firm. As stated by Judge Amando C.
Bugayong in the court's March 22,1966 decision, the respondent Ang Wo Long
did not show any just cause for dispensing with the services of all the 21 union
members. We agree with Judge Bugayong that "the conclusion becomes
inescapable that he (Mr. Ang) dismissed the complainants in order to break the
union and do away with the existing collective bargaining agreement which it has
obtained only after a strike and bargaining negotiations."

Another mystifying aspect of the questioned order and resolution was the placing
of full responsibility on the shoulders of Mr. Benito Estanislao whom the court
funny knew had already conveniently disappeared even as it absolved the only
person who could grant affirmative relief and whose liability had earlier been
determined to be founded on substantial evidence. The summons issued to
Benito Estanislao was returned by Ang Wo Long's counsel who stated that
Benito Estanislao was no longer at his former address. Summons had to be
effected through publication. The person found guilty of unfair labor practice did
not show up at the reopened hearings and as far as the records before US show,
had disappeared. The concatenation of circumstances clearly indicates the
participation of both Mr. Estanislao and Mr. Ang in the unfair labor practice.
Hence, Ang Wo Long should be jointly and severally liable with Benito S.
Estanislao for the payment of backwages to the complaining employees.

Considering practical considerations, among them the length of time that has
lapsed since the dismissal of the complaining employees and following Our
rulings in the cases of Mercury Drug Co., Inc., et al vs. CIP, et al. (56 SCRA,
694); Aguinaldo Co., Inc., et al. vs. CIR, et al (82 SCRA 309); Danao
Development Corporation vs. NLRC, et al. (81 SCRA 489); Monteverde, et al. vs.
CIR, et al. (79 SCRA 259); Insular Life Insurance Co., Ltd Employees
Association — NATU vs. Insular Life Assurance Co., Ltd (76 SCRA 50); People's
Bank and Trust Company, et al. vs. People's Bank and Trust Company
Employees Union et al (69 SCRA 10) and Liberty Cotton Mills Workers Union vs.
Liberty Cotton Mills, Inc., (92 SCRA 391), We grant three (3) years backwages
without deduction or qualification to the dismissed employees. Following the
same considerations and in fairness to Ang Wo Long, reinstatement of the
complaining employees should be made on the basis of the latter's physical
fitness for the respective jobs from which they were illegally ousted. (Mercury
Drug Co., Inc. vs. Court of Industrial Relations), (supra).
WHEREFORE, the petition is hereby GRANTED.

1) Ang Wo Long and Benito S. Estanislao are hereby ORDERED jointly and
severally to pay the complaining employees three (3) years backwages without
deduction or qualification.

2) Ang Wo Long is hereby ordered to reinstate the complaining employees and


he may require certifications of their physical fitness by a government physician;
and

3) Ang Wo Long and Benito S. Estanislao shall pay the costs.


G.R. No. 147593 July 31, 2006

GERONIMO Q. QUADRA, petitioner,


vs.
THE COURT OF APPEALS and the PHILIPPINE CHARITY SWEEPSTAKES
OFFICE, respondents.

DECISION

PUNO, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. SP
No. 55634 dated December 29, 2000 and its resolution dated March 26, 2001.
The Court of Appeals reversed and set aside the decision of the National Labor
Relations Commission (NLRC) in NLRC NCR Case No. 4312-ULP which
affirmed the decision of the Labor Arbiter granting moral and exemplary damages
to petitioner Geronimo Q. Quadra in connection with his dismissal from the
service.

Petitioner Geronimo Q. Quadra was the Chief Legal Officer of respondent


Philippine Charity Sweepstakes Office (PCSO) when he organized and actively
participated in the activities of Philippine Charity Sweepstakes Employees
Association (CUGCO), an organization composed of the rank and file employees
of PCSO, and then later, the Association of Sweepstakes Staff Personnel and
Supervisors (CUGCO) (ASSPS [CUGCO]). In April 1964, he was administratively
charged before the Civil Service Commission with violation of Civil Service Law
and Rules for neglect of duty and misconduct and/or conduct prejudicial to the
interest of the service. On July 14, 1965, the Civil Service Commission rendered
a decision finding petitioner guilty of the charges and recommending the penalty
of dismissal. The following day, on July 15, 1965, the General Manager of PCSO,
Ignacio Santos Diaz, sent petitioner a letter of dismissal, in accordance with the
decision of the Civil Service Commission. Petitioner filed a motion for
reconsideration of the decision of the Civil Service Commission on August 10,
1965. At the same time, petitioner, together with ASSPS (CUGCO), filed with the
Court of Industrial Relations (CIR) a complaint for unfair labor practice against
respondent PCSO and its officers. The case was docketed as Case No. 4312-
ULP.

On November 19, 1966, the CIR issued its decision finding respondent PCSO
guilty of unfair labor practice for having committed discrimination against the
union and for having dismissed petitioner due to his union activities. It ordered
the reinstatement of petitioner to his former position with full backwages and with
all the rights and privileges pertaining to said position.1
Respondent PCSO complied with the decision of the CIR. But while it reinstated
petitioner to his former position and paid his backwages, it also filed with the
Supreme Court a petition for review on certiorari entitled "Philippine Charity
Sweepstakes Office, et al. v. The Association of Sweepstakes Staff Personnel, et
al." assailing the decision of the CIR in Case No. 4312-ULP. The petition was
docketed as G.R. No. L-27546.2

On March 16, 1967, during the pendency of the case in the Supreme Court,
petitioner filed with the CIR a "Petition for Damages." He prayed for moral and
exemplary damages in connection with Case No. 4312-ULP. He cited the
decision of the Supreme Court in Rheem of the Philippines, Inc., et al. v.
Ferrer, et al.3 where it upheld the jurisdiction of the CIR over claims for damages
incidental to an employee's dismissal.

Respondent PCSO moved to dismiss the petition for damages on the following
grounds: (1) the CIR has no jurisdiction to award moral and exemplary damages;
(2) the cause of action is barred by prior judgment, it appearing that two
complaints are brought for different parts of a single cause of action; and (3) the
petition states no valid cause of action.

Petitioner resigned from PCSO on August 18, 1967.

The petition for damages and the motion to dismiss, however, remained pending
with the CIR until it was abolished and the NLRC was created. On April 25, 1980,
the Labor Arbiter rendered a decision awarding moral and exemplary damages to
petitioner in the amount of P1.6 million. The dispositive portion of the decision
stated:

WHEREFORE, in view of all the foregoing considerations, judgment is


hereby rendered awarding to complainant Geronimo Q. Quadra moral
damages consisting of the following sum: Three Hundred Fifty Thousand
Pesos (P350,000.00) for besmirched reputation; Three Hundred Fifty
Thousand Pesos (P350,000.00) for social humiliation; One Hundred
Thousand Pesos (P100,000.00) for mental anguish; One Hundred
Thousand Pesos (P100,000.00) for serious anxiety; One Hundred
Thousand Pesos (P100,000.00) for wounded feelings; One Hundred
Thousand Pesos (P100,000.00) for moral shock; and the further sum
of P500,000.00 as exemplary damages, on account of the arbitrary and
unlawful dismissal effected by respondents. Consequently, respondents
are therefore ordered to pay complainant Quadra the total sum of One
Million Six Hundred Thousand Pesos (P1,600,000.00) within ten (10) days
after this Decision becomes final.
SO ORDERED.4

The NLRC affirmed the decision of the Labor Arbiter,5 prompting respondent
PCSO to file a petition for certiorari with the Court of Appeals.

The Court of Appeals reversed the decision of the NLRC. It held that there was
no basis for the grant of moral and exemplary damages to petitioner as his
dismissal was not tainted with bad faith. It was the Civil Service Commission that
recommended petitioner's dismissal after conducting an investigation. It also held
that the petition claiming moral and exemplary damages filed by petitioner after
respondent PCSO had complied with the CIR decision of reinstatement and
backwages amounted to splitting of cause of action.6

Petitioner filed a motion for reconsideration of the decision of the Court of


Appeals, but the same was denied for lack for merit.7

Petitioner now seeks the Court to review the ruling of the Court of Appeals. He
basically argues:

First: The ruling of the Court of Appeals that the PCSO did not act in bad
faith when it dismissed the petitioner is contrary to the already final and
executory decision of the CIR dated November 1[9], 1966 finding the
PCSO guilty of bad faith and unfair labor practice in dismissing the
petitioner. The decision of the CIR was affirmed by the High Court in the
case of PCSO, et al. v. Geronimo Q. Quadra, et al., 115 SCRA 34. The
Court of Appeals has no jurisdiction to amend the final and executory
decision of November 1[9], 1966 of the CIR which was affirmed by the
High Court. Once a decision has become final [and] executory, it could no
longer be amended or altered.

Second: The ruling of the Court of Appeals that the claims for moral and
exemplary damages of the petitioner is allegedly "tantamount to splitting of
cause of action under Sec. 4, Rule 2 of the 1997 Rules of Civil Procedure"
is contrary to law. When petitioner filed with the CIR his complaint for
illegal dismissal and unfair labor practice, the prevailing law and
jurisprudence was that the CIR did not have jurisdiction to grant moral and
exemplary damages. Petitioner's claim for moral damages was filed with
the CIR in the same case by virtue of the ruling of the High Court in Rheem
v. Ferrer, 19 SCRA 130 holding that the CIR has jurisdiction to award
moral and exemplary damages arising out of illegal dismissal and unfair
labor practice.8

The petition is impressed with merit.


A dismissed employee is entitled to moral damages when the dismissal is
attended by bad faith or fraud or constitutes an act oppressive to labor, or is done
in a manner contrary to good morals, good customs or public policy. Exemplary
damages may be awarded if the dismissal is effected in a wanton, oppressive or
malevolent manner.9 It appears from the facts that petitioner was deliberately
dismissed from the service by reason of his active involvement in the activities of
the union groups of both the rank and file and the supervisory employees of
PCSO, which unions he himself organized and headed. Respondent PCSO first
charged petitioner before the Civil Service Commission for alleged neglect of
duty and conduct prejudicial to the service because of his union activities. The
Civil Service Commission recommended the dismissal of petitioner. Respondent
PCSO immediately served on petitioner a letter of dismissal even before the
latter could move for a reconsideration of the decision of the Civil Service
Commission. Respondent PCSO may not impute to the Civil Service
Commission the responsibility for petitioner's illegal dismissal as it was
respondent PCSO that first filed the administrative charge against him. As found
by the CIR, petitioner's dismissal constituted unfair labor practice. It was done to
interfere with, restrain or coerce employees in the exercise of their right to self-
organization. It stated:

Upon the entire evidence as a whole (sic), the [c]ourt feels and believes
that complainant Quadra was discriminatorily dismissed by reason of his
militant union activities, not only as President of PCSEA, but also as
President of the ASSPS.10

In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees


Association, et al. v. NLRC, et al.,11 we found it proper to award moral and
exemplary damages to illegally dismissed employees as their dismissal was
tainted with unfair labor practice. The Court said:

Unfair labor practices violate the constitutional rights of workers and


employees to self-organization, are inimical to the legitimate interests of
both labor and management, including their right to bargain collectively
and otherwise deal with each other in an atmosphere of freedom and
mutual respect; and disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations. As the conscience of the
government, it is the Court's sworn duty to ensure that none trifles with
labor rights.

For this reason, we find it proper in this case to impose moral and
exemplary damages on private respondent. x x x
On the second issue, we agree with petitioner that the filing of a petition for
damages before the CIR did not constitute splitting of cause of action under the
Revised Rules of Court. The Revised Rules of Court prohibits parties from
instituting more than one suit for a single cause of action. Splitting a cause of
action is the act of dividing a single cause of action, claim or demand into two or
more parts, and bringing suit for one of such parts only, intending to reserve the
rest for another separate action. The purpose of the rule is to avoid harassment
and vexation to the defendant and avoid multiplicity of suits.12

The prevailing rule at the time that the action for unfair labor practice and illegal
dismissal was filed and tried before the CIR was that said court had no
jurisdiction over claims for damages. Hence, petitioner, at that time, could not
raise the issue of damages in the proceedings. However, on January 27, 1967,
the Supreme Court rendered its ruling in Rheem of the Philippines, Inc., et al.
v. Ferrer, et al.13 upholding the jurisdiction of the CIR over claims for damages
incidental to an employee's illegal dismissal. Petitioner properly filed his claim for
damages after the declaration by the Court and before the ruling on their case
became final. Such filing could not be considered as splitting of cause of action.

IN VIEW WHEREOF, the assailed decision and resolution of the Court of


Appeals are REVERSED and SET ASIDE. The decision of the NLRC in NLRC
NCR Case No. 4312-ULP is REINSTATED.
G.R. No. L-67158, 67159, 67160, 67161, & 67162 May 30, 1988

CLLC E.G. GOCHANGCO WORKERS UNION, CORNELIO L. PANGILINAN,


LEO TROPACIO, OLIMPIO GUMIN, JUANITO SUBA, ROLANDO SANTOS,
RUBEN BUELA, ODILON LISING, REYNALDO DAYRIT, ROGELIO
MANGUERRA, ORLANDO NACU, DIOSILINO PERDON, ERNESTO GALANG,
ORLANDO PANGILINAN, JESUS SEMBRANO, RENATO CASTANEDA,
EDILBERTO BINGCANG, ERNESTO CAPIO, RUFO A. BUGAYONG,
RICARDO S. DOMINGO, TERESITO CULLARIN, ISRAEL VINO, ERNESTO
RAMIREZ, ROMEO S. GINA, ARNEL CALILUNG, PEDRO A. SANTOS,
RODOLFO CAPITLY, BUENAVENTURA B. PUNO, EDILBERTO QUIAMBAO,
FERNANDO LISING, ERNESTO M. TUAZON, MARCELO LANGUNSAD,
MARCELINO VALERIO, SERAFIN PAWA, JESUS S. DAQUIGAN, and
ISMAEL CAYANAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), and e.g.
GOCHANGCO, INC., respondents.

Navarro, Angeles, Anero & Falcon Law Notice for petitioners.

The Solicitor General, Isagani M. Jungco, and Bernardo P. Fernandez for


respondents.

SARMIENTO, J.:
The cases before the Court pit labor against management, in which, on not a few occasions, it is labor that has cause for complaint.

The Solicitor General states the facts as follows:

xxx xxx xxx

1. Petitioner union is a local chapter of the Central Luzon Labor


Congress (CLLC), a legitimate labor federation duly registered with
the Ministry of Labor and Employment (MOLE), while the individual
petitioners are former employees of private respondent who were
officers and members of the petitioner union.

2. Private respondent is a corporation engaged in packing and


crating, general hauling, warehousing, sea van and freight
forwarding,
3. Sometime in January 1980, the majority of the rank and file
employees of respondent firm organized the e.g. Gochangco
Workers Union as an affiliate of the CLLC. On January 23, 1980, the
union filed a petition for certification election under R03-LRD (MA)
Case No. 178-80. The MOLE Region 111 office set the hearing for
the petition on February 27,1980.

4. On February 7,1980, the CLLC national president wrote the


general manager of respondent firm informing him of the
organization of the union and requesting for a labor management
conference to normalize employer-employee relations (Annex "D,"
Case 486-80).

5. On February 26,1980, the, union sent a written notice to


respondent firm requesting permission for certain member officers
and members of the union to attend the hearing of the petition for
certification election. The management refused to acknowledge
receipt of said notice (Annex "E," Case 486-80).

6. On February 28, 1980, private respondent preventively


suspended the union officers and members who attended the
hearing namely: Cornelio Pangilinan, president; Leo Tropics, vice-
president; Olimpio Gumin, treasurer; Buenaventura Puno, director;
Reynaldo Dayrit, sgt-at-arms; Ernesto Ramirez; Ernesto Galang;
Odilon Lising; Jesus Daquigan; and Edilberto Quiambao. The
common ground alleged by private respondent for its action was
"abandonment of work on February 27, 1980." On the same date, all
the gate passes of all the above-mentioned employees to Clark Air
Base were confiscated by a Base guard.

7. Claiming that private respondent instigated the confiscation of


their gate passes to prevent them from performing their duties and
that respondent firm did not pay them their overtime pay, 13th month
pay and other benefits, petitioner union and its members filed a
complaint for constructive lockout and unfair labor practice against
private respondent, docketed as R03-AB Case No. 486-80 on March
10, 1980.

8. On March 12, 1980, private respondent filed an application for


clearance to dismiss Cornelio Pangilinan, Leo Tropics, Olimpio
Gumin, Reynaldo Dayrit, Odilon Lising, Edilberto Quiambao; Ernesto
Ramirez, Ernesto Galang, Buenaventura Puno, Arnel Calilung,
Romeo Guina, docketed as R03-AB Case No. 556-80. Subsequently
private respondent filed another clearance to dismiss Jesus
Daquigan, Serafin Pawa and Rufo Bugayong, docketed as R03-A-B
Case No. 55780.

9. On April 22,1980, petitioner Ricardo Dormingo who was


preventively suspended on April 17, 1980 filed a complaint for unfair
labor practice against the latter, docketed as R03-AB Case No.
55880.

10. On April 30, 1980, the services of nine (9) more union members,
namely: Ernesto Tuason, Israel Vino, Pedro Santos, Juanita Suba,
Edilberto Sarmiento, Diosalino Pandan, Antonio Razon, Benjamin
Capiz and Jesus Sembrano, were terminated by private respondent
on the ground that its contract with the U.S. Air Force had expired.
The rune employees filed a complaint for illegal dismissal against
private respondents on June 2, 1980. docketed as R03-AB Case No.
663-80.

11. On May 9, 1980, private respondent filed with MOLE, Region III,
a Notice of Termination of Contract together with a list of employees
affected by the expiration of the contract, among them, the 39
individual petitioners herein.

12. All the aforementioned cases were consolidated and assigned to


Labor Arbiter Andres Palumbarit.

13. After heating, Labor Arbiter Federico S. Bernardo who took over
the cases from Arbiter Palumbarit rendered a decision dated July 2,
1982, the dispositive portion of which reads:

WHEREFORE, In view of all the foregoing, the instant complaint of


complainants is hereby granted and the respondent's application for
clearance is hereby denied.

The respondent is hereby ordered:

1. To reinstate all the suspended/dismissed employees


to their former positions without loss of seniority rights
and other privileges, with full backwages including cost
of emergency living allowance from the date of their
suspension/dismissal up to the supposed date of actual
reinstatement, as follows:
NAME
BAC ECO TOTA
K- LA L
WAG
ES
1.Corn P P P
elio 11,2 7,73 19,00
Pangili 66.0 8.00 4.00
nan 0
2. Leo 11,2 7,73 19,00
Tropico 66.0 8.00 4.00
0
3. 11,2 7,73 19,00
Olimpio 66.0 8.00 4.00
Gumin 0
4. 11,2 7,73 19,00
Reynal 66.0 8.00 4.00
do 0
Dayrit
5. 11,2 7,73 19,00
Buenav 66.0 8.00 4.00
entura 0
Puno
6. 11,2 7,73 19,00
Ernest 66.0 8.00 4.00
o 0
Galang
7. 11,2 7,73 19,00
Ernest 66.0 8.00 4.00
o 0
Ramire
z
8. 11,2 7,73 19,00
Edilbert 66.0 8.00 4.00
o 0
Quiam
bao
9 11,2 7,73 19,00
Jesus 66.0 8.00 4.00
Daquig 0
an
10. 11,1 7,63 19,00
Renato 34.0 3.00 4.00
Castan 0
eda
11. 11,1 7,66 18,76
Edilbert 34.0 3.00 7.00
o 0
Bingca
ng
12. 11,1 7,66 18,76
Benedi 34.0 3.00 7.00
cto 0
Capio
13. 11,1 7,63 18,76
Orland 34.0 3.00 7.00
o Nacu 0
14. 11,1 7,66 18,76
Rodolf 34.0 3.00 7.00
o 0
Capitly
15. 11,1 7,66 18,76
Arnel 34.0 3.00 7.00
Calilun 0
g
16. 11,1 7,66 18,76
Romeo 34.0 3.00 7.00
Gina 0
17. 11,1 7,66 18,76
Orland 34.0 3.00 7.00
o 0
Pangili
nan
18. 11,1 7,66 18,76
Eduard 34.0 3.00 7.00
o 0
Alegad
o
19. 11,1 7,66 18,76
Teresit 34.0 3.00 7.00
o 0
Cullarin
20. 11,1 7,66 18,76
Rogelio 34.0 3.00 7.00
Mangu 0
erra
21. 11,1 7,66 18,76
Ruben 34.0 3.00 7.00
Buela 0
22. 11,1 7,66 18,76
Roland 34 3.00 7.00
o 00
Santos
23. 11,1 7,66 18,76
Ricard 34.0 3.00 7.00
o 0
Domin
go
24. 11,1 7,66 18,76
Serafin 34.0 3.00 7.00
Pawa 0
25. 11,1 7,66 18,76
Rufo 34.0 3.00 7.00
Bugayo 0
ng
26. 11,1 7,66 18,76
Ernest 34.0 3.00 7.00
o 0
Santos
27. 11,1 7,66 18,76
Ismael 34.0 3.00 7.00
Cayan 0
an
28. 11,1 7,66 18,76
Marcel 34.0 3.00 7.00
o 0
Lagans
ad
29. 11,1 7,66 18,76
Marceli 34.0 3.00 7.00
no 0
Valerio
30. 10,6 7,22 18,76
Ernest 18.0 5.00 7.00
o M. 0
Tuazon
31. 10,6 7,22 17,84
Israel 18.0 5.00 3.00
Vino 0
32. 10,6 7,22 17,84
Pedro 18.0 5.00 3.00
Santos 0
33. 10,6 7,22 17,84
Juanita 18.0 5.00 3.00
Suba 0
34. 10,6 7,22 17,84
Edilbert 18.0 5.00 3.00
o 0
Sarmie
nto
35. 10,6 7,22 17,84
Diosali 18.0 5.00 3.00
no 0
Pendo
n
36. 10,6 7,22 17,84
Antonio 18.0 5.00 3.00
Razon 0
37. 10,6 7,22 17,84
Benjam 18.0 5.00 3.00
in 0
Capiz
38. 10,6 7,22 17,84
Jesus 18.0 5.00 3.00
Sembr 0
ano
GRAN P P P267,
D 419, 706, 337.0
TOTAL 636. 973. 0
00 00

2. To restore transportation privilege as being extended


before the filing of the instant case; and

3. If their reinstatement is no longer possible due to


closure of the establishment, in addition to the payment
of their full backwages and cost of living allowance, to
pay their respective separation pay as provided for
under the Labor Code.

14. Private respondent appealed to the NLRC which rendered the


questioned decision on May 31, 1983 as follows:

WHEREFORE, in the light of foregoing premises, the appealed


decision is hereby set aside and another one issued dismissing the
above-entitled cases filed by the complainants-appellees for lack of
merit and granting the application for clearance to terminate the
services of individual complainants-appellees filed by respondent-
appellant.

15. Petitioners moved for a reconsideration of the above decision on


July 12, 1983 which NLRC denied in a resolution dated December
6,1983.

16. Hence, this petition. 1


xxx xxx xxx

The petitioners assign three errors in support of their petition:

I.

THAT PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION AND


SERIOUSLY COMMITTED ERRORS IN LAW IN CONSIDERING PRIVATE
RESPONDENTS EVIDENCE INTRODUCED FOR THE FIRST TIME ON
APPEAL, AND PUBLIC RESPONDENT NLRC HAS SERIOUSLY COMMITTED
ERRORS IN GIVING DUE COURSE TO PRIVATE RESPONDENT APPEAL
FROM THE DECISION OF LABOR ARBITER FEDERICO S. BERNARDO,
ALTHOUGH SAID APPEAL WAS NOT VALIDLY PERFECTED ON TIME;

II.

THAT PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERRORS IN


LAW IN RENDERING A DECISION THAT IS CONTRARY TO THE EVIDENCE
ON RECORD(S); and

III.

THAT PUBLIC RESPONDENT NLRC COMMITTED AN ERROR IN NOT


AWARDING BACK WAGES TO THE INDIVIDUAL PETITIONERS FOR
REFUSAL OF PRIVATE RESPONDENT TO REINSTATE THEM AFTER
RENDERING OF THE DECISION OF LABOR ARBITER FEDERICO S.
BERNARDO AND AFTER SAID LABOR ARBITER ORDERED PRIVATE
RESPONDENT TO REINSTATE THEM. 2

On the first issue, the petitioners submit that the motion for reconsideration,
treated subsequently as an appeal, 3 of the private respondent had been filed
beyond the ten-day period prescribed by the Labor Code, in the absence of any
statement thereon as to material dates. The respondent Commission ruled that it
was, on the strength of receipts in possession of the Labor Department
disclosing such dates and showing that said appeal had been seasonably filed.
As a matter of practice, and in connection with ordinary civil cases, this Court has
assumed a stance of liberality towards the application of the material data rule, if
it in be otherwise verified from other evidence that the appeal had been perfected
within the time prescribed. 4 We see no reason why we should hold otherwise as
far as labor cases are concerned. Accordingly, we yield to the respondent
Commission's finding that the e.g. Gochangco, Inc. had filed its appeal on time. It
may be further noted that the petitioners themselves can offer no proof, other
than vague inferences from circumstances, of the belated appeal they allege.
This is not to say, however, that such an appeal has judgment. The Solicitor
General himself urges that we grant that, petition and hence, reverse the
respondent Commission. But apart from such urgings, the records themselves
show that a reversal is in order.

We are convinced that the respondent company is indeed guilty of an unfair labor
practice. It is no coincidence that at the time said respondent issued its
suspension and termination orders, the petitioners were in the midst of a
certification election preliminary to a labor management conference, purportedly,
"to normalize employer-employee relations." 5 It was within the legal right of the
petitioners to do so, 6 the exercise of which was their sole prerogative, 7 and in
which management may not as a rule interfere. 8 In this connection, the
respondent company deserves our strongest condemnation for ignoring the
petitioners' request for permission for some time out to attend to the hearing of
their petition before the med-arbiter. It is not only an act of arrogance, but a
brazen interference as well with the employees right to self-organization, contrary
to the prohibition of the Labor Code against unfair labor practices. 9

But as if to add insult to injury, the company suspended the petitioners on the
ground of "abandonment of work" 10on February 27, 1980, the date on which,
apparently, the pre-election conference had been scheduled. (The petitioners
sought permission on February 26, 1980 while the suspension order was issued
on February 28, 1980.) What unfolds here is a clear effort by management to
punish the petitioners for their union activities.

As a consequence of such a suspension, the Clark Air Base guards confiscated


the employees' gate passes, and banned them from the base premises. We
cannot be befooled by the company's pretenses that "[t]he subsequent
confiscation by the Americans of the complainants' passes is beyond the powers
of management." To start with, those passes would not have been confiscated
had not management ordered the suspension. As put by the Solicitor General,
"the U.S. Air Force authorities could not have known who were supposed to
report for work on February 27, 1980," 12and who were under suspension.
Conversely, in the absence of such a suspension order, there was no ground to
seize such gate passes. Base guards, by themselves, cannot bar legitimate
employees without the 'proper sanction of such employees'employers.

What disturbs us even more, however, is the perplexing gullibility with which the
respondent National Labor Relations Commission would fall for such an
indefensible position. Said the Commission: "So, with their gate passes
confiscated, even if management will reinstate them, without the gate passes,
they cannot enter the US Clark Airforce Base and perform their jobs, for the gate
pass is a pre-requisite for their entrance for employment." 13 For surely, and as
we stated, the petitioners were dispossessed of those gate passes precisely
because of the suspension meted out against them. It is not the other way
around, as the Commission would have us behave, for the confiscation of such
passes would not furnish a ground for suspension. Reinstatement then would
have deprived the base gullibility guards any right to hold on to such passes any
further. In the absence of superior orders, mere base guards are bereft of any
discretion to act on such matters.

In finding the petitioners' suspension illegal, with more reason do we hold their
subsequent dismissal to be illegal. We are not persuaded by the respondent
firm's argument that final termination should be effected as the contract has
expired." 14 What impresses us is the Solicitor General's submission that the
petitioners were regular employees and as such, their tenure did not end with the
expiration of the contract. We quote:

The records show that petitioners were do so, 6 The ar employees


whose employment did not terminate with the expiration of private
respondent's contract with the U.S. Air Force. In their position paper
in the arbitration proceedings, they averred that been employer
employed by private respondent for six (6) months or more before
they were terminated as follows:

NAMES
DATE POSITION
EMPLOYED
1. Cornelio Jan. 1976 Driver
Pangilinan
2. Leo Mar. 1977 Driver
Tropico
3. Olimpio Jan. 1977 Driver
Gumin
4. Juanita June l976 Driver
Suba
5. Rolando Oct. 1978 Driver
Santos
6. Ruben Jan. 1975 Packer
Buela
7. Odilon May 1975 Packer
Lising
8. Reynaldo May 1976 Packer
Dayrit
9. Rogelio Mar. 1977 Packer
Manguerra
10. Orlando May 1977 Packer
Nacu
11. Diosalino May 1977 Packer
Perdon
12. Ernesto June 1977 Packer
Galang
13. Orlando June l977 Packer
Pangilinan
14. Jesus May 1977 Packer
Sembrano
15. Renato May 1976 Packer
Castaneda
16. Edilberto Aug. 1977 Packer
Sarmiento
17, Eduardo Dec. 1977 Packer
Alegado
18. Benjamin June l978 Packer
Capiz
19. Antonio Nov. 1978 Packer
Razon
20. Edilberto May 1978 Packer
Bingcang
21. Ernesto June 1978 Packer
Santos
22. Benedicto Oct. 1978 Packer
Capio
23. Rufo May 1977 Packer
Bugayong
24. Ricardo Dec. 1978 Packer
S. Domingo
25. Teresito Mar. 1978 Packer
Cullarin
26. Israel May 1979 Packer
Vino
27. Ernesto Mar. 1979 Packer
Ramirez
28. Romeo S. Sept. 1979 Packer
Gina
29. Arnel Sept. 1979 Packer
Calflung
30. Pedro A. May 1979 Packer
Santos
31. Rodolfo Nov. 1978 Packer
Capitly
32. Sept. 1979 Packer
Buenaventura
B. Puno
33. Edilberto Nov. 1978 Packer
Quiambao
34. Fernando Jan. 1975 Checker
Lising
35. Ernesto Feb. 1975 Mechanic
M. Tuazon
36. Marcelo Jan. 1963 Mechanic
Lagansad
37. Marcelino May 1979 Mechanic
Valerio
38. Serafin Feb. 1979 Packer
Pawa
39. Jesus S. May 1977 Packer
Daquigan
40. Ismael May 1978 Packer 15
Cayanan

As regular employees, the petitioners' tenure are secure, and their dismissal
must be premised on a just cause. 16

We find none here. What we find, instead, are flimsy attempts by the respondent
company to discredit the person of the petitioners' counsel, or their officers, and
other resorts to argumenta ad hominem. 17

There is no merit in the claim that the petitioners' terms were coterminous with
the duration of the contract. There is nothing in the records that would show that
the petitioners were parties to that contract. It appears furthermore that the
petitioners 18 were in the employ of the respondent company long before that
contract was concluded. They were not contract workers whose work terms are
tied to the agreement, but were, rather, regular employees of their employer who
entered into that contract.

But even if dismissal were warranted, the same nonetheless faces our
disapproval in the absence of a proper clearance then required under the Labor
Code.19 It is true that efforts were undertaken to seek such a clearance, yet there
is no showing that it was issued. That still taints the dismissal with the vice of
illegality.

The Court likewise rejects the claims of an alleged waiver by the petitioners of
their economic demands, in the light of an alleged order issued by Labor Arbiter
Luciano Aquino in connection with another case(s) involving the same parties. (It
was Labor Arbiter Federico Bernardo who penned the unfair labor practice/illegal
dismissal case.) The Honorable Aquino's disposition reads:

The records show that a "Waiver of Claims, Rights and Interest" was
filed by above-named petitioners stating, among other things, that
said petitioners are waiving their claims, rights and interests against
the respondents.

ACCORDINGLY, let the above-entitled cases be DISMISSED in


view of the waiver made by the petitioners. 20
Acting on these allegations, the respondent Commission, baring its
clear bias for management, ruled that the petitioners had waived
their claims. Thus:

xxx xxx xxx

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

xxx xxx xxx

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

In any event, we have held that unfair labor practice cases are not, in view of the
public interest involved, subject to compromises. 23 Furthermore, these alleged
waivers do not appear to have been presented in the first instance. They cannot
be introduced for the first time on appeal.

We come, finally, to the respondent company's liability for backwages and for
emergency cost of living allowances (ECOLA). In its appeal, the company denies
any liability, pointing to "[r]epresentative samples of the documents evidencing
payment was likewise submitted due to the voluminous records which cannot be
all produced." 24 The Commission accepted this argument, noting that 'these
xerox copies of payment of allowances, were never spurned by complainants-
appellees." 25 The Solicitor General observes, on the other hand, that these
alleged documents were never presented at the hearing but surfaced only on
appeal. 26 Indeed, there is no reference in the Labor Arbiter's decision to these
documents, and apparently, the respondent firm entered the same in evidence at
the appeal level only. As we have declared, a party is barred from introducing
fresh matters at the appellate stage. Besides, and as the Solicitor General points
out, "the ECOLA awarded to petitioners in the decision of the Labor Arbiter
include only those that pertain to them from the time of their dismissal up to July
1, 1982 " 27 the date the Labor Arbiter ordered their reinstatement. 28 Accordingly,
we rule the respondent corporation liable for such unpaid claims.

Before Batas Blg. 70 29 was enacted into law, unfair labor practices were
considered administrative offenses, 30 and have been held akin to tort, 31 wherein
damages are payable. We therefore not only order herein the reinstatement of
the petitioners and the payment of backwages (including cost-of-living
allowances) to them, but impose as well moral and exemplary damages. With
respect to backwages, we hold the respondent e.g. Gochangco, Inc. liable, in line
with the recommendation of the Solicitor General and in accordance with
accepted practice, for backwages equivalent to three (3) years without
qualification or deduction. 32

As for moral damages, we hold the said respondent liable therefor under the
provisions of Article 2220 of the Civil Code providing for damages for "breaches
of contract where the defendant acted fraudulently or in bad faith." We deem just
and proper the sum of P5,000.00 each in favor of the terminated workers, in the
concept of such damages.

We likewise grant unto said workers another P5,000.00 each to answer for
exemplary damages based on the provisions of Articles 2229 and 2231 and/or
2232 of the Civil Code. For "act[ing] in gross and evident bad faith in refusing to
satisfy the [petitioners'] plainly valid, just and demandable claim[s] " 33 the
respondent firm is further condemned to pay attorney's fees. The Court considers
the total sum of P20,000.00 fair and reasonable.

If only for emphasis, the new Constitution considers "labor as a primary social
economic force." 34 As the conscience of the government, it is this Court's sworn
duty to ensure that none trifles with labor rights.
WHEREFORE, the petition is GRANTED. The decision of the public respondent,
the National Labor Relations Commission, is REVERSED and SET ASIDE.
Judgment is hereby rendered:

1. Ordering the private respondent, e.g. Gochangco, Inc., to REINSTATE the


terminated workers;

2. Ordering the private respondent to PAY them backwages equivalent to three


(3) years without qualification or deduction;

3. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS


EACH, as and for moral damages;

4. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS


EACH, as and for exemplary damages; and

5. Ordering it to PAY them the sum of TWENTY THOUSAND (P20,000.00)


PESOS as and for attorney's fees.

This Decision is IMMEDIATELY EXECUTORY.

Costs against the private respondent.

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