Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-39546 November 29, 1977

PROGRESSIVE DEVELOPMENT CORPORATION, JORGE L. ARANETA, JUDY A.

ROXAS, MANUEL B. JOVER , RAMON LLORENTE and PROGRESSIVE
EMPLOYEES UNION, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS and ARANETA COLISEUM EMPLOYEES
ASSOCIATION, respondents.

Emilio S. Torres, Jr. for petitioners.

Jose D. Iglesias for petitioner Union.

Liver B. Gesmundo for private respondents.

FERNANDEZ, J.:

This is a petition for review the decision of the Court of Industrial Relations in Case No.
3304-ULP entitled "Araneta Coliseum Employees Association. complainant. versus
Progressive Corporation. et al., respondents". the dispositive part of which reads:

WHEREFORE, all of the foregoing considered, and as so recommended,

the respondents in this case should be, as they are hereby declared
GUILTY of having committed the unfair labor practice acts complained of,
and, as a consequence thereof, are therefore ordered to cease and desist
from further committing the same or similar acts and to reinstate the
individual complainants to their former or substantially equivalent
employment in respondent corporation, without loss of seniority status and
other benefits and/or with back wages from the time of their dismissal up
to April 11, 1972 when this case was considered submitted for Decision,
considering the delay encountered in the disposition of this case.

The Chief of the Examining Division of this Court, or his duly authorized
representative, is hereby directed to proceed to the premises of the
respondent corporation to examine its pertinent payrolls, vouchers and
other books of accounts necessary to compute the monetary liability of
respondents in line with this Decision, and to submit immediately
 thereafter his Report on the results of such computation for further
disposition of the Court.

SO ORDERED.

Manila, Philippines, March 15, 1914.

(SGD.
)
ALBE
RTO
S.
VELO
SO

Associ
ate
Judge
1

The motion for reconsideration of the aforementioned decision was denied in a resolution en bane dated
October 10, 1974. 2

In September 1962, Araneta Coliseum Employees Association (ACEA) a legitimate labor organization in
behalf of forty-eight (48) members, instituted Case No. 3304-ULP for unfair labor practice in the Court of
Industrial Relations against Progressive Development Corporation (PDC), a domestic business entity
operating the Araneta Coliseum, Jorge Araneta, Judy A. Roxas, Manuel B. Jover and Ramon Llorente, as
officers of the corporation PDC and Progressive Employees Union (PEU), a labor organization existing in
the PDC.

The complaint alleged that the PDC, through its officers, initiated a move to disauthorize the counsel of
the complainant ACEA from appearing in a union conference with the respondents, petitioners herein;
that the supervisors of PDC encouraged, and assisted in, the formation of the Progressive Employees
Union (PEU) and coerced the employees, particularly the individual complainants, to disaffiliate from the
complainant union and to affiliate with the PEU; that in July and August 1962 the respondents, petitioners
herein, discriminated against the individual complainants by either not giving them their working
schedules, lessening their number of working days and eventually dismissing them from their
employment, because of their refusal to disaffiliate from their union and join the Progressive Employees
Union; and the individual complainants are:

1. Antonio Buluran

2. Mario Bagaybayan

3. Bonifacio Cendanio

4. Eduardo Evangelista

5. Juan Cumiran
6. Antonio Martin

7. Arthur Melbielb

8. Amando Reyes, Jr.

9. Jaime Serrano

10. Dominador Semon

11. Azarcon Roberto

12. Jaime Villazo

13. Pedro Estabello

14. Garcia Edilberto

15. Rodolfo Macalino

16. Eduardo Misa

17. Bernardo Orquia

18. Florentino Ricardo

19. Jorge Buan

20. Restituto Makilala

21. Gregorio Viray

22. Carlos Celistino

23. Federico Bola

24. Jose Dueñas

25. Aida Avenia

26. Mira Divinagracia

27. Amaparo Fernandez

28. Rose Haguisan

29. Aurora Reyes

30. Remedios Berdanea

 31. Felisa Siason

32. Luz Caquiela

33. Benodian Nieva

34. Dimarocot Aquino

35. Domingo Malate

36. Reynaldo Asis

37. Feliciano Cabuang

38. Carmencita Anakan

39. Welhelmina Basco

40. Corazon Feliciano

41. Florecerfina Guerra

42. Antonio Jalla

43. Rosa de delos Santos

44. Ida Velasquez

45. Erlando Martin

46. Solidad Fernando

47. Margie Osorio

48. Sulpicio Makali 3

Said individual complainants prayed that after declaring the respondents, petitioners herein, guilty of
unfair labor practice acts, the complainants be ordered reinstated to their former positions with back
wages and all the rights and privileges formerly appertaining thereto.

The respondents, corporation PDC, Jorge L. Araneta, Judy A. Roxas and Manuel B. Jover claimed in
their answer that the individual complainants were merely casuals or temporary employees and their
services depended on the availability of work as ushers, usherettes, guards and janitors when there were
shows, performances or exhibits at the Araneta Coliseum. They alleged that they did not interfere with the
complainant union and in fact they met and conferred with said union's counsel; that they did not initiate
nor assist the PEU; that they did not discriminate against the individual complainants nor dismiss them as
said complainants were only casuals or temporary employees; that the services of complainant Gregorio
Viray were terminated because the office to which he was assigned was closed and that complainant
Reynaldo Asis was dismissed for collecting his salary without actually rendering the corresponding
services. 4
The Progressive Employees Union (PEU) denied that the officers and supervisors of the corporation PDC
initiated and assisted in its formation and claimed that its organization is the joint efforts of the
overwhelming majority of the employees and laborers of the corporation PDC, free from any undue
influence, interference and/or intimidation from any party. The PEU claimed that the institution of the
unfair labor practice case by the complainants is a desperate attempt to unduly delay the proceedings in
Case No. 1054-MC for certification election. 5 Ramon Llorente denied all imputations against him in the
complaint and alleged that Gregorio Viray, a casual janitor, was separated when his office was closed.
Llorente claimed that he severed his employment with the PDC in June 1962 and could not have
committed the acts complained of against him in July and August 1962. 6

The Court of Industrial Relations found the following facts to be established by the evidence of record:

From the evidence on record, the following facts are established, to wit:

1. That the complainant union was registered in the Department of Labor with
Registration No. 3367-IP, dated September 11, 1961, and that the individual
complainants are members thereof;

2. That the Progressive Development Corporation (PDC) is a domestic entity engaged in

show business and operates the Araneta Coliseum, with respondents Jorge Araneta,
Judy A. Roxas, Manuel B. Jover and Ramon Llorente as its officers;

3. That, on September 19, 1961, the complainant union formally informed the
management of its existence (Exh. 'KK-1' and the management acknowledged the same
on October 25, 1961 (Exh. 'B', 'B-1' & 'B-2');

4. That, on January 6, 1962, a 24-item proposal was sent by the complainant union to the
management thru respondent Jorge Araneta (Exh. 'C'), which was only received by
respondent Ramon Llorente (Exh. 'C-l');

5. That, on February 19, 1962, thru Nicolas Santiago, the management answered the
said proposals (Exh. 'D');

6. That, on February 23, 1962, relative to the management's answer b 19, 1962), the
complainant union requested the management for a negotiation conference on February
21, 1962 (Exh. 'E'), but Mr. Santiago requested them that the same be postponed to
March 1, 1962, (Exh. 'E-l');

7. That, on February 28, 1962, Mr. Nicolas Santiago requested for the cancellation of the
projected conference of March 1, 1962, alleging as reason therefor the 'hurried departure
of the managing Director, Mr. Jorge Araneta for the United States' (Exh. 'F) and
requested for a later date, which he will inform the union;

8. That, on April 21, 1962, the complainant union reminded Mr. Nicolas Santiago that, in
view of the fact that Mr. Jorge Araneta had already arrived, they requested for a
conference (Exh. 'M', 'H', & 'I'), which was set for June 14, 1962 at the office of the
Araneta Enterprises Bldg., Cubao, Quezon City (Exh. 'J');

9. That, on June 13, 1962, respondent Ramon Llorente requested the President of the
complainant union Antonio (Tony) Buluran to him in his residence to take up with him the
agenda for tomorrow's meeting (June 14, 1962) (Exh. 'E').
 It was this meeting, as well as the circumstances that preceded the same, which the
union claims started the management's exertion of all efforts to discourage membership
in the complainant union, and which eventually culminated in the formation of the
respondent union, The Progressive Employees Union (PEU), allegedly formed
purportedly to bust the complainant union. 7

The Progressive Development Corporation and its officers assumed the following errors:

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THE PETITIONERS

GUILTY OF UNFAIR LABOR PRACTICE IN SPITE OF- PETITIONERS' CONTENTION
THAT THE INDIVIDUAL COMPLAINANTS WHO WERE HIRED AS USHERS,
USHERETTES, JANITORS OR ATTENDANTS WERE MERELY CASUALS AND THAT
THEIR HIRINGS DEPENDED ENTIRELY ON ACTUAL SHOWS OR PERFORMANCES
IN THE ARANETA COLISEUM.

II

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THE PETITIONERS

GUILTY OF UNFAIR LABOR PRACTICE IN DISMISSING INDIVIDUAL COMPLAINANT
GREGORIO VIRAY FOR HIS ALLEGED UNION MEMBERSHIP WITH THE
RESPONDENT UNION ARANETA COLISEUM EMPLOYEES ASSOCIATION, FOR
SHORT, ACEA, DESPITE PETITIONERS' CONTENTION THAT SAID GREGORIO
VIRAY WAS MERELY A CASUAL WORKER FROM MARCH 1962 UP TO JUNE 1962,
AND WHOSE DISMISSAL WAS DUE TO THE ABOLITION OF THE OFFICE WHERE
HE WAS ASSIGNED.

III

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THAT INDIVIDUAL

COMPLAINANT REYNALDO ASIS A SECURITY GUARD WAS ALLEGEDLY
DISCHARGED DUE TO HIS UNION ACTIVITIES AND THEREFORE CONSTITUTE
UNFAIR LABOR PRACTICE ON THE PART OF THE PETITIONERS DESPITE
PETITIONERS' CONTENTION THAT THE SAID SECURITY GUARD REYNALDO ASIS
WAS DISCHARGED FOR CAUSE FOLLOWING HIS OWN ADMISSION THAT HE
PUNCHED HIS TIME CARD AND COLLECTED HIS SALARY WITHOUT RENDERING
THE CORRESPONDING SERVICES. 8

The Progressive Employees Union filed a separate brief and contended that the Court of Industrial
Relations committed as following errors:

RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN DECLARING

PARTICULARLY PROGRESSIVE EMPLOYEES UNION GUILTY O HAVING
COMMITTED THE UNFAIR LABOR PRACTICE ACTS COMPLAINED OF.

II

RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN HOLDING THAT

INDIVIDUAL COMPLAINANTS WERE SUBJECT OF DISCRIMINATIONS AND
DISMISSAL FROM THEIR WORK THEREBY ENTITLED TO REINSTATEMENT
 WITH BACK WAGES. 9

It is contended by the petitioners that in view of the irregularity of actual promotions and performances
held in Araneta Coliseum, the individual complainants and members of the respondent ACEA were
naturally hired by the petitioner company only as casuals, extras or replacements in various positions of
ushers, usherettes, Porters, attendants and/or janitors, and all in rotation basis only because of the
numerous other applicants for accommodation, hence there was no basis for petitioners to have
dismissed with discrimination the individual complainants and members of the respondent ACEA because
of petitioners' practice of hiring by rotation. 10 This contention is without merit. As testified to by Jose
Generoso, Jr., President of the Progressive Employees Union, their members were also casual
employees but are now regulars. This fact shows that the casual status of the members of ACEA could
not have been the cause of their dismissals. Moreover, as testified to by Concordia Araiza, a witness for
petitioners, it was the Personnel Manager, Ramon Llorente, who was in charge of assigning ushers and
usherettes every time there were scheduled shows; and that while the Araneta Coliseum maintained only
such number of ushers, usherettes and janitors, if their services were needed, every time there was a
scheduled show or during show days, the Coliseum hired additional personnel. 11 It is, therefore, clear that
the services of the members of the ACEA were also needed, their casual status notwithstanding.

It appears that the individual complainants, during show days, were always scheduled to work until June
1962 when they were not included in the schedule anymore. 12 This virtually amounted to dismissal,
without prior notice. Their not being included in the list of schedule since June 1962 could only be the
result of petitioners' earlier threat of dismissal should said complainants refuse to heed petitioners'
admonition for them to resign from the ACEA.

There is reason to believe that had the individual complainants agreed to resign from the ACEA and to
transfer to the PEU, they would not have been separated from their work and would even have been
made permanent employees. Thus, a Mrs. Concordia Araiza who was a casual employee of the petitioner
corporation, upon her suspension for four (4) hours on representation of the ACEA, became a permanent
employee after she handed her resignation from the ACEA Union personally to Jose E. Belmonte, the
General Manager of the Progressive Development Corporation. 13

From the facts of record, it is clear that the individual complainants were dismissed because they refused
to resign from the Araneta Coliseum Employees Association and to affiliate with the Progressive
Employees Union which was being aided and abetted by the Progressive Development Corporation.

The assertion of the petitioner Progressive Development Corporation and its officials that they have
nothing to do with the formation of the Progressive Employees Union is not supported by the facts of
record.

The President then of the Progressive Employees Union was Jose Generoso, Jr., Stage Manager of the
Progressive Development Corporation. The stage Manager, Generoso, has supervisory power over the
twenty-two (22) employees under him. Generoso was then the No. 2 man in the Araneta Coliseum, being
an assistant of the Director of said Coliseum. While the Progressive Employees Union was allegedly
organized on June 26, 1962, it was only on July 11, 1962 that its existence was publicly announced when
the management of the petitioner corporation refused to meet with the Araneta Coliseum Employees
Association. The Progressive Employees Union never collected dues from its members and all their
members are now regular employees and are still working in the construction unit of the Philippine
Development Corporation. There is evidence that the Progressive Employees Union became inactive
after the death of Atty. Reonista the former counsel of the Progressive Development Corporation. 14 This
shows that the Progressive Employees Union was organized to camouflage the petitioner corporation's
dislike for the Araneta Coliseum Employees Association and to stave off the latter's recognition.
It is also a fact that the Progressive Employees Union, after exerting efforts to win in the Certification
Election, Case No. 1054-MC, did not conclude and enter into a collective bargaining agreement with the
management. According to Generoso, the Progressive Employees Union was already disbanded. 15

As regards Gregorio Viray, it is not refuted that he was an active member of the ACEA and that he was in
charge of around eighteen (18) janitors. There can be no other reason for dismissal except his active
membership with the Araneta Coliseum Employees Association because the office where he was working
was not closed. After Ramon Llorente with whom Viray was assigned had resigned, his position was
taken over by Alicia Nonado Iglesias. 16

The contention of the petitioner that Reynaldo Asis collected his salary without actually rendering
corresponding services is not supported by the following facts found by the Court of Industrial Relation:

In the case of Gregorio Viray, it is on record that, while assigned in the office of Mr.
Llorente, he was sent to Aida Aveña and Carmencita Anacan for them to sign the
disauthorization of Atty. Rino, ACEA's Counsel. Since the two refused to sign, another
letter was again sent to Aida Aveña who again refused to sign. Infuriated by said refusal,
Llorente got mad and said that those who cannot follow instructions were not needed by
him (tsn. pp. 32-33, June 4, 1964). And this obviously included Viray himself.

It is not refuted that Gregorio Viray was an active member of ACEA and that he as in
charge of around eighteen (18) janitors. If, as argued Ii is dismissal was due to the
abolition of the office where he was assigned, it puzzles us to note why he, alone, of the
rest of the janitors was singled out for dismissal. And the fact that, after the separation of
Mr. Ramon Llorente, with whom Viray was assigned, Mrs. Alicia Nonada Iglesias took
over the position of Llorente (it is not Mrs. Iglesias who is in charge of the schedule of
ushers and usherettes) completely belie respondents' allegation that Viray was dismissed
because the office where he was working was already close This being the case, there
can be no other reason for his dismissal except his undisputed active membership with
complainant. 17

The evidence shows that Reynaldo Asis, like the other individual complainants, was dismissed because
he refused to join the Progressive Employees Union.

The petitioners were correctly found to have committed acts constituting unfair labor practice.

In view of the length of time that has passed since the individual complainants were dismissed in 1962.
there is need to apply the formula adopted by this Court in Davao Free Workers Front vs. CIR and other
cases. 18

Under the circumstances and equity of the case, and considering the length of time and the union-busting
activities of petitioner, the individual complainants are granted back wages for five (5) years without
qualification or deduction.

WHEREFORE, the decision appealed from is hereby affirmed with the modification that the Progressive
Development Corporation is ordered to reinstate the individual complainants to their former or
substantially equivalent positions with the same rank and compensation and without loss of seniority and
other privileges within fifteen (15) days from the promulgation of this decision and said Progressive
Development Corporation is further ordered to pay the individual complainants back wages equivalent to
five (5) years without qualification or deduction, with costs against the petitioners. This decision is
declared immediately executory.

SO ORDERED.
 SECOND DIVISION

ALABANG COUNTRY CLUB, INC., G.R. No. 170287

Petitioner,

Present:

- versus -

QUISUMBING, J., Chairperson,

CARPIO MORALES,

NATIONAL LABOR RELATIONS AZCUNA,

COMMISSION, ALABANG TINGA, and

COUNTRY CLUB INDEPENDENT VELASCO, JR., JJ.

EMPLOYEES UNION,

CHRISTOPHER PIZARRO,

MICHAEL BRAZA, and Promulgated:

NOLASCO CASTUERAS,

Respondents. February 14, 2008

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

DECISION

 

VELASCO, JR., J.:

Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit

corporation with principal office at Country Club Drive, Ayala Alabang,
Muntinlupa City. Respondent Alabang Country Club Independent Employees
Union (Union) is the exclusive bargaining agent of the Clubs rank-and-file
employees. In April 1996, respondents Christopher Pizarro, Michael Braza, and
Nolasco Castueras were elected Union President, Vice-President, and Treasurer,
respectively.

On June 21, 1999, the Club and the Union entered into a Collective
Bargaining Agreement (CBA), which provided for a Union shop and maintenance
of membership shop.

The pertinent parts of the CBA included in Article II on Union Security

read, as follows:

ARTICLE II

UNION SECURITY

 
SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-
file employees, who are members or subsequently become members of the
UNION shall maintain their membership in good standing as a condition for their
continued employment by the CLUB during the lifetime of this Agreement or any
extension thereof.
 
 SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW
REGULAR RANK-AND-FILE EMPLOYEES
 
a)      New regular rank-and-file employees of the Club shall join the UNION
within five (5) days from the date of their appointment as regular employees
as a condition for their continued employment during the lifetime of this
Agreement, otherwise, their failure to do so shall be a ground for dismissal
from the CLUB upon demand by the UNION.
b)      The Club agrees to furnish the UNION the names of all new probationary and
regular employees covered by this Agreement not later than three (3) days
from the date of regular appointment showing the positions and dates of
hiring.
 
xxxx
 
SECTION 4. TERMINATION UPON UNION DEMAND. Upon written
demand of the UNION and after observing due process, the Club shall dismiss a
regular rank-and-file employee on any of the following grounds:
 
(a)                Failure to join the UNION within five (5) days from the time of
regularization;
(b)               Resignation from the UNION, except within the period allowed
by law;
(c)                Conviction of a crime involving moral turpitude;
(d)               Non-payment of UNION dues, fees, and assessments;
(e)                Joining another UNION except within the period allowed by law;
(f)                 Malversation of union funds;
(g)                Actively campaigning to discourage membership in the UNION;
and
(h)                Inflicting harm or injury to any member or officer of the UNION.
 
It is understood that the UNION shall hold the CLUB free and harmless
[sic] from any liability or damage whatsoever which may be imposed upon it by
any competent judicial or quasi-judicial authority as a result of such dismissal and
the UNION shall reimburse the CLUB for any and all liability or damage it may
be adjudged.1[1] (Emphasis supplied.)
 
 

Subsequently, in July 2001, an election was held and a new set of officers
was elected. Soon thereafter, the new officers conducted an audit of the Union
funds. They discovered some irregularly recorded entries, unaccounted expenses
and disbursements, and uncollected loans from the Union funds. The Union
1
notified respondents Pizarro, Braza, and Castueras of the audit results and asked
them to explain the discrepancies in writing.2[2]

Thereafter, on October 6, 2001, in a meeting called by the Union,

respondents Pizarro, Braza, and Castueras explained their side. Braza denied any
wrongdoing and instead asked that the investigation be addressed to Castueras,
who was the Union Treasurer at that time. With regard to his unpaid loans, Braza
claimed he had been paying through monthly salary deductions and said the Union
could continue to deduct from his salary until full payment of his loans, provided
he would be reimbursed should the result of the initial audit be proven wrong by a
licensed auditor. With regard to the Union expenses which were without receipts,
Braza explained that these were legitimate expenses for which receipts were not
issued, e.g. transportation fares, food purchases from small eateries, and food and
transportation allowances given to Union members with pending complaints with
the Department of Labor and Employment, the National Labor Relations
Commission (NLRC), and the fiscals office. He explained that though there were
no receipts for these expenses, these were supported by vouchers and itemized as
expenses. Regarding his unpaid and unliquidated cash advances amounting to
almost PhP 20,000, Braza explained that these were not actual cash advances but
payments to a certain Ricardo Ricafrente who had loaned PhP 200,000 to the
Union.3[3]

3
 Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan
and cash advances. He claimed his salaries were regularly deducted to pay his loan
and he did not know why these remained unpaid in the records. Nonetheless, he
likewise agreed to continuous salary deductions until all his accountabilities were
paid.4[4]

Castueras also denied any wrongdoing and claimed that the irregular entries
in the records were unintentional and were due to inadvertence because of his
voluminous work load. He offered that his unpaid personal loan of PhP 27,500 also
be deducted from his salary until the loans were fully paid. Without admitting any
fault on his part, Castueras suggested that his salary be deducted until the
unaccounted difference between the loans and the amount collected amounting to a
total of PhP 22,000 is paid.5[5]

Despite their explanations, respondents Pizarro, Braza, and Castueras were

expelled from the Union, and, on October 16, 2001, were furnished individual
letters of expulsion for malversation of Union funds. 6[6] Attached to the letters
were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63
Union members and officers, and a Board of Directors Resolution 7[7] expelling
them from the Union.

7
 In a letter dated October 18, 2001, the Union, invoking the Security Clause
of the CBA, demanded that the Club dismiss respondents Pizarro, Braza, and
Castueras in view of their expulsion from the Union.8[8] The Club required the
three respondents to show cause in writing within 48 hours from notice why they
should not be dismissed. Pizarro and Castueras submitted their respective written
explanations on October 20, 2001, while Braza submitted his explanation the
following day.

During the last week of October 2001, the Clubs general manager called
respondents Pizarro, Braza, and Castueras for an informal conference inquiring
about the charges against them. Said respondents gave their explanation and
asserted that the Union funds allegedly malversed by them were even over the total
amount collected during their tenure as Union officersPhP 120,000 for Braza, PhP
57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total collection
from April 1996 to December 2001 of only PhP 102,000. They claimed the charges
are baseless. The general manager announced he would conduct a formal
investigation.

8
 Nonetheless, after weighing the verbal and written explanations of the three
respondents, the Club concluded that said respondents failed to refute the validity
of their expulsion from the Union. Thus, it was constrained to terminate the
employment of said respondents. On December 26, 2001, said respondents
received their notices of termination from the Club.9[9]

Respondents Pizarro, Braza, and Castueras challenged their dismissal from

the Club in an illegal dismissal complaint docketed as NLRC-NCR Case No. 30-
01-00130-02 filed with the NLRC, National Capital Region Arbitration Branch. In
his January 27, 2003 Decision,10[10] the Labor Arbiter ruled in favor of the Club,
and found that there was justifiable cause in terminating said respondents. He
dismissed the complaint for lack of merit.

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an

Appeal docketed as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision 11[11] granting the
appeal, the fallo of which reads:

10

11
 WHEREFORE, finding merit in the Appeal, judgment is hereby rendered
declaring the dismissal of the complainants illegal. x x x Alabang Country Club,
Inc. and Alabang Country Club Independent Union are hereby ordered to reinstate
complainants Christopher Pizarro, Nolasco Castueras and Michael Braza to their
former positions without loss of seniority rights and other privileges with full
backwages from the time they were dismissed up to their actual reinstatement.
 
SO ORDERED.
 
 

The NLRC ruled that there was no justifiable cause for the termination of
respondents Pizarro, Braza, and Castueras. The commissioners relied heavily on
Section 2, Rule XVIII of the Rules Implementing Book V of the Labor Code. Sec.
2 provides:

 
SEC. 2. Actions arising from Article 241 of the Code. Any action arising
from the administration or accounting of union funds shall be filed and disposed
of as an intra-union dispute in accordance with Rule XIV of this Book.
 
In case of violation, the Regional or Bureau Director shall order the
responsible officer to render an accounting of funds before the general
membership and may, where circumstances warrant, mete the appropriate penalty
to the erring officer/s, including suspension or expulsion from the union.12[12]
 
 

According to the NLRC, said respondents expulsion from the Union was
illegal since the DOLE had not yet made any definitive ruling on their liability
regarding the administration of the Unions funds.

The Club then filed a motion for reconsideration which the NLRC denied in
its June 20, 2004 Resolution.13[13]

12

13
 

Aggrieved by the Decision and Resolution of the NLRC, the Club filed a
Petition for Certiorari which was docketed as CA-G.R. SP No. 86171 with the
Court of Appeals (CA).

The CA Upheld the NLRC Ruling

that the Three Respondents were Deprived Due Process

On July 5, 2005, the appellate court rendered a Decision, 14[14] denying the
petition and upholding the Decision of the NLRC. The CAs Decision focused
mainly on the Clubs perceived failure to afford due process to the three
respondents. It found that said respondents were not given the opportunity to be
heard in a separate hearing as required by Sec. 2(b), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code, as follows:

SEC. 2. Standards of due process; requirements of notice.In all cases of

termination of employment, the following standards of due process shall be
substantially observed:
 
For termination of employment based on just causes as defined in Article
282 of the Code:
 
xxxx
 
(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented
against him.
 
 

14
 The CA also said the dismissal of the three respondents was contrary to the
doctrine laid down in Malayang Samahan ng mga Manggagawa sa M. Greenfield
v. Ramos (Malayang Samahan), where this Court ruled that even on the
assumption that the union had valid grounds to expel the local union officers, due
process requires that the union officers be accorded a separate hearing by the
employer company.15[15]

In a Resolution16[16] dated October 20, 2005, the CA denied the Clubs

motion for reconsideration.

The Club now comes before this Court with these issues for our resolution,
summarized as follows:

1.                  Whether there was just cause to dismiss private respondents, and whether
they were afforded due process in accordance with the standards provided
for by the Labor Code and its Implementing Rules.
 
2.                  Whether or not the CA erred in not finding that the NLRC committed
grave abuse of discretion amounting to lack or excess of jurisdiction when
it ruled that respondents Pizarro, Braza, and Castueras were illegally
expelled from the Union.

3.                  Whether the case of Agabon vs. NLRC17[17] should be applied to this
case.

15

16

17
 4.                  Whether that in the absence of bad faith and malice on the part of the
Club, the Union is solely liable for the termination from employment of
said respondents.

The main issue is whether the three respondents were illegally dismissed and
whether they were afforded due process.

The Club avers that the dismissal of the three respondents was in accordance
with the Union security provisions in their CBA. The Club also claims that the
three respondents were afforded due process, since the Club conducted an
investigation separate and independent from that conducted by the Union.

Respondents Pizarro, Braza, and Castueras, on the other hand, contend that
the Club failed to conduct a separate hearing as prescribed by Sec. 2(b), Rule
XXIII, Book V of the implementing rules of the Code.

First, we resolve the legality of the three respondents dismissal from the
Club.

Valid Grounds for Termination

  

Under the Labor Code, an employee may be validly terminated on the

following grounds: (1) just causes under Art. 282; (2) authorized causes under Art.
283; (3) termination due to disease under Art. 284; and (4) termination by the
employee or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the

enforcement of the union security clause in the CBA. Here, Art. II of the CBA on
Union security contains the provisions on the Union shop and maintenance of
membership shop. There is union shop when all new regular employees are
required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees who are
union members as of the effective date of the agreement, or who thereafter become
members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit or the
agreement is terminated.18[18] Termination of employment by virtue of a union
security clause embodied in a CBA is recognized and accepted in our jurisdiction. 19
[19] This practice strengthens the union and prevents disunity in the bargaining
unit within the duration of the CBA. By preventing member disaffiliation with the
threat of expulsion from the union and the consequent termination of employment,
the authorized bargaining representative gains more numbers and strengthens its
position as against other unions which may want to claim majority representation.

 
18

19
 In terminating the employment of an employee by enforcing the union
security clause, the employer needs only to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of the
union security provision in the CBA; and (3) there is sufficient evidence to support
the unions decision to expel the employee from the union. These requisites
constitute just cause for terminating an employee based on the CBAs union
security provision.

The language of Art. II of the CBA that the Union members must maintain
their membership in good standing as a condition sine qua non for their continued
employment with the Club is unequivocal. It is also clear that upon demand by the
Union and after due process, the Club shall terminate the employment of a regular
rank-and-file employee who may be found liable for a number of offenses, one of
which is malversation of Union funds.20[20]

Below is the letter sent to respondents Pizarro, Braza, and Castueras,

informing them of their termination:

On October 18, 2001, the Club received a letter from the Board of
Directors of the Alabang Country Club Independent Employees Union (Union)
demanding your dismissal from service by reason of your alleged commission of
act of dishonesty, specifically malversation of union funds. In support thereof, the
Club was furnished copies of the following documents:
 

20
 1.      A letter under the subject Result of Audit dated September 14, 2001
(receipt of which was duly acknowledged from your end), which
required you to explain in writing the charges against you (copy
attached);
 
2.      The Unions Board of Directors Resolution dated October 2, 2001,
which explained that the Union afforded you an opportunity to explain
your side to the charges;

3.      Minutes of the meeting of the Unions Board of Directors wherein an

administrative investigation of the case was conducted last October 6,
2001; and

4.      The Unions Board of Directors Resolution dated October 15, 2001
which resolved your expulsion from the Union for acts of dishonesty
and malversation of union funds, which was duly approved by the
general membership.

After a careful evaluation of the evidence on hand vis--vis a thorough

assessment of your defenses presented in your letter-explanation dated October 6,
2001 of which you also expressed that you waived your right to be present during
the administrative investigation conducted by the Unions Board of Directors on
October 6, 2001, Management has reached the conclusion that there are
overwhelming reasons to consider that you have violated Section 4(f) of the CBA,
particularly on the grounds of malversation of union funds. The Club has
determined that you were sufficiently afforded due process under the
circumstances.
 
Inasmuch as the Club is duty-bound to comply with its obligation under
Section 4(f) of the CBA, it is unfortunate that Management is left with no other
recourse but to consider your termination from service effective upon your receipt
thereof. We wish to thank you for your services during your employment with the
Company. It would be more prudent that we just move on independently if only to
maintain industrial peace in the workplace.
 
Be guided accordingly.21[21]
 
 

21
 Gleaned from the above, the three respondents were expelled from and by
the Union after due investigation for acts of dishonesty and malversation of Union
funds. In accordance with the CBA, the Union properly requested the Club,
through the October 18, 2001 letter22[22] signed by Mario Orense, the Union
President, and addressed to Cynthia Figueroa, the Clubs HRD Manager, to enforce
the Union security provision in their CBA and terminate said respondents. Then, in
compliance with the Unions request, the Club reviewed the documents submitted
by the Union, requested said respondents to submit written explanations, and
thereafter afforded them reasonable opportunity to present their side. After it had
determined that there was sufficient evidence that said respondents malversed
Union funds, the Club dismissed them from their employment conformably with
Sec. 4(f) of the CBA.

Considering the foregoing circumstances, we are constrained to rule that

there is sufficient cause for the three respondents termination from employment.

Were respondents Pizarro, Braza, and Castueras accorded due process before
their employments were terminated?

We rule that the Club substantially complied with the due process
requirements before it dismissed the three respondents.

 
22
 The three respondents aver that the Club violated their rights to due process
as enunciated in Malayang Samahan,23[23] when it failed to conduct an
independent and separate hearing before they were dismissed from service.

The CA, in dismissing the Clubs petition and affirming the Decision of the
NLRC, also relied on the same case. We explained in Malayang Samahan:

 
x x x Although this Court has ruled that union security clauses embodied
in the collective bargaining agreement may be validly enforced and that
dismissals pursuant thereto may likewise be valid, this does not erode the
fundamental requirements of due process. The reason behind the enforcement of
union security clauses which is the sanctity and inviolability of contracts cannot
override ones right to due process.24[24]
 
 

In the above case, we pronounced that while the company, under a

maintenance of membership provision of the CBA, is bound to dismiss any
employee expelled by the union for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company acts in bad
faith in dismissing a worker without giving him the benefit of a hearing. 25[25] We
cautioned in the same case that the power to dismiss is a normal prerogative of the
employer; however, this power has a limitation. The employer is bound to exercise
caution in terminating the services of the employees especially so when it is made
upon the request of a labor union pursuant to the CBA. Dismissals must not be
arbitrary and capricious. Due process must be observed in dismissing employees
because the dismissal affects not only their positions but also their means of
23

24

25
livelihood. Employers should respect and protect the rights of their employees,
which include the right to labor.26[26]

The CA and the three respondents err in relying on Malayang Samahan, as

its ruling has no application to this case. In Malayang Samahan, the union
members were expelled from the union and were immediately dismissed from the
company without any semblance of due process. Both the union and the company
did not conduct administrative hearings to give the employees a chance to explain
themselves. In the present case, the Club has substantially complied with due
process. The three respondents were notified that their dismissal was being
requested by the Union, and their explanations were heard. Then, the Club, through
its President, conferred with said respondents during the last week of October
2001. The three respondents were dismissed only after the Club reviewed and
considered the documents submitted by the Union vis--vis the written explanations
submitted by said respondents. Under these circumstances, we find that the Club
had afforded the three respondents a reasonable opportunity to be heard and defend
themselves.

 
On the applicability of Agabon, the Club points out that the CA ruled that
the three respondents were illegally dismissed primarily because they were not
afforded due process. We are not unaware of the doctrine enunciated in Agabon
that when there is just cause for the dismissal of an employee, the lack of statutory
due process should not nullify the dismissal, or render it illegal or ineffectual, and
the employer should indemnify the employee for the violation of his statutory

26
rights.27[27] However, we find that we could not apply Agabon to this case as we
have found that the three respondents were validly dismissed and were actually
afforded due process.
 
Finally, the issue that since there was no bad faith on the part of the Club,
the Union is solely liable for the termination from employment of the three
respondents, has been mooted by our finding that their dismissal is valid.
 
WHEREFORE, premises considered, the Decision dated July 5, 2005 of
the CA and the Decision dated February 26, 2004 of the NLRC are hereby
REVERSED and SET ASIDE. The Decision dated January 27, 2003 of the Labor
Arbiter in NLRC-NCR Case No. 30-01-00130-02 is hereby REINSTATED.
 

27
FIRST DIVISION

GENERAL
CORPORATION,
MILLING
  G.R. No. 149552
Petitioner,
   
- versus -
 
 
 
Present:
ERNESTO CASIO, ROLANDO
IGOT, MARIO FAMADOR,  
NELSON LIM, FELICISIMO
BOOC, PROCOPIO OBREGON, PUNO, C.J.,
JR., and ANTONIO ANINIPOK,
Respondents, Chairperson,
 
and CARPIO MORALES,
  LEONARDO-DE CASTRO,
VIRGILIO PINO, PAULINO
CABREROS, MA. LUNA P. BERSAMIN, and
JUMAOAS, DOMINADOR
BOOC, FIDEL VALLE, VILLARAMA, JR., JJ.
BARTOLOME AUMAN,
 
REMEGIO CABANTAN,
LORETO GONZAGA,  
EDILBERTO MENDOZA and
ANTONIO PANILAG,  
Respondents.
 

 
 Promulgated:

March 10, 2010

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

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of

Court seeking the reversal of the Decision28[1] dated March 30, 2001 and
Resolution29[2] dated July 18, 2001 of the Court of Appeals in CA-G.R. SP No.
40280, setting aside the Voluntary Arbitration Award30[3] dated August 16, 1995
of the National Conciliation and Mediation Board (NCMB), Cebu City, in VA
Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K. Canonoy-Morada
(Canonoy-Morada) dismissed the Complaint filed by respondents Ernesto Casio,
Rolando Igot, Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon,
Jr. and Antonio Aninipok (Casio, et al.) against petitioner General Milling
28

29

30
Corporation (GMC) for unfair labor practice, illegal suspension, illegal dismissal,
and payment of moral and exemplary damages.

The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter

(Local 31) was the sole and exclusive bargaining agent of the rank and file
employees of GMC in Lapu-Lapu City. On November 30, 1991, IBM-Local 31,
through its officers and board members, namely, respondents Virgilio Pino, 31[4]
Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc, Bartolome Auman,
Remegio Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto Mendoza and Antonio
Panilag (Pino, et al.), entered into a Collective Bargaining Agreement (CBA) with
GMC. The effectivity of the said CBA was retroactive to August 1, 1991.32[5]

The CBA contained the following union security provisions:

Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers

employed by the Company with the exception of those who are specifically
excluded by law and by the terms of this Agreement must be members in good
standing of the Union within thirty (30) days upon the signing of this agreement
and shall maintain such membership in good standing thereof as a condition of
their employment or continued employment.
Section 6. The Company, upon written request of the Union, shall
terminate the services of any employee/worker who fails to fulfill the conditions
set forth in Sections 3 and 4 thereof, subject however, to the provisions of the
Labor Laws of the Philippines and their Implementing Rules and Regulations.
The Union shall absolve the Company from any and all liabilities, pecuniary or
otherwise, and responsibilities to any employee or worker who is dismissed or

31

32
 terminated in pursuant thereof.33[6]
 
 

Casio, et al. were regular employees of GMC with daily earnings ranging
from P173.75 to P201.50, and length of service varying from eight to 25 years.34[7]
Casio was elected IBM-Local 31 President for a three-year term in June 1991,
while his co-respondents were union shop stewards.

In a letter35[8] dated February 24, 1992, Rodolfo Gabiana (Gabiana), the

IBM Regional Director for Visayas and Mindanao, furnished Casio, et al. with
copies of the Affidavits of GMC employees Basilio Inoc and Juan Potot, charging
Casio, et al. with acts inimical to the interest of the union. Through the same letter,
Gabiana gave Casio, et al. three days from receipt thereof within which to file their
answers or counter-affidavits. However, Casio, et al. refused to acknowledge
receipt of Gabianas letter.

Subsequently, on February 29, 1992, Pino, et al., as officers and members of

the IBM-Local 31, issued a Resolution36[9] expelling Casio, et al. from the union.
Pertinent portions of the Resolution are reproduced below:

 
Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio

33

34

35

36
 Aninipok, Mario Famador, Nelson Lim and Ernesto Casio, through Ernesto Casio
have refused to acknowledge receipt of the letter-complaint dated February 24,
1992, requiring them to file their answer[s] or counter-affidavits as against the
charge of acts inimical to the interest of the union and that in view of such refusal
to acknowledge receipt, a copy of said letter complaint was dropped or left in
front of E. Casio;
 
 
Whereas, the three (3)[-]day period given to file their answer or counter-
affidavit have already lapsed prompting the union Board to investigate the charge
ex parte;
 
Whereas, after such ex parte investigation the said charge has been more
than adequately substantiated by the affidavits/witnesses and documentary
exhibits presented.
 
NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that
Ernesto Casio, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio
Aninipok, Mario Famador and Nelson Lim be expelled as union member[s] of
good standing effectively immediately.
 
RESOLVED FURTHER, to furnish copy of this Resolution to the GMC
Management for their information and guidance with the recommendation as it is
hereby recommended to dismiss the above-named employees from work.
 
 

Gabiana then wrote a letter37[10] dated March 10, 1992, addressed to

Eduardo Cabahug (Cabahug), GMC Vice-President for Engineering and Plant
Administration, informing the company of the expulsion of Casio, et al. from the
union pursuant to the Resolution dated February 29, 1992 of IBM-Local 31
officers and board members. Gabiana likewise requested that Casio, et al. be
immediately dismissed from their work for the interest of industrial peace in the
plant.

Gabiana followed-up with another letter38[11] dated March 19, 1992,

inquiring from Cabahug why Casio, et al. were still employed with GMC despite
the request of IBM-Local 31 that Casio, et al. be immediately dismissed from
37

38
service pursuant to the closed shop provision in the existing CBA. Gabiana
reiterated the demand of IBM-Local 31 that GMC dismiss Casio, et al., with the
warning that failure of GMC to do so would constitute gross violation of the
existing CBA and constrain the union to file a case for unfair labor practice against
GMC.

Pressured by the threatened filing of a suit for unfair labor practice, GMC
acceded to Gabianas request to terminate the employment of Casio, et al. GMC
issued a Memorandum dated March 24, 1992 terminating the employment of
Casio, et al. effective April 24, 1992 and placing the latter under preventive
suspension for the meantime.

 
 

On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a
Notice of Strike with the NCMB-Regional Office No. VII (NCMB-RO). Casio, et
al. alleged as bases for the strike the illegal dismissal of union officers and
members, discrimination, coercion, and union busting. The NCMB-RO held
conciliation proceedings, but no settlement was reached among the parties.39[12]

Casio, et al. next sought recourse from the National Labor Relations
Commission (NLRC) Regional Arbitration Branch VII by filing on August 3, 1992
a Complaint against GMC and Pino, et al. for unfair labor practice, particularly, the
39
termination of legitimate union officers, illegal suspension, illegal dismissal, and
moral and exemplary damages. Their Complaint was docketed as NLRC Case No.
RAB-VII-08-0639-92.40[13]

Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo

voluntary arbitration, the Labor Arbiter dismissed the case for lack of jurisdiction,
but endorsed the same to the NCMB-RO. Prior to undergoing voluntary arbitration
before the NCMB-RO, however, the parties agreed to first submit the case to the
grievance machinery of IBM-Local 31. On September 7, 1994, Casio, et al. filed
their Complaint with Pino, the Acting President of IBM-Local 31. Pino
acknowledged receipt of the Complaint and assured Casio, et al. that they would be
seasonably notified of whatever decision and/or action the Board may have in the
instant case.41[14] When the IBM-Local 31 Board failed to hold grievance
proceedings on the Complaint of Casio, et al., NCMB Voluntary Arbitrator
Canonoy-Morada assumed jurisdiction over the same. The Complaint was
docketed as VA Case No. AC 389-01-01-95.

Based on the Position Papers and other documents submitted by the parties,42
[15] Voluntary Arbitrator Canonoy-Morada rendered on August 16, 1995 a
Voluntary Arbitration Award dismissing the Complaint in VA Case No. AC 389-
01-01-95 for lack of merit, but granting separation pay and attorneys fees to Casio,
et al. The Voluntary Arbitration Award presented the following findings: (1) the
40

41

42
termination by GMC of the employment of Casio, et al. was in valid compliance
with the closed shop provision in the CBA; (2) GMC had no competence to
determine the good standing of a union member; (3) Casio, et al. waived their right
to due process when they refused to receive Gabianas letter dated February 24,
1992, which required them to submit their answer to the charges against them; (4)
the preventive suspension of Casio, et al. by GMC was an act of self-defense; and
(5) the IBM-Local 31 Resolution dated February 29, 1992 expelling Casio, et al. as
union members, also automatically ousted them as union officers. 43[16] The
dispositive portion of the Voluntary Arbitration Award reads:

 
WHEREFORE, above premises considered, this case filed by [Casio, et
al.] is hereby ordered DISMISSED for lack of merit.
 
Since the dismissal is not for a cause detrimental to the interest of the
company, respondent General Milling Corporation is, nonetheless, ordered to pay
separation pay to all [Casio, et al.] within seven (7) calendar days upon receipt of
this order at the rate of one-half month per year of service reckoned from the time
of their employment until the date of their separation on March 24, 1992, thus:
 
Employee Date Hired Rate/Month Service Total
(1/2 mo/yr
of service)
 
Casio April 24/74 P2,636.29 x 18 years =
P47,453.22
Igot May 1980 P2,472.75 x 12 years =
P29,673.00
Famador Feb. 1977 P2,498.92 x 15 years =
P37,483.80
Lim Aug. 1975 P2,466.21 x 17 years =
P41,925.57
Booc Aug. 1978 P2,498.92 x 14 years =
P34,984.88
Obregon May 1984 P2,273.23 x 08 years =
P18,185.84
Aninipok Sept. 1967 P2,616.01 x 25 years =
P65,400.25

43
  
The attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of
the total amount due them; and shall be shared proportionately by all of the same
[Casio, et al.].
 
All other claims are hereby denied.44[17]
 
 

Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went to the
Court of Appeals by way of a Petition for Certiorari under Rule 65 of the Rules of
Court to have said Award set aside.

The Court of Appeals granted the writ of certiorari and set aside the
Voluntary Arbitration Award. The appellate court ruled that while the dismissal of
Casio, et al., was made by GMC pursuant to a valid closed shop provision under
the CBA, the company, however, failed to observe the elementary rules of due
process in implementing the said dismissal. Consequently, Casio, et al. were
entitled to reinstatement with backwages from the time of their dismissal up to the
time of their reinstatement. Nevertheless, the Court of Appeals did not hold GMC
liable to Casio, et al. for moral and exemplary damages and attorneys fees, there
being no showing that their dismissal was attended by bad faith or malice, or that
the dismissal was effected in a wanton, oppressive, or malevolent manner, given
that GMC merely accommodated the request of IBM-Local 31. The appellate
court, instead, made Pino, et al. liable to Casio, et al., for moral and exemplary
damages and attorneys fees, since it was on the basis of the imputations and
actuations of Pino, et al. that Casio, et al. were illegally dismissed from
employment. The Court of Appeals thus decreed:

44
  
WHEREFORE, the assailed award is hereby SET ASIDE, and private
respondent General Milling Corporation is hereby ordered to reinstate [Casio, et
al.] to their former positions without loss of seniority rights, and to pay their full
backwages, solidarily with [Pino, et al.]. Further, [Pino, et al.] are ordered to
indemnify each of [Casio, et al.] in the form of moral and exemplary damages in
the amounts of P50,000.00 and P30,000.00, respectively, and to pay attorneys
fees.45[18]
 
 

The Motion for Reconsideration of GMC was denied by the Court of

Appeals in the Resolution dated July 18, 2001.

Hence, GMC filed the instant Petition for Review, arguing that:

 
THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF
JURISDICTION WHEN IT SET ASIDE THE AWARD OF THE VOLUNTARY
ARBITRATOR, AND IN AWARDING REINSTATEMENT AND FULL
BACKWAGES TO [Casio, et al.].

II
 
THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT SAID THAT PETITIONER GMC FAILED TO ACCORD DUE
PROCESS TO [Casio, et al.].
 
III
 
THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF

45
 JURISDICTION WHEN IT DID NOT ABSOLVE PETITIONER GMC OF ANY
LIABILITY AND INSTEAD RULED THAT IT WAS SOLIDARILY LIABLE
WITH THE UNION OFFICERS FOR THE PAYMENT OF FULL
BACKWAGES TO [Casio, et al.].
 
 

At this point, we take note that Pino, et al. did not appeal from the decision
of the Court of Appeals.

GMC avers that in reviewing and reversing the findings of the Voluntary
Arbitrator, the Court of Appeals departed from the principle of conclusiveness of
the trial judges findings. GMC also claims that the findings of the Voluntary
Arbitrator as to the legality of the termination from employment of Casio, et al. are
well supported by evidence. GMC further insists that before IBP-Local 31 expelled
Casio, et al. from the union and requested GMC to dismiss Casio, et al. from
service pursuant to the closed shop provision in the CBA, IBP-Local 31 already
accorded Casio, et al. due process, only that Casio, et al. refused to avail
themselves of such opportunity. GMC additionally maintains that Casio, et al.
were expelled by IBP-Local 31 for acts inimical to the interest of the union, and
GMC had no authority to inquire into or rule on which employee-member is or is
not loyal to the union, this being an internal affair of the union. Thus, GMC had to
rely on the presumption that Pino, et al. regularly performed their duties and
functions as IBP-Local 31 officers and board members, when the latter
investigated and ruled on the charges against Casio, et al.46[19] GMC finally
asserts that Pino, et al., the IBP-Local 31 officers and board members who
resolved to expel Casio, et al. from the union, and not GMC, should be held liable
for the reinstatement of and payment of full backwages to Casio, et al. for the
46
company had acted in good faith and merely complied with the closed shop
provision in the CBA.

On the other hand, Casio, et al. counters that GMC failed to identify the
specific pieces of evidence supporting the findings of the Voluntary Arbitrator.
Casio, et al. contends that to accord them due process, GMC itself, as the
employer, should have held proceedings distinct and separate from those
conducted by IBM-Local 31. GMC cannot justify its failure to conduct its own
inquiry using the argument that such proceedings would constitute an intrusion by
the company into the internal affairs of the union. The claim of GMC that it had
acted in good faith when it dismissed Casio, et al. from service in accordance with
the closed shop provision of the CBA is inconsistent with the failure of the
company to accord the dismissed employees their right to due process.

In general, in a petition for review on certiorari as a mode of appeal under

Rule 45 of the Rules of Court, the petitioner can raise only questions of law - the
Supreme Court is not the proper venue to consider a factual issue as it is not a trier
of facts.  A departure from the general rule may be warranted where the findings of
fact of the Court of Appeals are contrary to the findings and conclusions of the trial
court [or quasi-judicial agency, as the case may be], or when the same is
unsupported by the evidence on record.47[20]

Whether Casio, et al. were illegally dismissed without any valid reason is a
47
question of fact better left to quasi-judicial agencies to determine. In this case, the
Voluntary Arbitrator was convinced that Casio, et al. were legally dismissed; while
the Court of Appeals believed the opposite, because even though the dismissal of
Casio, et al. was made by GMC pursuant to a valid closed shop provision in the
CBA, the company still failed to observe the elementary rules of due process. The
Court is therefore constrained to take a second look at the evidence on record
considering that the factual findings of the Voluntary Arbitrator and the Court of
Appeals are contradictory.

There are two aspects which characterize the concept of due process under
the Labor Code: one is substantive whether the termination of employment was
based on the provision of the Labor Code or in accordance with the prevailing
jurisprudence; the other is procedural the manner in which the dismissal was
effected.48[21]

After a thorough review of the records, the Court agrees with the Court of
Appeals. The dismissal of Casio, et al. was indeed illegal, having been done
without just cause and the observance of procedural due process.

In Alabang Country Club, Inc. v. National Labor Relations Commission,49

[22] the Court laid down the grounds for which an employee may be validly

48

49
terminated, thus:

Under the Labor Code, an employee may be validly terminated on the

following grounds: (1) just causes under Art. 282; (2) authorized causes under
Art. 283; (3) termination due to disease under Art. 284, and (4) termination by the
employee or resignation under Art. 285.
 
Another cause for termination is dismissal from employment due to
the enforcement of the union security clause in the CBA. x x x. (Emphasis
ours.)
 
 

Union security is a generic term, which is applied to and comprehends

closed shop, union shop, maintenance of membership, or any other form of
agreement which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment. There is union shop when all
new regular employees are required to join the union within a certain period as a
condition for their continued employment. There is maintenance of membership
shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership
as a condition for continued employment until they are promoted or transferred out
of the bargaining unit or the agreement is terminated. A closed shop, on the other
hand, may be defined as an enterprise in which, by agreement between the
employer and his employees or their representatives, no person may be employed
in any or certain agreed departments of the enterprise unless he or she is, becomes,
and, for the duration of the agreement, remains a member in good standing of a
union entirely comprised of or of which the employees in interest are a part.50[23]

50
 Union security clauses are recognized and explicitly allowed under Article
248(e) of the Labor Code, which provides that:

 
 
Art. 248. Unfair Labor Practices of Employers. x x x
 
xxxx
 
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any
labor organization. Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who are already
members of another union at the time of the signing of the collective
bargaining agreement. (Emphasis supplied.)
 
 

It is State policy to promote unionism to enable workers to negotiate with

management on an even playing field and with more persuasiveness than if they
were to individually and separately bargain with the employer. For this reason, the
law has allowed stipulations for union shop and closed shop as means of
encouraging workers to join and support the union of their choice in the protection
of their rights and interest vis--vis the employer.51[24]

Moreover, a stipulation in the CBA authorizing the dismissal of employees

are of equal import as the statutory provisions on dismissal under the Labor Code,
since a CBA is the law between the company and the union and compliance
therewith is mandated by the express policy to give protection to labor.52[25]

51

52
 

In terminating the employment of an employee by enforcing the union

security clause, the employer needs only to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of the
union security provision in the CBA; and (3) there is sufficient evidence to support
the decision of the union to expel the employee from the union. These requisites
constitute just cause for terminating an employee based on the union security
provision of the CBA.53[26]

There is no question that in the present case, the CBA between GMC and
IBM-Local 31 included a maintenance of membership and closed shop clause as
can be gleaned from Sections 3 and 6 of Article II. IBM-Local 31, by written
request, can ask GMC to terminate the employment of the employee/worker who
failed to maintain its good standing as a union member.

It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM

Regional Director for Visayas and Mindanao, twice requested GMC, in the letters
dated March 10 and 19, 1992, to terminate the employment of Casio, et al. as a
necessary consequence of their expulsion from the union.

It is the third requisite that there is sufficient evidence to support the

53
decision of IBM-Local 31 to expel Casio, et al. which appears to be lacking in this
case.

The full text of the individual but identical termination letters, 54[27] served
by GMC on Casio, et al., is very revealing. They read:

To: [Employees Name]

From: Legal Counsel
Subject: Dismissal Upon Union Request Thru
CBA Closed Shop Provision
 
The company is in receipt of two letters dated March 10, 1992 and March 19,
1992 respectively from the union at the Mill in Lapulapu demanding the
termination of your employment pursuant to the closed shop provision of our
existing Collective Bargaining Agreement. It appears from the attached
resolutions that you have been expelled from union membership and has thus
ceased to become a member in good standing. The resolutions are signed by the
same officers who executed and signed our existing CBA, copies of the letters and
resolutions are enclosed hereto for your reference.
 
The CBA in Article II provides the following:
 
Section 3. MAINTENANCE OF MEMBERSHIP All
employees/workers employed by the Company with the exception
of those who are specifically excluded by law and by the terms of
this Agreement must be members in good standing of the Union
within thirty (30) days upon the signing of this agreement and shall
maintain such membership in good standing thereof as a condition
of their employment or continued employment.
 
 
Section 6. The Company, upon written request of the
Union, shall terminate the services of any employee/worker who
fails to fulfill the conditions set forth in Sections 3 and 4 thereof,
subject however, to the provisions of the Labor Laws of the
Philippines and their Implementing Rules and Regulations. The
Union shall absolve the Company from any and all liabilities,
pecuniary or otherwise, and responsibilities to any employee or
worker who is dismissed or terminated in pursuant thereof.

54
  
The provisions of the CBA are clear enough. The termination of employment
on the basis of the closed shop provision of the CBA is well recognized in law
and in jurisprudence.
 
There is no valid ground to refuse to terminate. On the other hand as pointed out
in the unions strongly demanding letter dated March 19, 1992, the company
could be sued for unfair labor practice. While we would have wanted not to
accommodate the unions request, we are left with no other option. The terms
of the CBA should be respected. To refuse to enforce the CBA would result in the
breakdown of industrial peace and the end of harmonious relations between the
union and management. The company would face the collective anger and enmity
of its employees who are union members.
 
In the light of the unions very insistent demand, verbal and in writing and to avoid
the union accusation of coddling you, and considering the explicitly mandatory
language of the closed shop provision of the CBA, the company is constrained to
terminate your employment, to give you ample time to look and find another
employment, and/or exert efforts to become again a member of good standing of
your union, effective April 24, 1992.
 
In the meantime, to prevent serious danger to the life and property of the company
and of its employees, we are placing you under preventive suspension beginning
today.
 
 

It is apparent from the aforequoted letter that GMC terminated the

employment of Casio, et al. relying upon the Resolution dated February 29, 1992
of Pino, et al. expelling Casio, et al. from IBM-Local 31; Gabianas Letters dated
March 10 and 19, 1992 demanding that GMC terminate the employment of Casio,
et al. on the basis of the closed shop clause in the CBA; and the threat of being
sued by IBM-Local 31 for unfair labor practice. The letter made no mention at all
of the evidence supporting the decision of IBM-Local 31 to expel Casio, et al.
from the union. GMC never alleged nor attempted to prove that the company
actually looked into the evidence of IBM-Local 31 for expelling Casio, et al. and
made a determination on the sufficiency thereof. Without such a determination,
GMC cannot claim that it had terminated the employment of Casio, et al. for just
cause.

The failure of GMC to make a determination of the sufficiency of evidence

supporting the decision of IBM-Local 31 to expel Casio, et al. is a direct
consequence of the non-observance by GMC of procedural due process in the
dismissal of employees.

As a defense, GMC contends that as an employer, its only duty was to

ascertain that IBM-Local 31 accorded Casio, et al. due process; and, it is the
finding of the company that IBM-Local 31 did give Casio, et al. the opportunity to
answer the charges against them, but they refused to avail themselves of such
opportunity.

This argument is without basis.

The Court has stressed time and again that allegations must be proven by
sufficient evidence because mere allegation is definitely not evidence.55[28] Once
more, in Great Southern Maritime Services Corporation. v. Acua,56[29] the Court
declared:

 
55

56
 Time and again we have ruled that in illegal dismissal cases like the
present one, the onus of proving that the employee was not dismissed or if
dismissed, that the dismissal was not illegal, rests on the employer and failure to
discharge the same would mean that the dismissal is not justified and therefore
illegal. Thus, petitioners must not only rely on the weakness of respondents
evidence but must stand on the merits of their own defense. A party alleging
a critical fact must support his allegation with substantial evidence for any
decision based on unsubstantiated allegation cannot stand as it will offend
due process. x x x. (Emphasis supplied.)
 
 

The records of this case are absolutely bereft of any supporting evidence to
substantiate the bare allegation of GMC that Casio, et al. were accorded due
process by IBM-Local 31. There is nothing on record that would indicate that
IBM-Local 31 actually notified Casio, et al. of the charges against them or that
they were given the chance to explain their side. All that was stated in the IBM-
Local 31 Resolution dated February 29, 1992, expelling Casio, et al. from the
union, was that a copy of the said letter complaint [dated February 24, 1992] was
dropped or left in front of E. Casio. 57[30] It was not established that said letter-
complaint charging Casio, et al. with acts inimical to the interest of the union was
properly served upon Casio, that Casio willfully refused to accept the said letter-
notice, or that Casio had the authority to receive the same letter-notice on behalf of
the other employees similarly accused. Its worthy to note that Casio, et al. were
expelled only five days after the issuance of the letter-complaint against them. The
Court cannot find proof on record when the three-day period, within which Casio,
et al. was supposed to file their answer or counter-affidavits, started to run and had
expired. The Court is likewise unconvinced that the said three-day period was
sufficient for Casio, et al. to prepare their defenses and evidence to refute the
serious charges against them.

57
  

Contrary to the position of GMC, the acts of Pino, et al. as officers and
board members of IBM-Local 31, in expelling Casio, et al. from the union, do not
enjoy the presumption of regularity in the performance of official duties, because
the presumption applies only to public officers from the highest to the lowest in the
service of the Government, departments, bureaus, offices, and/or its political
subdivisions.58[31]

More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton

Mills, Inc.,59[32] the Court issued the following reminder to employers:

The power to dismiss is a normal prerogative of the employer. However,

this is not without limitations. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon the
request of a labor union pursuant to the Collective Bargaining Agreement. x x x.
Dismissals must not be arbitrary and capricious. Due process must be observed in
dismissing an employee because it affects not only his position but also his means
of livelihood. Employers should therefore respect and protect the rights of their
employees, which include the right to labor. x x x.
 
 

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M.

Greenfield v. Ramos60[33] that:

58

59

60
 While respondent company may validly dismiss the employees expelled
by the union for disloyalty under the union security clause of the collective
bargaining agreement upon the recommendation by the union, this dismissal
should not be done hastily and summarily thereby eroding the employees right to
due process, self-organization and security of tenure. The enforcement of union
security clauses is authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due process. Even on the
assumption that the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate hearing by
respondent company. (Emphases supplied.)
 
 

The twin requirements of notice and hearing constitute the essential

elements of procedural due process. The law requires the employer to furnish the
employee sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) a written notice apprising the employee of
the particular acts or omissions for which his dismissal is sought in order to afford
him an opportunity to be heard and to defend himself with the assistance of
counsel, if he desires, and (2) a subsequent notice informing the employee of the
employers decision to dismiss him. This procedure is mandatory and its absence
taints the dismissal with illegality.61[34]

Irrefragably, GMC cannot dispense with the requirements of notice and

hearing before dismissing Casio, et al. even when said dismissal is pursuant to the
closed shop provision in the CBA. The rights of an employee to be informed of the
charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own union are not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement.
An employee is entitled to be protected not only from a company which disregards

61
his rights but also from his own union the leadership of which could yield to the
temptation of swift and arbitrary expulsion from membership and hence dismissal
from his job.62[35]

In the case at bar, Casio, et al. did not receive any other communication
from GMC, except the written notice of termination dated March 24, 1992. GMC,
by its own admission, did not conduct a separate and independent investigation to
determine the sufficiency of the evidence supporting the expulsion of Casio, et al.
by IBP-Local 31. It straight away acceded to the demand of IBP-Local 31 to
dismiss Casio, et al.

The very same circumstances took place in Liberty Cotton Mills, wherein the
Court held that the employer-company acted in bad faith in dismissing its workers
without giving said workers an opportunity to present their side in the controversy
with their union, thus:

While respondent company, under the Maintenance of Membership

provision of the Collective Bargaining Agreement, is bound to dismiss any
employee expelled by PAFLU for disloyalty, upon its written request, this
undertaking should not be done hastily and summarily. The company acted in
bad faith in dismissing petitioner workers without giving them the benefit of
a hearing. It did not even bother to inquire from the workers concerned and
from PAFLU itself about the cause of the expulsion of the petitioner workers.
Instead, the company immediately dismissed the workers on May 30, 1964 after
its receipt of the request of PAFLU on May 29, 1964 in a span of only one day
stating that it had no alternative but to comply with its obligation under the
Security Agreement in the Collective Bargaining Agreement, thereby
disregarding the right of the workers to due process, self-organization and security
of tenure.63[36] (Emphasis ours.)
 
62
  

In sum, the Court finds that GMC illegally dismissed Casio, et al. because
not only did GMC fail to make a determination of the sufficiency of evidence to
support the decision of IBM-Local 31 to expel Casio, et al., but also to accord the
expelled union members procedural due process, i.e., notice and hearing, prior to
the termination of their employment

Consequently, GMC cannot insist that it has no liability for the payment of
backwages and damages to Casio, et al., and that the liability for such payment
should fall only upon Pino, et al., as the IBP-Local 31 officers and board members
who expelled Casio, et al. GMC completely missed the point that the expulsion of
Casio, et al. by IBP-Local 31 and the termination of employment of the same
employees by GMC, although related, are two separate and distinct acts. Despite a
closed shop provision in the CBA and the expulsion of Casio, et al. from IBP-
Local 31, law and jurisprudence imposes upon GMC the obligation to accord
Casio, et al. substantive and procedural due process before complying with the
demand of IBP-Local 31 to dismiss the expelled union members from service. The
failure of GMC to carry out this obligation makes it liable for illegal dismissal of
Casio, et al.

In Malayang Samahan ng mga Manggagawa sa M. Greenfield, 64[37] the

Court held that notwithstanding the fact that the dismissal was at the instance of

63

64
the federation and that the federation undertook to hold the company free from any
liability resulting from the dismissal of several employees, the company may still
be held liable if it was remiss in its duty to accord the would-be dismissed
employees their right to be heard on the matter.

An employee who is illegally dismissed is entitled to the twin reliefs of full

backwages and reinstatement. If reinstatement is not viable, separation pay is
awarded to the employee. In awarding separation pay to an illegally dismissed
employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to
one month salary for every year of service. Under Republic Act No. 6715,
employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the
time their actual compensation was withheld from them up to the time of their
actual reinstatement but if reinstatement is no longer possible, the backwages shall
be computed from the time of their illegal termination up to the finality of the
decision. Thus, Casio, et al. are entitled to backwages and separation pay
considering that reinstatement is no longer possible because the positions they
previously occupied are no longer existing, as declared by GMC.65[38]

Casio, et al., having been compelled to litigate in order to seek redress for
their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10%
of the total monetary award.66[39]

65

66
 WHEREFORE, the instant petition is hereby DENIED.  The assailed
decision of the Court of Appeals dated March 30, 2001 in CA-G.R. SP No. 40280
is AFFIRMED.

SO ORDERED.

 
 Republic of the Philippines
Supreme Court
Manila

 
SECOND DIVISION

 
PICOP RESOURCES, G.R. No. 160828
INCORPORATED (PRI),
 

Petitioner, Present:
 
 
 
-         versus
CARPIO, J., Chairperson,
  NACHURA,
ANACLETO L. TAECA, GEREMIAS S. PERALTA
TATO, JAIME N. CAMPOS,
ABAD, and
MARTINIANO A. MAGAYON, JOSEPH B.
BALGOA, MANUEL G. ABUCAY, MOISES MENDOZA, JJ.
M. ALBARAN, MARGARITO G.  
ALICANTE, JERRY ROMEO T. AVILA,
LORENZO D. CANON, RAUL P. DUERO,  
DANILO Y. ILAN, MANUEL M. Promulgated:
MATURAN, JR., LUISITO R. POPERA,
 
CLEMENTINO C. QUIMAN, ROBERTO Q.
SILOT, CHARLITO D. SINDAY, REMBERT August 9, 2010
B. SUZON ALLAN J. TRIMIDAL, and
 
NAMAPRI-SPFL,
 
 Respondents.

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

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of

Court seeking the reversal of the Decision67[1] dated July 25, 2003 and
Resolution68[2] dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No.
71760, setting aside the Resolutions dated October 8, 2001 69[3] and April 29,
200270[4] of the National Labor Relations Commission in NLRC CA No. M-
006309-2001 and reinstating the Decision71[5] dated March 16, 2001 of the Labor
Arbiter.

The facts, as culled from the records, are as follows:

67

68

69

70

71
 

On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph

Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and
fourteen (14) others filed a Complaint for unfair labor practice, illegal dismissal
and money claims against petitioner PICOP Resources, Incorporated (PRI),
Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident Manager), Atty.
Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern
Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as
Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of
Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and
Atty. Proculo Fuentes, Jr.72[6] (in his capacity as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide

members of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of
Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-
file employees of petitioner PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a

period of five (5) years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

72
  

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are
members of the UNION at the time of the signing of this AGREEMENT shall, as a
condition of continued employment by the COMPANY, maintain their membership in
the UNION in good standing during the effectivity of this AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position

covered by the bargaining unit shall be advised by the COMPANY that they are required
to file an application for membership with the UNION within thirty (30) days from the
date his appointment shall have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after
compliance with the requirements of the New Labor Code, shall give notice of
termination of services of any employee who shall fail to fulfill the condition provided
in Section 6.1 and 6.2 of this Article, but it assumes no obligation to discharge any
employee if it has reasonable grounds to believe either that membership in the UNION
was not available to the employee on the same terms and conditions generally
applicable to other members, or that membership was denied or terminated for reasons
other than voluntary resignation or non-payment of regular union dues. Separation
under the Section is understood to be for cause, consequently, the dismissed employee
is not entitled to separation benefits provided under the New Labor Code and in this
AGREEMENT.73[7]

On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to
the management of PRI demanding the termination of employees who allegedly
campaigned for, supported and signed the Petition for Certification Election of the

73
Federation of Free Workers Union (FFW) during the effectivity of the CBA.
NAMAPRI-SPFL considered said act of campaigning for and signing the petition for
certification election of FFW as an act of disloyalty and a valid basis for
termination for a cause in accordance with its Constitution and By-Laws, and the
terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on
Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the
management of PRI to investigate those union members who signed the Petition
for Certification Election of FFW during the existence of their CBA. NAMAPRI-SPFL,
likewise, furnished PRI with machine copy of the authorization letters dated
March 19, 20 and 21, 2000, which contained the names and signatures of
employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty.
Romero A. Boniel issued a memorandum addressed to the concerned employees
to explain in writing within 72 hours why their employment should not be
terminated due to acts of disloyalty as alleged by their Union.

Within the period from May 26 to June 2, 2000, a number of employees

who were served explanation memorandum submitted their explanation, while
some did not.
  

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters
of the employees to Atty. Fuentes for evaluation and final disposition in
accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the
management of PRI that the Union found the member's explanations to be
unsatisfactory. He reiterated the demand for termination, but only of 46 member-
employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31
out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the
ground of acts of disloyalty committed against it when respondents allegedly
supported and signed the Petition for Certification Election of FFW before the
freedom period during the effectivity of the CBA. A Notice dated October 21, 2000
was also served on the Department of Labor and Employment Office (DOLE),
Caraga Region.

Respondents then accused PRI of Unfair Labor Practice punishable under

Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and
Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248 (a)
and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership

from NAMAPRI-SPFL or submitted to PRI any union dues and check-off
disauthorizations against NAMAPRI-SPFL. They claimed that they continue to
remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that
a patent manifestation of ones disloyalty would have been the explicit resignation
or withdrawal of membership from the Union accompanied by an advice to
management to discontinue union dues and check-off deductions. They insisted
that mere affixation of signature on such authorization to file a petition for
certification election was not per se an act of disloyalty. They claimed that while it
may be true that they signed the said authorization before the start of the
freedom period, the petition of FFW was only filed with the DOLE on May 18,
2000, or 58 days after the start of the freedom period.

Respondents maintained that their acts of signing the authorization

signifying support to the filing of a Petition for Certification Election of FFW was
merely prompted by their desire to have a certification election among the rank-
and-file employees of PRI with hopes of a CBA negotiation in due time; and not to
cause the downfall of NAMAPRI-SPFL.

 
 Furthermore, respondents contended that there was lack of procedural due
process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up
letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their
names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to
investigate union members who supported the Petition for Certification Election
of FFW. Respondents claimed that they should have been summoned individually,
confronted with the accusation and investigated accordingly and from where the
Union may base its findings of disloyalty and, thereafter, recommend to
management the termination for causes.

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded

their termination, it was no longer the bargaining representative of the rank-and-
file workers of PRI, because the CBA had already expired on May 22, 2000. Hence,
there could be no justification in PRIs act of dismissing respondents due to acts of
disloyalty.

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel
in giving in to the wishes of the Union in discharging them on the ground of
disloyalty to the Union amounted to interference with, restraint or coercion of
respondents exercise of their right to self-organization. The act indirectly required
petitioners to support and maintain their membership with NAMAPRI-SPFL as a
condition for their continued employment. The acts of NAMAPRI-SPFL, Atty.
Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners
in the exercise of their rights to self-organization and constituted acts of unfair
labor practice.

In a Decision74[8] dated March 16, 2001, the Labor Arbiter declared the
respondents dismissal to be illegal and ordered PRI to reinstate respondents to
their former or equivalent positions without loss of seniority rights and to jointly
and solidarily pay their backwages. The dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.                                  Declaring complainants dismissal illegal; and

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

to reinstate complainants to their former or equivalent positions without loss of seniority
rights and to jointly and solidarily pay their backwages in the total amount of
P420,339.30 as shown in the said Annex A plus damages in the amount of P10,000.00
each, or a total of P210,000.00 and attorneys fees equivalent to 10% of the total
monetary award.

SO ORDERED.75[9]

74

75
 PRI and NAMAPRI-SPFL appealed to the National Labor Relations
Commission (NLRC), which reversed the decision of the Labor Arbiter; thus,
declaring the dismissal of respondents from employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April

29, 2001 for lack of merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before

the Court of Appeals and sought the nullification of the Resolution of the NLRC
dated October 8, 2001 which reversed the Decision dated March 16. 2001 of
Labor Arbiter and the Resolution dated April 29, 2002, which denied respondents
motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed
Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of the
Labor Arbiter.

Thus, before this Court, PRI, as petitioner, raised the following issues:

 
 I

WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE

GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS
UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS
YET BEEN ENTERED INTO.

II

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION

OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI
UNDER RULE 65, REVISED RULES OF COURT. 76[10]

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents

for the purpose of assailing the decision of the NLRC.  It claimed that assuming
that the NLRC erred in its judgment on the legal issues, its error, if any, is not
tantamount to abuse of discretion falling within the ambit of Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or
Petition for Certiorari has been settled as early as in our decision in St. Martin

76
Funeral Home v. National Labor Relations Commission.77[11] This Court held that
the proper vehicle for such review was a Special Civil Action for Certiorari under
Rule 65 of the Rules of Court, and that this action should be filed in the Court of
Appeals in strict observance of the doctrine of the hierarchy of courts. 78[12]
Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129,
as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of
the Court of Appeals, amending for the purpose of Section Nine of Batas
Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of
1980), the Court of Appeals pursuant to the exercise of its original jurisdiction
over Petitions for Certiorari is specifically given the power to pass upon the
evidence, if and when necessary, to resolve factual issues. 79[13]

We now come to the main issue of whether there was just cause to
terminate the employment of respondents.

PRI argued that the dismissal of the respondents was valid and legal. It
claimed to have acted in good faith at the instance of the incumbent union
pursuant to the Union Security Clause of the CBA.

77

78

79
 Citing Article 253 of the Labor Code,80[14] PRI contends that as parties to
the CBA, they are enjoined to keep the status quo and continue in full force and
effect the terms and conditions of the existing CBA during the 60-day period
and/or until a new agreement is reached by the parties.

Petitioner's argument is untenable.

Union security" is a generic term, which is applied to and comprehends

"closed shop," union shop," "maintenance of membership," or any other form of
agreement which imposes upon employees the obligation to acquire or retain
union membership as a condition affecting employment. There is union shop
when all new regular employees are required to join the union within a certain
period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective
date of the agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit, or the agreement is terminated. A closed
shop, on the other hand, may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person may
be employed in any or certain agreed departments of the enterprise unless he or
she is, becomes, and, for the duration of the agreement, remains a member in

80
good standing of a union entirely comprised of or of which the employees in
interest are a part.81[15]

However, in terminating the employment of an employee by enforcing the

union security clause, the employer needs to determine and prove that: (1) the
union security clause is applicable; (2) the union is requesting for the enforcement
of the union security provision in the CBA; and (3) there is sufficient evidence to
support the decision of the union to expel the employee from the union. These
requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.82[16]

As to the first requisite, there is no question that the CBA between PRI and
respondents included a union security clause, specifically, a maintenance of
membership as stipulated in Sections 6 of Article II, Union Security and Check-
Off. Following the same provision, PRI, upon written request from the Union, can
indeed terminate the employment of the employee who failed to maintain its good
standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2)
occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to
terminate the employment of respondents due to their acts of disloyalty to the
Union.
 

81

82
 However, as to the third requisite, we find that there is no sufficient evidence
to support the decision of PRI to terminate the employment of the respondents.
 

PRI alleged that respondents were terminated from employment based on

the alleged acts of disloyalty they committed when they signed an authorization
for the Federation of Free Workers (FFW) to file a Petition for Certification
Election among all rank-and-file employees of PRI. It contends that the acts of
respondents are a violation of the Union Security Clause, as provided in their
Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere
signing of the authorization in support of the Petition for Certification Election of
FFW on March 19, 20 and 21, or before the freedom period, is not sufficient
ground to terminate the employment of respondents inasmuch as the petition
itself was actually filed during the freedom period. Nothing in the records would
show that respondents failed to maintain their membership in good standing in
the Union. Respondents did not resign or withdraw their membership from the
Union to which they belong. Respondents continued to pay their union dues and
never joined the FFW.

 
 Significantly, petitioner's act of dismissing respondents stemmed from the
latter's act of signing an authorization letter to file a petition for certification
election as they signed it outside the freedom period. However, we are
constrained to believe that an authorization letter to file a petition for
certification election is different from an actual Petition for Certification Election.
Likewise, as per records, it was clear that the actual Petition for Certification
Election of FFW was filed only on May 18, 2000. 83[17] Thus, it was within the
ambit of the freedom period which commenced from March 21, 2000 until May
21, 2000. Strictly speaking, what is prohibited is the filing of a petition for
certification election outside the 60-day freedom period. 84[18] This is not the
situation in this case. If at all, the signing of the authorization to file a certification
election was merely preparatory to the filing of the petition for certification
election, or an exercise of respondents right to self-organization.

Moreover, PRI anchored their decision to terminate respondents

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

83

84
 The provision of Article 256 of the Labor Code is particularly enlightening.
It reads:
 

Article 256. Representation issue in organized establishments. - In organized

establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and Employment
within the sixty-day period before the expiration of a collective bargaining agreement,
the Med-Arbiter shall automatically order an election by secret ballot when the verified
petition is supported by the written consent of at least twenty-five percent (25%) of all
the employees in the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a majority of all eligible
voters in the unit must have cast their votes. The labor union receiving the majority of
the valid votes cast shall be certified as the exclusive bargaining agent of all the workers
in the unit. When an election which provides for three or more choices results in no
choice receiving a majority of the valid votes cast, a run-off election shall be conducted
between the labor unions receiving the two highest number of votes: Provided, That the
total number of votes for all contending unions is at least fifty per cent (50%) of the
number of votes cast.

At the expiration of the freedom period, the employer shall continue to

recognize the majority status of the incumbent bargaining agent where no petition for
certification election is filed.85[19]

Applying the same provision, it can be said that while it is incumbent for
the employer to continue to recognize the majority status of the incumbent
bargaining agent even after the expiration of the freedom period, they could only
do so when no petition for certification election was filed. The reason is, with a
pending petition for certification, any such agreement entered into by
management with a labor organization is fraught with the risk that such a labor
union may not be chosen thereafter as the collective bargaining representative. 86
[20] The provision for status quo is conditioned on the fact that no certification

85

86
election was filed during the freedom period. Any other view would render
nugatory the clear statutory policy to favor certification election as the means of
ascertaining the true expression of the will of the workers as to which labor
organization would represent them.87[21]

In the instant case, four (4) petitions were filed as early as May 12, 2000. In
fact, a petition for certification election was already ordered by the Med-Arbiter
of DOLE Caraga Region on August 23, 2000. 88[22] Therefore, following Article 256,
at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-
SPFL as the incumbent bargaining agent does not hold true when petitions for
certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which provides for automatic
renewal pertains only to the economic provisions of the CBA, and does not
include representational aspect of the CBA. An existing CBA cannot constitute a
bar to a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await the
creation of a new agreement will not apply. Otherwise, it will create an absurd
situation where the union members will be forced to maintain membership by
virtue of the union security clause existing under the CBA and, thereafter, support
another union when filing a petition for certification election. If we apply it, there
will always be an issue of disloyalty whenever the employees exercise their right
to self-organization. The holding of a certification election is a statutory policy
that should not be circumvented,89[23] or compromised.

87

88

89
 Time and again, we have ruled that we adhere to the policy of enhancing
the welfare of the workers. Their freedom to choose who should be their
bargaining representative is of paramount importance. The fact that there
already exists a bargaining representative in the unit concerned is of no moment
as long as the petition for certification election was filed within the freedom
period. What is imperative is that by such a petition for certification election the
employees are given the opportunity to make known of who shall have the right
to represent them thereafter. Not only some, but all of them should have the
right to do so. What is equally important is that everyone be given a democratic
space in the bargaining unit concerned.90[24]

We will emphasize anew that the power to dismiss is a normal prerogative of

the employer. This, however, is not without limitations. The employer is bound to
exercise caution in terminating the services of his employees especially so when it
is made upon the request of a labor union pursuant to the Collective Bargaining
Agreement. Dismissals must not be arbitrary and capricious. Due process must be
observed in dismissing an employee, because it affects not only his position but
also his means of livelihood. Employers should, therefore, respect and protect the
rights of their employees, which include the right to labor.91[25]
An employee who is illegally dismissed is entitled to the twin reliefs of full
backwages and reinstatement. If reinstatement is not viable, separation pay is
awarded to the employee. In awarding separation pay to an illegally dismissed
employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to
one month salary for every year of service. Under Republic Act No. 6715,
90

91
employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the
time their actual compensation was withheld from them up to the time of their
actual reinstatement. But if reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal termination up to the finality of the
decision. Moreover, respondents, having been compelled to litigate in order to seek
redress for their illegal dismissal, are entitled to the award of attorneys fees
equivalent to 10% of the total monetary award.92[26]

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

SO ORDERED.

92
 THIRD DIVISION

DEL PILAR ACADEMY, EDUARDO

ESPEJO and ELISEO OCAMPO, JR., G.R. No.
Petitioners,
170112
 
 
Present:
 
 
 
YNARES-SANTIAGO, J.,
- versus -
Chairperson,
 
AUSTRIA-MARTINEZ,
 
CHICO-NAZARIO,
 
NACHURA, and
 
REYES, JJ.
DEL PILAR ACADEMY EMPLOYEES
UNION,  
Respondent. Promulgated:
   

April 30, 2008

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

 
 
 DECISION

NACHURA, J.:

Before this Court is a petition for review on certiorari assailing the July 19,
2005 Decision93[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 86868, and
its September 28, 2005 Resolution94[2] denying the motion for reconsideration.

Following are the factual antecedents.

Respondent Del Pilar Academy Employees Union (the UNION) is the

certified collective bargaining representative of teaching and non-teaching
personnel of petitioner Del Pilar Academy (DEL PILAR), an educational
institution operating in Imus, Cavite.

93

94
 On September 15, 1994, the UNION and DEL PILAR entered into a
Collective Bargaining Agreement (CBA)95[3] granting salary increase and other
benefits to the teaching and non-teaching staff. Among the salient provisions of the
CBA are:

ARTICLE V
 
SALARY INCREASE
 
SECTION 1. Basic Pay the ACADEMY and the UNION agreed to
maintain the wage increase in absolute amount as programmed in the computation
prepared by the ACADEMY and dated 30 June 1994 initialed by the members of
the bargaining panel of both parties, taking into account increases in tuition fees,
if any.
 
SECTION 2. The teaching load of teachers shall only be Twenty-Three
(23) hours per week effective this school year and any excess thereon shall be
considered as overload with pay.
 
SECTION 3. Overloadpay (sic) will be based on the Teachers Basic
Monthly Rate.
 
SECTION 4. The ACADEMY agrees to grant longevity pay as follows:
P100.00 for every 5 years of continuous service. The longevity shall be integrated
in the basic salary within three (3) years from the effectivity of this agreement.
 
ARTICLE VI
 
VACATION LEAVE WITH PAY
 
SECTION 1. Every faculty member who has rendered at least six (6)
consecutive academic semester of service shall be entitled to the 11th month and
12th month pay as summer vacation leave with pay. They may, however, be
required to report [and] undergo briefings or seminars in connection with their
teaching assignments for the ensuing school year.
 
SECTION 2. Non-teaching employees who shall have rendered at least
one (1) year of service shall be entitled to fifteen days leave with pay.
 

95
  

The UNION then assessed agency fees from non-union employees, and
requested DEL PILAR to deduct said assessment from the employees salaries and
wages. DEL PILAR, however, refused to effect deductions claiming that the non-
union employees were not amenable to it.

In September 1997, the UNION negotiated for the renewal of the CBA. DEL
PILAR, however, refused to renew the same unless the provision regarding
entitlement to two (2) months summer vacation leave with pay will be amended by
limiting the same to teachers, who have rendered at least three (3) consecutive
academic years of satisfactory service. The UNION objected to the proposal
claiming diminution of benefits. DEL PILAR refused to sign the CBA, resulting in
a deadlock. The UNION requested DEL PILAR to submit the case for voluntary
arbitration, but the latter allegedly refused, prompting the UNION to file a case for
unfair labor practice with the Labor Arbiter against DEL PILAR; Eduardo Espejo,
its president; and Eliseo Ocampo, Jr., chairman of the Board of Trustees.

Traversing the complaint, DEL PILAR denied committing unfair labor

practices against the UNION. It justified the non-deduction of the agency fees by
the absence of individual check off authorization from the non-union employees.
As regards the proposal to amend the provision on summer vacation leave with
pay, DEL PILAR alleged that the proposal cannot be considered unfair for it was
done to make the provision of the CBA conformable to the DECS Manual of
Regulations for Private Schools.96[4]

On October 2, 1998, Labor Arbiter Nieves V. De Castro rendered a

Decision, viz.:

Reviewing the records of this case and the law relative to the issues at
hand, we came to the conclusion that it was an error on [the] part of [DEL
PILAR] not to have collected agency fee due other workers who are non-union
members but are included in the bargaining unit being represented by [the
UNION]. True enough as was correctly quoted by [the UNION] Art. 248, to wit:
 
Employees of an appropriate collective bargaining unit who
are not members of the recognized collective bargaining agency
may be assessed a reasonable fee equivalent to the dues and other
fees paid by members of the recognized collective bargaining
agreement: Provided, that the individual authorization required
under Article [241], paragraph (o) of this Code shall not apply to
the non-members of the recognized collective bargaining agent.
 
As it is, [DEL PILARs] unwarranted fear re-individual dues [without]
authorization for non-union members has no basis in fact or in law. For receipt of
CBA benefits brought about by the CBA negotiated with [petitioners], they are
duty bound to pay agency fees which may lawfully be deducted sans individual
check-off authorization. Being [recipients] of said benefits, they should share and
be made to pay the same considerations imposed upon the union members. [DEL
PILAR], therefore, was in error in refusing to deduct corresponding agency fees
which lawfully belongs to the union.
 
Anent the proposal to decrease the coverage of the 11 th and 12th month
vacation with pay, we do not believe that such was done in bad faith but rather in
an honest attempt to make perfect procession following the DECS Manuals.
Moreso, it is of judicial notice that in the course of negotiation, almost all
provisions are up for grabs, amendments or change. This is something normal in
the course of a negotiation and does not necessarily connote bad faith as each

96
 every one (sic) has the right to negotiate reward or totally amend the provisions of
the contract/agreement.
 
All told while there was error on [the] part of [DEL PILAR] for the first
issue, [it] came through in the second. But as it is, we do not believe that a finding
of unfair labor practice can be had considering the lack of evidence on record that
said acts were done to undermine the union or stifle the members right to self
organization or that the [petitioners] were in bad faith. If at all, its (sic) error may
have been the result of a mistaken notion that individual check-off authorization is
needed for it to be able to validly and legally deduct assessment especially after
individual[s] concerned registered their objection. On the other hand, it is not
error to negotiate for a better term in the CBA. So long as [the] parties will agree.
It must be noted that a CBA is a contract between labor and management and is
not simply a litany of benefits for labor. Moreso, for unfair labor practice to
prosper, there must be a clear showing of acts aimed at stifling the workers right
to self-organization. Mere allegations and mistake notions would not suffice.
 
ACCORDINGLY, premises considered, the charge of unfair labor practice
is hereby Dismissed for want of basis.
 
SO ORDERED.97[5]
 
 

On appeal, the National Labor Relations Commission (NLRC) affirmed the

Arbiters ruling. In gist, it upheld the UNIONs right to agency fee, but did not
consider DEL PILARs failure to deduct the same an unfair labor practice.98[6]

The UNIONs motion for reconsideration having been denied, 99[7] it then
went to the CA via certiorari. On July 19, 2005, the CA rendered the assailed
decision, affirming with modification the resolutions of the NLRC. Like the
Arbiter and the NLRC, the CA upheld the UNIONs right to collect agency fees
from non-union employees, but did not adjudge DEL PILAR liable for unfair labor

97

98
99
practice. However, it ordered DEL PILAR to deduct agency fees from the salaries
of non-union employees.

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the petition is PARTIALLY

GRANTED. The assailed resolution of the NLRC dated April 30, 2004 is hereby
MODIFIED. Private respondent Del Pilar Academy is ordered to deduct the
agency fees from non-union members who are recipients of the collective
bargaining agreement benefits. The
 agency fees shall be equivalent to the dues and other fees paid by the union
members.
 
SO ORDERED.100[8]
 
 

DEL PILAR filed a motion for reconsideration of the decision, but the CA denied
the same on September 28, 2005.101[9]

Before us, DEL PILAR impugns the CA Decision on the following grounds:

I.                    IN PROMULGATING THE CHALLENGED DECISION AND

RESOLUTION, THE HON. COURT OF APPEALS DISREGARDED
THE FACT THAT THE ANNUAL INCREASE IN THE SALARIES OF
THE EMPLOYEES WAS NOT A BENEFIT ARISING FROM A
COLLECTIVE BARGAINING AGREEMENT, BUT WAS
MANDATED BY THE DIRECTIVE OF A GOVERNMENTAL
DEPARTMENT; and
 
II.                 CONSIDERING THE ANNUAL SALARY INCREASE OF NON-
UNION MEMBERS WAS NOT A BENEFIT ARISING FROM THE
CBA, THEIR INDIVIDUAL WRITTEN AUTHORIZATIONS ARE
STILL REQUIRED TO ALLOW PETITIONER ACADEMY TO
LEGALLY DEDUCT THE SAME FROM THEIR RESPECTIVE
SALARY.102[10]

The issue here boils down to whether or not the UNION is entitled to collect
agency fees from non-union members, and if so, whether an individual written
authorization is necessary for a valid check off.
100

101
102
 

The collection of agency fees in an amount equivalent to union dues and

fees, from employees who are not union members, is recognized by Article 248(e)
of the Labor Code, thus:

Employees of an appropriate collective bargaining unit who are not members of

the recognized collective bargaining agent may be assessed reasonable fees
equivalent to the dues and other fees paid by the recognized collective bargaining
agent, if such non-union members accept the benefits under the collective
bargaining agreement. Provided, That the individual authorization required under
Article 241, paragraph (o) of this Code shall not apply to the non-members of
recognized collective bargaining agent.

When so stipulated in a collective bargaining agreement or authorized in

writing by the employees concerned, the Labor Code and its Implementing Rules
recognize it to be the duty of the employer to deduct the sum equivalent to the
amount of union dues, as agency fees, from the employees' wages for direct
remittance to the union. The system is referred to as check off. 103[11] No
requirement of written authorization from the non-union employees is necessary if
the non-union employees accept the benefits resulting from the CBA.104[12]

DEL PILAR admitted its failure to deduct the agency fees from the salaries
of non-union employees, but justifies the non-deduction by the absence of
individual written authorization. It posits that Article 248(e) is inapplicable

103

104
considering that its employees derived no benefits from the CBA. The annual
salary increase of its employee is a benefit mandated by law, and not derived from
the CBA. According to DEL PILAR, the Department of Education, Culture and
Sports (DECS) required all educational institutions to allocate at least 70% of
tuition fee increases for the salaries and other benefits of teaching and non-
teaching personnel; that even prior to the execution of the CBA in September
1994, DEL PILAR was already granting annual salary increases to its employees.
Besides, the non-union employees objected to the deduction; hence, a written
authorization is indispensable to effect a valid check off. DEL PILAR urges this
Court to reverse the CA ruling insofar as it ordered the deduction of agency fees
from the salaries of non-union employees, arguing that such conclusion proceeds
from a misplaced premise that the salary increase arose from the CBA.

The argument cannot be sustained.

Contrary to what DEL PILAR wants to portray, the grant of annual salary
increase is not the only provision in the CBA that benefited the non-union
employees. The UNION negotiated for other benefits, namely, limitations on
teaching assignments to 23 hours per week, additional compensation for overload
units or teaching assignments in excess of the 23 hour per week limit, and payment
of longevity pay. It also negotiated for entitlement to summer vacation leave with
pay for two (2) months for teaching staff who have rendered six (6) consecutive
semesters of service. For the non-teaching personnel, the UNION worked for their
entitlement to fifteen (15) days leave with pay. 105[13] These provisions in the CBA
105
surely benefited the non-union employees, justifying the collection of, and the
UNIONs entitlement to, agency fees.

Accordingly, no requirement of written authorization from the non-union

employees is needed to effect a valid check off. Article 248(e) makes it explicit
that Article 241, paragraph (o),106[14] requiring written authorization is
inapplicable to non-union members, especially in this case where the non-union
employees receive several benefits under the CBA.

As explained by this Court in Holy Cross of Davao College, Inc. v. Hon.

Joaquin107[15] viz.:

The employee's acceptance of benefits resulting from a collective bargaining

agreement justifies the deduction of agency fees from his pay and the union's
entitlement thereto. In this aspect, the legal basis of the union's right to agency
fees is neither contractual nor statutory, but quasi-contractual, deriving from the
established principle that non-union employees may not unjustly enrich
themselves by benefiting from employment conditions negotiated by the
bargaining union.
 
 

By this jurisprudential yardstick, this Court finds that the CA did not err in
upholding the UNIONs right to collect agency fees.

WHEREFORE, the petition is DENIED. The Decision and Resolution of

the Court of Appeals in CA-G.R. SP No. 86868, are AFFIRMED.

106
107
SO ORDERED.

 
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-17739      December 24, 1964

ITOGON-SUYOC MINES, INC., petitioner,

vs.
JOSE BALDO, SANGILO-ITOGON WORKERS UNION and COURT OF INDUSTRIAL
RELATIONS, respondents.

Reyes & Cabato for petitioner.

Benjamin C. Rillera for respondents Jose Baldo and Sangilo-Itogon Workers Union.
Vidal C. Magbanua for respondent Court of Industrial Relations.

ZALDIVAR, J.:

This is a petition for certiorari to review the decision of the Court of Industrial Relations in Case
No. 50-ULP-PANG. finding the petitioner guilty of unfair labor practices and ordering it to
reinstate respondent Jose Baldo to his former work with back wages.

In a complaint dated November 18, 1958, an Acting Prosecutor of the Court of Industrial
Relations charged the herein petitioner-employer, Itogon-Suyoc Mines, Inc., and Claude Fertig
its General Superintendent, with having committed unfair labor practices within the meaning of
Section 4(a), paragraphs 1, 4 and 5 of Republic Act No. 875. The complaint substantially alleged
that A. Manaois and Jose Baldo, employees of herein petitioner, were dismissed by said
petitioner on June 9, 1957 and March 5, 1958, respectively, because of their membership with
the herein respondent Sangilo-Itogon Workers Union and for having testified against the
petitioner in a certification election case involving the employees of the petitioner (Case No. 3-
MC-PANG). The complaint prayed that an order be issued against the herein petitioner to cease
and desist from the labor practices complained of and that the complaining employees, A.
Manaois and Jose Baldo be reinstated to their former positions in the mining company without
loss of employee benefits and with back wages from the date of their respective dismissal until
the date of their actual reinstatement.

The petitioner herein (respondent below), in its answer to the complaint, admitted the fact of the
dismissal of the two complaining employees, but alleged that the complaining employees were
dismissed for just and lawful causes, namely, "inefficiency, utter disregard and violation of
safety rules and regulations established and enforced by the respondent for the protection of the
lives of the employees and properties of the respondent company, utter disregard of the company
property and poor attendance records."
After hearing, the Court of Industrial Relations, on October 5, 1960, rendered a decision, finding
that the charge of unfair labor practice as far as it concerned the complaining employee A.
Manaois was not proved and that the dismissal of said employee was just and legal; but as far as
the other complaining employee Jose Baldo was concerned, the charge of unfair labor practice
was proved and that the dismissal of said employee was unjust and illegal. The Court of
Industrial Relations, therefore, ordered the reinstatement of Jose Baldo to his former work with
back wages from April 7, 1958, when he was promised re-instatement, up to the day of his actual
re-employment.

The petitioner filed a motion for reconsideration of the decision with the Court of Industrial
Relations en banc, but said Court, on October 27, 1960, denied the petition for reconsideration.
The petitioner has appealed from the decision, and from the order denying the motion for
reconsideration, of the Court of Industrial Relations affecting only the case of Jose Baldo. No
appeal has been filed regarding the case of A. Manaois.

We have examined the records carefully, and we find that the decision of the Court of Industrial
Relations is supported by substantial evidence. We are quoting hereunder pertinent portions of
the decision of the lower court which embody its factual findings:

From the evidence of record, the following facts are clear. Baldo started working as
miner in the respondent company sometime in 1954. He worked continuously therein
until February 4, 1958 when he was given a "30-day notice of termination of
employment" to the effect that his services will not be needed by the respondent company
after March 5, 1958 (Exh. "4"). Baldo refused to acknowledge receipt of said notice when
Mowry, mine's superintendent of the company, asked him to sign the same. It appears
that Baldo was on 15 days vacation leave with pay immediately prior to his being served
his separation notice (Exh. "C").

The complainant's evidence tended to prove that Baldo was dismissed by the company
because of his membership in the complainant Sangilo-Itogon Workers Union, a
legitimate labor organization; and, for having testified for the said union in Case No. 3-
MC-PANG a certification proceeding involving the employees of the respondent
company. Baldo failed to obtain a reinstatement therein.

xxx      xxx      xxx

It is undeniable that Baldo's testimony in Case No. 3-MC-PANG of this Court on April 7,
1958, was favorable to the complainant Sangilo-Itogon Workers' Union of which he was
a member and in some way adverse to the interests of the company. The testimonies of
complainant's witnesses are clear that during the hearing of the certification case in
Itogon, Gelladoga, plant engineer and former labor relations officer of the respondent
company, asked Baldo not to testify therein are the promise that he will be reinstated.
Admittedly, the case of Baldo's separation from the respondent company which was
pending consideration at that time with the grievance committee of the union and
management was immediately "dropped" after Baldo testified in the certification case
"because he (Baldo) brought his case to a rival union of the Itogon Labor Union." It
 becomes obvious that Baldo's case was not considered further by the grievance
committee because of his testimony against the company in the certification proceeding.
An examination of the alleged offense imputed on Baldo previous to his dismissal and
which are relied upon by the respondent company (Exhibits "1", "2" and "3") shows that
they were not so serious as to warrant his immediate and permanent dismissal. Under the
circumstances it is safe to conclude that Gelladoga who is a Supervisor within the
meaning of the Act, really promised to reinstate Baldo to his former work in the company
should he desist from testifying in that certification case mentioned above.

Considering everything, we are convinced that because of Baldo's refusal to accede to the
demand of his employer not to testify in the certification proceeding mentioned above,
his Case was "dropped" by the grievance committee of the union and management, and
consequently, he failed to be reinstated in the company.

The petitioner, in this appeal, maintains that it was the Itogon Labor Union that dropped the case
of Baldo regarding the 30-day notice of separation because Baldo brought his case to a rival
union of the Itogon Labor Union, so that the petitioner should not be charged with unfair labor
practice. This contention of the petitioner has no merit.

The evidence shows that Baldo had joined the Sangilo-Itogon Workers Union, the rival union of
the Itogon Labor Union that had a collective bargaining contract with the petitioner, and that
Baldo's membership in the Sangilo-Itogon Workers Union was known to the management of the
herein petitioner; that at the time that Baldo was given the 30-day notice of separation from the
service there was pending before the Court of Industrial Relations a certification election case
which involved the employees of the petitioner, and the certification case was precisely brought
about upon petition by the Sangilo-Itogon Workers Union; that when Baldo was given said
notice of separation from the service he brought his case to the grievance committee of the
Itogon Labor Union and the management of the petitioner — said committee being composed of
representatives of the Itogon Labor Union and the management of the petitioner — with a view
to securing his reinstatement; that the grievance committee withheld action on the case of Baldo;
that the case of Baldo was pending before the grievance committee when he was asked by
Mansueto Gelladoga plant engineer and former labor relations officer of the petitioner (he was
also former Vice-President of the Itogon Labor Union), not to testify in the hearing of the
certification election case so that be would be reinstated to his job; that in spite of Gelladoga's
request Baldo testified at the healing of the certification election case on April 7,1958, and
Baldo's testimony was adverse to the petitioner; and that after Baldo had thus testified his case
was dropped by the grievance committee, and he was never reinstated. Considering that Baldo's
case was pending before the grievance committee when he was asked by Gelladoga not to testify,
and soon after he had testified adversely to the petitioner his case was dropped by the grievance
committee, the conclusion is inescapable that the management of the petitioner herein had much
to do with the dropping of Baldo's case, and because of the dropping of that case the petitioner
never reinstated Baldo to his work. This conclusion is bolstered further by the fact that the
petitioner herein had opposed the petition for certification election. The lower court found that
Baldo had not committed any serious offense as would warrant his immediate and permanent
dismissal. On the other hand, the evidence shows that when Baldo was given that notice of
separation from the service he had already joined the Sangilo-Itogon Workers Union. There is
evidence too that Claude Fertig, the General Superintendent of the petitioner, was at that time
acting as adviser of the Itogon Labor Union, the rival Union of the Sangilo-Itogon Workers
Union.

We agree with the finding of the Court of Industrial Relations that the petitioner had committed
unfair labor practices as contemplated in sub-paragraphs 1, 4 and 5 of sub-section (a) of Section
4 of Republic Act No. 875 (Henares & Sons vs. National Labor Union, G. R. No. L-17535,
December 28, 1961; National Fastener Corporation of the Philippines vs. Court of Industrial
Relations, etc. G.R. No. L-15834, January 20, 1961).

The petitioner, in this appeal, also contends that the Court of Industrial Relations had gravely
abused its discretion when it ordered the reinstatement of Jose Baldo with back wages. The
petitioner points out that it should not be made to pay back wages during the time that this case
had been pending. This contention is also without merit. When an employer commits unfair labor
practices he should be made to shoulder all the consequences of his unfair acts. The matter of
granting back wages or backpay to an employee that is reinstated is discretionary with the Court
of Industrial Relations (Section 5 [c], Republic Act No. 875). This question had already been
settled in a line of decisions rendered by this Court (United Employees Welfare Ass'n. vs. Isaac
Peral Bowling Alleys, G. R. No. 10327, Sept. 30, 1958; Union of Philippine Education Co.
Employees vs. Philippine Education Co., 91 Phil. 93, 95). We are satisfied that under the
circumstances as shown by the records of the present case the Court of Industrial Relations had
not abused the exercise of its discretion when it ordered the grant of back wages to respondent
Baldo from the date he was promised reinstatement to the day of his actual reinstatement.

WHEREFORE, the decision appealed from is affirmed, with costs against the petitioner.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, and Bengzon,
J.P., JJ., concur.

Bautista Angelo and Paredes, JJ., took no part.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-28607 May 31, 1971

SHELL OIL WORKERS' UNION, petitioner,

vs.
SHELL COMPANY OF THE PHILIPPINES, LTD., and THE COURT OF
INDUSTRIAL RELATIONS, respondents.

J.C. Espinas, B. C. Pineda, J. J. de la Rosa & Associates for petitioner.

Siguion Reyna, Montecillo, Belo & Ongsiako for respondent Company.

FERNANDO, J.:

The insistence on the part of respondent Shell Company of the Philippines

to dissolve its security guard section, stationed at its Pandacan Installation
notwithstanding its being embraced in, and its continuance as such thus
assured by an existing collective bargaining contract, resulted in a strike
called by petitioner Shell Oil Workers' Union, hereinafter to be designated
as the Union, certified a month later on June 27, 1967 by the President to
respondent Court of Industrial Relations. Against its decision declaring the
strike illegal primarily on the ground that such dissolution was a valid
exercise of a management prerogative, this appeal is taken. With due
Recognition that the system of industrial democracy fostered in the regime
of unionization and collective bargaining leaves room for the free exercise
of management rights, but unable to close our eyes to the violation of a
contract still in force implicit in such dissolution thus giving rise to an unfair
labor practice, we cannot sustain respondent Court of Industrial Relations.
Consequently, the harsh and unwarranted sanction imposed, the dismissal
of the security guards and the officers of the Union, cannot stand. Insofar,
however, as individual liability is deemed incurred for serious acts of
violence, whether committed by a leader or member of the Union, we leave
things as adjudged.

The deep-rooted differences between the parties that led to the subsequent
strike were made clear in the presidential certification. As set forth in the
opening paragraph of the decision now on appeal: "Before this Court for
resolution is the labor dispute between the petitioner Shell Oil Workers'
Union, Union for brevity, and the respondent Shell Company of the
Philippines Limited, Company for short, which was certified to this Court on
June 27, 1967 by the Office of the President of the Republic of the
Philippines pursuant to the provision of Section 10 of Republic Act No. 875.
Said dispute ... 'was a result of the transfer by the Company of the eighteen
(18) security guards to its other department and the consequent hiring of a
private security agency to undertake the work of said security guards.'" 1

The respective contentions of the parties were then taken up. Petitioner
"filed the petition on July 7, 1967 alleging, among others, that the eighteen
(18) security guards affected are part of the bargaining unit and covered by
the existing collective bargaining contract, and as such, their transfers and
eventual dismissals are illegal being done in violation of the existing
contract. It, therefore, prayed that said security guards be reinstated with
full back wages from the time of their dismissal up to the time of their actual
reinstatement." 2 Then came a summary of the stand Of Shell Company:
"For hours hereafter, respondent Company filed its Answer [to] the material
allegations in the Union's petition and adverted that the issues in this case
are: (1) whether or not the Company commits unfair labor practice in
contracting out its security service to an independent professional security
agency and assigning the 18 guards to other sections of the Company; (2)
whether or not the dismissal of the 18 security guards are justified; and (3)
whether or not (the strike called by the Union on May 25, 1967 is legal. As
special and affirmative defenses, the Company maintained that in
contracting out the security service and redeploying the 18 security guards
affected, it was merely performing its legitimate prerogative to adopt the
most efficient and economical method of operation; that said guards were
transferred to other sections with increase, except for four (4) guards, in
rates of pay and with transfer bonus; the said action was motivated by
business consideration in line with past established practice and made after
notice to and discussion with the Union; that the 18 guards concerned were
dismiss for wilfully refusing to obey the transfer order; and that the strike
staged by the Union on May 25, 1967 is illegal. Primarily, Company prayed,
among others, for the dismissal of the Union's petition and the said Union's
strike be declared illegal followed by the termination of the employee status
of those responsible and who participated in said illegal strike." 3

The move for the dissolution of the security section by reassigning the
guards to other positions and contracting out such service to an outside
security agency had its origins as far back as 1964. A study made by the
Shell Company for the purpose of improving the productivity, organization
and efficiency of its Pandacan Installation recommended its dissolution. If
an outside agency to perform such service were to be hired, there would be
a savings of P96,000.00 annually in addition to further economy
consequent on the elimination to overtime an administration expenses. Its
implementation was scheduled for 1965. 4 There was then, in July 1966, a
joint consultation by the Union and management on the matter. At that
stage, it would appear that there was no serious opposition to such a move
provided it be done gradually and in close consultation with the Union.
There was even an offer if cooperation as long as a scheme for retirement
of the security guards affected or their redeployment would be followed. 5

The tentative character of such proposed dissolution was made evident by

the fact however that on August 26, 1966, a collective bargaining contract
was executed between the Union and the Shell Company effective from the
first of the month of that year to December 31, 1969. It contained the usual
grievance procedure and no strike clauses. 6 More relevant to the case
before this Court, however, was the inclusion of the category of the security
guards in such collective bargaining contract. This was stressed in the brief
for the petitioner where specific mention is made of the agreement covering
rank and file personnel regularly employed by the Company, included in
which is the work area covered by the Pandacan Installation. 7 There was
likewise specific reference to such positions in the wage schedule for
hourly-rated categories appearing in an appendix thereof. 8 Mention was
expressly made in another appendix of the regular remuneration as well as
premium pay and night compensation. 9 Nonetheless, Shell Company was
bent on doing away with the security guard section, to be replaced by an
outside security agency. That was communicated to the Union in a panel to
panel meeting on May 3, 1967. A counter-offer on the part of the Union to
reduce the working days per week of the guards from six to five was
rejected by Shell Company on the ground of its being unusual and
impracticable. Two days later, there was a meeting of the Union where a
majority of the members made clear that should there be such a
replacement of the company guards by a private security agency, there
would be a strike. It was noted in the decision that when the strike vote was
taken, of 243 members, 226 were for the approval of a motion to that effect.
10
On the afternoon of May 24, 1967, a notice of reassignment effective at
8:00 o'clock the next morning was handed to the guards affected. At 10:00
o'clock that evening, there was a meeting by the Union attended by ten
officers and a majority of the members wherein it was agreed viva voce that
if there would be an implementation of the circular dissolving the security
section to be replaced by guards from an outside agency, the Union would
go on strike immediately. 11 The strike was declared at half-past 7:00
o'clock in the morning of May 25, 1967 when security guards from an
outside agency were trying to pass the main gate of the Shell Company to
their work. With the picket line established, they were unable to enter.
Efforts were made by the Conciliation Service of the Department of Labor
to settle the matter, but they were unsuccessful. 12 It was not until June 27,
1967, however, that the Presidential certification came. 13 There was a
return to work order on July 6, 1967 by respondent Court, by virtue of which
pending the resolution of the case, the Shell Company was not to lockout
the employees involved and the employees in turn were not to strike.

The decision of respondent Court was rendered on August 5, 1967. It

declared that no unfair labor practice was committed by Shell Company in
dissolving its security guards from an outside agency, as such a step was
well within management prerogative. Hence for it, the strike was illegal,
there being no compliance with the statutory requisites before an economic
strike could be staged. Respondent Court sought to reinforce such a
conclusion by a finding that its purpose was not justifiable and that it was
moreover carried out with violence. There was thus a failure on its part to
accord due weight to the terms of an existing collective bargaining
agreement. Accordingly as was made clear in the opening paragraph of
this opinion we view matters differently. The strike cannot be declared
illegal, there being a violation of the collective bargaining agreement by
Shell Company. Even if it were otherwise, however, this Court cannot lend
sanction of its approval to the outright dismissal of all union officers, a
move that certainly would have the effect of considerably weakening a
labor organization, and thus in effect frustrate the policy of the Industrial
Peace Act to encourage unionization. To the extent, however, that the
serious acts of violence occurring in the course of the strike could be made
the basis for holding responsible a leader or a member of the Union guilty
of their commission, what was decided by respondent Court should not be
disturbed.

1. It is the contention of Shell Company, sustained by respondent Court,

that the dissolution of the security guard section to be replaced by an
outside agency is a management prerogative. The Union argues otherwise,
relying on the assurance of the continued existence of a security guard
section at least during the lifetime of the collective bargaining agreement.
The second, third and fourth assignment of errors, while they could have
been more felicitously worded, did attack the conclusion reached by
respondent Court as contrary to and in violation of the existing contract. It is
to be admitted that the stand of Shell Company as to the scope of
management prerogative is not devoid of plausibility if it were not bound by
what was stipulated. The growth of industrial democracy fostered by the
institution of collective bargaining with the workers entitled to be
represented by a union of their choice, has no doubt contracted the sphere
of what appertains solely to the employer. It would be going too far to
assert, however, that a decision on each and every aspect of the
productive process must be reached jointly by an agreement between labor
and management. Essentially, the freedom to manage the business
remains with management. It still has plenty of elbow room for making its
wishes prevail. In much the same way that labor unions may be expected
to resist to the utmost what they consider to be an unwelcome intrusion into
their exclusive domain, they cannot justly object to management equally
being jealous of its prerogatives.

More specifically, it cannot be denied the faculty of promoting efficiency

and attaining economy by a study of what units are essential for its
operation. To it belongs the ultimate determination of whether services
should be performed by its personnel or contracted to outside agencies. it
is the opinion of the Court, that while management has the final say on
such matter, the labor union is not to be completely left out. What was done
by Shell Company in informing the Union as to the step it was intending to
take on the proposed dissolution of the security guard section to be
replaced by an outside agency is praise-worthy. There should be mutual
consultation eventually deference is to be paid to what management
decides. Thereby, in the words of Chief Justice Warren, there is likely to be
achieved "peaceful accommodation of conflicting interest." 14 In this
particular case though, what was stipulated in an existing collective
bargaining contract certainly precluded Shell Company from carrying out
what otherwise would have been within its prerogative if to do so would be
violative thereof.

2. The crucial question thus is whether the then existing collective

bargaining contract running for three years from August 1, 1966 to
December 31, 1969 constituted a bar to such a decision reached by
management? The answer must be in the affirmative. As correctly stressed
in the brief for the petitioner, there was specific coverage concerning the
security guard section in the collective bargaining contract. It is found not
only in the body thereof but in the two appendices concerning the wage
schedules as well as the premium pay and the night compensation to which
the personnel in such section were entitled. 15 It was thus an assurance of
security of tenure, at least, during the lifetime of the agreement. Nor is it a
sufficient answer, as set forth in the decision of respondent Court, that
while such a section would be abolished, the guards would not be
unemployed as they would be transferred to another position with an
increase in pay and with a transfer bonus. For what is involved is the
integrity of the agreement reached, the terms of which should be binding of
both parties. One of them may be released, but only with the consent of the
other. The right to object belongs to the latter, and if exercised, must be
respected. Such a state of affairs should continue during the existence of
the contract. Only thus may there be compliance with and fulfillment of the
covenants in a valid subsisting agreement.

What renders the stand of Shell Company even more vulnerable is the fact
that as set forth in its brief and as found by respondent Court as far back as
1964, it had already been studying the matter of dissolving the security
guard section and contracting out such service to an outside agency.
Apparently, it had reached a decision to that effect for implementation the
next year. In July 1966, there was a joint consultation between it and the
Union on the matter. Nonetheless on August 26, 1966, a collective
bargaining contract was entered into which, as indicated above, did assure
the continued existence of the security guard section. The Shell Company
did not have to agree to such a stipulation. Or it could have reserved the
right to effect a dissolution and reassign the guards. It did not do so.
Instead, when it decided to take such a step resulting in the strike, it would
rely primarily on provisions in the collective bargaining contract couched in
general terms, merely declaratory of certain management prerogatives.
Considering the circumstances of record, there can be no justification then
for Shell Company's insistence on pushing through its project of such
dissolution without thereby incurring a violation of the collective bargaining
agreement.

3. The Shell Company, in failing to manifest fealty to what was stipulated in

an existing collective bargaining contract, was thus guilty of an unfair labor
practice. Such a doctrine first found expression in Republic Savings Bank
v. Court of Industrial Relations, 16 the opinion of the Court being penned by
Justice Castro. There was a reiteration of such a view in Security Bank
Employees Union v. Security Bank and Trust Company. 17 Thus: "It being
expressly provided in the industrial Peace Act that [an] unfair labor practice
is committed by a labor union or its agent by its refusal 'to bargain
collectively with the employer' and this Court having decided in the
Republic Savings Bank case that collective bargaining does not end with
the execution of an agreement, being a continuous process, the duty to
bargain necessarily imposing on the parties the obligation to live up to the
terms of such a collective bargaining agreement if entered into, it is
undeniable that non-compliance therewith constitutes an unfair labor
practice." 18

4. Accordingly, the unfair labor practice strike called by the Union did have
the impress of validity. Rightly labor is justified in making use of such a
weapon in its arsenal to counteract what is clearly outlawed by the
Industrial Peace Act. That would be one way to assure that the objectives
of unionization and collective bargaining would not be thwarted. It could, of
course, file an unfair labor practice case before the Court of Industrial
Relations. It is not precluded, however, from relying on its own resources to
frustrate such an effort on the part of employer. So we have consistently
held — and for the soundest of reasons. 19

There is this categorial pronouncement from the present Chief Justice:

"Again, the legality of the strike follows as a corollary to the finding of fact,
made in the decision appealed from — which is supported by substantial
evidence — to the effect that the strike had triggered by the Company's
failure to abide by the terms and conditions of its collective bargaining
agreement with the Union, by the discrimination, resorted to by the
company, with regard to hire and tenure of employment, and the dismissal
of employees due to union activities, as well as the refusal of the company
to bargain collectively in good faith." 20 As a matter of fact, this Court has
gone even further. It is not even required that there be in fact an unfair
labor practice committed by the employer. It suffices, if such a belief in
good faith is entertained by labor, as the inducing factor for staging a strike.
So it was clearly stated by the present Chief Justice while still an Associate
Justice of this Court: "As a consequence, we hold that the strike in question
had been called to offset what petitioners were warranted in believing in
good faith to be unfair labor practices on the part of Management, that
petitioners were not bound, therefore, to wait for the expiration of thirty (30)
days from notice of strike before staging the same, that said strike was not,
accordingly, illegal and that the strikers had not thereby lost their status as
employees of respondents herein." 21

5. It would thus appear that the decision now on appeal did not reflect
sufficient awareness of authoritative pronouncements coming from this
Court. What is worse, certain portions thereof yield the impression that an
attitude decidedly unsympathetic to labors resort to strike is evident. Such
should not be the case. The right to self-organization so sedulously
guarded by the Industrial Peace Act explicitly includes the right "to engage
in concerted activities for the purpose of collective bargaining and to the
mutual aid or protection." 22 From and after June 17, 1953 then, there
cannot be the least doubt that a strike as form of concerted activity has the
stamp of legitimacy. As a matter of law, even under the regime of
compulsary arbitration under the Court of Industrial Relations Act, 23 a strike
was by no means a forbidden weapon. Such is the thought embodied in the
opinion of Justice Laurel in Rex Taxicab Company v. Court of Industrial
Relations. 24 Thus: "In other words, the employee, tenant or laborer is
inhibited from striking or walking out of his employment only when so
enjoined by the Court of Industrial Relations and after a dispute has been
submitted thereto and pending award or decision by the court of such
dispute. It follows that, as in the present case, the employees or laborers
may strike before being ordered not to do so and before an industrial
dispute is submitted to the Court of Industrial Relations, subject to the
power of the latter, after hearing when public interest so requires or when
the dispute cannot, in its opinion, be promptly decided or settled, to order
them to return, with the consequence that if the strikers fail to return to
work, when so ordered, the court may authorize the employer to accept
other employees or laborers." 25 Former Chief Justice Paras, in a case not
too long before enactment of the Industrial Peace Act, had occasion to
repeat such a view. Thus: "As a matter of fact, a strike may not be staged
only when, during the pendency of an industrial dispute, the Court of
industrial Relations has issued the proper injunction against the laborers
(section 19, Commonwealth Act No. 103, as amended). Capital need not,
however, be apprehensive about the recurrence of strikes in view of the
system of compulsory arbitration by the Court of Industrial Relations." 26

A strike then, in the apt phrase of Justice J.B.L. Reyes, is "an

institutionalized factor of democratic growth." 27 This is to foster industrial
democracy. Implicit in such a concept is the recognization that concerning
the ends which labor considers worth while, its wishes are ordinarily
entitled to respect. Necessarily so, the choice as to when such an objective
may be attained by striking likewise belongs to it. There is the rejection of
the concept that an outside authority, even if governmental, should make
the decisions for it as to ends which are desirable and how they may be
achieved. The assumption is that labor can be trusted to determine for itself
when the right to strike may be availed of in order to attain a successful
fruition in their disputes with management. It is true that there is a
requirement, in the Act that before the employees may do so, they must file
with the Conciliation Service of the Department of Labor a notice of their
intention to strike. 28 Such a requisite however, as has been repeatedly
declared by this Court, does not have to be complied with in case of unfair
labor practice strike, which certainly is entitled to greater judicial protection
if the Industrial Peace Act is to be rendered meaningful. What has been
said thus far would demonstrate the unwarranted deviation of the decision
now on appeal from what is indicated by the law and authoritative
decisions.

6. Respondent Court was likewise impelled to consider the strike illegal

because of the violence that attended it. What is clearly within the law is the
concerted activity of cessation of work in order that a union's economic
demands may be granted or that an employer cease and desist from an
unfair labor practice. That the law recognizes as a right. There is though a
disapproval of the utilization of force to attain such an objective. For implicit
in the very concept of a legal order is the maintenance of peaceful ways. A
strike otherwise valid, if violent in character may be placed beyond the
pale. Care is to be taken, however, especially where an unfair labor
practice is involved, to avoid stamping it with illegality just because it is
tainted by such acts. To avoid rendering illusory the recognition of the right
to strike, responsibility in such a case should be individual and not
collective. A different conclusion would be called for, of course, if the
existence of force while the strike lasts is pervasive and widespread,
consistently and deliberately resorted to as a matter of policy. It could be
reasonably concluded then that even if justified as to ends it becomes
illegal because of the means employed.

Respondent Court must have unduly impressed by the evidence submitted

by the Shell Company to the effect that the strike was marred by acts of
force, intimidation and violence on the evening of June 14 and twice in the
mornings of June 15 and 16, 1967 in Manila. Attention was likewise called
to the fact that even on the following day, with police officials stationed at
the strike-bound area, molotov bombs did explode and the streets were
obstructed with wooden planks containing protruding nails. Moreover, in the
branches of the Shell Company in Iloilo City as well as in Bacolod, on dates
unspecified, physical injuries appeared to have been inflicted on
management personnel. Respondent Court in the appealed decision did
penalize with loss of employment the ten individuals responsible for such
acts. Nor is it to be lost sight of that before the certification on June 27,
1967, one month had elapsed during which the Union was on strike. Except
on those few days specified then, the Shell Company could not allege that
the strike was conducted in a manner other than peaceful. Under the
circumstances, it would be going too far to consider that it thereby became
illegal. This is not by any means to condone the utilization of force by labor
to attain its objectives. It is only to show awareness that is labor conflicts,
the tension that fills the air as well as the feeling of frustration and
bitterness could break out in sporadic acts of violence. If there be in this
case a weighing of interests in the balance, the ban the law imposes on
unfair labor practices by management that could provoke a strike and its
requirement that it be conducted peaceably, it would be, to repeat,
unjustified, considering all the facts disclosed, to stamp the strike with
illegality. It is enough that individual liability be incurred by those guilty of
such acts of violence that call for loss of employee status.

Such an approach is reflected in our recent decisions. As was realistically

observed by the present Chief Justice, it is usually attended by "the
excitement, the heat and the passion of the direct participants in the labor
dispute, at the peak thereof ...." 29 Barely four months ago, in Insular Life
Assurance Co., Ltd. Employees Association v. Insular life Assurance Co.,
Ltd., 30 there is the recognition by this Court, speaking through Justice
Castro, of picketing as such being "inherently explosive." 31 It is thus clear
that not every form of violence suffices to affix the seal of illegality on a
strike or to cause the loss of employment by the guilty party.
7. In the light of the foregoing, there being a valid unfair labor practice
strike, the loss of employment decreed by respondent Court on all the
Union officers cannot stand. The premise on which such penalty was
decreed was the illegality of the strike. We rule differently. Hence, its
imposition is unwarranted. It is to be made clear, however, that because of
the commission of specific serious acts of violence, the Union's President,
Gregorio Bacsa, as well as its Assistant Auditor, Conrado Peña, did incur
such a
penalty. 32

On this point, it may be observed further that even if there was a mistake in
good faith by the Union that an unfair labor practice was committed by the
Shell Company when such was not the case, still the wholesale termination
of employee status of all the officers of the Union, decreed by respondent
Court, hardly commends itself for approval. Such a drastic blow to a labor
organization, leaving it leaderless, has serious repercussions. The
immediate effect is to weaken the Union. New leaders may of course
emerge. It would not be unlikely, under the circumstances, that they would
be less than vigorous in the prosecution of labor's claims. They may be
prove to fall victims to counsels of timidity and apprehension. At the
forefront of their consciousness must be an awareness that a mistaken
move could well mean their discharge from employment. That would be to
render the right to self-organization illusory. The plain and unqualified
constitutional command of protection to labor should not be lost sight of. 33
The State is thus under obligation to lend its aid and its succor to the efforts
of its labor elements to improve their economic condition. It is now
generally accepted that unionization is a means to such an end. It should
be encouraged. Thereby, labor's strength, what there is of it, becomes
solidified. It can bargain as a collectivity. Management then will not always
have the upper hand nor be in a position to ignore its just demands. That,
at any rate, is the policy behind the Industrial Peace Act. The judiciary and
administrative agencies in consrtruing it must ever be conscious of its
implications. Only thus may there be fidelity to what is ordained by the
fundamental law. For if it were otherwise, instead of protection, there would
be neglect or disregard. That is ito negate the fundamental principle that
the Constitution is the supreme law.

WHEREFORE, the decision of respondent Court of Industrial Relations of

August 5, 1967 is reversed, the finding of illegality of the strike declared by
the Shell Oil Workers' Union on May 25, 1967 not being in accordance with
law. Accordingly, the dismissal by the Shell Company on May 27, 1967 of
the eighteen security guards, 34 with the exception of Ernesto Crisostomo,
who was found guilty of committing a serious act of violence is set aside
and they are declared reinstated. The continuance of their status such is,
however, dependent on whether or not a security guard section is provided
for in the collective bargaining contract entered into after the expiration of
the contract that expired on December 31, 1969. The loss of employee
status of the officers of the Union, 35 decreed by respondent Court in its
decision, is likewise set aside, except as to Gregorio Bacsa and Conrado
Pena, both of whom did commit serious acts of violence. The termination of
the employment status of Nestor Samson, Jose Rey, Romeo Rosales,
Antonio Labrador and Sesinando Romero, who committed acts of violence
not serious in character, is also set aside, but while allowed to be
reinstated, they are not entitled to back pay. Ricardo Pagsibigan and Daniel
Barraquel, along with the aforesaid Gregorio Baesa, Conrado Peña and
Ernesto Crisostomo, were legally penalized with dismissal because of the
serious acts of violence committed by them in the course of the strike. The
rest of the employees laid off should be reinstated with back pay to be
counted from the date they were separated by virtue of the appealed
decision, from which should be deducted whatever earnings may have
been received by such employees during such period. The case is hereby
remanded to respondent Court for the implementation of this decision. In
ascertaining the back wages to which the security guards are entitled, it
must likewise be ascertained whether or not the security guard section is
continued after December 31, 1969. Without costs.

Concepcion, C.J., Zaldivar, Teehankee, Villamor and Makasiar, JJ.,

concur.

Castro, J., took no part.

Separate Opinions

 
BARREDO, J., concurring:

To be sure, a dissent from the opinion ably written by Our learned

colleague, Justice Fernando, may not be entirely without some degree of
plausibility. To begin with, the basic conclusion of fact of the Court of
Industrial Relations in the appealed decision, which by law and the
previously unbroken line of decisions of this Court on the point, We cannot
lightly set aside, seem to be logical and supported by evidence not
seriously disputed. Withal, when it is considered that there is nothing in the
record to show that in acting as it did in this case, respondent Shell
Company, Ltd. was not, actuated by any anti-union, much less anti-labor
motive but by purely economic reasons of sound management, and, in fact,
petitioner does not even suggest any such purpose, one must have to
hesitate and deliberate long and hard before giving assent to a
pronouncement that this respondent is guilty of unfair labor practice, such
as to legalize the strike declared by petitioner against it. I take it, however,
that in a larger sense this is a policy decision, and all things considered,
particularly the constitutional injunctions on social justice and protection to
labor, I prefer to err, since the juridical considerations and equities in this
case appear to my mind and conscience to be in equipoise, on the side of
labor, who, as I see it, acted in the same good faith that management did. I
must hasten to add though, that in thus referring to labor, I do not have in
mind the union leaders involved in this case to whom the Court of Industrial
Relations has attributed personal reasons for their attitude, but I am
thinking more of those security guards who felt uncertain about ultimate
consequences of their transfer ordered by respondent and naturally found
nothing to hold on was the protection of the collective bargaining
agreement which they had a right to assume insured the substantial
continuance of the terms and conditions of their employment contemplated
in said agreement at the time it was entered into.

Contrary to the conclusion of the distinguished writer of the main opinion, I

regret to say that the record amply supports the finding of the Industrial
Court that the transfer of the eighteen security guards concerned was not a
violation of the collective bargaining agreement between petitioner and said
respondent. The more I go over the considerations of the appealed
decision, the more I am convinced not only that the move was never tinged
by any anti- labor hue but also that respondent had from the very beginning
taken petitioner and its duly authorities representatives in its long study and
deliberation of the problem, which took years, and had, in fact, consulted
them on various aspects thereof. It is not denied that the maintenance of
security is not the only aspect of its multifarious departments it has decided
to contract out; petitioner did not object to the previous ones. Indeed, it is
safe, to conjecture that petitioner has always seen the point of respondent,
principally the economy it would achieve and the consequent benefits labor
might gain thereby. In this connection, I particularly note that there is
nothing in the record indicating that there is factual basis for petitioner's
claim that the security guards herein involved would surely suffer economic
loss as a result of their questioned transfer; respondent made it plain that
overtime and other benefits accruing to them as security guards would
likewise be given to them in their new positions. And in answer to
petitioner's almost rhetorical question, why were said guards being given
additional hourly pay and lump sum bonuses, if respondent did not feel,
that their rights were being violated, it is perhaps not unreasonable to
suppose that management simply felt that as the company was to save
money by contracting out its security maintenance, it was but proper that
the affected sector of labor' should share a part of its savings.

All these, however, do not mean, on the other hand, that petitioner's strike
should necessarily be held to be illegal. It is always a wholesome attitude in
cases of this nature to give but secondary importance to strict
technicalities, whether of substantive or remedial law, and to constantly
bear in mind the human values involved which are beyond pecuniary
estimation. As a general rule, labor's most potent and effective weapon is
the strike, and it is but natural that when things appear to be dimming on
the negotiation tables, labor should almost instinctively take a striking
posture. In other words, the determination of the legality or illegality of a
strike, particularly in this enlightened era of progressive thinking on labor-
management relations is something that cannot be achieved by mere
straight-jacketed legalistic argumentation and rationalization; the process is
broader and deeper than that, for to do justice in deciding such an issue, it
is imperative that utmost consideration should be given to the particular
circumstances of each case, with a view to having the most comprehensive
understanding of the motivations of the parties, in the light of human needs
on the part of labor, and in the perspective of the orderly and economical
conduct of business and industry, on the part of management. In this
particular case, for instance, I cannot agree that respondent has violated its
collective bargaining agreement with petitioner, but, on the other hand, I am
not ready to conclude that for this reason, the strike here in question was
consequently illegal. I hold that the two strike votes taken by the members
of the petitioning union were both premised on the sincere and honest
belief that there was a legal breach of the said agreement. That now I find,
as the Industrial Court did, that technically and in truth, there was no such
infringement did not of necessity stamp the said strike with the stigma of
illegality.

It may not be amiss to add at this juncture, to allay and disabuse possible
apprehension that the main opinion may conceivably produce in some
quarters, that I do not discern in it any prejudice on the part of Justice
Fernando, strictly pro-labor and anti-management. Precisely, I am giving
my concurrence to the judgment in this case because I am convinced that,
fundamentally he has also viewed the situation at hand in the light of the
above considerations, even if our respective approaches and articulation of
views have to differ, since I do not own all the perspectives whence he
gives support to his conclusions, because I personally do not find any
necessity to resort to other authorities, when I feel that plain reasoning,
predicated on commonly accepted principles and reliance on one's proper
sense of justice can suffice for the occasion.

I also concur in the sanctions ordered in the main opinion. The Court has
individualized the respective responsibilities of the strikers herein involved
because such exactly is what the justice of the situation demands. The
reinstatement of those relatively innocent cannot be but only fair and
equitable and the approval of the lay-off of those found to have acted
beyond the requirements of the circumstances is founded on sound policy.
In simple terms, I hold that the mere fact that a strike is not illegal, and I
want to emphasize here that there is, in my opinion, a large shade of
difference between a strike that is really justified and legal and one that is
merely held not to be illegal, cannot be an excuse for resort to violence.
Even picketing which is the sister remedy of strikes is not supposed to be
completely unrestrained and unrestricted, and unprovoked violence, threats
and duress of more or less grave nature employed by strikers against
person and property are twice removed from what can be judicially
tolerated.

Separate Opinions
BARREDO, J., concurring:

To be sure, a dissent from the opinion ably written by Our learned

colleague, Justice Fernando, may not be entirely without some degree of
plausibility. To begin with, the basic conclusion of fact of the Court of
Industrial Relations in the appealed decision, which by law and the
previously unbroken line of decisions of this Court on the point, We cannot
lightly set aside, seem to be logical and supported by evidence not
seriously disputed. Withal, when it is considered that there is nothing in the
record to show that in acting as it did in this case, respondent Shell
Company, Ltd. was not, actuated by any anti-union, much less anti-labor
motive but by purely economic reasons of sound management, and, in fact,
petitioner does not even suggest any such purpose, one must have to
hesitate and deliberate long and hard before giving assent to a
pronouncement that this respondent is guilty of unfair labor practice, such
as to legalize the strike declared by petitioner against it. I take it, however,
that in a larger sense this is a policy decision, and all things considered,
particularly the constitutional injunctions on social justice and protection to
labor, I prefer to err, since the juridical considerations and equities in this
case appear to my mind and conscience to be in equipoise, on the side of
labor, who, as I see it, acted in the same good faith that management did. I
must hasten to add though, that in thus referring to labor, I do not have in
mind the union leaders involved in this case to whom the Court of Industrial
Relations has attributed personal reasons for their attitude, but I am
thinking more of those security guards who felt uncertain about ultimate
consequences of their transfer ordered by respondent and naturally found
nothing to hold on was the protection of the collective bargaining
agreement which they had a right to assume insured the substantial
continuance of the terms and conditions of their employment contemplated
in said agreement at the time it was entered into.

Contrary to the conclusion of the distinguished writer of the main opinion, I

regret to say that the record amply supports the finding of the Industrial
Court that the transfer of the eighteen security guards concerned was not a
violation of the collective bargaining agreement between petitioner and said
respondent. The more I go over the considerations of the appealed
decision, the more I am convinced not only that the move was never tinged
by any anti- labor hue but also that respondent had from the very beginning
taken petitioner and its duly authorities representatives in its long study and
deliberation of the problem, which took years, and had, in fact, consulted
them on various aspects thereof. It is not denied that the maintenance of
security is not the only aspect of its multifarious departments it has decided
to contract out; petitioner did not object to the previous ones. Indeed, it is
safe, to conjecture that petitioner has always seen the point of respondent,
principally the economy it would achieve and the consequent benefits labor
might gain thereby. In this connection, I particularly note that there is
nothing in the record indicating that there is factual basis for petitioner's
claim that the security guards herein involved would surely suffer economic
loss as a result of their questioned transfer; respondent made it plain that
overtime and other benefits accruing to them as security guards would
likewise be given to them in their new positions. And in answer to
petitioner's almost rhetorical question, why were said guards being given
additional hourly pay and lump sum bonuses, if respondent did not feel,
that their rights were being violated, it is perhaps not unreasonable to
suppose that management simply felt that as the company was to save
money by contracting out its security maintenance, it was but proper that
the affected sector of labor' should share a part of its savings.

All these, however, do not mean, on the other hand, that petitioner's strike
should necessarily be held to be illegal. It is always a wholesome attitude in
cases of this nature to give but secondary importance to strict
technicalities, whether of substantive or remedial law, and to constantly
bear in mind the human values involved which are beyond pecuniary
estimation. As a general rule, labor's most potent and effective weapon is
the strike, and it is but natural that when things appear to be dimming on
the negotiation tables, labor should almost instinctively take a striking
posture. In other words, the determination of the legality or illegality of a
strike, particularly in this enlightened era of progressive thinking on labor-
management relations is something that cannot be achieved by mere
straight-jacketed legalistic argumentation and rationalization; the process is
broader and deeper than that, for to do justice in deciding such an issue, it
is imperative that utmost consideration should be given to the particular
circumstances of each case, with a view to having the most comprehensive
understanding of the motivations of the parties, in the light of human needs
on the part of labor, and in the perspective of the orderly and economical
conduct of business and industry, on the part of management. In this
particular case, for instance, I cannot agree that respondent has violated its
collective bargaining agreement with petitioner, but, on the other hand, I am
not ready to conclude that for this reason, the strike here in question was
consequently illegal. I hold that the two strike votes taken by the members
of the petitioning union were both premised on the sincere and honest
belief that there was a legal breach of the said agreement. That now I find,
as the Industrial Court did, that technically and in truth, there was no such
infringement did not of necessity stamp the said strike with the stigma of
illegality.

It may not be amiss to add at this juncture, to allay and disabuse possible
apprehension that the main opinion may conceivably produce in some
quarters, that I do not discern in it any prejudice on the part of Justice
Fernando, strictly pro-labor and anti-management. Precisely, I am giving
my concurrence to the judgment in this case because I am convinced that,
fundamentally he has also viewed the situation at hand in the light of the
above considerations, even if our respective approaches and articulation of
views have to differ, since I do not own all the perspectives whence he
gives support to his conclusions, because I personally do not find any
necessity to resort to other authorities, when I feel that plain reasoning,
predicated on commonly accepted principles and reliance on one's proper
sense of justice can suffice for the occasion.

I also concur in the sanctions ordered in the main opinion. The Court has
individualized the respective responsibilities of the strikers herein involved
because such exactly is what the justice of the situation demands. The
reinstatement of those relatively innocent cannot be but only fair and
equitable and the approval of the lay-off of those found to have acted
beyond the requirements of the circumstances is founded on sound policy.
In simple terms, I hold that the mere fact that a strike is not illegal, and I
want to emphasize here that there is, in my opinion, a large shade of
difference between a strike that is really justified and legal and one that is
merely held not to be illegal, cannot be an excuse for resort to violence.
Even picketing which is the sister remedy of strikes is not supposed to be
completely unrestrained and unrestricted, and unprovoked violence, threats
and duress of more or less grave nature employed by strikers against
person and property are twice removed from what can be judicially
tolerated.

Footnotes
 Republic of the Philippines
SUPREME COURT
Manila

SPECIAL THIRD DIVISION

G.R. Nos. 158930-31             March 3, 2008

UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES

UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner,
vs.
NESTLÉ PHILIPPINES, INCORPORATED, respondent.

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

G.R. Nos. 158944-45             March 3, 2008

NESTLÉ PHILIPPINES, INCORPORATED, petitioner,

vs.
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES
UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), respondent.

RESOLUTION

CHICO-NAZARIO, J.:

On 22 August 2006, this Court promulgated its Decision1 in the above-entitled cases, the
dispositive part of which reads –

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that
Nestlé be declared to have committed unfair labor practice in allegedly setting a
precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is
PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA
G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her
discretion in failing to confine her assumption of jurisdiction power over the ground rules
of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the
Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-
DFA-KMU and Nestlé is AFFIRMED. The parties are directed to resume negotiations
respecting the Retirement Plan and to take action consistent with the discussions
hereinabove set forth. No costs.

Subsequent thereto, Nestlé Philippines, Incorporated (Nestlé) filed a Motion for Clarification 2 on
20 September 2006; while Union of Filipro Employees – Drug, Food and Allied Industries
Union – Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September 2006, filed a Motion for
Partial Reconsideration3 of the foregoing Decision.
The material facts of the case, as determined by this Court in its Decision, may be summarized as
follows:

UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file employees of
Nestlé belonging to the latter’s Alabang and Cabuyao plants. On 4 April 2001, as the existing
collective bargaining agreement (CBA) between Nestlé and UFE-DFA-KMU4 was to end on 5
June 2001,5 the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed
Nestlé of their intent to "open [our] new Collective Bargaining Negotiation for the year 2001-
2004 x x x as early as June 2001."6 In response thereto, Nestlé informed them that it was also
preparing its own counter-proposal and proposed ground rules to govern the impending conduct
of the CBA negotiations.

On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only)7, Nestlé
reiterated its stance that "unilateral grants, one-time company grants, company-initiated policies
and programs, which include, but are not limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom."8

Dialogue between the company and the union thereafter ensued.

On 14 August 2001, however, Nestlé requested9 the National Conciliation and Mediation Board
(NCMB), Regional Office No. IV, Imus, Cavite, to conduct preventive mediation proceedings
between it and UFE-DFA-KMU owing to an alleged impasse in said dialogue; i.e., that despite
fifteen (15) meetings between them, the parties failed to reach any agreement on the proposed
CBA.

Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed a Notice of
Strike10 on 31 October 2001 with the NCMB, complaining, in essence, of a bargaining deadlock
pertaining to economic issues, i.e., "retirement (plan), panel composition, costs and attendance,
and CBA".11 On 07 November 2001, another Notice of Strike12 was filed by the union, this time
predicated on Nestlé’s alleged unfair labor practices, that is, bargaining in bad faith by setting
pre-conditions in the ground rules and/or refusing to include the issue of the Retirement Plan in
the CBA negotiations. The result of a strike vote conducted by the members of UFE-DFA-KMU
yielded an overwhelming approval of the decision to hold a strike.13

On 26 November 2001, prior to holding the strike, Nestlé filed with the DOLE a Petition for
Assumption of Jurisdiction,14 praying for the Secretary of the DOLE, Hon. Patricia A. Sto.
Tomas, to assume jurisdiction over the current labor dispute in order to effectively enjoin any
impending strike by the members of the UFE-DFA-KMU at the Nestlé’s Cabuyao Plant in
Laguna.

On 29 November 2001, Sec. Sto. Tomas issued an Order15 assuming jurisdiction over the subject
labor dispute. The fallo of said Order states that:
 CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the
labor dispute at the Nestlé Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of
the Labor Code, as amended.

Accordingly, any strike or lockout is hereby enjoined. The parties are directed to cease
and desist from committing any act that might lead to the further deterioration of the
current labor relations situation.

The parties are further directed to meet and convene for the discussion of the union
proposals and company counter-proposals before the National Conciliation and
Mediation Board (NCMB) who is hereby designated as the delegate/facilitator of this
Office for this purpose. The NCMB shall report to this Office the results of this attempt at
conciliation and delimitation of the issues within thirty (30) days from the parties’ receipt
of this Order, in no case later than December 31, 2001. If no settlement of all the issues is
reached, this Office shall thereafter define the outstanding issues and order the filing of
position papers for a ruling on the merits.

UFE-DFA-KMU sought reconsideration16 of the above but nonetheless moved for additional
time to file its position paper as directed by the Assumption of Jurisdiction Order.

On 14 January 2002, Sec. Sto. Tomas denied said motion for reconsideration.

On 15 January 2002, despite the order enjoining the conduct of any strike or lockout and
conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at Nestlé’s
Cabuyao Plant went on strike.

In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1) the
members of UFE-DFA-KMU to return-to-work within twenty-four (24) hours from receipt of
such Order; (2) Nestlé to accept back all returning workers under the same terms and conditions
existing preceding to the strike; (3) both parties to cease and desist from committing acts
inimical to the on-going conciliation proceedings leading to the further deterioration of the
situation; and (4) the submission of their respective position papers within ten (10) days from
receipt thereof. But notwithstanding the Return-to-Work Order, the members of UFE-DFA-
KMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the
Philippine National Police (PNP) for the enforcement of said order.

On 7 February 2002, Nestlé and UFE-DFA-KMU filed their respective position papers. Nestlé
addressed several issues concerning economic provisions of the CBA as well as the non-
inclusion of the issue of the Retirement Plan in the collective bargaining negotiations. On the
other hand, UFE-DFA-KMU limited itself to the issue of whether or not the retirement plan was
a mandatory subject in its CBA negotiations.

On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its stand
on the other issues raised by Nestlé but not covered by its initial position paper by way of a
Supplemental Position Paper.
UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings, one
of which was a Manifestation with Motion for Reconsideration of the Order dated February 11,
2002 assailing the Order of February 11, 2002 for supposedly being contrary to law,
jurisprudence and the evidence on record. The union posited that Sec. Sto. Tomas "could only
assume jurisdiction over the issues mentioned in the notice of strike subject of the current
dispute,"17 and that the Amended Notice of Strike it filed did not cite, as one of the grounds, the
CBA deadlock.

On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-KMU.

Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals,
alleging that Sec. Sto. Tomas committed grave abuse of discretion amounting to lack or excess
of jurisdiction when she issued the Orders of 11 February 2002 and 8 March 2002.

In the interim, in an attempt to finally resolve the crippling labor dispute between the parties,
then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with an Order19 dated 02
April 2002, ruling that:

a. we hereby recognize that the present Retirement Plan at the Nestlé Cabuyao Plant is a
unilateral grant that the parties have expressly so recognized subsequent to the Supreme
Court’s ruling in Nestlé, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is
therefore not a mandatory subject for bargaining;

b. the Union’s charge of unfair labor practice against the Company is hereby dismissed
for lack of merit;

c. the parties are directed to secure the best applicable terms of the recently concluded
CBSs between Nestlé Phils. Inc. and it eight (8) other bargaining units, and to adopt these
as the terms and conditions of the Nestlé Cabuyao Plant CBA;

d. all union demands that are not covered by the provisions of the CBAs of the other eight
(8) bargaining units in the Company are hereby denied;

e. all existing provisions of the expired Nestlé Cabuyao Plant CBA without any
counterpart in the CBAs of the other eight bargaining units in the Company are hereby
ordered maintained as part of the new Nestlé Cabuyao Plant CBA;

f. the parties shall execute their CBA within thirty (30) days from receipt of this Order,
furnishing this Office a copy of the signed Agreement;

g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years;
all other provisions shall be renegotiated not later than three (3) years after its effective
date which shall be December 5, 2001 (or on the first day six months after the expiration
on June 4, 2001 of the superceded CBA).
UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently denied
on 6 May 2002.

For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition for
Certiorari seeking to annul the Orders of 02 April 2002 and 06 May 2002 of the Secretary of the
DOLE, having been issued in grave abuse of discretion amounting to lack or excess of
jurisdiction.

On 27 February 2003, the appellate court promulgated its Decision on the twin petitions for
certiorari, ruling entirely in favor of UFE-DFA-KMU, the dispositive part thereof stating –

WHEREFORE, in view of the foregoing, there being grave abuse on the part of the
public respondent in issuing all the assailed Orders, both petitions are hereby
GRANTED. The assailed Orders dated February 11, 2001, and March 8, 2001 (CA-G.R.
SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP
No. 71540) of the Secretary of Labor and Employment in the case entitled: "IN RE:
LABOR DISPUTE AT NESTLE PHILIPPINES INC. (CABUYAO FACTORY)" under
OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-
01, NCMB-RBIV-LAG-NS-11-10-039—01) are hereby ANNULLED and SET ASIDE.
Private respondent is hereby directed to resume the CBA negotiations with the
petitioner.20

Both parties appealed the aforequoted ruling. Nestlé essentially assailed that part of the decision
finding the DOLE Secretary to have gravely abused her discretion amounting to lack or excess of
jurisdiction when she ruled that the Retirement Plan was not a valid issue to be tackled during
the CBA negotiations; UFE-DFA-KMU, in contrast, questioned the appellate court’s decision
finding Nestlé free and clear of any unfair labor practice.

Since the motions for reconsideration of both parties were denied by the Court of Appeals in a
joint Resolution dated 27 June 2003, UFE-DFA-KMU and Nestlé separately filed the instant
Petitions for Review on Certiorari under Rule 45 of the Rules of Court, as amended.

G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestlé seeking to reverse the Court of
Appeals Decision insofar as the appellate court’s failure to find Nestlé guilty of unfair labor
practice was concerned; while G.R. No. 158944-45 was instituted by Nestlé against UFE-DFA-
KMU likewise looking to annul and set aside the part of the Court of Appeals Decision declaring
that: 1) the Retirement Plan was a valid collective bargaining issue; and 2) the scope of the
power of the Secretary of the Department of Labor and Employment (DOLE) to assume
jurisdiction over the labor dispute between UFE-DFA-KMU and Nestlé was limited to the
resolution of questions and matters pertaining merely to the ground rules of the collective
bargaining negotiations to be conducted between the parties.

On 29 March 2004, this Court resolved21 to consolidate the two petitions inasmuch as they (1)
involved the same set of parties; (2) arose from the same set of circumstances, i.e., from several
Orders issued by then DOLE Secretary, Hon. Patricia A. Sto. Tomas, respecting her assumption
of jurisdiction over the labor dispute between Nestlé and UFE-DFA-KMU, Alabang and
Cabuyao Divisions;22 and (3) similarly assailed the same Decision and Resolution of the Court of
Appeals.

After giving due course to the instant consolidated petitions, this Court promulgated on 22
August 2006 its Decision, now subject of UFE-DFA-KMU’s Motion for Partial Reconsideration
and Nestlé’s Motion for Clarification.

In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court address and
discuss anew points or arguments that have basically been passed upon in this Court’s 22 August
2006 Decision. Firstly, it questions this Court’s finding that Nestlé was not guilty of unfair labor
practice, considering that the transaction speaks for itself, i.e, res ipsa loquitor. And made an
issue again is the question of whether or not the DOLE Secretary can take cognizance of matters
beyond the amended Notice of Strike.

As to Nestlé’s prayer for clarification, the corporation seeks elucidation respecting the
dispositive part of this Court’s Decision directing herein parties to resume negotiations on the
retirement compensation package of the concerned employees. It posits that "[i]n directing the
parties to negotiate the Retirement Plan, the Honorable Court x x x might have overlooked the
fact that here, the Secretary of Labor had already assumed jurisdiction over the entire 2001-2004
CBA controversy x x x."

As to the charge of unfair labor practice:

The motion does not put forward new arguments to substantiate the prayer for reconsideration of
this Court’s Decision except for the sole contention that the transaction speaks for itself, i.e., res
ipsa loquitor. Nonetheless, even a perusal of the arguments of UFE-DFA-KMU in its petition
and memorandum in consideration of the point heretofore raised will not convince us to change
our disposition of the question of unfair labor practice. UFE-DFA-KMU argues therein that
Nestlé’s "refusal to bargain on a very important CBA economic provision constitutes unfair labor
practice."23 It explains that Nestlé set as a precondition for the holding of collective bargaining
negotiations the non-inclusion of the issue of Retirement Plan. In its words, "respondent Nestlé
Phils., Inc. insisted that the Union should first agree that the retirement plan is not a bargaining
issue before respondent Nestlé would agree to discuss other issues in the CBA."24 It then
concluded that "the Court of Appeals committed a legal error in not ruling that respondent
company is guilty of unfair labor practice. It also committed a legal error in failing to award
damages to the petitioner for the ULP committed by the respondent."25

We are unconvinced still.

The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code, as
amended, which state –

ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively
means the performance of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours, of work and all other terms and conditions of employment including
 proposals for adjusting any grievances or questions arising under such agreement and
executing a contract incorporating such agreements if requested by either party but such
duty does not compel any party to agree to a proposal or to make any concession.

ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. – When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such agreement
during its lifetime. However, either party can serve a written notice to terminate or
modify the agreement at least sixty (60) days prior to its expiration date. It shall be the
duty of both parties to keep the status quo and to continue in full force and effect the
terms of conditions of the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties.

Obviously, the purpose of collective bargaining is the reaching of an agreement resulting in a

contract binding on the parties; but the failure to reach an agreement after negotiations have
continued for a reasonable period does not establish a lack of good faith. The statutes 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.

The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in
good faith typically turns on the facts of the individual case. As we have said, 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. To some degree, the question of good faith may be a question of credibility. The effect of
an employer’s or a union’s individual actions is not the test of good-faith bargaining, but the
impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn
therefrom collectively may offer a basis for the finding of the NLRC.26

For a charge of unfair labor practice to prosper, it must be shown that Nestlé was motivated by ill
will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy, and, of course, that social humiliation, wounded feelings, or
grave anxiety resulted x x x"27 in disclaiming unilateral grants as proper subjects in their
collective bargaining negotiations. While the law makes it an obligation for the employer and the
employees to bargain collectively with each other, such compulsion does not include the
commitment to precipitately accept or agree to the proposals of the other. All it contemplates is
that both parties should approach the negotiation with an open mind and make reasonable effort
to reach a common ground of agreement.

Herein, the union merely bases its claim of refusal to bargain on a letter28 dated 29 May 2001
written by Nestlé where the latter laid down its position that "unilateral grants, one-time
company grants, company-initiated policies and programs, which include, but are not limited to
the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very
nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom." But
as we have stated in this Court’s Decision, said letter is not tantamount to refusal to bargain. In
thinking to exclude the issue of Retirement Plan from the CBA negotiations, Nestlé, cannot be
faulted for considering the same benefit as unilaterally granted, considering that eight out of nine
bargaining units have allegedly agreed to treat the Retirement Plan as a unilaterally granted
benefit. This is not a case where the employer exhibited an indifferent attitude towards collective
bargaining, because the negotiations were not the unilateral activity of the bargaining
representative. Nestlé’s desire to settle the dispute and proceed with the negotiation being
evident in its cry for compulsory arbitration is proof enough of its exertion of reasonable effort at
good-faith bargaining.

In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU. The
corporation simply wanted to exclude the Retirement Plan from the issues to be taken up during
CBA negotiations, on the postulation that such was in the nature of a unilaterally granted benefit.
An employer’s steadfast insistence to exclude a particular substantive provision is no different
from a bargaining representative’s perseverance to include one that they deem of absolute
necessity. Indeed, an adamant insistence on a bargaining position to the point where the
negotiations reach an impasse does not establish bad faith.[fn24 p.10] It is but natural that at
negotiations, management and labor adopt positions or make demands and offer proposals and
counter-proposals. On account of the importance of the economic issue proposed by UFE-DFA-
KMU, Nestle could have refused to bargain with the former – but it did not. And the
management’s firm stand against the issue of the Retirement Plan did not mean that it was
bargaining in bad faith. It had a right to insist on its position to the point of stalemate.

The foregoing things considered, this Court replicates below its clear disposition of the issue:

The concept of "unfair labor practice" is defined by the Labor Code as:

ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR

PROSECUTION THEREOF. – Unfair labor practices violate the constitutional right of
workers and employees to self-organization, are inimical to the legitimate interests of
both labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management relations.

x x x x.

The same code likewise provides the acts constituting unfair labor practices committed
by employers, to wit:

ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. – It shall be unlawful for

an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to
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 right
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. Nothing in this Code or in any other law shall stop the parties
from requiring membership in a recognized collective bargaining agent as a
condition for employment, except those employees who are already members of
another union at the time of the signing of the collective bargaining agreement.

Employees of an appropriate collective bargaining unit who are not members of

the recognized collective bargaining agent may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of the recognized
collective bargaining agent, if such non-union members accept the benefits under
the collective agreement. Provided, That the individual authorization required
under Article 242, paragraph (o) of this Code shall not apply to the nonmembers
of the recognized collective bargaining agent; [The article referred to is 241, not
242. – CAA]

(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.

The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations associations or partnerships who have actually participated,
authorized or ratified unfair labor practices shall be held criminally liable.
(Emphasis supplied.)

Herein, Nestlé is accused of violating its duty to bargain collectively when it purportedly
imposed a pre-condition to its agreement to discuss and engage in collective bargaining
negotiations with UFE-DFA-KMU.

A meticulous review of the record and pleadings of the cases at bar shows that, of the two
notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the second
that the ground of unfair labor practice was alleged. Worse, the 7 November 2001 Notice
of Strike merely contained a general allegation that Nestlé committed unfair labor
practice by bargaining in bad faith for supposedly "setting pre-condition in the ground
rules (Retirement issue)." (Notice of Strike of 7 November 2001; Annex "C" of UFE-
DFA-KMU Position Paper; DOLE original records, p. 146.) In contrast, Nestlé, in its
Position Paper, did not confine itself to the issue of the non-inclusion of the Retirement
Plan but extensively discussed its stance on other economic matters pertaining to the
CBA. It is UFE-DFA-KMU, therefore, who had the burden of proof to present substantial
evidence to support the allegation of unfair labor practice.

A perusal of the allegations and arguments raised by UFE-DFA-KMU in the

Memorandum (in G.R. Nos. 158930-31) will readily disclose the need for the
presentation of evidence other than its bare contention of unfair labor practice in order to
make certain the propriety or impropriety of the ULP charge hurled against Nestlé. Under
Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code:

x x x. In cases of unfair labor practices, the notice of strike shall as far as

practicable, state the acts complained of and the efforts to resolve the dispute
amicably." (Emphasis supplied.)

In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither the
second Notice of Strike nor the records of these cases substantiate a finding of unfair
labor practice. It is not enough that the union believed that the employer committed acts
of unfair labor practice when the circumstances clearly negate even a prima facie
showing to warrant such a belief. (Tiu v. National Labor Relations Commission, G.R. No.
123276, 18 August 1997, 277 SCRA 681, 688.)

Employers are accorded rights and privileges to assure their self-determination and
independence and reasonable return of capital. (Capitol Medical Center, Inc. v. Meris,
G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) This mass of privileges
comprises the so-called management prerogatives. (Capitol Medical Center, Inc. v.
Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) In this connection,
the rule is that good faith is always presumed. As long as the company’s exercise of the
same is in good faith to advance its interest and not for purpose of defeating or
circumventing the rights of employees under the law or a valid agreement, such exercise
will be upheld. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September
2005, 470 SCRA 125, 136.)

There is no per se test of good faith in bargaining. (Hongkong Shanghai Banking

Corporation Employees Union v. National Labor Relations Commission, G.R. No.
125038, 6 November 1997, 281 SCRA 509, 518.) Good faith or bad faith is an inference
to be drawn from the facts. (Hongkong Shanghai Banking Corporation Employees Union
v. National Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281
SCRA 509, 518.) Herein, no proof was presented to exemplify bad faith on the part of
Nestlé apart from mere allegation. Construing arguendo that the content of the
aforequoted letter of 29 May 2001 laid down a pre-condition to its agreement to bargain
with UFE-DFA-KMU, Nestlé’s inclusion in its Position Paper of its proposals affecting
 other matters covered by the CBA negates the claim of refusal to bargain or bargaining in
bad faith. Accordingly, since UFE-DFA-KMU failed to proffer substantial evidence that
would overcome the legal presumption of good faith on the part of Nestlé, the award of
moral and exemplary damages is unavailing.

As to the jurisdiction of the DOLE Secretary under the amended Notice of Strike:

This Court is not convinced by the argument raised by UFE-DFA-KMU that the DOLE
Secretary should not have gone beyond the disagreement on the ground rules of the CBA
negotiations. The union doggedly asserts that the entire labor dispute between herein parties
concerns only the ground rules.

Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining deadlock as the
basis for the filing of its Notice of Strike; and at the time of the filing of the first Notice of Strike,
several conciliation conferences had already been undertaken where both parties had already
exchanged with each other their respective CBA proposals. In fact, during the conciliation
meetings before the NCMB, but prior to the filing of the notices of strike, the parties had already
delved into matters affecting the meat of the collective bargaining agreement.

The Secretary of the DOLE simply relied on the Notices of Strike that were filed by UFE-DFA-
KMU as stated in her Order of 08 March 2002, to wit:

x x x The records disclose that the Union filed two Notices of Strike. The First is dated
October 31, 2001 whose grounds are cited verbatim hereunder:

"A. Bargaining Deadlock

1. Economic issues (specify)

1. Retirement

2. Panel Composition

3. Costs and Attendance

4. CBA"

The second Notice of Strike is dated November 7, 2001 and the cited ground is like
quoted verbatim below:

"B. Unfair Labor Practices (specify)

Bargaining in bad faith –

Setting pre-condition in the ground rules (Retirement issue)"

Nowhere in the second Notice of Strike is it indicated that this Notice is an amendment to and
took the place of the first Notice of Strike. In fact, our Assumption of Jurisdiction Order dated
November 29, 2001 specifically cited the two (2) Notices of Strike without any objection on the
part of the Union x x x.29

Had the parties not been at the stage where the substantive provisions of the proposed CBA had
been put in issue, the union would not have based thereon its initial notice to strike. This Court
maintains its original position in the Decision that, based on the Notices of Strike filed by UFE-
DFA-KMU, the Secretary of the DOLE rightly decided on matters of substance. That the union
later on changed its mind is of no moment because to give premium to such would make the
legally mandated discretionary power of the Dole Secretary subservient to the whims of the
parties.

As to the point of clarification on the resumption of negotiations respecting the Retirement

Plan:

As for the supposed confusion or uncertainty of the dispositive part of this Court’s Decision,
Nestle moves for clarification of the statement – "The parties are directed to resume negotiations
respecting the Retirement Plan and to take action consistent with the discussion hereinabove set
forth. No costs." The entire fallo of this Court’s Decision reads:

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that
Nestlé be declared to have committed unfair labor practice in allegedly setting a
precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is
PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA
G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her
discretion in failing to confine her assumption of jurisdiction power over the ground rules
of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the
Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-
DFA-KMU and Nestlé is AFFIRMED. The parties are directed to resume negotiations
respecting the Retirement Plan and to take action consistent with the discussions
hereinabove set forth. No costs.

Nestle interprets the foregoing as an order for the parties to resume negotiations by themselves
respecting the issue of retirement benefits due the employees of the Cabuyao Plant. Otherwise
stated, Nestle posits that the dispositive part of the Decision directs the parties to submit to a
voluntary mode of dispute settlement.

A read-through of this Court’s Decision reveals that the ambiguity is more ostensible than real.
This Court’s Decision of 22 August 2006 designated marked boundaries as to the implications of
the assailed Orders of the Secretary of the DOLE. We said therein that 1) the Retirement Plan is
still a valid issue for herein parties’ collective bargaining negotiations; 2) the Court of Appeals
committed reversible error in limiting to the issue of the ground rules the scope of the power of
the Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3) Nestlé is not
guilty of unfair labor practice. Nowhere in our Decision did we require parties to submit to
negotiate by themselves the tenor of the retirement benefits of the concerned employees of
Nestlé, precisely because the Secretary of the DOLE had already assumed jurisdiction over the
labor dispute subject of herein petitions. Again, we spell out what encompass the Secretary’s
assumption of jurisdiction power. 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 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. In the case at
bar, the issue of retirement benefits was specifically what was presented before the Secretary of
the DOLE; hence, We reject Nestlé’s interpretation. Our decision is crystal and cannot be
interpreted any other way. The Secretary having already assumed jurisdiction over the labor
dispute subject of these consolidated petitions, the issue concerning the retirement benefits of the
concerned employees must be remanded back to him for proper disposition.

All told, in consideration of the points afore-discussed and the fact that no substantial arguments
have been raised by either party, this Court remains unconvinced that it should modify or reverse
in any way its disposition of herein cases in its earlier Decision. The labor dispute between the
Nestle and UFE-DFA-KMU has dragged on long enough. As no other issues are availing, let this
Resolution write an ending to the protracted labor dispute between Nestlé and UFE-DFA-KMU
(Cabuyao Division).

WHEREFORE, premises considered, the basic issues of the case having been passed upon and
there being no new arguments availing, the Motion for Partial Reconsideration is hereby
DENIED WITH FINALITY for lack of merit. Let these cases be remanded to the Secretary of
the Department of Labor and Employment for proper disposition, consistent with the discussions
in this Court’s Decision of 22 August 2006 and as hereinabove set forth. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-25291 January 30, 1971

THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES

ASSOCIATION-NATU, FGU INSURANCE GROUP WORKERS and
EMPLOYEES ASSOCIATION-NATU, and INSULAR LIFE BUILDING
EMPLOYEES ASSOCIATION-NATU, petitioners,
vs.
THE INSULAR LIFE ASSURANCE CO., LTD., FGU INSURANCE
GROUP, JOSE M. OLBES and COURT OF INDUSTRIAL RELATIONS,
respondents.

Lacsina, Lontok and Perez and Luis F. Aquino for petitioners.

Francisco de los Reyes for respondent Court of Industrial Relations.

Araneta, Mendoza and Papa for other respondents.

CASTRO, J.:

Appeal, by certiorari to review a decision and a resolution en banc of the

Court of Industrial Relations dated August 17, 1965 and October 20, 1965,
respectively, in Case 1698-ULP.

The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU

Insurance Group Workers & Employees Association-NATU, and Insular
Life Building Employees Association-NATU (hereinafter referred to as the
Unions), while still members of the Federation of Free Workers (FFW),
entered into separate collective bargaining agreements with the Insular Life
Assurance Co., Ltd. and the FGU Insurance Group (hereinafter referred to
as the Companies).
Two of the lawyers of the Unions then were Felipe Enaje and Ramon
Garcia; the latter was formerly the secretary-treasurer of the FFW and
acting president of the Insular Life/FGU unions and the Insular Life Building
Employees Association. Garcia, as such acting president, in a circular
issued in his name and signed by him, tried to dissuade the members of
the Unions from disaffiliating with the FFW and joining the National
Association of Trade Unions (NATU), to no avail.

Enaje and Garcia soon left the FFW and secured employment with the
Anti-Dummy Board of the Department of Justice. Thereafter, the
Companies hired Garcia in the latter part of 1956 as assistant corporate
secretary and legal assistant in their Legal Department, and he was soon
receiving P900 a month, or P600 more than he was receiving from the
FFW. Enaje was hired on or about February 19, 1957 as personnel
manager of the Companies, and was likewise made chairman of the
negotiating panel for the Companies in the collective bargaining with the
Unions.

In a letter dated September 16, 1957, the Unions jointly submitted

proposals to the Companies for a modified renewal of their respective
collective bargaining contracts which were then due to expire on
September 30, 1957. The parties mutually agreed and to make whatever
benefits could be agreed upon retroactively effective October 1, 1957.

Thereafter, in the months of September and October 1957 negotiations

were conducted on the Union's proposals, but these were snagged by a
deadlock on the issue of union shop, as a result of which the Unions filed
on January 27, 1958 a notice of strike for "deadlock on collective
bargaining." Several conciliation conferences were held under the auspices
of the Department of Labor wherein the conciliators urged the Companies
to make reply to the Unions' proposals en toto so that the said Unions
might consider the feasibility of dropping their demand for union security in
exchange for other benefits. However, the Companies did not make any
counter-proposals but, instead, insisted that the Unions first drop their
demand for union security, promising money benefits if this was done.
Thereupon, and prior to April 15, 1958, the petitioner Insular Life Building
Employees Association-NATU dropped this particular demand, and
requested the Companies to answer its demands, point by point, en toto.
But the respondent Insular Life Assurance Co. still refused to make any
counter-proposals. In a letter addressed to the two other Unions by the joint
management of the Companies, the former were also asked to drop their
union security demand, otherwise the Companies "would no longer
consider themselves bound by the commitment to make money benefits
retroactive to October 1, 1957." By a letter dated April 17, 1958, the
remaining two petitioner unions likewise dropped their demand for union
shop. April 25, 1958 then was set by the parties to meet and discuss the
remaining demands.

From April 25 to May 6, 1958, the parties negotiated on the labor demands
but with no satisfactory result due to a stalemate on the matter of salary
increases. On May 13, 1958 the Unions demanded from the Companies
final counter-proposals on their economic demands, particularly on salary
increases. Instead of giving counter-proposals, the Companies on May 15,
1958 presented facts and figures and requested the Unions to submit a
workable formula which would justify their own proposals, taking into
account the financial position of the former. Forthwith the Unions voted to
declare a strike in protest against what they considered the Companies'
unfair labor practices.

Meanwhile, eighty-seven (87) unionists were reclassified as supervisors

without increase in salary nor in responsibility while negotiations were
going on in the Department of Labor after the notice to strike was served on
the Companies. These employees resigned from the Unions.

On May 20, 1958 the Unions went on strike and picketed the offices of the
Insular Life Building at Plaza Moraga.

On May 21, 1958 the Companies through their acting manager and
president, the respondent Jose M. Olbes (hereinafter referred to as the
respondent Olbes), sent to each of the strikers a letter (exhibit A) quoted
verbatim as follows:

We recognize it is your privilege both to strike and to conduct

picketing.

However, if any of you would like to come back to work

voluntarily, you may:

1. Advise the nearest police officer or security guard of your

intention to do so.
 2. Take your meals within the office.

3. Make a choice whether to go home at the end of the day or

to sleep nights at the office where comfortable cots have been
prepared.

4. Enjoy free coffee and occasional movies.

5. Be paid overtime for work performed in excess of eight

hours.

6. Be sure arrangements will be made for your families.

The decision to make is yours — whether you still believe in the

motives of the strike or in the fairness of the Management.

The Unions, however, continued on strike, with the exception of a few

unionists who were convinced to desist by the aforesaid letter of May 21,
1958.

From the date the strike was called on May 21, 1958, until it was called off
on May 31, 1958, some management men tried to break thru the Unions'
picket lines. Thus, on May 21, 1958 Garcia, assistant corporate secretary,
and Vicente Abella, chief of the personnel records section, respectively of
the Companies, tried to penetrate the picket lines in front of the Insular Life
Building. Garcia, upon approaching the picket line, tossed aside the placard
of a picketer, one Paulino Bugay; a fight ensued between them, in which
both suffered injuries. The Companies organized three bus-loads of
employees, including a photographer, who with the said respondent Olbes,
succeeded in penetrating the picket lines in front of the Insular Life
Building, thus causing injuries to the picketers and also to the strike-
breakers due to the resistance offered by some picketers.

Alleging that some non-strikers were injured and with the use of
photographs as evidence, the Companies then filed criminal charges
against the strikers with the City Fiscal's Office of Manila. During the
pendency of the said cases in the fiscal's office, the Companies likewise
filed a petition for injunction with damages with the Court of First Instance
of Manila which, on the basis of the pendency of the various criminal cases
against striking members of the Unions, issued on May 31, 1958 an order
restraining the strikers, until further orders of the said court, from stopping,
impeding, obstructing, etc. the free and peaceful use of the Companies'
gates, entrance and driveway and the free movement of persons and
vehicles to and from, out and in, of the Companies' building.

On the same date, the Companies, again through the respondent Olbes,
sent individually to the strikers a letter (exhibit B), quoted hereunder in its
entirety:

The first day of the strike was last 21 May 1958.

Our position remains unchanged and the strike has made us

even more convinced of our decision.

We do not know how long you intend to stay out, but we cannot
hold your positions open for long. We have continued to
operate and will continue to do so with or without you.

If you are still interested in continuing in the employ of the

Group Companies, and if there are no criminal charges pending
against you, we are giving you until 2 June 1958 to report for
work at the home office. If by this date you have not yet
reported, we may be forced to obtain your replacement.

Before, the decisions was yours to make.

So it is now.

Incidentally, all of the more than 120 criminal charges filed against the
members of the Unions, except three (3), were dismissed by the fiscal's
office and by the courts. These three cases involved "slight physical
injuries" against one striker and "light coercion" against two others.

At any rate, because of the issuance of the writ of preliminary injunction

against them as well as the ultimatum of the Companies giving them until
June 2, 1958 to return to their jobs or else be replaced, the striking
employees decided to call off their strike and to report back to work on
June 2, 1958.

However, before readmitting the strikers, the Companies required them not
only to secure clearances from the City Fiscal's Office of Manila but also to
be screened by a management committee among the members of which
were Enage and Garcia. The screening committee initially rejected 83
strikers with pending criminal charges. However, all non-strikers with
pending criminal charges which arose from the breakthrough incident were
readmitted immediately by the Companies without being required to secure
clearances from the fiscal's office. Subsequently, when practically all the
strikers had secured clearances from the fiscal's office, the Companies
readmitted only some but adamantly refused readmission to 34 officials
and members of the Unions who were most active in the strike, on the
ground that they committed "acts inimical to the interest of the
respondents," without however stating the specific acts allegedly
committed. Among those who were refused readmission are Emiliano
Tabasondra, vice president of the Insular Life Building Employees'
Association-NATU; Florencio Ibarra, president of the FGU Insurance Group
Workers & Employees Association-NATU; and Isagani Du Timbol, acting
president of the Insular Life Assurance Co., Ltd. Employees Association-
NATU. Some 24 of the above number were ultimately notified months later
that they were being dismissed retroactively as of June 2, 1958 and given
separation pay checks computed under Rep. Act 1787, while others (ten in
number) up to now have not been readmitted although there have been no
formal dismissal notices given to them.

On July 29, 1958 the CIR prosecutor filed a complaint for unfair labor
practice against the Companies under Republic Act 875. The complaint
specifically charged the Companies with (1) interfering with the members of
the Unions in the exercise of their right to concerted action, by sending out
individual letters to them urging them to abandon their strike and return to
work, with a promise of comfortable cots, free coffee and movies, and paid
overtime, and, subsequently, by warning them that if they did not return to
work on or before June 2, 1958, they might be replaced; and (2)
discriminating against the members of the Unions as regards readmission
to work after the strike on the basis of their union membership and degree
of participation in the strike.

On August 4, 1958 the Companies filed their answer denying all the
material allegations of the complaint, stating special defenses therein, and
asking for the dismissal of the complaint.

After trial on the merits, the Court of Industrial Relations, through Presiding
Judge Arsenio Martinez, rendered on August 17, 1965 a decision
dismissing the Unions' complaint for lack of merit. On August 31, 1965 the
Unions seasonably filed their motion for reconsideration of the said
decision, and their supporting memorandum on September 10, 1965. This
was denied by the Court of Industrial Relations en banc in a resolution
promulgated on October 20, 1965.

Hence, this petition for review, the Unions contending that the lower court
erred:

1. In not finding the Companies guilty of unfair labor practice in

sending out individually to the strikers the letters marked
Exhibits A and B;

2. In not finding the Companies guilty of unfair labor practice for

discriminating against the striking members of the Unions in the
matter of readmission of employees after the strike;

3. In not finding the Companies guilty of unfair labor practice for

dismissing officials and members of the Unions without giving
them the benefit of investigation and the opportunity to present
their side in regard to activities undertaken by them in the
legitimate exercise of their right to strike; and

4. In not ordering the reinstatement of officials and members of

the Unions, with full back wages, from June 2, 1958 to the date
of their actual reinstatement to their usual employment.

I. The respondents contend that the sending of the letters, exhibits A and B,
constituted a legitimate exercise of their freedom of speech. We do not
agree. The said letters were directed to the striking employees individually
— by registered special delivery mail at that — without being coursed
through the Unions which were representing the employees in the
collective bargaining.

The act of an employer in notifying absent employees

individually during a strike following unproductive efforts at
collective bargaining that the plant would be operated the next
day and that their jobs were open for them should they want to
come in has been held to be an unfair labor practice, as an
active interference with the right of collective bargaining through
dealing with the employees individually instead of through their
collective bargaining representatives. (31 Am. Jur. 563, citing
 NLRB v. Montgomery Ward & Co. [CA 9th] 133 F2d 676, 146
ALR 1045)

Indeed, it is an unfair labor practice for an employer operating under a

collective bargaining agreement to negotiate or to attempt to negotiate with
his employees individually in connection with changes in the agreement.
And the basis of the prohibition regarding individual bargaining with the
strikers is that although the union is on strike, the employer is still under
obligation to bargain with the union as the employees' bargaining
representative (Melo Photo Supply Corporation vs. National Labor
Relations Board, 321 U.S. 332).

Indeed, some such similar actions are illegal as constituting unwarranted

acts of interference. Thus, the act of a company president in writing letters
to the strikers, urging their return to work on terms inconsistent with their
union membership, was adjudged as constituting interference with the
exercise of his employees' right to collective bargaining (Lighter Publishing,
CCA 7th, 133 F2d 621). It is likewise an act of interference for the employer
to send a letter to all employees notifying them to return to work at a time
specified therein, otherwise new employees would be engaged to perform
their jobs. Individual solicitation of the employees or visiting their homes,
with the employer or his representative urging the employees to cease
union activity or cease striking, constitutes unfair labor practice. All the
above-detailed activities are unfair labor practices because they tend to
undermine the concerted activity of the employees, an activity to which they
are entitled free from the employer's molestation. 1

Moreover, since exhibit A is a letter containing promises of benefits to the

employees in order to entice them to return to work, it is not protected by
the free speech provisions of the Constitution (NLRB v. Clearfield Cheese
Co., Inc., 213 F2d 70). The same is true with exhibit B since it contained
threats to obtain replacements for the striking employees in the event they
did not report for work on June 2, 1958. The free speech protection under
the Constitution is inapplicable where the expression of opinion by the
employer or his agent contains a promise of benefit, or threats, or reprisal
(31 Am. Jur. 544; NLRB vs. Clearfield Cheese Co., Inc., 213 F2d 70; NLRB
vs. Goigy Co., 211 F2d 533, 35 ALR 2d 422).

Indeed, when the respondents offered reinstatement and attempted to

"bribe" the strikers with "comfortable cots," "free coffee and occasional
movies," "overtime" pay for "work performed in excess of eight hours," and
"arrangements" for their families, so they would abandon the strike and
return to work, they were guilty of strike-breaking and/or union-busting and,
consequently, of unfair labor practice. It is equivalent to an attempt to break
a strike for an employer to offer reinstatement to striking employees
individually, when they are represented by a union, since the employees
thus offered reinstatement are unable to determine what the consequences
of returning to work would be.

Likewise violative of the right to organize, form and join labor organizations
are the following acts: the offer of a Christmas bonus to all "loyal"
employees of a company shortly after the making of a request by the union
to bargain; wage increases given for the purpose of mollifying employees
after the employer has refused to bargain with the union, or for the purpose
of inducing striking employees to return to work; the employer's promises of
benefits in return for the strikers' abandonment of their strike in support of
their union; and the employer's statement, made about 6 weeks after the
strike started, to a group of strikers in a restaurant to the effect that if the
strikers returned to work, they would receive new benefits in the form of
hospitalization, accident insurance, profit-sharing, and a new building to
work in.2

Citing paragraph 5 of the complaint filed by the acting prosecutor of the

lower court which states that "the officers and members of the complainant
unions decided to call off the strike and return to work on June 2, 1958 by
reason of the injunction issued by the Manila Court of First Instance," the
respondents contend that this was the main cause why the strikers
returned to work and not the letters, exhibits A and B. This assertion is
without merit. The circumstance that the strikers later decided to return to
work ostensibly on account of the injunctive writ issued by the Court of First
Instance of Manila cannot alter the intrinsic quality of the letters, which
were calculated, or which tended, to interfere with the employees' right to
engage in lawful concerted activity in the form of a strike. Interference
constituting unfair labor practice will not cease to be such simply because it
was susceptible of being thwarted or resisted, or that it did not proximately
cause the result intended. For success of purpose is not, and should not,
be the criterion in determining whether or not a prohibited act constitutes
unfair labor practice.
 The test of whether an employer has interfered with and
coerced employees within the meaning of subsection (a) (1) is
whether the employer has engaged in conduct which it may
reasonably be said tends to interfere with the free exercise of
employees' rights under section 3 of the Act, and it is not
necessary that there be direct evidence that any employee was
in fact intimidated or coerced by statements of threats of the
employer if there is a reasonable inference that anti-union
conduct of the employer does have an adverse effect on self-
organization and collective bargaining. (Francisco, Labor Laws
1956, Vol. II, p. 323, citing NLRB v. Ford, C.A., 1948, 170 F2d
735).

Besides, the letters, exhibits A and B, should not be considered by

themselves alone but should be read in the light of the preceding and
subsequent circumstances surrounding them. The letters should be
interpreted according to the "totality of conduct doctrine,"

... whereby the culpability of an employer's remarks were to be

evaluated not only on the basis of their implicit implications, but
were to be appraised against the background of and in
conjunction with collateral circumstances. Under this "doctrine"
expressions of opinion by an employer which, though innocent
in themselves, frequently were held to be culpable because of
the circumstances under which they were uttered, the history of
the particular employer's labor relations or anti-union bias or
because of their connection with an established collateral plan
of coercion or interference. (Rothenberg on Relations, p. 374,
and cases cited therein.)

It must be recalled that previous to the petitioners' submission of proposals

for an amended renewal of their respective collective bargaining
agreements to the respondents, the latter hired Felipe Enage and Ramon
Garcia, former legal counsels of the petitioners, as personnel manager and
assistant corporate secretary, respectively, with attractive compensations.
After the notice to strike was served on the Companies and negotiations
were in progress in the Department of Labor, the respondents reclassified
87 employees as supervisors without increase in salary or in responsibility,
in effect compelling these employees to resign from their unions. And
during the negotiations in the Department of Labor, despite the fact that the
petitioners granted the respondents' demand that the former drop their
demand for union shop and in spite of urgings by the conciliators of the
Department of Labor, the respondents adamantly refused to answer the
Unions' demands en toto. Incidentally, Enage was the chairman of the
negotiating panel for the Companies in the collective bargaining between
the former and the Unions. After the petitioners went to strike, the strikers
were individually sent copies of exhibit A, enticing them to abandon their
strike by inducing them to return to work upon promise of special privileges.
Two days later, the respondents, thru their president and manager,
respondent Jose M. Olbes, brought three truckloads of non-strikers and
others, escorted by armed men, who, despite the presence of eight
entrances to the three buildings occupied by the Companies, entered thru
only one gate less than two meters wide and in the process, crashed thru
the picket line posted in front of the premises of the Insular Life Building.
This resulted in injuries on the part of the picketers and the strike-
breakers.lâwphî1.ñèt Then the respondents brought against the picketers
criminal charges, only three of which were not dismissed, and these three
only for slight misdemeanors. As a result of these criminal actions, the
respondents were able to obtain an injunction from the court of first
instance restraining the strikers from stopping, impeding, obstructing, etc.
the free and peaceful use of the Companies' gates, entrance and driveway
and the free movement of persons and vehicles to and from, out and in, of
the Companies' buildings. On the same day that the injunction was issued,
the letter, Exhibit B, was sent — again individually and by registered
special delivery mail — to the strikers, threatening them with dismissal if
they did not report for work on or before June 2, 1958. But when most of
the petitioners reported for work, the respondents thru a screening
committee — of which Ramon Garcia was a member — refused to admit
63 members of the Unions on the ground of "pending criminal charges."
However, when almost all were cleared of criminal charges by the fiscal's
office, the respondents adamantly refused admission to 34 officials and
union members. It is not, however, disputed that all-non-strikers with
pending criminal charges which arose from the breakthrough incident of
May 23, 1958 were readmitted immediately by the respondents. Among the
non-strikers with pending criminal charges who were readmitted were
Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo,
Federico Barretto, Manuel Chuidian and Nestor Cipriano. And despite the
fact that the fiscal's office found no probable cause against the petitioning
strikers, the Companies adamantly refused admission to them on the
pretext that they committed "acts inimical to the interest of the
respondents," without stating specifically the inimical acts allegedly
committed. They were soon to admit, however, that these alleged inimical
acts were the same criminal charges which were dismissed by the fiscal
and by the courts..

Verily, the above actuations of the respondents before and after the
issuance of the letters, exhibit A and B, yield the clear inference that the
said letters formed of the respondents scheme to preclude if not destroy
unionism within them.

To justify the respondents' threat to dismiss the strikers and secure

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

TO: BUREAU OF LABOR RELATIONS

DEPARTMENT OF LABOR
MANILA

Thirty (30) days from receipt of this notice by the Office, this
[sic] unions intends to go on strike against

THE INSULAR LIFE ASSURANCE CO., LTD.

Plaza Moraga, Manila

THE FGU INSURANCE GROUP

Plaza Moraga, Manila

INSULAR LIFE BUILDING ADMINISTRATION

Plaza Moraga, Manila .

for the following reason: DEADLOCK IN COLLECTIVE

BARGAINING...

However, the employees did not stage the strike after the thirty-day period,
reckoned from January 27, 1958. This simply proves that the reason for the
strike was not the deadlock on collective bargaining nor any lack of
economic concessions. By letter dated April 15, 1958, the respondents
categorically stated what they thought was the cause of the "Notice of
Strike," which so far as material, reads:

3. Because you did not see fit to agree with our position on the
union shop, you filed a notice of strike with the Bureau of Labor
Relations on 27 January 1958, citing `deadlock in collective
bargaining' which could have been for no other issue than the
union shop." (exhibit 8, letter dated April 15, 1958.)

The strike took place nearly four months from the date the said notice of
strike was filed. And the actual and main reason for the strike was, "When it
became crystal clear the management double crossed or will not negotiate
in good faith, it is tantamount to refusal collectively and considering the
unfair labor practice in the meantime being committed by the management
such as the sudden resignation of some unionists and [who] became
supervisors without increase in salary or change in responsibility, such as
the coercion of employees, decided to declare the strike." (tsn., Oct. 14,
1958, p. 14.) The truth of this assertion is amply proved by the following
circumstances: (1) it took the respondents six (6) months to consider the
petitioners' proposals, their only excuse being that they could not go on
with the negotiations if the petitioners did not drop the demand for union
shop (exh. 7, respondents' letter dated April 7, 1958); (2) when the
petitioners dropped the demand for union shop, the respondents did not
have a counter-offer to the petitioners' demands. Sec. 14 of Rep. Act 875
required the respondents to make a reply to the petitioners' demands within
ten days from receipt thereof, but instead they asked the petitioners to give
a "well reasoned, workable formula which takes into account the financial
position of the group companies." (tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26,
1969, p. 49.)

II. Exhibit H imposed three conditions for readmission of the strikers,

namely: (1) the employee must be interested in continuing his work with the
group companies; (2) there must be no criminal charges against him; and
(3) he must report for work on June 2, 1958, otherwise he would be
replaced. Since the evidence shows that all the employees reported back
to work at the respondents' head office on June 2, 1953, they must be
considered as having complied with the first and third conditions.
Our point of inquiry should therefore be directed at whether they also
complied with the second condition. It is not denied that when the strikers
reported for work on June 2, 1958, 63 members of the Unions were refused
readmission because they had pending criminal charges. However, despite
the fact that they were able to secure their respective clearances 34
officials and union members were still refused readmission on the alleged
ground that they committed acts inimical to the Companies. It is beyond
dispute, however, that non-strikers who also had criminal charges pending
against them in the fiscal's office, arising from the same incidents whence
the criminal charges against the strikers evolved, were readily readmitted
and were not required to secure clearances. This is a clear act of
discrimination practiced by the Companies in the process of rehiring and is
therefore a violation of sec. 4(a) (4) of the Industrial Peace Act.

The respondents did not merely discriminate against all the strikers in
general. They separated the active from the less active unionists on the
basis of their militancy, or lack of it, on the picket lines. Unionists belonging
to the first category were refused readmission even after they were able to
secure clearances from the competent authorities with respect to the
criminal charges filed against them. It is significant to note in this
connection that except for one union official who deserted his union on the
second day of the strike and who later participated in crashing through the
picket lines, not a single union officer was taken back to work.
Discrimination undoubtedly exists where the record shows that the union
activity of the rehired strikers has been less prominent than that of the
strikers who were denied reinstatement.

So is there an unfair labor practice where the employer,

although authorized by the Court of Industrial Relations to
dismiss the employees who participated in an illegal strike,
dismissed only the leaders of the strikers, such dismissal being
evidence of discrimination against those dismissed and
constituting a waiver of the employer's right to dismiss the
striking employees and a condonation of the fault committed by
them." (Carlos and Fernando, Labor and Social Legislation, p.
62, citing Phil. Air Lines, Inc. v. Phil. Air Lines Emloyees
Association, L-8197, Oct. 31, 1958.)

It is noteworthy that — perhaps in an anticipatory effort to exculpate

themselves from charges of discrimination in the readmission of strikers
returning to work — the respondents delegated the power to readmit to a
committee. But the respondent Olbes had chosen Vicente Abella, chief of
the personnel records section, and Ramon Garcia, assistant corporate
secretary, to screen the unionists reporting back to work. It is not difficult to
imagine that these two employees — having been involved in unpleasant
incidents with the picketers during the strike — were hostile to the strikers.
Needless to say, the mere act of placing in the hands of employees hostile
to the strikers the power of reinstatement, is a form of discrimination in
rehiring.

Delayed reinstatement is a form of discrimination in rehiring, as

is having the machinery of reinstatement in the hands of
employees hostile to the strikers, and reinstating a union official
who formerly worked in a unionized plant, to a job in another
mill, which was imperfectly organized. (Morabe, The Law on
Strikes, p. 473, citing Sunshine Mining Co., 7 NLRB 1252;
Cleveland Worsted Mills, 43 NLRB 545; emphasis supplied.)

Equally significant is the fact that while the management and the members
of the screening committee admitted the discrimination committed against
the strikers, they tossed back and around to each other the responsibility
for the discrimination. Thus, Garcia admitted that in exercising for the
management the authority to screen the returning employees, the
committee admitted the non-strikers but refused readmission to the strikers
(tsn., Feb. 6, 1962, pp. 15-19, 23-29). Vicente Abella, chairman of the
management's screening committee, while admitting the discrimination,
placed the blame therefor squarely on the management (tsn., Sept. 20,
1960, pp. 7-8, 14-18). But the management, speaking through the
respondent Olbes, head of the Companies, disclaimed responsibility for the
discrimination. He testified that "The decision whether to accept or not an
employee was left in the hands of that committee that had been
empowered to look into all cases of the strikers." (tsn., Sept. 6, 1962, p.
19.)

Of course, the respondents — through Ramon Garcia — tried to explain

the basis for such discrimination by testifying that strikers whose
participation in any alleged misconduct during the picketing was not serious
in nature were readmissible, while those whose participation was serious
were not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But even this distinction
between acts of slight misconduct and acts of serious misconduct which
the respondents contend was the basis for either reinstatement or
discharge, is completely shattered upon a cursory examination of the
evidence on record. For with the exception of Pascual Esquillo whose
dismissal sent to the other strikers cited the alleged commission by them of
simple "acts of misconduct."

III. Anent the third assignment of error, the record shows that not a single
dismissed striker was given the opportunity to defend himself against the
supposed charges against him. As earlier mentioned, when the striking
employees reported back for work on June 2, 1958, the respondents
refused to readmit them unless they first secured the necessary
clearances; but when all, except three, were able to secure and
subsequently present the required clearances, the respondents still refused
to take them back. Instead, several of them later received letters from the
respondents in the following stereotyped tenor:

This will confirm the termination of your employment with the

Insular Life-FGU Insurance Group as of 2 June 1958.

The termination of your employment was due to the fact that

you committed acts of misconduct while picketing during the
last strike. Because this may not constitute sufficient cause
under the law to terminate your employment without pay, we
are giving you the amount of P1,930.32 corresponding to one-
half month pay for every year of your service in the Group
Company.

Kindly acknowledge receipt of the check we are sending

herewith.

Very truly yours,

(Sgd.) JOSE M.
OLBES
President,
Insurance Life
Acting President,
FGU.

The respondents, however, admitted that the alleged "acts of misconduct"

attributed to the dismissed strikers were the same acts with which the said
strikers were charged before the fiscal's office and the courts. But all these
charges except three were dropped or dismissed.

Indeed, the individual cases of dismissed officers and members of the

striking unions do not indicate sufficient basis for dismissal.

Emiliano Tabasondra, vice-president of the petitioner FGU Insurance

Group Workers & Employees Association-NATU, was refused
reinstatement allegedly because he did not report for duty on June 2, 1958
and, hence, had abandoned his office. But the overwhelming evidence
adduced at the trial and which the respondents failed to rebut, negates the
respondents' charge that he had abandoned his job. In his testimony,
corroborated by many others, Tabasondra particularly identified the
management men to whom he and his group presented themselves on
June 2, 1958. He mentioned the respondent Olbes' secretary, De Asis, as
the one who received them and later directed them — when Olbes refused
them an audience — to Felipe Enage, the Companies' personnel manager.
He likewise categorically stated that he and his group went to see Enage
as directed by Olbes' secretary. If Tabasondra were not telling the truth, it
would have been an easy matter for the respondents to produce De Asis
and Enage — who testified anyway as witnesses for the respondents on
several occasions — to rebut his testimony. The respondents did nothing of
the kind. Moreover, Tabasondra called on June 21, 1958 the respondents'
attention to his non-admission and asked them to inform him of the reasons
therefor, but instead of doing so, the respondents dismissed him by their
letter dated July 10, 1958. Elementary fairness required that before being
dismissed for cause, Tabasondra be given "his day in court."

At any rate, it has been held that mere failure to report for work after notice
to return, does not constitute abandonment nor bar reinstatement. In one
case, the U.S. Supreme Court held that the taking back of six of eleven
men constituted discrimination although the five strikers who were not
reinstated, all of whom were prominent in the union and in the strike,
reported for work at various times during the next three days, but were told
that there were no openings. Said the Court:

... The Board found, and we cannot say that its finding is
unsupported, that, in taking back six union men, the
respondent's officials discriminated against the latter on
account of their union activities and that the excuse given that
 they did not apply until after the quota was full was an
afterthought and not the true reason for the discrimination
against them. (NLRB v. Mackay Radio & Telegraph Co., 304
U.S. 333, 58 Sup. Ct. 904, 82 L. Ed. 1381) (Mathews, Labor
Relations and the Law, p. 725, 728)

The respondents' allegation that Tabasondra should have returned after

being refused readmission on June 2, 1958, is not persuasive. When the
employer puts off reinstatement when an employee reports for work at the
time agreed, we consider the employee relieved from the duty of returning
further.

Sixto Tongos was dismissed allegedly because he revealed that despite

the fact that the Companies spent more than P80,000 for the vacation trips
of officials, they refused to grant union demands; hence, he betrayed his
trust as an auditor of the Companies. We do not find this allegation
convincing. First, this accusation was emphatically denied by Tongos on
the witness stand. Gonzales, president of one of the respondent
Companies and one of the officials referred to, took a trip abroad in 1958.
Exchange controls were then in force, and an outgoing traveller on a
combined business and vacation trip was allowed by the Central Bank, per
its Circular 52 (Notification to Authorized Agent Banks) dated May 9, 1952,
an allocation of $1,000 or only P2,000, at the official rate of two pesos to
the dollar, as pocket money; hence, this was the only amount that would
appear on the books of the Companies. It was only on January 21, 1962,
per its Circular 133 (Notification to Authorized Agent Banks), that the
Central Bank lifted the exchange controls. Tongos could not therefore have
revealed an amount bigger than the above sum. And his competence in
figures could not be doubted considering that he had passed the board
examinations for certified public accountants. But assuming arguendo that
Tongos indeed revealed the true expenses of Gonzales' trip — which the
respondents never denied or tried to
disprove — his statements clearly fall within the sphere of a unionist's right
to discuss and advertise the facts involved in a labor dispute, in accordance
with section 9(a)(5) of Republic Act 875 which guarantees the untramelled
exercise by striking employees of the right to give "publicity to the existence
of, or the fact involved in any labor dispute, whether by advertising,
speaking, patrolling or by any method not involving fraud or violence."
Indeed, it is not only the right, it is as well the duty, of every unionist to
advertise the facts of a dispute for the purpose of informing all those
affected thereby. In labor disputes, the combatants are expected to expose
the truth before the public to justify their respective demands. Being a union
man and one of the strikers, Tongos was expected to reveal the whole truth
on whether or not the respondent Companies were justified in refusing to
accede to union demands. After all, not being one of the supervisors, he
was not a part of management. And his statement, if indeed made, is but
an expression of free speech protected by the Constitution.

Free speech on both sides and for every faction on any side of
the labor relation is to me a constitutional and useful right.
Labor is free ... to turn its publicity on any labor oppression,
substandard wages, employer unfairness, or objectionable
working conditions. The employer, too, should be free to
answer and to turn publicity on the records of the leaders of the
unions which seek the confidence of his men ... (Concurring
opinion of Justice Jackson in Thomas v. Collins, 323 U.S. 516,
547, 65 Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor
Relations and the Law, p. 591.)

The respondents also allege that in revealing certain confidential

information, Tongos committed not only a betrayal of trust but also a
violation of the moral principles and ethics of accountancy. But nowhere in
the Code of Ethics for Certified Public Accountants under the Revised
Rules and Regulations of the Board of Accountancy formulated in 1954, is
this stated. Moreover, the relationship of the Companies with Tongos was
that of an employer and not a client. And with regard to the testimonies of
Juan Raymundo and Antolin Carillo, both vice-presidents of the Trust
Insurance Agencies, Inc. about the alleged utterances made by Tongos,
the lower court should not have given them much weight. The firm of these
witnesses was newly established at that time and was still a "general
agency" of the Companies. It is not therefore amiss to conclude that they
were more inclined to favor the respondents rather than Tongos.

Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Daño, Vicente Alsol and
Hermenigildo Ramirez, opined the lower court, were constructively
dismissed by non-readmission allegedly because they not only prevented
Ramon Garcia, assistant corporate secretary, and Vicente Abella, chief of
the personnel records section of the Companies, from entering the
Companies' premises on May 21, 1958, but they also caused bruises and
abrasions on Garcia's chest and forehead — acts considered inimical to the
interest of the respondents. The Unions, upon the other hand, insist that
there is complete lack of evidence that Ner took part in pushing Garcia; that
it was Garcia who elbowed his way through the picket lines and therefore
Ner shouted "Close up," which the picketers did; and that Garcia tossed
Paulino Bugay's placard and a fight ensued between them in which both
suffered injuries. But despite these conflicting versions of what actually
happened on May 21, 1958, there are grounds to believe that the picketers
are not responsible for what happened.lâwphî1.ñèt The picketing on May
21, 1958, as reported in the police blotter, was peaceful (see Police blotter
report, exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner
was acquitted). Moreover, although the Companies during the strike were
holding offices at the Botica Boie building at Escolta, Manila; Tuason
Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati,
Rizal, Garcia, the assistant corporate secretary, and Abella, the chief of the
personnel records section, reported for work at the Insular Life Building.
There is therefore a reasonable suggestion that they were sent to work at
the latter building to create such an incident and have a basis for filing
criminal charges against the petitioners in the fiscal's office and applying for
injunction from the court of first instance. Besides, under the circumstances
the picketers were not legally bound to yield their grounds and withdraw
from the picket lines. Being where the law expects them to be in the
legitimate exercise of their rights, they had every reason to defend
themselves and their rights from any assault or unlawful transgression. Yet
the police blotter, about adverted to, attests that they did not resort to
violence.

The heated altercations and occasional blows exchanged on the picket line
do not affect or diminish the right to strike. Persuasive on this point is the
following commentary: .

We think it must be conceded that some disorder is

unfortunately quite usual in any extensive or long drawn out
strike. A strike is essentially a battle waged with economic
weapons. Engaged in it are human beings whose feelings are
stirred to the depths. Rising passions call forth hot words. Hot
words lead to blows on the picket line. The transformation from
economic to physical combat by those engaged in the contest
is difficult to prevent even when cool heads direct the fight.
Violence of this nature, however much it is to be regretted, must
have been in the contemplation of the Congress when it
 provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing
therein should be construed so as to interfere with or impede or
diminish in any way the right to strike. If this were not so, the
rights afforded to employees by the Act would indeed be
illusory. We accordingly recently held that it was not intended
by the Act that minor disorders of this nature would deprive a
striker of the possibility of reinstatement. (Republic Steel Corp.
v. N. L. R. B., 107 F2d 472, cited in Mathews, Labor Relations
and the Law, p. 378)

Hence the incident that occurred between Ner, et al. and Ramon Garcia
was but a necessary incident of the strike and should not be considered as
a bar to reinstatement. Thus it has been held that:

Fist-fighting between union and non-union employees in the midst of a

strike is no bar to reinstatement. (Teller, Labor Disputes and Collective
Bargaining, Vol. II, p. 855 citing Stackpole Carbon, Co. 6 NLRB 171,
enforced 105 F2d 167.)

Furthermore, assuming that the acts committed by the strikers were

transgressions of law, they amount only to mere ordinary misdemeanors
and are not a bar to reinstatement.

In cases involving misdemeanors the board has generally held that

unlawful acts are not bar to reinstatement. (Teller, Labor Disputes and
Collective Bargaining, Id., p. 854, citing Ford Motor Company, 23 NLRB
No. 28.)

Finally, it is not disputed that despite the pendency of criminal charges

against non-striking employees before the fiscal's office, they were readily
admitted, but those strikers who had pending charges in the same office
were refused readmission. The reinstatement of the strikers is thus in
order.

[W]here the misconduct, whether in reinstating persons equally

guilty with those whose reinstatement is opposed, or in other
ways, gives rise to the inference that union activities rather than
misconduct is the basis of his [employer] objection, the Board
has usually required reinstatement." (Teller, supra, p. 853,
citing the Third Annual Report of NLRB [1938], p. 211.)
Lastly, the lower Court justified the constructive dismissal of Florencio
Ibarra allegedly because he committed acts inimical to the interest of the
respondents when, as president of the FGU Workers and Employees
Association-NATU, he advised the strikers that they could use force and
violence to have a successful picket and that picketing was precisely
intended to prevent the non-strikers and company clients and customers
from entering the Companies' buildings. Even if this were true, the record
discloses that the picket line had been generally peaceful, and that
incidents happened only when management men made incursions into and
tried to break the picket line. At any rate, with or without the advice of
Ibarra, picketing is inherently explosive. For, as pointed out by one author,
"The picket line is an explosive front, charged with the emotions and fierce
loyalties of the union-management dispute. It may be marked by colorful
name-calling, intimidating threats or sporadic fights between the pickets
and those who pass the line." (Mathews, Labor Relations and the Law, p.
752). The picket line being the natural result of the respondents' unfair
labor practice, Ibarra's misconduct is at most a misdemeanor which is not a
bar to reinstatement. Besides, the only evidence presented by the
Companies regarding Ibarra's participation in the strike was the testimony
of one Rodolfo Encarnacion, a former member of the board of directors of
the petitioner FGU Insurance Group Workers and Employees Union-NATU,
who became a "turncoat" and who likewise testified as to the union
activities of Atty. Lacsina, Ricardo Villaruel and others (annex C, Decision,
p. 27) — another matter which emphasizes the respondents' unfair labor
practice. For under the circumstances, there is good ground to believe that
Encarnacion was made to spy on the actvities of the union members. This
act of the respondents is considered unjustifiable interference in the union
activities of the petitioners and is unfair labor practice.

It has been held in a great number of decisions at espionage by

an employer of union activities, or surveillance thereof, are such
instances of interference, restraint or coercion of employees in
connection with their right to organize, form and join unions as
to constitute unfair labor practice.

... "Nothing is more calculated to interfere with, restrain and

coerce employees in the exercise of their right to self-
organization than such activity even where no discharges
result. The information obtained by means of espionage is in
valuable to the employer and can be used in a variety of cases
 to break a union." The unfair labor practice is committed
whether the espionage is carried on by a professional labor spy
or detective, by officials or supervisory employees of the
employer, or by fellow employees acting at the request or
direction of the employer, or an ex-employee..." (Teller, Labor
Disputes and Collective Bargaining, Vol. II, pp. 765-766, and
cases cited.) .

IV. The lower court should have ordered the reinstatement of the officials
and members of the Unions, with full back wages from June 2, 1958 to the
date of their actual reinstatement to their usual employment. Because all
too clear from the factual and environmental milieu of this case, coupled
with settled decisional law, is that the Unions went on strike because of the
unfair labor practices committed by the respondents, and that when the
strikers reported back for work — upon the invitation of the respondents —
they were discriminatorily dismissed. The members and officials of the
Unions therefore are entitled to reinstatement with back pay.

[W]here the strike was induced and provoked by improper

conduct on the part of an employer amounting to an 'unfair
labor practice,' the strikers are entitled to reinstatement with
back pay. (Rothenberg on Labor Relations, p. 418.)

[A]n employee who has been dismissed in violation of the

provisions of the Act is entitled to reinstatement with back pay
upon an adjudication that the discharge was illegal." (Id., citing
Waterman S. S. Corp. v. N. L. R. B., 119 F2d 760; N. L. R. B. v.
Richter's Bakery, 140 F2d 870; N. L. R. B. v. Southern Wood
Preserving Co., 135 F. 2d 606; C. G. Conn, Ltd. v. N. L. R. B.,
108 F2d 390; N. L. R. B. v. American Mfg. Co., 106 F2d 61; N.
L. R. B. v. Kentucky Fire Brick Co., 99 F2d 99.)

And it is not a defense to reinstatement for the respondents to allege that

the positions of these union members have already been filled by
replacements.

[W]here the employers' "unfair labor practice" caused or

contributed to the strike or where the 'lock-out' by the employer
constitutes an "unfair labor practice," the employer cannot
successfully urge as a defense that the striking or lock-out
 employees position has been filled by replacement. Under such
circumstances, if no job sufficiently and satisfactorily
comparable to that previously held by the aggrieved employee
can be found, the employer must discharge the replacement
employee, if necessary, to restore the striking or locked-out
worker to his old or comparable position ... If the employer's
improper conduct was an initial cause of the strike, all the
strikers are entitled to reinstatement and the dismissal of
replacement employees wherever necessary; ... . (Id., p. 422
and cases cited.)

A corollary issue to which we now address ourselves is, from what date
should the backpay payable to the unionists be computed? It is now a
settled doctrine that strikers who are entitled to reinstatement are not
entitled to back pay during the period of the strike, even though it is caused
by an unfair labor practice. However, if they offer to return to work under
the same conditions just before the strike, the refusal to re-employ or the
imposition of conditions amounting to unfair labor practice is a violation of
section 4(a) (4) of the Industrial Peace Act and the employer is liable for
backpay from the date of the offer (Cromwell Commercial Employees and
Laborers Union vs. Court of Industrial Relations, L-19778, Decision, Sept.
30, 1964, 12 SCRA 124; Id., Resolution on motion for reconsideration, 13
SCRA 258; see also Mathews, Labor Relations and the Law, p. 730 and
the cited cases). We have likewise ruled that discriminatorily dismissed
employees must receive backpay from the date of the act of discrimination,
that is, from the date of their discharge (Cromwell Commercial Employees
and Laborers Union vs. Court of Industrial Relations, supra).

The respondents notified the petitioner strikers to report back for work on
June 2, 1958, which the latter did. A great number of them, however, were
refused readmission because they had criminal charges against them
pending before the fiscal's office, although non-strikers who were also
facing criminal indictments were readily readmitted. These strikers who
were refused readmission on June 2, 1958 can thus be categorized as
discriminatorily dismissed employees and are entitled to backpay from said
date. This is true even with respect to the petitioners Jose Pilapil, Paulino
Bugay, Jr. and Jose Garcia, Jr. who were found guilty only of
misdemeanors which are not considered sufficient to bar reinstatement
(Teller, Labor Disputes and Collective Bargaining, p. 854), especially so
because their unlawful acts arose during incidents which were provoked by
the respondents' men. However, since the employees who were denied
readmission have been out of the service of the Companies (for more than
ten years) during which they may have found other employment or other
means of livelihood, it is only just and equitable that whatever they may
have earned during that period should be deducted from their back wages
to mitigate somewhat the liability of the company, pursuant to the equitable
principle that no one is allowed to enrich himself at the expense of another
(Macleod & Co. of the Philippines v. Progressive Federation of Labor, 97
Phil. 205 [1955]).

The lower court gave inordinate significance to the payment to and

acceptance by the dismissed employees of separation pay. This Court has
ruled that while employers may be authorized under Republic Act 1052 to
terminate employment of employees by serving the required notice, or, in
the absence thereof, by paying the required compensation, the said Act
may not be invoked to justify a dismissal prohibited by law, e.g., dismissal
for union activities.

... While Republic Act No. 1052 authorizes a commercial

establishment to terminate the employment of its employee by
serving notice on him one month in advance, or, in the absence
thereof, by paying him one month compensation from the date
of the termination of his employment, such Act does not give to
the employer a blanket authority to terminate the employment
regardless of the cause or purpose behind such termination.
Certainly, it cannot be made use of as a cloak to circumvent a
final order of the court or a scheme to trample upon the right of
an employee who has been the victim of an unfair labor
practice. (Yu Ki Lam, et al. v. Nena Micaller, et al., 99 Phil. 904
[1956].)

Finally, we do not share the respondents' view that the findings of fact of
the Court of Industrial Relations are supported by substantial and credible
proof. This Court is not therefore precluded from digging deeper into the
factual milieu of the case (Union of Philippine Education Employees v.
Philippine Education Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v.
Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]).

V. The petitioners (15 of them) ask this Court to cite for contempt the
respondent Presiding Judge Arsenio Martinez of the Court of Industrial
Relations and the counsels for the private respondents, on the ground that
the former wrote the following in his decision subject of the instant petition
for certiorari, while the latter quoted the same on pages 90-91 of the
respondents' brief: .

... Says the Supreme Court in the following decisions:

In a proceeding for unfair labor practice, involving a

determination as to whether or not the acts of the
employees concerned justified the adoption of the
employer of disciplinary measures against them, the
mere fact that the employees may be able to put up
a valid defense in a criminal prosecution for the
same acts, does not erase or neutralize the
employer's right to impose discipline on said
employees. For it is settled that not even the
acquittal of an employee of the criminal charge
against him is a bar to the employer's right to
impose discipline on its employees, should the act
upon which the criminal charged was based
constitute nevertheless an activity inimical to the
employer's interest... The act of the employees now
under consideration may be considered as a
misconduct which is a just cause for dismissal.
(Lopez, Sr., et al. vs. Chronicle Publication
Employees Ass'n. et al., G.R. No. L-20179-81,
December 28, 1964.) (emphasis supplied)

The two pertinent paragraphs in the above-cited decision * which contained

the underscored portions of the above citation read however as follows:

Differently as regard the dismissal of Orlando Aquino and

Carmelito Vicente, we are inclined to uphold the action taken by
the employer as proper disciplinary measure. A reading of the
article which allegedly caused their dismissal reveals that it
really contains an insinuation albeit subtly of the supposed
exertion of political pressure by the Manila Chronicle
management upon the City Fiscal's Office, resulting in the non-
filing of the case against the employer. In rejecting the
employer's theory that the dismissal of Vicente and Aquino was
 justified, the lower court considered the article as "a report of
some acts and omissions of an Assistant Fiscal in the exercise
of his official functions" and, therefore, does away with the
presumption of malice. This being a proceeding for unfair labor
practice, the matter should not have been viewed or gauged in
the light of the doctrine on a publisher's culpability under the
Penal Code. We are not here to determine whether the
employees' act could stand criminal prosecution, but only to find
out whether the aforesaid act justifies the adoption by the
employer of disciplinary measure against them. This is not
sustaining the ruling that the publication in question is qualified
privileged, but even on the assumption that this is so, the
exempting character thereof under the Penal Code does not
necessarily erase or neutralize its effect on the employer's
interest which may warrant employment of disciplinary
measure. For it must be remembered that not even the
acquittal of an employee, of the criminal charges against him, is
a bar to the employer's right to impose discipline on its
employees, should the act upon which the criminal charges
was based constitute nevertheless an activity inimical to the
employer's interest.

In the herein case, it appears to us that for an employee to

publish his "suspicion," which actually amounts to a public
accusation, that his employer is exerting political pressure on a
public official to thwart some legitimate activities on the
employees, which charge, in the least, would sully the
employer's reputation, can be nothing but an act inimical to the
said employer's interest. And the fact that the same was made
in the union newspaper does not alter its deleterious character
nor shield or protect a reprehensible act on the ground that it is
a union activity, because such end can be achieved without
resort to improper conduct or behavior. The act of the
employees now under consideration may be considered as a
misconduct which is a just cause for dismissal.** (Emphasis
ours)

It is plain to the naked eye that the 60 un-underscored words of the

paragraph quoted by the respondent Judge do not appear in the pertinent
paragraph of this Court's decision in L-20179-81. Moreover, the first
underscored sentence in the quoted paragraph starts with "For it is
settled ..." whereas it reads, "For it must be remembered ...," in this Court's
decision. Finally, the second and last underlined sentence in the quoted
paragraph of the respondent Judge's decision, appears not in the same
paragraph of this Court's decision where the other sentence is, but in the
immediately succeeding paragraph.

This apparent error, however, does not seem to warrant an indictment for
contempt against the respondent Judge and the respondents' counsels.
We are inclined to believe that the misquotation is more a result of clerical
ineptitude than a deliberate attempt on the part of the respondent Judge to
mislead. We fully realize how saddled with many pending cases are the
courts of the land, and it is not difficult to imagine that because of the
pressure of their varied and multifarious work, clerical errors may escape
their notice. Upon the other hand, the respondents' counsels have the
prima facie right to rely on the quotation as it appears in the respondent
Judge's decision, to copy it verbatim, and to incorporate it in their brief.
Anyway, the import of the underscored sentences of the quotation in the
respondent Judge's decision is substantially the same as, and faithfully
reflects, the particular ruling in this Court's decision, i.e., that "[N]ot even
the acquittal of an employee, of the criminal charges against him, is a bar
to the employer's right to impose discipline on its employees, should the act
upon which the criminal charges were based constitute nevertheless an
activity inimical to the employer's interest."

Be that as it may, we must articulate our firm view that in citing this Court's
decisions and rulings, it is the bounden duty of courts, judges and lawyers
to reproduce or copy the same word-for-word and punctuation mark-for-
punctuation mark. Indeed, there is a salient and salutary reason why they
should do this. Only from this Tribunal's decisions and rulings do all other
courts, as well as lawyers and litigants, take their bearings. This is because
the decisions referred to in article 8 of the Civil Code which reads, "Judicial
decisions applying or interpreting the laws or the Constitution shall form a
part of the legal system of the Philippines," are only those enunciated by
this Court of last resort. We said in no uncertain terms in Miranda, et al. vs.
Imperial, et al. (77 Phil. 1066) that "[O]nly the decisions of this Honorable
Court establish jurisprudence or doctrines in this jurisdiction." Thus, ever
present is the danger that if not faithfully and exactly quoted, the decisions
and rulings of this Court may lose their proper and correct meaning, to the
detriment of other courts, lawyers and the public who may thereby be
misled. But if inferior courts and members of the bar meticulously discharge
their duty to check and recheck their citations of authorities culled not only
from this Court's decisions but from other sources and make certain that
they are verbatim reproductions down to the last word and punctuation
mark, appellate courts will be precluded from acting on misinformation, as
well as be saved precious time in finding out whether the citations are
correct.

Happily for the respondent Judge and the respondents' counsels, there was
no substantial change in the thrust of this Court's particular ruling which
they cited. It is our view, nonetheless, that for their mistake, they should be,
as they are hereby, admonished to be more careful when citing
jurisprudence in the future. ACCORDINGLY, the decision of the Court of
Industrial Relations dated August 17, 1965 is reversed and set aside, and
another is entered, ordering the respondents to reinstate the dismissed
members of the petitioning Unions to their former or comparatively similar
positions, with backwages from June 2, 1958 up to the dates of their actual
reinstatements. Costs against the respondents.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Fernando, Teehankee,

Barredo, Villamor and Makasiar, JJ., concur.

Zaldivar, J., took no part.

 
SECOND DIVISION
 

CENTRAL AZUCARERA   G.R. No. 186605

DE BAIS EMPLOYEES
UNION-NFL [CABEU-NFL],  
 
represented by its President,
PABLITO SAGURAN, Present:

Petitioner,  

  CARPIO, J., Chairperson,

  NACHURA,

  PERALTA,

  ABAD, and

- versus - MENDOZA, JJ.

   

   

   

   

CENTRAL AZUCARERA  
DE BAIS, INC. [CAB],
represented by its President,  
ANTONIO STEVEN L.
 
CHAN,
 
Respondent.
  

Promulgated:

November 17, 2010

 

X ----------------------------------------------------------------------------------- X

DECISION
 

MENDOZA, J.:

 
 

Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court filed by petitioner Central Azucarera De Bais Employees Union-
National Federation of Labor (CABEU-NFL) seeking to reverse and set aside: (1)
the September 26, 2008 Decision108[1] of the Court of Appeals (CA), in CA-G.R.
SP No. 03238, which reversed the July 18, 2007 Decision 109[2] and September 28,
2007 Resolution110[3] of the National Labor Relations Commission (NLRC) and
reinstated the July 13, 2006 Decision111[4] of the Labor Arbiter (LA); and (2) its

108

109

110

111
January 21, 2009 Resolution112[5] denying the Motion for Reconsideration of
CABEU-NFL.

THE FACTS

Respondent Central Azucarera De Bais, Inc. (CAB) is a corporation duly

organized and existing under the laws of the Philippines. It is represented by its
President, Antonio Steven L. Chan (Chan), in this proceeding.

CABEU-NFL is a duly registered labor union and a certified bargaining

agent of the CAB rank-and-file employees, represented by its President, Pablito
Saguran (Saguran).

On January 19, 2004, CABEU-NFL sent CAB a proposed Collective

Bargaining Agreement (CBA)113[6] seeking increases in the daily wage and
vacation and sick leave benefits of the monthly employees and the grant of leave
benefits and 13th month pay to seasonal workers.

112

113
 On March 27, 2004, CAB responded with a counter-proposal 114[7] to the
effect that the production bonus incentive and special production bonus and
incentives be maintained. In addition, respondent CAB agreed to execute a pro-
rated increase of wages every time the government would mandate an increase in
the minimum wage. CAB, however, did not agree to grant additional and separate
Christmas bonuses.

On May 21, 2004, CAB received an Amended Union Proposal115[8] sent by

CABEU-NFL reducing its previous demand regarding wages and bonuses. CAB,
however, maintained its position on the matter. Thus, the collective bargaining
negotiations resulted in a deadlock.

On account of the impasse, CABEU-NFL filed a Notice of Strike with the

National Conciliation and Mediation Board (NCMB). The NCMB then assumed
conciliatory-mediation jurisdiction and summoned the parties to conciliation
conferences.116[9]

In its June 2, 2005 Letter sent to CAB117[10] (letter-request), CABEU-NFL

requested copies of CABs annual financial statements from 2001 to 2004 and
asked for the resumption of conciliation meetings.
114

115

116

117
  

CAB replied through its June 14, 2005 Letter 118[11] (letter-response) to
NCMB Regional Director of Dumaguete City Isidro Cepeda, which reads:

At the outset, it observed that the letter signed by Mr. Pablito

Saguran who is no longer an employee of the Central for he was one of
those lawfully terminated due to an authorized cause x x x.
 

More importantly, the declared purpose of the requested

conciliation meeting has already been rendered moot and academic
because: (1) the Union which Mr. Saguran purportedly represents has
already lost its majority status by reason of the disauthorization and
withdrawal of support thereto by more than 90% of the rank and file
employees in the bargaining unit of Central sometime in January, 2005,
and (2) the workers themselves, acting as principal, after disauthorizing
the previous agent CABEU-NFL have organized themselves into a new
Union known as Central Azucarera de Bais Employees Labor Association
(CABELA) and after obtaining their registration certificate and making
due representation that it is a duly organized union representing almost all
the rank and file workers in the Central, had concluded a new collective
bargaining agreement with the Central on April 21, 2005 in Dumaguete
City. The aforesaid CBA had been duly ratified by the rank and file workers
constituting 91% of the collective bargaining unit x x x.
 
Clearly, therefore, the request for further conciliation conference
will serve no lawful and practical purpose. In view of the foregoing, and for
the sake of continued industrial peace prevailing in the Central, we
beseech the Honorable Office to disregard the aforesaid request.

It appears that the NCMB failed to act on the letter-response of CAB.

Neither did it convene CAB and CABEU-NFL to continue the negotiations
between them.

118
 Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint
for Unfair Labor Practice119[12] for the formers refusal to bargain with it.

On July 13, 2006, the LA dismissed the complaint.120[13] Pertinent portions

of the LA decision read:

The procedure in the discharge of the duty to bargain collectively is

provided for in Article 250 of the Labor Code: (1) the party who desires to
negotiate an agreement shall serve a written notice upon the other party
with a statement of proposals; (2) the other party shall make a reply
thereto not later than ten (10) days from receipt of notice; (3) if the dispute
is unsettled resulting in a deadlock, the NCMB shall intervene upon the
request or at its own initiative and call the parties to conciliation Meeting x
x x (4) if the NCMB fails to effect an agreement, the Board shall exert all
efforts to settle disputes amicably and encourage the parties to submit
their case to a voluntary arbitrator; (5) the parties may also go on strike or
declare a lockout as the case may be after complying with legal
requirements. Subject, of course, to the plenary power of the Secretary of
Labor and Employment to assume jurisdiction over the dispute or to
certify the same to the NLRC for compulsory arbitration.

 
In the case at bar, the record shows that respondent CAB replied to
the complainant Unions CBA proposals with its own set of
counterproposals x x x. Likewise, respondent CAB responded to the
Unions subsequent counterproposals x x x. Record further shows that
respondent CAB participated in a series of CBA negotiations conducted by
the parties at the plant level as well as in the conciliation/mediation
proceedings conducted by the NCMB. Unfortunately, both exercises
resulted in a deadlock.

119

120
 At this juncture it cannot be said, therefore, that respondent CAB
refused to negotiate or that it violated its duty to bargain collectively in
light of its active participation in the past CBA negotiations at the plant
level as well as in the NCMB. x x x
 
xxx xxx xxx
 
We do not agree that respondent CAB committed an unfair labor
practice act in questioning the capacity of Mr. Pablito Saguran to represent
complainant union in the CBA negotiations because Mr. Pablito Saguran
was no longer an employee of respondent CAB at that time having been
separated from employment on the ground of redundancy and having
received the corresponding separation benefits. x x x.
 
So also, we do not find respondent CAB guilty of unfair labor
practice by its act of writing the NCMB Director in a letter dated June 24,
2005, stating its legal position on complainants request for further
conciliation to the effect that since almost [all] of the rank and file
employees, the principals in a principal-agent relationship, have
withdrawn their support to the complainant union and that in fact they
have already organized themselves into a DOLE-registered labor union
known as CABELA, any further conciliation will serve no lawful and
practical purpose. x x x.
 
At this juncture, it was incumbent upon the NCMB to make a ruling
on the request of the complainant union as well as upon the corresponding
comment of respondent CAB. If the NCMB chose not to pursue further
negotiation between the parties, respondent CAB should not be faulted
therefor. x x x.
 
Under the facts obtaining, when the conciliation/mediation by the
NCMB has not been officially concluded, we find the instant complaint for
unfair labor practice not only without merit but also premature.
 
WHEREFORE, foregoing considered, the case is hereby
DISMISSED for lack of merit.
 
SO ORDERED.

 
  

On appeal, the NLRC in its July 18, 2007 Decision121[14] reversed the LAs
decision and found CAB guilty of unfair labor practice. The NLRC explained:

The issue to be resolved is whether or not respondent company

committed an unfair labor practice for violation of its duty to bargain
collectively in good faith.
 
xxx xxx xxx
 
The important event to discuss in the instant case is respondents
act of concluding a CBA with CABELA. As gleaned from respondents letter
to NCMB dated June 14, 2005, it concluded a CBA with CABELA because
they opined that complainant lost its majority status in January 2005
when 90% of the rank-and-file employees disauthorized and withdrew
their support to complainant. These rank-and-file employees who
withdrew their support, organized and formed CABELA. In fine,
respondent believed that CABELA enjoyed the majority status of CABELA
since it was supported by 90% of all employees in the bargaining unit.
 
In resolving the issue of whether respondents act of concluding a
CBA with CABELA is warranted under the circumstances is to examine the
validity of such act. The mechanics of collective bargaining are set in
motion only when the following jurisdictional preconditions are present,
namely: 1) possession of the status of majority representation of the
employees representative in accordance with any of the means of selection
and designation provided for by the Labor Code, 2) proof of majority
representation, and 3) a demand to bargain under Article 250, par. (a) of
the Labor Code x x x.
 
In the instant case, it is undeniable that complainant is the certified
collective bargaining agent of the regular workers and seasonal employees
of respondent. Its status as such was determined in a certification election
conducted by the Department of Labor and Employment (DOLE). As such,
there was no reason for respondent to deal and negotiate with CABELA
since the latter does not have such status of majority representation. x x x.
 
X x x. Based on this premise, respondent violated its duty to bargain
with complainant when during the pendency of the conciliation
proceedings before the NCMB it concluded a CBA with another union as a

121
 consequence, it refused to resume negotiation with complainant upon the
latters demand.
 
 

With respect to respondents observation that the request for

conciliation meeting was signed by one who is not eligible and authorized
to represent any union with the company since he is no longer an
employee, suffice it to state that at the time the request was made, such
employee has questioned the validity of his dismissal with then NLRC. X x
x.
 
Respondents failure to act on the request of the complainant to
resume negotiation for no valid reason constitutes unfair labor practice.
Consequently, the proposed CBA as amended should be imposed to
respondent.
 
WHEREFORE, premises considered, the appealed Decision is
REVERSED and SET ASIDE. Another one is entered declaring that
respondent Central Azucarera de Bais is guilty of unfair labor practice. As
such, the proposed CBA of complainant, as amended is imposed to
respondent Central Azucarera de Bais.
 
SO ORDERED.

CAB moved for a reconsideration but the motion was denied by the NLRC
in its resolution dated September 28, 2007.122[15]

Unsatisfied, CAB elevated the matter to the CA by way of a petition for

certiorari under Rule 65 alleging grave abuse of discretion on the part of the
NLRC in reversing the LA decision and issuing the questioned resolution.

122
  

On September 26, 2008, the CA found CABs petition meritorious and

reversed the NLRC decision and resolution. The CA pointed out:

xxx xxx xxx

 
First. This Court has acquired jurisdiction over the person of private
respondent CABEU-NFL. Through its counsel of record, CABEU-NFL
already filed its extensive comment on the instant petition. Hence, it is
now useless to contend that it was denied notice of the same and the
opportunity to be heard on it. x x x.
 

xxx xxx xxx

 
 
Second. Petitioner CAB was not shown to have violated the rule
requiring parties to certify in their initiatory pleadings against forum
shopping. Private respondent CABEU-NFL alleges in its comment that the
two cases are pending before this Court: CA-G.R. No. 03132 and CA-G.R.
No. 03017 involving the same parties as in the case at bar. Unfortunately,
CABEU-NFL did not explain how the issues in those pending cases are
related to or similar to those involved in this proceeding. x x x.
 

xxx xxx xxx

 
Third. x x x xxx xxx

In the case at bar, private respondent CABEU-NFL failed in its

burden of proof to present substantial evidence to support the allegation of
unfair labor practice. The assailed Decision and Resolution of public
respondent referred merely to two (2) circumstances which allegedly
support the conclusion that the presumption of good faith had been
rebutted and that bad faith was extant in petitioners actions. To recall,
these circumstances are: (a) the execution of a supposed collective
bargaining agreement with another labor union, CABELA; and (b) CABs
 sending of the letter dated June 14, 2005 to NCMB seeking to call off the
collective bargaining negotiations. These, however, are not enough to
ascribe the very serious offense of unfair labor practice upon petitioner. x x
x.

xxx xxx xxx

x x x petitioner CAB was not scuttling the ongoing negotiations

towards a new collective bargaining agreement. It was simply propounding
a position to the NCMB for the latter to rule on. That the negotiations did
not push through was not the result of CAB managements intransigence
because there was none at least so far as the case record confirms. There is
nothing that establishes petitioners predetermined resolve not to budge
from an initial position perhaps stubbornness of some ambiguous sort but
not the absence of good faith to pursue collective bargaining. x x x.
 

xxx xxx xxx

 
WHEREFORE, the instant petition is GRANTED. The assailed
Decision dated July 18, 2007 and Resolution dated September 28, 2007 of
public respondent National Labor Relations Commission in NLRC Case
No. V-000002-07 are REVERSED and SET ASIDE. The Decision dated
July 13, 2006 in NLRC RAB VII Case No. 07-0104-2005-D entitled
Central Azucarera de Bais Employees Union-NFL (CABEU-NFL),
represented by Pablito Saguran, complainant, versus, (CAB) and/or Steven
Chan as Owner and Roberto de la Rosa as Manager, respondents of Labor
Arbiter Fructuoso T. Villarin IV is REINSTATED and AFFIRMED IN
TOTO. Costs of suit de oficio.
 
SO ORDERED.
 

CABEU-NFL moved for a reconsideration but its motion was denied by the
CA in its Resolution dated January 21, 2009.123[16]
 
Hence this petition.
123
 
In its Memorandum,124[17] CABEU-NFL raised the following:
 
ISSUES
 
I) WHETHER OF NOT THE COURT OF APPEALS VIOLATED THE
CONSTITUTIONAL RIGHTS OF PETITIONER WHEN THE
HONORABLE COURT OF APPEALS REVERSED THE FINDINGS OF
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) WHICH
HELD RESPONDENT GUILTY OF UNFAIR LABOR PRACTICE.125[18]
 
II) WHETHER OR NOT THE COURT OF APPEALS VIOLATED
THE CONSTITUTIONAL RIGHTS OF THE PETITIONER WHEN IT
GAVE DUE COURSE TO RESPONDENTS PETITION FOR
CERTIORARI WITHOUT COMPLYING WITH THE JURISDICTIONAL
REQUIREMENTS UNDER RULE 65, SECTION 1 AND SUPREME
COURT CIRCULAR NO. 04-94, ON CERTIFICATION ON NON-FORUM
SHOPPING.126[19]

In sum, the petition raises three (3) issues for the Courts consideration which
are whether or not the CA erred: (1) in giving due course to the petition for
certiorari despite service of the copy of the petition to CABEU-NFLs counsel and
not to itself ; (2) in giving due course to the petition for certiorari despite the
failure of CAB to indicate the address of CABEU-NFL in the petition; and (3) in
absolving CAB of unfair labor practice.

124

125

126
 CABEU-NFL insists that the CA erred in giving due course to the petition
for certiorari because respondent CAB served a copy of its CA petition to
CABEU-NFLs counsel and not to CABEU-NFL itself. CABEU-NFL, likewise,
harps on the failure of CAB to indicate CABEU-NFLs full address in the said
petition as required in petitions for certiorari, citing Section 1, Rule 65 127[20] in
relation to Section 3, Rule 46.128[21]

Ultimately, CABEU-NFL aggressively asserts that CAB is guilty of unfair

labor practice on the ground of its refusal to bargain collectively. CABEU-NFL
claims to be the duly certified bargaining agent of the CAB rank-and-file
employees such that it requested to bargain through a letter-request which was
subsequently turned down by CAB in its letter-response. Anchored on the
admission in the CAB letter-response of a supposed CBA with CABELA,
CABEU-NFL charges that such act constitutes a violation of CABs duty to bargain
collectively under Article 253 of the Labor Code 129[22] and consequently an act of
unfair labor practice prohibited under Article 248 (g) of the Labor Code. 130[23]
CABEU-NFL also submits that CAB violated the prohibition against forum
shopping when it filed its petition in the CA.   CABEU-NFL claims that the
failure of CABs counsel to disclose to the CA the pendency of CA-G.R. SP No.
033132 and CA-G.R. SP No. 03017 constituted forum shopping, a sufficient
ground to dismiss the said petition.

127

128

129

130
 In its Memorandum,131[24] CAB claims that service of the copy of the
petition for certiorari to CABEU-NFLs counsel was sufficient. It vehemently
denies its alleged failure to indicate CABEU-NFLs name and address in its
petition. CAB also stresses that CA-G.R. SP No. 033132 and CA-G.R. SP No.
03017 were initiated exclusively by members of CABEU and by CABEU itself,
respectively, and not by CAB.132[25] CAB further argues that there was no identity
of issues or causes of action between the two abovementioned cases and this case.

On the issue of unfair labor practice, CAB counters that in view of the
disassociation of more than 90% of rank-and-file workers from CABEU-NFL, it
was constrained to negotiate and conclude in good faith a new CBA with
CABELA, the newly established union by workers who disassociated from
CABEU-NFL. CAB emphasizes that it declined further negotiations with
CABEU-NFL in good faith because to continue with it would serve no practical
purpose. Considering that the NCMB has yet to resolve CABs query in its letter-
response, CAB was left without any choice but accede to the demands of
CABELA. In concluding a CBA with CABELA, CAB claims that it acted in the
best interest of the rank-and-file workers which belied bad faith.

THE COURTS RULING

The petition lacks merit.

131

132
 

On the technical issues, CABEU-NFLs insistence that service of the copy of

the CA petition should have been made to it, rather than to its counsel, is
unavailing.

On the matter of service, Section 1, Rule 65 in relation to Section 3, Rule 46

of the Rules of Court, clearly provides that in a petition filed originally in the CA,
the petitioner is required to serve a copy of the petition on the adverse party before
its filing. If the adverse party appears by counsel, service shall be made on such
counsel pursuant to Section 2, Rule 13.133[26]

With respect to the alleged failure of CAB to indicate the address of

CABEU-NFL in the CA petition, it appears that CABEU-NFL is misleading the
Court. A perusal of the petition134[27] filed before the CA reveals that CAB indeed
indicated both the name135[28] and address136[29] of CABEU-NFL. Moreover, the

133

134

135

136
indication in said petition by CAB that CABEU-NFL could be served with court
processes through its counsel was substantial compliance with the Rules.137[30]

The Court, likewise, cannot sustain CABEU-NFLs contention on forum

shopping against CAB.

By forum shopping, a party initiates two or more actions in separate

tribunals, grounded on the same cause, hoping that one or the other tribunal would
favorably dispose of the matter.  The elements of forum shopping are: (1) identity
of parties, or at least such parties as would represent the same interest in both
actions; (2) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (3) identity of the two preceding particulars such
that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration.138[31]

In the case at bench, CABEU-NFL merely raised the fact of the pendency of
CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 in its comment on the petition
for certiorari139[32] filed before the CA without demonstrating any similarity in the
causes of action between the said cases and the present case. The CA, citing the

137

138

139
ruling in Tboli Agro-Industrial Development, Inc. v. Solilapsi 140[33] as authority,
points out that:

This Court cannot take judicial notice of what CA-G.R. No. 03132 and CA-
G.R. No. 03017 involve because:
 
As a general rule, courts are not authorized to take
judicial notice in the adjudication of cases pending before
them of the contents of other cases even when such cases
have been tried or are pending in the same court and
notwithstanding the fact that both cases may have  been tried
or are actually pending before the same  judge. Courts may
be required to take judicial notice of the decisions of the
appellate courts but not of the decisions of the coordinate
trial courts, or even of a decision or the facts involved in
another case tried by the same court itself, unless the parties
introduce the same in evidence or the court, as a matter of
convenience, decides to do so. Besides, judicial notice of
matters which ought to be known to judges because of their
judicial functions is only discretionary upon the court.  It is
not mandatory.
 
In the absence of evidence to show that the issues involved in these cases
are the same, this Court cannot give credence to private respondents claim
of forum shopping.

The Court now proceeds to determine whether or not respondent CAB was
guilty of acts constituting unfair labor practice by refusing to bargain collectively.

 
140
 The Court rules in the negative.

CAB is being accused of violating its duty to bargain collectively

supposedly because of its act in concluding a CBA with CABELA, another union
in the bargaining unit, and its failure to resume negotiations with CABEU-NFL.

The concept of unfair labor practice is provided in Article 247 of the Labor
Code which states:

Article 247. Concept of Unfair Labor Practice and Procedure for

Prosecution thereof. -- Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an atmosphere
of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.

xxx xxx xxx

The Labor Code, likewise, enumerates the acts constituting unfair labor
practices of the employer, thus:

 
 Article 248. Unfair Labor Practices of Employers.It shall be
unlawful for an employer to commit any of the following unfair labor
practice:
 
xxx xxx xxx
 
(g) To violate the duty to bargain collectively as
prescribed by this Code.

For a charge of unfair labor practice to prosper, it must be shown that CAB
was motivated by ill will, bad faith, or fraud, or was oppressive to labor, or done in
a manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings or grave anxiety resulted x x x in suspending
negotiations with CABEU-NFL. Notably, CAB believed that CABEU-NFL was
no longer the representative of the workers.141[34] It just wanted to foster industrial
peace by bowing to the wishes of the overwhelming majority of its rank and file
workers and by negotiating and concluding in good faith a CBA with CABELA. 142
[35] Such actions of CAB are nowhere tantamount to anti-unionism, the evil
sought to be punished in cases of unfair labor practices.

Furthermore, basic is the principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same. By imputing bad faith to the
actuations of CAB, CABEU-NFL has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice. 143 [36] Apparently,
CABEU-NFL refers only to the circumstances mentioned in the letter-response,

141

142

143
namely, the execution of the supposed CBA between CAB and CABELA and the
request to suspend the negotiations, to conclude that bad faith attended CABs
actions. The Court is of the view that CABEU-NFL, in simply relying on the said
letter-response, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith. 

Moreover, as correctly determined by the LA, the filing of the complaint for
unfair labor practice was premature inasmuch as the issue of collective bargaining
is still pending before the NCMB.

In the resolution of labor cases, this Court has always been guided by the
State policy enshrined in the Constitution that the rights of workers and the
promotion of their welfare shall be protected. The Court is, likewise, guided by the
goal of attaining industrial peace by the proper application of the law.  Thus, it
cannot favor one party, be it labor or management, in arriving at a just solution to a
controversy if the party has no valid support to its claims.   It is not within this
Courts power to rule beyond the ambit of the law.144[37]

144
 WHEREFORE, the petition is DENIED.

 
SO ORDERED.
 SECOND DIVISION

SAN MIGUEL FOODS, INC., G.R. No. 168569

Petitioner,  

  Present:

   

  QUISUMBING, J., Chairperson,

CARPIO,
  CARPIO MORALES,

- versus - TINGA, and

  VELASCO, JR., JJ.

   

SAN MIGUEL CORPORATION Promulgated:

EMPLOYEES UNION-PTWGO,
October 5, 2007
Respondent.
 
 

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DECISION

CARPIO MORALES, J.:

 

The present petition for review on certiorari raises the issue of whether
respondents complaint is one for unfair labor practice (ULP) over which a Labor
Arbiter has jurisdiction.

At the time material to the case, respondent, San Miguel Corporation

Employees Union PTWGO (the Union), was the sole bargaining agent of all the
monthly paid employees of petitioner San Miguel Foods, Incorporated (SMFI). On
November 9, 1992, some employees of SMFIs Finance Department, through the
Union represented by Edgar Moraleda, brought a grievance against Finance
Manager Gideon Montesa (Montesa), for discrimination, favoritism, unfair labor
practices, not flexible [sic], harassment, promoting divisiveness and sectarianism,
etc.,145[1] before SMFI Plant Operations Manager George Nava in accordance with
Step 1 of the grievance machinery adopted in the Collective Bargaining Agreement
(CBA) forged by SMFI and the Union.

The Union sought the 1. review, evaluat[ion] & upgrad[ing of] all Finance
staff and 2. promot[ion of] G.Q. Montesa to other SMC affiliate[s] &
subsidiaries.146[2]

145

146
 At the grievance meeting held on January 14, 1993, SMFI informed the
Union that it planned to address the grievance through a work management review
which would be completed by March 1993, hence, it asked the finance personnel to
give it their attention and cooperation.

The work management review was not completed by March 1993, however,
prompting the Union to, on March 26, 1993, elevate the grievance to Step 2.147[3]

Almost nine months after the grievance meeting was held or on October 6,
1993, SMFI rendered a Decision on Step 1 Grievance stating that it was still in the
process of completing the work management review,148[4] hence, the Unions
requests could not be granted.

The Union thereupon filed a complaint on October 20, 1993 before the
National Labor Relations Commission (NLRC), Arbitration Branch, against
SMFI,149[5] its President Amadeo P. Veloso, and its Finance Manager Montesa for
unfair labor practice, [and] unjust discrimination in matters of promotion . . . [6]
150

It prayed that SMFI et al. be ordered to promote the therein named employees with
the corresponding pay increases or adjustment including payment of salary

147

148

149

150
differentials plus attorneys fees[,] and to cease and desist from committing the
same unjust discrimination in matters of promotion.151[7]

Instead of filing a position paper as required by the Labor Arbiter, SMFI et

al. filed a motion to dismiss, 152[8] contending that the issues raised in the complaint
were grievance issues and, therefore, should be resolved in the grievance
machinery provided in [the] collective bargaining agreements [sic] of the parties or
in the mandated provision of voluntary arbitration which is also provided in the
CBA.153[9] The Union opposed the motion to dismiss.

In its Position Paper, the Union specified acts of ULP of SMFI et al. under
Article 248, paragraphs (e) and (i) of the Labor Code154[10] which Article reads:

Art. 248. Unfair labor practices of employers. It shall be unlawful for an

employer to commit any of the following unfair labor practices:

xxxx

151

152

153

154
 (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
 
xxxx

(i) To violate a collective bargaining agreement.

xxxx

By Order of February 18, 1994, the Labor Arbiter granted SMFI et al.s
motion to dismiss and ordered the remand of the case to the grievance machinery
for completion of the proceedings.155[11] The Union appealed the said order to the
NLRC by Motion for Reconsideration/Appeal 156[12] which its Second Division
granted and accordingly ordered the Labor Arbiter to continue the proceedings on
the Unions complaint.157[13] SMFI et al. filed a Motion for Reconsideration of the
NLRC order but it was denied, hence, they filed a petition for certiorari with this
Court. After the parties and the Solicitor General had filed their respective
pleadings, this Court, by Resolution of January 25, 1999, referred the case to the
Court of Appeals pursuant to St. Martin Funeral Homes v. NLRC.158[14]

155

156

157

158
 By Decision of July 31, 2002,159[15] the Court of Appeals denied SMFI et
al.s petition for certiorari, it holding that the Labor Arbiter has jurisdiction over the
complaint of the Union, they having violated the seniority rule under the CBA by
appointing and promoting certain employees which amounted to a ULP.160[16]

Before this Court, SMFI lodged the present petition for review on certiorari,
faulting the appellate court in

A.
 
. . . FINDING THAT THE LABOR ARBITER HAS JURISDICTION OVER
THE COMPLAINT OF RESPONDENT UNION
 
B.
 
. . . FINDING THAT SMFIS ALLEGED VIOLATION OF THE CBA
CONSTITUTES UNFAIR LABOR PRACTICE.

The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor

Code, includes complaints for ULP.

SMFI argues that the allegations in the Unions complaint filed before the
Labor Arbiter do not establish a cause of action for ULP, the Union having merely
contended that SMFI was guilty thereof without specifying the ultimate facts upon

159

160
which it was based. It cites Section 1 of Rule 8 of the Rules of Court as applying
suppletorily to the proceedings before the Labor Arbiter, which Section reads:

Section 1. In general. Every pleading shall contain in a methodical and

logical form, a plain concise and direct statement of the ultimate facts on which
the party pleading relies for his claim . . .
 

Alleging that the Union failed to comply with this Rule, SMFI concludes that the
Labor Arbiter has no jurisdiction over its complaint.

A perusal of the complaint shows that, indeed, the particular acts of ULP
alleged to have been committed by SMFI were not specified; neither were the
ultimate facts in support thereof. In its Position Paper, however, the Union detailed
the particular acts of ULP attributed to SMFI and the ultimate facts in support
thereof.

Section 7, Rule V of the New Rules of Procedure of the NLRC provides:

Nature of Proceedings. The proceedings before the Labor Arbiter shall

be non-litigious in nature. Subject to the requirements of due process, the
technicalities of law and procedure and the rules obtaining in the courts of
law shall not strictly apply thereto. The Labor Arbiter may avail himself of all
reasonable means to ascertain the facts of the controversy speedily, including
 ocular inspection and examination of well-informed persons. (Emphasis and
underscoring supplied)
 

Section 1 of Rule 8 of the Rules of Court should thus not be strictly applied to a
case filed before a Labor Arbiter. In determining jurisdiction over a case,
allegations made in the complaint, as well as those in the position paper, may thus
be considered.

As stated above, the Union, in its Position Paper, mentioned the particular
acts of ULP and the ultimate facts in support thereof. Thus it alleged:

This is a complaint for unfair labor practices pursuant to Article 248 (e)
and (i) of the Labor Code, as amended, which reads:
 
Art. 248. Unfair labor practices of employers. It shall be unlawful
for an employer to commit any of the following unfair labor
practices:
xxxx
 
(e) To discriminate in regard to wages, hours of work,
and other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization.
 
xxxx
 
(i) to violate a collective bargaining agreement.
 
and which was committed by herein respondents as follows:

1. large scale and wanton unjust discrimination in matters of

promotion, particularly upon the following members of complainant: Ellen
Ventura, Julie Geronimo, Ronnie Cruz, Rita Calasin, Romy de Peralta, Malou
 Alano, And E. M. Moraleda, all assigned with the Finance Department or
respondent SMFI.
 
2. gross and blatant violations by respondent SMFI of Section 5,
Article III (Job Security) and Section 4, Article VIII (Grievance Machinery)
of the current collective bargaining agreement (CBA) between complainant
and respondent SMFI, which provisions of said CBA are hereunder quoted for
easy reference. (Emphasis and underscoring supplied)
 

On the questioned promotions, the Union did not allege that they were done
to encourage or discourage membership in a labor organization. In fact, those
promoted were members of the complaining Union. The promotions do not thus
amount to ULP under Article 248(e) of the Labor Code.

As for the alleged ULP committed under Article 248(i), for violation of a
CBA, this Article is qualified by Article 261 of the Labor Code, the pertinent
portion of which latter Article reads:

x x x violations of a Collective Bargaining Agreement, except those which are

gross in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For purposes
of this article, gross violations of Collective Bargaining Agreement shall
mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement. (Emphasis and underscoring supplied)
 
 
Silva v. NLRC instructs that for a
 
ULP case to be cognizable by the Labor Arbiter, and the NLRC to exercise its
appellate jurisdiction, the allegations in the complaint should show prima facie
 the concurrence of two things, namely: (1) gross violation of the CBA; AND (2)
the violation pertains to the economic provisions of the CBA. 161[17] (Emphasis
and underscoring supplied)
 

As reflected in the above-quoted allegations of the Union in its Position

Paper, the Union charges SMFI to have violated the grievance machinery provision
in the CBA. The grievance machinery provision in the CBA is not an economic
provision, however, hence, the second requirement for a Labor Arbiter to exercise
jurisdiction of a ULP is not present.

The Union likewise charges SMFI, however, to have violated the Job
Security provision in the CBA, specifically the seniority rule, in that SMFI
appointed less senior employees to positions at its Finance Department,
consequently intentionally by-passing more senior employees who are deserving of
said appointment.

Article 4 of the Labor Code provides that All doubts in the implementation
and interpretation of the provisions of this Code, including implementing rules and
regulations, shall be resolved in favor of labor. Since the seniority rule in the
promotion of employees has a bearing on salary and benefits, it may, following a
liberal construction of Article 261 of the Labor Code, be considered an economic
provision of the CBA.

 
161
 As above-stated, the Union charges SMFI to have promoted less senior
employees, thus bypassing others who were more senior and equally or more
qualified. It may not be seriously disputed that this charge is a gross or flagrant
violation of the seniority rule under the CBA, a ULP over which the Labor Arbiter
has jurisdiction.

SMFI, at all events, questions why the Court of Appeals came out with a
finding that it (SMFI) disregarded the seniority rule under the CBA when its
petition before said court merely raised a question of jurisdiction. The Court of
Appeals having affirmed the NLRC decision finding that the Labor Arbiter has
jurisdiction over the Unions complaint and thus remanding it to the Labor Arbiter
for continuation of proceedings thereon, the appellate courts said finding may be
taken to have been made only for the purpose of determining jurisdiction.

WHEREFORE, the Petition is DENIED.

SO ORDERED.
 THIRD DIVISION

ARELLANO UNIVERSITY EMPLOYEES G.R. No. 139940

AND WORKERS UNION, CARLOS C.  
A. RIVAS, JR., SIMEON B.
INOCENCIO, ROMULO D. JACOB, Present:
NYMIA M. PINEDA, BENEDICTO I.
NIETO, JR., LUIS JACINTO, MILBERT  
MORA, MONICO CALMA,
QUISUMBING, Chairperson,
CONSTANCIO BAYHONAN,
CARPIO,
BERNARDO SABLE, NESTOR
BRINOSA, NANJI MACARAMPAT, CARPIO MORALES,
EDUARDO FLORAGUE and DIONY S.
LUMANTA, TINGA, and
Petitioners, VELASCO, JR., JJ.
   
 
 
 
-versus-  
 
 
 

   

Promulgated:
COURT OF APPEALS, NATIONAL
 
LABOR RELATIONS COMMISSION,
 
and ARELLANO UNIVERSITY, INC.,
September 19, 2006
Respondents.
 
    

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DECISION

 
CARPIO MORALES, J.:

Subject of the present petition for certiorari are the Court of Appeals
Resolution of April 13, 1999162[1] and Resolution of September 3, 1999163[2] which
dismissed petitioners petition for certiorari for having been filed six days beyond
the reglementary period under Section 4, Rule 65 of the 1997 Rules of Civil
Procedure, as amended by Supreme Court En Banc Resolution dated July 21, 1998
reading:

If the petitioner had filed a motion for new trial or reconsideration in due time
after notice of said judgment, order or resolution, the period herein fixed shall be
interrupted. If the motion is denied, the aggrieved party may file the petition within the
remaining period, but which shall not be less than five (5) days in any event, reckoned
from notice of such denial. No extension of time to file the petition shall be granted
except for the most compelling reason and in no case to exceed fifteen (15) days.
(Emphasis and underscoring supplied)

162

163
 Petitioners, in the main, plead for the application of substantial justice over
procedural lapses, conformably to this Courts pronouncements in several cases,
and a liberal construction of the Rules in order to promote its objective of
securing a just disposition of every action or proceeding.164[3]

The record shows that the September 3, 1999 Resolution of the Court of
Appeals denying petitioners motion for reconsideration was received by them on
September 13, 1999. On September 27, 1999, petitioners filed a motion for 30-
day extension of time to file petition which this Court granted. 165[4] On October
28, 1999, petitioners filed the present petition for certiorari. 166[5] Doubtless,
petitioners could not have availed of such petition as a mere substitute for lost
appeal,167[6] hence, this Court treats it as one for review under Rule 45.

Indeed, Section 4 of Rule 65 of the 1997 Rules of Civil Procedure was

amended by the July 21, 1998 Resolution of this Court En Banc by adding to it as
second paragraph the above-quoted amendment.

The same Section was, however, subsequently amended by this Courts En

Banc Resolution in A.M. No. 00-2-03-SC which took effect on September 1, 2000

164

165
166
167
providing for a 60-day period to file petition under Rule 65 from denial of a
motion for reconsideration or new trial. As thus further amended, Section 4 of
Rule 65 now reads:

SEC. 4. When and where petition filed. The petition shall be filed not later than
sixty (60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of said motion.
(Emphasis and underscoring supplied)

The rule is settled that remedial statutes or modes of procedure, which do

not create new rights or take away vested rights but only operate in furtherance
of the remedy or confirmation of rights already existing, do not come within the
purview of the general rule against the retroactive operation of statutes. They are
construed to be applicable to actions pending and undetermined at the time of
their passage, and are deemed retroactive in that sense and to that extent.
Hence, in a long line of cases,168[7] the new period under Section 4 of Rule 65 was
given retroactive application. Of course at the time the assailed Resolutions of the
appellate court were issued in 1999, Section 4 of Rule 65 had not yet been
amended by this Courts Resolution in A.M. No. 00-2-03-SC.

168
 There being no reason why Section 4 of Rule 65, as amended in 2000 by
this Court, may not be given retroactive application to petitioners petition, it now
gives said application. While, normally, a remand of the case to the appellate
court for further proceedings is done,169[8] this Court now opts to decide the
petition on the merits to forestall further delay in its disposition.

On December 12, 1997, the Arellano University Employees and Workers

Union (the Union), the exclusive bargaining representative of about 380 rank-and-
file employees of Arellano University, Inc. (the University), filed with the National
Conciliation and Mediation Board (NCMB) a Notice of Strike charging the
University with Unfair Labor Practice (ULP) as follows:

1.      Interfering in union activities;

2.      Union Busting violation of CBAs Article IV, Section 2;170[9]

3.      Union Busting disregarding the unions request to deduct penalties from its
members who were absent and without justifiable reasons during union meetings;
and

4.      Contracting Workout the management is contracting out services and functions
being performed by Union members.171[10]

169

170
171
 

The Notice of Strike was docketed as NCMB-NCR-NS-12-520-97.

Subsequently or on December 17, 1997, a majority of the members of the

Union filed a December 15, 1997 petition for audit 172[11] of union funds before
the Office of the National Capital Region Director of the Department of Labor and
Employment (DOLE) against the officers of the Union.

On March 11, 1998, the Regional Director of DOLE-NCR directed the Union
officers to call a general membership meeting to, among other things, render an
accounting of union funds amounting to P481,117.28 which were remitted per
the check-off statement.173[12]

Also on March 11, 1998, then DOLE Secretary Cresenciano B. Trajano

certified the Notice of Strike for compulsory arbitration to the National Labor
Relations Commission (NLRC) which the latter assigned to Labor Arbiter Cristeta

172

173
D. Tamayo. The Labor Arbiter set the dispute for hearing/conference on July 3,
1998, July 17, 1998, and August 11, 1998. No settlement was reached by the
parties, however.174[13]

On July 28, 1998, the University moved for the consolidation with the ULP
charge (NCMB-NCR-NS-12-520-97) the Interpleader175[14] it filed against the
Union and some of its members, docketed as NLRC NCR Case No. 00-02-02036-98
and pending before Labor Arbiter Felipe T. Garduque II, and the Complaint the
Union filed for underpayment of wages arising from the change in the manner of
computation of salary of employees and non-payment of Sunday pay, docketed as
NLRC NCR Case No. 00-02-01422-98 and pending before Labor Arbiter Ramon
Valentin T. Reyes, both of which involve the same parties.176[15]

Before the NLRC could act on the Universitys motion for consolidation,
DOLE Secretary Bienvenido E. Laguesma, by Order177[16] of August 5, 1998,
certified for compulsory arbitration to the NLRC a second Notice of Strike filed by
the Union on July 16, 1998, docketed as NCMB-NCR-NS-07-277-98, charging the
University with the following:

174

175
176
177
 a. Violation of Collective Bargaining Agreement (CBA), Art. V withholding of union
and death benefits;

b. Violation of CBA, Art. VI non-granting of ten (10%) percent salary increase to some
union members;

c. Illegal/unauthorized deductions in the payroll;

d. Union interference circulating letters against the union; and

e. Non-implementation of the retirement plan as approved by the BIR. 178[17]

A strike was in fact staged on August 5, 1998.

By the same Order of August 5, 1998, the DOLE Secretary directed the
strikers to return to work within twenty-four (24) hours. The order was served
upon the Union on August 6, 1998, and the following day, August 7, 1998, at
about 3:00 p.m., the Union lifted its strike.179[18]

The strike staged by the Union on August 5-7, 1998 prompted the
University to file on August 24, 1998 a petition to declare the same illegal,

178

179
docketed as NLRC-NCR Case No. 00-08-06897-98, which was also consolidated
with the other cases.

Resolving the consolidated cases, the NLRC, by Decision 180[19] of October

12, 1998, disposed as follows:

WHEREFORE, judgment is hereby rendered declaring:

1.      That the Unions two notices of strike docketed as NCMB-NCR-NS-12-520-97 and
NCMB-NCR-NS-07-277-98 were, to the extent as they concern the issues herein
resolved, without merit;

2.      That as a consequence, the University is absolved from the charges of Unfair
Labor Practice contained in said notices of strike;

3.      The loss of employment status of all the individual respondents in NLRC-NCR-
Case No. 00-08-06897-98; and

4.      That there is no diminution of workers benefits in NLRC-NCR Case No. 00-02-
01422-98, because apart from the Unions failure to prove it, the University,
based on existing laws, is correct in using 314 days as divisor in computing the
daily wage of its daily paid employees.

 
181
SO ORDERED. [20] (Emphasis and underscoring supplied)

180

181
 The NLRC found that what triggered the strike was the Unions suspicion
that the petition for audit of union funds was initiated by the University. The
NLRC, citing an Order of March 11, 1998 issued by the DOLE Regional Director,
found the therein petitioners to have initiated, out of their own volition, the filing
of the petition. It thus concluded that there was no factual basis to hold the
University guilty of interference in union activities.182[21]

On the allegation of union busting, the NLRC ruled that the refusal of the
University to deduct penalties from the salaries of members of the Union who
failed to attend meetings was based on Article IV, Section 2 183[22] of the CBA vis--
vis Section 1184[23] of the same Article which requires as condition for a valid
checkoff prior submission to the management of individual checkoff
authorizations, a requirement which was not met by the Union. 185[24] Besides,
the NLRC held, the law mandates that the Union should not be arbitrary,
excessive or oppressive in imposing a fine.186[25]

On the claim that the University had been contracting out work, the NLRC
held that the same was never raised during the conciliation meetings at the
NCMB level.187[26]

182

183
184
185
186
187
 

Respecting the second Notice of Strike, the NLRC found that only the
charges of violation of the CBA for withholding union dues and death benefits,
and the non-implementation of the retirement plan, as approved by the BIR, were
left for resolution as the Union dropped the other issues raised therein after the
NCMB hearings on July 21, 1998 and July 28, 1998.188[27]

Crediting the explanation of the University that its withholding of union

dues and death aid benefits was upon the written request of several union
members themselves, the NLRC held that no ULP was committed.

On the charge of non-implementation of the retirement plan by the

University, the NLRC found that the same was baseless and it was in fact not
ventilated before the NCMB.189[28]

In NLRC NCR Case No. 00-02-02036-98, the NLRC ruled that the University
may not be held guilty of ULP for refusal to heed the demand of the Union that
salaries of its members be deducted for their failure to attend union meetings:
firstly, because the Union itself failed to meet the requirements provided for in

188

189
Sections 1 and 2, Article IV of the CBA; and secondly, an interpleader had been
filed by the University for the parties to litigate their claims before the NLRC. 190
[29] The NLRC also ruled that the resolution calling for such deduction was not
valid as it was not even signed by the majority of Union officers and circulated to
the members.191[30]

In NLRC NCR Case No. 00-08-06897-98 (the Universitys petition to declare

the strike staged by the Union on August 5-7, 1998 illegal), the NLRC granted the
petition and declared the loss of employment status of all the strikers for
knowingly defying the Return-to-Work Order of the DOLE Secretary dated August
5, 1998, said Order having been served upon the union on August 6, 1998 but it
was only on August 7, 1998, at about 3:00 p.m., that the strike was lifted. 192[31]

In NLRC NCR Case No. 00-02-01422-98, the NLRC ruled that the University
was correct in using 314 days as divisor, instead of 365 days, in computing the
equivalent daily rate193[32] of pay of a worker.

190

191
192
193
 The Union et al. (hereafter petitioners) filed a motion for reconsideration of
the NLRC decision which was denied by Resolution 194[33] of January 20, 1999.
Hence, they elevated the decision to the Court of Appeals via petition for
certiorari which was, as stated early on, dismissed.

In the present petition, petitioners insist that the University violated the
CBA by withholding union dues and death benefits. The University counters that
on the request of Union members in light of their gripes against the Union and its
officers, it did withhold said dues and benefits which they deposited with the
DOLE where the parties could settle the issues among themselves.

The then prevailing Rules Implementing the Labor Code, Book V 195[34], Rule
XVIII provided that

Section 1. Right of union to collect dues. The right of the incumbent bargaining
representative to check off and to collect dues resulting therefrom shall not be affected
by the pendency of a representation case or an intra-union dispute. 196[35] (Emphasis
supplied)

194

195

196
To constitute ULP, however, violations of the CBA must be gross. Gross violation
of the CBA, under Article 261 of the Labor Code, means flagrant and/or malicious
refusal to comply with the economic provisions thereof. Evidently, the University
can not be faulted for ULP as it in good faith merely heeded the above-said
request of Union members.

On the NLRCs declaration of loss of employment status of the strikers, the

pertinent provision of Article 264 of the Labor Code provides:

Article 264.

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 (Emphasis and underscoring
supplied)

Under the immediately quoted provision, an ordinary striking worker may

not be declared to have lost his employment status by mere participation in an
illegal strike. There must be proof that he knowingly participated in the
commission of illegal acts during the strike. While the University adduced
photographs197[36] showing strikers picketing outside the university premises, it
failed to identify who they were. It thus failed to meet the substantiality of
evidence test198[37] applicable in dismissal cases.

Petitioner-union members must thus be reinstated to their former position,

without backwages. If reinstatement is no longer possible, they should receive
separation pay of One (1) Month for every year of service in accordance with
existing jurisprudence.199[38]

With respect to the union officers, as already discussed, their mere

participation in the illegal strike warrants their dismissal.

As for petitioners claim of substantial diminution of their salary on account

of the divisor used by the University in its computation 314 days, instead of 365
days, this Court finds nothing wrong therewith. Sundays being un-worked and
considered unpaid rest days, while regular holidays as well as special holidays
considered as paid days,200[39] the factor used by the University merely complies

197

198

199
200
with the basic rule in this jurisdiction of no work, no pay. The right to be paid for
un-worked days is generally limited to the ten legal holidays in a year.201[40]

WHEREFORE, the Court of Appeals Resolution of April 13, 1999 and

Resolution of September 3, 1999 are SET ASIDE.

The NLRC Decision of October 12, 1998 and Resolution of January 20, 1999
are AFFIRMED, with the MODIFICATION that the dismissal of petitioner-union
members MONICO CALMA, CONSTANCIO BAYHONAN, BERNARDO SABLE, NESTOR
BRINOSA, NANJI MACARAMPAT, EDUARDO FLORAGUE and DIONY S. LUMANTA is
SET ASIDE, and they are thus ordered REINSTATED WITHOUT BACKWAGES. If their
reinstatement is no longer possible, however, they should be given SEPARATION
PAY at the rate of One (1) Month pay for every year of service.

SO ORDERED.

201
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-34948-49 May 15, 1979

PHILIPPINE METAL FOUNDRIES INC., petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, REGAL MANUFACTURING EMPLOYEES
ASSOCIATION REGEMAS and CELESTINO BAYLON, respondents.

V. E. del Rosario & A associates for petitioner.

Rufino B. Risma for private respondents.

ANTONIO, J.:

The Philippine Metal Foundries, Inc. (now dissolved and merged with Shriro
[Philippines] Inc.) is in this case a review of the decision of the Court of Industrial
Relations in Cases Nos. 3932-ULP and 3941-ULP .

Petitioner, in its complaint dated November 21, 1963 (Case No. 3941-ULP), charged the
Regal Manufacturing Employees Associations FTUP and its members (herein private
respondents), with unfair labor practice for declaring a strike on October 5, 1963 and
picketing the company's premises without filing a notice of strike in spite of the
existence of a no strike, no lockout clause and grievance procedure in the collective
bargaining agreement entered into between the petitioner and the Union. In their
answer to this complaint, the Union and its members denied the charge and, as
affirmative defense, alleged that on October 3, 1963, the Union requested the
management for a grievance conference, stating in its invitation the time and place of
meeting, but the company, through its General Manager, refused and instead handed
the Union's President a memorandum dismissing him from work and told the Union
members not to report for work, which is in violation of the no lockout and no strike
clause of the contract.

Upon the other hand, petitioner Philippine Metal Foundries, Inc. and its General
Manager, in Case No. 3932-ULP, were charged by private respondents on July 21,
1964 with unfair labor practice for the dismissal of Celestino Baylon, President of the
Union, on October 3, 1963, allegedly due to his union activities in representing and
protecting the Union members in their relations with the petitioner. To this complaint,
petitioner and its manager filed an answer denying the material allegations and alleged
as affirmative defenses, among others, that on October 3, 1963, the company was
constrained to terminate the services of Baylon by reason of the fact that he had, in
spite of repeated notices and warnings from the company, frequently and repeatedly
absented himself from his work as foundry worker and by reason of said dismissal he,
as President of the Union as well as an officer of the FTUP encouraged and abetted the
staging of a strike on October 5, 1963, without prior notice to the company or any of the
latter's officials, in gross violation of a stipulation provided in their Collective Bargain
Agreement, establishing pickets and blocking ingress and egress to and from the
company's premises, causing interruption of the work and/or business of the company
to its serious damage and prejudice.

After holding joint trial on these two cases, the Court of Industrial Relations rendered its
decision, finding that Baylon, as Union President, was discharged for his union activities
and that the employees declared a strike because they believed in good faith that the
dismissal of their President was an unfair labor practice. The Court declared
respondents Philippine Metal Foundries, Inc. and Leopoldo Relunia in Case No. 3932-
ULP, guilty of unfair labor practice in dismissing complainant Celestino Baylon; ordered
respondents to reinstate Celestino Baylon to his former position with all the rights and
privileges formerly appertaining thereto, with one (1) year back wages computed from
October 3, 1963; and dismissed the petitioner's charge in Case No. 3941-ULP.

Its motion for reconsideration having been denied by the Court of Industrial Relations
en banc, petitioner filed the present petition which was considered by this Court as
submitted for decision without respondents' brief.

The issues raised are: (1) whether Celestino Baylon was dismissed due to his absences
or to his union activities as Union President; and (2) whether the strike declared by the
Union on October 5, 1963, is legal or not.

With respect to the first issue, it is argued by petitioner that according to the Collective
Bargaining Agreement between the Union and the company "one absent for a period of
one week who fails to give notice thereof shall be dropped automatically" and under its
Disciplinary Policies and Procedures, dated and enforced since March 1, 1963, absence
of an employee without permission for a period of seven (7) consecutive calendar days
is a ground for immediate dismissal upon establishment of guilt; that since the Court of
Industrial Relations found that Baylon incurred numerous absences from January to
September 1963, broken dowm as follows: for the month of January, one (1) unexcused
absence; March one (1) unexcused absence and twelve (12) consecutive absences
without permission; April, four (4) consecutive absences without permission; May, two
(2) absences without permission; and September, five (5) unexcused absences, the
said court erred in holding that in Case No. 3932-ULP, Baylon was dismissed not
because of his absences but rather due to his being Union President and union
activities.

In determining whether a discharge is discriminatory, the true reason for the discharge
must be established. It has been said that while union activity is no bar to a discharge,
the existence of a lawful cause for discharge is no defense if the employee was actually
discharged for union activity. There is no question that Celestino Baylon incurred
numerous absences from January to September 1963. Had the company wanted to
terminate his services on the ground of absences, it could have done so, pursuant to
Article V of the Collective Bargaining Agreement as early as March 1963 when he
incurred twelve (12) consecutive absences without permission. Its failure to do so
shows that the infractions commited by Baylon were disregarded. The Court of
Industrial Relations found that Baylon went to the company on September 28, 1963, but
did not work as he was very sleepy. When he reported for work on October 1, 1963, he
submitted a written explanation for his absences which was received by the company.
Two (2) days later, as President of the Union, he invited the General Manager of the
company for a grievance conference to thresh out union problems at the D & E
Restaurant at 6:00 p.m. of October 5, 1963. The letter of invitation was received by the
company at almost 12:45 noon of October 3, 1963. At 2:45 p. m. of the same day,
Baylon was in turn handed his termination letter. Under the attendant circumstances,
We believe the Court of Industrial Relations was justified in concluding that:

In 1963, Baylon had been a habitual absentee. His excused absences for
causes other than sickness, sick leave and vacation leave, total two (2) in
January; nine (9) in February; eleven (11) in April; ten (10) in May; nine (9)
in June; eleven (11) in July; and five (5) in August (Exhs. '5' and '5-A').

This record, plus his numerous tardiness and half-day work, and the
aforesaid unexcused absences, show how little work for the employer
Baylon had been doing as an employee (Exhs. 'EE' and '6-A'). His last
unexcused absence in September must have been just enough on the
part of the company to withdraw its special treatment of Baylon as union
president (Exh 'EE').

This Court believes, however, that it was the aforementioned letter of

invitation to a grievance conference sent by Baylon to the general
manager (Exhs. 'DD' and '7'), coming at the heels of his last unexcused
absences, that broke the proverbial camel's back. His dismissal under the
foregoing circumstances, being ultimately triggered by his union activity, is
therefore not without some taint of unfair labor practice.

The question of whether an employee was discharged because of his union activities is
essentially a question of fact as to which the findings of the Court of Industrial Relations
are conclusive and binding if supported by substantial evidence considering the record
as a whole. 1 This is so because the Industrial Court is governed by the rule of substantial evidence,
rather than by the rule of preponderance of evidence as in any ordinary civil cases. 2 Substantial evidence
has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. 3 It means such evidence which affords a substantial basis from which the fact in issue can be
reasonably inferred. 4 Examining the evidence on hand on this matter, We find the same to be
substantially supported.
Although a man's motive, like his intent, is, in the words of Lord Justice Bowen "as much a fact as the
state of his digestion", evidence of such fact may consist both direct testimony by one whose motive is in
question and of inferences of probability drawn from the totality of other facts. 5

It is admitted by petitioner that it accepted the invitation of Baylon for a grievance conference on October
5, 1963. Yet, two hours after it accepted the letter of invitation, it dismissed Baylon without prior notice
and/or investigation. Such dismissal is undoubtedly an unfair labor practice committed by the company.
Under these facts and circumstances, Baylon and the members of the Union had valid reasons to ignore
the schedule grievance conference and declared a strike. When the Union declared a strike in the belief
that the dismissal of Baylon was due to union activities, said strike was not illegal . 6 It is not even required
that there be in fact an unfair labor practice committed by the employer. It suffices, if such a belief in good
faith is entertained by labor, as the inducing factor for staging a strike. 7 The strike declared by the Union
in this case cannot be considered a violation of the "no strike" clause of the Collective Bargaining
Agreement because it was due to the unfair labor practice of the employer. Moreover, a no strike clause
prohibition in a Collective Bargaining Agreement is applicable only to economic strikes. 8

The strike cannot be declared as illegal for lack of notice. In strikes arising out of and against a company's
unfair labor practice, a strike notice is not necessary in view of the strike being founded on urgent
necessity and directed against practices condemned by public policy, such notice being legally re.
required only in cases of economic strikes. 9

On the contention of petitioner that the grievance conference which Baylon requested to be held on
October 5, 1963 was not for the purpose of discussing union problems but of his dismissal, it is clearly
shown in the records that Baylon received his termination letter after he requested for a grievance
conference. It is, therefore, clear that when Baylon requested for a grievance conference, he was not yet
aware of his dismissal. Baylon could not have requested for a grievance conference on October 5, 1963 if
he did not have demands to present on that date. The records disclose that, as Union President, he used
to make representations and protestations in behalf of the members of the Union against unfair acts
committed by the company. As early as March 2, 1962, he reminded the company of an agreement
arrived at in a previous labor-management conference that was violated when the management hired
several casual workers without giving preference to previously laid off employees and without notifying
the Union President (Exhibit "P"). On May 25, 1962, he complained of the poor condition of the toilet
facilities in one of the buildings of the company and requested the management for its imp

ovement (Exhibit "Q"). On August 18, 1962, he caged the attention of the management regarding the
plight of seventy-two (72) workers who were supposed to be temporarily laid off for a period of two (2)
months only as agreed upon between the Union and the management, but were not re-hired after the
lapse of the period so he requested for the payment of their separation pay (Exhibit "R"). On December
14, 1962, he requested for the payment of a claim for compensation of a worker prior to the scheduled
hearing of the same (Exhibit " U "). On December 20, 1962, he worked for the payment of the accrued
vacation and sick leave of a terminated worker (Exh. exhibit "V"). On January 12, 1963, he interceded for
the payment of the two months separation pay of another terminated worker (Exhibit "W"). On April 25,
1963, he worked for the payment of separation pays of terminated workers found to be physically unfit
(Exhibit "AA"). And on September 2, 1963, he invited the General Manager of the company for a
grievance conference to settle the complaints of several Union members regarding their vacation leaves
and other union problems (Exhibit "BB"). These exhibits show how Baylon, as President of the Union,
fought for the rights and protection of his members. We are satisfied that the Court's finding, in the above
regard, are supported by substantial evidence on the record considered as a whole.

IN VIEW WHEREOF, the petition for certiorari is hereby DISMISSED.

Fernando, Concepcion, Jr., Santos and Abad Santos, JJ., concur.

Aquino, J., took no part.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-39040 June 6, 1990

ROYAL UNDERGARMENT CORPORATION OF THE PHILIPPINES,

petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ROYAL UNDERGARMENT
WORKERS UNION (PTGWO) and ANTONIO CRUZ, respondents.

Tanada, Vivo & Tan for petitioner.

Carlos E. Santiago for Antonio Cruz.

MEDIALDEA, J.:

This is a petition for review on certiorari seeking the reversal of the decision
rendered by the defunct Court of Industrial Relations on January 21, 1974
adjudging the petitioner corporation guilty of unfair labor practice and
ordering the reinstatement of and payment of backwages to respondent
Antonio Cruz.

The antecedent facts as found by the industrial court are as follows:

Respondent Antonio Cruz was employed by petitioner corporation in 1957

as an electrician. Sometime in December, 1961, he was elected president
of the Royal Undergarment Workers Union (RUWU for brevity), a legitimate
labor organization which became affiliated with the Philippine Transport
and General Workers Organization (PTGWO for brevity).

On December 14, 1961, the RUWU-PTGWO, represented by the National

Secretary of PTGWO and respondent Cruz as RUWU President, sent
proposals to petitioner corporation for the purpose of collective bargaining.
On the following day, December 15, 1961, petitioner corporation, thru its
personnel manager, terminated the services of respondent Cruz allegedly
on the basis of the latter's "record and after careful analysis and
deliberation." Respondent's wife, Felicidad Cruz, who was also an
employee of petitioner, was likewise terminated. Thus, RUWU called a
strike sometime during the first week of January, 1962.

On January 10, 1962, RUWU-PTGWO and petitioner corporation entered

into a Return-to-Work Agreement thru the conciliation efforts of the
Department of Labor. The agreement contained the following provision:

xxx xxx xxx

Regarding the two (2) employees, Mr. Antonio Cruz and Mrs.
Cruz, the union entrusts the settlement of its complaint for
decision to the Management, which shall be reinstatement for
both employees when the Royal Undergarment Workers Union-
PTGWO shall have been chosen as the collective bargaining
agent for the workers at the consent election to be held in the
company premises;

.... (pp. 39-40, Rollo)

The records do not disclose the results of the consent election.

Subsequently however, respondent Cruz and his wife were both re-
employed and reinstated by petitioner corporation, thereby indicating the
victory of RUWU-PTGWO in the consent election.

On March 31, 1962, RUWU-PTGWO and petitioner corporation entered

into a collective bargaining agreement which contained a grievance
procedure for the settlement of disputes. Such grievance procedure was
applied on several occasions involving suspensions of union members-
employees through the help and active participation of respondent Cruz as
union president.

Sometime in November, 1962, the PTGWO urged its member-unions to

stage a nationwide strike. Thus, respondent Cruz campaigned among the
members of RUWU to join the strike.

On November 28, 1962 at around 11:00 p.m., within the company

premises, respondent Cruz approached three co-employees who are
supervisors of the company, namely, Camaguin, Dayadante and Gaspar.
These persons contended that respondent Cruz, who was under the
influence of liquor, uttered the following remarks to them: "Ikaw, Ikaw, Ikaw-
mga hayop kayo. Bibigyan ko kayo ng isang linggong taning sa buhay
ninyo ipapapatay ko kayo." They also claim that respondent Cruz had
challenged another co-employee. Respondent and his witnesses denied
this charge and claimed that what the respondent actually said to the three
employees was: "Ikaw, Ikaw, Ikaw pare, alam kong matitigas kayo rito sa
compania, kayat ako'y nakikiusap, kung maaari pag-natuloy ang nationwide
strike bukas, makiisa kayo at gamitin ang tigas ninyo." Immediately
thereafter, the three employees went to the personnel officer of petitioner
corporation. On November 29, 1962, they executed an affidavit regarding
the incident.

The following day, on November 30, 1962, the general manager of

petitioner corporation placed respondent Cruz on preventive suspension
effective December 3, 1962 for threatening "the lives of four (4) employees"
and for having 'been reported under the influence of liquor," both acts being
"contrary to rules and regulations."

Upon the request of respondent Cruz and PTGWO, the petitioner

corporation conducted a conference which was in the nature of an
investigation of the incident.

On December 13, 1962, petitioner corporation dismissed respondent Cruz

for being under the influence of liquor on November 28, 1962 and for
having threatened the lives of four of his co-employees.

Respondent Cruz filed a complaint for unfair labor practice against

petitioner corporation with the Court of Industrial Relations. On January 21,
1974, the respondent industrial court, while affirming the findings of the
healing examiner, rendered a decision, the dispositive portion of which,
reads as follows:

WHEREFORE, respondent is hereby declared guilty of unfair

labor practice and is ordered to cease and desist from further
committing the same. Respondent is further directed to
reinstate complainant Antonio Cruz to his former or equivalent
position without loss of seniority and other privileges and to pay
 him backwages including all benefits attached to his position,
from the date he was dismissed up to November 17, 1969.

SO ORDERED. (pp. 43-44, Rollo)

Hence, this petition for review on certiorari with the petitioner assigning the
following errors:

RESPONDENT CIR COMMITTED A GRAVE

MISAPPREHENSION OF FACT IN HOLDING IN ITS
DECISION THAT IT WAS RESPONDENT CRUZ' UNION
ACTIVITIES WHICH CAUSED HIS DISMISSAL BY
PETITIONER.

II

RESPONDENT CIR LIKEWISE COMMITTED A GRAVE

MISAPPREHENSION OF FACT IN NOT HOLDING IN ITS
DECISION THAT THE DISMISSAL OF RESPONDENT CRUZ
WAS FOR CAUSE AS PROVIDED FOR IN THE
TERMINATION PAY LAW AND IN ACCORDANCE WITH
MANAGEMENT PREROGATIVE.

III

ASSUMING ARGUENDO THAT PETITIONER IS GUILTY OF

UNFAIR LABOR PRACTICE, RESPONDENT CIR ERRED IN
AWARDING RESPONDENT CRUZ FULL BACKWAGES
WITHOUT DEDUCTING THEREFROM THE INCOME HE
EARNED DURING SAID PERIOD. (pp. 9-10, Rollo)

Anent the first and second assigned errors, petitioner submits that the
records of the case, particularly the testimonies of respondent Cruz himself
and his witnesses, show that petitioner corporation did not interfere with or
prevent the union activities of its employees; that the former has even
allowed or abetted active unionism within the company; that the dismissal
of respondent Cruz was not impelled by reason of union participation of
respondent Cruz but solely by his infraction of company rules and
regulations, specifically, serious threats against the lives of three co-
employees, challenging another to a fight and intoxication while on duty, all
of which clearly amounted to a dismissal for cause under the Termination
Pay Law, Rep. Act No. 1052, as amended.

On the other hand, the Court of Industrial Relations found from the
surrounding circumstances of the case, a valid and sufficient basis for the
charge of unfair labor practice against petitioner company. Said the
respondent court:

There is no question as to the union activities of the

complainant. Starting from the time he was elected president of
the RUWU, he had engaged himself actively in union affairs. He
had in behalf of others pursued assiduously the employee
relationships of the membership. And on a higher plane, he
urged the members to join the nation-wide strike being planned
by the PTGWO.

On the part of respondent there appears to be an attitude of

antipathy towards the complainant. Going back to the time,
when the RUWU sent collective bargaining proposals
represented then by the complainant, the latter and his wife
were dismissed one day after the same was received by
respondent company. The record does not show the specific
reasons or bases for this action except the general proposition
that this (complainant's) record was supposedly carefully
analyzed. And yet, why include his wife in the dismissal? In the
Return-to-Work Agreement of January, 1962 which followed, a
peculiar and strange arrangement was made. The
reinstatement of complainant and his wife was made to depend
on a contingency-the victory of RUWU in the consent election.
The main consideration therefore of complainant's
reinstatement, as well as that of his wife, is, he gets back to
work if his union wins; he stays out, if his union loses. Should
one's employment be made to depend on his union affiliation or
Identity? This aspect only projects the animosity harbored by
the respondent against the complainant.

Then, in the space of eleven months, complainant once again

was dismissed from respondents' employ, e.g. in December of
the same year he was reinstated. Respondents based its
 dismissal of complainant on the ground that he was obviously
under the influence of liquor and he threatened the lives of four
co-employees. The evidence of being obviously under the
influence of liquor' is based on the supposed observation of the
three witnesses whose lives were allegedly threatened, coming
as it is from a biased source. None of these witnesses have
ever supplied, much less hinted on the motivation why
complainant threatened their lives. On the contrary, they
claimed that they were on friendly terms with the complainant
with no previous background of misunderstanding between
them. None of them ever filed criminal charges against the
complainant for the supposed threat on their lives indicating
that whatever has transpired is not as serious as pictured by
the respondent. The incident was simply blown into such
proportion so as to provide a supposed valid cause for
complainant's dismissal. In the light of the initial attitude of
respondent earlier discussed, the inducing cause directly
contributing to complainant's dismissal is the respondent's
antipathy to complainant's union activity and not his
misconduct. (pp. 42-43, Rollo)

We accord respect to the findings of the industrial court. Section 3 of

Republic Act No. 875, known as the The Industrial Peace Act, as amended,
provides that employees shall have the right to self-organization and to
form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid or protection. Hence, it shall be unfair labor
practice for an employer to discriminate in regard to tenure of employment
or any term or condition of employment to encourage or discourage
membership in any labor organization (Section 4 (a) (4), R.A. No. 875).

We have perused the record and found that the totality of evidence as
found by respondent court supports the conclusion that respondent Cruz
has been unjustly dismissed by reason of his union activities. The charge
by petitioner against respondent Cruz for being under the influence of liquor
on a certain date and for having threatened the lives of his co-employees is
too flimsy to merit serious consideration. We have on record the undisputed
facts that private respondent, as president of RUWU, was known for his
aggressive and militant union activities; that he and his wife had been
previously dismissed on the ground of active participation in union affairs;
that they were reemployed only pursuant to the express terms of the
Return-to-Work Agreement executed by petitioner corporation and RUWU
when the latter won in the consent election; that respondent Cruz was
dismissed again for the second time in the course of his campaign among
RUWU members to join the nationwide strike of PTGWO in which RUWU is
a member union.

It has previously been indicated that an employer may treat freely with an
employee and is not obliged to support his actions with a reason or
purpose. However, where the attendant circumstances, the history of the
employer's past conduct and like considerations, coupled with an intimate
connection between the employer's action and the union affiliations or
activities of the particular employee or employees taken as a whole raise a
suspicion as to the motivation for the employer's action, the failure of the
employer to ascribe a valid reason therefor may justify an inference that his
unexplained conduct in respect of the particular employee or employees
was inspired by the latter's union membership or activities (Rothenbergon
Labor Relations, pp. 401-402, cited in San Miguel Brewery, Inc., et al. v.
Santos, et al., No. L-12682, August 31, 1961, 2 SCRA 1081).

Further, factual findings of the Court of Industrial Relations are conclusive

in the absence of a showing that the same have no support in the evidence
on record. This Court will not review said court's factual findings as long as
the same are supported by evidence. This is so because the industrial
court is governed by the rule of substantial evidence rather than by the rule
of preponderance of evidence as in ordinary civil cases (Sanchez v. Court
of Industrial Relations, L-19000, July 31, 1963, 8 SCRA 654; Industrial
Commercial Agricultural Workers Organization v. Bautista, L-15639, April
30, 1963, 7 SCRA 907).

Anent the third assigned error, it is the judicial trend to fix a reasonable
period for the payment of backwages to avoid protracted delay in post
judgment hearings to prove earnings of the worker elsewhere during the
period that he had not been reinstated to his employment. In consonance
with the rulings in many cases, and in view of the circumstances and equity
of the instant case, respondent Cruz should be reinstated and granted
backwages corresponding to a period of three (3) years from the time he
was dismissed on December 13, 1962, without deduction for his earnings
elsewhere during his lay-off and without qualification of his backwages as
thus fixed, that is, unqualified by any wage increases (Bachrach Motor Co.,
Inc. v. Court of Industrial Relations, L-26136, October 30, 1978, 86 SCRA
27; L.R. Aguinaldo & Co., Inc. v. Court of Industrial Relations, No. L-31909,
April 5, 1978, 82 SCRA 309; Davao Free Workers Front v. Court of
Industrial Relations, L-29356, October 27, 1975, 67 SCRA 418).

ACCORDINGLY, the petition is hereby DENIED and the decision of the

Court of Industrial Relations dated January 21, 1974 is AFFIRMED with
MODIFICATION that petitioner is directed to reinstate respondent Antonio
Cruz without loss of seniority rights and with backwages for three (3) years
from the time of dismissal, without deduction and qualification. If
reinstatement is no longer possible, respondent Antonio Cruz should be
awarded separation pay of one (1) month for every year of service. With
costs against petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-31276 September 9, 1982

NATIONAL LABOR UNION, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, EVERLASTING MANUFACTURING, ANG
WO LONG and BENITO S. ESTANISLAO, respondents.

Eulogio R. Lerum for petitioner.

Jose J. Ferrer and Jose C. Magat for respondents.

GUTIERREZ, JR., J:

The petitioner asks for the review of the Court of Industrial Relations' Order dated
September 14, 1968 and the Resolution of the court en banc dated March 7, 1969 in
Case No. 3849-ULP entitled National Labor Union, complainant vs. Everlasting
Manufacturing and Ang Wo Long respondents.

The antecedent facts leading to the instant petition are:

Acting upon a charge filed by counsel for complainant union, the Acting
Prosecutor of this Court filed a formal complaint with this Court on August
10, 1963, charging respondent Everlasting Manufacturing of unfair labor
practice within the meaning of Section 4(a), sub-paragraphs 1, 4 and 6 in
relation to Sections 13, 14 and 15 of Republic Act 875. The pertinent
allegations of the complaint are quoted hereunder, to wit:

That following the conclusions of the collective bargaining

agreement by and between complainant union and
respondent company through its general manager Benito
Estanislao Alias Cha Wa began hiring 24 new workers;

That in order to avoid the implementation of the aforecited

collective bargaining contract, to bust complainant union, to
discourage membership with complainant union, on the
pretext of selling and closing its business, and without any
justifiable reason respondent company, by its general
manager Benito Estanislao and proprietor Ang Wo Long,
dismissed and/or locked out all the members of complainant
union on July 8, 1963, namely:

1. Federico Reyes

2. Angelino Ureta

3. Joaquin Tapalla

4. Hermenegildo Ignacio

5. Carlito Belarmino

6. Aniano Molina

7. Nolasco de Pedro

8. Urbano Bernaba

9. Isidoro Belarmino

10. Antonio Abella

11. Placido Reyes

12. Eugenio Lingo

13. Mateo Andrade

14. Angel Abella

15. Vicente Valentin

16. Arthur Agustin

17. Segundino Agustin

18. Virgilio Gapac

19. Calino Diaz

20. Rolando Lisondra

21. Ireneo Diaz

 That on the same date adverted to in paragraph 4 above,
and continuously thereafter, respondent company continued
with its business operations by availing of the services of the
above-mentioned 24 new workers who are non-union
members, using the same premises, business name,
machineries, tool and implements, same officials and
supervisors, including its assistant manager Tan Hoc;

That notwithstanding representations made by complaint

union for and in behalf of its members, respondent failed and
refused and continues to fail and refuse to reinstate them to
their jobs.

That since their mass dismissals and/or lock out on July 8,

1963, the above mentioned dismissed employees have not
found any substantial and/or equivalent employment for
themselves, in spite of diligent efforts to that effect.

On August 28, 1963, upon being summoned, respondent, through

counsel, filed its answer denying the material allegations of the complaint.
As affirmative defenses, it is claimed substantially that respondent
establishment is no longer owned by Benito Estanislao but by Ang Wo
Long who purchased the same from the former for valuable consideration
and that the new owner is not duty bound to respect whatever agreement
has been entered into by the former owner and the workers; that there has
never been any employer-employee relationship between the new owner
and the complaining workers so that the latter could not have been
dismissed or locked out. Respondent prays that the complaint be
dismissed.

Several hearings were had and when the case was pending decision, a
'Motion to Include Ang Wo Long as Party Respondent' was filed on
September 11, 1964, by counsel for petitioner union, which motion was
granted by this Court in its Order dated November 6, 1964. Upon being
summoned, respondent Ang Wo Long, through counsel, filed on January
13, 1965, his Answer which is substantially similar to the one filed by
respondent Everlasting Manufacturing. After farther hearing, this case was
submitted by the parties for decision. (Decision, CIR, March 22, 1966, pp.
61-63, rollo).

On March 22, 1966, the respondent court through Associate Judge Amando C.
Bugayong rendered a decision the dispositive portion of which reads:

ALL THE FOREGOING CONSIDERED, respondents are hereby found

guilty of unfair labor practice and they are hereby ordered:
 1. To cease and desist from committing further acts of unfair labor
practice; and

2. To reinstate the twenty-one complaining workers to their positions with

back wages from July 8, 1963, until they are actually reinstated.

The Examining Division of this Court is hereby directed to compute the

amount of back wages due to the workers based on the Payrolls Marked
as exhibits in the records of this case and, upon completion thereof, to
submit to the Court immediately a report for further disposition. (pp. 68-69,
rollo)

Acting on a motion for reconsideration of the afore-stated decision filed by the

respondents and a motion to dismiss thereto filed by the petitioner union, the
respondent court, after conducting a hearing issued a Resolution en banc dated
November 7, 1966 ordering the reopening of the case and to include Benito Estanislao
as party respondent to determine his liability under the complaint. Considering the
different opinions of the members of the respondent court the March 22, 1966 decision
was set aside.

Pursuant to the November 7, 1966 Resolution, Benito Estanislao was issued summons
at his last known address requiring him to answer the complaint. The summons was,
however, returned by the counsel for respondent Ang Wo Long on the ground that
Benito Estanislao did not reside and was not found at the premises of the former.
Hence, the respondent court issued an order to the effect that Estanislao be issued
summons by publication. Despite summons by publication, however, Estanislao did not
answer the complaint. Neither did Estanislao appear in court. The respondent court,
therefore, conducted hearings of the case without the presence and representation of
Estanislao.

On September 14, 1968, the respondent court issued an Order the dispositive portion of
which reads:

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the Court finds

Benito Estanislao guilty of unfair labor practice and he is hereby ordered
to pay backwages to the twenty-one (21) complaining workers during the
full duration of the collective bargaining contract.

The case is dismissed insofar as it concerns respondent Ang Wo Long.

(pp. 85-86, rollo)

On March 7, 1969, the respondent court issued a Resolution en banc denying a motion
for reconsideration of the September 14, 1968 Order filed by the complainant union.

Hence, the instant petition.

The main issue before Us is focused on the respondent court's exoneration of
respondent Ang Wo Long from any liability to the twenty-one(21) complaining workers
of the petitioner union under the May 3, 1963 collective bargaining agreement executed
between the petitioner union represented by its officers on one hand and respondent
Everlasting Manufacturing represented by Benito Estanislao as general manager.

There is no dispute over the circumstances of the dismissal of the twenty- one (21)
complaining workers from the respondent business establishment.

The twenty-one (21) complaining workers were members of the National Labor Union, a
legitimate labor organization. They were employed at the respondent Everlasting
Manufacturing, a business establishment which manufactured paper cups, water cups,
and other allied products. They were hired by Benito Sy Estanislao who owned the said
establishment.

On April 29, 1963, Benito Estanislao sold by Everlasting Manufacturing to Ang Wo Long
as evidenced by a Deed of Sale (Exhibit "6") "absolutely free from lien encumbrances or
liability of whatsoever kind and nature.

On May 3, 1963, after a series of negotiations, a collective bargaining agreement

(Exhibit "B") was entered into between the Everlasting Employees Union (NLU)
represented by its officers and the respondent business establishment represented by
Benito Estanislao who signed himself manager. Both parties were represented by their
respective counsel. The collective bargaining agreement was supposed to be "for a
period of not less than two (2) years or until March 3, 1965 and thereafter for an
additional twelve (12) months, unless written notice of intended change is served by
either party thereto, sixty (60) days prior to March 31, 1965."

In the meantime, on April 21, 1963, Ang Wo Long filed with the Bureau of Commerce an
application for the registration of Everlasting Manufacturing as a firm name or business
name. The corresponding certificate registration was issued by the Bureau of
Commerce on May 3, 1963, the same day that the collective bargaining agreement
(Exhibit "A", supra) was entered into.

On July 8, 1963, the Office of the Mayor, Caloocan City issued a business permit to Ang
Wo Long to operate the Everlasting Manufacturing.

On July 10, 1963, Ang Wo Long sent individual letters to the twenty-one (21)
complaining workers, with similar contents, quoted hereunder:

This is to inform you that the Everlasting Manufacturing is now under new
management. I am now the owner of this establishment which I bought
from the previous owner last month.
 In view of the above and in order to give the management a free hand in
operating the establishment, it is advised that the firm win be closed for
business temporarily.

You will be notified if your services will again be needed. (See Exh. "B").

On July 17, 1963, the petitioner union representing the twenty-one (21) dismissed
workers charged the respondent business establishment with unfair labor practice
before the respondent court on August 10, 1963 On July 20, 1963, Ang Wo Long
employed twenty-four (24) new workers in the Everlasting Manufacturing.

On August 10, 1963, the acting prosecutor of the respondent court formally filed a
complaint on the alleged discriminatory dismissal of the twenty-one (21) complaining
workers against the Everlasting Manufacturing.

Petitioner union wants Us to set aside the questioned Order and Resolution en banc
dated September 14, 1968 and March 7, 1969 respectively and to reinstate the March
22, 1966 decision finding Everlasting Manufacturing and Ang Wo Long guilty of unfair
labor practice. The petitioner states that the findings and conclusions of the respondent
court in the March 22, 1966 decision were founded on substantial evidence whereas the
findings and conclusions of the respondent court in the later order and resolution were
not founded upon substantial evidence. Furthermore, no reason was given by the
respondent court for the March 22, 1966 decision's reversal according to the petitioner.

The respondent court in its March 22, 1966 decision found Everlasting Manufacturing
and Ang Wo Long guilty of unfair labor practice in the following manner:

It is puzzling, to say the least that while the respondent establishment was
already sold to respondent Ang Wo Long on April 29, 1963, the collective
bargaining contract with the union was entered into by the vendor, Benito
S. Estanislao, four days after the sale. Was Ang Wo Long really unaware
of this contract as claimed by him? The evidence on record shows that as
early as April 21, 1963, or some eight days before the sale, Ang Wo Long
filed with the Bureau of Commerce an application for the registration of
'Everlasting Manufacturing' as a firm name or business name and that the
corresponding certificate of registration was issued to him by said office on
May 3, 1963, the same day that the collective bargaining contract with the
union was executed (Exh. "9"). On the same date that the document of
sale was executed, a sworn statement of the sale in favor of Ang Wo Long
was filed in the Bureau of Commerce under the Bulk Sales Law, Act No.
3942 (Exh. "8"). All these would indicate that, contrary to his claim,
respondent Ang Wo Long was already taking an active hand in the
operation of the business establishment after it was sold to him, and that
the 21 complaining employees since then were already working for him as
new owner. Thus, it will be noted that when the collective contract was
entered into Benito Sy Estanislao four days after the said sale, he signed
 in his capacity as "General Manager" and not any more as owner. Under
the circumstances, it is difficult to believe that Ang Wo Long was ignorant,
as he claims, of the contract entered into by Estanislao in his
representative capacity. To sustain the protestations of Ang Wo Long that
he was unaware of this contract entered into when he was already the
owner of the establishment, in the face of an these known facts, would be
tantamount to sanctioning a deception and conspiracy to defraud the
workers of their rights already obtained in the contract.

The evidence adduced by respondents, more specifically the testimony of

Ang Wo Long, subjected to a closer scrutiny, is full of glaring
inconsistencies on many material and important points. Thus, while
admitting on the stand that he became the owner of "Everlasting
Manufacturing" on April 29, 1963, by virtue of the dead of sale executed
by Estanislao in his favor (t.s.n., pp. 8-9. hearing of Jan. 29, 1964), yet he
stated in his letter to the laborers (Exh. "B") dated July 10, 1963, that he
bought the said establishment only 'last month', meaning June, 1963.
While in the same letter Ang Wo Long stated 'that the firm win be closed
for business temporarily' he admitted in his testimony that he did not
actually temporarily close the establishment inasmuch as Estanislao had
other contracts which were not finished (t.s.n., p. 7, Han. 29, 1964).
Admittedly, Ang Wo Long employed 24 new workers about July 20, 1963,
because it is claimed that the members of petitioner never applied to him
although he had been waiting for them for sometime (t.s.n., pp. 22-23,
Jan. 27, 1964). In his letter, however, (Exhibit "B") to the 21 complaining
workers, he stated that the laborers 'will be duly notified if your services
will again be needed.' The evidence is very clear that the workers involved
had never been notified that their services were needed. On the contrary,
the principal argument of respondents' counsel is that Ang Wo Long, being
a new owner, has that absolute right to employ workers whom he may
choose, and he had in fact chosen to dispense with the complaining
workers and hire new ones to replace them.

Respondent Ang Wo Long has not shown any just cause for dispensing
with the services of the twenty-one workers on July 8, 1963. From the
circumstances, the conclusion becomes inescapable that he dismissed
the complainants in order to break the union and do away with the existing
collective bargaining contract which it has obtained only after a strike and
bargaining negotiations. (pp. 66-68, rollo)

The foregoing findings and conclusions were completely superseded by a different set
of findings and conclusions of the respondent court on the main issue in the questioned
September 14, 1968 Order. In exonerating Everlasting Manufacturing and Ang Wo Long
from any liability against the twenty-one complaining workers of the petitioner union, the
respondent court said:
 There is no question that the twenty-one (21) complaining workers were
hired by Benito Estanislao before he sold his business to Ang Wo Long.
Ang Wo Long did not operate the business until after he has secured the
necessary business permits from the proper authorities, and it was only on
July 8, 1963, after securing those permits, that he started to operate the
business. There is no evidence on record that Ang Wo Long had
knowledge of the existence of the National Labor Union and the affiliation
thereto of the twenty-one (21) workers who are complainants in this case.
Neither is there evidence that Ang Wo Long had knowledge of the
collective bargaining contract which was still in force when the twenty-one
complainants were dismissed. Under the circumstances, the Court finds
no basis to hold respondent Ang Wo Long as having been motivated by
his desire to discriminate against these twenty-one workers because of
their union affiliation.

The negotiation and subsequent execution of the collective bargaining

contract undertaken by respondent Benito Estanislao was without the
knowledge of Ang Wo Long. The evidence shows that Benito Estanislao
who signed the contract was not clothed with the proper authority from
Ang Wo Long when the former entered into such contract. From this
alone, it is clear that the whole responsibility for entering into the contract
in question should rest with Estanislao. The Court is convinced that Benito
Estanislao is a transferrer in bad faith and, as such, he may be held liable
to the employees discharged in violation of the Industrial Peace Act
(Valentin A. Fernando vs. Angat Labor Union, G.R. No. L-17896, May 30,
1962). (pp. 84-85, rollo)

It can be readily seen that the respondent court's March 22, 'L966 decision was based
mainly on respondent Ang Wo Long's inconsistent testimony and the circumstances
surrounding his acquisition of respondent Everlasting Manufacturing which according to
the respondent court tended to show Ang Wo Long's knowledge of the existence of the
May 3, 1963 collective bargaining contract.

On the other hand, the respondent court in the September 4, 1968 Order found the
same circumstances to be merely preparatory acts of Ang Wo Long before he could
begin to operate the respondent Everlasting Manufacturing and that 'here was no
evidence on record which proved his knowledge of the May 3, 1963 collective
bargaining contract. The Order was silent however, on the March 22, 1966 decision as
regards the inconsistent testimony of Ang Wo Long.

The issue before Us boils down to whether or not the respondent court was justified in
completely over-turning its March 22, 1966 ruling on the liability of Ang Wo Long under
the May 3, 1963 collective bargaining contract.
A careful consideration of the facts and circumstances of this case constrains Us to
grant the petition and to set aside the questioned order and resolution of the respondent
court.

The respondent court modified its decision and absolved Ang Wo Long of responsibility
for and liability under the May 3, 1963 collective bargaining contract because of its
finding that there was a lack of evidence which would show knowledge not only of the
CBA but of the existence of the union itself on the part of Mr. Ang Wo Long.

Appreciation of facts and conclusions drawn from facts must be such as would be
acceptable to a reasonable mind. The reconsidered conclusions of the respondent court
not only fly against the dictates of reason and common sense but are out of touch with
the grounds of public policy implicit in the Industrial Peace Act and in the constitutional
mandate on protection to labor.

Knowledge or awareness of what is going on refers to a mental and inner state of

consciousness, cognizance, and information. Whether or not Mr. Ang Wo Long knew
the labor problems of the firm he purchased, the existence of a union, the on-going —
CBA negotiations, and the efforts of the employees he later dismissed to reach an
agreement with management on the terms and conditions of their employment can be
determined only from an admission of Mr. Ang himself or from the surrounding facts and
circumstances indicative of knowledge. or awareness.

Under the facts are circumstances of this case, it is irrational if not specious to assume
that Mr. Ang bought a business lock, stock, and barrel without inquiring into its labor-
management situation and that his dismissal of all the union members without retaining
a few experienced workers and their replacement with a completely new set of
employees who were strangers to the company was anything other than an attempt to
rid the firm of unwanted union activity.

There is substantial evidence to sustain a finding of Mr. Ang's knowledge of the

bargaining negotiations and the resulting CBA and, consequently, of unfair labor
practice on his part.

The former owner, Benito Estanislao alias Cha Wa, sold Everlasting Manufacturing to
Ang Wo Long on April 29, 1963 while CBA negotiations were going on and about to be
concluded. The firm had a recent history of labor problems and the bargaining
negotiations came about only after a strike.

According to the respondent court, the acts of Ang Wo Long — his filing an application
for registration with the Bureau of Commerce on April 21, 1963, his securing the
mayor's permit, and his other acts of management — were only acts preparatory to
taking over the firm and not acts indicating knowledge of union activity and the CBA
negotiations. We rule otherwise. Precisely because Mr. Ang performed acts indicative of
normal care and caution on the part of a man buying a manufacturing firm, We rule that
the same care and caution was also extended to a more sensitive aspect of the
business, one attracting the greatest degree of concern and attention of any new owner,
which was the relationship of the workers to management, their willingness to cooperate
with the owner, and their productivity arising from harmonious relations. Benito
Estanislao signed the CBA no longer as owner but as "general manager." The new
owner used the same premises, the same business name, machineries, tools and
implements and the same officials and supervisors including the assistant manager, Mr.
Tan Hoc The only change was the replacement of the 21 union member with a
completely new set of employees hired from outside the firm. As stated by Judge
Amando C. Bugayong in the court's March 22,1966 decision, the respondent Ang Wo
Long did not show any just cause for dispensing with the services of all the 21 union
members. We agree with Judge Bugayong that "the conclusion becomes inescapable
that he (Mr. Ang) dismissed the complainants in order to break the union and do away
with the existing collective bargaining agreement which it has obtained only after a
strike and bargaining negotiations."

Another mystifying aspect of the questioned order and resolution was the placing of full
responsibility on the shoulders of Mr. Benito Estanislao whom the court funny knew had
already conveniently disappeared even as it absolved the only person who could grant
affirmative relief and whose liability had earlier been determined to be founded on
substantial evidence. The summons issued to Benito Estanislao was returned by Ang
Wo Long's counsel who stated that Benito Estanislao was no longer at his former
address. Summons had to be effected through publication. The person found guilty of
unfair labor practice did not show up at the reopened hearings and as far as the records
before US show, had disappeared. The concatenation of circumstances clearly
indicates the participation of both Mr. Estanislao and Mr. Ang in the unfair labor
practice. Hence, Ang Wo Long should be jointly and severally liable with Benito S.
Estanislao for the payment of backwages to the complaining employees.

Considering practical considerations, among them the length of time that has lapsed
since the dismissal of the complaining employees and following Our rulings in the cases
of Mercury Drug Co., Inc., et al vs. CIP, et al. (56 SCRA, 694); Aguinaldo Co., Inc., et
al. vs. CIR, et al (82 SCRA 309); Danao Development Corporation vs. NLRC, et al. (81
SCRA 489); Monteverde, et al. vs. CIR, et al. (79 SCRA 259); Insular Life Insurance
Co., Ltd Employees Association — NATU vs. Insular Life Assurance Co., Ltd (76 SCRA
50); People's Bank and Trust Company, et al. vs. People's Bank and Trust Company
Employees Union et al (69 SCRA 10) and Liberty Cotton Mills Workers Union vs.
Liberty Cotton Mills, Inc., (92 SCRA 391), We grant three (3) years backwages without
deduction or qualification to the dismissed employees. Following the same
considerations and in fairness to Ang Wo Long, reinstatement of the complaining
employees should be made on the basis of the latter's physical fitness for the respective
jobs from which they were illegally ousted. (Mercury Drug Co., Inc. vs. Court of
Industrial Relations), (supra).

WHEREFORE, the petition is hereby GRANTED.

1) Ang Wo Long and Benito S. Estanislao are hereby ORDERED jointly and severally to
pay the complaining employees three (3) years backwages without deduction or
qualification.

2) Ang Wo Long is hereby ordered to reinstate the complaining employees and he may
require certifications of their physical fitness by a government physician; and

3) Ang Wo Long and Benito S. Estanislao shall pay the costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-67158, 67159, 67160, 67161, & 67162 May 30, 1988

CLLC E.G. GOCHANGCO WORKERS UNION, CORNELIO L. PANGILINAN, LEO

TROPACIO, OLIMPIO GUMIN, JUANITO SUBA, ROLANDO SANTOS, RUBEN
BUELA, ODILON LISING, REYNALDO DAYRIT, ROGELIO MANGUERRA,
ORLANDO NACU, DIOSILINO PERDON, ERNESTO GALANG, ORLANDO
PANGILINAN, JESUS SEMBRANO, RENATO CASTANEDA, EDILBERTO
BINGCANG, ERNESTO CAPIO, RUFO A. BUGAYONG, RICARDO S. DOMINGO,
TERESITO CULLARIN, ISRAEL VINO, ERNESTO RAMIREZ, ROMEO S. GINA,
ARNEL CALILUNG, PEDRO A. SANTOS, RODOLFO CAPITLY, BUENAVENTURA
B. PUNO, EDILBERTO QUIAMBAO, FERNANDO LISING, ERNESTO M. TUAZON,
MARCELO LANGUNSAD, MARCELINO VALERIO, SERAFIN PAWA, JESUS S.
DAQUIGAN, and ISMAEL CAYANAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), and e.g. GOCHANGCO,
INC., respondents.

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

The Solicitor General, Isagani M. Jungco, and Bernardo P. Fernandez for respondents.

SARMIENTO, J.:

The cases before the Court pit labor against management, in which, on not
a few occasions, it is labor that has cause for complaint.

The Solicitor General states the facts as follows:

xxx xxx xxx

1. Petitioner union is a local chapter of the Central Luzon Labor

Congress (CLLC), a legitimate labor federation duly registered
with the Ministry of Labor and Employment (MOLE), while the
individual petitioners are former employees of private
respondent who were officers and members of the petitioner
union.

2. Private respondent is a corporation engaged in packing and

crating, general hauling, warehousing, sea van and freight
forwarding,

3. Sometime in January 1980, the majority of the rank and file

employees of respondent firm organized the e.g. Gochangco
Workers Union as an affiliate of the CLLC. On January 23,
1980, the union filed a petition for certification election under
R03-LRD (MA) Case No. 178-80. The MOLE Region 111 office
set the hearing for the petition on February 27,1980.

4. On February 7,1980, the CLLC national president wrote the

general manager of respondent firm informing him of the
organization of the union and requesting for a labor
management conference to normalize employer-employee
relations (Annex "D," Case 486-80).

5. On February 26,1980, the, union sent a written notice to

respondent firm requesting permission for certain member
officers and members of the union to attend the hearing of the
petition for certification election. The management refused to
acknowledge receipt of said notice (Annex "E," Case 486-80).

6. On February 28, 1980, private respondent preventively

suspended the union officers and members who attended the
hearing namely: Cornelio Pangilinan, president; Leo Tropics,
vice- president; Olimpio Gumin, treasurer; Buenaventura Puno,
director; Reynaldo Dayrit, sgt-at-arms; Ernesto Ramirez;
Ernesto Galang; Odilon Lising; Jesus Daquigan; and Edilberto
Quiambao. The common ground alleged by private respondent
for its action was "abandonment of work on February 27, 1980."
On the same date, all the gate passes of all the above-
mentioned employees to Clark Air Base were confiscated by a
Base guard.

7. Claiming that private respondent instigated the confiscation

of their gate passes to prevent them from performing their
duties and that respondent firm did not pay them their overtime
pay, 13th month pay and other benefits, petitioner union and its
members filed a complaint for constructive lockout and unfair
labor practice against private respondent, docketed as R03-AB
Case No. 486-80 on March 10, 1980.

8. On March 12, 1980, private respondent filed an application

for clearance to dismiss Cornelio Pangilinan, Leo Tropics,
Olimpio Gumin, Reynaldo Dayrit, Odilon Lising, Edilberto
Quiambao; Ernesto Ramirez, Ernesto Galang, Buenaventura
Puno, Arnel Calilung, Romeo Guina, docketed as R03-AB Case
No. 556-80. Subsequently private respondent filed another
clearance to dismiss Jesus Daquigan, Serafin Pawa and Rufo
Bugayong, docketed as R03-A-B Case No. 55780.

9. On April 22,1980, petitioner Ricardo Dormingo who was

preventively suspended on April 17, 1980 filed a complaint for
unfair labor practice against the latter, docketed as R03-AB
Case No. 55880.

10. On April 30, 1980, the services of nine (9) more union
members, namely: Ernesto Tuason, Israel Vino, Pedro Santos,
Juanita Suba, Edilberto Sarmiento, Diosalino Pandan, Antonio
Razon, Benjamin Capiz and Jesus Sembrano, were terminated
by private respondent on the ground that its contract with the
U.S. Air Force had expired. The rune employees filed a
complaint for illegal dismissal against private respondents on
June 2, 1980. docketed as R03-AB Case No. 663-80.

11. On May 9, 1980, private respondent filed with MOLE,

Region III, a Notice of Termination of Contract together with a
list of employees affected by the expiration of the contract,
among them, the 39 individual petitioners herein.

12. All the aforementioned cases were consolidated and

assigned to Labor Arbiter Andres Palumbarit.

13. After heating, Labor Arbiter Federico S. Bernardo who took

over the cases from Arbiter Palumbarit rendered a decision
dated July 2, 1982, the dispositive portion of which reads:
 WHEREFORE, In view of all the foregoing, the instant
complaint of complainants is hereby granted and the
respondent's application for clearance is hereby denied.

The respondent is hereby ordered:

1. To reinstate all the suspended/dismissed

employees to their former positions without loss of
seniority rights and other privileges, with full
backwages including cost of emergency living
allowance from the date of their
suspension/dismissal up to the supposed date of
actual reinstatement, as follows:

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 2. To restore transportation privilege as being
extended before the filing of the instant case; and

3. If their reinstatement is no longer possible due to

closure of the establishment, in addition to the
payment of their full backwages and cost of living
allowance, to pay their respective separation pay as
provided for under the Labor Code.

14. Private respondent appealed to the NLRC which rendered

the questioned decision on May 31, 1983 as follows:

WHEREFORE, in the light of foregoing premises, the appealed

decision is hereby set aside and another one issued dismissing
the above-entitled cases filed by the complainants-appellees for
lack of merit and granting the application for clearance to
terminate the services of individual complainants-appellees filed
by respondent-appellant.

15. Petitioners moved for a reconsideration of the above

decision on July 12, 1983 which NLRC denied in a resolution
dated December 6,1983.

16. Hence, this petition. 1

xxx xxx xxx

The petitioners assign three errors in support of their petition:

I.

THAT PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION

AND SERIOUSLY COMMITTED ERRORS IN LAW IN CONSIDERING
PRIVATE RESPONDENTS EVIDENCE INTRODUCED FOR THE FIRST
TIME ON APPEAL, AND PUBLIC RESPONDENT NLRC HAS
SERIOUSLY COMMITTED ERRORS IN GIVING DUE COURSE TO
PRIVATE RESPONDENT APPEAL FROM THE DECISION OF LABOR
ARBITER FEDERICO S. BERNARDO, ALTHOUGH SAID APPEAL WAS
NOT VALIDLY PERFECTED ON TIME;

II.
THAT PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERRORS
IN LAW IN RENDERING A DECISION THAT IS CONTRARY TO THE
EVIDENCE ON RECORD(S); and

III.

THAT PUBLIC RESPONDENT NLRC COMMITTED AN ERROR IN NOT

AWARDING BACK WAGES TO THE INDIVIDUAL PETITIONERS FOR
REFUSAL OF PRIVATE RESPONDENT TO REINSTATE THEM AFTER
RENDERING OF THE DECISION OF LABOR ARBITER FEDERICO S.
BERNARDO AND AFTER SAID LABOR ARBITER ORDERED PRIVATE
RESPONDENT TO REINSTATE THEM. 2

On the first issue, the petitioners submit that the motion for reconsideration,
treated subsequently as an appeal, 3 of the private respondent had been
filed beyond the ten-day period prescribed by the Labor Code, in the
absence of any statement thereon as to material dates. The respondent
Commission ruled that it was, on the strength of receipts in possession of
the Labor Department disclosing such dates and showing that said appeal
had been seasonably filed. As a matter of practice, and in connection with
ordinary civil cases, this Court has assumed a stance of liberality towards
the application of the material data rule, if it in be otherwise verified from
other evidence that the appeal had been perfected within the time
prescribed. 4 We see no reason why we should hold otherwise as far as
labor cases are concerned. Accordingly, we yield to the respondent
Commission's finding that the e.g. Gochangco, Inc. had filed its appeal on
time. It may be further noted that the petitioners themselves can offer no
proof, other than vague inferences from circumstances, of the belated
appeal they allege.

This is not to say, however, that such an appeal has judgment. The
Solicitor General himself urges that we grant that, petition and hence,
reverse the respondent Commission. But apart from such urgings, the
records themselves show that a reversal is in order.

We are convinced that the respondent company is indeed guilty of an unfair

labor practice. It is no coincidence that at the time said respondent issued
its suspension and termination orders, the petitioners were in the midst of a
certification election preliminary to a labor management conference,
purportedly, "to normalize employer-employee relations." 5 It was within the
legal right of the petitioners to do so, 6 the exercise of which was their sole
prerogative, 7 and in which management may not as a rule interfere. 8 In
this connection, the respondent company deserves our strongest
condemnation for ignoring the petitioners' request for permission for some
time out to attend to the hearing of their petition before the med-arbiter. It is
not only an act of arrogance, but a brazen interference as well with the
employees right to self-organization, contrary to the prohibition of the Labor
Code against unfair labor practices. 9

But as if to add insult to injury, the company suspended the petitioners on

the ground of "abandonment of work" 10 on February 27, 1980, the date on
which, apparently, the pre-election conference had been scheduled. (The
petitioners sought permission on February 26, 1980 while the suspension
order was issued on February 28, 1980.) What unfolds here is a clear effort
by management to punish the petitioners for their union activities.

As a consequence of such a suspension, the Clark Air Base guards

confiscated the employees' gate passes, and banned them from the base
premises. We cannot be befooled by the company's pretenses that "[t]he
subsequent confiscation by the Americans of the complainants' passes is
beyond the powers of management." To start with, those passes would not
have been confiscated had not management ordered the suspension. As
put by the Solicitor General, "the U.S. Air Force authorities could not have
known who were supposed to report for work on February 27, 1980," 12and
who were under suspension. Conversely, in the absence of such a
suspension order, there was no ground to seize such gate passes. Base
guards, by themselves, cannot bar legitimate employees without the 'proper
sanction of such employees'employers.

What disturbs us even more, however, is the perplexing gullibility with

which the respondent National Labor Relations Commission would fall for
such an indefensible position. Said the Commission: "So, with their gate
passes confiscated, even if management will reinstate them, without the
gate passes, they cannot enter the US Clark Airforce Base and perform
their jobs, for the gate pass is a pre-requisite for their entrance for
employment." 13 For surely, and as we stated, the petitioners were
dispossessed of those gate passes precisely because of the suspension
meted out against them. It is not the other way around, as the Commission
would have us behave, for the confiscation of such passes would not
furnish a ground for suspension. Reinstatement then would have deprived
the base gullibility guards any right to hold on to such passes any further. In
the absence of superior orders, mere base guards are bereft of any
discretion to act on such matters.

In finding the petitioners' suspension illegal, with more reason do we hold

their subsequent dismissal to be illegal. We are not persuaded by the
respondent firm's argument that final termination should be effected as the
contract has expired." 14 What impresses us is the Solicitor General's
submission that the petitioners were regular employees and as such, their
tenure did not end with the expiration of the contract. We quote:

The records show that petitioners were do so, 6 The ar

employees whose employment did not terminate with the
expiration of private respondent's contract with the U.S. Air
Force. In their position paper in the arbitration proceedings,
they averred that been employer employed by private
respondent for six (6) months or more before they were
terminated as follows:

N D P
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As regular employees, the petitioners' tenure are secure, and their

dismissal must be premised on a just cause. 16

We find none here. What we find, instead, are flimsy attempts by the
respondent company to discredit the person of the petitioners' counsel, or
their officers, and other resorts to argumenta ad hominem. 17

There is no merit in the claim that the petitioners' terms were coterminous
with the duration of the contract. There is nothing in the records that would
show that the petitioners were parties to that contract. It appears
furthermore that the petitioners 18 were in the employ of the respondent
company long before that contract was concluded. They were not contract
workers whose work terms are tied to the agreement, but were, rather,
regular employees of their employer who entered into that contract.

But even if dismissal were warranted, the same nonetheless faces our
disapproval in the absence of a proper clearance then required under the
Labor Code. 19 It is true that efforts were undertaken to seek such a
clearance, yet there is no showing that it was issued. That still taints the
dismissal with the vice of illegality.
The Court likewise rejects the claims of an alleged waiver by the petitioners
of their economic demands, in the light of an alleged order issued by Labor
Arbiter Luciano Aquino in connection with another case(s) involving the
same parties. (It was Labor Arbiter Federico Bernardo who penned the
unfair labor practice/illegal dismissal case.) The Honorable Aquino's
disposition reads:

The records show that a "Waiver of Claims, Rights and Interest"

was filed by above-named petitioners stating, among other
things, that said petitioners are waiving their claims, rights and
interests against the respondents.

ACCORDINGLY, let the above-entitled cases be DISMISSED

in view of the waiver made by the petitioners. 20

Acting on these allegations, the respondent Commission,

baring its clear bias for management, ruled that the petitioners
had waived their claims. Thus:

xxx xxx xxx

With respect to the second issue, that is, whether or not the
waiver of rights and interests executed by Fernando do so, 6
The G Lising, Odilon do so, 6 The G Lising, Jose C. Tiamzon,
Ernesto Tuazon, Pedro Santos, Ruben Buela, Eduardo
Alegado, Estrael Vino, Rogelio Manguerra, Edilberto Bingcang,
Olimpio Gumin, Leo Tropico, Orlando Nacu, Rodolfo T. Capitly
and Juanito Suba, are valid, the alleged president of
complainant-appellee union Benigno Navarro, Sr., contends
that Id Atty. Solomon has no authority to appear floor and in
behalf of individual complainants-appellees who waived their
rights and interests in these cases since there was no authority
from him. Records, however, disclose that said Atty. Solomon
had been the attorney of record for complainants-appellees
since the inception of these cases, and, therefore, is authority
to represent them cannot be questioned- not even by Ministry.
Navarro who allegedly took over the presidency of complainant-
appellee union after the disappearance of the former president,
Mr. Ficardo Alconga, Sr. And besides, the waiver of rights and
 interests were personally executed by the signatories therein
and all that Atty. Solomon did was to assist them. 21

xxx xxx xxx

We find this puzzling for clearly, Labor Arbiter Aquino's resolution refers to
other cases 22 and not the instant unfair labor practice controversy. The
Commission cannot feign simple mistake for such a lapse. Wittingly or
unwittingly, it had made itself a Dawn of the respondent corporation or
otherwise had yielded to its influence. The Court rebukes Atty. Isagani M.
Jungco counsel for the respondent company, for his unbecoming act and
the individual members of the Commission itself, for besmirching the
integrity of the Commission.

In any event, we have held that unfair labor practice cases are not, in view
of the public interest involved, subject to compromises. 23 Furthermore,
these alleged waivers do not appear to have been presented in the first
instance. They cannot be introduced for the first time on appeal.

We come, finally, to the respondent company's liability for backwages and

for emergency cost of living allowances (ECOLA). In its appeal, the
company denies any liability, pointing to "[r]epresentative samples of the
documents evidencing payment was likewise submitted due to the
voluminous records which cannot be all produced." 24 The Commission
accepted this argument, noting that 'these xerox copies of payment of
allowances, were never spurned by complainants-appellees." 25 The
Solicitor General observes, on the other hand, that these alleged
documents were never presented at the hearing but surfaced only on
appeal. 26 Indeed, there is no reference in the Labor Arbiter's decision to
these documents, and apparently, the respondent firm entered the same in
evidence at the appeal level only. As we have declared, a party is barred
from introducing fresh matters at the appellate stage. Besides, and as the
Solicitor General points out, "the ECOLA awarded to petitioners in the
decision of the Labor Arbiter include only those that pertain to them from
the time of their dismissal up to July 1, 1982 " 27 the date the Labor Arbiter
ordered their reinstatement. 28 Accordingly, we rule the respondent
corporation liable for such unpaid claims.

Before Batas Blg. 70 29 was enacted into law, unfair labor practices were
considered administrative offenses, 30 and have been held akin to tort, 31
wherein damages are payable. We therefore not only order herein the
reinstatement of the petitioners and the payment of backwages (including
cost-of-living allowances) to them, but impose as well moral and exemplary
damages. With respect to backwages, we hold the respondent e.g.
Gochangco, Inc. liable, in line with the recommendation of the Solicitor
General and in accordance with accepted practice, for backwages
equivalent to three (3) years without qualification or deduction. 32

As for moral damages, we hold the said respondent liable therefor under
the provisions of Article 2220 of the Civil Code providing for damages for
"breaches of contract where the defendant acted fraudulently or in bad
faith." We deem just and proper the sum of P5,000.00 each in favor of the
terminated workers, in the concept of such damages.

We likewise grant unto said workers another P5,000.00 each to answer for
exemplary damages based on the provisions of Articles 2229 and 2231
and/or 2232 of the Civil Code. For "act[ing] in gross and evident bad faith in
refusing to satisfy the [petitioners'] plainly valid, just and demandable
claim[s] " 33 the respondent firm is further condemned to pay attorney's
fees. The Court considers the total sum of P20,000.00 fair and reasonable.

If only for emphasis, the new Constitution considers "labor as a primary

social economic force." 34 As the conscience of the government, it is this
Court's sworn duty to ensure that none trifles with labor rights.

WHEREFORE, the petition is GRANTED. The decision of the public

respondent, the National Labor Relations Commission, is REVERSED and
SET ASIDE. Judgment is hereby rendered:

1. Ordering the private respondent, e.g. Gochangco, Inc., to REINSTATE

the terminated workers;

2. Ordering the private respondent to PAY them backwages equivalent to

three (3) years without qualification or deduction;

3. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00)

PESOS EACH, as and for moral damages;

4. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00)

PESOS EACH, as and for exemplary damages; and
5. Ordering it to PAY them the sum of TWENTY THOUSAND (P20,000.00)
PESOS as and for attorney's fees.

This Decision is IMMEDIATELY EXECUTORY.

Costs against the private respondent.

IT IS SO ORDERED.
SECOND DIVISION

GERONIMO Q. QUADRA, G.R. No. 147593

Petitioner,

Present:

PUNO, J., Chairperson,

- versus - SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.

THE COURT OF APPEALS

and the PHILIPPINE CHARITY Promulgated:

SWEEPSTAKES OFFICE,

Respondents. July 31, 2006

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

 
 DECISION

PUNO, J.:

This is a petition for review of the decision of the Court of Appeals in CA-
G.R. SP No. 55634 dated December 29, 2000 and its resolution dated March 26,
2001. The Court of Appeals reversed and set aside the decision of the National
Labor Relations Commission (NLRC) in NLRC NCR Case No. 4312-ULP which
affirmed the decision of the Labor Arbiter granting moral and exemplary damages
to petitioner Geronimo Q. Quadra in connection with his dismissal from the
service.

Petitioner Geronimo Q. Quadra was the Chief Legal Officer of respondent

Philippine Charity Sweepstakes Office (PCSO) when he organized and actively
participated in the activities of Philippine Charity Sweepstakes Employees
Association (CUGCO), an organization composed of the rank and file employees
of PCSO, and then later, the Association of Sweepstakes Staff Personnel and
Supervisors (CUGCO) (ASSPS [CUGCO]). In April 1964, he was administratively
charged before the Civil Service Commission with violation of Civil Service Law
and Rules for neglect of duty and misconduct and/or conduct prejudicial to the
interest of the service. On July 14, 1965, the Civil Service Commission rendered a
decision finding petitioner guilty of the charges and recommending the penalty of
dismissal. The following day, on July 15, 1965, the General Manager of PCSO,
Ignacio Santos Diaz, sent petitioner a letter of dismissal, in accordance with the
decision of the Civil Service Commission. Petitioner filed a motion for
reconsideration of the decision of the Civil Service Commission on August 10,
1965. At the same time, petitioner, together with ASSPS (CUGCO), filed with the
Court of Industrial Relations (CIR) a complaint for unfair labor practice against
respondent PCSO and its officers. The case was docketed as Case No. 4312-ULP.

On November 19, 1966, the CIR issued its decision finding respondent
PCSO guilty of unfair labor practice for having committed discrimination against
the union and for having dismissed petitioner due to his union activities. It ordered
the reinstatement of petitioner to his former position with full backwages and with
all the rights and privileges pertaining to said position.202[1]

Respondent PCSO complied with the decision of the CIR. But while it
reinstated petitioner to his former position and paid his backwages, it also filed
with the Supreme Court a petition for review on certiorari entitled Philippine
Charity Sweepstakes Office, et al. v. The Association of Sweepstakes Staff
Personnel, et al. assailing the decision of the CIR in Case No. 4312-ULP. The
petition was docketed as G.R. No. L-27546.203[2]

202

203
 On March 16, 1967, during the pendency of the case in the Supreme Court,
petitioner filed with the CIR a Petition for Damages. He prayed for moral and
exemplary damages in connection with Case No. 4312-ULP. He cited the decision
of the Supreme Court in Rheem of the Philippines, Inc., et al. v. Ferrer, et al. 204
[3] where it upheld the jurisdiction of the CIR over claims for damages incidental
to an employees dismissal.

Respondent PCSO moved to dismiss the petition for damages on the

following grounds: (1) the CIR has no jurisdiction to award moral and exemplary
damages; (2) the cause of action is barred by prior judgment, it appearing that two
complaints are brought for different parts of a single cause of action; and (3) the
petition states no valid cause of action.

Petitioner resigned from PCSO on August 18, 1967.

The petition for damages and the motion to dismiss, however, remained
pending with the CIR until it was abolished and the NLRC was created. On April
25, 1980, the Labor Arbiter rendered a decision awarding moral and exemplary
damages to petitioner in the amount of P1.6 million. The dispositive portion of the
decision stated:

204
 WHEREFORE, in view of all the foregoing considerations, judgment is
hereby rendered awarding to complainant Geronimo Q. Quadra moral damages
consisting of the following sum: Three Hundred Fifty Thousand Pesos
(P350,000.00) for besmirched reputation; Three Hundred Fifty Thousand Pesos
(P350,000.00) for social humiliation; One Hundred Thousand Pesos
(P100,000.00) for mental anguish; One Hundred Thousand Pesos (P100,000.00)
for serious anxiety; One Hundred Thousand Pesos (P100,000.00) for wounded
feelings; One Hundred Thousand Pesos (P100,000.00) for moral shock; and the
further sum of P500,000.00 as exemplary damages, on account of the arbitrary
and unlawful dismissal effected by respondents. Consequently, respondents are
therefore ordered to pay complainant Quadra the total sum of One Million Six
Hundred Thousand Pesos (P1,600,000.00) within ten (10) days after this Decision
becomes final.
 
SO ORDERED.205[4]
 

The NLRC affirmed the decision of the Labor Arbiter, 206[5] prompting
respondent PCSO to file a petition for certiorari with the Court of Appeals.

The Court of Appeals reversed the decision of the NLRC. It held that there
was no basis for the grant of moral and exemplary damages to petitioner as his
dismissal was not tainted with bad faith. It was the Civil Service Commission that
recommended petitioners dismissal after conducting an investigation. It also held
that the petition claiming moral and exemplary damages filed by petitioner after
respondent PCSO had complied with the CIR decision of reinstatement and
backwages amounted to splitting of cause of action.207[6]

205

206

207
 Petitioner filed a motion for reconsideration of the decision of the Court of
Appeals, but the same was denied for lack for merit.208[7]

Petitioner now seeks the Court to review the ruling of the Court of Appeals.
He basically argues:

First: The ruling of the Court of Appeals that the PCSO did not act in
bad faith when it dismissed the petitioner is contrary to the already final and
executory decision of the CIR dated November 1[9], 1966 finding the PCSO
guilty of bad faith and unfair labor practice in dismissing the petitioner. The
decision of the CIR was affirmed by the High Court in the case of PCSO, et al. v.
Geronimo Q. Quadra, et al., 115 SCRA 34. The Court of Appeals has no
jurisdiction to amend the final and executory decision of November 1[9], 1966 of
the CIR which was affirmed by the High Court. Once a decision has become final
[and] executory, it could no longer be amended or altered.
 
Second: The ruling of the Court of Appeals that the claims for moral and
exemplary damages of the petitioner is allegedly tantamount to splitting of cause
of action under Sec. 4, Rule 2 of the 1997 Rules of Civil Procedure is contrary to
law. When petitioner filed with the CIR his complaint for illegal dismissal and
unfair labor practice, the prevailing law and jurisprudence was that the CIR did
not have jurisdiction to grant moral and exemplary damages. Petitioners claim for
moral damages was filed with the CIR in the same case by virtue of the ruling of
the High Court in Rheem v. Ferrer, 19 SCRA 130 holding that the CIR has
jurisdiction to award moral and exemplary damages arising out of illegal
dismissal and unfair labor practice.209[8]
 

The petition is impressed with merit.

208

209
 A dismissed employee is entitled to moral damages when the dismissal is
attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in
a manner contrary to good morals, good customs or public policy. Exemplary
damages may be awarded if the dismissal is effected in a wanton, oppressive or
malevolent manner.210[9] It appears from the facts that petitioner was deliberately
dismissed from the service by reason of his active involvement in the activities of
the union groups of both the rank and file and the supervisory employees of PCSO,
which unions he himself organized and headed. Respondent PCSO first charged
petitioner before the Civil Service Commission for alleged neglect of duty and
conduct prejudicial to the service because of his union activities. The Civil Service
Commission recommended the dismissal of petitioner. Respondent PCSO
immediately served on petitioner a letter of dismissal even before the latter could
move for a reconsideration of the decision of the Civil Service Commission.
Respondent PCSO may not impute to the Civil Service Commission the
responsibility for petitioners illegal dismissal as it was respondent PCSO that first
filed the administrative charge against him. As found by the CIR, petitioners
dismissal constituted unfair labor practice. It was done to interfere with, restrain or
coerce employees in the exercise of their right to self-organization. It stated:

Upon the entire evidence as a whole (sic), the [c]ourt feels and believes
that complainant Quadra was discriminatorily dismissed by reason of his militant
union activities, not only as President of PCSEA, but also as President of the
ASSPS.211[10]
 

In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees

Association, et al. v. NLRC, et al.,212[11] we found it proper to award moral and
210

211

212
exemplary damages to illegally dismissed employees as their dismissal was tainted
with unfair labor practice. The Court said:

Unfair labor practices violate the constitutional rights of workers and

employees to self-organization, are inimical to the legitimate interests of both
labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect; and disrupt
industrial peace and hinder the promotion of healthy and stable labor-management
relations. As the conscience of the government, it is the Courts sworn duty to
ensure that none trifles with labor rights.
 
For this reason, we find it proper in this case to impose moral and
exemplary damages on private respondent. x x x
 

On the second issue, we agree with petitioner that the filing of a petition for
damages before the CIR did not constitute splitting of cause of action under the
Revised Rules of Court. The Revised Rules of Court prohibits parties from
instituting more than one suit for a single cause of action. Splitting a cause of
action is the act of dividing a single cause of action, claim or demand into two or
more parts, and bringing suit for one of such parts only, intending to reserve the
rest for another separate action. The purpose of the rule is to avoid harassment and
vexation to the defendant and avoid multiplicity of suits.213[12]

The prevailing rule at the time that the action for unfair labor practice and
illegal dismissal was filed and tried before the CIR was that said court had no
jurisdiction over claims for damages. Hence, petitioner, at that time, could not raise
the issue of damages in the proceedings. However, on January 27, 1967, the
Supreme Court rendered its ruling in Rheem of the Philippines, Inc., et al. v.
Ferrer, et al.214[13] upholding the jurisdiction of the CIR over claims for damages

213

214
incidental to an employees illegal dismissal. Petitioner properly filed his claim for
damages after the declaration by the Court and before the ruling on their case
became final. Such filing could not be considered as splitting of cause of action.

IN VIEW WHEREOF, the assailed decision and resolution of the Court of

Appeals are REVERSED and SET ASIDE. The decision of the NLRC in NLRC
NCR Case No. 4312-ULP is REINSTATED.

SO ORDERED.
 FIRST DIVISION

G.R. No. 185160, July 24, 2013

POLYMER RUBBER CORPORATION AND JOSEPH ANG, Petitioners, v. BAYOLO

SALAMUDING, Respondent.

DECISION

REYES, J.:

The instant petition1 assails the Decision2 dated June 30, 2008 of the Court of Appeals (CA) in
CA-G.R. SP No. 98387 directing the recall of the alias writ of execution and the lifting of the
notice of levy on the shares of stocks of petitioner Joseph Ang (Ang).  The Resolution3 dated
November 5, 2008 denied the motion for reconsideration thereof.

The antecedent facts are as follows: cralavvonlinelawlibrary

Herein respondent Bayolo Salamuding (Salamuding), Mariano Gulanan and Rodolfo Raif
(referred to as the complainants) were employees of petitioner Polymer Rubber Corporation
(Polymer), who were dismissed after allegedly committing certain irregularities against Polymer.

On July 24, 1990, the three employees filed a complaint against Polymer and Ang (petitioners)
for unfair labor practice, illegal dismissal, non-payment of overtime services, violation of
Presidential Decree No. 851, with prayer for reinstatement and payment of back wages,
attorney’s fees, moral and exemplary damages.4

On November 21, 1990, the Labor Arbiter (LA) rendered a decision, the dispositive portion of
which reads: cralavvonlinelawlibrary

WHEREFORE, judgment is hereby rendered dismissing the complainant unfair labor practice
(sic) but directing the respondent the following: cralavvonlinelawlibrary

1.  Reinstate complainants to their former position with full back wages from the time they were
illegally dismissed up to the time of reinstatement.

2.  To pay individual complainants their 13th month pay and for the year 1990 in the following
amount: cralavvonlinelawlibrary

a. Mariano Gulanan.................[P]3,194
b.  Rodolfo Raif.......................[P]3,439
c. Bayolo Salam[u]ding.............[P]3,284

3.  To pay individual complainants overtime in the amount of [P]1,335 each.

4.  To pay individual complainants overtime in the amount of [P]6,608.80 each.

5.  To pay individual complainants moral and exemplary damages in the amount of [P]10,000
each.

6.  To pay attorney’s fee equivalent to ten (10) percent of the total monetary award of the
complainants.

SO ORDERED.5 nadcral avvonlinelawlibrary

A writ of execution was subsequently issued on April 18, 1991 to implement the aforesaid
judgment.6

The petitioners appealed to the National Labor Relations Commission (NLRC).

On April 7, 1992, the NLRC affirmed the decision of the LA with modifications.  The NLRC
deleted the award of moral and exemplary damages, service incentive pay, and modified the
computation of 13th month pay.7  The corresponding Entry of Judgment was made on September
25, 1992,8 and an alias writ of execution was issued on October 29, 1992, based on the NLRC
decision.9

The case was subsequently elevated to the Supreme Court (SC) on a petition for certiorari.  In a
Resolution dated September 29, 1993, the Court affirmed the disposition of the NLRC with the
further modification that the award of overtime pay to the complainants was deleted.10

On September 30, 1993, Polymer ceased its operations.11

Upon a motion dated November 11, 1994, the LA a quo issued a writ of execution on November
16, 1994 based on the SC resolution.  Since the writ of execution was returned unsatisfied,
another alias writ of execution was issued on June 4, 1997.12

In the latter part of 2004, Polymer with all its improvements in the premises was gutted by fire.13

On December 2, 2004, the complainants filed a Motion for Recomputation and Issuance of Fifth
(5th) Alias Writ of Execution.  The Research and Computation Unit of the NLRC came up with
the total amount of P2,962,737.65.  Due to the failure of the petitioners to comment/oppose the
amount despite notice, the LA approved said amount.14

Thus, on April 26, 2005, the LA issued a 5th Alias Writ of Execution15 prayed for commanding
the sheriff to collect the amount.

In the implementation of this alias writ of execution dated April 26, 2005, the shares of stocks of
Ang at USA Resources Corporation were levied.

On November 10, 2005, the petitioners moved to quash the 5th alias writ of execution, and to lift
the notice of garnishment.16  They alleged that: a) Ang should not be held jointly and severally
liable with Polymer since it was only the latter which was held liable in the decision of the LA,
NLRC and the Supreme Court; b) the computation of the monetary award in favor of the
complainants in the amount of P2,962,737.65 was misleading, anomalous and highly erroneous;
and c) the decision sought to be enforced by mere motion is already barred by the statute of
limitations.17

In an Order18 dated December 16, 2005, the LA granted the motion. The LA ordered the quashal
and recall of the writ of execution, as well as the lifting of the notice of levy on Ang’s shares of
stocks.

The LA ruled that the Decision dated November 21, 1990 did not contain any pronouncement
that Ang was also liable.  To hold Ang liable at this stage when the decision had long become
final and executory will vary the tenor of the judgment, or in excess of its terms.  As to the extent
of the computation of the backwages, the same must only cover the period during which the
company was in actual operation.  Further, the LA found that the complainant’s motion to
execute the LA’s decision was already barred by the statute of limitations.  The fallo of the
decision reads: cralavvonlinelawlibrary

WHEREFORE, premises all considered, an order is hereby rendered quashing and recalling the
Writ of Execution and lifting the Notice of Levy on the Shares of Stocks of respondent Joseph
Ang.19nadcral avvonlinelawlibrary

On appeal, the NLRC affirmed the findings of the LA in a Decision20 dated September 27, 2006. 
It, however, made a pronouncement that the complainants did not sleep on their rights as they
continued to file series of motions for the execution of the monetary award and are, thus, not
barred by the statute of limitations.  The appeal on the aspect of the lifting of the notice of levy
on the shares of stocks of Ang was dismissed.  The dispositive portion of the decision reads as
follows: cralavvonlinelawlibrary

WHEREFORE, the assailed Order dated December 16, 2005 is hereby AFFIRMED with
MODIFICATION declaring the rights of the complainants to execute the Decision dated
November 21, 1990 not having barred by the statute of limitations.  The appeal is hereby,
DISMISSED for lack of merit.21

On January 12, 2007, the NLRC denied the motion for reconsideration of the foregoing
decision.22

Undeterred, Salamuding filed a Petition for Certiorari23 before the CA.

On June 30, 2008, the CA found merit with the petition.24  The CA stated that there has to be a
responsible person or persons working in the interest of Polymer who may also be considered as
the employer, invoking the cases of NYK Int’l. Knitwear Corp. Phils. v. NLRC25 and A.C.
Ransom Labor Union-CCLU v. NLRC.26  Since Ang as the director of Polymer was considered
the highest ranking officer of Polymer, he was therefore properly impleaded and may be held
jointly and severally liable for the obligations of Polymer to its dismissed employees.  Thus, the
dispositive portion of the assailed decision reads as follows: cralavvonlinelawlibrary

WHEREFORE, the petition is granted in part. The Decision dated September 27, 2006 and the
Resolution dated January 12, 2007 of respondent NLRC are hereby annulled and set aside
insofar as they direct the recall and quashal of the Writ of Execution and lifting of the Notice of
Levy on the shares of stock of respondent Joseph Ang. The Order dated December 16, 2005 of
the Honorable Labor Arbiter Ramon Valentin C. Reyes is nullified.

Let the records of the case be remanded to the Labor Arbiter for execution of the Decision dated
November 21, 1990 as modified by the NLRC against the respondents Polymer Rubber
Corporation and Joseph Ang.27

Aggrieved by the CA decision, the petitioners filed the instant petition raising the following
questions of law: cralavvonlinelawlibrary

a. That upon the finality of the Decision, the same can no longer be altered or modified[;]
b.  That the Officer of the Corporation cannot be personally held liable and be made to pay the
liability of the corporation[;]
c. That the losing party cannot be held liable to pay the salaries and benefits of the employees
beyond the companies [sic] existence; chanroblesvirtualawlibrary

d.  That the separation pay of employees of the company which has closed its business
permanently is only half month salary for every year of service.28

There is merit in the petition.

“A corporation, as a juridical entity, may act only through its directors, officers and employees. 
Obligations incurred as a result of the directors’ and officers’ acts as corporate agents, are not
their personal liability but the direct responsibility of the corporation they represent.  As a rule,
they are only solidarily liable with the corporation for the illegal termination of services of
employees if they acted with malice or bad faith.”29

To hold a director or officer personally liable for corporate obligations, two requisites must
concur: (1) it must be alleged in the complaint that the director or officer assented to patently
unlawful acts of the corporation or that the officer was guilty of gross negligence or bad faith;
and (2) there must be proof that the officer acted in bad faith.30

In the instant case, the CA imputed bad faith on the part of the petitioners when Polymer ceased
its operations the day after the promulgation of the SC resolution in 1993 which was allegedly
meant to evade liability.  The CA found it necessary to pierce the corporate fiction and pointed at
Ang as the responsible person to pay for Salamuding’s money claims.  Except for this assertion,
there is nothing in the records that show that Ang was responsible for the acts complained of.  At
any rate, we find that it will require a great stretch of imagination to conclude that a corporation
would cease its operations if only to evade the payment of the adjudged monetary awards in
favor of three (3) of its employees.
The dispositive portion of the LA Decision dated November 21, 1990 which Salamuding
attempts to enforce does not mention that Ang is jointly and severally liable with Polymer.  Ang
is merely one of the incorporators of Polymer and to single him out and require him to personally
answer for the liabilities of Polymer is without basis.  In the absence of a finding that he acted
with malice or bad faith, it was error for the CA to hold him responsible.

In Aliling v. Feliciano,31  the Court explained to wit: cralavvonlinelawlibrary

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and
severally liable for the monetary awards of Aliling on the ground that the officers are considered
“employers” acting in the interest of the corporation.  The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission in support of its
argument.  Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC.

Such ruling has been reversed by the Court in Alba v. Yupangco, where the Court ruled: cralavvonlinelawlibrary

“By Order of September 5, 2007, the Labor Arbiter denied respondent’s motion to quash the 3rd
alias writ. Brushing aside respondent’s contention that his liability is merely joint, the Labor
Arbiter ruled: cralavvonlinelawlibrary

Such issue regarding the personal liability of the officers of a corporation for the payment of
wages and money claims to its employees, as in the instant case, has long been resolved by the
Supreme Court in a long list of cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA
269) and reiterated in the cases of Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183
SCRA 644)].  In the aforementioned cases, the  Supreme  Court  has  expressly  held that  the 
irresponsible  officer  of  the  corporation (e.g., President) is liable for the corporation’s
obligations to its workers. Thus, respondent Yupangco, being the president of the respondent YL
Land and Ultra Motors Corp., is properly jointly and severally liable with the defendant
corporations for the labor claims of Complainants Alba and De Guzman. x x x

xxxx
As reflected above, the Labor Arbiter held that respondent’s liability is solidary.

There is solidary liability when the obligation expressly so states, when the law so provides, or
when the nature of the obligation so requires. MAM Realty Development Corporation v. NLRC,
on solidary liability of corporate officers in labor disputes, enlightens: cralavvonlinelawlibrary

x x x A corporation being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, acting as such corporate agents are not theirs but the
direct accountabilities of the corporation they represent. True solidary liabilities may at times be
incurred but only when exceptional circumstances warrant such as, generally, in the following
cases:cralavvonlinelawlibrary

1. When directors and trustees or, in appropriate cases, the officers of a corporation: cralavvonlinelawlibrary

(a) vote for or assent to patently unlawful acts of the corporation; chanroblesvirtualawlibrary

(b) act in bad faith or with gross negligence in directing the corporate affairs; chanroblesvirtualawlibrary
xxxx
In labor cases, for instance, the Court has held corporate directors and officers solidarily liable
with the corporation for the termination of employment of employees done with malice or in bad
faith.”32  (Citations omitted and underscoring ours)

To hold Ang personally liable at this stage is quite unfair.  The judgment of the LA, as affirmed
by the NLRC and later by the SC had already long become final and executory.  It has been held
that a final and executory judgment can no longer be altered.  The judgment may no longer be
modified in any respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is attempted to
be made by the court rendering it or by the highest Court of the land.33  “Since the alias writ of
execution did not conform, is different from and thus went beyond or varied the tenor of the
judgment which gave it life, it is a nullity.  To maintain otherwise would be to ignore the
constitutional provision against depriving a person of his property without due process of law.”34

Anent the computation of their liability for the payment of separation pay in lieu of reinstatement
in favor of Salamuding, the Court agrees with the ruling of the LA that it must be computed only
up to the time Polymer ceased operations in September 1993.  The computation must be based
on the number of days when Polymer was in actual operation.35  It cannot be held liable to pay
separation pay beyond such closure of business because even if the illegally dismissed
employees would be reinstated, they could not possibly work beyond the time of the cessation of
its operation.36  In the case of Chronicle Securities Corp. v. NLRC,37 we ruled that even an
employer who is “found guilty of unfair labor practice in dismissing his employee may not be
ordered so to pay backwages beyond the date of closure of business where such closure was due
to legitimate business reasons and not merely an attempt to defeat the order of reinstatement.”38

WHEREFORE, the petition is GRANTED.  The Decision dated June 30, 2008 and the
Resolution dated November 5, 2008 of the Court of Appeals in CA-G.R. SP No. 98387 are SET
ASIDE.  The Decision of the National Labor Relations Commission dated September 27, 2006 is
REINSTATED.  Let the records of the case be remanded to the Labor Arbiter for proper
computation of the award in accordance with this decision.

SO ORDERED.