1.) [G.R. NO.

158158 : January 17, 2005]

BUKLURAN NG MANGGAGAWA SA CLOTHMAN KNITTING CORPORATION - SOLIDARITY OF

UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (BMC-SUPER) AND
RAYMOND TOMAROY, ROEL SARDONIDOS, JOSEPH SEDERIO, MARITCHU JAVELLANA,
ENRIQUE OMADTO, EFREN MOGAR, FRANCISCO BERTULFO, JUDY ROQUERO, PATERNO
SILVESTRE, CAYETANO PALMON, TEODORO OCOP AND JOSEPH
ESTIFANO, Petitioners, v. COURT OF APPEALS (Former Fifteenth Division), NATIONAL LABOR
RELATIONS COMMISSION (Second Division), and CLOTHMAN KNITTING
CORPORATION, Respondents.

DECISION

CALLEJO, SR., J.:

This is a Petition for Review of the Resolutions1 of the Court of Appeals (CA) in CA-G.R. SP No. 73353
filed by the Bukluran ng Manggagawa sa Clothman Knitting Corporation - Solidarity of Unions in the
Philippines for Empowerment and Reforms (the petitioner union) and Raymond Tomaroy, Roel
Sardonidos, Joseph Sederio, Maritchu Javellana, Enrique Omadto, Efren Mogar, Francisco Bertulfo,
Judy Roquero, Paterno Silvestre, Cayetano Palmon, Teodoro Ocop and Joseph Estifano.

Respondent Clothman Knitting Corporation (CKC) is a domestic corporation engaged in

knitting/textiles.2 It has approximately one hundred forty-four (144) rank-and-file employees. The
petitioner union is a legitimate labor organization of rank-and-file employees therein. The
petitioners were rank-and-file employees of the respondent and were also members and officers of
the petitioner union.

In the year 2001, the rank-and-file employees at the CKC banded together and formed the
petitioner union. It was registered with the Department of Labor and Employment (DOLE) on
February 23, 2001. In reaction thereto, the respondent, headed by its President, Paul U. Lee,
gathered the employees and advised them not to listen to outsiders.3

Meanwhile, another group of rank-and-file employees banded together and formed the
Nagkakaisang Lakas ng Manggagawa sa Clothman Corporation - Katipunan (NLM-
Katipunan). The NLM-Katipunan was issued a certificate of registration on April 23, 2001 by the
DOLE.4 A petition for certification election was later filed by the petitioner union with the
Bureau of Labor Relations (BLR).

Pending the resolution of the petition for certification election, the respondent issued a
Memorandum5 dated March 2, 2001, informing the employees of the change in the
schedule brought about by the decrease in the orders from the customers.

On March 10, 2001, another Memorandum6 was issued by the respondent informing its
employees at the Dyeing and Finishing Division that a temporary shutdown of the operations
therein would be effected for one week, from March 12 to 17, 2001. The employees were advised to
go on vacation leave, and were asked to verify any changes in the schedule from the Human
Resources Division on March 17, 2001.

Unable to solve its financial problems, the respondent decided to temporarily shutdown its
operations at the Dyeing and Finishing Division effective the next day, scheduled to resume
until further notice. It notified the DOLE of the said shutdown on May 26, 2001.7 The operations of
the other divisions of the CKC remained normal.

Labor II – 1
For its reduced dyeing and finishing needs, the respondent brought the textiles to Crayons,
Inc., a sister company. On June 11, 2001, while the respondent's service truck with plate
number TBK-158 was to deliver fabrics in Bulacan, the group of petitioner Raymond
Tomaroy and some companions approached the truck as it made its way towards Don Pedro
Street and blocked its way. As a result, the driver of the service truck decided to return to the
respondent's compound. Later that day, petitioner Tomaroy, with sixteen (16) members of
the petitioner union, staged a picket in front of the respondent's compound, carrying
placards with slogans that read:

1. Itigil ang sabwatan ng KATIPUNAN (FABIAN GROUP) at management BMC-SUPER.

2. Mr. Paul Lee - Huwag mong ipitin ang mid-year, 13th month pay ng mga manggagawa sa CKC.
BMC-SUPER.

3. Ibalik ang pasok sa Finishing Department.

4. Mr. Paul Lee - Magagara ang sasakyan mo, Montero, BMW, Pajero pero kaunting benepisyo ng
manggagawa ay di mo maibigay. BMC-SUPER.

5. Kilalanin ang karapatan ng manggagawa na magtatag ng unyon. BMC-SUPER.8

On June 14, 2001, twenty-three (23) members of the petitioner union gathered in front of
the respondent's compound carrying the same placards. Later that day, petitioner Tomaroy
agreed to talk to the management with the following priority demands: (a) resumption of work; and
(b) 13th month pay.9 The next day, members of the petitioner union and their supporters
gathered in front of the respondent's compound.10 From June 16, 2001 up to June 18,
2001, the members, as well as supporters of the union, gathered again in front of the
company's compound.11

On June 25, 2001, the respondent filed a petition to declare the strike illegal before the
arbitration branch of the National Labor Relations Commission (NLRC), docketed as NLRC-NCR 06-
03332-2001.12 The respondent alleged that the picket of the members of the union from
June 11, 2001 to June 18, 2001 in front of the company's compound constituted an illegal
strike. It cited the following reasons:

a) The strikers/picketers did not conduct a strike vote and no cooling-off period was observed;

b) The strikers/picketers did not file a notice of strike;

c) The reasons for the strike/picket involve a non-strikeable issue;

d) The work slowdown/picket caused damages to the petitioner in the sum of FIVE MILLION PESOS
(P5,000,000.00);

e) The illegal acts of respondents constrained petitioner to seek the services of undersigned counsel
for an attorney's fee of P50,000.00 and P2,000.00 per appearance.13

In a Decision dated October 18, 2001, the Labor Arbiter granted the petition, declared the
strike illegal and the employment status of the union officers who participated therein as
terminated:

WHEREFORE, in view of the foregoing, the petition filed by the petitioner is hereby GRANTED.

Labor II – 1
The strike conducted by the respondents is hereby declared as illegal.

Consequently, due to their illegal activities, the respondents namely: RAYMOND TOMAROY, President,
ROEL SARDONIDOS, Vice-President, JOSEPH SEDERIO, Secretary, MARITCHU JAVELLANA, Treasurer,
ENRIQUE OMADTO, Auditor, EFREN MOGAR, P.R.O., and FRANCISCO BERTULFO, P.R.O. and Board of
Directors: JUDY ROQUERO, PATERNO SILVESTRE, CAYETANO PALMON, TEODORO OCOP and JOSEPH
ESTIFANO are hereby declared to have lost their employment status with the petitioner.14

The Labor Arbiter found that the continued decline in job prompted the respondent to implement a
reduced working day from the original six (6) days to three (3) days per week because of the
continued decrease of job orders, which further led to its decision to temporarily stop the operation in
its Dyeing and Finishing Division for one (1) week - March 12 to 17, 2001. The affected employees
were then requested to utilize their vacation leaves and were, thereafter, admitted back to work.
However, Tomaroy and members of the union staged a strike, and the labor unrest resulted in the
cancellation of job orders amounting to P6,380,817.50. The aforestated losses prompted the
petitioner to close and stop the business operations of its Dyeing and Finishing Division.

It is worthy to note that the whole company did not cease to operate and that it was only the
workers in the Dyeing and Finishing Division who were affected by the temporary lay-off. Thus, when
the respondents conducted a picket in front of the company's premises, the whole business
operations of the respondent was affected. As borne out by the records, the Labor Arbiter found that
the petitioners therein failed to comply with the requirements for a valid strike, to wit:

1. It was not based on a valid factual ground, either based on Collective Bargaining Deadlock and/or
Unfair Labor Practice;

2. No notice of strike was filed with the National Conciliation and Mediation Board of the DOLE;

3. There was no strike-vote taken by the majority members of the union;

4. There was no strike-vote report submitted to the DOLE at least seven (7) days before the intended
date of the strike;

5. The cooling-off period prescribed by law was not observed; and cralawlibrary

6. The 7-day visiting period after submission of the strike vote report was not fully observed.15

Thus, the Labor Arbiter ruled that the strike staged by the petitioner union was illegal; hence, the
union officers who knowingly participated in an illegal strike, already lost their employment status.16

Aggrieved, the petitioner union interposed an appeal before the NLRC, docketed as NLRC-CA-
030216-01. In a Resolution promulgated on May 10, 2002, the NLRC dismissed the appeal and
affirmed the decision of the Labor Arbiter:

WHEREFORE, in view of the foregoing, and finding no cogent reason to disturb the finding of the
Labor Arbiter a quo, the assailed decision is hereby AFFIRMED.17

The NLRC reasoned that it found no instances and/or situation befitting grave abuse of discretion on
the part of the Labor Arbiter.

Dissatisfied, the petitioner union filed a motion for reconsideration which was denied in a
Resolution18 dated July 24, 2002.

Labor II – 1
The petitioner union filed a petition for certiorari before the CA, docketed as CA-G.R. SP No. 73353,
raising the following error:

I. PUBLIC RESPONDENTS, THE HONORABLE LABOR ARBITER AND THE COMMISSIONERS OF THE
NATIONAL LABOR RELATIONS COMMISSION COMMITTED PATENT GRAVE ABUSED (SIC) OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN THEY FAILED TO
APPRECIATE FACTS AND EVIDENCES, APPLICABLE LAWS AND EXISTING JURISPRUDENCE AND, IF
NOT CORRECTED, WOULD CAUSE IRREPARABLE DAMAGE TO HEREIN RESPONDENTS.19

In a Resolution20 dated October 25, 2002, the CA dismissed the petition. The CA found that,
contrary to Section 3, Rule 46 of the 1997 Rules of Civil Procedure, the petition for certiorari filed by
the petitioner union did not contain the full names and actual addresses of all the petitioners and the
respondents, as the petition merely mentioned "BMC-SUPER, et al." as the petitioners. Further, the
petition and the certification on non-forum shopping were signed by Raymond P. Tomaroy, who
claimed to be the union president/authorized representative of petitioners without, however, any
such authorization from the labor union and the other petitioners covered by the abbreviation et al.
Moreover, the petition was not verified as required by Section 1, Rule 65 of the 1997 Rules of Civil
Procedure; hence, did not produce legal effect as provided for in Section 4, Rule 7 of the Rules of
Court.

In addition, the petition was signed by petitioner Raymond P. Tomaroy in his capacity as union
president/authorized representative, assisted by Enrique T. Belarmino, Legal Head of Solidarity of
Unions in the Philippines for Empowerment and Reforms, neither of whom was a duly authorized
member of the Integrated Bar of the Philippines. Hence, according to the appellate court, neither of
them had authority to conduct litigation before the CA.21 A motion for reconsideration was filed by the
petitioner union which was similarly denied in a Resolution22 dated April 21, 2003. The CA reasoned
that, contrary to the petitioners' insistence that the verification was signed by Raymond P. Tomaroy,
page 16 of the petition filed before it did not bear such signature. Moreover, the special power of
attorney attached to the motion for reconsideration was subscribed and sworn to by the signatories
therein before Notary Public Orlando C. Dy only on November 20, 2002, i.e., more than one (1)
month after the filing of the petition on October 15, 2002. Consequently, the special power of
attorney did not cure the defect in the certification against forum shopping signed by Raymond
Tomaroy, which was, likewise, not accompanied by proof that he was authorized to file the petition
on behalf of the petitioner union.

The CA clarified that the authority of non-lawyers to represent the labor organization or members
thereof applies only to proceedings before the NLRC or Labor Arbiters, as provided for in Article 222
of the Labor Code. On the other hand, a non-lawyer may appear before it only if he is a party-
litigant. However, Raymond P. Tomaroy did not appear to be a party in the case before the CA as his
name was not mentioned in the caption nor in the body of the petition.23

Aggrieved, the petitioners filed the instant petition contending that:

PUBLIC RESPONDENT COURT OF APPEALS ERRED WHEN IT DISMISSED THE PETITIONERS' APPEAL
ON GROUNDS OF TECHNICALITIES.

II

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION ERRED [WHEN] IT

AFFIRMED THE FINDINGS OF THE HONORABLE LABOR ARBITER THAT PETITIONERS
COMMITTED ILLEGAL STRIKE.24

Labor II – 1
On the first ground, the petitioners allege that they complied with Section 3, Rule 46 and Section 7,
Rule 3 of the Rules of Court. They contend that the petition filed before the CA by the petitioner
union's president was sanctioned by Article 242 of the Labor Code, and the cases of Liberty
Manufacturing Workers Union v. CFI of Bulacan, 25 Davao Free Workers Front v. CIR,26 and La Carlota
Sugar Central v. CIR.27 The petitioner union insists that it would be illogical for the union, as an
entity, to require all its members to sign the said petition and the certificate of non-forum shopping.
It avers that a labor union is a judicial entity which functions thru its officers. Thus, the president, as
an officer of the union, needed no special power of attorney to sign for the union. It stresses that it
did not violate Section 34, Rule 138 of the Rules of Court.

The petitioner union further invokes the policy that the "rules of technicality must yield to the
broader interest of substantial justice;" when the rules strictly applied resulting in technicalities that
tend to frustrate rather than promote justice, this Court is empowered to support the rules.

The petitioners argue that they did not stage a strike, much more an illegal strike. They
explain that a strike means work stoppage. Considering that the Dyeing and Finishing
Division of the respondent was shutdown, it could not have caused a work stoppage. The
union members merely picketed in front of the respondent's factory to urge the
respondent to open and order the resumption of the operations in its Dyeing and Finishing
Division. There was, thus, no need to comply with the requirements laid down by Article
263 of the Labor Code and its implementing rules.

For its part, the respondent prayed that the petition be dismissed on the ground that the petition
filed before the CA failed to comply with Section 1 of Rule 65, Section 3 of Rule 46, and Section 7 of
Rule 3 of the Rules of Court, and that the requirement as to the signatories in the petition failed to
comply with Section 3, Rule 7 of the Rules of Court. The respondent reiterates that the petitioners
staged an illegal strike, and that as officers of the union who participated therein, the petitioners are
deemed to have lost their employment status. ςηαñrοblεš  Î½Î¹r† Ï…αl  lαω  lιbrαrà ¿

The contention of the petitioners is erroneous. They are of the erroneous impression that the only
respondent in the NLRC was the petitioner union and that it was sued in its representative capacity.
The fact of the matter is that the respondent sued not only the petitioner union as respondent, but
also its officers and members of its Board of Directors as principal respondents, and sought the
termination of the employment of the said officers. The Labor Arbiter rendered judgment against all
the respondents therein and declared the officers to have lost their employment status. The NLRC
affirmed the decision on appeal. It was not only the union that assailed the decision of the NLRC in
the CA, but also the dismissed officers. The petitioners (respondents therein) prayed for the reversal
thereof and that another judgment be rendered as prayed for by them in their position paper in the
NLRC, thus:

WHEREFORE, premises considered, it is respectfully prayed to this Honorable Labor Arbiter that, after
submission of this Position Paper, the above entitled case be considered submitted for resolution, and
the decision be rendered in favor of the respondents employees:

1. Declaring Petitioners guilty of illegal reduction of working days, shutdown and UNFAIR LABOR
PRACTICES against individual respondents;

2. Ordering petitioners be, jointly and severally, liable to pay respondents actual damages, payment
of MORAL and EXEMPLARY DAMAGES in the amount of not less than P50,000.00 each individual
employees and 10% of the total monetary award for the Office of BMC-SUPER plus P10,000.00
litigation expenses;

3. Ordering that Petitioner Paul Lee be in contempt of court and be fined to pay individual
respondents in the amount of P50,000.00 each or imprisonment of Two (2) to Four (4) Years or both.

Labor II – 1
Other relief and remedies equitable in the premises are, likewise, prayed for.28

Under Section 3 of Rule 46 in relation to Section 1, Rule 65 of the Rules of Court, the petition
for certiorari shall contain the full names and actual addresses of all the petitioners and the
respondents, and that the failure of the petitioners to comply with the said requirement shall be
sufficient ground for the dismissal of their petition:

Sec. 3. Contents and filing of petition; effect of non-compliance with requirements. - The petition
shall contain the full names and actual addresses of all the petitioners and respondents, a concise
statement of the matters involved, the factual background of the case and the grounds relied upon
for the relief prayed for.

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and shall
be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order,
resolution, or ruling subject thereof, such material portions of the record as are referred to therein
and other documents relevant or pertinent thereto. The certification shall be accomplished by the
proper clerk of court or by his duly authorized representative, or by the proper officer of the court,
tribunal, agency or office involved or by his duly authorized representative. The other requisite
number of copies of the petition shall be accompanied by clearly legible plain copies of all documents
attached to the original.

The petitioner shall also submit together with the petition a sworn certification that he has not
theretofore commenced any other action involving the same issues in the Supreme Court, the Court
of Appeals, or different divisions thereof, or any other tribunal or agency; if there is such other action
or proceeding, he must state the status of the same; and if he should, thereafter, learn that a similar
action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof within five (5) days therefrom.

The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court and
deposit the amount of P500.00 for costs at the time of the filing of the petition.

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition.

Moreover, under Section 1, Rule 7 of the Rules of Court, the title of the action indicates the names of
the parties who shall be named in the original petition:

Section 1. Caption. - The caption sets forth the name of the court, the title of the action, and the
docket number, if assigned.

The title of the action indicates the names of the parties. They shall all be named in the original
complaint or petition; but in subsequent pleadings, it shall be sufficient if the name of the first party
on each side be stated with an appropriate indication when there are other parties.

Their respective participation in the case shall be indicated.

In this case, the title of the petition for certiorari filed in the CA does not contain the names of the
petitioners officers of the petitioner BMC-SUPER and of the members of the Board of Directors; even
the petition itself does not contain the full names and addresses of the said officers and members of
the Board of Directors of the petitioner union. We quote the title of the petition and the averments
thereof having reference to the parties-petitioners:

Labor II – 1
BUKLURAN NG MANGGAGAWA SA CLOTHMAN KNITTING CORPORATION - SOLIDARITY OF UNIONS
IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (BMC-SUPER), ET AL.,Petitioner,

-vs -

CLOTHMAN KNITTING CORPORATION, Respondents.29

Petitioners, BUKLURAN NG MANGGAGAWA SA CLOTHMAN - SOLIDARITY OF UNIONS FOR

EMPOWERMENT AND REFORMS (BMC-SUPER), et al., is a legitimate labor organization with Charter
Certificate No. S-102, can be served with summons and other processes at 4th Floor Perlas Building,
646 Quezon Avenue, Quezon City. ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Private Respondent, CLOTHMAN KNITTING CORPORATION, is a domestic corporation organized and

existing under and by virtue of Philippine Laws engaged in textile industry with principal place of
business at No. 57 Don Pedro Street, Don Pedro Village, Marulas, Valenzuela City.

Public Respondents, National Labor Relations Commission, Second Division, herein impleaded as the
tribunal exercising judicial functions who issued the assailed decision in NLRC Case No. 05-03332-
2001.30

The petitioners' reliance on the ruling of this Court in Davao Free Workers Front v. CIR31 is misplaced.
In the said case, the Court held that the failure to specify the details regarding the number and
names of the striking members of a labor union in the decision or in the complaint was of no
consequence. This is due to the fact that it was established that all the union members went on strike
as a result of the unfair labor practice of the employer, in consonance with the rule that it is precisely
the function of a labor union to carry the representation of its members, particularly against the
employer's unfair labor practices against it and its members, and to file an action for their benefit
and behalf without joining each and every member as a separate party.

Significantly, the full names and addresses of the officers and members of the Board of Directors of
the petitioner union are set forth in their petition at bench; proof that, indeed, there is a need for the
full names and addresses of all the petitioners to be stated in the title of the petition and in the
petition itself. We quote the title of the petition and the allegation therein having reference to the
parties-petitioners:

BUKLURAN NG MANGGAGAWA SA CLOTHMAN KNITTING CORPORATION - SOLIDARITY OF UNIONS

IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (BMC-SUPER), AND RAYMOND TOMAROY,
ROEL SARDONIDOS, JOSEPH SEDERIO, MARITCHU JAVELLANA, ENRIQUE OMADTO, EFREN MOGAR,
FRANCISCO BERTULFO, JUDY ROQUERO, PATERNO SILVESTRE, CAYETANO PALMON, TEODORO
OCOP AND JOSEPH ESTIFANO, Petitioners.32

1. Petitioners, BUKLURAN NG MANGGAGAWA SA CLOTHMAN - SOLIDARITY OF UNIONS FOR

EMPOWERMENT AND REFORMS (BMC-SUPER), ROEL SARDONIDOS, JOSEPH SEDERIO, MARITCHU
JAVELLANA, ENRIQUE OMADTO, EFREN MOGAR, FRANCISCO BERTULFO, JUDY ROQUERO, PATERNO
SILVESTRE, CAYETANO PALMON, TEODORO OCOP AND JOSEPH ESTIFANO, the former is a legitimate
labor organization with Charter Certificate No. S-102, and the latter are members of the former; they
can be served with summons and other processes of this Honorable Court at c/o H.O. VICTORIA AND
ASSOCIATES LAW OFFICES, Unit 305 Web-Jet Building, 64 Quezon Avenue cor. BMA Avenue, Quezon
City.33

On the other hand, Section 5, Rule 7 of the Rules of Court reads:

Sec. 5. Certification against forum shopping. - The plaintiff or principal party shall certify under oath
in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification
Labor II – 1
annexed thereto and simultaneously filed therewith: (a) that he has not, therefore, commenced any
action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and,
to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such
other pending action or claim, a complete statement of the present status thereof; and (c) if he
should, thereafter, learn that the same or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and criminal actions. If the
acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same
shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as
a cause for administrative sanctions.

As gleaned from the petition for certiorari in the CA, only the petitioner Raymond P. Tomaroy signed
the certification of non-forum shopping in his capacity as the president of the petitioner union. The
officers and members of the Board of Directors, who were, likewise, principal petitioners, did not
execute any certification of non-forum shopping as mandated by the said Rule. The rule is that the
certification of non-forum shopping must be signed by all the petitioners and that the signing by only
one of them is insufficient.34 Although petitioner Tomaroy was authorized by virtue of his position as
president of the petitioner union to execute the certification for and in its behalf, he had no authority
to do so for and in behalf of its petitioners-officers, as well as the members of the Board of Directors
thereof. The execution by the individual petitioners of a special power of attorney subsequent to the
dismissal of the petition by the CA authorizing petitioner Tomaroy to execute the requisite
certification does not cure the fatal defect in their petition.35 
ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The respondent alleges that the petition for certiorari filed before the CA was correctly dismissed as it
was not signed by counsel. The respondent noted that petitioner Tomaroy was not a lawyer and that
petitioner Enrique Belarmino did not manifest in the petition that he was the lawyer. The respondent,
thus, contends that Tomaroy and Belarmino engaged in the illegal practice of law, in violation of
Section 34, Rule 138 of the Rules of Court.

We do not agree.

Section 3, Rule 7 of the Rules of Court provides that every pleading must be signed by the party or
counsel representing him.36 Considering that the union is one of the petitioners, Tomaroy, as its
president, may sign the pleading. For this reason alone, the CA cannot dismiss the petition.

Even if we glossed over the procedural lapses of the petitioners and resolved the petition on its
merits, we find that the petitioner union, along with its supporters, staged a strike without complying
with the requirements laid down in Article 263 of the Labor Code and its Implementing Rules.

The petitioner union alleges that it could not have staged a strike because the operations
at the Dyeing and Finishing Division were temporarily stopped. It insists that it merely
protested the unjustified closing of the respondent's Dyeing and Finishing Division by
forming a picket in front of the respondent's compound to urge the re-opening thereof.
lιbrαrà ¿
ςηαñrοblεš  Î½Î¹r†υαl  lαω

We do not agree.

A strike is any temporary stoppage of work by the concerted action of employees as a

result of an industrial or labor dispute. 37 A labor dispute includes any controversy or
Labor II – 1
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.38

The members and the supporters of the petitioner union, headed by petitioner Tomaroy,
thru concerted action, caused a temporary stoppage of work as a result of an industrial
dispute. This is evidenced in the June 13, 2001 spot report of the Atlantic Security & Investigation
Agency:

On or about 1445H of June 11, 2001, Mr. Jojo Flores and Mr. Rene Fabian were about to deliver
fabrics in Bulacan with service truck TBK-158. Upon reaching the corner of Don Pedro St. and
McArthur Highway, they gave way to a big truck turning to Don Pedro St. and at the same time the
group of Mr. Raymond Tomaroy, the leader of BUKLURAN NG MANGGAGAWA SA CLOTHMAN -
SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS - BMC SUPER
were on their way to CKC compound. Seeing the group, Mr. Fabian greeted them by giving a quick
forward motion of his head. But instead, according to Mr. Fabian, Mr. Tomaroy with finger pointing on
to Mr. Fabian accusing him as the one responsible for the delay of their 13th month pay. Mr. Fabian
just told the group BMC-SUPER to read the Memorandum of the HRD dated June 8, 2001. Mr. Flores
and Mr. Fabian returned to CKC, Don Pedro St., Marulas, Valenzuela, to report the matter.

At about 1517H of same date, Mr. Tomaroy with 16 members of BMC SUPER staged a rally and/or
gathered in front of Clothman Knitting Corporation gate carrying placards with slogan read as
follows:

1. Itigil ang sabwatan ng KATIPUNAN (FABIAN GROUP) at management BMC-SUPER;

2. Mr. Paul Lee - Huwag mong ipitin ang mid-year, 13th month pay ng mga manggagawa sa CKC.
BMC-SUPER;

3. Ibalik ang pasok sa Finishing Department;

4. Mr. Paul Lee - Magagara ang sasakyan mo, Montero, BMW, Pajero pero kaunting benepisyo ng
manggagawa ay di mo maibigay BMC-SUPER;

5. Kilalanin ang karapatan ng manggagawa na magtatag ng unyon BMC-SUPER.

On or about 1640H at the same date, a PNP-Valenzuela Mobil car had SPO1 Palma, PO2 Manresa and
PO1 Isip on board. The police with the BMC-SUPER.

The Valenzuela Police left at about 1727H.

At about 1810H of the same date, the group of BMC-SUPER abandoned the area.39

The subsequent Reports dated June 14, 15, 16 and 18, 2001 of the same agency further stated that
members of the petitioner union, along with other employees particularly from the knitting
department, joined in the picket.40 It is, thus, apparent that the concerted effort of the
members of the petitioner union and its supporters caused a temporary work stoppage.
The allegation that there can be no work stoppage because the operation in the Dyeing
and Finishing Division had been shutdown is of no consequence. It bears stressing that the
other divisions were fully operational. There is nothing on record showing that the union
members and the supporters who formed a picket line in front of the respondent's compound were
assigned to the finishing department. As can be clearly inferred from the spot reports, employees
from the knitting department also joined in picket. The blockade of the delivery of trucks and
Labor II – 1
the attendance of employees from the other departments of the respondent meant work
stoppage. The placards that the picketers caused to be displayed arose from matters
concerning terms or conditions of employment as well as the association or representation
of persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment.

Clearly, the petitioner union, its officers, members and supporters staged a strike. ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

In order for a strike to be valid, the following requirements laid down in paragraphs (c)
and (f) of Article 263 of the Labor Code must be complied with: (a) a notice of strike must
be filed; (b) a strike-vote must be taken; and (c) the results of the strike-vote must be
reported to the DOLE.41 It bears stressing that these requirements are mandatory,
meaning, non-compliance therewith makes the strike illegal. The evident intention of the
law in requiring the strike notice and strike-vote report is to reasonably regulate the right
to strike, which is essential to the attainment of legitimate policy objectives embodied in
the law.42

Considering that the petitioner union failed to comply with the aforesaid requirements, the strike
staged on June 11 to 18, 2001 is illegal. Consequently, the officers of the union who participated
therein are deemed to have lost their employment status.43

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Resolutions of the Court of
Appeals in CA-G.R. SP No. 73353 are AFFIRMED. No costs.

Labor II – 1
2.) G.R. Nos. 169829-30             April 16, 2008

STEEL CORPORATION OF THE PHILIPPINES, petitioner,

vs.
SCP EMPLOYEES UNION-NATIONAL FEDERATION OF LABOR UNIONS, respondent.

DECISION

AZCUNA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition is seeking to
set aside the Decision1 rendered by the Court of Appeals (CA) dated February 28, 2005 in the consolidated cases
CA-G.R. SP Nos. 79446 and 82314, wherein the CA denied the petition in CA-G.R. SP No. 79446 while partially
granting the petition in CA-G.R. SP No. 82314, as well as the Resolution2 dated September 22, 2005 denying
petitioner's motion for reconsideration.

The antecedents are as follows:

Petitioner Steel Corporation of the Philippines (SCP) is engaged in manufacturing construction materials, supplying
approximately 50% of the domestic needs for roofing materials.3 On August 17, 1998, SCP-Federated Union of the
Energy Leaders – General and Allied Services (FUEL-GAS) filed a petition for Certification Election in its bid
to represent the rank-and-file employees of the petitioner.4 Respondent SCP Employees Union (SCPEU) –
National Federation of Labor Unions (NAFLU) intervened, seeking to participate and be voted for in such
election5 but the same was denied for having been filed out of time.6

On September 14, 1998, a consent election was conducted, with "FUEL-GAS" and "NO UNION" as choices.
Said election was however declared a failure because less than a majority of the rank-and-file employees
cast their votes. FUEL-GAS filed an Election Protest claiming that the certification election was
characterized by and replete with irregularities.7 On September 21, 1998, NAFLU, the mother federation of
respondent, filed a petition for Certification Election for and on behalf of its affiliate, seeking to represent the
rank-and-file employees of petitioner.8 The Med-Arbiter denied the election protest of FUEL-GAS and granted
the petition for certification election filed by NAFLU and further ordered the conduct of the election with
"NAFLU" and "NO UNION" as choices. Both petitioner and FUEL-GAS appealed to the Secretary of Labor,
which appeals were later consolidated.9

On August 27, 1999, the Department of Labor and Employment (DOLE) Undersecretary rendered a
consolidated decision ordering the conduct of a certification election with "FUEL-GAS," respondent and
"NO UNION" as choices.10 Subsequent motions for reconsideration were denied on October 18,
1999.11 Unsatisfied, petitioner and FUEL-GAS appealed to the CA by way of certiorari.12

On April 14, 2000, the certification election, as ordered by the Med-Arbiter, proceeded. FUEL-GAS
participated without prejudice to the decision of the CA in its pending petition. In said election, respondent
emerged as winner; hence, the second election protest filed by FUEL-GAS.13

On July 12, 2000, the CA, in CA-G.R. SP No. 55721, rendered a Decision14 which annulled and set aside the
August 27, 1999 decision and October 18, 1999 resolution of the Undersecretary. The CA further directed the
holding of a certification election with "FUEL-GAS" and "NO UNION" as choices, to the exclusion of
respondent.15

On July 31, 2000, the Med-Arbiter dismissed FUEL-GAS' election protest but deferred the request of
respondent to be declared winner in the certification election until final resolution of the pending petitions
with the CA.16 Not satisfied with the deferment of their certification as winner, respondent appealed to the Labor
Secretary.17 It further filed a Manifestation before the CA pointing out that in the April 14, 2000 certification election, it
emerged as winner, and thus, the election should be considered as an intervening event sufficient to bar another
certification election.18 The CA, however, dismissed said manifestation on December 28, 2000.19
Labor II – 1
Meanwhile, on October 16, 2000, the Undersecretary rendered a Decision20 certifying respondent as the
exclusive bargaining agent of petitioner's employees. Petitioner and FUEL-GAS timely filed motions for
reconsideration of the aforesaid decision.21

As a consequence of its certification as the exclusive bargaining agent, respondent sent to petitioner CBA
proposals. Petitioner, however, held in abeyance any action on the proposals in view of its pending motion
for reconsideration.22

Finding no justification in petitioner's refusal to bargain with it, respondent filed a Notice of Strike with the
National Conciliation and Mediation Board (NCMB) on December 11, 2000. The union raised the issue of unfair
labor practice (ULP) allegedly committed by petitioner for the latter's refusal to bargain with it.23

On January 19, 2001, FUEL-GAS moved for the conduct of a certification election pursuant to the CA decision.24 On
February 27, 2001, the Undersecretary affirmed its October 16, 2000 decision.25

On March 16, 2001, the labor dispute was certified to the National Labor Relations Commission (NLRC) for
compulsory arbitration, which case was docketed as Cert. Case No. 000200-01.26 Again, on April 2, 2001,
another Notice of Strike27 was filed by respondent for non-recognition as a certified union; refusal to
bargain; discrimination against union officers and members; harassment and intimidation; and illegal dismissal,
which was later consolidated with the certified case.

On December 13, 2001, acting on the January 19, 2001 petition for certification election, the Med-Arbiter
recommended the holding of another certification election but with respondent and FUEL-GAS as contenders.28 The
decision was appealed to the Labor Secretary. The Labor Secretary in turn dismissed the motion to conduct
certification election in a Resolution dated October 17, 2002.29

Meanwhile, in Cert. Case No. 000200-01, the NLRC issued a Resolution dated April 17, 2002, declaring
petitioner as having no obligation to recognize respondent as the certified bargaining agent; dismissing the
charge of unfair labor practice; declaring as illegal the strike held by the union; and declaring the loss of
employment of the officers of the union.30 Petitioner filed a Motion for Partial Reconsideration31 of the resolution
praying that additional employees be dismissed. For its part, respondent also filed a Motion for Reconsideration.32

On May 20, 2002, respondent filed another Notice of Strike alleging as grounds, petitioner's refusal to
bargain and union busting.33 The notice was later dismissed and respondent was enjoined from holding a
strike.34

On January 7, 2003, respondent filed another Notice of Strike on the grounds of refusal to bargain and union
busting.35 Respondent thereafter went on strike on February 4, 2003. On February 7, 2003, the Labor Secretary
certified the dispute to the NLRC and directed the employees to return to work.36 The second certified case
was docketed as NLRC NCR CC No. 00253-03. On September 8, 2003, the NLRC rendered a Decision37 ordering
petitioner to bargain collectively with respondent as the duly certified bargaining agent. In addition, it ordered
the reinstatement of the employees who were dismissed in connection with the February 4, 2003 strike, without loss
of seniority rights and diminution of salary.38 Petitioner filed a motion for reconsideration but it was denied in the
Resolution39 dated January 26, 2004. The decision and resolution became the subject of a petition before the CA in
CA-G.R. SP No. 82314.

Meantime, in the first certified case, Cert. Case No. 000200-01, the NLRC, in a Decision40 dated February 12, 2003
opted to resolve the parties' respective motions for reconsideration collectively. In said decision, the NLRC modified
its earlier resolution by ordering the reinstatement of the union officers whom it previously ordered terminated, which
in effect denied petitioner's motion for partial reconsideration.41 Petitioner filed a motion for reconsideration but it was
denied in a Resolution dated June 30, 2003.42 These decision and resolution became the subject of a petition before
the CA in CA-G.R. SP No. 79446.

The petitions before the CA were later consolidated. In CA-G.R. SP No. 79446, herein petitioner argued that:

Labor II – 1
 PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS
DISCRETION IN ORDERING THE REINSTATEMENT OF THE OFFICERS OF PRIVATE RESPONDENT
UNION DESPITE ITS CONCLUSION THAT [PRIVATE] RESPONDENT HAD CONDUCTED AN ILLEGAL
STRIKE.43

In the other case, CA-G.R. SP No. 82314, petitioner herein argued that:

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS

DISCRETION IN DIRECTING PETITIONER TO RECOGNIZE PRIVATE RESPONDENT UNION DESPITE
THE DECISION OF THIS COURT DIRECTING THE HOLDING OF ANOTHER CERTIFICATION
ELECTION.

II

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE

OF DISCRETION WHEN IT REVERSED ITS OWN DECISION IN THE SAME CASE WHICH HAS
BECOME FINAL AND EXECUTORY.

III

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS

DISCRETION WHEN IT CONCLUDED THAT THE STRIKE CONDUCTED BY SCPEU-NAFLU IS NOT
ILLEGAL.

IV

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS

DISCRETION IN ORDERING THE REINSTATEMENT OF THE EMPLOYEES WHO DEFIED THE RETURN
TO WORK ORDER OF THE SECRETARY OF LABOR.44

On February 28, 2005, the CA rendered a Decision45 denying the petition in CA-G.R. SP No. 79446 while partially
granting the petition in CA-G.R. SP No. 82314. The decretal portion of which stated:

WHEREFORE, premises considered, the Petition in CA-G.R. SP No. 79446 is DENIED while the Petition in
CA-G.R. SP No. 82314 is PARTIALLY GRANTED, decreeing herein contending parties to comply with the
directives of this Tribunal in CA-G.R. SP No. 55721.

SO ORDERED.

In denying the petition in CA-G.R. SP No. 79446, the CA found no cogent reason to reverse the assailed decision of
the NLRC in Cert. Case No. 000200-01. The CA concluded that petitioner's claims are based on pure allegations
and not supported by any substantial evidence.46

In partially granting the petition in CA-G.R. SP No. 82314, the CA reasoned that by virtue of its decision in
CA-G.R. SP No. 55721 dated July 12, 2000, the second certification election was, in effect, nullified and set
aside. It is to be noted that FUEL-GAS participated in the second election without prejudice to the petition it
filed in court. The CA added that since it did not recognize the second certification election held on April 14,
2000, wherein NAFLU was voted as the duly-elected bargaining agent of petitioner's rank-and-file
employees, clearly it has no basis for its claim and it has no right to demand that petitioner collectively
bargain with it.47

Petitioner filed a Motion for Reconsideration48 which was denied in the Resolution49 dated September 22, 2005.

Labor II – 1
Hence, this petition raising the following issues:

[Whether or not] the Court of appeals has departed from the law and established jurisprudence when
it affirmed the reinstatement of officers who participated in an illegal strike.

II

[Whether or not] the Court of appeals seriously erred when it failed to declare as illegal the strike
held by the union on february 4, 2003.

III

[Whether or not] the Court of appeals seriously erred when it failed to invalidate the order of the national
labor relations commission directing the reinstatement of the strikers who defied the return-to-work order of
the labor secretary.

IV

[Whether or not] the Court of appeals committed a serious error when it ruled that the nlrc has reconsidered
its conclusion on the illegality of the march 2001 strike.

[Whether or not] the Court of appeals committed a serious error when it concluded that the national labor
relations commission may reconsider in the second certified case its decision on the first certified case
which has become final and executory.50

Petitioner contends that the February 2003 strike held by respondent is illegal. To buttress its claim,
petitioner argues that respondent has no right to demand that it bargain with the latter. Its refusal to
recognize respondent as the bargaining representative of its employees is based on the directive of the CA in CA-
G.R. SP No. 55721 to conduct another certification election. Petitioner maintains that respondent never denied
that its purpose for holding the strike was to force it to recognize the latter over the other union. Since the
strike is a union-recognition-strike, it is illegal.51

Petitioner further argues that the strike was manifestly illegal for it was in gross violation of the Labor Code,
particularly Art. 264,52 which expressly prohibits the declaration of a strike over an issue that is pending
arbitration between the parties.53 Since the labor dispute in the first certified case, Cert. Case No. 000200-01,
was still pending compulsory arbitration at the time of the strike on February 4, 2003, and since the said
strike was based substantially on the same grounds, i.e., the alleged refusal by petitioner to recognize the
union, the strike is illegal by express provision of the law.

Moreover, petitioner adds that the issue of illegality of the February 2003 strike was already resolved by the NLRC
in Cert. Case No. 000200-01 involving a strike in March 2001 over the same labor dispute, namely, the alleged
refusal of petitioner to recognize respondent. As such, the NLRC's decision in Cert. Case No. 000200-01
constitutes res judicata in the second certified case, NLRC NCR CC No. 00253-03.54

Petitioner also contends that the union officers who participated in the illegal strike are all deemed to have
lost their employment. Unlike ordinary members of the union, whose dismissal requires that the employer prove
that they committed illegal acts, mere participation of the union officers in an illegal strike warrants their termination
from employment. Consequently, since the strike was illegal, it follows that the termination from employment of the
union officers was warranted.55

Petitioner maintains that it was erroneous on the part of the CA not to have reversed the NLRC decision56 ordering
the reinstatement of the employees which were dismissed in connection with the February 4, 2003 strike. It argues
Labor II – 1
that since the termination of the employees was due to their refusal to comply with the return-to-work order issued
by the Labor Secretary, not to their alleged participation in an illegal strike, the CA erred in affirming the decision.57

Finally, petitioner avers that the CA also committed serious errors on procedural issues when it concluded that the
NLRC may reconsider in Cert. Case No. 000200-01 its decision in NLRC NCR CC No. 00253-03.58

The petition is meritorious.

Whether or not respondent is the recognized collective bargaining agent had been finally resolved in the
negative. Consequently, as correctly concluded by the CA, it could not compel petitioner to bargain with it.
Thus, the only issues left for determination are: the validity of the strike participated in by the officers of the
respondent union; and the validity of their termination from employment by reason of such participation.

The strike is a legitimate weapon in the human struggle for a decent existence. It is considered as the most effective
weapon in protecting the rights of the employees to improve the terms and conditions of their employment. But to be
valid, a strike must be pursued within legal bounds. The right to strike as a means for the attainment of social justice
is never meant to oppress or destroy the employer. The law provides limits for its exercise.59

In the instant case, the strike undertaken by the officers of respondent union is patently illegal for the
following reasons: (1) it is a union-recognition-strike which is not sanctioned by labor laws; (2) it was
undertaken after the dispute had been certified for compulsory arbitration; and (3) it was in violation of the
Secretary's return-to-work order.

Respondent's notices of strike were founded on petitioner's continued refusal to bargain with it. It thus
staged the strike to compel petitioner to recognize it as the collective bargaining agent, making it a union-
recognition-strike. As its legal designation implies, this kind of strike is calculated to compel the employer to
recognize one's union and not other contending groups, as the employees' bargaining representative to work out a
collective bargaining agreement despite the striking union's doubtful majority status to merit voluntary recognition
and lack of formal certification as the exclusive representative in the bargaining unit.60

The certification election that was conducted where respondent emerged as winner, not having been
recognized as valid, it has no authority to represent the rank and file employees of petitioner. Thus, it could
not ask petitioner to bargain with it. As the issue of its identity had been the subject of a separate case which had
been settled by the court with finality,61 petitioner cannot, therefore, be faulted in refusing to bargain. Neither could
this Court sustain respondent's imputation of unfair labor practice and union busting against petitioner. With more
reason, this Court cannot sustain the validity of the strike staged on such basis.

Even if this Court were to uphold the validity of respondent's purpose or objective in staging a strike, still,
the strike would be declared illegal for having been conducted in utter defiance of the Secretary's return-to-
work order and after the dispute had been certified for compulsory arbitration. Although ostensibly there were
several notices of strike successively filed by respondent, these notices were founded on substantially the same
grounds – petitioner's continued refusal to recognize it as the collective bargaining representative.

Article 263(g) of the Labor Code provides:

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 the compliance with this
provision as well as with such orders as he may issue to enforce the same. x x x.62

Labor II – 1
The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as an
exercise of the police power of the State, aimed at promoting the public good. When the Secretary exercises these
powers, he is granted "great breadth of discretion" to find a solution to a labor dispute. The most obvious of these
powers is the automatic enjoining of an impending strike or lockout or its lifting if one has already taken place.63

The moment the Secretary of Labor assumes jurisdiction over a labor dispute in an industry indispensable
to national interest, such assumption shall have the effect of automatically enjoining the intended or
impending strike. It was not even necessary for the Secretary of Labor to issue another order directing a
return to work. The mere issuance of an assumption order by the Secretary of Labor automatically carries
with it a return-to-work order, even if the directive to return to work is not expressly stated in the
assumption order.64

A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived.
While the workers may choose not to obey, they do so at the risk of severing their relationship with their
employer.65

Says the Labor Code:

Art. 264. Prohibited activities. –

xxx

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Secretary or
after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency
of cases involving the same grounds for the strike or lockout.

Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker
must return to his job together with his co-workers so that the operations of the company can be resumed
and it can continue serving the public and promoting its interest. This extraordinary authority given to the
Secretary of Labor is aimed at arriving at a peaceful and speedy solution to labor disputes, without
jeopardizing national interests. Regardless of their motives, or the validity of their claims, the striking workers
must cease and/or desist from any and all acts that undermine or tend to undermine this authority of the Secretary
of Labor, once an assumption and/or certification order is issued. They cannot, for instance, ignore return-to-work
orders, citing unfair labor practices on the part of the company, to justify their action.66

Respondent, in the instant case, after the assumption of jurisdiction and certification of the dispute to the
NLRC for compulsory arbitration, filed notices of strike and staged the strike obviously contrary to the
provisions of labor laws. Worse, it filed not one but several notices of strike which resulted in two certified
cases which were earlier consolidated. These disputes could have been averted had respondent respected
the CA's decision. That way, the collective bargaining agent would have been determined and petitioner could
have been compelled to bargain. Respondent, through its officers, instead opted to use the weapon of strike to force
petitioner to recognize it as the bargaining agent. The strike, having been staged after the dispute had been certified
for arbitration and contrary to the return-to-work order, became a prohibited activity, and was thus illegal.

Strikes exert disquieting effects not only on the relationship between labor and management, but also on the
general peace and progress of society, not to mention the economic well-being of the State. It is a weapon that can
either breathe life to or destroy the union and members in their struggle with management for a more equitable due
of their labors. Hence, the decision to wield the weapon of strike must therefore rest on a rational basis, free from
emotionalism, unswayed by the tempers and tantrums of a few, and firmly focused on the legitimate interest of the
union which should not however be antithetical to the public welfare. In every strike staged by a union, the general
peace and progress of society and public welfare are involved.67

Having settled that the subject strike was illegal, this Court shall now determine the proper penalty to be imposed on
the union officers who knowingly participated in the strike.

Article 264 of the Labor Code further provides:

Labor II – 1
 Art. 264. Prohibited activities.— x x x

Any workers whose employment has been terminated as a consequence of an unlawful lockout shall be
entitled to reinstatement with full back wages. 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. x x x.

It bears stressing that the law makes a distinction between union members and union officers. A worker merely
participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts
during a strike that he may be declared to have lost employment status. For knowingly participating in an illegal
strike or participating in the commission of illegal acts during a strike, the law provides that a union officer may be
terminated from employment. The law grants the employer the option of declaring a union officer who participated in
an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers
from service.68 Otherwise, the workers will simply refuse to return to their work and cause a standstill in the company
operations while retaining the positions they refuse to discharge and preventing management from filling up their
positions.69

WHEREFORE, the petition is partly GRANTED. The decision of the Court of Appeals dated February 28, 2005 in
the consolidated cases CA-G.R. SP Nos. 79446 and 82314 and its Resolution dated September 22, 2005
are MODIFIED in that the strike in question is found ILLEGAL and the order to reinstate the union officers who
participated in the illegal strike is REVERSED and SET ASIDE.

Labor II – 1
3.) G.R. No. 155679             December 19, 2006

BIFLEX PHILS. INC. LABOR UNION (NAFLU), PATRICIA VILLANUEVA, EMILIA BANDOLA, RAQUEL CRUZ,
DELIA RELATO, REGINA CASTILLO, LOLITA DELOS ANGELES, MARISSA VILLORIA, MARITA ANTONIO,
LOLITA LINDIO, ELIZA CARAULLIA, LIZA SUA, and FILFLEX INDUSTRIAL AND MANUFACTURING LABOR
UNION (NAFLU), MYRNA DELA TORRE, AVELINA AÑONUEVO, BERNICE BORCELO, NARLIE YAGIN,
EVELYN SANTILLAN, LEONY SERDONCILO, TRINIDAD CUYA, ANDREA LUMIBAO, GYNIE ARNEO,
ELIZABETH CAPELLAN, JOSEPHINE DETOSIL, ZENAIDA FRANCISCO, and FLORENCIA ANAGO, petitioners,
vs.
FILFLEX INDUSTRIAL AND MANUFACTURING CORPORATION and BIFLEX (PHILS.), INC., respondents.

DECISION

CARPIO MORALES, J.:

Assailed via Petition for Review on Certiorari is the Court of Appeals Decision1 of May 28, 2002 setting aside the
National Labor Relations Commission (NLRC) Resolution2 of August 14, 1995 which reversed the December 15,
1992 Decision3 of the Labor Arbiter.

Petitioners Patricia Villanueva, Emilia Bandola, Raquel Cruz, Delia Relato, Regina Castillo, Lolita delos Angeles,
Marissa Villoria, Marita Antonio, Lolita Lindio, Eliza Caraulia, and Liza Sua were officers of Biflex (Phils.) Inc. Labor
Union.

Petitioners Myrna dela Torre, Avelina Añonuevo, Bernice Borcelo, Narlie Yagin, Evelyn Santillan, Leony Serdoncilo,
Trinidad Cuya, Andrea Lumibao, Gynie Arneo, Elizabeth Capellan, Josephine Detosil, Zenaida Francisco, and
Florencia Anago were officers of Filflex Industrial and Manufacturing Labor Union.

The two petitioner-unions, which are affiliated with National Federation of Labor Unions (NAFLU), are the respective
collective bargaining agents of the employees of corporations.

Respondents Biflex (Phils.) Inc. and Filflex Industrial and Manufacturing Corporation (respondents) are sister
companies engaged in the garment business. Situated in one big compound along with another sister company,
General Garments Corporation (GGC), they have a common entrance.

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

On November 13, 1990, respondents resumed their operations.5 Petitioners, claiming that they were illegally locked
out by respondents, assert that aside from the fact that the welga ng bayan rendered it difficult to get a ride and the
apprehension that violence would erupt between those participating in the welga and the authorities, respondents’
workers were prevented from reporting for work.

Petitioners further assert that respondents were "slighted" by the workers’ no-show, and as a punishment, the
workers as well as petitioners were barred from entering the company premises.

On their putting up of tents, tables and chairs in front of the main gate of respondents’ premises, petitioners, who
claim that they filed a notice of strike on October 31, 1990,6 explain that those were for the convenience of union
members who reported every morning to check if the management would allow them to report for work.

Respondents, on the other hand, maintain that the work stoppage was illegal since the following requirements for
the staging of a valid strike were not complied with: (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.7

Labor II – 1
The Labor Arbiter, by Decision of December 15, 1992, finding for respondents, held that the strike was illegal.8 The
decretal text of its decision reads:

WHEREFORE, judgment is hereby rendered declaring the respondents guilty of an illegal strike.
Consequently, their following officers are declared to have lost their employment status:

BIFLEX LABOR UNION (NAFLU)

1. Reynaldo Santos President

2. Patricia Villanueva Vice President

3. Emilia Bandola Secretary

4. Raquel Cruz Treasurer

5. Delia Relato Auditor

6. Regina Castillo Board Member

7. Lolita delos Board Member

Angeles

8. Marissa Villoria Board Member

9. Marita Antonio Board Member

10. Lolita Lindio Board Member

11. Eliza Caranlia Board Member

12. Liza Sua Board Member

FIFLEX INDUSTRIAL AND MANUFACTURING LABOR UNION (NAFLU)

1. Myrna dela Torre President

2. Avelina Anonuevo Vice President

3. Barnice Borcelo Secretary

4. Nerlie Yagin Treasurer

5. Evelyn Santillan Auditor

6. Leony Serdoncilo Director

Labor II – 1
 7. Trinidad Cuga Director

8. Andrea Lumibao Director

9. Gynie Arneo Director

10. Elizabeth Capellar Director

11. Josephine Detosil Director

12. Zenaida Director

Francisco

13. Florencia Anago Director

SO ORDERED.9

Respondents thereupon terminated the employment of petitioners.

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the Labor Arbiter, it holding that
there was no strike to speak of as no labor or industrial dispute existed between the parties.10 It accordingly ordered
respondents to reinstate petitioners to their former positions, without loss of seniority rights, and with full backwages
from the date of their termination. 11

On respondents’ petition for certiorari, the Court of Appeals, by Decision of May 28, 2002, reversed that of the
NLRC and reinstated that of the Labor Arbiter.

In finding for respondents, the appellate court discredited petitioners’ claim of having been illegally locked out, given
their failure to even file a letter of protest or complaint with the management,12 and their failure to comply with the
legal requirements of a valid strike.13

The appellate court further noted that while petitioners claimed that they filed a notice of strike on October 31, 1990,
no copy thereof was ever produced before the Labor Arbiter.14

Hence, the instant petition which faults the appellate court to have:

. . . ERRED IN INTERPRETING ART. 264 (A) OF THE LABOR CODE TO BE MANDATORY AND CALLING
FOR THE AUTOMATIC DISMISSAL OF THE PETITIONERS FOR HAVING ENGAGED IN AN ILLEGAL
STRIKE.

II

. . . ERR[ED] IN NOT RULING THAT RESPONDENTS ERRED IN IMMEDIATELY IMPLEMENTING THE

DECISION OF THE LABOR ARBITER . . . DISMISSING PETITIONERS FROM WORK DESPITE THE
FACT THAT THE SAID DECISION HAS NOT YET BECOME FINAL AND EXECUTORY.

III

. . . ERRED IN DECLARING THAT PETITIONERS WERE GUILTY OF HOLDING AN ILLEGAL STRIKE

WHEN CIRCUMSTANCES SHOWED THAT RESPONDENTS WERE THE ONES WHO WERE GUILTY OF
AN ILLEGAL LOCKOUT.

Labor II – 1
The petition fails.

That petitioners staged a work stoppage on October 24, 1990 in conjunction with the welga ng bayan organized by
the labor sector to protest the accelerating prices of oil, it is not disputed.

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.15

Employees who have no labor dispute with their employer but who, on a day they are scheduled to work, refuse to
work and instead join a welga ng bayan commit an illegal work stoppage.16

Even if petitioners’ joining the welga ng bayan were considered merely as an exercise of their freedom of
expression, freedom of assembly or freedom to petition the government for redress of grievances, the exercise of
such rights is not absolute.17 For the protection of other significant state interests such as the "right of enterprises to
reasonable returns on investments, and to expansion and growth"18 enshrined in the 1987 Constitution must also be
considered, otherwise, oppression or self-destruction of capital in order to promote the interests of labor would be
sanctioned. And it would give imprimatur to workers’ joining demonstrations/rallies even before affording the
employer an opportunity to make the necessary arrangements to counteract the implications of the work stoppage
on the business, and ignore the novel "principle of shared responsibility between workers and employers"19 aimed at
fostering industrial peace.

There being no showing that petitioners notified respondents of their intention, or that they were allowed by
respondents, to join the welga ng bayan on October 24, 1990, their work stoppage is beyond legal protection.

Petitioners, nonetheless, assert that when they returned to work the day following the welga ng bayan on October
24, 1990, they were refused entry by the management, allegedly as punishment for their joining the welga. Hence,
they claim that they were illegally locked out by respondents.

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

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

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

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

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

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

In Gold City Integrated Port Service, Inc. v. National Labor Relations Commission,22 this Court, passing on the use of
the word "may" in the immediately quoted provision, held that "[t]he law . . . grants the employer the option of
declaring a union officer who participated in an illegal strike as having lost his employment." Reinstatement of a
Labor II – 1
striker or retention of his employment, despite his participation in an illegal strike, is a management prerogative
which this Court may not supplant.

Costs against petitioners.

WHEREFORE, the petition is DENIED.

Labor II – 1
 4.) [G.R. NO. 144899. February 5, 2004]

ELIZABETH C. BASCON and NOEMI V.COLE, Petitioners, v. HONORABLE COURT OF APPEALS,

METRO CEBU COMMUNITY HOSPITAL, INC., and GREGORIO IYOY, Respondents.

DECISION

QUISUMBING, J.:

This Petition for Review on Certiorari assails the Court of Appeals Decision1 in CA-G.R. SP No. 51690,
dated March 13, 2000, which set aside the decision of the National Labor Relations Commission
(NLRC), 4th Division, dated November 25, 1998, in NLRC Case No. V-00234-97. The NLRC had
reversed the judgment of the Labor Arbiter, dated April 24, 1997, in NLRC-RAB-VII Case No. 07-
0828-96, which held valid herein petitioners dismissal from employment. Petitioners also challenge
the appellate courts Resolution,2 dated August 9, 2000, which denied their motion for
reconsideration.

The petitioners in the instant case were employees of private respondent Metro Cebu
Community Hospital, Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro
Cebu Community Hospital (NAMA-MCCH), a labor union of MCCH employees. Petitioner
Elizabeth C. Bascon had been employed as a nurse by respondent MCCH since May 1984. At the time
of her termination from employment in April 1996, she already held the position of Head Nurse. The
other petitioner, Noemi V. Cole, had been working as a nursing aide with MCCH since August 1974.
Both petitioners were dismissed by the respondent hospital for allegedly participating in an illegal
strike.

The instant controversy arose from an intra-union conflict between the NAMA-MCCH and the
National Labor Federation (NFL), the mother federation of NAMA-MCCH. In November 1995,
NAMA-MCCH asked MCCH to renew their Collective Bargaining Agreement (CBA), which was
set to expire on December 31, 1995. NFL, however, opposed this move by its local affiliate.
Mindful of the apparent intra-union dispute, MCCH decided to defer the CBA negotiations until
there was a determination as to which of said unions had the right to negotiate a new CBA.

Believing that their union was the certified collective bargaining agent, the members and officers
of NAMA-MCCH staged a series of mass actions inside MCCHs premises starting February 27,
1996. They marched around the hospital putting up streamers, placards and posters.

On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) office in Region
7 issued two (2) certifications stating that NAMA-MCCH was not a registered labor
organization. This finding, however, did not deter NAMA-MCCH from filing a notice of strike
with the Region 7 Office of the National Conciliation and Mediation Board (NCMB). Said notice was,
however, disregarded by the NCMB for want of legal personality of the union.

Meanwhile, the MCCH management received reports that petitioners participated in NAMA-MCCHs
mass actions. Consequently, notices were served on all union members, petitioners included, asking
them to explain in writing why they were wearing red and black ribbons and roaming around the
hospital with placards. In their collective response dated March 18, 1996, the union members,
including Petitioners, explained that wearing armbands and putting up placards was their answer to
MCCHs illegal refusal to negotiate with NAMA-MCCH.

Subsequently, on March 28, 1996, MCCH notified the petitioners that they were to be investigated for
their activities in the mass actions, with the hearings being scheduled on March 28, 1996 and April 1,
1996. Petitioners, however, denied receiving said notices. In a notice dated April 8, 1996, MCCH
Labor II – 1
ordered petitioners to desist from participating in the mass actions conducted in the hospital
premises with a warning that non-compliance therewith would result in the imposition of disciplinary
measures. Petitioners again claimed they did not receive said order. Petitioners Bascon and Cole
were then served notices terminating their employment effective April 12, 1996 and April 19,
1996, respectively.

The dismissal of petitioners did not deter NAMA-MCCH from staging more mass actions.
The means of ingress to and egress from the hospital were blocked. Employees and patients,
including emergency cases, were harassed, according to MCCH management, which also complained
that mass actions held inside the hospital had created an atmosphere of animosity and violence,
aggravating the condition of ailing patients. Furthermore, the hospital also suffered heavy losses
brought about by a notable decline in the patient admission rates and the refusal of suppliers to
extend credit. To address its labor problems, MCCH sought an injunction from the NLRC on July 9,
1996 in Injunction Case No. V-0006-96.

Meanwhile, on July 1, 1996, Bascon and Cole filed a complaint for illegal dismissal, docketed as
NLRC-RAB-VII Case No. 07-0828-96. They denied having participated in said mass actions or having
received the notices (1) enjoining them from wearing armbands and putting up placards, with
warning that disciplinary measure would be imposed, and (2) informing them of the schedule of
hearing. They admit, however, to wearing armbands for union identity while nursing patients
as per instruction of their union leaders.

On July 16, 1996, a Temporary Restraining Order (TRO) was duly issued in Injunction Case No. V-
0006-96.

On August 27, 1996, the local government of Cebu City ordered the demolition of the picket staged
by the members of NAMA-MCCH for being both a public nuisance and a nuisance per se.

On September 18, 1996, the injunction was made permanent by an NLRC Resolution in Injunction
Case No. V-0006-96, the fallo of which reads: ςηαñrοblεš νιr†υαl  lαω lιbrαrÿ

WHEREFORE, premises considered, the petition for injunction is hereby GRANTED enjoining
respondents in the course of their strike/picket from committing the illegal acts mentioned in Article
264 (e) of the Labor Code more particularly the blocking of the free ingress to and egress from
petitioner hospital and from committing threats, coercion and intimidation of the
non-striking/picketing employees/workers reporting for work, vehicles/patients desiring to enter for
the purpose of seeking admission/confinement in petitioner hospital and for such other lawful
purpose.

SO ORDERED.3  ςrνll

In a Decision4 dated April 24, 1997, the Labor Arbiter found the termination complained of in
NLRC-RAB-VII Case No. 07-0828-96 to be valid and legal, and dismissed the complaint.
The Labor Arbiter held that petitioners were justly dismissed because they actually
participated in the illegal mass action. It also concluded that petitioners received the notices of
hearing, but deliberately refused to attend the scheduled investigation.

Petitioners then appealed the Labor Arbiters ruling to the NLRC, 4th Division, which docketed the
appeal as NLRC Case No. V-00234-97.

In its Decision5 dated November 25, 1998, the NLRC, 4th Division reversed the ruling of the
Labor Arbiter and ordered the reinstatement of petitioners with full backwages. First, it found
that petitioners merely wore armbands for union identity, per instruction of their union
officials. Said wearing of armbands while nursing patients, is a constitutional right, which cannot be
Labor II – 1
curtailed if peacefully carried out. Second, it ruled that the placards complained of by MCCH did not
contain scurrilous, indecent or libelous remarks. Finally, it concluded that, in a belated but crude
attempt to camouflage the illegal dismissal of Petitioners, MCCH merely fabricated the notices
allegedly sent to petitioners.

Anent the charge of gross insubordination, the NLRC ruled that petitioners were not guilty thereof,
because the elements thereof had not been sufficiently proven, to wit: (1) reasonableness and
lawfulness of the order or directive, (2) sufficiency of knowledge on the part of the employee of such
order, and (3) the connection of the order with the duties which the employee had been engaged to
discharge.

Unconvinced of the correctness of the NLRC decision, MCCH filed a motion for reconsideration
presenting the following documentary evidence: ςηαñrοblεš νιr†υαl  lαω lιbrαrÿ

1) Affidavits of Paz Velasco, Luciano Quitoy, Joseph Dagatan, and Gina Jumao-as to show that
petitioners were duly served the notices in question; chanroblesvirtuallawlibrary

2) Letter reply of NAMA-MCCH dated March 18, 1996 wherein Petitioners, together with the rest of
the union members, collectively acknowledged receipt of the March 15, 1996 directive; chanroblesvirtuallawlibrary

3) Position Paper of terminated co-employees where the receipt of the subject notices were admitted
as well as the commission of the aforementioned protest mass actions; and cralawlibrary

4) Appeal of private respondents, who did not join the protest mass action, to the Board of Trustees
of MCCH to show that reinstatement is no longer feasible in view of strained relationship.

On February 4, 1999, the NLRC denied the plea for reconsideration of MCCH.

Undeterred, MCCH filed a special civil action for certiorari  under Rule 65 of the 1997 Rules of Civil
Procedurebefore the Court of Appeals, docketed as CA-G.R. SP No. 51690.

In its Decision6 dated March 13, 2000, the Court of Appeals decided CA-G.R. SP No. 51690 as
follows:ςηαñrοblεš  νιr†υαl  lαω lιbrαrÿ

WHEREFORE, the petition is granted. The Decision of public respondent NLRC 4th Division dated
November 25, 1998 in NLRC Case No. V-00234-97 is hereby REVERSED and the complaint of private
respondents is dismissed for lack of merit. Petitioner Metro Cebu Community Hospital (MCCH) is
however ordered to pay the private respondents separation pay equivalent to one-half month for
every year of service in the interest of equity.

No costs.

SO ORDERED.7  ςrνll

The appellate court held that Bascon and Cole were validly terminated for their gross
insubordination or willful disobedience as: ςηαñrοblεš νιr†υαl  lαω lιbrαrÿ

1) The order for petitioners to refrain from wearing armbands and putting up placards was legal, fair
and reasonable.

2) The order was connected with the duties, which the petitioners had been engaged to discharge.

Labor II – 1
3) Said order was sufficiently made known to petitioners as receipt of the same by the latter was
convincingly substantiated by hard evidence.

The appellate court stressed that petitioners gross insubordination constituted unlawful acts
undertaken in conjunction with an illegal mass concerted action akin to an illegal strike. Finally, the
Court of Appeals ruled that petitioners union activities violated the rights of patients and third parties
such that they were outside the ambit of legality and beyond the mantle of protection of the freedom
of speech.

Hence, the instant case, with the petitioners submitting for resolution the following issues:

CAN THE HONORABLE COURT OF APPEALS SUPPLANT ITS FINDINGS OF FACTS WITH THAT OF THE
COMMISSION?

II

CAN THE HONORABLE COURT OF APPEALS REVERSE THE DECISION OF THE COMMISSION
ALTHOUGH THERE IS NO FINDING OF GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION?

III

CAN AN EMPLOYEE BE TERMINATED FOR INSUBORDINATION FOR IPSO FACTO NOT SHOWING UP

FOR THE INVESTIGATION?8  ςrνll

Anent the first and second issues, as a general rule, the findings of facts of the NLRC are deemed
binding and conclusive upon the Court. We have repeatedly said that the Court is not a trier of facts.
Thus, resort to judicial review of the decisions of the NLRC in a special civil action for certiorari under
Rule 65 of the Rules of Court is generally limited to the question of grave abuse of discretion
amounting to lack or excess of jurisdiction.9 However, where, as in the instant case, the findings of
facts of the NLRC contradict those of the Labor Arbiter, a departure from the general rule is
warranted. Thus, the Court may look into the records of the case and reexamine the questioned
findings.10 Where the NLRC and the Labor Arbiter disagree on their finding of facts, the Court can
review the records to determine which findings should be preferred as more conformable to the
evidentiary facts.11 
ςrνll

In St. Martin Funeral Home v. NLRC,12 we held that the special civil action of certiorari is the mode of
judicial review of the decisions of the NLRC either by this Court or the Court of Appeals, but the latter
court is the more appropriate forum in strict observance of the doctrine on the hierarchy of courts
and that, in the exercise of this power, the Court of Appeals can review the factual findings or the
legal conclusions of the NLRC.13  ςrνll

With regard to the third issue, note that petitioners were terminated for allegedly participating in an
illegal strike and gross insubordination to the order prohibiting them from wearing armbands and
putting up placards, not for ipso facto failing to show up in the scheduled investigation. Thus, the
real issue is whether or not petitioners were validly terminated for (1) allegedly
participating in an illegal strike and/or (2) gross insubordination to the order to stop
wearing armbands and putting up placards.

As to the first ground, Article 264 (a) of the Labor Code provides in part that: ςηαñrοblεš νιr†υαl  lαω lιbrαrÿ

Labor II – 1
Any union officer who knowingly participates in illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status (Emphasis ours)

Thus, while a union officer can be terminated for mere participation in an illegal strike, an
ordinary striking employee, like petitioners herein, must have participated in the
commission of illegal acts during the strike (underscoring supplied). There must be proof that
they committed illegal acts during the strike.14 But proof beyond reasonable doubt is not required.
Substantial evidence, which may justify the imposition of the penalty of dismissal, may suffice.

In this case, the Court of Appeals found that petitioners actual participation in the illegal
strike was limited to wearing armbands and putting up placards. There was no finding that
the armbands or the placards contained offensive words or symbols. Thus, neither such
wearing of armbands nor said putting up of placards can be construed as an illegal act. In
fact, per se, they are within the mantle of constitutional protection under freedom of
speech.

Evidence on record shows that various illegal acts were committed by unidentified union members in
the course of the protracted mass action. And we commiserate with MCCH, patients, and third parties
for the damage they suffered. But we cannot hold petitioners responsible for acts they did not
commit. The law, obviously solicitous of the welfare of the common worker, requires, before
termination may be considered, that an ordinary union member must have knowingly participated in
the commission of illegal acts during a strike.

As regards the appellate courts finding that petitioners were justly terminated for gross
insubordination or willful disobedience, Article 282 of the Labor Code provides in part: ςηαñrοblεš νιr†υαl  lαω lιbrαrÿ

An employer may terminate an employment for any of the following causes: ςηαñrοblεš  νιr†υαl  lαω lιbrαrÿ

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work.

However, willful disobedience of the employers lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct
must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the
duties which he had been engaged to discharge.15  ςrνll

In this case, we find lacking the element of willfulness characterized by a perverse mental attitude on
the part of petitioners in disobeying their employers order as to warrant the ultimate penalty of
dismissal. Wearing armbands and putting up placards to express ones views without violating the
rights of third parties, are legal per se and even constitutionally protected. Thus, MCCH could have
done well to respect petitioners right to freedom of speech instead of threatening them with
disciplinary action and eventually terminating them.

Neither are we convinced that petitioners exercise of the right to freedom of speech should be taken
in conjunction with the illegal acts committed by other union members in the course of the series of
mass actions. It bears stressing that said illegal acts were committed by other union
members after petitioners were already terminated, not during the time that the latter wore
armbands and put up placards.

Finally, even if willful disobedience may be properly appreciated, still, the penalty of dismissal is too
harsh. Not every case of willful disobedience by an employee of a lawful work-connected order of the
employer may be penalized with dismissal. There must be reasonable proportionality between, on the
Labor II – 1
one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed
therefor.16 In this case, evidence is wanting on the depravity of conduct and willfulness of the
disobedience on the part of Petitioners, as contemplated by law. Wearing armbands to signify union
membership and putting up placards to express their views cannot be of such great dimension as to
warrant the extreme penalty of dismissal, especially considering the long years of service rendered
by petitioners and the fact that they have not heretofore been subject of any disciplinary action in
the course of their employment with MCCH.

The termination of petitioners employment not being for any of the just or authorized
causes, it constitutes illegal dismissal. Article 279 of the Labor Code, as amended, provides
that:ςηαñrοblεš νιr†υαl  lαω lιbrαrÿ

An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.

Hence, illegally dismissed employees are entitled to both reinstatement and full backwages as a
matter of course. MCCH alleges that due to strained relations, reinstatement is no longer possible.
We disagree. In Quijano v. Mercury Drug Corporation,17 we stated that the doctrine of strained
relations is inapplicable to a situation where the employee has no say in the operation of the
employers business. Petitioners herein are nurse and nursing aide, respectively in MCCH and thus,
have no prerogative in the operation of the business. As also held in the Mercury Drug case: ςηαñrοblεš  νιr†υαl  lαω lιbrαrÿ

To protect labors security of tenure, we emphasize that the doctrine of strained relations should be
strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement.
Every labor dispute almost always results in strained relations, and the phrase cannot be given an
overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.18  ςrνll

We cannot in our conscience allow MCCH to unjustly deny petitioners their lawful occupation,
especially at this late point in their lives when it would be a near impossibility for them to find
another employment. The employers power to dismiss must be tempered with the employees right to
security of tenure. Time and again we have said that the preservation of the lifeblood of the toiling
laborer comes before concern for business profits. Employers must be reminded to exercise the
power to dismiss with great caution, for the State will not hesitate to come to the succor of workers
wrongly dismissed by capricious employers.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No.
51690 dated March 13, 2000 is REVERSED. Private respondent Metro Cebu Community Hospital is
hereby ordered to reinstate petitioners Noemi V. Cole and Elizabeth C. Bascon without loss of
seniority rights and other privileges and to pay them full backwages, inclusive of allowances, and
other benefits computed from the time they were dismissed up to the time of their actual
reinstatement.

Labor II – 1
 5.) [G.R. NOS. 158786 & 158789 : October 19, 2007]

TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION (TMPCWA), ED CUBELO,

EDWIN ALARANA, ALEX ALEJO, ERWIN ALFONSO, MELVIN APOSTOL, DANIEL
AROLLADO, DOMINADOR ARRIOLA, LESTER ATUN, ROLANDO BALUYOT, RODERICK
BAYANI, ABEL BERCES, BENNY BERING, MELCHOR BLANCO, JERRY BOLOCON, ELMER
BULAN, NELSON CABAHUG, JESSIE CABATAY, MARCELO CABEZAS, ROQUE
CANDELARIO, JR., LORENZO CARAQUEO, DENNIS CARINGAL, GIENELL CASABA,
CHRISTOPHER CATAPUSAN, RICO CATRAL, JULIUS COMETA, JAY ANTONIO CORAL,
REYNALDO CUEVAS, BENIGNO DAVID, JR., JOEY DE GUZMAN, LEONARDO DE LEON,
ROGELIO DELOS SANTOS, JOSELITO DE OCAMPO, FRANK MANUEL DIA, ANTONIO
DIMAYUGA, ARMANDO ERCILLO, DELMAR ESPADILLA, DENNIS ESPELOA, JASON
FAJILAGUTAN, JOHN FAJURA, MELENCIO FRANCO, DEXTER FULGAR, EDUARDO GADO,
ERWIN GALANG, ROBIN GARCES, ARIEL GARCIA, RONALD GASPI, ANGELO GAVARRA,
REYNALDO GOJAR, EDGAR HILANGA, EUGENE JAY HONDRADA, ALEJANDRO IMPERIAL,
FERDINAND JAEN, JOEY JAVILLONAR, BASILIO LAQUI, ALBERTO LOMBOY, JUDE
JONOBELL LOZADA, JOHNNY LUCIDO, ROMMEL MACALINDONG, NIXON MADRAZO,
ROGELIO MAGISTRADO, JR., PHILIP JOHN MAGNAYE, ALLAN JOHN MALABANAN,
ROLANDO MALALUAN, JR., PAULINO MALEON, MANUEL MANALO, JR., JONAMAR
MANAOG, JOVITO MANECLANG, BAYANI MANGUIL, JR., CARLITO MARASIGAN,
ROMMEL MARIANO, BOBIT MENDOZA, ERICSON MONTERO, MARLAW MONTERO,
EDWIN NICANOR, RODERICK NIERVES, LOLITO NUNEZ, FELIMON ORTIZ, EDWIN
PECAYO, ERWIN PENA, JOWALD PENAMANTE, JORGE POLUTAN, EDDIE RAMOS,
ROLANDO REYES, PHILIP ROXAS, DAVID SALLAN, JR., BERNARDO SALVADOR,
BALDWIN SAN PABLO, JEFFREY SANGALANG, BERNABE SAQUILABON, ALEX SIERRA,
ROMUALDO SIMBORIO, EDWIN TABLIZO, PETRONIO TACLAN, JR., RODEL TOLENTINO,
ROMMEL TOLENTINO, GRANT ROBERT TORAL, FEDERICO TORRES, JR., EMANNUEL
TULIO, NESTOR UMITEN, JR., APOLLO VIOLETA, SR., DOMINADOR ZAMORA, JR.,
ROMMEL ARCETA, ANTONIO BORSIGUE, EMILIO COMPLETO, RANDY CONSIGNADO,
BASILIO DELA CRUZ, ALEXANDER ESTEVA, NIKKO FRANCO, RODEL GAMIT, ROBERTO
GONZALES, PHILIP JALEA, JOEY LLANERA, GERONIMO LOPEZ, RUEL MANEGO, EDWIN
MANZANILLA, KENNETH NATIVIDAD, LARRY ORMILLA, CORNELIO PLATON, PAUL
ARTHUR SALES, ALEJANDRO SAMPANG, LAURO SULIT, ROLANDO TOMAS, JOSE
ROMMEL TRAZONA, MICHAEL TEDDY YANGYON, MAXIMINO CRUZ, VIRGILIO
COLANDOG, ROMMEL DIGMA, JOSELITO HUGO, and RICKY
CHAVEZ, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, (NLRC-
2ND DIVISION), HON. COMMISSIONERS: VICTORINO CALAYCAY, ANGELITA GACUTAN,
and RAUL AQUINO, TOYOTA MOTOR PHILIPPINES CORPORATION, TAKESHI FUKUDA,
and DAVID GO, Respondents,

[G.R. NOS. 158798-99]

TOYOTA MOTOR PHILIPPINES CORPORATION, Petitioner, v. TOYOTA MOTOR

PHILIPPINES CORP. WORKERS ASSOCIATION (TMPCWA), Respondent.

DECISION

VELASCO, JR., J.:

The Case

Labor II – 1
In the instant petition under Rule 45 subject of G.R. NOS. 158786 and 158789, Toyota Motor
Philippines Corporation Workers Association (Union) and its dismissed officers and members
seek to set aside the February 27, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP
Nos. 67100 and 67561, which affirmed the August 9, 2001 Decision2 and September 14, 2001
Resolution3 of the National Labor Relations Commission (NLRC), declaring illegal the strikes
staged by the Union and upholding the dismissal of the 227 Union officers and members.

On the other hand, in the related cases docketed as G.R. NOS. 158798-99, Toyota Motor
Philippines Corporation (Toyota) prays for the recall of the award of severance compensation to
the 227 dismissed employees, which was granted under the June 20, 2003 CA Resolution4 in CA-
G.R. SP Nos. 67100 and 67561.

In view of the fact that the parties are petitioner/s and respondent/s and vice-versa in the four
(4) interrelated cases, they will be referred to as simply the Union and Toyota hereafter.

The Facts

The Union is a legitimate labor organization duly registered with the Department of Labor and
Employment (DOLE) and is the sole and exclusive bargaining agent of all Toyota rank and file
employees.5

Toyota, on the other hand, is a domestic corporation engaged in the assembly and sale of
vehicles and parts.6 It is a Board of Investments (BOI) participant in the Car Development
Program and the Commercial Vehicle Development Program. It is likewise a BOI-preferred non-
pioneer export trader of automotive parts and is under the "Special Economic Zone Act of 1995."
It is one of the largest motor vehicle manufacturers in the country employing around 1,400
workers for its plants in Bicutan and Sta. Rosa, Laguna. It is claimed that its assets amount to
PhP 5.525 billion, with net sales of PhP 14.646 billion and provisions for income tax of PhP 120.9
million.

On February 14, 1999, the Union filed a petition for certification election among the Toyota rank
and file employees with the National Conciliation and Mediation Board (NCMB), which was
docketed as Case No. NCR-OD-M-9902-001. Med-Arbiter Ma. Zosima C. Lameyra denied the
petition, but, on appeal, the DOLE Secretary granted the Union's prayer, and, through the June
25, 1999 Order, directed the immediate holding of the certification election.7

After Toyota's plea for reconsideration was denied, the certification election was conducted. Med-
Arbiter Lameyra's May 12, 2000 Order certified the Union as the sole and exclusive bargaining
agent of all the Toyota rank and file employees. Toyota challenged said Order via an appeal to
the DOLE Secretary.8

In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) proposals to
Toyota, but the latter refused to negotiate in view of its pending appeal. Consequently, the
Union filed a notice of strike on January 16, 2001 with the NCMB, docketed as NCMB-NCR-NS-
01-011-01, based on Toyota's refusal to bargain. On February 5, 2001, the NCMB-NCR
converted the notice of strike into a preventive mediation case on the ground that the issue of
whether or not the Union is the exclusive bargaining agent of all Toyota rank and file employees
was still unresolved by the DOLE Secretary.

In connection with Toyota's appeal, Toyota and the Union were required to attend a hearing on
February 21, 2001 before the Bureau of Labor Relations (BLR) in relation to the exclusion of the
votes of alleged supervisory employees from the votes cast during the certification election. The
Labor II – 1
February 21, 2001 hearing was cancelled and reset to February 22, 2001. On February 21,
2001, 135 Union officers and members failed to render the required overtime work, and instead
marched to and staged a picket in front of the BLR office in Intramuros, Manila.9 The Union, in a
letter of the same date, also requested that its members be allowed to be absent on February
22, 2001 to attend the hearing and instead work on their next scheduled rest day. This request
however was denied by Toyota.

Despite denial of the Union's request, more than 200 employees staged mass actions on
February 22 and 23, 2001 in front of the BLR and the DOLE offices, to protest the partisan and
anti-union stance of Toyota. Due to the deliberate absence of a considerable number of
employees on February 22 to 23, 2001, Toyota experienced acute lack of manpower in its
manufacturing and production lines, and was unable to meet its production goals resulting in
huge losses of PhP 53,849,991.

Soon thereafter, on February 27, 2001, Toyota sent individual letters to some 360 employees
requiring them to explain within 24 hours why they should not be dismissed for their obstinate
defiance of the company's directive to render overtime work on February 21, 2001, for their
failure to report for work on February 22 and 23, 2001, and for their participation in the
concerted actions which severely disrupted and paralyzed the plant's operations.10 These letters
specifically cited Section D, paragraph 6 of the Company's Code of Conduct, to wit:

Inciting or participating in riots, disorders, alleged strikes, or concerted actions detrimental to

[Toyota's] interest.

1st offense - dismissal.11

Meanwhile, a February 27, 2001 Manifesto was circulated by the Union which urged its members
to participate in a strike/picket and to abandon their posts, the pertinent portion of which reads,
as follows:

YANIG sa kanyang komportableng upuan ang management ng TOYOTA. And dating takot, kimi,
at mahiyaing manggagawa ay walang takot na nagmartsa at nagprotesta laban sa desperadong
pagtatangkang baguhin ang desisyon ng DOLE na pabor sa UNYON. Sa tatlong araw na protesta,
mahigit sa tatlong daang manggagawa ang lumahok.

xxx

HANDA na tayong lumabas anumang oras kung patuloy na ipagkakait ng management

ang CBA. Oo maari tayong masaktan sa welga. Oo, maari tayong magutom sa
piketlayn. Subalit may pagkakaiba ba ito sa unti-unting pagpatay sa atin sa loob ng 12 taong
makabaling likod ng pagtatrabaho? Ilang taon na lang ay magkakabutas na ang ating mga baga
sa mga alipato at usok ng welding. Ilang taon na lang ay marupok na ang ating mga buto sa
kabubuhat. Kung dumating na ang panahong ito at wala pa tayong CBA, paano na? Hahayaan ba
nating ang kumpanya lang ang makinabang sa yamang likha ng higit sa isang dekadang
pagpapagal natin?

HUWAG BIBITIW SA NASIMULANG TAGUMPAY!

PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG MAKATARUNGANG CBA!

HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA MANGGAGAWA SA TOYOTA!12 (Emphasis

supplied.)
Labor II – 1
On the next day, the Union filed with the NCMB another notice of strike docketed as NCMB-NCR-
NS-02-061-01 for union busting amounting to unfair labor practice.

On March 1, 2001, the Union nonetheless submitted an explanation in compliance with the
February 27, 2001 notices sent by Toyota to the erring employees. The Union members
explained that their refusal to work on their scheduled work time for two consecutive days was
simply an exercise of their constitutional right to peaceably assemble and to petition the
government for redress of grievances. It further argued that the demonstrations staged by the
employees on February 22 and 23, 2001 could not be classified as an illegal strike or picket, and
that Toyota had already condoned the alleged acts when it accepted back the subject
employees.13

Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda to the concerned
employees to clarify whether or not they are adopting the March 1, 2001 Union's explanation as
their own. The employees were also required to attend an investigative interview,14 but they
refused to do so.

On March 16, 2001, Toyota terminated the employment of 227 employees15 for participation in
concerted actions in violation of its Code of Conduct and for misconduct under Article 282 of the
Labor Code. The notice of termination reads:

After a careful evaluation of the evidence on hand, and a thorough assessment of your
explanation, TMP has concluded that there are overwhelming reasons to terminate your services
based on Article 282 of the Labor Code and TMP's Code of Conduct.

Your repeated absences without permission on February 22 to 23, 2001 to participate in a

concerted action against TMP constitute abandonment of work and/or very serious misconduct
under Article 282 of the Labor Code.

The degree of your offense is aggravated by the following circumstances:

1. You expressed to management that you will adopt the union's letter dated March 1, 2001, as
your own explanation to the charges contained in the Due Process Form dated February 27,
2001. It is evident from such explanation that you did not come to work because you
deliberately participated together with other Team Members in a plan to engage in concerted
actions detrimental to TMP's interest. As a result of your participation in the widespread
abandonment of work by Team Members from February 22 to 23, 2001, TMP suffered substantial
damage.

It is significant that the absences you incurred in order to attend the clarificatory hearing
conducted by the Bureau of Labor Relations were unnecessary because the union was amply
represented in the said hearings by its counsel and certain members who sought and were
granted leave for the purpose. Your reason for being absent is, therefore, not acceptable; and cralawlibrary

2. Your participation in the organized work boycott by Team Members on February 22 and 23 led
to work disruptions that prevented the Company from meeting its production targets, resulting
[in] foregone sales of more than eighty (80) vehicles, mostly new-model Revos, valued at more
than Fifty Million Pesos (50,000,000.00).

The foregoing is also a violation of TMP's Code of Conduct (Section D, Paragraph 6) to wit:

Labor II – 1
"Inciting or participating in riots, disorders, illegal strikes or concerted actions detrimental to
TMP's interest."

Based on the above, TMP Management is left with no other recourse but to terminate your
employment effective upon your receipt thereof.

[Sgd.]
JOSE MARIA ALIGADA

Deputy Division Manager16

In reaction to the dismissal of its union members and officers, the Union went on strike on March
17, 2001. Subsequently, from March 28, 2001 to April 12, 2001, the Union intensified its strike
by barricading the gates of Toyota's Bicutan and Sta. Rosa plants. The strikers prevented
workers who reported for work from entering the plants. In his Affidavit, Mr. Eduardo Nicolas III,
Security Department Head, stated that:

3. On March 17, 2001, members of the Toyota Motor Philippines Corporation Workers
Association (TMPCWA), in response to the dismissal of some two hundred twenty seven (227)
leaders and members of TMPCWA and without observing the requirements mandated by the
Labor Code, refused to report for work and picketed TMPC premises from 8:00 a.m. to 5:00 p.m.
The strikers badmouthed people coming in and hurled invectives such as "bakeru" at Japanese
officers of the company. The strikers likewise pounded the officers' vehicle as they tried to enter
the premises of the company.

4. On March 28, 2001, the strikers intensified their picketing and barricaded the gates of TMPC's
Bicutan and Sta. Rosa plants, thus, blocking the free ingress/egress to and from the premises.
Shuttle buses and cars containing TMPC employees, suppliers, dealers, customers and other
people having business with the company, were prevented by the strikers from entering the
plants.

5. As a standard operating procedure, I instructed my men to take photographs and video

footages of those who participated in the strike. Seen on video footages taken on various dates
actively participating in the strike were union officers Emilio C. Completo, Alexander Esteva, Joey
Javellonar and Lorenzo Caraqueo.

6. Based on the pictures, among those identified to have participated in the March 28, 2001
strike were Grant Robert Toral, John Posadas, Alex Sierra, Allan John Malabanan, Abel Bersos,
Ernesto Bonavente, Ariel Garcia, Pablito Adaya, Feliciano Mercado, Charlie Oliveria, Philip Roxas,
June Lamberte, Manjolito Puno, Baldwin San Pablo, Joseph Naguit, Federico Torres, Larry Gerola,
Roderick Bayani, Allan Oclarino, Reynaldo Cuevas, Jorge Polutan, Arman Ercillo, Jimmy Hembra,
Albert Mariquit, Ramil Gecale, Jimmy Palisoc, Normandy Castalone, Joey Llanera, Greg Castro,
Felicisimo Escrimadora, Rodolfo Bay, Ramon Clemente, Dante Baclino, Allan Palomares, Arturo
Murillo and Robert Gonzales. Attached hereto as Annexes "1" to "18" are the pictures taken on
March 28, 2001 at the Bicutan and Sta. Rosa plants.

7. From March 29 to 31, 2001, the strikers continued to barricade the entrances to TMPC's two
(2) plants. Once again, the strikers hurled nasty remarks and prevented employees aboard
shuttle buses from entering the plants. Among the strikers were Christopher Saldivar, Basilio
Laqui, Sabas Bernabise, Federico Torres, Freddie Olit, Josel Agosto, Arthur Parilla, Richard
Calalang, Ariel Garcia, Edgar Hilaga, Charlie Oliveria, Ferdinand Jaen, Wilfredo Tagle, Alejandro
Imperial, Manjolito Puno, Delmar Espadilla, Domingo Javier, Apollo Violeta and Elvis Tabinao.17
Labor II – 1
On March 29, 2001, Toyota filed a petition for injunction with a prayer for the issuance of a
temporary restraining order (TRO) with the NLRC, which was docketed as NLRC NCR Case No.
INJ-0001054-01. It sought free ingress to and egress from its Bicutan and Sta. Rosa
manufacturing plants. Acting on said petition, the NLRC, on April 5, 2001, issued a TRO against
the Union, ordering its leaders and members as well as its sympathizers to remove their
barricades and all forms of obstruction to ensure free ingress to and egress from the company's
premises. In addition, the NLRC rejected the Union's motion to dismiss based on lack of
jurisdiction.18

Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC arbitration branch,
which was docketed as NLRC NCR (South) Case No. 30-04-01775-01, and prayed that the erring
Union officers, directors, and members be dismissed.19

On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an
Order20 certifying the labor dispute to the NLRC. In said Order, the DOLE Secretary directed all
striking workers to return to work at their regular shifts by April 16, 2001. On the other hand, it
ordered Toyota to accept the returning employees under the same terms and conditions
obtaining prior to the strike or at its option, put them under payroll reinstatement. The parties
were also enjoined from committing acts that may worsen the situation. ςηαñrοblεš  νιr†υαl  lαω lιbrαrÿ

The Union ended the strike on April 12, 2001. The union members and officers tried to return to
work on April 16, 2001 but were told that Toyota opted for payroll-reinstatement authorized by
the Order of the DOLE Secretary.

In the meantime, the Union filed a motion for reconsideration of the DOLE Secretary's April 10,
2001 certification Order, which, however, was denied by the DOLE Secretary in her May 25,
2001 Resolution. Consequently, a petition for certiorari was filed before the CA, which was
docketed as CA-G.R. SP No. 64998.

In the intervening time, the NLRC, in compliance with the April 10, 2001 Order of the DOLE
Secretary, docketed the case as Certified Case No. 000203-01.

Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of the DOLE Secretary's
certification Order, several payroll-reinstated members of the Union staged a protest rally in
front of Toyota's Bicutan Plant bearing placards and streamers in defiance of the April 10, 2001
Order.

Then, on May 28, 2001, around forty-four (44) Union members staged another protest action in
front of the Bicutan Plant. At the same time, some twenty-nine (29) payroll-reinstated
employees picketed in front of the Santa Rosa Plant's main entrance, and were later joined by
other Union members.

On June 5, 2001, notwithstanding the certification Order, the Union filed another notice of strike,
which was docketed as NCMB-NCR-NS-06-150-01. On June 18, 2001, the DOLE Secretary
directed the second notice of strike to be subsumed in the April 10, 2001 certification Order.

In the meantime, the NLRC, in Certified Case No. 000203-01, ordered both parties to submit
their respective position papers on June 8, 2001. The union, however, requested for abeyance of
the proceedings considering that there is a pending petition for certiorari with the CA assailing
the validity of the DOLE Secretary's Assumption of Jurisdiction Order.

Labor II – 1
Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its previous order for both
parties to submit their respective position papers on or before June 2, 2001. The same Order
also denied the Union's verbal motion to defer hearing on the certified cases.

On June 27, 2001, the Union filed a Motion for Reconsideration of the NLRC's June 19, 2001
Order, praying for the deferment of the submission of position papers until its petition
for certiorari is resolved by the CA.

On June 29, 2001, only Toyota submitted its position paper. On July 11, 2001, the NLRC again
ordered the Union to submit its position paper by July 19, 2001, with a warning that upon failure
for it to do so, the case shall be considered submitted for decision.

Meanwhile, on July 17, 2001, the CA dismissed the Union's petition for certiorari in CA-G.R. SP
No. 64998, assailing the DOLE Secretary's April 10, 2001 Order.

Notwithstanding repeated orders to file its position paper, the Union still failed to submit its
position paper on July 19, 2001. Consequently, the NLRC issued an Order directing the Union to
submit its position paper on the scheduled August 3, 2001 hearing; otherwise, the case shall be
deemed submitted for resolution based on the evidence on record.

During the August 3, 2001 hearing, the Union, despite several accommodations, still failed to
submit its position paper. Later that day, the Union claimed it filed its position paper by
registered mail.

Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes staged by the Union
on February 21 to 23, 2001 and May 23 and 28, 2001 as illegal. The decretal portion reads:

WHEREFORE, premises considered, it is hereby ordered:

(1) Declaring the strikes staged by the Union to be illegal.

(2) Declared [sic] that the dismissal of the 227 who participated in the illegal strike on February
21-23, 2001 is legal.

(3) However, the Company is ordered to pay the 227 Union members, who participated in the
illegal strike severance compensation in an amount equivalent to one month salary for every
year of service, as an alternative relief to continued employment.

(4) Declared [sic] that the following Union officers and directors to have forfeited their
employment status for having led the illegal strikes on February 21-23, 2001 and May 23 and
28, 2001: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog,
Rommel Digma, Federico Torres, Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo
Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo Mata.21

SO ORDERED.22

The NLRC considered the mass actions staged on February 21 to 23, 2001 illegal as the Union
failed to comply with the procedural requirements of a valid strike under Art. 263 of the Labor
Code.

After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10, 2001, the
Union again staged strikes on May 23 and 28, 2001. The NLRC found the strikes illegal as they
Labor II – 1
violated Art. 264 of the Labor Code which proscribes any strike or lockout after jurisdiction is
assumed over the dispute by the President or the DOLE Secretary.

The NLRC held that both parties must have maintained the status quo after the DOLE Secretary
issued the assumption/certification Order, and ruled that the Union did not respect the DOLE
Secretary's directive.

Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC denied
in its September 14, 2001 Resolution.23 Consequently, both parties questioned the August 9,
2001 Decision24 and September 14, 2001 Resolution of the NLRC in separate petitions
for certiorari filed with the CA, which were docketed as CA-G.R. SP Nos. 67100 and 67561,
respectively. The CA then consolidated the petitions.

In its February 27, 2003 Decision,25 the CA ruled that the Union's petition is defective in form for
its failure to append a proper verification and certificate of non-forum shopping, given that, out
of the 227 petitioners, only 159 signed the verification and certificate of non-forum shopping.
Despite the flaw, the CA proceeded to resolve the petitions on the merits and affirmed the
assailed NLRC Decision and Resolution with a modification, however, of deleting the award of
severance compensation to the dismissed Union members.

In justifying the recall of the severance compensation, the CA

considered the participation in illegal strikes as serious misconduct. It defined serious

misconduct as a transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. It cited Panay Electric Company, Inc. v. NLRC,26 where we revoked the grant of
separation benefits to employees who lawfully participated in an illegal strike based on Art. 264
of the Labor Code, which states that "any union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his employment status."27

However, in its June 20, 2003 Resolution,28 the CA modified its February 27, 2003 Decision by
reinstating severance compensation to the dismissed employees based on social justice.

The Issues

Petitioner Union now comes to this Court and raises the following issues for our consideration:

I. Whether the mere participation of ordinary employees in an illegal strike is enough

reason to warrant their dismissal.

II. Whether the Union officers and members' act of holding the protest rallies in front
of the BLR office and the Office of the Secretary of Labor and Employment on February
22 and 23, 2001 should be held as illegal strikes. In relation hereto, whether the
protests committed on May 23 and 28, 2001, should be held as illegal strikes. Lastly,
whether the Union violated the Assumption of Jurisdiction Order issued by the Secretary of Labor
and Employment.

III. Whether the dismissal of 227 Union officers and members constitutes unfair labor practice.

Labor II – 1
IV. Whether the CA erred in affirming the Decision of the NLRC which excluded the Union's
Position Paper which the Union filed by mail. In the same vein, whether the Union's right to due
process was violated when the NLRC excluded their Position Paper.

V. Whether the CA erred in dismissing the Union's Petition for Certiorari.

Toyota, on the other hand, presents this sole issue for our determination:

I. Whether the Court of Appeals erred in issuing its Resolution dated June 20, 2003, partially
modifying its Decision dated February 27, 2003, and awarding severance compensation to the
dismissed Union members.

In sum, two main issues are brought to the fore:

(1) Whether the mass actions committed by the Union on different occasions are
illegal strikes; and

(2) Whether separation pay should be awarded to the Union members who
participated in the illegal strikes.

The Court's Ruling

The Union contends that the NLRC violated its right to due process when it disregarded its
position paper in deciding Toyota's petition to declare the strike illegal.

We rule otherwise.

It is entirely the Union's fault that its position paper was not considered by the NLRC. Records
readily reveal that the NLRC was even too generous in affording due process to the Union. It
issued no less than three (3) orders for the parties to submit its position papers, which the Union
ignored until the last minute. No sufficient justification was offered why the Union belatedly filed
its position paper. In Datu Eduardo Ampo v. The Hon. Court of Appeals, it was explained that a
party cannot complain of deprivation of due process if he was afforded an opportunity to
participate in the proceedings but failed to do so. If he does not avail himself of the chance to be
heard, then it is deemed waived or forfeited without violating the constitutional
guarantee.29 Thus, there was no violation of the Union's right to due process on the part of the
NLRC.

On a procedural aspect, the Union faults the CA for treating its petition as an unsigned pleading
and posits that the verification signed by 159 out of the 227 petitioners has already substantially
complied with and satisfied the requirements under Secs. 4 and 5 of Rule 7 of the Rules of
Court.

The Union's proposition is partly correct.

Sec. 4 of Rule 7 of the Rules of Court states:

Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need
not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on authentic records.
Labor II – 1
A pleading required to be verified which contains a verification based on "information and belief"
or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an
unsigned pleading.

The verification requirement is significant, as it is intended to secure an assurance that the

allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation.30 This requirement is simply a condition affecting the form of pleadings,
and noncompliance with the requirement does not necessarily render it fatally defective. Indeed,
verification is only a formal and not a jurisdictional requirement.31

In this case, the problem is not the absence but the adequacy of the Union's verification, since
only 159 out of the 227 petitioners executed the verification. Undeniably, the petition meets the
requirement on the verification with respect to the 159 petitioners who executed the verification,
attesting that they have sufficient knowledge of the truth and correctness of the allegations of
the petition. However, their signatures cannot be considered as verification of the petition by the
other 68 named petitioners unless the latter gave written authorization to the 159 petitioners to
sign the verification on their behalf. Thus, in Loquias v. Office of the Ombudsman, we ruled that
the petition satisfies the formal requirements only with regard to the petitioner who signed the
petition but not his co-petitioner who did not sign nor authorize the other petitioner to sign it on
his behalf.32 The proper ruling in this situation is to consider the petition as compliant with the
formal requirements with respect to the parties who signed it and, therefore, can be given due
course only with regard to them. The other petitioners who did not sign the verification and
certificate against forum shopping cannot be recognized as petitioners have no legal standing
before the Court. The petition should be dismissed outright with respect to the non-conforming
petitioners.

In the case at bench, however, the CA, in the exercise of sound discretion, did not strictly apply
the ruling in Loquias and instead proceeded to decide the case on the merits.

The alleged protest rallies in front of the offices of BLR and DOLE Secretary and at the
Toyota plants constituted illegal strikes

When is a strike illegal? cra lawlibrary

Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz:

(1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing
governmental functions; or

(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on
the requisites of a valid strike]; or

(3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an
unfair labor practice against non-union employees; or

(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread
terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or

(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or
order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or

Labor II – 1
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive
arbitration clause.33

Petitioner Union contends that the protests or rallies conducted on February 21 and
23, 2001 are not within the ambit of strikes as defined in the Labor Code, since they
were legitimate exercises of their right to peaceably assemble and petition the
government for redress of grievances. Mainly relying on the doctrine laid down in the case
of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc.,34 it
argues that the protest was not directed at Toyota but towards the Government (DOLE
and BLR). It explains that the protest is not a strike as contemplated in the Labor Code. The
Union points out that in Philippine Blooming Mills Employees Organization, the mass action
staged in Malacañang to petition the Chief Executive against the abusive behavior of some police
officers was a proper exercise of the employees' right to speak out and to peaceably gather and
ask government for redress of their grievances.

The Union's position fails to convince us.

While the facts in Philippine Blooming Mills Employees Organization are similar in some respects
to that of the present case, the Union fails to realize one major difference: there was no labor
dispute in Philippine Blooming Mills Employees Organization. In the present case, there was an
on-going labor dispute arising from Toyota's refusal to recognize and negotiate with the Union,
which was the subject of the notice of strike filed by the Union on January 16, 2001. Thus, the
Union's reliance on Phililippine Blooming Mills Employees Organization is misplaced, as it cannot
be considered a precedent to the case at bar.

A strike means any temporary stoppage of work by the concerted action of employees as a
result of an industrial or labor dispute. A labor dispute, in turn, 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 the
employer and the employee.35

In Bangalisan v. Court of Appeals, it was explained that "[t]he 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
controlling."36 The term "strike" has been elucidated to encompass 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.37

Applying pertinent legal provisions and jurisprudence, we rule that the protest actions
undertaken by the Union officials and members on February 21 to 23, 2001 are not valid and
proper exercises of their right to assemble and ask government for redress of their complaints,
but are illegal strikes in breach of the Labor Code. The Union's position is weakened by the lack
of permit from the City of Manila to hold "rallies." Shrouded as demonstrations, they were in
reality temporary stoppages of work perpetrated through the concerted action of the employees
who deliberately failed to report for work on the convenient excuse that they will hold a rally at
the BLR and DOLE offices in Intramuros, Manila, on February 21 to 23, 2001. The purported
reason for these protest actions was to safeguard their rights against any abuse which the med-
arbiter may commit against their cause. However, the Union failed to advance convincing proof
that the med-arbiter was biased against them. The acts of the med-arbiter in the performance of
his duties are presumed regular. Sans ample evidence to the contrary, the Union was unable to
justify the February 2001 mass actions. What comes to the fore is that the decision not to work

Labor II – 1
for two days was designed and calculated to cripple the manufacturing arm of Toyota. It
becomes obvious that the real and ultimate goal of the Union is to coerce Toyota to finally
acknowledge the Union as the sole bargaining agent of the company. This is not a legal and valid
exercise of the right of assembly and to demand redress of grievance.

We sustain the CA's affirmance of the NLRC's finding that the protest rallies staged on February
21 to 23, 2001 were actually illegal strikes. The illegality of the Union's mass actions was
succinctly elaborated by the labor tribunal, thus:

We have stated in our questioned decision that such mass actions staged before the Bureau of
Labor Relations on February 21-23, 2001 by the union officers and members fall squarely within
the definition of a strike (Article 212 (o), Labor Code). These concerted actions resulted in the
temporary stoppage of work causing the latter substantial losses. Thus, without the
requirements for a valid strike having been complied with, we were constrained to consider the
strike staged on such dates as illegal and all employees who participated in the concerted
actions to have consequently lost their employment status.

If we are going to stamp a color of legality on the two (2) [day -] walk out/strike of respondents
without filing a notice of strike, in effect we are giving license to all the unions in the country to
paralyze the operations of their companies/employers every time they wish to hold a
demonstration in front of any government agency. While we recognize the right of every person
or a group to peaceably assemble and petition the government for redress of grievances, the
exercise of such right is governed by existing laws, rules and regulations.

Although the respondent union admittedly made earnest representations with the company to
hold a mass protest before the BLR, together with their officers and members, the denial of the
request by the management should have been heeded and ended their insistence to hold the
planned mass demonstration. Verily, the violation of the company rule cannot be dismissed as
mere absences of two days as being suggested by the union [are but] concerted actions
detrimental to Petitioner Toyota's interest.38 (Emphasis supplied.)

It is obvious that the February 21 to 23, 2001 concerted actions were undertaken without
satisfying the prerequisites for a valid strike under Art. 263 of the Labor Code. The Union failed
to comply with the following requirements: (1) a notice of strike filed with the DOLE 30 days
before the intended date of strike, or 15 days in case of unfair labor practice;39 (2) strike vote
approved by a majority of the total union membership in the bargaining unit concerned obtained
by secret ballot in a meeting called for that purpose; and (3) notice given to the DOLE of the
results of the voting at least seven days before the intended strike. These requirements are
mandatory and the failure of a union to comply with them renders the strike illegal.40 The
evident intention of the law in requiring the strike notice and the strike-vote report is to
reasonably regulate the right to strike, which is essential to the attainment of legitimate policy
objectives embodied in the law.41 As they failed to conform to the law, the strikes on February
21, 22, and 23, 2001 were illegal.

Moreover, the aforementioned February 2001 strikes are in blatant violation of Sec. D, par. 6 of
Toyota's Code of Conduct which prohibits "inciting or participating in riots, disorders, alleged
strikes or concerted actions detrimental to [Toyota's] interest." The penalty for the offense is
dismissal. The Union and its members are bound by the company rules, and the February 2001
mass actions and deliberate refusal to render regular and overtime work on said days violated
these rules. In sum, the February 2001 strikes and walk-outs were illegal as these were in
violation of specific requirements of the Labor Code and a company rule against illegal strikes or
concerted actions.

Labor II – 1
With respect to the strikes committed from March 17 to April 12, 2001, those were initially legal
as the legal requirements were met. However, on March 28 to April 12, 2001, the Union
barricaded the gates of the Bicutan and Sta. Rosa plants and blocked the free ingress to and
egress from the company premises. Toyota employees, customers, and other people having
business with the company were intimidated and were refused entry to the plants. As earlier
explained, these strikes were illegal because unlawful means were employed. The acts of the
Union officers and members are in palpable violation of Art. 264(e), which proscribes acts of
violence, coercion, or intimidation, or which obstruct the free ingress to and egress from the
company premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal.

Petitioner Union also posits that strikes were not committed on May 23 and 28, 2001. The Union
asserts that the rallies held on May 23 and 28, 2001 could not be considered strikes, as the
participants were the dismissed employees who were on payroll reinstatement. It concludes that
there was no work stoppage.

This contention has no basis.

It is clear that once the DOLE Secretary assumes jurisdiction over the labor dispute and certifies
the case for compulsory arbitration with the NLRC, the parties have to revert to the status quo
ante (the state of things as it was before). The intended normalcy of operations is apparent from
the fallo of the April 10, 2001 Order of then DOLE Secretary Patricia A. Sto. Tomas, which reads:

WHEREFORE, PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at Toyota
Motors Philippines Corporation to the [NLRC] pursuant to Article 263 (g) of the Labor Code, as
amended. This Certification covers the current labor cases filed in relation with the Toyota strike,
particularly, the Petition for Injunction filed with the National Labor Relations Commission
entitled Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Workers
Association (TMPCWA), Ed Cubelo, et al., NLRC Injunction Case No. 3401054-01; Toyota Motor
Philippines Corporation v. Toyota Motor Philippines Corporation Workers Association, et al., NLRC
NCR Case No. 3004-01775-01, and such other labor cases that the parties may file relating to
the strike and its effects while this Certification is in effect.

As provided under Article 2634(g) of the Labor Code, all striking workers are directed to return
to work at their regular shifts by April 16, 2001; the Company is in turn directed to accept them
back to work under the same terms and conditions obtaining prior to the work stoppage, subject
to the option of the company to merely reinstate a worker or workers in the payroll in light of
the negative emotions that the strike has generated and the need to prevent the further
deterioration of the relationship between the company and its workers.

Further, the parties are hereby ordered to cease and desist from committing any act that might
lead to the worsening of an already deteriorated situation.42 (Emphasis supplied.)

It is explicit from this directive that the Union and its members shall refrain from engaging in
any activity that might exacerbate the tense labor situation in Toyota, which certainly includes
concerted actions.

This was not heeded by the Union and the individual respondents who staged illegal concerted
actions on May 23 and 28, 2001 in contravention of the Order of the DOLE Secretary that no
acts should be undertaken by them to aggravate the "already deteriorated situation."

While it may be conceded that there was no work disruption in the two Toyota plants, the fact
still remains that the Union and its members picketed and performed concerted actions in front
Labor II – 1
of the Company premises. This is a patent violation of the assumption of jurisdiction and
certification Order of the DOLE Secretary, which ordered the parties "to cease and desist from
committing any act that might lead to the worsening of an already deteriorated situation." While
there are no work stoppages, the pickets and concerted actions outside the plants have a
demoralizing and even chilling effect on the workers inside the plants and can be considered as
veiled threats of possible trouble to the workers when they go out of the company premises after
work and of impending disruption of operations to company officials and even to customers in
the days to come. The pictures presented by Toyota undoubtedly show that the company
officials and employees are being intimidated and threatened by the strikers. In short, the
Union, by its mass actions, has inflamed an already volatile situation, which was explicitly
proscribed by the DOLE Secretary's Order. We do not find any compelling reason to reverse the
NLRC findings that the pickets on May 23 and 28, 2001 were unlawful strikes.

From the foregoing discussion, we rule that the February 21 to 23, 2001 concerted actions, the
March 17 to April 12, 2001 strikes, and the May 23 and 28, 2001 mass actions were illegal
strikes.

Union officers are liable for unlawful strikes or illegal acts during a strike

Art. 264 (a) of the Labor Code provides:

ART. 264. PROHIBITED ACTIVITIES

(a) x x x

Any worker whose employment has been terminated as a consequence of an unlawful lockout
shall be entitled to reinstatement with full backwages. 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.

Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an illegal
strike or who knowingly participates in the commission of illegal acts during a lawful strike.

It is clear that the responsibility of union officials is greater than that of the members. They are
tasked with the duty to lead and guide the membership in decision making on union activities in
accordance with the law, government rules and regulations, and established labor practices. The
leaders are expected to recommend actions that are arrived at with circumspection and
contemplation, and always keep paramount the best interests of the members and union within
the bounds of law. If the implementation of an illegal strike is recommended, then they would
mislead and deceive the membership and the supreme penalty of dismissal is appropriate. On
the other hand, if the strike is legal at the beginning and the officials commit illegal acts during
the duration of the strike, then they cannot evade personal and individual liability for said acts.

The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the
illegal strikes held from February 21 to 23, 2001, from March 17 to April 12, 2001, and on May
23 and 28, 2001. We uphold the findings of fact of the NLRC on the involvement of said union
officials in the unlawful concerted actions as affirmed by the CA, thus:

Labor II – 1
As regards to the Union officers and directors, there is overwhelming justification to declare their
termination from service. Having instigated the Union members to stage and carry out all illegal
strikes from February 21-23, 2001, and May 23 and 28, 2001, the following Union officers are
hereby terminated for cause pursuant to Article 264(a) of the Labor Code: Ed Cubelo, Maximino
Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico Torres, Emilio
Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo, Roderick Nieres, Antonio
Borsigue, Bayani Manguil, Jr., and Mayo Mata.43

The rule is well entrenched in this jurisdiction that factual findings of the labor tribunal, when
affirmed by the appellate court, are generally accorded great respect, even finality.44

Likewise, we are not duty-bound to delve into the accuracy of the factual findings of the NLRC in
the absence of clear showing that these were arbitrary and bereft of any rational basis.45 In the
case at bench, the Union failed to convince us that the NLRC findings that the Union officials
instigated, led, and knowingly participated in the series of illegal strikes are not reinforced by
substantial evidence. Verily, said findings have to be maintained and upheld. We reiterate, as a
reminder to labor leaders, the rule that "[u]nion officers are duty bound to guide their members
to respect the law."46 Contrarily, if the "officers urge the members to violate the law and defy the
duly constituted authorities, their dismissal from the service is a just penalty or sanction for their
unlawful acts."47

Member's liability depends on participation in illegal acts

Art. 264(a) of the Labor Code provides that a member is liable when he knowingly participates in
an illegal act "during a strike." While the provision is silent on whether the strike is legal or
illegal, we find that the same is irrelevant. As long as the members commit illegal acts, in a legal
or illegal strike, then they can be terminated.48 However, when union members merely
participate in an illegal strike without committing any illegal act, are they liable? cra lawlibrary

This was squarely answered in Gold City Integrated Port Service, Inc. v. NLRC,49 where it was
held that an ordinary striking worker cannot be terminated for mere participation in an illegal
strike. This was an affirmation of the rulings in Bacus v. Ople50 and Progressive Workers Union v.
Aguas,51 where it was held that though the strike is illegal, the ordinary member who merely
participates in the strike should not be meted loss of employment on the considerations of
compassion and good faith and in view of the security of tenure provisions under the
Constitution. In Esso Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), it was explained
that a member is not responsible for the union's illegal strike even if he voted for the holding of
a strike which became illegal.52

Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the history relating to the
liability of a union member in an illegal strike, starting with the "rule of vicarious liability," thus:

Under [the rule of vicarious liability], mere membership in a labor union serves as basis of
liability for acts of individuals, or for a labor activity, done on behalf of the union. The union
member is made liable on the theory that all the members are engaged in a general conspiracy,
and the unlawful acts of the particular members are viewed as necessary incidents of the
conspiracy. It has been said that in the absence of statute providing otherwise, the rule of
vicarious liability applies.

Even the Industrial Peace Act, however, which was in effect from 1953 to 1974, did not adopt
the vicarious liability concept. It expressly provided that:

Labor II – 1
No officer or member of any association or organization, and no association or organization
participating or interested in a labor dispute shall be held responsible or liable for the unlawful
acts of individual officers, members, or agents, except upon proof of actual participation in, or
actual authorization of, such acts or of ratifying of such acts after actual knowledge thereof.

Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious liability rule.53

Thus, the rule on vicarious liability of a union member was abandoned and it is only when a
striking worker "knowingly participates in the commission of illegal acts during a strike" that he
will be penalized with dismissal.

Now, what are considered "illegal acts" under Art. 264(a)? cra lawlibrary

No precise meaning was given to the phrase "illegal acts." It may encompass a number of
acts that violate existing labor or criminal laws, such as the following:

(1) Violation of Art. 264(e) of the Labor Code which provides that "[n]o person
engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer's premises for lawful
purposes, or obstruct public thoroughfares";

(2) Commission of crimes and other unlawful acts in carrying out the strike; 54 and

(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or
NLRC in connection with the assumption of jurisdiction/certification Order under Art.
263(g) of the Labor Code.

As earlier explained, this enumeration is not exclusive and it may cover other breaches of
existing laws.

In the cases at bench, the individual respondents participated in several mass actions, viz:

(1) The rallies held at the DOLE and BLR offices on February 21, 22, and 23, 2001;

(2) The strikes held on March 17 to April 12, 2001; and

(3) The rallies and picketing on May 23 and 28, 2001 in front of the Toyota Bicutan and Sta.
Rosa plants.

Did they commit illegal acts during the illegal strikes on February 21 to 23, 2001, from March 17
to April 12, 2001, and on May 23 and 28, 2001? cra lawlibrary

The answer is in the affirmative.

As we have ruled that the strikes by the Union on the three different occasions were illegal, we
now proceed to determine the individual liabilities of the affected union members for acts
committed during these forbidden concerted actions.

Our ruling in Association of Independent Unions in the Philippines v. NLRC lays down the rule on
the liability of the union members:

Labor II – 1
Decisive on the matter is the pertinent provisions of Article 264 (a) of the Labor Code that: "[x x
x] any worker [x x x] who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status. [x x x]" It can be gleaned unerringly from
the aforecited provision of law in point, however, that an ordinary striking employee can not be
terminated for mere participation in an illegal strike. There must be proof that he committed
illegal acts during the strike and the striker who participated in the commission of
illegal act[s] must be identified. But proof beyond reasonable doubt is not required.
Substantial evidence available under the circumstances, which may justify the
imposition of the penalty of dismissal, may suffice.

In the landmark case of Ang Tibay v. CIR, the court ruled "Not only must there be some
evidence to support a finding or conclusion, but the evidence must be 'substantial.' Substantial
evidence is more than a mere scintilla. It means such relevant evidence that a
reasonable mind might accept as sufficient to support a conclusion."55 (Emphasis
supplied.)

Thus, it is necessary for the company to adduce proof on the participation of the striking
employee in the commission of illegal acts during the strikes.

After a scrutiny of the records, we find that the 227 employees indeed joined the February 21,
22, and 23, 2001 rallies and refused to render overtime work or report for work. These rallies,
as we earlier ruled, are in reality illegal strikes, as the procedural requirements for strikes under
Art. 263 were not complied with. Worse, said strikes were in violation of the company rule
prohibiting acts "in citing or participating in riots, disorders, alleged strikes or concerted action
detrimental to Toyota's interest."

With respect to the February 21, 22, and 23, 2001 concerted actions, Toyota submitted the list
of employees who did not render overtime work on February 21, 2001 and who did not report
for work on February 22 and 23, 2001 as shown by Annex "I" of Toyota's Position Paper in NLRC
Certified Case No. 000203-01 entitled In Re: Labor Dispute at Toyota Motor Philippines Corp.
The employees who participated in the illegal concerted actions were as follows:

1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; 5. Alejo, Alex; 6.
Alfonso, Erwin; 7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10. Arellano, Ruel;
11. Ariate, Abraham; 12. Arollado, Daniel; 13. Arriola, Dominador; 14. Atun, Lester; 15. Bala,
Rizalino; 16. Baluyut, Rolando; 17. Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19. Benabise,
Sabas Jr.; 20. Berces, Abel; 21. Bering, Benny; 22. Birondo, Alberto; 23. Blanco, Melchor; 24.
Bolanos, Dexter; 25. Bolocon, Jerry; 26. Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue,
Antonio; 29. Bulan, Elmer; 30. Busano, Freddie; 31. Bustillo, Ernesto Jr.; 32. Caalim, Alexander;
33. Cabahug, Nelson; 34. Cabatay, Jessie; 35. Cabezas, Marcelo; 36. Calalang, Richard; 37.
Candelario, Roque Jr.; 38. Capate, Leo Nelson; 39. Carandang, Resty; 40. Caraqueo, Lorenzo;
41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan, Christopher; 44. Catral, Rico; 45.
Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48. Completo, Emilio; 49. Consignado,
Randy; 50. Coral, Jay Antonio; 51. Correa, Claudio Jr.; 52. Cuevas, Reynaldo; 53. Dacalcap,
Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56. Dalisay, Rene; 57. David, Benigno Jr.; 58.
De Guzman, Joey; 59. Dela Cruz, Basilio; 60. Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62.
De Leon, Leonardo; 63. Delos Santos, Rogelio; 64. De Ocampo, Joselito; 65. De Silva,
Leodegario; 66. Del Mundo, Alex; 67. Del Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank Manuel;
70. Dimayuga, Antonio; 71. Dingcong, Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74.
Ercillo, Armando; 75. Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78. Esteva,
Alexander; 79. Estole, Francisco; 80. Fajardo, George; 81. Fajilagutan, Jason; 82. Fajura, John;
83. Franco, Melencio; 84. Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante; 87. Gado,

Labor II – 1
Eduardo; 88. Galang, Erwin; 89. Gamit, Rodel; 90. Garces, Robin; 91. Garcia, Ariel; 92. Gaspi,
Ronald; 93. Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95. Gerola, Larry; 96. Gohilde, Michael;
97. Gojar, Regino; 98. Gojar, Reynaldo; 99. Gonzales, Roberto; 100. Gutierrez, Bernabe; 101.
Hilaga, Edgar; 102. Hilanga, Melchor; 103. Hondrada, Eugene Jay; 104. Imperial, Alejandro;
105. Jaen, Ferdinand; 106. Jalea, Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109.
Lalisan, Victorio; 110. Landicho, Danny; 111. Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro,
Orlando; 114. Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. Llanera, Joey; 117. Lomboy,
Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Johny; 121.
Macalindong, Rommel; 122. Madrazo, Nixon; 123. Magbalita, Valentin; 124. Magistrado, Rogelio
Jr.; 125. Magnaye, Philip John; 126. Malabanan, Allan John; 127. Malabrigo, Angelito; 128.
Malaluan, Rolando Jr.; 129. Malate, Leoncio Jr.; 130. Maleon, Paulino; 131. Manaig, Roger; 132.
Manalang, Joseph Patrick; 133. Manalo, Manuel Jr.; 134. Manaog, Jonamar; 135. Manaog,
Melchor; 136. Mandolado, Melvin; 137. Maneclang, Jovito; 138. Manego, Ruel; 139. Manguil,
Bayani Jr.; 140. Manigbas, June; 141. Manjares, Alfred; 142. Manzanilla, Edwin; 143.
Marasigan, Carlito; 144. Marcial, Nilo; 145. Mariano, Rommel; 146. Mata, Mayo; 147. Mendoza,
Bobit; 148. Mendoza, Roberto; 149. Milan, Joseph; 150. Miranda, Eduardo; 151. Miranda, Luis;
152. Montero, Ericson; 153. Montero, Marlaw; 154. Montes, Ruel; 155. Morales, Dennis; 156.
Natividad, Kenneth; 157. Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor, Edwin; 160.
Nierves, Roderick; 161. Nunez, Alex; 162. Nunez, Lolito; 163. Obe, Victor; 164. Oclarino,
Alfonso; 165. Ojenal, Leo; 166. Olit, Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; 169.
Operana, Danny; 170. Oriana, Allan; 171. Ormilla, Larry; 172. Ortiz, Felimon; 173. Paniterce,
Alvin; 174. Parallag, Gerald; 175. Pecayo, Edwin; 176. Pena, Erwin; 177. Penamante, Jowald;
178. Piamonte, Melvin; 179. Piamonte, Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182.
Posada, John; 183. Puno, Manjolito; 184. Ramos, Eddie; 185. Reyes, Rolando; 186. Roxas,
Philip; 187. Sales, Paul Arthur; 188. Sallan, David Jr.; 189. Salvador, Bernardo; 190. Sampang,
Alejandro; 191. San Pablo, Baldwin; 192. Sangalang, Jeffrey; 193. Santiago, Eric; 194. Santos,
Raymond; 195. Sapin, Al Jose; 196. Saquilabon, Bernabe; 197. Serrano, Ariel; 198. Sierra,
Alex; 199. Simborio, Romualdo; 200. Sulit, Lauro; 201. Tabirao, Elvisanto; 202. Tablizo, Edwin;
203. Taclan, Petronio; 204. Tagala, Rommel; 205. Tagle, Wilfredo Jr.; 206. Tecson Alexander;
207. Templo, Christopher; 208. Tenorio, Roderick; 209. Tolentino, Rodel; 210. Tolentino,
Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas, Rolando; 213. Topaz, Arturo Sr.; 214. Toral,
Grant Robert; 215. Torres, Dennis; 216. Torres, Federico; 217. Trazona, Jose Rommel; 218.
Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220. Vargas, Joseph; 221. Vergara, Allan; 222.
Vergara, Esdwin; 223. Violeta, Apollo Sr.; 224. Vistal, Alex; 225. Yangyon, Michael Teddy; 226.
Zaldevar, Christopher; and 227. Zamora, Dominador Jr.

Toyota's Position Paper containing the list of striking workers was attested to as true and correct
under oath by Mr. Jose Ma. Aligada, First Vice President of the Group Administration Division of
Toyota. Mr. Emerito Dumaraos, Assistant Department Manager of the Production Department of
Toyota, likewise submitted a June 29, 2001 Affidavit56 confirming the low attendance of
employees on February 21, 22, and 23, 2001, which resulted from the intentional absences of
the aforelisted striking workers. The Union, on the other hand, did not refute Toyota's
categorical assertions on the participation of said workers in the mass actions and their
deliberate refusal to perform their assigned work on February 21, 22, and 23, 2001. More
importantly, it did not deny the fact of absence of the employees on those days from the Toyota
manufacturing plants and their deliberate refusal to render work. Their admission that they
participated in the February 21 to 23, 2001 mass actions necessarily means they were absent
from their work on those days.

Anent the March 28 to April 12, 2001 strikes, evidence is ample to show commission of illegal
acts like acts of coercion or intimidation and obstructing free ingress to or egress from the
company premises. Mr. Eduardo Nicolas III, Toyota's Security Chief, attested in his affidavit that

Labor II – 1
the strikers "badmouthed people coming in and shouted invectives such as bakeru at Japanese
officers of the company." The strikers even pounded the vehicles of Toyota officials. More
importantly, they prevented the ingress of Toyota employees, customers, suppliers, and other
persons who wanted to transact business with the company. These were patent violations of Art.
264(e) of the Labor Code, and may even constitute crimes under the Revised Penal Code such
as threats or coercion among others.

On March 28, 2001, the following have committed illegal acts blocking the ingress to or egress
from the two (2) Toyota plants and preventing the ingress of Toyota employees on board the
company shuttle at the Bicutan and Sta. Rosa Plants, viz:

1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan John Malabanan; 5. Abel Berces;
6. Ariel Garcia; 7. Charlie Oliveria; 8. Manjolito Puno; 9. Baldwin San Pablo; 10. Federico Torres;
11. Larry Gerola; 12. Roderick Bayani; 13. Allan Oclarino; 14. Reynaldo Cuevas; 15. George
Polutan; 16. Arman Ercillo; 17. Joey Llanera; and 18. Roberto Gonzales

Photographs were submitted by Toyota marked as Annexes "1" through "18" of its Position
Paper, vividly showing the participation of the aforelisted employees in illegal acts.57

To further aggravate the situation, a number of union members committed illegal acts (blocking
the ingress to and egress from the plant) during the strike staged on March 29, 2001 at the
Toyota plant in Bicutan, to wit:

1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres; 4. Freddie Olit; and 5. Joel Agosto

Pictures marked as Annexes "21" to "22" of Toyota's Position Paper reveal the illegal acts
committed by the aforelisted workers.58

On the next day, March 30, 2001, several employees again committed illegal acts (blocking
ingress to and egress from the plant) during the strike at the Bicutan plant, to wit:

1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4. Ferdinand Jaen; 5. Wilfredo Tagle; 6.
Alejandro Imperial; 7. Manjolito Puno; 8. Delmar Espadilla; 9. Apollo Violeta; and 10. Elvis
Tabirao

Pictures marked as Annexes "25" to "26" and "28" of Toyota's Position Paper show the
participation of these workers in unlawful acts.59

On April 5, 2001, seven (7) Toyota employees were identified to have committed illegal acts
(blocking ingress to and egress from the plant) during the strike held at the Bicutan plant, to
wit:

1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4. Bernardo Salvador; 5. Antonio

Dimayuga; 6. Rurel Borebor; and 7. Alberto Lomboy

The participations of the strikers in illegal acts are manifest in the pictures marked as Annexes
"32" and "33" of Toyota's Position Paper.60

On April 6, 2001, only Rogelio Piamonte was identified to have committed illegal acts (blocking
ingress to and egress from the Toyota plant) during the strike at the Toyota Santa Rosa
plant.61 Then, on April 9, 2001, Alvin Paniterce, Dennis Apolinario, and Eduardo Miranda62 were

Labor II – 1
identified to have committed illegal acts (blocking ingress to and egress from the Toyota plant)
during the strike at the Toyota Santa Rosa plant and were validly dismissed by Toyota.

Lastly, the strikers, though on payroll reinstatement, staged protest rallies on May 23, 2001 and
May 28, 2001 in front of the Bicutan and Sta. Rosa plants. These workers' acts in joining and
participating in the May 23 and 28, 2001 rallies or pickets were patent violations of the April 10,
2001 assumption of jurisdiction/certification Order issued by the DOLE Secretary, which
proscribed the commission of acts that might lead to the "worsening of an already deteriorated
situation." Art. 263(g) is clear that strikers who violate the assumption/certification Order may
suffer dismissal from work. This was the situation in the May 23 and 28, 2001 pickets and
concerted actions, with the following employees who committed illegal acts:

A. Strikers who joined the illegal pickets on May 23, 2001 were (1) Dennis Apolinario; (2) Abel
Berces; (3) Benny Bering; (4) Dexter Bolaños; (5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7)
Randy Consignado; (8) Herbert Dalanon; (9) Leodegario De Silva; (10) Alexander Esteva; (11)
Jason Fajilagutan; (12) Nikko Franco; (13) Genaro Gerola, Jr.; (14) Michael Gohilde; (15)
Rogelio Magistrado; (16) Rolando Malaluan, Jr.; (17) Leoncio Malate, Jr.; (18) Edwin Manzanilla;
(19) Nila Marcial; (20) Roderick Nierves; (21) Larry Ormilla; (22) Filemon Ortiz; (23) Cornelio
Platon; (24) Alejandro Sampang; (25) Eric Santiago; (26) Romualdo Simborio; (27) Lauro Sulit;
and (28) Rommel Tagala.

Pictures show the illegal acts (participation in pickets/strikes despite the issuance of a return-to-
work order) committed by the aforelisted strikers.63

b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto; (2) Alex Alejo; (3) Erwin
Alfonso; (4) Dennis Apolinario; (5) Melvin Apostol; (6) Rommel Arceta; (7) Lester Atun; (8) Abel
Berces; (9) Benny Bering; (10) Dexter Bolanos; (11) Marcelo Cabezas; (12) Nelson Leo Capate;
(13) Lorenzo Caraqueo; (14) Christopher Catapusan; (15) Ricky Chavez; (16) Virgilio Colandog;
(17) Claudio Correa; (18) Ed Cubelo; (19) Reynaldo Cuevas; (20) Rene Dalisay; (21) Benigno
David, Jr.; (22) Alex Del Mundo; (23) Basilio Dela Cruz; (24) Roel Digma; (25) Aldrin Duyag;
(26) Armando Ercillo; (27) Delmar Espadilla; (28) Alexander Esteva; (29) Nikko Franco; (30)
Dexter Fulgar; (31) Dante Fulo; (32) Eduardo Gado; (33) Michael Gohilde; (34) Eugene Jay
Hondrada II; (35) Joey Javillonar; (36) Basilio Laqui; (37) Alberto Lomboy; (38) Geronimo
Lopez; (39) Rommel Macalindog; (40) Nixon Madrazo; (41) Valentin Magbalita; (42) Allan Jon
Malabanan; (43) Jonamar Manaog; (44) Bayani Manguil; (45) June Manigbas; (46) Alfred
Manjares; (47) Edwin Manzanilla; (48) Mayo Mata; (49) Leo Ojenal; (50) Allan Oriana; (51)
Rogelio Piamonte; (52) George Polutan; (53) Eric Santiago; (54) Bernabe Saquilabon; (55) Alex
Sierra; (56) Romualdo Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin Tablizo;
(60) Emmanuel Tulio; (61) Nestor Umiten; (62) Joseph Vargas; (63) Edwin Vergara; and (64)
Michael Teddy Yangyon.

Toyota presented photographs which show said employees conducting mass pickets and
concerted actions.64

Anent the grant of severance compensation to legally dismissed union members, Toyota assails
the turn-around by the CA in granting separation pay in its June 20, 2003 Resolution after
initially denying it in its February 27, 2003 Decision. The company asseverates that based on the
CA finding that the illegal acts of said union members constitute gross misconduct, not to
mention the huge losses it suffered, then the grant of separation pay was not proper.

The general rule is that when just causes for terminating the services of an employee under Art.
282 of the Labor Code exist, the employee is not entitled to separation pay. The apparent reason
Labor II – 1
behind the forfeiture of the right to termination pay is that lawbreakers should not benefit from
their illegal acts. The dismissed employee, however, is entitled to "whatever rights, benefits and
privileges [s/he] may have under the applicable individual or collective bargaining agreement
with the employer or voluntary employer policy or practice"65 or under the Labor Code and other
existing laws. This means that the employee, despite the dismissal for a valid cause, retains the
right to receive from the employer benefits provided by law, like accrued service incentive
leaves. With respect to benefits granted by the CBA provisions and voluntary management policy
or practice, the entitlement of the dismissed employees to the benefits depends on the
stipulations of the CBA or the company rules and policies.

As in any rule, there are exceptions. One exception where separation pay is given even though
an employee is validly dismissed is when the court finds justification in applying the principle of
social justice well entrenched in the 1987 Constitution. In Phil. Long Distance Telephone Co.
(PLDT) v. NLRC, the Court elucidated why social justice can validate the grant of separation pay,
thus:

The reason is that our Constitution is replete with positive commands for the promotion of social
justice, and particularly the protection of the rights of the workers. The enhancement of their
welfare is one of the primary concerns of the present charter. In fact, instead of confining itself
to the general commitment to the cause of labor in Article II on the Declaration of Principles of
State Policies, the new Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub-topic for labor. Article XIII expressly
recognizes the vital role of labor, hand in hand with management, in the advancement of the
national economy and the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more than sufficient basis to
justify the award of separation pay in proper cases even if the dismissal be for cause.66

In the same case, the Court laid down the rule that severance compensation shall be allowed
only when the cause of the dismissal is other than serious misconduct or that which reflects
adversely on the employee's moral character. The Court succinctly discussed the propriety of the
grant of separation pay in this wise:

We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal
is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called, on the
ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather
than punishing the erring employee for his offense. And we do not agree that the punishment is
his dismissal only and that the separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can expect a like leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general any good as it
will encourage the infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not

Labor II – 1
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of
our Constitution is not meant for the protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with the blemishes of their own
character.67

Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay
based on social justice' serious misconduct (which is the first ground for dismissal under Art.
282) or acts that reflect on the moral character of the employee. What is unclear is whether the
ruling likewise precludes the grant of separation pay when the employee is validly terminated
from work on grounds laid down in Art. 282 of the Labor Code other than serious misconduct.

A recall of recent cases decided bearing on the issue reveals that when the termination is legally
justified on any of the grounds under Art. 282, separation pay was not allowed. In Ha Yuan
Restaurant v. NLRC,68 we deleted the award of separation pay to an employee who, while
unprovoked, hit her co-worker's face, causing injuries, which then resulted in a series of fights
and scuffles between them. We viewed her act as serious misconduct which did not warrant the
award of separation pay. In House of Sara Lee v. Rey,69 this Court deleted the award of
separation pay to a branch supervisor who regularly, without authorization, extended the
payment deadlines of the company's sales agents. Since the cause for the supervisor's dismissal
involved her integrity (which can be considered as breach of trust), she was not worthy of
compassion as to deserve separation pay based on her length of service. In Gustilo v. Wyeth
Phils., Inc.,70 this Court found no exceptional circumstance to warrant the grant of financial
assistance to an employee who repeatedly violated the company's disciplinary rules and
regulations and whose employment was thus terminated for gross and habitual neglect of his
duties. In the doctrinal case of San Miguel v. Lao,71 this Court reversed and set aside the ruling
of the CA granting retirement benefits or separation pay to an employee who was dismissed for
willful breach of trust and confidence by causing the delivery of raw materials, which are needed
for its glass production plant, to its competitor. While a review of the case reports does not
reveal a case involving a termination by reason of the commission of a crime against the
employer or his/her family which dealt with the issue of separation pay, it would be adding insult
to injury if the employer would still be compelled to shell out money to the offender after the
harm done.

In all of the foregoing situations, the Court declined to grant termination pay because the causes
for dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and
attended by willful or wrongful intent or they reflected adversely on the moral character of the
employees. We therefore find that in addition to serious misconduct, in dismissals based on
other grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud
or willful breach of trust, and commission of a crime against the employer or his family,
separation pay should not be conceded to the dismissed employee.

In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the
courts may opt to grant separation pay anchored on social justice in consideration of the length
of service of the employee, the amount involved, whether the act is the first offense, the
performance of the employee and the like, using the guideposts enunciated in PLDT on the
propriety of the award of separation pay.

In the case at bench, are the 227 striking employees entitled to separation pay? cra lawlibrary

Labor II – 1
In the instant case, the CA concluded that the illegal strikes committed by the Union members
constituted serious misconduct.72

The CA ratiocinated in this manner:

Neither can social justice justify the award to them of severance compensation or any other form
of financial assistance. x x x

xxx

Considering that the dismissal of the employees was due to their participation in the illegal
strikes as well as violation of the Code of Conduct of the company, the same constitutes serious
misconduct. A serious misconduct is a transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error in judgment. In fact, in Panay Electric Company, Inc. v. NLRC, the Supreme
Court nullified the grant of separation benefits to employees who unlawfully participated in an
illegal strike in light of Article 264, Title VIII, Book V of the Labor Code, that, "any union officer
who knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his
employment status."

The constitutional guarantee on social justice is not intended only for the poor but for the rich as
well. It is a policy of fairness to both labor and management.73 (Emphasis supplied.)

In disposing of the Union's plea for reconsideration of its February 27, 2003 Decision, the CA
however performed a volte-face by reinstating the award of separation pay.

The CA's grant of separation pay is an erroneous departure from our ruling in Phil. Long Distance
Telephone Co. v. NLRC that serious misconduct forecloses the award of separation pay.
Secondly, the advertence to the alleged honest belief on the part of the 227 employees that
Toyota committed a breach of the duty to bargain collectively and an abuse of valid exercise of
management prerogative has not been substantiated by the evidence extant on record. There
can be no good faith in intentionally incurring absences in a collective fashion from work on
February 22 and 23, 2001 just to attend the DOLE hearings. The Union's strategy was plainly to
cripple the operations and bring Toyota to its knees by inflicting substantial financial damage to
the latter to compel union recognition. The Union officials and members are supposed to know
through common sense that huge losses would befall the company by the abandonment of their
regular work. It was not disputed that Toyota lost more than PhP 50 million because of the
willful desertion of company operations in February 2001 by the dismissed union members. In
addition, further damage was experienced by Toyota when the Union again resorted to illegal
strikes from March 28 to April 12, 2001, when the gates of Toyota were blocked and barricaded,
and the company officials, employees, and customers were intimidated and harassed. Moreover,
they were fully aware of the company rule on prohibition against concerted action inimical to the
interests of the company and hence, their resort to mass actions on several occasions in clear
violation of the company regulation cannot be excused nor justified. Lastly, they blatantly
violated the assumption/certification Order of the DOLE Secretary, exhibiting their lack of
obeisance to the rule of law. These acts indeed constituted serious misconduct.

A painstaking review of case law renders obtuse the Union's claim for separation pay. In a slew
of cases, this Court refrained from awarding separation pay or financial assistance to union
officers and members who were separated from service due to their participation in or
commission of illegal acts during strikes. In the recent case of Pilipino Telephone Corporation v.
Labor II – 1
Pilipino Telephone Employees Association (PILTEA),74 this Court upheld the dismissal of union
officers who participated and openly defied the return-to-work order issued by the DOLE
Secretary. No separation pay or financial assistance was granted. In Sukhothai Cuisine and
Restaurant v. Court of Appeals,75 this Court declared that the union officers who participated in
and the union members who committed illegal acts during the illegal strike have lost their
employment status. In this case, the strike was held illegal because it violated agreements
providing for arbitration. Again, there was no award of separation pay nor financial assistance.
In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union,76 the
strike was declared illegal because the means employed was illegal. We upheld the validity of
dismissing union members who committed illegal acts during the strike, but again, without
awarding separation pay or financial assistance to the erring employees. In Samahang
Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio Lines,77 this Court upheld the dismissal of union
officers who participated in an illegal strike sans any award of separation pay. Earlier, in Grand
Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied
Industries,78 we affirmed the dismissal of the Union's officers who participated in an illegal strike
without awarding separation pay, despite the NLRC's declaration urging the company to give
financial assistance to the dismissed employees.79 In Interphil Laboratories Union-FFW, et al. v.
Interphil Laboratories, Inc.,80 this Court affirmed the dismissal of the union officers who led the
concerted action in refusing to render overtime work and causing "work slowdowns." However,
no separation pay or financial assistance was allowed. In CCBPI Postmix Workers Union v.
NLRC,81 this Court affirmed the dismissal of union officers who participated in the strike and the
union members who committed illegal acts while on strike, without awarding them separation
pay or financial assistance. In 1996, in Allied Banking Corporation v. NLRC,82 this Court affirmed
the dismissal of Union officers and members, who staged a strike despite the DOLE Secretary's
issuance of a return to work order but did not award separation pay. In the earlier but more
relevant case of Chua v. NLRC,83 this Court deleted the NLRC's award of separation benefits to
an employee who participated in an unlawful and violent strike, which strike resulted in multiple
deaths and extensive property damage. In Chua, we viewed the infractions committed by
the union officers and members as a serious misconduct which resulted in the deletion
of the award of separation pay in conformance to the ruling in PLDT. Based on existing
jurisprudence, the award of separation pay to the Union officials and members in the
instant petitions cannot be sustained.

One last point to consider it is high time that employer and employee cease to view each other
as adversaries and instead recognize that theirs is a symbiotic relationship, wherein they must
rely on each other to ensure the success of the business. When they consider only their own
self-interests, and when they act only with their own benefit in mind, both parties suffer from
short-sightedness, failing to realize that they both have a stake in the business. The employer
wants the business to succeed, considering the investment that has been made. The employee
in turn, also wants the business to succeed, as continued employment means a living, and the
chance to better one's lot in life. It is clear then that they both have the same goal, even if the
benefit that results may be greater for one party than the other. If this becomes a source of
conflict, there are various, more amicable means of settling disputes and of balancing interests
that do not add fuel to the fire, and instead open avenues for understanding and cooperation
between the employer and the employee. Even though strikes and lockouts have been
recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial,
as they only provide short-term solutions by forcing concessions from one party; but staging
such strikes would damage the working relationship between employers and employees, thus
endangering the business that they both want to succeed. The more progressive and truly
effective means of dispute resolution lies in mediation, conciliation, and arbitration, which do not
increase tension but instead provide relief from them. In the end, an atmosphere of trust and

Labor II – 1
understanding has much more to offer a business relationship than the traditional enmity that
has long divided the employer and the employee.

WHEREFORE, the petitions in G.R. NOS. 158786 and 158789 are DENIED while those in G.R.
NOS. 158798-99 are GRANTED.

The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the grant of
severance compensation is ANNULLED and SET ASIDE.

The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which affirmed the
August 9, 2001 Decision of the NLRC but deleted the grant of severance compensation, is
REINSTATED and AFFIRMED.

Labor II – 1
6.) G.R. No. 163942             November 11, 2008

NATIONAL UNION OF WORKERS IN THE HOTEL RESTAURANT AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF)
DUSIT HOTEL NIKKO CHAPTER, petitioner,
vs.
THE HONORABLE COURT OF APPEALS (Former Eighth Division), THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC), PHILIPPINE HOTELIERS INC., owner and operator of DUSIT HOTEL NIKKO and/or CHIYUKI
FUJIMOTO, and ESPERANZA V. ALVEZ, respondents.

x----------------------------------------x

G.R. No. 166295             November 11, 2008

NUWHRAIN-DUSIT HOTEL NIKKO CHAPTER, petitioner,

vs.
SECRETARY OF LABOR AND EMPLOYMENT and PHILIPPINE HOTELIERS, INC., respondents.

DECISION

VELASCO, JR., J.:

In G.R. No. 163942, the Petition for Review on Certiorari under Rule 45 of the National Union of Workers in the Hotel
Restaurant and Allied Industries Dusit Hotel Nikko Chapter (Union) seeks to set aside the January 19, 2004 Decision1 and
June 1, 2004 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 76568 which affirmed the October 9, 2002
Decision3 of the National Labor Relations Commission (NLRC) in NLRC NCR CC No. 000215-02.

In G.R. No. 166295, the Petition for Certiorari under Rule 65 of the Union seeks to nullify the May 6, 2004 Decision4 and
November 25, 2004 Resolution5 of the CA in CA-G.R. SP No. 70778 which affirmed the January 31, 20026 and March 15,
20027 Orders of the Secretary of Labor and Employment, Patricia A. Sto. Tomas (Secretary).

Evolution of the Present Petitions

The Union is the certified bargaining agent of the regular rank-and-file employees of Dusit Hotel Nikko (Hotel), a five star
service establishment owned and operated by Philippine Hoteliers, Inc. located in Makati City. Chiyuki Fuijimoto and
Esperanza V. Alvez are impleaded in their official capacities as the Hotel's General Manager and Director of Human
Resources, respectively.

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), which was docketed as NCMB-NCR-NS-12-369-01. Thereafter,
conciliation hearings were conducted which proved unsuccessful. Consequently, a Strike Vote8 was conducted by the
Union on January 14, 2002 on which it was decided that the Union would wage a strike.

Soon thereafter, 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.

In view of the Hotel's action, 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.

Subsequently, 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
Labor II – 1
and violation of Article 248(a) of the Labor Code on illegal lockout, which was docketed as NCMB-NCR-NS-01-019-02. In
the meantime, the Union officers and members submitted their explanations to the charges alleged by the Hotel, while
they continued to stage a picket just inside the Hotel's compound.

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.

Consequently, on January 31, 2002, the Union filed its third Notice of Strike with the NCMB which was docketed as
NCMB-NCR-NS-01-050-02, this time on the ground of unfair labor practice and union-busting.

On the same day, the Secretary, through her January 31, 2002 Order, assumed jurisdiction over the labor dispute and
certified the case to the NLRC for compulsory arbitration, which was docketed as NLRC NCR CC No. 000215-02. The
Secretary's Order partly reads:

WHEREFORE, in order to have a complete determination of the bargaining deadlock and the other incidents of
the dispute, this Office hereby consolidates the two Notices of Strike - NCMB-NCR-NS-12-369-01 and NCMB-
NCR-NS-01-019-02 - and CERTIFIES the entire labor dispute covered by these Notices and the intervening
events, to the NATIONAL LABOR RELATIONS COMMISSION for compulsory arbitration pursuant to Article 263
(g) of the Labor Code, as amended, under the following terms:

xxxx

d. the Hotel is 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;

xxxx

SO ORDERED. (Emphasis added.)

Pursuant to the Secretary's Order, the Hotel, on February 1, 2002, issued an Inter-Office Memorandum,9 directing some of
the employees to return to work, while advising others not to do so, as they were placed under payroll reinstatement.

Unhappy with the Secretary's January 31, 2002 Order, the Union moved for reconsideration, but the same was denied per
the Secretary's subsequent March 15, 2002 Order. Affronted by the Secretary's January 31, 2002 and March 15, 2002
Orders, the Union filed a Petition for Certiorari with the CA which was docketed as CA-G.R. SP No. 70778.

Meanwhile, after due proceedings, the NLRC issued its October 9, 2002 Decision in NLRC NCR CC No. 000215-02, in
which it ordered the Hotel and the Union to execute a CBA within 30 days from the receipt of the decision. 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. The NLRC ordered the Hotel to grant the 61 dismissed Union members financial
assistance in the amount of ½ month's pay for every year of service or their retirement benefits under their retirement plan
whichever was higher. The NLRC explained that the strike which occurred on January 18, 2002 was illegal because it
failed to comply with the mandatory 30-day cooling-off period10 and the seven-day strike ban,11 as the strike occurred
only 29 days after the submission of the notice of strike on December 20, 2001 and only four days after the submission of
the strike vote on January 14, 2002. 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.

The Union then filed a Motion for Reconsideration of the NLRC's Decision which was denied in the February 7, 2003
NLRC Resolution. Unfazed, the Union filed a Petition for Certiorari under Rule 65 with the CA, docketed as CA-G.R. SP
No. 76568, and assailed both the October 9, 2002 Decision and the February 7, 2003 Resolution of the NLRC.

Soon thereafter, the CA promulgated its January 19, 2004 Decision in CA-G.R. SP No. 76568 which dismissed the
Union's petition and affirmed the rulings of the NLRC. The CA ratiocinated that the Union failed to demonstrate that the

Labor II – 1
NLRC committed grave abuse of discretion and capriciously exercised its judgment or exercised its power in an arbitrary
and despotic manner.

For this reason, the Union filed a Motion for Reconsideration which the CA, in its June 1, 2004 Resolution, denied for lack
of merit.

In the meantime, the CA promulgated its May 6, 2004 Decision in CA-G.R. SP No. 70778 which denied due course to and
consequently dismissed the Union's petition. The Union moved to reconsider the Decision, but the CA was unconvinced
and denied the motion for reconsideration in its November 25, 2004 Resolution.

Thus, the Union filed the present petitions.

The Union raises several interwoven issues in G.R. No. 163942, most eminent of which is whether the Union conducted
an illegal strike. The issues presented for resolution are:

-A-

WHETHER OR NOT THE UNION, THE 29 UNION OFFICERS AND 61 MEMBERS MAY BE ADJUDGED
GUILTY OF STAGING AN ILLEGAL STRIKE ON JANUARY 18, 2002 DESPITE RESPONDENTS' ADMISSION
THAT THEY PREVENTED SAID OFFICERS AND MEMBERS FROM REPORTING FOR WORK FOR ALLEGED
VIOLATION OF THE HOTEL'S GROOMING STANDARDS

-B-

WHETHER OR NOT THE 29 UNION OFFICERS AND 61 MEMBERS MAY VALIDLY BE DISMISSED AND
MORE THAN 200 MEMBERS BE VALIDLY SUSPENDED ON THE BASIS OF FOUR (4) SELF-SERVING
AFFIDAVITS OF RESPONDENTS

-C-

WHETHER OR NOT RESPONDENTS IN PREVENTING UNION OFFICERS AND MEMBERS FROM

REPORTING FOR WORK COMMITTED AN ILLEGAL LOCK-OUT12

In G.R. No. 166295, the Union solicits a riposte from this Court on whether the Secretary has discretion to impose
"payroll" reinstatement when he assumes jurisdiction over labor disputes.

The Court's Ruling

The Court shall first dispose of G.R. No. 166295.

According to the Union, there is no legal basis for allowing payroll reinstatement in lieu of actual or physical reinstatement.
As argued, Art. 263(g) of the Labor Code is clear on this point.

The Hotel, on the other hand, claims that the issue is now moot and any decision would be impossible to execute in view
of the Decision of the NLRC which upheld the dismissal of the Union officers and members.

The Union's position is untenable.

The Hotel correctly raises the argument that the issue was rendered moot when the NLRC upheld the dismissal of the
Union officers and members. In order, however, to settle this relevant and novel issue involving the breadth of the power
and jurisdiction of the Secretary in assumption of jurisdiction cases, we now decide the issue on the merits instead of
relying on mere technicalities.

We held in University of Immaculate Concepcion, Inc. v. Secretary of Labor:

With respect to the Secretary's Order allowing payroll reinstatement instead of actual reinstatement for the
individual respondents herein, an amendment to the previous Orders issued by her office, the same is usually not
Labor II – 1
 allowed. Article 263(g) of the Labor Code aforementioned states that all workers must immediately return to work
and all employers must readmit all of them under the same terms and conditions prevailing before the strike or
lockout. The phrase "under the same terms and conditions" makes it clear that the norm is actual reinstatement.
This is consistent with the idea that any work stoppage or slowdown in that particular industry can be detrimental
to the national interest.13

Thus, it was settled that in assumption of jurisdiction cases, the Secretary should impose actual reinstatement in
accordance with the intent and spirit of Art. 263(g) of the Labor Code. As with most rules, however, this one is subject to
exceptions. We held in Manila Diamond Hotel Employees' Union v. Court of Appeals that payroll reinstatement is a
departure from the rule, and special circumstances which make actual reinstatement impracticable must be shown.14 In
one case, payroll reinstatement was allowed where the employees previously occupied confidential positions, because
their actual reinstatement, the Court said, would be impracticable and would only serve to exacerbate the situation.15 In
another case, this Court held that the NLRC did not commit grave abuse of discretion when it allowed payroll
reinstatement as an option in lieu of actual reinstatement for teachers who were to be reinstated in the middle of the first
term.16 We held that the NLRC was merely trying its best to work out a satisfactory ad hoc solution to a festering and
serious problem.17

The peculiar circumstances in the present case validate the Secretary's decision to order payroll reinstatement instead of
actual reinstatement. It is obviously impracticable for the Hotel to actually reinstate the employees who shaved their heads
or cropped their hair because this was exactly the reason they were prevented from working in the first place. Further, as
with most labor disputes which have resulted in strikes, there is mutual antagonism, enmity, and animosity between the
union and the management. Payroll reinstatement, most especially in this case, would have been the only avenue where
further incidents and damages could be avoided. Public officials entrusted with specific jurisdictions enjoy great
confidence from this Court. The Secretary surely meant only to ensure industrial peace as she assumed jurisdiction over
the labor dispute. In this case, we are not ready to substitute our own findings in the absence of a clear showing of grave
abuse of discretion on her part.

The issues raised in G.R. No. 163942, being interrelated, shall be discussed concurrently.

To be determined whether legal or not are the following acts of the Union:

(1) Reporting for work with their bald or cropped hair style on January 18, 2002; and

(2) The picketing of the Hotel premises on January 26, 2002.

The Union maintains that the mass picket conducted by its officers and members did not constitute a strike and was
merely an expression of their grievance resulting from the lockout effected by the Hotel management. On the other hand,
the Hotel argues that the Union's deliberate defiance of the company rules and regulations was a concerted effort to
paralyze the operations of the Hotel, as the Union officers and members knew pretty well that they would not be allowed
to work in their bald or cropped hair style. For this reason, the Hotel argues that the Union committed an illegal strike on
January 18, 2002 and on January 26, 2002.

We rule for the Hotel.

Art. 212(o) of the Labor Code defines a strike as "any temporary stoppage of work by the concerted action of employees
as a result of an industrial or labor dispute."

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, we cited the
various categories of an illegal strike, to wit:

Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz.:

(1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing governmental
functions; or

(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the requisites of a
valid strike]; or

Labor II – 1
 (3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice
against non-union employees; or

(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers
[for example, prohibited acts under Art. 264(e) of the Labor Code]; or

(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or order issued by the
DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or

(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause.18

With the foregoing parameters as guide and the following grounds as basis, we hold that the Union is liable for conducting
an illegal strike for the following reasons:

First, the Union's violation of the Hotel's Grooming Standards was clearly a deliberate and concerted action to undermine
the authority of and to embarrass the Hotel and was, therefore, not a protected action. The appearances of the Hotel
employees directly reflect the character and well-being of the Hotel, being a five-star hotel that provides service to top-
notch clients. Being bald or having cropped hair per se does not evoke negative or unpleasant feelings. The reality that a
substantial number of employees assigned to the food and beverage outlets of the Hotel with full heads of hair suddenly
decided to come to work bald-headed or with cropped hair, however, suggests that something is amiss and insinuates a
sense that something out of the ordinary is afoot. Obviously, the Hotel does not need to advertise its labor problems with
its clients. It can be gleaned from the records before us that the Union officers and members deliberately and in apparent
concert shaved their heads or cropped their hair. This was shown by the fact that after coming to work on January 18,
2002, some Union members even had their heads shaved or their hair cropped at the Union office in the Hotel's
basement. Clearly, the decision to violate the company rule on grooming was designed and calculated to place the Hotel
management on its heels and to force it to agree to the Union's proposals.

In view of the Union's collaborative effort to violate the Hotel's Grooming Standards, it succeeded in forcing the Hotel to
choose between allowing its inappropriately hair styled employees to continue working, to the detriment of its reputation,
or to refuse them work, even if it had to cease operations in affected departments or service units, which in either way
would disrupt the operations of the Hotel. This Court is of the opinion, therefore, that the act of the Union was not merely
an expression of their grievance or displeasure but, indeed, a calibrated and calculated act designed to inflict serious
damage to the Hotel's finances or its reputation. Thus, we hold that the Union's concerted violation of the Hotel's
Grooming Standards which resulted in the temporary cessation and disruption of the Hotel's operations is an unprotected
act and should be considered as an illegal strike.

Second, the Union's concerted action which disrupted the Hotel's operations clearly violated the CBA's "No
Strike, No Lockout" provision, which reads:

ARTICLE XXII - NO STRIKE/WORK STOPPAGE AND LOCKOUT

SECTION 1. No Strikes

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.

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.19

Third, 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. 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.20 This rule prohibits the commission of any act which will disrupt or impede the early
settlement of the labor disputes that are under conciliation. 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

Labor II – 1
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.

Fourth, the Union failed to observe the mandatory 30-day cooling-off period and the seven-day strike ban before it
conducted the strike on January 18, 2002. The NLRC correctly held that the Union failed to observe the mandatory
periods before conducting or holding a strike. Records reveal that the Union filed its Notice of Strike on the ground of
bargaining deadlock on December 20, 2001. The 30-day cooling-off period should have been until January 19,
2002. On top of that, the strike vote was held on January 14, 2002 and was submitted to the NCMB only on
January 18, 2002; therefore, the 7-day strike ban should have prevented them from holding a strike until January
25, 2002. The concerted action committed by the Union on January 18, 2002 which resulted in the disruption of
the Hotel's operations clearly violated the above-stated mandatory periods.

Last, the Union committed illegal acts in the conduct of its strike. The NLRC ruled that the strike was illegal since, as
shown by the pictures21 presented by the Hotel, the Union officers and members formed human barricades and obstructed
the driveway of the Hotel. 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.

Furthermore, this Court, not being a trier of facts, finds no reason to alter or disturb the NLRC findings on this matter,
these findings being based on substantial evidence and affirmed by the CA.22 Factual findings of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect
but even finality, and bind us when supported by substantial evidence.23 Likewise, we are not duty-bound to delve into the
accuracy of the factual findings of the NLRC in the absence of clear showing that these were arrived at arbitrarily and/or
bereft of any rational basis.24

What then are the consequent liabilities of the Union officers and members for their participation in the illegal strike?

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." 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.25 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.26

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.

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. 27 We then held
in G & S Transport Corporation v. Infante:

With respect to backwages, the principle of a "fair day's wage for a fair day's labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed or otherwise illegally prevented from working. While it was found that respondents expressed their
intention to report back to work, the latter exception cannot apply in this case. In Philippine Marine Officer's Guild
v. Compañia Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees
Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a situation that
does not obtain in the case at bar.28

In this light, we stand by our recent rulings and reinstate the 61 Union members without backwages.

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WHEREFORE, premises considered, the CA's May 6, 2004 Decision in CA-G.R. SP No. 70778 is hereby AFFIRMED.

The CA's January 19, 2004 Decision in CA-G.R. SP No. 76568 is hereby SET ASIDE. The October 9, 2002 Decision of
the NLRC in NLRC NCR CC No. 000215-02 is hereby AFFIRMED with MODIFICATIONS, as follows:

The 29 Union officials are hereby declared to have lost their employment status, to wit:

1. LEO ANTONIO ATUTUBO

2. EDWIN E. BALLESTEROS
3. LORETTA DIVINA DE LUNA
4. INISUSAN DE VELEZ
5. DENNIS HABER
6. MARITES HERNANDEZ
7. BERNARD HUGO
8. NORZAMIA INTAL
9. LAURO JAVIER
10. SHANE LAUZ
11. MAY BELEN LEANO
12. EDGAR LINGHON
13. MILAGROS LOPEZ
14. JOSE MUZONES
15. RAY NERVA
16. JESUS NONAN
17. MARLYN OLLERO
18. CATHY ORDUNA
19. REYNALDO RASING
20. JUSTO TABUNDA
21. BARTOLOME TALISAYON
22. JUN TESORO
23. LYNDON TESORO
24. SALVADOR TIPONES
25. SONNY UY
26. WILFREDO VALLES, JR.
27. MEL VILLAHUCO
28. EMMA Q. DANAO
29. JORDAN ALEJANDRO

The 61 Union members are hereby REINSTATED to their former positions without backwages:

1. DANILO AGUINALDO
2. CLARO ABRANTE
3. FELIX ARRIESGADO
4. DAN BAUTISTA
5. MA. THERESA BONIFACIO
6. JUAN BUSCANO
7. ELY CHUA
8. ALLAN DELAGON
9. FRUMENCIO DE LEON
10. ELLIE DEL MUNDO
11. EDWIN DELOS CIENTOS
12. SOLOMON DIZON
13. YLOTSKI DRAPER
14. ERLAND COLLANTES
15. JONAS COMPENIDO
16. RODELIO ESPINUEVA
17. ARMANDO ESTACIO
18. SHERWIN FALCES
19. JELA FRANZUELA
20. REY GEALOGO
21. ALONA GERNOMINO
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 22. VINCENT HEMBRADOR
23. ROSLYN IBARBIA
24. JAIME IDIOMA, JR.
25. OFELIA LLABAN
26. RENATON LUZONG
27. TEODULO MACALINO
28. JAKE MACASAET
29. HERNANIE PABILONIA
30. HONORIO PACIONE
31. ANDREA VILLAFUERTE
32. MARIO PACULAN
33. JULIO PAJINAG
34. JOSELITO PASION
35. VICENTE PASIOLAN
36. HAZEL PENA
37. PEDRO POLLANTE
38. EDUARDO RAMOS
39. IMELDA RASIN
40. DELFIN RAZALAN
41. EVANGELINE REYES
42. RODOLFO REYES
43. BRIGILDO RUBIO
44. RIO SALCEDO
45. JUANITO SANCHEZ
46. MA. THERESA SANCHEZ
47. DONATO SAN AGUSTIN
48. RICARDO SOCORRO
49. VALERIO SOLIS
50. DOMINADOR SUAREZ
51. ORLANDO TABUGOCA
52. HELEN TALEON
53. ROBERT TANEGRA
54. LOURDES TAYAG
55. ROLANDO TOLENTINO
56. REYNALDO TRESNADO
57. RICHARD SABLADA
58. MAE YAP-DIANGCO
59. GILBERTO VEDASTO
60. DOMINGO VIDAROZAGA
61. DAN VILLANUEVA

In view of the possibility that the Hotel might have already hired regular replacements for the afore-listed 61 employees,
the Hotel may opt to pay SEPARATION PAY computed at one (1) month's pay for every year of service in lieu
of REINSTATEMENT, a fraction of six (6) months being considered one year of service.

Labor II – 1
 7.) G.R. No. 207898, October 19, 2016

ERROL RAMIREZ, JULITO APAS, RICKY ROSELO AND ESTEBAN MISSION,

JR., Petitioners, v. POLYSON INDUSTRIES, INC. AND WILSON S. YU, Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari  seeking to annul and set aside the
Decision1 and Resolution2 of the Court of Appeals (CA), dated January 23, 2013 and June 17,
2013, respectively, in CA-G.R. SP No. 125091. The assailed CA Decision affirmed the March 28,
2012 Resolution of the Fourth Division of the National Labor Relations Commission (NLRC),
which found that respondent corporation validly dismissed petitioners from their employment,
while the CA Resolution denied petitioners' Motion for Reconsideration.

The facts of the case are as follows:

Respondent Po!yson Industries, Inc. (Polyson) is a duly organized domestic corporation which
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is primarily engaged in the business of manufacturing plastic bags for supermarkets, department
stores and the like.

Petitioners, on the other hand, were employees of Polyson and were officers of Obrero Pilipino
(Obrero), the union of the employees of Polyson.

The instant case arose from a labor dispute, between herein petitioners and respondent
corporation, which was certified by the Secretary of the Department of Labor and Employment
(DOLE) to the NLRC for compulsory arbitration.

In its Position Paper3 submitted to the NLRC, Polyson alleged that: on April 28, 2011, it received
a notice of hearing from the DOLE with respect to the petition for certification election filed by
Obrero; on May 31, 2011, Polyson, through counsel and management representative, met with
the officers of Obrero, led by the union president, herein petitioner Ramirez; Obrero asked that it
be voluntarily recognized by Polyson as the exclusive bargaining agent of the rank-and-file
employees of Polyson, but the latter refused and opted for a certification election; furious at
such refusal, the Obrero officers threatened the management that the union will show its
collective strength in the coming days; on June 7, 2011, Polyson received a rush order from one
of its clients for the production of 100,000 pieces of plastic bags; the management of Polyson
informed the operators of its Cutting Section that they would be needing workers to work
overtime because of the said order; based on the usual practice of the company, those who
intend to perform overtime work were expected to sign the "time sheet" indicating their
willingness to work after their shift; on June 7, 2011, the supervisors approached the operators
but were told that they would be unable to work overtime because they have other
commitments after their shift; the supervisors then requested that the operators set aside their
time for the following day to work beyond their regular shift; on June 8, 2011, five (5) operators
indicated their desire to work overtime;4 however, after their regular shift, three of the five
workers did not work overtime which resulted in the delay in delivery of the client's order and
eventually resulted in the cancellation of the said order by reason of such delay;5 when
management asked the workers, who initially manifested their desire to work overtime, to
indicate in the time sheet the reason for their failure to do so, two of the three workers, namely,
Leuland Visca (Visca) and Samuel Tuting (Tuting) gave the same reason, to wit: "Ayaw nila/ng

Labor II – 1
iba na mag-OT [overtime] ako";6 the management then conducted an investigation and a
hearing where Visca affirmed his previous claim that petitioners were the ones who pressured
him to desist from rendering overtime work;7 on even date, Tuting executed a written statement
claiming that herein petitioners induced or threatened them not to work overtime;8 the
management then gave notices to petitioners asking them to explain why no disciplinary action
would be taken against them;9 petitioners submitted their respective explanations to the
management denying their liability;10 after evaluation, the management informed petitioners
that it has decided to terminate petitioners' employment on the ground that they instigated an
illegal concerted activity resulting in losses to the company.11 chanrobleslaw

In their Position Paper,12 petitioners denied the allegations of Polyson contending that they were
terminated from their employment not because they induced or threatened their co-employees
not to render overtime work but because they established a union which sought to become the
exclusive bargaining agent of the rank-and-file employees of Polyson; that their termination was
undertaken without affording them substantive and procedural due process; and that Polyson is
guilty of unfair labor practice.

Subsequently, on June 29, 2011, Obrero filed a Notice of Strike with the National Conciliation
and Mediation Board (NCMB) which was predicated on various grounds, among which was the
alleged illegal dismissal of herein petitioners.

Thereafter, on July 21, 2011, the DOLE Secretary certified the labor dispute to the NLRC for
immediate compulsory arbitration where the parties were required to maintain the  status quo, in
accordance with Article 263(g) of the Labor Code.13 chanrobleslaw

On December 26, 2011, the NLRC rendered its Decision14 finding petitioners illegally dismissed
from their employment and ordering their reinstatement to their former positions without loss of
seniority rights and other privileges and benefits as well as to pay petitioners their backwages
and attorney's fees. The NLRC ruled that, for failure of Polyson to submit in evidence petitioners'
supposed written explanations in answer to the company's Notice to Explain, Polyson failed to
discharge its burden of proving that petitioners were indeed terminated for a valid cause and in
accordance with due process.

Polyson then filed a Motion for Reconsideration15 submitting, for the consideration of the NLRC,
the subject written explanations of petitioners and reiterating their position that petitioners
were, indeed, validly dismissed.

On March 28, 2012, the NLRC issued a Resolution16 granting Polyson's Motion for
Reconsideration, thereby reversing and setting aside its December 26, 2011 Decision and
rendering a new judgment which declared petitioners as validly dismissed. In the said
Resolution, the NLRC found that Polyson was able to present sufficient evidence to establish that
petitioners' termination from employment was for a valid cause, as they were found guilty of
inducing or threatening their co-employees not to render overtime work, and that petitioners'
dismissal was in conformity with due process requirements.

Aggrieved by the above Resolution, petitioners filed a special civil action for certiorari with the
CA assailing the said Resolution and praying for the reinstatement of the December 26, 2011
Decision of the NLRC.17 chanrobleslaw

In its questioned Decision dated January 23, 2013, the CA denied petitioners' petition
for certiorari and affirmed the March 28, 2012 Resolution of the NLRC. The CA ruled that
petitioners' defense, which is anchored primarily on their denial of the allegations of Polyson,

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cannot overcome the categorical statements of Polyson's witnesses who identified petitioners as
the persons who induced or threatened them not to render overtime work.

Petitioners filed a Motion for Reconsideration,18 but the CA denied it in its Resolution dated June
17, 2013.

Hence, the present petition for review on certiorari based on the following grounds:
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THE HONORABLE COURT OF APPEALS THIRTEENTH DIVISION, COMMITTED GRAVE ABUSE OF

DISCRETION IN RENDERING THE HEREIN ASSAILED DECISIONS.

THE THIRTEENTH DIVISION OF THE COURT OF APPEALS MISAPPRECIATED THE ACTUAL FACTS
OF THE INSTANT CASE. THUS, A REVIEW IS NECESSARY AND THE ASSAILED DECISIONS
VACATED.19

The basic issue in the instant case is whether petitioners' dismissal from their employment was
valid.

Due process under the Labor Code involves two aspects: first is substantive, which refers to the
valid and authorized causes of termination of employment under the Labor Code; and second is
procedural, which points to the manner of dismissal.20 Thus, to justify fully the dismissal of an
employee, the employer must, as a rule, prove that the dismissal was for a just or authorized
cause and that the employee was afforded due process prior to dismissal.21 As a complementary
principle, the employer has the onus of proving with clear, accurate, consistent, and convincing
evidence the validity of the dismissal.22 chanrobleslaw

Anent the substantive aspect, the question that should be resolved, in the context of the facts
involved in and the charges leveled against petitioners in the present case, is whether
petitioners are guilty of an illegal act and, if so, whether such act is a valid ground for their
termination from employment.

In its Resolution dated March 28, 2012, the NLRC ruled that "[t]he evidence on record clearly
establishes that herein [petitioners] resorted to an illicit activity. The act of inducing and/or
threatening workers not to render overtime work, given the circumstances surrounding the
instant case, was undoubtedly a calculated effort amounting to 'overtime boycott' or 'work
slowdown'. [Petitioners], in their apparent attempt to make a statement as a response to
[Polyson's] refusal to voluntarily recognize Obrero Pilipino Polyson Industries Chapter as the sole
and exclusive bargaining representative of the rank-and-file employees, unduly caused [Polyson]
significant losses in the aggregate amount of Two Hundred Ninety Thousand Pesos
(PhP290,000.00)."23 chanrobleslaw

The Court finds no cogent reason to depart from the above findings, which were affirmed by the
CA. The Court is not duty-bound to delve into the accuracy of the factual findings of the NLRC in
the absence of clear showing that these were arbitrary and bereft of any rational basis.24 In the
present case, petitioners failed to convince this Court that the NLRC's findings that they
instigated the slowdown on June 8, 2011 are not reinforced by substantial evidence. Verily, said
findings have to be maintained and upheld. This Court reiterates, as a reminder to labor leaders,
the rule that union officers are duty-bound to guide their members to respect the
law.25  Contrarily, if the officers urge the members to violate the law and defy the duly-
cralawred

constituted authorities, their dismissal from the service is a just penalty or sanction for their
unlawful acts.26 chanrobleslaw

Labor II – 1
In any case, a review of the records at hand shows that the evidence presented by Polyson has
proven that petitioners are indeed guilty of instigating two employees to abstain from working
overtime. In the Cutting Section Overtime Sheet27 dated June 8, 2011, employees Visca and
Tuting indicated that "ayaw nila/ng iba na mag-OT [overtime] ako" as the reason why they did
not render overtime work despite having earlier manifested their desire to do so. In the
Administrative Hearing28 conducted on June 9, 2011, Visca identified petitioners as the persons
who pressured them not to work overtime. In the same manner, Tuting, in his written
statement,29 also pointed to petitioners as the ones who told him not to work overtime.

Petitioners question the credibility of Tuting and Visca's claims contending that these are self-
serving and that they were merely used by the management to manufacture evidence against
them. However, there is nothing on record to indicate any ulterior motive on the part of Visca
and Tuting to fabricate their claim that petitioners were the ones who threatened or induced
them not to work overtime. Absent convincing evidence showing any cogent reason why a
witness should testify falsely, his testimony may be accorded full faith and credit.30 Moreover,
petitioners' defense consists of mere denials and negative assertions. As between the affirmative
assertions of unbiased witnesses and a general denial and negative assertions on the part of
petitioners, weight must be accorded to the affirmative assertions.31 chanrobleslaw

In addition, the Court finds no error in the findings of the NLRC in its questioned Resolution that,
contrary to petitioners' claims, the slowdown was indeed planned, to wit:
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The abovementioned finding is bolstered by the Incident Report dated 10 June 2011 wherein it is
stated that upon inquiry by Respondent Wilson Yu as regards the reason for the non-rendering
of overtime work, [petitioner] Errol Ramirez retorted, thus: "[DI BA] SABI NINYO EIGHT (8)
HOURS LANG KAMI. EH DI EIGHT (8) NA LANG. KUNG MAG[-]OOVERTIME KAMI DAPAT LAHAT
MAY OVERTIME. AYAW KO MAGKAWATAK WATAK ANG MGA TAO KO." It is, therefore,
unmistakably clear that [petitioners] were completely aware of and, in fact, were responsible for
what transpired during the scheduled overtime. [Petitioners] cannot now feign ignorance and
simply deny liability upon the implausible pretext that the "overtime boycott" was undertaken
without their knowledge and not upon their prodding. Note that the exchange was witnessed by
several other workers and, interestingly, was never disputed by herein [petitioners].32 chanroblesvirtuallawlibrary

The Court agrees with both the NLRC and the CA that petitioners are guilty of instigating their
co-employees to commit slowdown, an inherently and essentially illegal activity even in the
absence of a no-strike clause in a collective bargaining contract, or statute or
rule.33 Jurisprudence defines a slowdown as follows:
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x x x a "strike on the installment plan;" as a willful reduction in the rate of work by

concerted action of workers for the purpose of restricting the output of the employer,
in relation to a labor dispute; as an activity by which workers, without a complete
stoppage of work, retard production or their performance of duties and functions to
compel management to grant their demands. The Court also agrees that such a
slowdown is generally condemned as inherently illicit and unjustifiable, because while
the employees "continue to work and remain at their positions and accept the wages
paid to them," they at the same time "select what part of their allotted tasks they care
to perform of their own volition or refuse openly or secretly, to the employer's
damage, to do other work;" in other words, they "work on their own terms. 34

The Court is not persuaded by petitioners' contention that they are not guilty of "illegal
concerted activity" as they claim that this term contemplates a "careful planning of a

Labor II – 1
considerable number of participants to insure that the desired result is attained."
Nothing in the law requires that a slowdown be carefully planned and that it be participated in by
a large number of workers. The essence of this kind of strike is that the workers do not
quit their work but simply reduce the rate of work in order to restrict the output or
delay the production of the employer. It has been held that while a cessation of work
by the concerted action of a large number of employees may more easily accomplish
the object of the work stoppage than if it is by one person, there is, in fact no
fundamental difference in the principle involved as far as the number of persons
involved is concerned, and thus, if the act is the same, and the purpose to be
accomplished is the same, there is a strike, whether one or more than one have ceased
to work.35 Furthermore, it is not necessary that any fixed number of employees should
quit their work in order to constitute the stoppage a strike, and the number of persons
necessary depends in each case on the peculiar facts in the case and no definite rule
can be laid down.36 As discussed above, petitioners engaged in slowdown when they induced
two of their co-workers to quit their scheduled overtime work and they accomplished their
purpose when the slowdown resulted in the delay and restriction in the output of Polyson on
June 8, 2011.

With respect to procedural due process, it is settled that in termination proceedings of

employees, procedural due process consists of the twin requirements of notice and
hearing.37 The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the second informs the employee of
the employer's decision to dismiss him.38 The requirement of a hearing is complied with as long
as there was an opportunity to be heard, and not necessarily that an actual hearing was
conducted.39 In the present case, Polyson was able to establish that these requirements were
sufficiently complied with.

As to petitioners' liability, the second paragraph of Article 264(a) of the Labor Code provides:
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xxxx

x x x Any union officer who knowingly participates in an illegal strike and any worker
or union officer who knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment status: 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.40

Finally, it cannot be overemphasized that strike, as the most preeminent economic weapon of
the workers to force management to agree to an equitable sharing of the joint product of labor
and capital, exert some disquieting effects not only on the relationship between labor and
management, but also on the general peace and progress of society and economic well-being of
the State.41 This weapon is so critical that the law imposes the supreme penalty of dismissal on
union officers who irresponsibly participate in an illegal strike and union members who commit
unlawful acts during a strike.42 The responsibility of the union officers, as main players in an
illegal strike, is greater than that of the members as the union officers have the duty to guide
their members to respect the law.43 The policy of the State is not to tolerate actions directed at
the destabilization of the social order, where the relationship between labor and management
has been endangered by abuse of one party's bargaining prerogative, to the extent of
disregarding not only the direct order of the government to maintain the status quo, but the
welfare of the entire workforce though they may not be involved in the dispute.44 The grave

Labor II – 1
penalty of dismissal imposed on the guilty parties is a natural consequence, considering the
interest of public welfare.45
chanrobleslaw

WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the Court of
Appeals, dated January 23, 2013 and June 17, 2013, respectively, in CA-G.R. SP No. 125091
are AFFIRMED.

Labor II – 1
8.) G.R. No. 147080. April 26, 2005

CAPITOL MEDICAL CENTER, INC., Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JAIME IBABAO, JOSE BALLESTEROS, RONALD CENTENO,
NARCISO SARMIENTO, EDUARDO CANAVERAL, SHERLITO DELA CRUZ, SOFRONIO COMANDAO,
MARIANO GALICIA, RAMON MOLOD, CARMENCITA SARMIENTO, HELEN MOLOD, ROSA COMANDAO,
ANGELITO CUIZON, ALEX MARASIGAN, JESUS CEDRO, ENRICO ROQUE, JAY PERILLA, HELEN
MENDOZA, MARY GLADYS GEMPEROSO, NINI BAUTISTA, ELENA MACARUBBO, MUSTIOLA SALVACION
DAPITO, ALEXANDER MANABE, MICHAEL EUSTAQUIO, ROSE AZARES, FERNANDO MANZANO, HENRY
VERA CRUZ, CHITO MENDOZA, FREDELITA TOMAYAO, ISABEL BRUCAL, MAHALKO LAYACAN, RAINIER
MANACSA, KAREN VILLARENTE, FRANCES ACACIO, LAMBERTO CONTI, LORENA BEACH, JUDILAH
RAVALO, DEBORAH NAVE, MARILEN CABALQUINTO, EMILIANA RIVERA, MA. ROSARIO URBANO,
ROWENA ARILLA, CAPITOL MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW, GREGORIO DEL
PRADO, ARIEL ARAJA, and JESUS STA. BARBARA, JR., Respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review of the Decision of the Court of Appeals (CA) in CA-G.R. SP No. 57500 and its
1 

Resolution denying the motion for reconsideration thereof.

The Antecedents 2

Whether the respondent Capitol Medical Center Employees Association-Alliance of Filipino Workers (the Union, for
brevity) was the exclusive bargaining agent of the rank-and-file employees of the petitioner Capitol Medical Center,
Inc. had been the bone of contention between the Union and the petitioner. The petitioner’s refusal to negotiate for a
collective bargaining agreement (CBA) resulted in a union-led strike on April 15, 1993.

The Union had to contend with another union – the Capitol Medical Center Alliance of Concerned Employees (CMC-
ACE) – which demanded for a certification election among the rank-and-file employees of the petitioner. Med-Arbiter
Brigida Fadrigon granted the petition, and the matter was appealed to the Secretary of Labor and Employment
(SOLE). Undersecretary Bienvenido E. Laguesma rendered a Resolution on November 18, 1994 granting the
appeal. He, likewise, denied the motion filed by the petitioner and the CMC-ACE. The latter thereafter brought the
matter to the Court which rendered judgment on February 4, 1997 affirming the resolution of Undersecretary
Laguesma, thus:

1. Dismissing the petition for certification election filed by the Capitol Medical Center Alliance of Concerned
Employees-United Filipino Services Workers for lack of merit; and

2. Directing the management of the Capitol Medical Center to negotiate a CBA with the Capitol Medical Center
Employees Association-Alliance of Filipino Workers, the certified bargaining agent of the rank-and-file employees. 3

The decision of the Court became final and executory. Thereafter, in a Letter dated October 3, 1997 addressed to
Dr. Thelma N. Clemente, the President and Director of the petitioner, the Union requested for a meeting to discuss
matters pertaining to a negotiation for a CBA, conformably with the decision of the Court. However, in a Letter to the
4 

Union dated October 10, 1997, Dr. Clemente rejected the proposed meeting, on her claim that it was a violation of
Republic Act No. 6713 and that the Union was not a legitimate one. On October 15, 1997, the petitioner filed a
Petition for the Cancellation of the Union’s Certificate of Registration with the Department of Labor and Employment
(DOLE) on the following grounds:

3) Respondent has failed for several years to submit annually its annual financial statements and other documents
as required by law. For this reason, respondent has long lost its legal personality as a union.

Labor II – 1
4) Respondent also engaged in a strike which has been declared illegal by the National Labor Relations
Commission. 5

Apparently unaware of the petition, the Union reiterated its proposal for CBA negotiations in a Letter dated October
16, 1997 and suggested the date, time and place of the initial meeting. The Union further reiterated its plea in
another Letter dated October 28, 1997, to no avail.
6 

Instead of filing a motion with the SOLE for the enforcement of the resolutions of Undersecretary Laguesma as
affirmed by this Court, the Union filed a Notice of Strike on October 29, 1997 with the National Conciliation and
Mediation Board (NCMB), serving a copy thereof to the petitioner. The Union alleged as grounds for the projected
strike the following acts of the petitioner: (a) refusal to bargain; (b) coercion on employees; and (c) interference/
restraint to self-organization. 7

A series of conferences was conducted before the NCMB (National Capital Region), but no agreement was
reached. On November 6, 1997, the petitioner even filed a Letter with the Board requesting that the notice of strike
be dismissed; the Union had apparently failed to furnish the Regional Branch of the NCMB with a copy of a notice of
8 

the meeting where the strike vote was conducted.

On November 20, 1997, the Union submitted to the NCMB the minutes of the alleged strike vote purportedly held on
9 

November 10, 1997 at the parking lot in front of the petitioner’s premises, at the corner of Scout Magbanua Street
and Panay Avenue, Quezon City. It appears that 178 out of the 300 union members participated therein, and the
results were as follows: 156 members voted to strike; 14 members cast negative votes; and eight votes were
spoiled.10

On November 28, 1997, the officers and members of the Union staged a strike. Subsequently, on December 1,
1997, the Union filed an ex parte motion with the DOLE, praying for its assumption of jurisdiction over the dispute.
The Union likewise prayed for the imposition of appropriate legal sanctions, not limited to contempt and other
penalties, against the hospital director/president and other responsible corporate officers for their continuous
refusal, in bad faith, to bargain collectively with the Union, to adjudge the same hospital director/president and other
corporate officers guilty of unfair labor practices, and for other just, equitable and expeditious reliefs in the
premises. 11

On December 4, 1997, the SOLE issued an Order, assuming jurisdiction over the ongoing labor dispute. The
decretal portion of the order reads:

WHEREFORE, this Office now assumes jurisdiction over the labor disputes at Capitol Medical Center pursuant to
Article 263(g) of the Labor Code, as amended. Consequently, all striking workers are directed to return to work
within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and
accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties
are directed to cease and desist from committing any act that may exacerbate the situation.

Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-
proposals leading to the conclusion of the collective bargaining agreements in compliance with aforementioned
Resolution of the Office as affirmed by the Supreme Court.

SO ORDERED. 12

In obedience to the order of the SOLE, the officers and members of the Union stopped their strike and returned to
work.

For its part, the petitioner filed a petition to declare the strike illegal with the National Labor Relations Commission
13 

(NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In its position paper, the petitioner appended the
affidavit of Erwin Barbacena, the overseer of the property across the hospital which was being used as a parking lot,
at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. Also included were the affidavits of Simon
J. Tingzon and Reggie B. Barawid, the petitioner’s security guards assigned in front of the hospital premises. They
attested to the fact that no secret balloting took place at the said parking lot from 6:00 a.m. to 7:00 p.m. of

Labor II – 1
November 10, 1997. The petitioner also appended the affidavit of Henry V. Vera Cruz, who alleged that he was a
14 

member of the Union and had discovered that signatures on the Statements of Cash Receipt Over Disbursement
submitted by the Union to the DOLE purporting to be his were not his genuine signatures; the affidavits of 17 of its
15 

employees, who declared that no formal voting was held by the members of the Union on the said date, were also
submitted. The latter employees also declared that they were not members of any union, and yet were asked to sign
documents purporting to be a strike vote attendance and unnumbered strike vote ballots on different dates from
November 8 to 11, 1997.

In their position paper, the respondents appended the joint affidavit of the Union president and those members who
alleged that they had cast their votes during the strike vote held on November 10, 1997. 16

In the meantime, on September 30, 1998, the Regional Director of the DOLE rendered a Decision denying the
petition for the cancellation of the respondent Union’s certificate of registration. The decision was affirmed by the
Director of the Bureau of Labor Relations on December 29, 1998.

In a parallel development, Labor Arbiter Facundo L. Leda rendered a Decision on December 23, 1998 in NLRC
NCR Case No. 00-12-08644-97 in favor of the petitioner, and declared the strike staged by the respondents illegal.
The fallo of the decision reads:

1. Declaring as illegal the strike staged by the respondents from November 28, 1997 to December 5, 1997;

2. Declaring respondent Jaime Ibabao, in his capacity as union president, the other union officers, and respondents
Ronald Q. Centeno, Michael Eustaquio and Henry Vera Cruz to have lost their employment status with petitioner;
and

3. Ordering the above respondents to pay, jointly and severally, petitioner the amount of Two Hundred Thousand
Pesos (₱200,000.00) by way of damages. 17

The Labor Arbiter ruled that no voting had taken place on November 10, 1997; moreover, no notice of such voting
was furnished to the NCMB at least twenty-four (24) hours prior to the intended holding of the strike vote. According
to the Labor Arbiter, the affidavits of the petitioner’s 17 employees who alleged that no strike vote was taken, and
supported by the affidavit of the overseer of the parking lot and the security guards, must prevail as against the
minutes of the strike vote presented by the respondents. The Labor Arbiter also held that in light of Article 263(9) of
the Labor Code, the respondent Union should have filed a motion for a writ of execution of the resolution of
Undersecretary Laguesma which was affirmed by this Court instead of staging a strike.

The respondents appealed the decision to the NLRC which rendered a Decision on June 14, 1999, granting their
18 

appeal and reversing the decision of the Labor Arbiter. The NLRC also denied the petitioner’s petition to declare the
strike illegal. In resolving the issue of whether the union members held a strike vote on November 10, 1997, the
NLRC ruled as follows:

We find untenable the Labor Arbiter’s finding that no actual strike voting took place on November 10, 1997, claiming
that this is supported by the affidavit of Erwin Barbacena, the overseer of the parking lot across the hospital, and the
sworn statements of nineteen (19) (sic) union members. While it is true that no strike voting took place in the parking
lot which he is overseeing, it does not mean that no strike voting ever took place at all because the same was
conducted in the parking lot immediately/directly fronting, not across, the hospital building (Annexes "1-J," "1-K" to
"1-K-6"). Further, it is apparent that the nineteen (19) (sic) hospital employees, who recanted their participation in
the strike voting, did so involuntarily for fear of loss of employment, considering that their Affidavits are uniform
and pro forma (Annexes "H-2" to "H-19"). 19

The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9, Series of 1997, absent a showing that the
NCMB decided to supervise the conduct of a secret balloting and informed the union of the said decision, or that
any such request was made by any of the parties who would be affected by the secret balloting and to which the
NCMB agreed, the respondents were not mandated to furnish the NCMB with such notice before the strike vote was
conducted. 20

Labor II – 1
The petitioner filed a motion for the reconsideration of the decision, but the NLRC denied the said motion on
September 30, 1999. 21

The petitioner filed a petition for certiorari with the CA assailing the decision and resolution of the NLRC on the
following allegation:

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, ACTED CAPRICIOUSLY, AND
CONTRAVENED THE LAW AND ESTABLISHED JURISPRUDENCE IN REVERSING THE LABOR ARBITER’S
DECISION DATED DECEMBER 23, 1998 (ANNEX "E") AND IN UPHOLDING THE LEGALITY OF THE STRIKE
STAGED BY PRIVATE RESPONDENTS FROM NOVEMBER 28, 1997 TO DECEMBER 5, 1997. 22

On September 29, 2000, the CA rendered judgment dismissing the petition and affirming the assailed decision and
resolution of the NLRC.

The petitioner filed the instant petition for review on certiorari under Rule 45 of the Rules of Court on the following
ground:

THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE NLRC’S FINDING THAT RESPONDENTS
COMPLIED WITH THE LEGAL REQUIREMENTS FOR STAGING THE SUBJECT STRIKE. 23

The petitioner asserts that the NLRC and the CA erred in holding that the submission of a notice of a strike
vote to the Regional Branch of the NCMB as required by Section 7, Rule XXII of the Omnibus Rules
Implementing the Labor Code, is merely directory and not mandatory. The use of the word "shall" in the
rules, the petitioner avers, indubitably indicates the mandatory nature of the respondent Union’s duty to
submit the said notice of strike vote.

The petitioner contends that the CA erred in affirming the decision of the NLRC which declared that the respondents
complied with all the requirements for a lawful strike. The petitioner insists that, as gleaned from the affidavits of the
17 union members and that of the overseer, and contrary to the joint affidavit of the officers and some union
members, no meeting was held and no secret balloting was conducted on November 10, 1997.

The petitioner faults the CA and the NLRC for holding that a meeting for a strike vote was held on the said date by
the respondents, despite the fact that the NLRC did not conduct an ocular inspection of the area where the
respondent’s members allegedly held the voting. The petitioner also points out that it adduced documentary
evidence in the form of affidavits executed by 17 members of the respondent union which remained unrebutted. The
petitioner also posits that the CA and the NLRC erred in reversing the finding of the Labor Arbiter; furthermore, there
was no need for the respondent union to stage a strike on November 28, 1997 because it had filed an urgent motion
with the DOLE for the enforcement and execution of the decision of this Court in G.R. No. 118915.

The petition is meritorious.

We agree with the petitioner that the respondent Union failed to comply with the second paragraph of Section 10,
Rule XXII of the Omnibus Rules of the NLRC which reads:

Section 10. Strike or lockout vote. – A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called for the
purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer,
corporation or association or the partners obtained by a secret ballot in a meeting called for the purpose.

The regional branch of the Board may, at its own initiative or upon the request of any affected party,
supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the
regional branch of the Board and notice of meetings referred to in the preceding paragraph at least twenty-
four (24) hours before such meetings as well as the results of the voting at least seven (7) days before the
intended strike or lockout, subject to the cooling-off period provided in this Rule.

Labor II – 1
Although the second paragraph of Section 10 of the said Rule is not provided in the Labor Code of the Philippines,
nevertheless, the same was incorporated in the Omnibus Rules Implementing the Labor Code and has the force
and effect of law.
24

Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the Labor Code, a union
intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least
twenty-four (24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the meeting
of the union members for the conduct of a strike vote, the NCMB would be unable to supervise the holding of the
same, if and when it decides to exercise its power of supervision. In National Federation of Labor v. NLRC, the 25 

Court enumerated the notices required by Article 263 of the Labor Code and the Implementing Rules, which
include the 24-hour prior notice to the NCMB:

1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional
Branch of the NCMB, copy furnished the employer of the union;

2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike
thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice.
However, in the case of union busting where the union’s existence is threatened, the cooling-off period
need not be observed.

4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour
prior notice to NCMB. The decision to declare a strike requires the secret-ballot approval of majority of the
total union membership in the bargaining unit concerned.

5) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended
strike or lockout, subject to the cooling-off period.

A union is mandated to notify the NCMB of an impending dispute in a particular bargaining unit via a notice of strike.
Thereafter, the NCMB, through its conciliator-mediators, shall call the parties to a conference at the soonest
possible time in order to actively assist them in exploring all possibilities for amicable settlement. In the event of the
failure in the conciliation/mediation proceedings, the parties shall be encouraged to submit their dispute for voluntary
arbitration. However, if the parties refuse, the union may hold a strike vote, and if the requisite number of votes is
obtained, a strike may ensue. The purpose of the strike vote is to ensure that the decision to strike broadly rests with
the majority of the union members in general and not with a mere minority, and at the same time, discourage wildcat
strikes, union bossism and even corruption. A strike vote report submitted to the NCMB at least seven days prior to
26 

the intended date of strike ensures that a strike vote was, indeed, taken. In the event that the report is false, the
seven-day period affords the members an opportunity to take the appropriate remedy before it is too late. The 15 to
27 

30 day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the
assistance of the NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an
28 

opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members. 29

The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the
meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a
strike vote; (b) give the NCMB ample time to decide on whether or not there is a need to supervise the
conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c)
should the NCMB decide on its own initiative or upon the request of an interested party including the
employer, to supervise the strike vote, to give it ample time to prepare for the deployment of the requisite
personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the
union’s decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine
for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The
failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior
to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal.

In this case, the respondent Union failed to comply with the 24-hour prior notice requirement to the NCMB
before it conducted the alleged strike vote meeting on November 10, 1997. As a result, the petitioner
Labor II – 1
complained that no strike vote meeting ever took place and averred that the strike staged by the respondent
union was illegal.

Conformably to Article 264 of the Labor Code of the Philippines and Section 7, Rule XXII of the Omnibus Rules
30 

Implementing the Labor Code, no labor organization shall declare a strike unless supported by a majority vote of
31 

the members of the union obtained by secret ballot in a meeting called for that purpose. The requirement is
mandatory and the failure of a union to comply therewith renders the strike illegal. The union is thus mandated to
32 

allege and prove compliance with the requirements of the law.

In the present case, there is a divergence between the factual findings of the Labor Arbiter, on the one hand, and
the NLRC and the CA, on the other, in that the Labor Arbiter found and declared in his decision that no secret voting
ever took place in the parking lot fronting the hospital on November 10, 1997 by and among the 300 members of the
respondent Union. Erwin Barbacena, the overseer of the only parking lot fronting the hospital, and security guards
Simon Tingzon and Reggie Barawid, declared in their respective affidavits that no secret voting ever took place on
November 10, 1997; 17 employees of the petitioner also denied in their respective statements that they were not
members of the respondent Union, and were asked to merely sign attendance papers and unnumbered votes. The
NLRC and the CA declared in their respective decisions that the affidavits of the petitioner’s 17 employees had no
probative weight because the said employees merely executed their affidavits out of fear of losing their jobs. The
NLRC and the CA anchored their conclusion on their finding that the affidavits of the employees were uniform
and pro forma.

We agree with the finding of the Labor Arbiter that no secret balloting to strike was conducted by the
respondent Union on November 10, 1997 at the parking lot in front of the hospital, at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City. This can be gleaned from the affidavit of Barbacena and the
joint affidavit of Tingzon and Barawid, respectively:

1. That I am working as an overseer of a parking lot owned by Mrs. Madelaine Dionisio and located right in front of
the Capitol Medical Center, specifically at the corner of Scout Magbanua Street and Panay Avenue, Quezon City;

2. That on November 10, 1997, during my entire tour of duty from 6:00 a.m. to 6:00 p.m., no voting or election was
conducted in the aforementioned parking space for employees of the Capitol Medical Center and/or their guests, or
by any other group for that matter. 33

1. That I, Simon J. Tingzon, am a security officer of Veterans Philippine Scout Security Agency (hereinafter referred
to as VPSSA), assigned, since July 1997 up to the present, as Security Detachment Commander at Capitol Medical
Center (hereinafter referred to as CMC) located at Scout Magbanua corner Panay Avenue, Quezon City;

2. That my (Tingzon) functions as such include over-all in charge of security of all buildings and properties of CMC,
and roving in the entire premises including the parking lots of all the buildings of CMC;

3. That I, Reggie B. Barawid, am a security guard of VPSSA, assigned, since June 1997 up to the present, as
security guard at CMC;

4. That my (Barawid) functions as such include access control of all persons coming in and out of CMC’s buildings
and properties. I also sometimes guard the parking areas of CMC;

5. That on November 10, 1997, both of us were on duty at CMC from 7:00 a.m. to 7:00 p.m., with me (Barawid)
assigned at the main door of the CMC’s Main Building along Scout Magbanua St.;

6. That on said date, during our entire tour of duty, there was no voting or election conducted in any of the four
parking spaces for CMC personnel and guests. 34

The allegations in the foregoing affidavits belie the claim of the respondents and the finding of the NLRC that a
secret balloting took place on November 10, 1997 in front of the hospital at the corner of Scout Magbanua Street
Labor II – 1
and Panay Avenue, Quezon City. The respondents failed to prove the existence of a parking lot in front of the
hospital other than the parking lot across from it. Indeed, 17 of those who purportedly voted in a secret voting
executed their separate affidavits that no secret balloting took place on November 10, 1997, and that even if they
were not members of the respondent Union, were asked to vote and to sign attendance papers. The respondents
failed to adduce substantial evidence that the said affiants were coerced into executing the said affidavits. The bare
fact that some portions of the said affidavits are similarly worded does not constitute substantial evidence that the
petitioner forced, intimidated or coerced the affiants to execute the same.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of Appeals and NLRC
are SET ASIDE AND REVERSED. The Decision of the Labor Arbiter is REINSTATED. No costs.

Labor II – 1
9.) G.R. No. 145428             July 7, 2004

TRANS-ASIA SHIPPING LINES, INC. - UNLICENSED CREWS EMPLOYEES UNION – ASSOCIATED LABOR
UNIONS (TASLI-ALU) and TRANS-ASIA SHIPPING LINES INC.- DECK AND ENGINE (LICENSED CREW)-
OFFICERS UNION-ASSOCIATION OF PROFESSIONALS, SUPERVISORS, OFFICE AND TECHNICAL
EMPLOYEES UNION (APSOTEU); AND MELCHOR VILLANUEVA, GERARDO SUAN, NESTOR SANCHEZ,
LUCAS APAS, JR., BONIFACIO YSAO, NICASIO CALAPRE, GILBERT SUMALPONG, ARNULFO VICTORIO,
ALBERTO SILVA, NEIL ARNEJO, DANILO JAYA, SOCRATES ALCOS, ARNOLD ARCIPE, JOSEL
ARRANGUEZ, OSCAR ARRANGUEZ, FRANCISCO CUIZON, RAMON ORTEGA, FRANCISCO MANTILLA and
MATEO MARAVILLAS, petitioners,
vs.
COURT OF APPEALS and TRANS-ASIA SHIPPING LINES, INC., respondents.

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by Trans-Asia Shipping Lines, Inc.-Unlicensed Crews
Employees Union-Associated Labor Unions (TASLI-ALU), Trans-Asia Shipping Lines, Inc.-Deck and Engine
(Licensed Crew) Officers Union-Associated Professionals, Supervisors, Officers and Technical Employees Union
(TASLI-APSOTEU) and nineteen (19) of their members, seeking to reverse and set aside the Decision dated May
1 

10, 2000 of the Court of Appeals in CA-G.R. SP No. 54393, which enjoined the Secretary of Labor from
implementing his "reinstatement order" pending resolution by the National Labor Relations Commission (NLRC) of
the legality of the individual petitioners' dismissal from employment. Likewise sought to be reversed and set aside is
the appellate court's Resolution dated September 13, 2000 denying the petitioners' motion for reconsideration.

The case arose from the following factual backdrop:

Respondent Trans-Asia Shipping Lines, Inc. is a domestic corporation engaged in coastwise shipping services for
the transportation of passengers and cargoes. It operates thirteen (13) vessels servicing seventeen (17) points in
the Visayas and Mindanao, including Cagayan de Oro, Ozamis, Zamboanga, Tagbilaran, Leyte, Masbate, Iloilo and
Bacolod, with the Port of Cebu as its base. The respondent employs 700 employees, more or less.

Petitioner TASLI-ALU is a labor union of the respondent's rank-and-file employees, while petitioner TASLI-
APSOTEU is a labor union of its supervisory employees. The individual petitioners are members of these two unions
and the respondent's employees.

On July 6 and 7, 1999, the two unions filed separate notices of strike with the National Conciliation and Mediation
Board, Regional Branch VII (NCMB-RB VII) against the respondent on the ground of unfair labor practice. Acting
thereon and to avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued
the Order dated July 20, 1999 certifying the labor dispute to the NLRC for compulsory arbitration pursuant to Article
263(g) of the Labor Code and enjoining any strike or lock-out. Further, the parties were directed to cease and desist
2 

from committing any act that would exacerbate the situation.  3

Despite the aforesaid order, the petitioners went on strike on July 23, 1999, paralyzing the respondent's operations.
The Secretary of Labor was thus constrained to issue the Order dated July 23, 1999 directing all striking
workers "to return to work within twelve (12) hours from receipt of this Order and for the Company to
accept them back under the same terms and conditions prevailing before the strike." 4

On even date, twenty-one (21) of the striking workers, including the individual petitioners, were dismissed from
employment by the respondent for alleged violation of the "cease-and-desist" directive contained in the Order of July
20, 1999 by waging an illegal strike. The petitioners, through their respective officers, manifested their willingness to
comply with the "return-to-work" order, provided the twenty-one (21) employees would also be allowed to report
back for work. They demanded that the respondent issue "embarkation orders" to the positions they held prior to the

Labor II – 1
strike before they lift the pickets and barricades. The respondent refused, claiming that the assignment of an
employee to a post is purely a management prerogative

The bone of contention between the petitioners, on the one hand, and the respondent, on the other, hinged
on the proper interpretation of the phrase "for the company to accept them back under the same terms and
conditions prevailing before the strike." The terminated workers asserted that said phrase must be
construed to mean that they be reinstated to their former assignments. The respondent posited that it refers
only to their salary grades, rank and seniority, but cannot encompass the usurpation of management's
prerogative to determine where its employees are to be assigned nor to determine their job assignments.
Consequently, the strike continued as the parties insisted on their respective hard-line stance. To aggravate the
situation, the Coalition of Shipowners and Arrastre Operators, of which the respondent is a member, supported the
latter by not operating their vessels beginning July 26, 1999.

Recognizing that protracted work disruptions were inimical not only to the parties involved but to the national interest
as well, the Secretary of Labor issued the Order dated July 27, 1999, stating in part:

WHEREFORE, the dispositions of this Office's Order dated 23 July 1999 are hereby reiterated. The striking
workers are directed to return to work immediately and the Company to accept them back under the same
terms and conditions of employment prevailing prior to the strike.

The effects of the termination of the twenty-one (21) employees are hereby suspended and management is
likewise directed to reinstate them.

The National Labor Relations Commission (NLRC) is enjoined to hold marathon hearings and terminate the
proceedings within sixty (60) days from start thereof.

This Office likewise reiterates the directive deputizing PNP Regional Director Danilo G. Flores to assist in
the smooth implementation of this Order. The deputization includes: (1) maintenance of free ingress to and
egress from the premises of the Company, specifically the removal of all blockades in the Company's
entrances and exits; (2) ensuring the maintenance of peace and order; and (3) ensuring the safety and
security of the Company employees who are returning to work in compliance with our Order. 5

On July 28 and 29, 1999, then NLRC Chairman Rogelio I. Rayala met with the parties. The petitioners manifested
that the 21 employees be issued their respective embarkation orders to the vessels they were assigned as crew
members as a precondition to their reporting for work. Chairman Rayala directed them to comply with the Secretary
6 

of Labor's "return-to-work" order. The respondent consequently reinstated the twenty-one (21) employees. Despite
7 

their reinstatement, however, the respondent continued to refuse to issue the said employees' "embarkation orders"
to their former ship assignments. The employees, thus, refused to report back for work.

The respondent forthwith filed with the Court of Appeals (CA) a petition for certiorari alleging grave abuse of
discretion on the part of the Secretary of Labor in issuing the reinstatement order of the dismissed employees. The
said order allegedly constituted an unlawful deprivation of property and denial of due process for it prevented the
respondent from taking disciplinary action and seeking redress for the huge property losses that it suffered as a
result of the petitioners' illegal mass action.

On August 26, 1999, the CA, through the former Tenth Division, issued a temporary restraining order enjoining the
Secretary of Labor from implementing the reinstatement order contained in his Order of July 27, 1999. The pertinent
portion of the CA resolution reads:

Meantime, in the interest of substantial justice and national interest, a temporary restraining order is hereby
ISSUED enjoining the implementation of public respondent's directive for petitioner to reinstate the
terminated workers. 8

On August 30, 1999, bolstered by the temporary restraining order issued by the CA, the respondent issued a
memorandum terminating the employment of the subject twenty-one (21) employees, including the individual
petitioners.

Labor II – 1
On September 27, 1999, the NLRC, Fourth Division, issued an Order directing the parties to comply faithfully with
the July 20, 1999 Order of the Secretary of Labor. The respondent manifested before the CA that a case was then
9 

pending with the NLRC, involving the issue of the legality of the strike and the individual petitioners' dismissal. The
respondent, thus, prayed that, pending the resolution thereof, a writ of preliminary injunction be issued to enjoin the
NLRC from implementing its Order dated September 27, 1999 directing the respondent to reinstate or accept back
the individual petitioners. Granting this prayer, the CA, upon the respondent's filing of a bond in the amount of
P1,000,000.00, promulgated the Resolution dated November 5, 1999, issuing the writ of preliminary injunction and
enjoining the Secretary of Labor, the NLRC, Fourth Division, and their agents and representatives from
implementing their respective orders directing the reinstatement of the individual petitioners.10

Thereafter, on May 10, 2000, the appellate court rendered the assailed decision. The appellate court ruled in favor
of the respondent, holding that the petitioners' demand that they be issued "embarkation orders" could not be
properly considered as "under the same terms and conditions prevailing before the strike" because the same
constituted undue interference with the respondent's management prerogative. The CA held that the continuous
refusal of the striking workers to comply with the "return-to-work" order and the violence that erupted during the
strike justified the respondent's position not to reinstate the dismissed employees. The appellate court, likewise,
noted that the striking workers might resort to sabotaging the operations of the respondent, and thereby endanger
the lives of its passengers. It thus ruled that the respondent's refusal to reinstate the twenty-one (21) employees
who participated in the illegal strike was a legitimate precautionary measure properly exercised. The dispositive
portion of the assailed decision reads:

WHEREFORE, the petition is GRANTED; public respondent Secretary of Labor is hereby ENJOINED from
implementing the reinstatement order pending the resolution by the NLRC of the legality of the dismissal. No
costs.

SO ORDERED. 11

The petitioners sought reconsideration of the said decision but the appellate court, in the assailed Resolution dated
September 13, 2000, denied the said motion. Hence, the recourse by the petitioners to this Court.

The petitioners present for resolution the sole issue:

WHETHER OR NOT PUBLIC RESPONDENT, COURT OF APPEALS, ACTED "CONTRARY TO LAW"

WHEN IT ENJOINED THE SECRETARY OF LABOR IN IMPLEMENTING ITS RETURN-TO- WORK
ORDERS, SPECIFICALLY ORDERS DATED 20 JULY 1999, 23 JULY 1999, AND 27 JULY 2000 (sic), IN
CONNECTION WITH LABOR DISPUTE AT TRANS-ASIA, INC. (NCMB RB VII-NS-07-43-99/07-44-99) 12

The petition is impressed with merit.

The Orders dated July 20, 1999, July 23, 1999 and July 27, 1999 of the Secretary of Labor, certifying the labor
dispute involving the herein parties to the NLRC for compulsory arbitration, and enjoining the petitioners to return to
work and the respondent to admit them under the same terms and conditions prevailing before the strike, were
issued pursuant to Article 263 (g) of the Labor Code. Said provision reads:

Art. 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

Labor II – 1
 agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce
the same.

A cursory reading of the above provision shows that when the Secretary of Labor assumes jurisdiction over a labor
dispute in an industry indispensable to national interest or certifies the same to the NLRC for compulsory arbitration,
such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or
lockout. Moreover, if one had already taken place, all striking workers 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 powers granted to the Secretary of Labor under Article 263 (g) of the Labor Code have been characterized as
an exercise of the police power of the State, with the aim of promoting public good:

... [I]t must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the
police power of the State, which has been defined as the power inherent in a government to enact laws,
within constitutional limits, to promote the order, safety, health, morals and general welfare of the society.
The police power, together with the power of eminent domain and the power of taxation, is an inherent
power of government and does not need to be expressly conferred by the Constitution. … 13

When the Secretary exercises these powers, he is granted "great breadth of discretion" in order to find a solution to
a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or
14 

the lifting thereof if one has already taken place. Assumption of jurisdiction over a labor dispute, or as in this case
the certification of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to
return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing
before the strike or lockout.
15

The CA, adopting the respondent's theory, ruled that the phrase "under the same terms and conditions prevailing
before the strike" could not encompass the usurpation of management's prerogative to determine where its
employees are to be assigned nor to determine their job assignments.

The appellate court committed reversible error in so ruling.

Case law recognizes the employer's right to transfer or assign employees from one area of operation to
another. This right, however, is not absolute but subject to limitations imposed by law. Article 263 (g) of the Labor
16 

Code constitutes one such limitation provided by law.

The case of Metrolab Industries, Inc. v. Roldan-Confesor is particularly instructive. In that case, the Secretary of
17 

Labor, pursuant to Article 263 (g) of the Labor Code, assumed jurisdiction over the labor dispute at Metro Drug, Inc.
Pending resolution of said dispute, the company laid-off ninety-four (94) of its rank-and-file employees invoking the
exercise of management prerogative. The Secretary of Labor declared the layoff illegal and ordered the company to
reinstate the employees. The Court upheld said order of the Secretary of Labor as it quoted the assailed resolution
therein, viz.:

... But it may nevertheless be appropriate to mention here that one of the substantive evils which Article 263
(g) of the Labor Code 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.
18

Likewise apropos is the case of University of Sto. Tomas v. NLRC where the Secretary of Labor, pursuant to Article
19 

263 (g) of the Labor Code, directed the University to "readmit all its faculty members, including the sixteen (16)
union officials, under the same terms and conditions prevailing prior to the present dispute." Instead of fully
20 

complying therewith, the University gave some of the teachers "substantially equivalent academic assignments
without loss in rank, pay or privilege." The Court ruled therein that the grant of substantially equivalent academic
assignments could not be sustained because it could not be considered a reinstatement under the same terms and
conditions prevailing before the strike.

Labor II – 1
In the same manner, the respondent cannot rightfully exercise its management's prerogative to determine
where its employees are to be assigned or to determine their job assignments in view of the explicit
directive contained in the Orders dated July 23, 1999 and July 27, 1999 of the Secretary of Labor to accept
the striking workers back "under the same terms and conditions prevailing prior to the strike." The order
simply means that the employees should be returned to their ship assignments as before they staged their
strike. To reiterate, Article 263 (g) of the Labor Code constitutes an exception to the management
prerogative of hiring, firing, transfer, demotion and promotion of employees. And to the extent that Article 263
21 

(g) calls for the admission of all workers under the same terms and conditions prevailing before the strike, the
respondent is restricted from exercising its generally unbounded right to transfer or reassign its employees. The
22 

respondent is mandated, under the said order, to issue embarkation orders to the employees to enable them to
report to their ship assignments in compliance with the Order of the Secretary of Labor.

As earlier opined, Article 263 (g) of the Labor Code has been enacted pursuant to the police power of the State.
Said provision of law requires that the powers thereunder be exercised only in labor disputes involving industries
indispensable to the national interest.
23

That respondent's business is of national interest is not disputed. It is engaged in coastwise shipping services for
the transportation of passengers and cargoes. Its vessels service various routes in the Visayas and Mindanao, with
the Port of Cebu as its base. As stated by the Secretary of Labor, in his Order dated July 20, 1999:

It may be recalled that the Port of Cebu has been previously rocked by concerted actions by the unions and
the shipowners and arrastre operators which have resulted in the disruption of port operations. Said
disruptions have seriously affected trade, commerce and transportation to and from said port and other
destinations in the Visayas and Mindanao.

The Company's operations form part of the chain of shipping services at the Port of Cebu and other ports.
Any work stoppage thereat is certain to have adverse effects on its operations with its accompanying effects
to trade, commerce and transportation. Moreover, a strike could trigger measures from the coalition of
shipowners of which the Company is a member, that could escalate to a situation disruptive of the tenuous
peace currently obtaining at the Port of Cebu.

At this point when efforts of the government are focused in ensuring economic recovery and growth, it is the
primordial concern of this Office to avert unnecessary work stoppages, especially when an alternative
mechanism to resolve the differences between the parties exists. The direct intervention of this Office
becomes imperative on account of the magnitude of the adverse effect of any work stoppage at the
Company to the regional and national economy. Under the present state of things, the exercise of this
Office's power as embodied under Article 263 (g) of the Labor Code, as amended, is warranted. 24

The maritime industry is indubitably imbued with national interest. Under the circumstances, the Labor Secretary
correctly intervened in the labor dispute between the parties to this case by certifying the same to the NLRC for
compulsory arbitration and issuing the Orders of July 20, 1999, July 23, 1999 and July 27, 1999 pursuant to Article
263(g) of the Labor Code.

We note that despite all its protestation of its right to dismiss the individual petitioners for committing illegal acts
during the strike, the respondent is deemed to have waived such right when it agreed to reinstate them and issue
25 

their embarkation orders during the conference on July 28 to 29, 1999 held by the parties with then NLRC Chairman
Rayala.26

In fine, absent any showing that there was grave abuse of discretion on the part of the Secretary of Labor in issuing
the said orders, particularly the Order of July 27, 1999, the appellate court patently erred in enjoining him from
implementing the same. By so doing, the appellate court unduly interfered with the powers granted to the Secretary
of Labor under Article 263 (g) of the Labor Code.

WHEREFORE, the petition is GRANTED. The Decision dated May 10, 2000 of the Court of Appeals in CA-G.R. SP
No. 54393 and its Resolution dated September 13, 2000 are REVERSED and SET ASIDE. The Order of the
Secretary of Labor and Employment dated July 27, 1999, is AFFIRMED.

Labor II – 1
Labor II – 1
10.) G.R. No. 140518             December 16, 2004

MANILA DIAMOND HOTEL EMPLOYEES’ UNION, petitioner,

vs.
THE HON. COURT OF APPEALS, THE SECRETARY OF LABOR AND EMPLOYMENT, and THE MANILA
DIAMOND HOTEL, respondents.

DECISION

AZCUNA, J.:

This petition for review of a decision of the Court of Appeals arose out of a dispute between the Philippine Diamond
Hotel and Resort, Inc. ("Hotel"), owner of the Manila Diamond Hotel, and the Manila Diamond Hotel Employees’
Union ("Union"). The facts are as follows:

On November 11, 1996, the Union filed a petition for a certification election so that it may be declared the exclusive
bargaining representative of the Hotel’s employees for the purpose of collective bargaining. The petition was
dismissed by the Department of Labor and Employment (DOLE) on January 15, 1997. After a few months, however,
on August 25, 1997, the Union sent a letter to the Hotel informing it of its desire to negotiate for a collective
bargaining agreement. In a letter dated September 11, 1997, the Hotel’s Human Resources Department Manager,
1 

Mary Anne Mangalindan, wrote to the Union stating that the Hotel cannot recognize it as the employees’ bargaining
agent since its petition for certification election had been earlier dismissed by the DOLE. On that same day, the
2 

Hotel received a letter from the Union stating that they were not giving the Hotel a notice to bargain, but that they
were merely asking for the Hotel to engage in collective bargaining negotiations with the Union for its members only
and not for all the rank and file employees of the Hotel.
3

On September 18, 1997, the Union announced that it was taking a strike vote. A Notice of Strike was thereafter filed
on September 29, 1997, with the National Conciliation and Mediation Board (NCMB) for the Hotel’s alleged "refusal
x x x to bargain" and for alleged acts of unfair labor practice. The NCMB summoned both parties and held a series
of dialogues, the first of which was on October 6, 1997.

On November 29, 1997, however, the Union staged a strike against the Hotel. Numerous confrontations between
the two parties followed, creating an obvious strain between them. The Hotel claims that the strike was illegal and it
had to dismiss some employees for their participation in the allegedly illegal concerted activity. The Union, on the
other hand, accused the Hotel of illegally dismissing the workers. What is pertinent to this case, however, is the
Order issued by the then Secretary of Labor and Employment Cresenciano B. Trajano assuming jurisdiction over
the labor dispute. A Petition for Assumption of Jurisdiction was filed by the Union on April 2, 1998. Thereafter, the
Secretary of Labor and Employment issued an Order dated April 15, 1998, the dispositive portion of which states:

WHEREFORE, premises considered[,] this Office CERTIFIES the labor dispute at the Manila Diamond Hotel
to the National Labor Relations Commission, for compulsory arbitration, pursuant to Article 263 (g) of the
Labor Code, as amended.

Accordingly, the striking officers and members of the Manila Diamond Hotel Employees Union ---
NUWHRAIN are hereby directed to return to work within twenty-four (24) hours upon receipt of this Order
and the Hotel to accept them back under the same terms and conditions prevailing prior to the strike. The
parties are enjoined from committing any act that may exacerbate the situation.

Labor II – 1
The Union received the aforesaid Order on April 16, 1998 and its members reported for work the next day, April 17,
1998. The Hotel, however, refused to accept the returning workers and instead filed a Motion for Reconsideration of
the Secretary’s Order.

On April 30, 1998, then Acting Secretary of Labor Jose M. Español, issued the disputed Order, which
modified the earlier one issued by Secretary Trajano. Instead of an actual return to work, Acting Secretary
Español directed that the strikers be reinstated only in the payroll. The Union moved for the reconsideration of
4 

this Order, but its motion was denied on June 25, 1998. Hence, it filed before this Court on August 26, 1998, a
petition for certiorari under Rule 65 of the Rules of Court alleging grave abuse of discretion on the part of the
Secretary of Labor for modifying its earlier order and requiring instead the reinstatement of the employees in the
payroll. However, in a resolution dated July 12, 1999, this Court referred the case to the Court of Appeals, pursuant
to the principle embodied in National Federation of Labor v. Laguesma. 5

On October 19, 1999, the Court of Appeals rendered a Decision dismissing the Union’s petition and affirming the
Secretary of Labor’s Order for payroll reinstatement. The Court of Appeals held that the challenged order is merely
an error of judgment and not a grave abuse of discretion and that payroll reinstatement is not prohibited by law, but
may be "called for" under certain circumstances. 6

Hence, the Union now stands before this Court maintaining that:

THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RULING THAT THE SECRETARY
OF LABOR’S UNAUTHORIZED ORDER OF MERE "PAYROLL REINSTATEMENT" IS NOT GRAVE
ABUSE OF DISCRETION 7

The petition has merit.

The Court of Appeals based its decision on this Court’s ruling in University of Santo Tomas (UST) v. NLRC. There,8 

the Secretary assumed jurisdiction over the labor dispute between striking teachers and the university. He ordered
the striking teachers to return to work and the university to accept them under the same terms and conditions.
However, in a subsequent order, the NLRC provided payroll reinstatement for the striking teachers as an alternative
remedy to actual reinstatement. True, this Court held therein that the NLRC did not commit grave abuse of
discretion in providing for the alternative remedy of payroll reinstatement. This Court found that it was merely an
error of judgment, which is not correctible by a special civil action for certiorari. The NLRC was only trying its best to
work out a satisfactory ad hoc solution to a festering and serious problem.

However, this Court notes that the UST ruling was made in the light of one very important fact: the teachers could
not be given back their academic assignments since the order of the Secretary for them to return to work was given
in the middle of the first semester of the academic year. The NLRC was, therefore, faced with a situation where the
striking teachers were entitled to a return to work order, but the university could not immediately reinstate them
since it would be impracticable and detrimental to the students to change teachers at that point in time.

In the present case, there is no showing that the facts called for payroll reinstatement as an alternative
remedy. A strained relationship between the striking employees and management is no reason for payroll
reinstatement in lieu of actual reinstatement. Petitioner correctly points out that labor disputes naturally
involve strained relations between labor and management, and that in most strikes, the relations between
the strikers and the non-strikers will similarly be tense. Bitter labor disputes always leave an aftermath of
9 

strong emotions and unpleasant situations. Nevertheless, the government must still perform its function
and apply the law, especially if, as in this case, national interest is involved.

After making the distinction between UST and the present case, this Court now addresses the issue of whether the
Court of Appeals erred in ruling that the Secretary did not commit any grave abuse of discretion in ordering payroll
reinstatement in lieu of actual reinstatement. This question is answered by the nature of Article 263(g). As a general
rule, the State encourages an environment wherein employers and employees themselves must deal with their
problems in a manner that mutually suits them best. This is the basic policy embodied in Article XIII, Section 3 of the
Constitution, which was further echoed in Article 211 of the Labor Code. Hence, a voluntary, instead of
10  11 

compulsory, mode of dispute settlement is the general rule.

Labor II – 1
However, Article 263, paragraph (g) of the Labor Code, which allows the Secretary of Labor to assume jurisdiction
over a labor dispute involving an industry indispensable to the national interest, provides an exception:

(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. x x x

This provision is viewed as an exercise of the police power of the State. A prolonged strike or lockout can be
inimical to the national economy and, therefore, the situation is imbued with public necessity and involves the right
of the State and the public to self-protection.
12

Under Article 263(g), all workers must immediately return to work and all employers must readmit all of them under
the same terms and conditions prevailing before the strike or lockout. This Court must point out that the law uses
the precise phrase of "under the same terms and conditions," revealing that it contemplates only actual
reinstatement. This is in keeping with the rationale that any work stoppage or slowdown in that particular industry
can be inimical to the national economy. It is clear that Article 263(g) was not written to protect labor from the
excesses of management, nor was it written to ease management from expenses, which it normally incurs during a
work stoppage or slowdown. It was an error on the part of the Court of Appeals to view the assumption order of the
Secretary as a measure to protect the striking workers from any retaliatory action from the Hotel. This Court
reiterates that this law was written as a means to be used by the State to protect itself from an emergency or crisis.
It is not for labor, nor is it for management.

It is, therefore, evident from the foregoing that the Secretary’s subsequent order for mere payroll reinstatement
constitutes grave abuse of discretion amounting to lack or excess of jurisdiction. Indeed, this Court has always
recognized the "great breadth of discretion" by the Secretary once he assumes jurisdiction over a labor dispute.
However, payroll reinstatement in lieu of actual reinstatement is a departure from the rule in these cases and there
must be showing of special circumstances rendering actual reinstatement impracticable, as in the UST case
aforementioned, or otherwise not conducive to attaining the purpose of the law in providing for assumption of
jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. None
appears to have been established in this case. Even in the exercise of his discretion under Article 236(g), the
Secretary must always keep in mind the purpose of the law. Time and again, this Court has held that when an
official by-passes the law on the asserted ground of attaining a laudable objective, the same will not be maintained if
the intendment or purpose of the law would be defeated. 13

WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals dated October 19, 1999
is REVERSED and SET ASIDE. The Order dated April 30, 1998 issued by the Secretary of Labor and Employment
modifying the earlier Order dated April 15, 1998, is likewise SET ASIDE. No pronouncement as to costs.

Labor II – 1
11.) G.R. No. 144315             July 17, 2006

PHILCOM EMPLOYEES UNION, petitioner,

vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the Court of Appeals in CA-G.R. SP No.
53989. The Court of Appeals affirmed the assailed portions of the 2 October 1998 and 27 November 1998 Orders of
the Secretary of Labor and Employment in OS-AJ-0022-97.

The Facts

The facts, as summarized by the Court of Appeals, are as follows:

Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner Philcom
Employees Union (PEU or union, for brevity) and private respondent Philippine Global
Communications, Inc. (Philcom, Inc.) on June 30, 1997, the parties started negotiations for the renewal
of their CBA in July 1997. While negotiations were ongoing, PEU filed on October 21, 1997 with the
National Conciliation and Mediation Board (NCMB) – National Capital Region, a Notice of Strike, docketed
as NCMB-NCR-NS No. 10-435-97, due to perceived unfair labor practice committed by the company
(Annex "1", Comment, p. 565, ibid.). In view of the filing of the Notice of Strike, the company suspended
negotiations on the CBA which moved the union to file on November 4, 1997 another Notice of Strike,
docketed as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining deadlock (Annex "2", Comment, p.
566, ibid.)

On November 11, 1997, at a conciliation conference held at the NCMB-NCR office, the parties agreed to
consolidate the two (2) Notices of Strike filed by the union and to maintain the status quo during the
pendency of the proceedings (Annex "3", Comment, p. 567, ibid.).

On November 17, 1997, however, while the union and the company officers and representatives were
meeting, the remaining union officers and members staged a strike at the company premises, barricading
the entrances and egresses thereof and setting up a stationary picket at the main entrance of the building.
The following day, the company immediately filed a petition for the Secretary of Labor and Employment to
assume jurisdiction over the labor dispute in accordance with Article 263(g) of the Labor Code.

On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued an Order
assuming jurisdiction over the dispute, enjoining any strike or lockout, whether threatened or actual,
directing the parties to cease and desist from committing any act that may exacerbate the situation, directing
the striking workers to return to work within twenty-four (24) hours from receipt of the Secretary's Order and
for management to resume normal operations, as well as accept the workers back under the same terms
and conditions prior to the strike. The parties were likewise required to submit their respective position
papers and evidence within ten (10) days from receipt of said order (Annex "4", Comment, pp. 610-
611, ibid.). On November 28, 1997, a second order was issued reiterating the previous directive to all
striking employees to return to work immediately.

On November 27, 1997, the union filed a Motion for Reconsideration assailing, among others, the authority
of then Acting Secretary Trajano to assume jurisdiction over the labor dispute. Said motion was denied in an
Order dated January 7, 1998.

Labor II – 1
 As directed, the parties submitted their respective position papers. In its position paper, the union raised
the issue of the alleged unfair labor practice of the company hereunder enumerated as follows:

"(a) PABX transfer and contractualization of PABX service and position;

"(b) Massive contractualization;

"(c) Flexible labor and additional work/function;

"(d) Disallowance of union leave intended for union seminar;

"(e) Misimplementation and/or non-implementation of employees' benefits like shoe allowance,

rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle
award and full-time physician;

"(f) Non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time
and staff meetings;

"(g) Economic inducement by promotion during CBA negotiation;

"(h) Disinformation scheme, surveillance and interference with union affairs;

"(i) Issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies; and

"(j) Inadequate transportation allowance, water and facilities."

(Annex A, Petition; pp. 110-182, ibid.)

The company, on the other hand, raised in its position paper the sole issue of the illegality of the
strike staged by the union (Annex B, Petition; pp. 302-320, ibid.).

On the premise that public respondent Labor Secretary cannot rule on the issue of the strike since
there was no petition to declare the same illegal, petitioner union filed on March 4, 1998 a
Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper for being
irrelevant, immaterial and impertinent to the issues assumed for resolution (Annex C, Petition; pp.
330-333, ibid.).

In opposition to PEU's Manifestation/Motion, the company argued that it was precisely due to the strike
suddenly staged by the union on November 17, 1997 that the dispute was assumed by the Labor Secretary.
Hence, the case would necessarily include the issue of the legality of the strike (Opposition to PEU'S Motion
to Strike Out; Annex F, Petition; pp. 389-393, ibid.).3

On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first assailed order. The
pertinent parts of the Order read:

Going now to the first issue at hand, a reading of the complaints charged by the Union as unfair labor
practices would reveal that these are not so within the legal connotation of Article 248 of the Labor Code. On
the contrary, these complaints are actually mere grievances which should have been processed through
the grievance machinery or voluntary arbitration outlined under the CBA. The issues of flexible labor and
additional functions, misimplementation or non-implementation of employee benefits, non-payment of
overtime and other monetary claims and inadequate transportation allowance, are all a matter of
implementation or interpretation of the economic provisions of the CBA subject to the grievance procedure.

Labor II – 1
 Neither do these complaints amount to gross violations which, thus, may be treated as unfair labor practices
outside of the coverage of Article 261. The Union failed to convincingly show that there is flagrant and/or
malicious refusal by the Company to comply with the economic provisions stipulated in the CBA.

With respect to the charges of contractualization and economic inducement, this Office is convinced that the
acts of said company qualify as a valid exercise of management prerogative. The act of the Company in
contracting out work or certain services being performed by Union members should not be seen as an unfair
labor practice act per se. First, the charge of massive contractualization has not been substantiated while
the contractualization of the position of PABX operator is an isolated instance. Secondly, in the latter case,
there was no proof that such contracting out interfered with, restrained or coerced the employees in the
exercise of their right to self-organization. Thus, it is not unfair labor practice to contract out work for reason
of reduction of labor cost through the acquisition of automatic machines.

Likewise, the promotion of certain employees, who are incidentally members of the Union, to managerial
positions is a prerogative of management. A promotion which is manifestly beneficial to an employee should
not give rise to a gratuitous speculation that such a promotion was made simply to deprive the union of the
membership of the promoted employee (Bulletin Publishing Co. v. Sanchez, et. al., G.R. No. 74425, October
7, 1986).

There remains the issue on bargaining deadlock. The Company has denied the existence of any impasse in
its CBA negotiations with the Union and instead maintains that it has been negotiating with the latter in good
faith until the strike was initiated. The Union, on the other hand, contends otherwise and further prays that
the remaining CBA proposals of the Union be declared reasonable and equitable and thus be ordered
incorporated in the new CBA to be executed.

As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the parties during the
CBA negotiations even before these were suspended. Prior to this Office's assumption over the case, the
Company furnished the Union its improved CBA counter-proposal on the matter of promotional and wage
increases which however was rejected by the Union as divisive. Even as the Union has submitted its
remaining CBA proposals for resolution, the Company remains silent on the matter. In the absence of any
basis, other than the Union's position paper, on which this Office may make its determination of the
reasonableness and equitableness of these remaining CBA proposals, this Office finds it proper to defer
deciding on the matter and first allow the Company to submit its position thereon.

We now come to the question of whether or not the strike staged by the Union on November 17, 1997
is illegal. The Company claims it is, having been held on grounds which are non-strikeable, during
the pendency of preventive mediation proceedings in the NCMB, after this Office has assumed
jurisdiction over the dispute, and with the strikers committing prohibited and illegal acts. The
Company further prays for the termination of some 20 Union officers who were positively identified to have
initiated the alleged illegal strike. The Union, on the other hand, refuses to submit this issue for resolution.

Considering the precipitous nature of the sanctions sought by the Company, i.e., declaration of illegality of
the strike and the corresponding termination of the errant Union officers, this Office deems it wise to defer
the summary resolution of the same until both parties have been afforded due process. The non-compliance
of the strikers with the return-to-work orders, while it may warrant dismissal, is not by itself conclusive to hold
the strikers liable. Moreover, the Union's position on the alleged commission of illegal acts by the strikers
during the strike is still to be heard. Only after a full-blown hearing may the respective liabilities of Union
officers and members be determined. The case of Telefunken Semiconductors Employees Union-FFW v.
Secretary of Labor and Employment and Temic Telefunken Micro-Electronics (Phils.), Inc. (G.R. No. 122743
and 127215, December 12, 1997) is instructive on this point:

It may be true that the workers struck after the Secretary of Labor and Employment had assumed
jurisdiction over the case and that they may have failed to immediately return to work even after the
issuance of a return-to-work order, making their continued strike illegal. For, a return-to-work order is
immediately effective and executory notwithstanding the filing of a motion for reconsideration. But,
the liability of each of the union officers and the workers, if any, has yet to be determined. xxx xxx
xxx.4
Labor II – 1
The dispositive portion of the Order reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:

The Union's Manifestation/Motion to Implead Philcom Corporation is hereby granted. Let summons be
issued to respondent Philcom Corporation to appear before any hearing that may hereafter be scheduled
and to submit its position paper as may be required.

The Union's Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position Paper is
hereby denied for lack of merit.

The Union's charges of unfair labor practice against the Company are hereby dismissed.

Pending resolution of the issues of illegal strike and bargaining deadlock which are yet to be heard, all the
striking workers are directed to return to work within twenty-four (24) hours from receipt of this Order and
Philcom and/or Philcom Corporation are hereby directed to unconditionally accept back to work all striking
Union officers and members under the same terms and conditions prior to the strike. The parties are
directed to cease and desist from committing any acts that may aggravate the situation.

Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is hereby designated as the
Hearing Officer to hear and receive evidence on all matters and issues arising from the present labor dispute
and, thereafter, to submit a report/recommendation within twenty (20) days from the termination of the
proceedings.

The parties are further directed to file their respective position papers with Atty. Lita V. Aglibut within ten (10)
days from receipt of this Order.

SO ORDERED.5

Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for reconsideration of the Order
impleading it as party-litigant in the present case and directing it to accept back to work unconditionally all the
officers and members of the union who participated in the strike.6 Philcom also filed a Motion to Certify Labor
Dispute to the National Labor Relations Commission for Compulsory Arbitration.7

For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration. PEU asked the Secretary to
"partially reconsider" the 2 October 1998 Order insofar as it dismissed the unfair labor practices charges against
Philcom and included the illegal strike issue in the labor dispute.8

The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed Order of 27 November
1998. The pertinent parts of the Order read:

The question of whether or not Philcom Corporation should be impleaded has been properly disposed of in
the assailed Order. We reiterate that neither the Company herein nor its predecessor was able to
convincingly establish that each is a separate entity in the absence of any proof that there was indeed an
actual closure and cessation of the operations of the predecessor-company. We would have accommodated
the Company for a hearing on the matter had it been willing and prepared to submit evidence to controvert
the finding that there was a mere merger. As it now stands, nothing on record would prove that the two (2)
companies are separate and distinct from each other.

Having established that what took place was a mere merger, we correspondingly conclude that the
employer-employee relations between the Company and the Union officers and members was never
severed. And in merger, the employees of the merged companies or entities are deemed absorbed by the
new company (Filipinas Port Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991). Considering
that the Company failed miserably to adduce any evidence to provide a basis for a contrary ruling,
allegations to the effect that employer-employee relations and positions previously occupied by the workers
no longer exist remain just that — mere allegations. Consequently, the Company cannot now exempt itself
Labor II – 1
 from compliance with the Order. Neither can it successfully argue that the employees were validly
dismissed. As held in Telefunken Semiconductor Employees Union-FFW v. Secretary of Labor and
Employment (G.R. Nos. 122743 and 122715, December 12, 1997), to exclude the workers without first
ascertaining the extent of their individual participation in the strike or non-compliance with the return-to-work
orders will be tantamount to dismissal without due process of law.

With respect to the unfair labor practice charges against the Company, we have carefully reviewed the
records and found no reason to depart from the findings previously rendered. The issues now being raised
by the Union are the same issues discussed and passed upon in our earlier Order.

Finally, it is our determination that the issue of the legality of the strike is well within the jurisdiction of this
Office. The same has been properly submitted and assumed jurisdiction by the Office for resolution.9

The dispositive portion of the Order reads:

WHEREFORE, there being no merit in the remaining Motions for Reconsideration filed by both parties, the
same are hereby DENIED. Our 2 October 1998 Order STANDS. To expedite the resolution of the Motion to
Certify Labor Dispute to the NLRC for Compulsory Arbitration, Philcom Employees Union is hereby directed
to submit its Opposition thereto within ten (10) days from receipt of the copy of this Order.

SO ORDERED.10

PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court assailing the
Secretary's Orders of 2 October 1998 and 27 November 1998. This Court, in accordance with its Decision of 10
March 1999 in G.R. No. 123426 entitled National Federation of Labor (NFL) vs. Hon. Bienvenido E. Laguesma,
Undersecretary of the Department of Labor and Employment, and Alliance of Nationalist Genuine Labor
Organization, Kilusang Mayo Uno (ANGLO-KMU),11 referred the case to the Court of Appeals.12

The Ruling of the Court of Appeals

On 31 July 2000, the Court of Appeals rendered judgment as follows:

WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed portions of the
Orders of the Secretary of Labor and Employment dated October 2, 1998 and November 27, 1998 are
AFFIRMED.

SO ORDERED.13

The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take cognizance of an issue, even only
incidental to the labor dispute, provided the issue must be involved in the labor dispute itself or otherwise submitted
to him for resolution.

The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor dispute upon Philcom's
petition as a consequence of the strike that PEU had declared and not because of the notices of strike that PEU
filed with the National Conciliation and Mediation Board (NCMB).

The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction over the labor dispute was
the staging of the strike. Consequently, any issue regarding the strike is not merely incidental to the labor dispute
between PEU and Philcom, but also part of the labor dispute itself. Thus, the Court of Appeals held that it was
proper for the Secretary to take cognizance of the issue on the legality of the strike.

The Court of Appeals also ruled that for an employee to claim an unfair labor practice by the employer, the
employee must show that the act charged as unfair labor practice falls under Article 248 of the Labor Code. The
Court of Appeals held that the acts enumerated in Article 248 relate to the workers' right to self-organization. The
Court of Appeals stated that if the act complained of has nothing to do with the acts enumerated in Article 248, there
is no unfair labor practice.
Labor II – 1
The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor practices, were not in any
way related to the workers' right to self-organization under Article 248 of the Labor Code. The Court of Appeals held
that PEU's complaint constitutes an enumeration of mere grievances which should have been threshed out through
the grievance machinery or voluntary arbitration outlined in the Collective Bargaining Agreement (CBA).

The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the provisions of the CBA, still
those acts do not constitute unfair labor practices under Article 248 of the Labor Code. The Court of Appeals held
that PEU failed to show that those violations were gross or that there was flagrant or malicious refusal on the part of
Philcom to comply with the economic provisions of the CBA.

The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC,14 violations of CBAs will no longer
be deemed unfair labor practices, except those gross in character. Violations of CBAs, except those gross in
character, are mere grievances resolvable through the appropriate grievance machinery or voluntary arbitration as
provided in the CBAs.

Hence, this petition.

The Issues

In assailing the Decision of the Court of Appeals, petitioner contends that:

1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions of the Supreme Court
when it affirmed the order/resolution of the Secretary of Labor denying the Union's Manifestation/Motion to
Strike Out Portions of & Attachments in Philcom's Position Paper and including the issue of illegal strike
notwithstanding the absence of any petition to declare the strike illegal.

2. The Honorable Court of Appeals has decided a question of substance in a way not in accord with law and
jurisprudence when it affirmed the order/resolution of the Secretary of Labor dismissing the Union's charges
of unfair labor practices.

3. The Honorable Court of Appeals has departed from the edict of applicable law and jurisprudence when it
failed to issue such order mandating/directing the issuance of a writ of execution directing the Company to
unconditionally accept back to work the Union officers and members under the same terms and conditions
prior to the strike and as well as to pay their salaries/backwages and the monetary equivalent of their other
benefits from October 6, 1998 to date.15

The Ruling of the Court

The petition must fail.

PEU contends that the Secretary should not have taken cognizance of the issue on the alleged illegal strike
because it was not properly submitted to the Secretary for resolution. PEU asserts that after Philcom
submitted its position paper where it raised the issue of the legality of the strike, PEU immediately opposed the
same by filing its Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position Paper. PEU
asserts that it stated in its Manifestation/Motion that certain portions of Philcom's position paper and some of its
attachments were "irrelevant, immaterial and impertinent to the issues assumed for resolution." Thus, PEU asserts
that the Court of Appeals should not have affirmed the Secretary's order denying PEU's Manifestation/Motion.

PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's assumption of
jurisdiction over the labor dispute was based on the two notices of strike that PEU filed with the NCMB. PEU
asserts that only the issues on unfair labor practice and bargaining deadlock should be resolved in the
present case.

PEU insists that to include the issue on the legality of the strike despite its opposition would convert the case into a
petition to declare the strike illegal.

Labor II – 1
PEU's contentions are untenable.

The Secretary properly took cognizance of the issue on the legality of the strike. As the Court of Appeals
correctly pointed out, since the very reason of the Secretary's assumption of jurisdiction was PEU's
declaration of the strike, any issue regarding the strike is not merely incidental to, but is essentially
involved in, the labor dispute itself.

Article 263(g) of the Labor Code provides:

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 the compliance with this provision as well as with such
orders as he may issue to enforce the same.

x x x x.

The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as an
exercise of the police power of the State, with the aim of promoting public good.16 When the Secretary exercises
these powers, he is granted "great breadth of discretion" in order to find a solution to a labor dispute. The
most obvious of these powers is the automatic enjoining of an impending strike or lockout or its lifting if one has
already taken place.17

In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry indispensable to the
national interest. As noted by the Secretary.

[T]he Company has been a vital part of the telecommunications industry for 73 years. It is particularly noted
for its expertise and dominance in the area of international telecommunications. Thus, it performs a vital role
in providing critical services indispensable to the national interest. It is for this very reason that this Office
strongly opines that any concerted action, particularly a prolonged work stoppage is fraught with dire
consequences. Surely, the on-going strike will adversely affect not only the livelihood of workers and their
dependents, but also the company's suppliers and dealers, both in the public and private sectors who
depend on the company's facilities in the day-to-day operations of their businesses and commercial
transactions. The operational viability of the company is likewise adversely affected, especially its expansion
program for which it has incurred debts in the approximate amount of P2 Billion. Any prolonged work
stoppage will also bring about substantial losses in terms of lost tax revenue for the government and would
surely pose a serious set back in the company's modernization program.

At this critical time when government is working to sustain the economic gains already achieved, it is the
paramount concern of this Office to avert any unnecessary work stoppage and, if one has already occurred,
to minimize its deleterious effect on the workers, the company, the industry and national economy as a
whole.18

It is of no moment that PEU never acquiesced to the submission for resolution of the issue on the legality of
the strike. PEU cannot prevent resolution of the legality of the strike by merely refusing to submit the issue
for resolution. It is also immaterial that this issue, as PEU asserts, was not properly submitted for resolution of the
Secretary.

The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to national interest includes and extends to all questions and

Labor II – 1
controversies arising from such labor dispute. The power is plenary and discretionary in nature to enable
him to effectively and efficiently dispose of the dispute.19

Besides, it was upon Philcom's petition that the Secretary immediately assumed jurisdiction over the labor dispute
on 19 November 1997.20 If petitioner's notices of strike filed on 21 October and 4 November 1997 were what
prompted the assumption of jurisdiction, the Secretary would have issued the assumption order as early as those
dates.

Moreover, after an examination of the position paper21 Philcom submitted to the Secretary, we see no reason to
strike out those portions which PEU seek to expunge from the records. A careful study of all the facts alleged,
issues raised, and arguments presented in the position paper leads us to hold that the portions PEU seek to
expunge are necessary in the resolution of the present case.

On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-22 inclusive22 which deal
with the supposed consolidation of Philippine Global Communications, Inc. and Philcom Corporation, we find the
other annexes relevant and material in the resolution of the issues that have emerged in this case.

PEU also claims that Philcom has committed several unfair labor practices. PEU asserts that there are "factual and
evidentiary bases" for the charge of unfair labor practices against Philcom.

On unfair labor practices of employers, Article 248 of the Labor Code provides:

Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following
unfair labor practice:

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

(b) To require as a condition of employment that a person or an employee shall not join a labor organization
or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization. x x x

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or
being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the settlement of any
issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the
workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how
unfair, are not unfair labor practices.23 The only exception is Article 248(f), which in any case is not one of the acts
specified in PEU's charge of unfair labor practice.

Labor II – 1
A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not fall under any
of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The issues of misimplementation or
non-implementation of employee benefits, non-payment of overtime and other monetary claims, inadequate
transportation allowance, water, and other facilities, are all a matter of implementation or interpretation of the
economic provisions of the CBA between Philcom and PEU subject to the grievance procedure.

We find it pertinent to quote certain portions of the assailed Decision, thus —

A reading of private respondent's justification for the acts complained of would reveal that they were actually
legitimate reasons and not in anyway related to union busting. Hence, as to compelling employees to render
flexible labor and additional work without additional compensation, it is the company's explanation that the
employees themselves voluntarily took on work pertaining to other assignments but closely related to their
job description when there was slack in the business which caused them to be idle. This was the case of the
International Telephone Operators who tried telemarketing when they found themselves with so much free
time due to the slowdown in the demand for international line services. With respect to the Senior
Combination Technician at the Cebu branch who was allegedly made to do all around work, the same
happened only once when the lineman was absent and the lineman's duty was his ultimate concern.
Moreover, the new assignment of the technicians at CTSS who were promoted to QCE were based on the
job description of QCE, while those of the other technicians were merely temporary due to the promotion of
several technicians to QCE (pars. 9-12, Philcom's Reply to PEU's Position Paper; Annex "E", Petition; pp.
350-351, ibid.).

On the alleged misimplementation and/or non-implementation of employees' benefits, such as shoe

allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance,
motorcycle award and full-time physician, the company gave the following explanation which this Court finds
plausible, to wit:

16. The employees at CTSS were given One Thousand Pesos (P1,000.00) cash or its equivalent in
purchase orders because it was their own demand that they be given the option to buy the pair of
leather boots they want. For the Cebu branch, the employees themselves failed to include these
benefits in the list of their demands during the preparation of the budget for the year 1997 despite
the instruction given to them by the branch manager. According to the employees, they were not
aware that they were entitled to these benefits. They thought that because they have been provided
with two vans to get to their respective assignments, these benefits are available only to collectors,
messengers and technicians in motorcycles.

17. The P450.00 monthly allowance was provided by the CBA to be given to counter clerks.
However, the position of counter clerks had been abolished in accordance with the reorganization
plan undertaken by the company in April 1995, with the full knowledge of the Union membership. As
a result of the abolition of the position of counter clerks, there was no more reason for granting the
subject allowance.

18. The company more than satisfied the provision in the CBA to engage the services of a physician
and provided adequate medical services. Aside from a part time physician who reports for duty
everyday, the company has secured the services of Prolab Diagnostics, which has complete medical
facilities and personnel, to serve the medical needs of the employees. x x x

19. The Union demands that a full-time physician to be assigned at the Head Office. This practice, is
not provided in the CBA and, moreover is too costly to maintain. The medical services offered by
Prolab [D]iagnostics are even better and more comprehensive than any full time physician can give.
It places at the employees' disposal numerous specialists in various fields of medicine. It is beyond
understanding why the Union would insist on having a full-time physician when they could avail of
better services from Prolab Diagnostics.

(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)

Labor II – 1
 On the issue of non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by
time and staff meeting allowance, suffice it to state that there is nothing on record to prove the same.
Petitioner did not present evidence substantial enough to support its claim.

As to the alleged inadequate transportation allowance and facilities, the company posits that:

30. The transportation allowances given to the Dasmarinas and Pinugay employees are more than
adequate to defray their daily transportation cost. Hence, there is absolutely no justification for an
increase in the said allowance. In fact, said employees at Dasmarinas and Pinugay, who are only
residing in areas near their place of work, are more privileged as they receive transportation
expenses while the rest of the company workers do not.

31. As to the demand for clean drinking water, the company has installed sufficient and potable
water inside the Head Office even before the strike was staged by the Union. Any person who visits
the Makati Head Office can attest to this fact.

(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)

Anent the allegation of PABX transfer and contractualization of PABX service and position, these were done
in anticipation of the company to switch to an automatic PABX machine which requires no operator. This
cannot be treated as ULP since management is at liberty, absent any malice on its part, to abolish positions
which it deems no longer necessary (Arrieta vs. National Labor Relations Commission, 279 SCRA 326,
332). Besides, at the time the company hired a temporary employee to man the machine during daytime, the
subject position was vacant while the assumption of the function by the company guard during nighttime was
only for a brief period.

With respect to the perceived massive contractualization of the company, said charge cannot be considered
as ULP since the hiring of contractual workers did not threaten the security of tenure of regular employees or
union members. That only 160 employees out of 400 employees in the company's payroll were considered
rank and file does not of itself indicate unfair labor practice since this is but a company prerogative in
connection with its business concerns.

Likewise, the offer or promotions to a few union members is neither unlawful nor an economic inducement.
These offers were made in accordance with the legitimate need of the company for the services of these
employees to fill positions left vacant by either retirement or resignation of other employees. Besides, a
promotion is part of the career growth of employees found competent in their work. Thus, in Bulletin
Publishing Corporation vs. Sanchez (144 SCRA 628, 641), the Supreme Court held that "(T)he promotion of
employees to managerial or executive positions rests upon the discretion of management. Managerial
positions are offices which can only be held by persons who have the trust of the corporation and its officers.
It is the prerogative of management to promote any individual working within the company to a higher
position. It should not be inhibited or prevented from doing so. A promotion which is manifestly beneficial to
an employee should not give rise to a gratuitous speculation that such a promotion was made simply to
deprive the union of the membership of the promoted employee, who after all appears to have accepted his
promotion."

That the promotions were made near or around the time when CBA negotiations were about to be held does
not make the company's action an unfair labor practice. As explained by the company, these promotions
were based on the availability of the position and the qualification of the employees promoted (p. 6, Annex
"4", Philcom's Reply to PEU's Position Paper; p. 380, ibid.)

On the union's charge that management disallowed leave of union officers and members to attend union
seminar, this is belied by the evidence submitted by the union itself. In a letter to PEU's President, the
company granted the leave of several union officers and members to attend a seminar notwithstanding that
its request to be given more details about the affair was left unheeded by the union (Annex "Y", PEU's
Position Paper; p. 222, ibid.). Those who were denied leave were urgently needed for the operation of the
company.

Labor II – 1
 On the ULP issue of disinformation scheme, surveillance and interference with union affairs, these are mere
allegations unsupported by facts. The charge of "black propaganda" allegedly committed by the company
when it supposedly posted two (2) letters addressed to the Union President is totally baseless. Petitioner
presents no proof that it was the company which was behind the incident. On the purported disallowance of
union members to observe the July 27, 1997 CBA meeting, the company explained that it only allowed one
(1) employee from ITTO, instead of two (2), as it would adversely affect the operation of the group. It also
took into consideration the fact that ITTO members represent only 20% of the union. Other union members
from other departments of the company should have equal representation (Annex "L", Position Paper for the
Union; pp. 205-206, ibid.). As to the alleged surveillance of the company guards during a union seminar, We
find the idea of sending guards to spy on a mere union seminar quite preposterous. It is thus not likely for
the company which can gain nothing from it to waste its resources in such a scheme.

On the issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies, the company has sufficiently rebutted the same,
thus:

27. The Union also whines about the failure of the company to furnish copies of memoranda or
notices sent to employees and change of work schedules at the Traffic Records Section and ITTO
policies. The CBA, however, does not obligate the Company to give the Union a copy of each and
every memorandum or notice sent to employees. This would be unreasonable and impractical.
Neither did the Union demand that they be furnished copies of the same. This is clearly a non-issue
as copies of all memoranda or notices issued by management are readily available upon request by
any employee or the Union.

28. Contrary to the allegations of the Union, the rationale and mechanics for the abolishment of the
midnight schedule at the Traffic Record Services had been thoroughly and adequately discussed
with the Union's President, Robert Benosa, and the staff of Traffic Record Services in the meeting
held on May 9, 1997. The midnight services were abolished for purely economic reasons. The
company realized that the midnight work can be handled in the morning without hampering normal
operations. At the same time, the company will be able to save on cost. For this objective, the
employees concerned agreed to create a manning and shifting schedule starting at 6:00 a.m. up to
10:00 p.m., with each employee rendering only eight hours of work every day without violating any
provision of the labor laws or the CBA.24

The Court has always respected a company's exercise of its prerogative to devise means to improve its operations.
Thus, we have held that management is free to regulate, according to its own discretion and judgment, all aspects
of employment, including hiring, work assignments, supervision and transfer of employees, working methods, time,
place and manner of work.25

This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right
to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable
operation of their business.26

Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no showing that
the same was a flagrant or malicious refusal to comply with its economic provisions. The law mandates that
such violations should not be treated as unfair labor practices.27

PEU also asserts that the Court of Appeals should have issued an order directing the issuance of a writ of execution
ordering Philcom to accept back to work unconditionally the striking union officers and members under the same
terms and conditions prevailing before the strike. PEU asserts that the union officers and members should be paid
their salaries or backwages and monetary equivalent of other benefits beginning 6 October 1998 when PEU
received a copy of the Secretary's 2 October 1998 return-to-work order.

PEU claims that even if the "issue of illegal strike can be included in the assailed orders and that the union officers
and members have been terminated as a result of the alleged illegal strike, still, the Secretary has to rule on the
illegality of the strike and the liability of each striker." PEU asserts that the union officers and members should first
be accepted back to work because a return-to-work order is immediately executory.28
Labor II – 1
We rule on the legality of the strike if only to put an end to this protracted labor dispute. The facts necessary to
resolve the legality of the strike are not in dispute.

The strike and the strike activities that PEU had undertaken were patently illegal for the following reasons:

1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD 823), as amended by
Presidential Decree No. 849, from strikes and lockouts. PD 823, as amended, provides:

Sec. 1. It is the policy of the State to encourage free trade unionism and free collective bargaining within the
framework of compulsory and voluntary arbitration. Therefore, all forms of strikes, picketings and lockouts
are hereby strictly prohibited in vital industries, such as in public utilities, including transportation
and communications, x x x. (Emphasis supplied)

Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:

For the guidance of workers and employers, some of whom have been led into filing notices of strikes and
lockouts even in vital industries, you are hereby instructed to consider the following as vital industries and
companies or firms under PD 823 as amended:

1. Public Utilities:

xxxx

B. Communications:

1) Wire or wireless telecommunications such as telephone, telegraph, telex, and

cable companies or firms; (Emphasis supplied)

xxxx

It is therefore clear that the striking employees violated the no-strike policy of the State in regard to vital
industries.

2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the return-to-work
orders dated 19 November and 28 November 1997, the striking employees failed to return to work and
continued with their strike.

Regardless of their motives, or the validity of their claims, the striking employees should have ceased or desisted
from all acts that would undermine the authority given the Secretary under Article 263(g) of the Labor Code. They
could not defy the return-to-work orders by citing Philcom's alleged unfair labor practices to justify such defiance.29

PEU could not have validly anchored its defiance to the return-to-work orders on the motion for reconsideration that
it had filed on the assumption of jurisdiction order. A return-to-work order is immediately effective and
executory despite the filing of a motion for reconsideration. It must be strictly complied with even during
the pendency of any petition questioning its validity.30

The records show that on 22 November 1997, Philcom published in the Philippine Daily Inquirer a notice to striking
employees to return to work.31 These employees did not report back to work but continued their mass action. In fact,
they lifted their picket lines only on 22 December 1997.32 Philcom formally notified twice these employees to explain
in writing why they should not be dismissed for defying the return-to-work order.33 Philcom held administrative
hearings on these disciplinary cases.34 Thereafter, Philcom dismissed these employees for abandonment of work in
defiance of the return-to-work order.35

A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived.
While the workers may choose not to obey, they do so at the risk of severing their relationship with their employer.36

Labor II – 1
The following provision of the Labor Code governs the effects of defying a return-to-work order:

ART. 264. Prohibited activities. ─ (a) x x x x

No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout x x x x

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

A strike undertaken despite the Secretary's issuance of an assumption or certification order becomes
a prohibited activity, and thus, illegal, under Article 264(a) of the Labor Code. The union officers who knowingly
participate in the illegal strike are deemed to have lost their employment status. The union members, including
union officers, who commit specific illegal acts or who knowingly defy a return-to-work order are also deemed to
have lost their employment status.37 Otherwise, the workers will simply refuse to return to their work and cause a
standstill in the company operations while retaining the positions they refuse to discharge and preventing
management to fill up their positions.38

Hence, the failure of PEU's officers and members to comply immediately with the return-to-work orders dated 19
November and 28 November 1997 cannot be condoned. Defiance of the return-to-work orders of the Secretary
constitutes a valid ground for dismissal.39

3. PEU staged the strike using unlawful means and methods.

Even if the strike in the present case was not illegal per se, the strike activities that PEU had undertaken, especially
the establishment of human barricades at all entrances to and egresses from the company premises and the use of
coercive methods to prevent company officials and other personnel from leaving the company premises, were
definitely illegal.40 PEU is deemed to have admitted that its officers and members had committed these illegal acts,
as it never disputed Philcom's assertions of PEU's unlawful strike activities in all the pleadings that PEU submitted
to the Secretary and to this Court.

PEU's picketing officers and members prohibited other tenants at the Philcom building from entering and leaving the
premises. Leonida S. Rabe, Country Manager of Societe Internationale De Telecommunications
Aeronautiques (SITA), a tenant at the Philcom building, wrote two letters addressed to PEU President Roberto B.
Benosa. She told Benosa that PEU's act of obstructing the free ingress to and egress from the company premises
"has badly disrupted normal operations of their organization."41

The right to strike, while constitutionally recognized, is not without legal constrictions. Article 264(e) of the Labor
Code, on prohibited activities, provides:

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.

The Labor Code is emphatic against the use of violence, coercion, and intimidation during a strike and to this end
prohibits the obstruction of free passage to and from the employer's premises for lawful purposes. A picketing labor
union has no right to prevent employees of another company from getting in and out of its rented premises,
otherwise, it will be held liable for damages for its acts against an innocent by-stander.42

The sanction provided in Article 264(a) is so severe that any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be declared to have lost his employment status.43

Labor II – 1
By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the resumption of
company operations, the striking employees have forfeited their right to be readmitted.44

4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB.

On 17 November 1997, while a conciliation meeting was being held at the NCMB in NCMB-NCR-NS 10-435-97,
PEU went on strike. It should be noted that in their meeting on 11 November 1997, both Philcom and PEU were
even "advised to maintain the status quo."45 Such disregard of the mediation proceedings was a blatant violation of
Section 6, Book V, Rule XXII of the Omnibus Rules Implementing the Labor Code, which explicitly obliges the
parties to bargain collectively in good faith and prohibits them from impeding or disrupting the proceedings.46 The
relevant provision of the Implementing Rules provides:

Section 6. Conciliation. ─ x x x x

During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of
dispute. They are obliged, as part of their duty, to bargain collectively in good faith, to participate fully and
promptly in the conciliation meetings called by the regional branch of the Board. x x x x

Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike "during the pendency of
cases involving the same grounds for the same strike."

Lamentably, PEU defiantly proceeded with their strike during the pendency of the conciliation proceedings.

5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA.

By PEU's own admission, "the Union's complaints to the management began in June 1997 even before the start of
the 1997 CBA renegotiations."47 Their CBA expired on 30 June 1997.48 PEU could have just taken up their
grievances in their negotiations for the new CBA. This is what a Philcom officer had suggested to the Dasmariñas
staff when the latter requested on 16 June 1997 for an increase in transportation allowance.49 In fact, when PEU
declared the strike, Philcom and PEU had already agreed on 37 items in their negotiations for the new CBA.50

The bottom line is that PEU should have immediately resorted to the grievance machinery provided for in the
CBA.51 In disregarding this procedure, the union leaders who knowingly participated in the strike have acted
unreasonably. The law cannot interpose its hand to protect them from the consequences of their illegal acts.52

A strike declared on the basis of grievances which have not been submitted to the grievance committee as
stipulated in the CBA of the parties is premature and illegal.53

Having held the strike illegal and having found that PEU's officers and members have committed illegal acts during
the strike, we hold that no writ of execution should issue for the return to work of PEU officers who participated in
the illegal strike, and PEU members who committed illegal acts or who defied the return-to-work orders that the
Secretary issued on 19 November 1997 and 28 November 1997. The issue of who participated in the illegal strike,
committed illegal acts, or defied the return-to-work orders is a question of fact that must be resolved in the
appropriate proceedings before the Secretary of Labor.

WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No.
53989, with the MODIFICATION that the Secretary of Labor is directed to determine who among the Philcom
Employees Union officers participated in the illegal strike, and who among the union members committed illegal acts
or defied the return-to-work orders of 19 November 1997 and 28 November 1997. No pronouncement as to costs.

Labor II – 1
12.) G.R. Nos. 158190-91             June 21, 2006

NISSAN MOTORS PHILIPPINES, INC., Petitioner,

vs.
SECRETARY OF LABOR AND EMPLOYMENT and BAGONG NAGKAKAISANG LAKAS SA NISSAN MOTOR
PHILIPPINES, INC. (BANAL-NMPI-OLALIA-KMU), Respondents.

x--------------------------------------x

G.R. Nos. 158276 and 158283             June 21, 2006

BAGONG NAGKAKAISANG LAKAS SA NISSAN MOTORS PHILIPPINES, INC. (BANAL-NMPI-OLALIA-

KMU), Petitioner,
vs.
COURT OF APPEALS (SPECIAL DIVISION OF FIVE), SECRETARY OF LABOR and EMPLOYMENT and
NISSAN MOTORS PHILIPPINES, INC., Respondents.

DECISION

GARCIA, J.:

Assailed and sought to be set aside in these petitions for review under Rule 45 of the Rules of Court are the
Decision of the Court of Appeals (CA) dated February 7, 20031 and its Resolution of May 15, 2003,2 in CA-G.R. SP
No. 69107 and CA G.R. SP No. 69799, denying the petitions for certiorari separately interposed by Nissan Motor
Philippines, Inc. ("Nissan Motor" or "Company") and Bagong Nagkakaisang Lakas sa Nissan Motor Philippines, Inc.
(BANAL-NMPI-OLALIA-KMU).

Docketed as G.R. Nos. 158190-91, Nissan Motor’s petition excepts from the assailed ruling of the appellate court
insofar as it affirmed (a) the award by the respondent Secretary of Labor and Employment of certain economic
benefits to the company’s rank-and-file workers and (b) the recall of the dismissal of 140 Union members. On the
other hand, the petition of BANAL-NMPI-OLALIA-KMU ("Union" hereafter), docketed as G.R. Nos. 158276 and
158283, assails the respondent Secretary’s holding that the Union and its members engaged in a concerted work
slowdown despite the issuance of the assumption of jurisdiction order dated August 22, 2001,3 infra, and
subsequent orders of similar import. The same petition raises too the issue respecting the correctness of the CA’s
resolution citing the Union’s counsel for contempt.

In gist, the case turns on the labor dispute triggered by a collective bargaining deadlock between Nissan Motor
and the Union resulting in the filing of four (4) notices of strike with the National Conciliation and Mediation Board
(NCMB). Filed on December 4, 2000, the first Notice of Strike (NCMB-RBIV-LAG-NS-12-045-00), on the ground of
alleged unfair labor practice, stemmed from the suspension of about 140 company employees, following the
November 15, 2000 disruptive protest action arising from the employees’ demand for payment of the 2nd half
of their 13th month pay. The Union filed the second strike notice (NCMB-RBIV-LAG-NS-07-027-01) on July 24,
2001 on the ground of deadlock in collective bargaining involving a mix of economic and non-economic issues.

On August 22, 2001, the Department of Labor and Employment (DOLE), upon Nissan Motor’s petition, issued an
order assuming jurisdiction over the dispute at Nissan Motor. In it, the DOLE Secretary expressly enjoined any
strike or lockout and directed the parties to cease and desist from committing any act that might exacerbate the
situation, and for the Union to refrain from any slowdown and other similar activities that may disrupt company
operations or bring its production to belowits normal and usual levels.

What happened next is summarized in the Decision of the respondent DOLE Secretary dated December 5,
2001,4 viz:

On 27 August 2001, the Union filed a 3rd Notice of Strike … on the ground of illegal lockout, illegal suspension,
union busting ….
Labor II – 1
 xxx xxx xxx

On 12 September 2001, [the DOLE] issued an Order directing that the 3rd Notice of Strike be consolidated with the
first two notices …; reiterating the injunction against strike or lockout, and directing the parties to cease and desist
from committing acts which may aggravate the situation and to refrain from any slowdown.

On 18 September 2001, the Union filed a [reiterative] Urgent Petition to Suspend the Effects of Termination of union
officers and members, now numbering 43 ….

On 24 September 2001, the Company filed its Position Paper.

On 18 September 2001, the Union filed a 4th Notice of Strike … on grounds of alleged illegal dismissal of
eighteen (18) union officials, illegal lockout on account of the forced leave, coercion/intimidation, union busting
and non-payment of salaries for the period August 15-30, 2001.

On 28 September 2001, Acting [DOLE] Secretary Arturo D. Brion issued an Order consolidating the 4th notice of
strike with the first three (3) notices … and reiterating the injunction contained in the assumption of jurisdiction order
of 22 August 2001 and the Order of 12 September 2001.

xxx xxx xxx

On 05 October 2001, the Company filed a Motion to Deputize PNP Laguna to Secure, Maintain and Preserve Free
Ingress and Egress of NMPI, alleging … that despite the injunctions … against any slowdown and strike, the Union
went on actual strike on 01 October 2001, picketed and blocked the company offices, and plant premises; unlawfully
blocked and obstructed all entrances and exits points.

On 08 October 2001, the Union filed a ‘Mosyon Laban sa Deputasyon [ng PNP],’….

xxx xxx xxx

On 13 October 2001, the Secretary of Labor issued an Order deputizing the [PNP] ….

On 22 October 2001, the Union filed a Supplemental Position Paper with Reply alleging that the bargaining unit at
NMPI … is composed of 360 highly skilled employees; that the workers are always on forced leave; work is only for
4 or 5 days. The average daily salary of employees is P400.00 which is allegedly below the poverty line …. The
average monthly salary of employees is P10,000.00 for rank and file P20,000.00 for supervisory (sic).

The Union states further that the Company realized P3.2 Billion in gross sale for the year 2000; that it is very flexible
with the pricing of its products which price ranges from P750,000.00 to P1.3 Million; that the estimated direct labor
cost is only P68.180 Million.

On the political issues, the Union alleges that 140 union officers and members were placed under suspension from
3-6 days without observing procedural due process. xxx. The Union alleges too that the Company abused its
prerogative in imposing discipline ….

The Union accuses the Company of violating the assumption of jurisdiction order by falsely accusing the Union of
committing slowdown and placing them on forced leave, as on (sic) June 18, 30, July 7, 14, & 21. While all these
were taking place and up until 23 July, the Union claims, the CKD parts have not arrived thus, the low production.

The Union claims that after the filing of the 2nd notice of strike, the Company charged the Union with engaging in
work slowdown. Despite explanation that the low production was due to many reasons none of which is attributable
to a slowdown; …. The Union requested for grievance but the Company ignored it.

Labor II – 1
The Union claims that the charge against the employees of violation of the assumption of jurisdiction order is just a
[union busting] ploy …. It claims likewise that the Company also violated the assumption order, therefore the
principle of pari delicto applies to both parties.

The Union explained also its position on the CBA deadlock ….

On 26 October 2001, the Company filed its Reply to the Union’s Position Paper [later followed by] a Rejoinder to the
Union’s Reply [therein alleging] ... that the first notice of strike is totally without merit as the Union’s charge of [UPL]
is not supported by the events xxx.

The charge of illegal suspension of more or less 140 union members ranging from 3 to 6 days is without merit as the
action was in the exercise of management’s prerogative to instill discipline among its employees. The Company
asserts that the suspension was a sanction for the employees’ misconduct committed on 15 November 2000, by
refusing to go back to their assigned workstations, and instead demanding payment of the 2nd half of their 13th
month pay. The suspension from work was imposed as a disciplinary measure under the Company Rules … and
after observance of due process, the Company alleges. The Company notes that the subject employees failed to
submit satisfactory explanation within the 48-hour period granted to them. The incident was recorded in the
Company’s Exhibits …. A copy of the Notice of Charge, marked as Exhibit "J," a copy of the Notice of Suspension,
marked as Exhibit "K," and the Affidavit of Mr. Artemio del Rosario, marked as Exhibit "M" were submitted to further
support the claim of validity of the suspension.

Anent the said 13th month-pay related issue, … the Company states that the statutory deadline for payment of the
13th month-pay is December 24th of the applicable year, thus the demand for early payment is not in order. The
13th month pay was released as promised on 29 November 2000.

On the 2nd Notice of Strike, the Company states that it is incapable of meeting the [capricious] economic demands
of the Union … [which are] being made despite the continued losses suffered by NMPI over the last four (4) years of
its operations amounting to about P1.490 Billion. Notwithstanding the reduction of the Union’s total package, it
would still cost P212,081,987.00 or 309.5% increase over the previous CBA; whereas the Company’s last offer
before withdrawing the same was a package amounting to P35, 386,458.00 which represents a 52.5% increase
over the previous CBA. This package consists in:

a. Annual Salary increase - P900.00 + P160.00 merit increase

b. Signing bonus - P3,000.00

c. Maternity assistance - Normal – P 6, 500.00

Caesarian – P13,000.00

Miscarriage – P 3, 900.00

xxx xxx xxx

p. Overtime pay premium Increase for ordinary day,

special holiday, rest day and regular day

xxx xxx xxx

The Company maintains that the losses [in] … its last four (4) years of operations, from 1997 to 2000, resulted in net
losses amounting to P1.490 Billion, owing to such factors as the 1997 Asian economic meltdown, …, and the
Company’s limited motor vehicle market share …. Copies of its audited financial statements were submitted as
Annexes "B", "C", "D", and "E" of the Affidavit of Mr. Valentino de Leon, Exhibit "L" of the Company’s Position Paper.

Labor II – 1
The Company contends that overall, NMPI’s total market share in the year 2000 was lower than the previous year
… and among the lowest in the industry …. These factors militate against drastic award of economic benefits … as
such could adversely affect the Company’s survival.

The Company states too, that the slowdown carried out by the Union after the filing of the 2nd strike notice, was in
violation of the cooling off period prescribed by law, therefore illegal.

Moreover, the slowdown violates … the CBA. The Company submitted a sworn affidavit of Mr. Manolito E. Burgos,
Exhibit "O" of the Position Paper, to prove the fact that a slowdown was in fact carried out which adversely affected
NMPI’s normal production ….

On the matter of the dismissal of 19 Union officers and 25 members … after the issuance of the Assumption of
Jurisdiction Order …, the Company asserts that the subject employees defied the … Order by continuing to carry on
the slowdown …. The Union’s refusal to formally acknowledge receipt of the Order of 22 August 2001, cannot thwart
the efficacy of the said Order …. Citing several [SC] decisions on the matter, the Company maintains that this
blatant defiance of the DOLE orders left it with no choice but to declare the concerned employees to have forfeited
or lost their jobs.

The Company averred that the dismissal was preceded by observance of due process. To prove this, it submitted
Exhibit "M" (Affidavit of Mr. Artemio A. del Rosario) and its Annexes …, consisting in the notices to explain and the
notices of dismissal.

xxx xxx xxx

In its Reply to the Union’s Position Paper, the Company contends that the unofficial figures given to Administrator
Olalia should not be used as NMPI’s last position since these were never directly presented by the Company to the
Union as they are confidential information.

The Company alleges that the Union’s computation of the incremental direct cost over the three (3) year period is
totally incorrect and misleading as annual increases are cumulative. Moreover, there is not basis for comparing total
labor cost against total sales revenues. While labor cost may be just a small percentage of total sales revenue,
NMPI is incurring tremendous losses because of big overhead cost ….

xxx xxx xxx

The Company … confirmed that it unofficially offered P3,000.00 only, however, the basis for signing bonus no
longer exist because the parties did not reach any agreement on the CBA. The signing bonus is premised on
goodwill which no longer existed …. (Underlining and words in bracket added; emphasis in the original.)

On December 5, 2001, public respondent DOLE Secretary Patricia A. Sto. Tomas issued her assailed Decision, the
fallo of which reads:

WHEREFORE, in the light of the foregoing discussions, this Office orders the following:

1. The suspension of the 140 employees which is the subject of the first notice of strike is hereby affirmed;

2. The dismissal of the Union officers is hereby sustained. However, the dismissal of the Union members is
recalled, hence, they are reinstated to their former positions without back wages. They are imposed a
suspension of one month which is deemed already served;

3. Bagong Nagkakaisang Lakas sa Nissan Motor Philippines, Inc. (BANAL-NMPI-OLALIA-KMU) and Nissan
Motor Philippines, Inc. are hereby ordered to conclude a Collective Bargaining Agreement embodying the
dispositions made above and all other agreements which were reached by the parties during negotiation and
conciliation. Such agreement shall have prospective effect.

SO ORDERED.
Labor II – 1
In due time, the Company and the Union each sought partial reconsideration, but their corresponding motions were
denied by the public respondent Secretary in a modificatory resolution dated January 22, 2002.5 The modification
consisted in the deletion from the list of dismissed Union officers the names of three (3) employees previously
identified as officers but are not listed as such in the official records of the Bureau of Labor Relations.

Therefrom, both the Company and the Union went to the CA via separate petitions for certiorari under Rule 65 of the
Rules of Court. The Company’s recourse, docketed as CA-G.R. SP No. 69107, and that of the Union, as CA-G.R.
SP No. 69799, were later ordered consolidated.

On February 7, 2003, the CA, thru its Special Division of Five, rendered its assailed Decision6 which denied the
private parties’ separate petitions and affirmed the public respondent Secretary’s Decision dated December 5, 2001
and Resolution of January 22, 2002. The Company’s and the Union’s respective motions for reconsideration were
denied by the CA in a Resolution dated May 15, 2003.

Before the CA, however, issued its February 7, 2003 decision on the merits, its Fourth Division to which the case, as
consolidated, originally pertained, issued a Resolution dated November 8, 20027 citing Atty. Napoleon Banzuela, Jr.,
counsel for the Union, for indirect contempt under Rule 71 of the Rules of Court and required to pay a fine
of P15,000.00. In brief, the citation is set against the following antecedents:

1. On February 28, 2002, in CA-G.R. SP No. 69107, the CA, per a Resolution8 penned by Associate Justice
Eloy R. Bello, then of the CA 5th Division, temporarily enjoined the implementation of the DOLE underlying
decision of December 5, 2001. Barely a month after, the Union filed its own petition for certiorari,9 docketed
as CA-G.R. SP No. 69799 of the court’s 11th Division- with prayer for its consolidation with CA-G.R. SP No.
69107 which was then pending with the CA’s 5th Division;

2. Subsequently, both petitions were consolidated and raffled to Justice Bello, formerly of the 5th Division,
but who was at this time with the 4th Division of the CA. Justice Bello accepted the consolidation, being, per
Resolution of October 11, 200210 , in accordance with CA internal rules.

3. On May 20, 2002, the Union moved for the inhibition of Justice Bello and/or the transfer of the case to the
11th Division11 , to which motion Nissan Motor interposed an opposition with prayer to expunge from the
records the Union’s motion.

4. On August 14, 2002 the CA issued a Resolution denying the motion for inhibition of Justice Bello.12 On
September 23, 2002, the Union, thru Atty. Banzuela, Jr. filed a Motion to Refer Back to the Fourth (4th)
Division to which the Case was Originally Consolidated and there alleging the following:

Lately, upon follow-up on the case by the workers, they learned that a reorganization as regards the
compositions of the Divisions of the entire [CA] transpired wherein JUSTICE ELOY BELLO was transferred
to the SECOND DIVISION, but surprisingly, he brought with him the above entitled case in the Second
Division which was originally docketed with the Fourth Division, despite the fact that the workers filed a
motion to inhibit, which was denied and expunged from the records. However, bringing with him the above-
entitled case in the SECOND (2nd) DIVISION lend credence to the allegation/accusation of the workers that
JUSTICE ELOY BELLO, has undue interest over the instant case.

6. The CA found the foregoing imputation to be baseless and malicious and likewise found Atty. Banzuela’s
proffered explanation insufficient to justify the utterances he made in his September 23, 2002 motion.

We now come to the instant petitions, which the Court, per its Resolution of September 17, 2003,13 as reiterated in
another Resolution dated March 22, 2004,14 ordered consolidated.

In its recourse, Nissan Motor contends that the CA erred:

1. In not considering and applying hereto pertinent law and jurisprudence which provide that regardless of
rank in the union, workers who defy and contravene the [DOLE’s] assumption of jurisdiction and/or return-to-

Labor II – 1
 work orders are deemed to have committed an illegal act and, as consequence thereof, have lost their
employment status.

2. In affirming public respondent Secretary of Labor and Employment’s award of economic benefits to
private respondent Union and the rank-and-file workers considering its own confirmatory finding of
petitioner’s financial distress.

On the other hand, the Union, apart from the matter of contempt of court, raises in its own petition the issue of
whether or not:

1. Mass dismissal and collective liability are sanctioned by law and existing jurisprudence;

2. Union officers and members accused of work slowdown in defiance of assumption of jurisdiction are
entitled to due process to determine their individual participation;

3. The Pari Delicto (sic) doctrine is applicable in the instant case;

4. Respondent company can dismiss union officers and members after it brought the issue of illegal strike
before the [DOLE] Secretary ; and

5. The 160 Union officers and members [total] illegally dismissed are entitled to reinstatement and full
backwages.

Nissan Motor faults the CA for effectively ordering, like the public respondent Secretary, the reinstatement of the
140 rank-and-file Union members who waged a work slowdown notwithstanding the assumption of jurisdiction order
dated August 22, 2001 and what amounts to a reiterated return-to-work orders (RTWO) dated September 12 and
28, 2001. The public respondent Secretary, Nissan Motors notes, had found the dismissal of the Union officers to be
justified. Accordingly, and consistent with extant jurisprudence, the dismissal of the 140 rank-and-file Union
members should have also been upheld, given the Secretary’s categorical factual determination about the Union
having engaged in work slowdown which, under the circumstances it was undertaken, she viewed as constituting an
illegal strike.15

Nissan Motor next sets its sight on the DOLE’s disposition on the economic aspect of the case. In relation thereto, it
expresses dismay over the bountiful basket of economic benefits, inclusive of what amounts to a signing bonus, that
the CA, following the lead of the DOLE Secretary, extended to the Union members and rank-and-file workers in
general, given the backdrop against which the award was made, viz: a) the benefits were based on confidential
"unofficial proposals" the company made before the NCMB at the start of the Collective Bargaining Agreement
(CBA) negotiations; b) these proposals were made before the Union’s work slowdown; and c) the Company is in dire
financial strait, a situation attributable to the 1997 Asian currency crisis but which the Union’s work slowdown
aggravated.

For its part, the Union claims that the appellate court erred in sustaining the finding respecting the concerted work
slowdown. As argued, no overt act has been shown to prove the fact of concerted work slowdown, let alone the
participation of each of its members thereon. Far from establishing such deplorable practice, the Union maintains
that the facts would tend to show that it was Nissan Motor which is guilty of unfair labor practices acts against the
Union and its members, pointing to their dismissal which was allegedly effected without due process of law.

And while not determinative of the final outcome of the substantive merits of this case, the CA’s resolution of
November 8, 200216 embodying the contempt citation is also assailed. According to the Union’s counsel Atty.
Banzuela, what the CA considers as contemptuous utterances against Justice Eloy Bello, Jr. were actually remarks
he made without malice, unaware as he was of the CA rules respecting distribution, assignment and disposition of
cases.

Subject to well-defined exceptions, the doctrinal rule is that factual determinations of administrative and quasi-
judicial agencies, such as the National Labor Relations Commission or the DOLE, are generally accorded not only
respect but even conclusiveness if supported by substantial evidence, in recognition of their expertise on specific
Labor II – 1
matters under their consideration and jurisdiction.17 This doctrine applies with greater force when the appellate court
passes upon and upholds such findings of facts.18

The conclusion of the public respondent Secretary of Labor and Employment, as confirmed by the CA, is that the
Union and its members indeed "engaged in work slowdown which under the circumstances in which they
were undertaken constitute illegal strike." The defiance came in the form of the continuation of the
slowdown enjoined in the underlying assumption order, by the strike actually staged by the Union, its
officers and members on October 1, 2001, the closure of the company’s offices and plant premises and the
barricading of main gates. In fact, the DOLE Secretary had to ask the intervention of the Laguna Philippine
National Police (PNP) to assist the Company in opening what appeared to be padlocked and welded gates leading
to company premises. But side by side with this determination is the CA’s categorical finding that the Company’s
hands were not entirely clean, having contributed to the ensuing deteriorating impasse between labor and
management.

Verily, the DOLE’s repeated admonitions against any act that might exacerbate the labor dispute cut both ways.
Accordingly, the Court is not disposed, as Nissan Motor and the Union respectively urge, to disturb, one way or the
other, the factual determination on what eventually led the parties to engage in a labor-management locking of
horns. To be sure, the Company’s act - after the DOLE Secretary had issued her assumption order - of
suspending a very substantial number of Union officers/members with threat of eventual dismissal and
perceived illegal lockout and union busting went against the injunction against the commission of any act
that would add fire to what was already a volatile situation. This is not to say that the Company is guilty of unfair
labor practice, or union busting, to be precise. It cannot be heard, however, to say that the CA – taking stock of the
third and fourth notices of strike filed and the grounds therefor – erred in saying that the Company "was not entirely
without fault for the defiant and adversarial level into which the tense situation between the parties eventually
degenerated."19 In the same token, the Union cannot plausibly say, as it does at every turn, that its officers and
members desisted from engaging in what turned out to be a crippling work slowdown. The evidence on record and
the ensuing discerning and detailed observations of the public respondent Secretary belie the Union’s posture:

A perusal of the Production Plan and Results, for the months of June [to] … September 2001 … provide[s] a vivid
picture of the extent of the reduction in production of the Company’s JIG Lines 1 and 2, Metal Line and Trim/Chassis
Line No. 1 during the period covered by the labor dispute, and tend[s] to validate the Company’s contention that a
slowdown was carried out by the Union starting 24 July 2001.

As the Union itself alleges, there was normal, even high production [95% – 100% of production plan in all lines] in
the month of June 2001. …. In the month of July 2001, production at JIG Line 2 was 100% of plan from July 2 to 23
(covering only 5 working days), and at Metal Line, production was from 88% to 142% of plan, for the first 3 weeks of
July. But production fell by at least 50% in the 4th week (Annexes A-1, B-1, C-1 and D-1 of Company’s Exhibit
"O"), the time when the CBA deadlock occurred and the 2nd strike notice was filed.

xxx xxx xxx

Union claims that production setback was due to … workers [training] on the new product line launched in June.
This claim is … belied by evidence. xxx.

Union claims that the low production was due also to lack of parts. Company’s Annexes to Exhibit "O" … show that
during the period in question, there were no parts delay in JIG Line 1 experienced on August 3. In Trim/Chassis Line
1, there was in fact work-in-progress delay from JIG 1 and JIG 2 owing clearly to the slowdown in the latter lines
xxx.

Neither is the Union’s claim that the forced leaves and suspension of workers were responsible for the disruption of
production true. On the contrary, it was the lack of work-in progress due to slowdown and absenteeism which are
responsible for the declaration of forced leave. Annex "B-2" of Company’s Exh. "O" in fact shows that operations at
JIG Line 2 were cancelled and transferred to Line 1 starting on August 22 due to high incidents of absenteeism. xxx.

Thus, the Union’s excuses do not hold sway on this Office. To be sure, the Union engaged in work slowdown which
under the circumstances in which they were undertaken constitutes illegal strike. The Company is therefore right in
dismissing the subject Union officers in accordance with Article 264 (a) of the Labor Code, for participating in illegal
Labor II – 1
strike in defiance of the assumption of jurisdiction order by the Labor Secretary.20 (Underscoring and letters in
bracket added)

Given the above perspective, the benign consideration which the public respondent Secretary accorded the rank-
and-file Union members who joined in the work slowdown in defiance of the assumption order and the
complementing RTWO commends itself for concurrence. As may be recalled, the public respondent Secretary
imposed on the erring Union members a one (1) month suspension to replace the penalty of loss of employment
status heretofore meted on them by the Company. Article 263(g) in relation to Article 264 of the Labor Code governs
the effects of a strike or similar prohibited acts in assumption cases, thus:

Art. 263. Strikes, picketing and lockouts. xxx (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 …. Such assumption … shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified …. If one has already taken place at
the time of assumption …, all striking or locked out employees shall immediately return to work and the employer
shall immediately resume operations and re-admit all workers under the same terms and conditions prevailing
before the strike or lockout. xxx. (Underscoring supplied.)

Article 264. Prohibited Activities.

(a) xxx

No strike or lockout shall be declared after the assumption of jurisdiction by … the Secretary or … during the
pendency of cases involving the same grounds for the strike or lockout.

xxx. Any union officer who knowingly participates in 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: ….

While the employer is authorized to declare a union officer who participated in an illegal strike as having lost his
employment,21 his/its option is not as wide with respect to union members or workers for the law itself draws a line
and makes a distinction between union officers and members/ordinary workers. An ordinary striking worker or union
member cannot, as a rule, be terminated for mere participation in an illegal strike; there must be proof that he
committed illegal acts during the strike.22 And lest it be forgotten, the law invests the Secretary of Labor and
Employment the prerogative of tempering the consequence of the defiance to the assumption order. The
Secretary may thus merely suspend rather than dismiss the employee involved.23 This is as it should be. For
as then Associate, now Chief, Justice Artemio V. Panganiban prefaced his ponencia in Solvic Industrial Corporation
vs. NLRC24 - "Except for the most serious causes affecting the business of the employer, our labor laws
frown upon dismissal. Where a penalty less punitive would suffice, an employee should not be sanctioned
with a consequence so severe."

With the view we take of this case, the public respondent Secretary of Labor and Employment - and necessarily the
CA - acted within the bounds of the law – and certainly rendered a judicious solution to the dispute – when she
spared the striking workers or union members from the penalty of dismissal. This disposition takes stock of the
following circumstances justifying a less drastic penalty for ordinary striking workers: a) the employees who engaged
in slowdown actually reported for work and continued to occupy their respective posts, or, in fine, did not abandon
their jobs; b) they were only following orders of their leaders; and c) no evidence has been presented to prove their
participation in the commission of illegal activities during the strike. Not to be overlooked is a factor which the CA,
perhaps having in mind PAL vs. Brillantes,25 regarded as justifying the leniency assumed by the public respondent
Secretary towards the members of the Union. We refer to the fact that Nissan Motor appeared to have also
exacerbated, as earlier indicated, the emerging volatile atmosphere despite the Secretary’s order veritably enjoining
the parties to respect the status quo prevailing when she assumed jurisdiction over the dispute. Foremost of these
exacerbating acts is the en masse termination of most of the Union members, albeit it may be conceded that the
employer has the prerogative of imposing disciplinary sanctions against assumption-order-defying employees.

The Court has considered the cases cited by the Company to support its brief on the issue of dismissal,
notably Union of Filipro Employees vs. Nestle Philippines, Inc.,26 St. Scholastica’s College vs. Torres,[27] and
Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals.28 There, we held that any worker who
Labor II – 1
participates in a strike or otherwise engages in any prohibited act in defiance of the assumption order may be meted
the penalty of loss of employment status. But as correctly pointed out by the public respondent Secretary, however,
the law itself authorizes the graduation of penalties, Article 264 of the Labor Code making, as it were, a distinction
between union officers and its members or any other workers, the main differing line contextually being that the
latter do not necessarily lose their job by mere participation in an illegal strike absent proof that they committed
illegal acts. Thus in Association of Independent Union in the Philippines vs. NLRC,29 we held that the responsibility
of union officers, as main players in an illegal strike, is greater than that of the members and, therefore, limiting the
penalty of dismissal only for the former for participation in an illegal strike is in order. Of the same tenor, albeit
formulated a bit differently is our holding in Gold City Integrated Port Service, Inc. vs. NLRC.30

Certainly not lost on the Court is the fact that the cited cases are not on all fours applicable, Filipro, St. Scholastica
and Telefunken involving as they do the staging of actual strikes, resulting in work stoppage and complete
abandonment of employment. There lies the difference. In this case, the element of abandonment of work does not
obtain, the employees engaging in work slowdown having reported for work at their usual post. Abandonment
means deliberate, unjustified refusal of the employee to resume employment.31

The Court, just like the public respondent Secretary, however, cannot lend cogency to the Union’s unyielding
contention that Nissan Motor imposed disciplinary sanctions against its officers and members without due process
of law. As it were, the records32 tend to show that the Company, before proceeding against those concerned, asked
the erring Union officers/members and workers to explain what amounts to their defiant attitude and duly warned
them of their imminent fate as a consequence of their intransigence, before declaring and then confirming their loss
of employment status. The Company’s evidence presented during the proceedings before the respondent
Secretary, specifically Exhibits "L," "M" and "O" of Annex "N" of the Company’s petition for review in G.R. Nos.
158190-91, which the latter gave full faith and credence in her Decision dated December 5, 2001 and thereafter the
CA proved this point.

At any rate, the Union’s protestation on non-observance of due process is altogether an issue of fact that has no
place in the instant appellate proceedings. For, the Court’s jurisdiction in a petition for review is limited to reviewing
or revising errors of law allegedly committed by the appellate court, its findings of fact being generally binding on this
Court.33

In view of the legality of the disciplinary measures taken against the union officers and members of the union, the
Court need not delve on the issue of entitlement to full backwages. Backwages is, as a rule, forthcoming only in
cases where the dismissal or suspension, as the case may be, is declared unlawful.

Apropos the contempt citation, we sustain the CA’s order penalizing Atty. Napoleon Banzuela, Jr. for indirect
contempt for his uncalled-for and disrespectful remarks directed against Justice Eloy Bello, Jr. Atty. Banzuela
cannot plausibly set up his ignorance of the appellate court’s internal rules as a justification for making his
contemptuous, malicious and disparaging statements against the person and integrity of a sitting CA justice. The
Court is at loss to understand how his lack of knowledge of such rules, if that be really the case, can serve as
excuse for his unwarranted and unfounded ascription of interest against a member of a court. A well-intentioned
mind could have conveyed its sentiments about such perceived interest in a civil and respectful language befitting a
gentleman and an officer of the court. It behooved Atty. Banzuela, as such officer, to uphold the dignity and authority
of the men and women in the judiciary. The innuendo embodied in the Union’s September 23, 2002 motion,
doubtless the product of Atty. Banzuela’s mind, is simply reprehensible. The Court cannot, as urged, let it pass
unpunished.

Finally, the disposition made by the public respondent Secretary relating to the economic aspects of the CBA, such
as, but not limited, transportation allowance, 14th month pay, seniority pay, separation pay and the effectivity of the
new CBA, appears to be proper. However, conformably with the evidence on record that shows the Company’s
precarious financial position, there is a need to modify the other awards she thus made:

1) The annual salary increases of P900.00 for the 1st year, P1,000.00 and P1,100.00 for the 2nd and 3rd
years, respectively, which, given the proven continued losses of the Company, are hereby modified to
minimize and mitigate its operational losses to: P900.00 annual increase for the initial 3-year term of the
CBA, effective upon execution of a new CBA. In this regard, the Court cannot sanction the award made by
the public respondent Secretary based ostensibly on the revelation of NCMB Administrator Olalia that was
Labor II – 1
 sourced from the confidential position given him by the Company. The reason for this is simple. Article 233
of the Labor Code34 prohibits the use in evidence of confidential information given during conciliation
proceedings. NCMB Administrator Olalia clearly breached this provision of law. Moreover, as correctly
pointed out by the Company, this confidential information given to Administrator Olalia was made prior to the
Union’s slowdown and defiance of the Assumption Order of August 22, 2001 causing it additional losses.

2) The award for gratuity bonus of P3,000.00 per employee is vacated for lack of basis. As no less pointed
out by the public respondent Secretary, the Union’s demand for a signing bonus is bereft of any factual or
legal basis considering that the CBA was not concluded in the bargaining table. Moreover, the filing by the
Union of a notice of strike, not to mention effecting a slowdown during the mandatory cooling-off period
prescribed under Article 263 (c)35 of the Code ate up whatever goodwill – the motivating basis for signing
bonus - there was between labor and management. By parity of reasoning, there can likewise be no basis
for the award or conversion of the Union’s demand for a signing bonus into gratuity pay inasmuch as the
latter benefit was, in the first place, never an issue between the parties nor part of the Union’s demand. It is
not amiss to state, therefore, that the public respondent Secretary abused her discretion when she extended
to the Union an award not asked for, let alone negotiated.

Parenthetically, the Company’s lament about the public respondent Secretary being in error when she proceeded to
extend to members of the rank-and-file of the bargaining unit the privilege of obtaining half a month’s pay/salary by
way of a salary loan for the employee’s benefit or that of the immediate members of his family every start of the
semestral school year is unacceptable. According to the Company, such arrangement, as opposed to the present
practice wherein the Company accords a P5,000.00 educational loan semestrally for its employees or that of the
immediate members of the employee’s family, while seemingly innocuous, would in reality weigh heavily on its
finances. Far from being burdensome and confiscatory, as argued by the Company, this particular award appears to
the Court, as it did to the CA and the DOLE, to be reasonable and modest increase in benefits, being in the form of
a loan. A loan suggests repayment. At the end of the day, therefore, the Company will get its money back and will
be doing its share to promote industrial peace.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals dated February 7, 2003 and May 15,
2003, respectively, in CA-G.R. SP 69107 and CA G.R. SP No. 69799 are hereby AFFIRMED, with the following
modifications:

1. The award of annual salary increases shall be at P900.00 effective during the initial three-year term of the
CBA; and

2. The award of gratuity bonus of P3,000.00 per covered employee is deleted.

ACCORDINGLY, except insofar as they delved on the awards immediately referred to above, the petition of Nissan
Motor Philippines, Inc. in G.R. Nos. 158190-91, and the petition of Bagong Nagkakaisang Lakas Sa Nissan Motor
Philippines, Inc. in G.R. Nos. 158276 and 158283 are both DENIED.

Labor II – 1
13.) G.R. No. 168362             October 12, 2006

FAR EASTERN UNIVERSITY - DR. NICANOR REYES MEDICAL FOUNDATION (FEU-NRMF) and LILIA P.
LUNA. M.D., petitioners,
vs.
FEU-NRMF EMPLOYEES ASSOCIATION-ALLIANCE OF FILIPINO WORKERS (FEU-NRMFEA-AFW), union
officers DANTE F. SUCGANG, VIRGILIO P. BLANCO, FERNANDO S.P. VILLAPANDO, LORNA M. MELECIO,
FLORENCIA O. REYES, MERCEDITA P. MENDOZA, LEONOR B. VIAJAR, union members DORIS
ABOLENCIA, SUSAN ADRIANO, AVELINO AGUILAR, REYNALDO AGUSTIN, SERGIO ALINGOD, MARSHA
EILEEN ALMAZAN, ELOISA ALONZO, LILIAN AMBITO, FERDINAND ANGELES, PABLOITO ARGUIL,
RAYMUNDO ATAYDE, RANULFO AUSTRIA, JOHNNY BALABBO, DELIA BALINGIT, DAISY BANGUIS,
CRISPIN BARANGAN, EVELYN BARCENAS, JONATHAN BASILIO, ROMULO BLANCO, ALFREDO
CABALLES, NOLAN FERNANDEZ, VICENTE FERRER, ALLAN FLORES, MANUEL GALANG, ESTELA
CABANA, WILFREDO CABANTOG, VIRGINIA CABRERA, MEDI GRACE CACHO, CLARA CANDELARIA,
NELIA CHIU, ANTONIA CHOZAS, IGNACIO CHUA, RUTH CUARTERO, AMELITA DECICATORIA, VICTORINO
DELOS SANTOS, YOLANDA DEL ROSARIO, JOSE ANTHONY DEL ROSARIO, FE DIZON, RENATO DUAÑO,
ANTONIO DUARTE, GERTRUDES DUNGO, DEOGRACIAS ESPAÑO, GREGORIO ESPINOSA, ELEANOR M.
FAJARDO, EMILIA FAJARDO, EDUARDO FRAMIL, DITCHER GARCIA, HILDA GARLITOS, JUSTINA GOOT,
JOSEFINA GRIMALDO, GERARDO GUTIERREZ, PRECILA IMPERIAL, MELLYN INSERTO, MICHELLE
IRAELA, DIVINE GRACE JEREZO, RAMERO JUSPICIO, LORENA GRACE LAO, DEXTER LA TORRE,
RONALD LANUZA, OFELIO LAZARO, CARMELITA LIPANA, JESUS LIBERES, ZAIL BENNET LIM, MERLIE
LIWANAG, ROSENDO LOBERIANO, DELIO LOTERTE, MA. SHEILA LOTERTE, FELIX LUBAO, DENNIS LUCE,
ANASTACIO LUZON, ARACELI MAGLANTAY, NELIA MAGSINO, MA. TERESA MALALUAN, REMUS
MAPULA, MYRNA MARCENA, ROSEMARIE MANGONON, PANCHO MANUCOM, GENARO MARASIGAN,
MARIO MARCOS, WILDA MARTINEZ, DONALYN MENDOZA, TERESITA MENDOZA, VIVIAN MENDOZA,
FELIZA MERCADO, TOMAS MERCADO, ROSITA MESINA, ADORA MEJICA, CRISANTO MONIS, HUBERTO
NIEVA, JOHN NORCIO, HERMAN OBRERO, JR., CRISTINA ONG, FLORDELIZA ORBIEN, LUCILA
PAGLINAWAN, ROMEO PAPIO, ROSARIO PACIAL, ALFREDO PARREÑAS, CHRISTINE PEREZ, RODOLFO
PEREZ, FRANCISCO PIDLAOAN, EDUARDO PUSING, FELIMON QUITALEG, BERNADETH RADOC, HERMES
RAQUEÑO, JASMIN RAZON, ELISA REYES, AGNES RIEGO, GLENDA RIVERA, JONEL ROMERO, RODEL
ROPEREZ, ELENITA RUAN, MARISA RUIZ, MARIO SANTOS, ARSENIA SAOI, ROSIE SARAOSOS, DESIRE
SARGADE, EDGAR SIM, LOLITA SISON, GERTRUDES TALLADOR, ZENAIDA TAN, EVANGELINE TRINIDAD,
VILMA TULABOT, MARIE TULLA, MARY ANN VILLAFANIA, RODOLFO VILLEGAS, GLENDA VALLANO,
DELSA WARQUEZ, the ALLIANCE OF FILIPINO WORKERS (AFW), federation officers GREGORIO C. DEL
PRADO and JOSE UMALI, respondents.

DECISION

YNARES-SANTIAGO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, as amended, assailing
the 22 March 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 86690 and its 22 June 2005
Resolution2 denying the Motion for Reconsideration of petitioner Far Eastern University - Dr. Nicanor Reyes Medical
Foundation’s (FEU-NRMF) Motion for Reconsideration. The challenged Decision disposed thus:

WHEREFORE, finding grave abuse of discretion, committed by public respondent NLRC, the instant petition
is GRANTED. The assailed Resolution, dated 23 September 2002, and Order, dated 30 June 2004, are
hereby REVERSED and SET ASIDE in so far as the illegality of the strike and loss of employment status of
individual petitioners are concerned. All other respects are AFFIRMED. No costs at this instance.3

Petitioner FEU-NRMF is a medical institution duly organized and existing under the Philippine laws. On the other
hand, respondent union is a legitimate labor organization and is the duly recognized representative of the rank and
file employees of petitioner FEU-NRMF.

In 1994, petitioner FEU-NRMF and respondent union entered into a Collective Bargaining Agreement (CBA) that will
expire on 30 April 1996.
Labor II – 1
In view of the forthcoming expiry, respondent union, on 21 March 1996, sent a letter-proposal4 to petitioner FEU-
NRMF stating therein their economic and non-economic proposals for the negotiation of the new CBA.

On 8 May 1996, petitioner FEU-NRMF sent a letter-reply5 flatly rejecting respondent union’s demands and proposed
to maintain the same provisions of the old CBA. Petitioner FEU-NRMF reasoned that due to financial constraints, it
cannot afford to accede to a number of their demands for educational and death benefits, uniforms, longetivity pay,
meal allowance and special pay, but nevertheless gave an assurance that it will seriously consider their proposal on
salary increase.

In an effort to arrive at a compromise, subsequent conciliation proceedings were conducted before the National
Conciliation and Mediation Board - National Capital Region (NCMB-NCR) but because of the unyielding stance of
both parties, the negotiation failed.

On 6 August 1996, respondent union filed a Notice of Strike before NCMB-NCR on the ground of bargaining
deadlock. A strike vote was conducted on 23 August 1996 and the result thereof was submitted to NCMB-NCR on
26 August 1996. After the expiration of the thirty-day cooling off period and the seven-day strike ban, respondent
union, on 6 September 1996, staged a strike.6

Before the strike was conducted, respondent union, on 4 September 1996, offered a skeletal force of nursing and
health personnel who will man the hospital’s operation for the duration of the strike. For reasons unknown to
respondent union, however, petitioner FEU-NRMF failed or refused to accept the offer.

For its part, petitioner FEU-NRMF, on 29 August 1996, filed a Petition for the Assumption of Jurisdiction or for
Certification of Labor Dispute with the National Labor Relations Commission (NLRC), underscoring the fact that it is
a medical institution engaged in the business of providing health care for its patients.7

Acting on the petition, the Secretary of Labor, on 5 September 1996, granted the petition and thus issued an
Order8 assuming jurisdiction over the labor dispute, thereby prohibiting any strike or lockout whether actual or
impending, and enjoining the parties from committing any acts which may exacerbate the situation.

On 6 September 1996, Francisco Escuadra, the NLRC process server, certified that, on 5 September 1996 at
around 4:00 P.M., he attempted to serve a copy of the Assumption of Jurisdiction Order to the union officers but
since no one was around at the strike area, he just posted copies of the said Order at several conspicuous places
within the premises of the hospital.

Claiming that they had no knowledge that the Secretary of Labor already assumed jurisdiction over the pending
labor dispute as they were not able to receive a copy of the Assumption of Jurisdiction Order, striking employees
continued holding a strike until 12 September 1996.

On 12 September 1996, the Secretary of Labor issued another Order9 directing all the striking employees to return
to work and the petitioner FEU-NRMF to accept them under the same terms and conditions prevailing before the
strike. Accordingly, on 13 September 1996, a Return to Work Agreement was executed by the disputing parties,
whereby striking employees agreed to return to their work and the petitioner FEU-NRMF undertook to accept them
under status pro ante. On the same day, the striking employees returned to their respective stations.

Subsequently, petitioner FEU-NRMF filed a case before the NLRC, contending that respondent union staged the
strike in defiance of the Assumption of Jurisdiction Order; hence, it was illegal. Further, the said strike was
conducted in a deleterious and prejudicial manner, endangering the lives of the patients confined at the hospital. In
its complaint docketed as NLRC-NCR No. 10-11-0733-96, petitioner FEU-NRMF specifically alleged that the striking
employees effectively barricaded the ingress and egress of the hospital, thus, preventing trucks carrying the
supplies of medicines and food for the patients from entering the hospital’s premises. In one instance, an
ambulance carrying a patient in critical condition was likewise prevented from passing through the blockade. Finally,
respondent union also prevented patients from seeking medical assistance by blocking their way into the hospital. In
order to redress the wrongful and illegal acts of the respondent union, petitioner FEU-NRMF prayed for the
declaration that the strike is illegal and, resultantly, for the dismissal of the striking employees and decertification of
the respondent union, plus damages.

Labor II – 1
In contrast, respondent union avers that petitioner FEU-NRMF refused to bargain collectively despite hefty financial
gains and, thus, guilty of surface bargaining. Before staging a strike, respondent union complied with the procedural
requirements by filing a notice of strike and strike vote with the NCMB-NCR. The thirty-day cooling off period and
the seven-day strike ban was also fully observed. Respondent union also offered a skeletal work force but it was
refused by petitioner FEU-NRMF. The strike was conducted in a peaceful and orderly manner where striking
employees merely sat down outside the hospital’s premises with their placards airing their grievances. Petitioner
FEU-NRMF’s allegation of sabotage, therefore, was merely concocted. Finally, respondent maintained that they did
not defy any order of the Secretary of Labor because neither its officers nor its members were able to receive a copy
of the same.

On 27 May 1998, the Labor Arbiter rendered a Decision10 declaring the strike illegal and dismissing the union
officers for conducting the strike in defiance of the Assumption of Jurisdiction Order. The dispositive portion of the
decision reads:

WHEREFORE, a decision is hereby rendered cast in favor of complainants and against the respondents
declaring the strike conducted by the latter last September 5-14, [1996] illegal and the following individual
respondents officers of union employed by complainant hospital to have lost their employment status, Dante
F. Sugcang, Virgilio P. Blanco, Fernando S.P. Villapando, Lorna M. Melecio, Florencia O. Reyes, Mercedita
P. Mendoza and Leonor P. Vajar.

The prayer for decertification is hereby denied for lack of jurisdiction and the prayer for damages is likewise
denied for lack of sufficient evidence.

Aggrieved, the respondent union filed a Partial Appeal11 before the NLRC asserting that the Labor Arbiter gravely
abused its discretion in denying a formal trial and in holding that the Assumption of Jurisdiction Order dated 5
September 1996 was properly served. In its Partial Appeal Memorandum12 filed on 29 July 1998, respondent union
claimed that the Labor Arbiter erred in declaring the strike illegal and in adjudging that the union officers have lost
their employment status.

On 23 September 2002, the NLRC handed down a Resolution13 affirming in toto the Decision of the Labor Arbiter
dated 27 May 1998 and, thus, upheld the illegality of the strike and loss of employment status of the union officers.
The NLRC found that during the conciliation proceedings before the NCMB-NCR, the union officers admitted that
they were aware that the Secretary of Labor issued an Assumption of Jurisdiction Order which enjoined the strike
they were conducting. There was, therefore, an utter defiance of the said Order, making the strike illegal. The union
officers’ dismissal is thus warranted.

Undaunted, the respondent union filed a Motion for Reconsideration14 which was likewise denied by the NLRC in its
Resolution15 dated 30 June 2004, for failure to present positive averment that the Resolution16 dated 11 October
2002 contains palpable or patent errors as required by the NLRC Revised Rules of Procedure.

Consequently, the respondent union brought a Petition for Certiorari under Rule 65 before the Court of Appeals
seeking to annul the NLRC Resolution dated 23 September 2002, affirming the Decision of the Labor Arbiter dated
27 May 1998 and the Resolution dated 30 June 2004, denying its Motion for Reconsideration. In its
Petition17 docketed as CA-G.R. SP No. 86690, FEU-NRMF Employees Association-Alliance of Filipino Workers
(FEU-NRMFEA-AFW), Dante Sugcang, Virgilio Blanco, Norma Melencio and Florencia Reyes v. National Labor
Relations Commission, and Far Eastern University – Dr. Nicanor Reyes Medical Foundation (FEU-NRMF),
respondent union alleged that the public respondents committed grave abuse of discretion amounting to lack or
excess of jurisdiction in rendering the aforesaid judgments which are contrary to law and established jurisprudence.

On 22 March 2005, the Court of Appeals rendered a Decision granting the Petition and reversing the assailed
Resolution dated 23 September 2002, and Order dated 30 June 2004, as they were made with grave abuse of
discretion amounting to lack or excess of jurisdiction. The appellate court found that no personal service was validly
effected by the process server that could bind the striking employees.

Similarly ill-fated was petitioner FEU-NRMF’s motion for reconsideration which was denied through the Court of
Appeals’ Resolution promulgated on 22 June 2005.18

Labor II – 1
Petitioners are now before this Court assailing the aforementioned decision and resolution of the Court of Appeals
on the ground that the appellate court erred in reversing both the decisions of the Labor Arbiter and the NLRC.19

For our resolution are the following issues:

I.

WHETHER OR NOT SERVICE OF THE ASSUMPTION OF JURISDICTION ORDER WAS VALIDLY

EFFECTED.

II.

WHETHER OR NOT THE STRIKE CONDUCTED BY THE RESPONDENT UNION WAS ILLEGAL.

III.

WHETHER OR NOT THE DISMISSAL OF THE UNION OFFICERS WAS VALID.

The crucial question for the determination of this Court, however, is whether the service of the Assumption
of Jurisdiction Order was validly effected by the process server so as to bind the respondent union and
hold them liable for the acts committed subsequent to the issuance of the said Order.

The certification/proof of service of the process server, Francisco A. Escuadra, dated 6 September 1996, reads:

CERTIFICATION/PROOF OF SERVICE

This is to certify that on September 5, 1996 at around 4:00 P.M., I attempted to serve a copy of the Order of
Assumption of Jurisdiction issued by the Secretary of Labor and Employment, to the officials of the FEU-
NRMF Employees Association-AFL.

Since none of the officials of the said union was available to receive a copy of the said Order, I posted
copies of the same at several conspicuous places within the premises of Far Eastern University Nicanor
Reyes Medical Foundation (FEU-NRMF).

The copies of the Order were posted on September 5, 1996 at around 4:30 PM.

Manila, Philippines, 6 September 1996.20

It can be inferred from the foregoing that the process server resorted to posting the Order when personal service
was rendered impossible since the striking employees were not present at the strike area. This mode of service,
however, is not sanctioned by either the NLRC Revised Rules of Procedure or the Revised Rules of Court.

The pertinent provisions of the NLRC Revised Rules of Procedure21 read:

Section 6. Service of Notices and Resolutions.

(a) Notices or summons and copies of orders, shall be served on the parties to the case personally
by the Bailiff or duly authorized public officer within three (3) days from receipt thereof or by
registered mail; Provided that in special circumstances, service of summons may be effected in
accordance with the pertinent provisions of the Rules of Court; Provided further, that in cases of
decisions and final awards, copies thereof shall be served on both parties and their counsel or
representative by registered mail; Provided further, that in cases where a party to a case or his counsel
on record personally seeks service of the decision upon inquiry thereon, service to said party shall be
deemed effected upon actual receipt thereof; Provided finally, that where parties are so numerous, service

Labor II – 1
 shall be made on counsel and upon such number of complainants, as may be practicable, which shall be
considered substantial compliance with Article 224(a) of the Labor Code, as amended. (Emphasis supplied.)

An Order issued by the Secretary of Labor assuming jurisdiction over the labor dispute is not a final judgment for it
does not dispose of the labor dispute with finality. 22 Consequently, the rule on service of summons and orders, and
not the proviso on service of decisions and final awards, governs the service of the Assumption of Jurisdiction
Order.

Under the NLRC Revised Rules of Procedure, service of copies of orders should be made by the process server
either personally or through registered mail. However, due to the urgent nature of the Assumption of Jurisdiction
Order and the public policy underlying the injunction carried by the issuance of the said Order, service of copies of
the same should be made in the most expeditious and effective manner, without any delay, ensuring its immediate
receipt by the intended parties as may be warranted under the circumstances. Accordingly, in this case, personal
service is the proper mode of serving the Assumption of Jurisdiction Order.

It is also provided under the same rules that in special circumstances, service of summons may be effected in
accordance with the pertinent provisions of the Rules of Court.23

Parenthetically, the manner upon which personal service may be made is prescribed by the following provisions of
the Revised Rules of Court:

Rule 13. Filing and Service of Pleadings, Judgments And Other Papers.

Section 6. Personal service. – Service of the papers may be made by delivering personally a copy to the
party or his counsel, or by leaving it in his office with his clerk or with a person having charge thereof. if no
person is found in his office, or his office is not known, or he has no office, then by leaving a copy, between
the hours of eight in the morning and six in the evening, at the party’s or counsel’s residence, if known, with
a person of sufficient age and discretion then residing therein.

Let it be recalled that the process server merely posted copies of the Assumption of Jurisdiction Order in
conspicuous places in the hospital. Such posting is not prescribed by the rules, nor is it even referred to
when the said rules enumerated the different modes of effecting substituted service, in case personal
service is impossible by the absence of the party concerned.

Clearly, personal service effectively ensures that the notice desired under the constitutional requirement of due
process is accomplished. If, however, efforts to find the party concerned personally would make prompt service
impossible, service may be completed by substituted service, that is, by leaving a copy, between the hours of eight
in the morning and six in the evening, at the party’s or counsel’s residence, if known, with a person of sufficient age
and discretion then residing therein.

Substituted service derogates the regular method of personal service. It is therefore required that statutory
restrictions for effecting substituted service must be strictly, faithfully and fully observed. Failure to comply with this
rule renders absolutely void the substituted service along with the proceedings taken thereafter.24 The underlying
principle of this rigid requirement is that the person, to whom the orders, notices or summons are addressed, is
made to answer for the consequences of the suit even though notice of such action is made, not upon the party
concerned, but upon another whom the law could only presume would notify such party of the pending
proceedings.25

Applying this principle in the case at bar, presumption of receipt of the copies of the Assumption of
Jurisdiction Order could not be lightly inferred from the circumstances considering the adverse effect in
case the parties failed to heed to the injunction directed by such Order. Worthy to note that in a number of
cases, we have ruled that defiance of the assumption and return-to-work orders of the Secretary of Labor after he
has assumed jurisdiction is a valid ground for the loss of employment status of any striking union officer or
member.26 Employment is a property right of which one cannot be deprived of without due process.27 Due process
here would demand that the respondent union be properly notified of the Assumption of Jurisdiction Order of the
Secretary of Labor enjoining the strike and requiring its members to return to work. Thus, there must be a clear and

Labor II – 1
unmistakable proof that the requirements prescribed by the Rules in the manner of effecting personal or substituted
service had been faithfully complied with. Merely posting copies of the Assumption of Jurisdiction Order does not
satisfy the rigid requirement for proper service outlined by the above stated rules. Needless to say, the manner of
service made by the process server was invalid and irregular. Respondent union could not therefore be adjudged to
have defied the said Order since it was not properly apprised thereof. Accordingly, the strike conducted by the
respondent union was valid under the circumstances.

For a strike to be valid, the following requisites must concur: (1) the thirty-day notice or the fifteen-day
notice, in case of unfair labor practices; (2) the two-thirds (2/3) required vote to strike done by secret ballot;
and (3) the submission of the strike vote to the Department of Labor and Employment at least seven days
prior to the strike.28 In addition, in case of strikes in hospitals, clinics and medical institutions, it shall be the
duty of the striking employees to provide and maintain an effective and skeletal workforce of medical and
other health personnel in order to insure the proper and adequate protection of the life and health of its
patients.29 These procedural requirements, along with the mandatory cooling off and strike ban periods had
been fully observed by the respondent union.

It is true that the strike may still be declared invalid where the means employed are illegal even if the procedural
requisites before staging a strike were satisfied.30 However, in the absence of evidence to support the allegations
that the respondent union did not commit illegal acts during the strike, we are constrained to dismiss the allegations
and uphold the strike as a valid exercise of the worker’s constitutional right to self-organization and collective
bargaining.

The affidavits presented by the petitioner FEU-NRMF and relied upon by the Labor Arbiter and the NLRC, in arriving
at the conclusion that the respondent union committed illegal acts during the strike, could not be given probative
value by this Court as the adverse party was not given a chance to cross-examine the affiants. In a catena of labor
cases, this Court has consistently held that where the adverse party is deprived of the opportunity to cross-examine
the affiants, affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on the
witness stand to testify thereon.31 Neither can this Court rely on the photographs supporting these allegations
without verifying its authenticity.

Verily, this Court is not bound to uphold the erroneous findings of the administrative bodies. While it is well-settled
that findings of facts of the Labor Arbiter, when affirmed by the NLRC, are entitled to great respect and are generally
binding on this Court, it is equally settled that this Court will not uphold erroneous conclusions of the said bodies as
when we find insufficient or insubstantial evidence on record to support these factual findings. The same holds true
when it is perceived that far too much is concluded, inferred or deduced from the bare allegations or insufficient
evidence appearing on the record.

Prescinding from the above, as the strike conducted by the respondent union is valid and legal, there is therefore no
cogent reason to dismiss the union officers.

WHEREFORE, premises considered, the instant Petition is DENIED. Costs against the petitioner.

Labor II – 1
 14.) [G.R. NO. 160058 : June 22, 2007]

PILIPINO TELEPHONE CORPORATION, Petitioner, v. PILIPINO TELEPHONE EMPLOYEES

ASSOCIATION (PILTEA), PELAGIO S. BRIONES II, GEORGE L. DE LEON, LECEL M.
FIDEL, AUGUSTO C. FRANCISCO, OLIVER B. ANTONIO, RONALDO B. CORONEL,
CHRISTOPHER L. HERRERA and GEM TORRES, Respondents.

[G.R. NO. 160094 : June 22, 2007]

PILIPINO TELEPHONE EMPLOYEES ASSOCIATION (PILTEA), PELAGIO S. BRIONES II,

GEORGE L. DE LEON, and GEM TORRES, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION and PILIPINO TELEPHONE CORPORATION, Respondents.

DECISION

PUNO, C.J.:

At bar are two consolidated petitions seeking review of the decision1 and resolution2 of the Court
of Appeals (CA) in CA-G.R. SP No. 59799 which modified the decision3 of the National Labor
Relations Commission (NLRC) by affirming the illegality of the strike conducted by Pilipino
Telephone Employees Association (the Union) but reducing the penalty against union officers
Pelagio S. Briones II, George De Leon, Lecel M. Fidel and Gem Torres from dismissal to
suspension for six (6) months.

First, we unfurl the facts.

The Collective Bargaining Agreement (CBA) between the Union and Pilipino Telephone
Corporation (the Company) was due to expire on December 31, 1997. On October 30, 1997, the
Union submitted to the Company its proposals for the renegotiation of the non-representation
aspects of their CBA. As there was a standstill on several issues, the parties submitted their
dispute to the National Conciliation and Mediation Board (NCMB) for preventive mediation.4 The
conciliation proceedings before the NCMB failed.

On July 13, 1998, the Union filed a Notice of Strike5 with the NCMB for unfair labor practice due
to the alleged acts of "restraint and coercion of union members and interference with their right
to self-organization" committed by the Company's Revenue Assurance Department (RAD)
Manager Rosales and its Call Center Department Manager, Manny Alegado, to wit:

1. Requiring employees to execute undated resignation letters prior to regularization as a

condition for continued employment.

2. Preventing employees from displaying Union flags and CBA's slogans.

3. Prohibiting employees from conducting and preventing employees from participating in Union
activities.

4. Requiring employees to render forced overtime to prevent them from attending Union
meetings and activities after office hours.

5. Using vulgar and insulting language such as "Kahit sa puwet n'yo isaksak ang mga banderang
yan!"
Labor II – 1
6. Threatening employees who join concerted Union activities with disciplinary action.

7. Discouraging employees from participating in Union activities by branding the activities illegal
and prohibited by law.

8. Abuse of Company Rules and Regulations to prevent the free exercise by the Union and its
members of their right to self organization and free expression (e.g. issuing show cause memos
for refusal to render overtime and vandalism).

9. Utilizing security guards to harass employees who participate in Union activities by requiring
the guards to take down the names of employees who participate in the Union activities.6

The Company filed a petition for Consolidated Assumption of Jurisdiction with the Office of the
Secretary of Labor. On August 14, 1998, then Secretary Bienvenido E. Laguesma issued an
Order, the dispositive portion of which states:

WHEREFORE, premises considered, this Office hereby assumes jurisdiction over the entire labor
dispute at Pilipino Telephone Corporation pursuant to Art. 263(g) of the Labor Code, as
amended.

Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined.

Furthermore, the parties are likewise directed to cease and desist from committing any
or all acts that might exacerbate the situation.

To expedite the resolution of the dispute, the parties are hereby directed to file their respective
position papers and documentary evidence within TEN (10) days from receipt of this Order.

SO ORDERED.7 (Emphases supplied.)

On September 4, 1998, the Union filed a second Notice of Strike8 with the NCMB on the grounds
of: a) union busting, for the alleged refusal of the Company to turn over union funds; and b) the
mass promotion of union members during the CBA negotiation, allegedly aimed at excluding
them from the bargaining unit during the CBA negotiation. On the same day, the Union went on
strike.

On September 9, 1998, Secretary Laguesma directed the striking Union officers and members to
return to work within twenty-four (24) hours from receipt of the Order and for the Company to
accept all strikers under the same terms and conditions of employment prior to the strike. The
Union and its members complied.

On December 7, 1998, the Company filed with the NLRC a petition9 to declare the Union's
September 4, 1998 strike illegal. On August 16, 1999, Labor Arbiter Aliman D. Mangandog
issued a decision, the dispositive portion of which states:

WHEREFORE, premises considered, the September 4, 1998 strike conducted by PILTEA is

declared illegal.

Accordingly, the following union officers of PILTEL/MKP, namely: George de Leon, Pelagio S.
Briones, Nelson C. Pineda, Rolando U. Sta. Ana, Elna E. Escalante, Gem P. Torres, Ma. Rica D.
Hilotin, Gerald Joseph P. Tayas, Lecel M. Fidel and Jose Rudylin R. Gamboa are declared to have
lost their employment status.
Labor II – 1
While the following members, namely: Romeo Anonuevo, Jonathan Molaer, Cris Herrera, Edgar
Alan Aquino, Aris Ablis, Dorothy Zulieta, Ronald Cornel, Arnel Garcia, Ranelio Mendoza, Oliver
Antonio, Alvin Usman, Augusto Francisco, Celia Mogol and Erlinda Madrid are hereby suspended
for six (6) months without pay.

SO ORDERED.10

The Labor Arbiter found the strike illegal for having been conducted in defiance of Secretary
Laguesma's August 14, 1998 assumption order and for non-compliance with the procedural
requirements for the conduct of a strike under the Labor Code and its implementing rules. The
Labor Arbiter cited Scholastica's College v. Ruben Torres11 which ruled that a strike
undertaken despite the issuance of an assumption or certification order by the Secretary of
Labor is a prohibited activity, hence, illegal under Article 264 of the Labor Code. He found that
the grounds relied upon by the Union in its second notice of strike were substantially the same
as those set forth in its first notice of strike. Moreover, he held that the Company's alleged
refusal to turn over the checked-off union dues was not a strikeable issue as it was not a gross
and blatant violation of the economic provisions of the CBA. He also held that the mass
promotion of the Union's members was not tantamount to dismissal, hence, did not constitute
union busting. The staging of the strike was likewise found to suffer from fatal procedural
defects, to wit: a) the notice of strike was filed on the same day that the strike was conducted;
b) the fifteen (15)-day cooling-off period was not observed; c) the Union failed to conduct a
strike vote within the time prescribed by law; and d) the result of the strike vote was not
furnished to the NCMB at least seven (7) days prior to the intended strike. Certain illegal acts
were likewise found to have been committed during the strike, among which were the following:
1) striker Manny Costales prevented the Company's Director, Lilibeth Pasa, from entering the
Bankers Centre Building; 2) union officers Judilyn Gamboa and Rolly Sta. Ana physically blocked
the front entrance of the same building; 3) striker Aris Ablis drove a company vehicle and used it
to block the driveway of PILTEL Centre II, thus, the cars inside the building were prevented from
going out. The tires of said company vehicle were found deflated the following day; 4) strikers
Dorothy Zulieta and Ronald Cornel prevented the Warehousing Manager assigned at the PILTEL
Metropolitan Warehouse from going out of his office; 5) the strikers, led by Nelson Pineda,
blocked the Detachment Supervisor of Protection Specialists and the uniformed company guards
from delivering food to the non-striking employees trapped inside PILTEL Call Center at the
Manila Memorial Park Building; 6) in General Santos City, some union members tied the
entrance doors of the PILTEL Building and tied the company vehicles together; 7) Fe Carandang,
Estrella Anonical, Zaldy Logos and Jovencio Laderas blocked the main entrance of the Boac,
Marinduque office of the Company; 8) strikers Edna Carrion, Celia Mogol, Erlinda Madrid, Raul
Montalan, Rolly Miraflor, Zaldy de Chavez and Dina Madla of the Company's office in Boac,
Marinduque were also heard telling the Company's clients not to transact business with the
company; and 9) strikers Zaldy Logos, Rizaldy de Chavez, Raul Montalan, Rolly Milaflor and
Jovencio Laderas were seen preventing the free ingress and egress of the Company's office
premises in Boac, Marinduque. The Labor Arbiter ruled that since the September 4, 1998 strike
was illegal, the Union officers were deemed to have lost their employment status. He further
ruled that the illegal acts committed during the strike were not serious enough to merit the
dismissal of the erring Union members as they were merely acting at the order of their leaders.
Hence, the erring union members were merely suspended for six (6) months.

On appeal, the NLRC affirmed the decision of the Labor Arbiter in toto.12 The Union, its dismissed
officers and its suspended members filed a motion for reconsideration, to no avail.13

The Union, its officers Briones, De Leon, Fidel and Torres, and its members Francisco, Antonio,
Coronel and Herrera filed a Petition for Certiorari under Rule 65 of the Rules of Court with the

Labor II – 1
CA, attributing grave abuse of discretion amounting to excess of jurisdiction on the part of the
NLRC.14 On September 20, 2002, the CA modified the ruling of the NLRC as follows:

WHEREFORE, the assailed decision of the NLRC dated February 29, 2000 is MODIFIED.
Petitioners Pelagio S. Briones, George L. De Leon, Lecel M. Fidel and Gem Torres shall be
suspended for six (6) months without pay instead of being dismissed. If already dismissed,
petitioners shall be reinstated back to their former positions, or, if already filled, then to any
other equal positions and shall be entitled to backwages computed from date of dismissal until
date of actual reinstatement less the pay for the six (6) months suspension they were supposed
to serve. The suspension of petitioners Augusto C. Francisco, Oliver B. Antonio, Ronaldo B.
Coronel and Christopher L. Herrera for six (6) months without pay and the finding of illegality of
the September 4, 1998 strike STANDS.

SO ORDERED.15

Both parties filed their respective partial motions for reconsideration - the company assailed the
CA decision decreasing the penalty of the union officers while the Union and its dismissed
officers assailed the decision declaring the strike illegal. Both motions were denied.16

Hence, the instant petitions.

In G.R. No. 160058, the Company raises the issue of:

[WHETHER] THE ASSAILED 20 SEPTEMBER 2002 DECISION AND 17 SEPTEMBER 2003

RESOLUTION OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND JURISPRUDENCE.17

It prays that the September 20, 2002 Decision and September 17, 2003 Resolution of the CA be
reversed in part and judgment be rendered affirming in toto the February 29, 2000 Decision of
the NLRC.

In G.R. No. 160094, the Union and Union officers Briones, De Leon and Torres raise the issue
of:

[WHETHER] THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

UPHOLDING NLRC'S FINDING THAT THE 4 SEPTEMBER 1998 STRIKE HELD BY PILTEA WAS
ILLEGAL AS IT IS NOT IN ACCORDANCE WITH EXISTING LAW OR JURISPRUDENCE.18

They pray that this Court modify the September 20, 2002 Decision and September 17, 2003
Resolution of the CA and: a) declare the Union's September 4, 1998 strike as legal; b) nullify the
six-month suspension imposed on Briones, De Leon and Torres; and c) order the Company to
pay them backwages covering the period of their suspension.

The twin issues to be resolved are: a) the legality of the Union's strike and b) the
penalty to be imposed on the Union officers, if any.

First, the legality of the strike.

The Union and its officers maintain that their September 4, 1998 strike was legal. They allege
that the Company was guilty of union busting in promoting a substantial number of Union
members and officers to positions outside the bargaining unit during the period of CBA
negotiations. Allegedly, said Union members and officers maintained the same jobs and duties
despite their promotion. They also capitalize on the CA's finding that the company was guilty of
Labor II – 1
unfair labor practice in refusing to turn over the deducted contingency fees of the union
members to the union. Citing Bacus v. Ople,19 Panay Electric Company v. NLRC20 and PNOC
Dockyard and Engineering Corporation v. NLRC,21 they contend that this finding of unfair
labor practice precludes the CA from ruling that the strike was illegal and that the Union was in
bad faith in conducting the strike.

These arguments do not sway.

Article 263 of the Labor Code, as amended by Republic Act (R.A.) No. 6715,22 and Rule XXII,
Book V of the Omnibus Rules Implementing the Labor Code outline the following procedural
requirements for a valid strike:

1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the
Regional Branch of the NCMB, copy furnished the employer of the union;

2) A cooling-off period must be observed between the filing of notice and the actual execution of
the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair
labor practice. However, in the case of union busting where the union's existence is threatened,
the cooling-off period need not be observed.

xxx

4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with
a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-ballot
approval of majority of the total union membership in the bargaining unit concerned.

5) The result of the strike vote should be reported to the NCMB at least seven (7) days before
the intended strike or lockout, subject to the cooling-off period.23

It is settled that these requirements are mandatory in nature and failure to comply therewith
renders the strike illegal.24

In the case at bar, the Union staged the strike on the same day that it filed its second notice of
strike. The Union violated the seven-day strike ban. This requirement should be observed to give
the Department of Labor and Employment (DOLE) an opportunity to verify whether the projected
strike really carries the approval of the majority of the union members.25

Moreover, we agree with the CA that there was no union busting which would warrant the
non-observance of the cooling-off period. To constitute union busting under Article
263 of the Labor Code, there must be: 1) a dismissal from employment of union
officers duly elected in accordance with the union constitution and by-laws; and 2) the
existence of the union must be threatened by such dismissal. In the case at bar, the
second notice of strike filed by the Union merely assailed the "mass promotion" of its
officers and members during the CBA negotiations. Surely, promotion is different from
dismissal. As observed by the Labor Arbiter:

x x x Neither does that (sic) PILTEL's promotion of some members of respondent union
constitutes (sic) union busting which could be a valid subject of strike because they were not
being dismissed. In fact, these promoted employees did not personally come forward to protest
their promotion vis - à-vis their alleged option to remain in the union bargaining unit of the rank
and filers.26

Labor II – 1
This is consistent with our ruling in Bulletin Publishing Corporation v. Sanchez 27 that a
promotion which is manifestly beneficial to an employee should not give rise to a gratuitous
speculation that it was made to deprive the union of the membership of the benefited employee.

The contention of the Union and its officers that the finding of unfair labor practice by the CA
precludes the ruling that the strike was illegal is unmeritorious. The refusal of the Company to
turn over the deducted contingency funds to the union does not justify the disregard of the
mandatory seven-day strike ban and the 15-day cooling-off period.

The Union's reliance on Bacus v. Ople,28 Panay Electric Company v. NLRC29 and PNOC

Dockyard and Engineering Corporation v. NLRC30 is likewise unavailing.

Nowhere in Panay Electric Company and PNOC Dockyard and Engineering

Corporation did the Court rule that the procedural requirements for a valid strike may
be dispensed with if the striking workers believed in good faith that the company was
committing acts of unfair labor practice. In both cases, the striking union members
complied with the procedural requirements for a valid strike. It is correct that this
Court, in Bacus, held that "a strike staged by the workers inspired by good faith does
not automatically make the same illegal," but said case was decided before the
effectivity of R.A. No. 6715 on March 21, 1989. We have ruled that with the enactment
of R.A. No. 6715, the requirements as to the filing of a notice of strike, strike vote, and
notice given to the DOLE are mandatory in nature.31

Moreover, we agree with the NLRC that the subject strike defied the assumption order of the
Secretary of Labor. The NLRC correctly affirmed the Labor Arbiter that the second notice of
strike was based on substantially the same grounds as the first notice of strike. The Union and
its officers and members alleged that the mass promotion of the union officers and members and
the non-remittance of the deducted contingency fees were the reasons for their concerted
activities which annoyed the Company's RAD Manager and made him commit acts of unfair labor
practice, eventually leading to the Union's filing of the first notice of strike. Clearly then, the
issues which were made as grounds for the second notice of strike, viz, the mass promotion of
the union members and officers and the non-remittance of the deducted contingency fees, were
already existing when the Secretary of Labor assumed jurisdiction over the entire labor dispute
between the Company and the Union on August 14, 1998.

Article 264 of the Labor Code provides:

Art. 264. Prohibited activities. x x x

No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Secretary or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or lockout.

Having settled that the subject strike was illegal, we shall now determine the proper penalty to
be imposed on the union officers who knowingly participated in the strike.

Both the Labor Arbiter and the NLRC imposed the penalty of dismissal on the striking union
officers after finding that: a) the strike was illegal for having been conducted in defiance of
Secretary Laguesma's August 14, 1998 Order of assumption of jurisdiction and for non-
compliance with the procedural requirements for the conduct of a strike under the Labor Code
and its implementing rules; b) the grounds relied upon by the Union in its second notice of strike
were substantially the same as those set forth in its first notice of strike; c) the Company's
Labor II – 1
alleged refusal to turn over the checked-off union dues was not a strikeable issue as it was not a
gross and blatant violation of the economic provisions of the CBA; d) the mass promotion of the
Union's members was also not tantamount to dismissal, hence, did not constitute union busting;
and e) certain illegal acts were found to have been committed during the strike.

On the other hand, the CA reduced the penalty of the union officers from dismissal to suspension
for six months after finding that the "supreme penalty of dismissal" imposed on union officers
Briones, De Leon, Fidel and Torres was "so harsh" considering that the Union did not defy the
Secretary of Labor's Assumption Order and that the Company did not have "clean hands" when it
filed the instant case for having committed an unfair labor practice by refusing to turn over the
union dues to the Union.

We find that the CA committed a reversible error in modifying the rulings of the Labor Arbiter
and the NLRC.

For a petition for certiorari under Rule 65 of the Rules of Court to prosper, the tribunal, board or
officer exercising judicial or quasi-judicial functions must be proven to have acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction.32 "Grave abuse of discretion" has been defined as "a capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not
enough, it must be so grave as when the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility, and must be so patent and so gross as to amount to
an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all
in contemplation of law."33

We note that although the CA modified the ruling of the NLRC, nowhere in its decision did it
attribute grave abuse of discretion to the NLRC. And rightly so.

Article 264 of the Labor Code further provides:

Art. 264. Prohibited activities.' x x x

Any workers whose employment has been terminated as a consequence of an unlawful lockout
shall be entitled to reinstatement with full back wages. Any union officer who knowingly
participates in 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. x x x

We have explained the meaning of this provision as follows:

The effects of illegal strikes, as outlined in Article 264 of the Labor Code, make a distinction
between ordinary workers and union officers who participate therein. Under established
jurisprudence, a union officer may be terminated from employment for knowingly participating in
an illegal strike. The fate of union members is different. Mere participation in an illegal strike is
not a sufficient ground for termination of the services of the union members. The Labor Code
protects ordinary, rank-and-file union members who participated in such a strike from losing
their jobs provided that they did not commit illegal acts during the strike.34

In Gold City Integrated Port Service, Inc. v. NLRC,35 the Court held that "[t]he law, in
using the word may, grants the employer the option of declaring a union officer who
Labor II – 1
participated in an illegal strike as having lost his employment." Thus, in a number of
cases,36 proof that an employee who knowingly participated in an illegal strike is a union officer
was enough to warrant his dismissal from employment.

This rule was relaxed in the case of PAL v. Brillantes37 where the Court "invoke[d] its judicial
prerogative to resolve disputes in a way to render to each interested party the most judicious
solution, and in the ultimate scheme, a resolution of a dispute tending to preserve the greater
order of society." In said case, the Court dismissed the petition of PAL seeking the termination
from employment of certain Union members and officers who staged a strike in violation of the
Secretary of Labor's return-to-work order. The Court found that both parties contributed to the
volatile atmosphere that emerged despite the Secretary of Labor's status quo order as PAL
terminated en masse the employment of 183 union officers and members. It noted the finding of
the Acting Secretary of Labor that PAL "did not come to this office with 'clean hands' in seeking
the termination of the officers and members of PALEA who participated in the 16 June 1994
strike."38

This Court exercised this judicial prerogative sparingly in Nissan Motors Philippines, Inc. v.
Secretary of Labor.39 In said case, the Court also found Nissan equally guilty of exacerbating
the situation after the assumption order of the Secretary for suspending a substantial number of
Union officers and members with threat of eventual dismissal and perceived illegal lockout and
union busting. However, while it affirmed the ruling of the Secretary of Labor suspending the
union members who participated in the illegal strike, the Court sustained the dismissal of the
union officers, v. iz:

While the employer is authorized to declare a union officer who participated in an illegal strike as
having lost his employment, his/its option is not as wide with respect to union members or
workers for the law itself draws a line and makes a distinction between union officers and
members/ordinary workers. An ordinary striking worker or union member cannot, as a rule, be
terminated for mere participation in an illegal strike; there must be proof that he committed
illegal acts during the strike.40

The Court further explained the reason:

x x x Thus in Association of Independent Union in the Philippines v. NLRC,41 we held that the

responsibility of union officers, as main players in an illegal strike, is greater than that
of the members and, therefore, limiting the penalty of dismissal only for the former for
participation in an illegal strike is in order. Of the same tenor, albeit formulated a bit differently
is our holding in Gold City Integrated Port Service, Inc. v. NLRC.42 (Emphasis supplied.)

In the case at bar, we do not find any reason to deviate from our rulings in Gold City
Integrated Port Service, Inc. and Nissan Motors Philippines, Inc. It bears emphasis that
the strike staged by the Union in the instant case was illegal for its procedural infirmities and for
defiance of the Secretary's assumption order. The CA, the NLRC and the Labor Arbiter were
unanimous in finding that bad faith existed in the conduct of the subject strike. The relevant
portion of the CA Decision states:

x x x We cannot go to the extent of ascribing good faith to the means taken in
conducting the strike. The requirement of the law is simple, that is'1. Give a Notice of Strike;
2. Observe the cooling period; 3. Observe the mandatory seven day strike ban; 3. If the act is
union busting, then the union may strike doing away with the cooling-off period, subject only to
the seven-day strike ban. To be lawful, a strike must simply have a lawful purpose and should
be executed through lawful means. Here, the union cannot claim good faith in the conduct
Labor II – 1
of the strike because, as can be gleaned from the findings of the Labor Arbiter, this
was an extensively coordinated strike having been conducted all through out the
offices of PILTEL all over the country. Evidently, the strike was planned. Verily, they
cannot now come to court hiding behind the shield of "good faith." Be that as it may, petitioners
claim good faith only in so far as their grounds for the strike but not on the conduct of the strike.
Consequently, they still had to comply with the procedural requirements for a strike, which, in
this case, they failed to do so.43

Thus, in imposing the penalty of dismissal, the NLRC correctly held:

x x x the point We wish to stress is that the [open, blatant] and willful defiance by the
respondents of the Order emanating from the Secretary of Labor and Employment in this labor
dispute only goes to show that the respondents have little or no regard at all for lawful orders
from duly constituted authorities. For what their officers and members have suffered they have
no one else to blame.44

It cannot be overemphasized that strike, as the most preeminent economic weapon of the
workers to force management to agree to an equitable sharing of the joint product of labor and
capital, exert some disquieting effects not only on the relationship between labor and
management, but also on the general peace and progress of society and economic well-being of
the State.45 This weapon is so critical that the law imposes the supreme penalty of dismissal on
union officers who irresponsibly participate in an illegal strike and union members who commit
unlawful acts during a strike. The responsibility of the union officers, as main players in an illegal
strike, is greater than that of the members as the union officers have the duty to guide their
members to respect the law.46 The policy of the state is not to tolerate actions directed at the
destabilization of the social order, where the relationship between labor and management has
been endangered by abuse of one party's bargaining prerogative, to the extent of disregarding
not only the direct order of the government to maintain the status quo, but the welfare of the
entire workforce though they may not be involved in the dispute. The grave penalty of dismissal
imposed on the guilty parties is a natural consequence, considering the interest of public
welfare.47

IN VIEW WHEREOF, the petition in G.R. No. 160094 is DENIED. The petition in G.R. No.
160058 is GRANTED. The Decision and Resolution of the CA in CA-G.R. SP No. 59799 dated
September 20, 2002 and September 17, 2003, respectively, are REVERSED and the Decision
and Resolution of the NLRC dated February 29, 2000 and April 28, 2000, respectively,
are REINSTATED.

Labor II – 1
15.) G.R. No. 168406               July 13, 2009

CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON, Petitioners,

vs.
BENJAMIN BAUTISTA, RONIE SUALOG, JOEL CALIDA, JOHNNY ARINTO AND ROBERTO DE
GUZMAN,1 Respondents.

RESOLUTION

CORONA, J.:

Petitioner Club Filipino, Inc. (the company) is a non-stock, non profit corporation duly formed, organized and existing
under Philippine laws, with petitioner Atty. Roberto F. de Leon as its president. Respondents Ronnie Sualog, Joel
Calida, Johnny Arinto and Roberto de Guzman, on the other hand, were former officers and members of the Club
Filipino Employees Association (the union).

The union and the company had a collective bargaining agreement (CBA) which expired on May 31, 2000. Prior to
the expiration of the CBA and within the freedom period,2 the union made several demands for negotiation but the
company replied that it could not muster a quorum, thus no CBA negotiations could be held.

Sometime in 2000, the union submitted its formal CBA proposal to the company’s negotiating panel and repeatedly
asked for the start of negotiations. No negotiations, however, took place for various reasons proffered by the
company, among them the illness of the chairman of the management panel.

In order to compel the company to negotiate, respondents, as officers of the union, filed a request for preventive
mediation with the National Conciliation and Mediation Board (NCMB). Their strategy, however, failed to bring the
management to the negotiating table. The union and management only met on April 5, 2001, but the meeting
concluded with a declaration by both parties of a deadlock in their negotiations.

On April 6, 2001, the union filed a notice of strike with the NCMB on the grounds of bargaining deadlock and failure
to bargain. On April 22, 2001, the company formally responded to the demands of the union when it submitted the
first part of its economic counter-proposal; the second part was submitted on May 11, 2001.

Meanwhile, on May 4, 2001, the union conducted a strike vote under the supervision of the Department of Labor
and Employment.

In response to the company’s counter-proposal, the union sent the company its improved proposal, but the
company refused to improve on its offer. This prompted the union to stage a strike on May 26, 2001 on the ground
of a CBA bargaining deadlock.

On May 31, 2001, the company filed before the National Labor Relations Commission (NLRC) a petition to declare
the strike illegal. The company further prayed that all union officers who participated in the illegal strike be
considered separated from the service.3

In a decision dated November 28, 2001, the labor arbiter4 declared the strike "procedurally [infirm] and therefore
illegal."5 The labor arbiter noted that the union failed to attach its written CBA proposal and the company’s counter-
proposal to the notice of strike and to provide proof of a request for a conference to settle the dispute. Thus, the
notice to strike was deemed not to have been filed and the strike illegal. As a consequence, all the officers of the
union were deemed terminated from service. However, these employees were entitled to separation pay equivalent
to that granted to employees affected by the retrenchment program which the company had earlier launched.6

Respondents appealed but on September 30, 2002, the NLRC in a decision7 affirmed the labor arbiter. The NLRC
did not see fit to pass upon the issues raised by respondents because, by the time they appealed on December 20,
2001, they had either resigned from the company or were no longer part of the union because of the election of new
set of officers.8
Labor II – 1
Respondents’ motion for reconsideration was consequently denied.9 Aggrieved, they elevated the matter to the
Court of Appeals (CA) via a petition for certiorari.10

On May 31, 2005, the CA issued its assailed decision,11 holding that the labor arbiter and the NLRC "took a selective
view of the attendant facts of the case" and in "negating thereby the effects of the notice of strike the union
filed."12 What was more, the NLRC’s reasoning was flawed because "a worker ordered dismissed under a tribunal’s
decision has every right to question his or her dismissal."13 The labor arbiter’s ruling was likewise wrong because it
was based on a "flimsy technicality" that conveniently booted out the union officers from the company.14

Thus, the CA set aside the rulings of the NLRC and the labor arbiter as far as respondents Sualog, Calida, De
Guzman and Arinto were concerned and ordered petitioners to pay them full backwages and benefits from the time
of their dismissal up to the finality of its decision, plus separation pay computed at one month salary per year of
service from the time they were hired up to the finality of its decision.15 On the other hand, the CA dismissed the
petition as far as Laureano Fegalquin,16 Bautista and Precentacion were concerned.17

Petitioners then sought redress from this Court by filing a petition for review on certiorari 18 hoisting the
issue of whether or not the strike staged by respondents on May 26, 2001 was legal.

We rule in the affirmative.

It is undisputed that the notice of strike was filed by the union without attaching the counter-proposal of the
company. This, according to petitioners and the labor arbiter, made the ensuing strike of respondents illegal
because the notice of strike of the union was defective.

The contention is untenable.

Rule XXII, Section 4 of the Omnibus Rules Implementing the Labor Code states:

In cases of bargaining deadlocks, the notice shall, as far as practicable, further state the unresolved issues in the
bargaining negotiations and be accompanied by the written proposals of the union, the counter-proposals of the
employer and the proof of a request for conference to settle differences. In cases of unfair labor practices, the notice
shall, as far as practicable, state the acts complained of, and efforts taken to resolve the dispute amicably. 1avvphi1

Any notice which does not conform with the requirements of this and the foregoing section shall be deemed as not
having been filed and the party concerned shall be so informed by the regional branch of the Board. (emphasis
supplied)

In the instant case, the union cannot be faulted for its omission. The union could not have attached the
counter-proposal of the company in the notice of strike it submitted to the NCMB as there was no such
counter-proposal. To recall, the union filed a notice of strike on April 6, 2001 after several requests to start
negotiations proved futile. It was only on April 22, 2001, or after two weeks, when the company formally responded
to the union by submitting the first part of its counter-proposal. Worse, it took the company another three weeks to
complete it by submitting on May 11, 2001 the second part of its counter-proposal. This was almost a year after the
expiration of the CBA sought to be renewed.

The Implementing Rules use the words "as far as practicable." In this case, attaching the counter-proposal
of the company to the notice of strike of the union was not practicable. It was absurd to expect the union to
produce the company’s counter-proposal which it did not have. One cannot give what one does not have.
Indeed, compliance with the requirement was impossible because no counter-proposal existed at the time the union
filed a notice of strike. The law does not exact compliance with the impossible. Nemo tenetur ad impossibile.

Another error committed by the labor arbiter was his declaration that respondents, as union officers, automatically
severed their employment with the company due to the alleged illegal strike. In the first place, there was no illegal
strike. Moreover, it is hornbook doctrine that a mere finding of the illegality of the strike should not be automatically
followed by the wholesale dismissal of the strikers from employment.19

Labor II – 1
The law is clear:

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.20 (emphasis supplied)

Note that the verb "participates" is preceded by the adverb "knowingly." This reflects the intent of the legislature to
require "knowledge" as a condition sine qua non before a union officer can be dismissed from employment for
participating in an illegal strike.21 The provision is worded in such a way as to make it very difficult for employers to
circumvent the law by arbitrarily dismissing employees in the guise of exercising management prerogative. This is
but one aspect of the State’s constitutional22 and statutory23 mandate to protect the rights of employees to self-
organization.

Nowhere in the ruling of the labor arbiter can we find any discussion of how respondents, as union officers,
knowingly participated in the alleged illegal strike. Thus, even assuming arguendo that the strike was illegal, their
automatic dismissal had no basis.

WHEREFORE, the petition is hereby DENIED.

Labor II – 1
 16.) [G.R. NO. 166879 : August 14, 2009]

A. SORIANO AVIATION, Petitioner, v. EMPLOYEES ASSOCIATION OF A. SORIANO

AVIATION, JULIUS S. VARGAS IN HIS CAPACITY AS UNION PRESIDENT, REYNALDO
ESPERO, JOSEFINO ESPINO, GALMIER BALISBIS, GERARDO BUNGABONG, LAURENTE
BAYLON, JEFFREY NERI, ARTURO INES, REYNALDO BERRY, RODOLFO RAMOS, OSWALD
ESPION, ALBERT AGUILA, RAYMOND BARCO, REYNANTE AMIMITA, SONNY
BAWASANTA, MAR NIMUAN AND RAMIR LICUANAN, Respondents.

DECISION

CARPIO MORALES, J.:

On May 22, 1997, A. Soriano Aviation (petitioner or the company) which is engaged in providing
transportation of guests to and from Amanpulo and El Nido resorts in Palawan, and respondent
Employees Association of A. Soriano Aviation (the Union), the duly-certified exclusive bargaining
agent of the rank and file employees of petitioner, entered into a Collective Bargaining
Agreement (CBA) effective January 1, 1997 up to December 31, 1999. The CBA included a "No-
Strike, No-Lock-out" clause.

On May 1 & 12, and June 12, 1997, which were legal holidays and peak season for the company,
eight mechanics-members of respondent Union, its herein co-respondents Albert Aguila (Aguila),
Reynante Amimita (Amimita), Galmier Balisbis (Balisbis), Raymond Barco (Barco), Gerardo
Bungabong (Bungabong), Josefino Espino (Espino), Jeffrey Neri (Neri) and Rodolfo Ramos, Jr.
(Ramos), refused to render overtime work.

Petitioner treated the refusal to work as a concerted action which is a violation of the "No-Strike,
No-Lockout" clause in the CBA. It thus meted the workers a 30-day suspension. It also filed on
July 31, 1997 a complaint for illegal strike against them, docketed as NLRC Case No. 07-05409-
97, which was later dismissed at its instance in order to give way to settlement, without
prejudice to its re-filing should settlement be unavailing.

The attempted settlement between the parties having been futile, the Union filed a Notice of
Strike with the National Conciliation and Mediation Board (NCMB) on October 3, 1997, attributing
to petitioner the following acts: (1) union busting, (2) illegal dismissal of union officer, (3) illegal
suspension of eight mechanics, (4) violation of memorandum of agreement, (5) coercion of
employees and interrogation of newly-hired mechanics with regard to union affiliation, (6)
discrimination against the aircraft mechanics, (7) harassment through systematic fault-finding,
(8) contractual labor, and (9) constructive dismissal of the Union President, Julius Vargas
(Vargas).

As despite conciliation no amicable settlement of the dispute was arrived at, the Union went on
strike on October 22, 1997.

Meanwhile, pursuant to its reservation in NLRC Case No. 07-05409-97, petitioner filed a Motion
to Re-Open the Case which was granted by Labor Arbiter Manuel P. Asuncion by Order of
October 21, 1997.

By Decision1 dated September 28, 1998 rendered in petitioner's complaint in NLRC Case No. 07-
05409-97, the Labor Arbiter declared that the newly implemented work-shift schedule was a
valid exercise of management prerogative and the refusal of herein individual respondents to
Labor II – 1
work on three consecutive holidays was a form of protest by the Union, hence, deemed a
concerted action. Noting that the Union failed to comply with the formal requirements prescribed
by the Labor Code in the holding of strike, the strike was declared illegal.

The Union appealed to the NLRC which dismissed it in a per curiam Decision2 dated September
14, 1999, and the subsequent motion for reconsideration was denied by Resolution dated
November 11, 1999.

In the interim or on June 16, 1998, eight months into the "second strike," petitioner filed a
complaint against respondents before the Labor Arbiter, praying for the declaration as illegal of
the strike on account of their alleged pervasive and widespread use of force and violence and for
the loss of their employment, citing the following acts committed by them: publicly shouting of
foul and vulgar words to company officers and non-striking employees; threatening of officers
and non-striking employees with bodily harm and dousing them with water while passing by the
strike area; destruction of or inflicting of damage to company property, as well as private
property of company officers; and putting up of placards and streamers containing vulgar and
insulting epithets including imputing crime on the company.

By Decision3 of June 15, 2000, Labor Arbiter Ramon Valentin C. Reyes declared the "second
strike" illegal. Taking judicial notice of the September 28, 1998 Decision of Labor Arbiter
Asuncion, he noted that as the Union went on the "first strike" on a non-strikeable issue ─ the
questioned change of work schedule, it violated the "No-Strike, No-Lockout" clause in the CBA
and, in any event, the Union failed to comply with the requirements for a valid strike.

The Labor Arbiter went on to hold that the Union deliberately resorted to the use of violent and
unlawful acts in the course of the "second strike," hence, the individual respondents were
deemed to have lost their employment.

On appeal, the National Labor Relations Commission (NLRC) affirmed in toto the Labor Arbiter's
decision, by Resolution4 dated October 31, 2001. It held that even if the strike were legal at the
onset, the commission of violent and unlawful acts by individual respondents in the course
thereof rendered it illegal.

Its motion for reconsideration having been denied by Resolution5 dated December 14, 2001, the
Union appealed to the Court of Appeals.

By the assailed Decision of April 16, 2004,6 the appellate court reversed and set aside the NLRC
ruling, holding that the acts of violence committed by the Union members in the course of the
strike were not, as compared to the acts complained of in Shell Oil Workers' Union v. Shell
Company of the Philippines,7 First City Interlink Transportation Co., Inc., v. Roldan-
Confesor8 and Maria Cristina Fertilizer Plant Employees Association v. Tandaya, 9 (this case was
applied by the Labor Arbiter in his Decision of September 28, 2008) where the acts of violence
resulted in loss of employment, concluded that the acts in the present case were not as serious
or pervasive as in these immediately-cited cases to call for loss of employment of the striking
employees.

Specifically, the appellate court noted that at the time petitioner filed its complaint in June 1998,
almost eight months had already elapsed from the commencement of the strike and, in the
interim, the alleged acts of violence were committed only during nine non-consecutive days, viz:
one day in October, two days in November, four days in December, all in 1997, and two days in
January 1998. To the appellate court, these incidents did not warrant the conversion of an
otherwise legal strike into an illegal one, and neither would it result in the loss of employment of
Labor II – 1
the strikers. For, so the appellate court held, the incidents consisted merely of name-calling and
using of banners imputing negligence and criminal acts to the company and its officers, which do
not indicate a degree of violence that could be categorized as grave or serious to warrant the
loss of employment of the individual strikers found to be responsible.

By Resolution of January 25, 2005, the appellate court denied petitioner's motion for
reconsideration, hence, the present petition.

Petitioner insists that, contrary to the appellate court's finding, the questioned acts of the
strikers were of a serious character, widespread and pervasive; and that the Union's imputation
of crime and negligence on its part, and the prolonged strike resulted in its loss of goodwill and
business, particularly the termination of its lease and air-service contract with Amanpulo, the
loss of its after-sales repair service agreement with Bell Helicopters, the loss of its accreditation
as the Beechcraft service facility, and the decision of El Nido to put up its own aviation company.

Apart from the acts of violence committed by the strikers, petitioner bases its plea that the
strike should be declared illegal on the violation of the "No-Strike-No-Lockout" clause
in the CBA, the strike having arisen from non-strikeable issues. Petitioner proffers that
what actually prompted the holding of the strike was the implementation of the new shift
schedule, a valid exercise of management prerogative.

In issue then is whether the strike staged by respondents is illegal due to the alleged
commission of illegal acts and violation of the "No Strike-No Lockout" clause of the CBA
and, if in the affirmative, whether individual respondents are deemed to have lost their
employment status on account thereof.

The Court rules in the affirmative.

The Court notes that, as found by the Labor Arbiter in NLRC Case No. 07-05409-97, the first
strike or the mechanics' refusal to work on 3 consecutive holidays was prompted by their
disagreement with the management-imposed new work schedule. Having been grounded on a
non-strikeable issue and without complying with the procedural requirements, then
the same is a violation of the "No Strike-No Lockout Policy" in the existing CBA.
Respecting the second strike, where the Union complied with procedural
requirements, the same was not a violation of the "No Strike - No Lockout" provisions,
as a "No Strike-No Lockout" provision in the Collective Bargaining Agreement (CBA) is
a valid stipulation but may be invoked only by employer when the strike is economic in
nature or one which is conducted to force wage or other concessions from the
employer that are not mandated to be granted by the law. It would be inapplicable to
prevent a strike which is grounded on unfair labor practice.10 In the present case, the
Union believed in good faith that petitioner committed unfair labor practice when it went on
strike on account of the 30-day suspension meted to the striking mechanics, dismissal of a union
officer and perceived union-busting, among others. As held in Malayang Samahan ng mga
Manggaggawa sa M. Greenfield v. Ramos:11

On the submission that the strike was illegal for being grounded on a non-strikeable issue, that
is, the intra-union conflict between the federation and the local union, it bears reiterating that
when respondent company dismissed the union officers, the issue was transformed into a
termination dispute and brought respondent company into the picture. Petitioners believed in
good faith that in dismissing them upon request by the federation, respondent company was
guilty of unfair labor practice in that it violated the petitioner's right to self-organization. The
strike was staged to protest respondent company's act of dismissing the union officers. Even if
Labor II – 1
the allegations of unfair labor practice are subsequently found out to be untrue, the presumption
of legality of the strike prevails. (Emphasis supplied)
cralawlibrary

Be that as it may, the Court holds that the second strike became invalid due to the commission
of illegal action in its course.

It is hornbook principle that the exercise of the right of private sector employees to strike is not
absolute. Thus Section 3 of Article XIII of the Constitution provides:

SECTION 3. x x x

It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations and peaceful concerted activities, including the right to strike
in accordance with law. They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law. (Emphasis and underscoring
supplied) cralawlibrary

Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where the
means employed are illegal. Thus, the employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which are injurious to the right to property renders a
strike illegal. And so is picketing or the obstruction to the free use of property or the comfortable
enjoyment of life or property, when accompanied by intimidation, threats, violence, and coercion
as to constitute nuisance.12

Apropos is the following ruling in Sukhothai Cuisine v. Court of Appeals:13

Well-settled is the rule that even if the strike were to be declared valid because its objective or
purpose is lawful, the strike may still be declared invalid where the means employed are illegal.
Among such limits are the prohibited activities under Article 264 of the Labor Code, particularly
paragraph (e), which states that no person engaged in picketing shall:

a) commit any act of violence, coercion, or intimidation or

b) obstruct the free ingress to or egress from the employer's premises for lawful purposes, or

c) obstruct public thoroughfares.

The following acts have been held to be prohibited activities: where the strikers shouted
slanderous and scurrilous words against the owners of the vessels; where the strikers used
unnecessary and obscene language or epithets to prevent other laborers to go to work, and
circulated libelous statements against the employer which show actual malice; where the
protestors used abusive and threatening language towards the patrons of a place of business or
against co-employees, going beyond the mere attempt to persuade customers to withdraw their
patronage; where the strikers formed a human cordon and blocked all the ways and approaches
to the launches and vessels of the vicinity of the workplace and perpetrated acts of violence and
coercion to prevent work from being performed; and where the strikers shook their fists and
threatened non-striking employees with bodily harm if they persisted to proceed to the
workplace. Permissible activities of the picketing workers do not include obstruction of access of
customers. (emphasis supplied)

Labor II – 1
The appellate court found in the present case, as in fact it is not disputed, that the acts
complained of were the following:14

1. On 29 October 1997, while Robertus M. Cohen, personnel manager of the Company, was
eating at the canteen, petitioner Rodolfo Ramos shouted "insults and other abusive, vulgar and
foul-mouthed word" with the use of a megaphone, such as, "sige, ubusin mo yung pagkain,"
"kapal ng mukha mo;" that when he left the canteen to go back to his office he was splashed
with water from behind so that his whole back was drenched; that when he confronted that
strikers at the picket line accompanied by three (3) security guards, to find out who was
responsible, he was told by petitioner Oswald Espion who was then holding a thick piece of wood
approximately two (2) feet long to leave.

2. On the same day, 29 October 1997, petitioners Julius Vargas, Jeffrey Neri, and Rodolfo
Ramos, together with Jose Brin, shouted to Capt. Ben Hur Gomez, the chief operating officer of
the Company, in this wise, "Matanda ka na, balatuba ka pa rin. Mangungurakot ka sa
kompanya!"

3. In the morning of 11 November 1997, petitioner Ramos was reported to have shouted to Mr.
Maximo Cruz, the Mechanical and Engineering Manager of the Company, "Max, mag-resign ka
na, ang baho ng bunganga mo!"

4. In the afternoon of the same day, 11 November 1997, petitioner Jeffrey Neri was said to have
shouted these words - "Max, mag-resign ka na, ang baho ng bunganga mo!" to Mr. Maximo
Cruz;

5. On 12 November 1997. petitioners Julius Vargas, Jeffrey Neri, Oswald Espion, Raymond
Barco, together with Jose Brin, were reported to have shouted to Capt. Gomez and Mr. Maximo
Cruz, "Matanda ka na, balatuba ka pa rin! Max, ang baho ng bunganga mo, kasing baho ng ugali
mo!"

6. On the same day, 12 November 1997, petitioner Oswald Espion was said to have shouted to
the non-striking employees and officers of the Company, "putang-ina ninyo!"

7. Also, on 12 November 1997, petitioner Oswald Espion was reported to have thrown gravel
and sand to the car owned by Celso Villamor Gomez, lead man of the Company, as the said car
was traveling along company premises near the picket line; (apart from the marks of mud,
gravel and sand found on the entire body of the car, no heavy damages, however, appears to
have been sustained by the car)."

8. On 08 December 1997, petitioners Julius Vargas, Rey Espero, Rey Barry, Galmier Balisbis,
Rodolfo Ramos, Sonny Bawasanta and Arturo Ines, together with Jose Brin, shouted, "Max, ang
sama mo talaga, lumabas ka dito at pipitpitin ko ang mukha mo!" "Cohen, inutil ka talaga.
Nagpahaba ka pa ng balbas para kang tsonggo!" Cohen, lumabas ka dito at hahalikan kita."

9. On 10 December 1997, petitioners Vargas and Espion were reported to have shouted to Mr.
Maximino Cruz, "Hoy, Max Cruz, wala kang alam dyan, huwag kang poporma-porma dyan!" and
then flashed the "dirty finger" at him;

10. On 15 December 1997, petitioner Neri was said to have shouted to non-striking employees
at the canteen, "Hoy, mga iskerol, kain lang ng kain, mga putangina ninyo!"

Labor II – 1
11. Also on 15 December 1997, petitioners Vargas, Neri, Espion, Mar Nimuan, Ramir Licuanan,
Albert Aguila and Sonny Bawasanta, together with Jose Brin, splashed water over Edmund C.
Manibog, Jr., security guard of the Company;

12. On 20 December 1997, the strikers admittedly lit and threw firecrackers purportedly outside
the Company premises, as part of a noise barrage, while the Company was having its Christmas
party inside the Company premises;

13. On 14 January 1998, when Chris A. Oballas, collector of the Company, boarded a public
utility jeepney where Jose Brin, a striker, was also passenger, Jose Brin was said to have
shouted to the other passengers and driver of the jeepney, "Mga pasahero, driver, itong tao ito
sherol, ang kapal ng mukha. Iyong pinagtrabahuhan namin kinakain nito, ibenebent[a] kami
nito, hudas ito! Mga pasahero, tingnan niyo, hindi makatingin-tingin sa akin, hindi
makapagsalita. Hoy, tingin ka sa akin, napahiya ka sa mga ginagawa mo ano?" and, that when
Chris Oballas was alighting from the jeepney, he was kicked on his leg by Jose Brin; and,

14. On 15 January 1998, while Julio Tomas, Avionics Technician of the Company, and his
girlfriend, Elizabeth Gali, also an employee of the Company, were waiting for their ride, several
union members shouted to Elizabeth Gali, Beth iwanan mo na yang taong yan, walang kwentang
tao yan!" "Beth, paano na yung pinagsamahan natin?" irked, Julio Tomas upon boarding the
passenger jeepney with his girlfriend threw a P2.00 coin in the direction of the picketers, the
coin hit the windshield of a privately-owned jeepney belonging to petitioner Espion which was
parked alongside the premises of the strike area; The act of Tomas, provoked the petitioners
Espion and Amimita to follow Tomas, who when left alone inside the tricycle after his girlfriend
took a separate tricycle to her home, was approached by petitioners Espion and Amimita;
petitioner Espion then threw a P2.00 coin at him, and while pointing a baseball bat to his face
shouted, "Huwag mong uulitin yung ginawa mo kundi tatamaan ka sa akin!" (Emphasis and
italics in the original)

The Court notes that the placards and banners put up by the striking workers in the company
premises read: "ANDRES SORIANO AVIATION, INC. CAUGHT IN THE ACT, ATTEMPTING TO
BRIBE GOVERNMENT OFFICIALS BEWARE, NOW A NAME YOU CAN TRASH," "ASAI
DETERIORATING SAFETY RECORD KILLS 2 DEAD + VARIOUS (IN PLANE CRASH) FLIGHT
MISHAPS BEWARE," "FLY AT YOUR OWN RISK," "ANDRES SORIANO AVIATION, INC.
DETERIORATING SAFETY RECORD KILLS INNOCENT PEOPLE IN PLANE CRASH, THE CAUSE:
UNTRAINED MECHANICS DOING AIRCRAFT RELEASE, THE RESULT: SLIPSHOD MAINTENANCE
AND SLOPPY PLANE INSPECTION," "WANNA FLY BLIND?," "BENHUR GOMEZ DRAGS COMPANY
TO DEBT AND SHAMEFUL EXPERIENCE (MAHIYA KA NAMAN, OY!)," "A. SORIANO AVIATION,
INC., DEAD PEOPLE IN PLANE CRASH," "ELY BONIFACIO (MASAKIT ANG TOTOO) MAGNANAKAW
NG PIYESA, PALITAN NA RIN! TINGNAN NYO KUNG NAGNANAKAW," "MEKANIKO DE EROPLANO
Y HUELGA UN VIAJE DE PELIGRO, AIRCRAFT MANAGEMENT BULOK; "A. SORIANO AVIATION
KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROC." "(ELY BONIFACIO-PATALSIKIN NA RIN,"
"MANDARAMBONG" "MUKHANG KWARTA," "SAAN MO DINALA ANG DORNIER SPECIAL TOOLS?
IKAW HA!)," "ELY BONIFACIO KAWATAN BANTAY SALAKAY," "AMANPULO AND EL NIDO GUESTS,
BEWARE OF ASAI FLIGHTS, AIRCRAFT MECHANICS STILL ON STRIKE," "GOING TO BORACAY
AND EL NIDO IS GOOD BUT FLYING WITH A. SORIANO AVIATION? THINK TWICE!" "ACHTUNG:
A SORIANO AVIATION DEAD PEOPLE IN PLANE CRASH INSURANCE ENTITLEMENTS DENIED DUE
TO CAR VIOLATIONS," "UNDRESS SORIANO AVIATION, INC. UNRELIABLE FIXED BASED
OPERATOR KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROCEDURES."

It cannot be gainsaid that by the above-enumerated undisputed acts, the Union committed
illegal acts during the strike. The Union members' repeated name-calling, harassment and

Labor II – 1
threats of bodily harm directed against company officers and non-striking employees
and, more significantly, the putting up of placards, banners and streamers with vulgar
statements imputing criminal negligence to the company, which put to doubt reliability
of its operations, come within the purview of illegal acts under Art. 264 and
jurisprudence.

That the alleged acts of violence were committed in nine non-consecutive days during
the almost eight months that the strike was on-going does not render the violence less
pervasive or widespread to be excusable. Nowhere in Art. 264 does it require that
violence must be continuous or that it should be for the entire duration of the strike.
αl  lαω  lιbrαrÿ
ςηαñrοblεŠ¡  Î½Î¹r†υ

The appellate court took against petitioner its filing of its complaint to have the strike declared
illegal almost eight months from the time it commenced. Art. 264 does not, however, state for
purposes of having a strike declared as illegal that the employer should immediately report the
same. It only lists what acts are prohibited. It is thus absurd to expect an employer to file a
complaint at the first instance that an act of violence is alleged to be committed, especially, as in
the present case, when an earlier complaint to have the refusal of the individual respondents to
work overtime declared as an illegal strike was still pending - an issue resolved in its favor only
on September 25, 1998.

The records show that the Union went on strike on October 22, 1997, and the first reported
harassment incident occurred on October 29, 1997, while the last occurred in January, 1998.
Those instances may have been sporadic, but as found by the Labor Arbiter and the NLRC, the
display of placards, streamers and banners even up to the time the appeal was being resolved
by the NLRC works against the Union's favor.

The acts complained of including the display of placards and banners imputing criminal
negligence on the part of the company and its officers, apparently with the end in view of
intimidating the company's clientele, are, given the nature of its business, that serious as to
make the "second strike" illegal. Specifically with respect to the putting up of those banners and
placards, coupled with the name-calling and harassment, the same indicates that it was resorted
to to coerce the resolution of the dispute - the very evil which Art. 264 seeks to prevent.

While the strike is the most preeminent economic weapon of workers to force management to
agree to an equitable sharing of the joint product of labor and capital, it exerts some disquieting
effects not only on the relationship between labor and management, but also on the general
peace and progress of society and economic well-being of the State.15 If such weapon has to be
used at all, it must be used sparingly and within the bounds of law in the interest of industrial
peace and public welfare.

As to the issue of loss of employment of those who participated in the illegal strike,
Sukhothai16 instructs:

In the determination of the liabilities of the individual respondents, the applicable provision is
Article 264(a) of the Labor Code:

Art. 264. Prohibited Activities ' (a) x x x

xxx

x x x x Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during an illegal strike may
Labor II – 1
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.

xxx

In Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc., this Court

explained that the effects of such illegal strikes, outlined in Article 264, make a distinction
between workers and union officers who participate therein: an ordinary striking worker cannot
be terminated for mere participation in an illegal. There must be proof that he or she committed
illegal acts during a strike. A union officer, on the other hand, may be terminated from work
when he knowingly participates in an illegal strike, and like other workers, when he commits an
illegal act during an illegal strike. In all cases, the striker must be identified. But proof beyond
reasonable doubt is not required. Substantial evidence available under the attendant
circumstances, which may justify the imposition of the penalty of dismissal, may
suffice.17 (Emphasis supplied) cralawlibrary

The liability for prohibited acts has thus to be determined on an individual basis.  A perusal of
ςrαlαω

the Labor Arbiter's Decision, which was affirmed in toto by the NLRC, shows that on account of
the staging of the illegal strike, individual respondents were all deemed to have lost their
employment, without distinction as to their respective participation.

Of the participants in the illegal strike, whether they knowingly participated in the illegal strike in
the case of union officers or knowingly participated in the commission of violent acts during the
illegal strike in the case of union members, the records do not indicate. While respondent Julius
Vargas was identified to be a union officer, there is no indication if he knowingly participated in
the illegal strike. The Court not being a trier of facts, the remand of the case to the NLRC is in
order only for the purpose of determining the status in the Union of individual respondents and
their respective liability, if any.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision and Resolution dated April
16, 2004 and January 25, 2005, respectively, are REVERSED and SET ASIDE. The Resolutions
dated October 31, 2001 and December 14, 2001 of the National Labor Relations Commission
affirming the Decision of the Labor Arbiter in NLRC-NCR Case No. 00-06-04890-98 are
AFFIRMED with the MODIFICATION in light of the foregoing discussions.

The case is accordingly REMANDED to the National Labor Relations Commission for the purpose
of determining the Union status and respective liabilities, if any, of the individual respondents.

Labor II – 1
 17.) [G.R. NOS. 171618-19 : March 20, 2009]

JACKBILT INDUSTRIES, INC., Petitioner, v. JACKBILT EMPLOYEES WORKERS UNION-

NAFLU-KMU, Respondent.

DECISION

CORONA, J.:

This Petition for Review on Certiorari 1 seeks to reverse and set aside the July 13, 2005
decision2 and February 9, 2006 resolution3 of the Court of Appeals in CA-G.R. SP No. 65208 and
CA-G.R. SP No. 65425.

Due to the adverse effects of the Asian economic crisis on the construction industry beginning
1997, petitioner Jackbilt Industries, Inc. decided to temporarily stop its business of producing
concrete hollow blocks, compelling most of its employees to go on leave for six months.4

Respondent Jackbilt Employees Workers Union-NAFLU-KMU immediately protested the

temporary shutdown. Because its collective bargaining agreement with petitioner was expiring
during the period of the shutdown, respondent claimed that petitioner halted production to avoid
its duty to bargain collectively. The shutdown was allegedly motivated by anti-union sentiments.

Accordingly, on March 9, 1998, respondent went on strike. Its officers and members picketed
petitioner's main gates and deliberately prevented persons and vehicles from going into and out
of the compound.

On March 19, 1998, petitioner filed a petition for injunction5 with a prayer for the issuance of a
temporary restraining order (TRO) in the National Labor Relations Commission (NLRC). It sought
to enjoin respondent from obstructing free entry to and exit from its production facility.6

On April 14, 1998, the NLRC issued a TRO directing the respondents to refrain from preventing
access to petitioner's property.

The reports of both the implementing officer and the investigating labor arbiter revealed,
however, that respondent union violated the April 14, 1998 order. Union members, on various
occasions, stopped and inspected private vehicles entering and exiting petitioner's production
facility. Thus, in a decision dated July 17, 1998, the NLRC ordered the issuance of a writ
of preliminary injunction.7

Meanwhile, petitioner sent individual memoranda to the officers and members of respondent
who participated in the strike8 ordering them to explain why they should not be dismissed for
committing illegal acts in the course of a strike.9 However, respondent repeatedly ignored
petitioner's memoranda despite the extensions granted.10 Thus, on May 30, 1998, petitioner
dismissed the concerned officers and members and barred them from entering its premises
effective June 1, 1998.

Aggrieved, respondent filed complaints for illegal lockout, runaway shop and
damages,11 unfair labor practice, illegal dismissal and attorney's fees,12 and refusal to
bargain13 on behalf of its officers and members against petitioner and its corporate officers. It
argued that there was no basis for the temporary partial shutdown as it was undertaken by
petitioner to avoid its duty to bargain collectively.
Labor II – 1
Petitioner, on the other hand, asserted that because respondent conducted a strike without
observing the procedural requirements provided in Article 263 of the Labor Code,14 the March 9,
1998 strike was illegal. Furthermore, in view of the July 17, 1998 decision of the NLRC (which
found that respondent obstructed the free ingress to and egress from petitioner's premises),
petitioner validly dismissed respondent's officers and employees for committing illegal acts in the
course of a strike.

In a decision dated October 15, 1999, 15 the labor arbiter dismissed the complaints for illegal
lockout and unfair labor practice for lack of merit. However, because petitioner did not file a
petition to declare the strike illegal16 before terminating respondent's officers and employees, it
was found guilty of illegal dismissal. The dispositive portion of the decision read:

WHEREFORE, judgment is hereby rendered finding [petitioner and its corporate officers] liable
for the illegal dismissal of the 61 union officer and members of [respondent] and concomitantly,
[petitioner and its corporate officers] are hereby jointly and severally ordered to pay
[respondents' officers and members] limited backwages from June 1, 1998 to October 4, 1998.

[Petitioner and its corporate officers] are further ordered to pay [respondents' officers and
members] separation pay based on - salary for every year of credited service, a fraction of at
least 6 months to be considered as one whole year in lieu of reinstatement.

The complaint for unfair labor practice, moral and exemplary damages and runaway shop are
hereby disallowed for lack of merit.

SO ORDERED.

On December 28, 2000, the NLRC, on appeal, modified the decision of the labor arbiter. It held
that only petitioner should be liable for monetary awards granted to respondent's officers and
members.17

Both petitioner and respondent moved for reconsideration but they were denied for lack of
merit.18

Aggrieved, petitioner assailed the December 28, 2000 decision of the NLRC via a petition
for certiorari 19 in the CA. It asserted that the NLRC committed grave abuse of discretion in
disregarding its July 17, 1998 decision20 wherein respondent's officers and employees were
found to have committed illegal acts in the course of the March 9, 1998 strike. In view thereof
and pursuant to Article 264(a)(3) of the Labor Code,21 petitioner validly terminated respondent's
officers and employees.

The CA dismissed the petition but modified the December 28, 2000 decision of the
NLRC.22 Because most of affected employees were union members, the CA held that the
temporary shutdown was moved by anti-union sentiments. Petitioner was therefore guilty of
unfair labor practice and, consequently, was ordered to pay respondent's officers and employees
backwages from March 9, 1998 (instead of June 1, 1998) to October 4, 1998 and separation pay
of one month salary for every year of credited service.

Petitioner moved for reconsideration but it was denied.23 Thus, this recourse.

The primordial issue in this petition is whether or not the filing of a petition with the
labor arbiter to declare a strike illegal is a condition sine qua non  for the valid
termination of employees who commit an illegal act in the course of such strike.
Labor II – 1
Petitioner asserts that the filing of a petition to declare the strike illegal was
unnecessary since the NLRC, in its July 17, 1998 decision, had already found that
respondent committed illegal acts in the course of the strike.

We grant the petition.

The principle of conclusiveness of judgment, embodied in Section 47(c), Rule 39 of the Rules of
Court,24 holds that the parties to a case are bound by the findings in a previous judgment with
respect to matters actually raised and adjudged therein.25

Article 264(e) of the Labor Code prohibits any person engaged in picketing from obstructing the
free ingress to and egress from the employer's premises. Since respondent was found in the
July 17, 1998 decision of the NLRC to have prevented the free entry into and exit of vehicles
from petitioner's compound, respondent's officers and employees clearly committed illegal acts
in the course of the March 9, 1998 strike. ςηαñrοblεš  νιr†υαl  lαω lιbrαrÿ

The use of unlawful means in the course of a strike renders such strike
illegal.26 Therefore, pursuant to the principle of conclusiveness of judgment, the March
9, 1998 strike was ipso facto  illegal. The filing of a petition to declare the strike illegal
was thus unnecessary.

Consequently, we uphold the legality of the dismissal of respondent's officers and employees.
Article 264 of the Labor Code27 further provides that an employer may terminate employees
found to have committed illegal acts in the course of a strike.28 Petitioner clearly had the legal
right to terminate respondent's officers and employees.29

WHEREFORE, the petition is hereby granted. The July 13, 2005 decision and February 9, 2006
resolution of the Court of Appeals in CA-G.R. SP No. 65208 and CA-G.R. SP No. 65425 are
hereby REVERSED and SET ASIDE.

The December 28, 2000 and March 6, 2001 resolutions of the National Labor Relations
Commission in NLRC-CA No. 022614-2000 are MODIFIED insofar as they affirmed the October
15, 1999 decision of the labor arbiter in NLRC-NCR-Case No. 00-06-05017-98 finding petitioner
Jackbilt Industries, Inc. guilty of illegal dismissal for terminating respondent's officers and
employees. New judgment is hereby entered DISMISSING NLRC-NCR-Case No. 00-06-05017-
98 for lack of merit.

Labor II – 1
18.) G.R. No. 155109               September 29, 2010

C. ALCANTARA & SONS, INC., Petitioner,

vs.
COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR ARBITER ARTURO L.
GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL
(NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY,
EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME
MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO
SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO
TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN,
SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO
BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO
ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO
ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO
AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO
MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA,
CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO,
ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA,
MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ,
LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO,
JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA,
ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN,
ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO
SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO,
ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE
GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 155135

NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO,

ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY,
MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON,
GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE,
PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME
CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA,
JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY
SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO,
CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG,
RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE,
ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO
ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO,
RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR,
DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL,
ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD,
ROLANDO CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO OPLIMO, ANGELITO CASTANEDA,
EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN,
ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY CONSTANTINO,
ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES,
BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO
EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO
SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON,
CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO

Labor II – 1
GENELSA, Petitioners,
vs.
C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY. NELIA A. CLAUDIO, CORNELIO E. CAGUIAT,
JESUS S. DELA CRUZ, ROLANDO Z. ANDRES and JOSE MA. MANUEL YRASUEGUI, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 179220

NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), and its members whose names are listed
below, Petitioners,
vs.
C. ALCANTARA & SONS, INC., Respondent.

DECISION

ABAD, J.:

This case is about a) the consequences of an illegally staged strike upon the employment status of the union
officers and its ordinary members and b) the right of reinstated union members to go back to work pending the
company’s appeal from the order reinstating them.

The Facts and the Case

C. Alcantara & Sons, Inc., (the Company) is a domestic corporation engaged in the manufacture and processing of
plywood. Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) is the exclusive bargaining agent of the Company’s
rank and file employees. The other parties to these cases are the Union officers1 and their striking members.2

The Company and the Union entered into a Collective Bargaining Agreement (CBA) that bound them to hold no
strike and no lockout in the course of its life. At some point the parties began negotiating the economic provisions of
their CBA but this ended in a deadlock, prompting the Union to file a notice of strike. After efforts at conciliation by
the Department of Labor and Employment (DOLE) failed, the Union conducted a strike vote that resulted in an
overwhelming majority of its members favoring it. The Union reported the strike vote to the DOLE and, after the
observance of the mandatory cooling-off period, went on strike.

During the strike, the Company filed a petition for the issuance of a writ of preliminary injunction with prayer for the
issuance of a temporary restraining order (TRO) Ex Parte3 with the National Labor Relations Commission (NLRC) to
enjoin the strikers from intimidating, threatening, molesting, and impeding by barricade the entry of non-striking
employees at the Company’s premises. The NLRC first issued a 20-day TRO and, after hearing, a writ of
preliminary injunction, enjoining the Union and its officers and members from performing the acts complained of. But
several attempts to implement the writ failed. Only the intervention of law enforcement units made such
implementation possible. Meantime, the Union filed a petition4 with the Court of Appeals (CA), questioning the
preliminary injunction order. On February 8, 1999 the latter court dismissed the petition. The Union did not appeal
from such dismissal.

The Company, on the other hand, filed a petition with the Regional Arbitration Board to declare the Union’s strike
illegal,5 citing its violation of the no strike, no lockout, provision of their CBA. Subsequently, the Company amended
its petition to implead the named Union members who allegedly committed prohibited acts during the strike. For their
part, the Union, its officers, and its affected members filed against the Company a counterclaim for unfair labor
practices, illegal dismissal, and damages. The Union also assailed as invalid the service of summons on the
individual Union members included in the amended petition.

On June 29, 1999 the Labor Arbiter rendered a decision,6 declaring the Union’s strike illegal for violating the CBA’s
no strike, no lockout, provision. As a consequence, the Labor Arbiter held that the Union officers should be deemed
to have forfeited their employment with the Company and that they should pay actual damages of ₱3,825,000.00
plus 10% interest and attorney’s fees. With respect to the striking Union members, finding no proof that they actually
Labor II – 1
committed illegal acts during the strike, the Labor Arbiter ordered their reinstatement without backwages. The Labor
Arbiter denied the Union’s counterclaim for lack of merit.

On June 29, 1999 the terminated Union members promptly filed a motion for their immediate reinstatement
but the Labor Arbiter did not act on the same. At any rate, the Company did not reinstate them. Both parties
appealed7 the Labor Arbiter’s decision to the NLRC. The Company impugned the Labor Arbiter’s decision insofar as
it ordered the reinstatement of the terminated Union members. The Union, on the other hand, questioned the
declaration of illegality of the strike as well as the dismissal of its officers and the order for them to pay damages.

On November 8, 1999 the NLRC rendered a decision,8 affirming that of the Labor Arbiter insofar as the latter
declared the strike illegal, ordered the Union officers terminated, and directed them to pay damages to the
Company. The NLRC ruled, however, that the Union members involved, who were identified in the proceedings held
in the case, should also be terminated for having committed prohibited and illegal acts.

The Union filed a petition for certiorari9 with the CA, questioning the NLRC decision. Finding merit in the petition, the
CA rendered a decision on March 20, 2002,10 annulling the NLRC decision and reinstating that of the Labor Arbiter.
The Company and the Union with its officers and members filed separate petitions for review of the CA decision in
G.R. 155109 and 155135, respectively.

During the pendency of these cases, the affected Union members filed with the Labor Arbiter a motion for
reinstatement pending appeal by the parties and the computation of their backwages based on the CA
decision. After hearing, the Labor Arbiter issued a resolution dated November 21, 2002,11 holding that due to the
delay in the resolution of the dispute and the impracticability of reinstatement owing to the fact that the relations
between the terminated Union members and the Company had been severely strained by the prolonged litigation,
payment of separation pay to such Union members was in order. The Labor Arbiter thus approved the computation
and payment of their separation pay and denied all their other claims.

Both parties appealed the Labor Arbiter’s resolution12 to the NLRC. Initially, in its resolution dated April 30,
2003,13 the NLRC declared the Labor Arbiter’s resolution of November 21, 2002 void for lack of factual and legal
basis but ordered the Company to pay the affected employees’ accrued wages and 13th month pay considering the
Company’s refusal to reinstate them pending appeal. On motion for reconsideration by both parties, however, the
NLRC issued a resolution on August 29, 2003,14 modifying its earlier resolution by deleting the grant of accrued
wages and 13th month pay to the subject employees, thus denying their motion for computation.

Upon the Union’s petition for certiorari15 with the CA, questioning the NLRC’s denial of the terminated Union
members’ claim for separation pay, accrued wages, and other benefits, the CA rendered a decision on February 24,
2005,16 dismissing the petition. The CA ruled that the reinstatement pending appeal provided under Article 223 of
the Labor Code contemplated illegal dismissal or termination cases and not cases under Article 263. Thus, the CA
ruled that the resolution ordering the reinstatement of the terminated Union members and the payment of their
wages and other benefits had no basis. Aggrieved, the Union sought intervention by this Court.

The Issues Presented

The issues presented in these cases are:

1. Whether or not the NLRC properly acquired jurisdiction over the persons of the individual Union members
impleaded in the case;

2. Whether or not the Union staged an illegal strike;

3. Assuming the strike to be illegal, whether or not the impleaded Union members committed illegal acts
during the strike, justifying their termination from employment;

4. Whether or not the terminated Union members are entitled to the payment of backwages on account of
the Company’s refusal to reinstate them, pending appeal by the parties, from the Labor Arbiter’s decision of
June 29, 1999; and
Labor II – 1
 5. Whether or not the terminated Union members are entitled to accrued backwages and separation pay.

The Rulings of the Court

One. The NLRC acquires jurisdiction over parties in cases before it either by summons served on them or by their
voluntary appearance before its Labor Arbiter. Here, while the Union insists that summons were not properly served
on the impleaded Union members with respect to the Company’s amended petition that sought to declare the strike
illegal, the records show that they were so served. The Return of Service of Summons17 indicated that 74 out of the
8118 impleaded Union members were served with summons. But they refused either to accept the summons or to
acknowledge receipt of the same. Such refusal cannot of course frustrate the NLRC’s acquisition of jurisdiction over
them. Besides, the affected Union members voluntarily entered their appearance in the case when they sought
affirmative relief in the course of the proceedings like an award of damages in their favor.

Two. A strike may be regarded as invalid although the labor union has complied with the strict requirements
for staging one as provided in Article 263 of the Labor Code when the same is held contrary to an existing
agreement, such as a no strike clause or conclusive arbitration clause.19 Here, the CBA between the parties
contained a "no strike, no lockout" provision that enjoined both the Union and the Company from resorting
to the use of economic weapons available to them under the law and to instead take recourse to voluntary
arbitration in settling their disputes.

No law or public policy prohibits the Union and the Company from mutually waiving the strike and lockout
maces available to them to give way to voluntary arbitration. Indeed, no less than the 1987 Constitution
recognizes in Section 3, Article XIII, preferential use of voluntary means to settle disputes. Thus –

The State shall promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.

The Court finds no compelling reason to depart from the findings of the Labor Arbiter, the NLRC, and the CA
regarding the illegality of the strike. Social justice is not one-sided. It cannot be used as a badge for not complying
with a lawful agreement.

Three. Since the Union’s strike has been declared illegal, the Union officers can, in accordance with law be
terminated from employment for their actions. This includes the shop stewards. They cannot be shielded from the
coverage of Article 264 of the Labor Code since the Union appointed them as such and placed them in positions of
leadership and power over the men in their respective work units.

As regards the rank and file Union members, Article 264 of the Labor Code provides that termination from
employment is not warranted by the mere fact that a union member has taken part in an illegal strike. It must be
shown that such a union member, clearly identified, performed an illegal act or acts during the strike.20 1avvphi1

Here, although the Labor Arbiter found no proof that the dismissed rank and file Union members committed
illegal acts, the NLRC found following the injunction hearing in NLRC IC M-000126-98 that the Union
members concerned committed such acts, for which they had in fact been criminally charged before
various courts and the prosecutors’ office in Davao City. Since the CA held that the existence of criminal
complaints against the Union members did not warrant their dismissal, it becomes necessary for the Court to go into
the records to settle the issue.

The striking Union members allegedly committed the following prohibited acts:

a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers;

b. They obstructed the free ingress to and egress from the company premises; and

c. They resisted and defied the implementation of the writ of preliminary injunction issued against the
strikers.
Labor II – 1
Cornelio Caguiat, Ruben Tungapalan, and Eufracio Rabusa depicted the above prohibited acts in their affidavits and
testimonies. The Sheriff of the NLRC said in his Report21 that, in the course of his implementation of the writ of
injunction, he observed that the striking employees blocked the exit lane of the Alson drive with their tent.
Tungapalan, a non-striking employee, identified the Union members who threatened and coerced him. Indeed, he
filed criminal actions against them. Lastly, the photos taken of the strike show the strikers, properly identified,
committing the acts complained of. These constitute substantial evidence in support of the termination of the subject
Union members.

The mere fact that the criminal complaints against the terminated Union members were subsequently dismissed for
one reason or another does not extinguish their liability under the Labor Code. Nor does such dismissal bar the
admission of the affidavits, documents, and photos presented to establish their identity and guilt during the hearing
of the petition to declare the strike illegal. The technical grounds that the Union interposed for denying admission of
the photos are also not binding on the NLRC.22

Four. The terminated Union members contend that, since the Company refused to reinstate them after the
Labor Arbiter rendered a decision in their favor, the Company should be ordered to pay them their wages
during the pendency of the appeals from the Labor Arbiter’s decision.

It will be recalled that after the Labor Arbiter rendered his decision on June 29, 1999, which decision ordered the
reinstatement of the terminated Union members, the latter promptly filed a motion for their reinstatement pending
appeal. But the Labor Arbiter did not for some reason act on the motion. As it happened, after about four months or
on November 8, 1999, the NLRC reversed the Labor Arbiter’s reinstatement order. It cannot be said, therefore, that
the Company had resisted a standing order of reinstatement directed at it at this point.

Of course, on March 20, 2002 the CA restored the Labor Arbiter’s reinstatement order. And this prompted the
affected Union members to again file with the Labor Arbiter a motion for their reinstatement pending appeal. But,
acting on the motion, the Labor Arbiter resolved at this point that reinstatement was no longer practicable because
of the severely strained relation between the company and the terminated Union members. In place of
reinstatement, the Labor Arbiter ordered the Company to pay them their separation pays.

Both parties appealed the Labor Arbiter’s above ruling23 to the NLRC. But, as it turned out the NLRC did not also
favor reinstatement. It instead ordered the Company to pay the terminated Union members their accrued wages and
13th month pay considering its refusal to reinstate them pending appeal. On motion for reconsideration, however,
the NLRC reconsidered and deleted altogether the grant of accrued wages and 13th month pay. The Union
appealed the NLRC ruling to the CA on behalf of its terminated members but the CA denied their appeal.

The CA denied reinstatement for the reason that the reinstatement pending appeal provided under Article 223 of the
Labor Code contemplated illegal dismissal or termination cases and not cases under Article 264. But this perceived
distinction does not find support in the provisions of the Labor Code.

The grounds for termination under Article 264 are based on prohibited acts that employees could commit
during a strike. On the other hand, the grounds for termination under Articles 282 to 284 are based on the
employee’s conduct in connection with his assigned work. Still, Article 217, which defines the powers of
Labor Arbiters, vests in the latter jurisdiction over all termination cases, whatever be the grounds given for
the termination of employment. Consequently, Article 223, which provides that the decision of the Labor
Arbiter reinstating a dismissed employee shall immediately be executory pending appeal, cannot but apply
to all terminations irrespective of the grounds on which they are based.

Here, although the Labor Arbiter failed to act on the terminated Union members’ motion for reinstatement pending
appeal, the Company had the duty under Article 223 to immediately reinstate the affected employees even if it
intended to appeal from the decision ordaining such reinstatement. The Company’s failure to do so makes it liable
for accrued backwages until the eventual reversal of the order of reinstatement by the NLRC on November 8,
1999,24 a period of four months and nine days. 1avvphi1

Five. While it is true that generally the grant of separation pay is not available to employees who are validly
dismissed, there are, in furtherance of the law’s policy of compassionate justice, certain circumstances that
warrant the grant of some relief in favor of the terminated Union members based on equity.
Labor II – 1
Bitter labor disputes, especially strikes, always generate a throng of odium and abhorrence that sometimes result in
unpleasant, although unwanted, consequences.25 Considering this, the striking employees’ breach of certain
restrictions imposed on their concerted actions at their employer’s doorsteps cannot be regarded as so inherently
wicked that the employer can totally disregard their long years of service prior to such breach.26 The records also fail
to disclose any past infractions committed by the dismissed Union members. Taking these circumstances in
consideration, the Court regards the award of financial assistance to these Union members in the form of one-half
month salary for every year of service to the company up to the date of their termination as equitable and
reasonable.

WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its officers and
members in G.R. 155135 for lack of merit, and REVERSES and SETS ASIDE the decision of the Court of Appeals
in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the petition of C. Alcantara &
Sons, Inc. in G.R. 155109 and REINSTATES the decision of the National Labor Relations Commission in NLRC CA
M-004996-99 dated November 8, 1999.

Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and their
dismissed members in G.R. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union members
backwages for four (4) months and nine (9) days and separation pays equivalent to one-half month salary for every
year of service to the company up to the date of their termination, with interest of 12% per annum from the time this
decision becomes final and executory until such backwages and separation pays are paid. The Court DENIES all
other claims.

Labor II – 1
19.) G.R. No. 170830               August 11, 2010

PHIMCO INDUSTRIES, INC., Petitioner,

vs.
PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), and ERLINDA VAZQUEZ, RICARDO SACRISTAN,
LEONIDA CATALAN, MAXIMO PEDRO, NATHANIELA DIMACULANGAN,* RODOLFO MOJICO, ROMEO
CARAMANZA, REYNALDO GANITANO, ALBERTO BASCONCILLO,** and RAMON FALCIS, in their capacity
as officers of PILA, and ANGELITA BALOSA,*** DANILO BANAAG, ABRAHAM CADAY, ALFONSO CLAUDIO,
FRANCISCO DALISAY,**** ANGELITO DEJAN,***** PHILIP GARCES, NICANOR ILAGAN, FLORENCIO
LIBONGCOGON,****** NEMESIO MAMONONG, TEOFILO MANALILI, ALFREDO PEARSON,******** MARIO
PEREA,******** RENATO RAMOS, MARIANO ROSALES, PABLO SARMIENTO, RODOLFO TOLENTINO, FELIPE
VILLAREAL, ARSENIO ZAMORA, DANILO BALTAZAR, ROGER CABER,********* REYNALDO CAMARIN,
BERNARDO CUADRA,**********ANGELITO DE GUZMAN, GERARDO FELICIANO,*********** ALEX IBAÑEZ, BENJAMIN
JUAN, SR., RAMON MACAALAY, GONZALO MANALILI, RAUL MICIANO, HILARIO PEÑA, TERESA
PERMOCILLO,************ERNESTO RIO, RODOLFO SANIDAD, RAFAEL STA. ANA, JULIAN TUGUIN and AMELIA
ZAMORA, as members of PILA, Respondents.

DECISION

BRION, J.:

Before us is the petition for review on certiorari1 filed by petitioner Phimco Industries, Inc. (PHIMCO), seeking to
reverse and set aside the decision,2 dated February 10, 2004, and the resolution,3 dated December 12, 2005, of the
Court of Appeals (CA) in CA-G.R. SP No. 70336. The assailed CA decision dismissed PHIMCO’s petition for
certiorari that challenged the resolution, dated December 29, 1998, and the decision, dated February 20, 2002, of
the National Labor Relations Commission (NLRC); the assailed CA resolution denied PHIMCO’s subsequent motion
for reconsideration.

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly summarized below.

PHIMCO is a corporation engaged in the production of matches, with principal address at Phimco Compound, Felix
Manalo St., Sta. Ana, Manila. Respondent Phimco Industries Labor Association (PILA) is the duly authorized
bargaining representative of PHIMCO’s daily-paid workers. The 47 individually named respondents are PILA officers
and members.

When the last collective bargaining agreement was about to expire on December 31, 1994, PHIMCO and PILA
negotiated for its renewal. The negotiation resulted in a deadlock on economic issues, mainly due to disagreements
on salary increases and benefits.

On March 9, 1995, PILA filed with the National Conciliation and Mediation Board (NCMB) a Notice of Strike on the
ground of the bargaining deadlock. Seven (7) days later, or on March 16, 1995, the union conducted a strike vote; a
majority of the union members voted for a strike as its response to the bargaining impasse. On March 17, 1995,
PILA filed the strike vote results with the NCMB. Thirty-five (35) days later, or on April 21, 1995, PILA staged a
strike.

On May 3, 1995, PHIMCO filed with the NLRC a petition for preliminary injunction and temporary restraining order
(TRO), to enjoin the strikers from preventing – through force, intimidation and coercion – the ingress and egress of
non-striking employees into and from the company premises. On May 15, 1995, the NLRC issued an ex-parte TRO,
effective for a period of twenty (20) days, or until June 5, 1995.

On June 23, 1995, PHIMCO sent a letter to thirty-six (36) union members, directing them to explain within twenty-
four (24) hours why they should not be dismissed for the illegal acts they committed during the strike. Three days
later, or on June 26, 1995, the thirty-six (36) union members were informed of their dismissal.
Labor II – 1
On July 6, 1995, PILA filed a complaint for unfair labor practice and illegal dismissal (illegal dismissal case) with the
NLRC. The case was docketed as NLRC NCR Case No. 00-07-04705-95, and raffled to Labor Arbiter (LA) Pablo C.
Espiritu, Jr.

On July 7, 1995, then Acting Labor Secretary Jose S. Brillantes assumed jurisdiction over the labor dispute, and
ordered all the striking employees (except those who were handed termination papers on June 26, 1995) to return
to work within twenty-four (24) hours from receipt of the order. The Secretary ordered PHIMCO to accept the striking
employees, under the same terms and conditions prevailing prior to the strike.4 On the same day, PILA ended its
strike.

On August 28, 1995, PHIMCO filed a Petition to Declare the Strike Illegal (illegal strike case) with the NLRC, with a
prayer for the dismissal of PILA officers and members who knowingly participated in the illegal strike. PHIMCO
claimed that the strikers prevented ingress to and egress from the PHIMCO compound, thereby paralyzing
PHIMCO’s operations. The case was docketed as NLRC NCR Case No. 00-08-06031-95, and raffled to LA
Jovencio Ll. Mayor.

On March 14, 1996, the respondents filed their Position Paper in the illegal strike case. They countered that they
complied with all the legal requirements for the staging of the strike, they put up no barricade, and conducted their
strike peacefully, in an orderly and lawful manner, without incident.

LA Mayor decided the case on February 4, 1998,5 and found the strike illegal; the respondents committed prohibited
acts during the strike by blocking the ingress to and egress from PHIMCO’s premises and preventing the non-
striking employees from reporting for work. He observed that it was not enough that the picket of the strikers was a
moving picket, since the strikers should allow the free passage to the entrance and exit points of the company
premises. Thus, LA Mayor declared that the respondent employees, PILA officers and members, have lost their
employment status.

On March 5, 1998, PILA and its officers and members appealed LA Mayor’s decision to the NLRC.

THE NLRC RULING

The NLRC decided the appeal on December 29, 1998, and set aside LA Mayor’s decision.6 The NLRC did not give
weight to PHIMCO’s evidence, and relied instead on the respondents’ evidence showing that the union conducted a
peaceful moving picket.

On January 28, 1999, PHIMCO filed a motion for reconsideration in the illegal strike case.7

In a parallel development, LA Espiritu decided the union’s illegal dismissal case on March 2, 1999. He ruled the
respondents’ dismissal as illegal, and ordered their reinstatement with payment of backwages. PHIMCO appealed
LA Espiritu’s decision to the NLRC.

Pending the resolution of PHIMCO’s motion for reconsideration in the illegal strike case and the appeal of the illegal
dismissal case, PHIMCO moved for the consolidation of the two (2) cases. The NLRC acted favorably on the motion
and consolidated the two (2) cases in its Order dated August 5, 1999.

On February 20, 2002, the NLRC rendered its Decision in the consolidated cases, ruling totally in the union’s
favor.8 It dismissed the appeal of the illegal dismissal case, and denied PHIMCO’s motion for reconsideration in the
illegal strike case. The NLRC found that the picket conducted by the striking employees was not an illegal blockade
and did not obstruct the points of entry to and exit from the company’s premises; the pictures submitted by the
respondents revealed that the picket was moving, not stationary. With respect to the illegal dismissal charge, the
NLRC observed that the striking employees were not given ample opportunity to explain their side after receipt of
the June 23, 1995 letter. Thus, the NLRC affirmed the Decision of LA Espiritu with respect to the payment of
backwages until the promulgation of the decision, plus separation pay at one (1) month salary per year of service in
lieu of reinstatement, and 10% of the monetary award as attorney’s fees. It ruled out reinstatement because of the
damages sustained by the company brought about by the strike.

Labor II – 1
On March 14, 2002, PHIMCO filed a motion for reconsideration of the consolidated decision.

On April 26, 2002, without waiting for the result of its motion for reconsideration, PHIMCO elevated its case to the
CA through a petition for certiorari under Rule 65 of the Rules of Court.9

THE CA RULING

In a Decision10 promulgated on February 10, 2004, the CA dismissed PHIMCO’s petition for certiorari. The CA noted
that the NLRC findings, that the picket was peaceful and that PHIMCO’s evidence failed to show that the picket
constituted an illegal blockade or that it obstructed the points of entry to and exit from the company premises, were
supported by substantial evidence.

PHIMCO came to us through the present petition after the CA denied11 PHIMCO’s motion for reconsideration.12

THE PETITION

The petitioner argues that the strike was illegal because the respondents committed the prohibited acts under Article
264(e) of the Labor Code, such as blocking the ingress and egress of the company premises, threat, coercion, and
intimidation, as established by the evidence on record.

THE CASE FOR THE RESPONDENTS

The respondents, on the other hand, submit that the issues raised in this case are factual in nature that we cannot
generally touch in a petition for review, unless compelling reasons exist; the company has not shown any such
compelling reason as the picket was peaceful and uneventful, and no human barricade blocked the company
premises.

THE ISSUE

In Montoya v. Transmed Manila Corporation,13 we laid down the basic approach that should be followed in the
review of CA decisions in labor cases, thus:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for
jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law
raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the
prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In
question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case?

In this light, the core issue in the present case is whether the CA correctly ruled that the NLRC did not act with grave
abuse of discretion in ruling that the union’s strike was legal.

OUR RULING

We find the petition partly meritorious.

Requisites of a valid strike

A strike is the most powerful weapon of workers in their struggle with management in the course of setting their
terms and conditions of employment. Because it is premised on the concept of economic war between labor and

Labor II – 1
management, it is a weapon that can either breathe life to or destroy the union and its members, and one that must
also necessarily affect management and its members.14

In light of these effects, the decision to declare a strike must be exercised responsibly and must always rest on
rational basis, free from emotionalism, and unswayed by the tempers and tantrums of hot heads; it must focus on
legitimate union interests. To be legitimate, a strike should not be antithetical to public welfare, and must be pursued
within legal bounds. The right to strike as a means of attaining social justice is never meant to oppress or destroy
anyone, least of all, the employer.15

Since strikes affect not only the relationship between labor and management but also the general peace and
progress of the community, the law has provided limitations on the right to strike. Procedurally, for a strike to be
valid, it must comply with Article 26316 of the Labor Code, which requires that: (a) a notice of strike be filed with the
Department of Labor and Employment (DOLE) 30 days before the intended date thereof, or 15 days in case of
unfair labor practice; (b) a strike vote be approved by a majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in a meeting called for that purpose; and (c) a notice be given to the DOLE of
the results of the voting at least seven days before the intended strike.

These requirements are mandatory, and the union’s failure to comply renders the strike illegal.17 The 15 to 30-day
cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the
assistance of the NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an
opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.18

In the present case, the respondents fully satisfied the legal procedural requirements; a strike notice was filed on
March 9, 1995; a strike vote was reached on March 16, 1995; notification of the strike vote was filed with the DOLE
on March 17, 1995; and the actual strike was launched only on April 25, 1995.

Strike may be illegal for commission of prohibited acts

Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still be
held illegal where the means employed are illegal.19 The means become illegal when they come within the
prohibitions under Article 264(e) of the Labor Code which provides:

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.

Based on our examination of the evidence which the LA viewed differently from the NLRC and the CA, we
find the PILA strike illegal. We intervene and rule even on the evidentiary and factual issues of this case as both
the NLRC and the CA grossly misread the evidence, leading them to inordinately incorrect conclusions, both factual
and legal. While the strike undisputably had not been marred by actual violence and patent intimidation, the
picketing that respondent PILA officers and members undertook as part of their strike activities effectively blocked
the free ingress to and egress from PHIMCO’s premises, thus preventing non-striking employees and company
vehicles from entering the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor
Code.

The Evidence

We gather from the case record the following pieces of relevant evidence adduced in the compulsory arbitration
proceedings.20

For the Company

1. Pictures taken during the strike, showing that the respondents prevented free ingress to and egress from
the company premises;21

2. Affidavit of PHIMCO Human Resources Manager Francis Ferdinand Cinco, stating that he was one of the
employees prevented by the strikers from entering the PHIMCO premises;22
Labor II – 1
 3. Affidavit of Cinco, identifying Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro,
Nathaniela R. Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo,
and Ramon Falcis as PILA officers;23

4. Affidavit of Cinco identifying other members of PILA;24

5. Folder 1, containing pictures taken during the strike identifying and showing Leonida Catalan, Renato
Ramos, Arsenio Zamora, Reynaldo Ganitano, Amelia Zamora, Angelito Dejan, Teresa Permocillo, and
Francisco Dalisay as the persons preventing Cinco and his group from entering the company premises;25

6. Folder 2, with pictures taken on May 30, 1995, showing Cinco, together with non-striking PHIMCO
employees, reporting for work but being refused entry by strikers Teofilo Manalili, Nathaniela Dimaculangan,
Bernando Cuadra, Maximo Pedro, Nicanor Ilagan, Julian Tuguin, Nemesio Mamonong, Abraham Caday,
Ernesto Rio, Benjamin Juan, Sr., Ramon Macaalay, Gerardo Feliciano, Alberto Basconcillo, Rodolfo
Sanidad, Mariano Rosales, Roger Caber, Angelito de Guzman, Angelito Balosa and Philip Garces who
blocked the company gate;26

7. Folder 3, with pictures taken on May 30, 1995, showing the respondents denying free ingress to and
egress from the company premises;27

8. Folder 4, with pictures taken during the strike, showing that non-striking employees failed to enter the
company premises as a result of the respondents’ refusal to let them in;28

9. Affidavit of Joaquin Aguilar stating that the pictures presented by Cinco were taken during the strike;29

10. Pictures taken by Aguilar during the strike, showing non-striking employees being refused entry by the
respondents;30

11. Joint affidavit of Orlando Marfil and Rodolfo Digo, identifying the pictures they took during the strike,
showing that the respondents blocked ingress to and egress from the company premises;31 and,

12. Testimonies of PHIMCO employees Rodolfo Eva, Aguilar and Cinco, as well as those of PILA officers
Maximo Pedro and Leonida Catalan.

For the Respondents

1. Affidavit of Leonida Catalan, stating that the PILA strike complied with all the legal requirements, and the
strike/picket was conducted peacefully with no incident of any illegality;32

2. Affidavit of Maximo Pedro, stating that the strike/picket was conducted peacefully; the picket was always
moving with no acts of illegality having been committed during the strike;33

3. Certification of Police Station Commander Bienvenido de los Reyes that during the strike there was no
report of any untoward incident;34

4. Certification of Rev. Father Erick Adeviso of Dambanang Bayan Parish Church that the strike was
peaceful and without any untoward incident;35

5. Certification of Priest-In-Charge Angelito Fausto of the Philippine Independent Church in Punta, Santa
Ana, that the strike complied with all the requirements for a lawful strike, and the strikers conducted
themselves in a peaceful manner;36

6. Clearance issued by Punong Barangay Mario O. dela Rosa and Barangay Secretary Pascual Gesmundo,
Jr. that the strike from April 21 to July 7, 1995 was conducted in an orderly manner with no complaints
filed;37 and,

Labor II – 1
 7. Testimonies at the compulsory arbitration proceedings.

In its resolution of December 29, 1998,38 the NLRC declared that "the string of proofs" the company presented was
"overwhelmingly counterbalanced by the numerous pieces of evidence adduced by respondents x x x all depicting a
common story that respondents put up a peaceful moving picket, and did not commit any illegal acts x x x
specifically obstructing the ingress to and egress from the company premises[.]"39

We disagree with this finding as the purported "peaceful moving picket" upon which the NLRC resolution
was anchored was not an innocuous picket, contrary to what the NLRC said it was; the picket, under the
evidence presented, did effectively obstruct the entry and exit points of the company premises on various
occasions.

To strike is to withhold or to stop work by the concerted action of employees as a result of an industrial or
labor dispute.40 The work stoppage may be accompanied by picketing by the striking employees outside of
the company compound. While a strike focuses on stoppage of work, picketing focuses on publicizing the
labor dispute and its incidents to inform the public of what is happening in the company struck against. A
picket simply means to march to and from the employer’s premises, usually accompanied by the display of
placards and other signs making known the facts involved in a labor dispute.41 It is a strike activity separate
and different from the actual stoppage of work.

grievances,43 these rights are by no means absolute. Protected picketing does not extend to blocking ingress to
and egress from the company premises.44 That the picket was moving, was peaceful and was not attended
by actual violence may not free it from taints of illegality if the picket effectively blocked entry to and exit
from the company premises.

In this regard, PHIMCO employees Rodolfo Eva and Joaquin Aguilar, and the company’s Human Resources
Manager Francis Ferdinand Cinco testified during the compulsory arbitration hearings:

ATTY. REYES: this incident on May 22, 1995, when a coaster or bus attempted to enter PHIMCO compound, you
mentioned that it was refused entry. Why was this (sic) it refused entry?

WITNESS: Because at that time, there was a moving picket at the gate that is why the bus was not able to enter.45

xxxx

Q: Despite this TRO, which was issued by the NLRC, were you allowed entry by the strikers?

A: We made several attempts to enter the compound, I remember on May 7, 1995, we tried to enter the
PHIMCO compound but we were not allowed entry.

Q: Aside from May 27, 1995, were there any other instances wherein you were not allowed entry at
PHIMCO compound?

A: On May 29, I recall I was riding with our Production Manager with the Pick-up. We tried to enter but we
were not allowed by the strikers.46

xxxx

ARBITER MAYOR: How did the strikers block the ingress of the company?

A: They hold around, joining hands, moving picket.47

xxxx

Labor II – 1
 ARBITER MAYOR: Reform the question, and because of that moving picket conducted by the strikers, no
employees or vehicles can come in or go out of the premises?

A: None, sir.48

These accounts were confirmed by the admissions of respondent PILA officers Maximo Pedro and Leonida Catalan
that the strikers prevented non-striking employees from entering the company premises. According to these union
officers:

ATTY. CHUA: Mr. witness, do you recall an incident when a group of managers of PHIMCO, with several of
the monthly paid employees who tried to enter the PHIMCO compound during the strike?

MR. PEDRO: Yes, sir.

ATTY. CHUA: Can you tell us if these (sic) group of managers headed by Francis Cinco entered the
compound of PHIMCO on that day, when they tried to enter?

MR. PEDRO: No, sir. They were not able to enter.49

xxxx

ATTY. CHUA: Despite having been escorted by police Delos Reyes, you still did not give way, and instead
proceeded with your moving picket?

MR. PEDRO: Yes, sir.

ATTY. CHUA: In short, these people were not able to enter the premises of PHIMCO, Yes or No.

MR. PEDRO: Yes, sir. 50

xxxx

ATTY. CHUA: Madam witness, even if Major Delos Reyes instructed you to give way so as to allow the
employees and managers to enter the premises, you and your co-employees did not give way?

MS. CATALAN: No sir.

ATTY. CHUA: the managers and the employees were not able to enter the premises?

MS. CATALAN: Yes, sir.51

The NLRC resolution itself noted the above testimonial evidence, "all building up a scenario that the moving picket
put up by [the] respondents obstructed the ingress to and egress from the company premises[,]"52 yet it ignored the
clear import of the testimonies as to the true nature of the picket. Contrary to the NLRC characterization that it was a
"peaceful moving picket," it stood, in fact, as an obstruction to the company’s points of ingress and egress.

Significantly, the testimonies adduced were validated by the photographs taken of the strike area, capturing the
strike in its various stages and showing how the strikers actually conducted the picket. While the picket was moving,
it was maintained so close to the company gates that it virtually constituted an obstruction, especially when the
strikers joined hands, as described by Aguilar, or were moving in circles, hand-to-shoulder, as shown by the
photographs, that, for all intents and purposes, blocked the free ingress to and egress from the company premises.
In fact, on closer examination, it could be seen that the respondents were conducting the picket right at the
company gates.53

Labor II – 1
The obstructive nature of the picket was aggravated by the placement of benches, with strikers standing on top,
directly in front of the open wing of the company gates, clearly obstructing the entry and exit points of the company
compound.54

With a virtual human blockade and real physical obstructions (benches and makeshift structures both outside and
inside the gates),55 it was pure conjecture on the part of the NLRC to say that "[t]he non-strikers and their vehicles
were x x x free to get in and out of the company compound undisturbed by the picket line."56 Notably, aside from
non-strikers who wished to report for work, company vehicles likewise could not enter and get out of the factory
because of the picket and the physical obstructions the respondents installed. The blockade went to the point of
causing the build up of traffic in the immediate vicinity of the strike area, as shown by photographs.57 This, by itself,
renders the picket a prohibited activity. Pickets may not aggressively interfere with the right of peaceful ingress to
and egress from the employer’s shop or obstruct public thoroughfares; picketing is not peaceful where the sidewalk
or entrance to a place of business is obstructed by picketers parading around in a circle or lying on the sidewalk.58

What the records reveal belies the NLRC observation that "the evidence x x x tends to show that what respondents
actually did was walking or patrolling to and fro within the company vicinity and by word of mouth, banner or placard,
informing the public concerning the dispute."59

The "peaceful moving picket" that the NLRC noted, influenced apparently by the certifications (Mayor delos Reyes,
Fr. Adeviso, Fr. Fausto and Barangay Secretary Gesmundo presented in evidence by the respondents, was
"peaceful" only because of the absence of violence during the strike, but the obstruction of the entry and exit points
of the company premises caused by the respondents’ picket was by no means a "petty blocking act" or an
"insignificant obstructive act."60

As we have stated, while the picket was moving, the movement was in circles, very close to the gates, with the
strikers in a hand-to-shoulder formation without a break in their ranks, thus preventing non-striking workers and
vehicles from coming in and getting out. Supported by actual blocking benches and obstructions, what the union
demonstrated was a very persuasive and quietly intimidating strategy whose chief aim was to paralyze the
operations of the company, not solely by the work stoppage of the participating workers, but by excluding the
company officials and non-striking employees from access to and exit from the company premises. No doubt, the
strike caused the company operations considerable damage, as the NLRC itself recognized when it ruled out the
reinstatement of the dismissed strikers.61

Intimidation

Article 264(e) of the Labor Code tells us that picketing carried on with violence, coercion or intimidation is
unlawful.62 According to American jurisprudence, what constitutes unlawful intimidation depends on the totality of the
circumstances.63 Force threatened is the equivalent of force exercised. There may be unlawful intimidation without
direct threats or overt acts of violence. Words or acts which are calculated and intended to cause an ordinary person
to fear an injury to his person, business or property are equivalent to threats.64

The manner in which the respondent union officers and members conducted the picket in the present case had
created such an intimidating atmosphere that non-striking employees and even company vehicles did not dare cross
the picket line, even with police intervention. Those who dared cross the picket line were stopped. The compulsory
arbitration hearings bear this out.

Maximo Pedro, a PILA officer, testified, on July 30, 1997, that a group of PHIMCO managers led by Cinco, together
with several monthly-paid employees, tried to enter the company premises on May 27, 1995 with police escort; even
then, the picketers did not allow them to enter.65Leonida Catalan, another union officer, testified that she and the
other picketers did not give way despite the instruction of Police Major de los Reyes to the picketers to allow the
group to enter the company premises.66 (To be sure, police intervention and participation are, as a rule, prohibited
acts in a strike, but we note this intervention solely as indicators of how far the union and its members have gone to
block ingress to and egress from the company premises.)

Further, PHIMCO employee Rodolfo Eva testified that on May 22, 1995, a company coaster or bus attempted to
enter the PHIMCO compound but it was refused entry by the "moving picket."67 Cinco, the company personnel
manager, also testified that on May 27, 1995, when the NLRC TRO was in force, he and other employees tried to
Labor II – 1
enter the PHIMCO compound, but they were not allowed entry; on May 29, 1995, Cinco was with the PHIMCO
production manager in a pick-up and they tried to enter the company compound but, again, they were not allowed
by the strikers.68 Another employee, Joaquin Aguilar, when asked how the strikers blocked the ingress of the
company, replied that the strikers "hold around, joining hands, moving picket" and, because of the moving picket, no
employee or vehicle could come in and go out of the premises.69

The evidence adduced in the present case cannot be ignored. On balance, it supports the company’s submission
that the respondent PILA officers and members committed acts during the strike prohibited under Article 264(e) of
the Labor Code. The testimonies of non-striking employees, who were prevented from gaining entry into the
company premises, and confirmed no less by two officers of the union, are on record.

The photographs of the strike scene, also on record, depict the true character of the picket; while moving, it, in fact,
constituted a human blockade, obstructing free ingress to and egress from the company premises, reinforced by
benches planted directly in front of the company gates. The photographs do not lie – these photographs clearly
show that the picketers were going in circles, without any break in their ranks or closely bunched together, right in
front of the gates. Thus, company vehicles were unable to enter the company compound, and were backed up
several meters into the street leading to the company gates.

Despite all these clear pieces of evidence of illegal obstruction, the NLRC looked the other way and chose not to
see the unmistakable violations of the law on strikes by the union and its respondent officers and members.
Needless to say, while the law protects the rights of the laborer, it authorizes neither the oppression nor the
destruction of the employer.70 For grossly ignoring the evidence before it, the NLRC committed grave abuse of
discretion; for supporting these gross NLRC errors, the CA committed its own reversible error.

Liabilities of union officers and members

In the determination of the liabilities of the individual respondents, the applicable provision is Article 264(a) of the
Labor Code:

Art. 264. Prohibited activities. – (a) x x x

xxxx

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.

We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc. 71 that the effects of
illegal strikes, outlined in Article 264 of the Labor Code, make a distinction between participating workers and union
officers. The services of an ordinary striking worker cannot be terminated for mere participation in an illegal strike;
proof must be adduced showing that he or she committed illegal acts during the strike. The services of a
participating union officer, on the other hand, may be terminated, not only when he actually commits an illegal act
during a strike, but also if he knowingly participates in an illegal strike.72

In all cases, the striker must be identified. But proof beyond reasonable doubt is not required; substantial evidence,
available under the attendant circumstances, suffices to justify the imposition of the penalty of dismissal on
participating workers and union officers as above described.73

In the present case, respondents Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela
Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, and Ramon Falcis
stand to be dismissed as participating union officers, pursuant to Article 264(a), paragraph 3, of the Labor Code.
This provision imposes the penalty of dismissal on "any union officer who knowingly participates in an illegal strike."
The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost
his employment.74

Labor II – 1
PHIMCO was able to individually identify the participating union members thru the affidavits of PHIMCO
employees Martimer Panis75 and Rodrigo A. Ortiz,76 and Personnel Manager Francis Ferdinand Cinco,77 and the
photographs78 of Joaquin Aguilar. Identified were respondents Angelita Balosa, Danilo Banaag, Abraham Caday,
Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio
Mamonong, Teofilo Manalili, Alfredo Pearson, Mario Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento,
Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora, Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo
Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex Ibañez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo
Manalili, Raul Miciano, Hilario Peña, Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian
Tuguin and Amelia Zamora as the union members who actively participated in the strike by blocking the ingress to
and egress from the company premises and preventing the passage of non-striking employees. For participating in
illegally blocking ingress to and egress from company premises, these union members stand to be dismissed for
their illegal acts in the conduct of the union’s strike.

PHIMCO failed to observe due process

We find, however, that PHIMCO violated the requirements of due process of the Labor Code when it dismissed the
respondents.

Under Article 277(b)79 of the Labor Code, the employer must send the employee, who is about to be terminated, a
written notice stating the cause/s for termination and must give the employee the opportunity to be heard and to
defend himself.

We explained in Suico v. National Labor Relations Commission,80 that Article 277(b), in relation to Article 264(a) and
(e) of the Labor Code recognizes the right to due process of all workers, without distinction as to the cause of their
termination, even if the cause was their supposed involvement in strike-related violence prohibited under Article
264(a) and (e) of the Labor Code.

To meet the requirements of due process in the dismissal of an employee, an employer must furnish him or her with
two (2) written notices: (1) a written notice specifying the grounds for termination and giving the employee a
reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of
all circumstances, grounds have been established to justify the employer's decision to dismiss the employee.81

In the present case, PHIMCO sent a letter, on June 23, 1995, to thirty-six (36) union members, generally directing
them to explain within twenty-four (24) hours why they should not be dismissed for the illegal acts they committed
during the strike; three days later, or on June 26, 1995, the thirty-six (36) union members were informed of their
dismissal from employment. 1avvphi1

We do not find this company procedure to be sufficient compliance with the due process requirements that the law
guards zealously. It does not appear from the evidence that the union officers were specifically informed of the
charges against them and given the chance to explain and present their side. Without the specifications they had to
respond to, they were arbitrarily separated from work in total disregard of their rights to due process and security of
tenure.

As to the union members, only thirty-six (36) of the thirty-seven (37) union members included in this case were
notified of the charges against them thru the letters dated June 23, 1995, but they were not given an ample
opportunity to be heard and to defend themselves; the notice of termination came on June 26, 1995, only three (3)
days from the first notice - a perfunctory and superficial attempt to comply with the notice requirement under the
Labor Code. The short interval of time between the first and second notice speaks for itself under the circumstances
of this case; mere token recognition of the due process requirements was made, indicating the company’s intent to
dismiss the union members involved, without any meaningful resort to the guarantees accorded them by law.

Under the circumstances, where evidence sufficient to justify the penalty of dismissal has been adduced but the
workers concerned were not accorded their essential due process rights, our ruling in Agabon v. NLRC82 finds full
application; the employer, despite the just cause for dismissal, must pay the dismissed workers nominal damages
as indemnity for the violation of the workers’ right to statutory due process. Prevailing jurisprudence sets the amount
of nominal damages at ₱30,000.00, which same amount we find sufficient and appropriate in the present case.83

Labor II – 1
WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the decision dated February 10,
2004 and the resolution dated December 12, 2005 of the Court of Appeals in CA-G.R. SP No. 70336, upholding the
rulings of the National Labor Relations Commission.

The Decision, dated February 4, 1998, of Labor Arbiter Jovencio Ll. Mayor should prevail and is REINSTATED with
the MODIFICATION that Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela
Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, Ramon Falcis,
Angelita Balosa, Danilo Banaag, Abraham Caday, Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip
Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio Mamonong, Teofilo Manalili, Alfredo Pearson, Mario
Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora,
Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex
Ibañez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo Manalili, Raul Miciano, Hilario Peña, Teresa Permocillo,
Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian Tuguin, and Amelia Zamora are each awarded nominal
damages in the amount of ₱30,000.00. No pronouncement as to costs.

Labor II – 1
20.) G.R. No. 159460               November 15, 2010

SOLIDBANK CORPORATION (now known as FIRST METRO INVESTMENT CORPORATION), Petitioner,

vs.
ERNESTO U. GAMIER, ELENA R. CONDEVILLAMAR, JANICE L. ARRIOLA and OPHELIA C. DE
GUZMAN, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 159461

SOLIDBANK CORPORATION and/or its successor-in-interest, FIRST METRO INVESTMENT CORPORATION,

DEOGRACIAS N. VISTAN AND EDGARDO MENDOZA, JR., Petitioners,
vs.
SOLIDBANK UNION AND ITS DISMISSED OFFICERS AND MEMBERS, namely: EVANGELINE J. GABRIEL,
TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA, EVELYN A. SIA, MA. VICTORIA M.
VIDALLON, AUREY A. ALJIBE, REY ANTHONY M. AMPARADO, JOSE A. ANTENOR, AUGUSTO D. ARANDIA,
JR., JANICE L. ARRIOLA, RUTH SHEILA MA. BAGADIONG, STEVE D. BERING, ALAN ROY I. BUYCO,
MANALO T. CABRERA, RACHE M. CASTILLO, VICTOR O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S.
DABAY, ARMAND V. DAYANG-HIRANG, HUBERT V. DIMAGIBA, MA. LOURDES CECILIA B. EMPARADOR,
FELIX D. ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA, JOSE G. GUISADIO, JOSE RAINARIO
C. LAOANG, ALEXANDER A. MARTINEZ, JUAN ALEX C. NAMBONG, JOSEPHINE M. ONG, ARMANDO B.
OROZCO, ARLENE R. RODRIGUEZ, NICOMEDES P. RUIZO, JR., DON A. SANTANA, ERNESTO R. SANTOS,
JR., EDNA M. SARONG, GREGORIO S. SECRETARIO, ELLEN M. SORIANO, ROSIE C. UY, ARVIN D.
VALENCIA, FERMIN JOSSEPH B. VENTURA, JR., EMMANUEL C. YAPTANCO, ERNESTO C. ZUNIGA, ARIEL
S. ABENDAN, EMMA R. ABENDAN, PAULA AGNES A. ANGELES, JACQUILINE B. BAQUIRAN, JENNIFER S.
BARCENAS, ALVIN E. BARICANOSA, GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, RODERICK
M. BELLO, MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN, NEPTALI A. CADDARAO, FERDINAND
MEL S. CAPULING, MARGARETTE B. CORDOVA, MA. EDNA V. DATOR, RANIEL C. DAYAO, RAGCY L. DE
GUZMAN, LUIS E. DELOS SANTOS, CARMINA M. DEGALA, EPHRAIM RALPH A. DELFIN, KAREN M.
DEOCERA, CAROLINA C. DIZON, MARCHEL S. ESQUEJJO, JOCELYN I. ESTROBO, MINERVA S.
FALLARME, HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, MENCHIE R.
FRANCISCO, ERNESTO U. GAMIER, MACARIO RODOLFO N. GARCIA, JOEL S. GARMINO, LESTER MARK
Z. GATCHALIAN, MA. JINKY P. GELERA, MA. TERESA G. GONZALES, GONZALO G. GUINIT, EMILY H.
GUINO-O, FERDINAND S. HABIJAN, JUN G. HERNANDEZ, LOURDES D. IBEAS, MA. ANGELA L.
JALANDONI, JULIE T. JORNACION, MANUEL C. LIM, MA. LOURDES A. LIM, EMERSON V. LUNA, NOLASCO
B. MACATANGAY, NORMAN C. MANACO, CHERRY LOU B. MANGROBANG, MARASIGAN G. EDMUNDO,
ALLEN M. MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE, SHIRLEY A. ONG, LOTIZ E. ORTIZ LUIS,
PABLITO M. PALO, MARY JAINE D. PATINO, GEOFFREY T. PRADO, OMEGA MELANIE M. QUINTANO,
ANES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES, SALVACION N.
ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SAYLON, BENHARD E.
SIMBULAN, MA. TERESA S. SOLIS, MA. LOURDES ROCEL E. SOLIVEN, EMILY C. SUY AT, EDGAR ALLAN
P. TACSUAN, RAYMOND N. TANAY, JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA O. TISON,
EVELYN T. UYLANGCO, CION E. YAP, MA. OPHELIA C. DE GUZMAN, MA. HIDELISA P. IRA, RAYMUND
MARTIN A. ANGELES, MERVIN S. BAUTISTA, ELENA R. CONDEVILLAMAR, CHERRY T. CO, LEOPOLDO V.
DE LA ROSA, DOROTEO S. FROILAN, EMMANUEL B. GLORIA, JULIETEL JUBAC AND ROSEMARIE L.
TANG, Respondents.

DECISION

VILLARAMA, JR., J.:

The consolidated petitions before us seek to reverse and set aside the Decision1 dated March 10, 2003 of the Court
of Appeals (CA) in CA-G.R. SP Nos. 67730 and 70820 which denied the petitions for certiorari filed by Solidbank
Corporation (Solidbank) and ordered the reinstatement of the above-named individual respondents to their former
positions.
Labor II – 1
 The Antecedents

Sometime in October 1999, petitioner Solidbank and respondent Solidbank Employees’ Union (Union) were set to
renegotiate the economic provisions of their 1997-2001 Collective Bargaining Agreement (CBA) to cover the
remaining two years thereof. Negotiations commenced on November 17, 1999 but seeing that an agreement was
unlikely, the Union declared a deadlock on December 22, 1999 and filed a Notice of Strike on December 29,
1999.2 During the collective bargaining negotiations, some Union members staged a series of mass actions. In view
of the impending actual strike, then Secretary of Labor and Employment Bienvenido E. Laguesma assumed
jurisdiction over the labor dispute, pursuant to Article 263 (g) of the Labor Code, as amended. The assumption order
dated January 18, 2000 directed the parties "to cease and desist from committing any and all acts that might
exacerbate the situation."3

In his Order4 dated March 24, 2000, Secretary Laguesma resolved all economic and non-economic issues submitted
by the parties, as follows:

WHEREFORE, premises considered, judgment is hereby issued:

a. Directing Solidbank Corporation and Solidbank Union to conclude their Collective Bargaining Agreement
for the years 2000 and 2001, incorporating the dispositions above set forth;

b. Dismissing the unfair labor practice charge against Solidbank Corporation;

c. Directing Solidbank to deduct or check-off from the employees’ lump sum payment an amount equivalent
to seven percent (7%) of their economic benefits for the first (1st) year, inclusive of signing bonuses, and to
remit or turn over the said sum to the Union’s authorized representative, subject to the requirements of
check-off;

d. Directing Solidbank to recall the show-cause memos issued to employees who participated in the mass
actions if such memos were in fact issued.

SO ORDERED.5

Dissatisfied with the Secretary’s ruling, the Union officers and members decided to protest the same by holding a
rally infront of the Office of the Secretary of Labor and Employment in Intramuros, Manila, simultaneous with the
filing of their motion for reconsideration of the March 24, 2000 Order. Thus, on April 3, 2000, an overwhelming
majority of employees, including the individual respondents, joined the "mass leave" and "protest action" at the
Department of Labor and Employment (DOLE) office while the bank’s provincial branches in Cebu, Iloilo, Bacolod
and Naga followed suit and "boycotted regular work."6 The union members also picketed the bank’s Head Office in
Binondo on April 6, 2000, and Paseo de Roxas branch on April 7, 2000.

As a result of the employees’ concerted actions, Solidbank’s business operations were paralyzed. On the same day,
then President of Solidbank, Deogracias N. Vistan, issued a memorandum7 addressed to all employees calling their
absence from work and demonstration infront of the DOLE office as an illegal act, and reminding them that they
have put their jobs at risk as they will be asked to show cause why they should not be terminated for participating in
the union-instigated concerted action. The employees’ work abandonment/boycott lasted for three days, from April 3
to 5, 2000.

On the third day of the concerted work boycott (April 5, 2000), Vistan issued another memorandum,8 this time
declaring that the bank is prepared to take back employees who will report for work starting April 6, 2000 "provided
these employees were/are not part of those who led or instigated or coerced their co-employees into participating in
this illegal act." Out of the 712 employees who took part in the three-day work boycott, a total of 513 returned to
work and were accepted by the bank. The remaining 199 employees insisted on defying Vistan’s directive, which
included herein respondents Ernesto U. Gamier, Elena R. Condevillamar, Janice L. Arriola and Ophelia C. De
Guzman. For their failure to return to work, the said 199 employees were each issued a show-cause memo directing
them to submit a written explanation within twenty-four (24) hours why they should not be dismissed for the "illegal

Labor II – 1
strike x x x in defiance of x x x the Assumption Order of the Secretary of Labor x x x resulting [to] grave and
irreparable damage to the Bank", and placing them under preventive suspension.9

The herein 129 individual respondents were among the 199 employees who were terminated for their participation
in the three-day work boycott and protest action. On various dates in June 2000, twenty-one (21) of the individual
respondents executed Release, Waiver and Quitclaim in favor of Solidbank.10

On May 8, 2000, Secretary Laguesma denied the motions for reconsideration filed by Solidbank and the Union.11

The Union filed on May 11, 2000 a Motion for Clarification of certain portions of the Order dated March 24, 2000,
and on May 19, 2000 it filed a Motion to Resolve the Supervening Issue of Termination of 129 Striking
Employees. On May 26, 2000, Secretary Laguesma granted the first motion by clarifying that the contract-signing
bonus awarded in the new CBA should likewise be based on the adjusted pay. However, the Union’s second motion
was denied,12 as follows:

This Office cannot give due course to the Union’s second motion. The labor dispute arising from the termination of
the Bank employees is an issue that ought to be entertained in a separate case. The assumption order of January
18, 2000 covered only the bargaining deadlock between the parties and the alleged violation of the CBA provision
on regularization. We have already resolved both the deadlock and the CBA violation issues. The only motion
pending before us is the motion for clarification, which we have earlier disposed of in this Order. Thus, the only
option left is for the Union to file a separate case on the matter.13

In the meantime, the Monetary Board on July 28, 2000 approved the request of Metropolitan Bank and Trust
Company (Metrobank) to acquire the existing non-real estate assets of Solidbank in consideration of assumption by
Metrobank of the liabilities of Solidbank, and to integrate the banking operations of Solidbank with Metrobank.
Subsequently, Solidbank was merged with First Metro Investment Corporation, and Solidbank, the surviving
corporation, was renamed the First Metro Investment Corporation (FMIC).14 By August 31, 2000, Solidbank ceased
banking operations after surrendering its expanded banking license to the Bangko Sentral ng Pilipinas. Petitioners
duly filed a Termination Report with the DOLE and granted separation benefits to the bank’s employees.15

Respondents Gamier, Condevillamar, Arriola and De Guzman filed separate complaints for illegal dismissal, moral
and exemplary damages and attorney’s fees on April 28, May 15 and May 29, 2000, respectively (NLRC NCR Case
Nos. [S]30-04-01891-00, 30-05-03002-00 and 30-05-02253-00). The cases were consolidated before Labor Arbiter
Potenciano S. Cañizares, Jr. Respondent Union joined by the 129 dismissed employees filed a separate suit
against petitioners for illegal dismissal, unfair labor practice and damages (NLRC NCR Case No. 30-07-02920-00
assigned to Labor Arbiter Luis D. Flores).

Labor Arbiters’ Rulings

In his Decision dated November 14, 2000, Labor Arbiter Potenciano S. Cañizares, Jr. dismissed the complaints of
Gamier, Condevillamar, Arriola and De Guzman. It was held that their participation in the illegal strike violated the
Secretary of Labor’s return to work order upon the latter’s assumption of the labor dispute and after directing the
parties to execute their new CBA.16

On March 16, 2001, Labor Arbiter Luis D. Flores rendered a decision17 in favor of respondents Union and
employees, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring complainants’ dismissal as illegal and
unjustified and ordering the respondents Solidbank Corporation and/or its successor-in-interest First Metro
Investment Corporation and/or Metropolitan Bank and Trust Company and/or Deogracias Vistan and/or Edgardo
Mendoza to reinstate complainants to their former positions. Concomitantly, said respondents are hereby ordered to
jointly and severally pay the complainants their full backwages and other employee’s benefits from the time of their
dismissal up to the date of their actual reinstatement; payment of ten (10%) percent attorney’s fees; payment of
ONE HUNDRED FIFTY THOUSAND PESOS (₱150,000.00) each as moral damages and ONE HUNDRED
THOUSAND PESOS (₱100,000.00) each as exemplary damages which are computed, at the date of this decision
in the amount of THIRTY THREE MILLION SEVEN HUNDRED NINETY FOUR THOUSAND TWO HUNDRED

Labor II – 1
TWENTY TWO PESOS and 80/100 (₱33,794,222.80), by the Computation and Examination Unit of this branch and
becomes an integral part of this Decision.

SO ORDERED. 18

Respondents Gamier, Condevillamar, Arriola and De Guzman appealed the decision of Labor Arbiter Cañizares, Jr.
to the National Labor Relations Commission (NLRC NCR CA No 027342-01). Petitioners likewise appealed from the
decision of Labor Arbiter Flores (NLRC NCR CA No. 028510-01).

Rulings of the NLRC

On July 23, 2001, the NLRC’s Second Division rendered a Decision19 reversing the decision of Labor Arbiter Flores,
as follows:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby VACATED and SET ASIDE and a
new one entered dismissing the complaint for illegal dismissal and unfair labor practice for lack of merit. As
equitable relief, respondents are hereby ordered to pay complainants separation benefits as provided under the
CBA at least one (1) month pay for every year of service whichever is higher.

SO ORDERED.20

The Second Division ruled that the mass action held by the bank employees on April 3, 2000 infront of the Office of
the Secretary of Labor was not a legitimate exercise of the employees’ freedom of speech and assembly. Such was
a strike as defined under Article 212 (o) of the Labor Code, as amended, which does not distinguish as to whom the
action of the employees is directed against, nor the place/location where the concerted action of the employees took
place. Complainants Gamier, Condevillamar, Arriola and De Guzman did not report for work and picketed the DOLE
premises on April 3, 2000; they continuously refused to report back to work until April 7, 2000 when they were
issued a Notice of Termination. It was stressed that the mass action of the bank employees was an incident of a
labor dispute, and hence the concerted work abandonment was a prohibited activity contemplated under Article 264
(a) of the Labor Code, as amended, upon assumption of jurisdiction by the Secretary of Labor. Citing this Court’s
ruling in the case of Telefunken Semiconductors Employees Union-FFW v. Court of Appeals,21 the Second Division
found there was just and valid cause for the dismissal of complainants.22

On the charge of forum shopping with respect to twenty-one (21) individual complainants who have voluntarily
settled their claims against Solidbank, the said cases not having been dismissed by the Labor Arbiter despite proper
motion,23 the Second Division found that complainants admitted in their Answer that the said employees preferred to
pursue their own independent action against the bank and their names were stricken out from the original complaint;
hence, the Labor Arbiter erred in granting relief to said employees. Nevertheless, it held that the complaint will not
be dismissed on this ground as the issue of forum shopping should have been raised in the proceedings before the
Labor Arbiter.24

Respondents filed a motion for reconsideration while the petitioners filed a partial motion for reconsideration. Both
motions were denied under Resolution25 dated September 28, 2001.

As to respondents’ appeal, the NLRC’s Third Division by Decision26 dated January 31, 2002, reversed the decision
of Labor Arbiter Cañizares, Jr., as follows:

WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one entered finding the respondent
Solidbank Corporation liable for the illegal dismissal of complainants Ernesto U. Gamier, Elena P. Condevillamar,
Janice L. Arriola and Maria Ophelia C. de Guzman, and ordering the respondent bank to reinstate the complainants
to their former positions without loss of seniority rights and to pay full backwages reckoned from the time of their
illegal dismissal up to the time of their actual/payroll reinstatement. Should reinstatement not be feasible,
respondent bank is further ordered to pay complainants their separation pay in accordance with the provisions of the
subsisting Collective Bargaining Agreement.

All other claims are DISMISSED for lack of merit.

Labor II – 1
SO ORDERED.27

The Third Division held that the protest action staged by the bank’s employees before the DOLE did not amount to a
strike but rather an exercise of their right to express frustration and dissatisfaction over the decision rendered by the
Secretary of Labor. Hence, it cannot be concluded that the activity is per se illegal or violative of the assumption
order considering that at the time, both parties had pending motions for reconsideration of the Secretary’s decision.
Moreover, it was found that Gamier, Condevillamar, Arriola and De Guzman were not fully investigated on the
charge that they had instigated or actively participated in an illegal activity; neither was it shown that the
explanations submitted by them were considered by the management. Since said employees had presented
evidence of plausible and acceptable reasons for their absence at the workplace at the time of the protest action,
their termination based on such alleged participation in the protest action was unjustified.28

Respondents filed a "partial motion" while the petitioners filed a motion for reconsideration of the Decision dated
January 31, 2002. Both motions were denied under Resolution29 dated March 8, 2002.

On November 20, 2001, petitioners filed a petition for certiorari before the CA assailing the July 23, 2001 Decision
and Resolution dated September 28, 2001 of the NLRC’s Second Division insofar as it ordered the payment of
separation benefits to the 129 terminated employees of Solidbank who participated in the mass action/strike (CA-
G.R. SP No. 67730).30

On May 23, 2002, petitioners filed a separate petition in the CA (CA-G.R. SP No. 70820) seeking the reversal of the
January 31, 2002 Decision and Resolution dated March 8, 2002 of the NLRC’s Third Division and praying for the
following reliefs: (1) immediate issuance of a TRO and writ of preliminary injunction to restrain/enjoin the NLRC from
issuing a writ of execution in NLRC CA No. 027342-01; (2) the petition be consolidated with CA-G.R. SP No. 67730
before the Thirteenth Division and CA-G.R. SP No. 68054 before the Third Division, or if consolidation is no longer
possible, that the petition be resolved independently of the aforesaid cases; and (3) granting the petition by
annulling and setting aside the January 31, 2002 Decision of the NLRC, and reinstating the November 14, 2000
Decision of Labor Arbiter Cañizares, Jr.31

On August 9, 2002, petitioners filed a Manifestation before the Fifteenth Division (CA-G.R. SP No. 67730) attaching
thereto a copy of the Decision32 (dated July 26, 2002) rendered by the CA’s Special Third Division in CA-G.R. SP
No. 68998, a petition for certiorari separately filed by Metrobank which also sought to annul and set aside the July
23, 2001 Decision of the NLRC’s Second Division insofar as it ordered the payment of separation benefits to the
dismissed employees of Solidbank. In the said decision, the CA’s Fourteenth Division gave due course to the
petition of Metrobank and affirmed the July 23, 2001 decision of the NLRC but reversed and set aside the portion of
the decision ordering the payment of separation benefits.33

On September 11, 2002, respondents filed an Omnibus Motion and Counter-Manifestation arguing that petitioners’
Manifestation constitutes a judicial admission that Metrobank engaged in forum shopping; it was thus prayed that
CA-G.R. SP No. 68998 be consolidated with CA-G.R. SP No. 67730, the latter having a lower case number.
Further, respondents attached a copy of the Decision34 dated August 29, 2002 rendered by the CA’s Second
Division in CA-G.R. SP No. 68054, the petition separately filed by the Union and the 129 terminated employees of
Solidbank from the July 23, 2001 Decision of the NLRC’s Second Division. The CA’s Second Division granted the
petition in CA-G.R. SP No. 68054 and reinstated the March 16, 2001 Decision of Labor Arbiter Flores.

CA-G.R. SP Nos. 67730 and 70820 were consolidated before the Twelfth Division.

Court of Appeals’ Ruling

On March 10, 2003, the CA rendered its Decision35 the dispositive portion of which reads:

WHEREFORE, the twin petitions are hereby DENIED. The dismissal of private respondents are hereby declared to
be illegal. Consequently, petitioner is ordered to reinstate private respondents to their former position, consonant
with the Decision of this Court in CA-G.R. SP No. 68054.

SO ORDERED.36

Labor II – 1
First, on the issue of forum shopping, the CA found that while there were indeed two cases filed respecting the
same matter of illegality of the dismissal of certain employees of Solidbank, it appears that the individual
complainants have no hand in initiating the case before the Labor Arbiter for which the Union filed the complaint in
behalf of its members. Hence, the individual complainants cannot be said to have deliberately or consciously sought
two different fora for the same issues and causes of action. Petitioners, moreover, failed to call the attention of the
Labor Arbiter as to the fact of filing of similar complaints by four employees.

As to the nature of the mass action resorted to by the employees of Solidbank, the CA ruled that it was a legitimate
exercise of their right to free expression, and not a strike proscribed when the Secretary of Labor assumed
jurisdiction over the impassé between Solidbank and the Union in the collective bargaining negotiations. The CA
thus reasoned:

… while conceding that the aggregated acts of the private respondents may have resulted in a stoppage of work,
such was the necessary result of the exercise of a Constitutional right. It is beyond cavil that the mass action was
done, not to exert any undue pressure on the petitioner with regard to wages or other economic demands, but to
express dissatisfaction over the decision of the Labor Secretary subsequent to his assumption of jurisdiction. Surely,
this is one course of action that is not enjoined even when a labor dispute is placed under the assumption of the
said Labor Secretary. To allow an act of the Labor Secretary – one man in the Executive Department – to whittle
down a freedom guaranteed by the Bill of Rights would be to place upon that freedom a limitation never intended by
the several framers of our Constitution. In effect, it would make a right enshrined in the Fundamental Law that was
ratified by the Sovereign People, subordinate to a prerogative granted by the Labor Code, a statutory enactment
made by mere representatives of the People. This anomaly We cannot allow.

xxxx

Was private respondents’ act of massing in front of the DOLE Building calculated by them to cause work stoppage,
or were they merely airing their grievance over the ruling of the Labor Secretary in exercise of their civil liberties?
Who can divine the motives of their hearts? But when two different interpretations are possible, the courts must lean
towards that which gives meaning and vitality to the Bill of Rights. x x x37 (Emphasis supplied.)

On April 2, 2003, petitioners filed a motion for reconsideration but this was denied by the CA in its Resolution38 dated
August 7, 2003.

The Petitions

G.R. No. 159460

Petitioners argued that the CA erred in holding that the mass action of April 3, 2000 infront of the Office of
the Secretary of Labor was not a strike considering that it had all the elements of a strike and the
respondents judicially admitted that it was a strike. The CA deemed the mass action as an exercise of the
respondents’ freedom of expression but such constitutional right is not absolute and subject to certain well-defined
exceptions. Moreover, a mass action of this nature is considered a strike and not an exercise of one’s freedom of
expression, considering further that the Secretary’s Order dated January 18, 2000 is a valid exercise of police
power.

Petitioners assail the CA in not considering the damage and prejudice caused to the bank and its clients by
respondents’ illegal acts. Respondents’ mass actions crippled banking operations. Over-the-counter transactions
were greatly undermined. Checks for clearing were significantly delayed. On-line transactions were greatly
hampered, causing inestimable damage to the nationwide network of automated teller machines. Respondent
Union’s actions clearly belie its allegation that its mass action was merely intended to protest and express their
dissatisfaction with the Secretary’s Order dated March 24, 2000.

In view of the illegal strike conducted in violation of the Secretary’s assumption order, petitioners maintain that the
dismissal of respondents was not illegal, as consistently ruled by this Court in many cases. Even granting arguendo
that their termination was illegal, the CA erred in ordering the reinstatement of respondents and holding that
Solidbank, FMIC and Metrobank are solidarily liable to the respondents. Lastly, the CA erred in not finding that

Labor II – 1
respondents were guilty of forum shopping as respondents’ claim that they did not know the Union had filed a
complaint was unbelievable under the circumstances.39

G.R. No. 159461

Petitioners contend that the CA erred in ruling that the dismissal of respondents Gamier, Condevillamar, Arriola and
De Guzman was illegal, considering that this was not an issue raised in the petition for certiorari before the appellate
court. What was raised by petitioners was only the propriety of the award of separation pay by the NLRC which in
fact declared their dismissal to be valid and legal.

Petitioners maintain that respondents are not entitled to separation pay even if the dismissal was valid because they
committed serious misconduct and/or illegal act in defying the Secretary’s assumption order. Moreover, the CA also
erred in disregarding the Release, Waiver and Quitclaim executed by twenty-one (21) individual respondents who
entered into a compromise agreement with Solidbank.40

Issues

The fundamental issues to be resolved in this controversy are: (1) whether the protest rally and concerted work
abandonment/boycott staged by the respondents violated the Order dated January 18, 2000 of the Secretary of
Labor; (2) whether the respondents were validly terminated; and (3) whether the respondents are entitled to
separation pay or financial assistance.

Our Ruling

Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. A labor dispute includes any controversy or matter
concerning terms and 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 or not the
disputants stand in the proximate relation of employers and employees.41 The term "strike" shall comprise not only
concerted work stoppages, but also slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage
plant equipment and facilities and similar activities.42 Thus, 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.43

After a thorough review of the records, we hold that the CA patently erred in concluding that the concerted
mass actions staged by respondents cannot be considered a strike but a legitimate exercise of the
respondents’ right to express their dissatisfaction with the Secretary’s resolution of the economic issues in
the deadlocked CBA negotiations with petitioners. It must be stressed that the concerted action of the
respondents was not limited to the protest rally infront of the DOLE Office on April 3, 2000. Respondent
Union had also picketed the Head Office and Paseo de Roxas Branch. About 712 employees, including those in
the provincial branches, boycotted and absented themselves from work in a concerted fashion for three continuous
days that virtually paralyzed the employer’s banking operations. Considering that these mass actions stemmed
from a bargaining deadlock and an order of assumption of jurisdiction had already been issued by the
Secretary of Labor to avert an impending strike, there is no doubt that the concerted work
abandonment/boycott was the result of a labor dispute.

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,44 petitioners
union and members held similar protest rallies infront of the offices of BLR and DOLE Secretary and at the company
plants. We declared that said mass actions constituted illegal strikes:

Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not within the
ambit of strikes as defined in the Labor Code, since they were legitimate exercises of their right to peaceably
assemble and petition the government for redress of grievances. Mainly relying on the doctrine laid down in the
case of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc., it argues that the
protest was not directed at Toyota but towards the Government (DOLE and BLR). It explains that the protest is not a
strike as contemplated in the Labor Code. The Union points out that in Philippine Blooming Mills Employees

Labor II – 1
Organization, the mass action staged in Malacañang to petition the Chief Executive against the abusive behavior of
some police officers was a proper exercise of the employees’ right to speak out and to peaceably gather and ask
government for redress of their grievances.

The Union’s position fails to convince us.

While the facts in Philippine Blooming Mills Employees Organization are similar in some respects to that of the
present case, the Union fails to realize one major difference: there was no labor dispute in Philippine Blooming Mills
Employees Organization. In the present case, there was an on-going labor dispute arising from Toyota’s refusal to
recognize and negotiate with the Union, which was the subject of the notice of strike filed by the Union on January
16, 2001. Thus, the Union’s reliance on Philippine Blooming Mills Employees Organization is misplaced, as it cannot
be considered a precedent to the case at bar.

xxxx

Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken by the Union
officials and members on February 21 to 23, 2001 are not valid and proper exercises of their right to assemble and
ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. The Union’s
position is weakened by the lack of permit from the City of Manila to hold "rallies." Shrouded as demonstrations,
they were in reality temporary stoppages of work perpetrated through the concerted action of the employees who
deliberately failed to report for work on the convenient excuse that they will hold a rally at the BLR and DOLE offices
in Intramuros, Manila, on February 21 to 23, 2001. x x x (Emphasis supplied.)

Moreover, it is explicit from the directive of the Secretary in his January 18, 2000 Order that the Union and its
members shall refrain from committing "any and all acts that might exacerbate the situation,"45 which certainly
includes concerted actions. For all intents and purposes, therefore, the respondents staged a strike ultimately aimed
at realizing their economic demands. Whether such pressure was directed against the petitioners or the Secretary of
Labor, or both, is of no moment. All the elements of strike are evident in the Union-instigated mass actions.

The right to strike, while constitutionally recognized, is not without legal constrictions.46 Article 264 (a) of the Labor
Code, as amended, provides:

Art. 264. Prohibited activities. – (a) x x x

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Secretary or after
certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout.

x x x x (Emphasis supplied.)

The Court has consistently ruled that once the Secretary of Labor assumes jurisdiction over a labor
dispute, such jurisdiction should not be interfered with by the application of the coercive processes of a
strike or lockout.47 A strike that is undertaken despite the issuance by the Secretary of Labor of an
assumption order and/or certification is a prohibited activity and thus illegal.48

Article 264 (a) of the Labor Code, as amended, also considers it a prohibited activity to declare a strike
"during the pendency of cases involving the same grounds for the same strike." 49 There is no dispute that
when respondents conducted their mass actions on April 3 to 6, 2000, the proceedings before the Secretary
of Labor were still pending as both parties filed motions for reconsideration of the March 24, 2000 Order.
Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass
demonstration simultaneous with concerted work abandonment/boycott.

Notwithstanding the illegality of the strike, we cannot sanction petitioners’ act of indiscriminately terminating the
services of individual respondents who admitted joining the mass actions and who have refused to comply with the
offer of the management to report back to work on April 6, 2000. The liabilities of individual respondents must be
determined under Article 264 (a) of the Labor Code, as amended:
Labor II – 1
Art. 264. Prohibited activities.— x x x

xxxx

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to
reinstatement with full back wages. 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.

xxxx

The foregoing shows that the law makes a distinction between union officers and members. For knowingly
participating in an illegal strike or participating in the commission of illegal acts during a strike, the law provides that
a union officer may be terminated from employment. The law grants the employer the option of declaring a union
officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to
terminate the union officers from service.50

However, a worker merely participating in an illegal strike may not be terminated from employment. It is only when
he commits illegal acts during a strike that he may be declared to have lost employment status.51 We have held that
the responsibility of union officers, as main players in an illegal strike, is greater than that of the members and,
therefore, limiting the penalty of dismissal only for the former for participation in an illegal strike is in order.52 Hence,
with respect to respondents who are union officers, the validity of their termination by petitioners cannot be
questioned. Being fully aware that the proceedings before the Secretary of Labor were still pending as in fact they
filed a motion for reconsideration of the March 24, 2000 Order, they cannot invoke good faith as a defense.53

For the rest of the individual respondents who are union members, the rule is that an ordinary striking worker cannot
be terminated for mere participation in an illegal strike. There must be proof that he or she committed illegal acts
during a strike. In all cases, the striker must be identified. But proof beyond reasonable doubt is not required.
Substantial evidence available under the attendant circumstances, which may justify the imposition of the penalty of
dismissal, may suffice. Liability for prohibited acts is to be determined on an individual basis.54

Petitioners have not adduced evidence on such illegal acts committed by each of the individual respondents who
are union members. Instead, petitioners simply point to their admitted participation in the mass actions which they
knew to be illegal, being in violation of the Secretary’s assumption order. However, the acts which were held to be
prohibited activities are the following:

… where the strikers shouted slanderous and scurrilous words against the owners of the vessels; where the strikers
used unnecessary and obscene language or epithets to prevent other laborers to go to work, and circulated libelous
statements against the employer which show actual malice; where the protestors used abusive and threatening
language towards the patrons of a place of business or against co-employees, going beyond the mere attempt to
persuade customers to withdraw their patronage; where the strikers formed a human cordon and blocked all the
ways and approaches to the launches and vessels of the vicinity of the workplace and perpetrated acts of violence
and coercion to prevent work from being performed; and where the strikers shook their fists and threatened non-
striking employees with bodily harm if they persisted to proceed to the workplace. x x x55

The dismissal of herein respondent-union members are therefore unjustified in the absence of a clear showing that
they committed specific illegal acts during the mass actions and concerted work boycott. 1avvphi1

Are these dismissed employees entitled to backwages and separation pay?

The award of backwages is a legal consequence of a finding of illegal dismissal. Assuming that respondent-
union members have indeed reported back to work at the end of the concerted mass actions, but were soon
terminated by petitioners who found their explanation unsatisfactory, they are not entitled to backwages in
view of the illegality of the said strike. Thus, we held in G & S Transport Corporation v. Infante56--

Labor II – 1
It can now therefore be concluded that the acts of respondents do not merit their dismissal from employment
because it has not been substantially proven that they committed any illegal act while participating in the illegal
strike. x x x

xxxx

With respect to backwages, the principle of a "fair day’s wage for a fair day’s labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. While it was found that respondents expressed their intention to report
back to work, the latter exception cannot apply in this case. In Philippine Marine Officers’ Guild v. Compañia
Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court
stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the
case at bar. (Emphasis supplied.)

Under the circumstances, respondents’ reinstatement without backwages suffices for the appropriate relief.
But since reinstatement is no longer possible, given the lapse of considerable time from the occurrence of
the strike, not to mention the fact that Solidbank had long ceased its banking operations, the award of
separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order. 57 For the
twenty-one (21) individual respondents who executed quitclaims in favor of the petitioners, whatever amount they
have already received from the employer shall be deducted from their respective separation pay.

Petitioners contended that in view of the blatant violation of the Secretary’s assumption order by the striking
employees, the award of separation pay is unjust and unwarranted. That respondent-members themselves
knowingly participated in the illegal mass actions constitutes serious misconduct which is a just cause under Article
282 for terminating an employee.

We are not persuaded.

As we stated earlier, the Labor Code protects an ordinary, rank-and-file union member who participated in such a
strike from losing his job, provided that he did not commit an illegal act during the strike.58 Article 264 (e) of the Labor
Code, as amended, provides for such acts which are generally prohibited during concerted actions such as
picketing:

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares. (Emphasis
supplied.)

Petitioners have not adduced substantial proof that respondent-union members perpetrated any act of violence,
intimidation, coercion or obstruction of company premises and public thoroughfares. It did not submit in evidence
photographs, police reports, affidavits and other available evidence.

As to the issue of solidary liability, we hold that Metrobank cannot be held solidarily liable with Solidbank for the
claims of the latter’s dismissed employees. There is no showing that Metrobank is the successor-in-interest of
Solidbank. Based on petitioners’ documentary evidence, Solidbank was merged with FMIC, with Solidbank as the
surviving corporation, and was later renamed as FMIC. While indeed Solidbank’s banking operations had been
integrated with Metrobank, there is no showing that FMIC has ceased business operations. FMIC as successor-in-
interest of Solidbank remains solely liable for the sums herein adjudged against Solidbank.

Neither should individual petitioners Vistan and Mendoza be held solidarily liable for the claims adjudged against
petitioner Solidbank. Article 212 (e)59 does not state that corporate officers are personally liable for the unpaid
salaries or separation pay of employees of the corporation. The liability of corporate officers for corporate debts
remains governed by Section 3160 of the Corporation Code.

It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons
composing it as well as from that of any other legal entity to which it may be related. Mere ownership by a single

Labor II – 1
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.61 In labor cases, in particular, the Court has held
corporate directors and officers solidarily liable with the corporation for the termination of employment of corporate
employees done with malice or in bad faith.62 Bad faith is never presumed.63 Bad faith does not simply connote bad
judgment or negligence -- it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It
means a breach of a known duty through some motive or interest or ill-will that partakes of the nature of fraud.64

Respondents have not satisfactorily proven that Vistan and Mendoza acted with malice, ill-will or bad faith. Hence,
said individual petitioners are not liable for the separation pay of herein respondents-union members.

WHEREFORE, the petitions are PARTLY GRANTED. The Decision dated March 10, 2003 of the Court of Appeals
in CA-G.R. SP Nos. 67730 and 70820 is hereby SET ASIDE. Petitioner Solidbank Corporation (now FMIC) is
hereby ORDERED to pay each of the above-named individual respondents, except union officers who are hereby
declared validly dismissed, separation pay equivalent to one (1) month salary for every year of service. Whatever
sums already received from petitioners under any release, waiver or quitclaim shall be deducted from the total
separation pay due to each of them.

The NLRC is hereby directed to determine who among the individual respondents are union members entitled to the
separation pay herein awarded, and those union officers who were validly dismissed and hence excluded from the
said award.

Labor II – 1
21.) G.R. No. 160302               September 27, 2010

JAILE OLISA, ISIDRO SANCHEZ, ANTONIO SARCIA, OSCAR CONTRERAS, ROMEO ZAMORA, MARIANO
GAGAL, ROBERTO MARTIZANO, DOMINGO SANTILLICES, ARIEL ESCARIO, HEIRS OF FELIX LUCIANO,
AND MALAYANG SAMAHAN NG MGA MANGGAGAWA SA BALANCED FOODS, Petitioners,
vs.
DANILO ESCARIO, PANFILO AGAO, ARSENIO AMADOR, ELMER COLICO, ROMANO DELUMEN,
DOMINADOR AGUILO, OLYMPIO GOLOSINO, RICARDO LABAN, LORETO MORATA, ROBERTO TIGUE,
GILBERT VIBAR, THOMAS MANCILLA, JR., NESTOR LASTIMOSO, JIMMY MIRABALLES, NATIONAL LABOR
RELATIONS COMMISSION (THIRD DIVISION), PINAKAMASARAP CORPORATION, DR. SY LIAN TIN, AND
DOMINGO TAN, Respondents.

DECISION

BERSAMIN, J.:

Conformably with the long honored principle of a fair day’s wage for a fair day’s labor, employees dismissed for
joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue
of their being merely members of the striking union who did not commit any illegal act during the strike.

We apply this principle in resolving this appeal via a petition for review on certiorari of the decision dated August 18,
2003 of the Court of Appeals (CA),1 affirming the decision dated November 29, 2001 rendered by the National Labor
Relations Commission (NLRC) directing their reinstatement of the petitioners to their former positions without
backwages, or, in lieu of reinstatement, the payment of separation pay equivalent to one-half month per year of
service.2

Antecedents

The petitioners were among the regular employees of respondent Pinakamasarap Corporation (PINA), a corporation
engaged in manufacturing and selling food seasoning. They were members of petitioner Malayang Samahan ng
mga Manggagawa sa Balanced Foods (Union).

At 8:30 in the morning of March 13, 1993, all the officers and some 200 members of the Union walked out of PINA’s
premises and proceeded to the barangay office to show support for Juanito Cañete, an officer of the Union charged
with oral defamation by Aurora Manor, PINA’s personnel manager, and Yolanda Fabella, Manor’s secretary.3 It
appears that the proceedings in the barangay resulted in a settlement, and the officers and members of the Union
all returned to work thereafter.

As a result of the walkout, PINA preventively suspended all officers of the Union because of the March 13, 1993
incident. PINA terminated the officers of the Union after a month.

On April 14, 1993, PINA filed a complaint for unfair labor practice (ULP) and damages. The complaint was assigned
to then Labor Arbiter Raul Aquino, who ruled in his decision dated July 13, 1994 that the March 13, 1993 incident
was an illegal walkout constituting ULP; and that all the Union’s officers, except Cañete, had thereby lost their
employment.4

On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty of union busting through the
constructive dismissal of its officers.5 On May 9, 1993, the Union held a strike vote, at which a majority of 190
members of the Union voted to strike.6 The strike was held in the afternoon of June 15, 1993.7

PINA retaliated by charging the petitioners with ULP and abandonment of work, stating that they had violated
provisions on strike of the collective bargaining agreement (CBA), such as: (a) sabotage by the insertion of foreign
matter in the bottling of company products; (b) decreased production output by slowdown; (c) serious misconduct,
and willful disobedience and insubordination to the orders of the Management and its representatives; (d) disruption
of the work place by invading the premises and perpetrating commotion and disorder, and by causing fear and
Labor II – 1
apprehension; (e) abandonment of work since June 28, 1993 despite notices to return to work individually sent to
them; and (f) picketing within the company premises on June 15, 1993 that effectively barred with the use of threat
and intimidation the ingress and egress of PINA’s officials, employees, suppliers, and customers. 8

On September 30, 1994, the Third Division of the National Labor Relations Commission (NLRC) issued a temporary
restraining order (TRO), enjoining the Union’s officers and members to cease and desist from barricading and
obstructing the entrance to and exit from PINA’s premises, to refrain from committing any and all forms of violence,
and to remove all forms of obstructions such as streamers, placards, or human barricade.9

On November 29, 1994, the NLRC granted the writ of preliminary injunction.10

On August 18, 1998, Labor Arbiter Jose G. de Vera (LA) rendered a decision, to wit:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the subject
strike to be illegal.

The complainant’s prayer for decertification of the respondent union being outside of the jurisdiction of this
Arbitration Branch may not be given due course.

And finally, the claims for moral and exemplary damages for want of factual basis are dismissed.

SO ORDERED.11

On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LA’s ruling that there was
abandonment, viz:

However, we disagree with the conclusion that respondents’ union members should be considered to have
abandoned their employment.

Under Article 264 of the Labor Code, as amended, the union officers who knowingly participate in the illegal strike
may be declared to have lost their employment status. However, mere participation of a union member in the illegal
strike does not mean loss of employment status unless he participates in the commission of illegal acts during the
strike. While it is true that complainant thru individual memorandum directed the respondents to return to work (pp.
1031-1112, Records) there is no showing that respondents deliberately refused to return to work. A worker who
joins a strike does so precisely to assert or improve the terms and conditions of his work. If his purpose is to
abandon his work, he would not go to the trouble of joining a strike (BLTB v. NLRC, 212 SCRA 794).

WHEREFORE, premises considered, the Decision appealed from is hereby MODIFIED in that complainant
company is directed to reinstate respondents named in the complaint to their former positions but without
backwages. In the event that reinstatement is not feasible complainant company is directed to pay respondents
separation pay at one (1/2) half month per year of service.

SO ORDERED.12

Following the denial of their motion for reconsideration, the petitioners assailed the NLRC’s decision through a
petition for certiorari in the Court of Appeals (CA), claiming that the NLRC gravely abused its discretion in not
awarding backwages pursuant to Article 279 of the Labor Code, and in not declaring their strike as a good faith
strike.

On August 18, 2003, the CA affirmed the NLRC.13 In denying the petitioners’ claim for full backwages, the CA
applied the third paragraph of Article 264(a) instead of Article 279 of the Labor Code, explaining that the only
instance under Article 264 when a dismissed employee would be reinstated with full backwages was when he was
dismissed by reason of an illegal lockout; that Article 264 was silent on the award of backwages to employees
participating in a lawful strike; and that a reinstatement with full backwages would be granted only when the
dismissal of the petitioners was not done in accordance with Article 282 (dismissals with just causes) and Article 283
(dismissals with authorized causes) of the Labor Code.
Labor II – 1
The CA disposed thus:14

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit and the assailed 29 November
2001 Decision of respondent Commission in NLRC NRC CA No. 009701-95 is hereby AFFIRMED in toto. No costs.

SO ORDERED.15

On October 13, 2003, the CA denied the petitioners’ motion for reconsideration.16

Hence, this appeal via petition for review on certiorari.

Issue

The petitioners posit that they are entitled to full backwages from the date of dismissal until the date of
actual reinstatement due to their not being found to have abandoned their jobs. They insist that the CA
decided the question in a manner contrary to law and jurisprudence.

Ruling

We sustain the CA, but modify the decision on the amount of the backwages in order to accord with equity and
jurisprudence.

Third Paragraph of Article 264 (a), >Labor Code, is Applicable

The petitioners contend that they are entitled to full backwages by virtue of their reinstatement, and submit
that applicable to their situation is Article 279, not the third paragraph of Article 264(a), both of the Labor Code.

We do not agree with the petitioners.

Article 279 provides:

Article 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the
employer dismisses the employee without observing due process, either substantive or procedural. Substantive due
process requires the attendance of any of the just or authorized causes for terminating an employee as provided
under Article 278 (termination by employer), or Article 283 (closure of establishment and reduction of personnel), or
Article 284 (disease as ground for termination), all of the Labor Code; while procedural due process demands
compliance with the twin-notice requirement.17

In contrast, the third paragraph of Article 264(a) states:

Art. 264. Prohibited activities. – (a) xxx

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to
reinstatement with full backwages. 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

Labor II – 1
sufficient ground for termination of his employment, even if a replacement had been hired by the employer during
such lawful strike.

xxx

Contemplating two causes for the dismissal of an employee, that is: (a) unlawful lockout; and (b)
participation in an illegal strike, the third paragraph of Article 264(a) authorizes the award of full backwages
only when the termination of employment is a consequence of an unlawful lockout. On the consequences of
an illegal strike, the provision distinguishes between a union officer and a union member participating in an illegal
strike. A union officer who knowingly participates in an illegal strike is deemed to have lost his employment status,
but a union member who is merely instigated or induced to participate in the illegal strike is more benignly treated.
Part of the explanation for the benign consideration for the union member is the policy of reinstating rank-and-file
workers who are misled into supporting illegal strikes, absent any finding that such workers committed illegal acts
during the period of the illegal strikes.18

The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their
reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-
file workers whom the Union’s officers had misled into joining the illegal strike. They were not unjustly dismissed
from work. Based on the text and intent of the two aforequoted provisions of the Labor Code, therefore, it is plain
that Article 264(a) is the applicable one.

II

Petitioners not entitled to backwages despite their reinstatement:

A fair day’s wage for a fair day’s labor

The petitioners argue that the finding of no abandonment equated to a finding of illegal dismissal in their
favor. Hence, they were entitled to full backwages.

The petitioners’ argument cannot be sustained.

The petitioners’ participation in the illegal strike was precisely what prompted PINA to file a complaint to declare
them, as striking employees, to have lost their employment status. However, the NLRC ultimately ordered their
reinstatement after finding that they had not abandoned their work by joining the illegal strike. They were thus
entitled only to reinstatement, regardless of whether or not the strike was the consequence of the employer’s
ULP,19 considering that a strike was not a renunciation of the employment relation.20

As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the
whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his
employment, he is entitled to all the rights and privileges that accrue to him from the employment.21 The grant of
backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature
of a command to the employer to make a public reparation for his illegal dismissal of the employee in violation of the
Labor Code.22

That backwages are not granted to employees participating in an illegal strike simply accords with the
reality that they do not render work for the employer during the period of the illegal strike. 23 According to
G&S Transport Corporation v. Infante:24

With respect to backwages, the principle of a "fair day’s wage for a fair day’s labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. xxx In Philippine Marine Officers’ Guild v. Compañia Maritima, as
affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed that
for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar.
(emphasis supplied)

Labor II – 1
The petitioners herein do not deny their participation in the June 15, 1993 strike. As such, they did not suffer any
loss of earnings during their absence from work. Their reinstatement sans backwages is in order, to conform to the
policy of a fair day’s wage for a fair day’s labor.

Under the principle of a fair day’s wage for a fair day’s labor, the petitioners were not entitled to the wages
during the period of the strike (even if the strike might be legal), because they performed no work during the
strike. Verily, it was neither fair nor just that the dismissed employees should litigate against their employer on the
latter’s time.25 Thus, the Court deleted the award of backwages and held that the striking workers were entitled
only to reinstatement in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond
Hotel Employees Union,26 considering that the striking employees did not render work for the employer
during the strike.

III

Appropriate Amount for Separation Pay

Is One Month per Year of Service

The petitioners were ordered reinstated because they were union members merely instigated or induced to
participate in the illegal strike. By joining the strike, they did not renounce their employment relation with PINA but
remained as its employees.

The absence from an order of reinstatement of an alternative relief should the employer or a supervening event not
within the control of the employee prevent reinstatement negates the very purpose of the order. The judgment
favorable to the employee is thereby reduced to a mere paper victory, for it is all too easy for the employer to simply
refuse to have the employee back. To safeguard the spirit of social justice that the Court has advocated in favor of
the working man, therefore, the right to reinstatement is to be considered renounced or waived only when the
employee unjustifiably or unreasonably refuses to return to work upon being so ordered or after the employer has
offered to reinstate him.27

However, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when
reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of
the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; (d)
reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the
workers’ continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained
relations between the employer and employee.28

Here, PINA manifested that the reinstatement of the petitioners would not be feasible because: (a) it would "inflict
disruption and oppression upon the employer"; (b) "petitioners [had] stayed away" for more than 15 years; (c) its
machines had depreciated and had been replaced with newer, better ones; and (d) it now sold goods through
independent distributors, thereby abolishing the positions related to sales and distribution.29

Under the circumstances, the grant of separation pay in lieu of reinstatement of the petitioners was proper.  It is not
1awph!1

disputable that the grant of separation pay or some other financial assistance to an employee is based on equity,
which has been defined as justice outside law, or as being ethical rather than jural and as belonging to the sphere of
morals than of law.30 This Court has granted separation pay as a measure of social justice even when an employee
has been validly dismissed, as long as the dismissal has not been due to serious misconduct or reflective of
personal integrity or morality.31

What is the appropriate amount for separation pay?

In G & S Transport,32 the Court awarded separation pay equivalent to one month salary per year of service
considering that 17 years had passed from the time when the striking employees were refused reinstatement. In
Association of Independent Unions in the Philippines v. NLRC,33 the Court allowed separation pay equivalent to one
month salary per year of service considering that eight years had elapsed since the employees had staged their
illegal strike.

Labor II – 1
Here, we note that this case has dragged for almost 17 years from the time of the illegal strike. Bearing in mind
PINA’s manifestation that the positions that the petitioners used to hold had ceased to exist for various reasons, we
hold that separation pay equivalent to one month per year of service in lieu of reinstatement fully aligns with the
aforecited rulings of the Court on the matter.

WHEREFORE, we affirm the decision dated August 18, 2003 of the Court of Appeals, subject to the modification to
the effect that in lieu of reinstatement the petitioners are granted backwages equivalent of one month for every year
of service.

Labor II – 1
 22.) G.R. No.  167401 : July 5, 2010

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented

by SABINO F. GRAGANZA, Union President, and REYVILOSA
TRINIDAD, Petitioners, v. SECRETARY OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT and TRIUMPH INTERNATIONAL (PHILS.), INC., Respondents.

G.R. No. 167407 : July 5, 2010

TRIUMPH INTERNATIONAL (PHILS.), INC., Petitioner, v. BAGONG PAGKAKAISA NG

MANGGAGAWA NG TRIUMPH INTERNATIONAL, ELOISA FIGURA, JERRY JAICTEN,
ROWELL FRIAS, MARGARITA PATINGO and ROSALINDA OLANGAR, Respondents.

DECISION

BRION, J.:

Before the Court are two separate petitions1  which were consolidated pursuant to our Resolution
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dated June 8, 2005 .2  The first,3  filed by the Bagong Pagkakaisa ng Manggagawa ng Triumph
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International (union ), seeks to set aside the decision4  of the Court of Appeals (CA) in CA-G.R.
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SP No. 60516, and the subsequent resolution5  of March 10, 2005, on the parties' motion for
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reconsideration. The second,6  filed by Triumph International (Phils.), Inc. (company ), prays for
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the annulment of the same decision and resolution with respect to the illegal dismissal issue.

The Antecedents

The relevant facts, clearly laid out in the challenged CA decision, are summarized below.

The union and the company had a collective bargaining agreement (CBA) that expired on July
18, 1999. The union seasonably submitted proposals to the company for its renegotiation.
Among these proposals were economic demands for a wage increase of P180.00 a day, spread
over three (3) years, as follows: P70.00/day from July 19, 1999 ; P60.00/day from July 19,
2000, and P50.00/day from July 19, 2001. The company countered with a wage increase offer,
initially at P42.00 for three years, then increased it to P45.00, also for three years.

The negotiations reached a deadlock, leading to a Notice of Strike the union filed on October 15,
1999 .7  The National Conciliation and Mediation Board (NCMB ) exerted efforts but failed to
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resolve the deadlock.

On November 15, 1999, the company filed a Notice of Lock-out8  for unfair labor practice due to
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the union's alleged work slowdown. The unionwent on strike three days later, or on November
18, 1999.

On January 27, 2000, Secretary Bienvenido E. Laguesma (Labor Secretary ) of the Department
of Labor and Employment (DOLE ) assumed jurisdiction over the labor dispute, pursuant to
Article 263(g) of the Labor Code.9  The Labor Secretary directed all striking workers to return to
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work within twenty-four (24) hours from receipt of the assumption order, while the company
was directed to accept them back to work under the same terms and conditions existing before
the strike. The Labor Secretary also required the parties to submit their respective position
papers.

Labor II – 1
On February 2 and 3, 2000, several employees attempted to report for work, but the striking
employees prevented them from entering the company premises.

In a petition dated February 8, 2000,10  the company asked the Labor Secretary to issue an
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order directing the union to allow free ingress to and egress from the company premises; to
dismantle all structures obstructing free ingress and egress; and, to deputize the Philippine
National Police to assist the DOLE in the peaceful implementation of the Labor Secretary's
January 27, 2000 order.

The Labor Secretary reiterated his directives in another order dated February 22, 2000 ,11  and cralaw

deputized Senior Superintendent Manuel A. Cabigon, Director of the Southern Police District, " to
assist in the peaceful and orderly implementation of this Order ."

At a conciliation meeting held on February 29, 2000, the company agreed to extend the
implementation of the return-to-work order until March 6, 2000 .12  The union, through a letter cralaw

dated March 2, 2000 ,13  advised the NCMB Administrator of the union executive board's decision
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to return to work the following day. In a letter also dated March 2, 2000 ,14  the company cralaw

advised the NCMB Administrator that it was willing to accept all returning employees, without
prejudice to whatever legal action it may take against those who committed illegal acts. The
company also stated that all the union officers and members and the union board members
would be placed under preventive suspension, pending investigation of their alleged illegal acts.

The striking employees returned to work on March 3 and 4, 2000 but twenty (20) union officers
and a shop steward were not allowed entry into the company premises. The excluded union
leaders were each served identical letters15  directing them to explain in writing why their
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employment should not be terminated or why no disciplinary action should be imposed on them
for defying and violating the Labor Secretary's assumption order of January 27, 2000 and the
second return-to-work order of February 22, 2000; for blocking and resisting the entry of
returning employees on February 2, 3, and 8, 2000; for acts of violence committed on February
24 and 25, 2000; and for defying the company's return-to-work order of all employees on
February 8, 2000.16cräläwvirtualibräry

On March 6, 2000, the twenty-one (21) union officers, by motion, asked the Labor Secretary to
issue a reinstatement order and to cite the company for contempt. On March 9, 2000, the Labor
Secretary directed the company to accept the union officers and the shop steward back to work,
without prejudice to the continuation of the investigation.17 cräläwvirtualibräry

At the conciliation meeting of March 15, 2000, the company agreed to reinstate the union
officers in the payroll effective March 13, 2000 18  and withdrew its notice of lockout.19cralaw cräläwvirtualibräry

On March 21, 2000, the union officers again received identically worded letters requiring them to
explain in writing within twenty-four (24) hours why no disciplinary action, including dismissal,
should be taken against them for leading, instigating, and participating in a deliberate work
slowdown during the CBA negotiations.20 cräläwvirtualibräry

The union officers explained, as required, through their respective affidavits,21  and a hearing cralaw

followed on May 5, 2000. Thereafter, the union officers were each served a notice of termination
of employment effective at the close of office hours on May 11, 2000 .22 cräläwvirtualibräry

On June 8, 2000, the union and the officers filed a petition to cite the company and its
responsible officers for contempt, and moved that a reinstatement order be issued.23  They cralaw

claimed that: (1) the company officials violated the Labor Secretary's return-to-work order when
Labor II – 1
these officials placed them under preventive suspension and refused them entry into the
company premises; (2) the company also violated the March 9, 2000 order of the Labor
Secretary when they were reinstated only in the payroll; and (3) the company committed unfair
labor practice and dismissed them without basis.

The LABOR Secretary's Decision

The Labor Secretary resolved the bargaining deadlock24  and awarded a wage increase of P48.00
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distributed over three years, as follows:25

Effective July 19, 1999 - P15.00/day

Effective July 19, 2000 - P16.00/day

Effective July 19, 2001 - P17.00/day

The union's other economic demands and non-economic proposals were all denied.

The union moved for the reconsideration26  of the Labor Secretary's decision, while the company
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moved for its own partial reconsideration.27  The Labor Secretary denied both motions, declaring
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that the petition to cite the company and its responsible officers for contempt had already been
rendered moot and academic.28  He also ruled that the legality of the union officers' dismissal
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properly falls within the original and exclusive jurisdiction of the labor arbiter under Article 217
of the Labor Code.

The union elevated the case to the CA, through a petition for certiorari under Rule 65 of the
Rules of Court,29  on the following grounds:
cralaw chan robles virtual law library

1. The Labor Secretary committed grave abuse of discretion amounting to lack or excess of
jurisdiction when he denied the proposals of the 1,130 union members to improve the existing
CBA.

2. The Labor Secretary committed grave abuse of discretion when he declared that the issue of
reinstatement of the officers of the union and the petition to cite the company and its
responsible officers for contempt had become academic.

The union insisted on its demanded P180.00 daily wage increase distributed over three years
(1999 to 2001), arguing that the demand is just, fair and reasonable based on the company's
capacity to pay and the company's bargaining history. It noted that the company gave a P55.00
increase for the years 1993-1995, and P64.00 for the years 1996 to 1998. It also objected the
rejection of its other economic demands and non-economic proposals.

The union also contended that the company and its responsible officers should have been held in
contempt for violating the Labor Secretary's return-to-work order. It argued that the officers
should have been reinstated in the absence of substantial evidence supporting the charges
against them.

The company responded by praying for the dismissal of the petition for lack of abuse of
discretion on the part of the Labor Secretary. It posited that the P48.00 wage increase award is
more than reasonable, and that the Labor Secretary properly stayed his hand on the issue of
illegal dismissal as the matter was beyond his jurisdiction. The company likewise argued that
any question on the award had been mooted by the workers' acceptance of the wage increase.
Labor II – 1
While the petition was pending, individual settlements were reached between certain individual
petitioners (Cenon N. Dionisio, Catalina N. Velasquez, Nila P. Tresvalles, Vivian A. Arcos, Delia N.
Soliven, Leticia S. Santos, Emerita D. Maniebo, Conchita R. Encinas, Elpidia C. Cancino,
Consolacion S. Umalia, Nenette N. Gonzales, Creselita D. Rivera, and Rolando O. Madera) and
the company. These petitioners executed their respective Release, Waiver and Quitclaim after
receiving their separation pay and other benefits from the company.30 cräläwvirtualibräry

In light of these developments and the workers' acceptance of the wage award (except for the
union officers), the company moved for the dismissal of the petition.31  The union and the cralaw

remaining union officers opposed the motion, contending that the workers' acceptance of the
awarded wage increase cannot be considered a waiver of their demand; the receipt of
the P48.00 award was merely an advance on their demand. The Release, Waiver and Quitclaim
executed by the 13 officers, on the other hand, cannot bind the officers who opted to maintain
the petition.

On December 17, 2001, two more officers - Juliana D. Galo and Remedios C. Barque - also
executed their respective Release, Waiver and Quitclaim.32

The CA Decision

The CA found the petition partly meritorious. It affirmed the Labor Secretary's wage increase
award, but modified his ruling on the dismissal of the union officers.33 cräläwvirtualibräry

On the wage issue and related matters, the CA found the Labor Secretary's award legally in
order. It noted the following factors supportive of the award: chan robles virtual law library

1. The average daily salary of an employee of P310.00 is more than the statutory minimum
wage as admitted by the union itself.

2. The company grants to its employees forty-two (42) other monetary and welfare benefits.

3. The increase in the wages of the employees carries with it a corresponding increase in their
salary-based benefits.

4. The wage increase granted to workers employed in the industry is less than the increase
proposed by the company.

5. The Asian financial crisis.

The CA also noted that, in the meantime, the parties had executed a new CBA for the years
2002 to 2005 where they freely agreed on a total P45.00/day wage increase distributed over
three years.

On the other hand, the CA faulted the Labor Secretary for not ruling on the dismissal of the
union officers. It took exception to the Labor Secretary's view that the dismissal question is
within the exclusive jurisdiction of the labor arbiter pursuant to Article 217 of the Labor Code. It
invoked the ruling of this Court in Interphil Laboratories Employees Union-FFW v. Interphil
Laboratories, Inc., 34  which, in turn, cited International Pharmaceuticals, Inc. v. Secretary of
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Labor, 35  where we held that the Labor Secretary has jurisdiction over all questions and
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controversies arising from an assumed dispute, including cases over which the labor arbiter has
exclusive jurisdiction.

Labor II – 1
The CA pointed out that while the labor dispute before the Labor Secretary initially involved a
bargaining deadlock, a related strike ensued and charges were brought against the union officers
(for defiance of the return-to-work order of the Labor Secretary, and leading, instigating, and
participating in a deliberate work slowdown during the CBA negotiations) resulting in their
dismissal from employment; thus, the dismissal is intertwined with the strike that was the
subject of the Labor Secretary's assumption of jurisdiction.

The CA, however, avoided a remand of the illegal dismissal aspect of the case to the Labor
Secretary on the ground that it would compel the remaining six officers, lowly workers who had
been out of work for four (4) years, to go through the " calvary " of a protracted litigation. In the
CA's view, it was in keeping with justice and equity for it to proceed to resolve the dismissal
issue itself.

The six remaining officers of the union - Reyvilosa Trinidad, Eloisa Figura, Jerry Jaicten, Rowell
Frias, Margarita Patingo, and Rosalinda Olangar (shop steward) - all stood charged with defying
(1) the Labor Secretary's return-to-work order of January 27, 2000 ,36  and (2) the company'scralaw

general notice for the return of all employees on February 8, 2000 .37  Later, they were also
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charged with leading, instigating, and participating in a deliberate slowdown during the CBA
negotiations.

The charges were supported by the affidavits of Ernesto P. Dayag, Salvio Bayon, Victoria
Sanchez, Lyndon Dinglasan, Teresita Nacion, Herman Vinoya, and Leonardo Gomez.38  The CA cralaw

noted that in all these affidavits, "no mention was ever made of [anyone] of the six (6)
remaining individual petitioners, save for Reyvilosa Trinidad. Also, none of the said affidavits
even hinted at the culpabilities of petitioners Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita
Patingo, and Rosalinda Olangar for the alleged illegal acts imputed to them."39 cräläwvirtualibräry

For failure of the company to prove by substantial evidence the charges against the remaining
officers, the CA concluded that their employment was terminated without valid and just cause,
making their dismissal illegal.

With respect to Trinidad, the CA found that her presence in the picket line and participation in an
illegal act - obstructing the ingress to and egress from the company's premises - were duly
established by the affidavit of Bayon.40  For this reason, the CA found Trinidad 's dismissal valid.
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The appellate court thus affirmed the May 31, 2000 41  order of the Labor Secretary and modified
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the resolution dated July 14, 2000 .42 cräläwvirtualibräry

The CA denied the motions for reconsideration that the union and its officers, and the company
filed.43  Hence, the present petitions.
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The Petitions

G.R. No. 167401

The petition is anchored on the following grounds -

1. The CA erred in sustaining the Labor Secretary's wage increase award of P48.00/day spread
over three years.

2. The CA erred in finding the dismissal of Trinidad valid.

Labor II – 1
The union presents the following arguments -

On the CBA Award

The union contends that the CBA wage increases from 1994 to 1998 ranged from P16.00/day
to P27.00/day for every year of the CBA period; the arguments behind the company's decreased
wage offer were the same arguments it raised in previous CBA negotiations; the alleged financial
crisis in the region on which the CBA award was based actually did not affect the company
because it sourced its raw materials from its mother company, thereby avoiding losses; the
company's leading status in the industry in terms of wages should not be used in the
determination of the award; rather, it should be based on the company's financial condition and
its number one rank among 7,000 corporations in the country manufacturing ladies', girls', and
babies' garments, and number 46 in revenues with gross revenues of P1.08B, assets of P525.5M
and stockholders' equity of P232.1M; in granting only a wage increase out of 44 items in its
proposal, the award disregarded the factors on which its demands were based such as the peso
devaluation and the daily expenditure of P1,400.00/day for a family of six (6) as found by the
National Economic and Development Authority.

On the Dismissal of Reyvilosa Trinidad

The union seeks a reversal of the dismissal of Trinidad. It argues that she was dismissed for
alleged illegal acts based solely on the self-serving affidavits executed by officers of the
company; the strike had not been declared illegal for the company had not initiated an action to
have it declared illegal; Trinidad was discriminated against because of the four union officers
mentioned in the affidavits, three were granted one month separation pay plus other benefits to
settle the dispute in regard to the three; also the same arrangement was entered into with the
other officers, which resulted in the signing of the waiver, quitclaim and release; the only
statement in the affidavits against Trinidad was her alleged megaphone message to the striking
employees not to return to work.

The union thus asks this Court to modify the assailed CA ruling through an order improving the
CBA wage award and the grant of the non-wage proposals. It also asks that the dismissal of
Trinidad be declared illegal, and that the company be ordered to pay the union moral and
exemplary damages, litigation expenses, and attorney's fees.

G.R. No. 167407

For its part, the company seeks to annul the CA rulings on the dismissal issue, on the following
grounds -

1. The CA erred in ruling that the Labor Secretary abused his discretion in not
resolving the issue of the validity of the dismissal of the officers of the union.

2. The CA erred in resolving the factual issue of dismissal instead of remanding the case for
further proceedings.

3. In resolving the issue, the company was deprived of its right to present evidence and,
therefore, to due process of law.

The company submits that the Labor Secretary has no authority to decide the legality
or illegality of strikes or lockouts, jurisdiction over such issue having been vested on
the labor arbiters pursuant to Article 217 of the Labor Code; under Article 263 of the
Labor II – 1
Code, the Labor Secretary's authority over a labor dispute encompasses only the
issues, not the legality or illegality of any strike that may have occurred in the
meantime.44  It points out that before the Labor Secretary can take cognizance of an
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incidental issue such as a dismissal question, it must first be properly submitted to

him, as in the case of International Pharmaceuticals, Inc. v. Secretary of Labor 45  where the
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Labor Secretary was adjudged to have the power to assume jurisdiction over a labor dispute and
its incidental issues such as unfair labor practices subject of cases already ongoing before the
National Labor Relations Commission (NLRC ).

The company takes exception to the CA ruling that it submitted the dismissal issue to the Labor
Secretary claiming that it can be seen from its opposition to the union's petition to cite the
company for contempt;46  that it consistently maintained that the Labor Secretary has no
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jurisdiction over the dismissal issue; that the affidavits it submitted to the Labor Secretary were
only intended to establish the union's violation of the return-to-work orders and, to support its
petition, on February 8, 2000,47  for the issuance of a return-to-work order; and, that the CA
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overstepped its jurisdiction when it ruled on a factual issue, the sole office of certiorari being the
corrections of errors of jurisdiction, including the commission of grave abuse of discretion.

The company likewise disputes the CA's declaration that it took into consideration all the
evidence on the dismissal issue, claiming that the evidence on record is deficient, for it did not
have the opportunity to adduce evidence to prove the involvement of the union officers in the
individual acts for which they were dismissed; had it been given the opportunity to present
evidence, it could have done so. To prove its point, it included in its motion for partial
reconsideration48  a copy of the information,49  charging union officers Nenette Gonzales and
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Margarita Patingo of malicious mischief for stoning a company vehicle on February 25, 2000,
while the strike was ongoing.

Even assuming that it could no longer submit evidence on the dismissal of the union officers, the
company posits that sufficient grounds exist to uphold the dismissals. It maintains that the
officers are liable to lose their employment status for knowingly staging a strike after the
assumption of jurisdiction by the Labor Secretary and in defying the return-to-work mandated
by the assumption, which are considered prohibited activities under Article 264(a) of the Labor
Code, not to mention that without first having filed a notice, when the union officers and
members engaged in and instigated a work slowdown, a form of strike, without complying with
the procedural requirements for staging a strike, the union officers had engaged in an illegal
strike.

The parties practically reiterated these positions and the positions taken below in their
respective comments to each other's petition.

The Court's Ruling

The CBA Award

We affirm the CA's disposition, upholding the Labor Secretary's award in resolving the bargaining
deadlock between the union and the company for their 1999-2001 CBA.

We find no compelling justification to disturb the award. We are convinced, as the appellate
court was, of the reasonableness of the award. It was based on the prevailing economic
indicators in the workplace, in the industry, and in the local and regional economy. As well, it
took into account the comparative standing of the company in terms of employees' wages and
other economic benefits. We find the following factors as sufficient justification for the award: chan robles virtual law library

Labor II – 1
1. The regional financial crisis and the downturn in the economy at the time, impacting on the
performance of the company as indicated in its negative financial picture in 1999.

2. The company's favorable comparison with industry standards in terms of employee benefits,
especially wages. Its average daily basic wage of P310.00 is 40% higher than the statutory
minimum wage of P223.50, and superior to the industry's average of P258.00. For the years
prior to the 1999 negotiations, its aggregate daily wage increase of P64.00 surpassed the
statutory minimum increase of P33.00.

3. The forty-two (42) non-wage benefit programs of the company which undeniably extend the
reach of the employees' cash wage in enhancing the well-being of the employees and their
families.

The Labor Secretary's Order of May 31, 2000 fully explained these considerations as follows:50

We fully agree with the Union that relations between management and labor ought to be
governed by the higher precepts of social justice as enshrined in the Constitution and in the
laws. We further agree with it that the worker's over-all well-being is as much affected by his
wages as by other macro-economic factors as the CPI, cost of living, the varied needs of the
family. Yet, the other macro-economic factors cited by the company such as the after-effects of
the regional financial crisis, the existing unemployment rate, and the need to correlate the rate
of wage increase with the CPI are equally important. Of course[,] other macro-economic factors
such as the contraction of sales and production as well as the growing lack of direct investors,
are also important considerations. It is noteworthy that both the Union and Management
recognize that the entire gamut of macro-economic factors necessarily impact on the micro-
economic conditions of an individual company even in terms of wage increases.

The Union also makes mention of the need to factor in the industry where the employer belongs
x x x. This is affirmed by the Company when it provides a comparison with the other key players
in the industry. It has been properly shown that its prevailing levels of wages and other benefits
are, generally, superior to its counterparts in the local garments industry. x x x

But even as we agree with the Union that the Company's negative financial picture for 1999
should not be an overriding consideration in coming up with an adjudicated wage increase, We
cannot make the historical wage increases as our starting point in determining the appropriate
wage adjustment. The Company's losses for 1999 which, even the Union recognizes, amounts to
millions of pesos, coupled with the current economic tailspin warrant a more circumspect view[.]

Cognizance is likewise made of the Company's 42 non-wage benefits programs which

substantially [answer] the Union 's concerns with respect to the living wage and the needs of a
family. It would not be amiss to mention that said benefits have their corresponding monetary
valuations that in effect increase a worker's daily pay. Likewise, the needed family expenditure is
answered for not solely by an individual family member's income alone, but also from other
incomes derived by the entire family from all possible sources.

Considering the foregoing circumstances, We deem it reasonable and fair to balance our award
on wages.

The conclusions of the Labor Secretary, drawn as they were from a close examination of the
submissions of the parties, do not indicate any legal error, much less any grave abuse of
discretion. We accord respect to these conclusions as they were made by a public official
especially trained in the delicate task of resolving collective bargaining disputes, and are on their
Labor II – 1
face just and reasonable. "[U]nless there is a clear showing of grave abuse of discretion, this
Court cannot, and will not, interfere with the labor expertise of the public respondent Secretary
of Labor," as the Court held in Pier Arrastre and Stevedoring Services v. Ma. Nieves Roldan-
Confesor, et al .51
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We also note that during the pendency of the present dispute, the parties entered into a new
CBA for the years 2000-2005, providing for a P45.00/day wage increase for the workers. The CA
cited this agreed wage adjustment as an indication of the reasonableness of the disputed award.
The Labor Secretary himself alluded to " the letter-manifestation received by this Office on 15
June 2000 containing the signatures of some 700 employees of the Company indicating the
acceptance of the award rendered in the 31 May 2000 Order. "52  There was also the
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manifestation of the company dated February 7, 2006, advising the Court that it concluded
another CBA with the union providing for a wage increase of P22.00/day effective July 19,
2005; P20.00/day for July 19, 2006; and P20.00/day for July 19, 2007.53  The successful
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negotiation of two collective agreements even before the parties could sit down and formalize
the 1999-2001 CBA highlights the need for the parties to abide by the decision of the Labor
Secretary and move on to the next phase of their collective bargaining relationship.

The Illegal Dismissal Issue

Before we rule on the substantive aspect of this issue, we deem it proper to resolve first the
company's submission that the CA erred: (1) in ruling that the Labor Secretary gravely abused
his discretion in not deciding the dismissal issue; and, (2) in deciding the factual issue itself,
instead of remanding the case, thereby depriving it of the right to present evidence on the
matter.

We agree with the CA's conclusion that the Labor Secretary erred, to the point of
abusing his discretion, when he did not resolve the dismissal issue on the mistaken
reading that this issue falls within the jurisdiction of the labor arbiter. This was an
egregious error and an abdication of authority on the matter of strikes - the ultimate weapon in
labor disputes that the law specifically singled out under Article 263 of the Labor Code by
granting the Labor Secretary assumption of jurisdiction powers. Article 263(g) is both an
extraordinary and a preemptive power to address an extraordinary situation - a strike or lockout
in an industry indispensable to the national interest. This grant is not limited to the grounds
cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it
limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As
the term "assume jurisdiction" connotes, the intent of the law is to give the Labor
Secretary full authority to resolve all matters within the dispute that gave rise to or
which arose out of the strike or lockout; it includes and extends to all questions and
controversies arising from or related to the dispute, including cases over which the
labor arbiter has exclusive jurisdiction.54 cräläwvirtualibräry

In the present case, what the Labor Secretary refused to rule upon was the dismissal
from employment that resulted from the strike. Article 264 significantly dwells on this
exact subject matter by defining the circumstances when a union officer or member
may be declared to have lost his employment. We find from the records that this was
an issue that arose from the strike and was, in fact, submitted to the Labor Secretary,
through the union's motion for the issuance of an order for immediate reinstatement
of the dismissed officers and the company's opposition to the motion. Thus, the
dismissal issue was properly brought before the Labor Secretary and this development
in fact gave rise to his mistaken ruling that the matter is legally within the jurisdiction
of the labor arbiter to decide.

Labor II – 1
We cannot disagree with the CA's sympathies when it stated that a remand of the case " would
only compel the individual petitioners, x x x lowly workers who have been out of work for more
than four (4) years, to tread once again the [calvary] of a protracted litigation ."55  The dismissal
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issue and its resolution, however, go beyond the realm of sympathy as they are governed by law
and procedural rules. The recourse to the CA was through the medium of a petition
for certiorari under Rule 65 - an extraordinary but limited remedy. The CA was correct in
declaring that the Labor Secretary had seriously erred in not ruling on the dismissal issue, but
was totally out of place in proceeding to resolve the dismissal issue; its action required the prior
and implied act of suspending the Rules of Court - a prerogative that belongs to this Court alone.
In the recent case of Marcos-Araneta v. Court of Appeals, 56  we categorically ruled that the CA
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cannot resolve the merits of the case on a petition for certiorari under Rule 65 and must confine
itself to the jurisdictional issues raised. Let this case be another reminder to the CA of the
limits of its certiorari jurisdiction .

But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would
result if a remand would be ordered under a situation where we are in the position to resolve the
case based on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court
of Appeals: 57

[w]e have laid down the rule that the remand of the case to the lower court for further reception
of evidence is not necessary where the Court is in a position to resolve the dispute based on the
records before it. On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of remanding them to the
trial court for further proceedings, such as where the ends of justice, would not be subserved by
the remand of the case.58

Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not
validly rule on the merits of this issue, we shall not hesitate to refer back to its dismissal ruling,
where appropriate.

The first question to resolve is the sufficiency of the evidence and records before us to support a
ruling on the merits. We find that the union fully expounded on the merits of the dismissal issue
while the company's positions find principal support from the affidavits of Dayag, Bayon,
Sanchez, Dinglasan, Nacion, Vinoya, and Gomez. The affidavits became the bases of the
individual notices of termination of employment sent to the union officers. The parties' affidavits
and their submitted positions constitute sufficient bases to support a decision on the merits of
the dismissal issue.

The dismissed union officers of the union originally numbered twenty- one (21), twenty (20) of
whom - led by u nion President Cenon Dionisio - were executive officers and members of the
union board. Completing the list was shop steward Olangar. A s mentioned earlier, fifteen (15)
of the dismissed officers, including Dionisio,executed a R elease, W aiver and Q uitclaim and
readily accepted their dismissal.59  T hose who remained to contest their dismissal were
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Reyvilosa N. Trinidad, 2nd Vice-President; Eloisa Figura, Asst. Secretary; Jerry Jaicten, PRO;
Rowell Frias, Board M ember; Margarita Patingo, B oard M ember; and Rosalinda Olangar, S hop
S teward.

The officers of the u nion subject of the petition were dismissed from the service for allegedly
committing illegal acts (1) during the CBA negotiations and (2) during the strike declared by the
u nion, shortly after the negotiations reached a deadlock. The acts alluded to under the first
category60  involved "leading, instigating, participating in a deliberate slowdown during the CBA
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negotiations" and, under the second,61  the alleged defiance and violation by the u nion officers
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Labor II – 1
of the assumption of jurisdiction and the return-to-work order of the Labor Secretary dated
January 27, 2000, as well as the second return-to-work order dated February 22, 2000. More
specifically, in the course of the strike, the officers were charged with blocking and preventing
the entry of returning employees on February 2, 3, and 8, 2000; and on February 24 and 25,
2000, when acts of violence were committed. They likewise allegedly defied the c ompany's
general return-to-work notice for the return of all employees on February 8, 2000.62 cräläwvirtualibräry

The CA erred in declaring that except for Trinidad, the company failed to prove by substantial
evidence the charges against the remaining union officers, thus making this dismissal illegal. The
appellate court noted that in all the affidavits the company submitted as evidence "no mention
was ever made of [anyone] of the six (6) remaining individual petitioners, save for Reyvilosa
Trinidad. Also, none of the said affidavits even hinted at the culpabilities of petitioners Eloisa
Figuna, Jerry Jaicten, Rowell Frias, Margarita Patingo and Rosalinda Olangar for the alleged
illegal acts imputed to them."63cräläwvirtualibräry

The charges on which the company based its decision to dismiss the union officers and the shop
steward may be grouped into the following three categories: (1) defiance of the return-to-work
order of the Labor Secretary, (2) commission of illegal acts during the strike, and (3) leading,
instigating and participating in a deliberate work slowdown during the CBA negotiations.

While it may be true that the affidavits the company submitted to the Labor Secretary did not
specifically identify Figuna, Jaiden, Frias, Patingo and Olangar to have committed individual
illegal acts during the strike, there is no dispute that the union defied the return-to-work orders
the Labor Secretary handed down on two occasions, first on January 27, 2000 (more than two
months after the union struck on November 18, 1999) and on February 22, 2000. In decreeing a
return-to-work for the second time, the Labor Secretary noted:

To date, despite the lapse of the return-to-work period indicated in the Order, the Union
continues with its strike. A report submitted by NCMB-NCR even indicated that all gates of the
Company are blocked thereby preventing free ingress and egress to the premises.64 cräläwvirtualibräry

Under the law,65  the Labor Secretary's assumption of jurisdiction over the dispute or its
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certification to the National Labor Relations Commission for compulsory arbitration shall have the
effect of automatically enjoining the intended or impending strike or lockout and 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 before the
strike or lockout. The union and its officers, as well as the workers, defied the Labor Secretary's
assumption of jurisdiction, especially the accompanying return-to-work order within twenty-four
(24) hours; their defiance made the strike illegal under the law66  and applicable
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jurisprudence.67  Consequently, it constitutes a valid ground for dismissal.68  Article 264(a),

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paragraph 3 of the Labor Code provides that "Any union officer who knowingly participates in an
illegal strike and any worker or union officer who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his employment status."

The union officers were answerable not only for resisting the Labor Secretary's assumption of
jurisdiction and return-to-work orders; they were also liable for leading and instigating and, in
the case of Figura, for participating in a work slowdown (during the CBA negotiations), a form of
strike69  undertaken by the union without complying with the mandatory legal requirements of a
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strike notice and strike vote. These acts are similarly prohibited activities.70
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There is sufficient indication in the case record that the union officers, collectively, save for shop
steward Olangar, were responsible for the work slowdown, the illegal strike, and the violation of
Labor II – 1
the Labor Secretary's assumption order, that started with the slowdown in July 1999 and lasted
up to March 2000 (or for about ten (10) months).71  These illegal concerted actions could not
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have happened at the spur of the moment and could not have been sustained for several
months without the sanction and encouragement of the union and its officers; undoubtedly, they
resulted from a collective decision of the entire union leadership and constituted a major
component of the union's strategy to obtain concessions from the company management during
the CBA negotiations.

That the work slowdown happened is confirmed by the affidavits72  and the documentary
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evidence submitted by the company. Thus, Ernesto P. Dayag, a security officer of the agency
servicing the company (Tamaraw Security Service, Inc.) stated under oath that in October 1999,
the union members were engaging in a noise-barrage everyday and when it was time to go back
to work at noontime, they would mill around the production area or were at the toilet discussing
the ongoing CBA negotiations (among others), and were slow in their movements; in late
October (October 27, 1999), they did the same thing at about seven o'clock in the morning
which was already time for work; even those who were already working were deliberately slow
in their movements. On November 12, 1999, when union officer Lisa Velasquez talked to the
union members at lunchtime regarding the CBA negotiations, only about 50% of the union
members returned to their work stations.

Victoria P. Sanchez, a sewer in the company's production department, deposed that sometime in
the middle of September 1999, the sewers were told by the shop stewards to reduce their
efficiency below 75%. They followed the order as it came from a decision of the union officers at
a meeting. It was not difficult to comply with the order because they only had to slow down at
the pre-production and early segments of the production line so that the rest of the line would
suffer.

Teresita T. Nacion, another sewer, corroborated Sanchez's deposition stating that in mid-
September 1999, during the CBA negotiations, the sewers were told by the shop stewards to
reduce their efficiency below 75% pursuant to the union decision to slow down production so
that the company would suffer losses.

The work slowdown resulted in production losses to the company which it documented and
submitted in evidence73  before the Labor Secretary and was summarized in the affidavit74  of
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Leonardo T. Gomez, who testified on the impact of the decrease of the workers' production
efficiency that peaked in September, October, and November 1999, resulting in a financial loss
to the company of P69.277M. Specifically, the company's efficiency record for the year
199975  posted Eloisa C. Figura's76  work performance from April to June 1999 at 77.19% and
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from July to November 1999 at 51.77%, a substantial drop in her efficiency.

The union's two-pronged strategy to soften the company's stance in the CBA negotiations
culminated in its declaration of a strike on November 18, 1999, which prompted the Labor
Secretary's intervention through an assumption of jurisdiction. Judging from the manner the
union staged the strike, it is readily apparent that the union's objective was to paralyze the
company and to maintain the work stoppage for as long as possible.

This is the economic war that underlies the Labor Code's strike provisions, and which the same
Code also tries to temper by regulation. Thus, even with the assumption of jurisdiction and its
accompanying return-to-work order, the union persisted with the strike and prevented the entry
to the company premises of workers who wanted to report back for work. In particular, Salvio
Bayon, a company building technician and a member of the union, deposed that at about seven
o'clock in the morning of February 3, 2000, he and ten (10) of his co-employees attempted to

Labor II – 1
enter the company premises, but they were prevented by a member of the strikers, led by union
President Cenon Dionisio and other officers of the union; the same thing happened on February
8, 24 and 28, 2000.77 cräläwvirtualibräry

In the face of the union's defiance of his first return-to-work order, the Labor Secretary issued a
second return-to-work directive on February 22, 2000 where the labor official noted that despite
the lapse of the return-to-work period indicated in the order, the union continued with its
strike.78  At a conciliation meeting on February 29, 2000, the company agreed to extend the
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implementation of the return-to-work order to March 6, 2000.79  The union, through a letter cralaw

dated March 2, 2000,80  advised the NCMB administrator of the decision of the union executive
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board for the return to work of all striking workers the following day. In a letter also dated March
2, 2000,81  the company also advised the NCMB Administrator that it was willing to accept all
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returning employees, without prejudice to whatever legal action it may take against those who
committed illegal acts.

The above union letter clearly shows the involvement of the entire union leadership in defying
the Labor Secretary's assumption of jurisdiction order as well as return-to-work orders. From the
illegal work slowdown to the filing of the strike notice, the declaration of the strike, and the
defiance of the Labor Secretary's orders, it was the union officers who were behind the every
move of the striking workers; and collectively deciding the twists and turns of the strike which
even became violent as the striking members prevented and coerced returning workers from
gaining entry into the company premises. To our mind, all the union officers who knowingly
participated in the illegal strike knowingly placed their employment status at risk.

In a different vein, the union faulted the company for having dismissed the officers, there being
no case filed on the legality or illegality of the strike. We see no merit in this argument. In Gold
City Integrated Port Service, Inc. v. NLRC,82  we held that "[t]he law, in using the word 'may,'
cralaw

grants the employer the option of declaring a union officer who participated in an illegal strike as
having lost his employment." We reiterated this principle in San Juan De Dios Educational
Foundation Employees Union-Alliance of Filipino Workers v. San Juan De Dios Educational
Foundation, Inc.,83  where we stated that "Despite the receipt of an order from the SOLE to
cralaw

return to their respective jobs, the Union officers and members refused to do so and defied the
same. Consequently, then, the strike staged by the Union is a prohibited activity under Article
264 of the Labor Code. Hence, the dismissal of its officers is in order. The respondent Foundation
was, thus, justified in terminating the employment of the petitioner Union 's officers."

The union attempted to divert attention from its defiance of the return-to-work orders with the
specious submission that it was the company which violated the Labor Secretary's January 27,
2000 order, by not withdrawing its notice of lockout.84 cräläwvirtualibräry

The evidence indicates otherwise. The Labor Secretary himself, in his order of February 22,
2000,85  noted that the union continued its strike despite the lapse of the return-to-work period
cralaw

specified in his January 27, 2000 order. There is also the report of the NCMB-NCR clearly
indicating that all gates of the company were blocked, thereby preventing free ingress to and
egress from the company premises. There, too, was the letter of the company personnel
manager, Ralph Funtila, advising the union that the company will comply with the Labor
Secretary's January 27, 2000 order; Funtila appealed to the striking employees and the officers
to remove all the obstacles and to lift their picket line to ensure free ingress and
egress.86  Further, as we earlier noted, the union itself, in its letter of March 2, 2000, advised the
cralaw

NCMB that the union board of directors had decided to return to work on March 3, 2000
indicating that they had been on strike since November 18, 1999 and were defiant of the return-
to-work orders since January 28, 2000.

Labor II – 1
As a final point, the extension of the return-to-work order and the submission of all striking
workers, by the company, cannot in any way be considered a waiver that the union officers can
use to negate liability for their actions, as the CA opined in its assailed decision.87  In the first
cralaw

place, as clarified by Funtila's letter to the NCMB dated March 2, 2000,88  the company will
cralaw

accept all employees who will report for work up to March 6, 2000, without prejudice to
whatever legal action it may take against those who committed illegal acts. He also clarified that
it extended the return-to-work, upon request of the union and the DOLE to accommodate
employees who were in the provinces, who were not notified, and those who were sick.

As a point of law, we find that the company did not waive the right to take action against the
erring officers, and this was acknowledged by the Labor Secretary himself in his order of March
9, 2000,89  when he directed the company "to accept back to work the twenty (20) union officers
cralaw

and one (1) shop steward[,] without prejudice to the Company's exercise of its prerogative to
continue its investigation." The order was issued upon complaint of the union that the officers
were placed under preventive suspension.

For having participated in a prohibited activity not once, but twice, the union officers, except
those our Decision can no longer reach because of the amicable settlement they entered into
with the company, legally deserve to be dismissed from the service. For failure of the company,
however, to prove by substantial evidence the illegal acts allegedly committed by Rosalinda
Olangar, who is a shop steward but not a union officer, we find her dismissal without a valid
cause.

WHEREFORE, premises considered, judgment is hereby

rendered AFFIRMING with MODIFICATION the challenged decision and resolution of the Court
of Appeals in CA-G.R. SP No. 60516, as follows: chan robles virtual law library

1. The collective bargaining award of DOLE Secretary Bienvenido E. Laguesma, contained in his
order dated May 31, 2000, is fully AFFIRMED ;

2. The dismissal of REYVILOSA TRINIDAD, union 2ndVice-President, is likewise AFFIRMED ;

3. The dismissal of ELOISA FIGURA, Assistant Secretary; JERRY JAICTEN, Press Relations
Officer; and ROWELL FRIAS, Board Member, is declared VALID and for a just cause; and

4. The dismissal of ROSALINDA OLANGAR is declared illegal. The CA award is SUSTAINED in

her case.

Labor II – 1
23.) G.R. No. 178409               June 8, 2011

YOLITO FADRIQUELAN, ARTURO EGUNA, ARMANDO MALALUAN, DANILO ALONSO, ROMULO DIMAANO,
ROEL MAYUGA, WILFREDO RIZALDO, ROMEO SUICO, DOMINGO ESCAMILLAS and DOMINGO
BAUTRO, Petitioners,
vs.
MONTEREY FOODS CORPORATION, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 178434

MONTEREY FOODS CORPORATION, Petitioner,

vs.
BUKLURAN NG MGA MANGGAGAWA SA MONTEREY-ILAW AT BUKLOD NG MANGGAGAWA, YOLITO
FADRIQUELAN, CARLITO ABACAN, ARTURO EGUNA, DANILO ROLLE, ALBERTO CASTILLO, ARMANDO
MALALUAN, DANILO ALFONSO, RUBEN ALVAREZ, ROMULO DIMAANO, ROEL MAYUGA, JUANITO
TENORIO, WILFREDO RIZALDO, JOHN ASOTIGUE, NEMESIO AGTAY, ROMEO SUICO, DOMINGO
ESCAMILLAS and DOMINGO BAUTRO, Respondents.

DECISION

ABAD, J.:

These cases are about the need to clearly identify, for establishing liability, the union officers who took part in the
illegal slowdown strike after the Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over
the labor dispute.

The Facts and the Case

On April 30, 2002 the three-year collective bargaining agreement or CBA between the union Bukluran ng
Manggagawa sa Monterey-Ilaw at Buklod ng Manggagawa (the union) and Monterey Foods Corporation (the
company) expired. On March 28, 2003 after the negotiation for a new CBA reached a deadlock, the union filed a
notice of strike with the National Conciliation and Mediation Board (NCMB). To head off the strike, on April 30, 2003
the company filed with the DOLE a petition for assumption of jurisdiction over the dispute in view of its dire effects
on the meat industry. In an Order dated May 12, 2003, the DOLE Secretary assumed jurisdiction over the dispute
and enjoined the union from holding any strike. It also directed the union and the company to desist from taking any
action that may aggravate the situation.

On May 21, 2003 the union filed a second notice of strike before the NCMB on the alleged ground that the company
committed unfair labor practices. On June 10, 2003 the company sent notices to the union officers, charging them
with intentional acts of slowdown. Six days later or on June 16 the company sent new notices to the union officers,
informing them of their termination from work for defying the DOLE Secretary’s assumption order.

On June 23, 2003, acting on motion of the company, the DOLE Secretary included the union’s second notice of
strike in his earlier assumption order. But, on the same day, the union filed a third notice of strike based on
allegations that the company had engaged in union busting and illegal dismissal of union officers. On July 7, 2003
the company filed a petition for certification of the labor dispute to the National Labor Relations Commission (NLRC)
for compulsory arbitration but the DOLE Secretary denied the motion. He, however, subsumed the third notice of
strike under the first and second notices.

On November 20, 2003 the DOLE rendered a decision that, among other things, upheld the company’s termination
of the 17 union officers. The union and its officers appealed the decision to the Court of Appeals (CA).

Labor II – 1
On May 29, 2006 the CA rendered a decision, upholding the validity of the company’s termination of 10 union
officers but declaring illegal that of the other seven. Both parties sought recourse to this Court, the union in G.R.
178409 and the company in G.R. 178434.

The Issues Presented

The issues these cases present are:

1. Whether or not the CA erred in holding that slowdowns actually transpired at the company’s
farms; and

2. Whether or not the CA erred in holding that union officers committed illegal acts that warranted
their dismissal from work.

The Rulings of the Court

First. The law is explicit: no strike shall be declared after the Secretary of Labor has assumed jurisdiction over a
labor dispute. A strike conducted after such assumption is illegal and any union officer who knowingly participates in
the same may be declared as having lost his employment.1 Here, what is involved is a slowdown strike. Unlike
other forms of strike, the employees involved in a slowdown do not walk out of their jobs to hurt the
company. They need only to stop work or reduce the rate of their work while generally remaining in their
assigned post.

The Court finds that the union officers and members in this case held a slowdown strike at the company’s farms
despite the fact that the DOLE Secretary had on May 12, 2003 already assumed jurisdiction over their labor dispute.
The evidence sufficiently shows that union officers and members simultaneously stopped work at the company’s
Batangas and Cavite farms at 7:00 a.m. on May 26, 2003.

The union of course argues that it merely held assemblies to inform members of the developments in the CBA
negotiation, not protest demonstrations over it. But as the CA correctly observed, if the meetings had really been for
the stated reason, why did the union officers and members from separate company farms choose to start and end
their meetings at the same time and on the same day? And if they did not intend a slowdown, why did they not hold
their meetings after work. There is no allegation that the company prevented the union from holding meetings after
working hours.

Second. A distinction exists, however, between the ordinary workers’ liability for illegal strike and that of the union
officers who participated in it. The ordinary worker cannot be terminated for merely participating in the strike. There
must be proof that he committed illegal acts during its conduct. On the other hand, a union officer can be terminated
upon mere proof that he knowingly participated in the illegal strike.2

Still, the participating union officers have to be properly identified.3 The CA held that the company illegally
terminated union officers Ruben Alvarez, John Asotigue, Alberto Castillo, Nemesio Agtay, Carlito Abacan, Danilo
Rolle, and Juanito Tenorio, there being no substantial evidence that would connect them to the slowdowns. The CA
said that their part in the same could not be established with certainty.

But, although the witnesses did not say that Asotigue, Alvarez, and Rolle took part in the work slowdown, these
officers gave no credible excuse for being absent from their respective working areas during the slowdown. Tenorio
allegedly took a break and never went back to work. He claimed that he had to attend to an emergency but did not
elaborate on the nature of such emergency. In Abacan’s case, however, he explained that he was not feeling well
on May 26, 2003 and so he decided to take a two-hour rest from work. This claim of Abacan is consistent with the
report4 that only one officer (Tenorio) was involved in the slowdown at the Calamias farm. 1avvphi1

At the Quilo farm, the farm supervisor did not include Castillo in the list of employees who failed to report for work on
May 26, 2003.5 In Agtay’s case, the evidence is that he was on his rest day. There is no proof that the union’s
president, Yolito Fadriquelan, did not show up for work during the slowdowns. The CA upheld his dismissal, relying
solely on a security guard’s report that the company submitted as evidence. But, notably, that report actually
Labor II – 1
referred to a Rolly Fadrequellan, another employee who allegedly took part in the Lipa farm slowdown. Besides,
Yolito Fadriquelan was then assigned at the General Trias farm in Cavite, not at the Lipa farm. In fact, as shown in
the sworn statements6 of the Cavite farm employees, Fadriquelan even directed them not to do anything which
might aggravate the situation. This clearly shows that his dismissal was mainly based on his being the union
president.

The Court sustains the validity of the termination of the rest of the union officers. The identity and participations of
Arturo Eguna,7 Armando Malaluan,8 Danilo Alonso,9 Romulo Dimaano,10 Roel Mayuga,11 Wilfredo Rizaldo,12 Romeo
Suico,13 Domingo Escamillas,14 and Domingo Bautro15 in the slowdowns were properly established. These officers
simply refused to work or they abandoned their work to join union assemblies.

In termination cases, the dismissed employee is not required to prove his innocence of the charges against him. The
burden of proof rests upon the employer to show that the employee’s dismissal was for just cause. The employer’s
failure to do so means that the dismissal was not justified.16 Here, the company failed to show that all 17 union
officers deserved to be dismissed.

Ordinarily, the illegally dismissed employees are entitled to two reliefs: reinstatement and backwages. Still, the Court
has held that the grant of separation pay, instead of reinstatement, may be proper especially when as in this case
such reinstatement is no longer practical or will be for the best interest of the parties.17 But they shall likewise be
entitled to attorney’s fees equivalent to 10% of the total monetary award for having been compelled to litigate in
order to protect their interests.18

WHEREFORE, the Court MODIFIES the decision of the Court of Appeals in CA-G.R. SP

82526, DECLARES Monterey Foods Corporation’s dismissal of Alberto Castillo, Nemesio Agtay, Carlito Abacan,
and Yolito Fadriquelan illegal, and ORDERS payment of their separation pay equivalent to one month salary for
every year of service up to the date of their termination. The Court also ORDERS the company to pay 10%
attorney’s fees as well as interest of 6% per annum on the due amounts from the time of their termination and 12%
per annum from the time this decision becomes final and executory until such monetary awards are paid.

Labor II – 1
 24.) [G.R. Nos. 191138-39 : October 19, 2011]

MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE AND SANLOR MOTORS CORP.,

PETITIONERS, VS. KILUSANG MANGGAGAWA NG LGS, MAGDALA MULTIPURPOSE &
LIVELIHOOD CORPERATIVE (KMLMS) AND UNION MEMBERS/ STRIKERS, NAMELY:
THOMAS PADULLON, HERBERT BAUTISTA, ARIEL DADIA, AVELINO PARENAS, DENNIS
MONTEALEGRE, SONNY CONSTANTINO, SHANDY CONSTANTINO, JOSEPH PERNIA,
PETER ALCOY, EDILBERTO CERILLE, FERNANDO LEONOR, TEOTIMAR REGINIO,
ALBERTO BAJETA, ALLAN MENESES, RONEL FABUL, JESUS COMENDADOR, JERRY
PERNIA, OSCAR RIVERA, LEO MELGAR, ENRICO LAYGO, RICKY PALMERO, ROWELL
GARCIA, LEOPITO MERANO, ALEJANDRO DE LARA, JOEL GARCIA, BONIFACIO PEREDA,
REMEGIO CONSTANTINO, DICKSON PILAPIL, RANDY CORDANO, DARIUS PILAPIL,
VENICE LUCERO, GREGORIO REANZARES, EULOGIO REGINIO, MICHAEL JAVIER,
DENNIS MOSQUERA, FREDDIE AZORES, ROGELIO CABRERA, AURELIO TAGUINOD,
OSCAR TAGUINOD, DEWELL PILAPIL, JOEL MAS-ING, EDUARDO LOPEZ, GLICERIO
REANZAREZ, JOSEPH FLORES,BUENATO CASAS, ROMEO AZAGRA, ALFREDO ROSALES,
ESTELITO BAJETA, PEDY GEMINA, FERNANDO VELASCO, ALBERTO CANEZA,
ALEJANDRO CERVANTES, ERICK CARVAJAL, RONALDO BERNADEZ, JERRY COROSA,
JAYSON COROSA, JAYSON JUANSON, SHELLY NAREZ, EDGARDO GARCIA, ARIEL
LLOSALA, ROMMEL ILAYA, RODRIGO PAULETE, MERVIN PANGUINTO, MARVIN
SENATIN, JAYSON RILLORA, RAFAEL SARMIENTO, FREDERICK PERMEJO, NICOLAS
BERNARDO, LEONCIO PAZ DE LEON, EDWARD DENNIS MANAHAN, ANTONIO BALDAGO,
ALEXANDER BAJETA, RESPONDENTS.

DECISION

VELASCO JR., J.:

The Case

Petitioners Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp. assail and
seek the modification of the June 30, 2009 Decision[1] and January 28, 2010 Resolution[2] of the
Court of Appeals (CA) in CA-G.R. SP Nos. 88614 and 88645, which affirmed in toto the October
15, 2004 Decision[3] of the National Labor Relations Commission (NLRC) in NLRC CA No. 040560-
04 (NLRC RAB IV-9-1265-02-R).

The Facts

Respondent Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative

(KMLMS) is the union operating in Magdala Multipurpose & Livelihood Cooperative and Sanlor
Motors Corp.

KMLMS filed a notice of strike on March 5, 2002 and conducted its strike-vote on April 8, 2002.
However, KMLMS only acquired legal personality when its registration as an independent labor
organization was granted on April 9, 2002 by the Department of Labor and Employment under
Registration No. RO-400-200204-UR-002.[4]  On April 19, 2002, it became officially affiliated as a
local chapter of the Pambansang Kaisahan ng Manggagawang Pilipino when its application was
granted by the Bureau of Labor Relations.[5]

Thereafter, on May 6, 2002, KMLMS--now a legitimate labor organization (LLO)--staged a strike

where several prohibited and illegal acts were committed by its participating members.

Labor II – 1
On the ground of lack of valid notice of strike, ineffective conduct of a strike-vote and
commission of prohibited and illegal acts, petitioners filed their Petition to Declare the Strike of
May 6, 2002 Illegal[6] before the NLRC Regional Arbitration Board (RAB) No. IV in Quezon City,
docketed as NLRC RAB IV-9-1265-02-R.  In their petition, as well as their Position Paper,
[7]
 petitioners prayed, inter alia, that the officers and members of respondent KMLMS who
participated in the illegal strike and who knowingly committed prohibited and illegal activities,
respectively, be declared to have lost or forfeited their employment status.

The Ruling of the Labor Arbiter

In her March 26, 2004 Decision,[8] Executive Labor Arbiter Lita V. Aglibut (LA Aglibut) found the
May 6, 2002 strike illegal and declared 41 workers to have lost their employment, the dispositive
portion reading:

WHEREFORE, this Office finds the strike conducted by the Kilusang Manggagawa ng LGS,
Magdala / Sanlor Motors-KMLMS, now known and registered as Kilusang [Manggagawa] Ng
LGS/Magdala Sanlor Motors Corporation - PKMP, illegal and the employment status of the
following workers are hereby declared forfeited:  x x x.

All other claims are dismissed for lack of merit.

SO ORDERED.[9]

On the ground of non-compliance with the strict and mandatory requirements for a valid conduct
of a strike under Article 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the
Omnibus Rules Implementing the Labor Code, LA Aglibut found the May 6, 2002 strike illegal
and accordingly dismissed all the 14 union officers of KMLMS.  LA Aglibut likewise found 27
identified members of KMLMS to have committed prohibited and illegal acts proscribed under
Art. 264 of the Labor Code and accordingly declared them to have forfeited their employment.

Both parties appealed the Decision of LA Aglibut before the NLRC.

The Ruling of the NLRC

On October 15, 2004, the NLRC rendered its Decision affirming with modification LA Aglibut's
Decision by declaring an additional seven (7) union members to have forfeited their employment
status. The decretal portion reads:

WHEREFORE, premises considered, the decision appealed from is affirmed with modification in
that [said seven union members] are also declared to have lost their employment status for
having committed prohibited acts.

SO ORDERED.[10]

Unsatisfied, both parties again filed their respective appeals before the CA.

The Ruling of the CA

The CA rendered the assailed Decision on June 30, 2009 affirming in toto the NLRC Decision,
the fallo reading:

WHEREFORE, in view of the following disquisition, the respective petitions for certiorari in CA-
G.R. SP. No. 88614 and CA-G.R. SP. No. 88645 are hereby DISMISSED for lack of merit. 
Labor II – 1
Accordingly, the assailed Decision, dated 15 October 2004, of the National Labor Relations
Commission (NLRC) in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R) is hereby
AFFIRMED in toto.

SO ORDERED.[11]

Thus, petitioners have come to Us, praying for a partial modification of the assailed CA Decision
by declaring additional 73[12] similarly erring KMLMS members to have lost their employment.

The Issues

THE COURT OF APPEALS ERRED IN REFUSING TO SIMILARLY DECLARE AS HAVING LOST THEIR
EMPLOYMENT STATUS THE REST OF THE UNION STRIKERS WHO HAVE PARTICIPATED IN THE
ILLEGAL STRIKE AND COMMITTED PROHIBITED/ILLEGAL ACTS, TO THE PREJUDICE OF
PETITIONERS['] BUSINESS OPERATIONS.

THE COURT OF APPEALS ERRED IN REFUSING TO AWARD DAMAGES AND ATTORNEY'S FEES AS
A RESULT OF THE ILLEGAL STRIKE THAT NEARLY CRIPPLED THE BUSINESS OPERATIONS OF
PETITIONERS.[13]

The Court's Ruling

The petition is partly meritorious.

First Issue: The May 6, 2002 Strike Was Illegal    

There is no question that the May 6, 2002 strike was illegal, first, because when
KMLMS filed the notice of strike on March 5 or 14, 2002, it had not yet acquired legal
personality and, thus, could not legally represent the eventual union and its members. 
And second, similarly when KMLMS conducted the strike-vote on April 8, 2002, there
was still no union to speak of, since KMLMS only acquired legal personality as an
independent LLO only on April 9, 2002 or the day after it conducted the strike-vote. 
These factual findings are undisputed and borne out by the records.

Consequently, the mandatory notice of strike and the conduct of the strike-vote report
were ineffective for having been filed and conducted before KMLMS acquired legal
personality as an LLO, violating Art. 263(c), (d) and (f) of the Labor Code and Rule XXII,
Book V of the Omnibus Rules Implementing the Labor Code.  The Labor Code provisos
pertinently provide:

ART. 263.  Strikes, Picketing and Lockouts. -- (a)  x x x

(c)  In case of bargaining deadlocks, the duly certified or recognized bargaining agent may

file a notice of strike or the employer may file a notice of lockout with the Ministry at least 30
days before the intended date thereof.  In case of unfair labor practice, the period of notice shall
be 15 days and in absence of a duly certified or recognized bargaining agent, the notice
of strike may be filed by any legitimate labor organization in behalf of its members. 
However, in case of dismissal from employment of union officers duly elected in accordance with
the union constitution and by-laws, which may constitute union busting, where the existence of
Labor II – 1
the union is threatened, the 15-day cooling-off period shall not apply and the union may take
action immediately.  (As amended by Executive Order No. 111, December 24, 1986.)

(d)  The notice must be in accordance with such implementing rules and regulations as the
Ministry of Labor and Employment may promulgate.

xxxx

(f)  A decision to declare a strike must be approved by a majority of the total union membership
in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for
that purpose. A decision to declare a lockout must be approved by a majority of the board of
directors of the corporation or association or of the partners in a partnership, obtained by secret
ballot in a meeting called for that purpose.  The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered when the strike or lockout vote was
taken. The Ministry may, at its own initiative or upon the request of any affected party,
supervise the conduct of the secret balloting.  In every case, the union or the employer shall
furnish the Ministry the results of the voting at least seven days before the intended strike or
lockout, subject to the cooling-off period herein provided.  (As amended by Batas Pambansa
Bilang 130, August 21, 1981 and further amended by Executive Order No. 111, December 24,
1986.)

On the other hand, Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code
likewise pertinently provides:

RULE XXII

CONCILIATION, STRIKES AND LOCKOUTS

xxxx

SEC. 6.  Who may declare a strike or lockout. -- Any certified or duly recognized bargaining
representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. 
The employer may declare a lockout in the same cases.  In the absence of a certified or duly
recognized bargaining representative, any legitimate labor organization in the establishment
may declare a strike but only on grounds of unfair labor practice.  (Emphasis supplied.)

It is, thus, clear that the filing of the notice of strike and the conduct of the strike-vote by
KMLMS did not comply with the aforequoted mandatory requirements of law and its
implementing rules. Consequently, the May 6, 2002 strike is illegal.  As the Court held in Hotel
Enterprises of the Philippines, Inc. (HEPI) v. Samahan ng mga Manggagawa sa Hyatt-National
Union of Workers in the Hotel and Restaurant and Allied Industries (SAMASAH-NUWHRAIN),
[14]
 these requirements are mandatory and failure of a union to comply renders the strike illegal.

Striking KMLMS Members Committed Prohibited Acts

There is likewise no dispute that when the May 6, 2002 illegal strike was conducted, the
members of respondent KMLMS committed prohibited and illegal acts which doubly constituted
the strike illegal.  This is the unanimous factual finding of the courts a quo which the Court
accords finality, as supported by evidence on record.

The proscribed acts during a strike are provided under Art. 264 of the Labor Code, thus:

Labor II – 1
ART. 264.  Prohibited Activities. -- (a) No Labor organization or employer shall declare a strike or
lockout without first having bargained collectively in accordance with Title VII of this Book or
without first having filed the notice required in the preceding Article or without the necessary
strike or lockout vote first having been obtained and reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Minister or after certification or submission of the dispute to compulsory or voluntary arbitration
or during the pendency of case involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence of any unlawful lockout
shall be entitled to reinstatement with full backwages.  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.

xxxx

(e)  No person engaged in picketing shall commit any act of violence, coercion or
intimidation or obstruct the free ingress to or egress from the employer's premises for
lawful purposes, or obstruct public thoroughfares.  (As amended by Batas Pambansa Bilang
227, June 1, 1982).

Here, the striking workers committed acts of (1) interference by obstructing the free ingress to
or egress from petitioners' compound and (2) coercion and intimidation. As aptly pointed out by
the appellate court:

This is clear from the Police Blotter Certifications, including a Complaint for Grave Coercion,
Affidavits from several workers, including one from a proprietor, all of whom were prevented
from entering the company premises and doing their work or conducting their business, and the
countless photographs which show the striking workers blocking the gates of the company
premises which became the basis of the judgment of the Labor Arbiter and NLRC.[15]

Thus, We agree with the CA that the arguments of respondent KMLMS are bereft of merit as the
May 6, 2002 strike was properly declared an illegal strike and the prohibited and illegal acts
committed by union members during said strike were duly proved by substantial evidence on
record.  Substantial evidence is that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.[16]

Proper Sanctions for the Illegal Strike

We now come to the proper sanctions for the conduct of union officers in an illegal strike and for
union members who committed illegal acts during a strike. The above-cited Art. 264 of the Code
presents a substantial distinction of the consequences of an illegal strike between union officers
and mere members of the union.  For union officers, knowingly participating in an illegal strike is
a valid ground for termination of their employment.  But for union members who participated in
a strike, their employment may be terminated only if they committed prohibited and illegal acts
during the strike and there is substantial evidence or proof of their participation, i.e., that they
are clearly identified to have committed such prohibited and illegal acts.

As earlier explained, the May 6, 2002 strike is illegal for non-compliance with provisions of law
and its implementing rules.  Consequently, the termination of employment of the 14 union
Labor II – 1
officers is proper.

In the case of union members who participated in the May 6, 2002 strike and committed
prohibited and illegal acts of interference by obstructing the free ingress to or egress from
petitioners' compound, coercion and intimidation, the forfeiture of their employment is also
proper.

LA Aglibut found 27 union members to have committed the illegal acts and properly declared the
forfeiture of their employment status.  The NLRC found additional seven (7) union members
committing illegal acts and likewise declared the forfeiture of their employment status.  Thus, a
total of 34 union members have been declared to have lost their employment due to their
commission of prohibited and illegal acts during the illegal strike of May 6, 2002.  Petitioners,
however, take umbrage for the non-declaration of the forfeiture of employment of 72 other
union members who were similarly situated as the 34 union members whose employment was
declared forfeited in committing prohibited and illegal acts during the May 6, 2002 strike.

In affirming the NLRC Decision and refusing to declare the other strikers as dismissed, the
appellate court found that not all of the photographs in evidence sufficiently show the strikers
committing illegal acts and that the identification of said strikers is questionable considering that
some were still identified even when their faces were indiscernible from the photographs.

We, however, cannot agree with the appellate court's view that there is no substantial proof of
the identity of the other 72 striking union members who committed prohibited and illegal
activities.  The prohibited and illegal acts are undisputed.  It is only the identity of the striking
union workers who committed said acts that is the crux of the partial modification prayed for by
petitioners.

In the instant case, We have pored over the attachments to the pleadings of the parties and We
find that petitioners have substantially proved the identity of 72 other union members who
committed prohibited and illegal acts during the May 6, 2002 illegal strike, thus:

First, the photographs[17] submitted by petitioners graphically depict and show the identities of
the union members who committed prohibited and illegal acts.  Second, the identities of these
union members were substantially proved through the eyewitnesses[18] of petitioners who
personally knew and recognized them as those who committed the prohibited and illegal acts. 
Thus, the identities of these 72 other union members who participated in the strike and
committed prohibited and illegal acts are not only shown through the photographs, but are also
sufficiently supported, as earlier cited, by police blotter certifications,[19] a criminal complaint for
grave coercion,[20] and affidavits of several workers[21] and a proprietor.[22]  As aptly pointed out
by petitioners, while several union members were penalized, other union members with them
who are identifiable in the photographs and attested to by witnesses were not so penalized.  This
must be corrected, for these other unpenalized union members were similarly situated with
those penalized in that they all committed the same prohibited and illegal acts during the strike. 
Absent any exculpating circumstance, they must all suffer the same fate with the statutorily
provided consequence of termination of employment.

Thus, We find that there was patent misappreciation of evidence both by the LA and the NLRC,
but it was not corrected by the CA.

Second Issue: Damages and Attorney's Fees 

Anent the issue of the award of damages and attorney's fees, We affirm the courts a quo's
uniform findings and rulings that while petitioners prayed for damages and attorney's fees, they
Labor II – 1
failed to substantiate their claims.

Indeed, the grant of damages and attorney's fees requires factual, legal and equitable
justification; its basis cannot be left to speculation or conjecture.[23]  Petitioners simply bank
their claims on the Affidavit[24] of Julito Sioson.  The claim for actual damages for losses of PhP
10,000 daily or PhP 260,000 a month, as averred by Sioson, cannot be sustained by a mere
affidavit of the owner without being buttressed by other documentary evidence or unassailable
substantiation.  Even if attested to in an affidavit, the amount claimed for actual damages is
merely speculative at most.  To be recoverable, actual damages must not only be capable of
proof, but must actually be proved with reasonable degree of certainty. The Court cannot simply
rely on speculation, conjecture, or guesswork in determining the amount of damages.[25] 
Without any factual basis, it cannot be granted.

That petitioners had to litigate on the occasion of the illegal strike does not necessarily mean
that attorney's fees will automatically be granted.  On one hand, in labor cases, attorney's fees
granted under Art. 111[26] of the Labor Code apply to unlawful withholding of wages, which
indubitably does not apply to the instant case. On the other hand, Art. 2208(2) of the Civil Code
does not ipso facto grant the award of damages in the form of attorney's fees to a winning
party, for the exercise of protection of one's right is not compensable.

Besides, jurisprudence instructs that for the award of attorney's fees to be granted, there must
be factual, legal and equitable justification.[27]  As the Court held in Filipinas Broadcasting
Network, Inc. v. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-
BCCM):

It is an accepted doctrine that the award thereof as an item of damages is the exception rather
than the rule, and counsel's fees are not to be awarded every time a party wins a suit.  The
power of the court to award attorney's fees under Article 2208 of the Civil Code demands
factual, legal and equitable justification, without which the award is a conclusion without a
premise, its basis being improperly left to speculation and conjecture.  In all events, the court
must explicitly state in the text of the decision, and not only in the decretal portion thereof, the
legal reason for the award of attorney's fees.[28]

The fact that the courts a quo did not award attorney's fees to petitioners persuasively shows
that they found no factual, legal and equitable justification for it.  Neither do We find any.

WHEREFORE, the instant petition is hereby PARTIALLY GRANTED.  The assailed June 30,

2009 CA Decision in CA-G.R. SP Nos. 88614 and 88645 is AFFIRMED with MODIFICATION in
that the following additional 72 union members who committed prohibited and illegal acts during
the May 6, 2002 strike are also declared to have forfeited their employment: Thomas Padullon,
Herbert Bautista, Ariel Dadia, Avelino Parenas, Dennis Montealegre, Sonny Constantino, Shandy
Constantino, Joseph Pernia, Peter Alcoy, Edilberto Cerille, Fernando Leonor, Teotimar Reginio,
Alberto Bajeta, Allan Meneses, Ronel Fabul, Jesus Comendador, Jerry Pernia, Oscar Rivera, Leo
Melgar, Enrico Laygo, Ricky Palmero, Rowell Garcia, Leopito Merano, Alejandro de Lara, Joel
Garcia, Bonifacio Pereda, Remegio Constantino, Dickson Pilapil, Randy Cordano, Aurelio
Taguinod, Oscar Taguinod, Dewell Pilapil, Joel Mas-ing, Eduardo Lopez, Glicerio Reanzarez,
Joseph Flores, Buenato Casas, Romeo Azagra, Alfredo Rosales, Estelito Bajeta, Pedy Gemina,
Fernando Velasco, Alberto Caneza, Alejandro Cervantes, Erick Carvajal, Ronaldo Bernadez, Jerry
Corosa, Jayson Corosa, Jayson Juanson, Shelly Narez, Alexander Bajeta, Edgardo Garcia, Ariel
Llosala, Rommel Ilaya, Rodrigo Paulete, Mervin Paquinto, Marvin Senatin, Jayson Rillora, Darius
Pilapil, Venice Lucero, Gregorio Reanzares, Eulogio Reginio, Michael Javier, Dennis Mosquera,
Freddie Azores, Rogelio Cabrera, Rafael Sarmiento, Frederick Permejo, Nicolas Bernardo, Leoncio
Paz de Leon, Edward Dennis Manahan and Antonio Baldago
Labor II – 1
Labor II – 1
 25.) [G.R. No. 160138 : July 13, 2011]

AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES T.

INDUCIL, JOCELYN T. INDUCIL AND MA. CONCEPCION I. DONATO, PETITIONERS, VS.
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E.
AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ,
RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R.
NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA,
WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED,
ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., AND
RENATO SARABUNO, RESPONDENTS.

[G.R. NO. 160192]

PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E.

AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ,
RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R.
NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA,
WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED,
ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., AND
RENATO SARABUNO, PETITIONERS, VS. AUTOMOTIVE ENGINE REBUILDERS, INC., AND
ANTONIO T. INDUCIL, RESPONDENTS.

DECISION

MENDOZA, J.:

Challenged in these consolidated petitions for review is the October 1, 2003 Amended Decision [1] of
the Court of Appeals (CA), in CA-G.R. SP No. 73161, which modified the Resolution [2] of the National
Labor Relations Commission (NLRC), by ordering the immediate reinstatement of all the suspended
employees of Automotive Engine Rebuilders, Inc. (AER) without backwages.

Records show that AER is a company engaged in the automotive engine repair and rebuilding
business and other precision and engineering works for more than 35 years. Progresibong Unyon Ng
Mga Manggagawa sa AER (Unyon) is the legitimate labor union of the rank and file employees of AER
which was formed in the year 1998.

Due to a dispute between the parties, both filed a complaint against each other before the NLRC. 
AER accused the Unyon of illegal concerted activities (illegal strike, illegal walkout, illegal stoppage,
and unfair labor practice) while Unyon accused AER of unfair labor practice, illegal suspension and
illegal dismissal.

AER's Management's Version

On January 28, 1999, eighteen (18) employees of AER, acting collectively and in concert, suddenly
and without reason staged a walkout and assembled illegally in the company premises.

Despite management's plea for them to go back to work, the concerned employees refused and,
instead, walked out of the company premises and proceeded to the office of the AER Performance
and Service Center (AER-PSC) located on another street. Upon arrival, they collectively tried to cart
away one (1) line boring machine owned by AER out of the AER-PSC premises. They threatened and
forced the company guards and some company officers and personnel to open the gate of the AER-
PSC compound.  They also urged the AER-PSC employees to likewise stop working.

The concerned employees occupied the AER-PSC premises for several hours, thus, disrupting the
Labor II – 1
work of the other employees and AER's services to its clients. They refused to stop their unlawful acts
despite the intervention of the barangay officers. They left the AER-PSC premises only when the
police intervened and negotiated with them.

Subsequently, management issued a memorandum requiring the employees who joined the illegal
walkout to explain in writing why they should not be disciplined administratively and dismissed for
their unjustified and illegal acts.

The concerned employees submitted their written explanation which contained their admissions
regarding their unjustified acts. Finding their explanation unsatisfactory, AER terminated the services
of the concerned employees.

On February 22, 1999, the concerned employees started a wildcat strike, barricaded company
premises, and prevented the free ingress and egress of the other employees, officers, clients, and
visitors and the transportation of company equipments. They also tried to use force and inflict
violence against the other employees. Their wildcat strike stopped after the NLRC issued and served
a temporary restraining order (TRO).

Meantime, six (6) of the concerned employees, namely: Oscar Macaranas, Bernardino Acosta,
Ferdinand Flores, Benson Pingol, Otillo Rabino, and Jonathan Taborda resigned from the company
and signed quitclaims.

Unyon's Version

On December 22, 1998, Unyon filed a petition for certification election before the Department of
Labor and Employment (DOLE)  after organizing their employees union within AER. Resenting what
they did, AER forced all of its employees to submit their urine samples for drug testing. Those who
refused were threatened with dismissal.

On January 8, 1999, the results of the drug test came out and the following employees were found
positive for illegal drugs: Froilan Madamba, Arnold Rodriguez, Roberto Caldeo, Roger Bilatcha,
Ruperto Mariano, Edwin Fabian, and Nazario Madala.

On January 12, 1999, AER issued a memorandum suspending these employees from work for
violation of Article D, Item 2 of the Employee's handbook which reads as follows:

Coming to work under the influence of intoxicating liquor or any drug or drinking any alcoholic
beverages on the premises on company time.

Out of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala were allowed by
AER to report back to work. The other five (5) suspended employees were not admitted by AER
without first submitting the required medical certificate attesting to their fitness to work.

While they were in the process of securing their respective medical certificates, however, they were
shocked to receive a letter from AER charging them with insubordination and absence without leave
and directing them to explain their acts in writing. Despite their written explanation, AER refused to
reinstate them.

Meanwhile, Unyon found out that AER was moving out machines from the main building to the AER-
PSC compound located on another street. Sensing that management was going to engage in a
runaway shop, Unyon tried to prevent the transfer of the machines which prompted AER to issue a
memorandum accusing those involved of gross insubordination, work stoppage and other offenses.

On February 2, 1999, the affected workers were denied entry into the AER premises by order of
Labor II – 1
management. Because of this, the affected workers staged a picket in front of company premises
hoping that management would accept them back to work. When their picket proved futile, they filed
a complaint for unfair labor practice, illegal suspension and illegal dismissal.

Ruling of the Labor Arbiter

On August 9, 2001, the Labor Arbiter (LA) rendered a decision [3] in favor of Unyon by directing AER
to reinstate the concerned employees but without backwages effective October 16, 2001.

The LA ruled, among others, that the concerned employees were suspended from work without a
valid cause and without due process. In finding that there was illegal suspension, the LA held as
follows:

There is no doubt that the hostile attitude of the management to its workers and vice versa started
when the workers began organizing themselves into a union. As soon as the management learned
and received summons regarding the petition for certification election filed by the employees, they
retaliated by causing the employees to submit themselves to drug test. And out of the seven who
were found positive, five were placed on a 12 day suspension namely: (1) Froilan Madamba; (2)
Arnold Rodriguez; (3) Roberto Caldeo; (4) Roger Belatcha; and (5) Ruperto Mariano.

This is illegal suspension plain and simple. Even if they were found positive for drugs, they should
have been caused to explain why they were found so. It could have been that they have taken drugs
as cure for ailment under a physician's prescription and supervision. Doubts should be in favor of the
working class in the absence of evidence that they are drug addicts or they took prohibited or
regulated drugs without any justifiable reason at all. In fact, there is not even a showing by the
company that the performance of these employees was already adversely affected by their use of
drugs.

Lest be misunderstood that we are considering use of prohibited drug or regulated drugs, what we
abhor is suspension without valid cause and without due process. [4]

The LA further held that AER was guilty of illegal dismissal for refusing to reinstate the five (5)
employees unless they submit a medical certificate that they were fit to work. Thus:

x x x Firstly, the employer has not even established that the five employees are sick of ailments
which are not curable within six months, a burden which rests upon the employers and granting that
they were sick or drug addicts, the remedy is not dismissal but to allow them to be on sick leave and
be treated of their illness and if not cured within 6 months, that is the time that they may be
separated from employment but after payment of ½ month's salary for every year of service by
way of separation pay. [5]

Finally, the LA held that the concerned employees were not totally without fault. The concerted
slowdown of work that they conducted in protesting their illegal suspension was generally illegal and
unjustifiable. The LA, thus, ruled that both parties were in pari delicto and, therefore, must suffer the
consequences of the wrong they committed.

NLRC Ruling

Both parties filed their respective appeals with the NLRC. The concerned employees argued that the
LA erred in 1) not awarding backwages to them during the period of their suspension; 2) not holding
that AER is guilty of unfair labor practice; and 3) not holding that they were illegally dismissed from
their jobs. [6] AER, on the other hand, claimed that the LA erred in finding that there was illegal
dismissal and in ordering the reinstatement of the concerned employees without backwages. [7]

On March 5, 2002, the NLRC issued a Resolution [8] modifying the LA decision by setting aside the
Labor II – 1
order of reinstatement as it found no illegal dismissal.

The NLRC, however, considered only three (3)  out of the eighteen concerned employees, (18)
namely: Froilan Madamba, Ruperto Mariano, and Roberto Caldeo because their names were
commonly identified in the LA decision and in the concerned employees' position paper as those
employees who were allegedly illegally suspended.

It wrote that these three (3) employees were validly suspended because they were found positive for
illegal drugs in the drug test conducted by AER. Management was just exercising its management
prerogative in requiring them to submit a medical fit-to-work certificate before they could be
admitted back to work.  The drug test was found to be not discriminatory because all employees of
AER were required to undergo the drug test. Neither was the drug test related to any union activity.

Finally, the NLRC ruled that the concerned employees had no valid basis in conducting a strike.
Considering that the concerted activity was illegal, AER had the right to immediately dismiss them.

Unyon and the concerned employees filed a petition before the CA advancing the following

ARGUMENTS

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THERE ARE
ONLY THREE (3) REMAINING COMPLAINANTS IN THE CASE FILED BY THE PETITIONERS.

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE
SUSPENSION OF SEVERAL PETITIONERS WAS VALID DESPITE THE ABSENCE OF DUE PROCESS.

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSTAINING THE VALIDITY
OF THE DISMISSAL OF EMPLOYEES WHO TESTED POSITIVE DURING THE DRUG TEST.

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN ABSOLVING PRIVATE

RESPONDENTS OF THE OFFENSE OF UNFAIR LABOR PRACICE.

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN DISMISSING PETITIONERS'

COMPLAINT FOR ILLEGAL DISMISSAL.

The CA Ruling

On June 27, 2003, the CA rendered a decision, [9] the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the petition is GRANTED. Respondents are hereby directed to
reinstate the petitioners effective immediately but without backwages, except those who were tested
positive for illegal drugs and have failed to submit their respective medical certificates.

SO ORDERED. [10]

The CA explained that there still remained 26 complaining employees and not just three (3) as
claimed by the NLRC, because 32 members of Unyon signed and filed the complaint, and from the 32
complaining members, only six (6) voluntarily signed quitclaims in favor of AER. It reasoned out that
the number of parties to a complaint would correspond to the number of signatories thereto and not
necessarily to the names commonly appearing or identified in the position paper and the LA decision.
Citing Section 6 of the Rules of Court, the CA held that all persons in whom or against whom any
right to relief in respect to or arising out of the same transaction or series of transactions is alleged
to exist, whether jointly, severally, or in the alternative, may join as plaintiffs or be joined as
defendants in one complaint.

Labor II – 1
The CA, however, agreed with the NLRC on the legality and validity of the suspension. The CA wrote:

The petitioners themselves have admitted that all of them were ordered to give their urine samples
for the drug test; that the drug test was applicable to all the employees lends credence that such test
was not related to any union activity. The union members were not singled out for said drug testing.

The complainants who tested positive for illegal drugs were validly suspended under the company
rules. The Employee's Handbook of Company Rules and Regulations prohibit employees from
reporting for work under the influence of intoxicating liquor and drugs.

With the finding that the petitioners tested positive for illegal drugs, AER merely exercised their
management prerogative to require a medical certificate that said employees were already fit to work
before they can be admitted back to work.

Due to the failure of the affected petitioners to submit a medical certificate that they are already fit
to work, they were dismissed. Petitioners' act of not reporting for duty upon presentation of the
medical certificate that they are fit to work as per agreement with the DOLE NCMB on January 25,
1999 had the marks of willful disobedience giving AER the right to terminate employment. [11]

The CA further ruled that both parties were guilty of unfair labor practice. It stated that the hostile
attitude of AER towards its workers and vice-versa started when the workers began organizing
themselves into a union. AER tried to have a runaway shop when it transferred some of its machinery
from the main building to the AER-PSC office located on another street on the pretext that the main
building was undergoing renovation. AER also prevented its employees, even those who were
excluded from its complaint, from going back to work for allegedly staging an illegal strike. On the
other hand, the concerted work slowdown staged by the concerned employees as a result of their
alleged illegal suspension was unjustified. Hence, both parties were found by the CA to be in pari
delicto and must bear the consequences of their own wrongdoing.

On October 1, 2003, upon the motion for partial reconsideration filed by Unyon praying for the
payment of full backwages and the reinstatement of all suspended employees, the CA rendered the
assailed Amended Decision, the dispositive portion of which reads, as follows:

WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the reinstatement of the
suspended employees is concerned. This Court's decision dated June 27, 2003 is hereby MODIFIED.
Private respondents are hereby directed to reinstate all the petitioners immediately without
backwages.

SO ORDERED. [12]

Unsatisfied, both parties filed the present consolidated petitions on the following

GROUNDS

FOR UNYON:

THE COURT OF APPEALS LEGALLY ERRED IN NOT AWARDING BACKWAGES TO INDIVIDUAL

PETITIONERS NOTWITHSTANDING HAVING ORDERED THEIR REINSTATEMENT TO THEIR
PREVIOUS POSITIONS.

FOR AER:

THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY WHEN IT GAVE SO MUCH

Labor II – 1
WEIGHT ON THE PRIVATE RESPONDENTS' PARTIAL MOTION FOR RECONSIDERATION BY
AMENDING ITS DECISION IN ORDERING THEIR IMMEDIATE REINSTATEMENT INCLUDING
THOSE WHO HAVE TESTED POSITIVE FOR ILLEGAL DRUGS (DRUG ADDICTS) AND HAVE
FAILED TO SUBMIT ANY MEDICAL CERTIFICATE.
G.R. No. 160138

AER's Position

AER questions the findings of the CA that there were 32 complaining employees, which number was
reduced to only 26 because six (6) resigned and signed waivers and quitclaims. It argues that the CA
should have respected the findings of the LA and the NLRC that there were only 18 complaining
employees, which was reduced to 12 due to the resignations and signing of the corresponding
Release and Quitclaims by six (6) of them.  The figure was further reduced to 8, and finally to just 3
complaining employees.

AER argues that the reinstatement of those employees who tested positive for drugs and refused to
submit their respective medical certificate certifying that they were fit to work, violated AER's rules
and regulations, and the law in general because it would allow the sheltering of drug addicts in
company premises.

AER likewise insists that the drug test that it conducted was not related to any union activity because
the test covered all employees. The drug test was part of company rules and guidelines designed to
instill discipline and good behavior among its employees as contained in its Employees Manual
Company Rules and Regulations. AER also claims that it simply exercised its employer's prerogative
in requiring a medical certificate from the affected employees.

Finally, AER avers that the complaining employees, who did not report back to work despite their
medical certificate attesting that they were fit to work, committed willful disobedience. AER claims
that the complaining employees violated their agreement with the DOLE-National Conciliation and
Mediation Board (NCMB) dated January 25, 1999. AER likewise contends that the complaining
employees are deemed to have lost their employment status when they engaged in unlawful
activities such as abandonment of work, stoppage of work and the commission of attempted theft
involving its boring machine. Hence, the termination of their employment was valid.

Unyon's Position

Unyon argues that the complaint it filed indicated that there were 32 complainants who signed the
complaint. Out of the 32, six (6) executed waivers and quitclaims leaving 26 complainants, not 3 as
claimed by AER.

Unyon likewise avers that the dismissal of the affected employees was unlawful for lack of valid
ground and prior notice. Although it admits that some of the complainant employees tested positive
for drugs, it posits that AER should have, at least, required those affected employees to explain why
they tested positive for drugs because it could be possible that the drug taken was a regulated drug
for an ailment and prescribed by a doctor. Therefore, prior notice or due process was still necessary.

Unyon further asserts that the penalty for testing positive for illegal drugs was only a 15-day
suspension, which was already served by the affected employees. It also points out that AER never
imposed the policy of drug examination on its employees before the union was organized. Clearly,
AER adopted a hostile attitude towards the workers when they organized themselves into a union.

Moreover, of the 32 complaining employees in the illegal dismissal case against AER, only 18 were
charged by AER with illegal strike. Unyon argues that AER should have admitted back to work those
employees who were not included in the charge. There was no allegation either that those excluded
were involved in the January 28, 1999 incident.
Labor II – 1
Lastly, Unyon claims that the penalty of outright dismissal against the eighteen (18) employees
charged with illegal strike was grossly disproportionate to their offense.

G.R. 160192

Unyon's Position

Unyon basically argues that there was enough proof that AER acted in bad faith and it was guilty of
illegal lock-out for preventing the affected employees from going back to work. Hence, the
complaining employees are entitled to backwages.

AER's Position

AER counters that there are only three (3) remaining complaining employees who were validly
suspended, namely: Froilan Madamba,  Ruperto Mariano and Roberto Caldeo. AER claims that these
employees are not entitled to backwages or even reinstatement because their separation from work
was valid due to their unlawful activities and willful disobedience.  AER further states that Unyon
failed to properly file a verified position paper. Hence, the complaining employees who failed to file a
verified position paper should be excluded from the petition.

In sum, the main issue to be resolved in these consolidated cases is whether or not the CA erred in
ruling for the reinstatement of the complaining employees but without grant of backwages.

The Court's Ruling

The Court agrees with the ruling of the CA that there were 32 complaining employees who filed and
signed their complaint dated February 18, 1999 for unfair labor practice, illegal dismissal and illegal
suspension. [13] Out of the 32, six (6) undeniably resigned and signed waivers and quitclaims, leaving
26 remaining complainant employees. Thus, the Court adopts and affirms the following CA ruling on
this matter:

The number of parties to a complaint corresponds to the number of signatories thereto and not
necessarily to the names commonly appearing or identified in the position paper. All persons in whom
or against whom any right to relief in respect to or arising out of the same transaction or series of
transactions is alleged to exist whether jointly, severally, or in the alternative, may, except as
otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint,
where any question of law or fact common to all such plaintiffs or to all such defendants may arise in
the action; but the court may make such orders as may be just to prevent any plaintiff or defendant
from being embarrassed or put to expense in connection with any proceedings in which he may have
no interest. [14]

This Court likewise affirms the ruling of the CA favoring the reinstatement of all the complaining
employees including those who tested positive for illegal drugs, without backwages.  The Court is in
accord with the ruling of the LA and the CA that neither party came to court with clean hands.  Both
were in pari delicto.

It cannot be disputed that both parties filed charges against each other, blaming the other party for
violating labor laws. AER filed a complaint against Unyon and its 18 members for illegal concerted
activities. It likewise suspended 7 union members who tested positive for illegal drugs. On the other
hand, Unyon filed a countercharge accusing AER of unfair labor practice, illegal suspension and illegal
dismissal. In other words, AER claims that Unyon was guilty of staging an illegal strike while Unyon
claims that AER committed an illegal lockout.

AER's fault is obvious from the fact that a day after the union filed a petition for certification election
Labor II – 1
before the DOLE, it hit back by requiring all its employees to undergo a compulsory drug test.
Although AER argues that the drug test was applied to all its employees, it was silent as to whether
the drug test was a regular company policy and practice in their 35 years in the automotive engine
repair and rebuilding business. As the Court sees it, it was AER's first ever drug test of its employees
immediately implemented after the workers manifested their desire to organize themselves into a
union. Indeed, the timing of the drug test was suspicious.

Moreover, AER failed to show proof that the drug test conducted on its employees was performed by
an authorized drug testing center. It did not mention how the tests were conducted and whether the
proper procedure was employed. The case of Nacague v. Sulpicio Lines, [15] is instructive:

Contrary to Sulpicio Lines' allegation, Nacague was already questioning the credibility of S.M. Lazo
Clinic as early as the proceedings before the Labor Arbiter.  In fact, the Labor Arbiter declared that
the S.M. Lazo Clinic drug test result was doubtful since it is not under the supervision of the
Dangerous Drug Board.

The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacague's
employment because he was found guilty of using illegal drugs which constitutes serious misconduct
and loss of trust and confidence.  However, we find that Sulpicio Lines failed to clearly show that
Nacague was guilty of using illegal drugs.  We agree with the Labor Arbiter that the lack of
accreditation of S.M. Lazo Clinic made its drug test results doubtful.

Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized
drug testing centers.  Moreover, Section 36 also prescribes that drug testing shall consist
of both the screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads:

SEC. 36. Authorized Drug Testing.  Authorized drug testing shall be done by any government
forensic laboratories or by any of the drug testing laboratories accredited and monitored
by the DOH to safeguard the quality of test results.  The DOH shall take steps in setting the
price of the drug test with DOH accredited drug testing centers to further reduce the cost of such
drug test. The drug testing shall employ, among others, two (2) testing methods, the
screening test which will determine the positive result as well as the type of drug used and
the confirmatory test which will confirm a positive screening test. x x x  (Emphases supplied)

Department Order No. 53-03 further provides:

Drug Testing Program for Officers and Employees

Drug testing shall conform with the procedures as prescribed by the Department of Health (DOH)
(www.doh.gov.ph). Only drug testing centers accredited by the DOH shall be utilized.  A list of
accredited centers may be accessed through the OSHC website (www.oshc.dole.gov.ph).

Drug testing shall consist of both the screening test and the confirmatory test; the latter to
be carried out should the screening test turn positive.  The employee concerned must be
informed of the test results whether positive or negative.

In Social Justice Society v. Dangerous Drugs Board, we explained:

As to the mechanics of the test, the law specifies that the procedure shall employ two testing
methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as
possible the trustworthiness of the results.  But the more important consideration lies in the fact
that the tests shall be conducted by trained professionals in access-controlled laboratories monitored
by the Department of Health (DOH) to safeguard against results tampering and to ensure an
accurate chain of custody.

Labor II – 1
The law is clear that drug tests shall be performed only by authorized drug testing centers.  In this
case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center.  Sulpicio
Lines did not even deny Nacague's allegation that S.M. Lazo Clinic was not accredited.  Also, only a
screening test was conducted to determine if Nacague was guilty of using illegal drugs.  Sulpicio
Lines did not confirm the positive result of the screening test with a confirmatory test.  Sulpicio Lines
failed to indubitably prove that Nacague was guilty of using illegal drugs amounting to serious
misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid
and legal cause for terminating Nacague's employment. When the alleged valid cause for the
termination of employment is not clearly proven, as in this case, the law considers the matter a case
of illegal dismissal. (Emphases supplied)

Furthermore, AER engaged in a runaway shop when it began pulling out machines from the main AER
building to the AER-PSC compound located on another street on the pretext that the main building
was undergoing renovation. Certainly, the striking workers would have no reason to run and enter
the AER-PSC premises and to cause the return of the machines to the AER building if they were not
alarmed that AER was engaging in a runaway shop.

AER committed another infraction when it refused to admit back those employees who were not
included in its complaint against the union. Thirty-two (32) employees filed a complaint for illegal
dismissal, illegal suspension and unfair labor practice against AER. AER charged 18 employees with
illegal strike. AER should have reinstated the 14 employees excluded from its complaint.

Regarding AER's contention that the affected workers abandoned their jobs, the Court has thoroughly
reviewed the records and found no convincing proof that they deliberately abandoned their jobs.
Besides, this Court has consistently declared in a myriad of labor cases that abandonment is totally
inconsistent with the immediate filing of a complaint for illegal dismissal.

In any event, the penalty of dismissal imposed by AER against the striking employees,
who, by the way, only staged a one day walkout, was too severe. The pronouncement in the
case of Tupas Local Chapter No. 979 v. NLRC [16] is worth reiterating:

Neither respondent commission's decision nor the labor arbiter's decision as affirmed with
modification by it cites any substantial facts or evidence to warrant the terribly harsh imposition of
the capital penalty of dismissal and forfeiture of employment on twenty-two of forty-four workers for
having staged the so-called one-day (more accurately, a one-morning) "sitdown strike" on
August 19, 1980 to inform respondent employer of their having formed their own union and to
present their just requests for allowances, overtime pay and service incentive leave pay.  Prescinding
from respondent commission's misappreciation of the facts and evidence and accepting for the nonce
its factual conclusion that the petitioners staged a one-morning sit-down strike instead of making a
mass representation for the employer to recognize their newly formed union and negotiate their
demands, respondent commission's decision is not in consonance with the constitutional injunction
that the Court has invariably invoked and applied to afford protection to labor and assure the
workers' rights to self-organizaÂtion, collective bargaining, security of tenure and just and humane
conditions of work.  The said decision likewise is not in accordance with settled and authoritative
doctrine and legal principles that a mere finding of the illegality of a strike does not
automatically warrant a wholesale dismissal of the strikers from their employment and
that a premature or improvident strike should not be visited with a consequence so severe
as dismissal where a penalty less punitive would suffice.  Numerous precedents to this effect
have been cited and reaffirmed x x x.

x x x x.

In the analogous case of PBM Employees Organization vs. PBM Co., Inc., [17] [10]/ the Court, in setting
aside the questioned industrial court's orÂders held that "the dismissal or termination of the
employment of the petitioning eight (8) leaders of the union is harsh for a one-day
Labor II – 1
absence from work." They had been ordered dismissed for having carried out a mass
demonstration at Malacañang on March 4, 1969 in protest against alleged abuses of the Pasig
police department, upon two days' prior notice to resÂpondent employer company, as against the
latter's insistence that the first shift should not participate but instead report for work, under pain of
disÂmissal.  The Court held that they were merely exercising their basic human rights and fighting for
their very survival "in seeking sanctuary behind their freedom of expression as well as their right of
assembly and of petition against alleged persecution of local officialdom." We ruled that "(T)he
appropriate penalty - if it deserves any penalty at all - should have been simply to charge said one-
day absence against their vacation or sick leave.  But to dismiss the eight (8) leaders of the
petitioner Union is a most cruel penalty, since as aforestated the Union leaders depend on their
wages for their daily sustenance as well as that of their respective families aside from the fact that it
is a lethal blow to unionism, while at the same time strengthening the oppressive hand of the petty
tyrants in the localities." [Emphases supplied].

It must also be noted that there were no injuries during the brief walkout. Neither was there proof
that the striking workers inflicted harm or violence upon the other employees. In fact, the Police
Memorandum [18] dated January 29, 1999 reported no violent incidents and stated that all parties
involved in the January 28, 1999 incident were allowed to go home and the employees involved were
just given a stern warning.

To the Court's mind, the complaining workers temporarily walked out of their jobs because they
strongly believed that management was committing an unfair labor practice. They had no intention of
hurting anybody or steal company property. Contrary to AER's assertion, the striking workers did not
intend to steal the line boring machine which they tried to cart away from the AER-PSC compound;
they just wanted to return it to the main AER building.

Like management, the union and the affected workers were also at fault for resorting to a concerted
work slowdown and walking out of their jobs of protest for their illegal suspension. It was also wrong
for them to have forced their way to the AER-PSC premises to try to bring out the boring machine.
The photos [19] shown by AER are enough proof that the picketing employees prevented the entry and
exit of non-participating employees and possibly AER's clients. Although the union's sudden work
stoppage lasted a day, it surely caused serious disturbance and tension within AER's premises and
could have adversely affected AER's clients and business in general.

The in pari delicto doctrine in labor cases is not novel to us. It has been applied in the case
of Philippines Inter-Fashion, Inc. v NLRC, [20] where the Court held:

The Solicitor General has correctly stated in his comment that "from these facts are derived the
following conclusions which are likewise undisputed: that petitioner engaged in
an illegal lockout while the NAFLU engaged in an illegal strike; that the unconditional offer of the
150 striking employees to return to work and to withdraw their complaint of illegal lockout against
petitioner constitutes condonation of the illegal lock-out; and that the unqualified acceptance of the
offer of the 150 striking employees by petitioner likewise constitutes condonation of the illegal strike
insofar as the reinstated employees are concerned."

The issues at bar arise, however, from respondent commission's approval of its commissioner's
conclusions that (1) petitioner must be deemed to have waived its right to pursue the case of illegal
strike against the 114 employees who were not reinstated and who pursued their illegal lockout claim
against petitioner; and (2) the said 114 employees are entitled to reinstatement with three months'
backwages.

The Court approves the stand taken by the Solicitor General that there was no clear and unequivocal
waiver on the part of petitioner and on the contrary the record shows that it tenaciously pursued its
application for their dismissal, but nevertheless in view of the undisputed findings of illegal strike on
the part of the 114 employees and illegal lockout on petitioner's part, both parties are in pari
Labor II – 1
delicto and such situation warrants the restoration of the status quo ante and bringing the
parties back to the respective positions before the illegal strike and illegal lockout through
the reinstatement of the said 114 employees, as follows:

The Bisaya case (102 Phil. 438) is inapplicable to the present case, because in the former, there were
only two strikers involved who were both reinstated by their employer upon their request to return to
work. However, in the present case, there were more than 200 strikers involved, of which 150 who
desired to return to work were reinstated. The rest were not reinstated because they did not signify
their intention to return to work. Thus, the ruling cited in the Bisaya case that the employer waives
his defense of illegality of the strike upon reinstatement of strikers is applicable only to strikers who
signified their intention to return to work and were accepted back ...

Truly, it is more logical and reasonable for condonation to apply only to strikers who signified their
intention to return and did return to work. The reason is obvious. These strikers took the initiative in
normalizing relations with their employer and thus helped promote industrial peace. However, as
regards the strikers who decided to pursue with the case, as in the case of the 114 strikers herein,
the employer could not be deemed to have condoned their strike, because they had not shown any
willingness to normalize relations with it. So, if petitioner really had any intention to pardon the 114
strikers, it would have included them in its motion to withdraw on November 17, 1980. The fact that
it did not, but instead continued to pursue the case to the end, simply means that it did not pardon
the 114 strikers.

xxx xxx xxx

The finding of illegal strike was not disputed. Therefore, the 114 strikers employees who participated
therein are liable for termination (Liberal Labor Union v. Phil. Can Co., 91 Phil. 72; Insurefco
Employees Union v. Insurefco, 95 Phil. 761). On the other hard, the finding of illegal lockout was
likewise not disputed. Therefore, the 114 employees affected by the lockout are also subject to
reinstatement. Petitioner, however, contends that the application for readmission to work by the 150
strikers constitutes condonation of the lockout which should likewise bind the 114 remaining strikers.
Suffice it to say that the 150 strikers acted for themselves, not on behalf of the 114 remaining
strikers, and therefore the latter could not be deemed to have condoned petitioner's lockout.

The findings show that both petitioner and the 114 strikers are in pari delicto, a situation which
warrants the maintenance of the status quo. This means that the contending parties must be
brought back to their respective positions before the controversy; that is, before the
strike. Therefore, the order reinstating the 114 employees is proper.

With such restoration of the status quo ante it necessarily follows, as likewise submitted by the
Solicitor General, that the petition must be granted insofar as it seeks the setting aside of the award
of three months' backwages to the 114 employees ordered reinstated on the basis of the general rule
that strikers are not entitled to backwages (with some exceptions not herein applicable, such as
where the employer is guilty of oppression and union-busting activities and strikers ordered
reinstated are denied such reinstatement and therefore are declared entitled to backwages from the
date of such denial). More so, is the principle of "no work, no pay" applicable to the case at bar, in
view of the undisputed finding of illegality of the strike.

Likewise, the in pari delicto doctrine was applied in the case of First City Interlink Transportation Co.
Inc. v The Honorable Secretary, [21]  thus:

3) Petitioner substantially complied with the Return to Work Order. The medical examination, NBI,
Police and Barangay Clearances as well as the driver's and conductor's/conductress licenses and
photographs required as conditions for reinstatement were reasonable management prerogatives.
However, the other requirements imposed as condition for reinstatement were unreasonable
considering that the employees were not being hired for the first time, although the imposition of
Labor II – 1
such requirements did not amount to refusal on the part of the employer to comply with the Return
to Work Order or constitute illegal lockout so as to warrant payment of backwages to the strikers. If
at all, it is the employees' refusal to return to work that may be deemed a refusal to comply with the
Return to Work Order resulting in loss of their employment status. As both the employer and the
employees were, in a sense, at fault or in pari delicto, the nonreturning employees, provided
they did not participate in illegal acts; should be considered entitled to reinstatement. But since
reinstatement is no longer feasible, they should be given separation pay computed up to
March 8, 1988 (the date set for the return of the employees) in lieu of
reinstatement. [Emphases and underscoring supplied]

In the case at bar, since both AER and the union are at fault or in pari delicto, they should
be restored to their respective positions prior to the illegal strike and illegal lockout.
Nonetheless, if reinstatement is no longer feasible, the concerned employees should be
given separation pay up to the date set for the return of the complaining employees in lieu
of reinstatement.

WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be

reinstated without backwages. If reinstatement is no longer feasible, the concerned employees
should be given separation pay up to the date set for their return in lieu of reinstatement.

Labor II – 1
25.) B.)

Labor II – 1
 26.) G.R. No. 193789 : September 19, 2012

ALEX Q. NARANJO, DONNALYN DE GUZMAN, RONALD V. CRUZ, ROSEMARIE P.

PIMENTEL, and ROWENA B. BARDAJE, Petitioners, v. BIOMEDICA HEALTH CARE, INC.
and CARINA "KAREN" J. MOTOL, Respondents.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks to annul the June 25, 20101 ςrνll

Decision and September 20, 20102  Resolution of the Court of Appeals (CA) in CA-G.R. SP No.
ςrνll

108205, finding that petitioners were validly dismissed. The CA Decision overturned the Decision
dated November 21, 20083  of the National Labor Relations Commission (NLRC) and reinstated
ςrνll

the Decision dated March 31, 20084  of Labor Arbiter Ligerio V. Ancheta.
ςrνll ςηαοblενιrυαllαωlιbrαr

WHEREFORE, in view of the foregoing, judgment is hereby rendered modifying the assailed
Decision of the Labor Arbiter dated March 31, 2008;

(a) DECLARING the Complainants to have been illegally dismissed for lack of just cause;

(b) ORDERING Respondents jointly and solidarily to pay Complainants separation pay in lieu of
reinstatement computed on the basis of one (1) month pay for every year of service from date
of employment up to November 29, 2006 (the date of complainants illegal dismissal);

(c) ORDERING Respondents jointly and solidarily to pay Complainants backwages from
November 29, 2006 up to the finality of this Decision;

(d) ORDERING the Respondents jointly and solidarily to pay Complainants the following:

1. Unpaid salary for the period 08-15 November 2006;

2. Pro-rated 13th month pay for 2006;

3. Service Incentive Leave for 2006 (except for complainant Bardaje );

4. Unpaid commissions based on their sales for the years 2005 and 2006; and

5. Nominal damages in the amount of PhP 30,000 each.

(e) ORDERING the Respondents jointly and solidarily to pay Complainants attorney's fees in the
amount of I 0% of the total award of monetary claims.

All other claims and counterclaims are dismissed for lack of factual and legal basis.

Labor II – 1
The NLRC is ordered to recompute the monetary awards due to petitioners based on the
aforelisted dispositions deducting from the awards to Naranjo and Pimentel their cash advances
of PhP 4,750.00 and PhP 4,500.00, respectively.Ï‚rαlαωlιbrαr

Labor II – 1
27.) G.R. No. 196156               January 15, 2014

VISAYAS COMMUNITY MEDICAL CENTER (VCMC), Formerly known as METRO CEBU COMMUNITY
HOSPITAL (MCCH), Petitioner,
vs.
ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and EVELYN ONG, Respondents.

DECISION

VILLARAMA, JR., J.:

The present petition was included in the four consolidated cases previously decided by this Court.  However, its
1

reinstatement and separate disposition became necessary due to oversight in the issuance of the order of
consolidation.

The Facts

Respondents were hired as staff nurses (Ong and Angel) and midwives (Yballe and Cortez) by petitioner Visayas
Community Medical Center (VCMC), formerly the Metro Cebu Community Hospital, Inc. (MCCHI). MCCHI is a non-
stock, non-profit corporation which operates the Metro Cebu Community Hospital (MCCH), a tertiary medical
institution owned by the United Church of Christ in the Philippines (UCCP).

Considering the similar factual setting, we quote the relevant portions of the narration of facts in our Decision dated
December 7, 2011 in Abaria v. NLRC : 2

The National Federation of Labor (NFL) is the exclusive bargaining representative of the rank-and-file employees of
MCCHI. Under the 1987 and 1991 Collective Bargaining Agreements (CBAs), the signatories were Ciriaco B.
Pongasi, Sr. for MCCHI, and Atty. Armando M. Alforque (NFL Legal Counsel) and Paterno A. Lumapguid as
President of NFL-MCCH Chapter. In the CBA effective from January 1994 until December 31, 1995, the signatories
were Sheila E. Buot as Board of Trustees Chairman, Rev. Iyoy as MCCH Administrator and Atty. Fernando Yu as
Legal Counsel of NFL, while Perla Nava, President of Nagkahiusang Mamumuo sa MCCH (NAMA-MCCH-NFL)
signed the Proof of Posting.

On December 6, 1995, Nava wrote Rev. Iyoy expressing the union’s desire to renew the CBA, attaching to her letter
a statement of proposals signed/endorsed by 153 union members. Nava subsequently requested that the following
employees be allowed to avail of one-day union leave with pay on December 19, 1995: Celia Sabas, Jesusa
Gerona, Albina Bañez, Eddie Villa, Roy Malazarte, Ernesto Canen, Jr., Guillerma Remocaldo, Catalina Alsado,
Evelyn Ong, Melodia Paulin, Sofia Bautista, Hannah Bongcaras, Ester Villarin, Iluminada Wenceslao and Perla
Nava. However, MCCHI returned the CBA proposal for Nava to secure first the endorsement of the legal counsel of
NFL as the official bargaining representative of MCCHI employees.

Meanwhile, Atty. Alforque informed MCCHI that the proposed CBA submitted by Nava was never referred to NFL
and that NFL has not authorized any other legal counsel or any person for collective bargaining negotiations. By
January 1996, the collection of union fees (check-off) was temporarily suspended by MCCHI in view of the existing
conflict between the federation and its local affiliate. Thereafter, MCCHI attempted to take over the room being used
as union office but was prevented to do so by Nava and her group who protested these actions and insisted that
management directly negotiate with them for a new CBA. MCCHI referred the matter to Atty. Alforque, NFL’s
Regional Director, and advised Nava that their group is not recognized by NFL.

In his letter dated February 24, 1996 addressed to Nava, Ernesto Canen, Jr., Jesusa Gerona, Hannah Bongcaras,
Emma Remocaldo, Catalina Alsado and Albina Bañez, Atty. Alforque suspended their union membership for serious
violation of the Constitution and By-Laws. Said letter states:

xxxx

Labor II – 1
On February 26, 1996, upon the request of Atty. Alforque, MCCHI granted one-day union leave with pay for 12
union members. The next day, several union members led by Nava and her group launched a series of mass
actions such as wearing black and red armbands/headbands, marching around the hospital premises and putting up
placards, posters and streamers. Atty. Alforque immediately disowned the concerted activities being carried out by
union members which are not sanctioned by NFL. MCCHI directed the union officers led by Nava to submit within 48
hours a written explanation why they should not be terminated for having engaged in illegal concerted activities
amounting to strike, and placed them under immediate preventive suspension. Responding to this directive, Nava
and her group denied there was a temporary stoppage of work, explaining that employees wore their armbands only
as a sign of protest and reiterating their demand for MCCHI to comply with its duty to bargain collectively. Rev. Iyoy,
having been informed that Nava and her group have also been suspended by NFL, directed said officers to appear
before his office for investigation in connection with the illegal strike wherein they reportedly uttered slanderous and
scurrilous words against the officers of the hospital, threatening other workers and forcing them to join the strike.
Said union officers, however, invoked the grievance procedure provided in the CBA to settle the dispute between
management and the union.

On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) Regional Office No. 7 issued
certifications stating that there is nothing in their records which shows that NAMA-MCCH- NFL is a
registered labor organization, and that said union submitted only a copy of its Charter Certificate on January 31,
1995. MCCHI then sent individual notices to all union members asking them to submit within 72 hours a written
explanation why they should not be terminated for having supported the illegal concerted activities of NAMA-MCCH-
NFL which has no legal personality as per DOLE records. In their collective response/statement dated March 18,
1996, it was explained that the picketing employees wore armbands to protest MCCHI’s refusal to bargain; it was
also contended that MCCHI cannot question the legal personality of the union which had actively assisted in CBA
negotiations and implementation.

On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but the same was deemed not filed for want of legal
personality on the part of the filer. The National Conciliation and Mediation Board (NCMB) Region 7 office likewise
denied their motion for reconsideration on March 25, 1996. Despite such rebuff, Nava and her group still conducted
a strike vote on April 2, 1996 during which an overwhelming majority of union members approved the strike.

Meanwhile, the scheduled investigations did not push through because the striking union members insisted on
attending the same only as a group. MCCHI again sent notices informing them that their refusal to submit to
investigation is deemed a waiver of their right to explain their side and management shall proceed to impose proper
disciplinary action under the circumstances. On March 30, 1996, MCCHI sent termination letters to union leaders
and other members who participated in the strike and picketing activities. On April 8, 1996, it also issued a cease-
and-desist order to the rest of the striking employees stressing that the wildcat concerted activities spearheaded by
the Nava group is illegal without a valid Notice of Strike and warning them that non-compliance will compel
management to impose disciplinary actions against them. For their continued picketing activities despite the said
warning, more than 100 striking employees were dismissed effective April 12 and 19, 1996.

Unfazed, the striking union members held more mass actions. The means of ingress to and egress from the hospital
were blocked so that vehicles carrying patients and employees were barred from entering the premises. Placards
were placed at the hospital’s entrance gate stating:

"Please proceed to another hospital" and "we are on protest." Employees and patients reported acts of intimidation
and harassment perpetrated by union leaders and members. With the intensified atmosphere of violence and
animosity within the hospital premises as a result of continued protest activities by union members, MCCHI suffered
heavy losses due to low patient admission rates. The hospital’s suppliers also refused to make further deliveries on
credit.

With the volatile situation adversely affecting hospital operations and the condition of confined patients, MCCHI filed
a petition for injunction in the NLRC (Cebu City) on July 9, 1996 (Injunction Case No. V-0006-96). A temporary
restraining order (TRO) was issued on July 16, 1996. MCCHI presented 12 witnesses (hospital employees and
patients), including a security guard who was stabbed by an identified sympathizer while in the company of Nava’s
group. MCCHI’s petition was granted and a permanent injunction was issued on September 18, 1996 enjoining the
Nava group from committing illegal acts mentioned in Art. 264 of the Labor Code.

Labor II – 1
On August 27, 1996, the City Government of Cebu ordered the demolition of the structures and obstructions put up
by the picketing employees of MCCHI along the sidewalk, having determined the same as a public nuisance or
nuisance per se.

Thereafter, several complaints for illegal dismissal and unfair labor practice were filed by the terminated employees
against MCCHI, Rev. Iyoy, UCCP and members of the Board of Trustees of MCCHI. 3

On August 4, 1999, Executive Labor Arbiter Reynoso A. Belarmino rendered his Decision  in the consolidated cases
4

which included NLRC Case No. RAB-VII-02-0309-98 filed by herein respondents. The dispositive portion of said
decision reads:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the claim of unfair labor practice and
illegal dismissal and declaring the termination of the following as an offshoot of the illegal strike: Perla Nava,
Catalina Alsado, Albina Bañez, Hannah Bongcaras, Ernesto Canen, Jesusa Gerona and Guillerma Remocaldo but
directing the respondent Metro Cebu Community Hospital to pay the herein complainants separation pay in the sum
of THREE MILLION EIGHTY FIVE THOUSAND EIGHT HUNDRED NINETY SEVEN and [40]/100 (₱3,085,897.40)
detailed as follows:

xxxx

79. Erma Yballe

6/11/83 – 4/19/96: 12 years, 10 mos. (13 years)

₱5,000.00 ÷ 2 x 13 = 32,500.00

80. Eleuteria Cortez

12/13/[74]  – 4/12/96: 21 years, 4 mos. (21 years)

5

₱5,000.00 ÷ 2 x 21 = 52,500.00

81. Nelia Angel

6/01/88 – 4/12/96: 7 years, 10 mos. (8 years)

₱5,000.00 ÷ 2 x 8 = 20,000.00

82. Evelyn Ong

7/07/86 – 4/12/96: 9 years, 9 mos. (10 years)

₱5,000.00 ÷ 2 x 10 = 25,000.00

xxxx

SO ORDERED. 6

Executive Labor Arbiter Belarmino ruled that MCCHI and its administrators were not guilty of unfair labor practice.
He likewise upheld the termination of complainants union officers who conducted the illegal strike. The rest of the
complainants were found to have been illegally dismissed, thus:

We, however, see that the NAMA members deserve a different treatment. As the Court said, members of a union
cannot be held responsible for an illegal strike on the sole basis of such membership, or even on an account of their
affirmative vote authorizing the same. They become liable only if they actually participated therein (ESSO Phil., Inc.
vs. Malayang Manggagawa sa Esso 75 SCRA 73). But the illegality of their participation is placed in a state of doubt
they, being merely followers. Under the circumstances, We resort to Art. 4 of the Labor Code favoring the
workingman in case of doubt in the interpretation and implementation of laws.

Labor II – 1
Obviously swayed by the actuations of their leaders, herein complainants ought to be reinstated as a matter of
policy but without backwages for they cannot be compensated having skipped work during the illegal strike (National
Federation of Sugar Workers vs. Overseas et al. 114 SCRA 354). But with their positions already taken over by their
replacements and with strained relations between the parties having taken place, We deem it fair that complainants
except for the seven officers, should be paid separation pay of one-half (1/2) month for every year of service by the
respondent hospital. 7

Respondents and their co-complainants filed their respective appeals before the National Labor Relations
Commission (NLRC) Cebu City. On February 15, 2001, respondents and MCCHI jointly moved to defer resolution of
their appeal (NLRC Case No. V-001042-99) in view of a possible compromise. Consequently, in its Decision  dated8

March 14, 2001, the NLRC’s Fourth Division (Cebu City) resolved only the appeals filed by respondents’ co-
complainants. The dispositive portion of said decision reads:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair
labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring the dismissal of all the
complainants in RAB Case No. 07-02-0394-98 and RAB Case No. 07-03-0596-98 valid and legal. Necessarily, the
award of separation pay and attorney’s fees are hereby Deleted.

Resolution on RAB Case No. 07-02-0309-98 is hereby Deferred upon Joint Motion of the parties.

SO ORDERED. 9

The NLRC denied the motion for reconsideration of the above decision under its Resolution  dated July 2, 2001.
10

Having failed to reach a settlement, respondents’ counsel filed a motion to resolve their appeal on January 2, 2003.
Thus, on March 12, 2003, the NLRC-Cebu City Fourth Division rendered its Decision,  as follows:
11

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair
labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring all the complainants to have been
validly dismissed. Necessarily, the award of separation pay and attorney’s fees are hereby Deleted.

SO ORDERED. 12

In deleting the award of separation pay and attorney’s fees, the NLRC emphasized that respondents and their co-
complainants are guilty of insubordination, having persisted in their illegal concerted activities even after MCCHI had
sent them individual notices that the strike was illegal as it was filed by NAMA-MCCH-NFL which is not a legitimate
labor organization. It held that under the circumstances where the striking employees harassed, threatened and
prevented non-striking employees and doctors from entering hospital premises, blocked vehicles carrying patients to
the hospital premises and caused anxiety to recuperating patients by displaying placards along the corridors of the
hospital, and the resulting decrease in hospital admission, refusal of suppliers to make further deliveries due to fears
of violence erupting as a result of picketing, and diminished income due to low admission rates, it would be unfair to
saddle MCCHI with the burden of paying separation pay to complainants who were validly dismissed. Respondents’
motion for reconsideration was denied by the NLRC under its Resolution  dated April 13, 2004.
13

Meanwhile, the petition for certiorari filed by respondents’ co-complainants in the Court of Appeals (CA) Cebu
Station (CA-G.R. SP No. 66540) was initially dismissed by the CA’s Eighth Division on the ground that out of 88
petitioners only 47 have signed the certification against forum shopping. On motion for reconsideration filed by said
petitioners, the petition was reinstated but only with respect to the 47 signatories. Said ruling was challenged by
complainants before this Court via a petition for review on certiorari, docketed as G.R. No. 154113 (Abaria, et al. v.
NLRC, et al.). 14

On October 17, 2008, the CA dismissed the petition in CA-G.R. SP No. 66540, as follows:

WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING the Decision of the National Labor
Relations Commission (NLRC) – Fourth Division dated March 14, 2001 in NLRC Case No. V-001042-99, WITH
MODIFICATIONS to the effect that (1) the petitioners, except the union officers, shall be awarded separation pay
Labor II – 1
equivalent to one-half (1/2) month pay for every year of service, and (2) petitioner Cecilia Sabas shall be awarded
overtime pay amounting to sixty-three (63) hours.

SO ORDERED. 15

The motion for reconsideration and motion for partial reconsideration respectively filed by the complainants and
MCCHI in CA-G.R. SP No. 66540 were likewise denied by the CA.  Both parties elevated the case to this Court in
16

separate petitions: G.R. No. 187778 (Perla Nava, et al. v. NLRC, et al.) and G.R. No. 187861 (Metro Cebu
Community Hospital v. Perla Nava, et al.). Herein respondents also filed in the CA a petition for certiorari assailing
the March 12, 2003 Decision and April 13, 2004 Resolution of the NLRC, docketed as CA-G.R. SP No. 84998 (Cebu
City). By Decision  dated November 7, 2008, the CA granted their petition, as follows:
17

WHEREFORE, the challenged Decision of public respondent dated March 12, 2003 and its Resolution dated April
13, 2004 are hereby REVERSED AND SET ASIDE. Private respondent Metro Cebu Community Hospital is ordered
to reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia Angel and Evelyn Ong without loss of seniority rights
and other privileges; to pay them their full backwages inclusive of their allowances and other benefits computed
from the time of their dismissal up to the time of their actual reinstatement.

No pronouncement as to costs.

SO ORDERED. 18

Petitioner filed a motion for reconsideration which the CA denied in its February 22, 2011 Resolution. 19

The Case

The present petition (G.R. No. 196156) was filed on April 27, 2011. Records showed that as early as August 3,
2009, G.R. Nos. 187861 and 187778 were consolidated with G.R. No. 154113 pending with the Third Division.  As 20

to the present petition, it was initially denied under the June 8, 2011 Resolution  issued by the Second Division for
21

failure to show any reversible error committed by the CA. Petitioner filed a motion for reconsideration to which
respondents filed an opposition. Said motion for reconsideration of the earlier dismissal (June 8, 2011) remained
unresolved by the Second Division which, on June 29, 2011, issued a resolution ordering the transfer of the present
case to the Third Division. 22

It is further recalled that on June 23, 2011, petitioner moved to consolidate the present case with G.R. Nos. 154113,
187861 and 187778 which was opposed by respondents. Under Resolution dated August 1, 2011, the Third Division
denied the motion for consolidation, citing the earlier dismissal of the petition on June 8, 2011.  However, on motion
23

for reconsideration filed by petitioner, said resolution was set aside on October 19, 2011 and the present case was
ordered consolidated with G.R. Nos. 154113, 187778 and 187861 and transferred to the First Division where the
latter cases are pending. 24

On December 7, 2011, the Decision  in the consolidated cases (G.R. Nos. 154113, 187778, 187861 and 196156)
25

was rendered, the dispositive portion of which states:

WHEREFORE, the petition for review on certiorari in G.R. No. 187861 is DENIED while the petitions in G.R. Nos.
154113, 187778 and 196156 are PARTLY GRANTED. The Decision dated October 17, 2008 of the Court of
Appeals in CA-G.R. SP No. 66540 is hereby AFFIRMED with MODIFICATIONS in that MCCHI is ordered to pay the
petitioners in G.R. Nos. 154113 and 187778, except the petitioners who are union officers, separation pay
equivalent to one month pay for every year of service, and reasonable attorney’s fees in the amount of ₱50,000.00.
The Decision dated November 7, 2008 is likewise AFFIRMED with MODIFICATIONS in that MCCHI is ordered to
pay the private respondents in G.R. No. 196156 separation pay equivalent to one month pay for every year of
service, and that the award of back wages is DELETED.

The case is hereby remanded to the Executive Labor Arbiter for the recomputation of separation pay due to each of
the petitioners union members in G.R. Nos. 154113, 187778 and 196156 except those who have executed
compromise agreements approved by this Court.
Labor II – 1
No pronouncement as to costs.

SO ORDERED. 26

On February 7, 2012, respondents filed a Motion for Reconsideration with Motion for Severance and
Remand  asserting that they were denied due process as they had no opportunity to file a comment on the petition
27

prior to the rendition of the Decision dated December 7, 2011. They also point out that the issues in the present
case are different from those raised in the petitions filed by their co-complainants.

On June 18, 2012, this Court issued a Resolution (1) reinstating the petition and requiring the respondents to file
their comment on the petition; and (2) denying the motion for remand to the Second Division.  Respondents thus
28

filed their Comment, to which petitioner filed its Reply. Thereafter, the parties submitted their respective
memoranda.

Issues

In their Memorandum, respondents submit that since the Decision dated December 7, 2011 in the consolidated
cases of Abaria v. NLRC have already declared the dismissal of complainants union members as illegal but
awarded separation pay and reasonable attorney’s fees, the remaining issue to be resolved in this case is whether
respondents are entitled to back wages and damages.

Petitioner, however, further assail the CA in (a) allowing respondents to change their theory on appeal, (b) finding
that respondents did not commit illegal acts during the strike and (c) increasing the award of separation pay to one
month pay for every year of service as held in the December 7, 2011 Decision in view of the damages suffered by
petitioner.

Respondents’ Argument

Respondents maintain that there was no iota of evidence presented by petitioner that they took part in the illegal
strike conducted by the Nava group or committed illegal acts like the blocking of ingress and egress in the hospital
premises. They claim that they were never involved in work stoppage but instead were locked out by petitioner as
they were unable to resume work because hospital security personnel prevented them from entering the hospital
upon petitioner’s instructions.

Claiming that they have consistently manifested their non- participation in the illegal strike before the regional
arbitration branch, NLRC and the CA, respondents argue that there is absolutely no reason to delete the awards of
back wages and separation pay in lieu of reinstatement.

Petitioner’s Argument

Petitioner contends that respondents have surreptitiously changed their position from admitting in their pleadings
before the NLRC their participation in the illegal strike to that of mere wearing of arm bands and alleged non-receipt
of the notices in their appeal before the CA. They stress the established facts on record that: (1) respondents signed
the March 18, 1996 collective reply of the union officers and members to the notices sent by petitioner regarding
their illegal concerted activities, thus proving that they received the said notices; (2) acknowledged Perla Nava as
their union leader which belies respondents’ belated attempt to distance themselves from the Nava group who led
the illegal strike; and (3) respondents did not, in their motion for reconsideration of the NLRC Decision dated March
12, 2003, make any denial of their participation in the illegal strike but even justified their resort thereto due to the
prevailing labor dispute.

With the Decision in the consolidated cases (Abaria v. NLRC) having already upheld the consistent rule that
dismissed employees who participated in an illegal strike are not entitled to back wages, petitioner prays that the
previous rulings in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel
Employees Union,  G & S Transport Corporation v. Infante,  Philippine Marine Officers’ Guild v. Compañia
29 30

Maritima, et al.,  and Escario v. National Labor Relations Commission (Third Division)  be likewise applied in this
31 32

case.
Labor II – 1
 Our Ruling

The petition is partly meritorious.

Paragraph 3, Article 264(a) of the Labor Code provides that ". . .any union officer who knowingly participates in an
illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment status . . ." In the Decision dated December 7, 2011, we
declared as invalid the dismissal of MCCH employees who participated in the illegal strike conducted by NAMA-
MCCH-NFL which is not a legitimate labor organization. Since there was no showing that the complainants
committed any illegal act during the strike, they may not be deemed to have lost their employment status by their
mere participation in the illegal strike. On the other hand, the union leaders (Nava group) who conducted the illegal
strike despite knowledge that NAMA-MCCH-NFL is not a duly registered labor union were declared to have been
validly terminated by petitioner.

We stress that the law makes a distinction between union members and union officers. A worker merely
participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts
during a strike that he may be declared to have lost employment status.  In contrast, a union officer may be
33

terminated from employment for knowingly participating in an illegal strike or participates in the commission of illegal
acts during a strike. The law grants the employer the option of declaring a union officer who participated in an illegal
strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from
service.34

In this case, the NLRC affirmed the finding of the Labor Arbiter that respondents supported and took part in the
illegal strike and further declared that they were guilty of insubordination. It noted that the striking employees were
determined to force management to negotiate with their union and proceeded with the strike despite knowledge that
NAMA-MCCH-NFL is not a legitimate labor organization and without regard to the consequences of their acts
consisting of displaying placards and marching noisily inside the hospital premises, and blocking the entry of
vehicles and persons.

On appeal, the CA reversed the rulings of the Labor Arbiter and NLRC, ordered the reinstatement of respondents
and the payment of their full back wages. The CA found that respondents’ participation was limited to the wearing of
armband and thus, citing Bascon v. CA,  declared respondents’ termination as invalid in the absence of any
35

evidence that they committed any illegal act during the strike.

In the Decision dated December 7, 2011, we likewise ruled that the mass termination of complainants was illegal,
notwithstanding the illegality of the strike in which they participated. However, since reinstatement was no longer
feasible, we ordered MCCHI to pay the dismissed employees separation pay equivalent to one month pay for every
year of service. The claim for back wages was denied, consistent with existing law and jurisprudence. Respondents
argue that the CA correctly awarded them back wages because while they "supported the protest action" they were
not part of the Nava group who were charged with blocking the free ingress and egress of the hospital, threatening
and harassing persons entering the premises, and making boisterous and unpleasant remarks. They deny any
participation in the illegal strike and assert that no evidence of their actual participation in the strike was shown by
petitioner.

We are not persuaded by respondents’ attempt to dissociate themselves from the Nava group who led the illegal
strike. In their motion for reconsideration filed before the NLRC, respondents no longer denied having participated in
the strike but simply argued that no termination of employment in connection with the strike "staged by
complainants" cannot be legally sustained because MCCHI "did not file a complaint or petition to declare the strike
of complainants illegal or declare that illegal acts were committed in the conduct of the strike." Respondents further
assailed the NLRC’s finding that they were guilty of insubordination since "the proximate cause of the acts of
complainants was the prevailing labor dispute and the consequent resort by complainants of [sic] a strike
action."  When the case was elevated to the CA, respondents shifted course and again insisted that they did not
36

participate in the strike nor receive the March 15, 1996 individual notices sent by petitioner to the striking
employees.

Respondents’ inconsistent posture cannot be sanctioned. While there was indeed no evidence of any illegal act
committed by respondents during the strike, the Labor Arbiter and NLRC were one in finding that respondents
Labor II – 1
actively supported the concerted protest activities, signed the collective reply of union members manifesting that
they launched the mass actions to protest management’s refusal to negotiate a new CBA, refused to appear in the
investigations scheduled by petitioner because it was the union’s stand that they would only attend these
investigations as a group, and failed to heed petitioner’s final directive for them to desist from further taking part in
the illegal strike. The CA, on the other hand, found that respondents’ participation in the strike was limited to the
wearing of armbands. Since an ordinary striking worker cannot be dismissed for such mere participation in
the illegal strike, the CA correctly ruled that respondents were illegally dismissed. However, the CA erred in
awarding respondents full back wages and ordering their reinstatement despite the prevailing
circumstances.

As a general rule, back wages are granted to indemnify a dismissed employee for his loss of earnings during the
whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his
employment, he is entitled to all the rights and privileges that accrue to him from the employment.  The grant of
37

back wages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature
of a command to the employer to make a public reparation for his illegal dismissal of the employee in violation of the
Labor Code. 38

Are respondents then entitled to back wages? This Court, in G & S Transport Corporation v. Infante,  ruled in the
39

negative:

With respect to backwages, the principle of a "fair day’s wage for a fair day’s labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed or otherwise illegally prevented from working. x x x In Philippine Marine Officers’ Guild v. Compañia
Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court
stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the
case at bar. (Emphasis supplied)

The alternative relief for union members who were dismissed for having participated in an illegal strike is
the payment of separation pay in lieu of reinstatement under the following circumstances: (a) when
reinstatement can no longer be effected in view of the passage of a long period of time or because of the
realities of the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no
longer feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer
is prejudiced by the workers’ continued employment; (f) facts that make execution unjust or inequitable
have supervened; or (g) strained relations between the employer and employee. 40

In the Decision dated December 7, 2011, we held that the grant of separation pay to complainants is the appropriate
relief under the circumstances, thus:

Considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that
ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered from
its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or otherwise
incapacitated, separation pay without back wages is the appropriate relief. x x x 41

In fine, we sustain the CA in ruling that respondents who are mere union members were illegally dismissed for
participating in the illegal strike conducted by the Nava group. However, we set aside the order for their
reinstatement and payment of full back wages.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated November 7, 2008 and Resolution dated
February 22, 2011 of the Court of Appeals in CA-G.R. SP No. 84998 are hereby AFFIRMED with MODIFICATIONS.
In lieu of reinstatement, petitioner Visayas Community Medical Center formerly known as the Metro Cebu
Community Hospital) is ordered to PAY respondents Erma Yballe, Evelyn Ong, Nelia Angel and Eleuteria Cortez
separation pay equivalent to one month pay for every year of service. The award of back wages to the said
respondents is DELETED.

The case is hereby remanded to the Executive Labor Arbiter for the recomputation of separation pay due to each of
the respondents.
Labor II – 1
28.) G.R. No. 170007               April 7, 2014

TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION, Petitioner,

vs.
PILIPINAS SHELL PETROLEUM CORPORATION, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

This an appeal from the Decision  dated August 8, 2005 of the Court of Appeals in CA-G.R. SP No. 88178
1

dismissing the petition for certiorari of the petitioner Tabangao Shell Refinery Employees Association.

The origins of the controversy

In anticipation of the expiration on April 30, 2004 of the 2001-2004 Collective Bargaining Agreement (CBA) between
the petitioner and the respondent Pilipinas Shell Petroleum Corporation, the parties started negotiations for a new
CBA. After several meetings on the ground rules that would govern the negotiations and on political items, the
parties started their discussion on the economic items on July 27, 2004, their 31st meeting. The union proposed a
20o/o annual across-the-board basic salary increase for the next three years that would be covered by the new
CBA. In lieu of the annual salary increases, the company made a counter-proposal to grant all covered employees a
lump sum amount of ₱80,000.00 yearly for the three-year period of the new CBA. 2

The union requested the company to present its counter-proposal in full detail, similar to the presentation by the
union of its economic proposal. The company explained that the lump sum amount was based on its affordability for
the corporation, the then current salary levels of the members of the union relative to the industry, and the then
current total pay and benefits package of the employees. Not satisfied with the company’s explanation, the union
asked for further justification of the lump sum amount offered by the company. When the company refused to
acknowledge any obligation to give further justification, the union rejected the company’s counter-proposal and
maintained its proposal for a 20% annual increase in basic pay for the next three years.
3

On the 39th meeting of the parties on August 24, 2004, the union lowered its proposal to 12% annual across-the-
board increase for the next three years. For its part, the company increased its counter-proposal to a yearly lump
sum payment of ₱88,000.00 for the next three years. The union requested financial data for the manufacturing class
of business in the Philippines. It also requested justification for the company’s counter-offer. In response, the
company stated that financial measures for Tabangao were available in the refinery scorecard regularly cascaded
by the management to the employees. The company reiterated that its counter-offer is based on its affordability for
the company, comparison with the then existing wage levels of allied industry, and the then existing total pay and
benefits package of the employees. The company subsequently provided the union with a copy of the company’s
audited financial statements.4

However, the union remained unconvinced and asked for additional documents to justify the company’s counter-
offer. The company invited the attention of the union to the fact that additional data, such as the refinery
performance scorecard, were available from the refinery’s website and shared network drives. The company also
declared that the bases of its counter-offer were already presented to the union and contained in the minutes of
previous meetings. The union thereafter requested for a copy of the comparison of the salaries of its members and
those from allied industries. The company denied the request on the ground that the requested information was
entrusted to the company under a confidential agreement. Alleging failure on the part of the company to justify its
offer, the union manifested that the company was bargaining in bad faith.  The company, in turn, expressed its
5

disagreement with the union’s manifestation. 6

On the parties’ 41st meeting held on September 2, 2004, the company proposed the declaration of a deadlock and
recommended that the help of a third party be sought. The union replied that they would formally answer the
proposal of the company a day after the signing of the official minutes of the meeting. On that same day, however,
the union filed a Notice of Strike in the National Conciliation and Mediation Board (NCMB), alleging bad faith

Labor II – 1
bargaining on the part of the company. The NCMB immediately summoned the parties for the mandatory
conciliation-mediation proceedings but the parties failed to reach an amicable settlement. 7

Assumption of Jurisdiction by the Secretary of Labor and Employment

On September 16, 2004, during the cooling off period, the union conducted the necessary strike vote. The members
of the union, who participated in the voting, unanimously voted for the holding of a strike. Upon being aware of this
development, the company filed a Petition for Assumption of Jurisdiction with the Secretary of Labor and
Employment.  The petition was filed pursuant to the first paragraph of Article 263(g) of the Labor Code which
8

provides:

ART. 263. Strikes, picketing, and lockouts. – x x x

xxxx

(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 the compliance with this provision as well as with such orders as he may issue to enforce the same.

The company’s petition for assumption of jurisdiction was docketed as OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-

048-04.

In an Order  dated September 20, 2004, the then Secretary of Labor and Employment, Patricia Sto. Tomas, granted
9

the petition of the company. The Secretary of Labor and Employment took notice of the Notice of Strike filed by the
union in the NCMB which charged the company with unfair labor practice consisting of bad faith in bargaining
negotiations. The Secretary of Labor and Employment also found that the intended strike would likely affect the
company’s capacity to provide petroleum products to the company’s various clientele, including the transportation
sector, the energy sector, and the manufacturing and industrial sectors. The Secretary of Labor and Employment
further observed that a strike by the union would certainly have a negative impact on the price of commodities.
Convinced that such a strike would have adverse consequences on the national economy, the Secretary of Labor
and Employment ruled that the labor dispute between the parties would cause or likely to cause a strike in an
industry indispensable to the national interest. Thus, the Secretary of Labor and Employment assumed jurisdiction
over the dispute of the parties. The dispositive portion of the Order dated September 20, 2004 reads:

WHEREFORE, considering the foregoing premises, this Office hereby assumes jurisdiction over the labor dispute
between the TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION and the PILIPINAS SHELL
PETROLEUM CORPORATION, pursuant to Article 263 (g) of the Labor Code, as amended.

Accordingly, any form of concerted action, whether actual or intended, is hereby enjoined. Parties are directed to
maintain the status quo existing at the time of service of this Order. They are also ordered not to commit any act that
may exacerbate the situation.

However, if at the time of service of this Order a strike has already commenced, the employees are directed to
immediately return to work within twenty-four (24) hours from receipt thereof. In such case[,] the employer shall,
without unnecessary delay, resume operations and readmit all workers under the same terms and conditions
prevailing before the strike.

To expedite the resolution of this dispute, the parties are directed to submit in three [3] copies, their respective
Position Paper on the economic issues and those raised in the Notice of Strike, docketed as NCMB-RBIV-LAG-NS-
09-048-04. It must be submitted personally to this Office within seven [7] calendar days from receipt of this Order.

Labor II – 1
Another three [3] calendar days from receipt of the other party’s position paper shall be allowed for the personal
filing or submission of their respective Comment and Reply thereon. Service of position papers together with
annexes, affidavits and other papers accompanying the same should be done personally. If service by registered
mail cannot be avoided, it should follow the mandate of Article 263 of the Labor Code and shall be deemed
complete upon the expiration of five (5) calendar days from mailing. After said period[,] the allowed time for filing of
Reply shall start, after which, the case shall be deemed submitted for resolution.

The Company is ordered to attach the following documents to its position paper, to assist this Office in the prompt
resolution of this case:

a] Complete Audited Financial Statements for the past five [5] years certified as to its completeness by the Chief
Financial Comptroller or Accountant, as the case may be[;]

SEC stamped COMPLETE audited Financial Statements shall include the following:

1. Independent Auditor’s opinion

2. Comparative Balance Sheet

3. Comparative Income Statement

4. Comparative Cash Flows

5. Notes to the Financial Statements as required by SEC

b] Projected Financial Statements of the Company FOR THE NEXT THREE [3] YEARS (Balance Sheets, Income
Statements, Cash Flow, and Appropriate notes to such projected [F]inancial Statements);

c] CBA history as to all the economic issues;

d] Cost estimates of its final offer on the specific CBA issues;

e] A separate itemized summary of the Management Offer and the Union demands with [the] following format:

[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/170007.pdf]]

Description of Existing CBA Union Demands Management Offer

Demands

1.      

2.      

The Union is directed to provide a copy of their last CBA, an itemized summary of its CBA demands, as well as a
computation of their cost[s] that require resolution in triplicate copies using the same format stated above.

No petition, pleading or any opposition thereto shall be acted upon by this Office, without proof of its service to the
adverse party/parties.

In the interest of speedy labor justice, this Office will entertain no motion for extension or postponement.

The urgency of the need to rule on this case is only in faithful adherence to the following provision of Article 263
paragraph (i) of the Labor Code, as follows:

Labor II – 1
"The Secretary of Labor and Employment, the Commission or the voluntary arbitrator shall decide or resolve the
dispute within thirty (30) calendar days from the date of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. x x x"

The appropriate police authority is hereby deputized to enforce this Order if it turns out that within twenty-four (24)
hours from service hereof, there appears a refusal by either or both parties to comply herewith. 10

The Secretary of Labor and Employment denied the motion for reconsideration of the union in a Resolution dated
October 6, 2004. The union’s second motion for reconsideration was denied in a Resolution dated December 13,
2004.11

Petition for certiorari in the Court of Appeals

The union thereafter filed a petition for certiorari,  docketed as CA-G.R. SP No. 88178, in the Court of Appeals on
12

January 13, 2005. The union alleged in its petition that the Secretary of Labor and Employment acted with grave
abuse of discretion in grossly misappreciating the facts and issue of the case. It contended that the issue is the
unfair labor practice of the company in the form of bad faith bargaining and not the CBA deadlock. Anchoring its
position on item 8 of what the parties agreed upon as the ground rules that would govern the negotiations, the union
argued that, at the time the Order dated September 20, 2004 was issued, there was no CBA deadlock on account of
the union’s non-conformity with the declaration of a deadlock, as item 8 of the said ground rules provided that a
"deadlock can only be declared upon mutual consent of both parties." Thus, the Secretary of Labor and Employment
committed grave abuse of discretion when she assumed jurisdiction and directed the parties to submit position
papers even on the economic issues. 13

The Court of Appeals found the position of the union untenable. It cited this Court’s ruling in St. Scholastica’s
College v. Torres  that the authority of the Secretary of Labor and Employment under Article 263(g) of the Labor
14

Code to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes questions and controversies arising from the said dispute, including
cases over which the Labor Arbiter has exclusive jurisdiction. Applying St. Scholastica’s College, the Court of
Appeals found that the 2004 CBA Official Minutes of the Meetings show that the union and the company were
already discussing the economic issues when the union accused the company of bargaining in bad faith. As such,
the Secretary of Labor and Employment had the authority to take cognizance of the economic issues, which issues
were the necessary consequence of the alleged bad faith bargaining. 15

Moreover, according to the Court of Appeals, Article 263(g) of the Labor Code vests in the Secretary of Labor and
Employment not only the discretion to determine what industries are indispensable to national interest but also the
power to assume jurisdiction over such industries’ labor disputes, including all questions and controversies arising
from the said disputes. Thus, as the Secretary of Labor and Employment found the company’s business to be one
that is indispensable to national interest, she had authority to assume jurisdiction over all of the company’s labor
disputes, including the economic issues. 16

Finally, the Court of Appeals noted that the union’s contention that the Secretary of Labor and Employment cannot
resolve the economic issues because the union had not given its consent to the declaration of a deadlock was
already moot. The Court of Appeals observed that the union filed on February 7, 2005 another Notice of Strike citing
CBA deadlock as a ground and, in an Order dated March 1, 2005, the then Acting Secretary of Labor and
Employment, Manuel Imson, granted the company’s Manifestation with Motion to Consider the Second Notice of
Strike as Subsumed to the First Notice of Strike. 17

Given the above reasons, the Court of Appeals dismissed the petition for certiorari of the union. The dispositive
portion of the Decision dated August 8, 2005 reads as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition must be, as it hereby is DISMISSED, for lack of
merit. Costs against petitioner.18

A detour: from the National Labor Relations Commission to the Secretary of Labor and Employment

Labor II – 1
In the meantime, on February 2, 2005, the union filed a complaint for unfair labor practice against the corporation in
the National Labor Relations Commission. The union alleged that the company refused, or violated its duty, to
bargain.19

The company moved for the dismissal of the complaint, believing that all the elements of forum shopping and/or litis
pendentia were present. 20

In an Order  dated May 9, 2005, the Labor Arbiter found that the case arose from the very same CBA negotiations
21

which culminated into a labor dispute when the union filed a notice of strike for bad faith bargaining and CBA
deadlock. According to the Labor Arbiter, the issue raised by the union, refusal to bargain, was a proper incident of
the labor dispute over which the Secretary of Labor and Employment assumed jurisdiction. Thus, the case was
forwarded for consolidation with the labor dispute case of the parties in the Office of the Secretary of Labor and
Employment.

Decision of the Secretary of Labor and Employment

During the pendency of the union’s petition for certiorari in the Court of Appeals, the Secretary of Labor and
Employment rendered a Decision  dated June 8, 2005 in
22

OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-048-04/NCMB-RBIV-LAG-NS-02-004-05.

In her Decision, the Secretary of Labor and Employment held that there was already deadlock although the ground
for the first Notice of Strike was unfair labor practice for bargaining in bad faith. Citing Capitol Medical Center
Alliance of Concerned Employees-Unified Filipino Service Workers v. Laguesma  where it has been held that there
23

may be a deadlock not only in the strict legal sense of an impasse despite reasonable effort at good faith bargaining
but also where one of the parties unduly refuses to comply with its duty to bargain, the Secretary of Labor and
Employment ruled that the circumstances – 41 CBA meetings showing "reasonable efforts at good faith bargaining"
without arriving at a CBA – show that there was effectively a bargaining deadlock between the parties. 24

Moreover, the Secretary of Labor and Employment also passed upon the issue of whether the company was guilty
of bargaining in bad faith:

Now, is the Company guilty of bargaining in bad faith? This Office rules in the negative.

The duty to bargain does not compel any party to accept a proposal, or make any concession, as recognized by
Article 252 of the Labor Code, as amended. The purpose of collective bargaining is the reaching of an agreement
resulting in a contract binding on the parties; however, the failure to reach an agreement after negotiations
continued for a reasonable period does not establish a lack of good faith. The laws invite and contemplate a
collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to
reach an agreement. Thus, the Company’s insistence on a bargaining position to the point of stalemate does not
establish bad faith. The Company’s offer[,] a lump sum of Php88,000 per year, for each covered employee in lieu of
a wage increase cannot, by itself, be taken as an act of bargaining in bad faith. The minutes of the meetings of the
parties, show that they both exerted their best efforts, to try to resolve the issues at hand. Many of the proposed
improvements or changes, were either resolved, or deferred for further discussion. It is only on the matter of the
wage increase, that serious debates were registered. However, the totality of conduct of the Company as far as their
bargaining stance with the Union is concerned, does not show that it was bargaining in bad faith. 25

The Secretary of Labor and Employment then proceeded to decide on the matter of the wage increase and other
economic issues of the new CBA. For failure of the union to substantiate its demand for wage increase as it did not
file its position paper, the Secretary of Labor and Employment looked at the financial situation of the company, as
shown by its audited financial statements, and found it just and equitable to give a lump sum package of ₱95,000.00
per year, per covered employee, for the new CBA covering the period May 1, 2004 until April 30, 2007. The
Secretary of Labor and Employment further retained the other benefits covered by the 2001-2004 CBA as she found
the said benefits to be sufficient and reasonable.
26

Neither the union nor the company appealed the Decision dated June 8, 2005 of the Secretary of Labor and
Employment.  Thus, the said Decision attained finality.
27

Labor II – 1
 The present petition

The union now comes to this Court to press its contentions. It insists that the corporation is guilty of unfair labor
practice through bad faith bargaining. According to the union, bad faith bargaining and a CBA deadlock cannot
legally co-exist because an impasse in negotiations can only exist on the premise that both parties are bargaining in
good faith. Besides, there could have been no deadlock between the parties as the union had not given its
consent to it, pursuant to item 8 of the ground rules governing the parties’ negotiations which required mutual
consent for a declaration of deadlock. The union also posits that its filing of a CBA deadlock case against the
company was a separate and distinct case and not an offshoot of the company’s unfair labor practice through
bargaining in bad faith. According to the union, as there was no deadlock yet when the union filed the unfair
labor practice of bargaining in bad faith, the subsequent deadlock case could neither be an offshoot of, nor an
incidental issue in, the unfair labor practice case. Because there was no deadlock yet at the time of the filing of
the unfair labor practice case, the union claims that deadlock was not an incidental issue but a non-issue.
As deadlock was a non-issue with respect to the unfair labor practice case, the Court of Appeals misapplied
St. Scholastica’s College and the Secretary of Labor and Employment committed grave abuse of discretion
when it presumed deadlock in its Order dated September 20, 2004 assuming jurisdiction over the labor
dispute between the union and the company. 28

For its part, the company argues that the Court of Appeals correctly affirmed the Order dated September 20, 2004 of
the Secretary of Labor and Employment assuming jurisdiction over the labor dispute between the parties. The
company claims that it is engaged in an industry that is vital to the national interest, and that the evidence on record
established that there was already a full-blown labor dispute between the company and the union arising from the
deadlock in CBA negotiations. The company insists that the alleged bad faith on its part, which the union claimed to
have prevented any CBA deadlock, has no basis. The company invokes the final Decision dated June 8, 2005 of the
Secretary of Labor and Employment which ruled that the company was not guilty of bargaining in bad faith. For the
company, even if the union’s first Notice of Strike was based on unfair labor practice and not deadlock in bargaining,
the Secretary of Labor and Employment’s assumption of jurisdiction over the labor dispute between the parties
extended to all questions and controversies arising from the labor dispute, that is, including the economic issues. 29

The Court’s ruling

The petition fails. There are at least four reasons to support the denial of the petition and each reason is sufficient to
defeat the union’s claims.

First, the petition is barred by res judicata in the concept of conclusiveness of judgment.

The concept of conclusiveness of judgment is explained in Nabus v. Court of Appeals  as follows:
30

The doctrine states that a fact or question which was in issue in a former suit, and was there judicially passed on
and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein, as far as
concerns the parties to that action and persons in privity with them, and cannot be again litigated in any future action
between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the
same or a different cause of action, while the judgment remains unreversed or unvacated by proper authority. The
only identities thus required for the operation of the judgment as an estoppel x x x are identity of parties and identity
of issues.

It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another
action between the same parties or their privies, it is essential that the issues be identical. If a particular point or
question is in issue in the second action, and the judgment will depend on the determination of that particular point
or question, a former judgment between the same parties [or their privies] will be final and conclusive in the second
if that same point or question was in issue and adjudicated in the first suit[.] x x x. (Citations omitted.)

The Decision dated June 8, 2005 of the Secretary of Labor and Employment in the labor dispute over which he
assumed jurisdiction, OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-048-04/NCMB-RBIV-LAG-NS-02-004-05, has
long attained finality. The union never denied this.

Labor II – 1
In this connection, Article 263(i) of the Labor Code is clear:

ART. 263. Strikes, picketing, and lockouts. – x x x

xxxx

(i) The Secretary of Labor and Employment, the Commission or the voluntary arbitrator shall decide or resolve the
dispute within thirty (30) calendar days from the date of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. The decision of the President, the Secretary of Labor and
Employment, the Commission or the voluntary arbitrator shall be final and executory ten (10) calendar days after
receipt thereof by the parties. (Emphases supplied.)

Pursuant to Article 263(i) of the Labor Code, therefore, the Decision dated June 8, 2005 of the Secretary of Labor
and Employment became final and executory after the lapse of the period provided under the said provision.
Moreover, neither party further questioned the Decision dated June 8, 2005 of the Secretary of Labor and
Employment.

The Decision dated June 8, 2005 of the Secretary of Labor and Employment already considered and ruled upon the
issues being raised by the union in this petition. In particular, the said Decision already passed upon the issue of
whether there was already an existing deadlock between the union and the company when the Secretary of Labor
and Employment assumed jurisdiction over their labor dispute. The said Decision also answered the issue of
whether the company was guilty of bargaining in bad faith. As the Decision dated June 8, 2005 of the Secretary of
Labor and Employment already settled the said issues with finality, the union cannot once again raise those issues
in this Court through this petition without violating the principle of res judicata, particularly in the concept of
conclusiveness of judgment.

Second, a significant consequence of the finality of the Decision dated June 8, 2005 of the Secretary of Labor and
Employment is that it rendered the controversy between the union and the company moot.

In particular, with the finality of the Decision dated June 8, 2005, the labor dispute, covering both the alleged
bargaining in bad faith and the deadlock, between the union and the company was settled with finality. As the said
Decision settled essentially the same questions being raised by the union in this case, the finality of the said
Decision rendered this case moot. The union cannot be allowed to use this case to once again unsettle the issues
that have been already settled with finality by the final and executory Decision dated June 8, 2005 of the Secretary
of Labor and Employment.

Moreover, the issues of alleged bargaining in bad faith on the part of the company and the deadlock in the
negotiations were both incident to the framing of a new CBA that would govern the parties for the period 2004 to
2007. Not only had the said period long lapsed, the final Decision dated June 8, 2005 of the Secretary of Labor and
Employment also facilitated the framing of the new CBA, particularly on the disputed provision on annual lump sum
payment in lieu of wage increase. The dispositive portion of the said Decision is clear and categorical:

WHEREFORE, this Office hereby orders:

1. The award of Php95,000 lump sum, per covered employee per year, for the duration of their CBA,
effective 01 May 2004 to 30 April 2007;

2. The retention of benefits on vacation leave, sick leave, and special leave as provided in the 2001-2004
CBA;

3. All improvements that [the] parties may have agreed upon during the negotiations, are adopted as part of
the CBA. All other demands, not passed upon herein, are deemed DENIED.

The parties are hereby directed, to submit a copy of the CBA incorporating the awards granted herein, within ten
(10) days from receipt of this Decision.31

Labor II – 1
As the above directive of the Secretary of Labor and Employment in the decretal portion of the Decision dated June
8, 2005 has long been final and executory, the dispute on the matter of the provision on annual wage increase
contra yearly lump sum payment is already moot.

Third, the petition is improper as it presents questions of fact. A question of fact cannot properly be raised in a
petition for review under Rule 45 of the Rules of Court.  This petition of the union now before this Court is a petition
32

for review under Rule 45 of the Rules of Court.

The existence of bad faith is a question of fact and is evidentiary.  The crucial question of whether or not a party has
33

met his statutory duty to bargain in good faith typically turns on the facts of the individual case, and good faith or bad
faith is an inference to be drawn from the facts.  Thus, the issue of whether or not there was bad faith on the part of
34

the company when it was bargaining with the union is a question of fact. It requires that the reviewing court look into
the evidence to find if indeed there is proof that is substantial enough to show such bad faith.

The issue of whether there was already deadlock between the union and the company is likewise a question of fact.
It requires the determination of evidence to find whether there is a "counteraction" of forces between the union and
the company and whether each of the parties exerted "reasonable effort at good faith bargaining."  This is so
35

because a deadlock is defined as follows:

A ‘deadlock’ is x x x the counteraction of things producing entire stoppage; x x x There is a deadlock when there is a
complete blocking or stoppage resulting from the action of equal and opposed forces x x x. The word is synonymous
with the word impasse, which x x x ‘presupposes reasonable effort at good faith bargaining which, despite noble
intentions, does not conclude in agreement between the parties.’ 36

Considering that the issues presented by the union are factual issues, the union’s petition is improper. As a rule, this
Court cannot properly inquire into factual matters in the exercise of its judicial power under Rule 45 of the Rules of
Court. While there are exceptions to this rule, none of the exceptions apply in this case.

Fourth, and finally, assuming that this Court may disregard the conclusiveness of judgment and review the
factual matters raised by the union, the merits are still not in the union’s favor.

The findings of fact of the Secretary of Labor and Employment in the Decision dated June 8, 2005 that there already
existed a bargaining deadlock when she assumed jurisdiction over the labor dispute between the union and the
company, and that there was no bad faith on the part of the company when it was bargaining with the union are both
supported by substantial evidence. This Court sees no reason to reverse or overturn the said findings.

The final and executory Decision dated June 8, 2005 of the Secretary of Labor and Employment squarely
addressed the contention of the union that the company was guilty of bargaining in bad faith. The said Decision
correctly characterized the nature of the duty to bargain, that is, it does not compel any party to accept a proposal or
to make any concession.  While the purpose of collective bargaining is the reaching of an agreement between the
37

employer and the employee’s union resulting in a binding contract between the parties, the failure to reach an
agreement after negotiations continued for a reasonable period does not mean lack of good faith. The laws invite
and contemplate a collective bargaining contract but do not compel one.  For after all, a CBA, like any contract is a
38

product of mutual consent and not of compulsion. As such, the duty to bargain does not include the obligation to
reach an agreement.  In this light, the corporation’s unswerving position on the matter of annual lump sum payment
39

in lieu of wage increase did not, by itself, constitute bad faith even if such position caused a stalemate in the
negotiations, as correctly ruled by the Secretary of Labor and Employment in the decision dated June 8, 2005.

As there was no bad faith on the part of the company in its bargaining with the union, deadlock was possible and did
occur. The union’s reliance on item 8 of the ground rules governing the parties’ negotiations which required mutual
consent for a declaration of deadlock was reduced to irrelevance by the actual facts. Contra factum non valet
argumentum. There is no argument against facts. And the fact is that the negotiations between the union and the
company were stalled by the opposing offers of yearly wage increase by the union, on the one hand, and annual
lump sum payment by the company, on the other hand. Each party found the other’s offer unacceptable and neither
party was willing to yield. The company suggested seeking the assistance of a third party to settle the issue but the
union preferred the remedy of filing a notice of strike. Each party was adamant in its position. Thus, because of the
unresolved issue on wage increase, there was actually a complete stoppage of the ongoing negotiations
Labor II – 1
between the parties and the union filed a Notice of Strike. A mutual declaration would neither add to nor
subtract from the reality of the deadlock then existing between the parties. Thus, the absence of the parties’
mutual declaration of deadlock does not mean that there was no deadlock. At most, it would have been simply
a recognition of the prevailing status quo between the parties.

More importantly, the union only caused confusion in the proceedings before the Secretary of Labor and
Employment when it questioned the latter’s assumption of jurisdiction over the labor dispute between the union and
the company on the ground that the "Secretary erred in assuming jurisdiction over the ‘CBA’ case when it [was] not
the subject matter of the notice of strike" because the case was "all about ‘ULP’ in the form of bad faith bargaining."
For the union, the Secretary of Labor and Employment should not have touched the issue of the CBA as
there was no CBA deadlock at that time, and should have limited the assumption of jurisdiction to the
charge of unfair labor practice for bargaining in bad faith. 40

The union is wrong.

As discussed above, there was already an actual existing deadlock between the parties. What was lacking was the
formal recognition of the existence of such a deadlock because the union refused a declaration of deadlock. Thus,
the union’s view that, at the time the Secretary of Labor and Employment exercised her power of assumption of
jurisdiction, the issue of deadlock was neither an incidental issue to the matter of unfair labor practice nor an existing
issue is incorrect.

More importantly, however, the union’s mistaken theory that the deadlock issue was neither incidental nor existing is
based on its premise that the case is all about the company’s alleged unfair labor practice of bargaining in bad faith,
which is the ground stated in its first Notice of Strike. In particular, the union asserts:

The evidentiary value of the Notice of Strike for ULP of BAD FAITH BARGAINING (Annex "M" of the petition) cannot
be taken for granted. It is the very important documentary evidence that shows what is the existing "labor dispute"
between the parties. 41

While the first Notice of Strike is indeed significant in the determination of the existing labor dispute between the
parties, it is not the sole criterion. As this Court explained in Union of Filipro Employees-Drug, Food and Allied
Industries Unions-Kilusang Mayo Uno v. Nestle Philippines, Inc. : 42

The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and decide the same accordingly.  And, as a matter of necessity, it
1âwphi1

includes questions incidental to the labor dispute; that is, issues that are necessarily involved in the
dispute itself, and not just to that ascribed in the Notice of Strike or otherwise submitted to him for
resolution. x x x (Emphasis supplied.)

The totality of the company’s Petition for Assumption of Jurisdiction, including every allegation therein, also guided
the Secretary of Labor and Employment in the proper determination of the labor dispute over which he or she was
being asked to assume jurisdiction.

A "labor dispute" is defined under Article 212(l) of the Labor Code as follows:

ART. 212. Definitions. – x x x

xxxx

(l) "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.

Labor II – 1
In this case, there was a dispute, an unresolved issue on several matters, between the union and the company in
the course of the negotiations for a new CBA. Among the unsettled issues was the matter of compensation. In
particular, paragraphs 1 to 6 of the statement of Antecedent Facts in the company’s Petition for Assumption of
Jurisdiction  read:
43

1. The Collective Bargaining Agreement (CBA) of the Company and the Union expired on 30 April 2004.

2. Thus, as early as 13 April 2004, the Company and the Union already met to discuss the ground rules that
would govern their upcoming negotiations. Then, on 15 April 2004, the Union submitted its proposals for the
renewal of their CBA.

3. While a total of 41 meetings were held between the parties, several items, including the matter of
compensation, remained unresolved.

Copies of the Minutes of the 41 meetings are attached hereto and made integral part hereof as Annexes "A"
to "A-40".

4. On 2 September 2004, the Union filed a Notice of Strike with the NCMB, Region IV based in Calamba,
Laguna anchored on a perceived unfair labor practice consisting of alleged bad faith bargaining on the part
of the Company.

Although there is no basis to the charge of unfair labor practice as to give a semblance of validity to the
notice of strike, the Company willingly and actually participated in the conciliation and mediation conferences
called by the NCMB to settle the dispute.

A copy of the Notice of Strike is attached hereto and made integral part hereof as Annex "B".

5. Although conciliation meetings have been conducted by the National Conciliation and Mediation Board
(NCMB) through Conciliator Leodegario Teodoro on 09 and 13 September 2004, no settlement of the
dispute has yet been agreed upon.

6. Based on the attendant circumstances, as well as on the actuations of the Union officers and members, it
is likely that the Union has already conducted, or is set to conduct soon, a strike vote.
44

Thus, the labor dispute between the union and the company concerned the unresolved matters between the parties
in relation to their negotiations for a new CBA. The power of the Secretary of Labor and Employment to assume
jurisdiction over this dispute includes and extends to all questions and controversies arising from the said
dispute, such as, but not limited to the union’s allegation of bad faith bargaining. It also includes and
extends to the various unresolved provisions of the new CBA such as compensation, particularly the matter
of annual wage increase or yearly lump sum payment in lieu of such wage increase, whether or not there
was deadlock in the negotiations. Indeed, nowhere does the Order dated September 20, 2004 of the Secretary of
Labor and Employment mention a CBA deadlock. What the union viewed as constituting the inclusion of a CBA
deadlock in the assumption of jurisdiction was the inclusion of the economic issues, particularly the company’s
stance of yearly lump sum payment in lieu of annual wage increase, in the directive for the parties to submit their
respective position papers.  The union’s Motion for Reconsideration (With Urgent Prayer to Compel the Company to
45

Justify Offer of Wage [Increase] Moratorium) and Second Motion for Reconsideration questioning the Order dated
September 20, 2004 of the Secretary of Labor and Employment actually confirm that the labor dispute between the
parties essentially and necessarily includes the conflicting positions of the union, which advocates annual wage
increase, and of the company, which offers yearly lump sum payment in lieu of wage increase. In fact, that is the
reason behind the union’s prayer that the company be ordered to justify its offer of wage increase moratorium.  As
46

there is already an existing controversy on the matter of wage increase, the Secretary of Labor and Employment
need not wait for a deadlock in the negotiations to take cognizance of the matter. That is the significance of the
power of the Secretary of Labor and Employment under Article 263(g) of the Labor Code to assume jurisdiction over
a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest. As
this Court elucidated in Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the
Department of Labor and Employment : 47

Labor II – 1
Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary situation - a strike or
lockout in an industry indispensable to the national interest. This grant is not limited to the grounds cited in the
notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike
or lockout that in the meanwhile may have taken place. As the term "assume jurisdiction" connotes, the intent of the
law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which
arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to
the dispute, including cases over which the labor arbiter has exclusive jurisdiction. (Citation omitted.)

Everything considered, therefore, the Secretary of Labor and Employment committed no abuse of discretion when
she assumed jurisdiction over the labor dispute of the union and the company.

WHEREFORE, the petition is hereby DENIED.

Labor II – 1
29.) Ramirez v Polyson. Duplicate case. See previous.

Labor II – 1
 30.) G.R. No. 211526, June 29, 2016

PMI-FACULTY AND EMPLOYEES UNION, Petitioner, v. PMI COLLEGES BOHOL, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 which seeks to nullify the December
20, 2012 and January 30, 2014 resolutions2 of the Court of Appeals in CA-G.R. CEB-SP No.
07204.

The Antecedents

Respondent PMI Colleges Bohol (respondent) is an educational institution that offers maritime

and customs administration courses to the public. Petitioner PMI-Faculty and Employees
Union (Union) is the collective bargaining representative of the respondent's rank-and-file faculty
members and administrative staff.

On October 2, 2009, the Union filed a notice of strike3 with the National Conciliation and
Mediation Board (NCMB) in Cebu City, against the respondent, on grounds of gross violation of
Sections 3 and 3(a) of their collective bargaining agreement (CBA). The Union threatened to go
on strike on the first working day of the year 2010 following the failure of the conciliation and
mediation proceedings to settle the dispute. In an order4 dated December 29, 2009, Secretary
Marianito D. Roque of the Department of Labor and Employment (DOLE) certified the dispute to
the National Labor Relations Commission (NLRC) for compulsory arbitration.

On July 19, 2010, the Union filed a second notice of strike allegedly over the same CBA violation.
On July 28, 2010, the respondent filed a Motion to Strike Out Notice of Strike and to Refer the
Dispute to Voluntary Arbitration, claiming that the Union failed to exhaust administrative
remedies before resorting to a 2nd notice of strike. On August 5, 2010, the respondent filed
a Motion for Joinder of Issues under the 2nd notice of strike with those of the 1st notice.

On August 2, 2010, the Union submitted its strike vote. It alleged that while waiting for the
expiration of the 15-day cooling-off period and/or the completion of the 7-day strike vote period,
its members religiously reported for duty. On August 9, 2010, the last day of the cooling-off and
strike vote periods, the Union officers and members reported for work (except for Union
President Alberto Porlacin who was attending to his sick wife at the time), but they were
allegedly not allowed entry to the school premises. This incident, according to the Union, was
confirmed under oath by its officers/members.

In protest of what it considered a lock-out by the respondent, the Union staged a strike on the
same day. The respondent reacted with a Petition to Declare the Strike Illegal, also filed on the
same day. DOLE Secretary Rosalinda D. Baidoz assumed jurisdiction over the dispute through an
order5 dated August 10, 2010. She directed the strikers to return rework, and the school to
resume operations.

The Compulsory Arbitration Decisions

In his decision6 of September 26, 2011, Labor Arbiter Leo N. Montenegro (LA

Montenegro) dismissed the petition for lack of merit, declaring that the petitioner substantially

Labor II – 1
complied with all the requirements of a valid strike, except for staging the strike a day earlier.
LA Montenegro considered the staging of the strike one day earlier not sufficient for a
declaration of illegality as the Union "officers/members were illegally locked out by the petitioner
in not allowing them to enter the school premises to perform their respective jobs x x x."7 chanrobleslaw

LA Montenegro brushed aside the respondent's submission that there is no proof that it locked
out the Union officers/members on August 9, 2010, for the Union's failure to present as evidence
the memorandum the school supposedly issued regarding the alleged lockout. LA Montenegro
gave more credence to the testimonies8 of the Union officers and members regarding the
lockout. He stressed that the respondent could have been more convincing had it presented the
statements of the security guards who manned the gates during the strike on whether the
strikers were prevented from reporting for work on August 9, 2010.

On appeal by the respondent, the NLRC reversed9 LA Montenegro's decision as it found the strike
"to be illegal for having failed to comply with the requisites of a valid strike. Thus, the Union
officers serving and acting as such during the period of the illegal strike are x x x deemed to
have lost their employment status with complainant PMI Colleges Bohol."10 chanrobleslaw

The NLRC was not persuaded by the Union's claim that its premature strike was precipitated by
the respondent's refusal to admit the members and officers of the Union inside the school
premises when they reported for work on August 9, 2010. It considered the affidavits of the
officers and members on the alleged lockout self-serving.

On the other hand, the NLRC pointed out, the compact disc submitted in evidence by the
respondent revealed that the strikers never mentioned that they were staging a strike due to the
respondent's refusal to give them entry to the school. It added that during the strike, the entry
to and exit from the school premises did not appear to be restricted by the security guards.

The Union moved for reconsideration, but the NLRC denied the motion in its resolution11 of June
29, 2012. The Union was thus constrained to seek relief from the CA through a Rule 65 petition
for certiorari.

The CA Ruling

In its first assailed resolution,12 the CA 20th Division dismissed the petition due to the following
procedural infirmities:ChanRoblesVirtualawlibrary

1. There is a deficiency in the docket and other lawful fees paid by the petitioner in
the amount of P30.00;

2. Petitioner failed to append an Affidavit of Service, in violation of Section 13, Rule 13

of the Rules of Court;

3. Petitioner failed to attach the Postal Registry Receipts in violation of Section 13,
Rule 13 of the Rules of Court;

4. Petitioner failed to  explain why the preferred personal  mode of FILING was not
availed of, in violation of Section 11, Rule 13 of the Rules of Court;

5. Petitioner merely attached photocopies of the certified true copies of the assailed
NLRC Decision and Resolution in violation of Section 3, Rule 46 in relation to
Section 1, Rule 65 of the 1997 Rules of Civil Procedure;

Labor II – 1
 6. Petitioner failed to state in the verification that the allegations in the petition are
'based on authentic records,' in violation of Section 4, Rule 7 of the 1997 Rules of
Civil Procedure, as amended by A.M. No. 00-2-10-SC (May 1, 2000);

7. In the Verification and Certification of Non-forum Shopping, no competent evidence

as to the identity of the petitioner was shown fat least one current identification
document issued by an official agency bearing the photograph and signature of the
petitioner) in violation of Section 12, Rule II of the 2004 Rules on Notarial
Commission; and  cralawlawlibrary

8. The Notarial Certificate in the Verification and Certification of Non- forum Shopping
did not contain the serial number of the notary public, the province or city where he
was commissioned and the office address of the notary public, in violation of
Section (b) and (c), Rule VIII of the 2004 Rules of Notarial Practice."

Additionally, the CA noted that '"the petition is bereft of any proof of authority for Mr. ALBERTO
PORLACIN to sign the Verification and Certification of Non-forum Shopping page in behalf of
petitioner PMI Faculty and Employees Union."13 chanrobleslaw

Under the Rules of Court, the CA emphasized, a pleading that lacks proper verification is treated
as an unsigned pleading14 and, an unsigned pleading produces no legal effect."15 chanrobleslaw

Undaunted, the Union moved for reconsideration, but the CA denied the motion in its resolution
of January 30, 2014.16 It stressed that the motion was not a challenge to its December 20, 2012
resolution, but an appeal for a liberal application of the formal requirements for
a certiorari petition.  The Union offered its explanation for its procedural lapses and, as a gesture
of its willingness to abide by the rules, it submitted an amended petition.17 chanrobleslaw

The CA was not persuaded by the Union's submission. It regarded the Union's explanations to be
"either admission of negligence or dismal excuses"18 which, in its appreciation, were a sufficient
justification for the dismissal of the petition. Moreover, the CA considered the amended petition
to be of no help in curing the Union's procedural lapses as the pleading itself was defective. It
pointed out in this respect that an attachment to the amended petition, a certified true copy of
the NLRC's assailed April 30, 2012 decision,19 had no relevance to the present case.

The CA explained that, in this case, the Union assailed the April 30, 2012 NLRC
decision20 in NLRC Case No. VAC-01-000054-2012 which stemmed from RAB Case No.
VIII-04-0024-11-B involving the issue of the legality oi illegality of the strike on August 9,
2010. On the other hand, what was attached to the amended petition was the April 30, 2012
NLRC decision21 in NLRC Case No.VAC-01-000053-2012 which arose from RAB Case No.
VII-04-0026-B where the respondent sought to have the Union declared liable for unfair labor
practice on grounds of alleged refusal to sign a negotiated CBA.

The Petition

The Union is now before the Court seeking a reversal of the CA resolutions on the issue of
whether the appellate court committed a reversible error of law when it dismissed its petition for
ceniorari solely on technical grounds. It argues that in dismissing the petition, the CA ignored
the principle that "substantial justice must prevail over procedural infirmities."22 chanrobleslaw

The Union pleads for a liberal application of the rules of procedure in the resolution of its dispute
with the respondent, especially when "it is obvious that the NLRC seriously erred and committed
Labor II – 1
grave abuse of discretion in holding that the strike was illegal and declaring all union officers
who have participated in the strike to have lost their employment status."23 It impugns the
evidence-the video footage (compact disc) of the strike area-relied upon by the NLRC in
concluding that the strike was illegal.

Particularly, the Union faults the NLRC for not checking the source of the video footage and the
credibility of whoever took it. It questions the reliability of the compact disc as it-was presented
only on appeal or after the lapse of 15 months from the happening, of the strike on August 9,
2012. It bewails that due to the advances in science and technology, the footage could have
been edited and even altered to produce the desired result.

The Respondent's Position

In its Comment24 dated September 1, 2014, the respondent prays that the petition be dismissed
for lack of merit and for being procedurally flawed.

On the matter of procedure, the respondent submits that the verification and certification of
non-forum shopping attached to the petition is defective because: (1) it was executed before the
petition was completed, pointing out that the document was executed on April 3, 2014, while the
petition was completed only on April 5, 2014; and (2) the authority of the affiant (Alberto
Porlacin) had not been shown.

Further, the respondent maintains, the Union was guilty of forum-shopping considering that
contrary to the Union's averment in the petition's verification and certification page, the Union
officers also filed an illegal dismissal case before the NLRC,

In any event, the respondent argues, the petition would still be without merit as the NLRC
correctly found illegal the strike declared by the Union on August 9, 2010.

The Court's Ruling

The procedural question

The CA decided the present labor dispute purely on technical grounds. Also, the respondent itself
would want the petition dismissed for alleged procedural lapses on the part of the Union.

After a careful study of the records, we find that the relaxation of the rules of procedure in this
case was the more prudent move to follow in the interest of substantial justice. Rules of
procedure are not inflexible tools designed to hinder or delay, but rather to facilitate and
promote the administration of justice. Their strict and rigid application which would result in
technicalities that tend to frustrate rather than promote substantial justice must always be
eschewed.25  Procedural rules were conceived to aid in the attainment of justice. If the stringent
cralawred

application of the rules would hinder rather than service the demands of justice, the former must
yield to the latter.26 chanrobleslaw

Moreover, it must be emphasized that the right to appeal should not be lightly disregarded by a
stringent application of rules of procedure especially where the appeal is on its face meritorious
and the interest of substantial justice would be served by permitting the appeal.27 This principle
finds particular significance in administrative and quasi-judicial bodies, like the NLRC, which are
not bound by technical rules of procedure in the adjudication of cases.28 chanrobleslaw

Had the CA also looked into the merits of the case, it could have found that the Union's certiorari
petition was not without basis, as we shall discuss below. The case calls for a resolution on the
Labor II – 1
merits. And, although the Court is not a trier of facts, we deem it proper not to remand the case
to the CA anymore and to resolve the appeal ourselves, without further delay.

In Metro Eye Security, Inc., v. Julie V. Salsona,29 the Court avoided a remand of the case to the
CA, "x x x since all the records of this case are before us, there is no need to remand the case to
the Court of Appeals. On many occasions, the Court, in the public interest and for expeditious
administration of justice, has resolved actions on the merits, instead of remanding them for
further proceedings, as where the ends of justice would not be sub-served by the remand of the
case."30 The present case is in this same situation.

The merits of the case

The declaration of the strike a day before the completion of the cooling-off and strike
vote periods was but a reaction to the respondent's locking out the officers and
members of the Union. The Union does not deny that it staged the strike on August 9, 2010,
or on the 21st day after the filing of the strike notice on July 19, 2010, and the submission of
the strike vote on August 2, 2010, a day earlier than the 22 days required by law (15 days strike
notice, plus 7 days strike vote period).31 It, however, maintained that it was left with no choice
but to go on strike a day earlier because the respondent had barred its officers and members
from entering the school premises.

The NLRC had been too quick in rejecting the sworn statements32 of the Union officers and
members that they had been locked out by the respondent when they reported for duty in the
morning of August 9, 2010, branding their affidavits as self-serving, without providing any basis
for such a conclusion other than who submitted the statements in evidence,33 which it implied to
be the Union.

On the contrary, we find the statements credible, particularly those of Engr.

Teodomila Mascardo, Engr. Conchita Bagaslao, Ms. Mary Jean Enriquez, and Mr.
Cirilo Fallar34 that they had classes at 7:30 a.m. to 8:30 a.m. on Monday, August 9, 2010, and
that, in compliance with their teaching load, they had to be in the school premises at 7:00 a.m.
but were surprised when they were not allowed to enter on that day by the guards on duty. They
protested, they added, and insisted on entering the school premises, but they were pushed out
of the school grounds by the guards who said that they were just following orders from the PMI
management.

Under the circumstances, we find no reason for Mascardo, Bagaslao, Enriquez, and Fallar to
make self-serving and therefore false statements on their failure to hold their classes in the
morning of August 9, 2010 because they were refused entry by the security guards. While they
are Union members, they are first and foremost teachers who were reporting for duty on that
day. The same thing can be said of the Union officers who were also refused entry by the
guards. We likewise find no reason for the officers to throw away all their preparations for a
lawful strike on the very last day, had they not been pushed to act by the respondent's closing
of the gates on August 9, 2010.

It was thus grave abuse of discretion for the NLRC to completely ignore the affidavits of the
officers and members of the Union directly saying that they were refused entry into the school
premises on August 9, 2010, especially when LA Montenegro intimated that the respondent
could have presented the testimonies of the guards on duty at the time to belie .the statements
of the Union officers and members.

In sharp contrast, the NLRC readily admitted the video footage of the strike area on August 9,

Labor II – 1
2010, which the respondent offered in evidence only on appeal or more than a year (15 months)
after it was supposed to have been taken. The much belated submission of the video footage
puts in question, as the Union argued in its certwrari petition, the authenticity and. therefore,
the credibility of the footage. Why was the footage not presented to the labor arbiter,
considering that the respondent reserved the right to adduce additional evidence, documentary
and testimonial, in the resolution of the case?35 Why did it take more than a year to present it
when the footage was taken on the first day of the strike?

The respondent's explanation for the 15-month delay in the presentation of the compact disc
contents to prove that the school did not lock out the Union members and officers deserves
scant consideration. We are not convinced that the respondent spent more than a year to secure
the affidavits of the personnel of Ramasola Superstudio, based in Tagbilaran City, that
purportedly took the footage. As the Union pointed out,-a member of the school's management,
lawyer Evaneliza Cloma-Lucero, who resides in Tagbilaran City could have been asked to depose
the studio's personnel. Neither are we persuaded by the excuse that the respondent's counsel is
residing in Pasig City. Again, as observed by the Union, air travel can bring the lawyer to
Tagbilaran City in just a little over an hour to take the deposition.

The inordinate delay in the submission of the compact disc cannot but generate negative
speculations on why it took so long for the respondent to introduce it in evidence. We thus find
the Union's apprehension about the authenticity and credibility of the compact disc not
surprising; 15 months are too long a period to wait for the submission of a piece of evidence
which existed on the first day of the strike way back on August 9, 2010.

Like its immediate rejection of the affidavits of the Union members and officers for being "self-
serving," without giving any credible basis for its sweeping declaration, we find the NLRC to have
overstepped the bounds of its discretionary authority in "swallowing hook, line, and sinker," as
the Union put it,36 the compact disc submitted by the school, as it is obvious that it was suffering
from a serious doubt in credibility because of its much belated submission. The doubt should
have been resolved in favor of the Union.

At this point, it is well to stress that under Article 4 of the Labor Code, "all doubts in the
implementation and interpretation of the provisions of this Code, including its implementing
rules and regulations, shall be resolved in favor of labor." In Peñaflor v. Outdoor Clothing
Manufacturing Corporation,37 the Court reiterated that the principle laid down in the law has
been extended by jurisprudence to cover doubts in the evidence presented by the employer and
the employee.38 As discussed earlier, the Union has raised serious doubt on the evidence relied
on by the NLRC. Consistent with Article 4 of the Labor Code, we resolve the doubt in the Union's
favor.

In sum, we find merit in the petition. The CA reversibly erred when (1) it decided the present
labor dispute and dismissed the Union's certiorari petition purely on technical grounds, and (2) in
blindly ignoring the blatant grave abuse of discretion on the part of the NLRC that completely
disregarded the affidavits of the officers and members of the Union and readily admitted the
respondent's belatedly submitted video footage.

WHEREFORE, premises considered, the petition for review on certiorari  is GRANTED. The

assailed resolutions of the Court of Appeals are SET ASIDE. The September 26, 2011 decision
of Labor Arbiter Leo N. Montenegro is REINSTATED, and the April 30, 2012 decision of the
National Labor Relations Commission VACATED.

Labor II – 1
 31.) G.R. No. 156635, January 11, 2016

THE HONGKONG & SHANGHAI BANKING CORPORATION EMPLOYEES UNION, MA.

DALISAY P. DELA CHICA, MARVILON B. MILITANTE, DAVID Z. ATANACIO, JR.,
CARMINA C. RIVERA, MARIO T. FERMIN(T), ISABELO E. MOLO, RUSSEL M. PALMA,
IMELDA G. HERNANDEZ, VICENTE M. LLACUNA, JOSEFINA A. ORTIGUERRO, MA.
ASUNCION G. KIMSENG, MIGUEL R. SISON, RAUL P. GERONIMO, MARILOU E. CADENA,
ANA N. TAMONTE, AVELINO Q. RELUCIO, JORALYN R. GONGORA, CORAZON E. ALBOS,
ANABELLA J. GONZALES, MA. CORAZON Q. BALTAZAR, MARIA LUZ I. JIMENEZ, ELVIRA
A. ORLINA, SAMUEL B. ELLARMA, ROSARIO A. FLORES, EDITHA L. BROQUEZA,
REBECCA T. FAJARDO, MA. VICTORIA C. LUNA, MA. THERESA G. GALANG, BENIGNO V.
AMION, GERARDO J. DE LEON, ROWENA T. OCAMPO, MALOU P. DIZON, RUBEN DE C.
ATIENZA, MELO E. GABA, HERNAN B. CAMPOSANTO, NELIA D. M. DERIADA, LOLITO L.
HILIS, GRACE C. MABUNAY, FE ESPERANZA C. GERONG, MANUEL E. HERRERA,
JOSELITO J. GONZAGA, ULDARTCO D. PEDIDA, ROSALINA JULIET B. LOQUELLANO,
MARCIAL F. GONZAGA, MERCEDES R. PAULE, JOSE TEODORO A. MOTUS, BLANCHE D.
MOTUS, DAISY M. FAGUTAO, ANTONIO A. DEL ROSARIO, EMMANUEL JUSTIN S. GREY,
FRANCISCA DEL MUNDO, JULIETA A. CRUZ, RODRIGO J. DURANO, CATALINA R. YEE,
MENANDRO CALIGAGAN, MAIDA M. SACRO MILITANTE, LEONILA M. PEREZ, AND EMMA
MATEO, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION AND THE
HONGKONG & SHANGHAI BANKING CORPORATION, LTD., Respondents.

DECISION

BERSAMIN, J.:

A strike staged without compliance with the requirements of Article 2631 of the Labor Code is
illegal, and may cause the termination of the employment of the participating union officers and
members. However, the liability for the illegal strike is individual, not collective. To warrant the
termination of an officer of the labor organization on that basis, the employer must show that
the officer knowingly participated in the illegal strike. An ordinary striking employee cannot be
terminated based solely on his participation in the illegal strike, for the employer must further
show that the employee committed illegal acts during the strike.

The Case

Under appeal is the decision promulgated on January 31, 2002 by the Court of Appeals (CA) in
CA-GR. SP No. 56797 entitled The Hongkong & Shanghai Banking Corporation Employees Union,
et al. v. National Labor Relations Commission and The Hongkong & Shanghai Banking
Corporation, Ltd.,2 which disposed as follows:

WHEREFORE, the instant petition is DISMISSED and the questioned decision of the National
Labor Relations Commission is AFFIRMED with MODIFICATION.

Private respondent Hongkong & Shanghai Banking Corporation is ordered to pay each of the
following: Isabelo Molo, Elvira Orlina, Samuel Ellarma, Rosario Flores, Rebecca Fajardo, Ma.
Victoria Luna, Malou Dizon, Ruben Atienza, Melo Gaba, Nelia Deriada, Fe Esperanza Gerong,
Manuel Herrera, Rosalina Juliet Loquellano, Mercedes Paule, Binche Motus, Antonio del Rosario,
Francisca del Mundo and Maida Militante:

(a) full backwages from the time of their dismissal in 1993 up to the time this decision becomes
final; and
Labor II – 1
(b) separation pay equivalent to one-half (1/2) month salary for every year of service up to
1993.
SO ORDERED.3

Also under review is the resolution promulgated on December 9, 2002 whereby the CA denied
the petitioners' motion for reconsideration.4

Antecedents

In the period material to this case, petitioner Hongkong & Shanghai Banking Corporation
Employees Union (Union) was the duly recognized collective bargaining agent of the rank-and-
file employees of respondent Hongkong & Shanghai Banking Corporation (HSBC). A collective
bargaining agreement (CBA) governed the relations between the Union and its members, on one
hand, and HSBC effective April 1, 1990 until March 31, 1993 for the non-representational
(economic) aspect, and effective April 1, 1990 until March 31, 1995 for the representational
aspect.5 The CBA included a salary structure of the employees comprising of grade levels, entry
level pay rates and the individual pays depending on the length of service.6

On January 18, 1993, HSBC announced its implementation of a job evaluation program (JEP)
retroactive to January 1, 1993. The JEP consisted of a job designation per grade level with the
accompanying salary scale providing for the minimum and maximum pay the employee could
receive per salary level.7 By letter dated January 20, 1993,8 the Union demanded the suspension
of the JEP, which it labeled as an unfair labor practice (ULP). In another letter dated January 22,
1993, the Union informed HSBC that it would exercise its right to concerted action. On the same
day of January 22, 1993, the Union members started picketing during breaktime while wearing
black hats and black bands on their arms and other appendages.9 In its letter dated January 25,
1993, HSBC responded by insisting that the JEP was an express recognition of its obligation
under the CBA.10 The Union's concerted activities persisted for 11 months,11 notwithstanding that
both sides had meanwhile started the re-negotiation of the economic provisions of their CBA12 on
March 5, 1993.13 The continued concerted actions impelled HSBC to suspend the negotiations on
March 19, 1993,14 and to issue memoranda, warnings and reprimands to remind the members of
the Union to comply with HSBC's Code of Conduct.

Due to the sustained concerted actions, HSBC filed a complaint for ULP in the Arbitration Branch
of the National Labor Relations Commission (NLRC), docketed as NLRC-NCR Case No. 00-04-
02481-93. The Labor Arbiter's decision was appealed to the NLRC whose disposition to remand
the case to the Labor Arbiter for further proceedings was in turn assailed. Ultimately, in G.R. No.
125038 entitled The Hongkong & Shanghai Banking Corporation Employees Union v. National
Labor Relations Commission and The Hongkong & Shanghai Banking Corporation, Ltd., the Court
affirmed the disposition of the NLRC, and directed the remand of the case to the Labor Arbiter
for further proceedings.15

The Union conducted a strike vote on December 19, 1993 after HSBC accorded regular status to
Patrick King, the first person hired under the JEP. The majority of the members of the Union
voted in favor of a strike.16 The following day, the Union served its letter on HSBC in protest of
the continued implementation of the JEP, and insisted that HSBC's modification of the salary
structure under the JEP constituted ULP.

On December 22, 1993, at around 12:30 p.m., the Union's officers and members
walked out and gathered outside the premises of HSBC's offices on Ayala Avenue, Makati
and Ortigas Center, Pasig.17 According to HSBC, the Union members blocked the entry and exit
points of the bank premises, preventing the bank officers, including the chief executive officer,
Labor II – 1
from entering and/or leaving the premises.18 This prompted HSBC to resort to a petition
for habeas corpus on behalf of its officials and employees thus prevented from leaving the
premises, whom it airlifted on December 24, 1993 to enable them to leave the bank premises.19

On December 24, 1993, HSBC filed its complaint to declare the strike illegal.20 The HSBC also
petitioned for injunction (with prayer for temporary restraining order (TRO)/writ of prohibitory
injunction) in the NLRC, which issued the TRO on January 6, 1994, and the writ of preliminary
injunction on January 31, 1994.21 On November 22, 2001, the Court upheld the actions taken in
that case in The Hongkong and Shanghai Banking Corporation Employees Union v. National
Labor Relations Commission and The Hongkong and Shanghai Banking Corporation Limited.22

In the meantime, HSBC issued return-to-work notices to the striking employees on December
22, 1993. Only 25 employees complied and returned to work. Due to the continuing concerted
actions, HSBC terminated the individual petitioners on December 27, 1993.23 The latter,
undeterred, and angered by their separation from work, continued their concerted activities.

Ruling of the Labor Arbiter

On August 2, 1998, Labor Arbiter (LA) Felipe P. Pati declared the strike illegal for failure of the
Union to file the notice of strike with the Department of Labor and Employment (DOLE); to
observe the cooling-off period; and to submit the results of the strike vote to the National
Conciliation and Mediation Board (NCMB) pursuant to Article 263 of the Labor Code. He
concluded that because of the illegality of the strike the Union members and officers were
deemed to have lost their employment status. Lie disposed thusly:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

chanRoblesvirtualLawlibrary

1. The 22 December 1993 strike conducted by the union is hereby declared illegal;

2. The following Union officers and members who participated in the 22 December 1993 strike
are hereby deemed to have lost their employment status as of that date, namely: Dalisay Dela
Chica, Isabelo Molo, Danilo Alonso, Alvar Rosales, Russel Palma, Imelda Hernandez, Vicente
Llacuna, Josefina Ortiguero, Agustin Iligan, Ma. Asuncion Kimseng, Miguel Sison, Raul Geronimo,
Marilou Cadena, Ana Tamonte, Yolanda Enciso, Avelino Relucio, Joralyn Gongora, Corazon Albos,
Anabella Gozales, Ma. Corazon Baltazar, Maria Luz Jimenez, Concordio Madayag, Elvira Orlina,
Ma. Lourdes Austria, Josephine Landas, Samuel Ellarma, Rosario Flores, Editha Broqueza, Marina
Sal vac ion, Ma. Cecilia Ocampo, Rebecca Fajardo, Ma. Victoria Luna, Ma. Theresa Ofelia Galang,
Benigno Amion, Mercedes Castro, Gerardo de Leon, Rowena Ocampo, Malou Dizon, Juliet
Dacumos, Blandina dela Pena, Ruben Atienza, Ma. Fe Temporal, Mcllo Gaba, Herman
Camposanto, Nelia Deriada, Lolito Hilis, Ma. Dulce Abellar, Grace Mabunay, Fe Esperanza
Gerong, Romeo Tumlos, Sonia Argos, Manuel Herrera, Joselito Gonzaga, Uldarico Pedida,
Cynthia Calangi, Rosalina Loquellano, Marcial Gonzaga, Mercedes Paule, Jess Nicolas, Teodoro
Motus, Blanche Motus, Daisy Martinez Fagutao, Antonio del Rosario, Emmanuel Justin Grey,
Francisca del Mundo, Juliet Cruz, Rodrigo Durano, Carmina Rivera, David Atanacio, Jr., Ofelia
Rabuco, Alfred Tan Jr., Catalina Yee, Menandro Caligaga, Melorio Maida Militante, Antonio
Marilon, and Leonila Peres, Emma Mateo, Felipe Vital, Jr., Mario Fermin, and Virgilio Reli;

3. The Union, its officers and members are hereby held jointly and severally liable to pay the
Bank the amount of P45,000.00 as actual damages.
All the other claims for moral and exemplary damages are denied for lack of merit.

SO ORDERED.24 ChanRoblesVirtualawlibrary

Decision of the NLRC

Labor II – 1
On appeal, the NLRC modified the ruling of LA Pati, and pronounced the dismissal of the 18
Union members unlawful for failure of LISBC to accord procedural due process to them, viz.:

xxx [W]e note, however, that as per the submission of the parties, not all the respondents
(members) have been identified by complainant as having violated the law on free ingress and
egress (i.e., Article 264[e]). A meticulous review of the testimonies given during trial and a
comparison of the same show that 25 respondents were not named by complainant's witnesses.

Of the 25, 6 of them (Rabuco, Salvacion, Castro, Dacumos, Calangi and Nicolas) have already
settled with the complainant during the pendency of the appeal. Of the remaining 19, one
respondent is a union officer (Rivera) while the remaining 18 respondents (Molo, Orlina, Ellarma,
Flores, Fajardo, Luna, Dizon, Atienza, Gaba, Deriada, Gerong, Herrera, Loquellano, Paule, Motus,
Del Rosario, Mundo and Militante) are neither officers nor members who have been pinpointed
as having committed illegal act[s]. We, therefore, disagree with the Labor Arbiter's
generalization that these 18 respondents have similarly lost their employment status simply
because they participated in or acquiesced to the holding of the strike.

xxxx

Only insofar as the xxx 18 respondents are concerned, We rule that complainant did fail to give
them sufficient opportunity to present their side and adequate opportunity to answer the
charges against them. More was expected from complainant and its observance of due process
may not be dispensed with no matter how brazen and blatant the violation or its rules and
regulations may have perceived. The twin requirement of notice and hearing in termination
cases are as much indispensable and mandatory as the procedural requirements enumerated in
Article 262 of the Labor Code. In this case, We cannot construe complainant's notice to return-
to-work as substantial compliance with due process requirement.

Contrary however to respondents' insistence that complainant failed to observe due process in
the case of the 18 respondents does not mean that they are automatically entitled to backwages
or reinstatement. Consistent with decided cases, these respondents are entitled only to
indemnity for complainant's omission, specifically to the amount of P5,000.00 each, xxx

As a final word, and only as regard these 18 respondents, We take note of the fact that they
have remained silent spectators, if not mere bystanders, in the illegal strike and illegal acts
committed by the other individual respondents, and since the grounds for which they have been
terminated do not involve moral turpitude, the consequences for their acts must nevertheless be
tempered with some sense of compassion. Consistent with prevailing jurisprudence and in the
interest of social justice, We find the award of separation pay to each of the 18 respondents
equivalent to one-half (1/2) month salary for every year of service as equitable and proper.

XXXX

WHEREFORE, the decision dated 26 August 1998 is hereby AFFIRMED with the modification that
complainant is ordered to pay (a) P5,000.00 and (b) one-half (1/2) month salary for every year
of service up to December 1993 to each of the following respondents: Isabelo Molo, Elvira
Orlina, Samuel Ellarma, Rosario Flores, Rebecca Fajardo, Ma. Victoria Luna, Malou Dizon, Ruben
Atienza, Melo Gaba, Nelia Deriada, Fe Esperanza Gerong, Manuel Herrera, Rosalina Juliet
Loquellano, Mercedes Paule. Binche Motus, Antonio del Rosario, Francisca del Mundo and Maida
Militante.

SO ORDERED.25 ChanRoblesVirtualawlibrary

Labor II – 1
The petitioners filed their motion for reconsideration, but the NLRC denied their motion.26

Judgment of the CA

On certiorari, the CA, through the assailed judgment promulgated on January 31,

2002,27 deleted the award of indemnity, but ordered HSBC to pay backwages to the 18
employees in accordance with Serrano v. National Labor Relations Commission,28 to wit:

In Ruben Serrano v. NLRC and Isetcmn Department Store xxx, the Court ruled that an employee
who is dismissed, whether or not for just or authorized cause but without prior notice of his
termination, is entitled to full baekwages from the time he was terminated until the decision in
his case becomes final, when the dismissal was for cause; and in case the dismissal was without
just or valid cause, the backwages shall be computed from the time of his dismissal until his
actual reinstatement. In the case at bar, where the requirement of notice and hearing was not
complied with, the aforecited doctrine laid down in the Serrano case applies.29

On motion for reconsideration, the CA reiterated its judgment, and denied HSBC's motion to
delete the award of backwages.30

Hence, this appeal by petition for review on certiorari.

Pending the appeal, petitioners Elvira A. Orlina, Rosario A. Flores, Ma. Victoria C. Luna, Malou
Dizon, Fe Esperanza Gerong, Francisca del Mundo, and Ruben Atienza separately presented
motions to withdraw as petitioners herein by virtue of their having individually executed
compromise agreements/quitclaims with HSBC.31 The Court granted all the motions to
withdraw;32 hence, this adjudication relates only to the remaining petitioners.

Issues

The remaining petitioners raise the following grounds in support of their appeal, namely:

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN HOLDING THAT ALL THE
PETITIONERS WERE VALIDLY DISMISSED

A
The Court of Appeals cannot selectively apply the right to due process in determining the validity
of the dismissal of the employee

B
The refusal to lift the strike upon orders of the HSBC is not just cause for the dismissal of the
employees

C
The HSBC is liable for damages for having acted in utter bad faith by dismissing the
petitioners after having previously submitted the dispute to the NLRC

D
Union officers who did not knowingly participate in the strike do not lose their
employment status

Labor II – 1
 E
The responsibility for illegal acts committed in the course of a strike is individual and not
collective

F
The January 5, 1994 incident does not warrant the dismissal of the petitioners involved thereat

G
The penalty, if any, imposable on union officers should be suspension and not dismissal

II

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN HOLDING THAT THE STRIKE
WAS ILLEGAL
A
The test of good faith laid down by this Honorable Court is whether the union is of the
reasonable belief that the management was committing an unfair labor practice

B
The decision as to when to declare the strike is wholly dependent on the union, and the same
cannot negate good faith

C
The Court of Appeals committed grave error in concluding that this Court had already ruled on
the validity of the implementation of the Job Evaluation Program and no longer considered the
evidence presented by petitioners to establish unfair labor practice on the part of the HSBC

D
The doctrine automatically making a strike illegal due to non-compliance with the mandatory
procedural requirements needs to be revisited

The petitioners argue that they were illegally dismissed; that the CA erred in selectively applying
the twin notice requirement; that in the case of the Union officers, there must be a prior showing
that they had participated in the illegal strike before they could be terminated from employment,
but that HSBC did not make such showing, as, in fact, petitioners Carmina C. Rivera and Mario
T. Fermin were on leave during the period of the strike;33 that they could not be dismissed on
the ground of insubordination or abandonment in view of participation in a concerted action
being a guaranteed right; that their participation in the concerted activities out of their sincere
belief that HSBC had committed ULP in implementing the JEP constituted good faith to be
appreciated in their favor; that their actions merited only their suspension at most, not the
extreme penalty of dismissal; and that the prevailing rule that non-compliance with the
procedural requirements under the Labor Code before staging a strike would invalidate the strike
should be revisited because the amendment under Batas Pambansa Blg. 227 indicated the
legislative intent to ease the restriction on the right to strike.

HSBC counters that the appeal raises factual issues already settled by the CA, NLRC, and the LA,
rendering such issues inappropriate for determination in this appeal; that it was not liable for
illegal dismissal because the petitioners had willfully staged their illegal strike without prior
compliance with Article 263 of the Labor Code;34 that the procedural requirements of Article 263
of the Labor Code were mandatory and indispensable conformably with Article 26435 of the Labor
Code, which, in relation to Article 263(c), (d) and (f), expressly made such non-compliance a
prohibited activity; that for this reason Article 264 penalized the Union officers who had
Labor II – 1
participated in the illegal strike with loss of their employment status;36 that good faith could not
be accorded to the petitioners because aside from the non-compliance with the mandatory
procedure, they did not present proof to show that the strike had been held for a lawful purpose,
or that the JEP had amounted to ULP, or that they had made a sincere effort to settle the
disagreement;37 and that as far as the 18 employees were concerned, they were entitled only to
nominal damages, not backwages, following the ruling in Agabon v. National Labor Relations
Commission38 that meanwhile modified the doctrine in Serrano v. National Labor Relations
Commission.39

Two main issues to be resolved are, therefore, namely: (1) whether the strike
commenced on December 22, 1993 was lawfully conducted; and (2 whether the
petitioners were illegally dismissed.

Ruling of the Court

We PARTLY GRANT the petition for review on certiorari.

I
Non-compliance with Article 263 of the
Labor Code renders a labor strike illegal

The right to strike is a constitutional and legal right of all workers because the strike, which
seeks to advance their right to improve the terms and conditions of their employment, is
recognized as an effective weapon of labor in their struggle for a decent existence. However, the
right to strike as a means for the attainment of social justice is never meant to oppress or
destroy the employers. Thus, the law prescribes limits on the exercise of the right to strike.40 cralawred

Article 263 of the Labor Code specifies the limitations on the exercise of the right to strike, viz.:

Article 263. Strikes, picketing, and lockouts, x x x

xxxx

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a
notice of strike or the employers may file a notice of lockout with the [Department] at least 30
days before the intended date thereof. In cases of unfair labor practices, the period of notice
shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice
of strike may be filed by any legitimate labor organization in behalf of its members. However, in
case of dismissal from employment of union officers duly elected in accordance with the union
constitution and by-laws, which may constitute union busting, where the existence of the union
is threatened, the 15-day cooling off period shall not apply and the union may take action
immediately.

(d) The notice must be in accordance with such implementing rules and regulations as the
[Secretary] of Labor and Employment may promulgate.

(e) During the cooling-off period, it shall be the duty of the [Department] to exert all efforts at
mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled
until the lapse of the requisite number of clays from the mandatory filing of the notice, the labor
union may strike or the employer may declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union membership
in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for
Labor II – 1
that purpose. A decision to declare a lockout must be approved by a majority of the board of
directors of the corporation or association or of the partners in a partnership, obtained by secret
ballot in a meeting called for that purpose. The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered when the strike or lockout vote was
taken. The [Department] may, at its own initiative or upon request of any affected party,
supervise the conduct of the secret balloting. In every case, the union or the employer shall
furnish the [Department] the results of the voting at least seven days before the intended strike
or lockout, subject to the cooling-off period herein provided.

xxxx

The procedural requirements for a valid strike are, therefore, the following, to wit: (1) a notice
of strike filed with the DOLE at least 30 days before the intended date thereof, or 15 days in
case of ULP; (2) a strike vote approved by the majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and
(3) a notice of the results of the voting at least seven days before the intended strike given to
the DOLE. These requirements are mandatory, such that non-compliance therewith by the union
will render the strike illegal.41

According to the CA, the petitioners neither filed the notice of strike with the DOLE, nor
observed the cooling-off period, nor submitted the result of the strike vote. Moreover,
although the strike vote was conducted, the same was done by open, not secret,
balloting,42 in blatant violation of Article 263 and Section 7, Rule XIII of the Omnibus Rules
Implementing the Labor Code.43 It is not amiss to observe that the evident intention of the
requirements for the strike-notice and the strike-vote report is to reasonably regulate the right
to strike for the attainment of the legitimate policy objectives embodied in the law.44 As such,
the petitioners committed a prohibited activity under Article 264(a) of the Labor Code, and
rendered their strike illegal.

We underscore that the language of the law itself unmistakably bears out the mandatory
character of the limitations it has prescribed, to wit:

Art. 264. Prohibited activities. - (a) No labor organization or employer shall declare a
strike or lockout without first having bargained collectively in accordance with Title VII of this
Book or without first having filed the notice required in the preceding Article or without
the necessary strike or lockout vote first having been obtained and reported to the
[Department], (emphasis supplied)

xxxx

Accordingly, the petitioners' plea for the revisit of the doctrine to the effect that the compliance
with Article 263 was mandatory was entirely unwarranted. It is significant to remind that the
doctrine has not been established by judicial declaration but by congressional enactment. Verba
legis non est recedendum. The words of a statute, when they are clear, plain and free from
ambiguity, must be given their literal meaning and must be applied without interpretation.45 Had
the legislators' intention been to relax this restriction on the right of labor to engage in concerted
activities, they would have stated so plainly and unequivocally.

II
Commission of unlawful acts during
the strike further rendered the same illegal

The petitioners insist that all they did was to conduct an orderly, peaceful, and moving picket.
Labor II – 1
They deny employing any act of violence or obstruction of HSBC's entry and exit points during
the period of the strike.

The contrary was undeniably true. The strike was far from orderly and peaceful. HSBC's claim
that from the time when the strike was commenced on December 22, 1993 the petitioners had
on several instances obstructed the ingress into and egress from its offices in Makati and in
Pasig was not competently disputed, and should thus be accorded credence in the light of the
records. We agree with HSBC, for all the affidavits46 and testimonies of its witnesses,47 as well as
the photographs48 and the video recordings49 reviewed by LA Pati depicted the acts of
obstruction, violence and intimidation committed by the petitioners during their picketing. It was
undeniable that such acts of the strikers forced HSBC's officers to resort to unusual means of
gaining access into its premises at one point.50 In this connection, LA Pati even observed as
follows:

[I]t must be pointed out that the Bank has shown by clear and indubitable evidence that most of
the respondents have actually violated the prescription provided for in paragraph (b) of Article
264 on free ingress and egress. The incident depicted in the video footage of 05 January 1994,
which has been viewed several times during the trial and even privately, demonstrates beyond
doubt that the picket was a non-moving, stationary one - nothing less but a barricade.
This office is more than convinced that the respondents, at least on that day, have
demonstrated an abnormally high degree of hatred and anger at the Bank and its
officers (including the Bank's chief executive officer who fell to the ground as a result
of the pushing and shoving) leading them to do anything to carry out their resolve not
to let anymore inside the Bank. Additionally, as observed by this Labor Arbiter, the tensed
and disquieting relation between the parties became all the more apparent during the actual
hearings as clearly evident from the demeanor and actuations of the respondents.51 (Emphasis
supplied)

The situation during the strike actually went out of hand because of the petitioners' illegal
conduct, compelling HSBC to secure an injunction from the NLRC as well as to file its petition
for habeas corpus in the proper court in the interest of its trapped officers and employees; and
at one point to lease an helicopter to extract its employees and officers from its premises on the
eve of Christmas Day of 1993.

For sure, the petitioners could not justify their illegal strike by invoking the constitutional right of
labor to concerted actions. Although the Constitution recognized and promoted their right to
strike, they should still exercise the right within the bounds of law.52 Those bounds had been
well-defined and well-known. Specifically, Article 264(e) of the Labor Code expressly enjoined
the striking workers engaged in picketing from committing any act of violence, coercion or
intimidation, or from obstructing the free ingress into or egress from the employer's premises for
lawful purposes, or from obstructing public thoroughfares.53 The employment of prohibited
means in carrying out concerted actions injurious to the right to property of others could only
render their strike illegal. Moreover, their strike was rendered unlawful because their picketing
which constituted an obstruction to the free use of the employer's property or the comfortable
enjoyment of life or property, when accompanied by intimidation, threats, violence, and coercion
as to constitute nuisance, should be regulated.54 In fine, the strike, even if justified as to its
ends, could become illegal because of the means employed, especially when the means came
within the prohibitions under Article 264(e) of the Labor Code:55

III
Good faith did not avail because of the
patent violation of Article 263 of the  Labor Code

Labor II – 1
The petitioners assert their good faith by maintaining that their strike was conducted
out of their sincere belief that HSBC had committed ULP in implementing the JEP. They
had also hoped that HSBC would be willing to negotiate matters related to the JEP considering
that the economic aspect of the CBA was set to expire on March 31, 1993.

We rule out good faith on the part of the petitioners.

The petitioners' disregard of the procedural requirements for conducting a valid strike
negated their claim of good faith. For their claim to be upheld, it was not enough for
them to believe that their employer was guilty of ULP, for they must also sufficiently
show that the strike was undertaken with a modicum of obeisance to the restrictions
on their exercise of the right to strike prior to and during its execution as prescribed
by the law. They did not establish their compliance with the requirements specifically
for the holding of the strike vote and the giving of the strike notice. 56

The petitioners should entirely bear the consequence of their non-compliance with the legal
requirements. As we said in Pilipino Telephone Corporation v. Pilipino Telephone Employees
Association (PILTEA):57

[W]e do not find any reason to deviate from our rulings in Gold City Integrated Port Service, Inc.
and Nissan Motors Philippines, Inc. It bears emphasis that the strike staged by the Union in the
instant case was illegal for its procedural infirmities and for defiance of the Secretary's
assumption order. The CA, the NLRC and the Labor Arbiter were unanimous in finding that bad
faith existed in the conduct of the subject strike. The relevant portion of the CA Decision states:
chanRoblesvirtualLawlibrary

xxx We cannot go to the extent of ascribing good faith to the means taken in
conducting the strike. The requirement of the law is simple, that is — 1. Give a Notice
of Strike; 2. Observe the cooling period; 3. Observe the mandatory seven day strike
ban; 3. If the act is union busting, then the union may strike doing away with the
cooling-off period, subject only to the seven-day strike ban. To be lawful, a strike must
simply have a lawful purpose and should be executed through lawful means. Here, the
union cannot claim good faith in the conduct of the strike because, as can be gleaned
from the findings of the Labor Arbiter, this was an extensively coordinated strike
having been conducted all throughout the offices of PILTEL all over the country.
Evidently, the strike was planned. Verily, they cannot now come to court hiding behind the
shield of "good faith." Be that as it may, petitioners claim good faith only in so far as their
grounds for the strike but not on the conduct of the strike. Consequently, they still had to
comply with the procedural requirements for a strike, which, in this case, they failed to do
so.58 ChanRoblesVirtualawlibrary

IV
The finding on the illegal strike did not justify the
wholesale termination of the strikers from employment

The next issue to resolve is whether or not HSBC lawfully dismissed the petitioners for joining
the illegal strike.

As a general rule, the mere finding of the illegality of the strike does not justify the wholesale
termination of the strikers from their employment.59 To avoid rendering the recognition of the
workers' right to strike illusory, the responsibility for the illegal strike is individual instead of

Labor II – 1
collective.60 The last paragraph of Article 264(a) of the Labor Code defines the norm for
terminating the workers participating in an illegal strike, viz.:

Article 264. Prohibited Activities -xxx

xxxx

Any worker whose employment has been terminated as a consequence of any unlawful lockout
shall be entitled to reinstatement with full backwages. Any union officer who knowingly
participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have
lost his employment status: Provided, That mere participation of a worker in a lawful strike
shall not constitute sufficient ground for termination of his employment, even if a replacement
had been hired by the employer during such lawful strike, (emphasis supplied)

Conformably with Article 264, we need to distinguish between the officers and the members of
the union who participate in an illegal strike. The officers may be deemed terminated from their
employment upon a finding of their knowing participation in the illegal strike, but the members
of the union shall suffer the same fate only if they are shown to have knowingly participated in
the commission of illegal acts during the strike. Article 264 expressly requires that the
officer must have knowingly participated in the illegal strike. We have explained this
essential element in Club Filipino, Inc. v. Bautista,61 thusly:

Note that the verb "participates" is preceded by the adverb "knowingly." This reflects the intent
of the legislature to require "knowledge" as a condition sine qua non before a union officer can
be dismissed from employment for participating in an illegal strike. The provision is worded in
such a way as to make it very difficult for employers to circumvent the law by arbitrarily
dismissing employees in the guise of exercising management prerogative. This is but one aspect
of the State's constitutional and statutory mandate to protect the rights of employees to self-
organization.62

The petitioners assert that the CA erroneously affirmed the dismissal of Carmina Rivera and
Mario Fermin by virtue of their being officers of the Union despite lack of proof of their having
participated in the strike.

The assertion is partly correct.

In the case of Fermin, HSBC did not satisfactorily prove his presence during the strike,
much less identify him as among the strikers. In contrast, Union president Ma. Dalisay dela
Chica testified that Fermin was not around when the Union's Board met after the strike
vote to agree on the date of the strike.63 In that regard, Corazon Fermin, his widow,
confirmed the Union president's testimony by attesting that her husband had been on
leave from work prior to and during the strike because of his heart
condition.64 Although Corazon also attested that her husband had fully supported the
strike, his extending moral support for the strikers did not constitute sufficient proof
of his participation in the strike in the absence of a showing of any overt participation
by him in the illegal strike. The burden of proving the overt participation in the illegal strike
by Fermin solely belonged to HSBC, which did not discharge its burden. Accordingly, Fermin,
albeit an officer of the Union, should not be deemed to have lost his employment status.

However, the dismissal of Rivera and of the rest of the Union's officers, namely: Ma. Dalisay dela
Chica, Marvilon Militante and David Atanacio, is upheld. Rivera admitted joining the picket line
on a few occasions.65 Dela Chica, the Union president, had instigated and called for the strike on
Labor II – 1
December 22, 1993.66 In addition, HSBC identified Dela Chica67 and Militante68 as having actively
participated in the strike. Their responsibility as the officers of the Union who led the illegal
strike was greater than the responsibility of the members simply because the former had the
duty to guide their members to obey and respect the law.69 When said officers urged and made
their members violate the law, their dismissal became an appropriate penalty for their unlawful
act.70 The law granted to HSBC the option to dismiss the officers as a matter of right and
prerogative.71

Unlike the Union's officers, the ordinary striking members could not be terminated for merely
taking part in the illegal strike. Regardless of whether the strike was illegal or not, the dismissal
of the members could be upheld only upon proof that they had committed illegal acts during the
strike. They must be specifically identified because the liability for the prohibited acts was
determined on an individual basis.72 For that purpose, substantial evidence available under the
attendant circumstances justifying the penalty of dismissal sufficed.73

We declare the illegality of the termination of the employment of the 18 members of the Union
for failure of HSBC to prove that they had committed illegal acts during the strike. We also
declare that Daisy Fagutao was unlawfully dismissed because HSBC did not adduce substantial
evidence establishing her presence and her commission of unlawful acts during the strike.

We clarify that the 18 employees, including Fagutao and Union officer Fermin, were illegally
dismissed because of lack of any valid ground to dismiss them, and for deprivation of procedural
due process. Thus, we take exception to that portion of the NLRC ruling that held:

We here note that all of the herein named respondents were terminated by complainant for
reasons other than their holding of an participation in the illegal strike. Specifically, the grounds
for their termination were enumerated in the notices of termination sent out by complainant as
follows: abandonment, insubordination and seriously hampering operations. To Our mind, the
complainant in the exercise of its management prerogative, had every reason to discipline these
respondents for their disregard of the complainant's return-to-work order and for the damage
sustained by reason thereof. Although these 18 respondents did not commit any illegal act
during the strike, We can not simply ignore the fact that they nonetheless breached
complainant's rules and regulations and which acts serve as valid causes to terminate their
employment. These respondents took a risk when they refused to heed complainant's lawful
order and knowingly caused damage and prejudice to complainant's operations; they should be
prepared to take the consequences and be held accountable for their actions. Whether or not
complainant observed due process prior to the termination of these respondents is however a
totally different matter.74
ChanRoblesVirtualawlibrary

We hold that said employees' right to exercise their right to concerted activities should
not be defeated by the directive of HSBC for them to report back to work. Any worker
who joined the strike did so precisely to assert or improve the terms and conditions of his
work.75 Otherwise, the mere expediency of issuing the return to work memorandum could suffice
to stifle the constitutional right of labor to concerted actions. Such practice would vest in the
employer the functions of a strike breaker,76 which is prohibited under Article 264(c) of
the Labor Code.

The petitioners' refusal to leave their cause against HSBC constituted neither insubordination nor
abandonment. For insubordination to exist, the order must be: (1) reasonable and lawful; (2)
sufficiently known to the employee; and (3) in connection to his duties.77 None of these elements
existed in this case.

As to abandonment, two requirements need to be established, namely: (1) the failure to report
Labor II – 1
for work or absence must be without valid or justifiable reason; and (2) there must be a clear
intention to sever the employer-employee relationship. The second element is the more decisive
factor and must be manifested by overt acts.78 In that regard, the employer carries the burden
of proof to show the employee's deliberate and unjustified refusal to resume his employment
without any intention of returning.79 However, the petitioners unquestionably had no intention to
sever the employer-employee relationship because they would not have gone to the trouble of
joining the strike had their purpose been to abandon their employment.80

Moreover, we cannot subscribe to the view that the striking employees should be dismissed for
having seriously hampered and damaged HSBC's operations. In this aspect of the case, HSBC
did not discharge its burden to prove that the acts of the employees constituted any of the just
causes under the Labor Code or were prohibited under the company's code of conduct as to
warrant their dismissal.

V
Non-compliance with due process resulted
in illegal dismissal; the employer's liability
depended on the availing circumstances

While Article 264 authorizes the termination of the union officers and employees, it does not
remove from the employees their right to due process. Regardless of their actions during the
strike, the employees remain entitled to an opportunity to explain their conduct and why they
should not be penalized. In Suico v. National Labor Relations Commission,81 we have reiterated
the need for the employers to comply with the twin-notice requirement despite the cause for the
termination arising from the commission of the acts prohibited by Article 264, thus:

Art. 277(b) in relation to Art. 264(a) and (e) recognizes the right to due process of all workers,
without distinction as to the cause of their termination. Where no distinction is given, none is
construed. Hence, the foregoing standards of due process apply to the termination of
employment of Suico, et al. even if the cause therefor was their supposed involvement in strike-
related violence prohibited under Art. 264 (a) and (e).82

Consequently, failure of the employer to accord due process to its employees prior to their
termination results in illegal dismissal.

The petitioners maintain that the CA applied the twin-notice requirement in favor of the 18
employees. HSBC disagrees, claiming instead that the award of backwages in favor of said
employees should be modified following Agabon.

We partially agree with both parties.

Article 277(b)83 of the Labor Code mandates compliance with the twin-notice requirement in

terminating an employee, viz.:

Article 277. Miscellaneous Provisions. -

xxxx

(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement
of the causes for termination and shall afford the latter ample opportunity to be heard
Labor II – 1
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, x x x (Emphasis supplied)

In King of Kings Transport, Inc. v. Mamac,84 we have laid down the contents of the notices to be
served upon an employee prior to termination, as follows:

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they will raise against the
complaint. Moreover, in order to enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employees. A general description of the charge will
not suffice. Lastly,  the notice should specifically mention which company rules, if any,
are violated and/or which among the grounds under Art. 282 is being charged against
the employees.

xxxx

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been considered; and (2) grounds
have been established to justify the severance of their employment.85 (Emphasis
supplied)

HSBC admitted issuing two pro forma notices to the striking employees. The first notice, sent on
December 22, 1993, reads as follows:

Re: NOTICE OF RETURN TO WORK

__________________________________________________

On ___________________ at ________ o'clock in the morning/afternoon, you "walked-out" by

leaving your assigned work station without prior permission/leave during work hours.

You arc hereby directed to report back for work at the start of banking hours on the day
immediately following knowledge or receipt of this notice. Should you report for work no
disciplinary action shall be imposed on you. Ibis is without prejudice to any action the Bank may
take against the Union.

Should you fail to report back for work within the period abovestated, the Bank shall be forced to
terminate your employment and take all appropriate measures to continue serving its clients.86

As the notice indicates, HSBC did not fully apprise the strikers of the ground under the Labor
Code that they had supposedly violated. It also thereby deprived them the ample opportunity to
explain and justify their actions. Instead, it manifested therein its firm resolve to impose the
extreme penalty of termination should they not comply with the order. Plainly, the tenor of the
notice was short of the requirements of a valid first notice.

Labor II – 1
The second notice was as follows:

Re: NOTICE OF TERMINATION

__________________________________________________________

On_________ , 1993, you and a majority of the rank-and-file staff "walked out" by leaving your
respective work stations without prior leave and failed to return.

You were directed to report back for work when a copy of the Bank's Memorandum/Notice to
Return to Work dated________________ 1993 was:

1. [ ] Posted on the Bank's premises on_______________

2. [ ] served on your (sic) personally on____________________.
3. [ ] delivered to your last known address on file with the Bank and received by you (your
representative) on

Despite being directed to return to work, you have failed to comply.

Your "walk-out" is an illegal act amounting to abandonment, insubordination, and seriously

hampering and damaging the bank's operations. Consequently, your employment with the Bank
is terminated effective ____________________, 1993.87

The second notice merely ratified the hasty and unilateral decision to terminate the petitioners
without the benefit of a notice and hearing. Hence, this notice should be struck down for having
violated the right of the affected employees to due process.

The failure by HSBC to strictly observe the twin-notice requirement resulted in the illegal
dismissal. However, the extent of its liability should depend on the distinct circumstances of the
employees.

HSBC should be held liable for two types of illegal dismissal — the first type was made without
both substantive and procedural due process, while the other was based on a valid cause but
lacked compliance with procedural due process. To the first type belonged the dismissal of
Fermin, Fagutao and the 18 employees initially identified by the NLRC, while the second type
included the rest of the petitioners.

HSBC maintains that the dismissed 18 employees should not be entitled to backwages in
conformity with Agabon.

We disagree. Agabon involved the second type of dismissal, not the first type to which the 18
employees belonged. The rule for employees unlawfully terminated without substantive and
procedural due process is to entitle them to the reliefs provided under Article 27988 of the Labor
Code, that is, reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and other benefits or their monetary equivalent computed
from the time the compensation was withheld up to the time of actual reinstatement. However,
the award of backwages is subject to the settled policy that when employees
voluntarily go on strike, no baekwages during the strike shall be awarded.89

As regards reinstatement, the lapse of 22 years since the strike now warrants the award of
separation pay in lieu of reinstatement, the same to be equivalent of one (1) month for every
year of service.90 Accordingly, Fermin who did not participate in the strike, should be paid full
baekwages plus separation pay of one (1) month per year of service, while petitioners Isabelo
Labor II – 1
Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba, Nelia Deriada, Manuel Herrera, Rosalina
Juliet Loquellano, Mercedes Paule, Blanche Motus, Antonio del Rosario, Maida Militante and Daisy
Fagutao, who admitted their participation in the strike, were entitled to baekwages except during
the period of the strike, and to separation pay of one (1) month per year of service in lieu of
reinstatement.

In Agabon, we said that a dismissal based either on a just or authorized cause but effected
without due process should be upheld. The employer should be nonetheless liable for non-
compliance with procedural due process by paying indemnity in the form of nominal damages
amounting to P30,000.00.

In view of the non-observance of procedural due process by HSBC, the following petitioners
should be entitled to nominal damages of P30,000.00 each,91 namely: Ma. Dalisay dela Chica,
Marvilon Militante, David Atanacio, Carmina Rivera, Russel Palma, Imelda Hernandez, Vicente
Llacuna, Josefina A. Ortiguerro, Ma. Asuncion Kimseng, Miguel R. Sison, Raul P. Geronimo,
Marilou Cadena, Ana Tamonte, Avelino Relucio, Joralyn Gongora, Corazon Albos, Anabella
Gonzales, Ma. Corazon Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma. Theresa Galang,
Benigno Amoin, Gerardo de Leon, Rowena Ocampo, Hernan Camposanto, Lolito Hilis, Grace
Mabunay, Joselito Gonzaga, Uldarico Pedida, Marcial Gonzaga, Jose Teodoro Motus, Emmanuel
Justin Grey, Julieta Cruz, Rodrigo Durano, Catalina Yee, Menandro Caligagan, Leonila Perez, and
Emma Mateo.

ACCORDINGLY, the Court AFFIRMS the decision promulgated on January 31, 2002 in CA-G.R.

SP No. 56797 with MODIFICATION that respondent Hongkong & Shanghai Banking Corporation
(HSBC) shall pay:

1. Mario S. Fermin, full backwages and separation pay equivalent to one (1) month per year
of service in lieu of reinstatement;

2. Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba, Nelia Deriada, Manuel
Herrera, Rosalina Juliet Loquellano, Mercedes Paule, Blanche Motus, Antonio del Rosario,
Maida Militante and Daisy Fagutao, backwages except during the period of the strike, and
separation pay equivalent to one (1) month per year of service in lieu of reinstatement;
and

3. Ma. Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina Rivera, Russel Palma,
Imelda Hernandez, Vicente Llacuna, Josefina A. Ortiguerro, Ma. Asuncion Kimseng, Miguel
R. Sison, Raul P. Geronimo, Marilou Cadena, Ana Tamonte, Avelino Relucio, Joralyn
Gongora, Corazon Albos, Anabella Gonzales, Ma. Corazon Baltazar, Maria Luz Jimenez,
Editha Broqueza, Ma. Theresa Galang, Benigno Amion, Gerardo de Leon, Rowena Ocampo,
Hernan Camposanto, Lolito Hilis, Grace Mabunay, Joselito Gonzaga, Uldarico Pedida,
Marcial Gonzaga, Jose Teodoro Motus, Emmanuel Justin Grey, Julieta Cruz, Rodrigo
Durano, Catalina Yee, Menandro Caligagan, Leonila Perez and Emma Mateo, indemnity in
the form of nominal damages in the amount of P30,000.00 each.

Labor II – 1
 32.) G.R. No. 204693, July 13, 2016

GUAGUA NATIONAL COLLEGES, Petitioner, v. GUAGUA NATIONAL COLLEGES FACULTY

LABOR UNION AND GUAGUA NATIONAL COLLEGES NON-TEACHING AND
MAINTENANCE LABOR UNION, Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the September 26, 2012 Decision1 and December 3,
2012 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 120669, which respectively
denied for lack of merit the Petition for Certiorari filed therewith by petitioner Guagua National
Colleges (GNC) and the motion for reconsideration thereto.

Factual Antecedents

GNC is an educational institution located in Sta. Filomena, Guagua, Pampanga. On the other
hand, respondents Guagua National Colleges Faculty Labor Union (GNCFLU) and Guagua
National Colleges Non-Teaching and Maintenance Labor Union (GNCNTMLU) were the bargaining
agents for GNC's faculty members and non-teaching and maintenance personnel, respectively.

Beginning 1994 until their present dispute, the parties concluded their Collective Bargaining
Agreements (CBA) without issue as follows: (1) CBA effective June 1, 1994 to May 31, 1999
(1994-1999 CBA),3 the economic provisions of which were renegotiated on November 3, 1997
for years 1997-1999;4 (2) CBA effective June 1,1999 to May 31, 2004,5 the economic provisions
of which were renegotiated on July 4, 2002 for years 2002-2004;6 and, (3) CBA effective June 1,
2004 to May 31, 2009.7 The aforementioned CBAs applied to both GNCFLU and GNCNTMLU
without distinction.

Significantly, the 1994-1999 CBA has a "no-strike, no lock-out" clause under Section 17 thereof
which likewise provides for mechanism for grievance resolution and voluntary arbitration. This
provision was considered carried over in the subsequent CBAs.8 chanrobleslaw

On April 3, 2009, the Presidents of both GNCFLU and GNCNTMLU, wrote the President of GNC,
Atty. Ricardo V. Puno (Atty. Puno), to inform him of the former's intention to open the
negotiation for the renewal of the then existing CBA which would expire on May 31,
2009.9 Attached to the said letter was respondents' proposal for the next CBA10 which was
received by GNC on even date.11 chanrobleslaw

Instead of serving upon respondents a reply/counter-proposal within 10 days from its receipt of
respondents' proposal, GNC wrote respondents on May 11, 2009 calling for a meeting at 10:00
a.m. of May 15, 2009 regarding CBA negotiations. While the said meeting took place and was
attended by panel members from GNC, GNCFLU and GNCNTMLU, no agreement was reached
except that GNC would notify respondents of the next negotiation meeting. However, what
respondents later received from GNC's Corporate Secretary, Atty. Ricardo M. Sampang (Atty.
Sampang) was not a notice of meeting but a letter dated May 27, 2009 which, among others,
stated that the "management is not inclined to grant the economic/monetary-related proposals
in [respondents'] letter of April 3, 2009."12 chanrobleslaw

Still, respondents on June 1, 2009, requested for a conference with GNC to discuss the ground

Labor II – 1
rules.13 GNC granted respondents' request and scheduled a meeting at 1:00 p.m. of June 11,
2009 at the GNC boardroom.14 Although respondents described GNC as "non-committal" during
the meeting, they nevertheless reckoned thereon the start of the negotiation proper between the
parties.

As to the events that transpired thereafter, the parties have conflicting claims.

While GNC asserted in general terms that the parties exchanged proposals and counter-
proposals in the months that followed,15 respondents, on the other hand, detailed the
negotiations that allegedly ensued between the parties,16 to wit: (1) another meeting was held
on June 16, 2009 but since GNC at that time still did not have any reply/counter-proposal to
respondents' proposal, it asked for three weeks to submit the same; (2) in their July 10, 2009
meeting, GNC failed to submit its purported counter-proposal; (3) in the meeting of July 31,
2009, Cita Rodriguez (Rodriguez), the school treasurer and a member of the management panel,
discussed with respondents some of the economic items in respondents' proposal, particularly
those relating to longevity pay, birthday gift, family assistance, medical check-up and clothing
allowance; (4) the parties discussed further on longevity pay and family assistance benefit in the
August 11, 2009 meeting. They also talked about an increase in rice subsidy; (5) in the August
17, 2009 meeting, Rodriguez stated that based on GNC's Faculty Manual of 2008, longevity pay
shall be given according to the number of years of service and shall be deemed as loyalty pay.
The parties then agreed to an increase of P5.00 in the longevity pay previously being given; (6)
in the following meeting of August 24, 2009, Rodriguez announced the increased benefits
included in the new CBA, to wit: loyalty pay, cash gift, rice subsidy, birthday gift and clothing
allowance. Rodriguez likewise confirmed the grant of a Union Office at the 3rd floor of Goseco
Building in GNC. However, respondents' demand for an increased signing bonus of P100,000.00
for each union (previously given at P50,000.00 each union) remained unsettled. Nevertheless,
the parties agreed to further discuss the matter; (7) on September 23, 2009, respondents
submitted to GNC a draft of the CBA containing all the benefits agreed upon. GNC requested that
some revisions be made thereon; (8) Atty. Sampang called for a meeting on October 9, 2009. In
the said meeting, the parties reviewed all the benefits agreed on. Rodriguez then stated that the
signing of the next CBA may take place the following meeting; (9) on October 15,2009,
respondents submitted to Atty. Sampang the agreed terms of the CBA which already contained
the revisions requested by GNC and the P100,000.00 signing bonus for each union. The
document according to them was by then ready for signing; (10) respondents made several
follow-ups with both Atty. Sampang and Rodriguez regarding the signing of the CBA but to no
avail; (11) respondents received from Atty: Sampang, through a letter17 dated December 21,
2009, GNC's counter-proposal.18 Respondents were surprised since they thought all along that all
matters, except for some details on the signing bonus, were already settled. Besides, the three-
week period previously requested by GNC within which to submit its counter-proposal had long
lapsed; (12) Atty. Sampang requested respondents to attend a meeting with Atty. Puno on
January 5, 2010. Despite Atty. Puno's presence in the school premises, he did not, however,
face respondents' representatives who waited for him for a considerable length of time; (13) in
view of the foregoing, respondents were constrained to write Atty. Puno on January 8,
2010.19 They stressed that while they have been bargaining in good faith, it was otherwise on
the part of GNC. Respondents thus expressed their belief that the parties have already reached
an impasse. They therefore asked GNC to respond to their letter and therein state its stand as to
whether a third party is needed to assist them in threshing out their differences. As respondents
did not get any reply from GNC, they filed on February 3, 2010 a preventive mediation case with
the National Conciliation and Mediation Board (NCMB).20 chanrobleslaw

Proceedings before the National Conciliation and Mediation Board

Labor II – 1
Again, the parties differ in their account of what transpired before the NCMB.

Respondents alleged that after several mediation meetings, the parties finally agreed on the
details regarding the grant of signing bonus. Hence, they undertook to compose the final draft of
the 2009-2014 CBA which it submitted to the NCMB on May 14, 2010 and copy furnished GNC
on May 21, 2010.21 Respondents likewise averred that the parties already agreed to schedule the
signing of the said CBA on May 28, 2010. To their dismay, however, no signing of the CBA took
place. Instead, Atty. Sabino Jose M. Padilla III (Atty. Padilla) appeared before the NCMB on
behalf of GNC and requested for 10 days or until June 7, 2010 within which to submit GNC's
Comment/Counter-Proposal to the "Union[s'] CBA draft." Although disappointed that Atty. Padilla
merely referred to the supposed "final draft" of the parties as the "Union[s'] CBA draft,"
respondents agreed to the period requested by GNC to give the latter time to go over it.
Respondents, however, manifested that they would want the parties to meet again on June 1,
2010. Come the said date, no one appeared on behalf of GNC. Thus, respondents filed on the
same day a Notice of Strike22 charging GNC with bad faith bargaining, violation of its duty to
bargain, gross violations of the provisions of the CBA, and gross and blatant diminution of
benefits. Subsequent to this, GNC allegedly stopped the grant of certain benefits to its
employees.

GNC, on the other hand, contended that during mediation meetings with the NCMB, respondents
submitted several CBA drafts for its consideration. Upon its receipt on May 21, 2010 of another
draft CBA23 from respondents under cover letter dated May 20, 2010,24 it decided to secure the
services of Atty. Padilla to assist it in its negotiations with respondents. Hence, on May 28, 2010,
Atty. Padilla appeared before the NCMB and asked for 10 days to submit GNC's
comment/counter-proposal to the purported draft CBA of respondents. However, on June 1,
2010, respondents filed a notice of strike.

In view of the notice of strike, the NCMB called for a conciliation conference on June 4, 2010
which was later set for continuation on June 9, 2010. Meanwhile on June 7, 2010, GNC filed with
the NCMB its counter-proposal25  to respondents' purported final CBA draft.
cralawred

Subsequently during the June 9, 2010 conference, GNC filed a Motion to Strike Out Notice of
Strike and to Refer Dispute to Grievance Machinery and Voluntary Arbitration Pursuant to the
Collective Bargaining Agreement.26 It invoked the "no-strike, no lock-out" clause and the
grievance machinery and voluntary arbitration provision of the parties' existing CBA which was
carried over from their 1994-1999 CBA and the CBAs subsequent thereto. According to it, the
four grounds cited by respondents in their notice of strike, i.e., bad faith bargaining, violation of
the duty to bargain, gross violation of the provisions of the CBA, and gross and blatant
diminution of benefits, all come within the definition of "grievance" under their CBA, hence, not
strikeable.

In the afternoon of the same day, respondents conducted their respective Strike Votes wherein
majority voted in favor of a strike.27 They then informed the NCMB of the strike vote results on
June 21, 2010.28 chanrobleslaw

Since the NCMB had not yet acted upon GNC's Motion to Strike Out Notice of Strike and to Refer
Dispute to Grievance Machinery and Voluntary Arbitration Pursuant to the Collective Bargaining
Agreement despite the looming strike of respondents, GNC urged the Secretary of Labor and
Employment to assume jurisdiction over the dispute.29 It specifically prayed in its letter of June
24, 2010 that the Secretary of Labor and Employment, pursuant to Article 263(g)30 of the Labor
Code "assume jurisdiction over the labor dispute between GNC and the Unions, i.e., GNCFLU and
GNCNTMLU[,] in order to enjoin the intended strike x x x and thereafter direct the parties to

Labor II – 1
submit the dispute to the grievance machinery and voluntary arbitration provisions of the
CBA."31 chanrobleslaw

In an Order32 dated June 28, 2010, the Secretary of Labor and Employment, after finding the
subject labor dispute as one affecting national interest, assumed jurisdiction over the case;
certified the same to the National Labor Relations Commission (NLRC) for immediate compulsory
arbitration; and, accordingly enjoined the intended strike.

Proceedings before the National Labor Relations Commission

In their Position Paper,33 respondents recounted that GNC at the plant level had already failed to
reply or furnish them a timely counter-proposal. While GNC asked for three weeks to submit its
counter-proposal in the meeting of June 16, 2009, no such counter-proposal was submitted.
Instead, GNC opted to orally discuss with respondents the terms of the CBA. Yet, after the
conduct of a series of meetings/negotiations and at a time when the parties had already
substantially agreed on the terms of the new CBA, respondents received from Atty. Sampang on
December 21, 2009 GNC's counter-proposal to respondents' purported "latest proposal."
Respondents denied the existence of any "latest proposal" which requires a "counter-proposal"
from GNC. And even assuming that said counterproposal is GNC's answer to the proposal they
furnished it at very outset, the same was already belatedly submitted not only because the
period to serve a reply/counter-proposal had long lapsed, but also since all matters were already
substantially agreed upon by the parties. This explains why at that point, respondents were
already following up the signing of the CBA.

The same goes true in the NCMB level. Respondents averred that the parties had already come
into agreement regarding the signing bonus after several mediation/conciliation meetings held
therein. But when they undertook to draft the CBA containing the terms agreed upon by the
parties and submitted the same to the NCMB, Atty. Padilla suddenly entered the picture and
submitted a counterproposal to what he referred to as the "Union[s'] CBA draft" when in fact,
the same was actually the parties' final draft. Respondents thus argued that GNC clearly
committed an unfair labor practice by bad faith bargaining. In addition, respondents averred that
GNC, without notice, stopped the release of benefits to its employees.

For its part, GNC called attention to the fact that when it requested the Secretary of Labor and
Employment to assume jurisdiction over the dispute, it also prayed that the same be ordered
submitted to the grievance machinery and voluntary arbitration provided for under the parties'
CBA. It stressed that its participation in the compulsory arbitration proceeding should therefore
not be construed as a waiver of its position that jurisdiction over the dispute rests with the
voluntary arbitrator in view of the parties' agreement in the CBA, the pertinent provisions of the
Labor Code, and of the Court's ruling in University of San Agustin Employees' Union-FFW v.
Court of Appeals.34 chanrobleslaw

As to the charge of unfair labor practice on account of its alleged bad faith bargaining and
violation of duty to bargain, GNC argued that the same is belied by the fact that since the very
beginning, the parties were negotiating. This continued during the mediation and conciliation
proceedings before the NCMB. And had not for respondents' impatience which caused them to
file a notice of strike, such negotiations would have progressed. To GNC, respondents' move of
filing a notice of strike was uncalled for and was only intended to compel GNC to hastily concede
to their proposals. What respondents refused to see, however, was GNC's critical financial status
that hindered it from readily agreeing with their economic proposals.

GNC likewise denied the allegation that it stopped the release of benefits to its employees. It

Labor II – 1
explained that its Protégé Program35 was only subjected to stricter implementation guidelines but
not stopped; that its employees received their uniforms; and that it could not have stopped the
grant of pilgrimage or excursion benefits since no such benefit was provided for in their previous
CBAs. What was actually provided therein was the conduct of an annual retreat which was
already held in December 2009 at the GNC campus; that as to rice subsidy, the same is granted
on a best effort basis and only when savings are generated; and that it had always endeavored
to provide, to the best of its ability, the rice subsidy benefits to its employees. In fact, rice
subsidy was last given in December 2009; and, that since the management was not generating
savings from its operations, no rice subsidy has been released thereafter. GNC asserted that it
had been explaining these to the respondents but the latter would just not listen.

The NLRC rendered a Decision36 on March 31,2011.

As to GNC's contention that jurisdiction over the dispute rests on the voluntary arbitrator, the
NLRC had this to say:
chanRoblesvirtualLawlibrary

GNC prays that [w]e dismiss the labor dispute for lack of jurisdiction and direct the parties to
resolve their differences through the grievance machinery provided for by their CBA and
eventually, resolve it under voluntary arbitration. They aver that x x x the failure or refusal of
the NCMB and thereafter, the Secretary of Labor and Employment to enforce the grievance
machinery and voluntary arbitration x x x [allowed] the unions to circumvent the CBA and their
agreement to resolve conflicts through voluntary arbitration by the simple [expedient] of filing a
notice of strike. We completely disagree.

When GNC filed their petition for assumption of jurisdiction[,] they prayed that:ChanRoblesVirtualawlibrary

"x x x. . .the Honorable Secretary of Labor and Employment, pursuant to Article 263 (g) of the
Labor Code, assume jurisdiction over the labor dispute between GNC and the Unions, i.e.
GNCFLU and GNCNTMLU[,] in order to enjoin the intended strike, or to order the immediate
return to work of strikers if a strike has taken place, and thereafter direct the parties to submit
to the grievance machinery and voluntary arbitration provisions of the CBA."
The June 28, 2010 Order of the Secretary granted the assumption of jurisdiction of the labor
dispute and certified the same to this Commission for compulsory arbitration. In effect, the
Order denied GNC's plea to submit the dispute to the parties' grievance machinery and voluntary
arbitration. Article 263 (g) does not encompass referral of the labor dispute in an industry
imbibed with national interest to grievance machinery or voluntary arbitration. In the absence of
a timely reconsideration or proof that GNC had exercised available remedy in law, the Order now
stands beyond reproach. In Union of Filipro Employees v. NLRC x x x, the Supreme Court
ruled: ChanRoblesVirtualawlibrary

"When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is not
sitting as a judicial court but as an administrative body charged with the duty to implement the
order of the Secretary. Its function only is to formulate the terms and conditions of the CBA and
cannot go beyond the scope of the order. Moreover, the Commission is further tasked to act
within the earliest time possible and with the end in view that its action would not only serve the
interests of the parties alone, but would also have favorable implications to the community and
to the economy as a whole. This is the clear intention of the legislative body in enacting Art.
263, paragraph (g) of the Labor Code, as amended by Section 27 of RA 6175." x x x
Corollary thereto, as an implementing body, [o]ur authority does not include the power to
amend the Secretary's Order. To accede to a referral of the labor dispute to the grievance
machinery and ultimately to voluntary arbitration is equivalent to amending said Order, x x x37

The NLRC thus upheld its jurisdiction over the case, viz.:

Labor II – 1
chanRoblesvirtualLawlibrary

The Secretary is explicitly granted by Article 263 (g) of the Labor Code the authority to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and decide the same accordingly. Inevitably, this authority
to assume jurisdiction over a labor dispute must include and extend to all questions and
controversies arising therefrom, including cases over which the Labor Arbiter has exclusive
jurisdiction x x x. It is the declared policy of this Commission that in certified labor disputes for
compulsory arbitration, We must ensure and maintain industrial peace based on social justice
and national interest by having a full, complete and immediate settlement or adjudication of all
labor disputes between the parties, as well as issues that are relevant to or incidents of the
certified issues. Under Section 3, par. (b), Rule VIII of our 2005 Revised Rules of Procedure: ChanRoblesVirtualawlibrary

"(b) All cases between the same parties, except where the certification order specifies
otherwise, the issues submitted for arbitration which are already filed or may be filed, and are
relevant to or are proper incidents of the certified case, shall be considered subsumed or
absorbed by the certified case, and shall be decided by the appropriate Division of the
Commission.

Subject to the second paragraph of Section 4 of Rule IV, the parties to a certified case, under
pain of contempt, shall inform their counsels and the Division concerned of all cases pending
with the Regional Arbitration Branches and the Voluntary Arbitrators relative or incident to the
certified case before it."
Plaintly, [o]ur jurisdiction in this certified case extends to all other issues between the parties so
long as they are relevant and germane in the resolution of the main labor dispute. Our rules,
under pain of contempt, require consolidation of all cases pending with [o]ur Regional Arbitration
Branches or with any Voluntary Arbitrator and consider them included or absorbed in the
certified case to be able to completely and finally settle it. The intention of the law is an
immediate and complete resolution of a labor dispute in an industry indispensable to the national
interest. In this certified case, We are called to exercise [o]ur judgment and adjudicate the labor
dispute in accordance with the Order of the Secretary of Labor and Employment. This
Commission will not recuse from this responsibility for want of jurisdiction.38

Anent the merits of the case, the NLRC held that based on the totality of conduct of GNC, it was
guilty of bad faith bargaining and therefore committed an unfair labor practice. This was on
account of GNC's submission of a counterproposal despite the parties already having reached an
agreement regarding the terms of the CBA. To the NLRC, the belated submission of GNC's
counterproposal was intended to evade the execution of the CBA. With respect to GNC's alleged
withdrawal of employees' benefits, the NLRC ruled that pursuant to Article 253 of the Labor
Code, the parties have the duty to keep the status quo and to continue in full force and effect
the terms and conditions of their existing agreement within 60 days prior to the expiration
thereof and/or until a new agreement is reached by the parties. The NLRC, thus, held that GNC
failed to abide by this duty when it discontinued the release of benefits pending the conclusion of
a new CBA. Finally, pursuant to General Milling Corporation v. Court of Appeals,39 the NLRC
deemed it proper to declare the final draft submitted by respondents to the NCMB as the parties'
CBA for the period June 1, 2009 to May 31,2014.

The NLRC ultimately ruled as follows:

chanRoblesvirtualLawlibrary

WHEFORE, considering [o]ur foregoing disquisitions, [w]e find Guagua National Colleges (GNC)
to have committed an unfair labor practice by violating the statutory duty to bargain collectively
in good faith. We [o]rder that the final CBA draft submitted by the unions to GNC and NCMB x x
x be the Collective Bargaining Agreement between the parties for the period June 1, 2009 to
May 31, 2014 with the parties free to renegotiate the economic provisions not later than May

Labor II – 1
31,2012 in accordance with Article 253-A of the Labor Code. Lastly, We further [o]rder that the
benefits agreed on by the parties as of August 24, 2009 be given retroactive effect to June 1,
2009.
 
SO ORDERED.40

Since GNC's Motion for Reconsideration41 thereto was denied for lack of merit in the NLRC
Resolution42 dated May 25, 2011, it sought recourse from the CA through a Petition
for Certiorari.43 chanrobleslaw

Ruling of the Court of Appeals

In a Decision44 dated September 26, 2012, the CA did not find any grave abuse of discretion on
the part of NLRC in issuing its assailed orders. Hence, it denied the Petition for lack of merit.
GNC filed a Motion for Reconsideration45 thereto which, however, was likewise denied in the
Resolution46 dated December 3, 2012.

Hence, this Petition for Review on Certiorari.

Issue

WHETHER THE COURT OF APPEALS XXX COMMITTED GRIEVOUS AND IRREVERSIBLE ERROR
WHEN, IN ITS DECISION DATED 26 SEPTEMBER 2012 AND RESOLUTION DATED 3 DECEMBER
2012, IT DISMISSED [GNC's] PETITION FOR CERTIORARI AND MOTION FOR
RECONSIDERATION[,] RESPECTIVELY[,] FOR LACK OF MERIT, THEREBY AFFIRMING THE
DECISION DATED 31 MARCH 2011 AND RESOLUTION DATED 25 MAY 2011 OF THE NATIONAL
LABOR RELATIONS COMMISSION XXX47

Essential to the determination of the issue raised is the resolution of the following:
chanRoblesvirtualLawlibrary

1. Whether the subject labor dispute should have been ordered submitted to
voluntary arbitration by the Secretary of Labor and Employment pursuant to the
parties' CBA and not certified to the NLRC for compulsory arbitration;

2. Whether GNC is guilty of bad faith bargaining and thus violated its duty to bargain;

3. Whether the final CBA draft submitted by respondents to the NCMB was correctly declared
to be the parties' CBA for the period June 1, 2009 to May 31, 2014.

Our Ruling

The Petition has no merit.

The Secretary of Labor and Employment

correctly certified the subject labor
dispute to the NLRC for compulsory
arbitration.

GNC asserts that it is the voluntary arbitrator which has jurisdiction over the grounds
cited by respondents in their notice of strike in view of Section 17 of the parties' 1994-
Labor II – 1
1999 CBA. The said provision contains the agreement of the parties on a "no strike, no
lock-out" policy and on grievance resolution and voluntary arbitration which was
carried over to their subsequent CBAs up to the existing one. According to GNC,
respondents should not have filed a notice of strike in view of such "no-strike, no lock-out"
clause and also since respondents' grounds for strike are within the scope of "grievance" to be
resolved in accordance with the said Section 17. It argues that respondents, by the simple
expedient of filing a notice of strike, were able to circumvent the "no strike, no lock-out" clause
and the grievance machinery and voluntary arbitration provision of their CBA.

Indeed, the parties through their CBA, agreed to a "no-strike, no lock-out" policy and
to resolve their disputes through grievance machinery and voluntary arbitration.
Despite these, respondents were justified in filing a notice of strike in light of the facts
of this case. It is settled that a "no strike, no lock-out" provision in the CBA "may
[only] be invoked by [an] employer when the strike is economic in nature or one
which is conducted to force wage or other agreements from the employer that are not
mandated to be granted by law. It [is not applicable when the strike] is grounded on
unfair labor practice."48 Here, while respondents enumerated four grounds in their notice of
strike, the facts of the case reveal that what primarily impelled them to file said notice was their
perception of bad faith bargaining and violation of the duty to bargain collectively by GNC -
charges which constitute unfair labor practice under Article 248(g) of the Labor Code.49 chanrobleslaw

To recall, respondents acted prudently when they filed a preventive mediation case the first time
that GNC refused to acknowledge at the plant level that the parties already agreed on the terms
of their incoming CBA. However, GNC again rebuffed that the parties had already entered into an
agreement when respondents submitted the purported final CBA draft of the parties to the
NCMB. Hence, respondents cannot be faulted into believing that GNC was bargaining in bad faith
and had no genuine intention to comply with its duty to bargain collectively since it denied
arriving at an agreement with respondents not once but twice. This belief in good faith prompted
them to file a notice of strike. Clearly, respondents' intention was to protest what they perceived
to be acts of unfair labor practice on the part of GNC through the exercise of their right to strike
enshrined in the Constitution and not to circumvent the "no strike, no lock-out" clause and the
grievance machinery and voluntary arbitration provision of the CBA.

GNC relies heavily on University of San Agustin50 According to it, the facts therein are similar if
not identical to the facts of the present case. Hence, the Court's ruling in the said case squarely
applies here.

In University of San Agustin, the University of San Agustin (the University) and the University of
San Agustin Employees' Union (Union) entered into a five-year CBA in 2000. Complementary to
the economic provisions of the said CBA is Section 3, Article 8 thereof which provides for salary
increases for school years 2000-2003. Such salary increases shall take the form of either lump
sum or a percentage of the tuition incremental proceeds (TIP). Moreover and just like in the
present case, the parties' CBA therein contained a "no strike, no lock-out" clause, a grievance
machinery procedure, and a voluntary arbitration mechanism.

When the parties were renegotiating the economic provisions of their CBA, they could not agree
on the manner of computing the TIP. In view of this impasse, the Union declared a bargaining
deadlock. When the Union filed a Notice of Strike before the NCMB, the University opposed the
same by filing a Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary
Arbitration invoking the "no strike, no lock-out" clause of their CBA. The NCMB, however, failed
to resolve the said motion. The parties then jointly requested the Secretary of Labor and
Employment to assume jurisdiction over the dispute. When the Secretary of Labor and

Labor II – 1
Employment assumed jurisdiction, it proceeded to hear and decide on the dispute. Eventually, a
Decision was rendered wherein the economic issues over which the parties had a deadlock in the
collective bargaining were resolved, among others.

The CA, on certiorari petition, found merit in the University's argument that the Secretary of
Labor abused his/her discretion in resolving the economic issues on the ground that the same
were proper subject of the grievance machinery as embodied in the parties' CBA. Accordingly,
the said court directed the parties to submit the economic issues to voluntary arbitration.

This Court affirmed the CA's ruling based on the following ratiocinations:
chanRoblesvirtualLawlibrary

We xxx find logic in the CA's directive for the herein parties to proceed with voluntary arbitration
as provided in their CBA. As we see it, the issue as to the economic benefits, which included the
issue on the formula in computing the TIP share of the employees, is one that arises from the
interpretation or implementation of the CBA. To be sure, the parties' CBA provides for a
grievance machinery to resolve any 'complaint or dissatisfaction arising from the interpretation
or implementation of the CBA and those arising from the interpretation of enforcement of
company personnel policies.' Moreover, the same CBA provides that should the grievance
machinery fail to resolve the grievance or dispute, the same shall be 'referred to a Voluntary
Arbitrator for arbitration and final resolution.' However, through no fault of the University these
processes were not exhausted. It must be recalled that while undergoing preventive mediation
proceedings before the NCMB, the Union declared a bargaining deadlock, filed a notice of strike
and thereafter, went on strike. The University filed a Motion to Strike Out Notice of Strike and to
Refer the Dispute to Voluntary Arbitration  but the motion was not acted upon by the NCMB. As
borne by the records, the University has been consistent in its position that the Union must
exhaust the grievance machinery provisions of the CBA which ends in voluntary arbitration.

The University's stance is consistent with Articles 261 and 262 of the Labor Code, as amended
which respectively provide[s]: ChanRoblesVirtualawlibrary

Art. 261. Jurisdiction of voluntary arbitrators or 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.

Art. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks.

The grievance machinery and no strike, no lockout provisions of the CBA forged by the
University and the Union are founded on Articles 261 and 262 quoted above. The parties agreed

Labor II – 1
that practically all disputes - including bargaining deadlocks - shall be referred to the grievance
machinery which ends in voluntary arbitration. Moreover, no strike or no lockout shall ensue
while the matter is being resolved.

The University filed a Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary
Arbitration precisely to call the attention of the NCMB and the Union to the fact that the CBA
provides for a grievance machinery and the parties' obligation to exhaust and honor said
mechanism. Accordingly, the NCMB should have directed Hie Union to honor its agreement with
the University to exhaust administrative grievance measures and bring the alleged deadlock to
voluntary arbitration. Unfortunately, the NCMB did not resolve the University's motion thus
paving the way for the strike on September 19, 2003 and the deliberate circumvention of the
CBA's grievance machinery and voluntary arbitration provisions.

As we see it, the failure or refusal of the NCMB and thereafter the [Secretary of Labor and
Employment] to recognize, honor and enforce the grievance machinery and voluntary arbitration
provisions of the parties' CBA unwittingly rendered said provisions, as well as Articles 261 and
262 of the Labor Code, useless and inoperative. As here, a union can easily circumvent the
grievance machinery and previous agreement to resolve differences or conflicts through
voluntary arbitration through the simple expedient of filing a notice of strike. On the other hand,
management can avoid the grievance machinery and voluntary arbitration provisions of its CBA
by simply filing a notice of lockout.51

It must be noted that under the facts of University of San Agustin, the dispute between the
parties primarily involved the formula in computing the TIP share of the employees - one which
clearly arose from the interpretation or implementation of the CBA. Pursuant to Article 261 of
the Labor Code,52 such a grievance falls under the original and exclusive jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators. Even if otherwise, the dispute would still
fall under the said jurisdiction pursuant to Article 26253 of the same Code since the parties
agreed in their CBA that practically all disputes, including bargaining deadlock, shall be referred
to grievance machinery that ends in voluntary arbitration.

It can safely be concluded, therefore, that the clear showing of the voluntary arbitrator's
jurisdiction over the parties' dispute in University of San Agustin is the underlying reason why
the Court upheld the CA's directive for the parties to proceed to voluntary arbitration in
accordance with their CBA. After all, it is the declared policy of the State to promote and
emphasize the primacy of voluntary arbitration as a mode of settling labor or industrial
disputes.54 chanrobleslaw

Contrary to GNC's contention, however, there is a marked difference between the facts
of University of San Agustin  and of the present case which makes the ruling in the
former inapplicable to the latter. Unlike in University of San Agustin, the main cause of
the dispute between the parties in this case, i.e., GNC's alleged commission of unfair
labor practice, did not arise from the interpretation or implementation of the parties'
CBA, or neither from the interpretation or enforcement of company personnel policies.
Hence, it does not fall under the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators under the aforementioned Article 261. Be
that as it may, GNC argues that since the grounds cited by respondents in their notice of strike
come within the scope of "grievance" under the grievance resolution and voluntary arbitration
provision of the parties' CBA, the same is cognizable by the voluntary arbitrator. Otherwise
stated, since the parties allegedly agreed to submit a dispute of this kind to their CBA's
grievance resolution procedure which ends in voluntary arbitration, it is the voluntary arbitrator
which has jurisdiction in view of Article 262 of the Labor Code.

Labor II – 1
The grievance resolution and arbitration provision of the parties' CBA provides in part, viz.:
chanRoblesvirtualLawlibrary

17. Grievance Machinery

The parties hereto agree on the principle that all disputes between labor and management may
be settled through friendly negotiations, that the parties have the same interest in the continuity
of work until all matters in dispute shall have been discussed and settled in a manner to the
mutual benefit of the parties herein, that an open conflict in any form involves losses to the
parties, hence, all efforts must be exerted to avoid such an open conflict. In the furtherance of
the foregoing principle, the parties agree to establish a procedure for the adjustment of any
grievance to provide the widest opportunity for discussion of any dispute, request or complaint
and establish the procedure for the processing and settlement of grievances.

A grievance is defined as any protest, misunderstanding or difference of opinion or dispute

affecting the COLLEGE and the UNION or affecting any employee covered by this Agreement
with respect to:

1. Meaning, interpretation, implementation or violation of any of the provisions of this

Agreement;
2. Any matter directly relating or affecting the terms and conditions of employment including
all personnel policies;
3. Dismissal, suspension and/or any other disciplinary action;
4. Any other matter or dispute which may arise and is not settled by means other than the
grievance machinery.

x x x x55

Plainly, a charge of unfair labor practice does not fall under the first three definition of grievance
as above-quoted. Neither can it be considered as embraced by the fourth which at first blush,
appears to be a "catch-all" definition of grievance because of the phrase "[a]ny other matter or
dispute". It has been held that while the phrase "all other labor dispute" or its variant "any other
matter or dispute" may include unfair labor practices, it is imperative, however, that the
agreement between the union and the company states in unequivocal language that the parties
conform to the submission of unfair labor practices to voluntary arbitration.56 It is not sufficient
to merely say that parties to the CBA agree on principle that "all disputes" or as in this case,
"any other matter or dispute", should be submitted to the grievance machinery and eventually to
the voluntary arbitrator. There is a need for an express stipulation in the CBA that unfair
labor practices should be resolved in the ultimate by the voluntary arbitrator or panel
of voluntary arbitrators since the same fall within a special class of disputes that are
generally within the exclusive original jurisdiction of the Labor Arbiter by express
provision of the law.57 "Absent such express stipulation, the phrase 'all disputes' [or
"any other matter or dispute" for that matter] should be construed as limited to the
areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e.,
disputes relating to contract-interpretation, contract-implementation, or interpretation
or enforcement of company personnel policies. [Unfair labor practices cases] - not
falling within any of these categories - should then be considered as a special area of
interest governed by a specific provision of law."58 chanrobleslaw

In trie absence here of an express stipulation in the CBA that GNC and respondents agreed to
submit cases of unfair labor practice to their grievance machinery and eventually to voluntary
arbitration, jurisdiction over the parties' dispute does not vest upon the voluntary arbitrator. The

Labor II – 1
reason behind the ruling in  University of San Agustin is therefore not attendant in this case and
so does not find any application here. As it stands, the parties' dispute which centers on the
charge of unfair labor practice is the proper subject of compulsory arbitration. In fact, GNC itself
acknowledged in its June 24, 2010 letter to the Secretary of Labor and Employment that a
charge of unfair labor practice in a notice of strike is ordinarily certified for compulsary
arbitration.59 chanrobleslaw

GNC further avers that under the parties' CBA, there are only two instances where compulsory
arbitration may be resorted to, to wit: (1) at the grievance machinery level, if respondents are
not satisfied with GNC's decision on a grievance; and, (2) at the voluntary arbitration level,
when the parties cannot agree on the third member of the Arbitration Committee. GNC thus
contends that submission of the parties' dispute to compulsory arbitration is but another
violation of their agreement embodied in the CBA.

The argument is specious.

As expounded by both the NLRC and the CA, the Secretary of Labor and Employment's
certification for compulsory arbitration of a dispute over which he/she has assumed jurisdiction
is but an exercise of the powers granted to him/her by Article 263(g) of the Labor Code as
amended. "[These] powers x x x have been characterized as an exercise of the police power of
the State, aimed at promoting the public good. When the Secretary exercises these powers,
he[/she] is granted 'great breadth of discretion' to find a solution to a labor dispute."60 The Court
therefore cannot subscribe to GNC's contention since to say that compulsory arbitration may
only be resorted to in instances agreed upon by the parties would limit the power of the
Secretary of Labor and Employment to certify cases that are proper subject of compulsory
arbitration. The great breadth of discretion granted to the Secretary of Labor and Employment
for him/her to find an immediate solution to a labor dispute would unnecessarily be diminished if
such would be the case.

In view of the above discourse, the Court finds that the Secretary of Labor and Employment
correctly certified the parties' dispute to the NLRC for compulsory arbitration.

GNC engaged in bad faith bargaining

and thus violated its duty to bargain.

GNC insists that it is not guilty of bad faith bargaining nor did it commit any violation of its duty
to bargain by pointing out that it consistently engaged in negotiations with the respondents both
at the plant and NCMB levels. It underscores that following its submission of a counter-proposal
to the NCMB, it even manifested that it was willing to negotiate on a marathon basis. This
negates any ill will, bad faith, fraud or conduct oppressive to labor on its part. In any case, there
is no truth to respondents' assertion that the parties have already reached an agreement when
GNC submitted a counter-proposal. Hence, it cannot be said that GNC engaged in dilatory tactics
to avoid the signing of the CBA since there was yet no final agreement to speak of. GNC likewise
justifies its submission of counter-proposal asserting that the same was necessary in view of the
chronic financial situation of GNC, the need to conclude a separate CBA for GNCFLU and
GNCNTMLU, and in order to introduce thereon improved provisions for the mutual benefit of the
parties.

The duty to bargain collectively is defined under Article 252 of the Labor Code to, viz.:
chanRoblesvirtualLawlibrary

ARTICLE 252. Meaning of duty to bargain collectively. - The duty to bargain collectively

means the performance of a mutual obligation to meet and convene promptly and

Labor II – 1
expeditiously in good faith for the purpose of negotiating an agreement with respect to wages,
hours of work and all other terms and conditions of employment including proposals for
adjusting any grievances or questions arising under such agreements and executing a contract
incorporating such agreements if requested by either party but such duty does not compel any
party to agree to a proposal or to make any agreement. (Emphasis supplied)

"It has been held that the crucial question whether or not a party has met his statutory duty to
bargain in good faith typically turns on the facts of the individual case. There is no per se test of
good faith in bargaining. Good faith or bad faith is an inference to be drawn from the
facts."61 "The effect of an employer's or a union's actions individually is not the test of good-faith
bargaining, but the impact of all such occasions or actions, considered as a whole x x x"62 chanrobleslaw

Here, the collective conduct of GNC is indicative of its failure to meet its duty to bargain in good
faith. Badges of bad faith attended its actuations both at the plant and NCMB levels.

At the plant level, GNC failed to comply with the mandatory requirement of serving a
reply/counter-proposal within 10 calendar days from receipt of a proposal,63 a fact which by itself
is already an indication of lack of genuine interest to bargain.64 Then, it led respondents to
believe that it was doing away with the reply/counter-proposal when it proceeded to just orally
discuss the economic terms. After a series of negotiation meetings, the parties finally agreed on
the economic terms which based on the records was the only contentious issue between them.
In fact, in their meeting of August 24, 2009, Rodriguez, in her capacity as member of the
management panel, already announced the included under the CBA for 2009-2014.65 She then
stated that the signing thereof would be underway. In the days that followed, however, GNC
ignored the follow-ups made by respondents regarding the signing. It then suddenly capitalized
on the fact that it had not yet submitted a reply/counter-proposal and thereupon served one
upon respondents despite the parties already having reached an agreement.

It could not be any clearer from the above circumstances that GNC has no genuine intention to
comply with its duty to bargain. It merely went through the motions of negotiations and then
entered into an agreement with respondents which turned out to be an empty one since it later
denounced the same by submitting a reply/counter-proposal. Worse, when respondents tried to
clear out matters with the GNC President through their letter of January 8, 2010, GNC did not
even bother to respond.

To persuade the Court that no agreement has yet been reached by the parties, GNC refers to the
minutes of the October 9, 2009 meeting indicating that the economic benefits were still to be
discussed with the President of GNC. GNC takes this to mean that the economic benefits were at
that time still subject to the approval of the GNC President and, hence, not yet final. The Court,
however, notes that GNC conveniently disregarded not only the previous minutes of the parties'
meetings but also the other significant portions of the October 9, 2009 minutes it alluded to. The
minutes of the meeting held on August 24, 2009 clearly shows that Rodriguez categorically
announced and enumerated all the benefits "given by the school in the CBA 2009-
2014."66 Plainly, this means that the announced benefits were already approved by GNC. On the
other hand, the minutes of the meeting on October 09, 2009 states in full:
chanRoblesvirtualLawlibrary

III. [Ms. Rodriguez] cited all the benefits of the permanent faculty and covered employees
granted in the previous CBAs.

She requested to [sum] up all these benefits and privileges including the [additional benefits]
acquired on this present CBA [which shall] be discussed with the President, so next time we
will be on the signing.67 (Emphasis supplied)

Labor II – 1
Nowhere from the afore-quoted minutes of the meeting can it be deduced that the terms of the
CBA is still subject to the approval of the GNC President. There is no clear showing that the
purpose of discussing the economic benefits with him is to secure his approval thereto. If at all,
the purported discussion appears to be a mere formality since the signing of the CBA was not
made dependent to the result of the discussion with him. As can be seen, the statement that
"next time they will be on the signing" is clearly unqualified. Indubitably, indications lead to the
conclusion that the parties already agreed on the terms of the CBA and it was only the execution
thereof that needs to be done.

Anent GNC's claim that it was suffering from financial difficulties which according to it was one of
the reasons why it saw the need to submit a counterproposal, suffice it to say that GNC should
have squarely raised this early on in the negotiations, After all, the employer's duty to negotiate
in good faith with its employees consists of matching the latter's proposals, if unacceptable, with
counter-proposals, and of making every reasonable effort to reach an agreement.68 There must
be common willingness among the parties to discuss freely and fully their respective claims and
demands and, when these are opposed, to justify them on reason.69 However, instead of laying
all its card on the table, GNC for reasons only known to it, chose to forego the opportunity of
discussing its claimed financial predicament with respondents as shown by the following: (1)
GNC did not submit a reply/counter-proposal within 10 calendar days from its receipt of
respondents' proposed CBA on April 3, 2009 as required by law; (2) while it later manifested
through a letter dated May 27, 2009 that it is not inclined to grant the economic provisions in
respondents' proposal, it did not fully discuss or explain to respondents its claimed opposition;
(3) Atty. Sampang did not make good on the promise he made in the meeting of June 16, 2009
that GNC would submit its counter-proposal to respondents' economic provisions with the
corresponding explanation;70 and, (4) as shown by the minutes of the meetings, the members of
the management panel simply made general statements that GNC was having financial
difficulties but failed to elaborate on the same. As it is, GNC allowed itself to go through the
process of negotiating with respondents without fully discussing its financial status and despite
this, knowingly entered into an agreement with them. It cannot, therefore, be allowed to later
interpose an opposition to the terms of the CBA based on financial incapacity by belatedly
submitting a counter-proposal, which from the circumstances, is an obvious attempt to stall
what would have been the last step of the process - the execution of the CBA. The Court cannot
be expected to affix its imprimatur to such a dubious maneuver.71 chanrobleslaw

With respect to GNC's assertion that its submission of a counter-proposal was also impelled by
the need to conclude a separate CBA for GNCFLU and GNCNTMLU and to improve certain
provisions, records reveal that during the negotiations at the plant level, GNC did not at all
entertain this idea. This explains why the matter was not brought to fore during the negotiations
therein. The idea was only introduced to GNC by Atty. Padilla when the former asked him to
evaluate the final draft of the CBA submitted by respondents to the NCMB. Eventually, the same
was used as a ground for GNC's opposition to the said final draft as contained in the counter-
proposal that GNC submitted to the NCMB. The matter, however, loses its significance in the
light of the Court's succeeding discussion as to the inopportune submission of the said counter-
proposal.

The over-all conduct of GNC at the plant level, without a doubt, illustrates bad faith bargaining.
And as already stated, this display of bad faith continued evenattheNCMB.

True, GNC participated in the conciliation meetings in the NCMB. In fact, the minutes of the
proceedings would show that the parties were able to settle certain matters about the signing
bonus.72 Further, during the April 15, 2010 conciliation/meeting, it was agreed that respondents

Labor II – 1
will come up with the "final draft" of the parties to be submitted to the NCMB and copy furnished
GNC.73 Respondents complied with the said undertaking such that the minutes of the May 14,
2010 conciliation/meeting reveals that the only thing left for the parties to do was to go over the
details of the final draft of the CBA for fine-tuning.74
chanrobleslaw

However, GNC again engaged itself in the scheme of denying that the parties have already
reached an agreement. It denies that the draft submitted by the respondents to the NCMB was
the parties' final draft. It instead asserts that the document was merely respondents' draft which
was still subject to GNC's consideration. The Court, however, finds no merit in this assertion
since as shown above, the minutes of the proceedings before the NCMB reveal otherwise.

As proof of its claimed faithful intention to comply with its duty to bargain, GNC asserts that it
even manifested before the NCMB that it was willing to negotiate on a marathon basis following
its submission of a counter-proposal. Suffice it to say, however, that such manifestation, as well
as the said counterproposal, already came too late in the day since at that point there already
exists a "final draft" submitted by the respondents in accordance with the understanding reached
by the parties in the conciliation/meetings conducted by the NCMB.

In view of the foregoing, the Court finds that GNC engaged in bad faith bargaining and by the
same violated its duty to bargain collectively as mandated by law.

Before turning to. the next issue, however, the Court finds proper to pass upon the matter of
GNC's unilateral withdrawal of employee's benefits as found by the NLRC. GNC laments that
while it squarely raised this matter before the CA, the said court ignored the same.

Guided by the basic rule that he who alleges must prove,75 the Court finds that respondents
failed to substantiate its claim that GNC unilaterally stopped the release of certain benefits to its
employees. All that respondents advanced were bare allegations without any proof. On the other
hand, GNC was able to show that benefits such as clothing benefit76 and annual retreat were
already extended to its employees. The protege benefit, although subjected to stricter
implementation guidelines, was likewise still in efifect.77 And while rice assistance was last given
in December 2009, the grant of the same was shown to be on a best effort basis. Notably,
respondents were not able to refute GNC's explanation. Thus, the Court finds the charge of
unilateral withdrawal of benefits against GNC without basis. Be that as it may, let it be made
clear that this does not have any effect and therefore does not change the finding that GNC
committed a violation of its duty to bargain as extensively discussed above.

The final CBA draft submitted by

respondents to the NCMB was correctly
imposed by the NLRC as the parties'
CBA for the period June 1, 2009 to
May 31, 2014.

In the cases of Kiok Lay,79Divine Word University of Tacloban v. Secretary of Labor and
Employment80, and General Milling Corporation,81 the Court unilaterally imposed upon the
employers the CBAs proposed by the unions after the employers were found to have violated
their duty to bargain collectively. This is on the premise that the said employers, by their acts
which bespeak of insincerity, had lost their statutory right to negotiate or renegotiate the terms
and conditions contained in the unions' proposed CBAs.

Here, the Court finds nothing wrong in the pronouncement of the NLRC that the final CBA draft
submitted by respondents to the NCMB should serve as the parties' CBA for the period June 1,

Labor II – 1
2009 to May 31, 2014. More than the fact that GNC is the erring party in this case, records show
that the said draft is actually the final CBA draft of the parties which incorporates their
agreements. Indeed and as held by the NLRC, fairness, equity and social justice are best served
if the said final CBA draft shall govern their industrial relationship.

All told, the Court finds that the CA correctly affirmed the ruling of the NLRC and denied GNC's
Petition for Certiorari for lack of merit.

WHEREFORE, the Petition is hereby DENIED. The assailed Decision dated September 26,2012

and Resolution dated December 3,2012 of the Court of Appeals in CA-G.R. SP No. 120669
are AFFIRMED.

Labor II – 1
 33.) G.R. No. 200499, October 04, 2017

SAN FERNANDO COCA-COLA RANK-AND-FILE UNION (SACORU), REPRESENTED BY ITS

PRESIDENT, ALFREDO R. MARAÑON, Petitioner, v. COCA-COLA BOTTLERS PHILIPPINES,
INC. (CCBPI), Respondent.

DECISION

CAGUIOA, J.:

Petitioner San Fernando Coca-Cola Rank and File Union (SACORU) filed a petition for
review1 on certiorari under Rule 45 of the Rules of Court assailing the Decision2 dated July 21,
2011 and Resolution3 dated February 2, 2012 of the Court of Appeals (CA) in CA-G.R. SP No.
115985. The CA affirmed the Resolution4 dated March 16, 2010 of the National Labor Relations
Commission. (NLRC), Second Division, which dismissed SACORU's complaint against respondent
Coca-Cola Bottlers Philippines, Inc. (CCBPI) for unfair labor practice and declared the dismissal
of 27 members of SACORU for redundancy as valid.

Facts

The facts, as found by the CA, are:

On May 29, 2009, the private respondent company, Coca-Cola Bottlers Philippines., Inc.
("CCBPI") issued notices of termination to twenty seven (27) rank-and-file, regular
employees and members of the San Fernando Rank-and-File Union ("SACORU"), collectively
referred to as "union members", on the ground of redundancy due to the ceding out of two
selling and distribution systems, the Conventional Route System ("CRS") and Mini Bodega
System ("MB") to the Market Execution Partners ("MEPS"), better known as "Dealership
System". The termination of employment was made effective on June 30, 2009, but the union
members were no longer required to report for work as they were put on leave of absence with
pay until the effectivity date of their termination. The union members were also granted
individual separation packages, which twenty-two (22) of them accepted, but under protest.

To SACORU, the new, reorganized selling and distribution systems adopted and implemented by
CCBPI would result in the diminution of the union membership amounting to union busting and
to a violation of the Collective Bargaining Agreement (CBA) provision against contracting out of
services or outsourcing of regular positions; hence, they filed a Notice of Strike with the National
Conciliation and Mediation Board (NCMB) on June 3, 2009 on the ground of unfair labor practice,
among others. On June 11, 2009, SACORU conducted a strike vote where a majority decided on
conducting a strike.

On June 23, 2009, the then Secretary of the Department of Labor and Employment (DOLE),
Marianito D. Roque, assumed jurisdiction over the labor dispute by certifying for compulsory
arbitration the issues raised in the notice of strike. He ordered,
"WHEREFORE, premises considered, and pursuant to Article 263 (g) of the Labor Code of the
Philippines, as amended, this Office hereby CERTIFIES the labor dispute at COCA-COLA
BOTTLERS PHILIPPINES, INC. to the National Labor Relations Commission for compulsory
arbitration.

Accordingly, any intended strike or lockout or any concerted action is automatically enjoined. If
one has already taken place, all striking and locked out employees shall, within twenty-four (24)
hours from receipt of this Order, immediately return to work and the employer shall immediately

Labor II – 1
resume operations and re-admit all workers under the same terms and conditions prevailing
before the strike. The parties are likewise enjoined from committing any act that may further
exacerbate the situation."

Meanwhile, pending hearing of the certified case, SACORU filed a motion for execution of
the dispositive portion of the certification order praying that the dismissal of the union
members not be pushed through because it would violate the order of the DOLE
Secretary not to commit any act that would exacerbate the situation.

On August 26, 2009, however, the resolution of the motion for execution was ordered deferred
and suspended; instead, the issue was treated as an item to be resolved jointly with the main
labor dispute.

CCBPI, for its part, argued that the new business scheme is basically a management prerogative
designed to improve the system of selling and distributing products in order to reach more
consumers at a lesser cost with fewer manpower complement, but resulting in greater returns to
investment. CCBPI also contended that there was a need to improve its distribution system if it
wanted to remain viable and competitive in the business; that after a careful review and study of
the existing system of selling and distributing its products, it decided that the existing CRS and
MB systems be ceded out to the MEPs or better known as "Dealership System" because the
enhanced MEPs is a cost-effective and simplified scheme of distribution and selling company
products; that CCBPI, through the simplied system, would derive benefits such as: (a) lower
cost to serve; (b) fewer assets to manage; (c) zero capital infusion.

SACORU maintained that the termination of the 27 union members is a circumvention of the CBA
against the contracting out of regular job positions, and that the theory of redundancy as a
ground for termination is belied by the fact that the job positions are contracted out to a "third
party provider"; that the termination will seriously affect the union membership because out of
250 members, only 120 members will be left upon plan implementation; that there is no
redundancy because the sales department still exists except that job positions will be contracted
out to a sales contractor using company equipment for the purpose of minimizing labor costs
because contractual employees do not enjoy CBA benefits; that the contractualization program
of the company is illegal because it will render the union inutile in protecting the rights of its
members as there will be more contractual employees than regular employees; and that the
redundancy program will result in the displacement of regular employees which is a clear case of
union busting.

Further, CCBPI argued that in the new scheme of selling and distributing products through MEPs
or "Dealership [System]", which is a contract of sale arrangement, the ownership of the products
is transferred to the MEPs upon consummation of the sale and payment of the products; thus,
the jobs of the terminated union members will become redundant and they will have to be
terminated as a consequence; that the termination on the ground of redundancy was made in
good faith, and fair and reasonable criteria were determined to ascertain what positions were to
be phased out being an inherent management prerogative; that the terminated union members
were in fact paid their separation pay benefits when they were terminated; that they executed
quitclaims and release; and that the quitclaims and release being voluntarily signed by the
terminated union members should be declared valid and binding against them.5

The NLRC dismissed the complaint for unfair labor practice and declared as valid the dismissal of
the employees due to redundancy. The dispositive portion of the NLRC Resolution states:
WHEREFORE, in view of the foregoing, a Decision is hereby rendered ordering the dismissal of
the labor dispute between the Union and Coca-Cola Bottlers Company, Inc.

Labor II – 1
Accordingly, the charge of Unfair Labor Practice against the company is DISMISSED for lack of
merit and the dismissal of the twenty seven (27) complainants due to redundancy is hereby
declared valid. Likewise, the Union's Motion for Writ of Execution is Denied for lack of merit.

SO ORDERED.6
With the NLRC's denial of its motion for reconsideration, SACORU filed a petition
for certiorari under Rule 65 of the Rules of Court before the CA. The CA, however, dismissed the
petition and found that the NLRC did not commit grave abuse of discretion. The dispositive
portion of the CA Decision states:
WHEREFORE, the instant petition is DISMISSED.

IT IS SO ORDERED.7
SACORU moved for reconsideration of the CA Decision but this was denied. Hence, this petition.

Issues

a. Whether CCBPI validly implemented its redundancy program;

b. Whether CCBPI's implementation of the redundancy program was an unfair labor practice;
and

c. Whether CCBPI should have enjoined the effectivity of the termination of the
employment of the 27 affected union members when the DOLE Secretary
assumed jurisdiction over their labor dispute.

The Court's Ruling

The petition is partly granted.

Although SACORU claims that its petition raises only questions of law, a careful examination of
the issues on the validity of the redundancy program and whether it constituted an unfair labor
practice shows that in resolving the issue, the Court would have to reexamine the NLRC and CA's
evaluation of the evidence that the parties presented, thus raising questions of fact.8 This cannot
be done following Montoya v. Transmed Manila Corp.9 that only questions of law may be raised
against the CA decision and that the CA decision will be examined only using the prism of
whether it correctly determined the existence of grave abuse of discretion, thus:
Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA decision in the same context
that the petition for certiorari it ruled upon was presented to it; we have to examine the CA
decision from the prism of whether it correctly determined the presence or absence of
grave abuse of discretion in the NLRC decision before it, not on the basis of whether
the NLRC decision on the merits of the case was correct. x x x10
"[G]rave abuse of discretion may arise when a lower court or tribunal violates or contravenes
the Constitution, the law or existing jurisprudence."11 The Court further held in Banal III v.
Panganiban that:
By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must
be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of law.12
The reason for this limited review is anchored on the fact that the petition before the CA was
a certiorari petition under Rule 65; thus, even the CA did not have to assess and weigh the
Labor II – 1
sufficiency of evidence on which the NLRC based its decision. The CA only had to determine the
existence of grave abuse of discretion. As the Court held in Soriano, Jr. v. National Labor
Relations Commission:13
As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court, the appellate
court does not assess and weigh the sufficiency of evidence upon which the Labor Arbiter and
the NLRC based their conclusion. The query in this proceeding is limited to the determination of
whether or not the NLRC acted without or in excess of its jurisdiction or with grave abuse of
discretion in rendering its decision. However, as an exception, the appellate court may examine
and measure the factual findings of the NLRC if the same are not supported by substantial
evidence.14
Here, the Court finds that the CA was correct in its determination that the NLRC did not commit
grave abuse of discretion.

CCBPI's redundancy program is valid.

For there to be a valid implementation of a redundancy program, the following should be

present:
(1) written notice served on both the employees and the Department of Labor and Employment
at least one month prior to the intended date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of service,
whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished.15
The NLRC found the presence of all the foregoing when it ruled that the termination was due to a
scheme that CCBPI adopted and implemented which was an exercise of management
prerogative,16 and that there was no proof that it was exercised in a malicious or arbitrary
manner.17 Thus:
It appears that the termination was due to the scheme adopted and implemented by respondent
company in distributing and selling its products, to reach consumers at greater length with
greater profits, through MEPs or dealership system is basically an exercise of management
prerogative. The adoption of the scheme is basically a management prerogative and even if it
cause the termination of some twenty seven regular employees, it was not in violation of their
right to self-organization much more in violation of their right to security of tenure because the
essential freedom to manage business remains with management. x x x

Prior to the termination of the herein individual complainants, respondent company has made a
careful study of how to be more cost effective in operations and competitive in the business
recognizing in the process that its multi-layered distribution system has to be simplified. Thus, it
was determined that compared to other distribution schemes, the company incurs the lowest
cost-to-serve through Market Execution Partners (ME[P]s) or Dealership system. The CRS and
Mini-Bodega systems posted the highest in terms of cost-to-serve. Thus, the phasing out of the
CRS and MB is necessary which, however, resulted in the termination of the complainants as
their positions have become redundant. Be that as it may, respondent company complied with
granting them benefits that is more than what the law prescribes. They were duly notified of
their termination from employment thirty days prior to actual termination. x x x18
On the issue of CCBPI's violation of the CBA because of its engagement of an independent
contractor, the NLRC ruled that the implementation of a redundancy program is not destroyed
by the employer availing itself of the services of an independent contractor, thus:
In resolving this issue, We find the ruling in Asian Alcohol vs. NLRC, 305 SCRA 416, in parallel
application, where it was held that an employer's good faith in implementing a redundancy
program is not necessarily destroyed by availment of services of an independent contractor to
replace the services of the terminated employees. We have held previously that the reduction of

Labor II – 1
the number of workers in a company made necessary by the introduction of the services of an
independent contractor is justified when the latter is undertaken in order to effectuate more
economic and efficient methods of production. Likewise, in Maya Farms Employees Organization
vs. NLRC, 239 SCRA 508, it was held that labor laws discourage interference with employer's
judgment in the conduct of his business. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. As long as the company's exercise of the same is in good faith to
advance its interest and not for the purpose of circumventing the rights of employees under the
law or valid agreements, such exercise will be upheld. For while this right is not absolute, the
employees right to security of tenure does not give him the vested right in his position as would
deprive an employer of its prerogative to exercise his right to maximize profits. (Abbot
Laboratories, Phils. Inc. vs. NLRC, 154 SCRA 713).19
For its part, the CA ruled that the NLRC did not commit grave abuse of discretion, even as it still
reviewed the factual findings of the NLRC and arrived at the same conclusion as the NLRC. On
whether redundancy existed and the validity of CCBPI's implementation, the CA ruled that CCBPI
had valid grounds for implementing the redundancy program:
In the case at hand, CCBPI was able to prove its case that from the study it conducted, the
previous CRS and MB selling and distribution schemes generated the lowest volume contribution
which thus called for the redesigning and enhancement of the existing selling and distribution
strategy; that such study called for maximizing the use of the MEPs if the company is to retain
its market competitiveness and viability; that furthermore, based on the study, the company
determined that the MEPs will enable the CCBPI to "reach more" with fewer manpower and
assets to manage; that it is but a consequence of the new scheme that CCBPI had to implement
a redundancy program structured to downsize its manpower complement.20
The CA also agreed with the NLRC that CCBPI complied with the notice requirements for the
dismissal of the employees.21

Given the limited review in this petition, the Court cannot now re-examine the foregoing factual
findings of both the NLRC and CA that the redundancy program was valid.

As the CA found, the NLRC's factual findings were supported by substantial evidence and are in
fact in compliance with the law and jurisprudence. The CA therefore correctly determined that
there was no grave abuse of discretion on the part of the NLRC.

As stated earlier, the CA, even if it had no duty to re-examine the factual findings of the NLRC,
still reviewed them and, in doing so, arrived at the very same conclusion. These factual findings
are accorded not only great respect but also finality,22 and are therefore binding on the Court.

CCBPI did not commit an unfair labor practice.

The same principle of according finality to the factual findings of the NLRC and CA applies to the
determination of whether CCBPI committed an unfair labor practice. Again, the CA also correctly
ruled that the NLRC, with its findings supported by law and jurisprudence, did not commit grave
abuse of discretion.

In Zambrano v. Philippine Carpet Manufacturing Corp.,23 the Court stated:

Unfair labor practice refers to acts that violate the workers' right to organize. There should be no
dispute that all the prohibited acts constituting unfair labor practice in essence relate to the
workers' right to self-organization. Thus, an employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in whatever manner the right of his employees to
self-organize.24

Labor II – 1
To prove the existence of unfair labor practice, substantial evidence has to be presented.25

Here, the NLRC found that SACORU failed to provide the required substantial evidence, thus:
The union's charge of ULP against respondent company cannot be upheld. The union's mere
allegation of ULP is not evidence, it must be supported by substantial evidence.

Thus, the consequent dismissal of twenty seven (27) regular members of the complainant's
union due to redundancy is not per se an act of unfair labor practice amounting to union busting.
For while, the number of union membership was diminished due to the termination of herein
union members, it cannot safely be said that respondent company acted in bad faith in
terminating their services because the termination was not without a valid reason.26
The CA ruled similarly and found that SACORU failed to support its allegation that CCBPI
committed an unfair labor practice:
SACORU failed to proffer any proof that CCBPI acted in a malicious or arbitrarily manner in
implementing the redundancy program which resulted in the dismissal of the 27 employees, and
that CCBPI engaged instead the services of independent contractors. As no credible,
countervailing evidence had been put forth by SACORU with which to challenge the validity of
the redundancy program implemented by CCBPI, the alleged unfair labor practice acts allegedly
perpetrated against union members may not be simply swallowed. SACORU was unable to prove
its charge of unfair labor practice and support its allegations that the termination of the union
members was done with the end-in-view of weakening union leadership and representation.
There was no showing that the redundancy program was motivated by ill will, bad faith or
malice, or that it was conceived for the purpose of interfering with the employees' right to self-
organize.27
The Court accordingly affirms these findings of the NLRC and the CA that SACORU failed to
present any evidence to prove that the redundancy program interfered with their right to self-
organize.

CCBPI violated the return-to-work order.

SACORU claims that CCBPI violated the doctrine in Metrolab Industries, Inc. v. Roldan-
Confesor,28 when it dismissed the employees after the DOLE Secretary assumed
jurisdiction over the dispute. SACORU argues that CCBPI should have enjoined the
termination of the employees which took effect on July 1, 2009 because the DOLE
Secretary enjoined further acts that could exacerbate the situation.29 On the other
hand, CCBPI argued that the termination of the employment was a certainty, from the
time the notices of termination were issued,30 and the status quo prior to the issuance
of the assumption order included the impending termination of the employment of the
27 employees.31

Both the NLRC32 and CA33 ruled that Metrolab did not apply to the dispute because the
employees received the notice of dismissal prior to the assumption order of the DOLE Secretary,
thus CCBPI did not commit an act that exacerbated the dispute.

To the Court, the issue really is this: whether the status quo to be maintained after the
DOLE Secretary assumed jurisdiction means that the effectivity of the termination of
employment of the 27 employees should have been enjoined. The Court rules in favor of
SACORU.

Pertinent to the resolution of this issue is Article 263 (g)34 of the Labor Code, which provides the
conditions for, and the effects of, the DOLE Secretary's assumption of jurisdiction over a dispute:

Labor II – 1
ARTICLE 263. Strikes, picketing, and lockouts. x x x

xxxx

(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. (Emphasis and underscoring supplied.)
The powers given to the DOLE Secretary under Article 263 (g) is an exercise of police power with
the aim of promoting public good.35 In fact, the scope of the powers is limited to an industry
indispensable to the national interest as determined by the DOLE Secretary.36 Industries that are
indispensable to the national interest are those essential industries such as the generation or
distribution of energy, or those undertaken by banks, hospitals, and export-oriented
industries.37 And following Article 263 (g), the effects of the assumption of jurisdiction are the
following: 
 
(a) the enjoining of an impending strike or lockout or its lifting, and
(b) an order for the workers to return to work immediately and for the employer to readmit all workers
under the same terms and conditions prevailing before the strike or lockout,38 or the return to-work
order.

As the Court ruled in Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-
Associated Labor Union (TASLI-ALU) v. Court of Appeals 39:

When the Secretary exercises these powers, he is granted "great breadth of discretion" in order
to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining
of an impending strike or lockout or the lifting thereof if one has already taken place.
Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to
the NLRC for compulsory arbitration, always co-exists with an order for workers to return to
work immediately and for employers to readmit all workers under the same terms and
conditions prevailing before the strike or lockout.40

Of important consideration in this case is the return-to-work order, which the Court
characterized in Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance
Telephone Co., Inc.,41 as "interlocutory in nature, and is merely meant to maintain status
quo while the main issue is being threshed out in the proper forum ."42 The status quo is
simply the status of the employment of the employees the day before the occurrence of the
strike or lockout.43

Based on the foregoing, from the date the DOLE Secretary assumes jurisdiction over a dispute
until its resolution, the parties have the obligation to maintain the status quo while the main
issue is being threshed out in the proper forum - which could be with the DOLE Secretary or with
the NLRC. This is to avoid any disruption to the economy and to the industry of the employer -
Labor II – 1
as this is the potential effect of a strike or lockout in an industry indispensable to the national
interest - while the DOLE Secretary or the NLRC is resolving the dispute.

Since the union voted for the conduct of a strike on June 11, 2009, when the DOLE Secretary
issued the return-to-work order dated June 23, 2009,44 this means that the status quo was the
employment status of the employees on June 10, 2009. This status quo should have been
maintained until the NLRC resolved the dispute in its Resolution dated March 16, 2010, where
the NLRC ruled that CCBPI did not commit unfair labor practice and that the redundancy
program was valid. This Resolution then took the place of the return-to-work order of the DOLE
Secretary and CCBPI no longer had the duty to maintain the status quo after March 16, 2010.

Given this, the 27 employees are therefore entitled to backwages and other benefits from July 1,
2009 until March 16, 2010, and CCBPI should re-compute the separation pay that the 27
employees are entitled taking into consideration that the termination of their employment shall
be effective beginning March 16, 2010.

WHEREFORE, premises considered, the petition for review is hereby PARTLY GRANTED. The
Decision of the Court of Appeals dated July 21, 2011 and Resolution dated February 2, 2012 are
hereby AFFIRMED as to the finding that respondent did not commit unfair labor practice and
that the redundancy program is valid. Respondent, however, is directed to pay the 27 employees
backwages from July 1, 2009 until March 16, 2010, and to re-compute their separation pay
taking into consideration that the termination of their employment is effective March 16, 2010.

Labor II – 1
34.) G.R. No. 190389

MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS, Petitioner

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY INCORPORATED, Respondent

x-----------------------x

G.R. No. 190390

MANGAGAWA NG KOMUNIKASYON SA PILIPINAS, Petitioner,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY INCORPORATED, Respondent.

DECISION

LEONEN, J.:

An employer's declaration of redundancy becomes a valid and authorized cause for dismissal when the employer
proves by substantial evidence that the services of an employee are more than what is reasonably demanded by
the requirements of the business enterprise.  1

This resolves the Petition for Review on Certiorari  filed by Manggagawa ng Komunikasyon sa Pilipinas assailing the
2

Court of Appeals' Decision  dated August 28, 2008 and Resolution  dated November 24, 2009 in CA-G.R. SP No.
3 4

94365 and CA-G.R. SP No. 98975. CA-G.R. SP No. 94365 upheld the October 28, 2005  and January 31,
5

2006  Resolutions of the National Labor Relations Commission in NLRC Certified Case No. 000232-03 (NLRC NCR
6

NS 11-405-02 & 11-412-02). In turn, CA-G.R. SP No. 98975 upheld the Secretary of Labor and Employment's
August 11, 2006 Resolution  and March 16, 2007 Order.
7 8

On June 27, 2002, the labor organization Manggagawa ng Komunikasyon sa Pilipinas, which represented the
employees of Philippine Long Distance Telephone Company, filed a notice of strike with the National Conciliation
and Mediation Board.   Manggagawa ng Komunikasyon sa Pilipinas charged Philippine Long Distance Telephone
9

Company with unfair labor practice "for transferring several employees of its Provisioning Support Division to
Bicutan, Taguig."  10

The first notice of strike was amended twice by Manggagawa ng Komunikasyon sa Pilipinas.   On its second
11

amendment dated November 4, 2002, docketed as NCMB-NCR-NS No. 11-405-02,   Manggagawa ng12

Komunikasyon sa Pilipinas accused Philippine Long Distance Telephone Company of the following unfair labor
practices:

UNFAIR LABOR PRACTICES, to wit:

1. PLDT's abolition of the Provisioning Support Division. Such action, together with the consequent
redundancy of PSD employees and the farming out of the jobs to casuals and contractuals, violates the duty
to bargain collectively with MKP in good faith.

2. PLDT's unreasonable refusal to honor its commitment before this Honorable Office that it will provide
MKP its comprehensive plan/s with respect to personnel downsizing/ reorganization and closure of
exchanges. Such refusal violates its duty to bargain collectively with MKP in good faith.

3. PLDT's continued hiring of "contractual," "temporary," "project," and "casual" employees for regular jobs
performed by union members, resulting in the decimation of the union membership and in the denial of the
right to self-organization to the concerned employees. 13

Labor II – 1
On November 11, 2002, while the first notice of strike was pending, Manggagawa ng Komunikasyon sa Pilipinas
filed another notice of strike,   docketed as NCMB-NCR-NS No. 11-412-02, and accused Philippine Long Distance
14

Telephone Company of:

UNFAIR LABOR PRACTICES, to wit:

1. PLDT's alleged restructuring of its [Greater Metropolitan Manila] Operation Services December 31, 2002 and its
closure of traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena, Malolos and Tarlac Regional Operator
Services effective December 31, 2002. These twin moves unjustly imperil the job security of 503 of MKP's members
and will substantially decimate the parties' bargaining unit. And in the light of PLDT' s previous commitment before
this Honorable Office that it will provide MKP its comprehensive plan/s with respect to personnel
downsizing/reorganization and closure of exchanges and of its more recent declaration that the Davao operator
services will not be closed, these moves are treacherous and are thus violative of PLDT's duty to bargain
collectively with MKP in good faith. That these moves were effected with PLOT paying only lip service to its duties
under Art. III, Section 8 of the parties' CBA do [sic] signifies PLDT's gross violation of said CBA. 
15

On December 23, 2002, Manggagawa ng Komunikasyon sa Pilipinas went on strike.  16

On December 31, 2002, Philippine Long Distance Telephone Company declared only 323 employees as redundant
as it was able to redeploy 180 of the 503 affected employees to other positions. 17

On January 2, 2003, the Secretary of Labor and Employment certified the labor dispute for compulsory
arbitration.   The dispositive portion of the Secretary of Labor and Employment's Order read as follows:
18

WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at the
Philippine Long Distance Telephone Company to the National Labor Relations Commission (NLRC) for compulsory
arbitration pursuant to Article 263 (g) of the Labor Code, as amended.

Accordingly, the strike staged by the Union is hereby enjoined. All striking workers are hereby directed to return to
work within twenty four (24) hours from receipt of this Order, except those who were terminated due to redundancy.
The employer is hereby enjoined to accept the striking workers under the same terms and conditions prevailing prior
to the strike. The parties are likewise directed to cease and desist from committing any act that might worsen the
situation.

Let the entire records of the case be forwarded to the NLRC for its immediate and appropriate action.

SO ORDERED.  19

Manggagawa ng Komunikasyon sa Pilipinas filed a Petition for Certiorari before the Court of Appeals, challenging
the Secretary of Labor and Employment's Order insofar as it created a distinction among the striking workers in the
return-to-work order. The petition was docketed as CA-G.R. SP No. 76262. 20

On November 25, 2003, the Court of Appeals granted the Petition for Certiorari, setting aside and nullifying the
Secretary of Labor and Employment's assailed Order. 21

The Philippine Long Distance Telephone Company appealed the Court of Appeals' Decision to this Court. The
appeal was docketed as G.R. No. 162783. 22

On July 14, 2005,  this Court upheld the Court of Appeals' Decision, and directed Philippine Long Distance
23

Telephone Company to readmit all striking workers under the same terms and conditions prevailing before the
strike. This Court held:

As Article 263(g) is clear and unequivocal in stating that 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, then the unmistakable mandate must be followed by the
Secretary.24

Labor II – 1
On October 28, 2005, the National Labor Relations Commission dismissed Manggagawa ng Komunikasyon sa
Pilipinas' charges of unfair labor practices against Philippine Long Distance Telephone Company. 25

The National Labor Relations Commission held that Philippine Long Distance Telephone Company's redundancy
program in 2002 was valid and did not constitute unfair legal practice.   The redundancy program was due to the
26

decline of subscribers for long distance calls and to fixed line services produced by technological advances in the
communications industry.  The National Labor Relations Commission ruled that the termination of employment of
27

Philippine Long Distance Telephone Company's employees due to redundancy was legal.  The dispositive portion
28

of the National Labor Relations Commission's Resolution read:

WHEREFORE, premises considered, the Union[']s charge of unfair labor practice against PLDT is ordered
DISMISSED for lack of merit.

SO ORDERED. 29

On January 31, 2006, the National Labor Relations Commission denied Manggagawa ng Komunikasyon sa
Pilipinas' motion for reconsideration.  30

On May 8, 2006, Manggagawa ng Komunikasyon sa Pilipinas filed a Petition for Certiorari  with the Court of
31

Appeals. The petition was docketed as CA-G.R. SP No. 94365, and it assailed the National Labor Relations
Commission's resolutions, which upheld the validity of Philippine Long Distance Telephone Company's redundancy
program. 32

On August 11, 2006, the Secretary of Labor and Employment dismissed Manggagawa ng Komunikasyon sa
Pilipinas' Motion for Execution  of this Court's July 14, 2005 Decision.
33 34

On March 16, 2007, the Secretary of Labor and Employment denied  Manggagawa ng Komunikasyon sa Pilipinas'
35

motion for reconsideration. 36

On May 21, 2007, Manggagawa ng Komunikasyon sa Pilipinas filed a Petition for Certiorari  before the Court of
37

Appeals, assailing the August 11, 2006 Resolution and March 16, 2007 Order of the Secretary of Labor and
Employment. The petition was docketed as CA-G.R. SP No. 98975.

The Court of Appeals consolidated CA-G.R. SP No. 94365 with CAG.R. SP No. 98975, and dismissed Manggagawa
ng Komunikasyon sa Pilipinas' appeals on August 28, 2008. 38

For CA-G.R. SP No. 94365, the Court of Appeals ruled that the National Labor Relations Commission did not
commit grave abuse of discretion when it found that Philippine Long Distance Telephone Company's declaration of
redundancy was justified and valid, as the redundancy program was based on substantial evidence. 39

The Court of Appeals also found that Philippine Long Distance Telephone Company's 2002 declaration of
redundancy "was not attended by [unfair labor practice] . . . [because it was] transparent and forthright in its
implementation of the redundancy program."  Philippine Long Distance Telephone Company also successfully
40

redeployed 180 of the 503 affected employees to other positions. 41

As for CA-G.R. SP No. 98975, the Court of Appeals confirmed that its assailed order of reinstatement indicated that
all employees, even those declared separated effective December 31, 2002, should be
reinstated pendentelite.  However, the Court of Appeals stated that the order of reinstatement became moot due to
42

the National Labor Relations Commission's October 28, 2005 Decision, which upheld the validity of the dismissal of
the employees affected by the redundancy program. 43

The Court of Appeals also denied Manggagawa ng Komunikasyon sa Pilipinas' prayer that:

[T]he affected employees should at least be paid their salaries during the period from January 3, 2003 (the working
day immediately following the effectivity of their separation) to April 29, 2006 (the date when the October 28, 2005
decision of the NLRC (declaring the employees' dismissal as valid) became final and executory). 44

Labor II – 1
The Court of Appeals compared the case to an illegal dismissal case where the Labor Arbiter found for the
employee and ordered the payroll reinstatement of the employee; however, the finding of illegality was later
reversed on appeal.  45

The dispositive portion of the Court of Appeals' Decision read:

WHEREFORE, the PETITIONS FOR CERTIORARI IN CA-G.R. SP Nos. 94365 and 98975 are DISMISSED for lack
of merit.

SO ORDERED.  (Emphasis in the original)

46

On November 24, 2009, the Court of Appeals denied Manggagawa ng Komunikasyon sa Pilipinas' motion for
reconsideration. 47

In its Petition for Review on Certiorari, Manggagawa ng Komunikasyon sa Pilipinas states that employees in the
Provisioning Support Division and in the Operator Services Section had their positions declared redundant in
2002.  Manggagawa ng Komunikasyon sa Pilipinas asserts that the total number of rank-and-file positions actually
48

declared redundant was 538, or 35 positions in the Provisioning Support Division and 503 positions in the Operator
Services Section. 49

Manggagawa ng Komunikasyon sa Pilipinas maintains that Philippine Long Distance Telephone Company failed to
submit evidence in support of its declaration of redundancy of the 35 rank-and-file employees in the Provisioning
Support Division.  It claimed that "[Philippine Long Distance Telephone Company] only notified [the Department of
50

Labor and Employment] of the 'closure of traffic operations at Regional Operator Services affecting three hundred
ninety-two (392) employees and the restructuring of [Greater Metropolitan Manila] Operator Services affecting one
hundred eleven (111) employees."'  Manggagawa ng Komunikasyon sa Pilipinas asserts that there was no notice
51

given regarding the closure of Philippine Long Distance Telephone Company's Provisioning Support Division, and
the termination of employment due to redundancy of the affected rank-and-file employees.   It points out that the
52

justifications for the redundancy put forth by Philippine Long Distance Telephone Company "only pertained to the
affected operator services positions and not the affected [Provisioning Support Division] positions." 53

Manggagawa ng Komunikasyon sa Pilipinas also maintains that the National Labor Relations Commission
committed grave abuse of discretion when it disallowed the written interrogatories that Manggagawa ng
Komunikasyon sa Pilipinas submitted. 54

As for the issue of reinstatement pendente lite, Manggagawa ng Komunikasyon sa Pilipinas cites Garcia v.
Philippine Airlines, Inc.   to bolster its stand. It holds that an employee is entitled to reinstatement or backwages
55

pending appeal if the Labor Arbiter's finding of illegal dismissal is later on reversed by the National Labor Relations
Commission.  56

For its part, Philippine Long Distance Telephone Company claims that the validity of redundancy of the affected
Provisioning Support Division employees was only raised by Manggagawa ng Komunikasyon sa Pilipinas for the
first time on appeal.   Philippine Long Distance Telephone Company asserts that the real issue in that case was
57

whether Philippine Long Distance Telephone Company was obligated to transfer the affected Provisioning Support
Division employees, and not whether their redundancies were valid.  Philippine Long Distance Telephone Company
58

maintains that the affected Provisioning Support Division personnel were given the opportunity to apply for another
division, yet they chose not to.  59

Philippine Long Distance Telephone Company avers that Manggagawa ng Komunikasyon sa Pilipinas' resort to
interrogatories has been denied with finality by the Court of Appeals.   It also claims that the National Labor
60

Relations Commission's Rules of Procedure do not allow the use of discovery proceedings; thus, Manggagawa ng
Komunikasyon sa Pilipinas cannot assert that their resort to interrogatories is a matter of procedural right. 61

Philippine Long Distance Telephone Company states that neither the Court of Appeals nor the Supreme Court
ordered the reinstatement of Manggagawa ng Komunikasyon sa Pilipinas' members, since their decisions set aside
Secretary of Labor and Employment's January 2, 2003 Order.  The order enjoined the striking workers to return to
62

Labor II – 1
work, except those who were terminated due to redundancy.   Philippine Long Distance Telephone Company
63

asserts that "what controls execution is the dispositive or decretal statement of the [d]ecision sought to be
executed."  Furthermore, Philippine Long Distance Telephone Company maintains that the Court of Appeals
64

correctly ruled that the reinstatement of the excluded employees was rendered moot when the National Labor
Relations Commission upheld its redundancy program. 65

Finally, Philippine Long Distance Telephone Company holds that Garcia is not applicable because the case at bar
does not involve a reinstatement award by a Labor Arbiter. 66

We resolve the following issues:

First, whether the Court of Appeals committed grave abuse of discretion in upholding the validity of Philippine Long
Distance Telephone Company's 2002 redundancy program; and

Second, whether the return-to-work order of the Secretary of Labor and Employment was rendered moot when the
National Labor Relations Commission upheld the validity of the redundancy program.

The Petition is partly meritorious.

A petition for review on certiorari under Rule 45 is a mode of appeal where the issue is limited only to questions of
law.   In labor cases, a Rule 45 petition "can prosper only if the Court of Appeals ... fails to correctly determine
67

whether the National Labor Relations Commission committed grave abuse of discretion." 68

A court or tribunal is said to have acted with grave abuse of discretion when it capriciously acts or whimsically
exercises judgment to be "equivalent to lack of jurisdiction."  Furthermore, the abuse of discretion must be so
69

flagrant to amount to a refusal to perform a duty or to act as provided by law.  70

Career Philippines Shipmanagement, Inc. v. Serna,  citing Montoyav. Transmed,   provides the parameters of

71 72

judicial review for a labor case under Rule 45:

As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the particular
parameters of a Rule 45 appeal from the CA's Rule 65 decision on a labor case, as follows:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for
jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law
raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the
prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it.   (Emphasis in the original)
73

Justice Arturo D. Brion's dissent in AbbotLaboratories, Philippinesv. Alcaraz  thereafter laid down the guidelines to
74

be followed in reviewing a petition for review under Rule 45:

If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence, then no grave abuse of
discretion exists and the CA should so declare and, accordingly, dismiss the petition. If grave abuse of discretion
exists, then the CA must grant the petition and nullify the NLRC ruling, entering at the same time the ruling that is
justified under the evidence and the governing law, rules and jurisprudence. In our Rule 45 review, this Court
must deny the petition if it finds that the CA correctly acted.   (Emphasis in the original)
75

We shall adopt these parameters in resolving the substantive issues in the Petition.

II
Labor II – 1
Redundancy is one of the authorized causes for the termination of employment provided for in Article 298   of the
76

Labor Code, as amended:

Article 298. Closure of Establishment and Reduction of Personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.

Wiltshire File Co. Inc. v. National Labor Relations Commission  has explained that redundancy exists when "the
77

services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise." 78

While a declaration of redundancy is ultimately a management decision in exercising its business judgment, and the
employer is not obligated to keep in its payroll more employees than are needed for its day to-day
operations,   management must not violate the law nor declare redundancy without sufficient basis. 
79 80

Asian Alcohol Corporation v. National Labor Relations Commission  listed down the elements for the valid
81

implementation of a redundancy program:

For the implementation of a redundancy program to be valid, the employer must comply with the following
requisites: (1) written notice served on both the employees and the Department of Labor and Employment at least
one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the
redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant
and accordingly abolished.   (Citations omitted)
82

To establish good faith, the company must provide substantial proof that the services of the employees are in
excess of what is required of the company, and that fair and reasonable criteria were used to determine the
redundant positions. 83

In order to prove the validity of its redundancy program, Philippine Long Distance Telephone Company has
presented data on the decreasing volume of the received calls by the Operator Services Center for the years 1996
to 2002:84

RECEIVED CALLS

YEAR 108 109 TOTAL

1996 33,641,751 430,125,633 463,767,384

1997 34,834,800 318,942,573 353,777,373

1998 28,651,703 209,458,041 238,109,744

1999 24,797,870 212,363,846 237,161,716

2000 21,697,367 218,380,277 240,077,644

2001 15,773,988 158,310,276 174,084,264

Labor II – 1
 2002 14,363,918 114,430,469 128,794,387

Philippine Long Distance Telephone Company has stated that "from f 1996 to 2002, the [t]otal [d]emand of [c]alls
dropped by 334,972,997 or a 72% reduction."  It has attributed the reduction of demand for operator-assisted
85

108/109 calls to "migration calls to direct distance dialing," and to "more usage/substitution of text message over
voice."  It has added that "migration of calls from landline to cell," competitors' eating into the Philippine Long
86

Distance Telephone Company's market, and "compliance with the regulatory requirement of local integration per
province" likewise d aggravated the situation. 87

Philippine Long Distance Telephone Company claims that the pattern of decline with operator-assisted calls has
been consistent through the years, 88 and it has summarized the challenges facing its long distance services as
follows:

(a) international long distance revenues in 2001 stood at ₱11.4 billion; in 2002, this declined to ₱10.6 billion
(pg. 33, PLDT's Financial Statement and Annual Report; Annex "4-A") - a decrease of ₱813 million. More
drastically, this figure stood at ₱18.2 billion in 1997, indicating that international long distance call revenue
has declined to the tune of P8 billion in five years!

(b) national long distance revenues in 2001 were ₱8 .3 88 billion in 2001; in 2002, this declined to ₱7.6
billion (pg. 35, PLDT's Financial Statement and Annual Report; Annex ''4-B") - a decrease of ₱719 million.
As with international calls, there is a pattern on decline: PLDT earned ₱10.6 billion from this service in 2000,
so it is accurate to say that the company has seen revenue from national long distance decline by more than
a billion pesos a year. 
89

The National Labor Relations Commission has found that Philippine Long Distance Telephone Company was able
to discharge its burden of proving that its redundancy measures had substantial basis:

Guided by the foregoing jurisprudence, it is evident that PLDT discharged the burden of proving that the declaration
or implementation of redundancy measures have basis. For one, PLDT experienced a decline of subscribers, long
distance calls, operated both local and abroad, has declined, landline or fixed line services also declined. This
decrease of the need of PLDT services resulted from the advent of wireless telephone, of texting as means of
communication, the use of direct dialing including prepaid telesulit and teletipid measures introduced in the
communication services. For another, PLDT has a debt burden of ₱70 billion pesos and it cannot subsidize the
salaries of employees whose positions are redundant. 90

The Court of Appeals echoed the findings of the National Labor Relations Commission regarding the validity of
Philippine Long Distance Telephone Company's redundancy measures:

We find that MKP demonstrated no such patent and gross evasion of a positive duty on the part of the NLRC. On
the contrary, the NLRC's finding that the 2002 redundancy declaration of PLDT was justified and valid rested on
substantial evidence, for the NLRC ostensibly based its finding on established facts showing the decline of
subscribers, the decline in long distance local and international calls, and the decline in landline or fixed line
services, constraining PLDT to declare certain positions redundant. There could be no question that such factual
circumstances were traceable to "the advent of wireless telephone, of texting as a means of communication, the use
of direct dialing including prepaid telesulit and teletipid measures introduced in the communication services."

As such, the NLRC did not commit any grave abuse of discretion when it regarded the technological advancements
resulting in less work for the redundated employees as justifying PLDT's declaration of redundancy.  91

This Court sees no reason to depart from the findings of the Court of Appeals and of the National Labor Relations
Commission.

Philippine Long Distance Telephone Company's declaration of redundancy was backed by substantial evidence
showing a consistent decline for operator-assisted calls for both local and international calls because of cheaper
alternatives like direct dialing services, and the growth of wireless communication. Thus, the National Labor
Labor II – 1
Relations Commission did not commit grave abuse of discretion when it upheld the validity of PLDT's redundancy
program. Redundancy is ultimately a management prerogative, and the wisdom or soundness of such business
judgment is not subject to discretionary review by labor tribunals or even this Court, as long as the law was followed
and malicious or arbitrary action was not shown. 92

III

Nonetheless, there is a need to review the redundancy package awarded to the employees terminated due to
redundancy. For either redundancy or retrenchment, the law requires that the employer give separation pay
equivalent to at least one (1) month pay of the affected employee, or at least one (1) month pay for every year of
service, whichever is higher. The employer must also serve a written notice on both the employees and the
Department of Labor and Employment at least one (1) month before the effective date of termination due to
redundancy or retrenchment.  93

While we agree that Philippine Long Distance Telephone Company complied with the notice requirement, the same
cannot be said as regards the separation pay received by some of the affected workers.

Philippine Long Distance Telephone Company claims that most employees who were declared redundant received
a very generous separation package or "as much as 2.75 months [worth of salary] for every year of service, with the
average separation package at [₱]586,580.27."  However, the records belie its claims as shown by the notice of
94

termination of employment received by the workers affected by the redundancy program:

November 25, 2002

MYRNA C. CASTRO
OPERATOR SERVICES-NORTH

Dear Ms. Castro:

After a thorough review of operations, Management has determined that there is a need to reduce its manpower
requirements considering technological, organization, and process developments. This reduction is inevitable to
ensure the company's survival in the long term.

Your position is one of those affected by such changes and developments. Thus, with much regret, your service to
the company will be considered completed by December 30, 2002.

In recognition of your loyalty and dedicated service, the company is granting a generous separation pay package
that will assist you in making the necessary adjustments to your new situation.

This separation package consists of your regular retirement benefits plus 75% of basic monthly pay for every year
of service, or a minimum of 175% of basic monthly pay for every year of service for employees with less than 15
years of service.

Counseling service on financial options in the future will be available to assist you during your period of adjustment.

We would like to take this opportunity to thank you for your service to the Company and wish you well in all your
future undertakings.

Very truly yours,

PHILIPPINE LONG DISTANCE TELEPHONE CO., INC

(signed)
ERLINDA S. KABIGTING 95

Labor II – 1
(Emphasis supplied)

The notices of termination of employment96 signed by Erlinda S. Kabigting, Philippine Long Distance Telephone
Company Vice-President for Operator Services Section,  provided two (2) types of separation packages for the
97

terminated workers. These were: (1) regular retirement benefits plus 75% basic monthly pay for every year of
service for employees who had been with Philippine Long Distance Telephone Company for more than 15 years;
and (2) 175% of basic monthly pay for every year of service for employees who had been with PLDT for less than
15 years.

When an employer declares redundancy, Article 298 of the Labor Code requires that the employer provides a
separation pay equivalent to at least one (1) month pay of the affected employee, or at least one (1) month pay for
every year of service, whichever is higher.98 In this case, Philippine Long Distance Telephone Company claims that
the terminated workers received a generous separation package of about 2.75 months' worth of salary for every
year of service. But it seems that the retirement benefits of the terminated workers were added to the separation pay
due them, hence the large payout. This should not be the case.

Aquino v. National Labor Relations Commission  differentiated between separation pay and retirement benefits:
99

Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code, which include
retrenchment, and is computed at at least one month salary or at the rate of one-half month salary for every month
of service, whichever is higher. We have held that it is a statutory right designed to provide the employee with the
wherewithal during the period that he is looking for another employment.

Retirement benefits, where not mandated by law, may be granted by agreement of the employees and their
employer or as a voluntary act on the part of the employer. Retirement benefits are intended to help the employee
enjoy the remaining years of his life, lessening the burden of worrying for his financial support, and are a form of
reward for his loyalty and service to the employer.   (Citation omitted)
100

Separation pay brought about by redundancy is a statutory right, and it is irrelevant that the retirement benefits
together with the separation pay given to the terminated workers resulted in a total amount that appeared to be
more than what is required by the law. The facts show that instead of the legally required one (1) month salary for
every year of service rendered, the terminated workers who were with Philippine Long Distance Telephone
Company for more than 15 years received a separation pay of only 75% of their basic pay for every year of service,
despite the clear wording of the law.

The workers, who were terminated from employment as a result of redundancy, are entitled to the separation pay
due them under the law.

IV

Department of Labor and Employment Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas) assumed
jurisdiction over the labor dispute between Manggagawa ng Komunikasyon sa Pilipinas and Philippine Long
Distance Telephone Company pursuant to Article. 278(g)  of the Labor Code. She certified   the case to the
101 102

National Labor Relations Commission for compulsory arbitration. This return-to-work order from the Secretary of
Labor and Employment aims to preserve the status quoante  while the validity of the redundancy program is being
103

threshed out in the proper forum.

In Telefunken Semiconductors Employees Union-FFW v. Secretary of Labor,   pending resolution of the legality of
104

the· strike, the Secretary of Labor and Employment directed the employer to accept all the striking workers except
the Union Officers, shop stewards, and those with pending criminal charges.   This Court struck down the Secretary
105

of Labor and Employment's order for being issued with grave abuse of discretion, 106 and directed the employer to
accept all the striking workers without l qualifications. 107

The ruling in Telefunken cannot be applied to the case at bar.

Labor II – 1
In Philippine Long Distance Telephone Co. Inc. v. Manggagawa ng Komunikasyon sa Pilipinas,   which was
108

promulgated on July 14, 2005, this Court struck down the return-to-work order dated January 2, 2003 issued by
Secretary Sto. Tomas for being tainted with grave abuse of discretion. We ruled that the return-to-work order should
have included all striking workers, and should not have excluded the workers affected by the redundancy
program.   However, barely three (3) months after Philippine Long Distance Telephone Co. Inc. 's promulgation, the
109

National Labor Relations Commission in its October 28, 2005 Resolution   upheld the validity of Philippine Long
110

Distance Telephone Company's redundancy program. This resolution also dismissed the charges of unfair labor
practice, and illegal dismissal against Philippine Long Distance Telephone Company.  111

When petitioner filed its Motion for Execution  on January 17, 2006 pursuant to this Court's ruling in Philippine Long
112

Distance Telephone Co. Inc., there was no longer any existing basis for the return-to-work order. This was because
the Secretary of Labor and Employment's return-to-work order had been superseded by the National Labor
Relations Commission's Resolution. Hence, the Secretary of Labor and Employment did not err in dismissing the
motion for execution on the ground of mootness.

Petitioner cites Garcia v. Philippine Airlines  to support its claim that the affected and striking workers are entitled to
113

reinstatement and backwages from January 2, 2003, when Secretary Sto. Tomas directed the striking workers to
return to work, up to April 29, 2006, when the National Labor Relations Commission's Resolution upholding
Philippine Long Distance Telephone Company's redundancy program became final and executory.  114

Petitioner is mistaken.

Garcia upholds the prevailing doctrine that even if a Labor Arbiter's order of reinstatement is reversed on appeal, the
employer is obligated "to reinstate and pay the wages of the dismissed employee during the period of appeal until
reversal by the higher court." 115

There is no order of reinstatement from a Labor Arbiter in the case at bar, instead, what is at issue is the return-to-
work order from the Secretary of Labor and Employment. An order of reinstatement is different from a return-to-work
order.

The award of reinstatement, including backwages, is awarded by a Labor Arbiter to an illegally dismissed employee
pursuant to Article 294116 of the Labor Code:

Article 294. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. (Emphasis supplied)

If actual reinstatement is no longer possible, the employee becomes entitled to separation pay in lieu of
reinstatement.  117

On the other hand, a return-to-work order is issued by the Secretary of Labor and Employment when he or she
assumes jurisdiction over a labor dispute in an industry that is considered indispensable to the national interest.
Article 278(g) of the Labor Code provides that the assumption and certification of the Secretary of Labor and
Employment shall automatically enjoin the intended or impending strike. When a strike has already taken place at
the time the Secretary of Labor and Employment assumes jurisdiction over the labor dispute, all striking employees
shall immediately return to work. Moreover, the employer shall immediately resume operations, and readmit all
workers under the same terms and conditions prevailing before the strike.

Return-to-work and reinstatement orders are both immediately executory; however, a return-to-work order is
interlocutory in nature, and is merely meant to maintain status quo while the main issue is being threshed out in the
proper forum. In contrast, an order of reinstatement is a judgment on the merits handed down by the Labor Arbiter
pursuant to the original and exclusive jurisdiction provided for under Article 224(a)  of the Labor Code. Clearly,
118

Garcia is not applicable in the case at bar, and there is no basis to reinstate the employees who were terminated as
a result of redundancy.

Labor II – 1
WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The Court of Appeals' August 28,
2008 Decision and November 24, 2009 Resolution in CA-G.R. SP No. 94365 and CA-G.R. SP No. 98975
are AFFIRMED with MODIFICATION. Private respondent Philippine Long Distance Telephone Company, Inc.
is DIRECTED to pay the workers affected by its 2002 redundancy program and who had been employed for more
than fifteen (15) years prior to their dismissal, the balance of the separation pay due them or a sum equivalent to
twenty-five percent (25%) of their basic monthly pay for every year of service with Philippine Long Distance
Telephone Company, Inc.

A legal interest of 6% per annum shall be imposed on the total judgment award from the finality of this Decision until
its full satisfaction.

Labor II – 1
 35.) G.R. No. 200487, March 06, 2019

BIGG'S INC., PETITIONER, v. JAY BONCACAS, THELMA DIVINA, ALLAN DY, CHARVIE
NEO, RICHARD SABATER, ARACELI ENRIQUEZ, MA. REBECCA SAN JOSE, ALFREDO
ODIAMAR, JR., MICHAEL MAPA, DANTE BAYTA, GLEN REBUSI, RACHELLE MEA, ALBERT
TINASAS, WILHELMN JARDINERO,* JUN LADABAN, ARLENE COMIA, AND PURA
SABATER, RESPONDENTS.

G.R. No. 200636, March 6, 2019

JUNNIE ARINES,** MARY JEAN SAN JUAN-REPUESTO, REYNALDO LIRIA, EMMANUEL

STA. ROSA, MENANDRO*** RAMOS, ARNOLD SARTE, SHEILA RAYMUNDO-PONTE,
MARILYN JANA, MARIANO AYCARDO, ROSENDO CHICA, JOCELYN AYCARDO, JAY
ARINES, ANTONIO MONSALVE, JOSELITO ENRIQUEZ, SEGUNDINO CHICA, WINCESLAO
LIRAG, LINA BARTOLOME-ODIAMAR, ANA MARIE FRANCISCO-SATUR, CARMEN
TEJERO-BAYTA, NORBERTO PASANO, AND HEIRS OF EDWIN AYCARDO, REPRESENTED
BY MARIA JOSEFA P. AYCARDO, PETITIONERS, v. BIGG'S INCORPORATED, ARLENE
ACABADO, TERESITA AREJOLA, TERESA BUENAFLOR, CONSUELO BICHARA, AND
MARICAR MANJON, RESPONDENTS.

DECISION

CAGUIOA, J.:

Before the Court are consolidated petitions for review on certiorari1 under Rule 45 of the Rules of
Court assailing the Decision2 dated June 10, 2011 and Amended Decision3 dated January 20,
2012 of the Court of Appeals (CA) in CA-G.R. SP No. 78149.

The Facts

The facts, as summarized from the records, are narrated below.

Bigg's, Inc. (Bigg's) was the employer of Jay Boncacas (Boncacas), Junnie Arines, Mary Jean San
Juan-Repuesto, Meynardo Ramos, Sheila Raymundo-Ponte, Mariano Aycardo, Jay Arines,
Segundino Chica, Ana Marie Francisco-Satur, and Maria Josefa R. Aycardo (collectively, union
members). They are represented by their union president Boncacas. Bigg's is represented by
Arlene Acabado (Acabado) and Teresita Arejola (Arejola) who were the personnel officer and
general manager, respectively, of Bigg's at the time of filing of the petitions.

Bigg's operates a chain of restaurants with principal place of business in Naga City, Camarines
Sur. Its employees formed a labor union named Bigg's Employees Union (union) which was
issued a Certificate of Registration by the Department of Employment (DOLE) on January 30,
1996.

Both parties have contrasting versions of the incidents leading to the conflict between the Bigg's
management and the union members.

Bigg's alleges that on February 16, 1996, around 50 union members staged an illegal "sit-down
strike" in Bigg's restaurant. The union did not comply with the requirements of sending Notice of
Strike to the National Conciliation and Mediation Board (NCMB). Neither did the union obtain the
"strike vote" from its members. According to Bigg's, the union belatedly filed a Notice of Strike
Labor II – 1
with the NCMB on the same day to conceal the illegality of the sit-down strike. Bigg's issued a
memorandum to the striking union members placing them under preventive suspension and
requiring them to explain their actions within 24 hours from notice. The union members did not
comply with the company's order. Thus, they were sent employment termination letters on
February 19, 1996.4

On the other hand, the union members accuse Bigg's of interfering with union activities.
Allegedly, in February 1996, union members were asked to withdraw their membership under
threat of losing their employment. In the same month, employees Mariano Aycardo and Marilyn
Jana were dismissed from service purportedly due to their union membership. On February 16,
1996, the day of the alleged sit-down strike, union president Boncacas and other union members
were prevented from entering the premises of Bigg's. On the same day, they filed a Notice of
Strike with the NCMB. They attempted to return to work on February 17, 1996, but they were
informed to obtain their respective memoranda from the main office in Naga City. The
memoranda informed them of their suspension from work for participating in a sit-down strike.
Some union members tried to talk with the Bigg's management, but they were told not to report
for work the next day.5

The union members filed a complaint before the NCMB for unfair labor practices, illegal
dismissal, and damages, docketed as Sub RAB Case No. 05-03-00037-96. Bigg's also filed a
complaint before the NCMB for illegal strike against the union members docketed as Sub RAB
Case No. 05-03-00034-96. The two complaints were consolidated and the NCMB conducted
mediation proceedings. When mediation reached an impasse, the union conducted another strike
on March 5, 1996.6

Bigg's further alleges that during the strike on March 5, 1996, the union members were
disruptive and violent. They prevented ingress and egress of employees and customers to and
from the company's premises. They also stopped Bigg's vans from making deliveries by throwing
stones at the vans which caused injury to the driver as well as damage to vehicles and to the
guardhouse. They shouted at customers using megaphones to prevent them from going to
Bigg's Diner. The strike was later stopped when both parties agreed to compulsory arbitration.7

Findings of the labor tribunals

After several conferences and hearings, and upon the filing of the parties' respective position
papers and memoranda, Labor Arbiter Rolando L. Bobis (LA) issued a Joint Decision8 dated
January 31, 2000.

The LA first noted that some union members manifested that they entered into a settlement with
Bigg's and executed Quitclaims and Releases.9 The LA also found that there were union members
who were contractual employees whose contracts with Bigg's had ended prior to the
controversy.10 Thus, said employees were removed as parties.

On the issue of the illegality of the strikes, the LA ruled in favor of Bigg's. Under the provisions
of Articles 263 of the Labor Code and its implementing rules, for a strike to enjoy the protection
of law, the union must observe the following procedural requirements: cralawred

1. A notice of strike with the required contents should be filed with the [DOLE], specifically
the regional branch of the [NCMB], copy furnished the employer;

2. A cooling-off period must be observed, i.e., a time gap is required to cool off tempers
between the filing of the notice and the actual execution of the strike;

Labor II – 1
 3. During the cooling-off period, the NCMB mediates and conciliates the parties. They are not
allowed to do any act that may disrupt or impede the early settlement of the dispute;

4. Before a strike may actually be started, a strike vote should be taken by secret balloting,
with 24-hour prior notice to NCMB;

5. The result of the strike vote should be reported to the NCMB at least seven (7) days
before the intended strike or lockout, subject to the cooling off period.11

Thus, the LA ruled that the first strike conducted by the union members on February 16, 1996
was illegal for failure to comply with the above requirements. The union did not furnish Bigg's a
Notice of Strike and did not observe the cooling-off period.12

The second strike conducted on March 5, 1996, was likewise held illegal by the LA. Although the
union complied with the procedural requirements to conduct a valid strike, the union members
performed prohibited acts which rendered the strike illegal, such as acts of violence, aggression,
and obstruction of the free ingress and egress from company premises. The LA found that union
members prevented the ingress and egress of Bigg's delivery vans by forming human barricades
and throwing stones at the vans, as well as putting big rocks along the road. It was also
established that union members were using megaphones to discourage customers from going to
Bigg's, causing fear and fright to its customers.13

As to the issue of illegal dismissal, the LA ruled that the dismissal from employment of the union
officers, Boncacas (president), Rey Liria (Liria) (vice president), Jean San Juan (San Juan)
(treasurer), and Junnie Arines (Arines) (secretary)14 was valid as it was proven that they
instigated and participated in the illegal strikes based on Article 279 (formerly Article 264)
(a)15 of the Labor Code.16

While the dismissal of the union officers Boncacas, Liria, San Juan, and Arines was held valid, as
to the union members, the LA held that there was no evidence that they knowingly participated
in the illegal sit-down strike on February 16, 1996 or that they committed illegal acts during the
March 5, 1996 strike. Thus, Bigg's was ordered to reinstate the following employees to their
former positions:cralawred

1. Alfredo Odiamar, Jr. 1. Jun Ladaban

2. Albert Tinasas 2. Ma. Rebecca San Jose
3. Araceli Enriquez 3. Michael Mapa
4. Arlene Comia 4. Michael Valenzuela
5. Dante Bayta 5. Pura Sabater
6. Egino Palmera 6. Rachelle Mea
7. Glen Rebusi 7. Richard Sabater
8. Joseph A. Rull 8. Wilheim Jardenario.

On the allegation of unfair labor practice and union busting, the LA held that the union members
were unable to prove the same with substantial evidence. The union members' prayer for moral
and exemplary damages was consequently denied.17

On appeal, the NLRC reversed the LA Decision. In its Decision18 dated April 30, 2002 (NLRC's
First Decision), the NLRC ruled that the strike on February 16,1996 was valid because it was
grounded on unfair labor practices committed by Bigg's. As such, the union members were not

Labor II – 1
bound to wait for 15 days from the filing of the Notice of Strike before staging the same. The
NLRC also ruled that there was no evidence to establish that the union members displayed
violence, coercion, or prevented the free ingress to and egress from Bigg's premises during the
March 5, 1996 strike. The dispositive portion of the NLRC's First Decision reads:cralawred

WHEREFORE, the assailed Decision of January 31, 2000 is REVERSED AND SET ASIDE.
Accordingly, respondent-appellee BIGG's is hereby directed to immediately reinstate
complainants-appellants to their former positions without loss of seniority rights and to pay them
full backwages up to actual reinstatement, damages, of P 100,000.00 each and attorney's fee of
10%.19
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However, on motion for reconsideration (MR), the NLRC reversed its own ruling and reinstated
the LA Decision in its Decision dated October 22, 2002 (NLRC's Amended Decision). The NLRC
declared that there were material points which it had unintentionally missed in its First
Decision.20

The NLRC held that the two strikes staged by the union were illegal. As to the February 16, 1996
strike, there was no notice of strike filed with the NCMB. More significantly, the union had not
yet been qualified as the certified bargaining agent of Bigg's employees. Thus, it could not, as a
matter of right, stage a strike. The NLRC also held that there was no conclusive proof of union
busting or unfair labor practice.21

Regarding the March 5, 1996 strike, the NLRC held that audio-video footage was presented
showing the acts of violence, aggression, and prevention of ingress to and egress from the
premises of Bigg's. As well, during the hearings before the LA, counsel for the union members
stated that he was not contesting the allegation that some of the union members had attempted
to block the passage of Bigg's delivery vans.22

The dispositive portion of the NLRC's Amended Decision reads: cralawred

WHEREFORE, prescinding from the foregoing considerations, Our assailed decision of April 30,
2011 is hereby SET ASIDE and the Decision of the Labor Arbiter is hereby REINSTATED. This is,
however, without prejudice to those employees/complainants who have already opted to be
separated by receiving their respective separation benefits.23
chanRoblesvirtualLaw1ibrary

Ruling of the Court of Appeals

Both parties elevated the case to the CA. In its Decision24 dated June 10, 2011, the CA partially
granted the union's appeal.

The CA overturned the findings of the NLRC as to the finding of a sit-down strike on February
16, 1996. The CA held that Bigg's failed to adduce substantial evidence showing that the union
conducted a sit-down strike on February 16, 1996. Only one representative of Bigg's, Carmen
Manjon (corporate officer of Bigg's), attested that the union members conducted a sit-down
strike. Bigg's did not even bother to present corroborative evidence to substantiate the
allegation.25

On the other hand, the union clearly established that some of its members were barred from
entering the premises or threatened with dismissal by reason of their union membership. This,
said the CA, was a clear manifestation of unfair labor practice.26
Labor II – 1
With respect to the March 5, 1996 strike, the Court ruled that it was illegal for having been
conducted with violence and aggression. However, the CA clarified that a strike need not always
be declared by the duly certified bargaining representative. The implementing rules of the Labor
Code recognize the power of a legitimate labor organization to conduct a strike in the absence of
a certified or duly recognized bargaining representative, provided that the reason therefor is
unfair labor practice. The CA held that a legitimate labor organization may take direct action and
forego the usual procedural requirements if the raison d'etre is unfair labor practice or dismissal
of its members which constitutes union busting.27

The CA further found that Bigg's was guilty of anti-unionism by preventing Boncacas and other
union members from entering the premises and firing other union members on the same day
when they opted to retain union membership. As of February 16, 1996, the union had been
effectively busted. Thus, the CA held that it was no longer necessary to file the requisite notice
of strike.28

Nonetheless, the CA held that indeed, the strike held on March 5, 1996 was illegal as it was
marred by violence and restraint on the free passage and use of property of Biggs. It was not
disputed that the union members formed a human barricade and prevented delivery vehicles
from passing through Bigg's gates. They also placed three big stones along the gate entrance to
keep the vehicles from exiting the premises and flung stones at another van while it was on its
way out of the area.29

The dismissal of union officers Liria, San Juan, and Arines was upheld by the CA for their illegal
acts during the strike. However, the CA exonerated union president Boncacas as it was not
shown that he initiated or participated in any of the illegal acts that characterized the strike as
shown in the video evidence of the strike.30

The CA also held that Bigg's failed to prove that union members Maruja De Vera, Thelma Divina,
Allan Dy, Charvie Neo, Willy Oyarde, and Marlon Romero were contractual employees.

Thus, the C A ordered the reinstatement of the following union members with payment of
backwages: cralawred

1. Alfredo Odiamar, Jr. 1. Ma. Rebecca San Jose

2. Albert Tinasas 2. Marlon Romero
3. Allan Dy 3. Maruja De Vera
4. Araceli Enriquez 4. Michael Mapa
5. Arlene Comia 5. Michael Valenzuela
6. Charvie Neo 6. Pura Sabater
7. Dante Bayta 7. Rachelle Mea
8. Glen Rebusi 8. Richard Sabater
9. Jay Boncacas 9. Thelma Divina
10. Joseph A. Rull 10. Wilheim Jardenario
11. Jun Ladaban 11. Willy Oyarde

Both parties filed their respective MRs.31

The union argued that union members Menandro Ramos, Lina Bartolome, Carmen Tejero, Sheila
Raymundo, and Gregorio Come32 should also be reinstated and their names were just
inadvertently omitted from the LA Decision.33
Labor II – 1
For its part, Bigg's alleged that Michael Mapa, Rachelle Mea, Richard Sabater, Albert Tinasas,
Alfredo Odiamar, Jr., Dante Bayta, and Glen Rebusi should be excluded in the award as they had
already entered into a settlement with Bigg's and signed Quitclaims and Releases. Meanwhile,
Maruja De Vera, Willie Oyarde, Marlon Romero, Michael Valenzuela, Egino Palmar, and Joseph
Rull should be excluded as well because they were no longer listed as petitioners in the union's
petition before the CA.34

The CA promulgated an Amended Decision35 on January 20, 2012. On the matter of the union's
assertion that some union members' names had been omitted, the CA held that the exclusion of
said names from the LA Decision was not unintentional as they were found to have participated
in the illegal strike and as such, ineligible for reinstatement.

On the issue of the Compromise Agreement36 executed by Michael Mapa, Rachelle Mea, Joseph
Rull, Richard Sabater, Araceli Enriquez, Albert Tinasas, Alfredo Odiamar, Jr., Dante Bayta, and
Glen Rebusi, the CA held that the same was vague as it merely indicated the payment received
by the employees without any indication of whether it constituted backwages or separation pay.
Neither did it state that the said employees waived their right to reinstatement if so decided by
the court. The document also stated that "this agreement shall be without prejudice to the case
[titled Biggs, Incorporated v. Bigg's Employees Union], Sub RAB Case No. 05-03-00034-96 and
[the case titled,  Jay Boncacas et al. v. Biggs, Inc. et al.], Sub RAB Case No. 05-00037-96 now
pending before the [NLRC]." Thus, there was no relinquishment of the employees' rights to
pursue their case in spite of the agreement.

However, the CA held that it had not acquired jurisdiction over Maruja De Vera, Willie Oyarde,
Marlon Romero, Michael Valenzuela, Egino Palmar, and Joseph Rull as they were not named as
petitioners in the CA. Thus, they could not lawfully claim any benefit from the decision rendered
by the CA. Only the following union members/employees remained entitled to the award: cralawred

1. Alfredo Odiamar, Jr. 1. Jun Ladaban

2. Albert Tinasas 2. Ma. Rebecca San Jose
3. Allan Dy 3. Michael Mapa
4. Araceli Enriquez 4. Pura Sabater
5. Arlene Comia 5. Rachelle Mea
6. Charvie Neo 6. Richard Sabater
7. Dante Bayta 7. Thelma Divina
8. Glen Rebusi 8. Wilheim Jardenario
9. Jay Boncacas

The Petitions

Both parties filed their respective petitions for review on certiorari before the Court.37

At the outset, the Court notes that only the following persons joined in the petition for the union
in G.R. No. 200636 and signed the verification and certification of non-forum shopping: Jay
Boncacas, Junnie Arines, Menandro Ramos, Mariano Aycardo, Segundina Chica, Maria Josefa
Aycardo, Mary Jean San Juan, Sheila Raymundo, Jay Arines, and Ana Marie Francisco-Satur.
Reynaldo Liria, Lina Bartolome, and Rosendo Chica executed Special Powers of Attorney
authorizing Jay Boncacas to represent them in the case.38

Labor II – 1
The union members maintain that the strike held on March 5, 1996 was not illegal. They did not
commit violence, coercion, or any other prohibited act during the said strike.39

Granting arguendo that the March 5, 1996 strike was illegal, the union members contend that
their dismissal was still illegal because their employment had already been illegally terminated
prior thereto. Bigg's had sent them notices of termination on February 19, 1996. Thus, the
commission of any alleged prohibited acts during the March 5, 1996 strike cannot be used as a
justification for their illegal dismissal on February 19, 1996. The union members thus prayed
that its union officers Liria, San Juan, and Junie Arines should also be reinstated, with payment
of backwages.40

The union members pray for reinstatement of all petitioners without loss of seniority rights and
backwages. The union members also reiterate that union members Menandro Ramos, Lina
Bartolome, Carmen Tejero, Sheila Raymundo, and Gregorio Come should also be reinstated.
They were listed in the body of the LA Decision as entitled to reinstatement, but their names
were omitted from the dispositive portion without any explanation. There was also no mention in
the LA Decision of their purported participation in any illegal acts, contrary to the ruling of the
CA. Additionally, the union members pray for moral and exemplary damages each, and
attorney's fees.41

On the other hand, Bigg's, in its petition in G.R. No. 200487, alleges that the CA committed
reversible error in overturning the findings of the NLRC which had affirmed the findings of fact
and law of the LA, who had conducted hearings on the case. Bigg's argues that in a petition for
certiorari under Rule 65, it is not for the CA to review again the evidence of the parties. The CA's
purview is merely to determine if the NLRC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in reaching its decision.42

Bigg's also alleges that in reassessing the evidence of the parties, the CA misappreciated the
facts when it ruled that no strike was held on February 16, 1996 and gave credence to the union
members' testimonies that they were not allowed to enter Bigg's premises. Contrary to their
allegations, Bigg's claims that it was the employees who refused to perform their respective jobs
during the first shift of the day, such that the Bigg's management had to close its store at 10:00
a.m. and request the second shift employees to come to work earlier.43

Bigg's also maintains that union members Marilyn Jana, Jay Arines, Edwin Aycardo, Jocelyn
Aycardo, Mariano Aycardo, Rosendo Chica, Segundino Chica, Joselito Enriquez, Ana Marie
Francsico, Wenceslao Lirag, Antonio Monsalve, Eddie Nacario, Norberto Antonio Pasano, and
Arnold Sarte had already filed a manifestation with the LA that they had voluntarily accepted
their separation pay.44

Granting for the sake of argument, that the union members are entitled to reimbursement,
Bigg's argues that they are not entitled to backwages because the strike that they conducted
was illegal. Bigg's avers that assuming without admitting that there was illegal dismissal,
separation pay should be awarded instead of reinstatement considering the long period of time
that has already elapsed form the time of dismissal.45

Issues

The issues for the Court's consideration are the following: cralawred

1. Whether the strikes held on February 16, 1996 and March 5, 1996 were illegal;

Labor II – 1
 2. Whether the union officers and employees were validly dismissed; and,

3. The proper award and parties to the case.

Ruling

Petitions for review under Rule 45 are generally limited to questions of law as the Court is not a
trier of facts. However, in exceptional cases, such as when there are conflicting findings of facts
of the courts or tribunals below, the Courts may reevaluate and review the facts of a case.46 In
this case, the Court deems a review of the facts necessary in view of the inconsistent and
contrary findings of the CA and the labor tribunals.

Requirements of a valid strike

As defined under Article 219 (formerly Article 212) (o) of the Labor Code, a  strike means any
temporary stoppage of work by the concerted action of employees as a result of an industrial or
labor dispute.

Under Article 278 (formerly Article 263) of the Labor Code, there are different procedural
requirements depending on the ground of the strike: cralawred

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a
notice of strike or the employer may file a notice of lockout with the Ministry at least 30 days
before the intended date thereof. In cases of unfair labor practice, the period of notice shall be
15 days and in the absence of a duly certified or recognized bargaining agent, the notice of
strike may be filed by any legitimate labor organization in behalf of its members. However, in
case of dismissal from employment of union officers duly elected in accordance with the union
constitution and by-laws, which may constitute union busting where the existence of the union is
threatened, the 15-day cooling-off period shall not apply and the union may take action
immediately.

(d) The notice must be in accordance with such implementing rules and regulations as the
Minister of Labor and Employment may promulgate.

(e) During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at
mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled
until the lapse of the requisite number of days from the mandatory filing of the notice, the labor
union may strike or the employer may declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union membership
in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for
that purpose. A decision to declare a lockout must be approved by a majority of the board of
directors of the corporation or association or of the partners in a partnership, obtained by secret
ballot in a meeting called for that purpose. The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered when the strike or lockout vote was
taken. The Ministry may, at its own initiative or upon the request of any affected party,
supervise the conduct of the secret balloting. In every case, the union or the employer shall
furnish the Ministry the results of the voting at least seven days before the intended strike or
lockout, subject to the cooling-off period herein provided.

Labor II – 1
This provision was further implemented by Department Order (DO) Order No. 40-03, Amending
the Implementing Rules of Book V of the Labor Code of the Philippines (IRR) and DO 40-A-
0347 which amended Section 5, Rule XXII of the IRR.

The Labor Code and the IRR limit the grounds for a valid strike to: (1) a bargaining deadlock in
the course of collective bargaining, or (2) the conduct of unfair labor practices by the
employer.48

Only a certified or duly recognized bargaining representative may declare a strike in case of a
bargaining deadlock. However, in cases of unfair labor practices, the strike may be declared by
any legitimate labor organization.49

In both instances, the union must conduct a "strike vote" which requires that the actual strike is
approved by majority of the total union membership in the bargaining unit concerned. The union
is required to notify the regional branch of the NCMB of the conduct of the strike vote at least 24
hours before the conduct of the voting. Thereafter, the union must furnish the NCMB with the
results of the voting at least seven days before the intended strike or lockout.50 This seven-day
period has been referred to as the "seven-day strike ban"51 or "seven-day waiting period."52

In Lapanday Workers Union v. National Labor Relations Commission,53 the Court reasoned that
the period is intended to give the NCMB an opportunity to verify whether the projected strike
really carries the imprimatur of the majority of the union members.54 In a strike due to
bargaining deadlocks, the union must file a notice of strike or lockout with the regional branch of
the NCMB at least 30 days before the intended date of the strike and serve a copy of the notice
on the employer. This is the so-called "cooling-off period" when the parties may enter into
compromise agreements to prevent the strike. In case of unfair labor practice, the period of
notice is shortened to 15 days; in case of union busting, the "cooling-off period" does not apply
and the union may immediately conduct the strike after the strike vote and after submitting the
results thereof to the regional arbitration branch of the NCMB at least seven days before the
intended strike.55

Thus, in a strike grounded on unfair labor practice, the following are the requirements: (1) the
strike may be declared by the duly certified bargaining agent or legitimate labor organization;
(2) the conduct of the strike vote in accordance with the notice and reportorial requirements to
the NCMB and subject to the seven-day waiting period; (3) notice of strike filed with the NCMB
and copy furnished to the employer, subject to the 15-day cooling-off period. In cases of union
busting, the 15-day cooling-off period shall not apply.

The union conducted an illegal sit-down strike on February 16, 1996

With regard to the first strike conducted by the union members on February 16, 1996 (first
strike), the Court holds that the CA committed reversible error in overturning the findings of the
NLRC and LA. The CA held that no substantial evidence was presented to prove that the union
staged a "sit-down strike" as only one representative from Bigg's attested to the fact. However,
a review of the records proves otherwise.

Several employees of Bigg's executed affidavits deposing that the union members conducted a
sit-down strike on February 16, 1996. Ireneo Sumpay, Jr. (Sumpay), security guard, attested
that when he arrived at Bigg's restaurant on said date at 6:00 a.m., the union members who
were assigned on the first shift refused to do their jobs and declared that they were on
strike.56 Bigg's supervisor, Evelyn Rectin (Rectin) affirmed Sumpay's statement. Rectin averred

Labor II – 1
that on February 16, 1996, she arrived for work at 6:30 a.m. and Sumpay immediately reported
to her that some employees had refused to work. Indeed, she saw that employees Jay Boncacas,
Willy Oyarde, Jose Sonny Sio, Rosendo Chico, Greg Come, Alfred Odiamar, Eddie Nacario,
Marlon Romero, Glen Artuz, and Mano Aycardo were just sitting. She mentioned that other
employees were also just sitting on the second floor of the restaurant. Rectin reported the
matter to Bigg's Operations Officer, Teresita Arejola (Arejola).57 The latter also corroborated the
affidavits of Sumpay and Rectin. In her affidavit, Arejola confirmed that she received a call from
Rectin at around 6:00 a.m. informing her that the employees of Bigg's were staging a sit-down
strike. Arejola then reported the matter to corporate officers Teresita Puenaflor and Carmen
Manjon (Manjon). Arejola proceeded to Bigg's restaurant and saw that the employees were not
working. She ordered them to start their work but they still refused. At around 10:00 a.m. of the
same day, the striking employees left and did not return to work.58 During the conference before
the LA on November 11,1999, Manjon testified that she went to Bigg's restaurant after receiving
reports that there was a sit-down strike and upon arriving thereat, she saw that employees were
n performing their work.59

The consistent and corroborative sworn declarations of Bigg's witnesses constitute substantial
evidence to prove that the union members committed a sit-down strike on February 16, 1996.
The quantum of proof necessary in labor cases is substantial evidence, or such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.60 Thus, the CA committed reversible error in overturning the findings of the NLRC
and LA based on the CA's incorrect finding that only one representative of Bigg's attested that
there was a sit-down strike.

On this score, the Court reinstates and affirms the ruling of the NLRC, which had, for its part,
affirmed the findings of the LA that the union conducted an illegal sit-down strike on February
16, 1996, for failure of the union to comply with the pre-requisites for a valid strike.

The union did not file the requisite Notice of Strike and failed to observe the cooling-off period.
In an effort to legitimize the strike on February 16, 1996, the union filed a Notice of Strike on
the same day. This cannot be considered as compliance with the requirement, as the cooling-off
period is mandatory. The cooling-off period is not merely a period during which the union and
the employer must simply wait. The purpose of the cooling-off period is to allow the parties to
negotiate and seek a peaceful settlement of their dispute to prevent the actual conduct of the
strike. In other words, there must be genuine efforts to amicably resolve the dispute.

Moreover, the Court affirms the findings of the labor tribunals that the union failed to prove with
substantial evidence that Bigg's was guilty of unfair labor practice as defined under Article
25961 of the Labor Code to allow the union, a non-certified bargaining agent to initiate the strike.
Likewise, the union failed to prove that there was union busting62 to exempt compliance with the
cooling-off period. The union did not present any substantial evidence to prove its allegations
that union members were actually dismissed or threatened with dismissal for their union
membership.

In fine, the union's failure to comply with the mandatory requirements rendered the strike on
February 16, 1996 illegal.

The strike on March 5, 1996 was illegal; dismissal of union president valid

The Court upholds the consistent and uniform findings of the CA, NLRC, and LA on the illegality
of the strike on March 5, 1996, despite the compliance with the procedural requirements of a

Labor II – 1
valid strike. It was established that the striking union members committed acts of violence,
aggression, vandalism, and blockage of the free passage to and from Bigg's premises.

While the law protects the right of workers to engage in concerted activities for the purpose of
collective bargaining or to seek redress for unfair labor practices, this right must be exercised in
accordance with the law. Article 279 (formerly 264) (e) of the Labor Code provides: cralawred

No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares.

Thus, in this matter, the CA correctly upheld the findings of the labor tribunals.

The Court, however, reverses the CA's findings that the union president Boncacas' dismissal was
invalid as he did not commit illegal acts during the March 5, 1996 strike. The Labor Code
provides for a stricter standard on union officers. Article 279 (formerly Article 264) (a)
provides: cralawred

x x x Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status: 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 Magdala Multipurpose & Livelihood Cooperative v. Kilusang Manggagawa ng LGS,63 the Court

summarized the above rule accordingly: cralawred

We now come to the proper sanctions for the conduct of union officers in an illegal strike and for
union members who committed illegal acts during a strike. The above-cited Art. 264 of the Code
presents a substantial distinction of the consequences of an illegal strike between union officers
and mere members of the union. For union officers, knowingly participating in an illegal strike is
a valid ground for termination of their employment. But for union members who participated in a
strike, their employment may be terminated only if they committed prohibited and illegal acts
during the strike and there is substantial evidence or proof of their participation, i.e., that they
are clearly identified to have committed such prohibited and illegal acts.64
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Thus, for union members, what is required is that they knowing participated in the commission
of illegal acts during the strike for there to be sufficient ground for termination of
employment. For union officers, however, it suffices that they knowingly participated in
an illegal strike.

It must be noted that Boncacas not only knowingly participated but was the one who principally
organized two illegal strikes on February 16, 1996 and March 5, 1996. Thus, the dismissal of
Boncacas and the other union officers after the illegal strike on February 16, 1996 as well as the
March 5, 1996 strike was valid. However, as to the union members who did not participate in
any prohibited act during the strikes, their dismissal was invalid.

The proper parties and applicability of the Decision

Labor II – 1
In their petition, the union members maintain that Menandro Ramos, Lina Bartolome, Carmen
Tejero, Sheila Raymundo, and Gregorio Come should also be reinstated as their names were
merely inadvertently omitted from the dispositive portion of the LA Decision. There was also no
finding in the LA Decision of their purported participation in any illegal act, contrary to the ruling
of the CA.

On this point, the Court finds for the union. Indeed, the LA Decision names the following union
officers as those who participated in the illegal strike on February 16, 1996 and March 5, 1996:
Jay Boncacas, Rey Liria, Jean San Juan, and Junnie Arines.65 The LA Decision also lists union
member Gregorio Come as a participant in the March 5, 1996 but did not state whether he
knowingly participated in the commission of prohibited acts during the strike. Neither did the LA
declare that Menandro Ramos, Lina Bartolome, Carmen Tejero, and Sheila Raymundo as having
knowingly participated in any illegal act during the March 5, 1996 strike. However, as pointed
out by the union, their names were omitted in the dispositive portion of the LA Decision without
any explanation. Absent any definite finding that said members willingly participated in any
illegal act, they should have been included in the award of reinstatement with backwages by the
LA.

With regard to the Compromise Agreement66 executed by Michael Mapa, Rachelle Mea, Joseph
Rull, Richard Sabater, Araceli Enriquez, Albert Tinasas, Alfredo Odiamar, Jr., Dante Bayta, and
Glen Rebusi, the Court affirms the CA's Amended Decision. As held by the CA, the agreement is
vague as it was merely an acknowledgment of the receipt of funds. It did not indicate whether
the same constituted backwages or separation pay. More significantly, the Compromise
Agreement explicitly stated that "this agreement shall be without prejudice to the case
[titled  Biggs, Incorporated v. Bigg's Employees Union], Sub RAB Case No. 05-03-00034-96 and
[the case titled, Jay Boncacas et al. v. Biggs, Inc. et al.], Sub RAB Case No. 05-03-00037-96
now pending before the [NLRC]." Thus, the signatories thereto clearly reserved their right to
pursue the instant cases.

The CA also correctly ruled that Bigg's failed to prove that union members Maruja De Vera,
Thelma Divina, Allan Dy, Charvie Neo, Willy Oyarde, and Marlon Romero were contractual
employees. To substantiate its claim, Bigg's merely submitted the memorandum67 addressed to
said employees informing them of the termination of their service contracts. Bigg's failed to
submit the contracts themselves, which would have supported its claim that said employees
were contractual.

However, the Court also agrees with the CA's removal of the following names in its Amended
Decision: Maruja De Vera, Willie Oyarde, Marlon Romero, Michael Valenzuela, Egino Palmar, and
Joseph Rull. Their names were not included in the list of petitioners in the union's petition for
certiorar68 before the CA and neither were they signatories to the Verification and Certification of
Non-Forum Shopping.69 Thus, as it stands, the following persons should have been included in
the Amended CA Decision as regards its order of reinstatement: cralawred

1. Alfredo Odiamar, Jr. 1. Pura Sabater

2. Albert Tinasas 2. Rachelle Mea
3. Allan Dy 3. Richard Sabater
4. Araceli Enriquez 4. Thelma Divina
5. Arlene Comia 5. Wilheim Jardenario
6. Charvie Neo 6. Menandro Ramos
7. Dante Bayta 7. Lina Bartolome
8. Glen Rebusi 8. Carmen Tejero

Labor II – 1
 9. Jun Ladaban 9. Sheila Raymundo
10. Ma. Rebecca San Jose 10. Gregorio Come
11. Michael Mapa

However, the Court notes that of the five union members omitted from the LA Decision, only
Sheila Raymundo and Menandro Ramos joined in the instant petition. Thus, the Decision of the
Court shall only apply as to them In Municipality of Orion v. Pereyra70 the Court held: cralawred

x x x [A] reversal as to parties appealing does not necessitate a reversal as to parties not
appealing, but that the judgment may be affirmed or left undisturbed as to them. An exception
to the rule exists, however, where a judgment cannot be reversed as to the party appealing
without affecting the rights of his co-debtor.71
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Thus, as Lina Bartolome, Carmen Tejero, and Gregorio Come no longer participated in the
instant petition, they are no longer parties and the Court cannot issue a judgment as to them.

Lastly, the Court deletes the award of backwages in conformity with jurisprudence that
backwages are not granted to dismissed employees who participated in an illegal strike even if
they are later reinstated. In Escario v. NLRC72(Escario), the Court held: cralawred

Conformably with the long honored principle of a fair day's wage for a fair day's labor,
employees dismissed for joining an illegal strike are not entitled to backwages for the period of
the strike even if they are reinstated by virtue of their being merely members of the striking
union who did not commit any illegal act during the strike.73
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In Philippine Diamond Hotel & Resort, Inc. v. Manila Diamond Hotel Employees
Union74 (Philippine Diamond Hotel & Resort, Inc.), the Court laid down the exceptions to this
rule: cralawred

Jurisprudential law, however, recognizes several exceptions to the "no backwages rule," to wit:
when the employees were illegally locked to thus compel them to stage a strike; when the
employer is guilty of the grossest form of ULP; when the employer committed discrimination in
the rehiring of strikers refusing to readmit those against whom there were pending criminal
cases while admitting non-strikers who were also criminally charged in court; or when the
workers who staged a voluntary ULP strike offered to return to work unconditionally but the
employer refused to reinstate them. Not any of these or analogous instances is, however,
present in the instant case.

Respondent urges this Court to apply the exceptional rule enunciated in Philippine Marine
Officers' Guild v. Compañia Maritima and similar cases where the employees unconditionally
offered to return to work, it arguing that there was such an offer on its part to return to work
but the Hotel screened the returning strikers and refused to readmit those whom it found to
have perpetrated prohibited acts during the strike.

It must be stressed, however, that for the exception in Philippine Marine Officers' Guild  to apply,
it is required that the strike must be legal.75
chanRoblesvirtualLaw1ibrary

Labor II – 1
None of the exceptions mentioned above is existing in these cases and, as found by the Court,
both strikes conducted by the union were illegal. Thus, the listed employees are not entitled to
backwages despite the CA's order of reinstatement.

Separation pay in lieu of reinstatement

In certain cases, separation pay is awarded in lieu of reinstatement. The circumstances were
enumerated in Escario: cralawred

x x x (a) when reinstatement can no longer be effected in view of the passage of a long period of
time or because of the realities of the situation; (b) reinstatement is inimical to the employer's
interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best
interests of the parties involved; (e) the employer is prejudiced by the workers' continued
employment; (f) facts that make execution unjust or inequitable have supervened; or (g)
strained relations between the employer and employee.76
chanRoblesvirtualLaw1ibrary

As prayed for by Bigg's, considering that 23 years have passed since the dismissal of the union
members on February 19, 1996,77 and bearing in mind Bigg's manifestation that they could no
longer trust the striking employees especially as the company is in the food service
industry,78 separation pay may be more appropriate in lieu of reinstatement.

In Philippine Diamond Hotel & Resort, Inc., the Court made the following discussion: cralawred

Reinstatement without backwages of striking members of respondent who did not commit illegal
acts would thus suffice under the circumstances of the case. If reinstatement is no longer
possible, given the lapse of considerable time from the occurrence of the strike, the award of
separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in
order.79
chanRoblesvirtualLaw1ibrary

Thus, the Court adopts the above disquisition in this case. Finally, the monetary award herein
granted shall earn legal interest of 12% per annum from February 19, 1996, the date of
termination, until June 30, 2013 in line with the Court's ruling in Nacar v. Gallery Frames80 and
from July 1, 2013 until full satisfaction of the award, the interest rate shall be at 6%.81

WHEREFORE, premises considered, the petitions in G.R. Nos. 200487 & 200636
are PARTIALLY GRANTED. The Court further RESOLVES to MODIFY the assailed Decision
dated June 10, 2011 and Amended Decision dated January 20, 2012 of the Court of Appeals
(CA) in CA-G.R. SP No. 78149, accordingly: cralawred

1. DECLARE the strike of February 16, 1996 illegal;

2. DELETE the award of backwages;

3. GRANT separation pay in lieu of reinstatement at the rate of one (1) month pay for every
year of service from the time of dismissal on February 19, 1996 until the finality of this
Decision;

4. INCLUDE MENANDRO RAMOS and SHEILA RAYMUNDO in the award. The complete list of
employees ENTITLED to the award follows:

Labor II – 1
 a. Alfredo Odiamar, Jr. k. Michael Mapa.
b. Albert Tinasas l. Pura Sabater
c. Allan Dy m. Rachelle Mea
d. Araceli Enriquez n. Richard Sabater
e. Arlene Comia o. Thelma Divina
f. Charvie Neo p. Wilheim Jardenario
g. Dante Bayta q. Menandro Ramos
h. Glen Rebusi r. Sheila Raymundo
i. Jun Ladaban
j. Ma. Rebecca San Jose

5. The monetary award shall earn legal interest of 12% per annum from February 19, 1996
until June 30, 2013. From July 1, 2013 until full satisfaction of the award, the interest rate
shall be at 6%.

6. REMAND THE CASE TO THE LABOR ARBITER FOR EXECUTION OF THE AWARD AND
COMPUTATION OF SEPARATION PAY.

Labor II – 1
 36.) G.R. No. 241437, September 14, 2020

ALBAY ELECTRIC COOPERATIVE, INC. (ALECO), PETITIONER, V. ALECO LABOR

EMPLOYEES ORGANIZATION (ALEO), RESPONDENT.

DECISION

CAGUIOA, J.:

Through the present Petition for Review on Certiorari1 (Petition), petitioner Albay Electric
Cooperative, Inc. (ALECO) assails both the Decision2 dated August 10, 2018 of the Court of
Appeals, Special Sixteenth Division (CA), in CA-G.R. SP No. 149409, and the Resolution3 dated
January 17, 2018 of the Secretary of the Department of Labor and Employment (Secretary of
Labor) in OS-VA-2014-01.

Facts of the Case

The facts of the case, as narrated by the CA in its August 10, 2018 Decision, are as follows:  ChanRoblesVirtualawlibrary

[ALECO] is an electric cooperative which holds a franchise for the retail distribution of electricity
for the province of Albay, while [respondent ALECO Labor Employees Organization (ALEO)] is the
collective bargaining agent of [ALECO] 's employees.

As reported by ALECO Finance Manager, Atty. Lynne Rose Baroga, during the Special General
Membership Assembly held on March 24, 2012, [ALECO] was suffering from financial distress
with its current payables to the Philippine Electricity Market Corporation (PEMC) already
amounting to Php134 million. In addition, it has unpaid obligations to the National Grid
Corporation of the Philippines (NGCP), Philippine Rural Electric Association (PHILRECA), other
suppliers and contractors, as well as its retirees, in the aggregate amount of Php87 million.
Overall, [ALECO] then had long term obligations to the foregoing creditors of Php3.1 billion.

Thus, efforts were undertaken to rehabilitate the struggling electric cooperative. [ALECO] was
pushing for Private Sector Participation (PSP) as its appropriate rehabilitation strategy, while
[ALEO] was insisting on the Cooperative-to-Cooperative (C2C) rehabilitation scheme. Under the
PSP, the current employees of ALECO shall be required to tender their courtesy resignation to
give flexibility to the incoming private sector concessionaire, but they shall receive separation
pay based on the existing collective bargaining agreement (CBA) with ALEO, and shall have
priority in rehiring based on the standards set by the concessionaire.

In a letter dated April 8, 2013 addressed to Atty. Veronica S. Briones ([National Electrification
Administration (NEA)] Project Supervisor for ALECO), Bishop Joel Z. Baylon (Chair, Interim
Board of Directors for ALECO) and Reynaldo B. Reverente (OIC GM for ALECO), ALEO President
Dexter Brutas expressed grievance over the conditions set under the PSP.

Thus, on April 15, 2013, ALEO sought preventive mediation before the National Conciliation and
Mediation Board (NCMB), Regional Branch No. 5, for unfair labor practices. The parties, however,
failed to settle their differences which constrained [ALEO] to file a notice of strike on April 25,
2013. It conducted a strike vote on May 10, 17 and 20, 2013 with 217 out of 235 members
voting for a strike.

Subsequently, in a referendum held on September 14, 2013 to determine the appropriate

rehabilitation measure to be undertaken by [ALECO], the PSP was eventually chosen. In a public

Labor II – 1
bidding held earlier, the San Miguel Power Holdings Corporation (San Miguel Power) emerged as
the winning bidder and was awarded the concession under the PSP.

Still, ALEO went on strike on September 23, 2013.

Nonetheless, with the PSP adopted, Notices of Retrenchment were served on all of [ALECO]'s

employees under Office Memorandum No. 216 dated October 23, 2013.

As the labor dispute continued without any of the parties yielding, [ALECO,] [by virtue of an
Interim Board Resolution No. 2014-003, Series of 2014, and] through a letter dated January 7,
2014 signed by Bishop Baylon, formally requested the Secretary of Labor to assume jurisdiction
over the controversy. [ALEO] concurred with [ALECO].

The Secretary of Labor assumed jurisdiction on January 10, 2014 and correspondingly issued
a Return-to-Work Order of even date.4 cralawlawlibrary

Ruling of the Secretary of Labor

In a Resolution dated April 29, 2016, the Secretary of Labor upheld the validity of the
retrenchment of ALECO's employees and ordered ALECO to pay them backwages and other
benefits computed from January 10,2014 until the finality of the said Resolution. The Secretary
of Labor also ordered ALECO to pay the retrenched employees their separation benefits in
accordance with the CBA.

The pertinent dispositive portion of Resolution dated April 29, 2016 reads as follows: 
ChanRoblesVirtualawlibrary

"WHEREFORE, premises considered, this Office finds the retrenchment of employees at

ALECO VALID.

But by virtue of the Assumption of Jurisdiction Order dated 10 January 2014, ALECO
is ORDERED TO PAY accrued backwages and other benefits reckoned from 10 January 2014,
the date of the issuance of the Assumption Order of the Secretary of Labor and Employment
directing reinstatement of all ALEO members who have not accepted separation benefits on 25
December 2013, until the finality of this Resolution. Moreover, ALECO is ORDERED TO
PAY separation benefits, computed pursuant to the Collective Bargaining Agreement (CBA), due
them in view of the retrenchment.

[x x x x]

SO RESOLVED."5 cralawlawlibrary

Both parties sought partial reconsideration of the above Resolution, but were denied in a
Resolution6 dated December 2, 2016. With the denial of its Motion for Reconsideration, ALECO
filed with the CA a petition for certiorari7 under Rule 65.

In the meantime, execution proceedings ensued below and the Secretary of Labor issued the
Resolution8 dated January 17, 2018 (January 17, 2018 Resolution) which directed the execution
of the Resolution dated April 29, 2016 with modification to the effect that the payment of
backwages and other benefits shall only cover the period from January  10, 2014 until December
19, 2016, the date of the finality of the Resolution dated December 2, 2016. Accordingly, the
Secretary of Labor approved the sheriffs computation of the monetary award covering 78
employees.

Ruling of the CA

In its August 10, 2018 Decision, the CA affirmed the April 29, 2016 and December 2, 2016
Labor II – 1
Resolutions of the Secretary of Labor with modification on the computation of the backwages.
The decretal portion of which reads:  ChanRoblesVirtualawlibrary

WHEREFORE, the Court resolves to GRANT the Petition in part. The period for computation of
the backwages awarded in public respondent Secretary of Labor and
Employment's Resolutions is hereby fixed to be from the date of the Return-to-Work Order on
January 10, 2014 up to the issuance of Resolution dated April 29, 2016.

Additionally, ALECO is ordered to pay interest at the rate of six percent (6%) per annum on all
monetary awards as modified[,] computed from the finality of this Decision until fully paid.

SO ORDERED.9 cralawlawlibrary

Aggrieved, ALECO filed the present Petition.

With respect to the August 10, 2018 Decision, ALECO argues that the award of backwages is not
proper in this case given the Court's pronouncement in Manggagawa ng Komunikasyon sa
Pilipinas v. PLDT.10 Alternatively, ALECO argues that the computation of backwages should only
be limited to the period when the striking employees actually reported back to work. Meanwhile,
as regards the January 17, 2018 Resolution, ALECO, citing Banco Filipino Savings and Mortgage
Bank v. Lazaro,11 maintains that the base amount for the computation of backwages and
separation pay should correspond to the monthly compensation prevailing before the strike and
the one prevailing before the retrenchment took effect, respectively. In addition, ALECO
questions the inclusion of three groups of employees in the award of backwages for being in
excess of the Secretary of Labor's authority under Article 278 [263] of the Labor Code. Finally,
ALECO argues that the Secretary of Labor usurped legislative authority when it disallowed all
deductions to be made from the separation pay due to the employees.

In its Comment12 dated July 10, 2019, ALEO counters that the award of backwages is consistent
with Section 278 [263 ](g) of the Labor Code which prescribes backwages, among others, as
disciplinary action for non-compliance with any of the Secretary of Labor's orders. However,
relying on Bani Rural Bank, Inc., et al, v. De Guzman,13 ALEO claims that the backwages should
accrue until December 19,2016. With respect to ALECO's challenge on the January 17, 2018
Resolution, ALEO contends that the present Petition is not the proper remedy to do so. Lastly,
ALEO challenges the August 10, 2018 Decision for affirming the validity of the retrenchment, as
well as the denial of its claims for damages and attorney's fees.

ALECO reiterates its arguments in its Reply14 dated October 1, 2019, and adds that ALEO can no
longer question the legality of the retrenchment and its non-entitlement to damages and
attorney's fees since it did not raise these matters in a petition for certiorari before the CA.

Issues

The parties submit the following procedural and substantive issues for resolution of the
Court:  ChanRoblesVirtualawlibrary

1. Whether ALECO can assail the January 17, 2018 Resolution of the Secretary of Labor through the
instant Petition, and if so:

  a. Whether the computation of monetary award affirmed in the January 17, 2018 Resolution
used the correct base amount;

Labor II – 1
  

  b. Whether the January 17, 2018 Resolution was correct in including the three groups of
employees in the award of backwages; and

  c. Whether the January 17, 2018 Resolution was correct in disallowing deductions from the
separation pay.

2. Whether ALEO can still challenge the validity of the retrenchment of ALECO's employees and raise
anew its claims for damages and attorney's fees;

3. Whether the CA erred in sustaining the Secretary of Labor's award of backwages; and

4. Whether the CA erred in reducing the period for which ALECO is liable for payment of backwages.
The Court's Ruling

On the procedural matters, the Court finds no merit in the arguments of both parties.

ALECO assails the January 17, 2018 Resolution of the Secretary of Labor for erroneously: (1)
forbidding any deductions to be made from the separation pay due to employees/members of
ALEO; (2) affirming the allegedly bloated computation of backwages and separation pay; and (3)
including three groups of employees (i.e., those terminated for cause before the strike, those
deemed separated before the strike in accordance with NEA Guidelines for joining the 2013
Barangay Elections, and those who did not join the strike and reported for work until December
31, 2013) in the award of backwages.

However, it is a long-standing rule that decisions rendered by the Secretary of Labor under the
Labor Code, such as the January 17, 2018 Resolution, must be challenged through a petition
for certiorari under Rule 65 before the CA.15 Clearly, the present Petition is not the proper
remedy to assail the January 17, 2018 Resolution.

Even so, inasmuch as the January 17, 2018 Resolution was issued relative to the execution of
the Resolution dated April 29, 2016, which is the subject of the present appeal, the effectivity of
the former depends on the disposition of the present Petition, i.e., whether the Resolution dated
April 29, 2016 will be reinstated. Otherwise, the January 17, 2018 Resolution will become moot.

Similarly, ALEO cannot assail the validity of the retrenchment of ALECO's employees, as well as
the denial of its claims for damages and attorney's fees, through the present proceedings. As
correctly held by the CA, the Resolution dated April 29, 2016, insofar as these matters are
concerned, is already final.16 As such, and following the doctrine of finality of judgment, the
Resolution dated April 29, 2016 may no longer be modified in these respects even by the
Labor II – 1
Court.17 While there are exceptions to this doctrine, none of those obtain in this case.18

Having addressed the procedural issues, the Court shall now decide the substantive issues
regarding the award of backwages.

ALECO argues that the CA erred in sustaining the award of backwages in view of the
pronouncement of the Court in Manggagawa ng Komunikasyon sa Pilipinas v. PLDT that "[t]he
award of reinstatement, including backwages, is awarded by a Labor Arbiter to an illegally
dismissed employee x x x."19 In addition, ALECO claims that it complied with the return-to-work
order as early as January 14,2014. As such, it was not only erroneous for the Secretary of Labor
and the CA to conclude that it failed to comply with the Order dated January 10, 2014
(Assumption Order), but also to use such conclusion to justify the award of backwages.
Alternatively, ALECO argues that backwages should accrue only until February 26, 2014, the
date when the returning employees last reported for work. It laments the failure of the Secretary
of Labor to resolve the controversy within 30 days as provided in the Labor Code which caused
the backwages to accrue excessively, and stresses its inability to pay such allegedly excessive
amount in view of the cessation of the electric cooperative's operation under ALECO. ALECO fails
to convince the Court.

ALECO cannot fully rely on the case of Manggagawa ng Komunikasyon sa Pilipinas v. PLDT. In
the said case, the Court did not rule on the entitlement of employees to backwages for the
period beginning from the issuance of the return-to-work order until the resolution of the dispute
by the National Labor Relations Commission (NLRC). Rather, the ruling was limited to the
propriety of reinstating the employees even after the NLRC had declared their dismissal valid,
and even after said NLRC ruling had superseded the Secretary of Labor's return-to-work order.
As declared by the Court therein-"there is no basis to reinstate the employees who were
terminated as a result of redundancy."20 To be sure, Manggagawa ng Komunikasyon sa Pilipinas
v. PLDT does not altogether prohibit the award of backwages outside illegal dismissal cases.

That being said, even in the absence of illegal dismissal in this case, the Secretary of Labor has
the authority to award and was not mistaken in awarding backwages.

The Secretary of Labor assumed jurisdiction over the labor dispute between the parties on
January 10, 2014 and issued a return-to-work order on even date pursuant to Article 278 [263]
(g) of the Labor Code, which provides that:  ChanRoblesVirtualawlibrary

Art. 278. [263] Strikes, picketing, and lockouts. - x x x

xxxx

(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.

Labor II – 1
x x x x (Emphasis supplied.)
The effects of an assumption order issued by the Secretary of Labor are two-fold: (a) it enjoins
an impending strike on the part of the employees, and (b) it orders the employer to maintain the
status quo.21 In cases where a strike has already taken place, as in this case, the assumption
order shall have the effect of: (a) directing all striking workers to immediately return to work
(return-to-work order), and (b) mandating the employer to immediately resume operations and
readmit all workers under the same terms and conditions prevailing before the strike.

The status quo to be maintained under Article 278 [263] of the Labor Code refers to that which
was prevailing the day before the strike. As explained by the Court in San Fernando Coca-Cola
Rank-and-File Union (SACORU) v. Coca-Cola Bottlers Philippines, Inc. (CCBPI): 22
Of important consideration in this case is the return-to-work order, which the Court
characterized in Manggagawa ng Komunikasyon sa Filipinos v. Philippine Long Distance
Telephone Co., Inc., as "interlocutory in nature, and is merely meant to maintain
status quo while the main issue is being threshed out in the proper forum." The status quo is
simply the status of the employment of the employees the day before the occurrence of the
strike or lockout.

Based on the foregoing, from the date the [Department of Labor and Employment (DOLE)]
Secretary assumes jurisdiction over a dispute until its resolution, the parties have the obligation
to maintain the status quo while the main issue is being threshed out in the proper forum -
which could be with the DOLE Secretary or with the NLRC. This is to avoid any disruption to the
economy and to the industry of the employer - as this is the potential effect of a strike or lockout
in an industry indispensable to the national interest - while the DOLE Secretary or the NLRC is
resolving the dispute.

Since the union voted for the conduct of a strike on June 11, 2009, when the DOLE Secretary
issued the return-to-work order dated June 23, 2009, this means that the status quo was the
employment status of the employees on June 10, 2009. This status quo should have been
maintained until the NLRC resolved the dispute in its Resolution dated March 16,2010, where the
NLRC ruled that CCBPI did not commit unfair labor practice and that the redundancy program
was valid. This Resolution then took the place of the return-to-work order of the DOLE Secretary
and CCBPI no longer had the duty to maintain the status quo after March 16, 2010.23 cralawlawlibrary

The Court also held in the above case that the purpose of maintaining the status quo is to avoid
any disruption to the economy while the labor dispute is being resolved in the proper forum. The
objective is to minimize, if not totally avert, any damage that such labor dispute might cause
upon the national interest by occasion of any work stoppage or slow-down. It follows then, as
also demonstrated by the Court in the above case, that the directive to maintain the
status quo extends only until the labor dispute has been resolved.

Thus, as applied in this case, the status quo mandated by the Assumption Order extends from
the date of its issuance until the Secretary of Labor's resolution of the dispute between the
parties on April 29, 2016.

During this period, the striking employees should report back to work, and the employer should
readmit them "under the same terms and conditions prevailing before the strike." Particularly, in
this case, the Assumption Order required "x x x all striking employees, who have not accepted
separation benefits, shall, within twenty[-]four (24) hours from, receipt of this Order,
immediately return to work[,] and the employer shall immediately resume all operations and
readmit all workers under the same terms and conditions prevailing before the strike, x x
x"24 This obligation on the part of the employer generally requires actual reinstatement.

Labor II – 1
Here, ALECO claims that it complied with the Assumption Order when it admitted the striking
employees to its premises on January 14, 2014. ALECO alleges that no less that the Regional
Director of DOLE Region V witnessed the re-admission of these employees, and that this is
further evidenced by the attendance sheets signed by the returning employees and the
photographs taken on January 14, 2014.25 However, as pointed out by ALEO, and admitted by
ALECO, no actual work was given to the returning employees.26 Instead, they were merely
"confine[d] in a room for over three weeks."27 Although ALECO claimed that it tendered the
salaries of the employees who actually reported back for work, ALECO also admitted that the
employees refused to receive the amounts it supposedly tendered because of the parties' failure
to agree on the figures.28

In other words, to date, the affected employees are still not paid their wages and benefits for
the period they were supposed to be reinstated.

In consideration of the foregoing, the award of backwages is proper-not as a penalty for non-
compliance with the Assumption Order as argued by ALEO-but as satisfaction of ALECO's
obligation towards the employees covered by the Assumption Order. On said date, the obligation
of the employer to re-admit the striking employees and/or pay  them their respective salaries
and benefits arose. However, there is no proof that the affected employees were in fact paid by
ALECO their corresponding salaries and benefits. Because of ALECO's failure to perform this
obligation, and to give the affected employees what has become due to them as of January 10,
2014, backwages should be awarded.

In illegal dismissal cases, backwages refer to the employee's supposed earnings had he/she not
been illegally dismissed.29As applied in this case, backwages correspond to the amount ought to
have been received by the affected employees if only they had been reinstated following the
Assumption Order. This shall similarly include not only the employee's basic salary but also the
regular allowances being received, such as the emergency living allowances and the 13th month
pay mandated by the law, as well as those granted under a CBA, if any.30

Applying the foregoing discussion, the Court finds that the CA did not err in affirming the award
of backwages. Moreover, consistent with San Fernando Coca-Cola Rank-and-File Union
(SACORU) v. Coca-Cola Bottlers Philippines, Inc. (CCBPI), the CA also correctly limited the
computation of backwages until April 29, 2016.

WHEREFORE, premises considered, the Petition for Review on Certiorari dated August 30, 2018
of petitioner Albay Electric Cooperative, Inc. (ALECO) is DENIED. The Decision dated August 10,
2018 of the Court of Appeals, Special Sixteenth Division, in CA-G.R. SP No. 149409,
is AFFIRMED.

Let the records of the case be remanded to the Labor Arbiter for proper computation of the
award in accordance with this Decision.

Labor II – 1