Unfair Labor Practices
disputants. On 11 February 1994 respondent GREPALIFE submitted a draft
G.R. No. 126717 February 11, 1999
GREAT PACIFIC EMPLOYEES UNION and RODEL P. DE LA ROSA, petitioners,
vs. GREAT PACIFIC LIFE ASSURANCE CORPORATION, LABOR ARBITER
JOVENCIO LL. MAYOR JR. and NATIONAL LABOR COMMISSION (THIRD
DIVISION), respondents.
GREAT PACIFIC LIFE EMPLOYEES UNION and Great Pacific Life Assurance
Corporation entered sometime in 1990 into a Collective Bargaining Agreement (CBA)
to take effect 1 July 1990 until 30 June 1993.
On 18 May 1993, or about a month and a half before the expiration of the CBA, the
parties submitted their respective proposals and counter-proposals to serve as bases
for their discussions on its projected renewal. The ensuing series of negotiations
however resulted in a deadlock prompting petitioner Great Pacific Life Employees
Union (UNION hereon) on 23 September 1993 to file a notice of strike with the
National Conciliation and Mediation Board (NCMB) of the Department of Labor.
Despite several conciliatory conferences before the Board, the impasse could not be
resolved. Thus, on 3 November 1993 petitioner UNION led by its President Isidro
Alan B. Domingo and Vice President Rodel P. de la Rosa went on strike.
On 6 November 1993 respondent Great Pacific Life Assurance Corporation
(GREPALIFE hereon) required all striking employees to explain in writing within forty-
eight (48) hours why no disciplinary action, including possible dismissal from
employment, should be taken against them for committing illegal acts against the
company in the course of the strike, particularly on 4 and 5 November. They were
warned that failure to submit their explanations within the prescribed period would be
construed as waiver of their right to be heard. The company directive was apparently
triggered by some violent incidents that took place while the strike was in progress.
Strikers reportedly blocked all points of ingress and egress of the company premises
in Makati City thus preventing GREPALIFE employees reporting for work from
entering their respective offices. These employees and third persons doing business
with the company, including lessees of the GREPALIFE building, were allegedly
forced by the strikers to submit their cars/vehicles, bags and other belongings to
illegal search. 1
Complying with the order, UNION President Alan B. Domingo and some strikers
explained that they did not violate any law as they were merely exercising their
constitutional right to strike. Petitioner Rodel P. de la Rosa and the rest of the strikers
however ignored the management directive.
GREPALIFE found the explanation of Domingo totally unsatisfactory and considered
de la Rosa as having waived his right to be heard. Thus on 16 November 1993 both
UNION officers were notified of the termination of their services, effective
immediately, as Senior Benefits Clerk and Senior Data Analyst, respectively. 2 All
other strikers whose explanations were found unacceptable or who failed to submit
written explanations were likewise dismissed. 3 Notwithstanding their dismissal from
employment, Domingo and de la Rosa continued to lead the members of the striking
union in their concerted action against management.
LABOR LAW 2- SESSION 2 CASES
In the meantime, the NCMB resumed conciliatory conferences between the
Agreement denominated by petitioner UNION as the "last and final offer by
Management," which proposed among others that —
4. Employee/members of the Union subject of dismissal notices shall be
reinstated under the same terms and conditions prior to their dismissal.
5. The reinstatement of the employees mentioned in #4 shall be conditioned
upon the submission by Alan B. Domingo and Rodel P. de la Rosa . . . . of their
voluntary resignations to the Company upon the signing of this agreement.
6. It is agreed and understood that Messrs. Domingo's and de la Rosa's
resignation while being effective thirty (30) days after submission, shall mean that
they need not report to the Company any longer. For the duration of the thirty
(30) day period, they shall be considered on leave with pay if they still have any
outstanding vacation leave credits for 1993 and 1994.
7. Messrs. Domingo and de la Rosa, as showing of the Company's magnanimity,
shall be extended/given separation pay at the rate of one(1) month basic pay per
year of service based on the new CBA
rates. 4
On 14 February 1994 petitioner UNION in assenting to the offers expressed that —
. . . . Management will make a full and immediate implementation of all the terms
and conditions agreed upon.
On its part, the Union shall forthwith lift the picket lines at the premises of the
Company. All employees concerned shall terminate the strike and shall return to
work promptly at the start of working hours on February 16, 1994.
This acceptance should not be Interpreted to mean acquiescence by the Union to
any portion of the aforementioned "last and final offer of Management" which
may be deemed to be contrary to law or public policy, the said offer being the
sole responsibility of Management. Furthermore, it is understood that should any
portion of said offer be held invalid, the remainder of said offer which has been
herein accepted shall not be affected thereby. 5
On 15 February 1994 the UNION and GREPALIFE executed a Memorandum of
Agreement (MOA) before the NCMB which ended their dispute. The MOA provided in
its Par 4 (on dismissals) that —
(a) (Except for Domingo and de la Rosa) employees/members of the Union
subject of dismissal notices on account of illegal acts committed in the course of
the strike shall be given amnesty by the Company and he reinstated (under) the
same terms and conditions prior to their dismissals following the signing of this
agreement; (b) Messrs. Domingo and de la Rosa hereby reserve their right to
Page 1
 question before the NLRC the validity or legality of their dismissal from
employment . . . . 6
On 15 February 1994 Domingo and de la Rosa filed a joint letter of resignation with
respondent company but emphasized therein that "(their) resignation is submitted
only because the same is demanded by the Company, and it should not be
understood as a waiver — as none is expressingly or impliedly made — of whatever
rights (they) may have under existing contracts and labor and social legislation." 7 The
MOA was subsequently incorporated in a new CBA which was signed on 4 March
1994 but made effective on 1 July 1993 until 30 June 1996.
On 2 June 1994 Domingo and de la Rosa sue GREPALIFE for illegal dismissal, unfair
labor practice and damages.
The Labor Arbiter sustained the charge of illegal dismissal. He found that the
evidence of respondent company consisting of affidavits of its employees was self-
serving and inadequate to prove the illegal acts allegedly committed during the strike
by Domingo and de la Rosa. Calling attention to the fifth. Paragraph Of the "last and
final offer" Of respondent company, he rationalized that if indeed there was justifiable
ground to terminate complaints' employment, there would have been no need for the
company to demand the resignation of the two union officers in exchange for the
reinstatement of all the strikers. He branded this "offer" as nothing more than a
scheme to get rid the complainants, noting the undue haste with which their services
were terminated by the respondent company. This, he observed, constituted nothing
less than a deprivation of due process of law. Thus, on 25 July 1995 the Labor Arbiter
ordered respondent GREPALIFE to reinstate complaints to their former positions
without loss of seniority rights, with one (1) year back wages without qualification or
deduction computed from 16 November 1993, the date of their dismissal. The other
claims were dismissed for insufficiency of evidence. 8
Both parties appealed to the National Labor Relations Commission (NLRC).
Respondent NLRC rejected the finding below that Domingo and de la Rosa. were
illegally dismissed, contending that a just cause for dismissal had been sufficiently
established. However, it agreed that respondent company failed to comply strictly with
the requirements of due process prior to termination. In its decision dated 14 May
1996, it modified the ruling of the Labor Arbiter by directing respondent GREPALIFE
to pay complainants their one (1) month salary 9 for non-observance of due process
prior to their dismissal. Considering that at the final negotiation for the settlement
respondent company offered complainants separation pay of one (1) month salary for
every year of service based on the new CBA rates in exchange for their voluntary
resignation, the NLRC additionally ordered payment of such amount. 10
On 19 June 1996 respondent GREPALIFE's motion for reconsideration was denied.
Pending finality thereof, respondent company and Domingo entered into compromise
agreement11 which they submitted to the NLRC for approval. On 10 July 1996 the
NLRC considered the case against Domingo terminated, 12 and denied on 16 August
1996 de la Rosa's motion for reconsideration. 13
Pleading before us, petitioner de la Rosa raises two (2) issues. He asserts that he
was illegally dismissed because his actual participation in the illegal acts during the
LABOR LAW 2- SESSION 2 CASES
strike in voked by GREPALIFE as basis for his dismissal was not adequately
established. He also complains that he was later on forced to resign by management.
We hold that the NLRC did not commit grave abuse of discretion. The right to strike,
while constitutionally recognized, is not without legal constrictions. 14 The Labor Code
is emphatic against the use of violence, coercion and intimidation during a strike and
to this end prohibits the obstruction of free passage to and from the employer's
premises for lawful purposes. The sanction provided in par. (a) of Art. 262 thereof is
so severe that "any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his
employment status." 15
GREPALIFE submitted before the Labor Arbiter several affidavits of its employees
which de la Rosa did not refute. Of these documents, two (2) specifically described
the incidents that transpired during the strike on 4 and 5 November 1993. Security
guard Rodrigo S. Butalid deposed —
(3) Since 3 November 1993, I have noticed that the striking employees have
been doing the following: (a) the striking employees are picketing at the entrance
and exit gates. (b) The striking employees would surround every vehicle
including vehicles of lessees of the Grepalife Building, that would enter the
Grepalife premises, inspect the same and ask the driver of the vehicle to open
the trunk of the vehicle so that the striking employees can see whether there are
Grepalife business documents found therein. The vehicle which is being
inspected cannot enter the Grepalife premises as the striking employees would
place a wooden bench in front of the vehicle. This wooden bench is only
removed to enable the vehicle to enter the Grepalife premises once the signal
has been given by the striking employees, who stand at the sides and at the back
of the vehicle, to the other striking employees who stand in front of the vehicle
that the vehicle has already been inspected and cleared. (c) If the striking
employees find Grepalife business documents in the vehicle being inspected, the
striking employees would prevent the vehicle from entering the Grepalife
premises. (d) The striking employees do not allow Grepalife, employees to enter
the Grepalife premises. Occasionally however, the striking employees will allow a
Grepalife employees to enter the Grepalife office but on the condition that they
will only get their personal belongings. (e) All persons who wish to enter the
Grepalife premises are frisked and their bags/brief cases inspected. If a person is
found to carry any Grepalife business document, he is not allowed to enter the
Grepalife premises. In the alternative, he would be allowed to enter but the
Grepalife business document in his possession will be confiscated from him
before he is allowed to enter.
4. Among those who I have seen to have participated in the foregoing activities
are the following persons: (a) Alan B. Domingo who I know to be the President of
the Union; (b) Rodel P. dela Rosa who I know to be the Vice-President of the
Union;
The affidavit of another security guard, Wilson S. Concha was of similar import.
Page 2
Petitioner de la Rosa assails the inherent weakness of the sworn statements of these
security guards. But while it is true that affidavits may be regarded as infirm
evidence 16 before the regular courts unless the affiants are presented on the stand,
such affidavits by themselves are acceptable in proceedings before the Labor Arbiter.
Under Sec. 7, Rule V, of the New Rules of Procedure of the NLRC, these
proceedings, save for the constitutional requirements of due process, are not to be
strictly governed by the technicalities of law and procedural rules. Section 3, par. 2, of
the same Rule provides that verified position papers are to be accompanied by all
supporting documents including the affidavits of the parties' respective witnesses in
lieu of direct testimony. It is therefore a clear mandate that the Labor Arbiter may
employ all reasonable means to ascertain the facts of the controversy before him.
Since de la Rosa did not present countervailing evidence, the NLRC correctly
appreciated the affidavits of the two (2) security guards as having adequately
established the charges leveled against de la Rosa thus justifying his dismissal from
employment.
We now turn to the claim of de la Rosa that he was forced to resign. It is true that the
draft Agreement submitted by respondent company before the NCMB expressly
proposed that the reinstatement of its dismissed employees should be conditioned on
the voluntary resignations of Domingo and de la Rosa upon the signing of the
Agreements. It is also true that petitioner UNION was amenable to this proposition.
But the unalterable facts is that the MOA that was subsequently finalized and
executed did not carry this conditionally. Paragraph 4 (b) thereof merely expressed a
reservation by Domingo and de la Rosa of their right to question before the NLRC the
legality. of their dismissal from employment. Obviously they were referring to their
dismissal on 16 November 1993 due to the illegal acts they allegedly committed in the
course of the strike, and not to the voluntary resignation they were supposed to
tender to management.
Significantly, the joint letter of resignation submitted by Domingo and de la Rosa a
day after the MOA was executed was never acted upon by respondent company. And
rightly so for, having been earlier dismissed (i.e., on 16 November 1993), these two
(2) union officers had no more employment to resign from. To be sure, under the
MOA their resignations were no longer a condition imposed by respondent company
for the eventual reinstatement of the other strikers. This being the case, de la Rosa
cannot now complain that he was forced to resign. Did he not explicitly acknowledge
in his complaint with the Labor Arbiter that his cause of action was the Illegal
termination of his services on 16 November 1993? 17
Petitioner de la Rosa also claims that respondent company unreasonably singled out
the top officers of the UNION, including himself as unfit for reinstatement. Insisting
that this act constitutes unfair labor practice, he demands entitlement to moral and
exemplary damages.
We disagree. While an act or decision of an employer may be unfair, certainly not
every unfair act or decision constitutes unfair labor practice (ULP) as defined and
enumerated under Art. 248 Of the Labor Code. 18
LABOR LAW 2- SESSION 2 CASES
There should be no dispute that all the prohibited acts instituting unfair labor practice
in essence relate to the workers' right to self-organization. Thus, an employer may be
held liable under this provision if his conduct affects in whatever manner the right of
an employee to self-organize. The decision of respondent GREPALIFE to consider
the top officers of petitioner UNION as unfit for reinstatement is not essentially
discriminatory and constitutive of an unlawful labor practice of employers under the
above-cited provision. Discriminating in the context of the Code involves either
encouraging membership in any labor organization or is made on account of the
employee's having given or being about to give testimony under the Labor Code.
These have not been proved in the case at bar.
To elucidate further, there can be no discrimination where the employees concerned
are not similarly situated. 19 A union officer has larger and heavier responsibilities
than a union member. Union officers are duty bound to respect the law and to exhort
and guide their members to do the same; their position mandates them to lead by
example. By committing prohibited activities during the strike, de la Rosa as Vice
President of petitioner UNION demonstrated a high degree of imprudence and
irresponsibility. Verily this justifies his dismissal from employment. Since the objective
of the Labor Code is to ensure a stable but dynamic and just industrial peace, the
dismissal of undesirable labor leaders should be upheld. 20
It bears emphasis that the employer is free to regulate all aspects of employment
according to his own discretion and judgment. This prerogative flaws from the
established rule that labor laws do not authorize substitution of judgment of the
employer in the conduct of his business. Recall of workers clearly falls within the
ambit of management prerogative. 21 The employer can exercise this prerogative
without fear of liability so long as it is done in good faith for the advancement of his
interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or valid agreements. It is valid as long as it is not
performed in a malicious, harsh, oppressive, vindictive or wanton manner or out of
malice or spite.
That respondent company opted to reinstate all the strikers except Domingo and de la
Rosa is an option taken in good faith for the just and lawful protection and
advancement of its interest. Readmitting the union members to the exclusion of
Domingo and de la Rosa was nothing less than a sound exercise of management
prerogative, an act of selt-preservation in fact, designed to insure the maintenance of
peace and order in the company premises. 22 The dismissal of de la Rosa who had
shown his capacity for unmitigated mischief was intended to avoid a recurrence of the
violence that attended the fateful strike in November.
WHEREFORE, the petition is DISMISSED. The decision of respondent National
Labor Relations Commission dated 14 May 1996 (a) finding that petitioner Rodel P.
de la Rosa was legally dismissed, and, (b) ordering respondent Great Pacific Life
Assurance Corporation to pay petitioner his one (1) month salary or its failure to
comply strictly with due process prior to the latter's termination and his one (1) month
salary per year of service based on the new CBA rates as separation pay, as well as
its Resolution dated 16 August 1996 denying reconsideration, is AFFIRMED.
SO ORDERED.
Page 3
G.R. No. 123276 August 18, 1997
MARIO TIU and JONATHAN HAYUHAY, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION and REPUBLIC BROADCASTING SYSTEM, INC.
(CHANNEL 7), respondents.
This is a petition for certiorari under Rule 65 of the Rules of Court to annul and set
aside the resolution of the National Labor Relations Commission (NLRC) dated 28
November 1994 in NCR Case No. 00-08-0453-91 which affirmed the decision of labor
arbiter Edgardo Madriaga dated 18 February 1994 holding the strike held by GMA
Channel 7 Employees Union (GMAEU) on 2 August 1991 as illegal and declaring the
fourteen (14) GMAEU union officers who knowingly participated in the illegal strike to
have lost their employment status.
The records show that of the Fourteen (14) GMAEU officers involved in the strike, ten
(10) officers did not appeal the labor arbiter's decision and opted to avail of the
optional retirement benefits under the collective bargaining agreement with private
respondent Republic Broadcasting System Inc. (RBS) The remaining four (4) union
officers, namely: Mario Tiu, Nani Hayuhay, Bong Cerezo and Virgilio Santoyo,
appealed to the NLRC.
From the NLRC decision, Virgilio Santoyo filed a separate petition for certiorari before
this Court, docketed as G.R. No. 122613. In a resolution dated 31 January 1996, the
Court dismissed Santoyo's petition "for failure to sufficiently show that the respondent
Commission (NLRC) had committed a grave abuse of discretion in rendering the
questioned judgment."
Considering that Santoyo and herein petitioners were dismissed under the same
factual circumstance, the Court reviewed the records of G.R. No 122613 to determine
whether the ruling laid therein applies in the case at bar. The Court notes that the
issues raised by Santoyo in his petition were procedural in character Santoyo alleged
that he was never represented by counsel in the proceedings both before the labor
arbiter and the NLRC and was denied the opportunity to present his evidence. This
allegation, however, had no factual basis as the records showed that he was
represented by counsel during the entire proceedings below. In contrast, the present
petition raised substantive issues concerning the legality or illegality of the strike
conducted by GMAEU on 2 August 1991.
The Court required both public and private respondents to file their comment on the
petition. Private respondent RBS filed its comment on 23 April 1996 and public
respondent NLRC filed its own comment on 9 December 1996. Petitioners filed a
reply to both comments on 4 March 1997. Since the parties have exhaustively argued
their position in their respective pleadings, the Court dispensed with the filing of
memoranda and considered this case submitted for resolution.
The material and relevant facts are as follows:
RBS had a collective bargaining agreement with GMAEU which took effect on 2 July
1989. After the first quarter of 1991, RBS management noted the huge amount of
LABOR LAW 2- SESSION 2 CASES
overtime expense it incurred during the said period, which averaged to P363,085.26
monthly. To streamline its operations, the president of RBS created a committee to
formulate guidelines on the availment of leaves and rendering of overtime work.
On 11 June 1991, RBS, through its personnel department, furnished GMAEU a copy
of the new guidelines and requested the latter to comment thereon. The union did not
file any comment. On 25 June 1991, RBS officially issued the implementing
guidelines "on the availment of leaves and rendering of overtime services." The
following day, GMAEU sent a letter to the president of RBS wherein it argued that:
1. The union was not consulted in the formulation of said guidelines which was a clear
violation under Sec. 3(c) of the collective bargaining agreement;
2. The guidelines would render nugatory the collective bargaining agreement
provisions on the same subject;
3. The diminution of benefits being enjoyed by all employees with respect to the mid-
year bonuses (from 2-1/2 months to 1-1/2 months constitutes a withdrawal of an
existing company policy).
Thereafter, RBS management and GMAEU officials met on 3 July 1991 and on 10
July 1991 to thresh out the issues raised by GMAEU in its 26 June 1991 letter. Both
talks, however, were short lived as the union refused to hold further talks with RBS.
On 12 July 1991, GMAEU filed a Notice of Strike with the National Conciliation and
Mediation Board (NCMB) based on unfair labor practices allegedly committed by
RBS, as follows:
1. Gross violation of the existing collective bargaining agreement;
2. Employees (members and officers) coercion;
3. Union interference; and
4. Discrimination.
The NCMB set a conciliation meeting on 19 July 1991, but as early as 16 July 1991
the Union held a strike vote among its members and submitted the results thereof to
the NCMB on 18 July 1991 which showed that majority of the union members voted
to go on strike.
During the conciliation meeting held on 19 July 1991, RBS, through counsel, informed
GMAEU's officers that RBS did not violate any provision in the collective bargaining
agreement since the issuance of the guidelines was a management prerogative duly
recognized in their agreement. As regards GMAEU's charges of coercion, union
interference and discrimination, RBS argued that these alleged unfair labor practices
were neither raised by the union in its 26 June 1991 letter nor during their 3 July and
Page 4
10 July 1991 talks. RBS' counsel requested GMAEU's officers to name the persons or
officers of RBS involved in the alleged unfair labor practices and to state the specific
act or acts complained of so that RBS management could adequately refute said
allegations or impose appropriate disciplinary actions against its erring officers.
GMAEU's officers, however, ignored both RBS' and the labor conciliator's requests for
a bill of particulars.
In a second conciliation meeting held on 25 July 1991, RBS reiterated its request to
GMAEU's officers to furnish RBS the details of the alleged unfair labor practices
committed by RBS' officers. Again, the Union denied RBS' request and refused to
hold any further talks with RBS management. On the same day, RBS filed a motion to
dismiss GMAEU's notice of strike and forewarned the Union about the consequences
of an illegal strike.
On 2 August 1991, the union struck. On the same day, RBS filed a complaint for
illegal strike and unfair labor practice against GMAEU and its fourteen (14) officers
(hereafter, illegal strike case). The case was docketed as NLRC Case 00-08-04531-
91. Meanwhile, the Secretary of Labor immediately assumed jurisdiction over the
case, issued a return-to-work order, and certified the case to the NLRC for
compulsory arbitration (hereafter, certified case). The case was docketed as NCMB-
NCR-050-7-488-91.
In the certified case, the labor arbiter found no factual and legal ground to hold RBS
guilty of unfair labor practices against the Union. On appeal (docketed as NLRC-NCR
CC No. 00076-01), the NLRC affirmed the labor arbiter's decision in a resolution
dated 31 July 1992.
Meanwhile, the labor arbiter continued to hear the illegal strike case filed by RBS
against GMAEU. On 18 February 1994, the labor arbiter rendered judgment declaring
the strike illegal and the union officers who knowingly participated in the illegal strike
to have validly lost their employment status based on the following reasons:
a. "The notice of strike did not specifically charge the company (RBS) of unfair labor
practices, only pro formaallegations of gross violation of the collective bargaining
agreement, employees coercion, union interference, and discrimination." It is
"defective as it consisted of vague and general charges which could not be
substantiated and which the company could not properly defend itself against."
b. "The absence of evidence on record that the mandatory cooling-off period and
strike vote under the law were complied which renders the strike staged by the
respondents illegal per se on technical grounds."
c. "On the merits . . . there are no strikeable grounds as there was no bargaining
deadlock between the parties. The alleged gross violation of the collective bargaining
agreement cannot constitute an unfair labor practice because said charges were
bereft of factual and legal basis." "There being no unfair labor practice, it follows that
there is no strikeable issue to support the strike conducted by herein respondents (the
Union)."
LABOR LAW 2- SESSION 2 CASES
d. The union violated the no strike-no lockout clause of the CBA with RES; thus
rendering the strike held on 2 August 1991 illegal. As aforementioned, the NLRC
affirmed the labor arbiter's decision in a resolution dated 28 November 1994.
In their petition, petitioner raised six (6) alleged NLRC errors which ultimately narrow
down to one issue —
WHETHER OR NOT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT UPHELD THE LABOR ARBITER'S DECISION THAT PETITIONERS
STAGED AN ILLEGAL STRIKE ON 2 AUGUST 1991.
Petitioners argue that any defect in their pro-forma notice of strike was cured when
the NCMB took cognizance of the case and conducted conciliation proceedings on 19
July and 25 July 1991. In addition, upon assumption by the Secretary of Labor of
jurisdiction over the dispute and certification of the same for compulsory arbitration, it
is presumed that the union had complied with the procedural requirements under the
labor code for a valid notice of strike.
Anent the alleged unfair labor practice committed by RBS, petitioners assert that this
issue was thoroughly discussed with sufficient particularity in their position papers
filed in the certified case and in the illegal strike case; hence. "their notice of strike
was sufficient in form and in substance."
Petitioners further argue that they believed in good faith that RBS had committed acts
of unfair labor practice which induced them to proceed with the strike on 2 August
1991. Since it was an unfair labor practice strike, the no-strike clause in the collective
bargaining agreement with RBS does not apply They also showed good faith by their
immediate compliance with the return-to-work order issued by the Secretary of Labor
upon assuming jurisdiction over the case.
Private respondent RBS refutes these arguments and asserts that the factual findings
of the labor arbiter and the NLRC, being supported by substantial evidence, should
be upheld by this Court. This means that petitioners cannot invoke the protective
mantle of the good faith strike doctrine because the alleged issues in the notice of
strike were never substantiated by the union either before or during the conciliation
proceedings. The union violated the no strike clause under the collective bargaining
agreement and should be held accountable for their acts by considering them validly
dismissed from their employment with RBS.
We find no merit in the petition at bar.
The notice of strike filed by the union before the NCMB on 12 July 1991 contained
general allegations that RBS management committed unfair labor practices by its
gross violation of the economic provisions in their collective bargaining agreement
and by alleged acts of coercion, union interference and discrimination which
amounted to union busting. It is the union, therefore, who had the burden of proof to
present substantial evidence to support these allegations.
Page 5
It is not disputed that prior to 12 July 1991, the union treated RBS' issuance of the
"guidelines on the availment of leaves and rendering of overtime services" as "gross"
violations of the existing collective bargaining agreement. In its talks with the union,
RBS painstakingly explained that the said allegation was unfounded because the
issuance of said guidelines was RBS' management prerogative. Up to that point, the
union never raised the issue of unfair labor practices allegedly committed by RBS'
officials under Article 248 of the Labor Code. But in its notice of strike filed two days
later, the union raised issues of coercion, discrimination, and union interference for
the first time.
Significantly, the union had two (2) conciliatory meetings arranged by the
NCMB at which it could have substantiated these additional allegations. However, the
fact that it had submitted the results of the strike vote even ahead of the conciliatory
meetings, and continuously refused to substantiate its allegations in its notice of strike
thereafter, lends credence to the NLRC's observation that these charges were
indiscriminately hurled against RBS to give a semblance of validity to its notice of
strike.
Under Rule XIII Sec. 4 Book V of the Implementing Rules of the Labor Code —
. . . . . In cases of unfair labor practices, the notice of strike shall as far as
practicable, state the acts complained of and the efforts to resolve the dispute
amicably.
Upon the other hand, Rule III Sec. 6 provides that —
xxx xxx xxx
During the (conciliation) proceeding, the parties shall not do any act which may
disrupt or impede the early settlement of the dispute. They are obliged, as part of
their duty to bargain collectively in good faith, to participate fully and promptly in
the conciliation meetings called by the regional branch of the board. . . . .
(emphasis supplied)
The Court affirms the factual finding of the labor arbiter and the NLRC that" there was
no strikeable issue to support respondent's (the Union) subject strike." The evidence
show that the union anchored its position on alleged unfair labor practices in order to
evade not only the grievance machinery but also the no strike clause in their
collective bargaining agreement with RBS.
RBS did not issue its implementing guidelines dated 24 June 1991 concerning the
availment of leaves and rendering of overtime services in an arbitrary manner. The
union was promptly informed that RBS' decision was based on its management
prerogative to regulate all aspects of employment, subject of course to well-defined
limitations imposed by law or by contract.
Even assuming arguendo that in the issuance of said guidelines RBS may have
violated some provisions in the collective bargaining agreement, there was no
palpable showing that the same was a flagrant and/or malicious refusal to comply
with its economic provisions. (Book V Implementing Rules of the Labor Code, Rule
XIII, Section 1) Hence, the law mandates that said violation "shall not be considered
unfair labor practice and shall not be strikeable."
The bottom line is that the union should have immediately resorted to the grievance
machinery established in their agreement with RBS. In disregarding said procedure
the union leaders who knowingly participated in the illegal strike "have acted
unreasonably, and, as such, the law cannot interpose its hand to protect them from
the consequences of their behavior" (National labor Union v. Philippine Match
Factory, 70 Phil. 300; United Seamen's Union v. Davao Shipowner's Association, 20
SCRA 1226)
WHEREFORE, premises considered, the petition is hereby DISMISSED, there being
no substantial evidence of grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the NLRC.
SO ORDERED.

Petitioners plead that their contemporaneous acts, reckoned from their 26 June 1991
letter to RBS up to the actual strike held on 2 August 1991, were justified based on its
honest belief that RBS was committing unfair labor practices. Stated otherwise, "the
presumption of legality (of the strike) prevails even if the allegations of unfair labor
practices are subsequently found out to be untrue." (citing Muster Iron Labor Union v.
NLRC, 219 SCRA 47)

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

LABOR LAW 2- SESSION 2 CASES Page 6

Specific ULP Acts of Employer
Interference
G.R. No. L-67158, 67159, 67160, 67161, & 67162 May 30, 1988
CLLC E.G. GOCHANGCO WORKERS UNION, CORNELIO L. PANGILINAN, LEO
TROPACIO, OLIMPIO GUMIN, JUANITO SUBA, ROLANDO SANTOS, RUBEN
BUELA, ODILON LISING, REYNALDO DAYRIT, ROGELIO MANGUERRA,
ORLANDO NACU, DIOSILINO PERDON, ERNESTO GALANG, ORLANDO
PANGILINAN, JESUS SEMBRANO, RENATO CASTANEDA, EDILBERTO
BINGCANG, ERNESTO CAPIO, RUFO A. BUGAYONG, RICARDO S. DOMINGO,
TERESITO CULLARIN, ISRAEL VINO, ERNESTO RAMIREZ, ROMEO S. GINA,
ARNEL CALILUNG, PEDRO A. SANTOS, RODOLFO CAPITLY, BUENAVENTURA
B. PUNO, EDILBERTO QUIAMBAO, FERNANDO LISING, ERNESTO M. TUAZON,
MARCELO LANGUNSAD, MARCELINO VALERIO, SERAFIN PAWA, JESUS S.
DAQUIGAN, and ISMAEL CAYANAN, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION (NLRC), and e.g. GOCHANGCO, INC., respondents.
The cases before the Court pit labor against management, in which, on not a few
occasions, it is labor that has cause for complaint.
The Solicitor General states the facts as follows:
xxx xxx xxx
1. Petitioner union is a local chapter of the Central Luzon Labor Congress
(CLLC), a legitimate labor federation duly registered with the Ministry of Labor
and Employment (MOLE), while the individual petitioners are former employees
of private respondent who were officers and members of the petitioner union.
2. Private respondent is a corporation engaged in packing and crating, general
hauling, warehousing, sea van and freight forwarding,
3. Sometime in January 1980, the majority of the rank and file employees of
respondent firm organized the e.g. Gochangco Workers Union as an affiliate of
the CLLC. On January 23, 1980, the union filed a petition for certification election
under R03-LRD (MA) Case No. 178-80. The MOLE Region 111 office set the
hearing for the petition on February 27,1980.
4. On February 7,1980, the CLLC national president wrote the general manager
of respondent firm informing him of the organization of the union and requesting
for a labor management conference to normalize employer-employee relations
(Annex "D," Case 486-80).
5. On February 26,1980, the, union sent a written notice to respondent firm
requesting permission for certain member officers and members of the union to
LABOR LAW 2- SESSION 2 CASES
attend the hearing of the petition for certification election. The management
refused to acknowledge receipt of said notice (Annex "E," Case 486-80).
6. On February 28, 1980, private respondent preventively suspended the union
officers and members who attended the hearing namely: Cornelio Pangilinan,
president; Leo Tropics, vice- president; Olimpio Gumin, treasurer; Buenaventura
Puno, director; Reynaldo Dayrit, sgt-at-arms; Ernesto Ramirez; Ernesto Galang;
Odilon Lising; Jesus Daquigan; and Edilberto Quiambao. The common ground
alleged by private respondent for its action was "abandonment of work on
February 27, 1980." On the same date, all the gate passes of all the above-
mentioned employees to Clark Air Base were confiscated by a Base guard.
7. Claiming that private respondent instigated the confiscation of their gate
passes to prevent them from performing their duties and that respondent firm did
not pay them their overtime pay, 13th month pay and other benefits, petitioner
union and its members filed a complaint for constructive lockout and unfair labor
practice against private respondent, docketed as R03-AB Case No. 486-80 on
March 10, 1980.
8. On March 12, 1980, private respondent filed an application for clearance to
dismiss Cornelio Pangilinan, Leo Tropics, Olimpio Gumin, Reynaldo Dayrit,
Odilon Lising, Edilberto Quiambao; Ernesto Ramirez, Ernesto Galang,
Buenaventura Puno, Arnel Calilung, Romeo Guina, docketed as R03-AB Case
No. 556-80. Subsequently private respondent filed another clearance to dismiss
Jesus Daquigan, Serafin Pawa and Rufo Bugayong, docketed as R03-A-B Case
No. 55780.
9. On April 22,1980, petitioner Ricardo Dormingo who was preventively
suspended on April 17, 1980 filed a complaint for unfair labor practice against the
latter, docketed as R03-AB Case No. 55880.
10. On April 30, 1980, the services of nine (9) more union members, namely:
Ernesto Tuason, Israel Vino, Pedro Santos, Juanita Suba, Edilberto Sarmiento,
Diosalino Pandan, Antonio Razon, Benjamin Capiz and Jesus Sembrano, were
terminated by private respondent on the ground that its contract with the U.S. Air
Force had expired. The rune employees filed a complaint for illegal dismissal
against private respondents on June 2, 1980. docketed as R03-AB Case No.
663-80.
11. On May 9, 1980, private respondent filed with MOLE, Region III, a Notice of
Termination of Contract together with a list of employees affected by the
expiration of the contract, among them, the 39 individual petitioners herein.
12. All the aforementioned cases were consolidated and assigned to Labor
Arbiter Andres Palumbarit.
13. After heating, Labor Arbiter Federico S. Bernardo who took over the cases
from Arbiter Palumbarit rendered a decision dated July 2, 1982, the dispositive
portion of which reads:
Page 7
 WHEREFORE, In view of all the foregoing, the instant complaint of complainants
is hereby granted and the respondent's application for clearance is hereby 18. Eduardo Alegado 11,134.00 7,663.00 18,767.00
denied.
19. Teresito Cullarin 11,134.00 7,663.00 18,767.00
The respondent is hereby ordered:
20. Rogelio Manguerra 11,134.00 7,663.00 18,767.00

1. To reinstate all the suspended/dismissed employees to their former 21. Ruben Buela 11,134.00 7,663.00 18,767.00
positions without loss of seniority rights and other privileges, with full
backwages including cost of emergency living allowance from the date of their 22. Rolando Santos 11,134 00 7,663.00 18,767.00
suspension/dismissal up to the supposed date of actual reinstatement, as
follows:
23. Ricardo Domingo 11,134.00 7,663.00 18,767.00

NAME BACK- WAGES ECOLA TOTAL 24. Serafin Pawa 11,134.00 7,663.00 18,767.00

1.Cornelio Pangilinan P 11,266.00 P 7,738.00 P 19,004.00 25. Rufo Bugayong 11,134.00 7,663.00 18,767.00

2. Leo Tropico 11,266.00 7,738.00 19,004.00 26. Ernesto Santos 11,134.00 7,663.00 18,767.00

3. Olimpio Gumin 11,266.00 7,738.00 19,004.00 27. Ismael Cayanan 11,134.00 7,663.00 18,767.00

4. Reynaldo Dayrit 11,266.00 7,738.00 19,004.00 28. Marcelo Lagansad 11,134.00 7,663.00 18,767.00

5. Buenaventura Puno 11,266.00 7,738.00 19,004.00 29. Marcelino Valerio 11,134.00 7,663.00 18,767.00

6. Ernesto Galang 11,266.00 7,738.00 19,004.00 30. Ernesto M. Tuazon 10,618.00 7,225.00 18,767.00

7. Ernesto Ramirez 11,266.00 7,738.00 19,004.00 31. Israel Vino 10,618.00 7,225.00 17,843.00

8. Edilberto Quiambao 11,266.00 7,738.00 19,004.00 32. Pedro Santos 10,618.00 7,225.00 17,843.00

9 Jesus Daquigan 11,266.00 7,738.00 19,004.00 33. Juanita Suba 10,618.00 7,225.00 17,843.00

10. Renato Castaneda 11,134.00 7,633.00 19,004.00 34.Edilberto Sarmiento 10,618.00 7,225.00 17,843.00

11. Edilberto Bingcang 11,134.00 7,663.00 18,767.00 35. Diosalino Pendon 10,618.00 7,225.00 17,843.00

12. Benedicto Capio 11,134.00 7,663.00 18,767.00 36. Antonio Razon 10,618.00 7,225.00 17,843.00

13. Orlando Nacu 11,134.00 7,633.00 18,767.00 37. Benjamin Capiz 10,618.00 7,225.00 17,843.00

14. Rodolfo Capitly 11,134.00 7,663.00 18,767.00 38. Jesus Sembrano 10,618.00 7,225.00 17,843.00

15. Arnel Calilung 11,134.00 7,663.00 18,767.00 GRAND TOTAL P 419,636.00 P 706,973.00 P267,337.00
2. To restore transportation privilege as being extended before the filing of the
16. Romeo Gina 11,134.00 7,663.00 18,767.00 instant case; and

17. Orlando Pangilinan 11,134.00 7,663.00 18,767.00 3. If their reinstatement is no longer possible due to closure of the
establishment, in addition to the payment of their full backwages and cost of

LABOR LAW 2- SESSION 2 CASES Page 8

 living allowance, to pay their respective separation pay as provided for under
the Labor Code.
14. Private respondent appealed to the NLRC which rendered the questioned
decision on May 31, 1983 as follows:
WHEREFORE, in the light of foregoing premises, the appealed decision is
hereby set aside and another one issued dismissing the above-entitled cases
filed by the complainants-appellees for lack of merit and granting the application
for clearance to terminate the services of individual complainants-appellees filed
by respondent-appellant.
15. Petitioners moved for a reconsideration of the above decision on July 12,
1983 which NLRC denied in a resolution dated December 6,1983.
16. Hence, this petition. 1
xxx xxx xxx
The petitioners assign three errors in support of their petition:
I. THAT PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION AND
SERIOUSLY COMMITTED ERRORS IN LAW IN CONSIDERING PRIVATE
RESPONDENTS EVIDENCE INTRODUCED FOR THE FIRST TIME ON APPEAL,
AND PUBLIC RESPONDENT NLRC HAS SERIOUSLY COMMITTED ERRORS IN
GIVING DUE COURSE TO PRIVATE RESPONDENT APPEAL FROM THE
DECISION OF LABOR ARBITER FEDERICO S. BERNARDO, ALTHOUGH SAID
APPEAL WAS NOT VALIDLY PERFECTED ON TIME;
II. THAT PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERRORS IN LAW
IN RENDERING A DECISION THAT IS CONTRARY TO THE EVIDENCE ON
RECORD(S); and
III. THAT PUBLIC RESPONDENT NLRC COMMITTED AN ERROR IN NOT
AWARDING BACK WAGES TO THE INDIVIDUAL PETITIONERS FOR REFUSAL
OF PRIVATE RESPONDENT TO REINSTATE THEM AFTER RENDERING OF THE
DECISION OF LABOR ARBITER FEDERICO S. BERNARDO AND AFTER SAID
LABOR ARBITER ORDERED PRIVATE RESPONDENT TO REINSTATE THEM. 2
On the first issue, the petitioners submit that the motion for reconsideration, treated
subsequently as an appeal, 3 of the private respondent had been filed beyond the ten-
day period prescribed by the Labor Code, in the absence of any statement thereon as
to material dates. The respondent Commission ruled that it was, on the strength of
receipts in possession of the Labor Department disclosing such dates and showing
that said appeal had been seasonably filed. As a matter of practice, and in connection
with ordinary civil cases, this Court has assumed a stance of liberality towards the
application of the material data rule, if it in be otherwise verified from other evidence
that the appeal had been perfected within the time prescribed. 4 We see no reason
LABOR LAW 2- SESSION 2 CASES
why we should hold otherwise as far as labor cases are concerned. Accordingly, we
yield to the respondent Commission's finding that the e.g. Gochangco, Inc. had filed
its appeal on time. It may be further noted that the petitioners themselves can offer no
proof, other than vague inferences from circumstances, of the belated appeal they
allege.
This is not to say, however, that such an appeal has judgment. The Solicitor General
himself urges that we grant that, petition and hence, reverse the respondent
Commission. But apart from such urgings, the records themselves show that a
reversal is in order.
We are convinced that the respondent company is indeed guilty of an unfair labor
practice. It is no coincidence that at the time said respondent issued its suspension
and termination orders, the petitioners were in the midst of a certification election
preliminary to a labor management conference, purportedly, "to normalize employer-
employee relations." 5 It was within the legal right of the petitioners to do so, 6 the
exercise of which was their sole prerogative, 7 and in which management may not as
a rule interfere. 8 In this connection, the respondent company deserves our strongest
condemnation for ignoring the petitioners' request for permission for some time out to
attend to the hearing of their petition before the med-arbiter. It is not only an act of
arrogance, but a brazen interference as well with the employees right to self-
organization, contrary to the prohibition of the Labor Code against unfair labor
practices. 9
But as if to add insult to injury, the company suspended the petitioners on the ground
of "abandonment of work" 10on February 27, 1980, the date on which, apparently, the
pre-election conference had been scheduled. (The petitioners sought permission on
February 26, 1980 while the suspension order was issued on February 28, 1980.)
What unfolds here is a clear effort by management to punish the petitioners for their
union activities.
As a consequence of such a suspension, the Clark Air Base guards confiscated the
employees' gate passes, and banned them from the base premises. We cannot be
befooled by the company's pretenses that "[t]he subsequent confiscation by the
Americans of the complainants' passes is beyond the powers of management." To
start with, those passes would not have been confiscated had not management
ordered the suspension. As put by the Solicitor General, "the U.S. Air Force
authorities could not have known who were supposed to report for work on February
27, 1980," 12and who were under suspension. Conversely, in the absence of such a
suspension order, there was no ground to seize such gate passes. Base guards, by
themselves, cannot bar legitimate employees without the 'proper sanction of such
employees'employers.
What disturbs us even more, however, is the perplexing gullibility with which the
respondent National Labor Relations Commission would fall for such an indefensible
position. Said the Commission: "So, with their gate passes confiscated, even if
management will reinstate them, without the gate passes, they cannot enter the US
Clark Airforce Base and perform their jobs, for the gate pass is a pre-requisite for their
entrance for employment." 13 For surely, and as we stated, the petitioners were
dispossessed of those gate passes precisely because of the suspension meted out
Page 9
against them. It is not the other way around, as the Commission would have us
behave, for the confiscation of such passes would not furnish a ground for 15. Renato Castaneda May 1976 Packer
suspension. Reinstatement then would have deprived the base gullibility guards any
right to hold on to such passes any further. In the absence of superior orders, mere 16. Edilberto Sarmiento Aug. 1977 Packer
base guards are bereft of any discretion to act on such matters.
17, Eduardo Alegado Dec. 1977 Packer
In finding the petitioners' suspension illegal, with more reason do we hold their
subsequent dismissal to be illegal. We are not persuaded by the respondent firm's 18. Benjamin Capiz June l978 Packer
argument that final termination should be effected as the contract has
expired." 14 What impresses us is the Solicitor General's submission that the 19. Antonio Razon Nov. 1978 Packer
petitioners were regular employees and as such, their tenure did not end with the
expiration of the contract. We quote: 20. Edilberto Bingcang May 1978 Packer

The records show that petitioners were do so, 6 The ar employees whose 21. Ernesto Santos June 1978 Packer
employment did not terminate with the expiration of private respondent's contract
with the U.S. Air Force. In their position paper in the arbitration proceedings, they 22. Benedicto Capio Oct. 1978 Packer
averred that been employer employed by private respondent for six (6) months or
more before they were terminated as follows: 23. Rufo Bugayong May 1977 Packer

24. Ricardo S. Domingo Dec. 1978 Packer

NAMES DATE EMPLOYED POSITION
25. Teresito Cullarin Mar. 1978 Packer
1. Cornelio Pangilinan Jan. 1976 Driver
26. Israel Vino May 1979 Packer
2. Leo Tropico Mar. 1977 Driver
27. Ernesto Ramirez Mar. 1979 Packer
3. Olimpio Gumin Jan. 1977 Driver
28. Romeo S. Gina Sept. 1979 Packer
4. Juanita Suba June l976 Driver
29. Arnel Calflung Sept. 1979 Packer
5. Rolando Santos Oct. 1978 Driver
30. Pedro A. Santos May 1979 Packer
6. Ruben Buela Jan. 1975 Packer
31. Rodolfo Capitly Nov. 1978 Packer
7. Odilon Lising May 1975 Packer
32. Buenaventura B. Puno Sept. 1979 Packer
8. Reynaldo Dayrit May 1976 Packer
33. Edilberto Quiambao Nov. 1978 Packer
9. Rogelio Manguerra Mar. 1977 Packer
34. Fernando Lising Jan. 1975 Checker
10. Orlando Nacu May 1977 Packer
35. Ernesto M. Tuazon Feb. 1975 Mechanic
11. Diosalino Perdon May 1977 Packer
36. Marcelo Lagansad Jan. 1963 Mechanic
12. Ernesto Galang June 1977 Packer
37. Marcelino Valerio May 1979 Mechanic
13. Orlando Pangilinan June l977 Packer
38. Serafin Pawa Feb. 1979 Packer
14. Jesus Sembrano May 1977 Packer

LABOR LAW 2- SESSION 2 CASES Page 10


39. Jesus S. Daquigan May 1977 Packer
40. Ismael Cayanan May 1978 Packer 15
As regular employees, the petitioners' tenure are secure, and their dismissal must be
premised on a just cause. 16
We find none here. What we find, instead, are flimsy attempts by the respondent
company to discredit the person of the petitioners' counsel, or their officers, and other
resorts to argumenta ad hominem. 17
There is no merit in the claim that the petitioners' terms were coterminous with the
duration of the contract. There is nothing in the records that would show that the
petitioners were parties to that contract. It appears furthermore that the
petitioners 18 were in the employ of the respondent company long before that contract
was concluded. They were not contract workers whose work terms are tied to the
agreement, but were, rather, regular employees of their employer who entered into
that contract.
But even if dismissal were warranted, the same nonetheless faces our disapproval in
the absence of a proper clearance then required under the Labor Code. 19 It is true
that efforts were undertaken to seek such a clearance, yet there is no showing that it
was issued. That still taints the dismissal with the vice of illegality.
The Court likewise rejects the claims of an alleged waiver by the petitioners of their
economic demands, in the light of an alleged order issued by Labor Arbiter Luciano
Aquino in connection with another case(s) involving the same parties. (It was Labor
Arbiter Federico Bernardo who penned the unfair labor practice/illegal dismissal
case.) The Honorable Aquino's disposition reads:
The records show that a "Waiver of Claims, Rights and Interest" was filed by
above-named petitioners stating, among other things, that said petitioners are
waiving their claims, rights and interests against the respondents.
ACCORDINGLY, let the above-entitled cases be DISMISSED in view of the
waiver made by the petitioners. 20
Acting on these allegations, the respondent Commission, baring its clear bias for
management, ruled that the petitioners had waived their claims. Thus:
xxx xxx xxx
With respect to the second issue, that is, whether or not the waiver of rights and
interests executed by Fernando do so, 6 The G Lising, Odilon do so, 6 The G
Lising, Jose C. Tiamzon, Ernesto Tuazon, Pedro Santos, Ruben Buela, Eduardo
Alegado, Estrael Vino, Rogelio Manguerra, Edilberto Bingcang, Olimpio Gumin,
Leo Tropico, Orlando Nacu, Rodolfo T. Capitly and Juanito Suba, are valid, the
LABOR LAW 2- SESSION 2 CASES
alleged president of complainant-appellee union Benigno Navarro, Sr., contends
that Id Atty. Solomon has no authority to appear floor and in behalf of individual
complainants-appellees who waived their rights and interests in these cases
since there was no authority from him. Records, however, disclose that said Atty.
Solomon had been the attorney of record for complainants-appellees since the
inception of these cases, and, therefore, is authority to represent them cannot be
questioned- not even by Ministry. Navarro who allegedly took over the
presidency of complainant-appellee union after the disappearance of the former
president, Mr. Ficardo Alconga, Sr. And besides, the waiver of rights and
interests were personally executed by the signatories therein and all that Atty.
Solomon did was to assist them. 21
xxx xxx xxx
We find this puzzling for clearly, Labor Arbiter Aquino's resolution refers to other
cases22 and not the instant unfair labor practice controversy. The Commission cannot
feign simple mistake for such a lapse. Wittingly or unwittingly, it had made itself a
Dawn of the respondent corporation or otherwise had yielded to its influence. The
Court rebukes Atty. Isagani M. Jungco counsel for the respondent company, for his
unbecoming act and the individual members of the Commission itself, for besmirching
the integrity of the Commission.
In any event, we have held that unfair labor practice cases are not, in view of the
public interest involved, subject to compromises. 23 Furthermore, these alleged
waivers do not appear to have been presented in the first instance. They cannot be
introduced for the first time on appeal.
We come, finally, to the respondent company's liability for backwages and for
emergency cost of living allowances (ECOLA). In its appeal, the company denies any
liability, pointing to "[r]epresentative samples of the documents evidencing payment
was likewise submitted due to the voluminous records which cannot be all
produced." 24 The Commission accepted this argument, noting that 'these xerox
copies of payment of allowances, were never spurned by complainants-
appellees." 25 The Solicitor General observes, on the other hand, that these alleged
documents were never presented at the hearing but surfaced only on
appeal. 26 Indeed, there is no reference in the Labor Arbiter's decision to these
documents, and apparently, the respondent firm entered the same in evidence at the
appeal level only. As we have declared, a party is barred from introducing fresh
matters at the appellate stage. Besides, and as the Solicitor General points out, "the
ECOLA awarded to petitioners in the decision of the Labor Arbiter include only those
that pertain to them from the time of their dismissal up to July 1, 1982 " 27 the date the
Labor Arbiter ordered their reinstatement. 28 Accordingly, we rule the respondent
corporation liable for such unpaid claims.
Before Batas Blg. 70 29 was enacted into law, unfair labor practices were considered
administrative offenses, 30 and have been held akin to tort, 31 wherein damages are
payable. We therefore not only order herein the reinstatement of the petitioners and
the payment of backwages (including cost-of-living allowances) to them, but impose
as well moral and exemplary damages. With respect to backwages, we hold the
respondent e.g. Gochangco, Inc. liable, in line with the recommendation of the
Page 11
Solicitor General and in accordance with accepted practice, for backwages equivalent
to three (3) years without qualification or deduction. 32
As for moral damages, we hold the said respondent liable therefor under the
provisions of Article 2220 of the Civil Code providing for damages for "breaches of
contract where the defendant acted fraudulently or in bad faith." We deem just and
proper the sum of P5,000.00 each in favor of the terminated workers, in the concept
of such damages.
We likewise grant unto said workers another P5,000.00 each to answer for exemplary
damages based on the provisions of Articles 2229 and 2231 and/or 2232 of the Civil
Code. For "act[ing] in gross and evident bad faith in refusing to satisfy the
[petitioners'] plainly valid, just and demandable claim[s] " 33 the respondent firm is
further condemned to pay attorney's fees. The Court considers the total sum of
P20,000.00 fair and reasonable.
If only for emphasis, the new Constitution considers "labor as a primary social
economic force." 34 As the conscience of the government, it is this Court's sworn duty
to ensure that none trifles with labor rights.
WHEREFORE, the petition is GRANTED. The decision of the public respondent, the
National Labor Relations Commission, is REVERSED and SET ASIDE. Judgment is
hereby rendered:
1. Ordering the private respondent, e.g. Gochangco, Inc., to REINSTATE the
terminated workers;
2. Ordering the private respondent to PAY them backwages equivalent to three (3)
years without qualification or deduction;
3. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH,
as and for moral damages;
4. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH,
as and for exemplary damages; and
5. Ordering it to PAY them the sum of TWENTY THOUSAND (P20,000.00) PESOS
as and for attorney's fees.
This Decision is IMMEDIATELY EXECUTORY.
Costs against the private respondent.
IT IS SO ORDERED.
LABOR LAW 2- SESSION 2 CASES
G.R. No. 90519 March 23, 1992
UNION OF FILIPINO WORKERS (UFW), petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, SIMEX INTERNATIONAL INC., LILIA SANTANDER,
GEORGE SANTANDER and JOSEPH SANTANDER, respondents.
This Petition for Certiorari seeks to set aside the Decision of public respondent
National Labor Relations Commission (NLRC), dated 26 August 1989, which
reversed the Decision of the Labor Arbiter, dated 27 June 1988, and sustained the
closure of private respondent company, SIMEX International Inc., as valid.
On 4 September 1987, a Petition for Direct Certification among the rank-and-file
workers of SIMEX was filed before the Med Arbiter, docketed as Case No. 00-09-634-
87 (Petition for Direct Certification), with the hearing thereof set for 18 September
1987. These workers subsequently affiliated with petitioner Union of Filipino Workers
(UFW).
On 19 September 1987, thirty-six (36) workers of the "lumpia" department were not
given their usual working materials and equipment for that day and, instead, were
asked to clean their respective working areas. Since these workers were employed
on a "pakiao" basis, they refused. Nevertheless, they still reported for work on 21
September 1987 but to their surprise, they found out that SIMEX had removed all
materials and equipments from their workplaces. The Union claims that its members
were, therefore, effectively locked out.
From 1 October 1987 to 7 October 1987, sixteen (16) more workers from the other
departments were similarly refused employment. As a consequence, these workers,
through UFW, instituted a Complaint for Unfair Labor Practices and violation of labor
standard laws against SIMEX and its principal officers and stockholders, namely
private respondents Lilia, George and Joseph, all surnamed SANTANDER, docketed
as NLRC-NCR-00-09-03329-87 (for Illegal Dismissal/Lockout of 36 "lumpia"
department workers and 16 others, etc.).
On 9 October 1987, however, SIMEX had filed a Notice of "Permanent
Shutdown/Total Closure of All Units of Operation in the Establishment" with the
Department of Labor and Employment to take effect on 9 November 1987, allegedly
due to business reverses brought about by the enormous rejection of their products
for export to the United States. This notice of closure rendered the Petition for Direct
Certification moot and academic. Notices of Closure were placed in conspicuous
places around the company premises.
Meanwhile, in sympathy with their fifty-two (52) co-workers who were allegedly
illegally dismissed by SIMEX and in "protest to the continued acts of unfair labor
practices committed" by SIMEX, thirty-nine (39) other workers staged a picket outside
the company premises from 10 October 1987 to 27 October 1987. By reason thereof,
SIMEX's supposed offer of separation pay totalling P280,000.00 was withdrawn.
When these workers lifted their picket on 27 October 1987 and voluntarily reported for
work, SIMEX refused to give them their usual work. They were dismissed effective 1
November 1987.
Page 12
Another Complaint for Unfair Labor Practice was, therefore, filed against the same
respondents, this time involving the thirty-nine (39) workers who picketed the
company premises in sympathy with their other co-workers, docketed as NLRC-NCR-
11-03887-87 (for Unfair Labor Practice, Illegal Dismissal/Lockout of thirty-nine
[39]workers). It is this case that is the subject of this Petition for Certiorari.
On 27 June 1988, the Labor Arbiter rendered his verdict declaring that the closure of
SIMEX was a mere subterfuge in order to discourage the formation of the union. The
respondents, SIMEX and the SANTANDERs, were found guilty of unfair labor
practice and were ordered, jointly and solidarily, to reinstate the 39 workers without
loss of seniority rights, benefits and privileges, with full backwages from 1 November
1987 until such time that these workers are actually reinstated. They were also
ordered to pay ten per cent (10%) of the total awards as attorney's fees.
On appeal, the NLRC, in a Decision dated 28 August 1989, set aside the Labor
Arbiter's Decision when it held that the "determination of the wisdom or expediency to
close a department in a corporation, e.g., the 'lumpia' department in this case, due to
financial reverses, is the sole prerogative of the corporation." It ruled that since
SIMEX had filed a Notice of Closure on 9 October 1987 and had complied with the
requirements of the applicable rules and regulations when it posted in their main gate
the aforesaid Notice, its failure to accept the workers of UFW did not constitute unfair
labor practice considering that SIMEX had already closed the "lumpia" department.
Hence, SIMEX was merely ordered to pay the workers affected a separation pay
equivalent to one (1) month's salary for every year of service rendered.
Petitioner UFW has thus elevated its cause before us in this Petition for Certiorari,
seeking the reversal of the NLRC Decision, for having been rendered with grave
abuse of discretion, and the reinstatement instead of the Decision of the Labor Arbiter
and its affirmance in toto.
The public and private respondents in this case were required to file their respective
Comments. Since the Solicitor General adopted a position contrary to that of the
NLRC, the Court required the latter to file its own Comment, which it has done.
After the Comments, Reply, Rejoinders and the parties' respective Memoranda were
submitted, private respondents SIMEX and the SANTANDERs filed a Manifestation,
dated 10 December 1990 (p. 212, Rollo), signed by Atty. Julio F. Andres, Jr., stating
that after they had manifested to the Court on 9 December 1990 that they were
adopting their Memorandum, they discovered that an "Acknowledgment Receipt and
Undertaking," dated 9 June 1989, had already been signed between private
respondent George SANTANDER and petitioner's former counsel, Atty. Modesto S.
Mendoza, whereby this case as well as two (2) others had already been settled and
compromised. Thereby, this controversy has become moot and academic. Said
Undertaking reads:
I, MODESTO S. MENDOZA, . . ., have today RECEIVED FROM SIMEX
INTERNATIONAL, INC., through its Vice-President, MR. GEORGE
SANTANDER, the following amounts:
LABOR LAW 2- SESSION 2 CASES
P500,000.00 in cash and
P50,000.00 PCIB check No. 496869 dated Sept. 9, 1989
P50,000.00 PCIB check No. 496870 dated Dec. 9, 1989
P50,000.00 PCIB check No. 496871 dated March. 9, 1990
P50,000.00 PCIB check No. 496872 dated June 9, 1990
in full and complete settlement of NLRC-NCR-CASE NOS. 00-09-03329-87, 00-
11-3887-87 and 00-01-00255-88.
I undertake to take charge of obtaining the signatures of the proper officers of the
union to sign the Motion to Dismiss in order to implement the full and final
settlement of said cases between complainant and respondents.
I further undertake and warrant that with this payment by the respondents, the
complainant Union and each of their members, hereby RELEASE AND
DISCHARGE the SIMEX INTERNATIONAL INC., each (sic) Officers, agents and
representative (sic) fro any demands, claims and liabilities from any cause
whatsoever, arising out of their employment with the said respondents (sic)
corporation.
UFW maintains, however, that the settlement did not materialize because of its
objections as shown by the fact that it had not filed a Motion to Dismiss and Quitclaim
in this case.
The issues for determination then are: 1) whether or not a compromise had been
reached by the parties; and 2) whether or not there was a valid closure of SIMEX that
entitled it to terminate the employment of its thirty-nine (39) employees. A plea is also
made that the individual private respondents SANTANDERs be dropped from the suit
since they only acted within the scope of their authority.
We incline to the view that no valid compromise agreement was arrived at in this
case.
The alleged settlement involved three (3) cases, one of which charges alleged
violation of labor standards. Compromise agreements involving labor standards cases
must be reduced to writing and signed in the presence of the Regional Director or his
duly authorized representative (Atilano v. De la Cruz, G.R. No. 82488, 28 February
1990, 182 SCRA 886). Section 8, Rule II of the Rules on the Disposition of Labor
Standards Cases in the Regional Offices provides:
Sec. 8. Compromise Agreement. — Should the party arrive at an agreement as
to the whole or part of the dispute, said agreement shall be reduced [to] writing
and signed by the parties in the presence of the regional director or his duly
authorized representative.
The questioned "Acknowledgment Receipt and Undertaking" did not comply with this
requisite. It was not, therefore, duly executed.
Page 13
Even assuming arguendo that it was, Atty. Modesto Mendoza, counsel for petitioner
UFW, whose services were subsequently terminated, was not duly authorized to
enter into a compromise with SIMEX and the SANTANDERs. As aptly pointed out by
the Solicitor General, Article 1878 of the Civil Code provides that a Special Power of
Authority is required before an agent can be authorized to enter into a compromise. It
reads:
Art. 1878. Special powers of attorney are necessary in the following cases:
xxx xxx xxx
(3) To compromise, to submit questions to arbitration, to renounce the right to
appeal from a judgment, to waive objections to the venue of an action or to
abandon a prescription already acquired. (Emphasis ours).
No evidence was adduced that would show that the aforementioned counsel for UFW
was authorized to enter into a compromise. Correspondingly, he cannot release and
discharge SIMEX and the SANTANDERs from their obligation. A perusal of the
"Acknowledgment Receipt and Undertaking" reveals that no representative of UFW
signed the alleged settlement.
The fact that said counsel undertook to obtain the signatures of the proper officers of
UFW shows that his action was still subject to ratification by the union members. This
confirmation was never secured as shown by the fact that no motion for the dismissal
of the case at bar had been filed by UFW or on its behalf "in order to implement the
full and final settlement of said case," unlike in NLRC-NCR Case No. 00-01-00255-88
where such a Motion had been filed. In an Affidavit, dated 6 May 1991 (p. 258, Rollo),
Atty. Mendoza also declared that respondent George Santander had stopped the
payment of the three (3) postdated checks, which statement has not been refuted by
private respondents.
We now shift to the issue bearing on the legality of the closure of SIMEX. Article 283
(then Article 284) of the Labor Code provides:
Art. 283. Closure of the establishment and reduction of personnel. — The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at least
his one (1) month pay or at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment and undertaking not due to
serious business losses or financial losses, the separation pay shall be
equivalent to one (1) month pay or at least one half (1/2) month pay for every
LABOR LAW 2- SESSION 2 CASES
year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year. (Emphasis in text supplied).
Under this provision, the closure of a business establishment is a ground for the
termination of the services of any employee unless the closing is for the purpose of
circumventing the provisions of law. But, while business reverses can be a just cause
for terminating employees, they must be sufficiently proven by the employer (Indino v.
NLRC, G.R. No. 80352, 29 September 1989, 178 SCRA 168).
In the case at bar, SIMEX alleged that it suffered export rejections amounting to
$78,959.54 for 1985, $1,654.00 for 1986 and $28,414.11 for 1987, respectively. It
alleged that these export rejections resulted in huge financial losses to the company
(Rollo, p. 96) so much so that remedial measures were instituted as suppliers
hesitated to given the company their usual credit terms (ibid, p. 97).
The audited financial statement of SIMEX, however, clearly depicted that for 1985
and 1986, the company actually derived retained earnings of P35,593.21 and P73,
241.25, respectively. The private respondents never refuted this fact. Instead, they
merely insisted that these export rejections resulted in heavy losses for the company.
These export rejections may have, indeed, contributed to a reduction of SIMEX's
earnings. The company, however, was not suffering from business losses, as
claimed, at the time of application for closure.
Indeed, there is no question that an employer may reduce its work force to prevent
losses. However, these losses must be serious, actual and real (Lopez Sugar
Corporation v. Federation of Free Workers, G.R. No. 75000-01, 30 August 1990, 189
SCRA 179). Otherwise, this "ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning business losses or reverses in
their business ventures in order to ease out employees (Garcia v. NLRC, G.R. No. L-
67825, 4 September 1987, 153 SCRA 639).
In this regard, then, SIMEX failed to prove its claim. What were submitted as
evidence were mere receipts of export rejections, nothing more. SIMEX never
adduced evidence that would reflect the extent of losses suffered as a result of the
export rejections, which failure is fatal to its cause.
The Notice of Closure filed by SIMEX had indicated that it will have a permanent
shutdown and/or total closure of all its units of operation. This was not so. Workers
belonging to the Marketing and Export Divisions were never laid off. A SEC
Certification, dated 4 February 1988, shows that SIMEX never applied for dissolution.
The Labor Arbiter also found as a fact that SIMEX continued to export its products,
including "eggroll wrap," long after its target date of closure.
In explaining this discrepancy, SIMEX merely alleged that not all its operations were
closed. Even on this score alone, therefore, private respondents' position must be
rejected.
These factors strongly give more credence to the Solicitor General and UFW's
contention that the alleged closure of business of SIMEX was "but a subterfuge to
Page 14
discourage formation of a union" and that SIMEX was guilty of union busting. To all
appearances, the company had filed a Notice of Closure simply to pre-empt the
employees from forming a union within the company.

The SANTANDERs' prayer that they be dropped from this case must also be rejected.
They should have adopted that recourse during the earlier stages. Moreover, UFW
has adequately shown that the individual private respondents were not only officers of
the company but its major stockholders as well (see Carmelcraft Corporation v.
NLRC, G.R. Nos. 90634-35, 6 June 1990, 186 SCRA 393).

Lastly, if SIMEX has not yet recovered the balance of the compromise money given to
then counsel for petitioner, its recourse is to file the appropriate civil or criminal case
against the latter. After all, in said counsel's Affidavit, he has stated that he is ready to
return the balance of what he had received after payment of the amount due in
NLRC-NCR Case No. 00-01-00255-88.

WHEREFORE, the Petition for Certiorari is GRANTED. The Decision of respondent

NLRC, dated 26 August 1989, is hereby SET ASIDE and the Decision of the Labor
Arbiter, dated 27 June 1988, is hereby REINSTATED and AFFIRMED in toto.

Costs against private respondents.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 15

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.
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
LABOR LAW 2- SESSION 2 CASES
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.
Page 16
 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
LABOR LAW 2- SESSION 2 CASES
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.
Page 17
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
LABOR LAW 2- SESSION 2 CASES
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
Page 18
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,
LABOR LAW 2- SESSION 2 CASES
Enage was the chairman of the negotiating panel for the Companies in the collective
bargaining between the former and the Unions. After the petitioners went to strike, the
strikers were individually sent copies of exhibit A, enticing them to abandon their
strike by inducing them to return to work upon promise of special privileges. Two days
later, the respondents, thru their president and manager, respondent Jose M. Olbes,
brought three truckloads of non-strikers and others, escorted by armed men, who,
despite the presence of eight entrances to the three buildings occupied by the
Companies, entered thru only one gate less than two meters wide and in the process,
crashed thru the picket line posted in front of the premises of the Insular Life Building.
This resulted in injuries on the part of the picketers and the strike-
breakers.lâwphî1.ñèt Then the respondents brought against the picketers criminal
charges, only three of which were not dismissed, and these three only for slight
misdemeanors. As a result of these criminal actions, the respondents were able to
obtain an injunction from the court of first instance restraining the strikers from
stopping, impeding, obstructing, etc. the free and peaceful use of the Companies'
gates, entrance and driveway and the free movement of persons and vehicles to and
from, out and in, of the Companies' buildings. On the same day that the injunction
was issued, the letter, Exhibit B, was sent — again individually and by registered
special delivery mail — to the strikers, threatening them with dismissal if they did not
report for work on or before June 2, 1958. But when most of the petitioners reported
for work, the respondents thru a screening committee — of which Ramon Garcia was
a member — refused to admit 63 members of the Unions on the ground of "pending
criminal charges." However, when almost all were cleared of criminal charges by the
fiscal's office, the respondents adamantly refused admission to 34 officials and union
members. It is not, however, disputed that all-non-strikers with pending criminal
charges which arose from the breakthrough incident of May 23, 1958 were readmitted
immediately by the respondents. Among the non-strikers with pending criminal
charges who were readmitted were Generoso Abella, Enrique Guidote, Emilio
Carreon, Antonio Castillo, Federico Barretto, Manuel Chuidian and Nestor Cipriano.
And despite the fact that the fiscal's office found no probable cause against the
petitioning strikers, the Companies adamantly refused admission to them on the
pretext that they committed "acts inimical to the interest of the respondents," without
stating specifically the inimical acts allegedly committed. They were soon to admit,
however, that these alleged inimical acts were the same criminal charges which were
dismissed by the fiscal and by the courts..
Verily, the above actuations of the respondents before and after the issuance of the
letters, exhibit A and B, yield the clear inference that the said letters formed of the
respondents scheme to preclude if not destroy unionism within them.
To justify the respondents' threat to dismiss the strikers and secure replacements for
them in order to protect and continue their business, the CIR held the petitioners'
strike to be an economic strike on the basis of exhibit 4 (Notice of Strike) which states
that there was a "deadlock in collective bargaining" and on the strength of the
supposed testimonies of some union men who did not actually know the very reason
for the strike. It should be noted that exhibit 4, which was filed on January 27, 1958,
states, inter alia:
TO: BUREAU OF LABOR RELATIONS
DEPARTMENT OF LABOR
MANILA
Page 19

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.
LABOR LAW 2- SESSION 2 CASES
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.)
Page 20
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.
OLBES
President,
Insurance Life
Acting President, FGU.
LABOR LAW 2- SESSION 2 CASES
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
Page 21
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
LABOR LAW 2- SESSION 2 CASES
amiss to conclude that they were more inclined to favor the respondents rather than
Tongos.
Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Daño, Vicente Alsol and
Hermenigildo Ramirez, opined the lower court, were constructively dismissed by non-
readmission allegedly because they not only prevented Ramon Garcia, assistant
corporate secretary, and Vicente Abella, chief of the personnel records section of the
Companies, from entering the Companies' premises on May 21, 1958, but they also
caused bruises and abrasions on Garcia's chest and forehead — acts considered
inimical to the interest of the respondents. The Unions, upon the other hand, insist
that there is complete lack of evidence that Ner took part in pushing Garcia; that it
was Garcia who elbowed his way through the picket lines and therefore Ner shouted
"Close up," which the picketers did; and that Garcia tossed Paulino Bugay's placard
and a fight ensued between them in which both suffered injuries. But despite these
conflicting versions of what actually happened on May 21, 1958, there are grounds to
believe that the picketers are not responsible for what happened.lâwphî1.ñèt The
picketing on May 21, 1958, as reported in the police blotter, was peaceful (see Police
blotter report, exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner was
acquitted). Moreover, although the Companies during the strike were holding offices
at the Botica Boie building at Escolta, Manila; Tuason Building at San Vicente Street,
Manila; and Ayala, Inc. offices at Makati, Rizal, Garcia, the assistant corporate
secretary, and Abella, the chief of the personnel records section, reported for work at
the Insular Life Building. There is therefore a reasonable suggestion that they were
sent to work at the latter building to create such an incident and have a basis for filing
criminal charges against the petitioners in the fiscal's office and applying for injunction
from the court of first instance. Besides, under the circumstances the picketers were
not legally bound to yield their grounds and withdraw from the picket lines. Being
where the law expects them to be in the legitimate exercise of their rights, they had
every reason to defend themselves and their rights from any assault or unlawful
transgression. Yet the police blotter, about adverted to, attests that they did not resort
to violence.
The heated altercations and occasional blows exchanged on the picket line do not
affect or diminish the right to strike. Persuasive on this point is the following
commentary: .
We think it must be conceded that some disorder is unfortunately quite usual in
any extensive or long drawn out strike. A strike is essentially a battle waged with
economic weapons. Engaged in it are human beings whose feelings are stirred
to the depths. Rising passions call forth hot words. Hot words lead to blows on
the picket line. The transformation from economic to physical combat by those
engaged in the contest is difficult to prevent even when cool heads direct the
fight. Violence of this nature, however much it is to be regretted, must have been
in the contemplation of the Congress when it provided in Sec. 13 of Act 29 USCA
Sec. 163, that nothing therein should be construed so as to interfere with or
impede or diminish in any way the right to strike. If this were not so, the rights
afforded to employees by the Act would indeed be illusory. We accordingly
recently held that it was not intended by the Act that minor disorders of this
nature would deprive a striker of the possibility of reinstatement. (Republic Steel
Corp. v. N. L. R. B., 107 F2d 472, cited in Mathews, Labor Relations and the
Law, p. 378)
Page 22
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
LABOR LAW 2- SESSION 2 CASES
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
Page 23
 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
LABOR LAW 2- SESSION 2 CASES
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
Page 24
 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.
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.

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

LABOR LAW 2- SESSION 2 CASES Page 25

G.R. No. L-39040 June 6, 1990
ROYAL UNDERGARMENT CORPORATION OF THE PHILIPPINES, petitioner, vs.
COURT OF INDUSTRIAL RELATIONS, ROYAL UNDERGARMENT WORKERS
UNION (PTGWO) and ANTONIO CRUZ, respondents.
This is a petition for review on certiorari seeking the reversal of the decision rendered
by the defunct Court of Industrial Relations on January 21, 1974 adjudging the
petitioner corporation guilty of unfair labor practice and ordering the reinstatement of
and payment of backwages to respondent Antonio Cruz.
The antecedent facts as found by the industrial court are as follows:
Respondent Antonio Cruz was employed by petitioner corporation in 1957 as an
electrician. Sometime in December, 1961, he was elected president of the Royal
Undergarment Workers Union (RUWU for brevity), a legitimate labor organization
which became affiliated with the Philippine Transport and General Workers
Organization (PTGWO for brevity).
On December 14, 1961, the RUWU-PTGWO, represented by the National Secretary
of PTGWO and respondent Cruz as RUWU President, sent proposals to petitioner
corporation for the purpose of collective bargaining.
On the following day, December 15, 1961, petitioner corporation, thru its personnel
manager, terminated the services of respondent Cruz allegedly on the basis of the
latter's "record and after careful analysis and deliberation." Respondent's wife,
Felicidad Cruz, who was also an employee of petitioner, was likewise terminated.
Thus, RUWU called a strike sometime during the first week of January, 1962.
On January 10, 1962, RUWU-PTGWO and petitioner corporation entered into a
Return-to-Work Agreement thru the conciliation efforts of the Department of Labor.
The agreement contained the following provision:
xxx xxx xxx
Regarding the two (2) employees, Mr. Antonio Cruz and Mrs. Cruz, the union
entrusts the settlement of its complaint for decision to the Management, which
shall be reinstatement for both employees when the Royal Undergarment
Workers Union- PTGWO shall have been chosen as the collective bargaining
agent for the workers at the consent election to be held in the company
premises;
.... (pp. 39-40, Rollo)
The records do not disclose the results of the consent election. Subsequently
however, respondent Cruz and his wife were both re-employed and reinstated by
petitioner corporation, thereby indicating the victory of RUWU-PTGWO in the consent
election.
LABOR LAW 2- SESSION 2 CASES
On March 31, 1962, RUWU-PTGWO and petitioner corporation entered into a
collective bargaining agreement which contained a grievance procedure for the
settlement of disputes. Such grievance procedure was applied on several occasions
involving suspensions of union members-employees through the help and active
participation of respondent Cruz as union president.
Sometime in November, 1962, the PTGWO urged its member-unions to stage a
nationwide strike. Thus, respondent Cruz campaigned among the members of RUWU
to join the strike.
On November 28, 1962 at around 11:00 p.m., within the company premises,
respondent Cruz approached three co-employees who are supervisors of the
company, namely, Camaguin, Dayadante and Gaspar. These persons contended that
respondent Cruz, who was under the influence of liquor, uttered the following remarks
to them: "Ikaw, Ikaw, Ikaw-mga hayop kayo. Bibigyan ko kayo ng isang linggong
taning sa buhay ninyo ipapapatay ko kayo." They also claim that respondent Cruz
had challenged another co-employee. Respondent and his witnesses denied this
charge and claimed that what the respondent actually said to the three employees
was: "Ikaw, Ikaw, Ikaw pare, alam kong matitigas kayo rito sa compania, kayat ako'y
nakikiusap, kung maaari pag-natuloy ang nationwide strike bukas, makiisa kayo at
gamitin ang tigas ninyo." Immediately thereafter, the three employees went to the
personnel officer of petitioner corporation. On November 29, 1962, they executed an
affidavit regarding the incident.
The following day, on November 30, 1962, the general manager of petitioner
corporation placed respondent Cruz on preventive suspension effective December 3,
1962 for threatening "the lives of four (4) employees" and for having 'been reported
under the influence of liquor," both acts being "contrary to rules and regulations."
Upon the request of respondent Cruz and PTGWO, the petitioner corporation
conducted a conference which was in the nature of an investigation of the incident.
On December 13, 1962, petitioner corporation dismissed respondent Cruz for being
under the influence of liquor on November 28, 1962 and for having threatened the
lives of four of his co-employees.
Respondent Cruz filed a complaint for unfair labor practice against petitioner
corporation with the Court of Industrial Relations. On January 21, 1974, the
respondent industrial court, while affirming the findings of the healing examiner,
rendered a decision, the dispositive portion of which, reads as follows:
WHEREFORE, respondent is hereby declared guilty of unfair labor practice and
is ordered to cease and desist from further committing the same. Respondent is
further directed to reinstate complainant Antonio Cruz to his former or equivalent
position without loss of seniority and other privileges and to pay him backwages
including all benefits attached to his position, from the date he was dismissed up
to November 17, 1969.
SO ORDERED. (pp. 43-44, Rollo)
Page 26
Hence, this petition for review on certiorari with the petitioner assigning the following
errors:
I RESPONDENT CIR COMMITTED A GRAVE MISAPPREHENSION OF FACT
IN HOLDING IN ITS DECISION THAT IT WAS RESPONDENT CRUZ' UNION
ACTIVITIES WHICH CAUSED HIS DISMISSAL BY PETITIONER.
II RESPONDENT CIR LIKEWISE COMMITTED A GRAVE MISAPPREHENSION
OF FACT IN NOT HOLDING IN ITS DECISION THAT THE DISMISSAL OF
RESPONDENT CRUZ WAS FOR CAUSE AS PROVIDED FOR IN THE
TERMINATION PAY LAW AND IN ACCORDANCE WITH MANAGEMENT
PREROGATIVE.
III ASSUMING ARGUENDO THAT PETITIONER IS GUILTY OF UNFAIR
LABOR PRACTICE, RESPONDENT CIR ERRED IN AWARDING
RESPONDENT CRUZ FULL BACKWAGES WITHOUT DEDUCTING
THEREFROM THE INCOME HE EARNED DURING SAID PERIOD. (pp. 9-
10, Rollo)
Anent the first and second assigned errors, petitioner submits that the records of the
case, particularly the testimonies of respondent Cruz himself and his witnesses, show
that petitioner corporation did not interfere with or prevent the union activities of its
employees; that the former has even allowed or abetted active unionism within the
company; that the dismissal of respondent Cruz was not impelled by reason of union
participation of respondent Cruz but solely by his infraction of company rules and
regulations, specifically, serious threats against the lives of three co-employees,
challenging another to a fight and intoxication while on duty, all of which clearly
amounted to a dismissal for cause under the Termination Pay Law, Rep. Act No.
1052, as amended.
On the other hand, the Court of Industrial Relations found from the surrounding
circumstances of the case, a valid and sufficient basis for the charge of unfair labor
practice against petitioner company. Said the respondent court:
There is no question as to the union activities of the complainant. Starting from
the time he was elected president of the RUWU, he had engaged himself actively
in union affairs. He had in behalf of others pursued assiduously the employee
relationships of the membership. And on a higher plane, he urged the members
to join the nation-wide strike being planned by the PTGWO.
On the part of respondent there appears to be an attitude of antipathy towards
the complainant. Going back to the time, when the RUWU sent collective
bargaining proposals represented then by the complainant, the latter and his wife
were dismissed one day after the same was received by respondent company.
The record does not show the specific reasons or bases for this action except the
general proposition that this (complainant's) record was supposedly carefully
analyzed. And yet, why include his wife in the dismissal? In the Return-to-Work
Agreement of January, 1962 which followed, a peculiar and strange arrangement
was made. The reinstatement of complainant and his wife was made to depend
LABOR LAW 2- SESSION 2 CASES
on a contingency-the victory of RUWU in the consent election. The main
consideration therefore of complainant's reinstatement, as well as that of his wife,
is, he gets back to work if his union wins; he stays out, if his union loses. Should
one's employment be made to depend on his union affiliation or Identity? This
aspect only projects the animosity harbored by the respondent against the
complainant.
Then, in the space of eleven months, complainant once again was dismissed
from respondents' employ, e.g. in December of the same year he was reinstated.
Respondents based its dismissal of complainant on the ground that he was
obviously under the influence of liquor and he threatened the lives of four co-
employees. The evidence of being obviously under the influence of liquor' is
based on the supposed observation of the three witnesses whose lives were
allegedly threatened, coming as it is from a biased source. None of these
witnesses have ever supplied, much less hinted on the motivation why
complainant threatened their lives. On the contrary, they claimed that they were
on friendly terms with the complainant with no previous background of
misunderstanding between them. None of them ever filed criminal charges
against the complainant for the supposed threat on their lives indicating that
whatever has transpired is not as serious as pictured by the respondent. The
incident was simply blown into such proportion so as to provide a supposed valid
cause for complainant's dismissal. In the light of the initial attitude of respondent
earlier discussed, the inducing cause directly contributing to complainant's
dismissal is the respondent's antipathy to complainant's union activity and not his
misconduct. (pp. 42-43, Rollo)
We accord respect to the findings of the industrial court. Section 3 of Republic Act No.
875, known as the The Industrial Peace Act, as amended, provides that employees
shall have the right to self-organization and to form, join or assist labor organizations
of their own choosing for the purpose of collective bargaining through representatives
of their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection. Hence, it shall be unfair labor
practice for an employer to discriminate in regard to tenure of employment or any
term or condition of employment to encourage or discourage membership in any labor
organization (Section 4 (a) (4), R.A. No. 875).
We have perused the record and found that the totality of evidence as found by
respondent court supports the conclusion that respondent Cruz has been unjustly
dismissed by reason of his union activities. The charge by petitioner against
respondent Cruz for being under the influence of liquor on a certain date and for
having threatened the lives of his co-employees is too flimsy to merit serious
consideration. We have on record the undisputed facts that private respondent, as
president of RUWU, was known for his aggressive and militant union activities; that
he and his wife had been previously dismissed on the ground of active participation in
union affairs; that they were reemployed only pursuant to the express terms of the
Return-to-Work Agreement executed by petitioner corporation and RUWU when the
latter won in the consent election; that respondent Cruz was dismissed again for the
second time in the course of his campaign among RUWU members to join the
nationwide strike of PTGWO in which RUWU is a member union.
Page 27
It has previously been indicated that an employer may treat freely with an employee
and is not obliged to support his actions with a reason or purpose. However, where
the attendant circumstances, the history of the employer's past conduct and like
considerations, coupled with an intimate connection between the employer's action
and the union affiliations or activities of the particular employee or employees taken
as a whole raise a suspicion as to the motivation for the employer's action, the failure
of the employer to ascribe a valid reason therefor may justify an inference that his
unexplained conduct in respect of the particular employee or employees was inspired
by the latter's union membership or activities (Rothenbergon Labor Relations, pp.
401-402, cited in San Miguel Brewery, Inc., et al. v. Santos, et al., No. L-12682,
August 31, 1961, 2 SCRA 1081).

Further, factual findings of the Court of Industrial Relations are conclusive in the
absence of a showing that the same have no support in the evidence on record. This
Court will not review said court's factual findings as long as the same are supported
by evidence. This is so because the industrial court is governed by the rule of
substantial evidence rather than by the rule of preponderance of evidence as in
ordinary civil cases (Sanchez v. Court of Industrial Relations, L-19000, July 31, 1963,
8 SCRA 654; Industrial Commercial Agricultural Workers Organization v. Bautista, L-
15639, April 30, 1963, 7 SCRA 907).

Anent the third assigned error, it is the judicial trend to fix a reasonable period for the
payment of backwages to avoid protracted delay in post judgment hearings to prove
earnings of the worker elsewhere during the period that he had not been reinstated to
his employment. In consonance with the rulings in many cases, and in view of the
circumstances and equity of the instant case, respondent Cruz should be reinstated
and granted backwages corresponding to a period of three (3) years from the time he
was dismissed on December 13, 1962, without deduction for his earnings elsewhere
during his lay-off and without qualification of his backwages as thus fixed, that is,
unqualified by any wage increases (Bachrach Motor Co., Inc. v. Court of Industrial
Relations, L-26136, October 30, 1978, 86 SCRA 27; L.R. Aguinaldo & Co., Inc. v.
Court of Industrial Relations, No. L-31909, April 5, 1978, 82 SCRA 309; Davao Free
Workers Front v. Court of Industrial Relations, L-29356, October 27, 1975, 67 SCRA
418).

ACCORDINGLY, the petition is hereby DENIED and the decision of the Court of
Industrial Relations dated January 21, 1974 is AFFIRMED with MODIFICATION that
petitioner is directed to reinstate respondent Antonio Cruz without loss of seniority
rights and with backwages for three (3) years from the time of dismissal, without
deduction and qualification. If reinstatement is no longer possible, respondent Antonio
Cruz should be awarded separation pay of one (1) month for every year of service.
With costs against petitioner.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 28

G.R. No. 90634-35 June 6, 1990
CARMELCRAFT CORPORATION &/OR CARMEN V. YULO, President and
General Manager, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
CARMELCRAFT EMPLOYEES UNION, PROGRESSIVE FEDERATION OF
LABOR, represented by its Local President GEORGE OBANA, respondents.
The Court is appalled by the degree of bad faith that has characterized the petitioners'
treatment of their employees. It borders on puredisdain. And on top of this, they now
have the temerity to seek from us a relief to which they are clearly not entitled. The
petition must be dismissed.
The record shows that after its registration as a labor union, the Camelcraft
Employees Union sought but did not get recognition from the petitioners.
Consequently, it filed a petition for certification election in June 1987. On July 13,
1987, Camelcraft Corporation, through its president and general manager, Carmen
Yulo, announced in a meeting with the employees that it would cease operations on
August 13, 1987, due to serious financial losses. Operations did cease as
announced. On August 17, 1987, the union filed a complaint with the Department of
Labor against the petitioners for illegal lockout, unfair labor practice and damages,
followed the next day with another complaint for payment of unpaid wages,
emergency cost of living allowances, holiday pay, and other benefits. On November
29, 1988, the Labor Arbiter declared the shutdown illegal and violative of the
employees' right to self-organization. The claim for unpaid benefits was also
granted. 1 After reviewing the decision on appeal, the respondent NLRC declared:
WHEREFORE, premises considered, the appealed decision is modified. In
addition to the underpayment in their wages, emergency living allowance, 13th
month pay, legal holiday pay and premium pay for holidays for a period of three
years, the respondents are ordered to pay complainants their separation pay
equivalent to one-month pay for every year of service, a fraction of six months or
more shall be considered as one (1) whole year.
The rest of the disposition stand. 2
We do not find that the above decision is tainted with grave abuse of discretion. On
the contrary, it is comformable to the pertinent laws and the facts clearly established
at the hearing.
The reason invoked by the petitioner company to justify the cessation of its operations
is hardly credible; in fact, it is preposterous when viewed in the light of the other
relevent circumstances. Its justification is that it sustained losses in the amount of P
1,603.88 as of December 31, 1986 .3 There is no report, however, of its operations
during the period after that date, that is, during the succeeding seven and a half
months before it decided to close its business. Significantly, the company is
capitalized at P 3 million .4 Considering such a substantial investment, we hardly think
that a loss of the paltry sum of less than P 2,000.00 could be considered serious
enough to call for the closure of the company.
LABOR LAW 2- SESSION 2 CASES
We agree with the public respondent that the real reason for the decision of the
petitioners to cease operations was the establishment of respondent Carmelcraft
Employees Union. It was apparently unwelcome to the corporation, which would
rather shut down than deal with the union. There is the allegation from the private
respondent that the company had suggested that it might decide not to close the
business if the employees were to affiliate with another union which the management
preferred. 5 This allegation has not been satisfactorily disproved. At any rate, the
finding of the NLRC is more believable than the ground invoked by the petitioners.
Notably, this justification was made only eight months after the alleged year-end loss
and shortly after the respondent union filed a petition for certification election.
The act of the petitioners was an unfair labor practice prohibited by Article 248 of the
Labor Code, to wit:
ART. 248. Unfair labor practices of employers.-It shall be unlawful for an
employer to commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to
self-organization;
More importantly, it was a defiance of the constitutional provision guaranteeing to
workers the right to self-organization and to enter into collective bargaining with
management through the labor union of their own choice and confidence. 6
The determination to cease operations is a prerogative of management that is usually
not interfered with by the State as no business can be required to continue operating
at a loss simply to maintain the workers in employment. 7 That would be a taking of
property without due process of law which the employer has a right to resist. But
where it is manifest that the closure is motivated not by a desire to avoid further
losses but to discourage the workers from organizing themselves into a union for
more effective negotiations with the management, the State is bound to intervene.
And, indeed, even without such motivation, the closure cannot be justified because
the claimed losses are obviously not serious. In this situation, the employees are
entitled to separation pay at the rate of one-half month for every year of service under
Art. 283 of the Labor Code.
The contention of the petitioners that the employees are estopped from claiming the
alleged unpaid wages and other compensation must also be rejected. This claim is
based on the waivers supposedly made by the complainants on the understanding
that "the management will implement prospectively all benefits under existing labor
standard laws." The petitioners argue that this assurance provided the consideration
that made the quitclaims executed by the employees valid. They add that the waivers
were made voluntarily and contend that the contract should be respected as the law
between the parties.
Even if voluntarily executed, agreements are invalid if they are contrary to public
policy. This is elementary. The protection of labor is one of the policies laid down by
Page 29
the Constitution not only by specific provision but also as part of social justice. The
Civil Code itself provides:
ART. 6. Rights may be waived, unless the waiver is contrary to law, public order,
public policy, morals, or good customs, or prejudicial to a third person with a right
recognized by law.
ART. 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
The subordinate position of the individual employee vis-a-vis management renders
him especially vulnerable to its blandishments and importunings, and even
intimidations, that may result in his improvidently if reluctantly signing over benefits to
which he is clearly entitled. Recognizing this danger, we have consistently held that
quitclaims of the workers' benefits win not estop them from asserting them just the
same on the ground that public policy prohibits such waivers.
The petitioners obviously regard the private respondents as mere servants simply
because they are paid employees. That is a mistake. Laborers are not just hired help
to be exploited, without the right to defend and improve their interest . The working
class is an equal partner of management and should always be treated as such.
The more labor is prevented from pursuing its legitimate demands for its protection
and enhancement, the more it is likely to lose faith in our free institutions and to
incline toward Ideologies offering a more if deceptive regime. One way of disabusing
our working men and women of this delusion is to assure them that under our form of
government, the interests of labor deserve and will get proper recognition from an
enlightened and compassionate management, no less than the total sympathy of a
solicitous State.
WHEREFORE, the petition is DISMISSED and the challenged decision is
AFFIRMED, with costs against the petitioner. It is so ordered.

That the employee has signed a satisfaction receipt does not result in a waiver;
the law does not consider as valid any agreement to receive less compensation
than what a worker is entitled to recover. A deed of release or quitclaim cannot
bar an employee from demanding benefits to which he is legally entitled. 8

Release and quitclaim is inequitable and incongruous to the declared public

policy of the State to afford protection to labor and to assure the rights of workers
to security of tenure. 9

We find also untenable the contention of Carmen Yulo that she is not liable for the
acts of the petitioner company, assuming it had acted illegally, because the
Carmelcraft Corporation is a distinct and separate entity with a legal personality of its
own. Yulo claims she is only an agent of the company carrying out the decisions of its
board of directors. We do not agree. Our finding is that she is in fact and legal effect
the corporation, being not only its president and general manager but also its
owner. 10

Moreover, and this is a no less important consideration, she is raising this issue only
at this tardy hour, when she should have invoked this argument earlier, when the
case was being heard before the labor arbiter and later m the NLRC. It is too late now
to shunt these responsibilities to the company after she herself had been found liable.

All told, the conduct of the petitioners toward the employees has been less than
commendable. Indeed, it is reprehensible. First, the company inveigled them to waive
their claims to compensation due them on the promise that future benefits would be
paid (and to make matters worse, there is no showing that they were indeed paid).
Second, it refused to recognize the respondent union, suggesting to the employees
that they join another union acceptable to management. Third, it threatened the
employees with the closure of the company and then actually did so when the
employees insisted on their demands. All these acts reflect on the bona fides of the
petitioners and unmistakably indicate their ill will toward the employees.

LABOR LAW 2- SESSION 2 CASES Page 30

G.R. No. L-23010 July 9, 1971
H. ARONSON & CO., INC., THE PHOTO MATERIALS CO., INC. and MEDEL
OFFICE MATERIALS & PAPER CO., INC., petitioners, vs.ASSOCIATED LABOR
UNION, ALEJANDRO CENIZA, LORENZO SOLON, LUCAS ATIENZA, HOSPICIO
CASTILLO, EULOGIO GERNALE, PETRONIO BUSTAMANTE, CATALINA
ARANAS, MARIA CABATINGAN and THE COURT OF INDUSTRIAL
RELATIONS, respondents.
Petitioners' appeal from an order of the Court of industrial Relations issued in Case
No. 290-ULP-Cebu of November 11, 1963, penned by the then Presiding Judge, Jose
S. Bautista, subsequently affirmed by the court en banc, the dispositive part of which
is as follows:
WHEREFORE, the Court, finding the respondents guilty of unfair labor practices
as charged, orders them to cease and desist from such acts, and to reinstate
complainants Alejandro Ceniza, Lorenzo Solon, Lucas Atienza, Hospicio Castillo,
Eulogio Gernale, Petronio Bustamante, Catalina Aranas and Maria Cabatingan to
their former positions under the same terms and conditions of employment with
back wages from the time they were illegally dismissed until they are actually
reinstated by employing them either in the Photo Materials Company, Inc., or
Medel Office Materials and Paper Company, Inc.
Upon the filing of a charge for unfair labor practice with the Court of Industrial
Relations by herein respondents against petitioners H. Aronson & Co., Inc. —
hereinafter referred to as Aronson or the Company — and/or Photo Materials & Paper
Co., and/or Photo Materials Company, Inc. — hereinafter referred to as Photo
Materials — and Medel Office Materials and Paper Co., Inc. — also referred to
hereinafter as Medel — a preliminary investigation was had and thereafter the
corresponding charge was filed against them under the provisions of Section 4 (a),
sub-sections (1), (2), and (4) of Republic Act No. 875. After hearing, the parties
charged were found guilty. Their motion for reconsideration having been denied
subsequently by the court en banc, they took the present appeal.
The following facts have been established: Aronson, originally known as Moody
Aronson & Co., Inc., was incorporated in 1920, with an authorized capital stock of
P5000,000.00 and a corporate life of 50 years expiring on May 27, 1970. Its corporate
purpose was to engage, as it actually engaged, in the business of buying, importing
and selling of goods, wares and merchandise, wholesale and retail, including photo
materials and supplies, writing paper, school books, stationery and stationery
supplies. In the course of time it became an Aronson family controlled corporation.
In 1958 its President and General Manager was Francis Aronson, and its Assistant
Manager was Donato Medel. That year thirteen of its twenty-five employees became
members of the respondent Associated Labor Union, among them being the
individual respondents Alejandro Ceniza, Lorenzo Solon, Lucas Atienza, Hospicio
Castillo, Eulogio Gernale, Petronio Bustamante, Catalina Aranas and Maria
Cabatingan. In the month of September of that year, because of the dismissal of
Eugenia Solon, a union member, her co-employees who were union members
LABOR LAW 2- SESSION 2 CASES
declared a strike which was soon settled as a result of concilitation negotiations
initiated by the Cebu Regional Office of the Department of Labor.
Sometime thereafter, the respondent Union and its members made demands for a
collective bargaining agreement with the Company to obtain certain benefits in
connection with their working conditions. When the Company refused to enter into a
collective bargaining agreement, the employees who were union members declared a
second strike in December of that year. After some time the Company management
acceded to their demands and entered into a collective bargaining agreement with
them on January 6, 1959, the same having been renewed March 23, 1960. In this
manner the union members obtained labor benefits consisting of union security
clause, security of employment, conversion of daily to monthly salaries, sick and
vacation leaves, medical and dental care, etc.
On January 6, 1960, management sent to the employees of the Company letters of
termination of employment of the following tenor:
This is to notify you that on July 31, 1961 you will be separated from the service
of this Company. Consequently August 1, 1961 you will no longer be in the
employ of this Company.
Due to poor business, the stockholders desire to dissolve this Corporation or to
discontinue doing business on or about July 31, 1961.
Then on February 13, 1961 Aronson's original Articles of Incorporation were amended
so that, instead of its corporate existence expiring on May 27, 1970, it was made to
expire nine (9) years earlier, or more specifically, on July 31, 1961. On March 9,
1961, or less than a month after such amendment had been accomplished, Medel
was incorporated with a capital stock of P100,000.00, and on July 17 of the same
year, another new corporation, Photo Materials was also incorporated with an
authorized capital stock of P400,000.00.
The total authorized capital stock of the two new corporations amounting to
P500,000.00 was exactly the same authorized capital stock of Aronson. Moreover,
Photo Materials was organized to engage in the business of importing and exporting,
buying and selling goods, specifically photographic equipment and supplies, cameras,
graphic art films, greeting cards, and to maintain a photo processing laboratory and a
photo finishing and photographic studio, while the other new corporation, Medel, was
organized to engage in the business of buying and selling wares and merchandise of
all kinds, such as paper and other office materials. It will thus be seen that the two
new corporations were organized to engage in exactly the same business in which
Aronson had been engaged; in other words, to take over the latter's business.
On July 15, 1961, all the employees of Aronson who were members of the
respondent Union were required to stop working in spite of the fact that, according to
the notice of termination of employment served on them, their services were to be
terminated on the 31st of that month. On the other hand, the employees of the
Company who were not members of the respondent Union were allowed to continue
working up to that date, and thereafter they continued working because they were
Page 31
absorbed or re-employed by the newly organized corporations: Photo Materials and
Medel.
There is also sufficient evidence to show that Medel started its business with the
stocks and office equipment of Aronson, and occupied for that purpose one-half of the
store and bodega formerly used by the latter. The other half was used by the other
new corporation — Photo Materials — who started business at the same time as
Medel.
It is not disputed that the individual respondents were among the oldest in the service
of Aronson, as may be seen in the following table showing their date of employment,
salary upon termination, and number of years in the service, quoted from the
appealed order:
No. of Years
Date of Salary upon in the
Name Employment Termination Service
1. Hospicio Castillo 12-1-19 P130.00 41 yrs. 7 mos.
2. Alejandro Ceniza 2-18-29 200.00 32 "
3. Lucas Atienza 7-29-24 127.00 37 "
4. Maria Cabatingan 6- 1-27 170.00 34 "
5. Lorenzo Solon 3-27-32 130.00 29 " 4 "
6. Catalina Aranas 4- 1-33 130.00 28 " 3 "
7. Eulogio Gernale 3-21-48 127.00 13 " 4 "
8. Petronio Bustamante 1-13-41 120.00 20 "
To simplify the discussion of the fourteen errors allegedly committed by the Court of
Industrial Relations, We shall divide them into four groups on the basis of the relation
existing among the issues raised therein.
The first to the fourth, and the eighth to the ninth assignments of error partially state
petitioners' position as follows: that Photo Materials and Medel are not mere
successors-in-interest or subsidiaries of Aronson and that, therefore, there never had
existed a relationship of employer and employee between them, on the one hand,
and the individual respondents, on the other; that, in view of this absence of employer
and employee relationship, Court of Industrial Relations had no jurisdiction over
Photo Materials and Medel; that the law applicable to the facts of this case is
Republic Act No. 1052, as amended by Republic Act No. 1787, and not Republic Act
No. 875.
The fifth to the seventh assignments of error state another phase of petitioners'
position as follows: that the corporate life of Aronson expired on July 31, 1961; that as
a consequence, the herein individual respondents were legally dismissed from its
service as of that date in accordance with the provisions of Republic Act No. 1052, as
amended by Republic Act No. 1787; that, independently of this, Aronson properly
terminated their services in accordance with the terms of their collective bargaining
agreement in force at that time.
LABOR LAW 2- SESSION 2 CASES
Lastly, in the tenth to the fourteenth assignments of error petitioners contend that the
Court of Industrial Relations erred in finding them guilty of unfair labor practice; in
ordering them to reinstate the respondents named in the appealed order either in
Aronson or in either one of the other two petitioners; and lastly, in ordering them to
pay back wages to the individual respondents.
In view of the issues thus raised, it is quite obvious that the question of whether or not
the shortening of the corporate life or dissolution of Aronson, and the subsequent
incorporation of the other two petitioners were part and parcel of a plan, or were
intended to accomplish the dismissal of the individual respondents. In the light of the
facts set forth above and others to be mentioned hereinafter, We have come to the
conclusion that such was really the case.
It is clear from the record that prior to the year 1958 Aronson had no labor trouble
worth mentioning. That year, however, thirteen of its twenty-five employees became
members of the respondent Union, and that same year Aronson saw the even tenor
of its business disturbed first, by a strike declared in September 1958 by the union
members in protest against the dismissal of Eugenia Solon, and later, by a second
strike declared in December 1958 — lasting until January 1959 — as a result of
certain demands made upon the Company by its employees affiliated with the
respondent Union.
So, on January 6, 1960, Aronson served written notice to its employees of the
termination of their services as of July 31, 1961, allegedly due to the desire of its
stockholders to dissolve the corporation because of poor business. Then, on
February 13, 1961, obviously with the end in view of giving the termination of
employment the appearance of good faith and legality, Aronson amended its original
Articles of Incorporation to make its corporate life expire on July 31, 1961 instead
of May 27, 1970 as provided for in said original Articles of Incorporation.
Furthermore, evidently to further give a semblance of good faith and legality to the
termination of the services of its employees — particularly those affiliated with the
respondent Union — on March 9, 1961 petitioner Medel was established with a
capital stock of P100,000.00, followed by the incorporation on July 17 of the same
year of the other petitioner Photo Materials with an authorized capital stock of
P400,000.00. The combined capital of the two new corporations was exactly the
amount of the capital stock of Aronson, and the new corporations' corporate purposes
were exactly the same as those of Aronson. Indeed, the facts established by the
evidence lead to no other conclusion than that the two new corporations actually took
over the business of Aronson. To these circumstances so blatantly revealing
petitioners' purpose must be added these additional circumstances: that the new
corporations started business a day after the closure of business of Aronson; that the
members of the Aronson family who controlled said company are in the same
controlling position in the two new corporations; and lastly, that Aronson's employees
who were not members of the respondent Union later found immediate employment
with the new corporations.
Petitioners' contention that the dissolution of Aronson was due to "poor business" is,
upon the record, clearly without merit. It was ably disposed of by Judge Bautista in
the appealed order, as follows:
Page 32
 Upon careful and thorough analysis of the evidence adduced and from the Aronson & Company which allegedly depended upon import quota allocations. If
observation by the undersigned of the demeanor and manner of the witnesses at all, the opening for business of the Photo Materials Company and the Medel
who testified on both sides, the preponderance of evidence inclines towards the Office Materials and Paper Company for that matter after the dissolution of the H.
finding that the H. Aronson & Company was not doing poor business in 1959 or Aronson & Company, both of which newly-opened companies carry on the same
1960 but on the other hand, it was making better business than in the preceding business as the H. Aronson & Company is clear indication that the reduction and
two years, 1957 and 1958. In 1957, said Company had suffered a net loss of abolition of its import quota allocations did not constitute the primary cause of the
P6,179.50 (Exhibit "52"). In 1958 the Company recovered amazingly for it had a dissolution of the H. Aronson & Company.
net profit of P7,796.60 (Exhibit "53"). In 1959, its net profit increased to
P8,930.23 (Exhibit "34"). And in 1960, it doubled its net profit to the tune of The true cause of the termination of the services of the complainants is their
P16,903.63 (Exhibit "34"). These facts were admitted by Mr. Francis Aronson on membership with the Associated Labor Union and their union activities. This
the witness stand (t.s.n., pp. 794-95); he also admitted as it likewise appears in finding is supported by the antecedent facts related above, that is, since its
Exhibit "34", that in 1960, the Company had a surplus and profit in the total establishment in 1920 the only instance when the management of the H.
amount of P34,084.46 (t.s.n, p. 682). From these figures it is beyond dispute that Aronson & Company began to find interference in the conduct of its business
the Company's business improved gradually from 1958 to 1960 as its profit affairs was in 1958 when the Associated Labor Union, to which the complainants
progressively increased during the period. It is likewise apparent that its business are affiliated, declared two strikes wherein the union decisively got what it wanted
in 1960 was more profitable than in the previous years of 1959, 1958 and 1957. from the reluctant management. Attempts were made by the management to
Mr. Aronson openly admitted that there was more reason, from the business break the majority then held by the Union but it was not successful.
point of view, to dissolve the Company in 1959 than in 1960 (t.s.n., pp. 685-686).
Our conclusion, therefore, is that the Court of Industrial Relations had jurisdiction over
That the Company was not losing or doing poor business in 1960 is shown by the the case and the petitioners herein; that it correctly found petitioners guilty of unfair
fact that on April 24, 1960, it increased its personnel by adding two (2) additional labor practice, and in granting to the individual respondents the relief set forth in the
employees, Patricinio Diaza and Roberto Gorosin (t.s.n., pp. 605-606). Likewise dispositive portion of the appealed order (Majestic etc. vs. Court of Industrial
in January, 1960, the Company gave salary increases to two (2) employees, Relations, L-12607, Feb. 28, 1962; Fernando vs. Angat Labor Union, L-17896, May
namely, Juanito Solon and Andres Tugot (t.s.n., p. 597). 30, 1962; PLASLU vs. Sy, L-18476, May 30, 1964; Yu Ki Lam vs. Micaller, L-9565,
Sept. 14, 1956; Talisay etc. vs. CIR, et al., 60 O.G. pp. 5143, 5151, Jan. 30, 1960).
It is true (and the evidence supporting this is uncontradicted) that the H. Aronson
& Company suffered reduction of its import quota allocations beginning 1960 until WHEREFORE, the appealed order being in accordance with law, the same is, hereby
its quota was abolished in the second quarter of 1960. This court can take affirmed, with costs.
judicial notice that import quota allocations were progressively cut down
beginning 1961 and 1962 in order to prepare our international dollar reserve and
that this reduction was general and nationwide for it affected all import business
in the Philippines. But the business engaged in by the H. Aronson & Company
did not entirely depend for its stock upon importation from abroad. Thus, Mr.
Aronson himself admitted that to fill up its diminishing imported stock and
supplies, the Company resorted to local purchases from local Companies (t.s.n.,
pp. 672-673). That this recourse to local purchases after the import quota
allocations were altogether abolished did not as a whole bring about such poor
business as to warrant the immediate dissolution of the Company and the
complete stoppage of its business is clearly indicated by the fact that on August
1, 1961, Mr. Aronson and the members of his family, who owned majority if not
most of the stocks of the dissolved H. Aronson & Company, opened up for
business the newly incorporated Photo Materials Co., Inc., engaging in the
business of photography and sale of photographic supplies and equipments
which was the same business carried by the dissolved H. Aronson & Company.
As a matter of fact, this newly-incorporated Photo Materials Company started
business with stocks of photo supplies locally purchased from Kodak
(Philippines) (t.s.n., pp. 672-673). If it were true that the reduction and ultimate
abolition of import quota allocations constituted the important and immediate
cause of the dissolution of the H. Aronson & Company, then under the
substantial ownership and managership of Mr. Francis Aronson, it cannot be
understood why said Mr. Aronson opened up a business similar to that of H.

LABOR LAW 2- SESSION 2 CASES Page 33

G.R. No. 125792 November 9, 1998 7.) Marcelo Paragas — 44,888.35
8.) Romulo Parane — 13,411.80
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS 9.) Rafael Sanchez — 31,076.55
COMMISSION, LABOR ARBITER MANUEL ASUNCION; MANUEL PARENAS, 10.) Inocencio Alcantara — 51,794.25
DANIEL GACO, RODOLFO SIARON, ALFREDO C. MONTILLA, ROMULO S. 11.) Reynaldo Paraiso — 17,264.75
CASTRO, ELSA CASTRO, MARCELO PARAGAS, ROMULO PARANE, RAFAEL 12.) Roberto Geronimo — 58,700.15
SANCHEZ, INOCENCIO ALCANTARA, REYNALDO PARAISO, ROBERTO 13.) Nomer E. Pescante — 24,170.65
GERONIMO, NOMER E. PESCANTE, BENEDICTO SANTOS, ALBERTO TOMAS, 14.) Benedicto Santos — 55,247.20
BONIFACIO BAYETA JR., DANILO RODRIGUEZ, CARLETO DE LA CRUZ, 15.) Alberto Tomas — 20,717.70
RAFAEL BEQUIO, EDUARDO SITJAR, RUBEN TANSECO, TODORO K. 16.) Bonifacio Bayeta, Jr.— 27,623.60
DISCAYA, ERNESTO EVARDONE, ARNULFO LAVILLA, GLECERIO ELABARIN, 17.) Danilo Rodriguez — 27,623.60
MARCELINO CANEDA, EPIFANIO GALIBO, BENJAMIN GANDELARIA, LINO B. 18.) Carleto de la Cruz — 44,888.35
DAHOHOY, AVELINO MULLET, JIMMY M. CORDERO, IVANHOE MAGINO, FELIX 19.) Rafael Bequio — 20,717.70
V. CATINDOY, RUBEN DALUZ, ABENIR YARA, SANTIAGO CORTEZ JR., 20.) Eduardo Sitjar — 20,717.70
ARMANDO P. LUCIDO, ALBERTO MONTILLA, RENERIO CAPON, LEONARDO 21.) Ruben M. Tanseco — 20,717.70
BARROZO, IRENEO FRONDOZO, DIONESIO BANARES, MARCELO MANZON, 22.) Teodoro K. Discaya — 44,888.35
ALFREDO STA. MARIA, BERNARDO MAMARIL, CARLOS DELLORO, ALCON DE 23.) Ernesto Evardone — 48,341.30
LA TORRE, FLORENTINO PESTIDO and STELLAR INDUSTRIAL SERVICES, 24.) Arnulfo Lavilla — 10,358.85
INC., respondents. 25.) Glecerio Elabarin — 27,623.60
26.) Marcelino Caneda — 27,623.60
27.) Epifanio Galibo — 20,717.70
In legitimate job contracting, an independent contractor undertakes to perform work 28.) Benjamin Gandalera — 58,700.15
on its own account, under its own responsibility and according to its own manner and 29.) Lino B. Dagohoy — 27,623.60
method, free from the control and direction of the principal. No employment 30.) Avelino Mullet — 27,623.60
relationship arises between its employees and the principal. Consequently, the said 31.) Jimmy M. Cordero — 20,717.70
employees can claim separation pay only from the independent contractor, and not 32.) Ivanhoe Magno — 41,435.40
from the principal. 33.) Felix V. Catindoy — 24,170.65
34.) Ruben Daluz — 37,982.45
The Case 35.) Abenir R. Yarra — 41,435.40
36.) Santiago Cortes Jr. — 24,170.65
These principles are used by the Court in granting this special civil action 37.) Armando P. Lucido — 24,170.65
for certiorari, seeking to nullify the July 13, 1994 Decision and the June 27, 1996 38.) Alberto Montilla — 34,529.50
Resolution of the National Labor Relations Commission, which held Philippines 39.) Renerio Capon — 17,264.75
Airlines, Inc. liable for separation pay. 40.) Leonardo Barroso — 6,905.90
41.) Ireneo Frondozo — 62,153.10
42.) Dionesio Banares — 24,170.65
In five separate complaints for separation pay1 filed by the individual private 43.) Marcelo Marzan — 20,717.70
respondents against Philippine Airlines (PAL), Inc. (herein petitioner) and Stellar 44.) Alfredo Sta. Maria — 55,247.20
Industrial Services, Inc. (STELLAR, for brevity), Labor Arbiter Manuel P. Asuncion 45.) Bernardo Mamaril — 13,811.80
rendered on October 29, 1993 a Decision which held: 2 46.) Carlos Delloro — 44,888.35
47.) Alcon de la Torre — 24,170.65
WHEREFORE, premises considered, . . . PAL is hereby ordered to pay the 48.) Florentino Pestijo — 24,170.65
following complainants separation pay at the rate of one month salary for
every year of service, thus: The complaints of Edwin Pilapil, Pedro Bermas, and Orlando Orpiada against
Stellar Industrial Services, Inc., are dismissed for lack of merit.
1.) Manuel F. Parenas — P17,264.75
2.) Daniel Gaco — 37,982.45 On appeal, the National Labor Relations Commission (NLRC) 3 affirmed the labor
3.) Rodolfo Siaron — 31,076.55 arbiter's Decision in this wise:4
4.) Alfredo C. Montilla — 31,076.55
5.) Romulo S. Castro — 27,623.60
6.) Elsa C. Castro — 31,076.55

LABOR LAW 2- SESSION 2 CASES Page 34

 WHEREFORE, except insofar as Stellar Industrial Services, Inc. is held jointly
and severally liable with Philippine Airlines for the payment of complainants'
separation benefits, the Decision appealed from is hereby AFFIRMED.
However, acting on the Motions for Reconsideration separately filed by petitioner and
STELLAR, the NLRC modified its earlier Decision and ruled: 5
WHEREFORE, our July 13, 1994 decision is hereby modified in that the
separation pay adjudged in this case is hereby declared to be the sole liability of
[Petitioner] Philippine Airlines, Inc.
The Facts
The undisputed facts of this case, as summarized by the solicitor general, are as
follows:6
Sometime in 1977, PAL, a local air carrier, entered into a service agreement with
STELLAR, a domestic corporation engaged, among others, in the business of job
contracting janitorial services (PAL and STELLAR's Agreement, Annex "1" of
PAL's Position Paper, Annex "F", id.).
Pursuant to their service agreement, which was impliedly renewed year after
year, STELLAR hired workers to perform janitorial and maintenance services for
PAL. Among those employed were [Complainants] Manuel Parenas, Daniel
Gaco, Rodolfo Siaron, Alfredo C. Montilla, Romulo S. Castro, Elsa C. Castro,
Marcelo Paragas, Romulo Parane, Rafael Sanchez, Inocencio [Alcantara],
Reynaldo Paraiso, Roberto Geronimo, Nomer E. Pescante, Benedicto Santos,
Alberto Tomas, Bonifacio Bayeta, Jr., Danilo Rodriguez, Carleto dela Cruz,
Rafael Bequio, Eduardo Sitjar, Ruben Tanseco, Teodoro K. Discaya, Ernesto
Evardone, Arnulfo Lavilla, Glecerio Elabarin, Marcelino Caneda, Epifanio Galibo,
Benjamin Gandelaria, Lino B. Dahohoy, Avelino Mullet, Jimmy M. Cordero,
Ivanhoe Magino, Felix B. Catindoy, Ruben Daluz, Abenir Yara, Santiago Co[r]tez,
Jr., Armando P. Lucido, Alberto Montilla, Renerio Capon, Leonardo Barrozo,
Ireneo Frondozo, Dionesio Banares, Marcelo Marzon, Alfredo Sta. Maria,
Bernardo Mamaril, Carlos Delloro, Aldon dela Torre and Florentino Pestido, who
were assigned at PAL's various premises under the supervision of STELLAR's
supervisors/foremen and timekeepers. The workers were also furnished by
STELLAR with janitorial supplies, such as vacuum cleaner and polisher (Please
see Manuel Parenas' Contract of Employment with STELLAR, Annex "1" of
Annex "E", id.; STELLAR's Position Paper, pp. 2-5, supra; TSN, May 20, 1993,
pp. 15-16 and 19-20).
On December 31, 1990, the service agreement between PAL and STELLAR
expired. PAL then called for [the] bidding of its janitorial requirements. This
notwithstanding, STELLAR exerted efforts to maintain its janitorial contract with
PAL which, in the meantime, allowed Manuel Parenas and others to work at the
PAL's premises (STELLAR's Position Paper, pp. 2-5, supra, and Memorandum of
Appeal, Annex "H", pp. 3-4, id.; Carlos Callanga's Affidavit, p. 2, pp. 156-160
LABOR LAW 2- SESSION 2 CASES
Records; Annex "2" of STELLAR's Position Paper, supra; PAL's Memorandum of
Appeal, p. 2, Annex "G", Petition).
Subsequently, in a letter dated October 31, 1990, PAL formally informed
STELLAR that the service agreement would no longer be renewed effective
November 16, 1991, since PAL's janitorial requirements were bidded to three
other job contractors (Annex "2" of STELLAR's Position Paper, supra; PAL's
Memorandum of Appeal, p. 2, supra).
Alleging that they were illegally dismissed, the aforenamed individual private
respondents filed, from January to June 1992, five complaints against PAL and
STELLAR for illegal dismissal and for payment of separation pay (Annexes "C",
"C-1" to "C-19", id.).
The Ruling of Respondent Commission
In its Decision affirming the ruling of the labor arbiter, Respondent Commission held
petitioner, as an indirect employer, jointly and severally liable with STELLAR for
separation pay. First, the individual private respondent's work, although not directly
related to the business of petitioner, was necessary and desirable for the
maintenance of the petitioner's premises and airplanes. Second, the individual private
respondents were retained for thirteen long years, despite the fact that the contract,
which petitioner had entered into STELLAR in 1977, was only for one year.
On reconsideration, the NLRC modified its earlier Decision by absolving STELLAR of
liability, thereby making PAL solely responsible for the award decreed by the labor
arbiter. It held that, first, petitioner was the employer of the individual private
respondents, for it engaged in labor-only contracting with STELLAR. This was shown
by the failure of petitioner to refute the factual finding that it continued to employ the
individual private respondents after the expiration of the service contract on
December 31, 1990. Second, the individual private respondents' admission in their
Complaint that they were employees of STELLAR was not conclusive, as the
existence of an employer-employee relation was a question of law that could not be
the subject of stipulation. Respondent Commission concluded that their dismissal was
without just and valid cause. Because they were no longer seeking reinstatement,
petitioner was liable for separation pay.
Hence, this petition. 7 When required by the Court to comment on behalf of
Respondent Commission, the solicitor general manifested his disagreement with the
assailed Decision and Resolution. Thus, Respondent Commission, in compliance with
the February 5, 1997 Resolution of this Court,8 filed its own Comment.
The Issues
In its Memorandum,9 petitioner imputes grave abuse of discretion to Respondent
Commission in this wise: 10
(a) [I]n holding that the janitorial service agreement with STELLAR was a labor-
only arrangement;
Page 35
 (b) [I]n holding that PAL continued with the services of the individual respondents
after November 16, 1991, when the janitorial agreement with STELLAR expired;
and
(c) [I]n holding PAL liable for payment of separation pay to the individual
respondents.
The petition raises two main issues. First, whether the individual private respondents
are regular employees of PAL. Second, whether petitioner is liable to them for
separation pay. The resolution of the first issue involves a determination of (1)
whether petitioner was a labor-only contractor; and (2) whether the individual private
respondents became regular employees of PAL because they were allowed to
continue working for petitioner after the expiration of the service contract.
The Court's Ruling
The petition is meritorious.
First Issue: No Employer-Employee Relation
Between Complainants and Petitioner
Janitorial Service Agreement Is
Not Labor-Only Contacting
Prohibited labor-only contracting is defined in Article 106 of the Labor Code as
follows:
Art. 106. Contractor or subcontractor. — . . .
xxx xxx xxx
There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter were
directly employed by him.
This definition covers any person who undertakes to supply workers to an employer,
where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, [machinery], work premises and other materials; and
LABOR LAW 2- SESSION 2 CASES
(2) The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operations of the employer
in which workers are habitually employed. 11
On the other hand, permissible job contracting requires the following conditions:
(1) The contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to his
own manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to
the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, [machinery], work premises, and other materials which are necessary
in the conduct of his business. 12
Applying the foregoing provisions to the present case, the Court finds no basis for
holding that PAL engaged in labor-only contracting. The true nature of the individual
private respondents' employment is evident from the service agreement between
petitioner and STELLAR, which we reproduce hereunder:
1. The CONTRACTOR [STELLAR] undertakes to provide the following cleaning
and janitorial maintenance services.
Daily Routine:
(a) Dusting and/or damp-wiping of other vertical and horizontal surfaces that
require daily attention;
(b) Sweeping and mopping of floors;
(c) Polishing and spot-scrubbing of [illegible];
(d) Dusting, damp-wiping and polishing of [furniture], counters, . . . and other
office fixtures;
(e) Emptying and cleaning of ash trays;
(f) Cleaning and disinfecting of toilets and washrooms;
(g) Cleaning of inside windows, glasses, surfaces, [partitions], etc.;
(h) On-the-job supervision.
2. The CONTRACTOR shall provide sufficient personnel, equipments [sic],
supplies, and materials to carry out the undertakings; specified in the preceding
Page 36
 paragraph, except that water and electricity consumption shall be for the account
of the OWNER. The CONTRACTOR expressly represents that to adequately and
suitably comply with the undertakings under paragraph 1 of this Agreement, the
CONTRACTOR shall assign at least eight (8) employees, six (6) days a week
except Legal Holidays, to the OWNER's premises to perform the work
undertaken by the CONTRACTOR under this Agreement. To comply with such
minimum requirements, the CONTRACTOR shall at all times be ready with
relievers and/or replacements to ensure continuous and uninterrupted work in
case of absences of each assigned employee.
(3) The equipment, materials and supplies to be used by the CONTRACTOR in
connection with its aforesaid undertakings shall be of high quality and shall not
cause any damage to OWNER's premises and properties or cause any injury or
annoyance to the persons working or present in the premises. The OWNER shall
place at the disposal of the CONTRACTOR a suitable storage space with lock
and key for the safe-keeping of the cleaning equipment and materials which the .
. . CONTRACTOR shall use in connection with its undertakings in . . .
Agreement.
4. The CONTRACTOR warrants that the persons it shall employ to perform the
work subject to this Agreement shall be honest, reliable, carefully screened,
trained, cooperative, and in possession of health certificates and police
clearances; they will be neat, presentable in appearance, attired in identifying
uniforms and provided with identification cards. The uniforms and identification
cards shall be at the expense of the CONTRACTOR.
5. In consideration of the services to be rendered by the CONTRACTOR, the
OWNER shall pay to the CONTRACTOR the sum of PESOS: THREE
THOUSAND EIGHT HUNDRED FORTY (P3,840.00) per month in Philippine
Currency, payable in two equal payments on the 15th and end of each month
without necessity of demand. In the event that the minimum wage rate shall be
increased by the operation of law, there shall be a corresponding automatic
increase in the consideration of the contract price to be paid by the OWNER to
the CONTRACTOR in consideration of the latter's services.
6. In case the OWNER shall require the CONTRACTOR to perform the work
provided under paragraph 1 hereof in excess of eight hours on: (1) any regular
working day, the OWNER shall pay the CONTRACTOR an additional amount to
be computed in the following manner:
xxx xxx xxx
7. It is agreed that no authority has been conferred upon the CONTRACTOR by
the OWNER to hire any person on behalf of the latter and that each person
employed or hired by the CONTRACTOR in carrying out its part of this
Agreement shall be paid by the CONTRACTOR, and that no such person
employed or hired shall be deemed [an] employee or agent of the OWNER.
LABOR LAW 2- SESSION 2 CASES
8. It is furthermore agreed that the CONTRACTOR shall select, engage and
discharge its employees and shall have direct . . . control [of their] services. The
CONTRACTOR shall likewise have absolute prerogative to determine the rate of
wages or salaries of the employees.
9. It is further agreed that the CONTRACTOR shall comply with all the
requirements of laws, decrees, municipal ordinances, and regulations including
but not limited to payment of State Insurance Fund, Medicare contributions, SSS
contributions, and the Withholding Taxes of its employees.
10. This agreement shall be for a period of one (1) year from May 1, 1977 to April
30, 1978 and [illegible].
The foregoing agreement clearly indicates that an employee-employer relation
existed between the individual private respondents and STELLAR, not PAL. The
provisions of the agreement demonstrate that STELLAR possessed these earmarks
of an employer: (1) the power of selection and engagement of employees (Stipulation
Nos. 1, 4, 7 and 8), (2) the payment of wages (Stipulation Nos. 5, 6, 7 and 8), (3) the
power of dismissal, and (4) the power to control the employee's conduct (Stipulation
No. 8). 13
Aside from these stipulations in the service agreement, other pieces of evidence
support the conclusion that STELLAR, not PAL, was the employer of the individual
private respondents. A contract of employment 14 existed between STELLAR and the
individual private respondents, proving that it was said corporation which hired them.
It was also STELLAR which dismissed them, as evidenced by Complainant Parenas'
termination letter, which was signed by Carlos P. Callanga, vice president for
operations and comptroller of
STELLAR. 15 Likewise, they worked under STELLAR's own supervisors, Rodel
Pagsulingan, Napoleon Parungao and Renato Topacio. 16 STELLAR even had its
own collective bargaining agreement with its employees, including the individual
private respondents. 17 Moreover, PAL had no power of control and dismissal over
them.
In fact, STELLAR claims that it falls under the definition of an independent job
contractor. Thus, it alleges that it has sufficient capital in the form of tools and
equipment, like vacuum cleaners and polishers, and substantial capitalization as
proven by its financial statements. 18 Further, STELLAR has clients other than
petitioner, like San Miguel Corporation, Hongkong and Shanghai Bank, Eveready,
Benguet Management Corporation and Japan Airlines. 19
All these circumstances establish that STELLAR undertook said contract on its
account, under its own responsibility, according to its own manner and method, and
free from the control and direction of the petitioner. Where the control of the principal
is limited only to the result of the work, independent job contracting exists. 20 The
janitorial service agreement between petitioner and STELLAR is definitely a case of
permissible job contracting.
Extension of Service Contract is
Page 37
Not a Source of Employer-Employee Relation
Respondent NLRC found that petitioner was the individual private respondents'
employer, based primarily on the continued engagement of the employees after the
expiration of the service contract. It ruled: 21
Our taking cognizance of the fact that PAL, despite the expiration of its contract
with Stellar on December 31, 1990 continued with the service of some of the
complainants "as late as 1991", should have been enough notice for them to
refute this fact come [the] . . . motion for reconsideration.
But again, perusing PAL's motion for reconsideration, we note that . . . it never refuted
the finding below that it continued employing the complainants after its service
contract with Stellar expired. We thus cannot but hold on to our view that PAL should
be answerable to the separation pay awarded below not only for its engaging in a
labor-only contract with Stellar but more importantly for its continued employment of
complainants after its service contract with Stellar (the argued employer of
complainants) expired.
In its Comment, 22 NLRC, citing Loadstar Shipping Co, Inc. v. Gallo, 23 defended its
position on the ground that judicial review by this Court does not include appreciation
of the evidence, but is confined only to issues of jurisdiction or grave abuse of
discretion.
In trying to support this finding, the individual respondents presented, on the other
hand, an entirely different theory — that petitioner, by allowing them to continue
working after the expiration of the service agreement, because their successor —
employer. In their Memorandum, 24 they argue:
. . . [T]he records and evidence show that the janitorial service contract between
PAL and Stellar expired on December 31, 1990, and not on November 16, 1991
[as stated in the October 31, 1990 letter of the petitioner].
xxx xxx xxx
As a consequence of petitioner's letter and upon knowledge of the termination of
[the] janitorial service contract, respondent Stellar formally notified each of the
[complainants] that their individual employment contract likewise be terminated
effective November 16, 1991. Furthermore, it has been expressly and uniformly
stated in each of [complainants'] employment contract that their services would
last upon the termination of the janitorial service contract between PAL and
Stellar which was of course supposedly on December 31, 1990. By working up to
the time of the final termination which is November 16, 1991, from December 31,
1990, private respondents became direct employees of PAL.
xxx xxx xxx
LABOR LAW 2- SESSION 2 CASES
Petitioner's continued employment of [complainants] inspite of the expiration of
the janitorial contract is an implied absorption to the point of making them its
regular employees and making illegal their subsequent termination from service. .
. . As held by the Supreme Court, employees absorbed by [a] successor
employer enjoy the continuity of their employment status and their rights and
privileges (International Container Terminal Services, Inc. vs. NLRC, G.R. N[o].
982950-99, April 10, 1996, citing the case of Sumandi vs. Leogardo, et al., G.R.
N[o]. 67635, January 17, 1985). . . . . 25
Both contentions are untenable. First, while the issue of labor-only contracting may
involve some factual considerations, the existence of an employer-employee relation
is nonetheless a question of law. 26 Thus, it falls squarely within the ambit of this
Court's judicial review. Second, individual private respondents' invocation of the
successor-employer doctrine is not warranted. This doctrine involves a transfer of
ownership of the business to a new employer. Where the change of ownership is in
bad faith or is used to defeat the rights of labor, the successor-employer is deemed to
have absorbed the employees and is held liable for the transgressions of his or her
predecessor. 27 Petitioner, however did not become the successor-employer of the
individual private respondents when the service contract expired. There was no
transfer of the business of STELLAR in this particular case. The separate
undertakings of petitioner and STELLAR continued even after the expiration of the
service contract and the dismissal of individual private respondents.
Indeed, we agree with the solicitor general's explanation of this matter: 28
. . . What actually happened was that PAL and STELLAR impliedly renewed, as
they had previously done before, their service agreement until PAL's janitorial
requirements were bidded to other job contractors. This explains why the
individual private respondents remained working at PAL's premises even after
December 31, 1990.
From the foregoing disquisition, it is evident that petitioner was engaged in
permissible job contracting and that the individual private respondents, for the entire
duration of their employ, were employees not of petitioner but of STELLAR. In
legitimate job contracting, no employer-employee relation exists between the principal
and the job contractor's employees. The principal is responsible to the job contractor's
employees only for the proper payment of wages. 29 But in labor-only contracting, an
employer-employee relation is created by law between the principal and the labor-
only contractor's employees, such that the former is responsible to such employees,
as if he or she had directly employed them. 30 Besides, the Court has already taken
judicial notice of the general practice adopted in several government and private
institutions of securing janitorial services on an independent contractor basis. 31
Second Issue:
STELLAR Is Liable for Separation Pay
Short of expressly admitting to be the employer of the individual private respondents,
STELLAR avers that the former were project employees, whose employment was
coterminous with the service agreement, 32 as evidenced by the following stipulations
in their contract: 33
Page 38
 1. The EMPLOYER hereby contracts the services of the EMPLOYEE to work
as Janitor-CPD at the project of the EMPLOYER with PAL.

2. It is expressly agreed and understood that the work of the EMPLOYEE shall
last only during and shall in no case extend beyond the period fixed for the
duration of the contract between the EMPLOYER and PAL covering the project
to which the EMPLOYEE is assigned as specified in the second "WHEREAS"
hereof. Upon the expiration of said contract the employment of the said
employee is deemed automatically terminated without further notice.

In order to avoid liability for separation pay, STELLAR argues that it terminated the
services of the individual private respondents for a just and valid cause: the
completion of a specific project. Thus, they are not entitled to separation pay.

The Court is not convinced. The position of STELLAR that individual private
respondents were its project employees is totally unfounded. A regular employee is
distinguished from a project employee by the fact that the latter is employed to carry
out a specific project or undertaking, the duration or scope of which was specified at
the time the employees were engaged. 34 A "project" has reference to a particular job
or undertaking that may or may not be within the regular or usual business of the
employer. 35 In either case, the project must be distinct, separate and identifiable from
the main business of the employer, and its duration must be determined or
determinable.

In the case at bar, despite the protestations of STELLAR, the service agreement was
not a project because its duration was not determined or determinable. While the
service agreement may have had a specific term, STELLAR disregarded it,
repeatedly renewed the service agreement, and continued hiring the individual private
respondents for thirteen consecutive years. Had STELLAR won the bidding, the
alleged "project" would have never ended. In any event, the aforesaid stipulations in
the employment contract are not included in Articles 282 and 283 of the Labor Code
as valid causes for the dismissal of employees.

Again, we must emphasize that the main business of STELLAR is the supply of
manpower to perform janitorial services for its clients, and the individual private
respondents were janitors engaged to perform activities that were necessary and
desirable to STELLAR's enterprise. 36 In this case, we hold that the individual private
respondents were STELLAR's regular employees, and there was no valid cause for
their dismissal.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision and

Resolution are SET ASIDE insofar as they held PAL liable for separation pay. The
July 13, 1994 Decision is however reinstated insofar as it ORDERED STELLAR liable
for such award.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 39

G.R. No. 139940 September 19, 2006
ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, CARLOS C. A.
RIVAS, JR., SIMEON B. INOCENCIO, ROMULO D. JACOB, NYMIA M. PINEDA,
BENEDICTO I. NIETO, JR., LUIS JACINTO, MILBERT MORA, MONICO CALMA,
CONSTANCIO BAYHONAN, BERNARDO SABLE, NESTOR BRINOSA, NANJI
MACARAMPAT, EDUARDO FLORAGUE and DIONY S. LUMANTA, petitioners,
vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, and
ARELLANO UNIVERSITY, INC.,respondents.
Subject of the present petition for certiorari are the Court of Appeals Resolution of
April 13, 19991 and Resolution of September 3, 19992 which dismissed petitioners’
petition for certiorari for having been filed six days beyond the reglementary period
under Section 4, Rule 65 of the 1997 Rules of Civil Procedure, as amended by
Supreme Court En Banc Resolution dated July 21, 1998 reading:
If the petitioner had filed a motion for new trial or reconsideration in due time after
notice of said judgment, order or resolution, the period herein fixed shall be
interrupted. If the motion is denied, the aggrieved party may file the petition within
the remaining period, but which shall not be less than five (5) days in any
event, reckoned from notice of such denial. No extension of time to file the
petition shall be granted except for the most compelling reason and in no case to
exceed fifteen (15) days. (Emphasis and underscoring supplied)
Petitioners, in the main, plead for the application of substantial justice over procedural
lapses, conformably to this Court’s pronouncements in several cases, and a liberal
construction of the Rules in order to promote its objective of securing a just
disposition of every action or proceeding.3
The record shows that the September 3, 1999 Resolution of the Court of Appeals
denying petitioners’ motion for reconsideration was received by them on September
13, 1999. On September 27, 1999, petitioners filed a motion for 30-day extension of
time to file petition which this Court granted.4 On October 28, 1999, petitioners filed
the present petition for certiorari.5 Doubtless, petitioners could not have availed of
such petition as a mere substitute for lost appeal, 6 hence, this Court treats it as one
for review under Rule 45.
Indeed, Section 4 of Rule 65 of the 1997 Rules of Civil Procedure was amended by
the July 21, 1998 Resolution of this Court En Banc by adding to it as second
paragraph the above-quoted amendment.
The same Section was, however, subsequently amended by this Court’s En Banc
Resolution in A.M. No. 00-2-03-SC which took effect on September 1, 2000 providing
for a 60-day period to file petition under Rule 65 from denial of a motion for
reconsideration or new trial. As thus further amended, Section 4 of Rule 65 now
reads:
SEC. 4. When and where petition filed. – The petition shall be filed not later than
sixty (60) days from notice of the judgment, order or resolution. In case a motion
LABOR LAW 2- SESSION 2 CASES
for reconsideration or new trial is timely filed, whether such motion is required or
not, the sixty (60) day period shall be counted from notice of the denial of
said motion. (Emphasis and underscoring supplied)
The rule is settled that remedial statutes or modes of procedure, which do not create
new rights or take away vested rights but only operate in furtherance of the remedy or
confirmation of rights already existing, do not come within the purview of the general
rule against the retroactive operation of statutes. They are construed to be applicable
to actions pending and undetermined at the time of their passage, and are deemed
retroactive in that sense and to that extent. Hence, in a long line of cases, 7 the new
period under Section 4 of Rule 65 was given retroactive application. Of course at the
time the assailed Resolutions of the appellate court were issued in 1999, Section 4 of
Rule 65 had not yet been amended by this Court’s Resolution in A.M. No. 00-2-03-
SC.
There being no reason why Section 4 of Rule 65, as amended in 2000 by this Court,
may not be given retroactive application to petitioners’ petition, it now gives said
application. While, normally, a remand of the case to the appellate court for further
proceedings is done,8 this Court now opts to decide the petition on the merits to
forestall further delay in its disposition.
On December 12, 1997, the Arellano University Employees and Workers Union (the
Union), the exclusive bargaining representative of about 380 rank-and-file employees
of Arellano University, Inc. (the University), filed with the National Conciliation and
Mediation Board (NCMB) a Notice of Strike charging the University with Unfair Labor
Practice (ULP) as follows:
1. Interfering in union activities;
2. Union Busting – violation of CBA’s Article IV, Section 2;9
3. Union Busting – disregarding the union’s request to deduct penalties from its
members who were absent and without justifiable reasons during union
meetings; and
4. Contracting Workout – the management is contracting out services and
functions being performed by Union members.10
The Notice of Strike was docketed as NCMB-NCR-NS-12-520-97.
Subsequently or on December 17, 1997, a majority of the members of the Union filed
a December 15, 1997 petition for audit11 of union funds before the Office of the
National Capital Region Director of the Department of Labor and Employment (DOLE)
against the officers of the Union.
On March 11, 1998, the Regional Director of DOLE-NCR directed the Union officers
to call a general membership meeting to, among other things, render an accounting of
Page 40
union funds amounting to P481,117.28 which were remitted per the check-off
statement.12
Also on March 11, 1998, then DOLE Secretary Cresenciano B. Trajano certified the
Notice of Strike for compulsory arbitration to the National Labor Relations
Commission (NLRC) which the latter assigned to Labor Arbiter Cristeta D. Tamayo.
The Labor Arbiter set the dispute for hearing/conference on July 3, 1998, July 17,
1998, and August 11, 1998. No settlement was reached by the parties, however. 13
On July 28, 1998, the University moved for the consolidation with the ULP charge
(NCMB-NCR-NS-12-520-97) the Interpleader14 it filed against the Union and some of
its members, docketed as NLRC NCR Case No. 00-02-02036-98 and pending before
Labor Arbiter Felipe T. Garduque II, and the Complaint the Union filed for
underpayment of wages arising from the change in the manner of computation of
salary of employees and non-payment of Sunday pay, docketed as NLRC NCR Case
No. 00-02-01422-98 and pending before Labor Arbiter Ramon Valentin T. Reyes,
both of which involve the same parties.15
Before the NLRC could act on the University’s motion for consolidation, DOLE
Secretary Bienvenido E. Laguesma, by Order16 of August 5, 1998, certified for
compulsory arbitration to the NLRC a second Notice of Strike filed by the Union on
July 16, 1998, docketed as NCMB-NCR-NS-07-277-98, charging the University with
the following:
a. Violation of Collective Bargaining Agreement (CBA), Art. V – withholding of
union and death benefits;
b. Violation of CBA, Art. VI – non-granting of ten (10%) percent salary increase to
some union members;
c. Illegal/unauthorized deductions in the payroll;
d. Union interference – circulating letters against the union; and
e. Non-implementation of the retirement plan as approved by the BIR.17
A strike was in fact staged on August 5, 1998.
By the same Order of August 5, 1998, the DOLE Secretary directed the strikers to
return to work within twenty-four (24) hours. The order was served upon the Union on
August 6, 1998, and the following day, August 7, 1998, at about 3:00 p.m., the Union
lifted its strike.18
The strike staged by the Union on August 5-7, 1998 prompted the University to file on
August 24, 1998 a petition to declare the same illegal, docketed as NLRC-NCR Case
No. 00-08-06897-98, which was also consolidated with the other cases.
LABOR LAW 2- SESSION 2 CASES
Resolving the consolidated cases, the NLRC, by Decision19 of October 12, 1998,
disposed as follows:
WHEREFORE, judgment is hereby rendered declaring:
1. That the Union’s two notices of strike docketed as NCMB-NCR-NS-12-
520-97 and NCMB-NCR-NS-07-277-98 were, to the extent as they concern
the issues herein resolved, without merit;
2. That as a consequence, the University is absolved from the charges of
Unfair Labor Practicecontained in said notices of strike;
3. The loss of employment status of all the individual respondents in
NLRC-NCR-Case No. 00-08-06897-98; and
4. That there is no diminution of workers’ benefits in NLRC-NCR Case No.
00-02-01422-98, because apart from the Union’s failure to prove it, the
University, based on existing laws, is correct in using 314 days as divisor in
computing the daily wage of its daily paid employees.
SO ORDERED.20 (Emphasis and underscoring supplied)
The NLRC found that what triggered the strike was the Union’s suspicion that the
petition for audit of union funds was initiated by the University. The NLRC, citing an
Order of March 11, 1998 issued by the DOLE Regional Director, found the therein
petitioners to have initiated, out of their own volition, the filing of the petition. It thus
concluded that there was no factual basis to hold the University guilty of interference
in union activities.21
On the allegation of union busting, the NLRC ruled that the refusal of the University to
deduct penalties from the salaries of members of the Union who failed to attend
meetings was based on Article IV, Section 222 of the CBA vis-á-vis Section 123 of the
same Article which requires as condition for a valid checkoff prior submission to the
management of individual checkoff authorizations, a requirement which was not met
by the Union.24 Besides, the NLRC held, the law mandates that the Union should not
be "arbitrary, excessive or oppressive" in imposing a fine.25
On the claim that the University had been contracting out work, the NLRC held that
the same was never raised during the conciliation meetings at the NCMB level. 26
Respecting the second Notice of Strike, the NLRC found that only the charges of
violation of the CBA for withholding union dues and death benefits, and the non-
implementation of the retirement plan, as approved by the BIR, were left for resolution
as the Union dropped the other issues raised therein after the NCMB hearings on July
21, 1998 and July 28, 1998.27
Page 41
Crediting the explanation of the University that its withholding of union dues and
death aid benefits was upon the written request of several union members
themselves, the NLRC held that no ULP was committed.
On the charge of non-implementation of the retirement plan by the University, the
NLRC found that the same was baseless and it was in fact not ventilated before the
NCMB.28
In NLRC NCR Case No. 00-02-02036-98, the NLRC ruled that the University may not
be held guilty of ULP for refusal to heed the demand of the Union that salaries of its
members be deducted for their failure to attend union meetings: firstly, because the
Union itself failed to meet the requirements provided for in Sections 1 and 2, Article IV
of the CBA; and secondly, an interpleader had been filed by the University for the
parties to litigate their claims before the NLRC.29 The NLRC also ruled that the
resolution calling for such deduction was not valid as it was not even signed by the
majority of Union officers and circulated to the members. 30
In NLRC NCR Case No. 00-08-06897-98 (the University’s petition to declare the
strike staged by the Union on August 5-7, 1998 illegal), the NLRC granted the petition
and declared the loss of employment status of all thestrikers for knowingly defying the
Return-to-Work Order of the DOLE Secretary dated August 5, 1998, said Order
having been served upon the union on August 6, 1998 but it was only on August 7,
1998, at about 3:00 p.m., that the strike was lifted.31
In NLRC NCR Case No. 00-02-01422-98, the NLRC ruled that the University was
correct in using 314 days as divisor, instead of 365 days, in computing the "equivalent
daily rate"32 of pay of a worker.
The Union et al. (hereafter petitioners) filed a motion for reconsideration of the NLRC
decision which was denied by Resolution33 of January 20, 1999. Hence, they elevated
the decision to the Court of Appeals via petition for certiorari which was, as stated
early on, dismissed.
In the present petition, petitioners insist that the University violated the CBA by
withholding union dues and death benefits. The University counters that on the
request of Union members in light of their gripes against the Union and its officers, it
did withhold said dues and benefits which they deposited with the DOLE where the
parties could settle the issues among themselves.
The then prevailing Rules Implementing the Labor Code, Book V 34, Rule XVIII
provided that
Section 1. Right of union to collect dues. – The right of the incumbent bargaining
representative to check off and to collect dues resulting therefrom shall not be
affected by the pendency of a representation case or an intra-union
dispute.35 (Emphasis supplied)
To constitute ULP, however, violations of the CBA must be gross. Gross violation of
the CBA, under Article 261 of the Labor Code, means flagrant and/or malicious
LABOR LAW 2- SESSION 2 CASES
refusal to comply with the economic provisions thereof. Evidently, the University can
not be faulted for ULP as it in good faith merely heeded the above-said request of
Union members.
On the NLRC’s declaration of loss of employment status of the strikers, the pertinent
provision of Article 264 of the Labor Code provides:
Article 264. x x x x… Any union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be declared to have lost his
employment status… (Emphasis and underscoring supplied)
Under the immediately quoted provision, an ordinary striking worker may not be
declared to have lost his employment status by mere participation in an illegal strike.
There must be proof that he knowingly participated in the commission of illegal acts
during the strike. While the University adduced photographs 36 showing strikers
picketing outside the university premises, it failed to identify who they were. It thus
failed to meet the "substantiality of evidence test"37 applicable in dismissal cases.
Petitioner-union members must thus be reinstated to their former
position, without backwages. If reinstatement is no longer possible, they should
receive separation pay of One (1) Month for every year of service in accordance with
existing jurisprudence.38
With respect to the union officers, as already discussed, their mere participation in
the illegal strike warrants their dismissal.
As for petitioners’ claim of substantial diminution of their salary on account of the
divisor used by the University in its computation – 314 days, instead of 365 days, this
Court finds nothing wrong therewith. Sundays being un-worked and considered
unpaid rest days, while regular holidays as well as special holidays considered as
paid days,39 the factor used by the University merely complies with the basic rule in
this jurisdiction of "no work, no pay." The right to be paid for un-worked days is
generally limited to the ten legal holidays in a year.40
WHEREFORE, the Court of Appeals Resolution of April 13, 1999 and Resolution of
September 3, 1999 are SET ASIDE.
The NLRC Decision of October 12, 1998 and Resolution of January 20, 1999
are AFFIRMED, with the MODIFICATION that the dismissal of petitioner-union
members MONICO CALMA, CONSTANCIO BAYHONAN, BERNARDO SABLE,
NESTOR BRINOSA, NANJI MACARAMPAT, EDUARDO FLORAGUE and DIONY S.
LUMANTA is SET ASIDE, and they are thus ordered REINSTATED WITHOUT
BACKWAGES. If their reinstatement is no longer possible, however, they should be
given SEPARATION PAY at the rate of One (1) Month pay for every year of service.
SO ORDERED.
Page 42
Yellow- Dog Contract
Contracting out - no need to consult union consult first

Contracting Out of Work All benefits - existing terms and conditions all terms

Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995

G.R. No. 127598 February 22, 2000

MANILA ELECTRIC COMPANY, petitioner, vs. Hon. SECRETARY OF LABOR Dissatisfied with the Decision, some alleged members of private respondent union
LEONARDO QUISUMBING and MERALCO EMPLOYEES and WORKERS (Union for brevity) filed a motion for intervention and a motion for reconsideration of
ASSOCIATION (MEWA), respondent. the said Decision. A separate intervention was likewise made by the supervisor's
union (FLAMES2) of petitioner corporation alleging that it has bona fide legal interest
in the outcome of the case.3 The Court required the "proper parties" to file a comment
In the Decision promulgated on January 27, 1999, the Court disposed of the case as
to the three motions for reconsideration but the Solicitor-General asked that he be
follows:
excused from filing the comment because the "petition filed in the instant case was
granted" by the Court.4 Consequently, petitioner filed its own consolidated comment.
WHEREFORE, the petition is granted and the orders of public respondent An "Appeal Seeking Immediate Reconsideration" was also filed by the alleged newly
Secretary of Labor dated August 19, 1996 and December 28, 1996 are set aside elected president of the Union.5 Other subsequent pleadings were filed by the parties
to the extent set forth above. The parties are directed to execute a Collective and intervenors.
Bargaining Agreement incorporating the terms and conditions contained in the
unaffected portions of the Secretary of Labor's orders of August 19, 1996 and
The issues raised in the motions for reconsideration had already been passed upon
December 28, 1996, and the modifications set forth above. The retirement fund
by the Court in the January 27, 1999 decision. No new arguments were presented for
issue is remanded to the Secretary of Labor for reception of evidence and
consideration of the Court. Nonetheless, certain matters will be considered herein,
determination of the legal personality of the MERALCO retirement fund. 1
particularly those involving the amount of wages and the retroactivity of the Collective
Bargaining Agreement (CBA) arbitral awards.
The modifications of the public respondent's resolutions include the following:
Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the
January 27, 1999 decision Secretary's resolution Secretary is allowed, it would simply pass the cost covering such increase to the
consumers through an increase in the rate of electricity. This is a non sequitur. The
Wages - P1,900.00 for 1995-96 P2,200.00 Court cannot be threatened with such a misleading argument. An increase in the
prices of electric current needs the approval of the appropriate regulatory government
X'mas bonus - modified to one month 2 months agency and does not automatically result from a mere increase in the wages of
petitioner's employees. Besides, this argument presupposes that petitioner is capable
Retirees - remanded to the Secretary granted of meeting a wage increase. The All Asia Capital report upon which the Union relies
to support its position regarding the wage issue cannot be an accurate basis and
Loan to coops - denied granted conclusive determinant of the rate of wage increase. Section 45 of Rule 130 Rules of
Evidence provides:
GHSIP, HMP and
Housing loans - granted up to P60,000.00 granted
Commercial lists and the like. — Evidence of statements of matters of interest to
Signing bonus - denied granted persons engaged in an occupation contained in a list, register, periodical, or
other published compilation is admissible as tending to prove the truth of any
Union leave - 40 days (typo error) 30 days relevant matter so stated if that compilation is published for use by persons
engaged in that occupation and is generally used and relied upon by them
High voltage/pole - not apply to those who are members of a team therein.
not exposed to the risk
Under the afore-quoted rule, statement of matters contained in a periodical, may be
Collectors - no need for cash bond, no
admitted only "if that compilation is published for use by persons engaged in that
need to reduce quota and MAPL
occupation and is generally used and relied upon by them therein." As correctly held
CBU - exclude confidential employees include in our Decision dated January 27, 1999, the cited report is a mere newspaper account
and not even a commercial list. At most, it is but an analysis or opinion which carries
Union security - maintenance of membership closed shop no persuasive weight for purposes of this case as no sufficient figures to support it

LABOR LAW 2- SESSION 2 CASES Page 43

were presented. Neither did anybody testify to its accuracy. It cannot be said that
businessmen generally rely on news items such as this in their occupation. Besides,
no evidence was presented that the publication was regularly prepared by a person in
touch with the market and that it is generally regarded as trustworthy and reliable.
Absent extrinsic proof of their accuracy, these reports are not admissible.6 In the
same manner, newspapers containing stock quotations are not admissible in
evidence when the source of the reports is available.7 With more reason, mere
analyses or projections of such reports cannot be admitted. In particular, the source
of the report in this case can be easily made available considering that the same is
necessary for compliance with certain governmental requirements.
Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was
P5.1 billion.8 An estimate by the All Asia financial analyst stated that petitioner's net
operating income for the same year was about P5.7 billion, a figure which the Union
relies on to support its claim. Assuming without admitting the truth thereof, the figure
is higher than the P4.171 billion allegedly suggested by petitioner as its projected net
operating income. The P5.7 billion which was the Secretary's basis for granting the
P2,200.00 is higher than the actual net income of P5.1 billion admitted by petitioner. It
would be proper then to increase this Court's award of P1,900.00 to P2,000.00 for the
two years of the CBA award. For 1992, the agreed CBA wage increase for rank-and-
file was P1,400.00 and was reduced to P1,350.00; for 1993; further reduced to
P1,150.00 for 1994. For supervisory employees, the agreed wage increase for the
years 1992-1994 are P1,742.50, P1,682.50 and P1,442.50, respectively. Based on
the foregoing figures, the P2,000.00 increase for the two-year period awarded to the
rank-and-file is much higher than the highest increase granted to supervisory
employees.9 As mentioned in the January 27, 1999 Decision, the Court does "not
seek to enumerate in this decision the factors that should affect wage determination"
because collective bargaining disputes particularly those affecting the national
interest and public service "requires due consideration and proper balancing of the
interests of the parties to the dispute and of those who might be affected by the
dispute."10 The Court takes judicial notice that the new amounts granted herein are
significantly higher than the weighted average salary currently enjoyed by other rank-
and-file employees within the community. It should be noted that the relations
between labor and capital is impressed with public interest which must yield to the
common good.11 Neither party should act oppressively against the other or impair the
interest or convenience of the public.12Besides, matters of salary increases are part of
management prerogative.13
On the retroactivity of the CBA arbitral award, it is well to recall that this petition had
its origin in the renegotiation of the parties' 1992-1997 CBA insofar as the last two-
year period thereof is concerned. When the Secretary of Labor assumed jurisdiction
and granted the arbitral awards, there was no question that these arbitral awards
were to be given retroactive effect. However, the parties dispute the reckoning period
when retroaction shall commence. Petitioner claims that the award should retroact
only from such time that the Secretary of Labor rendered the award, invoking the
1995 decision in Pier 8 case14 where the Court, citing Union of Filipino Employees v.
NLRC,15 said:
The assailed resolution which incorporated the CBA to be signed by the parties
was promulgated on June 5, 1989, the expiry date of the past CBA. Based on the
provision of Section 253-A, its retroactivity should be agreed upon by the parties.
LABOR LAW 2- SESSION 2 CASES
But since no agreement to that effect was made, public respondent did not abuse
its discretion in giving the said CBA a prospective effect. The action of the public
respondent is within the ambit of its authority vested by existing law.
On the other hand, the Union argues that the award should retroact to such time
granted by the Secretary, citing the 1993 decision of St. Luke's.16
Finally, the effectivity of the Order of January 28, 1991, must retroact to the date
of the expiration of the previous CBA, contrary to the position of petitioner. Under
the circumstances of the case, Article 253-A cannot be properly applied to herein
case. As correctly stated by public respondent in his assailed Order of April 12,
1991 dismissing petitioner's Motion for Reconsideration —
Anent the alleged lack of basis for the retroactivity provisions awarded; we
would stress that the provision of law invoked by the Hospital, Article 253-A
of the Labor Code, speaks of agreements by and between the parties, and
not arbitral awards . . .
Therefore, in the absence of a specific provision of law prohibiting retroactivity of
the effectivity of arbitral awards issued by the Secretary of Labor pursuant to
Article 263(g) of the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to determine the effectivity
thereof.
In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine
and ruled that:
In St. Luke's Medical Center v. Torres, a deadlock also developed during the
CBA negotiations between management and the union. The Secretary of
Labor assumed jurisdiction and ordered the retroaction of the CBA to the date
of expiration of the previous CBA. As in this case, it was alleged that the
Secretary of Labor gravely abused its discretion in making his award
retroactive. In dismissing this contention this Court held:
Therefore, in the absence of a specific provision of law prohibiting retroactive of
the effectivity of arbitral awards issued by the Secretary of Labor pursuant to
Article 263(g) of the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to determine the effectivity
thereof.
The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective
for a period of 2 years counted from December 28, 1996 up to December 27, 1999."
Parenthetically, this actually covers a three-year period. Labor laws are silent as to
when an arbitral award in a labor dispute where the Secretary had assumed
jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. In general, a
CBA negotiated within six months after the expiration of the existing CBA retroacts to
the day immediately following such date and if agreed thereafter, the effectivity
depends on the agreement of the parties. 18 On the other hand, the law is silent as to
the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual
Page 44
agreement of the parties but by intervention of the government. Despite the silence of
the law, the Court rules herein that CBA arbitral awards granted after six months from
the expiration of the last CBA shall retroact to such time agreed upon by both
employer and the employees or their union. Absent such an agreement as to
retroactivity, the award shall retroact to the first day after the six-month period
following the expiration of the last day of the CBA should there be one. In the
absence of a CBA, the Secretary's determination of the date of retroactivity as part of
his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized as an agreement
voluntarily entered into by the parties because it requires the interference and
imposing power of the State thru the Secretary of Labor when he assumes
jurisdiction. However, the arbitral award can be considered as an approximation of a
collective bargaining agreement which would otherwise have been entered into by the
parties.19 The terms or periods set forth in Article 253-A pertains explicitly to a CBA.
But there is nothing that would prevent its application by analogy to an arbitral award
by the Secretary considering the absence of an applicable law. Under Article 253-A:
"(I)f any such agreement is entered into beyond six months, the parties shall agree on
the duration of retroactivity thereof." In other words, the law contemplates retroactivity
whether the agreement be entered into before or after the said six-month period. The
agreement of the parties need not be categorically stated for their acts may be
considered in determining the duration of retroactivity. In this connection, the Court
considers the letter of petitioner's Chairman of the Board and its President addressed
to their stockholders, which states that the CBA "for the rank-and-file employees
covering the period December 1, 1995 to November 30, 1997 is still with the Supreme
Court,"20 as indicative of petitioner's recognition that the CBA award covers the said
period. Earlier, petitioner's negotiating panel transmitted to the Union a copy of its
proposed CBA covering the same period inclusive. 21 In addition, petitioner does not
dispute the allegation that in the past CBA arbitral awards, the Secretary granted
retroactivity commencing from the period immediately following the last day of the
expired CBA. Thus, by petitioner's own actions, the Court sees no reason to retroact
the subject CBA awards to a different date. The period is herein set at two (2) years
from December 1, 1995 to November 30, 1997.
On the allegation concerning the grant of loan to a cooperative, there is no merit in
the union's claim that it is no different from housing loans granted by the employer.
The award of loans for housing is justified because it pertains to a basic necessity of
life. It is part of a privilege recognized by the employer and allowed by law. In
contrast, providing seed money for the establishment of the employee's cooperative is
a matter in which the employer has no business interest or legal obligation. Courts
should not be utilized as a tool to compel any person to grant loans to another nor to
force parties to undertake an obligation without justification. On the contrary, it is the
government that has the obligation to render financial assistance to cooperatives and
the Cooperative Code does not make it an obligation of the employer or any private
individual.22
Anent the 40-day union leave, the Court finds that the same is a typographical error.
In order to avoid any confusion, it is herein declared that the union leave is only thirty
(30) days as granted by the Secretary of Labor and affirmed in the Decision of this
Court.
LABOR LAW 2- SESSION 2 CASES
The added requirement of consultation imposed by the Secretary in cases of
contracting out for six (6) months or more has been rejected by the Court. Suffice it to
say that the employer is allowed to contract out services for six months or more.
However, a line must be drawn between management prerogatives regarding
business operationsper se and those which affect the rights of employees, and in
treating the latter, the employer should see to it that its employees are at least
properly informed of its decision or modes of action in order to attain a harmonious
labor-management relationship and enlighten the workers concerning their
rights.23 Hiring of workers is within the employer's inherent freedom to regulate and is
a valid exercise of its management prerogative subject only to special laws and
agreements on the matter and the fair standards of justice.24 The management
cannot be denied the faculty of promoting efficiency and attaining economy by a study
of what units are essential for its operation. It has the ultimate determination of
whether services should be performed by its personnel or contracted to outside
agencies. While there should be mutual consultation, eventually deference is to be
paid to what management decides.25 Contracting out of services is an exercise of
business judgment or management prerogative. 26 Absent proof that management
acted in a malicious or arbitrary manner, the Court will not interfere with the exercise
of judgment by an employer.27 As mentioned in the January 27, 1999 Decision, the
law already sufficiently regulates this matter.28 Jurisprudence also provides adequate
limitations, such that the employer must be motivated by good faith and the
contracting out should not be resorted to circumvent the law or must not have been
the result of malicious or arbitrary actions.29 These are matters that may be
categorically determined only when an actual suit on the matter arises.
WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the
assailed Decision is MODIFIED as follows: (1) the arbitral award shall retroact from
December 1, 1995 to November 30, 1997; and (2) the award of wage is increased
from the original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two
Thousand Pesos (P2,000.00) for the years 1995 and 1996. This Resolution is subject
to the monetary advances granted by petitioner to its rank-and-file employees during
the pendency of this case assuming such advances had actually been distributed to
them. The assailed Decision is AFFIRMED in all other respects.1âwphi1.nêt
SO ORDERED.
Page 45
G.R. No. L-28607 May 31, 1971
SHELL OIL WORKERS' UNION, petitioner, vs.SHELL COMPANY OF THE
PHILIPPINES, LTD., and THE COURT OF INDUSTRIAL RELATIONS, respondents.
The insistence on the part of respondent Shell Company of the Philippines to dissolve
its security guard section, stationed at its Pandacan Installation notwithstanding its
being embraced in, and its continuance as such thus assured by an existing collective
bargaining contract, resulted in a strike called by petitioner Shell Oil Workers' Union,
hereinafter to be designated as the Union, certified a month later on June 27, 1967 by
the President to respondent Court of Industrial Relations. Against its decision
declaring the strike illegal primarily on the ground that such dissolution was a valid
exercise of a management prerogative, this appeal is taken. With due Recognition
that the system of industrial democracy fostered in the regime of unionization and
collective bargaining leaves room for the free exercise of management rights, but
unable to close our eyes to the violation of a contract still in force implicit in such
dissolution thus giving rise to an unfair labor practice, we cannot sustain respondent
Court of Industrial Relations. Consequently, the harsh and unwarranted sanction
imposed, the dismissal of the security guards and the officers of the Union, cannot
stand. Insofar, however, as individual liability is deemed incurred for serious acts of
violence, whether committed by a leader or member of the Union, we leave things as
adjudged.
The deep-rooted differences between the parties that led to the subsequent strike
were made clear in the presidential certification. As set forth in the opening paragraph
of the decision now on appeal: "Before this Court for resolution is the labor dispute
between the petitioner Shell Oil Workers' Union, Union for brevity, and the respondent
Shell Company of the Philippines Limited, Company for short, which was certified to
this Court on June 27, 1967 by the Office of the President of the Republic of the
Philippines pursuant to the provision of Section 10 of Republic Act No. 875. Said
dispute ... 'was a result of the transfer by the Company of the eighteen (18) security
guards to its other department and the consequent hiring of a private security agency
to undertake the work of said security guards.'"1
The respective contentions of the parties were then taken up. Petitioner "filed the
petition on July 7, 1967 alleging, among others, that the eighteen (18) security guards
affected are part of the bargaining unit and covered by the existing collective
bargaining contract, and as such, their transfers and eventual dismissals are illegal
being done in violation of the existing contract. It, therefore, prayed that said security
guards be reinstated with full back wages from the time of their dismissal up to the
time of their actual reinstatement."2 Then came a summary of the stand Of Shell
Company: "For hours hereafter, respondent Company filed its Answer [to] the
material allegations in the Union's petition and adverted that the issues in this case
are: (1) whether or not the Company commits unfair labor practice in contracting out
its security service to an independent professional security agency and assigning the
18 guards to other sections of the Company; (2) whether or not the dismissal of the
18 security guards are justified; and (3) whether or not (the strike called by the Union
on May 25, 1967 is legal. As special and affirmative defenses, the Company
maintained that in contracting out the security service and redeploying the 18 security
guards affected, it was merely performing its legitimate prerogative to adopt the most
LABOR LAW 2- SESSION 2 CASES
efficient and economical method of operation; that said guards were transferred to
other sections with increase, except for four (4) guards, in rates of pay and with
transfer bonus; the said action was motivated by business consideration in line with
past established practice and made after notice to and discussion with the Union; that
the 18 guards concerned were dismiss for wilfully refusing to obey the transfer order;
and that the strike staged by the Union on May 25, 1967 is illegal. Primarily, Company
prayed, among others, for the dismissal of the Union's petition and the said Union's
strike be declared illegal followed by the termination of the employee status of those
responsible and who participated in said illegal strike."3
The move for the dissolution of the security section by reassigning the guards to other
positions and contracting out such service to an outside security agency had its
origins as far back as 1964. A study made by the Shell Company for the purpose of
improving the productivity, organization and efficiency of its Pandacan Installation
recommended its dissolution. If an outside agency to perform such service were to be
hired, there would be a savings of P96,000.00 annually in addition to further economy
consequent on the elimination to overtime an administration expenses. Its
implementation was scheduled for 1965.4 There was then, in July 1966, a joint
consultation by the Union and management on the matter. At that stage, it would
appear that there was no serious opposition to such a move provided it be done
gradually and in close consultation with the Union. There was even an offer if
cooperation as long as a scheme for retirement of the security guards affected or their
redeployment would be followed.5
The tentative character of such proposed dissolution was made evident by the fact
however that on August 26, 1966, a collective bargaining contract was executed
between the Union and the Shell Company effective from the first of the month of that
year to December 31, 1969. It contained the usual grievance procedure and no strike
clauses.6 More relevant to the case before this Court, however, was the inclusion of
the category of the security guards in such collective bargaining contract. This was
stressed in the brief for the petitioner where specific mention is made of the
agreement covering rank and file personnel regularly employed by the Company,
included in which is the work area covered by the Pandacan Installation. 7 There was
likewise specific reference to such positions in the wage schedule for hourly-rated
categories appearing in an appendix thereof.8 Mention was expressly made in
another appendix of the regular remuneration as well as premium pay and night
compensation.9 Nonetheless, Shell Company was bent on doing away with the
security guard section, to be replaced by an outside security agency. That was
communicated to the Union in a panel to panel meeting on May 3, 1967. A counter-
offer on the part of the Union to reduce the working days per week of the guards from
six to five was rejected by Shell Company on the ground of its being unusual and
impracticable. Two days later, there was a meeting of the Union where a majority of
the members made clear that should there be such a replacement of the company
guards by a private security agency, there would be a strike. It was noted in the
decision that when the strike vote was taken, of 243 members, 226 were for the
approval of a motion to that effect. 10 On the afternoon of May 24, 1967, a notice of
reassignment effective at 8:00 o'clock the next morning was handed to the guards
affected. At 10:00 o'clock that evening, there was a meeting by the Union attended by
ten officers and a majority of the members wherein it was agreed viva voce that if
there would be an implementation of the circular dissolving the security section to be
replaced by guards from an outside agency, the Union would go on strike
Page 46
immediately. 11 The strike was declared at half-past 7:00 o'clock in the morning of
May 25, 1967 when security guards from an outside agency were trying to pass the
main gate of the Shell Company to their work. With the picket line established, they
were unable to enter. Efforts were made by the Conciliation Service of the
Department of Labor to settle the matter, but they were unsuccessful. 12 It was not
until June 27, 1967, however, that the Presidential certification came. 13 There was a
return to work order on July 6, 1967 by respondent Court, by virtue of which pending
the resolution of the case, the Shell Company was not to lockout the employees
involved and the employees in turn were not to strike.
The decision of respondent Court was rendered on August 5, 1967. It declared that
no unfair labor practice was committed by Shell Company in dissolving its security
guards from an outside agency, as such a step was well within management
prerogative. Hence for it, the strike was illegal, there being no compliance with the
statutory requisites before an economic strike could be staged. Respondent Court
sought to reinforce such a conclusion by a finding that its purpose was not justifiable
and that it was moreover carried out with violence. There was thus a failure on its part
to accord due weight to the terms of an existing collective bargaining agreement.
Accordingly as was made clear in the opening paragraph of this opinion we view
matters differently. The strike cannot be declared illegal, there being a violation of the
collective bargaining agreement by Shell Company. Even if it were otherwise,
however, this Court cannot lend sanction of its approval to the outright dismissal of all
union officers, a move that certainly would have the effect of considerably weakening
a labor organization, and thus in effect frustrate the policy of the Industrial Peace Act
to encourage unionization. To the extent, however, that the serious acts of violence
occurring in the course of the strike could be made the basis for holding responsible a
leader or a member of the Union guilty of their commission, what was decided by
respondent Court should not be disturbed.
1. It is the contention of Shell Company, sustained by respondent Court, that the
dissolution of the security guard section to be replaced by an outside agency is a
management prerogative. The Union argues otherwise, relying on the assurance of
the continued existence of a security guard section at least during the lifetime of the
collective bargaining agreement. The second, third and fourth assignment of errors,
while they could have been more felicitously worded, did attack the conclusion
reached by respondent Court as contrary to and in violation of the existing contract. It
is to be admitted that the stand of Shell Company as to the scope of management
prerogative is not devoid of plausibility if it were not bound by what was stipulated.
The growth of industrial democracy fostered by the institution of collective bargaining
with the workers entitled to be represented by a union of their choice, has no doubt
contracted the sphere of what appertains solely to the employer. It would be going too
far to assert, however, that a decision on each and every aspect of the productive
process must be reached jointly by an agreement between labor and management.
Essentially, the freedom to manage the business remains with management. It still
has plenty of elbow room for making its wishes prevail. In much the same way that
labor unions may be expected to resist to the utmost what they consider to be an
unwelcome intrusion into their exclusive domain, they cannot justly object to
management equally being jealous of its prerogatives.
More specifically, it cannot be denied the faculty of promoting efficiency and attaining
economy by a study of what units are essential for its operation. To it belongs the
LABOR LAW 2- SESSION 2 CASES
ultimate determination of whether services should be performed by its personnel or
contracted to outside agencies. it is the opinion of the Court, that while management
has the final say on such matter, the labor union is not to be completely left out. What
was done by Shell Company in informing the Union as to the step it was intending to
take on the proposed dissolution of the security guard section to be replaced by an
outside agency is praise-worthy. There should be mutual consultation eventually
deference is to be paid to what management decides. Thereby, in the words of Chief
Justice Warren, there is likely to be achieved "peaceful accommodation of conflicting
interest." 14 In this particular case though, what was stipulated in an existing collective
bargaining contract certainly precluded Shell Company from carrying out what
otherwise would have been within its prerogative if to do so would be violative thereof.
2. The crucial question thus is whether the then existing collective bargaining contract
running for three years from August 1, 1966 to December 31, 1969 constituted a bar
to such a decision reached by management? The answer must be in the affirmative.
As correctly stressed in the brief for the petitioner, there was specific coverage
concerning the security guard section in the collective bargaining contract. It is found
not only in the body thereof but in the two appendices concerning the wage schedules
as well as the premium pay and the night compensation to which the personnel in
such section were entitled. 15 It was thus an assurance of security of tenure, at least,
during the lifetime of the agreement. Nor is it a sufficient answer, as set forth in the
decision of respondent Court, that while such a section would be abolished, the
guards would not be unemployed as they would be transferred to another position
with an increase in pay and with a transfer bonus. For what is involved is the integrity
of the agreement reached, the terms of which should be binding of both parties. One
of them may be released, but only with the consent of the other. The right to object
belongs to the latter, and if exercised, must be respected. Such a state of affairs
should continue during the existence of the contract. Only thus may there be
compliance with and fulfillment of the covenants in a valid subsisting agreement.
What renders the stand of Shell Company even more vulnerable is the fact that as set
forth in its brief and as found by respondent Court as far back as 1964, it had already
been studying the matter of dissolving the security guard section and contracting out
such service to an outside agency. Apparently, it had reached a decision to that effect
for implementation the next year. In July 1966, there was a joint consultation between
it and the Union on the matter. Nonetheless on August 26, 1966, a collective
bargaining contract was entered into which, as indicated above, did assure the
continued existence of the security guard section. The Shell Company did not have to
agree to such a stipulation. Or it could have reserved the right to effect a dissolution
and reassign the guards. It did not do so. Instead, when it decided to take such a step
resulting in the strike, it would rely primarily on provisions in the collective bargaining
contract couched in general terms, merely declaratory of certain management
prerogatives. Considering the circumstances of record, there can be no justification
then for Shell Company's insistence on pushing through its project of such dissolution
without thereby incurring a violation of the collective bargaining agreement.
3. The Shell Company, in failing to manifest fealty to what was stipulated in an
existing collective bargaining contract, was thus guilty of an unfair labor practice.
Such a doctrine first found expression in Republic Savings Bank v. Court of Industrial
Relations, 16 the opinion of the Court being penned by Justice Castro. There was a
reiteration of such a view in Security Bank Employees Union v. Security Bank and
Page 47
Trust Company. 17 Thus: "It being expressly provided in the industrial Peace Act that
[an] unfair labor practice is committed by a labor union or its agent by its refusal 'to
bargain collectively with the employer' and this Court having decided in the Republic
Savings Bank case that collective bargaining does not end with the execution of an
agreement, being a continuous process, the duty to bargain necessarily imposing on
the parties the obligation to live up to the terms of such a collective bargaining
agreement if entered into, it is undeniable that non-compliance therewith constitutes
an unfair labor practice." 18
4. Accordingly, the unfair labor practice strike called by the Union did have the
impress of validity. Rightly labor is justified in making use of such a weapon in its
arsenal to counteract what is clearly outlawed by the Industrial Peace Act. That would
be one way to assure that the objectives of unionization and collective bargaining
would not be thwarted. It could, of course, file an unfair labor practice case before the
Court of Industrial Relations. It is not precluded, however, from relying on its own
resources to frustrate such an effort on the part of employer. So we have consistently
held — and for the soundest of reasons. 19
There is this categorial pronouncement from the present Chief Justice: "Again, the
legality of the strike follows as a corollary to the finding of fact, made in the decision
appealed from — which is supported by substantial evidence — to the effect that the
strike had triggered by the Company's failure to abide by the terms and conditions of
its collective bargaining agreement with the Union, by the discrimination, resorted to
by the company, with regard to hire and tenure of employment, and the dismissal of
employees due to union activities, as well as the refusal of the company to bargain
collectively in good faith." 20 As a matter of fact, this Court has gone even further. It is
not even required that there be in fact an unfair labor practice committed by the
employer. It suffices, if such a belief in good faith is entertained by labor, as the
inducing factor for staging a strike. So it was clearly stated by the present Chief
Justice while still an Associate Justice of this Court: "As a consequence, we hold that
the strike in question had been called to offset what petitioners were warranted in
believing in good faith to be unfair labor practices on the part of Management, that
petitioners were not bound, therefore, to wait for the expiration of thirty (30) days from
notice of strike before staging the same, that said strike was not, accordingly, illegal
and that the strikers had not thereby lost their status as employees of respondents
herein." 21
5. It would thus appear that the decision now on appeal did not reflect sufficient
awareness of authoritative pronouncements coming from this Court. What is worse,
certain portions thereof yield the impression that an attitude decidedly unsympathetic
to labors resort to strike is evident. Such should not be the case. The right to self-
organization so sedulously guarded by the Industrial Peace Act explicitly includes the
right "to engage in concerted activities for the purpose of collective bargaining and to
the mutual aid or protection." 22 From and after June 17, 1953 then, there cannot be
the least doubt that a strike as form of concerted activity has the stamp of legitimacy.
As a matter of law, even under the regime of compulsary arbitration under the Court
of Industrial Relations Act, 23 a strike was by no means a forbidden weapon. Such is
the thought embodied in the opinion of Justice Laurel in Rex Taxicab Company v.
Court of Industrial Relations. 24 Thus: "In other words, the employee, tenant or laborer
is inhibited from striking or walking out of his employment only when so enjoined by
the Court of Industrial Relations and after a dispute has been submitted thereto and
LABOR LAW 2- SESSION 2 CASES
pending award or decision by the court of such dispute. It follows that, as in the
present case, the employees or laborers may strike before being ordered not to do so
and before an industrial dispute is submitted to the Court of Industrial Relations,
subject to the power of the latter, after hearing when public interest so requires or
when the dispute cannot, in its opinion, be promptly decided or settled, to order them
to return, with the consequence that if the strikers fail to return to work, when so
ordered, the court may authorize the employer to accept other employees or
laborers." 25 Former Chief Justice Paras, in a case not too long before enactment of
the Industrial Peace Act, had occasion to repeat such a view. Thus: "As a matter of
fact, a strike may not be staged only when, during the pendency of an industrial
dispute, the Court of industrial Relations has issued the proper injunction against the
laborers (section 19, Commonwealth Act No. 103, as amended). Capital need not,
however, be apprehensive about the recurrence of strikes in view of the system of
compulsory arbitration by the Court of Industrial Relations." 26
A strike then, in the apt phrase of Justice J.B.L. Reyes, is "an institutionalized factor
of democratic growth." 27 This is to foster industrial democracy. Implicit in such a
concept is the recognization that concerning the ends which labor considers worth
while, its wishes are ordinarily entitled to respect. Necessarily so, the choice as to
when such an objective may be attained by striking likewise belongs to it. There is the
rejection of the concept that an outside authority, even if governmental, should make
the decisions for it as to ends which are desirable and how they may be achieved.
The assumption is that labor can be trusted to determine for itself when the right to
strike may be availed of in order to attain a successful fruition in their disputes with
management. It is true that there is a requirement, in the Act that before the
employees may do so, they must file with the Conciliation Service of the Department
of Labor a notice of their intention to strike. 28 Such a requisite however, as has been
repeatedly declared by this Court, does not have to be complied with in case of unfair
labor practice strike, which certainly is entitled to greater judicial protection if the
Industrial Peace Act is to be rendered meaningful. What has been said thus far would
demonstrate the unwarranted deviation of the decision now on appeal from what is
indicated by the law and authoritative decisions.
6. Respondent Court was likewise impelled to consider the strike illegal because of
the violence that attended it. What is clearly within the law is the concerted activity of
cessation of work in order that a union's economic demands may be granted or that
an employer cease and desist from an unfair labor practice. That the law recognizes
as a right. There is though a disapproval of the utilization of force to attain such an
objective. For implicit in the very concept of a legal order is the maintenance of
peaceful ways. A strike otherwise valid, if violent in character may be placed beyond
the pale. Care is to be taken, however, especially where an unfair labor practice is
involved, to avoid stamping it with illegality just because it is tainted by such acts. To
avoid rendering illusory the recognition of the right to strike, responsibility in such a
case should be individual and not collective. A different conclusion would be called
for, of course, if the existence of force while the strike lasts is pervasive and
widespread, consistently and deliberately resorted to as a matter of policy. It could be
reasonably concluded then that even if justified as to ends it becomes illegal because
of the means employed.
Respondent Court must have unduly impressed by the evidence submitted by the
Shell Company to the effect that the strike was marred by acts of force, intimidation
Page 48
and violence on the evening of June 14 and twice in the mornings of June 15 and 16,
1967 in Manila. Attention was likewise called to the fact that even on the following
day, with police officials stationed at the strike-bound area, molotov bombs did
explode and the streets were obstructed with wooden planks containing protruding
nails. Moreover, in the branches of the Shell Company in Iloilo City as well as in
Bacolod, on dates unspecified, physical injuries appeared to have been inflicted on
management personnel. Respondent Court in the appealed decision did penalize with
loss of employment the ten individuals responsible for such acts. Nor is it to be lost
sight of that before the certification on June 27, 1967, one month had elapsed during
which the Union was on strike. Except on those few days specified then, the Shell
Company could not allege that the strike was conducted in a manner other than
peaceful. Under the circumstances, it would be going too far to consider that it
thereby became illegal. This is not by any means to condone the utilization of force by
labor to attain its objectives. It is only to show awareness that is labor conflicts, the
tension that fills the air as well as the feeling of frustration and bitterness could break
out in sporadic acts of violence. If there be in this case a weighing of interests in the
balance, the ban the law imposes on unfair labor practices by management that could
provoke a strike and its requirement that it be conducted peaceably, it would be, to
repeat, unjustified, considering all the facts disclosed, to stamp the strike with
illegality. It is enough that individual liability be incurred by those guilty of such acts of
violence that call for loss of employee status.
Such an approach is reflected in our recent decisions. As was realistically observed
by the present Chief Justice, it is usually attended by "the excitement, the heat and
the passion of the direct participants in the labor dispute, at the peak thereof
...." 29 Barely four months ago, in Insular Life Assurance Co., Ltd. Employees
Association v. Insular life Assurance Co., Ltd., 30 there is the recognition by this Court,
speaking through Justice Castro, of picketing as such being "inherently
explosive." 31 It is thus clear that not every form of violence suffices to affix the seal of
illegality on a strike or to cause the loss of employment by the guilty party.
7. In the light of the foregoing, there being a valid unfair labor practice strike, the loss
of employment decreed by respondent Court on all the Union officers cannot stand.
The premise on which such penalty was decreed was the illegality of the strike. We
rule differently. Hence, its imposition is unwarranted. It is to be made clear, however,
that because of the commission of specific serious acts of violence, the Union's
President, Gregorio Bacsa, as well as its Assistant Auditor, Conrado Peña, did incur
such a section is continued after December 31, 1969. Without costs.
penalty. 32
On this point, it may be observed further that even if there was a mistake in good faith
by the Union that an unfair labor practice was committed by the Shell Company when
such was not the case, still the wholesale termination of employee status of all the
officers of the Union, decreed by respondent Court, hardly commends itself for
approval. Such a drastic blow to a labor organization, leaving it leaderless, has
serious repercussions. The immediate effect is to weaken the Union. New leaders
may of course emerge. It would not be unlikely, under the circumstances, that they
would be less than vigorous in the prosecution of labor's claims. They may be prove
to fall victims to counsels of timidity and apprehension. At the forefront of their
consciousness must be an awareness that a mistaken move could well mean their
discharge from employment. That would be to render the right to self-organization
LABOR LAW 2- SESSION 2 CASES
illusory. The plain and unqualified constitutional command of protection to labor
should not be lost sight of. 33 The State is thus under obligation to lend its aid and its
succor to the efforts of its labor elements to improve their economic condition. It is
now generally accepted that unionization is a means to such an end. It should be
encouraged. Thereby, labor's strength, what there is of it, becomes solidified. It can
bargain as a collectivity. Management then will not always have the upper hand nor
be in a position to ignore its just demands. That, at any rate, is the policy behind the
Industrial Peace Act. The judiciary and administrative agencies in consrtruing it must
ever be conscious of its implications. Only thus may there be fidelity to what is
ordained by the fundamental law. For if it were otherwise, instead of protection, there
would be neglect or disregard. That is ito negate the fundamental principle that the
Constitution is the supreme law.
WHEREFORE, the decision of respondent Court of Industrial Relations of August 5,
1967 is reversed, the finding of illegality of the strike declared by the Shell Oil
Workers' Union on May 25, 1967 not being in accordance with law. Accordingly, the
dismissal by the Shell Company on May 27, 1967 of the eighteen security
guards, 34 with the exception of Ernesto Crisostomo, who was found guilty of
committing a serious act of violence is set aside and they are declared reinstated.
The continuance of their status such is, however, dependent on whether or not a
security guard section is provided for in the collective bargaining contract entered into
after the expiration of the contract that expired on December 31, 1969. The loss of
employee status of the officers of the Union, 35 decreed by respondent Court in its
decision, is likewise set aside, except as to Gregorio Bacsa and Conrado Pena, both
of whom did commit serious acts of violence. The termination of the employment
status of Nestor Samson, Jose Rey, Romeo Rosales, Antonio Labrador and
Sesinando Romero, who committed acts of violence not serious in character, is also
set aside, but while allowed to be reinstated, they are not entitled to back pay.
Ricardo Pagsibigan and Daniel Barraquel, along with the aforesaid Gregorio Baesa,
Conrado Peña and Ernesto Crisostomo, were legally penalized with dismissal
because of the serious acts of violence committed by them in the course of the strike.
The rest of the employees laid off should be reinstated with back pay to be counted
from the date they were separated by virtue of the appealed decision, from which
should be deducted whatever earnings may have been received by such employees
during such period. The case is hereby remanded to respondent Court for the
implementation of this decision. In ascertaining the back wages to which the security
guards are entitled, it must likewise be ascertained whether or not the security guard
Page 49
G.R. No. 174912 July 24, 2013
BPI EMPLOYEES UNION-DAVAO CITY-FUBU (BPIEU-DAVAO CITY-
FUBU), Petitioner, vs. BANK OF THE PHILIPPINE ISLANDS (BPI), and BPI
OFFICERS CLARO M. REYES, CECIL CONANAN and GEMMA
VELEZ, Respondents.
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, assailing the April 5, 2006 Decision1 and August 17, 2006
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 74595 affirming the
December 21, 20013 and August 23, 20024 Resolutions of the National Labor
Relations Commission (NLRC) in declaring as valid and legal the action of
respondent Bank of the Philippine Islands-Davao City (BPI-Davao) in contracting out
certain functions to BPI Operations Management Corporation (BOMC).
The Factual Antecedents
BOMC, which was created pursuant to Central Bank5 Circular No. 1388, Series of
1993 (CBP Circular No. 1388, 1993), and primarily engaged in providing and/or
handling support services for banks and other financial institutions, is a subsidiary of
the Bank of Philippine Islands (BPI) operating and functioning as an entirely separate
and distinct entity.
A service agreement between BPI and BOMC was initially implemented in BPI’s
Metro Manila branches. In this agreement, BOMC undertook to provide services such
as check clearing, delivery of bank statements, fund transfers, card production,
operations accounting and control, and cash servicing, conformably with BSP Circular
No. 1388. Not a single BPI employee was displaced and those performing the
functions, which were transferred to BOMC, were given other assignments.
The Manila chapter of BPI Employees Union (BPIEU-Metro ManilaFUBU) then filed a
complaint for unfair labor practice (ULP). The Labor Arbiter (LA) decided the case in
favor of the union. The decision was, however, reversed on appeal by the NLRC.
BPIEU-Metro Manila-FUBU filed a petition for certiorari before the CA which denied it,
holding that BPI transferred the employees in the affected departments in the pursuit
of its legitimate business. The employees were neither demoted nor were their
salaries, benefits and other privileges diminished.6
On January 1, 1996, the service agreement was likewise implemented in Davao City.
Later, a merger between BPI and Far East Bank and Trust Company (FEBTC) took
effect on April 10, 2000 with BPI as the surviving corporation. Thereafter, BPI’s
cashiering function and FEBTC’s cashiering, distribution and bookkeeping functions
were handled by BOMC. Consequently, twelve (12) former FEBTC employees were
transferred to BOMC to complete the latter’s service complement.
BPI Davao’s rank and file collective bargaining agent, BPI Employees Union-Davao
City-FUBU (Union), objected to the transfer of the functions and the twelve (12)
personnel to BOMC contending that the functions rightfully belonged to the BPI
employees and that the Union was deprived of membership of former FEBTC
LABOR LAW 2- SESSION 2 CASES
personnel who, by virtue of the merger, would have formed part of the bargaining unit
represented by the Union pursuant to its union shop provision in the CBA. 7
The Union then filed a formal protest on June 14, 2000 addressed to BPI Vice
Presidents Claro M. Reyes and Cecil Conanan reiterating its objection. It requested
the BPI management to submit the BOMC issue to the grievance procedure under the
CBA, but BPI did not consider it as "grievable." Instead, BPI proposed a Labor
Management Conference (LMC) between the parties. 8
During the LMC, BPI invoked management prerogative stating that the creation of the
BOMC was to preserve more jobs and to designate it as an agency to place
employees where they were most needed. On the other hand, the Union charged that
BOMC undermined the existence of the union since it reduced or divided the
bargaining unit. While BOMC employees perform BPI functions, they were beyond
the bargaining unit’s coverage. In contracting out FEBTC functions to BOMC, BPI
effectively deprived the union of the membership of employees handling said
functions as well as curtailed the right of those employees to join the union.
Thereafter, the Union demanded that the matter be submitted to the grievance
machinery as the resort to the LMC was unsuccessful. As BPI allegedly ignored the
demand, the Union filed a notice of strike before the National Conciliation and
Mediation Board (NCMB) on the following grounds:
a) Contracting out services/functions performed by union members that interfered
with, restrained and/or coerced the employees in the exercise of their right to
self-organization;
b) Violation of duty to bargain; and
c) Union busting.9
BPI then filed a petition for assumption of jurisdiction/certification with the Secretary of
the Department of Labor and Employment (DOLE), who subsequently issued an
order certifying the labor dispute to the NLRC for compulsory arbitration. The DOLE
Secretary directed the parties to cease and desist from committing any act that might
exacerbate the situation.
On October 27, 2000, a hearing was conducted. Thereafter, the parties were required
to submit their respective position papers. On November 29, 2000, the Union filed its
Urgent Omnibus Motion to Cease and Desist with a prayer that BPI-Davao and/or Mr.
Claro M. Reyes and Mr. Cecil Conanan be held in contempt for the following alleged
acts of BPI:
1. The Bank created a Task Force Committee on November 20, 2000 composed
of six (6) former FEBTC employees to handle the Cashiering, Distributing,
Clearing, Tellering and Accounting functions of the former FEBTC branches but
the "task force" conducts its business at the office of the BOMC using the latter’s
equipment and facilities.
Page 50
 2. On November 27, 2000, the bank integrated the clearing operations of the BPI
and the FEBTC. The clearing function of BPI, then solely handled by the BPI
Processing Center prior to the labor dispute, is now encroached upon by the
BOMC because with the merger, differences between BPI and FEBTC
operations were diminished or deleted. What the bank did was simply to get the
total of all clearing transactions under BPI but the BOMC employees process the
clearing of checks at the Clearing House as to checks coming from former
FEBTC branches. Prior to the labor dispute, the run-up and distribution of the
checks of BPI were returned to the BPI processing center, now all checks
whether of BPI or of FEBTC were brought to the BOMC. Since the clearing
operations were previously done by the BPI processing center with BPI
employees, said function should be performed by BPI employees and not by
BOMC.10
On December 21, 2001, the NLRC came out with a resolution upholding the validity of
the service agreement between BPI and BOMC and dismissing the charge of ULP. It
ruled that the engagement by BPI of BOMC to undertake some of its activities was
clearly a valid exercise of its management prerogative. 11 It further stated that the
spinning off by BPI to BOMC of certain services and functions did not interfere with,
restrain or coerce employees in the exercise of their right to self-organization.12 The
Union did not present even an iota of evidence showing that BPI had terminated
employees, who were its members. In fact, BPI exerted utmost diligence, care and
effort to see to it that no union member was terminated. 13 The NLRC also stressed
that Department Order (D.O.) No. 10 series of 1997, strongly relied upon by the
Union, did not apply in this case as BSP Circular No. 1388, series of 1993, was the
applicable rule.
After the denial of its motion for reconsideration, the Union elevated its grievance to
the CA via a petition for certiorari under Rule 65. The CA, however, affirmed the
NLRC’s December 21, 2001 Resolution with modification that the enumeration of
functions listed under BSP Circular No. 1388 in the said resolution be deleted. The
CA noted at the outset that the petition must be dismissed as it merely touched on
factual matters which were beyond the ambit of the remedy availed of. 14 Be that as it
may, the CA found that the factual findings of the NLRC were supported by
substantial evidence and, thus, entitled to great respect and finality. To the CA, the
NLRC did not act with grave abuse of discretion as to merit the reversal of the
resolution.15
Furthermore, the CA ratiocinated that, considering the ramifications of the corporate
merger, it was well within BPI’s prerogatives "to determine what additional tasks
should be performed, who should best perform it and what should be done to meet
the exigencies of business."16 It pointed out that the Union did not, by the mere fact of
the merger, become the bargaining agent of the merged employees17 as the Union’s
right to represent said employees did not arise until it was chosen by them. 18
As to the applicability of D.O. No. 10, the CA agreed with the NLRC that the said
order did not apply as BPI, being a commercial bank, its transactions were subject to
the rules and regulations of the BSP.
LABOR LAW 2- SESSION 2 CASES
Not satisfied, the Union filed a motion for reconsideration which was, however, denied
by the CA.1âwphi1
Hence, the present petition with the following
ASSIGNMENT OF ERRORS:
A. THE PETITION BEFORE THE COURT OF APPEALS INVOLVED
QUESTIONS OF LAW AND ITS DECISION DID NOT ADDRESS THE ISSUE
OF WHETHER BPI’S ACT OF OUTSOURCING FUNCTIONS FORMERLY
PERFORMED BY UNION MEMBERS VIOLATES THE CBA.
B. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT DOLE
DEPARTMENT ORDER NO. 10 DOES NOT APPLY IN THIS CASE.
The Union is of the position that the outsourcing of jobs included in the existing
bargaining unit to BOMC is a breach of the union-shop agreement in the CBA. In
transferring the former employees of FEBTC to BOMC instead of absorbing them in
BPI as the surviving corporation in the merger, the number of positions covered by
the bargaining unit was decreased, resulting in the reduction of the Union’s
membership. For the Union, BPI’s act of arbitrarily outsourcing functions formerly
performed by the Union members and, in fact, transferring a number of its members
beyond the ambit of the Union, is a violation of the CBA and interfered with the
employees’ right to self organization. The Union insists that the CBA covers the
agreement with respect, not only to wages and hours of work, but to all other terms
and conditions of work. The union shop clause, being part of these conditions, states
that the regular employees belonging to the bargaining unit, including those absorbed
by way of the corporate merger, were required to join the bargaining union "as a
condition for employment." Simply put, the transfer of former FEBTC employees to
BOMC removed them from the coverage of unionized establishment. While the Union
admitted that BPI has the prerogative to determine what should be done to meet the
exigencies of business in accordance with the case of Sime Darby Pilipinas, Inc. v.
NLRC,19 it insisted that the exercise of management prerogative is not absolute, thus,
requiring good faith and adherence to the law and the CBA. Citing the case of Shell
Oil Workers’ Union v. Shell Company of the Philippines, Ltd.,20 the Union claims that it
is unfair labor practice for an employer to outsource the positions in the existing
bargaining unit.
Position of BPI-Davao
For its part, BPI defended the validity of its service agreement with BOMC on three
(3) grounds: 1] that it was pursuant to the prevailing law at that time, CBP Circular No.
1388; 2] that the creation of BOMC was within management prerogatives intended to
streamline the operations and provide focus for BPI’s core activities; and 3] that the
Union recognized, in its CBA, the exclusive right and prerogative of BPI to conduct
the management and operation of its business.21
BPI argues that the case of Shell Oil Workers’ Union v. Shell Company of the
Philippines, Ltd.,22 cited by the Union, is not on all fours with the present case. In said
Page 51
case, the company dissolved its security guard section and replaced it with an outside
agency, claiming that such act was a valid exercise of management prerogative. The
Court, however, ruled against the said outsourcing because there was an express
assurance in the CBA that the security guard section would continue to exist. Having
failed to reserve its right to effect a dissolution, the company’s act of outsourcing and
transferring security guards was invalidated by the Court, ruling that the unfair labor
practice strike called by the Union did have the impression of validity. In contrast,
there is no provision in the CBA between BPI and the Union expressly stipulating the
continued existence of any position within the bargaining unit. For BPI, the absence of
this peculiar fact is enough reason to prevent the application of Shell to this case.
BPI likewise invokes settled jurisprudence,23 where the Court upheld the acts of
management to contract out certain functions held by employees, and even notably
those held by union members. In these cases, the decision to outsource certain
functions was a justifiable business judgment which deserved no judicial interference.
The only requisite of this act is good faith on the part of the employer and the
absence of malicious and arbitrary action in the outsourcing of functions to BOMC.
On the issue of the alleged curtailment of the right of the employees to self-
organization, BPI refutes the Union’s allegation that ULP was committed when the
number of positions in the bargaining was reduced. It cites as correct the CA ruling
that the representation of the Union’s prospective members is contingent on the
choice of the employee, that is, whether or not to join the Union. Hence, it was
premature for the Union to claim that the rights of its prospective members to self-
organize were restrained by the transfer of the former FEBTC employees to BOMC.
The Court’s Ruling
In essence, the primordial issue in this case is whether or not the act of BPI to
outsource the cashiering, distribution and bookkeeping functions to BOMC is in
conformity with the law and the existing CBA. Particularly in dispute is the validity of
the transfer of twelve (12) former FEBTC employees to BOMC, instead of being
absorbed in BPI after the corporate merger. The Union claims that a union shop
agreement is stipulated in the existing CBA. It is unfair labor practice for employer to
outsource the positions in the existing bargaining unit, citing the case of Shell Oil
Workers’ Union v. Shell Company of the Philippines, Ltd. 24
The Union’s reliance on the Shell Case is misplaced. The rule now is covered by
Article 261 of the Labor Code, which took effect on November 1, 1974. 25 Article 261
provides:
ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. – x x
x Accordingly, violations of a Collective Bargaining Agreement, except those which
are gross in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For purposes of
this article, gross violations of Collective Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the economic provisions of such agreement.
[Emphases supplied]
LABOR LAW 2- SESSION 2 CASES
Clearly, only gross violations of the economic provisions of the CBA are treated as
ULP. Otherwise, they are mere grievances.
In the present case, the alleged violation of the union shop agreement in the CBA,
even assuming it was malicious and flagrant, is not a violation of an economic
provision in the agreement. The provisions relied upon by the Union were those
articles referring to the recognition of the union as the sole and exclusive bargaining
representative of all rank-and-file employees, as well as the articles on union security,
specifically, the maintenance of membership in good standing as a condition for
continued employment and the union shop clause.26 It failed to take into consideration
its recognition of the bank’s exclusive rights and prerogatives, likewise provided in the
CBA, which included the hiring of employees, promotion, transfers, and dismissals for
just cause and the maintenance of order, discipline and efficiency in its operations.27
The Union, however, insists that jobs being outsourced to BOMC were included in the
existing bargaining unit, thus, resulting in a reduction of a number of positions in such
unit. The reduction interfered with the employees’ right to self-organization because
the power of a union primarily depends on its strength in number. 28
It is incomprehensible how the "reduction of positions in the collective bargaining unit"
interferes with the employees’ right to self-organization because the employees
themselves were neither transferred nor dismissed from the service. As the NLRC
clearly stated:
In the case at hand, the union has not presented even an iota of evidence that
petitioner bank has started to terminate certain employees, members of the union. In
fact, what appears is that the Bank has exerted utmost diligence, care and effort to
see to it that no union member has been terminated. In the process of the
consolidation or merger of the two banks which resulted in increased diversification of
functions, some of these non-banking functions were merely transferred to the BOMC
without affecting the union membership.29
BPI stresses that not a single employee or union member was or would be dislocated
or terminated from their employment as a result of the Service Agreement. 30 Neither
had it resulted in any diminution of salaries and benefits nor led to any reduction of
union membership.31
As far as the twelve (12) former FEBTC employees are concerned, the Union failed to
substantially prove that their transfer, made to complete BOMC’s service
complement, was motivated by ill will, anti-unionism or bad faith so as to affect or
interfere with the employees’ right to self-organization.
It is to be emphasized that contracting out of services is not illegal perse.1âwphi1 It is
an exercise of business judgment or management prerogative. Absent proof that the
management acted in a malicious or arbitrary manner, the Court will not interfere with
the exercise of judgment by an employer.32 In this case, bad faith cannot be attributed
to BPI because its actions were authorized by CBP Circular No. 1388, Series of
199333 issued by the Monetary Board of the then Central Bank of the Philippines (now
Bangko Sentral ng Pilipinas). The circular covered amendments in Book I of the
Page 52
Manual of Regulations for Banks and Other Financial Intermediaries, particularly on
the matter of bank service contracts. A finding of ULP necessarily requires the
alleging party to prove it with substantial evidence. Unfortunately, the Union failed to
discharge this burden.
Much has been said about the applicability of D.O. No. 10. Both the NLRC and the
CA agreed with BPI that the said order does not apply. With BPI, as a commercial
bank, its transactions are subject to the rules and regulations of the governing agency
which is the Bangko Sentral ng Pilipinas.34 The Union insists that D.O. No. 10 should
prevail.
The Court is of the view, however, that there is no conflict between D.O. No. 10 and
CBP Circular No. 1388. In fact, they complement each other.
Consistent with the maxim, interpretare et concordare leges legibus est optimus
interpretandi modus, a statute should be construed not only to be consistent with itself
but also to harmonize with other laws on the same subject matter, as to form a
complete, coherent and intelligible system of jurisprudence. 35 The seemingly
conflicting provisions of a law or of two laws must be harmonized to render each
effective.36 It is only when harmonization is impossible that resort must be made to
choosing which law to apply.37
In the case at bench, the Union submits that while the Central Bank regulates
banking, the Labor Code and its implementing rules regulate the employment
relationship. To this, the Court agrees. The fact that banks are of a specialized
industry must, however, be taken into account. The competence in determining which
banking functions may or may not be outsourced lies with the BSP. This does not
mean that banks can simply outsource banking functions allowed by the BSP through
its circulars, without giving regard to the guidelines set forth under D.O. No. 10 issued
by the DOLE.
While D.O. No. 10, Series of 1997, enumerates the permissible contracting or
subcontracting activities, it is to be observed that, particularly in Sec. 6(d) invoked by
the Union, the provision is general in character – "x x x Works or services not directly
related or not integral to the main business or operation of the principal… x x x." This
does not limit or prohibit the appropriate government agency, such as the BSP, to
issue rules, regulations or circulars to further and specifically determine the
permissible services to be contracted out. CBP Circular No. 1388 38enumerated
functions which are ancillary to the business of banks, hence, allowed to be
outsourced. Thus, sanctioned by said circular, BPI outsourced the cashiering (i.e.,
cash-delivery and deposit pick-up) and accounting requirements of its Davao City
branches.39 The Union even described the extent of BPI’s actual and intended
contracting out to BOMC as follows:
"As an initiatory move, the functions of the Cashiering Unit of the Processing Center
of BPI, handled by its regular rank and file employees who are members of the Union,
xxx [were] transferred to BOMC with the Accounting Department as next in line. The
Distributing, Clearing and Bookkeeping functions of the Processing Center of the
former FEBTC were likewise contracted out to BOMC."40
LABOR LAW 2- SESSION 2 CASES
Thus, the subject functions appear to be not in any way directly related to the core
activities of banks. They are functions in a processing center of BPI which does not
handle or manage deposit transactions. Clearly, the functions outsourced are not
inherent banking functions, and, thus, are well within the permissible services under
the circular.
The Court agrees with BPI that D.O. No. 10 is but a guide to determine what functions
may be contracted out, subject to the rules and established jurisprudence on
legitimate job contracting and prohibited labor-only contracting.41 Even if the Court
considers D.O. No. 10 only, BPI would still be within the bounds of D.O. No. 10 when
it contracted out the subject functions. This is because the subject functions were not
related or not integral to the main business or operation of the principal which is the
lending of funds obtained in the form of deposits. 42 From the very definition of "banks"
as provided under the General Banking Law, it can easily be discerned that banks
perform only two (2) main or basic functions – deposit and loan functions. Thus,
cashiering, distribution and bookkeeping are but ancillary functions whose
outsourcing is sanctioned under CBP Circular No. 1388 as well as D.O. No. 10. Even
BPI itself recognizes that deposit and loan functions cannot be legally contracted out
as they are directly related or integral to the main business or operation of banks. The
CBP's Manual of Regulations has even categorically stated and emphasized on the
prohibition against outsourcing inherent banking functions, which refer to any contract
between the bank and a service provider for the latter to supply, or any act whereby
the latter supplies, the manpower to service the deposit transactions of the former. 43
In one case, the Court held that it is management prerogative to farm out any of its
activities, regardless of whether such activity is peripheral or core in nature. 44 What is
of primordial importance is that the service agreement does not violate the
employee's right to security of tenure and payment of benefits to which he is entitled
under the law. Furthermore, the outsourcing must not squarely fall under labor-only
contracting where the contractor or sub-contractor merely recruits, supplies or places
workers to perform a job, work or service for a principal or if any of the following
elements are present:
i) The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over the performance of
the work of the contractual employee.45
WHEREFORE, the petition is DENIED.
SO ORDERED.
Page 53
Company Union
G.R. No. L-32853 September 25, 1981
JUAN S. BARRERA, (doing business under the firm and trade name,
MACHINERY AND STEEL PRODUCTS ENGINEERING MASPE petitioner, vs. THE
HONORABLE COURT OF INDUSTRIAL RELATIONS, Philippine Associated
Workers Union (PAWO) and MASPE WORKERS' UNION, respondents.
It was the absence of any definite ruling at the time this petition was filed on the
question of whether or not a pending certification election proceeding may be
dismissed or held in abeyance, there being such a motion on the part of the employer
Juan S. Barrera, doing business under the firm and trade name of Machinery and
Steel Products Engineering MASPE alleging an unfair labor practice against one of
the contending parties, private respondent MASPE Workers Union, the other being
private respondent Philippine Associated Workers Union, that led this Court to give it
due course. The unfair labor practice imputed to such labor union consisted of failure
to bargain collectively, aggravated by an illegal strike. Respondent Court of Industrial
Relations denied such a motion to dismiss, stating that the grounds therein alleged
"appear not to be indubitable A motion for reconsideration having proved futile, this
petition was filed.
Subsequently, to be precise, in 1973, in the case of B. F. Goodrich Philippines, Inc.
vs. Goodrich (Marikina Factory) Confidential and Salaried Employees Union-
NATU. 1 such a question was given an answer by this Court, one adverse to the claim
of petitioner. This petition, therefore, must be dismissed.
The case for petitioner was put most vigorously in the exhaustive and scholarly brief
of its counsel, Manuel M. Crudo To quote from its pertinent portion: "On September
22, 1970 the petitioner Barrera filed a motion to dismiss or hold case in abeyance, in
CIR Case No. 2759-MC. In said motion, we called attention to the admission of
MASPE Workers Union as intervenor in the case. We stated that the intervenor union,
its officers and members had committed various acts of unfair labor practice and were
on illegal strike punctuated by force, violence and intimidation. We called attention to
our formal charge of unfair labor practice against the intervenor union. We called
attention to the fact that in the charge of unfair labor practice among the reliefs prayed
for were to declare respondents therein collectively and individually guilty of unfair
labor practice; to declare the strike, and other concerted actions resorted to in
pursuance of said unfair labor practice illegal to declare the MASPE Workers Union
as consequently having lost all rights and privileges accorded by law to a legitimate
labor union; and to declare all individual respondents therein and others as having
lost their employment status by virtue of the illegality of the strike staged by them. We
then pointed out that unless the case for unfair labor practice against MASPE
Workers Union, its officers and members is decided the status of that union and its
members who are respondents would be uncertain (i.e., in relation to the requested
certification election and the outcome thereof). * * * Unfortunately, the respondent
Honorable Court of Industrial Relations denied our motion to dismiss or hold case in
abeyance. * * * ." 2It remains only to be added that subsequently the Court of
Industrial Relations en banc denied a motion for reconsideration, failing "to find
sufficient justification to alter or to modify the aforesaid Order." 3
LABOR LAW 2- SESSION 2 CASES
To repeat, the petition cannot prosper.
1. As set forth in the B. F. Goodrich Philippines, Inc. decision: "There is novelty in the
specific question raised, as to whether or not a certification election may be stayed at
the instance of the employer, pending the determination of an unfair labor practice
case filed by it against certain employees affiliated with respondent-unions. That is a
matter of which this Court has not had an opportunity to speak on previously. What is
settled law, dating from the case of Standard Cigarette Workers' Union v. Court of
Industrial Relations, decided in 1957, is that if it were a labor organization objecting to
the participation in a certification election of a company dominated union, as a result
of which a complaint for an unfair labor practice case against the employer was filed,
the status of the latter union must be first cleared in such a proceeding before such
voting could take place." 4
2. This is the more relevant excerpt: "The unique situation before us, however, is
exactly the reverse. It is management that would have an unfair labor practice case
filed by it for illegal strike engaged in by some of its employees concluded, before it
would agree to the holding of a certification election. That is the stand of petitioner. It
does not carry conviction. The reason that justifies the postponement of a certification
election pending an inquiry, as to the bona fides of a labor union, precisely calls for a
different conclusion. If under the circumstances disclosed, management is allowed to
have its way, the result might be to dilute or fritter away the strength of an
organization bent on a more zealous defense of labor's prerogatives. The difficulties
and obstacles that must be then hurdled would not be lost on the rest of the
personnel who had not as yet made up their minds one way or the other. This is not
to say that management is to be precluded from filing an unfair labor practice case. It
is merely to stress that such a suit should not be allowed to lend itself as a means,
whether intended or not, to prevent a truly free expression of the will of the labor
group as to the organization that will represent it. It is not only the loss of time
involved, in itself not likely to enhance the prospect of respondent-unions, but also the
fear engendered in the mind of an ordinary employee that management has many
weapons in its arsenal to bring the full force of its undeniable power against those of
its employees dissatisfied with things as they are. There is no valid reason then for
the postponement sought. This is one instance that calls for the application of the
maxim, lex dilationes semper exhorret. Moreover, is there not in the posture taken by
petitioner a contravention of what is expressly set forth in the Industrial Peace Act,
which speaks of the labor organizations 'designated or selected for the purpose of
collective bargaining by the majority of the employees in an appropriate collective
bargaining unit [be the exclusive] representative of all the employees in such unit for
the purpose of collective bargaining.' The law clearly contemplates all the employees,
not only some of them. As much as possible then, there is to be no unwarranted
reduction in the number of those taking part in a certification election, even under the
guise that in the meanwhile, which may take some time, some of those who are
employees could possibly lose such status, by virtue of a pending unfair labor
practice case." 5
3. Even on the assumption that the vigorous condenmation of the strike and the
picketing were attended by violence, it does not automatically follow that thereby the
strikers in question are no longer entitled to participate in the certification election for
having automatically lost their jobs. So it was made clear in another B.F. Goodrich
decision: 6 What was set forth in the facts as found by respondent Judge Salvador
Page 54
would indicate that it was during the picketing, certainly not peaceful, that the imputed
acts of violence did occur. It cannot be ignored, however, that there were injuries on
both sides because management did not, understandably, play a passive role
confronted as it was with the unruly disruptive tactics of labor. This is not, by any
means, to condone activities of such character, irrespective of the parties responsible.
It is merely to explain what cannot be justified. Nonetheless, did the acts in question
call for an automatic finding of illegality? Again, the order issued on February 4, 1972
appeared to be oblivious of a 1971 decision of this Court, Shell Oil Workers' Union v.
Shell Company of the Philippines, Ltd. There it was clearly held: 'A strike otherwise
valid, if violent in character, may be placed beyond the pale. Care is to be taken,
however, especially where an unfair labor practice is involved, to avoid stamping it
with illegality just because it is tainted by such acts. To avoid rendering illusory the
recognition of the right to strike, responsibility in such a case should be individual and
not collective. A different conclusion would be called for, of course, if the existence of
force while the strike lasts is pervasive and widespread, consistently and deliberately
resorted to as a matter of policy. It could be reasonably concluded then that even if
justified as to ends, it becomes illegal because of the means employed.' It must be
pointed out likewise that the facts as there found would seem to indicate a greater
degree of violence. Thus: 'Respondent Court must have been unduly impressed by
the evidence submitted by the Shell Company to the effect that the strike was marred
by acts of force, intimidation and violence on the evening of June 14 and twice in the
mornings of June 15 and 16, 1967 in Manila. Attention was likewise called to the fact
that even on the following day, with police officials stationed at the strike bound area,
molotov bombs did explode and the streets were obstructed witlh wooden planks
containing protruding nails. Moreover, in the branches of the Shell Company in Iloilo
City as well as in Bacolod, on dates unspecified, physical injuries appeared to have
been inflicted on management personnel. Respondent Court in the appealed decision
did penalize with loss of employment the ten individuals responsible for such acts.
Nor is it to be lost sight of that before the certification on June 27, 1967, one month
had elapsed during which the Union was on strike. Except on those few days
specified then, the Shell Company could not allege that the strike was conducted in a
manner other than peaceful Under the circumstances, it would be going too far to
consider that it thereby became illegal.' Then, mention was made of a decision in
Insular Life Assurance Co., Ltd. Employees' Association vs. Insular Life Assurance
Co., Ltd. [where] there is the recognition by this Court, speaking through Justice
Castro, of picketing as such being "inherently explosive." It is thus clear that not every
form of violence suffices to affix the seal of illegality on a strike or to cause the loss of
employment by the guilty party. " 7

WHEREFORE, this petition is dismissed and the appealed order affirmed. No costs.

LABOR LAW 2- SESSION 2 CASES Page 55

[G.R. No. 51337. March 22, 1984.]
UNITED CMC TEXTILE WORKERS UNION, Petitioner, v. BUREAU OF LABOR
RELATIONS, HON. CARMELO NORIEL, PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS, (JULY CONVENTION), Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR LAWS; BUREAU OF LABOR
RELATIONS; PENDENCY OF UNFAIR LABOR PRACTICE CASE, A PREJUDICIAL
QUESTION TO CERTIFICATION ELECTION; CASE AT BAR. — Under settled
jurisprudence, the pendency of a formal charge of company domination is a
prejudicial question that, until decided, bars proceedings for a certification election,
the reason being that the votes of the members of the dominated union would not be
free. The ULP Case herein was filed on August 31, 1978, or anterior to the
Certification Case, which was presented on September 5, 1978. The pendency of the
charge was known to respondent public official by virtue of the Motion to Dismiss filed
by petitioner as intervenor in the Certification Case. No allegation has been made that
said ULP Case was instituted in bad faith to forestall the Certification Case.
The question to resolve is whether or not public respondent acted with grave abuse of
discretion in affirming the Order of the Med-Arbiter calling for a certification election
despite: (a) the pendency of an unfair labor practice case filed by petitioner charging
respondent PAFLU as being company-dominated; (b) the existence of a deadlock in
negotiations for renewal of the collective bargaining agreement between petitioner
and the Central Textile Mills, Inc. (CENTEX, for short); and (c) a reasonable doubt as
to whether the 30% requirement for holding a certification election has been met.
Petitioner is a legitimate labor organization, the incumbent collective bargaining
representative of all rank and file workers of CENTEX since 1956. Respondent
PAFLU is also a legitimate labor organization seeking representation as the
bargaining agent of the rank and file workers of CENTEX.
On August 31, 1978, petitioner filed a complaint for Unfair Labor Practice (R4-LRD-C-
8-1493-78) (the ULP Case, for brevity) against CENTEX and PAFLU alleging that
CENTEX had "helped and cooperated in the organization of the Central Textile Mills,
Inc. Local PAFLU by allowing the organizing members of the PAFLU to solicit
signatures of employees of the company who are members of the complainant union
to disaffiliate from complainant union and join the respondent PAFLU, during
company time and inside the company premises on August 21, 1978 and the
following days thereafter." 1
While the ULP Case was pending, PAFLU, on September 5, 1978, filed a Petition for
Certification Election (R4-LRD-M-9432-78) (the Certification Case, for short) among
the rank and file workers of CENTEX, alleging that: 1) there has been no certification
election during the 12 months period prior to the filing of the petition; 2) the petition is
supported by signatures of 603 workers, or more than 30% of the rank and file
workers of CENTEX; 3) the collective bargaining agreement between CENTEX and
petitioner will expire on October 31, 1978; 4) the petition is filed within the 60-day-
freedom-period immediately preceding the expiration of the CBA, and 6) there is no
legal impediment to the filing of the petition. 2
LABOR LAW 2- SESSION 2 CASES
Petitioner intervened in the Certification Case and filed a Motion to Dismiss on
September 27, 1978 on the grounds that: 1) the ULP Case charging that PAFLU is a
company-dominated union is a prejudicial question and bars the holding of the
certification election; and 2) PAFLU failed to comply with the 30% requirement for
mandatory certification election since only 440 of the 603 are valid signatures and
that 719 signatories are required as constitutive of 30% of the rank and file workers
totalling 2,397 and not 1,900 as alleged by PAFLU. 3
On October 16, 1978, petitioner filed a Notice of Strike with the Bureau of Labor
Relations for deadlock in the CBA negotiations with CENTEX. The parties having
failed to effect a conciliation, the Labor Minister assumed jurisdiction on November 9,
1978 in Case No. AJML-033-78 4 (referred to hereafter as the Deadlock Case)
A Supplemental Motion to Dismiss in the Certification Case was filed by petitioner on
December 7, 1978 alleging that the Labor Minister had already taken cognizance of
the deadlock in the CBA negotiations and constituted an impediment to the holding of
a certification election. 5
On December 18, 1978, in the Deadlock Case, the Deputy Minister of Labor released
a Decision directing petitioner and CENTEX to execute and sign a CBA to take effect
on November 1, 1978 up to October 30, 1981 based on the guidelines enumerated
therein, and to furnish the Office of the Minister of Labor with a signed copy of the
renewed agreement not later than January 31, 1979. 6
On January 23, 1979, in the Certification Case, the Med-Arbiter issued an Order for
the holding of a certification election among CENTEX rank and file workers, whereby
qualified voters could choose either PAFLU or petitioner as the collective bargaining
representative or No Union at all. 7 This was affirmed by respondent Director of the
Bureau of Labor Relations on appeal, in the challenged Resolution, dated May 25,
1979, stating that: 1) the Bureau has discretion to order certification election where
several unions are contending for representation and when there is doubt as to
whether the 30% requirement has been met; and 2) to preclude the filing of a petition
for certification election the notice of strike for deadlock in CBA negotiations must
occur prior to the petition. 8
A Motion for Reconsideration filed by petitioner was denied for lack of merit in the
Resolution of August 20, 1979 9 , also assailed herein.
Hence, this petition, on the general proposition that public respondent has committed
serious error of law and acted with grave abuse of discretion, and that petitioner has
no plain and adequate remedy in the ordinary course of law.
We issued a Temporary Restraining Order enjoining the conduct of the certification
election, and eventually gave the Petition due course.
The issues raised are: (1) is the pendency of the ULP Case charging a participating
union in the certification election proceedings as company-dominated a prejudicial
question to the conduct of the election? (2) Does the decision in the Deadlock Case
directing the parties to execute a CBA have the effect of barring the certification
election? (3) Does respondent Director have the discretion to call for a certification
election even if the 30% consent requirement is lacking?
Page 56

The case can be resolved on the basis of the first issue alone, which must be
answered in the affirmative. Under settled jurisprudence, the pendency of a formal
charge of company domination is a prejudicial question that, until decided, bars
proceedings for a certification election 10 , the reason being that the votes of the
members of the dominated union would not be free. 11 The ULP Case herein was
filed on August 31, 1978, or anterior to the Certification Case, which was presented
on September 5, 1978. The pendency of the charge was known to respondent public
official by virtue of the Motion to Dismiss filed by petitioner as intervenor in the
Certification Case. No allegation has been made that said ULP Case was instituted in
bad faith to forestall the Certification Case. The following ruling is thus squarely in
point:
"There is no assertion that such complaint was flimsy, or made in bad faith or filed
purposely to forestall the certification election. So, no reason existed for the Industrial
Court to depart from its established practice of suspending the election proceeding.
And this seems to be accepted rule in the law of labor relations, the reason being, in
the words of Mr. Justice Montemayor, `if there is a union dominated by the company,
to which some of the workers belong, an election among workers and employees of
the company would not reflect the true sentiment and wishes of the said workers and
employees because the votes of the members of the dominated union would not be
free.’ (Manila Paper Mills Employees v. Court of Industrial Relations, 104 Phil. 10)
"And we have held, through Mr. Justice J.B.L. Reyes, that such charge of company
domination is a prejudicial question that until decided, shall suspend or bar
proceedings for certification election. (Standard Cigarette Workers’ Union v. Court of
Industrial Relations, 101 Phil. 126)
"Indeed, if as a result of the Pelta’s complaint in Case No. 255-ULP, the Workers
Union should be ordered dissolved as a company dominated union, any election held
in the meantime would be a waste of energy and money to all parties concerned." 12
The rationale for the suspension of the election proceedings has been further
amplified as follows:
"What is settled law, dating from the case of Standard Cigarette Workers’ Union v.
Court of Industrial Relations (101 Phil. 126), decided in 1957, is that if it were a labor
organization objecting to the participation in a certification election of a company-
dominated union, as a result of which a complaint for an unfair labor practice case
against the employer was filed, the status of the latter union must be first cleared in
such a proceeding before such voting could take place. In the language of Justice
J.B.L. Reyes as ponente: `As correctly pointed out by Judge Lanting in his dissenting
opinion on the denial of petitioner’s motion for reconsideration, a complaint for unfair
labor practice may be considered a prejudicial question in a proceeding for
certification election when it is charged therein that one or more labor unions
participating in the election are being aided, or are controlled, by the company or
employer. The reason is that the certification election may lead to the selection of an
employer-dominated or company union as the employees’ bargaining representative,
and when the court finds that said union is employer-dominated in the unfair labor
practice case, the union selected would be decertified and the whole election
proceedings would be rendered useless and nugatory.’ (Ibid., 128). The next year, the
same jurist had occasion to reiterate such doctrine in Manila Paper Mills Employees
LABOR LAW 2- SESSION 2 CASES
and Workers Association v. Court of Industrial Relations (104 Phil. 10 [1958]), thus:
`We agree with the CIR on the reasons given in its order that only a formal charge of
company domination may serve as a bar to and stop a certification election, the
reason being that if there is a union dominated by the Company, to which some of the
workers belong, an election among the workers and employees of the company
would not reflect the true sentiment and wishes of the said workers and employees
from the standpoint of their welfare and interest, because as to the members of the
company dominated union, the vote of the said members in the election would not be
free. It is equally true, however, that the opposition to the holding of a certification
election due to a charge of company domination can only be filed and maintained by
the labor organization which made the charge of company domination, because it is
the entity that stands to lose and suffer prejudice by the certification election, the
reason being that its members might be overwhelmed in the voting by the other
members controlled and dominated by the Company,’ (Ibid., 15). It is easily
understandable why it should be thus. There would be an impairment of the integrity
of the collective bargaining process if a company-dominated union were allowed to
participate in a certification election. The timid, the timorous, and the faint-hearted in
the ranks of labor could easily be tempted to cast their votes in favor of the choice of
management. Should it emerge victorious, and it becomes the exclusive
representative of labor at the conference table, there is a frustration of the statutory
scheme. It takes two to bargain. There would be instead a unilateral imposition by the
employer. There is need therefore to inquire as to whether a labor organization that
aspires to be the exclusive bargaining representative is company-dominated before
the certification election."
With the suspension of the certification proceedings clearly called for by reason of a
prejudicial question, the necessity of passing upon the remaining issues is obviated.
virtual law library
WHEREFORE, the Resolution of August 20, 1979 issued by public respondent
affirming the Order of the Med-Arbiter, dated January 23, 1979, calling for a
certification election is hereby REVERSED and SET ASIDE. The Temporary
Restraining Order heretofore issued by this Court shall continue to be in force and
effect until the status is cleared of respondent Philippine Association of Free Labor
Unions (July Convention) in Case No. R4-LRD-M-9-432-78 entitled "In the Matter of
Certification Election Among Rank and File Workers of Central Textile Mills, Inc.,
Philippine Association of Free Labor Unions, Petitioner, United CMC Textile Workers
Union, Intervenor."
No costs.
SO ORDERED.
Page 57
G.R. No. 135547 January 23, 2002
GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD, DENNIS R.
ARANAS, DAVID SORIMA, JR., JORGE P. DELA ROSA, and ISAGANI
ALDEA, Petitioners, vs. HON. EDGARDO ESPIRITU in his capacity as Chairman
of the PAL Inter-Agency Task Force created under Administrative Order No. 16;
HON. BIENVENIDO LAGUESMA in his capacity as Secretary of Labor and
Employment; PHILIPPINE AIRLINES (PAL), LUCIO TAN, HENRY SO UY,
ANTONIO V. OCAMPO, MANOLO E. AQUINO, JAIME J. BAUTISTA, and
ALEXANDER O. BARRIENTOS, Respondents.
In this special civil action for certiorari and prohibition, petitioners charge public
respondents with grave abuse of discretion amounting to lack or excess of jurisdiction
for acts taken in regard to the enforcement of the agreement dated September 27,
1998, between Philippine Airlines (PAL) and its union, the PAL Employees
Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the
Philippines (ALPAP) went on a three-week strike, causing serious losses to the
financially beleaguered flag carrier. As a result, PAL’s financial situation went from
bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation plan and
downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the retrenchment measures
adopted by the airline, which affected 1,899 union members. The strike ended four
days later, when PAL and PALEA agreed to a more systematic reduction in PAL’s
work force and the payment of separation benefits to all retrenched employees.
On August 28, 1998, then President Joseph E. Estrada issued Administrative Order
No. 16 creating an Inter-Agency Task Force (Task Force) to address the problems of
the ailing flag carrier. The Task Force was composed of the Departments of Finance,
Labor and Employment, Foreign Affairs, Transportation and Communication, and
Tourism, together with the Securities and Exchange Commission (SEC). Public
respondent Edgardo Espiritu, then the Secretary of Finance, was designated
chairman of the Task Force. It was "empowered to summon all parties concerned for
conciliation, mediation (for) the purpose of arriving at a total and complete solution of
the problem."1Conciliation meetings were then held between PAL management and
the three unions representing the airline’s employees, 2 with the Task Force as
mediator.
On September 4, 1998, PAL management submitted to the Task Force an offer by
private respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a plan
to transfer shares of stock to its employees. The pertinent portion of said plan reads:
1. From the issued shares of stock within the group of Mr. Lucio Tan’s holdings,
the ownership of 60,000 fully paid shares of stock of Philippine Airlines with a par
value of PH₱5.00/share will be transferred in favor of each employee of
LABOR LAW 2- SESSION 2 CASES
Philippine Airlines in the active payroll as of September 15, 1998. Should any
share-owning employee leave PAL, he/she has the option to keep the shares or
sells (sic) his/her shares to his/her union or other employees currently employed
by PAL.
2. The aggregate shares of stock transferred to PAL employees will allow them
three (3) members to (sic) the PAL Board of Directors. We, thus, become
partners in the boardroom and together, we shall address and find solutions to
the wide range of problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are tackling its
problems, we would request for a suspension of the Collective Bargaining
Agreements (CBAs) for 10 years.3
On September 10, 1998, the Board of Directors of PALEA voted to accept Tan’s offer
and requested the Task Force’s assistance in implementing the same. Union
members, however, rejected Tan’s offer. Under intense pressure from PALEA
members, the union’s directors subsequently resolved to reject Tan’s offer.
On September 17, 1998, PAL informed the Task Force that it was shutting down its
operations effective September 23, 1998, preparatory to liquidating its assets and
paying off its creditors. The airline claimed that given its labor problems, rehabilitation
was no longer feasible, and hence, the airline had no alternative but to close shop.
On September 18, 1998, PALEA sought the intervention of the Office of the President
in immediately convening the parties, the PAL management, PALEA, ALPAP, and
FASAP, including the SEC under the direction of the Inter-Agency Task Force, to
prevent the imminent closure of PAL.4
On September 19, 1998, PALEA informed the Department of Labor and Employment
(DOLE) that it had no objection to a referendum on the Tan’s offer. 2,799 out of 6,738
PALEA members cast their votes in the referendum under DOLE supervision held on
September 21-22, 1998. Of the votes cast, 1,055 voted in favor of Tan’s offer while
1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent notices of termination to
its employees.
Two days later, the PALEA board wrote President Estrada anew, seeking his
intervention. PALEA offered a 10-year moratorium on strikes and similar actions and
a waiver of some of the economic benefits in the existing CBA. 5 Tan, however,
rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the President proposing the
following terms and conditions, subject to ratification by the general membership:
1. Each PAL employee shall be granted 60,000 shares of stock with a par value
of ₱5.00, from Mr. Lucio Tan’s shareholdings, with three (3) seats in the PAL
Page 58
 Board and an additional seat from government shares as indicated by His
Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate
representation in committees or bodies which deal with matters affecting terms
and conditions of employment;
3. To enhance and strengthen labor-management relations, the existing Labor-
Management Coordinating Council shall be reorganized and revitalized, with
adequate representation from both PAL management and PALEA;
4. To assure investors and creditors of industrial peace, PALEA agrees, subject
to the ratification by the general membership, (to) the suspension of the PAL-
PALEA CBA for a period of ten (10) years, provided the following safeguards are
in place:
a. PAL shall continue recognizing PALEA as the duly certified bargaining agent
of the regular rank-and-file ground employees of the Company;
b. The ‘union shop/maintenance of membership’ provision under the PAL-
PALEA CBA shall be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of
Agreement forged by and between PAL and PALEA, to those employees who
may opt to retire or be separated from the company.
6. PALEA members who have been retrenched but have not received separation
benefits shall be granted priority in the hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the provisions of the
Labor Code shall apply.6
Among the signatories to the letter were herein petitioners Rivera, Ramiso, and
Aranas, as officers and/or members of the PALEA Board of Directors. PAL
management accepted the PALEA proposal and the necessary referendum was
scheduled.
On October 2, 1998, 5,324 PALEA members cast their votes in a DOLE-supervised
referendum. Of the votes cast, 61% were in favor of accepting the PAL-PALEA
agreement, while 34% rejected it.
On October 7, 1998, PAL resumed domestic operations. On the same date, seven
officers and members of PALEA filed this instant petition to annul the September 27,
1998 agreement entered into between PAL and PALEA on the following grounds:
LABOR LAW 2- SESSION 2 CASES
I PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND
EXCEEDED THEIR JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION
OF THE PAL-PALEA AGREEMENT AS THE CONSTITUTIONAL RIGHTS TO SELF-
ORGANIZATION AND COLLECTIVE BARGAINING, BEING FOUNDED ON PUBLIC
POLICY, MAY NOT BE WAIVED, NOR THE WAIVER, RATIFIED.
II PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND
EXCEEDED THEIR JURISDICTION IN PRESIDING OVER THE CONCLUSION OF
THE PAL-PALEA AGREEMENT UNDER THREAT OF ABUSIVE EXERCISE OF
PAL’S MANAGEMENT PREROGATIVE TO CLOSE BUSINESS USED AS
SUBTERFUGE FOR UNION-BUSTING.
The issues now for our resolution are:
(1) Is an original action for certiorari and prohibition the proper remedy to
annul the PAL-PALEA agreement of September 27, 1998;
(2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the
suspension of the PAL-PALEA CBA unconstitutional and contrary to public
policy?
Anent the first issue, petitioners aver that public respondents as functionaries of the
Task Force, gravely abused their discretion and exceeded their jurisdiction when they
actively pursued and presided over the PAL-PALEA agreement.
Respondents, in turn, argue that the public respondents merely served as conciliators
or mediators, consistent with the mandate of A.O. No. 16 and merely supervised the
conduct of the October 3, 1998 referendum during which the PALEA members ratified
the agreement. Thus, public respondents did not perform any judicial and quasi-
judicial act pertaining to jurisdiction. Furthermore, respondents pray for the dismissal
of the petition for violating the "hierarchy of courts" doctrine enunciated in People v.
Cuaresma7 and Enrile v. Salazar.8
Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of Civil
Procedure. The essential requisites for a petition for certiorari under Rule 65 are: (1)
the writ is directed against a tribunal, a board, or an officer exercising judicial or
quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in
excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in
the ordinary course of law.9 For writs of prohibition, the requisites are: (1) the
impugned act must be that of a "tribunal, corporation, board, officer, or person,
whether exercising judicial, quasi-judicial or ministerial functions;" and (2) there is no
plain, speedy, and adequate remedy in the ordinary course of law."10
The assailed agreement is clearly not the act of a tribunal, board, officer, or person
exercising judicial, quasi-judicial, or ministerial functions. It is not the act of public
respondents Finance Secretary Edgardo Espiritu and Labor Secretary Bienvenido
Laguesma as functionaries of the Task Force. Neither is there a judgment, order, or
resolution of either public respondents involved. Instead, what exists is a contract
Page 59
between a private firm and one of its labor unions, albeit entered into with the
assistance of the Task Force. The first and second requisites for certiorari and
prohibition are therefore not present in this case.
Furthermore, there is available to petitioners a plain, speedy, and adequate remedy in
the ordinary course of law. While the petition is denominated as one for certiorari and
prohibition, its object is actually the nullification of the PAL-PALEA agreement. As
such, petitioners’ proper remedy is an ordinary civil action for annulment of contract,
an action which properly falls under the jurisdiction of the regional trial
courts.11 Neither certiorari nor prohibition is the remedy in the present case.
Petitioners further assert that public respondents were partial towards PAL
management. They allegedly pressured the PALEA leaders into accepting the
agreement. Petitioners ask this Court to examine the circumstances that led to the
signing of said agreement. This would involve review of the facts and factual issues
raised in a special civil action for certiorari which is not the function of this Court.12
Nevertheless, considering the prayer of the parties principally we shall look into the
substance of the petition, in the higher interest of justice 13 and in view of the public
interest involved, inasmuch as what is at stake here is industrial peace in the nation’s
premier airline and flag carrier, a national concern.
On the second issue, petitioners contend that the controverted PAL-PALEA
agreement is void because it abrogated the right of workers to self-organization14 and
their right to collective bargaining.15 Petitioners claim that the agreement was not
meant merely to suspend the existing PAL-PALEA CBA, which expires on September
30, 2000, but also to foreclose any renegotiation or any possibility to forge a new CBA
for a decade or up to 2008. It violates the "protection to labor" policy 16 laid down by
the Constitution.
Article 253-A of the Labor Code reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. – Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be entertained
and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of
such five-year term of the Collective Bargaining Agreement. All other provisions of the
Collective Bargaining Agreement shall be renegotiated not later than three (3) years
after its execution. Any agreement on such other provisions of the Collective
Bargaining Agreement entered into within six (6) months from the date of expiry of the
term of such other provisions as fixed in such Collective Bargaining Agreement, shall
retroact to the day immediately following such date. If any such agreement is entered
into beyond six months, the parties shall agree on the duration of the retroactivity
thereof. In case of a deadlock in the renegotiation of the collective bargaining
agreement, the parties may exercise their rights under this Code.
LABOR LAW 2- SESSION 2 CASES
Under this provision, insofar as representation is concerned, a CBA has a term of five
years, while the other provisions, except for representation, may be negotiated not
later than three years after the execution.17 Petitioners submit that a 10-year CBA
suspension is inordinately long, way beyond the maximum statutory life of a CBA,
provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect,
abdicated the workers’ constitutional right to bargain for another CBA at the
mandated time.
We find the argument devoid of merit.
A CBA is "a contract executed upon request of either the employer or the exclusive
bargaining representative incorporating the agreement reached after negotiations with
respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions arising under such
agreement."18 The primary purpose of a CBA is the stabilization of labor-management
relations in order to create a climate of a sound and stable industrial peace. 19 In
construing a CBA, the courts must be practical and realistic and give due
consideration to the context in which it is negotiated and the purpose which it is
intended to serve.20
The assailed PAL-PALEA agreement was the result of voluntary collective bargaining
negotiations undertaken in the light of the severe financial situation faced by the
employer, with the peculiar and unique intention of not merely promoting industrial
peace at PAL, but preventing the latter’s closure. We find no conflict between said
agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose.
One is to promote industrial stability and predictability. Inasmuch as the agreement
sought to promote industrial peace at PAL during its rehabilitation, said agreement
satisfies the first purpose of Article 253-A. The other is to assign specific timetables
wherein negotiations become a matter of right and requirement. Nothing in Article
253-A, prohibits the parties from waiving or suspending the mandatory timetables and
agreeing on the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive bargaining agent of PAL’s ground
employees, that voluntarily entered into the CBA with PAL. It was also PALEA that
voluntarily opted for the 10-year suspension of the CBA. Either case was the union’s
exercise of its right to collective bargaining. The right to free collective bargaining,
after all, includes the right to suspend it.
The acts of public respondents in sanctioning the 10-year suspension of the PAL-
PALEA CBA did not contravene the "protection to labor" policy of the Constitution.
The agreement afforded full protection to labor; promoted the shared responsibility
between workers and employers; and the exercised voluntary modes in settling
disputes, including conciliation to foster industrial peace." 21
Petitioners further allege that the 10-year suspension of the CBA under the PAL-
PALEA agreement virtually installed PALEA as a company union for said period,
amounting to unfair labor practice, in violation of Article 253-A of the Labor Code
mandating that an exclusive bargaining agent serves for five years only.
Page 60
The questioned proviso of the agreement reads:

a. PAL shall continue recognizing PALEA as the duly certified-bargaining agent of the
regular rank-and-file ground employees of the Company;

Said proviso cannot be construed alone. In construing an instrument with several

provisions, a construction must be adopted as will give effect to all. Under Article
1374 of the Civil Code,22 contracts cannot be construed by parts, but clauses must be
interpreted in relation to one another to give effect to the whole. The legal effect of a
contract is not determined alone by any particular provision disconnected from all
others, but from the whole read together.23 The aforesaid provision must be read
within the context of the next clause, which provides:

b. The ‘union shop/maintenance of membership’ provision under the PAL-PALEA

CBA shall be respected.

The aforesaid provisions, taken together, clearly show the intent of the parties to
maintain "union security" during the period of the suspension of the CBA. Its objective
is to assure the continued existence of PALEA during the said period. We are unable
to declare the objective of union security an unfair labor practice. It is State policy to
promote unionism to enable workers to negotiate with management on an even
playing field and with more persuasiveness than if they were to individually and
separately bargain with the employer. For this reason, the law has allowed
stipulations for "union shop" and "closed shop" as means of encouraging workers to
join and support the union of their choice in the protection of their rights and
interests vis-à-vis the employer.24

Petitioners’ contention that the agreement installs PALEA as a virtual company union
is also untenable.1âwphi1 Under Article 248 (d) of the Labor Code, a company union
exists when the employer acts "[t]o initiate, dominate, assist or otherwise interfere
with the formation or administration of any labor organization, including the giving of
financial or other support to it or its organizers or supporters." The case records are
bare of any showing of such acts by PAL.

We also do not agree that the agreement violates the five-year representation limit
mandated by Article 253-A. Under said article, the representation limit for the
exclusive bargaining agent applies only when there is an extant CBA in full force and
effect. In the instant case, the parties agreed to suspend the CBA and put in
abeyance the limit on the representation period.

In sum, we are of the view that the PAL-PALEA agreement dated September 27,
1998, is a valid exercise of the freedom to contract. Under the principle of inviolability
of contracts guaranteed by the Constitution,25 the contract must be upheld.

WHEREFORE, there being no grave abuse of discretion shown, the instant petition is
DISMISSED. No pronouncement as to costs.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 61

G.R. No. L-18112 October 30, 1962
6. Cobarrubias, Luz 32. Martin, Ramon

KAPISANAN NG MGA MANGGAGAWA NG ALAK (NAFLU), petitioner, vs. 7. Cobarrubias, Corazon 33. Hermogeno, Esther
HAMILTON DISTILLERY COMPANY, CO BON BENG, MARIANO ANG ENG and
HAMILTON WORKERS' UNION, respondents. 8. Castranero, Filimena 34. Javier, Mercedes

Appeal by certiorari from a decision of the Court of Industrial Relations dismissing the 9. Cenon, Marina 35. Lacsamana, Nenita
complaint herein for unfair labor practice.
10. Dumlao, Cristina 36. Manreza, Avelina
Respondent Hamilton Distillery Company or Hamilton Wine Manufacturing Co.,
11. Cruz, Elena de la 37. Masiglat, Norma
hereinafter referred to as the Company, is a commercial establishment engaged in
the manufacture of wine in the Philippines, whereas respondents Co Bon Beng and
12. Esquivel, Plavia 38. Montealegre, Angelina
Mariano Ang Eng are the superintendent or cashier and the manager respectively
thereof.
13. Evangelista, Rosanna 39. Yumul, Laura

On September 24, 1957, two (2) labors unions, composed of employees and laborers 14. Francisco, Rosita 40. Reyes, Elnora
of the Company, were registered with the Department of Labor, namely, petitioner
Kapisanan ng mga Manggagawa ng Alak (NAFLU), hereinafter referred to as the 15. Flores, Dorotea 41. Sarmiento, Purita
NAFLU, and respondent Hamilton Workers' Union, hereinafter referred to as the
Workers' Union. Thereupon, the latter and the Company entered into a collective 16. Germeno, Caridad 42. Santos, Crisanta
bargaining agreement, incorporated into a private instrument purporting to have been
executed on September 24, 1957. Moreover, the Company issued a notice bearing 17. Pique, Remedios 43. Perez, Cresencia
the same date, addressed to all of its employees, giving non-members of the
Workers' Union thirty (30) days within which to join the same, or else, be dismissed. 18. Vigo, Leda 44. Martin, Jorge

There is evidence to the effect that, upon learning that the NAFLU was being 19. Avinante, Simplicio 45. Martin, Severino
organized, or on September 23, 1957, Co Bon Beng sent for Francisco Dumlao, and
inquired whether it was true that he had organized said labor and was its president; 20. Brion, Felix 46. Mariano, Anicito
that upon receipt of an affirmative answer, Co Bon Beng urged Dumlao to dissolve
the NAFLU, for otherwise he would be dismissed; that when Dumlao answered that 21. Bayano, Ramon 47. Mendoza, Roman
he could not follow this advice, Co Bon Beng bade him to look for another job; that on
September 24, 1957, Co Bon Beng refused to admit him to work upon the ground that 22. Cruz, Jose de la 48. Montevirgin, Manuel
he was unwilling to dissolve the NAFLU; that, subsequently, some members thereof
resigned therefrom and joined the Workers' Union, because otherwise they would be 23. Diaz, Angel 49. Opinaldo, Fernando
dismissed by the Company; that beginning from September 30, 1957, those who
remained affiliated to the NAFLU were allowed to work only two (2) days a week; and 24. Dumalo, Francisco 50. Santos, Vicente
that on October 28, 1957 the following members of the NAFLU, who had not joined
the Workers' Union were dismissed by the Company, namely: 25. Gindoy, Luis, Jr. 51. Reyes, Felicisimo

26. Gonzaga, Atanacio 52. Sanchez, Esteban

1. Ambos, Avelina
2. Belarmino, Gleceria
3. Bada, Adora
4. Cerezo, Rosa
5. Cerdeno, Josefa
27. Gawiran, Gorgonio
These dismissed employees reported the matter to the Court of Industrial Relations,
28. Jusay, Ruben with which a formal complaint for unfair labor practice was, on November 28, 1957,
filed, by an acting prosecutor of said court, against the Company, its aforementioned
29. Ignacio, Antonio superintendent or cashier and manager, and the Workers' Union. In their answer to
this complaint, respondents denied the charge and invoked, in justification for said
30. Labusta, Engracio dismissal of members of the NAFLU, a "closed shop" clause in the collective
bargaining agreement between the Company and the Workers Union.
31. Libatique, Ceril

LABOR LAW 2- SESSION 2 CASES Page 62

Meanwhile, or on October 11, 1957, the NAFLU had filed with the Court of Industrial
Relations a petition for certification election (Case No. 500 MC), in view of which said
court issued an order dated October 19, 1957, directing that copies thereof be posted
for the information of the employees and laborers concerned and that copies of the
petition be served upon the corresponding officers of the Company and of the
Workers' Union. Still later, or on November 25, 1957, the NAFLU filed, in the unfair
labor practice proceedings, an urgent petition for an injunctive relief, praying, among
other things, that the effectivity of the collective bargaining agreement between the
Company and the Workers' Union be suspended and that the Company be ordered to
reinstate the dismissed employees or laborers with backpay. This petition was denied
on January 3, 1958. In due course thereafter, or on December 29, 1960, said Court
rendered a decision dismissing the unfair labor practice case. A reconsideration of
such decision having been denied by the Court sitting en banc, the case is now
before us on appeal by certiorari taken by the NAFLU.
The main issues in this appeal are: (1) whether or not the collective bargaining
agreement between the Company and the Workers' Union had been made
fraudulently; and (2) whether or not the dismissal of members of the NAFLU who had
failed and refused to join the Workers' union constitutes an unfair labor practice.
With respect to the first issue, one cannot minimize the importance of the fact that,
although the Workers' Union was registered on September 24, 1957, its collective
bargaining agreement with the Company and the notice issued by the Company —
giving its employees who were not members of the Workers' Union thirty (30) days to
join the same, or else be dismissed — bear the same date. Likewise, noteworthy is
the circumstance that, aside from being a Chinese, Valentin Kaw, the president of the
Workers' Union, was the time-keeper of the Company, who, as such, had supervisory
authority over its employees and laborers, and could, therefore, exercise substantial
pressure upon them to induce, if not compel, them to join the Workers' Union, and
that the treasurer thereof was his brother Benito Kaw, another Chinese. Considering
further that said agreement was contained in a private document, and that the NAFLU
was, also, registered as a duly organized labor union, on the date aforementioned, we
find it difficult to avoid the feeling that the Workers' Union was, if not company
dominated, at least organized under the patronage of the Company, and that the
same was in such a hurry to bargain with the Workers' Union, in order to beat the
NAFLU and prevent it from taking appropriate action prior, thereto, that the
agreement was made in a private instrument, thus suggesting that it must have been
made late at night. Otherwise the agreement would have been executed before a
notary public for the corresponding acknowledgment.
Indeed, the record shows that, despite several defections from the NAFLU, prior to
the expiration of the period given by the Company to non-members of the Workers'
Union, the Company had to dismiss 52 members of the NAFLU, apart from its
president, for failure to join the Workers' Union within said period. Considering that
the Company had altogether around 100 employees only, it is clear that a petition for
certification election, if filed by the NAFLU prior to the execution of the collective
bargaining agreement between the Workers' Union and the Company, would have, in
all probability, barred effectively said agreement. Independently of the foregoing, the
provisions thereof do not legalize the dismissal of members of the NAFLU. The lower
court held otherwise, relying upon the "closed shop" clause of said agreement
reading:
LABOR LAW 2- SESSION 2 CASES
That the COMPANY shall establish the policy of "Union Shop," effective October 24,
1957. All workers shall by that date become members of the UNION, except those
monthly salaried employees, and other supervisor-employee (technical men) listed by
the Management. The COMPANY shall be free to hire new laborers without giving
consideration to their membership or non-membership to the Union. However, all
laborers hired must join the UNION within sixty (60) days of employment, or face
discharge, except, those selected by the Management above. The UNION assumes
responsibility of individually signing up new laborers. In this connection, it is well
settled in this jurisdiction that, in the absence of a manifest intent to the contrary,
"closed shop" provisions in a collective bargaining agreement "apply only to
persons to be hired or to employees who are not yet members of any labor
organization" and that said provisions of the agreement are "not applicable to
those already in the service at the time of its execution" (Confederated Sons of Labor
vs. Anakan Lumber Co., L-12503 [April 29, 1960]; Local 7, Press & Printing Free
Workers[FFW] vs. Judge Tabigne, L-16093 [November 29, 1960]; Freeman Shirt
Manufacturing Co. vs. CIR, L-16561 [January 28, 1961]; San Carlos Milling Co. vs.
CIR, L-15463 and L-15723 [March 17, 1961]; Talim Quarry Co., Inc. vs. Bartolo, L-
15768 [April 29, 1961]).
The language of the above quoted "closed shop" clause is not such as to bar
necessarily the limitation of its application to new employees or laborers, or, at least,
to those who were not as yet affiliated to any labor organization. The first sentence of
said clause may be construed to refer to laborers or employees admitted after
September 24, but before October 24, 1957. At any rate, if the Company and the
Workers' Union intended by said clause, to authorize the dismissal of persons already
in the service of said Company on or before September 24, 1957, but belonging to
another labor organization, and who failed to quit from the latter and join the Workers'
Union on or before October 24, 1957, then such stipulation would be null and void
(Findlay Millar Timber Co. vs. PLASLU L-18217 and L-18222 [September 29, 1962].
As held in Freeman Shirt Manufacturing Co., Inc vs. CIR (supra):
The closed-shop agreement authorized under sec. 4, subsec. a(4) of the Industrial
Peace Act above quoted should however, apply only to persons to be hired or to
employees who are not yet members of any labor organization. It is inapplicable to
those already in the service who are members of another union. To hold otherwise,
i.e., that the employees in a company who are members of a minority union may be
compelled to disaffiliate from their union and join the majority or contracting union,
would render nugatory the right of all employees to self organization and to form, join
or assist labor organizations of their own choosing, a right guaranteed by the
Industrial Peace Act (sec. 3, Rep. Act No. 875) as well as by the Constitution (Art. III,
sec. 1[6]).
WHEREFORE, the decision appealed from is hereby reversed, and another one shall
be entered ordering the Company to cease and desist from further unfair labor
practices, to pay the members of the NAFLU who had been discriminated against the
difference between the compensation actually paid to them and that which they would
have received had there been no discrimination, and to reinstate the employees
named above, with back wages from the time of their dismissal until their actual
reinstatement, with all of the rights and privileges appertaining thereto, as well as to
pay the costs. It is so ordered.
Page 63
Unlawful Discrimination
G.R. No. L-5206 April 29, 1953
CALTEX (PHILIPPINES), INC., petitioner, vs.PHILIPPINE LABOR
ORGANIZATIONS, CALTEX CHAPTER, respondent.
In a controversy involving several demands made by the Philippine Labor
Organizations, Caltex Chapter, in February 1950, upon the domestic corporation
Caltex (Philippines) Inc., the Court of Industrial Relations required the said
corporation to pay its "eleven female prewar employees . . . the corresponding one-
year gratuity that it has extended to its prewar male employees". The order, dated
August 10, 1951 said, in part, as follows:
This is a request for one year gratuity to prewar female employees who were not
readmitted to the service of the respondent-company after the liberation, in the
same manner that the prewar male employees of the company presented on the
demand, it appears that there are 11 prewar female employees involved in this
request,
. . . . These female employees used to handle, before the war, machineries that
were functioning a little differently from the ones now in operation in the
respondent-company which are presently being handled by the male employees.
It is for the reason that they were not reinstated by the company after liberation.
Their reinstatement in the service respondent-company, however, is beside the
point. It is precisely for the fact that they were not reinstated that they were now
requesting for one year gratuity given to prewar male employees by the
respondent-company. There is no denial on the part of the respondent as to the
fact of its having given one year gratuity to the prewar male employees of the
company. In the face of this fact, the Court finds no reason why the female
prewar employees should be treated differently from the prewar male employees.
Upon the whole, it proceeds, in justice and equity, that the prewar female
employees of the respondent-company should be extended the same treatment
as to the prewar male employees.
Calling attention to the fact that the gratuity had been granted pursuant to a
stipulation approved by the same Court of Industrial Relations on August 9, 1949, in
these words,
(5) On the matter of backpay, the parties stipulated and agreed that the company
will give additional ex gratia rehabilitation allowance to its present employees and
laborers who were in its employ prior to the last war (in addition to what they
have received in the past) such that the total that each employee and laborer will
receive will be as much as the Shell Company of the Philippine Islands, Ltd., has
given to its present employees and laborers who were in its employ prior to the
last war. Any employee or laborer who has not been paid ex gratia allowance in
1947, but entitled thereto, will be paid the amount to him.
LABOR LAW 2- SESSION 2 CASES
the corporation argued, in a move to reconsider, that the payment had been made
only to prewar male employees who were working for the company at the time the
gratuity was given — which was not exactly the situation of the aforesaid eleven
female employees.
With the denial of its motion to reconsider, the Caltex Company petitioned for this
review, which, in the existing circumstances, appears to be meritorious.
We have held that prewar employees have no legal right to backpay, i.e., salary
during the war when they rendered no service to their employer. (Fitzsimmons vs.
Atlantic Gulf,1 47 Off. Gaz., 678.)
Thinking alone the same line we recently cited "the age-old rule governing the relation
between labor and capital or management and employee, "a fair day's wage for a fair
day's labor'." (J.P. Heilbronn Co. vs. National Labor Union,2G.R. No. L-5121.)
Hence as a matter of principal, these prewar female employees have no right to back
pay. However, we must agree with the Court of Industrial Relations that if prewar
male employees are granted backpay gratuity, prewar female employees should also
be extended the same privilege, on grounds of equity, remembering always the
Government's constitutional duty to protect labor, especially women, and the statutory
injunction that in exercising its duties and powers "the Court shall act according to
justice and equity and the substantial merits of the case." (Sec. 20 Com. Act No. 103.)
It appears that Caltex (Phil.) Inc., distributed one year gratuities to its prewar male
employees who were working for it after liberation on July 16, 1949. The gratuity was
granted only to those prewar employees who were in the employ of Caltex, Inc. on
July 16, 1949. On equitable grounds, and in our opinion, that gratuity should likewise
be given to its prewar female employees who were working for it on July 16, 1949.
Now, it is obvious that as these female laborers were admittedly not working for
Caltex on July 16, 1949, they could not, invoking equity, request the same privilege or
gratuity.
The above conclusion might be modified, if as respondent's counsel argues, these
women workers "were refused reemployment by their employer when demand
therefor had been made after liberation."
Yet the record does not support such allegation of rejected for reemployment. The
Court of Industrial Relations merely declared that those ladies were not "reinstated by
the company after liberation." That statement is not necessarily a finding that they
desired reemployment but were turned down. They might not have taken because the
machineries were different, or because they chose not to report again to work. The
Court's dictum may not be interpreted as having adjudicated the question of demand-
and-refusal, because the issues were joined upon the Chapter's "request that the one
year gratuity given to prewar male employees should also be given to prewar female
employees," without reference to women workers who had been refused
reemployment. In other words, these women did not plead for money on the ground
that they had not been reinstated or had been denied reemployment — rather belated
claim it would be seem, the company having reopened four years before (1946) —
Page 64
but only because the male employees were given the gratuity. In this connection we
would be the last to deny them gratuity had the Caltex corporation awarded
compensation to those male prewar employees who had not been reinstated after the
war.

In the settlement of industrial disputes it is proper and convenient for the court to
insist, in exercising its ample powers, that capital shall make no discrimination
between male and female laborers. But discrimination only exists when one is denied
privileges given to the other under identical or similar conditions. Material conditions
of course. And the condition as to actual employment required by the company is
undoubtedly material, the purpose of gratuity being obviously to induce the company's
workers to render better service in return for such generosity, or simply to improve the
finances and morale of its helpers with consequent beneficial effects upon the
corporate business operations. In the instant controversy, the conditions were
different: the male beneficiaries were employees; whereas these female claimants
were not.

WHEREFORE having previously ruled that the claim for backpay has no legal
foundation, and being shown no resultant unfairness, this Court is constrained
presently to disapprove the order directing payment to the herein named workers,
finding no justification for it, either in law or in equity. Needless to say, Courts are not
permitted to render judgments solely upon the basis of sympathies and inclinations.
Neither are they authorized, in the guise of affording protection to labor, to distribute
charities at the expense of natural or judicial persons, because our constitutional
government assures the latter against deprivation of their property except in
accordance with the statutes of supplementary equitable principles.

The appealed order is set aside, without costs.

LABOR LAW 2- SESSION 2 CASES Page 65

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.
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 —
I 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-
LABOR LAW 2- SESSION 2 CASES
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.
Page 66
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.

LABOR LAW 2- SESSION 2 CASES Page 67

G.R. No. 73721 March 30, 1987
AHS/PHILIPPINES EMPLOYEES UNION [FFW], B.A. AGANON, D.T. GUILLES,
E.G. SULIT and E.C. RODRIGUEZ, * petitioners, vs. THE NATIONAL LABOR
RELATIONS COMMISSIONS and AHS/PHILIPPINES, INC., respondents.
Assailed in this petition for certiorari with prayer for a writ of preliminary injunction is
the decision dated December 27, 1985 of the National Labor Relations Commission
[NLRC] in NCR-9-3217-84 entitled, "ASH/Philippines, Inc., Complainant-Appellee,
versus AHS/Philippines Employees Union [FFW], B.A. Aganon, D.T. Guilles, e.g. Sulit
and E.C. Rodriguez, Respondents-Appellants," which affirmed the labor arbiter's
decision declaring the strike held by petitioners as illegal but with the modification that
individual petitioners be reinstated to their former positions, or paid separation pay or
the economic package offered by the company, if reinstatement is impossible. 1
Petitioner AHS/Philippines Employees Union [FFW] was the recognized collective
bargaining agent of the rank-and-file employees of private respondent
AHS/Philippines Inc., a company engaged in the sale of hospital and laboratory
equipment and Berna and Pharmaton products. A collective bargaining agreement
[CBA] was concluded between the parties for the period commencing December 1,
1981 to November 30, 1984.
On July 26, 1984, petitioner union filed a notice of strike with the Bureau of Labor
Relations, listing as ground therefor unfair labor practice consisting in: 1] diminution of
benefits, 2] union busting, 3] illegal termination and 4] harassment. 2 A second notice
of strike was thereafter filed on August 3, 1984 on substantially the same grounds
and the additional charges of refusal to bargain, violation of the CBA and dismissal of
union officers and members. 3
On August 15, 1984, petitioner union struck. A picket was staged at private
respondent company's premises at Pasong Tamo in Makati.
When the conciliation meetings conducted by the Bureau of Labor Relations proved
unavailing, private respondent company filed a petition to declare the strike
illegal 4 After issues had been joined with petitioner union's submission of its position
paper, hearings ensued before Labor Arbiter Virginia Son.
On March 26, 1985, Labor Arbiter Son rendered a decision declaring the strike staged
by petitioner union illegal and ordering the lifting of the picket established in the
premises of private respondent company. All the officers of the union who joined and
were responsible for the declaration of said strike were deemed to have lost their
employment status, while the other non-officer employees who symphathized and
joined the strike were ordered reinstated to their former or equivalent positions
without strike duration pay, or paid separation pay or the economic package offered
by the company, whichever is higher, in case reinstatement was not possible. 5
Dissatisfied, petitioners appealed the labor arbiter's ruling to the NLRC en banc,
which rendered the assailed decision. Hence, this petition.
LABOR LAW 2- SESSION 2 CASES
On July 30, 1986, after public and private respondents had submitted their respective
comments to the petition, the Court resolved to discuss the petition for lack of
merit. 6 A motion for reconsideration filed by union president Lorenzo Leones and
vice- president Ernesto Ilagan 7 was denied on September 8, 1986. 8 Upon receipt of
the notice of said denial petitioners forthwith filed a motion with leave of Court to allow
petitioners to file last or final motion for reconsideration, on the ground, among others,
that the first motion for reconsideration was filed by the aforesaid union officers
without the assistance of counsel. 9 The motion was opposed by private respondent
company. 10
Pending action on this motion, the Kilusang Mayo Uno [KMU] staged a picket in front
of the P. Faura gate of this Court on October 27, 1986 in protest of the dismissal by
the Court of the petition at bar. Reacting to the circular signed by Nick Elman of the
KMU distributed to the public during the picket, respondent company filed a motion to
cite petitioners, the KMU and Nick Elman in contempt of court. The alleged
contemptors, upon being required, submitted their joint comment on the contempt
charge, 11 to which respondent company filed a reply. 12
Meanwhile, the case was heard on November 10, 1986, 13 after which the Court
resolved to require the parties to file their respective memoranda within 20
days. 14 The parties complied with this order.
In a manifestation dated December 2, 1986, counsel for private respondent company
informed the Court that in January 1987, private respondent would close its
operations in the Philippines because of the continuing losses being sustained by its
Philippine operations and the uncertainty of business recovery in the immediate
future. 15 Petitioners filed a counter-manifestation and motion for early resolution. 16
Because petitioners submitted a supplemental memorandum the Court required
private respondent company to file its own supplemental memorandum in reply to
petitioners' supplemental memorandum. After private respondent had done so, the
Court resolved to set aside its resolutions of July 30 and September 8, 1986 and to
give due course to the petition.
In concluding that the strike declared by petitioners was illegal for being based on
trivial grounds, public respondent NLRC ruled on the issues alleged in the notice of
strike in this wise:
1] On the dismissal of fourteen [14] rank and file employees by respondent company,
which according to petitioner union triggered the first notice of strike, the NLRC, while
conceding that these employees had rendered service to respondent company for
more than six [6] months when they were dismissed and that they performed activities
which were usually necessary or desirable in the usual business of respondent
company, took note that their services were engaged under a contract entered into by
respondent company with a placement agency and that petitioner union never
demanded that they be converted into regular employees nor instituted any grievance
or complaint in behalf of said employees until some of them wrote petitioner union for
assistance after their dismissal. On the basis of these observations, respondent
NLRC concluded that petitioner union had no personality to represent said employees
as their category as regular employees eligible for membership in the union under the
Page 68
terms of the CBA has not yet been finally determined at grievance or by final
judgment and the assistance sought by them did not vest petitioner union with the
legal personality to represent the much less use their dismissal as a ground to
strike. 17
2] With respect to the increase in the area sales quota of the union president and
vice-president, the NLRC found the increase justified by the change in the sales
organization in January 1984, whereby each field representative, instead of carrying
both Berna and Pharmaton products, would concentrate only on either one. It further
observed that it was only after six [6] months after the plan had been in operation and
when the union president failed to meet his quota that said union president filed his
grievance; that the grievance was being threshed out in accordance with the
grievance procedure outlined in the CBA and that any delay in the resolution thereof
was not entirely attributable to the company. Moreover, respondent NLRC found the
setting of the area sales quota not to be ill-motivated nor related to the president's
union activities. Hence, it concluded that the union president's grievance was not a
valid ground for a strike. 18
3] As regards the non-implementation of the yearly increase in per diems and
allowances, public respondent concurred with the observation of the Labor Arbiter
that there was no such provision in the CBA so that said issue could not be a proper
ground for the notice of strike or the strike itself. 19
4] Likewise not considered by the NLRC as a valid ground for strike was the failure of
respondent company to provide space for a union office as stipulated under Art. XV,
Section 1 of the CBA. The NLRC attributed such failure to the complacency exhibited
by petitioner union in not taking up the matter again with respondent company after
petitioner union rejected the set of rules drawn up by respondent company with
respect to the use of the office in accordance with the CBA provision that the use of
such office would be subject to any rules and regulations to be agreed upon by both
union and company. 20
5] Anent the recall by respondent company of the cars assigned to the field
representatives, the NLRC found no violation of the CBA nor any unfair labor practice
to have been committed by respondent company by reason thereof. Referring to Art.
XIV, Sec. 2 of the CBA which granted to the assignee of a car to be disposed of the
first priority to purchase the car at fifty [50] percent of the appraised market value, the
NLRC found no indication that the cars were to be disposed of and therefore the CBA
provision invoked by petitioner union had not come into operation. This being the
case, such recall could not be a ground for a strike. 21
6] The dismissal of 31 employees of respondent company's Pharmaceutical Division,
the additional ground cited in the second notice of strike, was found by the NLRC to
have been dictated by the change in the marketing strategy of Berna and Pharmaton
products and not for the purpose of union-busting. Respondent NLRC gave credence
to respondent company's claim that as early as October 1983, its operations had
been seriously affected by the suspension of trade and foreign credit facilities, which
situation grew worse in early 1984 when its suppliers of Berna and Pharmaton
products insisted on a cash L/C basis or full guarantee by the mother company. As
respondent company could not comply with these requirements, it decided to
LABOR LAW 2- SESSION 2 CASES
strengthen its other division, the HML Division, which sold hospital and laboratory
equipment bought from the parent company. It posted a job-opening notice for 7 to 10
medical representatives and one field supervisor for the HML Division. Amelita
Calderon, a member of petitioner union applied for the position of medical
representative, but was rejected for lack of the necessary educational attainment and
unwillingness to accept provincial assignments.
When the economic crisis continued until mid-year of 1984, respondent company
decided to change its marketing strategy for the Berna and Pharmaton products to
ensure the whole company's viability. Instead of ethical selling through the field
representatives, it was decided to shift to the over-the counter [OTC] method and to
appoint Zuellig Pharma as national distributor. As this move would result in the
abolition of the Pharmaceutical Division, the union president was advised on July 26,
1984 of the impending dissolution of said division and was asked to suggest ways
and means by which the termination could be effected in the smoothest manner
possible and with least pain. When on August 1, 1984, the union president
categorically stated to the company president that the union would oppose any
termination at all costs, respondent company decided to proceed with the
announcement of the termination by serving notice on the same day to the 31
employees of the Pharmaceutical Division, said termination to take effect immediately
upon service thereof. In lieu of the 30-day notice required by law, the employees were
paid one month's salary. Fifteen accepted their termination.
Petitioners seek reversal of the above-cited NLRC findings and conclusions on the
following grounds:
A. THE ASSAILED DECISION WHOLLY DISREGARDED VIOLATIONS BY THE
COMPANY OF ART. 284 OF THE LABOR CODE AS WELL AS THE STIPULATED
PROCEDURES GOVERNING DISMISSALS IN THE PARTIES' COLLECTIVE
BARGAINING AGREEMENT;
B. THE NLRC ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
AFFIRMED THAT THE DISMISSAL OF THE FOURTEEN [14] EMPLOYEES ON
JULY 26, 1984 WAS NOT A PROPER GROUND FOR A STRIKE DESPITE
CONFERMENT BY LAW OF REGULAR STATUS TO THEIR EMPLOYMENT;
C. THE NLRC GRAVELY ERRED IN HOLDING THAT THE QUADRUPLING OF THE
UNION PRESIDENT'S AREA SALES QUOTA WAS NOT AN ACT OF
DISCRIMINATION AND HENCE NOT A VALID GROUND FOR STRIKE; and,
D. THE COMMISSION ACTED CAPRICIOUSLY, UNREASONABLY AND WITHOUT
LEGAL BASIS WHEN IT RULED THAT THE CLOSURE OF THE
PHARMACEUTICAL DIVISION AND THE SUBSEQUENT TRANSFER OF ITS
DISTRIBUTION FUNCTIONS TO ANOTHER COMPANY IS NOT AN UNFAIR
LABOR PRACTICE.
Grounds A and B cited by petitioners are interrelated and will be discuss jointly.
Page 69
Concededly, retrenchment to prevent losses is considered a just cause for
terminating employment 22 and the decision whether to resort to such move or not is a
management prerogative. 23 Basic, however, in human relations is the precept that
"every person must, in the exercise of his rights, and in the performance of his duties,
act with justice, give everyone his due and observed honesty and good faith." 24 Thus,
in the case of Remerco Garment Manufacturing v. Minister of Labor and Employment,
et al, 25 We stated that:
Basically, the right of an employer to dismiss an employee differs from and
should not be confused with the manner in which such right is exercised. It must
not be oppressive and abusive since it affects one's person and property.
Due perhaps to the fact that private respondent company presented a legally tenable
ground for dismissing the 31 employees of its Pharmaceutical Division, both the labor
arbiter and respondent NLRC totally missed the point petitioners were trying to drive
home, i.e. that the banner by which the retrenchment was effected by respondent-
company ran counter to both law and the collective bargaining agreement.
Art. 284 of the Labor Code of the Philippines, as amended by Sec. 15 of Batas
Pambansa Blg. 130, provides:
Art. 284. 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 present losses, or the closing
or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this title, by serving a written
notice on the workers and the Ministry of Labor and Employment at least one [1]
month before the intended date thereof. ... In case of retrenchment to prevent
losses and in case of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one [1] month or at least one-half [1/2]
month pay for every year of service, whichever is higher. A fraction of at least six
[6] months shall be considered one [1] whole year.
In the case at bar, respondent company offered to pay the 31 dismissed employees
one month salary in lieu of the one [1] month written notice required by law. This
practice was allowed under the termination Pay Laws 26 whereby if the employee is
dismissed on the basis of just cause, the employer is not required to serve advance
written notice based on the number of years the employee has served the employer,
nor is the employer required to grant termination pay. It is only where the dismissal is
without just cause that the employer must serve timely notice on the employee,
otherwise the employer is obliged to pay the required termination compensation,
except where other applicable statutes provide a different remedy. 27 Otherwise
stated, it was the employer's failure to serve notice upon the employee, not the cause
for the dismissal, that rendered the employer answerable for terminal pay. 28 Thus,
notice may effectively be substituted by payment of the termination pay.
Under the New Labor Code, however, even if the dismissal is based on a just cause
under Art. 284, the one-month written notice to both the affected employee and the
Minister labor is required, on top of the separation pay. Hence, unlike in the old
LABOR LAW 2- SESSION 2 CASES
termination pay laws, payment of a month's salary cannot be considered substantial
compliance with the provisions of Art. 284 of the Labor Code. Since the dismissal of
the 31 employees of the Pharmaceutical Division of respondent company was
effected in violation of the above-cited provision, the same is illegal.
Needless to say, in the absence of a showing that the illegal dismissal was dictated
by anti-union motives, the same does not constitute an unfair labor practice as would
be a valid ground for a strike. The remedy is an action for reinstatement with
backwages and damages, Nevertheless, We take this actuation of respondent
company as evidence of the abusive and oppressive manner by which the
retrenchment was effected. And while the lack of proper notice could not be a ground
for a strike, this does not mean that the strike staged by petitioner union was illegal
because it was likewise grounded on a violation by respondent company of the CBA,
enumerated as an unfair labor practice under Art. 249 [i] of the Labor Code.
Appearing on record is the testimony of Carlito V. Santos, Controller of respondent
company that the "principal strategy to shift to one distributor came as early as
July. 29 Inspire of this, petitioner union was never consulted, on the matter as provided
under Section 4, Article VIII of the CBA as follows:
Section 4. Consultations on Lay-Offs and Terminations.
a] the COMPANY agrees that whenever it will lay-off or terminate any covered
employee for economic or other reasons, the UNION shall be consulted prior to
such lay off/termination. 30
Verily, union president Lorenzo Leones was told by respondent company's president
and managing director, Constancio V. Halili, Jr. on July 25, 1984 about the impending
closure, but contrary to the NLRC's assessment, said notice cannot be taken as a
substantial compliance with the above-cited CBA provision. The July 25, 1984
meeting was called by Halt for the purpose of discussing Leones grievance over the
latter's increase in area sales quota. The information about the closure was a mere
"by the way" or an "incidentally," a lip service, which does not constitute compliance in
good faith of the CBA provision on consultation.
It appears that paying up service to the CBA is a practice resorted to by respondent
company. Thus, it posted for two days a job-opening notice for 7-10 field
representatives and one supervisor in the HML Division as required by the CBA, but
without disclosing that the Pharmaceutical Division was about to be dissolved.
Feeling secure in their positions, the field representatives in the Pharmaceutical
Division would naturally be uninterested in applying for the same position in the other
division. Furthermore, respondent company listed educational requirements
calculated to disqualify would be applicants from the Pharmaceutical Division who
were mostly commerce graduates, but eventually hired applicants who did not
possess the required educational attainment.
Another evidence that respondent company intended to terminate the 31 employees
of the Pharmaceutical Division without prior consultation with petitioner union is the
recall of the cars assigned to the field representatives. Two memoranda dated July 23
Page 70
and 24 addressed to the HML Division and the Pharmaceutical Division, respectively,
were sent out, directing the field representatives to turnover their respective cars for
inspection at the nearby Cressida Motors. The memorandum to the HML Division
indicated July 26, 1984 as the date of release of the cars to the field representatives,
while that to the Pharmaceutical Division merely mentioned "cut-off dates this
July. 31 The reason given by respondent company for the recall was that estimates of
car maintenance and repair costs were to be reported by Carlito Santos to its
Regional Office in Australia. This is obviously an afterthought because the testimony
of said Carlito Santos was that he left for Sydney, Australia on July 24, 1984 and
stayed there only for three [3] days or until July 27, 1984. 32 While the recall of the
cars per se did not constitute a violation of Section 2, Article XIV of the CBA on the
car purchase option, We consider the same as an indicia of the blatant disregard by
private respondent company of the CBA provision on consultation.
In the same manner that We found the dismissal of the 31 employees of the
Pharmaceutical Division in itself not to be constitutive of an unfair labor practice, so
must the dismissal of the 14 rank-and-file employees be characterized. In the first
instance it is not disputed that these employees were hired by respondent company
thru a placement agency. In the absence of any evidence that the placement agency
did not have substantial capital or investment in the form of tools, equipment
machineries, work premises, among others, We cannot conclude that the
arrangement between respondent company and said placement agency was "Labor-
only" contracting as to make respondent company the direct employer of these 14
employees. 33 In the second place, even if such conclusion is reached and the 14
employees be deemed regular employees of respondent company, their dismissal not
having been shown in the least manner to be connected with union affiliation or
activities cannot be considered an unfair labor practice, and therefore, not a valid
ground for a strike.
We agree with petitioners that respondent NLRC gravely abused its discretion in
concluding that the increase in the area sales quota of union president Leones was
not an act of discrimination. The NLRC found the increase in the area sales quota
justified by the change in the sales organization. It, however, overlooked a very
important and crucial factor: that unlike the other field representatives whose quotas
were increased by an average of 98%, that of the union president and vice-president
were increase 400% and 300%, respectively. No valid explanation was advanced by
respondent company for such marked difference. Considered in the light of the anti-
union attitude exhibited by respondent company in transferring union president
Leones from the main office in Manila to Cebu when the union was still being
organized, and which act was found by the NLRC as constituting unfair labor practice
and union-busting in connection with the application for clearance to terminate
Leones filed by respondent company, 34 the uneven application of its marketing plan
by respondent company is patently an act of discrimination, considered as an unfair
labor practice under Art. 249[e] of the Labor Code.
It has previously been indicated that an employer may treat freely with an
employee and is not obliged to support his actions with a reason or purpose.
However, where the attendant circumstances, the history of employer's past
conduct and like considerations, coupled with an intimate connection between
the employer's action and the union affiliations or activities of the particular
employee or employees taken as a whole raise a suspicion as to the motivation
LABOR LAW 2- SESSION 2 CASES
for the employer's action, the failure of the employer to ascribe a valid reason
therefor may justify an inference that his unexplained conduct in respect of the
particular employee or employees was inspired by the latter's union membership
or activities. While the presence of this mere suspicion neither takes the place of
evidence that the employer's conduct was improperly motivated nor dispenses
with the requirement of proof of the fact, such suspicion, when coupled with other
facts which in themselves, might have been inadequate to support an adverse
finding against the employer, may suffice to sustain a finding that the employer's
action violated the prohibition of the Act. 35
The contempt charge against petitioner union, KMU and Nick Elman was predicated
mainly on the statement appearing in the circular apparently authored by Nick Elman,
to wit:
It is an open secret, that most of the Supreme Court Justices belong to the upper
privileged class and some of them belonged at one time or another, to law firms
that serve the interests of giant transnational corporations as corporate counsels
and retainers and this ruling merely confirmed the perceived apparent pro-
multinational, pro-capital anti-labor, anti-union and anti-strike posture of
personalities in the Supreme Court. 36
and on the fact that at the time the picket was staged, the case was still sub judice.
Oliveros v. Villaluz, 57 SCRA 163, is but one of the numerous authorities enunciating
the principle that "the power to punish for contempt should be used sparingly, with
caution, deliberation and with due regard to the provisions of the law and the
constitutional rights of the individual." On this basis, We clear the alleged contemptors
of the charge against them.
To our mind, the statements complained of are mere expressions of opinion intended
not so much to bring the Court in disrepute as to advance the cause of labor. It must
be noted that the picket was staged only eight [8] months after the EDSA Revolution
which saw the ouster of the past dispensation and the restoration of the basic rights
to the people. Freedom of speech, much repressed during the previous regime, had
only begun to take wings again. Taken against this background, We understand the
overzealousness demonstrated by the KMU and Nick Elman in exercising their
freedom of speech and expression and are inclined to give more weight to said
constitutional rights than to the Court's inherent power to preserve its dignity to which
the power to punish for contempt appertains.
Although the picket was staged when the motion for leave to file a final and last
motion for reconsideration was still pending action by the Court, the KMU and Nick
Elman, not being parties to the case, were unaware of such fact. They believed the
case to have been finally disposed of in view of the final denial of the first motion for
reconsideration. On the other hand, there is no sufficient proof that petitioner union
had participated in the picket nor in the preparation of the circular under
consideration.
Page 71
WHEREFORE, the petition is hereby granted. The decision of the NLRC dated
December 27, 1985 in NCR-9-3217-84 is set aside and the strike staged by petitioner
union is declared to be legal. Respondent company AHS/Philippines, Inc. is hereby
found guilty of unfair labor practices. Since reinstatement of individual petitioners is
no longer possible in view of the cessation of its operations in the Philippines,
respondent company is ordered to pay said individual petitioners, except E.C.
Rodriguez, backwages from August 15, 1984 until Respondent company's closure as
well as the separation pay mandated under Art. 284 of the Labor Code. Furthermore,
respondent company is hereby ordered to pay the fifteen [15] employees of the
Pharmaceutical Division who did not accept their termination, backwages from August
1, 1984 until Respondent company's closure and the economic package being offered
by respondent company as stated in its letters of termination.

The contempt charge against petitioner union, KMU and Nick Elman is dismissed.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 72

G.R. No. 78604 May 9, 1988
BATAAN SHIPYARD and ENGINEERING CO., INC., petitioner, vs.NATIONAL
LABOR RELATIONS COMMISSION, HON. FRANCISCO JOSE, JR., HON.
VLADIMIR P. L. SAMPANG, JOSE G. CRUZ and NATIONAL FEDERATION OF
LABOR UNIONS , respondents.
This is a Petition for certiorari under Rule 65 of the Rules of Court. It seeks to set
aside a Resolution of the National Labor Relations Commission.
The record of the case discloses that the herein petitioner Bataan Shipyard &
Engineering Co., Inc. (BASECO) is a corporate entity duly organized under the laws
of the Philippines. Its principal office is in Port Area, Manila. On the other hand, the
herein private respondent National Federation of Labor Unions (NAFLU) is a labor
organization registered with the Department of Labor and Employment. The Company
has around a thousand employees in its payroll and more than a hundred of them
belong to the said labor organization.
Sometime before 1984, the Company filed with the herein respondent National Labor
Relations Commission an application for the retrenchment of 285 of its employees on
the ground that the firm had been incurring heavy losses since the end of 1979. The
case was docketed as NLRC Case No. RABIII-2-53682. In the meantime, some
employees who had been on sick leave earlier were considered retrenched. All of
those so retrenched happen to be officers and members of the NAFLU.
As expected, the NAFLU submitted an opposition to the said application in
representation of the affected employees. Those employees retrenched earlier joined
the case as individual complainants. their respective position complainants. The
parties submitted papers and memoranda.
In a Decision dated January 30, 1984, the Executive Labor Arbiter of the respondent
Commission declared the retrenchment undertaken by the Company legal and valid.
As a consequence thereof, the firm was ordered to pay the separation benefits of the
retrenched employees. The Executive Labor Arbiter also observed that the Company
had discriminated against the members of the NAFLU in the selection of the
employees to be retrenched. Thus, the firm was found guilty of unfair labor practice
and was ordered to pay each of the individual complainants six months backwages as
a penalty therefor. 1
The Company appealed the case to the corresponding division of the respondent
Commission and challenged the legality of the ruling of the Executive Labor Arbiter to
the effect that it had discriminated in the retrenchment arrangements it had
undertaken. The Company likewise questioned the legality of the award for
backwages.
In its Resolution promulgated on December 27, 1985, the Third Division of the
respondent Commission affirmed the Decision of the Executive Labor Arbiter. 2 The
Commission pointed out that the Company had failed to satisfactorily explain why all
of the employees it had retrenched were officers and members of the NAFLU. The
LABOR LAW 2- SESSION 2 CASES
Commission went on to say that the management was in a position to know who of
the employees on leave were affiliated with the said labor organizations. This view
prompted the Commission to conclude that the NAFLU officers and members so
retrenched were being discriminated against by reason of their affiliation in the labor
organization.
On June 10, 1987, the Company elevated the case to this Court by way of the instant
Petition for certiorari 3 and sought the annulment or modification of the Resolution of
the respondent Commission as well as the Decision of the Executive Labor Arbiter
insofar as the ruling on unfair labor practice and backwages is concerned. The
Company maintains that the respondent Commission committed a grave abuse of
discretion, amounting to loss of jurisdiction, in finding the firm guilty of having
committed an act of unfair labor practice when are the while the retrenchment it had
sought was held to be legal and valid. The thrust of the Petition is that the Company
cannot be considered guilty of committing an act of unfair labor practice in effecting a
valid retrenchment.
The Office of the Solicitor General, representing the respondent Commission,
submitted a Comment on the Petition on September 9, 1 987. 4 The Solicitor General
points exit that while the retrenchment undertaken by the Company is legal, the
prerogative to do so should not be confused with the manner in which the prerogative
is exercised and that such exercise must be made without abuse of discretion
because employment — the livelihood of the working class — is at stake. The
Solicitor General adds that inasmuch as the Company was found guilty of
discriminatory acts in the selection of employees to be retrenched, it cannot escape
liability by simply claiming that the retrenchment is legal and that to do so would
encourage discriminatory dismissals in other business enterprises. 5
In support of the argument that the findings of fact made by the respondent
Commission is supported by substantial evidence, the Solicitor General had this to
say —
The "substantial evidence" test was more than adequately met by private
respondents because the evidence is clear that membership or non-membership
in the NAFLU was the determining factor in the selection of the employees to be
retrenched.
The record of this case is bereft of any guideline employed by petitioner in
determining who were to be laid off, such as the following: (1) ability to perform
the work; (2) physical fitness; (3) old age; (4) disablement; (5) security in work;
and (6) financial hardship of certain workers. These factors should at least be
decided by a committee. In the absence of any guideline in the implementation of
the retrenchment and the clear evidence that only NAFLU members were
retrenched, it is quite evident that there was unfair labor practice committed by
petitioner in the implementation of a valid and legal retrenchment. 6
On account of these reasons, the Solicitor General sought the dismissal of the instant
Petition for lack of merit.
Page 73
In due time, the case was deemed submitted for decision.

After a careful examination of the entire record of the case, We find the instant,
Petition devoid of merit.

It is not disputed that the retrenchment undertaken by the Company is valid.

However, the manner in which this prerogative is exercised should not be tainted with
abuse of discretion. Labor is a person's means of livelihood. He cannot be deprived of
his labor or work without due process of law. 7 Retrenchment very heart of one's
employment. While the right of strikes at the very heart of an employer to dismiss an
employee is conceded in a valid retrenchment, the right differs from and should not
be confused with the manner in which such right is exercised. It should not be
oppressive and abusive since it affects one's person and property. 8 Due process of
law demands nothing less.

Under the circumstances obtaining in this case, We are inclined to believe that the
Company had indeed been discriminatory in selecting the employees who were to be
retrenched. All of the retrenched employees are officers and members of the NAFLU.
The record of the case is bereft of any satisfactory explanation from the Company
regarding this situation. As such, the action taken by the firm becomes highly suspect.
It leads Us to conclude that the firm had been discriminating against membership in
the NAFLU, an act which amounts to interference in the employees' exercise of their
right of self-organization. Under Article 249 of the Labor Code of the Philippines, such
interference is considered an act of unfair labor Practice on the part of the Company,
to wit —

ART. 249. Unfair labor practices of employers. — It shall be unlawful for an

employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to
self- organization.;

xxx xxx xxx

The respondent Commission and the Executive Labor Arbiter took these
considerations into account in resolving the dispute- This being so, it cannot be said
that the respondent Commission committed a grave abuse of discretion, amounting to
loss of jurisdiction, in finding BASECO guilty of having committed an act of unfair
labor practice despite the valid retrenchment. Accordingly, the writ of certiorari prayed
for by the petitioner cannot issue.

WEREFORE, in view of the foregoing, the instant Petition for certiorari is hereby
DISMISSED for lack of meat. The restraining order of June 22, 1987 is hereby
dissolved. We make no pronouncement as to costs.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 74

 Discrimination as a Result of Giving Testimony
G.R. No. L-18364 February 28, 1963
PHILIPPINE AMERICAN CIGAR & CIGARETTE FACTORY WORKERS
INDEPENDENT UNION (NLU), petitioner, vs.PHILIPPINE AMERICAN CIGAR &
CIGARETTE MANUFACTURING CO., INC., respondent.
Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers
Independent Union (NLU), from a decision of the Court of Industrial Relations
dismissing a complaint of said petitioner for unfair labor practice, and ordering
respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. to reinstate
Apolonio San Jose, within five (5) days from notice of said decision, without backpay.
The pertinent facts are set forth in said decision from which we quote:
Paragraph 3, sub-paragraph (a) of the complaint states:—
a. That sometime on October 23, 1958, Apolonio San Jose's brother, Francisco
San Jose, who is also a regular worker of the respondent and a member of the
complainant union, filed a charge for unfair labor practice against herein
respondent docketed as Case No. 1857-ULP of this Court, which case is still
pending.
b. That subsequent to the filing of the said charge, or on about November 29,
1958 and also on or about December 11, 1958, the respondent herein, by its
manager Chua Yiong, summoned and advised union president Lazaro Peralta
that if Francisco San Jose will not withdraw his charge against the company
(Case No. 1857-ULP), the company will also dismiss his brother Apolonio San
Jose, to which the union president replied that that should not be the attitude of
the company because Apolonio has nothing to do with his brother's case.
c. That on or about January 24, 1959, respondent, by its officers and agents, did
dismiss Apolonio San Jose without just and valid cause and in gross violation of
the operative collective bargaining agreement between the complainant union
and respondent corporation.
The allegations in said sub-paragraphs (a), (b) and (c) of the complaint were
substantiated by the oral testimony of complainant's witnesses, but the Court
finds that such allegations do not constitute unfair labor practice acts on the part
of respondent. In sub-paragraphs (a) and (b), the Court finds no interference,
coercion and restraint against the employees in the exercise of their guaranteed
rights to self-organization and discrimination against complainant Apolonio San
Jose in regard to hire or tenure of his employment. In short, the complainants'
charge is that if Francisco San Jose would not withdraw his unfair labor practice
charge against respondent company, the manager of the latter would dismiss
Apolonio San Jose, the brother of Francisco. In fact, said manager dismissed
LABOR LAW 2- SESSION 2 CASES
Apolonio San Jose. This may be an illegal or improper dismissal, but certainly, it
does not constitute an unfair labor practice.
The Court further finds that in sub-paragraph (c), complainants allege that the
dismissal of Apolonio San Jose was in gross violation of the collective bargaining
agreement between complainant union and respondent corporation.
The Court of Industrial Relations found "that the moving cause of Apolonio's dismissal
was the refusal of his brother Francisco San Jose, to withdraw his charge of unfair
labor practice against the company. But" — it added — "be that as it may, it cannot
constitute an actionable offense under the Act". Seemingly believing that, since the
one dismissed by reason of said charge of unfair labor practice was, not the
complainant therein, Francisco San Jose, but his brother Apolonio San Jose, the
latter's dismissal does not constitute another unfair labor practice under Section 4 (a)
(5) of Republic Act No. 875, which provides that:
(a) It shall be unfair labor practice for an employer:
xxx xxx xxx
(5) To dismiss, discharge, or otherwise prejudice or discriminate against an
employee for having filed charges or for having given or being about to give
testimony under this Act.
the lower court concluded that it had no jurisdiction to entertain the claim of petitioner
herein. This conclusion is untenable.
Although subdivision (5) of paragraph (a) of said Section 4 would seem to refer only
to the discharge of the one who preferred charges against the company as
constituting unfair labor practice, the aforementioned subdivision (5) should be
construed in line with the spirit and purpose of said Section 4 and of the legislation of
which forms part — namely, to assure absolute freedom of the employees and
laborers to establish labor organizations and unions, as well as to prefer charges
before the proper organs of the Government for violation of our labor laws. Now, then,
if the dismissal of an employee due to the filing by him of said charges would be and
is an undue restraint upon said freedom, the dismissal of his brother owing to the
non-withdrawal of the charges of the former, would be and constitute as much a
restraint upon the same freedom. In fact, it may be a greater and more effective
restraint thereto. Indeed, a complainant may be willing to risk the hazards of a
possible and even probable retaliatory action by the employer in the form of a
dismissal or another discriminatory act against him personally, considering that
nobody is perfect, that everybody commits mistakes and that there is always a
possibility that the employer may find in the records of any employee, particularly if he
has long been in the service, some act or omission constituting a fault or negligence
which may be an excuse for such dismissal or discrimination. Yet, such complainant
may not withstand the pressure that would result if his brother or another member of
his immediate family were threatened with such action unless the charges in question
were withdrawn.
Page 75
In fact, it is a well settled rule of law that what is prohibited to be done directly shall Section 4(a), which is the counterpart of Section 8(3)of the National Labor Relations
not be allowed to be accomplished indirectly. Thus in the Matter of Quidnick Dye Act (Wagner Act) of the United States.
Works, Inc. and Federation of Dyers, Finishers, Printers and Bleachers of America (2
NLRB 963) it was held that the dismissal of a laborer on account of union activities of Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
his brother constituted an unfair labor practice. To the same effect, substantially, are admitted and approved by this Honorable Court, without prejudice to the parties
the decisions in the Matter of the Fashion Piece Dye Works, Inc. and Federation of adducing other evidence to prove their case not covered by this stipulation of
Silk and Rayon Dyers and Finishers of American, 6 NLRB p. 274; In the Matter of facts. 1äwphï1.ñët
Ford Motor Company and H.C. McGarity, 26 NLRB, p. 322 (which refers to the union
activities of the wife of the discharged employee), and Union Asbestos & Rubber Co.
and United Textile Workers of America, AFL, 98 NLRB p. 1055 (involving the WHEREFORE, the decision appealed from is hereby reversed, insofar as it dismisses
dismissal of a female employee, due to the union activities of her husband). Hence, the complaint of petitioner herein, and another one shall be entered finding
Teller in his work on Labor Disputes and Collective Bargaining (Vol. 2, p. 859), says: respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. guilty of
unfair labor practice and ordering said respondent to reinstate Apolonio San Jose,
immediately after his decision shall have become final, with backpay. It is so ordered..
The discharge of relatives of an employee who was himself been discriminately
discharged, for no other reason than the relation, is itself of a discriminatory
discharge, in violation of Sec. 8(3) of the Act. An illustration is Memphis Furniture
Co. (3 NLRB 26 [1937], enforced 2 F2d 1018 [CCA 6, 1938], cert. den. 305 US
627, 59 S Ct 91, 83 L. Ed. 402 [CCA 6, 1938])where the evidence indicated that
the sole reason for the dismissal of a female employee was that she was the wife
of an employee who has been discharged. It was held that the discharge under
the circumstances was discriminatory and a violation of the Act, even though
discharged female employee was not herself a member of any union. The Board
said: "The respondent thus made union membership and activities a bar to the
employment not only of the union member himself but of members of his family
as well. A more effective mode of discouragement of union affiliation could hardly
be found than the knowledge that such activities put not merely the union
member's employment but that of those closely related to him in jeopardy. The
direct cause of Mrs. Barmer's discharge was the fact that her husband had been
discharged, but the indirect and antecedent cause was discrimination against
union members in regard to hire and tenure of employment with intent to
discourage membership in the Union." So also the Board has held that the
discharge of discriminatingly discharged employees' wives for the reason that the
employer did not desire the employees to continue to live in the employer's
houses, which they would do so long as their wives remained employed, is itself
a discriminating discharge in violation of the Act. (Mexis Textile Mills, 11 NLRB
1167 [1939], enforced 110 F2d 565 [CCA 5, 1940].) In Mansfield Mills, Inc. (3
NLRB 901 [1937] ), the respondent alleged that the wife of an employee who had
been discharged allegedly in violation of the Act was herself discharged in
consequence of a company rule requiring the dismissal of all members of the
family when the head of the family is discharged. The Board said: "Assuming this
as the reason for Mrs. Sutton's discharge, we would necessarily find that she was
the victim of discrimination in violation of the Act, if we determined that Sutton
was discharged as the result of his union affiliation."

In the usual case, it is the wife who is the sufferer because of the husband's
union affiliation. In I. Youlin and Company (22 NLRB No. 65 [1940]),the husband
was discharged for failure to secure his wife's resignation from the union this was
held violative of Section 8(3) of the Act.

In addition to violating Section 4(a) (5) of Republic Act No. 875, the discharge of
Apolonio San Jose is, therefore, an unfair labor practice under subdivision (4) of said

LABOR LAW 2- SESSION 2 CASES Page 76

G.R. No. L-17739 December 24, 1964
ITOGON-SUYOC MINES, INC., petitioner, vs.JOSE BALDO, SANGILO-ITOGON
WORKERS UNION and COURT OF INDUSTRIAL RELATIONS, respondents.
This is a petition for certiorari to review the decision of the Court of Industrial
Relations in Case No. 50-ULP-PANG. finding the petitioner guilty of unfair labor
practices and ordering it to reinstate respondent Jose Baldo to his former work with
back wages.
In a complaint dated November 18, 1958, an Acting Prosecutor of the Court of
Industrial Relations charged the herein petitioner-employer, Itogon-Suyoc Mines, Inc.,
and Claude Fertig its General Superintendent, with having committed unfair labor
practices within the meaning of Section 4(a), paragraphs 1, 4 and 5 of Republic Act
No. 875. The complaint substantially alleged that A. Manaois and Jose Baldo,
employees of herein petitioner, were dismissed by said petitioner on June 9, 1957
and March 5, 1958, respectively, because of their membership with the herein
respondent Sangilo-Itogon Workers Union and for having testified against the
petitioner in a certification election case involving the employees of the petitioner
(Case No. 3-MC-PANG). The complaint prayed that an order be issued against the
herein petitioner to cease and desist from the labor practices complained of and that
the complaining employees, A. Manaois and Jose Baldo be reinstated to their former
positions in the mining company without loss of employee benefits and with back
wages from the date of their respective dismissal until the date of their actual
reinstatement.
The petitioner herein (respondent below), in its answer to the complaint, admitted the
fact of the dismissal of the two complaining employees, but alleged that the
complaining employees were dismissed for just and lawful causes, namely,
"inefficiency, utter disregard and violation of safety rules and regulations established
and enforced by the respondent for the protection of the lives of the employees and
properties of the respondent company, utter disregard of the company property and
poor attendance records."
After hearing, the Court of Industrial Relations, on October 5, 1960, rendered a
decision, finding that the charge of unfair labor practice as far as it concerned the
complaining employee A. Manaois was not proved and that the dismissal of said
employee was just and legal; but as far as the other complaining employee Jose
Baldo was concerned, the charge of unfair labor practice was proved and that the
dismissal of said employee was unjust and illegal. The Court of Industrial Relations,
therefore, ordered the reinstatement of Jose Baldo to his former work with back
wages from April 7, 1958, when he was promised re-instatement, up to the day of his
actual re-employment.
The petitioner filed a motion for reconsideration of the decision with the Court of
Industrial Relations en banc, but said Court, on October 27, 1960, denied the petition
for reconsideration. The petitioner has appealed from the decision, and from the order
denying the motion for reconsideration, of the Court of Industrial Relations affecting
only the case of Jose Baldo. No appeal has been filed regarding the case of A.
Manaois.
LABOR LAW 2- SESSION 2 CASES
We have examined the records carefully, and we find that the decision of the Court of
Industrial Relations is supported by substantial evidence. We are quoting hereunder
pertinent portions of the decision of the lower court which embody its factual findings:
From the evidence of record, the following facts are clear. Baldo started working
as miner in the respondent company sometime in 1954. He worked continuously
therein until February 4, 1958 when he was given a "30-day notice of termination
of employment" to the effect that his services will not be needed by the
respondent company after March 5, 1958 (Exh. "4"). Baldo refused to
acknowledge receipt of said notice when Mowry, mine's superintendent of the
company, asked him to sign the same. It appears that Baldo was on 15 days
vacation leave with pay immediately prior to his being served his separation
notice (Exh. "C").
The complainant's evidence tended to prove that Baldo was dismissed by the
company because of his membership in the complainant Sangilo-Itogon Workers
Union, a legitimate labor organization; and, for having testified for the said union
in Case No. 3-MC-PANG a certification proceeding involving the employees of
the respondent company. Baldo failed to obtain a reinstatement therein.
xxx xxx xxx
It is undeniable that Baldo's testimony in Case No. 3-MC-PANG of this Court on
April 7, 1958, was favorable to the complainant Sangilo-Itogon Workers' Union of
which he was a member and in some way adverse to the interests of the
company. The testimonies of complainant's witnesses are clear that during the
hearing of the certification case in Itogon, Gelladoga, plant engineer and former
labor relations officer of the respondent company, asked Baldo not to testify
therein are the promise that he will be reinstated. Admittedly, the case of Baldo's
separation from the respondent company which was pending consideration at
that time with the grievance committee of the union and management was
immediately "dropped" after Baldo testified in the certification case "because he
(Baldo) brought his case to a rival union of the Itogon Labor Union." It becomes
obvious that Baldo's case was not considered further by the grievance committee
because of his testimony against the company in the certification proceeding. An
examination of the alleged offense imputed on Baldo previous to his dismissal
and which are relied upon by the respondent company (Exhibits "1", "2" and "3")
shows that they were not so serious as to warrant his immediate and permanent
dismissal. Under the circumstances it is safe to conclude that Gelladoga who is a
Supervisor within the meaning of the Act, really promised to reinstate Baldo to his
former work in the company should he desist from testifying in that certification
case mentioned above.
Considering everything, we are convinced that because of Baldo's refusal to
accede to the demand of his employer not to testify in the certification proceeding
mentioned above, his Case was "dropped" by the grievance committee of the
union and management, and consequently, he failed to be reinstated in the
company.
Page 77
The petitioner, in this appeal, maintains that it was the Itogon Labor Union that When an employer commits unfair labor practices he should be made to shoulder all
dropped the case of Baldo regarding the 30-day notice of separation because Baldo the consequences of his unfair acts. The matter of granting back wages or backpay to
brought his case to a rival union of the Itogon Labor Union, so that the petitioner an employee that is reinstated is discretionary with the Court of Industrial Relations
should not be charged with unfair labor practice. This contention of the petitioner has (Section 5 [c], Republic Act No. 875). This question had already been settled in a line
no merit. of decisions rendered by this Court (United Employees Welfare Ass'n. vs. Isaac Peral
Bowling Alleys, G. R. No. 10327, Sept. 30, 1958; Union of Philippine Education Co.
The evidence shows that Baldo had joined the Sangilo-Itogon Workers Union, the Employees vs. Philippine Education Co., 91 Phil. 93, 95). We are satisfied that under
rival union of the Itogon Labor Union that had a collective bargaining contract with the the circumstances as shown by the records of the present case the Court of Industrial
petitioner, and that Baldo's membership in the Sangilo-Itogon Workers Union was Relations had not abused the exercise of its discretion when it ordered the grant of
known to the management of the herein petitioner; that at the time that Baldo was back wages to respondent Baldo from the date he was promised reinstatement to the
given the 30-day notice of separation from the service there was pending before the day of his actual reinstatement.
Court of Industrial Relations a certification election case which involved the
employees of the petitioner, and the certification case was precisely brought about WHEREFORE, the decision appealed from is affirmed, with costs against the
upon petition by the Sangilo-Itogon Workers Union; that when Baldo was given said petitioner.
notice of separation from the service he brought his case to the grievance committee
of the Itogon Labor Union and the management of the petitioner — said committee
being composed of representatives of the Itogon Labor Union and the management of
the petitioner — with a view to securing his reinstatement; that the grievance
committee withheld action on the case of Baldo; that the case of Baldo was pending
before the grievance committee when he was asked by Mansueto Gelladoga plant
engineer and former labor relations officer of the petitioner (he was also former Vice-
President of the Itogon Labor Union), not to testify in the hearing of the certification
election case so that be would be reinstated to his job; that in spite of Gelladoga's
request Baldo testified at the healing of the certification election case on April 7,1958,
and Baldo's testimony was adverse to the petitioner; and that after Baldo had thus
testified his case was dropped by the grievance committee, and he was never
reinstated. Considering that Baldo's case was pending before the grievance
committee when he was asked by Gelladoga not to testify, and soon after he had
testified adversely to the petitioner his case was dropped by the grievance committee,
the conclusion is inescapable that the management of the petitioner herein had much
to do with the dropping of Baldo's case, and because of the dropping of that case the
petitioner never reinstated Baldo to his work. This conclusion is bolstered further by
the fact that the petitioner herein had opposed the petition for certification election.
The lower court found that Baldo had not committed any serious offense as would
warrant his immediate and permanent dismissal. On the other hand, the evidence
shows that when Baldo was given that notice of separation from the service he had
already joined the Sangilo-Itogon Workers Union. There is evidence too that Claude
Fertig, the General Superintendent of the petitioner, was at that time acting as adviser
of the Itogon Labor Union, the rival Union of the Sangilo-Itogon Workers Union.

We agree with the finding of the Court of Industrial Relations that the petitioner had
committed unfair labor practices as contemplated in sub-paragraphs 1, 4 and 5 of
sub-section (a) of Section 4 of Republic Act No. 875 (Henares & Sons vs. National
Labor Union, G. R. No. L-17535, December 28, 1961; National Fastener Corporation
of the Philippines vs. Court of Industrial Relations, etc. G.R. No. L-15834, January 20,
1961).

The petitioner, in this appeal, also contends that the Court of Industrial Relations had
gravely abused its discretion when it ordered the reinstatement of Jose Baldo with
back wages. The petitioner points out that it should not be made to pay back wages
during the time that this case had been pending. This contention is also without merit.

LABOR LAW 2- SESSION 2 CASES Page 78

 Violation of the Duty to Bargain Collectively
G.R. No. L-31195 June 5, 1973
PHILIPPINE BLOOMING MILLS EMPLOYMENT ORGANIZATION, NICANOR
TOLENTINO, FLORENCIO, PADRIGANO RUFINO, ROXAS MARIANO DE LEON,
ASENCION PACIENTE, BONIFACIO VACUNA, BENJAMIN PAGCU and
RODULFO MUNSOD, petitioners, vs.PHILIPPINE BLOOMING MILLS CO., INC. and
COURT OF INDUSTRIAL RELATIONS, respondents.
The petitioner Philippine Blooming Mills Employees Organization (hereinafter referred
to as PBMEO) is a legitimate labor union composed of the employees of the
respondent Philippine Blooming Mills Co., Inc., and petitioners Nicanor Tolentino,
Florencio Padrigano, Rufino Roxas, Mariano de Leon, Asencion Paciente, Bonifacio
Vacuna, Benjamin Pagcu and Rodulfo Munsod are officers and members of the
petitioner Union.
Petitioners claim that on March 1, 1969, they decided to stage a mass demonstration
at Malacañang on March 4, 1969, in protest against alleged abuses of the Pasig
police, to be participated in by the workers in the first shift (from 6 A.M. to 2 P.M.) as
well as those in the regular second and third shifts (from 7 A.M. to 4 P.M. and from 8
A.M. to 5 P.M., respectively); and that they informed the respondent Company of their
proposed demonstration.
The questioned order dated September 15, 1969, of Associate Judge Joaquin M.
Salvador of the respondent Court reproduced the following stipulation of facts of the
parties — parties —
3. That on March 2, 1969 complainant company learned of the projected mass
demonstration at Malacañang in protest against alleged abuses of the Pasig
Police Department to be participated by the first shift (6:00 AM-2:00 PM) workers
as well as those working in the regular shifts (7:00 A.M. to 4:00 PM and 8:00 AM
to 5:00 PM) in the morning of March 4, 1969;
4. That a meeting was called by the Company on March 3, 1969 at about 11:00
A.M. at the Company's canteen, and those present were: for the Company: (1)
Mr. Arthur L. Ang (2) Atty. S. de Leon, Jr., (3) and all department and section
heads. For the PBMEO (1) Florencio Padrigano, (2) Rufino Roxas, (3) Mariano
de Leon, (4) Asencion Paciente, (5) Bonifacio Vacuna and (6) Benjamin Pagcu.
5. That the Company asked the union panel to confirm or deny said projected
mass demonstration at Malacañang on March 4, 1969. PBMEO thru Benjamin
Pagcu who acted as spokesman of the union panel, confirmed the planned
demonstration and stated that the demonstration or rally cannot be cancelled
because it has already been agreed upon in the meeting. Pagcu explained
further that the demonstration has nothing to do with the Company because the
union has no quarrel or dispute with Management;
LABOR LAW 2- SESSION 2 CASES
6. That Management, thru Atty. C.S. de Leon, Company personnel manager,
informed PBMEO that the demonstration is an inalienable right of the union
guaranteed by the Constitution but emphasized, however, that any
demonstration for that matter should not unduly prejudice the normal operation of
the Company. For which reason, the Company, thru Atty. C.S. de Leon warned
the PBMEO representatives that workers who belong to the first and regular
shifts, who without previous leave of absence approved by the Company,
particularly , the officers present who are the organizers of the demonstration,
who shall fail to report for work the following morning (March 4, 1969) shall be
dismissed, because such failure is a violation of the existing CBA and, therefore,
would be amounting to an illegal strike;
7. That at about 5:00 P.M. on March 3, 1969, another meeting was convoked
Company represented by Atty. C.S. de Leon, Jr. The Union panel was composed
of: Nicanor Tolentino, Rodolfo Munsod, Benjamin Pagcu and Florencio
Padrigano. In this afternoon meeting of March 3, 1969, Company reiterated and
appealed to the PBMEO representatives that while all workers may join the
Malacañang demonstration, the workers for the first and regular shift of March 4,
1969 should be excused from joining the demonstration and should report for
work; and thus utilize the workers in the 2nd and 3rd shifts in order not to violate
the provisions of the CBA, particularly Article XXIV: NO LOCKOUT — NO
STRIKE'. All those who will not follow this warning of the Company shall be
dismiss; De Leon reiterated the Company's warning that the officers shall be
primarily liable being the organizers of the mass demonstration. The union panel
countered that it was rather too late to change their plans inasmuch as the
Malacañang demonstration will be held the following morning; and
8. That a certain Mr. Wilfredo Ariston, adviser of PBMEO sent a cablegram to the
Company which was received 9:50 A.M., March 4, 1969, the contents of which
are as follows: 'REITERATING REQUEST EXCUSE DAY SHIFT EMPLOYEES
JOINING DEMONSTRATION MARCH 4, 1969.' (Pars. 3-8, Annex "F", pp. 42-43,
rec.)
Because the petitioners and their members numbering about 400 proceeded with the
demonstration despite the pleas of the respondent Company that the first shift
workers should not be required to participate in the demonstration and that the
workers in the second and third shifts should be utilized for the demonstration from 6
A.M. to 2 P.M. on March 4, 1969, respondent Company prior notice of the mass
demonstration on March 4, 1969, with the respondent Court, a charge against
petitioners and other employees who composed the first shift, charging them with a
"violation of Section 4(a)-6 in relation to Sections 13 and 14, as well as Section 15, all
of Republic Act No. 875, and of the CBA providing for 'No Strike and No Lockout.' "
(Annex "A", pp. 19-20, rec.). The charge was accompanied by the joint affidavit of
Arthur L. Ang and Cesareo de Leon, Jr. (Annex "B", pp. 21-24, rec.). Thereafter, a
corresponding complaint was filed, dated April 18, 1969, by Acting Chief Prosecutor
Antonio T. Tirona and Acting Prosecutor Linda P. Ilagan (Annex "C", pp. 25-30, rec.)
In their answer, dated May 9, 1969, herein petitioners claim that they did not violate
the existing CBA because they gave the respondent Company prior notice of the
mass demonstration on March 4, 1969; that the said mass demonstration was a valid
Page 79
exercise of their constitutional freedom of speech against the alleged abuses of some
Pasig policemen; and that their mass demonstration was not a declaration of strike
because it was not directed against the respondent firm (Annex "D", pp. 31-34, rec.)
After considering the aforementioned stipulation of facts submitted by the parties,
Judge Joaquin M. Salvador, in an order dated September 15, 1969, found herein
petitioner PBMEO guilty of bargaining in bad faith and herein petitioners Florencio
Padrigano, Rufino Roxas, Mariano de Leon, Asencion Paciente, Bonifacio Vacuna,
Benjamin Pagcu, Nicanor Tolentino and Rodulfo Munsod as directly responsible for
perpetrating the said unfair labor practice and were, as a consequence, considered to
have lost their status as employees of the respondent Company (Annex "F", pp. 42-
56, rec.)
Herein petitioners claim that they received on September 23, 1969, the aforesaid
order (p. 11, rec.); and that they filed on September 29, 1969, because September
28, 1969 fell on Sunday (p. 59, rec.), a motion for reconsideration of said order dated
September 15, 1969, on the ground that it is contrary to law and the evidence, as well
as asked for ten (10) days within which to file their arguments pursuant to Sections
15, 16 and 17 of the Rules of the CIR, as amended (Annex "G", pp. 57-60, rec. )
In its opposition dated October 7, 1969, filed on October 11, 1969 (p. 63, rec.),
respondent Company averred that herein petitioners received on September 22,
1969, the order dated September 17 (should be September 15), 1969; that under
Section 15 of the amended Rules of the Court of Industrial Relations, herein
petitioners had five (5) days from September 22, 1969 or until September 27, 1969,
within which to file their motion for reconsideration; and that because their motion for
reconsideration was two (2) days late, it should be accordingly dismissed,
invoking Bien vs. Castillo,1 which held among others, that a motion for extension of
the five-day period for the filing of a motion for reconsideration should be filed before
the said five-day period elapses (Annex "M", pp. 61-64, rec.).
Subsequently, herein petitioners filed on October 14, 1969 their written arguments
dated October 11, 1969, in support of their motion for reconsideration (Annex "I", pp.
65-73, rec.).
In a resolution dated October 9, 1969, the respondent en banc dismissed the motion
for reconsideration of herein petitioners for being pro forma as it was filed beyond the
reglementary period prescribed by its Rules (Annex "J", pp. 74-75, rec.), which herein
petitioners received on October 28, 196 (pp. 12 & 76, rec.).
At the bottom of the notice of the order dated October 9, 1969, which was released on
October 24, 1969 and addressed to the counsels of the parties (pp. 75-76, rec.),
appear the requirements of Sections 15, 16 and 17, as amended, of the Rules of the
Court of Industrial Relations, that a motion for reconsideration shall be filed within five
(5) days from receipt of its decision or order and that an appeal from the decision,
resolution or order of the C.I.R., sitting en banc, shall be perfected within ten (10)
days from receipt thereof (p. 76, rec.).
LABOR LAW 2- SESSION 2 CASES
On October 31, 1969, herein petitioners filed with the respondent court a petition for
relief from the order dated October 9, 1969, on the ground that their failure to file their
motion for reconsideration on time was due to excusable negligence and honest
mistake committed by the president of the petitioner Union and of the office clerk of
their counsel, attaching thereto the affidavits of the said president and clerk (Annexes
"K", "K-1" and "K-2", rec.).
Without waiting for any resolution on their petition for relief from the order dated
October 9, 1969, herein petitioners filed on November 3, 1969, with the Supreme
Court, a notice of appeal (Annex "L", pp. 88-89, rec.).
I
There is need of briefly restating basic concepts and principles which underlie the
issues posed by the case at bar.
(1) In a democracy, the preservation and enhancement of the dignity and worth of the
human personality is the central core as well as the cardinal article of faith of our
civilization. The inviolable character of man as an individual must be "protected to the
largest possible extent in his thoughts and in his beliefs as the citadel of his person." 2
(2) The Bill of Rights is designed to preserve the ideals of liberty, equality and security
"against the assaults of opportunism, the expediency of the passing hour, the erosion
of small encroachments, and the scorn and derision of those who have no patience
with general principles."3
In the pithy language of Mr. Justice Robert Jackson, the purpose of the Bill of Rights
is to withdraw "certain subjects from the vicissitudes of political controversy, to place
them beyond the reach of majorities and officials, and to establish them as legal
principles to be applied by the courts. One's rights to life, liberty and property, to free
speech, or free press, freedom of worship and assembly, and other fundamental
rights may not be submitted to a vote; they depend on the outcome of no
elections."4 Laski proclaimed that "the happiness of the individual, not the well-being
of the State, was the criterion by which its behaviour was to be judged. His interests,
not its power, set the limits to the authority it was entitled to exercise." 5
(3) The freedoms of expression and of assembly as well as the right to petition are
included among the immunities reserved by the sovereign people, in the rhetorical
aphorism of Justice Holmes, to protect the ideas that we abhor or hate more than the
ideas we cherish; or as Socrates insinuated, not only to protect the minority who want
to talk, but also to benefit the majority who refuse to listen. 6 And as Justice Douglas
cogently stresses it, the liberties of one are the liberties of all; and the liberties of one
are not safe unless the liberties of all are protected.7
(4) The rights of free expression, free assembly and petition, are not only civil rights
but also political rights essential to man's enjoyment of his life, to his happiness and
to his full and complete fulfillment. Thru these freedoms the citizens can participate
not merely in the periodic establishment of the government through their suffrage but
also in the administration of public affairs as well as in the discipline of abusive public
Page 80
officers. The citizen is accorded these rights so that he can appeal to the appropriate
governmental officers or agencies for redress and protection as well as for the
imposition of the lawful sanctions on erring public officers and employees.
(5) While the Bill of Rights also protects property rights, the primacy of human rights
over property rights is recognized.8 Because these freedoms are "delicate and
vulnerable, as well as supremely precious in our society" and the "threat of sanctions
may deter their exercise almost as potently as the actual application of sanctions,"
they "need breathing space to survive," permitting government regulation only "with
narrow specificity."9
Property and property rights can be lost thru prescription; but human rights are
imprescriptible. If human rights are extinguished by the passage of time, then the Bill
of Rights is a useless attempt to limit the power of government and ceases to be an
efficacious shield against the tyranny of officials, of majorities, of the influential and
powerful, and of oligarchs — political, economic or otherwise.
In the hierarchy of civil liberties, the rights of free expression and of assembly occupy
a preferred position as they are essential to the preservation and vitality of our civil
and political institutions; 10 and such priority "gives these liberties the sanctity and the
sanction not permitting dubious intrusions." 11
The superiority of these freedoms over property rights is underscored by the fact that
a mere reasonable or rational relation between the means employed by the law and
its object or purpose — that the law is neither arbitrary nor discriminatory nor
oppressive — would suffice to validate a law which restricts or impairs property
rights. 12 On the other hand, a constitutional or valid infringement of human rights
requires a more stringent criterion, namely existence of a grave and immediate
danger of a substantive evil which the State has the right to prevent. So it has been
stressed in the main opinion of Mr. Justice Fernando in Gonzales vs. Comelec and
reiterated by the writer of the opinion in Imbong vs. Ferrer. 13 It should be added that
Mr. Justice Barredo in Gonzales vs. Comelec, supra, like Justices Douglas, Black and
Goldberg in N.Y. Times Co. vs. Sullivan, 14 believes that the freedoms of speech and
of the press as well as of peaceful assembly and of petition for redress of grievances
are absolute when directed against public officials or "when exercised in relation to
our right to choose the men and women by whom we shall be governed," 15 even as
Mr. Justice Castro relies on the balancing-of-interests test. 16 Chief Justice Vinson is
partial to the improbable danger rule formulated by Chief Judge Learned Hand, viz. —
whether the gravity of the evil, discounted by its improbability, justifies such invasion
of free expression as is necessary to avoid the danger. 17
II
The respondent Court of Industrial Relations, after opining that the mass
demonstration was not a declaration of strike, concluded that by their "concerted act
and the occurrence temporary stoppage of work," herein petitioners are guilty
bargaining in bad faith and hence violated the collective bargaining agreement with
private respondent Philippine Blooming Mills Co., inc.. Set against and tested by
foregoing principles governing a democratic society, such conclusion cannot be
sustained. The demonstration held petitioners on March 4, 1969 before Malacañang
LABOR LAW 2- SESSION 2 CASES
was against alleged abuses of some Pasig policemen, not against their employer,
herein private respondent firm, said demonstrate was purely and completely an
exercise of their freedom expression in general and of their right of assembly and
petition for redress of grievances in particular before appropriate governmental
agency, the Chief Executive, again the police officers of the municipality of Pasig.
They exercise their civil and political rights for their mutual aid protection from what
they believe were police excesses. As matter of fact, it was the duty of herein private
respondent firm to protect herein petitioner Union and its members fro the
harassment of local police officers. It was to the interest herein private respondent
firm to rally to the defense of, and take up the cudgels for, its employees, so that they
can report to work free from harassment, vexation or peril and as consequence
perform more efficiently their respective tasks enhance its productivity as well as
profits. Herein respondent employer did not even offer to intercede for its employees
with the local police. Was it securing peace for itself at the expenses of its workers?
Was it also intimidated by the local police or did it encourage the local police to
terrorize or vex its workers? Its failure to defend its own employees all the more
weakened the position of its laborers the alleged oppressive police who might have
been all the more emboldened thereby subject its lowly employees to further
indignities.
In seeking sanctuary behind their freedom of expression well as their right of
assembly and of petition against alleged persecution of local officialdom, the
employees and laborers of herein private respondent firm were fighting for their very
survival, utilizing only the weapons afforded them by the Constitution — the
untrammelled enjoyment of their basic human rights. The pretension of their employer
that it would suffer loss or damage by reason of the absence of its employees from 6
o'clock in the morning to 2 o'clock in the afternoon, is a plea for the preservation
merely of their property rights. Such apprehended loss or damage would not spell the
difference between the life and death of the firm or its owners or its management. The
employees' pathetic situation was a stark reality — abused, harassment and
persecuted as they believed they were by the peace officers of the municipality. As
above intimated, the condition in which the employees found themselves vis-a-vis the
local police of Pasig, was a matter that vitally affected their right to individual
existence as well as that of their families. Material loss can be repaired or adequately
compensated. The debasement of the human being broken in morale and brutalized
in spirit-can never be fully evaluated in monetary terms. The wounds fester and the
scars remain to humiliate him to his dying day, even as he cries in anguish for
retribution, denial of which is like rubbing salt on bruised tissues.
As heretofore stated, the primacy of human rights — freedom of expression, of
peaceful assembly and of petition for redress of grievances — over property rights
has been sustained. 18 Emphatic reiteration of this basic tenet as a coveted boon —
at once the shield and armor of the dignity and worth of the human personality, the
all-consuming ideal of our enlightened civilization — becomes Our duty, if freedom
and social justice have any meaning at all for him who toils so that capital can
produce economic goods that can generate happiness for all. To regard the
demonstration against police officers, not against the employer, as evidence of bad
faith in collective bargaining and hence a violation of the collective bargaining
agreement and a cause for the dismissal from employment of the demonstrating
employees, stretches unduly the compass of the collective bargaining agreement, is
"a potent means of inhibiting speech" and therefore inflicts a moral as well as mortal
Page 81
wound on the constitutional guarantees of free expression, of peaceful assembly and
of petition. 19
The collective bargaining agreement which fixes the working shifts of the employees,
according to the respondent Court Industrial Relations, in effect imposes on the
workers the "duty ... to observe regular working hours." The strain construction of the
Court of Industrial Relations that a stipulated working shifts deny the workers the right
to stage mass demonstration against police abuses during working hours, constitutes
a virtual tyranny over the mind and life the workers and deserves severe
condemnation. Renunciation of the freedom should not be predicated on such a
slender ground.
The mass demonstration staged by the employees on March 4, 1969 could not have
been legally enjoined by any court, such an injunction would be trenching upon the
freedom expression of the workers, even if it legally appears to be illegal picketing or
strike. 20 The respondent Court of Industrial Relations in the case at bar concedes
that the mass demonstration was not a declaration of a strike "as the same not rooted
in any industrial dispute although there is concerted act and the occurrence of a
temporary stoppage work." (Annex "F", p. 45, rec.).
The respondent firm claims that there was no need for all its employees to participate
in the demonstration and that they suggested to the Union that only the first and
regular shift from 6 A.M. to 2 P.M. should report for work in order that loss or damage
to the firm will be averted. This stand failed appreciate the sine qua non of an
effective demonstration especially by a labor union, namely the complete unity of the
Union members as well as their total presence at the demonstration site in order to
generate the maximum sympathy for the validity of their cause but also immediately
action on the part of the corresponding government agencies with jurisdiction over the
issues they raised against the local police. Circulation is one of the aspects of
freedom of expression. 21 If demonstrators are reduced by one-third, then by that
much the circulation of the issues raised by the demonstration is diminished. The
more the participants, the more persons can be apprised of the purpose of the rally.
Moreover, the absence of one-third of their members will be regarded as a substantial
indication of disunity in their ranks which will enervate their position and abet
continued alleged police persecution. At any rate, the Union notified the company two
days in advance of their projected demonstration and the company could have made
arrangements to counteract or prevent whatever losses it might sustain by reason of
the absence of its workers for one day, especially in this case when the Union
requested it to excuse only the day-shift employees who will join the demonstration
on March 4, 1969 which request the Union reiterated in their telegram received by the
company at 9:50 in the morning of March 4, 1969, the day of the mass demonstration
(pp. 42-43, rec.). There was a lack of human understanding or compassion on the
part of the firm in rejecting the request of the Union for excuse from work for the day
shifts in order to carry out its mass demonstration. And to regard as a ground for
dismissal the mass demonstration held against the Pasig police, not against the
company, is gross vindictiveness on the part of the employer, which is as unchristian
as it is unconstitutional.
III
LABOR LAW 2- SESSION 2 CASES
The respondent company is the one guilty of unfair labor practice. Because the
refusal on the part of the respondent firm to permit all its employees and workers to
join the mass demonstration against alleged police abuses and the subsequent
separation of the eight (8) petitioners from the service constituted an unconstitutional
restraint on the freedom of expression, freedom of assembly and freedom petition for
redress of grievances, the respondent firm committed an unfair labor practice defined
in Section 4(a-1) in relation to Section 3 of Republic Act No. 875, otherwise known as
the Industrial Peace Act. Section 3 of Republic Act No. 8 guarantees to the
employees the right "to engage in concert activities for ... mutual aid or protection";
while Section 4(a-1) regards as an unfair labor practice for an employer interfere with,
restrain or coerce employees in the exercise their rights guaranteed in Section
Three."
We repeat that the obvious purpose of the mass demonstration staged by the workers
of the respondent firm on March 4, 1969, was for their mutual aid and protection
against alleged police abuses, denial of which was interference with or restraint on
the right of the employees to engage in such common action to better shield
themselves against such alleged police indignities. The insistence on the part of the
respondent firm that the workers for the morning and regular shift should not
participate in the mass demonstration, under pain of dismissal, was as heretofore
stated, "a potent means of inhibiting speech." 22
Such a concerted action for their mutual help and protection deserves at least equal
protection as the concerted action of employees in giving publicity to a letter
complaint charging bank president with immorality, nepotism, favoritism an
discrimination in the appointment and promotion of ban employees. 23 We further
ruled in the Republic Savings Bank case, supra, that for the employees to come
within the protective mantle of Section 3 in relation to Section 4(a-1) on Republic Act
No. 875, "it is not necessary that union activity be involved or that collective
bargaining be contemplated," as long as the concerted activity is for the furtherance
of their interests. 24
As stated clearly in the stipulation of facts embodied in the questioned order of
respondent Court dated September 15, 1969, the company, "while expressly
acknowledging, that the demonstration is an inalienable right of the Union guaranteed
by the Constitution," nonetheless emphasized that "any demonstration for that matter
should not unduly prejudice the normal operation of the company" and "warned the
PBMEO representatives that workers who belong to the first and regular shifts, who
without previous leave of absence approved by the Company, particularly the officers
present who are the organizers of the demonstration, who shall fail to report for work
the following morning (March 4, 1969) shall be dismissed, because such failure is a
violation of the existing CBA and, therefore, would be amounting to an illegal strike
(;)" (p. III, petitioner's brief). Such threat of dismissal tended to coerce the employees
from joining the mass demonstration. However, the issues that the employees raised
against the local police, were more important to them because they had the courage
to proceed with the demonstration, despite such threat of dismissal. The most that
could happen to them was to lose a day's wage by reason of their absence from work
on the day of the demonstration. One day's pay means much to a laborer, more
especially if he has a family to support. Yet, they were willing to forego their one-day
salary hoping that their demonstration would bring about the desired relief from police
abuses. But management was adamant in refusing to recognize the superior
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legitimacy of their right of free speech, free assembly and the right to petition for
redress.
Because the respondent company ostensibly did not find it necessary to demand from
the workers proof of the truth of the alleged abuses inflicted on them by the local
police, it thereby concedes that the evidence of such abuses should properly be
submitted to the corresponding authorities having jurisdiction over their complaint and
to whom such complaint may be referred by the President of the Philippines for
proper investigation and action with a view to disciplining the local police officers
involved.
On the other hand, while the respondent Court of Industrial Relations found that the
demonstration "paralyzed to a large extent the operations of the complainant
company," the respondent Court of Industrial Relations did not make any finding as to
the fact of loss actually sustained by the firm. This significant circumstance can only
mean that the firm did not sustain any loss or damage. It did not present evidence as
to whether it lost expected profits for failure to comply with purchase orders on that
day; or that penalties were exacted from it by customers whose orders could not be
filled that day of the demonstration; or that purchase orders were cancelled by the
customers by reason of its failure to deliver the materials ordered; or that its own
equipment or materials or products were damaged due to absence of its workers on
March 4, 1969. On the contrary, the company saved a sizable amount in the form of
wages for its hundreds of workers, cost of fuel, water and electric consumption that
day. Such savings could have amply compensated for unrealized profits or damages
it might have sustained by reason of the absence of its workers for only one day.
IV
Apart from violating the constitutional guarantees of free speech and assembly as
well as the right to petition for redress of grievances of the employees, the dismissal
of the eight (8) leaders of the workers for proceeding with the demonstration and
consequently being absent from work, constitutes a denial of social justice likewise
assured by the fundamental law to these lowly employees. Section 5 of Article II of
the Constitution imposes upon the State "the promotion of social justice to insure the
well-being and economic security of all of the people," which guarantee is
emphasized by the other directive in Section 6 of Article XIV of the Constitution that
"the State shall afford protection to labor ...". Respondent Court of Industrial Relations
as an agency of the State is under obligation at all times to give meaning and
substance to these constitutional guarantees in favor of the working man; for
otherwise these constitutional safeguards would be merely a lot of "meaningless
constitutional patter." Under the Industrial Peace Act, the Court of Industrial Relations
is enjoined to effect the policy of the law "to eliminate the causes of industrial unrest
by encouraging and protecting the exercise by employees of their right to self-
organization for the purpose of collective bargaining and for the promotion of their
moral, social and economic well-being." It is most unfortunate in the case at bar that
respondent Court of Industrial Relations, the very governmental agency designed
therefor, failed to implement this policy and failed to keep faith with its avowed
mission — its raison d'etre — as ordained and directed by the Constitution.
V the inadvertent omission to comply with a mere Court of Industrial Relations
LABOR LAW 2- SESSION 2 CASES
It has been likewise established that a violation of a constitutional right divests the
court of jurisdiction; and as a consequence its judgment is null and void and confers
no rights. Relief from a criminal conviction secured at the sacrifice of constitutional
liberties, may be obtained through habeas corpus proceedings even long after the
finality of the judgment. Thus, habeas corpus is the remedy to obtain the release of
an individual, who is convicted by final judgment through a forced confession, which
violated his constitutional right against self-incrimination; 25 or who is denied the right
to present evidence in his defense as a deprivation of his liberty without due process
of law, 26 even after the accused has already served sentence for twenty-two years. 27
Both the respondents Court of Industrial Relations and private firm trenched upon
these constitutional immunities of petitioners. Both failed to accord preference to such
rights and aggravated the inhumanity to which the aggrieved workers claimed they
had been subjected by the municipal police. Having violated these basic human rights
of the laborers, the Court of Industrial Relations ousted itself of jurisdiction and the
questioned orders it issued in the instant case are a nullity. Recognition and
protection of such freedoms are imperative on all public offices including the
courts 28 as well as private citizens and corporations, the exercise and enjoyment of
which must not be nullified by mere procedural rule promulgated by the Court
Industrial Relations exercising a purely delegate legislative power, when even a law
enacted by Congress must yield to the untrammelled enjoyment of these human
rights. There is no time limit to the exercise of the freedoms. The right to enjoy them
is not exhausted by the delivery of one speech, the printing of one article or the
staging of one demonstration. It is a continuing immunity to be invoked and exercised
when exigent and expedient whenever there are errors to be rectified, abuses to be
denounced, inhumanities to be condemned. Otherwise these guarantees in the Bill of
Rights would be vitiated by rule on procedure prescribing the period for appeal. The
battle then would be reduced to a race for time. And in such a contest between an
employer and its laborer, the latter eventually loses because he cannot employ the
best an dedicated counsel who can defend his interest with the required diligence and
zeal, bereft as he is of the financial resources with which to pay for competent legal
services. 28-a
VI
The Court of Industrial Relations rule prescribes that motion for reconsideration of its
order or writ should filed within five (5) days from notice thereof and that the
arguments in support of said motion shall be filed within ten (10) days from the date of
filing of such motion for reconsideration (Sec. 16). As above intimated, these rules of
procedure were promulgated by the Court of Industrial Relations pursuant to a
legislative delegation. 29
The motion for reconsideration was filed on September 29, 1969, or seven (7) days
from notice on September 22, 1969 of the order dated September 15, 1969 or two (2)
days late. Petitioners claim that they could have filed it on September 28, 1969, but it
was a Sunday.
Does the mere fact that the motion for reconsideration was filed two (2) days late
defeat the rights of the petitioning employees? Or more directly and concretely, does
Page 83
procedural rule governing the period for filing a motion for reconsideration or appeal
in labor cases, promulgated pursuant to a legislative delegation, prevail over
constitutional rights? The answer should be obvious in the light of the aforecited
cases. To accord supremacy to the foregoing rules of the Court of Industrial Relations
over basic human rights sheltered by the Constitution, is not only incompatible with
the basic tenet of constitutional government that the Constitution is superior to any
statute or subordinate rules and regulations, but also does violence to natural reason
and logic. The dominance and superiority of the constitutional right over the aforesaid
Court of Industrial Relations procedural rule of necessity should be affirmed. Such a
Court of Industrial Relations rule as applied in this case does not implement or
reinforce or strengthen the constitutional rights affected,' but instead constrict the
same to the point of nullifying the enjoyment thereof by the petitioning employees.
Said Court of Industrial Relations rule, promulgated as it was pursuant to a mere
legislative delegation, is unreasonable and therefore is beyond the authority granted
by the Constitution and the law. A period of five (5) days within which to file a motion
for reconsideration is too short, especially for the aggrieved workers, who usually do
not have the ready funds to meet the necessary expenses therefor. In case of the
Court of Appeals and the Supreme Court, a period of fifteen (15) days has been fixed
for the filing of the motion for re hearing or reconsideration (See. 10, Rule 51; Sec. 1,
Rule 52; Sec. 1, Rule 56, Revised Rules of Court). The delay in the filing of the
motion for reconsideration could have been only one day if September 28, 1969 was
not a Sunday. This fact accentuates the unreasonableness of the Court of Industrial
are concerned.
It should be stressed here that the motion for reconsideration dated September 27,
1969, is based on the ground that the order sought to be reconsidered "is not in
accordance with law, evidence and facts adduced during the hearing," and likewise
prays for an extension of ten (10) days within which to file arguments pursuant to
Sections 15, 16 and 17 of the Rules of the Court of Industrial Relations (Annex "G",
pp. 57-60, rec.); although the arguments were actually filed by the herein petitioners
on October 14, 1969 (Annex "I", pp. 70-73, rec.), long after the 10-day period required
for the filing of such supporting arguments counted from the filing of the motion for
reconsideration. Herein petitioners received only on October 28, 1969 the resolution
dated October 9, 1969 dismissing the motion for reconsideration for being pro
forma since it was filed beyond the reglementary period (Annex "J", pp. 74-75, rec.)
It is true that We ruled in several cases that where a motion to reconsider is filed out
of time, or where the arguments in suppf such motion are filed beyond the 10 day
reglementary period provided for by the Court of Industrial Relations rules, the order
or decision subject of29-a reconsideration becomes final and unappealable. But in all
these cases, the constitutional rights of free expression, free assembly and petition
were not involved.
It is a procedural rule that generally all causes of action and defenses presently
available must be specifically raised in the complaint or answer; so that any cause of
action or defense not raised in such pleadings, is deemed waived. However, a
constitutional issue can be raised any time, even for the first time on appeal, if it
appears that the determination of the constitutional issue is necessary to a decision of
the case, the very lis mota of the case without the resolution of which no final and
complete determination of the dispute can be made. 30 It is thus seen that a
procedural rule of Congress or of the Supreme Court gives way to a constitutional
LABOR LAW 2- SESSION 2 CASES
right. In the instant case, the procedural rule of the Court of Industrial Relations, a
creature of Congress, must likewise yield to the constitutional rights invoked by herein
petitioners even before the institution of the unfair labor practice charged against
them and in their defense to the said charge.
In the case at bar, enforcement of the basic human freedoms sheltered no less by the
organic law, is a most compelling reason to deny application of a Court of Industrial
Relations rule which impinges on such human rights. 30-a
It is an accepted principle that the Supreme Court has the inherent power to "suspend
its own rules or to except a particular case from its operation, whenever the purposes
of justice require." 30-b Mr. Justice Barredo in his concurring opinion in Estrada vs.
Sto. Domingo. 30-c reiterated this principle and added that
Under this authority, this Court is enabled to cove with all situations without
concerning itself about procedural niceties that do not square with the need to do
justice, in any case, without further loss of time, provided that the right of the
parties to a full day in court is not substantially impaired. Thus, this Court may
treat an appeal as a certiorari and vice-versa. In other words, when all the
material facts are spread in the records before Us, and all the parties have been
duly heard, it matters little that the error of the court a quo is of judgment or of
jurisdiction. We can then and there render the appropriate judgment. Is within the
contemplation of this doctrine that as it is perfectly legal and within the power of
this Court to strike down in an appeal acts without or in excess of jurisdiction or
committed with grave abuse of discretion, it cannot be beyond the admit of its
authority, in appropriate cases, to reverse in a certain proceed in any error of
judgment of a court a quo which cannot be exactly categorized as a flaw of
jurisdiction. If there can be any doubt, which I do not entertain, on whether or not
the errors this Court has found in the decision of the Court of Appeals are short
of being jurisdiction nullities or excesses, this Court would still be on firm legal
grounds should it choose to reverse said decision here and now even if such
errors can be considered as mere mistakes of judgment or only as faults in the
exercise of jurisdiction, so as to avoid the unnecessary return of this case to the
lower court for the sole purpose of pursuing the ordinary course of an appeal.
(Emphasis supplied). 30-d
Insistence on the application of the questioned Court industrial Relations rule in this
particular case at bar would an unreasoning adherence to "Procedural niceties" which
denies justice to the herein laborers, whose basic human freedoms, including the
right to survive, must be according supremacy over the property rights of their
employer firm which has been given a full hearing on this case, especially when, as in
the case at bar, no actual material damage has be demonstrated as having been
inflicted on its property rights.
If We can disregard our own rules when justice requires it, obedience to the
Constitution renders more imperative the suspension of a Court of Industrial Relations
rule that clash with the human rights sanctioned and shielded with resolution concern
by the specific guarantees outlined in the organic law. It should be stressed that the
application in the instant case Section 15 of the Court of Industrial Relations rules
relied upon by herein respondent firm is unreasonable and therefore such application
Page 84
becomes unconstitutional as it subverts the human rights of petitioning labor union
and workers in the light of the peculiar facts and circumstances revealed by the
record.
The suspension of the application of Section 15 of the Court of Industrial Relations
rules with reference to the case at is also authorized by Section 20 of Commonwealth
Act No. 103, the C.I.R. charter, which enjoins the Court of Industrial Relations to "act
according to justice and equity and substantial merits of the case, without regard to
technicalities or legal forms ..."
On several occasions, We emphasized this doctrine which was re-stated by Mr.
Justice Barredo, speaking for the Court, in the 1970 case of Kapisanan, etc. vs.
Hamilton, etc., et. al., 30-e thus:
As to the point that the evidence being offered by the petitioners in the motion for
new trial is not "newly discovered," as such term is understood in the rules of
procedure for the ordinary courts, We hold that such criterion is not binding upon
the Court of Industrial Relations. Under Section 20 of Commonwealth Act No.
103, 'The Court of Industrial Relations shall adopt its, rules or procedure and
shall have such other powers as generally pertain to a court of justice: Provided,
however, That in the hearing, investigation and determination of any question or
controversy and in exercising any duties and power under this Act, the Court
shall act according to justice and equity and substantial merits of the case,
without regard to technicalities or legal forms and shall not be bound by any
technical rules of legal evidence but may inform its mind in such manner as it
may deem just and equitable.' By this provision the industrial court is disengaged
from the rigidity of the technicalities applicable to ordinary courts. Said court is
not even restricted to the specific relief demanded by the parties but may issue
such orders as may be deemed necessary or expedient for the purpose of
settling the dispute or dispelling any doubts that may give rise to future disputes.
(Ang Tibay v. C.I.R., G.R. No. 46496, Feb. 17, 1940; Manila Trading & Supply
Co. v. Phil. Labor, 71 Phil. 124.) For these reasons, We believe that this
provision is ample enough to have enabled the respondent court to consider
whether or not its previous ruling that petitioners constitute a minority was
founded on fact, without regard to the technical meaning of newly discovered
evidence. ... (Alonso v. Villamor, 16 Phil. 315; Chua Kiong v. Whitaker, 46 Phil.
578). (emphasis supplied.)
To apply Section 15 of the Court of Industrial Relations rules with "pedantic rigor" in
the instant case is to rule in effect that the poor workers, who can ill-afford an alert
competent lawyer, can no longer seek the sanctuary of human freedoms secured to
them by the fundamental law, simply because their counsel — erroneously believing
that he received a copy of the decision on September 23, 1969, instead of September
22, 1969 - filed his motion for reconsideration September 29, 1969, which practically
is only one day late considering that September 28, 1969 was a Sunday.
Many a time, this Court deviated from procedure technicalities when they ceased to
be instruments of justice, for the attainment of which such rules have been devised.
Summarizing the jurisprudence on this score, Mr. Justice Fernando, speaking for a
unanimous Court in Palma vs. Oreta, 30-f Stated:
LABOR LAW 2- SESSION 2 CASES
As was so aptly expressed by Justice Moreland in Alonso v. Villamor (16 Phil.
315 [1910]. The Villamor decision was cited with approval in Register of Deeds v.
Phil. Nat. Bank, 84 Phil. 600 [1949]; Potenciano v. Court of Appeals, 104 Phil.
156 [1958] and Uy v. Uy, 14243, June 30, 1961, 2 SCRA 675.), decided as far
back as 1910, "technicality. when it deserts its proper-office as an aid to justice
and becomes its great hindrance and chief enemy, deserves scant consideration
from courts." (Ibid., p, 322.) To that norm, this Court has remained committed.
The late Justice Recto in Blanco v. Bernabe, (63 Phil. 124 [1936]) was of a
similar mind. For him the interpretation of procedural rule should never "sacrifice
the ends justice." While "procedural laws are no other than technicalities" view
them in their entirety, 'they were adopted not as ends themselves for the
compliance with which courts have organized and function, but as means
conducive to the realization the administration of the law and of justice (Ibid.,
p.,128). We have remained steadfastly opposed, in the highly rhetorical language
Justice Felix, to "a sacrifice of substantial rights of a litigant in altar of
sophisticated technicalities with impairment of the sacred principles of justice."
(Potenciano v. Court of Appeals, 104 Phil. 156, 161 [1958]). As succinctly put by
Justice Makalintal, they "should give way to the realities of the situation."
(Urbayan v. Caltex, L-15379, Aug. 31, 1962, 5 SCRA 1016, 1019). In the latest
decision in point promulgated in 1968, (Udan v. Amon, (1968, 23 SCRA citing
McEntee v. Manotok, L-14968, Oct. 27, 1961, 3 SCRA 272.) Justice Zaldivar was
partial to an earlier formulation of Justice Labrador that rules of procedure "are
not to be applied in a very rigid, technical sense"; but are intended "to help
secure substantial justice." (Ibid., p. 843) ... 30-g
Even if the questioned Court of Industrial Relations orders and rule were to be given
effect, the dismissal or termination of the employment of the petitioning eight (8)
leaders of the Union is harsh for a one-day absence from work. The respondent Court
itself recognized the severity of such a sanction when it did not include the dismissal
of the other 393 employees who are members of the same Union and who
participated in the demonstration against the Pasig police. As a matter of fact, upon
the intercession of the Secretary of Labor, the Union members who are not officers,
were not dismissed and only the Union itself and its thirteen (13) officers were
specifically named as respondents in the unfair labor practice charge filed against
them by the firm (pp. 16-20, respondent's Brief; Annexes "A", "B" and "C", pp. 20-30,
rec.). Counsel for respondent firm insinuates that not all the 400 or so employee
participated in the demonstration, for which reason only the Union and its thirteen (13)
officers were specifically named in the unfair labor practice charge (p. 20,
respondent's brief). If that were so, then many, if not all, of the morning and regular
shifts reported for work on March 4, 1969 and that, as a consequence, the firm
continued in operation that day and did not sustain any damage.
The appropriate penalty — if it deserves any penalty at all — should have been
simply to charge said one-day absence against their vacation or sick leave. But to
dismiss the eight (8) leaders of the petitioner Union is a most cruel penalty, since as
aforestated the Union leaders depend on their wages for their daily sustenance as
well as that of their respective families aside from the fact that it is a lethal blow to
unionism, while at the same time strengthening the oppressive hand of the petty
tyrants in the localities.
Mr. Justice Douglas articulated this pointed reminder:
Page 85
 The challenge to our liberties comes frequently not from those who consciously
seek to destroy our system of Government, but from men of goodwill — good
men who allow their proper concerns to blind them to the fact that what they
propose to accomplish involves an impairment of liberty.
... The Motives of these men are often commendable. What we must remember,
however, is thatpreservation of liberties does not depend on motives. A
suppression of liberty has the same effect whether the suppress or be a reformer
or an outlaw. The only protection against misguided zeal is a constant alertness
of the infractions of the guarantees of liberty contained in our Constitution. Each
surrender of liberty to the demands of the moment makes easier another, larger
surrender. The battle over the Bill of Rights is a never ending one.
... The liberties of any person are the liberties of all of us.
... In short, the Liberties of none are safe unless the liberties of all are protected.
... But even if we should sense no danger to our own liberties, even if we feel
secure because we belong to a group that is important and respected, we must
recognize that our Bill of Rights is a code of fair play for the less fortunate that we
in all honor and good conscience must be observe. 31
The case at bar is worse.
Management has shown not only lack of good-will or good intention, but a complete
lack of sympathetic understanding of the plight of its laborers who claim that they are
being subjected to indignities by the local police, It was more expedient for the firm to
conserve its income or profits than to assist its employees in their fight for their
freedoms and security against alleged petty tyrannies of local police officers. This is
sheer opportunism. Such opportunism and expediency resorted to by the respondent
company assaulted the immunities and welfare of its employees. It was pure and
implement selfishness, if not greed.
Of happy relevance is the 1967 case of Republic Savings Bank vs. C.I.R., 32 where
the petitioner Bank dismissed eight (8) employees for having written and published "a
patently libelous letter ... to the Bank president demanding his resignation on the
grounds of immorality, nepotism in the appointment and favoritism as well as
discrimination in the promotion of bank employees." Therein, thru Mr. Justice Castro,
We ruled:
It will avail the Bank none to gloat over this admission of the respondents.
Assuming that the latter acted in their individual capacities when they wrote the
letter-charge they were nonetheless protected for they were engaged in
concerted activity, in the exercise of their right of self organization that includes
concerted activity for mutual aid and protection, (Section 3 of the Industrial Peace
Act ...) This is the view of some members of this Court. For, as has been aptly
stated, the joining in protests or demands, even by a small group of employees, if
in furtherance of their interests as such, is a concerted activity protected by the
LABOR LAW 2- SESSION 2 CASES
Industrial Peace Act. It is not necessary that union activity be involved or that
collective bargaining be contemplated. (Annot., 6 A.L.R. 2d 416 [1949]).
xxx xxx xxx
Instead of stifling criticism, the Bank should have allowed the respondents to air
their grievances.
xxx xxx xxx
The Bank defends its action by invoking its right to discipline for what it calls the
respondents' libel in giving undue publicity to their letter-charge. To be sure, the
right of self-organization of employees is not unlimited (Republic Aviation Corp.
vs. NLRB 324 U.S. 793 [1945]), as the right of the employer to discharge for
cause (Philippine Education Co. v. Union of Phil. Educ. Employees, L-13773,
April 29, 1960) is undenied. The Industrial Peace Act does not touch the normal
exercise of the right of the employer to select his employees or to discharge
them. It is directed solely against the abuse of that right by interfering with the
countervailing right of self organization (Phelps Dodge Corp. v. NLRB 313 U.S.
177 [1941])...
xxx xxx xxx
In the final sum and substance, this Court is in unanimity that the Bank's conduct,
identified as an interference with the employees' right of self-organization or as a
retaliatory action, and/or as a refusal to bargain collectively, constituted an unfair
labor practice within the meaning and intendment of section 4(a) of the Industrial
Peace Act. (Emphasis supplied.) 33
If free expression was accorded recognition and protection to fortify labor unionism in
the Republic Savings case, supra, where the complaint assailed the morality and
integrity of the bank president no less, such recognition and protection for free
speech, free assembly and right to petition are rendered all the more justifiable and
more imperative in the case at bar, where the mass demonstration was not against
the company nor any of its officers.
WHEREFORE, judgement is hereby rendered:
(1) setting aside as null and void the orders of the respondent Court of Industrial
Relations dated September 15 and October 9, 1969; and
(2) directing the re instatement of the herein eight (8) petitioners, with full back pay
from the date of their separation from the service until re instated, minus one day's
pay and whatever earnings they might have realized from other sources during their
separation from the service.
With costs against private respondent Philippine Blooming Company, Inc.
Page 86
G.R. No. 155679 December 19, 2006 Petitioners further assert that respondents were "slighted" by the workers’ no-show,
and as a punishment, the workers as well as petitioners were barred from entering
BIFLEX PHILS. INC. LABOR UNION (NAFLU), PATRICIA VILLANUEVA, EMILIA the company premises.
BANDOLA, RAQUEL CRUZ, DELIA RELATO, REGINA CASTILLO, LOLITA
DELOS ANGELES, MARISSA VILLORIA, MARITA ANTONIO, LOLITA LINDIO, On their putting up of tents, tables and chairs in front of the main gate of respondents’
ELIZA CARAULLIA, LIZA SUA, and FILFLEX INDUSTRIAL AND premises, petitioners, who claim that they filed a notice of strike on October 31,
MANUFACTURING LABOR UNION (NAFLU), MYRNA DELA TORRE, AVELINA 1990,6 explain that those were for the convenience of union members who reported
AÑONUEVO, BERNICE BORCELO, NARLIE YAGIN, EVELYN SANTILLAN, every morning to check if the management would allow them to report for work.
LEONY SERDONCILO, TRINIDAD CUYA, ANDREA LUMIBAO, GYNIE ARNEO,
ELIZABETH CAPELLAN, JOSEPHINE DETOSIL, ZENAIDA FRANCISCO, and Respondents, on the other hand, maintain that the work stoppage was illegal since
FLORENCIA ANAGO, petitioners, vs.FILFLEX INDUSTRIAL AND the following requirements for the staging of a valid strike were not complied with: (1)
MANUFACTURING CORPORATION and BIFLEX (PHILS.), INC., respondents. filing of notice of strike; (2) securing a strike vote, and (3) submission of a report of
the strike vote to the Department of Labor and Employment.7
Assailed via Petition for Review on Certiorari is the Court of Appeals Decision 1 of May
28, 2002 setting aside the National Labor Relations Commission (NLRC) The Labor Arbiter, by Decision of December 15, 1992, finding for respondents, held
Resolution2 of August 14, 1995 which reversed the December 15, 1992 Decision 3 of that the strike was illegal.8 The decretal text of its decision reads:
the Labor Arbiter.
WHEREFORE, judgment is hereby rendered declaring the respondents
Petitioners Patricia Villanueva, Emilia Bandola, Raquel Cruz, Delia Relato, Regina guilty of an illegal strike. Consequently, their following officers are declared
Castillo, Lolita delos Angeles, Marissa Villoria, Marita Antonio, Lolita Lindio, Eliza to have lost their employment status:
Caraulia, and Liza Sua were officers of Biflex (Phils.) Inc. Labor Union.
BIFLEX LABOR UNION (NAFLU)
Petitioners Myrna dela Torre, Avelina Añonuevo, Bernice Borcelo, Narlie Yagin,
Evelyn Santillan, Leony Serdoncilo, Trinidad Cuya, Andrea Lumibao, Gynie Arneo,
Elizabeth Capellan, Josephine Detosil, Zenaida Francisco, and Florencia Anago 1. Reynaldo Santos President
were officers of Filflex Industrial and Manufacturing Labor Union.
2. Patricia Villanueva Vice President
The two petitioner-unions, which are affiliated with National Federation of Labor
Unions (NAFLU), are the respective collective bargaining agents of the employees of 3. Emilia Bandola Secretary
corporations.
4. Raquel Cruz Treasurer
Respondents Biflex (Phils.) Inc. and Filflex Industrial and Manufacturing Corporation
(respondents) are sister companies engaged in the garment business. Situated in one 5. Delia Relato Auditor
big compound along with another sister company, General Garments Corporation
(GGC), they have a common entrance. 6. Regina Castillo Board Member

On October 24, 1990, the labor sector staged a welga ng bayan to protest the 7. Lolita delos Angeles Board Member
accelerating prices of oil. On even date, petitioner-unions, led by their officers, herein
petitioners, staged a work stoppage which lasted for several days, prompting 8. Marissa Villoria Board Member
respondents to file on October 31, 1990 a petition to declare the work stoppage illegal
for failure to comply with procedural requirements.4 9. Marita Antonio Board Member

On November 13, 1990, respondents resumed their operations.5 Petitioners, claiming 10. Lolita Lindio Board Member
that they were illegally locked out by respondents, assert that aside from the fact that
the welga ng bayan rendered it difficult to get a ride and the apprehension that 11. Eliza Caranlia Board Member
violence would erupt between those participating in the welga and the authorities,
respondents’ workers were prevented from reporting for work.
12. Liza Sua Board Member
FIFLEX INDUSTRIAL AND MANUFACTURING LABOR UNION (NAFLU)

LABOR LAW 2- SESSION 2 CASES Page 87


1. Myrna dela Torre
2. Avelina Anonuevo
I. . . ERRED IN INTERPRETING ART. 264 (A) OF THE LABOR CODE TO BE
President
MANDATORY AND CALLING FOR THE AUTOMATIC DISMISSAL OF THE
PETITIONERS FOR HAVING ENGAGED IN AN ILLEGAL STRIKE.
Vice President

3. Barnice Borcelo
4. Nerlie Yagin
5. Evelyn Santillan
6. Leony Serdoncilo
7. Trinidad Cuga
Secretary II. . . ERR[ED] IN NOT RULING THAT RESPONDENTS ERRED IN
IMMEDIATELY IMPLEMENTING THE DECISION OF THE LABOR ARBITER . . .
Treasurer DISMISSING PETITIONERS FROM WORK DESPITE THE FACT THAT THE
SAID DECISION HAS NOT YET BECOME FINAL AND EXECUTORY.
Auditor
III. . . ERRED IN DECLARING THAT PETITIONERS WERE GUILTY OF
Director HOLDING AN ILLEGAL STRIKE WHEN CIRCUMSTANCES SHOWED THAT
RESPONDENTS WERE THE ONES WHO WERE GUILTY OF AN ILLEGAL
Director LOCKOUT.

8. Andrea Lumibao Director

9. Gynie Arneo
10. Elizabeth Capellar
11. Josephine Detosil
12. Zenaida Francisco
13. Florencia Anago
SO ORDERED.9
Respondents thereupon terminated the employment of petitioners.
The petition fails.
Director
That petitioners staged a work stoppage on October 24, 1990 in conjunction with
Director the welga ng bayan organized by the labor sector to protest the accelerating prices of
oil, it is not disputed.
Director
Stoppage of work due to welga ng bayan is in the nature of a general strike, an
Director extended sympathy strike. It affects numerous employers including those who do not
have a dispute with their employees regarding their terms and conditions of
Director employment.15
Employees who have no labor dispute with their employer but who, on a day they are
scheduled to work, refuse to work and instead join a welga ng bayan commit an
illegal work stoppage.16

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of
the Labor Arbiter, it holding that there was no strike to speak of as no labor or
industrial dispute existed between the parties.10 It accordingly ordered respondents to
reinstate petitioners to their former positions, without loss of seniority rights, and with
full backwages from the date of their termination. 11
On respondents’ petition for certiorari, the Court of Appeals, by Decision of May 28,
2002, reversed that of the NLRC and reinstated that of the Labor Arbiter.
In finding for respondents, the appellate court discredited petitioners’ claim of having
been illegally locked out, given their failure to even file a letter of protest or complaint
with the management,12 and their failure to comply with the legal requirements of a
valid strike.13
The appellate court further noted that while petitioners claimed that they filed a notice
of strike on October 31, 1990, no copy thereof was ever produced before the Labor
Arbiter.14
Hence, the instant petition which faults the appellate court to have:
Even if petitioners’ joining the welga ng bayan were considered merely as an exercise
of their freedom of expression, freedom of assembly or freedom to petition the
government for redress of grievances, the exercise of such rights is not
absolute.17 For the protection of other significant state interests such as the "right of
enterprises to reasonable returns on investments, and to expansion and
growth"18 enshrined in the 1987 Constitution must also be considered, otherwise,
oppression or self-destruction of capital in order to promote the interests of labor
would be sanctioned. And it would give imprimatur to workers’ joining
demonstrations/rallies even before affording the employer an opportunity to make the
necessary arrangements to counteract the implications of the work stoppage on the
business, and ignore the novel "principle of shared responsibility between workers
and employers"19 aimed at fostering industrial peace.
There being no showing that petitioners notified respondents of their intention, or that
they were allowed by respondents, to join the welga ng bayan on October 24, 1990,
their work stoppage is beyond legal protection.
Petitioners, nonetheless, assert that when they returned to work the day following
the welga ng bayan on October 24, 1990, they were refused entry by the

LABOR LAW 2- SESSION 2 CASES Page 88

management, allegedly as punishment for their joining the welga. Hence, they claim
that they were illegally locked out by respondents.

If there was illegal lockout, why, indeed, did not petitioners file a protest with the
management or a complaint therefor against respondents? As the Labor Arbiter
observed, "[t]he inaction of [petitioners] betrays the weakness of their contention for
normally a locked-out union will immediately bring management before the bar of
justice."20

Even assuming arguendo that in staging the strike, petitioners had complied with
legal formalities, the strike would just the same be illegal, for by blocking the free
ingress to and egress from the company premises, they violated Article 264(e) of the
Labor Code which provides that "[n]o person engaged in picketing shall … obstruct
the free ingress to or egress from the employer’s premises for lawful purposes, or
obstruct public thoroughfares."

Even the NLRC, which ordered their reinstatement, took note of petitioners’ act of
"physically blocking and preventing the entry of complainant’s customers, supplies
and even other employees who were not on strike." 21

In fine, the legality of a strike is determined not only by compliance with its legal
formalities but also by the means by which it is carried out.

Petitioners, being union officers, should thus bear the consequences of their acts of
knowingly participating in an illegal strike, conformably with the third paragraph of
Article 264 (a) of the Labor Code which provides:

. . . Any union officer who knowingly participates in an illegal strike and any
worker or union officer who knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike shall not
constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.
(Emphasis and underscoring supplied)

In Gold City Integrated Port Service, Inc. v. National Labor Relations

Commission,22 this Court, passing on the use of the word "may" in the immediately
quoted provision, held that "[t]he law . . . grants the employer the option of declaring a
union officer who participated in an illegal strike as having lost his employment."
Reinstatement of a striker or retention of his employment, despite his participation in
an illegal strike, is a management prerogative which this Court may not supplant.

Costs against petitioners.

WHEREFORE, the petition is DENIED.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 89

 Payment to the Union or its Officers
Violation of a Collective Bargaining Agreement
G.R. No. 178083 July 22, 2008
FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES
(FASAP), Petitioner, vs.PHILIPPINE AIRLINES, INC., PATRIA CHIONG and
COURT OF APPEALS, Respondents.
This petition for review on certiorari assails the Decision 1 of the Court of Appeals (CA)
dated August 23, 2006 in CA-G.R. SP No. 87956 which affirmed the National Labor
Relations Commission’s (NLRC) decision setting aside the Labor Arbiter’s findings of
illegal retrenchment and ordering the reinstatement of the retrenched Philippine
Airlines, Inc. (PAL) employee-members of petitioner Flight Attendants and Stewards
Association of the Philippines (FASAP), with payment of backwages, moral and
exemplary damages, and attorney’s fees. Also assailed is the May 29, 2007
Resolution2 denying the motion for reconsideration.
Petitioner FASAP is the duly certified collective bargaining representative of PAL flight
attendants and stewards, or collectively known as PAL cabin crew personnel.
Respondent PAL is a domestic corporation organized and existing under the laws of
the Republic of the Philippines, operating as a common carrier transporting
passengers and cargo through aircraft.
On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400
of its cabin crew personnel, to take effect on July 15, 1998. PAL adopted the
retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a
result of a downturn in the airline industry brought about by the Asian financial crisis.
During said period, PAL claims to have incurred P90 billion in liabilities, while its
assets stood at P85 billion.3
In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14"
whereby PAL’s fleet of aircraft would be reduced from 54 to 14, thus requiring the
services of only 654 cabin crew personnel.4 PAL admits that the retrenchment is
wholly premised upon such reduction in fleet,5 and to "the strike staged by PAL pilots
since this action also translated into a reduction of flights." 6 PAL claims that the
scheme resulted in "savings x x x amounting to approximately P24 million per month
– savings that would greatly alleviate PAL’s financial crisis." 7
Prior to the full implementation of the assailed retrenchment program, FASAP and
PAL conducted a series of consultations and meetings and explored all possibilities of
cushioning the impact of the impending reduction in cabin crew personnel. However,
the parties failed to agree on how the scheme would be implemented. Thus PAL
unilaterally resolved to utilize the criteria set forth in Section 112 of the PAL-FASAP
Collective Bargaining Agreement8 (CBA) in retrenching cabin crew personnel: that is,
that retrenchment shall be based on the individual employee’s efficiency rating and
seniority.
LABOR LAW 2- SESSION 2 CASES
PAL determined the cabin crew personnel efficiency ratings through an evaluation of
the individual cabin crew member’s overall performance for the year 1997
alone.9 Their respective performance during previous years, i.e., the whole duration of
service with PAL of each cabin crew personnel, was not considered. The factors
taken into account on whether the cabin crew member would be retrenched, demoted
or retained were: 1) the existence of excess sick leaves; 2) the crew member’s being
physically overweight; 3) seniority; and 4) previous suspensions or warnings
imposed.10
While consultations between FASAP and PAL were ongoing, the latter began
implementing its retrenchment program by initially terminating the services of 140
probationary cabin attendants only to rehire them in April 1998. Moreover, their
employment was made permanent and regular.11
On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400
cabin crew personnel.
Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a
rehabilitation plan was approved per Securities and Exchange Commission (SEC)
Order dated June 23, 1998 in SEC Case No. 06-98-6004.12
On September 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO)
Lucio Tan, made an offer to transfer shares of stock to its employees and three seats
in its Board of Directors, on the condition that all the existing Collective Bargaining
Agreements (CBAs) with its employees would be suspended for 10 years, but it was
rejected by the employees. On September 17, 1998, PAL informed its employees that
it was shutting down its operations effective September 23, 1998, 13 despite the
previous approval on June 23, 1998 of its rehabilitation plan.
On September 23, 1998, PAL ceased its operations and sent notices of termination to
its employees. Two days later, PAL employees, through the Philippine Airlines
Employees Association (PALEA) board, sought the intervention of then President
Joseph E. Estrada. PALEA offered a 10-year moratorium on strikes and similar
actions and a waiver of some of the economic benefits in the existing CBA. Lucio
Tan, however, rejected this counter-offer.14
On September 27, 1998, the PALEA board again wrote the President proposing the
following terms and conditions, subject to ratification by the general membership:
1. Each PAL employee shall be granted 60,000 shares of stock with a par value
of P5.00, from Mr. Lucio Tan’s shareholdings, with three (3) seats in the PAL
Board and an additional seat from government shares as indicated by His
Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate
representation in committees or bodies which deal with matters affecting terms
and conditions of employment;
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 3. To enhance and strengthen labor-management relations, the existing Labor-
Management Coordinating Council shall be reorganized and revitalized, with
adequate representation from both PAL management and PALEA;
4. To assure investors and creditors of industrial peace, PALEA agrees, subject
to the ratification by the general membership, (to) the suspension of the PAL-
PALEA CBA for a period of ten (10) years, provided the following safeguards are
in place:
a. PAL shall continue recognizing PALEA as the duly certified bargaining
agent of the regular rank-and-file ground employees of the Company;
b. The ‘union shop/maintenance of membership’ provision under the PAL-
PALEA CBA shall be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of
Agreement forged by and between PAL and PALEA, to those employees who
may opt to retire or be separated from the company.
6. PALEA members who have been retrenched but have not received separation
benefits shall be granted priority in the hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the provisions of the
Labor Code shall apply.15
In a referendum conducted on October 2, 1998, PAL employees ratified the above
proposal. On October 7, 1998, PAL resumed domestic operations and, soon after,
international flights as well.16
Meanwhile, in November 1998, or five months after the June 15, 1998 mass dismissal
of its cabin crew personnel, PAL began recalling to service those it had previously
retrenched. Thus, in November 199817 and up to March 1999,18 several of those
retrenched were called back to service. To date, PAL claims to have recalled 820 of
the retrenched cabin crew personnel.19 FASAP, however, claims that only 80 were
recalled as of January 2001.20
In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by
which it undertook a recovery on its own while keeping its options open for the entry
of a strategic partner in the future. Accordingly, it submitted an amended rehabilitation
plan to the SEC with a proposed revised business and financial restructuring plan,
which required the infusion of US$200 million in new equity into the airline.
On May 17, 1999, the SEC approved the proposed "Amended and Restated
Rehabilitation Plan" of PAL and appointed a permanent rehabilitation receiver for the
latter.21
LABOR LAW 2- SESSION 2 CASES
On June 7, 1999, the SEC issued an Order confirming its approval of the "Amended
and Restated Rehabilitation Plan" of PAL. In said order, the cash infusion of US$200
million made by Lucio Tan on June 4, 1999 was acknowledged. 22
On October 4, 2007, PAL officially exited receivership; thus, our ruling in Philippine
Air Lines v. Kurangking23 no longer applies.
On June 22, 1998, FASAP filed a Complaint24 against PAL and Patria T.
Chiong25 (Chiong) for unfair labor practice, illegal retrenchment with claims for
reinstatement and payment of salaries, allowances and backwages of affected
FASAP members, actual, moral and exemplary damages with a prayer to enjoin the
retrenchment program then being implemented. Instead of a position paper,
respondents filed a Motion to Dismiss and/or Consolidation with NCMB Case No. NS
12-514-97 pending with the Office of the Secretary of the Department of Labor and
Employment and/or Suspension and Referral of Claims to the interim rehabilitation
proceedings (motion to dismiss).26
On July 6, 1998, FASAP filed its Comment to respondents’ motion to dismiss. On July
23, 1998, the Labor Arbiter issued an Order 27 denying respondents’ motion to
dismiss; granting a writ of preliminary injunction against PAL’s implementation of its
retrenchment program with respect to FASAP members; setting aside the respective
notices of retrenchment addressed to the cabin crew; directing respondents to restore
the said retrenched cabin crew to their positions and PAL’s payroll until final
determination of the case; and directing respondents to file their position paper.
Respondents appealed to the NLRC which reversed the decision of the Labor Arbiter.
The NLRC directed the lifting of the writ of injunction and to vacate the directive
setting aside the notices of retrenchment and reinstating the dismissed cabin crew to
their respective positions and in the PAL payroll.28
FASAP filed its Position Paper29 on September 28, 1999. On November 8, 1999,
respondents filed their Position Paper30 with counterclaims against FASAP, to which
FASAP filed its Reply.31 Thereafter, the parties were directed to file their respective
Memoranda.32
Meanwhile, instead of being dismissed in accordance with the Kurangking case, the
FASAP case (NLRC-NCR Case No. 06-05100-98) was consolidated with the
following cases:
1. Ramon and Marian Joy Camahort v. PAL, et al. (NLRC-NCR Case No. 00-07-
05854-98);
2. Erlinda Arevalo and Chonas Santos v. PAL, et al. (NLRC-NCR Case No. 00-
07-09793-98); and
3. Victor Lanza v. PAL, et al. (NLRC-NCR Case No.00-04-04254-99).
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On July 21, 2000, Labor Arbiter Jovencio Ll. Mayor rendered a Decision, 33 the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, this Office renders judgment declaring that
Philippine Airlines, Inc., illegally retrenched One Thousand Four Hundred (1,400)
cabin attendants including flight pursers for effecting the retrenchment program in a
despotic and whimsical manner. Philippine Airlines, Inc. is likewise hereby ordered to:
1. Reinstate the cabin attendants retrenched and/or demoted to their previous
positions;
2. Pay the concerned cabin attendants their full backwages from the time they
were illegally dismissed/retrenched up to their actual reinstatements;
3. Pay moral and exemplary damages in the amount of Five Hundred Thousand
Pesos (P500,000.00); and
4. Ten (10%) per cent of the total monetary award as and by way of attorney’s
fees.
SO ORDERED.34
Respondents appealed to the NLRC. Meanwhile, FASAP moved for the
implementation of the reinstatement aspect of the Labor Arbiter’s decision. Despite
respondents’ opposition, the Labor Arbiter issued a writ of execution with respect to
the reinstatement directive in his decision. Respondents moved to quash the writ, but
the Labor Arbiter denied the same. Again, respondents took issue with the NLRC.
Meanwhile, on May 31, 2004, the NLRC issued its Decision 35 in the appeal with
respect to the Labor Arbiter’s July 21, 2000 decision. The dispositive portion thereof
reads:
WHEREFORE, premises considered, the Decision dated July 21, 2000 is hereby SET
ASIDE and a new one entered DISMISSING the consolidated cases for lack of merit.
With respect to complainant Ms. Begonia Blanco, her demotion is hereby declared
illegal and respondent PAL is ordered to pay her salary differential covering the
period from the time she was downgraded in July 1998 up to the time she resigned in
October 1999.
Respondent PAL is likewise ordered to pay the separation benefits to those
complainants who have not received their separation pay and to pay the balance to
those who have received partial separation pay.
The Order of the Labor Arbiter dated April 6, 2000 is also SET ASIDE and the Writ of
Execution dated November 13, 2000 is hereby quashed.
LABOR LAW 2- SESSION 2 CASES
Annexes "A" and "B" are considered part of this Decision.
SO ORDERED.36
FASAP moved for reconsideration but it was denied; hence it filed an appeal to the
Court of Appeals which was denied in the herein assailed Decision.
FASAP’s motion for reconsideration was likewise denied; hence, the instant petition
raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS DECIDED THE CASE A QUO IN A
WAY CONTRARY TO LAW AND/OR APPLICABLE JURISPRUDENCE WHEN IT
DENIED FASAP’S PETITION FOR CERTIORARI UNDER RULE 65 AND
EFFECTIVELY VALIDATED THE RETRENCHMENT EXERCISED BY
RESPONDENT PAL WHICH WAS INITIALLY DECLARED AS ILLEGAL BY THE
LABOR ARBITER A QUO SINCE:
FIRST, the record shows that PAL failed or neglected to adopt less drastic cost-
cutting measures before resorting to retrenchment. No less than the Supreme Court
held that resort to less drastic cost-cutting measures is an indispensable requirement
for a valid retrenchment x x x.
SECOND, PAL arbitrarily and capriciously singled out the year 1997 as a reference in
its alleged assessment of employee efficiency. With this, it totally disregarded the
employee’s performance during the years prior to 1997. This resulted in the
unreasonable and unfair retrenchment or demotion of several flight pursers and
attendants who showed impeccable service records during the years prior to 1997.
THIRD, seniority was totally disregarded in the selection of employees to be
retrenched, which is a clear and willful violation of the CBA.
FOURTH, PAL maliciously represented in the proceedings below that it could only
operate on a fleet of fourteen (14) planes in order to justify the retrenchment scheme.
Yet, the evidence on record revealed that PAL operated a fleet of twenty two (22)
planes. In fact, after having illegally retrenched the unfortunate flight attendants and
pursers, PAL rehired those who were capriciously dismissed and even hired from the
outside just to fulfill their manning requirements.
FIFTH, PAL did not use any fair and reasonable criteria in effecting retrenchment. If
there really was any, the same was applied arbitrarily, if not discriminatorily.
FINALLY, and perhaps the worst transgression of FASAP’s rights, PAL used
retrenchment to veil its union-busting motives and struck at the heart of FASAP when
it retrenched seven (7) of its twelve (12) officers and demoted three (3)
others.37 (Emphasis supplied)
These issues boil down to the question of whether PAL’s retrenchment scheme was
justified.
Page 92
It is a settled rule that in the exercise of the Supreme Court’s power of review, the
Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during trial. However, there are several
exceptions to this rule38 such as when the factual findings of the Labor Arbiter differ
from those of the NLRC, as in the instant case, which opens the door to a review by
this Court.39
Under the Labor Code, retrenchment or reduction of employees is authorized as
follows:
ART. 283. Closure of establishment and reduction of personnel. - The employer may
also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or 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.
The law recognizes the right of every business entity to reduce its work force if the
same is made necessary by compelling economic factors which would endanger its
existence or stability.40 Where appropriate and where conditions are in accord with
law and jurisprudence, the Court has authorized valid reductions in the work force to
forestall business losses, the hemorrhaging of capital, or even to recognize an
obvious reduction in the volume of business which has rendered certain employees
redundant.41
Nevertheless, while it is true that the exercise of this right is a prerogative of
management, there must be faithful compliance with substantive and procedural
requirements of the law and jurisprudence, for retrenchment strikes at the very heart
of the worker’s employment, the lifeblood upon which he and his family owe their
survival. Retrenchment is only a measure of last resort, when other less drastic
means have been tried and found to be inadequate.42
The burden clearly falls upon the employer to prove economic or business losses with
sufficient supporting evidence. Its failure to prove these reverses or losses
necessarily means that the employee’s dismissal was not justified. 43 Any claim of
actual or potential business losses must satisfy certain established standards, all of
which must concur, before any reduction of personnel becomes legal. 44 These are:
(1) That retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but substantial,
LABOR LAW 2- SESSION 2 CASES
serious, actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended
date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent
to one (1) month pay or at least one-half (½) month pay for every year of service,
whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the
employees’ right to security of tenure; and,
(5) That the employer used fair and reasonable criteria in ascertaining who would
be dismissed and who would be retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.45
In view of the facts and the issues raised, the resolution of the instant petition hinges
on a determination of the existence of the first, fourth and the fifth elements set forth
above, as well as compliance therewith by PAL, taking to mind that the burden of
proof in retrenchment cases lies with the employer in showing valid cause for
dismissal;46that legitimate business reasons exist to justify retrenchment. 47
FIRST ELEMENT: That retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer.
The employer’s prerogative to layoff employees is subject to certain limitations. In
Lopez Sugar Corporation v. Federation of Free Workers, 48 we held that:
Firstly, the losses expected should be substantial and not merely de minimis in
extent. If the loss purportedly sought to be forestalled by retrenchment is clearly
shown to be insubstantial and inconsequential in character, the bona fide nature of
the retrenchment would appear to be seriously in question. Secondly, the substantial
loss apprehended must be reasonably imminent, as such imminence can be
perceived objectively and in good faith by the employer. There should, in other words,
be a certain degree of urgency for the retrenchment, which is after all a drastic
recourse with serious consequences for the livelihood of the employees retired or
otherwise laid-off. Because of the consequential nature of retrenchment, it must,
thirdly, be reasonably necessary and likely to effectively prevent the expected losses.
The employer should have taken other measures prior or parallel to retrenchment to
forestall losses, i.e., cut other costs than labor costs. An employer who, for instance,
lays off substantial numbers of workers while continuing to dispense fat executive
bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be
retrenching in good faith to avoid losses. To impart operational meaning to the
Page 93
constitutional policy of providing "full protection" to labor, the employer’s prerogative
to bring down labor costs by retrenching must be exercised essentially as a measure
of last resort, after less drastic means - e.g., reduction of both management and rank-
and-file bonuses and salaries, going on reduced time, improving manufacturing
efficiencies, trimming of marketing and advertising costs, etc. - have been tried and
found wanting.
Lastly, but certainly not the least important, alleged losses if already realized, and the
expected imminent losses sought to be forestalled, must be proved by sufficient and
convincing evidence.
The law speaks of serious business losses or financial reverses. Sliding incomes or
decreasing gross revenues are not necessarily losses, much less serious business
losses within the meaning of the law. The fact that an employer may have sustained a
net loss, such loss, per se, absent any other evidence on its impact on the business,
nor on expected losses that would have been incurred had operations been
continued, may not amount to serious business losses mentioned in the law. The
employer must show that its losses increased through a period of time and that the
condition of the company will not likely improve in the near future, 49 or that it expected
no abatement of its losses in the coming years. 50 Put simply, not every loss incurred
or expected to be incurred by a company will justify retrenchment.51
The employer must also exhaust all other means to avoid further losses without
retrenching its employees.52Retrenchment is a means of last resort; it is justified only
when all other less drastic means have been tried and found insufficient. 53 Even
assuming that the employer has actually incurred losses by reason of the Asian
economic crisis, the retrenchment is not completely justified if there is no showing that
the retrenchment was the last recourse resorted to. 54 Where the only less drastic
measure that the employer undertook was the rotation work scheme, or the three-
day-work-per-employee-per-week schedule, and it did not endeavor at other
measures, such as cost reduction, lesser investment on raw materials, adjustment of
the work routine to avoid scheduled power failure, reduction of the bonuses and
salaries of both management and rank-and-file, improvement of manufacturing
efficiency, and trimming of marketing and advertising costs, the claim that
retrenchment was done in good faith to avoid losses is belied. 55
Alleged losses if already realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence. The reason for
requiring this is readily apparent: any less exacting standard of proof would render too
easy the abuse of this ground for termination of services of employees; scheming
employers might be merely feigning business losses or reverses in order to ease out
employees.56
In establishing a unilateral claim of actual or potential losses, financial statements
audited by independent external auditors constitute the normal method of proof of
profit and loss performance of a company.57 The condition of business losses
justifying retrenchment is normally shown by audited financial documents like yearly
balance sheets and profit and loss statements as well as annual income tax returns.
Financial statements must be prepared and signed by independent auditors;
otherwise, they may be assailed as self-serving.58 A Statement of Profit and Loss
LABOR LAW 2- SESSION 2 CASES
submitted to prove alleged losses, without the accompanying signature of a certified
public accountant or audited by an independent auditor, is nothing but a self-serving
document which ought to be treated as a mere scrap of paper devoid of any probative
value.59
The audited financial statements should be presented before the Labor Arbiter who is
in the position to evaluate evidence. They may not be submitted belatedly with the
Court of Appeals, because the admission of evidence is outside the sphere of the
appellate court’s certiorari jurisdiction. Neither can this Court admit in evidence
audited financial statements, or make a ruling on the question of whether the
employer incurred substantial losses justifying retrenchment on the basis thereof, as
this Court is not a trier of facts.60 Even so, this Court may not be compelled to accept
the contents of said documents blindly and without thinking.61
The requirement of evidentiary substantiation dictates that not even the affidavit of the
Assistant to the General Manager is admissible to prove losses, as the same is self-
serving.62 Thus, in Central Azucarera de la Carlota v. National Labor Relations
Commission,63 the Court ruled that the mere citation by the employer of the economic
setback suffered by the sugar industry as a whole cannot, in the absence of
adequate, credible and persuasive evidence, justify its retrenchment program, 64 thus:
A litany of woes, from a labor strike way back in 1982 to the various crises endured
by the sugar industry, droughts, the 1983 assassination of former Senator Benigno
Aquino, Jr., high crop loan interests, spiraling prices of fertilizers and spare parts, the
depression of sugar prices in the world market, cutback in the U.S. sugar quota,
abandonment of productive areas because of the insurgency problem and the
absence of fair and consistent government policies may have contributed to the
unprecedented decline in sugar production in the country, but there is no solid
evidence that they translated into specific and substantial losses that would
necessitate retrenchment. Just exactly what negative effects were borne by petitioner
as a result, petitioner failed to underscore.65
In Anino v. National Labor Relations Commission,66 the Court also held that the
employer’s claim – that retrenchment was undertaken as a measure of self-
preservation to prevent losses brought about by the continuing decline of nickel prices
and export volume in the mining industry, as well as its allegation that the reduction of
excise taxes on mining from 5% to 1% on a graduated basis as provided under
Republic Act No. 7729 was a clear recognition by the government of the industry’s
worsening economic difficulties – was a bare claim in the absence of evidence of
actual losses in its business operations.67
In the instant case, PAL failed to substantiate its claim of actual and imminent
substantial losses which would justify the retrenchment of more than 1,400 of its
cabin crew personnel. Although the Philippine economy was gravely affected by the
Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL
to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate
rehabilitation does not automatically justify the retrenchment of its cabin crew
personnel.
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Records show that PAL was not even aware of its actual financial position when it
implemented its retrenchment program. It initially decided to cut its fleet size to only
14 ("Plan 14") and based on said plan, it retrenched more than 1,400 of its cabin crew
personnel. Later on, however, it abandoned its "Plan 14" and decided to retain 22
units of aircraft ("Plan 22"). Unfortunately, it has retrenched more than what was
necessary. PAL admits that:
[U]pon reconsideration and with some optimistic prospects for operations, the
Company (PAL) decided not to implement "Plan 14" and instead implemented "Plan
22," which would involve a fleet of 22 planes. Since "Plan 14" was abandoned, the
Company deemed it appropriate to recall back into employment employees it had
previously retrenched. Thus, some of the employees who were initially laid off were
recalled back to duty, the basis of which was passing the 1997 efficiency rating to
meet the Company’s operational requirements.68
PAL decided to adopt "Plan 14" on June 12, 1998. Three days after, or on June 15,
1998, it sent notices of retrenchment to its cabin crew personnel to take effect on July
15, 1998. However, after allegedly realizing that it was going to retain 22 of its aircraft
instead of 14, and after more than 1,400 of its cabin crew have been fired – during the
period from November 30, 1998 to December 15, 1998, it suddenly recalled to duty
202 of the retrenched cabin crew personnel.69
This only proves that PAL was not aware of the true state of its finances at the time it
implemented the assailed massive retrenchment scheme. It embarked on the mass
dismissal without first undertaking a well-considered study on the proposed
retrenchment scheme. This view is underscored by the fact that previously, PAL
terminated the services of 140 probationary cabin attendants, but rehired them almost
immediately and even converted their employment into permanent and regular, even
as a massive retrenchment was already looming in the horizon.
To prove that PAL was financially distressed, it could have submitted its audited
financial statements but it failed to present the same with the Labor Arbiter. Instead, it
narrated a litany of woes without offering any evidence to show that they translated
into specific and substantial losses that would necessitate retrenchment, thus:
1. It is a matter of public knowledge that PAL had been suffering severe financial
losses that reached its most critical condition in 1998 when its liabilities amounted to
about P90,642,933,919.00, while its assets amounted to only about
P85,109,075,351.00. The precarious situation prompted PAL to adopt cost-cutting
measures to prevent it from becoming totally bankrupt, including the reduction of its
flight fleet from 56 to 14 aircrafts and the retrenchment of unneeded employees.
xxxx
26. To save its business, PAL had every right to undergo a retrenchment
program immediately. PAL did not need, by law, to justify or explain to FASAP the
reasons for the retrenchment before it could implement it. Proof of actual financial
losses incurred by the company is not a condition sine qua non for retrenchment. 70
LABOR LAW 2- SESSION 2 CASES
This bare and unilateral claim does not suffice. The Labor Arbiter’s finding that PAL
"amply satisfied the rules imposed by law and jurisprudence that sustain
retrenchment," is without basis, absent the presentation of documentary evidence to
that effect. In Saballa v. National Labor Relations Commission,71 we ruled that where
the decision of the Labor Arbiter did not indicate the specific bases for such crucial
finding that the employer was suffering business reverses, the same was arbitrary.
We ratiocinated therein that since the employer insisted that its critical financial
condition was the central and pivotal reason for its retrenchment, there was no reason
why it should have neglected or refused to submit its audited financial statements.
PAL’s assertion – that its finances were gravely compromised as a result of the 1997
Asian financial crisis and the pilots’ strike – lacks basis due to the non-presentation of
its audited financial statements to prove actual or imminent losses. Also, the fact that
PAL was placed under receivership did not excuse it from submitting to the labor
authorities copies of its audited financial statements to prove the urgency, necessity
and extent, of its retrenchment program. PAL should have presented its audited
financial statements for the years immediately preceding and during which the
retrenchment was carried out. Law and jurisprudence require that alleged losses or
expected imminent losses must be proved by sufficient and convincing evidence.
Likewise, PAL has not shown to the Court’s satisfaction that the pilots’ strike had
gravely affected its operations. It offered no proof to show the correlation between the
pilots’ strike and its alleged financial difficulties. In Guerrero v. National Labor
Relations Commission,72 the Court held that where the employer failed to prove its
claim with competent evidence that the employees’ strike paralyzed its operations
and resulted in the withdrawal of its clients’ orders, the retrenchment of its employees
must be declared illegal.73
Moreover, as the Court ruled in the case of EMCO Plywood Corporation, 74 it must be
shown that the employer resorted to other means but these proved to be insufficient
or inadequate, such as cost reduction, lesser investment on raw materials,
adjustment of the work routine to avoid scheduled power failure, reduction of the
bonuses and salaries of both management and rank-and-file, improvement of
manufacturing efficiency, and trimming of marketing and advertising costs. In the
instant case, there is no proof that PAL engaged in cost-cutting measures other than
a mere reduction in its fleet of aircraft and the retrenchment of 5,000 of its personnel.
The only manifestation of PAL’s attempt at exhausting other possible measures
besides retrenchment was when it conducted negotiations and consultations with
FASAP which, however, ended nowhere. None of the plans and suggestions taken up
during the meetings was implemented. On the other hand, PAL’s September 4, 1998
offer of shares of stock to its employees was adopted belatedly, or only after its more
than 1,400 cabin crew personnel were retrenched. Besides, this offer can hardly be
considered to be borne of good faith, considering that it was premised on the
condition that, if accepted, all existing CBAs between PAL and its employees would
have to be suspended for 10 years. When the offer was rejected by the employees,
PAL ceased its operations on September 23, 1998. It only resumed business when
the CBA suspension clause was ratified by the employees in a referendum
subsequently conducted.75 Moreover, this stock distribution scheme does not do
away with PAL’s expenditures or liabilities, since it has for its sole consideration the
Page 95
commitment to suspend CBAs with its employees for 10 years. It did not improve the
financial standing of PAL, nor did it result in corporate savings, vis-à-vis the financial
difficulties it was suffering at the time.
Also, the claim that PAL saved P24 million monthly due to the implementation of the
retrenchment program does not prove anything; it has not been shown to what extent
or degree such savings benefited PAL, vis-à-vis its total expenditures or its overall
financial position. Likewise, its claim that its liabilities reached P90 billion, while its
assets amounted to P85 billion only – or a debt to asset ratio of more than 1:1 – may
not readily be believed, considering that it did not submit its audited financial
statements. All these allegations are self-serving evidence.
Interestingly, PAL submitted its audited financial statements only when the case was
the subject of certiorari proceedings in the Court of Appeals by attaching in its
Comment76 a copy of its consolidated audited financial statements for the years 2002,
2003 and 2004.77 However, these are not the financial statements that would have
shown PAL’s alleged precarious position at the time it implemented the massive
retrenchment scheme in 1998. PAL should have submitted its financial statements for
the years 1997 up to 1999; and not for the years 2002 up to 2004 because these
financial statements cover a period markedly distant to the years in question, which
make them irrelevant and unacceptable.
Neither could PAL claim to suffer from imminent or resultant losses had it not
implemented the retrenchment scheme in 1998. It could not have proved that
retrenchment was necessary to prevent further losses, because immediately
thereafter – or in February 199978 – PAL was on the road to recovery; this is the
airline’s bare admission in its Comment to the instant petition. 79 During that period, it
was recalling to duty cabin crew it had previously retrenched. In March 2000, PAL
declared a net income of P44.2 million. In March 2001, it reported a profit of P419
million. In March 2003, it again registered a net income of P295 million. 80 All these
facts are anathema to a finding of financial difficulties.
Finally, what further belied PAL’s allegation that it was suffering from substantial
actual and imminent losses was the fact that in December 1998, PAL submitted a
"stand-alone" rehabilitation plan to the SEC, and on June 4, 1999, or less than a year
after the retrenchment, the amount of US$200 million was invested directly into PAL
by way of additional capital infusion for its operations. 81 These facts betray PAL’s
claim that it was in dire financial straits. By submitting a "stand-alone" rehabilitation
plan, PAL acknowledged that it could undertake recovery on its own and that it
possessed enough resources to weather the financial storm, if any.
Thus said, it was grave error for the Labor Arbiter, the NLRC and the Court of
Appeals, to have simply assumed that PAL was in grievous financial state, without
requiring the latter to substantiate such claim. It bears stressing that in retrenchment
cases, the presentation of proof of financial difficulties through the required
documents, preferably audited financial statements prepared by independent
auditors, may not summarily be done away with.
That FASAP admitted and took for granted the existence of PAL’s financial woes
cannot excuse the latter from proving to the Court’s satisfaction that indeed it was
LABOR LAW 2- SESSION 2 CASES
bleeding financially. It was the airline’s obligation to prove that it was in such financial
distress; that it was necessary to implement an appropriate retrenchment scheme;
that it had to undergo a retrenchment program in proportion to or commensurate with
the extent of its financial distress; and that, it was carrying out the scheme in good
faith and without undermining the security of tenure of its employees. The Court is
mindful that the characterization of an employee’s services as no longer necessary or
sustainable, and therefore, properly terminable, is an exercise of business judgment
on the part of the employer, and that the wisdom or soundness of such
characterization or decision is not subject to discretionary review, provided of course
that violation of law or arbitrary or malicious action is not shown. 82
The foregoing principle holds true with respect to PAL’s claim in its Comment that the
only issue is the manner by which its retrenchment scheme was carried out because
the validity of the scheme has been settled in its favor. 83Respondents might have
confused the right to retrench with its actual retrenchment program, treating them as
one and the same. The first, no doubt, is a valid prerogative of management; it is a
right that exists for all employers. As to the second, it is always subject to scrutiny in
regard to faithful compliance with substantive and procedural requirements which the
law and jurisprudence have laid down. The right of an employer to dismiss an
employee differs from and should not be confused with the manner in which such
right is exercised.84
FOURTH ELEMENT: That the employer exercises its prerogative to retrench
employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees’ right to security of tenure.
Concededly, retrenchment to prevent losses is an authorized cause for terminating
employment and the decision whether to resort to such move or not is a management
prerogative. However, the right of an employer to dismiss an employee differs from
and should not be confused with the manner in which such right is exercised. It must
not be oppressive and abusive since it affects one's person and property.85
In Indino v. National Labor Relations Commission,86 the Court held that it is almost an
inflexible rule that employers who contemplate terminating the services of their
workers cannot be so arbitrary and ruthless as to find flimsy excuses for their
decisions. This must be so considering that the dismissal of an employee from work
involves not only the loss of his position but more important, his means of livelihood.
Applying this caveat, it is therefore incumbent for the employer, before putting into
effect any retrenchment process on its work force, to show by convincing evidence
that it was being wrecked by serious financial problems. Simply declaring its state of
insolvency or its impending doom will not be sufficient. To do so would render the
security of tenure of workers and employees illusory. Any employer desirous of
ridding itself of its employees could then easily do so without need to adduce proof in
support of its action. We can not countenance this. Security of tenure is a right
guaranteed to employees and workers by the Constitution and should not be denied
on the basis of mere speculation.
On the requirement that the prerogative to retrench must be exercised in good faith,
we have ruled that the hiring of new employees and subsequent rehiring of
"retrenched" employees constitute bad faith;87 that the failure of the employer to
Page 96
resort to other less drastic measures than retrenchment seriously belies its claim that
retrenchment was done in good faith to avoid losses; 88 and that the demonstrated
arbitrariness in the selection of which of its employees to retrench is further proof of
the illegality of the employer’s retrenchment program, not to mention its bad faith. 89
When PAL implemented Plan 22, instead of Plan 14, which was what it had originally
made known to its employees, it could not be said that it acted in a manner
compatible with good faith. It offered no satisfactory explanation why it abandoned
Plan 14; instead, it justified its actions of subsequently recalling to duty retrenched
employees by making it appear that it was a show of good faith; that it was due to its
good corporate nature that the decision to consider recalling employees was made.
The truth, however, is that it was unfair for PAL to have made such a move; it was
capricious and arbitrary, considering that several thousand employees who had long
been working for PAL had lost their jobs, only to be recalled but assigned to lower
positions (i.e., demoted), and, worse, some as new hires, without due regard for their
long years of service with the airline.
The irregularity of PAL’s implementation of Plan 14 becomes more apparent when it
rehired 140 probationary cabin attendants whose services it had previously
terminated, and yet proceeded to terminate the services of its permanent cabin crew
personnel.
In sum, we find that PAL had implemented its retrenchment program in an arbitrary
manner and with evident bad faith, which prejudiced the tenurial rights of the cabin
crew personnel.
Moreover, the management’s September 4, 1998 offer to transfer PAL shares of
stock in the name of its employees in exchange for the latter’s commitment to
suspend all existing CBAs for 10 years; the closure of its operations when the offer
was rejected; and the resumption of its business after the employees relented; all
indicate that PAL had not acted in earnest in regard to relations with its employees at
the time.
FIFTH ELEMENT: That the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the employees, such as
status, efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.
In selecting employees to be dismissed, fair and reasonable criteria must be used,
such as but not limited to: (a) less preferred status (e.g., temporary employee), (b)
efficiency and (c) seniority.90
In Villena v. National Labor Relations Commission, 91 the Court considered seniority
an important aspect for the validity of a retrenchment program. In Philippine
Tuberculosis Society, Inc. v. National Labor Union,92 the Court held that the
implementation of a retrenchment scheme without taking seniority into account
rendered the retrenchment invalid, even as against factors such as dependability,
adaptability, trainability, job performance, discipline, and attitude towards work.
LABOR LAW 2- SESSION 2 CASES
In the implementation of its retrenchment scheme, PAL evaluated the cabin crew
personnel’s performance during the year preceding the retrenchment (1997), based
on the following set of criteria or rating variables found in the Performance Evaluation
Form of the cabin crew personnel’s Grooming and Appearance Handbook:
A. INFLIGHT PROFICIENCY EVALUATION – 30%
B. JOB PERFORMANCE – 35%
· Special Award – +5
· Commendations – +2
· Appreciation – +1
· Disciplinary Actions – Reminder (-3), Warning/Admonition & Reprimands (-5),
Suspension (-20), Passenger Complaints (-30), Appearance (-10)
C. ATTENDANCE – 35%
· Perfect Attendance – +2
· Missed Assignment – -30
· Sick Leaves in excess of allotment and other leaves in excess of allotment – -
20
· Tardiness – -10 93
The appellate court held that there was no need for PAL to consult with FASAP
regarding standards or criteria that the airline would utilize in the implementation of
the retrenchment program; and that the criteria actually used which was unilaterally
formulated by PAL using its Performance Evaluation Form in its Grooming and
Appearance Handbook was reasonable and fair. Indeed, PAL was not obligated to
consult FASAP regarding the standards it would use in evaluating the performance of
the each cabin crew. However, we do not agree with the findings of the appellate
court that the criteria utilized by PAL in the actual retrenchment were reasonable and
fair.
This Court has repeatedly enjoined employers to adopt and observe fair and
reasonable standards to effect retrenchment. This is of paramount importance
because an employer’s retrenchment program could be easily justified considering
the subjective nature of this requirement. The adoption and implementation of unfair
and unreasonable criteria could not easily be detected especially in the retrenchment
of large numbers of employees, and in this aspect, abuse is a very distinct and real
possibility. This is where labor tribunals should exercise more diligence; this aspect is
Page 97
where they should concentrate when placed in a position of having to judge an
employer’s retrenchment program.
Indeed, the NLRC made a detailed listing of the retrenchment scheme based on the
ICCD Masterank and Seniority 1997 Ratings. It found the following:
1. Number of employees retrenched due to inverse seniority rule and other
reasons -- 454
2. Number of employees retrenched due to excess sick leaves -- 299
3. Number of employees who were retrenched due to excess sick leave and
other reasons -- 61
4. Number of employees who were retrenched due to other reasons -- 107
5. Number of employees who were demoted -- 552
Total -- 1,473.94
Prominent from the above data is the retrenchment of cabin crew personnel due to
"other reasons" which, however, are not specifically stated and shown to be for a
valid cause. This is not allowed because it has no basis in fact and in law.
Moreover, in assessing the overall performance of each cabin crew personnel, PAL
only considered the year 1997. This makes the evaluation of each cabin attendant’s
efficiency rating capricious and prejudicial to PAL employees covered by it. By
discarding the cabin crew personnel’s previous years of service and taking into
consideration only one year’s worth of job performance for evaluation, PAL virtually
did away with the concept of seniority, loyalty and past efficiency, and treated all
cabin attendants as if they were on equal footing, with no one more senior than the
other.
In sum, PAL’s retrenchment program is illegal because it was based on wrongful
premise (Plan 14, which in reality turned out to be Plan 22, resulting in retrenchment
of more cabin attendants than was necessary) and in a set of criteria or rating
variables that is unfair and unreasonable when implemented. It failed to take into
account each cabin attendant’s respective service record, thereby disregarding
seniority and loyalty in the evaluation of overall employee performance.
Anent the claim of unfair labor practices committed against petitioner, we find the
same to be without basis. Article 261 of the Labor Code provides that violations of a
CBA, except those which are gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the parties’ CBA. Moreover,
"gross violations of CBA" under the same Article referred to flagrant and/or malicious
refusal to comply with the economic provisions of such agreement, which is not the
issue in the instant case.1avvphi1
LABOR LAW 2- SESSION 2 CASES
Also, we fail to see any specific instance of union busting, oppression or harassment
and similar acts of FASAP’s officers. The fact that majority of FASAP’s officers were
either retrenched or demoted does not prove restraint or coercion in their right to
organize. Instead, we see a simple retrenchment scheme gone wrong for failure to
abide by the stringent rules prescribed by law, and a failure to discharge the
employer’s burden of proof in such cases.
Quitclaims executed as a result of PAL’s illegal retrenchment program are likewise
annulled and set aside because they were not voluntarily entered into by the
retrenched employees; their consent was obtained by fraud or mistake, as volition
was clouded by a retrenchment program that was, at its inception, made without
basis. The law looks with disfavor upon quitclaims and releases by employees
pressured into signing by unscrupulous employers minded to evade legal
responsibilities. As a rule, deeds of release or quitclaim cannot bar employees from
demanding benefits to which they are legally entitled or from contesting the legality of
their dismissal. The acceptance of those benefits would not amount to estoppel. The
amounts already received by the retrenched employees as consideration for signing
the quitclaims should, however, be deducted from their respective monetary
awards.95
In Trendline Employees Association-Southern Philippines Federation of Labor v.
NLRC,96 we held that where the employer led its employees to believe that the
employer was suffering losses and as a result thereof accept retrenchment by
executing quitclaims and waivers, there was evident bad faith on the part of the
employer justifying the setting aside of the quitclaims and waivers executed.
As to PAL’s recall and rehire process (of retrenched cabin crew employees), the
same is likewise defective. Considering the illegality of the retrenchment, it follows
that the subsequent recall and rehire process is likewise invalid and without effect.
A corporate officer is not personally liable for the money claims of discharged
corporate employees unless he acted with evident malice and bad faith in terminating
their employment.97 We do not see how respondent Patria Chiong may be held
personally liable together with PAL, it appearing that she was merely acting in
accordance with what her duties required under the circumstances. Being an
Assistant Vice President for Cabin Services of PAL, she takes direct orders from
superiors, or those who are charged with the formulation of the policies to be
implemented.
With respect to moral damages, we have time and again held that as a general rule, a
corporation cannot suffer nor be entitled to moral damages. A corporation, being an
artificial person and having existence only in legal contemplation, has no feelings, no
emotions, no senses; therefore, it cannot experience physical suffering and mental
anguish. Mental suffering can be experienced only by one having a nervous system
and it flows from real ills, sorrows, and griefs of life – all of which cannot be suffered
by an artificial, juridical person.98 The Labor Arbiter’s award of moral damages was
therefore improper.
WHEREFORE, the instant petition is GRANTED. The assailed Decision of the Court
of Appeals in CA-G.R. SP No. 87956 dated August 23, 2006, which affirmed the
Page 98
Decision of the NLRC setting aside the Labor Arbiter’s findings of illegal retrenchment
and its Resolution of May 29, 2007 denying the motion for reconsideration, are
REVERSED and SET ASIDE and a new one is rendered:

1. FINDING respondent Philippine Airlines, Inc. GUILTY of illegal dismissal;

2. ORDERING Philippine Air Lines, Inc. to reinstate the cabin crew personnel
who were covered by the retrenchment and demotion scheme of June 15, 1998
made effective on July 15, 1998, without loss of seniority rights and other
privileges, and to pay them full backwages, inclusive of allowances and other
monetary benefits computed from the time of their separation up to the time of
their actual reinstatement, provided that with respect to those who had received
their respective separation pay, the amounts of payments shall be deducted from
their backwages. Where reinstatement is no longer feasible because the
positions previously held no longer exist, respondent Corporation shall pay
backwages plus, in lieu of reinstatement, separation pay equal to one (1) month
pay for every year of service;

3. ORDERING Philippine Airlines, Inc. to pay attorney’s fees equivalent to ten

percent (10%) of the total monetary award.

Costs against respondent PAL.

SO ORDERED.

LABOR LAW 2- SESSION 2 CASES Page 99

ULP of Labor Organizations Restraint or Coercion
G.R. No. L-18810 April 23, 1963
MD TRANSIT and TAXI CO., INC. and CAM TRANSPORTATION
CO., petitioners, vs.BIENVENIDO DE GUZMAN, CECILIO CAJOLES and
BERNARDITA ORACION, respondents.
Appeal by certiorari, taken by petitioners MD Transit & Taxi Co. Inc., and CAM
Transportation Co. from a decision of the Court of Industrial Relations directing the
reinstatement of complainants Bienvenido de Guzman, Bernardita Oracion, and
Cecilio Cajoles, as members of the MD-CAM Local 3 (PTGWO), as well as the
reinstatement of Bernardita Oracion, and Bienvenido de Guzman as employees of the
MD Transit & Taxi Co., Inc. with back wages from October 27 and November 9, 1958,
respectively, and that of Cecilio Cajoles as employee of CAM Transportation Co.,
from October 27, 1958, until actual reinstatement in all cases, and, likewise, directing
the Chief of the Examining Division of said Court or his duly authorized
representative, to proceed to the premises of said petitioners and go over the records
thereof "to determine the back wages" of said "complainants and thereafter to submit
a report to the court for further disposition."
Petitioners MD Transit & Taxi Co., Inc. and CAM Transportation Co. are separate
entities engaged in business as common carriers, but under joint management, which
had entered into a collective bargaining agreement with the MD-CAM Local 3
(PTGWO), a labor union composed of employees of said entities, to which prior to
October 27, 1958, complainants Bienvenido de Guzman, Cecilio Cajoles and
Bernardita Oracion were rendering services, the first two as drivers and the last as
conductress. On October 23, 1958, complainants secured the signatures of their co-
employees to a petition to the Department of Labor for an auditing of the mutual aid
fund of said Union, collected by its president, Felipe de Guzman. As the auditing
requested took place, said Department found on October 27, 1958, that there was a
shortage of over P22,000.00 in the aforementioned mutual aid fund. The matter was,
accordingly, referred to the City Fiscal of Quezon City for appropriate action. On the
same date, complainants were suspended as members of the Union by order of said
Felipe de Guzman, and several days later, or on November 9, 1958, they were
expelled from the Union by its Board of Directors. Complainants were, likewise,
dismissed by the petitioners, although the parties do not agree on the date on which
this took place. Hence, complainants brought their case to the Court of Industrial
Relations, an Acting Prosecutor of which subsequently filed a complaint charging the
petitioners, as well as the President, the Vice-President and the members of the
Board of Directors of the Union, with unfair labor practice.
In their answer, petitioners denied the commission of unfair labor practice on their
part and alleged that complainants' dismissal was due: 1) to their absence from work
for four (4) consecutive days, in violation of their collective bargaining contract; and 2)
to a communication of the Union to the petitioners urging the same to dismiss the
complainants pursuant to a closed shop stipulation in said contract, in view of their
expulsion from the Union. The answer filed by the officers of the latter was
substantially of the same tenor.
LABOR LAW 2- SESSION 2 CASES
In due course, the lower court rendered the aforementioned decision in favor of the
complainants, upon the ground that their expulsion from the Union was illegal it
having been effected without previous notice and hearing, and its true cause being,
not their alleged absence from work, but the complaint by them filed with the
Department of Labor for alleged irregularities in the handling of the mutual aid fund of
the Union, and that complainants were dismissed by the petitioners before the latter
had received the communication, Exhibit 5, of the Union, asking the petitioners to
dismiss the complainants owing to their aforementioned expulsion from the Union. A
reconsideration of said decision having been denied by the lower court sitting en
banc, the petitioners have interposed the present appeal by certiorari, contending: 1)
that having acted in compliance with a valid close shop provision of the contract
above referred to, petitioners cannot be convicted of the unfair labor practice
commented by the Union; and 2) that the lower court had acted on mere conjectures,
and, consequently, had erred in findings that complainants were dismissed by the
petitioners before the latter had received said letter of the Union, Exhibit 5. The
officers of the Union did not appeal from the aforementioned decision.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1äwphï1.ñët
We find no merit in this appeal of petitioners herein, the lower court found that
complainants were dismissed before said Exhibit 5 was received by petitioners
herein. Said dismissal could not have been made, therefore, in pursuance either of
the request contained in said communication or of the closed shop provision of the
aforementioned collective bargaining agreement. Moreover, the lower court found and
this amply supported by the evidence or record — that complainants' suspension by
the President of the Union, and their subsequent expulsion by its Board of Directors,
were due to the charges preferred by said complainants against the officers of the
Union, which led to the discovery of an alleged shortage in its Mutual Aid Fund, and
the preference of the case to the City Fiscal of Quezon City. Thus the Union was
guilty of unfair labor practice under subdivision (b) (2) of Section 4 of Republic Act No.
875. Necessarily, this was, also, the reason why complainants were dismissed by the
petitioners herein — since there is no other possible cause for said dismissal, in the
light of circumstances adverted to above — thereby committing an unfair labor
practice under subdivision (a) (5) of said Section 4.
With respect to the sufficiency of the evidence in support of the finding that
complainants were dismissed by petitioners before the latter had receive the
aforementioned Exhibit 5, the record abundantly shows that complainants were not
allowed by agents of petitioners herein to enter its premises or work for the petitioners
since November 9, 1958 despite the fact that said communication was not written and
sent until November 10, 1958.
WHEREFORE, with the modification that the backwages of the three (3)
complainants shall begin from November 9, 1958, which is the date of their dismissal
by the petitioners, the decision appealed from is hereby affirmed, in all other respects,
with costs against the petitioners.
Page 100
Causing Employer Discrimination
Violation of the Duty to Bargain Collectivel
G.R. No. L-38258 November 19, 1982
LAKAS NG MANGGAGAWANG MAKABAYAN (LAKAS), petitioner, vs.MARCELO
ENTERPRISES and MARCELO TIRE & RUBBER CORP., MARCELO RUBBER
AND LATEX PRODUCTS, MARCELO STEEL, CORPORATION, MARCELO
CHEMICAL & PIGMENT CORP., POLARIS MARKETING CORPORATION and
THE COURT OF INDUSTRIAL RELATIONS, respondents,
G.R. No. L-38260 November 19, 1982
MARCELO TIRE & RUBBER CORPORATION, MARCELO RUBBER & LATEX
PRODUCTS, INC., MARCELO STEEL CORPORATION, POLARIS MARKETING
CORPORATION, MARCELO CHEMICAL AND PIGMENT CORP., MARCELO
ENTERPRISES, under which name or style they are also
known, petitioners, vs.LAKAS NG MANGGAGAWANG MAKABAYAN (LAKAS)
AND THE HONORABLE COURT OF INDUSTRIAL RELATIONS, respondents.
Separate appeals by certiorari from the Decision of the Court of Industrial Relations
(Manila) dated July 20, 1973, as well as the Resolution of the court en banc dated
January 24, 1974 denying the reconsideration thereof rendered in ULP Case No.
4951 entitled, "Lakas ng Manggagawang Makabayan, Petitioner, versus Marcelo
Enterprises and Marcelo Tire and Rubber Corporation, Marcelo Rubber and Latex
Products, Marcelo Steel Corporation, Polaris Marketing Corporation, and Marcelo
Chemical and Pigment Corporation, Respondents. "
The antecedent facts as found by the respondent Court of Industrial Relations
embodied in the appealed Decision are correct, supported as they are by the
evidence on record. Nevertheless, We find it necessary to make a re-statement of the
facts that are integrated and inter-related, drawn from the voluminuous records of
these cases which are herein jointly decided, since it would only be from a statement
of all the relevant facts of the cases made in all fullness, collectively and
comprehensively, can the intricate issues posed in these appeals be completely and
judiciously resolved.
It appears that prior to May 23, 1967, the date which may be stated as the start of the
labor dispute between Lakas ng Manggagawang Makabayan (hereinafter referred to
as complainant LAKAS) and the management of the Marcelo Tire and Rubber
Corporation, Marcelo Rubber and Latex Products, Inc., Polaris Marketing
Corporation, Marcelo Chemical and Pigment Corporation, and the Marcelo Steel
Corporation (Nail Plan) (hereinafter referred to as respondent Marcelo Companies)
the Marcelo Companies had existing collective bargaining agreements (CBAs) with
the local unions then existing within the appropriate bargaining units, viz: (1) the
respondent Marcelo Tire and Rubber Corporation, with the Marcelo Camelback Tire
and Foam Union (MACATIFU); (2) the respondent Marcelo Rubber and Latex
Products, Inc., with the Marcelo Free Workers Union (MFWU); and (3) the respondent
Marcelo Steel Corporation with the United Nail Workers Union (UNWU). These
existing CBAs were entered into by and between the parties while the aforestated
LABOR LAW 2- SESSION 2 CASES
local unions were then affiliated with a national federation, the Philippine Social
Security Labor Union (PSSLU).
It is well to note from the records that when the aforestated CBAs of the said local
unions were nearing their respective expiration dates (March 15,1967) for MACATIFU
and UNWU, and June 5, 1967 for MFWU), the general situation within the ranks of
labor was far from united. The MACATIFU in respondent Marcelo Tire and Rubber
Corporation, then headed by Augusto Carreon, did not enjoy the undivided support of
all the workers of the respondent corporation, as there existed a rival union, the
Marcelo United Employees and Workers Association (MUEWA) whose president was
then Paulino Lazaro. As events would later develop, the members of the MACATIFU
of Augusto Carreon joined the MUEWA of Paulino Lazaro, after the latter filed a
petition for direct certification which was granted by the industrial court's Order of July
5, 1967 recognizing and certifying MUEWA as the sole and exclusive bargaining
representative of all the regular workers of the respondent corporation. The union
rivalry between MACATIFU and MUEWA did not, however, end with the Order of July
5. 1967, but more than ever developed into a more pressing problem of union
leadership because Augusto Carreon also claimed to be the president of the MUEWA
by virtue of the affiliation of his MACATIFU members with MUEWA. The records also
reveal that even the ranks of MFWU in respondent Marcelo Rubber and Latex
Products, Inc. was divided between those supporting Ceferino Ramos and Cornelio
Dizon who both claimed the presidency in said union. Only the UNWU in respondent
Marcelo Steel Corporation was then enjoying relative peace as Jose Roque was
solely recognized as the union's president. The events that followed are hereinafter
stated in chronological order for a clearer understanding of the present situation.
On March 14, 1967, the management of respondent Marcelo Steel Corporation
received a letter requesting the negotiation of a new CBA together with a draft
thereof, from the PSSLU president, Antonio Diaz, for and in behalf of UNWU whose
CBA was to expire the following day. Similar letters and proposals were, likewise,
sent to the management of respondent Marcelo Tire and Rubber Corporation for and
in behalf of MACATIFU, and to respondent Marcelo Rubber and Latex Products for
and in behalf of MFWU, whose respective CBAs were both to expire on June 5, 1967.
However, on that very same day of March 14, 1967, the management of respondent
Marcelo Tire and Rubber Corporation received a letter from the UNWU president,
Jose Roque, disauthorizing the PSSLU from representing his union.
Then, on April 14, 1967, Paulino Lazaro of MUEWA requested negotiation of a new
CBA with respondent Marcelo Tire and Rubber Corporation, submitting therewith his
union's own proposals.
Again, on May 3, 1967, the management of respondents Marcelo Tire and Rubber
Corporation and Marcelo Rubber and Latex Products, Inc., received another letter
requesting negotiation of new CBAs also for and in behalf of the MACATIFU and the
MFWU from J.C. Espinas & Associates.
Finally, on May 23, 1967, the management of all the respondent Marcelo Companies
received a letter from Prudencio Jalandoni, the alleged president of the complainant
LAKAS. In this letter of May 23, 1967, the complainant LAKAS informed management
Page 101
of the affiliation of the Marcelo United Labor Union (MULU) with it. Included therein
was a 17-points demand for purposes of the requested collective bargaining with
management.
Confronted with a problem of whom to recognize as the bargaining representative of
all its workers, the management of all the respondent Marcelo Companies
understandably dealt with the problem in this wise, viz: (1) it asked proof of authority
to represent the MFWU and the MACATIFU from J.C. Espinas & Associates; and (2)
in a letter dated May 25, 1967, it apprised PSSLU, Paulino Lazaro of MUEWA and
complainant LAKAS of the fact of the existing conflicting demands for recognition as
the bargaining representative in the appropriate units involved, consequently
suggesting to all to settle the question by filing a petition for certification election
before the Court of Industrial Relations, with an assurance that the management will
abide by whatever orders the industrial court may issue thereon.
PSSLU demurred to management's stand and informed them of its intention to file an
unfair labor practice case because of management's refusal to bargain with it,
pointedly stating that it was with the PSSLU that the existing CBAs were entered into.
Again, as events later developed, on or about the middle of August 1981, PSSLU filed
a Notice of Strike which became the subject of conciliation with the respondent
companies. In the case of MUEWA, Paulino Lazaro threatened that his union will
declare a strike against respondent Marcelo Tire and Rubber Corporation. On the
other hand, complainant LAKAS for MULU filed on June 13, 1967 before the Bureau
of Labor Relations a Notice of Strike against all the respondent Marcelo Companies,
alleging as reasons therefore harrassment of union officers and members due to
union affiliation and refusal to bargain. This aforestated Notice of Strike was,
however, withdrawn on July 14, 1967.
In the meantime, as stated earlier in this Decision, the MUEWA filed a petition for
direct certification before the industrial court. There being no other union or interested
person appearing before the court except the MUEWA, and finding that MUEWA
represented more than the majority of the workers in respondent Marcelo Tire and
Rubber Corporation, the court granted the petition and by Order of July 5, 1967,
certified MUEWA of Paulino Lazaro as the sole and exclusive bargaining
representative of all the regular workers in said respondent.
On July 11, 1967, Augusto Carreon of MACATIFU wrote the management of
respondent Marcelo Tire and Rubber Corporation expressly stating that no one was
yet authorized to submit proposals for and in behalf of the union for the renewal of its
CBA, adding that "(a)ny group representing our Union is not authorized and should
not be entertained."
On July 14, 1967, as earlier stated, the Notice of Strike filed by complainant LAKAS
was withdrawn pursuant to a Memorandum Agreement signed on the same day by
management and LAKAS.
Thereafter, or on July 20, 1967, letters of proposal for collective bargaining were sent
by Prudencio Jalandoni of LAKAS to all the respondent Marcelo companies. In
answer thereto, management wrote two (2) letters, both dated July 24, 1967,
addressed to Jalandoni, expressing their conformity to sit down in conference on the
LABOR LAW 2- SESSION 2 CASES
points to be negotiated as soon as LAKAS can present evidence of authority to
represent the employees of respondent corporations in said conference. The records
disclose that it was in the atmosphere of constant reservation on the part of
management as to the question of representation recognition that complainant
LAKAS and management sat down for CBA negotiations.
The first conference was held on August 14, 1967, followed by one on August 16,
1967 whereby management, in formal reply to union's economic demands, stated its
willingness to give pay adjustments and suggested renewal of other provisions of the
old CBAs. A third conference was set although no one from LAKAS or the local
unions appeared. On August 29, 1967, the fourth conference was held where, from a
letter dated August 30, 1967 from Jose Delfin of Management to Jose B. Roque of
UNWU, can be inferred that in the conference of August 29, 1967, the management
with respect to respondent Marcelo Steel Corporation, agreed to give pay
adjustments from P0.15 to P0.25 to meritorious cases only, and to increase its
contribution to the retirement fund from 1-1/2% to 3% provided the employees'
contribution will be increased from 1% to 2%. Management likewise suggested the
renewal of the other provisions of the existing CBA. Management's offers were not
accepted by complainant LAKAS who insisted on the grant of all its economic
demands and in all of the Marcelo Companies.
As it would later appear during the trial of the ULP case below, and as found as a fact
by the respondent court, only the economic proposals of complainant LAKAS were
the matters taken up in all these CBA conferences.
Less than a week after the fourth CBA conference, or on September 4, 1967, the
complainant LAKAS declared a strike against all the respondent Marcelo Companies.
Acts of violence and vandalism attended the picketing. Ingress and egress at the
respondents' premises were successfully blocked. One worker, Plaridel Tiangco, was
manhandled by the strikers and was hospitalized. Windows of the Chemical Plant
were badly damaged. As a consequence, ten (10) strikers were later charged before
the Municipal Court of Malabon, Rizal, four of whom were convicted while the others
were at large.
On September 13, 1967, the respondent Marcelo Companies obtained a writ of
preliminary injunction from the Court of First Instance of Rizal enjoining the strikers
from preventing the ingress and egress at the respondents' premises. The following
day, a "Return to Work Agreement" (Exhibit "A") was executed by and among the
management, represented by Jose P. Marcelo and Jose A. Delfin, and the local
unions, together with complainant LAKAS, represented by Prudencio Jalandoni for
LAKAS, Jose B. Roque for UNWU, Cornelio Dizon for MFWU and Augusto Carreon
for MUEWA, the representations of the latter two, however, being expressly subjected
by management to non-recognition. Aside from providing for the immediate lifting of
the picket lines, the agreement, more pertinently provides, to wit,
4. The management agrees to accept all employees who struck without
discrimination or harassment consistent with an orderly operation of its various
plants, provided it is understood that management has not waived and shall
continue to exercise freely its rights and prerogatives to punish, discipline and
Page 102
 dismiss its employees in accordance with law and existing rules and regulations
that cases filed in court will be allowed to take their normal course.
By virtue of this agreement, the respondent Marcelo Companies resumed operations
and the strikers went back to work. As found by the respondent court, all strikers were
admitted back to work, except four (4) namely, Wilfredo Jarquio, Leonardo Sakdalan,
Jesus Lim and Arlington Glodeviza, who chose not to report for work because of the
criminal charges filed against them before the municipal court of Malabon and
because of the administrative investigation conducted by management in connection
with the acts of violence and vandalism committed during the September 4 strike.
Together with Jesus Lim, three other strikers who reported for work and were
admitted, namely, Jose Roque, Alfredo Cabel and Ramon Bataycan, were convicted
in said criminal case.
After the resumption of normal business, the management of the respondent Marcelo
Companies, the complainant LAKAS together with the local unions resumed their
bargaining negotiations subject to the conditions earlier mentioned. On October 4,
1967, the parties met and discussed the bargaining unit to be covered by the CBA in
case one is entered into, union shop arrangement, check-off, waiver of the employer
of the notice requirement in case of employees' separation, separation pay in cash
equivalent to 12-days pay for every year of service, retirement plan, and one or two
years duration of the CBA. It was also agreed in that meeting not to negotiate with
respect to respondent Marcelo Tire and Rubber Corporation inasmuch as a CBA had
already been entered into by management with the MUEWA of Paulino Lazaro, the
recently certified union in said respondent.
Finally, on October 13, 1967, the negotiations reached its final stage when the
management of respondents Marcelo Rubber and Latex Products, Inc. and Marcelo
Steel Corporation gave the complainant LAKAS a copy of management's drafts of the
collective bargaining proposals for MFWU and UNWU, respectively.
Unexpectedly and without filing a notice of strike, complainant LAKAS declared
another strike against the respondent Marcelo Companies on November 7, 1967,
resulting in the complete paralyzation of the business of said respondents. Because
of this second strike, conciliation conferences were again set by the Conciliation
Service Division of the Department of Labor on November 8, November 23, and
December 4, 1967. On the last aforementioned date, however, neither complainant
LAKAS nor the local unions appeared.
Instead, on December 13, 1967, Prudencio Jalandoni of complainant LAKAS, in
behalf of the striking unions, coursed a letter (Exhibit "B") to Jose P. Marcelo of
management advising that, "on Monday, December 18, 1967, at 7:00 o'clock in the
morning, all your striking workers and employees will return to work under the same
terms and conditions of employment before the strike." The letter was attested to by
Cornelio Dizon for MFWU, Jose Roque for UNWU and Augusto Carreon for MUEWA.
On December 15,1967, the Bureau of Labor Relations was informed by the
complainant LAKAS who requested for the Bureau's representative to witness the
return of the strikers to their jobs.
LABOR LAW 2- SESSION 2 CASES
The records reveal that in the meantime, prior to December 13, 1967, some of the
strikers started going back to work and were admitted; and that as early as December
4, 1967, the management started posting notices at the gates of the respective
premises of the respondents for strikers to return back to work, Similar notices were
also posted on December 18 and December 27, 1967.
Upon their return, the reporting strikers were requested to fill up a certain form
(Exhibit "49") wherein they were to indicate the date of their availability for work in
order that they may be scheduled. According to the respondent Marcelo Companies,
this requirement was asked of the strikers for legitimate business reasons within
management prerogative. Several of the strikers filled up the required form and were
accordingly scheduled for work. The remaining others, led and supported by
complainant LAKAS, refused and insisted that they be all admitted back to work
without complying with the aforestated requirement, alleging that the same
constituted a "screening" of the striking workers. As matters stood, Management
refused to forego the requirement; on the other hand, the remaining strikers
demanded to be readmitted without filing up the form for scheduling.
These then constitute the factual background when the complainant LAKAS,
represented by its counsel, Atty. Benjamin C. Pineda, on December 26, 1967 , filed
before the respondent court a charge for unfair labor practice against the respondent
Marcelo Companies, alleging non-readmission of the striking members of the three
(3) affiliated local unions despite the unconditional offer to return to work after the
strike of November 7, 1967. Based on the allegations of the foregoing charge and
after a preliminary investigation conducted by the acting Prosecutor of said
respondent court, the acting Chief Prosecutor, Atty. Antonio Tria Tirona, filed on
February 12, 1968 the instant complaint under authority of Section 5(b) of Republic
Act 875, otherwise known as the Industrial Peace Act.
The Complaint below alleges, among others, to wit:
1. That complainant is a legitimate labor organization, with its affiliates, namely:
Marcelo Free Workers Union, United Nail Workers Union, and Marcelo United
Employees Unions, whose members listed in Annexes "A", "B", and "C" of this
complaint are considered employees of respondent within the meaning of the
Act;
2. ...
xxx xxx xxx
xxx xxx xxx
3. That individual complaints listed in Annexes "A", "B", and "C" of this complaint
are members of the Marcelo United Employees and Workers Association,
Marcelo Free Workers Union, and United Nail Workers Union, respectively; that
the members of the Marcelo United Employees and Workers Union are workers
of respondent Marcelo Tire and Rubber Corporation; that the members of the
Marcelo Free Workers Union compose the workers of the Marcelo Rubber and
Page 103
 Latex Products, Polaris Marketing Corporation, and the members of the United
Nail Workers Union compose the workers of the Marcelo Steel Corporation (Nail
Plant);
4. That each of the aforesaid local unions, before their affiliation with the
complainant union LAKAS, had a collective bargaining agreement with
respondents; that after the expiration of the collective bargaining agreement
above-mentioned and after the above-mentioned local unions affiliated with the
complainant LAKAS, the said federation sent to respondents' president, Jose P.
Marcelo, on May 23, 1967, a letter, requesting for a negotiation for collective
bargaining, together with union proposals thereof, but respondents refused;
5. That after respondents knew of the affiliation of the aforementioned local
unions with the LAKAS, the said respondents, thru their officers and agents
began harassing the union members, discriminated against them by transferring
some of its officers and members from one section to another in such a way that
their work was reduced to manual labor, and by suspending them without
justifiable cause. in spite of long years of service with said respondents;
6. That as a result of the abovementioned unfair labor practice of respondents,
and after complainant sent communication thereto, protesting against the acts of
the above-mentioned, complainant decided to stage a strike on September 4,
1967, after filing a notice of strike with the Department of Labor;
7. That on September 14, 1967, however, Jose P. Marcelo, and Jose A. Delfin,
president and vice-president of the respondents, respectively, on one hand and
the presidents of the three local unions above-mentioned and the national
president of complainant union on the other, entered into a Return-to-Work
Agreement. providing among others, as follows:
4. The management agrees to accept all employees who struck without
discrimination or harassment consistent with an orderly operation of its
various plants provided it is understood that management has not waived
and shall continue to exercise freely its rights and prerogatives to punish,
discipline and dismiss its employees in accordance with law and existing
rules and regulations and that cases filed in Court will be allowed to take
their normal course.
8. That, contrary to the above Return-to-Work agreement, and in violation
thereof, respondents refused to admit the members of the three striking local
unions; that in admitting union members back to work, they were screened in
spite of their long employment with respondent, but respondents gave preference
to the casual employees;
9. That, because of the refusal of the respondents to accept some union
members, in violation of the above-mentioned Return-to-Work agreement and
refusal of respondents to bargain in good faith with complainant, the latter,
together with the members of the three local unions above-mentioned, again
staged a strike on November 7, 1967;
LABOR LAW 2- SESSION 2 CASES
10. That on December 13, 1967, complainant sent a letter to respondents that
the members of the striking unions abovementioned offered to return to work on
December 18, 1967 without any condition, but respondents likewise refused, and
still continue to refuse to reinstate them up to the present;
11. That here to attached are the list of names of the members of the three local
unions above-mentioned who were not admitted back to work by respondents,
marked as Annexes "A ", "B ", and "C and made as an integral part of this
complaint;
12. That the union members listed in Annexes "A", "B", and "C" hereof were not
able to secure substantial employment in spite of diligent efforts exerted by them;
13. That the above unfair labor practice acts of respondents are in violation of
Section 4, subsections 1, 4 and 6 in relation to Sections 13, 14 and 15 of
Republic Act No. 875.
The complaint prayed "that after due hearing, judgment be rendered, declaring
respondents guilty of unfair labor practice, and
(a) Ordering respondents to cease and desist from further committing the acts
complained of;
(b) Ordering respondents to comply with the Return-to-Work agreement dated
September 14, 1967, and to admit back to work the workers listed in annexes
"A", "B " and "C" hereof, with back wages, without loss of seniority rights and
privileges thereof;
(c) Ordering respondents to bargain in good faith with complainant union; and
(d) Granting complainant and its complaining members thereof such other
affirmative reliefs and remedies equitable and proper, in order to effectuate the
policies of the Industrial Peace Act.
On March 16, 1968, after an Urgent Motion for Extension of Time to File Answer, the
respondents filed their Answer denying the material allegations of the Complaint and
alleging as affirmative defenses,
I. That the Collective Bargaining Agreement between respondent Marcelo Steel
Corporation and the United Nail Workers Union expired on March 15, 1967; The
Collective Bargaining Agreement between the United Rubber Workers Union
(which eventually became the Marcelo Free Workers Union) and the respondent
Marcelo Rubber and Latex Products, Inc., expired on June 5, 1967; the
Collective Bargaining Agreement between Marcelo Camelback Tire and Foam
Union and the Marcelo Tire and Rubber Corporation expired on June 5, 1967;
II. That on May 23, 1967, one Mr. Prudencio Jalandoni of complainant addressed
a communication to Mr. Jose P. Marcelo of respondents informing him of the
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 alleged affiliation of the Marcelo United Labor Union with complainant and
submitting a set of collective bargaining proposal to which counsel for
respondents replied suggesting that a petition for certification election be filed
with the Court of Industrial Relations in view of the several demands for
representation recognition;
III. That the transfers of workers from one job to another were made in
accordance with needs of the service. Respondents afforded union officers and
members affected by the transfers the privilege to watch out for vacancies and
select positions they prefer to be in. No suspensions without justifiable cause
were made as alleged in the Complaint;
IV. That between May 23, 1967, the date of their first demand for negotiations,
and September 4, 1967, the start of the first strike, proposals and counter-
proposals were had. Respondents are not aware of whether or not a notice of
strike was filed with the Court of Industrial Relations;
V. That Mr. Jose P. Marcelo is the President of Marcelo Rubber and Latex
Products, Inc., Marcelo Tire and Rubber Corporation, and Marcelo Steel
Corporation, while Mr. Jose A. Delfin is the acting Personnel Manager of
respondent Marcelo Rubber and Latex Products, Inc., Marcelo Tire and Rubber
Corporation, Marcelo Steel Corporation and Marcelo Chemical and Pigment
Corporation;
VI. That respondents did not refuse to admit members of the striking union. Only
four (4) workers who had criminal cases filed against them voluntarily failed to
report to the Personnel Department for administrative investigation;
VII. That after September 14, 1967, all workers of the different respondent
corporations returned to work except the four mentioned in the preceding
paragraph hereof who have pending criminal cases; between September 14,
1967, and November 7, 1967 another strike was declared without justifiable
cause;
VIII. That on November 28, 1967, respondent obtained an injunction from the
Court of First Instance of Rizal, Caloocan City Branch, against the illegal
picketing of the local unions; in the first week of December, 1967, the striking
workers began returning to work; on December 13, 1967, a letter was received
from complainant advising respondents that its striking workers were calling off,
lifting the picket line and returning to work, that from the first week of December,
1967, respondents invited the striking workers desiring to return to work to fill out
an information sheet stating therein their readiness to work and the exact dates
they were available so that proper scheduling could be done; a number of
workers showed no interest in reporting to work; management posted in the
Checkpoint, Bulletin Boards, and the gates notices calling all workers to return to
work but a number of workers obviously were not interested in returning
anymore;
LABOR LAW 2- SESSION 2 CASES
IX. That respondents posted several times lists of names of workers who had not
returned to work with the invitation to return to work, but they did not return to
work;
X. That a number of workers in the list Annexes "A", "B" and "C" have resigned
after they found more profitable employment elsewhere;
XI. That the local unions referred to in the Complaint if they ever had affiliated
with complainant union had subsequently disaffiliated therefrom;
XII. That the strikes called and declared by the striking unions were illegal;
XIII. That the local unions were bargaining in bad faith with respondents,
and praying for the dismissal of the Complaint as well as for the declaration of
illegality of the two (2) strikes called by the striking unions.
Thereafter, the trial commenced. Then on October 24, 1968, a development occurred
which gave a peculiar aspect to the case at bar. A Manifestation and Motion signed
by the respective officers and members of the MUEWA, headed by Paulino Lazaro,
was filed by the said union, alleging, to wit,
l. That the above-entitled case purportedly shows that the Marcelo United
Employees and Workers Association is one of the Complainants being
represented by the Petitioner Lakas ng Manggagawang Makabayan (LMM);
2. That it likewise appears in the above-entitled case that the services of the
herein Petitioner was sought by a certain Augusto Carreon together with his
cohorts who are not members of the Marcelo United Employees and Workers
Association much less connected with the Marcelo Tire and Rubber Corporation
wherein the Marcelo United Employees and Workers Association has an existing
Collective Bargaining Agreement;
3. That to set the records of this Honorable Court straight, the undersigned
officers and members of the Marcelo United Employees and Workers Association
respectfully manliest that the aforesaid organization has no complaint
whatsoever against any of the Marcelo Enterprises;
4. ...
5. ..., the Complaint filed by the Petitioner in the above-entitled case in behalf of
the Marcelo United Employees and Workers Association is without authority from
the latter and therefore the officers and/or representatives of the petitioning labor
organization should be cited for Contempt of Court;
Page 105
 6. ...., the Complaint filed by the Petitioner in the above-entitled case in behalf of
the Marcelo United and Employees and Workers Association should be
considered as withdrawn;
xxx xxx xxx
This was followed by another Manifestation and Motion flied on November 6, 1968
and signed by the officers and members of the UNWU, headed by its President, Juan
Balgos, alleging, to wit,
1. That the above-entitled case purportedly shows that the United Nail Workers
Union is being represented by the Petitioner Lakas ng Manggagawang
Makabayan for the alleged reason that the former is one of the affiliates of the
latter;
2. That on January 15, 1968, all the Officers and members of the United Nail
Workers Union disaffiliated from the herein Petitioning labor organization for the
reason that Petitioning labor organization could not serve the best interest of the
Officers and members of the United Nail Workers Union and as such is a
stumbling block to a harmonious labor- management relations within all the
Marcelo enterprises; ...
3. That the filing of the above-entitled case by the herein Petitioning labor
organization was made over and above the objections of the officers and
members of the United Nail Workers Union;
4. That in view of all the foregoing, the Officers and members of the United Nail
Workers Union do hereby disauthorize the Petitioner of the above-entitled case
(Re:: Lakas ng Manggagawang Makabayan) from further representing the United
Nail Workers Union in the above-entitled case;
5. That in view further of the fact that the filing of the above-entitled case was
made over and above the objections of the Officers and members of the United
Nail Workers Union, the latter therefore manifest their intention to cease and
desist as they hereby ceased and desisted from further prosecuting the above-
entitled case in the interest of a harmonius labor-management relation within the
Marcelo Enterprises;
xxx xxx xxx
Likewise, a Manifestation and Motion signed by the Officers and members of the
MFWU, headed by its president, Benjamin Mañaol, dated October 28, 1968 and filed
November 6, 1968, stated the same allegations as the Manifestation and Motion filed
by the UNWU quoted above, except that the disaffiliation of the MFWU from LAKAS
was made effective January 25, 1968. The Resolutions of Disaffiliation of both MFWU
and UNWU were attached to these Manifestations.
LABOR LAW 2- SESSION 2 CASES
On November 19, 1968, complainant LAKAS filed an Opposition to these
Manifestations and Motions, materially alleging that, to wit:
1. That complainants respectfully stated that when Charge No. 2265 was filed on
December 26, 1967 in this case, giving rise to the instant complaint, the alleged
officers of the union-movants were not yet officers on the filing of said Charge
No. 2265,...
2. That the alleged officers and members who signed the three (3) Manifestations
and Motions are the very employees who were accepted back to work by the
respondents during the strike by the complainants on September 4, 1967 and
November 7, 1967, and the said alleged officers and members who signed the
said manifestations and motions are still working up to the present in the
establishments of the respondents.
3. That precisely because of the acceptance back to work of these alleged
officers and members of the union-movants, and the refusal of respondents to
accept back to work all the individual complainants in this case mentioned in
Annexes "A", "B" and "C" of the instant complaint, inspite of the offer to return to
work by the complainants herein made to the respondents without any conditions
at the time of the strike, as per complainants' letter of December 13, 1967 (Exh.
"B", for the complainants), which fact precisely gave rise to the filing of this case.
xxx xxx xxx
On January 31, 1969, after the submission of their respective Memoranda on the
motions asking for the dismissal and withdrawal of the complaint, the Court of
Industrial Relations issued an Order deferring the resolution of the Motions until after
the trial on the merits. To this Order, two separate Motions for Reconsideration were
filed by the respondent companies and the movant-unions, which motions were,
however, denied by the court en banc by its Resolution dated March 5, 1969.
After the trial on the merits of the case, and after submission by the parties of their
respective memoranda, the respondent court rendered on July 20, 1973 the Decision
subject of these petitions. On the motions for dismissal or withdrawal of the complaint
as prayed for by MUEWA, UNWU and MFWU, the respondent court denied the same
on the ground that the instant case was filed by the Lakas ng Manggagawang
Makabayan for and in behalf of the individual employees concerned and not for the
movants who were not authorized by said individual complainants to ask for the
dismissal. On the merits of the case, while the Decision contained opinions to the
effect that the respondent Marcelo Companies were not remiss in their obligation to
bargain, and that the September 4, 1967 strike as well as the November 7, 1967
strike, were economic strikes, and were, therefore, illegal because of lack of the
required notices of strike before the strikes were declared in both instances, the
Decision, nevertheless, on the opinion that the "procedure of scheduling adopted by
the respondents was in effect a screening of those who were to be readmitted,"
declared respondent Marcelo Companies guilty of unfair labor practice in
discriminating against the employees named in Annexes "A", "B", and "C" by refusing
to admit them back to work other strikers were admitted back to work after the strike
of November 7, 1967. The dispositive portion of the appealed Decision states, to wit,
Page 106
 WHEREFORE, in view of all the foregoing, respondents should be, as they are
hereby, declared guilty of unfair labor practice only for the discrimination on
terms or conditions of employment as hereinbefore discussed in connection with
the return of the strikers complainants back to work after the second strike, and,
therefore, ordered to pay the individual complainants appearing in Annexes "A",
"B" and "C" of the Complaint, except Arlington Glodeviza, Jesus Lim, Wilfredo
Jarquio, Leonardo Sakdalan, Jose Roque, Alfredo Cabel, and those still working,
were dismissed for cause, whose contracts expired or who had resigned as
above indicated, their back wages from December l8, 1967 but only up to June
29, 1970 when this case was submitted for decision, without reinstatement,
minus their earnings elsewhere for the same period.
As to those who died without having been re-employed, the back wages shall be
from December 18, 1967 up to the date of their demise, as indicated in the body
of this Decision, but not beyond June 20, 1970, likewise less their earnings
elsewhere.
The Chief Auditing Examiner of this Court, or his duly authorized representative,
is hereby directed to proceed to the premises of respondent companies to
examine their books, payrolls, vouchers and other pertinent papers or documents
as may be necessary to compute the back wages due the individual complainant
in line with this Decision, and to submit his Report thereon not later than twenty
(20) days after completion of such examination for further disposition of the
Court.
SO ORDERED.
On August 9, 1973, counsel for respondent Marcelo Companies filed a Motion for
Reconsideration of the above Decision assigning as errors, to wit,
I. The trial court erred in not finding that complainant Lakas ng Manggagawang
Makabayan (Lakas) has no authority to file and/or to prosecute the Complaint
against respondents in representation of the local unions and/or individual
complainants and/or members of local unions in their individual capacities and in
not dismissing the complaint on that ground upon motions of the local unions
concerned and/or their members.
II. The trial court erred in finding that respondent discriminated against individual
complainants who were not readmitted to work after the November 7, 1967 strike
while others were able to return to their former employment and in holding that
the procedure adopted by respondents was in effect a screening of those who
were readmitted and in finding respondents guilty of unfair labor practice by
reason thereof. "
On August 14, 1973, the individual complainants who had earlier disauthorized the
counsel of record, Atty. Benjamin Pineda, from further representing them and from
amicably settling their claims, on their own behalf filed their arguments in support of
their Motion for Reconsideration, through a newly retained counsel, Atty. Pablo B.
Castillon. Assigned as errors are, to wit,
LABOR LAW 2- SESSION 2 CASES
I. The findings of the trial court excluding some of the employees from the
aforementioned Decision as well as from the benefits resulting therefrom is not in
accordance with law and the facts.
II. The findings of the trial court declaring the strikes of September 4 and
November 7, 1967 as illegal for being an economic strike is not in accordance
with law and the facts adduced in this case.
III. The Honorable trial court in ordering the reduction of the back wages, without
reinstatement, appears to have departed from the substantial evidence rule and
established jurisprudence.
By Resolution of January 24, 1974, the Court en banc denied the two (2) Motions for
Reconsideration filed by both the respondent Marcelo Companies and the individual
complainants. On February 19, 1974 and on February 20, 1974, both parties filed
their respective Notices of Appeals. Hence, these petitions.
In L-38258, the petition filed by complainant Lakas ng Manggagawang Makabayan
(LAKAS), the following were assigned as reversible errors, to wit,
I. The respondent court erred in finding the strikes of September 4 and
November 7, 1967 to be economic strikes and declaring the said strikes illegal for
non-compliance with the procedural requirement of Section 14(d) of Republic Act
875, although its illegality was condoned or waived because of the Return-to-
Work agreement on the first strike, and the discriminatory rehiring of the striking
employees after the second strike.
II. The respondent court erred in denying reinstatement to the striking
complainants in Case No. 4951-ULP, and limiting the computation of their
backwages from December 18, 1967 to June 29, 1970 only, despite its findings
of unfair labor practice against private respondents herein as a consequence of
the discriminatory rehiring of the striking employees after the November 7, 1967
strike.
III. The respondent court erred in excluding the other individual complainants,
except those who are still working, those who resigned on or before December
18, 1967, and those whose employment contract expired, and denying to these
individual complainants the benefits resulting therefrom.
On the other hand, in L-38260 which is the petition filed by respondents Marcelo
Enterprises, Marcelo Tire and Rubber Corporation, Marcelo Rubber & Latex
Products, Marcelo Steel Corporation, Marcelo Chemical & Pigment Corporation, and
Polaris Marketing Corporation, the following is the alleged assignment of errors, to
wit,
I. Respondent court erred in not finding that respondent Lakas ng
Manggagawang Makabayan (LAKAS) had no authority to file and/or to prosecute
the complaint against the petitioners herein in representation of the local unions
and/or individual complainants and/or members of local unions in their individual
Page 107
 capacities and in not dismissing the complaint in Case No. 4951-ULP of
respondent court on that ground upon motions of the local unions concerned
and/or their officers and members.
II. Respondent court erred in finding that petitioners herein discriminated against
individual complainants in Case No. 4951-ULP of respondent court who were not
readmitted to work after the November 7, 1967 strike, while others were able to
return to their former employment and in holding that the procedure adopted by
petitioners herein was in effect a screening of those who were readmitted and in
finding petitioners herein guilty of unfair labor practice by reasons thereof.
III. Respondent court erred in rendering judgment ordering petitioners herein to
pay individual complainants in Case No. 4951-ULP of respondent court
backwages from December 18, 1967, to June 29, 1970, minus their earnings
elsewhere, except those who have resigned, those who have been dismissed for
cause, those whose contracts have expired and those who are already working.
IV. Respondent court erred in holding that petitioners herein have waived their
right to declare the strikes of September 4, 1967 and November 7, 1967, illegal.
From the aforecited assignments of errors respectively made in both petitions before
Us, We find that there are only two basic issues posed for Our resolution, viz: (1)
whether or not the complaint filed by LAKAS against the Marcelo Companies can be
sustained, in view of the alleged fact that its authority to file and prosecute the same
has been squarely raised in issue at the first instance before the respondent court;
and (2) whether or not the Marcelo Companies are guilty of unfair labor practice, for
which they should be made liable for backwages and be obliged to reinstate the
employees appearing in Annexes "A", "B", and "C " of the complaint, taking into
consideration the prayer of LAKAS anent the correct payment of said backwages and
the non-exclusion of some employees from the benefits arising from the appealed
Decision.
The first issue poses a procedural question which We shall dwell on after a resolution
of the second issue, this latter issue being of greater significance to the correct
determination of the rights- of all parties concerned as it treats of the merits of the
present petitions.
Hence, anent the second issue of whether or not the complaint for unfair labor
practice can be sustained, this Court rules in favor of the respondent Marcelo
Companies and consequently, the appealed Decision is reversed. This reversal is
inevitable after this Court has pored through the voluminuous records of the case as
well as after applying the established jurisprudence and the law on the matters raised.
We are not unmindful of the plight of the employees in this case but We consider it
oppressive to grant their petition in G.R. No. L38258 for not only is there no evidence
which shows that the respondent Marcelo Companies were seeking for an opportunity
to discharge these employees for union activities, or to discriminate against them
because of such activities, but there is affirmative evidence to establish the contrary
conclusion.
LABOR LAW 2- SESSION 2 CASES
The present controversy is a three-sided conflict, although focus has been greatly
placed upon an alleged labor dispute between complainant LAKAS and the
respondent Marcelo Companies. It would bear emphasizing, however, that what had
been patently disregarded by the respondent industrial court and the parties alike, is
the fact that LAKAS had never been the bargaining representative of any and an of
the local unions then existing in the respondent Marcelo Companies.
Contrary to the pretensions of complainant LAKAS, the respondent Marcelo
Companies did not ignore the demand for collective bargaining contained in its letter
of June 20, 1967. Neither did the companies refuse to bargain at all. What it did was
to apprise LAKAS of the existing conflicting demands for recognition as the
bargaining representative in the appropriate units involved, and suggested the
settlement of the issue by means of the filing of a petition for certification election
before the Court of Industrial Relations. This was not only the legally approved
procedure but was dictated by the fact that there was indeed a legitimate
representation issue. PSSLU, with whom the existing CBAs were entered into, was
demanding of respondent companies to collectively bargain with it; so was Paulino
Lazaro of MUEWA, J.C. Espinas & Associates for MACATIFU and the MFWU, and
the complainant LAKAS for MULU which we understand is the aggrupation of
MACATIFU, MFWU and UNWU. On top of all of these, Jose Roque of UNWU
disauthorized the PSSLU from representing his union; and similarly, Augusta Carreon
of MACATIFU itself informed management as late as July 11, 1967 or after the
demand of LAKAS that no group representing his Union "is not authorized and should
not be entertained. "
Indeed, what We said in Philippine Association of Free Labor Unions (PAFLU) vs.
The Bureau of Labor Relations,69 SCRA 132, applies as well to this case.
..., in a situation like this where the issue of legitimate representation in dispute is
viewed for not only by one legitimate labor organization but two or more, there is
every equitable ground warranting the holding of a certification election. In this
way, the issue as to who is really the true bargaining representative of all the
employees may be firmly settled by the simple expedient of an election.
The above-cited case gives the reason for the need of determining once and for all
the true choice of membership as to who should be their bargaining representative,
which is that, "(E)xperience teaches us, one of the root causes of labor or industrial
disputes is the problem arising from a questionable bargaining representative
entering into CBA concerning terms and conditions of employment. "
Respecting the issue of representation and the right of the employer to demand
reasonable proof of majority representation on the part of the supposed or putative
bargaining agent, the commentaries in Rothenberg on Labor Relations, pp. 42943 1,
are forceful and persuasive, thus:
It is essential to the right of a putative bargaining agent to represent the
employees that it be the delegate of a majority of the employees and, conversely,
an employer is under duty to bargain collectively only when the bargaining agent
is representative of the majority of the employees. A natural consequence of
these principles is that the employer has the right to demand of the asserted
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 bargaining agent proof of its representation of its employees. Having the right to
demonstration of this fact, it is not an 'unfair labor practice' for an employer to
refuse to negotiate until the asserted bargaining agent has presented reasonable
proof of majority representation. It is necessary however, that such demand be
made in good faith and not merely as a pretext or device for delay or evasion.
The employer's right is however to reasonable proof. ...
... Although an employer has the undoubted right to bargain with a bargaining
agent whose authority has been established, without the requirement that the
bargaining agent be officially certified by the National Labor Relations Board as
such, if the informally presented evidence leaves a real doubt as to the issue, the
employer has a right to demand a certification and to refuse to negotiate until
such official certification is presented."
The clear facts of the case as hereinbefore restated indusputably show that a
legitimate representation issue confronted the respondent Marcelo Companies. In the
face of these facts and in conformity with the existing jurisprudence.
We hold that there existed no duty to bargain collectively with The complainant
LAKAS on the part of said companies. And proceeding from this basis, it follows that
all acts instigated by complainant LAKAS such as the filing of the Notice of strike on
June 13, 1967 (although later withdrawn) and the 'two strikes of September 4, 1967
and November 7, 1967 were calculated , designed and intended to compel the
respondent Marcelo Companies to recognize or bargain with it notwithstanding that it
was an uncertified union, or in the case of respondent Marcelo Tire and Rubber
Corporation, to bargain with it despite the fact that the MUEWA of Paulino Lazaro vas
already certified as the sole bargaining agent in said respondent company. These
concerted activities executed and carried into effect at the instigation and motivation
of LAKAS ire all illegal and violative of the employer's basic right to bargain
collectively only with the representative supported by the majority of its employees in
each of the bargaining units. This Court is not unaware of the present predicament of
the employees involved but much as We sympathize with those who have been
misled and so lost their jobs through hasty, ill-advised and precipitate moves, We rule
that the facts neither substantiate nor support the finding that the respondent Marcelo
Companies are guilty of unfair labor practice.
There are also other facts which this Court cannot ignore. the complaint of LAKAS
charge that after their first strike of September 4, 1967, management and the striking
employees entered into a Return-to-Work Agreement but that it was violated by the
respondent companies who "refused to admit the members of the three striking local
unions ... and gave reference to the casual employees." (No. 8, Complaint). It is also
alleged that the strike of November 7, 1967 was staged "because of the refusal of the
respondents to accept some union members ... and refusal of respondents to bargain
in good faith with complainant" (No. 9, Complaint). We find however, that in making
these charges, complainant LAKAS lacked candor, truth and fidelity towards the
courts.
It is a fact found by the respondent court, and as revealed by he records of the case,
that the respondent Marcelo Companies did not violate the terms of the Return-to-
Work Agreement negotiated after the first strike. All of the strikers were admitted back
LABOR LAW 2- SESSION 2 CASES
to work except four (4) who opted not to report for work because of the administrative
investigation conducted in connection with the acts of violence perpetrated during the
said strike.
It is also evident from the records that the charge of bargaining in bad faith imputed to
the respondent companies, is hardly credible. In fact, such charge is valid as only
against the complainant LAKAS. The parties had a total of five (5) conferences for
purposes of collective bargaining. It is worth considering that the first strike of
September 4, 1967 was staged less than a week after the fourth CBA conference and
without any benefit of any previous strike notice. In this connection, it must be stated
that the notice of strike filed on June 13, 1967 could not have been the strike notice
for the first strike because it was already withdrawn on July 14, 1967. Thus, from
these stated facts can be seen that the first strike was held while the parties were in
the process of negotiating. Nor can it be sustained that the respondent Marcelo
Companies bargained in bad faith since there were proposals offered by them, but
the complainant LAKAS stood pat on its position that all of their economic demands
should be met and that all of these demands should be granted in all of the
respondent Marcelo Companies. The companies' refusal to accede to the demands of
LAKAS appears to be justified since there is no showing that these companies were
in the same state of financial and economic affairs. There is reason to believe that the
first strike was staged only for the purpose of compelling the respondent Marcelo
Companies to accede to the inflexible demands of the complainant LAKAS. The
records further establish that after the resumption of normal operations following the
first strike and the consequent Return-to-Work Agreement, the striking unions led by
complainant LAKAS and the management of the respondent Marcelo Companies
resumed their bargaining negotiations. And that on October 13, 1967, complainant
LAKAS sent the final drafts of the collective bargaining proposals for MFWU and
UNWU. The second strike of November 7, 1967 was then staged immediately after
which strike, as before, was again lacking of a strike notice. All of these facts show
that it was complainant LAKAS, and not the respondent Marcelo Companies, which
refused to negotiate in the pending collective bargaining process. AR that the facts
show is that the bargaining position of complainant LAKAS was inflexible and that it
was in line with this uncompromising attitude that the strikes were declared,
significantly after notice that management did not or could not meet all of their 17-
points demand.
Respondent court, upholding the contention of petitioner LAKAS that after the second
strike, the respondent Marcelo Companies, despite the strikers' unconditional offer to
return to work, refused to readmit them without "screening" which LAKAS insists to be
"discriminatory hiring of the striking employees, " declared that although the two
strikes were illegal, being economic strikes held in violation of the strike notice
requirement, nevertheless held the Marcelo Companies guilty of unfair labor practice
in discriminating against the complaining employees by refusing to readmit them
while other strikers were admitted back to work. We do not agree.
It is the settled jurisprudence that it is an unfair labor practice for an employer not to
reinstate, or refuse re-employment of members of union who abandon their strike and
make unconditional offer to return to work. 1 As indeed Exhibit "B" presents an
unconditional offer of the striking employees to return to work under the same terms
and conditions of employment before the strike, the question then confronting Us is
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whether or not on the part of the respondent companies, there was refusal to
reinstate or re-employ the strikers.
We find as a fact that the respondent Marcelo Companies did not refuse to reinstate
or re-employ the strikers, as a consequence of which We overrule the finding of unfair
labor practice against said companies based on the erroneous conclusion )f the
respondent court. It is clear from the records that even before the unconditional offer
to return to work contained in , Exhibit "B" was made, the respondent Marcelo
Companies had already posted notices for the strikers to return back to work.
It is true that upon their return, the strikers were required to fill up a form (Exhibit "49")
wherein they were to indicate the date of their availability for work. But We are more
impressed and are persuaded to accept as true the contention of the respondent
Marcelo Companies that the aforestated requirement was only for purposes of proper
scheduling of the start of work for each returning striker. It must be noted that as a
consequence of the two strikes which were both attended by widespread acts of
violence and vandalism, the businesses of the respondent companies were
completely paralyzed. It would hardly be justiciable to demand of the respondent
companies to readmit all the returning workers in one big force or as each demanded
readmission. There were machines that were not in operating condition because of
long disuse during the strikes. Some of the machines needed more than one worker
to operate them so that in the absence of the needed team of workers, the start of
work by one without his teammates would necessarily be useless, and the company
would be paying for his time spent doing no work. Finally, We take judicial cognizance
of the fact that companies whose businesses were completely paralyzed by major
strikes cannot resume operations at once and in the same state or force as before the
strikes.
But what strikes Us most in lending credence to respondents' allegation that Exhibit
"49" was not meant to screen the strikers, is the fact that an of the returning strikers
who filled up the form were scheduled for work and consequently started with their
jobs. It is only those strikers who refused or failed to fill-up the required form, like the
herein complaining employees, who were not scheduled for work and consequently
have not been re- employed by the respondent Marcelo Companies. Even if there
was a sincere belief on their part that the requirement of Exhibit "49" was a ruse at
"screening" them, this fear would have been dispelled upon notice of the fact that
each and all of their co-strikers who rued up the required form were in fact scheduled
for work and started to work. The stoppage of their work was not, therefore, the direct
consequence of the respondent companies' complained act, Hence, their economic
loss should not be shifted to the employer. 2
It was never the state policy nor Our judicial pronouncement that the employees' right
to self-organization and to engage in concerted activities for mutual aid and
protection, are absolute or be upheld under an circumstances. Thus, in the case
of Royal Interocean Lines, et al. vs. CIR, 3 We cited these authorities giving adequate
panoply to the rights of employer, to wit:
The protection of workers' right to self-organization in no way interfere with
employer's freedom to enforce such rules and orders as are necessary to proper
conduct of his businesses, so long as employer's supervision is not for the
LABOR LAW 2- SESSION 2 CASES
purpose of intimidating or coercing his employees with respect to their self-
organization and representation. (National Relations Board vs. Hudson Motor
Car Co., C.C.A., 1942, 123 F 2d. 528). "
It is the function of the court to see that the rights of self-organization and
collective bargaining guaranteed by the Act are amply secured to the employee,
but in its effort to prevent the prescribed unfair labor practice, the court must be
mindful of the welfare of the honest employer (Martel Mills Corp. vs. M.L.R.L.,
C.C.A., 1940,11471 F2d. 264)."
In Pagkakaisang Itinataguyod ng mga Manggagawa sa Ang Tibay (PIMA), Eliseo
Samson, et al., vs. Ang Tibay, Inc., et al., L-22273, May 16, 1967, 20 SCRA 45, We
held that the exaction, by the employer, from the strikers returning to work, of a
promise not to destroy company property and not to commit acts of reprisal against
union members who did not participate in the strike, cannot be considered an unfair
labor practice because it was not intended to discourage union membership. It was
an act of a self- preservation designed to insure peace and order in the employer's
premises. It was also held therein that what the Industrial Peace Act regards as an
unfair labor practice is the discrimination committed by the employer in regard to
tenure of employment for the purpose of encouraging or discouraging union
membership.
In the light of the above ruling and taking the facts and circumstances of the case
before Us in relation to the requirement by the respondent companies in the filling up
of Exhibit "49", We hold and rule that the requirement was an act of self-preservation,
designed to effect cost-savings as well as to insure peace and order within their
premises. Accordingly, the petition in G. R. No. L-38258 should be dismissed, it
having failed to prove, substantiate and justify the unfair labor practice charges
against the respondent Marcelo Companies.
Now to the procedural question posed in the first issue brought about by the
respondent court's denial of the motions to withdraw the complaint respectively filed
by MUEWA, UNWU and MFWU. In their petition (G.R. L-38260) the respondent
Marcelo Companies maintain that the respondent court erred in not dismissing the
complaint even as it knew fully well that the very authority of LAKAS to represent the
labor unions who had precisely disaffiliated from the LAKAS, was open to serious
question and was being ventilated before it. On the other hand, the respondent court
rationalized the denial of the aforestated motions to withdraw by holding that the
complaint was filed by LAKAS on behalf of the individual employees whose names
were attached to the complaint and hence, that the local unions who were not so
authorized by these individual employees, cannot withdraw the said complaint. The
lower court's opinion is erroneous.
Firstly, LAKAS cannot bring any action for and in behalf of the employees who were
members of MUEWA because, as intimated earlier in this Decision, the said local
union was never an affiliate of LAKAS. What appears clearly from the records is that it
was Augusto Carreon and his followers who joined LAKAS, but then Augusto Carreon
was not the recognized president of MUEWA and neither he nor his followers can
claim any legitimate representation of MUEWA. Apparently, it is this split faction of
MUEWA, headed by Augusta Carreon, who is being sought to be represented by
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LAKAS. However, it cannot do so because the members constituting this split faction
of MUEWA were still members of MUEWA which was on its own right a duly
registered labor union. Hence, any suit to be brought for and in behalf of them can be
made only by MUEWA, and not LAKAS. It appearing then that Augusta Carreon and
his cohorts did not disaffiliate from MUEWA nor signed any individual affiliation with
LAKAS, LAKAS bears no legal interest in representing MUEWA or any of its
members.
WHEREFORE, upon the foregoing considerations, the petition in L-38258 is
dismissed and the petition in L-38260 is granted. The decision of the Court of
Industrial Relations is hereby REVERSED and SET ASIDE and a new judgment is
rendered holding that the respondent Marcelo Companies are not guilty of unfair labor
practice.
No costs.

Nor will the lower court's opinion be availing with respect to the complaining SO ORDERED.
employees belonging to UNWU and MFWU. Although it is true, as alleged by LAKAS,
that when it filed the charge on December 26, 1967, the officers of the movant unions
were not yet then the officers thereof, nevertheless, the moment MFWU and UNWU Feather-Bedding
separated from and disaffiliated with 'LAKAS to again exercise its rights as
independent local unions, registered before as such, they are no longer affiliates of Asking for or Accepting Negotiation or Attorney’s fees
LAKAS, as what transpired here. Naturally, there would no longer be any reason or
occasion for LAKAS to continue representing them. Notable is the fact that the Violation of a CBA
members purportedly represented by LAKAS constitute the mere minority of the
movant unions, as may be inferred from the allegations of the movant unions as well
as the counter-allegations of LAKAS filed below. As such, they cannot prevail or
dictate upon the will of the greater majority of the unions to which they still belong, it
appearing that they never disaffiliated from their unions; or stated in another way,
they are bound by the action of the greater majority. 4

In NARIC Workers' Union vs. CIR, 5 We ruled that, "(a) labor union would go beyond
the limits of its legitimate purposes if it is given the unrestrained liberty to prosecute
any case even for employees who are not members of any union at all. A suit brought
by another in representation of a real party in interest is defective." Under the
uncontroverted facts obtaining herein, the aforestated ruling is applicable, the only
difference being that, here, a labor federation seeks to represent members of a
registered local union never affiliated with it and members of registered local unions
which, in the course of the proceedings before the industrial court, disaffiliated from it.

This is not to say that the complaining employees were without any venue for redress.
Under the aforestated considerations, the respondent court should have directed the
amendment of the complaint by dropping LAKAS as the complainant and allowing the
suit to be further prosecuted in the individual names of those who had grievances. A
class suit under Rule 3, Section 12 of the Rules of Court is authorized and should
suffice for the purpose.

In fairness to the complaining employees, however, We treated their Motion for

Reconsideration of the Decision subject of appeal as curing the defect of the
complaint as the said motion expressly manifested their collective desire to pursue
the complaint for and in their own behalves and disauthorizing LAKAS' counsel from
further representing them. And We have also treated their petition before Us in the
same manner, disregarding the fact that LAKAS remained the petitioning party, as it
appears from the verification that the petition in L38258 was for and in behalf of the
complaining employees. The merits of their petition, however, fall short of
substantiating the charge of unfair labor practice against the respondent Marcelo
Companies. On the other hand, the appeal of the Marcelo Companies in L-38260
must be upheld and sustained.

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