You are on page 1of 28

1.

Hacienda Fatima vs. National Federation of


Sugarcane Workers, (G.R. No 149440, 28 Jan. 2003)
Facts:
When complainant union (respondents) was certified as the
collective bargaining representative, petitioners refused to
sit down w/ the union for the purpose of entering into a
CBA. The workers including complainants were not given
work for more than 1 month. In protest, they staged a strike
w/c was however settled upon the signing of a MOA.
Subsequently, alleging that complainants failed to load some
wagons, petitioners reneged on its commitment to bargain
collectively & employed all means including the use of
private armed guards to prevent the organizers from
entering the premises. No work assignments were given to
complainants w/c forced the union to stage a strike. Due to
conciliation efforts by the DOLE, another MOA was signed by
the parties & they met in a conciliation meeting. When
petitioners again reneged on its commitment, complainants
filed a complaint. Petitioner accused respondents of
refusing to work & being choosy in the kind of work they
have to perform.
The NLRC ruled that petitioners were guilty of ULP & that
the respondents were illegally dismissed. The CA affirmed
that while the work of respondents was seasonal in nature,
they were considered to be merely on leave during the offseason & were therefore still employed by petitioners.
Issue:
Whether the CA erred in holding that respondents,
admittedly seasonal workers, were regular employees,
contrary to the clear provisions of Article 280 of the Labor
Code, which categorically state that seasonal employees are
not covered by the definition of regular employees under
paragraph 1, nor covered under paragraph 2 which refers
exclusively to casual employees who have served for at least
one year
Held:
No. For respondents to be excluded from those classified as
regular employees, it is not enough that they perform work
or services that are seasonal in nature. They must have also
been employed only for the duration of one season. The
evidence proves the existence of the first, but not of the
second, condition. The fact that respondents repeatedly
worked as sugarcane workers for petitioners for several
years is not denied by the latter. Evidently, petitioners
employed respondents for more than one season. Therefore,
the general rule of regular employment is applicable.
If the employee has been performing the job for at least a
year, even if the performance is not continuous & merely
intermittent, the law deems the repeated & continuing need
for its performance as sufficient evidence of the necessity if
not indispensability of that activity to the business. Hence,
the employment is considered regular, but only w/ respect
to such activity & while such activity exists. Seasonal
workers who are called to work from time to time & are
temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until
re-employed (De Leon v. NLRC)
Respondents, having performed the same tasks for
petitioners every season for several years, are considered
the latter's regular employees for their respective tasks.
Petitioners' eventual refusal to use their services even if
they were ready, able and willing to perform their usual
duties whenever these were available and hiring of other

workers to perform the tasks originally assigned to


respondents amounted to illegal dismissal of the latter.
The Court finds no reason to disturb the CA's dismissal of
what petitioners claim was their valid exercise of a
management prerogative. The sudden changes in work
assignments reeked of bad faith. These changes were
implemented immediately after respondents had organized
themselves into a union and started demanding collective
bargaining. Those who were union members were
effectively deprived of their jobs. Petitioners' move actually
amounted to unjustified dismissal of respondents, in
violation of the Labor Code.
2.

Biflex Phils., Inc., Laboar Union [NAFLU] et Al., vs


Filflex Industrial and Manufacturing Corp. and
Biflex Phils. Inc., (511 SCRA 247 [2006])
Any union officer who knowingly participates in an illegal
strike and any worker or union who knowingly participates in
the commission of illegal acts during a strike may be declared
to have lost his employment status.
Biflex Philippines Inc. Labor Union and Filflex Industrial and
Manufacturing Labor Union are the respective collective
bargaining agents of the employees of the sister companies
Biflex and Filflex which are engaged in the garment business.
They are situated in one big compound and they have a
common entrance.
On October 24, 1990, the labor sector staged a welga ng
bayan to protest against oil price hike; the unions staged a
work stoppage which lasted for several days, prompting the
companies to file a petition to declare the work stoppage
illegal for failure to comply with procedural requirements.
The Labor Arbiter held that the strike is illegal and declared
the officers of the union to have lost their employment
status.
ISSUE:
Whether or not the staged strike is illegal and a ground for
the lost of employment status of the union officers
HELD:
Article 264 (a) of the Labor Code states that any union
officer who knowingly participates in an illegal strike and
any worker or union who knowingly participates in the
commission of illegal acts during a strike may be declared to
have lost his employment status.
Thus, a union officer may be declared to have lost his
employment status if he knowingly participates in an illegal
strike and in this case, the strike is declared illegal by the
court because the means employed by the union are illegal.
Here, the unions blocked the egress and ingress of the
company premises thus, a violation of Article 264 (e) of the
Labor Code which would affect the strike as illegal even if
assuming arguendo that the unions had complied with legal
formalities and thus, the termination of the employees was
valid.
The court said that the legality of a strike is determined not
only by compliance with its legal formalities but also by
means by which it is carried out.

3.

Phil. Blooming Mills Employees Org. vs. Philippine


Blooming Mills, Co., Inc., (51 SCRA 189 [1973])
Facts: Philippine Blooming Employees Organization (PBMEO)
decided to stage a mass demonstration in front of Malacaang to
express their grievances against the alleged abuses of the Pasig
Police.
After learning about the planned mass demonstration, Philippine
Blooming Mills Inc., called for a meeting with the leaders of the
PBMEO. During the meeting, the planned demonstration was
confirmed by the union. But it was stressed out that the
demonstration was not a strike against the company but was in
fact an exercise of the laborers inalienable constitutional right to
freedom of expression, freedom of speech and freedom for
petition for redress of grievances.
The company asked them to cancel the demonstration for it
would interrupt the normal course of their business which may
result in the loss of revenue. This was backed up with the threat
of the possibility that the workers would lose their jobs if they
pushed through with the rally.
A second meeting took place where the company reiterated their
appeal that while the workers may be allowed to participate,
those from the 1st and regular shifts should not absent
themselves to participate , otherwise, they would be dismissed.
Since it was too late to cancel the plan, the rally took place and
the officers of the PBMEO were eventually dismissed for a
violation of the No Strike and No Lockout clause of their
Collective Bargaining Agreement.
The lower court decided in favor of the company and the officers
of the PBMEO were found guilty of bargaining in bad faith. Their
motion for reconsideration was subsequently denied by the
Court of Industrial Relations for being filed two days late.
Issue: Whether or not the workers who joined the strike
violated the CBA.
Held: No. While the Bill of Rights also protects property rights,
the primacy of human rights over property rights is recognized.
Because these freedoms are "delicate and vulnerable, as well as
supremely precious in our society" and the "threat of sanctions
may deter their exercise almost as potently as the actual
application of sanctions," they "need breathing space to survive,"
permitting government regulation only "with narrow specificity."
Property and property rights can be lost thru prescription; but
human rights are imprescriptible. In the hierarchy of civil
liberties, the rights of free expression and of assembly occupy a
preferred position as they are essential to the preservation and
vitality of our civil and political institutions; and such priority
"gives these liberties the sanctity and the sanction not permitting
dubious intrusions."
The freedoms of speech and of the press as well as of peaceful
assembly and of petition for redress of grievances are absolute
when directed against public officials or "when exercised in
relation to our right to choose the men and women by whom we
shall be governed.
4.

Manila Diamond Hotel and Resort, Inc., vs. Manila


Diamond Hotel Employees Union, (494 SCRA 195
[2006])
An ordinary striking worker cannot be dismissed for mere
participation in an illegal strike unless there be a proof that he
committed illegal acts during a strike.
The Diamond Hotel Employee's Union (the union) filed a
petition for Certification Election before the DOLE-National

Capital Region (NCR) seeking certification as the exclusive


bargaining representative of its members. The DOLE-NCR
denied said petition as it failed to comply with the legal
requirements.
The Union later notified petitioner hotel of its intention to
negotiate for collective bargaining agreement (CBA). The
Human Resource Department of Diamond Hotel rejected the
notice and advised the union since it was not certified by the
DOLE as the exclusive bargaining agent, it could not be
recognized as such. Since there was a failure to settle the
dispute regarding the bargaining capability of the union, the
union went on to file a notice of strike due to unfair labor
pracritce (ULP) in that the hotel refused to bargain with it
and the rank-and-file employees were being harassed and
prevented from joining it. In the meantime, Kimpo filed a
complaint for ULP against petitioner hotel.
After several conferences, the union suddenly went on
strike. The following day, the National Union of Workers in
the Hotel, Restaurant and Allied Industries (NUWHRAIN)
joined the strike and openly extended its support to the
union. The some of the entrances were blocked by the
striking employees. The National Labour Relations
Commission (NLRC) representative who conducted an
ocular inspection of the Hotel premises confirmed in his
Report that the strikers obstructed the free ingress to and
egress from the Hotel. The NLRC thus issued a Temporary
Restraining Order (TRO) directing the strikers to
immediately "cease and desist from obstructing the free
ingress and egress from the Hotel premises. During the
implementation of the order, the striking employees resisted
and some of the guards tasked to remove the barricades
were injured. The NLRC declared that the strike was illegal
and that the union officers and members who participated
were terminated on the grounds of participating in an illegal
strike.
The union contended that the strike was premised on valid
ground and that it had the capacity to negotiate the CBA as
the representatives of the employees of Diamond Hotel. The
union contended that their dismissal is tantamount to an
unfair labour practice and union busting.
On appeal, the Court of Appeals affirmed the NLRC
Resolution dismissing the complaints of Mary Grace, Agustin
and Rowena and of the union. It modified the NLRC
Resolution, however, by ordering the reinstatement with
back wages of union members.
ISSUE:
Whether or not the dismissal of the union members is valid
on the grounds of participating in an illegal strike
HELD:
Even if the purpose of a strike is valid, the strike may still be
held illegal where the means employed are illegal. Thus, the
employment of violence, intimidation, restraint or coercion
in carrying out concerted activities which are injurious to
the rights to property renders a strike illegal. And so is
picketing or the obstruction to the free use of property or
the comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence, and coercion
as to constitute nuisance.
As the appellate court correctly held, the union officers
should be dismissed for staging and participating in the
illegal strike, following paragraph 3, Article 264(a) of the
Labor Code which provides that ". . .any union officer who

knowingly participates in an illegal strike and any worker or


union officer who knowingly participates in the commission
of illegal acts during strike may be declared to have lost his
employment status . . ."
An ordinary striking worker cannot, thus be dismissed for
mere participation in an illegal strike. There must
be proof that he committed illegal acts during a strike, unlike
a union officer who may be dismissed by mere knowingly
participating in an illegal strike and/or committing an illegal
act during a strike.
5.

Grand Boulevard Hotel vs. Genuine Labor


Organizations in Hotel Restaurants and Allied
Industries, (G.R. No. 153664 [18 July 2003], citing
NFL vs. NLRC [283 SCRA 275])

FACTS
- Respondent Genuine Labor Organization of Workers in Hotel,
Restaurant and Allied Industries Silahis International Hotel
Chapter (Union) and the petitioner Grand Boulevard Hotel (then
Silahis International Hotel, Inc.) executed a CBA covering the
period from July 10, 1985 up to July 9, 1988.
- Thereafter, Union filed several notices of strike on account of
alleged violations of CBA, illegal dismissal and suspension of EEs.
In these instances, SOLE issued a status quo ante bellum order
certifying the labor dispute to the NLRC for compulsory
arbitration pursuant to Article 263(g) of LC. After notice was
given by Hotel re its decision to implement retrenchment
program, Union informed the DOLE that the union will conduct a
strike vote referendum. The members of the Union voted to stage
a strike. Union informed the DOLE of the results of the strike vote
referendum. SOLE issued another status quo ante bellum order
certifying the case to the NLRC for compulsory arbitration and
enjoining the parties from engaging in any strike or lockout.
Then, another notice of strike was filed by Union on account of
the illegal dismissal of EEs pusrsuant to Hotels act of retrenching
around 171 EEs. Officers of the respondent union and some
members staged a picket in the premises of the hotel, obstructing
the free ingress and egress thereto. Because of this, they were
terminated.
- Hotel filed a complaint with NLRC for illegal strike against the
union, its members and officers. Petitioner Hotel alleged inter alia
that the union members and officers staged a strike on November
16, 1990 which lasted until November 29, 1990 without
complying with the requirements provided under Articles 263
and 264 of the Labor Code. It further alleged that the officers and
members of the respondent union blocked the main ingress to
and egress from the hotel.
- The respondent Union denied the material allegations of the
complaint and alleged that the petitioner committed ULP prior to
the filing of the Nov. 16, 1990 notice of strike. Hence, there was
no need for the union to comply with A263 and 264 of LC, as the
notice
- LA Linsangans Ruling: Unions failure to comply with the
requirements laid down in A263 and 264 of LC, the strike that
was staged was illegal. Considering the admissions of the
individual respondents that they participated in the said strike,
the termination of their employment by the petitioner was legal.

LA noted that if as alleged by the respondent union the petitioner


was guilty of
ULP, it should have filed a complaint therefor against the Hotel
and/or its officials for which the latter could have been meted
penal and administrative sanctions as provided for in A272 of LC.
The Union failed.
- Appeal by Union to NLRC: that it had complied with the
requirements laid down in A263 and 264 of LC because its Nov
16, 1990 notice of strike was a mere reiteration of its Sept 27,
1990 notice of strike, which, in turn, complied with all the
requirements of the aforementioned articles, i.e., the cooling-off
period, the strike ban, the strike vote and the strike vote report.
- NLRC affirmed LA Decision. Compliance of the requirements
laid down in A263 and 264 of LC respecting the Sept 27, 1990
notice of strike filed by the union cannot be carried over to the
Nov 16, 1990 notice of strike.
Resultantly, for failure of the union to comply with the
requirements, the strike staged on November 16 up to November
29, 1990 was illegal.
- CA reversed NLRC and LA: It took into account the observation
of the Sol-Gen that the Hotel retrenched EEs pending the
resolution of the certified cases respecting the alleged illegal
suspension and dismissals effected by Hotel during and prior to
the notices of strike filed by Union. Sol-Gen opined that even if
the strike was staged without the proper notice and compliance
with the cooling-off period, resort thereto was simply triggered
by the petitioners' belief in good faith that Hotel was engaged in
ULP. Hence, this petition
ISSUES
1 WON the strike staged by the respondent union on Nov16-29,
1990 is legal
2 WON the dismissals of the officers and some members of the
Union as a consequence of the strike on Nov16-29, 1990 are
valid.
HELD
1. NO
Re: Procedural Requirements
- Under A263 (c) and (f) of LC, the requisites for a valid strike are
as follows: (a) a notice of strike fled with the DOLE 30 days
before the intended date thereof or 15 days in case of ULP; (b)
strike vote approved by a majority of the total union membership
in the bargaining unit concerned obtained by secret ballot in a
meeting called for that purpose; (c) notice given to the DOLE of
the results of the voting at least 7 days before the intended strike.
The requisite 7-day period is intended to give the DOLE an
opportunity to verify whether the projected strike really carries
the approval of the majority of the union members. The notice of
strike and the cooling-off period were intended to provide an
opportunity for mediation and conciliation. The requirements are
mandatory and failure of a union to comply therewith renders
the strike illegal. A strike simultaneously with or immediately
after a notice of strike will render the requisite periods nugatory.

- In this case, union filed its notice of strike with the DOLE on Nov
16, 1990 and on the same day, staged a picket on the premises of
the hotel, in violation of the law. Union cannot argue that since
the notice of strike on Nov 16, 1990 were for the same grounds as
those contained in their notice of strike on September 27, 1990
which complied with the requirements of the law on the coolingoff period, strike ban, strike vote and strike vote report, the strike
staged by them on Nov16, 1990 was lawful. The matters
contained in the notice of strike of Sept 27, 1990 had already
been taken cognizance of by the SOLE when he issued on Oct 31,
1990 a status quo ante bellum order enjoining union from
intending or staging a strike. Despite SOLE order, the union
nevertheless staged a strike on Nov16, 1990 simultaneously with
its notice of strike, thus violating A264(a) LC
Grounds
- A strike that is undertaken, despite the issuance by the SOLE of
an assumption or certification order, becomes a prohibited
activity and, thus, illegal pursuant to A264 of LC: No strike or
lockout shall be declared after assumption of jurisdiction by the
President or the Secretary or after certification or submission of
the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or
lockout.
- Even if the union acted in good faith in the belief that the
company was committing an unfair labor practice, if no notice of
strike and a strike vote were conducted, the said strike is illegal.
2. YES
Re: Effect of Illegality
Ratio Since a strike that is undertaken, despite the issuance by
the SOLE of an assumption or certification order, becomes a
prohibited activity and, thus, illegal pursuant to A264 of LC, the
union officers and members, as a result, are deemed to have lost
their employment status for having knowingly participated in an
illegal act.
Disposition Petition is GRANTED. LA Decision REINSTATED.
6.

Hyatt Enterprises of the Phils., Inc., vs. Samahan ng


mga Manggagawa sa Hyatt NUHRAIN (588 SCRA 497
[2009])
DECISION
NACHURA, J.:
The Constitution affords full protection to labor, but the
policy is not to be blindly followed at the expense of capital.
Always, the interests of both sides must be balanced in light of
the evidence adduced and the peculiar circumstances
surrounding each case.
This is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the Court of Appeals (CA)
Decision[1] dated July 20, 2004 and the Resolution[2] dated
October 20, 2004 in CA-G.R. SP No. 81153. The appellate court, in
its decision and resolution, reversed the April 3, 2003
Resolution[3] of the National Labor Relations Commission
(NLRC) and reinstated the October 30, 2002 Decision[4] issued
by Labor Arbiter Aliman Mangandog upholding the legality of the
strike staged by the officers and members of respondent
Samahan ng mga Manggagawa sa Hyatt-National Union of
Workers in the Hotel Restaurant and Allied Industries (Union).

We trace the antecedent facts below.


Respondent Union is the certified collective bargaining agent of
the rank-and-file employees of Hyatt Regency Manila, a hotel
owned by petitioner Hotel Enterprises of the Philippines, Inc.
(HEPI).

In 2001, HEPIs hotel business suffered a slump due to the local


and international economic slowdown, aggravated by the events
of September 11, 2001 in theUnited States. An audited financial
report made by Sycip Gorres Velayo (SGV) & Co. on January 28,
2002 indicated that the hotel suffered a gross operating loss
amounting to P16,137,217.00 in 2001,[5] a staggering decline
compared to its P48,608,612.00 gross operating profit[6] in year
2000.[7]
2000
Income from Hotel Operations
P 78,434,103
----------------------------------------------------------------------------------Other Deductions
Provision for hotel rehabilitation
Provision for replacements of and
additions to furnishings and
equipment
Gross Operating Profit (Loss)

20,000,000

9,825,491
29,825,491
P 48,608,612

According to petitioner, the management initially decided to costcut by implementing energy-saving schemes: prioritizing
acquisitions/purchases; reducing work weeks in some of the
hotels departments; directing the employees to avail of their
vacation leaves; and imposing a moratorium on hiring employees
for the year 2001 whenever practicable.[8]
Meanwhile, on August 31, 2001, the Union filed a notice of strike
due to a bargaining deadlock before the National Conciliation
Mediation Board (NCMB), docketed as NCMB-NCR-NS 08-25301.[9] In the course of the proceedings, HEPI submitted its
economic proposals for the rank-and-file employees covering the
years 2001, 2002, and 2003. The proposal included manning and
staffing standards for the 248 regular rank-and-file
employees. The Union accepted the economic proposals. Hence,
a new collective bargaining agreement (CBA) was signed on
November 21, 2001, adopting the manning standards for the 248
rank-and-file employees.[10]
Then, on December 21, 2001, HEPI issued a memorandum
offering a Special Limited Voluntary Resignation/Retirement
Program (SLVRRP) to its regular employees. Employees who
were qualified to resign or retire were given separation packages
based on the number of years of service.[11] The vacant
positions, as well as the regular positions vacated, were later
filled up with contractual personnel and agency employees.[12]
Subsequently, on January 21, 2002, petitioner decided to
implement a downsizing scheme after studying the operating
costs of its different divisions to determine the areas where it
could obtain significant savings. It found that the hotel could save
on costs if certain jobs, such as engineering services,
messengerial/courier services, janitorial and laundry services,
and operation of the employees cafeteria, which by their nature
were contractable pursuant to existing laws and jurisprudence,
were abolished and contracted out to independent job
contractors. After evaluating the hotels manning guide, the
following positions were identified as redundant or in excess of
what was required for the hotels actual operation given the

prevailing poor business condition, viz.: a) housekeeping


attendant-linen; b) tailor; c) room attendant; d) messenger/mail
clerk; and e) telephone technician.[13] The effect was to be a
reduction of the hotels rank-and file employees from the agreed
number of 248 down to just 150[14] but it would generate
estimated savings of around P9,981,267.00 per year.[15]
On January 24, 2002, petitioner met with respondent Union to
formally discuss the downsizing
program.[16] The Union opposed the downsizing plan because
no substantial evidence was shown to prove that the hotel was
incurring heavy financial losses, and for being violative of the
CBA, more specifically the manning/staffing standards agreed
upon by both parties in November 2001.[17] In a financial
analysis made by the Union based on Hyatts financial statements
submitted to the Securities and Exchange Commission (SEC), it
noted that the hotel posted a positive profit margin with respect
to its gross operating and net incomes for the years 1998, 1999,
2000, and even in 2001.[18] Moreover, figures comprising the
hotels unappropriated retained earnings showed a consistent
increase from 1998 to 2001, an indication that the company was,
in fact, earning, contrary to petitioners assertion. The net income
from hotel operations slightly dipped fromP78,434,103.00 in
2000 to P12,230,248.00 for the year 2001, but nevertheless
remained positive.[19] With this, the Union, through a letter,
informed the management of its opposition to the scheme and
proposed instead several cost-saving measures.[20]
Despite its opposition, a list of the positions declared redundant
and to be contracted out was given by the management to
the Union on March 22, 2002.[21]Notices of termination were,
likewise, sent to 48 employees whose positions were to be
retrenched or declared as redundant. The notices were sent on
April 5, 2002 and were to take effect on May 5, 2002.[22] A notice
of termination was also submitted by the management to the
Department of Labor and Employment (DOLE) indicating the
names, positions, addresses, and salaries of the employees to be
terminated.[23] Thereafter, the hotel management engaged the
services of independent job contractors to perform the following
services: (1) janitorial (previously, stewarding and public area
attendants); (2) laundry; (3) sundry shop; (4) cafeteria;[24] and
(5) engineering.[25] Some employees, including one Union
officer, who were affected by the downsizing plan were
transferred to other positions in order to save their
employment.[26]
On April 12, 2002, the Union filed a notice of strike based on
unfair labor practice (ULP) against HEPI. The case was docketed
as NCMB-NCR-NS-04-139-02.[27] On April 25, 2002, a strike vote
was conducted with majority in the bargaining unit voting in
favor of the strike.[28] The result of the strike vote was sent to
NCMB-NCR Director Leopoldo de Jesus also on April 25,
2002.[29]
On April 29, 2002, HEPI filed a motion to dismiss notice of strike
which was opposed by the Union. On May 3, 2002, the Union filed
a petition to suspend the effects of termination before the Office
of the Secretary of Labor. On May 5, 2002, the hotel management
began implementing its downsizing plan immediately
terminating seven (7) employees due to redundancy and 41 more
due to retrenchment or abolition of positions.[30] All were given
separation pay equivalent to one (1) months salary for every
year of service.[31]
On May 8, 2002, conciliation proceedings were held between
petitioner and respondent, but to no avail. On May 10, 2002,
respondent Union went on strike. A petition to declare the strike

illegal was filed by petitioner on May 22, 2002, docketed as


NLRC-NCR Case No. 05-03350-2002.
On June 14, 2002, Acting Labor Secretary Manuel Imson issued an
order in NCM-NCR-NS-04-139-02 (thence, NLRC Certified Case
No. 000220-02), certifying the labor dispute to the NLRC for
compulsory arbitration and directing the striking workers, except
the 48 workers earlier terminated, to return to work within 24
hours. On June 16, 2002, after receiving a copy of the order,
members of respondent Union returned to work.[32] On August
1, 2002, HEPI filed a manifestation informing the NLRC of the
pending petition to declare the strike illegal. Because of this, the
NLRC, on November 15, 2002, issued an order directing Labor
Arbiter Aliman Mangandog to immediately suspend the
proceedings in the pending petition to declare the strike illegal
and to elevate the records of the said case for consolidation with
the certified case.[33] However, the labor arbiter had already
issued a Decision[34] dated October 30, 2002 declaring the strike
legal.[35]Aggrieved, HEPI filed an appeal ad cautelam before the
NLRC questioning the October 30, 2002 decision.[36] The Union,
on the other hand, filed a motion for reconsideration of the
November 15, 2002 Order on the ground that a decision was
already issued in one of the cases ordered to be consolidated.[37]
On appeal, the NLRC reversed the labor arbiters decision. In a
Resolution[38] dated April 3, 2003, it gave credence to the
financial report of SGV & Co. that the hotel had incurred huge
financial losses necessitating the adoption of a downsizing
scheme. Thus, NLRC declared the strike illegal, suspended all
Union officers for a period of six (6) months without pay, and
dismissed the ULP charge against HEPI.[39]
Respondent Union moved for reconsideration, while petitioner
HEPI filed its partial motion for reconsideration. Both were
denied in a Resolution[40] dated September 24, 2003.
The Union filed a petition for certiorari with the CA on December
19, 2003[41] questioning in the main the validity of the NLRCs
reversal of the labor arbiters decision.[42] But while the petition
was pending, the hotel management, on December 29, 2003,
issued separate notices of suspension against each of the 12
Union officers involved in the strike in line with the April 3, 2003
resolution of the NLRC.[43]
On July 20, 2004, the CA promulgated the assailed
Decision,[44] reversing the resolution of the NLRC and
reinstating the October 30, 2002 decision of the Labor Arbiter
which declared the strike valid. The CA also ordered the
reinstatement of the 48 terminated employees on account of the
hotel managements illegal redundancy and retrenchment
scheme and the payment of their backwages from the time they
were illegally dismissed until their actual
reinstatement.[45] HEPI moved for reconsideration but the same
was denied for lack of merit.[46]
Hence, this petition.
The issue boils down to whether the CAs decision, reversing the
NLRC ruling, is in accordance with law and established facts.
We answer in the negative.
To resolve the correlative issues (i.e., the validity of the strike; the
charges of ULP against petitioner; the propriety of petitioners act
of hiring contractual employees from employment agencies; and
the entitlement of Union officers and terminated employees to
reinstatement, backwages and strike duration pay), we answer

first the most basic question: Was petitioners downsizing


scheme valid?
The pertinent provision of the Labor Code states:
ART. 283. x x x
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 worker and the
[Department] of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to
the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one (1)
whole year.
Retrenchment is the reduction of work personnel usually due to
poor financial returns, aimed to cut down costs for operation
particularly on salaries and wages.[47] Redundancy, on the other
hand, exists where the number of employees is in excess of what
is reasonably demanded by the actual requirements of the
enterprise.[48] Both are forms of downsizing and are often
resorted to by the employer during periods of business recession,
industrial depression, or seasonal fluctuations, and during lulls in
production occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program, or
introduction of new methods or more efficient machinery or
automation.[49] Retrenchment and redundancy are valid
management prerogatives, provided they are done in good faith
and the employer faithfully complies with the substantive and
procedural requirements laid down by law and
jurisprudence.[50]
For a valid retrenchment, the following requisites must be
complied with: (1) the retrenchment is necessary to prevent
losses and such losses are proven; (2) written notice to the
employees and to the DOLE at least one month prior to the
intended date of retrenchment; and (3) payment of separation
pay equivalent to one-month pay or at least one-half month pay
for every year of service, whichever is higher.[51]
In case of redundancy, the employer must prove that: (1) a
written notice was served on both the employees and the DOLE
at least one month prior to the intended date of retrenchment;
(2) separation pay equivalent to at least one month pay or at
least one month pay for every year of service, whichever is
higher, has been paid; (3) good faith in abolishing the redundant
positions; and (4) adoption of fair and reasonable criteria in
ascertaining which positions are to be declared redundant and
accordingly abolished.[52]
It is the employer who bears the onus of proving compliance with
these requirements, retrenchment and redundancy being in the
nature of affirmative defenses.[53] Otherwise, the dismissal is
not justified.[54]

In the case at bar, petitioner justifies the downsizing scheme on


the ground of serious business losses it suffered in 2001. Some
positions had to be declared redundant to cut losses. In this
context, what may technically be considered as redundancy may
verily be considered as a retrenchment measure.[55] To
substantiate its claim, petitioner presented a financial report
covering the years 2000 and 2001 submitted by the SGV & Co., an
independent external auditing firm.[56] From an impressive
gross operating profit of P48,608,612.00 in 2000, it nose-dived to
negative P16,137,217.00 the following year. This was the same
financial report submitted to the SEC and later on examined by
respondent Unions auditor. The only difference is that, in
respondents analysis, Hyatt Regency Manila was still earning
because its net income from hotel operations in 2001
was P12,230,248.00. However, if provisions for hotel
rehabilitation as well as replacement of and additions to the
hotels furnishings and equipments are included, which
respondent Union failed to consider, the result is indeed a
staggering deficit of more than P16 million. The hotel was
already operating not only on a slump in income, but on a huge
deficit as well. In short, while the hotel did earn, its earnings were
not enough to cover its expenses and other liabilities; hence, the
deficit. With the local and international economic conditions
equally unstable, belt-tightening measures logically had to be
implemented to forestall eventual cessation of business.
Losses or gains of a business entity cannot be fully and
satisfactorily assessed by isolating or highlighting only a
particular part of its financial report. There are recognized
accounting principles and methods by which a companys
performance can be objectively and thoroughly evaluated at the
end of every fiscal or calendar year. What is important is that the
assessment is accurately reported, free from any manipulation of
figures to suit the companys needs, so that the companys actual
financial condition may be impartially and accurately gauged.
The audit of financial reports by independent external auditors is
strictly governed by national and international standards and
regulations for the accounting profession.[57] It bears emphasis
that the financial statements submitted by petitioner were
audited by a reputable auditing firm and are clear and substantial
enough to prove that the company was in a precarious financial
condition.
In the competitive and highly uncertain world of business, cash
flow is as important as and oftentimes, even more critical than
profitability.[58] So long as the hotel has enough funds to pay its
workers and satisfy costs for operations, maintenance and other
expenses, it may survive and bridge better days for its recovery.
But to ensure a viable cash flow amidst the growing business and
economic uncertainty is the trick of the trade. Definitely, this
cannot be achieved if the cost-saving measures continuously fail
to cap the losses. More drastic, albeit painful, measures have to
be taken.
This Court will not hesitate to strike down a companys
redundancy program structured to downsize its personnel, solely
for the purpose of weakening the union leadership.[59] Our labor
laws only allow retrenchment or downsizing as a valid exercise of
management prerogative if all other else fail. But in this case,
petitioner did implement various cost-saving measures and even
transferred some of its employees to other viable positions just to
avoid the premature termination of employment of its affected
workers. It was when the same proved insufficient and the
amount of loss became certain that petitioner had to resort to
drastic measures to stave off P9,981,267.00 in losses, and be able
to survive.

If we see reason in allowing an employer not to keep all its


employees until after its losses shall have fully
materialized,[60] with more reason should we allow an employer
to let go of some of its employees to prevent further financial
slide.
This, in turn, gives rise to another question: Does the
implementation of the downsizing scheme preclude petitioner
from availing the services of contractual and agency-hired
employees?
In Asian Alcohol Corporation v. National Labor Relations
Commission, [61] we answered in the negative. We said:
In any event, we have held that an employers good faith in
implementing a redundancy program is not necessarily
destroyed by availment of the services of an independent
contractor to replace the services of the terminated
employees. We have previously ruled that the reduction of the
number of workers in a company made necessary by the
introduction of the services of an independent contractor is
justified when the latter is undertaken in order to effectuate
more economic and efficient methods of production. In the case
at bar, private respondent failed to proffer any proof that the
management acted in a malicious or arbitrary manner in
engaging the services of an independent contractor to operate
the Laura wells. Absent such proof, the Court has no basis to
interfere with the bona fide decision of management to effect
more economic and efficient methods of production.
With petitioners downsizing scheme being valid, and the
availment of contractual and agency-hired employees legal, the
strike staged by officers and members of respondent Union is,
perforce, illegal.
Given the foregoing finding, the only remaining question that
begs resolution is whether the strike was staged in good faith. On
this issue, we find for the respondent.
Procedurally, a strike to be valid must comply with Article 263 of
the Labor Code, which pertinently reads:
Article 263. x x x
xxxx
(c) In cases of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of strike or the
employer may file a notice of lockout with the [Department] at
least 30 days before the intended date thereof. In cases of unfair
labor practice, the period of notice shall be 15 days and in the
absence of a duly certified or recognized bargaining agent, the
notice of strike may be filed by any legitimate labor organization
in behalf of its members. However, in case of dismissal from
employment of union officers duly elected in accordance with the
union constitution and by-laws, which may constitute union
busting where the existence of the union is threatened, the 15day cooling-off period shall not apply and the union may take
action immediately.
(d) The notice must be in accordance with such implementing
rules and regulations as the [Secretary] of Labor and
Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the
[Department] to exert all efforts at mediation and conciliation to
effect a voluntary settlement. Should the dispute remain

unsettled until the lapse of the requisite number of days from the
mandatory filing of the notice, the labor union may strike or the
employer may declare a lockout.
(f) A decision to declare a strike must be approved by a majority
of the total union membership in the bargaining unit concerned,
obtained by secret ballot in meetings or referenda called for that
purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or
association or of the partners in a partnership, obtained by secret
ballot in a meeting called for the purpose. The decision shall be
valid for the duration of the dispute based on substantially the
same grounds considered when the strike or lockout vote was
taken. The [Department] may at its own initiative or upon the
request of any affected party, supervise the conduct of the secret
balloting. In every case, the union or the employer shall furnish
the [Department] the results of the voting at least seven days
before the intended strike or lockout, subject to the cooling-off
period herein provided.
Accordingly, the requisites for a valid strike are: (a) a notice of
strike filed with the DOLE 30 days before the intended date
thereof or 15 days in case of ULP; (b) a strike vote approved by a
majority of the total union membership in the bargaining unit
concerned obtained by secret ballot in a meeting called for that
purpose; and (c) a notice to the DOLE of the results of the voting
at least seven (7) days before the intended strike.[62] The
requirements are mandatory and failure of a union to comply
therewith renders the strike illegal.[63]
In this case, respondent fully satisfied the procedural
requirements prescribed by law: a strike notice filed on April 12,
2002; a strike vote reached on April 25, 2002; notification of the
strike vote filed also on April 25, 2002; conciliation proceedings
conducted on May 8, 20002; and the actual strike on May 10,
2002.
Substantively, however, there appears to be a problem. A valid
and legal strike must be based on strikeable grounds, because if
it is based on a non-strikeable ground, it is generally deemed an
illegal strike. Corollarily, a strike grounded on ULP is illegal if no
acts constituting ULP actually exist. As an exception, even if no
such acts are committed by the employer, if the employees
believe in good faith that ULP actually exists, then the strike held
pursuant to such belief may be legal. As a general rule, therefore,
where a union believes that an employer committed ULP and the
surrounding circumstances warranted such belief in good faith,
the resulting strike may be considered legal although,
subsequently, such allegations of unfair labor practices were
found to be groundless.[64]
Here, respondent Union went on strike in the honest belief that
petitioner was committing ULP after the latter decided to
downsize its workforce contrary to the staffing/manning
standards adopted by both parties under a CBA forged only four
(4) short months earlier. The belief was bolstered when the
management hired 100 contractual workers to replace the 48
terminated regular rank-and-file employees who were all Union
members.[65] Indeed, those circumstances showed prima
faciethat the hotel committed ULP. Thus, even if technically there
was no legal ground to stage a strike based on ULP, since the
attendant circumstances support the belief in good faith that
petitioners retrenchment scheme was structured to weaken the
bargaining power of the Union, the strike, by exception, may be
considered legal.

Because of this, we view the NLRCs decision to suspend all the


Union officers for six (6) months without pay to be too harsh a
punishment. A suspension of two (2) months without pay should
have been more reasonable and just. Be it noted that the striking
workers are not entitled to receive strike-duration pay, the ULP
allegation against the employer being unfounded. But since
reinstatement is no longer feasible, the hotel having permanently
ceased operations on July 2, 2007,[66]we hereby order the Labor
Arbiter to instead make the necessary adjustments in the
computation of the separation pay to be received by the Union
officers concerned.
Significantly, the Manifestations[67] filed by petitioner with
respect to the quitclaims executed by members of respondent
Union state that 34 of the 48 employees terminated on account of
the downsizing program have already executed quitclaims on
various dates.[68] We, however, take judicial notice that 33 of
these quitclaims failed to indicate the amounts received by the
terminated employees.[69] Because of this, petitioner leaves us
no choice but to invalidate and set aside these quitclaims.
However, the actual amount received by the employees upon
signing the said documents shall be deducted from whatever
remaining amount is due them to avoid double recovery of
separation pay and other monetary benefits. We hereby order the
Labor Arbiter to effect the necessary computation on this matter.
For this reason, this Court strongly admonishes petitioner and its
counsel for making its former employees sign quitclaim
documents without indicating therein the consideration for the
release and waiver of their employees rights. Such conduct on
the part of petitioner and its counsel is reprehensible and puts in
serious doubt the candor and fairness required of them in their
relations with their hapless employees. They are reminded to
observe common decency and good faith in their dealings with
their unsuspecting employees, particularly in undertakings that
ultimately lead to waiver of workers rights. This Court will not
renege on its duty to protect the weak against the strong, and the
gullible against the wicked, be it for labor or for capital.
However, with respect to the second batch of quitclaims signed
by 85 of the remaining 160 employees who were terminated
following Hyatts permanent closure,[70] we hold that these are
valid and binding undertakings. The said documents indicate that
the amount received by each of the employees represents a
reasonable settlement of their monetary claims against petitioner
and were even signed in the presence of a DOLE representative. A
quitclaim, with clear and unambiguous contents and executed for
a valid consideration received in full by the employee who signed
the same, cannot be later invalidated because its signatory claims
that he was pressured into signing it on account of his dire
financial need. When it is shown that the person executing the
waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and
binding undertaking.[71]
WHEREFORE, the petition is PARTLY GRANTED. The downsizing
scheme implemented by petitioner is hereby declared a valid
exercise of management prerogative. The penalty of six (6)
months suspension without pay imposed in the April 3, 2003
NLRC Resolution[72] is hereby reduced to two (2) months, to be
considered in the Labor Arbiters computation of the separation
pay to be received by the Union officers concerned. The first
batch of quitclaims signed by 33 of the 48 terminated employees
is hereby declared invalid and illegal for failure to state the
proper consideration therefor, but the amount received by the
employees concerned, if any, shall be deducted from their
separation pay and other monetary benefits, subject to the

computation to be made by the Labor Arbiter. The second batch


of quitclaims signed by 85 of the 160 terminated employees,
following Hyatt Regency Manilas permanent closure, is declared
valid and binding.
SO ORDERED.
7. CIRTEC Employees Union- FFW vs CIRTEK Electronics, Inc.,
(G. R. No. 190515 [15 Nov., 2010])
RESOLUTION
CARPIO MORALES, J.:
This resolves the motion for reconsideration and
supplemental motion for reconsideration filed by respondent,
Cirtek Electronics, Inc., of the Courts Decision dated November
15, 2010.
Respondent-movant avers that petitioner, in filing the
petition for certiorari under Rule 65, availed of the wrong
remedy, hence, the Court should have dismissed the petition
outright. It goes on to aver that the Court erred in resolving a
factual issue whether the August 24, 2005 Memorandum of
Agreement (MOA) was validly entered into , which is not the
office of a petition for certiorari.
Respondent-movant
further
avers
that the
MOA[1] signed by the remaining officers of petitioner Union and
allegedly ratified by its members should have been given
credence by the Court.
Furthermore, respondent-movant maintains that the
Secretary of Labor cannot insist on a ruling beyond the
compromise agreement entered into by the parties; and that, as
early as February 5, 2010, petitioner Union had already filed with
the Department of Labor and Employment (DOLE) a resolution of
disaffiliation from the Federation of Free Workers resulting in
the latters lack of personality to represent the workers in the
present case.
The motion is bereft of merit.
Respondent indeed availed of the wrong remedy of
certiorari under Rule 65. Due, however, to the nature of the case,
one involving workers wages and benefits, and the fact that
whether the petition was filed under Rule 65 or appeal by
certiorari under Rule 45 it was filed within 15 days (the
reglementary period under Rule 45) from petitioners receipt of
the resolution of the Court of Appeals Resolution denying its
motion for reconsideration, the Court resolved to give it due
course. As Almelor v. RTC of Las Pias, et al. [2] restates:
Generally, an appeal taken either
to the Supreme Court or the CA by the
wrong or inappropriate mode shall be
dismissed. This is to prevent the party from
benefiting
from
ones
neglect
and
mistakes. However, like most rules, it
carries
certain
exceptions.
After
all, the ultimate purpose of all rules of
procedures is to achieve substantial justice
as expeditiously as possible. (emphasis and
underscoring supplied)
Respecting the attribution of error to the Court in ruling
on a question of fact, it bears recalling that a QUESTION OF FACT

arises when the doubt or difference arises as to the truth or


falsehood of alleged facts,[3] while a QUESTION OF LAW exists
when the doubt or difference arises as to what the law is on a
certain set of facts.
The present case presents the primordial issue
of whether the Secretary of Labor is empowered to give arbitral
awards in the exercise of his authority to assume jurisdiction over
labor disputes.
Ineluctably, the issue involves a determination and
application of existing law, the provisions of the Labor Code, and
prevailing jurisprudence. Intertwined with the issue, however, is
the question of validity of the MOA and its ratification which, as
movant correctly points out, is a question of fact and one which is
not appropriate for a petition for review on certiorari under Rule
45. The rule, however, is not without exceptions, viz:
This rule provides that the parties may raise
only questions of law, because the Supreme
Court is not a trier of facts. Generally, we are
not duty-bound to analyze again and weigh the
evidence introduced in and considered by the
tribunals below. When supported by
substantial evidence, the findings of fact of
the CA are conclusive and binding on the
parties and are not reviewable by this
Court, unless the case falls under any of the
following recognized exceptions:
(1)
conclusion
grounded
speculation,
conjectures;

When
the
is a finding
entirely
on
surmises and

(2)
When
the
inference
made
is
manifestly
mistaken,
absurd or impossible;
(3)
Where there
is a grave abuse of
discretion;
(4)
When
the
judgment is based on a
misapprehension of facts;
(5)
When
findings of fact
conflicting;

the
are

(6)
When
the
Court of Appeals, in making
its findings, went beyond
the issues of the case and
the same is contrary to the
admissions
of
both
appellant and appellee;

citation of specific evidence


on which they are based;
(9)
When
the
facts set forth in the
petition as well as in the
petitioners' main and reply
briefs are not disputed by
the respondents; and
(10) When
the
findings of fact of the Court
of Appeals are premised on
the supposed absence of
evidence and contradicted
by the evidence on record.
(emphasis
and
underscoring supplied)
In the present case, the findings of the Secretary of Labor
and the appellate court on whether the MOA is valid and binding
are conflicting, the former giving scant consideration thereon,
and the latter affording it more weight.
As found by the Secretary of Labor, the MOA came about
as a result of the constitution, at respondents behest, of the
Labor-Management Council (LMC) which, he reminded the
parties, should not be used as an avenue for bargaining but for
the purpose of affording workers to participate in policy and
decision-making. Hence, the agreements embodied in the MOA
were not the proper subject of the LMC deliberation or
procedure but of CBA negotiations and, therefore, deserving little
weight.
The appellate court, held, however, that the Secretary
did not have the authority to give an arbitral award higher than
what was stated in the MOA. The conflicting views drew the
Court to re-evaluate the facts as borne by the records, an
exception to the rule that only questions of law may be dealt with
in an appeal by certiorari under Rule 45.
As discussed in the Decision under reconsideration, the
then Acting Secretary of Labor Manuel G. Imson acted well within
his jurisdiction in ruling that the wage increases to be given
are P10 per day effective January 1, 2004 and P15 per day
effective January 1, 2005, pursuant to his power to assume
jurisdiction under Art. 263 (g)[4] of the Labor Code.
While an arbitral award cannot per se be categorized as
an agreement voluntarily entered into by the parties because it
requires the interference and imposing power of the State thru
the Secretary of Labor when he assumes jurisdiction, the award
can be considered as an approximation of a collective
bargaining agreement which would otherwise have been
entered into by the parties. Hence, it has the force and effect of
a valid contract obligation between the parties.[5]

(7)
When
the
findings are contrary to
those of the trial court;

In determining arbitral awards then, aside from the


MOA, courts considered other factors and documents including,
as in this case, the financial documents[6]submitted by
respondent as well as its previous bargaining history and
financial outlook and improvements as stated in its own
website.[7]

(8)
When
the
findings
of
fact
are
conclusions
without

The appellate courts ruling that giving credence to the


Pahayag and the minutes of the meeting which were not
verified and notarized would violate the rule on parol evidence is

erroneous. The parol evidence rule, like other rules on evidence,


should not be strictly applied in labor cases. Interphil
Laboratories Employees Union-FFW v. Interphil Laboratories,
Inc. [8] teaches:
[R]eliance on the parol evidence rule is
misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of
evidence prevailing in courts of law or
equity
are not controlling.
Rules
of
procedure and evidence are not applied in a
very rigid and technical sense in labor cases.
Hence, the Labor Arbiter is not precluded from
accepting and evaluating evidence other
than, and even contrary to, what is stated in
the
CBA. (emphasis
and
underscoring
supplied)
On the contention that the MOA should have been given
credence because it was validly entered into by the parties, the
Court notes that even those who signed it expressed reservations
thereto. A CBA (assuming in this case that the MOA can be
treated as one) is a contract imbued with public interest. It must
thus be given a liberal, practical and realistic, rather than a
narrow and technical construction, with due consideration to the
context in which it is negotiated and the purpose for which it is
intended.[9]
As for the contention that the alleged disaffiliation of
the Union from the FFW during the pendency of the case resulted
in the FFW losing its personality to represent the Union, the same
does not affect the Courts upholding of the authority of the
Secretary of Labor to impose arbitral awards higher than what
was supposedly agreed upon in the MOA. Contrary to
respondents assertion, the unavoidable issue of disaffiliation
bears no significant legal repercussions to warrant the reversal of
the Courts Decision.
En passant, whether there was a valid disaffiliation is a
factual issue. Besides, the alleged disaffiliation of the Union from
the FFW was by virtue of a Resolution signed on February 23,
2010 and submitted to the DOLE Laguna Field Office on March 5,
2010 two months after the present petition was filed on
December 22, 2009, hence, it did not affect FFW and its Legal
Centers standing to file the petition nor this Courts jurisdiction
to resolve the same.
At all events, the issue of disaffiliation is an intra-union
dispute which must be resolved in a different forum in an action
at the instance of either or both the FFW and the Union or a rival
labor organization, not the employer.
An intra-union dispute refers to any conflict
between and among union members,
including grievances arising from any
violation of the rights and conditions of
membership, violation of or disagreement
over any provision of the unions
constitution and by-laws, or disputes arising
from chartering or disaffiliation of the
union. Sections 1 and 2, Rule XI of Department
Order No. 40-03, Series of 2003 of the DOLE
enumerate the following circumstances as
inter/intra-union disputes, viz:
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS
DISPUTES

SECTION 1.
Coverage.
Inter/intra-union disputes shall include:
(a)

cancellation of registration
of a labor organization
filed by its members or by
another
labor
organization;

(b)

conduct of election of union


and workers association
officers/nullification
of
election of union and
workers
association
officers;

(c)

audit/accounts examination
of union or workers
association funds;

(d)

deregistration of collective
bargaining agreements;

(e)

validity/invalidity
union
affiliation
disaffiliation;

(f)

validity/invalidity
acceptance/nonacceptance
for
membership;

of
or
of
union

(g)

validity/invalidity
of
impeachment/expulsion
of union and workers
association officers and
members;

(h)

validity/invalidity
voluntary recognition;

(i)

opposition to application
for union and CBA
registration;

(j)

violations
of
or
disagreements over any
provision in a union or
workers
association
constitution and by-laws;

(k)

disagreements
over
chartering or registration
of labor organizations and
collective
bargaining
agreements;

(l)

violations of the rights and


conditions of union or
workers
association
membership;

(m)

violations of the rights of


legitimate
labor
organizations,
except
interpretation of collective
bargaining agreements;

(n)

such other disputes or


conflicts involving the
rights to self-organization,
union membership and
collective bargaining

of

(1) between and among


legitimate
labor
organizations;
(2) between and among
members of a union
or
workers
association.
SECTION 2. Coverage. Other related
labor relations disputes shall include any
conflict between a labor union and the
employer or any individual, entity or group
that is not a labor organization or workers
association. This includes: (1) cancellation of
registration of unions and workers
associations; and (2) a petition for
interpleader.[10] (emphasis supplied)

Indeed, as respondent-movant itself argues, a local


union may disaffiliate at any time from its mother
federation, absent any showing that the same is prohibited
under its constitution or rule. Such, however, does not result
in it losing its legal personality altogether. Verily, Anglo-KMU
v. Samahan Ng Mga Manggagawang Nagkakaisa Sa Manila Bay
Spinning Mills At J.P. Coats[11] enlightens:
A local labor union is a separate and
distinct unit primarily designed to secure and
maintain an equality of bargaining power
between the employer and their employeemembers. A local union does not owe its
existence to the federation with which it is
affiliated. It is a separate and distinct
voluntary association owing its creation to the
will of its members. The mere act of
affiliation does not divest the local union of
its own personality, neither does it give the
mother federation the license to act
independently of the local union. It only
gives rise to a contract of agency where the
former acts in representation of the latter.
(emphasis and underscoring supplied)
Whether then, as respondent claims, FFW went against the will
and wishes of its principal (the member-employees) by pursuing
the case despite the signing of the MOA, is not for the Court, nor
for respondent to determine, but for the Union and FFW to
resolve on their own pursuant to their principal-agent
relationship.
WHEREFORE, the motion for reconsideration of this
Courts Decision of November 15, 2010 is DENIED.
SO ORDERED.
Grave Abuse of Discretion
Despite all these clear pieces of evidence of illegal obstruction,
the NLRC looked the other way and chose not to see the
unmistakable violations of the law on strikes by the union and its
respondent officers and members. Needless to say, while the law
protects the rights of the laborer, it authorizes neither the
oppression nor the destruction of the employer. For grossly
ignoring the evidence before it, the NLRC committed grave abuse
of discretion; for supporting these gross NLRC errors, the CA
committed its own reversible error. (PHIMCO INDUSTRIES, INC.

v. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et al,G.R.


No. 170830, August 11, 2010)
Strike
Dismissal of Union Officers
In the present case, respondents Erlinda Vazquez, Ricardo
Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela
Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo
Ganitano, Alberto Basconcillo, and Ramon Falcis stand to be
dismissed as participating union officers, pursuant to Article
264(a), paragraph 3, of the Labor Code. This provision imposes
the penalty of dismissal on any union officer who knowingly
participates in an illegal strike. The law grants the employer the
option of declaring a union officer who participated in an illegal
strike as having lost his employment. (PHIMCO INDUSTRIES, INC.
v. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et al,G.R.
No. 170830, August 11, 2010)
We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.NAFLU v. Sulpicio Lines, Inc. that the effects of illegal strikes,
outlined in Article 264 of the Labor Code, make a distinction
between participating workers and union officers. The services of
an ordinary striking worker cannot be terminated for mere
participation in an illegal strike; proof must be adduced showing
that he or she committed illegal acts during the strike. The
services of a participating union officer, on the other hand, may
be terminated, not only when he actually commits an illegal act
during a strike, but also if he knowingly participates in an illegal
strike. (PHIMCO INDUSTRIES, INC. v. PHIMCO INDUSTRIES
LABOR ASSOCIATION (PILA), et al,G.R. No. 170830, August 11,
2010)
Requisites of a Valid Strike
Since strikes affect not only the relationship between labor and
management but also the general peace and progress of the
community, the law has provided limitations on the right to
strike. Procedurally, for a strike to be valid, it must comply with
Article 263 of the Labor Code, which requires that: (a) a notice of
strike be filed with the Department of Labor and Employment
(DOLE) 30 days before the intended date thereof, or 15 days in
case of unfair labor practice; (b) a strike vote be approved by a
majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in a meeting called for that
purpose; and (c) a notice be given to the DOLE of the results of
the voting at least seven days before the intended strike.
(PHIMCO INDUSTRIES, INC. v. PHIMCO INDUSTRIES LABOR
ASSOCIATION (PILA), et al,G.R. No. 170830, August 11, 2010)
Prohibited Activities
With a virtual human blockade and real physical obstructions
(benches and makeshift structures both outside and inside the
gates), it was pure conjecture on the part of the NLRC to say that
[t]he non-strikers and their vehicles were x x x free to get in and
out of the company compound undisturbed by the picket line.
Notably, aside from non-strikers who wished to report for work,
company vehicles likewise could not enter and get out of the
factory because of the picket and the physical obstructions the
respondents installed. The blockade went to the point of causing
the build up of traffic in the immediate vicinity of the strike area,
as shown by photographs. This, by itself, renders the picket a
prohibited activity. Pickets may not aggressively interfere with
the right of peaceful ingress to and egress from the employers
shop or obstruct public thoroughfares; picketing is not peaceful
where the sidewalk or entrance to a place of business is
obstructed by picketers parading around in a circle or lying on
the sidewalk. (PHIMCO INDUSTRIES, INC. v. PHIMCO
INDUSTRIES LABOR ASSOCIATION (PILA), et al,G.R. No. 170830,
August 11, 2010)
Grave Abuse of Discretion
Despite all these clear pieces of evidence of illegal obstruction,
the NLRC looked the other way and chose not to see the
unmistakable violations of the law on strikes by the union and its

respondent officers and members. Needless to say, while the law


protects the rights of the laborer, it authorizes neither the
oppression nor the destruction of the employer. For grossly
ignoring the evidence before it, the NLRC committed grave abuse
of discretion; for supporting these gross NLRC errors, the CA
committed its own reversible error. (PHIMCO INDUSTRIES, INC.
v. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et al,G.R.
No. 170830, August 11, 2010)

PHILIPPINE MARINE OFFICERS' GUILD, petitioner,


vs.
COMPAIA MARITIMA, PHILIPPINE STEAMSHIP NAVIGATION
CO., MADRIGAL SHIPPING CO., COURT OF AGRARIAN
RELATIONS ASSOCIATE JUDGES ARSENIO MARTINEZ,
BALTAZAR VILLANUEVA, and ARMANDO
BUGAYONG, respondents.
MAKALINTAL, J.:
Petition for certiorari to review the decision dated
December 23, 1961 and the resolution en banc dated May 18,
1962 of the Court of Industrial Relations in Cases Nos. 6-IPA and
617-ULP.
The respondents Compaia Maritima, Philippine Steamship
Navigation Company and Madrigal Shipping Company
[hereinafter referred to as MARITIMA, PHILSTEAM, and
MADRIGAL, respectively, and as COMPANIES jointly] are
domestic corporations engaged in the operation of motor ships
and vessels in the different ports of the Philippines, while the
petitioner, Philippine Marine Officers' Guild (hereinafter referred
to as PMOG), is a labor organization composed of marine officers
and engineers.
On different dates in June, 1954 PMOG sent separate letters
to several shipping firms, including MARITIMA, PHILSTEAM, and
MADRIGAL, each letter containing a set of demands, informing
the addresses that PMOG represented the deck officers and
engineers respectively employed by them, and requesting a
conference concerning said demands. A dispute thereafter arose
between PMOG and each of the COMPANIES, and on July 17, 1954
PMOG filed with the Conciliation Service of the Department of
Labor notices of its intention to be against MARITIMA and
PHILSTEAM, alleging refusal to bargain and other unspecified
unfair labor practices. The Conciliation Service called a
conference of the parties but no agreement was reached by them.
Another conference was set for August 17, 1954, at which
MADRIGAL was also requested to be present in view of the fact
that PMOG had also filed a strike notice against it.
On August 16, 1954 a day before the date set for the second
conference, MARITIMA concluded with another labor union, the
Marine Officers Association of the Philippines (MOAP) a
collective bargaining agreement covering the Maritima officers
and engineers. The second conference was held as scheduled, but
the parties were unable to come to any settlement of their
disputes. On August 24, 1954 PHILSTEAM likewise entered into
an agreement with another labor union, the Cebu Seaman's
Association, Inc. (CSA). PMOG thereupon declared a strike against
the three COMPANIES and pickets were placed at Piers 4 and 8,
North Harbor, Manila, where PHILSTEAM and MARITIMA vessels
regularly docked, respectively, as well as in front of the Madrigal
Building on the Escolta. The picketing at Pier 4 did not last long,
but that at Pier 8 and on the Escolta was carried on for weeks and
months. On January 14, 1955, while the strike and the picketing
in these two places were still in progress, the President of the
Philippines, pursuant to Section 10 of Republic Act 875, certified
the dispute to the Court of Industrial Relations, where it was
docketed as Case No. 6-IPA. On January 18, 1955 the CIR issued a
resolution ordering the "strikers to return to work immediately

upon receipt of this order, and the respondent companies to


readmit them". The following day, PMOG filed a manifestation
expressing its willingness to abide by said resolution and
requesting that "three bailiffs accompany the three groups of
members to their respective companies" and that the "members
of the petitioner . . . in the provinces . . . be given ten (10) days
from date to report to duty to their respective companies."
However, by virtue of the injunction issued by this Court1 the
return-to-work order was not enforced.
Subsequently, the following formal complaints involving
unfair labor practices were docketed with the CIR, to wit:
(1) Case No. 617-ULP filed on February 25, 1955 by
PMOG against MARITIMA and MOAP;
(2) Case No. 618-ULP filed on February 25, 1955 by
PMOG against PHILSTEAM and CSA;
(3) Case No. 646-ULP filed on March 29, 1955 by PMOG
against MADRIGAL;
(4) Case No. 672-ULP filed on April 30, 1955 by MOAP
against PMOG;
(5) Case No. 1002-ULP filed on July 6. 1956 by PHILSTEAM against PMOG.
All the aforementioned cases were heard separately, but
because the issue in Case No. 6-IPA, which is whether or not the
PMOG strike was legal, was intertwined with the questions raised
in the unfair labor practice cases, the CIR rendered a single
decision, with the following findings:
(1) Case No. 617-ULP:
Considering the respective acts and conducts of
Maritima and PMOG from the time the latter first sought
to have a bargaining conference with the former up to
the date of the second and last conference, the Court is
convinced, and so holds that Maritima had not refused
to bargain collectively with PMOG.
One of the charges herein states that Maritima had
refused to reinstate the strikers when they offered to
return to work unconditionally. As will be seen from our
discussion in Case No. 6-IPA of the issue as to whether
the company had discriminatorily denied reinstatement
to the strikers after the termination of the PMOG strike,
this charge has neither factual nor legal basis. As
regards the other charges herein the Court finds, upon
the entire record of the case, that none of them has been
substantiated either, and that Maritima, had not
engaged in any kind of unfair labor practices.
(2) Case No. 618-ULP:
We find that by initiating and conducting the
above interrogation and investigation to determine
whether its employees had authorized PMOG to act as
their bargaining agent, Philsteam had interfered with,
restrained and coerced employees in the exercise of
their rights to self-organization.
xxx
xxx
xxx
We find that by their acts and omission, Philsteam
had tried to discourage Feliciano from remaining as
member of the PMOG and to encourage him to affiliate
with CSA and had, thereby, restrained, coerced and
interfered with employees in the exercise of their right
to self-organization.
xxx
xxx
xxx
We find, and so hold, that this employer had not
refused to bargain collectively with a representative of
its employees within the meaning of Section 4(a) (6) of
the Act.
xxx
xxx
xxx
Upon the entire record of the case, we find that,
notwithstanding the fact that Philsteam had committed
certain unfair labor practices hereinbefore mentioned,
the charge that CSA is a company union or employer-

dominated has not been established by substantial


evidence.
(3) Case No. 646-ULP:
And since, as indicated by the evidence, no deck
officer or engineer had volunteered to inform his
employer that he was or was not a member of any labor
organization, we are convinced, and so find, that after
being requested to bargain collectively with PMOG,
Madrigal, one way or another, and by the use of the
letters for "union members" and "non-union members",
had unwittingly interrogated its employees, especially
the above PMOG witnesses, to ascertain whether they
were members of PMOG or had authorized it to
represent them. In a way, it could be claimed and the
Court so finds that Madrigal interfered with the right of
its employees to self-organization guaranteed by the
Act.
xxx
xxx
xxx
But when, as in this case, the contracts were
individually initiated and executed not through the
union and while PMOG is still claiming to be the
bargaining representative of its employees, we find that
this act of Madrigal and/or its agent has left open for
doubts, as the court does, that it had further interfered
with its employees' right to self-organization.
xxx
xxx
xxx
Upon the record of this case, we find that Madrigal
had not refused to bargain collectively with PMOG in
contemplation of law.
(4) Case No. 672-ULP:
Upon the entire record of this case, the Court finds
that the charge against PMOG has not been proved by
substantial evidence.
(5) Case No. 1002-ULP:
Upon the entire record of this case, the Court finds
that the charge against PMOG has not been proved by
substantial evidence.
(6) Case No. 6-IPA:
Strike against Madrigal:
It appearing that the Madrigal deck officers and
engineers who struck on August 24, 1954, had
justifiable reason for their action, and considering that
there is no evidence of record showing that Madrigal's
interests has been injured or prejudiced by any of the
unlawful acts imputed to PMOC men, the Court is of the
opinion and concludes that the strike on the whole
against this employer was proper and legal.
Strike Against Philsteam:
Upon the entire record of the case, the Court, finds
and so holds, that the strike against Philsteam was not
only justified but properly and lawfully carried out.
Strike Against Maritima:
It having been declared against Maritima for no
cause or purpose and unlawful means having been
resorted to by some strikers and picketers in the course
of the prosecution thereof at Pier 8 for which the
striking labor organization has been found responsible,
and considering further that, Maritima can not be held
liable for the death of the late Modesto Rodriguez, the
Court finds, and so holds, that the PMOG strike against
this employer was illegal from its inception.
In view thereof, the CIR in the dispositive portion of the
decision ordered:
1. Madrigal Shipping Company, its agents, successors
and assigns, to cease and desist from investigating their
employees to ascertain whether they are members of
the Philippine Marine Officers Guild or any other labor
organization or have authorized it or any other labor

organization to represent them for the purpose of


collective bargaining and, in any manner, interfering
with, restraining, or coercing such employees in the
exercise of their rights guaranteed in Section 3 of the
Act; and offer all of their striking employees immediate
and full reinstatement to their former or substantially
equivalent positions, without back salaries and without
prejudice to their seniority or other rights and
privileges, unless they have found substantially
equivalent employment elsewhere during the pendency
of this case;
2. Philippine Steamship Navigation Company, its agents,
successors and assigns, to cease and desist from
interrogating and investigating their employees to
determine whether they have authorized Philippine
Marine Officers GuiId or any other labor organization to
represent them for the purpose of collective bargaining,
discouraging or trying to discourage any of such
employees from remaining as a member of Philippine
Marine Officers Guild or any other labor organization,
and encouraging or trying to encourage any of such
employees to join Cebu Seamen's Association or any
other labor organization, and, in any manner,
interfering with, restraining or coercing their
employees in the exercise of their right to selforganization and other rights guaranteed in Section 3 of
this Act; and offer all of their striking employees
immediate and full reinstatement to their former or
substantially equivalent positions, without back
salaries, rights and privileges, unless they have found
substantially equivalent employment elsewhere during
the pendency of this case;
3. Compaia Maritima, its agents, successors and
assigns, to reinstate immediately upon their application,
all of their striking employees, except those with
pending and/or decided criminal cases connected with
or related to the strike or picket whether the decision is
stayed or on appeal, to their former or substantially
equivalent positions, without back salaries, unless they
have found substantial equivalent employment
elsewhere during the pendency of this case.
To facilitate the return and avoid confusion in the
Companies, the strikers concerned are given sixty (60)
days to present themselves for work.
All the parties except intervenor Cebu Seamen's Association
moved to reconsider the decision of the trial court. The
resolution penned by Judge Arsenio Martinez on May 18, 1962,
ruled thus: "All motions denied." But insofar as the case of
MARITIMA was concerned, three Judges (Villanueva, Tabigne and
Bugayong) filed separate opinions, each concurring in the
findings of fact made in the decision but dissenting from the
dispositive portion thereof which ordered reinstatement of the
strikers. Thereafter PMOG filed the instant petition for review
by certiorari.
In this connection, it is to be noted that PHILSTEAM also
appealed from the decision and resolution en banc in Case No. 6IPA, as well as in Case No. 618-ULP and Case No. 1002-ULP, but
this Court affirmed the decision and resolution appealed from
without, however, passing upon the question of back wages
inasmuch as the same was not at issue in the appeal.2
PMOG advances the following propositions in its petition,
stating that the first two (2) apply to all the COMPANIES and the
last three (3) to MARITIMA only, to wit:
1. Terms and Conditions of Work
In cases certified by the President of the
Philippines as labor disputes in industries
indispensable to the national interest, it is the duty of
the Court of Industrial Relations to fix the terms and

conditions of work through compulsory arbitration and


not leave the same to the parties through free collective
bargaining.
2. Back Wages
It is a dangerous precedent to disallow back wages
to workers who were refused reinstatement when they
unconditionally offered to return to work after they had
abandoned their legal strike.
3. Unfair Labor Practices
a. An employer asking a union, which desires to bargain
collectively, to prove its majority when said employer
would not and could not bargain is an unfair labor
practice.
b. The killing of the head of the picketers by the Chief of
the company's security guard is the worst form of
interference.
c. Refusal to reinstate and employ the employees who
have abandoned their strike and who have offered to
return to work unconditionally is an unfair labor
practice.
4. Legality of Means in a strike
In this jurisdiction, should the Supreme Court
adopt the viewpoint that labor violence is a special
category of unlawfulness, to be suffered (except in
extreme cases), and to be overlooked in favor of efforts
at settling the underlying controversy giving rise to
violence?
5. Reinstatement of Strikers
Illegality of a strike does not ipso facto deprive a
striker of reinstatement if he is not personally guilty of
any illegal act.
As regards the first issue, the petitioner in its brief
maintains in effect that the CIR tried to solve the labor dispute by
mediation during the preliminary conferences, and that when it
failed to find a solution to the dispute the said Court decided to
proceed with it as a compulsory arbitration case. The following
statement of the Court is cited:
THE COURT:
All right, there being no possibility of settling the
case amicably, let us go to the merits of the case.
Now, according to the pleadings here the question
of the legality or illegality of the strike should be given
preference. The court is of the opinion that the said
question of the legality or illegality of the strike should
be heard first.
(p. 7, t.s.n., hearing of March 28, 1955, before Judge
Modesto Castillo).1wph1.t
The petitioner contends that it was error for the CIR not to
fix the terms and conditions of employment after having found no
solution to the dispute, citing Section 10 of Republic Act 875,
which reads:
Sec. 10. Labor Disputes in Industries Indispensable
to the National Interest. When in the opinion of the
President of the Philippines there exists a labor dispute
in an industry indispensable to the national interest and
when such labor dispute is certified by the President to
the Court of Industrial Relations, said Court may cause
to be issued a restraining order forbidding the
employees to strike or the employer to lockout the
employees, pending an investigation by the Court, and if
no other solution to the dispute is found, the Court may
issue an order fixing the terms and conditions of
employment.
The contention of the petitioner that the CIR failed to find a
solution to the dispute is not true. The fact is that after
ascertaining that the question of majority representation had
been the cause of misunderstanding between PMOG and the
COMPANIES and after correctly analyzing the absurdity of the

whole set-up if it should fix the terms and conditions of


employment before resolving the question of majority
representation, the CIR enjoined the parties to consider holding a
certification election. The proposed solution thus found by the
CIR cannot be questioned.
When a case is certified to the CIR by the President
of the Philippines pursuant to Section 10 of Republic Act
875, the CIR is granted authority to find a solution to the
industrial dispute; and the solution which the CIR has
found under the authority of presidential certification
and conformable thereto cannot be questioned. (Radio
Operators' Association of the Philippines vs. Philippine
Marine Radio Officers Association, et al., L-10112, Nov.
29, 1957, 54 O.G. 3218; Feati University vs. Bautista, L21278, L-21462, L-21500, Dec. 27, 1966).
Regarding the second issue, the petitioner contends that it
was an abuse of discretion to disallow back wages to workers
who abandoned their legal strike but were refused reinstatement
in spite of their unconditional offer to return to work. This
contention has for its premises: (1) that the strike was legal; (2)
that there was an unconditional offer to return to work, and (3)
that the strikers were refused reinstatement. Indeed, if all these
circumstances concurred, the strikers would be entitled to
backwages.
Now it is clear from the statement of the rule that
those who strike voluntarily even if in protest of
unfair labor practice are entitled to backpay only
When the strikers abandon the strike and apply for
reinstatement despite the unfair labor practice and the
employer either refuses to reinstate them or imposes
upon their reinstatement new conditions that constitute
unfair labor practices.
(Cromwell Commercial Employees & Laborers
Union (PTUC), vs Court of Industrial Relations and
Cromwell Commercial Co., Inc., G.R. No. L-19778, Feb.
26, 1965).
However, the CIR found that "the companies are not to
blame for their failure to rehire the strikers after the issuance of
the Court's back-to-work order." Said the Court:
. . . it will be recalled that the disputes in the case at
bar reached the Court through presidential certification
on January 14, 1955. The record shows that three days
later, or on January 17, 1955, to be exact, the strikers
met and after some discussion among themselves
unanimously agreed and resolved to terminate the
strike "within two weeks whether or not an order to
return is issued by the Court." On the following day the
Court "without prejudice to the hearing and disposition
in the usual manner of the demands and of whatever
issues that might arise," issued a resolution, ordering
the "strikers to return to work immediately upon
receipt of this order, and the respondent companies to
readmit them." On January 19, 1955, PMOG filed a
manifestation, expressing its willingness "to abide by
said resolution" and requesting that "three bailiffs
accompany the three groups of members to their
respective companies" and that the members of the
petitioner . . . in the provinces . . . be given ten (10) days
from date to report to duty to their respective
companies.' On the same day, the Court issued a
supplementary resolution granting PMOG's request and
directing the bailiffs "to be at the premises of the
respondents until the strikers shall have reported not
later than January 28, 1955, at four o'clock in the
afternoon." In the presence of the bailiffs, all the
available strikers reported back to the Companies and
the latter directed them to proceed to their respective
vessels. In some instances, the replacements who were

hired during the strike refused to relinquish their posts


in favor of the returning strikers. In others, the ship
masters did not accept the strikers because the strikers
had no embarkation orders. Because of these
difficulties, PMOG twice moved for enforcement of the
resolutions through the assistance of law-enforcing
agencies and other government authorities, including
customs officials and the Philippine Constabulary.
Those motions were granted by the Court in two orders
issued on February 16 and 19, 1955. On February 23,
1955, Maritima and Philsteam filed a joint
manifestation, advising the Court that although the
strikers who reported back to work had been
readmitted and were already "on board the vessels for
the last few days . . . same cannot depart because the old
officers and engineers, who remained in their posts
when the strike was declared would not sail with the
strikers so that the said vessels are now tied up," and
praying that "if there is anything more that they can
possibly and legally do in compliance with the said
order, . . . they be duly advised for their guidance." On
February 24, 1955, CSA and MOAP, in separate petition
filed with the Supreme Court, sought an injunction to
restrain the enforcement of the above back-to-work
resolution and supplementary resolutions and order.
On the same day, the high tribunal issued a writ of
preliminary injunction prayed for. On March 25, 1955,
the Supreme Court, after hearing all the parties
concerned, including the Companies and PMOG
declared this injunction permanent. . . .
Accordingly, the CIR concluded that "none of the companies
had discriminatorily rejected their application for
reemployment." Such findings being upon a question of fact, the
same cannot be reversed herein because they are supported by
substantial evidence. On this score alone, the claim for back
wages has to be denied; hence, the CIR did not commit any abuse
of discretion in this regard.
With the resolution of the first two issues raised by
petitioner MADRIGAL'S motion to dismiss, the appeal need no
longer be considered. 1wph1.t
The third issue raised by the petitioner pertains to three (3)
alleged unfair labor practices committed by MARITIMA, which
will be discussed hereunder in the order they are listed in the
petition.
a. An employer asking a union, which desires to
bargain collectively, to prove its majority when said
employer would not and could not bargain is an unfair
labor practice.
Petitioner maintains that it was an unfair labor practice for
MARITIMA, after having concluded an agreement with MOAP on
August 16, 1954, just one day before the scheduled second
conciliation conference, to ask PMOG to prove its majority
representation notwithstanding the fact that MARITIMA could no
longer validly enter into a collective bargaining contract with it.
The contention of petitioner has no factual basis. The
testimony of Atty. Dinglasan, which is quoted by petitioner in its
brief, does not show that MARITIMA asked PMOG to prove its
majority representation during the conference on August 17,
1954. The testimony is as follows:
THE COURT
continuing
Q. You were present in that conference had on
August 17?
THE WITNESS
I think, I was.
THE COURT
Do you know the subject matter taken up in
that last conference?

THE WITNESS
We have the transcript of stenographic notes
of that conference.
THE COURT
Were the demands of the Philippine Marine
Officers' Guild ever taken up in that
conference?
THE WITNESS
I think we did not take up the discussion of the
demands because we were threshing out the
legal points of majority representation.
THE COURT
So, in that last conference of August 17, the
principal subject-matter taken up was the
majority representation, was it?
THE WITNESS
I think the August 17 conference was a
continuation of the July 30th conference
(pp. 90-91, t.s.n. Jan. 10, 1956, Dinglasan
testifying.)
Indeed there is no finding in the decision that MARITIMA
asked PMOG to prove its majority representation during that
conference. The decision merely states the following:
But the best evidence of PMOG's true position is to
be found in what Tan stated in the second conference.
When asked by the conciliator whether the PMOG was
willing to submit to a certification election, Tan
answered: "No comment". It should be added that Tan
also manifested that PMOG would institute a
certification case with this Court. But the record shows
that no such case was ever filed by this union. (pp. 8687 of the Decision of the Trial Court.)
In view thereof, the contention of petitioner on this point
cannot be sustained.
b. The killing of the head of the picketers by the
chief of the company's security guard is the worst form
of interference.
Again, the allegation of the petitioner is devoid of factual
and legal basis. The reference is to the fatal stabbing of Modesto
Rodriguez, a MARITIMA employee striker, allegedly by Andres
Alarcon, MARITIMA chief security guard. Alarcon was prosecuted
in the Court of First Instance of Manila and was found guilty of
the crime of homicide. However, on appeal to the Court of
Appeals he was acquitted. The appellate court found:
That the slaying of Modesto Rodriguez was
manifestly committed without the concurrence of the
will of Alarcon as it has not been proved that he
participated or agreed with the criminal design of the
actual killer. As has been heretofore stated, the
presence of Alarcon in the scene of the commotion was
for the purpose of performing his duty as security guard
of the Compaia Maritima, and not to kill or harm
anybody. (People vs. Alarcon, 61 O.G. No. 10, p. 1380.)
Accordingly, it cannot be said that in this particular
connection MARITIMA interfered with the freedom of the
strikers to pursue union activities.
c. Refusal to reinstate and employ the employees
who have abandoned their strike and who have offered
to return to work unconditionally is an unfair labor
practice.
This proposition has no factual basis either. As heretofore
discussed, the COMPANIES, which include MARITIMA, were not
to blame for their failure to reemploy the strikers in view of the
injunction issued by this Court, restraining the CIR from
enforcing its return-to-work order upon which the offer to return
to work of the strikers was predicated. Furthermore, there is no
showing that the strikers renewed their offer to work after the
issuance of said injunction. It cannot be alleged, therefore, that

MARITIMA refused to reinstate and employ the strikers who


have abandoned their strike.
d. Under the fourth issue, petitioner poses the
following question:
In this jurisdiction should the Supreme Court adopt the
viewpoint that labor violence is a special category of
unlawfulness, to be suffered (except in extreme cases), and to be
overlooked in favor of efforts at settling the underlying
controversy giving rise to violence?
In raising this question the petitioner would like the Court
to overlook the following acts of violence in determining the
legality or illegality of the strike, to wit:
a. Physical injuries and malicious mischief committed
by Capt. Yenko (pp. 131-132, Decision of Trial Court.)
b. Assault by Villaflor, who was sentenced to suffer 4
months and one day of arresto mayor (pp. 132-133,
Decision of Trial Court.)
c. Breaking of truck side and windows by Labrador and
Yenko, who were, as a consequence, charged with
coercion before the Municipal Court. (pp. 133-134.
Decision of Trial Court.)
d. Picketers threw empty bottles at Ramirez, a truck
driver, and inflicted injuries on his right arm.
Consequently, Ricardo Antonio was charged with slight
physical injuries before the Municipal Court of Manila.
(p. 134, Decision of Trial Court.)
e. Free-for-all fight in the pier during which Lizardo, a
picketer, drew his pistol and fired shots in the air (pp.
134-135, Decision of Trial Court.)
The question has obvious reference to the following citation
from Ludwig Teller of the New York Bar:
But the viewpoint is gaining more ground, both in
legislation and in law enforcement, that labor violence
is a special category in unlawfulness, to be suffered
except in extreme cases, and to be overlooked in favor
of efforts at settling the underlying controversy giving
rise to the violence. The Supreme Court of the United
States has held, for example, that an employer subject to
the Railway Act may not secure an injunction
restraining violence where he refuses to submit the
labor controversy to arbitration. The National Labor
Relations Board has often disregarded unlawful activity
committed by employees and labor unions, and has
protected their rights under the Wagner Act despite
such unlawful activity. Local police authorities are
found to be increasingly reluctant to intervene in cases
of labor unruliness. (Teller, Labor Disputes and
Collective Bargaining, April 1947, Cummulative
Supplement, p. 101)
In this jurisdiction, however, acts of violence in carrying on
a strike are not so easily overlooked in the determination of its
legality or illegality. To overlook them "would encourage abuses
and terrorism and would subvert the very purpose of the law
which provides for arbitration and peaceful settlement of
disputes." (Liberal Labor Union vs. Phil. Can Co., 91 Phil. 78). This
Court has repeatedly frowned upon the use of unlawful means in
carrying out a strike.
In cases not falling within the prohibition against
strikes, the legality or illegality of a strike depends first,
upon the purpose for which it is maintained, and,
second, upon the means employed in carrying it on.
Thus, if the purpose which the laborers intend to
accomplish by means of a strike is trivial, unreasonable,
or unjust (as in the case of National Labor Union vs.
Philippine Match Co., 70 Phil. 300), or if in carrying on
the strike the strikers should commit violence or cause
injuries to persons or damage to property (as in the
case of National Labor Union, Inc. vs. Court of Industrial

Relations, et al., 68 Phil. 732) the strike, although not


prohibited by injunction, may be declared by the court
illegal with adverse consequences to the strikers.
(Luzon Marine Dept. Union vs. Roldan, 86 Phil. 507).
Here we find that the majority opinion predicated
the illegality of the strike not merely on the
infringement of said agreement by the union but on the
proven fact that, in carrying out the strike, coercion,
force, intimidation, violation (sic) with physical injuries,
sabotage and the use of unnecessary and obscene
language or epithets were committed by top officials
and members of the union in an attempt to prevent
arbitration and peaceful settlement of labor disputes. As
aptly said in one case: "A labor philosophy based upon
the theory that might is right, in disregard of law and
order, is an unfortunate philosophy of regression whose
sole consequences can be disorder, class hatred and
intolerance." (Grater City Masters Plumbers Association
vs. Kahme (1939 y N.Y.S (2nd 589)) (Liberal Labor
Union vs. Phil. Can Co., supra)
The above view was reiterated by this Court in United
Seamen's Union of the Philippines vs. Davao Shipowners
Association (G.R. No. L-18778-79, August 31, 1967).
The CIR, in finding the PMOG responsible for the
aforementioned acts of violence, said:
As some of the above offenses were perpetrated by
the picketers not only in Yenko's presence but in direct
cooperation with him and under his leadership PMOG
can not seriously pretend innocence and avoid
complicity in or liability for their acts and conduct and
the consequent effects thereof upon Maritima's
property. True, Section 9(c) of the Act has discarded the
principle of "vicarious liability" under which a striking
labor organization is necessarily held responsible for
the acts of even a single striker. That the law, as it is
now, requires in order to hold an association or
organization liable for the unlawful acts of individual
officers, members, or agents, "proof of actual
participation in, or actual authorization of such acts or
of ratifying of such acts after actual knowledge thereof."
It is not essential that two or three of these elements
should concur. One suffices. In the case at bar, the
unlawful acts, as already pointed out, were done in the
presence of Yenko as well as with his cooperation and
under his direction, and, hence, conclusive of the actual
participation and ratification thereof of PMOG.
Moreover, there is nothing in the record to show that
this union disauthorized or objected to Yenko's acts and
those of the other picketers despite the fact that such
acts had undoubtedly come to its knowledge or that of
its officers and members. (p. 137-138 of the Decision of
Trial Court)
Under the circumstances, the CIR correctly held that the
PMOG strike against MARITIMA was illegal.
The last proposition raised by the petitioner is that the
illegality of a strike does not ipso facto deprive a striker of the
right to reinstatement if he is not personally guilty of any illegal
act.
It bears repeating here that according to the CIR the strike
against MARITIMA was "for no cause or purpose" and hence was
unjustified, and unlawful means was resorted to by some strikers
and picketers in the prosecution of the strike. On the first point
the court categorically found that MARITIMA "had not refused to
bargain collectively with PMOG" and "had not engaged in any
kind of unfair labor practice." On the second point the specific
acts of illegality have been mentioned in the earlier part of this
decision. In view of such findings three Judges of the CIR
(Villanueva, Tabigne and Bugayong), as hereinbefore stated,

upon motion for reconsideration, voted for the reversal of the


decision penned by Judge Martinez insofar as it ordered
MARITIMA to reinstate the strikers.
Judge Martinez himself in the decision found that PMOG,
through its leaders, not only had knowledge of the acts of
violence committed by some of the strikers but either
participated in such commission or ratified the same. This Court
has held in a number of cases that if a strike is unjustified, as
when it is declared for trivial, unjust or unreasonable purpose,
the employer may not be compelled to reinstate the strikers to
their employment. (Almeda, et al. vs. CIR, et al., 97 Phil. 306,
citing National Labor Union vs. Phil. Match Factory Co., 70 Phil.
300; and Luzon Marine Department Union vs. Arsenio Roldan, et
al., 47 O.G. Supp. No. 12, p. 136). This is not of course an inflexible
rule, and its application must depend to a considerable degree
upon the circumstances. InUnited Seamen's Union vs. Davao
Shipowners Association (Nos. L-18778 and L-18779, August 31,
1967) we affirmed the decision of the Industrial Court dismissing
the employees who were active participants in a strike which was
held to be illegal and unjustified. In the present case, where the
strike against MARITIMA was not only unjustified but also
carried on illegally, we find no justifiable ground to disagree with
the majority in the court below who voted against the
reinstatement of the strikers.
With the foregoing modification, the decision of the lower
Court of December 23, 1961 is affirmed. Costs against petitioner.
Legend International Resorts Limited v. Kilusang Manggagawa ng
Legenda, G.R. No. 169754, February 23, 2011
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the September 18,
2003 Decision of the Court of Appeals in CA-G.R. SP No. 72848 which
found no grave abuse of discretion on the part of the Office of the
Secretary of the Department of Labor and Employment (DOLE) which
ruled in favor of Kilusang Manggagawa ng Legenda (KML). Also assailed
is the September 14, 2005 Resolution denying petitioners motion for
reconsideration.
Factual Antecedents

Ruling of the Med-Arbiter


On September 20, 2001, the Med-Arbiter[4] rendered
judgment[5] dismissing for lack of merit the petition for certification
election. The Med-Arbiter found that indeed there were several
supervisory employees in KMLs membership. Since Article 245 of the
Labor Code expressly prohibits supervisory employees from joining the
union of rank and file employees, the Med-Arbiter concluded that KML is
not a legitimate labor organization. KML was also found to have
fraudulently procured its registration certificate by misrepresenting that
70 employees were among those who attended its organizational
meeting on April 5, 2001 when in fact they were either at work or
elsewhere.
KML thus appealed to the Office of the Secretary of the DOLE.
Ruling of the Office of the Secretary of DOLE
On May 22, 2002, the Office of the Secretary of DOLE rendered its
Decision[6] granting KMLs appeal thereby reversing and setting aside the
Med-Arbiters Decision. The Office of the Secretary of DOLE held that
KMLs legitimacy as a union could not be collaterally attacked, citing
Section 5,[7] Rule V of Department Order No. 9, series of 1997.
The Office of the Secretary of DOLE also opined that Article 245 of
the Labor Code merely provides for the prohibition on managerial
employees to form or join a union and the ineligibility of supervisors to
join the union of the rank and file employees and vice versa. It declared
that any violation of the provision of Article 245 does not ipso
factorender the existence of the labor organization illegal. Moreover, it
held that Section 11, paragraph II of Rule XI which provides for the
grounds for dismissal of a petition for certification election does not
include mixed membership in one union.
The dispositive portion of the Office of the Secretary of DOLEs
Decision reads:
WHEREFORE, the appeal is hereby
GRANTED and the order of the Med-Arbiter dated
20 September 2001 is REVERSED and SET ASIDE.

On June 6, 2001, KML filed with the Med-Arbitration Unit of the


DOLE, San Fernando, Pampanga, a Petition for Certification
Election[1] docketed as Case No. RO300-0106-RU-001. KML alleged that
it is a legitimate labor organization of the rank and file employees of
Legend International Resorts Limited (LEGEND). KML claimed that it
was issued its Certificate of Registration No. RO300-0105-UR-002 by the
DOLE on May 18, 2001.

Accordingly, let the entire record of the case


be remanded to the regional office of origin for the
immediate conduct of the certification election,
subject to the usual pre-election conference, among
the rank and file employees of LEGEND
INTERNATIONAL RESORTS LIMITED with the
following choices:

LEGEND moved to dismiss[2] the petition alleging that KML is not a


legitimate labor organization because its membership is a mixture of
rank and file and supervisory employees in violation of Article 245 of the
Labor Code. LEGEND also claimed that KML committed acts of fraud and
misrepresentation when it made it appear that certain employees
attended its general membership meeting on April 5, 2001 when in
reality some of them were either at work; have already resigned as of
March 2001; or were abroad.

1.
KILUSANG MANGGAGAWA NG
LEGENDA (KML-INDEPENDENT); and

In its Comment,[3] KML argued that even if 41 of its members are


indeed supervisory employees and therefore excluded from its
membership, the certification election could still proceed because the
required number of the total rank and file employees necessary for
certification purposes is still sustained. KML also claimed that its
legitimacy as a labor union could not be collaterally attacked in the
certification election proceedings but only through a separate and
independent action for cancellation of union registration. Finally, as to
the alleged acts of misrepresentation, KML asserted that LEGEND failed
to substantiate its claim.

2.

NO UNION.

Pursuant to Rule XI, Section II.1 of D.O.


No. 9, the employer is hereby directed to submit to
the office of origin, within ten days from receipt of
the decision, the certified list of employees in the
bargaining unit for the last three (3) months prior to
the issuance of this decision.
SO DECIDED.[8]
LEGEND filed its Motion for Reconsideration[9] reiterating its
earlier arguments. It also alleged that on August 24, 2001, it filed a
Petition[10] for Cancellation of Union Registration of KML docketed as
Case No. RO300-0108-CP-001 which was granted[11] by the DOLE

Regional Office No. III of San Fernando, Pampanga in its Decision[12]dated


November 7, 2001.

Hence, this Petition for Review on Certiorari raising the lone


assignment of error, viz:

In a Resolution[13] dated August 20, 2002, the Office of the


Secretary of DOLE denied LEGENDs motion for reconsideration. It
opined that Section 11, paragraph II(a), Rule XI of Department Order No.
9 requires a final order of cancellation before a petition for certification
election may be dismissed on the ground of lack of legal
personality. Besides, it noted that the November 7, 2001 Decision of
DOLE Regional Office No. III of San Fernando, Pampanga in Case No.
RO300-0108-CP-001 was reversed by the Bureau of Labor Relations in a
Decision dated March 26, 2002.

WHETHER X X X THE HONORABLE COURT OF


APPEALS COMMITTED SERIOUS ERRORS IN THE
APPLICATION OF LAW IN DENYING THE
PETITIONERS PETITION FOR CERTIORARI.[20]
Petitioners Arguments

Undeterred, LEGEND filed a Petition for Certiorari[14] with the Court


of Appeals docketed as CA-G.R. SP No. 72848. LEGEND alleged that the
Office of the Secretary of DOLE gravely abused its discretion in reversing
and setting aside the Decision of the Med-Arbiter despite substantial and
overwhelming evidence against KML.

LEGEND submits that the Court of Appeals grievously erred in


ruling that the March 26, 2002 Decision denying its Petition for
Cancellation of KMLs registration has already become final and
executory. It asserts that it has seasonably filed a Petition
for Certiorari[21] before the CA docketed as CA-G.R. SP No. 72659 assailing
said Decision. In fact, on June 30, 2005, the Court of Appeals granted the
petition, reversed the March 26, 2002 Decision of the Bureau of Labor
Relations and reinstated the November 7, 2001 Decision of the DOLE
Regional Office III ordering the cancellation of KMLs registration.

For its part, KML alleged that the Decision dated March 26,
2002 of the Bureau of Labor Relations in Case No. RO300-0108-CP-001
denying LEGENDs petition for cancellation and upholding KMLs
legitimacy as a labor organization has already become final and
executory, entry of judgment having been made on August 21, 2002.[15]

Finally, LEGEND posits that the cancellation of KMLs certificate of


registration should retroact to the time of its issuance.[22] It thus claims
that the petition for certification election and all of KMLs activities
should be nullified because it has no legal personality to file the same,
much less demand collective bargaining with LEGEND.[23]

The Office of the Secretary of DOLE also filed its


Comment[16] asserting that KMLs legitimacy cannot be attacked
collaterally. Finally, the Office of the Secretary of DOLE stressed that
LEGEND has no legal personality to participate in the certification
election proceedings.

LEGEND thus prays that the September 20, 2001 Decision of the
Med-Arbiter dismissing KMLs petition for certification election be
reinstated.[24]

On September 18, 2003, the Court of Appeals rendered its


Decision[17] finding no grave abuse of discretion on the part of the Office
of the Secretary of DOLE. The appellate court held that the issue on the
legitimacy of KML as a labor organization has already been settled with
finality in Case No. RO300-0108-CP-001. The March 26, 2002 Decision
of the Bureau of Labor Relations upholding the legitimacy of KML as a
labor organization had long become final and executory for failure of
LEGEND to appeal the same. Thus, having already been settled that KML
is a legitimate labor organization, the latter could properly file a petition
for certification election. There was nothing left for the Office of the
Secretary of DOLE to do but to order the holding of such certification
election.

In its Comment filed before this Court dated March 21, 2006, KML
insists that the Decision of the Bureau of Labor Relations upholding its
legitimacy as a labor organization has already attained finality[25] hence
there was no more hindrance to the holding of a certification
election. Moreover, it claims that the instant petition has become moot
because the certification election sought to be prevented had already
been conducted.

Ruling of the Court of Appeals

The dispositive portion of the Decision reads:


WHEREFORE, in view of the foregoing,
and finding that no grave abuse of discretion
amounting to lack or excess of jurisdiction has been
committed by the Department of Labor and
Employment, the assailed May 22, 2002 Decision
and August 20, 2002 Resolution in Case No. RO300106-RU-001 are UPHELD and AFFIRMED. The
instant petition is DENIED due course and,
accordingly, DISMISSED for lack of merit.[18]
LEGEND filed a Motion for Reconsideration[19] alleging, among
others, that it has appealed to the Court of Appeals the March 26, 2002
Decision in Case No. RO300-0108-CP-001 denying its petition for
cancellation and that it is still pending resolution.
On September 14, 2005, the appellate court denied LEGENDs
motion for reconsideration.

Respondents Arguments

Our Ruling
The petition is partly meritorious.
LEGEND
has
timely
appealed
the
March
26, 2002
Decision
of
the
Bureau of
Labor
Relations
to
the
Court of
Appeals.
We cannot understand why the Court of Appeals totally
disregarded LEGENDs allegation in its Motion for Reconsideration that
the March 26, 2002 Decision of the Bureau of Labor Relations has not yet
attained finality considering that it has timely appealed the same to the
Court of Appeals and which at that time is still pending resolution. The
Court of Appeals never bothered to look into this allegation and instead
dismissed outright LEGENDs motion for reconsideration. By doing so,

the Court of Appeals in effect maintained its earlier ruling that the March
26, 2002 Decision of the Bureau of Labor Relations upholding the
legitimacy of KML as a labor organization has long become final and
executory for failure of LEGEND to appeal the same.
This is inaccurate. Records show that (in the cancellation of
registration case) LEGEND has timely filed on September 6, 2002 a
petition for certiorari[26] before the Court of Appeals which was docketed
as CA-G.R. SP No. 72659 assailing the March 26, 2002 Decision of the
Bureau of Labor Relations. In fact, KML received a copy of said petition
on September 10, 2002[27] and has filed its Comment thereto on
December 2, 2002.[28] Thus, we find it quite interesting for KML to claim
in its Comment (in the certification petition case) before this Court dated
March 21, 2006[29] that the Bureau of Labor Relations Decision in the
petition for cancellation case has already attained finality. Even in its
Memorandum[30] dated March 13, 2007 filed before us, KML is still
insisting that the Bureau of Labor Relations Decision has become final
and executory.
Our perusal of the records shows that on June 30, 2005, the
Court of Appeals rendered its Decision[31] in CA-G.R. SP No. 72659
reversing the March 26, 2002 Decision of the Bureau of Labor Relations
and reinstating the November 7, 2001 Decision of the Med-Arbiter which
canceled the certificate of registration of KML.[32] On September 30,
2005, KMLs motion for reconsideration was denied for lack of
merit.[33] On November 25, 2005, KML filed its Petition for Review
on Certiorari[34] before this Court which was docketed as G.R. No.
169972. However, the same was denied in a Resolution[35] dated
February 13, 2006 for having been filed out of time. KML moved for
reconsideration but it was denied with finality in a Resolution[36] dated
June 7, 2006. Thereafter, the said Decision canceling the certificate of
registration of KML as a labor organization became final and executory
and entry of judgment was made on July 18, 2006.[37]
The
cancellati
on
of
KMLs
certificat
e
of
registrati
on should
not
retroact
to
the
time of its
issuance.
Notwithstanding the finality of the Decision canceling the
certificate of registration of KML, we cannot subscribe to LEGENDs
proposition that the cancellation of KMLs certificate of registration
should retroact to the time of its issuance. LEGEND claims that KMLs
petition for certification election filed during the pendency of the petition
for cancellation and its demand to enter into collective bargaining
agreement with LEGEND should be dismissed due to KMLs lack of legal
personality.

x x x It is well-settled
rule that a certification
proceedings is not a litigation
in the sense that the term is
ordinarily understood, but an
investigation of a nonadversarial and fact finding
character. (Associated Labor
Unions (ALU) v. Ferrer-Calleja,
179
SCRA
127
[1989]; Philippine Telegraph
and Telephone Corporation v.
NLRC, 183
SCRA
451
[1990]. Thus, the technical
rules of evidence do not apply
if the decision to grant it
proceeds from an examination
of the sufficiency of the petition
as well as a careful look into
the arguments contained in the
position papers and other
documents.
At any rate, the
Court applies the established
rule correctly followed by the
public respondent that an
order to hold a certification
election is
proper despite
the pendency of the petition
for cancellation of the
registration certificate of the
respondent
union. The
rationale for this is that at
the time the respondent
union filed its petition, it still
had the legal personality to
perform such act absent an
order
directing
the
cancellation.[39] (Emphasis
supplied.)
In Capitol Medical Center, Inc. v. Hon. Trajano,[40] we also held
that the pendency of a petition for cancellation of union registration
does not preclude collective bargaining.[41] Citing the Secretary of Labor,
we held viz:
That there is a pending cancellation
proceedings against the respondent Union is
not a bar to set in motion the mechanics of
collective bargaining. If a certification election
may still be ordered despite the pendency of a
petition to cancel the unions registration
certificate x x x more so should the collective
bargaining process continue despite its
pendency.[42] (Emphasis supplied.)

This issue is not new or novel. In Pepsi-Cola Products


Philippines, Inc. v. Secretary of Labor,[38] we already ruled that:
Anent the issue of whether or not the
Petition to cancel/revoke registration is a
prejudicial question to the petition for certification
election, the following ruling in the case
of Association of the Court of Appeals Employees
(ACAE) v. Hon. Pura Ferrer-Calleja, x x x is in point, to
wit:

In Association of Court of Appeals Employees v. FerrerCalleja,[43] this Court was tasked to resolve the issue of whether the
certification proceedings should be suspended pending [the petitioners]
petition for the cancellation of union registration of the
UCECA[44].[45] The Court resolved the issue in the negative holding that
an order to hold a certification election is proper despite the
pendency of the petition for cancellation of the registration
certificate of the respondent union. The rationale for this is that at the

time the respondent union filed its petition, it still had the legal
personality to perform such act absent an order directing a
cancellation.[46] We reiterated this view in Samahan ng Manggagawa sa
Pacific Plastic v. Hon. Laguesma[47] where we declared that a
certification election can be conducted despite pendency of a
petition to cancel the union registration certificate. For the fact is
that at the time the respondent union filed its petition for certification, it
still had the legal personality to perform such act absent an order
directing its cancellation.[48]
Based on the foregoing jurisprudence, it is clear that a
certification election may be conducted during the pendency of the
cancellation proceedings. This is because at the time the petition for
certification was filed, the petitioning union is presumed to possess the
legal personality to file the same. There is therefore no basis for
LEGENDs assertion that the cancellation of KMLs certificate of
registration should retroact to the time of its issuance or that it effectively
nullified all of KMLs activities, including its filing of the petition for
certification election and its demand to collectively bargain.
The
legitimac
y of the
legal
personali
ty of KML
cannot be
collateral
ly
attacked
in
a
petition
for
certificati
on
election.
We agree with the ruling of the Office of the Secretary of DOLE
that the legitimacy of the legal personality of KML cannot be collaterally
attacked in a petition for certification election proceeding. This is in
consonance with our ruling in Laguna Autoparts Manufacturing
Corporation v. Office of the Secretary, Department of Labor and
Employment[49] that such legal personality may not be subject to a
collateral attack but only through a separate action instituted particularly
for the purpose of assailing it.[50] We further held therein that:
This is categorically prescribed by Section 5, Rule V
of the Implementing Rules of Book V, which states
as follows:

in this case. The pronouncement of the Labor


Relations Division Chief, that the respondent union
acquired a legal personality x x x cannot be
challenged in a petition for certification election.
The discussion of the Secretary of Labor
and Employment on this point is also enlightening,
thus:
. . . Section 5, Rule V
of D.O. 9 is instructive on the
matter. It provides that the
legal personality of a union
cannot be the subject of
collateral attack in a petition
for certification election, but
may be questioned only in an
independent petition for
cancellation
of
union
registration. This has been the
rule since NUBE v. Minister of
Labor, 110 SCRA 274
(1981). What applies in this
case is the principle that once a
union acquires a legitimate
status as a labor organization,
it continues as such until its
certificate of registration is
cancelled or revoked in an
independent
action
for
cancellation.
Equally important is
Section 11, Paragraph II, Rule
IX of D.O. 9, which provides for
the dismissal of a petition for
certification election based on
the lack of legal personality of a
labor organization only in the
following
instances:
(1)
appellant is not listed by the
Regional Office or the BLR in
its registry of legitimate labor
organizations;
or
(2)
appellants legal personality
has been revoked or cancelled
with finality. Since appellant is
listed in the registry of
legitimate labor organizations,
and its legitimacy has not been
revoked or cancelled with
finality, the granting of its
petition
for
certification
election is proper.[52]

SEC. 5.[51] Effect of


registration. The labor
organization or workers
association shall be deemed
registered and vested with
legal personality on the date of
issuance of its certificate of
registration. Such
legal
personality cannot thereafter
be subject to collateral attack
but may be questioned only in
an independent petition for
cancellation in accordance with
these Rules.

[T]he legal personality of a legitimate labor organization x x x


cannot be subject to a collateral attack. The law is very clear on this
matter. x x x The Implementing Rules stipulate that a labor organization
shall be deemed registered and vested with legal personality on the date
of issuance of its certificate of registration. Once a certificate of
registration is issued to a union, its legal personality cannot be subject to
a collateral attack. In may be questioned only in an independent petition
for cancellation in accordance with Section 5 of Rule V, Book V of the
Implementing Rules.[53]

Hence, to raise the issue of the


respondent unions legal personality is not proper

WHEREFORE, in view of the foregoing, the petition


is PARTLY GRANTED. The Decision of the Court of Appeals

dated September 18, 2003 in CA-G.R. SP No. 72848 insofar as it affirms


the May 22, 2002 Decision and August 20, 2002 Resolution of the Office
of the Secretary of Department of Labor and Employment
is AFFIRMED. The Decision of the Court of Appeals insofar as it declares
that the March 26, 2002 Decision of the Bureau of Labor Relations
in Case No. RO300-0108-CP-001 upholding that the legitimacy of KML as
a labor organization has long become final and executory for failure of
LEGEND to appeal the same, is REVERSED and SET ASIDE.
SO ORDERED.
Nelson A. Culili v. Eastern Telecommunications Philippines, Inc.,
et al. G.R. No. 165381, February 9, 2011
LEONARDO-DE CASTRO, J.:
Before Us is a petition for review on certiorari[1] of the
February 5, 2004 Decision[2] and September 13, 2004
Resolution[3] of the Court of Appeals in CA-G.R. SP No.
75001, wherein the Court of Appeals set aside the March 1, 2002
Decision[4] and September 24, 2002 Resolution[5] of the National
Labor Relations Commission (NLRC), which affirmed the Labor
Arbiters Decision[6] dated April 30, 2001.
Respondent Eastern Telecommunications Philippines,
Inc. (ETPI) is a telecommunications company engaged mainly in
the business of establishing commercial telecommunications
systems and leasing of international datalines or circuits that
pass through the international gateway facility (IGF).[7] The other
respondents are ETPIs officers: Salvador Hizon, President and
Chief Executive Officer; Emiliano Jurado, Chairman of the Board;
Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice
President.
Petitioner Nelson A. Culili (Culili) was employed by
ETPI as a Technician in its Field Operations Department on
January 27, 1981. On December 12, 1996, Culili was promoted to
Senior Technician in the Customer Premises Equipment
Management Unit of the Service Quality Department and his basic
salary was increased.[8]
As a telecommunications company and an authorized
IGF operator, ETPI was required, under Republic Act. No. 7925
and Executive Order No. 109, to establish landlines in Metro
Manila and certain provinces.[9] However, due to interconnection
problems with the Philippine Long Distance Telephone Company
(PLDT), poor subscription and cancellation of subscriptions, and
other business difficulties, ETPI was forced to halt its roll out of
one hundred twenty-nine thousand (129,000) landlines already
allocated to a number of its employees.[10]
In 1998, due to business troubles and losses, ETPI was
compelled to implement a Right-Sizing Program which consisted
of two phases: the first phase involved the reduction of ETPIs
workforce to only those employees that were necessary and
which ETPI could sustain; the second phase entailed a companywide reorganization which would result in the transfer, merger,
absorption or abolition of certain departments of ETPI.[11]
As part of the first phase, ETPI, on December 10, 1998,
offered to its employees who had rendered at least fifteen years
of service, the Special Retirement Program, which consisted of
the option to voluntarily retire at an earlier age and a retirement
package equivalent to two and a half (2) months salary for
every year of service.[12] This offer was initially rejected by the
Eastern Telecommunications Employees Union (ETEU), ETPIs
duly recognized bargaining agent, which threatened to stage a
strike. ETPI explained to ETEU the exact details of the RightSizing Program and the Special Retirement Program and after

consultations with ETEUs members, ETEU agreed to the


implementation of both programs.[13] Thus, on February 8, 1999,
ETPI re-offered the Special Retirement Program and the
corresponding retirement package to the one hundred two (102)
employees who qualified for the program.[14] Of all the
employees who qualified to avail of the program, only Culili
rejected the offer.[15]
After the successful implementation of the first phase of
the Right-Sizing Program, ETPI, on March 1, 1999 proceeded with
the second phase which necessitated the abolition, transfer and
merger of a number of ETPIs departments.[16]
Among the departments abolished was the Service
Quality Department. The functions of the Customer Premises
Equipment Management Unit, Culilis unit, were absorbed by the
Business and Consumer Accounts Department. The abolition of
the Service Quality Department rendered the specialized
functions of a Senior Technician unnecessary. As a result, Culilis
position was abolished due to redundancy and his functions were
absorbed by Andre Andrada, another employee already with the
Business and Consumer Accounts Department.[17]
On March 5, 1999, Culili discovered that his name was
omitted in ETPIs New Table of Organization. Culili, along with
three of his co-employees who were similarly situated, wrote
their union president to protest such omission.[18]
In a letter dated March 8, 1999, ETPI, through its
Assistant Vice President Stella Garcia, informed Culili of his
termination from employment effective April 8, 1999. The letter
reads:
March 8, 1999
To:
N. Culili
Thru: S. Dobbin/G. Ebue
From: AVP-HRD
----------------------------------------------------------------------------------------As you are aware, the current economic crisis
has adversely affected our operations and
undermined our earlier plans to put in place
major work programs and activities. Because
of this, we have to implement a Rightsizing
Program
in
order
to
cut
administrative/operating costs and to avoid
losses. In line with this program, your
employment with the company shall terminate
effective at the close of business hours on
April 08, 1999. However, to give you ample
time to look for other employment, provided
you have amply turned over your pending
work and settled your accountabilities, you
are no longer required to report to work
starting tomorrow. You will be considered on
paid leave until April 08, 1999.
You will likewise be paid separation pay
in compliance with legal requirements (see
attached), as well as other benefits accruing to
you under the law, and the CBA. We take this
opportunity to thank you for your services and
wish you well in your future endeavors.
(Signed)
Stella J. Garcia[19]

This letter was similar to the memo shown to Culili by


the union president weeks before Culili was dismissed. The
memo was dated December 7, 1998, and was advising him of his
dismissal effective January 4, 1999 due to the Right-Sizing
Program ETPI was going to implement to cut costs and avoid
losses.[20]
Culili alleged that neither he nor the Department of
Labor and Employment (DOLE) were formally notified of his
termination. Culili claimed that he only found out about it
sometime in March 1999 when Vice President Virgilio Garcia
handed him a copy of the March 8, 1999 letter, after he was
barred from entering ETPIs premises by its armed security
personnel when he tried to report for work.[21] Culili believed
that ETPI had already decided to dismiss him even prior to the
March 8, 1999 letter as evidenced by the December 7, 1998
version of that letter. Moreover, Culili asserted that ETPI had
contracted out the services he used to perform to a labor-only
contractor which not only proved that his functions had not
become unnecessary, but which also violated their Collective
Bargaining Agreement (CBA) and the Labor Code. Aside from
these, Culili also alleged that he was discriminated against when
ETPI offered some of his co-employees an additional benefit in
the form of motorcycles to induce them to avail of the Special
Retirement Program, while he was not.[22]
ETPI denied singling Culili out for termination. ETPI
claimed that while it is true that they offered the Special
Retirement Package to reduce their workforce to a sustainable
level, this was only the first phase of the Right-Sizing Program to
which ETEU agreed. The second phase intended to simplify and
streamline the functions of the departments and employees of
ETPI. The abolition of Culilis department - the Service Quality
Department - and the absorption of its functions by the Business
and Consumer Accounts Department were in line with the
programs goals as the Business and Consumer Accounts
Department was more economical and versatile and it was
flexible enough to handle the limited functions of the Service
Quality Department. ETPI averred that since Culili did not avail
of the Special Retirement Program and his position was
subsequently declared redundant, it had no choice but to
terminate Culili.[23] Culili, however, continued to report for
work. ETPI said that because there was no more work for Culili, it
was constrained to serve a final notice of termination [24] to Culili,
which Culili ignored. ETPI alleged that Culili informed his
superiors that he would agree to his termination if ETPI would
give him certain special work tools in addition to the benefits he
was already offered. ETPI claimed that Culilis counter-offer was
unacceptable as the work tools Culili wanted were worth almost
a million pesos. Thus, on March 26, 1999, ETPI tendered to Culili
his final pay check of Eight Hundred Fifty-Nine Thousand ThirtyThree and 99/100 Pesos (P859,033.99) consisting of his basic
salary, leaves, 13th month pay and separation pay.[25] ETPI
claimed that Culili refused to accept his termination and
continued to report for work.[26] ETPI denied hiring outside
contractors to perform Culilis work and denied offering added
incentives to its employees to induce them to retire early. ETPI
also explained that the December 7, 1998 letter was never given
to Culili in an official capacity. ETPI claimed that it really needed
to reduce its workforce at that time and that it had to prepare
several letters in advance in the event that none of the employees
avail of the Special Retirement Program. However, ETPI decided
to wait for a favorable response from its employees regarding the
Special Retirement Program instead of terminating them.[27]

On February 8, 2000, Culili filed a complaint against


ETPI and its officers for illegal dismissal, unfair labor practice,
and money claims before the Labor Arbiter.
On April 30, 2001, the Labor Arbiter rendered a
decision finding ETPI guilty of illegal dismissal and unfair labor
practice, to wit:
WHEREFORE, decision is hereby
rendered declaring the dismissal of
complainant Nelson A. Culili illegal for having
been made through an arbitrary and malicious
declaration of redundancy of his position and
for having been done without due process for
failure of the respondent to give complainant
and the DOLE written notice of such
termination prior to the effectivity thereof.
In view of the foregoing, respondents
Eastern Telecommunications Philippines and
the individual respondents are hereby found
guilty of unfair labor practice/discrimination
and illegal dismissal and ordered to pay
complainant backwages and such other
benefits due him if he were not illegally
dismissed, including moral and exemplary
damages
and
10%
attorneys
fees. Complainant likewise is to be reinstated
to his former position or to a substantially
equivalent position in accordance with the
pertinent provisions of the Labor Code as
interpreted in the case of Pioneer texturing
[Pioneer Texturizing Corp. v. National Labor
Relations Commission], G.R. No. 11865[1], 16
October 1997. Hence, Complainant must be
paid the total amount of TWO MILLION SEVEN
HUNDRED FORTY[-]FOUR THOUSAND THREE
[HUNDRED] SEVENTY[-] NINE and 41/100
(P2,744,379.41), computed as follows:
I. Backwages (from 16 March 1999
to 16 March 2001)
a.

Basic Salary (P29,030


x
24
mos.) P696,720.96

b.

13th Month
Pay
(P692,720.96/12) 58
,060.88

c.

Leave Benefits
1.

Vacation
Leave
(30
days/annum)
P1,116.54 x
60
days
66,
992.40

2.

Sick
Leave
(30
days/annum)
P1,116.54 x
60
days
66,
992.40

3.

d.

Birthday
Leave
(1
day/annum)
P1,116.54
x 2
days
2,
233.08

Rice and Meal Subsidy


16 March 31 July
1999
(P1,750 x 4.5 mos.
= P7,875.00)
01 August 1991 31
July 2000
(P1,850 x 12 mos.
= P22,200.00)
01 August 2000 16
March 2001
(P1,950 x 7.5 mos.
= P14,625.00) 44,70
0.00

e.

Uniform Allowance
P7,000/annum x 2
years
__14,000.
00
P949,699.72

II. Damages
a.
b.
III. Attorneys
award)
GRAND
TOTAL:
379.41[28]

MoralP500,000
.00
ExemplaryP250,00
0.00
Fees
(10%
__94,969.97

of

P2,744,

The Labor Arbiter believed Culilis claim that ETPI


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

WHEREFORE, the Decision appealed


from is AFFIRMED granting complainant the
money claims prayed for including full
backwages, allowances and other benefits or
their monetary equivalent computed from the
time of his illegal dismissal on 16 March 1999
up to his actual reinstatement except the
award of moral and exemplary damages which
is modified to P200,000.00 for moral
and P100,000.00 for exemplary damages. For
this purpose, this case is REMANDED to the
Labor Arbiter for computation of backwages
and other monetary awards to complainant.[29]
ETPI filed a Petition for Certiorari under Rule 65 of the
Rules of Civil Procedure before the Court of Appeals on the
ground of grave abuse of discretion. ETPI prayed that a
Temporary Restraining Order be issued against the NLRC from
implementing its decision and that the NLRC decision and
resolution be set aside.
The Court of Appeals, on February 5, 2004, partially granted
ETPIs petition. The dispositive portion of the decision reads as
follows:
WHEREFORE,
all
the
foregoing
considered, the petition is PARTIALLY
GRANTED. The assailed Decision of public
respondent
National
Labor
Relations
Commission is MODIFIED in that petitioner
Eastern Telecommunications Philippines Inc.
(ETPI) is hereby ORDERED to pay respondent
Nelson Culili full backwages from the time his
salaries were not paid until the finality of this
Decision plus separation pay in an amount
equivalent to one (1) month salary for every
year of service. The awards for moral and
exemplary damages are DELETED. The Writ
of Execution issued by the Labor Arbiter dated
September 8, 2003 is DISSOLVED.[30]
The Court of Appeals found that Culilis position was validly
abolished due to redundancy. The Court of Appeals said that
ETPI had been very candid with its employees in implementing
its Right-Sizing Program, and that it was highly unlikely that ETPI
would effect a company-wide reorganization simply for the
purpose of getting rid of Culili. The Court of Appeals also held
that ETPI cannot be held guilty of unfair labor practice as mere
contracting out of services being performed by union members
does not per se amount to unfair labor practice unless it
interferes with the employees right to self-organization. The
Court of Appeals further held that ETPIs officers cannot be held
liable absent a showing of bad faith or malice. However, the
Court of Appeals found that ETPI failed to observe the standards
of due process as required by our laws when it failed to properly
notify both Culili and the DOLE of Culilis termination. The Court
of Appeals maintained its position in its September 13, 2004
Resolution when it denied Culilis Motion for Reconsideration
and Urgent Motion to Reinstate the Writ of Execution issued by
the Labor Arbiter, and ETPIs Motion for Partial Reconsideration.
Culili is now before this Court praying for the reversal of the
Court of Appeals decision and the reinstatement of the NLRCs
decision based on the following grounds:

I
THE COURT OF APPEALS DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD
WITH
THE
APPLICABLE
LAW
AND
JURISPRUDENCE WHEN IT REVERSED THE
DECISIONS OF THE NLRC AND THE LABOR
ARBITER HOLDING THE DISMISSAL OF
PETITIONER ILLEGAL IN THAT:
A.

B.

CONTRARY TO
THE FINDINGS OF
THE COURT OF
APPEALS,
RESPONDENTS
CHARACTERIZATI
ON
OF
PETITIONERS
POSITION
AS
REDUNDANT
WAS TAINTED BY
BAD FAITH.
THERE WAS NO
ADEQUATE
JUSTIFICATION
TO
DECLARE
PETITIONERS
POSITION
AS
REDUNDANT.
II

THE COURT OF APPEALS DECIDED A


QUESTION OF SUBSTANCE NOT IN ACCORD
WITH LAW AND JURISPRUDENCE IN FINDING
THAT NO UNFAIR LABOR PRACTICE ACTS
WERE
COMMITTED
AGAINST
THE
PETITIONER.
III
THE COURT OF APPEALS DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD
WITH LAW AND JURISPRUDENCE IN
DELETING THE AWARD OF MORAL AND
EXEMPLARY DAMAGES AND ATTORNEYS
FEES IN FAVOR OF PETITIONER AND IN
DISSOLVING THE WRIT OF EXECUTION
DATED 8 SEPTEMBER 2003 ISSUED BY THE
LABOR ARBITER.
IV
THE COURT OF APPEALS DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD
WITH LAW AND JURISPRUDENCE IN
ABSOLVING THE INDIVIDUAL RESPONDENTS
OF PERSONAL LIABILITY.

V
CONTRARY TO APPLICABLE LAW AND
JURISPRUDENCE, THE COURT OF APPEALS, IN

A CERTIORARI PROCEEDING, REVIEWED THE


FACTUAL FINDINGS OF THE NLRC WHICH
AFFIRMED THAT OF THE LABOR ARBITER
AND, THEREAFTER, ISSUED A WRIT OF
CERTIORARI REVERSING THE DECISIONS OF
THE NLRC AND THE LABOR ARBITER EVEN
IN THE ABSENCE OF GRAVE ABUSE OF
DISCRETION.[31]
Procedural Issue: Court of Appeals
Power to Review Facts in a Petition
For Certiorari under Rule 65
Culili argued that the Court of Appeals acted in
contravention of applicable law and jurisprudence when it
reexamined the facts in this case and reversed the factual
findings of the Labor Arbiter and the NLRC in a special civil action
for certiorari.
This Court has already confirmed the power of the Court of
Appeals, even on a Petition for Certiorari under Rule 65,[32] to
review the evidence on record, when necessary, to resolve factual
issues:
The power of the Court of Appeals to
review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in
our decision in St. Martin Funeral Home v.
National Labor Relations Commission. This
Court held that the proper vehicle for such
review was a Special Civil Action for Certiorari
under Rule 65 of the Rules of Court, and that
this action should be filed in the Court of
Appeals in strict observance of the doctrine of
the hierarchy of courts. Moreover, it is already
settled that under Section 9 of Batas
Pambansa Blg. 129, as amended by Republic
Act No. 7902[10] (An Act Expanding the
Jurisdiction of the Court of Appeals, amending
for the purpose of Section Nine 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.[33]
While it is true that factual findings made by quasijudicial and administrative tribunals, if supported by substantial
evidence, are accorded great respect and even finality by the
courts, this general rule admits of exceptions. When there is a
showing that a palpable and demonstrable mistake that needs
rectification has been committed[34] or when the factual findings
were arrived at arbitrarily or in disregard of the evidence on
record, these findings may be examined by the courts.[35]
In the case at bench, the Court of Appeals found itself
unable to completely sustain the findings of the NLRC thus, it was
compelled to review the facts and evidence and not limit itself to
the issue of grave abuse of discretion.
With the conflicting findings of facts by the tribunals
below now before us, it behooves this Court to make an
independent evaluation of the facts in this case.

Main Issue: Legality of Dismissal


Culili asserted that he was illegally dismissed because
there was no valid cause to terminate his employment. He
claimed that ETPI failed to prove that his position had become
redundant and that ETPI was indeed incurring losses. Culili
further alleged that his functions as a Senior Technician could not
be considered a superfluity because his tasks were crucial and
critical to ETPIs business.
Under our laws, an employee may be terminated for
reasons involving measures taken by the employer due to
business necessities. Article 283 of the Labor Code provides:
Art. 283. Closure of establishment
and reduction of personnel. - The employer
may also terminate the employment of any
employee due to the installation of labor
saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of
operation of the establishment or undertaking
unless the closing is for the purpose of
circumventing the provisions of this Title, by
serving a written notice on the workers and
the Department of Labor and Employment at
least one (1) month before the intended date
thereof. In case of termination due to the
installation of labor-saving devices or
redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one
(1) month pay for every year of service,
whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or
cessation of operations of establishment or
undertaking not due to serious business losses
or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at
least six (6) months shall be considered one
(1) whole year.
There is redundancy when the service capability of the
workforce is greater than what is reasonably required to meet
the demands of the business enterprise. A position becomes
redundant when it is rendered superfluous by any number of
factors such as over-hiring of workers, decrease in volume of
business, or dropping a particular product line or service activity
previously manufactured or undertaken by the enterprise.[36]
This Court has been consistent in holding that the
determination of whether or not an employees services are still
needed
or
sustainable
properly
belongs
to
the
employer. Provided there is no violation of law or a showing that
the employer was prompted by an arbitrary or malicious act, the
soundness or wisdom of this exercise of business judgment is not
subject to the discretionary review of the Labor Arbiter and the
NLRC.[37]
However, an employer cannot simply declare that it has
become overmanned and dismiss its employees without
producing adequate proof to sustain its claim of
redundancy.[38] Among the requisites of a valid redundancy
program are: (1) the good faith of the employer in abolishing the
redundant position; and (2) fair and reasonable criteria in
ascertaining what positions are to be declared redundant,[39] such

as but not limited to: preferred status, efficiency, and


seniority.[40]
This Court also held that the following evidence may be
proffered to substantiate redundancy: the new staffing pattern,
feasibility studies/ proposal on the viability of the newly created
positions, job description and the approval by the management of
the restructuring.[41]
In the case at bar, ETPI was upfront with its employees
about its plan to implement a Right-Sizing Program. Even in the
face of initial opposition from and rejection of the said program
by ETEU, ETPI patiently negotiated with ETEUs officers to make
them understand ETPIs business dilemma and its need to reduce
its workforce and streamline its organization. This evidently
rules out bad faith on the part of ETPI.
In deciding which positions to retain and which to
abolish, ETPI chose on the basis of efficiency, economy, versatility
and flexibility. It needed to reduce its workforce to a sustainable
level while maintaining functions necessary to keep it
operating. The records show that ETPI had sufficiently
established not only its need to reduce its workforce and
streamline its organization, but also the existence of redundancy
in the position of a Senior Technician. ETPI explained how it
failed to meet its business targets and the factors that caused this,
and how this necessitated it to reduce its workforce and
streamline its organization. ETPI also submitted its old and new
tables of organization and sufficiently described how limited the
functions of the abolished position of a Senior Technician were
and how it decided on whom to absorb these functions.
In his affidavit dated April 10, 2000,[42] Mr. Arnel D.
Reyel, the Head of both the Business Services Department and
the Finance Department of ETPI, described how ETPI went about
in reorganizing its departments. Mr. Reyel said that in the course
of ETPIs reorganization, new departments were created, some
were transferred, and two were abolished. Among the
departments abolished was the Service Quality Department. Mr.
Reyel said that ETPI felt that the functions of the Service Quality
Department, which catered to both corporate and small and
medium-sized clients, overlapped and were too large for a single
department, thus, the functions of this department were split and
simplified into two smaller but more focused and efficient
departments. In arriving at the decision to abolish the position of
Senior Technician, Mr. Reyel explained:
11.3. Thus, in accordance with the
reorganization of the different departments of
ETPI, the Service Quality Department was
abolished and its functions were absorbed by
the Business and Consumer Accounts
Department and the Corporate and Major
Accounts Department.
11.4. With the abolition and resulting
simplification of the Service Quality
Department, one of the units thereunder, the
Customer Premises Equipment Maintenance
(CPEM) unit was transferred to the Business
and Consumer Accounts Department. Since
the Business and Consumer Accounts
Department had to remain economical and
focused yet versatile enough to meet all the
needs of its small and medium sized clients, it
was decided that, in the judgment of ETPI
management, the specialized functions of a
Senior Technician in the CPEM unit whose sole

function was essentially the repair and


servicing of ETPIs telecommunications
equipment was no longer needed since the
Business
and
Consumer
[Accounts]
Department had to remain economical and
focused yet versatile enough to meet all the
multifarious needs of its small and medium
sized clients.
11.5. The business reason for the abolition
of the position of Senior Technician was
because in ETPIs judgment, what was needed
in the Business and Consumer Accounts
Department was a versatile, yet economical
position with functions which were not limited
to the mere repair and servicing of
telecommunications
equipment. It
was
determined that what was called for was a
position that could also perform varying
functions such as the actual installation of
telecommunications products for medium and
small scale clients, handle telecommunications
equipment inventory monitoring, evaluation
of telecommunications equipment purchased
and the preparation of reports on the daily
and monthly activation of telecommunications
equipment by these small and medium scale
clients.
11.6. Thus, for the foregoing reasons, ETPI
decided that the position of Senior Technician
was to be abolished due to redundancy. The
functions of a Senior Technician was to be
abolished due to redundancy. The functions of
a Senior Technician would then be absorbed
by an employee assigned to the Business and
Consumer Accounts Department who was
already performing the functions of actual
installation of telecommunications products in
the field and handling telecommunications
equipment inventory monitoring, evaluation
of telecommunications equipment purchased
and the preparation of reports on the daily
and monthly activation of telecommunications
equipment. This employee would then simply
add to his many other functions the duty of
repairing and servicing telecommunications
equipment which had been previously
performed by a Senior Technician.[43]
In the new table of organization that the management
approved, one hundred twelve (112) employees were redeployed
and nine (9) positions were declared redundant.[44] It is
inconceivable that ETPI would effect a company-wide
reorganization of this scale for the mere purpose of singling out
Culili and terminating him. If Culilis position were indeed
indispensable to ETPI, then it would be absurd for ETPI, which
was then trying to save its operations, to abolish that one
position which it needed the most. Contrary to Culilis assertions
that ETPI could not do away with his functions as long as it is in
the telecommunications industry, ETPI did not abolish the
functions performed by Culili as a Senior Technician. What ETPI
did was to abolish the position itself for being too specialized and
limited. The functions of that position were then added to
another employee whose functions were broad enough to absorb
the tasks of a Senior Technician.

Culili maintains that ETPI had already decided to


dismiss him even before the second phase of the Right-Sizing
Program was implemented as evidenced by the December 7,
1998 letter.
The December 7, 1998 termination letter signed by
ETPIs AVP Stella Garcia hardly suffices to prove bad faith on the
part of the company. The fact remains that the said letter was
never officially transmitted and Culili was not terminated at the
end of the first phase of ETPIs Right-Sizing Program. ETPI had
given an adequate explanation for the existence of the letter and
considering that it had been transparent with its employees,
through their union ETEU, so much so that ETPI even gave ETEU
this unofficial letter, there is no reason to speculate and attach
malice to such act. That Culili would be subsequently terminated
during the second phase of the Right-Sizing Program is not
evidence of undue discrimination or singling out since not only
Culilis position, but his entire unit was abolished and absorbed
by another department.
Unfair Labor Practice
Culili also alleged that ETPI is guilty of unfair labor
practice for violating Article 248(c) and (e) of the Labor Code, to
wit:
Art. 248. Unfair labor practices of
employers. - It shall be unlawful for an
employer to commit any of the following
unfair labor practice:
xxxx
c. To contract out services or functions
being performed by union members when
such will interfere with, restrain or coerce
employees in the exercise of their rights to
self-organization;
xxxx
e. To discriminate in regard to wages,
hours of work, and other terms and conditions
of employment in order to encourage or
discourage membership in any labor
organization. Nothing in this Code or in any
other law shall stop the parties from requiring
membership in a recognized collective
bargaining agent as a condition for
employment, except those employees who are
already members of another union at the time
of the signing of the collective bargaining
agreement. Employees of an appropriate
collective bargaining unit who are not
members of the recognized collective
bargaining agent may be assessed a
reasonable fee equivalent to the dues and
other fees paid by members of the recognized
collective bargaining agent, if such non-union
members accept the benefits under the
collective agreement: Provided, that the
individual authorization required under
Article 242, paragraph (o) of this Code shall
not apply to the non-members of the
recognized collective bargaining agent.

Culili asserted that ETPI is guilty of unfair labor practice


because his functions were sourced out to labor-only contractors
and he was discriminated against when his co-employees were
treated differently when they were each offered an additional
motorcycle to induce them to avail of the Special Retirement
Program. ETPI denied hiring outside contractors and averred
that the motorcycles were not given to his co-employees but
were purchased by them pursuant to their Collective Bargaining
Agreement, which allowed a retiring employee to purchase the
motorcycle he was assigned during his employment.
The concept of unfair labor practice is provided in
Article 247 of the Labor Code which states:
Article 247. Concept of unfair
labor practice and procedure for
prosecution thereof. -- Unfair labor practices
violate the constitutional right of workers and
employees to self-organization, are inimical to
the legitimate interest of both labor and
management, including their right to bargain
collectively and otherwise deal with each
other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder
the promotion of healthy and stable labormanagement relations.
In the past, we have ruled that unfair labor practice
refers to acts that violate the workers' right to organize. The
prohibited acts are related to the workers' right to selforganization and to the observance of a CBA.[45] We have
likewise declared that there should be no dispute that all the
prohibited acts constituting unfair labor practice in essence
relate to the workers' right to self-organization.[46] Thus, an
employer may only be held liable for unfair labor practice if it can
be shown that his acts affect in whatever manner the right of his
employees to self-organize.[47]
There is no showing that ETPI, in implementing its
Right-Sizing Program, was motivated by ill will, bad faith or
malice, or that it was aimed at interfering with its employees
right to self-organize. In fact, ETPI negotiated and consulted with
ETEU before implementing its Right-Sizing Program.
Both the Labor Arbiter and the NLRC found ETPI guilty
of unfair labor practice because of its failure to dispute Culilis
allegations.
According to jurisprudence, basic is the principle that
good faith is presumed and he who alleges bad faith has the duty
to prove the same.[48] By imputing bad faith to the actuations of
ETPI, Culili has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice. Culili
failed to discharge this burden and his bare allegations deserve
no credit.
Observance of Procedural Due Process
Although the Court finds Culilis dismissal was for a
lawful cause and not an act of unfair labor practice, ETPI,
however, was remiss in its duty to observe procedural due
process in effecting the termination of Culili.
We have previously held that there are two aspects
which characterize the concept of due process under the Labor
Code: one is substantive whether the termination of
employment was based on the provision of the Labor Code or in

accordance with the prevailing jurisprudence; the other is


procedural the manner in which the dismissal was
effected.[49]
Section 2(d), Rule I, Book VI of the Rules Implementing the
Labor Code provides:
(d) In all cases of termination of
employment, the following standards of due
process shall be substantially observed:
xxxx
For termination of employment as
defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed
complied with upon service of a written notice
to the employee and the appropriate Regional
Office of the Department of Labor and
Employment at least thirty days before
effectivity of the termination, specifying the
ground or grounds for termination.
In Mayon Hotel & Restaurant v. Adana,[50] we observed:
The requirement of law mandating
the giving of notices was intended not only to
enable the employees to look for another
employment and therefore ease the impact of
the loss of their jobs and the corresponding
income, but more importantly, to give the
Department of Labor and Employment (DOLE)
the opportunity to ascertain the verity of the
alleged authorized cause of termination.[51]
ETPI does not deny its failure to provide DOLE with a
written notice regarding Culilis termination. It, however, insists
that it has complied with the requirement to serve a written
notice to Culili as evidenced by his admission of having received
it and forwarding it to his union president.
In Serrano v. National Labor Relations Commission,[52] we
noted that a job is more than the salary that it carries. There is
a psychological effect or a stigma in immediately finding ones
self laid off from work.[53] This is exactly why our labor laws have
provided for mandating procedural due process clauses. Our
laws, while recognizing the right of employers to terminate
employees it cannot sustain, also recognize the employees right
to be properly informed of the impending severance of his ties
with the company he is working for. In the case at bar, ETPI, in
effecting Culilis termination, simply asked one of its guards to
serve the required written notice on Culili. Culili, on one hand,
claims in his petition that this was handed to him by ETPIs vice
president, but previously testified before the Labor Arbiter that
this was left on his table.[54] Regardless of how this notice was
served on Culili, this Court believes that ETPI failed to properly
notify Culili about his termination. Aside from the manner the
written notice was served, a reading of that notice shows that
ETPI failed to properly inform Culili of the grounds for his
termination.
The Court of Appeals, in finding that Culili was not afforded
procedural due process, held that Culilis dismissal was
ineffectual, and required ETPI to pay Culili full backwages in
accordance with our decision in Serrano v. National Labor
Relations Commission.[55] Over the years, this Court has had the

opportunity to reexamine the sanctions imposed upon employers


who fail to comply with the procedural due process requirements
in terminating its employees. In Agabon v. National Labor
Relations Commission,[56] this Court reverted back to the doctrine
in Wenphil
Corporation
v.
National
Labor
Relations
Commission[57] and held that where the dismissal is due to a just
or authorized cause, but without observance of the due process
requirements, the dismissal may be upheld but the employer
must pay an indemnity to the employee. The sanctions to be
imposed however, must be stiffer than those imposed
in Wenphil to achieve a result fair to both the employers and the
employees.[58]
In Jaka Food Processing Corporation v. Pacot,[59] this
Court, taking a cue from Agabon, held that since there is a clearcut distinction between a dismissal due to a just cause and a
dismissal due to an authorized cause, the legal implications for
employers who fail to comply with the notice requirements must
also be treated differently:
Accordingly, it is wise to hold that:
(1) if the dismissal is based on a just cause
under Article 282 but the employer failed to
comply with the notice requirement, the
sanction to be imposed upon him should be
tempered because the dismissal process was,
in effect, initiated by an act imputable to the
employee; and (2) if the dismissal is based on
an authorized cause under Article 283 but the
employer failed to comply with the notice
requirement, the sanction should be stiffer
because the dismissal process was initiated by
the employer's exercise of his management
prerogative.[60]
Hence, since it has been established that Culilis
termination was due to an authorized cause and cannot be
considered unfair labor practice on the part of ETPI, his dismissal
is valid. However, in view of ETPIs failure to comply with the
notice requirements under the Labor Code, Culili is entitled to
nominal damages in addition to his separation pay.
Personal Liability of ETPIs Officers
And Award of Damages
Culili asserts that the individual respondents, Salvador
Hizon, Emiliano Jurado, Virgilio Garcia, and Stella Garcia, as
ETPIs officers, should be held personally liable for the acts of
ETPI
which
were
tainted
with
bad
faith
and
arbitrariness. Furthermore, Culili insists that he is entitled to
damages because of the sufferings he had to endure and the
malicious manner he was terminated.
As a general rule, a corporate officer cannot be held
liable for acts done in his official capacity because a corporation,
by legal fiction, has a personality separate and distinct from its
officers, stockholders, and members. To pierce this fictional veil,
it must be shown that the corporate personality was used to
perpetuate fraud or an illegal act, or to evade an existing
obligation, or to confuse a legitimate issue. In illegal dismissal
cases, corporate officers may be held solidarily liable with the
corporation if the termination was done with malice or bad
faith. [61]
In illegal dismissal cases, moral damages are awarded
only where the dismissal was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner

contrary to morals, good customs or public policy.[62] Exemplary


damages may avail if the dismissal was effected in a wanton,
oppressive or malevolent manner to warrant an award for
exemplary damages.[63]
It is our considered view that Culili has failed to prove
that his dismissal was orchestrated by the individual respondents
herein for the mere purpose of getting rid of him. In fact, most of
them have not even dealt with Culili personally. Moreover, it has
been established that his termination was for an authorized
cause, and that there was no bad faith on the part of ETPI in
implementing its Right-Sizing Program, which involved
abolishing certain positions and departments for redundancy. It
is not enough that ETPI failed to comply with the due process
requirements to warrant an award of damages, there being no
showing that the companys and its officers acts were attended
with bad faith or were done oppressively.
WHEREFORE, the instant petition is DENIED and the
assailed February 5, 2004 Decision and September 13, 2004
Resolution of the Court of Appeals inCA-G.R. SP No.
75001 are AFFIRMED with
the MODIFICATION that petitioner Nelson A. Culilis dismissal is
declared valid but respondent Eastern Telecommunications
Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the
amount of Fifty Thousand Pesos (P50,000.00) representing
nominal damages for non-compliance with statutory due process,
in addition to the mandatory separation pay required under
Article 283 of the Labor Code.
SO ORDERED.