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THIRD DIVISION

[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. DECISION
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 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads:
[1]

WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED.
[2] [3]

On the other hand, the National Labor Relations Commission (NLRC) Decision, 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 hereby ORDERED 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. 2. 3. 4.

Luisa Rombo Ramona Rombo Bobong Abrega 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. 2. 3. 4. 5. 6. Jose Dagle Rico Dagle Ricardo Dagle Jesus Silva Fernando Silva Ernesto Tejares 7. 8. 9. 10. 11. 12. Alejandro Tejares Gaudioso Rombo Martin Alas-as Jr. Cresensio Abrega Ariston Eruela Sr. 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. (Citations omitted)
[5]

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 petitioners 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 NLRCs finding that petitioners were guilty of unfair labor practice. Hence this Petition.
[7]

Issues Petitioners raise the following issues for the Courts 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 NLRCs 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 Courts 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. Questions of fact are not entertained. The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. Factual questions are for labor tribunals to resolve. In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court.
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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, the Court issued this clarification:
[13]

[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.
xxx x xx xxx

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 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 latters 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.
[15]

The Court finds no reason to disturb the CAs 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. In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees.
[16]

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 haciendaa clear interference in the right of the workers to self-organization.
[17]

We uphold the CAs 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. Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. 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.
[18] [19] [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 Decision AFFIRMED. Costs against petitioners. SO ORDERED.

the

assailed

Puno, J., (Chairman), Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.

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Eighth Division, composed of Justices Ramon A. Barcelona (chairman and ponente), Rodrigo V. Cosico and Alicia L. Santos (members). Assailed CA Decision, p. 7; rollo, p. 36. Fourth Division, composed of Commissioner Bernabe S. Batuhan (ponente), Presiding Commissioner Irenea E. Ceniza and Commissioner Amorito V. Canete. NLRC Decision, pp. 9-10; rollo, pp. 63-64; records, pp. 28-29. NLRC Decision, pp. 5-9; rollo, pp. 59-63; records, pp. 24-28. Italics provided. Assailed CA Decision, p. 6; rollo, p. 35. This case was deemed submitted for resolution on April 30, 2002, upon receipt by the Court of petitioners Memorandum, which was signed by Atty. Teodoro V. Cortes. Respondents Memorandum, signed by Attys. Francisco D. Yap and Whelma F. Siton-Yap, was received by the Court on March 7, 2002. Petitioners Memorandum, p. 6; rollo, p. 275. Viloria v. Court of Appeals, 309 SCRA 529, June 30, 1999. Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc., 306 SCRA 762, May 5, 1999; Villarico v. Court of Appeals, 309 SCRA 193, June 28, 1999; Alipoon v. Court of Appeals, 305 SCRA 118, March 22, 1999; Baguio v. Republic, 301 SCRA 450, January 21, 1999. Ropali Trading Corporation v. National Labor Relations Commission, 296 SCRA 309, September 25, 1998.

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Chua v. National Labor Relations Commission, 267 SCRA 196, January 30, 1997. 346 SCRA 293, November 29, 2000. Id., pp. 304-305, per De Leon Jr., J. 201 SCRA 332, September 5, 1991. Valiant Machinery and Metal Corp. v. National Labor Relations Commission, 252 SCRA 369, January 25, 1996, per Mendoza, J. NLRC Decision, p. 9; rollo, p. 63; records, p. 28. C. Planas Commercial v. National Labor Relations Commission, 303 SCRA 49, February 11, 1999. Barros v. National Labor Relations Commission, 315 SCRA 23, September 22, 1999. Tan v. National Labor Relations Commission, supra. Nueva Ecija I Electric Cooperative, Inc. v. National Labor Relations Commission, 323 SCRA 86, January 24, 2000.

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FIRST DIVISION G.R. No. L-39546 November 29, 1977 PROGRESSIVE DEVELOPMENT CORPORATION, JORGE L. ARANETA, JUDY A. ROXAS, MANUEL B. JOVER , RAMON LLORENTE and PROGRESSIVE EMPLOYEES UNION, petitioners, vs. COURT OF INDUSTRIAL RELATIONS and ARANETA COLISEUM EMPLOYEES ASSOCIATION, respondents. Emilio S. Torres, Jr. for petitioners. Jose D. Iglesias for petitioner Union. Liver B. Gesmundo for private respondents.

FERNANDEZ, J.: This is a petition for review the decision of the Court of Industrial Relations in Case No. 3304-ULP entitled "Araneta Coliseum Employees Association. complainant. versus Progressive Corporation. et al., respondents". the dispositive part of which reads: WHEREFORE, all of the foregoing considered, and as so recommended, the respondents in this case should be, as they are hereby declared GUILTY of having committed the unfair labor practice acts complained of, and, as a consequence thereof, are therefore ordered to cease and desist from further committing the same or similar acts and to reinstate the individual complainants to their former or substantially equivalent employment in respondent corporation, without loss of seniority status and other benefits and/or with back wages from the time of their dismissal up to April 11, 1972 when this case was considered submitted for Decision, considering the delay encountered in the disposition of this case. The Chief of the Examining Division of this Court, or his duly authorized representative, is hereby directed to proceed to the premises of the respondent corporation to examine its pertinent payrolls, vouchers and other books of accounts necessary to compute the monetary liability of respondents in line with this Decision, and to submit immediately thereafter his Report on the results of such computation for further disposition of the Court. SO ORDERED. Manila, Philippines, March 15, 1914. (SGD.) ALBERTO

S. VELOSO Associate Judge 1 The motion for reconsideration of the aforementioned decision was denied in a resolution en bane dated October 10, 1974. 2 In September 1962, Araneta Coliseum Employees Association (ACEA) a legitimate labor organization in behalf of forty-eight (48) members, instituted Case No. 3304-ULP for unfair labor practice in the Court of Industrial Relations against Progressive Development Corporation (PDC), a domestic business entity operating the Araneta Coliseum, Jorge Araneta, Judy A. Roxas, Manuel B. Jover and Ramon Llorente, as officers of the corporation PDC and Progressive Employees Union (PEU), a labor organization existing in the PDC. The complaint alleged that the PDC, through its officers, initiated a move to disauthorize the counsel of the complainant ACEA from appearing in a union conference with the respondents, petitioners herein; that the supervisors of PDC encouraged, and assisted in, the formation of the Progressive Employees Union (PEU) and coerced the employees, particularly the individual complainants, to disaffiliate from the complainant union and to affiliate with the PEU; that in July and August 1962 the respondents, petitioners herein, discriminated against the individual complainants by either not giving them their working schedules, lessening their number of working days and eventually dismissing them from their employment, because of their refusal to disaffiliate from their union and join the Progressive Employees Union; and the individual complainants are: 1. Antonio Buluran 2. Mario Bagaybayan 3. Bonifacio Cendanio 4. Eduardo Evangelista 5. Juan Cumiran 6. Antonio Martin 7. Arthur Melbielb 8. Amando Reyes, Jr. 9. Jaime Serrano 10. Dominador Semon 11. Azarcon Roberto 12. Jaime Villazo 13. Pedro Estabello 14. Garcia Edilberto 15. Rodolfo Macalino 16. Eduardo Misa 17. Bernardo Orquia 18. Florentino Ricardo 19. Jorge Buan 20. Restituto Makilala 21. Gregorio Viray

22. Carlos Celistino 23. Federico Bola 24. Jose Dueas 25. Aida Avenia 26. Mira Divinagracia 27. Amaparo Fernandez 28. Rose Haguisan 29. Aurora Reyes 30. Remedios Berdanea 31. Felisa Siason 32. Luz Caquiela 33. Benodian Nieva 34. Dimarocot Aquino 35. Domingo Malate 36. Reynaldo Asis 37. Feliciano Cabuang 38. Carmencita Anakan 39. Welhelmina Basco 40. Corazon Feliciano 41. Florecerfina Guerra 42. Antonio Jalla 43. Rosa de delos Santos 44. Ida Velasquez 45. Erlando Martin 46. Solidad Fernando 47. Margie Osorio

48. Sulpicio Makali

Said individual complainants prayed that after declaring the respondents, petitioners herein, guilty of unfair labor practice acts, the complainants be ordered reinstated to their former positions with back wages and all the rights and privileges formerly appertaining thereto. The respondents, corporation PDC, Jorge L. Araneta, Judy A. Roxas and Manuel B. Jover claimed in their answer that the individual complainants were merely casuals or temporary employees and their services depended on the availability of work as ushers, usherettes, guards and janitors when there

were shows, performances or exhibits at the Araneta Coliseum. They alleged that they did not interfere with the complainant union and in fact they met and conferred with said union's counsel; that they did not initiate nor assist the PEU; that they did not discriminate against the individual complainants nor dismiss them as said complainants were only casuals or temporary employees; that the services of complainant Gregorio Viray were terminated because the office to which he was assigned was closed and that complainant Reynaldo Asis was dismissed for collecting his salary without actually rendering the corresponding services. 4 The Progressive Employees Union (PEU) denied that the officers and supervisors of the corporation PDC initiated and assisted in its formation and claimed that its organization is the joint efforts of the overwhelming majority of the employees and laborers of the corporation PDC, free from any undue influence, interference and/or intimidation from any party. The PEU claimed that the institution of the unfair labor practice case by the complainants is a desperate attempt to unduly delay the proceedings in Case No. 1054-MC for certification election. 5 Ramon Llorente denied all imputations against him in the complaint and alleged that Gregorio Viray, a casual janitor, was separated when his office was closed. Llorente claimed that he severed his employment with the PDC in June 1962 and could not have committed the acts complained of against him in July and August 1962. 6 The Court of Industrial Relations found the following facts to be established by the evidence of record: From the evidence on record, the following facts are established, to wit: 1. That the complainant union was registered in the Department of Labor with Registration No. 3367-IP, dated September 11, 1961, and that the individual complainants are members thereof; 2. That the Progressive Development Corporation (PDC) is a domestic entity engaged in show business and operates the Araneta Coliseum, with respondents Jorge Araneta, Judy A. Roxas, Manuel B. Jover and Ramon Llorente as its officers; 3. That, on September 19, 1961, the complainant union formally informed the management of its existence (Exh. 'KK-1' and the management acknowledged the same on October 25, 1961 (Exh. 'B', 'B-1' & 'B-2'); 4. That, on January 6, 1962, a 24-item proposal was sent by the complainant union to the management thru respondent Jorge Araneta (Exh. 'C'), which was only received by respondent Ramon Llorente (Exh. 'C-l'); 5. That, on February 19, 1962, thru Nicolas Santiago, the management answered the said proposals (Exh. 'D'); 6. That, on February 23, 1962, relative to the management's answer b 19, 1962), the complainant union requested the management for a negotiation conference on February 21, 1962 (Exh. 'E'), but Mr. Santiago requested them that the same be postponed to March 1, 1962, (Exh. 'E-l'); 7. That, on February 28, 1962, Mr. Nicolas Santiago requested for the cancellation of the projected conference of March 1, 1962, alleging as reason therefor the 'hurried departure of the managing Director, Mr. Jorge Araneta for the United States' (Exh. 'F) and requested for a later date, which he will inform the union; 8. That, on April 21, 1962, the complainant union reminded Mr. Nicolas Santiago that, in view of the fact that Mr. Jorge Araneta had already arrived, they requested for a conference (Exh. 'M', 'H', & 'I'), which was set for June 14, 1962 at the office of the Araneta Enterprises Bldg., Cubao, Quezon City (Exh. 'J'); 9. That, on June 13, 1962, respondent Ramon Llorente requested the President of the complainant union Antonio (Tony) Buluran to him in his residence to take up with him the agenda for tomorrow's meeting (June 14, 1962) (Exh. 'E').

It was this meeting, as well as the circumstances that preceded the same, which the union claims started the management's exertion of all efforts to discourage membership in the complainant union, and which eventually culminated in the formation of the respondent union, The Progressive Employees Union (PEU), allegedly formed purportedly to bust the complainant union.
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The Progressive Development Corporation and its officers assumed the following errors: I THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THE PETITIONERS GUILTY OF UNFAIR LABOR PRACTICE IN SPITE OF- PETITIONERS' CONTENTION THAT THE INDIVIDUAL COMPLAINANTS WHO WERE HIRED AS USHERS, USHERETTES, JANITORS OR ATTENDANTS WERE MERELY CASUALS AND THAT THEIR HIRINGS DEPENDED ENTIRELY ON ACTUAL SHOWS OR PERFORMANCES IN THE ARANETA COLISEUM. II THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THE PETITIONERS GUILTY OF UNFAIR LABOR PRACTICE IN DISMISSING INDIVIDUAL COMPLAINANT GREGORIO VIRAY FOR HIS ALLEGED UNION MEMBERSHIP WITH THE

RESPONDENT UNION ARANETA COLISEUM EMPLOYEES ASSOCIATION, FOR SHORT, ACEA, DESPITE PETITIONERS' CONTENTION THAT SAID GREGORIO VIRAY WAS MERELY A CASUAL WORKER FROM MARCH 1962 UP TO JUNE 1962, AND WHOSE DISMISSAL WAS DUE TO THE ABOLITION OF THE OFFICE WHERE HE WAS ASSIGNED. III

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THAT INDIVIDUAL COMPLAINANT REYNALDO ASIS A SECURITY GUARD WAS ALLEGEDLY DISCHARGED DUE TO HIS UNION ACTIVITIES AND THEREFORE CONSTITUTE UNFAIR LABOR PRACTICE ON THE PART OF THE PETITIONERS DESPITE PETITIONERS' CONTENTION THAT THE SAID SECURITY GUARD REYNALDO ASIS WAS DISCHARGED FOR CAUSE FOLLOWING HIS OWN ADMISSION THAT HE PUNCHED HIS TIME CARD AND COLLECTED HIS SALARY WITHOUT RENDERING THE CORRESPONDING SERVICES.
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The Progressive Employees Union filed a separate brief and contended that the Court of Industrial Relations committed as following errors: I RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN DECLARING PARTICULARLY PROGRESSIVE EMPLOYEES UNION GUILTY O HAVING COMMITTED THE UNFAIR LABOR PRACTICE ACTS COMPLAINED OF. II RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN HOLDING THAT INDIVIDUAL COMPLAINANTS WERE SUBJECT OF DISCRIMINATIONS AND DISMISSAL FROM THEIR WORK THEREBY ENTITLED TO REINSTATEMENT

WITH BACK WAGES.

It is contended by the petitioners that in view of the irregularity of actual promotions and performances held in Araneta Coliseum, the individual complainants and members of the respondent ACEA were naturally hired by the petitioner company only as casuals, extras or replacements in various positions of ushers, usherettes, Porters, attendants and/or janitors, and all in rotation basis only because of the numerous other applicants for accommodation, hence there was no basis for petitioners to have dismissed with discrimination the individual complainants and members of the respondent ACEA because of petitioners' practice of hiring by rotation. 10 This contention is without merit. As testified to by Jose Generoso, Jr., President of the Progressive Employees Union, their members were also casual employees but are now regulars. This fact shows that the casual status of the members of ACEA could not have been the cause of their dismissals. Moreover, as testified to by Concordia Araiza, a witness for petitioners, it was the Personnel Manager, Ramon Llorente, who was in charge of assigning ushers and usherettes every time there were scheduled shows; and that while the Araneta Coliseum maintained only such number of ushers, usherettes and janitors, if their services were needed, every time there was a scheduled show or during show days, the Coliseum hired additional personnel. 11 It is, therefore, clear that the services of the members of the ACEA were also needed, their casual status notwithstanding. It appears that the individual complainants, during show days, were always scheduled to work until June 1962 when they were not included in the schedule anymore.12 This virtually amounted to dismissal, without prior notice. Their not being included in the list of schedule since June 1962 could only be the result of petitioners' earlier threat of dismissal should said complainants refuse to heed petitioners' admonition for them to resign from the ACEA. There is reason to believe that had the individual complainants agreed to resign from the ACEA and to transfer to the PEU, they would not have been separated from their work and would even have been made permanent employees. Thus, a Mrs. Concordia Araiza who was a casual employee of the petitioner corporation, upon her suspension for four (4) hours on representation of the ACEA, became a permanent employee after she handed her resignation from the ACEA Union personally to Jose E. Belmonte, the General Manager of the Progressive Development Corporation. 13 From the facts of record, it is clear that the individual complainants were dismissed because they refused to resign from the Araneta Coliseum Employees Association and to affiliate with the Progressive Employees Union which was being aided and abetted by the Progressive Development Corporation. The assertion of the petitioner Progressive Development Corporation and its officials that they have nothing to do with the formation of the Progressive Employees Union is not supported by the facts of record. The President then of the Progressive Employees Union was Jose Generoso, Jr., Stage Manager of the Progressive Development Corporation. The stage Manager, Generoso, has supervisory power over the twenty-two (22) employees under him. Generoso was then the No. 2 man in the Araneta Coliseum, being an assistant of the Director of said Coliseum. While the Progressive Employees Union was allegedly organized on June 26, 1962, it was only on July 11, 1962 that its existence was publicly announced when the management of the petitioner corporation refused to meet with the Araneta Coliseum Employees Association. The Progressive Employees Union never collected dues from its members and all their members are now regular employees and are still working in the construction unit of the Philippine Development Corporation. There is evidence that the Progressive Employees Union became inactive after the death of Atty. Reonista the former counsel of the Progressive Development Corporation. 14 This shows that the Progressive Employees Union was organized to camouflage the petitioner corporation's dislike for the Araneta Coliseum Employees Association and to stave off the latter's recognition.

It is also a fact that the Progressive Employees Union, after exerting efforts to win in the Certification Election, Case No. 1054-MC, did not conclude and enter into a collective bargaining agreement with the management. According to Generoso, the Progressive Employees Union was already disbanded. 15 As regards Gregorio Viray, it is not refuted that he was an active member of the ACEA and that he was in charge of around eighteen (18) janitors. There can be no other reason for dismissal except his active membership with the Araneta Coliseum Employees Association because the office where he was working was not closed. After Ramon Llorente with whom Viray was assigned had resigned, his position was taken over by Alicia Nonado Iglesias. 16 The contention of the petitioner that Reynaldo Asis collected his salary without actually rendering corresponding services is not supported by the following facts found by the Court of Industrial Relation: In the case of Gregorio Viray, it is on record that, while assigned in the office of Mr. Llorente, he was sent to Aida Avea and Carmencita Anacan for them to sign the disauthorization of Atty. Rino, ACEA's Counsel. Since the two refused to sign, another letter was again sent to Aida Avea who again refused to sign. Infuriated by said refusal, Llorente got mad and said that those who cannot follow instructions were not needed by him (tsn. pp. 32-33, June 4, 1964). And this obviously included Viray himself.

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

The evidence shows that Reynaldo Asis, like the other individual complainants, was dismissed because he refused to join the Progressive Employees Union. The petitioners were correctly found to have committed acts constituting unfair labor practice. In view of the length of time that has passed since the individual complainants were dismissed in 1962. there is need to apply the formula adopted by this Court in Davao Free Workers Front vs. CIR and other cases. 18 Under the circumstances and equity of the case, and considering the length of time and the union-busting activities of petitioner, the individual complainants are granted back wages for five (5) years without qualification or deduction. WHEREFORE, the decision appealed from is hereby affirmed with the modification that the Progressive Development Corporation is ordered to reinstate the individual complainants to their former or substantially equivalent positions with the same rank and compensation and without loss of seniority and other privileges within fifteen (15) days from the promulgation of this decision and said Progressive Development Corporation is further ordered to pay the individual complainants back wages equivalent to five (5) years without qualification or deduction, with costs against the petitioners. This decision is declared immediately executory. SO ORDERED. Teehankee (Chairman), Makasiar, Muoz Palma, Martin and Guerrero, JJ., concur. EN BANC G.R. No. L-22456 September 27, 1967

FRANCISCO SALUNGA, petitioner, vs. COURT OF INDUSTRIAL RELATIONS; SAN MIGUEL BREWERY, INC. and MIGUEL NOEL; NATIONAL BREWERY & ALLIED INDUSTRIES LABOR UNION OF THE PHILIPPINES (NABAILUP-PAFLU); JOHN DE CATILLO and CIPRIANO CID, respondents. C. Magat & Associates for petitioner. Cipriano Cid & Associates and Ponce Enrile, S. Reyna, Montecillo & Belo for respondents.

CONCEPCION, C.J.:

Appeal by petitioner Francisco Salunga from a resolution of the Court of Industrial Relations, sitting en banc, dismissing unfair labor practice charges against the National Brewery and Allied Industries Labor Union of the Philippines (PAFLU) hereinafter referred to as the Union John de Castillo, Cipriano Cid, San Miguel Brewery, Inc. hereinafter referred to as the Company and Miguel Noel. Petitioner had, since 1948, been an employee of the Company, which, on October 2, 1959, entered with the Union, of which respondent John de Castillo is the president, into a collective bargaining agreement, effective up to June 30, 1962. Section 3 thereof reads: The company agrees to require as a condition of employment of those workers covered by this agreement who either are members of the UNION on the date of the signing of this agreement, or may join the UNION during the effectivity of this agreement, that they shall not voluntarily resign from the UNION earlier than thirty (30) days before the expiry date of this agreement as provided in Article XIII hereof, provided, however, that nothing herein contained shall be construed to require the company to enforce any sanction whatsoever against any employee or worker who fails to retain his membership in the UNION as hereinbefore stated, for any cause other than voluntary resignation or non-payment of regular union dues on the part of said employee or worker. (Exh. 4-A-Union.) . Petitioner was a member of the Union since 1953. For reasons later to be stated, on August 18, 1961, he tendered his resignation from the Union, which accepted it on August 26, 1961, and transmitted it to the Company on August 29, 1961, with a request for the immediate implementation of said section 3. The Company having informed him that his aforementioned resignation would result in the termination of his employment, in view of said section, petitioner wrote to the Union, on August 31, 1961, a letter withdrawing or revoking his resignation and advising the Union to continue deducting his monthly union dues. He, moreover, furnished a copy of this communication to the Company. The latter, in turn, notified the Union of the receipt of said copy and that "in view thereof, we shall not take any action on this case and shall consider Mr. Francisco Salunga still a member of your union and continue deducting his union dues." On September 8, 1961, the Union told the Company that petitioner's membership could not be reinstated and insisted on his separation from the service, conformably with the stipulation above-quoted. The Company replied, on September 12, 1961, stating: . . . We asked Mr. Salunga if he realized that by resigning from the Union he would in effect be forfeiting his position in the company. When he answered in the negative, we showed him a copy of our Collective Bargaining Agreement and called his attention to Sec. 3, Art. II thereof. He then told us that he did not realize that he would be losing his job if he were to resign from the Union. We did not at any time ask or urge him to withdraw his resignation; neither are we now asking or insisting that you readmit him into your membership. We thought that informing him of the consequences of his resignation from the Union, was the only humane thing to do under the circumstances. Nevertheless, if notwithstanding our foregoing clarification you still consider him as having actually resigned from your organization, and you insist that we dismiss him from the service in accordance with Sec. 3, Article II of our agreement, we will have no alternative but to do so. (Exh. E) In a letter to the Company, dated September 20, 1961, the Union reiterated its request for implementation of said section 3, for which reason, on September 22, 1961, the Company notified petitioner that, in view of said letter and the aforementioned section, "we regret we have to terminate your employment for cause. You are, therefore, hereby notified of your dismissal from the service effective as of the close of business hours, September 30, 1961." Meanwhile, petitioner had sought the intervention of PAFLU's National President, respondent Cipriano Cid, to which the Union was affiliated, for a review of the latter's action. The PAFLU gave due course to petitioner's request for review and asked the Company, on September 29, 1961, to defer his dismissal, for at least two (2) weeks, so that its (PAFLU's) Executive Board could act on his appeal. On October 6, 1961, respondent Cid advised petitioner that the PAFLU had found no ground to review the action taken by the Union and that, on the expiration of the 15-day grace granted to him by the Company, the decision thereof to terminate his services would take effect. Thereupon, or on October 11, 1961, petitioner notified the PAFLU that he was appealing to its supreme authority the PAFLU National Convention and requested that action on his case be deferred until such time as the Convention shall have acted on his appeal. A letter of the same date and tenor was sent, also, by the petitioner to the Union. Furthermore, he asked the Company to maintain the status quo, in the meantime. This notwithstanding, at the close of the business hours, on October 15, 1961, petitioner was discharged from the employment of the Company, through its assistant-secretary and vice-president, herein respondent Miguel Noel. At petitioner's behest, on or about December 7, 1961, a prosecutor of the Court of Industrial Relations commenced, therefore, the present proceedings, for unfair labor practice, against the Union, its president, respondent John de Castillo, respondent Cipriano Cid, as PAFLU president, the Company, and its aforementioned Vice-President Miguel Noel. In due course, thereafter, the trial Judge rendered a decision the dispositive part of which reads: IN VIEW OF ALL THE FOREGOING, the San Miguel Brewery, Inc. and Miguel Noel and National Brewery & Allied Industrial Labor Union of the Philippines (PAFLU), John de Castillo, and Cipriano Cid, are hereby declared guilty of unfair labor practices as charged, and ordered to cease and desist from further committing such unfair labor practice acts complained of; and as affirmative reliefs: (a) The National Brewery & Allied Industries Labor Union of the Philippines (PAFLU), John de Castillo and Cipriano Cid, their officers and agents, are hereby directed to readmit and to continue the membership of Francisco Salunga in the membership rolls of the union after paying all union dues, with all the rights and privileges being enjoyed by bonafide members; (b) The San Miguel Brewery, Inc., and Miguel Noel, their officers and agents are hereby directed to immediately reinstate Francisco Salunga to his former or substantially equivalent position with one-half back wages, without prejudice, however, to his seniority and/or other rights and privileges; and (c) Respondents Union and Company, their respective officers and agents, are likewise directed to post two copies of this decision in conspicuous places in their respective offices or plants for a period of one month, furnishing this Court with certificate of compliance after the expiration of said period.

On motion for reconsideration of the respondents, this decision was reversed by the Court of Industrial Relations sitting en banc with two (2) judges concurring in the result and the trial judge dissenting which dismissed the case. Hence, this appeal by the petitioner. The appeal is well taken, for, although petitioner had resigned from the Union and the latter had accepted the resignation, the former had, soon later upon learning that his withdrawal from the Union would result in his separation from the Company, owing to the closed-shop provision above referred to revoked or withdrawn said resignation, and the Union refused to consent thereto without any just cause therefor. The Union had not only acted arbitrarily in not allowing petitioner to continue his membership. The trial Judge found said refusal of the Union officers to be due to his critical attitude towards certain measures taken or sanctioned by them. As set forth in the decision of the trial Judge: . . . Prior to August, 1961, he had been criticizing and objecting to what he believed were illegal or irregular disbursements of union funds, i.e., allowing Florencio Tirad, a union official, to receive six months advanced salaries when Tirad went to the United States, which objection he openly manifested in a meeting of the board of directors and stewards, but instead of receiving favorable response, he (Salunga) was twitted and felt insulted by the laughter of those present that he would be the next man to be sent to America; second, granting Ricardo Garcia, union secretary, two months advanced salaries when preparing for the bar examinations, which objection he broached to union officer Efren Meneses; third, the union's additional monthly expense for the salary of a counsel when the PAFLU, their mother union is well staffed with a number of lawyers who could attend to and handle their cases and other legal matters, and to which mother union the NABAILUP has been paying a monthly assessment of more than P1,000.00; and fourth, giving salary to Charles Mitschek who was dismissed by the company but denying the same privilege to other similarly situated member-employees. Salunga was later removed by the union from his position as steward without his knowledge. It also appears that the power of attorney executed in his favor by co-worker Alejandro Miranda for the collection of Miranda's indebtedness of P60.00 to him (the latter has certain amount in possession of the Union) was not honored by the union.
1awphl. nt

xxx

xxx

xxx

The record is clear that feeling dejected by the inaction of the union officials on his grievances and objections to what he believed were illegal disbursements of union funds, coupled with the fact that he was later removed from his position as a union steward without his knowledge, as well as the fact that the union did not honor the power of attorney executed in his favor by Alejandro Miranda, a co-worker, for the collection of Miranda's indebtedness of P60.00 to him, he submitted his letter of resignation from the union on August 18, 1961. It must be stated here that no evidence was adduced by the respondent union to overcome complainant's testimonies about his objections to the disbursements of union funds but only tried to elicit from him, on cross examination, that the funds of the union are only disbursed upon authority of the Executive Board of the union. . . . It should be noted that the Court of Industrial Relations en banc did not reverse these findings of fact or even question the accuracy thereof. What is more, the officers of the Union have, in effect, confirmed the fact that their refusal to allow the withdrawal of petitioner's resignation had been due to his aforementioned criticisms. Indeed said officers tried to justify themselves by characterizing said criticisms as acts of disloyalty to the Union, which, of course, is not true, not only because the criticism assailed, not the Union, but certain acts of its officers, and, indirectly, the officers themselves, but also because the constitution and by-laws of the Union explicitly recognize the right of its members to give their views on "all transactions made by the Union." As a consequence, the resolution appealed from cannot be affirmed without, in effect, nullifying said right which, independently of the constitution and bylaws of the Union, is part and parcel of the freedom of speech guaranteed in the Constitution of our Republic, as a condition sine qua non to the sound growth and development of labor organizations and democratic institutions. Although, generally, a state may not compel ordinary voluntary associations to admit thereto any given individual, because membership therein may be accorded or withheld as a matter of privilege,1 the rule is qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given locality, or as regards a particular employer with which it has a closed-shop agreement.2 The reason is that . . . The closed shop and the union shop cause the admission requirements of trade union to becomeaffected with the public interest. Likewise, a closed shop, a union shop, or maintenance of membership clauses cause the administration of discipline by unions to be affected with the public interest.3 Consequently, it is well settled that such unions are not entitled to arbitrarily exclude qualified applicants for membership, and a closed-shop provision would not justify the employer in discharging, or a union in insisting upon the discharge of, an employee whom the union thus refuses to admit to membership, without any reasonable ground therefor.4 Needless to say, if said unions may be compelled to admit new members, who have the requisite qualifications, with more reason may the law and the courts exercise the coercive power when the employee involved is a long standing union member, who, owing to provocations of union officers, was impelled to tender his resignation, which he forthwith withdrew or revoked. Surely, he may, at least, invoke the rights of those who seek admission for the first time, and can not arbitrarily he denied readmission. We cannot agree, however, with the finding of the trial Judge to the effect that the Company was guilty of unfair labor practice. The Company was reluctant if not unwilling to discharge the petitioner. When the Union first informed the Company of petitioner's resignation and urged implementation of section 3 of the bargaining contract, the Company advised petitioner of the provision thereof, thereby intimating that he had to withdraw his resignation in order to keep his employment. Besides, the Company notified the Union that it (the Company) would not take any action on the case and would consider the petitioner, "still a member" of the Union. When the latter, thereafter, insisted on petitioner's discharge, the Company still demurred and explained it was not taking sides and that its stand was prompted merely by "humane" considerations, springing from the belief that petitioner had resigned from the Union without realizing its effect upon his employment. And, as the Union reiterated its demand, the Company notified petitioner that it had no other alternative but to terminate his employment, and dismissed him from the service, although with "regret". Under these circumstances, the Company was not "unfair" to the petitioner. On the contrary, it did not merely show a commendable understanding of and sympathy for his plight. It even tried to help him, although to such extent only as was consistent with its obligation to refrain from interfering in purely internal affairs of the Union. At the same time, the Company could not safely inquire into the motives of the Union officers, in refusing to allow the petitioner to withdraw his resignation. Inasmuch as the true motives were not manifest, without such inquiry, and petitioner had concededly tendered his resignation of his own free will, the arbitrary nature of the decision of said officers was not such as to be apparent and to justify the company in regarding said decision unreasonable. Upon the other hand, the Company can not be blamed for assuming the contrary, for petitioner had appealed to the National Officers of the PAFLU and the latter had sustained the Union. The Company was justified in presuming that the PAFLU had inquired into all relevant circumstances, including the motives of the Union Officers.

In finding, this notwithstanding, that the Company is guilty of unfair labor practice, the trial Judge seemed to have been unduly influenced by the fact that the former had dismissed the petitioner despite his announced intention to appeal from the decision of the Union and that of the Officers of PAFLU to its "Supreme authority", namely, the PAFLU's "National Convention". In other words, said Judge felt that the Company should have waited for the action of the national convention before issuing the notice of dismissal. There is no evidence, however, that petitioner had really brought this matter to said "Convention". Much less is there any proof that the latter had sustained him and reversed the PAFLU officers and the Union. Thus, the record does not show that petitioner was prejudiced by the Company's failure to maintain the status quo, after the Union had been sustained by said officers. In fact, petitioner did not even try to establish that he had submitted to the Company as he has not introduced in the lower court satisfactory proof that an appeal had really been taken by him to the aforementioned Convention. In short, it was error to hold the Company guilty of unfair labor practice. Just the same, having been denied readmission into the Union and having been dismissed from the service owing to an unfair labor practice on the part of the Union, petitioner is entitled to reinstatement as member of the Union and to his former or substantially equivalent position in the Company, without prejudice to his seniority and/or rights and privileges, and with back pay, which back pay shall be borne exclusively by the Union. In the exercise of its sound judgment and discretion, the lower court may, however, take such measures as it may deem best, including the power to authorize the Company to make deductions, for petitioner's benefit, from the sums due to the Union, by way of check off or otherwise, with a view to executing this decision, and, at the same time, effectuating the purposes of the Industrial Peace Act. With this modification, the aforementioned decision of the trial Judge is hereby affirmed in all other respects, and the appealed resolution of the Court of Industrial Relations en banc is reversed, with costs against respondents, except the Company. Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Bengzon, J.P., J., is on leave.

[Decision]

SYLLABUS 1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; WAGES; GENERAL PRINCIPLES INVOLVED IN WAGE DISTORTION.- At this point it is opportune to re-state the general principles enunciated in that case, summarized in Metro Transit Organization, Inc. vs. NLRC, et al., as follows: "(a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees; (b) Wage distortions have often been the result of governmentdecreed increases in minimum wages. There are, however, other causes of wage distortions, like the merger of two (2) companies (with differing classification of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved corporation. (In the present Metro case, as already noted, the wage distortion arose because the effectivity dates of wage increases given to each of the two (2) classes of employees (rank-and-file and supervisory) had not been synchronized in their respective CBA'S; (c) Should a wage distortion exist, there is no legal requirement that in the rectification of that distortion by re-adjustment of the wage rates of the differing classes of employees, the gap which had previously or historically existed be restored in precisely the same

amount. In other words, correction of a wage distortion may be done by reestablishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the differing classes of employees; (d) The re-establishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective bargaining negotiations." 2. ID.; ID.; ID.; R.A. NO. 6727; DEFINES "WAGE DISTORTION."- It was only on June 9, 1989, upon the enactment of R.A. No. 6727 (Wage Rationalization Act, amending, among others, Article 124 of the Labor Code), that the term "wage distortion" came to be explicitly defined as: "a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." 3. ID.; ID.; ID.; ID.; LAYS DOWN THE PROCEDURES TO BE FOLLOWED IN CASE WAGE DISTORTION ARISES.- T'he same provision lays down the procedure to be followed where wage distortion arises from the implementation of a wage increase prescribed by law or ordered by a Regional Wage Board, viz.: "Where the application of any prescribed wage increase by virtue of a law or Wage order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall

not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order." 4. ID.; ID.; COMPROMISE AND SETTLEMENT; RECOGNIZED MEANS TO SETTLE AND END LABOR DISPUTES.- The Labor Code recognizes the conclusiveness of compromises as a means to settle and end labor disputes. Article 227 provides that "(a)ny compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding, upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion." In Olaybar vs. NLRC, this Court had occasion, in a labor dispute, to apply the rule that compromises and settlements have the effect and conclusiveness of res judicata upon the parties. 5. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS IN LABOR CASES; WHEN REVIEWABLE BY THE SUPREME COURT.- The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, is a question of fact; and as a rule, factual findings in labor cases, where grounded on substantial evidence, are not reviewed. However, a disharmony between the factual findings of the Labor Arbiter and those of the NLRC, opens the door to a review thereof by this Court. APPEARANCES OF COUNSEL Raul E. Espinosa for petitioner. Angara Abello Concepcion Regala & Cruz for private respondent.
[Syllabus]

THIRD DIVISION

[G.R. No. 108556. November 19, 1996]

MANILA MANDARIN EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, and the MANILA MANDARIN HOTEL, respondents.
DECISION
NARVASA, C.J.:

The petitioner in this special civil action of certiorari seeks nullification of the September 11, 1992 Decision of the Second Division of the National Labor Relations Commission reversing the judgment of the Labor Arbiter in NLRC NCR Case No. 104336-86 and dismissing the case for lack of merit, as well as of the Commissions November 24, 1992 Resolution denying reconsideration of said decision. On October 30, 1986, the Manila Mandarin Employees Union (hereafter UNION), as exclusive bargaining agent of the rank-and-file employees of the Manila Mandarin Hotel, Inc. (hereafter MANDARIN), filed with the NLRC Arbitration Branch a complaint in its members behalf to compel MANDARIN to pay the salary differentials of the individual employees concerned because of wage distortions in their salary structure allegedly created by the upward revisions of the minimum wage pursuant to various Presidential Decrees and Wage Orders, and the failure of MANDARIN to implement the corresponding increases in the basic salary rate of newly-hired employees. The relevant Presidential Decrees and Wage Orders were specified by the UNION as follows:

a. PD 1389, amending PD 928, mandating an increase in the statutory minimum wage by P3.00 spread out over a period of three years, as follows: P1.00 starting July 1, 1978; P1.00 starting May 1, 1979; and P1.00 starting May 1, 1980. b. PD 1614, providing that workers covered by PD 1389, whether agricultural or non-agricultural, should receive an increase of P2.00 in their statutory minimum wage effective April 1, 1979, the same representing an acceleration of the remaining increases under PD 1389; and that all non-agricultural workers in Metro Manila shall receive a minimum wage of P12.00; c. PD 1713, issued on august 18, 1980 providing an increase in the minimum daily wage rates and for additional allowance; increasing the minimum daily wage rates by P1.00 and providing that all private employers shall pay their employees with wages or salaries not exceeding P1,500.00 a month, an additional mandatory living allowance of P60.00 a month for non-agricultural workers, P45.00 for plantation workers and P30.00 a month for agricultural non-plantation workers;

d. PD 1751, issued on December 14, 1980, increasing the statutory daily minimum wages by integrating the P4.00 mandatory allowance under PD 525 and PD 1123 into the basic pay of all covered workers; e. Wage Order No. 1, issued on March 26, 1981, increasing the mandatory emergency living allowance of all workers with salaries or wages of P1,500.00 a month by P2.00 a day for non-agricultural workers, P1.50 a day for agricultural plantation workers, P1.00 a day for agricultural nonplantation workers, effective March 22, 1981; f. Wage Order No. 2 issued on July 6, 1983 increasing the mandatory basic minimum wage and living allowance for non-agricultural and agricultural workers in the following manner: 1) For non-agricultural employees, receiving not more than P1,800.00 monthly, P1.00 a day as minimum wage and P1.50 a day as cost of living allowance; 2) For plantation agricultural employees, P1.00 a day as minimum wage and P0.50 a day as cost of living allowance subject to the same salary ceiling provided in the immediately preceding section; and 3) For non-plantation agricultural employees, P1.00 a day as minimum wage; and also, providing that effective October 1, 1983, the living allowances rates as adjusted in the preceding section shall be further increased subject to the same salary ceiling, for non-agricultural employees, by P1.00. g. Wage Order No. 3 issued November 7, 1983 increasing the statutory minimum wage rates for workers in the private sector by P1.00 per day effective November 1, 1983, and also increasing the statutory wage rates by P1.00 per day, effective December 1, 1983; h. Wage Order No. 4 issued on May 1, 1984 increasing the statutory daily minimum wages, after integrating the mandatory living allowance under PDs 1614, 1634, 1678 and 1713 into the basic pay of all covered employees, effective May 1, 1984; -- after the integration, the minimum daily wage rate was increased by P11.00 for non-agricultural workers. i. Wage Order No. 5 issued on June 11, 1984 increasing the statutory daily minimum wage rates and living allowances of workers in the private sector byP3.00 effective June 16, 1984 -- the minimum daily wage rates became P35.00 for Metro Manila and P34.00 for outside Metro Manila; and j. Wage Order No. 6, effective November 1, 1984, increasing the statutory minimum wage rate by P2.00 per day.

On January 15, 1987, the UNION filed its Position Paper amplifying the allegations of its complaint and setting forth the legal bases of its demands against MANDARIN; and on March 25, 1987, it filed an Amended Complaint presenting an additional claim for payment of salary differentials to the union members affected, allegedly resulting from underpayment of wages. The Labor Arbiter eventually ruled in favor of the UNION, holding that there were in fact wage distortions entitling its members to salary adjustments totalling P26,173,601.25 -- for 541 employees -- as well as underpayments amounting to P1,978,296.18 -- 182 employees. The dispositive portion of his decision reads:[1]

WHEREFORE, judgment is hereby rendered ordering the respondent Hotel to pay the individual complainants who are members of the respondent Union whose names appear on the respective computations embodied in this Decision, the aggregate amount of P26,173,601.25 representing their salary adjustments by way of correcting the wage distortions in their respective salary structure, for the period from October 30, 1983 up to October 31, 1990, and continuously thereafter to pay the corresponding amounts due them as such salary adjustments until the same are properly and finally restored in their basic monthly rates; to pay the aggregate amount of P1,978,296.18 representing their salary differentials resulting from underpayment of wages in violation of the minimum wage laws, Presidential Decrees and Wage Orders for the period from March 25, 1984 up to October 31, 1990, and continuously thereafter to pay the corresponding amounts due them as such salary differentials until the same are properly and finally restored into their basic monthly rates. Likewise, the respondent Hotel is ordered to pay an amount equivalent to ten percent (10%) of the total awards granted to individual complainants, by way of and as attorneys fees.
On appeal, the Second Division of respondent Commission (composed of Commissioner Domingo H. Zapanta, ponente, and Presiding Commissioner Edna Bonto-Perez) rendered the dispositions already referred to and now assailed -- setting aside the Labor Arbiters judgment and dismissing the UNIONs complainant, and later denying the UNIONs motion for reconsideration.[2] The principal issues raised in this Court are: (1) Whether or not the NLRC had jurisdiction to take cognizance of MANDARINS appeal from the Labor Arbiters decision; and (2) if so, whether or not it gravely abused its discretion in setting aside the Labor Arbiters judgment and dismissing the UNIONS complaint. The issue of jurisdiction is grounded on the posited tardiness of private respondents appeal from the Labor Arbiters judgment to the NLRC, and fatal defect in their supersedeas bond. The UNION contends[3] that the records indubitably show that MANDARIN received on January 22, 1991 its copy of the Labor Arbiters Decision (of January 15, 1991), but

filed its appeal and paid the appeal fee only on February 4, 1991, three (3) days beyond the reglementary ten-day period for doing so. It also condemns as anomalous the certification of Deputy Executive Clerk Gaudencio P. Demaisip, Jr., NLRC, to the effect that MANDARINs lawyer had approached Hon. Domingo H. Zapanta, a member of the Second Division, NLRC, for assistance to have the appeal including the appeal fee in said case duly received and acknowledged on February 1, 1991, at 4:40 P.M; and claims that the anomally was aggravated when it was Commissioner Zapanta who wrote the Decision for the Second Division[4]-- reversing the Labor Arbiters judgment, as aforesaid -- despite the UNIONS motion for his disqualification and/or inhibition. The UNION finally argues that MANDARINS appeal was not only tardy but also fatally flawed in that its supersedeas bond had been issued by a surety company -- Plaridel Surety & Insurance Company -- which had pending obligations and liabilities at the time, the Insurance Commissioner having in fact issued a Cease-and-Desist Order against said company for issuing bonds of no little magnitude without authority; and that moreover, the replacement bond of the Commonwealth Insurance Company -subsequently filed by order of the NLRC -- was just as defective because the latter company had an authorized maximum net retention level in the amount of only P686,582.80, way below the monetary award subject of MANDARINS appeal to the Commission. The Court rules that respondent Commission acted correctly in accepting and acting on MANDARINs appeal. The circumstances attendant upon the filing of the appeal and supersedeas bond are clearly set forth in the Certification of Deputy Executive Clerk Demaisip, Jr.[5] above mentioned, viz.:

This is to certify that when Atty. Godofredo Labay filed the appeal in NLRC NCR Case No. 10-4335-86 entitled Manila Mandarin Employees Union vs. Manila Mandarin on Friday, February 1, 1991, the Cashier and the Docket Section, NCR, were not around, that no one would receive the pleadings and the appeal fee. He therefore approached Commissioner Domingo H. Zapanta for assistance and to have the appeal including the appeal bond in said case duly received on February 1, 1991 at 4:50 p.m. with respect to the appeal fee, since no one was authorized to act as substitute for the Cashier of the NCR for purposes of receiving the appeal fee and issuing a temporary receipt and/or official receipt therefor, Commissioner Zapanta requested Atty. Gaudencio P. Demaisip, Jr. to receive said pleadings and allowed Atty. Labay to pay the appeal fee on Monday, February 4, 1991. This certification is issued upon request of Atty. Labay for whatever purpose it may serve him. (SGD.) GAUDENCIO P. DEMAISIP, JR.
Deputy Executive Clerk Second Division

MANDARIN cannot be faulted for paying the appeal fee only on February 4, 1991. The fact is that on February 1, 1991, its lawyer was in the NLRC premises, ready

to pay said fee, but was unable to do so because the NLRC Cashier or any other employee authorized to receive payment in his stead, was no longer around. This is why Commissioner Zapanta allowed payment of the appeal fee to be made on the next business day, as in fact the appeal fee was paid on, February 4, 1991. This Court has ruled that the failure to pay the appeal docketing fee within the reglementary period confers a directory, not mandatory, power to dismiss an appeal, to be exercised with circumspection in light of all the relevant facts.[6] In view of these considerations, and the meritoriousness of MANDARINs appeal -- as later pronounced by respondent NLRC -the interest of justice was quite evidently served when MANDARINs appeal was given due course despite delayed payment of the docketing fee. The contention concerning MANDARINs ostensibly defective appeal bond, issued by Plaridel Surety and Insurance Company, deserves short shrift, too. The issuance of the bond antedated this Courts resolution of January 15, 1992 -- to which the attention of respondent NLRC had been invited by the UNION -- declaring said surety company to be of doubtful solvency. More important, the issue was mooted when MANDARIN posted a new surety bond, through Commonwealth Insurance Company, in compliance with the Order of the respondent Commission dated December 10, 1991. The UNIONs contention that this new bond was equally defective because the bonding company had an authorized maximum net retention level lower than the sum of P30,967,087.17 involved in this dispute, is inconsequential, the new bonding company being duly accredited by this Court and licensed by the Insurance Commission. At any rate, this Court has invariably ruled that Article 223 of the Labor Code, requiring a bond in appeals involving monetary awards, must be liberally construed, in line with the desired objective of resolving controversies on their merits. [7] The circumstance under which the bond was filed in this case adequately justify such liberal application of the provision. As to the alleged partiality of Commissioner Domingo Zapanta, the Court finds that his intervention on February 1, 1991 in the matter of payment of the appeal docketing fee did not, in the circumstances already related, constitute impropriety or pre-judgment of the case and a ground for his disqualification as a member of the Second Division to which the case was thereafter raffled. Significantly, in its motion to inhibit, the UNION mentioned that the case was assigned particularly to the late Commissioner Rustico Diokno ** (but) that upon the latters demise, the case was reassigned to Commissioner Domingo Zapanta as the new ponente.[8] As Commissioner Zapanta had always been a member of the Second Division, the UNIONs motion for his inhibition, filed more than a year after the occurrence of the incident on which it was based, becomes suspect as a mere afterthought. In any case, Commissioner Zapanta did inhibit himself from taking part in the resolution of the UNIONS motion for reconsideration of the assailed decision of September 11, 1992, thus dispelling what doubts might linger about his impartiality. Coming now to the issue of wage distortion, prior to the effectivity on June 9, 1989 of Republic Act No. 6727 which, among others, amended Article 124 (Standards/Criteria for Minimum Wage Fixing) of the Labor Code, the concept to wage distortion was relatively obscure. So it was observed by this Court in National Federation of Labor vs. NLRC,[9] a case involving the same subject Wage Orders:

We note that neither the Wage Orders noted above, nor the Implementing Rules promulgated by the Department of Labor and Employment, set forth a clear and specific notion of wage distortion. What the Wage Orders and the Implementing Rules did was simply to recognize that implementation of the Wage Orders could result in a distortion of the wage structure of an employer, and to direct the employer and the union to negotiate with each other to correct the distortion. Thus, Section 6 of Wage Order No. 3, dated 7 November 1983, provided as follows: Section 6. Where the application of the minimum wage rate prescribed herein results in distortions of the wage structure of an establishment, theemployer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement of through conciliation. In case where there is no collective bargaining agreement or recognized labor organization, the employer shall endeavor to correct such distortions in consultation with their workers. Any dispute arising from wage distortions shall be resolved through conciliation by the appropriate Regional Office of the Ministry of Labor and Employment or through arbitration by the NLRC Arbitration Branch having jurisdiction over the work-place. (Underscoring supplied)
It is therefore opportune to re-state the general principles enunciated in that case, summarized in Metro Transit Organization, Inc. vs. NLRC, et al.[10] as follows:

(a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees. (b) Wage distortions have often been the result of government-decreed increases in minimum wages. There are, however, other causes of wage distortions, like the merger of two (2) companies (with differing classification of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved corporation. (In the present Metro case, as already noted, the wage distortion arose because the effectivity dates of wage increases given to each of the two (2) classes of employees (rank-in-file and supervisory) had not been synchronized in their respective CBAs.) (c) Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion by re-adjustment of the wage rates of the differing classes of employees, the gap which had previously or historically existed be restored in precisely the same amount. In other words, correction

of a wage distortion may be done by re-establishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the differing classes of employees. (d) The re-establishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective bargaining negotiations.
It was only on June 9, 1989, upon the enactment of R.A. No. 6727 (Wage Rationalization Act, amending, among others, Article 124 of the Labor Code),[11] that the term wage distortion came to be explicitly defined as:

** a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.
The same provision lays down the procedure to be followed where wage distortion arises from the implementation of a wage increase prescribed by law or ordered by a Regional Wage Board, viz.:

Where the application of any prescribed wage increase by virtue of a law or Wage order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pusurant to the provisions of law or Wage Order.

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, is a question of fact;[12] and as a rule, factual findings in labor cases, where grounded on substantial evidence, are not reviewed. [13] However, a disharmony such as exists here, between the factual findings of the Labor Arbiter and those of the NLRC, opens the door to a review thereof by this Court.
[14]

The Labor Arbiter ruled that a wage distortion existed, and that the only and logical way to correct ** (it) in the salary structure of the employees of respondent Hotel is to apply the corresponding increase made by way of revising upward the minimum wage or integration of the ECOLA into the basic wage as embodied in the various Presidential Decrees and Wage Orders, across-the-board, so that employees whose salaries are above the minimum set by law who have already been long in the service will not be discriminated against.[15] On the other hand, respondent Commission declared in its decision [16] that there was no wage distortion arising from the implementation of said Presidential Decrees and Wage Orders such as warranted across-the-board increases to all employees:

On the issue of wage distortion, we have examined the various presidential decrees and wage orders referred to by the complainant and in the Labor Arbiters decision and we found nothing therein that would justify the award of across-the-board increases to all employees. The apparent intention of the law is only to upgrade the salaries or wages of the employees receiving lower than the minimum daily wage set therein. For example, Section 1 of Wage Order No. 6 provides that effective November 1, 1984, the statutory minimum daily wage rates workers in the private sector shall be increased by P2.00. Also, Section 1 of Presidential Decree 1389 provides that Presidential Decree 928 is hereby amended by increasing all existing statutory minimum wages in the country by Three Pesos (P3.00) spread equally over a period of three years, as follows: 1)One Peso (P1.00) starting July 1, 1978; 2)One Peso(P1.00) starting May 1, 1979; and One Peso (P1.00) starting May 1, 1980. Thus, it is clear that the presidential decrees and wage orders merely provide for a floor wage to be observed by the employers in the private sector.
It indeed appears that the clear mandate of those issuances was merely to increase the prevailing minimum wages of particular employee groups. There were no acrossthe-board increases to all employees; increases were required only as regards those specified therein.[17] It was therefore incorrect for the UNION to claim that all its members became automatically entitled to across-the-board increases upon the effectivity of the Decrees and Wage Orders in question. And even if there were wage distortions, which is not the case here, the appropriate remedy thereunder prescribed is for the employer and the union to negotiate to correct them; or, if the dispute be not thereby resolved, to thresh out the controversy through the grievance procedure in the collective bargaining agreement, or through conciliation or arbitration.

A review of the records convinces this Court that respondent NLRC committed no grave abuse of discretion in holding that no wage distortion was demonstrated by the UNION. It was, to be sure, incumbent on the UNION to prove by substantial evidence its assertion of the existence of a wage distortion. This it failed to do. It presented no such evidence to establish, as required by the law, what, if any, were the designed quantitative differences in wage or salary rates between employee groups, and if there were any severe contractions or elimination of these quantitative differences. The UNIONs effort to prove wage distortion consisted only of the presentation of an unverified list of thirteen (13) employees denominated a Sample Comparison of Salary Rates Affected by Wage Distortion,[18] viz.:

SAMPLE COMPARISON OF SALARY RATES OF COMPLAINANTS AFFECTED BY WAGE DISTORTION F & B DEPT. Name Hired (12/30/85) 1. Pablo Trinidad -Waiter -- 9/1/78 2. Eduardo Vito -Waiter -- 10/16/80 3. Camilo Sanchez -Busboy -- 8/1/83 4. Renato Solomon -Busboy -- 7/19/84 5. Buenconsejo Monico -Busboy -- 4/15/85 P1,300 P1,375 P 954 P1,096 P 968 Position Basic Rate Date

HOUSEKEEPING DEPT. 1. Ruben A. Rillo -- Linen Uniform Att. -- 6/19/76 P 984 2. Hubert Malolot -- Linen Uniform Att. -- 1/16/80 P1,238 3. Aurella Kilat -- Linen Uniform Att. -5/2/79 P1,272 4. Rogelio Molaco Attn. -9/1/80 5. David Pineda Attn. -- 9/14/81 -- Cloakroom P 946 -- Cloakroom P1,194

6. Nemesio Matro Attn. -- 6/10/76 7. Domgo Sabando Attn. -3/8/82 8. Renato Guina SUBMITTED:

-- Houseman P1,142 -- Houseman P1,194 -- Houseman Attn.

--

8/24/81

P1,194

(SGD.) ATTY. R. E. ESPINOSA 9/17/87.


The UNIONs Internal Vice-President, Arnulfo Castro, deposed that the employees named in this list were the more or less (13) persons found to have suffered wage distortion,[19] and the UNION pointed out that while these thirteen employees occupied similar positions, they were receiving different rates of salary. Respondent Commission however found that as explained by respondents, such disparity was due simply to the fact that the employees mentioned had been hired on different dates and were thus receiving different salaries; or that an employee was hired initially at a position level carrying a hiring rate than the others; or that an employee failed to meet the cut-off date in the grant of yearly CBA increase; or that the union did not get the correct data on salaries. The Commission accepted as more accurate the data presented by MANDARIN respecting the same employees, to wit:[20]

A N N E X 2 F & B Dept. NAME Rate Position per Hotel Records 1. Pablo Trinidad Waiter 2. Eduardo Vito Waiter 3. Camilo Sanchez Busboy 4. Renato Solomon Busboy 5. Buenconsejo Monico Busboy Housekeeping Dept. 1. Ruben A. Rillo Linen Uniform Att. 06/19/76 1,417.00 09/01/78 10/16/80 08/01/83 07/19/84 14/15/85 Date Hired Basic

as of 12/30/85 P1,302.00* 1,375.00* 1,194.00 1,096.00 968.00

2. Hubert Malolot Linen Uniform Att. 01/16/80 1.238.00 3. Aurella Kilat Linen Uniform Att. 05/02/79 1,272.00 4. Rogelio Molaco Cloakroom Attn. 09/01/80 1,272.00 5. David Pineda Cloakroom Attn. 09/14/81 1,213.00 6. Nemesio Matro Houseman Attn. 06/10/77 1,342.00 7. Domingo Sabando Houseman Attn. 03/08/82 1,194.00 8. Renato Guina Houseman Attn. 08/24/81 1,194.00 * Vito was hired at a higher position with a higher hiring rate than that given to Trinidad, i.e. Vito was hired at P366/mo. While Trinidad at P301/mo. Prior to hiring, Vito already worked as a waiter at the Metropolitan Club.
The Court agrees that the claimed wage distortion was actually a result of the UNIONS failure to appreciate various circumstances relating to the employment of the thirteen employees. For instance, while some of these employees mentioned by UNION Vice-President Arnulfo Castro occupied the same or similar positions, they were hired by the Hotel on different dates and at different salaries. As explained in part by MANDARIN:

With respect to the case of Pablo Trinidad and Eduardo Vito, while they were both occupying the position of waiter in 1987, with monthly salaries ofP2,044.00 and P2,217.00, respectively, a comparative study of the records of these employees shows one of them was initially hired at a higher position level which naturally carried a higher hiring rate. Trinidad was originally hired in 1978 as a mere Houseman at the Banquet Department with a basic starting rate of P301.00 a month. On the other hand, Vito was originally hired in 1980 already a Busboy at the Food and Beverage Department with a starting salary of P366.00 a month. Before he was hired at the Mandarin Hotel, Vito had already been working as Waiter at the Metropolitan Club. Rrecords also show that it was only after some time that Trinidad was promoted to Busboy but still with the smaller Banquet Department. The headway in rate was carried by Vito although at some point in their careers, these two employees achieved the same position as Waiter. Not long after, Vito was promoted to Captain Waiter while Trinidad remained Waiter. There is therefore no reason to compare the remuneration of these two employees as the circumstances attendant to their employment are different. [21]
Respondent Commission correctly concluded that these did not represent cases of wage distortion contemplated by the law (Article 124, Labor Code, as amended), i.e., a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employees groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical basis of differentation.

Moreover, even assuming arguendo that there was really a wage distortion, it was wrong for the Labor Arbiter, after first acknowledging that some of the money claims had prescribed under Article 291 of the Labor Code, [22] to nevertheless order the computation of salary differentials retroactive to the effective dates of PDs 1389,1614,1713, 1751 and Wage Orders Nos. 2,3,4,5,and 6: in 1978, 1979, 1980, 1980, July 1983, November 1983, May 1984, June 1981 and November 1984, respectively. Clearly, five of these Decrees and Wage Orders took effect after the lapse of the three-year prescriptive period for litigating claims for wage distortion differentials, the original complaint for wage distortion having been filed on October 30, 1986 and the amended complaint for underpayment of wages, on March 25, 1987. Consequently, the applicable cut-off dates, for purposes of prescription, were October 30, 1983 and March 25, 1984, respectively. Finally, the records show that the matter of wage distortion, actual or imputed under the various issuances up to Wage Order No. 6, had been settled by the parties as early as July 30, 1985. On that day they executed a Compromise Agreement with the assistance of the then Regional Director of the National Capital Region, Severo M. Pucan in which they affirmed that with the implementation by MANDARIN of Wage Order Nos. 4 and 6 as well as P.D. 1634, the latter was deemed for all legal and purposes to have fully satisfied all its legal and contractual obligations to its employees under all presidential issuances on wages,[23] The Compromise Agreement pertinently states:

1. That the respondent shall implement Wage Order No. 6 effective July 1, 1985, without prejudice to the outcome of the application for exemption as distressed employer filed by said respodent with the National Wage Council as regards benefits that might be due between November 1, 1985 and June 30, inclusive; 2. The the respondent shall also implement effective August 1, 1985 the integration of the P90.00 a month cost of living allowance under P.D. 1634 into the basic wages of its employees as called for under Wage Order No. 4 in accordance with the Guidelines contained in the Explanatory Bulletin issued by the Bureau of Working Conditions on August 8, 1985; 3. That as soon as the respondent shall have complied with the above terms of this Compromise Agreement, said respondent shall be deemed for all legal intents and puposes to have fully satisfied all the legal and contractual obligations to its employees under all presidential issuances on wages, including Wage Orders No. 4 and 6, and Article XI of the collective bargaining agreement,
The Labor Code recognizes the conclusiveness of compromises as a means to settle and end labor disputes. Article 227 provides that (a)ny compromise settlement, including those involving labor standard laws, voluntary agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be

final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion. In Olaybar vs. NLRC,[24] this Court had occasion, in a labor dispute, to apply the rule that compromises and settlements have the effect and conclusiveness of res judicata upon the parties. Thus, and again assuming arguendo the existence of a wage distortion, this was corrected under the fully implemented Compromise Agreement;[25] and such correction having been explicitly acknowledge by the UNION, it is now estopped from claiming that a distortion still subsists. In the same manner, when the UNION entered into a new collective agreement with MANDARIN, providing for wage increases in 1987, it is deemed to have thereby settled any remaining question of wage distortion, since the subject of wages and wage distortions were plainly and unavoidably an economic issue and the proper subject of collective bargaining.[26] Neither did respondent Commission gravely abuse its discretion in ruling against the UNION on the issue of underpayment of wages. The UNIONs theory was that since the employees of MANDARIN are paid on a monthly basis under the Group III category, the applicable increase in daily wage must be multiplied by 365 and then divided by 12 to determine the equivalent monthly rate. MANDARINs position, on the other hand, was that it had consistently been using the multiplier 313, and not 365, for the purpose of deriving salary related benefits of its employees who are paid by the month, excluding from 365, the 52 unpaid rest days in a year. This appears to have been the consistent practice of MANDARIN, following the formula for daily paid employees under Group II category as prepared by the Bureau of Labor Standards:[27]

AR x 313 days ____________ 12 Where: 313 days

EMR

= 303 actual working days a year plus the paid 10 unworked regular

holidays. Actual working days . 303 10 legal holidays 10 _____ Total No. of Days 313.
MANDARIN presented evidence of its practice regarding the use of the factor 313 in computing the monthly equivalent of the minimum daily wages and other related benefits of its employees; i.e., Annexes 3 and 4 of its Supplemental Appeal dated November 12, 1991. This was corroborated by the UNIONs Internal Vice President, Arnulfo Castro, who admitted during cross-examination that in his research and study,

he found that the divisor used in arriving at the daily rate of the hotel employees was 313 days, which meant that the days-off or rest days are not paid. [28] The admission confirms that the hotel employees pertain to Group II category under the Bureau of Labor Standards Guidelines for computing the equivalent monthly minimum wage rates. [29] Thus, instead of multiplying the applicable minimum daily wage by 365 and dividing the result by 12 to derive the applicable minimum monthly salary, the factor used is 313, composed of 303 actual working days and the 10 unworked but paid regular holidays in a year. In his explanatory Bulletin on the payment of Holiday Pay -- Ref. No. 85-08 dated 6 November 1985 -- then Secretary Augusto Sanchez of the Department of Labor and Employment, expatiating on the implications of the Chartered Bank case,[30] stated:

6. Monthly Paid Employees Oftentime confusion arises from the different interpretations as to who is a monthly-paid employee. A monthly-paid employee is one whose monthly salary includes payments for everyday of the month although he does not regularly work on his rest days or Sundays and on regular and special holidays. Group III in the above illustration covers monthly paid employees. Employees falling under Group I, II and IV are in reality daily paid employees but whose daily rate is translated into its monthly equivalent. The fact, therefore, that an employee is regularly paid a fixed monthly rate does not necessarily mean that he is a monthly-paid employee as defined above. (Italics supplied)
As applied to the UNION, the monthly equivalent of the minimum wage under the various Presidential Decrees and Wage Orders based on the above formula should be as follows:

PD/WO NO. Daily Rate PD 1389 PD 1614 PD 1813 WO # 2 WO # 3 WO # 4 WO # 5 WO # 6

Effectivity Equivalent

Minimum Wage Rate Monthly P 286.96 339.00 365.17 495.58 521.67 834.67 912.92 965.08

01 July 1978 1 March 1979 18 Aug. 1980 06 July 1983 01 Nov. 1983 01 May 1984 01 Nov. 1984 01 Nov. 1984

P 11.00 13.00 14.00 19.00 20.00 32.00 35.00 37.00

On the other hand, the monthly pay of the Hotel employees and their hiring rate may be illustrated as follows:

PD/WO NO. Salary Hotel PD 1389 PD 1614 1979 PD 1813 WO # 2 WO # 3 WO # 4 WO # 5 WO # 6

Effectivity

Equivalent Monthly Rate

Lowest in the P 350.00 562.00 960.00 960.00 960.00 960.00 1,015.00.

01 July 1978 01 March 339.08 18 Aug. 1980 06 July 1983 01 Nov. 1983 01 May 1984 16 May 1984 01 Nov. 1984

P 286.92 411.00 365.17 495.58 521.67 834.67 912.92 965.08

A comparative analysis of the wages of the Hotels employees from 1978 to 1984 vis a vis the minimum wages fixed by law for the same period reveals that at no time during the said period was there any underpayment of wages by the respondent Hotel. On the contrary, the prevailing monthly salaries of the subject hotel employees appear to be and above the minimum amounts required under the applicable Presidential Decrees and Wage Orders. WHEREFORE, the assailed Decision of respondent Commission promulgated on September 11, 1992 -- reversing the judgment of the Labor Arbiter and dismissing the UNIONS complaint - - being based on substantial evidence and in accord with applicable laws and jurisprudence, as well as said Commissions Resolution dated November 24, 1992 -- denying reconsideration -- are hereby AFFIRMED in toto. SO ORDERED. Davide, Jr., Melo, Francisco, and Panganiban, JJ., concur.

[1] [2]

Rollo, p. 65. Rollo, pp. 102-131; 142 [3] Rollo, pp. 7-17. [4] SEE opening paragraph of this opinion. [5] Private Respondents Memorandum, p. 13-14; Rollo, pp. 282-283 [6] C.W. Tan Manufacturing vs. NLRC, 170 SCRA 240 [1989], citing Del Rosario & Sons Logging Enteprises, Inc. vs. NLRC, 136 SCRA 669 [1985] [7] Star Angel Handicraft vs. NLRC, 236 SCRA 580 [1994]; Blancaflor vs. NLRC, 218 SCRA 366 [1993]; Erectors, Inc. vs. NLRC, 202 SCRA 597 [1991], citing YBL (Your Bus Line) vs. NLRC, 190 SCRA 160 [1990] [8] p. 1 of the petitioners Amended Manifestation and Motion to Inhibit Commissioner Domingo Zapata from Resolving the Appeal filed by MANDARIN [9] Supra, 234 SCRA 311 [1991] [10] 245 SCRA 767 [1995] [11] Art. 124 on Standards/Criteria for Minimum Wage Fixing [12] Associated Labor Unions-TUCP vs. NLRC, 235 SCRA 395 [1994]; Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. NLRC, 226 SCRA 268 [1993]; Cardona vs. NLRC, 195 SCRA 92 [1991]

[13]

Philippine Overseas Drilling and Oil Development Corporation vs. Ministry of Labor, 146 SCRA 79 [1986]. [14] Pantranco North Express, Inc. vs. NLRC, 239 SCRA 272 [1994] [15] Rollo, pp. 27-28 [16] Petition, Annex D; Rollo, pp. 102-131 [17] See capitol Wireless, Inc. vs. Bate, 246 SCRA 289 [1995] [18] Comment, Annex 1, Rollo, p. 224. [19] Rollo, pp. 68-69; TSN, June 5, 1989, p. 3-5 [20] Annex 2, MANDARINs Comment dated 15 July 1993 on the Manifestation and Motion of the Solicitor General dated 16 June 1993 [21] Rollo, pp. 189-190. [22] Labor Arbiters Decision dated 15 January 1991, pp. 21-65 [23] citing Annex 1 of the Hotels Reply/Comment dated 23 November 1987 and/or p. 4 and Annex B of the Hotels Supplemental Appeal [with Reply to the Petitioners Answer And/Or Motion to Dismiss Appeal] dated 12 November 1971 [24] 237 SCRA 819 [1994] [25] Rollo, p. 76 [26] Article 252 of the Labor Code [27] Rollo, p. 226 [28] pp. 8-10, 22-23, TSN, November 16, 1988 [29] Rollo, p. 226 [30] Chartered Bank Employees Association vs. Hon Blas F. Ople, et al, 138 SCRA 273 [1985]

FIRST DIVISION

[G.R. No. 119293. June 10, 2003]

SAN

MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD NG MANGGAGAWA (IBM), respondents. DECISION

AZCUNA, J.:

Before us is a petition for certiorari and prohibition seeking to set aside the decision of the Second Division of the National Labor Relations Commission (NLRC) in Injunction Case No. 00468-94 dated November 29, 1994, and its resolution dated February 1, 1995 denying petitioners motion for reconsideration.
[1] [2]

Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa (IBM), exclusive bargaining agent of petitioners daily-paid rank and file employees, executed a Collective Bargaining Agreement (CBA) under which they agreed to submit all disputes to grievance and arbitration proceedings. The CBA also

included a mutually enforceable no-strike no-lockout agreement. The pertinent provisions of the said CBA are quoted hereunder:

ARTICLE IV GRIEVANCE MACHINERY Section 1. - The parties hereto agree on the principle that all disputes between labor and management may be solved through friendly negotiation;. . . that an open conflict in any form involves losses to the parties, and that, therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of the foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of grievances so as to (1) provide an opportunity for discussion of any request or complaint and (2) establish procedure for the processing and settlement of grievances.
xxx xxx xxx

ARTICLE V ARBITRATION Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY and the UNION and/or the workers involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations arising during the effectivity of this Agreement or any renewal thereof, shall be settled by arbitration through a Committee in accordance with the procedure established in this Article. No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article IV shall be presented for arbitration until all the steps of the grievance procedure are exhausted.
xxx xxx xxx

ARTICLE VI STRIKES AND WORK STOPPAGES Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of this Agreement. Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so long as the procedure outlined in Article IV hereof is followed by the UNION.
[3]

On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as NCMB-NCR-NS-04-180-94, against petitioner for allegedly committing: (1) illegal

dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being performed by union members, (5) labor-only contracting, (6) harassment of union officers and members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair labor practice.
[4]

The next day, IBM filed another notice of strike, this time through its president Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only contracting, (3) violation of CBA, (4) dismissal of union officers and members, and (5) other acts of unfair labor practice. This was docketed as NCMB-NCR-NS-04-182-94.
[5]

The Galvez group subsequently requested the NCMB to consolidate its notice of strike with that of the Colomeda group, to which the latter opposed, alleging Galvezs lack of authority in filing the same.
[6] [7]

Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to Dismiss, on the grounds that the notices raised non-strikeable issues and that they affected four corporations which are separate and distinct from each other.
[8]

After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real issues involved are non-strikeable. Hence on May 2, 1994, he issued separate letter-orders to both union groups, converting their notices of strike into preventive mediation. The said letter-orders, in part, read:

During the conciliation meetings, it was clearly established that the real issues involved are illegal dismissal, labor only contracting and internal union disputes, which affect not only the interest of the San Miguel Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC. Considering that San Miguel Corporation is the only impleaded employer-respondent, and considering further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies in order to evolve voluntary settlement of the disputes. . . . (Emphasis supplied)
[9]

On May 16, 1994, while separate preventive mediation conferences were ongoing, the Colomeda group filed with the NCMB a notice of holding a strike vote. Petitioner opposed by filing a Manifestation and Motion to Declare Notice of Strike Vote Illegal, invoking the case of PAL v. Drilon, which held that no strike could be legally declared during the pendency of preventive mediation. NCMB Director Ubaldo in response issued another letter to the Colomeda Group reiterating the conversion of the notice of strike into a case of preventive mediation and emphasizing the findings that the grounds raised center only on an intra-union conflict, which is not strikeable, thus:
[10] [11]

xxx

xxx

xxx

A perusal of the records of the case clearly shows that the basic point to be resolved entails the question of as to who between the two (2) groups shall represent the workers for collective bargaining purposes, which has been the subject of a Petition for Interpleader case pending resolution before the Office of the Secretary of Labor and Employment. Similarly, the other issues raised which have been discussed by the parties at the plant level, are ancillary issues to the main question, that is, the union leadership... (Emphasis supplied)
[12]

Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds were set forth therein, including discrimination, coercion of employees, illegal lockout and illegal closure. The NCMB however found these grounds to be mere amplifications of those alleged in the first notice that the group filed. It therefore ordered the consolidation of the second notice with the preceding one that was earlier reduced to preventive mediation. On the same date, the group likewise notified the NCMB of its intention to hold a strike vote on May 27, 1994.
[13] [14]

On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote, which favored the holding of a strike. In reply, NCMB issued a letter again advising them that by virtue of the PAL v. Drilon ruling, their notice of strike is deemed not to have been filed, consequently invalidating any subsequent strike for lack of compliance with the notice requirement. Despite this and the pendency of the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The strike paralyzed the operations of petitioner, causing it losses allegedly worth P29.98 million in daily lost production.
[15] [16] [17]

Two days after the declaration of strike, or on June 6, 1994, petitioner filed with public respondent NLRC an amended Petition for Injunction with Prayer for the Issuance of Temporary Restraining Order, Free Ingress and Egress Order and Deputization Order. After due hearing and ocular inspection, the NLRC on June 13, 1994 resolved to issue a temporary restraining order (TRO) directing free ingress to and egress from petitioners plants, without prejudice to the unions right to peaceful picketing and continuous hearings on the injunction case.
[18] [19]

To minimize further damage to itself, petitioner on June 16, 1994, entered into a Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting of the picket lines and resumption of work in exchange of good faith talks between the management and the labor management committees. The MOA, signed in the presence of Department of Labor and Employment (DOLE) officials, expressly stated that cases filed in relation to their dispute will continue and will not be affected in any manner whatsoever by the agreement. The picket lines ended and work was then resumed.
[20]

Respondent thereafter moved to reconsider the issuance of the TRO, and sought to dismiss the injunction case in view of the cessation of its picketing activities as a result of the signed MOA. It argued that the case had become moot and academic there being no more prohibited activities to restrain, be they actual or threatened. Petitioner, however, opposed and submitted copies of flyers being circulated by IBM, as proof of
[21]

the unions alleged threat to revive the strike. The NLRC did not rule on the opposition to the TRO and allowed it to lapse.
[22]

On November 29, 1994, the NLRC issued the challenged decision, denying the petition for injunction for lack of factual basis. It found that the circumstances at the time did not constitute or no longer constituted an actual or threatened commission of unlawful acts. It likewise denied petitioners motion for reconsideration in its resolution dated February 1, 1995.
[23] [24]

Hence, this petition. Aggrieved by public respondents denial of a permanent injunction, petitioner contends that:
A.

THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY INJUNCTION, THE PARTIES RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION AND NOT TO STRIKE.
B.

THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.
C.

THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER THE LAPSE OF THE TRO.
[25]

We find for the petitioner. Article 254 of the Labor Code provides that no temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code expressly confers upon the NLRC the power to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party x x x. The second exception, on the other hand, is when the labor

organization or the employer engages in any of the prohibited activities enumerated in Article 264. Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain an actual or threatened unlawful strike. In the case of San Miguel Corporation v. NLRC, where the same issue of NLRCs duty to enjoin an unlawful strike was raised, we ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on nonstrikeable grounds. Further, in IBM v. NLRC, we held that it is the legal duty and obligation of the NLRC to enjoin a partial strike staged in violation of the law. Failure promptly to issue an injunction by the public respondent was likewise held therein to be an abuse of discretion.
[26] [27]

In the case at bar, petitioner sought a permanent injunction to enjoin the respondents strike. A strike is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. However, to be valid, a strike must be pursued within legal bounds. One of the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes, this requirement has been held to be mandatory, the lack of which shall render a strike illegal.
[28] [29] [30]

In the present case, NCMB converted IBMs notices into preventive mediation as it found that the real issues raised are non-strikeable. Such order is in pursuance of the NCMBs duty to exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably, and in line with the state policy of favoring voluntary modes of settling labor disputes. In accordance with the Implementing Rules of the Labor Code, the said conversion has the effect of dismissing the notices of strike filed by respondent. A case in point is PAL v. Drilon, where we declared a strike illegal for lack of a valid notice of strike, in view of the NCMBs conversion of the notice therein into a preventive mediation case. We ruled, thus:
[31] [32] [33] [34]

The NCMB had declared the notice of strike as appropriate for preventive mediation. The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During the pendency of preventive mediation proceedings no strike could be legally declared... The strike which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by the petitioner as an ambush. (Emphasis supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB ordered the preventive mediation on May 2, 1994, respondent had thereupon lost the notices of strike it had filed. Subsequently, however, it still defiantly proceeded with the strike while mediation was ongoing, and notwithstanding the letter-advisories of NCMB warning it of its lack of notice of strike. In the case of NUWHRAIN v. NLRC, where the petitioner-union therein similarly defied a prohibition by the NCMB, we said:
[35]

Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not ULP, hence not strikeable. The refusal of the petitioners to heed said proscription of the NCMB is reflective of bad faith.
Such disregard of the mediation proceedings was a blatant violation of the Implementing Rules, which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings.
[36]

The NCMB having no coercive powers of injunction, petitioner sought recourse from the public respondent. The NLRC issued a TRO only for free ingress to and egress from petitioners plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike, and five months after came out with a decision summarily rejecting petitioners cited jurisprudence in this wise:

Complainants scholarly and impressive arguments, formidably supported by a long line of jurisprudence cannot however be appropriately considered in the favorable resolution of the instant case for the complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not similarly situated and the remedy sought for were different.
[37]

Unfortunately, the NLRC decision stated no reason to substantiate the above conclusion. Public respondent, in its decision, moreover ruled that there was a lack of factual basis in issuing the injunction. Contrary to the NLRCs finding, we find that at the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM-NCR Council which led the union. These flyers categorically declared: Ipaalala nyo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line. These flyers were not denied by respondent, and were dated June 19, 1994, just a day after the unions manifestation with the NLRC that there existed no threat of commission of prohibited activities.
[38]

Moreover, it bears stressing that Article 264(a) of the Labor Code explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. Clearly, public respondent should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike.
[39]

Also noteworthy is public respondents disregard of petitioners argument pointing out the unions failure to observe the CBA provisions on grievance and arbitration. In the case of San Miguel Corp. v. NLRC, we ruled that the union therein violated the mandatory provisions of the CBA when it filed a notice of strike without availing of the remedies prescribed therein. Thus we held:
[40]

x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for not complying with the grievance procedure provided in the collective bargaining agreement. . . (Citations omitted)
As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent however resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. As we said long ago: Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.
[41]

As to petitioners allegation of violation of the no-strike provision in the CBA, jurisprudence has enunciated that such clauses only bar strikes which are economic in nature, but not strikes grounded on unfair labor practices. The notices filed in the case at bar alleged unfair labor practices, the initial determination of which would entail factfinding that is best left for the labor arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike dispenses with the need to discuss this issue.
[42]

We cannot sanction the respondent-unions brazen disregard of legal requirements imposed purposely to carry out the state policy of promoting voluntary modes of settling disputes. The states commitment to enforce mutual compliance therewith to foster industrial peace is affirmed by no less than our Constitution. Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But misuse of these instruments can be the subject of judicial intervention to forestall grave injury to a business enterprise.
[43] [44]

WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private respondent are hereby directed to submit the issues raised in the dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as prescribed in their CBA, if necessary. No pronouncement as to costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Carpio, JJ., concur.

[1]

Entitled: San Miguel Corp. v. Ilaw at Buklod ng Manggagawa, et al., rollo, pp. 27-36. Rollo, p. 37.

[2]

[3]

Rollo, pp.38-48. Rollo, pp. 59-61. Rollo, pp. 63-65. Rollo, p. 66. Rollo, pp. 67-72. Rollo, pp. 82-89. Rollo, pp. 90-93. Rollo, pp. 123-127. 193 SCRA 223 (1991). Rollo, pp. 128-129. Rollo, p. 130. Rollo, p. 137. Rollo, p. 138. Rollo, p. 139. Rollo, p. 10. Rollo, pp. 152-168. Rollo, p.169. Rollo, pp. 169-170. Rollo, pp. 171-197. Rollo, pp. 225-227. Supra, note 1. Supra, note 2. Rollo, p. 12. 304 SCRA 1(1999). 198 SCRA 586 (1991). AIUP et al., v. NLRC et al., 305 SCRA 219 (1999). NFSW v. Ovejera et al., 114 SCRA 354 (1982). NFL et al., v. NLRC, et al., 283 SCRA 275 (1997), First City Interlink Transportation Co. v. Confesor, 272 SCRA 124 (1997), Lapanday Workers Union v. NLRC, 248 SCRA 95 (1995). Rules to Implement the Labor Code, Book V, Rule XXII, Sec. 6. LABOR CODE, art. 211(a). Rules to Implement the Labor Code, Book V, Rule XXII,

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Sec. 1. Grounds for strike and lockout - A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practice. Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor

practice and shall not be strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on issues brought to voluntary or compulsory arbitration. xxx xxx xxx

Sec. 3. Notice of Strike or Lockout - xxx Any notice which does not conform with the requirements of this and the foregoing sections shall be deemed as not having been filed and the party concerned shall be so informed by the regional branch of the Board.
[34]

Supra, note 11. 287 SCRA 192 (1998). Rules to Implement the Labor Code, Book V, Rule XXII, Sec. 6. Rollo, p. 35. Rollo, p. 228. Art. 264 PROHIBITED ACTIVITIES - (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. (Emphasis supplied.) Supra, note 26. Insurefco Paper Pulp & Project Workers Union v. Insular Sugar Refining Corp., 95 Phil. 761 (1954). MSMG-UWP v. Ramos, et al., 326 SCRA 428 (2000), citing Master Iron Labor Union et al., v. NLRC et al., 219 SCRA 47(1993). CONSTITUTION, art. XIII, sec. 3. Bulletin Publishing Corporation v. Sanchez, 144 SCRA 628 (1986).

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EN BANC G.R. No. L-19997 May 19, 1965

VISAYAN BICYCLE, MANUFACTURING CO., INC., petitioner, vs. NATIONAL LABOR UNION and COURT OF INDUSTRIAL RELATIONS respondents. Mascardo, Mintu and Lazaro Law Offices for petitioner. Eulogio R. Lerum for respondent National Labor Union. Mariano B. Tuason for respondent Court of Industrial Relations. BENGZON, J.P., J.: On November 3, 1958, workers in the Visayan Bicycle Manufacturing Co., Inc. formed the Visayan Bicycle Employees and Workers Union (VIBEMWU). Pedro Evangelista was its president. On November 14, 1958, VIBEMWU and the company signed a collective bargaining agreement. Among other things it provided for union security, checkoff, wage increases, fifteen days vacation leave and fifteen days sick leave. On February 21, 1959, Pedro Evangelista was again elected president, for 1959. Felicisimo Rodiel was elected board member. For the year 1960 VIBEMWU, on December 12, 1959, re-elected Pedro Evangelista president and elected Fulgencio Besana and Felicisimo Rodiel, vicepresident and secretary respectively. On February 27, 1960, through its executive board headed by Besana, acting as president, VIBEMWU affiliated with the National Labor Union (NLU). Subsequently, on March 4, 1960, the Constitution and By-laws of VIBEMWU were amended. On March 9, 1960, another election was held and Besana was chosen president thereby replacing Evangelista.

On March 17, 1960, the national secretary of NLU, by a letter, informed the company of VIBEMWU'S affiliation to NLU, and demanded enforcement of the collective bargaining agreement. The company, however, did not accede to the demand. Consequently, on April 5, 1960, VIBEMWU filed a notice to strike.
1wph 1.t

The Department of Labor's Conciliation Service held several hearings on the union's demands and strike notice, but the company still refused. On April 25, 1960, the company dismissed Besana and Rodiel after they figured, on the same day, in a fight with two other employees, within the premises and during working hours. Alleging unfair labor practice, NLU, on behalf of VIBEMWU, as well as of Besana and Rodiel, filed on May 6, 1960 a complaint against the company in the Court of Industrial Relations. The company answered it on May 23, 1,960. It stated that the dismissal of Besana and Rodiel was due to violation of a company rule that penalizes "Inciting or provoking a fight or fighting during working hours or on company premises". The Presiding Judge of the Court of Industrial Relations, after trying the case, rendered a decision on March 3, 1962 in favor of the complainant union. An unfair labor practice, according to said decision, was committed by the company in dismissing Besana and Rodiel due to their union activities. The dispositive portion reads: This Court finds substantial evidence to sustain the charge against respondent Company in violation of Section 4(a), paragraphs 1 and 4 of the Industrial Peace Act, and, therefore, orders respondent Company, its official and/or agents to: (1) Cease and desist from interfering, restraining or coercing its employees in the exercise of their rights guaranteed by Section 3 of the Act; (2) Cease and desist from discriminating against employees in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization; (3) Reinstate Fulgencio Besana and Felicisimo Rodiel to their former or equivalent positions in respondent Company with backwages from the time of their dismissal on April 25, 1960, up to the time of their actual reinstatement and with the rights and privileges formerly appertaining thereto, including seniority; To facilitate the proper payment of backwages due them, the Chief of the Examining Division of this Court and or his duly designated assistant is hereby directed to examine the payrolls, daily time records and other pertinent documents relative to complainants Besana's and Rodiel's services with respondent Company, and to submit a corresponding report for further disposition. SO ORDERED. After receipt of copy of the decision on March 13, 1962, the company filed on March 15, 1962 a motion for reconsideration. It contained no argument but reserved the "right" to file supporting memorandum within ten days from March 18, 1962. A motion, however, was filed on March 27, 1962, requesting for 15-day extension of time to file the memorandum. Adhering to a "no extension" policy thereon, the Court of Industrial Relations en banc denied, on March 28, 1962, the aforesaid motion for extension to file memorandum. Accordingly, on April 6, 1962, it further denied the motion for reconsideration. Following its receipt on July 6, 1962 of the last resolution, the company filed this petition for review on July 16, 1962. Petitioner has raised two issues: First, did the Court of Industrial Relations abuse its discretion in denying the motion for extension of time to file memorandum in support of the motion for reconsideration? Second, did the company's dismissal of Besana and Rodiel constitute unfair labor practice? The first issue has already been settled. The denial by the Court of Industrial Relations of a motion to extend the 10-day period to file arguments in support of a motion for reconsideration, pursuant to its standing rule against such extension, does not constitute abuse of discretion. 1 Regarding the second issue, the record shows that on April 25, 1960, Besana and Rodiel were provoked by Saturnino Reyes and Silvestre Pacia into a pre-arranged fight pursuant to a strategy of the company designed to provide an appparently lawful cause for their dismissal. Reyes and Pacia were hired only within that week. 2Besana and Rodiel were not shown to have previously figured in similar incidents before or to have violated company rules and regulations in their many years with the company.. 3 The company did not investigate the incident, and its manager, Co Hing, admitted that Besana was dismissed because he was a "hard-headed leader of the union". It was this manager who had warned VIBEMWU'S officers responsible for the affiliation that if they will not withdraw VIBEMWU from theNLU, he would take " steps in order to dismiss them from work." The findings of the Court of Industrial Relations to the foregoing effect are supported by substantial evidence. No reason obtains to alter the conclusion that Besana and Rodiel were in reality dismissed because of their union activities and not because of their violation of a company rule against fights in the premises or during working hours. Furthermore, the so-called violation of company rules having been brought about by the company itself, thru the recent employment of Saturnino Reyes and Silvestre Pacia whoprovoked the fight as above indicated, the same cannot be regarded as a ground to punish the aforementioned employees. Such being the case, the dismissal of Besana and Rodiel constituted unfair labor practice under Section 4(a) (1) and (4) of Republic Act 875: SEC.4. Unfair Labor Practices. (a) It shall be unfair labor practice for an employer:

(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in Section three;4 xxx xxx xxx

(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: ... . Rothenberg has this to say: ... it can be established that the true and basic inspiration for the employer's act is derived from the employee's union affiliations or activities, the assignment by the employer or another reason, whatever its semblance of validity, is unavailing. Thus, it has been held that the facts disclosed that the employer's acts in discharging employees were actually prompted by the employers's improper interest in the affected employee's improper interest in the affected employee's union affiliations and activities, even though the employer urged that his acts were predicated on economic necessity, desire to give employment to more needy persons, lack of work, cessation of operations, refusal to work overtime, refusal of non-union employees to work with union employees, seasonal lay-off, libelous remarks against management, violationof company rules. (Rothenberg on Labor Relations, pp. 400-401; emphasis supplied.) Since the only reason or basis for Besana and Rodiel's dismissal was in fact their actuation as officers of VIBEMWU, the dismissal is clearly discriminatory. It is this inconsiderate act of power that makes a subordinate a rebel; it is this malicious tactic that forces labor to dislike management; this unjustifiable conduct that creates a gap between management and labor; and this attitude that makes the laborer hate the officials of the company to the detriment of all efforts to harmonize management and labor for the benefit of both as envisioned by the Industrial Peace Act. So plain from the record is the bad faith that attended the company's deliberate and calculated act of unfair labor practice that we find in the present appeal an obvious attempt to delay and carry on a pretense which this Court can ill afford to let go without stern disapproval. WHEREFORE, the decision and resolutions appealed from are hereby affirmed, with treble costs against petitioner. So ordered. Bengzon, C.J., Bautista, Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal and Zaldivar, JJ., concur. Concepcion, J., took no part. Footnotes Luzon Stevedoring Co., Inc. vs. CIR, L-16682, July 26, 1963; Manila Metal Caps and Tin Cans Manufacturing Co. vs. CIR, L-17579, July 31, 1963.
1 2

April 19, 1960 and April 18, 1960, respectively. Besana was employed since October 4, 1956; Rodiel, since November, 1957.

"SEC. 3. Employee's Right to Self-Organization. Employees shall have the right to self-organization and to form, join or assist labor organzations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. ... .
4

EN BANC

G.R. No. L-25291 January 30, 1971 THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU, FGU INSURANCE GROUP WORKERS and EMPLOYEES ASSOCIATION-NATU, and INSULAR LIFE BUILDING EMPLOYEES ASSOCIATION-NATU, petitioners, vs. THE INSULAR LIFE ASSURANCE CO., LTD., FGU INSURANCE GROUP, JOSE M. OLBES and COURT OF INDUSTRIAL RELATIONS, respondents. Lacsina, Lontok and Perez and Luis F. Aquino for petitioners. Francisco de los Reyes for respondent Court of Industrial Relations. Araneta, Mendoza and Papa for other respondents.

CASTRO, J.: Appeal, by certiorari to review a decision and a resolution en banc of the Court of Industrial Relations dated August 17, 1965 and October 20, 1965, respectively, in Case 1698-ULP. The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group Workers & Employees Association-NATU, and Insular Life Building Employees Association-NATU (hereinafter referred to as the Unions), while still members of the Federation of Free Workers (FFW), entered into separate collective bargaining agreements with the Insular Life Assurance Co., Ltd. and the FGU Insurance Group (hereinafter referred to as the Companies). Two of the lawyers of the Unions then were Felipe Enaje and Ramon Garcia; the latter was formerly the secretary-treasurer of the FFW and acting president of the Insular Life/FGU unions and the Insular Life Building Employees Association. Garcia, as such acting president, in a circular issued in his name and signed by him, tried to dissuade the members of the Unions from disaffiliating with the FFW and joining the National Association of Trade Unions (NATU), to no avail. Enaje and Garcia soon left the FFW and secured employment with the Anti-Dummy Board of the Department of Justice. Thereafter, the Companies hired Garcia in the latter part of 1956 as assistant corporate secretary and legal assistant in their Legal Department, and he was soon receiving P900 a month, or P600 more than he was receiving from the FFW. Enaje was hired on or about February 19, 1957 as personnel manager of the Companies, and was likewise made chairman of the negotiating panel for the Companies in the collective bargaining with the Unions. In a letter dated September 16, 1957, the Unions jointly submitted proposals to the Companies for a modified renewal of their respective collective bargaining contracts which were then due to expire on September 30, 1957. The parties mutually agreed and to make whatever benefits could be agreed upon retroactively effective October 1, 1957. Thereafter, in the months of September and October 1957 negotiations were conducted on the Union's proposals, but these were snagged by a deadlock on the issue of union shop, as a result of which the Unions filed on January 27, 1958 a notice of strike for "deadlock on collective bargaining." Several conciliation conferences were held under the auspices of the Department of Labor wherein the conciliators urged the Companies to make reply to the Unions' proposals en toto so that the said Unions might consider the feasibility of dropping their demand for union security in exchange for other benefits. However, the Companies did not make any counter-proposals but, instead, insisted that the Unions first drop their demand for union security, promising money benefits if this was done. Thereupon, and prior to April 15, 1958, the petitioner Insular Life Building Employees Association-NATU dropped this particular demand, and requested the Companies to answer its demands, point by point, en toto. But the respondent Insular Life Assurance Co. still refused to make any counter-proposals. In a letter addressed to the two other Unions by the joint management of the Companies, the former were also asked to drop their union security demand, otherwise the Companies "would no longer consider themselves bound by the commitment to make money benefits retroactive to October 1, 1957." By a letter dated April 17, 1958, the remaining two petitioner unions likewise dropped their demand for union shop. April 25, 1958 then was set by the parties to meet and discuss the remaining demands. From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no satisfactory result due to a stalemate on the matter of salary increases. On May 13, 1958 the Unions demanded from the Companies final counter-proposals on their economic demands, particularly on salary increases. Instead of giving counter-proposals, the Companies on May 15, 1958 presented facts and figures and requested the Unions to submit a workable formula which would justify their own proposals, taking into account the financial position of the former. Forthwith the Unions voted to declare a strike in protest against what they considered the Companies' unfair labor practices. Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase in salary nor in responsibility while negotiations were going on in the Department of Labor after the notice to strike was served on the Companies. These employees resigned from the Unions. On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life Building at Plaza Moraga. On May 21, 1958 the Companies through their acting manager and president, the respondent Jose M. Olbes (hereinafter referred to as the respondent Olbes), sent to each of the strikers a letter (exhibit A) quoted verbatim as follows: We recognize it is your privilege both to strike and to conduct picketing. However, if any of you would like to come back to work voluntarily, you may: 1. Advise the nearest police officer or security guard of your intention to do so. 2. Take your meals within the office. 3. Make a choice whether to go home at the end of the day or to sleep nights at the office where comfortable cots have been prepared. 4. Enjoy free coffee and occasional movies. 5. Be paid overtime for work performed in excess of eight hours.

6. Be sure arrangements will be made for your families. The decision to make is yours whether you still believe in the motives of the strike or in the fairness of the Management. The Unions, however, continued on strike, with the exception of a few unionists who were convinced to desist by the aforesaid letter of May 21, 1958. From the date the strike was called on May 21, 1958, until it was called off on May 31, 1958, some management men tried to break thru the Unions' picket lines. Thus, on May 21, 1958 Garcia, assistant corporate secretary, and Vicente Abella, chief of the personnel records section, respectively of the Companies, tried to penetrate the picket lines in front of the Insular Life Building. Garcia, upon approaching the picket line, tossed aside the placard of a picketer, one Paulino Bugay; a fight ensued between them, in which both suffered injuries. The Companies organized three bus-loads of employees, including a photographer, who with the said respondent Olbes, succeeded in penetrating the picket lines in front of the Insular Life Building, thus causing injuries to the picketers and also to the strike-breakers due to the resistance offered by some picketers. Alleging that some non-strikers were injured and with the use of photographs as evidence, the Companies then filed criminal charges against the strikers with the City Fiscal's Office of Manila. During the pendency of the said cases in the fiscal's office, the Companies likewise filed a petition for injunction with damages with the Court of First Instance of Manila which, on the basis of the pendency of the various criminal cases against striking members of the Unions, issued on May 31, 1958 an order restraining the strikers, until further orders of the said court, from stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates, entrance and driveway and the free movement of persons and vehicles to and from, out and in, of the Companies' building. On the same date, the Companies, again through the respondent Olbes, sent individually to the strikers a letter (exhibit B), quoted hereunder in its entirety: The first day of the strike was last 21 May 1958. Our position remains unchanged and the strike has made us even more convinced of our decision. We do not know how long you intend to stay out, but we cannot hold your positions open for long. We have continued to operate and will continue to do so with or without you. If you are still interested in continuing in the employ of the Group Companies, and if there are no criminal charges pending against you, we are giving you until 2 June 1958 to report for work at the home office. If by this date you have not yet reported, we may be forced to obtain your replacement. Before, the decisions was yours to make. So it is now. Incidentally, all of the more than 120 criminal charges filed against the members of the Unions, except three (3), were dismissed by the fiscal's office and by the courts. These three cases involved "slight physical injuries" against one striker and "light coercion" against two others. At any rate, because of the issuance of the writ of preliminary injunction against them as well as the ultimatum of the Companies giving them until June 2, 1958 to return to their jobs or else be replaced, the striking employees decided to call off their strike and to report back to work on June 2, 1958. However, before readmitting the strikers, the Companies required them not only to secure clearances from the City Fiscal's Office of Manila but also to be screened by a management committee among the members of which were Enage and Garcia. The screening committee initially rejected 83 strikers with pending criminal charges. However, all non-strikers with pending criminal charges which arose from the breakthrough incident were readmitted immediately by the Companies without being required to secure clearances from the fiscal's office. Subsequently, when practically all the strikers had secured clearances from the fiscal's office, the Companies readmitted only some but adamantly refused readmission to 34 officials and members of the Unions who were most active in the strike, on the ground that they committed "acts inimical to the interest of the respondents," without however stating the specific acts allegedly committed. Among those who were refused readmission are Emiliano Tabasondra, vice president of the Insular Life Building Employees' Association-NATU; Florencio Ibarra, president of the FGU Insurance Group Workers & Employees Association-NATU; and Isagani Du Timbol, acting president of the Insular Life Assurance Co., Ltd. Employees Association-NATU. Some 24 of the above number were ultimately notified months later that they were being dismissed retroactively as of June 2, 1958 and given separation pay checks computed under Rep. Act 1787, while others (ten in number) up to now have not been readmitted although there have been no formal dismissal notices given to them. On July 29, 1958 the CIR prosecutor filed a complaint for unfair labor practice against the Companies under Republic Act 875. The complaint specifically charged the Companies with (1) interfering with the members of the Unions in the exercise of their right to concerted action, by sending out individual letters to them urging them to abandon their strike and return to work, with a promise of comfortable cots, free coffee and movies, and paid overtime, and, subsequently, by warning them that if they did not return to work on or before June 2, 1958, they might be replaced; and (2) discriminating against the members of the Unions as regards readmission to work after the strike on the basis of their union membership and degree of participation in the strike. On August 4, 1958 the Companies filed their answer denying all the material allegations of the complaint, stating special defenses therein, and asking for the dismissal of the complaint. After trial on the merits, the Court of Industrial Relations, through Presiding Judge Arsenio Martinez, rendered on August 17, 1965 a decision dismissing the Unions' complaint for lack of merit. On August 31, 1965 the Unions seasonably filed their motion for reconsideration of the said decision, and their

supporting memorandum on September 10, 1965. This was denied by the Court of Industrial Relations en banc in a resolution promulgated on October 20, 1965. Hence, this petition for review, the Unions contending that the lower court erred: 1. In not finding the Companies guilty of unfair labor practice in sending out individually to the strikers the letters marked Exhibits A and B; 2. In not finding the Companies guilty of unfair labor practice for discriminating against the striking members of the Unions in the matter of readmission of employees after the strike; 3. In not finding the Companies guilty of unfair labor practice for dismissing officials and members of the Unions without giving them the benefit of investigation and the opportunity to present their side in regard to activities undertaken by them in the legitimate exercise of their right to strike; and 4. In not ordering the reinstatement of officials and members of the Unions, with full back wages, from June 2, 1958 to the date of their actual reinstatement to their usual employment. I. The respondents contend that the sending of the letters, exhibits A and B, constituted a legitimate exercise of their freedom of speech. We do not agree. The said letters were directed to the striking employees individually by registered special delivery mail at that without being coursed through the Unions which were representing the employees in the collective bargaining. The act of an employer in notifying absent employees individually during a strike following unproductive efforts at collective bargaining that the plant would be operated the next day and that their jobs were open for them should they want to come in has been held to be an unfair labor practice, as an active interference with the right of collective bargaining through dealing with the employees individually instead of through their collective bargaining representatives. (31 Am. Jur. 563, citing NLRB v. Montgomery Ward & Co. [CA 9th] 133 F2d 676, 146 ALR 1045) Indeed, it is an unfair labor practice for an employer operating under a collective bargaining agreement to negotiate or to attempt to negotiate with his employees individually in connection with changes in the agreement. And the basis of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative (Melo Photo Supply Corporation vs. National Labor Relations Board, 321 U.S. 332). Indeed, some such similar actions are illegal as constituting unwarranted acts of interference. Thus, the act of a company president in writing letters to the strikers, urging their return to work on terms inconsistent with their union membership, was adjudged as constituting interference with the exercise of his employees' right to collective bargaining (Lighter Publishing, CCA 7th, 133 F2d 621). It is likewise an act of interference for the employer to send a letter to all employees notifying them to return to work at a time specified therein, otherwise new employees would be engaged to perform their jobs. Individual solicitation of the employees or visiting their homes, with the employer or his representative urging the employees to cease union activity or cease striking, constitutes unfair labor practice. All the above-detailed activities are unfair labor practices because they tend to undermine the concerted activity of the employees, an activity to which they are entitled free from the employer's molestation.1 Moreover, since exhibit A is a letter containing promises of benefits to the employees in order to entice them to return to work, it is not protected by the free speech provisions of the Constitution (NLRB v. Clearfield Cheese Co., Inc., 213 F2d 70). The same is true with exhibit B since it contained threats to obtain replacements for the striking employees in the event they did not report for work on June 2, 1958. The free speech protection under the Constitution is inapplicable where the expression of opinion by the employer or his agent contains a promise of benefit, or threats, or reprisal (31 Am. Jur. 544; NLRB vs. Clearfield Cheese Co., Inc., 213 F2d 70; NLRB vs. Goigy Co., 211 F2d 533, 35 ALR 2d 422). Indeed, when the respondents offered reinstatement and attempted to "bribe" the strikers with "comfortable cots," "free coffee and occasional movies," "overtime" pay for "work performed in excess of eight hours," and "arrangements" for their families, so they would abandon the strike and return to work, they were guilty of strike-breaking and/or union-busting and, consequently, of unfair labor practice. It is equivalent to an attempt to break a strike for an employer to offer reinstatement to striking employees individually, when they are represented by a union, since the employees thus offered reinstatement are unable to determine what the consequences of returning to work would be. Likewise violative of the right to organize, form and join labor organizations are the following acts: the offer of a Christmas bonus to all "loyal" employees of a company shortly after the making of a request by the union to bargain; wage increases given for the purpose of mollifying employees after the employer has refused to bargain with the union, or for the purpose of inducing striking employees to return to work; the employer's promises of benefits in return for the strikers' abandonment of their strike in support of their union; and the employer's statement, made about 6 weeks after the strike started, to a group of strikers in a restaurant to the effect that if the strikers returned to work, they would receive new benefits in the form of hospitalization, accident insurance, profit-sharing, and a new building to work in.2 Citing paragraph 5 of the complaint filed by the acting prosecutor of the lower court which states that "the officers and members of the complainant unions decided to call off the strike and return to work on June 2, 1958 by reason of the injunction issued by the Manila Court of First Instance," the respondents contend that this was the main cause why the strikers returned to work and not the letters, exhibits A and B. This assertion is without merit. The circumstance that the strikers later decided to return to work ostensibly on account of the injunctive writ issued by the Court of First Instance of Manila cannot alter the intrinsic quality of the letters, which were calculated, or which tended, to interfere with the employees' right to engage in lawful concerted activity in the form of a strike. Interference constituting unfair labor practice will not cease to be such simply because it was susceptible of being thwarted or resisted, or that it did not proximately cause the result intended. For success of purpose is not, and should not, be the criterion in determining whether or not a prohibited act constitutes unfair labor practice.

The test of whether an employer has interfered with and coerced employees within the meaning of subsection (a) (1) is whether the employer has engaged in conduct which it may reasonably be said tends to interfere with the free exercise of employees' rights under section 3 of the Act, and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining. (Francisco, Labor Laws 1956, Vol. II, p. 323, citing NLRB v. Ford, C.A., 1948, 170 F2d 735). Besides, the letters, exhibits A and B, should not be considered by themselves alone but should be read in the light of the preceding and subsequent circumstances surrounding them. The letters should be interpreted according to the "totality of conduct doctrine," ... whereby the culpability of an employer's remarks were to be evaluated not only on the basis of their implicit implications, but were to be appraised against the background of and in conjunction with collateral circumstances. Under this "doctrine" expressions of opinion by an employer which, though innocent in themselves, frequently were held to be culpable because of the circumstances under which they were uttered, the history of the particular employer's labor relations or anti-union bias or because of their connection with an established collateral plan of coercion or interference. (Rothenberg on Relations, p. 374, and cases cited therein.) It must be recalled that previous to the petitioners' submission of proposals for an amended renewal of their respective collective bargaining agreements to the respondents, the latter hired Felipe Enage and Ramon Garcia, former legal counsels of the petitioners, as personnel manager and assistant corporate secretary, respectively, with attractive compensations. After the notice to strike was served on the Companies and negotiations were in progress in the Department of Labor, the respondents reclassified 87 employees as supervisors without increase in salary or in responsibility, in effect compelling these employees to resign from their unions. And during the negotiations in the Department of Labor, despite the fact that the petitioners granted the respondents' demand that the former drop their demand for union shop and in spite of urgings by the conciliators of the Department of Labor, the respondents adamantly refused to answer the Unions' demands en toto. Incidentally, Enage was the chairman of the negotiating panel for the Companies in the collective bargaining between the former and the Unions. After the petitioners went to strike, the strikers were individually sent copies of exhibit A, enticing them to abandon their strike by inducing them to return to work upon promise of special privileges. Two days later, the respondents, thru their president and manager, respondent Jose M. Olbes, brought three truckloads of non-strikers and others, escorted by armed men, who, despite the presence of eight entrances to the three buildings occupied by the Companies, entered thru only one gate less than two meters wide and in the process, crashed thru the picket line posted in front of the premises of the Insular Life Building. This resulted in injuries on the part of the picketers and the strikebreakers. Then the respondents brought against the picketers criminal charges, only three of which were not dismissed, and these three only for slight misdemeanors. As a result of these criminal actions, the respondents were able to obtain an injunction from the court of first instance restraining the strikers from stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates, entrance and driveway and the free movement of persons and vehicles to and from, out and in, of the Companies' buildings. On the same day that the injunction was issued, the letter, Exhibit B, was sent again individually and by registered special delivery mail to the strikers, threatening them with dismissal if they did not report for work on or before June 2, 1958. But when most of the petitioners reported for work, the respondents thru a screening committee of which Ramon Garcia was a member refused to admit 63 members of the Unions on the ground of "pending criminal charges." However, when almost all were cleared of criminal charges by the fiscal's office, the respondents adamantly refused admission to 34 officials and union members. It is not, however, disputed that all-non-strikers with pending criminal charges which arose from the breakthrough incident of May 23, 1958 were readmitted immediately by the respondents. Among the nonstrikers with pending criminal charges who were readmitted were Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo, Federico Barretto, Manuel Chuidian and Nestor Cipriano. And despite the fact that the fiscal's office found no probable cause against the petitioning strikers, the Companies adamantly refused admission to them on the pretext that they committed "acts inimical to the interest of the respondents," without stating specifically the inimical acts allegedly committed. They were soon to admit, however, that these alleged inimical acts were the same criminal charges which were dismissed by the fiscal and by the courts..
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Verily, the above actuations of the respondents before and after the issuance of the letters, exhibit A and B, yield the clear inference that the said letters formed of the respondents scheme to preclude if not destroy unionism within them. To justify the respondents' threat to dismiss the strikers and secure replacements for them in order to protect and continue their business, the CIR held the petitioners' strike to be an economic strike on the basis of exhibit 4 (Notice of Strike) which states that there was a "deadlock in collective bargaining" and on the strength of the supposed testimonies of some union men who did not actually know the very reason for the strike. It should be noted that exhibit 4, which was filed on January 27, 1958, states, inter alia: TO: BUREAU OF LABOR RELATIONS DEPARTMENT OF LABOR MANILA Thirty (30) days from receipt of this notice by the Office, this [sic] unions intends to go on strike against THE INSULAR LIFE ASSURANCE CO., LTD. Plaza Moraga, Manila THE FGU INSURANCE GROUP Plaza Moraga, Manila INSULAR LIFE BUILDING ADMINISTRATION Plaza Moraga, Manila . for the following reason: DEADLOCK IN COLLECTIVE BARGAINING...

However, the employees did not stage the strike after the thirty-day period, reckoned from January 27, 1958. This simply proves that the reason for the strike was not the deadlock on collective bargaining nor any lack of economic concessions. By letter dated April 15, 1958, the respondents categorically stated what they thought was the cause of the "Notice of Strike," which so far as material, reads: 3. Because you did not see fit to agree with our position on the union shop, you filed a notice of strike with the Bureau of Labor Relations on 27 January 1958, citing `deadlock in collective bargaining' which could have been for no other issue than the union shop." (exhibit 8, letter dated April 15, 1958.) The strike took place nearly four months from the date the said notice of strike was filed. And the actual and main reason for the strike was, "When it became crystal clear the management double crossed or will not negotiate in good faith, it is tantamount to refusal collectively and considering the unfair labor practice in the meantime being committed by the management such as the sudden resignation of some unionists and [who] became supervisors without increase in salary or change in responsibility, such as the coercion of employees, decided to declare the strike." (tsn., Oct. 14, 1958, p. 14.) The truth of this assertion is amply proved by the following circumstances: (1) it took the respondents six (6) months to consider the petitioners' proposals, their only excuse being that they could not go on with the negotiations if the petitioners did not drop the demand for union shop (exh. 7, respondents' letter dated April 7, 1958); (2) when the petitioners dropped the demand for union shop, the respondents did not have a counter-offer to the petitioners' demands. Sec. 14 of Rep. Act 875 required the respondents to make a reply to the petitioners' demands within ten days from receipt thereof, but instead they asked the petitioners to give a "well reasoned, workable formula which takes into account the financial position of the group companies." (tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26, 1969, p. 49.) II. Exhibit H imposed three conditions for readmission of the strikers, namely: (1) the employee must be interested in continuing his work with the group companies; (2) there must be no criminal charges against him; and (3) he must report for work on June 2, 1958, otherwise he would be replaced. Since the evidence shows that all the employees reported back to work at the respondents' head office on June 2, 1953, they must be considered as having complied with the first and third conditions. Our point of inquiry should therefore be directed at whether they also complied with the second condition. It is not denied that when the strikers reported for work on June 2, 1958, 63 members of the Unions were refused readmission because they had pending criminal charges. However, despite the fact that they were able to secure their respective clearances 34 officials and union members were still refused readmission on the alleged ground that they committed acts inimical to the Companies. It is beyond dispute, however, that non-strikers who also had criminal charges pending against them in the fiscal's office, arising from the same incidents whence the criminal charges against the strikers evolved, were readily readmitted and were not required to secure clearances. This is a clear act of discrimination practiced by the Companies in the process of rehiring and is therefore a violation of sec. 4(a) (4) of the Industrial Peace Act. The respondents did not merely discriminate against all the strikers in general. They separated the active from the less active unionists on the basis of their militancy, or lack of it, on the picket lines. Unionists belonging to the first category were refused readmission even after they were able to secure clearances from the competent authorities with respect to the criminal charges filed against them. It is significant to note in this connection that except for one union official who deserted his union on the second day of the strike and who later participated in crashing through the picket lines, not a single union officer was taken back to work. Discrimination undoubtedly exists where the record shows that the union activity of the rehired strikers has been less prominent than that of the strikers who were denied reinstatement. So is there an unfair labor practice where the employer, although authorized by the Court of Industrial Relations to dismiss the employees who participated in an illegal strike, dismissed only the leaders of the strikers, such dismissal being evidence of discrimination against those dismissed and constituting a waiver of the employer's right to dismiss the striking employees and a condonation of the fault committed by them." (Carlos and Fernando, Labor and Social Legislation, p. 62, citing Phil. Air Lines, Inc. v. Phil. Air Lines Emloyees Association, L-8197, Oct. 31, 1958.) It is noteworthy that perhaps in an anticipatory effort to exculpate themselves from charges of discrimination in the readmission of strikers returning to work the respondents delegated the power to readmit to a committee. But the respondent Olbes had chosen Vicente Abella, chief of the personnel records section, and Ramon Garcia, assistant corporate secretary, to screen the unionists reporting back to work. It is not difficult to imagine that these two employees having been involved in unpleasant incidents with the picketers during the strike were hostile to the strikers. Needless to say, the mere act of placing in the hands of employees hostile to the strikers the power of reinstatement, is a form of discrimination in rehiring. Delayed reinstatement is a form of discrimination in rehiring, as is having the machinery of reinstatement in the hands of employees hostile to the strikers, and reinstating a union official who formerly worked in a unionized plant, to a job in another mill, which was imperfectly organized. (Morabe, The Law on Strikes, p. 473, citing Sunshine Mining Co., 7 NLRB 1252; Cleveland Worsted Mills, 43 NLRB 545; emphasis supplied.) Equally significant is the fact that while the management and the members of the screening committee admitted the discrimination committed against the strikers, they tossed back and around to each other the responsibility for the discrimination. Thus, Garcia admitted that in exercising for the management the authority to screen the returning employees, the committee admitted the non-strikers but refused readmission to the strikers (tsn., Feb. 6, 1962, pp. 15-19, 23-29). Vicente Abella, chairman of the management's screening committee, while admitting the discrimination, placed the blame therefor squarely on the management (tsn., Sept. 20, 1960, pp. 7-8, 14-18). But the management, speaking through the respondent Olbes, head of the Companies, disclaimed responsibility for the discrimination. He testified that "The decision whether to accept or not an employee was left in the hands of that committee that had been empowered to look into all cases of the strikers." (tsn., Sept. 6, 1962, p. 19.) Of course, the respondents through Ramon Garcia tried to explain the basis for such discrimination by testifying that strikers whose participation in any alleged misconduct during the picketing was not serious in nature were readmissible, while those whose participation was serious were not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But even this distinction between acts of slight misconduct and acts of serious misconduct which the respondents contend was the basis for either reinstatement or discharge, is completely shattered upon a cursory examination of the evidence on record. For with the exception of Pascual Esquillo whose dismissal sent to the other strikers cited the alleged commission by them of simple "acts of misconduct." III. Anent the third assignment of error, the record shows that not a single dismissed striker was given the opportunity to defend himself against the supposed charges against him. As earlier mentioned, when the striking employees reported back for work on June 2, 1958, the respondents refused to

readmit them unless they first secured the necessary clearances; but when all, except three, were able to secure and subsequently present the required clearances, the respondents still refused to take them back. Instead, several of them later received letters from the respondents in the following stereotyped tenor: This will confirm the termination of your employment with the Insular Life-FGU Insurance Group as of 2 June 1958. The termination of your employment was due to the fact that you committed acts of misconduct while picketing during the last strike. Because this may not constitute sufficient cause under the law to terminate your employment without pay, we are giving you the amount of P1,930.32 corresponding to one-half month pay for every year of your service in the Group Company. Kindly acknowledge receipt of the check we are sending herewith. Very truly yours, (Sgd.) JOSE M. OLBES President, Insurance Life Acting President, FGU. The respondents, however, admitted that the alleged "acts of misconduct" attributed to the dismissed strikers were the same acts with which the said strikers were charged before the fiscal's office and the courts. But all these charges except three were dropped or dismissed. Indeed, the individual cases of dismissed officers and members of the striking unions do not indicate sufficient basis for dismissal. Emiliano Tabasondra, vice-president of the petitioner FGU Insurance Group Workers & Employees Association-NATU, was refused reinstatement allegedly because he did not report for duty on June 2, 1958 and, hence, had abandoned his office. But the overwhelming evidence adduced at the trial and which the respondents failed to rebut, negates the respondents' charge that he had abandoned his job. In his testimony, corroborated by many others, Tabasondra particularly identified the management men to whom he and his group presented themselves on June 2, 1958. He mentioned the respondent Olbes' secretary, De Asis, as the one who received them and later directed them when Olbes refused them an audience to Felipe Enage, the Companies' personnel manager. He likewise categorically stated that he and his group went to see Enage as directed by Olbes' secretary. If Tabasondra were not telling the truth, it would have been an easy matter for the respondents to produce De Asis and Enage who testified anyway as witnesses for the respondents on several occasions to rebut his testimony. The respondents did nothing of the kind. Moreover, Tabasondra called on June 21, 1958 the respondents' attention to his non-admission and asked them to inform him of the reasons therefor, but instead of doing so, the respondents dismissed him by their letter dated July 10, 1958. Elementary fairness required that before being dismissed for cause, Tabasondra be given "his day in court." At any rate, it has been held that mere failure to report for work after notice to return, does not constitute abandonment nor bar reinstatement. In one case, the U.S. Supreme Court held that the taking back of six of eleven men constituted discrimination although the five strikers who were not reinstated, all of whom were prominent in the union and in the strike, reported for work at various times during the next three days, but were told that there were no openings. Said the Court: ... The Board found, and we cannot say that its finding is unsupported, that, in taking back six union men, the respondent's officials discriminated against the latter on account of their union activities and that the excuse given that they did not apply until after the quota was full was an afterthought and not the true reason for the discrimination against them. (NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 Sup. Ct. 904, 82 L. Ed. 1381) (Mathews, Labor Relations and the Law, p. 725, 728) The respondents' allegation that Tabasondra should have returned after being refused readmission on June 2, 1958, is not persuasive. When the employer puts off reinstatement when an employee reports for work at the time agreed, we consider the employee relieved from the duty of returning further. Sixto Tongos was dismissed allegedly because he revealed that despite the fact that the Companies spent more than P80,000 for the vacation trips of officials, they refused to grant union demands; hence, he betrayed his trust as an auditor of the Companies. We do not find this allegation convincing. First, this accusation was emphatically denied by Tongos on the witness stand. Gonzales, president of one of the respondent Companies and one of the officials referred to, took a trip abroad in 1958. Exchange controls were then in force, and an outgoing traveller on a combined business and vacation trip was allowed by the Central Bank, per its Circular 52 (Notification to Authorized Agent Banks) dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official rate of two pesos to the dollar, as pocket money; hence, this was the only amount that would appear on the books of the Companies. It was only on January 21, 1962, per its Circular 133 (Notification to Authorized Agent Banks), that the Central Bank lifted the exchange controls. Tongos could not therefore have revealed an amount bigger than the above sum. And his competence in figures could not be doubted considering that he had passed the board examinations for certified public accountants. But assuming arguendo that Tongos indeed revealed the true expenses of Gonzales' trip which the respondents never denied or tried to disprove his statements clearly fall within the sphere of a unionist's right to discuss and advertise the facts involved in a labor dispute, in accordance with section 9(a)(5) of Republic Act 875 which guarantees the untramelled exercise by striking employees of the right to give "publicity to the existence of, or the fact involved in any labor dispute, whether by advertising, speaking, patrolling or by any method not involving fraud or violence." Indeed, it is not only the right, it is as well the duty, of every unionist to advertise the facts of a dispute for the purpose of informing all those affected thereby. In labor disputes, the combatants are expected to expose the truth before the public to justify their respective demands. Being a union man and one of the strikers, Tongos was expected to reveal the whole truth on whether or not the respondent Companies were justified in refusing to accede to union demands. After all, not being one of the supervisors, he was not a part of management. And his statement, if indeed made, is but an expression of free speech protected by the Constitution. Free speech on both sides and for every faction on any side of the labor relation is to me a constitutional and useful right. Labor is free ... to turn its publicity on any labor oppression, substandard wages, employer unfairness, or objectionable working conditions.

The employer, too, should be free to answer and to turn publicity on the records of the leaders of the unions which seek the confidence of his men ... (Concurring opinion of Justice Jackson in Thomas v. Collins, 323 U.S. 516, 547, 65 Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor Relations and the Law, p. 591.) The respondents also allege that in revealing certain confidential information, Tongos committed not only a betrayal of trust but also a violation of the moral principles and ethics of accountancy. But nowhere in the Code of Ethics for Certified Public Accountants under the Revised Rules and Regulations of the Board of Accountancy formulated in 1954, is this stated. Moreover, the relationship of the Companies with Tongos was that of an employer and not a client. And with regard to the testimonies of Juan Raymundo and Antolin Carillo, both vice-presidents of the Trust Insurance Agencies, Inc. about the alleged utterances made by Tongos, the lower court should not have given them much weight. The firm of these witnesses was newly established at that time and was still a "general agency" of the Companies. It is not therefore amiss to conclude that they were more inclined to favor the respondents rather than Tongos. Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Dao, Vicente Alsol and Hermenigildo Ramirez, opined the lower court, were constructively dismissed by non-readmission allegedly because they not only prevented Ramon Garcia, assistant corporate secretary, and Vicente Abella, chief of the personnel records section of the Companies, from entering the Companies' premises on May 21, 1958, but they also caused bruises and abrasions on Garcia's chest and forehead acts considered inimical to the interest of the respondents. The Unions, upon the other hand, insist that there is complete lack of evidence that Ner took part in pushing Garcia; that it was Garcia who elbowed his way through the picket lines and therefore Ner shouted "Close up," which the picketers did; and that Garcia tossed Paulino Bugay's placard and a fight ensued between them in which both suffered injuries. But despite these conflicting versions of what actually happened on May 21, 1958, there are grounds to believe that the picketers are not responsible for what happened. The picketing on May 21, 1958, as reported in the police blotter, was peaceful (see Police blotter report, exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner was acquitted). Moreover, although the Companies during the strike were holding offices at the Botica Boie building at Escolta, Manila; Tuason Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati, Rizal, Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records section, reported for work at the Insular Life Building. There is therefore a reasonable suggestion that they were sent to work at the latter building to create such an incident and have a basis for filing criminal charges against the petitioners in the fiscal's office and applying for injunction from the court of first instance. Besides, under the circumstances the picketers were not legally bound to yield their grounds and withdraw from the picket lines. Being where the law expects them to be in the legitimate exercise of their rights, they had every reason to defend themselves and their rights from any assault or unlawful transgression. Yet the police blotter, about adverted to, attests that they did not resort to violence.
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The heated altercations and occasional blows exchanged on the picket line do not affect or diminish the right to strike. Persuasive on this point is the following commentary: . We think it must be conceded that some disorder is unfortunately quite usual in any extensive or long drawn out strike. A strike is essentially a battle waged with economic weapons. Engaged in it are human beings whose feelings are stirred to the depths. Rising passions call forth hot words. Hot words lead to blows on the picket line. The transformation from economic to physical combat by those engaged in the contest is difficult to prevent even when cool heads direct the fight. Violence of this nature, however much it is to be regretted, must have been in the contemplation of the Congress when it provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing therein should be construed so as to interfere with or impede or diminish in any way the right to strike. If this were not so, the rights afforded to employees by the Act would indeed be illusory. We accordingly recently held that it was not intended by the Act that minor disorders of this nature would deprive a striker of the possibility of reinstatement. (Republic Steel Corp. v. N. L. R. B., 107 F2d 472, cited in Mathews, Labor Relations and the Law, p. 378) Hence the incident that occurred between Ner, et al. and Ramon Garcia was but a necessary incident of the strike and should not be considered as a bar to reinstatement. Thus it has been held that: Fist-fighting between union and non-union employees in the midst of a strike is no bar to reinstatement. (Teller, Labor Disputes and Collective Bargaining, Vol. II, p. 855 citing Stackpole Carbon, Co. 6 NLRB 171, enforced 105 F2d 167.) Furthermore, assuming that the acts committed by the strikers were transgressions of law, they amount only to mere ordinary misdemeanors and are not a bar to reinstatement. In cases involving misdemeanors the board has generally held that unlawful acts are not bar to reinstatement. (Teller, Labor Disputes and Collective Bargaining, Id., p. 854, citing Ford Motor Company, 23 NLRB No. 28.) Finally, it is not disputed that despite the pendency of criminal charges against non-striking employees before the fiscal's office, they were readily admitted, but those strikers who had pending charges in the same office were refused readmission. The reinstatement of the strikers is thus in order. [W]here the misconduct, whether in reinstating persons equally guilty with those whose reinstatement is opposed, or in other ways, gives rise to the inference that union activities rather than misconduct is the basis of his [employer] objection, the Board has usually required reinstatement." (Teller, supra, p. 853, citing the Third Annual Report of NLRB [1938], p. 211.) Lastly, the lower Court justified the constructive dismissal of Florencio Ibarra allegedly because he committed acts inimical to the interest of the respondents when, as president of the FGU Workers and Employees Association-NATU, he advised the strikers that they could use force and violence to have a successful picket and that picketing was precisely intended to prevent the non-strikers and company clients and customers from entering the Companies' buildings. Even if this were true, the record discloses that the picket line had been generally peaceful, and that incidents happened only when management men made incursions into and tried to break the picket line. At any rate, with or without the advice of Ibarra, picketing is inherently explosive. For, as pointed out by one author, "The picket line is an explosive front, charged with the emotions and fierce loyalties of the union-management dispute. It may be marked by colorful name-calling, intimidating threats or sporadic fights between the pickets and those who pass the line." (Mathews, Labor Relations and the Law, p. 752). The picket line being the natural result of the respondents' unfair labor practice, Ibarra's misconduct is at most a misdemeanor which is not a bar to reinstatement. Besides, the only evidence presented by the Companies regarding Ibarra's participation in the strike was the testimony of one Rodolfo Encarnacion, a former member of the board of directors of the petitioner FGU Insurance Group Workers and Employees Union-NATU, who became a "turncoat" and who likewise testified as to the union activities of Atty. Lacsina, Ricardo Villaruel and others (annex C, Decision, p. 27) another matter which emphasizes the respondents' unfair labor practice. For under the circumstances, there is good ground to believe

that Encarnacion was made to spy on the actvities of the union members. This act of the respondents is considered unjustifiable interference in the union activities of the petitioners and is unfair labor practice. It has been held in a great number of decisions at espionage by an employer of union activities, or surveillance thereof, are such instances of interference, restraint or coercion of employees in connection with their right to organize, form and join unions as to constitute unfair labor practice. ... "Nothing is more calculated to interfere with, restrain and coerce employees in the exercise of their right to self-organization than such activity even where no discharges result. The information obtained by means of espionage is in valuable to the employer and can be used in a variety of cases to break a union." The unfair labor practice is committed whether the espionage is carried on by a professional labor spy or detective, by officials or supervisory employees of the employer, or by fellow employees acting at the request or direction of the employer, or an ex-employee..." (Teller, Labor Disputes and Collective Bargaining, Vol. II, pp. 765-766, and cases cited.) . IV. The lower court should have ordered the reinstatement of the officials and members of the Unions, with full back wages from June 2, 1958 to the date of their actual reinstatement to their usual employment. Because all too clear from the factual and environmental milieu of this case, coupled with settled decisional law, is that the Unions went on strike because of the unfair labor practices committed by the respondents, and that when the strikers reported back for work upon the invitation of the respondents they were discriminatorily dismissed. The members and officials of the Unions therefore are entitled to reinstatement with back pay. [W]here the strike was induced and provoked by improper conduct on the part of an employer amounting to an 'unfair labor practice,' the strikers are entitled to reinstatement with back pay. (Rothenberg on Labor Relations, p. 418.) [A]n employee who has been dismissed in violation of the provisions of the Act is entitled to reinstatement with back pay upon an adjudication that the discharge was illegal." (Id., citingWaterman S. S. Corp. v. N. L. R. B., 119 F2d 760; N. L. R. B. v. Richter's Bakery, 140 F2d 870; N. L. R. B. v. Southern Wood Preserving Co., 135 F. 2d 606; C. G. Conn, Ltd. v. N. L. R. B., 108 F2d 390; N. L. R. B. v. American Mfg. Co., 106 F2d 61; N. L. R. B. v. Kentucky Fire Brick Co., 99 F2d 99.) And it is not a defense to reinstatement for the respondents to allege that the positions of these union members have already been filled by replacements. [W]here the employers' "unfair labor practice" caused or contributed to the strike or where the 'lock-out' by the employer constitutes an "unfair labor practice," the employer cannot successfully urge as a defense that the striking or lock-out employees position has been filled by replacement. Under such circumstances, if no job sufficiently and satisfactorily comparable to that previously held by the aggrieved employee can be found, the employer must discharge the replacement employee, if necessary, to restore the striking or locked-out worker to his old or comparable position ... If the employer's improper conduct was an initial cause of the strike, all the strikers are entitled to reinstatement and the dismissal of replacement employees wherever necessary; ... . (Id., p. 422 and cases cited.) A corollary issue to which we now address ourselves is, from what date should the backpay payable to the unionists be computed? It is now a settled doctrine that strikers who are entitled to reinstatement are not entitled to back pay during the period of the strike, even though it is caused by an unfair labor practice. However, if they offer to return to work under the same conditions just before the strike, the refusal to re-employ or the imposition of conditions amounting to unfair labor practice is a violation of section 4(a) (4) of the Industrial Peace Act and the employer is liable for backpay from the date of the offer (Cromwell Commercial Employees and Laborers Union vs. Court of Industrial Relations, L-19778, Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion for reconsideration, 13 SCRA 258; see also Mathews, Labor Relations and the Law, p. 730 and the cited cases). We have likewise ruled that discriminatorily dismissed employees must receive backpay from the date of the act of discrimination, that is, from the date of their discharge (Cromwell Commercial Employees and Laborers Union vs. Court of Industrial Relations, supra). The respondents notified the petitioner strikers to report back for work on June 2, 1958, which the latter did. A great number of them, however, were refused readmission because they had criminal charges against them pending before the fiscal's office, although non-strikers who were also facing criminal indictments were readily readmitted. These strikers who were refused readmission on June 2, 1958 can thus be categorized as discriminatorily dismissed employees and are entitled to backpay from said date. This is true even with respect to the petitioners Jose Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr. who were found guilty only of misdemeanors which are not considered sufficient to bar reinstatement (Teller, Labor Disputes and Collective Bargaining, p. 854), especially so because their unlawful acts arose during incidents which were provoked by the respondents' men. However, since the employees who were denied readmission have been out of the service of the Companies (for more than ten years) during which they may have found other employment or other means of livelihood, it is only just and equitable that whatever they may have earned during that period should be deducted from their back wages to mitigate somewhat the liability of the company, pursuant to the equitable principle that no one is allowed to enrich himself at the expense of another (Macleod & Co. of the Philippines v. Progressive Federation of Labor, 97 Phil. 205 [1955]). The lower court gave inordinate significance to the payment to and acceptance by the dismissed employees of separation pay. This Court has ruled that while employers may be authorized under Republic Act 1052 to terminate employment of employees by serving the required notice, or, in the absence thereof, by paying the required compensation, the said Act may not be invoked to justify a dismissal prohibited by law, e.g., dismissal for union activities. ... While Republic Act No. 1052 authorizes a commercial establishment to terminate the employment of its employee by serving notice on him one month in advance, or, in the absence thereof, by paying him one month compensation from the date of the termination of his employment, such Act does not give to the employer a blanket authority to terminate the employment regardless of the cause or purpose behind such termination. Certainly, it cannot be made use of as a cloak to circumvent a final order of the court or a scheme to trample upon the right of an employee who has been the victim of an unfair labor practice. (Yu Ki Lam, et al. v. Nena Micaller, et al., 99 Phil. 904 [1956].)

Finally, we do not share the respondents' view that the findings of fact of the Court of Industrial Relations are supported by substantial and credible proof. This Court is not therefore precluded from digging deeper into the factual milieu of the case (Union of Philippine Education Employees v. Philippine Education Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v. Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]). V. The petitioners (15 of them) ask this Court to cite for contempt the respondent Presiding Judge Arsenio Martinez of the Court of Industrial Relations and the counsels for the private respondents, on the ground that the former wrote the following in his decision subject of the instant petition for certiorari, while the latter quoted the same on pages 90-91 of the respondents' brief: . ... Says the Supreme Court in the following decisions: In a proceeding for unfair labor practice, involving a determination as to whether or not the acts of the employees concerned justified the adoption of the employer of disciplinary measures against them, the mere fact that the employees may be able to put up a valid defense in a criminal prosecution for the same acts, does not erase or neutralize the employer's right to impose discipline on said employees. For it is settled that not even the acquittal of an employee of the criminal charge against him is a bar to the employer's right to impose discipline on its employees, should the act upon which the criminal charged was based constitute nevertheless an activity inimical to the employer's interest... The act of the employees now under consideration may be considered as a misconduct which is a just cause for dismissal. (Lopez, Sr., et al. vs. Chronicle Publication Employees Ass'n. et al., G.R. No. L-20179-81, December 28, 1964.) (emphasis supplied) The two pertinent paragraphs in the above-cited decision * which contained the underscored portions of the above citation read however as follows: Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente, we are inclined to uphold the action taken by the employer as proper disciplinary measure. A reading of the article which allegedly caused their dismissal reveals that it really contains an insinuation albeit subtly of the supposed exertion of political pressure by the Manila Chronicle management upon the City Fiscal's Office, resulting in the non-filing of the case against the employer. In rejecting the employer's theory that the dismissal of Vicente and Aquino was justified, the lower court considered the article as "a report of some acts and omissions of an Assistant Fiscal in the exercise of his official functions" and, therefore, does away with the presumption of malice. This being a proceeding for unfair labor practice, the matter should not have been viewed or gauged in the light of the doctrine on a publisher's culpability under the Penal Code. We are not here to determine whether the employees' act could stand criminal prosecution, but only to find out whether the aforesaid act justifies the adoption by the employer of disciplinary measure against them. This is not sustaining the ruling that the publication in question is qualified privileged, but even on the assumption that this is so, the exempting character thereof under the Penal Code does not necessarily erase or neutralize its effect on the employer's interest which may warrant employment of disciplinary measure. For it must be remembered that not even the acquittal of an employee, of the criminal charges against him, is a bar to the employer's right to impose discipline on its employees, should the act upon which the criminal charges was based constitute nevertheless an activity inimical to the employer's interest. In the herein case, it appears to us that for an employee to publish his "suspicion," which actually amounts to a public accusation, that his employer is exerting political pressure on a public official to thwart some legitimate activities on the employees, which charge, in the least, would sully the employer's reputation, can be nothing but an act inimical to the said employer's interest. And the fact that the same was made in the union newspaper does not alter its deleterious character nor shield or protect a reprehensible act on the ground that it is a union activity, because such end can be achieved without resort to improper conduct or behavior. The act of the employees now under consideration may be considered as a misconduct which is a just cause for dismissal.** (Emphasis ours) It is plain to the naked eye that the 60 un-underscored words of the paragraph quoted by the respondent Judge do not appear in the pertinent paragraph of this Court's decision in L-20179-81. Moreover, the first underscored sentence in the quoted paragraph starts with "For it is settled ..." whereas it reads, "For it must be remembered ...," in this Court's decision. Finally, the second and last underlined sentence in the quoted paragraph of the respondent Judge's decision, appears not in the same paragraph of this Court's decision where the other sentence is, but in the immediately succeeding paragraph. This apparent error, however, does not seem to warrant an indictment for contempt against the respondent Judge and the respondents' counsels. We are inclined to believe that the misquotation is more a result of clerical ineptitude than a deliberate attempt on the part of the respondent Judge to mislead. We fully realize how saddled with many pending cases are the courts of the land, and it is not difficult to imagine that because of the pressure of their varied and multifarious work, clerical errors may escape their notice. Upon the other hand, the respondents' counsels have the prima facie right to rely on the quotation as it appears in the respondent Judge's decision, to copy it verbatim, and to incorporate it in their brief. Anyway, the import of the underscored sentences of the quotation in the respondent Judge's decision is substantially the same as, and faithfully reflects, the particular ruling in this Court's decision, i.e., that "[N]ot even the acquittal of an employee, of the criminal charges against him, is a bar to the employer's right to impose discipline on its employees, should the act upon which the criminal charges were based constitute nevertheless an activity inimical to the employer's interest." Be that as it may, we must articulate our firm view that in citing this Court's decisions and rulings, it is the bounden duty of courts, judges and lawyers to reproduce or copy the same word-for-word and punctuation mark-for-punctuation mark. Indeed, there is a salient and salutary reason why they should do this. Only from this Tribunal's decisions and rulings do all other courts, as well as lawyers and litigants, take their bearings. This is because the decisions referred to in article 8 of the Civil Code which reads, "Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines," are only those enunciated by this Court of last resort. We said in no uncertain terms in Miranda, et al. vs. Imperial, et al. (77 Phil. 1066) that "[O]nly the decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction." Thus, ever present is the danger that if not faithfully and exactly quoted, the decisions and rulings of this Court may lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may thereby be misled. But if inferior courts and members of the bar meticulously discharge their duty to check and recheck their citations of authorities culled not only from this Court's decisions but from other sources and make certain that they are verbatim reproductions down to the last word and punctuation mark, appellate courts will be precluded from acting on misinformation, as well as be saved precious time in finding out whether the citations are correct.

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

Footnotes 1 Cf. Chicago Apparatus Company, 12 NLRB 1002; Fruehauf Trailer Co., 1 NLRB 68; Remington Rand, Inc., 2 NLRB 626; Metropolitan Engineering Co., 4 NLRB 542; Ritzwoller Company, 11 NLRB 79; American Mfg. Co., 5 NLRB 443; Ralph A. Fruendich, Inc., 2 NLRB 802). 2 See Robert Bros., Inc., 8 NLRB 925; Hercules Campbell Body, Inc., 7 NLRB 431; Aronson Printing Co., 13 NLRB 799; E.A. Laboratories, Inc., 88 NLRB 673; Star Beef Company, 92 NLRB 1018; Jackson Press, Inc., 96 NLRB 132. * As reproduced on pp. 123-127 of the mimeographed and paperbound Supreme Court decisions for December 1964. ** Id., p. 126. (The entire decision may now be found in printed form in 12 SCRA 699-700.)

FIRST DIVISION

[G.R. No. 112661. May 30, 2001]

SIMEON DE LEON, EFREN ABAD, JAIME ABAD, JESSIE ABAY-ABAY, ROLANDO ABIOLA, ALICIO ABISO, CELEDONIO ABSALON, JEREMIAS ADO, VICENTE ADO, VICENTE AGGABAO, EFRAIN AGUIRRE, ALEXANDER ALATA, ERNESTO ALCALDE, LORENZO ALCOY, ALMARIO ALICIO, CESAR AMADOR, JOSE AMANTE, ESTELITO AMBROSIO, VICENTE ANAPI, ARNEL ANCHETA, ROGELIO ANCHETA, WILFREDO ANONUEVO, DOMINGO ANTIGRO, MARGARITO ANTIGRO, ROGELIO ANZANO, ANTONIO APOSTOL, ORLANDO AQUINO, JUAN ARCALAS, BONIFACIO ARIOLA, EDGAR ARIOLA, BONIFACIO ARMASA, FERNANDO BACCAY, MARIO BACUD, RUPERTO BACUDAN, NILO BALAG, ARGEL BALTAZAR, DEMETRIO BARAYOGA, FELIX BARNEDO, FLORENTINO BARTE, SARRI BASIRUL, MARCELO BATANES, RECTO BAYONA, VICTORIO BERMUNDO, ISMAEL BERNAL, LERIO BERSABE, FIDEL BOSE,

MARIANO BOTACION, DANILO BRAZIL, REYNALDO BRUNIO, MARIO BUENAVENTURA, ARSENIO BULATAO, FRANCISCO BULATAO, CARLOS CAJARA, ROSENDO CAMACHO, RUBEN CAMACHO, NESTOR CAPILOS, DOMINGO CASTRO, MAXIMIANO DE CASTO, EDINO CASTUERA, ZALDY CERDON, ANTONIO DERUJANO, VICTOR CIPRIANO, JUANITO CORPUZ, ALFREDO CRUZ, FERNANDO DELA CRUZ, MARIO CUSTOPAY, ROSAURO CUSTODIO, FRANKLIN CUSTODIO, ALFREDO DAPROZA, RENATO DAVAG, NOEL DEMINGOY, GENE DIESTRO, ESTEBAN DIONSON, RAMON DIZA, JEREMIAS DOROMAL, MANUEL EDATO, FERNANDO EDORA, CONRADO ENRIQUEZ, NICOMEDEZ ENRIQUEZ, ROLITO ESPIEL, LAURO ESPANOL, NONITO ESPLANA, ELPIDIO ESPANOL, DIOLITO ESTOPEREZ, ODILON EUSTE, HENRY FACTOR, VIRGILIO FAVORITO, ARISTOTLE FERNANDEZ, RODOFLO FORMALEJO, JUNE FULAY, RUIS FUTOL, JESUS GABA, RODRIGO GABAT, ROSALIA GABAT, CLEMENTE GASPAR, RODRIGO GAVIOLA, ELLEN GODELOSON, SALVADOR GUELA, EDUARDO GUZMAN, BALTAZAR DE GUZMAN, ZOSIMO DE GUZMAN, REYANLDO HAGUIRING, CARLOS GINDAP, BERNARDINO GIPIT, WILFREDO HERNANDEZ, IMMANUEL IBRING, PEPITO IMPERIO, MAGTANGGOL INSORIO, RODELYN JACUNTO, MARIO JARAPAN, MAXIMO JIMENEZ, ALEJANDRO JUDLOMAN, JUAN LAOAGAN, DANTE LARIOSA, ELINO LASAGA, JOSEPH LEGASPINA, ZOSIMO LEPALAM, BENJAMIN LIBAN, EFREN LIGUE, CLETO LINGA, ROMEO LLAGAS, LUCIO LLARENA, ALFREDO LOPEZ, FELIX LOPEZ, SANTOS LOPEZ, RUBEN LORENZO, NILO LUGANA, CANCIO MAATUBANG, ANTONIO MACASIO, ROBERTO MACATUNGGAL, VIRGILIO MACALINAO, RAMON MACOY, JOSE MAGALONA, ALEJO MANAGUELOD, DOMINGO MANALO, EMILIANO MANALO, SULPICIO MANTALABA, EDITO MANUEL, ROMULO MANUEL, FELINO MARANA, CARLITO MARGAJA, ROMARES MARIANO, CERMELO MARTINEZ, MODESTO MASULIT, ALMA MATUSALEM, FLAVIANO MEDEL, DOLCIANO MEDINA, DOLOROSA MEDINA, NORLINDO MEJARITO, PEDRITO MENDOZA, GUARDITO MERANO, ALBERTO DE MESA, CHARLIE MINANO, JOSE MONTEROSO, ROSENDO MORALES, CESAR NARDA, DOMINADOR NAGAL, EDEMIO NARISMA, DINISIO NAVASCA, REGINO NEPICON, JR., JESSIE CRIS NILO,

JERWYN ORARIO, EUGENIO ORBEGOZO, IRENEO ORGANISTA, CATALINO OJENDRAS, WILLIAM OLIVARES, JUANITO ORIO, WILLIAM ORTIZO, ROQUE PAL-PALLATOC, ROGELIO PAEL, LORENZO PAMINTUAN, VIRGILIO PANTALEON, ANTONIO PAPA, EMMANUEL PASCUAL, FRANCISCO PECUNDO, RUFINO PELICER, LEONARDO PEPITO, PABLITO PERALTA, EDILBERTO PEREZ, LOLITO PEREZ, PELAGIO PEREZ, JR., FERNANDO PINEDA, CARMEN PIO, ALEJANDRO QUIAMCO, VIRGILIO QUILALANG, JEREMEAS QUINES, ZENAIDA RAQUINE, DOMINGO RANOLA, SABINO RANULO, EDDIE RAZONABE, ALBERTO REBAULA, BENIGNO REGIS, PERFECTO REBOYO, VITALIANO REYES, ZOSIMO REYES, EDWIN ROBERTS, ROBERT ROJO, GODOFREDO ROLIO, ANATALIA ROSANTO, DOMINADOR ROSANTO, RAMON ROSANTO, SR., RODRIGO ROSANTO, JULIO RUBIO, DANTE RUZOL, VENUS RUZOL, ROMULO SABINO, CIPRIANO SACUILLES, SR., PRIMO SALAZAR, GASPAR SAMUYA, ANTONIO SANCHEZ, CLAUDIO SANCHEZ, YOLANDA SAN LUIS, ROBERTO SANTOS, BENITO SEGUDIENTE, EDGAR SIBAL, GREGORIO SIBAL, VALENTINO SIBAL, SONNY SINGH, ROMEO SOMERA, EDGAR TABAQUE, BENITO TACATA, MATILDE TACATA, ANDRESITO TALAM, ANTOLIN TALISIC, PABLO TAMAYO, JULIE TAMIEZA, ROGELIO TAYO, CELSO TE, ENRIQUE TRIPULCA, ARMANDO TUIBEO, NICANOR TUMAMAO, EDUARDO TUMBALE, RAMON TURIRIT, LONGENIO UMACAM, TOLENTINO UNDAUNDO, DIOLITO VALENCIA, ERNESTO VARGAS, BILLY VASQUEZ, TOMAS VELINA, MARCOS DE VERA, IRENEO VILELA, NICANDRO VILLAFRANCA, DANNY VILLANUEVA, LOLITA VITALICO, ALIPIO YGOT, AGOSTO YROMA, FELIX ZAMBALES, and GUILLERMO ZIPANGAN, petioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), and FORTUNE TOBACCO CORPORATION and/or MAGNUM INTEGRATED SERVICES, INC. (formerly FORTUNE INTEGRATED SERVICES, INC.), respondents. DECISION
PUNO, J.:

This case stemmed from a complaint for illegal dismissal, unfair labor practice and refund of cash bond filed by petitioners against respondents before the Arbitration Branch of the National

Labor Relations Commission (NLRC). The petition at bar seeks the annulment of the resolution of the NLRC dated July 5, 1993 reversing the decision of the Labor Arbiter finding respondents liable for the charges, and its resolution dated August 10, 1993 denying petitioners' motion for reconsideration. The undisputed facts are as follows: On August 23, 1980, Fortune Tobacco Corporation (FTC) and Fortune Integrated Services, Inc. (FISI) entered into a contract for security services where the latter undertook to provide security guards for the protection and security of the former. The petitioners were among those engaged as security guards pursuant to the contract. On February 1, 1991, the incorporators and stockholders of FISI sold out lock, stock and barrel to a group of new stockholders by executing for the purpose a "Deed of Sale of Shares of Stock". On the same date, the Articles of Incorporation of FISI was amended changing its corporate name to Magnum Integrated Services, Inc. (MISI). A new by-laws was likewise adopted and approved by the Securities and Exchange Commission on June 4, 1993. On October 15, 1991, FTC terminated the contract for security services which resulted in the displacement of some five hundred eighty two (582) security guards assigned by FISI/MISI to FTC, including the petitioners in this case. FTC engaged the services of two (2) other security agencies, Asian Security Agency and Ligalig Security Services, whose security guards were posted on October 15, 1991 to replace FISI's security guards. Sometime in October 1991, the Fortune Tobacco Labor Union, an affiliate of the National Federation of Labor Unions (NAFLU), and claiming to be the bargaining agent of the security guards, sent a Notice of Strike to FISI/MISI. On November 14, 1991, the members of the union which include petitioners picketed the premises of FTC. The Regional Trial Court of Pasig, however, issued a writ of injunction to enjoin the picket. On November 29, 1991, Simeon de Leon, together with sixteen (16) other complainants instituted the instant case before the Arbitration Branch of the NLRC. The complaint was later amended to allow the inclusion of other complainants. The parties submitted the following issues for resolution:
(1) Whether petitioners were illegally dismissed; (2) Whether respondents are guilty of unfair labor practice; and (3) Whether petitioners are entitled to the refund of their cash bond deposited with respondent FISI.

Petitioners alleged that they were regular employees of FTC which was also using the corporate names Fortune Integrated Services, Inc. and Magnum Integrated Services, Inc. They were assigned to work as security guards at the company's main factory plant, its tobacco redrying plant and warehouse. They averred that they performed their duties under the control and supervision of FTC's security supervisors. Their services, however, were severed in October 1991 without valid cause and without due process. Petitioners claimed that their dismissal was part of respondents' design to bust their newly-organized union which sought to enforce their rights under the Labor Standards law.[1]

Respondent FTC, on the other hand, maintained that there was no employer-employee relationship between FTC and petitioners. It said that at the time of the termination of their services, petitioners were the employees of MISI which was a separate and distinct corporation from FTC. Hence, petitioners had no cause of action against FTC.[2] Respondent FISI, meanwhile, denied the charge of illegal dismissal and unfair labor practice. It argued that petitioners were not dismissed from service but were merely placed on floating status pending re-assignment to other posts. It alleged that the temporary displacement of petitioners was not due to its fault but was the result of the pretermination by FTC of the contract for security services.[3] The Labor Arbiter found respondents liable for the charges. Rejecting FTC's argument that there was no employer-employee relationship between FTC and petitioners, he ruled that FISI and FTC should be considered as a single employer. He observed that the two corporations have common stockholders and they share the same business address. In addition, FISI had no client other than FTC and other corporations belonging to the group of companies owned by Lucio Tan. The Labor Arbiter thus found respondents guilty of union busting and illegal dismissal. He observed that not long after the stockholders of FISI sold all their stocks to a new set of stockholders, FTC terminated the contract of security services and engaged the services of two other security agencies. FTC did not give any reason for the termination of the contract. The Labor Arbiter gave credence to petitioners' theory that respondents' precipitate termination of their employment was intended to bust their union. Consequently, the Labor Arbiter ordered respondents to pay petitioners their backwages and separation pay, to refund their cash bond deposit, and to pay attorney's fees.[4] On appeal, the NLRC reversed and set aside the decision of the Labor Arbiter. First, it held that the Labor Arbiter erred in applying the "single employer" principle and concluding that there was an employer-employee relationship between FTC and FISI on one hand, and petitioners on the other hand. It found that at the time of the termination of the contract of security services on October 15, 1991, FISI which, at that time, had been renamed Magnum Integrated Services, Inc. had a different set of stockholders and officers from that of FTC. They also had separate offices. The NLRC held that the principle of "single employer" and the doctrine of piercing the corporate veil could not apply under the circumstances. It further ruled that the proximate cause for the displacement of petitioners was the termination of the contract for security services by FTC on October 15, 1991. FISI could not be faulted for the severance of petitioners' assignment at the premises of FTC. Consequently, the NLRC held that the charge of illegal dismissal had no basis. As regards the charge of unfair labor practice, the NLRC found that petitioners who had the burden of proof failed to adduce any evidence to support their charge of unfair labor practice against respondents. Hence, it ordered the dismissal of petitioners' complaint.[5] The petitioners filed a motion for reconsideration of the resolution of the NLRC but the same was denied.[6] Hence, this petition. We gave due course to the petition on May 15, 1995. Thus, the ruling in St. Martin Funeral Home vs. NLRC[7] remanding all petitions for certiorari from the decision of the NLRC to the Court of Appeals does not apply to the case at bar. The petition is impressed with merit.

An examination of the facts of this case reveals that there is sufficient ground to conclude that respondents were guilty of interfering with the right of petitioners to self-organization which constitutes unfair labor practice under Article 248 of the Labor Code.[8] Petitioners have been employed with FISI since the 1980s and have since been posted at the premises of FTC -- its main factory plant, its tobacco redrying plant and warehouse. It appears from the records that FISI, while having its own corporate identity, was a mere instrumentality of FTC, tasked to provide protection and security in the company premises. The records show that the two corporations had identical stockholders and the same business address. FISI also had no other clients except FTC and other companies belonging to the Lucio Tan group of companies. Moreover, the early payslips of petitioners show that their salaries were initially paid by FTC.[9] To enforce their rightful benefits under the laws on Labor Standards, petitioners formed a union which was later certified as bargaining agent of all the security guards. On February 1, 1991, the stockholders of FISI sold all their participations in the corporation to a new set of stockholders which renamed the corporation Magnum Integrated Services, Inc. On October 15, 1991, FTC, without any reason, preterminated its contract of security services with MISI and contracted two other agencies to provide security services for its premises. This resulted in the displacement of petitioners. As MISI had no other clients, it failed to give new assignments to petitioners. Petitioners have remained unemployed since then. All these facts indicate a concerted effort on the part of respondents to remove petitioners from the company and thus abate the growth of the union and block its actions to enforce their demands in accordance with the Labor Standards laws. The Court held in Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular Life Assurance Co., Ltd.:[10]

The test of whether an employer has interfered with and coerced employees within the meaning of section (a) (1) is whether the employer has engaged in conduct which it may reasonably be said tends to interfere with the free exercise of employees' rights under section 3 of the Act, and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining. [11]
We are not persuaded by the argument of respondent FTC denying the presence of an employer-employee relationship. We find that the Labor Arbiter correctly applied the doctrine of piercing the corporate veil to hold all respondents liable for unfair labor practice and illegal termination of petitioners' employment. It is a fundamental principle in corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporations to which it is connected. However, when the concept of separate legal entity is used to defeat public convenience, justify wrong, protect fraud or defend crime, the law will regard the corporation as an association of persons, or in case of two corporations, merge them into one. The separate juridical personality of a corporation may also be disregarded when such corporation is a mere alter ego or business conduit of another person.[12] In the case at bar, it was shown that FISI was a mere adjunct of FTC. FISI, by virtue of a contract for security services, provided FTC with security guards to safeguard its premises. However, records show that FISI and FTC have the same owners and business address, and FISI provided security services only to FTC and other companies belonging to the Lucio Tan group of companies. The purported sale of the shares of the former stockholders to a new set of stockholders who changed the name of the corporation to Magnum Integrated

Services, Inc. appears to be part of a scheme to terminate the services of FISI's security guards posted at the premises of FTC and bust their newly-organized union which was then beginning to become active in demanding the company's compliance with Labor Standards laws. Under these circumstances, the Court cannot allow FTC to use its separate corporate personality to shield itself from liability for illegal acts committed against its employees. Thus, we find that the termination of petitioners' services was without basis and therefore illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges, and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was witheld from him up to the time of his actual reinstatement. However, if reinstatement is no longer possible, the employer has the alternative of paying the employee his separation pay in lieu of reinstatement.[13] IN VIEW WHEREOF, the petition is GRANTED. The assailed resolutions of the NLRC are SET ASIDE. Respondents are hereby ordered to pay petitioners their full backwages, and to reinstate them to their former position without loss of seniority rights and privileges, or to award them separation pay in case reinstatement is no longer feasible. SO ORDERED. Davide, Jr., C.J. (Chairman), Pardo and Ynares-Santiago, JJ., concur. Kapunan J., on leave.

[1] [2] [3] [4] [5] [6] [7] [8]

Position Paper of Complainants, Original Record, pp. 66-73. Position Paper of Respondent Fortune Tobacco Corporation, Original Record, pp. 140-150. Position Paper of Respondent Fortune Integrated Services, Inc., Original Record, pp. 121-125. Rollo, pp. 47-64. Rollo, pp. 26-45. Rollo, p. 46. 295 SCRA 494 (1998).

Art. 248. Unfair labor practices of employers.-- It shall be unlawful for an employer to commit any of the following unfair labor practice: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; xxx
[9]

Annex "B"-"B-19", Position Paper of Complainants, Original Record, pp. 81-100. 37 SCRA 244 (1971). citing Francisco, Labor Laws, 1956, Vol. II, p. 323.

[10] [11] [12]

Yutivo Sons and Hardware Co. vs. Court of Tax Appeals, 1 SCRA 160 (1961); See also La Campana Coffee Factory, Inc. vs. Kaisahan ng mga Manggagawa sa La Campana (KKM), 93 Phil 160 (1953); Tan Boon Bee & Co., Inc. vs. Jarencio, 163 SCRA 205 (1988); Tomas Lao Construction vs. NLRC, 278 SCRA 716 (1997).
[13]

Dela Cruz vs. NLRC, 268 SCRA 458 (1997).

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