THIRD DIVISION

[G.R. No. 131235. November 16, 1999]

UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI, NORMA CALAGUAS, IRMA
POTENCIANO, LUZ DE GUZMAN, REMEDIOS GARCIA, RENE ARNEJO, EDITHA OCAMPO,
CESAR REYES, CELSO NIERRA, GLICERIA BALDRES, MA. LOURDES MEDINA, HIDELITA
GABO, MAFEL YSRAEL, LAURA ABARA, NATIVIDAD SANTOS, FERDINAND LIMOS,
CARMELITA ESPINA, ZENAIDA FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA and
LEONCIO CASAL, petitioners vs. Dir. BENEDICTO ERNESTO R. BITONIO JR. of the Bureau of
Labor Relations, Med-Arbiter TOMAS F. FALCONITIN of The National Capital Region,
Department of Labor and Employment (DOLE), EDUARDO J. MARIO JR., MA. MELVYN
ALAMIS, NORMA COLLANTES, URBANO ALABAGIA, RONALDO ASUNCION, ZENAIDA
BURGOS, ANTHONY CURA, FULVIO M. GUERRERO, MYRNA HILARIO, TERESITA MEER,
FERNANDO PEDROSA, NILDA REDOBLADO, RENE SISON, EVELYN TIROL and ROSIE
ALCANTARA, respondents.

DECISION
PANGANIBAN, J.:

There is a right way to do the right thing at the right time for the right reasons, [1] and in the present case, in the right forum by the
right parties. While grievances against union leaders constitute legitimate complaints deserving appropriate redress, action thereon
should be made in the proper forum at the proper time and after observance of proper procedures. Similarly, the election of union
officers should be conducted in accordance with the provisions of the unions constitution and bylaws, as well as the Philippine
Constitution and the Labor Code. Specifically, while all legitimate faculty members of the University of Santo Tomas (UST)
belonging to a collective bargaining unit may take part in a duly convened certification election, only bona fide members of the UST
Faculty Union (USTFU) may participate and vote in a legally called election for union officers. Mob hysteria, however well-
intentioned, is not a substitute for the rule of law.

The Case

The Petition for Certiorari before us assails the August 15, 1997 Resolution[2] of Director Benedicto Ernesto R. Bitonio Jr. of the
Bureau of Labor Relations (BLR) in BLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-Arbiter Tomas
F. Falconitin. The med-arbiters Decision disposed as follows:

WHEREFORE, premises considered, judgment is hereby rendered declaring the election of USTFU officers conducted
on October 4, 1996 and its election results as null and void ab initio.

Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist from acting and performing the
duties and functions of the legitimate officers of [the] University of Santo Tomas Faculty Union (USTFU) pursuant to
[the] unions constitution and by-laws (CBL).

The Temporary Restraining Order (TRO ) issued by this Office on December 11, 1996 in connection with the instant
petition, is hereby made and declared permanent.[3]

Likewise challenged is the October 30, 1997 Resolution[4]of Director Bitonio, which denied petitioners Motion for
Reconsideration.

The Facts

The factual antecedents of the case are summarized in the assailed Resolution as follows:

Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly elected officers of the UST
Faculty Union (USTFU). The union has a subsisting five-year Collective Bargaining Agreement with its employer, the
University of Santo Tomas (UST). The CBA was registered with the Industrial Relations Division, DOLE-NCR, on 20
February 1995. It is set to expire on 31 May 1998.

On 21 September 1996, appellee Collantes, in her capacity as Secretary General of USTFU, posted a notice addressed
to all USTFU members announcing a general assembly to be held on 05 October 1996. Among others, the general
assembly was called to elect USTFUs next set of officers. Through the notice, the members were also informed of the
constitution of a Committee on Elections (COMELEC) to oversee the elections. (Annex B, petition)

On 01 October 1996, some of herein appellants filed a separate petition with the Med-Arbiter, DOLE-NCR, directed
against herein appellees and the members of the COMELEC. Docketed as Case No. NCR-OD-M-9610-001, the
petition alleged that the COMELEC was not constituted in accordance with USTFUs constitution and by-laws (CBL)
and that no rules had been issued to govern the conduct of the 05 October 1996 election.

On 02 October 1996, the secretary general of UST, upon the request of the various UST faculty club presidents (See
paragraph VI, Respondents Comment and Motion to Dismiss), issued notices allowing all faculty members to hold a
convocation on 04 October 1996 (See Annex C Petition; Annexes 4 to 10, Appeal). Denominated as [a] general faculty
assembly, the convocation was supposed to discuss the state of the unratified UST-USTFU CBA and status and
election of USTFU officers (Annex 11, Appeal)

On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a temporary restraining order against
herein appellees enjoining them from conducting the election scheduled on 05 October 1996.

Also on 04 October 1996, and as earlier announced by the UST secretary general, the general faculty assembly was
held as scheduled. The general assembly was attended by members of the USTFU and, as admitted by the appellants,
also by 'non-USTFU members [who] are members in good standing of the UST Academic Community Collective
Bargaining Unit' (See paragraph XI, Respondents Comment and Motion to Dismiss). On this occasion, appellants were
elected as USTFUs new set of officers by acclamation and clapping of hands (See paragraphs 40 to 50, Annex '12',
Appeal).
The election of the appellants came about upon a motion of one Atty. Lopez, admittedly not a member of USTFU, that
the USTFU CBL and 'the rules of the election be suspended and that the election be held [on] that day' (See --paragraph
39, Idem.)

On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and the nullification of the results of
the 04 October 1996 election. Appellees alleged that the holding of the same violated the temporary restraining order
issued in Case No. NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized the election as
spurious for being violative of USTFUs CBL, specifically because the general assembly resulting in the election of
appellants was not called by the Board of Officers of the USTFU; there was no compliance with the ten-day notice rule
required by Section 1, Article VIII of the CBL; the supposed elections were conducted without a COMELEC being
constituted by the Board of Officers in accordance with Section 1, Article IX of the CBL; the elections were not by
secret balloting as required by Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly was
convened by faculty members some of whom were not members of USTFU, so much so that non-USTFU members
were allowed to vote in violation of Section 1, Article V of the CBL.

On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary restraining order, this time alleging
that appellants had served the former a notice to vacate the union office. For their part, appellants moved to dismiss the
original petition and the subsequent motion on jurisdictional grounds. Both the petition and the motion were captioned
to be for Prohibition, Injunction with Prayer for Preliminary Injunction and Temporary Restraining Order. According to
the appellants, the med-arbiter has no jurisdiction over petitions for prohibition, 'including the ancillary remedies of
restraining order and/or preliminary injunction, which are merely incidental to the main petition for PROHIBITION'
(Paragraph XVIII3, Respondents Comment and Motion to Dismiss). Appellants also averred that they now constituted
the new set of union officers having been elected in accordance with law after the term of office of appellees had
expired. They further maintained that appellees scheduling of the 5 October 1996 elections was illegal because no rules
and regulations governing the elections were promulgated as required by USTFUs CBL and that one of the members of
the COMELEC was not a registered member of USTFU. Appellants likewise noted that the elections called by the
appellees should have been postponed to allow the promulgation of rules and regulations and to 'insure a free, clean,
honest and orderly elections and to afford at the same time the greater majority of the general membership to
participate' (See paragraph V, Idem). Finally, appellants contended that the holding of the general faculty assembly on
04 October 1996 was under the control of the Council of College/Faculty Club Presidents in cooperation with the
USTFU Reformist Alliance and that they received the Temporary Restraining Order issued in Case No. NCR-OD-M-
9610-001 only on 07 October 1996 and were not aware of the same on 04 October 1996.

On 03 December 1996, appellants and UST allegedly entered into another CBA covering the period from 01 June 1996
to 31 May 2001 (Annex 11, appellants Rejoinder to the Reply and Opposition).

Consequently, appellees again moved for the issuance of a temporary restraining order to prevent appellants from
making further representations that [they] had entered into a new agreement with UST. Appellees also reiterated their
earlier stand that appellants were usurping the formers duties and functions and should be stopped from continuing
such acts.

On 11 December 1996, over appellants insistence that the issue of jurisdiction should first be resolved, the med-arbiter
issued a temporary restraining order directing the respondents to cease and desist from performing any and all acts
pertaining to the duties and functions of the officers and directors of USTFU.

In the meantime, appellants claimed that the new CBA was purportedly ratified by an overwhelming majority of USTs
academic community on 12 December 1996 (Annexes 1 to 10, Idem). For this reason, appellants moved for the
dismissal of what it denominated as appellees petition for prohibition on the ground that this had become moot and
academic.[5]

Petitioners appealed the med-arbiters Decision to the labor secretary,[6] who transmitted the records of the case to the Bureau of
Labor Relations which, under Department Order No. 9, was authorized to resolve appeals of intra-union cases, consistent with the last
paragraph of Article 241 of the Labor Code.[7]

The Assailed Ruling

Agreeing with the med-arbiter that the USTFU officers purported election held on October 4, 1994 was void for having been
conducted in violation of the unions Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners contention that it
was a legitimate exercise of their right to self-organization. He ruled that the CBL, which constituted the covenant between the union
and its members, could not be suspended during the October 4, 1996 general assembly of all faculty members, since that assembly had
not been convened or authorized by the USTFU.
Director Bitonio likewise held that the October 4, 1996 election could not be legitimized by the recognition of the newly elected
set of officers by UST or by the alleged ratification of the new CBA by the general membership of the USTFU. Ruled Respondent
Bitonio:

"This submission is flawed. The issue at hand is not collective bargaining representation but union leadership, a matter
that should concern only the members of USTFU. As pointed out by the appellees, the privilege of determining who the
union officers will be belongs exclusively to the members of the union. Said privilege is exercised in an election
proceeding in accordance with the union's CBL and applicable law.

To accept appellants' claim to legitimacy on the foregoing grounds is to invest in appellants the position, duties,
responsibilities, rights and privileges of USTFU officers without the benefit of a lawful electoral exercise as defined in
USTFU's CBL and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit the employer
from interfering with the employees in the latter' exercise of their right to self-organization. To allow appellants to
become USTFU officers on the strength of management's recognition of them is to concede to the employer the power
of determining who should be USTFU's leaders. This is a clear case of interference in the exercise by USTFU members
of their right to self-organization.[8]

Hence, this Petition.[9]

The Issues

The main issue in this case is whether the public respondent committed grave abuse of discretion in refusing to recognize the
officers elected during the October 4, 1996 general assembly. Specifically, petitioners in their Memorandum urge the Court to resolve
the following questions:[10]
(1) Whether the Collective Bargaining Unit of all the faculty members in that General Faculty Assembly had the right
in that General Faculty Assembly to suspend the provisions of the Constitution and By-Laws of the USTFU regarding
the elections of officers of the union[.]

(2) Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU in that General Faculty
Assembly is valid pursuant to the constitutional right of the Collective Bargaining Unit to engage in peaceful concerted
activities for the purpose of ousting the corrupt regime of the private respondents[.]

(3) Whether the overwhelming ratification of the Collective Bargaining Agreement executed by the petitioners in
behalf of the USTFU with the University of Santo Tomas has rendered moot and academic the issue as to the validity
of the suspension of the Constitution and By-Laws and the elections of October 4, 1996 in the General Faculty
Assembly[.]

The Courts Ruling

The petition is not meritorious. Petitioners fail to convince this Court that Director Bitonio gravely abused his discretion in
affirming the med-arbiter and in refusing to recognize the binding effect of the October 4, 1996 general assembly called by the UST
administration.

First Issue: Right to Self-Organization and Union Membership

At the outset, the Court stresses that National Federation of Labor (NFL) v. Laguesma[11] has held that challenges against rulings
of the labor secretary and those acting on his behalf, like the director of labor relations, shall be acted upon by the Court of Appeals,
which has concurrent jurisdiction with this Court over petitions for certiorari. However, inasmuch as the memoranda in the instant
case have been filed prior to the promulgation and finality of our Decision in NFL, we deem it proper to resolve the present
controversy directly, instead of remanding it to the Court of Appeals.Having disposed of the foregoing procedural matter, we now
tackle the issues in the present case seriatim.
 Self-organization is a fundamental right guaranteed by the Philippine Constitution and the Labor Code. Employees have the right
to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection.[12] Whether
employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of
membership in a labor union.[13]
Corollary to this right is the prerogative not to join, affiliate with or assist a labor union.[14]Therefore, to become a union member,
an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize that intent. The
procedure for union membership is usually embodied in the unions constitution and bylaws.[15] An employee who becomes a union
member acquires the rights and the concomitant obligations that go with this new status and becomes bound by the unions rules and
regulations.

When a man joins a labor union (or almost any other democratically controlled group), necessarily a portion of his
individual freedom is surrendered for the benefit of all members. He accepts the will of the majority of the members in
order that he may derive the advantages to be gained from the concerted action of all. Just as the enactments of the
legislature bind all of us, to the constitution and by-laws of the union (unless contrary to good morals or public policy,
or otherwise illegal), which are duly enacted through democratic processes, bind all of the members. If a member of a
union dislikes the provisions of the by-laws, he may seek to have them amended or may withdraw from the union;
otherwise, he must abide by them. It is not the function of courts to decide the wisdom or propriety of legitimate by-
laws of a trade union.

On joining a labor union, the constitution and by-laws become a part of the members contract of membership under
which he agrees to become bound by the constitution and governing rules of the union so far as it is not inconsistent
with controlling principles of law. The constitution and by-laws of an unincorporated trade union express the terms of a
contract, which define the privileges and rights secured to, and duties assumed by, those who have become
members. The agreement of a member on joining a union to abide by its laws and comply with the will of the lawfully
constituted majority does not require a member to submit to the determination of the union any question involving his
personal rights.[16]

Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latters incumbency
impelled the October 4, 1996 election of the new set of USTFU officers.They assert that such exercise was pursuant to their right to
self-organization.
 Petitioners frustration over the performance of private respondents, as well as their fears of a fraudulent election to be held under
the latters supervision, could not justify the method they chose to impose their will on the union. Director Bitonio aptly elucidated:[17]

The constitutional right to self-organization is better understood in the context of ILO Convention No. 87 (Freedom of
Association and Protection of Right to Organize), to which the Philippines is signatory. Article 3 of the Convention
provides that workers organizations shall have the right to draw up their constitution and rules and to elect their
representatives in full freedom, free from any interference from public authorities. The freedom conferred by the
provision is expansive; the responsibility imposed on union members to respect the constitution and rules they
themselves draw up equally so. The point to be stressed is that the unions CBL is the fundamental law that governs the
relationship between and among the members of the union. It is where the rights, duties and obligations, powers,
functions and authority of the officers as well as the members are defined. It is the organic law that determines the
validity of acts done by any officer or member of the union.Without respect for the CBL, a union as a democratic
institution degenerates into nothing more than a group of individuals governed by mob rule.

Union Election vs. Certification Election

A union election is held pursuant to the unions constitution and bylaws, and the right to vote in it is enjoyed only by
union members. A union election should be distinguished from a certification election, which is the process of determining, through
secret ballot, the sole and exclusive bargaining agent of the employees in the appropriate bargaining unit, for purposes of collective
bargaining.[18]Specifically, the purpose of a certification election is to ascertain whether or not a majority of the employees wish to be
represented by a labor organization and, in the affirmative case, by which particular labor organization.[19]
In a certification election, all employees belonging to the appropriate bargaining unit can vote.[20]Therefore, a union member who
likewise belongs to the appropriate bargaining unit is entitled to vote in said election. However, the reverse is not always true; an
employee belonging to the appropriate bargaining unit but who is not a member of the union cannot vote in the union election, unless
otherwise authorized by the constitution and bylaws of the union. Verily, union affairs and elections cannot be decided in a non-union
activity.
In both elections, there are procedures to be followed. Thus, the October 4, 1996 election cannot properly be called
a union election, because the procedure laid down in the USTFUs CBL for the election of officers was not followed. It could not have
been a certification election either, because representation was not the issue, and the proper procedure for such election was not
followed. The participation of non-union members in the election aggravated its irregularity.

Second Issue: USTFUs Constitution and ByLaws Violated

The importance of a unions constitution and bylaws cannot be overemphasized. They embody a covenant between a union and its
members and constitute the fundamental law governing the members rights and obligations.[21] As such, the unions constitution and
bylaws should be upheld, as long as they are not contrary to law, good morals or public policy.
We agree with the finding of Director Bitonio and Med-Arbiter Falconitin that the October 4, 1996 election was tainted with
irregularities because of the following reasons.
First, the October 4, 1996 assembly was not called by the USTFU. It was merely a convocation of faculty clubs, as indicated in
the memorandum sent to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo Tomas. [22] It
was not convened in accordance with the provision on general membership meetings as found in the USTFUs CBL, which reads:

ARTICLE VIII-MEETINGS OF THE UNION

Section 1. The Union shall hold regular general membership meetings at least once every three (3) months. Notices of
the meeting shall be sent out by the Secretary-General at least ten (10) days prior to such meetings by posting in
conspicuous places, preferably inside Company premises, said notices.The date, time and place for the meetings shall
be determined by the Board of Officers.[23]

Unquestionably, the assembly was not a union meeting. It was in fact a gathering that was called and participated in by
management and non-union members. By no legal fiat was such assembly transformed into a union activity by the participation of
some union members.
Second, there was no commission on elections to oversee the election, as mandated by Sections 1 and 2 of Article IX of the
USTFUs CBL, which provide:

ARTICLE IX - UNION ELECTION

Section 1. There shall be a Committee on Election (COMELEC) to be created by the Board of Officers at least thirty
(30) days before any regular or special election. The functions of the COMELEC include the following:

a) Adopt and promulgate rules and regulations that will ensure a free, clean, honest and orderly election, whether regular or special;
b) Pass upon qualifications of candidates;
c) Rule on any question or protest regarding the conduct of the election subject to the procedure that may be promulgated by the Board
of Officers; and
d) Proclaim duly elected officers.

Section 2. The COMELEC shall be composed of a chairman and two members all of whom shall be appointed by the
Board of Officers.

xxx xxx xxx[24]

Third, the purported election was not done by secret balloting, in violation of Section 6, Article IX of the USTFUs CBL, as well
as Article 241 (c) of the Labor Code.
The foregoing infirmities considered, we cannot attribute grave abuse of discretion to Director Bitonios finding and
conclusion. In Rodriguez v. Director, Bureau of Labor Relations,[25] we invalidated the local union elections held at the wrong date
without prior notice to members and conducted without regard for duly prescribed ground rules. We held that the proceedings were
rendered void by the lack of due process -- undue haste, lack of adequate safeguards to ensure integrity of the voting, and the absence
of the notice of the dates of balloting.

Third Issue: Suspension of USTFUs CBL

Petitioners contend that the October 4, 1996 assembly suspended the unions CBL. They aver that the suspension and the election
that followed were in accordance with their constituent and residual powers as members of the collective bargaining unit to choose
their representatives for purposes of collective bargaining. Again they cite the numerous anomalies allegedly committed by the private
respondents as USTFU officers. This argument does not persuade.
 First, as has been discussed, the general faculty assembly was not the proper forum to conduct the election of USTFU
officers. Not all who attended the assembly were members of the union; some, apparently, were even disqualified from becoming
union members, since they represented management. Thus, Director Bitonio correctly observed:

Further, appellants cannot be heard to say that the CBL was effectively suspended during the 04 October 1996 general
assembly. A union CBL is a covenant between the union and its members and among members (Johnson and Johnson
Labor Union-FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a
unions full freedom to draw up its constitution and rules, it includes freedom from interference by persons who are not
members of the union. The democratic principle that governance is a matter for the governed to decide upon applies to
the labor movement which, by law and constitutional mandate, must be assiduously insulated against intrusions coming
from both the employer and complete strangers if the 'protection to labor clause' of the constitution is to be
guaranteed. By appellants own evidence, the general faculty assembly of 04 October 1996 was not a meeting of
USTFU. It was attended by members and non-members alike, and therefore was not a forum appropriate for transacting
union matters. The person who moved for the suspension of USTFUs CBL was not a member of USTFU. Allowing a
non-union member to initiate the suspension of a unions CBL, and non-union members to participate in a union
election on the premise that the unions CBL had been suspended in the meantime, is incompatible with the freedom of
association and protection of the right to organize.

If there are members of the so-called academic community collective bargaining unit who are not USTFU members but
who would nevertheless want to have a hand in USTFUs affairs, the appropriate procedure would have been for them
to become members of USTFU first. The procedure for membership is very clearly spelled out in Article IV of
USTFUs CBL. Having become members, they could then draw guidance from Ang Malayang Manggagawa Ng Ang
Tibay v. Ang Tibay, 103 Phil. 669. Therein the Supreme Court held that if a member of the union dislikes the provisions
of the by-laws he may seek to have them amended or may withdraw from the union; otherwise he must abide by them.
Under Article XVII of USTFUs CBL, there is also a specific provision for constitutional amendments. What is clear
therefore is that USTFUs CBL provides for orderly procedures and remedies which appellants could have easily
availed [themselves] of instead of resorting to an exercise of their so-called residual power'.[26]

Second, the grievances of the petitioners could have been brought up and resolved in accordance with the procedure laid down by
the unions CBL[27]and by the Labor Code.[28] They contend that their sense of desperation and helplessness led to the October 4, 1996
election. However, we cannot agree with the method they used to rectify years of inaction on their part and thereby ease bottled-up
frustrations, as such method was in total disregard of the USTFUs CBL and of due process. The end never justifies the means.
We agree with the solicitor generals observation that the act of suspending the constitution when the questioned election was held
is an implied admission that the election held on that date [October 4, 1996] could not be considered valid under the existing USTFU
constitution xxx.[29]
The ratification of the new CBA executed between the petitioners and the University of Santo Tomas management did not
validate the void October 4, 1996 election. Ratified were the terms of the new CBA, not the issue of union leadership -- a matter that
should be decided only by union members in the proper forum at the proper time and after observance of proper procedures.

Epilogue

In dismissing this Petition, we are not passing upon the merits of the mismanagement allegations imputed by the petitioners to the
private respondents; these are not at issue in the present case.Petitioners can bring their grievances and resolve their differences with
private respondents in timely and appropriate proceedings. Courts will not tolerate the unfair treatment of union members by their own
leaders. When the latter abuse and violate the rights of the former, they shall be dealt with accordingly in the proper forum after the
observance of due process.
WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED.Costs against petitioners.
SO ORDERED.
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

[1] See Panganiban, Battles in the Supreme Court, 1998 ed., p. 50.1

[2] Rollo, pp. 74-86.2

[3] Rollo, pp. 72-73.3

[4] Rollo, pp. 87-91.4

[5] Rollo, pp. 75-79.5

[6] Rollo, pp. 112-141. The petitioners filed their appeal with the Department of Labor and Employment on March 3, 1997.6

[7] Assailed Resolution, p. 2; rollo, p. 75.7

[8] Ibid., p. 12; rollo, p. 85.8

[9] The case was deemed submitted for resolution upon receipt by the Court of the Memorandum for the private respondents on March 1, 1999.Petitioners Memorandum was received on January 11, 1999, and public respondents Memorandum on
January 18, 1999.9

[10] Rollo, pp. 504-505.10

[11] GR No. 123426, March 10, 1999.11

[12] See Article 244 of the Labor Code in conjunction with Executive Order No. 180, as well as Article 245 of the same Code.12

[13] Art. 277 (c), Labor Code.13

[14] Reyes v. Trajano, 209 SCRA 484, June 2, 1992.14

[15] For example, the following are pertinent provisions as regards membership in USTFU, as set forth in its CBL:

ARTICLE IV - MEMBERSHIP

Section 1. Every faculty member of the University of Santo Tomas, not otherwise disqualified by law and without regard to sex, race, nationality, religious or political belief or affiliation, is eligible for membership in the UNION.

Section 2. Qualified faculty members of the Company may become members of the UNION by written application approved by the President upon recommendation of the Committee on Membership and after payment in full of the required
admission fee.

Section 3. The following shall not be eligible for membership nor to election or appointment to any position in the UNION:

a) Subversives or persons who profess subversive ideas;

b) Persons who have been convicted of a crime involving moral turpitude; and

c) Persons who are not faculty members of the Company. (Rollo, p.283).15

[16] Ang Malayang Manggagawa ng Ang Tibay Enterprises et al. v. Ang Tibay, 102 Phil. 669, December 23, 1957, per Bautista Angelo, J.16

[17] August 15, 1997 Resolution, pp. 9-10; rollo, pp. 82-83.17

[18] 1 (x), Rule I, Book V, Rules and Regulations Implementing the Labor Code.18

[19] Reyes v. Trajano, supra.19

[20] Airtime Specialists v. Ferrer-Calleja, 180 SCRA 749, December 29, 1989.20

[21] Johnson and Johnson Labor Union-FFW v. Director of Labor Relations, 170 SCRA 469, February 21, 1989.21

[22] See Annex C of private respondents Petition filed with the med-arbiter; rollo, p. 261.22
[23] Rollo, p. 288.23

[24] Rollo, p. 290.24

[25] 165 SCRA 239, August 31, 1988.25

[26] Rollo, pp. 83-84.26

[27] The USTFUs CBL as regards impeachment and recall reads as follows:

ARTICLE XV- IMPEACHMENT AND RECALL

Section 1. Any of the following shall be grounds for the impeachment or recall of UNION officers:

a) Committing or causing the commission directly or indirectly of acts against the interest and welfare of the UNION.

b) Malicious attack against the UNION, its officers, or against a fellow UNION officer.

c) Failure to comply with the obligation to turn over and return to the UNION Treasurer within three (3) days any unexpended sum or sums of money received from the UNION funds to answer for an authorized UNION purpose.

d) Gross misconduct unbecoming a UNION officer.

e) Misappropriation of UNION funds and property. This is without prejudice to the filing of an appropriate criminal or civil action against the responsible officer or officers by any interested party.

f) Willful violation of any provision of this Constitution and By-Laws or rules, regulations, measures, resolutions or decisions of the UNION.

Section 2. The following procedure shall govern impeachment and recall proceedings:

a) Impeachment or recall proceedings shall be initiated by a formal petition or resolution signed by at least thirty (30) percent of all bonafide members of the UNION and addressed to the Chairman of the Board of Officers.

b) The Board Chairman shall then convene a general membership meeting to consider the impeachment or recall of an officer or a group of officers, whether elective or appointive.

c) UNION officers against whom impeachment or recall charges have been filed shall be given ample opportunity to defend themselves before any impeachment or recall vote is finally taken.

d) A majority of all the members of the UNION shall be required to impeach or recall UNION officers.

e) The UNION officers impeached shall ipso facto be considered resigned or ousted from office and shall no longer be elected or appointed to any position in the UNION.

f) The decision of the general membership on the impeachment or recall charge shall be final and executory.27

[28] Art. 241.28

[29] Public respondents Memorandum, p. 13; rollo, pp. 533.29

SECOND DIVISION

G.R. No. L-25246 September 12, 1974

BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.

Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.

Cipriano Cid & Associates for defendant-appellant.

ZALDIVAR, J.:p

Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila in its Civil Case No. 58894.

The undisputed facts that spawned the instant case follow:

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the "Iglesia ni Cristo", had been in the
employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958. As such employee, he was a member of the
Elizalde Rope Workers' Union (hereinafter referred to as Union) which had with the Company a collective bargaining agreement containing
a closed shop provision which reads as follows:

Membership in the Union shall be required as a condition of employment for all permanent employees workers covered by
this Agreement.

The collective bargaining agreement expired on March 3, 1964 but was renewed the following day, March 4, 1964.

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350, the employer was 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." On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an
amendment to — paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover
members of any religious sects which prohibit affiliation of their members in any such labor organization".

Being a member of a religious sect that prohibits the affiliation of its members with any labor organization, Appellee presented his
resignation to appellant Union in 1962, and when no action was taken thereon, he reiterated his resignation on September 3, 1974.
Thereupon, the Union wrote a formal letter to the Company asking the latter to separate Appellee from the service in view of the fact that he
was resigning from the Union as a member. The management of the Company in turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with the Union, the Company would be constrained to dismiss him from the service. This
prompted Appellee to file an action for injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila to enjoin the
Company and the Union from dismissing Appellee.1 In its answer, the Union invoked the "union security clause" of the collective bargaining
agreement; assailed the constitutionality of Republic Act No. 3350; and contended that the Court had no jurisdiction over the case, pursuant
to Republic Act No. 875, Sections 24 and 9 (d) and (e).2 Upon the facts agreed upon by the parties during the pre-trial conference, the
Court a quo rendered its decision on August 26, 1965, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant Elizalde Rope Factory, Inc. from dismissing
the plaintiff from his present employment and sentencing the defendant Elizalde Rope Workers' Union to pay the plaintiff
P500 for attorney's fees and the costs of this action.3

From this decision, the Union appealed directly to this Court on purely questions of law, assigning the following errors:

I. That the lower court erred when it did not rule that Republic Act No. 3350 is unconstitutional.

II. That the lower court erred when it sentenced appellant herein to pay plaintiff the sum of P500 as attorney's fees and the
cost thereof.

In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that the Act infringes on the fundamental
right to form lawful associations; that "the very phraseology of said Republic Act 3350, that membership in a labor organization is banned to
all those belonging to such religious sect prohibiting affiliation with any labor organization"4 , "prohibits all the members of a given religious
sect from joining any labor union if such sect prohibits affiliations of their members thereto"5 ; and, consequently, deprives said members of
their constitutional right to form or join lawful associations or organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to
Article III, Section 1 (6) of the 1935 Constitution. 6

Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing the obligation of contracts in that, while the
Union is obliged to comply with its collective bargaining agreement containing a "closed shop provision," the Act relieves the employer from
its reciprocal obligation of cooperating in the maintenance of union membership as a condition of employment; and that said Act,
furthermore, impairs the Union's rights as it deprives the union of dues from members who, under the Act, are relieved from the obligation
to continue as such members.7

Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects which ban their members from joining
labor unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution; and while said Act unduly protects certain religious sects, it
leaves no rights or protection to labor organizations.8

Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right to join associations for purposes not contrary to law has to be
determined under the Act by his affiliation with a religious sect; that conversely, if a worker has to sever his religious connection with a sect
that prohibits membership in a labor organization in order to be able to join a labor organization, said Act would violate religious freedom.9

Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by exempting from the operation of closed shop agreement the members of the "Iglesia ni Cristo", it
has granted said members undue advantages over their fellow workers, for while the Act exempts them from union obligation and liability, it
nevertheless entitles them at the same time to the enjoyment of all concessions, benefits and other emoluments that the union might
secure from the employer. 10

Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding the promotion of social justice. 11

Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining agreement cannot be considered violative of
religious freedom, as to call for the amendment introduced by Republic Act No. 3350; 12and that unless Republic Act No. 3350 is declared
unconstitutional, trade unionism in this country would be wiped out as employers would prefer to hire or employ members of the Iglesia ni
Cristo in order to do away with labor organizations. 13

Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the right to form lawful associations, for
the right to join associations includes the right not to join or to resign from a labor organization, if one's conscience does not allow his
membership therein, and the Act has given substance to such right by prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of contracts for said law formed part of, and was incorporated into, the terms of
the closed shop agreement; 15 that the Act does not violate the establishment of religion clause or separation of Church and State, for
Congress, in enacting said law, merely accommodated the religious needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized labor with the constitutional right of an individual to freely exercise his
chosen religion; that the constitutional right to the free exercise of one's religion has primacy and preference over union security measures
which are merely contractual 16; that said Act does not violate the constitutional provision of equal protection, for the classification of workers
under the Act depending on their religious tenets is based on substantial distinction, is germane to the purpose of the law, and applies to all
the members of a given class; 17 that said Act, finally, does not violate the social justice policy of the Constitution, for said Act was enacted
precisely to equalize employment opportunities for all citizens in the midst of the diversities of their religious beliefs." 18

I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there are some thoroughly established
principles which must be followed in all cases where questions of constitutionality as obtains in the instant case are involved. All
presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt, that a law may work hardship does not render it unconstitutional; that if any reasonable basis may be
conceived which supports the statute, it will be upheld, and the challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the members of such religious sects that forbid affiliation of
their members with labor unions from joining labor unions appears nowhere in the wording of Republic Act No. 3350; neither can the same
be deduced by necessary implication therefrom. It is not surprising, therefore, that appellant, having thus misread the Act, committed the
error of contending that said Act is obnoxious to the constitutional provision on freedom of association.

Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article III of the Constitution of 1935, as
well as Section 7 of Article IV of the Constitution of 1973, provide that the right to form associations or societies for purposes not contrary to
law shall not be abridged. Section 3 of Republic Act No. 875 provides that employees shall have the right to self-organization and to form,
join of assist labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid or protection. What the Constitution and the Industrial Peace Act recognize and
guarantee is the "right" to form or join associations. Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a "right", it can be safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act
for himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or refrain from Joining an
association. It is, therefore, the employee who should decide for himself whether he should join or not an association; and should he
choose to join, he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the liberty
and the power to leave and cancel his membership with said organization at any time. 20 It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union. 21 Inasmuch as what both the Constitution and the Industrial Peace Act have
recognized, and guaranteed to the employee, is the "right" to join associations of his choice, it would be absurd to say that the law also
imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an employee to sign up with any
association.

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.

To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception, when it added to Section
4 (a) (4) of the Industrial Peace Act the following proviso: "but such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization". Republic Act No. 3350 merely excludes ipso jure from the application
and coverage of the closed shop agreement the employees belonging to any religious sects which prohibit affiliation of their members with
any labor organization. What the exception provides, therefore, is that members of said religious sects cannot be compelled or coerced to
join labor unions even when said unions have closed shop agreements with the employers; that in spite of any closed shop agreement,
members of said religious sects cannot be refused employment or dismissed from their jobs on the sole ground that they are not members
of the collective bargaining union. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on freedom of
association, upholds and reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves
to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the
members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they
refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and neither may the
employer or labor union compel them to join. Republic Act No. 3350, therefore, does not violate the constitutional provision on freedom of
association.

2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract, specifically, the "union security
clause" embodied in its Collective Bargaining Agreement with the Company, by virtue of which "membership in the union was required as a
condition for employment for all permanent employees workers". This agreement was already in existence at the time Republic Act No.
3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the agreement. But by reason of
this amendment, Appellee, as well as others similarly situated, could no longer be dismissed from his job even if he should cease to be a
member, or disaffiliate from the Union, and the Company could continue employing him notwithstanding his disaffiliation from the Union.
The Act, therefore, introduced a change into the express terms of the union security clause; the Company was partly absolved by law from
the contractual obligation it had with the Union of employing only Union members in permanent positions, It cannot be denied, therefore,
that there was indeed an impairment of said union security clause.

According to Black, any statute which introduces a change into the express terms of the contract, or its legal construction, or its validity, or
its discharge, or the remedy for its enforcement, impairs the contract. The extent of the change is not material. It is not a question of degree
or manner or cause, but of encroaching in any respect on its obligation or dispensing with any part of its force. There is an impairment of
the contract if either party is absolved by law from its performance. 22 Impairment has also been predicated on laws which, without
destroying contracts, derogate from substantial contractual rights. 23

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The
prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to be read with literal
exactness like a mathematical formula, for it prohibits unreasonable impairment only. 24 In spite of the constitutional prohibition, the State
continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguarding said interests may
modify or abrogate contracts already in effect. 25 For not only are existing laws read into contracts in order to fix the obligations as between
the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All
contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference
to the possible exercise of that power. 26 Otherwise, important and valuable reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting contracts against impairment
presupposes the maintenance of a government by virtue of which contractual relations are worthwhile a government which retains
adequate authority to secure the peace and good order of society. The contract clause of the Constitution must, therefore, be not only in
harmony with, but also in subordination to, in appropriate instances, the reserved power of the state to safeguard the vital interests of the
people. It follows that not all legislations, which have the effect of impairing a contract, are obnoxious to the constitutional prohibition as to
impairment, and a statute passed in the legitimate exercise of police power, although it incidentally destroys existing contract rights, must
be upheld by the courts. This has special application to contracts regulating relations between capital and labor which are not merely
contractual, and said labor contracts, for being impressed with public interest, must yield to the common good. 27

In several occasions this Court declared that the prohibition against impairing the obligations of contracts has no application to statutes
relating to public subjects within the domain of the general legislative powers of the state involving public welfare. 28 Thus, this Court also
held that the Blue Sunday Law was not an infringement of the obligation of a contract that required the employer to furnish work on
Sundays to his employees, the law having been enacted to secure the well-being and happiness of the laboring class, and being,
furthermore, a legitimate exercise of the police power. 29

In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging yardstick, applicable at all times and
under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be
determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the
promotion of the general good of the people, and when the means adopted to secure that end are reasonable. Both the end sought and the
means adopted must be legitimate, i.e., within the scope of the reserved power of the state construed in harmony with the constitutional
limitation of that power. 30

What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom of belief and religion, and
to promote the general welfare by preventing discrimination against those members of religious sects which prohibit their members from
joining labor unions, confirming thereby their natural, statutory and constitutional right to work, the fruits of which work are usually the only
means whereby they can maintain their own life and the life of their dependents. It cannot be gainsaid that said purpose is legitimate.

The questioned Act also provides protection to members of said religious sects against two aggregates of group strength from which the
individual needs protection. The individual employee, at various times in his working life, is confronted by two aggregates of power —
collective labor, directed by a union, and collective capital, directed by management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from the power of collective capital, is, paradoxically, both the champion of
employee rights, and a new source of their frustration. Moreover, when the Union interacts with management, it produces yet a third
aggregate of group strength from which the individual also needs protection — the collective bargaining relationship. 31

The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House Bill No. 5859, which later became
Republic Act No. 3350, as follows:

It would be unthinkable indeed to refuse employing a person who, on account of his religious beliefs and convictions, cannot
accept membership in a labor organization although he possesses all the qualifications for the job. This is tantamount to
punishing such person for believing in a doctrine he has a right under the law to believe in. The law would not allow
 discrimination to flourish to the detriment of those whose religion discards membership in any labor organization. Likewise,
the law would not commend the deprivation of their right to work and pursue a modest means of livelihood, without in any
manner violating their religious faith and/or belief. 32

It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose — exempting the members of said religious
sects from coverage of union security agreements — is reasonable.

It may not be amiss to point out here that the free exercise of religious profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former. The Supreme Court of the United States has also declared on several occasions that the
rights in the First Amendment, which include freedom of religion, enjoy a preferred position in the constitutional system. 33 Religious
freedom, although not unlimited, is a fundamental personal right and liberty, 34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is only where unavoidably necessary to prevent an immediate and grave
danger to the security and welfare of the community that infringement of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.

3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union averred that said Act discriminates in
favor of members of said religious sects in violation of Section 1 (7) of Article Ill of the 1935 Constitution, and which is now Section 8 of
Article IV of the 1973 Constitution, which provides:

No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise
and enjoyment of religious profession and worship, without discrimination and preference, shall forever be allowed. No
religious test shall be required for the exercise of civil or political rights.

The constitutional provision into only prohibits legislation for the support of any religious tenets or the modes of worship of any sect, thus
forestalling compulsion by law of the acceptance of any creed or the practice of any form of worship, 35 but also assures the free exercise of
one's chosen form of religion within limits of utmost amplitude. It has been said that the religion clauses of the Constitution are all designed
to protect the broadest possible liberty of conscience, to allow each man to believe as his conscience directs, to profess his beliefs, and to
live as he believes he ought to live, consistent with the liberty of others and with the common good. 36 Any legislation whose effect or
purpose is to impede the observance of one or all religions, or to discriminate invidiously between the religions, is invalid, even though the
burden may be characterized as being only indirect. 37 But if the stage regulates conduct by enacting, within its power, a general law which
has for its purpose and effect to advance the state's secular goals, the statute is valid despite its indirect burden on religious observance,
unless the state can accomplish its purpose without imposing such burden. 38

In Aglipay v. Ruiz 39 , this Court had occasion to state that the government should not be precluded from pursuing valid objectives secular in
character even if the incidental result would be favorable to a religion or sect. It has likewise been held that the statute, in order to withstand
the strictures of constitutional prohibition, must have a secular legislative purpose and a primary effect that neither advances nor inhibits
religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be said to violate the constitutional inhibition of the "no-establishment"
(of religion) clause of the Constitution.

The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or holy and eternal. It was intended to
serve the secular purpose of advancing the constitutional right to the free exercise of religion, by averting that certain persons be refused
work, or be dismissed from work, or be dispossessed of their right to work and of being impeded to pursue a modest means of livelihood,
by reason of union security agreements. To help its citizens to find gainful employment whereby they can make a living to support
themselves and their families is a valid objective of the state. In fact, the state is enjoined, in the 1935 Constitution, to afford protection to
labor, and regulate the relations between labor and capital and industry. 41 More so now in the 1973 Constitution where it is mandated that
"the State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless
of sex, race or creed and regulate the relation between workers and employers. 42

The primary effects of the exemption from closed shop agreements in favor of members of religious sects that prohibit their members from
affiliating with a labor organization, is the protection of said employees against the aggregate force of the collective bargaining agreement,
and relieving certain citizens of a burden on their religious beliefs; and by eliminating to a certain extent economic insecurity due to
unemployment, which is a serious menace to the health, morals, and welfare of the people of the State, the Act also promotes the well-
being of society. It is our view that the exemption from the effects of closed shop agreement does not directly advance, or diminish, the
interests of any particular religion. Although the exemption may benefit those who are members of religious sects that prohibit their
members from joining labor unions, the benefit upon the religious sects is merely incidental and indirect. The "establishment clause" (of
religion) does not ban regulation on conduct whose reason or effect merely happens to coincide or harmonize with the tenets of some or all
religions. 43 The free exercise clause of the Constitution has been interpreted to require that religious exercise be preferentially aided. 44

We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the constitutional provision. It acted merely
to relieve the exercise of religion, by certain persons, of a burden that is imposed by union security agreements. It was Congress itself that
imposed that burden when it enacted the Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems advisable, could
take away the same burden. It is certain that not every conscience can be accommodated by all the laws of the land; but when general laws
conflict with scrupples of conscience, exemptions ought to be granted unless some "compelling state interest" intervenes. 45 In the instant
case, We see no such compelling state interest to withhold exemption.

Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves no right to, and is silent as to the
protection of, labor organizations. The purpose of Republic Act No. 3350 was not to grant rights to labor unions. The rights of labor unions
are amply provided for in Republic Act No. 875 and the new Labor Code. As to the lamented silence of the Act regarding the rights and
protection of labor unions, suffice it to say, first, that the validity of a statute is determined by its provisions, not by its silence 46 ; and,
second, the fact that the law may work hardship does not render it unconstitutional. 47

It would not be amiss to state, regarding this matter, that to compel persons to join and remain members of a union to keep their jobs in
violation of their religious scrupples, would hurt, rather than help, labor unions, Congress has seen it fit to exempt religious objectors lest
their resistance spread to other workers, for religious objections have contagious potentialities more than political and philosophic
objections.

Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor — union assuming that such unity
and loyalty can be attained through coercion — is not a goal that is constitutionally obtainable at the expense of religious liberty. 48 A
desirable end cannot be promoted by prohibited means.

4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition against requiring a religious test for the
exercise of a civil right or a political right, is not well taken. The Act does not require as a qualification, or condition, for joining any lawful
association membership in any particular religion or in any religious sect; neither does the Act require affiliation with a religious sect that
prohibits its members from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining or withdrawing
from a labor union requires a positive act. Republic Act No. 3350 only exempts members with such religious affiliation from the coverage of
closed shop agreements. So, under this Act, a religious objector is not required to do a positive act — to exercise the right to join or to
resign from the union. He is exempted ipso jure without need of any positive act on his part. A conscientious religious objector need not
perform a positive act or exercise the right of resigning from the labor union — he is exempted from the coverage of any closed shop
agreement that a labor union may have entered into. How then can there be a religious test required for the exercise of a right when no
right need be exercised?

We have said that it was within the police power of the State to enact Republic Act No. 3350, and that its purpose was legal and in
consonance with the Constitution. It is never an illegal evasion of a constitutional provision or prohibition to accomplish a desired result,
which is lawful in itself, by discovering or following a legal way to do it. 49

5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch as it grants to the members of
certain religious sects undue advantages over other workers, thus violating Section 1 of Article III of the 1935 Constitution which forbids the
denial to any person of the equal protection of the laws. 50

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not,
therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on
persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require
that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid
discrimination as to things that are different. 51 It does not prohibit legislation which is limited either in the object to which it is directed or by
the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law
is not invalid because of simple inequality. 52 The very idea of classification is that of inequality, so that it goes without saying that the mere
fact of inequality in no manner determines the matter of constitutionality. 53 All that is required of a valid classification is that it be
reasonable, which means that the classification should be based on substantial distinctions which make for real differences; that it must be
germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of
the class. 54 This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or
rational basis and is not palpably arbitrary. 55

In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is
recognized as enjoying a wide range of discretion. 56 It is not necessary that the classification be based on scientific or marked differences
of things or in their relation. 57 Neither is it necessary that the classification be made with mathematical nicety. 58 Hence legislative
classification may in many cases properly rest on narrow distinctions, 59 for the equal protection guaranty does not preclude the legislature
from recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear.

We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies employees and workers, as to the
effect and coverage of union shop security agreements, into those who by reason of their religious beliefs and convictions cannot sign up
with a labor union, and those whose religion does not prohibit membership in labor unions. Tile classification rests on real or substantial,
not merely imaginary or whimsical, distinctions. There is such real distinction in the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and different religions differ in their dogmas and cannons. Religious beliefs,
manifestations and practices, though they are found in all places, and in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum of religious beliefs among the people. There are diverse manners in
which beliefs, equally paramount in the lives of their possessors, may be articulated. Today the country is far more heterogenous in religion
than before, differences in religion do exist, and these differences are important and should not be ignored.

Even from the phychological point of view, the classification is based on real and important differences. Religious beliefs are not mere
beliefs, mere ideas existing only in the mind, for they carry with them practical consequences and are the motives of certain rules. of human
conduct and the justification of certain acts. 60 Religious sentiment makes a man view things and events in their relation to his God. It gives
to human life its distinctive character, its tone, its happiness or unhappiness its enjoyment or irksomeness. Usually, a strong and passionate
desire is involved in a religious belief. To certain persons, no single factor of their experience is more important to them than their religion,
or their not having any religion. Because of differences in religious belief and sentiments, a very poor person may consider himself better
than the rich, and the man who even lacks the necessities of life may be more cheerful than the one who has all possible luxuries. Due to
their religious beliefs people, like the martyrs, became resigned to the inevitable and accepted cheerfully even the most painful and
excruciating pains. Because of differences in religious beliefs, the world has witnessed turmoil, civil strife, persecution, hatred, bloodshed
and war, generated to a large extent by members of sects who were intolerant of other religious beliefs. The classification, introduced by
Republic Act No. 3350, therefore, rests on substantial distinctions.

The classification introduced by said Act is also germane to its purpose. The purpose of the law is precisely to avoid those who cannot,
because of their religious belief, join labor unions, from being deprived of their right to work and from being dismissed from their work
because of union shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of its enactment. The law does not
provide that it is to be effective for a certain period of time only. It is intended to apply for all times as long as the conditions to which the law
is applicable exist. As long as there are closed shop agreements between an employer and a labor union, and there are employees who
are prohibited by their religion from affiliating with labor unions, their exemption from the coverage of said agreements continues.

Finally, the Act applies equally to all members of said religious sects; this is evident from its provision. The fact that the law grants a
privilege to members of said religious sects cannot by itself render the Act unconstitutional, for as We have adverted to, the Act only
restores to them their freedom of association which closed shop agreements have taken away, and puts them in the same plane as the
other workers who are not prohibited by their religion from joining labor unions. The circumstance, that the other employees, because they
are differently situated, are not granted the same privilege, does not render the law unconstitutional, for every classification allowed by the
Constitution by its nature involves inequality.

The mere fact that the legislative classification may result in actual inequality is not violative of the right to equal protection, for every
classification of persons or things for regulation by law produces inequality in some degree, but the law is not thereby rendered invalid. A
classification otherwise reasonable does not offend the constitution simply because in practice it results in some inequality. 61 Anent this
matter, it has been said that whenever it is apparent from the scope of the law that its object is for the benefit of the public and the means
by which the benefit is to be obtained are of public character, the law will be upheld even though incidental advantage may occur to
individuals beyond those enjoyed by the general public. 62

6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on social justice is also baseless. Social
justice is intended to promote the welfare of all the people. 63 Republic Act No. 3350 promotes that welfare insofar as it looks after the
welfare of those who, because of their religious belief, cannot join labor unions; the Act prevents their being deprived of work and of the
means of livelihood. In determining whether any particular measure is for public advantage, it is not necessary that the entire state be
directly benefited — it is sufficient that a portion of the state be benefited thereby.

Social justice also means the adoption by the Government of measures calculated to insure economic stability of all component elements of
society, through the maintenance of a proper economic and social equilibrium in the inter-relations of the members of the
community. 64 Republic Act No. 3350 insures economic stability to the members of a religious sect, like the Iglesia ni Cristo, who are also
component elements of society, for it insures security in their employment, notwithstanding their failure to join a labor union having a closed
shop agreement with the employer. The Act also advances the proper economic and social equilibrium between labor unions and
employees who cannot join labor unions, for it exempts the latter from the compelling necessity of joining labor unions that have closed
shop agreements and equalizes, in so far as opportunity to work is concerned, those whose religion prohibits membership in labor unions
with those whose religion does not prohibit said membership. Social justice does not imply social equality, because social inequality will
always exist as long as social relations depend on personal or subjective proclivities. Social justice does not require legal equality because
legal equality, being a relative term, is necessarily premised on differentiations based on personal or natural conditions. 65 Social justice
guarantees equality of opportunity 66 , and this is precisely what Republic Act No. 3350 proposes to accomplish — it gives laborers,
irrespective of their religious scrupples, equal opportunity for work.
7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is not called for — in other words, the
Act is not proper, necessary or desirable. Anent this matter, it has been held that a statute which is not necessary is not, for that reason,
unconstitutional; that in determining the constitutional validity of legislation, the courts are unconcerned with issues as to the necessity for
the enactment of the legislation in question. 67 Courts do inquire into the wisdom of laws. 68 Moreover, legislatures, being chosen by the
people, are presumed to understand and correctly appreciate the needs of the people, and it may change the laws accordingly. 69 The fear
is entertained by appellant that unless the Act is declared unconstitutional, employers will prefer employing members of religious sects that
prohibit their members from joining labor unions, and thus be a fatal blow to unionism. We do not agree. The threat to unionism will depend
on the number of employees who are members of the religious sects that control the demands of the labor market. But there is really no
occasion now to go further and anticipate problems We cannot judge with the material now before Us. At any rate, the validity of a statute is
to be determined from its general purpose and its efficacy to accomplish the end desired, not from its effects on a particular case. 70 The
essential basis for the exercise of power, and not a mere incidental result arising from its exertion, is the criterion by which the validity of a
statute is to be measured. 71

II. We now pass on the second assignment of error, in support of which the Union argued that the decision of the trial court ordering the
Union to pay P500 for attorney's fees directly contravenes Section 24 of Republic Act No. 875, for the instant action involves an industrial
dispute wherein the Union was a party, and said Union merely acted in the exercise of its rights under the union shop provision of its
existing collective bargaining contract with the Company; that said order also contravenes Article 2208 of the Civil Code; that, furthermore,
Appellee was never actually dismissed by the defendant Company and did not therefore suffer any damage at all . 72

In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no industrial dispute involved in the
attempt to compel Appellee to maintain its membership in the union under pain of dismissal, and that the Union, by its act, inflicted
intentional harm on Appellee; that since Appellee was compelled to institute an action to protect his right to work, appellant could legally be
ordered to pay attorney's fees under Articles 1704 and 2208 of the Civil Code. 73

The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides that:

No suit, action or other proceedings shall be maintainable in any court against a labor organization or any officer or member
thereof for any act done by or on behalf of such organization in furtherance of an industrial dispute to which it is a party, on
the ground only that such act induces some other person to break a contract of employment or that it is in restraint of trade
or interferes with the trade, business or employment of some other person or with the right of some other person to dispose
of his capital or labor. (Emphasis supplied)

That there was a labor dispute in the instant case cannot be disputed for appellant sought the discharge of respondent by virtue of the
closed shop agreement and under Section 2 (j) of Republic Act No. 875 a question involving tenure of employment is included in the term
"labor dispute". 74 The discharge or the act of seeking it is the labor dispute itself. It being the labor dispute itself, that very same act of the
Union in asking the employer to dismiss Appellee cannot be "an act done ... in furtherance of an industrial dispute". The mere fact that
appellant is a labor union does not necessarily mean that all its acts are in furtherance of an industrial dispute. 75 Appellant Union, therefore,
cannot invoke in its favor Section 24 of Republic Act No. 875. This case is not intertwined with any unfair labor practice case existing at the
time when Appellee filed his complaint before the lower court.

Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The article provides that attorney's fees and
expenses of litigation may be awarded "when the defendant's act or omission has compelled the plaintiff ... to incur expenses to protect his
interest"; and "in any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be
recovered". In the instant case, it cannot be gainsaid that appellant Union's act in demanding Appellee's dismissal caused Appellee to incur
expenses to prevent his being dismissed from his job. Costs according to Section 1, Rule 142, of the Rules of Court, shall be allowed as a
matter of course to the prevailing party.

WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court of First Instance of Manila, in its Civil
Case No. 58894, appealed from is affirmed, with costs against appellant Union. It is so ordered.

Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma and Aquino, JJ., concur.

Separate Opinions

FERNANDO, J, concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the constitutional infirmities imputed to it was
demonstrated in a manner wellnigh conclusive in the learned, scholarly, and comprehensive opinion so typical of the efforts of the ponente,
Justice Zaldivar. Like the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and every objection
raised as to its validity and the clarity and persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it
would appear that the last word has been written on this particular subject. Nonetheless, I deem it proper to submit this brief expression of
my views on the transcendent character of religious freedom1 and its primacy even as against the claims of protection to labor,2 also one of
the fundamental principles of the Constitution.
1. Religious freedom is identified with the liberty every individual possesses to worship or not a Supreme Being, and if a devotee of any
sect, to act in accordance with its creed. Thus is constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an
active power that binds and elevates man to his Creator ...."3 The choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to which the law is denied entry, whatever be his thoughts or hopes. In that
sphere, what he wills reigns supreme. The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational
foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It suffices that for him such a concept
holds undisputed sway. That is a recognition of man's freedom. That for him is one of the ways of self- realization. It would be to disregard
the dignity that attaches to every human being to deprive him of such an attribute. The "fixed star on our constitutional constellation," to
borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the highest, has it in his power to prescribe what shall be
orthodox in matters of conscience — or to mundane affairs, for that matter.

Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief and creed is infinite and limitless bounded only by one's
imagination and thought. So is the freedom of belief, including religious belief, limitless and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the
same may appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal standards."5 There was this qualification though: "But between the freedom of belief and the
exercise of said belief, there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established institutions of society and with the law, then the former must yield
and give way to the latter. The Government steps in and either restrains said exercise or even prosecutes the one exercising it."6 It was on that basis that the daily compulsory flag ceremony in
accordance with a statute7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that their participation would be
offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette,8 the American Supreme Court reached a contrary conclusion. Justice Jackson's
eloquent opinion is, for this writer, highly persuasive. Thus: "The case is made difficult not because the principles of its decision are obscure but because the flag involved is our own.
Nevertheless, we apply the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social organization. To believe
that patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous instead of a compulsory routine is to make an unflattering estimate of the appeal of our institutions to free
minds. We can have intellectual individualism and the rich cultural diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they are so
harmless to others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to things that do not matter much. That would be a mere shadow of
freedom. The test of its substance is the right to differ as to things that touch the heart of the existing order."9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom in the forum of conscience even as
against the command of the State itself: "Much has been said of the paramount duty to the state, a duty to be recognized, it is urged, even
though it conflicts with convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for government may
enforce obedience to laws regardless of scruples. When one's belief collides with the power of the state, the latter is supreme within its
sphere and submission or punishment follows. But, in the forum of conscience, duty to a moral power higher than the state has always
been maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably be made by many of our
conscientious and law-abiding citizens. The essence of religion is belief in a relation to God involving duties superior to those arising from
any human relation." 10 The American Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists
who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted and entire. With such a cardinal
postulate as the basis of our polity, it has a message that cannot be misread. Thus is intoned with a reverberating clang, to paraphrase
Cardozo, a fundamental principle that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision in
question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the judicial function, to restrict the scope of a
preferred freedom.
3. There is, however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to
protect labor, likewise, as noted, constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer
analysis, it cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late
Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic
sovereignty. So great is the respect for the autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can
determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the
welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our
decisions, the latest of which is Guijarno v. Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision
then to further curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of constitutional tradition. That, for me, is the
channel to follow.

Separate Opinions

FERNANDO, J, concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the constitutional infirmities imputed to it was
demonstrated in a manner wellnigh conclusive in the learned, scholarly, and comprehensive opinion so typical of the efforts of the ponente,
Justice Zaldivar. Like the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and every objection
raised as to its validity and the clarity and persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it
would appear that the last word has been written on this particular subject. Nonetheless, I deem it proper to submit this brief expression of
my views on the transcendent character of religious freedom1 and its primacy even as against the claims of protection to labor,2 also one of
the fundamental principles of the Constitution.

1. Religious freedom is identified with the liberty every individual possesses to worship or not a Supreme Being, and if a devotee of any
sect, to act in accordance with its creed. Thus is constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an
active power that binds and elevates man to his Creator ...."3 The choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to which the law is denied entry, whatever be his thoughts or hopes. In that
sphere, what he wills reigns supreme. The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational
foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It suffices that for him such a concept
holds undisputed sway. That is a recognition of man's freedom. That for him is one of the ways of self- realization. It would be to disregard
the dignity that attaches to every human being to deprive him of such an attribute. The "fixed star on our constitutional constellation," to
borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the highest, has it in his power to prescribe what shall be
orthodox in matters of conscience — or to mundane affairs, for that matter.

Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief and creed is infinite and limitless bounded only by one's
imagination and thought. So is the freedom of belief, including religious belief, limitless and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the
same may appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal standards."5 There was this qualification though: "But between the freedom of belief and the
exercise of said belief, there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established institutions of society and with the law, then the former must yield
and give way to the latter. The Government steps in and either restrains said exercise or even prosecutes the one exercising it."6 It was on that basis that the daily compulsory flag ceremony in
accordance with a statute7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that their participation would be
offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette,8 the American Supreme Court reached a contrary conclusion. Justice Jackson's
eloquent opinion is, for this writer, highly persuasive. Thus: "The case is made difficult not because the principles of its decision are obscure but because the flag involved is our own.
Nevertheless, we apply the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social organization. To believe
that patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous instead of a compulsory routine is to make an unflattering estimate of the appeal of our institutions to free
minds. We can have intellectual individualism and the rich cultural diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they are so
harmless to others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to things that do not matter much. That would be a mere shadow of
freedom. The test of its substance is the right to differ as to things that touch the heart of the existing order."9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom in the forum of conscience even as
against the command of the State itself: "Much has been said of the paramount duty to the state, a duty to be recognized, it is urged, even
though it conflicts with convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for government may
enforce obedience to laws regardless of scruples. When one's belief collides with the power of the state, the latter is supreme within its
sphere and submission or punishment follows. But, in the forum of conscience, duty to a moral power higher than the state has always
been maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably be made by many of our
conscientious and law-abiding citizens. The essence of religion is belief in a relation to God involving duties superior to those arising from
any human relation." 10 The American Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists
who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted and entire. With such a cardinal
postulate as the basis of our polity, it has a message that cannot be misread. Thus is intoned with a reverberating clang, to paraphrase
Cardozo, a fundamental principle that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision in
question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the judicial function, to restrict the scope of a
preferred freedom.

3. There is, however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to
protect labor, likewise, as noted, constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer
analysis, it cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late
Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic
sovereignty. So great is the respect for the autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can
determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the
welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our
decisions, the latest of which is Guijarno v. Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision
then to further curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of constitutional tradition. That, for me, is the
channel to follow.

Footnotes

EN BANC

[G.R. No. 122226. March 25, 1998]

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E.

LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

DECISION
MENDOZA, J.:

Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for
certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was
denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route
managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245
of the Labor Code, which provides:

Ineligibility of managerial employees to join any labor organization; right of supervisory employees.
Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own.
 Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order dated
September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third Division for lack
of showing that respondent committed grave abuse of discretion. But petitioner filed a motion for reconsideration, pressing
for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial
employees to be ineligible to form, assist or join unions, contravenes Art. III 8 of the Constitution which provides:

The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for the purposes not contrary to law shall not be abridged.

For this reason, the petition was referred to the Court en banc.

The Issues in this Case

Two question are presented by the petition: (1) whether the route managers at Pepsi-Cola Products Philippines, Inc.
are managerial employees and (2) whether Art. 245, insofar as it prohibits managerial employees from forming, joining or
assisting labor unions, violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin by defining who are managerial employees and considering the
types of managerial employees.

Types of Managerial Employees

The term manager generally refers to anyone who is responsible for subordinates and other organization
resources.[1] As a class, managers constitute three levels of a pyramid:

Top Management

_________________

Middle Management
 _________________

First Line

Management

(also called Supervisor)

____________________

____________________

Operatives

Or Operating Employees

FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the
work of others is called first-line or first-level management. First-line managers direct operating employees
only; they do not supervise other managers. Example of first-line managers are the foreman or production
supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical
supervisor in a large office.First-level managers are often called supervisors.

MIDDLE MANAGERS The term middle management can refer to more than one level in an
organization. Middle managers direct the activities of other managers and sometimes also those of
operating employees. Middle managers principal responsibilities are to direct the activities that implement
their organizations policies and to balance the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronics firm is an example of a middle manager.

TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible
for the overall management of the organization. It establishes operating policies and guides the
organizations interactions with its environment. Typical titles of top managers are chief executive officer,
president, and senior vice-president. Actual titles vary from one organization to another and are not always a
reliable guide to membership in the highest management classification.[2]

As can be seen from this description, a distinction exist between those who have the authority to devise, implement
and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that
such polices are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What
distinguishes them from the rank-and file employees is that they act in the interest of the employer in supervising such
rank-and-file employees.
Managerial employees may therefore be said to fall into two distinct categories: the managers per se, who compose
the former group described above, and the supervisors who form the latter group. Whether they belong to the first or
second category, managers, vis--vis employers, are, likewise, employees.[3]
The first question is whether route managers are managers are managerial employees or supervisors.

Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees

It appears that this question was the subject of two previous determinations by the Secretary of Labor and
Employment, in accordance with which this case was decided by the med-arbiter.
In Case No. OS-MA-10318-91, entitled Workerss Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines,
Inc., decided on November 13, 1991, the Secretary of Labor found:

We examined carefully the pertinent job description of the subject employees and other documentary
evidence on record vis--vis paragraph (m), Article 212 of the Labor Code, as amended, and we find that only
those employees occupying the position of route manager and accounting manager are managerial
employees. The rest i.e. quality control manager, yard/transport manager and warehouse operations
manager are supervisory employees.

To qualify as managerial employee, there must be a clear showing of the exercise of managerial attributes
under paragraph (m), Article 212 of the Labor Code as amended.Designations or titles of positions are not
controlling. In the instant case, nothing on record will support the claim that the quality control manager,
yard/transport manager and warehouse operations manager are vested with said attributes. The warehouse
operations manager, for example, merely assists the plant finance manager in planning, organizing,
directing and controlling all activities relative to development and implementation of an effective
management control information system at the sale offices. The exercise of authority of the quality control
manager, on the other hand, needs the concurrence of the manufacturing manager

As to the route managers and accounting manager, we are convinced that they are managerial
employees. Their job descriptions clearly reveal so.

On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92, entitled In Re:Petition for Direct Certification
and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc., as follows:

The issue brought before us is not of first impression. At one time, we had the occasion to rule upon the
status of route manager in the same company vis a vis the issue as to whether or not it is supervisory
employee or a managerial employee. In the case of Workers Alliance Trade Unions (NATU) vs. Pepsi Cola
Products, Phils., Inc. (OS-MA-A-10-318-91), 15 November 1991, we ruled that a route manager is a
managerial employee within the context of the definition of the law, and hence, ineligible to join, form or
assist a union. We have once more passed upon the logic of our Decision aforecited in the light of the issues
raised in the instant appeal, as well as the available documentary evidence on hand, and have come to the
view that there is no cogent reason to depart from our earlier holding. Route Managers are, by the very
nature of their functions and the authority they wield over their subordinates, managerial employees. The
prescription found in Art. 245 of the Labor Code, as amended therefore, clearly applies to them.[4]4

Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission, [5]5 however, petitioner argues that
these previous administrative determinations do not have the effect of res judicata in this case, because "labor relations
proceedings" are "non-litigious and summary in nature without regard to legal technicalities."[6] Nasipit Lumber Co.
involved a clearance to dismiss an employee issued by the Department of Labor. The question was whether in a
subsequent proceeding for illegal dismissal, the clearance was res judicata. In holding it was not, this Court made it clear
that it was referring to labor relations proceedings of a non-adversary character, thus:
The requirement of a clearance to terminate employment was a creation of the Department of labor to carry
out the Labor Code provisions on security of tenure and termination of employment. The proceeding
subsequent to the filing of an application for clearance to terminate employment was outlined in Book V,
Rule XIV of the Rules and Regulations Implementing the Labor Code. The fact that said rule allowed a
procedure for the approval of the clearance with or without the opposition of the employee concerned (Secs.
7 & 8), demonstrates the non-litigious and summary nature of the proceeding. The clearance requirement
was therefore necessary only as an expeditious shield against arbitrary dismissal without the knowledge and
supervision of the Department of Labor. Hence, a duly approved clearance implied that the dismissal was
legal or for cause (Sec. 2).[7]v. National Labor Relations Commission, 177 SCRA 93, 100 (1989).7

But the doctrine of res judicata certainly applies to adversary administrative proceedings.As early as 1956, in
Brillantes v. Castro,[8]8 we sustained the dismissal of an action by a trial court on the basis of a prior administrative
determination of the same case by the Wage Administration Service, applying the principle of res judicata. Recently, in
Abad v. NLRC[9]9 we applied the related doctrine of stare decisis in holding that the prior determination that certain jobs at
the Atlantic Gulf and Pacific Co. were project employments was binding in another case involving another group of
employees of the same company. Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the
doctrine of res judicataapplies . . . to judicial or quasi judicial proceedings and not to the exercise of administrative
powers."[10]v. National Labor Relations Commission, supra note 7.10 Now proceedings for certification election, such as
those involved in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore,
decisions rendered in such proceedings can attain finality. [11]v. B.F. Goodrich (Marikina Factory) Confidential and Salaries
Employees Union-NATU, 49 SCRA 532 (1973).11
Thus, we have in this case an expert's view that the employees concerned are managerial employees within the
purview of Art. 212 which provides:

(m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer, effectively recommend
such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of the above definitions are
considered rank-and-file employees for purposes of this Book.
At the very least, the principle of finality of administrative determination compels respect for the finding of the Secretary of
Labor that route managers are managerial employees as defined by law in the absence of anything to show that such
determination is without substantial evidence to support it. Nonetheless, the Court, concerned that employees who are
otherwise supervisors may wittingly or unwittingly be classified as managerial personnel and thus denied the right of self-
organization, has decided to review the record of this case.

DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record

The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by substantial
evidence. The nature of the job of route managers is given in a four-page pamphlet, prepared by the company, called
"Route Manager Position Description,"the pertinent parts of which read:

A. BASIC PURPOSE

A Manager achieves objectives through others.

As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through
the skillful MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF YOUR PEOPLE.

These then are your functions as Pepsi-Cola Route Manager. Within these functions - managing your
job and managing your people - you are accountable to your District Manager for the execution and
completion of various tasks and activities which will make it possible for you to achieve your sales
objectives.

B. PRINCIPAL ACCOUNTABILITIES

1.0 MANAGING YOUR JOB

The Route Manager is accountable for the following:

1.1 SALES DEVELOPMENT

1.1.1 Achieve the sales plan.

1.1.2 Achieve all distribution and new account objectives.

1.1.3 Develop new business opportunities thru personal contacts with dealers.

1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved in all outlets.

1.1.5 maintain and improve productivity of all cooling equipment and kiosks.

1.1.6 Execute and control all authorized promotions.

1.1.7 Develop and maintain dealer goodwill.

1.1.8 Ensure all accounts comply with company suggested retail pricing.

1.1.9 Study from time to time individual route coverage and productivity for possible adjustments
to maximize utilization of resources.

1.2 Administration

1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles
before check-in.

1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required
on an accurate and timely basis.
 1.2.3 Ensure proper implementation of the various company policies and procedures incl. but not
limited to shakedown; route shortage; progressive discipline; sorting; spoilages;
credit/collection; accident; attendance.

1.2.4 Ensure collection of receivables and delinquent accounts.

2.0 MANAGING YOUR PEOPLE

The Route Manager is accountable for the following:

2.1 Route Sales Team Development

2.1.1 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers
at least 3 days a week, to be supported by required route ride documents/reports & back
check/spot check at least 2 days a week to be supported by required documents/reports.

2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement
of effective sales and merchandizing [sic] techniques of the salesmen and
helpers. Conduct group training at least 1 hour each week on a designated day and of
specific topic.

2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and
the universal standards of unquestioned business ethics.[12]12

Earlier in this opinion, reference was made to the distinction between managers per se (top managers and middle
managers) and supervisors (first-line managers). That distinction is evident in the work of the route managers which sets
them apart from supervisors in general. Unlike supervisors who basically merely direct operating employees in line with
set tasks assigned to them, route managers are responsible for the success of the company's main line of business
through management of their respective sales teams. Such management necessarily involves the planning, direction,
operation and evaluation of their individual teams and areas which the work of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve,
but goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those
above them. They are not mere functionaries with simple oversight functions but business administrators in their own
right.An idea of the role of route managers as managers per se can be gotten from a memo sent by the director of metro
sales operations of respondent company to one of the route managers. It reads:[13]

03 April 1995

To : CESAR T. REOLADA

From : REGGIE M. SANTOS

Subj : SALARY INCREASE

Effective 01 April 1995, your basic monthly salary of P11,710 will be increased to P12,881 or an
increase of 10%. This represents the added managerial responsibilities you will assume due to the
recent restructuring and streamlining of Metro Sales Operations brought about by the continuous losses
for the last nine (9) months.

Let me remind you that for our operations to be profitable, we have to sustain the intensity and
momentum that your group and yourself have shown last March. You just have to deliver the desired
volume targets, better negotiated concessions, rationalized sustaining deals, eliminate or
reduced overdues, improved collections, more cash accounts, controlled operating
expenses, etc. Also, based on the agreed set targets, your monthly performance will be closely
monitored.

You have proven in the past that your capable of achieving your targets thru better planning,
managing your group as a fighting team, and thru aggressive selling. I am looking forward to
 your success and I expect that you just have to exert your doubly best in turning around our
operations from a losing to a profitable one!

Happy Selling!!

(Sgd.) R.M. SANTOS

The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug, although entitled "RM's
Job Description," is only a summary of performance standards. It does not show whether route managers are
managers per se or supervisors. Obviously, these performance standards have to be related to the specific tasks given to
route managers in the four-page "Route Manager Position Description," and, when this is done, the managerial nature of
their jobs is fully revealed. Indeed, if any, the card indicates the great latitude and discretion given to route managers -
from servicing and enhancing company goodwill to supervising and auditing accounts, from trade (new business)
development to the discipline, training and monitoring of performance of their respective sales teams, and so forth, - if
they are to fulfill the company's expectations in the "key result areas."
Article 212(m) says that "supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment."Thus, their only power is to recommend. Certainly, the route managers in this
case more than merely recommend effective management action. They perform operational, human resource, financial
and marketing functions for the company, all of which involve the laying down of operating policies for themselves and
their teams. For example, with respect to marketing, route managers, in accordance with B.1.1.1 to B.1.1.9 of the Route
Managers Job Description, are charged, among other things, with expanding the dealership base of their respective sales
areas, maintaining the goodwill of current dealers, and distributing the company's various promotional items as they see
fit. It is difficult to see how supervisors can be given such responsibility when this involves not just the routine supervision
of operating employees but the protection and expansion of the company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people (the evidence shows that they only
"recommended" or "endorsed" the taking of disciplinary action against certain employees), this is because this is a
function of the Human Resources or Personnel Department of the company. [14]14 And neither should it be presumed that
just because they are given set benchmarks to observe, they are ipso facto supervisors.Adequate control methods (as
embodied in such concepts as "Management by Objectives [MBO]" and "performance appraisals") which require
a delineation of the functions and responsibilities of managers by means of ready reference cards as here, have long
been recognized in management as effective tools for keeping businesses competitive.
 This brings us to the second question, whether the first sentence of Art. 245 of the Labor Code, prohibiting managerial
employees from forming, assisting or joining any labor organization, is constitutional in light of Art. III, 8 of the Constitution
which provides:

The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.

As already stated, whether they belong to the first category (managers per se) or the second category (supervisors),
managers are employees. Nonetheless, in the United States, as Justice Puno's separate opinion notes, supervisors have
no right to form unions. They are excluded from the definition of the term "employee" in 2(3) of the Labor-Management
Relations Act of 1947.[15]v. Bell Aerospace Co., 416 U.S. 281, n 11, 40 L.Ed.2d 134, 147, n. 11 (1974), thus:
Supervisors are management people. They have distinguished themselves in their work. They have demonstrated their ability to take care of
themselves without depending upon the pressure of collective action.No one forced them to become supervisors. They abandoned the "collective
security" of the rank and file voluntarily, because they believed the opportunities thus opened to them to be more valuable to them than such
"security". It seems wrong, and it is wrong, to subject people of this kind, who have demonstrated their initiative, their ambition and their ability to
get ahead, to the leveling processes of seniority, uniformity and standardization that the Supreme Court recognizes as being fundamental
principles of unionism. (J.I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 88 L.Ed. 762, 64 S. Ct. 576 (1994). It is wrong for the
foremen, for it discourages the things in them that made them foremen in the first place. For the same reason, that it discourages those best
qualified to get ahead, it is wrong for industry, and particularly for the future strength and productivity of our country. 15 In the Philippines, the
question whether managerial employees have a right of self-organization has arisen with respect to first-level managers or
supervisors, as shown by a review of the course of labor legislation in this country.

Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the Industrial Peace
Act (R.A. No. 875).
In accordance with the general definition above, this law defined "supervisor" as follows:

SECTION 2. . . .
(k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend,
lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them,
and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing,
the exercise of such authority is not of a merely routinary or clerical nature but requires the use of
independent judgment.[16]16

The right of supervisors to form their own organizations was affirmed:

SEC. 3. Employees' Right to Self-Organization. -- Employees shall have the right to self-organization and to
form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for
membership in a labor organization of employees under their supervision but may form separate
organizations of their own.[17]

For its part, the Supreme Court upheld in several of its decisions the right of supervisors to organize for purposes of labor
relations.[18]v. Filoil Supervisory and Confidential Employees Association, 6 SCRA 522

FIRST DIVISION

[G.R. No. 121084. February 19, 1997]

TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner, vs. TOYOTA MOTOR PHILIPPINES

CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND
EMPLOYMENT, respondents.

DECISION
KAPUNAN, J.:

On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed a petition for
certification election with the Department of Labor, National Capital Region, for all rank-and-file employees of the Toyota
Motor Corporation.[1]
In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the issuance of an Order
directing the holding of a certification election on two grounds: first, that the respondent union, being "in the process of
registration" had no legal personality to file the same as it was not a legitimate labor organization as of the date of the
filing of the petition; and second, that the union was composed of both rank-and-file and supervisory employees in
violation of law.[2] Attached to the position paper was a list of union members and their respective job classifications,
indicating that many of the signatories to the petition for certification election occupied supervisory positions and were not
in fact rank-and-file employees.[3]
The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election for lack of merit. In
his March 8, 1993 Order, the Med-Arbiter found that the labor organization's membership was composed of supervisory
and rank-and-file employees in violation of Article 245 of the Labor Code,[4] and that at the time of the filing of its petition,
respondent union had not even acquired legal personality yet. [5]
On appeal, the Office of the Secretary of Labor, in a Resolution [6] dated November 9, 1993 signed by Undersecretary
Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3, 1993, and directed the holding of a certification
election among the regular rank-and-file employees of Toyota Motor Corporation. In setting aside the questioned Order,
the Office of the Secretary contended that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was already a legitimate labor
organization at the time of the filing of the petition on 26 November 1992. Records show that on 24 November 1992 or
two (2) days before the filing of the said petition, it was issued a certificate of registration.

We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed the petition for certification
election based on the ground that the proposed bargaining unit is a mixture of supervisory and rank-and-file employees,
hence, violative of Article 245 of the Labor Code as amended.

A perusal of the petition and the other documents submitted by petitioner-appellant will readily show that what the
former really seeks to represent are the regular rank-and-file employees in the company numbering about 1,800 more or
less, a unit which is obviously appropriate for bargaining purposes. This being the case, the mere allegation of
respondent-appellee that there are about 42 supervisory employees in the proposed bargaining unit should have not
caused the dismissal of the instant petition. Said issue could very well be taken cared of during the pre-election
conference where inclusion/exclusion proceedings will be conducted to determine the list of eligible voters. [7]

Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for Reconsideration of
the Resolution of March 3, 1993, reiterating its claim that as of the date of filing of petition for certification election,
respondent TMPCLU had not yet acquired the status of a legitimate labor organization as required by the Labor Code,
and that the proposed bargaining unit was inappropriate.
Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set aside its earlier
resolution and remanded the case to the Med-Arbiter concluding that the issues raised by petitioner both on appeal and in
its motion for reconsideration were factual issues requiring further hearing and production of evidence. [8] The Order stated:

We carefully re-examined the records vis-a-vis the arguments raised by the movant, and we note that movant correctly
pointed out that petitioner submitted a copy of its certificate of registration for the first time on appeal and that in its
petition, petitioner alleges that it is an independent organization which is in the process of registration." Movant
strongly argues that the foregoing only confirms what it has been pointing out all along, that at the time the petition was
filed petitioner is (sic) not yet the holder of a registration certificate; that what was actually issued on 24 November
1992 or two (2) days before the filing of the petition was an official receipt of payment for the application fee; and, that
the date appearing in the Registration certificate which is November 24, 1992 is not the date when petitioner was
actually registered, but the date when the registration certificate was prepared by the processor. Movant also
ratiocinates that if indeed petitioner has been in possession of the registration certificate at the time this petition was
filed on November 26, 1992, it would have attached the same to the petition.

The foregoing issues are factual ones, the resolution of which is crucial to the petition. For if indeed it is true that at the
time of filing of the petition, the said registration certificate has not been approved yet, then, petitioner lacks the legal
personality to file the petition and the dismissal order is proper. Sadly, we can not resolve the said questions by merely
perusing the records. Further hearing and introduction of evidence are required. Thus, there is a need to remand the
case to the Med-Arbiter solely for the purpose.
WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside. Let the case be remanded to the
Med-Arbiter for the purpose aforestated.

SO ORDERED. [9]

Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on September 28, 1994,
stating the following:[10]

[T]he controvertible fact is that petitioner could not have been issued its Certificate of Registration on November 24,
1992 when it applied for registration only on November 23, 1992 as shown by the official receipt of payment of filing
fee. As Enrique Nalus, Chief LEO, this office, would attest in his letter dated September 8, 1994 addressed to Mr.
Porfirio T. Reyes, Industrial Relations Officer of Respondent company, in response to a query posed by the latter, "It is
unlikely that an application for registration is approved on the date that it is filed or the day thereafter as the processing
course has to pass thought routing, screening, and assignment, evaluation, review and initialing, and
approval/disapproval procedure, among others, so that a 30-day period is provided for under the Labor Code for this
purpose, let alone opposition thereto by interested parties which must be also given due course."

Another evidence which petitioner presented . . . is the "Union Registration 1992 Logbook of IRD" . . . and the entry
date November 25, 1992 as allegedly the date of the release of the registration certificate . . . On the other hand,
respondent company presented . . . a certified true copy of an entry on page 265 of the Union Registration Logbook
showing the pertinent facts about petitioner but which do not show the petitioner's registration was issued on or before
November 26, 1992. [11]

Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that respondent TMPCLU
could not have "acquire[d] legal personality at the time of the filing of (its) petition." [12]
On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a certification election
among the regular rank-and-file employees of the Toyota Motor Philippines Corporation.[13] Petitioner's motion for
reconsideration was denied by public respondent in his Order dated July 14, 1995. [14]
Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where petitioner contends
that "the Secretary of Labor and Employment committed grave abuse of discretion amounting to lack or excess of
jurisdiction in reversing, contrary to law and facts the findings of the Med-Arbiters to the effect that: 1) the inclusion of the
prohibited mix of rank-and file and supervisory employees in the roster of members and officers of the union cannot be
cured by a simple inclusion-exclusion proceeding; and that 2) the respondent union had no legal standing at the time of
the filing of its petition for certification election.[15]
We grant the petition.
The purpose of every certification election is to determine the exclusive representative of employees in an appropriate
bargaining unit for the purpose of collective bargaining. A certification election for the collective bargaining process is one
of the fairest and most effective ways of determining which labor organization can truly represent the working force. [16] In
determining the labor organization which represents the interests of the workforce, those interests must be, as far as
reasonably possible, homogeneous, so as to genuinely reach the concerns of the individual members of a labor
organization.
According to Rothenberg,[17] an appropriate bargaining unit is a group of employees of a given employer, composed of
all or less than the entire body of employees, which the collective interests of all the employees, consistent with equity to
the employer indicate to be best suited to serve reciprocal rights and duties of the parties under the collective bargaining
provisions of law. In Belyca Corporation v. Ferrer Calleja,[18] we defined the bargaining unit as "the legal collectivity for
collective bargaining purposes whose members have substantially mutual bargaining interests in terms and conditions of
employment as will assure to all employees their collective bargaining rights." This in mind, the Labor Code has made it a
clear statutory policy to prevent supervisory employees from joining labor organizations consisting of rank-and-file
employees as the concerns which involve members of either group are normally disparate and contradictory. Article 245
provides:

ART. 245 Ineligibility of managerial employees to join any labor organization; right of supervisory employees. --
Managerial Employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not
be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own.

Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no
labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a
legitimate labor organization, including the right to file a petition for certification election for the purpose of collective
bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire
into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of
Article 245 of the Labor Code.
It is the petitioner's contention that forty-two (42) of the respondent union's members, including three of its officers,
occupy supervisory positions.[19] In its position paper dated February 22, 1993, petitioner identified fourteen (14) union
members occupying the position of Junior Group Chief II[20] and twenty-seven (27) members in level five positions. Their
respective job-descriptions are quoted below:

LEVEL 4 (JUNIOR GROUP CHIEF II) He is responsible for all operators and assigned stations, prepares production
reports related to daily production output. He oversees smooth flow of production, quality of production, availability of
manpower, parts and equipments. He also coordinates with other sections in the Production Department.

LEVEL 5 He is responsible for overseeing initial production of new models, prepares and monitors construction
schedules for new models, identifies manpower requirements for production, facilities and equipment, and lay-out
processes. He also oversees other sections in the production process (e.g. assembly, welding, painting)." (Annex "V" of
Respondent TMP's Position Paper, which is the Job Description for an Engineer holding Level 5 position in the
Production Engineering Section of the Production Planning and Control Department).

While there may be a genuine divergence of opinion as to whether or not union members occupying Level 4 positions
are supervisory employees, it is fairly obvious, from a reading of the Labor Code's definition of the term that those
occupying Level 5 positions are unquestionably supervisory employees. Supervisory employees, as defined above, are
those who, in the interest of the employer, effectively recommend managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but require the use of independent judgment. [21] Under the job description for level
five employees, such personnel all engineers having a number of personnel under them, not only oversee production of
new models but also determine manpower requirements, thereby influencing important hiring decisions at the highest
levels. This determination is neither routine nor clerical but involves the independent assessment of factors affecting
production, which in turn affect decisions to hire or transfer workers. The use of independent judgment in making the
decision to hire, fire or transfer in the identification of manpower requirements would be greatly impaired if the employee's
loyalties are torn between the interests of the union and the interests of management. A supervisory employee occupying
a level five position would therefore find it difficult to objectively identify the exact manpower requirements dictated by
production demands.
 This is precisely what the Labor Code, in requiring separate unions among rank-and-file employees on one hand, and
supervisory employees on the other, seeks to avoid. The rationale behind the Code's exclusion of supervisors from unions
of rank-and-file employees is that such employees, while in the performance of supervisory functions, become the alter
ego of management in the making and the implementing of key decisions at the sub-managerial level. Certainly, it would
be difficult to find unity or mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory
employees. And this is so because the fundamental test of a bargaining unit's acceptability is whether or not such a unit
will best advance to all employees within the unit the proper exercise of their collective bargaining rights.[22] The Code itself
has recognized this, in preventing supervisory employees from joining unions of rank-and-file employees.
In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee
members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to
file a petition for certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to whether or not
respondent union was in possession of the status of a legitimate labor organization at the time of filing, when, as petitioner
vigorously claims, the former was still at the stage of processing of its application for recognition as a legitimate labor
organization. The union's composition being in violation of the Labor Code's prohibition of unions composed of
supervisory and rank-and-file employees, it could not possess the requisite personality to file for recognition as a
legitimate labor organization. In any case, the factual issue, albeit ignored by the public respondent's assailed Resolution,
was adequately threshed out in the Med-Arbiter's September 28, 1994 Order.
The holding of a certification election is based on clear statutory policy which cannot be circumvented.[23] Its rules,
strictly construed by this Court, are designed to eliminate fraud and manipulation. As we emphasized in Progressive
Development Corporation v. Secretary, Department of Labor and Employment, [24] the Court's conclusion should not be
interpreted as impairing any union's right to be certified as the employees' bargaining agent in the petitioner's
establishment. Workers of an appropriate bargaining unit must be allowed to freely express their choice in an election
where everything is open to sound judgment and the possibility for fraud and misrepresentation is absent.[25]
WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and Order dated July 14,
1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order dated September 28, 1994 of the Med-Arbiter
is REINSTATED.
SO ORDERED.
Padilla, (Chairman), Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
[1]
Annex "A," Rollo, p. 42.
[2]
Annex "D," Id., at 72.
[3]
Rollo, pp. 90-96.
[4]
Id., at 110.
[5]
Id., at 109.
[6]
Annex "I," Id., at 37-142.
[7]
Rollo, pp. 141-142.
[8]
Id., at p. 192.
[9]
Id., at 192-193.
[10]
Id., at 231-236.
[11]
Id., at 233-236.
[12]
Id., at 236.
[13]
Id., at 307-312.
[14]
Id., at 338-340.
[15]
Id., at 15-16.
[16]
PAFLU v. BLR, 69 SCRA 132 (1976).
[17]
ROTHENBERG, LABOR RELATIONS, cite in C.A. AZUCENA, II THE LABOR CODE (1993).
[18]
168 SCRA 184 (1988).
[19]
Rollo, p. 69.
[20]
Id., at 71.
[21]
Labor Code, art. 212 (m).
[22]
Philippine Land Air Sea Labor Union v. Court of Industrial Relations, et. al., 110 Phil. 176 (1960).
[23]
Progressive Development Corporation v. Secretary, Department of Labor and Employment, 205 SCRA 802 (1992).
[24]
205 SCRA 802,815 (1992).
[25]
Id.

FIRST DIVISION

[G.R. No. 108855. February 28, 1996]

METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA. NIEVES ROLDAN-CONFESOR,

in her capacity as Secretary of the Department of Labor and Employment and METRO
DRUG CORPORATION EMPLOYEES ASSOCIATION-FEDERATION OF FREE
WORKERS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF ADMINISTRATIVE AGENCIES; RULE; CASE AT BAR. - We
reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative
agencies supported by substantial evidence are accorded great respect and binds this Court. The Secretary of Labor
ruled, thus: x x x Any act committed during the pendency of the dispute that tends to give rise to further contentious
issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at
the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been
exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart from
its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had already
been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic action from
the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a regime of laws,
legal remedies take the place of violent ones. x xx Protest against the subject layoffs need not be in the form of violent
action or any other drastic measure. In the instant case the Union registered their dissent by swiftly filing a motion for
a cease and desist order. Contrary to petitioners allegations, the Union strongly condemned the layoffs and
threatened mass action if the Secretary of Labor fails to timely intervene: x x x 3. This unilateral action of management
is a blatant violation of the injunction of this Office against committing acts which would exacerbate the
 dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right to mass actions and
concerted activities to protest and stop the said management action. This mass layoff is clearly one which would
result in a very serious dispute unless this Office swiftly intervenes. x x x Metrolab and the Union were still in the
process of resolving their CBA deadlock when petitioner implemented the subject layoffs. As a result, motions and
oppositions were filed diverting the parties attention, delaying resolution of the bargaining deadlock and postponing
the signing of their new CBA, thereby aggravating the whole conflict.
2. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EXERCISE OF MANAGEMENT
PREROGATIVES; NOT ABSOLUTE; SUBJECT TO EXCEPTIONS IMPOSED BY LAW. - This Court recognizes the
exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the
employer.However, this privilege is not absolute but subject to limitations imposed by law. In PAL vs. NLRC,
(225 SCRA 301 [1993]), we issued this reminder: ... the exercise of management prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that managements prerogatives must be
without abuse of discretion ...All this points to the conclusion that the exercise of managerial prerogatives is not
unlimited. It is circumscribed by limi(ations found in law, a collective bargaining agreement, or the general principles of
fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]).
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION. - The case at bench constitutes one of the exceptions. The
Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor
disputes involving industries indispensable to national interest. The disputed injunction is subsumed under this special
grant of authority. Art. 263 (g) of the Labor Code specifically provides that: x x x (g) When, in his opinion, there exists
a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out employees shall immediately
return to work and the employer shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission
may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such
orders as he may issue to enforce the same. . . . That Metrolabs business is of national interest is not disputed.
Metrolab is one of the leading manufacturers and suppliers of medical and pharmaceutical products to the country.
Metrolabs management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered
by the limitations set by law, taking into account its special character and the particular circumstances in the case at
bench.
4. ID.; LABOR RELATIONS; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN, FORM AND ASSIST ANY
LABOR ORGANIZATION; PROHIBITION EXTENDED TO CONFIDENTIAL EMPLOYEES. - Although Article 245 of
the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees,
jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or
nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise
privy to sensitive and highly confidential records.
5. ID.; ID.; EXCLUSION OF CONFIDENTIAL EMPLOYEES FROM THE RANK AND FILE BARGAINING UNIT; NOT
TANTAMOUNT TO DISCRIMINATION. - Confidential employees cannot be classified as rank and file. As previously
discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting
a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not
tantamount to discrimination.
APPEARANCES OF COUNSEL
Bautista Picazo Buyco Tan & Fider for petitioner.
The Solicitor General for public respondent.
Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P. Fernandez for Metro Drug Corporation.

DECISION
KAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution
and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and 25 January 1993,
respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-9 1; NCMB-NCR-NS-09-678-91) on grounds that these were
issued with grave abuse of discretion and in excess of jurisdiction.
Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter referred
to as the Union) is a labor organization representing the rank and file employees of petitioner Metrolab Industries, Inc.
(hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. The
negotiations for a new CBA, however, ended in a deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc. The parties
failed to settle their dispute despite the conciliation efforts of the National Conciliation and Mediation Board.
 To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an
assumption order dated 20 September 1991, the dispositive portion of which reads, thus:

WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this
Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. - Metro Drug Distribution Division
and Metrolab Industries Inc.

Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug Corp. Employees
Association - FFW are likewise directed to cease and desist from committing any and all acts that might exacerbate the
situation.

Finally, the parties are directed to submit their position papers and evidence on the aforequoted deadlocked issues to
this office within twenty (20) days from receipt hereof.

SO ORDERED. (Italics ours.)

[1]

On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and
ordered the parties involved to execute a new CBA.
Thereafter, the Union filed a motion for reconsideration.
On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94 of
its rank and file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the
mass layoff, alleging that such act violated the prohibition against committing acts that would exacerbate the dispute as
specifically directed in the assumption order.[2]
On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its management
prerogative. It maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66) million
pesos due to the withdrawal of its principals in the Toll and Contract Manufacturing Department. Metrolab further asserted
that with the automation of the manufacture of its product Eskinol, the number of workers required its production is
significantly reduced.[3]
 Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to availability of
work in the production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolabs 94
rank and file workers illegal and ordered their reinstatement with full backwages. The dispositive portion reads as follows:

WHEREFORE, the Unions motion for reconsideration is granted in part, and our order of 28 December 1991 is
affirmed subject to the modifications in allowances and in the close shop provision.The layoff of the 94 employees at
MII is hereby declared illegal for the failure of the latter to comply with our injunction against committing any act
which may exacerbate the dispute and with the 30-day notice requirement. Accordingly, MII is hereby ordered to
reinstate the 94 employees, except those who have already been recalled, to their former positions or substantially
equivalent, positions with full backwages from the date they were illegally laid off on 27 January 1992 until actually
reinstated without loss of seniority rights and other benefits. Issues relative to the CBA agreed upon by the parties and
not embodied in our earlier order are hereby ordered adopted for incorporation in the CBA. Further, the dispositions
and directives contained in all previous orders and resolutions relative to the instant dispute, insofar as not inconsistent
herein, are reiterated. Finally, the parties are enjoined to cease and desist from committing any act which may tend to
circumvent this resolution.

SO RESOLVED. [4]

On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the
dispute since no untoward incident occurred as a result thereof.It, likewise, filed a motion for clarification regarding the
constitution of the bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution, however, was
without prejudice to the outcome of the issues raised in the reconsideration and clarification motions submitted for
decision to the Secretary of Labor.[5]
Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees on
grounds of redundancy due to lack of work which the Union again promptly opposed on 5 October 1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order.Metrolab moved for a
reconsideration.[6]
 On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution containing the following
orders:
xxx xxx xxx.

1. MIIs motion for partial reconsideration of our 14 April 1992 resolution specifically that portion thereof assailing our
ruling that the layoff of the 94 employees is illegal, is hereby denied. MII is hereby ordered to pay such employees their
full backwages computed from the time of actual layoff to the time of actual recall;

2. For the parties to incorporate in their respective collective bargaining agreements the clarifications herein contained;
and

3. MIIs motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73
employees, to the extent of assailing our ruling that such layoff tended to exacerbate the dispute, is hereby denied. But
inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced upon
which a categorical finding thereon can be based, the same is hereby referred to the NLRC for its appropriate action.

Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby
lifted.

SO RESOLVED. [7]

Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop provision of the
CBA, not from the bargaining unit.
On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present petition for
certiorari with application for issuance of a Temporary Restraining Order.
On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor from enforcing and
implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25 January 1993, respectively.
In its petition, Metrolab assigns the following errors:
A
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE
ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY
LAYOFF ILLEGAL AND ORDERING THE REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE
AFFECTED EMPLOYEES. *

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY ABUSED HER
DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK
AND FILE EMPLOYEES. [8]

Anent the first issue, we are asked to determine whether or not public respondent Labor Secretary committed grave
abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs instituted by Metrolab illegal on grounds
that these unilateral actions aggravated the conflict between Metrolab and the Union who were, then, locked in a
stalemate in CBA negotiations.
Metrolab argues that the Labor Secretarys order enjoining the parties from committing any act that might exacerbate
the dispute is overly broad, sweeping and vague and should not be used to curtail the employers right to manage his
business and ensure its viability.
We cannot give credence to Metrolabs contention.
This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate
business decisions of the employer. However, this privilege is not absolute but subject to limitations imposed by law. [9]
In PAL v. NLRC,[10] we issued this reminder:
xxx xxx xxx

. . .the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina ( 177 SCRA
565 [1989]), it was held that managements prerogatives must be without abuse of discretion....

xxx xxx xxx

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by
limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice
(University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]). . . . (Italics ours.)

xxx xxx xxx.

The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the
Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The
disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically provides
that:
xxx xxx xxx

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

xxx xxx xxx.

That Metrolabs business is of national interest is not disputed. Metrolab is one of the leading manufacturers and
suppliers of medical and pharmaceutical products to the country.
Metro labs management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered
by the limitations set by law, taking into account its special character and the particular circumstances in the case at
bench.
As aptly declared by public respondent Secretary of Labor in its assailed resolution:
xxx xxx xxx.
MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of management prerogatives
such as layoffs. But it may nevertheless be appropriate to mention here that one of the substantive evils which Article
263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national
interest. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission
of disruptive acts, management prerogatives must always be exercised consistently with the statutory objective. [11]

xxx xxx xxx.

Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident
occurred after the layoffs were implemented. There were no work disruptions or stoppages and no mass actions were
threatened or undertaken. Instead, petitioner asserts, the affected employees calmly accepted their fate as this was a
matter which they had been previously advised would be inevitable.[12]
After a judicious review of the record, we find no compelling reason to overturn the findings of the Secretary of Labor.
We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative
agencies supported by substantial evidence are accorded great respect and binds this Court. [13]
The Secretary of Labor ruled, thus:
xxx xxx xxx.

Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase
the tensions between the parties should be considered an act of exacerbation. One must look at the act itself, not on
speculative reactions. A misplaced recourse is not needed to prove that a dispute has been exacerbated. For instance,
the Union could not be expected to file another notice of strike. For this would depart from its theory of the case that
the layoff is subsumed under the instant dispute, for which a notice of strike had already been filed. On the other hand,
to expect violent reactions, unruly behavior, and any other chaotic or drastic action from the Union is to expect it to
commit acts disruptive of public order or acts that may be illegal. Under a regime of laws, legal remedies take the place
of violent ones.[14]

xxx xxx xxx.

Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. In the instant
case the Union registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to petitioners
allegations, the Union strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to
timely intervene:

xxx xxx xxx.

3. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts
which would exacerbate the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right
to mass actions and concerted activities to protest and stop the said management action. This mass layoff is clearly one
which would result in a very serious labor dispute unless this Office swiftly intervenes. [15]

xxx xxx xxx.

Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the
subject layoffs. As a result, motions and oppositions were filed diverting the parties attention, delaying resolution of the
bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict.
We, likewise, find untenable Metrolabs contention that the layoff of the 94 rank-and-file employees was temporary,
despite the recall of some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so in the notices it sent
to the affected employees and the Department of Labor and Employment. Consider the tenor of the pertinent portions of
the layoff notice to the affected employees:
xxx xxx xxx.

Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng lay-off ng mga empleyado sa Rank & File
dahil nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin ang kasama sa lay-off dahil wala nang trabaho
para sa kanila. Mahirap tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil hindi kaya ng kumpanya
ang magbayad ng suweldo kung ang empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad ng suweldo,
mas hihina ang ating kumpanya at mas marami ang maaring maapektuhan.
Sa pagpapatupad ng lay-off susundin natin ang LAST IN-FIRST OUT policy. Ang mga empleyadong may
pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Ito ay batay na rin sa nakasaad sa ating CBA na ang
mga huling pumasok sa kumpanya ang unang masasama sa lay-off kapag nagkaroon ng ganitong mga kalagayan.

Ang mga empleyado na kasama sa lay-off ay nakalista sa sulat na ito. Ang umpisa ng lay-off ay sa Lunes, Enero 27.
Hindi na muna sila papasok sa kumpanya. Makukuha nila ang suweldo nila sa Enero 30, 1992.

Hindi po natin matitiyak kung gaano katagal ang lay-off ngunit ang aming tingin ay matatagalan bago magkaroon ng
dagdag na trabaho. Dahil dito, sinimulan na namin ang isang Redundancy Program sa mga supervisors. Nabawasan
ang mga puwesto para sa kanila, kaya sila ay mawawalan ng trabaho at bibigyan na ng redundancy pay. (Italics
[16]

ours.)

xxx xxx xxx.

We agree with the ruling of the Secretary of Labor, thus:
xxx xxx xxx.

. . .MII insists that the layoff in question is temporary not permanent. It then cites International Hardware, Inc. vs.
NLRC, 176 SCRA 256, in which the Supreme Court held that the 30-day notice required under Article 283 of the Labor
Code need not be complied with if the employer has no intention to permanently severe (sic) the employment
relationship.

We are not convinced by this argument. International Hardware involves a case where there had been a reduction of
workload. Precisely to avoid laying off the employees, the employer therein opted to give them work on a rotating
basis. Though on a limited scale, work was available. This was the Supreme Courts basis for holding that there was no
intention to permanently severe (sic) the employment relationship.

Here, there is no circumstance at all from which we can infer an intention from MII not to sever the employment
relationship permanently. If there was such an intention, MII could have made it very clear in the notices of layoff. But
as it were, the notices are couched in a language so uncertain that the only conclusion possible is the permanent
termination, not the continuation, of the employment relationship.
MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While insisting that there is
really no best time to announce a bad news, (sic) it also claims that it broke the bad news only on 27 January 1992
because had it complied with the 30-day notice, it could have broken the bad news on 02 January 1992, the first
working day of the year. If there is really no best time to announce a bad news (sic), it wouldnt have mattered if the
same was announced at the first working day of the year. That way, MII could have at least complied with the
requirement of the law. [17]

The second issue raised by petitioner merits our consideration.

In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA provisions on closed-shop and the
scope of the bargaining unit in this wise:
xxx xxx xxx.
Appropriateness of the bargaining unit.
xxx xxx xxx.
Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as follows:

These aside, we reconsider our denial of the modifications which the Union proposes to introduce on the close shop
provision. While we note that the provision as presently worded has served the relationship of the parties well under
previous CBAs, the shift in constitutional policy toward expanding the right of all workers to self-organization should
now be formally recognized by the parties, subject to the following exclusions only:

1. Managerial employees; and

2. The executive secretaries of the President, Executive Vice-President, Vice-President, Vice President for Sales,
Personnel Manager, and Director for Corporate Planning who may have access to vital labor relations information or
who may otherwise act in a confidential capacity to persons who determine or formulate management policies.

The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be modified consistently with the
foregoing.
 Article I (b) of the 1988-1990 CBA provides:

b)Close Shop. - All Qualified Employees must join the Association immediately upon regularization as a condition for
continued employment. This provision shall not apply to: (i) managerial employees who are excluded from the scope of
the bargaining unit; (ii) the auditors and executive secretaries of senior executive officers, such as, the President,
Executive Vice-President, Vice-President for Finance, Head of Legal, Vice-President for Sales, who are excluded from
membership in the Association; and (iii) those employees who are referred to in Attachment I hereof, subject, however,
to the application of the provision of Article II, par. (b) hereof. Consequently, the above-specified employees are not
required to join the Association as a condition for their continued employment.

On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision
The following positions in the Bargaining Unit are not covered by the Close Shop provision of the CBA (Article I, par.
b):

1. Executive Secretaries of Vice-Presidents, or equivalent positions.

2. Executive Secretary of the Personnel Manager, or equivalent positions.

3. Executive Secretary of the Director for Corporate Planning, or equivalent positions.

4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head Office, Accounting
Department at Head Office, and Budget Staff, who because of the nature of their duties and responsibilities need not
join the Association as a condition for their employment.

5. Newly-hired secretaries of Branch Managers and Regional Managers.

Both MDD and MII read the exclusion of managerial employees and executive secretaries in our 14 April 1992
resolution as exclusion from the bargaining unit. They point out that managerial employees are lumped under one
classification with executive secretaries, so that since the former are excluded from the bargaining unit, so must the latter
be likewise excluded.
 This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing the expanded scope of
the right to self-organization, our intent was to delimit the types of employees excluded from the close shop provision, not
from the bargaining unit, to executive secretaries only. Otherwise, the conversion of the exclusionary provision to one that
refers to the bargaining unit from one that merely refers to the close shop provision would effectively curtail all the
organizational rights of executive secretaries.
The exclusion of managerial employees, in accordance with law, must therefore still carry the qualifying phrase from
the bargaining unit in Article I (b)(i) of the 1988-1990 CBA. In the same manner, the exclusion of executive secretaries
should be read together with the qualifying phrase are excluded from membership in the Association of the same Article
and with the heading of Attachment I. The latter refers to Exclusions from Scope of Close Shop Provision and provides
that [t]he following positions in Bargaining Unit are not covered by the close shop provision of the CBA.
The issue of exclusion has different dimension in the case of MII. In an earlier motion for clarification, MII points out
that it has done away with the positions of Executive Vice-President, Vice-President for Sales, and Director for Corporate
Planning. Thus, the foregoing group of exclusions is no longer appropriate in its present organizational structure.
Nevertheless, there remain MII officer positions for which there may be executive secretaries. These include the General
Manager and members of the Management Committee, specifically i) the Quality Assurance Manager; ii) the Product
Development Manager; iii) the Finance Director; iv) the Management System Manager; v) the Human Resources
Manager; vi) the Marketing Director; vii) the Engineering Manager; viii) the Materials Manager; and ix) the Production
Manager.
xxx xxx xxx
The basis for the questioned exclusions, it should be noted, is no other than the previous CBA between MII and the
Union. If MII had undergone an organizational restructuring since then, this is a fact to which we have never been made
privy. In any event, had this been otherwise the result would have been the same. To repeat, we limited the exclusions to
recognize the expanded scope of the right to self-organization as embodied in the Constitution.[18]
Metrolab, however, maintains that executive secretaries of the General Manager and the executive secretaries of the
Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human
Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager, who are all
members of the companys Management Committee should not only be exempted from the closed-shop provision but
should be excluded from membership in the bargaining unit of the rank and file employees as well on grounds that their
executive secretaries are confidential employees, having access to vital labor information. [19]
We concur with Metrolab.
 Although Article 245 of the Labor Code [20] limits the ineligibility to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of
their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence,
are likewise privy to sensitive and highly confidential records.
The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file employees
and their disqualification to join any labor organization was succinctly discussed in Philips Industrial Development v.
NLRC:[21]
xxx xxx xxx.

On the main issue raised before Us, it is quite obvious that respondent NLRC committed grave abuse of discretion in
reversing the decision of the Executive Labor Arbiter and in decreeing that PIDIs Service Engineers, Sales Force,
division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of
Audit, EDP and Financial Systems are included within the rank and file bargaining unit.

In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are
confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs
between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their
functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who
exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union equally applies to them.

In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus:

x x x The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or
be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated with the presence of managerial employees in Union
membership.

In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to confidential employees:
This rationale holds true also for confidential employees such as accounting personnel, radio and telegraph operators,
who having access to confidential information, may become the source of undue advantage. Said employee(s) may act
as a spy or spies of either party to a collective bargaining agreement. This is specially true in the present case where the
petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. To allow the
confidential employees to join the existing Union of the rank-and-file would be in violation of the terms of the
Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are
expressly excluded.

xxx xxx xxx.

Similarly, in National Association of Trade Union - Republic Planters Bank Supervisors Chapter v. Torres[22] we
declared:
xxx xxx xxx.

. . . As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and Controllers are
confidential employees, having control, custody and/ or access to confidential matters, e.g., the branchs cash position,
statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other
negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, this claim is not
even disputed by petitioner. A confidential employee is one entrusted with confidence on delicate matters, or with the
custody, handling, or care and protection of the employers property. While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary,
implication, confidential employees are similarly disqualified. . . .

xxx xxx xxx.

. . .(I)n the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act
as its representatives, and to see to it that its interest are well protected. The employer is not assured of such protection
if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is
the same reason that impelled this Court to consider the position of confidential employees as included in the
disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If
confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed
by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for
the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to
act in the interest of the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize
that interest which they are duty-bound to protect. . . .

xxx xxx xxx.

And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor,[23] we ruled that:
xxx xxx xxx.

Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically routinary and
clerical. However, they should be differentiated from rank-and-file employees because they are tasked with, among
others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of
and receiving notices, and such other duties as required by the legal personnel of the corporation. Legal secretaries
therefore fall under the category of confidential employees. . . .

xxx xxx xxx.

We thus hold that public respondent acted with grave abuse of discretion in not excluding the four foremen and legal
secretary from the bargaining unit composed of rank-and-file employees.

xxx xxx xxx.

In the case at bench, the Union does not disagree with petitioner that the executive secretaries are confidential
employees. It however, makes the following contentions:

xxx xxx xxx.

There would be no danger of company domination of the Union since the confidential employees would not be
members of and would not participate in the decision making processes of the Union.
Neither would there be a danger of espionage since the confidential employees would not have any conflict of interest,
not being members of the Union. In any case, there is always the danger that any employee would leak management
secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the union nor the
bargaining unit.

Confidential employees are rank and file employees and they, like all the other rank and file employees, should be
granted the benefits of the Collective Bargaining Agreement. There is no valid basis for discriminating against them.
The mandate of the Constitution and the Labor Code, primarily of protection to Labor, compels such conclusion. [24]

xxx xxx xxx.

The Unions assurances fail to convince. The dangers sought to be prevented, particularly the threat of conflict of
interest and espionage, are not eliminated by non-membership of Metrolabs executive secretaries or confidential
employees in the Union.Forming part of the bargaining unit, the executive secretaries stand to benefit from any agreement
executed between the Union and Metrolab. Such a scenario, thus, gives rise to a potential conflict between personal
interests and their duty as confidential employees to act for and in behalf of Metrolab. They do not have to be union
members to affect or influence either side.
Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of
employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate
category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.
WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public respondent
Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive
secretaries of petitioner Metrolabs General Manager and the executive secretaries of the members of its Management
Committee are excluded from the bargaining unit of petitioners rank and file employees.
SO ORDERED.
Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
[1]
Rollo, p.74.
[2]
Id., at 202-204.
[3]
Id., at 8-9.
[4]

[5]
Id., at 303.
[6]
Id., at 236-241.
[7]
Id., at 70-71.
*
Metrolab submits that the issue in the instant petition for certiorari is limited to the determination of whether or not the Secretary of Labor gravely
abused her discretion in ruling that the layoff of its 94 workers exacerbated their labor dispute with the Union. Metrolab underscores that
the basis for the said layoff has never been placed in issue. (Rollo, pp. 327- 328.)
In the same manner, Metrolab prefatorily declared that it does not dispute the Secretary of Labors certification to the NLRC of the legality (or
illegality) of the second layoff of Metrolabs 73 rank and file workers on grounds of redundancy (Rollo, pp. 11-12). In its Consolidated
Reply, Metrolab states, thus:
5.0. Moreover, the redundancy program of October 1992 is not an issue in the present petition. The assailed Omnibus Order, in no uncertain
terms, ordered that this matter be brought before the National Labor Relations Commission (NLRC) for adjudication (Please see Annex A-i
of the Petition). Petitioner herein does not question the said part of the Omnibus Resolution in the present petition. The time for the same
is not yet ripe, as the NLRC still has to pass judgment upon the facts surrounding the redundancy program. As of this writing, the said
redundancy program is presently being litigated before the Arbitration Branch of the NLRC in NLRC-NCR Case No. 00-05-03325-93
entitled Metro Drug Corporation Employees Association - FFW v. Metrolab Industries, Inc., et al. before Labor Arbiter Cornelio
Linsangan. (Rollo, p. 330.)
[8]
Id., at 13.
[9]
Radio Communications of the Philippines, Inc. v. NLRC, 221 SCRA 782 (1993); Corral v. NLRC, 221 SCRA 693(1993); Rubberworld (Phils.),
Inc. v. NLRC, 175 SCRA 450 (1989).
[10]
225 SCRA 301 (1993).
[11]
Rollo, p. 46.
[12]
Id., at 335.
[13]
Association of Marine Officers & Seamen of Reyes & Lim Co. v. Laguesma, 239 SCRA 460 (1994); Maya Farms Employees Organization v.
NLRC, 239 SCRA 508 (1994); Rabago v. NLRC, 200 SCRA 158 (1991); Pan Pacific Industrial Sales, Co., Inc. v. NLRC, 194 SCRA 633
(1991).
[14]
Rollo, p. 57.
[15]
Id., at 202-204; 228-234; Urgent Motion to Resolve Unions Motion dated 27 January 1992, Folder 4, Original Record.
[16]
Rollo, p. 198.
[17]
Id., at 58-59.
[18]
Rollo, pp. 59-63.
[19]
Id., at 31-32.
[20]
Art. 245. Labor Code. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. -Managerial
employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own.
[21]
210 SCRA 339(1992).
[22]
239 SCRA 546(1994).
[23]
241 SCRA 294(1995).
[24]
Rollo, pp. 192-193.

Today is Monday, January 08, 2018

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-33955 January 26, 1989

FORTUNATO DA. BONDOC petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, PHILIPPINE NATIONAL RAILWAYS and LIBERTADO S. CASTRO, respondents.
The Government Corporate Counsel for respondent Phil. National Railways.

GRIÑO-AQUINO, J.:

This is a petition for review of the order dated January 11, 1971 of the Court of Industrial Relations (CIR for short), dismissing the
charge of unfair labor practice against the private respondents in Case No. 4927-ULP, as well as, the Resolution dated March 2,
1971 of that court, denying petitioner's motion for reconsideration.

On January 10, 1968, a complaint for unfair labor practices under Section 4(a), sub-sections 4 and 5 of Republic Act No. 875 was
filed by the Acting Prosecutor of the CIR against the private respondents based on the complaint of petitioner Fortunato Da.
Bondoc charging the private respondents with having discriminated against him in the giving of promotions to its employees
because he was not a member of any labor organization. Bondoc prayed for a cease and desist order against the respondents
and for his promotion to the position of General Road Foreman effective July 1, 1962 with the corresponding salary and benefits.

The private respondents denied the material allegations of the complaint and, on July 1, 1968, filed a motion to dismiss the
complaint for failure to allege a valid cause of action. The CIR deferred the resolution of the motion until after it had heard the
merits of the case.

Petitioner presented evidence in the CIR to show that, in derogation of his seniority, rank, competence, and fitness, and because
he did not belong to any labor union, private respondents discriminated against him by promoting and appointing Simeon
Mendoza on July 1, 1962 to the position of Road Foreman of the engineering Department, instead of him. Again, on January 1,
1965, Simeon Mendoza, instead of petitioner, was promoted to the position of General Road Foreman of the Engineering
Department. Private respondents paid no heed to petitioner's protests against such discrimination. Instead of promoting him, the
private respondents assigned him at the Hearing Committee without per diems. When Simeon Mendoza retired as General Road
Foreman, private respondents appointed someone else-Simeon Malinay-to the vacant position, by-passing the petitioner. Finally,
private respondents subdivided the Central Division of the Engineering Department, thereby reducing petitioner's area of
responsibility. Petitioner alleged he had exhausted all his administrative remedies in vain.

Answering the complaint, the private respondents alleged that petitioner was not next-in-rank to the position of Road Foreman;
that based on individual work merits and the Revised Civil Service Rules, Mendoza and Malinay obtained higher ratings than the
petitioner; that Mendoza was promoted to Assistant General Foreman because be was next-in-rank; that Simeon Malinay was
next-in-rank to Simeon Mendoza; that when the position of General Road Foreman became vacant, Mendoza was recommended
for the position but his retirement precluded his appointment thereto; that the position of General Road Foreman was later
abolished; that the reorganization was for the best interest of the company; that contrary to petitioner's allegation, his transfer to
the Hearing Committee was done at his own request. As for per diems, he was paid for the first month, but he was not paid per
diems for services rendered in excess of one month because it would have been contrary to law, rules and regulations.

As aptly put by the CIR, the issue in this case is whether or not the private respondents were guilty of unfair labor practice under
Section 4 (a) (4); of Republic Act 875, otherwise known as the Industrial Peace Act, which provides:

SEC. 4. Unfair Labor Practices. —

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

xxx xxx xxx

(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment to
encourage or discourage membership in any labor organization; ... (As amended by R.A. No. L-3350,
approved June 17, 1961).

In dismissing the charge of unfair labor practice, the CIR found that the alleged discriminatory acts against the petitioner did not
arise from union membership or activity because he was not in fact a union member.

Petitioner's allegation that be was discriminated against to force him to join a labor organization is unconvincing since no specific
union was mentioned in his complaint. It is unbelievable that the private respondents would harass and oppress him to force him
to join any labor union for We do not see how that can possibly be advantageous to the former.

The petitioner does not show how or why the CIR Order allegedly conflicts with the evidence presented at the trial. We have, time
and again, ruled that findings of fact of the CIR are accorded full respect by the Supreme Court if supported by substantial
evidence (Community Sawmill Company vs. CIR, 89 SCRA 164; Dy Keh Beng vs. International Labor & Marine Union of the
Phil., 90 SCRA 162; Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 97). In this case, We find no reason to depart from that
doctrine.

WHEREFORE, the petition for review is denied for lack of merit.

Narvasa, Cruz; Gancayco and Medialdea, JJ., concur.

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 Today is Monday, January 08, 2018

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-87672 October 13, 1989

WISE AND CO., INC., petitioner,

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

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

GANCAYCO, J.:

The center of controversy in this petition is whether the grant by management of profit sharing benefits to its non-union member employees
is discriminatory against its workers who are union members.
The facts are undisputed. On April 3,1987 the management issued a memorandum circular introducing a profit sharing scheme for its
managers and supervisors the initial distribution of which was to take effect March 31, 1988.

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

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

On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and supervisors but also to all other rank and file
employees not covered by the CBA. This caused the respondent union to file a notice of strike alleging that petitioner was guilty of unfair
labor practice because the union members were discriminated against in the grant of the profit sharing benefits. Consequently,
management refused to proceed with the CBA negotiations unless the last notice of strike was first resolved. The union agreed to postpone
discussions on the profit sharing demand until a new CBA was concluded. After a series of conciliation conferences, the parties agreed to
settle the dispute through voluntary arbitration. After the parties submitted their position papers, a rejoinder and reply, on March 20,1989
the voluntary arbitrator issued an award ordering petitioner to likewise extend the benefits of the 1987 profit sharing scheme to the
members of respondent union.1 Hence, this petition wherein petitioner alleged the following grounds in support thereof —

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

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

NOT SIMILARLY SITUATED.

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

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

II

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

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

The petition is impressed with merit.

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

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

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

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

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

Respondent union also decries that no less than the president of the petitioner agreed to include its members in the coverage of the 1987
profit sharing benefit provided that they would agree to an earlier negotiation for the renewal of the CBA which expired in 1988. Be this as it
may, since there was actually a deadlock in the negotiation and it was not resolved and consummated on the period expected, private
respondent can not now claim that petitioner has a duty to extend the profit sharing benefit to the union members.
The Court holds that it is the prerogative of management to regulate, according to its discretion and judgment, all aspects of employment.
This flows from the established rule that labor law does not authorize the of the employer in the conduct of its business.6 such management
prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employers'
interest and not for the purpose of defeating or circumventing the rights of employees under special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.7

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

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

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

SO ORDERED.

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

Footnotes

1 Pages 32-34, Rollo.

2 Pages 11-12, Rollo.

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

4 Pages 4-5, Rollo.

5 Caltex Phils. vs. Phil. Labor Organization, Caltex Chapter, 92 Phil. 1014,1018 (1953).
 6 NLU vs. Insular-Yebana Tobacco Corporation, 2 SCRA 924,931 (1961); Republic Savings Bank vs. CIR, 21 SCRA
226,235-236 (1967).

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

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

The Lawphil Project - Arellano Law Foundation

Today is Monday, January 08, 2018

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 80737 September 29, 1988

PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND CARLOS CABAL, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ROSALINA M. PULPULAAN AND EMELITA SALONGA, respondents.

George L. Howard for petitioners.

The Office of the Solicitor General for public respondent.

Raul E. Espinosa for private respondents.

GUTIERREZ, JR., J.:

In October, 1984, the petitioner corporation was forced by economic circumstances to require its workers to go on mandatory vacation leave in batches of seven or nine for periods
ranging from 15, 30, to 45 days. The workers were paid while on leave but the pay was charged against their respective earned leaves.

As a result, the private respondents filed complaints for unfair labor practice and discrimination.

On April 9, 1986, the Labor Arbiter rendered a decision the dispositive portion of which reads:

Wherefore, for lack of merit, the complaint for unfair labor practice on grounds of discrimination, forced
leave and reduction of working days is hereby, DISMISSED. Respondent is hereby ordered to restore and
grant to all its employees the company policy regarding groceries previously enjoyed by them. (p. 27,
Rollo)

The private respondents filed a "partial appeal" with the National Labor Relations Commission (NLRC) questioning the Labor
Arbiter's dismissal of their complaint for unfair labor practice and the resultant forced vacation leaves which were actually without
pay.

On June 19,1986, the NLRC affirmed the arbiter's decision with modification as follows:

Be that as it may, since as intimated at the outset, the vacation leave forced upon the complainants was
visited with arbitrariness not amounting to unfair labor practice, a refund of the amount equivalent to the
earned leave of each of the complainants treated as their pay during their vacation is believed in order.

WHEREFORE, modified as above indicated, the decision appealed from is hereby AFFIRMED. (PARTIAL
APPEAL TO THE NATIONAL LABOR RELATIONS COMMISSION, p. 1) (p. 60, Rollo)

The petitioners raise two issues in their petition, namely:

A. PUBLIC RESPONDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN RENDERING A

RESOLUTION ON AN ISSUE INVOLVING A MONEY CLAIM, WHICH WAS NOT A SUBJECT OF AN
APPEAL NOR ASSIGNED AS AN ERROR.
 B. PUBLIC RESPONDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN RENDERING A
RESOLUTION IN FAVOR OF THE UNION AND/OR 23 OTHER EMPLOYEES WHO ARE NOT REAL
PARTIES IN THE CASE, NOR IN THE PARTIAL APPEAL. (pp. 17 & 22, Rollo)

After considering the petition and treating the comments of the private respondents and the Solicitor General as Answers, the
Court resolved to give due course to the petition and decide it on the basic merits.

The principal issue now before the Court is the forced vacation leave without pay whether or not it is unfair labor practice and if
not an unfair labor practice, whether or not it was tainted with arbitrariness.

The Court is convinced from the records now before it, that there was no unfair labor practice. As found by the NLRC, the private
respondents themselves never questioned the existence of an economic crisis but, in fact, admitted its existence. There is basis
for the petitioner's contentions that the reduction of work schedule was temporary, that it was taken only after notice and
consultations with the workers and supervisors, that a consensus was reached on how to deal with deteriorating economic
conditions and reduced sales and that the temporary reduction of working days was a more humane solution instead of a
retrenchment and reduction of personnel. The petitioner further points out that this is in consonance with the collective bargaining
agreement between the employer and its employees. The Court, therefore, agrees with the Solicitor General in his submission
that:

There is also no showing that the imposition of forced leave was exercised for the purpose of defeating or
circumventing the rights of employees under special laws or under valid agreements. As the records
show, petitioners instituted the forced leave due to economic crisis, which private respondents do not
even question. (Position Paper [Private Respondents'], dated July 1985, p. 2)

Likewise the forced leave was enforced neither in a malicious, harsh, oppressive, vindictive nor wanton
manner, or out of malice or spite. Apart from private respondents concurrence that the forced leave was
implemented due to economic crisis, what only "hurts" (ibid.) them "is that said management's plan was
not even discussed in the grievance procedure so that the Union members thereof may well be apprised
of the reason therefor." (Ibid.)

However, to rule that petitioners' failure to bring the question of necessity in the imposition of forced leave
and the distribution of work availability before the grievance machinery, as a prior requisite for the
implementation of the forced leave scheme, constitutes arbitrariness is erroneous. (Rollo, pp. 63-64)

The decision to resort to forced leaves was, under the circumstances, a management prerogative. The workers' claim of non-
resort. to the grievance machinery is negated by their failure to initiate steps for its employment.
As stressed by the Solicitor General:

The statutory law on grievance procedure provides that:

ART. 261. Grievance machinery. Whenever a grievance arises from the interpretation or
implementation of a collective agreement, including disciplinary actions imposed on
members of the bargaining unit, the employer and the bargaining representative shall
meet to adjust the grievance. Where the grievance procedure as provided herein does not
apply, grievances shall be subject to negotiation, conciliation or arbitration as provided
elsewhere in this Code (Labor Code (Emphasis supplied)

As the law stands, both employers and bargaining representative of the employees are required to go
through the grievance machinery in case a grievance arises. And though the law does not provide who,
as between labor and capital, should initiate that said grievance be brought first to the, grievance
machinery, it is only logical, just and equitable that whoever is aggrieved should initiate settlement of the
grievance through the grievance machinery. To impose the compulsory procedure on employers alone
would be oppressive of capital, notwithstanding the fact that in most cases the grievance is of the
employees.

In the case at bar, when petitioners sent notice to complainants, no grievance between petitioners and
private respondents that need be threshed out before the grievance machinery has yet materialized. But
then, private respondents, who received such notice and being aggrieved thereof, instituted a case before
the Labor Arbiter for unfair labor practices and discrimination, prior to any referral to the grievance
machinery, which they are equally mandated to go through and under the circumstances they were better
situated to initiate; likewise, petitioners even prayed before the Labor Arbiter that the complaint be
dismissed and/or referred to the grievance machinery. (Position Paper (Petitioners'), dated 24 July 1985,
p. 7) Thus, petitioner should not be faulted if the grievance machinery was in any way by-passed. (Rollo,
pp. 64-66)

WHEREFORE, the petition is hereby GRANTED. The June 19, 1987 resolution of the National Labor Relations Commission is
set aside and the April 9, 1986 decision of the Labor Arbiter is REINSTATED.

SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.

The Lawphil Project - Arellano Law Foundation

 Today is Monday, January 08, 2018

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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 picketers criminal charges, only three of which were not
lâwphî1.ñèt

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
lâwphî1.ñèt

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

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

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

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

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

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

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

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

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

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

It has been held in a great number of decisions at espionage by an employer of union activities, or surveillance
 thereof, are such instances of interference, restraint or coercion of employees in connection with their right to
organize, form and join unions as to constitute unfair labor practice.

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

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

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

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

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

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

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

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

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

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

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

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

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

Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente, we are inclined to uphold the action
taken by the employer as proper disciplinary measure. A reading of the article which allegedly caused their
dismissal reveals that it really contains an insinuation albeit subtly of the supposed exertion of political pressure by
the Manila Chronicle management upon the City Fiscal's Office, resulting in the non-filing of the case against the
employer. In rejecting the employer's theory that the dismissal of Vicente and Aquino was justified, the lower court
considered the article as "a report of some acts and omissions of an Assistant Fiscal in the exercise of his official
functions" and, therefore, does away with the presumption of malice. This being a proceeding for unfair labor
practice, the matter should not have been viewed or gauged in the light of the doctrine on a publisher's culpability
under the Penal Code. We are not here to determine whether the employees' act could stand criminal prosecution,
but only to find out whether the aforesaid act justifies the adoption by the employer of disciplinary measure against
them. This is not sustaining the ruling that the publication in question is qualified privileged, but even on the
assumption that this is so, the exempting character thereof under the Penal Code does not necessarily erase or
neutralize its effect on the employer's interest which may warrant employment of disciplinary measure. For it must
be remembered that not even the acquittal of an employee, of the criminal charges against him, is a bar to the
employer's right to impose discipline on its employees, should the act upon which the criminal charges was based
constitute nevertheless an activity inimical to the employer's interest.
 In the herein case, it appears to us that for an employee to publish his "suspicion," which actually amounts to a
public accusation, that his employer is exerting political pressure on a public official to thwart some legitimate
activities on the employees, which charge, in the least, would sully the employer's reputation, can be nothing but an
act inimical to the said employer's interest. And the fact that the same was made in the union newspaper does not
alter its deleterious character nor shield or protect a reprehensible act on the ground that it is a union activity,
because such end can be achieved without resort to improper conduct or behavior. The act of the employees now
under consideration may be considered as a misconduct which is a just cause for dismissal.** (Emphasis ours)

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

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

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

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

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

Zaldivar, J., took no part.

Footnotes

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

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

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

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

The Lawphil Project - Arellano Law Foundation

SYLLABI/SYNOPSIS

FIRST DIVISION

[G.R. No. 121315. July 19, 1999]

COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA) represented by its union president
CECILIA TALAVERA, GEORGE ARSOLA, MARIO DIAGO AND SOCORRO
BONCAYAO, petitioners, vs.THE NATIONAL LABOR RELATIONS COMMISSION, COMPLEX
ELECTRONICS CORPORATION, IONICS CIRCUIT, INC., LAWRENCE QUA, REMEDIOS DE
JESUS, MANUEL GONZAGA, ROMY DELA ROSA, TERESITA ANDINO, ARMAN
CABACUNGAN,GERRY GABANA, EUSEBIA MARANAN and BERNADETH
GACAD, respondents.

[G.R. No. 122136 July 19, 1999]

COMPLEX ELECTRONICS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA), represented
by Union President, CECILIA TALAVERA, respondents.

DECISION
KAPUNAN, J.:

These consolidated cases filed by Complex Electronics Employees Association (G.R. No. 121315) and Complex Electronics
Corporation (G.R. No. 122136) assail the Decision of the NLRC dated March 10, 1995 which set aside the Decision of the Labor
Arbiter dated April 30, 1993.
The antecedents of the present petitions are as follows:
Complex Electronics Corporation (Complex) was engaged in the manufacture of electronic products. It was actually a
subcontractor of electronic products where its customers gave their job orders, sent their own materials and consigned their equipment
to it. The customers were foreign-based companies with different product lines and specifications requiring the employment of
workers with specific skills for each product line. Thus, there was the AMS Line for the Adaptive Micro System, Inc., the Heril Line
for Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co., etc.
 The rank and file workers of Complex were organized into a union known as the Complex Electronics Employees Association,
herein referred to as the Union.
On March 4, 1992, Complex received a facsimile message from Lite-On Philippines Electronics Co., requiring it to lower its price
by 10%. The full text reads as follows:

This is to inform your office that Taiwan required you to reduce your assembly cost since it is higher by 50 % and no
longer competitive with that of mainland China. It is further instructed that Complex Price be patterned with that of
other sources, which is 10% lower.

Please consider and give us your revised rates soon.[1]

Consequently, on March 9, 1992, a meeting was held between Complex and the personnel of the Lite-On Production
Line. Complex informed its Lite-On personnel that such request of lowering their selling price by 10% was not feasible as they were
already incurring losses at the present prices of their products. Under such circumstances, Complex regretfully informed the
employees that it was left with no alternative but to close down the operations of the Lite-On Line. The company, however, promised
that:
1) Complex will follow the law by giving the people to be retrenched the necessary 1 month notice.Hence, retrenchment will not take
place until after 1) month from March 09, 1992.
2) The Company will try to prolong the work for as many people as possible for as long as it can by looking for job slots for them in
another line if workload so allows and if their skills are compatible with the line requirement.
3) The company will give the employees to be retrenched a retrenchment pay as provided for by law i.e. half a month for every year of
service in accordance with Article 283 of the Labor Code of Philippines.[2]
The Union, on the other hand, pushed for a retrenchment pay equivalent to one (1) month salary for every year of service, which
Complex refused.
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the Department of Labor and Employment
(DOLE) and the retrenchment of the ninety-seven (97) affected employees.[3]
On March 25, 1993, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which resulted in a "yes" vote.
 In the evening of April 6, 1992, the machinery, equipment and materials being used for production at Complex were pulled-out
from the company premises and transferred to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna. The following day, a
total closure of company operation was effected at Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair labor practice, illegal closure/illegal
lockout, money claims for vacation leave, sick leave, unpaid wages, 13th month pay, damages and attorney's fees. The Union alleged
that the pull-out of the machinery, equipment and materials from the company premises, which resulted to the sudden closure of the
company was in violation of Section 3 and 8, Rule XIII, Book V of the Labor Code of the Philippines [4] and the existing CBA. Ionics
was impleaded as a party defendant because the officers and management personnel of Complex were also holding office at Ionics
with Lawrence Qua as the President of both companies.
Complex, on the other hand, averred that since the time the Union filed its notice of strike, there was a significant decline in the
quantity and quality of the products in all of the production lines. The delivery schedules were not met prompting the customers to
lodge complaints against them. Fearful that the machinery, equipment and materials would be rendered inoperative and unproductive
due to the impending strike of the workers, the customers ordered their pull-out and transfer to Ionics. Thus, Complex was compelled
to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and had been in existence since July 5, 1984 or eight (8)
years before the labor dispute arose at Complex. Like Complex, it was also engaged in the semi-conductor business where the
machinery, equipment and materials were consigned to them by their customers. While admitting that Lawrence Qua, the President of
Complex was also the President of Ionics, the latter denied having Qua as their owner since he had no recorded subscription
of P1,200,000.00 in Ionics as claimed by the Union. Ionics further argued that the hiring of some displaced workers of Complex was
an exercise of management prerogatives. Likewise, the transfer of the machinery, equipment and materials from Complex was the
decision of the owners who were common customers of Complex and Ionics.
On April 30, 1993, the Labor Arbiter rendered a decision the dispositive portion of which reads:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent
Complex Electronics Corporation and/or Ionics Circuit Incorporated and/or Lawrence Qua, to reinstate the 531 above-
listed employees to their former position with all the rights, privileges and benefits appertaining thereto, and to pay said
complainants-employees the aggregate backwages amounting P26,949,891.80 as of April 6, 1993 and to such further
backwages until their actual reinstatement. In the event reinstatement is no longer feasible for reasons not attributable
to the complainants, said respondents are also liable to pay complainants-employees their separation pay to be
computed at the rate of one (1) month pay for every year of service, a fraction of at least six (6) months to be
considered as one whole year.

Further, the aforenamed three (3) respondents are hereby ordered to pay jointly and solidarily the complainants-
employees an aggregate moral damages in the amount of P1,062,000.00 and exemplary damages in the aggregate sum
of P531,000.00.

And finally, said respondents are ordered to pay attorney's fees equivalent to ten percent (10%) of whatever has been
adjudicated herein in favor of the complainants.

The charge of slowdown strike filed by respondent Complex against the union is hereby dismissed for lack of merit.

SO ORDERED.[5]

Separate appeals were filed by Complex, Ionics and Lawrence Qua before the respondent NLRC which rendered the questioned
decision on March 10, 1995, the decretal portion of which states:

WHEREFORE, premises considered, the assailed decision is hereby ordered vacated and set aside, and a new one
entered ordering respondent Complex Electronics Corporation to pay 531 complainants equivalent to one month pay in
lieu of notice and separation pay equivalent to one month pay for every year of service and a fraction of six months
considered as one whole year.

Respondents Ionics Circuit Incorporated and Lawrence Qua are hereby ordered excluded as parties solidarily liable
with Complex Electronics Corporation.

The award of moral damages is likewise deleted for lack of merit.

Respondent Complex, however, is hereby ordered to pay attorney's fees equivalent to ten (10%) percent of the total
amount of award granted the complainants.

SO ORDERED.[6]
 Complex, Ionics and the Union filed their motions for reconsideration of the above decision which were denied by the respondent
NLRC in an Order dated July 11, 1995.[7]
Hence these petitions.
In G.R. No. 121315, petitioner Complex Electronics Employees Association asseverates that the respondent NLRC erred when it:
I

SET ASIDE THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE
VERA.
II

EXCLUDED PRIVATE RESPONDENTS IONICS CIRCUITS, INCORPORATED AND LAWRENCE QUA AS

PARTIES SOLIDARILY LIABLE WITH COMPLEX ELECTRONICS CORPORATION.
III

FOUND THAT COMPLEX ELECTRONICS CORPORATION WAS NOT GUILTY OF ILLEGAL CLOSURE AND
ILLEGAL DISMISSAL OF THE PETITIONERS.
IV

REMOVED THE AWARD FOR BACKWAGES, REINSTATEMENT AND DAMAGES IN THE DECISION
DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.[8]

On the other hand, in G.R. No. 122136, petitioner Complex Electronics Corporation raised the following issues, to wit:
I

PUBLIC RESPONDENT NLRC ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR

IN EXCESS OF JURISDICTION IN PROMULGATING ITS DECISION AND ORDER DATED 10 MARCH 1995,
AND 11 JULY 1995, RESPECTIVELY, THE SAME BEING IN CONTRAVENTION OF THE EXPRESS
MANDATE OF THE LAW GOVERNING THE PAYMENT OF ONE MONTH PAY IN LIEU OF NOTICE,
SEPARATION PAY AND ATTORNEY'S FEES.
II

THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY
COURSE OF LAW.[9]

On December 23, 1996, the Union filed a motion for consolidation of G.R. No. 122136 with G.R. No. 121315.[10] The motion was
granted by this Court in a Resolution dated June 23, 1997.[11]
On November 10, 1997, the Union presented additional documentary evidence which consisted of a newspaper clipping in the
Manila Bulletin, dated August 18, 1997 bearing the picture of Lawrence Qua with the following inscription:

RECERTIFICATION. The Cabuyao (Laguna) operation of Ionic Circuits, Inc. consisting of plants 2, 3, 4 and 5 was
recertified to ISO 9002 as electronics contract manufacturer by the TUV, a rating firm with headquarters in Munich,
Germany. Lawrence Qua, Ionics president and chief executive officer, holds the plaque of recertification presented by
Gunther Theisz (3rd from left), regional manager of TUV Products Services Asia during ceremonies held at Sta. Elena
Golf Club. This is the first of its kind in the country that four plants were certified at the same time.[12]

The Union claimed that the said clipping showed that both corporations, Ionics and Complex are one and the same.
In answer to this allegation, Ionics explained that the photo which appeared at the Manila Bulletin issue of August 18, 1997
pertained only to respondent Ionics recertification of ISO 9002. There was no mention about Complex Electronics Corporation. Ionics
claimed that a mere photo is insufficient to conclude that Ionics and Complex are one and the same.[13]
We shall first delve on the issues raised by the petitioner Union.
The Union anchors its position on the fact that Lawrence Qua is both the president of Complex and Ionics and that both
companies have the same set of Board of Directors. It claims that business has not ceased at Complex but was merely transferred to
Ionics, a runaway shop. To prove that Ionics was just a runaway shop, petitioner asserts that out of the 80,000 shares comprising the
increased capital stock of Ionics, it was Complex that owns majority of said shares with P1,200,000.00 as its capital subscription and
P448,000.00 as its paid up investment, compared to P800,000.00 subscription and P324,560.00 paid-up owing to the other
stockholders, combined. Thus, according to the Union, there is a clear ground to pierce the veil of corporate fiction.
 The Union further posits that there was an illegal lockout/illegal dismissal considering that as of March 11, 1992, the company
had a gross sales of P61,967,559 from a capitalization of P1,500,000.00. It even ranked number thirty among the top fifty corporations
in Muntinlupa.Complex, therefore, cannot claim that it was losing in its business which necessitated its closure.
With regards to Lawrence Qua, petitioner maintains that he should be made personally liable to the Union since he was the
principal player in the closure of the company, not to mention the clandestine and surreptitious manner in which such closure was
carried out, without regard to their right to due process.
The Union's contentions are untenable.
A runaway shop is defined as an industrial plant moved by its owners from one location to another to escape union labor
regulations or state laws, but the term is also used to describe a plant removed to a new location in order to discriminate against
employees at the old plant because of their union activities.[14] It is one wherein the employer moves its business to another location or
it temporarily closes its business for anti-union purposes.[15] A runaway shop in this sense, is a relocation motivated by anti-
union animus rather than for business reasons. In this case, however, Ionics was not set up merely for the purpose of transferring the
business of Complex. At the time the labor dispute arose at Complex, Ionics was already existing as an independent company. As
earlier mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be said that the temporary closure in Complex and
its subsequent transfer of business to Ionics was for anti-union purposes. The Union failed to show that the primary reason for the
closure of the establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not a sufficient ground
for disregarding separate corporate personalities. Thus, in Indophil Textile Mill Workers Union vs. Calica,[16] we ruled that:

[I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the
corporation is a devise to evade the application of the CBA between petitioner Union and private respondent
company. While we do not discount the possibility of the similarities of the businesses of private respondent and
Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that
the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are
the same persons manning and providing for auxiliary services to the units of Acrylic, and that the physical plants,
offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to
justify the piercing of the corporate veil of Acrylic.
 Likewise, in Del Rosario vs. National Labor Relations Commission,[17] the Court stated that substantial identity of the
incorporators of two corporations does not necessarily imply that there was fraud committed to justify piercing the veil of corporate
fiction.
In the recent case of Santos vs. National Labor Relations Commission,[18] we also ruled that:

The basic rule is still that which can be deduced from the Courts pronouncement in Sunio vs. National Labor Relations
Commission, thus:

xxx.. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself sufficient ground for disregarding the separate corporate personality.

Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason to pierce the veil of
corporate fiction of the corporation. Well-settled is the rule that a corporation has a personality separate and distinct from that of its
officers and stockholders. This fiction of corporate entity can only be disregarded in certain cases such as when it is used to defeat
public convenience, justify wrong, protect fraud, or defend crime.[19] To disregard said separate juridical personality of a corporation,
the wrongdoing must be clearly and convincingly established.[20]
As to the additional documentary evidence which consisted of a newspaper clipping filed by petitioner Union, we agree with
respondent Ionics that the photo/newspaper clipping itself does not prove that Ionics and Complex are one and the same entity. The
photo/newspaper clipping merely showed that some plants of Ionics were recertified to ISO 9002 and does not show that there is a
relation between Complex and Ionics except for the fact that Lawrence Qua was also the president of Ionics. However, as we have
stated above, the mere fact that both of the corporations have the same president is not in itself sufficient to pierce the veil of corporate
fiction of the two corporations.
We, likewise, disagree with the Union that there was in this case an illegal lockout/illegal dismissal. Lockout is the temporary
refusal of employer to furnish work as a result of an industrial or labor dispute.[21] It may be manifested by the employer's act of
excluding employees who are union members.[22] In the present case, there was a complete cessation of the business operations at
Complex not because of the labor dispute. It should be recalled that, before the labor dispute, Complex had already informed the
employees that they would be closing the Lite-On Line. The employees, however, demanded for a separation pay equivalent to one (1)
month salary for every year of service which Complex refused to give. When Complex filed a notice of closure of its Lite-On Line,
the employees filed a notice of strike which greatly alarmed the customers of Complex and this led to the pull-out of their equipment,
machinery and materials from Complex. Thus, without the much needed equipment, Complex was unable to continue its business. It
was left with no other choice except to shut down the entire business. The closure, therefore, was not motivated by the union activities
of the employees, but rather by necessity since it can no longer engage in production without the much needed materials, equipment
and machinery. We quote with approval the findings of the respondent NLRC on this matter:

At first glance after reading the decision a quo, it would seem that the closure of respondent's operation is not
justified. However, a deeper examination of the records along with the evidence, would show that the closure, although
it was done abruptly as there was no compliance with the 30-day prior notice requirement, said closure was not
intended to circumvent the provisions of the Labor Code on termination of employment. The closure of operation by
Complex on April 7, 1992 was not without valid reasons. Customers of respondent alarmed by the pending labor
dispute and the imminent strike to be foisted by the union, as shown by their strike vote, directed respondent Complex
to pull-out its equipment, machinery and materials to other safe bonded warehouse. Respondent being mere consignees
of the equipment, machinery and materials were without any recourse but to oblige the customers' directive. The pull-
out was effected on April 6, 1992. We can see here that Complex's action, standing alone, will not result in illegal
closure that would cause the illegal dismissal of the complainant workers. Hence, the Labor Arbiter's conclusion that
since there were only two (2) of respondent's customers who have expressed pull-out of business from respondent
Complex while most of the customer's have not and, therefore, it is not justified to close operation cannot be
upheld. The determination to cease operation is a prerogative of management that is usually not interfered with by the
State as no employer can be required to continue operating at a loss simply to maintain the workers in
employment. That would be taking of property without due process of law which the employer has the right to
resist. (Columbia Development Corp. vs. Minister of Labor and Employment, 146 SCRA 42)

As to the claim of petitioner Union that Complex was gaining profit, the financial statements for the years 1990, 1991 and 1992
issued by the auditing and accounting firm Sycip, Gorres and Velayo readily show that Complex was indeed continuously
experiencing deficit and losses.[23] Nonetheless, whether or not Complex was incurring great losses, it is still one of the managements
prerogative to close down its business as long as it is done in good faith. Thus, in Catatista et al., vs. NLRC and Victorias Milling Co.,
Inc.[24] we ruled:

In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business operations or
undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his
employees their termination pay in the amount corresponding to their length of service. It would indeed, be stretching
the intent and spirit of the law if we were to unjustly interfere in managements prerogative to close or cease its business
operations just because said business operations or undertaking is not suffering from any loss.
 Going now to the issue of personal liability of Lawrence Qua, it is settled that in the absence of malice or bad faith, a stockholder
or an officer of a corporation cannot be made personally liable for corporate liabilities. [25] In the present case, while it may be true that
the equipment, materials and machinery were pulled-out of Complex and transferred to Ionics during the night, their action was
sufficiently explained by Lawrence Qua in his Comment to the petition filed by the Union. We quote:

The fact that the pull-out of the machinery, equipment and materials was effected during nighttime is not per se an
indicia of bad faith on the part of respondent Qua since he had no other recourse, and the same was dictated by the
prevailing mood of unrest as the laborers were already vandalizing the equipment, bent on picketing the company
premises and threats to lock out the company officers were being made. Such acts of respondent Qua were, in fact,
made pursuant to the demands of Complex's customers who were already alarmed by the pending labor dispute and
imminent strike to be stage by the laborers, to have their equipment, machinery and materials pull out of Complex. As
such, these acts were merely done pursuant to his official functions and were not, in any way, made with evident bad
faith.[26]

We perceive no intention on the part of Lawrence Qua and the other officers of Complex to defraud the employees and the
Union. They were compelled to act upon the instructions of their customers who were the real owners of the equipment, materials and
machinery. The prevailing labor unrest permeating within the premises of Complex left the officers with no other choice but to pull
them out of Complex at night to prevent their destruction. Thus, we see no reason to declare Lawrence Qua personally liable to the
Union.
Anent the award of damages, we are inclined to agree with the NLRC that there is no basis for such award. We again quote the
respondent NLRC with favor:

By and large, we cannot hold respondents guilty of unfair labor practice as found by the Labor Arbiter since the closure
of operation of Complex was not established by strong evidence that the purpose of said closure was to interfere with
the employees' right to self-organization and collective bargaining.As very clearly established, the closure was
triggered by the customers' pull-out of their equipment, machinery and materials, who were alarmed by the pending
labor dispute and the imminent strike by the union, and as a protection to their interest pulled-out of business from
Complex who had no recourse but to cease operation to prevent further losses. The indiscretion committed by the
Union in filing the notice of strike, which to our mind is not the proper remedy to question the amount of benefits due
the complainants who will be retrenched at the closure of the Lite-On Line, gave a wrong signal to customers of
Complex, which consequently resulted in the loss of employment of not only a few but to all the of the workers. It may
be worth saying that the right to strike should only be a remedy of last resort and must not be used as a show of force
against the employer.[27]

We shall now go to the issues raised by Complex in G.R. No. 122136.

Complex claims that the respondent NLRC erred in ordering them to pay the Union one (1) month pay as indemnity for failure to
give notice to its employees at least thirty (30) days before such closure since it was quite clear that the employees were notified of the
impending closure of the Lite-On Line as early as March 9, 1992. Moreover, the abrupt cessation of operations was brought about by
the sudden pull-out of the customers which rendered it impossible for Complex to observe the required thirty (30) days notice.
Article 283 of the Labor Code provides that:

ART. 283. Closure of establishment and reduction of personnel.-- The employer may also terminate the employment of
any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. x x x. (Underlining ours.)

The purpose of the notice requirement is to enable the proper authorities to determine after hearing whether such closure is being
done in good faith, i.e., for bona fide business reasons, or whether, to the contrary, the closure is being resorted to as a means of
evading compliance with the just obligations of the employer to the employees affected.[28]
While the law acknowledges the management prerogative of closing the business, it does not, however, allow the business
establishment to disregard the requirements of the law. The case of Magnolia Dairy Products v. NLRC[29] is quite emphatic about this:

The law authorizes an employer, like the herein petitioners, to terminate the employment of any employee due to the
installation of labor saving devices. The installation of these devices is a management prerogative, and the courts will
not interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of
management, as in this case. Nonetheless, this did not excuse petitioner from complying with the required written
notice to the employee and to the Department of Labor and Employment (DOLE) at least one month before the
intended date of termination. This procedure enables an employee to contest the reality or good faith character of the
asserted ground for the termination of his services before the DOLE.
The failure of petitioner to serve the written notice to private respondent and to the DOLE, however, does not ipso
facto make private respondent's termination from service illegal so as to entitle her to reinstatement and payment of
backwages. If at all, her termination from service is merely defective because it was not tainted with bad faith or
arbitrariness and was due to a valid cause.

The well settled rule is that the employer shall be sanctioned for non-compliance with the requirements of, or for failure
to observe due process in terminating from service its employee. In Wenphil Corp. v. NLRC, we sanctioned the
employer for this failure by ordering it to indemnify the employee the amount of P1,000.00. Similarly, we imposed the
same amount as indemnification in Rubberworld (Phils.), Inc. v. NLRC, and, Aurelio v. NLRC and Alhambra
Industries, Inc. v. NLRC.Subsequently, the sum of P5,000.00 was awarded to an employee in Worldwide Papermills,
Inc. v. NLRC, and P2,000.00 in Sebuguero, et al., v. NLRC, et al. Recently, the sum of P5,000.00 was again imposed as
indemnify against the employer. We see no valid and cogent reason why petitioner should not be likewise sanctioned
for its failure to serve the mandatory written notice. Under the attendant facts, we find the amount of P5,000.00, to be
just and reasonable.

We, therefore, find no grave abuse of discretion on the part of the NLRC in ordering Complex to pay one (1) month salary by way
of indemnity. It must be borne in mind that what is at stake is the means of livelihood of the workers so they are at least entitled to be
formally informed of the management decisions regarding their employment.[30]
Complex, likewise, maintains that it is not liable for the payment of separation pay since Article 283 of the Labor Code awards
separation pay only in cases of closure not due to serious business reversals. In this case, the closure of Complex was brought about by
the losses being suffered by the corporation.
We disagree.
Article 283 further provides:

x x x. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and in case of cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.

It is settled that in case of closures or cessation of operation of business establishments not due to serious business losses or
financial reverses,[31] the employees are always given separation benefits.
In the instant case, notwithstanding the financial losses suffered by Complex, such was, however, not the main reason for its
closure. Complex admitted in its petition that the main reason for the cessation of the operations was the pull-out of the materials,
equipment and machinery from the premises of the corporation as dictated by its customers. It was actually still capable of continuing
the business but opted to close down to prevent further losses. Under the facts and circumstances of the case, we find no grave abuse
of discretion on the part of the public respondent in awarding the employees one (1) month pay for every year of service as
termination pay.
WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Melo, Pardo, and Ynares-Santiago, JJ., concur.

[1]
Rollo, of G.R. No. 122636, p. 270.
[2]
Id., at 271.
[3]
NLRC Decision dated March 10, 1995, rollo of G.R. No. 121315, p. 78.
[4]
Sec. 3. Notice of strike or lockout.-- In cases of bargaining deadlocks, a notice of strike or lockout shall be filed with the regional branch of the Board at least
thirty (30) days before the intended dated thereof, a copy of said notice having been served on the other party concerned. In case of unfair labor practices, the
period of notice shall be fifteen (15) days. However, in case of unfair labor practice involving the dismissal from employment of union officers duly elected in
accordance with the union constitution and by-laws which may constitute union-busting where the existence of the union is threatened, the fifteen-day cooling-
off period shall not apply and the union may take action immediately after the strike vote is conducted and the results thereof submitted to the Department of
Labor and Employment.
Sec. 8. Declaration of strike and lockout.-- Should the dispute remain unsettled after the lapse of the requisite number of days from the filing of the notice of
strike or lockout and the results of the election required in the preceding section, the labor union may strike or the employer may lockout its workers. The
regional branch or the Board shall continue mediating and conciliating.
[5]
Rollo of G.R. 121315, pp. 72-73.
[6]
Id., at 99-100.
[7]
Id., at 102-106.
[8]
Id., at 31.
[9]
Rollo of G.R. No. 122136, p. 21.
[10]
Rollo of G.R. 121315, pp. 273-274.
[11]
Rollo of G.R. No. 122136, p. 597.
[12]
Rollo of G.R. No. 121315, pp. 383-386.
[13]
Id., at 287-291.
[14]
See Textile Workers Union v. Darlington Mfg. Co., 380 US 263, 12 L Ed. 2d 827, 85, S Ct 994.
[15]
William P. Statsky, WEST'S LEGAL THESAURUS/DICTIONARY, Special Deluxe Edition, p. 671.
[16]
205 SCRA 697 [1992].
[17]
187 SCRA 777 [1990].
[18]
254 SCRA 673 [1996].
[19]
Concept Builders, Inc. v. National Labor Relations Commission, 257 SCRA 149 [1996]; Philippine International Bankv. Court of Appeals, 252 SCRA 259
[1996]; Yu v. National Labor Relations Commission, 245 SCRA 134 [1995].
[20]
Matuguina Integrated Wood Products, Inc. v. Court of Appeals, 263 SCRA 490 [1996].
[21]
Art. 212 (p), LABOR CODE OF THE PHILIPPINES.
[22]
Sta. Mesa Slipways & Engineering Co. v. CIR, 48 O.G. 3353, as cited in II C.A. Azucena, THE LABOR CODE WITH COMMENTS AND CASES, Revised
1993 Ed., p.296.
[23]
Records pp. 427-434.
[24]
247 SCRA 46 [1995].
[25]
AHS/Philippines, Inc. vs. Court of Appeals, 257 SCRA 319 [1996].
[26]
Rollo of G.R. No. 121315, p. 182.
[27]
Id., at. 97-98.
[28]
Coca Cola Bottlers (Phils.), Inc. v. NLRC, 194 SCRA 592 [1991].
[29]
252 SCRA 483 [1996].
[30]
PAL v. NLRC, 225 SCRA 301 [1993].
[31]
North Davao Mining Corp. vs. NLRC, 254 SCRA 721, [1996]; See also: State Investment House, Inc. vs. court of Appeals, 206 SCRA 348, [1992]; Mindanao
Terminal and Brokerage Service, Inc. vs. The Hon. Minister of Labor and Employment, 238 SCRA 77, [1994].

Today is Monday, January 08, 2018

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 58768-70 December 29, 1989

LIBERTY FLOUR MILLS EMPLOYEES, ANTONIO EVARISTO and POLICARPIO BIASCAN, petitioners,
vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE LABOR ALLIANCE COUNCIL (PLAC) and NATIONAL LABOR RELATIONS
COMMISSION, (NLRC), respondents.

Julius A. Magno for petitioners.

De Leon, Diokno & Associates for respondent Liberty Flour Mills, Inc.

CRUZ, J.:
In this petition for certiorari, the resolution of the public respondent dated August 3, 1978, is faulted for: (a) affirming the decision of the
labor arbiter dismissing the employees' claim for emergency allowance for lack of jurisdiction; and (b) modifying the said decision by
disallowing the award of back wages to petitioners Policarpio Biascan and Antonio Evaristo.

The basic facts are as follows:

On February 6, 1974, respondent Philippine Labor Alliance Council (PLAC) and respondent Liberty Flour Mills, Inc. entered into a three-
year collective bargaining agreement effective January 1, 1974, providing for a daily wage increase of P2.00 for 1974, Pl.00 for 1975 and
another Pl.00 for 1976. The agreement contained a compliance clause, which will be explained later in this opinion. Additionally, the parties
agreed to establish a union shop by imposing "membership in good standing for the duration of the CBA as a condition for continued
employment" of workers. 1

On October 18, 1974, PLAC filed a complaint against the respondent company for non-payment of the emergency cost of living allowance
under P.D. No. 525. 2 A similar complaint was filed on March 4, 1975, this time by the petitioners, who apparently were already veering
away from PLAC.3

On March 20, 1975, petitioners Evaristo and Biascan, after organizing a union caged the Federation of National Democratic Labor Unions,
filed with the Bureau of Labor Relations a petition for certification election among the rank-and-file employees of the respondent
company 4 PLAC then expelled the two for disloyalty and demanded their dismissal by the respondent company, which complied on May
20, 1975.5

The objection of Evaristo and Biascan to their termination were certified for compulsory arbitration and assigned to Labor Arbiter Apolinario
N. Lomabao, Jr. Meanwhile, the claims for emergency allowance were referred for voluntary arbitration to Edmundo Cabal, who eventually
dismissed the same on the ground that the allowances were already absorbed by the wage increases. This latter case was ultimately also
certified for compulsory arbitration and consolidated with the termination case being heard by Lomabao. His decision was, on appeal, dealt
with by the NLRC as above stated, 6 and the motion for reconsideration was denied on August 26, 1981.7

At the outset, we note that the petitioners are taking an ambivalent position concerning the CBA concluded in 1974. While claiming that this
was entered into in bad faith and to forestall the payment of the emergency allowances expected to be decreed, they nonetheless invoke
the same agreement to support their contention that their complaint for emergency allowances was invalidly referred to voluntary arbitrator
Cabal rather than Froilan M. Bacungan.

We find there was no such violation as the choice of the voluntary arbitrator was not limited to Bacungan although he was probably the first
preference. Moreover, the petitioners are estopped from raising this objection now because they did not seasonably interpose it and instead
willingly submitted to Cabal's jurisdiction when he undertook to hear their complaint.

In sustaining Labor Arbiter Lomabao, the NLRC agreed that the decision of voluntary Arbiter Cabal was final and unappealable under
Article 262-A of the Labor Code and so could no longer be reviewed by it. True enough. However, it is equally true that the same decision is
not binding on this Court, as we held in Oceanic Bic Division (FFW) v. Romero 8 and reiterated in Mantrade/FMMC Division Employees and
Workers Union v. Bacungan. 9 The rule as announced in these cases is reflected in the following statements:

In spite of statutory provisions making "final" the decision of certain administrative agencies, we have taken
cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of
due process, denial of substantial justice, or erroneous interpretation of the law were brought to our attention.

xxx xxx xxx

A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no reason why her
decisions involving interpretation of law should be beyond this Court's review. Administrative officials are presumed
to act in accordance with law and yet we do not hesitate to pass upon their work where a question of law is involved
or where a showing of abuse of authority or discretion in their official acts is properly raised in petitions for certiorari.

Accordingly, the validity of the voluntary arbiter's finding that the emergency allowance sought by the petitioners are already absorbed in
the stipulated wage increases will now be examined by the Court itself.

The position of the company is that the emergency allowance required by P.D. No. 525 is already covered by the wage increases
prescribed in the said CBA. Furthermore, pursuant to its Article VIII, such allowances also include all other statutory minimum wage
increases that might be decreed during the lifetime of the said agreement.

That agreement provided in Section 2 thereof as follows:

Section 2. The wage increase in the amounts and during the period above set forth shall, in the event of any
statutory increase of the minimum wage, either as allowance or as basic wage, during the life of this Agreement, be
considered compliance and payment of such required statutory increase as far as it will go and under no
circumstances will it be cumulative nor duplication to the differential amount involved consequent to such statutory
wage increase.

The Court holds that such allowances are indeed absorbed by the wage increases required under the agreement. This is because Section
6 of the Interpretative Bulletin on LOI No. 174 specifically provides:

Sec. 6. Allowances under LOI. — -All allowances, bonuses, wage adjustments and other benefits given by
employers to their employees shall be treated by the Department of Labor as in substantial compliance with the
minimum standards set forth in LOI No. 174 if:
 (a) they conform with at least the minimum allowances scales specified in the immediately preceding
Section; and

(b) they are given in response to the appeal of the President in his speech on 4 January 1974, or to
countervail the quantum jump in the cost of living as a result of the energy crisis starting in
November 1973, or pursuant to Presidential Decree No. 390; Provided, That the payment is
retroactive to 18 February 1974 or earlier.

The allowances and other benefits may be granted unilaterally by the employer or through collective bargaining, and
may be paid at the same time as the regular wages of the employees.

Allowances and other benefits which are not given in substantial compliance with the LOI as interpreted herein shall
not be treated by the Department of Labor as emergency allowances in the contemplation of the LOI unless
otherwise shown by sufficient proof. Thus, without such proof, escalation clauses in collective bargaining
agreements concluded before the appeal of the President providing for automatic or periodic wage increases shall
not be considered allowances for purposes of the LOI. (Emphasis supplied.)

The "immediately preceding section" referred to above states:

SEC. 5. Determination of Amount of Allowances. — In determining the amount of allowances that should be given by employers to meet
the recommended minimum standards, the LOI has classified employers into three general categories. As an implementation policy, the
Department of Labor shall consider as sufficient compliance with the scales of allowances recommended by the LOI if the following monthly
allowances are given by employers:

(a) P50.00 or higher where the authorized capital stock of the corporation, or the total assets in the
case of other undertakings, exceeds P 1 million;

(b) P 30.00 or higher where the authorized capital stock of the corporation, or the total assets in the
case of other undertakings, is not less than P100,000.00 but not more than P1million; and

(c) P15.00 or higher where the authorized capital stock or total assets, as the case may be, is less
than P100,000.00.

It is not denied that the company falls under paragraph (a), as it has a capitalization of more than P l million, 10 and so must pay a minimum
allowance of P50.00 a month. This amount is clearly covered by the increases prescribed in the CBA, which required a monthly increase
(on the basis of 30 days) of P60.00 for 1974, to be increased by P30.00 in 1975 (to P90.00) and another P 30.00 in 1976 (to P120.00). The
first increase in 1974 was already above the minimum allowance of P50.00, which was exceeded even more with the increases of Pl.00 for
each of the next two years.

Even if the basis used were 26 days a month (excluding Sundays), the conclusion would remain unchanged as the raise in wage would be
P52.00 for 1974, which amount was increased to P78.00 in 1975 and to P104.00 in 1976.

But the petitioners contend that the wage increases were the result of negotiation undertaken long before the promulgation of P.D. No. 525
and so should not be considered part of the emergency allowance decreed. In support of this contention, they cite Section 15 of the Rules
implementing P.D. No. 525, providing as follows:

Nothing herein shall prevent the employer and his employees, from entering into any agreement with terms more
favorable to the employees than those provided herein, or be construed to sanction the diminution of any benefits
granted to the employees under existing laws, agreements, and voluntary practice.

Obviously, this section should not be read in isolation but must be related to the other sections above-quoted, to give effect to the intent and
spirit of the decree. The meaning of the section simply is that any benefit over and above the prescribed allowances may still be agreed
upon by the employees and the employer or, if already granted, may no longer be withdrawn or diminished.

The petitioners also maintain that the above-quoted Section 2 of CBA is invalid because it constitutes a waiver by the laborers of future
benefits that may be granted them by law. They contend this cannot be done because it is contrary to public policy.

While the principle is correct, the application is not, for there are no benefits being waived under the provision. The benefits are already
included in the wage increases. It is the law itself that considers these increases, under the conditions prescribed in LOI No. 174, as
equivalent to, or in lieu of, the emergency allowance granted by P.D. No. 525.

In fact, the company agreed to grant the emergency allowance even before the obligation was imposed by the government. What the
petitioners claim they are being made to waive is the additional P50.00 allowance but the truth is that they are not entitled to this because
they are already enjoying the stipulated increases. There is no waiver of these increases.

Moreover, Section 2 provides that the wage increase shall be considered payment of any statutory increase of the minimum wage "as far
as it will go," which means that any amount not covered by such wage increase will have to be made good by the company. In short, the
difference between the stipulated wage increase and the statutory minimum wage will have to be paid by the company notwithstanding and,
indeed, pursuant to the said article. There is no waiver as to this.

Curiously, Article 2 was produced verbatim in the collective bargaining agreement concluded by the petitioners with the company in 1977
after PLAC had been replaced by the new labor union formed by petitioners Evaristo and Biascan. 11 It is difficult to understand the
petitioners' position when they blow hot and cold like this.
Coming now to the second issue, we find that it must also be resolved against the petitioners.

Evaristo and Biascan claim they were illegally dismissed for organizing another labor union opposed to PLAC, which they describe as a
company union. Arguing that they were only exercising the right to self organization as guaranteed by the Constitution, they insist they are
entitled to the back wages which the NLRC disallowed while affirming their reinstatement.

In its challenged decision, the public respondent held that in demanding the dismissal of Evaristo and Biascan, PLAC had acted
prematurely because the 1974 CBA providing for union shop and pursuant to which the two petitioners were dismissed had not yet been
certified. 12 The implication is that it was not yet in effect and so could not be the basis of the action taken against the two petitioners. This
conclusion is erroneous. It disregards the ruling of this Court in Tanduay Distillery Labor Union v. NLRC, 13 were we held:

The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU's request for
certification of the CBA in question is of no moment to the resolution of the issues presented in this case. The BLR
itself found in its order of July 8, 1982, that the (un)certified CBA was duly filed and submitted on October 29, 1980,
to last until June 30, 1982 is certifiable for having complied with all the requirements for certification. (Emphasis
supplied.)

The CBA concluded in 1974 was certifiable and was in fact certified on April 11, 1975, It bears stressing that Evaristo and Biascan were
dismissed only on May 20, 1975, more than a month after the said certification.

The correct view is that expressed by Commissioner Cecilio P. Seno in his concurring and dissenting opinion, 14 viz.:

I cannot however subscribe to the majority view that the 'dismissal of complainants Biascan and Evaristo, ... was, to
say the least, a premature action on the part of the respondents because at the time they were expelled by PLAC
the contract containing the union security clause upon which the action was based was yet to be certified and the
representation status of the contracting union was still in question.

Evidence on record show that after the cancellation of the registration certificate of the Federation of Democratic
Labor Unions, no other union contested the exclusive representation of the Philippine Labor Alliance Council
(PLAC), consequently, there was no more legal impediment that stood on the way as to the validity and
enforceability of the provisions of the collective bargaining agreement entered into by and between respondent
corporation and respondent union. The certification of the collective bargaining agreement by the Bureau of Labor
Relations is not required to put a stamp of validity to such contract. Once it is duly entered into and signed by the
parties, a collective bargaining agreement becomes effective as between the parties regardless of whether or not
the same has been certified by the BLR.

To be fair, it must be mentioned that in the certification election held at the Liberty Flour Mills, Inc. on December 27, 1976, the Ilaw at
Buklod ng Manggagawa, with which the union organized by Biascan and Evaristo was affiliated, won overwhelmingly with 441 votes as
against the 5 votes cast for PLAC. 15 However, this does not excuse the fact that the two disaffiliated from PLAC as early as March 1975
and thus rendered themselves subject to dismissal under the union shop clause in the CBA.

The petitioners say that the reinstatement issue of Evaristo and Biascan has become academic because the former has been readmitted
and the latter has chosen to await the resolution of this case. However, they still insist on the payment of their back wages on the ground
that their dismissal was illegal. This claim must be denied for the reasons already given. The union shop clause was validly enforced
against them and justified the termination of their services.

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-a-vis the employer.

The Court would have preferred to resolve this case in favor of the petitioners, but the law and the facts are against them. For all the
concern of the State, for the well-being of the worker, we must at all times conform to the requirements of the law as long as such law has
not been shown to be violative of the Constitution. No such violation has been shown here.

WHEREFORE, the petition is DISMISSED, without any pronouncement as to costs. It is so ordered.

Narvasa, Gancayco, Griño-Aquino Medialdea, JJ., concur.

Footnotes

1 Rollo, p. 166.

2 Ibid.

3 Id., p. 167.

4 Id., p. 25.
 5 Id., p. 54.

6 Id., p. 108.

7 Id., p. 116.

8 130 SCRA 392.

9 144 SCRA 510.

10 Rollo, pp. 39, 44 and 50.

11 Ibid., p. 94.

12 Id., pp. 110-111.

13 149 SCRA 470.

14 Rollo, p. 106.

15 Ibid., p. 84.

The Lawphil Project - Arellano Law Foundation

118 Phil. 995

LABRADOR, J.:
The above-entitled cases originated from a complaint for unfair labor practice against the Victorias
Milling Company, Inc., filed by the acting prosecutor of the Court of Industrial Relations on March 2,
1960. At the hearing of the charges the parties entered into a stipulation of facts, the most important
provisions of which are as follows: On April 6, 1957 the Victorias Milling Company, Inc. and the Free
Visayan Workers entered into a collective bargaining agreement which was to expire on December
31, 1959. The agreement contains an automatic renewal
clause after December 31, 1959. The duration of the agreement and the automatic renewal clause are
contained in the following paragraphs of the agreement:
"DURATION OF AGREEMENT"
"This agreement shall remain in full force and effect until midnight of December 31, 1959, continuing
from year to year from the date of the signing hereof, unless either party gives written notice by
registered mail no more than seventy-five (75) days nor less than thirty (30) days prior to
December 31, 1959, or each subsequent renewal anniversary date thereafter, to the effect that said
party shall modify or terminate the entire agreement, in which event this agreement shall be
considered terminated or open for negotiation.
"If the notice sent in accordance which the above paragraph affects a portion or portions
of the agreement, the portion or portions not affected shall remain in force during the renewal period.
"Twenty (20) days after receipt of the notice of modification or termination, the parties shall meet for
the purpose of bargaining with respect to the provisions of this agreement or parts thereof which have
been terminated by either party."
Sometime in October, 1957, a petition for certification of elections in the
Victorias Milling Company, Inc. was filed by Victorina A. Combate and 318 others. In this
case before the Industrial Court in May, 1959, the Philippine Association of Free Labor Unions (PAFLU)
intervened. And on August 12, 1960, the Court of Industrial Relations in the case for certification of
elections ordered the holding of a certification of election. It does not appear from the record that
the election has already been made. Neither does the result thereof appear.
On October 26, 1959 Vicente Convito, President of the Victorias-Manapla Workers Organization
(PAPLU) wrote a communication to the respondent Victorias Milling Company, Inc., requesting that
the company desist from entering into a new agreement with any union until the question of
representation has been determined by the court; that the majority of the workers of the Victorias
Milling Company, Inc. have joined the said organization (PAFLU). Again on October 29, 1959, Vicente
Convito representing the same Philippine Association of Free Labor Unions wrote a letter to
the respondent company alleging that in view of the affiliation of the workers and laborers with the Free
Visayas Workers and in view of the fact that the latter's agreement with the respondent company is
bound to expire, certain proposals be taken up for the purpose of collective bargaining. In answer to
the above two communications sent by the President of the PAFLU the respondent company wrote the
representative of the PAFLU as follows: That m view of the fact that the petition for the
certification of elections is still pending and the issue of the majority representation has not been
resolved yet, the respondent company could not take action on the request for collective bargaining
presented by the PAFLU.
The complaint for unfair labor practice arose from the dismissal of 10 employees, namely,
Felino Dalipe, Donato Anazarias, Prudencio Parcon, Celestino Bernila, Remegio Seballos,
Belarmino Bartico, Agustin Dulano, Ignacio Lozano, Loreto Undar, and William Cevero. These
employees were on or before December 31, 1959 members of the Free Farmers Union or the
Federation of Free Workers.
On January 11, 1960, a supplemental agreement having been entered into by the Victorias Milling
Company, Inc. and the Free Visayan Workers providing for wage increases, the above-named ten
dismissed employees had received increases in their pay. But on February 10, 1960, they resigned or
separated from the Free Farmers or Workers Union and joined the Association of Free Labor Unions
(PAFLU). In view of this change in their affiliation from the Free Farmers Union to the Philippine
Association of Free Labor Unions (PAFLU), which change became known to the respondent company,
an investigation of their membership and change in membership was made.
The Free Visayan Workers Union conducted an investigation of the 10 dismissed employees prior to
their expulsion from the respondent union and its recommendation was for their dismissal. In this
investigation it was found out that they received the wage increases on January 14, 1960,
but changed their affiliation on February 10, 1960, from the Free Visayan Workers Union to the
Philippine Association of Free Labor Unions (PAPFLU). Consequently, with this finding of the change
in their membership and in view of the following portion of the existing agreement between the Free
Farmers Union and the respondent Company:
"Section 5(a). All employees who are covered by this agreement as provided for in Section 4 hereof, who,
at the date of the signing of the agreement, are member of the union, shall remain members in
good standing as a condition of continued employment. Those covered employees who, at the date of
the signing of this agreement, are not members of the Union, shall be required to join and
remain members of the Union in good standing as a condition of continued employment. * * *
"Any laborer or employee who shall join the union in pursuance of the above requirement and who
thereafter shall resign from the union or is expelled therefrom for any act contrary to the by-laws, rules
and regulation of the Union, shall upon the advise of the Union to the management of the company be
dismissed from his employment. It is to be understood, however, that the company reserves its
right to look into the merits of the expulsion of the laborer or employee concerned, where his dismissal
from the Company is sought by the Union. * * *"
which agreement is a closed-shop agreement, the respondent company, upon advice of the Free
Farmers Union, dismissed the above-mentioned 10 employees. Their dismissal is the subject of
the complaint for unfair labor practice filed by the prosecutor of the Court of Industrial Relations in
these two cases now before the Court. The facts found by the hearing officer regarding the
previous affiliation of the above-mentioned ten dismissed employees are as follows:
"With respect to the individual complainants, except Santiago Palomo and Pedro Moran, the charges
in regard to said persons having been withdrawn (t.s.n. pp. 68-69), all were former members of the
respondent union. On February 11, 1960, they severed their affiliation
with respondent union (Exhibits "A" to "M-9"). Immediately thereafter the investigating committee
of the Victorias Milling Company Unit of the respondent union started an investigation and its finding
forwarded to the Central Board of said respondent union. (Exhibit "F"). The latter accepted the
resignation of the complainants and recommended their dismissal. (Exhibit "G"). The respondent
company in similarly worded letters dismissed the said complainants based on
the union security provisions of the Collective Bargaining agreement in question (Exhibits "B" to "B"-
9"), after proper investigation (Stipulation No. 9).
"It must be noted that the circumstances mentioned in the preceding paragraph occurred after the
execution of the supplementary agreement and after the period
for the modification and/or termination of the agreement has expired.
"It is also a fact that the herein complainants before their dismissal were members of
the respondent union."
The hearing officer in arriving at its recommendation to the court reasoned as follows:
"The reasons for those express prohibitions are apparent. Should the closed shop provisions for a
collective bargaining agreement be given absolute effect, it will maintain any labor organization in
perpetuity despite the manifest wishes of the employees concerned which is contrary to the letter
and spirit of Republic Act No. 875. Just as our very own system of life guarantees a periodical gauge to
determine the people's free wishes in those they have elected to govern them through a system of
political election, so must the bargaining representative cf the employees be equally determined at an
appropriate time and the Court of Industrial Relations by law is the agency charged with such
function, and the exercise of such choice should likewise be free from discrimination.
"While this Court is fully aware of the possible levelings of
the accusation that we must not interfere with the closed shop provisions of any validity entered
bargaining as the same might constitute internal union matters, yet such matters, do constitute
relations going deeply into the roots of the right to self-organization which this Court is duty bound by
law to protect and uphold."
We do not agree with the court below in its ruling that the recognition and enforcement cf the closed-
shop agreement between the Free Farmers Union and the Victorias
Milling Company, Inc. would tend to perpetuate the labor organization which secured it. This claim
cannot be true because the closed-shop agreement is to be enforced after December 31, 1959,
automatically until such time as a new bargaining agreement can be entered into.
The ruling of the court below suspending the operation of the agreement automatically renewed, would
produce as a result a period of interregnum in which no agreement would govern at all. There would be
a void if we do not authorize enforcement of the automatic renewal clause adopted in the
agreement. Such a situation where no agreement is in force to govern the relations between
laborers and capitalists is unwise, as it would give either party an opportunity to commit a breach of
the law.
Another reason for enforcing the closed-shop agreement is the principle of sanctity or inviolability of
contracts guaranteed by the Constitution. As a matter of principle the provision of the Industrial Peace
Act granting freedom to employees to organize themselves and select their
representative for entering into bargaining agreements, should be subordinated to the constitutional
provision protecting the sanctity of contracts. We can not conceive how freedom to contract, which
should be allowed to be exercised without limitation may be subordinated to the freedom of laborers to
choose the organization they desire to represent them. And even if the legislature had intended to
do so and made such freedom of the laborer paramount to the sanctity of obligation of contracts, such
attempt to override the constitutional provision would necessarily ipso facto be null and void.
A case brought on a writ of certiorari to the Supreme Court of the United States presented the same
problem that we now have before us, namely, the effectivity of a closed-shop agreement as against the
freedom of the laborers or employees to choose the labor organization they want to
affiliate with. There it was said that the Act granting the employer and employees the privilege to
enter into a closed-shop agreement, also recognized the right of the workers to choose their union,
but that said right to choose a labor union is limited by the proviso authorizing parties to enter into a
closed-shop agreement. Hereinbelow is a summary of the facts involved in said case and the reasons
adduced by the court in arriving at its conclusion:
Petitioner was engaged in producing glycerin for war purposes. Its employees were at first
represented by a union affiliated with the American Federation of Labor. In 193S the International
Longshoremen's and Warehousemen's Union, affiliated with the Congress of Industrial Organizations,
became the representative of petitioner's employees. On July 9, 1941, the C. I. O. entered into a
collective bargaining contract with petitioner which contained a closed-shop provision to the effect
that new employees shall be hired through the offices of the Union, provided the latter shall be able to
furnish competent workers for the work required; otherwise, the employer may hire
from outside sources, provided that employees so hired shall make application for membership in
the Union within 15 days of their employment; and that the employees
covered by the agreement shall be members in good standing of the Union. This contract was entered
in good faith by the parties and was of indefinite duration.
On July 24, 1945, the C.I.O. and petitioner entered into a supplemental agreement that their
contract of July 9, 1941, "shall remain in full force and effect" pending approval of certain agreed-
upon items, other than the closed-shop provision, by the War Labor Board. Shortly after
the making of the supplemental agreement, open agitation for a change of bargaining representative
began at a period during which the National Labor Relation believed was appropriate to seek
a redetermination of representatives. On July 31 an unauthorized strike occurred which lasted two
and one half days, although the C.I.O. had pledged its membership not to strike during wartime. A
group of employees formed an independent organization which later sought to affiliate with the
American Federation of Labor. Because they were unmindful of the warnings issued by the C. I. O.
that disciplinary action against members would be taken for rival union activity, some 37 employees
were suspended and expelled by the C. I. O. and discharged by petitioner upon demand by the C.I.O.
on the ground that they were no longer "members in good standing" of the C.I.O. as required by the
closed-shop contract.
Petitioner was charged with violation of Sec. 8(1) and Sec. 8(3) of the National Labor Relations
Act and found by the National Labor Relations Board guilty thereof and ordered to reinstate the
discharged employees. The Court of Appeals having entered a decree enforcing the Board's order, a
petition for a writ of certiorari against the judgment of said court was brought before the Supreme
Court of the United States.
Sec. 8(3) referred to above considers as 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, but does not
preclude an employer from making an agreement with labor organization to require as a
condition of employment membership therein, if such labor organization is the representative of the
employees.
Recognizing that the discharges had the effect of interfering with the employees' right given by
Sec. 7 of the National Labor Relations Act to self-organization and to collective bargaining
through representatives of their own choosing, and that the discharges had the effect of discriminating,
contrary to the prohibition of Sec. 8(3) of said Act, the Supreme Court nevertheless found that a
closed-shop agreement was valid under California law, and the California Supreme Court, in the case
of James vs. Marinship (155 P2d 32), explicity recognized that a union may expel persons who "have
interests inimical to the union" because of the right of the union to reject Sr expel persons who refuse
to abide by any reasonable regulation or lawful policy adopted by the union. Citing the case of Davis
vs. International Alliance, 141 P2d 486, it stated that under California law, "an organization has the
natural right of self-preservation, and may with propriety expel members who show their disloyalty by
joining a rival organization." The contract was held to be valid under the Act and under state law.
Upholding the validity of closed-shop agreements the Supreme Court further held that
such agreements protect the integrity of the union and provides stability to labor relations, to
achieve which was the primary objective of Congress in enacting the National Labor Relations
Act. Congress knew that a closed-shop agreement would interfere with freedom of employees to
organize in another union and would, if used, lead inevitably to discrimination in tenure
of employment. Nevertheless, Congress inserted the proviso of See. 8(3) allowing closed shop
contracts with full realization that it would be a limitation on Sec. 7 granting employees the the right
to self-organization and collective bargaining. (Colgate-Palmolive-Peet Co. vs. Nat. Labor Relations
Bd., et al., 388 U.S. 355, 365, 94 L ed. 161).
The above U.S. Supreme Court decision cleared an employer which discharged employees expelled from
the union because of activities for a rival union, from charges of unfair labor practice, where its action
was based on a closed-shop contract with a bona fide labor union entered into and performed in good
faith and valid in the state where made.
Returning now to the case at bar, as we have found that the dismissal of the employees by the
respondent Victorias Milling Company, Inc. was in pursuance of a clause of an agreement between said
company and the Free Farmers Union, which agreement became automatically renewed upon its
expiration on December 31, 1959 and before a new bargaining agreement could be arrived at, the
action of the respondent company in enforcing the terms of the closed-shop agreement is a valid exercise
of its rights and obligations under the contract. The dismissal by virtue thereof cannot constitute
an unfair labor practice, as it was in pursuance of an agreement that has been found to be regular and
of a closed-shop agreement which under our laws is valid and binding.
The decision of the lower court declaring that the respondent company was guilty of unfair labor
practice should, therefore, be set aside and the complaint for the said unfair labor practice dismissed.
The Victorias-Manapla Organization (PAFLU) had also appealed from the decision of the court below
for the reason that it did not grant them pay during the period of the dismissal of the laborers
in question. In view of our ruling that the dismissal was valid, the appeal for back wages must also be
denied. Without costs. So ordered.
Bengzon, C. J., Padilla, Bautista Angelo, Barrera, Paredes, Dizon, Regala, and Makalintal,
JJ., concur.

FIRST DIVISION
 [G.R. No. 118506. April 18, 1997]

NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER

NG/HOTEL SUPREME, respondents.

DECISION
KAPUNAN, J.:

This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated
April 28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally enshrined
rights of the working class.Without the protection accorded by our laws and the tempering of courts, the natural and
historical inclination of capital to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the Hotel
Supreme 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 employees. [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.[26] Granting 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 wages. 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.[31] Considering, 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 full wage 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 circumstances, 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.
SO ORDERED.
Padilla, Bellosillo and Vitug, JJ., concur.
Hermosisima, Jr., J., on leave.

Rollo, p. 5. Petitioner was employed by the private respondent originally at his Belfront Hotel but was later pulled out for work at the Hotel
[1]

Supreme, owned by the former.

[2]
Id., at 6.
[3]
Rollo, p. 6.
[4]
Id., at 24.
[5]
Rollo, p. 7.
[6]
Id., at 31.
[7]
Id., at 23-24.
[8]
Rollo, p. 22.
[9]
Id., at 24.
[10]
Id., at 30-36.
[11]
Ibid.
[12]
Rollo, p. 4.
[13]
Id., at 64-83.
[14]
Polymedic General Hospital vs. NLRC, 134 SCRA 420, 424 (1985); Molave Tours Corporation vs. NLRC, 250 SCRA 325, 329 (1995).
[15]
Rollo, p. 32.
[16]
Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA 328 (1990).
[17]
Asphalt and Cement Pavers, Inc. vs. Leogardo, Jr., 162 SCRA 312 (1988).
[18]
Flexo Manufacturing Corporation vs. NLRC, 135 SCRA 145 (1985).
[19]
Rollo, p. 72.
[20]
193 SCRA 420, 426 (1991).
[21]
Ibid.
[22]
General Bank and Trust Co. vs. Court of Appeals, 135 SCRA 569, 578 (1985).
[23]
Rollo, p. 73.
[24]
Rollo, p. 78.
[25]
Labor Code, art. 248 (f).
[26]
Rollo, p. 26
[27]
Labor Code, art. 97 (f).
[28]
Rollo, p. 80.
[29]
Ibid.
[30]
Rollo, p. 80.
[31]
States Marine Corporation vs. Cebu Seamen's Association, Inc., 7 SCRA 294, 301 (1963).
[32]
Omnibus Rules Implementing the Labor Code, Book VII, Rule II, sec. 1.
[33]
G.R. No. 111651, November 28, 1996.
[34]
Ibid.