Labor Relations 1st Semester (SY 2019-20)
Atty. Balais
Compilation of Cases
SONEDCO vs. URC (2016)
An employer who refuses to bargain with the union and
tries to restrict its bargaining power is guilty of unfair
labor practice. In determining whether an employer has
not bargained in good faith, the totality of all the acts of
the employer at the time of negotiations must be taken
into account.
FACTS
On May 6, 2002, Universal Robina Corporation Sugar
Division - Southern Negros Development Corporation
(URC-SONEDCO) and Philippine Agricultural
Commercial and Industrial Workers Union (PACIWU-
TUCP), then the exclusive bargaining representative of
URC-SONEDCO's rank-and-file employees, entered into
a Collective Bargaining Agreement (2002 Collective
Bargaining Agreement) effective January 1, 2002 to
December 31, 2006.
On May 17, 2002, days after the 2002 Collective
Bargaining Agreement was signed, a certification election
was conducted. SONEDCO Workers Free Labor Union
(SWOFLU) won and replaced PACIWU-TUCP as the
exclusive bargaining representative.
PACIWU-TUCP questioned the results of the certification
election before the Department of Labor and
Employment. On July 8, 2002, Med-Arbiter Romulo
Sumalinog certified SONEDCO Workers Free Labor
Union as the sole and exclusive bargaining
representative of URC-SONEDCO.8 PACIWU-TUCP
elevated the same issue to the Court of Appeals and
thereafter this Court, which on July 11, 2007, resolved
that the certification election was valid. SWOFLU was
declared the exclusive bargaining agent of URC-
SONEDCO's rank-and-file employees.10
URC-SONEDCO consistently refused to negotiate a new
collective bargaining agreement with SONEDCO Workers
Free Labor Union, despite several demands from
SONEDCO Workers Free Labor Union, allegedly due to
the 2002 Collective Bargaining Agreement, which it
signed with PACIWU-TUCP.12
On December 31, 2006, the 2002 Collective Bargaining
Agreement expired with no new collective bargaining
agreement being signed.14
On August 28, 2007, with no collective bargaining
agreement in effect, URC-SONEDCO informed the rank-
and-file employees that they would be granted the
following economic benefits: (for 2007 and 2008)
(1) Wage increase of P16.00/day effective January 1,
2007;
(2) Group life insurance of P50,000.00 coverage/year;
(3) Emergency leave in lieu of bereavement leave, up to
five (5) days per year; and
(4) Cash loan in lieu of emergency loan of P5,000.00,
payable in 11 months.15
URC-SONEDCO asked the employees who wished to
avail themselves of these-benefits to sign a 2007 and
2008 waiver (2007 waiver), which stated that "[i]n the
event that a subsequent [collective bargaining
agreement] is negotiated between Management and
Union, the new [Collective Bargaining Agreement] shall
only be effective January 1, 2008."
In 2008, another wage increase of P16.00/day effective
January 1, 2008 were given to employees who signed an
acknowledgment receipt/waiver (2008 waiver).19 The
2008 waiver stated that "[s]a panahon na kung saan
may [collective bargaining agreement] na maisasara sa
pagitan ng Management at Uniyon, ito ay magiging
epektibo lamang Simula January 1, 2009."20
Again, several SONEDCO Workers Free Labor Union
members refused to sign the 2008 waiver. They did not
receive the benefits from URC-SONEDCO.20
On August 20, 2008, a certification election was
conducted.21 SONEDCO Workers Free Labor Union won
again and proceeded to negotiate a new collective
bargaining agreement, which became effective January
1, 2009 to December 31, 2013 (2009 Collective
Bargaining Agreement).22
On July 2, 2009, SONEDCO Workers Free Labor Union
and its members who refused to sign the 2007 and 2008
waivers filed a complaint for unfair labor practices
against URC-SONEDCO.23 They argued that the
requirement of a waiver before the release of the wage
increase violated their right to self-organization,
collective bargaining, and concerted action.24
The Labor Arbiter found that URC-SONEDCO did not
commit unfair labor practice. However, the Labor Arbiter
ordered URC-SONEDCO to pay the employees who
refused to sign the 2007 and 2008 waivers of the
benefits received by their fellow employees for 2007 and
2008. As a new collective bargaining agreement had
already been renegotiated and did not include the years
2007 and 2008, the purpose of the waivers was already
served.
On appeal, the National Labor Relations Commission
sustained27 the Labor Arbiter's Decision.
The Court of Appeals found no grave abuse of discretion
and sustained NLRC.
Petitioners now argue that the Court of Appeals failed
to consider the totality of respondent's dealings with
them.35 They allege that despite their several invitations,
respondent consistently failed to bargain with them, and
the wage increase was just another move to avoid
negotiations.36 Petitioners claim that the benefits given
by respondent was an economic incentive meant to
encourage individual employees to give up agreement
bargaining for 2007 and 2008.37
1
Issues:
First, whether respondent committed unfair labor
practice; YES
Second, whether petitioners, who refused to sign the
2007 and 2008 waivers, are entitled to the wage increase
and other economic benefits as a continuing employee
benefit notwithstanding the 2009 Collective Bargaining
Agreement;YES
Lastly, whether respondent is liable for damages. YES
First
Respondent is guilty of unfair labor practice.
Both the National Labor Relations Commission and the
Court of Appeals ruled that respondent did not commit
unfair labor practice since the requirement of a waiver
for 2007 and 2008 did not interfere with the employees 5
exercise of their right to self-organization.44 However, the
Court of Appeals failed to take into account that unfair
labor practice not only involves acts that violate the right
to self-organization but also covers several acts
enumerated in Article 259 of the Labor Code, thus:
ARTICLE 259. [248] Unfair Labor Practices of
Employers. — It shall be unlawful for an employer to
commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the
exercise of their right to self-organization;
(e) To discriminate in regard to wages, hours of
work and other terms and conditions of employment
in order to encourage or discourage membership in
any labor organization. Nothing in this Code or in any
other law shall stop the parties from requiring
membership in a recognized collective bargaining agent
as a condition for employment, except those employees
who are already members of another union at the time of
the signing of the collective
(g) To violate the duty to bargain collectively as
prescribed by this Code;
Under this provision, an employer is guilty of unfair
labor practice when it fails in its duty to bargain in good
faith.
In ruling that respondent did not commit unfair labor
practice, the National Labor Relations Commission and
the Court of Appeals failed to consider the totality of
respondent's acts, which showed that it violated its duty
to bargain collectively. This constitutes unfair labor
practice under Article 259(g) of the Labor Code.
ARTICLE 263. [252] Meaning of Duty to Bargain
Collectively. — The duty to bargain collectively means
the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions
of employment including proposals for adjusting any
grievances or questions arising under such agreement
and executing a contract incorporating such agreements
if requested by either party but such duty does not
compel any party to agree to a proposal or to make any
concession.
Respondent repeatedly refused to meet and bargain with
SONEDCO Workers Free Labor Union, the exclusive
bargaining agent of its rank-and-file employees.
Respondent admitted that it refused to meet with
petitioners in light of the 2002 Collective Bargaining
Agreement, which it signed with PACIWU-TUCP, the
previous bargaining representative. It claimed that the
2002 Collective Bargaining Agreement remained in full
force and effect without change until December 31,
2006, despite PACIWU-TUCP losing the May 17, 2002
certification election to SONEDCO Workers Free Labor
Union.50
Respondent's argument has no merit. Respondent's
reliance on the 2002 Collective Bargaining Agreement as
basis for not negotiating with petitioners is unjustified.
The Collective Bargaining Agreement that respondent
invoked had been entered into when a Petition for
Certification Election was already filed.
In Associated Trade Unions v. Trajano,50 this Court
ruled on the temporary nature of this type of collective
bargaining agreement:
The said CBA cannot be deemed permanent, precluding
the commencement of negotiations by another union with
the management. In the meantime however, so as not to
deprive the workers of the benefits of the said
agreement, it shall be recognized and given effect on a
temporary basis, subject to the results of the certification
election. The agreement may be continued in force if
ATU is certified as the exclusive bargaining
representative of the workers or may be rejected and
replaced in the event that TUP AS emerges as the
winner.51 (Emphasis supplied)
Respondent claimed that it refused to bargain with
petitioners because the issue of representation was still
pending before the courts. It claimed that when the 2002
Collective Bargaining Agreement expired on December
31, 2006, it had no bargaining agent to deal with as
SONEDCO Workers Free Labor Union had filed before
the Department of Labor and Employment a Petition for
Certification Election on December 6, 2006, which
resulted in the absence of a duly elected bargaining
representative.52Respondent claimed it was only on
September 25, 2008 that SONEDCO Workers Free Labor
Union was certified by the Department of Labor and
Employment as the exclusive bargaining agent of
respondent's rank-and-file employees.53
The Department of Labor and Employment, in its
Order54 dated May 4, 2007 granting SONEDCO Workers
Free Labor Union's second Petition for Certification
Election, As far as this Office is concerned, SWOFLU is
the incumbent sole and exclusive bargaining agent of the
rank-and-file employees of SONEDCO. As such, there was
actually no necessity for SWOFLU to file the subject
2
petition, as its representation status remains to be
effective unless challenged by other legitimate labor
organizations during the freedom period of the CBA that
was entered into by PACIWU-TUCP and employer
SONEDCO.
Incidentally, the Office of the Secretary declared in OS-A-
6-63-01 that SWOFLU had the option to adopt the
interim CBA or negotiate with SONEDCO a new CBA.
Whether SWOFLU was able to actually administer the
said CBA, or whether it attempted to negotiate with the
employer for a new CBA but was rejected, the issues are
already moot and academic by reason of the expiration of
the effectivity of the agreement.
Respondent's duty to bargain with SONEDCO
Workers Free Labor Union as the incumbent
bargaining agent is clear. The last paragraph of
Article 268 of the Labor Code
states:chanRoblesvirtualLawlibrary
ARTICLE 268 [256]. Representation issue in
organized establishments.
Xxx
At the expiration of the freedom period, the
employer shall continue to recognize the majority
status of the incumbent bargaining agent where no
petition for certification election is filed. (Emphasis
supplied)
When petitioners held a conference on May 26, 2003,
respondent refused to attend.57 Instead of explaining its
non-attendance to the conference or making a counter-
offer, respondent replied on August 15, 2003
acknowledging the receipt and contents of the July 2003
letter but invoking the 2002 Collective Bargaining
Agreement as an excuse not to answer petitioners'
demands to negotiate.59 This is contrary to Article 261 of
the Labor Code, which requires the other party to reply
within 10 days from receipt of the written demand:
ARTICLE 261. [250] Procedure in Collective
Bargaining. — The following procedures shall be
observed in collective bargaining:cralawlawlibrary
(a) When a party desires to negotiate an agreement,
it shall serve a written notice upon the other party
with a statement of its proposals. The other party
shall make a reply thereto not later than ten (10)
calendar days from receipt of such notice[.]
Respondent likewise failed to reply to the collective
bargaining agreement proposal sent by petitioners on
August 21, 2007.60 The September 22, 2007 letter, sent
with the agreement proposal, also went unheeded.61
The new CBA negotiated by petitioners whether or not
submitted to the MOLE in accordance with Article 231 of
the Labor Code cannot be deemed permanent,
precluding commencement of negotiations by another
union with management, considering that it was entered
into at a time when the petition for certification election
had already been filed by respondent union. Meantime,
this interim agreement must be recognized and given
effect on a temporary basis so as not to deprive the
workers of the favorable terms of the agreement. . . .
Respondent was remiss in its duty when it repeatedly
refused negotiations with petitioners.
Even if we consider respondent's refusal to bargain as
merely a mistake made in good faith, its subsequent acts
show an attempt to restrict petitioners' negotiating
power.
First, the 2002 Collective Bargaining Agreement was
done on May 6, 2002, only days before the May 17, 2002
certification election. When respondent and PACIWU-
TUCP entered into the 2002 Collective Bargaining
Agreement, they had been aware that a certification
election was going to be conducted in a few days. In
pushing through with negotiations instead of waiting for
the outcome of the election, respondent risked needing
to renegotiate with a new union if PACIWU-TUCP loses.
It cannot, thus, invoke the hastily concluded 2002
Collective Bargaining Agreement as an excuse not to
bargain with petitioners. If respondent had truly
intended to bargain in good faith, it could have easily
waited a few more days to know the result of the
certification election.
Second, when the 2002 Collective Bargaining Agreement
expired in December 2006, the Labor Secretary's
Resolution declaring SONEDCO Workers Free Labor
Union as the bargaining agent of respondent's rank-and-
file employees was already final and executory.
Respondent's initial basis for refusal to bargain had
expired, and since no temporary restraining order was
issued, nothing was legally preventing respondent from
negotiating a new collective bargaining agreement with
petitioners. That it chose to refuse negotiations and
instead entered into an agreement with its employees to
essentially waive negotiations for 2007 and 2008 betrays
its intention of limiting petitioners' bargaining power.
The wording of the waivers shows a clear attempt to limit
petitioners' bargaining power by making them waive the
negotiations for 2007 and 2008. In stipulating that the
collective bargaining agreement that would be entered
into would only be effective the year following the 2008
waiver, respondent limited when the collective
bargaining agreement could be deemed effective. In other
words, respondent asked petitioners to forego any
benefits they might have received under a collective
bargaining agreement in exchange for the company-
granted benefits.
Lastly, when the 2007 waiver was circulated,
respondent already had a copy of petitioners' agreement
proposal. Respondent was aware that petitioners asked
for a P50.00 wage increase in the proposed CBA of
SWOFLU.
II
The National Labor Relations Commission did not err in
granting the benefits for 2007 and 2008 to the
employees who did not sign the waiver.
3
After SONEDCO Workers Free Labor Union was again
declared as the exclusive bargaining representative in
the August 20, 2008 certification election, the 2009
Collective Bargaining Agreement was created to cover
2009 to 2013.70 Since the 2009 Collective Bargaining
Agreement did not include the years 2007 and 2008, the
alleged purpose of the waivers, which was to prevent
double compensation, was already served.71 It would be
unfair for the employees to still not receive the benefits
for 2007 and 2008 simply because they refused to sign a
waiver that was already moot.
However, there is no need for the continuation of the
wage increase for 2007 and 2008 since the 2009
Collective Bargaining Agreement contains wage increase
provisions for 2009 to 2013. As explained in Samahang
Manggagawa sa Top Form Manufacturing v. National
Labor Relations Commission,72 if a proposal is not
printed in the collective bargaining agreement, it cannot
be demanded:
The CBA is the law between the contracting parties —
the collective bargaining representative and the
employer-company
If petitioners wanted the wage increase for 2007 and
2008 to be carried on, the proper recourse would have
been to demand that this be included in the 2009
Collective Bargaining Agreement.
III
Respondent is liable to pay moral and exemplary
damages. In Nueva Ecija Electric Cooperative, Inc. v.
National Labor Relations
Commission:73chanroblesvirtuallawlibrary
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 Courts sworn duty to ensure that
none trifles with labor rights.
SONEDCO vs. URC (2017)
Generally, a wage increase not included in the Collective
Bargaining Agreement is not demandable. However, if it
was withheld by the Er as part of its unfair labor practice
against the union members, this benefit should be
granted.
NOTE:
§ Petitioner Southern Negros Development
Corporation (SONEDCO) Workers Free Labor
Union shall be referred as UNION.
§ Respondent Universal Robina Corporation,
Sugar Division-Southern Negros
Development Corporation (URC-SONEDCO)
shall be referred as the Employer or Er.
§ Employees shall be referred in this case
digest as Ees
§ Present action filed before SC: Motion for
Partial Reconsideration filed by the
union.
FACTS:
Here, the Union members are asking that the wage
increase given to their fellow Ees be awarded to them as
well. Their co-workers of the same rank are allegedly
earning P32.00/day more than they are receiving.
This case arose from an ULP complaint filed by the
Union against its Er.
In 2007, while there was no CBA in effect, the Er offered
a P16.00/day wage increase to their Ees. To receive the
benefits, employees had to sign a waiver which provides
that any CBA negotiated for that year shall only be
effective on January 1, 2008. Some members of the Union
refused to sign realizing that the waiver was an ULP.
The Er offered the same arrangement in 2008. It
extended an additional P16.00/day wage increase to Ees
who would agree that any CBA negotiated for that year
would only be effective on January 1, 2009. Several
members of the Union again refused to waive their rights.
Consequently, they did not receive the wage increase
which already amounted to a total of P32.00/day,
beginning 2009.
On July 2, 2009, the Union and its members who
refused to sign the 2007 and 2008 waivers filed a
complaint for ULP against their Er.
a. They argued that the requirement of a waiver
prior to the release of the wage increase
constituted an interference to the Ees' right to
self-organization, collective bargaining, and
concerted action.
b. They asked that they be granted a
P16.00/day wage increase for 2007 and an
additional P16.00/day wage increase for
2008.
c. The Union also demanded a continuing wage
increase of P32.00/day "from January 1,
2009 onwards."
October 5, 2016, SC found the Er guilty of ULP for failing
to bargain with the union in good faith. The Er restricted
the Union's bargaining power when it asked the rank-
and-file employees to sign a waiver foregoing CBA
negotiations in exchange for wage increases. Thus, SC
ordered the Er to grant the union members the 2007 and
2008 wage increases.
Nevertheless, SC denied the claim for the 2009 wage
increase and ruled that if the Union wished to continue
receiving the additional wage after 2008, the proper
recourse was to include it in the 2009 CBA.
On February 20, 2017 petitioners, filed a Motion for
Partial Reconsideration.
Petitioners argued that the P16.00 wage increases
granted in 2007 and 2008 were integrated in the salary
of the Ees who signed the waiver. Thus, since the start of
2009, Ees who signed the waiver have been receiving
P32.00/day more than petitioners.
4
Respondent Er argues that this issue has already been
ruled upon. Since the 2009 wage increase was not
included in the 2009 CBA, it cannot be demanded.
ISSUE:
Whether a P32.00/day wage increase beginning January
1, 2009 to present should be awarded to petitioners.
RULING:
Yes, the requested wage increase should be awarded.
Generally, the CBA controls the relationship between the
parties. Any benefit not included in it is not demandable.
However, in light of the peculiar circumstances in
this case, the requested wage increase should be
granted.
According to petitioners, the wage increase was
integrated in the salary of those who signed the waivers.
To prove this allegation, petitioners have attached a
JOINT AFFIDAVIT where the affiants stated that they
signed the 2007 and 2008 waivers and are, thus,
currently receiving P32.00/day more than petitioners.
When the affiants waived their rights, respondent
rewarded them with a P32.00/day wage increase that
continues to this day. The respondent granted this
benefit to its employees to induce them to waive their
collective bargaining rights. This Court has declared this
an ULP.
Accordingly, it is illegal to continue denying the
petitioners the wage increase that was granted to Ees
who signed the waivers. To rule otherwise will perpetuate
the discrimination against petitioners. All the
consequences of the ULP must be addressed.
The grant of the P32.00/day wage increase is not an
additional benefit outside the CBA of 2009. By granting
this increase to petitioners, this Court is eliminating the
discrimination against them, which was a result of
respondent's ULP.
ERGONOMICS vs. ENAJE
FACTS:
Respondents (Emerito Enaje, et al.) were union officers
and members of Ergonomic System Employees Union-
Workers Alliance Trade Unions (local union).
Said local union was not independently registered, but
was affiliated with Workers Alliance Trade Unions-Trade
Union Congress of the Philippines (Federation).
On Oct. 29, 1999, the local union entered into a
Collective Bargaining Agreement (CBA) with petitioner
Ergonomic Systems Philippines, Inc. (ESPI), which was
valid for five (5) years or until October 2004.
The CBA contained a security clause which provides in
part:
SECTION 1. Union Shop. All regular, permanent
employees covered by this Agreement who are
members of the UNION as of the date of
effectivity of this Agreement as well as any
employees who shall subsequently become
members of the UNION during the lifetime of this
Agreement or any extension, thereof, shall as a
condition of continued employment, maintain
their membership in the UNION during the term
of this Agreement or any extension thereof.
xxxx
SECTION 3. The COMPANY shall terminate the
services of any concerned employee when so
requested by the UNION for any of the following
reasons:
a. Voluntary Resignation from the Union
during the term of this Agreement or
any extension thereof;
b. Non-payment of membership fee, regular
monthly dues, mutual aid benefit and
other assessments submitted by the
UNION to the COMPANY;
c. Violation of the UNION Constitution and
Bylaws. The UNION shall furnish the
COMPANY a copy of their Constitution
and Bylaws and any amendment
thereafter.
d. Joining of another Union whose interest
is adverse to the UNION, AWATU, during
the lifetime of this Agreement.
e. Other acts which are inimical to the
interests of the UNION and AWATU.
On Nov. 15, 2001, before the CBA expired, the union
officers secured the independent registration of the local
union with the Regional Office of DOLE.
They were then charged before the Federation and
investigated for attending and participating in other
union's seminars and activities using union leaves
without the knowledge and consent of the Federation
and ESPI as well as in initiating and conspiring in the
disaffiliation before the freedom period.
On Jan. 10, 2002, the Federation rendered a decision
finding respondents-union officers guilty of disloyalty.
They were penalized with immediate expulsion from the
Federation.
On Jan. 11, 2002, the Federation furnished ESPI with a
copy of its decision against respondents-union officers
and recommended the termination of their employment
by invoking the CBA.
ESPI notified respondents-union officers of the
Federation's demand and gave them 48 hours to explain.
Thereafter, on Feb. 20, 2002, the union officers were
issued letters of termination, which they refused to
receive.
On Feb 20, 2002, ESPI submitted to the DOLE a list of
the dismissed employees. On the same day, the local
union filed a notice of strike with the National
Conciliation and Mediation Board (NCMB).
From Feb. 21-23, 2002, the local union staged a series of
noise barrage and "slow down" activities.
5
During the same period, 40 union members refused to
submit their Daily Product Reports (DPRs). There were
also 28 union members who abandoned their work and
held a picket line outside the premises of ESPI. Also,
others did not report for work without official leave.
It was only on April 2, 2002 that the strike vote was
taken. And the report thereon was submitted to the
NCMB on April 4, 2002.
Thereafter, the union members were required to submit
their explanation why they should not be sanctioned,
but they did not submit their explanation. Subsequently,
they were issued letters of termination.
On Jan. 27, 2003, they filed a complaint for illegal
dismissal and unfair labor practice against ESPI.
ISSUE # I. WHETHER THE FEDERATION MAY
INVOKE THE UNION SECURITY CLAUSE IN
DEMANDING THE RESPONDENTS' DISMISSAL. (No)
Only the local union may invoke the union security
clause in the CBA. Before an employer terminates an
employee pursuant to the union security clause, it needs
to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting the
enforcement of the union security provision in the CBA;
and (3) there is sufficient evidence to support the
decision of the union to expel the employee from the
union.
In this case, the primordial requisite, i.e., the union is
requesting the enforcement of the union security
provision in the CBA, is clearly lacking.
There is no doubt that the union referred to in the
provisions of the CBA is the Ergonomic Systems
Employees Union or the local union as provided in
Article I of the CBA.
A perusal of the CBA shows that the local union, not the
Federation, was recognized as the sole and exclusive
collective bargaining agent for all its workers and
employees in all matters concerning wages, hours of
work, and other terms and conditions of employment.
Consequently, only the union may invoke the union
security clause in case any of its members commits a
violation thereof. Even assuming that the union officers
were disloyal to the Federation and committed acts
inimical to its interest, such circumstance did not give
the Federation the prerogative to demand the union
officers' dismissal pursuant to the union security clause
which, in the first place, only the union may rightfully
invoke. Certainly, it does not give the Federation the
privilege to act independently of the local union. At most,
what the Federation could do is to refuse to recognize
the local union as its affiliate and revoke the charter
certificate it issued to the latter.
II. WHETHER THE STRIKE CONDUCTED BY THE
RESPONDENTS COMPLIED WITH THE LEGAL
REQUIREMENTS. (No)
Procedurally, for a strike to be valid, it must comply with
Article 278 of the Labor Code, which requires that: (a) a
notice of strike be filed with the NCMB 30 days before
the intended date thereof, or 15 days in case of unfair
labor practice; (b) a strike vote be approved by a majority
of the total union membership in the bargaining unit
concerned, obtained by secret ballot in a meeting called
for that purpose; and (c) a notice be given to the NCMB
of the results of the voting at least seven days before the
intended strike. These requirements are mandatory, and
the union's failure to comply renders the strike illegal.
The union filed a notice of strike on Feb. 20, 2002. The
strike commenced on Feb. 21, 2002. The strike vote was
taken on April 2, 2002 and the report thereon was
submitted to the NCMB on April 4, 2002. Indeed, the
first requisite or the cooling-off period need not be
observed when the ground relied upon for the conduct of
strike is union-¬busting. Nevertheless, the second and
third requirements are still mandatory. In this case, it is
apparent that the union conducted a strike without
seeking a strike vote and without submitting a report
thereon to the DOLE. Thus, the strike which commenced
on Feb. 21, 2002 was illegal.
III. WHETHER THE UNION OFFICERS’ DISMISSAL
FROM EMPLOYMENT WAS VALID. (Yes)
Article 279(a) of the Labor Code provides:
Art. 279. Prohibited activities. - (a) x x x
xxxx
Any union officer who knowingly participates in
an illegal strike and any worker or union officer
who knowingly participates in the commission of
illegal acts during a strike may be declared to
have lost his employment status: Provided, That
mere participation of a worker in a lawful strike
shall not constitute sufficient ground for
termination of his employment, even if a
replacement had been hired by the employer
during such lawful strike.
In the determination of the consequences of illegal
strikes, the law makes a distinction between union
members and union officers. The services of an
ordinary union member cannot be terminated for mere
participation in an illegal strike; proof must be adduced
showing that he or she committed illegal acts during the
strike. A union officer, on the other hand, may be
dismissed, not only when he actually commits an illegal
act during a strike, but also if he knowingly participates
in an illegal strike.
In the present case, respondents-union officers stand to
be dismissed as they conducted a strike despite
knowledge that a strike vote had not yet been approved
by majority of the union and the corresponding strike
vote report had not been submitted to the NCMB.
UNITED COCONUT vs. VALMORES
The base figure in the determination of full backwages is
fixed at the salary rate received by the ee at the time he
was illegally dismissed. The award shall include the
benefits and allowances regularly received by the ee as of
6
the time of the illegal dismissal, as well as those granted
under the Collective Bargaining Agreement (CBA), if any.
Parties:
ER – United Coconut Chemical, Inc. (UCCI)
EE – Victoriano B. Valmores
Union – UCCI Employees’ Labor Organization
(UELO)
Facts:
• Valmores worked as Senior Utilities Inspector at
UCCI.
• His monthly salary is P11, 194.00
• He was a member of UELO from his employment
until his expulsion sometime in 1995.
• Due to his expulsion from UELO, the union
formally demanded that UCCI terminate the
services of Valmores pursuant to the Union
Security Clause of the CBA.
• February 22, 1996: UCCI dismissed Valmores.
Valmores filed a complaint for illegal dismissal in the
NLRC.
• LA dismissed his complaint for lack of
merit.
Appeal with NLRC (Third Division):
• LA decision was reversed. UCCI and
UELO liable for illegal dismissal.
• UCCI and UELO ordered to reinstate
Valmores to his former position without
loss of seniority rights AND with full
backwages from February 22, 1996
(date of dismissal) to the date of actual
reinstatement.
Motion for Reconsideration (NLRC En Banc):
• Partially granted UCCI’s motion by
granting its prayer to be exempted from
paying backwages.
UELO separately elevated the matter to the CA on
certiorari:
• NLRC Third Division decision affirmed in
all respect (UCCI is also liable insofar as
the award of full backwages in favor of
complainant is concerned).
UCCI filed petition for review on certiorari with the
SC:
• Petition denied.
• Decision became final and executory on
February 26, 2004.
Valmores moved for the execution of judgment in his
favor.
• January 18, 2010: Labor Arbiter granted
motion for execution and issued writ.
• Labor Arbiter opined that the backwages
due to the respondent should be
computed by excluding the benefits
under the CBA.
• Backwages used in Article 279 of the
Labor Code includes benefits which the
complainant should have received had
he not been dismissed from work.
Benefits which are not prescribed by law
of those referring to benefits granted by
the er either pursuant to the CBA or its
benevolence, cannot be recognized
unless duly proved.
June 29, 2010: NLRC issued its resolution remanding
the case to the Labor Arbiter for the recomputation of
the backwages inclusive of the benefits granted under
the CBA.
• UCCI is directed to furnish the office of
the Labor Arbiter copies of the pertinent
CBA.
• The reinstatement salary of Valmores
amounted to P26, 614 in the personnel
action submitted by UCCI as opposed to
the P11,194 alleged salary at the time of
Valmores’ dismissal.
• The disparity should have prompted the
Labor Arbiter to probe into Valmores’
claim of entitlement to the benefits
granted under the CBA as part of the
backwages.
CA:
• Agreed with NLRC.
• UCCI had failed to submit the documents
proving the details of the benefits granted to
its ees form the time when Valmores was
illegally dismissed until his reinstatement
on July 1, 2008.
Valmores was insisting on the inclusion of CBA-granted
benefits in the payment of backwages. UCCI of course
opposed contending that it would be contrary to prevailing
jurisprudence.
It is noteworthy that there were increases after the period
of Valmores’ dismissal. UCCI was saying that these
increases shouldn’t be included:
• Salary, meal subsidy, safety incentive pay,
SOFA, financial grant and medical assistance,
one-time CBA increase
Issues:
1. W/N the benefits granted to ees in the CBA
should be included in the computation for
backwages. Yes
2. W/N UCCI is solely liable for payment of
backwages. Yes
Held:
Issue #1: Backwages include all the benefits
previously enjoyed by the illegally dismissed
employee.
• Article 279. Security of Tenure. – xxx. An
employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent
computed form the time his compensation was
withheld from him up to the time of his actual
reinstatement.
• The settled rule is that full backwages shall be
pegged at the wage rate at the time of the ee’s
7
 dismissal, unqualified by any deductions and
increases. There is no award of salary
differentials.
• Unqualified award of backwages: ee is paid at
the wage rate at the time of his dismissal.
• Base figure (for computation of backwages):
basic salary and regular allowances received
such as the emergency living allowances and the
13th month pay mandated by law.
Purpose: To compensate the worker for what he
has lost because of his dismissal, and to set the
price or penalty on the er for illegally dismissing
his ee.
• LA correct in using P11, 194 as base figure
because it represented Valmores’ wage rate at
the time of his dismissal which included his 13th
month pay and service incentive leave. However,
there should have been a determination of the
CBA benefits that Valmores had been receiving
as of the time of his dismissal.
Ø Valmores had to prove his entitlement to
the benefits by submitting sufficient
evidence of his having received the same
at the time of his dismissal.
Ø Valmores was not able to discharge this
burden because the relevant documents
including the CBA had been in the
possession and custody of UCCI.
Ø UCCI failed to submit the documents
providing the details of benefits granted
to its ees from the time of Valmores’
dismissal up to the date of
reinstatement. The presumption that
“evidence wilfully suppressed would be
adverse if produced” applies.
Ø Valmores’
• Respondent should only receive backwages that
included amounts he was receiving at the time of
his illegal dismissal BUT NOT the benefits
granted to his coemployees after his dismissal.
This includes CBA-granted benefits he had been
enjoying and excludes those increases made after
his dismissal. Sufficient proof must be adduced in
order to avail of CBA-granted benefits.
FACTS:
• Case is remanded to the Labor Arbiter for the
recomputation of full backwages using the base
figure of P11,194 plus other benefits and
allowances granted under the CBA being
regularly received by Valmores as of February
22, 1996.
Issue #2: UCCI is solely liable for payment of
backwages.
• The NLRC ruled that:
Ø UCCI dismissed Valmores without cause
and did not observe procedural due
process;
Ø UELO had wrongly expelled Valmores
from its membership.
Ø UCCI had not conducted its own
investigation of the circumstances
behind his expulsion in order to
determine for itself whether or not the
union security clause was applicable.
• UCCI relied on the decision of the NLRC which
the SC has already affirmed and has become
final and executory, declaring both UCCI and
UELO liable for backwages to Valmores.
Ø The NLRC did not include in the body of
its decision anything to the effect that
UELO should be liable for Valmores’
expulsion. Nonetheless, UELO was
included in the fallo (‘wherefore’ part) of
the decision as liable for the backwages.
Ø GR: The fallo controls when there is a
conflict between the body of the
decision and the dispositive portion
(fallo) on the theory that the fallo is the
final order, while the opinion stated in
the body is a mere statement ordering
nothing.
EXC: It is the body of the decision that
should prevail where the inevitable
conclusion from the same is so clear as
to show that there was a mistake in the
fallo. The rationality of the decision
should justify the fallo.
Ø The exception applies here.
• The company may still be held liable if it was
remiss in its duty to accord the would-be
dismissed EEs their right to be heard even if the
dismissal was at the instance of the federation
and that the latter undertook to hold the
company free from any liability resulting from
the dismissal of employees.
• UCCI, as the ER effecting the unlawful
dismissal, is solely liable for the backwages of
Valmores, its EE.
(Interest rate imposed was 12% per annum
reckoned from the finality of the decision of the
NLRC until full payment)
GENERAL MILLING vs. CASIO
1. The labor union Ilaw at Buklod ng Mangagawa
(IBM)-Local 31 Chapter (Local 31) was the SEBA
of the rank and file employees of GMC in Lapu-
Lapu City.
2. IBM-Local 31, through its officers and board
members, namely Pino et. al entered into a CBA
with GMC. The CBA contained union security
provisions (Sections 3 and 6 Article II f the CBA)
3. Casio, et al. were regular employees of GMC with
daily earnings ranging from P173.75 to P201.50,
and length of service varying from eight to 25
years.
4. Rodolfo Gabiana, the IBM Regional Director for
Visayas and Mindanao, furnished Casio, et al.
with copies of the Affidavits of GMC employees
charging Casio, et al. with "acts inimical to the
interest of the union." Through the same letter,
8
 Gabiana gave Casio, et al. three days from
receipt thereof within which to file their answers
or counter-affidavits. However, Casio, et al.
refused to acknowledge receipt of Gabiana's
letter.
5. Pino, et al., as officers and members of the IBM-
Local 31, issued a Resolution expelling Casio, et
al. from the union.
6. Gabiana then wrote a letter addressed to
Eduardo Cabahug, GMC Vice-President for
Engineering and Plant Administration, informing
the company of the expulsion of Casio, et al.
from the union pursuant to the Resolution of
IBM-Local 31 officers and board members.
Gabiana likewise requested that Casio, et al. "be
immediately dismissed from their work for the
interest of industrial peace in the plant.
7. Gabiana followed-up with another letter
inquiring from Cabahug why Casio, et al. were
still employed with GMC despite the request of.
Gabiana reiterated the demand of IBM-Local 31
with the warning that failure of GMC to do so
would constitute gross violation of the existing
CBA and constrain the union to file a case for
unfair labor practice against GMC.
8. GMC acceded to Gabiana's request to terminate
the employment of Casio, et al.
9. Casio, et al., in the name of IBM-Local 31, filed a
Notice of Strike with the NCMB. Casio, et al.
alleged as bases for the strike the illegal
dismissal of union officers and members,
discrimination, coercion, and union busting. The
NCMB-RO held conciliation proceedings, but no
settlement was reached among the parties.
10. Casio, et al. next sought recourse from the NLRC
by filing a Complaint against GMC and Pino, et
al. for unfair labor practice, particularly, the
termination of legitimate union officers, illegal
suspension, illegal dismissal, and moral and
exemplary damages.
LABOR ARBITER: Finding that NLRC Case did not
undergo voluntary arbitration, the Labor Arbiter
dismissed the case for lack of jurisdiction, but endorsed
the same to the NCMB.
11. Prior to undergoing voluntary arbitration before
the NCMB, however, the parties agreed to first
submit the case to the grievance machinery of
IBM-Local 31.
12. Casio, et al. filed their Complaint with Pino, the
Acting President of IBM-Local 31. Pino
acknowledged receipt of the Complaint and
assured Casio, et al. that they would be
"seasonably notified of whatever decision and/or
action the Board may have in the instant case."
When the IBM-Local 31 Board failed to hold
grievance proceedings on the Complaint of
Casio, et al., NCMB Voluntary Arbitrator
assumed jurisdiction over the same.
VA: the termination by GMC of the employment of Casio,
et al. was in valid compliance with the closed shop
provision in the CBA
13. Dissatisfied with the Voluntary Arbitration
Award, Casio, et al. went to the Court of Appeals
by way of a Petition for Certiorari under Rule 65.
CA: while the dismissal of Casio, et al., was made by
GMC pursuant to a valid closed shop provision under
the CBA, the company, however, failed to observe the
elementary rules of due process in implementing the
said dismissal.
The CA made Pino, et al. liable to Casio, et al., for moral
and exemplary damages and attorney's fees.
ISSUE: WON CASIO ET. AL WERE ILLEGALLY
DISMISSED. YES
GMC:
1. GMC claims that the findings of the Voluntary
Arbitrator as to the legality of the termination
from employment of Casio, et al. are well
supported by evidence.
2. IBP-Local 31 already accorded Casio, et al. due
process, only that Casio, et al. refused to avail
themselves of such opportunity.
3. GMC had no authority to inquire into or rule on
which employee-member is or is not loyal to the
union, this being an internal affair of the union.
4. GMC had to rely on the presumption that Pino,
et al. regularly performed their duties and
functions as IBP-Local 31 officers and board
members, when the latter investigated and ruled
on the charges against Casio, et al.
5. GMC asserts that Pino, et al., the IBP-Local 31
officers and board members who expelled Casio,
et al. from the union, and not GMC, should be
held liable for the reinstatement of and payment
of full backwages to Casio, et al. for the company
had acted in good faith and merely complied
with the closed shop provision in the CBA.
CASIO ET. AL:
1. GMC failed to identify the specific pieces of
evidence supporting the findings of the
Voluntary Arbitrator.
2. To accord them due process, GMC itself, as the
employer, should have held proceedings distinct
and separate from those conducted by IBM-
Local 31.
3. GMC cannot justify its failure to conduct its own
inquiry using the argument that such
proceedings would constitute an intrusion by
the company into the internal affairs of the
union.
RULING:
1. CONCEPT OF DUE PROCESS UNDER THE
LABOR CODE
• Substantive - whether the termination of
employment was based on the provision of the
Labor Code or in accordance with the prevailing
jurisprudence
• Procedural - the manner in which the dismissal
was effected.
"Union security" is a generic term, which is applied to
and comprehends "closed shop," "union shop,"
9
"maintenance of membership," or any other form of
agreement which imposes upon employees the obligation
to acquire or retain union membership as a condition
affecting employment.
• Union shop: when all new regular employees are
required to join the union within a certain period
as a condition for their continued employment.
• Maintenance of membership shop: when
employees, who are union members as of the
effective date of the agreement, or who thereafter
become members, must maintain union
membership as a condition for continued
employment until they are promoted or
transferred out of the bargaining unit or the
agreement is terminated.
• Closed shop: an enterprise in which, by
agreement between the employer and his
employees or their representatives, no person
may be employed in any or certain agreed
departments of the enterprise unless he or she
is, becomes, and, for the duration of the
agreement, remains a member in good standing
of a union entirely comprised of or of which the
employees in interest are a part.
Union security clauses are recognized and explicitly
allowed under Article 248(e) of the LC.
In terminating the employment of an employee by
enforcing the union security clause, the employer needs
only to determine and prove that:
(1) the union security clause is applicable;
(2) the union is requesting for the enforcement of
the union security provision in the CBA; and
(3) there is sufficient evidence to support the
decision of the union to expel the employee from
the union. These requisites constitute just cause
for terminating an employee based on the union
security provision of the CBA.
It is the third requisite - that there is sufficient evidence
to support the decision of IBM-Local 31 to expel Casio, et
al. - which appears to be lacking in this case. The full
text of the individual but identical termination letters,
served by GMC on Casio, et al., is very revealing.
It is apparent from letter that GMC terminated the
employment of Casio, et al. relying upon the Resolution
of Pino, et al. expelling Casio, et al. from IBM-Local 31.
The letter made no mention at all of the evidence
supporting the decision of IBM-Local 31 to expel Casio,
et al. from the union. GMC never alleged nor attempted
to prove that the company actually looked into the
evidence of IBM-Local 31 for expelling Casio, et al. and
made a determination on the sufficiency thereof. Without
such a determination, GMC cannot claim that it had
terminated the employment of Casio, et al. for just
cause.
2. ILLEGAL DISMISSAL
In illegal dismissal cases, the onus of proving that the
employee was not dismissed or if dismissed, that the
dismissal was not illegal, rests on the employer and
failure to discharge the same would mean that the
dismissal is not justified and therefore illegal.
The records of this case are absolutely bereft of any
supporting evidence to substantiate the bare allegation
of GMC that Casio, et al. were accorded due process by
IBM-Local 31.
There is nothing on record that would indicate that IBM-
Local 31 actually notified Casio, et al. of the charges
against them or that they were given the chance to
explain their side. All that was stated in the IBM-Local
31 Resolution expelling Casio, et al. from the union, was
that "a copy of the said letter complaint was dropped or
left in front of E. Casio. It was not established that said
letter-complaint charging Casio, et al. with acts inimical
to the interest of the union was properly served upon
Casio, that Casio willfully refused to accept the said
letter-notice, or that Casio had the authority to receive
the same letter-notice on behalf of the other employees
similarly accused.
It's worthy to note that Casio, et al. were expelled only
five days after the issuance of the letter-complaint
against them. The Court cannot find proof on record
when the three-day period, within which Casio, et al.
was supposed to file their answer or counter-affidavits,
started to run and had expired. The Court is likewise
unconvinced that the said three-day period was
sufficient for Casio, et al. to prepare their defenses and
evidence to refute the serious charges against them.
3. PRESUMPTION OF REGULARITY
The acts of Pino, et al. as officers and board members of
IBM-Local 31, in expelling Casio, et al. from the union,
do not enjoy the presumption of regularity in the
performance of official duties, because the presumption
applies only to public officers.
4. REQUREMENTS OF PROCEDURAL DUE
PROCESS
The twin requirements of notice and hearing constitute
the essential elements of procedural due process.
The law requires the employer to furnish the employee
sought to be dismissed with two written notices before
termination of employment can be legally effected:
(1) a written notice apprising the employee of the
particular acts or omissions for which his
dismissal is sought in order to afford him an
opportunity to be heard and to defend himself
with the assistance of counsel, if he desires, and
(2) a subsequent notice informing the employee
of the employer's decision to dismiss him. This
procedure is mandatory and its absence taints
the dismissal with illegality.
GMC cannot dispense with the requirements of notice
and hearing before dismissing Casio, et al. even when
said dismissal is pursuant to the closed shop provision
in the CBA. The rights of an employee to be informed of
the charges against him and to reasonable opportunity
to present his side in a controversy with either the
company or his own union are not wiped away by a
10
union security clause or a union shop clause in a
collective bargaining agreement.
An employee is entitled to be protected not only from a
company which disregards his rights but also from his
own union the leadership of which could yield to the
temptation of swift and arbitrary expulsion from
membership and hence dismissal from his job.
In the case at bar, Casio, et al. did not receive any other
communication from GMC, except the written notice of
termination. GMC, by its own admission, did not
conduct a separate and independent investigation to
determine the sufficiency of the evidence supporting the
expulsion of Casio, et al. by IBP-Local 31. It straight
away acceded to the demand of IBP-Local 31 to dismiss
Casio, et al.
5. PAYMENT OF BACKWAGES AND SEPARATION
PAY
GMC completely missed the point that the expulsion of
Casio, et al. by IBP-Local 31 and the termination of
employment of the same employees by GMC, although
related, are two separate and distinct acts. Despite a
closed shop provision in the CBA and the expulsion of
Casio, et al. from IBP-Local 31, law and jurisprudence
imposes upon GMC the obligation to accord Casio, et al.
substantive and procedural due process before
complying with the demand of IBP-Local 31 to dismiss
the expelled union members from service. The failure of
GMC to carry out this obligation makes it liable for
illegal dismissal
An employee who is illegally dismissed is entitled to the
twin reliefs of full backwages and reinstatement.
If reinstatement is not viable, separation pay is
awarded to the employee.
In awarding separation pay to an illegally dismissed
employee, in lieu of reinstatement, the amount to be
awarded shall be equivalent to one-month salary for
every year of service.
Under Republic Act No. 6715, employees who are
illegally dismissed are entitled to full backwages,
inclusive of allowances and other benefits or their
monetary equivalent, computed from the time their
actual compensation was withheld from them up to the
time of their actual reinstatement but if reinstatement
is no longer possible, the backwages shall be computed
from the time of their illegal termination up to the
finality of the decision.
Thus, Casio, et al. are entitled to backwages and
separation pay considering that reinstatement is no
longer possible because the positions they previously
occupied are no longer existing, as declared by GMC.
UNITED POLYRESIN vs. PINUELA
Facts
v Petitioner United Polyresins, Inc. (UPI) is a
registered domestic corporation doing business
in San Pedro, Laguna, while petitioners Ernesto
Uy Soon, Jr. and Julito Uy Soon are its
corporate officers.
v Respondent Marcelino Pinuela was employed by
UPI in 1987.
v He became a member of the labor union,
Polyresins Rank and File Association (PORFA),
and was elected President thereof in May, 2005
and slated to serve until the end of 20076
v Respondent and the other union officers were
accused of mismanagement, unduly hanging
on to their positions, and lack of
accountability
v Thus, in March 2008, special elections were
held, and a new union President and set of
officers were elected.
v On March 29, 2008, the union's new set of
officers conducted an investigation into the fact
that the union had little or no funds remaining
in its bank account.
v Respondent attended the investigation, and
admitted that the union had no more funds as
they were "utilized in the prosecution of cases
during his incumbency.
v He likewise failed to make a formal turnover of
documents to the new President.
v Respondent was required to surrender union
documents in his possession on the next
scheduled meeting.
v On April 8, 2008, another inquiry was held
where respondent was present. The investigation
centered on respondent's continued failure to
account for the union's bank accounts,
documents, and deposits made during his
incumbency, and his failure to formally turn
over union's papers to the new officers.
On April 10, 2008, the new set of union officers issued a
Resolution 17 expelling respondent from PORF A for
being guilty of the following violations:
1. No annual financial statement.
2. No listings or ledger of union member's [sic]
emergency loans.
3. Unposted cheques on the Union's passbook
collected from umon members [sic] monthly
dues.
4. Our union checking account at Security
Bank were [sic] Zero balance/closed account.
11
 5. No receipts/cash disbursement presented
for the union operational [sic] expenses.
6. Unable to return the ₱300,000.00 lent by
the management free of interest. (Art. XXVII,
Section 3 of our CBA).
7. Unable to explain and present documents to
support where the agency fees and union dues
collected from legitimate union members were
used.18
v The officers held that these violations
constituted an infringement of the union's
Constitution, particularly Article XV, Section
1, paragraphs (e) and (f) thereof, which
specifically prohibit the misappropriation of
union funds and property and give ground for
the impeachment and recall of union officers.19
v In an April 11, 2008 letter20 to petitioners,
PORF A communicated respondent's expulsion
from the union.
On April 14, 2008, petitioners issued a letter of
termination to respondent, to take effect
immediately.
LA- dismissed the case (termination valid)
NLRC- initially set aside but MR (valid dismissal
pursuant to Union Security clause)
Court of Appeals- termination not valid (awarded
backwages)
But filed an MR—present petition
Issue
1. WON Pinuela was illegally expelled from Union
membership (YES)
2. WON Pinuela was illegally dismissed (YES)
Ruling
Constitution and By-Laws was examined; no valid
ground for expulsion and dismissal for just cause
Respondent's expulsion from PORFA is grounded on
Article XV, Section 1, paragraphs (e) and (f) of the
union's Constitution, which provides:
ARTICLE-XV IMPEACHMENT AND RECALL
Section 1. Any of the following shall be ground for the
impeachment or recall of the union officers.
a. Committing or causing the commission directly or
indirectly of acts against the interest and welfare of the
union;
b. Malicious attack against the union, its officers or
against a fellow union officer or member;
c. Failure to comply with the obligation to tum over and
return to union treasurer within three (3) days
unexpanded [sic] sum of money received from the money
funds to answer for an authorized union purpose;
d. Gross misconduct unbecoming of a union officer;
e. Misappropriation of union funds and property. This is
without prejudice to the filing of an appropriate criminal
or civil action against the responsible officer/(s) by any
interested party;
f. Willful violation of any provision of the constitution or
rules, regulations, measures, resolution(s) and decision
of the union.37 (Emphasis supplied)
CASE AT BAR
However, these provisions refer to impeachment and
recall of union officers, and not expulsion from union
membership. This is made clear by Section 2(e) of the
same Article XV, which provides that "(t)he union officers
impeached shall 'IPSO FACTO' to [sic] be considered
resigned or ousted from office and shall no longer be
elected nor appointed to any position in the union."
In short, any officer found guilty of violating these
provisions shall simply be removed, impeached or
recalled, from office, but not expelled or stripped of
union membership.
It was therefore error on the part of PORFA and
petitioners to terminate respondent's employment based
on Article XV, Section 1, paragraphs (e) and (f) of the
union's Constitution. Such a ground does not
constitute just cause for termination.
A review of the PORFA Constitution itself reveals that the
only provision authorizing removal from the union is
found in Article X, Section 6, that is, on the ground of
failure to pay union dues, special assessments, fines,
and other mandatory charges.38 On the other hand,
grounds for disqualification from membership may be
found in Article IV, which states that-
Section 3. The following are not eligible neither [sic] for
membership nor to election or appointment to any
position in the union:
a. Subversive or persons who profess subversive ideas.
b. Persons who have been convicted of crime
involving moral turpitude.
c. Persons who are not employees of the company.39
These provisions do not apply in respondent's case.
Although he was eventually charged with estafa,40 a
crime involving moral turpitude,41 still, he has not
been convicted of the crime. For this reason, he may
not be disqualified as union member.
Thus, for what he is charged with, respondent may not
be penalized with expulsion from the union, since this is
not authorized and provided for under PORFA's
Constitution.
Contrary to petitioners' claim, Carino v. National Labor
Relations Commission is not applicable here. In that
case, the employee was terminated on the basis of
existing suspension and expulsion provisions contained
in the CBA and rules on discipline found in the union's
Constitution. There are no such provisions in PORFA's
Constitution; neither has it been shown that there are
similar stipulations in the parties' CBA.
12
The matter of respondent's alleged failure to return
petitioners' ₱300,000.00 which was lent to PORFA is
immaterial as well. It may not be used as a ground to
terminate respondent's employment; under the Labor
Code, such a contribution by petitioners to PORFA is
illegal and constitutes unfair labor practice.
ART. 248. Unfair labor practices of employers. - It shall
be unlawful for an employer to commit any of the
following unfair labor practice:
xxxx
(d) To initiate, dominate, assist or otherwise interfere
with the formation or administration of any labor
organization, including the giving of financial or other
support to it or its organizers or supporters;42
(Emphasis supplied)
This could be an opportune time for the union to
consider amending its Constitution in order to provide
for specific rules on the discipline of its members, not
just its officers. After all, it is given the right under the
Labor Code, "to prescribe its own rules with respect to
the acquisition or retention of membership."
But it may not insist on expelling respondent from PORF
A and assist in his dismissal from UPI without just
cause, since it is an unfair labor practice for a labor
organization to "cause or attempt to cause an
employer to discriminate against an employee,
including discrimination against an employee with
respect to whom membership in such organization has
been denied or to terminate an employee on any ground
other than the usual terms and conditions under which
membership or continuation of membership is made
available to other members."
ZAMBRANO vs. PHILIPPINE CARPET
FACTS:
Petitioners were former employees of respondent
Philippine Carpet Manufacturing Corporation (Phil
Carpet) who were terminated on the ground of cessation
of operation due to serious business losses.
According to petitioners, however, their dismissal was
without just cause and in violation of due process
because the closure of Phil Carpet was a mere pretense
to transfer its operations to its wholly owned and
controlled corporation, Pacific Carpet Manufacturing
Corporation (Pacific Carpet). They claimed that the job
orders of some regular clients of Phil Carpet and several
machines were moved from the premises of Phil Carpet
to Pacific Carpet. They asserted that their dismissal
constituted unfair labor practice as it involved the mass
dismissal of all union officers and members of the
Philippine Carpet Manufacturing Employees Association
(PHILCEA). Hence, they filed complaints for illegal
dismissal and ULP against respondents before the Labor
Arbiter (LA).
In its defense, Phil Carpet countered that it permanently
closed and totally ceased its operations because there
had been a steady decline in the demand for its products
due to global recession, stiffer competition, and the
effects of a changing market.
LA Ruling (affirmed by the NLRC):
The complaints for illegal dismissal and unfair labor
practice were dismissed. It ruled that the termination of
the petitioners' employment was due to total cessation of
manufacturing operations of Phil Carpet because it
suffered continuous serious business losses from 2007
to 2010. The LA added that the closure was truly
dictated by economic necessity as evidenced by its
audited financial statements.
It observed that written notices of termination were
served on the DOLE and on the petitioners at least one
(1) month before the intended date of closure. The LA
further found that the petitioners voluntarily accepted
their separation pay and other benefits and eventually
executed their individual release and quitclaim in favor
of the company. Finally, it declared that there was no
showing that the total closure of operations was
motivated by any specific and clearly determinable union
activity of the employees.
CA Ruling
The total cessation of Phil Carpet's manufacturing
operations was not made in bad faith because the same
was clearly due to economic necessity. It determined that
there was no convincing evidence to show that the
regular clients of Phil Carpet secretly transferred their
job orders to Pacific Carpet; and that Phil Carpet's
machines were not transferred to Pacific Carpet but were
actually sold to the latter after the closure of business as
shown by the several sales invoices and official receipts
issued by Phil Carpet. The CA adjudged that the
dismissal of the petitioners who were union officers and
members of PHILCEA did not constitute unfair labor
practice because Phil Carpet was able to show that the
closure was due to serious business losses.
ISSUES:
1. Whether the petitioners were dismissed from
employment for a lawful cause
2. Whether the petitioners' termination from
employment constitutes unfair labor practice
RULING:
1ST issue:
Yes. The petitioners were terminated from
employment for an authorized cause.
Under Article 298 of the Labor Code, closure or cessation
of operation of the establishment is an authorized cause
for terminating an employee.
Article 298. Closure of establishment and reduction of
personnel. -The employer may also terminate the
employment ofany employee due to the installation of
labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operations of
the establishment or undertaking xx
In this case, Phil Carpet continuously incurred losses
starting 2007, as shown by the Audited Financial
Statements which were offered in evidence by the
petitioners themselves. Further, even if the petitioners
refuse to consider these losses as serious enough to
13
warrant Phil Carpet's total and permanent closure, it
was a business judgment on the part of the company's
owners and stockholders to cease operations, a
judgment which the Court has no business interfering
with. The only limitation provided by law is that the
closure must be "bonafide in character and not impelled
by a motive to defeat or circumvent the tenurial rights of
employees." Thus, when an employer complies with the
foregoing conditions, the Court cannot prohibit closure
"just because the business is not suffering from any loss
or because of the desire to provide the workers
continued employment.
Under Article 298 of the Labor Code, three requirements
are necessary for a valid cessation of business
operations: (a) service of a written notice to the
employees and to the DOLE at least one month before
the intended date thereof; (b) the cessation of business
must be bona fide in character; and (c) payment to the
employees of termination pay amounting to one month
pay or at least one-half month pay for every year of
service, whichever is higher.
These were all complied in this case. Phil Carpet notified
DOLE and the petitioners of its decision to cease
manufacturing operations on January 3, 2011, or at
least one (1) month prior to the intended date of closure
on February 3, 2011. The petitioners were also given
separation pay equivalent to 100% of their monthly basic
salary for every year of service.
2nd issue:
No. The dismissal of the petitioners did not amount
to unfair labor practice.
The general principle is that one who makes an
allegation has the burden of proving it. And in order to
show that the employer committed ULP under the Labor
Code, substantial evidence is required to support the
claim.
The petitioners miserably failed to discharge the duty
imposed upon them. They did not identify the acts of
Phil Carpet which, they claimed, constituted unfair labor
practice. They did not even point out the specific
provisions which Phil Carpet violated. Thus, they would
have the Court pronounce that Phil Carpet committed
unfair labor practice on the ground that they were
dismissed from employment simply because they were
union officers and members. The constitutional
commitment to the policy of social justice, however,
cannot be understood to mean that every labor dispute
shall automatically be decided in favor of labor.
In this case, as far as the pieces of evidence offered by
the petitioners are concerned, there is no showing that
the closure of the company was an attempt at union-
busting. Hence, the charge that Phil Carpet is guilty of
unfair labor practice must fail for lack of merit.
SAN FERNANDO vs. COCA COLA BOTTLERS
FACTS:
On May 29, 2009, the private respondent
company, Coca-Cola Bottlers Philippines., Inc. ("CCBPI")
issued notices of termination to 27 rank&file, regular
employees and members of the San Fernando Rank-
and-File Union ("SACORU"). The ground asserted by
CCBPI was redundancy. This was due to the ceding out
of two selling and distribution systems, the Conventional
Route System ("CRS") and Mini Bodega System ("MB") to
the Market Execution Partners ("MEPS"), better known as
"Dealership System". The termination of employment
was made effective on June 30, 2009, but the union
members were no longer required to report for work as
they were put on leave of absence with pay until the
effectivity date of their termination.
To SACORU, the new, reorganized selling and
distribution systems adopted and implemented by
CCBPI would result in the diminution of the union
membership amounting to union busting and to a
violation of the Collective Bargaining Agreement
(CBA) provision against contracting out of services or
outsourcing of regular positions.
By reason thereof, on June 3, 2009, SACORU filed
a Notice of Strike with the National Conciliation and
Mediation Board (NCMB) on the ground of unfair labor
practice, among others. On June 11, 2009, SACORU
conducted a strike vote where a majority decided on
conducting a strike.
On June 23, 2009, the then Secretary of the
Department of Labor and Employment (DOLE),
Marianito D. Roque, assumed jurisdiction over the labor
dispute by certifying for compulsory arbitration the
issues raised in the notice of strike. He ordered:
xxx Accordingly, any intended strike or lockout or
any concerted action is automatically enjoined. If one has
already taken place, all striking and locked out employees
shall, within twenty-four (24) hours from receipt of this
Order, immediately return to work and the employer shall
immediately resume operations and re-admit all workers
under the same terms and conditions prevailing before the
strike. The parties are likewise enjoined from committing
any act that may further exacerbate the situation. xxx
Meanwhile, pending hearing of the certified case,
SACORU filed a motion for execution of the dispositive
portion of the certification order praying that the
dismissal of the union members not be pushed through
because it would violate the order of the DOLE Secretary
not to commit any act that would exacerbate the
situation.
On August 26, 2009, however, the resolution of
the motion for execution was ordered deferred and
suspended; instead, the issue was treated as an item to
be resolved jointly with the main labor dispute.
NLRC
On March 16,2010, the NLRC dismissed the
complaint for unfair labor practice and declared as valid
the dismissal of the employees due to redundancy. It
also denied the Union's Motion for Writ of Execution for
lack of merit.
CA
14
 The CA dismissed the petition for certiorari and
found that the NLRC did not commit grave abuse of
discretion.
ISSUES:
1. Whether CCBPI validly implemented the
redundancy program?
2. Whether CCBPI’s implementation of the
redundancy program was an unfair labor practice;
and
3. Whether the status quo to be maintained after the
DOLE Secretary assumed jurisdiction means that the
effectivity of the termination of employment of the
27 employees should have been enjoined?
1ST ISSUE:
CCBPI’S redundancy program is VALID.
The Court ruled that the adoption of the scheme is
basically a management prerogative and even if it cause
the termination of some twenty seven regular employees,
it was not in violation of their right to self-organization
much more in violation of their right to security of tenure
because the essential freedom to manage business
remains with management.
Further, CCBPI had valid grounds for implementing
the redundancy program:
In the case at hand, CCBPI was able to prove its
case that from the study it conducted, the previous CRS
and MB selling and distribution schemes generated the
lowest volume contribution which thus called for the
redesigning and enhancement of the existing selling and
distribution strategy; that such study called for
maximizing the use of the MEPs if the company is to
retain its market competitiveness and viability; that
furthermore, based on the study, the company
determined that the MEPs will enable the CCBPI to
"reach more" with fewer manpower and assets to
manage; that it is but a consequence of the new scheme
that CCBPI had to implement a redundancy program
structured to downsize its manpower complement.
Sub-issue on violation of the CBA
In resolving this issue, the Court find the ruling in
Asian Alcohol vs. NLRC, 305 SCRA 416, in parallel
application, where it was held that an employer's good
faith in implementing a redundancy program is not
necessarily destroyed by availment of services of an
independent contractor to replace the services of the
terminated employees. We have held previously that the
reduction of the number of workers in a company made
necessary by the introduction of the services of an
independent contractor is justified when the latter is
undertaken in order to effectuate more economic and
efficient methods of production.
2nd ISSUE:
CCBPI did not commit an unfair labor practice.
The Court ruled that the consequent dismissal of
twenty seven (27) regular members of the complainant's
union due to redundancy is not per se an act of unfair
labor practice amounting to union busting.
SACORU was unable to prove its charge of unfair
labor practice and support its allegations that the
termination of the union members was done with the
end-in-view of weakening union leadership and
representation. There was no showing that the
redundancy program was motivated by ill will, bad faith
or malice, or that it was conceived for the purpose of
interfering with the employees' right to self-organize.
3rd ISSUE:(VERY IMPORTANT)
The Court ruled in the affirmative.
Pertinent to the resolution of this issue is Article
263 (g) of the Labor Code, which provides the conditions
for, and the effects of, the DOLE Secretary's assumption
of jurisdiction over a dispute.
DISCUSSIONS
The powers given to the DOLE Secretary under
Article 263 (g) is an exercise of police power with the
aim of promoting public good.
Scope of the powers of the SOLE under Article 263
(g)
These powers are limited only to an industry
indispensable to the national interest as determined by
the DOLE Secretary. Industries that are indispensable to
the national interest are those essential industries such
as the generation or distribution of energy, or those
undertaken by banks, hospitals, and export-oriented
industries.
Effects of the Assumption of Jurisidiction
Following Article 263 (g), the effects of the assumption of
jurisdiction are the following:
(a the enjoining of an impending strike or lockout
) or its lifting, and
(b an order for the workers to return to work
) immediately and for the employer to readmit all
workers under the same terms and conditions
prevailing before the strike or lockout,38 or the
return to-work order.
As the Court ruled in Trans-Asia Shipping Lines,
Inc.-Unlicensed Crews Employees Union-Associated
Labor Union (TASLI-ALU) v. Court of Appeals:
When the Secretary exercises these powers, he is
granted "great breadth of discretion" in order to find a
solution to a labor dispute. The most obvious of these
powers is the automatic enjoining of an impending strike
or lockout or the lifting thereof if one has already taken
place. Assumption of jurisidction over a labor dispute
or certification of the same to the NLRC, always co-
exists with an order for workers to return to work
immediately and for employers to readmit all workers
under the same terms and conditions prevailing before the
strike or lockout.
Nature of the Return-to-work order
The Court characterized such order in the case
Manggagawa ng Komunikasyon sa Pilipinas v.
Philippine Long Distance Telephone Co., Inc., as
"interlocutory in nature, and is merely meant to
maintain status quo while the main issue is being
threshed out in the proper forum." The status quo is
15
simply the status of the employment of the employees
the day before the occurrence of the strike or lockout.
Simply put, from the date the DOLE Secretary
assumes jurisdiction over a dispute until its resolution,
the parties have the obligation to maintain the status
quo while the main issue is being threshed out in the
proper forum - which could be with the DOLE Secretary
or with the NLRC.This is to avoid any disruption to the
economy and to the industry of the employer - as this is
the potential effect of a strike or lockout in an industry
indispensable to the national interest - while the DOLE
Secretary or the NLRC is resolving the dispute.
AS APPLIED IN THE CASE
Since the union voted for the conduct of a strike on
June 11, 2009, when the DOLE Secretary issued the
return-to-work order dated June 23, 2009, this means
that the status quo was the employment status of the
employees on June 10, 2009.
Hence,this status quo should have been maintained
until the NLRC resolved the dispute in its Resolution
dated March 16, 2010, where the NLRC ruled that
CCBPI did not commit unfair labor practice and that the
redundancy program was valid. The NLRC’s Resolution
then took the place of the return-to-work order of the
DOLE Secretary and CCBPI no longer had the duty to
maintain the status quo after March 16, 2010.
SUMIFRU vs. MAGKAHIUSANG NAMUMUO SA SUYAPI
FARM
Facts:
• Petitioner Sumifru is a domestic corporation and
is the surviving corporation after its merger with
Fresh Banana Agricultural Corporation (FBAC)
in 2008. FBAC was engaged in the buying,
marketing, and exportation of Cavendish
bananas.
• Respondent Nagkahiusang Mamumuo sa
Suyapa Farm (NAMASUF ANAFLU-KMU)
(NAMASUFA) is labor organization affiliated with
the National Federation of Labor Unions and
Kilusang Mayo Uno.
• On March 14, 2008, the private respondent
NAMASUF A-NAFLU-KMU, a legitimate labor
organization, filed a Petition for Certification
Election before the Department of Labor and
Employment, Regional Office No. XI in Davao
City. NAMASUFA sought to represent all rank-
and-file employees, numbering around one
hundred forty, of packing plant 90 (PP 90) of
Fresh Banana Agricultural Corporation (FBAC).
• On May 9, 2008 FBAC filed an Opposition to the
Petition. It argued that there exists no employer-
employee relationship between it and the
workers involved. It alleged that members of
NAMASUFA are actually employees of A2Y
Contracting Services (A2Y), a duly licensed
independent contractor, as evidenced by the
payroll records of the latter.
• In June 20, 2008, pending resolution of the
petition, FBAC was merged with SUMIFRU, the
latter being the surviving corporation.
• On July 28, 2008, the DOLE Med-Arbiter issued
an Order granting the Petition for Certification
Election of NAMASUF A and declared that
Sumifru was the employer of the workers
concerned.
• Sumifru appealed to the DOLE Secretary and
the latter dismissed the appeal. The DOLE
Secretary ruled that Sumifru is the true
employer of the workers.
• During appeal, CA ruled that the DOLE
Secretary did not commit grave abuse of
discretion because the latter's ruling that
Sumifru was the employer of the workers was
anchored on substantial evidence. Sumifru
moved for reconsideration but the CA denied
this in its Resolution dated May 18, 2012.
Issue: Whether or not Sumifru, is the employer of the
workers engaged by the cooperative and/or A2Y for the
Upper Siocon Growers' Packaging Operations.
Ruling: Yes. The CA was correct in finding that the
DOLE Secretary did not commit any whimsical or
capricious exercise of judgment when it found
substantial evidence to support the DOLE Secretary's
ruling that Sumifru was the employer of the members of
NAMASUFA.
In affirming the Med-Arbiter, the DOLE
Secretary relied on the documents submitted by the
parties and ascertained that Sumifru indeed exercised
control over the workers in PP 90. The DOLE Secretary
found that the element of control was present because
Sumifru required monitoring sheets and imposed
disciplinary actions for non-compliance with "No Helmet
- No Entry" "No ID - No Entry" policies.
The Court has consistently applied the "four-fold
test" to determine the existence of an employer-employee
relationship: the employer (a) selects and engages the
employee; (b) pays his wages; (c) has power to dismiss
him; and (d) has control over his work. Of these, the
most crucial is the element of control. Control refers to
the right of the employer, whether actually exercised or
reserved, to control the work of the employee as well as
the means and methods by which he accomplishes the
same.
In this case, the records are replete with
evidence which would show that SUMIFRU has control
over the concerned workers, to wit:
1. FBAC memorandum on "Standardized
Packing Plant Breaktime";
2. Material Requisition for PP 90;
3. Memorandum dated February 9, 2008 on "no
helmet, no entry" policy posted at the packing
plant;
4. Memorandum dated October 15, 2007 on "no
ID, no entry policy";
5. Attendance Sheet for General Assembly
Meeting called by FBAC on February 18[,] 2004;
16
 6. Attendance Sheet for Packers ISO awareness
seminar on February 11, 2004 called by FBAC;
7. FBAC Traypan Fruit Inspection Packer's
Checklist issued by FBAC for the use of workers
in the Packing Plant;
8. FBAC KD Gluing Pattern Survey.
The above orders issued by SUMIFRU/FBAC
would show that not only does it have control over the
results of the workers in PP 90 but also in the manners
and methods of its accomplishment. The CA, after
reviewing the records, accorded respect to the findings of
facts of the DOLE Secretary, which affirmed the Med-
Arbiter, as they have special knowledge and expertise
over matters under their jurisdiction.
MANGGAGWA NG KOMUNIKASYON SA PILIPINA vs.
PLDT
Facts:
On June 27, 2002, the labor organization Manggagawa
ng Komunikasyon sa Pilipinas, which represented the
employees of Philippine Long Distance Telephone
Company, filed a notice of strike with the National
Conciliation and Mediation Board.
Manggagawa ng Komunikasyon sa Pilipinas charged
Philippine Long Distance Telephone Company with
unfair labor practice "for transferring several employees
of its Provisioning Support Division to Bicutan, Taguig.
First Notice of Strike: On its first notice of Strike the
Manggawa ng Komunikasyon sa Pilipinas accused PLDT
of the following Unfair Labor Practices—
• Violation of Duty to Bargain Collectively—
PLDT’s abolition of the Provisioning Support
Division together with the consequent
redundancy of PSD employees, the farming out
of jobs to contractuals, and the unreasonable
refusal to honor its commitment that it will
provide MKP (Union) its comprehensive plans
with respect to personnel downsizing and
closure changes, constitute a ULP;
• Denial of the right to self-organization—
PLDT’s continued hiring of contractual,
temporary, project and casual employees for
regular jobs performed by union members
constitutes the decimation of union membership
and denial of the right to self-organization.
Second Notice of Strike: While the first notice of strike
was pending, Manggagawa ng Komunikasyon sa
Pilipinas filed another notice of strike,14 docketed as
NCMB-NCR-NS No. 11-412-02, and accused Philippine
Long Distance Telephone Company of the following
Unfair Labor Practices—
• Imperil of Job Security and substantially
decimate the Bargaining Unit—PLDT’s alleged
restructuring and its closure of traffic operations
result to such ULP;
• Violation of Duty to bargain collectively—In
light of PLDT’s previous commitment that it will
provide MKP its comprehensive plan with
respect to downsizing/reorganization and
closure of exchanges and declaration that the
Davao Operator services will not be closed;
• Gross violation of the CBA—That PLDT’s lip
service to its duties constitute gross violation of
the CBA.
On December 23, 2002, Manggagawa ng Komunikasyon
sa Pilipinas went on strike.
On December 31, 2002, Philippine Long Distance
Telephone Company declared only 323 employees as
redundant as it was able to redeploy 180 of the 503
affected employees to other positions.
SOLE: The Secretary of Labor held the following—
• The alleged strike staged by the Union is
enjoined;
• Return to Work Order: All striking workers are
directed to return to work within 24 hours from
receipt of the Order, except those terminated
due to redundancy;
• Employer (PLDT) is enjoined to accept the
striking workers under the same terms and
conditions prevailing prior to the strike;
• Parties are directed to cease and desist from
committing any acts as to worsen the situation
• Certification to the NLRC: The entire records
of the case is forwarded to the NLRC for
immediate and appropriate action
Manggagawa ng Komunikasyon sa Pilipinas filed a
Petition for Certiorari before the Court of Appeals,
challenging the Secretary of Labor and Employment's
Order insofar as it created a distinction among the
striking workers in the return-to-work order.
CA: The Court of Appeals granted the Petition for
Certiorari, setting aside and nullifying the Secretary of
Labor and Employment's assailed Order.
PLDT appealed the Court of Appeals decision to this
Court.
This Court upheld the Court of Appeals' Decision, and
directed Philippine Long Distance Telephone Company to
readmit all striking workers under the same terms and
conditions prevailing before the strike.
NLRC: The National Labor Relations Commission
dismissed Manggagawa ng Komunikasyon sa Pilipinas'
charges of unfair labor practices against Philippine Long
Distance Telephone Company
• It held the PLDTS’s redundancy program in
2002 was valid and didn’t constitute ULP;
• The redundancy program was due to the decline
of subscribers for long distance calls and to fixed
line services;
On May 8, 2006, Manggagawa ng Komunikasyon sa
Pilipinas filed a Petition for Certiorari with the Court of
Appeals.
• The Petition for Certiorari assailed the NLRC’s
resolution, which upheld the validity of the
PLDT’s redundancy program
17
CA: The CA ruled that the NLRC didn’t commit grave
abuse of discretion when it found that PLDT’s
declaration of redundancy was justified and valid—as it
was based on substantial evidence.
• Moot and Academic—The Court of Appeals
confirmed that its assailed order of
reinstatement indicated that all employees, even
those declared separated effective December 31,
2002, should be reinstated pendente lite.
However, the Court of Appeals stated that the
order of reinstatement became moot due to
the National Labor Relations Commission's
October 28, 2005 Decision, which upheld the
validity of the dismissal of the employees
affected by the redundancy program;
• The Court of Appeals also denied the MKP’s
prayer that the affected employees should be
paid their salaries during the period from
January 3, 2009 to April 29, 2006 (from the
working day immediately following the
separation to the date of declaration of the
validity of the employees’ dismissal)
Petition for Review of Certiorari— In its Petition for
Review on Certiorari, Manggagawa ng Komunikasyon sa
Pilipinas states that:
• The employees in the Provisioning Support
Division and in the Operator Services Section
had their positions declared redundant since
2002;
• MKP asserts that the total number of Rank-and-
file positions declared redundant was 538;
• 35 Positions in the Provisioning Support
Division;
• 503 Positions in the Operator Services Section
• MKPS maintains that PLDT failed to submit
evidence in support of its declaration of
redundancy of the 35 Rank and File employees
in the Provisioning Support Division;
• That PLDT only notified the DOLE of the closure
of traffic operations at Regional Operator
Services affecting 392 employees and the
restructuring of the Operator Services in Metro
Manila affecting 111 employees.
• No Notice Given—There was no notice
regarding the closure of the PLDT’s Provisioning
Support Division and the termination of the
employment due to redundancy of the affected
Rank-and-file employees
• Justification for Redundancy—That the
justification for redundancy by PLDT only
pertained to the affected services position and
not the affected Provisioning Supports Division
• Garcia vs. PAL—MKP cites the case in order to
bolster its stand that an employee is entitled to
reinstatement or back wages pending appeal if
the Labor Arbiter’s finding of the illegal dismissal
is reversed by the NLRC
PLDT’s contention— For its part, Philippine Long
Distance Telephone Company:
• It claims that the validity of the redundancy of
the affected Provisioning Support Division
employees was only raised by Manggagawa ng
Komunikasyon sa Pilipinas for the first time on
appeal
• Real Issue—Philippine Long Distance Telephone
Company asserts that the real issue in that case
was whether Philippine Long Distance Telephone
Company was obligated to transfer the affected
Provisioning Support Division employees, and
not whether their redundancies were valid.;
• Philippine Long Distance Telephone Company
maintains that the affected Provisioning Support
Division personnel were given the opportunity to
apply for another division, yet they chose not to.
• Garcia vs. PAL doesn’t apply in this case—
Finally, Philippine Long Distance Telephone
Company holds that Garcia is not applicable
because the case at bar does not involve a
reinstatement award by a Labor Arbiter
Issues:
1. W/N the CA committed grave abuse of discretion
in upholding the PLDT’s 2002 redundancy
program? No. Redundancy Program is valid.
2. W/N the separation pay given to the separated
redundant workers valid? No.
3. W/N the return-to-work order of the Secretary of
Labor and Employment (SOLE) was rendered
moot when the NLRC upheld the validity of the
redundancy program? Rendered moot and
academic
4. W/N the striking workers are entitled to
reinstatement and back wages from January 2,
2003 up to April 29, 2006? Not entitled to
backwages
Held:
First Issue: PLDT’s redundancy program is valid
Redundancy is one of the authorized causes for the
termination of employment provided for in Article 298 of
the Labor Code—
Article 298. Closure of Establishment and Reduction of
Personnel. -The employer may also terminate the
employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of
the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month
before the intended date thereof.
In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher.
In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or
undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent
to one (1) month pay or at least one-half (112) month pay
18
for every year of service, whichever is higher. A fraction of
at least six (6) months shall be considered one (1) whole
year.
Wiltshire File Co. Inc. v. National Labor Relations
Commission has held hat redundancy exists when "the
services of an employee are in excess of what is
reasonably demanded by the actual requirements of the
enterprise;
There must be no violation of laws or declaration of
redundancy without sufficient basis: While a
declaration of redundancy is ultimately a management
decision in exercising its business judgment, and the
employer is not obligated to keep in its payroll more
employees than are needed for its day- to-day
operations, management must not violate the law nor
declare redundancy without sufficient basis.
Asian Alcohol Corporation v. National Labor
Relations Commission lists down the elements the valid
implementation of a redundancy program. The employer
must comply with the following requisites:
1. Written notice served on both the employees and
the DOLE at least one month prior to the
intended date of retrenchment;
2. Payment of Separation pay equivalent to at least
one month pay or at least one month pay for
every year of service, whichever is higher;
3. Good faith in abolishing the redundant
positions;
4. Fair and reasonable criteria in ascertaining what
positions are to be declared redundant and
accordingly abolished
Good Faith—To establish good faith, the company must
provide substantial proof that the services of the
employees are in excess of what is required of the
company, and that fair and reasonable criteria were
used to determine the redundant positions.
In order to prove the validity of its redundancy program,
Philippine Long Distance Telephone Company provided
the following:
• Data on the decreasing volume of the received
calls by Operator Service Centers from 1996 to
2002;
• PLDT has attributed the reduction of demand for
operator-assisted 108/109 calls to "migration
calls to direct distance dialing," and to "more
usage/substitution of text message over voice
• That the "migration of calls from landline to cell,"
competitors' eating into the Philippine Long
Distance Telephone Company's market, and
"compliance with the regulatory requirement of
local integration per province" likewise
aggravated the situation;
• Philippine Long Distance Telephone Company
claims that the pattern of decline with operator-
assisted calls has been consistent through the
years
Guided by the foregoing jurisprudence, it is evident that
PLDT discharged the burden of proving that the
declaration or implementation of redundancy measures
have basis.
For one, PLDT experienced a decline of subscribers, long
distance calls, operated both local and abroad, has
declined, landline or fixed line services also declined.
This decrease of the need of PLDT services resulted from
the advent of wireless telephone, of texting as means of
communication, the use of direct dialing including
prepaid telesulit and teletipid measures introduced in
the communication services. For another, PLDT has a
debt burden of P70 billion pesos and it cannot subsidize
the salaries of employees.
Second Issue: Retirement benefits should not be
included in the separation pay in relation to redundancy.
Nonetheless, there is a need to review the redundancy
package awarded to the employees terminated due to
redundancy. For either redundancy or retrenchment, the
law requires that the employer give separation pay
equivalent to at least one (1) month pay of the affected
employee, or at least one (1) month pay for every year of
service, whichever is higher.
The employer must also serve a written notice on both
the employees and the Department of Labor and
Employment at least one (1) month before the effective
date of termination due to redundancy or retrenchment.
While we agree that Philippine Long Distance Telephone
Company complied with the notice requirement, the
same cannot be said as regards the separation pay
received by some of the affected workers.
Philippine Long Distance Telephone Company claims
that most employees who were declared redundant
received a very generous separation package or "as much
as 2.75 months [worth of salary] for every year of service,
with the average separation package at [P]586,580.27."
The notices of termination of employment96 signed by
Erlinda S. Kabigting, Philippine Long Distance Telephone
Company Vice-President for Operator Services
Section,97 provided two (2) types of separation packages
for the terminated workers. These were:
(1) regular retirement benefits plus 75% basic
monthly pay for every year of service for
employees who had been with Philippine Long
Distance Telephone Company for more than 15
years; and
(2) 175% of basic monthly pay for every year of
service for employees who had been with PLDT
for less than 15 years.
When an employer declares redundancy, Article 298 of
the Labor Code requires that the employer provides a
separation pay equivalent to at least one (1) month pay
of the affected employee, or at least one (1) month pay
for every year of service, whichever is higher.98 In this
case, Philippine Long Distance Telephone Company
claims that the terminated workers received a generous
separation package of about 2.75 months' worth of
salary for every year of service.
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But it seems that the retirement benefits of the and Employment did not err in dismissing the motion for
terminated workers were added to the separation pay execution on the ground of mootness.
due them, hence the large payout. This should not be
the case Fourth Issue: The striking employees are not entitled to
backwages.
Aquino v. National Labor Relations Commission
differentiated between separation pay and retirement Petitioner cites Garcia v. Philippine Airlines113 to
benefits: support its claim that the affected and striking workers
are entitled to reinstatement and backwages from
Separation Pay Retirement Pay January 2, 2003, when Secretary Sto. Tomas directed
Separation pay is Retirement benefits were the striking workers to return to work, up to April 29,
required in the cases not mandated by law, 2006, when the National Labor Relations Commission's
enumerated in Articles may be granted by Resolution upholding Philippine Long Distance
283 and 284 of the Labor agreement of the Telephone Company's redundancy program became final
Code, which includes employees and their and executory.
retrenchment. employer or as a
voluntary act on the part Petitioner is mistaken.
This is a statutory right of the employer.
designed to provide the Garcia upholds the prevailing doctrine that even if a
employee with Retirement benefits are Labor Arbiter's order of reinstatement is reversed on
wherewithal during the intended to help the appeal, the employer is obligated "to reinstate and pay
period he is looking for employee enjoy the the wages of the dismissed employee during the period of
another employment remaining years of his life appeal until reversal by the higher court."115
lessening the burden of
worrying for his financial There is no order of reinstatement from a Labor Arbiter
support. in the case at bar, instead, what is at issue is the return-
Separation pay may be Retirement pay doesn’t to-work order from the Secretary of Labor and
brought by redundancy result from redundancy. Employment. An order of reinstatement is different from
as a statutory right a return-to-work order.

The workers, who were terminated from employment as The award of reinstatement, including backwages, is
a result of redundancy, are entitled to the separation pay awarded by a Labor Arbiter to an illegally dismissed
due them under the law. employee pursuant to Article 294116 of the Labor Code:

Third Issue: The Return to Work Order is rendered moot
and academic.
This return-to-work order from the Secretary of Labor
and Employment aims to preserve the status quo ante
while the validity of the redundancy program is being
threshed out in the proper forum.
In Telefunken Semiconductors Employees Union-FFW
v. Secretary of Labor, pending resolution of the legality
of the strike, the Secretary of Labor and Employment
directed the employer to accept all the striking workers
except the Union Officers, shop stewards, and those with
pending criminal charges.
Article 294. Security of Tenure. - In cases of regular
employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computedfrom the
time his compensation was withheld from him up to the
time of his actual reinstatement.
If actual reinstatement is no longer possible, the
employee becomes entitled to separation pay in lieu of
reinstatement.117

This Court struck down the Secretary of Labor and On the other hand, a return-to-work order is issued by
Employment's order for being issued with grave abuse of the Secretary of Labor and Employment when he or she
discretion, and directed the employer to accept all the assumes jurisdiction over a labor dispute in an industry
striking workers without qualification. that is considered indispensable to the national interest.
Article 278(g) of the Labor Code provides that the
The ruling in Telefunken cannot be applied to the case at assumption and certification of the Secretary of Labor
bar. and Employment shall automatically enjoin the intended
or impending strike. When a strike has already taken
When petitioner filed its Motion for Execution112 on place at the time the Secretary of Labor and Employment
January 17, 2006 pursuant to this Court's ruling in assumes jurisdiction over the labor dispute, all striking
Philippine Long Distance Telephone Co. Inc., there was employees shall immediately return to work. Moreover,
no longer any existing basis for the return-to-work order. the employer shall immediately resume operations, and
This was because the Secretary of Labor and readmit all workers under the same terms and
Employment's return-to-work order had been conditions prevailing before the strike.
superseded by the National Labor Relations
Commission's Resolution. Hence, the Secretary of Labor Return-to-work and reinstatement orders are both
immediately executory; however, a return-to-work order

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is interlocutory in nature, and is merely meant to
maintain status quo while the main issue is being
threshed out in the proper forum. In contrast, an order
of reinstatement is a judgment on the merits handed
down by the Labor Arbiter pursuant to the original and
exclusive jurisdiction provided for under Article
224(a)118 of the Labor Code. Clearly, Garcia is not
applicable in the case at bar, and there is no basis to
reinstate the employees who were terminated as a result
of redundancy.
GARCIA vs. PAL
FACTS:
§ PAL filed an administrative charge against Juanito
Garcia and Alberto Dumago, petitioners
§ Garcia and Dumago were allegedly caught in the act
of sniffing shabu during joint raid
§ 9 Oct. 1995: After due notice, they were dismissed
for violating PAL’s Code of discipline
§ Petitioners filed a complaint for illegal dismissal with
the LA
§ During this time, PAL was suffering from severe
financial losses. SEC placed PAL under receivership.
§ LA decided in favor of petitioners, ordering PAL to
immediately reinstate them. PAL appealed to the
NLRC.
§ NLRC: reversed the LA. Entry of judgment was
issued on 13 Jul. 2000.
§ 5 Oct. 2000: LA issued a Writ of Execution
respecting the reinstatement aspect.
§ PAL appealed to the CA.
§ CA nullified NLRC resolution on 2 grounds:
(1) a subsequent finding of a valid dismissal
removes the basis for implementing the
reinstatement aspect of a labor arbiter's decision
(the first ground), and
(2) the impossibility to comply with the
reinstatement order due to corporate
rehabilitation provides a reasonable justification
for the failure to exercise the options under
Article 223 of the Labor Code (the second
ground).
§ 29 Aug. 2007: SC PARTIALLY GRANTED the present
petition and effectively reinstated the NLRC
Resolutions insofar as it suspended the proceedings
(regarding the payment of their money claims for
wages pending appeal) during the rehabilitation
proceedings.
§ 30 Oct. 2007: PAL informed the SC that the SEC
granted PAL’s request to exit from rehabilitation
proceedings.
ISSUE:
1. WON the EE shall refund the ER the salaries
received during payroll reinstatement after there
was a finding of valid dismissal. i.e. What is the
proper interpretation of Art. 223 (now 229) par.
3.
2. WON Garcia and Dumago may collect their
wages during the period between the LA’s order
of reinstatement pending appeal and the NLRC
overturning the LA.
RULING 1: NO.
PAL contends:
§ The reversal of the LA decision means that there
is no more basis to enforce the reinstatement
aspect of the decision. i.e. PAL does not need to
pay the money claims for wages anymore
2 Diverging Views in the interpretation of Art. 223 (now
229) par. 3:
1. Even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on
the part of the employer to reinstate and pay the
wages of the dismissed employee during the
period of appeal until reversal by the higher
court.
2. If the decision of the labor arbiter is later
reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer
has the right to require the dismissed employee
on payroll reinstatement to refund the salaries
s/he received while the case was pending
appeal, or it can be deducted from the accrued
benefits
SC: the 1st view is the prevailing principle.
Amplification of the First Ground:
A dismissed employee whose case was favorably decided
by the Labor Arbiter is entitled to receive wages pending
appeal upon reinstatement, which is immediately
executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the
order of reinstatement and it is mandatory on the
employer to comply therewith.
The provision of Article 223 is clear that an award [by
the Labor Arbiter] for reinstatement shall be immediately
executory even pending appeal and the posting of a bond
by the employer shall not stay the execution for
reinstatement.
The Court reaffirms the prevailing principle that even if
the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until
reversal by the higher court.
It settles the view that the Labor Arbiter's order of
reinstatement is immediately executory and the
employer has to either re-admit them to work under the
same terms and conditions prevailing prior to their
dismissal, or to reinstate them in the payroll, and that
failing to exercise the options in the alternative, employer
must pay the employee's salaries.
RULING 2: NO.
Despite RULING #1, petitioners cannot collect the
money claim for wages pending appeal from PAL.
There was no fault in PAL’s delay in exercising its
options under Art. 223 (now 229) since the peculiar
predicament of a corporate rehabilitation rendered it
impossible for PAL to exercise its option under the
circumstances.
Amplification of the Second Ground:
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After the labor arbiter's decision is reversed by a higher
tribunal, the employee may be barred from collecting the In sum, the obligation to pay the employee's salaries
accrued wages, if it is shown that the delay in enforcing upon the employer's failure to exercise the
the reinstatement pending appeal was without fault on alternative options under Article 223 of the Labor
the part of the employer. Code is not a hard and fast rule, considering the
inherent constraints of corporate rehabilitation.
The test is two-fold:
(1) there must be actual delay or the fact that the order
of reinstatement pending appeal was not executed
prior to its reversal; and ***End of Digest***
(2) the delay must not be due to the employer's
unjustified act or omission. If the delay is due to the
employer's unjustified refusal, the employer may still
be required to pay the salaries notwithstanding the
reversal of the Labor Arbiter's decision.

The new NLRC Rules of Procedure, which took effect on

January 7, 2006, now require the employer to submit a
report of compliance within 10 calendar days from
receipt of the Labor Arbiter's decision, disobedience to
which clearly denotes a refusal to reinstate. The
employee need not file a motion for the issuance of the
writ of execution since the Labor
Arbiter shall thereafter motu proprio issue the writ. With
the new rules in place, there is hardly any difficulty in
determining the employer's intransigence in immediately
complying with the order.

In the case at bar, petitioners exerted efforts to execute

the Labor Arbiter's order of reinstatement until they were
able to secure a writ of execution, albeit issued on
October 5, 2000 after the reversal by the NLRC of the
Labor Arbiter's decision. Technically, there was still
actual delay which brings to the question of whether the
delay was due to respondent's unjustified act or
omission.

It is apparent that there was inaction on the part of

respondent to reinstate them, but whether such
omission was justified depends on the onset of the
exigency of corporate rehabilitation.

It is settled that upon appointment by the SEC of a

rehabilitation receiver, all actions for claims before any
court, tribunal or board against the corporation
shall ipso jure be suspended. As stated early on, during
the pendency of petitioners' complaint before the Labor
Arbiter, the SEC placed respondent under an Interim
Rehabilitation Receiver. After the Labor Arbiter
rendered his decision, the SEC replaced the Interim
Rehabilitation Receiver with a Permanent Rehabilitation
Receiver.

Respondent was, during the period material to the

case, effectively deprived of the alternative choices
under Article 223 of the Labor Code, not only by
virtue of the statutory injunction but also in view of
the interim relinquishment of management control
to give way to the full exercise of the powers of the
rehabilitation receiver. Had there been no need to
rehabilitate, respondent may have opted for actual
physical reinstatement pending appeal to optimize the
utilization of resources. Then again, though the
management may think this wise, the rehabilitation
receiver may decide otherwise, not to mention the
subsistence of the injunction on claims.

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