Unfair Labor Practices FULLTEXT

UNFAIR LABOR PRACTICES
G.R. No. L-12429 February 27, 1961
ERMIDIA A. MARIANO, plaintiff-appellee,

vs.
THE ROYAL INTEROCEAN LINES (Keninkijke Java-China-Pakitvaart Lijnen N. V. Amsterdam) and J. V.
KAMERLING, defendants-appellants.
Emilio Javier for plaintiff-appellee.

Manuel V. San Jose for defendants-appellants.
PADILLA, J.:
This is an appeal from a judgment rendered by the Court of First Instance of Manila holding that the dismissal of
the plaintiff by the defendants "was summary, unreasonable and arbitrary," and ordering the latter to pay to the
former the Sum of P13,222.58, which represents the plaintiff's basic salary, high costs of living allowance,
Christmas bonuses and automatic increases in salary, as computed by her pursuant to the defendant company's
rules and regulations (Exhibit W), from 24 October 1953, the date she was dismissed from the service, to 21 August
1955, the date she would have retired upon reaching the age of 55 years; 1 P20,000 for moral damages and P10,000
as attorney's fee (civil No. 21888).
The following appears from the stipulation of facts entered into by and between the parties and the documents
attached thereto and made an integral part thereof. The appellee was employed by the appellant Royal Interocean
Lines as stenographer-typist and filing clerk from 5 January 1932 until the outbreak of the war on 8 December
1941, when the employment was interrupted, and from March 1948 until 23 October 1953, when she was
dismissed from the service (par. 2, stipulation of facts, p. 48, rec. on app.). At the time of her dismissal, the
appellee was receiving a basic salary of P312 and a high cost of living allowance of P206, or a total of P518 a month
(par. 5 stipulation of facts, pp. 48-49, rec. on app.).
On 5 October 1953 the appellee sent a letter to the managing directors of the appellant company in Hongkong,
coursed through its manager for the Philippines, the appellant J. V. Kamerling, complaining against the latter's
"inconsiderate and untactful attitude" towards the employees under him and the clients of the appellant company
in the Philippines (par. 5 stipulation of facts, p. 49, rec. on app.; Annexes A & B, pp. 10, 11-16, rec on app.). On 19
October 1953 the appellant manager advised the appellee that her letter of 5 October 1953 had been forwarded
to the managing directors of the appellant company in Hongkong; that in view of the contents and tenor of her
letter, the managing directors believed with the appellant manager that it was impossible to maintain her further
in the service of the company; that despite the fact that they were justified in dismissing her from the service and
that she was not entitled to any compensation, out of generosity and in consideration of her length of service, the
appellant company ,as willing to grant her a sum equivalent to three months' salary; that in order not to adversely
affect her chances of future employment with other firms, it was suggested that she hand in a formal letter of
resignation effective 31 October 1953, otherwise the appellants would dismiss her; and that should they not hear
from her in writing until noon of 23 October 1953, she would be considered dismissed from the service (par. 6,
stipulation of facts, pp. 49-50, rec. on app.; Annex D, pp. 17-18, rec. on app.)
On 23 October 1953 the appellee sent a letter to the appellants by messenger, stating that she was "compelled to
hand this letter of resignation severing my services from the Royal Interocean Lines effective October 31st, 1953,
much to my dislike and disappointment after being in their employment for almost twenty-two (22) years" (par. 7,
stipulation of facts, p. 50, rec. on app.; Annex E, P. 19, rec. on app.). However, the appellants refused acceptance of
her, letter and on the same date, 23 October, 1953, sent to the appellee a letter by registered mail dismissing her
from the service, which she received on 27 October 1953, (par. 7, stipulation of facts, p. 50, rec. on app.; Annex F,
pp. 19-20, rec. on app.). The appellee sought reconsideration of her dismissal from the managing directors of the
appellant company in Hongkong but received no answer to any of her five letters (par. 9, stipulation of facts, p. 51,
rec. on app.).
On 19 December 1953 the appellants finally tendered to the appellant) an offer of compromise settlement
whereby she would be paid the sum of P3,108 equivalent to six months salary, provided that she would sign a quit
claim embodying a provision that she would release the appellants and any of their officers or employees from any
civil or criminal liability and from any other liability and from any other liability arising from her employment (par.
10, stipulation of facts, p.51, rec., on app.; Annexes J & K-Stipulation, pp. 30-31, 122-124, rec. on app.). Not
satisfied with the offer of compromise, on 2 February 1954 the appellee brought this action for recovery of
damages in the total sum of P107,002.58 and for other just and equitable relief (pp. 1-10, rec. on app.) .
Unfair Labor Practices | 1

It appears further on the record that on 25 May 1955, the acting chief prosecutor of the Court of Industrial
Relations, at the appellee's instance, filed a complaint dated 24 May 1955 in the Court of Industrial Relations,
charging the appellants with unfair labor practice for having dismissed her from the service "for the reason that on
October 5, 1953 she wrote a letter to the Managing Directors in Hongkong which was sent through said Kamerling,
complaining against the latter's attitude and behavior to her (Miss Mariano) and other employees," and for
refusing to reinstate her to her former position (Exhibit 4); that after the appellant company had filed its answer
(Exhibit 5) to the complaint and the Court had conducted a hearing, the latter rendered judgment holding that the
appellants were guilty of unfair labor practice and ordering them to reinstate the appellee to her former position
with backpay from the date of dismissal to the date of reinstatement; and that the appellants had filed in this
Court a petition for certiorari to review the judgment of the Court of Industrial Relations (G.R. No. L-11745). On 31
October, 1960, this Court, deciding the case under review, found and held as follows: .
The issue involved is whether or not the petitioner was guilty of unfair labor practice in having dismissed
the respondent because the latter had filed charges against Kamerling not connected with or necessarily
arising from union activities. The pertinent legal provision is section 4(a), sub-section 5, of Republic Act
No. 875 which reads as follows: "Sec. 4 Unfair Labor Practice, (a) It shall be unfair labor practice for an
employer: . . . (5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee, for
having filed charges or for having given or being about to give testimony under this Act." .
xxx xxx xxx
Considering the policy behind the enactment of the statute, it is readily discoverable that the provisions of
sections 1 and 3 are the bases for the protection of the laborer's right to self- organization, and the
enumeration in section 4 (of unfair labor practices), are nothing more than a detailed description of an
employer's acts that may interfere with the right to self-organization and collective bargaining.
xxx xxx xxx
Despite the employees' right to self-organization, the employer therefore still retains his inherent right to
discipline his employees, his normal prerogative to hire or dismiss them. The prohibition is directed only
against the use of the right to employ or discharge as an instrument of discrimination, interference or
oppression because of one's labor or union activities.; (See Rotenberg on Labor Relations, pp. 398-399.)
Even from a liberal and grammatical point of view, the provision in dispute has to be interpreted in the
sense that the charges, the filing, of which is the cause of the dismissal of the employee, must be related
to his right to self-organization, in order to give rise to unfair labor practice on the part of the employer.
(Under subsection 5 of section 4(a), the employee's (1) having filed charges or (2) having given testimony
or (3) being about to give testimony, are modified by "under this Act" appearing after the last item. In
other words, the three acts must have reference to the employee's right to self-organization and
collective bargaining, because the element of unfair labor practice is interference in such right. It would
be redundant to repeat "under this Act" after each enumeration connected by the disjunctive conjunction
"or." .
As the respondent's dismissal has no relation to union activities and the charges filed by her against the
petitioner had nothing to do with or did not arise from her union activities, the appealed decision is
hereby reversed and the directive for the respondent's reinstatement with backpay revoked.
The notice of appeal to this Court was filed on 2 May 1957 and the record on appeal allowed on 29 May 1957
before the approval of Republic Act No. 2613 on 1 August 1959. The amount involved in this appeal not being
more than P200,000, it would have been certified to the Court of Appeals. However, there being a stipulation of
facts and no dispute as to such facts, this Court proceeds to render judgment thereon.
Considering that the appellee's dismissal by the appellants, because of charges preferred against the appellant
manager with the managing directors of the appellant company in Hongkong, "not connected with or necessarily
arising from union activities," did not constitute unfair labor practice; that this is the same cause of action upon
which her claim for recovery of damages in the ewe at bar is predicated; and that despite the employees' right to
self-organization, the employer still retains his inherent right to discipline his employees, "his normal prerogative
to hire or dismiss them," the appellee has no cause of action against the appellants. Nevertheless, as the dismissal
of the appellee was without cause, because her inefficiency as the ground or reason for her dismissal as claimed by
the appellants is belied by the successive increases of her compensation, the amount of P3,108 for six monthly
salary, as offend by the appellants, should be paid to her.
The judgment appealed from is modified as above stated. The appellants are ordered to pay the appellee the sum
of P3,108, without interest. No special pronouncement as to costs.

G.R. No. L-87672 October 13, 1989
WISE AND CO., INC., petitioner,

vs.
WISE & CO., INC. EMPLOYEES UNION-NATU AND HONORABLE BIENVENIDO G. LAGUESMA, in his capacity as
voluntary Arbitrator, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
GANCAYCO, J.:
The center of controversy in this petition is whether the grant by management of profit sharing benefits to its non-
union member employees is discriminatory against its workers who are union members.
The facts are undisputed. On April 3,1987 the management issued a memorandum circular introducing a profit
sharing scheme for its managers and supervisors the initial distribution of which was to take effect March 31, 1988.
On July 3,1987 the respondent union wrote petitioner through its president asking for participation in this scheme.
This was denied by petitioner on the ground that it had to adhere strictly to the Collective Bargaining Agreement
(CBA).
In the meantime, talks were underway for early negotiation by the parties of the CBA which was due to expire on
April 30, 1988. The negotiation thus begun earlier than the freedom period. On November 11, 1987 petitioner
wrote respondent union advising the latter that they were prepared to consider including the employees covered
by the CBA in the profit sharing scheme beginning the year 1987 provided that the ongoing negotiations were
concluded prior to December 1987. However, the collective bargaining negotiations reached a deadlock on the
issue of the scope of the bargaining unit. Conciliation efforts to settle the dispute on 29 March 1988 were made
but no settlement was reached.
On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and supervisors but also
to all other rank and file employees not covered by the CBA. This caused the respondent union to file a notice of
strike alleging that petitioner was guilty of unfair labor practice because the union members were discriminated
against in the grant of the profit sharing benefits. Consequently, management refused to proceed with the CBA
negotiations unless the last notice of strike was first resolved. The union agreed to postpone discussions on the
profit sharing demand until a new CBA was concluded. After a series of conciliation conferences, the parties
agreed to settle the dispute through voluntary arbitration. After the parties submitted their position papers, a
rejoinder and reply, on March 20,1989 the voluntary arbitrator issued an award ordering petitioner to likewise
extend the benefits of the 1987 profit sharing scheme to the members of respondent union. 1 Hence, this petition
wherein petitioner alleged the following grounds in support thereof —
THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE ORDERED THE EXTENSION OF
PROFIT SHARING BENEFITS TO THOSE EMPLOYEES COVERED BY THE CBA DESPITE PATENT LACK
OF FACTUAL AND LEGAL BASIS THEREFOR IN THAT-
1. DISCRIMINATION PER SE IS NOT UNLAWFUL ESPECIALLY WHEN THE

EMPLOYEES ARE NOT SIMILARLY SITUATED.
2. THE TERMS AND CONDITIONS STIPULATED IN THE CBA HAVE THE FORCE
AND EFFECT OF A LAW BETWEEN THE PARTIES. PRIVATE RESPONDENT,
THEREFORE CANNOT DEMAND, AS A MATTER OF RIGHT, WHAT IS NOT
STIPULATED IN THE CBA.
3. THE ACT OF THE UNION IN NEGOTIATING FOR THE INCLUSION OF THE

PROFIT SHARING BENEFIT IN THE PRESENT CBA IS AN IMPLIED ADMISSION
THAT THEY WERE NOT ENTITLED TO IT IN 1987.
II

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE MADE THE CLEARLY BASELESS
CONCLUSION THAT THE PETITIONER WAS MOTIVATED BY ITS DESIRE TO DEFEAT OR OTHERWISE
PREJUDICE THE BASIC RIGHTS OF ITS EMPLOYEES. 2
The petition is impressed with merit.
Under the CBA between the parties that was in force and effect from May 1, 1985 to April 30,1988 it was agreed
that the "bargaining unit" covered by the CBA "consists of all regular or permanent employees, below the rank of
assistant supervisor, 3 Also expressly excluded from the term "appropriate bargaining unit" are all regular rank and
file employees in the office of the president, vice-president, and the other offices of the company — personnel
office, security office, corporate affairs office, accounting and treasurer department . 4
It is to this class of employees who were excluded in the "bargaining unit" and who do not derive benefits from the
CBA that the profit sharing privilege was extended by petitioner.
There can be no discrimination committed by petitioner thereby as the situation of the union employees are
different and distinct from the non-union employees. 5 Indeed, discrimination per se is not unlawful. There can be
no discrimination where the employees concerned are not similarly situated.
Respondent union can not claim that there is grave abuse of discretion by the petitioner in extending the benefits
of profit sharing to the non-union employees as they are two (2) groups not similarly situated. These non-union
employees are not covered by the CBA. They do not derive and enjoy the benefits under the CBA.
The contention of the respondent union that the grant to the non-union employees of the profit sharing benefits
was made at a time when there was a deadlock in the CBA negotiation so that apparently the motive thereby was
to discourage such non-union employees from joining the union is not borne by the record. Petitioner denies this
accusation and instead points out that inspite of this benefit extended to them, some non-union workers actually
joined the respondent union thereafter.
Respondent union also decries that no less than the president of the petitioner agreed to include its members in
the coverage of the 1987 profit sharing benefit provided that they would agree to an earlier negotiation for the
renewal of the CBA which expired in 1988. Be this as it may, since there was actually a deadlock in the negotiation
and it was not resolved and consummated on the period expected, private respondent can not now claim that
petitioner has a duty to extend the profit sharing benefit to the union members.
The Court holds that it is the prerogative of management to regulate, according to its discretion and judgment, all
aspects of employment. This flows from the established rule that labor law does not authorize the of the employer
in the conduct of its business. 6 such management prerogative may be availed of without fear of any liability so
long as it is exercised in good faith for the advancement of the employers' interest and not for the purpose of
defeating or circumventing the rights of employees under special laws or valid agreement and are not exercised in
a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite. 7
The grant by petitioner of profit sharing benefits to the employees outside the "bargaining unit" falls under the
ambit of its managerial prerogative. It appears to have been done in good faith and without ulterior motive. More
so when as in this case there is a clause in the CBA where the employees are classified into those who are
members of the union and those who are not. In the case of the union members, they derive their benefits from
the terms and conditions of the CBA contract which constitute the law between the contracting parties. 8 Both the
employer and the union members are bound by such agreement.
However, the court serves notice that it will not hesitate to strike down any act of the employer that tends to be
discriminatory against union members. It is only because of the peculiar circumstances of this case showing there
is no such intention that this court ruled otherwise.
WHEREFORE, the petition is GRANTED and the award of respondent Voluntary Arbitrator dated March 20,1989 is
hereby REVERSED AND SET ASIDE being null and void, without pronouncement as to costs.
SO ORDERED.

G.R. No. L-87672 October 13, 1989
WISE AND CO., INC., petitioner,

vs.
WISE & CO., INC. EMPLOYEES UNION-NATU AND HONORABLE BIENVENIDO G. LAGUESMA, in his capacity as
voluntary Arbitrator, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
GANCAYCO, J.:
The center of controversy in this petition is whether the grant by management of profit sharing benefits to its non-
union member employees is discriminatory against its workers who are union members.
The facts are undisputed. On April 3,1987 the management issued a memorandum circular introducing a profit
sharing scheme for its managers and supervisors the initial distribution of which was to take effect March 31, 1988.
On July 3,1987 the respondent union wrote petitioner through its president asking for participation in this scheme.
This was denied by petitioner on the ground that it had to adhere strictly to the Collective Bargaining Agreement
(CBA).
In the meantime, talks were underway for early negotiation by the parties of the CBA which was due to expire on
April 30, 1988. The negotiation thus begun earlier than the freedom period. On November 11, 1987 petitioner
wrote respondent union advising the latter that they were prepared to consider including the employees covered
by the CBA in the profit sharing scheme beginning the year 1987 provided that the ongoing negotiations were
concluded prior to December 1987. However, the collective bargaining negotiations reached a deadlock on the
issue of the scope of the bargaining unit. Conciliation efforts to settle the dispute on 29 March 1988 were made
but no settlement was reached.
On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and supervisors but also
to all other rank and file employees not covered by the CBA. This caused the respondent union to file a notice of
strike alleging that petitioner was guilty of unfair labor practice because the union members were discriminated
against in the grant of the profit sharing benefits. Consequently, management refused to proceed with the CBA
negotiations unless the last notice of strike was first resolved. The union agreed to postpone discussions on the
profit sharing demand until a new CBA was concluded. After a series of conciliation conferences, the parties
agreed to settle the dispute through voluntary arbitration. After the parties submitted their position papers, a
rejoinder and reply, on March 20,1989 the voluntary arbitrator issued an award ordering petitioner to likewise
extend the benefits of the 1987 profit sharing scheme to the members of respondent union. 1 Hence, this petition
wherein petitioner alleged the following grounds in support thereof —
THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE ORDERED THE EXTENSION OF
PROFIT SHARING BENEFITS TO THOSE EMPLOYEES COVERED BY THE CBA DESPITE PATENT LACK
OF FACTUAL AND LEGAL BASIS THEREFOR IN THAT-
1. DISCRIMINATION PER SE IS NOT UNLAWFUL ESPECIALLY WHEN THE

EMPLOYEES ARE NOT SIMILARLY SITUATED.
2. THE TERMS AND CONDITIONS STIPULATED IN THE CBA HAVE THE FORCE
AND EFFECT OF A LAW BETWEEN THE PARTIES. PRIVATE RESPONDENT,
THEREFORE CANNOT DEMAND, AS A MATTER OF RIGHT, WHAT IS NOT
STIPULATED IN THE CBA.
3. THE ACT OF THE UNION IN NEGOTIATING FOR THE INCLUSION OF THE

PROFIT SHARING BENEFIT IN THE PRESENT CBA IS AN IMPLIED ADMISSION
THAT THEY WERE NOT ENTITLED TO IT IN 1987.
II

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE MADE THE CLEARLY BASELESS
CONCLUSION THAT THE PETITIONER WAS MOTIVATED BY ITS DESIRE TO DEFEAT OR OTHERWISE
PREJUDICE THE BASIC RIGHTS OF ITS EMPLOYEES. 2
The petition is impressed with merit.
Under the CBA between the parties that was in force and effect from May 1, 1985 to April 30,1988 it was agreed
that the "bargaining unit" covered by the CBA "consists of all regular or permanent employees, below the rank of
assistant supervisor, 3 Also expressly excluded from the term "appropriate bargaining unit" are all regular rank and
file employees in the office of the president, vice-president, and the other offices of the company — personnel
office, security office, corporate affairs office, accounting and treasurer department . 4
It is to this class of employees who were excluded in the "bargaining unit" and who do not derive benefits from the
CBA that the profit sharing privilege was extended by petitioner.
There can be no discrimination committed by petitioner thereby as the situation of the union employees are
different and distinct from the non-union employees. 5 Indeed, discrimination per se is not unlawful. There can be
no discrimination where the employees concerned are not similarly situated.
Respondent union can not claim that there is grave abuse of discretion by the petitioner in extending the benefits
of profit sharing to the non-union employees as they are two (2) groups not similarly situated. These non-union
employees are not covered by the CBA. They do not derive and enjoy the benefits under the CBA.
The contention of the respondent union that the grant to the non-union employees of the profit sharing benefits
was made at a time when there was a deadlock in the CBA negotiation so that apparently the motive thereby was
to discourage such non-union employees from joining the union is not borne by the record. Petitioner denies this
accusation and instead points out that inspite of this benefit extended to them, some non-union workers actually
joined the respondent union thereafter.
Respondent union also decries that no less than the president of the petitioner agreed to include its members in
the coverage of the 1987 profit sharing benefit provided that they would agree to an earlier negotiation for the
renewal of the CBA which expired in 1988. Be this as it may, since there was actually a deadlock in the negotiation
and it was not resolved and consummated on the period expected, private respondent can not now claim that
petitioner has a duty to extend the profit sharing benefit to the union members.
The Court holds that it is the prerogative of management to regulate, according to its discretion and judgment, all
aspects of employment. This flows from the established rule that labor law does not authorize the of the employer
in the conduct of its business. 6 such management prerogative may be availed of without fear of any liability so
long as it is exercised in good faith for the advancement of the employers' interest and not for the purpose of
defeating or circumventing the rights of employees under special laws or valid agreement and are not exercised in
a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite. 7
The grant by petitioner of profit sharing benefits to the employees outside the "bargaining unit" falls under the
ambit of its managerial prerogative. It appears to have been done in good faith and without ulterior motive. More
so when as in this case there is a clause in the CBA where the employees are classified into those who are
members of the union and those who are not. In the case of the union members, they derive their benefits from
the terms and conditions of the CBA contract which constitute the law between the contracting parties. 8 Both the
employer and the union members are bound by such agreement.
However, the court serves notice that it will not hesitate to strike down any act of the employer that tends to be
discriminatory against union members. It is only because of the peculiar circumstances of this case showing there
is no such intention that this court ruled otherwise.
WHEREFORE, the petition is GRANTED and the award of respondent Voluntary Arbitrator dated March 20,1989 is
hereby REVERSED AND SET ASIDE being null and void, without pronouncement as to costs.
SO ORDERED.

G.R. No. L-51494 August 19, 1982
JUDRIC CANNING CORPORATION, petitioner,

vs.
THE HONORABLE AMADO G. INCIONG, in his capacity as Deputy Minister of Labor, THE HONORABLE FRANCISCO
L. ESTRELLA, in his capacity as Director of Region IV, Ministry of Labor, UNITED LUMBER & GENERAL WORKERS
OF THE PHILIPPINES (ULGWP), NORMA PINEDA, LEONILA MORALES, TERESITA BALMACEDA, VICKY PENALOSA,
ADELINA VALENZUELA and JUANITA REPOSAR, respondents.
CONCEPCION JR., J.:
Petition for certiorari, with a prayer for the issuance of a writ of preliminary injunction or restraining order, to
annul and set aside the Order issued by the Regional Director of the Ministry, of Labor on November 15, 1978 in
Case No. R4-STF – 5515-78, entitled: "United Lumber and General Workers of the Philippines (ULGWP), et al.,
complainants, versus Judric Canning Corporation, respondents," which ordered the herein petitioner to reinstate
immediately herein private respondents Norma Pineda, Vicky Penalosa, Leonila Morales, Teresita Balmaceda,
Adelina Valenzuela, and Juanita Reposar to their former positions with full backwages from the date of their
dismissal up to their actual reinstatement; the Order issued by the respondent Amado G. Inciong on August 3,
1979, which affirmed the aforestated order of the Regional Director and dismissed the appeal of the herein
petitioner; and the Writ of Execution issued in said case on September 24, 1979.
The records show that the herein private respondents Norma Pineda, Vicky Penalosa, Leonila Morales, Teresita
Balmaceda, Adelina Valenzuela, and Juanita Reposar are employees of the petitioner corporation and are
members of the United Lumber and General Workers of the Philippines (ULGWP). On August 19, 1978, the said
complainants were allegedly not allowed to report for work due to their union activities in soliciting membership in
a union yet to be organized in the company and their time cards were removed from the rack. As a result, the said
complainants and their labor union filed a complaint for unfair labor practice against the petitioner with Region IV
of the Ministry of Labor, seeking the reinstatement of the complainants with full backwages. 1
The herein petitioner denied having locked out the complainants and claims that the said complainants failed to
report for work and abandoned their positions. The petitioner also denied having knowledge of the union activities
of the complainants until August 30, 1978, when it was served notice of a petition for direct certification filed by
the complainant union. 2
After hearing the parties, or on November 15, 1978, the Regional Director of Region IV of the Ministry of Labor,
after finding that the petitioner had dismissed the complainants without valid cause, ordered the petitioner to
immediately reinstate the complainants to their former positions with fun backwages from the date of their
dismissal up to their actual reinstatement. 3
The petitioner corporation appealed to the Ministry of Labor, 4 but its appeal was dismissed for lack of merit on
August 3, 1979. 5 Thereafter, a writ of execution was issued on September 24, 1979. 6
Hence, the present recourse. As prayed for, a temporary restraining order, restraining the respondents from
enforcing, implementing and/or carrying out the writ of execution dated September 24, 1979, was issued on
November 12, 1979. 7
1. The petitioner contends that the Regional Director's finding, witch was affirmed by the respondent Deputy
Minister of Labor, that the petitioner is guilty of unfair labor practice for terminating the services of the
respondent union members due to their alleged union activities, is not supported by the evidence of record.
This contention is untenable.ït¢@lFº The record shows that after the parties had submitted their respective
position papers, a hearing was held, at the conclusion of which, the respondent Regional Director found that the
private respondents did not abandon their jobs but were dismissed because of their union activities. This is a
finding of fact which may not now be disturbed.
Besides, the private respondents immediately filed a complaint for illegal dismissal, seeking their reinstatement, on
August 24, 1978, soon after their services were terminated on August 19, 1978. it would be illogical for the private
respondents to abandon their work and then immediately file an action seeking their reinstatement.
Moreover, there was no reason at all and none has been suggested by the petitioner, for the private respondents
to abandon their work. No employee with a family to support, like the private respondents, would abandon their
work knowing fully well of the acute unemployment and underemployment problem and the difficulty of looking
for a means of livelihood. As the Solicitor General stated: "To get a job is difficult; to run from it is foolhardy."

But, most of all, the petitioner stated that in spite of its position that the private respondents had abandoned their
jobs, it "offered to pay respondent union members severance pay of one (1) month." 8 This is a clear admission of
the charge of arbitrary dismissal, for why should the petitioner offer to pay what it calls "severance pay" if the
private respondents were not, indeed, dismissed, or if the petitioner sincerely believed in the righteousness of its
stance?
2. The petitioner further claims that it could not have committed the unfair labor practice charge for dismissing
some of its employees due to their alleged union activities because the alleged dismissal took place more than four
(4) months before the organizational meeting of the union and more than one (1) year before actual registration of
said union with the Labor Organization Division of the Bureau of Labor Relations.
The contention is without merit. Under Article 248(a) of the Labor Code of the Philippines, "to interfere with,
restrain, or coerce employees in their exercise of the right to self-organization" is an unfair labor practice on the
part of the employer. Paragraph (d) of said Article also considers it an unfair labor practice for an employer "to
initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization,
including the giving of financial or other support to it. In this particular case, the private respondents were
dismissed or their services were terminated, because they were soliciting signatures in order to form a union
within the plant. In their affidavit, executed on September 19, 1978, 9 the private respondents stated: 1äwphï1.ñët
Na kami ay nagkampanya upang papirmahin namin sa 'membership form' ng ULGWP ang

nakakarami (majority) sa mga empleyado at nagharap kaming petisyon sa Ministri ng Paggawa
upang masertify ang aming unyon sa Case No. R4-LRD-M-8-403- 78;
Na dahil sa aming pagreklamo sa Pangasiwaan na ibigay sa amin ang mga biyaya sa ilalim ng
Kodigo ng Paggawa at dahil sa pagtayo at pagkampaniya namin sa mga empleyado na sumapi sa
unyon ay kami ay pinag-initan at tinanggal sa trabaho ng Pangasiwaan.
For sure, the petitioner corporation is guilty of unfair labor practice in interfering with the formation of a labor
union and retaliating against the employees' exercise of their right to self-organization.
3. Finally, the petitioner claims that the "respondent Regional Director's finding, which was affirmed by respondent
Deputy Minister of Labor that the 'dismissal' of respondent union members 'is conclusively presumed to be
without a valid cause' because petitioner failed to apply for clearance is contrary to the applicable Rules and
Regulations Implementing the Labor Code and is at variance with jurisprudence on the matter.
The petitioner obviously refers to the following portion of the Order of the Regional Director dated November 15,
1978: 1äwphï1.ñët
The record shows that complainants Norma Pineda, Vicky Penalosa, Leonila Morales, Teresita
Balmaceda, Adelina Valenzuela and Juanita Reposar were employed by respondent in January,
1978, up to August, 1978. They worked continuously up to the time that their services were
terminated by respondent on the ground of abandonment. However, respondent did not apply
for clearance with this Office to terminate the services of complainants. Hence, their dismissal is
conclusively presumed to be without a valid cause.
Indeed, prior clearance with the Ministry of Labor for the termination of the private respondents is not necessary
in this case since the private respondents have been employed with the petitioner corporation for less than one (1)
year. Section 1, Rule XIV, Book V of the Implementing Rules and Regulations provides as follows: 1äwphï1.ñët
Section 1. Requirement for shutdown or dismissal. — No employer may shut down his
establishment or dismiss any of his employees with at least one year during the last two years,
whether the service is broken or continuous, without prior clearance issued therefor in
accordance with this Rule. Any provision in a collective agreement dispensing with the clearance
requirement shall be null and void.
However, the questioned order finding the dismissal of the private respondents to be without just cause is not
based upon such absence of prior clearance alone. The respondent Regional Director also found that the private
respondents were dismissed because of their union activities and for the failure of the petitioners to file a report in
lieu of prior clearance, as provided for in Section 11, Rule XIV, Book V of the Implementing Rules and
Regulations.ït¢@lFº The questioned order further reads, as follows: 1äwphï1.ñët
Moreover, we find that complainants did not abandon their job. They were terminated due to
the fact that they actively campaigned and assisted in the organization of their union.

Therefore, the dismissal of complainants is without valid cause, considering that respondent
failed to justify their action and report as required under the Labor Code.
The error of the Regional Director in stating that the dismissal of the private respondents was without just cause in
view of the absence of prior clearance from the Ministry of Labor is, thus, not sufficient to warrant a reversal of the
questioned order.
WHEREFORE, the petition should be, as it is hereby, DISMISSED. The temporary restraining order heretofore issued
is hereby LIFTED and set ASIDE. With costs against the petitioner.
SO ORDERED.

G.R. No. L-67158, 67159, 67160, 67161, & 67162 May 30, 1988
CLLC E.G. GOCHANGCO WORKERS UNION, CORNELIO L. PANGILINAN, LEO TROPACIO, OLIMPIO GUMIN, JUANITO
SUBA, ROLANDO SANTOS, RUBEN BUELA, ODILON LISING, REYNALDO DAYRIT, ROGELIO MANGUERRA,
ORLANDO NACU, DIOSILINO PERDON, ERNESTO GALANG, ORLANDO PANGILINAN, JESUS SEMBRANO, RENATO
CASTANEDA, EDILBERTO BINGCANG, ERNESTO CAPIO, RUFO A. BUGAYONG, RICARDO S. DOMINGO, TERESITO
CULLARIN, ISRAEL VINO, ERNESTO RAMIREZ, ROMEO S. GINA, ARNEL CALILUNG, PEDRO A. SANTOS, RODOLFO
CAPITLY, BUENAVENTURA B. PUNO, EDILBERTO QUIAMBAO, FERNANDO LISING, ERNESTO M. TUAZON,
MARCELO LANGUNSAD, MARCELINO VALERIO, SERAFIN PAWA, JESUS S. DAQUIGAN, and ISMAEL
CAYANAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), and e.g. GOCHANGCO, INC., respondents.
Navarro, Angeles, Anero & Falcon Law Notice for petitioners.
The Solicitor General, Isagani M. Jungco, and Bernardo P. Fernandez for respondents.
SARMIENTO, J.:
The cases before the Court pit labor against management, in which, on not a few occasions, it is labor that has
cause for complaint.
The Solicitor General states the facts as follows:
xxx xxx xxx
1. Petitioner union is a local chapter of the Central Luzon Labor Congress (CLLC), a legitimate
labor federation duly registered with the Ministry of Labor and Employment (MOLE), while the
individual petitioners are former employees of private respondent who were officers and
members of the petitioner union.
2. Private respondent is a corporation engaged in packing and crating, general hauling,

warehousing, sea van and freight forwarding,
3. Sometime in January 1980, the majority of the rank and file employees of respondent firm
organized the e.g. Gochangco Workers Union as an affiliate of the CLLC. On January 23, 1980, the
union filed a petition for certification election under R03-LRD (MA) Case No. 178-80. The MOLE
Region 111 office set the hearing for the petition on February 27,1980.
4. On February 7,1980, the CLLC national president wrote the general manager of respondent
firm informing him of the organization of the union and requesting for a labor management
conference to normalize employer-employee relations (Annex "D," Case 486-80).
5. On February 26,1980, the, union sent a written notice to respondent firm requesting
permission for certain member officers and members of the union to attend the hearing of the
petition for certification election. The management refused to acknowledge receipt of said notice
(Annex "E," Case 486-80).
6. On February 28, 1980, private respondent preventively suspended the union officers and
members who attended the hearing namely: Cornelio Pangilinan, president; Leo Tropics, vice-
president; Olimpio Gumin, treasurer; Buenaventura Puno, director; Reynaldo Dayrit, sgt-at-arms;
Ernesto Ramirez; Ernesto Galang; Odilon Lising; Jesus Daquigan; and Edilberto Quiambao. The
common ground alleged by private respondent for its action was "abandonment of work on
February 27, 1980." On the same date, all the gate passes of all the above-mentioned employees
to Clark Air Base were confiscated by a Base guard.
7. Claiming that private respondent instigated the confiscation of their gate passes to prevent
them from performing their duties and that respondent firm did not pay them their overtime
pay, 13th month pay and other benefits, petitioner union and its members filed a complaint for
constructive lockout and unfair labor practice against private respondent, docketed as R03-AB
Case No. 486-80 on March 10, 1980.

8. On March 12, 1980, private respondent filed an application for clearance to dismiss Cornelio
Pangilinan, Leo Tropics, Olimpio Gumin, Reynaldo Dayrit, Odilon Lising, Edilberto Quiambao;
Ernesto Ramirez, Ernesto Galang, Buenaventura Puno, Arnel Calilung, Romeo Guina, docketed as
R03-AB Case No. 556-80. Subsequently private respondent filed another clearance to dismiss
Jesus Daquigan, Serafin Pawa and Rufo Bugayong, docketed as R03-A-B Case No. 55780.
9. On April 22,1980, petitioner Ricardo Dormingo who was preventively suspended on April 17,
1980 filed a complaint for unfair labor practice against the latter, docketed as R03-AB Case No.
55880.
10. On April 30, 1980, the services of nine (9) more union members, namely: Ernesto Tuason,
Israel Vino, Pedro Santos, Juanita Suba, Edilberto Sarmiento, Diosalino Pandan, Antonio Razon,
Benjamin Capiz and Jesus Sembrano, were terminated by private respondent on the ground that
its contract with the U.S. Air Force had expired. The rune employees filed a complaint for illegal
dismissal against private respondents on June 2, 1980. docketed as R03-AB Case No. 663-80.
11. On May 9, 1980, private respondent filed with MOLE, Region III, a Notice of Termination of
Contract together with a list of employees affected by the expiration of the contract, among
them, the 39 individual petitioners herein.
12. All the aforementioned cases were consolidated and assigned to Labor Arbiter Andres
Palumbarit.
13. After heating, Labor Arbiter Federico S. Bernardo who took over the cases from Arbiter
Palumbarit rendered a decision dated July 2, 1982, the dispositive portion of which reads:
WHEREFORE, In view of all the foregoing, the instant complaint of complainants is hereby
granted and the respondent's application for clearance is hereby denied.
The respondent is hereby ordered:
1. To reinstate all the suspended/dismissed employees to their former

positions without loss of seniority rights and other privileges, with full
backwages including cost of emergency living allowance from the date of their
suspension/dismissal up to the supposed date of actual reinstatement, as
follows:
NAME BACK- ECOLA TOTAL
WAGES
1.Cornelio P P P
Pangilinan 11,266. 7,738.0 19,004.0
00 0 0
2. Leo 11,266. 7,738.0 19,004.0

Tropico 00 0 0
3. Olimpio 11,266. 7,738.0 19,004.0

Gumin 00 0 0
4. 11,266. 7,738.0 19,004.0

Reynaldo 00 0 0
Dayrit
5. 11,266. 7,738.0 19,004.0

Buenavent 00 0 0
ura Puno
6. Ernesto 11,266. 7,738.0 19,004.0

Galang 00 0 0
7. Ernesto 11,266. 7,738.0 19,004.0

Ramirez 00 0 0
8. 11,266. 7,738.0 19,004.0

Edilberto 00 0 0
Quiambao
9 Jesus 11,266. 7,738.0 19,004.0

Daquigan 00 0 0
10. 11,134. 7,633.0 19,004.0

Renato 00 0 0
Castaneda
11. 11,134. 7,663.0 18,767.0

Edilberto 00 0 0
Bingcang
12. 11,134. 7,663.0 18,767.0

Benedicto 00 0 0
Capio
13. 11,134. 7,633.0 18,767.0

Orlando 00 0 0
Nacu
14. 11,134. 7,663.0 18,767.0

Rodolfo 00 0 0
Capitly
15. Arnel 11,134. 7,663.0 18,767.0

Calilung 00 0 0
16. 11,134. 7,663.0 18,767.0

Romeo 00 0 0
Gina
17. 11,134. 7,663.0 18,767.0

Orlando 00 0 0
Pangilinan
18. 11,134. 7,663.0 18,767.0

Eduardo 00 0 0
Alegado
19. 11,134. 7,663.0 18,767.0

Teresito 00 0 0
Cullarin
20. 11,134. 7,663.0 18,767.0

Rogelio 00 0 0
Manguerr
a
21. Ruben 11,134. 7,663.0 18,767.0

Buela 00 0 0
22. 11,134 7,663.0 18,767.0

Rolando 00 0 0
Santos
23. 11,134. 7,663.0 18,767.0

Ricardo 00 0 0
Domingo
24. Serafin 11,134. 7,663.0 18,767.0

Pawa 00 0 0

25. Rufo 11,134. 7,663.0 18,767.0
Bugayong 00 0 0
26. 11,134. 7,663.0 18,767.0

Ernesto 00 0 0
Santos
27. Ismael 11,134. 7,663.0 18,767.0

Cayanan 00 0 0
28. 11,134. 7,663.0 18,767.0

Marcelo 00 0 0
Lagansad
29. 11,134. 7,663.0 18,767.0

Marcelino 00 0 0
Valerio
30. 10,618. 7,225.0 18,767.0

Ernesto 00 0 0
M. Tuazon
31. Israel 10,618. 7,225.0 17,843.0

Vino 00 0 0
32. Pedro 10,618. 7,225.0 17,843.0

Santos 00 0 0
33. Juanita 10,618. 7,225.0 17,843.0

Suba 00 0 0
34. 10,618. 7,225.0 17,843.0

Edilberto 00 0 0
Sarmiento
35. 10,618. 7,225.0 17,843.0

Diosalino 00 0 0
Pendon
36. 10,618. 7,225.0 17,843.0

Antonio 00 0 0
Razon
37. 10,618. 7,225.0 17,843.0

Benjamin 00 0 0
Capiz
38. Jesus 10,618. 7,225.0 17,843.0

Sembrano 00 0 0
GRAND P P P267,33
TOTAL 419,636 706,973 7.00
.00 .00
2. To restore transportation privilege as being extended before the filing of the

instant case; and
3. If their reinstatement is no longer possible due to closure of the

establishment, in addition to the payment of their full backwages and cost of
living allowance, to pay their respective separation pay as provided for under
the Labor Code.
14. Private respondent appealed to the NLRC which rendered the questioned decision on May
31, 1983 as follows:

WHEREFORE, in the light of foregoing premises, the appealed decision is hereby set aside and
another one issued dismissing the above-entitled cases filed by the complainants-appellees for
lack of merit and granting the application for clearance to terminate the services of individual
complainants-appellees filed by respondent-appellant.
15. Petitioners moved for a reconsideration of the above decision on July 12, 1983 which NLRC
denied in a resolution dated December 6,1983.
16. Hence, this petition. 1
xxx xxx xxx
The petitioners assign three errors in support of their petition:
I.
THAT PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION AND SERIOUSLY COMMITTED ERRORS IN LAW IN
CONSIDERING PRIVATE RESPONDENTS EVIDENCE INTRODUCED FOR THE FIRST TIME ON APPEAL, AND PUBLIC
RESPONDENT NLRC HAS SERIOUSLY COMMITTED ERRORS IN GIVING DUE COURSE TO PRIVATE RESPONDENT
APPEAL FROM THE DECISION OF LABOR ARBITER FEDERICO S. BERNARDO, ALTHOUGH SAID APPEAL WAS NOT
VALIDLY PERFECTED ON TIME;
II.
THAT PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERRORS IN LAW IN RENDERING A DECISION THAT IS
CONTRARY TO THE EVIDENCE ON RECORD(S); and
III.
THAT PUBLIC RESPONDENT NLRC COMMITTED AN ERROR IN NOT AWARDING BACK WAGES TO THE INDIVIDUAL
PETITIONERS FOR REFUSAL OF PRIVATE RESPONDENT TO REINSTATE THEM AFTER RENDERING OF THE DECISION
OF LABOR ARBITER FEDERICO S. BERNARDO AND AFTER SAID LABOR ARBITER ORDERED PRIVATE RESPONDENT TO
REINSTATE THEM. 2
On the first issue, the petitioners submit that the motion for reconsideration, treated subsequently as an
appeal, 3of the private respondent had been filed beyond the ten-day period prescribed by the Labor Code, in the
absence of any statement thereon as to material dates. The respondent Commission ruled that it was, on the
strength of receipts in possession of the Labor Department disclosing such dates and showing that said appeal had
been seasonably filed. As a matter of practice, and in connection with ordinary civil cases, this Court has assumed a
stance of liberality towards the application of the material data rule, if it in be otherwise verified from other
evidence that the appeal had been perfected within the time prescribed. 4 We see no reason why we should hold
otherwise as far as labor cases are concerned. Accordingly, we yield to the respondent Commission's finding that
the e.g. Gochangco, Inc. had filed its appeal on time. It may be further noted that the petitioners themselves can
offer no proof, other than vague inferences from circumstances, of the belated appeal they allege.
This is not to say, however, that such an appeal has judgment. The Solicitor General himself urges that we grant
that, petition and hence, reverse the respondent Commission. But apart from such urgings, the records themselves
show that a reversal is in order.
We are convinced that the respondent company is indeed guilty of an unfair labor practice. It is no coincidence
that at the time said respondent issued its suspension and termination orders, the petitioners were in the midst of
a certification election preliminary to a labor management conference, purportedly, "to normalize employer-
employee relations." 5 It was within the legal right of the petitioners to do so, 6 the exercise of which was their sole
prerogative, 7 and in which management may not as a rule interfere. 8 In this connection, the respondent company
deserves our strongest condemnation for ignoring the petitioners' request for permission for some time out to
attend to the hearing of their petition before the med-arbiter. It is not only an act of arrogance, but a brazen
interference as well with the employees right to self-organization, contrary to the prohibition of the Labor Code
against unfair labor practices. 9
But as if to add insult to injury, the company suspended the petitioners on the ground of "abandonment of
work"10 on February 27, 1980, the date on which, apparently, the pre-election conference had been scheduled.

(The petitioners sought permission on February 26, 1980 while the suspension order was issued on February 28,
1980.) What unfolds here is a clear effort by management to punish the petitioners for their union activities.
As a consequence of such a suspension, the Clark Air Base guards confiscated the employees' gate passes, and
banned them from the base premises. We cannot be befooled by the company's pretenses that "[t]he subsequent
confiscation by the Americans of the complainants' passes is beyond the powers of management." To start with,
those passes would not have been confiscated had not management ordered the suspension. As put by the
Solicitor General, "the U.S. Air Force authorities could not have known who were supposed to report for work on
February 27, 1980," 12and who were under suspension. Conversely, in the absence of such a suspension order,
there was no ground to seize such gate passes. Base guards, by themselves, cannot bar legitimate employees
without the 'proper sanction of such employees'employers.
What disturbs us even more, however, is the perplexing gullibility with which the respondent National Labor
Relations Commission would fall for such an indefensible position. Said the Commission: "So, with their gate passes
confiscated, even if management will reinstate them, without the gate passes, they cannot enter the US Clark
Airforce Base and perform their jobs, for the gate pass is a pre-requisite for their entrance for employment." 13 For
surely, and as we stated, the petitioners were dispossessed of those gate passes precisely because of the
suspension meted out against them. It is not the other way around, as the Commission would have us behave, for
the confiscation of such passes would not furnish a ground for suspension. Reinstatement then would have
deprived the base gullibility guards any right to hold on to such passes any further. In the absence of superior
orders, mere base guards are bereft of any discretion to act on such matters.
In finding the petitioners' suspension illegal, with more reason do we hold their subsequent dismissal to be illegal.
We are not persuaded by the respondent firm's argument that final termination should be effected as the contract
has expired." 14 What impresses us is the Solicitor General's submission that the petitioners were regular
employees and as such, their tenure did not end with the expiration of the contract. We quote:
The records show that petitioners were do so, 6 The ar employees whose employment did not
terminate with the expiration of private respondent's contract with the U.S. Air Force. In their
position paper in the arbitration proceedings, they averred that been employer employed by
private respondent for six (6) months or more before they were terminated as follows:
NAMES DATE POSITION

EMPLOYED
1. Cornelio Jan. 1976 Driver

Pangilinan
2. Leo Tropico Mar. 1977 Driver
3. Olimpio Jan. 1977 Driver

Gumin
4. Juanita June l976 Driver

Suba
5. Rolando Oct. 1978 Driver

Santos
6. Ruben Jan. 1975 Packer

Buela
7. Odilon May 1975 Packer

Lising
8. Reynaldo May 1976 Packer

Dayrit
9. Rogelio Mar. 1977 Packer

Manguerra
10. Orlando May 1977 Packer

Nacu

11. Diosalino May 1977 Packer
Perdon
12. Ernesto June 1977 Packer

Galang
13. Orlando June l977 Packer

Pangilinan
14. Jesus May 1977 Packer

Sembrano
15. Renato May 1976 Packer

Castaneda
16. Edilberto Aug. 1977 Packer

Sarmiento
17, Eduardo Dec. 1977 Packer

Alegado
18. Benjamin June l978 Packer

Capiz
19. Antonio Nov. 1978 Packer

Razon
20. Edilberto May 1978 Packer

Bingcang
21. Ernesto June 1978 Packer

Santos
22. Benedicto Oct. 1978 Packer

Capio
23. Rufo May 1977 Packer

Bugayong
24. Ricardo S. Dec. 1978 Packer

Domingo
25. Teresito Mar. 1978 Packer

Cullarin
26. Israel May 1979 Packer

Vino
27. Ernesto Mar. 1979 Packer

Ramirez
28. Romeo S. Sept. 1979 Packer

Gina
29. Arnel Sept. 1979 Packer

Calflung
30. Pedro A. May 1979 Packer

Santos
31. Rodolfo Nov. 1978 Packer

Capitly
32. Sept. 1979 Packer

Buenaventura
B. Puno

33. Edilberto Nov. 1978 Packer
Quiambao
34. Fernando Jan. 1975 Checker

Lising
35. Ernesto Feb. 1975 Mechanic

M. Tuazon
36. Marcelo Jan. 1963 Mechanic

Lagansad
37. Marcelino May 1979 Mechanic

Valerio
38. Serafin Feb. 1979 Packer

Pawa
39. Jesus S. May 1977 Packer

Daquigan
40. Ismael May 1978 Packer 15

Cayanan
As regular employees, the petitioners' tenure are secure, and their dismissal must be premised on a just cause. 16
We find none here. What we find, instead, are flimsy attempts by the respondent company to discredit the person
of the petitioners' counsel, or their officers, and other resorts to argumenta ad hominem. 17
There is no merit in the claim that the petitioners' terms were coterminous with the duration of the contract.
There is nothing in the records that would show that the petitioners were parties to that contract. It appears
furthermore that the petitioners 18 were in the employ of the respondent company long before that contract was
concluded. They were not contract workers whose work terms are tied to the agreement, but were, rather, regular
employees of their employer who entered into that contract.
But even if dismissal were warranted, the same nonetheless faces our disapproval in the absence of a proper
clearance then required under the Labor Code. 19 It is true that efforts were undertaken to seek such a clearance,
yet there is no showing that it was issued. That still taints the dismissal with the vice of illegality.
The Court likewise rejects the claims of an alleged waiver by the petitioners of their economic demands, in the
light of an alleged order issued by Labor Arbiter Luciano Aquino in connection with another case(s) involving the
same parties. (It was Labor Arbiter Federico Bernardo who penned the unfair labor practice/illegal dismissal case.)
The Honorable Aquino's disposition reads:
The records show that a "Waiver of Claims, Rights and Interest" was filed by above-named
petitioners stating, among other things, that said petitioners are waiving their claims, rights and
interests against the respondents.
ACCORDINGLY, let the above-entitled cases be DISMISSED in view of the waiver made by the
petitioners. 20
Acting on these allegations, the respondent Commission, baring its clear bias for management,
ruled that the petitioners had waived their claims. Thus:
xxx xxx xxx
With respect to the second issue, that is, whether or not the waiver of rights and interests
executed by Fernando do so, 6 The G Lising, Odilon do so, 6 The G Lising, Jose C. Tiamzon,
Ernesto Tuazon, Pedro Santos, Ruben Buela, Eduardo Alegado, Estrael Vino, Rogelio Manguerra,
Edilberto Bingcang, Olimpio Gumin, Leo Tropico, Orlando Nacu, Rodolfo T. Capitly and Juanito
Suba, are valid, the alleged president of complainant-appellee union Benigno Navarro, Sr.,
contends that Id Atty. Solomon has no authority to appear floor and in behalf of individual
complainants-appellees who waived their rights and interests in these cases since there was no

authority from him. Records, however, disclose that said Atty. Solomon had been the attorney of
record for complainants-appellees since the inception of these cases, and, therefore, is authority
to represent them cannot be questioned- not even by Ministry. Navarro who allegedly took over
the presidency of complainant-appellee union after the disappearance of the former president,
Mr. Ficardo Alconga, Sr. And besides, the waiver of rights and interests were personally executed
by the signatories therein and all that Atty. Solomon did was to assist them. 21
xxx xxx xxx
We find this puzzling for clearly, Labor Arbiter Aquino's resolution refers to other cases 22 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. 28Accordingly, we rule the respondent corporation
liable for such unpaid claims.
Before Batas Blg. 70 29 was enacted into law, unfair labor practices were considered administrative offenses, 30 and
have been held akin to tort, 31 wherein damages are payable. We therefore not only order herein the
reinstatement of the petitioners and the payment of backwages (including cost-of-living allowances) to them, but
impose as well moral and exemplary damages. With respect to backwages, we hold the respondent e.g.
Gochangco, Inc. liable, in line with the recommendation of the Solicitor General and in accordance with accepted
practice, for backwages equivalent to three (3) years without qualification or deduction. 32
As for moral damages, we hold the said respondent liable therefor under the provisions of Article 2220 of the Civil
Code providing for damages for "breaches of contract where the defendant acted fraudulently or in bad faith." We
deem just and proper the sum of P5,000.00 each in favor of the terminated workers, in the concept of such
damages.
We likewise grant unto said workers another P5,000.00 each to answer for exemplary damages based on the
provisions of Articles 2229 and 2231 and/or 2232 of the Civil Code. For "act[ing] in gross and evident bad faith in
refusing to satisfy the [petitioners'] plainly valid, just and demandable claim[s] " 33 the respondent firm is further
condemned to pay attorney's fees. The Court considers the total sum of P20,000.00 fair and reasonable.
If only for emphasis, the new Constitution considers "labor as a primary social economic force." 34 As the
conscience of the government, it is this Court's sworn duty to ensure that none trifles with labor rights.
WHEREFORE, the petition is GRANTED. The decision of the public respondent, the National Labor Relations
Commission, is REVERSED and SET ASIDE. Judgment is hereby rendered:
1. Ordering the private respondent, e.g. Gochangco, Inc., to REINSTATE the terminated workers;
2. Ordering the private respondent to PAY them backwages equivalent to three (3) years without qualification or
deduction;
3. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH, as and for moral damages;

4. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH, as and for exemplary damages;
and
5. Ordering it to PAY them the sum of TWENTY THOUSAND (P20,000.00) PESOS as and for attorney's fees.
This Decision is IMMEDIATELY EXECUTORY.
Costs against the private respondent.
IT IS SO ORDERED.

G.R. No. L-26519 October 29, 1971
CARLOS CRUZ, petitioner,

vs.
PHILIPPINE ASSOCIATION LABOR UNIONS (PAFLU), respondent.
G.R. No. L-26525 October 29, 1971
CATALINA V. TAN and VICTOR TAN, petitioners,
vs. PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) and COURT OF INDUSTRIAL
RELATIONS,respondents.
FERNANDO, J.:
Respondent Court of Industrial Relations, in its decision sought to be reviewed in this petition, sustained the claim
of respondent Philippine Association of Free Labor Union hereinafter designated as the respondent Union, that the
sale of the Quality Container Factory was designed to avoid bargaining collectively with it as the duly chosen
representative of such employees and thus constituted unfair labor practice. It therefore held vendors Catalina V.
Tan and Victor Tan 1 and vendee Carlos Cruz 2 liable for the reinstatement of the members of respondent Union
their employment with full back wages. With such a finding of bad faith reached by respondent Court, which not
for us to disregard, there is a heavy burden of persuasion that must be borne by the party assailing a decision of an
administrative tribunal. A careful scrutiny of the arguments in the respective briefs filed by petitioners in these two
cases does not, for all their plausibility, suffice to indicate that a different conclusion is called for. We affirm.
The background facts are set forth thus in the resolution of respondent Court now before us: "It appears from
record that the Quality Container Factory is a joint business venture of a husband and wife team — [the Tan
spouses] — employing hired hands in the manufacture and sale of tin cans. Sometime in January 1961 these
workers formed a union, elected its officers and had it registered with the Department of Labor. Subsequently, on
February 28, 1961 the factory received from the complaining union a notice of its existence with an attached set of
collective bargaining proposal after a series of unreasonable delay in discussing or negotiating with complainant
the possibility of entering into a collective bargaining contract, a management-inspired petition was later filed with
this Court docketed as Case No. 894-MC. This notwithstanding, and inspite of the protest lodged by the petitioner
Philippine Transport and General Workers Organization (PTGWO), herein complainant Philippine Association of
Free Labor Union (PAFLU) came out by a clear majority and was declared as the winning collective bargaining
representative of the Quality Container Factory Workers." 3 Then came this portion: "On June 14, 1963, after the
issue of certification was decided by this Court, complainant union proposed to continue the negotiations to
possibly finalize a collective bargaining contract with the management. Less than a month thereafter, on July 11,
1963, the factory was however sold to respondent Carlos Cruz. The Trial Court while admitting the testimony of
Mrs. Tan that she adequately informed the buyer of the existence of the complainant union, ..., in the same way,
sustained the testimony of Carlos Cruz that this matter was never discussed in the preliminary talks prior to the
sale of the factory. Neither one nor the other could be telling the truth. It is not at all possible for the Court to lend
credence to the two narrations of facts one of which, on the whole contradicts the other. Of course, the sale in all
its phases is seemingly without flaw. All its elements are anyway present to clothe it with the taint of validity,
except the motive, which undoubtly was never disclosed." 4 It was noted in such a resolution: "This Court has in
mind that there are a number of causes why a business enterprise has to be sold. There are so many factors to be
considered, say, losses are being heavily incurred or that the owners have tired of its so many industrial problems
and would therefore want to retreat to a less busier corner. A sale, under nominal conditions, may even be
executed for fun of it, and nobody would lift a finger against its valid effects. Oftentimes, however, it is simulated
to rid the management of mounting labor problems." 5 After which came this observation on the part of
respondent Court: "Under the situation, there was no evidence presented which would somehow indicate that
business was lean much less was it hinted that the former owners really wanted to seek retirement from further
engaging into world of trade. It could not be said that the sale was made just for the sake of selling, or that the
owners were branching out into other business fields. There were none of these reasons." 6
It then ascertained what could be the possible motive for the sale in this wise: "From the outset of the organization
of complainant union, the management considerable found a foe which it would not recognize for reasons which
we do not know. Evidence strongly insinuated that the company supported a stand apparently adverse to the
sentiments of the workers. In the mentioned certification Case (894-MC) which is interrelated herein, the same
company claimed to have an existing collective bargaining contract with another union but which was never
produced before the Court. That is why the dispute continued from there. Evidence further hinted that during the
pendency of protest in the said certification case, the company financed the presentation of witnesses to testify
against the union ... . The labor dispute was indeed at its height, still mounting, at the same time when the alleged

sale was made. There was no other excuse that the Court could exhaust under the prevailing conditions. The sale
was executed not for any other cause but to rid the company of the curricular labor problems. (See Angat Case) All
phases of evidence pointed to it." 7
It was not surprising therefore that the conclusion reached by it was that the transaction was tainted by bad faith
and that there was an unfair labor practice. Thus: "But a buyer should not be allowed to reap and enjoy all the
profits of a sale without the corresponding responsibilities that are attached to the industrial enterprise, specially
so when the sale was executed under dubious circumstances. If it is so the convenience of ridding the
management of any labor problem is easily facilitated by simulating a sale everytime the laboring elements agitate
the protection of their rights. That is why under the present condition, responsibility should be shared by both the
buyer and the seller otherwise the efforts of the workers would have been futile and fruitless, since they would
naturally face a blank wall after the sale. For how can they be reinstated to their former employment if the duty to
rehire them be limited to the seller? This seems impossible. After all respondent Carlos Cruz, was not at all free
from the attending faults. As was discussed earlier, Mrs. Tan made a disclosure that he was made aware of the
current labor problems. It cannot be reasoned out that there was a failure, much less can it be said that he is a
buyer in good faith as far as the workers are concerned. Let all the party respondents be liable, therefore." 8
It is thus apparent that as noted at the outset the decision now on review must be affirmed. The conclusion
reached by respondent Court finds support in the law. It would be a frustration of the statutory scheme in the
Industrial Peace Act 9 instituting a regime of free collective bargaining to hold otherwise. The choice as to the
bargaining representative of the employee belongs to them alone. The language of the Act: "The labor
organization designated or selected for the purpose of collective bargaining by the majority of the employees in an
appropriate collective bargaining unit shall be the exclusive representative of all the employees in such unit for the
purpose of collective bargaining in respect to rates of pay, wages, hours of employment, or another conditions of
employment: ... . 10
Petitioners, the Tan spouses, were thereafter called to bargain collectively with respondent Union as such
exclusive representative. There was a failure to do so them. That was an unfair labor practice, 11 compounded by
another actuation amounting to discrimination in regard to tenure or condition of employment against a labor
union. 12Apparently in an effort to avoid the legal consequences of such conduct frowned upon by the law,
connivance of petitioner Cruz was elicited. Necessary the sale was attended with bad faith. Respondent Co was not
blind to such an attempt at evasion. It refused to countenance the resulting dismissal of the members respondent
Union. It ordered the reinstatement. Its decision far from being repugnant to law is in conform with it. This
certainly cannot be one of those cases which the judgment arrived at by respondent Court is to ignored, much less
set aside.
1. Its conclusion must be respected. There is no justification for the principal contention advanced in the ably-
written briefs of both petitioners Tan and Cruz that the conclusion of respondent Court that the sale was tainted
by bad faith should not be sustained. The law has not been ignored. Far from it. There is nothing offensive to the
reason or common sense in the verdict thus arrived at. Moreover, as far back as 1940, it was already noted by
Justice Laurel, for a finding of respondent Court to lose its conclusive character, there must be a showing of abuse
of discretion. 13 As worded in the Industrial Peace Act, factual determinations of the Court of Industrial Relations "if
supported by substantial evidence on the record shall be conclusive." 14 It is to be noted further that it is not only
findings of fact that are ordinarily left undisturbed. The principle as to the recognition to be accorded the
conclusion reached by respondent Court goes further. So it was stressed in a relatively recent case, National
Waterworks and Sewerage Authority v. NWSA Consolidated Union: 15 "The controlling doctrine recognizes the wide
discretion enjoyed by respondent Court in ascertaining what actually did occur in labor disputes of whatever sort.
Its conclusion once reached is invariably accorded the seal of our acceptance. Its disposition of a case before it
usually elicits assent from us. It could happen of course that we may fail to view matters similarly. We have that
power; it must be made use of when warranted. It does not occur often though. That is not merely so as to the
facts . The acceptance of its legal conclusion reached is not a rare event either. This is merely to recognize that on
labor matters, its recognized expertise has well nigh earned for its decrees the title-deed to recognition, unless
there be a rank failure to observe the constitutional and statutory limitations which it must observe." 16 It follows
therefore that the principal assignment of error of petitioners as to the absence of bad faith appears to be without
sufficient legal basis.
Support for the above conclusion comes from a leading case, Philippine Land-Air-Sea Labor Union v. Sy Indong Co.
Rice & Corn Mills, 17 the opinion being penned by the then Justice, now Chief Justice, Concepcion. It speaks for
itself. Thus: "Upon a review of the record we are inclined to sustain the conclusion of the trial judge. Indeed, as set
forth in His Honor's decision, and the Resolution appealed from does not deny it: 'The management, in making
their union busting air-tight, dissolved their partnership without any reason at all although its existence is for 20
years per Article of Partnership of Ang Han Tiong & Company, doing business in the name of Sy Indong Company ...
. Alfredo Que, in his testimony, alleged that the Sy Indong Company was bankrupt, but nowhere in the records
there any declaration of bankruptcy made by a company court pursuant to the provisions of the Code of

Commerce. On the contrary, the manager, Ton Chua Seng Tiong declared that as manager of the Sy Indong
Company, he owned P20,000.00 worth of shares and that his shares of stock increased a little when he withdrew
it. ... The alleged bankruptcy, therefore, of the company as pictured by Alfredo Que is absurd. Otherwise, the
manager could not have withdrawn with an increased shares in stocks if the company was really bankrupt.' The
ensuing paragraph follows: "Moreover, Sen Chiong was organized on very same day on which the assignment
thereto of the assets of Sy Indong in Tubod took place, and Ang Han Tion the managing partner of Sy Indong is the
same managing partner of Sen Chiong. Again, Tiu E. Tec is, likewise a partner of both enterprises. These
circumstances, when considered in relation to the fact that the present unfair labor practice case had been
pending in the CIR for about 18 months prior to February 4, 1957, lead to no other conclusion than that the
organizers of Sen Chiong were aware of said case when they established the company and acquired the assets of
Sy Indong in Tubod and that they either organized Sen Chiong, in an attempt to relieve Sy Indong of the
consequences or effects of the present litigation, or acquired said assets assuming the risk of having to bear the
liabilities or part of the liabilities that said litigation may eventually entail. In either case, the trial was justified in
rendering judgment against Sen Chiong." 18
2. Necessarily then, the alleged error assigned by petitioners, the Tan spouses, and petitioner Cruz that respondent
Court should not have ordered the reinstatement of the members of complainant Union as well as the back wages
to which they are entitled is equally without foundation. The language of the Industrial Peace Act is unequivocal.
For respondent Court, according to the Industrial Peace Act, is called upon to "take such affirmative action as will
effectuate [its policies] including reinstatement of employees with or without back pay." Less than two months
ago, in East Asiatic Company, Ltd. v. Court of Industrial Relations, 19 to this Court, through Justice Barredo, had
occasion to announce the applicable doctrine. Thus: "It is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses and
general increases, to which he would have been normally entitled had he not been dismissed and had not stopped
working, but it is the right, on the other hand, of the employer to deduct from the total of these, the amount
equivalent to the salaries or wages the employee or worker would have earned in his old employment on the
corresponding days that he was actually gainfully employed elsewhere with an equal or higher salary or wage, such
that if his salary or wage in his other employment was less, the employer may deduct only what has been actually
earned." 20 There is thus a reconciliation of the principle that would hold an employer liable for a defiance of the
plain statutory command with the equitable concept that he is not thereby precluded from reducing the financial
liability incumbent upon him by the deduction of whatever wages might have been earned by the aggrieved
employees. The decision now under review as thus construed is thus free from such alleged infirmity.
3. There is likewise an error assigned by petitioner Cruz that labor contracts being in personam are not enforceable
against a transferee of an enterprise, there being no previous employer-employee relationship existing between
the new owner and the complaining employees. Reliance is placed on our ruling in Visayan Transportation Co. v.
Java. 21 There is no need to inquire as to the applicability of such a decision in the disposition of the present case. If
the facts were otherwise and no bad faith could be imputed to petitioner Cruz, then perhaps it would be in order
to ascertain whether it governs the situation. Without discounting therefore the criticism to which the Visayan
Transportation Company case had been subjected insofar as it would ignore the binding force of a collective
bargaining contract just because of the sale of the enterprise when the vendee would be looked upon as the
successor-in-interest of the vendor to whatever rights or obligation could be transferred, it suffices to state that
petitioner Cruz is in the position of a tort-feasor having been a party likewise responsible for the damage inflicted
on the members of respondent Union and therefore cannot justly escape liability. That would dispose of all the
errors assigned by petitioners in this appeal.
WHEREFORE, the decision of respondent Court on August 18, 1966 is affirmed. The case is hereby remanded to the
Court of Industrial Relations for further proceedings in conformity with this opinion. With costs against petitioners,
the Tan spouses as well as petitioner Carlo Cruz.

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.
CASTRO, J.:
Appeal, by certiorari to review a decision and a resolution en banc of the Court of Industrial Relations dated August
17, 1965 and October 20, 1965, respectively, in Case 1698-ULP.
The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group Workers & Employees
Association-NATU, and Insular Life Building Employees Association-NATU (hereinafter referred to as the Unions),
while still members of the Federation of Free Workers (FFW), entered into separate collective bargaining
agreements with the Insular Life Assurance Co., Ltd. and the FGU Insurance Group (hereinafter referred to as the
Companies).
Two of the lawyers of the Unions then were Felipe Enaje and Ramon Garcia; the latter was formerly the secretary-
treasurer of the FFW and acting president of the Insular Life/FGU unions and the Insular Life Building Employees
Association. Garcia, as such acting president, in a circular issued in his name and signed by him, tried to dissuade
the members of the Unions from disaffiliating with the FFW and joining the National Association of Trade Unions
(NATU), to no avail.
Enaje and Garcia soon left the FFW and secured employment with the Anti-Dummy Board of the Department of
Justice. Thereafter, the Companies hired Garcia in the latter part of 1956 as assistant corporate secretary and legal
assistant in their Legal Department, and he was soon receiving P900 a month, or P600 more than he was receiving
from the FFW. Enaje was hired on or about February 19, 1957 as personnel manager of the Companies, and was
likewise made chairman of the negotiating panel for the Companies in the collective bargaining with the Unions.
In a letter dated September 16, 1957, the Unions jointly submitted proposals to the Companies for a modified
renewal of their respective collective bargaining contracts which were then due to expire on September 30, 1957.
The parties mutually agreed and to make whatever benefits could be agreed upon retroactively effective October
1, 1957.
Thereafter, in the months of September and October 1957 negotiations were conducted on the Union's proposals,
but these were snagged by a deadlock on the issue of union shop, as a result of which the Unions filed on January
27, 1958 a notice of strike for "deadlock on collective bargaining." Several conciliation conferences were held
under the auspices of the Department of Labor wherein the conciliators urged the Companies to make reply to the
Unions' proposals en toto so that the said Unions might consider the feasibility of dropping their demand for union
security in exchange for other benefits. However, the Companies did not make any counter-proposals but, instead,
insisted that the Unions first drop their demand for union security, promising money benefits if this was done.
Thereupon, and prior to April 15, 1958, the petitioner Insular Life Building Employees Association-NATU dropped
this particular demand, and requested the Companies to answer its demands, point by point, en toto. But the
respondent Insular Life Assurance Co. still refused to make any counter-proposals. In a letter addressed to the two
other Unions by the joint management of the Companies, the former were also asked to drop their union security
demand, otherwise the Companies "would no longer consider themselves bound by the commitment to make
money benefits retroactive to October 1, 1957." By a letter dated April 17, 1958, the remaining two petitioner
unions likewise dropped their demand for union shop. April 25, 1958 then was set by the parties to meet and
discuss the remaining demands.
From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no satisfactory result due to a
stalemate on the matter of salary increases. On May 13, 1958 the Unions demanded from the Companies final
counter-proposals on their economic demands, particularly on salary increases. Instead of giving counter-
proposals, the Companies on May 15, 1958 presented facts and figures and requested the Unions to submit a
workable formula which would justify their own proposals, taking into account the financial position of the former.
Forthwith the Unions voted to declare a strike in protest against what they considered the Companies' unfair labor
practices.
Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase in salary nor in
responsibility while negotiations were going on in the Department of Labor after the notice to strike was served on
the Companies. These employees resigned from the Unions.

On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life Building at Plaza Moraga.
On May 21, 1958 the Companies through their acting manager and president, the respondent Jose M. Olbes
(hereinafter referred to as the respondent Olbes), sent to each of the strikers a letter (exhibit A) quoted verbatim
as follows:
We recognize it is your privilege both to strike and to conduct picketing.
However, if any of you would like to come back to work voluntarily, you may:
1. Advise the nearest police officer or security guard of your intention to do so.
2. Take your meals within the office.
3. Make a choice whether to go home at the end of the day or to sleep nights at the office where
comfortable cots have been prepared.
4. Enjoy free coffee and occasional movies.
5. Be paid overtime for work performed in excess of eight hours.
6. Be sure arrangements will be made for your families.
The decision to make is yours — whether you still believe in the motives of the strike or in the
fairness of the Management.
The Unions, however, continued on strike, with the exception of a few unionists who were convinced to desist by
the aforesaid letter of May 21, 1958.
From the date the strike was called on May 21, 1958, until it was called off on May 31, 1958, some management
men tried to break thru the Unions' picket lines. Thus, on May 21, 1958 Garcia, assistant corporate secretary, and
Vicente Abella, chief of the personnel records section, respectively of the Companies, tried to penetrate the picket
lines in front of the Insular Life Building. Garcia, upon approaching the picket line, tossed aside the placard of a
picketer, one Paulino Bugay; a fight ensued between them, in which both suffered injuries. The Companies
organized three bus-loads of employees, including a photographer, who with the said respondent Olbes,
succeeded in penetrating the picket lines in front of the Insular Life Building, thus causing injuries to the picketers
and also to the strike-breakers due to the resistance offered by some picketers.
Alleging that some non-strikers were injured and with the use of photographs as evidence, the Companies then
filed criminal charges against the strikers with the City Fiscal's Office of Manila. During the pendency of the said
cases in the fiscal's office, the Companies likewise filed a petition for injunction with damages with the Court of
First Instance of Manila which, on the basis of the pendency of the various criminal cases against striking members
of the Unions, issued on May 31, 1958 an order restraining the strikers, until further orders of the said court, from
stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates, entrance and driveway
and the free movement of persons and vehicles to and from, out and in, of the Companies' building.
On the same date, the Companies, again through the respondent Olbes, sent individually to the strikers a letter
(exhibit B), quoted hereunder in its entirety:
The first day of the strike was last 21 May 1958.
Our position remains unchanged and the strike has made us even more convinced of our
decision.
We do not know how long you intend to stay out, but we cannot hold your positions open for
long. We have continued to operate and will continue to do so with or without you.
If you are still interested in continuing in the employ of the Group Companies, and if there are no
criminal charges pending against you, we are giving you until 2 June 1958 to report for work at
the home office. If by this date you have not yet reported, we may be forced to obtain your
replacement.

Before, the decisions was yours to make.
So it is now.
Incidentally, all of the more than 120 criminal charges filed against the members of the Unions, except three (3),
were dismissed by the fiscal's office and by the courts. These three cases involved "slight physical injuries" against
one striker and "light coercion" against two others.
At any rate, because of the issuance of the writ of preliminary injunction against them as well as the ultimatum of
the Companies giving them until June 2, 1958 to return to their jobs or else be replaced, the striking employees
decided to call off their strike and to report back to work on June 2, 1958.
However, before readmitting the strikers, the Companies required them not only to secure clearances from the
City Fiscal's Office of Manila but also to be screened by a management committee among the members of which
were Enage and Garcia. The screening committee initially rejected 83 strikers with pending criminal charges.
However, all non-strikers with pending criminal charges which arose from the breakthrough incident were
readmitted immediately by the Companies without being required to secure clearances from the fiscal's office.
Subsequently, when practically all the strikers had secured clearances from the fiscal's office, the Companies
readmitted only some but adamantly refused readmission to 34 officials and members of the Unions who were
most active in the strike, on the ground that they committed "acts inimical to the interest of the respondents,"
without however stating the specific acts allegedly committed. Among those who were refused readmission are
Emiliano Tabasondra, vice president of the Insular Life Building Employees' Association-NATU; Florencio Ibarra,
president of the FGU Insurance Group Workers & Employees Association-NATU; and Isagani Du Timbol, acting
president of the Insular Life Assurance Co., Ltd. Employees Association-NATU. Some 24 of the above number were
ultimately notified months later that they were being dismissed retroactively as of June 2, 1958 and given
separation pay checks computed under Rep. Act 1787, while others (ten in number) up to now have not been
readmitted although there have been no formal dismissal notices given to them.
On July 29, 1958 the CIR prosecutor filed a complaint for unfair labor practice against the Companies under
Republic Act 875. The complaint specifically charged the Companies with (1) interfering with the members of the
Unions in the exercise of their right to concerted action, by sending out individual letters to them urging them to
abandon their strike and return to work, with a promise of comfortable cots, free coffee and movies, and paid
overtime, and, subsequently, by warning them that if they did not return to work on or before June 2, 1958, they
might be replaced; and (2) discriminating against the members of the Unions as regards readmission to work after
the strike on the basis of their union membership and degree of participation in the strike.
On August 4, 1958 the Companies filed their answer denying all the material allegations of the complaint, stating
special defenses therein, and asking for the dismissal of the complaint.
After trial on the merits, the Court of Industrial Relations, through Presiding Judge Arsenio Martinez, rendered on
August 17, 1965 a decision dismissing the Unions' complaint for lack of merit. On August 31, 1965 the Unions
seasonably filed their motion for reconsideration of the said decision, and their supporting memorandum on
September 10, 1965. This was denied by the Court of Industrial Relations en banc in a resolution promulgated on
October 20, 1965.
Hence, this petition for review, the Unions contending that the lower court erred:
1. In not finding the Companies guilty of unfair labor practice in sending out individually to the
strikers the letters marked Exhibits A and B;
2. In not finding the Companies guilty of unfair labor practice for discriminating against the
striking members of the Unions in the matter of readmission of employees after the strike;
3. In not finding the Companies guilty of unfair labor practice for dismissing officials and
members of the Unions without giving them the benefit of investigation and the opportunity to
present their side in regard to activities undertaken by them in the legitimate exercise of their
right to strike; and
4. In not ordering the reinstatement of officials and members of the Unions, with full back wages,
from June 2, 1958 to the date of their actual reinstatement to their usual employment.

I. The respondents contend that the sending of the letters, exhibits A and B, constituted a legitimate exercise of
their freedom of speech. We do not agree. The said letters were directed to the striking employees individually —
by registered special delivery mail at that — without being coursed through the Unions which were representing
the employees in the collective bargaining.
The act of an employer in notifying absent employees individually during a strike following
unproductive efforts at collective bargaining that the plant would be operated the next day and
that their jobs were open for them should they want to come in has been held to be an unfair
labor practice, as an active interference with the right of collective bargaining through dealing
with the employees individually instead of through their collective bargaining representatives.
(31 Am. Jur. 563, citing NLRB v. Montgomery Ward & Co. [CA 9th] 133 F2d 676, 146 ALR 1045)
Indeed, it is an unfair labor practice for an employer operating under a collective bargaining agreement to
negotiate or to attempt to negotiate with his employees individually in connection with changes in the agreement.
And the basis of the prohibition regarding individual bargaining with the strikers is that although the union is on
strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative
(Melo Photo Supply Corporation vs. National Labor Relations Board, 321 U.S. 332).
Indeed, some such similar actions are illegal as constituting unwarranted acts of interference. Thus, the act of a
company president in writing letters to the strikers, urging their return to work on terms inconsistent with their
union membership, was adjudged as constituting interference with the exercise of his employees' right to
collective bargaining (Lighter Publishing, CCA 7th, 133 F2d 621). It is likewise an act of interference for the
employer to send a letter to all employees notifying them to return to work at a time specified therein, otherwise
new employees would be engaged to perform their jobs. Individual solicitation of the employees or visiting their
homes, with the employer or his representative urging the employees to cease union activity or cease striking,
constitutes unfair labor practice. All the above-detailed activities are unfair labor practices because they tend to
undermine the concerted activity of the employees, an activity to which they are entitled free from the employer's
molestation.1
Moreover, since exhibit A is a letter containing promises of benefits to the employees in order to entice them to
return to work, it is not protected by the free speech provisions of the Constitution (NLRB v. Clearfield Cheese Co.,
Inc., 213 F2d 70). The same is true with exhibit B since it contained threats to obtain replacements for the striking
employees in the event they did not report for work on June 2, 1958. The free speech protection under the
Constitution is inapplicable where the expression of opinion by the employer or his agent contains a promise of
benefit, or threats, or reprisal (31 Am. Jur. 544; NLRB vs. Clearfield Cheese Co., Inc., 213 F2d 70; NLRB vs. Goigy
Co., 211 F2d 533, 35 ALR 2d 422).
Indeed, when the respondents offered reinstatement and attempted to "bribe" the strikers with "comfortable
cots," "free coffee and occasional movies," "overtime" pay for "work performed in excess of eight hours," and
"arrangements" for their families, so they would abandon the strike and return to work, they were guilty of strike-
breaking and/or union-busting and, consequently, of unfair labor practice. It is equivalent to an attempt to break a
strike for an employer to offer reinstatement to striking employees individually, when they are represented by a
union, since the employees thus offered reinstatement are unable to determine what the consequences of
returning to work would be.
Likewise violative of the right to organize, form and join labor organizations are the following acts: the offer of a
Christmas bonus to all "loyal" employees of a company shortly after the making of a request by the union to
bargain; wage increases given for the purpose of mollifying employees after the employer has refused to bargain
with the union, or for the purpose of inducing striking employees to return to work; the employer's promises of
benefits in return for the strikers' abandonment of their strike in support of their union; and the employer's
statement, made about 6 weeks after the strike started, to a group of strikers in a restaurant to the effect that if
the strikers returned to work, they would receive new benefits in the form of hospitalization, accident insurance,
profit-sharing, and a new building to work in.2
Citing paragraph 5 of the complaint filed by the acting prosecutor of the lower court which states that "the officers
and members of the complainant unions decided to call off the strike and return to work on June 2, 1958 by reason
of the injunction issued by the Manila Court of First Instance," the respondents contend that this was the main
cause why the strikers returned to work and not the letters, exhibits A and B. This assertion is without merit. The
circumstance that the strikers later decided to return to work ostensibly on account of the injunctive writ issued by
the Court of First Instance of Manila cannot alter the intrinsic quality of the letters, which were calculated, or
which tended, to interfere with the employees' right to engage in lawful concerted activity in the form of a strike.
Interference constituting unfair labor practice will not cease to be such simply because it was susceptible of being

thwarted or resisted, or that it did not proximately cause the result intended. For success of purpose is not, and
should not, be the criterion in determining whether or not a prohibited act constitutes unfair labor practice.
The test of whether an employer has interfered with and coerced employees within the meaning
of subsection (a) (1) is whether the employer has engaged in conduct which it may reasonably be
said tends to interfere with the free exercise of employees' rights under section 3 of the Act, and
it is not necessary that there be direct evidence that any employee was in fact intimidated or
coerced by statements of threats of the employer if there is a reasonable inference that anti-
union conduct of the employer does have an adverse effect on self-organization and collective
bargaining. (Francisco, Labor Laws 1956, Vol. II, p. 323, citing NLRB v. Ford, C.A., 1948, 170 F2d
735).
Besides, the letters, exhibits A and B, should not be considered by themselves alone but should be read in the light
of the preceding and subsequent circumstances surrounding them. The letters should be interpreted according to
the "totality of conduct doctrine,"
... whereby the culpability of an employer's remarks were to be evaluated not only on the basis
of their implicit implications, but were to be appraised against the background of and in
conjunction with collateral circumstances. Under this "doctrine" expressions of opinion by an
employer which, though innocent in themselves, frequently were held to be culpable because of
the circumstances under which they were uttered, the history of the particular employer's labor
relations or anti-union bias or because of their connection with an established collateral plan of
coercion or interference. (Rothenberg on Relations, p. 374, and cases cited therein.)
It must be recalled that previous to the petitioners' submission of proposals for an amended renewal of their
respective collective bargaining agreements to the respondents, the latter hired Felipe Enage and Ramon Garcia,
former legal counsels of the petitioners, as personnel manager and assistant corporate secretary, respectively,
with attractive compensations. After the notice to strike was served on the Companies and negotiations were in
progress in the Department of Labor, the respondents reclassified 87 employees as supervisors without increase in
salary or in responsibility, in effect compelling these employees to resign from their unions. And during the
negotiations in the Department of Labor, despite the fact that the petitioners granted the respondents' demand
that the former drop their demand for union shop and in spite of urgings by the conciliators of the Department of
Labor, the respondents adamantly refused to answer the Unions' demands en toto. Incidentally, Enage was the
chairman of the negotiating panel for the Companies in the collective bargaining between the former and the
Unions. After the petitioners went to strike, the strikers were individually sent copies of exhibit A, enticing them to
abandon their strike by inducing them to return to work upon promise of special privileges. Two days later, the
respondents, thru their president and manager, respondent Jose M. Olbes, brought three truckloads of non-
strikers and others, escorted by armed men, who, despite the presence of eight entrances to the three buildings
occupied by the Companies, entered thru only one gate less than two meters wide and in the process, crashed
thru the picket line posted in front of the premises of the Insular Life Building. This resulted in injuries on the part
of the picketers and the strike-breakers.lâwphî1.ñèt Then the respondents brought against the picketers criminal
charges, only three of which were not dismissed, and these three only for slight misdemeanors. As a result of these
criminal actions, the respondents were able to obtain an injunction from the court of first instance restraining the
strikers from stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates, entrance and
driveway and the free movement of persons and vehicles to and from, out and in, of the Companies' buildings. On
the same day that the injunction was issued, the letter, Exhibit B, was sent — again individually and by registered
special delivery mail — to the strikers, threatening them with dismissal if they did not report for work on or before
June 2, 1958. But when most of the petitioners reported for work, the respondents thru a screening committee —
of which Ramon Garcia was a member — refused to admit 63 members of the Unions on the ground of "pending
criminal charges." However, when almost all were cleared of criminal charges by the fiscal's office, the
respondents adamantly refused admission to 34 officials and union members. It is not, however, disputed that all-
non-strikers with pending criminal charges which arose from the breakthrough incident of May 23, 1958 were
readmitted immediately by the respondents. Among the non-strikers with pending criminal charges who were
readmitted were Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo, Federico Barretto, Manuel
Chuidian and Nestor Cipriano. And despite the fact that the fiscal's office found no probable cause against the
petitioning strikers, the Companies adamantly refused admission to them on the pretext that they committed
"acts inimical to the interest of the respondents," without stating specifically the inimical acts allegedly committed.
They were soon to admit, however, that these alleged inimical acts were the same criminal charges which were
dismissed by the fiscal and by the courts..
Verily, the above actuations of the respondents before and after the issuance of the letters, exhibit A and B, yield
the clear inference that the said letters formed of the respondents scheme to preclude if not destroy unionism
within them.

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

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

Plaza Moraga, Manila
THE FGU INSURANCE GROUP

Plaza Moraga, Manila
INSULAR LIFE BUILDING ADMINISTRATION

Plaza Moraga, Manila .
for the following reason: DEADLOCK IN COLLECTIVE BARGAINING...
However, the employees did not stage the strike after the thirty-day period, reckoned from January 27, 1958. This
simply proves that the reason for the strike was not the deadlock on collective bargaining nor any lack of economic
concessions. By letter dated April 15, 1958, the respondents categorically stated what they thought was the cause
of the "Notice of Strike," which so far as material, reads:
3. Because you did not see fit to agree with our position on the union shop, you filed a notice of
strike with the Bureau of Labor Relations on 27 January 1958, citing `deadlock in collective
bargaining' which could have been for no other issue than the union shop." (exhibit 8, letter
dated April 15, 1958.)
The strike took place nearly four months from the date the said notice of strike was filed. And the actual and main
reason for the strike was, "When it became crystal clear the management double crossed or will not negotiate in
good faith, it is tantamount to refusal collectively and considering the unfair labor practice in the meantime being
committed by the management such as the sudden resignation of some unionists and [who] became supervisors
without increase in salary or change in responsibility, such as the coercion of employees, decided to declare the
strike." (tsn., Oct. 14, 1958, p. 14.) The truth of this assertion is amply proved by the following circumstances: (1) it
took the respondents six (6) months to consider the petitioners' proposals, their only excuse being that they could
not go on with the negotiations if the petitioners did not drop the demand for union shop (exh. 7, respondents'
letter dated April 7, 1958); (2) when the petitioners dropped the demand for union shop, the respondents did not
have a counter-offer to the petitioners' demands. Sec. 14 of Rep. Act 875 required the respondents to make a
reply to the petitioners' demands within ten days from receipt thereof, but instead they asked the petitioners to
give a "well reasoned, workable formula which takes into account the financial position of the group companies."
(tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26, 1969, p. 49.)
II. Exhibit H imposed three conditions for readmission of the strikers, namely: (1) the employee must be interested
in continuing his work with the group companies; (2) there must be no criminal charges against him; and (3) he
must report for work on June 2, 1958, otherwise he would be replaced. Since the evidence shows that all the
employees reported back to work at the respondents' head office on June 2, 1953, they must be considered as
having complied with the first and third conditions.
Our point of inquiry should therefore be directed at whether they also complied with the second condition. It is
not denied that when the strikers reported for work on June 2, 1958, 63 members of the Unions were refused
readmission because they had pending criminal charges. However, despite the fact that they were able to secure
their respective clearances 34 officials and union members were still refused readmission on the alleged ground
that they committed acts inimical to the Companies. It is beyond dispute, however, that non-strikers who also had
criminal charges pending against them in the fiscal's office, arising from the same incidents whence the criminal
charges against the strikers evolved, were readily readmitted and were not required to secure clearances. This is a
clear act of discrimination practiced by the Companies in the process of rehiring and is therefore a violation of sec.
4(a) (4) of the Industrial Peace Act.

The respondents did not merely discriminate against all the strikers in general. They separated the active from the
less active unionists on the basis of their militancy, or lack of it, on the picket lines. Unionists belonging to the first
category were refused readmission even after they were able to secure clearances from the competent authorities
with respect to the criminal charges filed against them. It is significant to note in this connection that except for
one union official who deserted his union on the second day of the strike and who later participated in crashing
through the picket lines, not a single union officer was taken back to work. Discrimination undoubtedly exists
where the record shows that the union activity of the rehired strikers has been less prominent than that of the
strikers who were denied reinstatement.
So is there an unfair labor practice where the employer, although authorized by the Court of
Industrial Relations to dismiss the employees who participated in an illegal strike, dismissed only
the leaders of the strikers, such dismissal being evidence of discrimination against those
dismissed and constituting a waiver of the employer's right to dismiss the striking employees and
a condonation of the fault committed by them." (Carlos and Fernando, Labor and Social
Legislation, p. 62, citing Phil. Air Lines, Inc. v. Phil. Air Lines Emloyees Association, L-8197, Oct. 31,
1958.)
It is noteworthy that — perhaps in an anticipatory effort to exculpate themselves from charges of discrimination in
the readmission of strikers returning to work — the respondents delegated the power to readmit to a committee.
But the respondent Olbes had chosen Vicente Abella, chief of the personnel records section, and Ramon Garcia,
assistant corporate secretary, to screen the unionists reporting back to work. It is not difficult to imagine that
these two employees — having been involved in unpleasant incidents with the picketers during the strike — were
hostile to the strikers. Needless to say, the mere act of placing in the hands of employees hostile to the strikers the
power of reinstatement, is a form of discrimination in rehiring.
Delayed reinstatement is a form of discrimination in rehiring, as is having the machinery of

reinstatement in the hands of employees hostile to the strikers, and reinstating a union official
who formerly worked in a unionized plant, to a job in another mill, which was imperfectly
organized. (Morabe, The Law on Strikes, p. 473, citing Sunshine Mining Co., 7 NLRB 1252;
Cleveland Worsted Mills, 43 NLRB 545; emphasis supplied.)
Equally significant is the fact that while the management and the members of the screening committee admitted
the discrimination committed against the strikers, they tossed back and around to each other the responsibility for
the discrimination. Thus, Garcia admitted that in exercising for the management the authority to screen the
returning employees, the committee admitted the non-strikers but refused readmission to the strikers (tsn., Feb.
6, 1962, pp. 15-19, 23-29). Vicente Abella, chairman of the management's screening committee, while admitting
the discrimination, placed the blame therefor squarely on the management (tsn., Sept. 20, 1960, pp. 7-8, 14-18).
But the management, speaking through the respondent Olbes, head of the Companies, disclaimed responsibility
for the discrimination. He testified that "The decision whether to accept or not an employee was left in the hands
of that committee that had been empowered to look into all cases of the strikers." (tsn., Sept. 6, 1962, p. 19.)
Of course, the respondents — through Ramon Garcia — tried to explain the basis for such discrimination by
testifying that strikers whose participation in any alleged misconduct during the picketing was not serious in nature
were readmissible, while those whose participation was serious were not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But
even this distinction between acts of slight misconduct and acts of serious misconduct which the respondents
contend was the basis for either reinstatement or discharge, is completely shattered upon a cursory examination
of the evidence on record. For with the exception of Pascual Esquillo whose dismissal sent to the other strikers
cited the alleged commission by them of simple "acts of misconduct."
III. Anent the third assignment of error, the record shows that not a single dismissed striker was given the
opportunity to defend himself against the supposed charges against him. As earlier mentioned, when the striking
employees reported back for work on June 2, 1958, the respondents refused to readmit them unless they first
secured the necessary clearances; but when all, except three, were able to secure and subsequently present the
required clearances, the respondents still refused to take them back. Instead, several of them later received letters
from the respondents in the following stereotyped tenor:
This will confirm the termination of your employment with the Insular Life-FGU Insurance Group
as of 2 June 1958.
The termination of your employment was due to the fact that you committed acts of misconduct
while picketing during the last strike. Because this may not constitute sufficient cause under the
law to terminate your employment without pay, we are giving you the amount of P1,930.32
corresponding to one-half month pay for every year of your service in the Group Company.

Kindly acknowledge receipt of the check we are sending herewith.
Very truly yours,
(Sgd.) JOSE M. OLBES

President, Insurance Life
Acting President, FGU.
The respondents, however, admitted that the alleged "acts of misconduct" attributed to the dismissed strikers
were the same acts with which the said strikers were charged before the fiscal's office and the courts. But all these
charges except three were dropped or dismissed.
Indeed, the individual cases of dismissed officers and members of the striking unions do not indicate sufficient
basis for dismissal.
Emiliano Tabasondra, vice-president of the petitioner FGU Insurance Group Workers & Employees Association-
NATU, was refused reinstatement allegedly because he did not report for duty on June 2, 1958 and, hence, had
abandoned his office. But the overwhelming evidence adduced at the trial and which the respondents failed to
rebut, negates the respondents' charge that he had abandoned his job. In his testimony, corroborated by many
others, Tabasondra particularly identified the management men to whom he and his group presented themselves
on June 2, 1958. He mentioned the respondent Olbes' secretary, De Asis, as the one who received them and later
directed them — when Olbes refused them an audience — to Felipe Enage, the Companies' personnel manager.
He likewise categorically stated that he and his group went to see Enage as directed by Olbes' secretary. If
Tabasondra were not telling the truth, it would have been an easy matter for the respondents to produce De Asis
and Enage — who testified anyway as witnesses for the respondents on several occasions — to rebut his
testimony. The respondents did nothing of the kind. Moreover, Tabasondra called on June 21, 1958 the
respondents' attention to his non-admission and asked them to inform him of the reasons therefor, but instead of
doing so, the respondents dismissed him by their letter dated July 10, 1958. Elementary fairness required that
before being dismissed for cause, Tabasondra be given "his day in court."
At any rate, it has been held that mere failure to report for work after notice to return, does not constitute
abandonment nor bar reinstatement. In one case, the U.S. Supreme Court held that the taking back of six of eleven
men constituted discrimination although the five strikers who were not reinstated, all of whom were prominent in
the union and in the strike, reported for work at various times during the next three days, but were told that there
were no openings. Said the Court:
... The Board found, and we cannot say that its finding is unsupported, that, in taking back six
union men, the respondent's officials discriminated against the latter on account of their union
activities and that the excuse given that they did not apply until after the quota was full was an
afterthought and not the true reason for the discrimination against them. (NLRB v. Mackay Radio
& Telegraph Co., 304 U.S. 333, 58 Sup. Ct. 904, 82 L. Ed. 1381) (Mathews, Labor Relations and the
Law, p. 725, 728)
The respondents' allegation that Tabasondra should have returned after being refused readmission on June 2,
1958, is not persuasive. When the employer puts off reinstatement when an employee reports for work at the
time agreed, we consider the employee relieved from the duty of returning further.
Sixto Tongos was dismissed allegedly because he revealed that despite the fact that the Companies spent more
than P80,000 for the vacation trips of officials, they refused to grant union demands; hence, he betrayed his trust
as an auditor of the Companies. We do not find this allegation convincing. First, this accusation was emphatically
denied by Tongos on the witness stand. Gonzales, president of one of the respondent Companies and one of the
officials referred to, took a trip abroad in 1958. Exchange controls were then in force, and an outgoing traveller on
a combined business and vacation trip was allowed by the Central Bank, per its Circular 52 (Notification to
Authorized Agent Banks) dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official rate of two
pesos to the dollar, as pocket money; hence, this was the only amount that would appear on the books of the
Companies. It was only on January 21, 1962, per its Circular 133 (Notification to Authorized Agent Banks), that the
Central Bank lifted the exchange controls. Tongos could not therefore have revealed an amount bigger than the
above sum. And his competence in figures could not be doubted considering that he had passed the board
examinations for certified public accountants. But assuming arguendo that Tongos indeed revealed the true
expenses of Gonzales' trip — which the respondents never denied or tried to
disprove — his statements clearly fall within the sphere of a unionist's right to discuss and advertise the facts
involved in a labor dispute, in accordance with section 9(a)(5) of Republic Act 875 which guarantees the
untramelled exercise by striking employees of the right to give "publicity to the existence of, or the fact involved in

any labor dispute, whether by advertising, speaking, patrolling or by any method not involving fraud or violence."
Indeed, it is not only the right, it is as well the duty, of every unionist to advertise the facts of a dispute for the
purpose of informing all those affected thereby. In labor disputes, the combatants are expected to expose the
truth before the public to justify their respective demands. Being a union man and one of the strikers, Tongos was
expected to reveal the whole truth on whether or not the respondent Companies were justified in refusing to
accede to union demands. After all, not being one of the supervisors, he was not a part of management. And his
statement, if indeed made, is but an expression of free speech protected by the Constitution.
Free speech on both sides and for every faction on any side of the labor relation is to me a
constitutional and useful right. Labor is free ... to turn its publicity on any labor oppression,
substandard wages, employer unfairness, or objectionable working conditions. The employer,
too, should be free to answer and to turn publicity on the records of the leaders of the unions
which seek the confidence of his men ... (Concurring opinion of Justice Jackson in Thomas v.
Collins, 323 U.S. 516, 547, 65 Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor Relations and the Law,
p. 591.)
The respondents also allege that in revealing certain confidential information, Tongos committed not only a
betrayal of trust but also a violation of the moral principles and ethics of accountancy. But nowhere in the Code of
Ethics for Certified Public Accountants under the Revised Rules and Regulations of the Board of Accountancy
formulated in 1954, is this stated. Moreover, the relationship of the Companies with Tongos was that of an
employer and not a client. And with regard to the testimonies of Juan Raymundo and Antolin Carillo, both vice-
presidents of the Trust Insurance Agencies, Inc. about the alleged utterances made by Tongos, the lower court
should not have given them much weight. The firm of these witnesses was newly established at that time and was
still a "general agency" of the Companies. It is not therefore amiss to conclude that they were more inclined to
favor the respondents rather than Tongos.
Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Daño, Vicente Alsol and Hermenigildo Ramirez, opined the lower
court, were constructively dismissed by non-readmission allegedly because they not only prevented Ramon Garcia,
assistant corporate secretary, and Vicente Abella, chief of the personnel records section of the Companies, from
entering the Companies' premises on May 21, 1958, but they also caused bruises and abrasions on Garcia's chest
and forehead — acts considered inimical to the interest of the respondents. The Unions, upon the other hand,
insist that there is complete lack of evidence that Ner took part in pushing Garcia; that it was Garcia who elbowed
his way through the picket lines and therefore Ner shouted "Close up," which the picketers did; and that Garcia
tossed Paulino Bugay's placard and a fight ensued between them in which both suffered injuries. But despite these
conflicting versions of what actually happened on May 21, 1958, there are grounds to believe that the picketers
are not responsible for what happened.lâwphî1.ñèt The picketing on May 21, 1958, as reported in the police
blotter, was peaceful (see Police blotter report, exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner
was acquitted). Moreover, although the Companies during the strike were holding offices at the Botica Boie
building at Escolta, Manila; Tuason Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati, Rizal,
Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records section, reported for work
at the Insular Life Building. There is therefore a reasonable suggestion that they were sent to work at the latter
building to create such an incident and have a basis for filing criminal charges against the petitioners in the fiscal's
office and applying for injunction from the court of first instance. Besides, under the circumstances the picketers
were not legally bound to yield their grounds and withdraw from the picket lines. Being where the law expects
them to be in the legitimate exercise of their rights, they had every reason to defend themselves and their rights
from any assault or unlawful transgression. Yet the police blotter, about adverted to, attests that they did not
resort to violence.
The heated altercations and occasional blows exchanged on the picket line do not affect or diminish the right to
strike. Persuasive on this point is the following commentary: .
We think it must be conceded that some disorder is unfortunately quite usual in any extensive or
long drawn out strike. A strike is essentially a battle waged with economic weapons. Engaged in it
are human beings whose feelings are stirred to the depths. Rising passions call forth hot words.
Hot words lead to blows on the picket line. The transformation from economic to physical
combat by those engaged in the contest is difficult to prevent even when cool heads direct the
fight. Violence of this nature, however much it is to be regretted, must have been in the
contemplation of the Congress when it provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing
therein should be construed so as to interfere with or impede or diminish in any way the right to
strike. If this were not so, the rights afforded to employees by the Act would indeed be illusory.
We accordingly recently held that it was not intended by the Act that minor disorders of this
nature would deprive a striker of the possibility of reinstatement. (Republic Steel Corp. v. N. L. R.
B., 107 F2d 472, cited in Mathews, Labor Relations and the Law, p. 378)

Hence the incident that occurred between Ner, et al. and Ramon Garcia was but a necessary incident of the strike
and should not be considered as a bar to reinstatement. Thus it has been held that:
Fist-fighting between union and non-union employees in the midst of a strike is no bar to reinstatement. (Teller,
Labor Disputes and Collective Bargaining, Vol. II, p. 855 citing Stackpole Carbon, Co. 6 NLRB 171, enforced 105 F2d
167.)
Furthermore, assuming that the acts committed by the strikers were transgressions of law, they amount only to
mere ordinary misdemeanors and are not a bar to reinstatement.
In cases involving misdemeanors the board has generally held that unlawful acts are not bar to reinstatement.
(Teller, Labor Disputes and Collective Bargaining, Id., p. 854, citing Ford Motor Company, 23 NLRB No. 28.)
Finally, it is not disputed that despite the pendency of criminal charges against non-striking employees before the
fiscal's office, they were readily admitted, but those strikers who had pending charges in the same office were
refused readmission. The reinstatement of the strikers is thus in order.
[W]here the misconduct, whether in reinstating persons equally guilty with those whose
reinstatement is opposed, or in other ways, gives rise to the inference that union activities rather
than misconduct is the basis of his [employer] objection, the Board has usually required
reinstatement." (Teller, supra, p. 853, citing the Third Annual Report of NLRB [1938], p. 211.)
Lastly, the lower Court justified the constructive dismissal of Florencio Ibarra allegedly because he committed acts
inimical to the interest of the respondents when, as president of the FGU Workers and Employees Association-
NATU, he advised the strikers that they could use force and violence to have a successful picket and that picketing
was precisely intended to prevent the non-strikers and company clients and customers from entering the
Companies' buildings. Even if this were true, the record discloses that the picket line had been generally peaceful,
and that incidents happened only when management men made incursions into and tried to break the picket line.
At any rate, with or without the advice of Ibarra, picketing is inherently explosive. For, as pointed out by one
author, "The picket line is an explosive front, charged with the emotions and fierce loyalties of the union-
management dispute. It may be marked by colorful name-calling, intimidating threats or sporadic fights between
the pickets and those who pass the line." (Mathews, Labor Relations and the Law, p. 752). The picket line being the
natural result of the respondents' unfair labor practice, Ibarra's misconduct is at most a misdemeanor which is not
a bar to reinstatement. Besides, the only evidence presented by the Companies regarding Ibarra's participation in
the strike was the testimony of one Rodolfo Encarnacion, a former member of the board of directors of the
petitioner FGU Insurance Group Workers and Employees Union-NATU, who became a "turncoat" and who likewise
testified as to the union activities of Atty. Lacsina, Ricardo Villaruel and others (annex C, Decision, p. 27) — another
matter which emphasizes the respondents' unfair labor practice. For under the circumstances, there is good
ground to believe that Encarnacion was made to spy on the actvities of the union members. This act of the
respondents is considered unjustifiable interference in the union activities of the petitioners and is unfair labor
practice.
It has been held in a great number of decisions at espionage by an employer of union activities,
or surveillance thereof, are such instances of interference, restraint or coercion of employees in
connection with their right to organize, form and join unions as to constitute unfair labor
practice.
... "Nothing is more calculated to interfere with, restrain and coerce employees in the exercise of
their right to self-organization than such activity even where no discharges result. The
information obtained by means of espionage is in valuable to the employer and can be used in a
variety of cases to break a union." The unfair labor practice is committed whether the espionage
is carried on by a professional labor spy or detective, by officials or supervisory employees of the
employer, or by fellow employees acting at the request or direction of the employer, or an ex-
employee..." (Teller, Labor Disputes and Collective Bargaining, Vol. II, pp. 765-766, and cases
cited.) .
IV. The lower court should have ordered the reinstatement of the officials and members of the Unions, with full
back wages from June 2, 1958 to the date of their actual reinstatement to their usual employment. Because all too
clear from the factual and environmental milieu of this case, coupled with settled decisional law, is that the Unions
went on strike because of the unfair labor practices committed by the respondents, and that when the strikers
reported back for work — upon the invitation of the respondents — they were discriminatorily dismissed. The
members and officials of the Unions therefore are entitled to reinstatement with back pay.

[W]here the strike was induced and provoked by improper conduct on the part of an employer
amounting to an 'unfair labor practice,' the strikers are entitled to reinstatement with back pay.
(Rothenberg on Labor Relations, p. 418.)
[A]n employee who has been dismissed in violation of the provisions of the Act is entitled to
reinstatement with back pay upon an adjudication that the discharge was illegal."
(Id., citingWaterman S. S. Corp. v. N. L. R. B., 119 F2d 760; N. L. R. B. v. Richter's Bakery, 140 F2d
870; N. L. R. B. v. Southern Wood Preserving Co., 135 F. 2d 606; C. G. Conn, Ltd. v. N. L. R. B., 108
F2d 390; N. L. R. B. v. American Mfg. Co., 106 F2d 61; N. L. R. B. v. Kentucky Fire Brick Co., 99 F2d
99.)
And it is not a defense to reinstatement for the respondents to allege that the positions of these union members
have already been filled by replacements.
[W]here the employers' "unfair labor practice" caused or contributed to the strike or where the
'lock-out' by the employer constitutes an "unfair labor practice," the employer cannot
successfully urge as a defense that the striking or lock-out employees position has been filled by
replacement. Under such circumstances, if no job sufficiently and satisfactorily comparable to
that previously held by the aggrieved employee can be found, the employer must discharge the
replacement employee, if necessary, to restore the striking or locked-out worker to his old or
comparable position ... If the employer's improper conduct was an initial cause of the strike, all
the strikers are entitled to reinstatement and the dismissal of replacement employees wherever
necessary; ... . (Id., p. 422 and cases cited.)
A corollary issue to which we now address ourselves is, from what date should the backpay payable to the
unionists be computed? It is now a settled doctrine that strikers who are entitled to reinstatement are not entitled
to back pay during the period of the strike, even though it is caused by an unfair labor practice. However, if they
offer to return to work under the same conditions just before the strike, the refusal to re-employ or the imposition
of conditions amounting to unfair labor practice is a violation of section 4(a) (4) of the Industrial Peace Act and the
employer is liable for backpay from the date of the offer (Cromwell Commercial Employees and Laborers Union vs.
Court of Industrial Relations, L-19778, Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion for
reconsideration, 13 SCRA 258; see also Mathews, Labor Relations and the Law, p. 730 and the cited cases). We
have likewise ruled that discriminatorily dismissed employees must receive backpay from the date of the act of
discrimination, that is, from the date of their discharge (Cromwell Commercial Employees and Laborers Union vs.
Court of Industrial Relations, supra).
The respondents notified the petitioner strikers to report back for work on June 2, 1958, which the latter did. A
great number of them, however, were refused readmission because they had criminal charges against them
pending before the fiscal's office, although non-strikers who were also facing criminal indictments were readily
readmitted. These strikers who were refused readmission on June 2, 1958 can thus be categorized as
discriminatorily dismissed employees and are entitled to backpay from said date. This is true even with respect to
the petitioners Jose Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr. who were found guilty only of misdemeanors
which are not considered sufficient to bar reinstatement (Teller, Labor Disputes and Collective Bargaining, p. 854),
especially so because their unlawful acts arose during incidents which were provoked by the respondents' men.
However, since the employees who were denied readmission have been out of the service of the Companies (for
more than ten years) during which they may have found other employment or other means of livelihood, it is only
just and equitable that whatever they may have earned during that period should be deducted from their back
wages to mitigate somewhat the liability of the company, pursuant to the equitable principle that no one is
allowed to enrich himself at the expense of another (Macleod & Co. of the Philippines v. Progressive Federation of
Labor, 97 Phil. 205 [1955]).
The lower court gave inordinate significance to the payment to and acceptance by the dismissed employees of
separation pay. This Court has ruled that while employers may be authorized under Republic Act 1052 to terminate
employment of employees by serving the required notice, or, in the absence thereof, by paying the required
compensation, the said Act may not be invoked to justify a dismissal prohibited by law, e.g., dismissal for union
activities.
... While Republic Act No. 1052 authorizes a commercial establishment to terminate the
employment of its employee by serving notice on him one month in advance, or, in the absence
thereof, by paying him one month compensation from the date of the termination of his
employment, such Act does not give to the employer a blanket authority to terminate the
employment regardless of the cause or purpose behind such termination. Certainly, it cannot be
made use of as a cloak to circumvent a final order of the court or a scheme to trample upon the

right of an employee who has been the victim of an unfair labor practice. (Yu Ki Lam, et al. v.
Nena Micaller, et al., 99 Phil. 904 [1956].)
Finally, we do not share the respondents' view that the findings of fact of the Court of Industrial Relations are
supported by substantial and credible proof. This Court is not therefore precluded from digging deeper into the
factual milieu of the case (Union of Philippine Education Employees v. Philippine Education Company, 91 Phil. 93;
Lu Do & Lu Ym Corporation v. Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]).
V. The petitioners (15 of them) ask this Court to cite for contempt the respondent Presiding Judge Arsenio
Martinez of the Court of Industrial Relations and the counsels for the private respondents, on the ground that the
former wrote the following in his decision subject of the instant petition for certiorari, while the latter quoted the
same on pages 90-91 of the respondents' brief: .
... Says the Supreme Court in the following decisions:
In a proceeding for unfair labor practice, involving a determination as to

whether or not the acts of the employees concerned justified the adoption of
the employer of disciplinary measures against them, the mere fact that the
employees may be able to put up a valid defense in a criminal prosecution for
the same acts, does not erase or neutralize the employer's right to impose
discipline on said employees. For it is settled that not even the acquittal of an
employee of the criminal charge against him is a bar to the employer's right to
impose discipline on its employees, should the act upon which the criminal
charged was based constitute nevertheless an activity inimical to the
employer's interest... The act of the employees now under consideration may be
considered as a misconduct which is a just cause for dismissal. (Lopez, Sr., et al.
vs. Chronicle Publication Employees Ass'n. et al., G.R. No. L-20179-81,
December 28, 1964.) (emphasis supplied)
The two pertinent paragraphs in the above-cited decision * which contained the underscored portions of the
above citation read however as follows:
Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente, we are inclined to
uphold the action taken by the employer as proper disciplinary measure. A reading of the article
which allegedly caused their dismissal reveals that it really contains an insinuation albeit subtly of
the supposed exertion of political pressure by the Manila Chronicle management upon the City
Fiscal's Office, resulting in the non-filing of the case against the employer. In rejecting the
employer's theory that the dismissal of Vicente and Aquino was justified, the lower court
considered the article as "a report of some acts and omissions of an Assistant Fiscal in the
exercise of his official functions" and, therefore, does away with the presumption of malice. This
being a proceeding for unfair labor practice, the matter should not have been viewed or gauged
in the light of the doctrine on a publisher's culpability under the Penal Code. We are not here to
determine whether the employees' act could stand criminal prosecution, but only to find out
whether the aforesaid act justifies the adoption by the employer of disciplinary measure against
them. This is not sustaining the ruling that the publication in question is qualified privileged, but
even on the assumption that this is so, the exempting character thereof under the Penal Code
does not necessarily erase or neutralize its effect on the employer's interest which may warrant
employment of disciplinary measure. For it must be remembered that not even the acquittal of
an employee, of the criminal charges against him, is a bar to the employer's right to impose
discipline on its employees, should the act upon which the criminal charges was based constitute
nevertheless an activity inimical to the employer's interest.
In the herein case, it appears to us that for an employee to publish his "suspicion," which actually
amounts to a public accusation, that his employer is exerting political pressure on a public official
to thwart some legitimate activities on the employees, which charge, in the least, would sully the
employer's reputation, can be nothing but an act inimical to the said employer's interest. And the
fact that the same was made in the union newspaper does not alter its deleterious character nor
shield or protect a reprehensible act on the ground that it is a union activity, because such end
can be achieved without resort to improper conduct or behavior. The act of the employees now
under consideration may be considered as a misconduct which is a just cause for dismissal.**
(Emphasis ours)

It is plain to the naked eye that the 60 un-underscored words of the paragraph quoted by the respondent Judge do
not appear in the pertinent paragraph of this Court's decision in L-20179-81. Moreover, the first underscored
sentence in the quoted paragraph starts with "For it is settled ..." whereas it reads, "For it must be remembered
...," in this Court's decision. Finally, the second and last underlined sentence in the quoted paragraph of the
respondent Judge's decision, appears not in the same paragraph of this Court's decision where the other sentence
is, but in the immediately succeeding paragraph.
This apparent error, however, does not seem to warrant an indictment for contempt against the respondent Judge
and the respondents' counsels. We are inclined to believe that the misquotation is more a result of clerical
ineptitude than a deliberate attempt on the part of the respondent Judge to mislead. We fully realize how saddled
with many pending cases are the courts of the land, and it is not difficult to imagine that because of the pressure
of their varied and multifarious work, clerical errors may escape their notice. Upon the other hand, the
respondents' counsels have the prima facie right to rely on the quotation as it appears in the respondent Judge's
decision, to copy it verbatim, and to incorporate it in their brief. Anyway, the import of the underscored sentences
of the quotation in the respondent Judge's decision is substantially the same as, and faithfully reflects, the
particular ruling in this Court's decision, i.e., that "[N]ot even the acquittal of an employee, of the criminal charges
against him, is a bar to the employer's right to impose discipline on its employees, should the act upon which the
criminal charges were based constitute nevertheless an activity inimical to the employer's interest."
Be that as it may, we must articulate our firm view that in citing this Court's decisions and rulings, it is the bounden
duty of courts, judges and lawyers to reproduce or copy the same word-for-word and punctuation mark-for-
punctuation mark. Indeed, there is a salient and salutary reason why they should do this. Only from this Tribunal's
decisions and rulings do all other courts, as well as lawyers and litigants, take their bearings. This is because the
decisions referred to in article 8 of the Civil Code which reads, "Judicial decisions applying or interpreting the laws
or the Constitution shall form a part of the legal system of the Philippines," are only those enunciated by this Court
of last resort. We said in no uncertain terms in Miranda, et al. vs. Imperial, et al. (77 Phil. 1066) that "[O]nly the
decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction." Thus, ever present is the
danger that if not faithfully and exactly quoted, the decisions and rulings of this Court may lose their proper and
correct meaning, to the detriment of other courts, lawyers and the public who may thereby be misled. But if
inferior courts and members of the bar meticulously discharge their duty to check and recheck their citations of
authorities culled not only from this Court's decisions but from other sources and make certain that they are
verbatim reproductions down to the last word and punctuation mark, appellate courts will be precluded from
acting on misinformation, as well as be saved precious time in finding out whether the citations are correct.
Happily for the respondent Judge and the respondents' counsels, there was no substantial change in the thrust of
this Court's particular ruling which they cited. It is our view, nonetheless, that for their mistake, they should be, as
they are hereby, admonished to be more careful when citing jurisprudence in the future. ACCORDINGLY, the
decision of the Court of Industrial Relations dated August 17, 1965 is reversed and set aside, and another is
entered, ordering the respondents to reinstate the dismissed members of the petitioning Unions to their former or
comparatively similar positions, with backwages from June 2, 1958 up to the dates of their actual reinstatements.
Costs against the respondents.

[G.R. No. 121315. July 19, 1999]
COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA) represented by its union president CECILIA TALAVERA,
GEORGE ARSOLA, MARIO DIAGO AND SOCORRO BONCAYAO, petitioners, vs. THE NATIONAL LABOR
RELATIONS COMMISSION, COMPLEX ELECTRONICS CORPORATION, IONICS CIRCUIT, INC., LAWRENCE
QUA, REMEDIOS DE JESUS, MANUEL GONZAGA, ROMY DELA ROSA, TERESITA ANDINO, ARMAN
CABACUNGAN,GERRY GABANA, EUSEBIA MARANAN and BERNADETH GACAD, respondents.
[G.R. No. 122136 July 19, 1999]
COMPLEX ELECTRONICS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, COMPLEX
ELECTRONICS EMPLOYEES ASSOCIATION (CEEA), represented by Union President, CECILIA
TALAVERA, respondents.
DECISION
KAPUNAN, J.:
These consolidated cases filed by Complex Electronics Employees Association (G.R. No. 121315) and Complex
Electronics Corporation (G.R. No. 122136) assail the Decision of the NLRC dated March 10, 1995 which set aside
the Decision of the Labor Arbiter dated April 30, 1993.
The antecedents of the present petitions are as follows:
Complex Electronics Corporation (Complex) was engaged in the manufacture of electronic products. It was
actually a subcontractor of electronic products where its customers gave their job orders, sent their own materials
and consigned their equipment to it. The customers were foreign-based companies with different product lines
and specifications requiring the employment of workers with specific skills for each product line. Thus, there was
the AMS Line for the Adaptive Micro System, Inc., the Heril Line for Heril Co., Ltd., the Lite-On Line for the Lite-On
Philippines Electronics Co., etc.
The rank and file workers of Complex were organized into a union known as the Complex Electronics
Employees Association, herein referred to as the Union.
On March 4, 1992, Complex received a facsimile message from Lite-On Philippines Electronics Co., requiring it
to lower its price by 10%. The full text reads as follows:
This is to inform your office that Taiwan required you to reduce your assembly cost since it is higher by 50 % and
no longer competitive with that of mainland China. It is further instructed that Complex Price be patterned with
that of other sources, which is 10% lower.
Please consider and give us your revised rates soon.[1]
Consequently, on March 9, 1992, a meeting was held between Complex and the personnel of the Lite-On
Production Line. Complex informed its Lite-On personnel that such request of lowering their selling price by 10%
was not feasible as they were already incurring losses at the present prices of their products. Under such
circumstances, Complex regretfully informed the employees that it was left with no alternative but to close down
the operations of the Lite-On Line. The company, however, promised that:
1) Complex will follow the law by giving the people to be retrenched the necessary 1 month
notice. Hence, retrenchment will not take place until after 1) month from March 09, 1992.
2) The Company will try to prolong the work for as many people as possible for as long as it can by
looking for job slots for them in another line if workload so allows and if their skills are compatible
with the line requirement.
3) The company will give the employees to be retrenched a retrenchment pay as provided for by law i.e.
half a month for every year of service in accordance with Article 283 of the Labor Code of
Philippines.[2]

The Union, on the other hand, pushed for a retrenchment pay equivalent to one (1) month salary for every
year of service, which Complex refused.
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the Department of Labor and
Employment (DOLE) and the retrenchment of the ninety-seven (97) affected employees.[3]
On March 25, 1993, the Union filed a notice of strike with the National Conciliation and Mediation Board
(NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which resulted in a "yes" vote.
In the evening of April 6, 1992, the machinery, equipment and materials being used for production at
Complex were pulled-out from the company premises and transferred to the premises of Ionics Circuit, Inc. (Ionics)
at Cabuyao, Laguna. The following day, a total closure of company operation was effected at Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair labor practice,
illegal closure/illegal lockout, money claims for vacation leave, sick leave, unpaid wages, 13th month pay, damages
and attorney's fees. The Union alleged that the pull-out of the machinery, equipment and materials from the
company premises, which resulted to the sudden closure of the company was in violation of Section 3 and 8, Rule
XIII, Book V of the Labor Code of the Philippines[4] and the existing CBA. Ionics was impleaded as a party defendant
because the officers and management personnel of Complex were also holding office at Ionics with Lawrence Qua
as the President of both companies.
Complex, on the other hand, averred that since the time the Union filed its notice of strike, there was a
significant decline in the quantity and quality of the products in all of the production lines. The delivery schedules
were not met prompting the customers to lodge complaints against them. Fearful that the machinery, equipment
and materials would be rendered inoperative and unproductive due to the impending strike of the workers, the
customers ordered their pull-out and transfer to Ionics. Thus, Complex was compelled to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and had been in existence since
July 5, 1984 or eight (8) years before the labor dispute arose at Complex. Like Complex, it was also engaged in the
semi-conductor business where the machinery, equipment and materials were consigned to them by their
customers. While admitting that Lawrence Qua, the President of Complex was also the President of Ionics, the
latter denied having Qua as their owner since he had no recorded subscription of P1,200,000.00 in Ionics as
claimed by the Union. Ionics further argued that the hiring of some displaced workers of Complex was an exercise
of management prerogatives. Likewise, the transfer of the machinery, equipment and materials from Complex was
the decision of the owners who were common customers of Complex and Ionics.
On April 30, 1993, the Labor Arbiter rendered a decision the dispositive portion of which reads:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent
Complex Electronics Corporation and/or Ionics Circuit Incorporated and/or Lawrence Qua, to reinstate the 531
above-listed employees to their former position with all the rights, privileges and benefits appertaining thereto,
and to pay said complainants-employees the aggregate backwages amounting P26,949,891.80 as of April 6, 1993
and to such further backwages until their actual reinstatement. In the event reinstatement is no longer feasible for
reasons not attributable to the complainants, said respondents are also liable to pay complainants-employees their
separation pay to be computed at the rate of one (1) month pay for every year of service, a fraction of at least six
(6) months to be considered as one whole year.
Further, the aforenamed three (3) respondents are hereby ordered to pay jointly and solidarily the complainants-
employees an aggregate moral damages in the amount of P1,062,000.00 and exemplary damages in the aggregate
sum of P531,000.00.
And finally, said respondents are ordered to pay attorney's fees equivalent to ten percent (10%) of whatever has
been adjudicated herein in favor of the complainants.
The charge of slowdown strike filed by respondent Complex against the union is hereby dismissed for lack of merit.
SO ORDERED.[5]
Separate appeals were filed by Complex, Ionics and Lawrence Qua before the respondent NLRC which
rendered the questioned decision on March 10, 1995, the decretal portion of which states:
WHEREFORE, premises considered, the assailed decision is hereby ordered vacated and set aside, and a new one
entered ordering respondent Complex Electronics Corporation to pay 531 complainants equivalent to one month
pay in lieu of notice and separation pay equivalent to one month pay for every year of service and a fraction of six
months considered as one whole year.

Respondents Ionics Circuit Incorporated and Lawrence Qua are hereby ordered excluded as parties solidarily liable
with Complex Electronics Corporation.
The award of moral damages is likewise deleted for lack of merit.
Respondent Complex, however, is hereby ordered to pay attorney's fees equivalent to ten (10%) percent of the
total amount of award granted the complainants.
SO ORDERED.[6]
Complex, Ionics and the Union filed their motions for reconsideration of the above decision which were
denied by the respondent NLRC in an Order dated July 11, 1995. [7]
Hence these petitions.
In G.R. No. 121315, petitioner Complex Electronics Employees Association asseverates that the respondent
NLRC erred when it:
I
SET ASIDE THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.
II
EXCLUDED PRIVATE RESPONDENTS IONICS CIRCUITS, INCORPORATED AND LAWRENCE QUA AS PARTIES
SOLIDARILY LIABLE WITH COMPLEX ELECTRONICS CORPORATION.
III
FOUND THAT COMPLEX ELECTRONICS CORPORATION WAS NOT GUILTY OF ILLEGAL CLOSURE AND ILLEGAL
DISMISSAL OF THE PETITIONERS.
IV
REMOVED THE AWARD FOR BACKWAGES, REINSTATEMENT AND DAMAGES IN THE DECISION DATED APRIL 30,
1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.[8]
On the other hand, in G.R. No. 122136, petitioner Complex Electronics Corporation raised the following
issues, to wit:
I
PUBLIC RESPONDENT NLRC ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION IN PROMULGATING ITS DECISION AND ORDER DATED 10 MARCH 1995, AND 11 JULY 1995,
RESPECTIVELY, THE SAME BEING IN CONTRAVENTION OF THE EXPRESS MANDATE OF THE LAW GOVERNING THE
PAYMENT OF ONE MONTH PAY IN LIEU OF NOTICE, SEPARATION PAY AND ATTORNEY'S FEES.
II
THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW. [9]
On December 23, 1996, the Union filed a motion for consolidation of G.R. No. 122136 with G.R. No.
121315.[10] The motion was granted by this Court in a Resolution dated June 23, 1997.[11]
On November 10, 1997, the Union presented additional documentary evidence which consisted of a
newspaper clipping in the Manila Bulletin, dated August 18, 1997 bearing the picture of Lawrence Qua with the
following inscription:
RECERTIFICATION. The Cabuyao (Laguna) operation of Ionic Circuits, Inc. consisting of plants 2, 3, 4 and 5 was
recertified to ISO 9002 as electronics contract manufacturer by the TUV, a rating firm with headquarters in
Munich, Germany. Lawrence Qua, Ionics president and chief executive officer, holds the plaque of recertification
presented by Gunther Theisz (3rd from left), regional manager of TUV Products Services Asia during ceremonies
held at Sta. Elena Golf Club. This is the first of its kind in the country that four plants were certified at the same
time.[12]

The Union claimed that the said clipping showed that both corporations, Ionics and Complex are one and the
same.
In answer to this allegation, Ionics explained that the photo which appeared at the Manila Bulletin issue of
August 18, 1997 pertained only to respondent Ionics recertification of ISO 9002. There was no mention about
Complex Electronics Corporation. Ionics claimed that a mere photo is insufficient to conclude that Ionics and
Complex are one and the same.[13]
We shall first delve on the issues raised by the petitioner Union.
The Union anchors its position on the fact that Lawrence Qua is both the president of Complex and Ionics and
that both companies have the same set of Board of Directors. It claims that business has not ceased at Complex
but was merely transferred to Ionics, a runaway shop. To prove that Ionics was just a runaway shop, petitioner
asserts that out of the 80,000 shares comprising the increased capital stock of Ionics, it was Complex that owns
majority of said shares with P1,200,000.00 as its capital subscription and P448,000.00 as its paid up investment,
compared to P800,000.00 subscription and P324,560.00 paid-up owing to the other stockholders, combined. Thus,
according to the Union, there is a clear ground to pierce the veil of corporate fiction.
The Union further posits that there was an illegal lockout/illegal dismissal considering that as of March 11,
1992, the company had a gross sales of P61,967,559 from a capitalization of P1,500,000.00. It even ranked number
thirty among the top fifty corporations in Muntinlupa. Complex, therefore, cannot claim that it was losing in its
business which necessitated its closure.
With regards to Lawrence Qua, petitioner maintains that he should be made personally liable to the Union
since he was the principal player in the closure of the company, not to mention the clandestine and surreptitious
manner in which such closure was carried out, without regard to their right to due process.
The Union's contentions are untenable.
A runaway shop is defined as an industrial plant moved by its owners from one location to another to escape
union labor regulations or state laws, but the term is also used to describe a plant removed to a new location in
order to discriminate against employees at the old plant because of their union activities. [14] It is one wherein the
employer moves its business to another location or it temporarily closes its business for anti-union purposes.[15] A
runaway shop in this sense, is a relocation motivated by anti-union animus rather than for business reasons. In this
case, however, Ionics was not set up merely for the purpose of transferring the business of Complex. At the time
the labor dispute arose at Complex, Ionics was already existing as an independent company. As earlier mentioned,
it has been in existence since July 5, 1984. It cannot, therefore, be said that the temporary closure in Complex and
its subsequent transfer of business to Ionics was for anti-union purposes. The Union failed to show that the
primary reason for the closure of the establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not
a sufficient ground for disregarding separate corporate personalities. Thus, in Indophil Textile Mill Workers Union
vs. Calica,[16] we ruled that:
[I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of
the corporation is a devise to evade the application of the CBA between petitioner Union and private respondent
company. While we do not discount the possibility of the similarities of the businesses of private respondent and
Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact
that the businesses of private respondent and Acrylic are related, that some of the employees of the private
respondent are the same persons manning and providing for auxiliary services to the units of Acrylic, and that the
physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these
facts are not sufficient to justify the piercing of the corporate veil of Acrylic.
Likewise, in Del Rosario vs. National Labor Relations Commission,[17] the Court stated that substantial identity
of the incorporators of two corporations does not necessarily imply that there was fraud committed to justify
piercing the veil of corporate fiction.
In the recent case of Santos vs. National Labor Relations Commission,[18] we also ruled that:
The basic rule is still that which can be deduced from the Courts pronouncement in Sunio vs. National Labor
Relations Commission, thus:
xxx.. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself sufficient ground for disregarding the separate corporate personality.
Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason to
pierce the veil of corporate fiction of the corporation. Well-settled is the rule that a corporation has a personality

separate and distinct from that of its officers and stockholders. This fiction of corporate entity can only be
disregarded in certain cases such as when it is used to defeat public convenience, justify wrong, protect fraud, or
defend crime.[19] To disregard said separate juridical personality of a corporation, the wrongdoing must be clearly
and convincingly established.[20]
As to the additional documentary evidence which consisted of a newspaper clipping filed by petitioner Union,
we agree with respondent Ionics that the photo/newspaper clipping itself does not prove that Ionics and Complex
are one and the same entity. The photo/newspaper clipping merely showed that some plants of Ionics were
recertified to ISO 9002 and does not show that there is a relation between Complex and Ionics except for the fact
that Lawrence Qua was also the president of Ionics. However, as we have stated above, the mere fact that both of
the corporations have the same president is not in itself sufficient to pierce the veil of corporate fiction of the two
corporations.
We, likewise, disagree with the Union that there was in this case an illegal lockout/illegal dismissal. Lockout is
the temporary refusal of employer to furnish work as a result of an industrial or labor dispute. [21] It may be
manifested by the employer's act of excluding employees who are union members. [22] In the present case, there
was a complete cessation of the business operations at Complex not because of the labor dispute. It should be
recalled that, before the labor dispute, Complex had already informed the employees that they would be closing
the Lite-On Line. The employees, however, demanded for a separation pay equivalent to one (1) month salary for
every year of service which Complex refused to give. When Complex filed a notice of closure of its Lite-On Line, the
employees filed a notice of strike which greatly alarmed the customers of Complex and this led to the pull-out of
their equipment, machinery and materials from Complex. Thus, without the much needed equipment, Complex
was unable to continue its business. It was left with no other choice except to shut down the entire business. The
closure, therefore, was not motivated by the union activities of the employees, but rather by necessity since it can
no longer engage in production without the much needed materials, equipment and machinery. We quote with
approval the findings of the respondent NLRC on this matter:
At first glance after reading the decision a quo, it would seem that the closure of respondent's operation is not
justified. However, a deeper examination of the records along with the evidence, would show that the closure,
although it was done abruptly as there was no compliance with the 30-day prior notice requirement, said closure
was not intended to circumvent the provisions of the Labor Code on termination of employment. The closure of
operation by Complex on April 7, 1992 was not without valid reasons. Customers of respondent alarmed by the
pending labor dispute and the imminent strike to be foisted by the union, as shown by their strike vote, directed
respondent Complex to pull-out its equipment, machinery and materials to other safe bonded
warehouse. Respondent being mere consignees of the equipment, machinery and materials were without any
recourse but to oblige the customers' directive. The pull-out was effected on April 6, 1992. We can see here that
Complex's action, standing alone, will not result in illegal closure that would cause the illegal dismissal of the
complainant workers. Hence, the Labor Arbiter's conclusion that since there were only two (2) of respondent's
customers who have expressed pull-out of business from respondent Complex while most of the customer's have
not and, therefore, it is not justified to close operation cannot be upheld. The determination to cease operation is
a prerogative of management that is usually not interfered with by the State as no employer can be required to
continue operating at a loss simply to maintain the workers in employment. That would be taking of property
without due process of law which the employer has the right to resist. (Columbia Development Corp. vs. Minister
of Labor and Employment, 146 SCRA 42)
As to the claim of petitioner Union that Complex was gaining profit, the financial statements for the years
1990, 1991 and 1992 issued by the auditing and accounting firm Sycip, Gorres and Velayo readily show that
Complex was indeed continuously experiencing deficit and losses. [23] Nonetheless, whether or not Complex was
incurring great losses, it is still one of the managements prerogative to close down its business as long as it is done
in good faith. Thus, in Catatista et al., vs. NLRC and Victorias Milling Co., Inc.[24] we ruled:
In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business operations or
undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his
employees their termination pay in the amount corresponding to their length of service. It would indeed, be
stretching the intent and spirit of the law if we were to unjustly interfere in managements prerogative to close or
cease its business operations just because said business operations or undertaking is not suffering from any loss.
Going now to the issue of personal liability of Lawrence Qua, it is settled that in the absence of malice or bad
faith, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities. [25] In
the present case, while it may be true that the equipment, materials and machinery were pulled-out of Complex
and transferred to Ionics during the night, their action was sufficiently explained by Lawrence Qua in his Comment
to the petition filed by the Union. We quote:

The fact that the pull-out of the machinery, equipment and materials was effected during nighttime is not per
se an indicia of bad faith on the part of respondent Qua since he had no other recourse, and the same was dictated
by the prevailing mood of unrest as the laborers were already vandalizing the equipment, bent on picketing the
company premises and threats to lock out the company officers were being made. Such acts of respondent Qua
were, in fact, made pursuant to the demands of Complex's customers who were already alarmed by the pending
labor dispute and imminent strike to be stage by the laborers, to have their equipment, machinery and materials
pull out of Complex. As such, these acts were merely done pursuant to his official functions and were not, in any
way, made with evident bad faith.[26]
We perceive no intention on the part of Lawrence Qua and the other officers of Complex to defraud the
employees and the Union. They were compelled to act upon the instructions of their customers who were the real
owners of the equipment, materials and machinery. The prevailing labor unrest permeating within the premises of
Complex left the officers with no other choice but to pull them out of Complex at night to prevent their
destruction. Thus, we see no reason to declare Lawrence Qua personally liable to the Union.
Anent the award of damages, we are inclined to agree with the NLRC that there is no basis for such
award. We again quote the respondent NLRC with favor:
By and large, we cannot hold respondents guilty of unfair labor practice as found by the Labor Arbiter since the
closure of operation of Complex was not established by strong evidence that the purpose of said closure was to
interfere with the employees' right to self-organization and collective bargaining. As very clearly established, the
closure was triggered by the customers' pull-out of their equipment, machinery and materials, who were alarmed
by the pending labor dispute and the imminent strike by the union, and as a protection to their interest pulled-out
of business from Complex who had no recourse but to cease operation to prevent further losses. The indiscretion
committed by the Union in filing the notice of strike, which to our mind is not the proper remedy to question the
amount of benefits due the complainants who will be retrenched at the closure of the Lite-On Line, gave a wrong
signal to customers of Complex, which consequently resulted in the loss of employment of not only a few but to all
the of the workers. It may be worth saying that the right to strike should only be a remedy of last resort and must
not be used as a show of force against the employer.[27]
We shall now go to the issues raised by Complex in G.R. No. 122136.

Complex claims that the respondent NLRC erred in ordering them to pay the Union one (1) month pay as
indemnity for failure to give notice to its employees at least thirty (30) days before such closure since it was quite
clear that the employees were notified of the impending closure of the Lite-On Line as early as March 9,
1992. Moreover, the abrupt cessation of operations was brought about by the sudden pull-out of the customers
which rendered it impossible for Complex to observe the required thirty (30) days notice.
Article 283 of the Labor Code provides that:
ART. 283. Closure of establishment and reduction of personnel.-- The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. x x x. (Underlining ours.)
The purpose of the notice requirement is to enable the proper authorities to determine after hearing
whether such closure is being done in good faith, i.e., for bona fide business reasons, or whether, to the contrary,
the closure is being resorted to as a means of evading compliance with the just obligations of the employer to the
employees affected.[28]
While the law acknowledges the management prerogative of closing the business, it does not, however, allow
the business establishment to disregard the requirements of the law. The case of Magnolia Dairy Products
v. NLRC[29] is quite emphatic about this:
The law authorizes an employer, like the herein petitioners, to terminate the employment of any employee due to
the installation of labor saving devices. The installation of these devices is a management prerogative, and the
courts will not interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on
the part of management, as in this case. Nonetheless, this did not excuse petitioner from complying with the
required written notice to the employee and to the Department of Labor and Employment (DOLE) at least one
month before the intended date of termination. This procedure enables an employee to contest the reality or
good faith character of the asserted ground for the termination of his services before the DOLE.
The failure of petitioner to serve the written notice to private respondent and to the DOLE, however, does not ipso
facto make private respondent's termination from service illegal so as to entitle her to reinstatement and payment

of backwages. If at all, her termination from service is merely defective because it was not tainted with bad faith or
arbitrariness and was due to a valid cause.
The well settled rule is that the employer shall be sanctioned for non-compliance with the requirements of, or for
failure to observe due process in terminating from service its employee. In Wenphil Corp. v. NLRC, we sanctioned
the employer for this failure by ordering it to indemnify the employee the amount of P1,000.00. Similarly, we
imposed the same amount as indemnification in Rubberworld (Phils.), Inc. v. NLRC, and, Aurelio v.
NLRC and Alhambra Industries, Inc. v. NLRC. Subsequently, the sum of P5,000.00 was awarded to an employee
in Worldwide Papermills, Inc. v. NLRC, and P2,000.00 in Sebuguero, et al., v. NLRC, et al. Recently, the sum of
P5,000.00 was again imposed as indemnify against the employer. We see no valid and cogent reason why
petitioner should not be likewise sanctioned for its failure to serve the mandatory written notice. Under the
attendant facts, we find the amount of P5,000.00, to be just and reasonable.
We, therefore, find no grave abuse of discretion on the part of the NLRC in ordering Complex to pay one (1)
month salary by way of indemnity. It must be borne in mind that what is at stake is the means of livelihood of the
workers so they are at least entitled to be formally informed of the management decisions regarding their
employment.[30]
Complex, likewise, maintains that it is not liable for the payment of separation pay since Article 283 of the
Labor Code awards separation pay only in cases of closure not due to serious business reversals.In this case, the
closure of Complex was brought about by the losses being suffered by the corporation.
We disagree.
Article 283 further provides:
x x x. In case of termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in case of
cessation of operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
It is settled that in case of closures or cessation of operation of business establishments not due to serious
business losses or financial reverses,[31] the employees are always given separation benefits.
In the instant case, notwithstanding the financial losses suffered by Complex, such was, however, not the
main reason for its closure. Complex admitted in its petition that the main reason for the cessation of the
operations was the pull-out of the materials, equipment and machinery from the premises of the corporation as
dictated by its customers. It was actually still capable of continuing the business but opted to close down to
prevent further losses. Under the facts and circumstances of the case, we find no grave abuse of discretion on the
part of the public respondent in awarding the employees one (1) month pay for every year of service as
termination pay.
WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED.
SO ORDERED.

G.R. No. 75037 April 30, 1987
TANDUAY DISTILLERY LABOR UNION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LAMBERTO SANTOS, PEDRO ESTERAL, ROMAN CHICO, JOSELITO
ESTANISLAO, JOSE DELGADO, JUANITO ARGUELLES, RICARDO CAJOLES, and JOSEFINO PAGUYO, respondents.
No. 75055 April 30, 1987
TANDUAY DISTILLERY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), LAMBERTO SANTOS, PEDRO ESTERAL, ROMAN CHICO,
JOSELITO ESTANISLAO, JOSE DELGADO, JUANITO ARGUELLES, RICARDO CAJOLES, and JOSEFINO
PAGUYO, respondents.
GUTIERREZ, JR.:
These consolidated petitions for certiorari seek the review and setting aside of respondent National Labor
Relations Commission's decision in NLRC Case No. AB-6-11685-81 dated May 26, 1986, affirming the October 12,
1984 decision of the Labor Arbiter, and of the NLRC resolution dated June 28, 1986, which denied the motion for
reconsideration of the petitioners.
The facts of the case are as follows:
Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and members of the Tanduay Distillery
Labor Union (TDLU), a duly organized and registered labor organization and the exclusive bargaining agent of the
rank and file employees of the petitioner company.
On March 11, 1980, a Collective Bargaining Agreement (CBA), was executed between TDI and TDLU. The CBA was
duly ratified by a majority of the workers in TDI including herein private respondents, and a copy was filed with the
Ministry of Labor and Employment (MOLE) on October 29, 1980 for certification. The CBA had a term of three (3)
years from July 1, 1979 to June 30, 1982. It also contained a union security clause. which provides:
All workers who are or may during the effectivity of this Contract, become members of the Union
in accordance with its Constitution and By-Laws shall, as a condition of their continued
employment, maintain membership in good standing in the Union for the duration of the
agreement.
On or about the early part of October 1980, while the CBA was in effect and within the contract bar period the
private respondents joined another union, the Kaisahan Ng Manggagawang Pilipino KAMPIL) and organized its
local chapter in TDI, with private respondents Pedro Esteral and Lamberts Santos being elected President and Vice-
President, respectively.
On November 7, 1980, KAMPIL filed a petition for certification election to determine union representation in TDI,
which development compelled TDI to file a grievance with TDLU on November 7, 1980 pursuant to Article XV of the
CBA.
Acting on the grievance of TDI, TDLU wrote the private respondents on December 23, 1980 requiring them to
explain why TDLU should not take disciplinary action against them for, among other things —
Disloyalty to the Tanduay Distillery Labor Union (T.D.L.U.) by forming and joining another union
with a complete takeover intent as the sole and exclusive bargaining representative of all rank
and file employees at TDI. (p. 16, Rollo)
TDLU created a committee to investigate its erring members in accordance with its by-laws which are not disputed
by the private respondents. Except for Josefino Paguyo who, despite due notice, was absent during the
investigation conducted on January 2, 1981, all the private respondents were present and given a chance to
explain their side. Thereafter, in a resolution dated January 9, 1981, TDLU, through the Investigating Committee
and approved by TDLU's Board of Directors, expelled the private respondents from TDLU for disloyalty to the
Union effective January 16, 1981. By letter dated January 10, 1981, TDLU notified TDI that private respondents had
been expelled from TDLU and demanded that TDI terminate the employment of private, respondents because they
had lost their membership with TDLU.

Acting on the demand of TDLU, TDI, in a Memorandum dated January 13, 1981, notified "that effective January 16,
1981, we shall file the usual application for clearance (with preventive suspension to take effect on the same day)
to terminate your services on the basis of the union security clause of our CBA.
Accordingly, TDI filed with the MOLE on January 14, 1981 its application for clearance to terminate the
employment of private respondents. This application docketed as Case No. NCR-AC-1-435-81 specifically stated
that the action applied for was preventive suspension which will result in termination of employment, ... due to
(T)hreat to (P)roduction traceable to rival (U)nion activity. The private respondents then filed with the MOLE a
complaint for illegal dismissal against TDI and Benjamin Agaloos, in his capacity as President of TDLU, which
complaint was docketed as Case No. STF-1-333-91. The cases were jointly heard and tried by Labor Arbiter
Teodorico Dogelio.
However, on January 26, 1981, the Med-Arbiter granted the private respondents' petition calling for a certification
election among the rank and file employees of TDI. The Med-Arbiter's Order stated, inter-alia that the existence of
an uncertified CBA cannot be availed of as a bar to the holding of a certification election (Emphasis supplied). On
appeal of TDI and TDLU to the Bureau of Labor Relations (BLR), the order for the holding of a certification election
was reversed and set aside by the BLR on July 8,1982, thus:
A careful perusal of the records of the case will reveal that the uncertified CBA was duly filed and
submitted on 29 October 1980, to last until June 30, 1982. Indeed, said CBA is certifiable for
havingcomplied with all the necessary requirements for certification. Consistent with the intent
and spirit of P.D. 1391 and its implementing rules, the contract bar rule should have been applied
in this case. The representation issue cannot be entertained except within the last sixty (60) days
of the collective agreement. (Emphasis supplied) (p. 243, Rollo)
The last 60 days in a collective bargaining agreement is referred to as the "freedom period" when rival union
representation can be entertained during the existence of a valid CBA. In this case, the "freedom period" was May
1 to June 30, 1982. After the term of the CBA lapsed, KAMPIL moved for a reconsideration of the July 8, 1982
decision of the BLR on July 23, 1982 on the same ground that since the CBA then in question was uncertified, the
contract bar rule could not be made to apply. On December 3, 1982, the BLR reversed itself, but for a different
reason and held that:
Movant union (Kampil) now seeks for the reconsideration of that Order on the ground, among
others, that the CBA in question is not certifiable and, hence, the contract bar rule cannot
properly apply in this case.
After a more careful examination of the records, this Bureau is of the view that the instant
motion should be given due course, not necessarily for the arguments raised by herein movant.
It should be noted that the alleged CBA has now expired. Its expiry date being 30 June 1982.
Consequently; there appears to be no more obstacle in allowing a certification election to be
conducted among the rank and file of respondent. The contract bar rule will no longer apply in
view of the supervening event, that is, the expiration of the contract. (Emphasis supplied) (pp.
244-245, Rollo)
TDLU filed a petition for review of the BLR decision with the Supreme Court, docketed as Case No. G.R. No. 63995
TDI argued that KAMPIL did not have a cause of action when the petition for certification was filed on November 7,
1980 because the freedom period was not yet in effect. The fact that the BLR issued its order when the 60-day
freedom period had supervened, did not cure this defect. Moreover, the BLR decision completely overlooked or
ignored the fact that on September 21, 1982, a new CBA had been executed between the TDLU and TDI so that
when the BLR allowed a certification election in its order dated December 3, 1982, the contract bar rule was
applicable again. This Court denied TDLU's petition in a minute resolution on November 14,1983.
Using the foregoing as relevant and applicable to the consolidated cases for the clearance application for
termination filed by TDI and the illegal dismissal case filed by the private respondents on October 12, 1984, Labor
Arbiter Teodorico Dogelio rendered a decision denying TDI's application to terminate the private respondents and
ordering TDI to reinstate the complainants with backwages. It should be noted that the Labor Arbiter rendered the
decision even before the petitioner company could file its memorandum, formal offer of exhibits and its
manifestation and motion to correct tentative markings of exhibits. This decision of the arbiter was upheld by the
respondent NLRC in NLRC Case No. AB-6-11685-81 in its decision dated May 20,1986.
TDI and TDLU moved for reconsideration of the questioned decision, In its motion, TDI alleged, inter alia, that
respondent NLRC did not rule on the validity of the CBA as a contract, neither did it resolve squarely the validity of

the enforcement of the union security clause of the CBA. TDI stated further that respondent NLRC failed to
consider the fact that at the time the private respondents were expelled by TDLU and consequently terminated by
TDI, the union security clause of the CBA was in full force and effect, binding TDI and TDLU.
For its part, TDLU said that the decision of the Supreme Court in the certification case could not be used by
respondent NLRC to justify its decision in the dismissal case because the issues on the cases are entirely different
and miles apart. It is for this reason that there are two (2) cases that are involved. TDLU explained that the
Supreme Court decided to dismiss the petition for certiorari of TDI and TDLU in the certification case because the
original CBA existing at the time the private respondents formed and joined KAMPIL had already expired. However,
TDLU made it clear that when the private respondents organized KAMPIL in TDI, the same CBA was still in force
and the disaffiliation did not take place within the freedom period. Hence, at that point in time, the private
respondents committed disloyalty against the union.
On June 26, 1986, respondent NLRC denied the motion for reconsideration filed by TDI and TDLU for lack of merit.
In its petition, TDI alleged that:
RESPONDENT COMMISSION ACTED IN EXCESS AND WITH GRAVE ABUSE OF ITS DISCRETION AND
IN A MANNER CONTRARY TO LAW IN RENDERING ITS DECISION EN BANC OF MAY 20, 1986 AND
IN DENYING PETITIONER'S MOTION FOR RECONSIDERATION THEREOF IN ITS RESOLUTION
SOLUTION DATED JUNE 26, 1986 BECAUSE —
1. THE RESPONDENT COMMISSION HAS IGNORED THE FACT THAT THE PRIVATE
RESPONDENTS WERE EXPELLED BY TDLU FROM ITS MEMBERSHIP ON JANUARY
16, 1981 AND, CONSEQUENTLY, TDLU HAD DEMANDED OF THE PETITIONER OF
THE ENFORCEMENT OF THE UNION SECURITY CLAUSE OF THE CBA, THE SAID
CBA WAS AN EXISTING AND A VALID CONTRACT BETWEEN THE PETITIONER
AND TDLU, AND EFFECTIVE BETWEEN THE PARTIES;
2. IT IS FUNDAMENTAL THAT A UNION SECURITY CLAUSE PROVISION IN

COLLECTIVE BARGAINING AGREEMENT IS BINDING BETWEEN THE PARTIES TO
THE CBA UNDER THE LAWS;
3. THE EXPULSION OF THE PRIVATE RESPONDENTS FROM TDLU WAS THE

UNION'S OWN DECISION. HENCE, WHEN TDLU DEMANDED OF THE PETITIONER
THE ENFORCEMENT OF THE SECURITY CLAUSE PROVISION OF THE CBA BY
SEPARATING PRIVATE RESPONDENTS FROM THEIR EMPLOYMENT, FOR HAVING
LOST THEIR MEMBERSHIP IN THE UNION, THE PETITIONER WAS DUTY BOUND
TO DO SO;
4. THE ALLUSION THAT THE CBA WAS NOT CERTIFIED BY THE BUREAU OF
LABOR RELATIONS (BLR) HAS NOTHING TO DO WITH ITS EFFECTIVENESS AS A
VALID CONTRACT BETWEEN ALL PARTIES THERETO.
II
RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AND IN EXCESS OF ITS
JURISDICTION IN HOLDING THAT PRIVATE RESPONDENTS DID NOT COMMIT ACTS PREJUDICIAL
TO THE PETITIONER'S PRODUCTION EFFORTS TO BE SUFFICIENT BASIS FOR THEIR PREVENTIVE
SUSPENSION AND EVENTUAL REMOVAL.
On the other hand, petitioner TDLU in essence contends that:
THE CBA IS VALID AND BINDING NOT ONLY ON TDI AND TDLU BUT LIKEWISE ON PRIVATE RESPONDENTS WHO
HAVE RATIFIED THE SAME IN THEIR INDIVIDUAL CAPACITIES AS MEMBERS OF TDLU; HENCE, THE UNION SECURITY
CLAUSE IS VALID AND BINDING ON THEM;
THE ACTION OF TDLU IN REQUESTING FOR THE ENFORCEMENT OF THE UNION SECURITY CLAUSE OF THE CBA
BETWEEN TDI AND TDLU IS PART OF THE INHERENT RIGHT TO SELF- ORGANIZATION;

TDLU CANNOT BE MADE LIABLE FOR THE PAYMENT OF BACKWAGES BECAUSE ALL THAT IT DID WAS ASK FOR THE
ENFORCEMENT OF A CBA, WHICH CBA HAS NEVER BEEN DECLARED NULL AND VOID AND THE UNION SECURITY
CLAUSE SOUGHT TO BE ENFORCED WAS NOT ALSO DECLARED NULL AND VOID;
PRIVATE RESPONDENTS DISAFFILIATED THEMSELVES FROM TDLU BY ORGANIZING THE LOCAL CHAPTER OF KAMPIL
IN TDI IN OCTOBER 1980, BUT THE ACT OF DISAFFILIATION WAS COMMITTED OUTSIDE THE FREEDOM PERIOD
PROVIDED UNDER PRESIDENTIAL DECREE 1391 WHICH LIMIT ALL PETITIONS FOR CERTIFICATION ELECTION,
DISAFFILIATION AND INTERVENTION TO THE 60 DAY FREEDOM PERIOD PRECEDING THE EXPIRATION OF THE CBA.
HENCE, PRIVATE RESPONDENTS COULD BE EXPELLED FROM MEMBERSHIP FOR DISLOYALTY AND OTHER INIMICAL
ACTS AGAINST THE INTEREST OF TDLU.
The private respondents admit that the root of the whole controversy in the instant case is the organization of a
Local Union Chapter of KAMPIL at TDI and the subsequent filing of a petition for certification election with the
MOLE by said local chapter. This local chapter of KAMPIL was organized with the help of, among others, the private
respondents some of whom were elected union officers of said chapter. They contend that their act of organizing a
local chapter of KAMPIL and eventual filing of a petition for certification election was pursuant to their
constitutional right to self-organization.
The issues to be resolved are the following: (a) whether or not TDI was justified in terminating private respondents'
employment in the company on the basis of TDLU's demand for the enforcement of the Union Security Clause of
the CBA between TDI and TDLU; and (b) whether or not TDI is guilty of unfair labor practice in complying with
TDLU's demand for the dismissal of private respondents.
We enforce basic principles essential to a strong and dynamic labor movement. An established postulate in labor
relations firmly rooted in this jurisdiction is that the dismissal of an employee pursuant to a demand of the
majority union in accordance with a union security agreement following the loss of seniority rights is valid and
privileged and does not constitute an unfair labor practice.
Article 249 (e) of the Labor Code as amended specifically recognizes the closed shop arrangement as a form of
union security. The closed shop, the union shop, the maintenance of membership shop, the preferential shop, the
maintenance of treasury shop, and check-off provisions are valid forms of union security and strength. They do not
constitute unfair labor practice nor are they violations of the freedom of association clause of the Constitution.
(See Pascual, Labor Relations Law, 1986 Edition, pp. 221-225 and cases cited therein.) There is no showing in these
petitions of any arbitrariness or a violation of the safeguards enunciated in the decisions of this Court interpreting
union security arrangements brought to us for review.
In this light, the petitioner points out that embedded at the very core and as raison d'etre for the doctrine which
enforces the closed-shop, the union shop, and other forms of union security clauses in the collective bargaining
agreement is the principle of sanctity and inviolability of contracts guaranteed by the Constitution.
This Court speaking thru Mr. Justice Labrador, in Victorias Milling Co., Inc., v. Victorias-Manapia Workers
Organization (9 SCRA 154), ruled:
Another reason for enforcing the closed-shop agreement is the principle of sanctity or
inviolability of contracts guaranteed by the Constitution. As a matter of principle the provision of
the Industrial Peace Act relating freedom to employees to organize themselves and set their
representative for entering into bargaining agreements, should be subordinate to the
constitutional provision protecting the sanctity of contracts. We can not conceive how freedom
to contract, which should be allowed to be exercised without limitation may be subordinated to
the freedom of laborers to choose the organization they desire to represent them. And even if
the legislature had intended to do so and made such freedom of the laborer paramount to the
sanctity of obligation of contracts, such attempt to override the constitutional provision would
necessarily and ipso facto be null and void.
xxx xxx xxx
[T]he action of the respondent company in enforcing the terms of the closed-shop agreement is
a valid exercise of its rights and obligations under the contract. The dismissal by virtue thereof
cannot constitute an unfair labor practice, as it was in pursuance of an agreement that has been
found to be regular and of a closed-shop agreement which under our laws is valid and binding.
In the instant case, the CBA in question provides for a Union Security Clause requiring:

(c) All workers who are or may during the effectivity of this contract become members of the
union in accordance with its constitution and by-laws shall as a condition of their continued
employment, maintain membership in good standing in the union for the duration of the
agreement. (Emphasis supplied)
Having ratified that CBA and being then members of the TDLU, the private respondents owe fealty and are
required under the Union Security Clause to maintain their membership in good standing with it during the term
thereof, a requirement which ceases to be binding only during the 60-day freedom period immediately preceding
the expiration of the CBA. When the private respondents organized and joined the KAMPIL Chapter in TDI and filed
the corresponding petition for certification election in November 1980, there was no freedom period to speak of
yet. For under Presidential Decree No. 1391, promulgated May 29, 1978, the law applicable in this instance
provides:
No petition for certification election for intervention disaffiliation shall be entertained or given
due course except within the 60 day freedom period immediately preceding the execution of the
Collective Bargaining Agreement.
and under Section 21, Rule 3 of the Rules Implementing PD 1391 "... pending certification of a duly filed collective
bargaining agreement no petition for certification election in the same bargaining unit shall be entertained or
processed." (promulgated September 19, 1978). The Labor Code further mandates that "no certification election
shall be entertained if a Collective Bargaining Agreement which has been submitted in accordance with Article 231
of the Code exists between the employer and a legitimate labor organization except within sixty (60) days prior to
the expiration of the life of such collective agreement (Art. 257).
The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU's request for
certification of the CBA in question is of no moment to the resolution of the issues presented in this case. The BLR
itself found in its order of July 8, 1982 that "the certified CBA was duly filed and submitted on October 29, 1980, to
last until June 30, 1982 is certifiable for having complied with all the requirements for certification.
The validity of the CBA is not here assailed by private respondents. They admitted having organized the local
chapter of KAMPIL at TDI, although it is claimed that this was done when there was no certified CBA between TDI
and TDLU that would constitute a bar to the certification election. Of significance is the ruling in Manalang v. Artex
Development Co., Inc., (21 SCRA 561, 569) decided on a factual setting where the petitioners had affiliated
themselves with another labor union, Artex Free Workers, without first terminating their membership with Bagong
Buhay Labor Union (BBLU) and without the knowledge of the officers of the latter union, for which reason the
petitioners were expelled from the BBLU for acts of disloyalty; and the company, upon the behest of BBLU
dismissed them from employment pursuant to the closed-shop stipulation in a Collective Bargaining Agreement.
This Court ruled:
The validity of the Collective Bargaining Agreement of March 4, 1960 is not assailed by the
petitioners. Nor do they deny that they were members of the BBLU prior to March 4, 1960 and
until they were expelled from the union. ...
The petitioners further contention that the closed-shop provision in the collective Bargaining
Agreement is illegal because it is unreasonable,restrictive of right of freedom of association
guaranteed by the Constitution is a futile exercise in argumentation of this Court has in a number
of cases sustained closed-shop as valid union security.
Finally, even if we assume, in gratia argumenti,that the petition were unaware of the stipulation
set forth in the collective bargaining agreement since their membership in the BBLU prior to t the
expulsion thereform is undenied there can be no question that as long as the agreement with
closed-shop provision was in force they were bound by it. Neither their ignorance of,nor their
dissatisfaction with, its terms and condition would justify breach thereof or the formation by
them of a union of their own.As has been aptly said the collective bargaining agreement entered
into by officers of a union as agent of the member,and an employer,gives rise to valid inforcible
contractual relation against the individual union members in matters that affect the entire
membership or large classes of its member who employed under an agreement between the
union and his employer is bound by the provision thereof,since it is a joint and several contract of
the members of the union and entered into by the union as their agent.
In an earlier case, this Court held:

Nor can it be said that the stipulation providing that the employer may dismiss an employee
whenever the union recommends his expulsion either for disloyalty or for any violation of its by-
laws and constitution is illegal or constitute of unfair labor practice, for such is one of the matters
on which management and labor can agree in order to bring about harmonious relations
between them and the union, and cohesion and integrity of their organization And as an act of
loyalty a union may certainly require its members not to affiliate with any other labor union and
to consider its infringement as a reasonable cause for separation. This is what was done by
respondent union. And the respondent employer did nothing but to put in force their agreement
when it separated the herein complainants upon the recommendation of said union. Such a
stipulation is not only necessary to maintain loyalty and preserve the integrity of the union but is
allowed by the Magna Charta of Labor when it provided that while it is recognized that an
employee shall have the right to self-organization, it is at the same time postulated that such
right shall not injure the right of the labor organization to prescribe its own rules with respect to
the acquisition or retention of membership therein (Section 41(b) par. 1, Republic Act 875). This
provision is significant. It is an indirect restriction on the right of an employee to self-
organization. It is a solemn pronouncement of a policy that while an employee is given the right
to join a labor organization, such right should only be asserted in a manner that will not spell the
destruction of the same organization The law requires loyalty to the union on the part of its
members in order to obtain to the full extent its cohesion and integrity. We therefore, see
nothing improper in the disputed provisions of the collective bargaining agreement entered into
between the parties. (Ang Malayang Manggagawa ng Ang Tibay Enterprises, et al. v. Ang Tibay, et
al. 102 Phil. 669) (Emphasis supplied)
We agree with petitioner TDLU that the dismissal of the petition for certiorari in G.R. No. 63995 entitled TDLU v.
Kaisahan ng Manggagawang Pilipina could not be construed as to extinguish the right of TDLU to expel private
respondents for acts of disloyalty when they organized a local chapter of KAMPIL in October 1980 in TDI. The
subject matter brought to this Court in G.R. No. 63995 was the decision of the Bureau of Labor Relations dated
December 3, 1982 requiring the holding of certification election in TDI within twenty (20) days from receipt of said
BLR's decision which reads:
Movant union (KAMPIL) now seeks for the reconsideration of that order on the ground, among
others, that the CBA in question is not certifiable and, hence, the contract bar rule cannot
properly apply to this case.
After a careful examination of the records, this Bureau is of the view that the instant motion
should be given due course, not necessarily for the arguments raised by herein movant.
It should be noted that alleged CBA has now expired, its expiry date being 30 June 1982.
Consequently, there appears to be no more obstacle in allowing a certification election to be
conducted among the rank and file of respondent. The contract bar rule will no longer apply in
view of the supervening even that is, the expiration of the contract. (ANNEX C, TDI's
Memorandum dated November 28,1986; Emphasis supplied).
It is clearly apparent that the BLR aforesaid Order which this Court upheld in G.R. No. 63995 when it dismissed
TDLU's petition in a minute resolution, did not pass upon the question of legality or illegality of the dismissal of
private respondents from TDI by reason of their expulsion from TDLU for disloyalty. That question was neither
raised nor passed upon in the certification case, and was not a proper issue therein because a petition for
certification election is not a litigation but a mere investigation of a non-adversary character to determine the
bargaining unit to represent the employees (George Peter Lines, Inc. v. Associated Labor Union, 134 SCRA 82).
Hence, no inference could be derived from the dismissal of said petition that either the BLR or this Court has
decided in favor of private respondents insofar as the question of union disloyalty and their suspension and
termination from employment of TDI is concerned.
Simply put, the BLR ordered the holding of a certification election because the CBA in question had already
expired, its expiry date being June 30, 1982. Consequently, there appears to be no more obstacle in allowing a
certification election. "... [T]he contract bar rule will not apply in view of the supervening event, that is, the
expiration of the CBA."
But the fact that the CBA had expired on June 30, 1982 and the BLR, because of such supervening event, ordered
the holding of a certification election could not and did not wipe out or cleanse private respondents from the acts
of disloyalty committed in October 1980 when they organized KAMPIL's local chapter in TDI while still members of
TDLU. The ineluctable fact is that private respondents committed acts of disloyalty against TDLU while the CBA was
in force and existing for which they have to face the necessary sanctions lawfully imposed by TDLU.

In Villar v. Inciong (121 SCRA 444), we held that "petitioners, although entitled to disaffiliation from their union and
to form a new organization of their own must however, suffer the consequences of their separation from the union
under the security clause of the CBA: "
Inherent in every labor union, or any organization for that matter, is the right of self-
preservation. When members of a labor union, therefore, sow the seeds of dissension and strife
within the union; when they seek the disintegration and destruction of the very union to which
they belong; they thereby forfeit their rights to remain as members of the union which they seek
to destroy. Prudence and equity, as well as the dictates of law and justice, therefore, compelling
mandate the adoption by the labor union of such corrective and remedial measures, in keeping
with its laws and regulations, for its preservation and continued existence; lest by its folly and
inaction, the labor union crumble and fall. (Idem., p. 458)
The private respondents cannot, therefore, escape the effects of the security clause of their own applicable
collective bargaining agreement.
WHEREFORE, the decision dated May 26, 1986 and the resolution dated June 26, 1986 of respondent National
Labor Relations Commission in NLRC Case No. AB-11685-81 are hereby SET ASIDE. The expulsion of private
respondents from TANDUAY DISTILLERY LABOR UNION and their consequent suspension and termination from
employment with TANDUAY DISTILLERY, INC., without reinstatement and backwages, are hereby SUSTAINED. No
cost.
SO ORDERED.

G.R. No. L-12503 April 29, 1960
CONFEDERATED SONS OF LABOR, petitioner,

vs.
ANAKAN LUMBER COMPANY, UNITED WORKERS' UNION and COURT OF INDUSTRIAL RELATIONS,respondents.
Gregorio E. Fajardo for petitioner.

Banaag, Boquirin and Morabe for respondent Lumber Co.
Pablo S. Reyes for respondent Union.
Joaquin M. Salvador for respondent Court of Industrial Relations.
CONCEPCION, J.:
This is an unfair labor practice case instituted at the instance of the Confederated Sons of Labor against the Anakan
Lumber Company and the United Workers' Union, hereafter referred to as the petitioner, the company and
respondent union, respectively. The amended complaint filed with the Court of Relations charged said
respondents with unfair labor practices committed by
A. Anakan Lumber Company —
1. "by dominating, assisting and interferring with the administration of the respondent United Workers'
Union and by contributing financial and other support to it, . . . .
2. "in discriminating in regards to hire or tenure of employment for the purpose of encouraging
membership in the respondent United Workers' Union and/or discouraging membership in the
complainant Confederated Sons of Labor or because of union membership or activity by dismissing and in
fact did dismiss without cause all its workers affiliated with the complainant union and replaced by new
ones, . . . .
B. United Workers' Union —
in causing the respondent Anakan Company to discriminate against the workers mentioned in Paragraph
IV of the foregoing complaint in violation of Section 4 (a), subparagraph 4 of the Act by demanding from
the respondent Anakan Lumber Company the dismissal of said workers from their work therein, or in
discriminating against them to whom membership in the respondent United Workers' Union have been
terminated on grounds other than the usual terms and conditions of membership made available to other
members by expelling them as members from the said Union in violation of the respondent union's
Constitution and By-laws and who were subsequently dismissed by the respondent Anakan Lumber
Company on demand by the respondent United Workers' Union, in violation of Section 4(b), sub-
paragraph 2 of Republic Act No. 875.
On motion of petitioner and with the conformity of respondents, the Court of Industrial Relations issued, in the
course of the trial, an order dismissing the charge of union domination against the company. Subsequently, upon
submission of the case for decision on the merits, the presiding judge of said court issued an order, dated October
4, 1956, absolving respondent union, but finding the company guilty of unfair labor practices in dismissing 46
employees thereof and ordering said company "to cease and desist from engaging in unfair labor practice and to
reinstate the 46 employees concerned, with back wages from the date of their separation from its service until
reinstated." On motion for reconsideration filed by respondents, a majority of the members of the court, sitting in
banc, reversed said order and dismissed the complaint, in a resolution dated December 28, 1956. Hence, this
petition for review by certiorari filed by petitioner herein.
It appears that respondent union has a membership of more than 1,000 laborers and employees of the company,
with whom it entered, on January 23, 1955, into a contract entitled "Collective Bargaining and Closed Shop
Agreement". Subsequently, 46 employees of the company and members of respondent union joined petitioner
herein, which is another labor organization. As a consequence, said 46 employees were expelled from respondent
union, pursuant to its constitution and by-laws. Thereafter, respondent union demanded from the company the
dismissal of these 46 employees, upon the authority of Article II of said "Collective Bargaining and Closed Shop
Agreement", and claiming to act in pursuance of such Article II and in compliance with the aforementioned
agreement, the company dismissed said 46 employees. Inasmuch as they are members of petitioner herein, the
latter caused this unfair labor practice proceedings to be instituted.
The main issue in the case at bar is whether the company was bound to expel the aforementioned 46 employees
under the provisions of said Article II of its collective bargaining agreement with respondent union reading:

That the UNION shall have the exclusive right, and privilege to supply the COMPANY with such laborers,
employees and workers as are necessary in the logging, mechanical, sawmill, office, logponds, motor
pools, security guards and all departments in its many phases of operations, excepting such positions
which are highly technical and confidential in character and/or such positions which carry the exercise of
authority in the interest of the COMPANY which exercise is not merely clerical or routinary within the
contemplation of the law, and that the COMPANY agrees to employ or hire in any of its departments only
such person or persons who are members of the UNION.
Respondents maintain that since respondent union is thus given "the exclusive right and privilege to supply the
company with such laborers, employees and workers are as necessary" for the activities specified in said Article II
and the company had agreed "to employ or hire in any of its departments only such persons who are members of
the union", it follows that such laborers, employees and workers of the company as may cease to be members of
the respondent union must be expelled from the company. Upon mature deliberation, the Court is of the opinion
that respondents' pretense cannot be sustained.
At the outset, respondents labor evidently under the impression that said Article II of their contract establishes a
"closed shop" agreement, which is erroneous for, as held by this Court.
Closed-Shop agreement is an agreement whereby an employer binds himself to hire only members of the
contracting union who must continue to remain members in good standing to keep their job. (National
Labor Union vs. Aguinaldo's Echague, Inc., 51 Off. Gaz. No. 6, p. 2899, cited in Bacolod-Murcia Milling Co.,
Inc. and Alfredo T. Garcia vs. National Employees-Workers Security Union, 53 Off. Gaz., 615; Emphasis
ours.)
Rothenberg, in his work on Labor Relations, has the following to say about "closed shop":
A "closed shop" may be defined as an enterprise in which, agreement between the employer and his
employees or their representatives, no person may be employed in any or certain agreed departments of
the enterprise unless he or she is, becomes, and, for duration of the agreement, remains a member in
good standing for a union entirely comprised of or of which the employees in interest are a part.
(Rothenberg on Labor Relations, p. 48; Emphasis ours.)
Inasmuch as Article II above quoted does not provide that employees "must continue to remain members in good
standing" of respondent union "to keep their jobs," the collective bargain-agreement between them does not
establish a 'closed shop," except in a very limited sense, namely, that the laborers, employees and workers
engaged by the company after the signing of the agreement on January 23, 1955, must be members of respondent
union. The agreement does not affect the right of the company to retain those already working therefor on or
before said date, or those hired or employed subsequently thereto, while they were members of respondent
union, but who, thereafter, resign or are expelled therefrom.
In order that an employer may be deemed bound, under a collective bargaining agreement, to dismiss employees
for non-union membership, the stipulation to this effect must be so clear and unequivocal as to leave no room for
doubt thereon. An undertaking of this nature is so harsh that it must be strictly construed, and doubts must be
resolved against the existence of "closed shop". Referring particularly to the above-quoted Article II, we note that
the same establishes the exclusive right of respondent union to "supply" laborers etc., and limits the authority of
the company to "employ or hire" them. In other words, it requires that the laborers, employees and workers hired
or employed by the company be members of respondent union at the time of the commencement of the
employer-employee relation. Membership respondent union is not a condition for the continuation of said relation
or for the retention of a laborer or employee engaged either before said agreement or while he was a member of
said union.
Indeed, Article III-A of the agreement provides:
That the COMPANY may dismiss or otherwise remove from employments any employee or laborer for
gross inefficiency, misconduct, gross disrespect to the manager, misbehavior, or culpable negligence in
the office, commission of any crime or misdemeanor while in the course of his employment or work or
office, only upon report of the same in writing duly signed by the supervisor or company official directly
responsible over such employee or laborer to the Manager of the COMPANY which report shall contain in
concise form the facts and circumstances upon which such removal or dismissal is based, furnishing
therewith in the form of notice the President of the UNION within 3 days before such dismissal or removal
is effected, the latter upon receipt thereof shall give his consent or dissent thereto in writing, which in
case of dissent shall be considered a formal request for reconsideration of the cause of each individual
case or removal or dismissal by the COMPANY.

If the parties to the agreement intended to establish a "closed shop", in the strict sense of the phrase, they would
have inserted in said Article III-a, among the grounds for dismissal by the company therein specified the
discontinuance of membership in respondent union. Their failure to make such insertion strongly indicates that
said discontinuance of membership was not understood to be a ground for dismissal.
Further confirmation of this view is the fact that on August 24, 1955, or after the dismissal of all of the employees
above mentioned--except one who was dismissed on August 30, 1955 — Article II of the agreement was amended
to read as follows:
That the UNION shall have the exclusive right and privilege to supply the COMPANY with such skilled
and/or unskilled laborers, employees and workers as are necessary in the logging, mechanical, sawmill,
office, log ponds, motor pool, security guards and all departments in its many phases of operation
whether on an apprenticeship or temporary status, excepting such positions which are highly technical
and confidential in character and/or such positions which carry the exercise of authority in the interest of
the COMPANY which exercise is not merely clerical or routinary within the contemplation of the law, and
that the COMPANY agrees to comply or hire in any of its department only such person or persons who are
members of the union and to retain in its employ only such employees or laborers who remain members
of good standing of the Union; subject to the following limitations or conditions, to wit:
1. An apprentice shall, after serving 78 working days, be automatically classified as temporary employee
or laborer.
2. A temporary employee becomes automatically permanent and regular after working 152 working days.
The addition, to the last part of the original Article II, of the clause "and to retain in its employ only such employees
or laborers who remain members of good standing of the union," indicates that the company was not prohibited
prior thereto from retaining in its employ such laborers as do not remain members of good standing of respondent
union.
In short, the dismissal of 45 out of the 46 laborers in question, prior to said amendment of Article II, was illegal,
and, hence, said 45 laborers should be reinstated. Considering, however, that the agreement was entitled "Closed
Shop" and that there is no local decision squarely in point, the Court is inclined to give the company the benefit of
doubt as regards its claim that it acted under the honest belief that it was bound to dismiss them pursuant to said
agreement.
Wherefore, the resolution appealed from is hereby affirmed, insofar only as the aforementioned 45 laborers and
employees are concerned, and another one shall be entered directing the reinstatement of said 45 laborers and
employees, with costs against the respondents. It is so ordered.

G.R. No. 113907 February 28, 2000
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (MSMG-UWP) vs. RAMOS
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the National
Labor Relations Commission in an unfair labor practice case instituted by a local union against its employer
company and the officers of its national federation.
The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG), hereinafter referred
to as the "local union", is an affiliate of the private respondent, United Lumber and General Workers of the
Philippines (ULGWP), referred to as the "federation". The collective bargaining agreement between MSMG and M.
Greenfield, Inc., names the parties as follows:
This agreement made and entered into by and between:
M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the Republic of the
Philippines with office address at Km. 14, Merville Road, Parañaque, Metro Manila, represented in this act
by its General manager, Mr. Carlos T. Javelosa, hereinafter referred to as the Company;
-and-
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B) (MSMG)/UNITED LUMBER AND

GENERAL WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor organization with address at Suite
404, Trinity Building, T. M. Kalaw Street, Manila, represented in this act by a Negotiating Committee
headed by its National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement as the
UNION.1
The CBA includes, among others, the following pertinent provisions:
Art. II-Union Security
Sec. 1. Coverage and Scope. All employees who are covered by this Agreement and presently members of
the UNION shall remain members of the UNION for the duration of this Agreement as a condition
precedent to continued employment with the COMPANY.
xxx xxx xxx
Sec. 4. Dismissal. Any such employee mentioned in Section 2 hereof, who fails to maintain his
membership in the UNION for non-payment of UNION dues, for resignation and for violation of UNION's
Constitution and By-Laws and any new employee as defined in Section 2 of this Article shall upon written
notice of such failure to join or to maintain membership in the UNION and upon written recommendation
to the COMPANY by the UNION, be dismissed from the employment by the
COMPANY; provided, however, that the UNION shall hold the COMPANY free and blameless from any and
all liabilities that may arise should the dismissed employee question, in any manner, his
dismissal; provided, further that the matter of the employee's dismissal under this Article may be
submitted as a grievance under Article XIII and, provided, finally, that no such written recommendation
shall be made upon the COMPANY nor shall COMPANY be compelled to act upon any such
recommendation within the period of sixty (60) days prior to the expiry date of this Agreement
conformably to law.
Art. IX
Sec. 4. Program Fund — The Company shall provide the amount of P10,000.00 a month for a continuing
labor education program which shall be remitted to the Federation . . . 2
On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the herein
petitioner, Beda Magdalena Villanueva, and the other union officers were proclaimed as winners. Minutes of the
said election were duly filed with the Bureau of Labor Relations on September 29, 1986.

On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the defeated
candidates in the aforementioned election.
On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not yield any
unfavorable result and the local union officers were cleared of the charges of anomaly in the custody, handling and
disposition of the union funds.1âwphi1.nêt
The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union officers with the DOLE
NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was dismissed on March 2,
1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges and to present evidence in support of
the allegations.
On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in Pasig. Several
union members failed to attend the meeting, prompting the Executive Board to create a committee tasked to
investigate the non-attendance of several union members in the said assembly, pursuant to Sections 4 and 5,
Article V of the Constitution and By-Laws of the union, which read:
Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng hakbangin ng unyon ng
sinumang kasapi o pinuno ay maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa ng hindi
hihigit sa P50.00 sa bawat araw na nagkulang.
Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na pagliban at
maparusahan itong alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o
pisyales na mahuli and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00 at
babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng pagdating ng huli ay
ituturing na pagliban.3
On June 27, 1988, the local union wrote respondent company a letter requesting it to deduct the union fines from
the wages/salaries of those union members who failed to attend the general membership meeting. A portion of
the said letter stated:
xxx xxx xxx
In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please deduct the
amount of P50.00 from each of the union members named in said annexes on the payroll of July 2-8, 1988
as fine for their failure to attend said general membership meeting.4
In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo Paceño, Jr.
disapproved the resolution of the local union imposing the P50.00 fine. The union officers protested such action by
the Federation in a Reply dated July 4, 1988.
On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct the fifty-
peso fine from the salaries of the union members requesting that:
. . . any and all future representations by MSMG affecting a number of members be first cleared from the
federation before corresponding action by the Company. 5
The following day, respondent company sent a reply to petitioner union's request in a letter, stating that it cannot
deduct fines from the employees' salary without going against certain laws. The company suggested that the union
refer the matter to the proper government office for resolution in order to avoid placing the company in the
middle of the issue.
The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and the local
union culminating in the latter's declaration of general autonomy from the former through Resolution No. 10
passed by the local executive board and ratified by the general membership on July 16, 1988.
In retaliation, the national federation asked respondent company to stop the remittance of the local union's share
in the education funds effective August 1988. This was objected to by the local union which demanded that the
education fund be remitted to it in full.

The company was thus constrained to file a Complaint for Interpleader with a Petition for Declaratory Relief with
the Med-Arbitration Branch of the Department of Labor and Employment, docketed as Case No. OD-M-8-435-88.
This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an Order, disposing thus:
WHEREFORE, premises considered, it is hereby ordered:
1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local union
officers shall administer the collective bargaining agreement (CBA).
2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to the
ULGWP subject to the condition that it shall use the said amount for its intended purpose.
3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the
amount of P50.00 as penalty for their failure to attend the general membership assembly on April 17,
1988.
However, if the MSMG Officers could present the individual written authorizations of the 356 union
members, then the company is obliged to deduct from the salaries of the 356 union members the P50.00
fine.6
On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in part the
earlier disposition, to wit:
WHEREFORE, premises considered, the appealed portion is hereby modified to the extent that the
company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00 monthly labor
education program fund to ULGWP and the other P5,000.00 to MSMG, both unions to use the same for its
intended purpose.7
Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph International,
General Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of the federation and
education funds of ULGWP which was granted by Med-Arbiter Rasidali Abdullah on December 25, 1988 in an Order
which directed the audit and examination of the books of account of ULGWP.
On September 30, 1988, the officials of ULGWP called a Special National Executive Board Meeting at Nasipit,
Agusan del Norte where a Resolution was passed placing the MSMG under trusteeship and appointing respondent
Cesar Clarete as administrator.
On October 27, 1988, the said administrator wrote the respondent company informing the latter of its designation
of a certain Alfredo Kalingking as local union president and "disauthorizing" the incumbent union officers from
representing the employees. This action by the national federation was protested by the petitioners in a letter to
respondent company dated November 11, 1988.
On November 13, 1988, the petitioner union officers received identical letters from the administrator requiring
them to explain within 72 hours why they should not be removed from their office and expelled from union
membership.
On November 26, 1988, petitioners replied:
(a) Questioning the validity of the alleged National Executive Board Resolution placing their union under
trusteeship;
(b) Justifying the action of their union in declaring a general autonomy from ULGWP due to the latter's
inability to give proper educational, organizational and legal services to its affiliates and the pendency of
the audit of the federation funds;
(c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of ULGWP;
(d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of coercion,
intimidation and harassment.8
However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination letter read:

Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND GENERAL
WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and/or acts inimical to the
interest and violative to the Constitution and by-laws of your federation.
You failed and/or refused to offer an explanation inspite of the time granted to you.
Since you are no longer a member of good standing, ULGWP is constrained to recommend for your
termination from your employment, and provided in Article II Section 4, known as UNION SECURITY, in
the Collective Bargaining agreement.9
On the same day, the federation advised respondent company of the expulsion of the 30 union officers and
demanded their separation from employment pursuant to the Union Security Clause in their collective bargaining
agreement. This demand was reiterated twice, through letters dated February 21 and March 4, 1989, respectively,
to respondent company.
Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to compel
the company to effect the immediate termination of the expelled union officers.
On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30 union
officers from employment, serving them identical copies of the termination letter reproduced below:
We received a demand letter dated 21 November 1988 from the United Lumber and General Workers of
the Philippines (ULGWP) demanding for your dismissal from employment pursuant to the provisions of
Article II, Section 4 of the existing Collective Bargaining Agreement (CBA). In the said demand letter,
ULGWP informed us that as of November 21, 1988, you were expelled from the said federation "for
committing acts of disloyalty and/or acts inimical to the interest of ULGWP and violative to its
Constitution and By-laws particularly Article V, Section 6, 9, and 12, Article XIII, Section 8.
In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for your
dismissal, pointing out that notwithstanding your expulsion from the federation, you have continued in
your employment with the company in violation of Sec. 1 and 4 of Article II of our CBA, and of existing
provisions of law.
In view thereof, we are left with no alternative but to comply with the provisions of the Union Security
Clause of our CBA. Accordingly, we hereby serve notice upon you that we are dismissing you from your
employment with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA effective
immediately.10
On that same day, the expelled union officers assigned in the first shift were physically or bodily brought out of the
company premises by the company's security guards. Likewise, those assigned to the second shift were not
allowed to report for work. This provoked some of the members of the local union to demonstrate their protest for
the dismissal of the said union officers. Some union members left their work posts and walked out of the company
premises.
On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed with the
NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as Case No.
NCMB-NCR-NS-03-216-89, alleging the following grounds for the strike:
(a) Discrimination
(b) Interference in union activities
(c) Mass dismissal of union officers and shop stewards
(d) Threats, coercion and intimidation
(e) Union busting
The following day, March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union members who
cast their votes, 2,086 members voted to declare a strike.

On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as Case No. NCMB-
NCR-NS-03-216-89, with the Office of the Secretary of the Department of Labor and Employment praying for the
suspension of the effects of their termination from employment. However, the petition was dismissed by then
Secretary Franklin Drilon on April 11, 1989, the pertinent portion of which stated as follows:
At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No mass
lay-off is evident as the terminations have been limited to those allegedly leading the secessionist group
leaving MSMG-ULGWP to form a union under the KMU. . . .
xxx xxx xxx
WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our extraordinary authority
under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby DISMISSED for lack of
merit.
SO ORDERED.11
On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension by
respondent company. This prompted the union members to again stage a walk-out and resulted in the official
declaration of strike at around 3:30 in the afternoon of March 14, 1989. The strike was attended with violence,
force and intimidation on both sides resulting to physical injuries to several employees, both striking and non-
striking, and damage to company properties.
The employees who participated in the strike and allegedly figured in the violent incident were placed under
preventive suspension by respondent company. The company also sent return-to-work notices to the home
addresses of the striking employees thrice successively, on March 27, April 8 and April 31, 1989, respectively.
However, respondent company admitted that only 261 employees were eventually accepted back to work. Those
who did not respond to the return-to-work notice were sent termination letters dated May 17, 1989, reproduced
below:
M. Greenfield Inc., (B)
Km. 14, Merville Rd., Parañaque, M.M.
May 17, 1989
xxx xxx xxx
On March 14, 1989, without justifiable cause and without due notice, you left your work assignment at
the prejudice of the Company's operations. On March 27, April 11, and April 21, 1989, we sent you notices
to report to the Company. Inspite of your receipt of said notices, we have not heard from you up to this
date.
Accordingly, for your failure to report, it is construed that you have effectively abandoned your
employment and the Company is, therefore, constrained to dismiss you for said cause.
Very truly yours,
M. GREENFIELD, INC., (B)
By:
WENZEL STEPHEN LIGOT

Asst. HRD Manager12
On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch, National Capital Region,
DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging private respondents of unfair labor practice
which consists of union busting, illegal dismissal, illegal suspension, interference in union activities, discrimination,
threats, intimidation, coercion, violence, and oppression.

After the filing of the complaint, the lease contracts on the respondent company's office and factory at Merville
Subdivision, Parañaque expired and were not renewed. Upon demand of the owners of the premises, the company
was compelled to vacate its office and factory.
Thereafter, the company transferred its administration and account/client servicing department at AFP-RSBS
Industrial Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for relocation of its
factory and manufacturing operations, the company was constrained to move the said departments to Tacloban,
Leyte. Hence, on April 16, 1990, respondent company accordingly notified its employees of a temporary shutdown
in operations. Employees who were interested in relocating to Tacloban were advised to enlist on or before April
23, 1990.
The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was thereafter
reassigned to Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from acting on the case.
On December 15, 1992, finding the termination to be valid in compliance with the union security clause of the
collective bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint.
Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo Putong retired from the service,
leaving only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman Bartolome Carale in the First
Division. When Commissioner Veloso inhibited himself from the case, Commissioner Joaquin Tanodra of the Third
Division was temporarily designated to sit in the First Division for the proper disposition of the case.
The First Division affirmed the Labor Arbiter's disposition. With the denial of their motion for reconsideration on
January 28, 1994, petitioners elevated the case to this Court, attributing grave abuse of discretion to public
respondent NLRC in:
I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY AS VALID;
II. HOLDING THAT THE STRIKE STAGED BY THE PETITIONERS AS ILLEGAL;
III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE ABANDONED THEIR WORK AND
HENCE, VALIDLY DISMISSED BY RESPONDENT COMPANY; AND
IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS GUILTY OF ACTS OF
UNFAIR LABOR PRACTICE.
Notwithstanding the several issues raised by the petitioners and respondents in the voluminous pleadings
presented before the NLRC and this Court, they revolve around and proceed from the issue of whether or not
respondent company was justified in dismissing petitioner employees merely upon the labor federation's demand
for the enforcement of the union security clause embodied in their collective bargaining agreement.
Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be resolved.
Petitioners contend that the decision rendered by the First Division of the NLRC is not valid because Commissioner
Tanodra, who is from the Third Division, did not have any lawful authority to sit, much less write theponencia, on a
case pending before the First Division. It is claimed that a commissioner from one division of the NLRC cannot be
assigned or temporarily designated to another division because each division is assigned a particular territorial
jurisdiction. Thus, the decision rendered did not have any legal effect at all for being irregularly issued.
Petitioners' argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the Chairman of
the National Labor Relations Commission provides that:
The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a
judgment or resolution. Whenever the required membership in a division is not complete and the
concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the other divisions as may be
necessary.
It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the three
commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and Commissioner
Vicente Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case because the counsel for the
petitioners was his former classmate in law school. The First Division was thus left with only one commissioner.

Since the law requires the concurrence of two commissioners to arrive at a judgment or resolution, the
Commission was constrained to temporarily designate a commissioner from another division to complete the First
Division. There is nothing irregular at all in such a temporary designation for the law empowers the Chairman to
make temporary assignments whenever the required concurrence is not met. The law does not say that a
commissioner from the first division cannot be temporarily assigned to the second or third division to fill the gap or
vice versa. The territorial divisions do not confer exclusive jurisdiction to each division and are merely designed for
administrative efficiency.
Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the
petitioners against respondent company which charges union busting, illegal dismissal, illegal suspension,
interference in union activities, discrimination, threats, intimidation, coercion, violence, and oppression actually
proceeds from one main issue which is the termination of several employees by respondent company upon the
demand of the labor federation pursuant to the union security clause embodied in their collective bargaining
agreement.
Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and illegal
manner because it was undertaken by the respondent company without any prior administrative investigation;
that, had respondent company conducted prior independent investigation it would have found that their expulsion
from the union was unlawful similarly for lack of prior administrative investigation; that the federation cannot
recommend the dismissal of the union officers because it was not a principal party to the collective bargaining
agreement between the company and the union; that public respondents acted with grave abuse of discretion
when they declared petitioners' dismissals as valid and the union strike as illegal and in not declaring that
respondents were guilty of unfair labor practice.
Private respondents, on the other hand, maintain that the thirty dismissed employees who were former officers of
the federation have no cause of action against the company, the termination of their employment having been
made upon the demand of the federation pursuant to the union security clause of the CBA; the expelled officers of
the local union were accorded due process of law prior to their expulsion from their federation; that the strike
conducted by the petitioners was illegal for noncompliance with the requirements; that the employees who
participated in the illegal strike and in the commission of violence thereof were validly terminated from work; that
petitioners were deemed to have abandoned their employment when they did not respond to the three return to
work notices sent to them; that petitioner labor union has no legal personality to file and prosecute the case for
and on behalf of the individual employees as the right to do so is personal to the latter; and that, the officers of
respondent company cannot be liable because as mere corporate officers, they acted within the scope of their
authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and legally
terminated because the dismissal was effected in compliance with the union security clause of the CBA which is
the law between the parties. And this was affirmed by the Commission on appeal. Moreover, the Labor Arbiter
declared that notwithstanding the lack of a prior administrative investigation by respondent company, under the
union security clause provision in the CBA, the company cannot look into the legality or illegality of the
recommendation to dismiss by the union nd the obligation to dismiss is ministerial on the part of the company. 13
This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied in the
collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be
valid, this does not erode the fundamental requirement of due process. The reason behind the enforcement of
union security clauses which is the sanctity and inviolability of contracts 14 cannot override one's right to due
process.
In the case of Cariño vs. National Labor Relations Commission,15 this Court pronounced that while the company,
under a maintenance of membership provision of the collective bargaining agreement, is bound to dismiss any
employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily
and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing.
The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. The
employer is bound to exercise caution in terminating the services of his employees especially so when it is
made upon the request of a labor union pursuant to the Collective Bargaining Agreement, . . . Dismissals
must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it
affects not only his position but also his means of livelihood. Employers should respect and protect the
rights of their employees, which include the right to labor.
In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly committing acts
of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution and By-laws. Upon

demand of the federation, the company terminated the petitioners without conducting a separate and
independent investigation. Respondent company did not inquire into the cause of the expulsion and whether or
not the federation had sufficient grounds to effect the same. Relying merely upon the federation's allegations,
respondent company terminated petitioners from employment when a separate inquiry could have revealed if the
federation had acted arbitrarily and capriciously in expelling the union officers. Respondent company's allegation
that petitioners were accorded due process is belied by the termination letters received by the petitioners which
state that the dismissal shall be immediately effective.
As held in the aforecited case of Cariño, "the right of an employee to be informed of the charges against him and
to reasonable opportunity to present his side in a controversy with either the company or his own union is not
wiped away by a union security clause or a union shop clause in a collective bargaining agreement. An employee is
entitled to be protected not only from a company which disregards his rights but also from his own union the
leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere
dismissal from his job.
While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union
security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal
should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization
and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement
is not characterized by arbitrariness, and always with due process.16 Even on the assumption that the federation
had valid grounds to expel the union officers, due process requires that these union officers be accorded a
separate hearing by respondent company.
In its decision, public respondent also declared that if complainants (herein petitioners) have any recourse in law,
their right of action is against the federation and not against the company or its officers, relying on the findings of
the Labor Secretary that the issue of expulsion of petitioner union officers by the federation is a purely intra-union
matter.
Again, such a contention is untenable. While it is true that the issue of expulsion of the local union officers is
originally between the local union and the federation, hence, intra-union in character, the issue was later on
converted into a termination dispute when the company dismissed the petitioners from work without the benefit
of a separate notice and hearing. As a matter of fact, the records reveal that the termination was effective on the
same day that the termination notice was served on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.17, the Court held the company liable
for the payment of backwages for having acted in bad faith in effecting the dismissal of the employees.
. . . Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner
workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must
assume solidary liability, since it apparently chose to summarily dismiss the workers at the union's
instance secure in the union's contractual undertaking that the union would hold it "free from any
liability" arising from such dismissal.
Thus, notwithstanding the fact that the dismissal was at the instance of the federation and that it undertook to
hold the company free from any liability resulting from such a dismissal, the company may still be held liable if it
was remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter.
Anent petitioners contention that the federation was not a principal party to the collective bargaining agreement
between the company and the union, suffice it to say that the matter was already ruled upon in the Interpleader
case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled:
After a careful examination of the facts and evidences presented by the parties, this Officer hereby
renders its decision as follows:
1.) It appears on record that in Collective Bargaining Agreement (CBA) which took effect on July 1, 1986,
the contracting parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M.
Greenfield, Inc. (B) (MSMG)/United Lumber and General Workers of the Philippines (ULGWP). However,
MSMG was not yet registered labor organization at the time of the signing of the CBA. Hence, the union
referred to in the CBA is the ULGWP.18
Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:

It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all the regular
rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the records).
It has been established also that the company and ULGWP signed a 3-year collective bargaining
agreement effective July 1, 1986 up to June 30, 1989.19
Although the issue of whether or not the federation had reasonable grounds to expel the petitioner union officers
is properly within the original and exclusive jurisdiction of the Bureau of Labor Relations, being an intra-union
conflict, this Court deems it justifiable that such issue be nonetheless ruled upon, as the Labor Arbiter did, for to
remand the same to the Bureau of Labor Relations would be to intolerably delay the case.
The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for committing
acts of disloyalty when it "undertook to disaffiliate from the federation by charging ULGWP with failure to provide
any legal, educational or organizational support to the local. . . . and declared autonomy, wherein they prohibit the
federation from interfering in any internal and external affairs of the local union." 20
It is well-settled that findings of facts of the NLRC are entitled to great respect and are generally binding on this
Court, but it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC as when the
Court finds insufficient or insubstantial evidence on record to support those factual findings. The same holds true
when it is perceived that far too much is concluded, inferred or deduced from the bare or incomplete facts
appearing of record.21
In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by the local
union was part of its "plan to take over the respondent federation." This is purely conjecture and speculation on
the part of public respondent, totally unsupported by the evidence.
A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union, being a
separate and voluntary association, is free to serve the interests of all its members including the freedom to
disaffiliate or declare its autonomy from the federation to which it belongs when circumstances warrant, in
accordance with the constitutional guarantee of freedom of association. 22
The purpose of affiliation by a local union with a mother union or a federation.
. . . is to increase by collective action the bargaining power in respect of the terms and conditions of labor.
Yet the locals remained the basic units of association, free to serve their own and the common interest of
all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to
renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it
into existence.23
Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and such
disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation's constitution
prohibiting disaffiliation or the declaration of autonomy of a local union, a local may dissociate with its parent
union.24
The evidence on hand does not show that there is such a provision in ULGWP's constitution. Respondents' reliance
upon Article V, Section 6, of the federation's constitution is not right because said section, in fact, bolsters the
petitioner union's claim of its right to declare autonomy:
Sec. 6. The autonomy of a local union affiliated with ULGWP shall be respected insofar as it pertains to its
internal affairs, except as provided elsewhere in this Constitution.
There is no disloyalty to speak of, neither is there any violation of the federation's constitution because there is
nothing in the said constitution which specifically prohibits disaffiliation or declaration of autonomy. Hence, there
cannot be any valid dismissal because Article II, Section 4 of the union security clause in the CBA limits the
dismissal to only three (3) grounds, to wit: failure to maintain membership in the union (1) for non-payment of
union dues, (2) for resignation; and (3) for violation of the union's Constitution and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989, the
petitioners declared as vacant all the responsible positions of ULGWP, filled these vacancies through an election
and filed a petition for the registration of UWP as a national federation. It should be pointed out, however, that
these occurred after the federation had already expelled the union officers. The expulsion was effective November

21, 1988. Therefore, the act of establishing a different federation, entirely separate from the federation which
expelled them, is but a normal retaliatory reaction to their expulsion.
With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike was illegal for
the following reasons: (1) it was based on an intra-union dispute which cannot properly be the subject of a strike,
the right to strike being limited to cases of bargaining deadlocks and unfair labor practice (2) it was made in
violation of the "no strike, no lock-out" clause in the CBA, and (3) it was attended with violence, force and
intimidation upon the persons of the company officials, other employees reporting for work and third persons
having legitimate business with the company, resulting to serious physical injuries to several employees and
damage to company property.
On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the intra-union
conflict between the federation and the local union, it bears reiterating that when respondent company dismissed
the union officers, the issue was transformed into a termination dispute and brought respondent company into the
picture. Petitioners believed in good faith that in dismissing them upon request by the federation, respondent
company was guilty of unfair labor practice in that it violated the petitioner's right to self-organization. The strike
was staged to protest respondent company's act of dismissing the union officers. Even if the allegations of unfair
labor practice are subsequently found out to be untrue, the presumption of legality of the strike prevails. 25
Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike no lockout
provision in the CBA. Again, such a ruling is erroneous. A no strike, no lock out provision can only be invoked when
the strike is economic in nature, i.e. to force wage or other concessions from the employer which he is not
required by law to grant.26 Such a provision cannot be used to assail the legality of a strike which is grounded on
unfair labor practice, as was the honest belief of herein petitioners. Again, whether or not there was indeed unfair
labor practice does not affect the strike.
On the allegation of violence committed in the course of the strike, it must be remembered that the Labor Arbiter
and the Commission found that "the parties are agreed that there were violent incidents . . . resulting to injuries to
both sides, the union and management."27 The evidence on record show that the violence cannot be attributed to
the striking employees alone for the company itself employed hired men to pacify the strikers. With violence
committed on both sides, the management and the employees, such violence cannot be a ground for declaring the
strike as illegal.
With respect to the dismissal of individual petitioners, the Labor Arbiter declared that their refusal to heed
respondent's recall to work notice is a clear indication that they were no longer interested in continuing their
employment and is deemed abandonment. It is admitted that three return to work notices were sent by
respondent company to the striking employees on March 27, April 11, and April 21, 1989 and that 261 employees
who responded to the notice were admitted back to work.
However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the employee must
have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must
have been a clear intention to sever the employer-employee relationship manifested by some overt
acts.28Deliberate and unjustified refusal on the part of the employee to go back to his work post amd resume his
employment must be established. Absence must be accompanied by overt acts unerringly pointing to the fact that
the employee simply does not want to work anymore.29 And the burden of proof to show that there was
unjustified refusal to go back to work rests on the employer.
In the present case, respondents failed to prove that there was a clear intention on the part of the striking
employees to sever their employer-employee relationship. Although admittedly the company sent three return to
work notices to them, it has not been substantially proven that these notices were actually sent and received by
the employees. As a matter of fact, some employees deny that they ever received such notices. Others alleged that
they were refused entry to the company premises by the security guards and were advised to secure a clearance
from ULGWP and to sign a waiver. Some employees who responded to the notice were allegedly told to wait for
further notice from respondent company as there was lack of work.
Furthermore, this Court has ruled that an employee who took steps to protest his lay-off cannot be said to have
abandoned his work.30 The filing of a complaint for illegal dismissal is inconsistent with the allegation of
abandonment. In the case under consideration, the petitioners did, in fact, file a complaint when they were
refused reinstatement by respondent company.
Anent public respondent's finding that there was no unfair labor practice on the part of respondent company and
federation officers, the Court sustains the same. As earlier discussed, union security clauses in collective bargaining
agreements, if freely and voluntarily entered into, are valid and binding. Corollary, dismissals pursuant to union

security clauses are valid and legal subject only to the requirement of due process, that is, notice and hearing prior
to dismissal. Thus, the dismissal of an employee by the company pursuant to a labor union's demand in accordance
with a union security agreement does not constitute unfair labor practice. 31
However, the dismissal was invalidated in this case because of respondent company's failure to accord petitioners
with due process, that is, notice and hearing prior to their termination. Also, said dismissal was invalidated because
the reason relied upon by respondent Federation was not valid. Nonetheless, the dismissal still does not constitute
unfair labor practice.
Lastly, the Court is of the opinion, and so holds, that respondent company officials cannot be held personally liable
for damages on account of the employees' dismissal because the employer corporation has a personality separate
and distinct from its officers who merely acted as its agents.
It has come to the attention of this Court that the 30-day prior notice requirement for the dismissal of employees
has been repeatedly violated and the sanction imposed for such violation enunciated in Wenphil Corporation
vs.NLRC32 has become an ineffective deterrent. Thus, the Court recently promulgated a decision to reinforce and
make more effective the requirement of notice and hearing, a procedure that must be observed before
termination of employment can be legally effected.
In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040, January 27, 2000), the Court ruled that
an employee who is dismissed, whether or not for just or authorized cause but without prior notice of his
termination, is entitled to full backwages from the time he was terminated until the decision in his case becomes
final, when the dismissal was for cause; and in case the dismissal was without just or valid cause, the backwages
shall be computed from the time of his dismissal until his actual reinstatement. In the case at bar, where the
requirement of notice and hearing was not complied with, the aforecited doctrine laid down in the Serrano case
applies.
WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations Commission in Case No. NCR-
00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to immediately
reinstate the petitioners to their respective positions. Should reinstatement be not feasible, respondent company
shall pay separation pay of one month salary for every year of service. Since petitioners were terminated without
the requisite written notice at least 30 days prior to their termination, following the recent ruling in the case
of Ruben Serrano vs. National Labor Relations Commission and Isetann Department Store, the respondent
company is hereby ordered to pay full backwages to petitioner-employees while the Federation is also ordered to
pay full backwages to petitioner-union officers who were dismissed upon its instigation. Since the dismissal of
petitioners was without cause, backwages shall be computed from the time the herein petitioner employees and
union officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their
backwages shall be computed from the time petitioners were terminated until the finality of this decision. Costs
against the respondent company.1âwphi1.nêt
SO ORDERED.

G.R. No. L-43495-99 January 20, 1990
TROPICAL HUT EMPLOYEES' UNION-CGW vs TROPICAL HUT
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 seeking to set aside the decisions of the public respondents Secretary
of Labor and National Labor Relations Commission which reversed the Arbitrators rulings in favor of petitioners
herein.
The following factual background of this case appears from the record:
On January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated, referred to herein as
respondent company, organized a local union called the Tropical Hut Employees Union, known for short as the
THEU, elected their officers, adopted their constitution and by-laws and immediately sought affiliation with the
National Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU application for
affiliation. Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the Department
of Labor in the name of the Tropical Hut Employees Union — NATU. It appears, however, that NATU itself as a
labor federation, was not registered with the Department of Labor.
After several negotiations were conducted between THEU-NATU, represented by its local president and the
national officers of the NATU, particularly Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-President and
Marcelino Lontok, Jr., Vice President, and respondent Tropical Hut Food Market, Incorporated, thru its President
and General Manager, Cesar Azcona, Sr., a Collective Bargaining Agreement was concluded between the parties on
April 1, 1968, the term of which expired on March 31, 1971. Said agreement' contained these clear and
unequivocal terms:
This Agreement made and entered into this __________ day of ___________, 1968, by and
between:
The Tropical Hut Food Market, Inc., a corporation duly organized and existing under and by virtue
of the laws of the Republic of the Philippines, with principal office at Quezon City, represented in
this Act by its President, Cesar B. Azcona (hereinafter referred to as the Company)
—and—
The Tropical Hut Employees Union — NATU, a legitimate labor organization duly organized and
existing in accordance with the laws of the Republic of the Philippines, and affiliated with the
National Association of Trade Unions, with offices at San Luis Terraces, Ermita, Manila, and
represented in this Act by its undersigned officers (hereinafter referred to as the UNION)
Witnesseth:
xxx xxx xxx
Article I
Coverage and Effectivity
Sec. 1. The COMPANY recognizes the UNION as the sole and exclusive collective bargaining agent
for all its workers and employees in all matters concerning wages, hours of work, and other
terms and conditions of employment.
xxx xxx xxx
Article III
Union Membership and Union Check-off
Sec. 1 —. . . Employees who are already members of the UNION at the time of the signing of this
Agreement or who become so thereafter shall be required to maintain their membership therein
as a condition of continued employment.

xxx xxx xxx
Sec. 3—Any employee who is expelled from the UNION for joining another federation or forming
another union, or who fails or refuses to maintain his membership therein as required, . . . shall,
upon written request of the UNION be discharged by the COMPANY. (Rollo, pp. 667-670)
And attached to the Agreement as Appendix "A" is a check-off Authorization Form, the terms of which are as
follows:
We, the undersigned, hereby designate the NATIONAL Association of Trade Unions, of which the
TROPICAL HUT EMPLOYEES UNION is an affiliate as sole collective bargaining agent in all matters
relating to salary rates, hours of work and other terms and conditions of employment in the
Tropical Hut Food Market, Inc. and we hereby authorize the said company to deduct the amount
of Four (P 4.00) Pesos each every month as our monthly dues and to deliver the amount to the
Treasurer of the Union or his duly authorized representatives. (Rollo, pp. 680-684)
On May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining Agreement
which ended on March 31, 1974. This new CBA incorporated the previous union-shop security clause and the
attached check-off authorization form.
Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-NATU, was appointed by the respondent
company as Assistant Unit Manager. On July 24, 1973, he wrote the general membership of his union that for
reason of his present position, he was resigning as President of the THEU-NATU effective that date. As a
consequence thereof, his Vice-President, Jose Encinas, assumed and discharged the duties of the presidency of the
THEU-NATU.
On December 19,1973, NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers
of the local union informing the NATU that THEU was disaffiliating from the NATU federation. On December 20,
1973, the Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general
membership of the THEU, concerning the latter's disaffiliation from the NATU and its affiliation with the
Confederation of General Workers (CGW). The letter was passed around among the members of the THEU-NATU,
to which around one hundred and thirty-seven (137) signatures appeared as having given their consent to and
acknowledgment of the decision to disaffiliate the THEU from the NATU.
On January 1, 1974, the general membership of the so-called THEU-CGW held its annual election of officers, with
Jose Encinas elected as President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed
the respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal, President of the
Confederation of General Workers (CGW), wrote a letter in behalf of complainant THEU-CGW to the respondent
company demanding the remittance of the union dues collected by the Tropical Hut Food Mart, Incorporated to
the THEU-CGW, but this was refused by the respondent company.
On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the
latter to assume immediately the position of President of the THEU-NATU in place of Jose Encinas, but the position
was declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a letter, concerning the request made
by the NATU federation to the respondent company to dismiss him (Encinas) in view of his violation of Section 3 of
Article III of the Collective Bargaining Agreement. Encinas was also advised in the letter that NATU was returning
the letter of disaffiliation on the ground that:
1. Under the restructuring program NOT of the Bureau of Labor but of the Philippine National
Trade Union Center in conjunction with the NATU and other established national labor centers,
retail clerks and employees such as our members in the Tropical Hut pertain to Industry II which
by consensus, has been assigned already to the jurisdiction of the NATU;
2. The right to disaffiliate belongs to the union membership who — on the basis of verified
reports received by — have not even been consulted by you regarding the matter;
3. Assuming that the disaffiliation decision was properly reached; your letter nevertheless is
unacceptable in view of Article V, Section 1, of the NATU Constitution which provides that
"withdrawal from the organization shall he valid provided three (3) months notice of intention to
withdraw is served upon the National Executive Council." (p. 281, Rollo)
In view of NATU's request, the respondent company, on the same day, which was January 11, 1974,
suspended Encinas pending the application for clearance with the Department of Labor to dismiss him. On

January 12, 1974, members of the THEU-CGW passed a resolution protesting the suspension of Encinas
and reiterated their ratification and approval of their union's disaffiliation from NATU and their affiliation
with the Confederation of General Workers (CGW). It was Encinas' suspension that caused the filing of
NLRC Case No. LR-2511 on January 11, 1974 against private respondents herein, charging them of unfair
labor practice.
On January 15,1974, upon the request of NATU, respondent company applied for clearance with the Secretary of
Labor to dismiss the other officers and members of THEU-CGW. The company also suspended them effective that
day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual complainants against private respondents for
unfair labor practices.
On January 19, 1974, Lontok, acting as temporary chairman, presided over the election of officers of the remaining
THEU-NATU in an emergency meeting pending the holding of a special election to be called at a later date. In the
alleged election, Arturo Dilag was elected acting THEU-NATU President together with the other union officers. On
February 14, 1974, these temporary officers were considered as having been elected as regular officers for the
year 1974.
On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce Enrile, Secretary of National Defense,
complaining of the unfair labor practices committed by respondent company against its members and requesting
assistance on the matter. The aforementioned letter contained the signatures of one hundred forty-three (143)
members.
On February 24,1974, the secretary of THEU-NATU, notified the entire rank and file employees of the company
that they will be given forty-eight (48) hours upon receipt of the notice within which to answer and affirm their
membership with THEU-NATU. When the petitioner employees failed to reply, Arturo Dilag advised them thru
letters dated February 26, March 2 and 5, 1974, that the THEU-NATU shall enforce the union security clause set
forth in the CBA, and that he had requested respondent company to dismiss them.
Respondent company, thereafter, wrote the petitioner employees demanding the latter's comment on Dilag's
charges before action was taken thereon. However, no comment or reply was received from petitioners. In view of
this, Estelita Que, President/General Manager of respondent company, upon Dilag's request, suspended twenty
four (24) workers on March 5, 1974, another thirty seven (37) on March 8, 1974 and two (2) more on March 11,
1974, pending approval by the Secretary of Labor of the application for their dismissal.
As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015 and an unnumbered case were filed by petitioners
against Tropical Hut Food Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo Dilag.
It is significant to note that the joint letter petition signed by sixty-seven (67) employees was filed with the
Secretary of Labor, the NLRC Chairman and Director of Labor Relations to cancel the words NATU after the name of
Tropical Hut Employee Union under Registration Certificate No. 5544 IP. Another letter signed by one hundred
forty-six (146) members of THEU-CGW was sent to the President of the Philippines informing him of the unfair
labor practices committed by private respondents against THEU-CGW members.
After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed with the Labor Arbiter, Arbitrator Daniel
Lucas issued an order dated March 21, 1974, holding that the issues raised by the parties became moot and
academic with the issuance of NLRC Order dated February 25, 1974 in NLRC Case No. LR-2670, which directed the
holding of a certification election among the rank and file workers of the respondent company between the THEU-
NATU and THEU-CGW. He also ordered: a) the reinstatement of all complainants; b) for the respondent company
to cease and desist from committing further acts of dismissals without previous order from the NLRC and for the
complainant Tropical Hut Employees UNION-CGW to file representation cases on a case to case basis during the
freedom period provided for by the existing CBA between the parties (pp. 91-93, Rollo).
With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered case, Arbitrator Cleto T. Villatuya rendered
a decision dated October 14, 1974, the dispositive portion of which states:
Premises considered, a DECISION is hereby rendered ordering respondent company to reinstate

immediately the sixty three (63) complainants to their former positions with back wages from
the time they were illegally suspended up to their actual reinstatement without loss of seniority
and other employment rights and privileges, and ordering the respondents to desist from further
committing acts of unfair labor practice. The respondent company's application for clearance
filed with the Secretary of Labor to terminate the subject complainants' services effective March
20 and 23, 1974, should be denied.

SO ORDERED. (pp. 147-148, Rollo)
From the orders rendered above by Abitrator Daniel Lucas in NLRC Cases No. LR-2511 and LR-2521 and by
Arbitrator Cleto Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and the unnumbered case, all parties thereto,
namely, petitioners herein, respondent company, NATU and Dilag appealed to the National Labor Relations
Commission.
In a decision rendered on August 1, 1975, the National Labor Relations Commission found the private respondents'
appeals meritorious, and stated, inter alia:
WHEREFORE, in view of the foregoing premises, the Order of Arbitrator Lucas in NLRC CASE NOS.
LR-2511, 2521 and the decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971, 3015 and the
unnumbered Case are hereby REVERSED. Accordingly, the individual complainants are deemed to
have lost their status as employees of the respondent company. However, considering that the
individual complainants are not presumed to be familiar with nor to have anticipated the legal
mesh they would find themselves in, after their "disaffiliation" from National Association of
Trade Unions and the THEU-NATU, much less the legal consequences of the said action which we
presume they have taken in all good faith; considering, further, that the thrust of the new
orientation in labor relations is not towards the punishment of acts violative of contractual
relations but rather towards fair adjustments of the resulting complications; and considering,
finally, the consequent economic hardships that would be visited on the individual complainants,
if the law were to be strictly enforced against them, this Commission is constrained to be
magnanimous in this instant, notwithstanding its obligation to give full force and effect to the
majesty of the law, and hereby orders the respondent company, under pain of being cited for
contempt for failure to do so, to give the individual complainants a second chance by
reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical
Hut Employees Union-NATU and the National Association of Trade Unions in the event it hires
additional personnel.
SO ORDERED. (pp. 312-313, Rollo)
The petitioner employees appealed the decision of the respondent National Labor Relations Commission to the
Secretary of Labor. On February 23, 1976, the Secretary of Labor rendered a decision affirming the findings of the
Commission, which provided inter alia:
We find, after a careful review of the record, no sufficient justification to alter the decision
appealed from except that portion of the dispositive part which states:
. . . this Commission . . . hereby orders respondent company under pain of

being cited for contempt for failure to do so, to give the individual
complainants a second chance by reemploying them upon their voluntary
reaffirmation of membership and loyalty to the Tropical Hut Employees UNION-
NATU and the National Association of Trade Union in the event it hires
additional personnel.
Compliance by respondent of the above undertaking is not immediately feasible considering that
the same is based on an uncertain event, i.e., reemployment of individual complainants "in the
event that management hires additional personnel," after they shall have reaffirmed their loyalty
to THEU-NATU, which is unlikely.
In lieu of the foregoing, and to give complainants positive relief pursuant to Section 9,
Implementing Instruction No. 1. dated November 9, 1972, respondent is hereby ordered to grant
to all the individual complainants financial assistance equivalent to one (1) month salary for
every year of service.
WHEREFORE, with the modification as above indicated, the Decision of the National Labor
Relations Commission is hereby affirmed.
SO ORDERED.(pp. 317-318, Rollo)
From the various pleadings filed and arguments adduced by petitioners and respondents, the following issues
appear to be those presented for resolution in this petition to wit: 1) whether or not the petitioners failed to
exhaust administrative remedies when they immediately elevated the case to this Court without an appeal having

been made to the Office of the President; 2) whether or not the disaffiliation of the local union from the national
federation was valid; and 3) whether or not the dismissal of petitioner employees resulting from their unions
disaffiliation for the mother federation was illegal and constituted unfair labor practice on the part of respondent
company and federation.
We find the petition highly meritorious.
The applicable law then is the Labor Code, PD 442, as amended by PD 643 on January 21, 1975, which states:
Art. 222. Appeal — . . .
xxx xxx xxx
Decisions of the Secretary of Labor may be appealed to the President of the Philippines subject
to such conditions or limitations as the President may direct. (Emphasis ours)
The remedy of appeal from the Secretary of Labor to the Office of the President is not a mandatory requirement
before resort to courts can be had, but an optional relief provided by law to parties seeking expeditious disposition
of their labor disputes. Failure to avail of such relief shall not in any way served as an impediment to judicial
intervention. And where the issue is lack of power or arbitrary or improvident exercise thereof, decisions of the
Secretary of Labor may be questioned in a certiorari proceeding without prior appeal to the President (Arrastre
Security Association —TUPAS v. Ople, No. L-45344, February 20, 1984, 127 SCRA 580). Since the instant petition
raises the same issue of grave abuse of discretion of the Secretary of Labor amounting to lack of or in excess of
jurisdiction in deciding the controversy, this Court can properly take cognizance of and resolve the issues raised
herein.
This brings Us to the question of the legality of the dismissal meted to petitioner employees. In the celebrated case
of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512, We held
that the validity of the dismissals pursuant to the union security clause in the collective bargaining agreement
hinges on the validity of the disaffiliation of the local union from the federation.
The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate
and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when
circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association
(Volkschel Labor Union v. Bureau of Labor Relations, No. L-45824, June 19, 1985, 137 SCRA 42).
All employees enjoy the right to self organization and to form and join labor organizations of their own choosing
for the purpose of collective bargaining and to engage in concerted activities for their mutual aid or protection.
This is a fundamental right of labor that derives its existence from the Constitution. In interpreting the protection
to labor and social justice provisions of the Constitution and the labor laws or rules or regulations, We have always
adopted the liberal approach which favors the exercise of labor rights.
Relevant on this point is the basic principle We have repeatedly in affirmed in many rulings:
. . . The locals are separate and distinct units primarily designed to secure and maintain an
equality of bargaining power between the employer and their employee-members in the
economic struggle for the fruits of the joint productive effort of labor and capital; and the
association of the locals into the national union (PAFLU) was in furtherance of the same end.
These associations are consensual entities capable of entering into such legal relations with their
member. The essential purpose was the affiliation of the local unions into a common enterprise
to increase by collective action the common bargaining power in respect of the terms and
conditions of labor. Yet the locals remained the basic units of association, free to serve their own
and the common interest of all, subject to the restraints imposed by the Constitution and By-
Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the
terms laid down in the agreement which brought it into existence. (Adamson & Adamson, Inc. v.
CIR, No. L-35120, January 31, 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v. Noriel,
No. L-41955, December 29, 1977, 80 SCRA 681; Liberty Cotton Mills Workers Union v. Liberty
Cotton Mills, Inc., supra).
The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of
Labor is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the
said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own

interests independently of the federation. A local union owes its creation and continued existence to the will of its
members and not to the federation to which it belongs.
When the local union withdrew from the old federation to join a new federation, it was merely exercising its
primary right to labor organization for the effective enhancement and protection of common interests. In the
absence of enforceable provisions in the federation's constitution preventing disaffiliation of a local union a local
may sever its relationship with its parent (People's Industrial and Commercial Employees and Workers
Organization (FFW) v. People's Industrial and Commercial Corporation, No. 37687, March 15, 1982, 112 SCRA 440).
There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was
expressly forbidden to disaffiliate from the federation (pp. 62, 281, Rollo), The alleged non-compliance of the local
union with the provision in the NATU Constitution requiring the service of three months notice of intention to
withdraw did not produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not
even a legitimate labor organization, it appearing that it was not registered at that time with the Department of
Labor, and therefore did not possess and acquire, in the first place, the legal personality to enforce its constitution
and laws, much less the right and privilege under the Labor Code to organize and affiliate chapters or locals within
its group, and secondly, the act of non-compliance with the procedure on withdrawal is premised on purely
technical grounds which cannot rise above the fundamental right of self-organization.
Respondent Secretary of Labor, in affirming the decision of the respondent Commission, concluded that the
supposed decision to disaffiliate was not the subject of a free and open discussion and decision on the part of the
THEU-NATU general membership (p. 305, Rollo). This, however, is contradicted by the evidence on record.
Moreover, We are inclined to believe Arbitrator Villatuya's findings to the contrary, as follows:
. . . . However, the complainants refute this allegation by submitting the following: a) Letter
dated December 20, 1.973 signed by 142 members (Exhs. "B to B-5") resolution dated January
12, 1974, signed by 140 members (Exhs. "H to H-6") letter dated February 26, 1974 to the
Department of Labor signed by 165 members (Exhs. "I to I-10"); d) letter dated January 30, 1974
to the Secretary of the National Defense signed by 144 members (Exhs. "0 to 0-5") and; e) letter
dated March 6, 1974 signed by 146 members addressed to the President of the Philippines (Exhs.
"HH to HH-5"), to show that in several instances, the members of the THEU-NATU have
acknowledged their disaffiliation from NATU. The letters of the complainants also indicate that
an overwhelming majority have freely and voluntarily signed their union's disaffiliation from
NATU, otherwise, if there was really deception employed in securing their signatures as claimed
by NATU/ Dilag, it could not be possible to get their signatures in five different documents. (p.
144, Rollo)
We are aware of the time-honored doctrine that the findings of the NLRC and the Secretary of Labor are binding
on this Court if supported by substantial evidence. However, in the same way that the findings of facts
unsupported by substantial and credible evidence do not bind this Court, neither will We uphold erroneous
conclusions of the NLRC and the Secretary of Labor when We find that the latter committed grave abuse of
discretion in reversing the decision of the labor arbiter (San Miguel Corporation v. NLRC, L-50321, March 13, 1984,
128 SCRA 180). In the instant case, the factual findings of the arbitrator were correct against that of public
respondents.
Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union
security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective
bargaining agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and
exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of
work and other terms and conditions of employment (pp. 667-706, Rollo). Although NATU was designated as the
sole bargaining agent in the check-off authorization form attached to the CBA, this simply means it was acting only
for and in behalf of its affiliate. The NATU possessed the status of an agent while the local union remained the
basic principal union which entered into contract with the respondent company. When the THEU disaffiliated from
its mother federation, the former did not lose its legal personality as the bargaining union under the CBA.
Moreover, the union security clause embodied in the agreements cannot be used to justify the dismissals meted to
petitioners since it is not applicable to the circumstances obtaining in this case. The CBA imposes dismissal only in
case an employee is expelled from the union for joining another federation or for forming another union or who
fails or refuses to maintain membership therein. The case at bar does not involve the withdrawal of merely some
employees from the union but of the whole THEU itself from its federation. Clearly, since there is no violation of
the union security provision in the CBA, there was no sufficient ground to terminate the employment of
petitioners.

Public respondents considered the existence of Arturo Dilag's group as the remaining true and valid union. We,
however, are inclined to agree instead with the Arbitrator's findings when he declared:
. . . . Much more, the so-called THEU-NATU under Dilag's group which assumes to be the original
THEU-NATU has a very doubtful and questionable existence not to mention that the alleged
president is performing supervisory functions and not qualified to be a bona fide member of the
rank and file union. (p. 146, Rollo)
Records show that Arturo Dilag had resigned in the past as President of THEU-NATU because of his promotion to a
managerial or supervisory position as Assistant Unit Manager of respondent Company. Petitioner Jose Encinas
replaced Dilag as President and continued to hold such position at the time of the disaffiliation of the union from
the federation. It is therefore improper and contrary to law for Dilag to reassume the leadership of the remaining
group which was alleged to be the true union since he belonged to the managerial personnel who could not be
expected to work for the betterment of the rank and file employees. Besides, managers and supervisors are
prohibited from joining a rank and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association
of Free Labor Unions (PAFLU), et al., L-18782, August 29, 1963, 8 SCRA 700). Correspondingly, if a manager or
supervisor organizes or joins a rank and file union, he will be required to resign therefrom (Magalit, et al. v. Court
of Industrial Relations, et al., L-20448, May 25, 1965,14 SCRA 72).
Public respondents further submit that several employees who disaffiliate their union from the NATU subsequently
retracted and reaffirmed their membership with the THEU-NATU. In the decision which was affirmed by
respondent Secretary of Labor, the respondent Commission stated that:
. . . out of the alleged one hundred and seventy-one (171) members of the THEU-CGW whose
signatures appeared in the "Analysis of Various Documents Signed by Majority Members of the
THEU-CGW, (Annex "T", Complainants), which incidentally was relied upon by Arbitrator Villatuya
in holding that complainant THEU-CGW commanded the majority of employees in respondent
company, ninety-three (93) of the alleged signatories reaffirmed their membership with the
THEU-NATU and renounced whatever connection they may have had with other labor unions,
(meaning the complainant THEU-CGW) either through resolution or membership application
forms they have unwittingly signed." (p. 306, Rollo)
Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction
were executed on various dates beginning January 11, 1974 to March 8, 1974 (pp. 278-280, Rollo). This shows that
the retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose
Encinas, formerly THEU-NATU President, who became THEU-CGW President, and the suspension pending their
dismissal of the other elected officers and members of the THEU-CGW on January 15, 1974. It is also clear that
some of the retractions occurred after the suspension of the first set of workers numbering about twenty-four (24)
on March 5, 1974. There is no use in saying that the retractions obliterated the act of disaffiliation as there are
doubts that they were freely and voluntarily done especially during such time when their own union officers and
co-workers were already suspended pending their dismissal.
Finally, with regard to the process by which the workers were suspended or dismissed, this Court finds that it was
hastily and summarily done without the necessary due process. The respondent company sent a letter to
petitioners herein, advising them of NATU/Dilag's recommendation of their dismissal and at the same time giving
them forty-eight (48) hours within which to comment (p. 637, Rollo). When petitioners failed to do so, respondent
company immediately suspended them and thereafter effected their dismissal. This is certainly not in fulfillment of
the mandate of due process, which is to afford the employee to be dismissed an opportunity to be heard.
The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or
arbitrainess, for what is at stake is not only the employee's name or position but also his means of livelihood. Thus,
the discharge of an employee from his employment is null and void where the employee was not formally
investigated and given the opportunity to refute the alleged findings made by the company (De Leon v. NLRC, L-
52056, October 30, 1980, 100 SCRA 691). Likewise, an employer can be adjudged guilty of unfair labor practice for
having dismissed its employees in line with a closed shop provision if they were not given a proper hearing
(Binalbagan-Isabela Sugar Co., Inc.,(BISCOM) v. Philippine Association of Free Labor Unions (PAFLU) et al., L-18782,
August 29, 1963, 8 SCRA 700).
In view of the fact that the dispute revolved around the mother federation and its local, with the company
suspending and dismissing the workers at the instance of the mother federation then, the company's liability
should be limited to the immediate reinstatement of the workers. And since their dismissals were effected without
previous hearing and at the instance of NATU, this federation should be held liable to the petitioners for the
payment of their backwages, as what We have ruled in the Liberty Cotton Mills Case (supra).

ACCORDINGLY, the petition is hereby GRANTED and the assailed decision of respondent Secretary of Labor is
REVERSED and SET ASIDE, and the respondent company is hereby ordered to immediately reinstate all the
petitioner employees within thirty (30) days from notice of this decision. If reinstatement is no longer feasible, the
respondent company is ordered to pay petitioners separation pay equivalent to one (1) month pay for every year
of service. The respondent NATU federation is directed to pay petitioners the amount of three (3) years backwages
without deduction or qualification. This decision shall be immediately executory upon promulgation and notice to
the parties.
SO ORDERED.

G.R. No. L-18112 October 30, 1962
KAPISANAN NG MGA MANGGAGAWA NG ALAK (NAFLU), petitioner,

vs.
HAMILTON DISTILLERY COMPANY, CO BON BENG, MARIANO ANG ENG and HAMILTON WORKERS'
UNION, respondents.
Oliveros and Mallare for petitioner.

Agapito S. Mendoza for respondent Hamilton Workers Union.
Lopez-De Joja, Dimaguila, Hermoso and Divino for respondent Hamilton Distillery Company, et al.
CONCEPCION, J.:
Appeal by certiorari from a decision of the Court of Industrial Relations dismissing the complaint herein for unfair
labor practice.
Respondent Hamilton Distillery Company or Hamilton Wine Manufacturing Co., 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 Mariano Ang Eng are the superintendent or cashier and the manager respectively
thereof.
On September 24, 1957, two (2) labors unions, composed of employees and laborers of the Company, were
registered with the Department of Labor, namely, petitioner Kapisanan ng mga Manggagawa ng Alak (NAFLU),
hereinafter referred to as the NAFLU, and respondent Hamilton Workers' Union, hereinafter referred to as the
Workers' Union. Thereupon, the latter and the Company entered into a collective bargaining agreement,
incorporated into a private instrument purporting to have been executed on September 24, 1957. Moreover, the
Company issued a notice bearing 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.
There is evidence to the effect that, upon learning that the NAFLU was being 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; 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 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 he was unwilling to dissolve the NAFLU; that, subsequently, some members thereof resigned
therefrom and joined the Workers' Union, because otherwise they would be 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 that on October 28, 1957 the following members of the NAFLU, who had not joined the
Workers' Union were dismissed by the Company, namely:
1. Ambos, Avelina 27. Gawiran, Gorgonio
2. Belarmino, Gleceria 28. Jusay, Ruben
3. Bada, Adora 29. Ignacio, Antonio
4. Cerezo, Rosa 30. Labusta, Engracio
5. Cerdeno, Josefa 31. Libatique, Ceril
6. Cobarrubias, Luz 32. Martin, Ramon
7. Cobarrubias, Corazon 33. Hermogeno, Esther
8. Castranero, Filimena 34. Javier, Mercedes
9. Cenon, Marina 35. Lacsamana, Nenita
10. Dumlao, Cristina 36. Manreza, Avelina
11. Cruz, Elena de la 37. Masiglat, Norma
12. Esquivel, Plavia 38. Montealegre, Angelina

13. Evangelista, Rosanna 39. Yumul, Laura
14. Francisco, Rosita 40. Reyes, Elnora
15. Flores, Dorotea 41. Sarmiento, Purita
16. Germeno, Caridad 42. Santos, Crisanta
17. Pique, Remedios 43. Perez, Cresencia
18. Vigo, Leda 44. Martin, Jorge
19. Avinante, Simplicio 45. Martin, Severino
20. Brion, Felix 46. Mariano, Anicito
21. Bayano, Ramon 47. Mendoza, Roman
22. Cruz, Jose de la 48. Montevirgin, Manuel
23. Diaz, Angel 49. Opinaldo, Fernando
24. Dumalo, Francisco 50. Santos, Vicente
25. Gindoy, Luis, Jr. 51. Reyes, Felicisimo
26. Gonzaga, Atanacio 52. Sanchez, Esteban
These dismissed employees reported the matter to the Court of Industrial Relations, 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 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 dismissal of members of the
NAFLU, a "closed shop" clause in the collective bargaining agreement between the Company and the Workers
Union.
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:
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.

G.R. No. 118506 April 18, 1997
NORMA MABEZA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.
KAPUNAN, J.:
This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission
dated April 28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally
enshrined rights of the working class. Without the protection accorded by our laws and the tempering of courts,
the natural and historical inclination of capital to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are
illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the
Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's
compliance with minimum wage and other labor standard provisions of law. 1 The instrument provides: 2
JOINT AFFIDAVIT
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA
NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos
and residents of Baguio City, under oath, depose and say:
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay
Ave., Baguio City.
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
3. That we are all (8) employees in the hotel and assigned in each respective shifts;
4. That we have no complaints against the management of the Hotel Supreme as we are paid
accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or intimidation and for the
purpose of informing the authorities concerned and to dispute the alleged report of the Labor
Inspector of the Department of Labor and Employment conducted on the said establishment on
February 2, 1991.
IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City,
Philippines.
(Sgd.) (Sgd.) (Sgd.)

SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(Sgd.) (Sgd.) (Sgd.)

MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.
(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines.
Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and
contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day
to the Regional Office of the Department of Labor and Employment in Baguio City.
As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the
Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse
to the private respondent. 3
After she refused to proceed to the City Prosecutor's Office — on the same day the affidavit was submitted to the
Cordillera Regional Office of DOLE — petitioner avers that she was ordered by the hotel management to turn over
the keys to her living quarters and to remove her belongings from the hotel
premises. 4 According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office
to attest to the affidavit. 5 She thereafter reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the hotel's cashier, Margarita Choy,
informed her that she should not report to work and, instead, continue with her unofficial leave of absence.
Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a complaint for
illegal dismissal before the Arbitration Branch of the National Labor Relations Commission — CAR Baguio City. In
addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay,
service incentive leave pay, 13th month pay, night differential and other benefits. The complaint was docketed as
NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P. Pati.
Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent
Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the
management" 6 and that she actually abandoned her work. He maintained that there was no basis for the money
claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the
hotel's other employee. 7Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his
employees actually have no problems with management. In a supplemental answer submitted eleven (11) months
after the original complaint for illegal dismissal was filed, private respondent raised a new ground, loss of
confidence, which was supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office
of the City of Baguio against petitioner on July 4, 1991. 8
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of
confidence. His disquisitions in support of his conclusion read as follows:
It appears from the evidence of respondent that complainant carted away or stole one (1)
blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits "9", "9-A," "9-B," "9-C" and
"10" pages 12-14 TSN, December 1, 1992).
In fact, this was the reason why respondent Peter Ng lodged a criminal complaint against
complainant for qualified theft and perjury. The fiscal's office finding a prima facie evidence that
complainant committed the crime of qualified theft issued a resolution for its filing in court but
dismissing the charge of perjury (Exhibit "4" for respondent and Exhibit "B-7" for complainant).
As a consequence, complainant was charged in court for the said crime (Exhibit "5" for
respondent and Exhibit "B-6" for the complainant).
With these pieces of evidence, complainant committed serious misconduct against her employer
which is one of the just and valid grounds for an employer to terminate an employee (Article 282
of the Labor Code as amended). 9
On April 28, 1994, respondent NLRC promulgated its assailed

Resolution 10 — affirming the Labor Arbiter's decision. The resolution substantially incorporated the findings of the
Labor Arbiter. 11 Unsatisfied, petitioner instituted the instant special civil action for certiorari under Rule 65 of the
Rules of Court on the following grounds: 12
1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION
COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN
ITS FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN
AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY,
THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT;
ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF

WAGES AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF
COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS
TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS;
FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING
UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's
principal claims and defenses and urges this Court to set aside the public respondent's assailed resolution. 13
We agree.
It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just
cause, the failure of which would mean that the dismissal is not justified and the employee is entitled to
reinstatement. 14
In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to
return to work on May 8, 1991. Additionally, in order to strengthen his contention that there existed sufficient
cause for the termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this
with charges that petitioner had stolen a blanket, a bedsheet and two towels from the hotel. 15 Appended to his
last complaint was a suit for qualified theft filed with the Baguio City prosecutor's office.
From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his
claim that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of
her services under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two
things: 1) lack of intention to work; 16 and 2) the presence of overt acts signifying the employee's intention not to
work.17
In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she
learned that the hotel management was displeased with her refusal to attest to the affidavit. The fact that she
made this attempt clearly indicates not an intention to abandon but an intention to return to work after the period
of her leave of absence, had it been granted, shall have expired.
Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances,
mere absence of one or two days would not be enough to sustain such a claim. The overt act (absence) ought
to unerringly point to the fact that the employee has no intention to return to work, 18 which is patently not the
case here. In fact, several days after she had been advised to take an informal leave, petitioner tried to resume
working with the hotel, to no avail. It was only after she had been repeatedly rebuffed that she filed a case for
illegal dismissal. These acts militate against the private respondent's claim that petitioner abandoned her job. As
the Solicitor General in his manifestation observed:
Petitioner's absence on that day should not be construed as abandonment of her job. She did not
report because the cashier told her not to report anymore, and that private respondent Ng did
not want to see her in the hotel premises. But two days later or on the 10th of May, after
realizing that she had to clarify her employment status, she again reported for work. However,
she was prevented from working by private respondents. 19
We now come to the second cause raised by private respondent to support his contention that petitioner was
validly dismissed from her job.
Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given
the seal of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of
security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the employee is routinely charged with
the care and custody of the employer's money or property. To the first class belong managerial employees, i.e.,
those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to
the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine
exercise of their functions, regularly handle significant amounts of money or property. Evidently, an ordinary
chambermaid who has to sign out for linen and other hotel property from the property custodian each day and

who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift
would not fall under any of these two classes of employees for which loss of confidence, if ably supported by
evidence, would normally apply. Illustrating this distinction, this Court in Marina Port Services, Inc. vs. NLRC, 20has
stated that:
To be sure, every employee must enjoy some degree of trust and confidence from the employer
as that is one reason why he was employed in the first place. One certainly does not employ a
person he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some
measure if only because he is the one who opens the office in the morning and closes it at night
and in this sense is entrusted with the care or protection of the employer's property. The keys he
holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the trust and
confidence of his employer, whose property he is safeguarding. Like the janitor, he has access to
this property. He too, is charged with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of
protecting that property. The employer's trust and confidence in him is limited to that ministerial
function. He is not entrusted, in the Labor Arbiter's words, with the duties of safekeeping and
safeguarding company policies, management instructions, and company secrets such as
operation devices. He is not privy to these confidential matters, which are shared only in the
higher echelons of management. It is the persons on such levels who, because they discharge
these sensitive duties, may be considered holding positions of trust and confidence. The security
guard does not belong in such category. 21
More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what
would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for
causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier
action taken in bad faith." 22
In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner
long after the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her
act of filing illegal dismissal charges against the private respondent would hardly warrant serious consideration of
loss of confidence as a valid ground for dismissal. Notably, the Solicitor General has himself taken a position
opposite the public respondent and has observed that:
If petitioner had really committed the acts charged against her by private respondents (stealing
supplies of respondent hotel), private respondents should have confronted her before dismissing
her on that ground. Private respondents did not do so. In fact, private respondent Ng did not
raise the matter when petitioner went to see him on May 9, 1991, and handed him her
application for leave. It took private respondents 52 days or up to July 4, 1991 before finally
deciding to file a criminal complaint against petitioner, in an obvious attempt to build a case
against her.
The manipulations of private respondents should not be countenanced. 23
Clearly, the efforts to justify petitioner's dismissal — on top of the private respondent's scheme of inducing his
employees to sign an affidavit absolving him from possible violations of the Labor Code — taints with evident bad
faith and deliberate malice petitioner's summary termination from employment.
Having said this, we turn to the important question of whether or not the dismissal by the private respondent of
petitioner constitutes an unfair labor practice.
The answer in this case must inevitably be in the affirmative.
The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or
not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's
right to institute concerted action for better terms and conditions of employment. Without doubt, the act of
compelling employees to sign an instrument indicating that the employer observed labor standards provisions of
law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with
the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's
workers to seek better terms and conditions of employment through concerted action.

We agree with the Solicitor General's observation in his manifestation that "[t]his actuation . . . is analogous to the
situation envisaged in paragraph (f) of Article 248 of the Labor Code" 24 which distinctly makes it an unfair labor
practice "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or
being about to give testimony" 25 under the Labor Code. For in not giving positive testimony in favor of her
employer, petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof
but also to work for better terms and conditions of employment.
For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to
all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience.
Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that
they would not only be deprived of their means of livelihood, but also possibly, their personal liberty.
This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably
supported by the evidence on record. However, where such conclusions are based on a misperception of facts or
where they patently fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going
into the issue of petitioner's money claims, we find one more salient reason in this case to set things right: the
labor arbiter's evaluation of the money claims in this case incredibly ignores existing law and jurisprudence on the
matter. Its blatant one-sidedness simply raises the suspicion that something more than the facts, the law and
jurisprudence may have influenced the decision at the level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary
benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did
not factor in the meals, lodging, electric consumption and water she received during the period in her
computations. 26 Granting that meals and lodging were provided and indeed constituted facilities, such facilities
could not be deducted without the employer complying first with certain legal requirements. Without satisfying
these requirements, the employer simply cannot deduct the value from the employee's ages. First, proof must be
shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must
be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable
value. 27
These requirements were not met in the instant case. Private respondent "failed to present any company policy or
guideline to show that the meal and lodging . . . (are) part of the salary;" 28 he failed to provide proof of the
employee's written authorization; and, he failed to show how he arrived at the valuations. 29
Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures
furnished by the private respondent's own accountant, without corroborative evidence. On the pretext that
records prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to produce payroll records,
receipts and other relevant documents, where he could have, as has been pointed out in the Solicitor General's
manifestation, "secured certified copies thereof from the nearest regional office of the Department of Labor, the
SSS or the BIR." 30
More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities
but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a
facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the
purpose. 31 Considering, therefore, that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such
as the private respondent's hotel.
It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to
the fullwage applicable from May 13, 1988 up to the date of her illegal dismissal.
Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living allowance,
night differential pay, and 13th month pay for the periods alleged by the petitioner as the private respondent has
never been able to adduce proof that petitioner was paid the aforestated benefits.
However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are
barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of
employer-employee relationship to three (3) years from the time the cause of action accrues. 32
We depart from the settled rule that an employee who is unjustly dismissed from work normally should be
reinstated without loss of seniority rights and other privileges. Owing to the strained relations between petitioner
and private respondent, allowing the former to return to her job would only subject her to possible harassment

and future embarrassment. In the instant case, separation pay equivalent to one month's salary for every year of
continuous service with the private respondent would be proper, starting with her job at the Belfront Hotel.
In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision in Osmalik
Bustamante, et al. vs. National Labor Relations Commission, 33 petitioner is entitled to full backwages from the
time of her illegal dismissal up to the date of promulgation of this decision without qualification or deduction.
Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to be terminated
from employment with two written notices before the same may be legally effected. The first is a written notice
containing a statement of the cause(s) for dismissal; the second is a notice informing the employee of the
employer's decision to terminate him stating the basis of the dismissal. During the process leading to the second
notice, the employer must give the employee ample opportunity to be heard and defend himself, with the
assistance of counsel if he so desires.
Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is noteworthy that the
private respondent never even bothered to inform petitioner of the charges against her. Neither was petitioner
given the opportunity to explain the loss of the articles. It was only almost two months after petitioner had filed a
complaint for illegal dismissal, as an afterthought, that the loss was reported to the police and added as a
supplemental answer to petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of notice
and hearing prior to her termination violated her constitutional right to due process. Under the circumstance an
award of One Thousand Pesos (P1,000.00) on top of payment of the deficiency in wages and benefits for the
period aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission dated April 24,
1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits due the petitioner are hereby
summarized as follows:
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's illegal dismissal;
2) Service incentive leave pay; night differential pay and 13th month pay for the same period;
3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private
respondent starting with her job at the Belfront Hotel;
4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up to the date
of promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC. 34
5) P1,000.00.
ORDERED.

PICOP VS DEQUILLA
MENDOZA, J.:
This is a petition for review assailing the April 14, 2005 Decision [1] of the Court of Appeals (CA) which
reversed and set aside the Resolutions[2] of the National Labor Relations Commission (NLRC) dated December 27,
2002 and March 28, 2003, and reinstated the June 9, 2001 Decision [3] of the Labor Arbiter (LA), which declared the
dismissal of the private respondents as illegal.
The Facts
Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private respondents) were regular rank-and-file employees of
Picop Resources, Inc. (PICOP) and members of the NAMAPRI-SPFL, a duly registered labor organization and existing
bargaining agent of the PICOP rank-and-file employees. PICOP and NAMAPRI-SPFL had a collective bargaining
agreement (CBA) which would expire on May 22, 2000.
On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes), then National President of the Southern
Philippines Federation of Labor (SPFL), advised the PICOP management to terminate about 800 employees due to
acts of disloyalty, specifically, for allegedly campaigning, supporting and signing a petition for the certification of a
rival union, the Federation of Free Workers Union (FFW) before the 60-day freedom period and during the
effectivity of the CBA. Such acts of disloyalty were construed to be a valid cause for termination under the terms
and conditions of the CBA. Based on the CBA, the freedom period would start on March 22, 2000.
Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty. Boniel), Manager of the PICOP Legal and Labor
Relations Department, issued a memorandum directing the employees concerned to explain within seventy-two
(72) hours why their employment should not be terminated due to alleged acts of disloyalty. Upon receiving their
explanation letters, Atty. Boniel endorsed the same to Atty. Fuentes who then requested the termination of 46
employees found guilty of acts of disloyalty.
On October 16, 2000, PICOP served a notice of termination due to acts of disloyalty to 31 of the 46
employees. Private respondents were among the 31 employees dismissed from employment by PICOP
on November 16, 2000.
Enraged at what management did to them, private respondents filed a complaint before the NLRC Regional
Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal Dismissal with money claims, damages
and attorneys fees.
LA Ruling
On June 9, 2001, after the parties submitted their respective position papers, the LA rendered a decision
declaring as illegal the termination of the private respondents. The dispositive portion of the LA Decision reads:
WHEREFORE, premises considered, judgment is hereby entered:
1. Declaring complainants dismissal illegal; and
2. Ordering respondents PRI and NAMPRI-SPFL to reinstate complainants to

their former or equivalent positions without loss of seniority rights and to
jointly and solidarily pay their backwages in the total amount of ₱177,403.68,
as shown in the computation, hereto attached and marked as Annex A
hereof, plus damages in the amount of ₱10,000.00 each and attorneys fees
equivalent to 10% of the total monetary award.
SO ORDERED. [4]
NLRC Ruling

PICOP elevated the LA decision to the NLRC but its appeal was dismissed in the November 19, 2002 NLRC
Resolution.[5] On motion for reconsideration, however, the NLRC issued another resolution,[6] dated December 27,
2002, reversing and setting aside its November 19, 2002 Resolution, the dispositive portion of which reads:
WHEREFORE, foregoing premises considered, the above resolution dated November 19,
2002, is Reversed and Set Aside. In lieu thereof, a new judgment is rendered DISMISSING the
above-entitled case for lack of merit.
SO ORDERED.[7]
CA Ruling
Upon the denial of their motion for reconsideration, the private respondents brought the case to the CA.
On April 14, 2005, the CA rendered the subject decision reversing and setting aside the December 27, 2002 NLRC
resolution and reinstating the June 9, 2001 Decision of the LA. The decretal portion of the CA decision reads:
WHEREFORE, premises considered, [the] instant petition is GRANTED and the assailed
resolutions of the Public Respondent NLRC are hereby REVERSED and SET ASIDE. In view thereof,
ordered REINSTATED is the Decision of Acting Executive Labor Arbiter Rogelio P. Legaspi dated 09
June 2001 which reads:
2. Ordering Respondents PRI and NAMPRI-SPFL to reinstate

Complainants to their former or equivalent positions without loss of
seniority rights and to jointly and solidarily pay their backwages in
the total amount of ₱177,403.68, plus damages in the amount
of ₱10,000.00 each and attorneys fees equivalent to 10% of the
total monetary award.
SO ORDERED.[8]
The CA ruled, among others, that although private respondents signed an authorization for the filing of
the petition for certification election of a rival union, PICOP Democratic Trade Unionist-Federation of Free
Workers (FFW), such act was not a sufficient ground to terminate the employment of private respondents. It
explained:
Ruminating from the alleged violation of the CBA, We see no reason, sufficient and
compelling enough, to sustain the Public Respondents raison detre in overturning the Labor
Arbiters ruling in favor of the Petitioners. While it is true that Petitioners signed the authorization
in support of the Petition for certification election of FFW before the freedom period, such act is
not a sufficient ground to terminate the employment of the Petitioners in as much as the petition
itself was filed during the freedom period. Hence, there is nil a basis to impute acts of disloyalty
to Petitioners. Imputations of an alleged violation of the CBA should not arise from a vague and
all embracing definition of alleged acts of disloyalty. Neither should it arise from speculative
inferences where no evidence appears from the record that Respondent NAMAPRI-SPFL
expressly defined acts of disloyalty. Besides, to Our mind, signing an authorization for the filing of
the petition for certification election does not constitute an act of disloyalty per se. There must
be proof of contemporaneous acts of resignation or withdrawal of their membership from the
Respondent NAMAPRI-SPFL to which they are members. Respondents miserably failed to present
evidence to justify a valid termination of employees in pursuance to the CBA allegedly violated.
Petitioners, in fact remained in good standing, a continuing requirement for retaining their
employment in the Respondent PRI. Petitioners neither joined nor affiliated with FFW and
continuously paid their union dues with Respondent NAMAPRI-SPFL. Consequently, this lends
credence to the Labor Arbiters ruling that Petitioners dismissal was indeed illegal.

Likewise, the advise of the Respondent NAMAPRI-SPFL to the Respondent PRI to effect
the termination of employees, including herein Petitioners, finds no basis in fact and in law
considering that at the time the Respondent PRI dismissed the Petitioners, among others, on 16
November 2000, there was no more CBA to speak of after it had already expired on 22 May
2000.[9]
The CA further agreed with private respondents that Article 256 and not Article 253, of the Labor Code
applied in this case. The CA discussed this point as follows:
We are inclined to favor Petitioners stance that Article 256, supra, is applicable. The
issue of acts of disloyalty relates more to a direct connection on the alleged violation or breach of
loyalty to the majority status of the incumbent union than on violation of the terms and
conditions of the agreement under Article 253, supra, as the Respondents would want Us to
believe. Article 256 provides that at the expiration of the 60-day period reckoned from the
expiration date of the CBA, the employer shall continue to recognize the majority status of the
incumbent bargaining agent only where no petition for certification election is filed. However, as
earlier pointed, a petition was already filed by the Petitioners, among others, during the 60-day
freedom period. Clearly, from the imports of said provision, it will render nugatory the purpose
of the law providing for a freedom period for the filing of a petition for certification election
should the act of signing/filing the said petition be interpreted as an act of disloyalty and will
render farce the need for a certification election as an instrument of ascertaining the true
expression of the will of the workers as to which labor organization would represent them.
To construe the provision of law in Article 253, supra, as imposing a restriction against
the signing and filing a petition for certification election during the freedom period, is to violate
the constitutional right of the employees to organize freely. It is a basic precept of statutory
construction that statutes should be construed not so much according to the letters
that killeth but in line with the purpose for which they have been enacted.[10]
Not in conformity with the CA decision, PICOP filed this petition for review posing the following
ISSUES
WHETHER [OR NOT] AN EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA) CAN

BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITIONS INCLUDING ITS
UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET
BEEN ENTERED INTO?
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION

OF LAW FALLS WITHIN THE AMBIT OF THE EXTRA ORDINARY REMEDY OF CERTIORARI UNDER
RULE 65, REVISED RULES OF COURT.[11]
PICOP basically argues that Article 253 of the Labor Code applies in this case. Article 253 of the Labor Code
provides that the terms and conditions of a CBA remain in full force and effect even beyond the 5-year period
when no new CBA has yet been reached. It claims that the private respondents violated this provision when they
campaigned for, supported and signed FFWs petition for certification election on March 19 and 20, 2000, before
the onset of the freedom period. It further argues that private respondents were not denied due process when
they were terminated. Finally, it claims that the decision of the NLRC on the issues raised was not without merit.
Even assuming that it erred in its judgment on the legal issues raised, its error is not equivalent to an abuse of
discretion that should fall within the ambit of the extraordinary remedy of certiorari.
Private respondents position
Private respondents argue that the substantial arguments raised by PICOP in this petition are basically a rehash of
the same issues and arguments contained in its Motion for Reconsideration of the CA decision. Private
respondents adopted and repleaded the ruling of the CA in their Comment [12] on this petition.
The Courts Ruling
The petition merits a denial.

There is no question that in the CBA entered into by the parties, there is a union security clause. The
clause imposes upon the workers the obligation to join and maintain membership in the companys recognized
union as a condition for employment.
"Union security" is a generic term, which is applied to and comprehends "closed shop,"
"union shop," "maintenance of membership," or any other form of agreement which imposes
upon employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the
bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be
defined as an enterprise in which, by agreement between the employer and his employees or
their representatives, no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a
member in good standing of a union entirely comprised of or of which the employees in interest
are a part.[13]
There is no dispute that private respondents were members of NAMAPRI-SPFL who were terminated by
PICOP due to alleged acts of disloyalty. It is basic in labor jurisprudence that the burden of proof rests upon
management to show that the dismissal of its worker was based on a just cause. When an employer exercises its
power to terminate an employee by enforcing the union security clause, it needs to determine and prove the
following: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the
employee from the union.[14]
In this case, the resolution thereof hinges on whether PICOP was able to show sufficient evidence to
support the decision of the union to expel private respondents from it.
PICOP basically contends that private respondents were justly terminated from employment for
campaigning, supporting and signing a petition for the certification of FFW, a rival union, before the 60-day
freedom period and during the effectivity of the CBA. Their acts constitute an act of disloyalty against the union
which is valid cause for termination pursuant to the Union Security Clause in the CBA.
The Court finds Itself unable to agree.
Considering the peculiar circumstances, the Court is of the view that the acts of private respondents are
not enough proof of a violation of the Union Security Clause which would warrant their dismissal. PICOP failed to
show in detail how private respondents campaigned and supported FFW. Their mere act of signing an
authorization for a petition for certification election before the freedom period does not necessarily demonstrate
union disloyalty. It is far from being within the definition of acts of disloyalty as PICOP would want the Court to
believe. The act of signing an authorization for a petition for certification election is not disloyalty to the union per
se considering that the petition for certification election itself was filed during the freedom period which started
on March 22, 2000.
Moreover, as correctly ruled by the CA, the records are bereft of proof of any contemporaneous acts of
resignation or withdrawal of union membership or non-payment of union dues. Neither is there proof that private
respondents joined FFW. The fact is, private respondents remained in good standing with their union, NAMAPRI-
SPFL. This point was settled in the case of PICOP Resources, Incorporated (PRI) v. Anacleto L. Taeca,[15] where it was
written:
However, as to the third requisite, we find that there is no sufficient evidence to support
the decision of PRI to terminate the employment of the respondents.
PRI alleged that respondents were terminated from employment based on the alleged
acts of disloyalty they committed when they signed an authorization for the Federation of Free
Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of
PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as
provided in their Collective Bargaining Agreement.
We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of
the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and
21, or before the "freedom period," is not sufficient ground to terminate the employment of
respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing
in the records would show that respondents failed to maintain their membership in good
standing in the Union. Respondents did not resign or withdraw their membership from
the Union to which they belong. Respondents continued to pay their union dues and never
joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of
signing an authorization letter to file a petition for certification election as they signed it outside
the freedom period. However, we are constrained to believe that an "authorization letter to file a
petition for certification election" is different from an actual "Petition for Certification Election."
Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was
filed only on May 18, 2000. Thus, it was within the ambit of the freedom period which
commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the
filing of a petition for certification election outside the 60-day freedom period. This is not the
situation in this case. If at all, the signing of the authorization to file a certification election was
merely preparatory to the filing of the petition for certification election, or an exercise of
respondents right to self-organization.[16]
Finally, PICOP insists that Article 253 of the Labor Code applies in this case, not Article 256 thereof. The
Court agrees with the CA that its argument is misplaced. This issue was tackled and settled in the same PICOP
Resources, Incorporated (PRI) v. Taeca case, to wit:
Moreover, PRI anchored their decision to terminate respondents employment on Article

253 of the Labor Code which states that "it shall be the duty of both parties to keep the status
quo and to continue in full force and effect the terms and conditions of the existing agreement
during the 60-day period and/or until a new agreement is reached by the parties." It claimed that
they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA;
hence, the need to terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is particularly enlightening. It reads:
Article 256. Representation issue in organized establishments. - In organized

establishments, when a verified petition questioning the majority status of the incumbent
bargaining agent is filed before the Department of Labor and Employment within the sixty-day
period before the expiration of a collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot when the verified petition is supported by the
written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit
to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election,
at least a majority of all eligible voters in the unit must have cast their votes. The labor union
receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of
all the workers in the unit. When an election which provides for three or more choices results in
no choice receiving a majority of the valid votes cast, a run-off election shall be conducted
between the labor unions receiving the two highest number of votes: Provided, That the total
number of votes for all contending unions is at least fifty per cent (50%) of the number of votes
cast.
At the expiration of the freedom period, the employer shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for certification election is
filed.
Applying the same provision, it can be said that while it is incumbent for the employer
to continue to recognize the majority status of the incumbent bargaining agent even after the
expiration of the freedom period, they could only do so when no petition for certification
election was filed. The reason is, with a pending petition for certification, any such agreement
entered into by management with a labor organization is fraught with the risk that such a labor
union may not be chosen thereafter as the collective bargaining representative. The provision
for status quo is conditioned on the fact that no certification election was filed during the
freedom period. Any other view would render nugatory the clear statutory policy to favor
certification election as the means of ascertaining the true expression of the will of the workers
as to which labor organization would represent them.

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a
petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region
on August 23, 2000. Therefore, following Article 256, at the expiration of the freedom period,
PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold
true when petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal
pertains only to the economic provisions of the CBA, and does not include representational
aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification
election. When there is a representational issue, the status quo provision in so far as the need to
await the creation of a new agreement will not apply. Otherwise, it will create an absurd
situation where the union members will be forced to maintain membership by virtue of the
union security clause existing under the CBA and, thereafter, support another union when filing a
petition for certification election. If we apply it, there will always be an issue of disloyalty
whenever the employees exercise their right to self-organization. The holding of a certification
election is a statutory policy that should not be circumvented, or compromised.
Time and again, we have ruled that we adhere to the policy of enhancing the welfare of
the workers. Their freedom to choose who should be their bargaining representative is of
paramount importance. The fact that there already exists a bargaining representative in the unit
concerned is of no moment as long as the petition for certification election was filed within the
freedom period. What is imperative is that by such a petition for certification election the
employees are given the opportunity to make known of who shall have the right to represent
them thereafter. Not only some, but all of them should have the right to do so. What is equally
important is that everyone be given a democratic space in the bargaining unit concerned.
We will emphasize anew that the power to dismiss is a normal prerogative of the
employer. This, however, is not without limitations. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon the request of a
labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary
and capricious. Due process must be observed in dismissing an employee, because it affects not
only his position but also his means of livelihood. Employers should, therefore, respect and
protect the rights of their employees, which include the right to labor. [17]
Considering that private respondents were illegally dismissed, basic law provides that they shall be
entitled to the benefit of full backwages and reinstatement unless the latter is no longer viable, in which case, a
grant of separation pay shall be awarded equivalent to one month salary for every year of service.
X x x Under Republic Act No. 6715, employees who are illegally dismissed are entitled to
full backwages, inclusive of allowances and other benefits, or their monetary equivalent,
computed from the time their actual compensation was withheld from them up to the time of
their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be
computed from the time of their illegal termination up to the finality of the decision X x x. [18]
Private respondents are also entitled to an award of attorneys fees equivalent to 10% of the total
monetary award as they were compelled to litigate in order to seek redress for their illegal dismissal.
WHEREFORE, the petition is DENIED.
SO ORDERED.

PICOP RESOURCES VS TAECA ET AL
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision[1] dated July 25, 2003 and Resolution[2] dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No.
71760, setting aside the Resolutions dated October 8, 2001[3] and April 29, 2002[4] of the National Labor Relations
Commission in NLRC CA No. M-006309-2001 and reinstating the Decision[5] dated March 16, 2001 of the Labor
Arbiter.
The facts, as culled from the records, are as follows:
On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato,
Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal
dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his
capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of
Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary
General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP
Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.[6] (in his capacity as National President of
SPFL).
Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang
Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining
agent for the rank-and-file employees of petitioner PRI.
PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from
May 22, 1995 until May 22, 2000.
The CBA contained the following union security provisions:
Article II- Union Security and Check-Off
Section 6. Maintenance of membership.
6.1 All employees within the appropriate bargaining unit who are members of the
UNION at the time of the signing of this AGREEMENT shall, as a condition of continued
employment by the COMPANY, maintain their membership in the UNION in good standing
during the effectivity of this AGREEMENT.
6.2 Any employee who may hereinafter be employed to occupy a position covered by
the bargaining unit shall be advised by the COMPANY that they are required to file an application
for membership with the UNION within thirty (30) days from the date his appointment shall have
been made regular.
6.3 The COMPANY, upon the written request of the UNION and after compliance with
the requirements of the New Labor Code, shall give notice of termination of services of any
employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but
it assumes no obligation to discharge any employee if it has reasonable grounds to believe either
that membership in the UNION was not available to the employee on the same terms and
conditions generally applicable to other members, or that membership was denied or terminated
for reasons other than voluntary resignation or non-payment of regular union dues. Separation
under the Section is understood to be for cause, consequently, the dismissed employee is not
entitled to separation benefits provided under the New Labor Code and in this AGREEMENT. [7]
On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI
demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for
Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-
SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of
disloyalty and a valid basis for termination for a cause in accordance with its Constitution and By-Laws, and the
terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate
those union members who signed the Petition for Certification Election of FFW during the existence of their CBA.
NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and 21,
2000, which contained the names and signatures of employees.
Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a
memorandum addressed to the concerned employees to explain in writing within 72 hours why their employment
should not be terminated due to acts of disloyalty as alleged by their Union.
Within the period from May 26 to June 2, 2000, a number of employees who were served explanation
memorandum submitted their explanation, while some did not.
In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty.
Fuentes for evaluation and final disposition in accordance with the CBA.
After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the
Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only
of 46 member-employees, including respondents.
On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees
whom NAMAPRIL-SPFL sought to be terminated on the ground of acts of disloyalty committed against it when
respondents allegedly supported and signed the Petition for Certification Election of FFW before the freedom
period during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of
Labor and Employment Office (DOLE), Caraga Region.
Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d) and
(e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of violating
Article 248 (a) and (b) of the Labor Code.
Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to PRI
any union dues and check-off disauthorizations against NAMAPRI-SPFL. They claimed that they continue to remain
on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of ones disloyalty
would have been the explicit resignation or withdrawal of membership from the Union accompanied by an advice
to management to discontinue union dues and check-off deductions. They insisted that mere affixation of
signature on such authorization to file a petition for certification election was not per se an act of disloyalty. They
claimed that while it may be true that they signed the said authorization before the start of the freedom period,
the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period.
Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for
Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-
and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-
SPFL.
Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May 16,
2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention
their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union members who
supported the Petition for Certification Election of FFW. Respondents claimed that they should have been
summoned individually, confronted with the accusation and investigated accordingly and from where the Union
may base its findings of disloyalty and, thereafter, recommend to management the termination for causes.
Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the
bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22,
2000. Hence, there could be no justification in PRIs act of dismissing respondents due to acts of disloyalty.
Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union
in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion
of respondents exercise of their right to self-organization. The act indirectly required petitioners to support and
maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of
NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the
exercise of their rights to self-organization and constituted acts of unfair labor practice.
In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the respondents dismissal to be illegal
and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights
and to jointly and solidarily pay their backwages. The dispositive portion of which reads:

2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to

reinstate complainants to their former or equivalent positions without loss of seniority rights and
to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the
said Annex A plus damages in the amount of P10,000.00 each, or a total of P210,000.00 and
attorneys fees equivalent to 10% of the total monetary award.
SO ORDERED.[9]
PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the decision
of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal.
Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit.
Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the
nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16.
2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondents motion for
reconsideration.
On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated
the Decision dated March 16, 2001 of the Labor Arbiter.
Thus, before this Court, PRI, as petitioner, raised the following issues:
I
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS
FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY
CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO.
II
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW
FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65,
REVISED RULES OF COURT.[10]
We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the decision
of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if any, is
not tantamount to abuse of discretion falling within the ambit of Rule 65.
Petitioner is mistaken.
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled
as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.[11] This Court held
that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court,
and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of
courts.[12] Moreover, it is already settled that under Section 9 ofBatas Pambansa Blg. 129, as amended by Republic
Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section
Nine ofBatas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of
Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the
power to pass upon the evidence, if and when necessary, to resolve factual issues. [13]
We now come to the main issue of whether there was just cause to terminate the employment of
respondents.
PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the
instance of the incumbent union pursuant to the Union Security Clause of the CBA.
Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the CBA, they are enjoined to keep
the status quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day
period and/or until a new agreement is reached by the parties.
Petitioner's argument is untenable.

Union security" is a generic term, which is applied to and comprehends "closed shop," union shop,"
"maintenance of membership," or any other form of agreement which imposes upon employees the obligation to
acquire or retain union membership as a condition affecting employment. There is union shop when all new
regular employees are required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the bargaining unit, or the
agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives, no person may be employed in any
or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.[15]
However, in terminating the employment of an employee by enforcing the union security clause, the
employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting
for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the
decision of the union to expel the employee from the union. These requisites constitute just cause for terminating
an employee based on the union security provision of the CBA.[16]
As to the first requisite, there is no question that the CBA between PRI and respondents included a union
security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union Security
and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed terminate the
employment of the employee who failed to maintain its good standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI, in their
letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of disloyalty to
the Union.
However, as to the third requisite, we find that there is no sufficient evidence to support the decision of
PRI to terminate the employment of the respondents.
PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they
committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for
Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a
violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.
We are unconvinced.
We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support
of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the freedom period, is not
sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed
during the freedom period. Nothing in the records would show that respondents failed to maintain their
membership in good standing in the Union. Respondents did not resign or withdraw their membership from the
Union to which they belong. Respondents continued to pay their union dues and never joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization
letter to file a petition for certification election as they signed it outside the freedom period. However, we are
constrained to believe that an authorization letter to file a petition for certification election is different from an
actual Petition for Certification Election. Likewise, as per records, it was clear that the actual Petition for
Certification Election of FFW was filed only on May 18, 2000.[17] Thus, it was within the ambit of the freedom
period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing
of a petition for certification election outside the 60-day freedom period.[18] This is not the situation in this case. If
at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the
petition for certification election, or an exercise of respondents right to self-organization.
Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the Labor
Code which states that it shall be the duty of both parties to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties. It claimed that they are still bound by the Union Security Clause of the CBA
even after the expiration of the CBA; hence, the need to terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is particularly enlightening. It reads:
Article 256. Representation issue in organized establishments. - In organized

establishments, when a verified petition questioning the majority status of the incumbent
bargaining agent is filed before the Department of Labor and Employment within the sixty-day

period before the expiration of a collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot when the verified petition is supported by the
written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit
to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election,
at least a majority of all eligible voters in the unit must have cast their votes. The labor union
receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent
of all the workers in the unit. When an election which provides for three or more choices results
in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted
between the labor unions receiving the two highest number of votes: Provided, That the total
number of votes for all contending unions is at least fifty per cent (50%) of the number of votes
cast.
At the expiration of the freedom period, the employer shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for certification election
is filed.[19]
Applying the same provision, it can be said that while it is incumbent for the employer to continue to
recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period,
they could only do so when no petition for certification election was filed. The reason is, with a pending petition
for certification, any such agreement entered into by management with a labor organization is fraught with the
risk that such a labor union may not be chosen thereafter as the collective bargaining representative. [20] The
provision for status quo is conditioned on the fact that no certification election was filed during the freedom
period. Any other view would render nugatory the clear statutory policy to favor certification election as the
means of ascertaining the true expression of the will of the workers as to which labor organization would
represent them.[21]
In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election
was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.[22] Therefore, following Article
256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent
bargaining agent does not hold true when petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic
provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute
a bar to a filing of a petition for certification election. When there is a representational issue,
the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise,
it will create an absurd situation where the union members will be forced to maintain membership by virtue of the
union security clause existing under the CBA and, thereafter, support another union when filing a petition for
certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise
their right to self-organization. The holding of a certification election is a statutory policy that should not be
circumvented,[23] or compromised.
Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers.
Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that
there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for
certification election was filed within the freedom period. What is imperative is that by such a petition for
certification election the employees are given the opportunity to make known of who shall have the right to
represent them thereafter. Not only some, but all of them should have the right to do so. What is equally
important is that everyone be given a democratic space in the bargaining unit concerned. [24]
We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not
without limitations. The employer is bound to exercise caution in terminating the services of his employees
especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement.
Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because
it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect
the rights of their employees, which include the right to labor. [25]
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement.
If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an
illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month
salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to
full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of their actual reinstatement. But if
reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up
to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress

for their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary
award.[26]
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated October 23,
2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, 2001
and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M -006309-2001,
areAFFIRMED accordingly. Respondents are hereby awarded full backwages and other allowances, without
qualifications and diminutions, computed from the time they were illegally dismissed up to the time they are
actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of the full
backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as possible.
SO ORDERED.

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UNFAIR LABOR PRACTICES

G.R. No. L-12429 February 27, 1961

ERMIDIA A. MARIANO, plaintiff-appellee,

Emilio Javier for plaintiff-appellee.

Unfair Labor Practices | 1

xxx xxx xxx

xxx xxx xxx

Unfair Labor Practices | 2

WISE AND CO., INC., petitioner,

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

THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION

1. DISCRIMINATION PER SE IS NOT UNLAWFUL ESPECIALLY WHEN THE

3. THE ACT OF THE UNION IN NEGOTIATING FOR THE INCLUSION OF THE

Unfair Labor Practices | 3

The petition is impressed with merit.

Unfair Labor Practices | 4

WISE AND CO., INC., petitioner,

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

THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION

1. DISCRIMINATION PER SE IS NOT UNLAWFUL ESPECIALLY WHEN THE

3. THE ACT OF THE UNION IN NEGOTIATING FOR THE INCLUSION OF THE

Unfair Labor Practices | 5

The petition is impressed with merit.

Unfair Labor Practices | 6

JUDRIC CANNING CORPORATION, petitioner,

CONCEPCION JR., J.:

Unfair Labor Practices | 7

Na kami ay nagkampanya upang papirmahin namin sa 'membership form' ng ULGWP ang

Unfair Labor Practices | 8

Unfair Labor Practices | 9

Navarro, Angeles, Anero & Falcon Law Notice for petitioners.

The Solicitor General states the facts as follows:

xxx xxx xxx

2. Private respondent is a corporation engaged in packing and crating, general hauling,

Unfair Labor Practices | 10

The respondent is hereby ordered:

1. To reinstate all the suspended/dismissed employees to their former

NAME BACK- ECOLA TOTAL

2. Leo 11,266. 7,738.0 19,004.0

3. Olimpio 11,266. 7,738.0 19,004.0

4. 11,266. 7,738.0 19,004.0

5. 11,266. 7,738.0 19,004.0

6. Ernesto 11,266. 7,738.0 19,004.0

7. Ernesto 11,266. 7,738.0 19,004.0

Unfair Labor Practices | 11

8. 11,266. 7,738.0 19,004.0

9 Jesus 11,266. 7,738.0 19,004.0

10. 11,134. 7,633.0 19,004.0

11. 11,134. 7,663.0 18,767.0

12. 11,134. 7,663.0 18,767.0

13. 11,134. 7,633.0 18,767.0

14. 11,134. 7,663.0 18,767.0

15. Arnel 11,134. 7,663.0 18,767.0

16. 11,134. 7,663.0 18,767.0

17. 11,134. 7,663.0 18,767.0

18. 11,134. 7,663.0 18,767.0

19. 11,134. 7,663.0 18,767.0

20. 11,134. 7,663.0 18,767.0

21. Ruben 11,134. 7,663.0 18,767.0

22. 11,134 7,663.0 18,767.0

23. 11,134. 7,663.0 18,767.0

24. Serafin 11,134. 7,663.0 18,767.0

Unfair Labor Practices | 12