1
negotiating, fixing, maintaining, changing or arranging the terms and conditions
Article 212. Definitions. (a) "Commission" means the National Labor Relations Commission
or any of its divisions, as the case may be, as provided under this Code.
(b) "Bureau" means the Bureau of Labor Relations and/or the Labor Relations
Divisions in the regional offices established under Presidential Decree No. 1, in
the Department of Labor.
(c) "Board" means the National Conciliation and Mediation Board established
under Executive Order No. 126.
(d) "Council" means the Tripartite Voluntary Arbitration Advisory Council
established under Executive Order No. 126, as amended.
(e) "Employer" includes any person acting in the interest of an employer, directly
or indirectly. The term shall not include any labor organization or any of its
officers or agents except when acting as employer.
(f) "Employee" includes any person in the employ of an employer. The term shall
not be limited to the employees of a particular employer, unless this Code so
explicitly states. It shall include any individual whose work has ceased as a result
of or in connection with any current labor dispute or because of any unfair labor
practice if he has not obtained any other substantially equivalent and regular
employment.
(g) "Labor organization" means any union or association of employees which
exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment.
(h) "Legitimate labor organization" means any labor organization duly registered
with the Department of Labor and Employment, and includes any branch or local
thereof.
(i) "Company union" means any labor organization whose formation, function or
administration has been assisted by any act defined as unfair labor practice by
this Code.
(j) "Bargaining representative" means a legitimate labor organization or any
officer or agent of such organization whether or not employed by the employer.
(k) "Unfair labor practice" means any unfair labor practice as expressly defined by
this Code.
(l) "Labor dispute" includes any controversy or matter concerning terms or
conditions of employment or the association or representation of persons in
of employment, regardless of whether the disputants stand in the proximate
relation of employer and employee.
(m) "Managerial employee" is one who is vested with powers or prerogatives to
lay down and execute management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees. Supervisory employees
are those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.
(n) "Voluntary Arbitrator" means any person accredited by the Board as such, or
any person named or designated in the collective bargaining agreement by the
parties to act as their voluntary arbitrator, or one chosen, with or without the
assistance of the National Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the collective bargaining agreement, or any
official that may be authorized by the Secretary of Labor and Employment to act
as voluntary arbitrator upon the written request and agreement of the parties to
a labor dispute.
(o) "Strike" means any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute.
(p) "Lockout" means the temporary refusal of an employer to furnish work as a
result of an industrial or labor dispute.
(q) "Internal union dispute" includes all disputes or grievances arising from any
violation of or disagreement over any provision of the constitution and by-laws of
a union, including any violation of the rights and conditions of union membership
provided for in this Code.
(r) "Strike breaker" means any person who obstructs, impedes, or interferes with
by force, violence, coersion, threats or intimidation any peaceful picketing by
employees during any labor controversy affecting wages, hours or conditions of
work or in the exercise of the right of self-organization or collective bargaining.
(s) "Strike area" means the establishment, warehouses, depots, plants or offices,
including the sites or premises used as run-away shops, of the employer struck
against, as well as the immediate vicinity actually used by picketing strikers in
moving to and for. before all points of entrance to and exit from said
establishment. (As amended by RA 6715)
CASES:
Metrolab

San Miguel
Metrolab Industries vs. Roldan-Confesor | February 28, 1996
Facts:
 Metro Drug Corporation Employees Association-FFW (Union) is a labor organization
representing rank and file employees of Metrolab Industries Inc. and also of Metro
Drug, Inc.
 31 Dec 1990: The CBA between Union and Metrolab expired.
o The negotiations for a new CBA ended in a deadlock.
 23 Aug 1991: Union filed a notice of strike against Metrolab and Metro Drug
o They failed to settle their dispute despite conciliation efforts of NCMB
 20 Sep 1991: SOLE Torres issued an assumption order:
o Any strike or lockout is strictly enjoined
o Parties are directed to maintain status quo (refrain from committing any
acts that might exacerbate the situation)
o Parties are ordered to submit position papers
 27 Dec 1991: SOLE Torres issued Order resolving disputed items in the CBA and
ordered the parties to execute new CBA
o Union filed a motion for reconsideration
 27 Jan 1992: during pendency of MR, Metrolab laid off 94 of its rank and file
employees
o Union filed a motion for a cease and desist order to enjoin Metrolab from
implementing the mass layoff alleging that such act violated the status quo
order
o Metrolab: layoff was temporary and in exercise of its management
prerogative
 It would suffer yearly losses with the withdrawal of its principals
in the Toll and Contract Manufacturing Department
 Automation of the manufacture of its product Eskinol would
significantly reduce the number of employees required for
production
 Thereafter, on various dates, Metrolab recalled some of the laid off workers on a
temporary basis due to availability of work in production lines
 14 Apr 1992: Acting SOLE issued Resolution declaring the layoff illegal and ordered
their reinstatement with full backwages
o Metrolab filed a Partial MR alleging that the layoff did not aggravate the
dispute since no untoward incident occurred as a result thereof
o Metrolab also filed for motion for clarification regarding the constitution of
the bargaining unit covered by the CBA
 29 Jun 1992: Parties entered into a new CBA without prejudice to the outcome of the
issues raised in the reconsideration or clarification motions
1 (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the assumption or certification order. If one has already taken
2
 2 Oct 1992: Metrolab laid off 73 employees on the ground of redundancy
o Union opposed
 15 Oct 1992: SOLE Confesor again issued cease and desist
 25 Jan 1993: SOLE issued Omnibus Resolution:
o Metrolab’s MR on the SOLE Ruling on illegality of layoff of 94 employees:
DENIED
o Ordered the parties to incorporate in their CBAs the clarifications provided
by the SOLE
o Metrolab’s MR on the ruling of SOLE on the nature of the second wave of
layoff (that it tended to exacerbate the situation): DENIED, but insofar as
the legality of the layoff was not raised to the SOLE for resolution, it was
submitted to NLRC for appropriate action
 SOLE also ruled that executive secretaries are excluded from the closed-shop
provision of the CBA, not from the bargaining unit.
 04 Feb 1993: Union filed a motion for execution.
o Metrolab opposed
 Hence, this petition for certiorari with application for issuance of TRO
 4 Mar 1993: SC issued TRO enjoining SOLE from enforcing and implementing the
assailed Resolution and Omnibus Rsolution dated 14 Apr 1992 and 25 Jan 1993.
W/N the layoffs were illegal on the ground that they were unilateral actions which aggravated the
conflict between the parties which were in deadlock? YES
 SC recognizes the exercise of management prerogatives and often declines to
interfere with the legitimate business decisions of the employer. However, the
privilege is not absolute but is subject to limitations imposed by law, the CBA, or
general principles of fair play and justice
 Here, the disputed injunction is subsumed under the SOLE’s special authority under
Art. 263 (g) of the LC.1
 Metrolab’s business is of national interest, its management prerogatives, therefore,
are not being unjustly curtailed but duly balanced with and tempered by the
limitations set by law, taking into account its special character and the particular
circumstances in the case at bench.
o one of the substantive evils which Article 263 (g) LC seeks to curb is the
exacerbation of a labor dispute to the further detriment of the national
interest. When a labor dispute has in fact occurred and a general injunction
has been issued restraining the commission of disruptive acts, management
prerogatives must always be exercised consistently with the statutory
objective.
 Any act committed during the pendency of the dispute that tends to give rise to
further contentious issues or increase the tensions between the parties should be
place at the time of assumption or certification, all striking or locked out employees shall immediately
return to work and the employer shall immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment
or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue to enforce the same. . . .

considered an act of exacerbation. One must look at the act itself, not on speculative
reactions.
 Protest against the subject layoffs need not be in the form of violent action or any
other drastic measure. In the instant case the Union registered their dissent by swiftly
filing a motion for a cease and desist order.
 Here, Metrolab and the Union were still in the process of resolving their CBA deadlock
when petitioner implemented the subject layoffs. As a result, motions and
oppositions were filed diverting the parties’ attention, delaying resolution of the
bargaining deadlock and postponing the signing of their new CBA, thereby aggravating
the whole conflict.
 Re temporary layoff: If Metrolab intended the layoff of the 94 workers to be
temporary, it should have plainly stated so in the notices it sent to the affected
employees and the DOLE.
[Related] W/N executive secretaries are part of the bargaining unit of rank and file employees?
 In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA
provisions on closed-shop and the scope of the bargaining unit:
o While we note that the provision as presently worded has served the
relationship of the parties well under previous CBA’s2, the shift in
constitutional policy toward expanding the right of all workers to self-
organization should now be formally recognized by the parties, subject to
the following exclusions only:
 Managerial employees and
 The executive secretaries of the President, EVP, Vice President,
VP for Sales, Personnel Manager, and Director for Corporate
Planning who may have access to vital labor relations information
or who may otherwise act in confidential capacity to persons who
determine or formulate management policies.
 The companies read the exclusion of managerial employees and executive secretaries
in the 14 April 1992 resolution as exclusion from the bargaining unit.
o However, the reading is contrary to the 14 Apr 1992 Resolution. By
recognizing the expanded scope of the right to self-organization, our intent
was to delimit the types of employees excluded from the close shop
provision, not from the bargaining unit, to executive secretaries only.
Otherwise, the conversion of the exclusionary provision to one that refers
2 b) Close Shop.—All Qualified Employees must join the Association immediately upon regularization as a
condition for continued employment. This provision shall not apply to: (i) managerial employees who are
excluded from the scope of the bargaining unit; (ii) the auditors and executive secretaries of senior
executive officers, such as, the President, Executive Vice President, VicePresident for Finance, Head of
Legal, Vice President for Sales, who are excluded from membership in the Association; and (iii) those
employees who are referred to in Attachment I hereof, subject, however, to the application of the
provision of Article II, par. (b) hereof. Consequently, the above specified employees are not required to
join the Association as a condition for their continued employment.
On the other hand, Attachment I provides:
Exclusion from the Scope of the Close Shop Provision
3
to the bargaining unit from one that merely refers to the close shop
provision would effectively curtail all the organizational rights of executive
secretaries.
 Here, the issue of exclusion has a different dimension.
o Metrolab has done away with positions of EVP, VP for Sales, Director for
Corporate Planning. However, there remain officer positions for which
there may be executive secretaries.
o The basis for the exclusions is the previous CBA between the parties
o Regardless of the organizational restructuring, the result would have been
the same i.e. the exclusions is limited to recognize the expanded scope of
the right to self-organization as embodied in the Constitution.
 Metrolab: executive secretaries of other offices who are all members of the company’s
Management Committee should not only be exempted from the closed-shop provision
but should be excluded from membership in the bargaining unit of the rank and file
employees as well on grounds that their executive secretaries are confidential
employees, having access to “vital labor information.”
 SC: Agreed with Metrolab.
 Art. 245 LC 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.
o Philips Industrial vs. NLRC: …confidential employees. By the very nature of
their functions, they assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial
functions in the field of labor relations. As such, the rationale behind the
inegilibility of managerial employees to form, assist or join a labor union
equally applies to them.
o Bulletin Publishing vs. Hon. Sanchez: if these managerial employees would
belong to or be affiliated with a Union, the latter might not be assured of
their loyalty to the Union in view of evident conflict of interests. The Union
can also become company dominated with the presence of managerial
employees in Union membership.
o Golden Farms vs. Ferrer-Calleja: confidential employees… who having
access to confidential information, may become the source of undue
advantage. Said employee(s) may act as a spy or spies of either party to a
collective bargaining agreement. This is specially true in the present case
The following positions in the Bargaining Unit are not covered by the Close Shop provision of the CBA
(Article I, par. b):
1. Executive Secretaries of Vice Presidents, or equivalent positions.
2. Executive Secretary of the Personnel Manager, or equivalent positions.
3. Executive Secretary of the Director for Corporate Planning, or equivalent positions.
4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head
Office, Accounting Department at Head Office, and Budget Staff, who because of the nature of
their duties and responsibilities need not join the Association as a condition for their
employment.
5. Newly hired secretaries of Branch Managers and Regional Managers.

where the petitioning Union is already the bargaining agent of the rankand-
file employees in the establishment. To allow the confidential employees to
join the existing Union of the rankandfile would be in violation of the terms
of the Collective Bargaining Agreement wherein this kind of employees by
the nature of their functions/positions are expressly excluded.
 National Association of Trade Union-Republic Planters Banks Supervisors Chapter vs.
Torres: A confidential employee is one entrusted with confidence on delicate matters,
or with the custody, handling, or care and protection of the employer’s property.
While Art. 245 of the Labor Code singles out managerial employees as ineligible to
join, assist or form any labor organization, under the doctrine of necessary
implication, confidential employees are similarly disqualified. . . .
 (I)n the collective bargaining process, managerial employees are supposed to be on
the side of the employer, to act as its representatives, and to see to it that its interest
are well protected. The employer is not assured of such protection if these employees
themselves are union members. Collective bargaining in such a situation can become
onesided. It is the same reason that impelled this Court to consider the position of
confidential employees as included in the disqualification found in Art. 245 as if the
disqualification of confidential employees were written in the provision. If confidential
employees could unionize in order to bargain for advantages for themselves, then
they could be governed by their own motive rather than the interest of the employers.
Moreover, unionization of confidential employees for the purpose of collective
bargaining would mean the extension of the law to persons or individuals who are
supposed to act “in the interest of the employers. It is not farfetched that in the
course of collective bargaining, they might jeopardize that interest which they are
dutybound to protect…
 Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor: Upon the other hand,
legal secretaries are neither managers nor supervisors. Their work is basically
routinary and clerical. However, they should be differentiated from rank-and-file
employees because they are tasked with, among others, the typing of legal
documents, memoranda and correspondence, the keeping of records and files, the
giving of and receiving notices, and such other duties as required by the legal
personnel of the corporation. Legal secretaries therefore fall under the category of
confidential employees. . . .
3
Sec.5. Processing of Grievance. - Should a grievance arise, an earnest effort shall be
made to settle the grievance expeditiously in accordance with the following
procedures:
Step 1. - The individual employee concerned and the Union Directors, or the Union
Steward shall, first take up the employees grievance orally with his immediate
superior. If no satisfactory agreement or adjustment of the grievance is reached, the
grievance shall, within twenty (20) working days from the occurrence of the cause or
event which gave rise to the grievance, be filed in writing with the Department
Manager or the next level superior who shall render his decision within ten (10)
working days from the receipt of the written grievance. A copy of the decision shall be
furnished the Plant Personnel Officer.
4
 The dangers sought to be prevented, particularly the threat of conflict of interest and
espionage, are not eliminated by non membership of Metrolab’s executive secretaries
or confidential employees in the Union. Forming part of the bargaining unit, the
executive secretaries stand to benefit from any agreement executed between the
Union and Metrolab. Such a scenario, thus, gives rise to a potential conflict between
personal interests and their duty as confidential employees to act for and in behalf of
Metrolab. They do not have to be union members to affect or influence either side.
 Finally, confidential employees cannot be classified as rank and file. As previously
discussed, the nature of employment of confidential employees is quite distinct from
the rank and file, thus, warranting a separate category. Excluding confidential
employees from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.
RULING: Petition partially GRANTED; the Resolutions of the SOLE are MODIFIED to the extent
that executive secretaries of petitioner Metrolab’s General Manager and the executive
secretaries of the members of its Management Committee are excluded from the bargaining
unit of petitioner’s rank and file employees.
San Miguel Corp v. NLRC and San Miguel Corp Employees’ Union- PTGWO (1999)
PURISIMA, J.
 July 1990, San Miguel Corporation, alleging financial losses, shut down some of its
plants and declared 55 positions as redundant, listed as follows:
seventeen(17) employees in the Business Logistics Division (BLD), seventeen (17) in
the Ayala Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying
Station (Magnolia-MBS.)
 The union filed several grievance cases for the said retrenched employees, praying
for the redeployment of the said employees to the other divisions of the company.
 The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII
of the parties 1990 Collective Bargaining Agreement.3
Step 2. - If the decision in Step 1 is rejected, the employee concerned may elevate or
appeal this in writing to the Plant Manager/Director or his duly authorized
representative within twenty (20) working days from the receipt of the Decision of the
Department Manager. Otherwise, the decision in Step 1 shall be deemed accepted by
the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall determine
the necessity of conducting grievance meetings. If necessary, the Plant
Manager/Director and the Plant Personnel Officer shall meet the employee concerned
and the Union Director/Steward on such date(s) as may be designated by the Plant
Manager. In every plant/office, Grievance Meetings shall be scheduled at least twice
a month.

 During the grievance proceedings, however, most of the employees were
redeployed, while others accepted early retirement. As a result only 17 employees
remained when the parties proceeded to Step 3 of the grievance procedure.
 In a meeting on October 26, 1990, SMC informed the union that if by October 30,
the remaining 17 employees could not yet be redeployed, their services would be
terminated on November 2.
 Mr. Daniel S. L. Borbon II, a rep of the union, declared that there was nothing more
to discuss in view of the deadlock.
 November 7, 1990, the union filed with the National Conciliation and Mediation
Board (NCMB) of the DOLE a notice of strike on the following grounds: a) bargaining
deadlock; b) union busting; c) gross violation of the Collective Bargaining
Agreement (CBA), such as non-compliance with the grievance procedure; d) failure
to provide private respondent with a list of vacant positions pursuant to the parties
side agreement that was appended to the 1990 CBA; and e) defiance of voluntary
arbitration award. Petitioner on the other hand, moved to dismiss the notice of
strike but the NCMB failed to act on the motion.
 SMC asked to dismiss the notice of strike given by union and for it to comply with
the provisions of the SBA on grievance machinery, arbitration, and the no-strike
clause.
The Plant Manager shall give his written comments and decision within ten (10)
working days after his receipt of such grievance or the date of submission of the
grievance for resolution, as the case may be.A copy of his Decision shall be furnished
the Employee Relations Directorate.
Step 3. - If no satisfactory adjustment is arrived at Step 2, the employee may appeal
the Decision to the Conciliation Board as provided under Section 6 hereof, within
fifteen (15) working days from the date of receipt of the decision of the Plant
Manager/Director or his designate. Otherwise, the decision in Step 2 shall be deemed
accepted by the employee.
The Conciliation Board shall meet on the grievance in such dates as shall be
designated by the Division/Business Unit Manager or his representative. In every
Division/Business Unit, Grievance Meetings of the Conciliation Board shall be
scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of
submission of the grievance for resolution within which to decide on the grievance.
SEC. 6. Conciliation Board. - There shall be a conciliation Board per Business Unit or
Division. Every Conciliation Board shall be composed of not more than five (5)
representatives each from the Company and the Union. Management and the Union
may be assisted by their respective legal counsels.
5
 NLRC dismissed the SMC complaint, hence this certiorari petition.
ISSUE: WON NLRC committed grave abuse of discretion in dismissing SMC’s complaint?- YES
See Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code.4 In
the case under consideration, the grounds relied upon by the private respondent union are
non-strikeable. The grounds appear more illusory than real.
 Collective Bargaining Deadlock- the situation between the labor and the management of
the company where there is failure in the collective bargaining negotiations resulting in a
stalemate.
o This situation is non-existent in the present case since there is a Board assigned
on Step 3 of the grievance machinery to resolve the conflicting views of the
parties.
o Instead of asking the Conciliation Board composed of five representatives each
from the company and the union to decide the conflict, union declared a
deadlock & filed a notice of strike.
o It failed to exhaust all the steps in the grievance machinery and arbitration
proceedings provided in the CBA, thus the notice of strike should have been
In every Division/Business Unit, the names of the Company and Union representatives
to the Conciliation Board shall be submitted to the Division/Business Unit Manager
not later than January of every year. The Conciliation Board members shall act as such
for one (1) year until removed by the Company or the Union, as the case may be.
Sec. 8. Submission to Arbitration. - If the employee or Union is not satisfied with the
Decision of the Conciliation Board and desires to submit the grievance to arbitration,
the employee or the Union shall serve notice of such intention to the Company within
fifteen (15) working days after receipt of the Boards decision. If no such written notice
is received by the Company within fifteen (15) working days, the grievance shall be
considered settled on the basis of the companys position and shall no longer be
available for arbitration.
4
Section 1. Grounds for strike and lockout. -- A strike or lockout may be declared in
cases of bargaining deadlocks and unfair labor practices. Violations of the collective
bargaining agreements, except flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor practice and shall not be
strikeable. No strike or lockout may be declared on grounds involving inter-union and
intra-union disputes or on issues brought to voluntary or compulsory arbitration.

dismissed by the NLRC and the union ordered to proceed with the grievance
and arbitration proceedings.
o Liberal Labor Union vs. Phil. Can Co: the strike staged by the union is illegal for
not complying with the grievance procedure provided in the collective
bargaining agreement. The main purpose of the parties in adopting a procedure
in the settlement of their disputes is to prevent a strike. This procedure must be
followed in its entirety if it is to achieve its objective. x x x strikes held in violation
of the terms contained in the collective bargaining agreement are illegal,
especially when they provide for conclusive arbitration clauses. These
agreements must be strictly adhered to and respected if their ends have to be
achieved.
 Re: alleged violation of the CBA, such a violation is chargeable against the union. In
abandoning the grievance proceedings and stubbornly refusing to avail of the remedies
under the CBA, it violated the mandatory provisions of the collective bargaining
agreement.
 Abolition of departments or positions in the company is one of the recognized
management prerogatives.
o The union does not question the validity of the business move of petitioner.
o It is presumed that SMC acted in good faith. In fact, it redeployed most of the
employees involved; such that from an original 17 excess employees in BLD, 15
were successfully redeployed. In AOC, out of the 17 original excess, 15 were
redeployed. In the Magnolia - Manila Buying Station, out of 18 employees, 6
were redeployed and only 12 were terminated.
o SMC having evinced its willingness to negotiate the fate of the remaining
employees affected, there is no ground to sustain the notice of strike of the
private respondent union.
 NLRC gravely abused its discretion in dismissing the complaint of petitioner SMC for the
dismissal of the notice of strike, issuance of a temporary restraining order, and an order
compelling the respondent union to settle the dispute under the grievance machinery of
their CBA.
DISPOSITIVE: PETITION GRANTED. 3rd Step of Grievance Procedure to commence.
San Miguel Corporation v. NLRC, Ilaw at Buklod ng Manggagawa (IBM)
G.R. No. 119293
June 10, 2003
Azcuna, J.
6
FACTS:
 Petitioner SMC and respondent IBM, the exclusive bargaining agent of petitioner’s
daily-paid rank and file employees, executed a CBA under which they agreed to
submit all disputes to grievance and arbitration proceedings.5 It also included a
mutually enforceable no-strike no-lockout agreement.6
 April 11, 1994 – IBM, through its VP Colomeda, filed with the NCMB a notice of
strike against petitioner for allegedly committing: (1) illegal dismissal of union
members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being
performed by union members, (5) labor-only contracting, (6) harassment of union
officers and members, (7) non-recognition of duly-elected union officers, and (8)
other acts of unfair labor practice.
 Next day, IBM filed another notice of strike, this time though its President Galvez
raising similar ground.
 Galvez group requested the NCMB to consolidate its notice of strike with that of the
Colomeda group, to which the latter opposed, alleging that Galvez lacks authority in
filing the same.
 Petitioner filed a Motion for Severance of Notices of Strike with Motion to Dismiss,
on the grounds that the notices raised non-strikeable issues and that they affected
four corporations which are separate and distinct from each other.
 NCMB Director Ubaldo found that the real issues involved are non-strikeable
grounds. He issued an order converting their notices of strike into preventive
mediation.
 May 16, 1994 – Colomeda group filed with the NCMB a notice of holding a strike
vote. This was opposed by petitioner. Colomeda group notified the NCMB of the
results of their strike vote, which favored the holding of a strike. The strike paralyzed
the operations of petitioner, causing it losses allegedly worth P29.98 M in daily lost
production.
 May 23, 1994 – Galvez group filed its second notice of strike. NCMB however found
the grounds to be mere amplifications of those alleged in the first notice.

 Petitioner filed with the NLRC a Petition for Injunction. NLRC resolved to issue a TRO
directing free ingress and egress from petitioner’s plants, without prejudice to the
union’s right to peaceful picketing and continuous hearings on the injunction case.
 Petitioner entered into a Memorandum of Agreement (MOA) with IBM, calling for a
lifting of the picket lines and resumption of work in exchange of good faith talks. The
MOA, signed in the presence of DOLE officials, expressly stated that cases filed in
relation to their dispute will continue and will not be affected in any manner
whatsoever by the agreement. The picket lines ended and work was then resumed.
 November 29, 1994 – NLRC issued the challenged decision, denying SMC’s petition
for injunction for lack of factual basis. It found that the circumstances at the time did
not constitute or no longer constituted an actual or threatened commission of
unlawful acts.
 Hence, this petition.
ISSUE:
(1) WON NLRC gravely abused its discretion when it failed to enforce, by injunction, the
parties’ reciprocal obligations to submit to arbitration and not to strike. YES.
(2) WON NLRC gravely abused its discretion in withholding injunction which is the only
immediate and effective substitute for the disastrous economic warfare that
arbitration is designed to avoid. YES.
HOLDING/RATIO:
 Article 254 of the LC provides that no temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be
issued by any court or other entity except as otherwise provided in Articles 218 and
264.
o Under the first exception, Article 218 (e) of the Labor Code expressly
confers upon the NLRC the power to enjoin or restrain actual and
threatened commission of any or all prohibited or unlawful acts, or to
require the performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of such
party.
7
o The second exception, on the other hand, is when the labor organization
or the employer engages in any of the prohibited activities enumerated in
Article 264.
 In the case at bar, petitioner sought a permanent injunction to enjoin the
respondent’s strike. A strike is considered as the most effective weapon in
protecting the rights of the employees to improve the terms and conditions of their
employment. However, to be valid, a strike must be pursued within legal bounds.
One of the procedural requisites that Article 263 of the Labor Code and its IRR
prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the
purpose of encouraging the voluntary settlement of disputes, this requirement has
been held to be mandatory, the lack of which shall render a strike illegal.
 In the present case, NCMB converted IBM’s notices into preventive mediation as it
found that the real issues raised are non-strikeable. Such order is in pursuance of
the NCMB’s duty to exert all efforts at mediation and conciliation to enable the
parties to settle the dispute amicably, and in line with the state policy of favoring
voluntary modes of settling labor disputes. In accordance with the IRR of the LC, the
said conversion has the effect of dismissing the notices of strike filed by respondent.
A case in point is PAL v. Drilon, where the Court declared a strike illegal for lack of a
valid notice of strike, in view of the NCMB’s conversion of the notice therein into a
preventive mediation case.
 Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB
ordered the preventive mediation, respondent had thereupon lost the notices of
strike it had filed. Subsequently, however, it still defiantly proceeded with the strike
while mediation was ongoing, and notwithstanding the letter-advisories of NCMB
warning it of its lack of notice of strike.
 Such disregard of the mediation proceedings was a blatant violation of the IRR,
which explicitly oblige the parties to bargain collectively in good faith and prohibit
them from impeding or disrupting the proceedings.
 The NCMB having no coercive powers of injunction, petitioner sought recourse from
the public respondent. The NLRC issued a TRO only for free ingress to and egress
from petitioners plants, but did not enjoin the unlawful strike itself. It ignored the
fatal lack of notice of strike.
 Moreover ruled that there was a lack of factual basis in issuing the injunction.
Contrary to the NLRC’s finding, the Court finds that at the time the injunction was
being sought, there existed a threat to revive the unlawful strike as evidenced by the
flyers then being circulated by the IBM-NCR Council which led the union. These

flyers categorically declared: Ipaalala nyo sa management na hindi iniaatras ang
ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang
picket line. These flyers were not denied by respondent, and were dated June 19,
1994, just a day after the union’s manifestation with the NLRC that there existed no
threat of commission of prohibited activities.
 Moreover, it bears stressing that Article 264(a) of the Labor Code explicitly states
that a declaration of strike without first having filed the required notice is a
prohibited activity, which may be prevented through an injunction in accordance
with Article 254. Clearly, public respondent should have granted the injunctive relief
to prevent the grave damage brought about by the unlawful strike.
 Also noteworthy is public respondent’s disregard of petitioner’s argument pointing
out the unions failure to observe the CBA provisions on grievance and arbitration. In
the case of San Miguel Corp. v. NLRC, we ruled that the union therein violated the
mandatory provisions of the CBA when it filed a notice of strike without availing of
the remedies prescribed therein.
 As in the abovecited case, petitioner herein evinced its willingness to negotiate with
the union by seeking for an order from the NLRC to compel observance of the
grievance and arbitration proceedings. Respondent however resorted to force
without exhausting all available means within its reach. Such infringement of the
aforecited CBA provisions constitutes further justification for the issuance of an
injunction against the strike. As we said long ago: Strikes held in violation of the
terms contained in a collective bargaining agreement are illegal especially when they
provide for conclusive arbitration clauses. These agreements must be strictly
adhered to and respected if their ends have to be achieved.7
 As to petitioner’s allegation of violation of the no-strike provision in the CBA,
jurisprudence has enunciated that such clauses only bar strikes which are economic
in nature, but not strikes grounded on unfair labor practices. The notices filed in the
case at bar alleged unfair labor practices, the initial determination of which would
entail fact-finding that is best left for the labor arbiters. Nevertheless, our finding
herein of the invalidity of the notices of strike dispenses with the need to discuss
this issue.
 The Court cannot sanction IBM’s brazen disregard of legal requirements imposed
purposely to carry out the state policy of promoting voluntary modes of settling
8
disputes. The states commitment to enforce mutual compliance therewith to foster
industrial peace is affirmed by no less than our Constitution. Trade unionism and
strikes are legitimate weapons of labor granted by our statutes. But misuse of these
instruments can be the subject of judicial intervention to forestall grave injury to a
business enterprise.
Article 252 on duty to bargain collectively
Article 247 – concept of ULP
Types of ULP – Article 248 and 249
Under RA 6715 – CBA violation not a ULP, merely a type of grievance
BUT if gross violation it is ULP
Article 260
ARTICLE 260. Grievance machinery and voluntary arbitration.
The parties to a collective bargaining agreement shall include therein provisions that will
ensure the mutual observance of its terms and conditions. They shall establish a machinery
for the adjustment and resolution of grievances arising from the interpretation or
implementation of their collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not settled within seven (7)
calendar days from the date of its submission shall automatically be referred to voluntary
arbitration prescribed in the collective bargaining agreement.
For this purpose, parties to a collective bargaining agreement shall name and designate in
advance a voluntary arbitrator or panel of voluntary arbitrators, or include in the
agreement a procedure for the selection of such voluntary arbitrator or panel of voluntary
arbitrators, preferably from the listing of qualified voluntary arbitrators duly accredited by
the Board. In case the parties fail to select a voluntary arbitrator or panel of voluntary
arbitrators, the Board shall designate the voluntary arbitrator or panel of voluntary
arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the
collective bargaining agreement, which shall act with the same force and effects as if the
voluntary arbitrator or panel of voluntary arbitrators have been selected by the parties as
described above. (As added by RA 6715)
NCMB to choose VA Chair of Panel
Conciliation v. Mediation
VA jurisdiction Article 261
Article 261. Jurisdiction of voluntary arbitrators and panel of voluntary arbitrators. The
voluntary arbitrator or panel of voluntary arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in the

immediately preceding Article. Accordingly, violations of a collective bargaining agreement,
except those which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the collective bargaining agreement. For
purposes of this Article, gross violations of a collective bargaining agreement shall mean
flagrant and/or malicious refusal to comply with the economic provisions of such
agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of
Labor and Employment shall not entertain disputes, grievances or matters under the
exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same to the grievance machinery or
voluntary arbitration provided in the collective bargaining agreement. (As added by RA
6715)
Original and exclusive jurisdiction on
(1) Interpretation and implementation of CBA
(2) Enforcement of company policies
(3) Wage distribution disputes
(4) Productivity incentive scheme
Article 262 – If the parties agree, they can refer ANY labor dispute to the VA
Article 262-A, See: 277
Article 262-A. Procedures. The voluntary arbitrator or panel of voluntary arbitrators shall
have the power to hold hearings, receive evidences and take whatever action is necessary
to resolve the issue or issues subject of the dispute, including efforts to effect a voluntary
settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration proceedings. The
attendance of any third party or the exclusion of any witness from the proceedings shall be
determined by the voluntary arbitrator or panel of voluntary arbitrators. Hearings may be
adjourned for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the voluntary arbitrator or
panel of voluntary arbitrators to render an award or decision within twenty (20) calendar
days from the date of submission of the dispute to voluntary arbitration.
The award or decision of the voluntary arbitrator or panel of voluntary arbitrators shall
contain the facts and the law on which it is based. It shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or decision by the parties.
Upon motion of any interested party, the voluntary arbitrator or panel of voluntary
arbitrators or the Labor Arbiter in the region where the movant resides, in case of the
absence or incapacity of the voluntary arbitrator or panel of voluntary arbitrators for any
reason, may issue a writ of execution requiring either the sheriff of the Commission or
regular courts or any public official whom the parties may designate in the submission
agreement to execute the final decision, order or award. (As added by RA 6715)
9
Article 277. Miscellaneous provisions. (a) All unions are authorized to collect reasonable
membership fees, union dues, assessments and fines and other contributions for labor
education and research, mutual death and hospitalization benefits, welfare fund, strike
fund and credit and cooperative undertakings. (As amended by RA 6715)
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just or authorized cause and
without prejudice to the requirement of notice under Article 283 of this Code,
the employer shall furnish the workers whose employment is so sought to be
terminated a written notice containing a statement of the cause for termination
and shall afford the latter ample opportunity to be heard and to defend himself
with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by employer shall be
without prejudice to the right of the worker to contest the validity or legality of
his dismissal by filing a complaint with the regional branch of the National Labor
Relations Commission. The burden of proving that the termination was for a valid
or authorized cause shall rest on the employer. The Secretary of Labor and
Employment may suspend the effects of the termination pending resolution of
the dispute in the event of a prima facie finding by the appropriate official of the
Department of Labor and Employment before whom such dispute is pending that
the termination may cause a serious labor dispute or is in implementation of a
mass lay-off. (As amended by RA 6715)
(c) Any employee, whether employed for a definite period or not, shall, beginning
on his first day of service, be considered an employee for purposes of
membership in any labor union. (As amended by RA 6715)
(d) No docket fee shall be assessed in labor standards disputes. In all other
disputes, docket fees may be assessed against the filing party, provided that in
bargaining deadlocks, such fees shall be shared equally by the negotiating
parties.
(e) The Secretary of Labor and Employment and the Secretary of the Budget shall
cause to be created or reclassified in accordance with law such positions as may
be necessary to carry out the objectives of this Code and cause the upgrading of
the salaries of the personnel involved in the Labor Relations System of the
Department. Funds needed for this purpose shall be provided out of the Special
Activities Fund appropriated by Batas Pambansa Blg. 80 and from annual
appropriation thereafter.
(f) A Special Voluntary Arbitration Fund is hereby established in the Board to
subsidize the cost of voluntary arbitration in cases involving the interpretation
and implementation of the collective bargaining agreement, including the
arbitrator's fees, and for such other related purposes to promote and develop

voluntary arbitration. The Board shall administer the Special Voluntary
Arbitration Fund in accordance with the guidelines it may adopt upon the
recommendation of the Council, which guidelines shall be subject to the approval
of the Secretary of Labor and Employment. Continuing funds needed for this
purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00)
shall be provided in the 1989 and subsequent annual General Appropriations
Acts.
The amount of subsidy in appropriate cases shall be determined by the Board in
accordance with established guidelines issued by it upon the recommendation of
the Council.
The fund shall also be utilized for the operation of the Council, the training and
education of voluntary arbitrators, and the promotion and development of a
comprehensive voluntary arbitration program. (As amended by RA 6715)
(g) The Department shall help promote and gradually develop, with the
agreement of labor organizations and employers, labor-management
cooperation programs at appropriate levels of the enterprise based on shared
responsibility and mutual respect in order to ensure industrial peace and
improvement in productivity, working conditions and the quality of working life.
(h) In establishments where no legitimate labor organization exists, labor-
management committees may be formed voluntarily by workers and employers
for the purpose of promoting industrial peace. The Department of Labor and
Employment shall endeavor to enlighten and educate the workers and
employees on their rights and responsibilities through labor education with
emphasis on the policy thrust of this Code. (As amended by RA 6715)
(i) To ensure speedy labor justice, the periods provided in this Code within which
decisions or resolutions of labor relations cases or matters should be rendered
shall be mandatory. For this purpose, a case or matter shall be deemed
submitted for decision or resolution upon the filing of the last pleading or
memorandum required by the rules of the Commission or by the Commission
itself, or the Labor Arbiter or the Director of the Bureau of Labor Relations or
Med-Arbiter, or the Regional Director.
Upon expiration of the corresponding period, a certification stating why a decision or
resolution has not been rendered within the said period shall be issued forthwith by the
Chairman of the Commission, the Executive Labor Arbiter, or the Director of the Bureau of
Labor Relations or Med-Arbiter, or the Regional Director, as the case may be, and a copy
thereof served upon the parties.
Despite the expiration of the applicable mandatory period, the aforesaid officials shall,
without prejudice to any liability which may have been incurred as a consequence thereof,
10
see to it that the case or matter shall be decided or resolved without any further delay. (As
amended by RA 6715)
Procedure (262-A)
Parties to the dispute shall be entitled to attend the arbitration proceedings. Attendance of
any third party or exclusion of any witness shall be determined by the VA.
Decision or award rendered within 20 calendar days from the date of submission of the
dispute to voluntary arbitration
 Final and executory after 10 calendar days from receipt of the copy of the award
 The award or decision of the VA shall contain facts and law on which it is based
Case of Philippine Electric contra Rule 43 on period of appeal – Labor Code being the more
specific law will prevail over the rules provided by the Supreme Court
LC 255 – union as the SEBA
Article 255. Exclusive bargaining representation and workers' participation in policy and
decision-making. The labor organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be the exclusive representative
of the employee in such unit for the purpose of collective bargaining. However, an
individual employee or group of employees shall have the right at any time to present
grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the right, subject
to such rules and regulations as the Secretary of Labor and Employment may promulgate,
to participate in policy and decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights, benefits and welfare. For
this purpose, workers and employers may form labor-management councils: Provided, That
the representatives of the workers in such labor-management councils shall be elected by
at least the majority of all employees in said establishment. (As amended by RA 6715)
Under American jurisprudence, when there is a labor dispute and employer goes
directly to the employee, bypassing the union, such constitutes ULP
Insular Hotel Employees Union-NFL v. Waterfront Insular Hotel Davao Sept 22 2010 | Peralta, J.
FACTS:
Employer (respondent): Waterfront Insular Hotel Davao
Registered Union: Davao Insular Hotel Free Employees Union (DIHFEU-NFL)
Unregistered Union and actually the Federation NFL (petitioner): Insular Hotel Employees
Union-NFL (IHEU-NFL)
1. Nov. 6, 2000: Respondent Waterfront Insular Hotel Davao sent the DOLE a Notice of
Suspension of Operations for a period of 6 months due to severe and serious business
losses.
2. Domy Rojas, the President of DIHFEU-NFL (Union 1) sent respondent a number of letters
asking management to reconsider its decision.

3. Rojas intimated that the members of the Union were determined to keep their jobs and
were willing to help respondent by suspending re-negotiations of the CBA, and reducing
employee benefits such as:
a. Suspension of the CBA for 10 years, No strike no lock-out shall be enforced.
b. Pay all the employees their benefits due, and put the length of service to zero
with a minimum hiring rate. Payment of benefits may be on a staggered basis
or as available.
c. Night premium and holiday pays shall be according to law. Overtime hours
rendered shall be offsetted as practiced.
d. Reduce the sick leaves and vacation leaves to 15 days/15days.
e. Emergency leave and birthday off are hereby waived.
f. Duty meal allowance is fixed at P30.00 only. No more midnight snacks and
double meal allowance. The cook drinks be stopped as practiced.
g. We will shoulder 50% of the group health insurance and family medical
allowance be reduced to 1,500.00 instead of 3,000.00.
h. The practice of bringing home our uniforms for laundry be continued.
i. Fixed manning shall be implemented, the rest of manpower requirements
maybe sourced thru WAP and casual hiring. Manpower for fixed manning shall
be 145 rank-and-file union members.
j. Union will cooperate fully on strict implementation of house rules in order to
attain desired productivity and discipline. The union will not tolerate problem
members.
k. The union in its desire to be of utmost service would adopt multi-tasking for
the hotel to be more competitive.
4. Jan. 2001: the Union, through Rojas, submitted to respondent a Manifesto concretizing
their earlier proposals.
5. After series of negotiations, the respondent and Union signed a MOA for the re-opening of
the hotel subject to the concessions made by the Union in their Manifesto.
6. Respondent downsized its manpower structure to 100 (from 145) rank-and-file
employees in accordance with the MOA and a new pay scale was made.
7. Retained employees individually signed a "Reconfirmation of Employment” which
embodied the new terms and conditions of their continued employment. Each employee
was assisted by Rojas who co-signed the document.
8. June 15, 2001: Hotel resumed its business operations.
9. Aug. 22, 2002: Darius Joves and Debbie Planas, claiming to be local officers of the National
Federation of Labor (NFL) filed a Notice of Mediation before the National Conciliation and
Mediation Board (NCMB). The issue raised was the "Diminution of wages and other
benefits through unlawful MOA.”
a. In the Notice it was stated that the union involved was “DARIUS JOVES/DEBBIE
PLANAS et al, National Federation of Labor”
10. Aug. 29, 2002: NCMB called Joves and respondent to a preliminary conference. In said
conference, the Submission Agreement signed by respondent and Joves, assisted by Atty.
11
Cullo, wherein they chose the accredited voluntary arbitrator (AVA Olvida), Joves
indicated that he represented IHEU-NFL instead of NFL.
a. To support his authority to file, Joves presented several SPA (from union
members) w/c were not notarized and undated.
11. Sept. 2, 2002 or 4 days after, respondent filed a "Manifestation with Motion for a Second
Preliminary Conference" that the persons who filed the instant complaint in the name of
IHEU-NFL had no authority to represent the Union.
12. During the 2nd conference, Cullo confirmed that the case was filed not by the IHEU-NFL but
by the NFL. When asked to present his authority from NFL, Cullo admitted that the case
was filed by 79 individual employees and members of the Union named in SPAs.
13. Respondent filed a motion to withdraw from the proceedings arguing that the persons who
signed the complaint were not the authorized representatives of the Union indicated in the
Submission Agreement nor were they parties to the MOA.
14. AVA Olvida denied the motion to withdraw.
a. He ruled that proper party complainant was actually the IHEU-NFL as the union
and not NFL and the other members
b. However, since the NFL is the mother federation of the local union, and
signatory to the existing CBA, it can represent the union, the officers, the
members or union and officers or members.
15. Cullo, in his pleadings, now started using the caption Insular Hotel Employess Union-NFL,
Complainant.
16. Respondent demanded inhibition of Olvida for his bias and prejudice. Olvida complied
and voluntarily inhibited himself out of “delicadeza.” It likewise reiterated its statance
that the members had no standing to file notice of mediation.
17. New AVA was selected. AVA Montejo (Olvida’s replacement) decided in favor of Cullo,
a. Declaring the MOA in question as invalid as it is contrary to law and public
policy;
b. Declaring that there is a diminution of the wages and other benefits of the
Union members and officers under the said invalid MOA.
c. Ordering respondent management to immediately reinstate the workers wage
rates and other benefits that they were receiving and enjoying before the
signing of the invalid MOA;
d. Ordering the management respondent to pay attorney’s fees.
18. Upon appeal, CA reversed and declared the MOA valid and enforceable. MR denied
hence this petition.
ISSUES/HELD/RATIO:

W/N the accredited voluntary arbitrator has jurisdiction because the Notice of Mediation does
not mention the name of the local union but only of the affiliate federation (NFL). – NO,
complaint for mediation was not filed by the Union.
 A review of the development of the case shows that there has been much confusion as to
the identity of the party which filed the case against respondent.
o In the Notice of Mediation filed before the NCMB, it stated that the union
involved was "DARIUS JOVES/DEBBIE PLANAS ET. AL., National Federation of
Labor."
o In the Submission Agreement, however, it stated that the union involved was
IHEU-NFL
 While it is undisputed that a submission agreement was signed by respondent and IHEU-
NFL, then represented by Joves and Cullo, this Court finds that there are two
circumstances which affect its validity:
1. the Notice of Mediation was filed by a party who had no authority to do so;
2. that respondent had persistently voiced out its objection questioning the
authority of Joves, Cullo and the individual members of the Union to file the
complaint before the NCMB.
 Under Section 3, Rule IV of the NCMB Manual of Procedure, only a certified or duly
recognized bargaining agent may file a notice or request for preventive mediation.
 Cullo himself admitted, in a number of pleadings, that the case was filed not by the Union
but by the NFL and individual members of the Union. Therefore, the NCMB had no
jurisdiction to entertain the notice filed before it.
 Even though respondent signed a Submission Agreement, it had immediately manifested
after 4 days its desire to withdraw from the proceedings after it became apparent that
the Union had no part in the complaint.
 Respondent cannot be estopped in raising the jurisdictional issue, because it is basic that
the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal,
and is not lost by waiver or by estoppel.
W/N the individual employees and members of the UNION had standing to file the complaint
before the NCMB. – NO
 Tabigue v. International Copra Export Corporation citing Atlas Farms, Inc. v. NLRC is
instructive:
“Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their
respective representatives to the grievance machinery and if the grievance is unsettled in that
level, it shall automatically be referred to the voluntary arbitrators designated in advance by
parties to a CBA. Consequently, only disputes involving the union and the company shall be
referred to the grievance machinery or voluntary arbitrators.”
W/N the federation NFL had standing to file the complaint before the NCMB. – NO
12
 In Coastal Subic Bay Terminal, Inc. v. DOLE, SC pronounced that
o “A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to
the will of its members. Mere affiliation does not divest the local union of its
own personality, neither does it give the mother federation the license to act
independently of the local union.”
 Even granting that petitioner Union was affiliated with NFL, still the relationship between
that of the local union and the affiliated labor federation or national union with is that of
an agency, where the local is the principal and the federation the agency. Being merely an
agent of the local union, NFL should have presented its authority to file the Notice of
Mediation.
 As provided under the NCMB Manual of Procedures, only a certified or duly recognized
bargaining representative and an employer may file a notice of mediation, declare a
strike or lockout or request preventive mediation. The CBA recognizes that DIHFEU-NFL is
the exclusive bargaining representative of all permanent employees.
o The inclusion of the word "NFL" after the name of the local union merely
stresses that the local union is NFL's affiliate. It does notmean that the local
union cannot stand on its own. The local union owes its creation and continued
existence to the will of its members and not to the federation to which it
belongs. The spring cannot rise higher than its source, so to speak.
 RE: IHEU-NFL:
o It is not a registered labor organization but respondent is estopped from
questioning its existence since it did not raise this issue before the NCMB
W/N respondent was really suffering from serious losses. – YES
 Cullo’s reliance on the denial by the Wage Board of respondent’s petition from
exemption from a Wage Order is misplaced since said petition was denied because the
financial statements then submitted by respondents were not audited.
 In this case, respondent submitted its audited financial statements which show that for
the years 1998, 1999, until September 30, 2000, its total operating losses amounted to
P48,409,385.00. Based on the foregoing, the CA was not without basis when it declared
that respondent was suffering from impending financial distress.
W/N the MOA was an invalid dimunition of benefits prohibited under Art. 100. – NO
 The prohibition against elimination or diminution of benefits set out in Article 100 of the
Labor Code is specifically concerned with benefits already enjoyed at the time of the
promulgation of the Labor Code. Article 100 does not, in other words, purport to apply to
situations arising after the promulgation date of the Labor Code.
 Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with
respondent that the same does not prohibit a union from offering and agreeing to reduce
wages and benefits of the employees.

 In Rivera v. Espiritu, Court ruled that right to free collective bargaining, after all, includes
the right to suspend it. In said case, it was held that:
o A CBA is a contract executed upon request of either the employer or the
exclusive bargaining representative incorporating the agreement reached after
negotiations with respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting any grievances or
questions arising under such agreement.
o The primary purpose of a CBA is the stabilization of labor-management
relations in order to create a climate of a sound and stable industrial peace. In
construing a CBA, the courts must be practical and realistic and give due
consideration to the context in which it is negotiated and the purpose which it
is intended to serve.
o The assailed PAL-PALEA agreement was the result of voluntary collective
bargaining negotiations undertaken in the light of the severe financial situation
faced by the employer, with the peculiar and unique intention of not merely
promoting industrial peace at PAL, but preventing the latter’s closure
o In the instant case, it was PALEA, as the exclusive bargaining agent of PALs
ground employees, which voluntarily entered into the CBA with PAL. It was also
PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case
was the union’s exercise of its right to collective bargaining. The right to free
collective bargaining, after all, includes the right to suspend it
 Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws
specifically provides that "the results of the collective bargaining negotiations shall be
subject to ratification and approval by majority vote of the Union members at a meeting
convened, or by plebiscite held for such special purpose."
o Accordingly, there was no need for the MOA to be ratified by the members of
the Union (because not a CBA)
o However, despite this non-ratification, EEs individually signed contracts
denominated as "Reconfirmation of Employment” with the assistance by their
president, Rojas. Therefore EEs are aware of the MOA.
o 87 union members signed said Reconfirmation contract and 71 of them are
allegedly being represented by Cullo. Court notes that contract was freely
entered into by the EEs and MOA is deemed impliedly ratified by them,
o Having enjoyed the benefit under said contract and MOA (not losing their jobs)
it would now be iniquitous for them to renege on their agreement.
8
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT,
petitioner,
vs.
13
Petition DENIED
 Issue of taking advantage of employer by employee
When employee goes directly to employer and former presents grievances, totally
VALID
LC 258; 258-A (RA 9481)
Employer is a mere bystander in certification election cases
Article 258. When an employer may file petition. When requested to bargain collectively, an
employer may petition the Bureau for an election. If there is no existing certified collective
bargaining agreement in the unit, the Bureau shall, after hearing, order a certification
election.
All certification cases shall be decided within 20 working days.
The Bureau shall conduct a certification election within 20 days in accordance with the
rules and regulations prescribed by the Secretary of Labor and Employment.
Article 258-A (now 271). Employer as Bystander. – In all cases, whether the petition for
certification election is filed by an employer or a legitimate labor organization, the
employer shall not be considered a party thereto with a concomitant right to oppose a
petition for certification election. The employer’s participation in such proceedings shall be
limited to (1) being notified or informed of petitions of such nature; and (2) submitting the
list of employees during the pre-election conference should the Med-Arbiter act favorably
on the petition.
COLLECTIVE BARGAINING
The moment there is acceptance on employer that union is the SEBA, collective bargaining can
commence
If employer ignores proposals submitted by the union
SEE: Kiok Loy v. NLRC
San Juan de Letran v. Assoc of Employees
General Milling Corp v. CA
- Employer has 10 days to submit counterproposal after submission of proposal by
union
Kiok Loy v. NLRC8
Jan 22, 1986 | Cuevas J.
SUMMARY: Pambansang Kilusang Paggawa (UNION) won in the certification election as the
sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG
PAGGAWA (KILUSAN),

(COMPANY). The Union submitted its proposals to the Company and requested for its counter-
proposals, but the company ignored the requests. The case was submitted to NLRC for
compulsory arbitration. While the case was in NLRC, the Company asked for several
postponements on several occasions. One day, when the Company asked for another
postponement, the Labor Arbiter denied the request and considered the case submitted for
resolution. The NLRC declared the Company guilty of unjustified refusal to bargain, in violation
of Sec. (g) Art. 248 (now 249) of PD 442, as amended.
In deciding whether or not the company is guilty of unjustified refusal to bargain, the court
took into consideration its attitude and over-all acts throughout the bargaining process. The
Court ruled that the Union has a valid cause to complain against the company’s attitude
indicative of the failure to follow what is enjoined by the Labor Code – to bargain in good
faith.Collective bargaining, which is defined as negotiations towards a collective agreement, is
one of the democratic frameworks under the New Labor Code, designed to stabilize the relation
between labor and management and to create a climate of sound and stable industrial peace. It
is a mutual responsibility of the employer and the Union and is characterized as a legal
obligation.
In this case, it was pointed out that the company made no counter-proposal whatsoever. The
company’s conduct conclusively indicates lack of a sincere desire to negotiate. As stated in
Bradman v CIR: “While the law does not compel the parties to reach an agreement, it does
contemplate that both parties will approach the negotiation with an open mind and make a
reasonable effort to reach a common ground of agreement.” The Company is guilty and its
petition should be dismissed.
FACTS:
 In a certification election, the Pambansang Kilusang Paggawa (UNION) won and was
certified by the Bureau of Labor Relations as the sole and exclusive bargaining agent
of the rank-and-file employees of Sweden Ice Cream Plant (COMPANY). The Company
filed an MR which was denied.
 The Union furnished the Company with 2 copies of its proposed bargaining agreement
along with a request for a copy of the Company's counter-proposals. Eliciting no
response from the company, however, the Union reiterated its request for collective
bargaining negotiations. These 2 requests were ignored by the company.
 Seeing no other alternative to bring the Company to the bargaining table, the Union
filed a “Notice of Strike” with the Bureau of Labor Relations (BLR) on the ground of
unresolved economic issues in collective bargaining.
 During the 30-day statutory cooling-off period, conciliation proceedings followed but
an amicable settlement was not reached. BLR certified to the case to NLRC for
compulsory arbitration pursuant to PD 823, as amended.
 April 29, 1979 - The labor arbiter set the initial hearing, but the same was cancelled
and reset to another date for failure of the parties to submit their respective position
papers.
 The Union subsequently submitted its position paper. On the other hand, the
company, instead of submitting its own position paper, requested for a resetting
which was granted.
14
 The case was further reset to May 11, 1979 due to the withdrawal of the Company’s
counsel of record, Atty. Rodolfo Dela Cruz.
o Atty. Fortunanto Panganiban formally entered his appearance as counsel
and requested for another postponement allegedly for the purpose of
acquainting himself with the case. The company was only able to submit its
position paper on May 28, 1979. (17 days after the date the case was reset
to)
 June 7, 1979 – the case was called for hearing, but the Company’s representative, Mr.
Ching, who was supposed to be examined, failed to appear. Atty. Panganiban then
requested for another postponement (Note: this is the 4th time the Company asked
the court for postponement)
 This request was denied by the labor arbiter, ruling that the Company has waived its
right to present further evidence and, therefore, considered the case submitted for
resolution. Labor Arbiter Andres Fidelino submitted its report to the NLRC.
 [NLRC] declared Sweden Ice Cream Plant guilty of unjustified refusal to bargain, in
violation of Sec. (g) Art. 248 (now 249) of PD 442, as amended. Further, the NLRC
found the Union’s draft proposal for a collective bargaining agreement reasonable,
and declared the same to be the collective agreement which should govern the
relationship between the parties.
 Sweden Ice Cream Plant filed a Petition for Certiorari to annul the NLRC decision. SC
initially dismissed the petition for lack of merit, but the same was given due course
upon MR by the Company.
ISSUES/HELD:
1. WON THE COMPANY IS GUILTY OF UNFAIR LABOR PRACTICE. (YES)
- Collective bargaining, which is defined as negotiations towards a collective agreement, is one
of the democratic frameworks under the New Labor Code, designed to stabilize the relation
between labor and management and to create a climate of sound and stable industrial
peace. It is a mutual responsibility of the employer and the Union and is characterized as a
legal obligation.
o Art. 249 (g) of the Labor Code even makes it an unfair labor practice for an
employer to refuse “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 grievance or question arising under
such an agreement and executing a contract incorporating such agreement,
if requested by either party.
- Although it’s a mutual obligation for the parties to bargain, the employer is not bound to
initiate contract negotiation. The following jurisdictional preconditions need to be present
in order to set the mechanics of collective bargaining in motion:
1) Possession of the status of majority representation of the employees'
representative in accordance with any of the means of selection or designation
provided for by the Labor Code;
2) proof of majority representation;
3) a demand to bargain under Article 251, par. (a) of the New Labor Code
- Taking into consideration the over-all conduct of the company in relation to the
negotiation, the Union has a valid cause to complaint against the company’s attitude

indicative of the failure to follow what is enjoined by the Labor Code – to bargain in good
faith.
- In this case, it has been established that;
 respondent Union was a duly certified bargaining agent;
 it made a definite request to bargain, accompanied with a copy of the
proposed Collective Bargaining Agreement, to the Company not only once but
twice which were left unanswered and unacted upon; and
 the Company made no counter proposal whatsoever, all of which conclusively
indicate lack of a sincere desire to negotiate
- Such refusal to make counter proposal, in relation to the entire bargaining process, may
indicate bad faith and this is especially true where the union’s request for a counter-
proposal is left unanswered. Besides, the Company’s approach and attitude (stalling
through a series of postponements, non-appearance at hearings, and undue delay in
submitting financial statements) lead to no other conclusion except that it is unwilling to
negotiate.
- [Herald Deliver Carriers Union (PAFLU) v Herald Publications]: "unfair labor practice is
committed when it is shown that the respondent employer, after having been served with
a written bargaining proposal by the petitioning Union, did not even bother to submit an
answer or reply to the said proposal.”
- This was reiterated anew in [Bradman v CIR] wherein it was further ruled that: "while the
law does not compel the parties to reach an agreement, it does contemplate that both
parties will approach the negotiation with an open mind and make a reasonable effort to
reach a common ground of agreement”
2. WON THE COMPANY WAS DENIED PROCEDURAL DUE PROCESS. (NO)
- Company’s contention that it was denied procedural due process is bereft of any
legal and factual support. As discussed above, the moves and overall behavior of the
Company were in total derogation of the policy enshrined in the New Labor Code
which is aimed towards expediting settlement of economic disputes.
3. WON THE CBA APPROVED BY NLRC IS NULL AND VOID (NO)
- Company contends that CBA is null and void because: 1) it lacks the company’s
consent and; 2) the company will face the prospect of closing down since it has to
pay a staggering amount of economic benefits
- Court said: Such a stand and the evidence in support thereof should have been
presented before the Labor Arbiter which is the proper forum for the purpose.
Court’s closing remarks: Although it’s not obligatory upon either side to accept/agree to the
proposals of the other, an erring party should not be tolerated and allowed with impunity to
resort to schemes feigning negotiations by going through empty gestures.
Dispositive: PETITION DISMISSED.
15
COLEGIO DE SAN JUAN DE LETRAN vs. ASSOCIATION OF EMPLOYEES AND FACULTY OF LETRAN
G.R. No. 141471| September 18, 2000| Kapunan.
Summary: The union filed a case for ULP against Letran when the latter refused to bargain/ re-
negotiate the CBA in lieu of a petition for certification election filed by rival union. The SC ruled
against Letran and held that the mere filing of a petition for certification election does not ipso
facto justify the suspension of the negotiation by the employer. The petition must comply with
the provisions of the Labor Code. The SC also held that there was ULP when Letran unilaterally
suspended the ongoing negotiations for a new CBA. Lastly, Letran was held in violation of the
employees’ right to self-organization when it terminated the union president.
Facts:
1. December 1992- union initiated a renegotiation of its CBA with Letran for the last 2
years of the CBA’s 5-year life from 1989-94.
2. The new officers wanted to continue the renegotiation but Letran refused, claiming
that the CBA was already prepared for signing by the parties. The disputed CBA was
submitted to a referendum but this was rejected by the union members.
3. Letran then accused the union officers of bargaining in bad faith before the NLRC. The
LA ruled in favor of petitioner but this was reversed by the NLRC.
4. January 1996- union notified the NCMB of its intention to strike due to Letran’s non-
compliance with the NLRC order to:
a. Delete the name of Atty. Federico Leyness as the union’s legal counsel; and
b. Engage in bargaining
5. January 18, 1996- parties agreed to disregard the CBA and start negotiation on a new
5-year CBA starting 1994-1999. The union’s proposals were submitted to the Board
of Trustees for its approval. Further, the union’s president, Eleanor Ambas was
informed that her shift was changed from M-F to Tue-Sat. Ambas protested and
requested manangement to submit the issue to a grievance machinery under the old
CBA.
6. March 13, 1996- due to petitioner’s inaction, the union filed a notice of strike.
7. March 27, 1996- before the NCMB the parties met to discuss the grounds rules for
the negotiation.
8. March 29, 1996- union received a letter from Letran dismissing Ambas for
insubordination. The union amended its notice of strike to include Ambas’ dismissal.
9. April 20, 1996- both parties again discussed the ground rules for the CBA
renegotiation but petitioner stopped the negotiations after it purportedly received
information that a new group of employees had filed a petition for certification
election.
10. June 18, 1996- union finally struck. SOLE assumed jurisdiction and ordered employees
to get back to work and for Letran to accept them back. Striking members were
admitted except Ambas. SOLE declared Letran guilty of ULP.

Issue: WON Letran is guilty of ULP.
Held: Yes.
Ratio:
1. The duty to bargain is defined under Article 2529. Noteworthy in the definision is the
requirement on both parties of the performance of the mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement. Undoubtedly, the union lived up to this requisite when it presented its
proposals for the CBA to petitioner on February 7, 1996. On the other hand, petitioner
devised ways and means in order to prevent the negotiation.
2. Petitioner's utter lack of interest in bargaining with the union is obvious in its failure
to make a timely reply to the proposals presented by the latter. More than a month
after the proposals were submitted bythe union, petitioner still had not made any
counter-proposals. This inaction on the part of petitioner prompted the union to file
its second notice of strike on March 13, 1996. Petitioner could only offer a feeble
explanation that the Board of Trustees had not yet convened to discuss the matter as
its excuse for failing to file its reply. This is a clear violation of Article 25010 of the Labor
Code governing the procedure in collective bargaining.
3. The company's refusal to make counter-proposal to the union's proposed CBA 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. In the case at bar, petitioner's actuation show a lack of sincere
desire to negotiate rendering it guilty of unfair labor practice.
4. The claim of the petitioner that there was a pending petition for certification election
is unavailing. In order to allow the employer to validly suspend the bargaining process
there must be a valid petition for certification election raising a legitimate
representation issue. Hence, the mere filing of a petition for certification election
does not ipso facto justify the suspension of negotiation by the employer. The petition
must first comply with the provisions of the Labor Code and its Implementing Rules.
Foremost is that a petition for certification election must be filed during the sixty-day
freedom period. The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the
Omnibus Rules Implementing the Labor Code.
5. In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition
for certification election by ACEC, allegedly a legitimate labor organization, was filed
with the Department of Labor and Employment (DOLE) only on May 26, 1996. Clearly,
the petition was filed outside the sixty-day freedom period. Hence, the filing thereof
9 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 with respect to wages, hours of
work and all other terms and conditions of employment including proposals for adjusting
any grievances or questions arising under such agreement 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.
16
was barred by the existence of a valid and existing collective bargaining agreement.
Consequently, there is no legitimate representation issue and, as such, the filing of
the petition for certification election did not constitute a bar to the ongoing
negotiation.
6. Concerning the issue on the validity of the termination of the union president, we
hold that the dismissal was effected in violation of the employees' right to self-
organization.
7. To justify the dismissal, petitioner asserts that the union president was terminated for
cause, allegedly for insubordination for her failure to comply with the new working
schedule assigned to her, and pursuant to its managerial prerogative to discipline
and/or dismiss its employees. While we recognize the right of the employer to
terminate the services of an employee for a just or authorized cause, nevertheless,
the dismissal of employees must be made within the parameters of law and pursuant
to the tenets of equity and fair play.The employer's right to terminate the services of
an employee for just or authorized cause must be exercised in good faith. More
importantly, it must not amount to interfering with, restraining or coercing employees
in the exercise of their right to self-organization because it would amount to, as in this
case, unlawful labor practice under Article 248 of the Labor Code.
8. The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion
that she was dismissed in order to strip the union of a leader who would fight for the
right of her co-workers at the bargaining table. Ms. Ambas, at the time of her
dismissal, had been working for the petitioner for ten (10) years already. In fact, she
was a recipient of a loyalty award. Moreover, for the past ten (10) years her working
schedule was from Monday to Friday. However, things began to change when she was
elected as union president and when she started negotiating for a new CBA. Thus, it
was when she was the union president and during the period of tense and difficult
negotiations when her work schedule was altered from Mondays to Fridays to
Tuesdays to Saturdays. When she did not budge, although her schedule was changed,
she was outrightly dismissed for
alleged insubordination.
General Milling Corp. v. CA
February 11, 2004 | Quisumbing, J.
By: Jadd
SUMMARY:
10Art. 250. Procedure in collective bargaining. - The following procedures shall be
observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a reply
thereto not later than ten (10) calendar days from receipt of such notice.

Two months before the 1988 CBA expired, GMC received union withdrawal letters from GMC-
ILU members. GMC-ILU sent a proposed CBA 1 day before the expiration. GMC did not send a
counter-proposal. GMC also refused to act on the union's request for grievance procedures
after GMC dismissed a union member for incompetence. The union filed a ULP complaint for
refusal to bargain collectively, interference with the right to self-organization, and
discrimination. The LA dismissed the complaint and recommended a petition for certification
election. The NLRC initially set aside the LA's decision and ordered GMC to abide by the
proposed CBA draft from the expiration of the 1988 CBA. However, the NLRC granted GMC's
MR and reversed itself. The CA reinstated the first NLRC decision ordering GMC to abide by the
proposed CBA draft. SC denied GMC's petition for certiorari, holding that the CA could impose
the terms of the draft CBA because fairness, equity, and social justice would be defeated if the
old terms subsisted due to GMC's delaying tactics. GMC was also found to be guilty of the ULPs
of refusing to collectively bargain and interfering with the right to self-organization.
DOCTRINE:
A proposed draft CBA may be imposed where a party abuses the grace period by purposely
delaying the bargaining process and the terms are found to be reasonable.
The old CBA subsists until a new one is agreed upon except where there is bad faith, such as the
abuse of the grace period by purposely delaying the bargaining process.
FACTS:
 Parties:
o Petitioner – GMC (General Milling Corporation)
o Respondents:
 Public Respondent – Court of Appeals
 Private Respondents:
 The Union – GMC-ILU (General Milling Corporation-
Independent Labor Union)
 Rito Mangubat – Union officer
 April 28, 1989 – GMC and the union concluded a CBA.
o Includes provision for a 3-year representation term.
o Effectivity – 3 years retroacting to December 1, 1988
o Expiry – November 30, 1991
 As early as October 1991 – GMC received letters (collective and individual) from
workers stating their withdrawal from the union due to religious affiliation and
personal differences.
 November 29, 1991 (1 day before expiration) – The union sent a proposed CBA and
requested for a counter-proposal w/in 10 days.
 GMC did not send a counter-proposal.
 December 16, 1991 – GMC wrote to 2 union officers (Rito Mangubat and Victor
Lastimoso) explaining that it felt no basis to negotiate with a non-existent union but
also expressing willingness to dialogue on common concerns.
 December 19, 1991 – Rito and Victor wrote a letter of this date, disclaiming any mass
disaffiliation or resignation, and submitted a manifesto signed by union members to
the effect that they did not withdraw.
 January 13, 1992 – GMC dismissed a union member (Marcia Tumbiga) for
incompetence.
17
o Despite the union’s protest and request for grievance procedures, GMC told
them to refer to the December 16, 1991 Letter.
 July 2, 1992 – The union filed a ULP complaint for: (1) refusal to bargain collectively;
(2) interfering with the right to self-organization; and (3) discrimination.
 LA dismissed the complaint and recommended a petition for certification election.
 January 30, 1998 – NLRC set aside the LA’s decision, ordering GMC to abide by the
proposed CBA draft beginning from the end of the first CBA.
 October 6, 1998 – NLRC reversed itself and granted GMC’s MR.
 July 19, 2000 – CA granted the union’s petition for certiorari and reinstated the first
NLRC decision.
 GMC goes up to the SC through a petition for certiorari.
ISSUES/HELD:
1) (Topical) WON the CA had jurisdiction to impose the terms of the draft CBA for 2 years
beginning from the expiration of the prior one. – YES
2) WON GMC is guilty of the ULP of refusing to collectively bargain and/or interference
with the right to self-organization – YES (both)
RATIO:
1) Yes, a proposed draft CBA may be imposed where a party abuses the grace period by
purposely delaying the bargaining process because it would be contrary to fairness,
equity, and social justice to allow the old CBA’s terms and conditions to subsist despite
the employer’s delaying the negotiations.
A) General Rule – Status quo: Old CBA subsists until new one agreed upon.
1. Statutory Basis – Labor Code Art. 259 (then Art. 253)
2. Limitation – This presupposes that there is no bad faith (in other words, all
other things are equal.)
3. Exception – Deviating from this rule is warranted where a party abuses the
grace period by purposely delaying the bargaining process.
a) Illustrative cases:
1. Kiok Loy v. NLRC (1986):
a. Situation – Sweden Ice Cream Plant refused to
submit any counter proposal to the certified
bargaining agent's proposed CBA.
b. Holding – The employer lost the right to bargain,
and the SC imposed the proposed CBA terms.
c. Delays – postponements, non-appearance, undue
delay in submitting documents
2. Divine Word University of Tacloban v. SOLE (1992):
a. Holding – SC upheld CBA’s unilateral imposition
because the employer’s own acts led to it
forfeiting whatever rights it had as an employer.
b) In this case:
1. It would be unfair to the union and its members if the
old terms subsisted for the remaining 2 years.

2. The employer delayed negotiations, violating its duty to
collectively bargain, so it lost its right to negotiate on
the proposed draft CBA.
3. Even if the instant case differs from the 2 illustrative
cases in that there was no pre-existing CBA in them, the
rationale still applies because holding otherwise would
amount to letting GMC “have its cake and eat it too.”
4. Substantial evidence supports the CA’s affirmation of
the NLRC’s findings that the proposed terms were
reasonable.
B) On the acceptance of proposals:
1. Generally, parties are not obliged to accept or agree to the other’s
proposals.
2. However, erring parties should not be allowed to resort with impunity to
feign negotiations with empty gestures. (Citing Divine Word University of
Tacloban v. SOLE, 1992)
a. Basis – Equity and fair play.
2) Yes, GMC committed the ULPs of: (1) failing its duty to collectively bargain because it
failed to make a timely reply without sufficient justification; and (2) interfering with
the right to self-organization because the letters of withdrawal came out during the
case’s pendency at the LA level.
A) On the duty to collectively bargain:
1. Test – Depends on the facts of the case, particularly the impact of all acts
as a whole. (Citing Hongkong and Shanghai Banking Corporation Employees
Union v. NLRC, 1997)
2. Concept – Found in Art. 258 and 259 (then 252 only): The performance of a
mutual obligation to meet and convene promptly and expeditiously in good
faith for negotiating an agreement.
3. Procedure – Found in Labor Code Art. 256 (then 250).
a. Nature – Mandatory because of the state interest in industrial
peace.
4. In this case: GMC
i. Failed to make a timely reply.
ii. Had a flimsy excuse since its feeling that the union no
longer represented the workers turned out to be
baseless.
5. GMC’s refusal to make a counter-proposal indicated bad faith.
A) On the interference with the right to self-organization – The CA correctly held
that the timing of the letters showed an attempt to cast doubt on the union’s
status.
1. The letters were dated February to June of 1993, during the pendency of
the case with the LA.11
11
But I don’t know what the Court made of the earlier letters (See Fact Bullet #3).
18
See also:
National Union of Restaurants v. CIR
SC: absolved employer of ULP charge. Employer held several meetings with union
and officers. In the proposals submitted by the union, employer put marks and notes
National Union of Workers in the Hotel Restaurant and Allied Industries v. Court of Appeals
Velasco Jr., J.
Types of Union Security Provisions
FACTS
 The Union is the certified bargaining agent of the regular rank-and-file employees of
Dusit Hotel Nikko (Hotel)
 On October 24, 2000, the Union submitted its Collective Bargaining Agreement
(CBA) negotiation proposals to the Hotel. As negotiations ensued, the parties failed
to arrive at mutually acceptable terms and conditions
 Due to the bargaining deadlock, the Union, on December 20, 2001, filed a Notice of
Strike on the ground of the bargaining deadlock with the National Conciliation and
Mediation Board (NCMB)
 Conciliation hearings were conducted which proved unsuccessful. A Strike Vote was
conducted by the Union on January 14, 2002 on which it was decided that the Union
would wage a strike.
 In the afternoon of January 17, 2002, the Union held a general assembly at its office
located in the Hotel's basement, where some members sported closely cropped hair
or cleanly shaven heads
 The next day, or on January 18, 2002, more male Union members came to work
sporting the same hair style. The Hotel prevented these workers from entering the
premises claiming that they violated the Hotel's Grooming Standards.
 The Union staged a picket outside the Hotel premises. Later, other workers were
also prevented from entering the Hotel causing them to join the picket. For this
reason the Hotel experienced a severe lack of manpower which forced them to
temporarily cease operations in three restaurants.
 On January 20, 2002, the Hotel issued notices to Union members, preventively
suspending them and charging them with the following offenses: (1) violation of the
duty to bargain in good faith; (2) illegal picket; (3) unfair labor practice; (4) violation
of the Hotel's Grooming Standards; (5) illegal strike; and (6) commission of illegal
acts during the illegal strike.

 The next day, the Union filed with the NCMB a second Notice of Strike on the
ground of unfair labor practice and violation of Article 248(a) of the Labor Code on
illegal lockout
 On January 26, 2002, the Hotel terminated the services of twenty-nine (29) Union
officers and sixty-one (61) members; and suspended eighty-one (81) employees for
30 days, forty-eight (48) employees for 15 days, four (4) employees for 10 days, and
three (3) employees for five days. On the same day, the Union declared a strike.
Starting that day, the Union engaged in picketing the premises of the Hotel. During
the picket, the Union officials and members unlawfully blocked the ingress and
egress of the Hotel premises.
 The DOLE Secretary, through her January 31, 2002 Order, assumed jurisdiction over
the labor dispute and certified the case to the NLRC for compulsory arbitration.
o In the order, the Hotel was given the option, in lieu of actual
reinstatement, to merely reinstate the dismissed or suspended workers in
the payroll in light of the special circumstances attendant to their
reinstatement
o the Hotel, on February 1, 2002, issued an Inter-Office Memorandum,
directing some of the employees to return to work, while advising others
not to do so, as they were placed under payroll reinstatement.
NLRC
 the NLRC issued its October 9, 2002 Decision in which it ordered the Hotel and the
Union to execute a CBA within 30 days from the receipt of the decision.
o The NLRC also held that the January 18, 2002 concerted action was an
illegal strike in which illegal acts were committed by the Union; and that
the strike violated the "No Strike, No Lockout" provision of the CBA, which
thereby caused the dismissal of 29 Union officers and 61 Union members.
o The NLRC also ruled that even if the Union had complied with the
temporal requirements mandated by law, the strike would nonetheless be
declared illegal because it was attended by illegal acts committed by the
Union officers and members.
 This was affirmed by the CA
ISSUE/RULING
Whether the Union's concerted action amounted to a strike, in violation of the CBA's No Strike,
No Lockout provision. YES
 The Union agrees that there shall be no strikes, walkouts, stoppage or slow-down of
work, boycott, refusal to handle accounts, picketing, sit-down strikes, sympathy
strikes or any other form of interference and/or interruptions with any of the
normal operations of the HOTEL during the life of this Agreement.
19
 The facts are clear that the strike arose out of a bargaining deadlock in the CBA
negotiations with the Hotel. The concerted action is an economic strike upon which
the afore-quoted "no strike/work stoppage and lockout" prohibition is squarely
applicable and legally binding.
o the Union officers and members' concerted action to shave their heads
and crop their hair not only violated the Hotel's Grooming Standards but
also violated the Union's duty and responsibility to bargain in good faith.
o By shaving their heads and cropping their hair, the Union officers and
members violated then Section 6, Rule XIII of the Implementing Rules of
Book V of the Labor Code. This rule prohibits the commission of any act
which will disrupt or impede the early settlement of the labor disputes
that are under conciliation.
o Since the bargaining deadlock is being conciliated by the NCMB, the
Union's action to have their officers and members' heads shaved was
manifestly calculated to antagonize and embarrass the Hotel management
and in doing so effectively disrupted the operations of the Hotel and
violated their duty to bargain collectively in good faith.
 the Union committed illegal acts in the conduct of its strike. The NLRC ruled that the
strike was illegal since, as shown by the pictures presented by the Hotel, the Union
officers and members formed human barricades and obstructed the driveway of the
Hotel.
o There is no merit in the Union's argument that it was not its members but
the Hotel's security guards and the police officers who blocked the
driveway, as it can be seen that the guards and/or police officers were just
trying to secure the entrance to the Hotel. The pictures clearly
demonstrate the tense and highly explosive situation brought about by
the strikers' presence in the Hotel's driveway.
 What then are the consequent liabilities of the Union officers and members for their
participation in the illegal strike?
o Regarding the Union officers and members' liabilities for their
participation in the illegal picket and strike, Art. 264(a), paragraph 3 of the
Labor Code provides that "[a]ny union officer who knowingly participates in
an illegal strike and any worker or union officer who knowingly participates
in the commission of illegal acts during a strike may be declared to have lost
his employment status x x x."
o The law makes a distinction between union officers and mere union
members. Union officers may be validly terminated from employment for
their participation in an illegal strike, while union members have to
participate in and commit illegal acts for them to lose their employment
status. Thus, it is necessary for the company to adduce proof of the
participation of the striking employees in the commission of illegal acts
during the strikes.

o Clearly, the 29 Union officers may be dismissed pursuant to Art. 264(a),
par. 3 of the Labor Code which imposes the penalty of dismissal on "any
union officer who knowingly participates in an illegal strike." We, however,
are of the opinion that there is room for leniency with respect to the
Union members. It is pertinent to note that the Hotel was able to prove
before the NLRC that the strikers blocked the ingress to and egress from
the Hotel. But it is quite apparent that the Hotel failed to specifically point
out the participation of each of the Union members in the commission of
illegal acts during the picket and the strike. For this lapse in judgment or
diligence, we are constrained to reinstate the 61 Union members.
o Further, we held in one case that union members who participated in an
illegal strike but were not identified to have committed illegal acts are
entitled to be reinstated to their former positions but without backwages.
NLRC Decision affirmed with modifications.
ON NEGOTIATIONS
Standard Chartered Bank Case
Blue sky bargaining -> committed ONLY by the union
Surface bargaining -> ONLY by the employer
Standard Chartered Bank Employees Union (NUBE) v. Hon. Ma. Nieves Confesor (SOLE) and The
Standard Chartered Bank
16 June 2004; Callejo, J.
Digest prepared by Jethro Koon
I. Facts
1. Prior to the expiration of the three-year period but within the sixty-day freedom
period, the Union/SEBA initiated the negotiations on the next CBA.
2. Before the commencement of the negotiation, the Union, through its President
Divinagracia, suggested to the Bank’s HR Manager and 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 Umali, the
President of the National Union of Bank Employees (NUBE), be excluded as well.
However, Umali was retained as a member of their panel.
3. 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 NCMB.
II. Issues
4. The Bank filed a complaint for ULP and Damages before the Arbitration Branch of the
NLRC.
20
▪ It contended that the Union demanded "sky high economic demands,"
indicative of blue-sky bargaining.
▪ Further, the Union violated its no strike-no lockout clause by filing a notice
of strike before the NCMB. Considering that the filing of notice of strike was
an illegal act, the Union officers should be dismissed.
▪ Nominal and actual damages and was forced to litigate and hire a lawyer.
5. SOLE assumed jurisdiction over the dispute (LC 263(g)). The complaint for ULP was
consolidated with the complaint over which the SOLE assumed jurisdiction. The SOLE
ordered the parties to execute a CBA incorporating her awards. ULP charges for both
parties were dismissed, explaining that both parties failed to substantiate their claims.
She stated that ULP charges would prosper only if shown to have directly prejudiced
the public interest.
6. Both parties filed an MR, both of which were denied. The Union filed a second MR,
also denied. The Bank and the Union signed the CBA. Immediately thereafter, the
wage increase was effected and the signing bonuses based on the increased wage
were distributed to the employees covered by the CBA.
7. The Union filed this R65 alleging that the SOLE acted with GAD when it found that the
Bank did not commit ULP when it interfered with the Union’s choice of negotiator.
▪ It argued that, Diokno’s suggestion that the negotiation be limited as a
"family affair" was tantamount to suggesting that Federation President Jose
Umali, Jr. be excluded from the Union’s negotiating panel.
▪ Contrary to the ruling of the SOLE, damage or injury to the public interest
need not be present in order for unfair labor practice to prosper.
▪ SOLE failed to rule on the ULP charges arising from the Bank’s surface
bargaining. The Bank merely went through the motions of collective
bargaining without the intent to reach an agreement, and made bad faith
proposals when it announced that the parties should begin from a clean
slate. It argued that the Bank opened the political provisions "up for grabs,"
which had the effect of diminishing or obliterating the gains that the Union
had made.
▪ The Union also accused the Bank of refusing to disclose material and
necessary data, even after a request was made by the Union to validate its
"guestimates."
8. The Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the CBA. It was the Union that committed ULP when Umali
hurled invectives at Diokno, and demanded that she be excluded from the Bank’s
negotiating team.
9. OSG: Union failed to prove its ULP charges and that the SOLE did not commit GAD.
1. Whether the Union was able to substantiate its claim of ULP. NO

2. Whether the SOLE acted with GAD. NO
3. Whether the Union is estopped from filing the instant action. NO
III. Holding
Resolutions of then SOLE are AFFIRMED. The Petition is hereby DISMISSED.
IV. Ratio
Topic under syllabus: "Interference" under LC 248 (a)
1. Under 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."
2. 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:
1. Workers’ and employers’ organizations shall enjoy adequate protection against any acts or
interference by each other or each other’s 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.
3. The aforcited ILO Conventions are incorporated in LC24312, 248, and 249 (ULP of
employers and labor organizations)
4. The said ILO Conventions were ratified on Dec. 29, 1953. However, even as early as
the 1935 Constitution, the State had already expressly bestowed protection to labor
as part of the general provisions. The 1973 Constitution, on the other hand, declared
it as a policy of the state to afford protection to labor, specifying that the workers’
rights to self-organization, collective bargaining, security of tenure, and just and
humane conditions of work would be assured. 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.
5. Article 248(a) of the Labor Code, considers it an unfair labor practice when an
12 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 self-organization and to form, join, or assist
21
employer interferes, restrains or coerces employees in the exercise of their right to
self-organization or the right to form association. The right to self-organization
necessarily includes the right to collective bargaining.
6. Parenthetically, 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 self-organization or on the right to collective bargaining
of the employees, ULP under 248(a) in connection with 243 of the Labor Code is
committed.
7. (Substantial evidence is the degree of evidence required) The circumstances that
occurred do not show that the suggestion is an anti-union conduct, especially
considering that such was undertaken previous to the commencement of the
negotiation and simultaneously with Divinagracia’s suggestion that the bank lawyers
be excluded from its negotiating panel.
8. The records show that after the initiation of the collective bargaining process, 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.
9. 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.
The Duty to Bargain Collectively
1. 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.
2. 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 Bank’s counter-proposals. It explained that of the 34
economic provisions it made, the Bank only made 6 economic counterproposals.
Further, as borne by the minutes of the meetings, the Bank, after indicating the
economic provisions it had rejected, accepted, retained or were open for discussion,
refused to make a list of items it agreed to include in the economic package.
3. Surface bargaining is defined as "going through the motions of negotiating" without
any legal intent to reach an agreement. It involves the question of whether an
employer’s conduct demonstrates an unwillingness to bargain in good faith or is
merely hard bargaining.
4. The Union has not been able to show that the Bank had done acts, both at and away
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.

from the bargaining table, which tend to show that it did not want to reach an
agreement. Admittedly, the parties 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."
5. As can be gleaned from the Bank’s counterproposal, there were many provisions
which it proposed to be retained. Likewise, the Union failed to substantiate its claim
that the Bank refused to furnish the information it needed.
6. In the case at bar, Umali requested the Bank to validate its guestimates on the data
of the rank and file. However, Umali failed to put his request in writing (LC242(c)).
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.
No Grave Abuse of Discretion On the Part of the Public Respondent
1. While it is true that a showing of prejudice to public interest is not a requisite for ULP
charges to prosper, it cannot be said that the SOLE acted in capricious and whimsical
exercise of judgment, equivalent to lack of jurisdiction or excess thereof.
2. Neither was it shown that the she exercised its power in an arbitrary and despotic
manner by reason of passion or personal hostility.
Estoppel not Applicable In the Case at Bar
1. 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 an MR
respecting its ULP charges.
The Union Did Not Engage In Blue-Sky Bargaining
1. The Bank failed to show that the economic demands made by the Union were
exaggerated or unreasonable. 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.
--------
Hard bargaining v. Unwillingness to bargain in good faith
Hard bargaining – does not mean that law/rules are violated
Even if the parties are in good faith, they sometimes reach an impasse – DEADLOCK
See: Divine Word University v. Secretary
Strikeable issues – only two!
(1) Deadlock in the course of negotiations OR
(2) Commission of ULP acts
If there is a declaration of deadlock, it is stupid to continue negotiations. Go to NCMB and file
a notice of strike (for the union) OR lockout (for the employer)
22
If issue is not strikeable, conciliator or mediator from NCMB will summon parties to
conciliation conference and C/M will strongly suggest preventive mediation.
Notice of strike will then convert into a preventive mediation case. Notice of strike will be
dropped from NCMB calendar.
Preventive mediation does not always require conciliator/mediator NCMB interference or
participation
If upon conversion, what will happen if union stages a strike?
SEE: PAL v. Drilon
LC 233 on privileged communication (now 239)
Article 233. Privileged communication. Information and statements made at conciliation
proceedings shall be treated as privileged communication and shall not be used as
evidence in the Commission. Conciliators and similar officials shall not testify in any court
or body regarding any matters taken up at conciliation proceedings conducted by them.
SEE: Nissan Motors case
Bargaining in good faith
 Cooling off period – depends on basis of notice of strike
 10-day waiting out period – to ensure that workers are ready to conduct a strike
After the waiting out period, employee can conduct the strike
Strike vote by secret ballot + 24-hour notice to NCMB is part of the NCMB manual
SEE: Capitol Medical Center
If 24-hour notice is not complied with, strike is illegal.
 So NCMB can have a representative on strike vote – to indicate that everything was
legal, peaceful, orderly and honest.
Strike vote results to be submitted to NCMB
LC 254 – TRO and injunction will not lie except when there is no employer-employee
relationship
LC 218 and LC 264 – WHEN TRO can be issue: irreparable damage, prohibited acts
Article 254. Injunction prohibited. No temporary or permanent injunction or restraining
order in any case involving or growing out of labor disputes shall be issued by any court or
other entity, except as otherwise provided in Articles 218 and 264 of this Code. (As
amended by BP Blg. 227)
Picketing
SEE: Sta. Rosa Coca Cola Plant Employees Union v. CCBPI
STA ROSA COCA-COLA PLANT EMPLOYEES UNION, et al. V. COCA-COLA BOTTLERS PHILS., INC.

January 24, 2007 | Callejo, Sr., J.
Prof. Sobreviñas for Coca-Cola Bottlers.
SUMMARY: When the negotiation for CBA reached an impasse, the union, by virtue of the
mayor’s permit, conducted a picketing where union members and officers left their works for
3 hrs and marched to and fro on the side of the highway. The company filed a case to declare
the activity as a strike and an illegal one at that. The contention is on whether the said acts
constitute a strike. The SC ruled that it was a strike and not a mere picketing, using the
definition of a strike in the LC.
DOCTRINE: Art. 212, LC defines strike as a temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. In Bangalisan v. Court of
Appeals, the Court ruled that “the fact that the conventional term ‘strike’ was not used by the
striking employees to describe their common course of action is inconsequential, since the
substance of the situation, and not its appearance, will be deemed to be controlling. The term
“strike” encompasses not only concerted work stoppages, but also slowdowns, mass leaves,
sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities, and
similar activities. . . what is definitive of whether the action staged by petitioners is a strike and
not merely a picket is the totality of the circumstances surrounding the situation.
FACTS:
The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the SEBA of the regular daily paid
workers and the monthly paid non-commission-earning employees of the Coca-Cola Bottlers
Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant.
Upon the expiration of the CBA, the Union informed the Company of its desire to renegotiate
its terms. The CBA meetings commenced on July 26, 1999, where the Union and the Company
discussed the ground rules of the negotiations. The Union insisted that representatives from
the Alyansa ng mga Unyon sa Coca-Cola be allowed to sit down as observers in the CBA
meetings. The Union officers and members also insisted that their wages be basedon their
work shift rates. For its part, the Company was of the view that the members of the Alyansa
were not members of the bargaining unit. The Alyansa was a mere aggregate of employees of
the Company in its various plants; and is not a registered labor organization. Thus, an impasse
ensued.
On August 30, 1999, the Union, its officers, directors and six shop stewards filed a “Notice of
Strike” with the NCMB. The Company filed a Motion to Dismiss alleging that the reasons cited
by the Union were not valid grounds for a strike. The Union then filed an Amended Notice of
Strike.
Meanwhile, the Union decided to participate in a mass action organized by the Alyansa in
front of the Company’s premises. 106 Union members, officers and members of the BoD, and
23
shop stewards, individually filed applications for leave of absence for September 21, 1999.
Certain that its operations in the plant would come to a complete stop since there were no
sufficient trained contractual employees who would take over, the Company disapproved all
leave applications and notified the applicants accordingly. A day before the mass action, some
Union members wore gears, red tag cloths stating "YES KAMI SA STRIKE" as headgears and on
the different parts of their uniform, shoulders and chests.
The Office of the Mayor issued a permit to the Union, allowing it "to conduct a mass protest
action within the perimeter of the Coca-Cola plant on September 21, 1999 from 9:00 a.m. to
12:00 noon." Thus, the Union officers and members held a picket along the front perimeter of
the plant on September 21, 1999. All of the 14 personnel of the Engineering Section of the
Company did not report for work, and 71 production personnel were also absent. As a result,
only one of the three bottling lines operated during the day shift. All the three lines were
operated during the night shift with cumulative downtime of five (5) hours due to lack of
manning, complement and skills requirement. The volume of production for the day was short
by 60,000 physical cases versus budget.
On October 13, 1999, the Company filed a “Petition to Declare Strike Illegal” alleging that the
mass concerted action was clearly a strike and since the Union did not observe the
requirements mandated by law, i.e., strike vote, cooling-off period and reporting
requirements, the strike was therefore illegal. The NCMB recommended that the Notice of
Strike of the Union be converted into a preventive mediation case. After conciliation
proceedings failed, the parties were required to submit their respective position papers. LA
declared the strike illegal. NLRC affirmed LA. CA dismissed petition.
The Union answered by alleging that it was not a strike but just a valid exercise of their right to
picket, which is part of the right of free expression as guaranteed by the Constitution.
LA: the mass leave was a strike under art. 212, LC:
1) Union itself admitted that on the said date, members and officers did not report for work.
Instead, they all assembled in front of the Sta. Rosa Plant and picketed the premises. Very
clearly, there was a concerted action here on the part of the respondents brought about a
temporary stoppage of work at two out of three bottling lines at the Sta. Rosa Plant
2) It is evident that respondents’ concerted activity resulted in a temporary stoppage of work
at the Sta. Rosa Plant of the company
3) Such concerted activity by respondents was by reason of a labor dispute
The strike was illegal since there was no showing that the Union conducted a strike vote,
observed the prescribed cooling-off period, much less, submitted a strike vote to the DOLE
within the required time. Consequently, for knowingly participating in the illegal strike, the
individual petitioners were considered to have lost their employment status.
NLRC and CA: affirmed LA.

ISSUES:
1. WON the mass action was a strike? – YES
2. If in the affirmative, was it legal - NO
3. WON the individual officers and shop stewards of petitioner Union be dismissed
from their employment? – YES
RATIO:
The mass action was a strike
Union: It was not a strike but a picket, a valid exercise of their constitutional right to free
expression and assembly. It was a peaceful mass protest action to dramatize their legitimate
grievances against respondent.
 They did not intend to have work stoppage as they knew beforehand that there was
no bottling operation scheduled on that day.
 They applied for leaves of absences.
 They obtained a mayor’s permit and they faithfully complied with the conditions
therein.
 They merely marched to and fro at the side of the highway, did not block ingress or
egress of company’s premises.
 Request to hold the activity for 4 hrs was reduced to 3 hrs and they all went back to
work after.
 IBM-KMU in San Fernando Plant staged simultaneous walkout from work and there
the SOLE declared the walkout as a mass action and not a strike. Coca-Cola accepted
the SOLE’s decision. It should likewise apply here.
SC: It was a strike and not a mere picket. The factual findings of LA that it was a strike which
was affirmed by both the NLRC and CA are conclusive to the SC.
Strike: Art. 212, LC defines strike as a temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute. The fact that the conventional term
‘strike’ was not used by the striking employees to describe their common course of action is
inconsequential, since the substance of the situation, and not its appearance, will be deemed
to be controlling. The term “strike” encompasses not only concerted work stoppages, but also
slowdowns, mass leaves, sit-downs, attempts to damage, destroy or sabotage plant
equipment and facilities, and similar activities. (Bangalisan vs CA)
Picketing: involves merely the marching to and fro at the premises of the employer, usually
accompanied by the display of placards and other signs making known the facts involved in a
labor dispute. As applied to a labor dispute, to picket means the stationing of one or more
13Art.263 of the Labor Code must be observed: (a) a notice of strike filed with the DOLE 30 days before the intended
date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by a majority of the total union
membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose, (c)
notice given to the DOLE of the results of the voting at least seven days before the intended strike.
24
persons to observe and attempt to observe. The purpose of pickets is said to be a means of
peaceable persuasion.
Labor dispute: includes any controversy or matter concerning terms or conditions of
employment or the association or representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee.
ICAB, there was a labor dispute. The basic elements of a strike are present in this case: 106
members of petitioner Union, whose respective applications for leave of absence
on September 21, 1999 were disapproved, opted not to report for work on said date, and
gathered in front of the company premises to hold a mass protest action. Petitioners
deliberately absented themselves and instead wore red ribbons, carried placards with slogans
such as: “YES KAMI SA STRIKE,” “PROTESTA KAMI,” “SAHOD, KARAPATAN NG MANGGAGAWA
IPAGLABAN,” ”CBA-‘WAG BABOYIN,” “STOP UNION BUSTING.” They marched to and fro in
front of the company’s premises during working hours. Thus, petitioners engaged in a
concerted activity which already affected the company’s operations. The mass concerted
activity constituted a strike. Mayor’s permit is not conclusive evidence that their
action/activity did not amount to a strike. The Mayor’s description of what activities
petitioners were allowed to conduct is inconsequential. What is definitive of whether the
action staged by petitioners is a strike and not merely a picket is the totality of the
circumstances surrounding the situation.
On the illegality of the strike
Art. 263 states the requirements for a strike to be valid13. The said requirements are
MANDATORY. In the case at bar, the union totally ignored the requirements.
There is no showing that respondents had observed the prescribed cooling-off period,
conducted a strike vote, much less submitted a strike vote report to the Department of Labor
within the required time. . . the intention of the law in requiring the strike notice and strike-
vote report as mandatory requirements is to reasonably regulate the right to strike which is
essential to the attainment of legitimate policy objectives embodied in the law. Verily,
substantial compliance with a mandatory provision will not suffice. Strict adherence to the
mandate of the law is required.
Aside from the above infirmity, the strike staged by respondents was, further, in violation of
the CBA14. The union had not referred their issues to the grievance machinery as a prior step.
14SECTION 1, Art. VI - The UNION agrees that there shall be no strike, walkout, stoppage or slowdown of work,
boycott, secondary boycott, refusal to handle any merchandise, picketing, sitdown strikes of any kind, sympathetic
or general strike, or any other interference with any of the operations of the COMPANY during the term of this
Agreement, so long as the grievance procedure for which provision is made herein is followed by the COMPANY.

Instead, they chose to go on strike right away, thereby bypassing the required grievance
procedure dictated by the CBA.
On shop stewards being considered as officers
Under Section 501(a) and (b) of the Landrum Griffin Act of 195915, shop stewards are officers
of the Union. Admittedly, there is no similar provision in the Labor Code of the Philippines;
nonetheless, petitioners who are shop stewards are considered union officers:
Officers normally mean those who hold defined offices. An officer is any person occupying a
position identified as an office. An office may be provided in the constitution of a labor union
or by the union itself in its CBA with the employer.
The union’s constitution and by-laws define the position of a shop steward.16 Likewise, sec. 6,
rule 19, book 5 of the Implementing rules of the LC provides the duties of a shop steward.
Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as
representative of the Union, charged with negotiating and adjustment of grievances of
employees with the supervisor of the employer.
The jurisdiction of shop stewards and the supervisors includes the determination of the issues
arising from the interpretation or even implementation of a provision of the CBA, or from any
order or memorandum, circular or assignments issued by the appropriate authority in the
establishment. In fine, they are part and parcel of the continuous process of grievance
resolution designed to preserve and maintain peace among the employees and their
employer. They occupy positions of trust and laden with awesome responsibilities.
In this case, instead of playing the role of "peacemakers" and grievance solvers, the
petitioners-shop stewards participated in the strike. Thus, like the officers and directors of
petitioner Union who joined the strike, petitioners-shop stewards also deserve the penalty of
dismissal from their employment.
LIABILITIES
15Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions
of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking
into account the special problems and functions of a labor organization, to hold its money and property solely for the
benefit of the organization and its members and to manage, invest, and expend the same in accordance with its
constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with
such organization as an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary
or personal interest which conflicts with the interest of such organization, and to account to the organization for any profit
received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf
of the organization. A general exculpatory resolution of a governing body purporting to relieve any such person of liability
for breach of the duties declared by this section shall be void as against public policy.
25
Union Member v. Union Officer
If strike is declared illegal, employer can terminate the affected employees
Employer, upon showing that an unlawful strike has been committed, he can choose
to file a separate complaint with labor arbiter
Separate complaint can be to ask for a declaration that employees lost
their employee status for participating in the illegal strike
How to prevent DOLE from declaring strike as illegal?
It is not necessary for union to be notified for assumption of jurisdiction by secretary of DOLE
LC 263(g)
Article 263. Strikes, picketing and lockouts.
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and
Employment may assume jurisdiction over the dispute and decide it or certify the same to
the Commission for compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or lockout as specified in
the assumption or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall immediately return to
work and the employer shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout. The Secretary
of Labor and Employment or the Commission may seek the assistance of law enforcement
agencies to ensure compliance with this provision as well as with such orders as he may
issue to enforce the same.
Secretary of DOLE
(1) May assume jurisdiction and hear and decide himself (with assumption order) OR
(2) Certify the dispute to the NLRC for compulsory arbitration (with certification order)
Upon receipt of certification order, dispute will be assigned to a division – hearings to be
scheduled
(b) When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the
duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail
to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being
requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or
representative in any district court of the United States or in any State court of competent jurisdiction to recover damages
or secure an accounting or other appropriate relief for the benefit of the labor organization.
16SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and shall inform management of
the distribution of these stewards among the departments concerned. Shop Stewards, union officers and members or
employees shall not lose pay for attending Union-Management Labor dialogues, investigations and grievance meetings
with management.

When an assumption order or a certification order is issued, he need not specify that there is a
return to work order.
Workers are expected to report back to work.
CASE: Sarmiento v. Tuico
See: Biflex Philippine Labor Union
MR may be filed by the party is not an excuse for striking employees to return to work.
Biflex Phils Inc Labor Union (NAFLU) v. Filflex Industrial and Biflex Phils. Inc.
December 19, 2006 / Carpio-Morales, J.
Digest by Cate Alegre
Summary
There was a welga ng bayan. Two labor unions, on the date such welga was held joined in and
conducted work stoppage and prevented ingress and egress at their office. Management
claimed that such work stoppage was illegal. SC sided with management claiming what the
union did was in the nature of sympathy strike, did not follow the proper procedure in staging
a strike, and assuming arguendo that the procedural rules were followed, the act of preventing
ingress and egress was also illegal
Doctrine
Employees who have no labor dispute with their employer but who, on a day they are scheduled
to work, refuse to work and instead join a welga ng bayan commit an illegal work stoppage.
Even if petitioners’ joining the welga ng bayan were considered merely as an exercise of their
freedom of expression, the exercise of such rights is not absolute. For the protection of other
significant state interests such as the "right of enterprises to reasonable returns on investments,
and to expansion and growth" enshrined in the 1987 Constitution must also be considered. The
legality of a strike is determined not only by compliance with its legal formalities but also by the
means by which it is carried out.
FACTS:
 The unions involved in this case were Biflex (Phils) Inc. Labor Union and Filflex Industrial and
Manufacturing Labor Union (Petitioners), which are affiliated with National Federation of
Labor Unions (NAFLU).
o Unions are the respective collective bargaining agents of the employees of the
corporations
 Biflex (Phils.) Inc. and Filflex Industrial and Manufacturing Corporation (Respondents) are
sister companies engaged in garment business. They are situated in one big compound and
have a common entrance
 October 24, 1990 – a welga ng bayan was staged to protest the oil price hike. Petitioners also
staged a work stoppage to join the welga which lasted for several days.
o October 31 - Respondents filed a petition to declare the work stoppage illegal for
failure to comply with procedural requirements
 November 13, 1990 – upon resumption of operations, Petitioners claimed that they were
illegally locked out by the respondents.
o Respondents were slighted by their no-show and as a punishment they were barred
from the company premises
26
o They placed tents, tables and chairs in front of the main gate because these were for
the convenience of union members who check everyday if they will be allowed to go
back to work (basically saying that they didn’t conduct a strike)
 Respondents – the work stoppage was illegal since they failed to comply with the following:
(1) filing of notice of strike; (2) securing a strike vote, and (3) submission of a report of the
strike vote to the Department of Labor and Employment
 LA – strike was illegal! Respondents then terminated the employment of petitioners’ union
members
 NLRC – reversed
 CA – reversed NLRC and reinstated LA
ISSUE: WON the strike was illegal? YES
RATIO
 Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended
sympathy strike. It affects numerous employers including those who do not have a dispute
with their employees regarding their terms and conditions of employment.
o Even if petitioners’ joining the welga ng bayan were considered merely as an exercise of
their freedom of expression, freedom of assembly or freedom to petition the
government for redress of grievances, the exercise of such rights is not absolute.
o The “right of enterprises to reasonable returns on investments and to expansion and
growth” which is enshrined in the 1987 Constitution must also be considered.
 There being no showing that petitioners notified respondents of their intention, or that they
were allowed by respondents, to join the welga ng bayan, their work stoppage is beyond legal
protection.
 Even assuming arguendo that in staging the strike, petitioners had complied with legal
formalities, the strike would just the same be illegal, for by blocking the free ingress to and
egress from the company premises, they violated Article 264(e) of the Labor Code which
provides that "[n]o person engaged in picketing shall … obstruct the free ingress to or egress
from the employer’s premises for lawful purposes, or obstruct public thoroughfares."
 In fine, the legality of a strike is determined not only by compliance with its legal formalities
but also by the means by which it is carried out. Article 264 (a) of the Labor Code provides:
. . . Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment status: Provided, That mere
participation of a worker in a lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement had been hired by the
employer during such lawful strike.
 In Gold City Integrated Port Service, Inc. v. National Labor Relations Commission,22 this Court,
passing on the use of the word "may" in the immediately quoted provision, held that "[t]he
law . . . grants the employer the option of declaring a union officer who participated in an
illegal strike as having lost his employment." Reinstatement of a striker or retention of his
employment, despite his participation in an illegal strike, is a management prerogative which
this Court may not supplant.
 27
Issuance of assumption or certification order – strike must be stopped (OR will not push  Respondents – the work stoppage was illegal since they failed to comply with the following:
through (1) filing of notice of strike; (2) securing a strike vote, and (3) submission of a report of the
SEE: Bisig ng Manggagawa sa Concrete Aggregates – issuance of TRO strike vote to the Department of Labor and Employment
SC summarized the developments of the law on strike  LA – strike was illegal! Respondents then terminated the employment of petitioners’ union
members
 NLRC – reversed
Biflex Phils Inc Labor Union (NAFLU) v. Filflex Industrial and Biflex Phils. Inc.
 CA – reversed NLRC and reinstated LA
December 19, 2006 / Carpio-Morales, J.
Digest by Cate Alegre
ISSUE: WON the strike was illegal? YES
Summary
RATIO
There was a welga ng bayan. Two labor unions, on the date such welga was held joined in and
 Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended
conducted work stoppage and prevented ingress and egress at their office. Management
sympathy strike. It affects numerous employers including those who do not have a dispute
claimed that such work stoppage was illegal. SC sided with management claiming what the
with their employees regarding their terms and conditions of employment.
union did was in the nature of sympathy strike, did not follow the proper procedure in staging
o Even if petitioners’ joining the welga ng bayan were considered merely as an exercise of
a strike, and assuming arguendo that the procedural rules were followed, the act of preventing
their freedom of expression, freedom of assembly or freedom to petition the
ingress and egress was also illegal
government for redress of grievances, the exercise of such rights is not absolute.
o The “right of enterprises to reasonable returns on investments and to expansion and
Doctrine
growth” which is enshrined in the 1987 Constitution must also be considered.
Employees who have no labor dispute with their employer but who, on a day they are scheduled
 There being no showing that petitioners notified respondents of their intention, or that they
to work, refuse to work and instead join a welga ng bayan commit an illegal work stoppage.
were allowed by respondents, to join the welga ng bayan, their work stoppage is beyond legal
Even if petitioners’ joining the welga ng bayan were considered merely as an exercise of their
protection.
freedom of expression, the exercise of such rights is not absolute. For the protection of other
 Even assuming arguendo that in staging the strike, petitioners had complied with legal
significant state interests such as the "right of enterprises to reasonable returns on investments,
formalities, the strike would just the same be illegal, for by blocking the free ingress to and
and to expansion and growth" enshrined in the 1987 Constitution must also be considered. The
egress from the company premises, they violated Article 264(e) of the Labor Code which
legality of a strike is determined not only by compliance with its legal formalities but also by the
provides that "[n]o person engaged in picketing shall … obstruct the free ingress to or egress
means by which it is carried out.
from the employer’s premises for lawful purposes, or obstruct public thoroughfares."
FACTS:  In fine, the legality of a strike is determined not only by compliance with its legal formalities
but also by the means by which it is carried out. Article 264 (a) of the Labor Code provides:
 The unions involved in this case were Biflex (Phils) Inc. Labor Union and Filflex Industrial and
. . . Any union officer who knowingly participates in an illegal strike and any worker or
Manufacturing Labor Union (Petitioners), which are affiliated with National Federation of
union officer who knowingly participates in the commission of illegal acts during a
Labor Unions (NAFLU).
strike may be declared to have lost his employment status: Provided, That mere
o Unions are the respective collective bargaining agents of the employees of the
participation of a worker in a lawful strike shall not constitute sufficient ground for
corporations
termination of his employment, even if a replacement had been hired by the
 Biflex (Phils.) Inc. and Filflex Industrial and Manufacturing Corporation (Respondents) are
employer during such lawful strike.
sister companies engaged in garment business. They are situated in one big compound and
 In Gold City Integrated Port Service, Inc. v. National Labor Relations Commission,22 this Court,
have a common entrance
passing on the use of the word "may" in the immediately quoted provision, held that "[t]he
 October 24, 1990 – a welga ng bayan was staged to protest the oil price hike. Petitioners also
law . . . grants the employer the option of declaring a union officer who participated in an
staged a work stoppage to join the welga which lasted for several days.
illegal strike as having lost his employment." Reinstatement of a striker or retention of his
o October 31 - Respondents filed a petition to declare the work stoppage illegal for
employment, despite his participation in an illegal strike, is a management prerogative which
failure to comply with procedural requirements
this Court may not supplant.
 November 13, 1990 – upon resumption of operations, Petitioners claimed that they were
illegally locked out by the respondents.
o Respondents were slighted by their no-show and as a punishment they were barred Voluntary arbitration as the preferred mode.
from the company premises
o They placed tents, tables and chairs in front of the main gate because these were for Me-Shurn Co v Me-Shurn Workers Union-FSM
the convenience of union members who check everyday if they will be allowed to go
back to work (basically saying that they didn’t conduct a strike) January 11, 2005| PANGANIBAN, J.

Petitioner: Me-Shurn Co & Sammy Chou
Respondent: Me-Shurn Workers Union-FSM & Rosalina Cruz
SUMMARY: The employees of Me-Shurn organized a union and said union filed a petition for
certification election. Me-Shurn then started to lay off employees who was part of the union
on account of its alleged inability to meet its export quota. The union filed a notice of strike.
Me-Shurn required the union officer to sign an agreement that upon return to work no union
would be organized. It was signed and operations resumed. New officers were elected and
the union then filed a case for ULP. In August 1998 Me-Shurn then closed its business to
prevent serious business losses and paid its employees separation pay. Me-Shurn argues that
the case has become moot and academic as they had validly dismissed the employees filing
the petition. The respondent argues that there were no losses as Me-Shurn Corp. resumed
business 1 month after in September 1998 and the dismissals were void. LA dismissed the
petition. NLRC reversed held Me-Shurn guilty of ULP. The SC held that the dismissal was void.
Me-Shurn failed to prove the alleged business losses as they only provided their income tax
returns in the SC proceedings. (See doctrine).
DOCTRINE: The determination to cease operations is a management prerogative that the
State does not usually interfere in. Indeed, no business can be required to continue operating
at a loss, simply to maintain the workers in employment. That would be a taking of property
without due process of law. But where it is manifest that the closure is motivated not by a
desire to avoid further losses, but to discourage the workers from organizing themselves into
a union for more effective negotiations with management, the State is bound to intervene.
FACTS:
 On June 7, 1998, the regular rank and file employees of Me-Shurn Corporation organized
Me-Shurn Workers Union-FSM, an affiliate of the February Six Movement (FSM). Ten
days later petitioner corporation started placing on forced leave all the rank and file
employees who were members of the unions bargaining unit. On June 23, 1998,
respondent union filed a Petition for Certification Election. Instead of filing an answer to
the Petition, the corporation filed a comment stating that it would temporarily lay off
employees and cease operations, on account of its alleged inability to meet the export
quota required by the Board of Investment. While the Petition was pending, 184 union
members allegedly submitted a retraction/withdrawal. As a consequence, the med-
arbiter dismissed the Petition. On appeal the Department of Labor and Employment
28
(DOLE) Undersecretary Rosalinda Dimapilis-Baldoz granted the unions appeal and
ordered the holding of a certification election. Meanwhile respondent union filed a
Notice of Strike on the ground of unfair labor practice
 Chou Fang Kuen (alias Sammy Chou) and Raquel Lamayra (the Filipino administrative
manager) imposed a precondition for the resumption of operation and the rehiring of laid
off workers. He required the remaining union officers to sign an Agreement containing a
guarantee that upon their return to work, no union or labor organization would be
organized. After the signing of the Agreement, the operations of the corporation
resumed in September 1998.
 On November 5, 1998, the union reorganized and elected a new set of officers.
Respondent Rosalina Cruz was elected president. Thereafter, it filed two Complaints for
unfair labor practice, illegal dismissal, underpayment of wages and deficiency in
separation pay, for which they prayed for damages and attorneys fees.
 The corporation countered that because of economic reversals, it was compelled to close
and cease its operations to prevent serious business losses; that under Article 283 of the
Labor Code, it had the right to do so; that in August 1998, it had paid its 342 laid off
employees separation pay and benefits in the total amount of P1,682,863.88; and that by
virtue of these payments, the cases had already become moot and academic. It also
averred that its resumption of operations in September 1998 had been announced and
posted at the Bataan Export Processing Zone, and that some of the former employees
had reapplied.
 Petitioner corporation questioned the legality of the representation of respondent union.
Allegedly, it was not the latter, but the Me-Shurn Independent Employees Union that was
recognized as the existing exclusive bargaining agent of the rank and file employees.
Respondents contested the legality of the formation of the Me-Shurn Independent
Employees Union and petitioners recognition of it as the exclusive bargaining agent of
the employees. Respondents argued that the pendency of the representation issue
before the DOLE had barred the alleged recognition of the aforementioned union.
 Labor Arbiter Isorena dismissed the Complaints for lack of merit. He ruled that (1) actual
and expected losses justified the closure and its dismissal of its employees; (2) the
voluntary acceptance of separation pay by the workers precluded them from questioning
the validity of their dismissal; and (3) the claim for separation pay lacked factual basis. On
appeal, the NLRC reversed. Finding petitioners guilty of unfair labor practice, the
Commission ruled that the closure of the corporation shortly after respondent union had
been organized, as well as the dismissal of the employees, had been effected under false
pretenses. The true reason therefor was allegedly to bar the formation of the union. The
CA dismissed the Petition because of the failure of petitioners to submit sufficient proof
of business losses.
ISSUE/S & RATIO:
WoN the dismissal due to business losses was valid - NO
● Other than generally referring to the financial crisis in 1998 and to their supposed
difficulty in obtaining an export quota, interestingly, they never presented any report on
the financial operations of the corporation during the period before its shutdown.
Neither did they submit any credible evidence to substantiate their allegation of business

losses. Basic is the rule in termination cases that the employer bears the burden of
showing that the dismissal was for a just or authorized cause. Otherwise, the dismissal is
deemed unjustified. Apropos this responsibility, petitioner corporation should have
presented clear and convincing evidence of imminent economic or business reversals as a
form of affirmative defense in the proceedings before the labor arbiter or, under
justifiable circumstances, even on appeal with the NLRC. In all the proceedings before the
two quasi-judicial bodies and even before the CA, no evidence was submitted to show
the corporations alleged business losses. It is only before the SC that petitioners have
belatedly submitted the corporations income tax returns from 1996 to 1999 as proof of
alleged continued losses during those years. Obviously, on the basis of the evidence -- or
the lack thereof -- the appellate court cannot be faulted for ruling that the NLRC did not
gravely abuse its discretion in finding that the closure of petitioner corporation was not
due to alleged financial losses.
● At any rate, even if we admit these additional pieces of evidence, the circumstances
surrounding the cessation of operations of the corporation reveal the doubtful character
of its supposed financial reason:
● First, the claim of petitioners that they were compelled to close down the company to
prevent further losses is belied by their resumption of operations barely a month after
the corporation supposedly folded up. Moreover, petitioners attribute their loss mainly
to their failure to obtain an export quota from the Garments and Textile Export Board
(GTEB). Yet, as pointed out by respondents, the corporation resumed its business without
first obtaining an export quota from the GTEB. Besides, these export quotas pertain only
to business with companies in the United States and do not preclude the corporation
from exporting its products to other countries.
● Second, the Statements of Income and Deficit for the years 1996 and 1997 show that at
the beginning of 1996, the corporation had a deficit of P2,474,505. Yet, the closure was
effected only after more than a year from such year-end deficit; that is, in the middle of
1998, shortly after the formation of the union. If petitioners were seriously desirous of
averting losses, why did the corporation not close in 1996 or earlier, when it began
incurring deficits? They have not satisfactorily explained why the workers dismissal was
effected only after the formation of respondent union in September 1998. We also take
note of the allegation that after several years of attempting to organize a union, the
employees finally succeeded on June 7, 1998. Ten days later, without any valid notice, all
of them were placed on forced leave, allegedly because of lack of quota. All these
considerations give credence to their claim that the closure of the corporation was a
mere subterfuge, a systematic approach intended to dampen the enthusiasm of the
union members.
● Third, as a condition for the rehiring of the employees, the union officers were made to
sign an agreement that they would not form any union upon their return to work. This
move was contrary to law.
● Fourth, notwithstanding the Petition for Certification Election filed by respondents and
despite knowledge of the pendency thereof, petitioners recognized a newly formed
union and hastily signed with it an alleged Collective Bargaining Agreement. Their
preference for the new union was at the expense of respondent union.
● Fifth, petitioners were not able to prove their allegation that some of the employees
contracts had expired even before the cessation of operations. We find this claim
inconsistent with their position that all 342 employees of the corporation were paid their
separation pay plus accrued benefits in August 1998.
29
● Sixth, written notices of the closure were not sent to the DOLE and the employees at
least one month before the effectivity date of the termination, under the Labor Code.
Notice to the DOLE is mandatory to enable the proper authorities to ascertain whether
the closure and/or dismissals were being done in good faith and not just as a pretext for
evading compliance with the employers just obligations to the affected employees.
● All these factors strongly give credence to the contention of respondents that the real
reason behind the shutdown of the corporation was the formation of their union. Note
that, to constitute an unfair labor practice, the dismissal need not entirely and exclusively
be motivated by the unions activities or affiliations. It is enough that the discrimination
was a contributing factor. WoN the Respondent Union has capacity to sue - Yes
 Under this Code, in an unorganized establishment, only a legitimate union may file a
petition for certification election. Hence, while it is not clear from the record whether
respondent union is a legitimate organization, we are not readily inclined to believe
otherwise, especially in the light of the pro-labor policies enshrined in the Constitution
and the Labor Code. Verily, the union has the requisite personality to sue in its own name
in order to challenge the unfair labor practice committed by petitioners against it and its
members.
RULING:
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against the
petitioners.
Me-Shurn Co v Me-Shurn Workers Union-FSM
January 11, 2005| PANGANIBAN, J.
Petitioner: Me-Shurn Co & Sammy Chou
Respondent: Me-Shurn Workers Union-FSM & Rosalina Cruz
SUMMARY: The employees of Me-Shurn organized a union and said union filed a petition for
certification election. Me-Shurn then started to lay off employees who was part of the union
on account of its alleged inability to meet its export quota. The union filed a notice of strike.
Me-Shurn required the union officer to sign an agreement that upon return to work no union
would be organized. It was signed and operations resumed. New officers were elected and
the union then filed a case for ULP. In August 1998 Me-Shurn then closed its business to
prevent serious business losses and paid its employees separation pay. Me-Shurn argues that
the case has become moot and academic as they had validly dismissed the employees filing

the petition. The respondent argues that there were no losses as Me-Shurn Corp. resumed
business 1 month after in September 1998 and the dismissals were void. LA dismissed the
petition. NLRC reversed held Me-Shurn guilty of ULP. The SC held that the dismissal was void.
Me-Shurn failed to prove the alleged business losses as they only provided their income tax
returns in the SC proceedings. (See doctrine).
DOCTRINE: The determination to cease operations is a management prerogative that the
State does not usually interfere in. Indeed, no business can be required to continue operating
at a loss, simply to maintain the workers in employment. That would be a taking of property
without due process of law. But where it is manifest that the closure is motivated not by a
desire to avoid further losses, but to discourage the workers from organizing themselves into
a union for more effective negotiations with management, the State is bound to intervene.
FACTS:
 On June 7, 1998, the regular rank and file employees of Me-Shurn Corporation organized
Me-Shurn Workers Union-FSM, an affiliate of the February Six Movement (FSM). Ten
days later petitioner corporation started placing on forced leave all the rank and file
employees who were members of the unions bargaining unit. On June 23, 1998,
respondent union filed a Petition for Certification Election. Instead of filing an answer to
the Petition, the corporation filed a comment stating that it would temporarily lay off
employees and cease operations, on account of its alleged inability to meet the export
quota required by the Board of Investment. While the Petition was pending, 184 union
members allegedly submitted a retraction/withdrawal. As a consequence, the med-
arbiter dismissed the Petition. On appeal the Department of Labor and Employment
(DOLE) Undersecretary Rosalinda Dimapilis-Baldoz granted the unions appeal and
ordered the holding of a certification election. Meanwhile respondent union filed a
Notice of Strike on the ground of unfair labor practice
 Chou Fang Kuen (alias Sammy Chou) and Raquel Lamayra (the Filipino administrative
manager) imposed a precondition for the resumption of operation and the rehiring of laid
off workers. He required the remaining union officers to sign an Agreement containing a
guarantee that upon their return to work, no union or labor organization would be
organized. After the signing of the Agreement, the operations of the corporation
resumed in September 1998.
 On November 5, 1998, the union reorganized and elected a new set of officers.
Respondent Rosalina Cruz was elected president. Thereafter, it filed two Complaints for
unfair labor practice, illegal dismissal, underpayment of wages and deficiency in
separation pay, for which they prayed for damages and attorneys fees.
 The corporation countered that because of economic reversals, it was compelled to close
and cease its operations to prevent serious business losses; that under Article 283 of the
Labor Code, it had the right to do so; that in August 1998, it had paid its 342 laid off
employees separation pay and benefits in the total amount of P1,682,863.88; and that by
30
virtue of these payments, the cases had already become moot and academic. It also
averred that its resumption of operations in September 1998 had been announced and
posted at the Bataan Export Processing Zone, and that some of the former employees
had reapplied.
 Petitioner corporation questioned the legality of the representation of respondent union.
Allegedly, it was not the latter, but the Me-Shurn Independent Employees Union that was
recognized as the existing exclusive bargaining agent of the rank and file employees.
Respondents contested the legality of the formation of the Me-Shurn Independent
Employees Union and petitioners recognition of it as the exclusive bargaining agent of
the employees. Respondents argued that the pendency of the representation issue
before the DOLE had barred the alleged recognition of the aforementioned union.
 Labor Arbiter Isorena dismissed the Complaints for lack of merit. He ruled that (1) actual
and expected losses justified the closure and its dismissal of its employees; (2) the
voluntary acceptance of separation pay by the workers precluded them from questioning
the validity of their dismissal; and (3) the claim for separation pay lacked factual basis. On
appeal, the NLRC reversed. Finding petitioners guilty of unfair labor practice, the
Commission ruled that the closure of the corporation shortly after respondent union had
been organized, as well as the dismissal of the employees, had been effected under false
pretenses. The true reason therefor was allegedly to bar the formation of the union. The
CA dismissed the Petition because of the failure of petitioners to submit sufficient proof
of business losses.
ISSUE/S & RATIO:
WoN the dismissal due to business losses was valid - NO
● Other than generally referring to the financial crisis in 1998 and to their supposed
difficulty in obtaining an export quota, interestingly, they never presented any report on
the financial operations of the corporation during the period before its shutdown.
Neither did they submit any credible evidence to substantiate their allegation of business
losses. Basic is the rule in termination cases that the employer bears the burden of
showing that the dismissal was for a just or authorized cause. Otherwise, the dismissal is
deemed unjustified. Apropos this responsibility, petitioner corporation should have
presented clear and convincing evidence of imminent economic or business reversals as a
form of affirmative defense in the proceedings before the labor arbiter or, under
justifiable circumstances, even on appeal with the NLRC. In all the proceedings before the
two quasi-judicial bodies and even before the CA, no evidence was submitted to show
the corporations alleged business losses. It is only before the SC that petitioners have
belatedly submitted the corporations income tax returns from 1996 to 1999 as proof of
alleged continued losses during those years. Obviously, on the basis of the evidence -- or
the lack thereof -- the appellate court cannot be faulted for ruling that the NLRC did not
gravely abuse its discretion in finding that the closure of petitioner corporation was not
due to alleged financial losses.
● At any rate, even if we admit these additional pieces of evidence, the circumstances
surrounding the cessation of operations of the corporation reveal the doubtful character
of its supposed financial reason:
● First, the claim of petitioners that they were compelled to close down the company to
 31
prevent further losses is belied by their resumption of operations barely a month after
the corporation supposedly folded up. Moreover, petitioners attribute their loss mainly
to their failure to obtain an export quota from the Garments and Textile Export Board RULING:
(GTEB). Yet, as pointed out by respondents, the corporation resumed its business without
first obtaining an export quota from the GTEB. Besides, these export quotas pertain only WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against the
to business with companies in the United States and do not preclude the corporation petitioners.
from exporting its products to other countries.
● Second, the Statements of Income and Deficit for the years 1996 and 1997 show that at
the beginning of 1996, the corporation had a deficit of P2,474,505. Yet, the closure was
effected only after more than a year from such year-end deficit; that is, in the middle of
1998, shortly after the formation of the union. If petitioners were seriously desirous of
averting losses, why did the corporation not close in 1996 or earlier, when it began
incurring deficits? They have not satisfactorily explained why the workers dismissal was
effected only after the formation of respondent union in September 1998. We also take
note of the allegation that after several years of attempting to organize a union, the Kapisanan ng Manggagawa ng Alak NAFLU v Hamilton Distillery
employees finally succeeded on June 7, 1998. Ten days later, without any valid notice, all
of them were placed on forced leave, allegedly because of lack of quota. All these - On September 23, 1957, Kapisanan ng mga Manggagawa ng Alak (NAFLU) was being
considerations give credence to their claim that the closure of the corporation was a organized
mere subterfuge, a systematic approach intended to dampen the enthusiasm of the
o Co Bon Beng, the superintendent of Hamilton Distillery (HD), sent for Francisco
union members.
Dumlao, and inquired whether it was true that he had organized said labor and was
● Third, as a condition for the rehiring of the employees, the union officers were made to
its president; that upon receipt of an affirmative answer, Co Bon Beng urged Dumlao
sign an agreement that they would not form any union upon their return to work. This
move was contrary to law. to dissolve the NAFLU, for otherwise he would be dismissed; that when Dumlao
● Fourth, notwithstanding the Petition for Certification Election filed by respondents and answered that he could not follow this advice, Co Bon Beng bade him to look for
despite knowledge of the pendency thereof, petitioners recognized a newly formed another job;
union and hastily signed with it an alleged Collective Bargaining Agreement. Their - On September 24, 1957, 2 labor unions composed of employees and laborers of HD were
preference for the new union was at the expense of respondent union. registered with the DOLE - Kapisanan ng mga Manggagawa ng Alak (NAFLU) and Hamilton
● Fifth, petitioners were not able to prove their allegation that some of the employees WU (HWU);
contracts had expired even before the cessation of operations. We find this claim o On the same day, Co Bon Beng refused to admit Dumlao to work upon the ground
inconsistent with their position that all 342 employees of the corporation were paid their that he was unwilling to dissolve the NAFLU; that, subsequently, some members
separation pay plus accrued benefits in August 1998. thereof resigned therefrom and joined the WU, because otherwise they would be
● Sixth, written notices of the closure were not sent to the DOLE and the employees at dismissed by the HD;
least one month before the effectivity date of the termination, under the Labor Code. o On the same day, as well, HD entered into a CBA with Hamilton Worker’s Union (WU)
Notice to the DOLE is mandatory to enable the proper authorities to ascertain whether incorporated in a private instrument purporting to have been executed on September
the closure and/or dismissals were being done in good faith and not just as a pretext for
24, 1957
evading compliance with the employers just obligations to the affected employees.
o HD then issued a notice to all employees giving non-members of WU 30 days to join
● All these factors strongly give credence to the contention of respondents that the real
or else, be dismissed;
reason behind the shutdown of the corporation was the formation of their union. Note
that, to constitute an unfair labor practice, the dismissal need not entirely and exclusively o Beginning from September 30, 1957, those who remained affiliated to the NAFLU
be motivated by the unions activities or affiliations. It is enough that the discrimination were allowed to work only two days a week.
was a contributing factor. WoN the Respondent Union has capacity to sue - Yes - On October 28, 1957, 52 members of NAFLU were dismissed – they filed a complaint for
 Under this Code, in an unorganized establishment, only a legitimate union may file a ULP with the Court of Industrial Relations against HD
petition for certification election. Hence, while it is not clear from the record whether - HD: denied the charge and invoked, in justification for said dismissal of members of the
respondent union is a legitimate organization, we are not readily inclined to believe NAFLU, a "closed shop" clause in the CBA between the HD and WU
otherwise, especially in the light of the pro-labor policies enshrined in the Constitution
and the Labor Code. Verily, the union has the requisite personality to sue in its own name W/N the CBA between HD and WU was fraudulently made – YES
in order to challenge the unfair labor practice committed by petitioners against it and its
members.
 32
- WU is a company dominated union and was hurriedly made to beat NAFLU to bargain with o To hold otherwise, i.e., that the employees in a company who are members of a
the company minority union may be compelled to disaffiliate from their union and join the
o Supporting facts: WU was registered on September 24, 1957, its collective bargaining majority or contracting union, would render nugatory the right of all employees to
agreement with the HD and the notice issued by the HD - giving its employees who self organization and to form, join or assist labor organizations of their own choosing
were not members of the WU thirty (30) days to join the same, or else be dismissed -
bear the same date.
o Aside from being a Chinese, Valentin Kaw, the president of the WU, was the time-
keeper of the Company, who, as such, had supervisory authority over its employees
and laborers, and could, therefore, exercise substantial pressure upon them to
induce, if not compel, them to join the WU
o The treasurer of WU was his brother Benito Kaw, another Chinese.
o The CBA was contained in a private document, thus suggesting that it must have been
made late at night
- Also, despite several defections from the NAFLU, prior to the expiration of the period given
by HD to non-members of the WU, HD had to dismiss 52 members of the NAFLU, apart
from its president, for failure to join the WU within said period.
o Considering that HD had altogether around 100 employees only, it is clear that a
petition for certification election, if filed by the NAFLU prior to the execution of the
collective bargaining agreement between the WU and the Company, would have, in
all probability, barred effectively said agreement.
- Moreover, the provisions of the CBA do not legalize the dismissal of members of the NAFLU
o Such CBA provides that the “Company shall establish the policy of "Union Shop”. All
workers shall by that date become members of the UNION, except those monthly
salaried employees, and other supervisor-employee listed by the Management. The
COMPANY shall be free to hire new laborers without giving consideration to their
membership or non-membership to the Union. However, all laborers hired must join
the UNION within 60 days of employment, or face discharge, except, those selected
by the Management above. The UNION assumes responsibility of individually signing
up new laborers.”
o In the absence of a manifest intent to the contrary, "closed shop" provisions in a
collective bargaining agreement "apply only to persons to be hired or to employees
who are not yet members of any labor organization" and that said provisions of the
agreement are "not applicable to those already in the service at the time of its
execution"
- In this case, the language of the CBA is not such as to bar necessarily the limitation of its
application to new employees or laborers, or, at least, to those who were not as yet
affiliated to any labor organization.
o Also, if HD and the WU intended by said clause, to authorize the dismissal of persons
already in the service of said Company on or before September 24, 1957, but
belonging to another labor organization, and who failed to quit from the latter and
join the Workers' Union on or before October 24, 1957, then such stipulation would
be null and void
- The closed-shop agreement authorized the law should apply only to persons to be hired
or to employees who are not yet members of any labor organization. It is inapplicable to
those already in the service who are members of another union.