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TOPIC 14: UNFAIR LABOR PRACTICE

GENERAL MILLING CORP. vs. COURT OF APPEALS


[G.R. No. 146728, February 11, 2004]
Facts:
In its plants located at Cebu City and Lapu-Lapu City,
General Milling Corporation (GMC) employed 190 workers,
who were all members of respondent General Milling
Corporation Independent Labor Union (union, for brevity),
a duly certified bargaining agent. On April 28, 1989, GMC
and the union concluded a collective bargaining
agreement (CBA) which included the issue of
representation effective for a term of three years. The
CBA was effective for three years retroactive to
December 1, 1988. Hence, it would expire on November
30, 1991. On November 29, 1991, a day before the
expiration of the CBA, the union sent GMC a proposed
CBA, with a request that a counter-proposal be submitted
within ten (10) days.
As early as October 1991, GMC received letters from
workers who stated that they had withdrawn from their
union membership, on grounds of religious affiliation and
personal differences. Believing that the union no longer
had standing to negotiate a CBA, GMC did not send any
counter-proposal. On December 16, 1991, GMC wrote a
letter to the unions officers stating that it felt there was
no basis to negotiate with a union which no longer
existed.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a
union member, on the ground of incompetence. The
union protested and requested GMC to submit the matter
to the grievance procedure provided in the CBA. GMC,
however, advised the union to "refer to our letter dated
December 16, 1991."
Thus, the union filed, on July 2, 1992, a complaint against
GMC with the NLRC, Arbitration Division, Cebu City. The
complaint alleged unfair labor practice on the part of GMC
for: (1) refusal to bargain collectively; (2) interference
with the right to self-organization; and (3) discrimination.
Issues:
1. Whether or not GMC is guilty of unfair labor practice.
2. Whether or not the Court of Appeals was correct when
it imposed upon the GMC the draft CBA proposes by the
union for two years to begin from expiration of the
original CBA.
Ruling:
GMC is guilty of unfair labor practice. Failing to
comply with the mandatory obligation to submit a
reply to the unions proposals, GMC violated its
duty to bargain collectively, making it liable for
unfair labor practice.
On the first issue, Article 253-A of the Labor Code, as
amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining
agreement. Any Collective Bargaining Agreement that
the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five
(5) years. No petition questioning the majority status of
the incumbent bargaining agent shall be entertained and
no certification election shall be conducted by the
Department of Labor and Employment outside of the
sixty-day period immediately before the date of expiry of
such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective

Bargaining Agreement shall be renegotiated not later


than three (3) years after its execution.
The law mandates that the representation provision of a
CBA should last for five years. The relation between labor
and management should be undisturbed until the last 60
days of the fifth year.
Hence, when the union requested for a renegotiation on
November 29, 1991, it was still the certified collective
bargaining agent of the workers, because it was seeking
said renegotiation within 5 years from the date of
effectivity of the CBA on December 1, 1988. The unions
proposal was also submitted within the prescribed 3-year
period from the date of effectivity of the CBA, just before
the last day of said period. It was obvious that GMC had
no valid reason to refuse to negotiate in good faith with
the union. For refusing to send a counter-proposal to the
union and to bargain anew on the economic terms of the
CBA, the company committed an unfair labor practice
under Article 248 of the Labor Code, which provides that:
ART. 248. Unfair labor practices of employers. It
shall be unlawful for an employer to commit any of the
following unfair labor practice:
(g) To violate the duty to bargain
collectively as prescribed by this Code;
Article 252 of the Labor Code elucidates the meaning of
the phrase "duty to bargain collectively," thus:
ART. 252. Meaning of duty to bargain collectively.
The duty to bargain collectively means the performance
of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of
negotiating an agreement....
We have held that there is no per se test of good faith in
bargaining. Good faith or bad faith is an inference to be
drawn from the facts.The effect of an employers or a
unions actions individually is not the test of good-faith
bargaining,but the impact of all such occasions or
actions, considered as a whole.
Under Article 252, both parties are required to perform
their mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of
negotiating an agreement.
The union lived up to this obligation when it presented
proposals for a new CBA to GMC within three (3) years
from the effectivity of the original CBA. But GMC failed in
its duty under Article 252. What it did was to devise a
flimsy excuse, by questioning the existence of the union
and the status of its membership to prevent any
negotiation.
Procedure in Collective Bargaining
It bears stressing that the procedure in collective
bargaining prescribed by the Code is mandatory because
of the basic interest of the state in ensuring lasting
industrial peace.
ART. 250. Procedure in collective bargaining. The
following procedures shall be observed in collective
bargaining:
xxxx The other party shall make a reply thereto not later
than ten (10) calendar days from receipt of such notice.
GMCs failure to make a timely reply to the proposals
presented by the union is indicative of its utter lack of
interest in bargaining with the union. Its excuse that it felt
the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless.

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We hold that GMCs refusal to make a counter-proposal to


the unions proposal for CBA negotiation is an indication
of its bad faith. Where the employer did not even bother
to submit an answer to the bargaining proposals of the
union, there is a clear evasion of the duty to bargain
collectively.
Failing to comply with the mandatory obligation to submit
a reply to the unions proposals, GMC violated its duty to
bargain collectively, making it liable for unfair labor
practice.
The fact that the resignations of the union members
occurred during the pendency of the case before the
labor arbiter shows GMCs desperate attempts to cast
doubt on the legitimate status of the union. The ill-timed
letters of resignation from the union members indicate
that GMC had interfered with the right of its employees to
self-organization.
CA was correct in imposing the draft proposed by
the Union on GMC following the doctrines on Kiok
Loy vs. NLRC and Divine Word University of
Tacloban vs. Secretary of Labor and Employment.
ART. 253 on the duty to bargain collectively when
there exists a collective bargaining agreement,
mandates the parties to keep the status quo while they
are still in the process of working out their respective
proposal and counter proposal. The general rule is that
when a CBA already exists, its provision shall continue to
govern the relationship between the parties, until a new
one is agreed upon. The rule necessarily presupposes
that all other things are equal. That is, that neither party
is guilty of bad faith. However, when one of the parties
abuses this grace period by purposely delaying the
bargaining process, a departure from the general rule is
warranted.
In Kiok Loy vs. NLRC,Sweden Ice Cream Plant, who
refused to submit any counter proposal proposed by its
employees certified bargaining agent, had lost its right to
bargain the terms and conditions of the CBA. That
Swedens approach and attitude stalling the negotiation
lead to a conclusion that it is unwilling to negotiate and
reach an agreement with the Union. Petitioner has not at
any instance, evinced good faith.
In Divine Word University of Tacloban vs. Secretary of
Labor and Employment, Divine Word University of
Tacloban, refused to perform its duty to bargain
collectively. Thus, we upheld the unilateral imposition on
the university of the CBA proposed by the Divine Word
University Employees Union.
Applying the principle in the foregoing cases to the
instant case, it would be unfair to the union and its
members if the terms and conditions contained in the old
CBA would continue to be imposed on GMCs employees
for the remaining two (2) years of the CBAs duration. We
are not inclined to gratify GMC with an extended term of
the old CBA after it resorted to delaying tactics to prevent
negotiations.
Since it was GMC which violated the duty to bargain
collectively,
based
on Kiok
Loy and Divine
Word
University of Tacloban, it had lost its statutory right to
negotiate or renegotiate the terms and conditions of the
draft CBA proposed by the union.
However, that as strictly distinguished from the facts of
this case, there was no pre-existing CBA between the
parties in Kiok Loy and Divine Word University of
Tacloban. Nonetheless, we deem it proper to apply in this

case the rationale of the doctrine in the said two cases. To


rule otherwise would be to allow GMC to have its cake
and eat it too.
Thus, by imposing on GMC the provisions of the draft CBA
proposed by the union, in our view, the interests of equity
and fair play were properly served and both parties
regained equal footing, which was lost when GMC
thwarted the negotiations for new economic terms of the
CBA.

STANDARD CHARTERED BANK EMPLOYEES UNION


vs. CONFESOR
[G.R. No. 114974, June 16, 2004]
Facts:
The exclusive bargaining agent of the rank and file
employees of the Standard Chartered Bank is the
Standard Chartered Bank Employees Union (the Union,
for brevity). Prior to the expiration of the 3-year period of
their CBA, but within the 60-day freedom period, the
Union initiated the negotiations. On February 18, 1993,
the Union, through its President, Eddie L. Divinagracia,
sent a letter containing its proposals covering political
provisions and 34 economic provisions. Included therein
was a list of the names of the members of the Unions
negotiating panel.
The Union suggested to the Banks head of the
negotiating panel, Cielito Diokno, that the bank lawyers
should be excluded from the negotiating team. The Bank
acceded.Meanwhile, Diokno suggested to Divinagracia
that Jose P. Umali, Jr., the President of the National Union
of Bank Employees (NUBE), the federation to which the
Union was affiliated, be excluded from the Unions
negotiating panel. However, Umali was retained as a
member thereof.
On March 12, 1993, the parties met and set the ground
rules for the negotiation. Diokno suggested that the
negotiation be kept a "family affair." The proposed noneconomic provisions of the CBA were discussed first. Even
during the final reading of the non-economic provisions
on May 4, 1993, there were still provisions on which the
Union and the Bank could not agree.
On May 18, 1993, the negotiation for economic provisions
commenced. Towards the end of the Banks presentation,
Umali requested the Bank to validate the Unions
"guestimates," especially the figures for the rank and file
staff. In the succeeding meetings, Umali chided the Bank
for the insufficiency of its counter-proposal on the
provisions on salary increase, group hospitalization, death
assistance and dental benefits.
In the morning of the June 15, 1993 meeting, the Union
suggested that if the Bank would not make the necessary
revisions on its counter-proposal, it would be best to seek
a 3rd party assistance. After the break, the Bank
presented its revised counter-proposal, wherein, except
for the provisions on signing bonus and uniforms, the
Union and the Bank failed to agree on the remaining
economic provisions of the CBA. The Union declared a
deadlock and filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) on June 21,
1993, docketed as NCMB-NCR-NS-06-380-93.26.
On the other hand, the Bank filed a complaint for Unfair
Labor Practice (ULP) and Damages before the Arbitration

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Branch of the NLRC in Manila against the Union on June


28, 1993. The Bank alleged that the Union violated its
duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded "sky high economic
demands," indicative of blue-sky bargaining.
On July 21, 1993, then SOLE Nieves R. Confesor, pursuant
to Article 263(g) of the Labor Code, issued an Order
assuming jurisdiction over the labor dispute at the Bank.
An order was issued that the parties execute a collective
bargaining agreement. Thus, the Banks charge for unfair
labor practice which it originally filed with the NLRC but
which is deemed consolidated herein, is dismissed for
lack of merit. On the other hand, the Unions charge for
unfair labor practice is similarly dismissed.
The parties then executed a Collective Bargaining
Agreement wherein the wage increase was effected and
the signing bonuses based on the increased wage were
distributed to the employees covered by the CBA.
The Union filed this petition for certiorari under Rule 65 of
the Rules of Procedure.
Issues:
1. Whether or not the company is guilty of unfair labor
practice
2. Whether or not the Union is estopped after it executed
with the company the CBA
3. Whether or not the Union is engaged in Blue-Sky
Bargaining
Ruling:
The bank is not guilty of ULP.
"Interference" under Article248 (a) of the Labor Code to
amount to ULP.
The petitioner asserts that respondent committed ULP,
i.e., interference in the selection of the Unions
negotiating panel, when Cielito Diokno, the Banks
Human Resource Manager, suggested to the Unions
President Eddie L. Divinagracia that Jose P. Umali, Jr.,
President of the NUBE, be excluded from the Unions
negotiating panel. In support of its claim, Divinagracia
executed an affidavit, stating that prior to the
commencement of the negotiation, Diokno approached
him and suggested the exclusion of Umali from the
Unions negotiating panel, and that during the first
meeting, Diokno stated that the negotiation be kept a
"family affair."
In U.S. Postal Service and Harley Davidson Motor Co.,
Inc., AMF, the National Labor Relations Board held that
upon the employers refusal to engage in negotiations
with the Union for collective-bargaining contract when the
Union includes a person who is not an employee, or one
who is a member or an official of other labor
organizations, such employer is engaged in unfair labor
practice under Section 8(a)(1) and (5) of the NLRA.
In, Insular Life Assurance Co., Ltd. Employees Association
NATU vs. Insular Life Assurance Co. Ltd., the test of
whether an employer has interfered with and coerced
employees in the exercise of their right to selforganization within the meaning of subsection (a)(1) is
whether the employer has engaged in conduct which it
may reasonably be said, tends to interfere with the free
exercise of employees rights under Section 3 of the
Act.Further, it is not necessary that there be direct
evidence that any employee was in fact intimidated or
coerced by statements of threats of the employer if there
is a reasonable inference that anti-union conduct of the
employer does have an adverse effect on selforganization and collective bargaining.
Under the International Labor Organization Convention

(ILO) No. 87 FREEDOM OF ASSOCIATION AND


PROTECTION OF THE RIGHT TO ORGANIZE to which the
Philippines is a signatory, "workers and employers,
without distinction whatsoever, shall have the right to
establish and, subject only to the rules of the organization
concerned, to job organizations of their own choosing
without previous authorization.
Workers and employers organizations shall have the
right to draw up their constitutions and rules, to elect
their representatives in full freedom to organize their
administration and activities and to formulate their
programs. Article 2 of ILO Convention No. 98 pertaining to
the Right to Organize and Collective Bargaining, provides:
Article 2
1. Workers and employers organizations shall
enjoy adequate protection against any acts or
interference by each other or each others
agents or members in their establishment,
functioning or administration.
2. In particular, acts which are designed to
promote
the
establishment
of
workers
organizations
under
the
domination
of
employers or employers organizations or to
support workers organizations by financial or
other means, with the object of placing such
organizations under the control of employers or
employers organizations within the meaning of
this Article.
The aforecited ILO Conventions are incorporated in our
Labor Code, particularly in Article 243 thereof, which
provides:
ART. 243. COVERAGE AND EMPLOYEES RIGHT
TO SELF-ORGANIZATION. All persons employed
in commercial, industrial and agricultural
enterprises and in religious, charitable, medical
or educational institutions whether operating for
profit or not, shall have the right to selforganization and to form, join, or assist labor
organizations of their own choosing for purposes
of collective bargaining. Ambulant, intermittent
and itinerant workers, self-employed people,
rural workers and those without any definite
employers may form labor organizations for their
mutual aid and protection.
and Articles 248 and 249 respecting ULP of employers
and labor organizations.
The 1987 Constitution, aside from making it a policy to
"protect the rights of workers and promote their
welfare," devotes an entire section, emphasizing its
mandate to afford protection to labor, and highlights "the
principle of shared responsibility" between workers and
employers to promote industrial peace.
Article 248(a) of the Labor Code, considers it an unfair
labor practice when an employer interferes, restrains or
coerces employees in the exercise of their right to selforganization or the right to form association. The right to
self-organization necessarily includes the right to
collective bargaining.
If an employer interferes in the selection of its negotiators
or coerces the Union to exclude from its panel of
negotiators a representative of the Union, and if it can be
inferred that the employer adopted the said act to yield
adverse effects on the free exercise to right to selforganization or on the right to collective bargaining of the

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employees, ULP under Article 248(a) in connection with


Article 243 of the Labor Code is committed.
Substantial Evidence required to support the claim of ULP
under the Labor Code.
In order to show that the employer committed ULP under
the Labor Code, substantial evidence is required to
support the claim. Substantial evidence has been defined
as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. In the case
at bar, the Union bases its claim of interference on the
alleged suggestions of Diokno to exclude Umali from the
Unions negotiating panel.
The circumstances that occurred during the negotiation
do not show that the suggestion made by Diokno to
Divinagracia is an anti-union conduct from which it can be
inferred that the Bank consciously adopted such act to
yield adverse effects on the free exercise of the right to
self-organization and collective bargaining of the
employees, especially considering that such was
undertaken previous to the commencement of the
negotiation and simultaneously with Divinagracias
suggestion that the bank lawyers be excluded from its
negotiating panel.
The records show that after the initiation of the collective
bargaining process, with the inclusion of Umali in the
Unions negotiating panel, the negotiations pushed
through. The complaint was made only on August 16,
1993 after a deadlock was declared by the Union on June
15, 1993.
It is clear that such ULP charge was merely an
afterthought. The accusation occurred after the
arguments and differences over the economic provisions
became heated and the parties had become frustrated. It
happened after the parties started to involve
personalities. As the public respondent noted, passions
may rise, and as a result, suggestions given under less
adversarial situations may be colored with unintended
meanings.49 Such is what appears to have happened in
this case.
The Duty to BargainCollectively
If at all, the suggestion made by Diokno to Divinagracia
should be construed as part of the normal relations and
innocent communications, which are all part of the
friendly relations between the Union and Bank.
The Union alleges that the Bank violated its duty to
bargain; hence, committed ULP under Article 248(g) when
it engaged in surface bargaining. It alleged that the Bank
just went through the motions of bargaining without any
intent of reaching an agreement, as evident in the Banks
counter-proposals. It explained that of the 34 economic
provisions it made, the Bank only made 6 economic
counterproposals.
Surface Bargaining
Surface bargaining is defined as "going through the
motions of negotiating" without any legal intent to reach
an agreement. The resolution of surface bargaining
allegations never presents an easy issue. The
determination of whether a party has engaged in unlawful
surface bargaining is usually a difficult one because it
involves, at bottom, a question of the intent of the party
in question, and usually such intent can only be inferred
from the totality of the challenged partys conduct both at
and away from the bargaining table. 51 It involves the
question of whether an employers conduct demonstrates
an unwillingness to bargain in good faith or is merely hard
bargaining.52
The Union has not been able to show that the Bank had

done acts, both at and away from the bargaining table,


which tend to show that it did not want to reach an
agreement with the Union or to settle the differences
between it and the Union. Admittedly, the parties were
not able to agree and reached a deadlock. However, it is
herein emphasized that the duty to bargain "does not
compel either party to agree to a proposal or require the
making of a concession."53 Hence, the parties failure to
agree did not amount to ULP under Article 248(g) for
violation of the duty to bargain.
In view of the finding of lack of ULP based on Article
248(g), the accusation that the Bank made bad-faith
provisions has no leg to stand on.
While the refusal to furnish requested information is in
itself an unfair labor practice, and also supports the
inference of surface bargaining. We, likewise, find that the
Union failed to substantiate its claim that the Bank
refused to furnish the information it needed.
Umali, in a meeting dated May 18, 1993, requested the
Bank to validate its guestimates on the data of the rank
and file. However, Umali failed to put his request in
writing as provided for in Article 242(c) of the Labor Code.
The Union, did not, as the Labor Code requires, send a
written request for the issuance of a copy of the data
about the Banks rank and file employees. Moreover, as
alleged by the Union, the fact that the Bank made use of
the aforesaid guestimates, amounts to a validation of the
data it had used in its presentation.
Estoppel not ApplicableIn the Case at Bar
The respondent Bank argues that the petitioner is
estopped from raising the issue of ULP when it signed the
new CBA.
In the case, however, the approval of the CBA and the
release of signing bonus do not necessarily mean that the
Union waived its ULP claim against the Bank during the
past negotiations. After all, the conclusion of the CBA was
included in the order of the SOLE, while the signing bonus
was included in the CBA itself. Moreover, the Union twice
filed a motion for reconsideration respecting its ULP
charges against the Bank before the SOLE.
The Union Did Not EngageIn Blue-Sky Bargaining
Blue-Sky Bargaining is defined as "unrealistic and
unreasonable demands in negotiations by either or both
labor and management, where neither concedes anything
and demands the impossible." It actually is not collective
bargaining at all. (Roberts Dictionary of Industrial
Relations (Revised Edition, 1971, p. 51).
We do not agree that the Union is guilty of ULP for
engaging in blue-sky bargaining or making exaggerated
or unreasonable proposals. The Bank failed to show that
the economic demands made by the Union were
exaggerated or unreasonable. The minutes of the
meeting show that the Union based its economic
proposals on data of rank and file employees and the
prevailing economic benefits received by bank employees
from other foreign banks doing business in the Philippines
and other branches of the Bank in the Asian region.
While the approval of the CBA and the release of the
signing bonus did not estop the Union from pursuing its
claims of ULP against the Bank, we find the latter did not
engage in ULP. We, likewise, hold that the Union is not
guilty of ULP.

PHILIPPINE CARPET EMPLOYEES ASSOCIATION vs.


HON. STO. TOMAS
[G.R. No. 168719, February 22, 2006]

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Facts:
Philippine Carpet Manufacturing Corporation is engaged
in the business of manufacturing wool and yarn carpets
and rugs. The Corporation also had 100% equity
investments in the following corporations: Pacific Carpet
Mills Corporation (PCMC-USA) which sold carpets and
mats on wholesale basis; Pacific Carpet Manufacturing
Corporation (PCMC-Clark) which manufactured handtufted and machine-tufted carpets and rugs; and the
Philippine Woolen Spinning Corporation (PWSC) which
manufactured wool yarn. The Corporation also owned
17.95% of the shares of stocks in DI Security and General
Services, Inc., and 2.20% of such shares in the Manila
Peninsula Hotel, Inc. The Corporation employed 473
employees, 355 of whom were members of the sole
bargaining unit of the employees therein, the Philippine
Carpet Employees Association (Union for brevity).
In a letter dated February 10, 2004 addressed to the
Corporations Assistant Vice President for Administration,
Manuel Ike Diaz, the Union proposed the holding of a
conference between representatives of the Union and the
Corporation on February 24, 2004, to commence
negotiations. Appended to the letter were proposals on
revisions of the previous CBA.
The Corporation did not respond to the letter. Diaz issued
a Memorandum informing all employees that a
comprehensive cost reduction program would be
implemented by the Corporation on April 15, 2004, "on
account of depressed business conditions brought about
by the currency crisis in Southeast Asia, the Middle East
war and the 9/11 incident in the United States of America.
Of the 88 employees who were terminated from
employment, 77 were Union members, including Edgardo
Villanueva, who was elected Union officer after the
personnel reduction program commenced.
Frustrated at the Corporations reason for retrenchment,
the Union filed a notice of strike with the DOLE.
Negotiations before the National Conciliation and
Mediation Board ensued, but the Corporation stood pat on
its stance for a moratorium on increases in wages and
benefits. The Union rejected this and accused the
Corporation of union busting, as 77 of its members
were dismissed.
The Union filed a petitionwith the DOLE for the Secretary
of Labor and Employment (SOLE) to assume jurisdiction
over the labor dispute involving economic issues on wage
increases and certain benefits and non-economic issues
such as scope of bargaining unit and on the issue of
unfair labor practice.
The Union claimed that there was no valid economic
reason to retrench employees, and that a "slump" in
demand of the Corporations products was not a valid
ground to dismiss employees. The Union also charged the
Corporation of resorting to a sinister scheme of rechanneling its carpet business to its wholly owned
subsidiary, PCMC-Clark, while negotiations for a new CBA
were ongoing. According to the Union, this was also
to justify the dismissal of the 77 Union members
and bust the Union in the process. The Union
insisted that the Corporation was guilty of unfair
labor practice.
The Union maintained that in dismissing its employees,
the Corporation violated the mandatory 30-day notice
rule because such employees received the notice of
termination
on
March
13,
2004
(Saturday),

to take effect the following working day, March 15, 2004


(Monday). It stressed that the 30-day mandatory notice
could not be substituted by paying the affected
employees their respective one month salaries.
Corporation alleged that based on the documents
submitted to the SOLE, it suffered a sharp decline in
business in terms of volume and income derived since
2001, caused by the Asian financial crisis and later
aggravated by the 9/11 incident in the U.S. and the
ongoing war in the Middle East. The Corporation went on
to explain that its income from the domestic market and
export operations declined sharply: from its export
operations, its income of P28,855,000.00 in 2001 dropped
to P23,927,000.00
in
2002;
and,
thereafter,
to P5,796,000.00 in 2003.
On June 23, 2004, the SOLE rendered a Decision granting
wage increases totaling P8,039,330.00 to the employees
for the three years of the CBA. Relative to increased
benefits for uniform, Christmas package, rice subsidy,
and early retirement plan/separation pay, the SOLE
ordered the retention of the status quo. However, the
SOLE denied the demand of the Union as to the scope of
the bargaining unit.
The SOLE likewise affirmed the termination of the 88
employees on the ground that, if not for the personnel
reduction program.The Union thereafter filed a petition
for
certiorari
with
the
CA
which
rendered
judgmentdismissing the petition for lack of merit. The
appellate court ruled that the Corporation failed to prove
that the SOLE committed grave abuse of discretion
amounting to excess or lack of jurisdiction in issuing the
decision.
The appellate court affirmed the finding of the SOLE that
there was a slump in the demand of the Corporations
products, holding that while low volume of work was not
listed as a valid ground for dismissal under Articles 282
and 283 of the Labor Code of the Philippines, it
nevertheless justified the dismissal on the ground of
redundancy.
Issue:
Whether or not respondent corporation is guilty of unfair
labor practice because of dismissing the 77 union
members and bust the union in the process.
Ruling:
The petition is meritorious.
1. Retrenchment
Retrenchment is an authorized cause for the termination
of employment under Article 283 of the Labor Code.
Retrenchment is defined as the termination of
employment initiated by the employer through no fault of
the employee and without prejudice to the latter, resorted
by management during periods of business recession,
industrial depression or seasonal fluctuations or during
lulls over shortage of materials. It is a reduction in
manpower, a measure utilized by an employer to
minimize business losses incurred in the operation of its
business.
In Lopez Sugar Corporation v. Federation of Free Workers,
the phrase "to prevent losses" was defined to mean that
retrenchment or termination of the services of some
employees is authorized to be undertaken by the
employer sometime before the losses anticipated are
actually sustained or realized. It is not, in other words, the
intention of the lawmaker to compel the employer to stay
his hand and keep all his employees until sometime after
losses shall have, in fact, materialized; if such an intent
were expressly written into the law, that law may well be

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

vulnerable to constitutional attack as taking property


from one man to give to another. This is simple enough.
The prerogative of an employer to retrench its employees
must be exercised only as a last resort, considering that it
will lead to the loss of the employees livelihood. It is
justified only when all other less drastic means have been
tried and found insufficient or inadequate.48 Moreover, the
employer must prove the requirements for a valid
retrenchment by clear and convincing evidence;
otherwise, said ground for termination would be
susceptible to abuse by scheming employers who might
be merely feigning losses or reverses in their business
ventures in order to ease out employees.
The requirements are:
(1) that the retrenchment is reasonably
necessary and likely to prevent business losses
which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real,
or if only expected, are reasonably imminent as
perceived objectively and in good faith by the
employer; (2) that the employer served written
notice both to the employees and to the
Department of Labor and Employment at least
one month prior to the intended date of
retrenchment; (3) that the employer pays the
retrenched employees separation pay equivalent
to one month pay or at least month pay for
every year of service, whichever is higher; (4)
that the employer exercises its prerogative to
retrench employees in good faith for the
advancement of its interest and not to defeat or
circumvent the employees right to security of
tenure; and (5) that the employer used fair and
reasonable criteria in ascertaining who would be
dismissed and who would be retained among the
employees, such as status (i.e., whether they are
temporary, casual, regular or managerial
employees),
efficiency,
seniority,
physical
fitness, age, and financial hardship for certain
workers.
What the law speaks of is serious business losses or
financial reverses. Sliding incomes or decreasing gross
revenues are not necessarily losses, much less serious
business losses within the meaning of the law. The bare
fact that an employer may have sustained a net loss,
such loss, per se, absent any other evidence on its impact
on the business, nor on expected losses that would have
been incurred had operations been continued, may not
amount to serious business losses mentioned in the
law.50 The employer must also show that its losses
increased through a period of time and that the condition
of the company will not likely improve in the near future.
2. Redundancy
Redundancy, on the other hand, exists when the service
capability of the work force is in excess of what is
reasonably needed to meet the demands of the
enterprise. A redundant position is one rendered
superfluous by any number of factors, such as overhiring
of workers, decreased volume of business, dropping of a
particular product line previously manufactured by the
company, or phasing out of a service activity previously
undertaken by the business. Under these conditions, the
employer has no legal obligation to keep in its payroll
more employees than are necessary for the operation of
its business.
For the implementation of a redundancy program to be
valid, the employer must comply with the following
requisites: (1) written notice served on both the
employees and the Department of Labor and

Employment at least one month prior to the intended


date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay for every year of
service, whichever is higher; (3) good faith in abolishing
the redundant positions; and (4) fair and reasonable
criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.
3. Respondent corporation failed to produce clear
evidence for valid retrenchment.
Respondents failed to adduce clear and convincing
evidence to prove the confluence of the essential
requisites for a valid retrenchment of its employees. We
believe that respondents acted in bad faith in terminating
the employment of the members of petitioner Union.
Corporation, in fact, amassed substantial earnings from
1999 to 2003. It found no need to appropriate its retained
earnings except on March 23, 2001, when it
appropriated P60,000,000.00 to increase production
capacity.
The appropriation of P20,000,000.00 by the respondent
Corporation on September 16, 2004 was made barely five
months after the 77 Union members were dismissed on
the ground that respondent Corporation was suffering
from "chronic depression." Cash dividends were likewise
declared on March 29, 2004, barely two weeks after it
implemented its "retrenchment program."
There is likewise no justification for the hiring of more
than 100 new employees, more than the number of those
who were retrenched, as well as the order authorizing full
blast overtime work for six hours daily. All these are
inconsistent with the intransigent claim that respondent
Corporation was impelled to retrench its employees
precisely because of low demand for its products and
other external causes.
Admittedly, the net income of respondent Corporation
of P46,559,917.00 in 2001 decreased to P37,764,303.00
in 2002. However, such decrease ensued because
respondent Corporation declared cash dividends for its
shareholders amounting to P28,000,000.00.
It also appears that respondent Corporations personnel
costs decreased to P97,971,479.00. There was thus no
reason for respondent Corporation to implement its
"retrenchment
program"
and
terminate
the
88
employees.
The net income of the respondent Corporation
of P39,553,028.00 in 2002 decreased to P12,729,776.00
in 2003.It bears stressing, however, that the stockholders
received
cash
dividends
in
the
total
amount
of P12,259,473.00.
That respondents acted in bad faith in retrenching the 77
members of petitioner is buttressed by the fact that Diaz
issued his Memorandum announcing the cost-reduction
program on March 9, 2004, after receipt of the February
10, 2004 letter of the Union president which included the
proposal for additional benefits and wage increases to be
incorporated in the CBA for the ensuing year.
Moreover, respondent Corporation failed to exhaust all
other means to avoid further losses without retrenching
its employees, such as utilizing the latters respective
forced vacation leaves. Respondents also failed to use fair
and reasonable criteria in implementing the retrenchment
program, and instead chose to retrench 77 of the
members of petitioner out of the dismissed 88
employees. Worse, respondent Corporation hired new

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

employees and even rehired the others who had been


"retrenched."

of Labor and Employment (SOLE) for assumption of


jurisdiction.

Respondents failed to prove that there was a drastic or


severe decrease in the product sales or that it suffered
severe business losses within an interval of three (3)
months from January 2004 to March 9, 2004 when Diaz
issued said Memorandum.

After which, the strike ended and classes resumed.


Pending resolution of the labor dispute before the SOLE,
the Board of Directors of SJCI approved on February 22,
1998 a resolution recommending the closure of the high
school which was approved by the stockholders on even
date because of the irreconcilable differences between
the school management and the Academys Union
particularly the safety of our students and the financial
aspect of the ongoing CBA negotiations.

4. Since termination illegal, members are entitled to


reinstatement with full backwages.
The retrenchment effected by respondent Corporation is
invalid due to a substantive defect, non-compliance with
the substantial requirements to effect a valid
retrenchment; it necessarily follows that the termination
of the employment of petitioner Unions members on
such ground is, likewise, illegal. As such, they (petitioner
Unions members) are entitled to reinstatement with full
backwages. However, in the case of those employeesmembers of petitioner Union who had received their
respective separation pay, the amounts of such payments
shall be deducted from the backwages due them.Where
reinstatement is no longer feasible because the positions
they previously held no longer exist, respondent
Corporation shall pay the employees-members of
petitioner Union backwages plus, in lieu of reinstatement,
separation pay equivalent to one month pay, or one-half
month pay for every year of service, whichever is higher.

Subsequently, some teaching and non-teaching personnel


of the high school agreed to the closure. On April 2, 1998,
SJCI informed the DOLE that as of March 31, 1998, 51
employees had received their separation compensation
package while 25 employees refused to accept the same.
On May 4, 1998, the 25 employees conducted a protest
action within the perimeter of the high school. The Union
filed a notice of strike with the NCMB only on May 7,
1998.
On May 21, 1998, the 25 employees filed a complaint for
unfair labor practice (ULP), illegal dismissal and nonpayment of monetary benefits against SJCI before the
NLRC which was docketed as RAB-IV-5-10039-98-L. The
Union members alleged that the closure of the high
school was done in bad faith in order to get rid of the
Union and render useless any decision of the SOLE on the
CBA deadlocked issues.
Labor Arbiter Antonio dismissed the Unions complaint for
ULP and illegal dismissal while granting SJCIs petition to
declare the strike illegal coupled with a declaration of loss
of employment status of the 25 Union members involved
in the strike.
On June 28, 2002, the NLRC rendered judgment reversing
the decision of the Labor Arbiter. It found SJCI guilty of
ULP and illegal dismissal and ordered it to reinstate the
25 employees to their former positions without loss of
seniority rights and other benefits, and with full
backwages.
On appeal, the Court of Appeals, affirmed with
modification the decision of the NLRC wherein the two
month unworked summer vacation should excluded.

ST. JOHN COLLEGES, INC. vs. ST. JOHN ACADEMY


FACULTY EMPLOYEES UNION
[G.R. No. 167892, October 27, 2006]
Facts:
Prior to 1998, petitioner offered a secondary course only.
The high school, which it employed, then employed about
80 teaching and non-teaching personnel who were
members of the St. John Academy Faculty & Employees
Union (Union).
The Collective Bargaining Agreement (CBA) between SJCI
and the Union was set to expire on May 31, 1997. During
the ensuing collective bargaining negotiations, SJCI
rejected all the proposals of the Union for an increase in
workers benefits. This resulted to a bargaining deadlock
which led to the holding of a valid strike by the Union on
November 10, 1997. In order to end the strike, on
November 27, 1997, SJCI and the Union, through the
efforts of the National Conciliation and Mediation Board
(NCMB), agreed to refer the labor dispute to the Secretary

Issue:
Whether or not St. John Colleges is guilty of unfair labor
practice through its act of closing the academy.

Ruling:
The petition lacks merit.
1. Closure. The closure was done to defeat the parties
agreement to refer the labor dispute to the SOLE; to
unilaterally end the bargaining deadlock; to render
nugatory any decision of the SOLE; and to circumvent the
Unions right to collective bargaining and its members
right to security of tenure.
Under Article 283 of the Labor Code, the following
requisites must concur for a valid closure of the business:
(1) serving a written notice on the workers at least one
(1) month before the intended date thereof; (2) serving a
notice with the DOLE one month before the taking effect
of the closure; (3) payment of separation pay equivalent
to one (1) month or at least one half (1/2) month pay for

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

every year of service, whichever is higher, with a fraction


of at least six (6) months to be considered as a whole
year; and (4) cessation of the operation must be bona
fide. It is not disputed that the first two requisites were
satisfied. The third requisite would have been satisfied
were it not for the refusal of the herein private
respondents to accept the separation compensation
package.
The instant case, thus, revolves around the fourth
requisite, i.e., whether SJCI closed the high school in good
faith.
Whether or not the closure of the high school was done in
good faith is a question of fact and is not reviewable by
this Court in a petition for review on certiorari save for
exceptional circumstances. In fine, the finding of the
NLRC, which was affirmed by the Court of Appeals, that
SJCI closed the high school in bad faith is supported by
substantial evidence and is, thus, binding on this Court.
Consequently, SJCI is liable for ULP and illegal dismissal.
Whether SJCI acted in bad faith depends on the particular
facts as established by the evidence on record. Bad faith
is, after all, an inference which must be drawn from the
peculiar circumstances of a case. The two decisive factors
in determining whether SJCI acted in bad faith are (1) the
timing of, and reasons for the closure of the high school,
and (2) the timing of, and the reasons for the subsequent
opening of a college and elementary department, and,
ultimately, the reopening of the high school department
by SJCI after only one year from its closure.
Under these circumstances, it is not difficult to discern
that the closure was done to defeat the parties
agreement to refer the labor dispute to the SOLE; to
unilaterally end the bargaining deadlock; to render
nugatory any decision of the SOLE; and to circumvent the
Unions right to collective bargaining and its members
right to security of tenure. By admitting that the closure
was due to irreconcilable differences between the Union
and school management, specifically, the financial aspect
of the ongoing CBA negotiations, SJCI in effect admitted
that it wanted to end the bargaining deadlock and
eliminate the problem of dealing with the demands of the
Union. This is precisely what the Labor Code abhors
and punishes as unfair labor practice since the net
effect is to defeat the Unions right to collective
bargaining.
SJCI contends that these circumstances do not establish
its bad faith in closing down the high school. Rather, it
claims that it was forced to close down the high school
due to alleged difficult labor problems that it encountered
while dealing with the Union since 1995, specifically, the
Unions illegal demands in violation of R.A. 6728 or the
"Government Assistance to Students and Teachers in
Private Education Act." Under R.A. 6728, the income from
tuition fee increase is to be used as follows: (a) 70% of
the tuition fee shall go to the payment of salaries, wages,
allowances, and other benefits of teaching and nonteaching personnel, and (b) 20% of the tuition fee
increase shall go to the improvement or modernization of
the buildings, equipment, and other facilities as well as
payment of the cost of operations.
We are not persuaded.
These alleged difficult labor problems merely show that
SJCI and the Union had disagreements regarding workers
benefits which are normal in any business establishment.
If SJCI found the Unions demands excessive, its remedy
under the law is to refer the matter for voluntary or

compulsory dispute resolution. Besides, this incident


complained of occurred in 1995, which could hardly
establish the good faith of SJCI or justify the closure in
1998.
Anent the Unions claim for the unimplemented 20%
tuition fee increase in 1996, suffice it to say that it is
erroneous to rule on said issue since the same was
submitted before the Voluntary Arbitrator and is not on
appeal before this Court. Besides, by referring the labor
dispute to the Voluntary Arbitrator, the parties
themselves acknowledged that there is a sufficient
mechanism to resolve the said dispute. Again, we fail to
see how this alleged labor problem in 1996 shows the
good faith of SJCI in closing the high school in 1998.
At any rate, even assuming that the Unions demands
were illegal or excessive, the important and crucial point
is that these alleged illegal or excessive demands did not
justify the closure of the high school and do not, in any
way, establish SJCIs good faith. The employer cannot
unilaterally close its establishment on the pretext
that the demands of its employees are excessive.
As already discussed, neither party is obliged to give-in to
the others excessive or unreasonable demands during
collective bargaining, and the remedy in such case is to
refer the dispute to the proper tribunal for resolution. This
was what SJCI and the Union did when they referred the
1997 CBA bargaining deadlock to the SOLE; however, SJCI
pre-empted the resolution of the dispute by closing the
high school. SJCI disregarded the whole dispute resolution
mechanism and undermined the Unions right to
collective bargaining when it closed down the high school
while the dispute was still pending with the SOLE.
The Labor Code does not authorize the employer to close
down the establishment on the ground of illegal or
excessive demands of the Union. Instead, aside from the
remedy of submitting the dispute for voluntary or
compulsory arbitration, the employer may file a
complaint for ULP against the Union for bargaining in bad
faith. If found guilty, this gives rise to civil and criminal
liabilities and allows the employer to implement a lock
out, but not the closure of the establishment resulting to
the permanent loss of employment of the whole
workforce.
In fine, SJCI undermined the Labor Codes system of
dispute resolution by closing down the high school while
the 1997 CBA negotiations deadlock issues were pending
resolution before the SOLE. The closure was done in bad
faith for the purpose of defeating the Unions right to
collective bargaining. Besides, as found by the NLRC, the
alleged illegality and excessiveness of the Unions
demands were not sufficiently proved by SJCI. Even on
the assumption that the Unions demands were illegal or
excessive, SJCIs remedy was to await the resolution by
the SOLE and to file a ULP case against the Union.
However, SJCI did not have the power to take matters into
its own hands by closing down the school in order to get
rid of the Union.
2. Circumstances lead to the inescapable conclusion that
SJCI merely used the alleged safety and well-being of the
students as a subterfuge to justify its actions.
SJCI next argues that the Union unduly endangered the
safety and well-being of the students who joined the valid
strike held on November 10, 1997, thus it closed down
the high school on March 31, 1998. It claims that the
Union coerced the students to join the protest actions to
pressure SJCI to give-in to the demands of the Union.
The Union categorically denied that it put the students in
harms way or pressured them to join the protest actions.

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

Given this denial by the Union, it was incumbent upon


SJCI to prove that the students were actually harmed or
put in harms way and that the Union coerced them to
join the protest actions. The reason for this is that the
employer carries the burden of proof to establish
that the closure of the business was done in good
faith. In the instant case, SJCI had the burden of proving
that, indeed, the closure of the school was necessary to
uphold the safety and well-being of the students.
There is insufficient evidence to hold that the safety and
well-being of the students were endangered and/or
compromised, and that the Union was responsible
therefor. Even assuming arguendo that the students
safety and well-being were jeopardized by the said
protest actions, the alleged threat to the students safety
and well-being had long ceased by the time the high
school was closed. Moreover, the parents were
vehemently opposed to the closure of the school because
there was no basis to claim that the students safety was
at risk. Taken together, these circumstances lead to the
inescapable conclusion that SJCI merely used the alleged
safety and well-being of the students as a subterfuge to
justify its actions.
3. Pieces of evidence regarding the subsequent
reopening of the high school after only one year from its
closure further show that the high schools closure was
done in bad faith.
SJCI next contends that the subsequent reopening of the
high school after only one year from its closure did not
show that the previous decision to close the high school
was tainted with bad faith because the reopening was
done due to the clamor of the high schools former
students and their parents. It claims that its former
students complained about the cramped classrooms in
the schools where they transferred.
The contention is untenable.

ULP and illegal dismissal.

SAN MIGUEL FOODS, INC. vs. SAN MIGUEL


CORPORATION EMPLOYEES UNION-PTGWO
[G.R. No. 168569, October 5, 2007]
Facts:
On November 9, 1992, some employees of San Miguel
Foods, Incs Finance Department, through the Union
represented by Edgar Moraleda, brought a grievance
against Finance Manager Gideon Montesa (Montesa), for
"discrimination, favoritism, unfair labor practices,
promoting divisiveness, etc, before SMFI Plant Operations
Manager George Nava in accordance with Step 1 of the
grievance machinery. The Union sought the "1. review,
evaluation & upgrading ofall Finance staff and 2.
Promotion of G.Q. Montesa to other SMC affiliate[s] &
subsidiaries."
SMFI informed the Union that it planned to address the
grievance through a "work management review" to be
completed by March 1993. However, it was not
completed by March 1993, prompting the Union to,
elevate the grievance to Step 2.
Almost 9 months after the grievance meeting was held or
on October 6, 1993, SMFI rendered a "Decision on Step 1
Grievance" stating that it was still in the process of
completing the "work management review," hence, the
Unions requests could not be granted.
The Union filed a complaint on October 20, 1993 before
the NLRC, Arbitration Branch, against SMFI, its President
Amadeo P. Veloso, and its Finance Manager Montesa for
"unfair labor practice, [and] unjust discrimination in
matters of promotion . . . " It prayed that SMFI et al. be
ordered to promote the therein named employees "with
the corresponding pay increases, etc.

First, the fact that after one year from the time it closed
its high school, SJCI opened a college and elementary
department, and reopened its high school department
showed that it never intended to cease operating as an
educational institution. Second, there is evidence on
record contesting the alleged reason of SJCI for reopening
the

SMFI et al. filed a motion to dismiss,8contending that the


issues raised in the complaint were grievance issues and,
therefore, "should be resolved in the grievance
machinery. The Labor Arbiter granted SMFI et al.s motion
to dismiss and ordered the remand of the case to the
grievance machinery for completion of the proceedings.

Finally, when SJCI reopened its high school, it did not


rehire the Union members. Evidently, the closure had
achieved its purpose, that is, to get rid of the Union
members.

On
appeal,
to
the
NLRC
by
"Motion
for
Reconsideration/Appeal",
such
was
granted
and
accordingly ordered the Labor Arbiter to continue the
proceedings on the Unions complaint. Hence, SMFI filed a
petition for certiorari with SC which they referred the case
to the CA pursuant to St. Martin Funeral Homes v. NLRC.

Clearly, these pieces of evidence regarding the


subsequent reopening of the high school after only one
year from its closure further show that the high schools
closure was done in bad faith.
Lastly, SJCI asserts that the strike conducted by the 25
employees on May 4, 1998 was illegal for failure to take
the necessary strike vote and give a notice of strike.
However, protest actions of the Union cannot be
considered a strike because, by then, the employeremployee relationship has long ceased to exist because
of the previous closure of the high school on March 31,
1998.
In sum, the timing of, and the reasons for the closure of
the high school and its reopening after only one year from
the time it was closed down, show that the closure was
done in bad faith for the purpose of circumventing the
Unions right to collective bargaining and its members
right to security of tenure. Consequently, SJCI is liable for

Court of Appeals denied SMFI et al.s petition for


certiorari, it holding that the Labor Arbiter has jurisdiction
over the complaint of the Union, they having violated the
seniority rule under the CBA by appointing and promoting
certain employees which amounted to a ULP.
Issues:
Whether or not the labor arbiter has jurisdiction over the
case.
Whether or not SMFI is guilty of unfair labor practice.
Ruling:
Section 1 of Rule 8 of the Rules of Court should
thus not be strictly applied to a case filed before a
Labor Arbiter. In determining jurisdiction over a
case, allegations made in the complaint, as well as
those in the position paper, may thus be
considered.

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

SMFI argues that the allegations in the Unions complaint


filed before the Labor Arbiter do not establish a cause of
action for ULP, the Union having merely contended that
SMFI was guilty thereof without specifying the ultimate
facts upon which it was based. It cites Section 1 of Rule 8
of the Rules of Court as applying suppletorily to the
proceedings before the Labor Arbiter. Thus, SMFI
concludes that the Labor Arbiter has no jurisdiction over
its complaint.
The jurisdiction of Labor Arbiters, enumerated in Article
217 of the Labor Code, includes complaints for ULP.
Indeed, the particular acts of ULP alleged to have been
committed by SMFI were not specified; neither were the
ultimate facts in support thereof. In its Position Paper,
however, the Union detailed the particular acts of ULP
attributed to SMFI and the ultimate facts in support
thereof.
Section 7, Rule V of the New Rules of Procedure of the
NLRC provides: The proceedings before the Labor
Arbiter shall be non-litigious in nature. The
technicalities of law and procedure and the rules
obtaining in the courts of law shall not strictly
apply thereto. The Labor Arbiter may avail himself of all
reasonable means to ascertain the facts of the
controversy speedily, including ocular inspection and
examination of well-informed persons.
Section 1 of Rule 8 of the Rules of Court should
thus not be strictly applied to a case filed before a
Labor Arbiter. In determining jurisdiction over a
case, allegations made in the complaint, as well as
those in the position paper, may thus be
considered.
SMFI guilty of ULP but only on the ground of violation of
the CBA Agreement.
ULP on the ground of discrimination which must allege
that that they were done to encourage or discourage
membership in a labor organization.
Based on Art. 248. Unfair labor practices of employers.
It shall be unlawful for an employer to commit any of the
following unfair labor practices: (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.
On the questioned promotions, the Union did not allege
that they were done to encourage or discourage
membership in a labor organization. In fact, those
promoted were members of the complaining Union. The
promotions do not thus amount to ULP under Article
248(e) of the Labor Code.
ULP on the ground of violation of Collective Bargaining
Agreement
(1) gross violation of the CBA; AND
(2) the violation pertains to the economic
provisions of the CBA.
As for the alleged ULP committed under Article 248(i), for
violation of a CBA, this Article is qualified by Article 261 of
the Labor Code, the pertinent portion of which latter
Article reads: x x x violations of a Collective
Bargaining Agreement, except those which are
gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under
the Collective Bargaining Agreement. For purposes of
this
article,
gross
violations
of
Collective
Bargaining Agreement shall mean flagrant and/or
malicious
refusal
to
comply
with

the economic provisions of such agreement.


In Silva v. NLRC, for a ULP case to be cognizable by the
Labor Arbiter, and the NLRC to exercise its appellate
jurisdiction, the allegations in the complaint should
show prima
facie theconcurrence
of
two
things,
namely: (1) gross violation of the CBA; AND (2) the
violation pertains to the economic provisions of the
CBA.
First, Thegrievance machinery provision in the CBA is not
an economic provision, however, hence, the second
requirement for a Labor Arbiter to exercise jurisdiction of
a ULP is not present.
Second, the Union alleges that violated the Job Security
provision in the CBA, specifically the seniority rule, in that
SMFI "appointed less senior employees to positions at its
Finance Department, consequently intentionally bypassing more senior employees who are deserving of said
appointment."
Since the seniority rule in the promotion of employees
has a bearing on salary and benefits, it may, following a
liberal construction (following the rule on construction in
favor of labor) of Article 261 of the Labor Code, be
considered an "economic provision" of the CBA.
the Union charges SMFI to have promoted less senior
employees, thus bypassing others who were more senior
and equally or more qualified. It may not be seriously
disputed that this charge is a gross or flagrant violation of
the seniority rule under the CBA, a ULP over which the
Labor Arbiter has jurisdiction.
The Court of Appeals having affirmed the NLRC decision
finding that the Labor Arbiter has jurisdiction over the
Unions complaint and thus remanding it to the Labor
Arbiter for continuation of proceedings thereon, the
appellate courts said finding may be taken to have been
made only for the purpose of determining jurisdiction.

PUREFOODS CORP. vs. NAGKAKAISANG SAMAHANG


MANGGAGAWA NG PUREFOODS RANK AND FILE
[G.R. No. 150896, August 28, 2008]
Facts:
The respondents in this case, 3 labor organizations and a
federation:
NAGSAMA-Purefoods),
the
exclusive
bargaining agent of the rank-and-file workers of
Purefoods' meat division throughout Luzon; STFWU, in
the farm in Sto. Tomas, Batangas; PGFWU, of those in the
poultry farm in Sta. Rosa, Laguna. These organizations
were affiliates of the federation, Purefoods Unified Labor
Organization (PULO).
STFWU, NAGSAMA-Purefoods, and PGFWU submitted their
respective proposals for CBA renewal, and their general
membership
resolutions
which,
affirmed
the
organizations' affiliation with PULO. Purefoods refused to
negotiate with the unions should a PULO representative
be in the panel. The parties then agreed to postpone the
negotiations indefinitely.
On July 24, 1995, however, the petitioner company
concluded a new CBA with another union in its farm in
Malvar, Batangas. 5 days thereafter, at around 8:00pm, 4
company employees facilitated the transfer of around
23,000 chickens from the poultry farm in Sto. Tomas,
Batangas (where STFWU was the exclusive bargaining
agent) to that in Malvar.The next day, the regular rank-

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

and-file workers in the Sto. Tomas farm were refused


entry in the company premises; and on July 31, 1995, 22
STFWU members were terminated from employment. The
farm manager, supervisors and electrical workers of the
Sto. Tomas farm, who were members of another union,
were nevertheless retained by the company in its employ.
Aggrieved by these developments, the respondent labor
organizations jointly instituted a complaint for unfair labor
practice (ULP), illegal lockout/dismissal and damages,
docketed with the Labor Arbitration Branch of the NLRC.
In the proceedings before the Labor Arbiter, Purefoods
interposed, among others, the defenses that PULO was
not a legitimate labor organization or federation for it did
not have the required minimum number of member
unions; that the closure of the Sto. Tomas farm was not
arbitrary but was the result of the financial non-viability of
the operations; STFWU, lost its status as bargaining
representative when the Sto. Tomas farm was closed.
LA rendered a Decisiondismissing the complaint.
NLRC reversed the ruling of the LA, saying that the
company's refusal to recognize the labor organizations'
affiliation with PULO was unjustified considering that the
latter had been granted the status of a federation by the
Bureau of Labor Relations; and that this refusal
constituted undue interference in, and restraint on the
exercise of the employees' right to self-organization and
free collective bargaining. The real motive of the
company in the sudden closure and the mass dismissal
was union busting, as only the union members were
locked out, and the company subsequently resumed
operations of the closed farm under a new contract with
the landowner.
The petitioner corporation filed a Rule 65 petition before
the CA who dismissed the petition outright for no proof of
authority to act for and on behalf of the corporation was
submitted by the corporation's senior vice-president who
signed the non-forum shopping.
Petitioner instituted before us the instant petition for
review on certiorariunder Rule 45.
Issue:
Whether or not petitioner is guilty of ULP.
Whether or not the NLRC gravely abused its discretion.
Ruling:
The petition is denied.
When the petitioner is a corporation, the certification
shall be executed by a natural person authorized by the
corporation's board of directors. While technical rules of
procedure are not designed to frustrate the ends of
justice, they are provided to effect the proper and orderly
disposition of cases and effectively prevent the clogging
of court dockets.
Section 1, Rule 65 of the Rules of Court mandates that
the petition for certiorari shall be accompanied by a
sworn certification of non-forum shopping. When the
petitioner is a corporation, the certification shall be
executed by a natural person authorized by the
corporation's board of directors, and proof of such
authority must be attached to the petition. Failure to
attach to the certification any proof of the signatory's
authority is a sufficient ground for the dismissal of the
petition.
In the instant case, the senior vice-president of the
petitioner corporation signed the certificate of non-forum
shopping. No proof of his authority to sign the said
certificate was, however, attached to the petition. Thus,
applying settled jurisprudence,

we find that the CA committed no error when it dismissed


the petition.
The Court cannot even be liberal in the application of the
rules because liberality is warranted only in instances
when there is substantial compliance with the technical
requirements in pleading and practice, and when there is
sufficient explanation that the non-compliance is for a
justifiable cause, such that the outright dismissal of the
case will defeat the administration of justice. Here, the
petitioner corporation did not present a reasonable
explanation for its non-compliance with the rules. Further,
it cannot be said that petitioner substantially complied
therewith, because it did not attach to its motion for
reconsideration any proof of the authority of its signatory.
It stands to reason, therefore, that this Court now refuses
to condone petitioner's procedural transgression.
We must reiterate that the rules of procedure are
mandatory, except only when, for the most persuasive of
reasons, they may be relaxed to relieve a litigant of an
injustice.While technical rules of procedure are not
designed to frustrate the ends of justice, they are
provided to effect the proper and orderly disposition of
cases and effectively prevent the clogging of court
dockets.
2. Petitioner guilty of ULP.
It is crystal clear that the closure of the Sto. Tomas farm
was made in bad faith. Badges of bad faith are evident
from the following acts of the petitioner: it unjustifiably
refused to recognize the STFWU's and the other unions'
affiliation with PULO; it concluded a new CBA with another
union in another farm during the agreed indefinite
suspension of the collective bargaining negotiations; it
surreptitiously transferred and continued its business in a
less hostile environment; and it suddenly terminated the
STFWU members, but retained and brought the nonmembers to the Malvar farm.
Petitioner presented no evidence to support the
contention that it was incurring losses or that the subject
farm's lease agreement was pre-terminated. Ineluctably,
the closure of the Sto. Tomas farm circumvented the labor
organization's right to collective bargaining and violated
the members' right to security of tenure.
3. Need to prove grave abuse of discretion of the NLRC.
It was incumbent for petitioner to prove before the
appellate court that the labor commission capriciously
and whimsically exercised its judgment tantamount to
lack of jurisdiction, or that it exercised its power in an
arbitrary or despotic manner by reason of passion or
personal hostility, and that its abuse of discretion is so
patent and gross as to amount to an evasion of a positive
duty enjoined or to act at all in contemplation of law.
Here, as aforesaid, no such proof was adduced by
petitioner. We, thus, declare that the NLRC ruling is not
characterized by grave abuse of discretion.
3. Award of moral and exemplary damages due to
existence of ULP.
We deem as proper the award of moral and exemplary
damages. We hold that the sudden termination of the
STFWU members is tainted with ULP because it was done
to interfere with, restrain or coerce employees in the
exercise of their right to self-organization. Thus, the
petitioner company is liable for the payment of the
aforesaid damages. Correcting the dispositive portion of
the NLRC ruling, payment of P500,000.00 as moral and
exemplary damages should be made to the illegally
dismissed STFWU members.
As to the order of reinstatement, since it is no longer

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

feasible considering the length of time that the


employees have been out of petitioner's employ, the
company is ordered to pay the illegally dismissed STFWU
members separation pay equivalent to one (1) month
pay, or one-half (1/2) month pay for every year of service,
whichever is higher.
The releases and quitclaims, as well as the affidavits of
desistance, signed by the employees, who were then
necessitous men at the time of execution of the
documents, are declared invalid and ineffective.

GENERAL SANTOS COCA-COLA PLANT FREE


WORKERS UNION-TUPAS vs. CCBPI(GEN. SANTOS
CITY) ET AL.
[G.R. No. 178647, Feb. 13, 2009]
Facts:
CCBPI experienced a decline in profitability due to the
Asian economic crisis, decrease in sales, and tougher
competition. It implemented 3 waves of an Early
Retirement Program. Meanwhile, there was an inter-office
memorandum mandating officers to put on hold all
requests for hiring to fill in vacancies in both regular and
temporary positions in the Head Office and in the Plants.
Because several employees availed of the early
retirement program, vacancies were created in some
departments, including the production department of
CCBPI
Gen
San,
where
members
of
petitioner Union worked.
Faced with the freeze hiring directive, CCBPI engaged
the services of JLBP Services Corporation (JLBP), a
company in the business of providing labor and
manpower
services,
including
janitorial
services,
messengers, and office workers.
The Union petitioner filed with the National Conciliation
and Mediation Board (NCMB), a Notice of Strike on the
ground of alleged unfair labor practice for contracting-out
services regularly performed by union members (union
busting). The parties failed to come to an amicable
settlement. CCBPI filed a Petition for Assumption of
Jurisdiction with the Office of the Secretary of Labor and
Employment. The Secretary of Labor issued an Order
enjoining the threatened strike and certifying the dispute
to the NLRC for compulsory arbitration.
NLRC ruled that CCBPI was not guilty of unfair labor
practice for contracting out jobs to JLBP. The NLRC
anchored its ruling on the validity of the Going-to-theMarket (GTM) system implemented by the company,
which called for restructuring its selling and distribution
system, leading to the closure of certain sales offices and
the elimination of conventional sales routes. The NLRC
held that petitioner failed to prove by substantial
evidence that the system was meant to curtail the right
to self-organization of petitioners members.
The CA upheld the NLRCs finding that CCBPI was not
guilty of unfair labor practice. It found that JLBP was an
independent contractor and that the decision to contract
out jobs was a valid exercise of management prerogative
to meet exigent circumstances.
Issue:
Whether or not CCBPI was guilty of unfair labor practice
for contracting out jobs.

Ruling:
The petition is bereft of merit. Hence, we deny the
Petition.
Dismissed for issues raised which are questions of
facts.
First, an examination of the issues raised by petitioner
reveals that they are questions of fact. The issues
raised, i.e., whether JLBP is an independent contractor,
whether CCBPIs contracting-out of jobs to JLBP amounted
to unfair labor practice, and whether such action was a
valid exercise of management prerogative, call for a reexamination of evidence, which is not within the ambit of
this Courts jurisdiction.
Moreover, factual findings of the NLRC, an administrative
agency deemed to have acquired expertise in matters
within its jurisdiction, are generally accorded not only
respect but finality especially when such factual findings
are affirmed by the CA.
The companys action to contract did not
constitute unfair labor practice as this was not
directed
at
the
members
right
to
selforganization.
Second, the NLRC found and the same was sustained by
the CA that the companys action to contract-out the
services and functions performed by Union members did
not constitute unfair labor practice as this was not
directed at the members right to self-organization.
Article 248 of the Labor Code provides: It shall be
unlawful for an employer to commit any of the following
unfair labor practices:
x x x (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 right to self-organization;
xxx
Unfair labor practice refers to acts that violate the
workers right to organize. The prohibited acts are
related to the workers right to self-organization and to
the observance of a CBA. Without that element, the acts,
even if unfair, are not unfair labor practices.
Both the NLRC and the CA found that petitioner was
unable to prove its charge of unfair labor practice. It was
the Union that had the burden of adducing substantial
evidence to support its allegations of unfair labor
practice, which burden it failed to discharge.

DE LA SALLE UNIVERSITY ET AL. vs. DE LA SALLE


UNIVERSITY EMPLOYEES ASSOCIATION
[G.R. No. 177283, April 7, 2009]
Facts:
In 2001, a group of respondents led by one Belen Aliazas
(Aliazas group) filed a petition for conduct of elections
with the DOLE, alleging that the then incumbent officers
of respondent had failed to call for a regular election
since 1985.
Disputing the Aliazas groups allegation, respondent
claimed that an election was conducted in 1987 but by
virtue of the enactment of Republic Act 6715, which
amended the Labor Code, the term of office of its officers
was extended to 5 years or until 1992 during which a
general assembly was held affirming their hold-over
tenure until the termination of collective bargaining

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

negotiations; and that a collective bargaining agreement


(CBA) was executed only on March 30, 2000.

case. The NLRC Third Division granted


motion.

The DOLE-NCR held that the holdover authority of


respondents incumbent set of officers had been
extinguished by virtue of the execution of the CBA. It
accordingly ordered the conduct of elections to be placed
under the control and supervision of its Labor Relations
Division and subject to pre-election conferences.

The NLRC Second Division, in the meantime, affirmed the


dismissal by the Arbiter of respondents ULP complaint.
The Court of Appeals Tenth Division, REVERSED the said
Order of the NLRC Third Divisiom with respect to the
subsuming of respondents ULP complaint, the ULP
complaint
having
been,
at
the
time
the
NLRC Third Division Order was issued, already disposed
of (dismissed) by the Arbiter and was in fact pending
appeal before the NLRC Second Division.

Notwithstanding the conduct of election imposed,


respondent called for a regular election on July 9, 2001,
without prior notice to the DOLE and without the conduct
of pre-election conference, prompting the Aliazas group
to file an Urgent Motion for Intervention with the Bureau
of Labor Relations (BLR) of the DOLE. The BLR granted
the Aliazas groups motion for intervention directing
to cease and desist from holding the general
election of DLSUEA officers.
The Aliazas group thereupon, via letter of August 7, 2001
to Brother Rolando Dizon, FSC, President of petitioner
DLSU, requested the University to please put on
escrow all union dues/agency fees and whatever money
considerations deducted from salaries of concerned coacademic personnel until such time that an election of
union officials has been scheduled and subsequent
elections has been held.
Thus, DLSU decided that, the hold-over authority of your
incumbent set of officers has been considered
extinguished and an election of new union officers, to be
conducted and supervised by the DOLE has been directed
to be held. It decided the following saying that it does not
want itself to be unnecessarily involved in your intraunion dispute. This is the only way that the University can
maintain neutrality on this matter of grave concern.
1. Establish a savings account for the Union where all
collected union dues and agency fees will be deposited
and held in trust; and
2. Discontinue normal relations with any group within the
Union including the incumbent set of officers.
Consequently, respondent to file a complaint against
petitioners for Unfair Labor Practice (ULP complaint),
claiming that petitioners unduly interfered with its
internal affairs and discriminated against its members.
During the pendency of its ULP complaint, respondent
filed its First Notice of Strike with the Office of the
Secretary of Labor (OSL), charging petitioners for 1) gross
violation of the CBA and 2) bargaining in bad faith which
was certified for compulsory arbitration to the NLRC
(certified case). The certified case, docketed as NLRCNCR CC000222-02, was raffled to the NLRC Third
Division.
In the meantime, Labor Arbiter Felipe Pati, by Decision of
July
12,
2002,
dismissed
respondents
ULP
complaint. Respondent appealed to the NLRC, and was
lodged at the NLRC Second Division.
While the dismissal of its ULP complaint was pending
appeal before the NLRC Second Division, respondent, on
behalf of some of its members, filed four other cases
against petitioners which were lodged at the
NLRC Second Division.
Respondent thereafter filed in the certified case which
was lodged at the NLRC Third Division a motion to have
its
four
other
cases
and
its
ULP
complaint
thenpending appeal before the NLRC Second Division to
have these cases subsumed in the certified

respondents

The Court of Appeals First Division SET ASIDE the


NLRC Second Division Order affirming the dismissal of
respondents
ULP
complaint
and
ordered
NLRC Second Division to transmit the entire records of
the ULP complaint to the NLRC Third Division where the
ULP complaint had been ordered consolidated.
Hence, petitioners petition for review on certiorari at bar.
Issues:
Whether or not the CAs tenth divisions decision was
correct in declaring the act of subsuming wrong.
Whether or not petitioner is guilty of unfair labor
practice.
Ruling:
The petition is partly meritorious.
1. To transmit the records of respondents ULP complaint
to the NLRC Third Division, the same can no longer be
effected, the CAs Tenth Division ruling having become
final.
The appellate courts Tenth Division Decision had become
final and executory on July 11, 2004. Therefore, with
respect to the herein challenged Decision of the appellate
courts First Division
ordering
the
NLRC Second
Division to transmit the records of respondents ULP
complaint to the NLRC Third Division, the same can no
longer be effected, the appellate courts Tenth Division
ruling having, it bears repeating, become final.
2. Pending the final resolution of the intra-union dispute,
respondents officers remained duly authorized to
conduct union affairs.
On the other matter raised by petitioners that their acts
of withholding union and agency dues and suspension of
normal relations with respondents incumbent set of
officers pending the intra-union dispute did not constitute
interference, the Court finds for respondent.
Pending the final resolution of the intra-union dispute,
respondents officers remained duly authorized to
conduct union affairs. The clarification letter by BLR
Director Hans Leo J. Cacdac enlightens:
We take this opportunity to clarify that there
is no void in the DLSUEA leadership. The
Decision of DOLE-NCR Regional Director
should not be construed as an automatic
termination of the incumbent officers
tenure of office. As duly-elected officers of the
DLSUEA, their leadership is not deemed
terminated by the expiration of their terms of
office, for they shall continue their functions and
enjoy the rights and privileges pertaining to their
respective positions in a hold-over capacity,
until their successors shall have been
elected and qualified.
It bears noting that at the time petitioners questioned
moves were adopted, a valid and existing CBA had been

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

entered between the parties. It thus behooved


petitioners to observe the terms and conditions thereof
bearing on union dues and representation. It is axiomatic
in labor relations that a CBA entered into by a legitimate
labor organization and an employer becomes the law
between the parties, compliance with which is mandated
by express policy of the law.
3. The grant of nominal damages in order. No basis for
exemplary damages.
Exemplary or corrective damages are imposed by way of
example or correction for the public good in addition to
the moral, temperate, liquidated or compensatory
damages. While the amount of exemplary damages need
not be proved, respondent must show proof of
entitlement to moral, temperate or compensatory
damages before the Court may consider awarding
exemplary damages. No such damages were prayed for,
however, hence, the Court finds no basis to grant the
prayer for exemplary damages.
The grant of nominal damages and attorneys fees is in
order.
In so far as the the NLRC Second Division Decision is
REVERSED finding petitioners liable for Unfair Labor
Practice, and to pay respondent nominal damages in the
amount of P250,000 and attorneys fees in the amount
ofP50,000.

TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA


BREWERY vs. ASIA BREWERY, INC.
[G.R. No. 162025, Aug. 3, 2010]
Facts:
Asia Brewery, Inc. (ABI) is engaged in the manufacture,
sale and distribution of beer, shandy, bottled water and
glass products. ABI entered into a Collective Bargaining
Agreement (CBA) with Bisig at Lakas ng mga
Manggagawa sa Asia-Independent (BLMA-INDEPENDENT),
the exclusive bargaining representative of ABIs rank-andfile employees.
Article I of the CBA defined the scope of the bargaining
unit, as follows:
Section 1.Recognition. The COMPANY recognizes the
UNION
as
the
sole
and
exclusive
bargaining
representative of all the regular rank-and-file daily paid
employees within the scope of the appropriate bargaining
unit with respect to rates of pay, hours of work and other
terms and conditions of employment. The UNION shall not
represent or accept for membership employees outside
the scope of the bargaining unit herein defined.
Section 2.Bargaining Unit. The bargaining unit shall be
comprised of all regular rank-and-file daily-paid
employees of the COMPANY. However, the following
jobs/positions as herein defined shall be excluded from
the bargaining unit, to wit:
1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees

12. Purchasing and Quality Control Staff


Subsequently, a dispute arose when ABIs management
stopped deducting union dues from eighty-one (81)
employees, believing that their membership in BLMAINDEPENDENT violated the CBA. Eighteen (18) of these
affected
employees
are
QA
Sampling
Inspectors/Inspectresses and Machine Gauge Technician
who formed part of the Quality Control Staff. Twenty (20)
checkers are assigned at the Materials Department of the
Administration Division, Full Goods Department of the
Brewery Division and Packaging Division. The rest are
secretaries/clerks directly under their respective division
managers.
BLMA-INDEPENDENT claimed that ABIs actions restrained
the employees right to self-organization and brought the
matter to the grievance machinery. As the parties failed
to amicably settle the controversy, BLMA-INDEPENDENT
lodged a complaint before the National Conciliation and
Mediation Board (NCMB). The parties eventually agreed to
submit the case for arbitration to resolve the issue of
"whether or not there is restraint to employees in the
exercise of their right to self-organization."
Voluntary Arbitrator sustained the BLMA-INDEPENDENT
after finding that the positions of the subject employees
qualify under the rank-and-file category because their
functions are merely routinary and clerical. On appeal,
the CA reversed the Voluntary Arbitrator.
BLMA-INDEPENDENT filed a motion for reconsideration. In
the meantime, a certification election was held on August
10, 2002 wherein petitioner Tunay na Pagkakaisa ng
Manggagawa sa Asia (TPMA) won. As the incumbent
bargaining
representative
of
ABIs
rank-and-file
employees claiming interest in the outcome of the case,
petitioner filed with the CA an omnibus motion for
reconsideration of the decision and intervention, with
attached petition signed by the union officers.11 Both
motions were denied by the CA.12
Issues:
Whether or not the 81 employees are excluded from and
are not eligible for inclusion in the bargaining unit as
defined in the CBA;
Whether or not the ABI committed an act in restraining
the employees in the exercise of their right to selforganization;
Ruling:
1. Although Article 245 of the Labor Code limits the
ineligibility to join, form and assist any labor organization
to managerial employees, jurisprudence has extended
this prohibition to confidential employees or those who by
reason of their positions or nature of work are required to
assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and
highly confidential records. Confidential employees are
thus excluded from the rank-and-file bargaining unit. The
rationale for their separate category and disqualification
to join any labor organization is similar to the inhibition
for managerial employees because if allowed to be
affiliated with a Union, the latter might not be assured of
their loyalty in view of evident conflict of interests and
the Union can also become company-denominated with
the presence of managerial employees in the Union
membership. Having access to confidential information,
confidential employees may also become the source of
undue advantage. Said employees may act as a spy or
spies of either party to a collective bargaining agreement.
In Philips Industrial Development, Inc. v. NLRC, this Court

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

held that petitioners "division secretaries, all Staff of


General Management, Personnel and Industrial Relations
Department, Secretaries of Audit, EDP and Financial
Systems" are confidential employees not included within
the rank-and-file bargaining unit. Earlier, in Pier 8 Arrastre
& Stevedoring Services, Inc. v. Roldan-Confesor, the court
declared that legal secretaries who are tasked with,
among others, the typing of legal documents,
memoranda and correspondence, the keeping of records
and files, the giving of and receiving notices, and such
other duties as required by the legal personnel of the
corporation, fall under the category of confidential
employees and hence excluded from the bargaining unit
composed of rank-and-file employees.
Also considered having access to "vital labor information"
are the executive secretaries of the General Manager and
the executive secretaries of the Quality Assurance
Manager, Product Development Manager, Finance
Director,
Management
System
Manager,
Human
Resources Manager, Marketing Director, Engineering
Manager, Materials Manager and Production Manager.
In the present case, the CBA expressly excluded
"Confidential and Executive Secretaries" from the rankand-file bargaining unit, for which reason ABI seeks their
disaffiliation from the union. Petitioner, however,
maintains that except for Daisy Laloon, Evelyn
Mabilangan and Lennie Saguan who had been promoted
to monthly paid positions, several secretaries/clerks are
deemed included among the rank-and-file employees of
ABI. It is rather curious that there would be several
secretaries/clerks for just one (1) department/division
performing tasks which are mostly routine and clerical.
ABI insisted they fall under the "Confidential and
Executive Secretaries" expressly excluded by the CBA
from the rank-and-file bargaining unit.
However, perusal of the job descriptions of these
secretaries/clerks reveals that their assigned duties and
responsibilities involve routine activities of recording and
monitoring, and other paper works for their respective
departments while secretarial tasks such as receiving
telephone calls and filing of office correspondence appear
to have been commonly imposed as additional duties.
ABI failed to indicate who among these numerous
secretaries/clerks have access to confidential data
relating to management policies that could give rise to
potential conflict of interest with their Union membership.
Clearly, the rationale under our previous rulings for the
exclusion of executive secretaries or division secretaries
would have little or no significance considering the lack of
or very limited access to confidential information of these
secretaries/clerks.

decorating and glass sections of the Production


Department plainly showed that they perform routine and
mechanical tasks preparatory to the delivery of the
finished products. Consequently, we hold that the twenty
(20) checkers may not be considered confidential
employees under the category of Quality Control Staff
who were expressly excluded from the CBA of the rankand-file bargaining unit.
Confidential employees are defined as those who (1)
assist or act in a confidential capacity, (2) to persons who
formulate, determine, and effectuate management
policies in the field of labor relations. The two (2) criteria
are cumulative, and both must be met if an employee is
to be considered a confidential employee that is, the
confidential relationship must exist between the
employee and his supervisor, and the supervisor must
handle the prescribed responsibilities relating to labor
relations. The exclusion from bargaining units of
employees who, in the normal course of their duties,
become aware of management policies relating to labor
relations is a principal objective sought to be
accomplished by the "confidential employee rule.
There is no showing in this case that the
secretaries/clerks and checkers assisted or acted in a
confidential capacity to managerial employees and
obtained confidential information relating to labor
relations policies.
Not being confidential employees, the secretaries/clerks
and checkers are not disqualified from membership in the
Union of respondents rank-and-file employees.
2. Unfair labor practice refers to "acts that violate the
workers right to organize." The prohibited acts are
related to the workers right to self-organization and to
the observance of a CBA. For a charge of unfair labor
practice to prosper, it must be shown that ABI was
motivated by ill will, "bad faith, or fraud, or was
oppressive to labor, or done in a manner contrary to
morals, good customs, or public policy, and, of course,
that social humiliation, wounded feelings or grave anxiety
resulted from ABIs act in discontinuing the union dues
deduction from those employees it believed were
excluded by the CBA. Considering that the herein dispute
arose from a simple disagreement in the interpretation of
the CBA provision on excluded employees from the
bargaining unit, respondent cannot be said to have
committed unfair labor practice that restrained its
employees in the exercise of their right to selforganization, nor have thereby demonstrated an antiunion stance.

We thus hold that the secretaries/clerks, numbering about


forty (40), are rank-and-file employees and not
confidential employees.

MANILA MINING CORP. EMPLOYEES ASSOCIATIONFFW vs. MANILA MINING CORP.


[G.R. No. 178222-23, Sept. 29, 2010]

With respect to the Sampling Inspectors/Inspectresses


and the Gauge Machine Technician, there seems no
dispute that they form part of the Quality Control Staff
who, under the express terms of the CBA, fall under a
distinct category. But we disagree with ABIs contention
that the twenty (20) checkers are similarly confidential
employees being "quality control staff" entrusted with the
handling and custody of company properties and
sensitive information.

Facts:
Respondent Manila Mining Corporation (MMC) is a
publicly-listed corporation engaged in large-scale mining
for gold and copper ore. MMC is required by law to
maintain a tailings containment facility to store the waste
material
generated
by
its
mining
operations.
Consequently, MMC constructed several tailings dams to
treat and store its waste materials. One of these dams it
constructed in 1993 and was operated under a permit
issued by the DENR, through its Environmental
Management Bureau (EMB) in Butuan City, Agusan del
Norte.

Again, the job descriptions of these checkers assigned in


the storeroom section of the Materials Department,
finishing section of the Packaging Department, and the

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

Eleven (11) rank-and-file employees of MMC, who later


became complainants before the labor arbiter, attended
the organizational meeting of MMC-Makati Employees
Association-Federation of Free Workers Chapter (Union).
The Union filed with the DOLE all the requirements for its
registration, acquired its legitimate registration status
and subsequently, submitted letters to MMC relating its
intention to bargain collectively. The Union submitted its
Collective Bargaining Agreement (CBA) proposal to MMC.
Upon expiration of the tailings permit, DENR-EMB did not
issue a permanent permit due to the inability of MMC to
secure an Environmental Compliance Certificate (ECC).
MMC was compelled to temporarily shut down its mining
operations, resulting in the temporary lay-off of more
than 400 employees in the mine site.

of MMCs mining operations was not due to its fault nor


was it necessitated by financial reasons. Such suspension
was brought about by the non-issuance of a permit for
the continued operation of TP No. 7 without which MMC
cannot resume its milling and mining operations. x x x.21
[Emphasis supplied.]
Unfair labor practice cannot be imputed to MMC since, as
ruled by the Court of Appeals, the call of MMC for a
suspension of the CBA negotiations cannot be equated to
"refusal to bargain."
Article 252 of the Labor Code defines the phrase "duty to
bargain collectively," to wit:
ARTICLE 252.Meaning of duty to bargain
collectively. - The duty to bargain collectively
means the performance of a mutual obligation to
meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an
agreement with respect to wages, hours of work
and all other terms and conditions of
employment including proposals for adjusting
any grievances or questions arising under such
agreements
[and
executing
a
contract
incorporating such agreements] if requested by
either party but such duty does not compel any
party to agree to a proposal or to make any
concession.

MMC called for the suspension of negotiations on the CBA


with the Union until resumption of mining operations.
Among the employees laid-off, the 11 complainants,
together with the Union filed a complaint before the labor
arbiter praying for reinstatement, recognition of the Union
as the sole and exclusive representative of its rank-andfile employees, and payment of moral and exemplary
damages and attorneys fees.
The labor arbiter ruled in favor of MMC and held that the
temporary shutdown of the mining operation, as well as
the temporary lay-off of the employees, is valid. The
NLRC modified the judgment of the labor arbiter and
ordered the payment of separation pay equivalent to one
month pay for every year of service. It ratiocinated that
the temporary lay-off, which exceeded more than six (6)
months, had the effect of severance of the employeremployee relationship. The Court of Appeals maintained
the order to pay separation pay but set aside the MMC
liability to pay the Union attorneys fees equivalent to
10% of the award.
Issue:
Whether or not MMC is guilty of unfair labor practice
Ruling:
The lay-off is neither illegal nor can it be considered as
unfair labor practice.
Despite all efforts exerted by MMC, it did not succeed in
obtaining the consent of the residents of the community
where the tailings pond would operate, one of the
conditions imposed by DENR-EMB in granting its
application for a permanent permit. It is precisely MMCs
faultless failure to secure a permit which caused the
temporary shutdown of its mining operations. As aptly
put by the Court of Appeals:
The evidence on record indeed clearly shows that MMCs
suspension of its mining operations was bonafide and the
reason for such suspension was supported by substantial
evidence. MMC cannot conduct mining operations without
a tailings disposal system. For this purpose, MMC
operates TP No. 7 under a valid permit from the
Department of Environment and Natural Resources
(DENR) through its Environmental Management Bureau
(EMB). In fact, a "Temporary Authority to Construct and
Operate" was issued on January 25, 2001 in favor of MMC
valid for a period of six (6) months or until July 25, 2001.
The NLRC did not dispute MMCs claim that it had timely
filed an application for renewal of its permit to operate TP
No. 7 but that the renewal permit was not immediately
released by the DENR-EMB, hence, MMC was compelled
to temporarily shut down its milling and mining
operations. Here, it is once apparent that the suspension

For a charge of unfair labor practice to prosper, it must be


shown that the employer was motivated by ill-will, bad
faith or fraud, or was oppressive to labor. The employer
must have acted in a manner contrary to morals, good
customs, or public policy causing social humiliation,
wounded feelings or grave anxiety. While the law makes it
an obligation for the employer and the employees to
bargain collectively with each other, such compulsion
does not include the commitment to precipitately accept
or agree to the proposals of the other. All it contemplates
is that both parties should approach the negotiation with
an open mind and make reasonable effort to reach a
common ground of agreement.
The Union based its contention on the letter request by
MMC for the suspension of the collective bargaining
negotiations until it resumes operations. Verily, it cannot
be said that MMC deliberately avoided the negotiation. It
merely sought a suspension and in fact, even expressed
its willingness to negotiate once the mining operations
resume. There was valid reliance on the suspension of
mining operations for the suspension, in turn, of the CBA
negotiation. The Union failed to prove bad faith in MMCs
actuations.
PRINCE TRANSPORT ET AL. vs. GARCIA ET AL.
[G.R. No. 167291, January 12, 2011]
Facts:
Prince Transport, Inc. (PTI) is a company engaged in the
business of transporting passengers by land.
Respondents alleged in their complaints that: that they
were hired by petitioner either as drivers, conductors,
mechanics or inspectors, except for respondent Diosdado
Garcia, who was assigned as Operations Manager.; in
addition to their regular monthly income, they also
received commissions equivalent to 8 to 10% of their
wages.; sometime in October 1997, the said commissions
were reduced to 7 to 9%; this led respondents and other

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

employees of PTI to hold a series of meetings to discuss


the protection of their interests as employees; these
meetings led Renato Claros, who is the president of PTI,
to suspect that respondents are about to form a union; he
made known to Garcia his objection to the formation of a
union; in December 1997, PTI employees requested for a
cash advance, but the same was denied by management
which resulted in demoralization on the employees'
ranks; later, PTI acceded to the request of some, but not
all, of the employees; the foregoing circumstances led
respondents to form a union for their mutual aid and
protection; in order to block the continued formation of
the union, PTI caused the transfer of all union members
and sympathizers to one of its sub-companies, Lubas
Transport (Lubas); despite such transfer, the schedule of
drivers and conductors, as well as their company
identification cards, were issued by PTI; the daily time
records, tickets and reports of the respondents were also
filed at the PTI office; and, all claims for salaries were
transacted at the same office; later, the business of Lubas
deteriorated because of the refusal of PTI to maintain and
repair the units being used therein, which resulted in the
virtual stoppage of its operations and respondents' loss of
employment.
Petitioners, on the other hand, denied the material
allegations of the complaints contending that herein
respondents were no longer their employees, since they
all transferred to Lubas at their own request; petitioners
have nothing to do with the management and operations
of Lubas as well as the control and supervision of the
latter's employees; petitioners were not aware of the
existence of any union in their company and came to
know of the same only in June 1998 when they were
served a copy of the summons in the petition for
certification election filed by the union; that before the
union was registered on April 15, 1998, the complaint
subject of the present petition was already filed; that the
real motive in the filing of the complaints was because
PTI asked respondents to vacate the bunkhouse where
they (respondents) and their respective families were
staying because PTI wanted to renovate the same.
The Labor Arbiter ruled that petitioners are not guilty of
unfair labor practice in the absence of evidence to show
that they violated respondents' right to self-organization.
The Labor Arbiter also held that Lubas is the respondents'
employer and that it is an entity which is separate,
distinct and independent from PTI. Nonetheless, the Labor
Arbiter found that Lubas is guilty of illegally dismissing
respondents from their employment. The NLRC partly
sustained the Labor Arbiters ruling.
The CA granted respondents' petition, ruling that
petitioners are guilty of unfair labor practice; that Lubas is
a mere instrumentality, agent conduit or adjunct of PTI;
and that petitioners' act of transferring respondents'
employment to Lubas is indicative of their intent to
frustrate the efforts of respondents to organize
themselves into a union.
Issues:
(1) Whether or not Lubas is a separate and independent
entity from PTI
(2) Whether or not PTI is guilty of unfair labor practice
Held:
(1) The Court agrees with the CA that Lubas is a mere
agent, conduit or adjunct of PTI. A settled formulation of
the doctrine of piercing the corporate veil is that when
two business enterprises are owned, conducted and
controlled by the same parties, both law and equity will,

when necessary to protect the rights of third parties,


disregard the legal fiction that these two entities are
distinct and treat them as identical or as one and the
same. In the present case, it may be true that Lubas is a
single proprietorship and not a corporation. However,
petitioners' attempt to isolate themselves from and hide
behind the supposed separate and distinct personality of
Lubas so as to evade their liabilities is precisely what the
classical doctrine of piercing the veil of corporate entity
seeks to prevent and remedy.
Thus, the Court agrees with the observations of the CA, to
wit:
As correctly pointed out by petitioners, if Lubas were truly
a separate entity, how come that it was Prince Transport
who made the decision to transfer its employees to the
former? Besides, Prince Transport never regarded Lubas
Transport as a separate entity. In the aforesaid letter, it
referred to said entity as "Lubas operations." Moreover, in
said letter, it did not transfer the employees; it "assigned"
them. Lastly, the existing funds and 201 file of the
employees were turned over not to a new company but a
"new management."
The Court also agrees with respondents that if Lubas is
indeed an entity separate and independent from PTI why
is it that the latter decides which employees shall work in
the former?
Moreover, petitioners failed to refute the contention of
respondents that despite the latter's transfer to Lubas of
their daily time records, reports, daily income remittances
of conductors, schedule of drivers and conductors were
all made, performed, filed and kept at the office of PTI. In
fact, respondents' identification cards bear the name of
PTI. It may not be amiss to point out at this juncture that
in two separate illegal dismissal cases involving different
groups of employees transferred by PTI to other
companies, the Labor Arbiter handling the cases found
that these companies and PTI are one and the same
entity; thus, making them solidarily liable for the
payment of backwages and other money claims awarded
to the complainants therein.
Petitioners likewise aver that the CA erred and committed
grave abuse of discretion when it ordered petitioners to
reinstate respondents to their former positions,
considering that the issue of reinstatement was never
brought up before it and respondents never questioned
the award of separation pay to them.
(2) As to whether petitioners are guilty of unfair labor
practice, the Court finds no cogent reason to depart from
the findings of the CA that respondents' transfer of work
assignments to Lubas was designed by petitioners as a
subterfuge to foil the former's right to organize
themselves into a union. Under Article 248 (a) and (e) of
the Labor Code, an employer is guilty of unfair labor
practice if it interferes with, restrains or coerces its
employees in the exercise of their right to selforganization or if it discriminates 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.
Indeed, evidence of petitioners' unfair labor practice is
shown by the established fact that, after respondents'
transfer to Lubas, petitioners left them high and dry
insofar as the operations of Lubas was concerned. The
Court finds no error in the findings and conclusion of the
CA that petitioners "withheld the necessary financial and
logistic support such as spare parts, and repair and
maintenance of the transferred buses until only two units
remained in running condition." This left respondents
virtually jobless.

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

PARK HOTEL ET AL. vs. SORIANO ET AL.


[G.R. No. 17118, September 10, 2012]
Facts:
Soriano was initially hired by Park Hotel but was
transferred to Burgos Corporation.Gonzales and Badilla
were employees of Burgos Corporation.Burgos is a sister
company of Park Hotel. Harbutt and Percy are the General
Managerand owner, respectively, of Park Hotel. Percy,
Harbutt and Atty. Roberto Enriquez are also theofficers
and stockholders of Burgos Corporation.Soriano, Gonzales
and Badilla were dismissed from work for allegedly
stealing companyproperties. As a result, respondents filed
complaints
for
illegal
dismissal,
unfair
labor
practice,before the Labor Arbiter (LA). In their complaints,
respondents alleged that the real reason fortheir
dismissal was that they were organizing a union for the
company's employees.
Issue:
Whether or not corporate officers are solidarily and
personally liable in a case for illegaldismissal and unfair
labor practice
Ruling:
A corporation, being a juridical entity, may act only
through its directors, officers andemployees. Obligations
incurred by them, while acting as corporate agents, are
not theirpersonal liability but the direct accountability of
the corporation they represent. However,corporate
officers may be deemed solidarily liable with the
corporation for the termination ofemployees if they acted
with malice or bad faith. In the present case, the lower
tribunalsunanimously found that Percy and Harbutt, in
their capacity as corporate officers of Burgos,acted
maliciously in terminating the services of respondents
without any valid ground and inorder to suppress their
right to self-organization.Section 31 of the Corporation
Code
makes
a
director
personally
liable
for
corporatedebts if he willfully and knowingly votes for or
assents to patently unlawful acts of thecorporation. It also
makes a director personally liable if he is guilty of gross
negligence or badfaith in directing the affairs of the
corporation. Thus, Percy and Harbutt, having acted in
badfaith in directing the affairs of Burgos, are jointly and
severally liable with the latter forrespondents' dismissal.

Inc. Employees Union-FFW (Union) to request for a


grievance conference on the ground that the contractual
workers do not belong to the categories of employees
stipulated in the existing Collective Bargaining Agreement
(CBA). When the matter remained unresolved, the
grievance was referred to the National Conciliation and
Mediation Board (NCMB) for voluntary arbitration.
During the hearing on July 1, 2004, the Company and the
Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement was no
longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not [the
Company] is guilty of unfair labor acts in engaging the
services of PESO, a third party service provider[,] under
the existing CBA, laws[,] and jurisprudence." Both parties
thereafter filed their respective pleadings.
The Union asserted that the hiring of contractual
employees from PESO is not a management prerogative
and in gross violation of the CBA tantamount to unfair
labor practice (ULP). It noted that the contractual workers
engaged have been assigned to work in positions
previously handled by regular workers and Union
members, in effect violating Section 4, Article I of the
CBA, which provides for three categories of employees in
the Company, to wit:
Section 4.Categories of Employees. The
parties agree on the following categories of employees:
(a)Probationary Employee. One hired to
occupy a regular rank-and-file position in the
Company and is serving a probationary period. If
the probationary employee is hired or comes
from outside the Company (non-Goya, Inc.
employee), he shall be required to undergo a
probationary period of six (6) months, which
period, in the sole judgment of management,
may be shortened if the employee has already
acquired the knowledge or skills required of the
job. If the employee is hired from the casual pool
and has worked in the same position at any time
during the past two (2) years, the probationary
period shall be three (3) months.
(b)Regular Employee. An employee who has
satisfactorily completed his probationary period
and automatically granted regular employment
status in the Company.
(c)Casual Employee. One hired by the
Company to perform occasional or seasonal
work directly connected with the regular
operations of the Company, or one hired for
specific projects of limited duration not
connected directly with the regular operations of
the Company.

GOYA, INC. vs. GOYA, INC. EMPLOYEES UNION-FFW


[G.R. No. 170054, January 21, 2013]
Facts:
Sometime in January 2004, petitioner Goya, Inc.
(Company), a domestic corporation engaged in the
manufacture, importation, and wholesale of top quality
food products, hired contractual employees from PESO
Resources Development Corporation (PESO) to perform
temporary and occasional services in its factory in
Parang, Marikina City. This prompted respondent Goya,

It was averred that the categories of employees had been


a part of the CBA since the 1970s and that due to this
provision, a pool of casual employees had been
maintained by the Company from which it hired workers
who then became regular workers when urgently
necessary to employ them for more than a year. Likewise,
the Company sometimes hired probationary employees
who also later became regular workers after passing the
probationary period. With the hiring of contractual
employees, the Union contended that it would no longer
have probationary and casual employees from which it
could obtain additional Union members; thus, rendering
inutile Section 1, Article III (Union Security) of the CBA,
which states:

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

Section 1.Condition of Employment. As a


condition of continued employment in the
Company, all regular rank-and-file employees
shall remain members of the Union in good
standing and that new employees covered by
the
appropriate
bargaining
unit
shall
automatically become regular employees of the
Company and shall remain members of the
Union in good standing as a condition of
continued employment.
The Union moreover advanced that sustaining the
Company's position would easily weaken and ultimately
destroy the former with the latter's resort to
retrenchment and/or retirement of employees and not
filling up the vacant regular positions through the hiring
of contractual workers from PESO, and that a possible
scenario could also be created by the Company wherein it
could "import" workers from PESO during an actual strike.
In countering the Union's allegations, the Company
argued that: (a) the law expressly allows contracting and
subcontracting arrangements through Department of
Labor and Employment (DOLE) Order No. 18-02; (b) the
engagement of contractual employees did not, in any
way, prejudice the Union, since not a single employee
was terminated and neither did it result in a reduction of
working hours nor a reduction or splitting of the
bargaining unit; and (c) Section 4, Article I of the CBA
merely provides for the definition of the categories of
employees and does not put a limitation on the
Company's right to engage the services of job contractors
or
its
management
prerogative
to
address
temporary/occasional needs in its operation.
Issue:
Whether or not the voluntary artbitrator committed an
error in declaring that the engagement of PESO is not
keeping with the intent and spirit of the CBA .
Ruling:
We confirm that the VA ruled on a matter that is covered
by the sole issue submitted for voluntary arbitration.
Resultantly, the CA did not commit serious error when it
sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent
and spirit of the CBA. Indeed, the opinion of the VA is
germane to, or, in the words of the CA, "interrelated and
intertwined with," the sole issue submitted for resolution
by the parties. This being said, the Company's invocation
of Sections 4 and 5, Rule IV 20 and Section 5, Rule VI 21
of the Revised Procedural Guidelines in the Conduct of
Voluntary Arbitration Proceedings dated October 15, 2004
issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited case
of Ludo & Luym Corporation v. Saornido. 22 In Ludo, the
company was engaged in the manufacture of coconut oil,
corn starch, glucose and related products. In the course
of its business operations, it engaged the arrastre
services of CLAS for the loading and unloading of its
finished products at the wharf. The arrastre workers
deployed by CLAS to perform the services needed were
subsequently hired, on different dates, as Ludo's regular
rank-and-file employees. Thereafter, said employees
joined LEU, which acted as the exclusive bargaining agent
of the rank-and-file employees. When LEU entered into a
CBA with Ludo, providing for certain benefits to the
employees (the amount of which vary according to the
length of service rendered), it requested to include in its
members' period of service the time during which they
rendered arrastre services so that they could get higher

benefits.
Lastly, the Company kept on harping that both the VA and
the CA conceded that its engagement of contractual
workers from PESO was a valid exercise of management
prerogative. It is confused. To emphasize, declaring that a
particular act falls within the concept of management
prerogative is significantly different from acknowledging
that such act is a valid exercise thereof. What the VA and
the CA correctly ruled was that the Company's act of
contracting out/outsourcing is within the purview of
management prerogative. Both did not say, however, that
such act is a valid exercise thereof. Obviously, this is due
to the recognition that the CBA provisions agreed upon by
the Company and the Union delimit the free exercise of
management prerogative pertaining to the hiring of
contractual employees. Indeed, the VA opined that "the
right of the management to outsource parts of its
operations is not totally eliminated but is merely limited
by the CBA," while the CA held that "[t]his management
prerogative of contracting out services, however, is not
without limitation. . . . [These] categories of employees
particularly with respect to casual employees [serve] as
limitation to [the Company's] prerogative to outsource
parts of its operations especially when hiring contractual
employees."
A collective bargaining agreement is the law between the
parties:
It is familiar and fundamental doctrine in labor law that
the CBA is the law between the parties and they are
obliged to comply with its provisions. We said so in Honda
Phils., Inc. v. Samahan ng Malayang Manggagawa sa
Honda:
A collective bargaining agreement or CBA refers to the
negotiated contract between a legitimate labor
organization and the employer concerning wages, hours
of work and all other terms and conditions of employment
in a bargaining unit. As in all contracts, the parties in a
CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided these
are not contrary to law, morals, good customs, public
order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties
and compliance therewith is mandated by the express
policy of the law.
Moreover, if the terms of a contract, as in a CBA,
are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of their
stipulations shall control.

BAPTISTA ET AL. vs. VILLANUEVA ET AL.


[G.R. No. 194709, July 31, 2013]

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

seemingly unjust, would not constitute ULP


Facts:
Petitioners were former union members of Radio
Philippines Network Employees Union (RPNEU), a
legitimate labor organization and the sole and exclusive
bargaining agent of the rank and file employees of Radio
Philippines Network (RPN), a government-sequestered
corporation involved in commercial radio and television
broadcasting affairs, while the respondents were the
unions elected officers and members.
On April 26, 2005, on suspicion of union mismanagement,
petitioners, together with some other union members,
filed a complaint for impeachment of their union
president, Reynato Siozon, before the executive board of
RPN, which was eventually abandoned. They later relodged the impeachment complaint, this time, against all
the union officers and members of RPNEU before the
Department of Labor and Employment (DOLE). They
likewise filed various petitions for audit covering the
period from 2000 to 2004.
Thereafter, cases were filed against the petitioners and
several others for alleged violation of the unions
constitution and by-laws.
After an exchange of
communications between the grievance committee and
the
petitioners,
petitioners
were,
through
a
memorandum, served an expulsion notice from the union.
RPNEUs officers informed their company of the expulsion
of petitioners and the 12 others from the union and
requested the management to serve them notices of
termination from employment in compliance with their
CBAs union security clause. On February 17, 2006, RPN
HRD Manager, Lourdes Angeles, informed petitioners and
the 12 others of the termination of their employment
effective March 20, 2006, enforcing Article II, Section
21 also known as the union security clause of their
current CBA.
Aggrieved, petitioners filed three (3) separate complaints
for ULP against the respondents, which were later
consolidated, questioning legality of their expulsion from
the union and their subsequent termination from
employment.
Issue:
Whether or not respondents committed unfair labor
practices
Ruling:
The petition is bereft of merit.
The primary concept of ULP is embodied in Article 247 of
the Labor Code, which provides:
Article 247. Concept of unfair labor practice and
procedure for prosecution thereof.Unfair labor practices
violate the constitutional right of workers and employees
to self-organization, are inimical to the legitimate
interests of both labor and management, including their
right to bargain collectively and otherwise deal with each
other in an atmosphere of freedom and mutual respect,
disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations.

Based on RPNEUs Constitution and By-Laws, the charges


against petitioners were not mere internal squabbles, but
violations that demand proper investigation because, if
proven, would constitute grounds for their expulsion from
the union.
Besides, any supposed procedural flaw in the proceedings
before the Committee was deemed cured when
petitioners were given the opportunity to be heard. Due
process, as a constitutional precept, is satisfied when a
person was notified of the charge against him and was
given an opportunity to explain or defend himself. In
administrative proceedings, the filing of charges and
giving reasonable opportunity for the person so charged
to answer the accusations against him constitute the
minimum requirements of due process.
It is well-settled that workers and employers
organizations shall have the right to draw up their
constitutions and rules to elect their representatives in
full freedom, to organize their administration and
activities and to formulate their programs. In this case,
RPNEUs Constitution and By-Laws expressly mandate
that before a party is allowed to seek the intervention of
the court, it is a pre-condition that he should have availed
of all the internal remedies within the organization.
Petitioners were found to have violated the provisions of
the unions Constitution and By-Laws when they filed
petitions for impeachment against their union officers and
for audit before the DOLE without first exhausting all
internal remedies available within their organization. This
act is a ground for expulsion from union membership.
Thus, petitioners expulsion from the union was not a
deliberate attempt to curtail or restrict their right to
organize, but was triggered by the commission of an act,
expressly sanctioned by Section 2.5 of Article IX of the
unions Constitution and By-Laws.
For a charge of ULP against a labor organization to
prosper, the onus probandi rests upon the party alleging
it to prove or substantiate such claims by the requisite
quantum of evidence. In labor cases, as in other
administrative proceedings, substantial evidence or such
relevant evidence as a reasonable mind might accept as
sufficient to support a conclusion is required. Moreover, it
is indubitable that all the prohibited acts constituting
unfair labor practice should materially relate to the
workers' right to self-organization.
Unfortunately, petitioners failed to discharge the burden
required to prove the charge of ULP against the
respondents. Aside from their self-serving allegations,
petitioners were not able to establish how they were
restrained or coerced by their union in a way that
curtailed their right to self-organization. The records
likewise failed to sufficiently show that the respondents
unduly persuaded management into discriminating
against petitioners. other than to bring to its attention
their expulsion from the union, which in turn, resulted in
the implementation of their CBA' s union security clause.

In essence, ULP relates to the commission of acts that


transgress the workers right to organize. As specified in
Articles 248 and 249 of the Labor Code, the prohibited
acts must necessarily relate to the workers' right to selforganization and to the observance of a CBA. Absent the
said vital elements, the acts complained, although

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem

TH SHOPFITTERS CORP. ET AL. vs. T&H


SHOPFITTERS CORP. UNION
[G.R. No. 191714, February 26, 2014]
Facts:
On September 7, 2004, the T&H Shopfitters Corporation/
Gin Queen Corporation workers union (THS-GQ Union), its
officers and/or members of THS-GQ union, filed their
Complaint7 for Unfair Labor Practice (ULP) by way of union
busting, and Illegal Lockout, with moral and exemplary
damages and attorneys fees, against T&H Shopfitters
Corporation (T&H Shopfitters) and Gin Queen Corporation
(Gin Queen) (collectively referred to as "petitioners"),
before the Labor Arbiter (LA).
Respondents treated T&H Shopfitters and Gin Queen as a
single entity and their sole employer. In their desire to
improve their working conditions, respondents and other
employees of petitioners held their first formal meeting
on November 23, 2003 to discuss the formation of a
union. The following day or on November 24, 2003,
seventeen (17) employees were barred from entering
petitioners factory premises located in Castillejos,
Zambales, and ordered to transfer to T&H Shopfitters
warehouse at Subic Bay Freeport Zone (SBFZ) purportedly
because of its expansion. Afterwards, the said seventeen
(17) employees were repeatedly ordered to go on forced
leave due to the unavailability of work.
On December 18, 2003, the Department of Labor and
Employment (DOLE), Regional Office No. III issued a
certificate of registration in favor of THS-GQ Union.
On March 24, 2004, THS-GQ Union filed a petition for
certification election. On July 12, 2004, an order was
issued to hold the certification election in both T&H
Shopfitters and Gin Queen. Eventually, the certification
election was scheduled on October 11, 2004.
Meanwhile, through a memorandum, dated August 17,
2004, petitioner Ben Huang (Huang), Director for Gin
Queen, informed its employees of the expiration of the
lease contract between Gin Queen and its lessor in
Castillejos, Zambales and announced the relocation of its
office and workers to Cabangan, Zambales. Some of the
respondents, who visited the site in Cabangan,
discovered that it was a "talahiban" or grassland. Later,
the said union officers and members were made to work
as grass cutters in Cabangan, under the supervision of a
certain Barangay Captain Greg Pangan. Due to these
circumstances, the employees assigned in Cabangan did
not report for work. As a consequence, the THS-GQ Union
president was made to explain why he should not be
terminated for insubordination. The other employees who
likewise failed to report in Cabangan were meted out with
suspension.
On October 10, 2004, petitioners sponsored a field trip to
Iba, Zambales, for its employees. The officers and
members of the THS-GQ Union were purportedly excluded
from the field trip. On the evening of the field trip, a
certain Angel Madriaga, a sales officer of petitioners,
campaigned against the union in the forthcoming
certification election.
The following day or on October 11, 2004, the employees
were escorted from the field trip to the polling center in
Zambales to cast their votes. On October 13, 2004, the

remaining employees situated at the SBFZ plant cast


their votes as well. Due to the heavy pressure exerted by
petitioners, the votes for "no union" prevailed. On
October 14, 2004, the THS-GQ Union filed its protest with
respect to the certification election proceedings.
Issue:
Whether or not acts of unfair labor practices were
committed by petitioners against respondents

Ruling:
As to the issue of ULP, petitioners argument is
utterly without merit.
In the case at bench, petitioners are being accused of
violations of paragraphs (a), (c), and (e) of Article 257
(formerly Article 248) of the Labor Code,to wit:
Article
257.
Unfair
labor
practices
of
employers.It shall be unlawful for an employer
to commit any of the following unfair labor
practices:
(a) To interfere with, restrain or coerce
employees in the exercise of their right to selforganization;
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 right 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.
xxx
The questioned acts of petitioners, namely: 1) sponsoring
a field trip to Zambales for its employees, to the
exclusion of union members, before the scheduled
certification election; 2) the active campaign by the sales
officer of petitioners against the union prevailing as a
bargaining agent during the field trip; 3) escorting its
employees after the field trip to the polling center; 4) the
continuous
hiring
of
subcontractors
performing
respondents functions; 5) assigning union members to
the Cabangan site to work as grass cutters; and 6) the
enforcement of work on a rotational basis for union
members, all reek of interference on the part of
petitioners.
Indubitably, the various acts of petitioners, taken
together, reasonably support an inference that, indeed,
such were all orchestrated to restrict respondents free
exercise of their right to self-organization. The Court is of
the considered view that petitioners undisputed actions
prior and immediately before the scheduled certification
election, while seemingly innocuous, unduly meddled in
the affairs of its employees in selecting their exclusive
bargaining representative.

Labor Relations Case Digests (Finals) | S.Y. 2015-2016, 2nd Sem