G.R. No. 169717               March 16, 2011SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union President,Petitioner,vs.CHARTER CHEMICAL and COATING CORPORATION, Respondent.

D E C I S I O NDEL CASTILLO, J.:The right to file a petition for certification election is accorded to a labor organization provided that it complies with the requirements of law for proper registration. The inclusion of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees does not divest it of its status as a legitimate labor organization. We apply these principles to this case.This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeal’s March 15, 2005 Decision1 in CA-G.R. SP No. 58203, which annulled and set aside the January 13, 2000 Decision2 of the Department of Labor and Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005 Resolution3 denying petitioner union’s motion for reconsideration.Factual AntecedentsOn February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration Unit of the DOLE, National Capital Region.On April 14, 1999, respondent company filed an Answer with Motion to Dismiss4 on the ground that petitioner union is not a legitimate labor organization because of (1) failure to comply with the documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union.5

Med-Arbiter’s RulingOn April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision6 dismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and attested to by the union president as required by Section 235 of the Labor Code7 in relation to Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union registration was, thus, fatally defective.The Med-Arbiter further held that the list of membership of petitioner union consisted of 12 batchman, mill operator and leadman who performed supervisory functions. Under Article 245 of the Labor Code, said supervisory employees are prohibited from joining petitioner union which seeks to represent the rank-and-file employees of respondent company.As a result, not being a legitimate labor organization, petitioner union has no right to file a petition for certification election for the purpose of collective bargaining.Department of Labor and Employment’s RulingOn July 16, 1999, the DOLE initially issued a Decision8 in favor of respondent company dismissing petitioner union’s appeal on the ground that the latter’s petition for certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the Med-Arbiter, that the charter certificate need not be verified and that there was no independent evidence presented to establish respondent company’s claim that some members of petitioner union were holding supervisory positions, the DOLE sustained the dismissal of the petition for certification after it took judicial notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a petition for certification election on January 16, 1998. The Decision granting the said petition became final and executory on September 16, 1998 and was remanded for immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a certification election in an unorganized establishment should be filed prior to the finality of the decision calling for a certification election. Considering that petitioner union filed its petition only on February 14, 1999, the same was filed out of time.On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE found that a review of the records indicates that no certification election was previously conducted in respondent company. On the contrary, the prior certification election filed by

Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the DOLE for being filed out of time. Hence, there was no obstacle to the grant of petitioner union’s petition for certification election, viz:WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this Office dated 16 July 1999 is MODIFIED to allow the certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation with the following choices:

1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines for Empowerment and Reform (SMCC-SUPER); and2. No Union.

Let the records of this case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference.SO DECIDED.9

Court of Appeal’s RulingOn March 15, 2005, the CA promulgated the assailed Decision, viz:WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET ASIDE.SO ORDERED.10

In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the Med-Arbiter that petitioner union failed to comply with the documentation requirements under the Labor Code. It, likewise, upheld the Med-Arbiter’s finding that petitioner union consisted of both rank-and-file and supervisory employees. Moreover, the CA held that the issues as to the legitimacy of petitioner union may be attacked collaterally in a petition for certification election and the infirmity in the membership of petitioner union cannot be remedied through the exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling in Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union.11 Thus, considering that petitioner union is not a legitimate labor organization, it has no legal right to file a petition for certification election.

IssuesI

Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in granting the respondent [company’s] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues subject of the respondent company[’s] petition was already settled with finality and barred from being re-litigated.

IIWhether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged mixture of rank-and-file and supervisory employee[s] of petitioner [union’s] membership is [a] ground for the cancellation of petitioner [union’s] legal personality and dismissal of [the] petition for certification election.

IIIWhether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged failure to certify under oath the local charter certificate issued by its mother federation and list of the union membership attending the organizational meeting [is a ground] for the cancellation of petitioner [union’s] legal personality as a labor organization and for the dismissal of the petition for certification election.12

Petitioner Union’s ArgumentsPetitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification election is barred by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all the documentation requirements and that there was no independent evidence presented to prove an illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision, respondent company did not move for reconsideration, thus, this issue must be deemed settled.Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its membership are not grounds for the dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a union’s registration under Section 3, Rule VIII of said issuance. It contends that what is required to be certified under oath by the local union’s secretary or treasurer and attested to by the local

union’s president are limited to the union’s constitution and by-laws, statement of the set of officers, and the books of accounts.Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an independent petition for cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO.13

Respondent Company’s ArgumentsRespondent company asserts that it cannot be precluded from challenging the July 16, 1999 Decision of the DOLE. The said decision did not attain finality because the DOLE subsequently reversed its earlier ruling and, from this decision, respondent company timely filed its motion for reconsideration.On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified under oath.It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees in violation of Article 245 of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union14 continues to be good case law. Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification election and its legal personality may be collaterally attacked in the proceedings for a petition for certification election as was done here.

Our RulingThe petition is meritorious.The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE.A review of the records indicates that the issue as to petitioner union’s legal personality has been timely and consistently raised by respondent company before the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied with the documentation requirements of the Labor Code and that the evidence was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its membership. Nonetheless, the petition for certification election was dismissed on the ground that another union had previously filed a petition for certification election seeking to represent the same bargaining unit in respondent company.Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld the right of petitioner union to file the subject petition for certification election because its previous decision was based on a mistaken appreciation of facts.15 From this adverse decision, respondent company timely moved for reconsideration by reiterating its previous arguments before the Med-Arbiter that petitioner union has no legal personality to file the subject petition for certification election.The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties timely moved for reconsideration. The issue then as to the legal personality of petitioner union to file the certification election was properly raised before the DOLE, the appellate court and now this Court.The charter certificate need not be certified under oath by the local union’s secretary or treasurer and attested to by its president.Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 948116 which took effect on June 14, 2007.17 This law introduced substantial amendments to the Labor Code. However, since the operative facts in this case occurred in 1999, we shall decide the issues under the pertinent legal provisions then in force (i.e., R.A. No. 6715,18 amending Book V of the Labor Code, and the rules and regulations19 implementing R.A. No. 6715, as amended by D.O. No. 9,20

series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.21

In the main, the CA ruled that petitioner union failed to comply with the requisite documents for registration under Article 235 of the Labor Code and its implementing rules. It agreed with the Med-Arbiter that the Charter Certificate, Sama-samang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be accorded the status of a legitimate labor organization.We disagree.The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, provides:

Section 1. Chartering and creation of a local chapter — A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following:

(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter;(b) The names of the local/chapter’s officers, their addresses, and the principal office of the local/chapter; and(c) The local/chapter’s constitution and by-laws provided that where the local/chapter’s constitution and by-laws [are] the same as [those] of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President.As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among the documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As to the charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and the records confirm that its charter certificate was not executed under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFU-FFW),22 which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled –In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it wasnot necessary for the charter certificate to be certified and attested by the local/chapter officers. Id. While this ruling was based on the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997 amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapter’s officers x x x certify or attest to a document which they had no hand in the preparation of.23 (Emphasis supplied)In accordance with this ruling, petitioner union’s charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate,24 (2) the names of its officers, their addresses, and its principal office,25 and (3) its constitution and by-laws26— the last two requirements having been executed under oath by the proper union officials as borne out by the records.The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a legitimate labor organization.The CA found that petitioner union has for its membership both rank-and-file and supervisory employees. However, petitioner union sought to represent the bargaining unit consisting of rank-and-file employees. Under Article 24527 of the Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-and-file employees. Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union28(hereinafter Toyota).Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and leadman, are supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings below after respondent company submitted in evidence the job descriptions29 of the aforesaid employees. The job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory employees under Article 212(m)30 of the Labor Code. For this reason, we are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted of both rank-and-file and supervisory employees.Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. The appellate court’s reliance on Toyota is misplaced in view of this Court’s subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.31 (hereinafter Kawashima). InKawashima, we explained at length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to this case, viz:

R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-mingling of supervisory and rank-and-file employees] would bring about on the legitimacy of a labor organization.It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions):"Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz:"Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath.Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition.The petition, when filed by a legitimate labor organization, shall contain, among others:x x x x(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis supplied)By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for certification election.Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held:"Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code.

x x x x

In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election." (Emphasis supplied)In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members.It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases.But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules – that the petition for certification election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees – was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus:

Rule XICertification Elections

x x x xSec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the bargaining unit.

In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, to wit:"Section. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of the local/chapter's officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter's constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly.All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President."which does not require that, for its creation and registration, a local or chapter submit a list of its members.Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the core issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlopand reverted to its pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof. Thus, the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code.In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members.More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed membership: the Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court in   Tagaytay Highlands ,   San Miguel   and   Air Philippines,   had already set the tone for it. Toyota   and Dunlop no longer hold sway   in the present altered state of the law and the rules.32 [Underline supplied]The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashimaapplies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor organization even if some of its members were supervisory employees; it had the right to file the subject petition for certification election.The legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election proceedings.Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the certification election proceedings. As we explained in Kawashima:Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the

employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere allegation that some employees participating in a petition for certification election are actually managerial employees will lend an employer legal personality to block the certification election. The employer's only right in the proceeding is to be notified or informed thereof.The amendments to the Labor Code and its implementing rules have buttressed that policy even more.33

WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED.

CATHAY PACIFIC STEEL CORPORATION, BENJAMIN CHUA JR., VIRGILIO AGERO, and LEONARDO VISORRO, JR.,                              Petitioners,

-  versus  -

HON. COURT OF APPEALS, CAPASCO UNION OF SUPERVISORY EMPLOYEES (CUSE) and ENRIQUE TAMONDONG III,                              Respondents.

G.R. No. 164561

Present:

PANGANIBAN, C.J.       Chairperson,YNARES-SANTIAGO,AUSTRIA-MARTINEZ,CALLEJO, SR., andCHICO-NAZARIO, JJ.

Promulgated:

August 30, 2006x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -  - - - - - - - - - - - - - - - - - - - - - -x

  

D E C I S I O N

  CHICO-NAZARIO, J.:

 

            This is a special civil action for Certiorari under Rule 65 of the Rules of Court seeking to annul and

set aside, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction, (1) the

Decision[1] of the Court of Appeals in CA-G.R. SP No. 57179 dated 28 October 2003 which annulled the

Decision[2] of the National Labor Relations Commission (NLRC) in NLRC Case No. 017822-99 dated 25

August 1999, thereby, reinstating the Decision[3] of Acting Executive Labor Arbiter Pedro C. Ramos dated

7 August 1998; and (2) the Resolution[4] of the same court, dated 3 June 2004, which denied the

petitioners’ Motion for Reconsideration.

         

          Herein petitioners are Cathay Pacific Steel Corporation (CAPASCO), a domestic corporation

engaged in the business of manufacturing steel products; Benjamin Chua, Jr. (now deceased), the former

CAPASCO President; Virgilio Agerro, CAPASCO’s Vice-President; and Leonardo Visorro,

Jr., CAPASCO’s Administrative-Personnel Manager. Herein private respondents are Enrique Tamondong

III, the Personnel Superintendent of CAPASCO who was previously assigned at the petitioners’ Cainta

Plant, and CAPASCO Union of Supervisory Employees (CUSE), a duly registered union of CAPASCO.

 

          The facts of the case are as follows:   

         

          Four former employees of CAPASCO originally filed this labor case before the NLRC,

namely: Fidel Lacambra, Armando Dayson, Reynaldo Vacalares, and EnriqueTamondong III.  However,

in the course of the proceedings, Fidel Lacambra[5] and Armando Dayson[6] executed a Release and

Quitclaim, thus, waiving and abandoning any and all claims that they may have against petitioner

CAPASCO.  On 3 November 1999, Reynaldo Vacalares also signed a Quitclaim/Release/Waiver.

[7]  Hence, this Petition shall focus solely on issues affecting private respondent Tamondong.  

 

          Petitioner CAPASCO, hired private respondent Tamondong as Assistant to the Personnel Manager

for its Cainta Plant on 16 February 1990.  Thereafter, he was promoted to the position of

Personnel/Administrative Officer, and later to that of Personnel Superintendent.  Sometime in June 1996,

the supervisory personnel of CAPASCO launched a move to organize a union among their ranks, later

known as private respondent CUSE.  Private respondent Tamondong actively involved himself in the

formation of the union and was even elected as one of its officers after its creation.  Consequently,

petitioner CAPASCO sent a memo[8] dated 3 February 1997, to private respondent Tamondong requiring

him to explain and to discontinue from his union activities, with a warning that a continuance thereof shall

adversely affect his employment in the company.  Private respondentTamondong ignored said warning

and made a reply letter[9] on 5 February 1997, invoking his right as a supervisory employee to join and

organize a labor union.  In view of that, on 6 February 1997, petitioner CAPASCO through a

memo[10] terminated the employment of private respondent Tamondong on the ground of loss of trust and

confidence, citing his union activities as acts constituting serious disloyalty to the company.

 

          Private respondent Tamondong challenged his dismissal for being illegal and as an act involving

unfair labor practice by filing a Complaint for Illegal Dismissal and Unfair Labor Practice before the NLRC,

Regional Arbitration Branch IV.  According to him, there was no just cause for his dismissal and it was

anchored solely on his involvement and active participation in the organization of the union of supervisory

personnel in CAPASCO.  Though private respondent Tamondong admitted his active role in the formation

of a union composed of supervisory personnel in the company, he claimed that such was not a valid

ground to terminate his employment because it was a legitimate exercise of his constitutionally

guaranteed right to self-organization.

 

          In contrast, petitioner CAPASCO contended that by virtue of private

respondent Tamondong’s position as Personnel Superintendent and the functions actually performed by

him in the company, he was considered as a managerial employee, thus, under the law he was prohibited

from joining a union as well as from being elected as one of its officers.  Accordingly, petitioners

maintained their argument that the dismissal of private respondent Tamondong was perfectly valid based

on loss of trust and confidence because of the latter’s active participation in the affairs of the union.

 

          On 7 August 1998, Acting Executive Labor Arbiter Pedro C. Ramos rendered a Decision in favor of

private respondent Tamondong, decreeing as follows:

           WHEREFORE, premises considered, judgment is hereby rendered finding [petitioner CAPASCO] guilty of unfair labor practice and illegal dismissal.  Concomitantly, [petitioner CAPASCO] is hereby ordered: 

1.      To cease and desist from further committing acts of unfair labor practice, as charged;

 2.      To reinstate [private respondent Tamondong] to his former position without

loss of seniority rights and other privileges and his full backwages inclusive of allowances, and to his other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement, and herein partially computed as follows:

 a)      P167,076.00 - backwages from February 7, 1997 to August 7, 1998;b)        P18,564.00 - 13th month pay for 1997 and 1998;c)          P4,284.00 - Holiday pay for 12 days;d)              P 3,570.00  - Service Incentive Leave for 1997 and 1998.     P 193,494.00 - Total partial backwages and benefits.[11]

  

          Aggrieved, petitioners appealed the afore-quoted Decision to the NLRC.  On 25 August 1999, the

NLRC rendered its Decision modifying the Decision of the Acting Executive Labor Arbiter Pedro C.

Ramos, thus:

           WHEREFORE, premises all considered, the decision appealed from is hereby MODIFIED: 

a)      Dismissing the Complaint for Illegal Dismissal filed by [private respondent Tamondong] for utter lack of merit;

 b)      Dismissing the Complaint for Unfair Labor Practice for lack of

factual basis; 

c)      Deleting the awards to [private respondent Tamondong] of backwages, moral and exemplary damages, and attorney’s fees;

 d)      Affirming the awards to [private respondent Tamondong],

representing 13th month pay for 1997 and 1998, holiday pay for 12 days, and service incentive leave for 1997 totalingP26,418.00; and

 e)      Ordering the payment of backwages to [private

respondent Tamondong] reckoned from 16 September 1998 up to the date of this Decision.[12]

  

          Petitioners filed a Motion for Clarification and Partial Reconsideration, while, private respondent

Tamondong filed a Motion for Reconsideration of the said NLRC Decision, but the NLRC affirmed its

original Decision in its Resolution[13] dated 25 November 1999.   

 

          Dissatisfied with the above-mentioned Decision of the NLRC, private respondents Tamondong and

CUSE filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals,

alleging grave abuse of discretion on the part of the NLRC.  Then, the Court of Appeals in its Decision

dated 28 October 2003, granted the said Petition.  The dispositive of which states that:

           WHEREFORE, premises considered, the instant Petition for Certiorari is GRANTED and the herein assailed Decision dated August 25, 1999 of the NLRC, Third Division is ANNULLED and SET ASIDE.  Accordingly, the Decision dated August 7, 1998 of NLRC, RAB IV Acting Executive Labor Arbiter Pedro C. Ramos, insofar as [private respondent Tamondong] is concerned is hereby REINSTATED.[14]

  

          Consequently, petitioners filed a Motion for Reconsideration of the aforesaid Decision of the Court

of Appeals.  Nonetheless, the Court of Appeals denied the said Motion for Reconsideration for want of

convincing and compelling reason to warrant a reversal of its judgment.

 

          Hence, this present Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure.

 

          In the Memorandum[15] filed by petitioners, they aver that private respondent Tamondong as

Personnel Superintendent of CAPASCO was performing functions of a managerial employee because he

was the one laying down major management policies on personnel relations such as: issuing memos on

company rules and regulations, imposing disciplinary sanctions such as warnings and suspensions, and

executing the same with full power and discretion.  They claim that no further approval or review is

necessary for private respondent Tamondong to execute these functions, and the notations “NOTED BY”

of petitioner Agerro, the Vice-President of petitioner CAPASCO, on the aforesaid memos are nothing but

mere notice that petitioner Agerro was aware of such company actions performed by private

respondent Tamondong.  Additionally, private respondent Tamondong was not only a managerial

employee but also a confidential employee having knowledge of confidential information involving

company policies on personnel relations. Hence, the Court of Appeals acted with grave abuse of

discretion amounting to lack or excess of jurisdiction when it held that private respondent Tamondong

was not a managerial employee but a mere supervisory employee, therefore, making him eligible to

participate in the union activities of private respondent CUSE.

 

          Petitioners further argue that they are not guilty of illegal dismissal and unfair labor practice

because private respondent Tamondong was validly dismissed and the reason for preventing him to join a

labor union was the nature of his position and functions as Personnel Superintendent, which position was

incompatible and in conflict with his union activities.  Consequently, it was grave abuse of discretion on

the part of the Court of Appeals to rule that petitioner CAPASCO was guilty of illegal dismissal and unfair

labor practice.

 

            Lastly, petitioners maintain that the Court of Appeals gravely abused its discretion when it

reinstated the Decision of Executive Labor Arbiter Pedro C. Ramos holding CAPASCO liable for

backwages, 13th month pay, service incentive leave, moral damages, exemplary damages, and attorney’s

fees.

 

          On the other hand, private respondents, assert that the assailed Decision being a final disposition

of the Court of Appeals is appealable to this Court by a Petition for Review on Certiorari under Rule 45 of

the Rules of Court and not under Rule 65 thereof.  They also claim that petitioners new ground that

private respondent Tamondong was a confidential employee of CAPASCO, thus, prohibited from

participating in union activities, is not a valid ground to be raised in this Petition for Certiorari seeking the

reversal of the assailed Decision and Resolution of the Court of Appeals. 

 

          Now, given the foregoing arguments raise by both parties, the threshold issue that must first be

resolved is whether or not the Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure is

the proper remedy for the petitioners, to warrant the reversal of the Decision and Resolution  of the Court

of Appeals dated 28 October  2003 and 3 June 2004, respectively.

         

          The petition must fail.

 

           The special civil action for Certiorari is intended for the correction of errors of jurisdiction only or

grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to keep the

inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse

of discretion amounting to lack or excess of jurisdiction.[16]  

 

          The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed

against a tribunal, a board, or an officer exercising judicial or quasi-judicial function; (2) such tribunal,

board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting

to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in

the ordinary course of law.[17]  Excess of jurisdiction as distinguished from absence of jurisdiction means

that an act, though within the general power of a tribunal, board or officer is not authorized, and invalid

with respect to the particular proceeding, because the conditions which alone authorize the exercise of

the general power in respect of it are wanting.[18]  Without jurisdiction means lack or want of legal power,

right or authority to hear and determine a cause or causes, considered either in general or with reference

to a particular matter.  It means lack of power to exercise authority.[19]  Grave abuse of discretion implies

such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other

words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal

hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual

refusal to perform the duty enjoined or to act at all in contemplation of law.[20] 

 

          In the case before this Court, petitioners fail to meet the third requisite for the proper invocation of

Petition for Certiorari under Rule 65, to wit: that there is no appeal or any plain, speedy, and adequate

remedy in the ordinary course of law.  They simply alleged that the Court of Appeals gravely abuse its

discretion which amount to lack or excess of jurisdiction in rendering the assailed Decision and

Resolution.  They did not bother to explain why an appeal cannot possibly cure the errors committed by

the appellate court. It must be noted that the questioned Decision of the Court of Appeals was already a

disposition on the merits; this Court has no remaining issues to resolve, hence, the proper remedy

available to the petitioners is to file Petition for Review under Rule 45 not under Rule 65. 

 

          Additionally, the general rule is that a writ of certiorari will not issue where the remedy of appeal is

available to the aggrieved party.  The remedies of appeal in the ordinary course of law and that

of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or

cumulative.[21]  Time and again this Court reminded members of the bench and bar that the special civil

action of Certiorari cannot be used as a substitute for a lost appeal[22] where the latter remedy is

available.  Such a remedy will not be a cure for failure to timely file a Petition for Review

on Certiorari under Rule 45.  Nor can it be availed of as a substitute for the lost remedy of an ordinary

appeal, especially if such loss or lapse was occasioned by one’s own negligence or error in the choice of

remedies.[23] 

 

          In the case at bar, petitioners received on 9 June 2004 the Resolution of the Court of Appeals

dated 3 June 2004 denying their Motion for Reconsideration.  Upon receipt of the said Resolution, they

had 15 days or until 24 June 2004 within which to file an appeal by way of Petition for Review under Rule

45, but instead of doing so, they just allowed the 15 day period to lapse, and then on the 61st day from

receipt of the Resolution denying their Motion for Reconsideration, they filed this Petition

for Certiorari under Rule 65 alleging grave abuse of discretion on the part of the appellate

court.  Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the

interest of justice, has the discretion to treat a Petition for Certiorari as a Petition for Review

on Certiorari under Rule 45, especially if filed within the reglementary period for filing a Petition for

Review.[24]  However, in the present case, this Court finds no compelling reason to justify a liberal

application of the rules, as this Court did in the case of Delsan Transport Lines, Inc. v. Court of Appeals.

[25]  In the said case, this Court treated the Petition for Certiorari filed by the petitioner therein as having

been filed under Rule 45 because said Petition was filed within the 15-day reglementary period for filing a

Petition for Review on Certiorari.  Petitioner’s counsel therein received the Court of Appeals Resolution

denying their Motion for Reconsideration on 26 October 1993 and filed the Petition for Certiorari on 8

November 1993, which was within the 15-day reglementary period for filing a Petition for Review

on Certiorari.  It cannot therefore be claimed that the Petition was used, as a substitute for appeal after

that remedy has been lost through the fault of the petitioner. [26]  Conversely, such was not the situation in

the present case.  Hence, this Court finds no reason to justify a liberal application of the rules.

 

          Accordingly, where the issue or question involves or affects the wisdom or legal soundness of the

decision, and not the jurisdiction of the court to render said decision, the same is beyond the province of a

petition for certiorari.[27]  It is obvious in this case that the arguments raised by the petitioners delved into

the wisdom or legal soundness of the Decision of the Court of Appeals, therefore, the proper remedy is a

Petition for Review on Certiorari under Rule 45.  Consequently, it is incumbent upon this Court to dismiss

this Petition.

 

           In any event, granting arguendo, that the present petition is proper, still it is dismissible.  The Court

of Appeals cannot be said to have acted with grave abuse of discretion amounting to lack or excess of

jurisdiction in annulling the Decision of the NLRC because the findings of the Court of Appeals that private

respondent Tamondong was indeed a supervisory employee and not a managerial employee, thus,

eligible to join or participate in the union activities of private respondent CUSE, were supported by

evidence on record.  In the Decision of the Court of Appeals dated 28 October 2003, it made reference to

the Memorandum[28] dated 12 September 1996, which required private respondentTamondong to observe

fixed daily working hours from 8:00 am to 12:00 noon and from 1:00 pm to 5:00 pm.  This imposition upon

private respondent Tamondong, according to the Court of Appeals, is very uncharacteristic of a

managerial employee.  To support such a conclusion, the Court of Appeals cited the case of Engineering

Equipment, Inc. v. NLRC[29] where this Court held that one of the essential characteristics [30] of an

employee holding a managerial rank is that he is not subjected to the rigid observance of regular office

hours or maximum hours of work. 

 

          Moreover, the Court of Appeals also held that upon careful examination of the documents

submitted before it, it found out that:

 [Private respondent] Tamondong may have possessed enormous powers and was performing important functions that goes with the position of Personnel Superintendent, nevertheless, there was no clear showing that he is at liberty, by using his own discretion and disposition, to lay down and execute major business and operational policies for and in behalf of CAPASCO.  [Petitioner] CAPASCO miserably failed to establish that [private respondent] Tamondong was authorized to act in the interest of the company using his independent judgment. x x x. Withal, [private respondent] Tamondong may have been exercising certain important powers, such as control and supervision over erring rank-and-file employees, however, x x x he does not possess the power to hire, transfer, terminate, or discipline erring employees of the company.  At the most, the record merely showed that [private respondent] Tamondong informed and warned rank-and-file employees with respect to their violations of CAPASCO’srules and regulations. x x x.  [Also, the functions performed by private respondent such as] issuance of warning[31] to employees with irregular attendance and unauthorized leave of absences and requiring employees to explain regarding charges of abandonment of work, are normally performed by a mere supervisor, and not by a manager.[32]   

          Accordingly, Article 212(m) of the Labor Code, as amended, differentiates supervisory employees

from managerial employees, to wit: supervisory employees are those who, in the interest of the employer,

effectively recommend such managerial actions, if the exercise of such authority is not merely routinary or

clerical in nature but requires the use of independent judgment; whereas, managerial employees are

those who are vested with powers or prerogatives to lay down and execute management policies and/or

hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees.  Thus, from the

foregoing provision of the Labor Code, it can be clearly inferred that private respondentTamondong was

just a supervisory employee.  Private respondent Tamondong did not perform any of the functions of a

managerial employee as stated in the definition given to it by the Code.  Hence, the Labor

Code[33] provisions regarding disqualification of a managerial employee from joining, assisting or forming

any labor organization does not apply to herein private respondent Tamondong.  Being a supervisory

employee of CAPASCO, he cannot be prohibited from joining or participating in the union activities of

private respondent CUSE, and in making such a conclusion, the Court of Appeals did not act whimsically,

capriciously or in a despotic manner, rather, it was guided by the evidence submitted before it.  Thus,

given the foregoing findings of the Court of Appeals that private respondent is a supervisory employee, it

is indeed an unfair labor practice[34] on the part of petitioner CAPASCO to dismiss him on account of his

union activities, thereby curtailing his constitutionally guaranteed right to self-organization.[35]  

           

          With regard to the allegation that private respondent Tamondong was not only a managerial

employee but also a confidential employee, the same cannot be validly raised in this Petition

for Certiorari.  It is settled that an issue which was not raised in the trial court cannot be raised for the first

time on appeal.  This principle applies to a special civil action for certiorari under Rule 65.[36]  In addition,

petitioners failed to adduced evidence which will prove that, indeed, private respondent was also a

confidential employee.

 

          WHEREFORE, premises considered, the instant Petition is DISMISSED.  The Decision and

Resolution of the Court of Appeals dated 28 October 2003 and 3 June 2004, respectively, in CA-G.R. SP

No. 57179, which annulled the Decision of the NLRC in NLRC Case No. 017822-99 dated 25 August

1999, thereby, reinstating the Decision of Acting Executive Labor Arbiter Pedro C. Ramos dated 7 August

1998, is hereby AFFIRMED.  With costs against petitioners.

           SO ORDERED. 

CHRIS GARMENTS CORPORATION,

                             Petitioner,

     G.R. No. 167426

- versus -

HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS WORKERS UNION-PTGWO LOCAL CHAPTER No. 832,

                             Respondents.

     Present:

       QUISUMBING, J., Chairperson,

       CARPIO,*

     CARPIO MORALES,

     TINGA, and

     VELASCO, JR., JJ.

     Promulgated:

     January 12, 2009

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

DECISION

QUISUMBING, J.:

Petitioner assails the Resolutions dated February 22, 2005[1] and March 16, 2005[2] of the Court of

Appeals in CA-G.R. SP No. 88444, which dismissed its petition forcertiorari due to its failure to file a

motion for reconsideration from the Decision[3] of the Secretary of the Department of Labor and

Employment before filing the petition.

The relevant facts are as follows:

Petitioner Chris Garments Corporation is engaged in the manufacture and export of quality

garments and apparel.

On February 8, 2002, respondent Chris Garments Workers Union–PTGWO, Local Chapter No.

832, filed a petition for certification election with the Med-Arbiter.  The union sought to represent

petitioner’s rank-and-file employees not covered by its Collective Bargaining Agreement (CBA) with

the Samahan Ng Mga Manggagawa sa Chris Garments Corporation–Solidarity of Union in

the Philippines for Empowerment and Reforms (SMCGC-SUPER), the certified bargaining agent of the

rank-and-file employees. The union alleged that it is a legitimate labor organization with a Certificate of

Creation of Local/Chapter No. PTGWO-832[4] dated January 31, 2002 issued by the Bureau of Labor

Relations.[5]

Petitioner moved to dismiss the petition.  It argued that it has an existing CBA from July 1,

1999 to June 30, 2004 with SMCGC-SUPER which bars any petition for certification election prior to the 60-

day freedom period.  It also contended that the union members are not its regular employees since they are

direct employees of qualified and independent contractors.[6]

The union countered that its members are regular employees of petitioner since:  (1) they are

engaged in activities necessary and desirable to its main business although they are called agency

employees; (2) their length of service have spanned an average of four years; (3) petitioner controlled

their work attitude and performance; and (4) petitioner paid their salaries.  The union added that while

there is an existing CBA between petitioner and SMCGC-SUPER, there are other rank-and-file

employees not covered by the CBA who seek representation for collective bargaining purposes. It also

contended that the contract bar rule does not apply.[7]

The Med-Arbiter dismissed the petition.  The Med-Arbiter ruled that there was no employer-

employee relationship between the parties since the union itself admitted that its members are agency

employees.  The Med-Arbiter also held that even if the union members are considered direct employees

of petitioner, the petition for certification election will still fail due to the contract bar rule under Article

232[8] of the Labor Code.  Hence, a petition could only be filed during the 60-day freedom period of the

CBA or from May 1, 2004 to June 30, 2004.  Nevertheless, the Med-Arbiter ruled that the union may avail

of the CBA benefits by paying agency fees to SMCGC-SUPER.[9]

In a Resolution[10] dated December 27, 2002, the Secretary of Labor and Employment affirmed

the decision of the Med-Arbiter.  She ruled that petitioner failed to prove that the union members are

employees of qualified and independent contractors with substantial capital or investment and added that

petitioner had the right to control the performance of the work of such employees.  She also noted that the

union members are garment workers who performed activities directly related to petitioner’s main

business. Thus, the union members may be considered part of the bargaining unit of petitioner’s rank-

and-file employees.  However, she held that the petition could not be entertained except during the 60-

day freedom period.  She also found no reason to split petitioner’s bargaining unit.

On May 16, 2003, the union filed a second petition for certification election.  The Med-Arbiter

dismissed the petition on the ground that it was barred by a prior judgment. On appeal, the Secretary of

Labor and Employment affirmed the decision of the Med-Arbiter.[11]

On June 4, 2004, the union filed a third petition for certification election.[12]  The Med-Arbiter

dismissed the petition on the grounds that no employer-employee relationship exists between the parties

and that the case was barred by a prior judgment.  On appeal, the Secretary of Labor and Employment

granted the petition in a Decision[13] datedJanuary 18, 2005.  Thus:

WHEREFORE, the appeal filed by Chris Garment[s] Workers Union–PTGWO is hereby GRANTED.  The 7 July 2004 Order of Med-Arbiter Tranquilino B. Reyes is hereby REVERSED andSET ASIDE.  Accordingly, let the entire records of the case be

remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference, among the regular rank-and-file employees of Chris Garments Corporation, with the following choices:

1.      Chris Garments Workers Union – PTGWO Local Chapter No. 832;

2.      Samahan ng Manggagawa sa Chris Garments Corp. – SUPER; and

3.      No Union.

Pursuant to Section 13(e), Rule VIII of Department Order No. 40-03, the employer is hereby directed to submit to the office of origin, within ten (10) days from receipt hereof, the certified list of its employees in the bargaining unit or when necessary a copy of its payroll covering the same employees for the last three (3) months preceding the issuance of this Decision.

SO DECIDED.[14]

Petitioner received a copy of the decision on January 25, 2005.  On February 4, 2005, petitioner

filed a petition for certiorari with the Court of Appeals which was dismissed due to its failure to file a

motion for reconsideration of the decision before filing the petition.

Incidentally, a certification election was conducted on June 21, 2005 among petitioner’s rank-and-

file employees where SMCGC-SUPER emerged as the winning union.  OnJanuary 20, 2006, the Med-

Arbiter certified SMCGC-SUPER as the sole and exclusive bargaining agent of all the rank-and-file

employees of petitioner.[15]

Petitioner now comes before us arguing that:

I.

THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE PETITION [FOR CERTIORARI] ON THE SOLE GROUND THAT THE COMPANY DID NOT FILE A MOTION FOR RECONSIDERATION DESPITE SECTION 21, RULE VIII OF DEPARTMENT ORDER NO. 43-03, . . . SERIES OF 2003, [WHICH] PROHIBITS THE FILING OF A MOTION FOR RECONSIDERATION FROM A DECISION OF THE SECRETARY OF LABOR.

II.

THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN REFUSING TO RESOLVE THE MERITS OF THE PETITION AS IT DISMISSED THE SAME BY MERE, ALBEIT, BASELESS TECHNICALITY WHICH ONLY FRUSTRATED RATHER THAN PROMOTED SUBSTANTIAL JUSTICE . . .

III.

PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE MED-ARBITER AND GIVING

[DUE] COURSE TO THE PETITION FOR CERTIFICATION ELECTION FILED BY PRIVATE RESPONDENT CGWU-PTGWO DESPITE THE ABSENCE OF ANY EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE COMPANY AND ITS MEMBERS.

IV.

PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE FINDINGS OF THE MED-ARBITER THAT THE PETITION FOR CERTIFICATION ELECTION WAS BARRED BY RES JUDICATA AND/OR THE PRINCIPLE OF CONCLUSIVENESS OF JUDGMENT.

V.

PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT DISMISSING OUTRIGHT THE APPEAL OF PRIVATE RESPONDENT FOR FAILURE TO SUBMIT A CERTIFICATION AGAINST FORUM SHOPPING.[16]

The principal issues are:  (1) Is a motion for reconsideration necessary before a party can file a

petition for certiorari from the decision of the Secretary of Labor and Employment?  (2) Is the case barred

by res judicata or conclusiveness of judgment?  and (3) Is there an employer-employee relationship

between petitioner and the union members?

First.  It is settled that the filing of a motion for reconsideration is a prerequisite to the filing of a

special civil action for certiorari to give the lower court the opportunity to correct itself. [17]  This rule,

however, admits of exceptions, such as when a motion for reconsideration would be useless under the

circumstances.[18]

Under Department Order No. 40-03, Series of 2003,[19] the decision of the Secretary of Labor and

Employment shall be final and executory after ten days from receipt thereof by the parties and that it shall

not be subject of a motion for reconsideration.

In this case, the Decision dated January 18, 2005 of the Secretary of Labor and Employment was

received by petitioner on January 25, 2005.  It would have become final and executory on February 4,

2005, the tenth day from petitioner’s receipt of the decision.  However, petitioner filed a petition for

certiorari with the Court of Appeals on even date.  Clearly, petitioner availed of the proper remedy since

Department Order No. 40-03 explicitly prohibits the filing of a motion for reconsideration.  Such motion

becomesdispensable and not at all necessary.

Second.  The doctrine of res judicata provides that a final judgment or decree on the merits by a

court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on

points and matters determined in the former suit.[20]  The elements of res judicata are:  (1) the judgment

sought to bar the new action must be final; (2) the decision must have been rendered by a court having

jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on

the merits; and (4) there must be as between the first and second action, identity of parties, subject

matter, and causes of action.[21]

Res judicata has a dual aspect:  first, “bar by prior judgment” which is provided in Rule 39,

Section 47(b)[22] of the 1997 Rules of Civil Procedure and second, “conclusiveness of judgment” which is

provided in Section 47(c)[23] of the same Rule.

There is “bar by prior judgment” when, as between the first case where the judgment was

rendered, and the second case that is sought to be barred, there is identity of parties, subject matter, and

causes of action.[24]  In this instance, the judgment in the first case constitutes an absolute bar to the

second action.  Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits

concludes the litigation between the parties, as well as their privies, and constitutes a bar to a new action

or suit involving the same cause of action before the same or any other tribunal.[25]

On the other hand, the doctrine of “conclusiveness of judgment” provides that issues actually and

directly resolved in a former suit cannot again be raised in any future case between the same parties

involving a different cause of action.  Under this doctrine, identity of causes of action is not required but

merely identity of issues.  Otherwise stated, conclusiveness of judgment bars the relitigation of particular

facts or issues in another litigation between the same parties on a different claim or cause of action.[26]

In the instant case, there is no dispute as to the presence of the first three elements

of res judicata.  The Resolution dated December 27, 2002 of the Secretary of Labor and Employment on

the first petition for certification election became final and executory.  It was rendered on the merits and

the Secretary of Labor and Employment had jurisdiction over the case.  Now, is the fourth element –

identity of parties, subject matter, and causes of action between the first and third petitions for certification

election – present?  We hold in the negative.

The Secretary of Labor and Employment dismissed the first petition as it was filed outside the 60-

day freedom period.  At that time therefore, the union has no cause of action since they are not yet legally

allowed to challenge openly and formally the status of SMCGC-SUPER as the exclusive bargaining

representative of the bargaining unit.  Such dismissal, however, has no bearing in the instant case since the

third petition for certification election was filed well within the 60-day freedom period.  Otherwise stated,

there is no identity of causes of action to speak of since in the first petition, the union has no cause of action

while in the third, a cause of action already exists for the union as they are now legally allowed to challenge

the status of SMCGC-SUPER as exclusive bargaining representative.

Third.  The matter of employer-employee relationship has been resolved with finality by the

Secretary of Labor and Employment in the Resolution dated December 27, 2002.  Since petitioner did not

appeal this factual finding, then, it may be considered as the final resolution of such issue.  To reiterate,

“conclusiveness of judgment” has the effect of preclusion of issues.[27]

WHEREFORE, the instant petition is DENIED for lack of merit.

SO ORDERED.

 GENERAL SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS,

Petitioner,

                  – versus –

COCA-COLA BOTTLERS PHILS., INC. (GENERALSANTOS CITY), THE COURT OF APPEALS and THE NATIONAL LABOR RELATIONS COMMISSION,

Respondents.

       G.R. No. 178647

       Present:

       YNARES-SANTIAGO,J.,             Chairperson,       AUSTRIA-MARTINEZ,       CHICO-NAZARIO,       NACHURA, and       PERALTA, JJ.

       Promulgated:

            February 13, 2009x------------------------------------------------------------------------------------------------------x  

RESOLUTION 

NACHURA, J.:  

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules on Civil Procedure,

petitioner General Santos Coca-Cola Plant Free Workers Union-Tupas (Union) is seeking the reversal of

the April 18, 2006 Decision[1] and May 30, 2007 Resolution[2] of the Court of Appeals in CA-G.R. SP No.

80916. The CA affirmed the January 31, 2003 and August 29, 2003 Resolutions[3] of the National Labor

Relations Commission (NLRC) in favor of respondent Coca-Cola Bottlers Phil., Inc. (CCBPI).

 

Sometime in the late 1990s, CCBPI experienced a significant decline in profitability due to the

Asian economic crisis, decrease in sales, and tougher competition. To curb the negative effects on the

company, it implemented three (3) waves of an Early Retirement Program.[4]   Meanwhile, there was an

inter-office memorandum sent to all of CCBPI’s Plant Human Resources Managers/Personnel Officers,

including those of the CCBPI General Santos Plant (CCBPI Gen San) mandating them to put on hold “all

requests for hiring to fill in vacancies in both regular and temporary positions in [the] Head Office and in

the Plants.” Because several employees availed of the early retirement program, vacancies were created

in some departments, including the production department of CCBPI Gen San, where members of

petitioner Union worked. This prompted petitioner to negotiate with the Labor Management Committee for

filling up the vacancies with permanent employees.  No resolution was reached on the matter.[5]

 

Faced with the “freeze hiring” directive, CCBPI Gen San engaged the services of JLBP Services

Corporation (JLBP), a company in the business of providing labor and manpower services, including

janitorial services, messengers, and office workers to various private and government offices.[6]

 

On January 21, 2002, petitioner filed with the National Conciliation and Mediation Board (NCMB),

Regional Branch 12, a Notice of Strike on the ground of alleged unfair labor practice committed by CCBPI

Gen San for contracting-out services regularly performed by union members (“union busting”).  After

conciliation and mediation proceedings before the NCMB, the parties failed to come to an amicable

settlement. On July 3, 2002, CCBPI filed a Petition for Assumption of Jurisdiction with the Office of the

Secretary of Labor and Employment. On July 26, 2002, the Secretary of Labor issued an Order enjoining

the threatened strike and certifying the dispute to the NLRC for compulsory arbitration.[7]

 

In a Resolution[8] dated January 31, 2003, the NLRC ruled that CCBPI was not guilty of unfair

labor practice for contracting out jobs to JLBP.  The NLRC anchored its ruling on the validity of the

“Going-to-the-Market” (GTM) system implemented by the company, which called for restructuring its

selling and distribution system, leading to the closure of certain sales offices and the elimination of

conventional sales routes.  The NLRC held that petitioner failed to prove by substantial evidence that the

system was meant to curtail the right to self-organization of petitioner’s members. Petitioner filed a motion

for reconsideration, which the NLRC denied in a Resolution[9] dated August 29, 2003. Hence, petitioner

filed a Petition for Certiorari before the CA.

 

The CA issued the assailed Decision[10] on April 18, 2006 upholding the NLRC’s finding that

CCBPI was not guilty of unfair labor practice. The CA based its decision on the validity of CCBPI’s

contracting out of jobs in its production department. It held that the contract between CCBPI and JLBP did

not amount to labor-only contracting. It found that JLBP was an independent contractor and that the

decision to contract out jobs was a valid exercise of management prerogative to meet exigent

circumstances. On the other hand, petitioner failed to adduce evidence to prove that contracting out of

jobs by the company resulted in the dismissal of petitioner’s members, prevented them from exercising

their right to self-organization, led to the Union’s demise or that their group was singled out by the

company. Consequently, the CA declared that CCBPI was not guilty of unfair labor practice.

 

Its motion for reconsideration having been denied,[11] petitioner now comes to this Court seeking

the reversal of the CA Decision.

 

The petition is bereft of merit. Hence, we deny the Petition.

 

Under Rule 45 of the Revised Rules on Civil Procedure, only questions of law may be raised in a

Petition for Review on Certiorari.[12]

 

There is a question of law if the issue raised is capable of being resolved without need of

reviewing the probative value of the evidence.  The resolution of the issue must rest solely on what the

law provides on a given set of circumstances.  Once it is clear that the issue invites a review of the

evidence presented, the question posed is one of fact.  If the query requires a re-evaluation of the

credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to

one another, the issue in that query is factual.[13]

 

An examination of the issues raised by petitioner reveals that they are questions of fact.  The

issues raised, i.e., whether JLBP is an independent contractor, whether CCBPI’s contracting-out of jobs to

JLBP amounted to unfair labor practice, and whether such action was a valid exercise of management

prerogative, call for a re-examination of evidence, which is not within the ambit of this Court’s jurisdiction.

 

Moreover, factual findings of the NLRC, an administrative agency deemed to have acquired

expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially

when such factual findings are affirmed by the CA.[14]

Furthermore, we find no reversible error in the assailed Decision.

 

It is true that the NLRC erroneously concluded that the contracting- out of jobs in CCBPI Gen San

was due to the GTM system, which actually affected CCBPI’s sales and marketing departments, and had

nothing to do with petitioner’s complaint. However, this does not diminish the NLRC’s finding that JLBP

was a legitimate, independent contractor and that CCBPI Gen San engaged the services of JLBP to meet

business exigencies created by the freeze-hiring directive of the CCBPI Head Office.

 

On the other hand, the CA squarely addressed the issue of job contracting in its assailed

Decision and Resolution.  The CA itself examined the facts and evidence of the parties[15] and found that,

based on the evidence, CCBPI did not engage in labor-only contracting and, therefore, was not guilty of

unfair labor practice.

 

The NLRC found – and the same was sustained by the CA – that the company’s action to

contract-out the services and functions performed by Union members did not constitute unfair labor

practice as this was not directed at the members’ right to self-organization.

 

Article 248 of the Labor Code provides:

           ART. 248. UNFAIR LABOR PRACTICE OF EMPLOYERS. – It shall be unlawful for an employer to commit any of the following unfair labor practices: 

            x x x             (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization;             x x x

 

 

Unfair labor practice refers to “acts that violate the workers’ right to organize.” The prohibited acts

are related to the workers’ right to self-organization and to the observance of a CBA.  Without that

element, the acts, even if unfair, are not unfair labor practices.[16]

 

Both the NLRC and the CA found that petitioner was unable to prove its charge of unfair labor

practice. It was the Union that had the burden of adducing substantial evidence to support its allegations

of unfair labor practice,[17] which burden it failed to discharge.

 

WHEREFORE, the foregoing premises considered, the Petition is DENIED.  The assailed

Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 80916 are AFFIRMED.

 

SO ORDERED.

UST FACULTY UNION,                       G.R. No. 180892

                                      Petitioner,                                                                 Present:                                                                  QUISUMBING, J., Chairperson,                   - versus -                               CARPIO-MORALES,                                                                 TINGA,                                                                         VELASCO, JR., and                                                                 BRION, JJ.UNIVERSITY OF SANTO TOMAS,REV. FR. ROLANDO DE LA ROSA,REV. FR. RODELIO ALIGAN,            Promulgated:DOMINGO LEGASPI, andMERCEDES HINAYON,                                                           Respondents.     April 7, 2009x-----------------------------------------------------------------------------------------x  

D E C I S I O N         

 VELASCO, JR., J.: 

The Case 

This Petition for Review on Certiorari under Rule 45 seeks the reversal of the June 14, 2007

Decision[1] and November 26, 2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 92236.

The CA Decision affirmed the November 28, 2003[3] and July 29, 2005[4] Resolutions of the Third Division

of the National Labor Relations Commission (NLRC) in NLRC CA No. 037320-03. These Resolutions, in

turn, affirmed the August 15, 2003 Decision of Labor Arbiter Edgardo M. Madriaga in NLRC NCR Case

No. 10-06255-96. Entitled University of Santo Tomas Faculty Union v. University of Santo Tomas, Rev.

Fr. Rolando De La Rosa, Rev. Fr. Rodelio Aligan, Domingo Legaspi, and Mercedes Hinayon, these

decisions and resolutions were all in favor of respondents that were found not guilty of Unfair Labor

Practice (ULP).

 

The Facts

 

On September 21, 1996, the University of Santo Tomas Faculty Union (USTFU) wrote a letter [5] to

all its members informing them of a General Assembly (GA) that was to be held on October 5, 1996. The

letter contained an agenda for the GA which included an election of officers. The then incumbent

president of the USTFU was Atty. Eduardo J. Mariño, Jr.

 

On October 2, 1996, Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a

Memorandum[6] allowing the request of the Faculty Clubs of the university to hold a convocation on

October 4, 1996.

 

Members of the faculties of the university attended the convocation, including members of the

USTFU, without the participation of the members of the UST administration. Also during the convocation,

an election for the officers of the USTFU was conducted by a group called the Reformist Alliance. Upon

learning that the convocation was intended to be an election, members of the USTFU walked out.

Meanwhile, an election was conducted among those present, and Gil Gamilla and other faculty members

(Gamilla Group) were elected as the president and officers, respectively, of the union. Such election was

communicated to the UST administration in a letter dated October 4, 1996. [7] Thus, there were two (2)

groups claiming to be the USTFU: the Gamilla Group and the group led by Atty. Mariño, Jr. (Mariño

Group).

 

On October 8, 1996, the Mariño Group filed a complaint for ULP against the UST with the

Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 10-06255-96. It also filed on October

11, 1996 a complaint with the Office of the Med-Arbiter of the Department of Labor and Employment

(DOLE), praying for the nullification of the election of the Gamilla Group as officers of the USTFU. The

complaint was docketed as Case No. NCR-OD-M-9610-016 and entitled UST Faulty Union, Gil Y.

Gamilla, Corazon Qui, et al., v. Eduardo J. Mariño, Jr., Ma. Melvyn Alamis, Norma Collantes, et al.

 

On December 3, 1996, a Collective Bargaining Agreement[8] (CBA) was entered into by the

Gamilla Group and the UST. The CBA superseded an existing CBA entered into by the UST and USTFU

which was intended for the period of June 1, 1993 to May 31, 1998.[9]

 

On January 27, 1997, Gamilla, accompanied by the barangay captain in the area, Dupont E.

Aseron, and Justino Cardenas, Chief Security Officer of the UST, padlocked the office of the

USTFU.  Afterwards, an armed security guard of the UST was posted in front of the USTFU office.

 

On February 11, 1997, the med-arbiter issued a Resolution, declaring the election of the Gamilla

group as null and void and ordering that this group cease and desist from performing the duties and

responsibilities of USTFU officers. This Resolution was appealed to the Director of the Bureau of Labor

Relations (BLR), docketed as BLR Case No. A-8-49-97 and entitled UST Faulty Union, Gil Y. Gamilla,

Corazon Qui, et al. v. Med-Arbiter Tomas F. Falconitin of the National Capital Region, Department of

Labor and Employment (DOLE), Eduardo J. Mariño, Jr., et al. Later, the director issued a Resolution

dated August 15, 1997 affirming the Resolution of the med-arbiter. His Resolution was then appealed to

this Court which rendered its November 16, 1999 Decision[10] in G.R. No. 131235 upholding the ruling of

the BLR.

 

Thus, on January 21, 2000, USTFU filed a Manifestation[11] with the Arbitration Branch of the

NLRC in NLRC Case No. 10-06255-96, informing it of the Decision of the Court. Thereafter, on August

15, 2003, the Arbitration Branch of the NLRC issued a Decision[12] dismissing the complaint for lack of

merit.

 

The complaint was dismissed on the ground that USTFU failed to establish with clear and

convincing evidence that indeed UST was guilty of ULP. The acts of UST which USTFU complained of as

ULP were the following: (1) allegedly calling for a convocation of faculty members which turned out to be

an election of officers for the faculty union; (2) subsequently dealing with the Gamilla Group in

establishing a new CBA; and (3) the assistance to the Gamilla Group in padlocking the USTFU office.

 

In his Decision, the labor arbiter explained that the alleged Memorandum dated October 2, 1996

merely granted the request of faculty members to hold such convocation. Moreover, by USTFU’s own

admission, no member of the UST administration attended or participated in the convocation.

 

As to the CBA, the labor arbiter ruled that when the new CBA was entered into, (1) the Gamilla

Group presented more than sufficient evidence to establish that they had been duly elected as officers of

the USTFU; and (2) the ruling of the med-arbiter that the election of the Gamilla Group was null and void

was not yet final and executory. Thus, UST was justified in dealing with and entering into a CBA with the

Gamilla Group, including helping the Gamilla Group in securing the USTFU office.

The USTFU appealed the labor arbiter’s Decision to the Third Division of the NLRC which

rendered a Resolution dated November 28, 2003 affirming the Decision of the labor arbiter. USTFU’s

Motion for Reconsideration of the NLRC’s November 28, 2003 Resolution was denied in a Resolution

dated July 29, 2005.

 

The case was then elevated to the CA which rendered the assailed Decision affirming the

Resolutions of the NLRC. The CA also denied the Motion for Reconsideration of USTFU in the assailed

resolution.

 

Hence, we have this petition.

 

The Issues

 1.                  The Honorable Court of Appeals committed serious and reversible

error when it dismissed the Petition for Certiorari in CA-G.R. SP No. 92236 and sustained the National Labor Relations Commission’s ruling that the herein respondents are not

guilty of Unfair Labor Practice despite abundance of evidence showing that Unfair Labor Practices were indeed committed. 

2.                  The Honorable Court of Appeals committed serious and reversible error when it manifestly overlooked relevant facts not disputed by the parties which, if properly considered, would justify a different conclusion and in rendering a judgment that is based on a misapprehension of facts.[13]

 

The Court’s Ruling

 

          The petition must be denied.

                                                                        

UST Is Not Guilty of ULP

 

Petitioner claims that given the factual circumstances attendant to the instant case, the labor

arbiter, NLRC, and CA should have found that UST is guilty of ULP. Petitioner enumerates the acts

constituting ULP as follows: (1) Atty. Domingo Legaspi, the legal counsel for the UST, conducted a faculty

meeting in his office, supplying derogatory information about the Mariño Group; (2) respondents provided

the Gamilla Group with the facilities and forum to conduct elections, in the guise of a convocation; and (3)

respondents transacted business with the Gamilla Group such as the processing of educational and

hospital benefits, deducting USTFU dues from the faculty members without turning over the dues to the

Mariño Group, and entering into a CBA with them.

 

          Additionally, petitioner claims that the CA, NLRC, and labor arbiter ignored vital pieces of evidence.

These were the Affidavit dated January 21, 2000 of Edgar Yu, the Certification dated January 27, 1997 of

Alexander Sibug, and the picture of a security guard posted outside the USTFU office purportedly to

“prevent entry into and exit from the union office.”

 

The concept of ULP is contained in Article 247 of the Labor Code which states:

 Article 247. Concept of unfair labor practice and procedure for prosecution

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

 

Notably, petitioner claims that respondents violated paragraphs (a) and (d) of Art. 248 of the

Code which provide:

 

Article 248. Unfair labor practices of employers.––It shall be unlawful for an employer to commit any of the following unfair labor practices:

 (a) To interfere with, restrain or coerce employees in the exercise of their right to

self-organization; x x x x (d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters.

 

The general principle is that one who makes an allegation has the burden of proving it. While

there are exceptions to this general rule, in the case of ULP, the alleging party has the burden of proving

such ULP.

 

Thus, we ruled in De Paul/King Philip Customs Tailor v. NLRC that “a party alleging a critical fact

must support his allegation with substantial evidence. Any decision based on unsubstantiated allegation

cannot stand as it will offend due process.”[14]

 

While in the more recent and more apt case of Standard Chartered Bank Employees Union

(NUBE) v. Confesor, this Court enunciated:

 In order to show that the employer committed ULP under the Labor Code,

substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[15] (Emphasis supplied.)

 

In other words, whether the employee or employer alleges that the other party committed ULP, it

is the burden of the alleging party to prove such allegation with substantial evidence. Such principle finds

justification in the fact that ULP is punishable with both civil and/or criminal sanctions.[16]

 

Given the above rulings of this Court, we shall now examine the acts of respondents which

allegedly constitute ULP.

 

With regard to the alleged derogatory remarks of Atty. Legaspi, the three tribunals correctly ruled

that there was no evidence to support such allegation. The alleged evidence to support petitioner’s claim,

the Affidavit dated January 21, 2000 of Yu, is unacceptable. In the Affidavit it is stated that: “6. That in the

said meeting, Atty. Legaspi gave the participants information that are derogatory to the officers of the UST

Faculty Union.”[17]

 

It may be observed that the information allegedly provided during the meeting as “derogatory” is a

conclusion of law and not of fact. What may be derogatory to Yu may not be punishable under the law.

There was, therefore, no fact that was established by the Affidavit. Hence, petitioner failed to present

evidence in support of its claim that respondents committed ULP through alleged remarks of Atty.

Legaspi.

 

As to the convocation, petitioner avers that: “Indeed, Respondents, under the guise of a faculty

convocation, ordered the suspension of classes and required the faculty members to attend the supposed

faculty convocation which was to be held at the Education Auditorium of the University of Santo

Tomas.”[18] An examination of the Memorandum dated October 2, 1996 [19] would, however, rebut such

allegation. It stated: MEMORANDUM TO

 THE DEANS, REGENTS, PRINCIPALSAND HEADS OF DEPARTMENTS                         Re: Convocation of Faculty Club As per request of the Faculty Clubs of the different Faculties, Colleges, Schools

and Institutes in the University through their Presidents, we are allowing them to hold a convocation on Friday, October 4, 1996 at 9:00 in the morning to 12:00 noon at the Education Auditorium.

 The officers and members of said faculty clubs are, therefore, excused from their

classes on Friday from 9:00 to 12:00 noon to allow them to attend.Regular classes shall resume at 1:00 in the afternoon. Please be guided

accordingly. Thank you.

FR. RODEL ALIGAN, O.P. (Sgd.)Secretary General

In no way can the contents of this memorandum be interpreted to mean that faculty members

were required to attend the convocation. Not one coercive term was used in the memorandum to show

that the faculty club members were compelled to attend such convocation. And the phrase “we are

allowing them to hold a convocation” negates any idea that the UST would participate in the proceedings.

 

Moreover, the CA ruled properly:

 More importantly, USTFU itself even admitted that during the October [4], 1996

convocation/election, not a single University Official was present. And the Faculty Convocation was held without the overt participation of any UST Administrator or Official.[20]

 

In other words, the Memorandum dated October 2, 1996 does not support a claim that UST

organized the convocation in connivance with the Gamilla Group.

 

Anent UST’s dealing with the Gamilla Group, including the processing of faculty members’

educational and hospitalization benefits, the labor arbiter ruled that: Neither are We persuaded by complainant’s stand that respondents’

acquiescence to bargain with USTFU, through Gamilla’s group, constitutes unfair labor practice. x x x Such conduct alone, uncorroborated by other overt acts leading to the commission of ULP, does not conclusively show and establish the commission of such unlawful acts.[21]

 

The fact of the matter is, the Gamilla Group represented itself to respondents as the duly elected

officials of the USTFU.[22] As such, respondents were bound to deal with them.

 

Art. 248(g) of the Labor Code 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: x x x x (g) To violate the duty to bargain collectively as prescribed by this Code.

 

Correlatively, Art. 250(a) of the Code provides:

 ART. 250. Procedure in collective bargaining.––The following procedures shall

be observed in collective bargaining: (a) When a party desires to negotiate an agreement, it shall serve a written

notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice;

 

Moreover, Art. 252 of the Code defines the duty to bargain collectively as:

 ART. 252. Meaning of duty to bargain collectively.––The duty to bargain

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

 

In the instant case, until our Decision in G.R. No. 131235 that the Gamilla Group was not validly

elected into office, there was no reason to believe that the members of the Gamilla Group were not the

validly elected officers and directors of USTFU. To reiterate, the Gamilla Group submitted a Letter dated

October 4, 1996 whereby it informed Fr. Rolando De La Rosa that its members were the newly elected

officers and directors of USTFU. In the Letter, every officer allegedly elected was identified with the Letter

signed by the alleged newly elected Secretary General and President, Ma. Lourdes Medina and Gamilla,

respectively.

 

More important though is the fact that the records are bereft of any evidence to show that the

Mariño Group informed the UST of their objections to the election of the Gamilla Group. In fact, there is

even no evidence to show that the scheduled elections on October 5, 1996 that was supposed to be

presided over by the Mariño Group ever pushed through. Instead, petitioner filed a complaint with the

med-arbiter on October 11, 1996 praying for the nullification of the election of the Gamilla Group.

 

As such, there was no reason not to recognize the Gamilla Group as the new officers and

directors of USTFU. And as stated in the above-quoted provisions of the Labor Code, the UST was

obligated to deal with the USTFU, as the recognized representative of the bargaining unit, through the

Gamilla Group. UST’s failure to negotiate with the USTFU would have constituted ULP.

 

It is not the duty or obligation of respondents to inquire into the validity of the election of the

Gamilla Group. Such issue is properly an intra-union controversy subject to the jurisdiction of the med-

arbiter of the DOLE. Respondents could not have been expected to stop dealing with the Gamilla Group

on the mere accusation of the Mariño Group that the former was not validly elected into office.

 

The subsequent ruling of this Court in G.R. No. 131235 that the Gamilla Group was not validly

elected into office cannot support petitioner’s allegation of ULP. Had respondents dealt with the Gamilla

Group after our ruling in G.R. No. 131235 had become final and executory, it would have been a different

story. As the CA ruled correctly, until the validity of the election of the Gamilla Group is resolved with

finality, respondents could not be faulted for negotiating with said group. 

 

 

Petitioner further alleges that respondents are guilty of ULP when on January 27, 1997, “Justino

Cardenas, Detachment Commander of the security agency contracted by the UST to provide security

services to the university, led a group of persons, including Dr. Gil Gamilla, who padlocked the door

leading to the USTFU.”[23] Petitioner claims that “Gamilla who was and is still being favored by the

employer, had no right whatsoever to padlock the union office. And, yet the Administrators of

the University of Santo Tomasaided him in performing an unlawful act.” Petitioner adds that an armed

security guard was posted at the USTFU office in order to prevent the Mariño Group from performing its

duties.[24] To support such contention, petitioner provides as evidence a Certification dated January 27,

1997[25] of Sibug, a messenger of the USTFU, and a photograph[26] of a security guard standing before the

USTFU office.

 

These pieces of evidence fail to support petitioner’s conclusions.

 

As to the padlocking of the USTFU office, it must be emphasized that based on the Certification

of Sibug, Cardenas was merely present, with Brgy. Captain Aseron of Brgy. 470, Zone 46, at the

padlocking of the USTFU office. The Certification also stated that Sibug himself also padlocked the

USTFU office and that he was neither harassed nor coerced by the padlocking group. Clearly, Cardenas’

mere presence cannot be equated to a positive act of “aiding” the Gamilla Group in securing the USTFU

office.  

 

With regard to the photograph, while it evidences that there was indeed a guard posted at the

USTFU office, such cannot be used to claim that the guard prevented the Mariño Group from performing

its duties.

 

Petitioner again failed to present evidence to support its contention that UST committed acts

amounting to ULP.

 

In any event, it bears stressing that at the time of these events, the legitimacy of the Gamilla

Group as the valid officers and directors of the USTFU was already submitted to the med-arbiter and no

decision had yet been reached on the matter. Having been shown evidence to support the legitimacy of

the Gamilla Group with no counter-evidence from the Mariño Group, UST had to recognize the Gamilla

Group and negotiate with it. Thus, the acts of UST in support of the USTFU as the legitimate

representative of the bargaining unit, albeit through the Gamilla Group, cannot be considered as ULP.

 

Finally, petitioner claims that “despite the ruling of this Honorable Court, the University of Santo

Tomas still entertains the interlopers whose claim to the leadership of the USTFU has been rejected by

the [DOLE] and the Highest Tribunal.”[27] Petitioner, however, fails to enumerate such objectionable

actions of the UST. Again, petitioner fails to present substantial evidence in support of its claim.

 

In sum, petitioner makes several allegations that UST committed ULP. The onus probandi falls on

the shoulders of petitioner to establish or substantiate such claims by the requisite quantum of evidence.

In labor cases as in other administrative proceedings, substantial evidence or such relevant evidence as a

reasonable mind might accept as sufficient to support a conclusion is required. In the petition at bar,

petitioner miserably failed to adduce substantial evidence as basis for the grant of relief. 

 

WHEREFORE, the petition is hereby DENIED. The June 14, 2007 Decision and November 26,

2007 Resolution of the CA in CA-G.R. SP No. 92236 are herebyAFFIRMED.

 

          No costs.

 

          SO ORDERED.

[G.R. No. 127374.  January 31, 2002]

PHILIPPINE SKYLANDERS, INC., MARILES C. ROMULO and FRANCISCO DAKILA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER EMERSON TUMANON,  PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER  (now UNIFIED PAFLU) and SERAFIN AYROSO, respondents.

[G.R. No. 127431.  January 31, 2002]

PHILIPPINE SKYLANDERS AND WORKERS ASSOCIATION-NCW, MACARIO CABANIAS,  PEPITO RODILLAS, SHARON CASTILLO, DANILO CARBONEL, MANUEL EDA, ROLANDO FELIX, JOCELYN FRONDA, RICARDO LUMBA, JOSEPH MARISOL, NERISA MORTEL, TEOFILO QUIRONG, LEONARDO REYES, MANUEL CADIENTE and HERMINIA RIOSA, petitioners, vs. PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER (now UNIFIED PAFLU) and NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, respondents.

D E C I S I O N

BELLOSILLO, J.:

This is a petition for certiorari[1] seeking to set aside the 31 July 1996 Decision[2] of the National Labor Relations Commission affirming the 30 June 1995 Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc., Mariles C. Romulo[3] and Francisco Dakila as well as the elected officers of the Philippine Skylanders Employees and Workers Association-PAFLU[4] guilty of unfair labor practice and ordering them to pay private respondent Philippine Association of Free Labor Union  (PAFLU) September[5] P150,000.00 as damages.  Petitioners likewise seek the reversal of the 31 October 1996 Resolution of the NLRC denying their Motion for Reconsideration.

In November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU),  won in the certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI).  Its rival union, Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor.

Several months later, pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLU's supposed deliberate and habitual dereliction of duty toward its members.  Attached to the notice was a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees Association - National Congress of Workers (PSEA-NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW.

On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered with the Department of Labor and Employment.   

Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU Secretary General Serafin Ayroso wrote Mariles C. Romulo requesting a copy of PSI's audited financial statement. Ayroso explained

that with the dismissal of PSEA-WATU’s election protest the time was ripe for the parties to enter into a collective bargaining agreement.

On 30 July 1994 PSI through its personnel manager Francisco Dakila denied the request citing as reason PSEA's disaffiliation from PAFLU and its subsequent affiliation with NCW.

Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila.   PAFLU alleged that aside from PSI’s refusal to bargain collectively with its workers, the company through its president and personnel manager, was also liable for interfering with its employees' union activities.[6]

Two (2) days later or on 6 October 1994 Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila.  Through Ayroso PAFLU claimed that Dakila was present in PSEA's organizational meeting thereby confirming his illicit participation in union activities.  Ayroso added that the members of the local union had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which was detrimental to their interests.[7] The two (2) complaints were thereafter consolidated.

On 1 February 1995 PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party respondents.   PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.[8]

PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter.  On the other hand, PSEA-NCW took the cudgels for its officers who were being sued in their capacities as former officers of PSEA-PAFLU and asserted that since PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint.  In support of this assertion, PSEA-NCW submitted in evidence a Katunayan signed by 111 out of 120 rank and file employees of PSI disauthorizing Ayroso or PAFLU from instituting any action in their behalf.[9]

In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice.  The Decision explained that despite PSEA-PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file employees, the company knowingly sanctioned and confederated with Dakila in actively assisting a rival union.  This, according to the Labor Arbiter, was a classic case of interference for which PSI could be held responsible.  As PSEA-NCW's personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid.  Ayroso's legal personality to file the complaint was sustained on the ratiocination that under the Labor Code no petition questioning the majority status of the incumbent bargaining agent shall be entertained outside of the sixty (60)-day period immediately before the expiry date of such five (5)-year term of the collective bargaining agreement that the parties may enter into.  Accordingly, judgment was rendered ordering PSI, PSEA-PAFLU and their officers to pay PAFLU P150,000.00 in damages.[10]

PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC).  But the NLRC upheld the Decision of the Labor Arbiter and conjectured that since an election protest questioning PSEA-PAFLU's certification as the sole and exclusive bargaining agent was pending resolution before the Secretary of Labor, PSEA could not validly separate from PAFLU, join another national federation and subsequently enter into a collective bargaining agreement with its employer-company.[11]

Petitioners separately moved for reconsideration but both motions were denied.   Hence, these petitions for certiorari filed by PSI and PSEA-NCW together with their respective officers pleading for a reversal of the NLRC's Decision which they claimed to have been rendered in excess of jurisdiction.  In due time, both petitions were consolidated.

In these petitions, petitioner PSEA together with its officers argued that by virtue of their disaffiliation PAFLU as a mere agent had no authority to represent them before any proceedings.  They further asserted that being an independent labor union PSEA may freely serve the interest of all its members and readily disaffiliate from its mother federation when circumstances so warrant.   This right, they averred, was consistent with the constitutional guarantee of freedom of association.[12]

For their part, petitioners PSI, Romulo and Dakila alleged that their decision to bargain collectively with PSEA-NCW was actuated, to a large extent, by PAFLU's behavior.   Having heard no objections or protestations from PAFLU relative to PSEA's disaffiliation, they reckoned that PSEA's subsequent association with NSW was done bona fide.[13]

The Solicitor General filed a Manifestation in Lieu of Comment recommending that both petitions be granted.  In his Manifestation, the Solicitor General argued against the Labor Arbiter's assumption of jurisdiction citing the following as reasons:  first, there was no employer-employee relationship between complainant Ayroso and PSI over which the Labor Arbiter could rightfully assert his jurisdiction; second, since the case involved a dispute between PAFLU as mother federation and PSEA as local union, the controversy fell within the jurisdiction of the Bureau of Labor Relations; and lastly, the relationship of principal-agent between PAFLU and PSEA had been severed by the local union through the lawful exercise of its right of disaffiliation.[14]

Stripped of non-essentials, the fundamental issue tapers down to the legitimacy of PSEA's disaffiliation.  To be more precise, may PSEA, which is an independent and separate local union, validly disaffiliate from PAFLU pending the settlement of an election protest questioning its status as the sole and exclusive bargaining agent of PSI's rank and file employees?

At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the jurisdiction of which properly lies with the Bureau of Labor Relations (BLR) and not with the Labor Arbiter.[15] Nonetheless, with due recognition of this fact, we deem it proper to settle the controversy at this instance since to remand the case to the BLR would only mean intolerable delay for the parties. 

The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law.  In the landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.[16] we upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members.  The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests.   Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into existence.

Such dictum has been punctiliously followed since then.[17]

Upon an application of the aforecited principle to the issue at hand, the impropriety of the questioned Decisions becomes clearly apparent.  There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway.  As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation.  Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf.  Surely, this is not a case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation, but it is a case where almost all local union members decided to disaffiliate.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW.  As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly

hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.

There is a further consideration that likewise argues for the granting of the petitions.   It stands unchallenged that PAFLU instituted the complaint for unfair labor practice against the wishes of workers whose interests it was supposedly protecting.  The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union.  Recreant to its mission, PAFLU cannot simply ignore the demands of the local chapter and decide for its welfare.  PAFLU might have forgotten that as an agent it could only act in representation of and in accordance with the interests of the local union.  The complaint then for unfair labor practice lodged by PAFLU against PSI, PSEA and their respective officers, having been filed by a party which has no legal personality to institute the complaint, should have been dismissed at the first instance for failure to state a cause of action. 

Policy considerations dictate that in weighing the claims of a local union as against those of a national federation, those of the former must be preferred.  Parenthetically though, the desires of the mother federation to protect its locals are not altogether to be shunned.  It will however be to err greatly against the Constitution if the desires of the federation would be favored over those of its members.  That, at any rate, is the policy of the law.  For if it were otherwise, instead of protection, there would be disregard and neglect of the lowly workingmen.

WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine Skylanders and Workers Association-NCW, together with their respective officers, are GRANTED.    The Decision of the National Labor Relations Commission of  31 July 1996 affirming the Decision of the Labor Arbiter of 30 June 1995 holding petitioners Philippine Skylanders and Workers Association-NCW, Philippine Skylanders, Inc. and their respective officers, guilty of unfair labor practice and ordering them to pay damages to private respondent Philippine Association of Free Labor Unions (PAFLU) September (now UNIFIED PAFLU) as well as the Resolution of 31 October 1996 denying reconsideration is REVERSED and SET ASIDE.  No costs.

SO ORDERED.

G.R. No. L-43495-99 January 20, 1990

TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE ENCINAS, JOSE LUIS TRIBINO, FELIPE DURAN, MANUEL MANGYAO, MAMERTO CAHUCOM, NEMESIO BARRO, TEODULFO CAPAGNGAN, VICTORINO ABORRO, VIDAL MANTOS, DALMACIO DALDE, LUCIO PIASAN, CANUTO LABADAN, TERESO ROMERDE, CONRADO ENGALAN, SALVADOR NERVA, BERNARDO ENGALAN, BONIFACIO CAGATIN, BENEDICTO VALDEZ, EUSEBIO SUPILANAS, ALFREDO HAMAYAN, ASUERO BONITO, GAVINO DEL CAMPO, ZACARIAS DAMING, PRUDENCIO LADION, FULGENCIO BERSALUNA, ALBERTO PERALES, ROMEO MAGRAMO, GODOFREDO CAMINOS, GILDARDO DUMAS, JORGE SALDIVAR, GENARO MADRIO, SEGUNDINO KUIZON, LUIS SANDOVAL, NESTOR JAPAY, ROGELIO CUIZON, RENATO ANTIPADO, GREGORIO CUEVO, MARTIN BALAZUELA, CONSTANCIO CHU, CRISPIN TUBLE, FLORENCIO CHIU, FABIAN CAHUCOM, EMILIANO VILLAMOR, RESTITUTO HANDAYAN, VICTORINO ESPEDILLA, NOEL CHUA, ARMANDO ALCORANO, ELEUTERIO TAGUIK, SAMSON CRUDA, DANILO CASTRO, CENON VALLENAS, DANILO CAWALING, SIMPLICIO GALLEROS, PERFECTO CUIZON, PROCESO LAUROS, ANICETO BAYLON, EDISON ANDRES, REYNALDO BAGOHIN, IRENEO SUPANGAN, RODRIGO CAGATIN, TEODORO ORENCIO, ARMANDO LUAYON, JAIME NERVA, NARCISO CUIZON, ALFREDO DEL ROSARIO, EDUARDO LORENZO, PEDRO ARANGO, VICENTE SUPANGAN, JACINTO BANAL AND BONIFACIO PUERTO, petitioners, vs.TROPICAL HUT FOOD MARKET, INC., ESTELITA J. QUE, ARTURO DILAG, MARCELINO LONTOK JR., NATIONAL ASSOCIATION OF TRADE UNIONS (NATU), NATIONAL LABOR RELATIONS COMMISSION (NLRC), HON. DIEGO P. ATIENZA, GERONIMO Q. QUADRA, FEDERICO C. BORROMEO, AND HON. BLAS F. OPLE,respondents.

Pacifico C. Rosal for petitioners.

Marcelino Lontok, Jr. for private respondents.

Dizon, Vitug & Fajardo Law Office for Tropical Hut Food Market, Inc. and Que.

 

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 seeking to set aside the decisions of the public respondents Secretary of Labor and National Labor Relations Commission which reversed the Arbitrators rulings in favor of petitioners herein.

The following factual background of this case appears from the record:

On January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated, referred to herein as respondent company, organized a local union called the Tropical Hut Employees Union, known for short as the THEU, elected their officers, adopted their constitution and by-laws and immediately sought affiliation with the National Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU application for affiliation. Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the Department of Labor in the name of the Tropical Hut Employees Union — NATU. It appears, however, that NATU itself as a labor federation, was not registered with the Department of Labor.

After several negotiations were conducted between THEU-NATU, represented by its local president and the national officers of the NATU, particularly Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-President and Marcelino Lontok, Jr., Vice President, and respondent Tropical Hut Food Market, Incorporated, thru its President and General Manager, Cesar Azcona, Sr., a Collective Bargaining

Agreement was concluded between the parties on April 1, 1968, the term of which expired on March 31, 1971. Said agreement' contained these clear and unequivocal terms:

This Agreement made and entered into this __________ day of ___________, 1968, by and between:

The Tropical Hut Food Market, Inc., a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal office at Quezon City, represented in this Act by its President, Cesar B. Azcona (hereinafter referred to as the Company)

—and—

The Tropical Hut Employees Union — NATU, a legitimate labor organization duly organized and existing in accordance with the laws of the Republic of the Philippines, and affiliated with the National Association of Trade Unions, with offices at San Luis Terraces, Ermita, Manila, and represented in this Act by its undersigned officers (hereinafter referred to as the UNION)

Witnesseth:

xxx xxx xxx

Article I

Coverage and Effectivity

Sec. 1. The COMPANY recognizes the UNION as the sole and exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work, and other terms and conditions of employment.

xxx xxx xxx

Article III

Union Membership and Union Check-off

Sec. 1 —. . . Employees who are already members of the UNION at the time of the signing of this Agreement or who become so thereafter shall be required to maintain their membership therein as a condition of continued employment.

xxx xxx xxx

Sec. 3—Any employee who is expelled from the UNION for joining another federation or forming another union, or who fails or refuses to maintain his membership therein as required, . . . shall, upon written request of the UNION be discharged by the COMPANY. (Rollo, pp. 667-670)

And attached to the Agreement as Appendix "A" is a check-off Authorization Form, the terms of which are as follows:

We, the undersigned, hereby designate the NATIONAL Association of Trade Unions, of which the TROPICAL HUT EMPLOYEES UNION is an affiliate as sole collective bargaining agent in all matters relating to salary rates, hours of work and other terms and conditions of employment in the Tropical Hut Food Market, Inc. and we hereby authorize the said company to deduct the amount of Four (P 4.00) Pesos each every month as our monthly dues and to deliver the amount to the Treasurer of the Union or his duly authorized representatives. (Rollo, pp. 680-684)

On May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining Agreement which ended on March 31, 1974. This new CBA incorporated the previous union-shop security clause and the attached check-off authorization form.

Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-NATU, was appointed by the respondent company as Assistant Unit Manager. On July 24, 1973, he wrote the general membership of his union that for reason of his present position, he was resigning as President of the THEU-NATU effective that date. As a consequence thereof, his Vice-President, Jose Encinas, assumed and discharged the duties of the presidency of the THEU-NATU.

On December 19,1973, NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of the local union informing the NATU that THEU was disaffiliating from the NATU federation. On December 20, 1973, the Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general membership of the THEU, concerning the latter's disaffiliation from the NATU and its affiliation with the Confederation of General Workers (CGW). The letter was passed around among the members of the THEU-NATU, to which around one hundred and thirty-seven (137) signatures appeared as having given their consent to and acknowledgment of the decision to disaffiliate the THEU from the NATU.

On January 1, 1974, the general membership of the so-called THEU-CGW held its annual election of officers, with Jose Encinas elected as President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed the respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal, President of the Confederation of General Workers (CGW), wrote a letter in behalf of complainant THEU-CGW to the respondent company demanding the remittance of the union dues collected by the Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was refused by the respondent company.

On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the latter to assume immediately the position of President of the THEU-NATU in place of Jose Encinas, but the position was declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a letter, concerning the request made by the NATU federation to the respondent company to dismiss him (Encinas) in view of his violation of Section 3 of Article III of the Collective Bargaining Agreement. Encinas was also advised in the letter that NATU was returning the letter of disaffiliation on the ground that:

1. Under the restructuring program NOT of the Bureau of Labor but of the Philippine National Trade Union Center in conjunction with the NATU and other established national labor centers, retail clerks and employees such as our members in the Tropical Hut pertain to Industry II which by consensus, has been assigned already to the jurisdiction of the NATU;

2. The right to disaffiliate belongs to the union membership who — on the basis of verified reports received by — have not even been consulted by you regarding the matter;

3. Assuming that the disaffiliation decision was properly reached; your letter nevertheless is unacceptable in view of Article V, Section 1, of the NATU Constitution which provides

that "withdrawal from the organization shall he valid provided three (3) months notice of intention to withdraw is served upon the National Executive Council." (p. 281, Rollo)

In view of NATU's request, the respondent company, on the same day, which was January 11, 1974, suspended Encinas pending the application for clearance with the Department of Labor to dismiss him. On January 12, 1974, members of the THEU-CGW passed a resolution protesting the suspension of Encinas and reiterated their ratification and approval of their union's disaffiliation from NATU and their affiliation with the Confederation of General Workers (CGW). It was Encinas' suspension that caused the filing of NLRC Case No. LR-2511 on January 11, 1974 against private respondents herein, charging them of unfair labor practice.

On January 15,1974, upon the request of NATU, respondent company applied for clearance with the Secretary of Labor to dismiss the other officers and members of THEU-CGW. The company also suspended them effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual complainants against private respondents for unfair labor practices.

On January 19, 1974, Lontok, acting as temporary chairman, presided over the election of officers of the remaining THEU-NATU in an emergency meeting pending the holding of a special election to be called at a later date. In the alleged election, Arturo Dilag was elected acting THEU-NATU President together with the other union officers. On February 14, 1974, these temporary officers were considered as having been elected as regular officers for the year 1974.

On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce Enrile, Secretary of National Defense, complaining of the unfair labor practices committed by respondent company against its members and requesting assistance on the matter. The aforementioned letter contained the signatures of one hundred forty-three (143) members.

On February 24,1974, the secretary of THEU-NATU, notified the entire rank and file employees of the company that they will be given forty-eight (48) hours upon receipt of the notice within which to answer and affirm their membership with THEU-NATU. When the petitioner employees failed to reply, Arturo Dilag advised them thru letters dated February 26, March 2 and 5, 1974, that the THEU-NATU shall enforce the union security clause set forth in the CBA, and that he had requested respondent company to dismiss them.

Respondent company, thereafter, wrote the petitioner employees demanding the latter's comment on Dilag's charges before action was taken thereon. However, no comment or reply was received from petitioners. In view of this, Estelita Que, President/General Manager of respondent company, upon Dilag's request, suspended twenty four (24) workers on March 5, 1974, another thirty seven (37) on March 8, 1974 and two (2) more on March 11, 1974, pending approval by the Secretary of Labor of the application for their dismissal.

As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015 and an unnumbered case were filed by petitioners against Tropical Hut Food Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo Dilag.

It is significant to note that the joint letter petition signed by sixty-seven (67) employees was filed with the Secretary of Labor, the NLRC Chairman and Director of Labor Relations to cancel the words NATU after the name of Tropical Hut Employee Union under Registration Certificate No. 5544 IP. Another letter signed by one hundred forty-six (146) members of THEU-CGW was sent to the President of the Philippines informing him of the unfair labor practices committed by private respondents against THEU-CGW members.

After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed with the Labor Arbiter, Arbitrator Daniel Lucas issued an order dated March 21, 1974, holding that the issues raised by the parties became

moot and academic with the issuance of NLRC Order dated February 25, 1974 in NLRC Case No. LR-2670, which directed the holding of a certification election among the rank and file workers of the respondent company between the THEU-NATU and THEU-CGW. He also ordered: a) the reinstatement of all complainants; b) for the respondent company to cease and desist from committing further acts of dismissals without previous order from the NLRC and for the complainant Tropical Hut Employees UNION-CGW to file representation cases on a case to case basis during the freedom period provided for by the existing CBA between the parties (pp. 91-93, Rollo).

With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered case, Arbitrator Cleto T. Villatuya rendered a decision dated October 14, 1974, the dispositive portion of which states:

Premises considered, a DECISION is hereby rendered ordering respondent company to reinstate immediately the sixty three (63) complainants to their former positions with back wages from the time they were illegally suspended up to their actual reinstatement without loss of seniority and other employment rights and privileges, and ordering the respondents to desist from further committing acts of unfair labor practice. The respondent company's application for clearance filed with the Secretary of Labor to terminate the subject complainants' services effective March 20 and 23, 1974, should be denied.

SO ORDERED. (pp. 147-148, Rollo)

From the orders rendered above by Abitrator Daniel Lucas in NLRC Cases No. LR-2511 and LR-2521 and by Arbitrator Cleto Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and the unnumbered case, all parties thereto, namely, petitioners herein, respondent company, NATU and Dilag appealed to the National Labor Relations Commission.

In a decision rendered on August 1, 1975, the National Labor Relations Commission found the private respondents' appeals meritorious, and stated, inter alia:

WHEREFORE, in view of the foregoing premises, the Order of Arbitrator Lucas in NLRC CASE NOS. LR-2511, 2521 and the decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971, 3015 and the unnumbered Case are hereby REVERSED. Accordingly, the individual complainants are deemed to have lost their status as employees of the respondent company. However, considering that the individual complainants are not presumed to be familiar with nor to have anticipated the legal mesh they would find themselves in, after their "disaffiliation" from National Association of Trade Unions and the THEU-NATU, much less the legal consequences of the said action which we presume they have taken in all good faith; considering, further, that the thrust of the new orientation in labor relations is not towards the punishment of acts violative of contractual relations but rather towards fair adjustments of the resulting complications; and considering, finally, the consequent economic hardships that would be visited on the individual complainants, if the law were to be strictly enforced against them, this Commission is constrained to be magnanimous in this instant, notwithstanding its obligation to give full force and effect to the majesty of the law, and hereby orders the respondent company, under pain of being cited for contempt for failure to do so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical Hut Employees Union-NATU and the National Association of Trade Unions in the event it hires additional personnel.

SO ORDERED. (pp. 312-313, Rollo)

The petitioner employees appealed the decision of the respondent National Labor Relations Commission to the Secretary of Labor. On February 23, 1976, the Secretary of Labor rendered a decision affirming the findings of the Commission, which provided inter alia:

We find, after a careful review of the record, no sufficient justification to alter the decision appealed from except that portion of the dispositive part which states:

. . . this Commission . . . hereby orders respondent company under pain of being cited for contempt for failure to do so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical Hut Employees UNION-NATU and the National Association of Trade Union in the event it hires additional personnel.

Compliance by respondent of the above undertaking is not immediately feasible considering that the same is based on an uncertain event, i.e., reemployment of individual complainants "in the event that management hires additional personnel," after they shall have reaffirmed their loyalty to THEU-NATU, which is unlikely.

In lieu of the foregoing, and to give complainants positive relief pursuant to Section 9, Implementing Instruction No. 1. dated November 9, 1972, respondent is hereby ordered to grant to all the individual complainants financial assistance equivalent to one (1) month salary for every year of service.

WHEREFORE, with the modification as above indicated, the Decision of the National Labor Relations Commission is hereby affirmed.

SO ORDERED.(pp. 317-318, Rollo)

From the various pleadings filed and arguments adduced by petitioners and respondents, the following issues appear to be those presented for resolution in this petition to wit: 1) whether or not the petitioners failed to exhaust administrative remedies when they immediately elevated the case to this Court without an appeal having been made to the Office of the President; 2) whether or not the disaffiliation of the local union from the national federation was valid; and 3) whether or not the dismissal of petitioner employees resulting from their unions disaffiliation for the mother federation was illegal and constituted unfair labor practice on the part of respondent company and federation.

We find the petition highly meritorious.

The applicable law then is the Labor Code, PD 442, as amended by PD 643 on January 21, 1975, which states:

Art. 222. Appeal — . . .

xxx xxx xxx

Decisions of the Secretary of Labor may be appealed to the President of the Philippines subject to such conditions or limitations as the President may direct. (Emphasis ours)

The remedy of appeal from the Secretary of Labor to the Office of the President is not a mandatory requirement before resort to courts can be had, but an optional relief provided by law to parties seeking expeditious disposition of their labor disputes. Failure to avail of such relief shall not in any way served as an impediment to judicial intervention. And where the issue is lack of power or arbitrary or improvident

exercise thereof, decisions of the Secretary of Labor may be questioned in a certiorari proceeding without prior appeal to the President (Arrastre Security Association —TUPAS v. Ople, No. L-45344, February 20, 1984, 127 SCRA 580). Since the instant petition raises the same issue of grave abuse of discretion of the Secretary of Labor amounting to lack of or in excess of jurisdiction in deciding the controversy, this Court can properly take cognizance of and resolve the issues raised herein.

This brings Us to the question of the legality of the dismissal meted to petitioner employees. In the celebrated case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512, We held that the validity of the dismissals pursuant to the union security clause in the collective bargaining agreement hinges on the validity of the disaffiliation of the local union from the federation.

The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association (Volkschel Labor Union v. Bureau of Labor Relations, No. L-45824, June 19, 1985, 137 SCRA 42).

All employees enjoy the right to self organization and to form and join labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for their mutual aid or protection. This is a fundamental right of labor that derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules or regulations, We have always adopted the liberal approach which favors the exercise of labor rights.

Relevant on this point is the basic principle We have repeatedly in affirmed in many rulings:

. . . The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members in the economic struggle for the fruits of the joint productive effort of labor and capital; and the association of the locals into the national union (PAFLU) was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their member. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into existence. (Adamson & Adamson, Inc. v. CIR, No. L-35120, January 31, 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v. Noriel, No. L-41955, December 29, 1977, 80 SCRA 681; Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., supra).

The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs.

When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. In the absence of enforceable provisions in the federation's constitution preventing disaffiliation of a local union a local may sever its relationship with its parent (People's Industrial and Commercial Employees

and Workers Organization (FFW) v. People's Industrial and Commercial Corporation, No. 37687, March 15, 1982, 112 SCRA 440).

There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the federation (pp. 62, 281, Rollo), The alleged non-compliance of the local union with the provision in the NATU Constitution requiring the service of three months notice of intention to withdraw did not produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not even a legitimate labor organization, it appearing that it was not registered at that time with the Department of Labor, and therefore did not possess and acquire, in the first place, the legal personality to enforce its constitution and laws, much less the right and privilege under the Labor Code to organize and affiliate chapters or locals within its group, and secondly, the act of non-compliance with the procedure on withdrawal is premised on purely technical grounds which cannot rise above the fundamental right of self-organization.

Respondent Secretary of Labor, in affirming the decision of the respondent Commission, concluded that the supposed decision to disaffiliate was not the subject of a free and open discussion and decision on the part of the THEU-NATU general membership (p. 305, Rollo). This, however, is contradicted by the evidence on record. Moreover, We are inclined to believe Arbitrator Villatuya's findings to the contrary, as follows:

. . . . However, the complainants refute this allegation by submitting the following: a) Letter dated December 20, 1.973 signed by 142 members (Exhs. "B to B-5") resolution dated January 12, 1974, signed by 140 members (Exhs. "H to H-6") letter dated February 26, 1974 to the Department of Labor signed by 165 members (Exhs. "I to I-10"); d) letter dated January 30, 1974 to the Secretary of the National Defense signed by 144 members (Exhs. "0 to 0-5") and; e) letter dated March 6, 1974 signed by 146 members addressed to the President of the Philippines (Exhs. "HH to HH-5"), to show that in several instances, the members of the THEU-NATU have acknowledged their disaffiliation from NATU. The letters of the complainants also indicate that an overwhelming majority have freely and voluntarily signed their union's disaffiliation from NATU, otherwise, if there was really deception employed in securing their signatures as claimed by NATU/ Dilag, it could not be possible to get their signatures in five different documents. (p. 144, Rollo)

We are aware of the time-honored doctrine that the findings of the NLRC and the Secretary of Labor are binding on this Court if supported by substantial evidence. However, in the same way that the findings of facts unsupported by substantial and credible evidence do not bind this Court, neither will We uphold erroneous conclusions of the NLRC and the Secretary of Labor when We find that the latter committed grave abuse of discretion in reversing the decision of the labor arbiter (San Miguel Corporation v. NLRC, L-50321, March 13, 1984, 128 SCRA 180). In the instant case, the factual findings of the arbitrator were correct against that of public respondents.

Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective bargaining agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work and other terms and conditions of employment (pp. 667-706, Rollo). Although NATU was designated as the sole bargaining agent in the check-off authorization form attached to the CBA, this simply means it was acting only for and in behalf of its affiliate. The NATU possessed the status of an agent while the local union remained the basic principal union which entered into contract with the respondent company. When the THEU disaffiliated from its mother federation, the former did not lose its legal personality as the bargaining union under the CBA. Moreover, the union security clause embodied in the agreements cannot be used to justify the dismissals meted to petitioners since it is not applicable to the circumstances obtaining in this case. The CBA imposes dismissal only in case an employee is expelled from the union for joining another federation or for forming another union or who fails or refuses to maintain membership therein. The case at bar does not involve the withdrawal of

merely some employees from the union but of the whole THEU itself from its federation. Clearly, since there is no violation of the union security provision in the CBA, there was no sufficient ground to terminate the employment of petitioners.

Public respondents considered the existence of Arturo Dilag's group as the remaining true and valid union. We, however, are inclined to agree instead with the Arbitrator's findings when he declared:

. . . . Much more, the so-called THEU-NATU under Dilag's group which assumes to be the original THEU-NATU has a very doubtful and questionable existence not to mention that the alleged president is performing supervisory functions and not qualified to be a bona fide member of the rank and file union. (p. 146, Rollo)

Records show that Arturo Dilag had resigned in the past as President of THEU-NATU because of his promotion to a managerial or supervisory position as Assistant Unit Manager of respondent Company. Petitioner Jose Encinas replaced Dilag as President and continued to hold such position at the time of the disaffiliation of the union from the federation. It is therefore improper and contrary to law for Dilag to reassume the leadership of the remaining group which was alleged to be the true union since he belonged to the managerial personnel who could not be expected to work for the betterment of the rank and file employees. Besides, managers and supervisors are prohibited from joining a rank and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association of Free Labor Unions (PAFLU), et al., L-18782, August 29, 1963, 8 SCRA 700). Correspondingly, if a manager or supervisor organizes or joins a rank and file union, he will be required to resign therefrom (Magalit, et al. v. Court of Industrial Relations, et al., L-20448, May 25, 1965,14 SCRA 72).

Public respondents further submit that several employees who disaffiliate their union from the NATU subsequently retracted and reaffirmed their membership with the THEU-NATU. In the decision which was affirmed by respondent Secretary of Labor, the respondent Commission stated that:

. . . out of the alleged one hundred and seventy-one (171) members of the THEU-CGW whose signatures appeared in the "Analysis of Various Documents Signed by Majority Members of the THEU-CGW, (Annex "T", Complainants), which incidentally was relied upon by Arbitrator Villatuya in holding that complainant THEU-CGW commanded the majority of employees in respondent company, ninety-three (93) of the alleged signatories reaffirmed their membership with the THEU-NATU and renounced whatever connection they may have had with other labor unions, (meaning the complainant THEU-CGW) either through resolution or membership application forms they have unwittingly signed." (p. 306, Rollo)

Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction were executed on various dates beginning January 11, 1974 to March 8, 1974 (pp. 278-280, Rollo). This shows that the retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose Encinas, formerly THEU-NATU President, who became THEU-CGW President, and the suspension pending their dismissal of the other elected officers and members of the THEU-CGW on January 15, 1974. It is also clear that some of the retractions occurred after the suspension of the first set of workers numbering about twenty-four (24) on March 5, 1974. There is no use in saying that the retractions obliterated the act of disaffiliation as there are doubts that they were freely and voluntarily done especially during such time when their own union officers and co-workers were already suspended pending their dismissal.

Finally, with regard to the process by which the workers were suspended or dismissed, this Court finds that it was hastily and summarily done without the necessary due process. The respondent company sent a letter to petitioners herein, advising them of NATU/Dilag's recommendation of their dismissal and at the same time giving them forty-eight (48) hours within which to comment (p. 637, Rollo). When petitioners failed to do so, respondent company immediately suspended them and thereafter effected their dismissal.

This is certainly not in fulfillment of the mandate of due process, which is to afford the employee to be dismissed an opportunity to be heard.

The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or arbitrainess, for what is at stake is not only the employee's name or position but also his means of livelihood. Thus, the discharge of an employee from his employment is null and void where the employee was not formally investigated and given the opportunity to refute the alleged findings made by the company (De Leon v. NLRC, L-52056, October 30, 1980, 100 SCRA 691). Likewise, an employer can be adjudged guilty of unfair labor practice for having dismissed its employees in line with a closed shop provision if they were not given a proper hearing (Binalbagan-Isabela Sugar Co., Inc.,(BISCOM) v. Philippine Association of Free Labor Unions (PAFLU) et al., L-18782, August 29, 1963, 8 SCRA 700).

In view of the fact that the dispute revolved around the mother federation and its local, with the company suspending and dismissing the workers at the instance of the mother federation then, the company's liability should be limited to the immediate reinstatement of the workers. And since their dismissals were effected without previous hearing and at the instance of NATU, this federation should be held liable to the petitioners for the payment of their backwages, as what We have ruled in the Liberty Cotton Mills Case (supra).

ACCORDINGLY, the petition is hereby GRANTED and the assailed decision of respondent Secretary of Labor is REVERSED and SET ASIDE, and the respondent company is hereby ordered to immediately reinstate all the petitioner employees within thirty (30) days from notice of this decision. If reinstatement is no longer feasible, the respondent company is ordered to pay petitioners separation pay equivalent to one (1) month pay for every year of service. The respondent NATU federation is directed to pay petitioners the amount of three (3) years backwages without deduction or qualification. This decision shall be immediately executory upon promulgation and notice to the parties.

SO ORDERED.

G.R. No. 150896             August 28, 2008

PUREFOODS CORPORATION, petitioner, vs.NAGKAKAISANG SAMAHANG MANGGAGAWA NG PUREFOODS RANK-AND-FILE, ST. THOMAS FREE WORKERS UNION, PUREFOODS GRANDPARENT FARM WORKERS UNION and PUREFOODS UNIFIED LABOR ORGANIZATION, respondents.

D E C I S I O N

NACHURA, J.:

The petitioner, Purefoods Corporation, in this Rule 45 petition seeks the reversal of the appellate court’s dismissal of its certiorari petition, and our consequent review of the labor commission’s finding that it committed unfair labor practice and illegally dismissed the concerned union members.

Three labor organizations and a federation are respondents in this case—Nagkakaisang Samahang Manggagawa Ng Purefoods Rank-And-File (NAGSAMA-Purefoods), the exclusive bargaining agent of the rank-and-file workers of Purefoods’ meat division throughout Luzon; St. Thomas Free Workers Union (STFWU), of those in the farm in Sto. Tomas, Batangas; and Purefoods Grandparent Farm Workers Union (PGFWU), of those in the poultry farm in Sta. Rosa, Laguna. These organizations were affiliates of the respondent federation, Purefoods Unified Labor Organization (PULO).1

On February 8, 1995, NAGSAMA-Purefoods manifested to petitioner corporation its desire to re-negotiate the collective bargaining agreement (CBA) then due to expire on the 28th of the said month. Together with its demands and proposal, the organization submitted to the company its January 28, 1995 General Membership Resolution approving and supporting the union’s affiliation with PULO, adopting the draft CBA proposals of the federation, and authorizing a negotiating panel which included among others a PULO representative. While Purefoods formally acknowledged receipt of the union’s proposals, it refused to recognize PULO and its participation, even as a mere observer, in the negotiation. Consequently, notwithstanding the PULO representative’s non-involvement, the negotiation of the terms of the CBA still resulted in a deadlock. A notice of strike was then filed by NAGSAMA-Purefoods on May 15, 1995. In the subsequent conciliation conference, the deadlock issues were settled except the matter of the company’s recognition of the union’s affiliation with PULO.2

In the meantime, STFWU and PGFWU also submitted their respective proposals for CBA renewal, and their general membership resolutions which, among others, affirmed the two organizations’ affiliation with PULO. Consistent with its stance, Purefoods refused to negotiate with the unions should a PULO representative be in the panel. The parties then agreed to postpone the negotiations indefinitely.3

On July 24, 1995, however, the petitioner company concluded a new CBA with another union in its farm in Malvar, Batangas. Five days thereafter, or on July 29, 1995, at around 8:00 in the evening, four company employees facilitated the transfer of around 23,000 chickens from the poultry farm in Sto. Tomas, Batangas (where STFWU was the exclusive bargaining agent) to that in Malvar. The following day, the regular rank-and-file workers in the Sto. Tomas farm were refused entry in the company premises; and on July 31, 1995, 22 STFWU members were terminated from employment. The farm manager, supervisors and electrical workers of the Sto. Tomas farm, who were members of another union, were nevertheless retained by the company in its employ.4

Aggrieved by these developments, the four respondent labor organizations jointly instituted a complaint for unfair labor practice (ULP), illegal lockout/dismissal and damages, docketed as NLRC Case No. NLRC-NCR-00-07-05159-95, with the Labor Arbitration Branch of the National Labor Relations Commission (NLRC).5

In the proceedings before the Labor Arbiter (LA), Purefoods interposed, among others, the defenses that PULO was not a legitimate labor organization or federation for it did not have the required minimum number of member unions; that the closure of the Sto. Tomas farm was not arbitrary but was the result of the financial non-viability of the operations therein, or the consequence of the landowner’s pre-termination of the lease agreement; that the other complainants had no cause of action considering that it was only the Sto. Tomas farm which was closed; that the termination of the employees complied with the 30-day notice requirement and that the said employees were paid 30-day advance salary in addition to separation pay; and that the concerned union, STFWU, lost its status as bargaining representative when the Sto. Tomas farm was closed.6

On August 17, 1999, the LA rendered a Decision7 dismissing the complaint, and declaring that the company neither committed ULP nor illegally dismissed the employees.

On appeal, the NLRC reversed the ruling of the LA, ordered the payment of P500,000.00 as moral and exemplary damages and the reinstatement with full backwages of the STFWU members. In its March 16, 2001 Decision (CA No. 022059-00), the labor commission ruled that the petitioner company’s refusal to recognize the labor organizations’ affiliation with PULO was unjustified considering that the latter had been granted the status of a federation by the Bureau of Labor Relations; and that this refusal constituted undue interference in, and restraint on the exercise of the employees’ right to self-organization and free collective bargaining. The NLRC said that the real motive of the company in the sudden closure of the Sto. Tomas farm and the mass dismissal of the STFWU members was union busting, as only the union members were locked out, and the company subsequently resumed operations of the closed farm under a new contract with the landowner. Because the requisites of a valid lockout were absent, the NLRC concluded that the company committed ULP. The dispositive portion of the NLRC decision reads:

WHEREFORE, respondent Purefoods Corporation is hereby directed to reinstate effective October 1, 2000 employees-members of the STFWU-PULO who were illegally locked out on July 30, 1995 and to pay them their full backwages.

SO ORDERED.

Its motion for reconsideration having been denied,8 the petitioner corporation filed a Rule 65 petition before the Court of Appeals (CA) docketed as CA-G.R. SP No. 66871.

In the assailed October 25, 2001 Resolution,9 the appellate court dismissed outright the company’s petition for certiorari on the ground that the verification and certification of non-forum shopping was defective since no proof of authority to act for and on behalf of the corporation was submitted by the corporation’s senior vice-president who signed the same; thus, the petition could not be deemed filed for and on behalf of the real party-in-interest. Then, the CA, in its November 22, 2001 Resolution,10 denied petitioner’s motion for reconsideration of the dismissal order.

Dissatisfied, petitioner instituted before us the instant petition for review on certiorari under Rule 45.

The petition is denied.

Section 1, Rule 65 of the Rules of Court explicitly mandates that the petition for certiorari shall be accompanied by a sworn certification of non-forum shopping.11 When the petitioner is a corporation, inasmuch as corporate powers are exercised by the board, the certification shall be executed by a natural person authorized by the corporation’s board of directors.12 Absent any authority from the board, no person, not even the corporate officers, can bind the corporation.13 Only individuals who are vested with authority by a valid board resolution may sign the certificate of non-forum shopping in behalf of the corporation, and proof of such authority must be attached to the petition.14 Failure to attach to the certification any proof of the signatory’s authority is a sufficient ground for the dismissal of the petition.15

In the instant case, the senior vice-president of the petitioner corporation signed the certificate of non-forum shopping. No proof of his authority to sign the said certificate was, however, attached to the petition. Thus, applying settled jurisprudence, we find that the CA committed no error when it dismissed the petition.

The Court cannot even be liberal in the application of the rules because liberality is warranted only in instances when there is substantial compliance with the technical requirements in pleading and practice, and when there is sufficient explanation that the non-compliance is for a justifiable cause, such that the outright dismissal of the case will defeat the administration of justice.16 Here, the petitioner corporation, in its motion for reconsideration before the appellate court and in its petition before us, did not present a reasonable explanation for its non-compliance with the rules. Further, it cannot be said that petitioner substantially complied therewith, because it did not attach to its motion for reconsideration any proof of the authority of its signatory. It stands to reason, therefore, that this Court now refuses to condone petitioner’s procedural transgression.

We must reiterate that the rules of procedure are mandatory, except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate to the degree of his thoughtlessness in not complying therewith.17 While technical rules of procedure are not designed to frustrate the ends of justice, they are provided to effect the proper and orderly disposition of cases and effectively prevent the clogging of court dockets.18

Be that as it may, this Court has examined the records if only to dispel any doubt on the propriety of the dismissal of the case, and we found no abuse of discretion, much more a grave one, on the part of the labor commission in reversing the ruling of the LA.

It is crystal clear that the closure of the Sto. Tomas farm was made in bad faith. Badges of bad faith are evident from the following acts of the petitioner: it unjustifiably refused to recognize the STFWU’s and the other unions’ affiliation with PULO; it concluded a new CBA with another union in another farm during the agreed indefinite suspension of the collective bargaining negotiations; it surreptitiously transferred and continued its business in a less hostile environment; and it suddenly terminated the STFWU members, but retained and brought the non-members to the Malvar farm. Petitioner presented no evidence to support the contention that it was incurring losses or that the subject farm’s lease agreement was pre-terminated. Ineluctably, the closure of the Sto. Tomas farm circumvented the labor organization’s right to collective bargaining and violated the members’ right to security of tenure.19

The Court reiterates that the petition for certiorari under Rule 65 of the Rules of Court filed with the CA will prosper only if there is clear showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the NLRC.20 It was incumbent, then, for petitioner to prove before the appellate court that the labor commission capriciously and whimsically exercised its judgment tantamount to lack of jurisdiction, or that it exercised its power in an arbitrary or despotic manner by reason of passion or personal hostility, and that its abuse of discretion is so patent and gross as to amount to an evasion of a positive duty enjoined or to act at all in contemplation of law.21 Here, as aforesaid, no such proof was adduced by petitioner. We, thus, declare that the NLRC ruling is not characterized by grave abuse of discretion. Accordingly, the same is also affirmed.

However, this Court makes the following observations and modifications:

We deem as proper the award of moral and exemplary damages. We hold that the sudden termination of the STFWU members is tainted with ULP because it was done to interfere with, restrain or coerce employees in the exercise of their right to self-organization. Thus, the petitioner company is liable for the payment of the aforesaid damages.22 Notable, though, is that this award, while stated in the body of the NLRC decision, was omitted in the dispositive portion of the said ruling. To prevent any further confusion in the implementation of the said decision, we correct the dispositive portion of the ruling to include the payment of P500,000.00 as moral and exemplary damages to the illegally dismissed STFWU members.

As to the order of reinstatement, the Court modifies the same in that if it is no longer feasible considering the length of time that the employees have been out of petitioner’s employ,23 the company is ordered to pay the illegally dismissed STFWU members separation pay equivalent to one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher.24

The releases and quitclaims, as well as the affidavits of desistance,25 signed by the concerned employees, who were then necessitous men at the time of execution of the documents, are declared invalid and ineffective. They will not bar the workers from claiming the full measure of benefits flowing from their legal rights.26

WHEREFORE, premises considered, the petition for review on certiorari is DENIED. The October 25, 2001 and the November 22, 2001 Resolutions of the Court of Appeals in CA-G.R. SP No. 66871 areAFFIRMED. The March 16, 2001 Decision of the National Labor Relations Commission in NLRC-NCR-00-07-05159-95 (CA No. 022059-00) is AFFIRMED with the MODIFICATION that petitioner company is ordered to: (1) reinstate the illegally dismissed STFWU members and pay them full backwages from the time of illegal termination up to actual reinstatement; (2) if reinstatement is no longer feasible, pay the illegally dismissed STFWU members their separation pay equivalent to one month pay, or one-half month pay for every year of service, whichever is higher; and (3) pay moral and exemplary damages in the aggregate amount of P500,000.00 to the said illegally dismissed STFWU members.

SO ORDERED.

DE LA SALLE UNIVERSITY  and

DR. CARMELITA I. QUEBENGCO,

                                    Petitioners,

                    - versus -

DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION

(DLSUEA-NAFTEU),

                                  Respondent.

G.R. No. 177283

Present:

 QUISUMBING,

 CARPIO MORALES,

 TINGA,

 VELASCO, JR.,

  BRION, JJ.

Promulgated:

April 7, 2009

 

 

SECOND DIVISION

 

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

D E C I S I O N

 

CARPIO MORALES, J.

 

          On challenge by the De La Salle University and its Executive Vice President Dr. Carmelita I.

Quebengco (petitioners) via the present petition for review on certiorari is the Court of Appeals First

Division Decision of September 16, 2005[1] in CA-G.R. No. SP No. 81220 which SET ASIDE the National

Labor Relations Commission (NLRC)Second Division Orders of June 26, 2003 and September 30, 2003

affirming the dismissal of the complaint for Unfair Labor Practices (ULP) filed by De La Salle University

Employees Association (respondent), and DIRECTED the NLRC Second Division to transmit the records

of the said complaint to the NLRC Third Division.

 

      The antecedent facts of the case are as follows:

 

          In 2001, a splinter group of respondent led by one Belen Aliazas (Aliazas group) filed a petition for

conduct of elections with the Department of Labor and Employment (DOLE), alleging that the then

incumbent officers of respondent had failed to call for a regular election since 1985.

 

          Disputing the Aliazas group’s allegation, respondent claimed that an election was conducted in

1987 but by virtue of the enactment of Republic Act 6715, [2] which amended the Labor Code, the term of

office of its officers was extended to five years or until 1992 during which a general assembly was held

affirming their hold-over tenure until the termination of collective bargaining negotiations;  and that a

collective bargaining agreement (CBA) was executed only on March 30, 2000.

 

   Acting on the petition for the conduct of election filed by the Aliazas group, the DOLE-NCR held, by

Decision of March 19, 2001, that the holdover authority of respondent’s incumbent set of officers had

been extinguished by virtue of the execution of the CBA.  It accordingly ordered the conduct of elections

to be placed under the control and supervision of its Labor Relations Division [3] and subject to pre-election

conferences.

 

          The conditions for the conduct of election imposed by the DOLE-NCR notwithstanding, respondent

called for a regular election on July 9, 2001, without prior notice to the DOLE and without the conduct of

pre-election conference, prompting the Aliazas group to file an Urgent Motion for Intervention with the

Bureau of Labor Relations (BLR) of the DOLE.  The BLR granted the Aliaza’s group’s motion for

intervention three days before the intended date of election or on July 6, 2001 and thus disposed as

follows:

             WHEREFORE, without necessarily resolving the merits of the appeal and considering the urgency of the issues raised by appellees and the limited time involved, the motion is hereby GRANTED.Consequently, appellants and or the members of the DLSUEA-COMELEC headed by Mr. Dominador Almodovar or any of their authorized representatives are hereby directed to   cease and desist from holding the general election of DLSUEA officers on 9 July 2001, until further ordered by this Office.             SO ORDERED.[4]  (Emphasis and underscoring supplied) 

The Aliazas group thereupon, via letter of August 7, 2001 to Brother Rolando Dizon, FSC,

President of petitioner DLSU, requested the University “to please put on escrowall union dues/agency

fees and whatever money considerations deducted from salaries of concerned co-academic

personnel until such time that an election of union officials has been scheduled and subsequent elections

has been held.”[5] (Underscoring in the original;  emphasis supplied)

Responding to the Aliazas group’s request, petitioners, citing the abovementioned DOLE and

BLR Orders, advised respondent by letter of August 16, 2001 as follows:

             x x x By virtue of the 19 March 2001 Decision and the 06 July 2001 Order of the Department of Labor and Employment (DOLE), the hold-over authority of your incumbent set of officers has been considered extinguished and an election of new union officers, to be conducted and supervised by the DOLE has been directed to be held. Until the result

of this election comes out and a declaration by the DOLE of the validly elected officers is made, a void in the Union leadership exists.

 In the light of these circumstances, the   University has no other alternative but to temporarily do the following:

 1.      Establish a savings account for the Union where all collected union dues and

agency fees will be deposited and held in trust; and2.      Discontinue normal relations with any group within the Union including the

incumbent set of officers. We are informing you of this decision of the University not only for your guidance but also for the apparent reason that the University does not want itself to be unnecessarily involved in your intra-union dispute. This is the only way that the University can maintain neutrality on this matter of grave concern.  (Emphasis and underscoring supplied) 

          Petitioners’ above-quoted move drew respondent to file a complaint against petitioners for Unfair

Labor Practice (ULP complaint), claiming that petitioners unduly interfered with its internal affairs and

discriminated against its members.  The ULP complaint was docketed as NLRC-NCR Case No. S-30-08-

03757-01.

 

          During the pendency of its ULP complaint or on March 7, 2002, respondent filed its First Notice of

Strike with the Office of the Secretary of Labor (OSL), charging petitioners for 1) gross violation of the

CBA and 2)  bargaining in bad faith which was certified for compulsory arbitration to the NLRC (certified

case).  The certified case, docketed as NLRC-NCR CC000222-02, was raffled to the NLRC Third

Division.  

          In the meantime, Labor Arbiter Felipe Pati, by Decision of July 12, 2002, dismissed respondent’s

ULP complaint.  Respondent appealed to the NLRC.  The appeal was docketed as NLRC-NCR CA No.

033173-02 and lodged at the NLRC Second Division. 

 

While the dismissal of its ULP complaint was pending appeal before the NLRC Second Division,

respondent, on behalf of some of its members, filed four other cases against petitioners which were

lodged at the NLRC Second Division. 

 

Respondent thereafter filed in the certified case which was lodged at the NLRC Third Division a

motion to have its four other cases and its ULP complaint then pendingappeal before the

NLRC Second Division to have these cases “subsumed” in the certified

case.  The NLRC Third Division granted respondent’s motion by Order of April 30, 2003.  Petitioners

moved to reconsider this Order but it was denied, prompting petitioners to elevate the matter via certiorari

to the Court of Appeals.  This petition, docketed as CA G.R. No. SP-79798, was raffled to the appellate

court’s Tenth Division.

 

          The NLRC Second Division, in the meantime, affirmed by Decision of June 26, 2003, the dismissal

by the Arbiter of respondent’s ULP complaint.  Respondent thus elevated the case to the Court of

Appeals via certiorari, docketed as CA-G.R. No. 81220.  This was raffled to the appellate court’s First

Division. 

 

By Decision of June 17, 2004, the Court of Appeals Tenth Division, to which petitioners’ certiorari

petition in CA-G.R. No. SP-79798 challenging the April 30, 2003 NLRCThird Division Order “subsuming”

respondent’s complaints including the ULP Complaint under the certified case, REVERSED the said

Order of the NLRC Third Division [6] with respect to the “subsuming” of respondent’s ULP complaint under

the certified case,   the ULP complaint having been, at the time the NLRC Third Division Order was issued,

“already disposed of” (dismissed) by the Arbiter and was in fact pending appeal before the

NLRC Second Division.  Thus the Tenth Division of the appellate court held:

 Anent ULP case with docket No. NLRC-NCR Case No. S-30-08-03757-01 raffled to Labor Arbiter Pati for resolution, private respondent gravely erred in including it among the cases to be consolidatedwith NLRC NCR CC No. 000222-02.  The case is obviously   no longer under arbitration . The records show that when complainant-appellee (respondent Union)   filed its motion   to consolidate the cases on January 28, 2003 and the   resolution of the said motion   by the Third Division of the NLRC on April 30, 2003 granting the desired consolidation,   NLRC-NCR Case No. S-30-08-03757-01   had already been disposed of by Labor Arbiter Pati and was, in fact, already on appeal before the Second Division of the NLRC, docketed therein as NLRC-NCR CA No. 033173-02. According to the Union itself, on June 26, 2003, the NLRC affirmed the decision of Labor Arbiter Pati and on September 30, 2003, it denied the Union’s motion for reconsideration. x x x (Citation omitted) The NLRC had thus already exhausted its jurisdiction over NLRC-NCR CA No. 033173-02. Consequently, the same case is now removed from the ambit of compulsory arbitration and may only be subject of judicial review via the special civil action of certiorari in this Court. But we are not informed if such a judicial action has been taken.[7] (Emphasis and underscoring supplied) 

 

The Court of Appeals First Division subsequently resolving respondent’s petition for certiorari

in CA-G.R. No. 81220 (which assailed the affirmance by the NLRC SecondDivision of the Arbiter’s

dismissal of its ULP complaint), upon the sole issue of “whether the NLRC [Second Division] committed

grave abuse of discretion . . . in ignoring the order of the [NLRC] 3 rd Division declaring subsumed or

absorbed [herein respondent’s ULP complaint] in the certified case,” answered the same in the

affirmative via the herein challenged September 16, 2005 Decision.  It thus SET ASIDE the

NLRC Second Division Order affirming the dismissal of respondent’s ULP complaint and accordingly

ordered said NLRC Second Division to transmit the entire records of the ULP complaint to the

NLRC Third Division to which said ULP complaint had priorly been ordered consolidated by the latter

Division with the certified case. 

             WHEREFORE, premises considered, the petition is granted. Accordingly, the Order dated June 26, 2003 of National Labor Relations Commission (NLRC) as well as the Order dated September 30, 2003 are hereby SET ASIDE. The 2 nd   Division of the NLRC is hereby directed to transmit the entire records of the case to the 3 rd   Division [of the NLRC] for its resolution.

                         SO ORDERED.[8]  (Underscoring supplied) 

 

Hence, petitioner’s petition for review on certiorari at bar.

 

Petitioners contend that the First Division of the Court of Appeals disregarded the ruling of the

appellate court’s Tenth Division setting aside the NLRC Third DivisionOrder “subsuming” respondent’s

ULP complaint, which was lodged at the NLRC Second Division, under the certified case pending with

said NLRC Third Division.  They fault the First Division of the appellate court for

 I 

. . . RULING THAT THE SECOND DIVISION OF THE NLRC COMMITTED SERIOUS ERROR OR GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THE RULING OF LABOR ARBITER FELIPE P. PATI DATED 12 JULY 2002 (THROUGH ITS RESOLUTION AND ORDER DATED 26 JUNE 2003 AND 30 SEPTEMBER 2003, RESPECTIVELY) CONSIDERINGTHAT: A.         WHEN THE NLRC’S SECOND DIVISION RENDERED ITS 26 JUNE 2003

RESOLUTION, WHICH DISMISSED THE APPEAL FILED BY THE UNION AND AFFIRMED THE 12 JULY 2002 DECISION OF LABOR ARBITER FELIPE P. PATI IN NLRC NCR CASE NO. 30-08-0357-01 (NLRC NCR CA NO. 033173-02), THE CONSOLIDATION ORDER OF THE NLRC THIRD DIVISION IN NCMB-NCR-NS NO. 03-093-02 (NLRC NCR CC NO. 000222-02) WHICH WAS ISSUED ON 30 APRIL 2003 HAD NOT YET ATTAINED FINALITY.

 B.          . . . [NOT] TAK[ING] COGNIZANCE OF THE DECISION RENDERED BY THE

TENTH DIVISION OF THE SAME COURT DATED 17 JUNE 2004, ANNULLING AND SETTING ASIDE THE 30 APRIL 2003 AND 28 JULY 2003 RESOLUTIONS OF THE THIRD DIVISION, WHICH ORDERED THE CONSOLIDATION OF ALL CASES FILED BY THE UNION AGAINST THE UNIVERSITY.[9]

  

In any event, petitioners contend that

 II 

THE SECOND DIVISION OF THE NLRC DID NOT GRAVELY ABUSE ITS DISCRETION WHEN IT HELD THAT THE PETITIONERS WERE NOT GUILTY OF UNFAIR LABOR PRACTICE, CONSIDERING THAT THE TEMPORARY MEASURES IMPLEMENTED BY THE UNIVERSITY WERE UNDERTAKEN IN GOOD FAITH AND ONLY TO MAINTAIN ITS NEUTRALITY AMID THE INTRA-UNION DISPUTE.”[10] (Underscoring supplied)

 

          The petition is partly meritorious.

 

 

 

The June 17, 2004 Decision of the appellate court’s Tenth Division SETTING ASIDE the order of

consolidation issued by the NLRC Third Division became final and executory on July 11, 2004.  The

herein challenged appellate court’s First Division Decision REVERSING the NLRC Second Division Order

which affirmed the dismissal of respondent’s ULP complaint and directing that the records of said

complaint be transmitted to the NLRC Third Division was promulgated on September 16, 2005.

 

          It is thus clear that the appellate court’s Tenth Division Decision declaring that the

NLRC Third Division’s order “subsuming” respondent’s ULP complaint (then pending appeal before the

NLRC Second Division) under the certified case pending before it (NLRC Third division) had become final

and executory on July 11, 2004. Therefore, with respect to the herein challenged Decision of the

appellate court’s First Division ordering the NLRC Second Division to transmit the records of respondent’s

ULP complaint to the NLRC Third Division, the same can no longer be effected, the appellate

court’s Tenth Division ruling having, it bears repeating, become final.

 

          To still transmit to the NLRC Third Division respondent’s ULP complaint on appeal which has

already been resolved by the NLRC Second Division would lead to absurd consequences.

 

          On the other matter raised by petitioners – that their acts of withholding union and agency dues and

suspension of normal relations with respondent’s incumbent set of officers pending the intra-union dispute

did not constitute interference, the Court finds for respondent. 

 

Pending the final resolution of the intra-union dispute, respondent’s officers remained duly

authorized to conduct union affairs.  The clarification letter of May 16, 2003 issued by BLR Director Hans

Leo J. Cacdac enlightens:

             We take this opportunity to clarify that there is no void in the DLSUEA leadership. The 19 March 2001 Decision of DOLE-NCR   Regional Director should not be construed as an automatic termination of the incumbent officers’ tenure   of office. As duly-elected officers of the DLSUEA, their leadership is not deemed terminated

by the expiration of their terms of office, for they shall continue their functions and enjoy the rights and privileges pertaining to their respective positions in a   hold-over capacity, until their successors shall have been elected and qualified.[11]  (Emphasis and underscoring supplied) 

 

It bears noting that at the time petitioners’ questioned moves were adopted, a valid and existing

CBA had been entered between the parties.     It thus behooved petitioners to observe the terms and

conditions thereof bearing on union dues and representation.  It is axiomatic in labor relations that a CBA

entered into by a legitimate labor organization and an employer becomes the law between the parties,

compliance with which is mandated by express policy of the law.[12]

 

Respecting the issue of damages, respondent, in its Position Paper before the Labor Arbiter,

prayed for the award of exemplary damages, nominal damages, and attorney’s fees.

 

Exemplary or corrective damages are imposed by way of example or correction for the public

good in addition to the moral, temperate, liquidated or compensatory damages. While the amount of

exemplary damages need not be proved, respondent must show proof of entitlement to moral, temperate

or compensatory damages before the Court may consider awarding exemplary damages.  No such

damages were prayed for, however, hence, the Court finds no basis to grant the prayer for exemplary

damages.

 

Nonetheless, the grant of nominal damages and attorney’s fees to respondent under Article

2221[13] and Article 2208 (8)[14] of the Civil Code, respectively, is in order.

 

          WHEREFORE, the petition, insofar as the challenged Court of Appeals First Division Decision

ordering the transmittal by the NLRC Second Division of the records of respondent’s ULP complaint to the

NLRC Third Division is concerned, has become moot. 

 

In so far as the petition involves the merits of the NLRC Second Division Decision is concerned,

the same is REVERSED and a NEW one is entered finding petitioners liable for Unfair Labor Practice,

and ordering them to pay respondent nominal damages in the amount of P250,000 and attorney’s fees in

the amount of P50,000.

 

          SO ORDERED.

MSMG_UWP V. RAMOS

D E C I S I O N

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the National Labor Relations Commission in an unfair labor practice case instituted by a local union against its employer company and the officers of its national federation.

The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG), hereinafter referred to as the "local union", is an affiliate of the private respondent, United Lumber and General Workers of the Philippines (ULGWP), referred to as the "federation". The collective bargaining agreement between MSMG and M. Greenfield, Inc. names the parties as follows:

"This agreement made and entered into by and between:

M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the Republic of the Philippines with office address at Km. 14, Merville Road, Parañaque, Metro Manila, represented in this act by its General manager, Mr. Carlos T. Javelosa, hereinafter referred to as the Company;

-and-

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B) (MSMG)/UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor organization with address at Suite 404, Trinity Building, T.M. Kalaw Street, Manila, represented in this act by a Negotiating Committee headed by its National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement as the UNION."[1]

The CBA includes, among others, the following pertinent provisions:

Article II-Union Security

Section 1. Coverage and Scope. All employees who are covered by this Agreement and presently members of the UNION shall remain members of the UNION for the duration of this Agreement as a condition precedent to continued employment with the COMPANY.

x x x x x x

x x x x x x

Section 4. Dismissal. Any such employee mentioned in Section 2 hereof, who fails to maintain his membership in the UNION for non-payment of UNION dues, for resignation and for violation of UNION’s Constitution and By-Laws and any new employee as defined in Section 2 of this Article shall upon written notice of such failure to join or to maintain membership in the UNION and upon written recommendation to the COMPANY by the UNION, be dismissed from the employment by the COMPANY; provided, however, that the UNION shall hold the COMPANY free and blameless from any and all liabilities that may arise should the dismissed employee question, in any manner, his dismissal; provided, further that the matter of the employee’s dismissal under this Article may be

submitted as a grievance under Article XIII and, provided, finally, that no such written recommendation shall be made upon the COMPANY nor shall COMPANY be compelled to act upon any such recommendation within the period of sixty (60) days prior to the expiry date of this Agreement conformably to law."

Article IX

Section 4. Program Fund - The Company shall provide the amount of P10, 000.00 a month for a continuing labor education program which shall be remitted to the Federation x x x."[2]

On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the herein petitioner, Beda Magdalena Villanueva, and the other union officers were proclaimed as winners. Minutes of the said election were duly filed with the Bureau of Labor Relations on September 29, 1986.

On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the defeated candidates in the aforementioned election.

On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not yield any unfavorable result and the local union officers were cleared of the charges of anomaly in the custody, handling and disposition of the union funds.

The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union officers with the DOLE NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was dismissed on March 2, 1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges and to present evidence in support of the allegations.

On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in Pasig. Several union members failed to attend the meeting, prompting the Executive Board to create a committee tasked to investigate the non-attendance of several union members in the said assembly, pursuant to Sections 4 and 5, Article V of the Constitution and By-Laws of the union, which read:

"Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng hakbangin ng unyon ng sinumang kasapi o pinuno ay maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa ng hindi hihigit sa P50.00 sa bawat araw na nagkulang.

Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na pagliban at maparusahan ito ng alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o pisyales na mahuli and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00 at babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng pagdating ng huli ay ituturing na pagliban.[3]

On June 27, 1988, the local union wrote respondent company a letter requesting it to deduct the union fines from the wages/salaries of those union members who failed to attend the general membership meeting. A portion of the said letter stated:

"xxx xxx xxx

In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please deduct the amount of P50.00 from each of the union members named in said annexes on the payroll of July 2-8, 1988 as fine for their failure to attend said general membership meeting."[4]

In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo Paceño, Jr. disapproved the resolution of the local union imposing the P50.00 fine. The union officers protested such action by the Federation in a Reply dated July 4, 1988.

On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct the fifty-peso fine from the salaries of the union members requesting that:

" x x x any and all future representations by MSMG affecting a number of members be first cleared from the federation before corresponding action by the Company."[5]

The following day, respondent company sent a reply to petitioner union’s request in a letter, stating that it cannot deduct fines from the employees’ salary without going against certain laws. The company suggested that the union refer the matter to the proper government office for resolution in order to avoid placing the company in the middle of the issue.

The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and the local union culminating in the latter’s declaration of general autonomy from the former through Resolution No. 10 passed by the local executive board and ratified by the general membership on July 16, 1988.

In retaliation, the national federation asked respondent company to stop the remittance of the local union’s share in the education funds effective August 1988. This was objected to by the local union which demanded that the education fund be remitted to it in full.

The company was thus constrained to file a Complaint for Interpleader with a Petition for Declaratory Relief with the Med-Arbitration Branch of the Department of Labor and Employment, docketed as Case No. OD-M-8-435-88. This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an Order, disposing thus:

"WHEREFORE, premises considered, it is hereby ordered:

1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local union officers shall administer the collective bargaining agreement (CBA).

2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to the ULGWP subject to the condition that it shall use the said amount for its intended purpose.

3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the amount of P50.00 as penalty for their failure to attend the general membership assembly on April 17, 1988.

However, if the MSMG Officers could present the individual written authorizations of the 356 union members, then the company is obliged to deduct from the salaries of the 356 union members the P50.00 fine."[6]

On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in part the earlier disposition, to wit:

"WHEREFORE, premises considered, the appealed portion is hereby modified to the extent that the company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00 monthly labor education program fund to ULGWP and the other P5,000.00 to MSMG, both unions to use the same for its intended purpose."[7]

Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph International, General Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of the federation and education funds of ULGWP which was granted by Med-Arbiter Rasidali Abdullah on December 25, 1988 in an Order which directed the audit and examination of the books of account of ULGWP.

On September 30, 1988, the officials of ULGWP called a Special National Executive Board Meeting at Nasipit, Agusan del Norte where a Resolution was passed placing the MSMG under trusteeship and appointing respondent Cesar Clarete as administrator.

On October 27, 1988, the said administrator wrote the respondent company informing the latter of its designation of a certain Alfredo Kalingking as local union president and "disauthorizing" the incumbent union officers from representing the employees. This action by the national federation was protested by the petitioners in a letter to respondent company dated November 11, 1988.

On November 13, 1988, the petitioner union officers received identical letters from the administrator requiring them to explain within 72 hours why they should not be removed from their office and expelled from union membership.

On November 26, 1988, petitioners replied:

(a) Questioning the validity of the alleged National Executive Board Resolution placing their union under trusteeship;

(b) Justifying the action of their union in declaring a general autonomy from ULGWP due to the latter’s inability to give proper educational, organizational and legal services to its affiliates and the pendency of the audit of the federation funds;

(c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of ULGWP;

(d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of coercion, intimidation and harrassment.[8]

However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination letter read:

"Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and/or acts inimical to the interest and violative to the Constitution and by-laws of your federation.

You failed and/or refused to offer an explanation inspite of the time granted to you.

Since you are no longer a member of good standing, ULGWP is constrained to recommend for your termination from your employment, and provided in Article II Section 4, known as UNION SECURITY, in the Collective Bargaining agreement."[9]

On the same day, the federation advised respondent company of the expulsion of the 30 union officers and demanded their separation from employment pursuant to the Union Security Clause in their collective bargaining agreement. This demand was reiterated twice, through letters dated February 21 and March 4, 1989, respectively, to respondent company.

Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to compel the company to effect the immediate termination of the expelled union officers.

On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30 union officers from employment, serving them identical copies of the termination letter reproduced below:

We received a demand letter dated 21 November 1988 from the United Lumber and General Workers of the Philippines (ULGWP) demanding for your dismissal from employment pursuant to the provisions of Article II, Section 4 of the existing Collective Bargaining Agreement (CBA). In the said demand letter, ULGWP informed us that as of November 21, 1988, you were expelled from the said federation "for committing acts of disloyalty and/or acts inimical to the interest of ULGWP and violative to its Constitution and By-laws particularly Article V, Section 6, 9, and 12, Article XIII, Section 8."

In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for your dismissal, pointing out that notwithstanding your expulsion from the federation, you have continued in your employment with the company in violation of Sec. 1 and 4 of Article II of our CBA, and of existing provisions of law.

In view thereof, we are left with no alternative but to comply with the provisions of the Union Security Clause of our CBA. Accordingly, we hereby serve notice upon you that we are dismissing you from your employment with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA effective immediately."[10]

On that same day, the expelled union officers assigned in the first shift were physically or bodily brought out of the company premises by the company’s security guards. Likewise, those assigned to the second shift were not allowed to report for work. This provoked some of the members of the local union to demonstrate their protest for the dismissal of the said union officers. Some union members left their work posts and walked out of the company premises.

On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed with the NCMB.

On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as Case No. NCMB-NCR-NS-03-216-89, alleging the following grounds for the strike:

(a) Discrimination

(b) Interference in union activities

(c) Mass dismissal of union officers and shop stewards

(d) Threats, coercion and intimidation

(e) Union busting

The following day, March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union members who cast their votes, 2,086 members voted to declare a strike.

On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as Case No. NCMB-NCR-NS-03-216-89, with the Offfice of the Secretary of the Department of Labor and Employment praying for the suspension of the effects of their termination from employment. However, the petition was

dismissed by then Secretary Franklin Drilon on April 11, 1989, the pertinent portion of which stated as follows:

"At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No mass lay-off is evident as the terminations have been limited to those allegedly leading the secessionist group leaving MSMG-ULGWP to form a union under the KMU. xxx

xxx xxx xxx

WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our extraordinary authority under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby DISMISSED for lack of merit.

SO ORDERED."[11]

On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension by respondent company. This prompted the union members to again stage a walk-out and resulted in the official declaration of strike at around 3:30 in the afternoon of March 14, 1989. The strike was attended with violence, force and intimidation on both sides resulting to physical injuries to several employees, both striking and non-striking, and damage to company properties.

The employees who participated in the strike and allegedly figured in the violent incident were placed under preventive suspension by respondent company. The company also sent return-to-work notices to the home addresses of the striking employees thrice successively, on March 27, April 8 and April 31, 1989, respectively. However, respondent company admitted that only 261 employees were eventually accepted back to work. Those who did not respond to the return-to-work notice were sent termination letters dated May 17, 1989, reproduced below:

M. Greenfield Inc., (B)

Km. 14, Merville Rd., Parañaque, M.M.

May 17, 1989

x x x

On March 14, 1989, without justifiable cause and without due notice, you left your work assignment at the prejudice of the Company’s operations. On March 27, April 11, and April 21, 1989, we sent you notices to report to the Company. Inspite of your receipt of said notices, we have not heard from you up to this date.

Accordingly, for your failure to report, it is construed that you have effectively abandoned your employment and the Company is, therefore, constrained to dismiss you for said cause.

Very truly yours,

M. GREENFIELD, INC., (B)

By:

WENZEL STEPHEN LIGOT

Asst. HRD Manager"[12]

On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch, National Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging private respondents of unfair labor practice which consists of union busting, illegal dismissal, illegal suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and oppresion.

After the filing of the complaint, the lease contracts on the respondent company’s office and factory at Merville Subdivision, Parañaque expired and were not renewed. Upon demand of the owners of the premises, the company was compelled to vacate its office and factory.

Thereafter, the company transferred its administration and account/client servicing department at AFP-RSBS Industrial Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for relocation of its factory and manufacturing operations, the company was constrained to move the said departments to Tacloban, Leyte. Hence, on April 16, 1990, respondent company accordingly notified its employees of a temporary shutdown. in operations. Employees who were interested in relocating to Tacloban were advised to enlist on or before April 23, 1990.

The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was thereafter reassigned to Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from acting on the case.

On December 15, 1992, finding the termination to be valid in compliance with the union security clause of the collective bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint.

Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo Putong retired from the service, leaving only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman Bartolome Carale in the First Division. When Commissioner Veloso inhibited himself from the case, Commissioner Joaquin Tanodra of the Third Division was temporarily designated to sit in the First Division for the proper disposition of the case.

The First Division affirmed the Labor Arbiter’s disposition. With the denial of their motion for reconsideration on January 28, 1994, petitioners elevated the case to this Court, attributing grave abuse of discretion to public respondent NLRC in:

I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY AS VALID;

II. HOLDING THAT THE STRIKE STAGED BYTHE PETITIONERS AS ILLEGAL;

III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE ABANDONED THEIR WORK AND HENCE, VALIDLY DISMISSED BY RESPONDENT COMPANY; AND

IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS GUILTY OF ACTS OF UNFAIR LABOR PRACTICE.

Notwithstanding the several issues raised by the petitioners and respondents in the voluminous pleadings presented before the NLRC and this Court, they revolve around and proceed from the issue of whether or not respondent company was justified in dismissing petitioner employees merely upon the labor

federation’s demand for the enforcement of the union security clause embodied in their collective bargaining agreement.

Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be resolved.

Petitioners contend that the decision rendered by the First Division of the NLRC is not valid because Commissioner Tanodra, who is from the Third Division, did not have any lawful authority to sit, much less write the ponencia, on a case pending before the First Division. It is claimed that a commissioner from one division of the NLRC cannot be assigned or temporarily designated to another division because each division is assigned a particular territorial jurisdiction. Thus, the decision rendered did not have any legal effect at all for being irregularly issued.

Petitioners’ argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the Chairman of the National Labor Relations Commission provides that:

"The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. Whenever the required membership in a division is not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary."

It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the three commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and Commissioner Vicente Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case because the counsel for the petitioners was his former classmate in law school. The First Division was thus left with only one commissioner. Since the law requires the concurrence of two commisioners to arrive at a judgment or resolution, the Commission was constrained to temporarily designate a commissioner from another division to complete the First Division. There is nothing irregular at all in such a temporary designation for the law empowers the Chairman to make temporary assignments whenever the required concurrence is not met. The law does not say that a commissioner from the first division cannot be temporarily assigned to the second or third division to fill the gap or vice versa. The territorial divisions do not confer exclusive jurisdiction to each division and are merely designed for administrative efficiency.

Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the petitioners against respondent company which charges union busting, illegal dismissal, illegal suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and oppression actually proceeds from one main issue which is the termination of several employees by respondent company upon the demand of the labor federation pursuant to the union security clause embodied in their collective bargaining agreement.

Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and illegal manner because it was undertaken by the respondent company without any prior administrative investigation; that, had respondent company conducted prior independent investigation it would have found that their expulsion from the union was unlawful similarly for lack of prior administrative investigation; that the federation cannot recommend the dismissal of the union officers because it was not a principal party to the collective bargaining agreement between the company and the union; that public respondents acted with grave abuse of discretion when they declared petitioners’ dismissals as valid and the union strike as illegal and in not declaring that respondents were guilty of unfair labor practice.

Private respondents, on the other hand, maintain that the thirty dismissed employees who were former officers of the federation have no cause of action against the company, the termination of their employment having been made upon the demand of the federation pursuant to the union security clause

of the CBA; the expelled officers of the local union were accorded due process of law prior to their expulsion from their federation; that the strike conducted by the petitioners was illegal for noncompliance with the requirements; that the employees who participated in the illegal strike and in the commission of violence thereof were validly terminated from work; that petitioners were deemed to have abandoned their employment when they did not respond to the three return to work notices sent to them; that petitioner labor union has no legal personality to file and prosecute the case for and on behalf of the individual employees as the right to do so is personal to the latter; and that, the officers of respondent company cannot be liable because as mere corporate officers, they acted within the scope of their authority.

Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and legally terminated because the dismissal was effected in compliance with the union security clause of the CBA which is the law between the parties. And this was affimed by the Commission on appeal. Moreover, the Labor Arbiter declared that notwithstanding the lack of a prior administrative investigation by respondent company, under the union security clause provision in the CBA, the company cannot look into the legality or illegality of the recommendation to dismiss by the union nd the obligation to dismiss is ministerial on the part of the company.[13]

This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirement of due process. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts[14] cannot override one’s right to due process.

In the case of Cariño vs. National Labor Relations Commission,[15] this Court pronounced that while the company, under a maintenance of membership provision of the collective bargaining agreement, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing.

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

In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly commiting acts of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution and By-laws. Upon demand of the federation, the company terminated the petitioners without conducting a separate and independent investigation. Respondent company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the same. Relying merely upon the federation’s allegations, respondent company terminated petitioners from employment when a separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling the union officers. Respondent company’s allegation that petitioners were accorded due process is belied by the termination letters received by the petitioners which state that the dismissal shall be immediately effective.

As held in the aforecited case of Cariño, "the right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union is not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job."

While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees’ right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and always with due process.[16] Even on the assumption that the federation had valid grounds to expell the union officers, due process requires that these union officers be accorded a separate hearing by respondent company.

In its decision, public respondent also declared that if complainants (herein petitioners) have any recourse in law, their right of action is against the federation and not against the company or its officers, relying on the findings of the Labor Secretary that the issue of expulsion of petitioner union officers by the federation is a purely intra-union matter.

Again, such a contention is untenable. While it is true that the issue of expulsion of the local union officers is originally between the local union and the federation, hence, intra-union in character, the issue was later on converted into a termination dispute when the company dismissed the petitioners from work without the benefit of a separate notice and hearing. As a matter of fact, the records reveal that the the termination was effective on the same day that the the termination notice was served on the petitioners.

In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.[17], the Court held the company liable for the payment of backwages for having acted in bad faith in effecting the dismissal of the employees.

"xxx Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must assume solidary liability, since it apparently chose to summarily dismiss the workers at the union’s instance secure in the union’s contractual undertaking that the union would hold it ‘free from any liability’ arising from such dismissal."

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

Anent petitioners contention that the federation was not a principal party to the collective bargaining agreement between the company and the union, suffice it to say that the matter was already ruled upon in the Interpleader case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled:

After a careful examination of the facts and evidences presented by the parties, this Officer hereby renders its decision as follows:

1.) It appears on record that in the Collective Bargaining Agreement (CBA) which took effect on July 1, 1986, the contracting parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M. Greenfield, Inc. (B) (MSMG)/United Lumber and General Workers of the Philippines (ULGWP). However, MSMG was not yet a registered labor organization at the time of the signing of the CBA. Hence, the union referred to in the CBA is the ULGWP."[18]

Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:

It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all the regular rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the records).

It has been established also that the company and ULGWP signed a 3-year collective bargaining agreement effective July 1, 1986 up to June 30, 1989.[19]

Although the issue of whether or not the federation had reasonable grounds to expel the petitioner union officers is properly within the original and exclusive jurisdiction of the Bureau of Labor Relations, being an intra-union conflict, this Court deems it justifiable that such issue be nonetheless ruled upon, as the Labor Arbiter did, for to remand the same to the Bureau of Labor Relations would be to intolerably delay the case.

The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for committing acts of disloyalty when it "undertook to disaffiliate from the federation by charging ULGWP with failure to provide any legal, educational or organizational support to the local. x x x and declared autonomy, wherein they prohibit the federation from interfering in any internal and external affairs of the local union."[20]

It is well-settled that findings of facts of the NLRC are entitled to great respect and are generally binding on this Court, but it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC as when the Court finds insufficient or insubstantial evidence on record to support those factual findings. The same holds true when it is perceived that far too much is concluded, inferred or deduced from the bare or incomplete facts appearing of record.[21]

In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by the local union was part of its "plan to take over the respondent federation." This is purely conjecture and speculation on the part of public respondent, totally unsupported by the evidence.

A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union, being a separate and voluntary association, is free to serve the interests of all its members including the freedom to disaffiliate or declare its autonomy from the federation to which it belongs when circumstances warrant, in accordance with the constitutional guarantee of freedom of association.[22]

The purpose of affiliation by a local union with a mother union or a federation

"xxx is to increase by collective action the bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into existence."[23]

Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and such disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation’s constitution prohibiting disaffiliation or the declaration of autonomy of a local union, a local may dissociate with its parent union.[24]

The evidence on hand does not show that there is such a provision in ULGWP’s constitution. Respondents’ reliance upon Article V, Section 6, of the federation’s constitution is not right because said section, in fact, bolsters the petitioner union’s claim of its right to declare autonomy:

Section 6. The autonomy of a local union affiliated with ULGWP shall be respected insofar as it pertains to its internal affairs, except as provided elsewhere in this Constitution.

There is no disloyalty to speak of, neither is there any violation of the federation’s constitution because there is nothing in the said constitution which specifically prohibits disaffiliation or declaration of autonomy. Hence, there cannot be any valid dismissal because Article II, Section 4 of the union security clause in the CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain membership in the union (1) for non-payment of union dues, (2) for resignation; and (3) for violation of the union’s Constitution and By-Laws.

To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989, the petitioners declared as vacant all the responsible positions of ULGWP, filled these vacancies through an election and filed a petition for the registration of UWP as a national federation. It should be pointed out, however, that these occurred after the federation had already expelled the union officers. The expulsion was effective November 21, 1988. Therefore, the act of establishing a different federation, entirely separate from the federation which expelled them, is but a normal retaliatory reaction to their expulsion.

With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike was illegal for the following reasons: (1) it was based on an intra-union dispute which cannot properly be the subject of a strike, the right to strike being limited to cases of bargaining deadlocks and unfair labor practice (2) it was made in violation of the "no strike, no lock-out" clause in the CBA, and (3) it was attended with violence, force and intimidation upon the persons of the company officials, other employees reporting for work and third persons having legitimate business with the company, resulting to serious physical injuries to several employees and damage to company property.

On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the intra-union conflict between the federation and the local union, it bears reiterating that when respondent company dismissed the union officers, the issue was transformed into a termination dispute and brought respondent company into the picture. Petitioners believed in good faith that in dismissing them upon request by the federation, respondent company was guilty of unfair labor pratice in that it violated the petitioner’s right to self-organization. The strike was staged to protest respondent company’s act of dismissing the union officers. Even if the allegations of unfair labor practice are subsequently found out to be untrue, the presumption of legality of the strike prevails.[25]

Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike no lockout provision in the CBA. Again, such a ruling is erroneous. A no strike, no lock out provision can only be invoked when the strike is economic in nature, i.e. to force wage or other concessions from the employer which he is not required by law to grant.[26] Such a provision cannot be used to assail the legality of a strike which is grounded on unfair labor practice, as was the honest belief of herein petitioners. Again, whether or not there was indeed unfair labor practice does not affect the strike.

On the allegation of violence committed in the course of the strike, it must be remembered that the Labor Arbiter and the Commission found that "the parties are agreed that there were violent incidents x x x resulting to injuries to both sides, the union and management."[27] The evidence on record show that the violence cannot be attributed to the striking employees alone for the company itself employed hired men to pacify the strikers. With violence committed on both sides, the management and the employees, such violence cannot be a ground for declaring the strike as illegal.

With respect to the dismissal of individual petitioners, the Labor Arbiter declared that their refusal to heed respondent’s recall to work notice is a clear indication that they were no longer interested in continuing their employment and is deemed abandonment. It is admitted that three return to work notices were sent by respondent company to the striking employees on March 27, April 11, and April 21, 1989 and that 261 employees who responded to the notice were admittted back to work.

However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2)

that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts.[28] Deliberate and unjustified refusal on the part of the employee to go back to his work post amd resume his employment must be established. Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore.[29] And the burden of proof to show that there was unjustified refusal to go back to work rests on the employer.

In the present case, respondents failed to prove that there was a clear intention on the part of the striking employees to sever their employer-employee relationship. Although admittedly the company sent three return to work notices to them, it has not been substantially proven that these notices were actually sent and received by the employees. As a matter of fact, some employees deny that they ever received such notices. Others alleged that they were refused entry to the company premises by the security guards and were advised to secure a clearance from ULGWP and to sign a waiver. Some employees who responded to the notice were allegedly told to wait for further notice from respondent company as there was lack of work.

Furthermore, this Court has ruled that an employee who took steps to protest his lay-off cannot be said to have abandoned his work.[30] The filing of a complaint for illegal dismissal is inconsistent with the allegation of abandonment. In the case under consideration, the petitioners did, in fact, file a complaint when they were refused reinstatement by respondent company.

Anent public respondent’s finding that there was no unfair labor practice on the part of respondent company and federation officers, the Court sustains the same. As earlier discussed, union security clauses in collective bargaining agreements, if freely and voluntarily entered into, are valid and binding. Corrolarily, dismissals pursuant to union security clauses are valid and legal subject only to the requirement of due process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an employee by the company pursuant to a labor union’s demand in accordance with a union security agreement does not constitute unfair labor practice.[31]

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

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

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

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

WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations Commission in case No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to immediately reinstate the petitioners to their respective positions. Should reinstatement be not

feasible, respondent company shall pay separation pay of one month salary for every year of service. Since petitioners were terminated without the requisite written notice at least 30 days prior to their termination, following the recent ruling in the case of Ruben Serrano vs. National Labor Relations Commission and Isetann Department Store, the respondent company is hereby ordered to pay full backwages to petitioner-employees while the Federation is also ordered to pay full backwages to petitioner-union officers who were dismissed upon its instigation. Since the dismissal of petitioners was without cause, backwages shall be computed from the time the herein petitioner employees and union officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their backwages shall be computed from the time petitioners were terminated until the finality of this decision. Costs against the respondent company.

SO ORDERED.

G.R. No. 170287             February 14, 2008

ALABANG COUNTRY CLUB, INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, ALABANG COUNTRY CLUB INDEPENDENT EMPLOYEES UNION, CHRISTOPHER PIZARRO, MICHAEL BRAZA, and NOLASCO CASTUERAS, respondents.

D E C I S I O N

VELASCO, JR., J.:

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

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

The pertinent parts of the CBA included in Article II on Union Security read, as follows:

ARTICLE II

UNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file employees, who are members or subsequently become members of the UNION shall maintain their membership in good standing as a condition for their continued employment by the CLUB during the lifetime of this Agreement or any extension thereof.

SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW REGULAR RANK-AND-FILE EMPLOYEES

a) New regular rank-and-file employees of the Club shall join the UNION within five (5) days from the date of their appointment as regular employees as a condition for their continued employment during the lifetime of this Agreement, otherwise, their failure to do so shall be a ground for dismissal from the CLUB upon demand by the UNION.

b) The Club agrees to furnish the UNION the names of all new probationary and regular employees covered by this Agreement not later than three (3) days from the date of regular appointment showing the positions and dates of hiring.

x x x x

SECTION 4. TERMINATION UPON UNION DEMAND. Upon written demand of the UNION and after observing due process, the Club shall dismiss a regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time of regularization;

(b) Resignation from the UNION, except within the period allowed by law;

(c) Conviction of a crime involving moral turpitude;

(d) Non-payment of UNION dues, fees, and assessments;

(e) Joining another UNION except within the period allowed by law;

(f) Malversation of union funds;

(g) Actively campaigning to discourage membership in the UNION; and

(h) Inflicting harm or injury to any member or officer of the UNION.

It is understood that the UNION shall hold the CLUB free and harmless [sic] from any liability or damage whatsoever which may be imposed upon it by any competent judicial or quasi-judicial authority as a result of such dismissal and the UNION shall reimburse the CLUB for any and all liability or damage it may be adjudged.1 (Emphasis supplied.)

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

Thereafter, on October 6, 2001, in a meeting called by the Union, respondents Pizarro, Braza, and Castueras explained their side. Braza denied any wrongdoing and instead asked that the investigation be addressed to Castueras, who was the Union Treasurer at that time. With regard to his unpaid loans, Braza claimed he had been paying through monthly salary deductions and said the Union could continue to deduct from his salary until full payment of his loans, provided he would be reimbursed should the result of the initial audit be proven wrong by a licensed auditor. With regard to the Union expenses which were without receipts, Braza explained that these were legitimate expenses for which receipts were not issued, e.g. transportation fares, food purchases from small eateries, and food and transportation allowances given to Union members with pending complaints with the Department of Labor and Employment, the National Labor Relations Commission (NLRC), and the fiscal's office. He explained that though there were no receipts for these expenses, these were supported by vouchers and itemized as expenses. Regarding his unpaid and unliquidated cash advances amounting to almost PhP 20,000, Braza explained that these were not actual cash advances but payments to a certain Ricardo Ricafrente who had loaned PhP 200,000 to the Union.3

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

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

Despite their explanations, respondents Pizarro, Braza, and Castueras were expelled from the Union, and, on October 16, 2001, were furnished individual letters of expulsion for malversation of Union funds.6 Attached to the letters were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63 Union members and officers, and a Board of Directors' Resolution7 expelling them from the Union.

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

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

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

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

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal docketed as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision11 granting the appeal, the fallo of which reads:

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

SO ORDERED.

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

SEC. 2. Actions arising from Article 241 of the Code. - Any action arising from the administration or accounting of union funds shall be filed and disposed of as an intra-union dispute in accordance with Rule XIV of this Book.

In case of violation, the Regional or Bureau Director shall order the responsible officer to render an accounting of funds before the general membership and may, where circumstances warrant, mete the appropriate penalty to the erring officer/s, including suspension or expulsion from the union.12

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

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

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

The CA Upheld the NLRC Rulingthat the Three Respondents were Deprived Due Process

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

SEC. 2. Standards of due process; requirements of notice.-In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Code:

x x x x

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him.

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

In a Resolution16 dated October 20, 2005, the CA denied the Club's motion for reconsideration.

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

1. Whether there was just cause to dismiss private respondents, and whether they were afforded due process in accordance with the standards provided for by the Labor Code and its Implementing Rules.

2. Whether or not the CA erred in not finding that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that respondents Pizarro, Braza, and Castueras were illegally expelled from the Union.

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

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

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

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

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

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

Valid Grounds for Termination

Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under Art. 284; and (4) termination by the employee or resignation under Art. 285.

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

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

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

Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing them of their termination:

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

1. A letter under the subject "Result of Audit" dated September 14, 2001 (receipt of which was duly acknowledged from your end), which required you to explain in writing the charges against you (copy attached);

2. The Union's Board of Directors' Resolution dated October 2, 2001, which explained that the Union afforded you an opportunity to explain your side to the charges;

3. Minutes of the meeting of the Union's Board of Directors wherein an administrative investigation of the case was conducted last October 6, 2001; and

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

After a careful evaluation of the evidence on hand vis-à-vis a thorough assessment of your defenses presented in your letter-explanation dated October 6, 2001 of which you also expressed that you waived your right to be present during the administrative investigation conducted by the Union's Board of Directors on October 6, 2001, Management has reached the conclusion that there are overwhelming reasons to consider that you have violated Section 4(f) of the CBA, particularly on the grounds of malversation of union funds. The Club has determined that you were sufficiently afforded due process under the circumstances.

Inasmuch as the Club is duty-bound to comply with its obligation under Section 4(f) of the CBA, it is unfortunate that Management is left with no other recourse but to consider your termination from service effective upon your receipt thereof. We wish to thank you for your services during your employment with the Company. It would be more prudent that we just move on independently if only to maintain industrial peace in the workplace.

Be guided accordingly.21

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

Considering the foregoing circumstances, we are constrained to rule that there is sufficient cause for the three respondents' termination from employment.

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

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

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

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

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

In the above case, we pronounced that while the company, under a maintenance of membership provision of the CBA, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing.25 We cautioned in the same case that the power to dismiss is a normal prerogative of the employer; however, this power has a limitation. The employer is bound to exercise caution in terminating the services of the employees especially so when it is made upon the request of a labor union pursuant to the CBA. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing employees because the dismissal affects not only their positions but also their means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor.26

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

On the applicability of Agabon, the Club points out that the CA ruled that the three respondents were illegally dismissed primarily because they were not afforded due process. We are not unaware of the doctrine enunciated in Agabon that when there is just cause for the dismissal of an employee, the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual, and the employer should indemnify the employee for the violation of his statutory rights.27 However, we find that we could not apply Agabon to this case as we have found that the three respondents were validly dismissed and were actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the Club, the Union is solely liable for the termination from employment of the three respondents, has been mooted by our finding that their dismissal is valid.

WHEREFORE, premises considered, the Decision dated July 5, 2005 of the CA and the Decision dated February 26, 2004 of the NLRC are hereby REVERSED and SET ASIDE. The Decision dated January 27, 2003 of the Labor Arbiter in NLRC-NCR Case No. 30-01-00130-02 is hereby REINSTATED.

SO ORDERED.

[G.R. No. 114974.  June 16, 2004]

STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner, vs. The Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard Chartered Bank Employees Union, seeking the nullification of the October 29, 1993 Order[1] of then Secretary of Labor and Employment Nieves R. Confesor and her resolutions dated December 16, 1993 and February 10, 1994.

The Antecedents

Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in the Philippines.  The exclusive bargaining agent of the rank and file employees of the Bank is the Standard Chartered Bank Employees Union (the Union, for brevity).

In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement (CBA) with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-year period[2] but within the sixty-day freedom period, the Union initiated the negotiations. On February 18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a letter[3]containing its proposals[4] covering political provisions[5] and thirty-four (34) economic provisions.[6] Included therein was a list of the names of the members of the Union’s negotiating panel.[7]

In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took note of the Union’s proposals.  The Bank attached its counter-proposal to the non-economic provisions proposed by the Union.[8] The Bank posited that it would be in a better position to present its counter-proposals on the economic items after the Union had presented its justifications for the economic proposals.[9]  The Bank, likewise, listed the members of its negotiating panel.[10] The parties agreed to set meetings to settle their differences on the proposed CBA.

Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Bank’s Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank lawyers should be excluded from the negotiating team. The Bank acceded.[11] Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Union’s negotiating panel.[12] However, Umali was retained as a member thereof.

On March 12, 1993, the parties met and set the ground rules for the negotiation.  Diokno suggested that the negotiation be kept a “family affair.” The proposed non-economic provisions of the CBA were discussed first.[13] Even during the final reading of the non-economic provisions on May 4, 1993, there were still provisions on which the Union and the Bank could not agree. Temporarily, the notation “DEFERRED” was placed therein.  Towards the end of the meeting, the Union manifested that the same should be changed to “DEADLOCKED” to indicate that such items remained unresolved. Both parties agreed to place the notation “DEFERRED/DEADLOCKED.”[14]

On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the basis of the Union’s economic proposals was made.  The next meeting, the Bank made a similar presentation. Towards the end of the Bank’s presentation, Umali requested the Bank to validate the Union’s “guestimates,” especially the figures for the rank and file staff. [15] In the succeeding meetings, Umali chided the Bank for the insufficiency of its counter-proposal on the provisions on salary increase, group hospitalization, death assistance and dental benefits. He reminded the Bank, how the Union got what it

wanted in 1987, and stated that if need be, the Union would go through the same route to get what it wanted.[16]

Upon the Bank’s insistence, the parties agreed to tackle the economic package item by item.  Upon the Union’s suggestion, the Bank indicated which provisions it would accept, reject, retain and agree to discuss.[17] The Bank suggested that the Union prioritize its economic proposals, considering that many of such economic provisions remained unresolved.  The Union, however, demanded that the Bank make a revised itemized proposal.

In the succeeding meetings, the Union made the following proposals:

Wage Increase:1st Year – Reduced from 45% to 40%2nd Year -  Retain at 20%

Total = 60%

Group Hospitalization Insurance:Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually

Death Assistance:For the employee -- Reduced from P50,000.00 to P45,000.00

For Immediate Family Member -- Reduced from P30,000.00 to P25,000.00

Dental and all others -- No change from the original demand.[18]

In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not make the necessary revisions on its counter-proposal, it would be best to seek a third party assistance. [19] After the break, the Bank presented its revised counter-proposal[20] as follows:

Wage Increase : 1st Year – from P1,000 to P1,050.002nd Year – P800.00 – no change

Group Hospitalization InsuranceFrom: P35,000.00 per illness

To    : P35,000.00 per illness per year

Death Assistance – For employeeFrom: P20,000.00

To    : P25,000.00

Dental Retainer – Original offer remains the same[21]

The Union, for its part, made the following counter-proposal:

Wage Increase:  1st Year - 40%2nd Year - 19.5%

Group Hospitalization InsuranceFrom: P60,000.00 per year

To   :  P50,000.00 per year

Dental:Temporary Filling/ – P150.00Tooth Extraction

Permanent Filling – 200.00Prophylaxis – 250.00Root Canal – From P2,000 per tooth

 To: 1,800.00 per tooth

Death Assistance:For Employees: From P45,000.00 to P40,000.00

For Immediate Family Member: From P25,000.00 to P20,000.00.[22]

The Union’s original proposals, aside from the above-quoted, remained the same.

Another set of counter-offer followed:

Management                                                        UnionWage Increase1st Year – P1,050.00                                            40%

2nd Year -      850.00                                            19.0%[23]

Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what it wanted to be included in the total economic package.  Umali replied that it was impossible to do so because the Bank’s counter-proposal was unacceptable.  He furthered asserted that it would have been easier to bargain if the atmosphere was the same as before, where both panels trusted each other.  Diokno requested the Union panel to refrain from involving personalities and to instead focus on the negotiations.[24] He suggested that in order to break the impasse, the Union should prioritize the items it wanted to iron out.  Divinagracia stated that the Bank should make the first move and make a list of items it wanted to be  included in the economic package.  Except for the provisions on signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic provisions of the CBA. The Union declared a deadlock[25]and filed a Notice of Strike before the National Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-NS-06-380-93.[26]

On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila, docketed as NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993.  The Bank alleged that the Union violated its duty to bargain, as it did not bargain in good faith.  It contended that the Union demanded “sky high economic demands,” indicative of blue-sky bargaining.[27] Further, the Union violated its no strike- no lockout clause by filing a notice of strike before the NCMB.  Considering that the filing of notice of strike was an illegal act, the Union officers should be dismissed.  Finally, the Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and actual damages and was forced to litigate and hire the services of the lawyer.[28]

On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order assuming jurisdiction over the labor dispute at the Bank.  The complaint for ULP filed by the Bank before the NLRC was consolidated with the complaint over which the SOLE assumed jurisdiction.  After the parties submitted their respective position papers, the SOLE issued an Order on October 29, 1993, the dispositive portion of which is herein quoted:

WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union – NUBE are hereby ordered to execute a collective bargaining agreement incorporating the dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall remain effective for two years thereafter, or until such time as a new CBA has superseded it.  All provisions in the expired CBA not expressly modified or not passed upon herein are deemed retained while all new provisions which are being demanded by either party are deemed denied, but without prejudice to such agreements as the parties may have arrived at in the meantime.

The Bank’s charge for unfair labor practice which it originally filed with the NLRC as NLRC-NCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack of merit.  On the other hand, the Union’s charge for unfair labor practice is similarly dismissed.

Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No. 00-06-04191-93 is pending for his guidance and appropriate action.[29]

The SOLE  gave the following economic awards:

1.       Wage Increase:a)      To be incorporated to present salary rates:

Fourth year : 7% of basic monthly salaryFifth year  : 5% of basic monthly salary based on the 4th year adjusted salary

b)      Additional fixed amount:Fourth year :  P600.00 per monthFifth year    :  P400.00 per month

2.       Group Insurancea)      Hospitalization : P45,000.00b)      Life                   : P130,000.00

c)      Accident           : P130,000.00

3.       Medicine AllowanceFourth year : P5,500.00Fifth year    : P6,000.00

4.       Dental Benefits   Provision of dental retainer as proposed by the Bank, but without diminishing existing benefits

5.       Optical AllowanceFourth year:  P2,000.00Fifth year   :  P2,500.00

6.       Death Assistancea)      Employee :  P30,000.00

b)      Immediate Family Member :  P5,000.00

7.       Emergency Leave – Five (5) days for each contingency

8.       Loansa)      Car Loan : P200,000.00

b)      Housing Loan :  It cannot be denied that the costs attendant to having one’s own home have tremendously gone up.  The need, therefore, to improve on this benefit cannot be overemphasized.  Thus, the management is urged to increase the existing and allowable housing loan that the Bank extends to its employees to an amount that will give meaning and substance to this CBA benefit.[30]

The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both parties failed to substantiate their claims.  Citing National Labor Union v. Insular-Yebana Tobacco Corporation,[31] the SOLE stated that ULP charges would prosper only if shown to have directly prejudiced the public interest.

Dissatisfied, the Union filed a motion for reconsideration with clarification, while the Bank filed a motion for reconsideration.  On December 16, 1993, the SOLE issued a Resolution denying the motions.  The Union filed a second motion for reconsideration, which was, likewise, denied on February 10, 1994.

On March 22, 1994, the Bank and the Union signed the CBA.[32] Immediately thereafter, the wage increase was effected and the signing bonuses based on the increased wage were distributed to the employees covered by the CBA.

The Present Petition

On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of Procedure alleging as follows:

A.  RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE UNION’S CHARGE OF UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS PROVING THE UNFAIR LABOR PRACTICES CHARGED.[33]

B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON OTHER UNFAIR LABOR PRACTICES CHARGED.[34]

C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE CHARGES OF UNFAIR LABOR PRACTICES ON THE GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST WAS PRESENTED.[35]

The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it found that the Bank did not commit unfair labor practice when it interfered with the Union’s choice of negotiator.  It argued that, Diokno’s suggestion that the negotiation be limited as a “family affair” was tantamount to suggesting that Federation President Jose Umali, Jr. be excluded from the Union’s negotiating panel.  It further argued that contrary to the ruling of the public respondent, damage or injury to the public interest need not be present in order for unfair labor practice to prosper.

The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges arising from the Bank’s surface bargaining.  The Union contended that the Bank merely went through the motions of collective bargaining without the intent to reach an agreement, and made bad faith proposals when it announced that the parties should begin from a clean slate.  It argued that the Bank opened the political provisions “up for grabs,” which had the effect of diminishing or obliterating the gains that the Union had made.

The Union also accused the Bank of refusing to disclose material and necessary data, even after a request was made by the Union to validate its “guestimates.”

In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped, considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994.  It asserted that contrary to the Union’s allegations, it was the Union that committed ULP when negotiator Jose Umali, Jr. hurled invectives at the Bank’s head negotiator, Cielito Diokno, and demanded that she be excluded from the Bank’s negotiating team.  Moreover, the Union engaged in blue-sky bargaining and isolated the no strike-no lockout clause of the existing CBA.

The Office of the Solicitor General, in representation of the public respondent, prayed that the petition be dismissed.  It asserted that the Union failed to prove its ULP charges and that the public respondent did not commit any grave abuse of discretion in issuing the assailed order and resolutions.

The Issues

The issues presented for resolution are  the following: (a) whether or not the Union was able to substantiate its claim of unfair labor practice against the Bank arising from the latter’s alleged “interference” with its choice of negotiator; surface bargaining; making bad faith non-economic proposals; and refusal to furnish the Union with copies of the relevant data; (b) whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction when she issued the assailed order and resolutions; and, (c) whether or not the petitioner is estopped from filing the instant action.

The Court’s Ruling

The petition is bereft of merit.

“Interference” under Article248 (a) of the Labor Code

The petitioner asserts that the private respondent committed ULP, i.e., interference in the selection of the Union’s negotiating panel, when Cielito Diokno, the Bank’s Human Resource Manager, suggested to the Union’s President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the NUBE, be excluded from the Union’s negotiating panel.  In support of its claim, Divinagracia executed an affidavit, stating that prior to the commencement of the negotiation, Diokno approached him and suggested the exclusion of Umali from the Union’s negotiating panel, and that during the first meeting, Diokno stated that the negotiation be kept a “family affair.”

Citing the cases of U.S. Postal Service[36] and Harley Davidson Motor Co., Inc., AMF,[37] the Union claims that interference in the choice of the Union’s bargaining panel is tantamount to ULP.

In the aforecited cases, the alleged ULP was based on the employer’s violation of Section 8(a)(1) and (5) of the National Labor Relations Act (NLRA),[38] which pertain to the interference, restraint or coercion of the employer in the employees’ exercise of their rights to self-organization and to bargain collectively through representatives of their own choosing; and the refusal of the employer to bargain collectively with the employees’ representatives.  In both cases, the National Labor Relations Board held that upon the employer’s refusal to engage in negotiations with the Union for collective-bargaining contract when the Union includes a person who is not an employee, or one who is a member or an official of other labor organizations, such employer is engaged in unfair labor practice under Section 8(a)(1) and (5) of the NLRA.

The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association – NATU vs. Insular Life Assurance Co., Ltd.,[39] wherein this Court said that the test of whether an employer has interfered with and coerced employees in the exercise of their right to self-organization within the meaning of subsection (a)(1) is whether the employer has engaged in conduct which it may reasonably be said, tends to interfere with the free exercise of employees’ rights under Section 3 of the Act. [40] Further, it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining.[41]

Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a signatory, “workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organization concerned, to job organizations of their own choosing without previous authorization.”[42] Workers’ and employers’ organizations shall have the right to draw up their constitutions and rules, to elect their representatives in full freedom to organize their administration and activities and to formulate their programs.[43] Article 2 of ILO Convention No. 98 pertaining to the Right to Organize and Collective Bargaining, provides:

Article 2

1.  Workers’ and employers’ organizations shall enjoy adequate protection against any acts or interference by each other or each other’s agents or members in their establishment, functioning or administration.

2.  In particular, acts which are designed to promote the establishment of workers’ organizations under the domination of employers or employers’ organizations or to support workers’ organizations by financial or other means, with the object of placing such organizations under the control of employers or employers’ organizations within the meaning of this Article.

The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243 thereof, which provides:

ART. 243. COVERAGE AND EMPLOYEES’ RIGHT TO SELF-ORGANIZATION. – All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining.  Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection.

and Articles 248 and 249 respecting ULP of employers and labor organizations.

The said ILO Conventions were ratified on December 29, 1953. However, even as early as the 1935 Constitution,[44] the State had already expressly bestowed protection to labor as part of the general provisions. The 1973 Constitution,[45] on the other hand, declared it as a policy of the state to afford protection to labor, specifying that the workers’ rights to self-organization, collective bargaining, security of tenure, and just and humane conditions of work would be assured. For its part, the 1987 Constitution, aside from making it a policy to “protect the rights of workers and promote their welfare,”[46] devotes an entire section, emphasizing its mandate to afford protection to labor, and highlights “the principle of shared responsibility” between workers and employers to promote industrial peace.[47]

Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form association.  The right to self-organization necessarily includes the right to collective bargaining.

Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed.

In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim.  Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[48] In the case at bar, the Union bases its claim of interference on the alleged suggestions of Diokno to exclude Umali from the Union’s negotiating panel.

The circumstances that occurred during the negotiation do not show that the suggestion made by Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank consciously adopted such act to yield adverse effects on the free exercise of the right to self-organization and collective bargaining of the employees, especially considering that such was undertaken previous to the commencement of the negotiation and simultaneously with Divinagracia’s suggestion that the bank lawyers be excluded from its negotiating panel.

The records show that after the initiation of the collective bargaining process, with the inclusion of Umali in the Union’s negotiating panel, the negotiations pushed through. The complaint was made only on August 16, 1993 after a deadlock was declared by the Union on June 15, 1993.

It is clear that such ULP charge was merely an afterthought.  The accusation occurred after the arguments and differences over the economic provisions became heated and the parties had become frustrated.  It happened after the parties started to involve personalities. As the public respondent noted, passions may rise, and as a result, suggestions given under less adversarial situations may be colored with unintended meanings.[49]  Such is what appears to have happened in this case.

The Duty to BargainCollectively

If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal relations and innocent communications, which are all part of the friendly relations between the Union and Bank.

The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article 248(g) when it engaged in surface bargaining. It alleged that the Bank just went through the motions of bargaining without any intent of reaching an agreement, as evident in the Bank’s counter-proposals.  It explained that of the 34 economic provisions it made, the Bank only made 6 economic counterproposals.  Further, as borne by the minutes of the meetings, the Bank, after indicating the economic provisions it had rejected, accepted, retained or were open for discussion, refused to make a list of items it agreed to include in the economic package.

Surface bargaining is defined as “going through the motions of negotiating” without any legal intent to reach an agreement.[50]  The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table.[51] It involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.[52]

The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any intention of violating its duty to bargain with the Union. Records show that after the Unionsent its proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on February 24, 1993.  Thereafter, meetings were set for the settlement of their differences.  The minutes of the meetings show that both the Bank and the Union exchanged economic and non-economic proposals and counter-proposals.

The Union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the Union or to settle the differences between it and the Union.  Admittedly, the parties were not able to agree and reached a deadlock.  However, it is herein emphasized that the duty to bargain “does not compel either party to agree to a proposal or require the making of a concession.”[53] Hence, the parties’ failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.

We can hardly dispute this finding, for it finds support in the evidence.  The inference that respondents did not refuse to bargain collectively with the complaining union because they accepted some of the demands while they refused the others even leaving open other demands for future discussion is correct, especially so when those demands were discussed at a meeting called by respondents themselves precisely in view of the letter sent by the union on April 29, 1960…[54]

In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad faith provisions has no leg to stand on.  The records show that the Bank’s counter-proposals on the non-economic provisions or political provisions did not put “up for grabs” the entire work of the Union and its predecessors.  As can be gleaned from the Bank’s counter-proposal, there were many provisions which it proposed to be retained.  The revisions on the other provisions were made after the parties had come to an agreement.  Far from buttressing theUnion’s claim that the Bank made bad-faith proposals on the non-economic provisions, all these, on the contrary, disprove such allegations.

We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish the information it needed.

While the refusal to furnish requested information is in itself an unfair labor practice, and also supports the inference of surface bargaining,[55] in the case at bar, Umali, in a meeting dated May 18, 1993, requested the Bank to validate its guestimates on the data of the rank and file.  However, Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code:

Article 242.  Rights of Legitimate Labor Organization…

(c) To be furnished by the employer, upon written request, with the annual audited financial statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar days from the date of receipt of the request, after the union has been duly recognized by the employer or certified as the sole and exclusive bargaining representatives of the employees in the bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective bargaining agreement, or during the collective negotiation;

The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy of the data about the Bank’s rank and file employees.  Moreover, as alleged by the Union, the fact that the Bank made use of the aforesaid guestimates, amounts to a validation of the data it had used in its presentation.

No Grave Abuse of DiscretionOn the Part of the Public Respondent

The special civil action for certiorari may be availed of when the tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law for the purpose of annulling the proceeding.[56] Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility which must be so patent and gross as to amount to an invasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.  Mere abuse of discretion is not enough.[57]

While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public respondent exercised its power in an arbitrary and despotic manner by reason of passion or personal hostility.

Estoppel not ApplicableIn the Case at Bar

The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it signed the new CBA.

Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

A person, who by his deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another.[58]

In the case, however, the approval of the CBA and the release of signing bonus do not necessarily mean that the Union waived its ULP claim against the Bank during the past negotiations. After all, the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was included in the

CBA itself.  Moreover, the Union twice filed a motion for reconsideration respecting its ULP charges against the Bank before the SOLE.

The Union Did Not EngageIn Blue-Sky Bargaining

We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or making exaggerated or unreasonable proposals.[59] The Bank failed to show that the economic demands made by the Union were exaggerated or unreasonable.  The minutes of the meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian region.

In sum, we find that the public respondent did not act with grave abuse of discretion amounting to lack or excess of jurisdiction when it issued the questioned order and resolutions.  While the approval of the CBA and the release of the signing bonus did not estop the Union from pursuing its claims of ULP against the Bank, we find that the latter did not engage in ULP.  We, likewise, hold that the Union is not guilty of ULP.

IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor are AFFIRMED. The Petition is hereby DISMISSED.

SO ORDERED.

 

[G.R. No. 146728.  February 11, 2004]

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, GENERAL MILLING CORPORATION INDEPENDENT LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents.

D E C I S I O N

QUISUMBING, J.:

Before us is a petition for certiorari assailing the decision[1] dated July 19, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, which earlier reversed the decision[2] dated January 30, 1998 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-0112-94.

The antecedent facts are as follows:

In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation (GMC) employed 190 workers.  They were all members of private respondent General Milling Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent.

On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) 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 (10) 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.

On December 16, 1991, GMC wrote a letter to the union’s officers, Rito Mangubat and Victor Lastimoso.  The letter stated that it felt there was no basis to negotiate with a union which no longer existed, but that management was nonetheless always willing to dialogue with them on matters of common concern and was open to suggestions on how the company may improve its operations.

In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive disaffiliation or resignation from the union and submitted a manifesto, signed by its members, stating that they had not withdrawn from the union.

On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union protested and requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC, however, advised the union to “refer to our letter dated December 16, 1991.”[3]

Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division, Cebu City. The complaint alleged 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.

On January 30, 1998, the NLRC set aside the labor arbiter’s decision.  Citing Article 253-A of the Labor Code, as amended by Rep. Act No. 6715,[4] which fixed the terms of a collective bargaining agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a period of two (2) years beginning December 1, 1991, the date when the original CBA ended, to November 30, 1993.  The NLRC also ordered GMC to pay the attorney’s fees.[5]

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 (5) 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.  For failure of the union to attach the required copies of pleadings and other documents and material portions of the record to support the allegations in its petition, the CA dismissed the petition on February 9, 1999.  The same petition was subsequently filed by the union, this time with the necessary documents.  In its resolution dated April 26, 1999, the appellate court treated the refiled petition as a motion for reconsideration and gave the petition due course.

On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads:

WHEREFORE, the petition is hereby GRANTED.  The NLRC Resolution of October 6, 1998 is hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the award of attorney’s fees which is hereby deleted, REINSTATED.[6]

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 for certiorari alleging that:

I

THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO DECISION SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH IT IS BASED.

II

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.

III

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING AGREEMENT.[7]

Thus, in the instant case, the principal issue for our determination is whether or not the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with the right of its employees to self-organization, and (2) imposing upon GMC the draft CBA proposed by the union for two years to begin from the expiration of the original CBA.

On the first issue, 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 (5) 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 turn$ on the facts of the individual case.[8] There is no per se test of good faith in bargaining.[9] Good faith or bad faith is an inference to be drawn from the facts. [10] 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.[11]

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 (3) 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.

It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the basic interest of the state in ensuring lasting industrial peace. Thus:

ART. 250. Procedure in collective bargaining. – The following procedures shall be observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice.  (Underscoring supplied.)

GMC’s failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers, was mainly dilatory as it turned out to be utterly baseless.

We hold that 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.[12]

Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor practice.

Did GMC interfere with the employees’ right to self-organization?  The CA found that the letters between February to June 1993 by 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. We agree with the CA’s conclusion that the ill-timed letters of resignation from the union members indicate that GMC had interfered with the right of its employees to self-organization. Thus, we hold that the appellate court did not commit grave abuse of discretion in finding GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization.

Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by the union for two years commencing from the expiration of the original CBA?

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. (Underscoring supplied.)

The provision mandates the parties to keep the status quo while they are still in the process of working out their respective proposal 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.

In Kiok Loy vs. NLRC,[13] we found that petitioner therein, Sweden Ice Cream Plant, refused to submit any counter proposal to the CBA proposed by its employees’ certified bargaining agent. We ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus, we did not hesitate to impose on the erring company the CBA proposed by its employees’ union - lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case, to wit:

…petitioner Company’s approach and attitude – stalling the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union.

Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its objection thereto.[14]

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,[15] petitioner therein, Divine Word University of Tacloban, refused to perform its duty to bargain collectively. Thus, we upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union. We said further:

That being the said case, the petitioner may not validly assert that its consent should be a primordial consideration in the bargaining process. By its acts, no less than its action which bespeak its insincerity, it has forfeited whatever rights it could have asserted as an employer.[16]

Applying the principle in the foregoing cases to the instant case, 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 (2) 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, based on Kiok Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union.

We carefully note, however, that as strictly distinguished from the facts of this case, there was no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC to have its cake and eat it too.

Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning negotiations by going through empty gestures. [17] Thus, by imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the interests of equity and fair play were properly served and both parties regained equal footing, which was lost when GMC thwarted the negotiations for new economic terms of the CBA.

The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft CBA proposed by the union should not be disturbed since they are supported by substantial evidence.  On this score, we see no cogent reason to rule otherwise.  Hence, we hold that the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the union for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social justice are best served in this case by sustaining the appellate court’s decision on this issue.

WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the resolution dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.

SO ORDERED.

 

[G.R. No. 149440.  January 28, 2003]

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents.

D E C I S I O N

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season.  In fact, petitioners do not deny that these workers have served them for several years already.  Hence, they are regular -- not seasonal -- employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals[1] (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads:

“WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED.” [2]

On the other hand, the National Labor Relations Commission (NLRC) Decision, [3] upheld by the CA, disposed in this wise:

“WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed.  Respondents are herebyORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until reinstated.  Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages.”[4]

The Facts

The facts are summarized in the NLRC Decision as follows:

“Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants’ persistence and dogged determination in going back to work.

“Indeed, it would appear that respondents did not look with favor workers’ having organized themselves into a union.  Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement.  Moreover, the workers including complainants herein 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 which stipulated among others that:

‘a)           The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days.

‘b)           The management will give priority to the women workers who are members of the union in case work relative x x x or amount[ing] to gahit and [dipol] arises.

‘c)           Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.

‘d)           The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority.  However, in case the said workforce would not be enough, the management can hire additional workers to supplement them.

‘e)           The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and

‘f)            The union will immediately lift the picket upon signing of this agreement.’

“However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively.  Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises.

“Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992.  But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides:

‘Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members;

‘Whereas parties to the present dispute agree to settle the case amicably once and for all;

‘Now therefore, in the interest of both labor and management, parties herein agree as follows:

‘1.           That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers;

‘2.           That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990;

‘3.           That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be;

‘4.           That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration;

‘5.           To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers.  (Union representatives:  Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)”

“Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:

‘The meeting started at 10:00 A.M.  A list of employees was submitted by Atty. Tayko based on who received their 13th month pay.  The following are deemed not considered employees:

1.            Luisa Rombo

2.            Ramona Rombo

3.            Bobong Abrega

4.            Boboy Silva

‘The name Orencio Rombo shall be verified in the 1990 payroll.

‘The following employees shall be reinstated immediately upon availability of work:

1.            Jose Dagle                  7.         Alejandro Tejares

2.            Rico Dagle                  8.         Gaudioso Rombo

3.            Ricardo Dagle             9.         Martin Alas-as Jr.

4.            Jesus Silva                  10.       Cresensio Abrega

5.            Fernando Silva            11.       Ariston Eruela Sr.

6.            Ernesto Tejares          12.       Ariston Eruela Jr.’

“When respondents again reneged on its commitment, complainants filed the present complaint.

“But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of ‘refusing to work and being choosy in the kind of work they have to perform’.”[5] (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners.  Moreover, the workers enjoyed security of tenure.  Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.

The appellate court found neither “rhyme nor reason in petitioner’s argument that it was the workers themselves who refused to or were choosy in their work.”  As found by the NLRC, the record of this case is “replete with complainants’ persistence and dogged determination in going back to work.”[6]

The CA likewise concurred with the NLRC’s finding that petitioners were guilty of unfair labor practice.

Hence this Petition.[7]

Issues

Petitioners raise the following issues for the Court’s consideration:

“A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year.

“B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, xxx, and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco,Bacolod-Murcia, and Gaco, xxx.

“C. Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC’s conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages.”[8]

Consistent with the discussion in petitioners’ Memorandum, we shall take up Items A and B as the first issue and Item C as the second.

The Court’s Ruling

The Petition has no merit.

First Issue:Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions.[9] Questions of fact are not entertained.[10] The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force.[11] Factual questions are for labor tribunals to resolve.[12] In the present case, these have already been threshed out by the NLRC.  Its findings were affirmed by the appellate court.

Contrary to petitioners’ contention, the CA did not err when it held that respondents were regular employees.

Article 280 of the Labor Code, as amended, states:

“Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to

be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

“An employment shall be deemed to be casual if it is not covered by the preceding paragraph:  Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist.”  (Italics supplied)

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.

In Abasolo v. National Labor Relations Commission,[13] the Court issued this clarification:

“[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held:

“The primary standard, therefore, 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.

x x x                                                                      x x x                                                                             x x x

“x x x [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the x x x season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed.”[14]

The CA did not err when it ruled that Mercado v. NLRC[15] was not applicable to the case at bar.  In the earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after which their services would be available to any other farm owner.  They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof.  On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latter’s regular employees for their respective tasks.  Petitioners’ eventual refusal to use their services -- even if they were ready, able and willing to perform their usual duties whenever these were available -- and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.

The Court finds no reason to disturb the CA’s dismissal of what petitioners claim was their valid exercise of a management prerogative.  The sudden changes in work assignments reeked of bad

faith.  These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining.  Those who were union members were effectively deprived of their jobs.  Petitioners’ move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code.

“Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause.”[16] In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees.

Second Issue:Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice.  It ruled as follows:

“Indeed, from respondents’ refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their hacienda—a clear interference in the right of the workers to self-organization.”[17]

We uphold the CA’s affirmation of the above findings.  Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality.  Their findings are binding on the Supreme Court.[18] Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence.[19] Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis.[20]

The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages.[21]

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED.  Costs against petitioners.

SO ORDERED.

G.R. No. 167892             October 27, 2006

ST. JOHN COLLEGES, INC., petitioner, vs.ST. JOHN ACADEMY FACULTY AND EMPLOYEES UNION, respondent.

This petition for review on certiorari assails the April 22, 2004 Decision1 of the Court of Appeals in CA-G.R. SP No. 74519, which affirmed with modifications the June 28, 2002 Resolution2 of the National Labor Relations Commission (NLRC) in NLRC CN RAB IV 5-10035-98-1, and its April 15, 2005 Resolution3 denying petitioner’s motion for reconsideration.

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 Collective Bargaining Agreement (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, on November 27, 1997, SJCI and the Union, through the efforts of the National Conciliation and Mediation Board (NCMB), agreed to refer the labor dispute to the Secretary of Labor and Employment (SOLE) for assumption of jurisdiction:

AGREEMENT AND JOINT PETITION FOR ASSUMPTION OF JURISDICTION

Both parties agree as follows:

1. That the issue raised by the Union shall be referred to the Honorable Secretary of Labor by way of Assumption of Jurisdiction. Note this will serve as a joint petition for Assumption of Jurisdiction.

2. Parties shall submit their respective position paper within 10 days upon the signing of this agreement and to be decided within two months.

3. That management shall grant the employees cash advance of P1,800.00 each to be given on or before December 5, 1997 deductible after two months payable in two installments starting January 31, 1998. The decision re: assumption [of] jurisdiction has not been resolved.

4. Union shall lift the picket immediately and remove all obstruction and return to work on Monday, December 1, 1997.

5. No retaliatory action shall be undertaken by either party against each other in relation to the strike.4

After which, the strike ended and classes resumed. Subsequently, the SOLE issued an Order dated January 19, 1998 assuming jurisdiction over the labor dispute pursuant to Article 263 of the Labor Code. The parties were required to submit their respective position papers within ten (10) days from receipt of said Order.

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. The Minutes5 of the stockholders’ meeting stated the reasons therefor, to wit:

98-3 CLOSURE OF THE SCHOOL

The President, Mr. Rivera, informed the stockholders that the Board at its meeting on February 15, 1998 unanimously approved to recommend to the stockholders the closure of the school because of the irreconcilable differences between the school management and the Academy’s Union particularly the safety of our students and the financial aspect of the ongoing CBA negotiations.

After due deliberations, and upon motion of Dr. Jose O. Juliano seconded by Miss Eva Escalano, it was unanimously resolved, as it is hereby resolved, that the Board of St. John Colleges, Inc. be authorized to decide on the terms and conditions of closure, if such decision is made, to the best interest of the stockholders, parents and students.6

Thereafter, SJCI informed the Department of Labor and Employment (DOLE), Department of Education, Culture and Sports (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. On April 2, 1998, SJCI informed the DOLE that as of March 31, 1998, 51 employees had received their separation compensation package while 25 employees refused to accept the same.

On May 4, 1998, the aforementioned 25 employees conducted a protest action within the perimeter of the high school. The Union filed a notice of strike with the NCMB only on May 7, 1998.

On May 19, 1998, SJCI filed a petition to declare the strike illegal before the NLRC which was docketed as NLRC Case No. RAB-IV-5-10035-98-L. It claimed that the strike was conducted in violation of the procedural requirements for holding a valid strike under the Labor Code.

On May 21, 1998, the 25 employees filed a complaint for unfair labor practice (ULP), illegal dismissal and non-payment of monetary benefits against SJCI before the NLRC which was docketed as RAB-IV-5-10039-98-L. The Union members alleged 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.

These two cases were then consolidated. On January 8, 1999, Labor Arbiter Antonio R. Macam rendered a Decision7 dismissing 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.

Meanwhile, in the proceedings before the SOLE, the Union filed a manifestation8 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 appearance9 on October 14, 1998 claiming that the closure of the high school rendered the CBA deadlocked issues moot. Upon receipt of the Labor Arbiter’s decision in the aforesaid consolidated cases, SJCI filed a second motion to dismiss10on February 1, 1999 arguing that the case had already been resolved.

Moreover, 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.

On July 23, 1999, the SOLE denied SJCI’s motions to dismiss and certified the CBA deadlock case to the NLRC. It ordered the consolidation of the CBA deadlock case with the ULP, illegal dismissal, and illegal strike cases which were then pending appeal before the NLRC.

On June 28, 2002, the 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. Finally, it dismissed, without prejudice, the certified case on the CBA deadlocked issues for failure of the parties to substantiate their respective positions.

On appeal, the Court of Appeals, in its Decision dated April 22, 2004, affirmed with modification the decision of the NLRC:

WHEREFORE, in light of the preceding discussions, the decision subject of the instant petition is hereby affirmed with a modification that in the computation of backwages, the two month unworked summer vacation should excluded.

SO ORDERED.11

With the denial of its motion for reconsideration, SJCI interposed the instant petition essentially raising two issues: (1) whether it is liable for ULP and illegal dismissal when it closed down the high school on March 31, 1998 and (2) whether the Union is liable for illegal strike due to the protest actions which its 25 members undertook within the high school’s perimeter on May 4, 1998.

The petition lacks merit.

Under Article 283 of the Labor Code, the following requisites must concur for a valid closure of the business: (1) serving a written notice on the workers at least one (1) month before the intended date thereof; (2) serving a notice with the DOLE one month before the taking effect of the closure; (3) payment of separation pay equivalent to one (1) month or at least one half (1/2) month pay for every year of service, whichever is higher, with a fraction of at least six (6) months to be considered as a whole year; and (4) cessation of the operation must be bona fide.12 It is not disputed that the first two requisites were satisfied. The third requisite would have been satisfied were it not for the refusal of the herein private respondents to accept the separation compensation package. The instant case, thus, revolves around the fourth requisite, i.e., whether SJCI closed the high school in good faith.

Whether or not the closure of the high school was done in good faith is a question of fact and is not reviewable by this Court in a petition for review on certiorari save for exceptional circumstances. In fine, the finding of the NLRC, which was affirmed by the Court of Appeals, that SJCI closed the high school in bad faith is supported by substantial evidence and is, thus, binding on this Court. Consequently, SJCI is liable for ULP and illegal dismissal.

The determination of whether SJCI acted in bad faith depends on the particular facts as established by the evidence on record. Bad faith is, after all, an inference which must be drawn from the peculiar circumstances of a case. The two decisive factors in determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the closure of the high school, and (2) the timing of, and the reasons for the subsequent opening of a college and elementary department, and, ultimately, the reopening of the high school department by SJCI after only one year from its closure.

Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to the SOLE for assumption of jurisdiction under Article 263 of the Labor Code. As a result, the strike ended and

classes resumed. After the SOLE assumed jurisdiction, it required the parties to submit their respective position papers. However, instead of filing its position paper, SJCI closed its high school, allegedly because of the "irreconcilable differences between the school management and the Academy’s Union particularly the safety of our students and the financial aspect of the ongoing CBA negotiations." Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE contending that it had become moot because of the closure. Nevertheless, a year after said closure, SJCI reopened its high school and did not rehire the previously terminated employees.

Under these circumstances, it is not difficult to discern that the closure was done to defeat the parties’ agreement to refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision of the SOLE; and to circumvent the Union’s right to collective bargaining and its members’ right to security of tenure. By admitting that the closure was due to irreconcilable differences between the Union and school management, specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the bargaining deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what the Labor Code abhors and punishes as unfair labor practice since the net effect is to defeat the Union’s right to collective bargaining.

However, SJCI contends that these circumstances do not establish its bad faith in closing down the high school. Rather, it claims that it was forced to close down the high school due to alleged difficult labor problems that it encountered while dealing with the Union since 1995, specifically, the Union’s illegal demands in violation of R.A. 6728 or the "Government Assistance to Students and Teachers in Private Education Act." Under R.A. 6728, the income from tuition fee increase is to be used as follows: (a) 70% of the tuition fee shall go to the payment of salaries, wages, allowances, and other benefits of teaching and non-teaching personnel, and (b) 20% of the tuition fee increase shall go to the improvement or modernization of the buildings, equipment, and other facilities as well as payment of the cost of operations. However, sometime in 1995, SJCI claims that it was forced to give-in to the demands of the Union by allocating 100% of the tuition fee increase for teachers’ benefits even though the same was in violation of R.A. 6728 in order to end the on-going strike of the Union and avoid prolonged disturbances of classes. Subsequently or during the school year 1996-1997, SJCI claims that it obtained an approval from the DECS for a 30% tuition fee increase, however, only 10% was implemented. Despite this, the Union persisted in making illegal demands by filing a complaint before the DOLE claiming that they were entitled to the unimplemented 20% tuition fee increase. Finally, during the collective bargaining negotiations in 1997, the Union again made economic demands in excess of the 70% of the tuition fee increase under R.A. 6728. As a result, SJCI claims it had no choice but to refuse the Union’s demands which thereafter led to the holding of a strike on November 10, 1998. It argues that the Union’s alleged illegal demands was a valid justification for the closure of the high school considering that it was financially incapable of meeting said demands and that it would violate R.A. 6728 if it gave in to said demands which carried corresponding penalties to be imposed by the DECS.

We are not persuaded.

These alleged difficult labor problems merely show that SJCI and the Union had disagreements regarding workers’ benefits which is normal in any business establishment. That SJCI agreed to appropriate 100% of the tuition fee increase to the workers’ benefits sometime in 1995 does not mean that it was helpless in the face of the Union’s demands because neither party is obligated to precipitately give in to the proposal of the other party during collective bargaining.13 If SJCI found the Union’s demands excessive, its remedy under the law is to refer the matter for voluntary or compulsory dispute resolution. Besides, this incident which occurred in 1995, could hardly establish the good faith of SJCI or justify the high school’s closure in 1998.

Anent the Union’s claim for the unimplemented 20% tuition fee increase in 1996, suffice it to say that it is erroneous to rule on said issue since the same was submitted before the Voluntary Arbitrator14 and is not on appeal before this Court.15 Besides, by referring the labor dispute to the Voluntary Arbitrator, the parties themselves acknowledged that there is a sufficient mechanism to resolve the said dispute. Again,

we fail to see how this alleged labor problem in 1996 shows the good faith of SJCI in closing the high school in 1998.

With respect to SJCI’s claim that during the 1997 CBA negotiations the Union made illegal demands because they exceeded the 70% limitation set by R.A. No. 6728, it is important to note that the alleged illegality or excessiveness of the Union’s demands were the issues to be resolved by the SOLE after the parties agreed to refer the said labor dispute to the latter for assumption of jurisdiction. As previously mentioned, the SOLE certified the case to the NLRC, which on June 28, 2002, rendered a decision finding that there was insufficient evidence to determine the reasonableness of the Union’s proposals. The NLRC found that SJCI failed to establish that the Union’s demands were illegal or excessive. A review of the records clearly shows that the Union submitted a position paper detailing its demands in actual monetary terms. However, SJCI failed to establish how and why these demands were in excess of the limitation set by R.A. 6728. Up to this point in the proceedings, it has merely relied on its self-serving statements that the Union’s demands were illegal and excessive. There is no basis, therefore, to hold that the Union ever made illegal or excessive demands.

At any rate, even assuming that the Union’s demands were illegal or excessive, the important and crucial point is that these alleged illegal or excessive demands did not justify the closure of the high school and do not, in any way, establish SJCI’s good faith. The employer cannot unilaterally close its establishment on the pretext that the demands of its employees are excessive. As already discussed, neither party is obliged to give-in to the other’s excessive or unreasonable demands during collective bargaining, and the remedy in such case is to refer the dispute to the proper tribunal for resolution. This was what SJCI and the Union did when they referred the 1997 CBA bargaining deadlock to the SOLE; however, SJCI pre-empted the resolution of the dispute by closing the high school. SJCI disregarded the whole dispute resolution mechanism and undermined the Union’s right to collective bargaining when it closed down the high school while the dispute was still pending with the SOLE.

The Labor Code does not authorize the employer to close down the establishment on the ground of illegal or excessive demands of the Union. Instead, aside from the remedy of submitting the dispute for voluntary or compulsory arbitration, the employer may file a complaint for ULP against the Union for bargaining in bad faith. If found guilty, this gives rise to civil and criminal liabilities and allows the employer to implement a lock out, but not the closure of the establishment resulting to the permanent loss of employment of the whole workforce.

In fine, SJCI undermined the Labor Code’s system of dispute resolution by closing down the high school while the 1997 CBA negotiations deadlock issues were pending resolution before the SOLE. The closure was done in bad faith for the purpose of defeating the Union’s right to collective bargaining. Besides, as found by the NLRC, the alleged illegality and excessiveness of the Union’s demands were not sufficiently proved by SJCI. Even on the assumption that the Union’s demands were illegal or excessive, SJCI’s remedy was to await the resolution by the SOLE and to file a ULP case against the Union. However, SJCI did not have the power to take matters into its own hands by closing down the school in order to get rid of the Union.

SJCI next argues that the Union unduly endangered the safety and well-being of the students who joined the valid strike held on November 10, 1997, thus it closed down the high school on March 31, 1998. It claims that the Union coerced the students to join the protest actions to pressure SJCI to give-in to the demands of the Union.

However, SJCI provided no evidence to substantiate these claims except for its self-serving statements in its position paper before the Labor Arbiter and pictures belatedly attached to the instant petition before this Court. However, the pictures were never authenticated and, on its face, only show that some students watched the Union members while they conducted their protest actions. More importantly, it is not true, as SJCI claims, that the Union admitted that it coerced the students to join the protest actions and recklessly placed the students in harm’s way. In its Reply16 to SJCI’s position paper before the Labor Arbiter, the Union categorically denied that it put the students in harm’s way or pressured them to join the protest

actions. Given this denial by the Union, it was incumbent upon SJCI to prove that the students were actually harmed or put in harm’s way and that the Union coerced them to join the protest actions. The reason for this is that the employer carries the burden of proof to establish that the closure of the business was done in good faith. In the instant case, SJCI had the burden of proving that, indeed, the closure of the school was necessary to uphold the safety and well-being of the students.

SJCI presented no evidence to show that the protest actions turned violent; that the parents did not give their consent to their children who allegedly joined the protest actions; that the Union did not take the necessary steps to protect some of the students who allegedly joined the same; or that the Union forced or pressured the said students to join the protest actions. Moreover, if the problem was the endangerment of the students’ well-being due to the protest actions by the Union, then the natural response would have been to immediately go after the Union members who allegedly coerced the students to join the protest actions and thereby endangered the students’ safety. But no such action appears to have been undertaken by SJCI. There is even no showing that it prohibited its students from joining the protest actions or informed the parents of the activities of the students who allegedly joined the protest actions. This raises serious doubts as to whether SJCI was really looking after the welfare of its students or merely using them as a scapegoat to justify the closure of the school and thereby get rid of the Union.

Even assuming arguendo that the safety and well-being of some of the students who allegedly joined the protest actions were compromised, still, the closure was done in bad faith because it was done long after the strike had ended. Thus, there is no more danger to the students’ well-being posed by the strike to speak of. It bears stressing that the closure was implemented on March 31, 1998 but the risk to the safety of the students had long ceased to exist as early as November 28, 1997 when the parties agreed to refer the labor dispute to the SOLE, thus, betraying SJCI’s claim that it wanted to safeguard the interest of the students.

Furthermore, if SJCI was after the interests of the students, then it should not have closed the school because the parents and the students were vehemently opposed to the same, as shown by the letter dated March 9, 1998 written by Mr. Teofilo G. Mamplata, President of the Parents’ Association, and addressed to the Secretary of DECS, to wit:

As per letters sent recently by the school Management to the teachers and parents, notifying of its closure on March 31, 1998, as decided upon by its Board of Trustees and Stockholders on February 22, 1998 no reasons were stated to justify said decision and action which will definitely affect adversely and to the detriment of the plight of parents, teachers, students and other personnel of the school.

In this connection and due to the urgency of the matter, we hereby reiterate our appeal with our prayer that the management and Board of Trustees of St. John Academy of Calamba, Laguna, be stopped from pursuing their most sudden, unfair, unfavorable and detrimental decision and action, and if warranted, sanctions be imposed against the erring party.17 (Italics supplied)

Along the same vein, the parents voiced out their strong objections to the proposed closure of the school, to wit:

PAHAYAG NG PAGTUTOL

Kami, mga magulang, mag-aaral, guro, propesyonal, manggagawa at iba pang sector ng pamayanan sa bayan ng Calamba, Laguna ay nagpapahayag ng pagtutol sa hindi makatarungang pagsasara ng paaralang SAINT JOHN ACADEMY. Ang kagyat na pagsasara nito ay nagdulot ng malaking suliranin sa 2,300 estudyante (incoming 2nd year – 4th year), kagaya ng mga sumusunod:

1. Kakaunti ang bilang ng paaralan sa Calamba;

2. Walang paaralan na basta tatanggap sa 700 incoming third year at 800 incoming fourth year;

3. Ang lahat ng "HONOR STUDENTS" ay mababaliwala ang kanilang pinagsikapan;

4. Negatibo ang epekto sa moral ng mga batang estudyante ang pagkakaroon ng physical and moral displacement dahil sa biglaang pagsasara nito;

5. Hindi lahat ng magulang ay kakayaning bumayad ng mataas na tuition fee sa ibang paaralan;

6. Ang mataas na kalidad ng turo ng mga guro sa paaralang ito ay mahirap pantayan; at

7. HIGIT NA LIGTAS SA SAKUNA ANG AMING MGA ANAK sa nasabing paaralan.

Bilang pagtutol sa pagsasara ng SAINT JOHN ACADEMY ay inilalagda namin ang aming pangalan sa libis nito. (56 signatures follow)18 [Italics supplied]

Worth noting is the belief of the parents that the safety of their children was properly secured in said high school. This was obviously in response to the claim of SJCI that the school was being closed, inter alia, for the safety and well-being of the students. As correctly observed by the CA:

The petitioner urges this Court to believe that they closed down the school out of their sheer concern for the students, some of whom have started to sympathize and participate in the union’s cause.

As intimated by the private respondent, however, the petitioner itself said that the closing down of the school was, inter alia, "because of irreconcilable differences between the school management and the Academy’s Union." Indeed, this translates into an admission that the cessation of business was neither due to any patrician nor noble objective of protecting the studentry but because the administration no longer wished to deal with respondent Union.

We are further tempted to doubt the verity of the petitioner’s claim that in deciding to shut down the school, it only had the welfare of its students in mind. There is evidence on record which hints otherwise. Apparently, the parents of the students were vehemently against the idea of closing down the academy as this would be, as it later did prove, more detrimental to the studentry. No less than Mr. Teofilo Mamplata, President of St. John Academy Parents Association of Calamba expressed the groups’ aversion against such move and even wrote a letter to the then Secretary of the Department of Education seeking immediate intervention to enjoin the school from closing. This is an indication that the parents were unanimous in their sentiment that the shutdown would result in inconvenience and displacement of the students who had already been halfway through elementary school and high school. It turned out some were even forced to pay higher tuition fees just so they would be admitted in other academies.19 (Italics supplied)

To recapitulate, there is insufficient evidence to hold that the safety and well-being of the students were endangered and/or compromised, and that the Union was responsible therefor. Even assuming arguendo that the students’ safety and well-being were jeopardized by the said protest actions, the alleged threat to the students’ safety and well-being had long ceased by the time the high school was closed. Moreover, the parents were vehemently opposed to the closure of the school because there was no basis to claim that the students’ safety was at risk. Taken together, these circumstances lead to the inescapable conclusion that SJCI merely used the alleged safety and well-being of the students as a subterfuge to justify its actions.

SJCI next contends that the subsequent reopening of the high school after only one year from its closure did not show that the previous decision to close the high school was tainted with bad faith because the

reopening was done due to the clamor of the high school’s former students and their parents. It claims that its former students complained about the cramped classrooms in the schools where they transferred.

The contention is untenable.

First, the fact that after one year from the time it closed its high school, SJCI opened a college and elementary department, and reopened its high school department showed that it never intended to cease operating as an educational institution. Second, there is evidence on record contesting the alleged reason of SJCI for reopening the high school, i.e., that its former students and their parents allegedly clamored for the reopening of the high school. In a letter20 dated December 15, 2000 addressed to the NLRC, which has never been rebutted by SJCI, Mr. Mamplata, stated that –

Para po sa inyong kabatiran xxx isinara nila ang paaralang ito dahil sa mga nag-alsang guro.

Sa ganitong kalagayan kaming pamunuan at kasapi ng PTA ay nakipag-usap sa pamunuan ng paaralang ito na huwag naming isara dahil malaking epekto ito sa aming mga anak dahil noon ay kalagitnaan pa lamang ng pasukan. Sa kabila ng pakiusap naming ito ay hindi kami pinakinggan at sa halip ay tuluyang isinara. Sa kanilang ginawang ito marami sa mga bata ang hindi nakapasok sa ibang paaralan at ang iba naman ay nadoble ang pinagbayaran sa matrikula. Sa kabuuan nito ay malaking paghirap ang ginawa nila sa aming mga magulang at anak na nag-aaral sa paaralang ito dahil lamang sa panggigipit sa mga gurong walang tanging hangarin kundi bayaran sila ng naaayon sa itinakda ng batas.

Sa taong 1999-2000 ay muling binuksan ang paaralang ito na sabi nila ay sa kahilingan ng PTA. Alin kayang PTA ang tinutukoy nila. Paanong magkakaroon ng PTA samantalang ito ay nakasara at kami ang PTA bago ito isinara.

Kaya po pinaabot naming sa inyong kaalaman na kaming PTA ng paaralang (St. John Academy) ito ay hindi kailanman humiling sa kanila na pamuling buksan ito.21 (Italics supplied)

Finally, 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.

Clearly, these pieces of evidence regarding the 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.

Lastly, 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, we agree with 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.

WHEREFORE, the petition is DENIED. The April 22, 2004 Decision and April 15, 2005 Resolution of the Court Appeals in CA-G.R. SP No. 74519 are AFFIRMED.

SO ORDERED.

CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEU-NFL], represented by its President, PABLITO SAGURAN,                                 Petitioner,

- versus -

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

Respondent.

G.R. No. 186605

Present:

CARPIO,  J., Chairperson,NACHURA,PERALTA,ABAD, andMENDOZA, JJ.

Promulgated:

   November 17, 2010 X ----------------------------------------------------------------------------------- X 

D E C I S I O N MENDOZA, J.:  

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by

petitioner Central Azucarera De Bais Employees Union-National Federation of Labor (CABEU-

NFL) seeking to reverse and set aside: (1) the September 26, 2008 Decision[1] of the Court of

Appeals (CA), in CA-G.R. SP No. 03238, whichreversed the July 18, 2007 Decision[2] and September 28,

2007 Resolution[3] of the National Labor Relations Commission (NLRC) and reinstated the July 13, 2006

Decision[4]of the Labor Arbiter (LA); and (2) its January 21, 2009 Resolution[5] denying the Motion for

Reconsideration of CABEU-NFL.

 

THE FACTS

 

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

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

this proceeding.

 

          CABEU-NFL is a duly registered labor union and a certified bargaining agent of the CAB rank-and-

file employees, represented by its President, Pablito Saguran (Saguran). 

          On January 19, 2004, CABEU-NFL sent CAB a proposed Collective Bargaining Agreement (CBA)

[6] seeking increases in the daily wage and vacation and sick leave benefits of the monthly employees and

the grant of leave benefits and 13th month pay to seasonal workers.

 

On March 27, 2004, CAB responded with a counter-proposal[7] to the effect that the production

bonus incentive and special production bonus and incentives be maintained. In addition, respondent CAB

agreed to execute a pro-rated increase of wages every time the government would mandate an increase

in the minimum wage. CAB, however, did not agree to grant additional and separate Christmas bonuses.

 

On May 21, 2004, CAB received an Amended Union Proposal[8] sent by CABEU-NFL reducing its

previous demand regarding wages and bonuses.  CAB, however, maintained its position on the matter.

Thus, the collective bargaining negotiations resulted in a deadlock.

 

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

and Mediation Board (NCMB). The NCMB then assumed conciliatory-mediation jurisdiction and

summoned the parties to conciliation conferences.”[9]

 

In its June 2, 2005 Letter sent to CAB[10] (letter-request), CABEU-NFL requested copies of CAB’s

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

 

CAB replied through its June 14, 2005 Letter[11] (letter-response) to NCMB Regional Director of

Dumaguete City Isidro Cepeda, which reads:

 At the outset, it observed that the letter signed by Mr. Pablito Saguran who is no

longer an employee of the Central for he was one of those lawfully terminated due to an authorized cause x x x.

 More importantly, the declared purpose of the requested conciliation meeting has

already been rendered moot and academic because: (1) the Union which Mr. Saguran purportedly represents has already lost its majority status by reason of the disauthorization and withdrawal of support thereto by more than 90% of the rank and file employees in the bargaining unit of Central sometime in January, 2005, and (2) the workers themselves, acting as principal, after disauthorizing the previous agent CABEU-NFL have organized themselves into a new Union known as Central Azucarera de Bais Employees Labor Association (CABELA) and after obtaining their registration certificate and making due representation that it is a duly organized union representing almost all the rank and file workers in the Central, had concluded a new collective bargaining agreement with the Central on April 21, 2005 in Dumaguete City. The aforesaid CBA had been duly ratified by the rank and file workers constituting 91% of the collective bargaining unit x x x.

 

Clearly, therefore, the request for further conciliation conference will serve no lawful and practical purpose. In view of the foregoing, and for the sake of continued industrial peace prevailing in the Central, we beseech the Honorable Office to disregard the aforesaid request.

 

          It appears that the NCMB failed to act on the letter-response of CAB. Neither did it convene CAB

and CABEU-NFL to continue the negotiations between them.

 

          Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for Unfair Labor

Practice[12] for the former’s refusal to bargain with it.

 

          On July 13, 2006, the LA dismissed the complaint.[13] Pertinent portions of the LA decision read: 

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

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

             At this juncture it cannot be said, therefore, that respondent CAB refused to negotiate or that it violated its duty to bargain collectively in light of its active participation in the past CBA negotiations at the plant level as well as in the NCMB. x x x                                     x x x                x x x                x x x             We do not agree that respondent CAB committed an unfair labor practice act in questioning the capacity of Mr. Pablito Saguran to represent complainant union in the CBA negotiations because Mr. Pablito Saguran was no longer an employee of respondent CAB at that time having been separated from employment on the ground of redundancy and having received the corresponding separation benefits. x x x.             So also, we do not find respondent CAB guilty of unfair labor practice by its act of writing the NCMB Director in a letter dated June 24, 2005, stating its legal position on complainant’s request for further conciliation to the effect that since almost [all] of the rank and file employees, the principals in a principal-agent relationship, have withdrawn

their support to the complainant union and that in fact they have already organized themselves into a DOLE-registered labor union known as CABELA, any further conciliation will serve no lawful and practical purpose. x x x.             At this juncture, it was incumbent upon the NCMB to make a ruling on the request of the complainant union as well as upon the corresponding comment of respondent CAB. If the NCMB chose not to pursue further negotiation between the parties, respondent CAB should not be faulted therefor. x x x.             Under the facts obtaining, when the conciliation/mediation by the NCMB has not been officially concluded, we find the instant complaint for unfair labor practice not only without merit but also premature.                      WHEREFORE, foregoing considered, the case is hereby DISMISSED for lack of merit.             SO ORDERED.

 

On appeal, the NLRC in its July 18, 2007 Decision[14] reversed the LA’s decision and found CAB

guilty of unfair labor practice. The NLRC explained:

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

            With respect to respondent’s observation that the request for conciliation meeting was signed by one who is not eligible and authorized to represent any union with the company since he is no longer an employee, suffice it to state that at the time the request was made, such employee has questioned the validity of his dismissal with then NLRC. X x x.

             Respondent’s failure to act on the request of the complainant to resume negotiation for no valid reason constitutes unfair labor practice. Consequently, the proposed CBA as amended should be imposed to respondent.

             WHEREFORE, premises considered, the appealed Decision is REVERSED and SET ASIDE. Another one is entered declaring that respondent Central Azucarera de Bais is guilty of unfair labor practice. As such, the proposed CBA of complainant, as amended is imposed to respondent Central Azucarera de Bais.

             SO ORDERED.

 

          CAB moved for a reconsideration but the motion was denied by the NLRC in its resolution

dated September 28, 2007.[15]

 Unsatisfied, CAB elevated the matter to the CA by way of a petition for certiorari under Rule 65

alleging grave abuse of discretion on the part of the NLRC in reversing the LA decision and issuing the

questioned resolution.

 On September 26, 2008, the CA found CAB’s petition meritorious and reversed the NLRC decision and resolution.  The CA pointed out:

                        x x x                x x x                x x x First. This Court has acquired jurisdiction over the person of private respondent

CABEU-NFL. Through its counsel of record, CABEU-NFL already filed its extensive comment on the instant petition. Hence, it is now useless to contend that it was denied notice of the same and the opportunity to be heard on it. x x x.

 

x x x                x x x                x x x 

 Second. Petitioner CAB was not shown to have violated the rule requiring parties

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

 

x x x                x x x               x x x

 

Third.         x x x                x x x                x x x In the case at bar, private respondent CABEU-NFL failed in its burden of proof to

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

x x x                x x x                x x x

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

 

x x x                x x x                x x x

 WHEREFORE, the instant petition is GRANTED. The

assailed Decision dated July 18, 2007 and Resolution dated September 28, 2007 of public respondent National Labor Relations Commission in NLRC Case No. V-000002-07 are REVERSED and SET ASIDE. The Decision dated July 13, 2006 in NLRC RAB VII Case No. 07-0104-2005-D entitled ‘Central Azucarera de Bais Employees Union-NFL (CABEU-NFL), represented by Pablito Saguran, complainant, versus,  (CAB) and/or Steven Chan as Owner and Roberto de la Rosa as Manager, respondents’ of Labor Arbiter Fructuoso T. Villarin IV is REINSTATED and AFFIRMED IN TOTO. Costs of suit de oficio.

 SO ORDERED.

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

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

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

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

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

R E S O L U T I O N

CHICO-NAZARIO, J.:

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

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

Subsequent thereto, Nestlé Philippines, Incorporated (Nestlé) filed a Motion for Clarification2 on 20 September 2006; while Union of Filipro Employees – Drug, Food and Allied Industries Union – Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September 2006, filed a Motion for Partial Reconsideration3 of the foregoing Decision.

The material facts of the case, as determined by this Court in its Decision, may be summarized as follows:

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

On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only)7, Nestlé reiterated its stance that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium,

are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom."8

Dialogue between the company and the union thereafter ensued.

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

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

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

On 29 November 2001, Sec. Sto. Tomas issued an Order15 assuming jurisdiction over the subject labor dispute. The fallo of said Order states that:

CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the labor dispute at the Nestlé Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as amended.

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

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

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

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

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

In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1) the members of UFE-DFA-KMU to return-to-work within twenty-four (24) hours from receipt of such Order; (2) Nestlé to

accept back all returning workers under the same terms and conditions existing preceding to the strike; (3) both parties to cease and desist from committing acts inimical to the on-going conciliation proceedings leading to the further deterioration of the situation; and (4) the submission of their respective position papers within ten (10) days from receipt thereof. But notwithstanding the Return-to-Work Order, the members of UFE-DFA-KMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine National Police (PNP) for the enforcement of said order.

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

On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its stand on the other issues raised by Nestlé but not covered by its initial position paper by way of a Supplemental Position Paper.

UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings, one of which was aManifestation with Motion for Reconsideration of the Order dated February 11, 2002 assailing the Order of February 11, 2002 for supposedly being contrary to law, jurisprudence and the evidence on record. The union posited that Sec. Sto. Tomas "could only assume jurisdiction over the issues mentioned in the notice of strike subject of the current dispute,"17 and that the Amended Notice of Strike it filed did not cite, as one of the grounds, the CBA deadlock.

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

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

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

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

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

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

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

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

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

g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all other provisions shall be renegotiated not later than three (3) years after its effective date which shall be December 5, 2001 (or on the first day six months after the expiration on June 4, 2001 of the superceded CBA).

UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently denied on 6 May 2002.

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

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

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

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

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

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

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

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

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

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

As to the charge of unfair labor practice:

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

We are unconvinced still.

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

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

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

Obviously, the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to reach an agreement.

The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the individual case. As we have said, there is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of credibility. The effect of an employer’s or a union’s individual actions is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the finding of the NLRC.26

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

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

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

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

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

ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR PROSECUTION THEREOF.– Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations.

x x x x.

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

ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. – It shall be unlawful for an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

(b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters;

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

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

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

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

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

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

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

x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable, state the acts complained of and the efforts to resolve the dispute amicably." (Emphasis supplied.)

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

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

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

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

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

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

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

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

"A. Bargaining Deadlock

1. Economic issues (specify)

1. Retirement

2. Panel Composition

3. Costs and Attendance

4. CBA"

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

"B. Unfair Labor Practices (specify)

Bargaining in bad faith –

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

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

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

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

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

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

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

A read-through of this Court’s Decision reveals that the ambiguity is more ostensible than real. This Court’s Decision of 22 August 2006 designated marked boundaries as to the implications of the assailed Orders of the Secretary of the DOLE. We said therein that 1) the Retirement Plan is still a valid issue for herein parties’ collective bargaining negotiations; 2) the Court of Appeals committed reversible error in limiting to the issue of the ground rules the scope of the power of the Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3) Nestlé is not guilty of unfair labor practice. Nowhere in our Decision did we require parties to submit to negotiate by themselves the tenor of the retirement benefits of the concerned employees of Nestlé, precisely because the Secretary of the DOLE had already assumed jurisdiction over the labor dispute subject of herein petitions. Again, we spell out what encompass the Secretary’s assumption of jurisdiction power. The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. And, as a matter of necessity, it includes questions incidental to the labor dispute; that is, issues that are necessarily involved in the dispute itself, and not just to that ascribed in the Notice of Strike or otherwise submitted to him for resolution. In the case at bar, the issue of retirement benefits was specifically what was presented before the Secretary of the DOLE; hence, We reject Nestlé’s interpretation. Our decision is crystal and cannot be interpreted any other way. The Secretary having already assumed jurisdiction over the labor dispute subject of these consolidated petitions, the issue concerning the retirement benefits of the concerned employees must be remanded back to him for proper disposition.

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

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

SO ORDERED.

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President,                             Petitioners,

                   - versus -

         G.R. No. 162943

         Present:

         CARPIO MORALES, J.,                              Chairperson,        BRION,        BERSAMIN,        VILLARAMA, JR., and        SERENO, JJ.

BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President),ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL,                             Respondents.

         Promulgated:

         December 6, 2010

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

DECISION 

VILLARAMA, JR., J.:

          This petition for review on certiorari assails the Decision[1] dated December 15, 2003 and

Resolution[2] dated March 23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73813.

          Petitioner Employees Union of Bayer Philippines[3] (EUBP) is the exclusive bargaining agent of all

rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers

(FFW).  In 1997, EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for

the signing of a collective bargaining agreement (CBA). During the negotiations, EUBP rejected Bayer’s

9.9% wage-increase proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike,

prompting the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over

the dispute.

          In November 1997, pending the resolution of the dispute, respondent Avelina Remigio (Remigio)

and 27 other union members, without any authority from their union leaders, accepted Bayer’s wage-

increase proposal. EUBP’s grievance committee questioned Remigio’s action and reprimanded Remigio

and her allies.  On January 7, 1998, the DOLE Secretary issued an arbitral award ordering EUBP and

Bayer to execute a CBA retroactive to January 1, 1997 and to be made effective until December 31,

2001.  The said CBA[4] was registered on July 8, 1998 with the Industrial Relations Division of the DOLE-

National Capital Region (NCR).[5]

          Meanwhile, the rift between Facundo’s leadership and Remigio’s group broadened.  On August 3,

1998, barely six months from the signing of the new CBA, during a company-sponsored seminar,

[6] Remigio solicited signatures from union members in support of a resolution containing the decision of

the signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed Employees Union of Bayer

Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4) abolish all existing officer

positions in the union and elect a new set of interim officers, and (5) authorize REUBP to administer the

CBA between EUBP and Bayer.[7]  The said resolution was signed by 147 of the 257 local union

members. A subsequent resolution was also issued affirming the first resolution.[8]

          A tug-of-war then ensued between the two rival groups, with both seeking recognition from Bayer

and demanding remittance of the union dues collected from its rank-and-file members. On September 8,

1998, Remigio’s splinter group wrote Facundo, FFW and Bayer informing them of the decision of the

majority of the union members to disaffiliate from FFW.[9] This was followed by another letter informing

Facundo, FFW and Bayer that an interim set of REUBP executive officers and board of directors had

been appointed, and demanding the remittance of all union dues to REUBP.  Remigio also asked Bayer

to desist from further transacting with EUBP.  Facundo, meanwhile, sent similar requests to

Bayer[10] requesting for the remittance of union dues in favor of EUBP and accusing the company of

interfering with purely union matters.[11]  Bayer responded by deciding not to deal with either of the two

groups, and by placing the union dues collected in a trust account until the conflict between the two

groups is resolved.[12]

          On September 15, 1998, EUBP filed a complaint for unfair labor practice (first ULP complaint)

against Bayer for non-remittance of union dues. The case was docketed as NLRC-NCR-Case No. 00-09-

07564-98.[13]

          EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance conference.

[14]  The meeting was conducted by the management on November 11, 1998, with all REUBP officers

including their lawyers present.  Facundo did not attend the meeting, but sent two EUBP officers to inform

REUBP and the management that a preventive mediation conference between the two groups has been

scheduled on November 12, 1998 before the National Conciliation and Mediation Board (NCMB).[15]

          Apparently, the two groups failed to settle their issues as Facundo again sent respondent Dieter J.

Lonishen two more letters, dated January 14, 1999[16] and September 2, 1999,[17] asking for a grievance

meeting with the management to discuss the failure of the latter to comply with the terms of their CBA.

Both requests remained unheeded.

          On February 9, 1999, while the first ULP case was still pending and despite EUBP’s repeated

request for a grievance conference, Bayer decided to turn over the collected union dues amounting

to P254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP.

          Aggrieved by the said development, EUBP lodged a complaint[18] on March 4, 1999 against

Remigio’s group before the Industrial Relations Division of the DOLE praying for their expulsion from

EUBP for commission of “acts that threaten the life of the union.”

          On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack

of jurisdiction.[19] The Arbiter explained that the root cause for Bayer’s failure to remit the collected union

dues can be traced to the intra-union conflict between EUBP and Remigio’s group [20] and that the charges

imputed against Bayer should have been submitted instead to voluntary arbitration.[21] EUBP did not

appeal the said decision.[22]

          On December 14, 1999, petitioners filed a second ULP complaint against herein respondents

docketed as NLRC-RAB-IV Case No. 12-11813-99-L. Three days later, petitioners amended the

complaint charging the respondents with unfair labor practice committed by organizing a company union,

gross violation of the CBA and violation of their duty to bargain. [23] Petitioners complained that Bayer

refused to remit the collected union dues to EUBP despite several demands sent to the management.

[24]  They also alleged that notwithstanding the requests sent to Bayer for a renegotiation of the last two

years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate instead with

Remigio’s group.[25]

          On even date, REUBP and Bayer agreed to sign a new CBA.  Remigio immediately informed her

allies of the management’s decision.[26]

          In response, petitioners immediately filed an urgent motion for the issuance of a restraining

order/injunction[27] before the National Labor Relations Commission (NLRC) and the Labor Arbiter against

respondents.  Petitioners asserted their authority as the exclusive bargaining representative of all rank-

and-file employees of Bayer and asked that a temporary restraining order be issued against Remigio’s

group and Bayer to prevent the employees from ratifying the new CBA. Later, petitioners filed a second

amended complaint[28] to include in its complaint the issue of gross violation of the CBA for violation of the

contract bar rule following Bayer’s decision to negotiate and sign a new CBA with Remigio’s group.

          Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations Division of DOLE

issued a decision dismissing the issue on expulsion filed by EUBP against Remigio and her allies for

failure to exhaust reliefs within the union and ordering the conduct of a referendum to determine which of

the two groups should be recognized as union officers.[29] EUBP seasonably appealed the said decision to

the Bureau of Labor Relations (BLR).[30] On June 16, 2000, the BLR reversed the Regional Director’s

ruling and ordered the management of Bayer to respect the authority of the duly-elected officers of EUBP

in the administration of the prevailing CBA.[31]

          Unfortunately, the said BLR ruling came late since Bayer had already signed a new CBA[32] with

REUBP on February 21, 2000.  The said CBA was eventually ratified by majority of the bargaining unit.[33]

          On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBP’s second ULP complaint

for lack of jurisdiction.[34]  The Labor Arbiter explained the dismissal as follows:

          All told, were it not for the fact that there were two (2) [groups] of employees, the Union led by its President Juanito Facundo and the members who decided to disaffiliate led by Ms. Avelina Remigio, claiming to be the rightful representative of the rank and file employees, the Company would not have acted the way it did and the Union would not have filed the instant case.

            Clearly then, as the case involves intra-union disputes, this Office is bereft of any jurisdiction pursuant to Article 226 of the Labor Code, as amended, which provides pertinently in part, thus:

          “Bureau of Labor Relations – The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and Employment shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.”

            Specifically, with respect to the union dues, the authority is the case of Cebu Seamen’s Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA 51), where the Supreme Court held that when the issue calls for the determination of which between the two groups within a union is entitled to the union dues, the same cannot be taken cognizance of by the NLRC.

            x x x x

            WHEREFORE, premises considered, the instant complaint is hereby DISMISSED on the ground of lack of jurisdiction.

            SO ORDERED.[35]    

          On June 28, 2000, the NLRC resolved to dismiss[36]  petitioners’ motion for a restraining order

and/or injunction stating that the subject matter involved an intra-union dispute, over which the said

Commission has no jurisdiction.[37]

          Aggrieved by the Labor Arbiter’s decision to dismiss the second ULP complaint, petitioners

appealed the said decision, but the NLRC denied the appeal.[38]  EUBP’s motion for reconsideration was

likewise denied.[39]

          Thus, petitioners filed a Rule 65 petition to the CA.  On December 15, 2003, the CA sustained both

the Labor Arbiter and the NLRC’s rulings. The appellate court explained,

          A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo, p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and the Second Amended Complaint dated March 8, 2000 (Vol. II, Rollo, pp. 219-225) will readily show that the instant case was brought about by the action of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves purely an (sic) inter-union and intra-union conflicts or disputes between EUBP-FFW and REUBP which issue should have been resolved by the Bureau of Labor Relations under Article 226 of the Labor Code. However, since no less than petitioners who admitted that respondents committed gross violations of the CBA, then the BLR is divested of jurisdiction over the case and the issue should have been referred to the Grievance Machinery and Voluntary Arbitrator and not to the Labor Arbiter as what petitioners did in the case at bar. x x x

            x x x x

            Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life span of only five years and after the said period, the employees have all the right to change their bargaining unit who will represent them. If there exist[s] two opposing unions in the same company, the remedy is not to declare that such act is considered unfair labor practice but rather they should conduct a certification election provided [that] it should be conducted within 60 days of the so[-]called freedom period before the expiration of the CBA.

            WHEREFORE, premises considered, this Petition is DENIED and the assailed Decision dated September 27, 2001 as well as the Order dated June 21, 2002, denying the motion for reconsideration, by the National Labor Relations Commission, First Division, in NLRC Case No. RAB-IV-12-11813-99-L, are hereby AFFIRMED in toto. Costs against petitioners.

            SO ORDERED.[40]

          Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the said petition was

denied for having been filed out of time and for failure to comply with the requirements provided in

the 1997 Rules of Civil Procedure, as amended.[41] Upon petitioners’ motion, however, we decided to

reinstate their appeal.

          The following are the issues raised by petitioners, to wit:

I.       WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE WITH LAW AND JURISPRUDENCE; AND

II.      WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN ITS FINDINGS AND CONCLUSION THAT:

THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF ANOTHER UNION, NEGOTIATING OR BARGAINING WITH SUCH UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE BARGAINING AGENT, VIOLATING THE DUTY TO BARGAIN COLLECTIVELY, REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE GRIEVANCE MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR TANTAMOUNT TO UNFAIR LABOR PRACTICE.[42]

          Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as follows:

I.       WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS, THE NLRC AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE COURT;

II.      WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE JURISDICTION OVER THE INSTANT CASE;

III.    WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION DISPUTE;

IV.    WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND

V.      WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND ACADEMIC.[43]

          Essentially, the issue in this petition is whether the act of the management of Bayer in dealing and

negotiating with Remigio’s splinter group despite its validly existing CBA with EUBP can be considered

unfair labor practice and, if so, whether EUBP is entitled to any relief.          

          Petitioners argue that the subject matter of their complaint, as well as the subsequent amendments

thereto, pertain to the unfair labor practice act of respondents Bayer, Lonishen and Amistoso in dealing

with Remigio’s splinter union. They contend that (1) the acts of abetting or assisting in the creation of

another union is among those considered by the Labor Code, as amended, specifically under Article 248

(d)[44] thereof, as unfair labor practice; (2) the act of negotiating with such union constitutes a violation of

Bayer’s duty to bargain collectively; and (3) Bayer’s unjustified refusal to process EUBP’s grievances and

to recognize the said union as the sole and exclusive bargaining agent are tantamount to unfair labor

practice.[45]

          Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that there can be no

unfair labor practice on their part since the requisites for unfair labor practice – i.e., that the violation of the

CBA should be gross, and that it should involve violation in the economic provisions of the CBA – were

not satisfied.  Moreover, they cite the ruling of the Labor Arbiter that the issues raised in the complaint

should have been ventilated and threshed out before the voluntary arbitrators as provided in Article 261 of

the Labor Code, as amended.[46]  Respondents Remigio and Villareal, meanwhile, point out that the case

should be dismissed as against them since they are not real parties in interest in the ULP complaint

against Bayer,[47] and since there are no specific or material acts imputed against them in the complaint.

[48]  

The petition is partly meritorious.

          An intra-union dispute refers to any conflict between and among union members, including

grievances arising from any violation of the rights and conditions of membership, violation of or

disagreement over any provision of the union’s constitution and by-laws, or disputes arising from

chartering or disaffiliation of the union.[49]  Sections 1 and 2, Rule XI of Department Order No. 40-03,

Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes, viz:

RULE XIINTER/INTRA-UNION DISPUTES AND

OTHER RELATED LABOR RELATIONS DISPUTES

SECTION 1. Coverage. - Inter/intra-union disputes shall include:

(a)          cancellation of registration of a labor organization filed by its members or by another labor organization;

(b)         conduct of election of union and workers’ association officers/nullification of election of union and workers’ association officers;

(c)          audit/accounts examination of union or workers’ association funds;

(d)         deregistration of collective bargaining agreements;

(e)          validity/invalidity of union affiliation or disaffiliation;

(f)          validity/invalidity of acceptance/non-acceptance for union membership;

(g)         validity/invalidity of impeachment/expulsion of union and workers’ association officers and members;

(h)         validity/invalidity of voluntary recognition;

(i)           opposition to application for union and CBA registration;

(j)           violations of or disagreements over any provision in a union or workers’ association constitution and by-laws;

(k)         disagreements over chartering or registration of labor organizations and collective bargaining agreements;

(l)           violations of the rights and conditions of union or workers’ association membership;

(m)       violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements;

(n)         such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining –

(1)   between and among legitimate labor organizations;

(2)   between and among members of a union or workers’ association.

SECTION 2. Coverage. – Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers’ association. This includes: (1) cancellation of registration of unions and workers’ associations; and (2) a petition for interpleader.

It is clear from the foregoing that the issues raised by petitioners do not fall under any of the

aforementioned circumstances constituting an intra-union dispute. More importantly, the petitioners do not

seek a determination of whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is

the true set of union officers. Instead, the issue raised pertained only to the validity of the acts of

management in light of the fact that it still has an existing CBA with EUBP.  Thus as to Bayer, Lonishen

and Amistoso the question was whether they were liable for unfair labor practice, which issue was within

the jurisdiction of the NLRC.  The dismissal of the second ULP complaint was therefore erroneous.

However, as to respondents Remigio and Villareal, we find that petitioners’ complaint was validly

dismissed.

Petitioners’ ULP complaint cannot prosper as against respondents Remigio and Villareal because

the issue, as against them, essentially involves an intra-union dispute based on Section 1 (n) of DOLE

Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the

NLRC will necessarily touch on the issues respecting the propriety of their disaffiliation and the legality of

the establishment of REUBP – issues that are outside the scope of their jurisdiction. Accordingly, the

dismissal of the complaint was validly made, but only with respect to these two respondents.

But are Bayer, Lonishen and Amistoso liable for unfair labor practice?  On this score, we find that

the evidence supports an answer in the affirmative.

It must be remembered that a CBA is entered into in order to foster stability and mutual

cooperation between labor and capital. An employer should not be allowed to rescind unilaterally its CBA

with the duly certified bargaining agent it had previously contracted with, and decide to bargain anew with

a different group if there is no legitimate reason for doing so and without first following the proper

procedure. If such behavior would be tolerated, bargaining and negotiations between the employer and

the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be

honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides:

          ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. – Where there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. (Emphasis supplied.)

          This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor

organization that has been duly certified as the exclusive bargaining representative and the employer

becomes the law between them. Additionally, in the Certificate of Registration[50] issued by the DOLE, it is

specified that the registered CBA serves as the covenant between the parties and has the force and

effect of law between them during the period of its duration. Compliance with the terms and conditions of

the CBA is mandated by express policy of the law primarily to afford protection to labor[51] and to promote

industrial peace. Thus, when a valid and binding CBA had been entered into by the workers and the

employer, the latter is behooved to observe the terms and conditions thereof bearing on union dues and

representation.[52]  If the employer grossly violates its CBA with the duly recognized union, the former may

be held administratively and criminally liable for unfair labor practice.[53]

          Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute unfair labor

practice as the same did not involve gross violations in the economic provisions of the CBA, citing the

provisions of Articles 248 (1) and 261[54] of the Labor Code, as amended.[55] Their argument is, however,

misplaced.

Indeed, in Silva v. National Labor Relations Commission,[56] we explained the correlations of

Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the

Labor Arbiter, and for the NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint

must show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the

violation pertains to the economic provisions of the CBA.[57]

This pronouncement in Silva, however, should not be construed to apply to violations of the CBA

which can be considered as gross violations per se, such as utter disregard of the very existence of the

CBA itself, similar to what happened in this case. When an employer proceeds to negotiate with a splinter

union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the

former indubitably abandons its recognition of the latter and terminates the entire CBA.

          Respondents cannot claim good faith to justify their acts. They knew that Facundo’s group

represented the duly-elected officers of EUBP. Moreover, they were cognizant of the fact that even the

DOLE Secretary himself had recognized the legitimacy of EUBP’s mandate by rendering an arbitral award

ordering the signing of the 1997-2001 CBA between Bayer and EUBP. Respondents were likewise well-

aware of the pendency of the intra-union dispute case, yet they still proceeded to turn over the collected

union dues to REUBP and to effusively deal with Remigio. The totality of respondents’ conduct, therefore,

reeks with anti-EUBP animus.

Bayer, Lonishen and Amistoso argue that the case is already moot and academic following the

lapse of the 1997-2001 CBA and their renegotiation with EUBP for the 2006-2007 CBA.  They also

reason that the act of the company in negotiating with EUBP for the 2006-2007 CBA is an obvious

recognition on their part that EUBP is now the certified collective bargaining agent of its rank-and-file

employees.[58]  

We do not agree. First, a legitimate labor organization cannot be construed to have abandoned

its pending claim against the management/employer by returning to the negotiating table to fulfill its duty

to represent the interest of its members, except when the pending claim has been expressly waived or

compromised in its subsequent negotiations with the management. To hold otherwise would be

tantamount to subjecting industrial peace to the precondition that previous claims that labor may have

against capital must first be waived or abandoned before negotiations between them may resume.

Undoubtedly, this would be against public policy of affording protection to labor and will encourage

scheming employers to commit unlawful acts without fear of being sanctioned in the future.

Second, that the management of Bayer decided to recognize EUBP as the certified collective

bargaining agent of its rank-and-file employees for purposes of its 2006-2007 CBA negotiations is of no

moment.  It did not obliterate the fact that the management of Bayer had withdrawn its recognition of

EUBP and supported REUBP during the tumultuous implementation of the 1997-2001 CBA.  Such act of

interference which is violative of the existing CBA with EUBP led to the filing of the subject complaint.

On the matter of damages prayed for by the petitioners, we have held that as a general rule, a

corporation cannot suffer nor be entitled to moral damages.  A corporation, and by analogy a labor

organization, being an artificial person and having existence only in legal contemplation, has no feelings,

no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish.  Mental

suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and

griefs of life – all of which cannot be suffered by an artificial, juridical person. [59]  A fortiori, the prayer for

exemplary damages must also be denied.[60]  Nevertheless, we find it in order to award (1) nominal

damages in the amount of P250,000.00 on the basis of our ruling in De La Salle University v. De La Salle

University Employees Association (DLSUEA-NAFTEU)[61] and Article 2221,[62] and (2) attorney’s fees

equivalent to 10% of the monetary award.  The remittance to petitioners of the collected union dues

previously turned over to Remigio and Villareal is likewise in order.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED.  The Decision

dated December 15, 2003 and the Resolution dated March 23, 2004 of the Court of Appeals in CA-G.R.

SP No. 73813 are MODIFIED as follows:

1)          Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are

found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit to petitioners

the amount of P254,857.15 representing the collected union dues previously turned over to

Avelina Remigio and Anastacia Villareal. They are likewise ORDERED to pay petitioners

nominal damages in the amount of P250,000.00 and attorney’s fees equivalent to 10% of

the monetary award; and

2)          The complaint, as against respondents Remigio and Villareal. is DISMISSED due to the

lack of jurisdiction of the Labor Arbiter and the NLRC, the complaint being in the nature of

an intra-union dispute.

          No pronouncement as to costs.

          SO ORDERED.