FIRST DIVISION

[G.R. No. 140518. December 16, 2004]

MANILA DIAMOND HOTEL EMPLOYEES UNION, petitioner, vs. THE
HON. COURT OF APPEALS, THE SECRETARY OF LABOR AND
EMPLOYMENT, and THE MANILA DIAMOND
HOTEL, respondents.
D E C I S I O N
AZCUNA, J .:
This petition for review of a decision of the Court of Appeals arose out of a
dispute between the Philippine Diamond Hotel and Resort, Inc. (Hotel),
owner of the Manila Diamond Hotel, and the Manila Diamond Hotel
Employees Union (Union). The facts are as follows:
On November 11, 1996, the Union filed a petition for a certification election
so that it may be declared the exclusive bargaining representative of the
Hotels employees for the purpose of collective bargaining. The petition was
dismissed by the Department of Labor and Employment (DOLE) on January
15, 1997. After a few months, however, on August 25, 1997, the Union sent a
letter to the Hotel informing it of its desire to negotiate for a collective
bargaining agreement.
[1]
In a letter dated September 11, 1997, the Hotels
Human Resources Department Manager, Mary Anne Mangalindan, wrote to
the Union stating that the Hotel cannot recognize it as the employees
bargaining agent since its petition for certification election had been earlier
dismissed by the DOLE.
[2]
On that same day, the Hotel received a letter from
the Union stating that they were not giving the Hotel a notice to bargain, but
that they were merely asking for the Hotel to engage in collective bargaining
negotiations with the Union for its members only and not for all the rank and
file employees of the Hotel.
[3]

On September 18, 1997, the Union announced that it was taking a strike
vote. A Notice of Strike was thereafter filed on September 29, 1997, with the
National Conciliation and Mediation Board (NCMB) for the Hotels alleged
refusal x x x to bargain and for alleged acts of unfair labor practice. The
NCMB summoned both parties and held a series of dialogues, the first of
which was on October 6, 1997.
On November 29, 1997, however, the Union staged a strike against the
Hotel. Numerous confrontations between the two parties followed, creating an
obvious strain between them. The Hotel claims that the strike was illegal and it
had to dismiss some employees for their participation in the allegedly illegal
concerted activity. The Union, on the other hand, accused the Hotel of
illegally dismissing the workers. What is pertinent to this case, however, is the
Order issued by the then Secretary of Labor and Employment Cresenciano B.
Trajano assuming jurisdiction over the labor dispute. A Petition for Assumption
of Jurisdiction was filed by the Union on April 2, 1998. Thereafter, the
Secretary of Labor and Employment issued an Order dated April 15, 1998, the
dispositive portion of which states:
WHEREFORE, premises considered[,] this Office CERTIFIES the labor dispute at
the Manila Diamond Hotel to the National Labor Relations Commission, for
compulsory arbitration, pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, the striking officers and members of the Manila Diamond Hotel
Employees Union --- NUWHRAIN are hereby directed to return to work within
twenty-four (24) hours upon receipt of this Order and the Hotel to accept them back
under the same terms and conditions prevailing prior to the strike. The parties are
enjoined from committing any act that may exacerbate the situation.
The Union received the aforesaid Order on April 16, 1998 and its
members reported for work the next day, April 17, 1998. The Hotel, however,
refused to accept the returning workers and instead filed a Motion for
Reconsideration of the Secretarys Order.
On April 30, 1998, then Acting Secretary of Labor Jose M. Espaol, issued
the disputed Order, which modified the earlier one issued by Secretary
Trajano. Instead of an actual return to work, Acting Secretary Espaol
directed that the strikers be reinstated only in the payroll.
[4]
The Union moved
for the reconsideration of this Order, but its motion was denied on June 25,
1998. Hence, it filed before this Court on August 26, 1998, a petition
for certiorari under Rule 65 of the Rules of Court alleging grave abuse of
discretion on the part of the Secretary of Labor for modifying its earlier order
and requiring instead the reinstatement of the employees in the payroll.
However, in a resolution dated July 12, 1999, this Court referred the case to
the Court of Appeals, pursuant to the principle embodied in National
Federation of Labor v. Laguesma.
[5]

On October 19, 1999, the Court of Appeals rendered a Decision
dismissing the Unions petition and affirming the Secretary of Labors Order
for payroll reinstatement. The Court of Appeals held that the challenged order
is merely an error of judgment and not a grave abuse of discretion and that
payroll reinstatement is not prohibited by law, but may be called for under
certain circumstances.
[6]

Hence, the Union now stands before this Court maintaining that:
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RULING
THAT THE SECRETARY OF LABORS UNAUTHORIZED ORDER OF MERE
PAYROLL REINSTATEMENT IS NOT GRAVE ABUSE OF DISCRETION
[7]

The petition has merit.
The Court of Appeals based its decision on this Courts ruling in University
of Santo Tomas (UST) v. NLRC.
[8]
There, the Secretary assumed jurisdiction
over the labor dispute between striking teachers and the university. He
ordered the striking teachers to return to work and the university to accept
them under the same terms and conditions. However, in a subsequent order,
the NLRC provided payroll reinstatement for the striking teachers as an
alternative remedy to actual reinstatement. True, this Court held therein that
the NLRC did not commit grave abuse of discretion in providing for the
alternative remedy of payroll reinstatement. This Court found that it was
merely an error of judgment, which is not correctible by a special civil action
for certiorari. The NLRC was only trying its best to work out a satisfactory ad
hoc solution to a festering and serious problem.
However, this Court notes that the UST ruling was made in the light of one
very important fact: the teachers could not be given back their academic
assignments since the order of the Secretary for them to return to work was
given in the middle of the first semester of the academic year. The NLRC
was, therefore, faced with a situation where the striking teachers were entitled
to a return to work order, but the university could not immediately reinstate
them since it would be impracticable and detrimental to the students to
change teachers at that point in time.
In the present case, there is no showing that the facts called for payroll
reinstatement as an alternative remedy. A strained relationship between the
striking employees and management is no reason for payroll reinstatement in
lieu of actual reinstatement. Petitioner correctly points out that labor disputes
naturally involve strained relations between labor and management, and that
in most strikes, the relations between the strikers and the non-strikers will
similarly be tense.
[9]
Bitter labor disputes always leave an aftermath of strong
emotions and unpleasant situations. Nevertheless, the government must still
perform its function and apply the law, especially if, as in this case, national
interest is involved.
After making the distinction between UST and the present case, this Court
now addresses the issue of whether the Court of Appeals erred in ruling that
the Secretary did not commit any grave abuse of discretion in ordering payroll
reinstatement in lieu of actual reinstatement. This question is answered by
the nature of Article 263(g). As a general rule, the State encourages an
environment wherein employers and employees themselves must deal with
their problems in a manner that mutually suits them best. This is the basic
policy embodied in Article XIII, Section 3 of the Constitution,
[10]
which was
further echoed in Article 211 of the Labor Code.
[11]
Hence, a voluntary, instead
of compulsory, mode of dispute settlement is the general rule.
However, Article 263, paragraph (g) of the Labor Code, which allows the
Secretary of Labor to assume jurisdiction over a labor dispute involving an
industry indispensable to the national interest, provides an exception:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or certification order. If
one has already taken place at the time of assumption or certification, all striking or
locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. x x x
This provision is viewed as an exercise of the police power of the State. A
prolonged strike or lockout can be inimical to the national economy and,
therefore, the situation is imbued with public necessity and involves the right
of the State and the public to self-protection.
[12]

Under Article 263(g), all workers must immediately return to work and all
employers must readmit all of them under the same terms and conditions
prevailing before the strike or lockout. This Court must point out that the law
uses the precise phrase of under the same terms and conditions, revealing
that it contemplates only actual reinstatement. This is in keeping with the
rationale that any work stoppage or slowdown in that particular industry can
be inimical to the national economy. It is clear that Article 263(g) was not
written to protect labor from the excesses of management, nor was it written
to ease management from expenses, which it normally incurs during a work
stoppage or slowdown. It was an error on the part of the Court of Appeals to
view the assumption order of the Secretary as a measure to protect the
striking workers from any retaliatory action from the Hotel. This Court
reiterates that this law was written as a means to be used by the State to
protect itself from an emergency or crisis. It is not for labor, nor is it for
management.
It is, therefore, evident from the foregoing that the Secretarys subsequent
order for mere payroll reinstatement constitutes grave abuse of discretion
amounting to lack or excess of jurisdiction. Indeed, this Court has always
recognized the great breadth of discretion by the Secretary once he
assumes jurisdiction over a labor dispute. However, payroll reinstatement in
lieu of actual reinstatement is a departure from the rule in these cases and
there must be showing of special circumstances rendering actual
reinstatement impracticable, as in the UST case aforementioned, or otherwise
not conducive to attaining the purpose of the law in providing for assumption
of jurisdiction by the Secretary of Labor and Employment in a labor dispute
that affects the national interest. None appears to have been established in
this case. Even in the exercise of his discretion under Article 236(g), the
Secretary must always keep in mind the purpose of the law. Time and again,
this Court has held that when an official by-passes the law on the asserted
ground of attaining a laudable objective, the same will not be maintained if the
intendment or purpose of the law would be defeated.
[13]

WHEREFORE, the petition is GRANTED and the assailed Decision of the
Court of Appeals dated October 19, 1999 is REVERSED and SET ASIDE.
The Order dated April 30, 1998 issued by the Secretary of Labor and
Employment modifying the earlier Order dated April 15, 1998, is likewise SET
ASIDE. No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Carpio, JJ., concur.
Quisumbing, J., no part.



Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

ALABANG COUNTRY CLUB, INC., G.R. No. 170287
Petitioner,

Present:
- versus -
QUISUMBING, J., Chairperson,
CARPIO MORALES,
NATIONAL LABOR RELATIONS AZCUNA,

COMMISSION, ALABANG TINGA, and
COUNTRY CLUB INDEPENDENT VELASCO, JR., JJ.
EMPLOYEES UNION,
CHRISTOPHER PIZARRO,
MICHAEL BRAZA, and Promulgated:
NOLASCO CASTUERAS,
Respondents. February 14, 2008
x-----------------------------------------------------------------------------------------x

D E C I S I O N

VELASCO, JR., J .:

Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit
corporation with principal office at Country Club Drive, Ayala
Alabang, Muntinlupa City. Respondent Alabang Country Club Independent
Employees Union (Union) is the exclusive bargaining agent of the Clubs rank-
and-file employees. In April 1996, respondents Christopher Pizarro, Michael
Braza, and Nolasco Castueras were elected Union President, Vice-President, and
Treasurer, respectively.

On June 21, 1999, the Club and the Union entered into a Collective
Bargaining Agreement (CBA), which provided for a Union shop and maintenance
of membership shop.

The pertinent parts of the CBA included in Article II on Union Security
read, as follows:
ARTICLE II
UNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-
file employees, who are members or subsequently become members of the
UNION shall maintain their membership in good standing as a condition for their
continued employment by the CLUB during the lifetime of this Agreement or any
extension thereof.

SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW
REGULAR RANK-AND-FILE EMPLOYEES

a) New regular rank-and-file employees of the Club shall join
the UNION within five (5) days from the date of their appointment as regular
employees as a condition for their continued employment during the lifetime
of this Agreement, otherwise, their failure to do so shall be a ground for
dismissal from the CLUB upon demand by the UNION.
b) The Club agrees to furnish the UNION the names of all new probationary and
regular employees covered by this Agreement not later than three (3) days
from the date of regular appointment showing the positions and dates of
hiring.

x x x x

SECTION 4. TERMINATION UPON UNION DEMAND. Upon written
demand of the UNION and after observing due process, the Club shall dismiss a
regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time of
regularization;
(b) Resignation from the UNION, except within the period allowed
by law;
(c) Conviction of a crime involving moral turpitude;
(d) Non-payment of UNION dues, fees, and assessments;
(e) Joining another UNION except within the period allowed by law;
(f) Malversation of union funds;
(g) Actively campaigning to discourage membership in the UNION;
and
(h) Inflicting harm or injury to any member or officer of the UNION.

It is understood that the UNION shall hold the CLUB free and harmless
[sic] from any liability or damage whatsoever which may be imposed upon it by
any competent judicial or quasi-judicial authority as a result of such dismissal and
the UNION shall reimburse the CLUB for any and all liability or damage it may
be adjudged.
[1]
(Emphasis supplied.)


Subsequently, in July 2001, an election was held and a new set of officers
was elected. Soon thereafter, the new officers conducted an audit of the Union
funds. They discovered some irregularly recorded entries, unaccounted expenses
and disbursements, and uncollected loans from the Union funds. The Union
notified respondents Pizarro, Braza, and Castueras of the audit results and asked
them to explain the discrepancies in writing.
[2]


Thereafter, on October 6, 2001, in a meeting called by the Union,
respondents Pizarro, Braza, and Castueras explained their side. Braza denied any
wrongdoing and instead asked that the investigation be addressed to Castueras,
who was the Union Treasurer at that time. With regard to his unpaid loans, Braza
claimed he had been paying through monthly salary deductions and said the Union
could continue to deduct from his salary until full payment of his loans, provided
he would be reimbursed should the result of the initial audit be proven wrong by a
licensed auditor. With regard to the Union expenses which were without receipts,
Braza explained that these were legitimate expenses for which receipts were not
issued, e.g. transportation fares, food purchases from small eateries, and food and
transportation allowances given to Union members with pending complaints with
the Department of Labor and Employment, the National Labor Relations
Commission (NLRC), and the fiscals office. He explained that though there were
no receipts for these expenses, these were supported by vouchers and itemized as
expenses. Regarding his unpaid and unliquidated cash advances amounting to
almost PhP 20,000, Braza explained that these were not actual cash advances but
payments to a certain Ricardo Ricafrente who had loaned PhP 200,000 to
the Union.
[3]


Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan
and cash advances. He claimed his salaries were regularly deducted to pay his loan
and he did not know why these remained unpaid in the records. Nonetheless, he
likewise agreed to continuous salary deductions until all his accountabilities were
paid.
[4]


Castueras also denied any wrongdoing and claimed that the irregular entries
in the records were unintentional and were due to inadvertence because of his
voluminous work load. He offered that his unpaid personal loan of PhP 27,500
also be deducted from his salary until the loans were fully paid. Without admitting
any fault on his part, Castueras suggested that his salary be deducted until the
unaccounted difference between the loans and the amount collected amounting to a
total of PhP 22,000 is paid.
[5]


Despite their explanations, respondents Pizarro, Braza, and Castueras were
expelled from the Union, and, on October 16, 2001, were furnished individual
letters of expulsion for malversation of Union funds.
[6]
Attached to the letters were
copies of thePanawagan ng mga Opisyales ng Unyon signed by 37 out of 63
Union members and officers, and a Board of Directors Resolution
[7]
expelling
them from the Union.

In a letter dated October 18, 2001, the Union, invoking the Security Clause
of the CBA, demanded that the Club dismiss respondents Pizarro, Braza, and
Castueras in view of their expulsion from the Union.
[8]
The Club required the three
respondents to show cause in writing within 48 hours from notice why they should
not be dismissed. Pizarro and Castueras submitted their respective written
explanations on October 20, 2001, while Braza submitted his explanation the
following day.



During the last week of October 2001, the Clubs general manager called
respondents Pizarro, Braza, and Castueras for an informal conference inquiring
about the charges against them. Said respondents gave their explanation and
asserted that the Union funds allegedly malversed by them were even over the total
amount collected during their tenure as Union officersPhP 120,000 for Braza,
PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total
collection from April 1996 to December 2001 of only PhP 102,000. They claimed
the charges are baseless. The general manager announced he would conduct a
formal investigation.

Nonetheless, after weighing the verbal and written explanations of the three
respondents, the Club concluded that said respondents failed to refute the validity
of their expulsion from the Union. Thus, it was constrained to terminate the
employment of said respondents. On December 26, 2001, said respondents
received their notices of termination from the Club.
[9]


Respondents Pizarro, Braza, and Castueras challenged their dismissal from
the Club in an illegal dismissal complaint docketed as NLRC-NCR Case No. 30-
01-00130-02 filed with the NLRC, National Capital Region Arbitration Branch. In
his January 27, 2003 Decision,
[10]
the Labor Arbiter ruled in favor of the Club, and
found that there was justifiable cause in terminating said respondents. He
dismissed the complaint for lack of merit.

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an
Appeal docketed as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision
[11]
granting the
appeal, the fallo of which reads:

WHEREFORE, finding merit in the Appeal, judgment is hereby rendered
declaring the dismissal of the complainants illegal. x x x Alabang Country Club,
Inc. and Alabang Country Club Independent Union are hereby ordered to reinstate
complainants Christopher Pizarro, Nolasco Castueras and Michael Braza to their
former positions without loss of seniority rights and other privileges with full
backwages from the time they were dismissed up to their actual reinstatement.

SO ORDERED.


The NLRC ruled that there was no justifiable cause for the termination of
respondents Pizarro, Braza, and Castueras. The commissioners relied heavily on
Section 2, Rule XVIII of the Rules Implementing Book V of the Labor Code. Sec.
2 provides:

SEC. 2. Actions arising from Article 241 of the Code. Any action arising
from the administration or accounting of union funds shall be filed and disposed
of as an intra-union dispute in accordance with Rule XIV of this Book.

In case of violation, the Regional or Bureau Director shall order the
responsible officer to render an accounting of funds before the general
membership and may, where circumstances warrant, mete the appropriate penalty
to the erring officer/s, including suspension or expulsion from the union.
[12]



According to the NLRC, said respondents expulsion from the Union was
illegal since the DOLE had not yet made any definitive ruling on their liability
regarding the administration of the Unions funds.

The Club then filed a motion for reconsideration which the NLRC denied in
its June 20, 2004 Resolution.
[13]


Aggrieved by the Decision and Resolution of the NLRC, the Club filed a
Petition for Certiorari which was docketed as CA-G.R. SP No. 86171 with the
Court of Appeals (CA).
The CA Upheld the NLRC Ruling
that the Three Respondents were Deprived Due Process

On July 5, 2005, the appellate court rendered a Decision,
[14]
denying the
petition and upholding the Decision of the NLRC. The CAs Decision focused
mainly on the Clubs perceived failure to afford due process to the three
respondents. It found that said respondents were not given the opportunity to be
heard in a separate hearing as required by Sec. 2(b), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code, as follows:

SEC. 2. Standards of due process; requirements of notice.In all cases of
termination of employment, the following standards of due process shall be
substantially observed:

For termination of employment based on just causes as defined in Article
282 of the Code:

x x x x

(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented
against him.


The CA also said the dismissal of the three respondents was contrary to the
doctrine laid down in Malayang Samahan ng mga Manggagawa sa M. Greenfield
v. Ramos (Malayang Samahan), where this Court ruled that even on the
assumption that the union had valid grounds to expel the local union officers, due
process requires that the union officers be accorded a separate hearing by the
employer company.
[15]


In a Resolution
[16]
dated October 20, 2005, the CA denied the Clubs motion
for reconsideration.

The Club now comes before this Court with these issues for our resolution,
summarized as follows:

1. Whether there was just cause to dismiss private respondents, and whether
they were afforded due process in accordance with the standards provided
for by the Labor Code and its Implementing Rules.

2. Whether or not the CA erred in not finding that the NLRC committed
grave abuse of discretion amounting to lack or excess of jurisdiction when
it ruled that respondents Pizarro, Braza, and Castueras were illegally
expelled from the Union.

3. Whether the case of Agabon vs. NLRC
[17]
should be applied to this case.

4. Whether that in the absence of bad faith and malice on the part of the
Club, the Union is solely liable for the termination from employment of
said respondents.


The main issue is whether the three respondents were illegally dismissed and
whether they were afforded due process.

The Club avers that the dismissal of the three respondents was in accordance
with the Union security provisions in their CBA. The Club also claims that the
three respondents were afforded due process, since the Club conducted an
investigation separate and independent from that conducted by the Union.

Respondents Pizarro, Braza, and Castueras, on the other hand, contend that
the Club failed to conduct a separate hearing as prescribed by Sec. 2(b), Rule
XXIII, Book V of the implementing rules of the Code.

First, we resolve the legality of the three respondents dismissal from the
Club.


Valid Grounds for Termination

Under the Labor Code, an employee may be validly terminated on the
following grounds: (1) just causes under Art. 282; (2) authorized causes under Art.
283; (3) termination due to disease under Art. 284; and (4) termination by the
employee or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the
enforcement of the union security clause in the CBA. Here, Art. II of the CBA on
Union security contains the provisions on the Union shop and maintenance of
membership shop. There is union shop when all new regular employees are
required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees who are
union members as of the effective date of the agreement, or who thereafter become
members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit or the
agreement is terminated.
[18]
Termination of employment by virtue of a union
security clause embodied in a CBA is recognized and accepted in our
jurisdiction.
[19]
This practice strengthens the union and prevents disunity in the
bargaining unit within the duration of the CBA. By preventing member
disaffiliation with the threat of expulsion from the union and the consequent
termination of employment, the authorized bargaining representative gains more
numbers and strengthens its position as against other unions which may want to
claim majority representation.

In terminating the employment of an employee by enforcing the union
security clause, the employer needs only to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of the
union security provision in the CBA; and (3) there is sufficient evidence to support
the unions decision to expel the employee from the union. These requisites
constitute just cause for terminating an employee based on the CBAs union
security provision.

The language of Art. II of the CBA that the Union members must maintain
their membership in good standing as a conditionsine qua non for their continued
employment with the Club is unequivocal. It is also clear that upon demand by
the Union and after due process, the Club shall terminate the employment of a
regular rank-and-file employee who may be found liable for a number of offenses,
one of which is malversation of Union funds.
[20]


Below is the letter sent to respondents Pizarro, Braza, and Castueras,
informing them of their termination:

On October 18, 2001, the Club received a letter from the Board of
Directors of the Alabang Country Club Independent Employees Union(Union)
demanding your dismissal from service by reason of your alleged commission of
act of dishonesty, specifically malversation of union funds. In support thereof, the
Club was furnished copies of the following documents:

1. A letter under the subject Result of Audit dated September 14, 2001
(receipt of which was duly acknowledged from your end), which
required you to explain in writing the charges against you (copy
attached);

2. The Unions Board of Directors Resolution dated October 2, 2001,
which explained that the Union afforded you an opportunity to explain
your side to the charges;

3. Minutes of the meeting of the Unions Board of Directors wherein an
administrative investigation of the case was conducted last October 6,
2001; and

4. The Unions Board of Directors Resolution dated October 15, 2001
which resolved your expulsion from the Union for acts of dishonesty
and malversation of union funds, which was duly approved by the
general membership.

After a careful evaluation of the evidence on hand vis--vis a thorough
assessment of your defenses presented in your letter-explanation dated October 6,
2001 of which you also expressed that you waived your right to be present during
the administrative investigation conducted by the Unions Board of Directors on
October 6, 2001, Management has reached the conclusion that there are
overwhelming reasons to consider that you have violated Section 4(f) of the CBA,
particularly on the grounds of malversation of union funds. The Club has
determined that you were sufficiently afforded due process under the
circumstances.

Inasmuch as the Club is duty-bound to comply with its obligation
under Section 4(f) of the CBA, it is unfortunate that Management is left with no
other recourse but to consider your termination from service effective upon your
receipt thereof. We wish to thank you for your services during your employment
with the Company. It would be more prudent that we just move on independently
if only to maintain industrial peace in the workplace.

Be guided accordingly.
[21]



Gleaned from the above, the three respondents were expelled from and by
the Union after due investigation for acts of dishonesty and malversation of Union
funds. In accordance with the CBA, the Union properly requested the Club,
through the October 18, 2001 letter
[22]
signed by Mario Orense, the Union
President, and addressed to Cynthia Figueroa, the Clubs HRD Manager, to
enforce the Union security provision in their CBA and terminate said
respondents. Then, in compliance with theUnions request, the Club reviewed the
documents submitted by the Union, requested said respondents to submit written
explanations, and thereafter afforded them reasonable opportunity to present their
side. After it had determined that there was sufficient evidence that said
respondents malversed Union funds, the Club dismissed them from their
employment conformably with Sec. 4(f) of the CBA.

Considering the foregoing circumstances, we are constrained to rule that
there is sufficient cause for the three respondents termination from employment.

Were respondents Pizarro, Braza, and Castueras accorded due process before
their employments were terminated?

We rule that the Club substantially complied with the due process
requirements before it dismissed the three respondents.

The three respondents aver that the Club violated their rights to due process
as enunciated in Malayang Samahan,
[23]
when it failed to conduct an independent
and separate hearing before they were dismissed from service.

The CA, in dismissing the Clubs petition and affirming the Decision of the
NLRC, also relied on the same case. We explained in Malayang Samahan:

x x x Although this Court has ruled that union security clauses embodied
in the collective bargaining agreement may be validly enforced and that
dismissals pursuant thereto may likewise be valid, this does not erode the
fundamental requirements of due process. The reason behind the enforcement of
union security clauses which is the sanctity and inviolability of contracts cannot
override ones right to due process.
[24]



In the above case, we pronounced that while the company, under a
maintenance of membership provision of the CBA, is bound to dismiss any
employee expelled by the union for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company acts in bad
faith in dismissing a worker without giving him the benefit of a hearing.
[25]
We
cautioned in the same case that the power to dismiss is a normal prerogative of the
employer; however, this power has a limitation. The employer is bound to exercise
caution in terminating the services of the employees especially so when it is made
upon the request of a labor union pursuant to the CBA. Dismissals must not be
arbitrary and capricious. Due process must be observed in dismissing employees
because the dismissal affects not only their positions but also their means of
livelihood. Employers should respect and protect the rights of their employees,
which include the right to labor.
[26]


The CA and the three respondents err in relying on Malayang Samahan, as
its ruling has no application to this case. InMalayang Samahan, the union
members were expelled from the union and were immediately dismissed from the
company without any semblance of due process. Both the union and the company
did not conduct administrative hearings to give the employees a chance to explain
themselves. In the present case, the Club has substantially complied with due
process. The three respondents were notified that their dismissal was being
requested by the Union, and their explanations were heard. Then, the Club,
through its President, conferred with said respondents during the last week of
October 2001. The three respondents were dismissed only after the Club reviewed
and considered the documents submitted by the Union vis--vis the written
explanations submitted by said respondents. Under these circumstances, we find
that the Club had afforded the three respondents a reasonable opportunity to be
heard and defend themselves.

On the applicability of Agabon, the Club points out that the CA ruled that
the three respondents were illegally dismissed primarily because they were not
afforded due process. We are not unaware of the doctrine enunciated
in Agabon that when there is just cause for the dismissal of an employee, the lack
of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual, and the employer should indemnify the employee for the violation of
his statutory rights.
[27]
However, we find that we could not apply Agabon to this
case as we have found that the three respondents were validly dismissed and were
actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the Club,
the Union is solely liable for the termination from employment of the three
respondents, has been mooted by our finding that their dismissal is valid.

WHEREFORE, premises considered, the Decision dated July 5, 2005 of
the CA and the Decision dated February 26, 2004of the NLRC are
hereby REVERSED and SET ASIDE. The Decision dated January 27, 2003 of
the Labor Arbiter in NLRC-NCR Case No. 30-01-00130-02 is
hereby REINSTATED.

No costs.

SO ORDERED.


PRESBITERO J. VELASCO, JR.
Associate Justice




SECOND DIVISION


YOLITO FADRIQUELAN, ARTURO G.R. No. 178409
EGUNA, ARMANDO MALALUAN,
DANILO ALONSO, ROMULO
DIMAANO, ROEL MAYUGA,
WILFREDO RIZALDO, ROMEO
SUICO, DOMINGO ESCAMILLAS
and DOMINGO BAUTRO,
Petitioners, Present:

CARPIO, J., Chairperson,
- versus - NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
MONTEREY FOODS CORPORATION,
Respondent.

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

MONTEREY FOODS CORPORATION, G.R. No. 178434
Petitioner,

- versus -

BUKLURAN NG MGA MANGGAGAWA
SA MONTEREY-ILAW AT BUKLOD NG
MANGGAGAWA, YOLITO FADRIQUELAN,
CARLITO ABACAN, ARTURO EGUNA,
DANILO ROLLE, ALBERTO CASTILLO,
ARMANDO MALALUAN, DANILO
ALFONSO, RUBEN ALVAREZ, ROMULO
DIMAANO, ROEL MAYUGA, JUANITO
TENORIO, WILFREDO RIZALDO, JOHN
ASOTIGUE, NEMESIO AGTAY, ROMEO
SUICO, DOMINGO ESCAMILLAS Promulgated:
and DOMINGO BAUTRO,
Respondents. June 8, 2011
x --------------------------------------------------------------------------------------- x

DECI SI ON

ABAD, J .:


These cases are about the need to clearly identify, for establishing liability,
the union officers who took part in the illegal slowdown strike after the
Department of Labor and Employment (DOLE) Secretary assumed jurisdiction
over the labor dispute.

The Facts and the Case

On April 30, 2002 the three-year collective bargaining agreement or CBA
between the union Bukluran ng Manggagawa sa Monterey-Ilaw at Buklod ng
Manggagawa (the union) and Monterey Foods Corporation (the company)
expired. On March 28, 2003 after the negotiation for a new CBA reached a
deadlock, the union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB). To head off the strike, on April 30, 2003 the company
filed with the DOLE a petition for assumption of jurisdiction over the dispute in
view of its dire effects on the meat industry. In an Order dated May 12, 2003, the
DOLE Secretary assumed jurisdiction over the dispute and enjoined the union from
holding any strike. It also directed the union and the company to desist from
taking any action that may aggravate the situation.

On May 21, 2003 the union filed a second notice of strike before the NCMB
on the alleged ground that the company committed unfair labor practices. On June
10, 2003 the company sent notices to the union officers, charging them with
intentional acts of slowdown. Six days later or on June 16 the company sent new
notices to the union officers, informing them of their termination from work for
defying the DOLE Secretarys assumption order.

On June 23, 2003, acting on motion of the company, the DOLE Secretary
included the unions second notice of strike in his earlier assumption order. But,
on the same day, the union filed a third notice of strike based on allegations that
the company had engaged in union busting and illegal dismissal of union
officers. On July 7, 2003 the company filed a petition for certification of the labor
dispute to the National Labor Relations Commission (NLRC) for compulsory
arbitration but the DOLE Secretary denied the motion. He, however, subsumed the
third notice of strike under the first and second notices.

On November 20, 2003 the DOLE rendered a decision that, among other
things, upheld the companys termination of the 17 union officers. The union and
its officers appealed the decision to the Court of Appeals (CA).

On May 29, 2006 the CA rendered a decision, upholding the validity of the
companys termination of 10 union officers but declaring illegal that of the other
seven. Both parties sought recourse to this Court, the union in G.R. 178409 and
the company in G.R. 178434.

The Issues Presented

The issues these cases present are:

1. Whether or not the CA erred in holding that slowdowns actually
transpired at the companys farms; and

2. Whether or not the CA erred in holding that union officers committed
illegal acts that warranted their dismissal from work.



The Rulings of the Court

First. The law is explicit: no strike shall be declared after the Secretary of
Labor has assumed jurisdiction over a labor dispute. A strike conducted after such
assumption is illegal and any union officer who knowingly participates in the
same may be declared as having lost his employment.
[1]
Here, what is involved is
a slowdown strike. Unlike other forms of strike, the employees involved in a
slowdown do not walk out of their jobs to hurt the company. They need only to
stop work or reduce the rate of their work while generally remaining in their
assigned post.

The Court finds that the union officers and members in this case held a
slowdown strike at the companys farms despite the fact that the DOLE Secretary
had on May 12, 2003 already assumed jurisdiction over their labor dispute. The
evidence sufficiently shows that union officers and members simultaneously
stopped work at the companys Batangas and Cavite farms at 7:00 a.m. on May 26,
2003.

The union of course argues that it merely held assemblies to inform
members of the developments in the CBA negotiation, not protest demonstrations
over it. But as the CA correctly observed, if the meetings had really been for the
stated reason, why did the union officers and members from separate company
farms choose to start and end their meetings at the same time and on the same
day? And if they did not intend a slowdown, why did they not hold their meetings
after work. There is no allegation that the company prevented the union from
holding meetings after working hours.

Second. A distinction exists, however, between the ordinary workers
liability for illegal strike and that of the union officers who participated in it. The
ordinary worker cannot be terminated for merely participating in the
strike. There must be proof that he committed illegal acts during its conduct. On
the other hand, a union officer can be terminated upon mere proof that he
knowingly participated in the illegal strike.
[2]


Still, the participating union officers have to be properly identified.
[3]
The
CA held that the company illegally terminated union officers Ruben Alvarez, John
Asotigue, Alberto Castillo, Nemesio Agtay, Carlito Abacan, Danilo Rolle, and
Juanito Tenorio, there being no substantial evidence that would connect them to
the slowdowns. The CA said that their part in the same could not be established
with certainty.

But, although the witnesses did not say that Asotigue, Alvarez, and Rolle
took part in the work slowdown, these officers gave no credible excuse for being
absent from their respective working areas during the slowdown. Tenorio
allegedly took a break and never went back to work. He claimed that he had to
attend to an emergency but did not elaborate on the nature of such emergency. In
Abacans case, however, he explained that he was not feeling well on May 26,
2003 and so he decided to take a two-hour rest from work. This claim of Abacan
is consistent with the report
[4]
that only one officer (Tenorio) was involved in the
slowdown at the Calamias farm.

At the Quilo farm, the farm supervisor did not include Castillo in the list of
employees who failed to report for work on May 26, 2003.
[5]
In Agtays case, the
evidence is that he was on his rest day. There is no proof that the unions
president, Yolito Fadriquelan, did not show up for work during the
slowdowns. The CA upheld his dismissal, relying solely on a security guards
report that the company submitted as evidence. But, notably, that report actually
referred to a Rolly Fadrequellan, another employee who allegedly took part in the
Lipa farm slowdown. Besides, Yolito Fadriquelan was then assigned at the
General Trias farm in Cavite, not at the Lipa farm. In fact, as shown in the sworn
statements
[6]
of the Cavite farm employees, Fadriquelan even directed them not to
do anything which might aggravate the situation. This clearly shows that his
dismissal was mainly based on his being the union president.

The Court sustains the validity of the termination of the rest of the union
officers. The identity and participations of Arturo Eguna,
[7]
Armando
Malaluan,
[8]
Danilo Alonso,
[9]
Romulo Dimaano,
[10]
Roel Mayuga,
[11]
Wilfredo
Rizaldo,
[12]
Romeo Suico,
[13]
Domingo Escamillas,
[14]
and Domingo Bautro
[15]
in
the slowdowns were properly established. These officers simply refused to work
or they abandoned their work to join union assemblies.

In termination cases, the dismissed employee is not required to prove his
innocence of the charges against him. The burden of proof rests upon the
employer to show that the employees dismissal was for just cause. The
employers failure to do so means that the dismissal was not justified.
[16]
Here, the
company failed to show that all 17 union officers deserved to be dismissed.

Ordinarily, the illegally dismissed employees are entitled to two reliefs:
reinstatement and backwages. Still, the Court has held that the grant of separation
pay, instead of reinstatement, may be proper especially when as in this case such
reinstatement is no longer practical or will be for the best interest of the
parties.
[17]
But they shall likewise be entitled to attorneys fees equivalent to 10%
of the total monetary award for having been compelled to litigate in order to
protect their interests.
[18]


WHEREFORE, the Court MODIFIES the decision of the Court of
Appeals in CA-G.R. SP 82526, DECLARESMonterey Foods Corporations
dismissal of Alberto Castillo, Nemesio Agtay, Carlito Abacan, and Yolito
Fadriquelan illegal, andORDERS payment of their separation pay equivalent to
one month salary for every year of service up to the date of their termination. The
Court also ORDERS the company to pay 10% attorneys fees as well as interest of
6% per annum on the due amounts from the time of their termination and 12% per
annum from the time this decision becomes final and executory until such
monetary awards are paid.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice