RIZAL LABOR UNION, CARLOS SANTOS, EDILBERTO REYES, TEOFENES shop proviso of the collective bargaining agreement, although
e bargaining agreement, although they were declared
MINGUILLAN, APRONIANO CELAJES, AUGUSTO RAYMUNDO, CELESTINO
RINO, EDMUNDO GARCIA, JOSE EVANCHES, MELENCIO ENRIQUEZ, PEDRO
ANTAZO, BENJAMIN ONGKIATCO, FELIX ADSUARA, GREGORIO YUNZAL and
VICENTE INAMAC, petitioners,
vs.
RIZAL CEMENT COMPANY, INC., JUAN DE LEON, RODOLFO FAUSTINO,
BINANGONAN LABOR UNION LOCAL 104, FILOMENO PRUDON, NICANOR
MEYCACAYAN, MACARIO CENIDOZA, APOLONIO SUMALDE, LOTARIO
BATAN, FRANCISCO EVANGELISTA, DOMINGO PUBLICO, HON. ARSENIO
MARTINEZ, Judge, Court of Industrial Relations, HON. EMILIANO TABIGNE,
Judge, Court of Industrial Relations, and HON. AMANDO BUGAYONG, Judge,
Court of Industrial Relations,respondents.
Pedro A. Lopez for petitioner.
Bausa, Ampil and Suarez for respondent Rizal Cement Co., Inc.
Mariano B. Tuazon for respondent Court of Industrial Relations.
A. V. Villacorta for respondent Union.
BARRERA, J.:
This is a petition filed by the Rizal Labor Union for the review of the resolution of the
Court of Industrial Relations en banc (in Case No. 16115-ULP), dismissing the
petition for unfair labor practice filed against the Binangonan Labor Union, Local 104
and the Rizal Cement Company.1äwphï1.ñët
On February 13, 1958, Carlos Santos and 14 other employees of the Rizal Cement
company, while still members of the Binangonan Labor Union Local 104, formed and
organized the Rizal Labor Union. The company was notified thereof on March 18,
1958. Prior to this date or on March 15, 1958, Carlos Santos and Teofines Minguillan,
president and secretary, respectively, of the newly-organized Rizal Labor Union,
received identical letters from the Binangonan Labor Union, requiring them to explain
in 48 hours why they should not be expelled for disloyalty. Although Santos and
Minguillan requested for the convocation of a general meeting of the members of the
Binangonan Labor Union to explain their side, the 15 organizers of the new union
were expelled from their original union on March 21, 1958. On the same day, it
demanded the dismissal of the expelled members from employment, which the
company did on March 22, 1958.
The dismissed employees went to the Court of Industrial Relations charging the
Company and the Binangonan Labor Union with unfair labor practices. Said
respondents answered the charges by referring to the alleged closed-shop proviso in
the subsisting collective bargaining agreement between them. After due hearing, the
trial judge rendered a decision holding that the supposed closed-shop proviso, while
valid, was inadequate to justify the dismissal of complainants from employment. The
company was thus ordered to reinstate them and both respondents were directed to
pay, jointly and severally, the complainants their back wages. Upon respondents,
motion for reconsideration, the judgment of the trial Judge was reversed by the
court en banc. The dismissal of complainants was found to be justified by the closed
entitled to separation pay. Complainants filed the present petition for review.
The only issue presented in this case is whether the dismissal of the complaining 15
employees was justified or not. The resolution of this question hinges on the validity
and adequacy of the supposed closed-shop proviso of the collective bargaining
contract between respondent Company and respondent union. For, it is axiomatic that
in order that the discharge of an employee pursuant to a closed-shop agreement may
be considered justified, it must first be shown that the said agreement is valid. The
provisions of the contract relied by respondents read as follows:
The EMPLOYER agrees to have in its employ and to employ only members
in good standing of the UNION in all its branches, units, plants, quarries,
warehouses, docks, etc. The UNION agrees to furnish at all time the
laborers, employees and all technical helps that the EMPLOYER may
require. EMPLOYER, however, reserves its right to accept or reject where
they fail to meet its requirements. (Article 1, Sec. 5.)
The EMPLOYER agrees not to have in its employ nor to hire any new
employee or laborer unless he is a member of good standing of the UNION,
and a bona fide holder of a UNION (NWB) card, provided such new
employee or laborer meets the qualifications required by the EMPLOYER.
(Article VII, Sec. 1-d).
The trial Judge construed the first, Article 1, Section 5, as applicable to those already
on the job at the time the agreement was entered into in 1954, 1 while Article VII,
Section 1-(d) as applicable to those getting employment thereafter. However, while
the trial Judge ruled that the aforequoted pertinent provision of the collective
bargaining agreement does not prescribe the period within which the employees must
remain as members of good standing of the union, and therefore the dismissal of the
complainants after they were expelled from the union was unjustified, the court en
banc ruled that the word "employ" as used in the proviso ("to have in its employ and
to employ only members in good standing of the union" means "to retain in service",
"to suffer or permit to work", "to keep at work". In short, the court en banc would read
in the provision the employer's assent to retain in the service or to keep at work only
those union members of good standing. We incline to uphold the stand of the trial
judge.
In one case,2 this Court ruled that a proviso in the collective bargaining contract which
reads:
That the UNION shall have the exclusive right and privilege to supply the
COMPANY with such laborers, employees and workers as are necessary in
the logging, mechanical, etc. ... and that the COMPANY agrees to employ or
hire in any of its departments only such person or persons who are members
of the UNION.
does not establish a "closed-shop" agreement, Thus, we held:
 Inasmuch as Article II above quoted does not provide that employees "must
continue to remain members in good standing" of respondent union
"to keep their jobs," the collective bargaining agreement between them does
not establish a "closed shop," except in a very limited sense, namely, that
the laborers' employees and workers engaged by the company after the
signing of the agreement on January 23, 1955, must be members of
respondent union. The agreement does not affect the right of the company
to retain those already working therefor on or before said date, or those
hired, or employed subsequently thereto, while they were members of
respondent union, but who, thereafter, resign or are expelled therefrom.

In order that an employer may be deemed bound, under a collective

bargaining agreement, to dismiss employees for non-union membership, the
stipulation to this effect must be so clear and unequivocal as to leave no
room for doubt thereon. An undertaking of this nature is so harsh that it must
be strictly construed, and doubts must be resolved against the existence of
"closed shop." Referring particularly to the abovequoted Article II, we note
that the same establishes the exclusive right of respondent union to "supply"
laborers, etc., and limits the authority of the company to "employ or hire"
them. In other words, it requires that the laborers, employees and workers
hired or employed by the company be members of respondent union at the
time of the commencement of the employer- employee relation. Membership
in respondent union is not a condition for the continuation of said relation or
for the retention of a laborer or employee engaged either before said
agreement or while he was a member of said union.

There being no substantial difference between the wording of the provision involved
in this case and that construed in the aforementioned case, we find no reason for the
adoption of a different ruling herein.

For the foregoing reason, the resolution of the respondent Court en banc is hereby
set aside. Respondents Company and union are declared guilty of unfair labor
practice as charged, and they are ordered to reinstate the complainants, and pay
jointly and severally, their back wages from the date of their dismissal until they are
reinstated by the respondent Company minus whatever they may have earned
elsewhere during the period of their dismissal. Without costs. So ordered.
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (MSMG-
UWP petitioners, vs. HON. CRESENCIO J. RAMOS, NATIONAL LABOR
RELATIONS COMMISSION, M. GREENFIELD (B), INC., SAUL TAWIL, CARLOS T.
JAVELOSA, RENATO C. PUANGCO, WINCEL LIGOT, MARCIANO HALOG,
GODOFREDO PACENO, SR., GERVACIO CASILLANO, LORENZO ITAOC, ATTY.
GODOFREDO PACENO, JR., MARGARITO CABRERA, GAUDENCIO RACHO,
SANTIAGO IBANEZ, AND RODRIGO AGUILING, respondents.
DECISION
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul
the decision of the National Labor Relations Commission in an unfair labor practice
case instituted by a local union against its employer company and the officers of its
national federation.
The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B)
(MSMG), hereinafter referred to as the "local union", is an affiliate of the private
respondent, United Lumber and General Workers of the Philippines (ULGWP),
referred to as the "federation". The collective bargaining agreement between MSMG
and M. Greenfield, Inc. names the parties as follows:
"This agreement made and entered into by and between:
M. GREENFIELD, INC. (B) a corporation duly organized in
accordance with the laws of the Republic of the
Philippines with office address at Km. 14, Merville Road,
Paraaque, Metro Manila, represented in this act by its
General manager, Mr. Carlos T. Javelosa, hereinafter
referred to as the Company;
-and-
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M.
GREENFIELD (B) (MSMG)/UNITED LUMBER AND
GENERAL WORKERS OF THE PHILIPPINES (ULGWP),
a legitimate labor organization with address at Suite 404,
Trinity Building, T.M. Kalaw Street, Manila, represented in
this act by a Negotiating Committee headed by its National
President, Mr. Godofredo Paceno, Sr., referred to in this
Agreement as the UNION."[1]
The CBA includes, among others, the following pertinent provisions:
Article II-Union Security
Section 1. Coverage and Scope. All employees who are covered by
this Agreement and presently members of the UNION shall remain
members of the UNION for the duration of this Agreement as a
condition precedent to continued employment with the COMPANY.
xxxxxx
xxxxxx
Section 4. Dismissal. Any such employee mentioned in Section 2
hereof, who fails to maintain his membership in the UNION for non-
payment of UNION dues, for resignation and for violation of
UNIONs Constitution and By-Laws and any new employee as
defined in Section 2 of this Article shall upon written notice of such
failure to join or to maintain membership in the UNION and upon
written recommendation to the COMPANY by the UNION, be
dismissed from the employment by the COMPANY; provided,
however, that the UNION shall hold the COMPANY free and
blameless from any and all liabilities that may arise should the
dismissed employee question, in any manner, his dismissal;
provided, further that the matter of the employees dismissal under
this Article may be submitted as a grievance under Article XIII and,
provided, finally, that no such written recommendation shall be
made upon the COMPANY nor shall COMPANY be compelled to
act upon any such recommendation within the period of sixty (60)
days prior to the expiry date of this Agreement conformably to law."
Article IX
Section 4. Program Fund - The Company shall provide the amount
of P10, 000.00 a month for a continuing labor education program
which shall be remitted to the Federation x x x." [2]
On September 12, 1986, a local union election was held under the auspices of the
ULGWP wherein the herein petitioner, Beda Magdalena Villanueva, and the other
union officers were proclaimed as winners. Minutes of the said election were duly filed
with the Bureau of Labor Relations on September 29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with the national federation
ULGWP by the defeated candidates in the aforementioned election.
On June 16, 1987, the federation conducted an audit of the local union funds. The
investigation did not yield any unfavorable result and the local union officers were
cleared of the charges of anomaly in the custody, handling and disposition of the
union funds.
The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local
union officers with the DOLE NCR on November 5, 1987, docketed as NCR-OD-M-
11-780-87. However, the same was dismissed on March 2, 1988, by Med-Arbiter
Renato Parungo for failure to substantiate the charges and to present evidence in
support of the allegations.
On April 17, 1988, the local union held a general membership meeting at the
Caruncho Complex in Pasig. Several union members failed to attend the meeting,
prompting the Executive Board to create a committee tasked to investigate the non-
attendance of several union members in the said assembly, pursuant to Sections 4
and 5, Article V of the Constitution and By-Laws of the union, which read:
"Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok
sa lahat ng hakbangin ng unyon ng sinumang kasapi o pinuno ay
maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa ng
hindi hihigit sa P50.00 sa bawat araw na nagkulang.
Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos
ang pulong ay ituturing na pagliban at maparusahan ito ng
alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino
mang kasapi o pisyales na mahuli and dating sa takdang oras ng di
lalampas sa isang oras ay magmumulta ng P25.00 at babawasin sa
sahod sa pamamagitan ng salary deduction at higit sa isang oras
ng pagdating ng huli ay ituturing na pagliban.[3]
On June 27, 1988, the local union wrote respondent company a letter requesting it to
deduct the union fines from the wages/salaries of those union members who failed to
attend the general membership meeting. A portion of the said letter stated:
"xxx xxx xxx
In connection with Section 4 Article II of our existing Collective
Bargaining Agreement, please deduct the amount of P50.00 from
each of the union members named in said annexes on the payroll
of July 2-8, 1988 as fine for their failure to attend said general
membership meeting."[4]
In a Memorandum dated July 3, 1988, the Secretary General of the national
federation, Godofredo Paceo, Jr. disapproved the resolution of the local union
imposing the P50.00 fine. The union officers protested such action by the Federation
in a Reply dated July 4, 1988.
On July 11, 1988, the Federation wrote respondent company a letter advising the
latter not to deduct the fifty-peso fine from the salaries of the union members
requesting that:
" x x x any and all future representations by MSMG affecting a
number of members be first cleared from the federation before
corresponding action by the Company."[5]
The following day, respondent company sent a reply to petitioner unions request in a
letter, stating that it cannot deduct fines from the employees salary without going
against certain laws. The company suggested that the union refer the matter to the
proper government office for resolution in order to avoid placing the company in the
middle of the issue.
The imposition of P50.00 fine became the subject of bitter disagreement between the
Federation and the local union culminating in the latters declaration of general
autonomy from the former through Resolution No. 10 passed by the local executive
board and ratified by the general membership on July 16, 1988.
In retaliation, the national federation asked respondent company to stop the
remittance of the local unions share in the education funds effective August 1988.
This was objected to by the local union which demanded that the education fund be
remitted to it in full.
The company was thus constrained to file a Complaint for Interpleader with a Petition
for Declaratory Relief with the Med-Arbitration Branch of the Department of Labor and
Employment, docketed as Case No. OD-M-8-435-88. This was resolved on October
28, 1988, by Med-Arbiter Anastacio Bactin in an Order, disposing thus:
"WHEREFORE, premises considered, it is hereby ordered:
1. That the United Lumber and General Workers of the Philippines
(ULGWP) through its local union officers shall administer the
collective bargaining agreement (CBA).
2. That petitioner company shall remit the P10,000.00 monthly
labor education program fund to the ULGWP subject to the
condition that it shall use the said amount for its intended purpose.
3. That the Treasurer of the MSMG shall be authorized to collect
from the 356 union members the amount of P50.00 as penalty for
their failure to attend the general membership assembly on April
17, 1988.
However, if the MSMG Officers could present the individual written
authorizations of the 356 union members, then the company is
obliged to deduct from the salaries of the 356 union members the
P50.00 fine."[6]
On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989,
which modified in part the earlier disposition, to wit:
"WHEREFORE, premises considered, the appealed portion is
hereby modified to the extent that the company should remit the
amount of five thousand pesos (P5,000.00) of the P10,000.00
monthly labor education program fund to ULGWP and the other
 P5,000.00 to MSMG, both unions to use the same for its intended
purpose."[7]
Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield,
Grosby, Triumph International, General Milling, and Vander Hons chapters) filed a
Petition for Audit and Examination of the federation and education funds of ULGWP
which was granted by Med-Arbiter Rasidali Abdullah on December 25, 1988 in an
Order which directed the audit and examination of the books of account of ULGWP.
On September 30, 1988, the officials of ULGWP called a Special National Executive
Board Meeting at Nasipit, Agusan del Norte where a Resolution was passed placing
the MSMG under trusteeship and appointing respondent Cesar Clarete as
administrator.
On October 27, 1988, the said administrator wrote the respondent company informing
the latter of its designation of a certain Alfredo Kalingking as local union president and
"disauthorizing" the incumbent union officers from representing the employees. This
action by the national federation was protested by the petitioners in a letter to
respondent company dated November 11, 1988.
On November 13, 1988, the petitioner union officers received identical letters from the
administrator requiring them to explain within 72 hours why they should not be
removed from their office and expelled from union membership.
On November 26, 1988, petitioners replied:
(a) Questioning the validity of the alleged National Executive Board
Resolution placing their union under trusteeship;
(b) Justifying the action of their union in declaring a general
autonomy from ULGWP due to the latters inability to give proper
educational, organizational and legal services to its affiliates and
the pendency of the audit of the federation funds;
(c) Advising that their union did not commit any act of disloyalty as
it has remained an affiliate of ULGWP;
(d) Giving ULGWP a period of five (5) days to cease and desist
from further committing acts of coercion, intimidation and
harrassment.[8]
However, as early as November 21, 1988, the officers were expelled from the
ULGWP. The termination letter read:
"Effective today, November 21, 1988, you are hereby expelled from
UNITED LUMBER AND GENERAL WORKERS OF THE
PHILIPPINES (ULGWP) for committing acts of disloyalty and/or
acts inimical to the interest and violative to the Constitution and by-
laws of your federation.
You failed and/or refused to offer an explanation inspite of the time
granted to you.
Since you are no longer a member of good standing, ULGWP is
constrained to recommend for your termination from your
employment, and provided in Article II Section 4, known as UNION
SECURITY, in the Collective Bargaining agreement."[9]
On the same day, the federation advised respondent company of the expulsion of the
30 union officers and demanded their separation from employment pursuant to the
Union Security Clause in their collective bargaining agreement. This demand was
reiterated twice, through letters dated February 21 and March 4, 1989, respectively,
to respondent company.
Thereafter, the Federation filed a Notice of Strike with the National Conciliation and
Mediation Board to compel the company to effect the immediate termination of the
expelled union officers.
On March 7, 1989, under the pressure of a threatened strike, respondent company
terminated the 30 union officers from employment, serving them identical copies of
the termination letter reproduced below:
We received a demand letter dated 21 November 1988 from the
United Lumber and General Workers of the Philippines (ULGWP)
demanding for your dismissal from employment pursuant to the
provisions of Article II, Section 4 of the existing Collective
Bargaining Agreement (CBA). In the said demand letter, ULGWP
informed us that as of November 21, 1988, you were expelled from
the said federation "for committing acts of disloyalty and/or acts
inimical to the interest of ULGWP and violative to its Constitution
and By-laws particularly Article V, Section 6, 9, and 12, Article XIII,
Section 8."
In subsequent letters dated 21 February and 4 March 1989, the
ULGWP reiterated its demand for your dismissal, pointing out that
notwithstanding your expulsion from the federation, you have
continued in your employment with the company in violation of Sec.
1 and 4 of Article II of our CBA, and of existing provisions of law.
In view thereof, we are left with no alternative but to comply with the
provisions of the Union Security Clause of our CBA. Accordingly,
we hereby serve notice upon you that we are dismissing you from
your employment with M. Greenfield, Inc., pursuant to Sections 1
and 4, Article II of the CBA effective immediately."[10]
On that same day, the expelled union officers assigned in the first shift were
physically or bodily brought out of the company premises by the companys security
guards. Likewise, those assigned to the second shift were not allowed to report for
work. This provoked some of the members of the local union to demonstrate their
protest for the dismissal of the said union officers. Some union members left their
work posts and walked out of the company premises.
On the other hand, the Federation, having achieved its objective, withdrew the Notice
of Strike filed with the NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE,
Manila, docketed as Case No. NCMB-NCR-NS-03-216-89, alleging the following
grounds for the strike:
(a) Discrimination
(b) Interference in union activities
(c) Mass dismissal of union officers and shop stewards
(d) Threats, coercion and intimidation
(e) Union busting
The following day, March 9, 1989, a strike vote referendum was conducted and out of
2, 103 union members who cast their votes, 2,086 members voted to declare a strike.
On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition,
docketed as Case No. NCMB-NCR-NS-03-216-89, with the Offfice of the Secretary of
the Department of Labor and Employment praying for the suspension of the effects of
their termination from employment. However, the petition was dismissed by then
Secretary Franklin Drilon on April 11, 1989, the pertinent portion of which stated as
follows:
"At this point in time, it is clear that the dispute at M. Greenfield is
purely an intra-union matter. No mass lay-off is evident as the
terminations have been limited to those allegedly leading the
secessionist group leaving MSMG-ULGWP to form a union under
the KMU. xxx
xxx xxx xxx
WHEREFORE, finding no sufficient jurisdiction to warrant the
exercise of our extraordinary authority under Article 277 (b) of the
Labor Code, as amended, the instant Petition is hereby
DISMISSED for lack of merit.
SO ORDERED."[11]
On March 13 and 14, 1989, a total of 78 union shop stewards were placed under
preventive suspension by respondent company. This prompted the union members to
again stage a walk-out and resulted in the official declaration of strike at around 3:30
in the afternoon of March 14, 1989. The strike was attended with violence, force and
intimidation on both sides resulting to physical injuries to several employees, both
striking and non-striking, and damage to company properties.
The employees who participated in the strike and allegedly figured in the violent
incident were placed under preventive suspension by respondent company. The
company also sent return-to-work notices to the home addresses of the striking
employees thrice successively, on March 27, April 8 and April 31, 1989, respectively.
However, respondent company admitted that only 261 employees were eventually
accepted back to work. Those who did not respond to the return-to-work notice were
sent termination letters dated May 17, 1989, reproduced below:
M. Greenfield Inc., (B)
Km. 14, Merville Rd., Paraaque, M.M.
May 17, 1989
xxx
On March 14, 1989, without justifiable cause and without due
notice, you left your work assignment at the prejudice of the
Companys operations. On March 27, April 11, and April 21, 1989,
we sent you notices to report to the Company. Inspite of your
receipt of said notices, we have not heard from you up to this date.
Accordingly, for your failure to report, it is construed that you have
effectively abandoned your employment and the Company is,
therefore, constrained to dismiss you for said cause.
Very truly yours,
M. GREENFIELD, INC., (B)
By:
WENZEL STEPHEN LIGOT
Asst. HRD Manager"[12]
On August 7, 1989, the petitioners filed a verified complaint with the Arbitration
Branch, National Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-
04199-89, charging private respondents of unfair labor practice which consists of
union busting, illegal dismissal, illegal suspension, interference in union activities,
discrimination, threats, intimidation, coercion, violence, and oppresion.
After the filing of the complaint, the lease contracts on the respondent companys
office and factory at Merville Subdivision, Paraaque expired and were not renewed.
Upon demand of the owners of the premises, the company was compelled to vacate
its office and factory.
Thereafter, the company transferred its administration and account/client servicing
department at AFP-RSBS Industrial Park in Taguig, Metro Manila. For failure to find a
suitable place in Metro Manila for relocation of its factory and manufacturing
operations, the company was constrained to move the said departments to Tacloban,
Leyte. Hence, on April 16, 1990, respondent company accordingly notified its
employees of a temporary shutdown. in operations. Employees who were interested
in relocating to Tacloban were advised to enlist on or before April 23, 1990.
The complaint for unfair labor practice was assigned to Labor Arbiter Manuel
Asuncion but was thereafter reassigned to Labor Arbiter Cresencio Ramos when
respondents moved to inhibit him from acting on the case.
On December 15, 1992, finding the termination to be valid in compliance with the
union security clause of the collective bargaining agreement, Labor Arbiter Cresencio
Ramos dismissed the complaint.
Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo
Putong retired from the service, leaving only two commissioners, Commissioner
Vicente Veloso III and Hon. Chairman Bartolome Carale in the First Division. When
Commissioner Veloso inhibited himself from the case, Commissioner Joaquin
Tanodra of the Third Division was temporarily designated to sit in the First Division for
the proper disposition of the case.
The First Division affirmed the Labor Arbiters disposition. With the denial of their
motion for reconsideration on January 28, 1994, petitioners elevated the case to this
Court, attributing grave abuse of discretion to public respondent NLRC in:
I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY
RESPONDENT COMPANY AS VALID;
II. HOLDING THAT THE STRIKE STAGED BYTHE PETITIONERS
AS ILLEGAL;
III. HOLDING THAT THE PETITIONER EMPLOYEES WERE
DEEMED TO HAVE ABANDONED THEIR WORK AND HENCE,
VALIDLY DISMISSED BY RESPONDENT COMPANY; AND
IV. NOT FINDING RESPONDENT COMPANY AND
RESPONDENT FEDERATION OFFICERS GUILTY OF ACTS OF
UNFAIR LABOR PRACTICE.
Notwithstanding the several issues raised by the petitioners and respondents in the
voluminous pleadings presented before the NLRC and this Court, they revolve around
and proceed from the issue of whether or not respondent company was justified in
dismissing petitioner employees merely upon the labor federations demand for the
enforcement of the union security clause embodied in their collective bargaining
agreement.
Before delving into the main issue, the procedural flaw pointed out by the petitioners
should first be resolved.
Petitioners contend that the decision rendered by the First Division of the NLRC is not
valid because Commissioner Tanodra, who is from the Third Division, did not have
any lawful authority to sit, much less write the ponencia, on a case pending before the
First Division. It is claimed that a commissioner from one division of the NLRC cannot
be assigned or temporarily designated to another division because each division is
assigned a particular territorial jurisdiction. Thus, the decision rendered did not have
any legal effect at all for being irregularly issued.
Petitioners argument is misplaced. Article 213 of the Labor Code in enumerating the
powers of the Chairman of the National Labor Relations Commission provides that:
"The concurrence of two (2) Commissioners of a division shall be
necessary for the pronouncement of a judgment or resolution.
Whenever the required membership in a division is not complete
and the concurrence of two (2) commissioners to arrive at a
judgment or resolution cannot be obtained, the Chairman shall
designate such number of additional Commissioners from the other
divisions as may be necessary."
It must be remembered that during the pendency of the case in the First Division of
the NLRC, one of the three commissioners, Commissioner Romeo Putong, retired,
leaving Chairman Bartolome Carale and Commissioner Vicente Veloso III.
Subsequently, Commissioner Veloso inhibited himself from the case because the
counsel for the petitioners was his former classmate in law school. The First Division
was thus left with only one commissioner. Since the law requires the concurrence of
two commisioners to arrive at a judgment or resolution, the Commission was
constrained to temporarily designate a commissioner from another division to
complete the First Division. There is nothing irregular at all in such a temporary
designation for the law empowers the Chairman to make temporary assignments
whenever the required concurrence is not met. The law does not say that a
commissioner from the first division cannot be temporarily assigned to the second or
third division to fill the gap or vice versa. The territorial divisions do not confer
exclusive jurisdiction to each division and are merely designed for administrative
efficiency.
Going into the merits of the case, the court finds that the Complaint for unfair labor
practice filed by the petitioners against respondent company which charges union
busting, illegal dismissal, illegal suspension, interference in union activities,
discrimination, threats, intimidation, coercion, violence, and oppression actually
proceeds from one main issue which is the termination of several employees by
respondent company upon the demand of the labor federation pursuant to the union
security clause embodied in their collective bargaining agreement.
Petitioners contend that their dismissal from work was effected in an arbitrary, hasty,
capricious and illegal manner because it was undertaken by the respondent company
without any prior administrative investigation; that, had respondent company
conducted prior independent investigation it would have found that their expulsion
from the union was unlawful similarly for lack of prior administrative investigation; that
the federation cannot recommend the dismissal of the union officers because it was
not a principal party to the collective bargaining agreement between the company and
the union; that public respondents acted with grave abuse of discretion when they
declared petitioners dismissals as valid and the union strike as illegal and in not
declaring that respondents were guilty of unfair labor practice.
Private respondents, on the other hand, maintain that the thirty dismissed employees
who were former officers of the federation have no cause of action against the
company, the termination of their employment having been made upon the demand of
the federation pursuant to the union security clause of the CBA; the expelled officers
of the local union were accorded due process of law prior to their expulsion from their
federation; that the strike conducted by the petitioners was illegal for noncompliance
with the requirements; that the employees who participated in the illegal strike and in
the commission of violence thereof were validly terminated from work; that petitioners
were deemed to have abandoned their employment when they did not respond to the
three return to work notices sent to them; that petitioner labor union has no legal
personality to file and prosecute the case for and on behalf of the individual
employees as the right to do so is personal to the latter; and that, the officers of
respondent company cannot be liable because as mere corporate officers, they acted
within the scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union officers
were validly and legally terminated because the dismissal was effected in compliance
with the union security clause of the CBA which is the law between the parties. And
this was affimed by the Commission on appeal. Moreover, the Labor Arbiter declared
that notwithstanding the lack of a prior administrative investigation by respondent
company, under the union security clause provision in the CBA, the company cannot
look into the legality or illegality of the recommendation to dismiss by the union nd the
obligation to dismiss is ministerial on the part of the company. [13]
This ruling of the NLRC is erroneous. 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 requirement of due process. The reason behind the
enforcement of union security clauses which is the sanctity and inviolability of
contracts[14] cannot override ones right to due process.
In the case of Cario vs. National Labor Relations Commission,[15] this Court
pronounced that while the company, under a maintenance of membership provision
of the collective bargaining agreement, 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.
"The power to dismiss is a normal prerogative of the employer.
However, this is not without limitation. 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, xxx. 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 respect
and protect the rights of their employees, which include the right to
labor."
In the case under scrutiny, petitioner union officers were expelled by the federation for
allegedly commiting acts of disloyalty and/or inimical to the interest of ULGWP and in
violation of its Constitution and By-laws. Upon demand of the federation, the company
terminated the petitioners without conducting a separate and independent
investigation. Respondent company did not inquire into the cause of the expulsion
and whether or not the federation had sufficient grounds to effect the same. Relying
merely upon the federations allegations, respondent company terminated petitioners
from employment when a separate inquiry could have revealed if the federation had
acted arbitrarily and capriciously in expelling the union officers. Respondent
companys allegation that petitioners were accorded due process is belied by the
termination letters received by the petitioners which state that the dismissal shall
be immediately effective.
As held in the aforecited case of Cario, "the right 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 is 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 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 mere dismissal from
his job."
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.[16] Even on the assumption that the federation had valid grounds to expell
the union officers, due process requires that these union officers be accorded a
separate hearing by respondent company.
In its decision, public respondent also declared that if complainants (herein
petitioners) have any recourse in law, their right of action is against the federation and
not against the company or its officers, relying on the findings of the Labor Secretary
that the issue of expulsion of petitioner union officers by the federation is a purely
intra-union matter.
Again, such a contention is untenable. While it is true that the issue of expulsion of
the local union officers is originally between the local union and the federation, hence,
intra-union in character, the issue was later on converted into a termination dispute
when the company dismissed the petitioners from work without the benefit of a
separate notice and hearing. As a matter of fact, the records reveal that the the
termination was effective on the same day that the the termination notice was served
on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. [17], the
Court held the company liable for the payment of backwages for having acted in bad
faith in effecting the dismissal of the employees.
"xxx Bad faith on the part of the respondent company may be
gleaned from the fact that the petitioner workers were dismissed
hastily and summarily. At best, it was guilty of a tortious act, for
which it must assume solidary liability, since it apparently chose to
summarily dismiss the workers at the unions instance secure in the
unions contractual undertaking that the union would hold it free
from any liability arising from such dismissal."
Thus, notwithstanding the fact that the dismissal was at the instance of the federation
and that it undertook to hold the company free from any liability resulting from such a
dismissal, 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.
Anent petitioners contention that the federation was not a principal party to the
collective bargaining agreement between the company and the union, suffice it to say
that the matter was already ruled upon in the Interpleader case filed by respondent
company. Med-Arbiter Anastacio Bactin thus ruled:
After a careful examination of the facts and evidences presented by
the parties, this Officer hereby renders its decision as follows:
1.) It appears on record that in the Collective Bargaining Agreement
(CBA) which took effect on July 1, 1986, the contracting parties are
M. Greenfield, Inc. (B) and Malayang Samahan ng Mga
Manggagawa sa M. Greenfield, Inc. (B) (MSMG)/United Lumber
and General Workers of the Philippines (ULGWP). However,
MSMG was not yet a registered labor organization at the time of the
signing of the CBA. Hence, the union referred to in the CBA is the
ULGWP."[18]
Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:
It is undisputed that ULGWP is the certified sole and exclusive
collective bargaining agent of all the regular rank-and-file workers
of the company, M. Greenfield, Inc. (pages 31-32 of the records).
It has been established also that the company and ULGWP signed
a 3-year collective bargaining agreement effective July 1, 1986 up
to June 30, 1989.[19]
Although the issue of whether or not the federation had reasonable grounds to expel
the petitioner union officers is properly within the original and exclusive jurisdiction of
the Bureau of Labor Relations, being an intra-union conflict, this Court deems it
justifiable that such issue be nonetheless ruled upon, as the Labor Arbiter did, for to
remand the same to the Bureau of Labor Relations would be to intolerably delay the
case.
The Labor Arbiter found that petitioner union officers were justifiably expelled from the
federation for committing acts of disloyalty when it "undertook to disaffiliate from the
federation by charging ULGWP with failure to provide any legal, educational or
organizational support to the local. x x x and declared autonomy, wherein they
prohibit the federation from interfering in any internal and external affairs of the local
union."[20]
It is well-settled that findings of facts of the NLRC are entitled to great respect and are
generally binding on this Court, but it is equally well-settled that the Court will not
uphold erroneous conclusions of the NLRC as when the Court finds insufficient or
insubstantial evidence on record to support those factual findings. The same holds
true when it is perceived that far too much is concluded, inferred or deduced from the
bare or incomplete facts appearing of record.[21]
In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration
of autonomy by the local union was part of its "plan to take over the respondent
federation." This is purely conjecture and speculation on the part of public
respondent, totally unsupported by the evidence.
A local union has the right to disaffiliate from its mother union or declare its autonomy.
A local union, being a separate and voluntary association, is free to serve the
interests of all its members including the freedom to disaffiliate or declare its
autonomy from the federation to which it belongs when circumstances warrant, in
accordance with the constitutional guarantee of freedom of association. [22]
The purpose of affiliation by a local union with a mother union or a federation
"xxx is to increase by collective action the bargaining power in
respect of the terms and conditions of labor. Yet the locals
remained the basic units of association, free to serve their own and
the common interest of all, subject to the restraints imposed by the
Constitution and By-Laws of the Association, and free also to
renounce the affiliation for mutual welfare upon the terms laid down
in the agreement which brought it into existence."[23]
Thus, a local union which has affiliated itself with a federation is free to sever such
affiliation anytime and such disaffiliation cannot be considered disloyalty. In the
absence of specific provisions in the federations constitution prohibiting disaffiliation
or the declaration of autonomy of a local union, a local may dissociate with its parent
union.[24]
The evidence on hand does not show that there is such a provision in ULGWPs
constitution. Respondents reliance upon Article V, Section 6, of the federations
constitution is not right because said section, in fact, bolsters the petitioner unions
claim of its right to declare autonomy:
Section 6. The autonomy of a local union affiliated with ULGWP
shall be respected insofar as it pertains to its internal affairs, except
as provided elsewhere in this Constitution.
There is no disloyalty to speak of, neither is there any violation of the federations
constitution because there is nothing in the said constitution which specifically
prohibits disaffiliation or declaration of autonomy. Hence, there cannot be any valid
dismissal because Article II, Section 4 of the union security clause in the CBA limits
the dismissal to only three (3) grounds, to wit: failure to maintain membership in the
union (1) for non-payment of union dues, (2) for resignation; and (3) for violation of
the unions Constitution and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on
February 26, 1989, the petitioners declared as vacant all the responsible positions of
ULGWP, filled these vacancies through an election and filed a petition for the
registration of UWP as a national federation. It should be pointed out, however, that
these occurred after the federation had already expelled the union officers. The
expulsion was effective November 21, 1988. Therefore, the act of establishing a
different federation, entirely separate from the federation which expelled them, is but
a normal retaliatory reaction to their expulsion.
With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held
that the strike was illegal for the following reasons: (1) it was based on an intra-union
dispute which cannot properly be the subject of a strike, the right to strike being
limited to cases of bargaining deadlocks and unfair labor practice (2) it was made in
violation of the "no strike, no lock-out" clause in the CBA, and (3) it was attended with
violence, force and intimidation upon the persons of the company officials, other
employees reporting for work and third persons having legitimate business with the
company, resulting to serious physical injuries to several employees and damage to
company property.
On the submission that the strike was illegal for being grounded on a non-strikeable
issue, that is, the intra-union conflict between the federation and the local union, it
bears reiterating that when respondent company dismissed the union officers, the
issue was transformed into a termination dispute and brought respondent company
into the picture. Petitioners believed in good faith that in dismissing them upon
request by the federation, respondent company was guilty of unfair labor pratice in
that it violated the petitioners right to self-organization. The strike was staged to
protest respondent companys act of dismissing the union officers. Even if the
allegations of unfair labor practice are subsequently found out to be untrue, the
presumption of legality of the strike prevails.[25]
Another reason why the Labor Arbiter declared the strike illegal is due to the
existence of a no strike no lockout provision in the CBA. Again, such a ruling is
erroneous. A no strike, no lock out provision can only be invoked when the strike is
economic in nature, i.e. to force wage or other concessions from the employer which
he is not required by law to grant.[26] Such a provision cannot be used to assail the
legality of a strike which is grounded on unfair labor practice, as was the honest belief
of herein petitioners. Again, whether or not there was indeed unfair labor practice
does not affect the strike.
On the allegation of violence committed in the course of the strike, it must be
remembered that the Labor Arbiter and the Commission found that "the parties are
agreed that there were violent incidents x x x resulting to injuries to both sides, the
union and management."[27] The evidence on record show that the violence cannot be
attributed to the striking employees alone for the company itself employed hired men
to pacify the strikers. With violence committed on both sides, the management and
the employees, such violence cannot be a ground for declaring the strike as illegal.
With respect to the dismissal of individual petitioners, the Labor Arbiter declared that
their refusal to heed respondents recall to work notice is a clear indication that they
were no longer interested in continuing their employment and is deemed
abandonment. It is admitted that three return to work notices were sent by respondent
company to the striking employees on March 27, April 11, and April 21, 1989 and that
261 employees who responded to the notice were admittted back to work.
However, jurisprudence holds that for abandonment of work to exist, it is essential (1)
that the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and (2) that there must have been a clear intention
to sever the employer-employee relationship manifested by some overt
acts.[28] Deliberate and unjustified refusal on the part of the employee to go back to
his work post amd resume his employment must be established. Absence must be
accompanied by overt acts unerringly pointing to the fact that the employee simply
does not want to work anymore.[29] And the burden of proof to show that there was
unjustified refusal to go back to work rests on the employer.
In the present case, respondents failed to prove that there was a clear intention on
the part of the striking employees to sever their employer-employee relationship.
Although admittedly the company sent three return to work notices to them, it has not
been substantially proven that these notices were actually sent and received by the
employees. As a matter of fact, some employees deny that they ever received such
notices. Others alleged that they were refused entry to the company premises by the
security guards and were advised to secure a clearance from ULGWP and to sign a
waiver. Some employees who responded to the notice were allegedly told to wait for
further notice from respondent company as there was lack of work.
Furthermore, this Court has ruled that an employee who took steps to protest his lay-
off cannot be said to have abandoned his work.[30] The filing of a complaint for illegal
dismissal is inconsistent with the allegation of abandonment. In the case under
consideration, the petitioners did, in fact, file a complaint when they were refused without cause, backwages shall be computed from the time the herein petitioner
reinstatement by respondent company. employees and union officers were dismissed until their actual reinstatement. Should
reinstatement be not feasible, their backwages shall be computed from the time
Anent public respondents finding that there was no unfair labor practice on the part of petitioners were terminated until the finality of this decision. Costs against the
respondent company and federation officers, the Court sustains the same. As earlier respondent company.
discussed, union security clauses in collective bargaining agreements, if freely and
voluntarily entered into, are valid and binding. Corrolarily, dismissals pursuant to
union security clauses are valid and legal subject only to the requirement of due
process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an
employee by the company pursuant to a labor unions demand in accordance with a
union security agreement does not constitute unfair labor practice. [31]

However, the dismissal was invalidated in this case because of respondent companys
failure to accord petitioners with due process, that is, notice and hearing prior to their
termination. Also, said dismissal was invalidated because the reason relied upon by
respondent Federation was not valid. Nonetheless, the dismissal still does not
constitute unfair labor practice.

Lastly, the Court is of the opinion, and so holds, that respondent company officials
cannot be held personally liable for damages on account of the employees dismissal
because the employer corporation has a personality separate and distinct from its
officers who merely acted as its agents.

It has come to the attention of this Court that the 30-day prior notice requirement for
the dismissal of employees has been repeatedly violated and the sanction imposed
for such violation enunciated in Wenphil Corporation vs. NLRC[32] has become an
ineffective deterrent. Thus, the Court recently promulgated a decision to reinforce and
make more effective the requirement of notice and hearing, a procedure that must be
observed before termination of employment can be legally effected.

In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040,
January 27, 2000), the Court ruled that an employee who is dismissed, whether or not
for just or authorized cause but without prior notice of his termination, is entitled to full
backwages from the time he was terminated until the decision in his case becomes
final, when the dismissal was for cause; and in case the dismissal was without just or
valid cause, the backwages shall be computed from the time of his dismissal until his
actual reinstatement. In the case at bar, where the requirement of notice and hearing
was not complied with, the aforecited doctrine laid down in the Serrano case applies.

WHEREFORE, the Petition is GRANTED; the decision of the National Labor

Relations Commission in case No. NCR-00-09-04199-89 is REVERSED and
SET ASIDE; and the respondent company is hereby ordered to immediately reinstate
the petitioners to their respective positions. Should reinstatement be not feasible,
respondent company shall pay separation pay of one month salary for every year of
service. Since petitioners were terminated without the requisite written notice at least
30 days prior to their termination, following the recent ruling in the case of Ruben
Serrano vs. National Labor Relations Commission and Isetann Department Store, the
respondent company is hereby ordered to pay full backwages to petitioner-employees
while the Federation is also ordered to pay full backwages to petitioner-union officers
who were dismissed upon its instigation. Since the dismissal of petitioners was
ROSARIO MANEJA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MANILA MIDTOWN
HOTEL, respondents.
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are
the Resolution 1 dated June 3, 1994 of the respondent National Labor Relations
Commission in NLRC NCR-00-10-05297-90, entitled "Rosario
Maneja, Complainant, vs. Manila Midtown Hotel, Respondent," which dismissed the
illegal dismissal case filed by petitioner against private respondent company for lack
of jurisdiction of the Labor Arbiter over the case; and its Resolution 2 dated October
20, 1995 denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel
beginning January, 1985 as a telephone operator. She was a member of the National
Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) with an
existing Collective Bargaining Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng
received a Request for Long Distance Call (RLDC) form and a deposit of P500.00
from a page boy of the hotel for a call by a Japanese guest named Hirota Ieda. The
call was unanswered. The P500.00 deposit was forwarded to the cashier. In the
evening, Ieda again made an RLDC and the page boy collected another P500.00
which was also given to the operator Loleng. The second call was also unanswered.
Loleng passed on the RLDC to petitioner for follow-up. Petitioner monitored the call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by
Ieda. After a search, Loleng found the first deposit of P500.00 inserted in the guest
folio while the second deposit was eventually discovered inside the folder for
cancelled calls with deposit and official receipts.
When petitioner saw that the second RLDC form was not time-stamped, she
immediately placed it inside the machine which stamped the date "February 15,
1990." Realizing that the RLDC was filed 2 days earlier, she wrote and changed the
date to February 13, 1990. Loleng then delivered the RLDC and the money to the
cashier. The second deposit of P500.00 by Ieda was later returned to him.
On March 7, 1990, the chief telephone operator issued a memorandum 3 to petitioner
and Loleng directing the two to explain the February 15 incident. Petitioner and
Loleng thereafter submitted their written explanation. 4
On March 20, 1990, a written report 5 was submitted by the chief telephone operator,
with the recommendation that the offenses committed by the operators concerned
covered violations of the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA
2.01: forging, falsifying official document(s), and (2) OSDA 1.11: culpable
carelessness — negligence or failure to follow specific instruction(s) or established
procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal 6 effective April 1,
1990. Petitioner refused to sign the notice and wrote therein "under protest."
Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified
Theft was filed before the Office of the City Prosecutor of Manila by private
respondent againts Loleng and petitioner. However, the resolution recommending the
filing of a case for estafa was reversed by 2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private
respondent before the Labor Arbiter. The complaint was later amended to include a
claim for unpaid wages, unpaid vacation leave conversion and moral damages.
Position papers were filed by the parties. Thereafter, the motion to set the case for
hearing filed by private respondent was granted by the Labor Arbiter and trial on the
merits ensued.
In his decision 8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the
petitioner was illegally dismiised. However, in the decision, the Labor Arbiter stated
that:
Preliminary, we hereby state that on the face of the instant
complaint, it is one that revolves on the matter of the
implementation and interpretation of existing company policies,
which per the last par. of Art. 217 of the Labor Code, as amended,
is one within the jurisdictional ambit of the grievance procedure
under the CBA and thereafter, if unresolved, one proper for
voluntary arbitration. This observation is re-entrenched by the fact,
that complainant claims she is a member of NUWRAIN with an
existing CBA with respondent hotel.
9
On this score alone, this case should have dismissed outright.
Despite the aforequoted preliminary statement, the Labor Arbiter still assumed
jurisdiction "since Labor Arbiters under Article 217 of the same Labor Code, are
conferred original and exclusive jurisdiction of all termination case(sic.)." The
dispositive portion of the decision states that:
WHEREFORE, premises considered, judgment is hereby renrdered
as follows:
(1) Declaring complainant's dismissal by respondent hotel as
illegally effected;
(2) Ordering respondent to immediately reinstate complainant to
her previous position without loss of seniority rights;
 (3) Ordering further respondent to pay complainant the full
backwages due her, which is computed as follows:
3/23/90 - 10/31/90 = 7.26/mos.
P2.540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
(4) Moreover, respondent is ordered to pay the 13th month pay due
the complainant in the amount of P6,831.67 including moral and
exemplary damages of P15,000.00 and P10,000.00 respectively,
as well as attorney's fees equivalent to ten (10) percent of the total
award herein in the amount of P11,381.17;
(5) Finally, all other claims are hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed the decision to the respondent commission on the
ground inter alia that the Laber Arbiter erred in "assuming jurisdiction over the illegal
dismissal case after finding that the case falls within the jurisdictional ambit of the
grievance procedure under the CBA, and if unresolved, proper for voluntary
arbitration." 10 An Opposition 11 was filed by petitioner.
In the assailed Resolution 12 dated June 3, 1994, respondent NLRC dismissed the
illegal dismissal case for lack of Jurisdiction of the Labor Arbiter because the same
should have instead been subjected to voluntary arbitration.
Petitioner's motion for reconsideration 13 was denied by respondent NLRC for lack of
merit.
In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of
discretion in —
1. Ruling that the Labor Arbiter was without jurisdiction over the
illegal dismissal case;
2. Not ruling that private respondent is estopped by laches from
questioning the jurisdiction of the illegal dismissal case;
3. Reversing the decision of the Labor Arbiter based on a
technicality notwithstanding the merits of the case.
Petitioner contents that Article 217(a)(2) and (c) relied upon by respondent NLRC in
divesting the labor arbiter of jurisdiction over the illegal dismissal case, should be
read in conjunction with Article 261 14 of the Labor Code. It is the view of petitioner
that termination cases arising from the interpretation or enforcement policies
pertaining to violations of Offenses Subject to Disciplinary Actions (OSDA), are under
the jurisdiction of the voluntary arbitrator only if these are unresolved in the plant-level
grievance machinery. Petitioner insists that her termination is not an unresolved
grievance as there has been no grievance meeting between the NUWHRAIN union
and the management. The reason for this, petitioner adds, is that it has been a
company practice that termination cases are not anymore referred to the grievance
machinery but directly to the labor arbiter.
In its comment, private respondent argues that the Labor Arbiter should have
dismissed the illegal dismissal case outright after finding that it is within the
jurisdictional ambit of the grievance procedure. Moreover, private respondent states
that the issue of jurisdiction may be raised at any time and at any stage of the
proceedings even on appeal, and is not in estoppel by laches as contended by the
petitioner.
For its part, public respondent, through the Office of the Solicitor General, cited the
ruling of this Court in Sanyo Philippines Workers Union- PSSLU vs. Cañizares 15 in
dismissing the case for lack of jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over
the illegal dismissal case.
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to
hear the illegal dismissal case, cited as basis therefor Article 217 of the Labor Code,
as amended by Republic Act No. 6715. It said:
White it is conceded that under Article 217(a), Labor Arbiters shall
have original and exclusive jurisdiction over cases involving
"termination disputes," the Supreme Court, in a fairy recent case
ruled:
The procedure introduced in RA 6715 of referring certain
grievances originally and exclusively to the grievance machinery,
and when not settled at this level, to a panel of voluntary arbitrators
outlined in CBAs does not only include grievances arising from the
interpretation or implementation of the CBA but applies as well to
 those arising from the implementation of company personnel
policies. No other body shall take cognizance of these cases. . . .
(Sanyo vs. Cañizares, 211 SCRA 361,
372) 16
We Find that the respondent Commission has erroneously interpreted the
aforequoted portion of our ruling in the case of Sanyo, as divesting the Labor Arbiter
of jurisdiction in a termination dispute.
Art. 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter,
to wit:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a)
Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decided
within thirty (30) calendar days after the submission of the case by
the parties for decision without extension even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim
for reinstatement, those cases
that workers may file involving
wages, rates of pay, hours of
work and other terms and
conditions of employment;
4. Claims for actual, moral,
exemplary and other forms of
damages arising from the
employer-employee relations;
5. Cases arising from any
violation of Article 264 of this
Code, including questions
involving the legality of strikes
and lockouts;
6. Except claims for Employees
Compensation, Social Security,
Medicare and maternity
benefits, all other claims,
arising from employer-
employee relations, including
those of persons in domestic or
household service, involving an
amount exceeding five
thousand pesos (P5,000.00)
regardless of whether
accompanied with a claim for
reinstatement.
b) The commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personel policies shall be
disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided
in said agreements.
As can be seen from the aforequoted Article, termination cases fall under the original
and exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the
opening there appears the phrase: "Except as otherwise provided under this Code . . .
." It is paragraph (c) of the same Article which respondent Commission has
erroneously interpreted as giving the voluntary arbitrator jurisdiction over the illegal
dismissal case.
However, Article 217 (c) should be read in conjunction with Article 261 of the Labor
Code which grants to voluntary arbitrators original and exclusive jurisdiction to hear
and decide all unresolvedgrievances arising from the interpretation or implementation
of the collective bargaining agreement and those arising from the interpretation or
enforcement of company personel policies. Note the phrase "unresolved grievances."
In the case at bar, the termination of petitioner is not an unresolved grievance.
The stance of the Solicitor General in the Sanyo case is totally the reverse of its
posture in the case at bar. In Sanyo, the Solicitor General was of the view that a
distinction should be made between a case involving "interpretation or implementation
of Collective Bargaining Agreement" or interpretation or "enforcement" of company
personel policies, on the one hand and a case involving termination, on the other
hand. It argued that the dismissal of the private respondents does not involve an
"interpretation or implementation" of a Collective Bargaining Agreement or
"interpretation or enforcement" of company personel policies but involves
"termination." The Solicitor General further said that where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the
grievance machinery set up the Collective Bargaining Agreement or by voluntary
arbitration. Where there was already actual termination, i.e., violation of rights, it is
already cognizable by the Labor Arbiter. 17 We fully agree with the theory of the
Solicitor General in the Sanyo case, which is radically apposite to its position in this
case.
Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising
from the interpretation or implementation of collective bargaining agreement and
those arising from the interpretation or enforcement of company personel policies,"
the jurisdiction of which pertains to the grievance machinery or thereafter, to a
voluntary arbitrator or panel of voluntary arbitrators. It is to be stressed that under
Article 260 of the Labor Code, which explains the function of the grievance machinery
and voluntary arbitrator. "(T)he parties to a Collective Bargaining Agreement shall
include therein provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective
Bargaining Agreement and those arising from the interpretation or enforcement of
company personel policies." Article 260 further provides that the parties to a CBA
shall name or designate their respective representative to the grievance machinery
and if the grievance is unsettled in that level, it shall automatically be refered to the
voluntary arbitrators designated in advance by the parties to a CBA of the union and
the company. It can thus be deduced that only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators. 18
In the case at bar, the union does not come into the picture, not having objected or
voiced any dissent to the dismissal of the herein petitioner. The reason for this,
according to petitioner is that "the practice in said Hotel in cases of termination is that
the latter cases are not referred anymore to the grievance committee;" and that "the
terminated employee who wishes to question the legality of his termination usually
goes to the Labor Arbiter for arbitration, whether the termination arose from the
interpretation or enforcement of the company personnel policies or otherwise." 19
As we ruled in Sanyo, "Since there has been an actual termination, the matter falls
within the jurisdiction of the labor Arbiter." The aforequoted doctrine is applicable
foursquare in petitioner's case. The dismissal of the petitioner does not call for the
interpretation or enforcement of company personnel policies but is a termination
dispute which comes under the jurisdiction of the Labor Arbiter.
It should be explained that "company personel policies" are guiding priciples stated in
broad, long-range terms that express the philosophy or beliefs of an organization's
top authority regarding personnel matters. They deal with matters affecting efficiency
and well-being of employees and include, among others, the procedure in the
administration of wages, benefits, promotions, transfer and other personnel
movements which are usually not spelled out in the collective agreement. The usual
source of grievances, however, are the rules and regulations governing disciplinary
actions. 20
The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the
issue of jurisdiction where the Court cited the Sanyo case and quoted the decision of
therein Labor Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the complaint on the
following grounds:
First, this is a complaint of illegal dismissal of which original and
exclusive jurisdiction under Article 217 has been conferred to the
labor Arbiters. The interpretation of the CBA or enforcement of the
company policy is only corollary to the complaint of illegal
dismissal. Otherwise, an employee who was on AWOL, or who
committed offenses contrary to the personnel policies(sic) can no
longer file a case of illegal discharge is premised on the
interpretation or enforcement of the company policies(sic).
Second. Respondent voluntarily submitted tha case to the
jurisdiction of this labor tribunal. It adduced arguments to the
legality of its act, whether such act may be retirement and/or
dismissal, and prayed for reliefs on the merits of the case. A litigant
cannot pray for reliefs on the merits and at the same time
attacks(sic) the jurisdiction of the tribunal. A person cannot have
one's cake and eat it too. . . . .
As to the second ground, petitioner correctly points out that respondent NLRC should
have ruled that private respondent is estopped by laches in questioning the
jurisdiction of the Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private
respondent's active participation in the proceedings below. In Marquez vs. Secretary
of Labor, 22 the Court said:
. . . . The active participation of the against whom the action was
brought, coupled with his failure to object to the jurisdiction of the
court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to
abide the resolution of the case and will bar said party from later on
impugning the court or body's jurisdiction.
In the assailed Resolution, 23 respondent NLRC cited La Naval Drug Corporation
vs. Court of Appeals 24 in holding that private respondent is not in estopel. Thus,
The operation of the principle of estoppel on the question of
jurisdiction seemingly depends upon whether the lower court
actually had jurisdiction or not. If it had no jurisdiction, but the case
was tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction,
for the same "must exist as a matter of law, and may not be
conferred by consent of the parties or by estoppel" (5 C.J.S., 861-
863). However, if the lower court had jurisdiction, and the case was
heard and decided upon a given theory, such, for instance, as that
the court had no jurisdiction, the party who induced it to adopt such
theory will not be permitted, on appeal, to assume an inconsistent
position — that the lower court had jurisdiction. Here,the principle of
estoppel applies. The rule that jurisdiction is conferred by law, and
does not depend upon the will of the parties, has no bearing
thereon. (Emphasis ours)
Again, the respondent NLRC has erroneously interpreted our ruling in the La
Naval case. Under the said ruling, estoppel lies in this case. Private respondent is
stopped from questioning the jurisdiction of the Labor Arbiter before the respondent
NLRC having actively participated in the proceedings before the former. At no time
before or during the trial on the merits did private respondent assail the jurisdiction of
the Labor Arbiter. Private respondent took the cue only from the preliminary
statement in the decision of the Labor Arbiter, which was a mere obiter, and raised
the issue of jurisdiction before the Commission. It was then too late. Estoppel had set
in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that
petitioner was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes
expressed in the Article 282 of the Labor Code, 25 and (2) the employee must be
given an opportunity to be heard and to defend himself. 26 The substantive and
procedural laws must be strictly complied with before a worker can be dismissed from
his employment because what is at stake is not only the employee's position but his
livelihood. 27
Petitioner's dismissal was grounded on culpade carelessness, negligence and failure
to follow specific instruction(s) or established procedure(s) under OSDA 1.11; and,
having forged or falsified official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the
hotel on a guest's request for long distance calls. Petitioner, however, explained that
the usual or established procedures are not followed by the operators and hotel
employees when circumstances warrant. For instance, the RLDC forms and the
deposits are brought by the page boy directly to the operators instead of the cashiers
if the latter are busy and cannot attend to the same. Furthermore, she avers that the
telephone operators are not concious of the serial numbers in the RLDCs and at
times, the used RLDCs are recycled. Even the page boys do not actually check the
serial numbers of all RLDCs in one batch, except for the first and the last.
On the charge of taking of the money by petitioner, it is to be noted that the second
P500.00 deposit made by the Japanese guest Ieda was later discovered to be
inserted in the folder for cancelled calls with deposit and official receipts. Thus, there
exists no basis for personal appropriation by the petitioner of the money involved.
Another reason is the alleged tampering of RLDC No. 862406. 28While petitioner and
her co-operator Loleng admitted that they indeed altered the date appearing therein
from February 15, 1990 to February 13, the same was purposely made to reflect the
true date of the transaction without any malice whatsoever on their part.
As pointed out by Labor Arbiter Oswald b. Lorenzo, thus:
The specifics of the grounds relied by respondent hotel's dismissal
of complainant are those stated in Annex "F" of the latter's
POSITION PAPER, which is the Notice of Dismissal, notably:
1. OSDA 2.01 — Forging, falsifying official documents(s)
2. OSDA 1.11 — Culpable negligence or failure to follow specific
instruction(s) or established procedure(s)
On this score, we are persuated by the complainant's arguments
that under OSDA 1.11, infractions of this sort is not without
qualifications, which is, that the alleged culpable carelessness,
negligence or failure to follow instruction(s) or established
procedure(s), RESULTING IN LOSS OR DAMAGE TO COMPANY
PROPERTY. From the facts obtaining in this case, there is no
quantum of proof whatsoever, except the general allegations in
respondent's POSITION PAPER and other pleadings that loss or
damage to company property resulted from the charged infraction.
To our mind, this is where labor tribunals should come in and help
correct interpretation of company policies which in the enforcement
thereof wreaks havoc to the constitutional guarantee of security of
tenure. Apparently, the exercise of little flexibility by complainant
and co-employees which is predicated on good faith should not be
taken against them and more particularly against the complainant
herein. In this case, to sustain the generalized charge of
respondent hotel under OSDA 1.11 would unduly be sanctioning
the imposition of too harsh a penalty — which is dismissal.
In the same tenor, the respondent's charge under OSDA 1.11 on
the alleged falsification of private document is also with a
qualification, in that the alleged act of falsification must have been
done "IN SUCH A WAY AS TO MISLEAD THE USER(S)
THEREOF." Again, based on the facts of the complained act, there
appeared no one to have been misled on the change of date from
RLDC #862406 FROM 15 TO 13 February 1990.
As a matter of fact, we are in agreement with the jurisprudence
cited by VIRGILIO M. PATAG, the 2nd Asst. City Prosecutor of the
City of Manila, who exculpated complainant MANEJA from the
charges of falsification of private documents and qualified theft
under IS No. 90-11083 and marked Annex. "H" of complainant's
POSITION PAPER, when he ruled that an altercation which makes
the document speak the truth cannot be the foundation of a criminal
action. As to the charge of qualified theft, we too are of the finding,
like the city prosecutor above-mentioned that there was no
evidence on the part of MANEJA to have unlawfully taken the
P500.00 either from the hotel or from guest IEDA on 13 February
1990 and moreover, we too, find no evidence that complainant
MANEJA had intention to profit thereby nor had misappropriated
the P500.00 in question. 29
Given the factual circumstances of the case, we cannot deduce dishonesty from the
act and omission of petitioner. Our norms of social justice demand that we credit
employees with the presumption of good faith in the performance of their
duties, 30 especially petitioner who has served private respondent since 1985 up to
1990 without any tinge of dishonesty and was even named "Model Employee" for the
month of April, 1989. 31
Petitioner has been charged with a very serious offense — dishonesty. This can
irreparably wreck her life as an employee for no employer will take to its bosom a
dishonest employee. Dismissal is the supreme penalty that can be meted to an
employee and its imposition cannot be justified where the evidence is ambivalent. 32 It
must, therefore, be based on a clear and not on an ambiguous or ambivalent ground.
Any ambiguity or ambivalence on the ground relied upon by an employer in
terminating the services of an employee denies the latter his full right to contest its
legality. Fairness cannot countenance such ambiguity or ambivalence. 33
An employer can terminate the services of an employee only for valid and just causes
which must be supported by clear and convincing evidence. The employer has the
burden of proving that the dismissal was indeed for a valid and just cause. 34 Failure
to do so result in a finding that the dismissal was
unjustified. 35
Finding that there was no just cause for dismissal of petitioner, we now determine if
the rudiments of due process have duly accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute
the essential elements of due process in the dismissal of employees. It is a cardinal
rule in our jurisdiction that the employer must furnish the employee with two written
notice before the termination of employment can be effected: (a) the first apprises the
employee of the particular acts or omissions for which his dismissal is sought; and,
(b) the second informs the employee of the employer's decision to dismiss him. The
requirement of a hearing, on the other hand, is complied with as long as there was an
opportunity to be heard, and not necessarily that an actual hearing was conducted. 36
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum
on March 7, 1990. On March 11, 1990, they submitted their written explanation
thereto. On March 20, 1990, a written report was made with a recommendation that
the offences committed by them were covered by OSDA 1.11 and 2.01. Thereafter,
on March 23, 1990, petitioner was served with a notice of dismissal for said violations
effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private
respondent before petitioner was dismissed. While it may be true that petitioner
submitted a written explanation, no hearing was actually conducted before her
employment was terminated. She was not accorded the opportunity to fully defend
herself.
Consultations or conferences may not be a substitute for the actual holding of a
hearing. Every opportunity and assistance must be accorded to the employee by the
management to enable hom to prepare adequately for his defense, including legal
representation. 37 Considering that petitioner denied having allegedly taken the
second P500.00 deposit of the Japanese guest which was eventually found; and,
having made the alteration of the date on the second RLDC merely to reflect the true
date of the transaction, these circumstances should have at least warranted a
separate hearing to enable petitioner to fully ventilate her side. Absent such hearing,
petitioner's right to due process was clearly violated. 38
It bears stressing that a worker's employment is properly in the constitutional sense.
He cannot be deprived of his work without due process of law. Substantive due
process mandates that an employee can only be dismissed based on just or
authorized causes. Procedural due process requires further that he can only be
dismissed after he has been given an opportunity to be heard. The import of due
process necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in
view of this finding that petitioner was dismissed without just cause and without due
process.
We ruled in the case of Bustamante vs. NLRC 39 that the amount of backwages to be
awarded to an illegally dismissed employee must be computed from the time he was
dismissed to the time he is actually reinstated, without deducting the earnings he
derived elsewhere pending the resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No.851,
as amended by Memorandum Order No. 28, provides that employees are entitled to
the thirteenth-month pay benefit regardless of their designation and irrespective of the
method by which their wages are paid. 40
The award of moral and exemplary damages to petitioner is also warranted where
there is lack of due process in effecting the dismissal.
Where the termination of the services of an employee is attended by fraud or bad
faith on the part of the employer, as when the latter knowingly made false allegations
of a supposed valid cause when none existed, moral and exemplary damages may
be awarded in favor of the former. 41
The anti-social and oppressive abuse of its right to investigate and dismiss its
employees constitute a violation of Article 1701 of the New Civil Code which prohibits
acts of oppression by either capital or labor against the other, and Article 21 on
human relations. The grant of moral damages to the employees by reason of such
conduct on the part of the company is sanctioned by Article 2219, No. 10 of the Civil
Code, which allows recovery of such damages in actions reffered to in Article 21. 42
The award of attorney's fees amounting to ten percent (10%) of the total award by the
labor arbiter is justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is GRANTED and the assailed
resolutions of the respondent National Labor Relations Commission dated June 3,
1994 and October 20, 1995 are hereby REVERSED AND SET ASIDE. The decision
dated May 29, 1992 of the Labor Arbiter is therefore REINSTATED.
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109
AND/OR ANTONIO DIAZ, PSSLU NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter,
BERNARDO YAP, RENATO BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO,
EDGARDO TANGKAY, LEONARDO DIONISIO, ARNEL SALVO, REYNALDO
RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND ALEXANDER
ATANASIO, respondents.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano
Cañizares dated August 6, 1991 deferring the resolution of the motion to dismiss the
complaint of private respondents filed by petitioner Sanyo Philippines Workers Union-
PSSLU Local Chapter No. 109 (PSSLU, for brevity) on the ground that the labor
arbiter had no jurisdiction over said complaint and 2) the order of the same
respondent clarifying its previous order and ruling that it had jurisdiction over the
case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective
July 1, 1989 to June 30, 1994. The same CBA contained a union security clause
which provided:
Sec. 2. All members of the union covered by this agreement must
retain their membership in good standing in the union as condition
of his/her continued employment with the company. The union shall
have the right to demand from the company the dismissal of the
members of the union by reason of their voluntary resignation from
membership or willful refusal to pay the Union Dues or by reasons
of their having formed, organized, joined, affiliated, supported
and/or aided directly or indirectly another labor organization, and
the union thus hereby guarantees and holds the company free and
harmless from any liability whatsoever that may arise consequent
to the implementation of the provision of this article. (pp. 5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed
the management of Sanyo that the following employees were notified that their
membership with PSSLU were cancelled for anti-union, activities, economic
sabotage, threats, coercion and intimidation, disloyalty and for joining another union:
Benito Valencia, Bernardo Yap, Arnel Salvo, Renato Baybon, Eduardo Porlaje,
Salvador Solibel, Conrado Sarol, Angelito Manzano, Allan Misterio, Reynaldo
Ricohermoso, Mario Ensay and Froilan Plamenco. The same letter informed Sanyo
that the same employees refused to submit themselves to the union's grievance
investigation committee (p. 53, Rollo). It appears that many of these employees were
not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon,
Solibel, Valencia, Misterio and Ricohermoso, executed a pledged of cooperation with
PSSLU promising cooperation with the latter union and among others, respecting,
accepting and honoring the CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until we
finally decide to rejoin Sanyo Phil. Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected
union officers of Sanyo Phil. Workers Union-PSSLU in any and all
its activities and programs to insure industrial peace and harmony;
3. That we collectively accept, honor, and respect the Collective
Bargaining Agreement entered into between Sanyo Phil. Inc. and
Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
4 That we collectively promise not to engage in any activities inside
company premises contrary to law, the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance
with the provision of the Labor Code, as amended;
6 That we collectively promise not to violate this pledge of
cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another
letter to Sanyo recommending the dismissal of the following non-union workers:
Bernardo Yap, Arnel Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador
Solibel, Benito Valencia, and Allan Misterio, allegedly because: 1) they were engaged
and were still engaging in anti-union activities; 2) they willfully violated the pledge of
cooperation with PSSLU which they signed and executed on February 14, 1990; and
3) they threatened and were still threatening with bodily harm and even death the
officers of the union (pp. 37-38, Rollo).
Also recommended for dismissal were the following union members who allegedly
joined, supported and sympathized with a minority union, KAMAO: Gerardo Lasala,
Legardo Tangkay, Alexander Atanacio, and Leonardo Dionisio.
The last part of the said letter provided:
The dismissal of the above-named union members is without
prejudice to receive (sic) their termination pay if management
decide (sic) to grant them benefits in accordance with law. The
union hereby holds the company free and harmless from any
liability that may arise consequent to the implementation by the
company of our recommendations for the dismissal of the above-
mentioned workers.
 It is however suggested that the Grievance Machinery be convened
pursuant to Section 3, Article XV of the Collective Bargaining
Agreement (CBA) before their actual dismissal from the company.
(p. 38, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the
same workers advising them that:
As per the attached letter from the local union President SPWU and
the federation President, PSSLU, requesting management to put
the herein mentioned employees on preventive suspension,
effective immediately, preliminary to their subsequent dismissal,
please be informed that the following employees are under
preventive suspension effective March 13, 1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company
premises without the permission of management.
As per request of the union's letter to management, should the
listed employees fail to appeal the decision of the union for
dismissal, then effective March 23, 1991, said listed employees
shall be considered dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to
PSSLU. Hence, it considered them dismissed as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with
the NLRC for illegal dismissal. Named respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the
Labor Arbiter was without jurisdiction over the case, relying on Article 217 (c) of P.D.
442, as amended by Section 9 of Republic Act No. 6715 which provides that cases
arising from the interpretation or implementation of the collective bargaining
agreements shall be disposed of by the labor arbiter by referring the same to the
grievance machinery and voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the
series of conferences before the National Conciliation and Mediation Board had been
terminated; 2) the NLRC Labor Arbiter had jurisdiction over the case which was a
termination dispute pursuant to Article 217 (2) of the Labor Code; and 3) there was
nothing in the CBA which needs interpretation or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It
held that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited
article of the Labor Code, the better interpretation will be to give
effect to both, and termination dispute being clearly spelled as
falling under the jurisdiction of the Labor Arbiter, the same shall be
respected. The jurisdiction of the grievance machinery and
voluntary arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended
until both parties have fully presented their respective positions and
the said issue shall be included in the final determination of the
above-captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held
pending.
Consequently, the parties are hereby directed to submit their
position papers and supporting documents pursuant to Section 2,
Rule VII of the Rules of the Commission on or before the hearing
on the merit of this case scheduled on August 29, 1991 at 11:00
a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss
complaint with a prayer that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned
order which held that it was assuming jurisdiction over the complaint of private
respondents, in effect, holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent
Labor Arbiter cannot assume jurisdiction over the complaint of public respondents
because it had no jurisdiction over the dispute subject of said complaint. It is their
submission that under Article 217 (c) of the Labor Code, in relation to Article 261
thereof, as well as Policy Instruction No. 6 of the Secretary of Labor, respondent
Arbiter has no jurisdiction and authority to take cognizance of the complaint brought
by private respondents which involves the implementation of the union security clause
of the CBA. The function of the Labor Arbiter under the same law and rule is to refer
this case to the grievance machinery and voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor
Code is explicit, to wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide . . . the following cases involving all workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso,
Solibel, Valencia, Misterio and Lasala were concerned, they joined another union,
KAMAO during the freedom period which commenced on May 1, 1989 up to June 30,
1989 or before the effectivity of the July 1, 1989 CBA. Hence, they are not covered by
the provisions of the CBA between Sanyo and PSSLU. Private respondents Tangkay,
Atanacio and Dionisio admit that in September 1989, they resigned from KAMAO and
rejoined PSSLU (pp.
66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the
view that a distinction should be made between a case involving "interpretation or
implementation of collective bargaining agreement or "interpretation" or "enforcement"
of company personnel policies, on the one hand and a case involving termination, on
the other hand. It argued that the case at bar does not involve an "interpretation or
implementation" of a collective bargaining agreement or "interpretation or
enforcement" of company policies but involves a "termination." Where the dispute is
just in the interpretation, implementation or enforcement stage, it may be referred to
the grievance machinery set up in the CBA or by voluntary arbitration. Where there
was already actual termination, i.e.,violation of rights, it is already cognizable by the
Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a)
Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide
within thirty (30) calendar days after the submission of the case by
the parties for decision without extension even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall
be disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided
in said agreements.
It is clear from the above article that termination cases fall under the jurisdiction of the
Labor Arbiter. It should be noted however that said article at the outset excepted from
the said provision cases otherwise provided for in other provisions of the same Code,
thus the phrase "Except as otherwise provided under this Code . . . ." Under
paragraph (c) of the same article, it is expressly provided that "cases arising from the
interpretation or implementation of collective bargaining agreements and those arising
from the interpretation and enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member's
voluntary resignation from membership, willful refusal to pay union dues and his/her
forming, organizing, joining, supporting, affiliating or aiding directly or indirectly
another labor union shall be a cause for it to demand his/her dismissal from the
company. The demand for the dismissal and the actual dismissal by the company on
any of these grounds is an enforcement of the union security clause in the CBA. This
act is authorized by law provided that enforcement should not be characterized by
arbitrariness (Manila Mandarin Employee Union v. NLRC, G.R. No. 76989, 29 Sept.
1987, 154 SCRA 368) and always with due process (Tropical Hut Employees Union
v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment
or resolution of grievances arising from the interpretation or implementation of their
CBA and those arising from the interpretation or enforcement of company personnel
policies is mandatory. The law grants to voluntary arbitrators original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies (Art.
261, Labor Code).
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to
assume jurisdiction over the complaint, thus:
The movants failed to show (1) the provisions of the CBA to be
implemented, and (2) the grievance machinery and voluntary
arbitrator already formed and properly named. What self-respecting
judge would refer a case from his responsibility to a shadow? To
whom really and specifically shall the case be indorsed or referred?
In brief, they could have shown the (1) existence of the grievance
machinery and (2) its being effective.
Furthermore, the aforecited law merely directs the "referral" cases.
It does not expressly confer jurisdiction on the grievance machinery
or voluntary arbitration panel, created or to be created. Article 260
of the Labor Code describes the formation of the grievance and
voluntary arbitration. All this of course shall be on voluntary basis.
Is there another meaning of voluntary arbitration? (The herein
complainant have strongly opposed the motion to dismiss. Would
they go willingly to the grievance machinery and voluntary
arbitration which are installed by their opponents if directed to do
so?) (p. 26, Rollo)
The failure of the parties to the CBA to establish the grievance machinery and its
unavailability is not an excuse for the Labor Arbiter to assume jurisdiction over
disputes arising from the implementation and enforcement of a provision in the CBA.
In the existing CBA between PSSLU and Sanyo, the procedure and mechanics of its
establishment had been clearly laid out as follows:
ARTICLE XV — GRIEVANCE MACHINERY
Sec. 1. Whenever any controversy should arise between the
company and the union as to the interpretation or application of the
provision of this agreement, or whenever any difference shall exist
between said parties relative to the terms and conditions of
employment, an earnest effort shall be made to settle such
controversy in substantially the following manner:
First step. (Thru Grievance) The dispute shall initially be resolved
by conference between the management to be represented by the
Management's authorized representatives on the one hand, and the
Union to be represented by a committee composed of the local
union president and one of the local union officer appointed by the
local union president, on the other hand within three days from date
of concurrence of grievance action. In the absence of the local
union president, he (shall) appoint another local union officer to
take over in his behalf. Where a controversy personally affects an
employee, he shall not be allowed to be a member of the
committee represented by the union.
Second step. (Thru Arbitrator mutually chosen) Should such
dispute remain unsettled after twenty (20) days from the first
conference or after such period as the parties may agree upon in
specified cases, it shall be referred to an arbitrator chosen by the
consent of the company and the union. In the event of failure to
agree on the choice of voluntary arbitrator, the National Conciliation
and Mediation Board, Department of Labor and Employment shall
be requested to choose an Arbitrator in accordance with voluntary
arbitration procedures.
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide
the issue presented to him and his decision shall be final, binding
and executory upon the parties. He shall have no authority to add
or subtract from and alter any provision of this agreement. The
expenses of voluntary arbitration including the fee of the arbitrator
shall be shared equally by the company and the union. In the event
the arbitrator chosen either by the mutual agreement of the
company and the union by (the) way of voluntary arbitration or by
the National Conciliation and Mediation Board (NCMB) failed to
assume his position, died, become disabled or any other manner
failed to function and or reach a decision, the company and the
union shall by mutual agreement choose another arbitrator; in the
event of failure to agree on the choice of a new voluntary arbitrator,
 the matter shall again be referred back to the NCMB who shall be referred to voluntary arbitrators (or panel of voluntary arbitrators) designated in
requested again to choose a new arbitrator as above provided. Any advance by the parties. It need not be mentioned that the parties to a CBA are the
grievance not elevated or processed as above provided within the union and the company. Hence, only disputes involving the union and the company
stipulated period shall be deemed settled and terminated. shall be referred to the grievance machinery or voluntary arbitrators.

Sec. 3. It is hereby agreed that decisions of the union relative to
their members, for implementation by the COMPANY, should be
resolved for review thru the Grievance Machinery; and
management be invited to participate in the Grievance procedure to
be undertaken by the union relative to (the) case of the union
against members. (pp. 134-135, Rollo)
All that needs to be done to set the machinery into motion is to call for the convening
thereof. If the parties to the CBA had not designated their representatives yet, they
should be ordered to do so.
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between
them exists which could be brought to a grievance machinery. The problem or dispute
in the present case is between the union and the company on the one hand and
some union and non-union members who were dismissed, on the other hand. The
dispute has to be settled before an impartial body. The grievance machinery with
members designated by the union and the company cannot be expected to be
impartial against the dismissed employees. Due process demands that the dismissed
workers grievances be ventilated before an impartial body. Since there has already
been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter.

The procedure introduced in RA 6715 of referring certain grievances originally and ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is
exclusively to the grievance machinery and when not settled at this level, to a panel of directed to resolve the complaints of private respondents immediately.
voluntary arbitrators outlined in CBA's does not only include grievances arising from
the interpretation or implementation of the CBA but applies as well to those arising SO ORDERED.
from the implementation of company personnel policies. No other body shall take
cognizance of these cases. The last paragraph of Article 261 enjoins other bodies
from assuming jurisdiction thereof:

The commission, its Regional Offices and the Regional Directors of

the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same to the
grievance machinery or voluntary arbitration provided in the
Collective Bargaining Agreement.

In the instant case, however, We hold that the Labor Arbiter and not the Grievance
Machinery provided for in the CBA has the jurisdiction to hear and decide the
complaints of the private respondents. While it appears that the dismissal of the
private respondents was made upon the recommendation of PSSLU pursuant to the
union security clause provided in the CBA, We are of the opinion that these facts do
not come within the phrase "grievances arising from the interpretation or
implementation of (their) Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies," the jurisdiction of which
pertains to the Grievance Machinery or thereafter, to a voluntary arbitrator or panel of
voluntary arbitrators. Article 260 of the Labor Code on grievance machinery and
voluntary arbitrator states that "(t)he parties to a Collective Bargaining Agreement
shall include therein provisions that will ensure the mutual observance of its terms
and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective
Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies." It is further provided in said article that the parties to a
CBA shall name or designate their respective representatives to the grievance
machinery and if the grievance is not settled in that level, it shall automatically be
CELESTINO VIVIERO, petitioner,
vs.
COURT OF APPEALS, HAMMONIA MARINE SERVICES, and HANSEATIC
SHIPPING CO., LTD. respondents.
DECISION
BELLOSILLO, J.:
CELESTINO VIVERO, in this petition for review, seeks the reversal of the Decision of
the Court of Appeals of 26 May 1999 setting aside the Decision of the National Labor
Relations Commission of 28 May 1998 as well as its Resolution of 23 July 1998
denying his motion for its reconsideration, and reinstating the decision of the Labor
Arbiter of 21 January 1997.
Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers
and Seamen's Union of the Philippines (AMOSUP). The Collective Bargaining
Agreement entered into by AMOSUP and private respondents provides, among
others -
ARTICLE XII
GRIEVANCE PROCEDURE
xxxx
Sec. 3. A dispute or grievance arising in connection with the terms and provisions of
this Agreement shall be adjusted in accordance with the following procedure:
1. Any seaman who feels that he has been unjustly treated or even subjected to an
unfair consideration shall endeavor to have said grievance adjusted by the
designated representative of the unlicensed department abroad the vessel in the
following manner:
A. Presentation of the complaint to his immediate superior.
B. Appeal to the head of the department in which the seaman involved shall
be employed.
C. Appeal directly to the Master.
Sec. 4. If the grievance cannnot be resolved under the provision of Section 3, the
decision of the Master shall govern at sea x x x x in foreign ports and until the vessel
arrives at a port where the Master shall refer such dispute to either the COMPANY or
the UNION in order to resolve such dispute. It is understood, however, if the dispute
could not be resolved then both parties shall avail of the grievance procedure.
Sec. 5. In furtherance of the foregoing principle, there is hereby created a
GRIEVANCE COMMITTEE to be composed of two COMPANY REPRESENTATIVES
to be designated by the COMPANY and two LABOR REPRESENTATIVES to be
designated by the UNION.
Sec. 6. Any grievance, dispute or misunderstanding concerning any ruling, practice,
wages or working conditions in the COMPANY, or any breach of the Employment
Contract, or any dispute arising from the meaning or the application of the provision of
this Agreement or a claim of violation thereof or any complaint that any such
crewmembers may have against the COMPANY, as well as complaint which the
COMPANY may have against such crewmembers shall be brought to the attention of
the GRIEVANCE COMMITTEE before either party takes any action, legal or
otherwise.
Sec. 7. The COMMITTEE shall resolve any dispute within seven (7) days from and
after the same is submitted to it for resolution and if the same cannot be settled by the
COMMITTEE or if the COMMITTEE fails to act on the dispute within the 7-day period
herein provided, the same shall be referred to a VOLUNTARY ARBITRATION
COMMITTEE.
An "impartial arbitrator" will be appointed by mutual choice and consent of
the UNION and the COMPANY who shall hear and decide the dispute or
issue presented to him and his decision shall be final and unappealable x x x
x1
As found by the Labor Arbiter -
Complainant was hired by respondent as Chief Officer of the vessel
"M.V. Sunny Prince" on 10 June 1994 under the terms and conditions, to wit:
Duration of Contract - - - - 10 months
Basic Monthly Salary - - - - US $1,100.00
Hours of Work - - - - 44 hrs./week
Overtime - - - - 495 lump O.T.
Vacation leave with pay - - - - US $220.00/mo.
On grounds of very poor performance and conduct, refusal to perform his job, refusal
to report to the Captain or the vessel’s Engineers or cooperate with other ship officers
about the problem in cleaning the cargo holds or of the shipping pump and his dismal
relations with the Captain of the vessel, complainant was repatriated on 15 July 1994.
On 01 August 1994, complainant filed a complaint for illegal dismissal at Associated
Marine Officers’ and Seaman’s Union of the Philippines (AMOSUP) of which
complainant was a member. Pursuant to Article XII of the Collective Bargaining
Agreement, grievance proceedings were conducted; however, parties failed to reach
and settle the dispute amicably, thus, on 28 November 1994, complainant filed [a]
complaint with the Philippine Overseas Employment Administration (POEA).2
The law in force at the time petitioner filed his Complaint with the POEA was EO No.
247.3
While the case was pending before the POEA, private respondents filed a Motion to
Dismiss on the ground that the POEA had no jurisdiction over the case considering
petitioner Vivero's failure to refer it to a Voluntary Arbitration Committee in
accordance with the CBA between the parties. Upon the enactment of RA 8042,
the Migrant Workers and Overseas Filipinos Act of 1995, the case was transferred to
the Adjudication Branch of the National Labor Relations Commission.
On 21 January 1997 Labor Arbiter Jovencio Ll. Mayor Jr., on the basis of the
pleadings and documents available on record, rendered a decision dismissing
the Complaint for want of jurisdiction.4 According to the Labor Arbiter, since the CBA
of the parties provided for the referral to a Voluntary Arbitration Committee should the
Grievance Committee fail to settle the dispute, and considering the mandate of Art.
261 of the Labor Code on the original and exclusive jurisdiction of Voluntary
Arbitrators, the Labor Arbiter clearly had no jurisdiction over the case.5
Petitioner (complainant before the Labor Arbiter) appealed the dismissal of his
petition to the NLRC. On 28 May 1998 the NLRC set aside the decision of the Labor
Arbiter on the ground that the record was clear that petitioner had exhausted his
remedy by submitting his case to the Grievance Committee of AMOSUP. Considering
however that he could not obtain any settlement he had to ventilate his case before
the proper forum, i.e., the Philippine Overseas Employment Administration.6 The
NLRC further held that the contested portion in the CBA providing for the intercession
of a Voluntary Arbitrator was not binding upon petitioner since both petitioner and
private respondents had to agree voluntarily to submit the case before a Voluntary
Arbitrator or Panel of Voluntary Arbitrators. This would entail expenses as the
Voluntary Arbitrator chosen by the parties had to be paid. Inasmuch however as
petitioner chose to file his Complaint originally with POEA, then the Labor Arbiter to
whom the case was transferred would have to take cognizance of the case. 7
The NLRC then remanded the case to the Labor Arbiter for further proceedings. On 3
July 1998 respondents filed a Motion for Reconsideration which was denied by the
NLRC on 23 July 1998.
Thus, private respondents raised the case to the Court of Appeals contending that the
provision in the CBA requiring a dispute which remained unresolved by the Grievance
Committee to be referred to a Voluntary Arbitration Committee, was mandatory in
character in view of the CBA between the parties. They stressed that "since it is a
policy of the state to promote voluntary arbitration as a mode of settling labor
disputes, it is clear that the public respondent gravely abused its discretion in taking
cognizance of a case which was still within the mantle of the Voluntary Arbitration
Commitee’s jurisdiction."8
On the other hand, petitioner argued -
(A)s strongly suggested by its very title, referral of cases of this nature to the
Voluntary Arbitration Committee is voluntary in nature. Otherwise, the committee
would not have been called Voluntary Arbitration Committee but rather, a Compulsory
Arbitration Committee. Moreover, if the referral of cases of similar nature to the
Voluntary Arbitration Committee would be deemed mandatory by virtue of the
provisions in the CBA, the [NLRC] would then be effectively deprived of its jurisdiction
to try, hear and decide termination disputes, as provided for under Article 217 of the
Labor Code. Lastly, [respondents] ought to be deemed to have waived their right to
question the procedure followed by [petitioner], considering that they have already
filed their Position Paper before belatedly filing a Motion to Dismiss x x x x 9
But the Court of Appeals ruled in favor of private respondents. It held that the CBA "is
the law between the parties and compliance therewith is mandated by the express
policy of the law."10 Hence, petitioner should have followed the provision in the CBA
requiring the submission of the dispute to the Voluntary Arbitration Committee once
the Grievance Committee failed to settle the controversy.11 According to the Court of
Appeals, the parties did not have the choice to "volunteer" to refer the dispute to the
Voluntary Arbitrator or a Panel of Arbitrators when there was already an agreement
requiring them to do so. "Voluntary Arbitration" means that it is binding because of a
prior agreement or contract, while "Compulsory Arbitration" is when the law declares
the dispute subject to arbitration, regardless of the consent or desire of the parties. 12
The Court of Appeals further held that the Labor Code itself enumerates the original
and exclusive jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators,
and prohibits the NLRC and the Regional Directors of the Department of Labor and
Employment (DOLE) from entertaining cases falling under the same.13 Thus, the fact
that private respondents filed their Position Paper first before filing their Motion to
Dismiss was immaterial and did not operate to confer jurisdiction upon the Labor
Arbiter, following the well-settled rule that jurisdiction is determined by law and not by
consent or agreement of the parties or by estoppel.14
Finally, the appellate court ruled that a case falling under the jurisdiction of the Labor
Arbiter as provided under Art. 217 of the Labor Code may be lodged instead with a
Voluntary Arbitrator because the law prefers, or gives primacy, to voluntary arbitration
instead of compulsory arbitration.15 Consequently, the contention that the NLRC
would be deprived of its jurisdiction to try, hear and decide termination disputes under
Art. 217 of the Labor Code, should the instant dispute be referred to the Voluntary
Arbitration Committee, is clearly bereft of merit.16 Besides, the Voluntary Arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency
independent of, and apart from, the NLRC since his decisions are not appealable to
the latter.17
Celestino Vivero, in his petition for review assailing the Decision of the Court of
Appeals, alleges that the appellate court committed grave abuse of discretion in
holding that a Voluntary Arbitrator or Panel of Voluntary Arbitrators, and not the
Adjudication Branch of the NLRC, has jurisdiction over his complaint for illegal
dismissal. He claims that his complaint for illegal dismissal was undeniably a
termination dispute and did not, in any way, involve an "interpretation or
implementation of collective bargaining agreement" or "interpretation" or
"enforcement" of company personnel policies. Thus, it should fall within the original
and exclusive jurisdiction of the NLRC and its Labor Arbiter, and not with a Voluntary
Arbitrator, in accordance with Art. 217 of the Labor Code.
Private respondents, on the other hand, allege that the case is clearly one "involving
the proper interpretation and implementation of the Grievance Procedure found in
the Collective Bargaining Agreement(CBA) between the parties"18 because of
petitioner’s allegation in his claim/assistance request form submitted to the Union, to
wit:
NATURE OF COMPLAINT
3. Illegal Dismissal - Reason: (1) That in this case it was the master of M.V. SUNNY
PRINCE Capt. Andersen who created the trouble with physical injury and stating false
allegation; (2) That there was no proper procedure of grievance; (3) No proper notice
of dismissal.
Is there a Notice of dismissal? _x_ Yes or ____ No
What date? 11 July 1994
Is there a Grievance Procedure observed? ____ Yes or _x_ No19
Private respondents further allege that the fact that petitioner sought the assistance of
his Union evidently shows that he himself was convinced that his Complaint was
within the ambit of the jurisdiction of the grievance machinery and subsequently by a
Panel of Voluntary Arbitrators as provided for in their CBA, and as explicitly mandated
by Art. 261 of the Labor Code.20
Thus, the issue is whether the NLRC is deprived of jurisdiction over illegal dismissal
cases whenever a CBA provides for grievance machinery and voluntary arbitration
proceedings. Or, phrased in another way, does the dismissal of an employee
constitute a "grievance between the parties," as defined under the provisions of the
CBA, and consequently, within the exclusive original jurisdiction of the Voluntary
Arbitrators, thereby rendering the NLRC without jurisdiction to decide the case?
On the original and exclusive jurisdiction of Labor Arbiters, Art. 217 of the Labor Code
provides -
Art. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural: (1) Unfair labor practice cases; (2) Termination disputes; (3) If
accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment; (4) Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations; (5) Cases arising from any violation of
Article 264 of this Code, including questions involving the legality of strikes and
lockouts; and, (6) Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims arising from employer-employee
relations, including those of persons in domestic or household service, involving an
amount exceeding five thousand pesos (₱5,000.00) regardless of whether
accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.
(c) Cases arising from the interpretation of collective bargaining agreements
and those arising from the interpretation or enforcement of company
personnel policies shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitration as may be
provided in said agreements (emphasis supplied).
However, any or all of these cases may, by agreement of the parties, be submitted to
a Voluntary Arbitrator or Panel of Voluntary Arbitrators for adjudication. Articles 261
and 262 of the Labor Code provide -
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. - The
Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies referred
to in the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the Grievance
Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.
Art. 262. Jurisdiction Over Other Labor Disputes. - The Voluntary Arbitrator or panel
of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all
other labor disputes including unfair labor practices and bargaining deadlocks
(emphasis supplied).
Private respondents attempt to justify the conferment of jurisdiction over the case on
the Voluntary Arbitrator on the ground that the issue involves the proper interpretation
and implementation of the Grievance Procedure found in the CBA. They point out that
when petitioner sought the assistance of his Union to avail of the grievance
machinery, he in effect submitted himself to the procedure set forth in the CBA
regarding submission of unresolved grievances to a Voluntary Arbitrator.
The argument is untenable. The case is primarily a termination dispute. It is clear
from the claim/assistance request form submitted by petitioner to AMOSUP that he
was challenging the legality of his dismissal for lack of cause and lack of due process.
The issue of whether there was proper interpretation and implementation of the CBA
provisions comes into play only because the grievance procedure provided for in the
CBA was not observed after he sought his Union’s assistance in contesting his
termination. Thus, the question to be resolved necessarily springs from the primary
issue of whether there was a valid termination; without this, then there would be no
reason to invoke the need to interpret and implement the CBA provisions properly.
In San Miguel Corp. v. National Labor Relations Commission21 this Court held that the
phrase "all other labor disputes" may include termination disputes provided that the
agreement between the Union and the Company states "in unequivocal language that
[the parties] conform to the submission of termination disputes and unfair labor
practices to voluntary arbitration."22 Ergo, it is not sufficient to merely say that parties
to the CBA agree on the principle that "all disputes" should first be submitted to a
Voluntary Arbitrator. There is a need for an express stipulation in the CBA that illegal
termination disputes should be resolved by a Voluntary Arbitrator or Panel of
Voluntary Arbitrators, since the same fall within a special class of disputes that are
generally within the exclusive original jurisdiction of Labor Arbiters by express
provision of law. Absent such express stipulation, the phrase "all disputes" should be
construed as limited to the areas of conflict traditionally within the jurisdiction of
Voluntary Arbitrators, i.e., disputes relating to contract-interpretation, contract-
implementation, or interpretation or enforcement of company personnel policies.
Illegal termination disputes - not falling within any of these categories - should then be
considered as a special area of interest governed by a specific provision of law.
In this case, however, while the parties did agree to make termination disputes the
proper subject of voluntary arbitration, such submission remains discretionary upon
the parties. A perusal of the CBA provisions shows that Sec. 6, Art. XII (Grievance
Procedure) of the CBA is the general agreement of the parties to refer grievances,
disputes or misunderstandings to a grievance committee, and henceforth, to a
voluntary arbitration committee. The requirement of specificity is fulfilled by Art. XVII
(Job Security) where the parties agreed -
Sec. 1. Promotion, demotion, suspension, dismissal or disciplinary action of the
seaman shall be left to the discretion of the Master, upon consultation with the
Company and notification to the Union. This notwithstanding, any and all disciplinary
action taken on board the vessel shall be provided for in Appendix "B" of this
Agreement x x x x 23
Sec. 4. x x x x Transfer, lay-off or discipline of seamen for incompetence, inefficiency,
neglect of work, bad behavior, perpetration of crime, drunkenness, insubordination,
desertion, violation of x x x regulations of any port touched by the Company’s vessel/s
and other just and proper causes shall be at Master’s discretion x x x in the high seas
or foreign ports. The Master shall refer the case/dispute upon reaching port and if not
satisfactorily settled, the case/dispute may be referred to the grievance machinery or
procedure hereinafter provided (emphasis supplied).24
The use of the word "may" shows the intention of the parties to reserve the right to
submit the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather
than to a Voluntary Arbitrator. Petitioner validly exercised his option to submit his
case to a Labor Arbiter when he filed his Complaint before the proper government
agency.
Private respondents invoke Navarro III v. Damasco25 wherein the Court held that "it is
the policy of the state to promote voluntary arbitration as a mode of settling
disputes."26 It should be noted, however, that in Navarro III all the parties voluntarily
submitted to the jurisdiction of the Voluntary Arbitrator when they filed their respective
position papers and submitted documentary evidence before him. Furthermore, they
manifested during the initial conference that they were not questioning the authority of
the Voluntary Arbitrator.27 In the case at bar, the dispute was never brought to a
Voluntary Arbitrator for resolution; in fact, petitioner precisely requested the Court to
recognize the jurisdiction of the Labor Arbiter over the case. The Court had held
in San Miguel Corp. v. NLRC28 that neither officials nor tribunals can assume
jurisdiction in the absence of an express legal conferment. In the same manner,
petitioner cannot arrogate into the powers of Voluntary Arbitrators the original and
exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination
disputes, and claims for damages, in the absence of an express agreement between
the parties in order for Art. 262 of the Labor Code to apply in the case at bar. In other
words, the Court of Appeals is correct in holding that Voluntary Arbitration is
mandatory in character if there is a specific agreement between the parties to that
effect. It must be stressed however that, in the case at bar, the use of the word "may"
shows the intention of the parties to reserve the right of recourse to Labor Arbiters.
The CBA clarifies the proper procedure to be followed in situations where the parties
expressly stipulate to submit termination disputes to the jurisdiction of a Voluntary
Arbitrator or Panel of Voluntary Arbitrators. For when the parties have validly agreed
on a procedure for resolving grievances and to submit a dispute to voluntary
arbitration then that procedure should be strictly observed.1âwphi1 Non-compliance
therewith cannot be excused, as petitioner suggests, by the fact that he is not well-
versed with the "fine prints" of the CBA. It was his responsibility to find out, through
his Union, what the provisions of the CBA were and how they could affect his rights.
As provided in Art. 241, par. (p), of the Labor Code -
(p) It shall be the duty of any labor organization and its officers to inform its members
on the provisions of its constitution and by-laws, collective bargaining agreement, the
prevailing labor relations system and all their rights and obligations under existing
labor laws.
In fact, any violation of the rights and conditions of union membership is a "ground for
cancellation of union registration or expulsion of officer from office, whichever is
appropriate. At least thirty percent (30%) of all the members of a union or any
member or members especially concerned may report such violation to the Bureau [of
Labor Relations] x x x x"29
It may be observed that under Policy Instruction No. 56 of the Secretary of Labor,
dated 6 April 1993, "Clarifying the Jurisdiction Between Voluntary Arbitrators and
Labor Arbiters Over Termination Cases and Providing Guidelines for the Referral of
Said Cases Originally Filed with the NLRC to the NCMB," termination cases arising in
or resulting from the interpretation and implementation of collective bargaining
agreements and interpretation and enforcement of company personnel policies which
were initially processed at the various steps of the plant-level Grievance Procedures
under the parties' collective bargaining agreements fall within the original and
exclusive jurisdiction of the voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of
the Labor Code; and, if filed before the Labor Arbiter, these cases shall be dismissed
by the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB
Regional Branch for appropriate action towards an expeditious selection by the
parties of a Voluntary Arbitrator or Panel of Arbitrators based on the procedures
agreed upon in the CBA.

As earlier stated, the instant case is a termination dispute falling under the original
and exclusive jurisdiction of the Labor Arbiter, and does not specifically involve the
application, implementation or enforcement of company personnel policies
contemplated in Policy Instruction No. 56. Consequently, Policy Instruction No.
56 does not apply in the case at bar. In any case, private respondents never invoked
the application of Policy Instruction No. 56 in their Position Papers, neither did they
raise the question in their Motion to Dismiss which they filed nine (9) months after the
filing of their Position Papers. At this late stage of the proceedings, it would not serve
the ends of justice if this case is referred back to a Voluntary Arbitrator considering
that both the AMOSUP and private respondents have submitted to the jurisdiction of
the Labor Arbiter by filing their respective Position Papers and ignoring the grievance
procedure set forth in their CBA.

After the grievance proceedings have failed to bring about a resolution, AMOSUP, as
agent of petitioner, should have informed him of his option to settle the case through
voluntary arbitration. Private respondents, on their part, should have timely invoked
the provision of their CBA requiring the referral of their unresolved disputes to a
Voluntary Arbitrator once it became apparent that the grievance machinery failed to
resolve it prior to the filing of the case before the proper tribunal. The private
respondents should not have waited for nine (9) months from the filing of
their Position Paper with the POEA before it moved to dismiss the case purportedly
for lack of jurisdiction. As it is, private respondents are deemed to have waived their
right to question the procedure followed by petitioner, assuming that they have the
right to do so. Under their CBA, both Union and respondent companies are
responsible for selecting an impartial arbitrator or for convening an arbitration
committee;30 yet, it is apparent that neither made a move towards this end.
Consequently, petitioner should not be deprived of his legitimate recourse because of
the refusal of both Union and respondent companies to follow the grievance
procedure.

WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and the case is
remanded to the Labor Arbiter to dispose of the case with dispatch until terminated
considering the undue delay already incurred.

SO ORDERED.
LUDO & LUYM CORPORATION, petitioner, vs. FERDINAND SAORNIDO as a. the 214 complainants, as listed in the Annex A, shall be
voluntary arbitrator and LUDO EMPLOYEES UNION (LEU) representing considered regular employees of the respondents six (6) months
214 of its officers and members, respondents.
from the first day of service at CLAS;

DECISION
b. the said complainants, being entitled to the CBA benefits during
QUISUMBING, J.: the regular employment, are awarded a) sick leave, b) vacation leave
& c) annual wage and salary increases during such period in the
This petition for review on certiorari seeks to annul and set aside the amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO
decision[1] of the Court of Appeals promulgated on July 6, 1999 and its Order denying
petitioners motion for reconsideration in CA-G.R. SP No. 44341. HUNDRED SIXTY ONE PESOS AND SIXTY ONE CENTAVOS
(P5,707,261.61) as computed in Annex A;
The relevant facts as substantially recited by the Court of Appeals in its decision
are as follows:
c. the respondents shall pay attorneys fees of ten (10) percent of the
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic total award;
corporation engaged in the manufacture of coconut oil, corn starch, glucose and related
products. It operates a manufacturing plant located at Tupas Street, Cebu City and a
wharf where raw materials and finished products are shipped out. d. an interest of twelve (12) percent per annum or one (1) percent
per month shall be imposed to the award from the date of
In the course of its business operations, LUDO engaged the arrastre services of
Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished promulgation until fully paid if only to speed up the payment of these
products at the wharf. Accordingly, several arrastre workers were deployed by CLAS long over due CBA benefits deprived of the complaining workers.
to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular Accordingly, all separation and/or retirement benefits shall be
rank-and-file employees of LUDO every time the latter needed additional manpower construed from the date of regularization aforementioned subject
services. Said employees thereafter joined respondent union, the LUDO Employees only to the appropriate government laws and other social legislation.
Union (LEU), which acted as the exclusive bargaining agent of the rank-and-file
employees.
SO ORDERED.[3]
On April 13, 1992, respondent union entered into a collective bargaining
agreement with LUDO which provides certain benefits to the employees, the amount
In due time, LUDO filed a motion for reconsideration, which was denied. On
of which vary according to the length of service rendered by the availing employee.
appeal, the Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator,
Thereafter, the union requested LUDO to include in its members period of thus:
service the time during which they rendered arrastre services to LUDO through the
CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, WHEREFORE, finding no reversible error committed by respondent
the matter was submitted for voluntary arbitration.
voluntary arbitrator, the instant petition is hereby DISMISSED.
The parties accordingly executed a submission agreement raising the sole issue
of the date of regularization of the workers for resolution by the Voluntary Arbitrator. SO ORDERED.[4]
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the
respondent employees were engaged in activities necessary and desirable to the Hence this petition. Before us, petitioner raises the following issues:
business of petitioner, and (2) CLAS is a labor-only contractor of petitioner.[2] It
disposed of the case thus: I

WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES,
the claims of the complainants meritorious and so hold that: VACATION LEAVE AND SICK LEAVE BENEFITS FOR THE YEARS 1977
TO 1987 ARE ALREADY BARRED BY PRESCRIPTION WHEN PRIVATE
RESPONDENTS FILED THEIR CASE IN JANUARY 1995;
 II
WHETHER OR NOT A VOLUNTARY ARBITRATOR CAN AWARD
BENEFITS NOT CLAIMED IN THE SUBMISSION AGREEMENT.[5]
Petitioner contends that the appellate court gravely erred when it upheld the
award of benefits which were beyond the terms of submission agreement. Petitioner
asserts that the arbitrator must confine its adjudication to those issues submitted by
the parties for arbitration, which in this case is the sole issue of the date of
regularization of the workers. Hence, the award of benefits by the arbitrator was done
in excess of jurisdiction.[6]
Respondents, for their part, aver that the three-year prescriptive period is
reckoned only from the time the obligor declares his refusal to comply with his
obligation in clear and unequivocal terms. In this case, respondents maintain that
LUDO merely promised to review the company records in response to respondents
demand for adjustment in the date of their regularization without making a categorical
statement of refusal.[7] On the matter of the benefits, respondents argue that the
arbitrator is empowered to award the assailed benefits because notwithstanding the
sole issue of the date of regularization, standard companion issues on reliefs and
remedies are deemed incorporated. Otherwise, the whole arbitration process would
be rendered purely academic and the law creating it inutile.[8]
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and
Labor Arbiters is clearly defined and specifically delineated in the Labor Code. The
pertinent provisions of the Labor Code, read:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. ---
(a) Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases:
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wage, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article.
Accordingly, violations of a Collective Bargaining Agreement, except
those which are gross in character, shall no longer be treated as
unfair labor practice and shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes of this article, gross
violations of Collective Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the economic provisions of
such agreement.
The Commission, its Regional Offices and the Regional Directors of
the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes. The Voluntary
Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks.
In construing the above provisions, we held in San Jose vs. NLRC, [9] that the
jurisdiction of the Labor Arbiter and the Voluntary Arbitrator or Panel of Voluntary
Arbitrators over the cases enumerated in the Labor Code, Articles 217, 261 and
262, can possibly include money claims in one form or another.[10] Comparatively,
in Reformist Union of R.B. Liner, Inc. vs. NLRC,[11] compulsory arbitration has been
defined both as the process of settlement of labor disputes by a government
agency which has the authority to investigate and to make an award which is binding
on all the parties, and as a mode of arbitration where the parties are compelled to
accept the resolution of their dispute through arbitration by a third party (emphasis
supplied).[12] While a voluntary arbitrator is not part of the governmental unit or labor
departments personnel, said arbitrator renders arbitration services provided for under
labor laws.
Generally, the arbitrator is expected to decide only those questions expressly
delineated by the submission agreement. Nevertheless, the arbitrator can assume
that he has the necessary power to make a final settlement since arbitration is the
final resort for the adjudication of disputes.[13] The succinct reasoning enunciated by
the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy
has jurisdiction to render the questioned arbitral awards, deserves our concurrence,
thus:
In general, the arbitrator is expected to decide those questions
expressly stated and limited in the submission agreement. However,
since arbitration is the final resort for the adjudication of disputes,
the arbitrator can assume that he has the power to make a final
settlement. Thus, assuming that the submission empowers the
arbitrator to decide whether an employee was discharged for just
cause, the arbitrator in this instance can reasonable assume that his
powers extended beyond giving a yes-or-no answer and included the
power to reinstate him with or without back pay.
In one case, the Supreme Court stressed that xxx the Voluntary
Arbitrator had plenary jurisdiction and authority to interpret the
agreement to arbitrate and to determine the scope of his own
authority subject only, in a proper case, to the certiorari jurisdiction
of this Court. The Arbitrator, as already indicated, viewed his
authority as embracing not merely the determination of the abstract
question of whether or not a performance bonus was to be granted
but also, in the affirmative case, the amount thereof.
By the same token, the issue of regularization should be viewed as
two-tiered issue. While the submission agreement mentioned only
the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of
authority as well as adequate prerogative to accomplish the reason
for which the law on voluntary arbitration was created speedy labor
justice. It bears stressing that the underlying reason why this case
arose is to settle, once and for all, the ultimate question of whether
respondent employees are entitled to higher benefits. To require
them to file another action for payment of such benefits would
certainly undermine labor proceedings and contravene the
constitutional mandate providing full protection to labor.[14]
As regards petitioners contention that the money claim in this case is barred by
prescription, we hold that this contention is without merit. So is petitioners stance that
the benefits claimed by the respondents, i.e., sick leave, vacation leave and 13 th-
month pay, had already prescribed, considering the three-year period for the
institution of monetary claims.[15] Such determination is a question of fact which must
be ascertained based on the evidence, both oral and documentary, presented by the
parties before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator found that
prescription has not as yet set in to bar the respondents claims for the monetary
benefits awarded to them. Basic is the rule that findings of fact of administrative and
quasi-judicial bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only great respect but even
finality.[16] Here, the Voluntary Arbitrator received the evidence of the parties first-
hand. No compelling reason has been shown for us to diverge from the findings of the
Voluntary Arbitrator, especially since the appellate court affirmed his findings, that it
took some time for respondent employees to ventilate their claims because of the
repeated assurances made by the petitioner that it would review the company records
and determine therefrom the validity of the claims, without expressing a categorical
denial of their claims. As elucidated by the Voluntary Arbitrator:
The respondents had raised prescription as defense. The controlling
law, as ruled by the High Court, is:
The cause of action accrues until the party obligated refuses xxx to
comply with his duty. Being warded off by promises, the workers not
having decided to assert [their] right[s], [their] causes of action had
not accrued (Citation omitted.)
Since the parties had continued their negotiations even after the
matter was raised before the Grievance Procedure and the voluntary
arbitration, the respondents had not refused to comply with their
duty. They just wanted the complainants to present some
proofs. The complainants cause of action had not therefore accrued
yet. Besides, in the earlier voluntary arbitration case aforementioned
involving exactly the same issue and employees similarly situated as
the complainants, the same defense was raised and dismissed by
Honorable Thelma Jordan, Voluntary Arbitrator.
In fact, the respondents promised to correct their length of service
and grant them the back CBA benefits if the complainants can prove
they are entitled rendered the former in estoppel, barring them from
raising the defense of laches or prescription. To hold otherwise
amounts to rewarding the respondents for their duplicitous
representation and abet them in a dishonest scheme against their
workers.[17]
Indeed, as the Court of Appeals concluded, under the equitable principle of
estoppel, it will be the height of injustice if we will brush aside the employees claims
on a mere technicality, especially when it is petitioners own action that prevented
them from interposing the claims within the prescribed period.
SIME DARBY PILIPINAS, INC., petitioners,
vs.
DEPUTY ADMINISTRATOR BUENAVENTURA C. MAGSALIN as Voluntary
Arbitrator and the SIME DARBY EMPLOYEES ASSOCIATION, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Cezar F. Maravilla, Jr. for private respondent.
FELICIANO, J.:
The Petition for certiorari before us assails the award of Voluntary Arbitrator
Buenaventura Magsalin dated 17 August 1989 which directed petitioner Sime Darby
Pilipinas, Inc. (Sime Darby) to pay the members of private respondent Sime Darby
Employees Association (SDEA) a performance bonus equivalent to seventy-five
percent (75%) of their monthly basic pay for the year 1988-1989.
On 13 June 1989, petitioner Sime Darby and private respondent SDEA executed a
Collective Bargaining Agreement (CBA) providing, among others, that:
Article X, Section 1. A performance bonus shall be granted, the
amount of which [is] to be determined by the Company depending
on the return of [sic] capital investment as reflected in the annual
financial statement.
On 31 July 1989, the Sime Darby Salaried Employees Association- ALU (SDSEA-
ALU) wrote petitioner demanding the implementation of a provision Identical to the
above contained in their own CBA with petitioner. Subsequently, petitioner called both
respondent SDEA and SDEA-ALU to a meeting wherein the former explained that it
was unable to grant the performance bonus corresponding to the fiscal year 1988-
1989 on the ground that the workers' performance during said period did not justify
the award of such bonus. On 27 July 1989, private respondent SDEA filed with the
National Conciliation and Mediation Board (NCMB) an urgent request for preventive
conciliation between private respondent and petitioner.
On 1 August 1989, the parties were called to a conciliation meeting and in such
meeting, both parties agreed to submit their dispute to voluntary arbitration. Their
agreement to arbitrate stated, among other things, that they were "submitting the
issue of performance bonus to voluntary arbitration" and that "the decision/award of
the voluntary arbitrator shall be respected and implemented by the parties as final
and executory, in accordance with the law." 1
On 14 August 1989, petitioner filed its position paper which aimed to show that the
performance of the members of respondent union during the year was below the
production goals or targets set by Sime Darby for 1988-1989 and below previous
years' levels for which reason the performance bonus could not be granted. Petitioner
there referred to the following performance indicators: a) number of tires produced; b)
degree of wastage of production materials; and c) number of pounds of tires
produced per man hour. On that same day, 14 August 1989, petitioner manifested
before the Voluntary Arbitrator that it would file a Reply to the union's Position Paper
submitted on 10 August 1989 not later than 18 August 1989.
However, before petitioner could submit its Reply to the union's Position Paper, the
Voluntary Arbitrator on 17 August 1989 issued an award which declared respondent
union entitled to a performance bonus equivalent to 75% of the monthly basic pay of
its members. In that award, the Voluntary Arbitrator held that a reading of the CBA
provision on the performance bonus would show that said provision was mandatory
hence the only issue to be resolved was the amount of performance bonus. The
Voluntary Arbitrator further stated that petitioner company's financial statements as of
30 June 1988 revealed retained earnings in the amount of P 324,370,372.32. From
the foregoing, the Voluntary Arbitrator concluded that petitioner company could well
afford to give members of respondent union a substantial performance bonus. The
Voluntary Arbitrator also stated that there was evidence to show that the company
has given performance bonuses to its managerial and non-unionized employees as
well as to monthly paid workers of the year 1988-1989.
Petitioner filed a motion for reconsideration which motion was not entertained by the
Voluntary Arbitrator upon the ground that under the ruling of this Court in Solidbank v.
Bureau of Labor Relations, (G.R. No. 64926, promulgated 8 October 1984;
unpublished) he, the Voluntary Arbitrator, had automatically lost jurisdiction over the
arbitration case upon the issuance of the award.
In this Petition for Certiorari, petitioner mainly argues that respondent Voluntary
Arbitrator gravely abused his discretion in holding that the grant of performance
bonus was mandatory and that the only issue before him was the amount of the
bonus. It is contended that since a performance bonus is a "gift" based on the
company's performance, the same is not justified when the company's performance
has been poor. Petitioner claims that during the fiscal year of 1988-1989, the
company performed poorly as shown by the decline in tire production for the said year
as well as the increase of the rate of wastage of production materials, and also by the
decrease in the number of tires produced per man hour. Petitioner also argues that
even if a performance bonus were justified, the Voluntary Arbitrator gravely abused
his discretion in giving an award of 75% of the monthly basic rate without any
evidence of the basis used in arriving at such an award. It is insisted that under the
relevant CBA provision, the company determines the amount of the bonus if the same
be justified. Petitioner also alleged that respondent Arbitrator gravely erred when he
based the award on the company's retained earnings the level of which represents
earnings accumulated during prior years and not merely during the fiscal year 1988-
1989.
On 8 November 1989, the Court temporarily restrained the enforcement of the
Voluntary Arbitrator's award to prevent the petition at bar becoming moot and
academic.
We are not persuaded by petitioner's arguments.
One point needs to be stressed at the outset: the award of a Voluntary Arbitrator is
final and executory after ten (10) calendar days from receipt of the award by the
parties. 2 There was a time when the award of a Voluntary Arbitrator relating to
money claims amounting to more than P 100,000.00 or forty percent (40%) of the
paid-up capital of the employer (whichever was lower), could be appealed to the
National Labor Relations Commission upon the grounds of (a) abuse of discretion; or
(b) gross incompetence, presumably of the arbitrator. 3 This is no longer so today
although, of course, certiorari will lie in appropriate cases. A petition
for certiorari under Rule 65 of the Revised Rules of Court will lie only where a grave
abuse of discretion or an act without or in excess of jurisdiction on the part of the
Voluntary Arbitrator is clearly shown. It must be borne in mind that the writ
of certiorari is an extraordinary remedy and that certiorari jurisdiction is not to be
equated with appellate jurisdiction. In a special civil action of certiorari, the Court will
not engage in a review of the facts found nor even of the law as interpreted or applied
by the Arbitrator unless the supposed errors of fact or of law are so patent and gross
and prejudicial as to amount to a grave abuse of discretion or an excess de pouvoir
on the part of the Arbitrator.4 The Labor Code and its Implementing Rules thus clearly
reflect the important public policy of encouraging recourse to voluntary arbitration and
of shortening the arbitration process by rendering the arbitral award non- appealable
to the NLRC. The result is that a voluntary arbitral award may be modified and set
aside only upon the same grounds on which a decision of the NLRC itself may be
modified or set aside, by this Court.
Examination of the pleadings in the instant Petition shows that two (2) principal issues
are raised: The first is whether or not the Voluntary Arbitrator acted with grave abuse
of discretion or without or in excess of jurisdiction in passing upon both the question
of whether or not a performance bonus is to be granted by petitioner Sime Darby to
the private respondents and the further question of the amount thereof. The second is
whether or not the award by the Arbitrator of a performance bonus amounting to
seventy five percent (75%) of the basic monthly salary of members of private
respondent union itself constituted a grave abuse of discretion or an act without or in
excess of jurisdiction. We consider these issues seriatim
1. In respect of the first issue, petitioner Sime Darby urges that the
Arbitrator gravely abused his discretion in passing upon not only
the question of whether or not a performance bonus is to be
granted but also, in the affirmative case, the matter of the amount
thereof. The position of petitioner, to the extent we can understand
it, is that the Arbitrator was authorized to determine only the
question of whether or not a performance bonus was to be granted,
the second question being reserved for determination by the
employer Sime Darby. We noted earlier that in their agreement to
arbitrate, the parties submitted to the Voluntary Arbitrator "the issue
of performance bonus." The language of the agreement to arbitrate
may be seen to be quite cryptic. There is no indication at all that the
parties to the arbitration agreement regarded "the issue of
performance bonus" as a two-tiered issue, only one tier of which
was being submitted to arbitration. Possibly, Sime Darby's counsel
considered that issue as having dual aspects and intended in his
own mind to submit only one of those aspects to the Arbitrator; if he
did, however, he failed to reflect his thinking and intent in the
arbitration agreement.
It is thus essential to stress that the Voluntary Arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own
authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The
Arbitrator, as already indicated, viewed his authority as embracing not merely the
determination of the abstract question of whether or not a performance bonus was to
be granted but also, in the affirmative case, the amount thereof. The Arbitrator said in
his award:
At this juncture, it would not be amiss to emphasize to the parties
that the matter of performance bonus necessarily includes not only
the determination of the existence of the right of the union to this
benefit but also the amount thereof. This conclusion arises from a
perusal of the terms of the submission agreement entered into by
Sime Darby Pilipinas, Inc. and Sime Darby Employees Association
which limited the voluntary arbitration only with regard to
submission of position papers of the parties, disposition and
rendition of the award. Nary (sic) a trace of qualification as to the
sole issue of performance bonus may be gleaned from a review of
said agreement.
With that as a timely reminder, this Arbitrator now proceeds to
resolve the issues herein submitted for resolution. Without doubt,
the Sime Darby Employees Association is entitled to performance
bonus. This conclusion arises from an analysis of the imperative
terms of the CBA provision on production bonus, hereinunder
reproduced, to wit:
A performance bonus shall be granted the amount of which to be
determined by the Company depending on the return of capital
investment as reflected in the annual financial
statements. 5(Emphasis supplied)
Analysis of the relevant provisions of the CBA between the parties and examination of
the record of the instant case lead us to the conclusion that the Arbitrator's reading of
the scope of his own authority must be sustained.
Article X, Section 1 of the CBA is, grammatically speaking, cast in mandatory terms:
"A performance bonus shall be granted ..." The CBA provision goes on, however,
immediately to say that the amount of the performance bonus "[is] to be determined
by the Company." Thus, notwithstanding the literal or grammatical tenor of Article X,
Section 1, as a practical matter, only the issue relating to the amount of the bonus to
be declared appears important. Not much reflection is needed to show that the critical
issue is the scope of authority of the company to determine the amount of any bonus
to be granted. If the company's discretionary authority were to be regarded as
unlimited and if the company may declare in any event a merely nominal bonus, the
use of mandatory language in Article X, Section 1, would seem largely illusory and
cosmetic in effect. Alternatively, even if one were to disregard the use of "shall" rather
than "may" in Article X, Section 1, the question of whether or not a performance
bonus is to be granted, still cannot realistically be dissociated from the intensely
practical issue of the amount of the bonus to be granted. It is noteworthy that
petitioner Sime Darby itself did not spend much time discussing as an abstract
question whether or not the grant of a performance bonus is per se obligatory upon
the company. Petitioner instead focused upon the production performance of the
company's employees as bearing upon the appropriateness of any amount of bonus.
Further, if petitioner Sime Darby's argument were to be taken seriously, one must
conclude that the parties to the arbitration agreement intended to refer only a
theoretical and practically meaningless issue to the Voluntary Arbitrator, a conclusion
that we find thoroughly unacceptable.
2. We turn then to the issue of whether or not the Voluntary
Arbitrator gravely abused his discretion or acted without or in
excess of jurisdiction in awarding an amount equivalent to seventy-
five percent (75%) of the basic monthly pay of members of
respondent union. Petitioner Sime Darby contends that that award
is devoid of factual basis. We understand this contention to be that
the Arbitrator did not apply the relevant CBA provision.
Once more, we are not persuaded by petitioner's contention.
Article X, Section 1 of the CBA does not in express terms identify whose performance
is to appraised in determining an appropriate amount to be awarded as performance
bonus. The Court considers that it is the performance of the company as a whole, and
not merely the production or manufacturing performance of its employees, which is
relevant in that determination. The CBA provision refers to the return on investment of
the company (ROI). The return on the stockholders' investment, as we understand it,
relates basically to the net profits shown by the company and therefore to many more
factors than simply the extent to which production targets were achieved or the rise
and fall of the manufacturing efficiency ratios. Among those factors would be the cost
of production, the quality of the products, the cost of money, the debt-equity ratio, the
cost of sales, the level of taxes due and payable, the gross revenues realized, and so
forth.
be realized before any particular amount of bonus may or should be declared by the
company.
The Voluntary Arbitrator also took into account, again in an indirect manner, the
performance of Sime Darby's employees by referring in his award to "the total labor
cost incurred by the Company":
This Arbitrator, however, is well aware that any effort in this regard
must be tempered and balanced as against the need to sustain the
continued viability of Sime Darby Pilipinas, Inc. in accordance with
the constitutional provision which recognizes the 'right of enterprise
to reasonable returns on investment and to expansion and growth.'
Furthermore, any award to be rendered must likewise take into
account the total labor cost incurred by the Company. It should not
merely be confined to those pertaining to the members of the Sime
Darby Employees Association but necessarily include that which
shall be paid and granted to all other employees of Sime Darby this
year. 6 (Emphasis supplied)
On balance, we believe and so hold that the award of the Voluntary Arbitrator of a
bonus amounting to seventy-five percent (75%) of the basic monthly salary cannot be
said to be merely arbitrary or capricious or to constitute an excess de pouvoir.
The remaining assertions of petitioner Sime Darby relating to denial of procedural due
process by the Voluntary Arbitrator, consisting of failure to wait for petitioner's
announced Reply (basically reiterative and amplificatory in nature) to the union's
Position Paper and of alleged failure to consider evidence submitted by petitioner, do
not require extended consideration; they are evidently bereft of merit.
WHEREFORE, the Petition for Certiorari is DISMISSED for lack of merit. The
Temporary Restraining Order issued on 8 November 1989 is hereby LIFTED. This
Decision is immediately executory. Costs against petitioner.

We note upon the other hand, that petitioner's counsel failed to discuss at all before
the Voluntary Arbitrator the rate of return on stockholders' investment achieved by
Sime Darby for the year 1988- 1989; as earlier noted, counsel confined his argument
and the evidence submitted by him to the number of tires produced, the decrease in
the rate of wastage of manufacturing materials, and the productivity of the work force
measured in terms of the number of tires produced per man hour.

The Voluntary Arbitrator, upon the other hand, explicitly considered the net earnings
of petitioner Sime Darby in 1988 (P 100,000,000.00) and in the first semester of 1989
(P 95,377,507.00) as well as the increase in the company's retained earnings from P
265,729,826.00 in 1988 to P 324, 370,372.00 as of 30 June 1989. Thus, the Arbitrator
impliedly or indirectly took into account the return on stockholders' investment
realized for the fiscal year 1988-1989. It should also be noted that the relevant CBA
provision does not specify a minimum rate of return on investment (ROI) which must
IMPERIAL TEXTILE MILLS, INC., Petitioner, vs. HON. VLADIMIR P.L.
SAMPANG and IMPERIAL TEXTILE MILLS-MONTHLY EMPLOYEES
ASSOCIATION (ITM-MEA), Respondents.
Batino, Angala, Salud & Fabia Law Offices for petitioner.chanrobles virtual
law library
Carlo A. Domingo for private respondent.
CRUZ, J.:
On March 20, 1987, petitioner Imperial Textile Mills, Inc. (the Company,
for brevity) and respondent Imperial Textile Mills-Monthly Employees
Association (the Union, for brevity) entered into a collective bargaining
agreement providing across-the-board salary increases and other benefits
retroactive to November 1, 1986.
On August 21, 1987, they executed another agreement on the job
classification and wage standardization plan. This was also to take effect
retroactively on November 1, 1986.
A dispute subsequently arose in the interpretation of the two agreements.
The parties then submitted it to arbitration and designated public
respondent Vladimir P.L. Sampang as the Voluntary Arbitrator. The
understanding was that his decision would be final, executory and
inappealable. 1
The Company maintained that the wage of a particular employee subject
of possible adjustment on base pay should be the pay with the first year
CBA increase already integrated therein.
The Union argued that the CBA increases should not be included in
adjusting the wages to the base pay level, as it was separate and distinct
from the increases resulting from the job classification and standardization
scheme.
On July 12, 1988, the Voluntary Arbitrator rendered a decision upholding
the formula used by the Company. virtual law library
The Union filed a motion for reconsideration which was opposed by the
Company.
On December 14, 1988, after a conference with the parties, the Voluntary
Arbitrator rendered another decision, this time in favor of the Union.
On January 20, 1989, the Company appealed to the NLRC. The appeal was
dismissed for lack of jurisdiction. The reason was that the original rule
allowing appeal if the Voluntary Arbitrator's award was more than
P100,000.00 had already been repealed by BP 130. Moreover, under
Article 262-A of the Labor Code, as amended, awards or decisions of
voluntary arbitrators become final and executory after calendar 10 days
from notice thereof to the parties.
The Company then came to this Court in this petition for certiorari under
Rule 65 of the Rules of Court.
The Court has deliberated on the arguments of the parties in light of the
established facts and the applicable law and finds for the Company.
The Union erred in filing a motion for reconsideration of the decision dated
July 12, 1988. So did the respondent Voluntary Arbitrator in entertaining
the motion and vacating his first decision.
When the parties submitted their grievance to arbitration, they expressly
agreed that the decision of the Voluntary Arbitrator would be final,
executory and inappealable. In fact, even without this stipulation, the first
decision had already become so by virtue of Article 263 of the Labor Code
making voluntary arbitration awards or decisions final and executory.
The philosophy underlying this rule was explained by Judge Freedman in
the case of La Vale Plaza, Inc., v. R.S. Noonan, Inc., 2 thus:
It is an equally fundamental common law principle that once an arbitrator
has made and published a final award, his authority is exhausted and be
is functus officio and can do nothing more in regard to the subject matter
of the arbitration. The policy which lies behind this is an unwillingness to
permit one who not a is judicial officer and who acts informally and
sporadically, to re-examine a final decision which he has already rendered,
because of the potential evil of outside communication and unilateral
influence which might affect a new conclusion. The continuity of judicial
office and the tradition which surround judicial conduct is lacking in the
isolated activity of an arbitrator, although even here the vast increase in
the arbitration of labor disputes has created the office of the specialized
provisional arbitrator. (Washington-Baltimore N.G., Loc. 35 v. Washington
Post Co., 442 F. 2d 1234 (1971], pp. 1238-1239)
In the case of The Consolidated Bank & Trust Corporation (SOLIDBANK) v.
Bureau of Labor Relations, et al., 3 this Court held that the Voluntary
Arbitrator lost jurisdiction over the case submitted to him the moment be
rendered his decision. Therefore, he could no longer entertain a motion for
reconsideration of the decision for its reversal or modification. Thus:
By modifying the original award, respondent arbitrator exceeded his
authority as such, a fact he was well aware of, as shown by his previous
Resolution of Inhibition wherein he refused to act on the Union's motion
for reconsideration of the award or decision. Thus, respondent arbitrator
emphatically ruled:
The above-quoted provision did not expressly fix the time when the
Voluntary Arbitrator's decision or award would become final. We have
held, however, that it would assume the attribute of finality upon its
issuance, subject only to judicial review in appropriate cases. 7chanrobles
virtual law library

It would be well to remind the Parties in this case that the arbitration law The public respondent exceeded his authority when he acted on the
or jurisprudence on the matter is explicit in its stand against revocation Union's motion for reconsideration and reversed his original decision.
and amendment of the submission agreement and the arbitration award Corollarily his second decision dated December 14, 1988, having been
once such has been made. The rationale behind this is that: rendered in violation of law, must be considered null and void and of no
force and effect whatsoever.8chanrobles virtual law library
An award should be regarded as the judgment of a court of last resort, so
that all reasonable presumptions should be ascertained in its favor and WHEREFORE, the decision of the Voluntary Arbitrator dated December 14,
none to overthrow it. Otherwise, arbitration proceedings, instead of being 1988, is SET ASIDE for lack of jurisdiction and his decision dated July 12,
a quick and easy mode of obtaining justice, would be merely an 1988, is REINSTATED.
unnecessary step in the course of litigation, causing delay and expenses,
but not finally settling anything. Notwithstanding the natural reluctance of
the courts to interfere with matters determined by the arbitrators. they will
do so in proper cases where the law ordains them. (Arbitration,
Manguiat, citing U.S. v. Gleason, 175 US 588)

The power and authority of the Voluntary Arbitrator to act in the case
commences from his appointment and acceptance to act as such under the
submission agreement of the Parties and terminates upon his rendition of
his decision or award which is accorded the benefits of the doctrine of res
judicata as in judgments of our regular courts of law. Since the power and
authority of the arbitrator to render a valid award, order or resolution rest
upon the continuing mutual consent of the parties, and there is none
shown here, the Voluntary Arbitrator has no choice but to decline to rule
on the pleadings submitted by the parties. (Emphasis supplied)

It is true that the present rule makes the voluntary arbitration award final
and executory after ten calendar days from receipt of the copy of the
award or decision by the parties. 4 Presumably, the decision may still be
reconsidered by the Voluntary Arbitrator on the basis of a motion for
reconsideration duly filed during that period. Such a provision, being
procedural, may be applied retroactively to pending actions as we have
held in a number of cases. 5However, it cannot be applied to a case in
which the decision had become final before the new provision took effect,
as in the case at bar. 6 R.A. 6715, which introduced amended Article 262-A
of the Labor Code, became effective on March 21, 1989. The first decision
of the Voluntary Arbitrator was rendered on July 12, 1988, when the law in
force was Article 263 of the Labor Code, which provided that:

Voluntary arbitration awards or decisions shall be final, inappealable, and

executory.
CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T.
COLLADO and RODITO NASAYAO, respondents.
Benito P. Fabie for petitioners.
Narciso C. Parayno, Jr. for respondents.
PADILLA, J.:
In this petition for mandamus, prohibition and certiorari with preliminary injunction,
petitioners seek to annul and set aside the decision rendered by the respondent
Arbitrator Jose T. Collado, dated 29 December 1975, in NLRC Case No. LR-6151,
entitled: "Rodito Nasayao, complainant, versus Continental Marble Corp. and Felipe
David, respondents," and the resolution issued by the respondent Commission, dated
7 May 1976, which dismissed herein petitioners' appeal from said decision.
In his complaint before the NLRC, herein private respondent Rodito Nasayao claimed
that sometime in May 1974, he was appointed plant manager of the petitioner
corporation, with an alleged compensation of P3,000.00, a month, or 25% of the
monthly net income of the company, whichever is greater, and when the company
failed to pay his salary for the months of May, June, and July 1974, Rodito Nasayao
filed a complaint with the National Labor Relations Commission, Branch IV, for the
recovery of said unpaid varies. The case was docketed therein as NLRC Case No.
LR-6151.
Answering, the herein petitioners denied that Rodito Nasayao was employed in the
company as plant manager with a fixed monthly salary of P3,000.00. They claimed
that the undertaking agreed upon by the parties was a joint venture, a sort of
partnership, wherein Rodito Nasayao was to keep the machinery in good working
condition and, in return, he would get the contracts from end-users for the installation
of marble products, in which the company would not interfere. In addition, private
respondent Nasayao was to receive an amount equivalent to 25% of the net profits
that the petitioner corporation would realize, should there be any. Petitioners alleged
that since there had been no profits during said period, private respondent was not
entitled to any amount.
The case was submitted for voluntary arbitration and the parties selected the herein
respondent Jose T. Collado as voluntary arbitrator. In the course of the proceedings,
however, the herein petitioners challenged the arbitrator's capacity to try and decide
the case fairly and judiciously and asked him to desist from further hearing the case.
But, the respondent arbitrator refused. In due time, or on 29 December 1975, he
rendered judgment in favor of the complainant, ordering the herein petitioners to pay
Rodito Nasayao the amount of P9,000.00, within 10 days from notice.1
Upon receipt of the decision, the herein petitioners appealed to the National Labor
Relations Commission on grounds that the labor arbiter gravely abused his discretion
in persisting to hear and decide the case notwithstanding petitioners' request for him
to desist therefrom: and that the appealed decision is not supported by evidence.2
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the
ground that the decision of the voluntary arbitrator is final, unappealable, and
immediately executory; 3 and, on 23 March 1976, he filed a motion for the issuance of
a writ of execution. 4
Acting on the motions, the respondent Commission, in a resolution dated 7 May 1976,
dismissed the appeal on the ground that the decision appealed from is final,
unappealable and immediately executory, and ordered the herein petitioners to
comply with the decision of the voluntary arbitrator within 10 days from receipt of the
resolution.5
The petitioners are before the Court in the present recourse. As prayed for, the Court
issued a temporary restraining order, restraining herein respondents from enforcing
and/or carrying out the questioned decision and resolution. 6
The issue for resolution is whether or not the private respondent Rodito Nasayao was
employed as plant manager of petitioner Continental Marble Corporation with a
monthly salary of P3,000.00 or 25% of its monthly income, whichever is greater, as
claimed by said respondent, or entitled to receive only an amount equivalent to 25%
of net profits, if any, that the company would realize, as contended by the petitioners.
The respondent arbitrator found that the agreement between the parties was for the
petitioner company to pay the private respondent, Rodito Nasayao, a monthly salary
of P3,000.00, and, consequently, ordered the company to pay Rodito Nasayao the
amount of P9,000.00 covering a period of three (3) months, that is, May, June and
July 1974.
The respondent Rodito Nasayao now contends that the judgment or award of the
voluntary arbitrator is final, unappealable and immediately executory, and may not be
reviewed by the Court. His contention is based upon the provisions of Art. 262 of the
Labor Code, as amended.
The petitioners, upon the other hand, maintain that "where there is patent and
manifest abuse of discretion, the rule on unappealability of awards of a voluntary
arbitrator becomes flexible and it is the inherent power of the Courts to maintain the
people's faith in the administration of justice." The question of the finality and
unappealability of a decision and/or award of a voluntary arbitrator had been laid to
rest in Oceanic Bic Division (FFW) vs. Romero, 7 and reiterated in Mantrade FMMC
Division Employees and Workers Union vs. Bacungan.8 The Court therein ruled that it
can review the decisions of voluntary arbitrators, thus-
We agree with the petitioner that the decisions of voluntary
arbitrators must be given the highest respect and as a general rule
must be accorded a certain measure of finality. This is especially
 true where the arbitrator chosen by the parties enjoys the first rate
credentials of Professor Flerida Ruth Pineda Romero, Director of
the U.P. Law Center and an academician of unquestioned expertise
in the field of Labor Law. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions. Article
262 of the Labor Code making voluntary arbitration awards final,
inappealable, and executory except where the money claims
exceed P l 00,000.00 or 40% of paid-up capital of the employer or
where there is abuse of discretion or gross incompetence refers to
appeals to the National Labor Relations Commission and not to
judicial review.
Inspite of statutory provisions making 'final' the decisions of certain
administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse
of discretion, violation of due process, denial of substantial justice,
or erroneous interpretation of the law were brought to our attention.
There is no provision for appeal in the statute creating the
Sandiganbayan but this has not precluded us from examining
decisions of this special court brought to us in proper petitions. ...
The Court further said:
A voluntary arbitrator by the nature of her fucntions acts in quasi-
judicial capacity. There is no reason why herdecisions involving
interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law
and yet we do hesitate to pass upon their work where a question of
law is involved or where a showing of abuse of authority or
discretion in their official acts is properly raised in petitions for
certiorari.
The foregoing pronouncements find support in Section 29 of Republic Act No. 876,
otherwise known as the Arbitration Law, which provides:
Sec. 29. Appeals — An appeal may be taken from an order made
in a proceeding under this Act, or from a judgment entered upon an
award through certiorari proceedings, but such appeals shall be
limited to questions of law. The proceedings upon such an appeal,
including the judgment thereon shall be governed by the Rules of
Court in so far as they are applicable.
The private respondent, Rodito Nasayao, in his Answer to the petition, 9 also claims
that the case is premature for non-exhaustion of administrative remedies. He
contends that the decision of the respondent Commission should have been first
appealed by petitioners to the Secretary of Labor, and, if they are not satisfied with
his decision, to appeal to the President of the Philippines, before resort is made to the
Court.
The contention is without merit. The doctrine of exhaustion of administrative remedies
cannot be invoked in this case, as contended. In the recent case of John Clement
Consultants, Inc. versus National Labor Relations Commission, 10 the Court said:
As is well known, no law provides for an appeal from decisions of
the National Labor Relations Commission; hence, there can be no
review and reversal on appeal by higher authority of its factual or
legal conclusions. When, however, it decides a case without or in
excess of its jurisdiction, or with grave abuse of discretion, the party
thereby adversely affected may obtain a review and nullification of
that decision by this Court through the extraordinary writ of
certiorari. Since, in this case, it appears that the Commission has
indeed acted without jurisdiction and with grave abuse of discretion
in taking cognizance of a belated appeal sought to be taken from a
decision of Labor Arbiter and thereafter reversing it, the writ of
certiorari will issue to undo those acts, and do justice to the
aggrieved party.
We also find no merit in the contention of Rodito Nasayao that only questions of law,
and not findings of fact of a voluntary arbitrator may be reviewed by the Court, since
the findings of fact of the voluntary arbitrator are conclusive upon the Court.
While the Court has accorded great respect for, and finality to, findings of fact of a
voluntary arbitrator 11 and administrative agencies which have acquired expertise in
their respective fields, like the Labor Department and the National Labor Relations
Commission, 12 their findings of fact and the conclusions drawn therefrom have to be
supported by substantial evidence. ln that instant case, the finding of the voluntary
arbitrator that Rodito Nasayao was an employee of the petitioner corporation is not
supported by the evidence or by the law.
On the other hand, we find the version of the petitioners to be more plausible and in
accord with human nature and the ordinary course of things. As pointed out by the
petitioners, it was illogical for them to hire the private respondent Rodito Nasayao as
plant manager with a monthly salary of P3,000.00, an amount which they could ill-
afford to pay, considering that the business was losing, at the time he was hired, and
that they were about to close shop in a few months' time.
Besides, there is nothing in the record which would support the claim of Rodito
Nasayao that he was an employee of the petitioner corporation. He was not included
in the company payroll, nor in the list of company employees furnished the Social
Security System.
Most of all, the element of control is lacking. In Brotherhood Labor Unity Movement in
the Philippines vs. Zamora,13 the Court enumerated the factors in determining
whether or not an employer-employee relationship exists, to wit:
In determining the existence of an employer-employee relationship,
the elements that are generally considered are the following: (a) the
selection and engagement of the employee; (b) the payment of
 wages; (c) the power of dismissal; and (d) the employer's power to
control the employee with respect to the means and methods by
which the work is to be accomplished. It is the so-called "control
test" that is the most important element (Investment Planning Corp.
of the Phils. vs. The Social Security System, 21 SCRA 924;
Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v.
Ople, 131 SCRA 72).<äre||anº•1àw>

In the instant case, it appears that the petitioners had no control over the conduct of
Rodito Nasayao in the performance of his work. He decided for himself on what was
to be done and worked at his own pleasure. He was not subject to definite hours or
conditions of work and, in turn, was compensated according to the results of his own
effort. He had a free hand in running the company and its business, so much so, that
the petitioner Felipe David did not know, until very much later, that Rodito Nasayao
had collected old accounts receivables, not covered by their agreement, which he
converted to his own personal use. It was only after Rodito Nasayao had abandoned
the plant following discovery of his wrong- doings, that Felipe David assumed
management of the plant.

Absent the power to control the employee with respect to the means and methods by
which his work was to be accomplished, there was no employer-employee
relationship between the parties. Hence, there is no basis for an award of unpaid
salaries or wages to Rodito Nasayao.

WHEREFORE, the decision rendered by the respondent Jose T. Collado in NLRC

Case No. LR-6151, entitled: "Rodito Nasayao, complainant, versus Continental
Marble Corp. and Felipe David, respondents," on 29 December 1975, and the
resolution issued by the respondent National Labor Relations Commission in said
case on 7 May 1976, are REVERSED and SET ASIDE and another one entered
DISMISSING private respondent's complaints. The temporary restraning order
heretofore isued by the Court is made permanent. Without costs.
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY.
ESTER S. GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the
Association of Luzon Development Bank Employees (ALDBE) arose an arbitration
case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining
Agreement provision and the Memorandum of Agreement dated
April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position
Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary
Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the other
hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator
reminding them to do so. As of May 23, 1995 no Position Paper had been filed by
LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a
decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not
adhered to the Collective Bargaining Agreement provision nor the
Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of
the Voluntary Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third
person for determination on the basis of evidence and arguments presented by such
parties who have bound themselves to accept the decision of the arbitrator as final
and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as
either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by
the government to forego their right to strike and are compelled to accept the
resolution of their dispute through arbitration by a third party.1 The essence of
arbitration remains since a resolution of a dispute is arrived at by resort to a
disinterested third party whose decision is final and binding on the parties, but in
compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is
made, pursuant to a voluntary arbitration clause in their collective agreement, to an
impartial third person for a final and binding resolution.2 Ideally, arbitration awards are
supposed to be complied with by both parties without delay, such that once an award
has been rendered by an arbitrator, nothing is left to be done by both parties but to
comply with the same. After all, they are presumed to have freely chosen arbitration
as the mode of settlement for that particular dispute. Pursuant thereto, they have
chosen a mutually acceptable arbitrator who shall hear and decide their case. Above
all, they have mutually agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are
required to include therein provisions for a machinery for the resolution of grievances
arising from the interpretation or implementation of the CBA or company personnel
policies.3 For this purpose, parties to a CBA shall name and designate therein a
voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection,
preferably from those accredited by the National Conciliation and Mediation Board
(NCMB). Article 261 of the Labor Code accordingly provides for exclusive original
jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the
interpretation or implementation of the CBA and (2) the interpretation or enforcement
of company personnel policies. Article 262 authorizes them, but only upon agreement
of the parties, to exercise jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction
over the following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
 6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a
panel of such arbitrators is quite limited compared to the original jurisdiction of the
labor arbiter and the appellate jurisdiction of the National Labor Relations
Commission (NLRC) for that matter.4 The state of our present law relating to voluntary
arbitration provides that "(t)he award or decision of the Voluntary Arbitrator . . . shall
be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties,"5 while the "(d)ecision, awards, or orders of the
Labor Arbiter are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders."6 Hence, while there is an express mode of appeal from the decision of a
labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the
decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more
often than not, elevated to the Supreme Court itself on a petition for certiorari,7 in
effect equating the voluntary arbitrator with the NLRC or the Court of Appeals. In the
view of the Court, this is illogical and imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,8 on the settled premise that the
judgments of courts and awards of quasi-judicial agencies must become final at some
definite time, this Court ruled that the awards of voluntary arbitrators determine the
rights of parties; hence, their decisions have the same legal effect as judgments of a
court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,9 this Court ruled that "a
voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity."
Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in
a panel, enjoys in law the status of a quasi-judicial agency but independent of, and
apart from, the NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the
Court of Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts
and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission,
the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the Constitution, the Labor
Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators
may not strictly be considered as a quasi-judicial agency, board or commission, still
both he and the panel are comprehended within the concept of a "quasi-judicial
instrumentality." It may even be stated that it was to meet the very situation presented
by the quasi-judicial functions of the voluntary arbitrators here, as well as the
subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission,11that the broader term "instrumentalities" was purposely
included in the above-quoted provision.
An "instrumentality" is anything used as a means or agency.12 Thus, the terms
governmental "agency" or "instrumentality" are synonymous in the sense that either of
them is a means by which a government acts, or by which a certain government act
or function is performed.13 The word "instrumentality," with respect to a state,
contemplates an authority to which the state delegates governmental power for the
performance of a state function.14 An individual person, like an administrator or
executor, is a judicial instrumentality in the settling of an estate, 15 in the same manner
that a sub-agent appointed by a bankruptcy court is an instrumentality of the
court,16 and a trustee in bankruptcy of a defunct corporation is an instrumentality of
the state.17
The voluntary arbitrator no less performs a state function pursuant to a governmental
power delegated to him under the provisions therefor in the Labor Code and he falls,
therefore, within the contemplation of the term "instrumentality" in the aforequoted
Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in the
Labor Code does not place him within the exceptions to said Sec. 9 since he is a
quasi-judicial instrumentality as contemplated therein. It will be noted that, although
the Employees Compensation Commission is also provided for in the Labor Code,
Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the
Court of Appeals under the foregoing rationalization, and this was later adopted by
Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators
should likewise be appealable to the Court of Appeals, in line with the procedure
outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-
judicial agencies, boards and commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular
No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all
quasi-judicial entities18 not expressly excepted from the coverage of Sec. 9 of B.P.
129 by either the Constitution or another statute. Nor will it run counter to the
legislative intendment that decisions of the NLRC be reviewable directly by the
Supreme Court since, precisely, the cases within the adjudicative competence of the
voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No.
876, also known as the Arbitration Law, arbitration is deemed a special proceeding of
which the court specified in the contract or submission, or if none be specified, the
Regional Trial Court for the province or city in which one of the parties resides or is
doing business, or in which the arbitration is held, shall have jurisdiction. A party to
the controversy may, at any time within one (1) month after an award is made, apply
to the court having jurisdiction for an order confirming the award and the court must
grant such order unless the award is vacated, modified or corrected. 19

In effect, this equates the award or decision of the voluntary arbitrator with that of the
regional trial court. Consequently, in a petition for certiorari from that award or
decision, the Court of Appeals must be deemed to have concurrent jurisdiction with
the Supreme Court. As a matter of policy, this Court shall henceforth remand to the
Court of Appeals petitions of this nature for proper disposition.

ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
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.
PHILIPPINE STEAM NAVIGATION CO., petitioner,
vs.
PHILIPPINE OFFICERS GUILD, ET AL., respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Beltran and Lacson for respondent Philippine Marine Officers Guild.
Mariano B. Tuason for respondent Court of Industrial Relations.
BENGZON, J.P., J.:
The present century saw in its opening decades the struggle of labor to attain equal
footing with capital. Statute after statute was passed in the Philippines to secure this
end. The Philippine Constitution, adopted in 1935, made it plain that the State can
regulate the relation between labor and capital to achieve social justice.1 Following
the modern trend, the Industrial Peace Act was passed by our Congress to effect
equality between labor and capital as partners in industry. 2 Special attention from all
three branches of the government was required on the problems arising in their
relation, a relation treated as sui generis. Nonetheless, as was to be expected, it was
not infrequent that capital would seek to preserve and labor to advance its position;
the management would fight to retain old practices and the workers cry for
progressive measures; employers would desire superiority and employees equality.
Hence, the continuing disputes regarding the scope and application of social and
labor legislations covering the relations of labor and capital. An instance is the dispute
in the three cases at bar.
The Philippine Steam Navigation Co., Inc., hereafter referred to as PHILSTEAM, is a
domestic corporation, with head offices in Cebu City, engaged in inter-island shipping.
In the year 1954 it had 16 vessels, with 8 officers to a vessel, or a total of 128 officers.
Philippine Marine Officers Guild, herein otherwise called PMOG, is a labor union
affiliated with the Federation of Free Workers (FFW), representing, and which
represented in 1954, some of PHILSTEAM's officers.
The Cebu Seamen's Association, CSA for short, is another labor union that
represents and likewise represented in 1954 some of PHILSTEAM's officers.
On June 15, 1954 PMOG sent PHILSTEAM a set of demands with a request for
collective bargaining. PHILSTEAM received the letter embodying the same on June
18, 1954. Subsequently, or on June 29, 1954, PHILSTEAM transmitted its answer to
PMOG, requiring the latter to first prove its representation of a majority of
PHILSTEAM's employees before its demands will be considered as requested.
PHILSTEAM, on the same date, started interrogating and investigating its captains,
deck officers, and engineers, to find out directly from them if they had joined PMOG
or authorized PMOG to represent them.
A reply was sent by PMOG to the answer of PHILSTEAM, insisting that PHILSTEAM
consider its requests and demands first before requiring proof of majority
representation. This reply was received by PHILSTEAM on July 6, 1954.
PMOG thereafter filed on July 17, 1954 a notice of intention to strike stating as
reasons therefor PHILSTEAM's alleged refusal to bargain and unspecified unfair labor
practices. The Department of Labor brought PHILSTEAM and PMOG to a conference
on July 30, 1954, without any success.
The CSA had meanwhile also transmitted its own set of demands to PHILSTEAM. On
August 16, 1954 PHILSTEAM and CSA met. PHILSTEAM therein recognized CSA as
representing the majority of its employees and proceeded to consider CSA's
demands.
Another PHILSTEAM-PMOG conference at the Department of Labor was held on
August, 17, 1954, likewise to no avail.
Subsequently, on August 24, 1954, PHILSTEAM and CSA signed a collective
bargaining agreement. On the same date, PMOG declared a strike against
PHILSTEAM. Although not the subject of the present appeal, it should also be
mentioned that the dispute included two other shipping companies, namely,
Compania Maritima and Madrigal Shipping, and that PMOG simultaneously struck
against all three companies.
Around 46 officers of PHILSTEAM joined PMOG's strike; 15 of these later returned to
work, leaving 31 PHILSTEAM officers on strike. Pier 4 of the North Harbor of the Port
of Manila, where PHILSTEAM vessels docked, was among the areas picketed during
the strike.
A final conference at the Department of Labor between PHILSTEAM and PMOG on
October 7, 1954 still failed to bring the parties to an agreement.
The President of the Philippines, on January 14, 1955, certified the dispute among
the aforementioned shipping companies and their employees to the Court of Industrial
Relations, as involving national interest, pursuant to Section 10 of Republic Act 875.
The Court of Industrial Relations held preliminary conferences and on January 18,
1955 issued a return-to-work order. The same, however, was not enforced in view of
an injunction issued by this Court in another case.3
Several formal complaints were accordingly docketed in the Court of Industrial
Relations, as follows:
(1) Case 6-IPA, the dispute certified to the CIR by the President;
(2) Case 617-ULP filed on February 25, 1955 by PMOG against Maritima, et al., for
unfair labor practice;
(3) Case 618-ULP filed on February 25, 1955 by PMOG against PHILSTEAM and
CSA, for unfair labor practice;
(4) Case 646-ULP filed on March 29, 1955 by PMOG against Madrigal Shipping, for
unfair labor practice;
(5) Case 672-ULP filed on April 30, 1955 by the Marine Officers Association of the
Philippines4 against PMOG, for unfair labor practice;
(6) Case 1002-ULP filed on July 6, 1956 by PHILSTEAM against PMOG, for unfair
labor practice.
A joint trial was held of all the cases and on December 20, 1962 the Court of
Industrial Relations rendered thereon a single decision, finding in the cases pertinent
to this appeal, i.e., where PHILSTEAM is a party, as follows:
(1) Case 618-ULP, PHILSTEAM committed unfair labor practice in having interfered
with, restrained and coerced employees in the exercise of their rights to self-
organization;
(2) Case 1002-ULP, PMOG has not been shown to have committed unfair labor
practice; and,
(3) Case 6-IPA, the strike of PMOG against PHILSTEAM was justified and lawfully
carried out.
Accordingly, it stated in the dispositive portion relative to the above-mentioned cases:
IN VIEW OF ALL THE FOREGOING, the Court hereby orders:
xxx xxx xxx
2. Philippine Steam Navigation Company, its agents, successors and
assigns, to cease and desist from interrogating and investigating their
employees to determine whether they have authorized Philippine Marine
Officers Guild or any other labor organization to represent them for the
purpose of collective bargaining, discouraging or trying to discourage any of
such employees from remaining as a member of Philippine Marine Officers
Guild or any other labor organization, and encouraging or trying to
encourage any of such employees to join Cebu Seamen's Association or any
other labor organization, and, in any manner, interfering with, restraining, or
coercing their employees in the exercise of their right to self-organization
and other rights guaranteed in Section 3 of this Act; and offer all of their
striking employees immediate and full reinstatement to their former or
substantially equivalent positions, without back salaries and without
prejudice to their seniority or other rights and privileges, unless they have
found substantially equivalent employment elsewhere during the pendency
of this case.
PHILSTEAM moved for reconsideration but the motion was denied on May 18, 1962
by resolution of the Court of Industrial Relations in banc. The present appeal by
PHILSTEAM is from the decision and resolution en banc in Case 6-IPA, Case 618-
ULP and Case 1002-ULP.
Petitioner would contend that the respondent court erred in ordering it to reinstate the
PMOG strikers. In support of this it advances the argument that, first, PHILSTEAM did
not commit acts constituting unfair labor practice; and, second, PMOG's strike was
illegal.
The finding of respondent court in Case 618-ULP, as stated, is that PHILSTEAM
interfered with, coerced, and restrained employees in their rights to self-organization.
The same, if true, is unfair labor practice (Section 4 [a] [1], Republic Act 875).
The acts found by respondent court constituting the foregoing unfair labor practice
are: (1) the interrogation and investigation by PHILSTEAM's supervisory officials of its
captains, deck officers and engineers, to determine whether they had authorized
PMOG to act as their bargaining agent; (2) the subjection of PMOG to vilification; and
(3) the participation of PHILSTEAM's pier superintendent in soliciting membership for
a competing union.
PHILSTEAM admits that it initiated and carried out an investigation of its officers as to
their membership in PMOG and whether they had given PMOG authority to represent
them in collective bargaining. The reason for this, PHILSTEAM would, however, aver,
was merely to ascertain for itself the existence of a duty to bargain collectively with
PMOG, a step allegedly justified by PMOG's refusal to furnish proof of majority
representation.
The asserted reason for the investigation cannot be sustained. The record discloses
that such investigation was started by PHILSTEAM even before it received PMOG's
reply stating a refusal to submit proof of majority representation. Specifically, the
investigation was put under way on June 29, 1954 — the same day PHILSTEAM sent
its request that PMOG submit proof of majority representation — whereas,
PHILSTEAM knew of PMOG's refusal to furnish said proof only on July 6, 1954, when
it received PMOG's reply letter. The respondent court, therefore, aptly concluded that
PMOG's refusal to submit evidence showing it represented a majority had nothing to
do with PHILSTEAM's decision to carry out the investigation.
An employer is not denied the privilege of interrogating its employees as to their union
affiliation, provided the same is for a legitimate purpose and assurance is given by the
employer that no reprisals would be taken against unionists. Nonetheless, any
employer who engages in interrogation does so with notice that he risks a finding of
unfair labor practice if the circumstances are such that his interrogation restrains or
interferes with employees in the exercise of their rights to self-organization. (Blue
Flash Express Co., Inc., 109 NLRB 591.)
The respondent court has found that PHILSTEAM's interrogation of its employees
had in fact interfered with, restrained and coerced the employees in the exercise of
their rights to self-organization (Petition, Annex A, p. 31). Such finding being upon
questions of fact, the same cannot be reversed herein, because it is fully supported
by substantial evidence.
The rule in this jurisdiction is that subjection by the company of its employees to a
series of questionings regarding their membership in the union or their union
activities, in such a way as to hamper the exercise of free choice on their part,
constitutes unfair labor practice (Scoty's Department Store vs. Micaller, 52 O.G.
5119). PHILSTEAM's aforestated interrogation squarely falls under this rule.
PMOG's subjection to vilification is likewise borne out by substantial evidence.
Santiago Beliso, PHILSTEAM's purchasing agent, told Luis Feliciano, on August 6,
1954, that PMOG was a "money-asking union," that "all the members of the FFW are
low people" and that CSA "is a good union." Fernando Guerrero, PHILSTEAM's inter-
island manager, had authorized Beliso to assist him in his investigation of PMOG
membership. The statement of Beliso was made in the presence of PHILSTEAM
office manager Ernesto Mañeru and PHILSTEAM pier superintendent Jose Perez,
and these supervisory officials did nothing to disavow Beliso's conduct as not
intended to represent PHILSTEAM's opinion. PHILSTEAM, through its supervisory
officials, obviously made it appear to Feliciano that Beliso was speaking for or on
behalf of the company, when he made the remarks derogatory to PMOG and
favorable to CSA. PHILSTEAM thereby interfered with Feliciano's right to self-
organization.
Appellant would, however, assert an inconsistency on the part of respondent court in
finding that Beliso was made to appear by PHILSTEAM supervisory officials as acting
for them as testified to by Feliciano, when said court elsewhere rejected a testimony
to this effect by Eugenio Obispo.
Appellant refers to the testimony of Obispo, an engine officer, that he signed up with
CSA because sometime in July 1954 he was intimidated by Santiago Beliso. Obispo's
testimony, however, referred to a different incident, wherein there was no showing
that Beliso acted in the presence and with the apparent approval of high supervisory
officials of PHILSTEAM. Furthermore, Obispo's credibility, unlike that of Feliciano,
was put in doubt because he falsely stated that Beliso was an Assistant Manager of
PHILSTEAM. We find no inconsistency or discrimination in the appreciation of the
evidence by respondent court in giving credence to Feliciano, as to one incident,
while disbelieving Obispo, as to another.
Finally, of record also stands the fact that PHILSTEAM pier superintendent Valeriano
Teves helped bring about the affiliation of Diosdado Capilitan, a PMOG member, with
CSA, by telling him that his joining with CSA would not affect his PMOG affiliation.
This incident was testified to by PHILSTEAM witnesses themselves. While such a
statement, if considered as an isolated remark, may be a harmless expression of
opinion, it in reality amounted to support of CSA's membership solicitation drive, in
the light of the circumstances in which it was made. For it in effect encouraged
membership in the competing, union and indorsed CSA's solicitation, it least with
respect to Capilitan.
The respondent court absolved PMOG from the charge of unfair labor practice in
Case 1002-ULP. The alleged threats and violence on the part of PMOG strikers were
found not sufficiently established by the evidence. And PHILSTEAM in this appeal no
longer argues that said threats and violence were committed.
Nonetheless, PHILSTEAM, would contend that PMOG's strike was illegal, for the
reason that the purpose of the strike was illegal. It is argued that PMOG staged a
strike so as to compel PHILSTEAM to bargain collectively with it notwithstanding that
it was a minority union. First of all, the statement that PMOG is a minority union is not
accurate. Respondent court precisely found that there has been no proof as to which
union, PMOG, CSA or any other, represented the majority of PHILSTEAM
employees. For lack of showing that CSA represented the majority it declared the
PHILSTEAM-CSA collective bargaining agreement null and void. It stated that the
parties to the dispute were welcomed to file a petition for certification election to
decide this point.
Secondly, PMOG's strike was in retaliation to PHILSTEAM's unfair labor practice
rather than, as PHILSTEAM would picture it, an attempt to undermine the
PHILSTEAM-CSA agreement. For said agreement was signed only on August 24,
1954 but PMOG filed its notice of strike is early as July 17, 1954. PHILSTEAM's
unfair labor practice, consisting in its interference with the employees, rights to self-
organization started on June 29, 1954. It was because of said unlawful act of the
employer that the union struck. The notice of strike in fact mentioned company unfair
labor practices as reason for the intended strike.
From the foregoing it follows that PMOG's strike was for a lawful purpose and,
therefore, justified.
As to the question of reinstatement, we have already ruled, in Cromwell Commercial
Employees and Laborers Union (PTUG) vs. C.I.R., et al., L-19778, September 30,
1964, that striking employees are entitled to reinstatement, whether or not the strike
was the consequence of the employer's unfair labor practice, unless, where the strike
was not the consequence of any unfair labor practice, the employer has hired others
to take the place of the strikers and has promised them continued employment (2
Teller, LABOR DISPUTES AND COLLECTIVE BARGAINING, Sec. 371,. pp. 996-
997).
The present strike was the consequence of PHILSTEAM's unfair labor practice.
Reinstatement of the strikers, who have not found substantially equivalent
employment elsewhere, therefore follows as a matter of right, notwithstanding that the
employer has hired others to take the place of the strikers for the purpose of
continuing the operation of the plant or the business of the industry (2 Teller, op. cit.,
Sec. 277, p. 754).
Petitioner finally argues that reinstatement was forfeited due to the failure of the strike
to paralyze the company's business or the failure of the employees to offer to return
to work voluntarily and without any condition. As adverted to above, even if the
employer hires others to replace the strikers, thereby avoiding paralysis of his
business, if the strike is against an unfair labor practice on its part, the employer is
bound to reinstate the strikers. As to the matter of a voluntary offer to return to work
without any condition the same is relevant only to the question of payment of back
wages in addition to reinstatement. Since in these cases no back wages were
awarded, and the union has not appealed, said question is not in point.
VISAYAN BICYCLE, MANUFACTURING CO., INC., petitioner,
vs.
NATIONAL LABOR UNION and COURT OF INDUSTRIAL
RELATIONS respondents.
Mascardo, Mintu and Lazaro Law Offices for petitioner.
Eulogio R. Lerum for respondent National Labor Union.
Mariano B. Tuason for respondent Court of Industrial Relations.
BENGZON, J.P., J.:
On November 3, 1958, workers in the Visayan Bicycle Manufacturing Co., Inc. formed
the Visayan Bicycle Employees and Workers Union (VIBEMWU). Pedro Evangelista
was its president. On November 14, 1958, VIBEMWU and the company signed a
collective bargaining agreement. Among other things it provided for union security,
checkoff, wage increases, fifteen days vacation leave and fifteen days sick leave.
On February 21, 1959, Pedro Evangelista was again elected president, for 1959.
Felicisimo Rodiel was elected board member.
For the year 1960 VIBEMWU, on December 12, 1959, re-elected Pedro Evangelista
president and elected Fulgencio Besana and Felicisimo Rodiel, vice-president and
secretary respectively.
On February 27, 1960, through its executive board headed by Besana, acting as
president, VIBEMWU affiliated with the National Labor Union (NLU). Subsequently,
on March 4, 1960, the Constitution and By-laws of VIBEMWU were amended. On
March 9, 1960, another election was held and Besana was chosen president thereby
replacing Evangelista.
On March 17, 1960, the national secretary of NLU, by a letter, informed the company
of VIBEMWU'S affiliation to NLU, and demanded enforcement of the collective
bargaining agreement. The company, however, did not accede to the demand.
Consequently, on April 5, 1960, VIBEMWU filed a notice to strike.1äwphï1.ñët
The Department of Labor's Conciliation Service held several hearings on the union's
demands and strike notice, but the company still refused.
On April 25, 1960, the company dismissed Besana and Rodiel after they figured, on
the same day, in a fight with two other employees, within the premises and during
working hours. Alleging unfair labor practice, NLU, on behalf of VIBEMWU, as well as
of Besana and Rodiel, filed on May 6, 1960 a complaint against the company in the
Court of Industrial Relations. The company answered it on May 23, 1,960. It stated
that the dismissal of Besana and Rodiel was due to violation of a company rule that
penalizes "Inciting or provoking a fight or fighting during working hours or on company
premises".
The Presiding Judge of the Court of Industrial Relations, after trying the case,
rendered a decision on March 3, 1962 in favor of the complainant union. An unfair
labor practice, according to said decision, was committed by the company in
dismissing Besana and Rodiel due to their union activities. The dispositive portion
reads:
This Court finds substantial evidence to sustain the charge against
respondent Company in violation of Section 4(a), paragraphs 1 and 4 of the
Industrial Peace Act, and, therefore, orders respondent Company, its official
and/or agents to:
(1) Cease and desist from interfering, restraining or coercing its employees
in the exercise of their rights guaranteed by Section 3 of the Act;
(2) Cease and desist from discriminating against employees in regard to hire
or tenure of employment or any term or condition of employment to
encourage or discourage membership in any labor organization;
(3) Reinstate Fulgencio Besana and Felicisimo Rodiel to their former or
equivalent positions in respondent Company with backwages from the time
of their dismissal on April 25, 1960, up to the time of their actual
reinstatement and with the rights and privileges formerly appertaining
thereto, including seniority;
To facilitate the proper payment of backwages due them, the Chief of the
Examining Division of this Court and or his duly designated assistant is
hereby directed to examine the payrolls, daily time records and other
pertinent documents relative to complainants Besana's and Rodiel's services
with respondent Company, and to submit a corresponding report for further
disposition.
SO ORDERED.
After receipt of copy of the decision on March 13, 1962, the company filed on March
15, 1962 a motion for reconsideration. It contained no argument but reserved the
"right" to file supporting memorandum within ten days from March 18, 1962. A motion,
however, was filed on March 27, 1962, requesting for 15-day extension of time to file
the memorandum.
Adhering to a "no extension" policy thereon, the Court of Industrial Relations en
banc denied, on March 28, 1962, the aforesaid motion for extension to file
memorandum. Accordingly, on April 6, 1962, it further denied the motion for
reconsideration.
Following its receipt on July 6, 1962 of the last resolution, the company filed this
petition for review on July 16, 1962.
Petitioner has raised two issues: First, did the Court of Industrial Relations abuse its
discretion in denying the motion for extension of time to file memorandum in support
of the motion for reconsideration? Second, did the company's dismissal of Besana
and Rodiel constitute unfair labor practice?
The first issue has already been settled. The denial by the Court of Industrial
Relations of a motion to extend the 10-day period to file arguments in support of a
motion for reconsideration, pursuant to its standing rule against such extension, does
not constitute abuse of discretion. 1
Regarding the second issue, the record shows that on April 25, 1960, Besana and
Rodiel were provoked by Saturnino Reyes and Silvestre Pacia into a pre-arranged
fight pursuant to a strategy of the company designed to provide an appparently lawful
cause for their dismissal. Reyes and Pacia were hired only within that week. 2 Besana
and Rodiel were not shown to have previously figured in similar incidents before or to
have violated company rules and regulations in their many years with the company. .
3 The company did not investigate the incident, and its manager, Co Hing, admitted
that Besana was dismissed because he was a "hard-headed leader of the union". It
was this manager who had warned VIBEMWU'S officers responsible for the affiliation
that if they will not withdraw VIBEMWU from theNLU, he would take " steps in order to
dismiss them from work."
The findings of the Court of Industrial Relations to the foregoing effect are supported
by substantial evidence. No reason obtains to alter the conclusion that Besana and
Rodiel were in reality dismissed because of their union activities and not because of
their violation of a company rule against fights in the premises or during working
hours. Furthermore, the so-called violation of company rules having been brought
about by the company itself, thru the recent employment of Saturnino Reyes and
Silvestre Pacia whoprovoked the fight as above indicated, the same cannot be
regarded as a ground to punish the aforementioned employees.
Such being the case, the dismissal of Besana and Rodiel constituted unfair labor
practice under Section 4(a) (1) and (4) of Republic Act 875:
SEC.4. Unfair Labor Practices. —
(a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce employees in the exercise of
their rights guaranteed in Section three;4
xxx xxx xxx
(4) To discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in any
labor organization: ... .
Rothenberg has this to say:
... it can be established that the true and basic inspiration for the employer's
act is derived from the employee's union affiliations or activities, the
assignment by the employer or another reason, whatever its semblance of
validity, is unavailing. Thus, it has been held that the facts disclosed that the
employer's acts in discharging employees were actually prompted by the
employers's improper interest in the affected employee's improper interest in
the affected employee's union affiliations and activities, even though the
employer urged that his acts were predicated on economic necessity, desire
to give employment to more needy persons, lack of work, cessation of
operations, refusal to work overtime, refusal of non-union employees to work
with union employees, seasonal lay-off, libelous remarks against
management, violation of company rules. (Rothenberg on Labor Relations,
pp. 400-401; emphasis supplied.)
Since the only reason or basis for Besana and Rodiel's dismissal was in fact their
actuation as officers of VIBEMWU, the dismissal is clearly discriminatory.
It is this inconsiderate act of power that makes a subordinate a rebel; it is this
malicious tactic that forces labor to dislike management; this unjustifiable conduct that
creates a gap between management and labor; and this attitude that makes the
laborer hate the officials of the company to the detriment of all efforts to harmonize
management and labor for the benefit of both as envisioned by the Industrial Peace
Act. So plain from the record is the bad faith that attended the company's deliberate
and calculated act of unfair labor practice that we find in the present appeal an
obvious attempt to delay and carry on a pretense which this Court can ill afford to let
go without stern disapproval.
WHEREFORE, the decision and resolutions appealed from are hereby affirmed, with
treble costs against petitioner. So ordered.
JUDRIC CANNING CORPORATION, petitioner,
vs.
THE HONORABLE AMADO G. INCIONG, in his capacity as Deputy Minister of
Labor, THE HONORABLE FRANCISCO L. ESTRELLA, in his capacity as Director
of Region IV, Ministry of Labor, UNITED LUMBER & GENERAL WORKERS OF
THE PHILIPPINES (ULGWP), NORMA PINEDA, LEONILA MORALES, TERESITA
BALMACEDA, VICKY PENALOSA, ADELINA VALENZUELA and JUANITA
REPOSAR, respondents.
Florante A. Bautista for petitioner.
The Solicitor General for respondent Deputy Minister.
Eduardo G. Araulo for private respondents.
& the respondent Deputy Minister of Labor, that the petitioner is guilty of unfair labor
CONCEPCION JR., J.:1äwphï1.ñët
Petition for certiorari, with a prayer for the issuance of a writ of preliminary injunction
or restraining order, to annul and set aside the Order issued by the Regional Director
of the Ministry, of Labor on November 15, 1978 in Case No. R4-STF – 5515-78,
entitled: "United Lumber and General Workers of the Philippines (ULGWP), et al.,
complainants, versus Judric Canning Corporation, respondents," which ordered the
herein petitioner to reinstate immediately herein private respondents Norma Pineda,
Vicky Penalosa, Leonila Morales, Teresita Balmaceda, Adelina Valenzuela, and
Juanita Reposar to their former positions with full backwages from the date of their
dismissal up to their actual reinstatement; the Order issued by the respondent Amado
G. Inciong on August 3, 1979, which affirmed the aforestated order of the Regional
Director and dismissed the appeal of the herein petitioner; and the Writ of Execution
issued in said case on September 24, 1979.
The records show that the herein private respondents Norma Pineda, Vicky
Penalosa, Leonila Morales, Teresita Balmaceda, Adelina Valenzuela, and Juanita
Reposar are employees of the petitioner corporation and are members of the United
Lumber and General Workers of the Philippines (ULGWP). On August 19, 1978, the
said complainants were allegedly not allowed to report for work due to their union
activities in soliciting membership in a union yet to be organized in the company and
their time cards were removed from the rack. As a result, the said complainants and
their labor union filed a complaint for unfair labor practice against the petitioner with
Region IV of the Ministry of Labor, seeking the reinstatement of the complainants with
full backwages. 1
The herein petitioner denied having locked out the complainants and claims that the
said complainants failed to report for work and abandoned their positions. The
petitioner also denied having knowledge of the union activities of the complainants
until August 30, 1978, when it was served notice of a petition for direct certification
filed by the complainant union. 2
After hearing the parties, or on November 15, 1978, the Regional Director of Region
IV of the Ministry of Labor, after finding that the petitioner had dismissed the
complainants without valid cause, ordered the petitioner to immediately reinstate the
complainants to their former positions with fun backwages from the date of their
dismissal up to their actual reinstatement. 3
The petitioner corporation appealed to the Ministry of Labor, 4 but its appeal was
dismissed for lack of merit on August 3, 1979. 5 Thereafter, a writ of execution was
issued on September 24, 1979. 6
Hence, the present recourse. As prayed for, a temporary restraining order, restraining
the respondents from enforcing, implementing and/or carrying out the writ of
execution dated September 24, 1979, was issued on November 12, 1979. 7
1. The petitioner contends that the Regional Director's finding, witch was affirmed by
practice for terminating the services of the respondent union members due to their
alleged union activities, is not supported by the evidence of record.
This contention is untenable.ït¢@lFº The record shows that after the parties had
submitted their respective position papers, a hearing was held, at the conclusion of
which, the respondent Regional Director found that the private respondents did not
abandon their jobs but were dismissed because of their union activities. This is a
finding of fact which may not now be disturbed.
Besides, the private respondents immediately filed a complaint for illegal dismissal,
seeking their reinstatement, on August 24, 1978, soon after their services were
terminated on August 19, 1978. it would be illogical for the private respondents to
abandon their work and then immediately file an action seeking their reinstatement.
Moreover, there was no reason at all and none has been suggested by the petitioner,
for the private respondents to abandon their work. No employee with a family to
support, like the private respondents, would abandon their work knowing fully well of
the acute unemployment and underemployment problem and the difficulty of looking
for a means of livelihood. As the Solicitor General stated: "To get a job is difficult; to
run from it is foolhardy."
But, most of all, the petitioner stated that in spite of its position that the private
respondents had abandoned their jobs, it "offered to pay respondent union members
severance pay of one (1) month." 8 This is a clear admission of the charge of arbitrary
dismissal, for why should the petitioner offer to pay what it calls "severance pay" if the
private respondents were not, indeed, dismissed, or if the petitioner sincerely believed
in the righteousness of its stance?
2. The petitioner further claims that it could not have committed the unfair labor
practice charge for dismissing some of its employees due to their alleged union
activities because the alleged dismissal took place more than four (4) months before
the organizational meeting of the union and more than one (1) year before actual
registration of said union with the Labor Organization Division of the Bureau of Labor
Relations.
The contention is without merit. Under Article 248(a) of the Labor Code of the
Philippines, "to interfere with, restrain, or coerce employees in their exercise of the
right to self-organization" is an unfair labor practice on the part of the employer.
Paragraph (d) of said Article also considers it an unfair labor practice for an employer
"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. In this
particular case, the private respondents were dismissed or their services were
terminated, because they were soliciting signatures in order to form a union within the
plant. In their affidavit, executed on September 19, 1978, 9 the private respondents
stated: 1äwphï1.ñët
Na kami ay nagkampanya upang papirmahin namin sa
'membership form' ng ULGWP ang nakakarami (majority) sa mga
empleyado at nagharap kaming petisyon sa Ministri ng Paggawa
upang masertify ang aming unyon sa Case No. R4-LRD-M-8-403-
78;
Na dahil sa aming pagreklamo sa Pangasiwaan na ibigay sa amin
ang mga biyaya sa ilalim ng Kodigo ng Paggawa at dahil sa
pagtayo at pagkampaniya namin sa mga empleyado na sumapi sa
unyon ay kami ay pinag-initan at tinanggal sa trabaho ng
Pangasiwaan.
For sure, the petitioner corporation is guilty of unfair labor practice in interfering with
the formation of a labor union and retaliating against the employees' exercise of their
right to self-organization.
3. Finally, the petitioner claims that the "respondent Regional Director's finding, which
was affirmed by respondent Deputy Minister of Labor that the 'dismissal' of
respondent union members 'is conclusively presumed to be without a valid cause'
because petitioner failed to apply for clearance is contrary to the applicable Rules and
Regulations Implementing the Labor Code and is at variance with jurisprudence on
the matter.
The petitioner obviously refers to the following portion of the Order of the Regional
Director dated November 15, 1978: 1äwphï1.ñët
The record shows that complainants Norma Pineda, Vicky
Penalosa, Leonila Morales, Teresita Balmaceda, Adelina
Valenzuela and Juanita Reposar were employed by respondent in
January, 1978, up to August, 1978. They worked continuously up to
the time that their services were terminated by respondent on the
ground of abandonment. However, respondent did not apply for
clearance with this Office to terminate the services of complainants.
Hence, their dismissal is conclusively presumed to be without a
valid cause.
Indeed, prior clearance with the Ministry of Labor for the termination of the private
respondents is not necessary in this case since the private respondents have been
employed with the petitioner corporation for less than one (1) year. Section 1, Rule
XIV, Book V of the Implementing Rules and Regulations provides as
follows: 1äwphï1.ñët
Section 1. Requirement for shutdown or dismissal. — No employer
may shut down his establishment or dismiss any of his employees
with at least one year during the last two years, whether the service
is broken or continuous, without prior clearance issued therefor in
accordance with this Rule. Any provision in a collective agreement
dispensing with the clearance requirement shall be null and void.
However, the questioned order finding the dismissal of the private respondents to be
without just cause is not based upon such absence of prior clearance alone. The
respondent Regional Director also found that the private respondents were dismissed
because of their union activities and for the failure of the petitioners to file a report in
lieu of prior clearance, as provided for in Section 11, Rule XIV, Book V of the
Implementing Rules and Regulations.ït¢@lFº The questioned order further reads, as
follows: 1äwphï1.ñët
Moreover, we find that complainants did not abandon their job.
They were terminated due to the fact that they actively campaigned
and assisted in the organization of their union.
Therefore, the dismissal of complainants is without valid cause,
considering that respondent failed to justify their action and report
as required under the Labor Code.
The error of the Regional Director in stating that the dismissal of the private
respondents was without just cause in view of the absence of prior clearance from the
Ministry of Labor is, thus, not sufficient to warrant a reversal of the questioned order.
WHEREFORE, the petition should be, as it is hereby, DISMISSED. The temporary
restraining order heretofore issued is hereby LIFTED and set ASIDE. With costs
against the petitioner.
MANILA HOTEL COMPANY, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and PINES HOTEL EMPLOYEES ASS'N.
(CUGCO), respondents.
G.R. No. L-30755 September 28, 1972
MANILA HOTEL COMPANY and SOFRONIO G. RIVERA, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS and PINES HOTEL EMPLOYEES
ASSOCIATION (CUGCO), respondents.
G.R. No. L-30818 September 28, 1972
MANILA HOTEL COMPANY, petitioner,
vs.
PINES HOTEL EMPLOYEES ASS'N. (CUGCO) and COURT OF INDUSTRIAL
RELATIONS, respondents.
Government Corporate Counsel Leopoldo M. Abellera and Trial Attorney Vicente M.
Constantino , Jr. for petitioners.
J. C. Espinas, B. C. Pineda & Associates and Ramon R. Buenaventura for
respondents Union.
TEEHANKEE, J.:p
These three appeals by certiorari filed on various dates in 1969 involve the same
parties and various incidents between them, commencing from an unfair labor
practice charge originally filed by respondent union against petitioner company and
culminating in supplemental proceedings to enjoin the abrupt dismissal and
termination of employment of all eighty-six employees at the Pines Hotel with its
sudden sale on March 28, 1968 to a third party.
Petitioner-employer has appealed from the cease-and-desist order of respondent
court of industrial relations in its decision in the original unfair labor case as well as
from the orders issued by it to enforce the settlement of the supplemental dispute
arising from the sudden sale of the Pines Hotel and the abrupt dismissal of all its
eighty-six employees with the award and payment to them of gratuities as agreed to
by the company itself and embodied in a formal resolution of its board of directors,
and from the court's en bancresolutions denying reconsideration thereof.
Hence, the Court in giving due course to the last appeal filed by petitioner-employer
on August 26, 1969, and docketed as Case L-30818, ordered per its resolution
therein of August 28, 1969 that all the three cases at bar be jointly taken up and
decided, in view of their related nature.
In L-30755, upon proper complaint filed by respondent court's prosecutor at the
instance of the union and after preliminary investigation, an unfair labor practice on
six (6) counts was filed against herein petitioner Manila Hotel Company then engaged
in the operation of the Pines Hotel in Baguio City and its co-petitioner Sofronio G.
Rivera as the hotel's then general manager.1 After due hearing, respondent court
dismissed four (4) counts and found said petitioners guilty of unfair labor practice on
two (2) counts, viz, (1) the charge of discrimination in the granting of the 1965
Christmas bonus and (2) the charge of discrimination in the granting of salary
adjustments pursuant to the then newly enacted Minimum Wage Law, Republic Act
4180, passed on April 21, 1965, and decreeing a two-peso increase in the daily
minimum wage for workers in industrial and commercial establishments from four
pesos (P4.00) to six pesos (P6.00). Respondent court in its decision dated December
16, 1968, accordingly ordered respondents
(1) To cease and desist from further committing such unfair labor
practice acts;
(2) To distribute the 1965 Christmas bonus on a "pro-rata" basis as
having been done in the previous years; and
(3) To implement the salary adjustments of all the employees,
except the assistant manager of the Pines Hotel, in accordance
with their salary scale in consonance with the minimum monthly
salary of P180.00 as provided for in the New Minimum Wage Law,
effective July 1, 1965 until the sale of the Pines Hotel to the Resort
Hotels Corporation.
Their motion for reconsideration having been denied by respondent court's en
banc resolution of May 20, 1969, petitioners filed their present appeal on August 11,
1969.
Re L-30139 — During the pendency of the unfair labor practice case in the court
below (subject of L-30755, supra), the eighty-six employees of Pines Hotel were
stunned when they abruptly received on March 28, 1968 written notices that the
National Development Company as owner of the Pines Hotel had sold it to the Resort
Hotels Corporation on that same date, March 28, 1968, and that since petitioner
Manila Hotel Company's operation of the hotel would cease effective the next day,
"(their) services are hereby terminated as of the close of business hours of March 28,
1968."2
Since the unfair labor practice case, No. 4506-ULP, was still pending before the
industrial court, respondent union forthwith filed with said court on the same date,
March 28, 1968, an "Urgent Petition with prayer for a temporary restraining
order"3 complaining of petitioner's actions in bad faith in abruptly giving them their
termination papers (during the very pendency of their case for other unfair labor
practices on its part) in violation of the guarantee of their tenure of employment in
their subsisting collective bargaining agreement while disclaiming at their latest
conciliation conference held only twelve (12) days earlier on March 16, 1968 any
knowledge of a reported plan to sell the Pines Hotel.
The union accordingly prayed inter alia that "this case be consolidated with CIR Case
No. 4506-ULP" and that pending consideration of the merits, an ex-parte restraining
order be issued against their abrupt dismissal or termination of services until further
orders of respondent court. The union also promptly established picket lines in protest
of the termination of their members without due notice and despite their pending
urgent petition for an injunction or restraining order against such termination.
Respondent court took cognizance of the union's petition which was docketed with
the same number as the original unfair labor practice case as "No. 4506-ULP (1)" and
called the parties immediately to a conference which it set on March 29, and April 2,
1968. 4 At the conference and hearing of the union's urgent petition for injunction,
petitioner-employer expressly manifested that it was willing to grant retirement
gratuity to all the employees, and its board of directors met and deliberated on April 4,
and April 8, 1968 to approve the corresponding resolutions.
Hence, petitioner's board expressly approved the payment of such gratuity to "those
who have served for 20 years or more (who) shall be paid in accordance with law"
and "(T)hat the basis of computing the gratuity pay shall be the basic salary as of the
day of separation."5 This expressly refers and applies to the sixteen (16) [out of 86]
employees who have twenty years or more of service with petitioner company and
whose gratuity pay has been ordered paid as per respondent court's order
of December 5, 1968 in the amounts therein computed.
Notwithstanding petitioner's having deposited with respondent court pursuant to its
own offer the sum of P100,000.00 through its check on which was written "for
payment of gratuity and/or separation pay and other money claims of the petitioner
union," and the union in turn having withdrawn its picket line, petitioner nevertheless
questioned the issuance of said order on grounds of alleged lack of jurisdiction and
impropriety thereof. Its motion for reconsideration having been denied per respondent
court's en banc resolution of January 9, 1969, it filed on February 22, 1969 its appeal,
which was docketed as L-30139.
Re L-30818 — In connection with the same sale on March 28, 1968 of the Pines
Hotel and the abrupt termination of all its employees as of the same date, petitioner's
board of directors had likewise approved on April 8, 1968 the payment of retirement
gratuity to the greater remainder of seventy (70) [of a total 86] employees who had
not completed 20 years of service and were not qualified under the Retirement Law,
R.A. No. 186, at the rate of "one month salary for every year of service, but not
exceeding twelve months."6
Citing the various manifestations in the record of petitioner's willingness to pay such
gratuity, respondent court issued its order of February 27, 1969 for the payment of
such gratuity not exceeding 12 months to the remaining seventy (70) employees who
have rendered one year to nineteen years of service to petitioner company.
Nevertheless, as in L-30139, petitioner raised the same questions of jurisdiction and
propriety of the industrial court's issuance of said payment order. Its motion for
reconsideration having been denied by respondent court's en banc resolution of May
3, 1969, petitioner filed on August 26, 1969 its herein appeal, docketed as L-30818.
I employees of the Pines Hotel did not receive any year-end bonus. This is a clear
Re L-30755
1. In the original unfair labor practice case, respondent court found petitioner guilty of
discrimination and unfairness in the distribution of the 1965 Christmas bonus in that it
radically departed from its adopted procedure of distributing pro-rata among all the
employees of the Manila Hotel, Taal Vista Lodge and the Pines Hotel the traditional
Christmas bonus (7% of the net profit of the company) as approved by the Office of
the Economic Coordinator which it had followed for the past six or seven years prior
to 1965.
The industrial court found that instead 'in the year 1965, the Manila Hotel Company,
thru its general manager, distributed the 7% from the net profit as Christmas bonus in
a way that 50% was allotted to the Manila Hotel employees, 25% to the Taal Vista
Lodge employees and the remaining 25% to the Pines Hotel employees. With this
way of distributing the 7% of the net profit amounting to P8,239.73, the share of the
Manila Hotel amounting to P4,119.63, when divided equally among its eight
employees, each will receive P500.00 more or less; the share of the Taal Vista Lodge
amounting to P2,060.05, when divided equally among its thirty employees, each will
receive P70.00, more or less; while the share of the Pines Hotel amounting to
P2,060.05, when divided equally among its one hundred twenty employees, each will
receive P20.00, as their respective bonus."7
The industrial court stressed that the Pines Hotel employees who were the most
numerous "would receive a lesser bonus than the employees of the Manila Hotel and
Taal Vista Lodge where neither is there any existing labor organization nor the
complainant union has any member" and that "(T)wo employees of the Manila Hotel,
namely, Modesto Hilario and Margarita Reyes, were granted a year-end bonus in the
amount of P2,011.55 and P1,645.82, respectively, despite the fact that the latter had
been employed by the company for over a year only, that is in September, 1964."
Petitioner's contention that the giving of the lion's share of the 1965 Christmas bonus
to the eightadministrative employees at its Manila office was a valid exercise of
discretion on the pretext that "the head office of the petitioner Manila Hotel realized a
net profit for the year 1965 in the amount of P226,055.42 while the Pines Hotel and
the Taal Vista Lodge incurred heavy losses for the same period." 8 is shown by the
record to be bereft of factual basis. The record clearly shows that the only income
from petitioner's Manila Hotel is derived from the lease of its hotel building and
facilities to a third party (Mrs. Esperanza Zamora) with the earning of which
petitioner's eight administrative employees at the head office in Manila had nothing to
do, whereas the Pines Hotel and the Taal Vista Lodge were actually operated as such
by petitioner company, with the Pines Hotel at times making actual profits from
operations in contrast to the Taal Vista Lodge which always showed operational
losses.
Respondent court thus correctly held that: "(T)o the mind of the Court, whether or not
the Pines Hotel incurred losses is of no moment. The fact that management granted
Christmas bonus to its employees, the same should have been divided equally as it
has been done before. Aside from the Christmas bonus of 50% that was allocated to
the Manila Hotel employees, some of them were granted year-end bonus while the
case of discrimination, it appearing that there is no union at the Manila Hotel or the
Taal Vista Lodge and considering further that lately respondents had always been
beset with demands for better living conditions from the complainant union as well as
strikes being staged by the union."
The Court finds that petitioner has failed to show any error in respondent court's
decision that petitioner distribute the bonus pro rata among all its employees
regardless of their place of work, as was consistently done in the previous years, and
that respondent court's order was but a proper exercise of its power under section 5
of Republic Act 875 to grant affirmative relief whenever it has adjudged the existence
of an unfair labor practice.
2. Respondent court also found petitioner guilty on a second count in the granting of
salary adjustments pursuant to the two-peso increase in the daily minimum wage
ordained by the then newly enacted Republic Act 4180.
On this point, petitioner's contention is that it could not be held guilty of unfair labor
practice because "it is not the herein petitioners who are not agreeable to paying the
respondent union members a minimum salary of P180.00, but the Office of the
Economic Coordination for the reason that the minimum monthly salary for said
employees, as prescribed by the Interpretative Bulletin of the Bureau of Labor
Standards of the Department of Labor, is P157.00." 9
The Court finds no error in respondent court's rejection of petitioner's claims, when it
held that it "cannot agree to the contentions of respondents that their failure to
implement the New Minimum Wage Law was due to the interpretative bulletin of the
Bureau of Labor Standards of the Department of Labor, which in the opinion of the
Office of the Economic Coordinator should apply to the employees of the Pines Hotel
because the said interpretative bulletin refers to daily wage employees (prescribing a
new minimum monthly salary of P157.00 for daily workers) and not to monthly paid
ones (such as the Pines Hotel employees) and, besides that, this is a mere opinion.
Likewise, the contention that the company finances do not warrant the revision of the
salary scales of the Pines Hotel employees is untenable considering that the
employees of the Manila Hotel and some employees of the Taal Vista Lodge where
there is no existing labor organization were given salary adjustments beginning the
fiscal period July 1, 1965, and that despite the alleged financial reverses suffered by
the company, the latter was able to grant year-end bonus to two of its employees,
which in effect belies the contention of the company that they are in a financial strait.
Furthermore, the Taal Vista Lodge had always been losing in its operation while the
Pines Hotel makes profits at times. Yet, despite all these, the respondent company
granted salary adjustments to some employees of the former without strictly adhering
to the aforesaid interpretative bulletin, which in the Court's opinion was purposely
done to discourage the members of the complainant union." 10
Respondent court's finding of unfair and unjust discrimination in the granting of salary
adjustments pursuant to the two-peso increase ordained by the then new Minimum
Wage Law is amply borne out by the record, with the eight (8) employees at the
Manila office being granted a total of P18,000.00 in salary adjustments for the fiscal
year July 1, 1965 to June 30, 1966, whereas eighty (80) regular employees of Pines
Hotel received only an aggregate salary adjustment in the lesser amount of
P15,000.00. Stated in another way, the total salary adjustments given every ten Pines
Hotel employees would not even equal the salary adjustment given one single Manila
office employee.
Hence, without in any way turning down or modifying the increases and high salary
adjustments which petitioner saw fit to grant to its Manila office employees,
respondent court correctly removed the unfair discrimination by granting the
corresponding affirmative relief to the Pines Hotel employees through ordering the
payment to them by petitioner of the new minimum monthly salary of P180.00 for
monthly-paid employees to which they were entitled under Republic Act 4180. 11
II
Re L-30139
As above stated, upon filing on March 28, 1968 by the union of its urgent petition with
prayer to restrain their abrupt separation from employment without prior notice by
virtue of the sale on that same date of the Pines Hotel to the Resort Hotels
Corporation, respondent court took cognizance thereof, permitted its docketing as a
supplemental case of the original unfair labor practice case as "No. 4506-ULP (1)"
and forthwith called the parties to a conference on March 29, and April 2, 1968.
A settlement of such dispute was worked out at such conference with petitioner
agreeing to pay retirement gratuities to all 86 Pines Hotel employees as above
mentioned and the union in turn withdrawing its picket line. Petitioner deposited with
respondent court the amount of P100,000.00 (per NDC-issued check dated April 5,
1968) 12 on account of such gratuity and/or separation pay and other money claims of
the union. An advance equivalent to one month's salary chargeable to any amount
that may be due the employees was given them therefrom in April, 1968. Much later,
on September 5, 1968, respondent court further issued in the same case its order for
the payment out of said deposit to the employees of their accrued leaves. Such order
was never questioned challenged by petitioner.
On December 5, 1968, respondent court issued its order for the payment of the full
gratuity of the sixteen (16) Pines Hotel employees with twenty (20) years or more of
service, stating the premises thereof as follows:
After the order dated September 5, 1968 in the above-entitled case
had been satisfied with the actual payment of the accrued leaves of
absences of the members of the complainant union, the other
matter deemed by the Court as the issue to be resolved is the
subject of gratuity. This order particularly refers to those employees
with twenty (20) years or above of service.
The facts on this matter, are quite clear and to the point. After the
termination of employment of individual claimants on March 28,
1968, the Board of Directors of the Manila Hotel Company, on April
4, 1968, met, deliberated and decided to extend some monetary
benefits to the terminated employees. The deliberation was formally
 reduced to writing in a subsequent meeting of the same Board on
April 8, 1968. Pertinent portion of the deliberation reads:
"Paragraph 2: —
Those who have served for 20 years or more shall be paid in
accordance with law.
"Paragraph 3: —
That the basis of computing the gratuity pay shall be the basic
salary as of the day of separation. (Exhibit "1-B")
The records is also rich with manifestations of the Company's
counsel reiterating willingness to pay gratuity in accordance with
law. ....
Indeed, the records as well as the evidence is replete with the
willingness of the Company to pay gratuity to the members of the
complainant union.
The records also show that individual claimants herein were
extended sometime in April, 1968 an advance equivalent to one
month's salary chargeable against any amount that may be due
them (Exhibit "5")
As to outstanding hotel bills totalling P1,847.23 which respondent court held to be
definitely deductible against the individual employees who incurred the same,
respondent court ruled that it would hold in its custody the corresponding amount
thereof, thus: " (A)s a condition of the payment of the claims of complainant members,
it was resolved by the Board of Directors of the Company that 'a) any amount due to
the Company from any employees shall be deducted before payments including their
personal accounts with the Company.' (Exhibit 'A'). The Company submitted a list of
hotel bills which unfortunately were unsupported with the very evidence of
indebtedness. Hence, said hotel bills, though definitely a deduction from the claims of
individual claimant, for very obvious reasons, will not be disposed of in this order but
will be held in abeyance until after sufficient facts are in the Court's possession for it
to treat later on. Meanwhile, the Court will hold in its custody the total amount of hotel
bills."
Accordingly, respondent court ordered as follows:
IN VIEW OF ALL THE FOREGOING, as manifested and agreed
upon by the respondents' counsel, the Cashier of the Court is
hereby ordered to issue, subject to the usual accounting and
auditing rules and regulations, a check in favor of the Pines Hotel
Employees Association (CUGCO), complainant herein, thru its
counsel, Atty. Benjamin C. Pineda, in the amount of P75,714.77
representing the net gratuity of the hereunder named employees
who have to their credit twenty years of service or above and
another check in favor of J. C. Espinas & B. C. Pineda &
Associates, thru Atty. Benjamin C. Pineda, in the amount of
P27,139.00 as attorney's fees.
For the proper guidance of the union president and Atty. Pineda,
who are authorized to make individual distributions of the claims of
the employees and who must submit a report or accounting
thereafter within fifteen (15) days from receipt of the total gratuity
for those with twenty (20) years of service or above, less twenty-
five per cent attorney's fees and one month advance gratuity, the
individual distribution is as stated hereunder, to wit:
(Note: Follows a list of the names of the sixteen
(16) employees, with five (5) columns, giving the
total gratuity due each of them, the 25%
attorney's fee deductible therefrom, hotel bills
deductible from five (5) employees accountable
therefor, amount of one month's advance gratuity
deductible from each employee, and the net
gratuity due each of them.)
The total hotel bills of P1,847.23 shall remain with the custody of
the Court until its further disposition. There is still a balance of
P78,415.57 remaining with the Court out of the initial deposits. And
so an additional amount of P26,285.43 must still be deposited with
the Court in order that the full gratuity of those with twenty years of
service or above could be paid. The Company is therefore ordered
to deposit the said amount of TWENTY-SIX THOUSAND TWO
HUNDRED EIGHTY-FIVE PESOS AND FORTY-THREE
CENTAVOS (P26,285.43) plus the amount of SIXTY-TWO PESOS
AND EIGHTY-SIX CENTAVOS (P62.86) representing the Court's
deposit fee.
Petitioner bases its present appeal from respondent court's order on the strength of
the "Opposition and/or Motion to Dismiss" dated April 28, 1968 that it filed with
respondent court on May 2, 1968, 13 after the union had filed on April 3, 1968 its
"Amended Urgent Petition" of the same date 14 formally impleading the National
Development Company, owner-seller of Pines Hotel, as party respondent. 15
Four grounds were stated by petitioner in said "opposition and/or motion to dismiss,"
as follows:
(1) that the urgent petition states no valid cause of action;
(2) that the respondent Court has no jurisdiction over the subject
matter of the petition and over the respondent;
 (3) that the claim set forth in the petition has been paid, waived,
abandoned or otherwise extinguished; and
(4) that the injunction prayed for does not lie against the Company.
The first two grounds are now re-assigned by petitioner as errors on appeal, claiming
that respondent court had no jurisdiction over the case below because "there exists
no longer employer-employee relationship notwithstanding that the case refers to acts
of unfair labor practice where no reinstatement is sought" and that "the lawyer of the
respondent union cannot file charge for unfair labor practices directly with the court,
because it is only the prosecutor of the respondent CIR that can file the same
pursuant to sec. 5(b) of Republic Act 875" and that "respondent CIR cannot just issue
an order granting awards without first resolving a motion to dismiss for lack of
jurisdiction and/or granting (petitioner) its right to file its answer to a complaint." 16
These alleged errors assigned now by petitioner are actually moot and academic, for
even as of the time petitioner had filed the same with respondent court on May 2,
1968, it had already recognized respondent court's valid jurisdiction over the unfair
labor complaint raised by the union over the abrupt termination of services of the
Pines Hotel employees and had come to a settlement of the dispute as early as April,
1968 with its agreement to pay retirement gratuity to the employees in two categories
(those with 20 years of service and above, and those with 1 to 19 years of
service, supra) and had deposited with respondent court the sum of P100,000.00 for
the purpose. On the other hand, the union, accepting the settlement, had lifted their
picket line and no longer insisted on its members' guarantee of tenure of employment
under their subsisting collective bargaining agreement.
Since the employees' claims had been settled with petitioner's agreement to pay them
retirement gratuity, respondent court certainly had jurisdiction to issue its questioned
payment order of December 5, 1968 to implement the very agreement and settlement
arrived at by the parties in the case before it.
As a matter of fact, the third-stated ground of petitioner's formal opposition below —
which it completely ignores in the present appeal — was that the union's claim or
demand has been paid, waived, abandoned or otherwise extinguished, citing
precisely the policy adopted as early as April 5, 1968 by petitioner "regarding the
payment of gratuity and/or termination pay to said employees," submitting photostat
copy of the board's resolution thereon, recording petitioner's "good faith and earnest
desire" and resolution to deposit P200,000.00 for the purpose and citing union's
counsel's conformity to the settlement and to the proviso "that all pending cases in
relation to the present dispute against MH Co, NDC and Resort Hotels Corporation
and its officials shall be withdrawn by the Pines Hotel Employees Association (Cugco)
and its members and to lift the picket lines at the Pines Hotel." 17
Such withdrawal of the case could not of course be literally implemented, as petitioner
would insinuate. The union, did withdraw its complaint for continued employment of
its members despite the sale of the Pines Hotel and it did lift the picket line, leaving
the new owner to go freely about its business. The case itself had to remain for
implementation in turn of petitioner's undertaking to pay retirement gratuity to all the
86 Pines Hotel employees who had lost their jobs, and this is exactly what respondent
court has done through its December 5, 1968 payment order. Respondent court
having properly assumed jurisdiction over the dispute and sanctioned the settlement
thereof offered by petitioner itself, certainly had unquestioned jurisdiction in all
incidents relating to the implementation and carrying out of the settlement.
Prescinding from the foregoing nevertheless and dealing with the alleged errors which
petitioner has assigned on appeal, it is obvious that its claim that the union members
sought no reinstatement has no factual basis in the record. The union precisely
sought an injunction against the abrupt termination of its members and claimed that
they were entitled to continued employment as guaranteed by their collective
bargaining agreement.
Petitioner's claim that the union counsel could not file an unfair labor practice charge
directly with respondent court may be correct as far as it goes. What the union had
actually filed on March 28, 1968 was a separate "urgent petition with prayer for a
restraining order." Respondent court however in effect granted the union's alternative
prayer for consolidation of the new unfair labor practice charge with the union's
pending case No. 4506-ULP. Assuming that a prior preliminary investigation was
necessary to determine the merit of the complaint, it cannot be gainsaid that in effect
respondent court undertook such preliminary investigation on its own when it
immediately called the parties to a conference on the next day, March 29, 1968 and
April 2, 1968. No prejudice could be said to have been caused to petitioner thereby,
for the very merit of the union complaint is borne out by the fact that the parties
promptly arrived at a satisfactory settlement thereof upon petitioner's undertaking to
pay retirement gratuity to all eighty-six affected employees. By the same token,
respondent court no longer had to formally rule on petitioner's "opposition and/or
motion to dismiss" of May 2, 1968 by virtue of the earlier settlement reached by the
parties in April, 1968, as already shown above.
Only one point apparently not raised by petitioner in its opposition-motion below
merits mention, and it is that payment of the retirement gratuity to the employees
directly through the respondent court from the amount therein deposited by petitioner
(and not through the Government Service Insurance System in accordance with the
usual practice) might disregard and not take into account "some accountabilities" and
"outstanding obligations" of said employees. 18 It is to be expected that respondent
court will take the necessary safeguard measures to avoid such contingency, by
properly calling in a GSIS representative in charge of the GSIS accounts of said
sixteen (16) employees to make the proper verification before authorizing final
payment of the amounts due to them.
III
Re L-30818
This appeal involves the last order issued on February 27, 1969 by respondent court
for the payment to the greater remainder of seventy (70) Pines Hotel employees with
less than twenty (20) years of service (and therefore not qualified for gratuity under
the Retirement Act, R.A. No. 186) of retirement gratuity of "one month salary for every
year of service, but not exceeding twelve months" as offered and agreed to by
petitioner itself, pursuant to its past practice.
In said order, respondent court, after noting the previous payment of the accrued
leaves and one month's salary advance, and the manifestations of record evidencing
petitioner's reiterations of its willingness to pay such gratuity, as in the case of the
sixteen other employees with 20 years or over of service (in Case L-30139), noted
that:
After the order dated September 5, 1968 in the above-entitled case
had been satisfied with the actual payments of the accrued leaves
of absences of the members of complainant union, the remaining
issue to be determined is the subject of gratuity for those with
services ranging from one year to nineteen years. Those with
twenty or above years of service were treated in a separate order.
It appears that the facts are quite clear and not controverted. After
the termination of employment of the individual complainants on
March 28, 1968, the Board of Directors of the Manila Hotel
Company, on April 4, 1968 met, deliberated and decided to extend
some monetary benefits to the terminated employees who are
incidentally members of complainant union. This deliberation was
formally reduced to writing in a subsequent meeting on April 8,
1968. Pertinent portions of the deliberation reads:
"Paragraph 1 — Employees who have rendered
one year to nineteen years of services with the
Manila Hotel Company should be paid one month
salary for every year of service, but not
exceeding 12 months" (Exh. 1-B).
xxx xxx xxx
Finally the company admitted that former employees of the Manila
Hotel Company in Manila were given one month pay for every year
of service but not exceeding twelve (12) months when their
services were terminated as a result of the relief of Mr. Zamora in
1954, June 30, 1954, except those employees who were
transferred to the Pines Hotel. (t.s.n., page 122, Aug. 9, 1968)
Respondent court, as in L-30139, made the same reservation of holding in abeyance
settlement of outstanding hotel bills in the total amount of P2,921.94 against the
individual employees liable therefor until after presentation by petitioner of the
necessary evidence.
Respondent court accordingly ordered the following:
From the evidence, testimonial and documentary, attached herewith is a statement of
the claims of the individual workers including hotel bills, one-month advance pay, and
25% attorney's fees. (Exh. B-2, B-3) 19
In view of the foregoing, the respondent, Manila Hotel Company, is
hereby ordered to deposit with the Court the amount of
P103,856.30 in order to meet the total claims of the workers less
their one-month advance pay," As already adverted to above,
petitioner assigns in this appeal the very same identical errors
assigned by it in Case L-30139, based on its "opposition and/or
motion to dismiss" filed on May 2, 1968 with respondent court.
Accordingly, petitioner's appeal must perforce be rejected for the very same grounds
already stated above with reference to Case L-30139. As in said case L-30139,
petitioner has in no manner questioned or disputed the factual bases and findings of
respondent court as to its undertaking and agreement in the record to pay the
retirement gratuity to the employees, by way of settlement of their dispute arising from
the protested abrupt termination of their employment with the sudden sale of the
Pines Hotel to a third party.
Respondent court in issuing the appealed payment order was but acting within its
jurisdiction properly assumed of implementing the very agreement and settlement for
payment of retirement gratuity arrived at by the parties in the case before it.
ACCORDINGLY, the decision, orders and resolutions appealed from are hereby
affirmed. With reference to Case L-30139 involving payment of retirement gratuity to
the sixteen (16) qualified employees therein named, respondent court is directed to
make the corresponding verification that their accountabilities to the Government
Service Insurance System as such members-employees are fully discharged before
final payment of the amounts found due to them under the appealed order, herein
affirmed, is made. No costs.
Concepcion, C.J., Zaldivar, Castro, Makasiar, Antonio and Esguerra, JJ., concur.
Makalintal, J., is on leave.
Fernando, J., concurs except as to the last paragraph in II -- re L-30139.
WISE AND CO., INC., petitioner, I
vs.
WISE & CO., INC. EMPLOYEES UNION-NATU AND HONORABLE BIENVENIDO THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH
G. LAGUESMA, in his capacity as voluntary Arbitrator, respondents. GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN HE ORDERED THE
Angara, Abello, Concepcion, Regala & Cruz for petitioner. EXTENSION OF PROFIT SHARING BENEFITS TO THOSE
EMPLOYEES COVERED BY THE CBA DESPITE PATENT LACK
OF FACTUAL AND LEGAL BASIS THEREFOR IN THAT-

1. DISCRIMINATION PER SE IS NOT

GANCAYCO, J.: UNLAWFUL ESPECIALLY WHEN THE
EMPLOYEES ARE NOT SIMILARLY SITUATED.
The center of controversy in this petition is whether the grant by management of profit
sharing benefits to its non-union member employees is discriminatory against its 2. THE TERMS AND CONDITIONS
workers who are union members. STIPULATED IN THE CBA HAVE THE FORCE
AND EFFECT OF A LAW BETWEEN THE
PARTIES. PRIVATE RESPONDENT,
The facts are undisputed. On April 3,1987 the management issued a memorandum THEREFORE CANNOT DEMAND, AS A
circular introducing a profit sharing scheme for its managers and supervisors the MATTER OF RIGHT, WHAT IS NOT
initial distribution of which was to take effect March 31, 1988. STIPULATED IN THE CBA.

On July 3,1987 the respondent union wrote petitioner through its president asking for
participation in this scheme. This was denied by petitioner on the ground that it had to
adhere strictly to the Collective Bargaining Agreement (CBA).
In the meantime, talks were underway for early negotiation by the parties of the CBA
which was due to expire on April 30, 1988. The negotiation thus begun earlier than
the freedom period. On November 11, 1987 petitioner wrote respondent union
advising the latter that they were prepared to consider including the employees
covered by the CBA in the profit sharing scheme beginning the year 1987 provided
that the ongoing negotiations were concluded prior to December 1987. However, the
collective bargaining negotiations reached a deadlock on the issue of the scope of the
bargaining unit. Conciliation efforts to settle the dispute on 29 March 1988 were made
but no settlement was reached.
On March 30, 1988, petitioner distributed the profit sharing benefit not only to
managers and supervisors but also to all other rank and file employees not covered
by the CBA. This caused the respondent union to file a notice of strike alleging that
petitioner was guilty of unfair labor practice because the union members were
discriminated against in the grant of the profit sharing benefits. Consequently,
management refused to proceed with the CBA negotiations unless the last notice of
strike was first resolved. The union agreed to postpone discussions on the profit
sharing demand until a new CBA was concluded. After a series of conciliation
conferences, the parties agreed to settle the dispute through voluntary arbitration.
After the parties submitted their position papers, a rejoinder and reply, on March
20,1989 the voluntary arbitrator issued an award ordering petitioner to likewise extend
the benefits of the 1987 profit sharing scheme to the members of respondent
union.1 Hence, this petition wherein petitioner alleged the following grounds in support
thereof —
3. THE ACT OF THE UNION IN NEGOTIATING
FOR THE INCLUSION OF THE PROFIT
SHARING BENEFIT IN THE PRESENT CBA IS
AN IMPLIED ADMISSION THAT THEY WERE
NOT ENTITLED TO IT IN 1987.
II
THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN HE MADE THE CLEARLY
BASELESS CONCLUSION THAT THE PETITIONER WAS
MOTIVATED BY ITS DESIRE TO DEFEAT OR OTHERWISE
PREJUDICE THE BASIC RIGHTS OF ITS EMPLOYEES. 2
The petition is impressed with merit.
Under the CBA between the parties that was in force and effect from May 1, 1985 to
April 30,1988 it was agreed that the "bargaining unit" covered by the CBA "consists of
all regular or permanent employees, below the rank of assistant supervisor, 3 Also
expressly excluded from the term "appropriate bargaining unit" are all regular rank
and file employees in the office of the president, vice-president, and the other offices
of the company — personnel office, security office, corporate affairs office, accounting
and treasurer department .4
It is to this class of employees who were excluded in the "bargaining unit" and who do
not derive benefits from the CBA that the profit sharing privilege was extended by
petitioner.
There can be no discrimination committed by petitioner thereby as the situation of the WHEREFORE, the petition is GRANTED and the award of respondent Voluntary
union employees are different and distinct from the non-union employees. 5 Indeed, Arbitrator dated March 20,1989 is hereby REVERSED AND SET ASIDE being null
discrimination per se is not unlawful. There can be no discrimination where the and void, without pronouncement as to costs.
employees concerned are not similarly situated.

Respondent union can not claim that there is grave abuse of discretion by the
petitioner in extending the benefits of profit sharing to the non-union employees as
they are two (2) groups not similarly situated. These non-union employees are not
covered by the CBA. They do not derive and enjoy the benefits under the CBA.

The contention of the respondent union that the grant to the non-union employees of
the profit sharing benefits was made at a time when there was a deadlock in the CBA
negotiation so that apparently the motive thereby was to discourage such non-union
employees from joining the union is not borne by the record. Petitioner denies this
accusation and instead points out that inspite of this benefit extended to them, some
non-union workers actually joined the respondent union thereafter.

Respondent union also decries that no less than the president of the petitioner agreed
to include its members in the coverage of the 1987 profit sharing benefit provided that
they would agree to an earlier negotiation for the renewal of the CBA which expired in
1988. Be this as it may, since there was actually a deadlock in the negotiation and it
was not resolved and consummated on the period expected, private respondent can
not now claim that petitioner has a duty to extend the profit sharing benefit to the
union members.

The Court holds that it is the prerogative of management to regulate, according to its
discretion and judgment, all aspects of employment. This flows from the established
rule that labor law does not authorize the of the employer in the conduct of its
business.6 such management prerogative may be availed of without fear of any
liability so long as it is exercised in good faith for the advancement of the employers'
interest and not for the purpose of defeating or circumventing the rights of employees
under special laws or valid agreement and are not exercised in a malicious, harsh,
oppressive, vindictive or wanton manner or out of malice or spite. 7

The grant by petitioner of profit sharing benefits to the employees outside the
"bargaining unit" falls under the ambit of its managerial prerogative. It appears to
have been done in good faith and without ulterior motive. More so when as in this
case there is a clause in the CBA where the employees are classified into those who
are members of the union and those who are not. In the case of the union members,
they derive their benefits from the terms and conditions of the CBA contract which
constitute the law between the contracting parties.8 Both the employer and the union
members are bound by such agreement.

However, the court serves notice that it will not hesitate to strike down any act of the
employer that tends to be discriminatory against union members. It is only because of
the peculiar circumstances of this case showing there is no such intention that this
court ruled otherwise.
SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (2ND DIVISION) and SIME DARBY SALARIED
EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.
DECISION
BELLOSILLO, J.:
Is the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of
automotive tires, tubes and other rubber products. Sime Darby Salaried Employees
Association (ALU-TUCP), private respondent, is an association of monthly salaried
employees of petitioner at its Marikina factory. Prior to the present controversy, all
company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based
employees advising all its monthly salaried employees in its Marikina Tire Plant,
except those in the Warehouse and Quality Assurance Department working on shifts,
a change in work schedule effective 14 September 1992 thus
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule factory
office will be as follows:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 P.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse and QA employees
who are on shifting. Their work and break time schedules will be
maintained as it is now.[1]
Since private respondent felt affected adversely by the change in the work
schedule and discontinuance of the 30-minute paid on call lunch break, it filed on
behalf of its members a complaint with the Labor Arbiter for unfair labor practice,
discrimination and evasion of liability pursuant to the resolution of this Court in Sime
Darby International Tire Co., Inc. v. NLRC.[2]However, the Labor Arbiter dismissed the
complaint on the ground that the change in the work schedule and the elimination of
the 30-minute paid lunch break of the factory workers constituted a valid exercise of
management prerogative and that the new work schedule, break time and one-hour
lunch break did not have the effect of diminishing the benefits granted to factory
workers as the working time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would be justly enriched if
they continued to be paid during their lunch break even if they were no longer on call
or required to work during the break. He also ruled that the decision in the
earlier Sime Darby case[3] was not applicable to the instant case because the former
involved discrimination of certain employees who were not paid for their 30-minute
lunch break while the rest of the factory workers were paid; hence, this Court ordered
that the discriminated employees be similarly paid the additional compensation for
their lunch break.
Private respondent appealed to respondent National Labor Relations
Commission (NLRC) which sustained the Labor Arbiter and dismissed the
appeal.[4] However, upon motion for reconsideration by private respondent, the NLRC,
this time with two (2) new commissioners replacing those who earlier retired, reversed
its arlier decision of 20 April 1994 as well as the decision of the Labor Arbiter. [5] The
NLRC considered the decision of this Court in the Sime Darby case of 1990 as the
law of the case wherein petitioner was ordered to pay the money value of these
covered employees deprived of lunch and/or working time breaks. The public
respondent declared that the new work schedule deprived the employees of the
benefits of time-honored company practice of providing its employees a 30-minute
paid lunch break resulting in an unjust diminution of company privileges prohibited by
Art. 100 of the Labor Code, as amended. Hence, this petition alleging that public
respondent committed grave abuse of discretion amounting to lack or excess of
jurisdiction: (a) in ruling that petitioner committed unfair labor practice in the
implementation of the change in the work schedule of its employees from 7:45 a.m.
3:45 p.m. to 7:45 a.m. 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00
p.m.; (b) in holding that there was diminution of benefits when the 30-minute paid
lunch break was eliminated; (c) in failing to consider that in the earlier Sime
Darby case affirming the decision of the NLRC, petitioner was authorized to
discontinue the practice of having a 30-minute paid lunch break should it decide to do
so; and (d) in ignoring petitioners inherent management prerogative of determining
and fixing the work schedule of its employees which is expressly recognized in the
collective bargaining agreement between petitioner and private respondent.
The Office of the Solicitor General filed in lieu of comment a manifestation and
motion recommending that the petition be granted, alleging that the 14 August 1992
memorandum which contained the new work schedule was not discriminatory of the
union members nor did it constitute unfair labor practice on the part of petitioner.
We agree, hence, we sustain petitioner. The right to fix the work schedules of
the employees rests principally on their employer. In the instant case petitioner, as
the employer, cites as reason for the adjustment the efficient conduct of its business
operations and its improved production.[6] It rationalizes that while the old work
schedule included a 30-minute paid lunch break, the employees could be called upon
to do jobs during that period as they were on call. Even if denominated as lunch
break, this period could very well be considered as working time because the factory WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor
employees were required to work if necessary and were paid accordingly for Relations Commission dated 29 November 1994 is SET ASIDE and the decision of
working. With the new work schedule, the employees are now given a one-hour lunch the Labor Arbiter dated 26 November 1993 dismissing the complaint against
break without any interruption from their employer. For a full one-hour undisturbed petitioner for unfair labor practice is AFFIRMED.
lunch break, the employees can freely and effectively use this hour not only for eating
but also for their rest and comfort which are conducive to more efficiency and better
performance in their work. Since the employees are no longer required to work during
this one-hour lunch break, there is no more need for them to be compensated for this
period. We agree with the Labor Arbiter that the new work schedule fully complies
with the daily work period of eight (8) hours without violating the Labor
Code.[7] Besides, the new schedule applies to all employees in the factory similarly
situated whether they are union members or not.[8]
Consequently, it was grave abuse of discretion for public respondent to equate
the earlier Sime Darby case[9] with the facts obtaining in this case. That ruling in the
former case is not applicable here. The issue in that case involved the matter of
granting lunch breaks to certain employees while depriving the other employees of
such breaks. This Court affirmed in that case the NLRCs finding that such act of
management was discriminatory and constituted unfair labor practice.
The case before us does not pertain to any controversy involving discrimination
of employees but only the issue of whether the change of work schedule, which
management deems necessary to increase production, constitutes unfair labor
practice. As shown by the records, the change effected by management with regard
to working time is made to apply to all factory employees engaged in the same line of
work whether or not they are members of private respondent union. Hence, it cannot
be said that the new scheme adopted by management prejudices the right of private
respondent to self-organization.
Every business enterprise endeavors to increase its profits. In the process, it
may devise means to attain that goal. Even as the law is solicitous of the welfare of
the employees, it must also protect the right of an employer to exercise what are
clearly management prerogatives.[10] Thus, management is free to regulate, according
to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of
workers.[11] Further, management retains the prerogative, whenever exigencies of the
service so require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employers interest
and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, this Court will uphold such exercise. [12]
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every dispute will be
automatically decided in favor of labor. Management also has right which, as such,
are entitled to respect and enforcement in the interest of simple fair play. Although
this Court has inclined more often than not toward the worker and has upheld his
cause in his conflicts with the employer, such as favoritism has not blinded the Court
to the rule that justice is in every case for the deserving, to be dispensed in the light of
the established facts and the applicable law and doctrine. [13]
ALHAMBRA INDUSTRIES, INC., petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and KAPISANAN NG MGA
MANGGAGAWA SA ALHAMBRA (PAFLU), respondents.
Gamboa and Gamboa for petitioner.
Fernando A. Sambajon for respondent Court.
Atanacio E. Pacis and Narciso L. Santiago for respondent Union.
CAPISTRANO, J.:
In this appeal by certiorari from an order of respondent Court of Industrial Relations
dated October 28, 1963, thereafter affirmed by respondent Court en banc, petitioner
Alhambra Industries, Inc. seeks to set aside the aforesaid order and to compel the
respondent Court to hear and receive evidence on its manifestation and motion of
October 9, 1963.
The antecedents of this case go back to April 3, 1962, when respondent Court found
petitioner's predecessor, Alhambra Cigar and Cigarette Factory Co., guilty of unfair
labor practice and ordered the reinstatement by it or its successor, petitioner
Alhambra Industries, Inc. being such successor, to reinstate Emiliano Averilla,
Maglayon Pangan, Alfredo Roy, Ricardo Bernardino and Juliana Lapasaran to their
former positions or to substantially equivalent positions in such corporation. This
order was affirmed by the respondent Court en banc on May 26, 1962, and this Court
dismissed a petition for certiorari seeking its reversal in our resolution of July 24,
1962. Until now, however, there has been no such reinstatement.
The petition itself explains why. On July 6, 1962, the respondent Union, Kapisanan
Ng Mga Manggagawa Sa Alhambra (PAFLU) filed a motion for execution of said
order of April 3, 1962. An opposition was filed by petitioner's predecessor Alhambra
Cigar & Cigarette Manufacturing Co., on the ground that it had ceased to do business
since January 12, 1962 on account of the expiration of its corporate life. On May 30,
1963, respondent Court issued an order holding that while Alhambra Cigar &
Cigarette Manufacturing Co. could no longer be held liable, petitioner Alhambra
Industries, Inc. as successor, should be held liable for both the reinstatement and
back wages in accordance with the order of April 3, 1962. Not in conformity with the
above order, petitioner sought in a petition to have this Court review the order, but in
our resolution of September 10, 1963, we dismissed the petition for certiorari with
preliminary injunction.
It is against such a background that the motion of respondent Union for reinstatement
and to compute back wages filed on October 4, 1963 should be viewed. The final and
executory character of the order of May 30, 1963 was stressed therein. Five days
later, petitioner Alhambra Industries, Inc., as respondent, continued its stubborn
refusal to comply with such final and executory order by filing with respondent Court
two pleadings entitled Opposition to Motion for Reinstatement and to Compute
Backwages and Manifestation and Motion. The first would pray that the Court hold in
abeyance the consideration of the Union's motion for reinstatement, and the second
would seek a hearing to enable it to present evidence why it should be exempted
from such reinstatement and the payment of back wages. Its reason is set forth in its
petition before us. Thus:
On October 9, 1963, the herein petitioner filed a "Manifestation and Motion,"
a certified copy of which is hereto attached as Annex "L" hereof, wherein it
represented that it can reinstate only Juliana Lapasaran in a position
equivalent to the one she had at the Alhambra Cigar & Cigarette
Manufacturing Company, but cannot reinstate Alfredo Roy, Maglayon
Pangan, Emiliano Averilla and Ricardo Bernardino, for the reason that the
Alhambra Cigar & Cigarette Manufacturing Co. itself, and then the petitioner,
at the start of its operations, which was in January, 1962, made innovations
in some of the working organizations formerly under the Alhambra Cigar &
Cigarette Manufacturing Co., which affected their former positions by
abolishing them for legitimate business reasons as explained in said
pleading, Annex "L" hereof, and there are no substantially equivalent
positions for them to occupy, and praying that the Honorable Court conduct
hearings at which the petitioner will introduce evidence in support of these
allegations and that after such hearings, the petitioner be declared exempted
from reinstating and paying the back wages of the aforesaid employees.
On the above pleadings, respondent Court issued its order of October 28, 1963 which
is now on appeal before us. Its dispositive portion reads, thus:
Wherefore, the Motion for Reinstatement and to Compute Backwages is
hereby granted. Consequently, let a writ of execution for the reinstatement of
Messrs. Maglayon Pangan, Alfredo Roy, Emiliano Averilla, Ricardo
Bernardino and Juliana Lapasaran, be immediately issued, in accordance
with the Order of May 30, 1963. The Chief Examiner of the Court is hereby
ordered to proceed to the Alhambra Industries, Inc., to compute the back
wages and Christmas bonus due complainants under previous orders of the
court and thereafter to submit a report thereof.
The challenged order of respondent court narrated the previous incidents that have
transpired in this attempt of the Union to have the employees reinstated as well as
paid their back wages. Thus:
It will be recalled that upon finality of the original decision of this Court, after
the same was unanimously affirmed by the Court en banc, then by the
Supreme Court, the issue of execution was brought before this Court.
Respondents then claimed that the order of reinstatement with full back
wages cannot be executed and/or enforced against both the old Alhambra
Cigar and Cigarette Mfg. Co. and the new Alhambra Industries, Inc., the
former's corporate life having expired under the Corporation Law and the
latter, on ground of due process of law, it being not a party to the case.
Complainants cannot be reinstated, respondent maintained.
After due hearing and the presentation of evidence, both oral and
documentary, the Court ruled on May 30, 1963, that the Alhambra
Industries, Inc. is liable for the unfair labor practice committed by the
Alhambra Cigar and Cigarette Mfg. Co. and consequently should be
 responsible for the reinstatement and the back wages of the complainants
from January 13, 1962 up to their actual reinstatement. This was affirmed by
the Court en banc in its resolution of August 23, 1963 and by the Supreme
Court in its resolutions of September 10 and 28, 1963, denying respondents'
appeal by certiorari and the motion for reconsideration, respectively. Hence,
said order is now final and executory and the Court has no alternative, but to
execute the same, by ordering immediate reinstatement of complainants and
the computation of their back wages.
Respondent Court likewise justified its inability to grant the motion of petitioner and to
postpone further the execution of the final order of May 3, 1963 for reinstatement and
back wages. Thus:
This Court cannot now entertain the objection of respondent. It would
amount to reopening the issue of reinstatement which has already been
decided and is now closed and terminated. The Supreme Court ruled
in Rattan Art vs. Rattan Art Union, G.R. No. L-6466, May 21, 1954, that a
proceeding may be reopened only upon grounds coming into existence after
the order was rendered by the CIR, but not upon grounds which had already
been directly or impliedly litigated and decided by said court, nor upon
grounds available to the parties of the former proceedings and not availed of
by any of them. (Emphasis supplied.)
Clearly, from the Motion and Manifestation and the records of the case, the
grounds now raised by respondent against the reinstatement of the four
complainants were existing and available, even during the trial of the merits
of the case, and more so, at the time when the issue of reinstatement was
squarely under consideration by this Court. They could and should have
been raised during those times. It is rather too late now.
In this appeal from the above-mentioned order, petitioner would raise as the basic
issue: "May the Respondent Court, upon direct resort to it by an employer, validly
refuse to receive evidence on the allegation that the employees which it had ordered
to be reinstated, cannot be reinstated, because their former positions have been
abolished for bona fide reasons, and there are no substantially equivalent positions
for them to occupy, and so bypass the determination of this fact and arbitrarily
overrule this proposition.?"
Whatever merit such an issue may intrinsically possess, we are not called upon to
resolve it in this petition, as there is a finding of fact by respondent Court evident from
the above narration that the grounds raised by petitioner against such reinstatement
were already in existence and available even during the trial of the merits of the case
and, therefore, under the ruling in Rattan Art vs. Rattan Art Employees Union 1 may
no longer be availed of. It is now too well-settled to need any citation of authorities
that the findings of fact of respondent Court, if supported by substantial evidence, are
binding on us. As we held in a recent decision: 2"In the more familiar terminology, only
on a showing of clear and grave abuse of discretion are we justified in disturbing its
findings of fact. So it has been uniformly and uninterruptedly held from Manila Electric
Company vs. National Labor Union, a 1940 decision, the opinion being rendered by
Justice Laurel, to Philippine Educational Institution vs. MLQSEA Faculty Association,
decided late last year."
It follows then that the appealed order is in accordance with law and cannot be
disturbed. There is another consideration that likewise sustains the conclusion arrived
at by respondent Court. In the very same National Waterworks and Sewerage
Authority decision above-cited, as well as in the case of Sanchez vs. The Preserver
Shoe
Company, 3 we have stressed the importance of the principle of the law of the case,
especially in labor litigations. In the Sanchez case, we said the following: "It does not
admit of doubt that with reference to our final judgment in labor matters, which insofar
as the back wages due the aggrieved workingmen could require further actions from
respondent Court, the law of the case does not apply solely to what is embodied in
our decision but to its implementation carried out in fealty to what has been by us
decreed." Considering that the petition itself admits that as of April 3, 1962, the
predecessor company had already been found guilty of unfair labor practice and that
petitioner as successor company did try in vain, its petition with us having been
dismissed, to avoid the effects of such an order, this persistence in refusing to abide
by such a final judgment, in effect twice affirmed by us, would clearly show a
disregard of the principle of the law of the case.
We have another reason for not sustaining the appeal of petitioner. The basic theory
of the Industrial Peace Act is to recognize the right to self-organization to enable labor
unions to bargain collectively and to avoid unfair labor practices on the part of labor
and management in order to attain industrial democracy. The sooner then an inquiry
is made into alleged unfair labor practices and the sooner it is stopped, the better for
harmonious labor-management relations. To discourage each party from committing
such unfair labor practices, sanctions are provided for. Here, management was at
fault, and petitioner, as the successor, can be compelled to reinstate and to pay back
wages. That order dates back to April 3, 1962. That order until now has not been
complied with. If we reopen the case to allow petitioner to introduce evidence with
respondent Court to show why it has not complied with the order of reinstatement, we
shall in effect be rendering futile the rights of labor and frustrating the policies of the
Industrial Peace Act. Considering the circumstances disclosed, we cannot and should
not do so.
WHEREFORE, this petition for certiorari is denied, and the appealed order of October
28, 1963 of the Court of Industrial Relations, as well as its resolution en banc of
November 25, 1963 sustaining such order, is hereby affirmed. With costs against
petitioner.
BALMAR FARMS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND ASSOCIATED LABOR
UNIONS (ALU), respondent.
Rudy G. Agravante for petitioner.
PARAS, J.:
This is a petition for certiorari which seeks to reverse and set aside: (a) the
resolution * datedJuly 31, 1985 by the respondent commission in NLRC Case No.
1114-LR-XI-83 entitled "Associated Labor Unions (ALU) v. Balmar Farms, Inc.
(BALMAR)" which dismissed the petition for lack of merit and affirmed the decision of
the Labor Arbiter dated March 13, 1984, and (b) the resolution dated October 4, 1985
denying the motion for reconsideration.
Petitioner Balmar Farms, Inc. (BALMAR for short) is a corporation duly organized and
existing under and by virtue of the laws of the Philippines, engaged in the planting of
bananas with operation at Kapalong, Davao and address at 60 V. Mapa St., Davao
City; while private respondent Associated Labor Union (ALU for short) is a labor
organization duly registered with the Ministry of Labor and Employment (now
Department of Labor and Employment) with Regional Office at 96-B corner Roxas-
Artiaga Sts., Davao City (Rollo, pp. 5-6).
On October 27, 1982, Med-Arbiter Antonino G. Jolejole issued an order certifying the
ALU as the sole and exclusive bargaining representative of the rank and file workers
and employees of BALMAR, Kapalong, Davao del Norte, it appearing that in the
certification election held at the premises of the employer Balmar on October 19,
1982, the ALU obtained the majority of the votes cast (Rollo, p. 26).
Sometime in November, 1982, BALMAR received a copy of the letter dated
November 12, 1982 signed by Johnny Y. Luces in his capacity as President of the
BALMAR Employees Association, addressed to the Regional Director, Hon. Eugenio
Sagmit, Jr. The letter states that:
... after discussing this matter among ourselves, it was agreed by more than
a majority of all that we disregard ALU in representing us. We do not have
any CBA at present. We are in better position to negotiate directly with
management for our working conditions being aware of what are our basic
needs.
We are filing this with your Office so that you could help us in requesting
BALMAR FARMS to negotiate directly with us and not thru ALU. (Rollo, p.
44).
That on February 8, 1983, ALU sent a letter to BALMAR, attaching therewith their
proposals for collective bargaining agreement (Rollo, pp. 27-30).
On February 25, 1983, BALMAR made a reply to the effect that it can not favorably
act on their request for the reason, among others, that it has been furnished a copy of
the letter of Mr. Johnny Luces, president of the Balmar Farms Employees
Association, addressed to the Regional Director of the Ministry of Labor and
Employment (MOLE), about their "disaffiliation from ALU" (Rollo, p. 31).
In another letter dated March 1, 1983, ALU answered BALMAR's letter of February
25, 1983 and requested that it be recognized as the bargaining representative it being
certified by the MOLE as the sole and exclusive bargaining representative of
BALMAR's rank and file workers (Rollo, p. 32).
On March 10, 1983, BALMAR replied to ALU's letter of March 1, 1983, stating that the
management was requested by Balmar Farms Employees Association to negotiate
with them directly and not with ALU because ALU has been dis-authorized as the
agent of the BALMAR employees. BALMAR further contended that ALU has to
disprove the dis-authorization for only then can BALMAR negotiate with ALU (Rollo,
p. 33).
For alleged refusal to bargain, ALU filed a complaint for unfair labor practice and
damages against BALMAR docketed as NLRC Case No. 1114-LR-XI-83 (Rollo, pp.
22-24).
The parties were required by the Labor Arbiter to submit their position papers. ALU
filed its position paper dated May 18, 1983 (Rollo, pp. 34-38), while BALMAR filed its
position paper dated May 20, 1983 (Rollo, pp. 40-42).
On the basis of the position papers submitted by the parties, Labor Arbiter Potenciano
S. Canizares, Jr. rendered a decision dated March 13, 1984, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring the respondent Balmar Farms, Inc. guilty of the unfair labor
practice acts complained of;
2. Ordering the respondent Balmar Farms, Inc. to cease and desist from
further committing unfair labor practice acts; and
3. Ordering the respondent Balmar Farms, Inc. to bargain collectively in
good faith with the complainant Associated Labor Union.
The claim for damages is hereby dismissed for lack of merit. (Rollo, p. 49).
From the foregoing decision, BALMAR appealed to the National Labor Relations
Commission (NLRC) by filing a Memorandum on Appeal (Rollo, pp. 50-55).
On July 31, 1985, the NLRC rendered its questioned resolution, the dispositive part of
which reads:
WHEREFORE, premises considered, the appeal is as it is hereby
DISMISSED for obvious lack of merit and the appealed Decision affirmed en
toto.
SO ORDERED. (Rollo, pp. 19-20).
On September 4, 1985, BALMAR moved for the reconsideration of the resolution of
the NLRC (Rollo, pp. 57-59). And on October 4, 1985, the NLRC issued a resolution
denying the motion for reconsideration (Rollo, p. 21).
Hence, this petition.
The pivotal issue in this case is whether or not petitioner BALMAR is guilty of unfair
labor practice for refusing to bargain collectively with ALU.
The petition is devoid of merit.
The record shows that on October 27, 1982, Med-Arbiter Antonino G. Jolejole issued
an order certifying ALU as the sole and exclusive bargaining representative of the
rank and file workers and employees of BALMAR, it appearing that in the certification
election held at the premises of the employer BALMAR on October 19, 1982, ALU
obtained the majority of the votes cast.
The purpose of certification election is to give the employees true representation in
their collective bargaining with an employer (Confederation of Citizens Labor Union
(CCLU) v. Noriel, 116 SCRA 649 [1982]), because certification election is the most
democratic and expeditious method by which the laborers can freely determine the
union that shall act as their representative in their dealing with the establishment
where they are working (National Assocation of Free Trade Union v. Bureau of Labor
Relations, 161 SCRA 246 [1988]). It is the most effective way of determining which
labor organization can truly represent the working force (PLUM Federation of
Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]).
Employees (like the employees in the case at bar) have a constitutional right to
choose their own bargaining representative (Phil. Airlines Employees' Association
(PALEA) v. Ferrer-Calleja, 162 SCRA 246 [1988]) and it is only through certification
election that they can obtain this purpose.
In the bargaining process, the workers and employer shall be represented by their
exclusive bargaining representatives. The labor organization designated or selected
by the majority of employees in an appropriate collective bargaining unit, shall be the
exclusive representative of the employees in such unit for the purpose of collective
bargaining. In the case at bar, it is the ALU which is the exclusive bargaining
representative of BALMAR employees and as such it has the right and duty to
bargain collectively with BALMAR.
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
or employment including proposals for adjusting any grievance or questions arising
under such agreement if requested by either party but such duty does not compel any
party to agree to a proposal or to make any concession (Art. 252, Labor Code, as
amended).
Procedurally, ALU sent a letter to BALMAR, attaching therewith its proposals for
collective bargaining agreement. In reply, BALMAR refused to negotiate with ALU
allegedly because` it received a copy of a letter purportedly written on November 12,
1982 by one Johnny Luces, who claimed to be the president of Balmar Farms
Employees Association, informing the Labor Regional Director that more than a
majority of them would like to negotiate directly with their employer BALMAR. There is
no showing, however, that said letter was favorably acted upon, much less, is there
an order superseding the Med-Arbiter's order of October 27, 1982 certifying ALU as
the sole and exclusive bargaining representative of the rank and file workerks of
BALMAR.
BALMAR cannot also invoke good faith in refusing to negotiate with ALU, considering
that the latter has been certified as the exclusive bargaining representative of
BALMAR rank and file employees. As observed by the Solicitor General, BALMAR'S
pretense that majority of its rank and file employees disaffiliated simply because of a
letter it received to that effect, all the more sustains the finding of bad faith for it is not
for the petitioner BALMAR to question which group is the collective bargaining
representative of its rank and file employees.
Balmar's taking side with the rank and file employee who allegedly disaffiliated,
renders its stand on the matter highly suspicious (Rollo, pp. 76-77).
It can, therefore, be inferred that BALMAR's refusal to bargain collectively with ALU is
a clear act of unfair labor practice. Article 248 (Labor Code, as amended),
enumerates unfair labor practices committed by employers such as for them:
(g) To violate the duty to bargain collectively as prescribed by this Code;
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the
assailed resolution is AFFIRMED.
FRANCISCO SALUNGA, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS; SAN MIGUEL BREWERY, INC. and
MIGUEL NOEL; NATIONAL BREWERY & ALLIED INDUSTRIES LABOR UNION
OF THE PHILIPPINES (NABAILUP-PAFLU); JOHN DE CATILLO and CIPRIANO
CID, respondents.
C. Magat & Associates for petitioner.
Cipriano Cid & Associates and Ponce Enrile, S. Reyna, Montecillo & Belo for
respondents.
CONCEPCION, C.J.:
Appeal by petitioner Francisco Salunga from a resolution of the Court of Industrial
Relations, sitting en banc, dismissing unfair labor practice charges against the
National Brewery and Allied Industries Labor Union of the Philippines (PAFLU) —
hereinafter referred to as the Union — John de Castillo, Cipriano Cid, San Miguel
Brewery, Inc. — hereinafter referred to as the Company — and Miguel Noel.
Petitioner had, since 1948, been an employee of the Company, which, on October 2,
1959, entered with the Union, of which respondent John de Castillo is the president,
into a collective bargaining agreement, effective up to June 30, 1962. Section 3
thereof reads:
The company agrees to require as a condition of employment of those
workers covered by this agreement who either are members of the UNION
on the date of the signing of this agreement, or may join the UNION during
the effectivity of this agreement, that they shall not voluntarily resign from the
UNION earlier than thirty (30) days before the expiry date of this agreement
as provided in Article XIII hereof, provided, however, that nothing herein
contained shall be construed to require the company to enforce any sanction
whatsoever against any employee or worker who fails to retain his
membership in the UNION as hereinbefore stated, for any cause other than
voluntary resignation or non-payment of regular union dues on the part of
said employee or worker. (Exh. 4-A-Union.) .
Petitioner was a member of the Union since 1953. For reasons later to be stated, on
August 18, 1961, he tendered his resignation from the Union, which accepted it on
August 26, 1961, and transmitted it to the Company on August 29, 1961, with a
request for the immediate implementation of said section 3. The Company having
informed him that his aforementioned resignation would result in the termination of his
employment, in view of said section, petitioner wrote to the Union, on August 31,
1961, a letter withdrawing or revoking his resignation and advising the Union to
continue deducting his monthly union dues. He, moreover, furnished a copy of this
communication to the Company. The latter, in turn, notified the Union of the receipt of
said copy and that "in view thereof, we shall not take any action on this case and shall
consider Mr. Francisco Salunga still a member of your union and continue deducting
his union dues." On September 8, 1961, the Union told the Company that petitioner's
membership could not be reinstated and insisted on his separation from the service,
conformably with the stipulation above-quoted. The Company replied, on September
12, 1961, stating:
. . . We asked Mr. Salunga if he realized that by resigning from the Union he
would in effect be forfeiting his position in the company. When he answered
in the negative, we showed him a copy of our Collective Bargaining
Agreement and called his attention to Sec. 3, Art. II thereof. He then told us
that he did not realize that he would be losing his job if he were to resign
from the Union. We did not at any time ask or urge him to withdraw his
resignation; neither are we now asking or insisting that you readmit him into
your membership. We thought that informing him of the consequences of his
resignation from the Union, was the only humane thing to do under the
circumstances.
Nevertheless, if notwithstanding our foregoing clarification you still consider
him as having actually resigned from your organization, and you insist that
we dismiss him from the service in accordance with Sec. 3, Article II of our
agreement, we will have no alternative but to do so. (Exh. E)
In a letter to the Company, dated September 20, 1961, the Union reiterated its
request for implementation of said section 3, for which reason, on September 22,
1961, the Company notified petitioner that, in view of said letter and the
aforementioned section, "we regret we have to terminate your employment for cause.
You are, therefore, hereby notified of your dismissal from the service effective as of
the close of business hours, September 30, 1961."
Meanwhile, petitioner had sought the intervention of PAFLU's National President,
respondent Cipriano Cid, to which the Union was affiliated, for a review of the latter's
action. The PAFLU gave due course to petitioner's request for review and asked the
Company, on September 29, 1961, to defer his dismissal, for at least two (2) weeks,
so that its (PAFLU's) Executive Board could act on his appeal. On October 6, 1961,
respondent Cid advised petitioner that the PAFLU had found no ground to review the
action taken by the Union and that, on the expiration of the 15-day grace granted to
him by the Company, the decision thereof to terminate his services would take effect.
Thereupon, or on October 11, 1961, petitioner notified the PAFLU that he was
appealing to its supreme authority — the PAFLU National Convention — and
requested that action on his case be deferred until such time as the Convention shall
have acted on his appeal. A letter of the same date and tenor was sent, also, by the
petitioner to the Union. Furthermore, he asked the Company to maintain the status
quo, in the meantime. This notwithstanding, at the close of the business hours, on
October 15, 1961, petitioner was discharged from the employment of the Company,
through its assistant-secretary and vice-president, herein respondent Miguel Noel.
At petitioner's behest, on or about December 7, 1961, a prosecutor of the Court of
Industrial Relations commenced, therefore, the present proceedings, for unfair labor
practice, against the Union, its president, respondent John de Castillo, respondent
Cipriano Cid, as PAFLU president, the Company, and its aforementioned Vice-
President Miguel Noel. In due course, thereafter, the trial Judge rendered a decision
the dispositive part of which reads:
IN VIEW OF ALL THE FOREGOING, the San Miguel Brewery, Inc. and
Miguel Noel and National Brewery & Allied Industrial Labor Union of the
Philippines (PAFLU), John de Castillo, and Cipriano Cid, are hereby
declared guilty of unfair labor practices as charged, and ordered to cease
and desist from further committing such unfair labor practice acts
complained of; and as affirmative reliefs:
(a) The National Brewery & Allied Industries Labor Union of the Philippines
(PAFLU), John de Castillo and Cipriano Cid, their officers and agents, are
hereby directed to readmit and to continue the membership of Francisco
Salunga in the membership rolls of the union after paying all union dues,
with all the rights and privileges being enjoyed by bonafide members;
(b) The San Miguel Brewery, Inc., and Miguel Noel, their officers and agents
are hereby directed to immediately reinstate Francisco Salunga to his former
or substantially equivalent position with one-half back wages, without
prejudice, however, to his seniority and/or other rights and privileges; and
(c) Respondents Union and Company, their respective officers and agents,
are likewise directed to post two copies of this decision in conspicuous
places in their respective offices or plants for a period of one month,
furnishing this Court with certificate of compliance after the expiration of said
period.
On motion for reconsideration of the respondents, this decision was reversed by the
Court of Industrial Relations — sitting en banc with two (2) judges concurring in the
result and the trial judge dissenting — which dismissed the case. Hence, this appeal
by the petitioner.
The appeal is well taken, for, although petitioner had resigned from the Union and the
latter had accepted the resignation, the former had, soon later — upon learning that
his withdrawal from the Union would result in his separation from the Company, owing
to the closed-shop provision above referred to — revoked or withdrawn said
resignation, and the Union refused to consent thereto without any just cause therefor.
The Union had not only acted arbitrarily in not allowing petitioner to continue his
membership. The trial Judge found said refusal of the Union officers to be due to his
critical attitude towards certain measures taken or sanctioned by them. As set forth in
the decision of the trial Judge:
. . . Prior to August, 1961, he had been criticizing and objecting to what he
believed were illegal or irregular disbursements of union funds, i.e., allowing
Florencio Tirad, a union official, to receive six months advanced salaries
when Tirad went to the United States, which objection he openly manifested
in a meeting of the board of directors and stewards, but instead of receiving
favorable response, he (Salunga) was twitted and felt insulted by the
laughter of those present that he would be the next man to be sent to
America; second, granting Ricardo Garcia, union secretary, two months
advanced salaries when preparing for the bar examinations, which objection
he broached to union officer Efren Meneses; third, the union's additional
monthly expense for the salary of a counsel when the PAFLU, their mother
union is well staffed with a number of lawyers who could attend to and
handle their cases and other legal matters, and to which mother union the
NABAILUP has been paying a monthly assessment of more than P1,000.00;
and fourth, giving salary to Charles Mitschek who was dismissed by the
company but denying the same privilege to other similarly situated member-
employees. Salunga was later removed by the union from his position as
steward without his knowledge. It also appears that the power of attorney
executed in his favor by co-worker Alejandro Miranda for the collection of
Miranda's indebtedness of P60.00 to him (the latter has certain amount in
possession of the Union) was not honored by the union.1awphîl.nèt
xxx xxx xxx
The record is clear that feeling dejected by the inaction of the union officials
on his grievances and objections to what he believed were illegal
disbursements of union funds, coupled with the fact that he was later
removed from his position as a union steward without his knowledge, as well
as the fact that the union did not honor the power of attorney executed in his
favor by Alejandro Miranda, a co-worker, for the collection of Miranda's
indebtedness of P60.00 to him, he submitted his letter of resignation from
the union on August 18, 1961. It must be stated here that no evidence was
adduced by the respondent union to overcome complainant's testimonies
about his objections to the disbursements of union funds but only tried to
elicit from him, on cross examination, that the funds of the union are only
disbursed upon authority of the Executive Board of the union. . . .
It should be noted that the Court of Industrial Relations en banc did not reverse these
findings of fact or even question the accuracy thereof. What is more, the officers of
the Union have, in effect, confirmed the fact that their refusal to allow the withdrawal
of petitioner's resignation had been due to his aforementioned criticisms. Indeed said
officers tried to justify themselves by characterizing said criticisms as acts of
disloyalty to the Union, which, of course, is not true, not only because the criticism
assailed, not the Union, but certain acts of its officers, and, indirectly, the officers
themselves, but also because the constitution and by-laws of the Union explicitly
recognize the right of its members to give their views on "all transactions made by the
Union." As a consequence, the resolution appealed from cannot be affirmed without,
in effect, nullifying said right which, independently of the constitution and by-laws of
the Union, is part and parcel of the freedom of speech guaranteed in the Constitution
of our Republic, as a condition sine qua non to the sound growth and development of
labor organizations and democratic institutions.
Although, generally, a state may not compel ordinary voluntary associations to admit
thereto any given individual, because membership therein may be accorded or
withheld as a matter of privilege,1 the rule is qualified in respect of labor unions
holding a monopoly in the supply of labor, either in a given locality, or as regards a
particular employer with which it has a closed-shop agreement.2 The reason is that
. . . The closed shop and the union shop cause the admission requirements
of trade union to become affected with the public interest. Likewise, a closed
shop, a union shop, or maintenance of membership clauses cause the
administration of discipline by unions to be affected with the public interest.3
Consequently, it is well settled that such unions are not entitled to arbitrarily exclude
qualified applicants for membership, and a closed-shop provision would not justify the
employer in discharging, or a union in insisting upon the discharge of, an employee
whom the union thus refuses to admit to membership, without any reasonable ground
therefor.4 Needless to say, if said unions may be compelled to admit new members,
who have the requisite qualifications, with more reason may the law and the courts
exercise the coercive power when the employee involved is a long standing union
member, who, owing to provocations of union officers, was impelled to tender his
resignation, which he forthwith withdrew or revoked. Surely, he may, at least, invoke
the rights of those who seek admission for the first time, and can not arbitrarily he
denied readmission.
We cannot agree, however, with the finding of the trial Judge to the effect that the
Company was guilty of unfair labor practice. The Company was reluctant — if not
unwilling — to discharge the petitioner. When the Union first informed the Company
of petitioner's resignation and urged implementation of section 3 of the bargaining
contract, the Company advised petitioner of the provision thereof, thereby intimating
that he had to withdraw his resignation in order to keep his employment. Besides, the
Company notified the Union that it (the Company) would not take any action on the
case and would consider the petitioner, "still a member" of the Union. When the latter,
thereafter, insisted on petitioner's discharge, the Company still demurred and
explained it was not taking sides and that its stand was prompted merely by
"humane" considerations, springing from the belief that petitioner had resigned from
the Union without realizing its effect upon his employment. And, as the Union
reiterated its demand, the Company notified petitioner that it had no other alternative
but to terminate his employment, and dismissed him from the service, although with
"regret".
Under these circumstances, the Company was not "unfair" to the petitioner. On the
contrary, it did not merely show a commendable understanding of and sympathy for
his plight. It even tried to help him, although to such extent only as was consistent
with its obligation to refrain from interfering in purely internal affairs of the Union. At
the same time, the Company could not safely inquire into the motives of the Union
officers, in refusing to allow the petitioner to withdraw his resignation. Inasmuch as
the true motives were not manifest, without such inquiry, and petitioner had
concededly tendered his resignation of his own free will, the arbitrary nature of the
decision of said officers was not such as to be apparent and to justify the company in
regarding said decision unreasonable. Upon the other hand, the Company can not be
blamed for assuming the contrary, for petitioner had appealed to the National Officers
of the PAFLU and the latter had sustained the Union. The Company was justified in
presuming that the PAFLU had inquired into all relevant circumstances, including the
motives of the Union Officers.
In finding, this notwithstanding, that the Company is guilty of unfair labor practice, the
trial Judge seemed to have been unduly influenced by the fact that the former had
dismissed the petitioner despite his announced intention to appeal from the decision
of the Union and that of the Officers of PAFLU to its "Supreme authority", namely, the
PAFLU's "National Convention". In other words, said Judge felt that the Company
should have waited for the action of the national convention before issuing the notice
of dismissal.
There is no evidence, however, that petitioner had really brought this matter to said
"Convention". Much less is there any proof that the latter had sustained him and
reversed the PAFLU officers and the Union. Thus, the record does not show that
petitioner was prejudiced by the Company's failure to maintain the status quo, after
the Union had been sustained by said officers. In fact, petitioner did not even try to
establish that he had submitted to the Company — as he has not introduced in the
lower court — satisfactory proof that an appeal had really been taken by him to the
aforementioned Convention. In short, it was error to hold the Company guilty of unfair
labor practice.
Just the same, having been denied readmission into the Union and having been
dismissed from the service owing to an unfair labor practice on the part of the Union,
petitioner is entitled to reinstatement as member of the Union and to his former or
substantially equivalent position in the Company, without prejudice to his seniority
and/or rights and privileges, and with back pay, which back pay shall be borne
exclusively by the Union. In the exercise of its sound judgment and discretion, the
lower court may, however, take such measures as it may deem best, including the
power to authorize the Company to make deductions, for petitioner's benefit, from the
sums due to the Union, by way of check off or otherwise, with a view to executing this
decision, and, at the same time, effectuating the purposes of the Industrial Peace Act.
With this modification, the aforementioned decision of the trial Judge is hereby
affirmed in all other respects, and the appealed resolution of the Court of Industrial
Relations en banc is reversed, with costs against respondents, except the Company.
UNITED RESTAUROR'S EMPLOYEES & LABOR UNION-PAFLU, petitioner,
vs.
HON. GUILLERMO E. TORRES, as Presiding Judge of Branch VIII, Court of First
Instance of Rizal, 7th Judicial District, and the DELTA DEVELOPMENT
CORPORATION, respondents.
Leonardo C. Fernandez for petitioner.
Ponce Enrile Siguion Reyna, Montecillo and Belo for respondent Delta Development
Corporation.
SANCHEZ, J.:
Certiorari to annul the writ of preliminary injunction issued by the Court of First
Instance of Rizal ordering United Restauror's Employees & Labor Union-PAFLU
(Union, for short), its attorneys, representatives, agents and any person assisting it to
"REFRAIN from picketing on the property of plaintiff Delta Development Corporation
within the Makati Commercial Center."
The case arose from a verified complaint for injunction with prayer for preliminary
injunction filed by Delta Development Corporation (Delta), against the Union on
January 16, 1965.1 It is there averred that: Delta is the owner of the Makati
Commercial Center situated at Makati, Rizal. It is in the business of leasing portions
thereof. The center has its own thoroughfares, pedestrian lanes, parking areas for the
benefit of customers and clients of its lessees. On the other hand, the Union is an
association of some employees of Sulo Restaurant, a lessee of Delta. On January 8,
1965, the Union sought permission from Delta to conduct picketing activities "on the
private property of plaintiff surrounding Sulo Restaurant." On January 11, Delta
denied the request because it "may be held liable for any incident that may happen in
the picket lines, since the picketing would be conducted on the private property
owned by plaintiff." Despite the denial, the Union picketed on Delta's property
surrounding Sulo Restaurant on January 16 and continued to conduct said activity.
Such act of the Union is violative of the property rights of, and would cause great and
irreparable injury to, Delta. No employer-employee relationship exists between Delta
and the Union members. Delta then prayed that a writ of preliminary injunction issue
and that, after hearing, such injunction be made permanent.
As aforesaid, respondent judge issued a writ of preliminary injunction. The Union's
move to reconsider was denied on January 26, 1965.
On January 19, 1965, the Union filed a motion to dismiss on the ground, inter
alia, that the court had no jurisdiction to try the case.
Without awaiting resolution of its motion to dismiss the Union commenced in this
Court the present original petition for certiorari on September 18, 1965, claiming that
respondent judge acted without or in excess of his jurisdiction in issuing the injunctive
writ "as no restraining order could be validly issued against the right to picket as part
of freedom of speech"; that respondent judge issued the questioned writ "without the
benefit of a previous hearing"; that it was issued in violation of Section 9(d) of
Republic Act 875; that jurisdiction over the case rests with the Court of Industrial
Relations (CIR) "for the same involves acts of unfair labor practice under Sec. 4(a) of
Republic Act 875 in connection with Sec. 5(a) thereof"; and that there is no appeal nor
any plain, speedy and adequate remedy in the ordinary course of law.
On September 29, 1965, this Court issued a writ of preliminary injunction upon the
Union's P1,000.00-bond.
On October 12, 1965, Delta answered. It alleged, amongst others, that respondent
judge validly issued the injunctive writ in question because the same "never enjoined
petitioner from picketing against the Sulo-D & E, Inc. but only from doing their
picketing on the private property of respondent who is not in any way privy to the
relationship between Sulo-D & E, Inc. and petitioner"; that Republic Act 875 is not
applicable to the case involving as it does an action to protect Delta's property rights;
that it has no labor relation or dispute of any kind with the Union; and that the
injunctive writ was issued after due hearing on January 19, 1965. Delta asked that the
present petition be denied.
After the submission of the parties' memoranda in lieu of oral argument, Delta moved
to dismiss the proceeding at bar on the ground that it has become moot and
academic. It averred that the Union lost in the consent election conducted by the
Department of Labor on October 4, 1965 in CIR Cases 1455-MC and 1464-MC, and
thereby also lost its right to picket; and that in said election cases, a rival union —
Sulo Employees Labor Union (SELU, for short) was — certified by CIR as the
exclusive bargaining representative of all the employees of Sulo Restaurant pursuant
to CIR's order of December 23, 1965.
The Union opposed. It argued that the picketing was conducted on or about January
16, 1965, that is, around 8 months before the consent election on October 4, 1965;
and that the issues that triggered the Union's labor strike of January 16, 1965 are
entirely distinct and foreign to the issues in Cases 1455-MC and 1464-MC.
The petition must be dismissed. Really, the case before us has become moot and
academic.
When the Union struck and picketed on January 16, 1965, it might have been true
that the Union commanded a majority of Sulo's employees. Without need of
certification, it could, under such circumstances, conclude a collective bargaining
agreement with Sulo.2 But it is not disputed that on October 4, 1965, i.e., shortly after
this case was filed on September 18, 1965, a consent election was held. Not
controverted, too, is the fact that, in that consent election, SELU defeated the Union,
petitioner herein. Because of this, SELU was certified to the Sulo management as the
"collective bargaining representative of the employees ... for collective bargaining
purposes as regards wages, hours of work, rates of pay and/or such other terms and
conditions of employment allowed them by law." 3
The consent election, it should be noted, was ordered by CIR pursuant to the Union's
petition for direct certification docketed as Case 1455-MC and a similar petition for
certification filed by SELU docketed as Case 1464-MC. Verily, the Union can no
longer demand collective bargaining. For, it became the minority union. As matters
stand, said right properly belongs to SELU, which commands the majority. By law, the
right to be the exclusive representative of all the employees in an appropriate
collective bargaining unit is vested in the labor union "designated or selected" for
such purpose "by the majority of the employees" in the unit concerned. 4 SELU has
the right as well as the obligation to hear, voice out and seek remedies for the
grievances of all Sulo employees, including employees who are members of
petitioner Union, regarding the "rates of pay, wages, hours of employment, or other
conditions of employment."

Indeed, petitioner Union's concerted activities designed to be recognized as the

exclusive bargaining agent of Sulo employees must come to a halt. 5 Collective
bargaining cannot be the appropriate objective of petitioning Union's continuation of
their concerted activities. The record before us does not reveal any other legitimate
purpose. To allow said Union to continue picketing for the purpose of drawing the
employer to the collective bargaining table would obviously be to disregard the results
of the consent election. To further permit the Union's picketing activities would be to
flaunt at the will of the majority.

The outcome of a consent election cannot be rendered meaningless by a minority

group of employees who had themselves invoked the procedure to settle the dispute.
Those who voted in the consent election against the labor union that was eventually
certified are hidebound to the results thereof. Logic is with this view. By their very act
of participating in the election, they are deemed to have acquiesced to whatever is
the consequence of the election. As to those who did not participate in the election,
the accepted theory is that they "are presumed to assent to the expressed will of the
majority of those voting."6

Adherence to the methods laid down by statute for the settlement of industrial strife is
one way of achieving industrial peace; one such method is certification election. 7 It is
the intent and purpose of the law that this procedure, when adopted and availed of by
parties to labor controversies, should end industrial disputes, not continue
them.8 Pertinent is the following observation to which we fully concur: "Before an
election is held by the Board9 to determine which of two rival unions represents a
majority of the employees, one of the unions may call a strike and demand that the
employer bargain with it. A labor dispute will then exist. Nothing in the statute makes
it illegal for a minority to strike and thereby seek to obtain sufficient strength so as to
become the sole bargaining agent. But after the Board certifies the bargaining
representative, a strike by a minority union to compel an employer to bargain with it is
unlawful. No labor dispute can exist between a minority union and an employer in
such a case."10

Upon the law then, the Union's right to strike and consequently to picket ceased by its
defeat in the consent election. That election occurred during the pendency before this
Court of this original petition for certiorari lodged by the Union the thrust of which is to
challenge the power of the Court of First Instance to enjoin its picketing activities. The
Union may not continue to picket. The object of the case before us is lost.

WE, ACCORDINGLY, vote to dismiss the petition for certiorari as moot and
academic, and to dissolve the writ of preliminary injunction we heretofore issued
herein, for being functus oficio.
MANILA MANDARIN EMPLOYEES UNION, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and MELBA C.
BELONCIO, respondents.
GUTIERREZ, JR., J.:
This is a petition to review on certiorari the National Labor Relations Commission's
(NLRC) decision which modified the Labor Arbiter's decision and ordered the Manila
Mandarin Employees Union to pay the wages and fringe benefits of Melba C.
Beloncio from the time she was placed on forced leave until she is actually reinstated,
plus ten percent (10%) thereof as attorney's fees. Manila Mandarin Hotel was ordered
to reinstate Beloncio and to pay her whatever service charges may be due her during
that period, which amount would be held in escrow by the hotel.
The petition was filed on January 19, 1987. The private respondent filed her comment
on March 7, 1987 while the Solicitor General filed a comment on June 1, 1987
followed by the petitioner's reply on August 22, 1987. We treat the comment as
answer and decide the case on its merits.
The facts of the case are undisputed.
Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel
since 1976 and at the time of her dismissal, assistant head waitress at the hotel's
coffee shop, was expelled from the petitioner Manila Mandarin Employees Union for
acts allegedly inimical to the interests of the union. The union demanded the
dismissal from employment of Beloncio on the basis of the union security clause of
their collective bargaining agreement and the Hotel acceded by placing Beloncio on
forced leave effective August 10, 1984.
The union security clause of the collective bargaining agreement provides:
Section 2. Dismissals.
xxx xxx xxx
b) Members of the Union who cease to be such members and/or
who fail to maintain their membership in good standing therein by
reason of their resignation from the Union and/or by reason of their
expulsion from the Union in accordance with the Constitution and
By-Laws of the Union, for non-payment of union dues and other
assessment for organizing, joining or forming another labor
organization shall, upon written notice of such cessation of
membership or failure to maintain membership in the Union and
upon written demand to the company by the Union, be dismissed
from employment by the Company after complying with the
requisite due process requirement; ... (Emphasis supplied) (Rollo,
p. 114)
Two days before the effective date of her forced leave or on August 8, 1984, Beloncio
filed a complaint for unfair labor practice and illegal dismissal against herein
petitioner-union and Manila Mandarin Hotel Inc. before the NLRC, Arbitration Branch.
Petitioner-union filed a motion to dismiss on grounds that the complainant had no
cause of action against it and the NLRC had no jurisdiction over the subject matter of
the complaint.
This motion was denied by the Labor Arbiter.
After the hearings that ensued and the submission of the parties' respective position
papers, the Labor Arbiter held that the union was guilty of unfair labor practice when it
demanded the separation of Beloncio. The union was then ordered to pay all the
wages and fringe benefits due to Beloncio from the time she was on forced leave until
actual reinstatement, and to pay P30,000.00 as exemplary damages and P10,000.00
as attorney's fees. The charge against the hotel was dismissed.
The Union then appealed to the respondent NLRC which modified the Labor Arbiter's
decision as earlier stated.
A subsequent motion for reconsideration and a second motion for reconsideration
were denied.
Hence, this present petition.
The petitioner raises the following assignment of errors:
I
THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT
THE PRESENT CONTROVERSY INVOLVED INTRA-UNION
CONFLICTS AND THEREFOR IT HAS NO JURISDICTION OVER
THE SUBJECT-MATTER THEREOF.
II
THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING
PETITIONER LIABLE FOR THE PAYMENT OF PRIVATE
RESPONDENT'S SALARY AND FRINGE BENEFITS, AND
AWARD OF 10% ATTORNEY'S FEES, AFTER FINDING AS
UNMERITORIOUS HER PRETENDED CLAIMS OR COMPLAINTS
FOR UNFAIR LABOR PRACTICE, ILLEGAL DISMISSAL, AND
DAMAGES. (Rollo, pp. 6-9)
On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse
of discretion in the NLRC conclusion that the dispute is not purely intra-union but
involves an interpretation of the collective bargaining agreement (CBA) provisions
and whether or not there was an illegal dismissal. Under the CBA, membership in the
union may be lost through expulsion only if there is non-payment of dues or a
member organizes, joins, or forms another labor organization. The charge of
disloyalty against Beloncio arose from her emotional remark to a waitress who
happened to be a union steward, "Wala akong tiwala sa Union ninyo." The remark
was made in the course of a heated discussion regarding Beloncio's efforts to make a
lazy and recalcitrant waiter adopt a better attitude towards his work.
We agree with the Solicitor General when he noted that:
... The Labor Arbiter explained correctly that "(I)f the only question
is the legality of the expulsion of Beloncio from the Union
undoubtedly, the question is one cognizable by the BLR (Bureau of
Labor Relations). But, the question extended to the dismissal of
Beloncio or steps leading thereto. Necessarily, when the hotel
decides the recommended dismissal, its acts would be subject to
scrutiny. Particularly, it will be asked whether it violates or not the
existing CBA. Certainly, violations of the CBA would be unfair labor
practice."
Article 250 of the Labor Code provides the following:
Art. 250. Unfair labor practices of labor
organizations. — It shall be unfair labor practice
for a labor organization, its officers, agents or
representatives:
xxx xxx xxx
(b) To cause or attempt to cause an employer to
discriminate against an employee, including
discrimination against an employee with respect
to whom membership in such organization has
been denied or to terminate an employee on any
ground other than the usual terms and conditions
under which membership or continuation of
membership is made available to other members.
(Emphasis supplied)
Article 217 of the Labor Code also provides:
Art. 217. Jurisdiction of Labor Arbiters and the
Commission — (a) The Labor Arbiters shall have
the original and exclusive jurisdiction to hear and
decide ... the following cases involving all
workers, whether agricultural or nonagricultural;
(1) Unfair labor practice cases;
xxx xxx xxx
(b) The Commission shall have exclusive
appellate jurisdiction over all cases decided by
Labor Arbiters. (Rollo, pp. 155-157.)
The petitioner also questions the factual findings of the public respondent on the
reasons for Beloncio's dismissal and, especially, on the argument that she was on
forced leave; she was never dismissed; and not having worked, she deserved no pay.
The Court finds nothing in the records that indicates reversible error, much less grave
abuse of discretion, in the NLRC's findings of facts.
It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC,
which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect but at times even finality if such
findings are supported by substantial evidence. (Akay Printing Press vs. Minister of
Labor and Employment, 140 SCRA 381; Alba Patio de Makati vs. Alba Patio de
Makati Employees Association, 128 SCRA 253; Dangan vs. National Labor Relations
Commission, 127 SCRA 706; De la Concepcion vs. Mindanao Portland Cement
Corporation, 127 SCRA 647).
The petitioner now questions the decision of the National Labor Relations
Commission ordering the reinstatement of the private respondent and directing the
Union to pay the wages and fringe benefits which she failed to receive as a result of
her forced leave and to pay attorney's fees.
We find no error in the questioned decision.
The Hotel would not have compelled Beloncio to go on forced leave were it not for the
union's insistence and demand to the extent that because of the failure of the hotel to
dismiss Beloncio as requested, the union filed a notice of strike with the Ministry of
Labor and Employment on August 17, 1984 on the issue of unfair labor practice. The
hotel was then compelled to put Beloncio on forced leave and to stop payment of her
salary from September 1, 1984.
Furthermore, as provided for in the collective bargaining agreement between the
petitioner-the Union and the Manila Mandarin Hotel "the Union shall hold the
Company free and blameless from any and all liabilities that may arise" should the
employee question the dismissal, as has happened in the case at bar.
It is natural for a union to desire that all workers in a particular company should be its
dues-paying members. Since it would be difficult to insure 100 percent membership
on a purely voluntary basis and practically impossible that such total membership
would continuously be maintained purely on the merits of belonging to the union, the
labor movement has evolved the system whereby the employer is asked, on the
strength of collective action, to enter into what are now familiarly known as "union
security" agreements.

The collective bargaining agreement in this case contains a union security clause — a
closed-shop agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire

only members of the contracting union who must continue to remain members in
good standing to keep their jobs. It is "the most prized achievement of unionism." It
adds membership and compulsory dues. By holding out to loyal members a promise
of employment in the closed-shop, it welds group solidarity. (National Labor Union vs.
Aguinaldo's Echague, Inc., 97 Phil. 184). It is a very effective form of union security
agreement.

This Court has held that a closed-shop is a valid form of union security, and such a
provision in a collective bargaining agreement is not a restriction of the right of
freedom of association guaranteed by the Constitution. (Lirag Textile Mills, Inc. vs.
Blanco, 109 SCRA 87; Manalang vs. Artex Development Company, Inc., 21 SCRA
561).

The Court stresses, however, that union security clauses are also governed by law
and by principles of justice, fair play, and legality. Union security clauses cannot be
used by union officials against an employer, much less their own members, except
with a high sense of responsibility, fairness, prudence, and judiciousness.

A union member may not be expelled from her union, and consequently from her job,
for personal or impetuous reasons or for causes foreign to the closed-shop
agreement and in a manner characterized by arbitrariness and whimsicality.

This is particularly true in this case where Ms. Beloncio was trying her best to make a
hotel bus boy do his work promptly and courteously so as to serve hotel customers in
the coffee shop expeditiously and cheerfully. Union membership does not entitle
waiters, janitors, and other workers to be sloppy in their work, inattentive to
customers, and disrespectful to supervisors. The Union should have disciplined its
erring and troublesome members instead of causing so much hardship to a member
who was only doing her work for the best interests of the employer, all its employees,
and the general public whom they serve.

WHEREFORE, the petition is hereby DISMISSED. The questioned decision of the

National Labor Relations Commission is AFFIRMED. Costs against the petitioner.
GOLD CITY INTEGRATED PORT SERVICE, INC. (INPORT), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fifth Division) ADELO EBUNA,
EMMANUEL VALMORIDA, RODOLFO PEREZ, ROGER ZAGADO, MARCOS
GANZAN, AND REY VALLE, (WILFREDO DAHAN, ROGELIO VILLAFUERTE,
WILFREDO AMPER, RICARDO ABA, YOLITO AMBUS, FIDEL CALIO, VICENTE
CAHATOL, SOTECO CUENCA, NICOLAS DALAGUAN, BALBINO FAJARDO,
ROLANDO JAMILA, RICARDO LAURETO, RUDY LAURETO, QUIRICO LEJANIO,
OSCAR LAPINIG, FELIPE LAURETE, JESUSTUDY OMISOL, ZOSIMO OMISOL,
PEDRO SUAREZ, SATURNINO SISIBAN and MANUEL YANEZ), respondents.
G.R. No. 103599 July 6, 1995
ADELO EBUNA, WILFREDO DAHAN, RICARDO LAURETO, REY VALLE,
VICENTE CAHATOL, MARCOS GANZAN, RODOLFO PEREZ, ROEL SAA,
ROGELIO VILLAFUERTE, MANUEL YANEZ, WILFREDO AMPER, QUIRECO
LEJANO, EMMANUEL VALMORIA, ROLANDO JAMILLA, NICOLAS DALAGUAN,
BALBINO FAJARDO, PEDRO SUAREZ, ELPIDIO ESTROGA, RUBEN PAJO,
JESUSTODY OMISOL, RICARDO ABA, FIDEL CALIO, SATURNINO SESYBAN,
RUDY LAURETO, OSCAR LAPINIG, FELIPE LAURENTE, ROGER ZAGADO,
SOTECO CUENCA, FIDEL ESLIT, ZOSIMO OMISOL, ANGEL BERNIDO, and
MICHAEL YAGOTYOT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and GOLD CITY
INTEGRATED PORT SERVICES, INC. (INPORT), respondents.
ROMERO, J.:
Should separation pay and backwages be awarded by public respondent NLRC to
participants of an illegal strike? This is the core issue to be decided in these two
petitions.
Gold City Integrated Port Service, Inc. (INPORT) filed a petition for certiorari against
the National Labor Relations Commission (NLRC) assailing the latter's decision in
"Gold City Integrated Port Services, Inc. v. Adelo Ebuna, et al." (NLRC RAB X Case
No. 5-0405-85) with twenty-seven private respondents (G.R. No. 103599).1 This
petition has been consolidated with G.R. No. 103599 where the petitioners are the
private respondents in instant case and the private respondent is INPORT. For the
sake of clarity, INPORT shall be denominated in the case at bench as the petitioner
and the employees as private respondents.
Instant case arose from the following facts:
Early in the morning of April 30, 1985, petitioner's employees stopped working and
gathered in a mass action to express their grievances regarding wages, thirteenth
month pay and hazard pay. Said employees were all members of the Macajalar Labor
Union — Federation of Free Workers (MLU-FFW) with whom petitioner had an
existing collective bargaining agreement.
Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan
de Oro. The strike paralyzed operations at said port.
On the same morning, the strikers filed individual notices of strike ("Kaugalingon nga
Declarasyon sa Pag-Welga") with the then Ministry of Labor and Employment.
With the failure of conciliation conferences between petitioner and the strikers,
INPORT filed a complaint before the Labor Arbiter for Illegal Strike with prayer for a
restraining order/preliminary injunction.
On May 7, 1985, the National Labor Relations Commission issued a temporary
restraining order. Thereafter, majority of the strikers returned to work, leaving herein
private respondents who continued their protest.2
Counsel for private respondents filed a manifestation that petitioner required prior
screening conducted by the MLU-FFW before the remaining strikers could be
accepted back to work.
Meanwhile, counsel for the Macajalar Labor Union (MLU-FFW) filed a "Motion to Drop
Most of the Party Respondents From the Above Entitled Case." The 278 employees
on whose behalf the motion was filed, claimed that they were duped or tricked into
signing the individual notices of strike. After discovering this deception and verifying
that the strike was staged by a minority of the union officers and members and
without the approval of, or consultation with, majority of the union members, they
immediately withdrew their notice of strike and returned to work.
The petitioner INPORT, not having interposed any objection, the Labor Arbiter, in his
decision dated July 23, 1985, granted their prayer to be excluded as respondents in
the complaint for illegal strike. Moreover, petitioner's complaint was directed against
the 31 respondents who did not return to work and continued with the strike.
For not having complied with the formal requirements in Article 264 of the Labor
Code,3 the strike staged by petitioner's workers on April 30, 1985 was found by the
Labor Arbiter to be illegal.4 The workers who participated in the illegal strike did not,
however, lose their employment, since there was no evidence that they participated in
illegal acts. After noting that petitioner accepted the other striking employees back to
work, the Labor Arbiter held that the private respondents should similarly be allowed
to return to work without having to undergo the required screening to be undertaken
by their union (MLU-FFW).
As regards the six private respondents who were union officers, the Labor Arbiter
ruled that they could not have possibly been "duped or tricked" into signing the strike
notice for they were active participants in the conciliation meetings and were thus fully
aware of what was going on. Hence, said union officers should be accepted back to
work after seeking reconsideration from herein petitioner. 5
The dispositive portion of the decision reads:
IN VIEW OF THE FOREGOING, it is hereby ordered that the strike
undertaken by the officers and majority union members of Macajalar Labor
Union-FFW is ILLEGAL contrary to Article 264 of the Labor Code, as
amended. Our conclusion on the employment status of the illegal strikers is
subject to our discussion above.6
Both petitioner and private respondents filed motions for reconsideration, which public
respondent NLRC treated as appeals.7
On January 14, 1991, the NLRC affirmed with modification 8 the Arbiter's decision. It
held that the concerted action by the workers was more of a "protest action" than a
strike. Private respondents, including the six union officers, should also be allowed to
work unconditionally to avoid discrimination. However, in view of the strained relations
between the parties, separation pay was awarded in lieu of reinstatement. The
decretal portion of the Resolution reads:
WHEREFORE, the decision appealed from is Affirmed with modification in
accordance with the foregoing resolution. Complainant INPORT is hereby
ordered, in lieu of reinstatement, to pay respondents the equivalent of twelve
(12) months salaries each as separation pay. Complainant is further ordered
to pay respondents two (2) years backwages based on their last salaries,
without qualification or deduction. The appeal of complainant INPORT
is Dismissed for lack of merit.9
Upon petitioner's motion for reconsideration, public respondent modified the above
resolution on December 12, 1991. 10
The Commission ruled that since private respondents were not actually terminated
from service, there was no basis for reinstatement. However, it awarded six months'
salary as separation pay or financial assistance in the nature of "equitable relief." The
award for backwages was also deleted for lack of factual and legal basis. In lieu of
backwages, compensation equivalent to P1,000.00 was given.
The dispositive portion of the assailed Resolution reads:
WHEREFORE, the resolution of January 14, 1991 is Modified reducing the
award for separation pay to six (6) months each in favor of respondents,
inclusive of lawful benefits as well as those granted under the CBA, if any,
based on the latest salary of respondents, as and by way of financial
assistance while the award for backwages is Deleted and Set Aside. In lieu
thereof, respondents are granted compensation for their sudden loss of
employment in the sum of P1,000.00 each. The motion of respondents to
implead PPA as third-party respondent is Noted. Except for this modification
the rest of the decision sought to be reconsidered shall stand. 11
In the instant petitions for certiorari, petitioner alleges that public respondent
Commission committed grave abuse of discretion in awarding private respondents
separation pay and backwages despite the declaration that the strike was illegal.
On the other hand, private respondents, in their petition, assail the reduction of
separation pay and deletion of backwages by the NLRC as constituting grave abuse
of discretion.
They also allege that the Resolution of January 14, 1991 could not be reconsidered
after the unreasonable length of time of eleven months.
Before proceeding with the principal issues raised by the parties, it is necessary to
clarify public respondent's statements concerning the strike staged by INPORT's
employees.
In its resolution dated January 14, 1991, the NLRC held that the facts prevailing in the
case at bench require a relaxation of the rule that the formal requisites for a
declaration of a strike are mandatory. Furthermore, what the employees engaged in
was more of a spontaneous protest action than a strike. 12
Nevertheless, the Commission affirmed the Labor Arbiter's decision which declared
the strike illegal.
A strike, considered as the most effective weapon of labor, 13 is defined as any
temporary stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute. 14 A labor dispute includes any controversy or matter
concerning terms or conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether or not the disputants stand in the
proximate relation of employers and employees. 15
Private respondents and their co-workers stopped working and held the mass action
on April 30, 1985 to press for their wages and other benefits. What transpired then
was clearly a strike, for the cessation of work by concerted action resulted from a
labor dispute.
The complaint before the Labor Arbiter involved the legality of said strike. The Arbiter
correctly ruled that the strike was illegal for failure to comply with the requirements of
Article 264 (now Article 263) paragraphs (c) and (f) of the Labor Code. 16
The individual notices of strike filed by the workers did not conform to the notice
required by the law to be filed since they were represented by a union (MLU-FFW)
which even had an existing collective bargaining agreement with INPORT.
Neither did the striking workers observe the strike vote by secret ballot, cooling-off
period and reporting requirements.
As we stated in the case of National Federation of Sugar Workers v. Ovejera, 17 the
language of the law leaves no room for doubt that the cooling-off period and the
seven-day strike ban after the strike-vote report were intended to be mandatory. 18
Article 265 of the Labor Code reads, inter alia:
(i)t SHALL be unlawful for any labor organization . . . to declare a strike . . .
without first having filed the notice required in the preceding Article or
without the necessary strike vote first having been obtained and reported to
the Ministry. (Emphasis ours)
In explaining the above provision, we said:
In requiring a strike notice and a cooling-off period, the avowed
intent of the law is to provide an opportunity for mediation and
conciliation. It thus directs the MOLE to exert all efforts at mediation
and conciliation to effect a voluntary settlement' during the cooling-
off period. . . .
xxx xxx xxx
The cooling-off period and the 7-day strike ban after the filing of a
strike-vote report, as prescribed in Art. 264 of the Labor Code, are
reasonable restrictions and their imposition is essential to attain the
legitimate policy objectives embodied in the law. We hold that they
constitute a valid exercise of the police power of the state. 19
From the foregoing, it is patent that the strike on April 30, 1985 was illegal
for failure to comply with the requirements of the law.
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of
the Labor Code, make a distinction between workers and union officers who
participate therein.
A 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 their employment status. 20 An
ordinary striking worker cannot be terminated for mere participation in an
illegal strike. There must be proof that he committed illegal acts during a
strike. A union officer, on the other hand, may be terminated from work when
he knowingly participates in an illegal strike, and like other workers, when he
commits an illegal act during a strike.
In the case at bench, INPORT accepted the majority of the striking workers,
including union officers, back to work. Private respondents were left to
continue with the strike after they refused to submit to the "screening"
required by the company. 21
The question to be resolved now is what these remaining strikers,
considering the circumstances of the case, are entitled to receive under the
law, if any.
Are they entitled, as they claim, to reinstatement or separation pay and
backwages?
In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the
remaining workers as well as to accept the remaining union officers after the
latter sought reconsideration from INPORT. 22
The NLRC on January 14, 1991, modified the above decision by ordering
INPORT to pay private respondents the equivalent of twelve months in
salary as separation pay in lieu of reinstatement and two years'
backwages. 23
On reconsideration, public respondent modified its original award and
reduced the separation pay to six months, deleted the award for backwages
and instead awarded P1,000.00 as compensation for their sudden loss of
employment. 24
Under the law, an employee is entitled to reinstatement and to his full
backwages when he is unjustly dismissed. 25
Reinstatement means restoration to a state or condition from which one had
been removed or separated. Reinstatement and backwages are separate
and distinct reliefs given to an illegally dismissed employee. 26
Separation pay is awarded when reinstatement is not possible, due, for
instance, to strained relations between employer and employee.
It is also given as a form of financial assistance when a worker is dismissed
in cases such as the installation of labor saving devices, redundancy,
retrenchment to prevent losses, closing or cessation of operation of the
establishment, or in case the employee was found to have been suffering
from a disease such that his continued employment is prohibited by law. 27
Separation pay is a statutory right defined as the amount that an employee
receives at the time of his severance from the service and is designed to
provide the employee with the wherewithal during the period that he is
looking for another employment. 28 It is oriented towards the immediate
future, the transitional period the dismissed employee must undergo before
locating a replacement job. 29
Hence, an employee dismissed for causes other than those cited above is
not entitled to separation pay. 30 Well-settled is it that separation pay shall be
allowed only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral
character. 31
Backwages, on the other hand, is a form of relief that restores the income
that was lost by reason of unlawful dismissal. 32
It is clear from the foregoing summary of legal provisions and jurisprudence
that there must generally be unjust or illegal dismissal from work, before
reinstatement and backwages may be granted. And in cases where
reinstatement is not possible or when dismissal is due to valid causes,
separation pay may be granted.
Private respondents contend that they were terminated for failure to submit
to the controversial "screening" requirement.
Public respondent Commission took the opposite view and held:
As the evidence on record will show, respondents were not actually
terminated from the service. They were merely made to submit to a
screening committee as a prerequisite for readmission to work.
While this condition was found not wholly justified, the fact remains
that respondents who are resistant to such procedure are partly
responsible for the delay in their readmission back to work. Thus,
We find justifiable basis in further modifying our resolution of
January 14, 1991 in accordance with the equities of the case.
We shall therefore recall the award for backwages for lack of
factual and legal basis. The award for separation pay shall likewise
(be) reasonably reduced. Normally, severance benefit is granted as
an alternative remedy to reinstatement. And since there is no
dismissal to speak of, there is no basis for awarding reinstatement
as a legal remedy. In lieu thereof, We shall grant herein
respondents separation pay as and by way of financial assistance
in the nature of an "equitable relief". 33
We find that private respondents were indeed dismissed when INPORT
refused to accept them back to work after the former refused to submit to the
"screening" process.
Applying the law (Article 264 of the Labor Code) which makes a distinction,
we differentiate between the union members and the union officers among
private respondents in granting the reliefs prayed for.
Under Article 264 of the Labor Code, a worker merely participating in an
illegal strike may not be terminated from his employment. It is only when he
commits illegal acts during a strike that he may be declared to have lost his
employment status. Since there appears no proof that these union members
committed illegal acts during the strike, they cannot be dismissed. The
striking union members among private respondents are thus entitled to
reinstatement, there being no just cause for their dismissal.
However, considering that a decade has already lapsed from the time the
disputed strike occurred, we find that to award separation pay in lieu of
reinstatement would be more practical and appropriate.
No backwages will be awarded to private respondent-union members as a
penalty for their participation in the illegal strike. Their continued participation
in said strike, even after most of their co-workers had returned to work, can
hardly be rewarded by such an award.
The fate of private respondent-union officers is different. Their insistence on
unconditional reinstatement or separation pay and backwages is
unwarranted and unjustified. For knowingly participating in an illegal strike,
the law mandates that a union officer may be terminated from
employment. 34
Notwithstanding the fact that INPORT previously accepted other union
officers and that the screening required by it was uncalled for, still it cannot
be gainsaid that it possessed the right and prerogative to terminate the union
officers from service. The law, in using the word may, grants the employer
the option of declaring a union officer who participated in an illegal strike as
having lost his employment. 35
Moreover, an illegal strike which, more often than not, brings about
unnecessary economic disruption and chaos in the workplace should not be
countenanced by a relaxation of the sanctions prescribed by law.
The union officers are, therefore, not entitled to any relief.
However, the above disquisition is now considered moot and academic and
cannot be effected in view of a manifestation filed by INPORT dated May 15,
1987. 36 In said Manifestation, it attached a Certification by the President of
the Macajalar Labor Union (MLU-FFW) to the effect that the private
respondents/remaining strikers have ceased to be members of said union.
The MLU-FFW had an existing collective bargaining agreement with
INPORT containing a union security clause. Article 1, Section 2(b) of the
CBA provides:
The corporation shall discharge, dismiss or terminate any employee
who may be a member of the Union but loses his good standing
with the Union and or corporation, upon proper notice of such fact
made by the latter; provided, however, . . . after they shall have
received the regular appointment as a condition for his continued
employment with the corporation. . . . 37
Since private respondents (union members) are no longer members of the
MLU, they cannot be reinstated. In lieu of reinstatement, which was a proper
remedy before May 1987 when they were dismissed from the union, we
award them separation pay. We find that to award one month salary for
every year of service until 1985, after April of which year they no longer
formed part of INPORT's productive work force partly through their own fault,
is a fair settlement.

Finally, there is no merit in INPORT's statement that a Resolution of the

NLRC cannot be modified upon reconsideration after the lapse of an
unreasonable period of time. Under the present circumstances, a period of
eleven months is not an unreasonable length of time. The Resolution of the
public respondent dated January 14, 1991 did not acquire finality in view of
the timely filing of a motion for reconsideration. Hence, the Commission's
modified Resolution issued on December 12, 1991 is valid and in
accordance with law.

In sum, reinstatement and backwages or, if no longer feasible, separation

pay, can only be granted if sufficient bases exist under the law, particularly
after a showing of illegal dismissal. However, while the union members may
thus be entitled under the law to be reinstated or to receive separation pay,
their expulsion from the union in accordance with the collective bargaining
agreement renders the same impossible.

The NLRC's award of separation pay as "equitable relief" and P1,000.00 as

compensation should be deleted, these being incompatible with our findings
detailed above.

WHEREFORE, from the foregoing premises, the petition in G.R. No. 103560
("Gold City Integrated Port Service Inc. v. National Labor Relations
Commission, et al.") is GRANTED. One month salary for each year of
service until 1985 is awarded to private respondents who were not union
officers as separation pay. The petition in G.R. No. 103599 ("Adelo Ebuna,
et al. v. National Labor Relations Commission, et al.") is DISMISSED for lack
of merit. No costs.
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, JOSE ERAD,
FERNANDO HERNANDO, EDDIE ESTRELLA, CIRILO DAYAG, EDUARDO
POQUITA, CARLITO PEPITO, RENE ARAO, JUANITO GAHUM, EMILIANO
MAGNO, PERLITO LISONDRA, GREGORIO ALBARAN, ABRAHAM BAYLON,
DIONESIO TRUCIO, TOMAS BASCO AND ROSARIO SINDAY, pertitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION & DEVELOPMENT
CORPORATION, respondents.
G.R. Nos. 95494-97 September 7, 1995
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND CADECO ARGO
DEVELOPMENT PHILS., INC. respondents.
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND LAPANDAY
AGRICULTURAL & DEVELOPMENT CORPORATION, respondents.
G.R. Nos. 95494-97 September 7, 1995
LAPANDAY WORKERS UNION, TOMAS N. BASCO, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND LAPANDAY
AGRICULTURAL & DEVELOPMENT CORPORATION, respondents.
PUNO, J.:
Petitioner Lapanday Agricultural Workers' Union (Union for brevity) and petitioners-
workers of Lapanday Agricultural and Development Corporation and CADECO Agro
Development Philippines, Inc., seek to reverse the consolidated Decision dated
August 29, 1990, 1rendered by public respondent National Labor Relations
Commision, declaring their strike illegal and ordering the dismissal of their leaders.
The background of the case:
Private respondents are sister companies engaged in the production of bananas.
Their agricultural establishments are located in Davao City.
On the other hand, petitioner Lapanday Workers' Union (Union) is the duly certified
bargaining agent of the rank and file employees of private respondents. The Union is
affiliated with the KMU-ANGLO. The other petitioners are all members of the Union.
The records show that petitioner Union has a collective bargaining agreement with
private respondents, covering the period from December 5, 1985 to November 30,
1988. A few months before the expiration of their CBA, private respondents initiated
certain management policies which disrupted the relationship of the parties.
First, on August 1, 1988, private respondents contracted Philippine Eagle Protectors
and Security Agency, Inc., to provide security services for their business premises
located in Lapanday, Bandug, Callawa, Davao City, and Guising, Davao Del Sur.
Their contract also called for the protection of the lives and limbs of private
respondents' officers, employees and guests within company premises. The Union
branded the security guards posted within the company premises as private
respondents' "goons" and "special forces." It also accused the guards of intimidating
and harassing their members.
Second, private respondents conducted seminars on Human Development and
Industrial Relations (HDIR) for their managerial and supervisory employees and, later,
the rank-and-filers, to promote their social education and economic growth. Among
the topics discussed in the seminar were the mission statement of the company,
corporate values, and the Philippine political spectrum. The Union claimed that the
module on the Philippine political spectrum lumped the ANGLO (Alliance of
Nationalist and Genuine Labor Organization), with other outlawed labor organizations
such as the National Democratic Front or other leftist groups.
These issues were discussed during a labor-management meeting held on August 2,
1988. The labor group was represented by the Union, through its President, petitioner
Arquilao Bacolod, and its legal counsel. After private respondents explained the
issues, the Union agreed to allow its members to attend the HDIR seminar for the
rank-and-filers. Nevertheless, on August 19 and 20, the Union directed its members
not to attend the seminars scheduled on said dates. Earlier on, or on August 6, 1988,
the Union, led by petitioners Arquilao Bacolod and Rene Arao, picketed the premises
of the Philippine Eagle Protectors to show their displeasure on the hiring of the
guards.
Worse still, the Union filed on August 25, 1988, a Notice of Strike with the National
Conciliation and Mediation Board (NCMB). It accused the company of unfair labor
practices consisting of coercion of employees, intimidation of union members and
union-busting.2 These were the same issues raised by the Union during the August 2,
1988 labor-management meeting.
On August 29, 1988, the NCMB called a conciliation conference. The conference
yielded the following agreement:
(1) Union officers, including the officials of KMU-ANGLO, and the Executive Director
of the NCMB would attend the HDIR seminar on September 5, 1988; and
(2) A committee shall convene on September 10, 1989, to establish guidelines
governing the guards.
The Union officials did attend the September 5, 1988 seminar. While they no longer
objected to the continuation of the seminar, they reiterated their demand for the
deletion of the discussion pertaining to the KMU-ANGLO.
With the apparent settlement of their differences, private respondents notified the
NCMB that there were no more bases for the notice of strike.
An unfortunate event brake the peace of the parties. On September 8, 1988, Danilo
Martinez, a member of the Board of Directors of the Union, was gunned down in his
house in the presence of his wife and children. The gunman was later identified as
Eledio Samson, an alleged member of the new security forces of private respondents.
On September 9, 1988, the day after the killing, most of the members of the Union
refused to report for work. They returned to work the following day but they did not
comply with the "quota system" adopted by the management to bolster production
output. Allegedly, the Union instructed the workers to reduce their production to thirty
per cent (30%). Private respondents charged the Union with economic sabotage
through slowdown.
On September 14, 1988, Private respondents filed separate charges against the
Union and its members for illegal strike, unfair labor practice and damages, with
prayer for injunction. These cases were docketed as Case Nos. RAB-11-09-00612-
888 and RAB No. 11-09-00613-88 before Labor Arbiter Antonio Villanueva.
On September 17, 1988, petitioners skipped work to pay their last respect to the slain
Danilo Martinez who was laid to rest. Again, on September 23, 1988, petitioners did
not report for work. Instead, they proceeded to private respondents' office at Lanang,
carrying placards and posters which called for the removal of the security guards, the
ouster of certain management officials, and the approval of their mass leave
application. Their mass action did not succeed.
In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor
Rodrigo Duterte intervened. Dialogues were held on September 27 and 29, 1988 at
the City Mayor's Office. Again, the dialogues proved fruitless as private respondents
refused to withdraw the cases they earlier filed with public respondent.
On October 3, 1988, a strike vote was canducted among the members of the Union
and those in favor of the strike won overwhelming support from the workers. The
result of the strike vote was then submitted to the NCMB on October 10, 1988. Two
days later, or on Ootober 12, 1988, the Union struck.
On the bases of the foregoing facts, Labor Arbiter Antonio Villanueva ruled that the
Onion staged an illegal strike. The dispositlve portion of the Decision, dated
December 12, 1988, states:
COMFORMABLY WITH ALL THE FOREGOING, judgment is
hereby rendered:
a) Declaring the strike staged by respondents (petitioners) to be
illegal;
b) Declaring the employees listed as respondents in the complaint
and those mentioned in page 21 to have lost their employment
status with complainants Lapanday Agricultural and Development
Corporation and Cadeco Agro Development Philippines, Inc.; and
c) Ordering respondents (petitioners in this case) to desist from
further committing an illegal strike.
Petitioners appealed the Villanueva decision to public respondent NLRC.
It also appears that on December 6, 1988, or before the promulgation of the decision
of Arbiter Villanueva, the Union, together with Tomas Basco and 25 other workers,
filed a complaint for unfair labor practice and illegal suspension against LADECO.
The case was docketed as Case No. RAB-11-12-00780-88. On even date, another
complaint for unfair labor practice and illegal dismissal was filed by the Union,
together with Arquilao Bacolod and 58 other complainants. This was docketed as
Case No. RAB-11-12-00779-88. These two (2) cases were heard by Labor Arbiter
Newton Sancho.
Before the NLRC could resolve the appeal taken on the Villanueva decision in Case
Nos. RAB-11-09-00612-88 and RAB-11-09-00613-88, Labor Arbiter Sancho rendered
a decision in the two (2) cases filed by the Union against private
respondents LADECO and CADECO (Case Nos. RAB-11-12-00779-88 and RAB-11-
12-00780-88). The Sancho decision, dated October 18, 1989,
declared LADECO and CADECO guilty of unfair labor practices and illegal dismissal
and ordered the reinstatement of the dismissed employees of private reapondents,
with backwages and other benefits. Significantly, the Sancho decision considered the
refusal of the workers to report for work on September 9, 1988, justified by the
circumstance then prevailing, the killing of Danilo Martinez on September 8,1988.
Private respondents appealed the Sancho decision, claiming, among others, that
labor arbiter Sancho erred in passing upon the legality of the strike staged by
petitioners since said issue had already been passed upon by the Regional
Arbitration Branch and was still on appeal before the NLRC.
Considering that the four (4) cases before it arose from the same set of facts and
involved substantially the same issues, the NLRC rendered a consolidated decision,
promulgated August 29, 1990, upholding the Villanueva decision in Case Nos. RAB-
11-09-00612-88 and RAB-11-09-00613-88. The dispositive portion of the assailed
NLRC decision states:
WHEREFORE, premises considered, a new judgment is entered in
the four consolidated and above-captioned cases as follows:
1. The strike staged by the Lapanday Agricultural Workers Union is
hereby declared to be (sic) illegal;
 2. As a consequence thereof, the following employees-union
officers are declared to have lost their employment status with
Lapanday Agricultural Development Corporation and CADECO
Agro Development Philippines, to wit: Arguilao Bacolod, Jose Erad,
Fernando Hernando, Eldie Estrella, Cerelo Dayag, Lucino
Magadan, Rene Arao, Eduardo Poquita, Juanito Gahum, Emilio
Magno, Perlito Lisondra, Gregorio Albaron, Abraham Baylon,
Dionosio Trocio, Tomas Basco and Rosario Sinday;
3. However, the individual respondents (union members), being
merely rank-and-file employees and who merely joined the strike
declared as illegal, are ordered reinstated but without backwages,
the period they were out of work is deemed the penalty for the
illegal strike they staged;
4. Ordering Lapanday Workers' Union, its leaders and members, to
desist from further committing an illegal strike; and
5. Dismissing the complaint for unfair labor practice, illegal
suspension and illegal dismissal filed by the Lapanday Workers
Union (LWU)-ANGLO and its members, for lack of merit.
SO ORDERED.
Petitioners fileds motion for reconsideration. It did not prosper. Hence, the
petition.
Petitioners now claim that public respondent NLRC gravely abused its discretion in: a)
declaring that their activities, from September 9, 1988 to October 12, 1988, were
strike activities; and b) declaring that the strike staged on October 12, 1988 was
illegal.
The critical issue is the legality of the strike held on October 12, 1988. The applicable
laws are Articles 263 and 264 of the Labor Code, as amended by E.O. No. 111, dated
December 24, 1986.3
Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111,
provides:
(c) In cases of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of strike or the
employer may file, notice of lockout with the Ministry at least 30
days before the intended date thereof. In cases of unfair labor
practice, the notice shall be 15 days and in the absence of a duly
certified or recognized bargaining agent, the notice of strike may be
filed by any legitimate labor organization in behalf of its members.
However, in case of dismissal from employment of union officers
duly elected in accordance with the union constitution and by-laws,
which may constitute union busting where the existence of the
union is threatened, the 15-daycooling-off period shall not apply
and the union may take action immediately.
xxx xxx xxx
(f) A decision to declare a strike must be approved by a majority of
the total union membership in the bargaining unit concerned,
obtained by secret ballot in meetings or referenda called for that
purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or association
or of the partners in a partnership, obtained by secret ballot in a
meeting called for that purpose. The decision shall be valid for the
duration of the dispute based on substantially the same grounds
considered when the strike or lockout vote was taken. The Ministry
may, at its own initiative or upon the request of any affected party,
supervise the conduct of secret balloting. In every case, the union
or the employer shall furnish the Ministry the results of the voting at
least seven (7) days before the intended strike or lockout subject to
the cooling-off period herein provided.
Article 264 of the same Code reads:
Art. 264. Prohibited activities. — (a) No labor organization or
employer shall declare a strike or lockout without first having
bargained collectively in accordance with Title VII of this Book or
without first having filed the notice required in the preceding Article
or without the necessary strike or lockout vote first having been
obtained and reported to the Ministry.
xxx xxx xxx
. . . . Any union officer who knowingly participates in an illegal strike
and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have
lost his employment status: Provided that mere participation of a
worker in a lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement had been
hired by the employer during such lawful strike. (emphasis ours).
A strike is "any temporary stoppage of work by the concerted action of employees as
a result of an industrial or labor dispute."4 It is the most preeminent of the economic
weapons of workers which they unsheathe to force management to agree to an
equitable sharing of the joint product of labor and capital. Undeniably, strikes exert
some disquieting effects not only on the relationship between labor and management
but also on the general peace and progress of society. Our laws thus regulate their
exercise within reasons by balancing the interests of labor and management together
with the overarching public interest.
Some of the limitations on the exercise of the right of strike are provided for in
paragraphs (c) and (f) of Article 263 of the Labor Code, as amended, supra. They
Provide for the procedural steps to be followed before staging a strike — filing of
notice of strike, taking of strike vote, and reporting of the strike vote result to the
Department of Labor and Employment. In National Federation of Sugar Workers
(NFSW) vs. Overseas, et al., 5 we ruled that these steps are mandatory in character,
thus:
If only the filing of the strike notice and the strike-vote report would
be deemed mandatory, but not the waiting periods so specifically
and emphatically prescribed by law, the purposes (hereafter
discussed) far which the filing of the strike notice and strike-vote
report is required cannot be achieved. . . .
xxx xxx xxx
So too, the 7-day strike-vote report is not without a purpose. As
pointed out by the Solicitor General —
. . . The submission of the report gives assurance that a strike vote
has been taken and that, if the report concerning it is false, the
majority of the members can take appropriate remedy before it is
too late.
The seven (7) day waiting period is intended to give the Department of Labor
and Employment an opportunity to verify whether the projected strike really
carries the imprimatur of the majority of the union members. The need for
assurance that majority of the union members support the strike cannot be
gainsaid. Strike is usually the last weapon of labor to compel capital to
concede to its bargaining demands or to defend itself against unfair labor
practices of management. It is a weapon that can either breathe life to or
destroy the union and its members in their struggle with management for a
more equitable due of their labors. The decision to wield the weapon of
strike must, therefore, rest on a rational basis, free from emotionalism,
unswayed by the tempers and tantrums of a few hotheads, and firmly
focused on the legitimate interest of the union which should not, however, be
antithetical to the public welfare. Thus, our laws require the decision to strike
to be the consensus of the majority for while the majority is not infallible, still,
it is the best hedge against haste and error. In addition, a majority vote
assures the union it will go to war against management with the strength
derived from unity and hence, with better chance to succeed. In Batangas
Laguna Tayabas Bus Company vs. NLRC,6 we held:
xxx xxx xxx
The right to strike is one of the rights recognized and guaranteed by
the Constitution as an instrument of labor for its protection against
exploitation by management. By virtue of this right, the workers are
able to press their demands for better terms of employment with
more energy and persuasiveness, poising the threat to strike as
their reaction to employer's intransigence. The strike is indeed a
powerful weapon of the working class. But precisely because of
this, it must be handled carefully, like a sensitive explosive, lest it
blow up in the workers' own hands. Thus, it must be declared only
after the most thoughtful consultation among them, conducted in
the only way allowed, that is, peacefully, and in every case
conformably to reasonable regulation. Any violation of the legal
requirements and strictures, . . . will render the strike illegal, to the
detriment of the very workers it is supposed to protect.
Every war must be lawfully waged. A labor dispute demands no
less observance of the rules, for the benefit of all concerned.
Applying the law to the case at bar, we rule that strike conducted by the union on
October 12, 1988 is plainly illegal as it was held within th seven (7) day waiting period
provided for by paragraph (f), Article 263 of the Labor Code, as amended. The haste
in holding the strike prevented the Department of Labor and Employment from
verifying whether it carried the approval of the majority of the union members. It set to
naught an important policy consideration of our law on strike. Considering this finding,
we need not exhaustively rule on the legality of the work stoppage conducted by the
union and some of their members on September 9 and 23, 1988. Suffice to state, that
the ruling of the public respondent on the matter is supported by substantial evidence.
We affirm the decision of the public respondent limiting the penalty of dismissal only
to the leaders of the illegal strike. especially the officers of the union who served as its
major players. They cannot claim good faith to exculpate themselves. They admitted
knowledge of the law on strike, including its procedure. They cannot violate the law
which ironically was cast to promote their interest.
We, likewise, agree with the public respondent that the union members who were
merely instigated to participate in the illegal strike should be treated differently from
their leaders. Part of our benign consideration for labor is the policy of reinstating
rank-and-file workers who were merely misled in supporting illegal strikes.
Nonetheless, these reinstated workers shall not be entitled to backwages as they
should not be compensated for services skipped during the illegal strike.
IN VIEW WHEREOF, the petition is dismissed for failure to show grave abuse of
discretion on the part of the public respondent. Costs against the petitioners.
ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN
TALUSAN and SAN MIGUEL CORPORATION, respondents.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner.
Jardeleza Law Offices for private respondents.
NARVASA, J.:
The controversy at bar had its origin in the "wage distortions" affecting the employees
of respondent San Miguel Corporation allegedly caused by Republic Act No. 6727,
otherwise known as the Wage Rationalization Act.
Upon the effectivity of the Act on June 5, 1989, the union known as "Ilaw at Buklod
Ng Manggagawa (IBM)" — said to represent 4,500 employees of San Miguel
Corporation, more or less, "working at the various plants, offices, and warehouses
located at the National Capital Region" — presented to the company a "demand" for
correction of the "significant distortion in . . . (the workers') wages." In that "demand,"
the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows:
xxx xxx xxx
(d) . . .
Where the application of the increases in the wage rates under this Section
results in distortions as defined under existing laws in the wage structure
within an establishment and gives rise to a dispute therein, such dispute
shall first be settled voluntarily between the parties and in the event of a
deadlock, the same shall be finally resolved through compulsory arbitration
by the regional branches of the National Labor Relations Commission
(NLRC) having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continuous hearings and
decide any dispute arising under this Section within twenty (20) calendar
days from the time said dispute is formally submitted to it for arbitration. The
pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of the increase in the wage rates prescribed under this
Section.
But the Union claims that "demand was ignored:1
The . . . COMPANY ignored said demand by offering a measly across-the-
board wage increase of P7.00 per day, per employee, as against the
proposal of the UNION of P25.00 per day, per employee. Later, the UNION
reduced its proposal to P15.00 per day, per employee by way of amicable
settlement.
When the . . . COMPANY rejected the reduced proposal of the UNION the
members thereof, on their own accord, refused to render overtime services,
most especially at the Beer Bottling Plants at Polo, starting October 16,
1989.
In this connection, the workers involved issues a joint notice reading as follows:2
SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG
POLO BREWERY PAWANG KASAPI NG ILAW AT BUKLOD NG
MANGGAGAWA (IBM) AY NAGKAISANG NAGPASYA NA IPATUPAD
MUNA ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG
HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE
DISTORTION.
The Union's position (set out in the petition subsequently filed in this Court, infra) was
that the workers' refuse "to work beyond eight (8) hours everyday starting October 16,
1989" as a legitimate means of compelling SMC to correct "the distortion in their
wages brought about by the implementation of the said laws (R.A. 6640 and R.A.
6727) to newly-hired employees.3 That decision to observe the "eight hours work
shift" was implemented on October 16, 1989 by "some 800 daily-paid workers at the
Polo Plant's production line (of San Miguel Corporation [hereafter, simply SMC])
joined by others at statistical quality control and warehouse, all members of . . . IBM .
. . "4 There ensued thereby a change in the work schedule which had been observed
by daily-paid workers at the Polo Plant for the past five (5) years, i.e., "ten (10) hours
for the first shift and ten (10) to fourteen (14) hours for the second shift, from
Mondays to Fridays . . ; (and on) Saturdays, . . eight (8) hours for both shifts" — a
work schedule which, SMC says, the workers had "welcomed, and encouraged"
because the automatic overtime built into the schedule "gave them a steady source of
extra-income," and pursuant to which it (SMC) "planned its production targets and
budgets.5
This abandonment of the long-standing schedule of work and the reversion to the
eight-hour shift apparently caused substantial losses to SMC. Its claim is that there
ensued "from 16 October 1989 to 30 November 1989 alone . . work disruption and
lower efficiency . . (resulting in turn, in) lost production of 2,004,105 cases of beer . . ;
that (i)n "money terms, SMC lost P174,657,598 in sales and P48,904,311 in revenues
. . (and the) Government lost excise tax revenue of P42 million, computed at the rate
of P21 per case collectible at the plant.6 These losses occurred despite such
measures taken by SMC as organizing "a third shift composed of regular employees
and some contractuals," and appeals "to the Union members, through letters and
memoranda and dialogues with their plant delegates and shop stewards," to adhere
to the existing work schedule.
Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the National
Labor Relations Commission a complaint against the Union and its members "to
declare the strike or slowdown illegal" and to terminate the employment of the union
officers and shop stewards. The complaint was docketed as NLRC-NCR Case No.
00-10-04917.7
Then on December 8, 1989, on the claim that its action in the Arbitration Branch had
as yet "yielded no relief," SMC filed another complaint against the Union and
members thereof, this time directly with the National labor Relations Commission, "to
enjoin and restrain illegal slowdown and for damages, with prayer for the issuance of
a cease-and-desist and temporary restraining order.8 Before acting on the application
for restraining order, the NLRC's First Division first directed SMC to present evidence
in support of the application before a commissioner, Labor Arbiter Carmen Talusan.
On December 19, 1989, said First Division promulgated a Resolution on the basis of
"the allegations of the petitioner (SMC) and the evidence adduced ex parte in support
of their petition." The Resolution —
1) authorized the issuance of "a Temporary Restraining Order for a period of
twenty (20) days . . upon . . a cash or surety bond in the amount of
P50,000.00 . . . DIRECTING the respondents to CEASE and DESIST from
further committing the acts complained about particularly their not complying
with the work schedule established and implemented by the company
through the years or at the least since 1984, which schedule appears to
have been adhered to by the respondents until October 16, 1989 . . .;
2) set the incident on injunction for hearing before Labor Arbiter Carmen
Talusan on 27 December 1989 . . .
The Labor Arbiter accordingly scheduled the incident for hearing on various dates:
December 27 and 29,1989, January 8, 11, 16, and 19, 1990. The first two settings
were cancelled on account of the unavailability of the Union's counsel. The hearing on
January 8, 1990 was postponed also at the instance of said counsel who declared
that the Union refused to recognize the NLRC's jurisdiction. The hearings set on
January 11, 16 and 19, 1990 were taken up with the cross-examination of SMC's
witness on the basis of his affidavit and supplemental affidavits. The Union thereafter
asked the Hearing Officer to schedule other hearings. SMC objected. The Hearing
Officer announced she would submit a report to the Commission relative to the
extension of the temporary restraining order of December 9, 1989, supra, prayed for
by SMC. Here the matter rested until February 14, 1990, when the Union filed the
petition which commenced the special civil action of certiorari and prohibition at bar. 9
In its petition, the Union asserted that:
1) the "central issue . . is the application of the Eight-Hour Labor Law . . .
(i.e.) (m)ay an employer force an employee to work everyday beyond eight
hours a day?
2) although the work schedule adopted by SMC with built-in automatic
overtime,10 "tremendously increased its production of beer at lesser cost,"
SMC had been paying its workers "wages far below the productivity per
employee," and turning a deaf ear to the Union's demands for wage
increases;
3) the NLRC had issued the temporary restraining order of December 19,
1989 "with indecent haste, based on ex parte evidence of SMC and such an
order had the effect of "forcing the workers to work beyond eight (8) hours a
day, everyday!!
4) the members of the NLRC had no authority to act as Commissioners
because their appointments had not been confirmed by the Commission on
Appointment; and
5) even assuming the contrary, the NLRC, as an essentially appellate body,
had no jurisdiction to act on the plea for injunction in the first instance.
The petition thus prayed:
1) for judgment (a) annulling the Resolution of December 19, 1990; (b)
declaring mandatory the confirmation by the Commission on Appointments
of the appointments of National Labor Relations Commissioners; and (c)
ordering the removal "from the 201 files of employees any and all
memoranda or disciplinary action issued/imposed to the latter by reason of
their refusal to render overtime work;" and
2) pending such judgment restraining(a) the NLR Commissioners "from
discharging their power and authority under R.A. 6715 prior to their re-
appointment and/or confirmation;" as well as (b) Arbiter Talusan and the
Commission from acting on the matter or rendering a decision or issuing a
permanent injunction therein, or otherwise implementing said Resolution of
December 19, 1989.
In traverse of the petition, SMC filed a pleading entitled "Comment with Motion to
Admit Comment as Counter-Petition," in which it contended that:
1) the workers' abandonment of the regular work schedule and their
deliberate and wilful reduction of the Polo plant's production efficiency is
a slowdown, which is an illegal and unprotected concerted activity;
2) against such a slowdown, the NLRC has jurisdiction to issue injunctive
relief in the first instance;
3) indeed, the NLRC has "the positive legal duty and statutory obligation to
enjoin the slowdown complained of and to compel the parties to arbitrate . .,
(and) to effectuate the important national policy of peaceful settlement of
labor disputes through arbitration;" accordingly, said NLRC "had no legal
choice but to issue injunction to enforce the reciprocal no lockout-no
slowdown and mandatory arbitration agreement of the parties;" and
4) the NLRC "gravely abused its discretion when it refused to decide the
application for injunction within the twenty day period of its temporary
 restraining order, in violation of its own rules and the repeated decisions of
this . . . Court.
It is SMC's submittal that the coordinated reduction by the Union's members of the
work time theretofore willingly and consistently observed by them, thereby causing
financial losses to the employer in order to compel it to yield to the demand for
correction of "wage distortions," is an illegal and "unprotected" activity. It is, SMC
argues, contrary to the law and to the collective bargaining agreement between it and
the Union. The argument is correct and will be sustained.
Among the rights guaranteed to employees by the Labor Code is that of engaging in
concerted activities in order to attain their legitimate objectives. Article 263 of the
Labor Code, as amended, declares that in line with "the policy of the State to
encourage free trade unionism and free collective bargaining, . . (w)orkers shall have
the right to engage in concerted activities for purposes of collective bargaining or for
their mutual benefit and protection." A similar right to engage in concerted activities
for mutual benefit and protection is tacitly and traditionally recognized in respect of
employers.
The more common of these concerted activities as far as employees are concerned
are: strikes — the temporary stoppage of work as a result of an industrial or labor
dispute; picketing — the marching to and fro at the employer's premises, usually
accompanied by the display of placards and other signs making known the facts
involved in a labor dispute; and boycotts — the concerted refusal to patronize an
employer's goods or services and to persuade others to a like refusal. On the other
hand, the counterpart activity that management may licitly undertake is the lockout —
the temporary refusal to furnish work on account of a labor dispute, In this connection,
the same Article 263 provides that the "right of legitimate labor organizations to strike
and picket and of employer to lockout, consistent with the national interest, shall
continue to be recognized and respected." The legality of these activities is usually
dependent on the legality of the purposes sought to be attained and the means
employed therefor.
It goes without saying that these joint or coordinated activities may be forbidden or
restricted by law or contract. In the particular instance of "distortions of the wage
structure within an establishment" resulting from "the application of any prescribed
wage increase by virtue of a law or wage order," Section 3 of Republic Act No. 6727
prescribes a specific, detailed and comprehensive procedure for the correction
thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as
modes of settlement of the issue. The provision11 states that —
. . . the employer and the union shall negotiate to correct the distort-ions.
Any dispute arising from wage distortions shall be resolved through
the grievance procedure under their collective bargaining agreement and, if
it remains unresolved, through voluntary arbitration. Unless otherwise
agreed by the parties in writing, such dispute shall be decided by the
voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar
days from the time said dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor
unions, the employers and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board and, if it remains unresolved after
ten (10) calendar days of conciliation, shall be referred to the appropriate
branch of the National Labor Relations Commission (NLRC). It shall be
mandatory for the NLRC to conduct continuous hearings and decide the
dispute within twenty (20) calendar days from the time said dispute is
submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any
way delay the applicability of any increase in prescribed wage rates pursuant
to the provisions of law or Wage Order.
xxx xxx xxx
The legislative intent that solution of the problem of wage distortions shall be sought
by voluntary negotiation or abitration, and not by strikes, lockouts, or other concerted
activities of the employees or management, is made clear in the rules implementing
RA 6727 issued by the Secretary of Labor and Employment 12pursuant to the authority
granted by Section 13 of the Act.13 Section 16, Chapter I of these implementing rules,
after reiterating the policy that wage distortions be first settled voluntarily by the
parties and eventually by compulsory arbitration, declares that, "Any issue involving
wage distortion shall not be a ground for a strike/lockout."
Moreover, the collective bargaining agreement between the SMC and the Union,
relevant provisions of which are quoted by the former without the latter's demurring to
the accuracy of the quotation,14 also prescribes a similar eschewal of strikes or other
similar or related concerted activities as a mode of resolving disputes or
controversies, generally, said agreement clearly stating that settlement of "all
disputes, disagreements or controversies of any kind" should be achieved by the
stipulated grievance procedure and ultimately by arbitration. The provisions are as
follows:
Section 1. Any and all disputes, disagreements and controversies of any
kind between the COMPANY and the UNION and/or the workers involving or
relating to wages, hours of work, conditions of employment and/or employer-
employee relations arising during the effectivity of this Agreement or any
renewal thereof, shall be settled by arbitration in accordance with the
procedure set out in this Article. No dispute, disagreement or controversy
which may be submitted to the grievance procedure in Article IX shall be
presented for arbitration unless all the steps of the grievance procedure are
exhausted (Article V — Arbitration).
Section 1. The UNION agrees that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary boycotts, refusal to
handle any merchandise, picketing, sit-down strikes of any kind, sympathetic
or general strikes, or any other interference with any of the operations of the
COMPANY during the terms of this agreement (Article VI).
The Union was thus prohibited to declare and hold a strike or otherwise engage in
non-peaceful concerted activities for the settlement of its controversy with SMC in
respect of wage distortions, or for that matter; any other issue "involving or relating to
wages, hours of work, conditions of employment and/or employer-employee
relations." The partial strike or concerted refusal by the Union members to follow the
five-year-old work schedule which they had therefore been observing, resorted to as
a means of coercing correction of "wage distortions," was therefore forbidden by law
and contract and, on this account, illegal.
Awareness by the Union of the proscribed character of its members' collective
activities, is clearly connoted by its attempt to justify those activities as a means of
protesting and obtaining redress against said members working overtime every day
from Monday to Friday (on an average of 12 hours), and every Saturday (on 8 hour
shifts),15 rather than as a measure to bring about rectification of the wage distortions
caused by RA 6727 — which was the real cause of its differences with SMC. By
concealing the real cause of their dispute with management (alleged failure of
correction of wage distortion), and trying to make it appear that the controversy
involved application of the eight-hour labor law, they obviously hoped to remove their
case from the operation of the rules implementing RA 6727 that "Any issue involving
wage distortion shall not be a ground for a strike/lockout." The stratagem cannot
succeed.
In the first place, that it was indeed the wage distortion issue that principally motivated
the Union's partial or limited strike is clear from the facts, The work schedule (with
"built-in overtime") had not been forced upon the workers; it had been agreed upon
between SMC and its workers at the Polo Plant and indeed, had been religiously
followed with mutually beneficial results for the past five (5) years. Hence, it could not
be considered a matter of such great prejudice to the workers as to give rise to a
controversy between them and management. Furthermore, the workers never asked,
nor were there ever any negotiations at their instance, for a change in that work
schedule prior to the strike. What really bothered them, and was in fact the subject of
talks between their representatives and management, was the "wage distortion"
question, a fact made even more apparent by the joint notice circulated by them prior
to the strike, i.e., that they would adopt the eight-hour work shift in the meantime
pending correction by management of the wage distortion (IPATUPAD MUNA ANG
EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD
NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION).
In the second place, even if there were no such legal prohibition, and even assuming
the controversy really did not involve the wage distortions caused by RA 6727, the
concerted activity in question would still be illicit because contrary to the workers'
explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or
slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise,
picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other
interference with any of the operations of the COMPANY during the term of . . . (their
collective bargaining) agreement.16
What has just been said makes unnecessary resolution of SMC's argument that the
workers' concerted refusal to adhere to the work schedule in force for the last several
years, is a slowdown, an inherently illegal activity essentially illegal even in the
absence of a no-strike clause in a collective bargaining contract, or statute or rule.
The Court is in substantial agreement with the petitioner's concept of a slowdown as a
"strike on the installment plan;" as a wilfull reduction in the rate of work by concerted
action of workers for the purpose of restricting the output of the employer, in relation
to a labor dispute; as an activity by which workers, without a complete stoppage of
work, retard production or their performance of duties and functions to compel
management to grant their demands.17 The Court also agrees that such a slowdown
is generally condemned as inherently illicit and unjustifiable, because while the
employees "continue to work and remain at their positions and accept the wages paid
to them," they at the same time "select what part of their allotted tasks they care to
perform of their own volition or refuse openly or secretly, to the employer's damage,
to do other work;" in other words, they "work on their own terms. 18 But whether or not
the workers' activity in question — their concerted adoption of a different work
schedule than that prescribed by management and adhered to for several years —
constitutes a slowdown need not, as already stated, be gone into. Suffice it to say that
activity is contrary to the law, RA 6727, and the parties' collective bargaining
agreement.
The Union's claim that the restraining order is void because issued by Commissioners
whose appointments had not been duly confirmed by the Commission on
Appointments should be as it is hereby given short shift, for, as the Solicitor General
points out, it is an admitted fact that the members of the respondent Commission
were actually appointed by the President of the Philippines on November 18, 1989;
there is no evidence whatever in support of the Union's bare allegation that the
appointments of said members had not been confirmed; and the familiar presumption
of regularity in appointment and in performance of official duty exists in their favor. 19
Also untenable is the Union's other argument that the respondent NLRC Division had
no jurisdiction to issue the temporary restraining order or otherwise grant the
preliminary injunction prayed for by SMC and that, even assuming the contrary, the
restraining order had been improperly issued. The Court finds that the respondent
Commission had acted entirely in accord with applicable provisions of the Labor
Code.
Article 254 of the Code provides that "No temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be issued
by any court or other entity, except as otherwise provided in Articles 218 and 264 . . ."
Article 264 lists down specific "prohibited activities" which may be forbidden or
stopped by a restraining order or injunction. Article 218 inter alia enumerates the
powers of the National Labor Relations Commission and lays down the conditions
under which a restraining order or preliminary injunction may issue, and the
procedure to be followed in issuing the same.
Among the powers expressly conferred on the Commission by Article 218 is the
power to "enjoin or restrain any actual or threatened commission of any or all
prohibited or unlawful acts or to require the performance of a particular act in any
labor dispute which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any decision in favor of such
party . . ."
As a rule such restraining orders or injunctions do not issue ex parte, but only after
compliance with the following requisites, to wit:
a) a hearing held "after due and personal notice thereof has been served, in
such manner as the Commission shall direct, to all known persons against
whom relief is sought, and also to the Chief Executive and other public
officials of the province or city within which the unlawful acts have been
threatened or committed charged with the duty to protect complainant's
property;"
b) reception at the hearing of "testimony of witnesses, with opportunity for
cross-examination, in support of the allegations of a complaint made under
oath," as well as "testimony in opposition thereto, if offered . . .;
c) a finding of fact by the Commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will
be committed and will be continued unless restrained, but no
injunction or temporary restraining order shall be issued on account
of any threat, prohibited or unlawful act, except against the person
or persons, association or organization making the threat or
committing the prohibited or unlawful act or actually authorizing or
ratifying the same after actual knowledge thereof;
(2) That substantial and irreparable injury to complainant's property
will follow;
(3) That as to each item of relief to be granted, greater injury will be
inflicted upon complainant by the denial of relief than will be
inflicted upon defendants by the granting of relief;
(4) That complainant has no adequate remedy at law; and
(5) That the public officers charged with the duty to protect
complainant's property are unable or unwilling to furnish adequate
protection.
However, a temporary restraining order may be issued ex parte under the following
conditions:
a) the complainant "shall also allege that, unless a temporary restraining
order shall be issued without notice, a substantial and irreparable injury to
complainant's property will be unavoidable;
b) there is "testimony under oath, sufficient, if sustained, to justify the
Commission in issuing a temporary injunction upon hearing after notice;"
c) the "complainant shall first file an undertaking with adequate security in an
amount to be fixed by the Commission sufficient to recompense those
enjoined for any loss, expense or damage caused by the improvident or
erroneous issuance of such order or injunction, including all reasonable
costs, together with a reasonable attorney's fee, and expense of defense
against the order or against the granting of any injunctive relief sought in the
same proceeding and subsequently denied by the Commission;" and
d) the "temporary restraining order shall be effective for no longer than
twenty (20) days and shall become void at the expiration of said twenty (20)
days.
The reception of evidence "for the application of a writ of injunction may be delegated
by the Commission to any of its Labor Arbiters who shall conduct such hearings in
such places as he may determine to be accessible to the parties and their witnesses
and shall submit thereafter his recommendation to the Commission."
The record reveals that the Commission exercised the power directly and plainly
granted to it by sub-paragraph (e) Article 217 in relation to Article 254 of the Code,
and that it faithfully observed the procedure and complied with the conditions for the
exercise of that power prescribed in said sub-paragraph (e) It acted on SMC's
application for immediate issuance of a temporary restraining order ex parte on the
ground that substantial and irreparable injury to its property would transpire before the
matter could be heard on notice; it, however, first direct SMC Labor Arbiter Carmen
Talusan to receive SMC's testimonial evidence in support of the application and
thereafter submit her recommendation thereon; it found SMC's evidence adequate
and issued the temporary restraining order upon bond.1âwphi1 No irregularity may
thus be imputed to the respondent Commission in the issuance of that order.
In any event, the temporary restraining order had a lifetime of only twenty (20) days
and became void ipso facto at the expired ration of that period.
In view of the foregoing factual and legal considerations, all irresistibly leading to the
basic conclusion that the concerted acts of the members of petitioner Union in
question are violative of the law and their formal agreement with the employer, the
latter's submittal, in its counter-petition that there was, in the premises, a "legal duty
and obligation" on the part of the respondent Commission "to enjoin the unlawful and
prohibited acts and omissions of petitioner IBM and the workers complained of, 20 — a
proposition with which, it must be said, the Office of the Solicitor General concurs,
asserting that the "failure of the respondent commission to resolve the application for
a writ of injunction is an abuse of discretion especially in the light of the fact that the
restraining order it earlier issued had already expired"21 — must perforce be
conceded.
WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the
case is REMANDED to the respondent Commission (First Division) with instructions
to immediately take such action thereon as is indicated by and is otherwise in accord
with, the findings and conclusions herein set forth. Costs against petitioner.