1

G.R. No. 165381 : February 9, 2011

NELSON A. CULILI, Petitioner, v. EASTERN TELECOMMUNICATIONS PHILIPPINES,

INC., SALVADOR HIZON (President and Chief Executive Officer), EMILIANO JURADO
(Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA
(Assistant Vice President), Respondents.

LEONARDO-DE CASTRO, J.:

FACTS:

Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications

company engaged mainly in the business of establishing commercial telecommunications
systems and leasing of international datalines or circuits that pass through the international
gateway facility (IGF). The other respondents are ETPIs officers.

Petitioner Nelson A. Culili was employed by ETPI as a Technician in its Field Operations
Department in 1981. In 1996, Culili was promoted to Senior Technician in the Customer
Premises Equipment Management Unit of the Service Quality Department.

As a telecommunications company and an authorized IGF operator, ETPI was required,

under RA No. 7925 and EO No. 109, to establish landlines in Metro Manila and certain
provinces. However, due to interconnection problems with the PLDT, poor subscription and
cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll
out of 129,000 landlines already allocated to a number of its employees.

In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-
Sizing Program which consisted of two phases: the first phase involved the reduction of
ETPIs workforce to only those employees that were necessary and which ETPI could
sustain; the second phase entailed a company-wide reorganization which would result in the
transfer, merger, absorption or abolition of certain departments of ETPI.

As part of the first phase, ETPI offered to its employees who had rendered at least fifteen
years of service, the Special Retirement Program, which consisted of the option to
voluntarily retire at an earlier age and a retirement package equivalent to two and a half (2)
months salary for every year of service. This offer was initially rejected by the Eastern
Telecommunications Employees Union (ETEU), ETPIs duly recognized bargaining agent,
which threatened to stage a strike. ETPI explained to ETEU the exact details of the Right-
Sizing Program and the Special Retirement Program and after consultations with ETEUs
members, ETEU agreed to the implementation of both programs. Thus, ETPI re-offered the
Special Retirement Program and the corresponding retirement package to the one hundred
two (102) employees who qualified for the program. Of all the employees who qualified to
avail of the program, only Culili rejected the offer.

Among the departments abolished was the Service Quality Department. The functions of
the Customer Premises Equipment Management Unit, Culilis unit, were absorbed by the
Business and Consumer Accounts Department. As a result, Culilis position was abolished
due to redundancy and his functions were absorbed by the Business and Consumer
Accounts Department.
ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination
from employment effective April 8, 1999.

Culili alleged that neither he nor the DOLE were formally notified of his termination. Culili
believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter.
Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a
labor-only contractor which not only proved that his functions had not become unnecessary,
but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code.
Aside from these, Culili also alleged that he was discriminated against when ETPI offered
some of his co-employees an additional benefit in the form of motorcycles to induce them to
avail of the Special Retirement Program, while he was not.

ETPI denied singling Culili out for termination. ETPI claimed that because there was no more
work for Culili, it was constrained to serve a final notice of termination to Culili, which Culili
ignored. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of P859,033.99
consisting of his basic salary, leaves, 13th month pay and separation pay. ETPI claimed that
Culili refused to accept his termination and continued to report for work.

Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice,
and money claims before the Labor Arbiter.

The Labor Arbiter found ETPI guilty of illegal dismissal and unfair labor practice.

On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral
and exemplary damages awarded.

The Court of Appeals found that Culilis position was validly abolished due to redundancy. It
further held that ETPI cannot be held guilty of unfair labor practice as mere contracting out
of services being performed by union members does not per se amount to unfair labor
practice unless it interferes with the employees right to self-organization. Hence, this
petition.

ISSUE: Whether or not Culili is illegally dismissed.

HELD: The decision of the Court of Appeals is sustained.

LABOR LAW

There is redundancy when the service capability of the workforce is greater than what is
reasonably required to meet the demands of the business enterprise. A position becomes
redundant when it is rendered superfluous by any number of factors such as over-hiring of
workers, decrease in volume of business, or dropping a particular product line or service
activity previously manufactured or undertaken by the enterprise. Soriano, Jr. v. NLRC, G.R.
No. 165594, April 23, 2007

This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the newly
created positions, job description and the approval by the management of the restructuring.

In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-
Sizing Program. Even in the face of initial opposition from and rejection of the said program
by ETEU, ETPI patiently negotiated with ETEUs officers to make them understand ETPIs
business dilemma and its need to reduce its workforce and streamline its organization. This
evidently rules out bad faith on the part of ETPI.

The records show that ETPI had sufficiently established not only its need to reduce its
workforce and streamline its organization, but also the existence of redundancy in the
position of a Senior Technician. ETPI explained how it failed to meet its business targets
and the factors that caused this, and how this necessitated it to reduce its workforce and
streamline its organization. ETPI also submitted its old and new tables of organization and
sufficiently described how limited the functions of the abolished position of a Senior
Technician were and how it decided on whom to absorb these functions.

LABOR LAW

Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair
labor practice, ETPI, however, was remiss in its duty to observe procedural due process in
effecting the termination of Culili.

For termination of employment as defined in Article 283 of the Labor Code, the requirement
of due process shall be deemed complied with upon service of a written notice to the
employee and the appropriate Regional Office of the Department of Labor and Employment
at least thirty days before effectivity of the termination, specifying the ground or grounds for
termination.

ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis
termination. It, however, insists that it has complied with the requirement to serve a written
notice to Culili as evidenced by his admission of having received it and forwarding it to his
union president.

The Court of Appeals, in finding that Culili was not afforded procedural due process, held
that Culilis dismissal was ineffectual, and required ETPI to pay Culili full backwages in
accordance with our decision in Serrano v. NLRC, 387 Phil. 345 (2000).

Hence, since it has been established that Culilis termination was due to an authorized cause
and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid.
However, in view of ETPIs failure to comply with the notice requirements under the Labor
Code, Culili is entitled to nominal damages in addition to his separation pay.

DENIED.

GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), et al. v. NATIONAL LABOR

RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG
504 SCRA 692 (2006)

FACTS: On account of serious business losses which occurred in 1997 up to mid-1999

totaling around P127,000,000.00, Galaxie Steel Workers Union decided to close down its
business operations. It thereafter filed a written notice with the Department of Labor and
Employment (DOLE) informing the latter of its intended closure and the consequent
termination of its employees effective August 31, 1999. It posted the notice of closure on the
corporate bulletin board.
On September 8, 1999, Galaxie Steel Workers Union and Galaxie employees filed a
complaint for illegal dismissal, unfair labor practice, and money claims against Galaxie. The
Labor Arbiter, NLRC and the Court of Appeals were unanimous in ruling that Galaxie’s
closure or cessation of business operations was due to serious business losses or financial
reverses, and not because of any alleged anti-union position.

The workers’ union and employees contend that Galaxie did not serve written notices of the
closure of business operations upon them, it having merely posted a notice on the company
bulletin board.

ISSUE: Whether or not the written notice posted by [Galaxie] on the company bulletin board
sufficiently complies with the notice requirement under Article 283 of the Labor Code.

HELD: The requirement of the Labor Code that notice shall be served on the workers is not
complied with by the mere posting of the notice on the bulletin board.

The mere posting on the company bulletin board does not meet the requirement under
Article 283 of ―serving a written notice on the workers.‖ The purpose of the written notice
is to inform the employees of the specific date of termination or closure of business
operations, and must be served upon them at least one month before the date of effectivity
to give them sufficient time to make the necessary arrangements. In order to meet the
foregoing purpose, service of the written notice must be made individually upon each and
every employee of the company.

Sterling Products International Inc. v Sol

1963 Ponente: Labrador

Petitioners: STERLING PRODUCTS INTERNATIONAL, INC. and V. SAN PEDRO

Respondents: LORETA C. SOL and COURT OF INDUSTRIAL RELATIONS

Facts:
Loreta C. Sol charged the herein petitioners Sterling Products International and its Radio
Director V. San Pedro with having committed an unfair labor practice act. She alleged in her
complaint that she has been a regular Radio Monitor of respondents-petitioners; that in 1960
filed a complaint against the said firm for underpayment, money equivalent of her vacation
leave from 1952 to 1959, and Christmas bonus for 1959 = this previous complaint resulted in
her dismissal without just cause

Petitioners’ answer: alleged that complainant is an independent contractor whose services

were retained by petitioners to submit reports of radio monitoring work performed outside of
their (petitioners') office and that she was dismissed because her services were no longer
required.
CIR: decided that complainant is not an employee of the respondent firm but only an
independent contractor and that respondent firm was justified in dismissing the complainant
due to economic reasons.

CIR on MFR: reversed, complainant was an employee and not an independent contractor, and
ordered her reinstatement with back wages. Moreover, petitioners are guilty of unfair labor
practice. Circumstances which made it rule that Sol is an employee: (1) Complainant was given
an identification card stating that "Bearer Loreta C. Sol is a bona fide employee of this
Company;" (2) when she applied for purchase of a lot from the PHHC, she was given a certificate
to show that she was indeed an employee of the respondent company for the last five years or
six years; and (3) as such employee, she enjoyed the privilege of borrowing money from the
Employees Loan Association of the firm.

Also, company not only hired and fired Mrs. Sol, without third party intervention, but also
reserved to itself, possessed and exercised its right to control 'the end' to be achieved and 'the
means' to be used in reaching such end, namely, the schedule and other instructions by which
the monitor shall be guided, and the reports with specifications by which the company observes
and verifies the performance of her work.

Issues/Held: 1) WON Sol is a regular employee – YES

2) WON Petitioners are guilty of ULP – NO

Ratio:
1) Sol was directed to listen to certain broadcasts, directing her, in the instructions given her,
when to listen and what to listen, petitioners herein naming the stations to be listened to, the
hours of broadcasts, and the days when listening was to be done. Sol had to follow these
directions. The mere fact that while performing the duties assigned to her she was not under
the supervision of the petitioners does not render her a contractor, because what she has to do,
the hours that she has to work and the report that she has to submit all — these are according
to instructions given by the employer.

Finally, the very act of respondent Sol in demanding vacation leave, Christmas bonus and
additional wages shows that she considered herself an employee. A contractor is not entitled to
a vacation leave or to a bonus nor to a minimum wage.

2) Following the ruling in Royal Interocean Lines, et al. vs. Court of Industrial Relations - as
respondent Sol was merely an employee and was not connected with any labor union, the
company cannot be considered as having committed acts constituting unfair labor practice as
defined in the Industrial Peace Act, Rep. Act 875.

The respondent Sol has never been found to commit any of the acts mentioned in paragraph (a)
of Sec. 4. Respondent Sol was not connected with any labor organization, nor has she ever
attempted to join a labor organization, or to assist, or contribute to a labor organization. The
company cannot, therefore, be considered as having committed an unfair labor practice.

Not relevant issue: there is an employment contract between petitioners and respondent Sol
in which it was expressly agreed that Sol could be dismissed upon fifteen days' advance notice,
if petitioners herein desire. Respondent Sol was dismissed on January 13, 1959 and therefore
the dismissal should be governed by the provisions of Republic Act 1787
Sec. 1 of RA 1787 - . In cases of employment, without a definite period, in a commercial,
industrial, or agricultural establishment or enterprise, the employer or the employee may
terminate at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or in the
case of an employer, by serving such notice to the employee at least one month in advance or
one-half month for every year of service of the employee, whichever is longer, a fraction of at
least six months being considered as one whole year.
XXX
Following are just causes for terminating an employment without a definite period: a. The
closing or cessation of operation of the establishment or enterprise, unless the closing is for the
purpose of defeating the intention of this law.

The contract between the petitioners and the respondent Sol providing that the respondent Sol
can be dismissed upon fifteen days' notice is therefore null and void. Pets are ordered to pay
Sol separation pay.

Central Azucarera De Tarlac vs Central Azucarera de Tarlac Labor Union-NLU

FACTS: Central Azucarera De Tarlac (petitioner) is a domestic corporation engaged in the

business of sugar manufacturing, while respondent is a legitimate labor organization which
serves as the exclusive bargaining representative of petitioner's rank-and-file employees. In
compliance with PD 851, petitioner granted its employees the mandatory 13th month pay
since 1975. The formula used by petitioner in computing the 13th-month pay was: Total
Basic Annual Salary divided by 12. Included in petitioner's computation of the Total Basic
Annual Salary were the following: basic monthly salary; first 8 hours overtime pay on Sunday
and legal/special holiday; night premium pay; and vacation and sick leaves for each year.
Throughout the years, petitioner used this computation until 2006.

On November 6, 2004, respondent staged a strike. During the pendency of the strike,
petitioner declared a temporary cessation of operations. In December 2005, all the striking
union members were allowed to return to work. Subsequently, petitioner declared another
temporary cessation of operations for the months of April and May 2006. The suspension of
operation was lifted on June 2006, but the rank-and-file employees were allowed to report
for work on a 15 day-per-month rotation basis that lasted until September 2006. In
December 2006, petitioner gave the employees their 13th-month pay based on the
employee's total earnings during the year divided by 12. Respondent objected to this
computation. It averred that petitioner did not adhere to the usual computation of the 13th-
month pay. It claimed that the divisor should have been 8 instead of 12, because the
employees worked for only 8 months in 2006. It likewise asserted that petitioner did not
observe the company practice of giving its employees the guaranteed amount equivalent to
their one month pay, in instances where the computed 13th-month pay was less than their
basic monthly pay.

Since the parties failed to reach a settlement, respondent applied for preventive mediation
before the National Conciliation and Mediation Board. However the parties still failed to settle
the dispute. On March 29, 2007, respondent filed a complaint against petitioner for money
claims based on the alleged diminution of benefits/erroneous computation of 13th-month
pay before the Regional Arbitration Branch of the NLRC. The Labor Arbiter (LA) dismissed
the complaint. The NLRC reversed the decision however, and ordered petitioner to adhere
to its established practice of granting 13th-month pay on the basis of gross annual basic
which includes basic pay, premium pay for work in rest days and special holidays, night shift
differential and paid vacation and sick leaves for each year. Additionally, respondent is
ordered to observe the guaranteed one month pay by way of 13th month pay. The CA
affirmed the decision of the NLRC.

ISSUE: Whether there was an error in the computation of the 13th-month pay of its
employees as a result of its mistake in implementing P.D. No. 851

HELD: NO, there was no error, even if there was it has already ripened into company
practice.

The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an
additional income based on wage but not part of the wage. It is equivalent to one-twelfth
(1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-
file employees, regardless of their designation or employment status and irrespective of the
method by which their wages are paid, are entitled to this benefit, provided that they have
worked for at least one month during the calendar year. If the employee worked for only a
portion of the year, the 13th-month pay is computed pro rata.

The Rules and Regulations Implementing P.D. No. 851 defines "basic salary" to include all
remunerations or earnings paid by an employer to an employee for services rendered but
may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525
or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary
benefits which are not considered or integrated as part of the regular or basic salary of the
employee at the time of the promulgation of the Decree on December 16, 1975. The
Supplementary Rules and Regulations clarifies that overtime pay, earnings, and other
remuneration that are not part of the basic salary shall not be included in the computation of
the 13th-month pay.

Under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, it was
specifically stated that the minimum 13th-month pay required by law shall not be less than
one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.
Furthermore, the term "basic salary" of an employee for the purpose of computing the 13th-
month pay was interpreted to include all remuneration or earnings paid by the employer for
services rendered, but does not include allowances and monetary benefits which are not
integrated as part of the regular or basic salary, such as the cash equivalent of unused
vacation and sick leave credits, overtime, premium, night differential and holiday pay, and
cost-of-living allowances. However, these salary-related benefits should be included as part
of the basic salary in the computation of the 13th-month pay if, by individual or collective
agreement, company practice or policy, the same are treated as part of the basic salary of
the employees.

Based on the foregoing, it is clear that there could have no erroneous interpretation or
application of what is included in the term "basic salary" for purposes of computing the 13th-
month pay. As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay
based on the employees' gross annual earnings which included the basic monthly salary,
premium pay for work on rest days and special holidays, night shift differential pay and
holiday pay continued for almost thirty (30) years and has ripened into a company policy or
practice which cannot be unilaterally withdrawn.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that
benefits given to employees cannot be taken back or reduced unilaterally by the employer
because the benefit has become part of the employment contract, written or unwritten. The
rule against diminution of benefits applies if it is shown that the grant of the benefit is based
on an express policy or has ripened into a practice over a long period of time and that the
practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is
due to error in the construction or application of a doubtful or difficult question of law. But
even in cases of error, it should be shown that the correction is done soon after discovery
of the error.

G.R. Nos. L-30632-33 April 11, 1972

CALTEX FILIPINO MANAGERS AND SUPERVISORS ASSOCIATION petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, CALTEX (PHILIPPINES), INC., W.E. MENEFEE
and B.F. EDWARDS, respondents.
I. Facts/Summary

The Caltex Filipino Managers and Supervisors' Association (hereinafter referred to as Union) is a
labor organization of Filipino managers supervisors in Caltex (Philippines), Inc., which sent a letter
to the respondent informing them of the Union’s registration to which the respondent inquired of
the position titles of the employees that the Union sought to represent. The Union sent proposals
to the respondent wherein one of the demands was the recognition of the Association as the duly
authorized bargaining agency for managers and supervisors of the respondent which was countered
by the respondent, stating that a distinction exists between representatives of management and
individuals employed as supervisors and that it is respondent's belief that managerial employees
are not qualified for membership in a labor organization which caused the Union to issue a
certification proceeding to remove any question with regard to position titles that should be
included in the bargaining unit. The Union filed notice to strike for reasons of refusal to bargain and
act on demands by the respondent; the respondent’s resort to union-busting tactics in order to
discourage the activities of the Union including discrimination and intimidation of the Union’s
members. The Judge handling the hearing of the certification proceedings advised the employees
not to go on strike; and on the basis of the strike notice filed, the Union struck after the efforts
exerted to settle differences failed. Because of this, the respondent filed an urgent petition to
declare the said strike as illegal; that the officers and members of Union who have instigated,
declared, encouraged and/or participated in the illegal strike be held and punished for contempt
and be declared to have lost their employee status; that a temporary injunction be issued to restrain
the Union and its members from doing acts that would disrupt the respondent’s activities.
The petition was met by the Union with a motion to dismiss questioning the jurisdiction of the
industrial court which was opposed by the respondent and by the trial court. Because of the
settlement between the parties of some of their disputes, the Union filed with respondent court a
manifestation to the effect that the issues had become moot and academic. The respondent
company filed a counter-manifestation disputing the representations of the Union on the effect of
the return-to-work agreement. On the basis of the manifestation and counter-manifestation,
respondent court en banc issued a resolution on which allowed the withdrawal of the Union's
motion for reconsideration against the order on the theory that there was justification for such
withdrawal. After several filing of different motions, the trial court ruled that under the return-to-
work agreement the respondent company had reserved its rights to prosecute and directed that the
case be set for hearing covering the alleged illegality of the strike. The Union’s charge for unfair
labor practices against the respondent company was denied by the respondent.

II. Issue/s

It was being questioned whether or not the Court of Industrial Relations can assume jurisdiction in
the case at hand. It was also being questioned whether or not the strike staged by the Union is illegal
and, incident thereto, whether respondent court correctly terminated the employee status of Jose
Mapa, Dominador Mangalino and Herminigildo Mandanas and reprimanded and admonished the
other officers of the Association. Moreover, there are contentions onwWhether or not respondent
court correctly absolved the respondents from the unfair labor practice charge.

III. Applicable Provisions of the Labor Code/Special Laws

Sec. 9 of Republic Act No. 875 - AN ACT TO PROMOTE INDUSTRIAL PEACE AND FOR OTHER
PURPOSES

(REPEALED BY PRESIDENTIAL DECREE NO. 442)

Sec. 9 - Injunctions in Labor Disputes

(d) No court of the Philippines shall have jurisdiction to issue a temporary or permanent
injunction in any case involving or growing out of a labor dispute, as herein defined except after
hearing the testimony of witnesses in open court (with opportunity for cross-examination) in
support of the allegations of a complaint made under oath, and testimony in opposition thereto, if
offered, and except after finding of fact by the Court, to the effect:

(1) That unlawful acts have been threatened and will be committed unless restrained,
or have been committed and will be continued unless restrained, but no injunction or temporary
restraining order shall be issued on account of any threat or unlawful act excepting against the
person or persons, association, or organization making the threat or committing the 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 granted greater injury will be inflicted upon complainant
by the denial of relief that will be inflicted upon defendants by the granting of relief;

(4) That complaint 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.
 …

Sec. 10 of Republic Act No. 875 - AN ACT TO PROMOTE INDUSTRIAL PEACE AND FOR OTHER
PURPOSES

(REPEALED BY PRESIDENTIAL DECREE NO. 442)

Section 10. Labor Disputes in Industries Indispensable to the National Interest. - When in the opinion
of the President of the Philippines there exists a labor dispute in an industry indispensable to the
national interest and when such labor dispute is certified by the President to the Court of Industrial
Relations, said Court may cause to be issued a restraining order forbidding the employees to strike
or the employer to lockout the employees, pending an investigation by the Court, and if no other
solution to the dispute is found, the Court may issue an order fixing the terms and conditions of
employment.

IV. Decision of the Supreme Court

The Supreme Court ruled that there can be no injunction issued against any strike except when a
labor dispute arises in an industry indispensable to the national interest and such dispute is certified
by the President of the Philippines to the Court of Industrial Relations in compliance with Sec. 10 of
Republic Act No. 875; however in this case, as the respondent has sought injunctive relief under Sec.
9(d) of Republic Act No.875, respondent court had jurisdiction over the Company's "Urgent Petition"
. The Supreme Court also ruled that the strike of the Caltex Filipino Managers and Supervisors'
Association as legal in all respects and ordered the respondent company to reinstate J.J. Mapa and
Dominador Mangalino to their former positions without loss of seniority and privileges, with
backwages from the time of dismissal. Since Herminigildo Mandanas appears to have voluntarily left
the Company, no reinstatement is ordered as to him. The Supreme Court also ruled that respondent
company is guilty of unfair labor practices and they are therefore ordered to cease and desist from
the same and they are directed to pay backwages to the striking employees.

REPUBLIC SAVINGS BANK (now REPUBLIC BANK)

vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN JARA,
FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S. MENDIOLA, TEODORO DE
LA CRUZ, NARCISO MACARAEG and MAURO A. ROVILLOS.
G.R. No. L-20303 September 27, 1967
Facts:
Herein private respondents are employees of the bank who were discharged for having
written and published “a patently libelous letter tending to cause the dishonor, discredit or
contempt not only of officers and employees of the bank, but also of the bank itself. The
letter referred to was a letter-charge which the respondents had written to the bank
president, demanding his resignation on the grounds of immorality, nepotism in the
appointment and favoritism as well as discrimination in the promotion of bank employees.
In several instances, according to respondents, the President instead of resolving several
anomalous activities committed by its employees who also happen to be his relatives, the
President promoted these employees resulting to demoralization of other deserving
employees and that the President have some illicit relationship with one of the bank
employees among others. Upon dismissal respondents filed a complaint in the CIR alleging
that the Bank’s conduct violated section 4(a) (5) of the Industrial Peace Act which makes it
an unfair labor practice for an employer “to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having filed charges or for having given or being about
to give testimony under this Act.”
The Bank moved for the dismissal of the complaint, contending that respondents were
discharged not for union activities but for having written and published a libelous letter
against the bank president. The Bank argues that the court should have dismissed the
complaint because the discharge of the respondents had nothing to do with their union
activities as the latter in fact admitted at the hearing that the writing of the letter-charge was
not a “union action” but merely their “individual” act.
ISSUE:
Whether or not the dismissal of the eight (8) respondent employees by the petitioner
Republic Bank (hereinafter referred to as the Bank) constituted an unfair labor practice within
the meaning and intendment of the Industrial Peace Act (Republic Act 875).
HELD:
Yes, the bank is guilty of ULP.
Assuming that the latter acted in their individual capacities when they wrote the letter-charge
they were nonetheless protected for they were engaged in concerted activity, in the exercise
of their right of self-organization that includes concerted activity for mutual aid and
protection, interference with which constitutes an unfair labor practice under section 4(a)(1).
For, as has been aptly stated, the joining in protests or demands, even by a small group of
employees, if in furtherance of their interests as such, is a concerted activity protected by
the Industrial Peace Act. It is not necessary that union activity be involved or that collective
bargaining be contemplated.
Indeed, when the respondents complained against nepotism, favoritism and other
management practices, they were acting within an area marked out by the Act as a proper
sphere of collective bargaining. Even the reference to immorality was not irrelevant as it was
made to support the respondents’ other charge that the bank president had failed to provide
wholesome working conditions, let alone a good moral example, for the employees by
practicing discrimination and favoritism in the appointment and promotion of certain
employees on the basis of illicit relations or blood relationship with them.

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and

CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE
WORKERS-FOOD AND GENERAL TRADE, respondents.

FACTS: In the course of a labor dispute between the petitioner and respondent union, the
union members were not given work for more than one month. In protest, complainants
staged a strike which was however settled upon the signing of a Memorandum of
Agreement. A conciliation meeting was conducted wherein Luisa Rombo, Ramona Rombo,
Bobong Abrega, and Boboy Silva were not considered by the company as employees, and
thus may not be members of the union. It was also agreed that a number of other employees
will be reinstated. When respondents again reneged on its commitment, complainants filed
the present complaint. It is alleged by the petitioners that the above employees are mere
seasonal employees.

ISSUE: Whether or not the seasonal employees have become regular employees.

HELD: The SC held that for respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are seasonal in nature.
They must have also been employed only for the duration of one season. The evidence
proves the existence of the first, but not of the second, condition. The fact that respondents
-- with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva --
repeatedly worked as sugarcane workers for petitioners for several years is not denied by
the latter. Evidently, petitioners employed respondents for more than one season. Therefore,
the general rule of regular employment is applicable.

The primary standard of determining regular employment is the reasonable connection

between the particular activity performed by the employee in relation to the usual trade or
business of the employer. The test is whether the former is usually necessary or desirable
in the usual trade or business of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme of the particular
business or trade in its entirety. Also if the employee has been performing the job for at least
a year, even if the performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of the necessity if
not indispensability of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity exists.

Petition is denied.

The ruling in Mercado v. NLRC is not applicable since in that case, the workers were merely
required to perform phases of agricultural work for a definite period of time, after which, their
services are available to other employers. The management's sudden change of assignment
reeks of bad faith, it is likewise guilty of ULP.

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.
G.R. No. L-25291, January 20, 1971

FACTS:
The Insular Life Assurance Co., Ltd., Employees Association - NATU, FGU Insurance Group Workers
and Employees Association - NATU, and Insular Life Building Employees Association - NATU (herein
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 (herein referred to as the Companies).

Two of the lawyers and officers of the Unions namely Felipe Enaje and Ramon Garcia, tried to
dissuade 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 and were thereafter hired by the companies -
Garcia as assistant corporate secretary and legal assistant, and Enaje as personnel manager and
chairman of the negotiating panel for the Companies in the collective bargaining with the Unions.

On October 1957, negotiations for the collective bargaining was conducted but resulted to a
deadlock. From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no
satisfactory results due to the stalemate on the matter of salary increases. This prompted the Unions
to declare a strike in protest against what they considered the Companies’ unfair labor practices.
On May 20, 1958, the Unions went on strike and picketed the offices of the Insular Life Building at
Plaza Moraga.

On May 21, Jose M. Olbes, the acting manager and president, sent individual letters to the striking
employees urging them to abandon their strike with a promise of free coffee, movies, overtime pay,
and accommodations. He also warned the strikers if they fail to return to work by a certain date,
they might be replaced in their jobs. Further, the Companies hired men to break into the picket lines
resulting in violence, and the filing of criminal charges against some union officers and members.
When eventually, the strikers called off their strike to return to their jobs, they were subjected to a
screening process by a management committee, among the members were Garcia and Enaje. After
screening, eighty-three (83) strikers were rejected due to pending criminal charges, and adamantly
refused readmission of thirty-four (34) officials and members of the Unions who were most active
in the strike.

The CIR prosecutor filed a complaint for unfair labor practice against the Companies, specifically (1)
interfering with the members of the Unions in the exercise of their right to concerted action; 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. After the trial, the
Court of Industrial Relations dismissed the Unions’ complaint for lack of merit.

ISSUES:

I. Whether or not the Companies are guilty of unfair labor practice when they sent
individual letters to the strikers with the promise of additional benefits, and
notifying them to either return to work, or lose their jobs; and

II. Whether or not the Companies are guilty of unfair labor practice for discriminating
against the striking members of the Unions in readmission of employees after the
strike.

HELD:
First issue. The Companies contended that by sending those letters, it constituted a legitimate
exercise of their freedom of expression. That contention is untenable. The Companies are guilty of
unfair labor practice when they sent individual letters to the strikers. It is an act of interference with
the right to collective bargaining through dealing with the strikers individually instead of through
their collective bargaining representatives. Although the Unions are on strike, the employer is still
obligated to bargain with the union as the employees’ bargaining representative. Further, it is also
an act of interference for the employer to send individual letters to the employees notifying them
to return to their jobs, otherwise, they would be replaced. Individual solicitation of the employees
urging them to cease union activity or cease striking consists of unfair labor practice. Furthermore,
when the Companies offered to “bribe” the strikers with “comfortable cots, free coffee, and movies,
overtime work pay” so they would abandon their strike and return to work, it was guilty of strike-
breaking and/or union busting which constitute unfair labor practice.

Second Issue. Some of the members of the Unions were refused readmission because they had
pending criminal charges. However, despite the fact they were able to secure clearances, 34 officials
and members were still refused readmission on the alleged ground that they committed acts
inimical to the Companies. It should be noted, however, that non-strikers who also had criminal
charges pending against them in the fiscal’s office, arising from the same incidents whence against
the criminal charges against the strikers are involved, were readily readmitted and were not
required to secure clearances. This is an 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 respondent Companies did not merely discriminate against all strikers in general since they
separated the active rom the less active unionists on the basis of their militancy, or lack of it, on the
picket lines. Discrimination 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.

Duplicate (Republic Savings Bank vs. CIR)

10

BANKARD, INC. vs. NLRC- FIRST DIVISION, PAULO BUENCONSEJO,BANKARD EM

PLOYEES UNION-AWATU G.R. No. 171664, 6 March 2013

FACTS:
The issue started when Bankard implemented Manpower Rationalization Program (MRP),
to further enhance its efficiency and be more competitive in the credit card industry, invitati
ng to the employees to tender their voluntary resignation, with entitlement to separation pa
y. Thereafter, majority of one division availed of the MRP. Thus, Bankard contracted an ind
ependent agency to handle its call center needs.
The Union filed before the NCMB its first Notice of Strike (NOS) alleging commission of unf
air labor practices by petitioner Bankard, Inc. . Labor Secretary of the DOLE issued the ord
er certifying the labor dispute to the NLRC upon the Bankard’s request. The Union filed its
second NOS the day after it declared deadlock, alleging bargaining in bad faith on the part
of Bankard. Bankard then again asked the Office of the Secretary of Labor to assume juris
diction, which was granted and certified the labor dispute to the NLRC.

ISSUE:
Whether job contractualization or outsourcing or contracting-
out is an unfair labor practice considering there was no bad faith.

RULING: No. Aside from the bare allegations of the Union, nothing in the records strongly
proves that Bankard intended its program, the MRP, as a tool to drastically and deliberatel
y reduce union membership. Contrary to the findings and conclusions of both the NLRC an
d the CA, there was no proof that the program was meant to encourage the employees to
disassociate themselves from the Union or to restrain them from joining any union or organ
ization. There was no showing that it was intentionally implemented to stunt the growth of t
he Union or that Bankard discriminated, or in any way singled out the union members who
had availed of the retirement package under the MRP. True, the program might have affec
ted the number of union membership because of the employees’ voluntary resignation and
availment of the package, but it does not necessarily follow that Bankard indeed purposel
y sought such result. It must be recalled that the MRP was implemented as a valid cost-
cutting measure, well within the ambit of the so-
called management prerogatives. Bankard contracted an independent agency to meet busi
ness exigencies. In the absence of any showing that Bankard was motivated by ill will, bad
faith or malice, or that it was aimed at interfering with its employees’ right to self-
organize, it cannot be said to have committed an act of unfair labor practice. The Court ha
s ruled that the prohibited acts considered as ULP relate to the workers’ right to self-
organization and to the observance of a CBA. It refers to “acts that violate the workers’ righ
t to organize.” Without that element, the acts, even if unfair, are not ULP. Thus, an employ
er may only be held liable for unfair labor practice if it can be shown that his acts affect in
whatever manner the right of his employees to self-organize.
Law on unfair labor practices is not intended to deprive employers of their fundamental rig
ht to prescribe and enforce such rules as they honestly believe to be necessary to the prop
er, productive and profitable operation of their business. Contracting out of services is an e
xercise of business judgment or management prerogative. Absent any proof that manage
ment acted in a malicious or arbitrary manner, the Court will not interfere with the exercise
of judgment by an employer.

11

ALABANG COUNTRY CLUB, et al. v. NATIONAL LABOR

RELATIONS COMMISSION, et al.
466 SCRA 329 (2005)

FACTS: The court cannot interfere with management’s prerogative to close or cease its
business operation just because the business is not suffering from any loss or because of
the desire to provide the workers continued employment.

Petitioner Alabang Country Club, Inc. (ACCI) requested its Internal Auditor Irene Campos-
Ugalde to conduct a study on the profitability of its Food and Beverage Department (F & B
Department). Irene found out that the business had been incurring substantial losses.
Consequently, the management decided to transfer the operation of the department to La
Tasca Restaurant Inc. (La Tasca). ACCI then sent its F & B Department employees
individual letters informing them that their services were being terminated and that they
would receive separation pay.

The private respondent Alabang Country Club Independent Employees Union (Union) filed
before the National Labor Relations Commission (NLRC) a complaint for illegal dismissal,
unfair labor practice, regularization and damages with prayer for the issuance of a writ of
preliminary injunction against ACCI.

The Labor Arbiter (LA) dismissed the complaint for illegal dismissal which was upheld by the
NLRC. The Court of Appeals (CA) reversed the decisions of the LA and NLRC.

ISSUE: Whether or not the ACCI can terminate its business operation

HELD: One of the prerogatives of management is the decision to close the entire
establishment or to close or abolish a department or section thereof for economic reasons,
such as to minimize expenses and reduce capitalization. While the Labor Code provides for
the payment of separation package in case of retrenchment to prevent losses, it does not
obligate the employer for the payment thereof if there is closure of business due to serious
losses.

As in the case of retrenchment, however, for the closure of a business or a department due
to serious business losses to be regarded as an authorized cause for terminating
employees, it must be proven that the losses incurred are substantial and actual or
reasonably imminent; that the same increased through a period of time; and that the
condition of the company is not likely to improve in the near future.

The closure of operation of an establishment or undertaking not due to serious business

losses or financial reverses includes both the complete cessation of operations and the
cessation of only part of a company’s activities.

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law
forces anyone to go into business, no law can compel anybody to continue the same. It
would be stretching the intent and spirit of the law if a court interferes with management’s
prerogative to close or cease its business operations just because the business is not
suffering from any loss or because of the desire to provide the workers continued
employment.

12

Jurisdiction ~ 261-262

58. DEL MONTE PHILIPPINES, INC. and WARFREDO C. BALANDRA

vs.
MARIANO SALDIVAR, NENA TIMBAL, VIRGINIO VICERA, ALFREDO AMONCIO and
NAZARIO S. COLASTE
October 11, 2006 ~ TINGA, J.

Nutshell: The Labor Arbiter refused to exercise jurisdiction over Del Monte's cross-claim (for
restitution by ALU should the company be held financially liable for dismissals). The CA agreed
with the LA. The SC held that the law precludes the LA from enforcing money claims arising
from the implementation of the CBA. Moreover, there is a provision in the CBA that states that
Voluntary Arbitrators have exclusive jurisdiction.
FACTS:
- Associated Labor Union (ALU) is the exclusive bargaining agent of plantation workers
of petitioner Del Monte Philippines, Inc. (Del Monte) in Bukidnon
- Respondent Nena Timbal was a rank-and-file employee of Del Monte and also a
member of ALU
- Del Monte and ALU entered into a CBA
o Section 5 of the CBA stipulated that "ALU assumes full responsibility of any
such termination of any member of the bargaining unit who loses his
membership in ALU and agrees to hold Del Monte free from any liability by
judgment of a competent authority for claims arising out of dismissals made
upon demand of ALU, and latter shall reimburse the former of such sums as it
shall have paid therefore.1
▪ Timbal, along with four other employees (collectively, co-employees),
were charged by ALU for disloyalty to the union (for encouraging
defections to a rival union, NFL). They allegedly attended seminars.
▪ Disloyalty Board >>> Affidavit of Artajo (turns out there is bad blood
between Artajo and Timbal) >>> Disloyalty Board nonetheless
recommended the expulsion of Timbal from membership in ALU, and
likewise her dismissal from Del Monte in accordance with the Union
Security Clause in the existing CBA >>> ALU Regional VP adopted
recommendations >>> ALU President affirmed the expulsion
▪ Del Monte terminated Timbal and her co-employees, noting that the
termination was "upon demand of ALU
- Timbal and her co-employees filed separate complaints against Del Monte and/or its
Personnel Manager Warfredo C. Balandra and ALU with the Regional Arbitration
Branch (RAB) of the National Labor Relations Commission (NLRC) for illegal
dismissal, unfair labor practice and damages.
o The Labor Arbiter affirmed that all five were illegally dismissed and ordered
Del Monte to reinstate complainants, to their former positions and to pay their
full backwages and other allowances >>> NLRC: all validly dismissed >>> CA:
all, except Timbal, validly dismissed
- Before the Labor Arbiter, Del Monte presented its cross-claim against ALU for
reimbursement should it be made liable for illegal dismissal or unfair labor practice
pursuant to the union security clause.
- LA ruled that it cannot validly entertain the cross-claims of respondent DMPI and
Tabusuares against the respondent ALU-TUCP because of the absence of employer-
employee relationship between the two
ISSUE: WoN the Labor Arbiter could properly pass judgment on the cross-claim
HELD: NO.
 The law precludes the Labor Arbiter from enforcing money claims arising from the
implementation of the CBA
 Del Monte and ALU expressly recognized the jurisdiction of Voluntary Arbitrators in
the CBA
 Article 217 of the Labor Code sets forth the original jurisdiction of the Labor Arbiters.
In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary Arbitrator
 or panel of Voluntary Arbitrators the "original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of
the Collective Bargaining Agreement." Among those areas of conflict traditionally
within the jurisdiction of Voluntary Arbitrators are contract-interpretation and
contract-implementation, the questions precisely involved in Del Monte’s claim.
 In reconciling the grants of jurisdiction vested under Articles 261 and 217 of the
Labor Code, the Court has pronounced that "the original and exclusive jurisdiction of
the Labor Arbiter under Article 217(c) for money claims is limited only to those arising
from statutes or contracts other than a Collective Bargaining Agreement. The
Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive
jurisdiction over money claims 'arising from the interpretation or implementation of
the Collective Bargaining Agreement and, those arising from the interpretation or
enforcement of company personnel policies', under Article 261.
The CBA obviously adopts a closed-shop policy which mandates, as a condition of employment,
membership in the exclusive bargaining agent. A "closed-shop" may be defined as an enterprise
in which, by agreement between the employer and his employees or their representatives, no
person may be employed in any or certain agreed departments of the enterprise unless he or
she is, becomes, and, for the duration of the agreement, remains a member in good standing of
a union entirely comprised of or of which the employees in interest are a part. A CBA provision
for a closed-shop is a valid form of union security and it is not a restriction on the right or
freedom of association guaranteed by the Constitution.

13

Bank of the Philippine Islands v. BPI Employees Union Davao Chapter – Federation of
Unions in BPI Unibank, G.R. No. 164301, October 19, 2011.
29
APR
[LEONARDO-DE CASTRO, J.]
FACTS
In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for
reconsideration of our Decision dated August 10, 2010, holding that former employees of
the Far East Bank and Trust Company (FEBTC) “absorbed” by BPI pursuant to the two
banks’ merger were covered by the Union Shop Clause in the then existing collective
bargaining agreement (CBA) of BPI with respondent BPI Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank (the Union).
ISSUE
Whether or not employees are absorbed in a merger of the two corporations.

RULING
YES.
It is more in keeping with the dictates of social justice and the State policy of according full
protection to labor to deem employment contracts as automatically assumed by the surviving
corporation in a merger, even in the absence of an express stipulation in the articles of
merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that:
To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally
declared policies on work, labor and employment, and the specific FEBTC-BPI situation
— i.e., a merger with complete “body and soul” transfer of all that FEBTC embodied and
possessed and where both participating banks were willing (albeit by deed, not by their
written agreement) to provide for the affected human resources by recognizing continuity of
employment — should point this Court to a declaration that in a complete merger situation
where there is total takeover by one corporation over another and there is silence in the
merger agreement on what the fate of the human resource complement shall be, the latter
should not be left in legal limbo and should be properly provided for, by compelling the
surviving entity to absorb these employees. This is what Section 80 of the Corporation Code
commands, as the surviving corporation has the legal obligation to assume all the
obligations and liabilities of the merged constituent corporation.
Not to be forgotten is that the affected employees managed, operated and worked on the
transferred assets and properties as their means of livelihood; they constituted a basic
component of their corporation during its existence. In a merger and consolidation situation,
they cannot be treated without consideration of the applicable constitutional declarations
and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court
to read and interpret the law so that they are treated in accordance with the legal
requirements of mergers and consolidation, read in light of the social justice, economic and
social provisions of our Constitution. Hence, there is a need for the surviving corporation to
take responsibility for the affected employees and to absorb them into its workforce where
no appropriate provision for the merged corporation’s human resources component is made
in the Merger Plan.
By upholding the automatic assumption of the non-surviving corporation’s existing
employment contracts by the surviving corporation in a merger, the Court strengthens
judicial protection of the right to security of tenure of employees affected by a merger and
avoids confusion regarding the status of their various benefits which were among the chief
objections of our dissenting colleagues. However, nothing in this Resolution shall impair the
right of an employer to terminate the employment of the absorbed employees for a lawful or
authorized cause or the right of such an employee to resign, retire or otherwise sever his
employment, whether before or after the merger, subject to existing contractual
obligations. In this manner, Justice Brion’s theory of automatic assumption may be
reconciled with the majority’s concerns with the successor employer’s prerogative to choose
its employees and the prohibition against involuntary servitude.
Notwithstanding this concession, the Court finds no reason to reverse our previous
pronouncement that the absorbed FEBTC employees are covered by the Union Shop
Clause.

14

Del Pilar Academy vs. Del Pilar Academy Employees Union

In September 1994, the Del Pilar Academy and the Del Pilar Academy Employees Union
entered into a collective bargaining agreement where it was agreed that:
a. the employees, teaching and non-teaching staff, shall have a salary increase;
b. the teaching staff shall have a maximum load of 23 hours per week in teaching;
c. any overload shall be paid extra;
d. there shall be an increase in the longevity pay;
e. teaching staff who have rendered service for 6 consecutive semester are entitled to
receive pay during summer breaks;
f. non-union members who have rendered at least 1 year of service shall be entitled to 15
days leave with pay.
Since the new CBA benefits non-union members, the union asked Del Pilar to deduct
agency fees from the salaries of non-union members. Del Pilar refused to do so hence a
labor case was filed by the union.
In its defense, Del Pilar avers that it cannot collect agency fees because the non-union
members refused to provide Del Pilar a check off authorization to make deductions from
their salaries; and that further, the non-union members are not benefited because regardless
of the CBA, employees are going to be given a salary increase pursuant to a program by
the DECS which mandates all private schools to provide for salary increase based on tuition
profits.
ISSUE: Whether or not Del Pilar must collect the said agency fees.
HELD: Yes. This is pursuant to Article 248 of the Labor Code which provides:
Employees of an appropriate collective bargaining unit who are not members of the
recognized collective bargaining agency may be assessed a reasonable fee equivalent to
the dues and other fees paid by members of the recognized collective bargaining
agreement… xxx
This is also an exception to the rule that any deductions comprising of special assessments
or extraordinary fees (Art. 241, Labor Code) made by the employer from an employees
salary must be authorized by the employee.
It may be true that the salary increase provision may not have benefited the non-union
members at all because of the existing DECS regulation but it is also undeniable that the
CBA also provides for other provisions which benefits non-union members such as the grant
of 15 paid leaves, the limitation of workloads, and premiums for overloads. All these surely
benefited even non-union employees.

15

MABEZA VS. NLRC

Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an
inspection was made by the Department of Labor and Employment (DOLE) at Hotel
Supreme and the DOLE inspectors discovered several violations by the hotel management.
Immediately, the owner of the hotel, Peter Ng, directed his employees to execute an affidavit
which would purport that they have no complaints whatsoever against Hotel Supreme.
Mabeza signed the affidavit but she refused to certify it with the prosecutor’s office. Later,
when she reported to work, she was not allowed to take her shift. She then asked for a leave
but was not granted yet she’s not being allowed to work. In May 1991, she then sued Peter
Ng for illegal dismissal. Peter Ng, in his defense, said that Mabeza abandoned her work. In
July 1991, Peter Ng also filed a criminal complaint against Mabeza as he alleged that she
had stolen a blanket and some other stuff from the hotel. Peter Ng went on to amend his
reply in the labor case to make it appear that the reason why he dismissed Mabeza was
because of his loss of confidence by reason of the theft allegedly committed by Mabeza.
The labor arbiter who handled the case, a certain Felipe Pati, ruled in favor of Peter Ng.
ISSUE: Whether or not there is abandonment in the case at bar. Whether or not loss of
confidence as ground for dismissal applies in the case at bar.
HELD: No. The side of Peter Ng is bereft of merit so is the decision of the Labor Arbiter
which was unfortunately affirmed by the NLRC.
Abandonment
Abandonment is not present. Mabeza returned several times to inquire about the status of
her work or her employment status. She even asked for a leave but was not granted. Her
asking for leave is a clear indication that she has no intention to abandon her work with the
hotel. Even the employer knows that his purported reason of dismissing her due to
abandonment will not fly so he amended his reply to indicate that it is actually “loss of
confidence” that led to Mabeza’s dismissal.
Loss of Confidence
It is true that loss of confidence is a valid ground to dismiss an employee. But this is ideally
only applied to workers whose positions require a certain level or degree of trust particularly
those who are members of the managerial staff. Evidently, an ordinary chambermaid who
has to sign out for linen and other hotel property from the property custodian each day and
who has to account for each and every towel or bedsheet utilized by the hotel’s guests at
the end of her shift would not fall under any of these two classes of employees for which
loss of confidence, if ably supported by evidence, would normally apply. Further, the
suspicious filing by Peter Ng of a criminal case against Mabeza long after she initiated her
labor complaint against him hardly warrants serious consideration of loss of confidence as a
ground of Mabeza’s dismissal.

16

San Miguel Corp. Employees Union v Bersamira

Facts:

Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with
Lipercon and D'Rite. These companies are independent contractors duly licensed by the
DOLE. SanMig entered into those contracts to maintain its competitive position and in
keeping with the imperatives of efficiency, business expansion and diversity of its operation.
In said contracts, it was expressly understood and agreed that the workers employed by the
contractors were to be paid by the latter and that none of them were to be deemed
employees or agents of SanMig. There was to be no employer-employee relation between
the contractors and/or its workers, on the one hand, and SanMig on the other. Petitioner
San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom
the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30
June 1989. Section 1 of their CBA specifically provides that "temporary, probationary, or
contract employees and workers are excluded from the bargaining unit and, therefore,
outside the scope of this Agreement." In a letter, dated 20 November 1988, the Union
advised SanMig that some Lipercon and D'Rite workers had signed up for union
membership and sought the regularization of their employment with SMC. The Union alleged
that this group of employees, while appearing to be contractual workers supposedly
independent contractors, have been continuously working for SanMig for a period ranging
from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal
as they are performing work or activities necessary or desirable in the usual business or
trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation.
It was then demanded that the employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from
SanMig, the Union filed a notice of strike for unfair labor practice, CBA violations, and union
busting. On 30 January 1989, the Union again filed a second notice of strike for unfair labor
practice. After several hearings on SanMig's application for injunctive relief, where the
parties presented both testimonial and documentary evidence on 25 March 1989,
respondent Court issued the questioned granting the application and enjoining the Union
from Committing the acts complained of, supra. In issuing the Injunction, respondent Court
rationalized: “The absence of employer-employee relationship negates the existence of
labor dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance. “
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification
of the challenged Writ.

Issue:

WON the case at bar involves, or is in connection with, or relates to a labor dispute
Held:

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy
or matter concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing, or arranging the
terms and conditions of employment, regardless of whether the disputants stand in the
proximate relation of employer and employee." While it is SanMig's submission that no
employer-employee relationship exists between itself, on the one hand, and the contractual
workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless exist
"regardless of whether the disputants stand in the proximate relationship of employer and
employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among
others, the terms and conditions of employment or a "change" or "arrangement" thereof
(ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative
by the fact that the plaintiffs and defendants do not stand in the proximate relation of
employer and employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the
Union seeks is to regularize the status of the employees contracted by Lipercon and D'Rite
in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells
on the working relationship between said employees vis-a-vis SanMig. Terms, tenure and
conditions of their employment and the arrangement of those terms are thus involved
bringing the matter within the purview of a labor dispute. Further, the Union also seeks to
represent those workers, who have signed up for Union membership, for the purpose of
collective bargaining. SanMig, for its part, resists that Union demand on the ground that
there is no employer-employee relationship between it and those workers and because the
demand violates the terms of their CBA. Obvious then is that representation and association,
for the purpose of negotiating the conditions of employment are also involved. In fact, the
injunction sought by SanMig was precisely also to prevent such representation. Again, the
matter of representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already taken
cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-
83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with
Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular employer-
employee relationship may, in fact, be said to exist; whether or not the Union can lawfully
represent the workers of Lipercon and D'Rite in their demands against SanMig in the light
of the existing CBA; whether or not the notice of strike was valid and the strike itself legal
when it was allegedly instigated to compel the employer to hire strangers outside the working
unit; — those are issues the resolution of which call for the application of labor laws, and
SanMig's cause's of action in the Court below are inextricably linked with those issues.
We recognize the proprietary right of SanMig to exercise an inherent management
prerogative and its best business judgment to determine whether it should contract out the
performance of some of its work to independent contractors. However, the rights of all
workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law (Section 3, Article XIII, 1987
Constitution) equally call for recognition and protection. Those contending interests must be
placed in proper perspective and equilibrium. The Writ of Certiorari is GRANTED.

17

GENERAL MILLING CORP.

VS
CA
422 SCRA 514
[February 11, 2004]

NATURE
Petition for certiorari
FACTS
-Petitioner General Milling Corporation (GMC) concluded a CBA with General Milling
Corporation Independent Labor Union (union) on April 28, 1989, which included the issue of
representation effective for a term of three years. The CBA was effective for three years
retroactive to December 1, 1988. Hence, it would expire on November 30, 1991.
-On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a
proposed CBA, with a request that a counter-proposal be submitted within ten days.
-As early as October 1991, however, GMC had received collective and individual letters from
workers who stated that they had withdrawn from their union membership, on grounds of
religious affiliation and personal differences. Believing that the union no longer had standing
to negotiate a CBA, GMC did not send any counter-proposal.
-The union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration
Division alleging unfair labor practice on the part of GMC for: (1) refusal to bargain
collectively; (2) interference with the right to self-organization; and (3) discrimination. The
labor arbiter dismissed the case with the recommendation that a petition for certification
election be held to determine if the union still enjoyed the support of the workers. The union
appealed to the NLRC. The NLRC set aside the labor arbiter’s decision. In its decision, the
NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a CBA,
insofar as the representation aspect is concerned, is five years which, in the case of GMC-
Independent Labor Union was from December 1, 1988 to November 30, 1993. All other
provisions of the CBA are to be renegotiated not later than three (3) years after its execution.
Thus, the NLRC held that respondent union remained as the exclusive bargaining agent
with the right to renegotiate the economic provisions of the CBA. Consequently, it was unfair
labor practice for GMC not to enter into negotiation with the union. The NLRC likewise held
that the individual letters of withdrawal from the union submitted by 13 of its members from
February to June 1993 confirmed the pressure exerted by GMC on its employees to resign
from the union. Thus, the NLRC also found GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization. With respect to the union’s claim of
discrimination, the NLRC found the claim unsupported by substantial evidence.
-On GMC’s motion for reconsideration, the NLRC set aside its decision of January 30, 1998,
through a resolution dated October 6, 1998. It found GMC’s doubts as to the status of the
union justified and the allegation of coercion exerted by GMC on the union’s members to
resign unfounded. Hence, the union filed a petition for certiorari before the Court of Appeals.
The CA reinstated the January 30, 1998 NLRC decision. A motion for reconsideration was
seasonably filed by GMC, but in a resolution dated October 26, 2000, the CA denied it for
lack of merit. Hence, the instant petition.
ISSUE
(1) WON GMC is guilty of unfair labor practice for violating the duty to bargain collectively
and/or interfering with the right of its employees to self-organization
(2) WON the draft CBA proposed by the union for two years to begin from the expiration of
the original CBA should be imposed on GMC

HELD
1. YES
-Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. – Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect is
concerned, be for a term of five (5) years. No petition questioning the majority status of the
incumbent bargaining agent shall be entertained and no certification election shall be
conducted by the Department of Labor and Employment outside of the sixty-day period
immediately before the date of expiry of such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective Bargaining Agreement shall be
renegotiated not later than three (3) years after its execution….
-The law mandates that the representation provision of a CBA should last for five years. The
relation between labor and management should be undisturbed until the last 60 days of the
fifth year. Hence, it is indisputable that when the union requested for a renegotiation of the
economic terms of the CBA on November 29, 1991, it was still the certified collective
bargaining agent of the workers, because it was seeking said renegotiation within five years
from the date of effectivity of the CBA on December 1, 1988. The union’s proposal was also
submitted within the prescribed 3-year period from the date of effectivity of the CBA, albeit
just before the last day of said period. It was obvious that GMC had no valid reason to refuse
to negotiate in good faith with the union. For refusing to send a counter-proposal to the union
and to bargain anew on the economic terms of the CBA, the company committed an unfair
labor practice under Article 248 of the Labor Code, which provides that:
ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to
commit any of the following unfair labor practice:
…
(g) To violate the duty to bargain collectively as prescribed by this Code;
…
-Article 252 of the Labor Code elucidates the meaning of the phrase “duty to bargain
collectively,” thus:
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively means
the performance of a mutual obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement…. We have held that the crucial
question whether or not a party has met his statutory duty to bargain in good faith typically
turns on the facts of the individual case. There is no per se test of good faith in bargaining.
Good faith or bad faith is an inference to be drawn from the facts.[ The effect of an
employer’s or a union’s actions individually is not the test of good-faith bargaining, but the
impact of all such occasions or actions, considered as a whole. Under Article 252
abovecited, both parties are required to perform their mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement. The
union lived up to this obligation when it presented proposals for a new CBA to GMC within
three years from the effectivity of the original CBA. But GMC failed in its duty under Article
252. What it did was to devise a flimsy excuse, by questioning the existence of the union
and the status of its membership to prevent any negotiation. GMC’s refusal to make a
counter-proposal to the union’s proposal for CBA negotiation is an indication of its bad faith.
Where the employer did not even bother to submit an answer to the bargaining proposals of
the union, there is a clear evasion of the duty to bargain collectively.
-GMC also interfered with the employees’ right to self-organization. The CA found that the
letters 13 union members signifying their resignation from the union clearly indicated that
GMC exerted pressure on its employees. The records show that GMC presented these
letters to prove that the union no longer enjoyed the support of the workers. The fact that
the resignations of the union members occurred during the pendency of the case before the
labor arbiter shows GMC’s desperate attempts to cast doubt on the legitimate status of the
union.
2. NO
-The Code provides: ART. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. – ….It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement during
the 60-day period [prior to its expiration date] and/or until a new agreement is reached by
the parties.
The provision mandates the parties to keep the status quo while they are still in the process
of working out their respective and counter proposal. The general rule is that when a CBA
already exists, its provision shall continue to govern the relationship between the parties,
until a new one is agreed upon. The rule necessarily presupposes that all other things are
equal. That is, that neither party is guilty of bad faith. However, when one of the parties
abuses this grace period by purposely delaying the bargaining process, a departure from
the general rule is warranted.
-It would be unfair to the union and its members if the terms and conditions contained in the
old CBA would continue to be imposed on GMC’s employees for the remaining two years of
the CBA’s duration. We are not inclined to gratify GMC with an extended term of the old
CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC which
violated the duty to bargain collectively, it had lost its statutory right to negotiate or
renegotiate the terms and conditions of the draft CBA proposed by the union.

18

Duplicate (central azucarera EEs vs central azucarera)

19

st. JOHN COLLEGES, INC., VS. ST. JOHN ACADEMY FACULTY AND EMPLOYEES
UNION
G.R. No. 167892 October 27, 2006

FACTS:

Petitioner St. John Colleges, Inc. (SJCI) is a domestic corporation which owns and operates
the St. John’s Academy (later renamed St. John Colleges) in Calamba, Laguna. Prior to
1998, the Academy offered a secondary course only. The high school then employed about
80 teaching and non-teaching personnel who were members of the St. John Academy
Faculty & Employees Union (Union).The CBA between SJCI and the Union was set to expire
on May 31, 1997. During the ensuing collective bargaining negotiations, SJCI rejected all
the proposals of the Union for an increase in worker’s benefits. This resulted to a bargaining
deadlock which led to the holding of a valid strike by the Union on November 10, 1997.In
order to end the strike, SJCI and the Union, through the efforts of the NCMB, agreed to refer
the labor dispute to the Secretary of Labor and Employment (SOLE) for assumption of
jurisdiction. After which, the strike ended and classes resumed. Subsequently, the SOLE
issued an Order dated January19, 1998 assuming jurisdiction over the labor dispute
pursuant to Article 263 of the Labor Code. The partieswere required to submit their
respective position papers. Pending resolution of the labor dispute before the SOLE, the
Board of Directors of SJCI approved on February 22, 1998 a resolution recommending the
closure of the high school which was approved by the stockholders on even date.
Thereafter, SJCI informed the DOLE, DECS, parents, students and the Union of the
impending closure of the high school which took effect on March 31, 1998. Subsequently,
some teaching and non-teaching personnel of the high school agreed to the closure. Some
51 employees had received their separation compensation package while 25 employees
refused to accept the same. Instead, these employees conducted a protest action within the
perimeter of the high school. The Union filed a notice of strike. Thereafter SJCI filed a petition
to declare the strike illegal before the NLRC. It claimed that the strike was conducted in
violation of the procedural requirements for holding a valid strike under the Labor Code.
Subsequently, the 25 employees filed a complaint for unfair labor practice (ULP), illegal
dismissal and non-payment of monetary benefits against SJCI before the NLRC, alleging
that the closure of the high school was done in bad faith in order to get rid of the Union and
render useless any decision of the SOLE on the CBA deadlocked issues.
LA: Dismissed the Union’s complaint for ULP and illegal dismissal while granting SJCI’s
petition to declare the strike illegal coupled with a declaration of loss of employment status
of the 25 Union members involved in the strike.[SOLE: Union filed a manifestation to
maintain the status quo on March 30, 1998 praying that SJCI be enjoined from closing the
high school. It claimed that the decision of SJCI to close the high school violated the SOLE’s
assumption order and the agreement of the parties not to take any retaliatory action against
the other. For its part, SJCI filed a motion to dismiss with entry of appearance on October
14, 1998 claiming that the closure of the high school rendered the CBA deadlocked issues
moot. The SOLE denied SJCI’s motions to dismiss and certified the CBA deadlock case to
the NLRC] After the favorable decision of the Labor Arbiter, SJCI resolved to reopen the
high school for school year 1999-2000. However, it did not restore the high school teaching
and non-teaching employees it earlier terminated. That same school year SJCI opened an
elementary and college department.
NLRC: Rendered judgment reversing the decision of the Labor Arbiter. It found SJCI guilty
of ULP and illegal dismissal and ordered it to reinstate the 25 employees to their former
positions without loss of seniority rights and other benefits, and with full backwages. It also
required SJCI to pay moral and exemplary damages, attorney’s fees, and two (2) months
summer/vacation pay. Moreover, it ruled that the mass actions conducted by the 25
employees on May 4, 1998 could not be considered as a strike since, by then, the employer-
employee relationship had already been terminated due to the closure of the high school.
CA: Affirmed the Decision of the NLRC

ISSUE:

W/N the petitioner is guilty of ULP and illegal dismissal

HELD:

Yes, the petitioner is guilty of UPL and illegal dismissal, base on the following premise:
When SJCI reopened its high school, it did not rehire the Union members. Evidently, the
closure had achieved its purpose, that is, to get rid of the Union members.
Evidence provides that subsequent reopening of the high school after only one year from its
closure further show that the high school’s closure was done in bad faith.
Thus, the SJCI asserts that the strike conducted by the 25 employees on May 4, 1998 was
illegal for failure to take the necessary strike vote and give a notice of strike. However, the
High Court finds for the findings of the NLRC and CA that the protest actions of the Union
cannot be considered a strike because, by then, the employer-employee relationship has
long ceased to exist because of the previous closure of the high school on March 31, 1998.
In sum, the timing of, and the reasons for the closure of the high school and its reopening
after only one year from the time it was closed down, show that the closure was done in bad
faith for the purpose of circumventing the Union’s right to collective bargaining and its
members’ right to security of tenure. Consequently, SJCI is liable for ULP and illegal
dismissal.

20
ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, et al. v. COURT OF APPEALS, et
al. 502 SCRA 219 (2006), THIRD DIVISION (Carpio Morales, J.)

An ordinary striking worker may not be declared to have lost his employment status by mere participation in an
illegal strike.

The Arellano University Employees and Workers Union (the Union), the exclusive bargaining representative of
about 380 rank-and-file employees of Arellano University, Inc. (the University), filed with the National
Conciliation and Mediation Board (NCMB) a Notice of Strike charging the University with Unfair Labor Practice
(ULP). After several controversies and petitions, a strike was staged.

Upon the lifting of the strike, the University filed a Petition to Declare the Strike Illegal before the National Labor
Relations Commission (NLRC). The NLRC issued a Resolution holding that the University was not guilty of ULP.
Consequently, the strike was declared illegal. All the employees who participated in the illegal strike were thereafter
declared to have lost their employment status.

ISSUE:
Whether or not an employee is deemed to have lost his employment by mere participation in an illegal strike

HELD:
Under Article 264 of the Labor Code, an ordinary striking worker may not be declared to have lost his employment
status by mere participation in an illegal strike. There must be proof that he knowingly participated in the
commission of illegal acts during the strike. While the University adduced photographs showing strikers picketing
outside the university premises, it failed to identify who they were. It thus failed to meet the ―substantiality of
evidence test‖ applicable in dismissal cases.
With respect to the union officers, as already discussed, their mere participation in the illegal strike warrants their
dismissal.

21

G.R. No. L-39040 June 6, 1990 ROYAL UNDERGARMENT CORPORATION OF THE

PHILIPPINES, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, ROYAL
UNDERGARMENT WORKERS UNION (PTGWO) and ANTONIO CRUZ, respondents.
Tanada, Vivo & Tan for petitioner. Carlos E. Santiago for Antonio Cruz. MEDIALDEA, J.:

FACTS;

1. Antonio Cruz (Cruz) was employed by Royal Undergarment Corporation (RUC) as an

electrician.
2. He was elected president of the Royal Undergarment Workers Union (RUWU for
brevity), a legitimate labor organization which became affiliated with the Philippine
Transport and General Workers Organization (PTGWO for brevity).
3. the RUWU-PTGWO, represented by the National Secretary of PTGWO and Cruz as
RUWU President, sent proposals to RUC for the purpose of collective bargaining.
4. RUC, thru its personnel manager, terminated the services of respondent Cruz allegedly
on the basis of the latter's "record and after careful analysis and deliberation."
5. Respondent's wife, Felicidad Cruz, who was also an employee of RUC, was likewise
terminated. Thus, RUWU called a strike.
6. RUWU-PTGWO and petitioner corporation entered into a Return-to-Work Agreement
thru the conciliation efforts of the Department of Labor.
7. The records do not disclose the results of the consent election. Subsequently however,
Cruz and his wife were both re-employed and reinstated by RUC, thereby indicating the
victory of RUWU-PTGWO in the consent election.
8. RUWU-PTGWO and RUC entered into a collective bargaining agreement which
contained a grievance procedure for the settlement of disputes. Such grievance
procedure was applied on several occasions involving suspensions of union members-
employees through the help and active participation of respondent Cruz as union
president.
9. The PTGWO urged its member-unions to stage a nationwide strike. Thus, respondent
Cruz campaigned among the members of RUWU to join the strike.
10. The general manager of RUC placed Cruz on preventive suspension for threatening "the
lives of four (4) employees" and for having 'been reported under the influence of liquor,"
both acts being "contrary to rules and regulations."
11. Upon the request of Cruz and PTGWO, RUC conducted a conference which was in the
nature of an investigation of the incident.
12. RUC dismissed Cruz for being under the influence of liquor and for having threatened
the lives of four of his co-employees.
13. Cruz filed a complaint for unfair labor practice against RUC with the Court of Industrial
Relations. The respondent industrial court, while affirming the findings of the healing
examiner, rendered a decision,
14. Hence, this petition for review on certiorari with the RUC.

ISSUE:

ASSUMING ARGUENDO THAT PETITIONER IS GUILTY OF UNFAIR LABOR PRACTICE,

RESPONDENT CIR ERRED IN AWARDING RESPONDENT CRUZ FULL BACKWAGES
WITHOUT DEDUCTING THEREFROM THE INCOME HE EARNED DURING SAID
PERIOD. (pp. 9-10, Rollo)

RULING:

Anent the first and second assigned errors, petitioner submits that the records of the case,
particularly the testimonies of respondent Cruz himself and his witnesses, show that
petitioner corporation did not interfere with or prevent the union activities of its employees;
that the former has even allowed or abetted active unionism within the company; that the
dismissal of respondent Cruz was not impelled by reason of union participation of
respondent Cruz but solely by his infraction of company rules and regulations, specifically,
serious threats against the lives of three co-employees, challenging another to a fight and
intoxication while on duty, all of which clearly amounted to a dismissal for cause under the
Termination Pay Law, Rep. Act No. 1052, as amended. On the other hand, the Court of
Industrial Relations found from the surrounding circumstances of the case, a valid and
sufficient basis for the charge of unfair labor practice against RUC. Said the respondent
court: We accord respect to the findings of the industrial court. Section 3 of Republic Act No.
875, known as the The Industrial Peace Act, as amended, provides that employees shall
have the right to self-organization and to form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective bargaining and
other mutual aid or protection. Hence, it shall be unfair labor practice for an employer to
discriminate in regard to tenure of employment or any term or condition of employment to
encourage or discourage membership in any labor organization (Section 4 (a) (4), R.A. No.
875). We have perused the record and found that the totality of evidence as found by
respondent court supports the conclusion that respondent Cruz has been unjustly dismissed
by reason of his union activities. The charge by petitioner against respondent Cruz for being
under the influence of liquor on a certain date and for having threatened the lives of his
coemployees is too flimsy to merit serious consideration. We have on record the undisputed
facts that private respondent, as president of RUWU, was known for his aggressive and
militant union activities; that he and his wife had been previously dismissed on the ground
of active participation in union affairs; that they were reemployed only pursuant to the
express terms of the Return-to-Work Agreement executed by petitioner corporation and
RUWU when the latter won in the consent election; that respondent Cruz was dismissed
again for the second time in the course of his campaign among RUWU members to join the
nationwide strike of PTGWO in which RUWU is a member union. It has previously been
indicated that an employer may treat freely with an employee and is not obliged to support
his actions with a reason or purpose. However, where the attendant circumstances, the
history of the employer's past conduct and like considerations, coupled with an intimate
connection between the employer's action and the union affiliations or activities of the
particular employee or employees taken as a whole raise a suspicion as to the motivation
for the employer's action, the failure of the employer to ascribe a valid reason therefor may
justify an inference that his unexplained conduct in respect of the particular employee or
employees was inspired by the latter's union membership or activities (Rothenbergon Labor
Relations, pp. 401-402, cited in San Miguel Brewery, Inc., et al. v. Santos, et al., No. L-
12682, August 31, 1961, 2 SCRA 1081). Further, factual findings of the Court of Industrial
Relations are conclusive in the absence of a showing that the same have no support in the
evidence on record. This Court will not review said court's factual findings as long as the
same are supported by evidence. This is so because the industrial court is governed by the
rule of substantial evidence rather than by the rule of preponderance of evidence as in
ordinary civil cases (Sanchez v. Court of Industrial Relations, L-19000, July 31, 1963, 8
SCRA 654; Industrial Commercial Agricultural Workers Organization v. Bautista, L-15639,
April 30, 1963, 7 SCRA 907). Anent the third assigned error, it is the judicial trend to fix a
reasonable period for the payment of backwages to avoid protracted delay in post judgment
hearings to prove earnings of the worker elsewhere during the period that he had not been
reinstated to his employment. In consonance with the rulings in many cases, and in view of
the circumstances and equity of the instant case, Cruz should be reinstated and granted
backwages corresponding to a period of three (3) years from the time he was dismissed on
December 13, 1962, without deduction for his earnings elsewhere during his lay-off and
without qualification of his backwages as thus fixed, that is, unqualified by any wage
increases (Bachrach Motor Co., Inc. v. Court of Industrial Relations, L-26136, October 30,
1978, 86 SCRA 27; L.R. Aguinaldo & Co., Inc. v. Court of Industrial Relations, No. L-31909,
April 5, 1978, 82 SCRA 309; Davao Free Workers Front v. Court of Industrial Relations,
L29356, October 27, 1975, 67 SCRA 418). Petition is hereby DENIED and the decision of
the Court of Industrial Relations is AFFIRMED with MODIFICATION that RUC is directed to
reinstate Antonio Cruz without loss of seniority rights and with backwages for three (3) years
from the time of dismissal, without deduction and qualification. If reinstatement is no longer
possible Antonio Cruz should be awarded separation pay of one (1) month for every year of
service

22

NATIONAL LABOR UNION v. CIR

G.R. No. L-31276 / 116 SCRA 417

September 9, 1982
Digest by: Thea Denilla
--------------------------------------------------
Petitioner: National Labor Union

Respondent: Court of Industrial Relations, Everlasting Manufacturing, Ang Wo Long and Benito S.
Estanislao

Ponente: Gutierrez, Jr., J.

Topic: Enforcement, Remedies and Sanctions; 2. Parties Liable for Acts b. Labor Organization

FACTS:

1. The Acting Prosecutor of this Court filed a formal complaint with this Court charging
respondent Everlasting Manufacturing of unfair labor practice within the meaning of
Section 4(a), sub-paragraphs 1, 4 and 6 in relation to Sections 13, 14 and 15 of Republic
Act 875 (An Act to Promote Industrial Peace and for other Purposes, repealed by P.D.
442).
2. A Collective bargaining agreement by and between complainant union and respondent
Everlasting Manufacturing, a business establishment which manufactured paper cups,
water cups, and other allied products, through its general manager Benito Estanislao
Alias Cha Wa began hiring 24 new workers.
3. It was alleged in the complaint that in order to avoid the implementation of the collective
bargaining contract, to bust complainant union, to discourage membership with
complainant union, on the pretext of selling and closing its business, and without any
justifiable reason respondent company, by its general manager Benito Estanislao and
proprietor Ang Wo Long, dismissed and/or locked out all the members of complainant
union.
4. Continuously thereafter, respondent company continued with its business operations by
availing of the services of the above-mentioned 24 new workers who are non-union
members, using the same premises, business name, machineries, tool and implements,
same officials and supervisors, including its assistant manager Tan Hoc;
5. That notwithstanding representations made by complaint union for and in behalf of its
members, respondent failed and refused and continues to fail and refuse to reinstate
them to their jobs.
6. That since their mass dismissals and/or lock out, the dismissed employees have not
found any substantial and/or equivalent employment for themselves, in spite of diligent
efforts to that effect
7. Respondent court through Associate Judge Amando C. Bugayong: rendered a decision
finding respondent guilty of unfair labor practice.
8. Respondents filed an MR and Petitioner Union filed a motion to dismission.
9. Respondent Court: ordered the reopening of the case and to include Benito Estanislao
as party respondent to determine his liability under the complaint.
10. Benito Estanislao was issued summons at his last known address requiring him to
answer the complaint.
11. The summons was, however, returned by the counsel for respondent Ang Wo Long on
the ground that Benito Estanislao did not reside and was not found at the premises of
the former.
12. Hence, the respondent court issued an order to the effect that Estanislao be issued
summons by publication. Despite summons by publication, however, Estanislao did not
answer the complaint. Neither did Estanislao appear in court.
13. The respondent court, therefore, conducted hearings of the case without the presence
and representation of Estanislao.
14. Respondent court issued an Order finding Benito Estanislao guilty of unfair labor practice
and he is hereby ordered to pay backwages to the twenty-one (21) complaining workers
during the full duration of the collective bargaining contract.
15. Hence, this petition for review.
ISSUES:

1. Whether or not the respondent court was justified in completely over-turning its March
22, 1966 ruling on the liability of Ang Wo Long (finding guilty of unfair labor practice)
under the May 3, 1963 collective bargaining contract.

RULING: 1. No, the respondent court was not justified in completely over-turning the said ruling.
No, because it must be noted that the respondent court modified its decision and absolved
Ang Wo Long of responsibility for and liability under the May 3, 1963 collective bargaining
contract because of its finding that there was a lack of evidence which would show
knowledge not only of the CBA but of the existence of the union itself on the part of Mr. Ang
Wo Long.
Knowledge or awareness of what is going on refers to a mental and inner state of
consciousness, cognizance, and information. Whether or not Mr. Ang Wo Long knew the
labor problems of the firm he purchased, the existence of a union, the on-going — CBA
negotiations, and the efforts of the employees he later dismissed to reach an agreement
with management on the terms and conditions of their employment can be determined only
from an admission of Mr. Ang himself or from the surrounding facts and circumstances
indicative of knowledge. or awareness.
Under the facts are circumstances of this case, it is irrational if not specious to assume that
Mr. Ang bought a business lock, stock, and barrel without inquiring into its labor-
management situation and that his dismissal of all the union members without retaining a
few experienced workers and their replacement with a completely new set of employees
who were strangers to the company was anything other than an attempt to rid the firm of
unwanted union activity.
There is substantial evidence to sustain a finding of Mr. Ang's knowledge of the
bargaining negotiations and the resulting CBA and, consequently, of unfair labor
practice on his part.
The former owner, Benito Estanislao alias Cha Wa, sold Everlasting Manufacturing to Ang
Wo Long on April 29, 1963 while CBA negotiations were going on and about to be
concluded. The firm had a recent history of labor problems and the bargaining negotiations
came about only after a strike.
According to the respondent court, the acts of Ang Wo Long — his filing an application for
registration with the Bureau of Commerce on April 21, 1963, his securing the mayor's permit,
and his other acts of management — were only acts preparatory to taking over the firm and
not acts indicating knowledge of union activity and the CBA negotiations. We rule otherwise.
Precisely because Mr. Ang performed acts indicative of normal care and caution on the part
of a man buying a manufacturing firm, We rule that the same care and caution was also
extended to a more sensitive aspect of the business, one attracting the greatest degree of
concern and attention of any new owner, which was the relationship of the workers to
management, their willingness to cooperate with the owner, and their productivity arising
from harmonious relations. Benito Estanislao signed the CBA no longer as owner but as
"general manager." The new owner used the same premises, the same business name,
machineries, tools and implements and the same officials and supervisors including the
assistant manager, Mr. Tan Hoc The only change was the replacement of the 21 union
member with a completely new set of employees hired from outside the firm. As stated by
Judge Amando C. Bugayong in the court's March 22,1966 decision, the respondent Ang Wo
Long did not show any just cause for dispensing with the services of all the 21 union
members. We agree with Judge Bugayong that "the conclusion becomes inescapable that
he (Mr. Ang) dismissed the complainants in order to break the union and do away with the
existing collective bargaining agreement which it has obtained only after a strike and
bargaining negotiations."
Another mystifying aspect of the questioned order and resolution was the placing of full
responsibility on the shoulders of Mr. Benito Estanislao whom the court funny knew had
already conveniently disappeared even as it absolved the only person who could grant
affirmative relief and whose liability had earlier been determined to be founded on
substantial evidence. The summons issued to Benito Estanislao was returned by Ang Wo
Long's counsel who stated that Benito Estanislao was no longer at his former address.
Summons had to be effected through publication. The person found guilty of unfair labor
practice did not show up at the reopened hearings and as far as the records before US
show, had disappeared. The concatenation of circumstances clearly indicates the
participation of both Mr. Estanislao and Mr. Ang in the unfair labor practice. Hence, Ang Wo
Long should be jointly and severally liable with Benito S. Estanislao for the payment of
backwages to the complaining employees.
Hence, the Court held that they grant three (3) years backwages without deduction or
qualification to the dismissed employees. Following the same considerations and in fairness
to Ang Wo Long, reinstatement of the complaining employees should be made on the basis
of the latter's physical fitness for the respective jobs from which they were illegally ousted.
DISPOSITIVE: WHEREFORE, the petition is hereby GRANTED.
1) Ang Wo Long and Benito S. Estanislao are hereby ORDERED jointly and severally to pay
the complaining employees three (3) years backwages without deduction or qualification.
2) Ang Wo Long is hereby ordered to reinstate the complaining employees and he may
require certifications of their physical fitness by a government physician; and
3) Ang Wo Long and Benito S. Estanislao shall pay the costs.
DOCTRINE: Appreciation of facts and conclusions drawn from facts must be such as would
be acceptable to a reasonable mind. The reconsidered conclusions of the respondent court
not only fly against the dictates of reason and common sense but are out of touch with the
grounds of public policy implicit in the Industrial Peace Act and in the constitutional mandate
on protection to labor.
Knowledge or awareness of what is going on refers to a mental and inner state of consciousness,
cognizance, and information.

23

Geronimo Quadra vs. Court of Appeals G.R. No. 147593 July 31, 2006
Facts:
Petitioner, member of the Association of Sweepstakes Staff Personnel and
Supervisors (CUGCO), was administratively charged before the Civil Service Commission
with violation of Civil Service Law and Rules for neglect of duty and misconduct and/or
conduct prejudicial to the interest of the service. He was found guilty and disnmissed.
Petitioner filed a motion for reconsideration of the decision of the Civil Service Commission.
At the same time, petitioner, together with ASSPS (CUGCO), filed with the CIR a complaint
for unfair labor practice against respondent PCSO and its officers. CIR found respondent
PCSO guilty of unfair labor practice for having committed discrimination against the union
and for having dismissed petitioner due to his union activities.
Respondent PCSO complied with the decision of the CIR. But while it reinstated
petitioner to his former position and paid his backwages, it also filed with the Supreme Court
a petition for review on certiorari. During its pendency, petitioner filed with the CIR a "Petition
for Damages." He prayed for moral and exemplary damages, citing the following grounds:
(1) the CIR has no jurisdiction to award moral and exemplary damages; (2) the cause of
action is barred by prior judgment, it appearing that two complaints are brought for different
parts of a single cause of action; and (3) the petition states no valid cause of action. LA and
NLRC's decision favored petitioner, but CA reversed it, holding that there was no basis for
the grant of moral and exemplary damages to petitioner as his dismissal was not tainted
with bad faith. It was the Civil Service Commission that recommended petitioner's dismissal
after conducting an investigation. It also held that the petition claiming moral and exemplary
damages filed by petitioner after respondent PCSO had complied with the CIR decision of
reinstatement and backwages amounted to splitting of cause of action.

Issue: Whether or not the CIR has jurisdiction to award moral and exemplary damages
arising out of illegal dismissal and unfair labor practice.

Ruling:
A dismissed employee is entitled to moral damages when the dismissal is attended
by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary
to good morals, good customs or public policy. Exemplary damages may be awarded if the
dismissal is effected in a wanton, oppressive or malevolent manner. It appears from the facts
that petitioner was deliberately dismissed from the service by reason of his active
involvement in the activities of the union groups of both the rank and file and the supervisory
employees of PCSO, which unions he himself organized and headed. Respondent PCSO
first charged petitioner before the Civil Service Commission for alleged neglect of duty and
conduct prejudicial to the service because of his union activities. The Civil Service
Commission recommended the dismissal of petitioner. Respondent PCSO immediately
served on petitioner a letter of dismissal even before the latter could move for a
reconsideration of the decision of the Civil Service Commission. Respondent PCSO may
not impute to the Civil Service Commission the responsibility for petitioner's illegal dismissal
as it was respondent PCSO that first filed the administrative charge against him. As found
by the CIR, petitioner's dismissal constituted unfair labor practice. It was done to interfere
with, restrain or coerce employees in the exercise of their right to self-organization.
Unfair labor practices violate the constitutional rights of workers and employees to
self-organization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. As the conscience of the
government, it is the Court's sworn duty to ensure that none trifles with labor rights.

24

CCLC E.G. GOCHANGCO WORKERS UNION v. NLRC

May 30, 1988
Digested by: Olive Cachapero

Topic: Enforcement, Remedies and Sanctions; Compromise

------------------------------------------------------------

FACTS:

1. Petitioner CCLC E.G. Gochangco Workers Union is a local chapter of the Central
Luzon Labor Congress (CLLC), a legitimate labor federation duly registered with the
Ministry of Labor and Employment (MOLE), while the individual petitioners are former
employees of private respondent who were officers and members of the petitioner union.
2. Majority of the rank and file employees of respondent firm organized the e.g. Gochangco
Workers Union as an affiliate of the CLLC.
3. Union filed a petition for certification
4. CLLC national president wrote the general manager of respondent firm informing him of
the organization of the union and requesting for a labor management conference to
normalize employer-employee relations
5. Union sent a written notice to respondent firm requesting permission for certain member
officers and members of the union to attend the hearing of the petition for certification
election. The management refused to acknowledge receipt of said notice
6. Private respondent preventively suspended the union officers and members who
attended the hearing. The common ground alleged by private respondent for its action
was "abandonment of work on February 27, 1980." On the same date, all the gate passes
of all the above-mentioned employees to Clark Air Base were confiscated by a Base
guard.
7. Claiming that private respondent instigated the confiscation of their gate passes to
prevent them from performing their duties and that respondent firm did not pay them their
overtime pay, 13th month pay and other benefits, petitioner union and its members filed
a complaint for constructive lockout and unfair labor practice against private respondent.
8. private respondent filed an application for clearance to dismiss the union officers and
members
9. Petitioner Ricardo Dormingo who was preventively suspended, filed a complaint for ULP.
Services of 9 more union members were terminated by private respondent on the ground
that its contract with the U.S. Air Force had expired. The 9 employees filed a complaint
for illegal dismissal against private respondents
10. Private respondent filed with MOLE a Notice of Termination of Contract together with a
list of employees affected by the expiration of the contract, among them, the 39 individual
petitioners herein.
11. LA ordered: To reinstate all the suspended/dismissed employees to their former
positions without loss of seniority rights and other privileges, with full backwages
including cost of emergency living allowance from the date of their suspension/dismissal
up to the supposed date of actual reinstatement
12. NLRC: set aside the decision of the LA; granted the application for clearance to terminate
the services of individual complainants-appellees filed by respondent-appellant.

ISSUE: WON petitioners waived their their economic demands, as alleged by private respondent, by
way of compromise.

RULING

NO.
We are convinced that the respondent company is indeed guilty of an ULP. It is no coincidence that
at the time said respondent issued its suspension and termination orders, the petitioners were in
the midst of a certification election preliminary to a labor management conference, purportedly,
"to normalize employer-employee relations." It was within the legal right of the petitioners to do
so, the exercise of which was their sole prerogative, and in which management may not as a rule
interfere. In this connection, the respondent company deserves our strongest condemnation for
ignoring the petitioners' request for permission for some time out to attend to the hearing of their
petition before the med-arbiter. It is not only an act of arrogance, but a brazen interference as well
with the employees’ right to self-organization, contrary to the prohibition of the Labor Code against
unfair labor practices.

In finding the petitioners' suspension illegal, with more reason do we hold their subsequent
dismissal to be illegal. We are not persuaded by the respondent firm's argument that final
termination should be effected as the contract has expired." What impresses us is the Solicitor
General's submission that the petitioners were regular employees and as such, their tenure did not
end with the expiration of the contract.

The Court rejects the claims of an alleged waiver by the petitioners of their economic demands, in
the light of an alleged order issued by Labor Arbiter Aquino in connection with another case(s)
involving the same parties. (It was Labor Arbiter Federico Bernardo who penned the unfair labor
practice/illegal dismissal case.)

The Honorable Aquino's disposition reads:

The records show that a "Waiver of Claims, Rights and Interest" was filed by above-named
petitioners stating, among other things, that said petitioners are waiving their claims, rights and
interests against the respondents.

ACCORDINGLY, let the above-entitled cases be DISMISSED in view of the waiver made by the
petitioners.

Acting on these allegations, the respondent Commission, baring its clear bias for management,
ruled that the petitioners had waived their claims. Thus:

xxx xxx xxx

With respect to the second issue, that is, whether or not the waiver of rights and interests
executed by Fernando do so, 6 The G Lising, Odilon do so, 6 The G Lising, Jose C. Tiamzon, Ernesto
Tuazon, Pedro Santos, Ruben Buela, Eduardo Alegado, Estrael Vino, Rogelio Manguerra, Edilberto
Bingcang, Olimpio Gumin, Leo Tropico, Orlando Nacu, Rodolfo T. Capitly and Juanito Suba, are
valid, the alleged president of complainant-appellee union Benigno Navarro, Sr., contends that
Id Atty. Solomon has no authority to appear floor and in behalf of individual complainants-
appellees who waived their rights and interests in these cases since there was no authority from
him. Records, however, disclose that said Atty. Solomon had been the attorney of record for
 complainants-appellees since the inception of these cases, and, therefore, is authority to
represent them cannot be questioned- not even by Ministry. Navarro who allegedly took over
the presidency of complainant-appellee union after the disappearance of the former president,
Mr. Ficardo Alconga, Sr. And besides, the waiver of rights and interests were personally executed
by the signatories therein and all that Atty. Solomon did was to assist them.

xxx xxx xxx

We find this puzzling for clearly, Labor Arbiter Aquino's resolution refers to other cases and not the
instant unfair labor practice controversy. The Commission cannot feign simple mistake for such a
lapse. In any event, we have held that ULP cases are not, in view of the public interest involved,
subject to compromises. Furthermore, these alleged waivers do not appear to have been presented
in the first instance. They cannot be introduced for the first time on appeal.

Dispositive: Petitioner won.

Doctrine: ULP cases are not, in view of the public interest involved, subject to compromises.