JACKIRI P. NUMOS JR.

LABOR RELATIONS

FILCRO DIGEST ON UNFAIR LABOR PRACTICE

CASE NO. 1
NUEVA ECIJA ELECTRIC COOPERATIVE, INC., VS NLRC
323 SCRA 86
January 24, 2000

FACTS:
Reynaldo Fajardo, Ernesto Marin, Ever Guevarra, Petronilo Baguisa, Victorino Carillo,
and Erdie Javate were permanent employees of Nueva Ecija I Electric Cooperative (NEECO I).
They were members of NEECO I Employees Association, a labor organization established for
the mutual aid and protection of its members. Rodolfo Jimenez was the president of the
association.

NEECO I is an electric cooperative under the general supervision and control of the
National Electrification Administration (NEA). The management of NEECO I is vested on the
Board of Directors. Patricio dela Peña was NEECO’s general manager on detail from NEA.

On 7 February 1987, the Board of Directors adopted Policy No. 3-33, which set the
guidelines for NEECO I’s retirement benefits. All regular employees were ordered by NEECO I
to accomplish Form 87, which were applications for either retirement, resignation, or separation
from service. The applications of Petronilo Baguisa and Ever Guevarra, respectively, were then
approved. They were paid the appropriate separation pay.

These successive events, followed by the promotion of certain union officers to

supervisory rank, caused apprehension in the labor association. They were considered as
harassment threatening the union members, and circumventing the employees’ security of tenure.
On 29 February 1992, to strengthen and neutralize management’s arbitrary moves, the union
held a "snap election" of officers. Fajardo was elected Treasurer, while Guevarra, Carillo and
Marin were elected Public Relations Officers.

On March 3, 1992, the Union passed a resolution withdrawing the applications for
retirement of all its members. However, petitioners Marin, Fajardo and Carillo were
compulsorily retired by management. They received their separation pay under protest. Erdie
Javate was also terminated from employment allegedly due to misappropriation of funds and
dishonesty. He was not however paid separation or retirement benefits.

On March 29, 1992, petitioners and Javate instituted a complaint for illegal dismissal and
damages with theNLRC Regional Arbitration Branch in San Fernando.

Petitioner’s Arguments:

They were purposely singled out for retirement from a listing of employees who were
made to submit retirement forms, even if they were not on top of the list because they were union
officers, past officers or active members of the association.
Their acceptance of the money offered by NEECO I did not constitute estoppel nor
waiver, since their acceptances were with vehement objections and without prejudice to all their
rights resulting from an illegal dismissal.

ISSUE:

Whether or not the petitioners are entitled to an award of moral and exemplary damages.

LAW APPLICABLE:

Article 248 of the Labor Code of the Philippines

CASE HISTORY:

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 The labor dispute arose when the employer promoted union officers to supervisory rank,
which caused apprehension in the labor organization. According to the union, this is considered
harassment which threatened union members and circumvented the employees’ security of
tenure.

RULING:

To warrant an award of moral damages, it must be shown that the dismissal of the
employee was attended to by bad faith, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy. The Labor Arbiter ruled that
there was unfair labor practice.

Unfair labor practices violate the constitutional rights of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management, including
their right to bargain collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect; and disrupt industrial peace and hinder the promotion of healthy
and stable labor-management relations. As the conscience of the government, it is the Court’s
sworn duty to ensure that none trifles with labor rights. For this reason, the Court finds it proper
in this case to impose moral and exemplary damages on private respondent.

However, the damages awarded by the labor arbiter, to our mind, are excessive. In
determining the amount of damages recoverable, the business, social and financial position of the
offended parties and the business and financial position of the offender are taken into account. It
is our view that herein private respondents had not fully acted in good faith. However, the Court
is cognizant that a cooperative promotes the welfare of its own members. The economic benefits
filter to the cooperative members. Either equally or proportionally, they are distributed among
members in correlation with the resources of the association utilized. Cooperatives help promote
economic democracy and support community development. Under these circumstances, the
Court deem it proper to reduce moral damages to onlyP10,000.00 payable by private respondent
NEECO I to each individual petitioner. The Court also deem it sufficient for private respondent
NEECO I to pay each individual petitioner P5,000.00 to answer for exemplary damages, based
on the provisions of Articles 2229 and 2232 of the Civil Code.

OPINION:

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

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CASE NO. 2
PEPSI-COLA PRODUCTS PHILIPPINES, INC., VS ANECITO MOLON, et. al.
G.R. No. 175002
February 18, 2013

FACTS:

In 1999, Pepsi adopted a company-wide retrenchment program denominated as Corporate

Rightsizing Program. On July 13, 1999, Pepsi notified the DOLE of the initial batch of forty
seven (47) workers to be retrenched. Among these employees were six (6) elected officers and
twenty-nine (29) active members of the LEPCEU-ALU, including herein respondents.

On July 19, 1999, LEPCEU-ALU filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) due to Pepsi’s alleged acts of union busting/ULP. It
claimed that Pepsi’s adoption of the retrenchment program was designed solely to bust their
union so that come freedom period, Pepsi’s company union, the Leyte Pepsi-Cola Employees
Union-Union de Obreros de Filipinas - would garner the majority vote to retain its exclusive
bargaining status.

ISSUE:

Whether Pepsi committed Unfair Labor Practice in the form of union busting or not.

LAW APPLICABLE:

Article 276(c) of the Labor Code

CASE HISTORY:

In 1999, Pepsi adopted a company-wide retrenchment program denominated as Corporate

Rightsizing Program. To commence with its program, it sent a notice of retrenchment to the
DOLE as well as individual notices to the affected employees informing them of their
termination from work. Subsequently, on July 13, 1999, Pepsi notified the DOLE of the initial
batch of forty-seven (47) workers to be retrenched. Among these employees were six (6) elected
officers and twenty-nine (29) active members of the LEPCEU-ALU, including herein
respondents.

RULING:

NO. Under Article 276(c) of the Labor Code, there is union busting when the existence of
the union is threatened by the employer’s act of dismissing the former’s officers who have been
duly-elected in accordance with its constitution and by-laws.

On the other hand, the term unfair labor practice refers to that gamut of offenses defined
in the Labor Code which, at their core, violates the constitutional right of workers and employees
to self-organization, with the sole exception of Article 257(f) (previously Article 248[f]).

Unfair labor practice refers to acts that violate the workers' right to organize. The
prohibited acts are related to the workers' right to self-organization and to the observance of a
CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices. The
only exception is Article 257(f)

OPINION:

I agree with the ruling of the Supreme Court that such act of the Pepsi company did not
practice unfair labor. Mindful of their nature, the Supreme Court finds it difficult to attribute any
act of union busting or ULP on the part of Pepsi considering that it retrenched its employees in
good faith. Pepsi tried to sit-down with its employees to arrive at mutually beneficial criteria
which would have been adopted for their intended retrenchment

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CASE NO. 3
GOYA INC. VS. GOYA, INC. EMPLOYEES UNION-FFW
G.R. No. 170054
January 21, 2013

FACTS:

Sometime in January 2004, petitioner Goya, Inc. (Company) hired contractual employees
from PESO Resources Development Corporation (PESO) to perform temporary and occasional
services in its factory. This prompted respondent Goya, Inc. Employees Union –FFW (Union) to
request for a grievance conference on the ground that the contractual workers do not belong to
the categories of employees stipulated in the existing Collective Bargaining Agreement (CBA).

The Union asserted that the hiring of contractual employees from PESO is not a
management prerogative and in gross violation of the CBA tantamount to unfair labor practice
(ULP). It noted that the contractual workers engaged have been assigned to work in positions
previously handled by regular workers and Union members, in effect violating Section 4, Article
I of the CBA, which provides for three categories of employees in the Company.

ISSUE:

Whether the CBA violation constitutes unfair labor practice or not.

LAW APPLICABLE:

Collective Bargaining agreement is the law between the parties. As stated in Honda
Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a
CBA may establish such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs, public order or public
policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties
and compliance therewith is mandated by the express policy of the law.

CASE HISTORY:
Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation
engaged in the manufacture, importation, and wholesale of top quality food products, hired
contractual employees from PESO Resources Development Corporation (PESO) to perform
temporary and occasional services in its factory in Parang, Marikina City. This prompted
respondent Goya, Inc. Employees Union–FFW (Union) to request for a grievance conference on
the ground that the contractual workers do not belong to the categories of employees stipulated
in the existing Collective Bargaining Agreement (CBA). When the matter remained unresolved,
the grievance was referred to the National Conciliation and Mediation Board (NCMB) for
voluntary arbitration.

RULING:

NO. If the terms of a contract, as in a CBA, are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of their stipulations shall control.

In this case, Section 4, Article I (on categories of employees) of the CBA between the
Company and the Union must be read in conjunction with its Section 1, Article III (on union
security). Both are interconnected and must be given full force and effect. Also, these provisions
are clear and unambiguous. The terms are explicit and the language of the CBA is not
susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly
held, the exercise of management prerogative is not unlimited; it is subject to the limitations
found in law, collective bargaining agreement or the general principles of fair play and
justice. To reiterate, the CBA is the norm of conduct between the parties and compliance
therewith is mandated by the express policy of the law.

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 However, while the engagement of PESO is in violation of Section 4, Article I of the
CBA, it does not constitute unfair labor practice as it is not characterized under the law as a gross
violation of the CBA.

OPINION:

I agree with the ruling of the Supreme Court that such act does not constitute unfair labor
practice. A collective bargaining agreement is the law between the parties and as such, if the
terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of their stipulations shall control.

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CASE NO. 4
DE LA SALLE UNIVERSITY VS DE LA SALLE UNIVERSITY EMPLOYEES
ASSOCIATION (DLSUEA-NAFTEU)
G.R. No. 177283
April 7, 2009

FACTS:

In 2001, a splinter group of respondent filed a petition for conduct of elections with the
DOLE alleging that the then incumbent officers of respondent had failed to call for a
regular election since1985. Respondent’s officers claimed that by virtue of RA 6715, which
amended the Labor Code, the term of office of its officers was extended to five years or until
1992 during which a general assembly was held affirming their hold-over tenure until the
termination of collective bargaining negotiations.

Acting on the petitioner, the DOLE-NCR held that the holdover authority of
respondent’s incumbent set of officers had been extinguished by virtue of the execution of the
CBA and ordered the conduct of elections subject to pre-election conferences.

Respondent wrote a letter to DLSU President to put on escrow all union dues/agency fees
and whatever money considerations deducted from salaries of concerned co-academic personnel
until the election of union officials has been scheduled and been held. Petitioner in
response, to do the following: (1) establish a savings account for the Union where all
collected union dues and agency will be deposited and held in trust; and (2) discontinue normal
relations with any group within the Union including the incumbent set of officers.

Respondents filed a complaint against petitioner for Unfair Labor Practice

(ULP) claiming that petitioner unduly interfered with its internal affairs. During the
pendency of this complaint, respondent file a notice of strike. LA dismissed the
respondent ULP complaint. On appeal, NLRC affirmed the decision of LA. On
respondent’s petition for certiorari before the CA, the Court set aside the decision of
NLRC. Hence, petitioner’s petition for review on certiorari.

ISSUE:

Whether the NLRC gravely abuse its discretion when it held that petitioner were not
guilty of ULP considering that the temporary measures implemented by the University were
undertaken in good faith and only to maintain its neutrality amid the intra-union dispute.

LAW APPLICABLE:

Article 248 of the Labor Code of the Philippines and Republic Act 6715

CASE HISTORY:

The labor dispute traces its roots to the 15-year delay in the holding of an election of
officers of the De La Salle University Employees Association (DLSU) -NAFTEU (union).
Allegedly, the delay was approved by the general union membership under the condition that the
officers would have holdover status until a collective bargaining agreement (CBA) was signed
with the employer, the De La Salle University (De La Salle).

A CBA was duly negotiated and signed on March 30, 2000, but no union election
followed until a group within the Union led by Ms. Belen Aliazas (Aliazas group) filed a petition
for union election in 2001 with the Department of Labor and Employment, National Capital
Region (DOLE-NCR). In a decision dated March 19, 2001, the DOLE-NCR called for union
election and pre-election conferences, plainly stating that the "rationale for the holdover is
already extinguished."

RULING:

It bears noting that at the time petitioners’ questioned moves were adopted, a
valid and existing CBA had been entered between the parties. It thus behooved petitioners to

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observe the terms and conditions thereof bearing on union dues and representation. It is
axiomatic in labor relations that a CBA entered into by a legitimate labor organization
and an employer become the law between the parties, compliance with which is mandated
by express policy of the law

OPINION:

I agree with the ruling of the Supreme Court in striking down as legally erroneous the CA
1st Division decision that the ULP charge before the NLRC 2nd Division could be absorbed by
the certified Notice of Strike case pending before the NLRC 3rd Division. Separately from the
reason stated in the Decision, I believe the NLRC 3rd Division has no jurisdiction to order that
the matter pending before the NLRC 2nd Division be "subsumed" in the certified case pending
before it. The various divisions within the NLRC are co-equal bodies and one division cannot
order another with binding effect.

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CASE NO. 5
UST FACULTY UNION VS UNIVERSITY OF STO. TOMAS
G.R. NO. 180892
APRIL 7, 2009

FACTS :

The UST Faculty Union (USTFU) informed its members of a General Assembly. One of
its agenda is the election of officers. The Secretary General of UST issued a Memorandum
allowing the request of Faculty Clubs to hold a convocation which the members of the
faculty including members of USTFU attended without the participation of UST
administration. Also, an election of USTFU was conducted by a group called Reformist
Alliance. Learning that the convocation was intended for election, some members
walked out but the election was conducted among those present (Gamilla
Group). Thus, two (2) groups claim to be USTFU namely; (1) Marino Group; and (2) Gamilla
Group.

Marino group filed a complaint for ULP against UST with the Arbitration
Branch. It also filed a complaint before Med-Arbiter praying for the nullification of the
election of the Gamilla Group.

A CBA was entered between Gamilla Group and UST superseding the existing CBA of
USTand USTFU. The MedArbiter declared the election of Gamilla Group as null and void. On a
ppeal, the BLR affirmed the decision of Med-Arbiter. On appeal before this Court,
the Court upheld the ruling of BLR. With the decision of this Court, the case before
the Arbitration Branch of NLRC was dismissed for lack of merit. USTFU appeal to the
NLRC, the NLRC affirmed the decision of LA. When the case is elevated to CA,
the Court affirmed the decision of NLRC.

ISSUE:

Whether CA committed serious and reversible error when it dismissed the

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

LAW APPLICABLE:

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

Article 247. Concept of unfair labor practice and procedure for

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

CASE HISTORY:

On September 21, 1996, the University of Santo Tomas Faculty Union (USTFU) wrote a
letter to all its members informing them of a General Assembly (GA) that was to be held on
October 5, 1996. The letter contained an agenda for the GA which included an election of
officers. The then incumbent president of the USTFU was Atty. Eduardo J. Mario, Jr.
On October 2, 1996, Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a
Memorandum allowing the request of the Faculty Clubs of the university to hold a convocation
on October 4, 1996.

Members of the faculties of the university attended the convocation, including members
of the USTFU, without the participation of the members of the UST administration.

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RULING:

The general principle is that one who makes an allegation has the burden of proving
it. While, there are exceptions to this general rule, in the case of ULP, the alleging
party has the burden of proving such ULP.

T h u s , t h e c o u r t r u l e d i n De Paul/King Philip Customs Tailor v. NLRC that

“a party alleging a critical fact must support his
a l l e g a t i o n w i t h s u b s t a n t i a l e v i d e n c e . A n y d e c i s i o n b a s e d o n unsubstantiated
allegation cannot stand as it will offend due process.”

“ I n o r d e r t o s h o w t h a t t h e e m p l o ye r c o m m i t t e d U L P u n d e r t h e L a b o r
C o d e , s u b s t a n t i a l evidence is required to support the claim. Substantial evidence
has been defined as such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion.”

OPINION:

I agree with the ruling of the Supreme Court that the UST administration is not guilty of
unfair labor practices as it was not supported clearly by the evidences shown by the petitioner.
The petitioner makes several allegations that UST committed ULP. It is on shoulders of
petitioner to establish or substantiate such claims by the requisite quantum of evidence. In labor
cases as in other administrative proceedings, substantial evidence or such relevant evidence as a
reasonable mind might accept as sufficient to support a conclusion is required. In the petition at
bar, petitioner miserably failed to adduce substantial evidence.

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CASE NO. 6
MINETTE BAPTISTA vs. ROSARIO VILLANUEVA, et. al.
G.R. No. 194709
31 July 2013

FACTS:

Petitioners and other members of the union filed impeachment complaint against all the
union officers and members of RPNEU and audit before the DOLE for suspicion of union
mismanagement. Thereafter, complaints were filed against petitioners and several other for
alleged violation of the union’s Constitution and by-laws and violation of Section 2.5 of Article
IX for urging or advocating that a member start an action in any court of justice or external
investigative body against the Union or its officer without first exhausting all internal remedies
open to him or available in accordance with the CBL. Petitioners and their group denies the
charges imputed against them and contested the procedure adopted by the Committee in its
investigation.

The Committee submitted their recommendation of expulsion from the union to

RPNEU’s Board of Directors which the latter affirmed, and they were served expulsion notice.
And their unemployment was terminated in compliance with their CBA’s union security clause.

Petitioners filed complaints for ULP against the respondents questioning legality of their
expulsion from the union and their subsequent termination from employment. LA ruled in favor
of the petitioners and adjudged the respondents guilty of ULP pursuant to Article 249 (a) and (b)
of the Labor Code. NLRC, on appeal, dismissed the case for lack of merit. CA sustained the NL
RC Decision.

ISSUE:

Whether or not the labor organization is guilty of unfair labor practice when it expels
members pursuant to the Union’s CBL.

LAW APPLICABLE:

Article 249 (a) and (b) of the Labor Code of the Philippines

CASE HISTORY:

Petitioners were former union members of Radio Philippines Network Employees Union
(RPNEU), a legitimate labor organization and the sole and exclusive bargaining agent of the rank
and file employees of Radio Philippines Network (RPN), a government-sequestered corporation
involved in commercial radio and television broadcasting affairs, while the respondents were the
union’s elected officers and members.

RULING:

No. It is well-settled that workers and employers organizations shall have the right to
draw up their constitutions and rules to elect their representatives in full freedom, to organize
their administration and activities and to formulate their programs.

In this case, RPNEU’s Constitution and by-laws expressly mandate that before a party is
allowed to seek the intervention of the court, it is a pre-condition that he should have availed of
all the internal remedies within the organization. Petitioners were found to have violated the
provisions of the union’s Constitution and by-laws when they filed petitions for impeachment
against their union officers and for audit before the DOLE without first exhausting all internal
remedies available within their organization. This act is a ground for expulsion from union
membership. Thus, petitioner’s expulsion from the union was not a deliberate attempt to curtail
or restrict their right to organize, but was triggered by the commission of an act, expressly
sanctioned by the union’s Constitution and by-laws.

Unfortunately, petitioners failed to discharge the burden required to prove the charge of
ULP against the respondents. Aside from their self-serving allegations, petitioners were not able

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to establish how they were restrained or coerced by their union in a way that curtailed their right
to self- organization. The records likewise failed to show that the respondents unduly persuaded
management into discriminating against petitioners. Other to bring to its attention their expulsion
from the union, which in turn, resulted in the implementation of their CBA’s union security
clause. As earlier stated, petitioners had the burden of adducing substantial evidence to support
its allegations of ULP, which burden they failed to discharge. In fact, both the NLRC and the CA
found that petitioners were unable to prove their charge of ULP against the respondents.

OPINION:

I agree with the ruling of the Supreme Court that such labor organization is not guilty of
unfair labor practice when it expels members pursuant to the Union’s CBL. As such, for a charge
of ULP against a labor organization to prosper, the onus probandi rests upon the party alleging it
to prove or substantiate such claims by the requisite quantum of evidence. In labor cases, as in
other administrative proceedings, substantial evidence or such relevant evidence as a reasonable
mind might accept as sufficient to support a conclusion is required. Moreover, it is indubitable
that all the prohibited acts constituting unfair labor practice should materially relate to the
workers' right to self-organization.

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CASE NO. 7
TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY vs. ASIA
BREWERY, INC.
G.R. No. 162025
Aug. 3, 2010

FACTS:

Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer,
shandy, bottled water and glass products. ABI entered into a Collective Bargaining Agreement
(CBA) with Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-
INDEPENDENT), the exclusive bargaining representative of ABI’s rank-and-file employees.

Article I of the CBA defined the scope of the bargaining unit, as follows:

Section 1.Recognition. The COMPANY recognizes the UNION as the sole and exclusive
bargaining representative of all the regular rank-and-file daily paid employees within the scope
of the appropriate bargaining unit with respect to rates of pay, hours of work and other terms and
conditions of employment. The UNION shall not represent or accept for membership employees
outside the scope of the bargaining unit herein defined.

Section 2.Bargaining Unit. The bargaining unit shall be comprised of all regular rank-
and-file daily-paid employees of the COMPANY. However, the following jobs/positions as
herein defined shall be excluded from the bargaining unit, to wit:
1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control Staff

Subsequently, a dispute arose when ABI’s management stopped deducting union dues
from eighty-one (81) employees, believing that their membership in BLMA-INDEPENDENT
violated the CBA. Eighteen (18) of these affected employees are QA Sampling
Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality Control
Staff. Twenty (20) checkers are assigned at the Materials Department of the Administration
Division, Full Goods Department of the Brewery Division and Packaging Division. The rest are
secretaries/clerks directly under their respective division managers

BLMA-INDEPENDENT claimed that ABI’s actions restrained the employees’ right to

self-organization and brought the matter to the grievance machinery. As the parties failed to
amicably settle the controversy, BLMA-INDEPENDENT lodged a complaint before the
National Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit
the case for arbitration to resolve the issue of "whether or not there is restraint to employees in
the exercise of their right to self-organization."

Voluntary Arbitrator sustained the BLMA-INDEPENDENT after finding that the

positions of the subject employees qualify under the rank-and-file category because their
functions are merely routinary and clerical. On appeal, the CA reversed the Voluntary Arbitrator.

BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a

certification election was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng
Manggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABI’s rank-
and-file employees claiming interest in the outcome of the case, petitioner filed with the CA an
omnibus motion for reconsideration of the decision and intervention, with attached petition
signed by the union officers. Both motions were denied by the CA.

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ISSUE:

Whether or not the 81 employees are excluded from and are not eligible for inclusion in
the bargaining unit as defined in the CBA;
Whether or not the ABI committed an act in restraining the employees in the exercise of
their right to self-organization.

LAW APPLICABLE:

Article 245 of the Labor Code of the Philippines

CASE HISTORY:

Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and
distribution of beer, shandy, bottled water and glass products. ABI entered into a Collective
Bargaining Agreement (CBA), effective for five (5) years from August 1, 1997 to July 31, 2002,
with Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the
exclusive bargaining representative of ABIs rank-and-file employees. On October 3, 2000, ABI
and BLMA-INDEPENDENT signed a renegotiated CBA effective from August 1, 2000 to 31
July 2003.

RULING:

1. Although Article 245 of the Labor Code limits the ineligibility to join, form and assist
any labor organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of work are required
to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to
sensitive and highly confidential records. Confidential employees are thus excluded from the
rank-and-file bargaining unit. The rationale for their separate category and disqualification to
join any labor organization is similar to the inhibition for managerial employees because if
allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of
evident conflict of interests and the Union can also become company-denominated with the
presence of managerial employees in the Union membership. Having access to confidential
information, confidential employees may also become the source of undue advantage. Said
employees may act as a spy or spies of either party to a collective bargaining agreement.

In Philips Industrial Development, Inc. v. NLRC, this Court held that petitioner’s
"division secretaries, all Staff of General Management, Personnel and Industrial Relations
Department, Secretaries of Audit, EDP and Financial Systems" are confidential employees not
included within the rank-and-file bargaining unit. Earlier, in Pier 8 Arrastre & Stevedoring
Services, Inc. v. Roldan-Confesor, the court declared that legal secretaries who are tasked with,
among others, the typing of legal documents, memoranda and correspondence, the keeping of
records and files, the giving of and receiving notices, and such other duties as required by the
legal personnel of the corporation, fall under the category of confidential employees and hence
excluded from the bargaining unit composed of rank-and-file employees.

Also considered having access to "vital labor information" are the executive secretaries of
the General Manager and the executive secretaries of the Quality Assurance Manager, Product
Development Manager, Finance Director, Management System Manager, Human Resources
Manager, Marketing Director, Engineering Manager, Materials Manager and Production
Manager.

In the present case, the CBA expressly excluded "Confidential and Executive Secretaries"
from the rankand-file bargaining unit, for which reason ABI seeks their disaffiliation from the
union. Petitioner, however, maintains that except for Daisy Laloon, Evelyn Mabilangan and
Lennie Saguan who had been promoted to monthly paid positions, several secretaries/clerks are
deemed included among the rank-and-file employees of ABI. It is rather curious that there would
be several secretaries/clerks for just one (1) department/division performing tasks which are
mostly routine and clerical. ABI insisted they fall under the "Confidential and Executive
Secretaries" expressly excluded by the CBA from the rank-and-file bargaining unit.

13 | P a g e
 However, perusal of the job descriptions of these secretaries/clerks reveals that their
assigned duties and responsibilities involve routine activities of recording and monitoring, and
other paper works for their respective departments while secretarial tasks such as receiving
telephone calls and filing of office correspondence appear to have been commonly imposed as
additional duties.

ABI failed to indicate who among these numerous secretaries/clerks have access to
confidential data relating to management policies that could give rise to potential conflict of
interest with their Union membership. Clearly, the rationale under our previous rulings for the
exclusion of executive secretaries or division secretaries would have little or no significance
considering the lack of or very limited access to confidential information of these
secretaries/clerks.

We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file
employees and not confidential employees.

With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine

Technician, there seems no dispute that they form part of the Quality Control Staff who, under
the express terms of the CBA, fall under a distinct category. But we disagree with ABI’s
contention that the twenty (20) checkers are similarly confidential employees being "quality
control staff" entrusted with the handling and custody of company properties and sensitive
information.

Again, the job descriptions of these checkers assigned in the storeroom section of the
Materials Department, finishing section of the Packaging Department, and the decorating and
glass sections of the Production Department plainly showed that they perform routine and
mechanical tasks preparatory to the delivery of the finished products. Consequently, we hold that
the twenty (20) checkers may not be considered confidential employees under the category of
Quality Control Staff who were expressly excluded from the CBA of the rank-and-file
bargaining unit.

Confidential employees are defined as those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management policies in the
field of labor relations. The two (2) criteria are cumulative, and both must be met if an employee
is to be considered a confidential employee – that is, the confidential relationship must exist
between the employee and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations. The exclusion from bargaining units of employees
who, in the normal course of their duties, become aware of management policies relating to labor
relations is a principal objective sought to be accomplished by the "confidential employee rule.

There is no showing in this case that the secretaries/clerks and checkers assisted or acted
in a confidential capacity to managerial employees and obtained confidential information
relating to labor relations policies. Not being confidential employees, the secretaries/clerks and
checkers are not disqualified from membership in the Union of respondent’s rank-and-file
employees.

2. Unfair labor practice refers to "acts that violate the workers’ right to organize." The
prohibited acts are related to the workers’ right to self-organization and to the observance of a
CBA. For a charge of unfair labor practice to prosper, it must be shown that ABI was motivated
by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to
morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings
or grave anxiety resulted from ABI’s act in discontinuing the union dues deduction from those
employees it believed were excluded by the CBA. Considering that the herein dispute arose from
a simple disagreement in the interpretation of the CBA provision on excluded employees from
the bargaining unit, respondent cannot be said to have committed unfair labor practice that
restrained its employees in the exercise of their right to self-organization, nor have thereby
demonstrated an anti-union stance.

OPINION:

I agree with the ruling of the Supreme Court that such dispute did not commit unfair
labor practice that restrained their employees in their right of exercising self-organization as the

14 | P a g e
ABI was not motivated by bad faith or fraud or acts which was contrary to morals, good
customs, or public policy as they did not demonstrate an anti-union stance but purely exercise of
their right to self-organization as one of the constitutional right granted to the workers in the
Philippines.

15 | P a g e
CASE NO. 8
MANILA MINING CORP. EMPLOYEES ASSOCIATION-FFW vs. MANILA MINING
CORP.
G.R. No. 178222-23
Sept. 29, 2010

FACTS:

Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged

in large-scale mining for gold and copper ore. MMC is required by law to maintain a tailings
containment facility to store the waste material generated by its mining operations.
Consequently, MMC constructed several tailings dams to treat and store its waste materials. One
of these dams it constructed in 1993 and was operated under a permit issued by the DENR,
through its Environmental Management Bureau (EMB) in Butuan City, Agusan del Norte.

Eleven (11) rank-and-file employees of MMC, who later became complainants before the
labor arbiter, attended the organizational meeting of MMC-Makati Employees Association-
Federation of Free Workers Chapter (Union). The Union filed with the DOLE all the
requirements for its registration, acquired its legitimate registration status and subsequently,
submitted letters to MMC relating its intention to bargain collectively. The Union submitted its
Collective Bargaining Agreement (CBA) proposal to MMC.

Upon expiration of the tailings permit, DENR-EMB did not issue a permanent permit due
to the inability of MMC to secure an Environmental Compliance Certificate (ECC). MMC was
compelled to temporarily shut down its mining operations, resulting in the temporary lay-off of
more than 400 employees in the mine site.

MMC called for the suspension of negotiations on the CBA with the Union until
resumption of mining operations.

Among the employees laid-off, the 11 complainants, together with the Union filed a
complaint before the labor arbiter praying for reinstatement, recognition of the Union as the sole
and exclusive representative of its rank-and-file employees, and payment of moral and
exemplary damages and attorney’s fees.

The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the
mining operation, as well as the temporary lay-off of the employees, is valid. The NLRC
modified the judgment of the labor arbiter and ordered the payment of separation pay equivalent
to one month pay for every year of service. It ratiocinated that the temporary lay-off, which
exceeded more than six (6) months, had the effect of severance of the employer-employee
relationship. The Court of Appeals maintained the order to pay separation pay but set aside the
MMC liability to pay the Union attorney’s fees equivalent to 10% of the award.

ISSUE:

Whether or not MMC is guilty of unfair labor practice

LAW APPLICABLE:

ARTICLE 252. Meaning of duty to bargain collectively. - The duty to bargain

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

CASE HISTORY:

The complainants challenged the validity of their lay-off on the averment that MMC was
not suffering from business losses. They alleged that MMC did not want to bargain collectively
with the Union, so that instead of submitting their counterproposal to the CBA, MMC decided to

16 | P a g e
terminate all union officers and active members. Petitioners questioned the timing of their lay-
off, and alleged that first, there was no showing that cost-cutting measures were taken by MMC;
second, no criteria were employed in choosing which employees to lay-off; and third, the
individuals laid-off were those who signed the attendance sheet of the union organizational
meeting. Petitioners likewise claimed that they were denied due process because they were not
given a 30-day notice informing them of the lay-off. Neither was the DOLE informed of this lay-
off, as mandated by law.

RULING:

The lay-off is neither illegal nor can it be considered as unfair labor practice. Despite all
efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the
community where the tailings pond would operate, one of the conditions imposed by DENR-
EMB in granting its application for a permanent permit. It is precisely MMC’s faultless failure to
secure a permit which caused the temporary shutdown of its mining operations. As aptly put by
the Court of Appeals:

The evidence on record indeed clearly shows that MMC’s suspension of its mining
operations was bonafide and the reason for such suspension was supported by substantial
evidence. MMC cannot conduct mining operations without a tailings disposal system. For this
purpose, MMC operates TP No. 7 under a valid permit from the Department of Environment and
Natural Resources (DENR) through its Environmental Management Bureau (EMB). In fact, a
"Temporary Authority to Construct and Operate" was issued on January 25, 2001 in favor of
MMC valid for a period of six (6) months or until July 25, 2001. The NLRC did not dispute
MMC’s claim that it had timely filed an application for renewal of its permit to operate TP No. 7
but that the renewal permit was not immediately released by the DENR-EMB, hence, MMC was
compelled to temporarily shut down its milling and mining operations. Here, it is once apparent
that the suspension of MMC’s mining operations was not due to its fault nor was it necessitated
by financial reasons. Such suspension was brought about by the non-issuance of a permit for the
continued operation of TP No. 7 without which MMC cannot resume its milling and mining
operations.

Unfair labor practice cannot be imputed to MMC since, as ruled by the Court of Appeals,
the call of MMC for a suspension of the CBA negotiations cannot be equated to "refusal to
bargain."

Article 252 of the Labor Code defines the phrase "duty to bargain collectively”. For a
charge of unfair labor practice to prosper, it must be shown that the employer was motivated by
ill will, bad faith or fraud, or was oppressive to labor. The employer must have acted in a manner
contrary to morals, good customs, or public policy causing social humiliation, wounded feelings
or grave anxiety. While the law makes it an obligation for the employer and the employees to
bargain collectively with each other, such compulsion does not include the commitment to
precipitately accept or agree to the proposals of the other. All it contemplates is that both parties
should approach the negotiation with an open mind and make reasonable effort to reach a
common ground of agreement.

The Union based its contention on the letter request by MMC for the suspension of the
collective bargaining negotiations until it resumes operations. Verily, it cannot be said that MMC
deliberately avoided the negotiation. It merely sought a suspension and in fact, even expressed its
willingness to negotiate once the mining operations resume. There was valid reliance on the
suspension of mining operations for the suspension, in turn, of the CBA negotiation. The Union
failed to prove bad faith in MMC’s actuations.

OPINION:

I agree with the ruling of the Supreme Court that such case does not involve any unfair
labor practice. For a charge of unfair labor practice to prosper, it must be shown that the
employer was motivated by ill will, bad faith or fraud, or was oppressive to labor. The employer
must have acted in a manner contrary to morals, good customs, or public policy causing social
humiliation, wounded feelings or grave anxiety.

17 | P a g e
CASE NO. 9
PRINCE TRANSPORT ET AL. vs. GARCIA ET AL.
G.R. No. 167291
January 12, 2011

FACTS:

Prince Transport, Inc. (PTI) is a company engaged in the business of transporting

passengers by land.

Respondents alleged in their complaints that: that they were hired by petitioner either as
drivers, conductors, mechanics or inspectors, except for respondent Diosdado Garcia, who was
assigned as Operations Manager.; in addition to their regular monthly income, they also received
commissions equivalent to 8 to 10% of their wages.; sometime in October 1997, the said
commissions were reduced to 7 to 9%; this led respondents and other employees of PTI to hold a
series of meetings to discuss the protection of their interests as employees; these meetings led
Renato Claros, who is the president of PTI, to suspect that respondents are about to form a union;
he made known to Garcia his objection to the formation of a union; in December 1997, PTI
employees requested for a cash advance, but the same was denied by management which
resulted in demoralization on the employees' ranks; later, PTI acceded to the request of some, but
not all, of the employees; the foregoing circumstances led respondents to form a union for their
mutual aid and protection; in order to block the continued formation of the union, PTI caused the
transfer of all union members and sympathizers to one of its sub-companies, Lubas Transport
(Lubas); despite such transfer, the schedule of drivers and conductors, as well as their company
identification cards, were issued by PTI; the daily time records, tickets and reports of the
respondents were also filed at the PTI office; and, all claims for salaries were transacted at the
same office; later, the business of Lubas deteriorated because of the refusal of PTI to maintain
and repair the units being used therein, which resulted in the virtual stoppage of its operations
and respondents' loss of employment.

Petitioners, on the other hand, denied the material allegations of the complaints
contending that herein respondents were no longer their employees, since they all transferred to
Lubas at their own request; petitioners have nothing to do with the management and operations
of Lubas as well as the control and supervision of the latter's employees; petitioners were not
aware of the existence of any union in their company and came to know of the same only in June
1998 when they were served a copy of the summons in the petition for certification election filed
by the union; that before the union was registered on April 15, 1998, the complaint subject of the
present petition was already filed; that the real motive in the filing of the complaints was because
PTI asked respondents to vacate the bunkhouse where they (respondents) and their respective
families were staying because PTI wanted to renovate the same.

ISSUE:

Whether or not PTI is guilty of unfair labor practice

LAW APPLICABLE:

Article 248 (a) and (e) of the Labor Code of the Philippines

CASE HISTORY:

The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice in the
absence of evidence to show that they violated respondents' right to self-organization. The Labor
Arbiter also held that Lubas is the respondents' employer and that it is an entity which is
separate, distinct and independent from PTI. Nonetheless, the Labor Arbiter found that Lubas is
guilty of illegally dismissing respondents from their employment. The NLRC partly sustained
the Labor Arbiter’s ruling.

The CA granted respondents' petition, ruling that petitioners are guilty of unfair labor
practice; that Lubas is a mere instrumentality, agent conduit or adjunct of PTI; and that
petitioners' act of transferring respondents' employment to Lubas is indicative of their intent to
frustrate the efforts of respondents to organize themselves into a union.

18 | P a g e
RULING:

As to whether petitioners are guilty of unfair labor practice, the Court finds no cogent
reason to depart from the findings of the CA that respondents' transfer of work assignments to
Lubas was designed by petitioners as a subterfuge to foil the former's right to organize
themselves into a union. Under Article 248 (a) and (e) of the Labor Code, an employer is guilty
of unfair labor practice if it interferes with, restrains or coerces its employees in the exercise of
their right to self-organization or if it discriminates in regard to wages, hours of work and other
terms and conditions of employment in order to encourage or discourage membership in any
labor organization.

Indeed, evidence of petitioners' unfair labor practice is shown by the established fact that,
after respondents' transfer to Lubas, petitioners left them high and dry insofar as the operations
of Lubas was concerned. The Court finds no error in the findings and conclusion of the CA that
petitioners "withheld the necessary financial and logistic support such as spare parts, and repair
and maintenance of the transferred buses until only two units remained in running condition."
This left respondents virtually jobless.

OPINION:

I agree to the ruling of the Supreme Court that Indeed, evidence of petitioners' unfair
labor practice is shown by the established fact that, after respondents' transfer to Lubas,
petitioners left them high and dry insofar as the operations of Lubas was concerned. The Court
finds no error in the findings and conclusion of the CA that petitioners "withheld the necessary
financial and logistic support such as spare parts, and repair and maintenance of the transferred
buses until only two units remained in running condition."

19 | P a g e
CASE NO. 10
PARK HOTEL ET AL. VS. SORIANO ET AL.
G.R. NO. 171118
SEPTEMBER 10, 2012

FACTS:

Soriano was initially hired by Park Hotel but was transferred to Burgos Corporation.
Gonzales and Badilla were employees of Burgos Corporation. Burgos is a sister company of
Park Hotel. Harbutt and Percy are the General Manager and owner, respectively, of Park Hotel.
Percy, Harbutt and Atty. Roberto Enriquez are also the officers and stockholders of Burgos
Corporation. Soriano, Gonzales and Badilla were dismissed from work for allegedly stealing
company properties. As a result, respondents filed complaints for illegal dismissal, unfair labor
practice, before the Labor Arbiter (LA). In their complaints, respondents alleged that the real
reason for their dismissal was that they were organizing a union for the company's employees.

ISSUE:

Whether or not corporate officers are solidarily and personally liable in a case for illegal
dismissal and unfair labor practice

LAW APPLICABLE:

Article 248 (a) of the Labor Code

CASE HISTORY:

In October of 1997, Soriano, Gonzales and Badilla were dismissed from work for
allegedly stealing company properties. As a result, respondents filed complaints for illegal
dismissal, unfair labor practice, and payment of moral and exemplary damages and attorney's
fees, before the Labor Arbiter (LA). In their complaints, respondents alleged that the real reason
for their dismissal was that they were organizing a union for the company's employees.

RULING:

A corporation, being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, while acting as corporate agents, are not their personal
liability but the direct accountability of the corporation they represent. However, corporate
officers may be deemed solidarily liable with the corporation for the termination of employees if
they acted with malice or bad faith. In the present case, the lower tribunals unanimously found
that Percy and Harbutt, in their capacity as corporate officers of Burgos, acted maliciously in
terminating the services of respondents without any valid ground and in order to suppress their
right to self-organization. Section 31 of the Corporation Code makes a director personally liable
for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of
the corporation. It also makes a director personally liable if he is guilty of gross negligence or
bad faith in directing the affairs of the corporation. Thus, Percy and Harbutt, having acted in bad
faith in directing the affairs of Burgos, are jointly and severally liable with the latter for
respondents' dismissal.

OPINION:

I agree with the ruling of the Supreme Court that before a corporation can be held
accountable for the corporate liabilities of another, the veil of corporate fiction must first be
pierced. Thus, before Park Hotel can be held answerable for the obligations of Burgos to its
employees, it must be sufficiently established that the two companies are actually a single
corporate entity, such that the liability of one is the liability of the other. As such the respondents
utterly failed to prove by competent evidence that Park Hotel was a mere instrumentality,
agency, conduit or adjunct of Burgos, or that its separate corporate veil had been used to cover
any fraud or illegality committed by Burgos against the respondents. Accordingly, Park Hotel
and Burgos cannot be considered as one and the same entity, and Park Hotel cannot be held
solidary liable with Burgos.

20 | P a g e
CASE NO. 11
TH SHOPFITTERS CORP. ET AL. VS. T&H SHOPFITTERS CORP. UNION
G.R. NO. 191714
FEBRUARY 26, 2014

FACTS:

On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation

workers union (THS-GQ Union), its officers and/or members of THS-GQ union, filed their
Complaint7 for Unfair Labor Practice (ULP) by way of union busting, and Illegal Lockout, with
moral and exemplary damages and attorney’s fees, against T&H Shopfitters Corporation (T&H
Shopfitters) and Gin Queen Corporation (Gin Queen) (collectively referred to as "petitioners"),
before the Labor Arbiter (LA).

Respondents treated T&H Shopfitters and Gin Queen as a single entity and their sole
employer. In their desire to improve their working conditions, respondents and other employees
of petitioners held their first formal meeting on November 23, 2003 to discuss the formation of a
union. The following day or on November 24, 2003, seventeen (17) employees were barred from
entering petitioners’ factory premises located in Castillejos, Zambales, and ordered to transfer to
T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its
expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered to go on
forced leave due to the unavailability of work.

On December 18, 2003, the Department of Labor and Employment (DOLE), Regional
Office No. III issued a certificate of registration in favor of THS-GQ Union. On March 24, 2004,
THS-GQ Union filed a petition for certification election. On July 12, 2004, an order was issued
to hold the certification election in both T&H Shopfitters and Gin Queen. Eventually, the
certification election was scheduled on October 11, 2004.

Meanwhile, through a memorandum, dated August 17, 2004, petitioner Ben Huang
(Huang), Director for Gin Queen, informed its employees of the expiration of the lease contract
between Gin Queen and its lessor in Castillejos, Zambales and announced the relocation of its
office and workers to Cabangan, Zambales. Some of the respondents, who visited the site in
Cabangan, discovered that it was a "talahiban" or grassland. Later, the said union officers and
members were made to work as grass cutters in Cabangan, under the supervision of a certain
Barangay Captain Greg Pangan. Due to these circumstances, the employees assigned in
Cabangan did not report for work. As a consequence, the THS-GQ Union president was made to
explain why he should not be terminated for insubordination. The other employees who likewise
failed to report in Cabangan were meted out with suspension.

On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its
employees. The officers and members of the THS-GQ Union were purportedly excluded from
the field trip. On the evening of the field trip, a certain Angel Madriaga, a sales officer of
petitioners, campaigned against the union in the forthcoming certification election. The
following day or on October 11, 2004, the employees were escorted from the field trip to the
polling center in Zambales to cast their votes. On October 13, 2004, the remaining employees
situated at the SBFZ plant cast their votes as well. Due to the heavy pressure exerted by
petitioners, the votes for "no union" prevailed. On October 14, 2004, the THS-GQ Union filed its
protest with respect to the certification election proceedings.

ISSUE:

Whether or not acts of unfair labor practices were committed by petitioners against
respondents

LAW APPLICABLE:

(a), (c), and (e) of Article 257 (formerly Article 248) of the Labor Code

CASE HISTORY:

The LA dismissed respondents’ complaint and all their money claims for lack of merit.

21 | P a g e
The respondents appealed to the NLRC. In its July 24, 2007 Decision, the NLRC reversed the
LA decision and ruled in favor of respondents The CA sustained the NLRC ruling. The CA held
that errors of judgment are not within the province of a special civil action for certiorari. It
declared that factual findings of quasi-judicial agencies that had acquired expertise in matters
entrusted to their jurisdiction were accorded not only respect but finality if they were supported
by substantial evidence. The CA noted that the NLRC considered the evidence and applied the
law in this case, thus, no grave abuse of discretion could be imputed on the part of the NLRC in
reversing the LA ruling.

RULING:

As to the issue of ULP, petitioners’ argument is utterly without merit.

In the case at bench, petitioners are being accused of violations of paragraphs (a), (c), and
(e) of Article 257 (formerly Article 248) of the Labor Code, to wit:

Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer to
commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
(c) To contract out services or functions being performed by union members when such
will interfere with, restrain, or coerce employees in the exercise of their right to selforganization;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization.

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its
employees, to the exclusion of union members, before the scheduled certification election; 2) the
active campaign by the sales officer of petitioners against the union prevailing as a bargaining
agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4)
the continuous hiring of subcontractors performing respondents’ functions; 5) assigning union
members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a
rotational basis for union members, all reek of interference on the part of petitioners.

Indubitably, the various acts of petitioners, taken together, reasonably support an

inference that, indeed, such were all orchestrated to restrict respondents’ free exercise of their
right to self-organization. The Court is of the considered view that petitioners’ undisputed
actions prior and immediately before the scheduled certification election, while seemingly
innocuous, unduly meddled in the affairs of its employees in selecting their exclusive bargaining
representative.

OPINION:

I agree to the findings of the Supreme Court that the NLRC, correctly sustained by the
CA, had sufficient factual and legal bases to support its finding of ULP. ULP relates to the
commission of acts that transgress the workers’ right to organize. As specified in Articles 248
[now Article 257] and 249 [now Article 258] of the Labor Code, the prohibited acts must
necessarily relate to the workers' right to self-organization. The petitioners' bare denial of some
of the complained acts and unacceptable explanations, a mere afterthought at best, cannot prevail
over respondents' detailed narration of the events that transpired. At this juncture, it bears to
emphasize that in labor cases, the quantum of proof necessary is substantial evidence, or that
amount of relevant evidence as a reasonable mind might accept as adequate to support to a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise

22 | P a g e
CASE NO. 12
ST. JOHN COLLEGES, INC. VS. ST. JOHN ACADEMY FACULTY EMPLOYEES
UNION
G.R. NO. 167892
OCTOBER 27, 2006

FACTS:

Prior to 1998, petitioner offered a secondary course only. The high school, which it
employed, then employed about 80 teaching and non-teaching personnel who were members of
the St. John Academy Faculty & Employees Union (Union).

The Collective Bargaining Agreement (CBA) between SJCI and the Union was set to
expire on May 31, 1997. During the ensuing collective bargaining negotiations, SJCI rejected all
the proposals of the Union for an increase in worker’s benefits. This resulted to a bargaining
deadlock which led to the holding of a valid strike by the Union on November 10, 1997. In order
to end the strike, on November 27, 1997, SJCI and the Union, through the efforts of the National
Conciliation and Mediation Board (NCMB), agreed to refer the labor dispute to the Secretary of
Labor and Employment (SOLE) for assumption of jurisdiction.

After which, the strike ended and classes resumed. Pending resolution of the labor
dispute before the SOLE, the Board of Directors of SJCI approved on February 22, 1998 a
resolution recommending the closure of the high school which was approved by the stockholders
on even date because of the irreconcilable differences between the school management and the
Academy’s Union particularly the safety of our students and the financial aspect of the ongoing
CBA negotiations.

Subsequently, some teaching and non-teaching personnel of the high school agreed to the
closure. On April 2, 1998, SJCI informed the DOLE that as of March 31, 1998, 51 employees
had received their separation compensation package while 25 employees refused to accept the
same. On May 4, 1998, the 25 employees conducted a protest action within the perimeter of the
high school. The Union filed a notice of strike with the NCMB only on May 7, 1998. On May
21, 1998, the 25 employees filed a complaint for unfair labor practice (ULP), illegal dismissal
and non-payment of monetary benefits against SJCI before the NLRC which was docketed as
RAB-IV-5-10039-98- L. The Union members alleged that the closure of the high school was
done in bad faith in order to get rid of the Union and render useless any decision of the SOLE on
the CBA deadlocked issues.

ISSUE:

Whether or not St. John Colleges is guilty of unfair labor practice through its act of
closing the academy.

LAW APPLICABLE:

Article 283 of the Labor Code of the Philippines

CASE HISTORY:

Labor Arbiter Antonio dismissed the Union’s complaint for ULP and illegal dismissal
while granting SJCI’s petition to declare the strike illegal coupled with a declaration of loss of
employment status of the 25 Union members involved in the strike. On June 28, 2002, the NLRC
rendered judgment reversing the decision of the Labor Arbiter. It found SJCI guilty of ULP and
illegal dismissal and ordered it to reinstate the 25 employees to their former positions without
loss of seniority rights and other benefits, and with full backwages. On appeal, the Court of
Appeals, affirmed with modification the decision of the NLRC wherein the two month unworked
summer vacation should excluded.

RULING:

The petition lacks merit.

23 | P a g e
 1. Closure. The closure was done to defeat the parties’ agreement to refer the labor
dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision
of the SOLE; and to circumvent the Union’s right to collective bargaining and its members’ right
to security of tenure.

Under Article 283 of the Labor Code, the following requisites must concur for a valid
closure of the business: (1) serving a written notice on the workers at least one (1) month before
the intended date thereof; (2) serving a notice with the DOLE one month before the taking effect
of the closure; (3) payment of separation pay equivalent to one (1) month or at least one half
(1/2) month pay for every year of service, whichever is higher, with a fraction of at least six (6)
months to be considered as a whole year; and (4) cessation of the operation must be bona fide. It
is not disputed that the first two requisites were satisfied. The third requisite would have been
satisfied were it not for the refusal of the herein private respondents to accept the separation
compensation package.

The instant case, thus, revolves around the fourth requisite, i.e., whether SJCI closed the
high school in good faith.

Whether or not the closure of the high school was done in good faith is a question of fact
and is not reviewable by this Court in a petition for review on certiorari save for exceptional
circumstances. In fine, the finding of the NLRC, which was affirmed by the Court of Appeals,
that SJCI closed the high school in bad faith is supported by substantial evidence and is, thus,
binding on this Court. Consequently, SJCI is liable for ULP and illegal dismissal.

Whether SJCI acted in bad faith depends on the particular facts as established by the
evidence on record. Bad faith is, after all, an inference which must be drawn from the peculiar
circumstances of a case. The two decisive factors in determining whether SJCI acted in bad faith
are (1) the timing of, and reasons for the closure of the high school, and (2) the timing of, and the
reasons for the subsequent opening of a college and elementary department, and, ultimately, the
reopening of the high school department by SJCI after only one year from its closure.

Under these circumstances, it is not difficult to discern that the closure was done to defeat
the parties’ agreement to refer the labor dispute to the SOLE; to unilaterally end the bargaining
deadlock; to render nugatory any decision of the SOLE; and to circumvent the Union’s right to
collective bargaining and its members’ right to security of tenure. By admitting that the closure
was due to irreconcilable differences between the Union and school management, specifically,
the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to
end the bargaining deadlock and eliminate the problem of dealing with the demands of the
Union. This is precisely what the Labor Code abhors and punishes as unfair labor practice since
the net effect is to defeat the Union’s right to collective bargaining.

SJCI contends that these circumstances do not establish its bad faith in closing down the
high school. Rather, it claims that it was forced to close down the high school due to alleged
difficult labor problems that it encountered while dealing with the Union since 1995,
specifically, the Union’s illegal demands in violation of R.A. 6728 or the "Government
Assistance to Students and Teachers in Private Education Act." Under R.A. 6728, the income
from tuition fee increase is to be used as follows: (a) 70% of the tuition fee shall go to the
payment of salaries, wages, allowances, and other benefits of teaching and non-teaching
personnel, and (b) 20% of the tuition fee increase shall go to the improvement or modernization
of the buildings, equipment, and other facilities as well as payment of the cost of operations.

These alleged difficult labor problems merely show that SJCI and the Union had
disagreements regarding workers’ benefits which are normal in any business establishment. If
SJCI found the Union’s demands excessive, its remedy under the law is to refer the matter for
voluntary or compulsory dispute resolution. Besides, this incident complained of occurred in
1995, which could hardly establish the good faith of SJCI or justify the closure in 1998.

Anent the Union’s claim for the unimplemented 20% tuition fee increase in 1996, suffice
it to say that it is erroneous to rule on said issue since the same was submitted before the
Voluntary Arbitrator and is not on appeal before this Court. Besides, by referring the labor
dispute to the Voluntary Arbitrator, the parties themselves acknowledged that there is a sufficient
mechanism to resolve the said dispute. Again, we fail to see how this alleged labor problem in

24 | P a g e
1996 shows the good faith of SJCI in closing the high school in 1998. At any rate, even assuming
that the Union’s demands were illegal or excessive, the important and crucial point is that these
alleged illegal or excessive demands did not justify the closure of the high school and do not, in
any way, establish SJCI’s good faith. The employer cannot unilaterally close its establishment on
the pretext that the demands of its employees are excessive. As already discussed, neither party
is obliged to give-in to the other’s excessive or unreasonable demands during collective
bargaining, and the remedy in such case is to refer the dispute to the proper tribunal for
resolution. This was what SJCI and the Union did when they referred the 1997 CBA bargaining
deadlock to the SOLE; however, SJCI preempted the resolution of the dispute by closing the
high school. SJCI disregarded the whole dispute resolution mechanism and undermined the
Union’s right to collective bargaining when it closed down the high school while the dispute was
still pending with the SOLE.

In fine, SJCI undermined the Labor Code’s system of dispute resolution by closing down
the high school while the 1997 CBA negotiations deadlock issues were pending resolution before
the SOLE. The closure was done in bad faith for the purpose of defeating the Union’s right to
collective bargaining. Besides, as found by the NLRC, the alleged illegality and excessiveness of
the Union’s demands were not sufficiently proved by SJCI. Even on the assumption that the
Union’s demands were illegal or excessive, SJCI’s remedy was to await the resolution by the
SOLE and to file a ULP case against the Union. However, SJCI did not have the power to take
matters into its own hands by closing down the school in order to get rid of the Union.

2. Circumstances lead to the inescapable conclusion that SJCI merely used the alleged
safety and wellbeing of the students as a subterfuge to justify its actions.

SJCI next argues that the Union unduly endangered the safety and well-being of the
students who joined the valid strike held on November 10, 1997, thus it closed down the high
school on March 31, 1998. It claims that the Union coerced the students to join the protest
actions to pressure SJCI to give-in to the demands of the Union.

The Union categorically denied that it put the students in harm’s way or pressured them
to join the protest actions. Given this denial by the Union, it was incumbent upon SJCI to prove
that the students were actually harmed or put in harm’s way and that the Union coerced them to
join the protest actions. The reason for this is that the employer carries the burden of proof to
establish that the closure of the business was done in good faith. In the instant case, SJCI had the
burden of proving that, indeed, the closure of the school was necessary to uphold the safety and
well-being of the students.

There is insufficient evidence to hold that the safety and well-being of the students were
endangered and/or compromised, and that the Union was responsible therefor. Even assuming
arguendo that the students’ safety and well-being were jeopardized by the said protest actions,
the alleged threat to the students’ safety and well-being had long ceased by the time the high
school was closed. Moreover, the parents were vehemently opposed to the closure of the school
because there was no basis to claim that the students’ safety was at risk. Taken together, these
circumstances lead to the inescapable conclusion that SJCI merely used the alleged safety and
well-being of the students as a subterfuge to justify its actions.

3. Pieces of evidence regarding the subsequent reopening of the high school after only
one year from its closure further show that the high school’s closure was done in bad faith.

SJCI next contends that the subsequent reopening of the high school after only one year
from its closure did not show that the previous decision to close the high school was tainted with
bad faith because the reopening was done due to the clamor of the high school’s former students
and their parents. It claims that its former students complained about the cramped classrooms in
the schools where they transferred.

First, the fact that after one year from the time it closed its high school, SJCI opened a
college and elementary department, and reopened its high school department showed that it
never intended to cease operating as an educational institution. Second, there is evidence on
record contesting the alleged reason of SJCI for reopening the

Finally, when SJCI reopened its high school, it did not rehire the Union members.

25 | P a g e
Evidently, the closure had achieved its purpose, that is, to get rid of the Union members.

Clearly, these pieces of evidence regarding the subsequent reopening of the high school
after only one year from its closure further show that the high school’s closure was done in bad
faith.

Lastly, SJCI asserts that the strike conducted by the 25 employees on May 4, 1998 was
illegal for failure to take the necessary strike vote and give a notice of strike. However, protest
actions of the Union cannot be considered a strike because, by then, the employer-employee
relationship has long ceased to exist because of the previous closure of the high school on March
31, 1998.
In sum, the timing of, and the reasons for the closure of the high school and its reopening
after only one year from the time it was closed down, show that the closure was done in bad faith
for the purpose of circumventing the Union’s right to collective bargaining and its members’
right to security of tenure. Consequently, SJCI is liable for ULP and illegal dismissal.

OPINION:

I agree with the ruling of the Supreme Court upholding the ruling of the Court of
Appeals. The Labor Code does not authorize the employer to close down the establishment on
the ground of illegal or excessive demands of the Union. Instead, aside from the remedy of
submitting the dispute for voluntary or compulsory arbitration, the employer may file a
complaint for ULP against the Union for bargaining in bad faith. If found guilty, this gives rise to
civil and criminal liabilities and allows the employer to implement a lock out, but not the closure
of the establishment resulting to the permanent loss of employment of the whole workforce.

26 | P a g e
CASE NO. 13
GENERAL SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS VS.
CCBPI (GEN. SANTOS CITY) ET AL.
G.R. NO. 178647
FEB. 13, 2009

FACTS:

CCBPI experienced a decline in profitability due to the Asian economic crisis, decrease
in sales, and tougher competition. It implemented 3 waves of an Early Retirement Program.
Meanwhile, there was an inter-office memorandum mandating officers to put on hold “all
requests for hiring to fill in vacancies in both regular and temporary positions in the Head Office
and in the Plants.” Because several employees availed of the early retirement program, vacancies
were created in some departments, including the production department of CCBPI Gen San,
where members of petitioner Union worked.

Faced with the “freeze hiring” directive, CCBPI engaged the services of JLBP Services
Corporation (JLBP), a company in the business of providing labor and manpower services,
including janitorial services, messengers, and office workers. The Union petitioner filed with the
National Conciliation and Mediation Board (NCMB), a Notice of Strike on the ground of alleged
unfair labor practice for contracting-out services regularly performed by union members (“union
busting”). The parties failed to come to an amicable settlement. CCBPI filed a Petition for
Assumption of Jurisdiction with the Office of the Secretary of Labor and Employment. The
Secretary of Labor issued an Order enjoining the threatened strike and certifying the dispute to
the NLRC for compulsory arbitration.

ISSUE:

Whether or not CCBPI was guilty of unfair labor practice for contracting out jobs.

LAW APPLICABLE:

Article 248 of the Labor Code of the Philippines

CASE HISTORY:

NLRC ruled that CCBPI was not guilty of unfair labor practice for contracting out jobs to
JLBP. The NLRC anchored its ruling on the validity of the “Going-to-the-Market” (GTM)
system implemented by the company, which called for restructuring its selling and distribution
system, leading to the closure of certain sales offices and the elimination of conventional sales
routes. The NLRC held that petitioner failed to prove by substantial evidence that the system was
meant to curtail the right to self-organization of petitioner’s members. The CA upheld the
NLRC’s finding that CCBPI was not guilty of unfair labor practice. It found that JLBP was an
independent contractor and that the decision to contract out jobs was a valid exercise of
management prerogative to meet exigent circumstances.

RULING:

Dismissed for issues raised which are questions of facts. First, an examination of the
issues raised by petitioner reveals that they are questions of fact. The issues raised, i.e., whether
JLBP is an independent contractor, whether CCBPI’s contracting-out of jobs to JLBP amounted
to unfair labor practice, and whether such action was a valid exercise of management
prerogative, call for a re-examination of evidence, which is not within the ambit of this Court’s
jurisdiction.

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

acquired expertise in matters within its jurisdiction, are generally accorded not only respect but
finality especially when such factual findings are affirmed by the CA.

The company’s action to contract did not constitute unfair labor practice as this was not
directed at the members’ right to self-organization.

27 | P a g e
 Second, the NLRC found – and the same was sustained by the CA – that the company’s
action to contractout the services and functions performed by Union members did not constitute
unfair labor practice as this was not directed at the members’ right to self-organization.

Article 248 of the Labor Code provides: It shall be unlawful for an employer to commit
any of the following unfair labor practices:
(c) To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their right to self-organization.

OPINION:

I agree with the ruling of the Supreme Court for dismissing the petition of the case
because Unfair labor practice refers to “acts that violate the workers’ right to organize.” The
prohibited acts are related to the workers’ right to self-organization and to the observance of a
CBA. Without that element, the acts, even if unfair, are not unfair labor practices. Both the
NLRC and the CA found that petitioner was unable to prove its charge of unfair labor practice. It
was the Union that had the burden of adducing substantial evidence to support its allegations of
unfair labor practice, which burden it failed to discharge.

28 | P a g e
CASE NO. 14
STANDARD CHARTERED BANK EMPLOYEES UNION VS. CONFESOR
G.R. NO. 114974
JUNE 16, 2004

FACTS:

The exclusive bargaining agent of the rank and file employees of the Standard Chartered
Bank is the Standard Chartered Bank Employees Union (the Union, for brevity). Prior to the
expiration of the 3-year period of their CBA, but within the 60-day freedom period, the Union
initiated the negotiations. On February 18, 1993, the Union, through its President, Eddie L.
Divinagracia, sent a letter containing its proposals covering political provisions and 34 economic
provisions. Included therein was a list of the names of the members of the Union’s negotiating
panel.

The Union suggested to the Bank’s head of the negotiating panel, Cielito Diokno, that the
bank lawyers should be excluded from the negotiating team. The Bank acceded. Meanwhile,
Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of
Bank Employees (NUBE), the federation to which the Union was affiliated, be excluded from
the Union’s negotiating panel. However, Umali was retained as a member thereof.

On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno
suggested that the negotiation be kept a "family affair." The proposed non-economic provisions
of the CBA were discussed first. Even during the final reading of the non-economic provisions
on May 4, 1993, there were still provisions on which the Union and the Bank could not agree.

On May 18, 1993, the negotiation for economic provisions commenced. Towards the end
of the Bank’s presentation, Umali requested the Bank to validate the Union’s "guestimates,"
especially the figures for the rank and file staff. In the succeeding meetings, Umali chided the
Bank for the insufficiency of its counterproposal on the provisions on salary increase, group
hospitalization, death assistance and dental benefits.

In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would
not make the necessary revisions on its counter-proposal, it would be best to seek a 3rd party
assistance. After the break, the Bank presented its revised counter-proposal, wherein, except for
the provisions on signing bonus and uniforms, the Union and the Bank failed to agree on the
remaining economic provisions of the CBA. The Union declared a deadlock and filed a Notice of
Strike before the National Conciliation and Mediation Board (NCMB) on June 21, 1993,
docketed as NCMB-NCR-NS-06-380-93.26.

ISSUE:

Whether or not the company is guilty of unfair labor practice

LAW APPLICABLE:

"Interference" under Article248 (a) of the Labor Code of the Philippines

CASE HISTORY:

The Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the
Arbitration Branch of the NLRC in Manila against the Union on June 28, 1993. The Bank
alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded "sky high economic demands," indicative of blue-sky
bargaining.

On July 21, 1993, then SOLE Nieves R. Confesor, pursuant to Article 263(g) of the
Labor Code, issued an Order assuming jurisdiction over the labor dispute at the Bank. An order
was issued that the parties execute a collective bargaining agreement. Thus, the Bank’s charge
for unfair labor practice which it originally filed with the NLRC but which is deemed
consolidated herein, is dismissed for lack of merit. On the other hand, the Union’s charge for
unfair labor practice is similarly dismissed.

29 | P a g e
 The parties then executed a Collective Bargaining Agreement wherein the wage increase
was effected and the signing bonuses based on the increased wage were distributed to the
employees covered by the CBA. The Union filed the petition for certiorari under Rule 65 of the
Rules of Procedure.

RULING:

The bank is not guilty of ULP. "Interference" under Article248 (a) of the Labor Code to
amount to ULP.

The petitioner asserts that respondent committed ULP, i.e., interference in the selection of
the Union’s negotiating panel, when Cielito Diokno, the Bank’s Human Resource Manager,
suggested to the Union’s President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the
NUBE, be excluded from the Union’s negotiating panel. In support of its claim, Divinagracia
executed an affidavit, stating that prior to thecommencement of the negotiation, Diokno
approached him and suggested the exclusion of Umali from the Union’s negotiating panel, and
that during the first meeting, Diokno stated that the negotiation be kept a "family affair."

In order to show that the employer committed ULP under the Labor Code, substantial
evidence is required to support the claim. Substantial evidence has been defined as such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at
bar, the Union bases its claim of interference on the alleged suggestions of Diokno to exclude
Umali from the Union’s negotiating panel.

The circumstances that occurred during the negotiation do not show that the suggestion
made by Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the
Bank consciously adopted such act to yield adverse effects on the free exercise of the right to
self-organization and collective bargaining of the employees, especially considering that such
was undertaken previous to the commencement of the negotiation and simultaneously with
Divinagracia’s suggestion that the bank lawyers be excluded from its negotiating panel.

The records show that after the initiation of the collective bargaining process, with the
inclusion of Umali in the Union’s negotiating panel, the negotiations pushed through. The
complaint was made only on August 16, 1993 after a deadlock was declared by the Union on
June 15, 1993. It is clear that such ULP charge was merely an afterthought. The accusation
occurred after the arguments and differences over the economic provisions became heated and
the parties had become frustrated. It happened after the parties started to involve personalities.
As the public respondent noted, passions may rise, and as a result, suggestions given under less
adversarial situations may be colored with unintended meanings. Such is what appears to have
happened in this case.

OPINION:

I agree with the ruling of the Supreme Court that such bank is not guilty of Unfair Labor
Practice. The Union has not been able to show that the Bank had done acts, both at and away
from the bargaining table, which tend to show that it did not want to reach an agreement with the
Union or to settle the differences between it and the Union. Admittedly, the parties were not able
to agree and reached a deadlock. However, it is herein emphasized that the duty to bargain "does
not compel either party to agree to a proposal or require the making of a concession." Hence, the
parties’ failure to agree did not amount to ULP under Article 248(g) for violation of the duty to
bargain. In view of the finding of lack of ULP based on Article 248(g), the accusation that the
Bank made bad-faith provisions has no leg to stand on. While the refusal to furnish requested
information is in itself an unfair labor practice, and also supports the inference of surface
bargaining.

30 | P a g e
CASE NO. 15
PHILIPPINE CARPET EMPLOYEES ASSOCIATION VS. HON. STO. TOMAS
G.R. NO. 168719
FEBRUARY 22, 2006

FACTS:

Philippine Carpet Manufacturing Corporation is engaged in the business of

manufacturing wool and yarn carpets and rugs. The Corporation also had 100% equity
investments in the following corporations: Pacific Carpet Mills Corporation (PCMC-USA)
which sold carpets and mats on wholesale basis; Pacific Carpet Manufacturing Corporation
(PCMC-Clark) which manufactured hand-tufted and machine-tufted carpets and rugs; and the
Philippine Woolen Spinning Corporation (PWSC) which manufactured wool yarn. The
Corporation also owned 17.95% of the shares of stocks in DI Security and General Services,
Inc., and 2.20% of such shares in the Manila Peninsula Hotel, Inc. The Corporation employed
473 employees, 355 of whom were members of the sole bargaining unit of the employees
therein, the Philippine Carpet Employees Association (Union for brevity).

In a letter dated February 10, 2004 addressed to the Corporation’s Assistant Vice
President for Administration, Manuel Ike Diaz, the Union proposed the holding of a conference
between representatives of the Union and the Corporation on February 24, 2004, to commence
negotiations. Appended to the letter were proposals on revisions of the previous CBA. The
Corporation did not respond to the letter. Diaz issued a Memorandum informing all employees
that a comprehensive cost reduction program would be implemented by the Corporation on April
15, 2004, "on account of depressed business conditions brought about by the currency crisis in
Southeast Asia, the Middle East war and the 9/11 incident in the United States of America.

Of the 88 employees who were terminated from employment, 77 were Union members,
including Edgardo Villanueva, who was elected Union officer after the personnel reduction
program commenced. Frustrated at the Corporation’s reason for retrenchment, the Union filed a
notice of strike with the DOLE. Negotiations before the National Conciliation and Mediation
Board ensued, but the Corporation stood pat on its stance for a moratorium on increases in wages
and benefits. The Union rejected this and accused the Corporation of union busting, as 77 of its
members were dismissed.

The Union filed a petition with the DOLE for the Secretary of Labor and Employment
(SOLE) to assume jurisdiction over the labor dispute involving economic issues on wage
increases and certain benefits and non-economic issues such as scope of bargaining unit and on
the issue of unfair labor practice. The Union claimed that there was no valid economic reason to
retrench employees, and that a "slump" in demand of the Corporation’s products was not a valid
ground to dismiss employees. The Union also charged the Corporation of resorting to a sinister
scheme of re-channeling its carpet business to its wholly owned subsidiary, PCMC-Clark, while
negotiations for a new CBA were ongoing. According to the Union, this was also to justify the
dismissal of the 77 Union members and bust the Union in the process. The Union insisted that
the Corporation was guilty of unfair labor practice.

The Union maintained that in dismissing its employees, the Corporation violated the
mandatory 30-day notice rule because such employees received the notice of termination on
March 13, 2004 (Saturday), to take effect the following working day, March 15, 2004 (Monday).
It stressed that the 30-day mandatory notice could not be substituted by paying the affected
employees their respective one month salaries.

Corporation alleged that based on the documents submitted to the SOLE, it suffered a
sharp decline in business in terms of volume and income derived since 2001, caused by the
Asian financial crisis and later aggravated by the 9/11 incident in the U.S. and the ongoing war
in the Middle East. The Corporation went on to explain that its income from the domestic market
and export operations declined sharply: from its export operations, its income of P28,855,000.00
in 2001 dropped to P23,927,000.00 in 2002; and, thereafter, to P5,796,000.00 in 2003.

ISSUE:

Whether or not respondent corporation is guilty of unfair labor practice because of

31 | P a g e
dismissing the 77 union members and bust the union in the process.

LAW APPLICABLE:

Articles 282 and 283 of the Labor Code of the Philippines

CASE HISTORY:

On June 23, 2004, the SOLE rendered a Decision granting wage increases totaling
P8,039,330.00 to the employees for the three years of the CBA. Relative to increased benefits for
uniform, Christmas package, rice subsidy, and early retirement plan/separation pay, the SOLE
ordered the retention of the status quo. However, the SOLE denied the demand of the Union as
to the scope of the bargaining unit. The SOLE likewise affirmed the termination of the 88
employees on the ground that, if not for the personnel reduction program. The Union thereafter
filed a petition for certiorari with the CA which rendered judgment dismissing the petition for
lack of merit. The appellate court ruled that the Corporation failed to prove that the SOLE
committed grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the
decision. The appellate court affirmed the finding of the SOLE that there was a slump in the
demand of the Corporation’s products, holding that while low volume of work was not listed as a
valid ground for dismissal under Articles 282 and 283 of the Labor Code of the Philippines, it
nevertheless justified the dismissal on the ground of redundancy

RULING:

The petition is meritorious. Retrenchment is an authorized cause for the termination of

employment under Article 283 of the Labor Code. Retrenchment is defined as the termination of
employment initiated by the employer through no fault of the employee and without prejudice to
the latter, resorted by management during periods of business recession, industrial depression or
seasonal fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a
measure utilized by an employer to minimize business losses incurred in the operation of its
business.

The prerogative of an employer to retrench its employees must be exercised only as a last
resort, considering that it will lead to the loss of the employees’ livelihood. It is justified only
when all other less drastic means have been tried and found insufficient or inadequate. Moreover,
the employer must prove the requirements for a valid retrenchment by clear and convincing
evidence; otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning losses or reverses in their business ventures in order to
ease out employees.

Redundancy, on the other hand, exists when the service capability of the work force is in
excess of what is reasonably needed to meet the demands of the enterprise. A redundant position
is one rendered superfluous by any number of factors, such as overhiring of workers, decreased
volume of business, dropping of a particular product line previously manufactured by the
company, or phasing out of a service activity previously undertaken by the business. Under these
conditions, the employer has no legal obligation to keep in its payroll more employees than are
necessary for the operation of its business.

For the implementation of a redundancy program to be valid, the employer must comply
with the following requisites: (1) written notice served on both the employees and the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment; (2) payment of separation pay equivalent to at least one month pay for every year
of service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair
and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished.

Respondents failed to adduce clear and convincing evidence to prove the confluence of
the essential requisites for a valid retrenchment of its employees. We believe that respondents
acted in bad faith in terminating the employment of the members of petitioner Union.
Respondent Corporation failed to exhaust all other means to avoid further losses without
retrenching its employees, such as utilizing the latter’s respective forced vacation leaves.
Respondents also failed to use fair and reasonable criteria in implementing the retrenchment

32 | P a g e
program, and instead chose to retrench 77 of the members of petitioner out of the dismissed 88
employees. Worse, respondent Corporation hired new employees and even rehired the others
who had been "retrenched."

OPINION:

I agree with the ruling of the Supreme Court that retrenchment effected by respondent
Corporation is invalid due to a substantive defect, noncompliance with the substantial
requirements to effect a valid retrenchment; it necessarily follows that the termination of the
employment of petitioner Union’s members on such ground is, likewise, illegal. As such, they
(petitioner Union’s members) are entitled to reinstatement with full backwages.

33 | P a g e
QUESTIONS:

ESSAY:

1. What is the definition of Unfair Labor Practice?

Unfair Labor Practices are offenses committed by the employer or labor organization
which violate the constitutional right of workers and employees to self-organization. Unfair
Labor Practice acts are inimical to the legitimate interests of both labor and management, disrupt
industrial peace and hinder the promotion of healthy and stable labor-management relations.
(Art. 248 of the Labor Code, as amended)

2. What is the concept and rationale behind Unfair Labor Practice?

Unfair Labor Practice is not only a violation of the civil rights of both labor and
management, but also a criminal offense against the State. Criminal ULP cases may be filed with
the regular courts. No criminal prosecution may be instituted, however, without a final judgment
from the NLRC that an unfair labor practice was committed.
Unfair labor practices violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interest of both labor and management, including
their right to bargain collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and
stable labor-management relations.
In the past, we have ruled that “unfair labor practice refers to ‘acts that violate the
workers’ right to organize.’ The prohibited acts are related to the workers’ right to self-
organization and to the observance of a CBA”. We have likewise declared that “there should be
no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the
workers’ right to self-organization.” Thus, an employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in whatever manner the right of his employees to
self-organize.

3. What are “Yellow Dog Contracts”?

A “yellow dog contract” is an agreement which exacts from workers as a condition of
employment, that they shall not join or belong to a labor organization, or attempt to organize
one, during their period of employment or that they shall withdraw therefrom, in case they are
already members of a labor organization.
The typical yellow dog contract embodies the following stipulations:
 1. a representation by the employee that he is not a member of a labor
organization;
 2. a promise by the employee that he will not join a union; and
 3. a promise by the employee that upon joining a labor organization, he will quit
his employment.

4. What is the Totality of Conduct Doctrine?

The “totality of conduct doctrine” means that expressions of opinion by an employer,
though innocent in themselves, may be held to be constitutive of unfair labor practice 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. An expression which might be permissibly uttered by one employer,
might, in the mouth of a more hostile employer, be deemed improper and consequently
actionable as an unfair labor practice.

5. What are the legal principles pertinent to union security clause arrangements?
To validly dismiss an employee based on violation of union security clause, employer
should still afford due process to the expelled unionists.
Although the Supreme Court has ruled that union security clauses embodied in the CBA
may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not
erode the fundamental requirement of due process. The reason behind the enforcement of union
security clauses which is the sanctity and inviolability of contracts, cannot override one’s right to
due process.
 In the case of Cariño vs. NLRC, [G. R. No. 91086, May 8, 1990, 185 SCRA 177], the
Supreme Court pronounced that while the company, under a maintenance of membership
provision of the CBA, is bound to dismiss any employee expelled by the union for
disloyalty upon its written request, this undertaking should not be done hastily and

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 summarily. The company acts in bad faith in dismissing a worker without giving him the
benefit of a hearing. The right of an employee to be informed of the charges against him
and to a reasonable opportunity to present his side in a controversy with either the
company or his own union is not wiped away by a union security clause or a union shop
clause in a CBA. An employee is entitled to be protected not only from a company which
disregards his rights but also from his own union the leadership of which could yield to
the temptation of swift and arbitrary expulsion from membership and mere dismissal
from his job.
 In Malayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) vs.
Ramos, [G. R. No. 113907, February 28, 2000], petitioner union officers were expelled
by the federation for allegedly committing acts of disloyalty and/or inimical to the
interest of the federation (ULGWP) and in violation of the Constitution and By-
laws. Upon demand of the federation, the company terminated the petitioners without
conducting a separate and independent investigation. Respondent company did not
inquire into the cause of the expulsion and whether or not the federation had sufficient
grounds to effect the same. Relying merely upon the federation’s allegations, respondent
company terminated petitioners from employment when a separate inquiry could have
revealed if the federation had acted arbitrarily and capriciously in expelling the union
officers. Respondent company’s allegation that petitioners were accorded due process is
belied by the termination letters received by the petitioners which state that the dismissal
shall be immediately effective.
 Before dismissal may be effected by the employer for breach of a union security
agreement, due process must be observed by the employer. The employee sought to be
dismissed must be given the opportunity to be heard. The employer should not rely solely
upon the request of the union. (Liberty Cotton Mills Workers Union vs. Liberty Cotton
Mills, 90 SCRA 391; Binalbagan-Isabela Sugar Co., Inc. [BISCOM] vs. Philippine
Association of Free Labor Unions [PAFLU], G. R. No. L-18782, Aug. 29, 1953, 8 SCRA
700; Sanyo Philippines Workers Union – PSSLU vs. Canizares, 211 SCRA 361).

OBJECTIVE:

1. What are the aspects of unfair labor practice?

Civil and Criminal aspects

2. Name the parties which may commit unfair labor practice.

Parties who may commit ULP.
(1) Employer (Article 248, Labor Code); and
(2) Labor Organization (Article 249, Labor Code).

3. What are the types of union security clause?

Classification. - (1) Closed shop agreement
(2) Maintenance of membership agreement
(3) Union shop agreement
(4) Modified union shop agreement
(5) Exclusive bargaining agreement
(6) Bargaining for members only agreement
(7) Agency shop agreement
(8) Preferential hiring agreement

4. What are the elements of ULP?

1. there should exist an employer-employee relationship between the offended party
and the offender; and
2. the act complained of must be expressly mentioned and defined in the Labor Code as
constitutive of unfair labor practice. If not mentioned, there is no ULP.

5. Who may be held criminally liable for ULPs of employer?

Officers, agents of corporations, associations or partnerships who have actually participated in,
authorized or ratified unfair labor practices

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