4F1718 Labrev Digests Part 6 Labor Relations

LABOR LAW REVIEW
Case Digests
Outline by Atty. Peter Joey
Usita
IV. LABOR RELATIONS LAW
1. Right to Self-Organization
a. Who can join
La Suerte Cigar & Cigarette Factory v. Director of BLR, G.R. No.
L-55674, July 25, 1983
b. Exceptions
2. Labor Organizations
a. Classification of Labor Organizations
b. Disaffiliation of a local union from the federation
Tropical Hut Employees’ Union-CGW v. Tropical Hut Food Market, Inc,
G.R. No. L-43495-99, January 20, 1990
3. Bargaining Agent and Certification Election

a. Voluntary Recognition (D.O. 40-03, Rule VII)
b. Certification Election
UST Faculty Union v. Bitonio, Jr., G.R. No. 131235, November 16, 1999
Progressive Development Corporation-Pizza Hut v. Laguesma, G.R.
No. 115077
i. Certification Election in an Organized v. Unorganized
Establishment
ii. Procedure in Pre-Election Contest (D.O. 40-03)
iii. Grounds for denial of petition for certification election (contract-bar
rule, deadlock bar-rule, charge-of-company unionism rule, outside-
of-the-freedom-period rule, negotiation rule, appeal bar rule).
c. Consent Election
d. Run-Off Election
e. Re-run Election
4. Union Security Arrangements

Bataan Shipyard and Engineering Co., Inc. v. NLRC, G.R. No. 78604,
May 9, 1988
5. Unfair Labor Practice
a. Article 253 (formerly Art. 247): Unfair Labor Practice
b. Article 254 (formerly Art. 248): ULP of Employers
Complex Electronics Employees Association v. NLRC, G.R. No. 121315,
July 19, 1999
Standard Chartered Bank v. Hon. Confesor, G.R. No. 114974, June 16,
2004
c. Article 255 (formerly Art. 249): ULP of Labor Organization
6. Collective Bargaining & Administration of Agreements
a. Procedures/steps in collective bargaining
b. Article 257: Duty to Bargain Collectively in the absence of
Collective Bargaining Agreements
c. Article 258: Duty to Bargain Collectively Definition
4F(A.Y. 2017-2018) CAVEAT: NOT FOR REPRODUCTION. USE AT YOUR OWN RISK.
Baccay, Bustillos, Cabuyadao, Cantos, Chua Cheng, Cruz, Dieta, Dimaporo,
San Beda College of Law Manila Domantay, Eloriaga, Feraren, Frando, Intal, Leano, Magday, Marohombsar,
Ocampo, Pallon, Panotes, Parojinog, Penaflor, Roque, Sale, Salor, Sanchez,
Santos, Sioson, Soliva, Uy.
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Kiok Loy v. NLRC, 141 SCRA 179
d. Article 259: Duty to Bargain Collectively when there exists a CBA
e. Article 260: Terms of CBA
i. Principle of Hold-over
ii. Substitutionary Doctrine
iii. Deadlock in CBA renegotiation
Divine Word University of Tacloban v. Sec. of Labor, G.R. No.
91995, September 11, 1992
7. Strikes & Lockouts

a. Definition of strikes & lockouts
b. Economic v. ULP Strike
c. Procedural Requirements
d. Liability in case of Illegal Strike/lockout
Jackbilt Industries Inc v. Jackbilt Employees Workers Union-NAFLU-
KMU, G.R. Nos. 171618-19, March 20, 2009
i. Union Officers
ii. Members
iii. Employer
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1. LA SUERTE CIGAR & CIGARETTE FACTORY v DIRECTOR OF BLR
G.R. No. L-55674, July 25, 1983
DOCTRINE:
1. The question of whether employer-employee relationship exists is a primordial
consideration before extending labor benefits under the workmen's compensation,
social security, Medicare, termination pay, and labor relations law. It is important in
the determination of who shall be included in a proposed bargaining unit because it
is the sine qua non, the fundamental and essential condition that a bargaining unit
be composed of employees. Failure to establish this juridical relationship between
the union members and the employer affects the legality of the union itself. It means
the ineligibility of the union members to present a petition for certification election as
well as to vote therein.
FACTS:
On April 7, 1979, the La Suerte Cigar and Cigarette Factory Provincial (Luzon)
and Metro Manila Sales Force Association (herein referred to as the local union) applied
for and was granted chapter status by the National Association of Trade Unions
(hereinafter referred to as NATU).
On April 16, 1979, some thirty-one (31) local union members signed a joint letter
withdrawing their membership from NATU.
Nonetheless, on April 18, 1979, the local union and NATU filed a petition for
direct certification or certification election which alleged among others, that forty-eight of
the sixty sales personnel of the Company were members of the local union; that the
petition is supported by no less than 75% of the sales force; that there is no existing
recognized labor union in the Company representing the said sales personnel; that
there is likewise no existing collecting bargaining agreement; and that there had been
no certification election in the last twelve months preceding the filing of the petition.
The Company then filed a motion to dismiss the petition on June 13, 1979 on the
ground that it is not supported by at least 30% of the members of the proposed
bargaining unit because (a) of the alleged forty-eight (48) members of the local union,
thirty-one (31) had withdrawn prior to the filing of the petition; and (b) fourteen (14) of
the alleged members of the union were not employees of the Company but were
independent contractors.
NATU and the local union opposed the Company's motion to dismiss alleging
that the fourteen dealers are actually employees of the Company because they are
subject to its control and supervision.
The Med-Arbiter issued dismissed the petition for lack of merit as the fourteen
dealers who joined the union should not be counted in determining the 30% consent
requirement because they are not employees but independent contractors and the
withdrawal of the 31 salesmen from the union prior to the filing of the petition for
certification election was uncontroverted by the parties.
Thereafter, the local union on its own signed only by the local union President,
filed a motion for reconsideration and/or appeal from the order of dismissal. The
Director of the Bureau of Labor Relations reversed and set aside the order of dismissal,
holding that the withdrawal of the 31 signatories to the petition two days prior to the
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filing of the instant petition did not establish the fact that the same was executed freely
and voluntarily and that the records are replete with company documents showing that
the alleged dealers are in fact employees of the company.
The Company filed a motion for reconsideration but it was denied. Hence this
petition.
ISSUES:
1. Whether or not the 14 dealers are employees or independent contractors.
2. Whether or not the withdrawal of 31 union members from the NATU affected the
petition for certification election insofar as the thirty per cent requirement is
concerned.
HELD:
1. They are considered as independent contractors and not employees.
According to the petitioner, to effectively market its products, the Company

maintains a network of dealers all over the country. These arrangements are covered by
a dealership agreement signed between the Company and a dealer in a particular area
or territory. A copy of such agreement was attached to the petition and was quoted in
the case.
Following the rule in the Mafinco case that in a petition for certiorari, the issue of
whether respondents are employees or independent contractors should be resolved
mainly in the light of their peddling contracts. Accordingly, after considering the terms
and stipulations of the Dealership Contracts which are clear and leave no doubt upon
the intention of the contracting parties in establishing the relationship between the
dealers on one hand and the company on the other as that of buyer and seller, the
Court found that the status thereby created is one of independent contractorship,
pursuant to the first rule in the interpretation of contracts that the literal meaning of the
stipulations shall control. (Article 1370, New Civil Code)
From the plain language of the Dealership Agreement, the Court found that the
same is premised with the prefatory statement "the factory has accepted the application
of (name of applicant) and therefore has appointed him as one of its dealers."
Its terms and conditions include, but not limited to, the following:
1. That the dealer shall handle the products in accordance with existing laws
and regulations of the government;
2. That the dealer alone shall be responsible for any violation of any law
(par.5);
3. In case of incapacity of the dealer, the Company may designate a
substitute. The Company also reserves the right to determine, from time to
time, the amount of credit granted or to be granted to the dealer;
4. It is likewise immediately noticeable that no such words as "to hire and
employ" are present;
5. No mention is made of the wages of the dealers. In fact, it specifies that
the dealer shall not receive any commission from the factory but the latter
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shall give the dealer a discount for all sales either on consignment or in
cash.
Respondents, in effect, admit the clarity of the terms and conditions of the
agreements which covenant that the relationship between the dealers and the Company
is one of buyer and seller of La Suerte products, and therefore, one of an independent
contractorship when they claimed that the dealership arrangement as established under
the Dealership Agreement and the Dealership Supplementary Agreement is essentially
a legal cover, cloak or disguise to hide the continuing Employer-Employee relationship
established prior to 1964.
Precisely, there was need to change the contract of employment because of the
change of relationship, from an employee to that of an independent dealer or contractor.
The employees were free to enter into the new status, to sign or not to sign the new
agreement. As in the Mafinco case, the respondents therein as in the instant case, were
free to reject the terms of the dealership but having signed it, they were bound by its
stipulations and the consequences thereof under existing labor laws. The fact that the
14 local union members voluntarily executed with La Suerte formal dealership
agreements which indicate the distribution and sale of La Suerte cigarettes signifies that
they were acting as independent businessmen.
It is not disputed that under the dealership agreement, the dealer purchases and
sells the cigarettes manufactured by the company under and for his own account. The
dealer on his own account sells the cigarettes in any manner he deems best without
constraint as to time. The dealers do not devote their full time in selling company
products. They are likewise engaged in other livelihood and businesses while selling
cigarettes manufactured by the company.
2. Yes, the withdrawal of 31 union members from the NATU affected the petition for
certification election insofar as the thirty per cent requirement is concerned.
The Court rejects the order of the respondent Director of the Bureau of Labor
Relations, it appearing undisputably that the 31 union members had withdrawn their
support to the petition before the filing of said petition. It would be otherwise if the
withdrawal was made after the filing of the petition for it would then be presumed that
the withdrawal was not free and voluntary. The presumption would arise that the
withdrawal was procured through duress, coercion or for valuable consideration. In
other words, the distinction must be that withdrawals made before the filing of the
petition are presumed voluntary unless there is convincing proof to the contrary,
whereas withdrawals made after the filing of the petition are deemed involuntary.
The reason for such distinction is that if the withdrawal or retraction is made
before the filing of the petition, the names of employees supporting the petition are
supposed to be held secret to the opposite party. Logically, any such withdrawal or
retraction shows voluntariness in the absence of proof to the contrary. Moreover, it
becomes apparent that such employees had not given consent to the filing of the
petition, hence the subscription requirement has not been met.
When the withdrawal or retraction is made after the petition is filed, the
employees who are supporting the petition become known to the opposite party since
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their names are attached to the petition at the time of filing. Therefore, it would not be
unexpected that the opposite party would use foul means for the subject employees to
withdrawal their support.
In recapitulation, the Court held and ruled that the 14 members of respondent
local union are dealers or independent contractors. They are not employees of the
petitioner. With the withdrawal by 31 members of their support to the petition prior to or
before the filing thereof, making a total of 45, the remainder of 3 out of the 48 alleged to
have supported the petition can hardly be said to represent the union. Hence, the
dismissal of the petition by the Med-Arbiter was correct and justified. Respondent
Director committed grave abuse of discretion in reversing the order of the Med- Arbiter.
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2. TROPICAL HUT EMPLOYEES’ UNION-CGW v TROPICAL HUT FOOD MARKET
INC., G.R. No. L-43495-99, January 20, 1990
DOCTRINES:
1. The right of a local union to disaffiliate from its mother federation is well-settled. A
local union, being a separate and voluntary association, is free to serve the interest
of all its members including the freedom to disaffiliate when circumstances warrant.
This right is consistent with the constitutional guarantee of freedom of association.
2. When the local union withdrew from the old federation to join a new federation, it
was merely exercising its primary right to labor organization for the effective
enhancement and protection of common interests. In the absence of enforceable
provisions in the federation's constitution preventing disaffiliation of a local union a
local may sever its relationship with its parent.
3. The act of non-compliance with the procedure on withdrawal is premised on purely

technical grounds which cannot rise above the fundamental right of self-
organization.
FACTS:
Petitioners (THEU) sought affiliation with the National Association of Trade
Unions (NATU). The NATU itself as a labor federation was not registered with the
Department of Labor.
Subsequently, a CBA Agreement was entered into between THEU-NATU and
Respondent Company. Under the CBA, Article 3 provided that employees who are
already members of THEU-NATU at the time of the signing of the Agreement or who
become so thereafter shall be required to maintain their membership therein as a
condition of continued employment. It further provided that any employee who is
expelled from the THEU-NATU for joining another federation or forming another union,
or who fails or refuses to maintain his membership therein as required shall, upon
written request of the UNION be discharged by the COMPANY. The CBA also provided
for a “Check-Off Authorization Form”, which designated THEU-NATU as the sole
bargaining agent in all matters relating to terms and conditions of employment.
Subsequently, NATU received a letter from THEU-NATU that the latter was
disaffiliating from the NATU Federation. THEU-NATU also made an announcement to its
general membership concerning the latter's disaffiliation from the NATU and its
affiliation with the Confederation of General Workers (CGW).
THEU-CGW held its election of officers and a certain Jose Encinas was elected
as President. The NATU requested the Respondent Company to dismiss Jose Encinas
because he violated Article 3 of the CBA. Respondent Company suspended Encinas,
pending the application for clearance with the Department of Labor to dismiss him.
Respondent Company also suspended the officers and members of the THEU-CGW.
Therefore, THEU-CGW filed a case for Unfair Labor Practice with the NLRC.
NLRC Ruling: In favor of Petitioners. Ordered their reinstatement, and for
Respondent Company to desist from committing further acts of ULP.
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On Appeal to the NLRC Commission: Reversed, ruled in favor of
Respondents. Howevr, ordered Respondent to give the complainants a second chance
by reemploying them upon their voluntary reaffirmation of membership and loyalty to the
THEU-NATU.
On Appeal to the Secretary of Labor: Affirmed findings of NLRC Commission.
ISSUES:
1. Whether or not the disaffiliation of THEU (a local union) from NATU (a national
federation) was valid;
2. Whether or not the dismissal of petitioner employees resulting from their unions
disaffiliation from the mother federation was illegal and constituted unfair labor
practice on the part of respondent company and federation
HELD:
1. Valid. When the local union withdrew from the old federation to join a new federation,
it was merely exercising its primary right to labor organization for the effective
enhancement and protection of common interests.
In the absence of enforceable provisions in the federation's constitution

preventing disaffiliation of a local union a local may sever its relationship with its parent.
There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU
that the THEU was expressly forbidden to disaffiliate from the federation.
The alleged non-compliance of the local union with the provision in the NATU
Constitution requiring the service of three months notice of intention to withdraw did not
produce the effect of nullifying the disaffiliation for the following grounds:
Firstly, NATU was not even a legitimate labor organization, it appearing that it
was not registered at that time with the Department of Labor, and therefore did not
possess and acquire, in the first place, the legal personality to enforce its constitution
and laws, much less the right and privilege under the Labor Code to organize and
affiliate chapters or locals within its group, and secondly, the act of non-compliance with
the procedure on withdrawal is premised on purely technical grounds which cannot rise
above the fundamental right of self-organization.
A local union, being a separate and voluntary association, is free to serve the
interest of all its members including the freedom to disaffiliate when circumstances
warrant. This right is consistent with the constitutional guarantee of freedom of
association. The inclusion of the word NATU after the name of the local union THEU in
the registration with the Department of Labor is merely to stress that the THEU is
NATU's affiliate at the time of the registration. It does not mean that the said local union
cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its
own interests independently of the federation. A local union owes its creation and
continued existence to the will of its members and not to the federation to which it
belongs.
2. Illegal. Unfair Labor Practice.

The THEU-NATU, and not the NATU federation, was recognized as the sole and
exclusive collective bargaining agent for all its workers and employees in all matters
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concerning wages, hours of work and other terms and conditions of employment.
Although NATU was designated as the sole bargaining agent in the Check-Off
Authorization Form attached to the CBA, this simply means it was acting only for and in
behalf of its affiliate. The NATU possessed the status of an agent while the local union
remained the basic principal union, which entered into contract with the respondent
company. When the THEU disaffiliated from its mother federation, the former did not
lose its legal personality as the bargaining union under the CBA.
The CBA imposes dismissal only in case an employee is expelled from the union
for joining another federation or for forming another union or who fails or refuses to
maintain membership therein. The case at bar does not involve the withdrawal of merely
some employees from the union but of the whole THEU itself from its federation.
Clearly, since there is no violation of the union security provision in the CBA, there was
no sufficient ground to terminate the employment of petitioners.
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3. UST FACULTY UNION v BITONIO, JR.
G.R. No. 131235, November 16, 1999
DOCTRINES:
1. RIGHT TO SELF-ORGANIZATION AND UNION MEMBERSHIP. —

Self-organization is a fundamental right guaranteed by the Philippine Constitution and
the Labor Code Employees have the right to form, join or assist labor organizations for
the purpose of collective bargaining or for their mutual aid and protection. Whether
employed for a definite period or not, any employee shall be considered as such,
beginning on his first day of service, for purposes of membership in a labor union.
Corollary to this right is the prerogative not to join, affiliate with or assist a labor union.
Therefore, to become a union member, an employee must, as a rule, not only signify the
intent to become one, but also take some positive steps to realize that intent. The
procedure for union membership is usually embodied in the union's constitution and
bylaws. An employee who becomes a union member acquires the rights and the
concomitant obligations that go with this new status and becomes bound by the union's
rules and regulations.
2. UNION ELECTION DISTINGUISHED FROM CERTIFICATION ELECTION;

ELECTION HELD BY PETITIONERS CANNOT BE CONSIDERED EITHER AS A
UNION ELECTION OR A CERTIFICATION ELECTION. — A union election is held
pursuant to the union's constitution and bylaws, and the right to vote in it is enjoyed only
by union members. A union election should be distinguished from a certification election,
which is the process of determining, through secret ballot, the sole and exclusive
bargaining agent of the employees in the appropriate bargaining unit, for purposes of
collective bargaining. Specifically, the purpose of a certification election is to ascertain
whether or not a majority of the employees wish to be represented by a labor
organization and, in the affirmative case, by which particular labor organization. In a
certification election, all employees belonging to the appropriate bargaining unit can
vote. Therefore, a union member who likewise belongs to the appropriate bargaining
unit is entitled to vote in said election. However, the reverse is not always true; an
employee belonging to the appropriate bargaining unit but who is not a member of the
union cannot vote in the union election, unless otherwise authorized by the constitution
and bylaws of the union. Verily, union affairs and elections cannot be decided in a non-
union activity. In both elections, there are procedures to be followed.
3. UNION'S CONSTITUTION AND BY LAWS. — The importance of a union's

constitution and bylaws (CBL) cannot be overemphasized. They embody a covenant
between a union and its members and constitute the fundamental law governing the
members' rights and obligations. As such, the union's constitution and bylaws should be
upheld, as long as they are not contrary to law, good morals or public policy.
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4. ACT OF SUSPENDING THE CONSTITUTION AND BY-LAWS AN IMPLIED
ADMISSION THAT THE ELECTION HELD IS INVALID; RATIFICATION OF THE NEW
COLLECTIVE BARGAINING AGREEMENT DID NOT VALIDATE THE VOID
ELECTION. — We agree with the solicitor general's observation that "the act of
suspending the constitution when the questioned election was held is an implied
admission that the election held on that date [October 4, 1996] could not be considered
valid under the existing USTFU constitution . . ." The ratification of the new CBA
executed between the petitioners and the University of Santo Tomas management did
not validate the void October 4, 1996 election. Ratified were the terms of the new CBA,
not the issue of union leadership — a matter that should be decided only by union
members in the proper forum at the proper time and after observance of proper
procedures.
FACTS:
Private Respondents are duly elected officers of the UST Faculty Union (USTFU),
whose subsisting 5-year CBA with its employer, UST, was set to expire on 31 May 1998.
One of the private respondents, the Secretary General of USTFU, posted a notice
addressed to all USTFU members announcing a general assembly to be held on 5
October 1996 to elect USTFU's next set of officers. A Committee on Elections
(COMELEC) was also constituted to oversee the elections.
The secretary general of UST, upon the request of the various UST faculty club
presidents, issued notices allowing all faculty members to hold a general faculty
assembly on 4 October 1996 to discuss the "state of the unratified UST-USTFU CBA"
and "status and election of USTFU officers.”
The med-arbiter issued a TRO against private respondents enjoining them from
conducting the election scheduled on 05 October 1996.
The general faculty assembly was held as scheduled. The general assembly was
attended by members of the USTFU and, as admitted by the petitioners, also by "non-
USTFU members who are members in good standing of the UST Academic Community
Collective Bargaining Unit”. On this occasion, petitioners were elected as USTFU's new
set of officers by acclamation and clapping of hands.
Private respondents filed a petition seeking injunctive reliefs and the nullification of
the results of the election. Accusing petitioners of usurpation, private respondents
characterized the election as spurious for being violative of USTFU's CBL (specifically
because the general assembly resulting in the election of petitioners was not called by
the Board of Officers of the USTFU; there was no compliance with the ten-day notice
rule; the supposed elections were conducted without a COMELEC being constituted by
the Board of Officers; the elections were not by secret balloting, and, the general
assembly was convened by faculty members some of whom were not members of
USTFU, so much so that non-USTFU members were allowed to vote).
Subsequently, petitioners and UST allegedly entered into a new CBA covering the
period from 01 June 1996 to 31 May 2001.
Consequently, private respondents again moved for the issuance of a TRO to
prevent petitioners from making further representations that they had entered into a new
agreement with UST.
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Med-arbiter: issued a TRO directing the petitioners to cease and desist from
performing any and all acts pertaining to the duties and functions of the officers and
directors of USTFU.
BLR Dir. Bitonio: USTFU officers' purported election held on October 4, 1996
was void for having been conducted in violation of the union's CBL. The CBL, which
constituted the covenant between the union and its members, could not be suspended
during the general faculty assembly, since that assembly had not been convened or
authorized by the USTFU.
ISSUE:
WON Petitioners had the right to suspend the provisions of the Constitution and By-
Laws (CBL) of the USTFU regarding the elections of officers of the union
HELD:
No. Petitioners' frustration over the performance of private respondents, as well
as their fears of a "fraudulent" election to be held under the latter's supervision, could
not justify the method they chose to impose their will on the union.
The union's CBL is the fundamental law that governs the relationship between
and among the members of the union. Without respect for the CBL, a union as a
democratic institution degenerates into nothing more than a group of individuals
governed by mob rule. The grievances of the petitioners could have been brought up
and resolved in accordance with the procedure laid down by the union's CBL and by the
Labor Code.
Union Election v. Certification Election

A union election is held pursuant to the union's constitution and bylaws, and
the right to vote in it is enjoyed only by union members. A union election should
be distinguished from a certification election, which is the process of determining,
through secret ballot, the sole and exclusive bargaining agent of the employees
in the appropriate bargaining unit, for purposes of collective bargaining.
Specifically, the purpose of a certification election is to ascertain whether or not a
majority of the employees wish to be represented by a labor organization and, in
the affirmative case, by which particular labor organization.
In a certification election, all employees belonging to the appropriate
bargaining unit can vote. Therefore, a union member who likewise belongs to the
appropriate bargaining unit is entitled to vote in said election. However, the
reverse is not always true; an employee belonging to the appropriate bargaining
unit but who is not a member of the union cannot vote in the union election,
unless otherwise authorized by the constitution and bylaws of the union. Verily,
union affairs and elections cannot be decided in a non-union activity.
In both elections, there are procedures to be followed. Thus, the October 4, 1996
election cannot properly be called a union election, because the procedure laid
down in the USTFU's CBL for the election of officers was not followed. It could
not have been a certification election either, because representation was not the
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issue, and the proper procedure for such election was not followed. The
participation of non-union members in the election aggravated its irregularity.
Petitioners cannot be heard to say that the CBL was effectively suspended during
the 04 October 1996 general assembly. A union CBL is a covenant between the union
and its members and among members. By appellant's own evidence, the general faculty
assembly was not a meeting of USTFU. It was attended by members and non-members
alike, and therefore was not a forum appropriate for transacting union matters. Allowing
a non-union member to initiate the suspension of a union's CBL, and non-union
members to participate in a union election on the premise that the union's CBL had
been suspended in the meantime, is incompatible with the freedom of association and
protection of the right to organize.
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4. PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT v LAGUESMA
G.R. No. 115077, April 18, 1997
DOCTRINES:
1. After a labor organization has filed the necessary papers and documents for
registration, it becomes mandatory for the Bureau of Labor Relations to check if the
requirements under Article 234 have been sedulously complied with. If its application
for registration is vitiated by falsification and serious irregularities, especially those
appearing on the face of the application and the supporting documents, a labor
organization should be denied recognition as a legitimate labor organization. And if a
certificate of recognition has been issued, the propriety of the labor organization's
registration could be assailed directly through cancellation of registration
proceedings in accordance with Articles 238 and 239 of the Labor Code, or
indirectly, by challenging its petition for the issuance of an order for certification
election.
2. Registration based on false and fraudulent statements and documents confer no

legitimacy upon a labor organization irregularly recognized, which, at best, holds on
to a mere scrap of paper. Under such circumstances, the labor organization, not
being a legitimate labor organization, acquires no rights, particularly the right to ask
for certification election in a bargaining unit.
FACTS:
Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union) filed
a petition for certification election with the Department of Labor (National Capital
Region) in behalf of the rank and file employees of the Progressive Development
Corporation (Pizza Hut).
Petitioner filed a verified Motion to Dismiss the petition alleging fraud, falsification
and misrepresentation in the respondent Union's registration making it void and invalid.
It alleged the following: respondent Union's registration was tainted with false, forged,
double or multiple signatures of those who allegedly took part in the ratification of the
respondent Union's constitution and by-laws and in the election of its officers that there
were two sets of supposed attendees to the alleged organizational meeting that was
alleged to have taken place on June 26, 1993; that the alleged chapter is claimed to
have been supported by 318 members when in fact the persons who actually signed
their names were much less; and b) while the application for registration of the charter
was supposed to have been approved in the organizational meeting held on June 27,
1993, the charter certification issued by the federation KATIPUNAN was dated June 26,
1993 or one (1) day prior to the formation of the chapter, thus, there were serious
falsities in the dates of the issuance of the charter certification and the organization
meeting of the alleged chapter, Respondent Union alleged that the election of its officers
was held on June 27, 1993; however, it appears from the documents submitted by
respondent union to the BIR-DOLE that the Union's constitution and by-laws were
adopted only on July 7, 1993, hence, there was no bases for the supposed election of
officers on June 27, 1993 because as of this date, there existed no positions to which
the officers could be validly elected, Voting was not conducted by secret ballot in
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violation of Article 241, section (c) of the Labor Code, The Constitution and by Laws
submitted in support of its petition were not properly acknowledged and notarized.
Petitioner filed a Petition seeking cancellation of the Union’s registration on the
ground of fraud and falsification in the Regional Office of the Department of Labor and
Employment. It also filed a Petition with the Med-Arbiter requesting suspension of
proceedings in the certification election case until after the prejudicial question of the
Union's legal personality is determined in the proceedings for cancellation of
registration.
MED-ARBITER: Denied the petition. Approved the holding of the petition for
certification election among the rank and file employees. Declared respondent union as
a legitimate labor organization. The alleged misrepresentation, fraud and false
statement in connection with the issuance of the charter certificate are collateral issues
which could be properly ventilated in the cancellation proceedings.
SECRETARY OF LABOR: DENIED the appeal. DENIED the MR.
ISSUE:
1. Whether or not a petition for certification can be held considering that (a) respondent
Union's legal personality was squarely put in issue; (b) allegations of fraud and
falsification, supported by documentary evidence were made; and (c) a petition to
cancel respondent Union's registration is pending with the regional office of the
Department of Labor and Employment?
2. Whether or not, after the necessary papers and documents have been filed by a
labor organization, recognition by the Bureau of Labor Relations merely becomes a
ministerial function
HELD:
No, the recognition does not become merely ministerial. Under Art 234, Any
applicant labor organization, association or group of unions or workers shall acquire
legal personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration based on
the following requirements….
The requirements embodied therein are intended as preventive measures
against the commission of fraud. After a labor organization has filed the necessary
papers and documents for registration, it becomes mandatory for the Bureau of Labor
Relations to check if the requirements under Article 234 have been sedulously complied
with. If its application for registration is vitiated by falsification and serious irregularities,
especially those appearing on the face of the application and the supporting documents,
a labor organization should be denied recognition as a legitimate labor organization.
And if a certificate of recognition has been issued, the propriety of the labor
organization's registration could be assailed directly through cancellation of registration
proceedings in accordance with Articles 238 and 239 of the Labor Code, or indirectly, by
challenging its petition for the issuance of an order for certification election.
The grounds ventilated in cancellation proceedings in accordance with Article
239 of the Labor Code constitute a grave challenge to the right of respondent Union to
ask for certification election. The Med-Arbiter should have looked into the merits of the
petition for cancellation before issuing an order calling for certification election.
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Registration based on false and fraudulent statements and documents confer no
legitimacy upon a labor organization irregularly recognized, which, at best, holds on to a
mere scrap of paper. Under such circumstances, the labor organization, not being a
legitimate labor organization, acquires no rights, particularly the right to ask for
certification election in a bargaining unit. The grounds ventilated in cancellation
proceedings in accordance with Article 239 of the Labor Code constitute a grave
challenge to the right of respondent Union to ask for certification election. The Med-
Arbiter should have looked into the merits of the petition for cancellation before issuing
an order calling for certification election. Registration based on false and fraudulent
statements and documents confer no legitimacy upon a labor organization irregularly
recognized, which, at best, holds on to a mere scrap of paper. Under such
circumstances, the labor organization, not being a legitimate labor organization,
acquires no rights, particularly the right to ask for certification election in a bargaining
unit.
CASE REMANDED TO MED-ARBTIER TO RESOLVE PETITIONER’S
PETITION FOR CANCELLATION OF RESPONDENT UNION’S REGISTRATION
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5. BATAAN SHIPYARD AND ENGINEERING CO. INC. v NLRC
G.R. No. 78604, May 9, 1988
DOCTRINES:
1. Discrimination by employer in selecting employees to be retrenched, constitutes
unfair labor practice. - Under the circumstances obtaining in this case, We are
inclined to believe that the Company had indeed been discriminatory in selecting the
employees who were to be retrenched. All of the retrenched employees are officers
and members of the NAFLU. The record of the case is bereft of any satisfactory
explanation from the Company regarding this situation. As such, the action taken by
the firm becomes highly suspect. It leads Us to conclude that the firm had been
discriminating against membership in the NAFLU, an act which amounts to
interference in the employees’ exercise of their right of self-organization. Under
Article 249 of the Labor Code of the Philippines, such interference is considered an
act of unfair labor practice on the part of the Company.
2. Retrenchment strikes at the very heart of one’s employment. While the right of an
employer to dismiss an employee is conceded in a valid retrenchment, the right
differs from and should not be confused with the manner in which such right is
exercised. It should not be oppressive and abusive since it affects one’s person and
property. Due process of law demands nothing less.
FACTS:
Sometime before 1984, Bataan Shipyard (BASECO) filed with the herein
respondent National Labor Relations Commission an application for the retrenchment of
285 of its employees on the ground that the firm had been incurring heavy losses since
the end of 1979. The case was docketed as NLRC Case No. RABIII-2-53682. In the
meantime, some employees who had been on sick leave earlier were considered
retrenched. All of those so retrenched happen to be officers and members of the
NAFLU.
As expected, the NAFLU submitted an opposition to the said application in
representation of the affected employees. Those employees retrenched earlier joined
the case as individual complainants. their respective position complainants. The parties
submitted papers and memoranda.
Executive Labor Arbiter of the respondent Commission: declared the
retrenchment undertaken by the Company legal and valid. As a consequence thereof,
the firm was ordered to pay the separation benefits of the retrenched employees. The
Executive Labor Arbiter also observed that the Company had discriminated against the
members of the NAFLU in the selection of the employees to be retrenched. Thus, the
firm was found guilty of unfair labor practice and was ordered to pay each of the
individual complainants six months backwages as a penalty therefor.
The Company appealed the case to the corresponding division of the respondent
Commission and challenged the legality of the ruling of the Executive Labor Arbiter to
the effect that it had discriminated in the retrenchment arrangements it had undertaken.
The Company likewise questioned the legality of the award for backwages.
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Third Division of the respondent Commission: affirmed the Decision of the

Executive Labor Arbiter. The Commission pointed out that the Company had failed to
satisfactorily explain why all of the employees it had retrenched were officers and
members of the NAFLU. The Commission went on to say that the management was in a
position to know who of the employees on leave were affiliated with the said labor
organizations. This view prompted the Commission to conclude that the NAFLU officers
and members so retrenched were being discriminated against by reason of their
affiliation in the labor organization.
The Company maintains that the respondent Commission committed a grave
abuse of discretion, amounting to loss of jurisdiction, in finding the firm guilty of having
committed an act of unfair labor practice when are the while the retrenchment it had
sought was held to be legal and valid. The thrust of the Petition is that the Company
cannot be considered guilty of committing an act of unfair labor practice in effecting a
valid retrenchment.
ISSUE: Whether or not the retrenchment is valid.
HELD:
It is not disputed that the retrenchment undertaken by the Company is valid. However,
the manner in which this prerogative is exercised should not be tainted with abuse of
discretion.
Under the circumstances obtaining in this case, We are inclined to believe that
the Company had indeed been discriminatory in selecting the employees who were to
be retrenched. All of the retrenched employees are officers and members of the NAFLU.
The record of the case is bereft of any satisfactory explanation from the Company
regarding this situation. As such, the action taken by the firm becomes highly suspect. It
leads Us to conclude that the firm had been discriminating against membership in the
NAFLU, an act which amounts to interference in the employees' exercise of their right of
self-organization. Under Article 249 of the Labor Code of the Philippines, such
interference is considered an act of unfair labor Practice on the part of the Company, to
wit —
ART. 249. 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.;
The respondent Commission and the Executive Labor Arbiter took these
considerations into account in resolving the dispute- This being so, it cannot be said that
the respondent Commission committed a grave abuse of discretion, amounting to loss
of jurisdiction, in finding BASECO guilty of having committed an act of unfair labor
practice despite the valid retrenchment. Accordingly, the writ of certiorari prayed for by
the petitioner cannot issue.
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6. COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION v NLRC
G.R. No. 121315, July 19, 1999
DOCTRINES:
1. A runaway shop one wherein the employer moves its business to another location or
it temporarily closes its business for anti-union purposes. In this case, however,
Ionics was not set up merely for the purpose of transferring the business of
Complex. At the time the labor dispute arose at Complex, Ionics was already existing
as an independent company since July 5, 1984. It cannot, therefore, be said that the
temporary closure in Complex and its subsequent transfer of business to Ionics was
for anti-union purposes. The Union failed to show that the primary reason for the
closure of the establishment was due to the union activities of the employees.
2. We cannot hold respondents guilty of ULP since the closure of operation of Complex
was not established by strong evidence that the purpose of said closure was to
interfere with the employees' right to self-organization and collective bargaining. As
established, the closure was triggered by the customers' pull-out of their equipment,
machinery and materials, who were alarmed by the pending labor dispute and the
imminent strike by the union, and as a protection to their interest pulled-out of
business from Complex who had no recourse but to cease operation to prevent
further losses.
3. Lockout is the temporary refusal of employer to furnish work as a result of an

industrial or labor dispute. It may be manifested by the employer's act of excluding
employees who are union members. Here, there was a complete cessation of the
business operations at Complex not because of the labor dispute. It should be
recalled that, before the labor dispute, Complex had already informed the employees
that they would be closing the Lite-On Line.
FACTS:
Complex Electronics Corporation (Complex) was engaged in the manufacture of
electronic products. It was actually a subcontractor of electronic products where its
customers gave their job orders, sent their own materials and consigned their
equipment to it. The customers were foreign-based companies with different product
lines and specifications requiring the employment of workers with specific skills for each
product line. Thus, there was the AMS Line for the Adaptive Micro System, Inc., the
Heril Line for Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co.,
etc.
The rank and file workers of Complex were organized into a union known as the
Complex Electronics Employees Association, herein referred to as the Union.
Complex received a facsimile message from Lite-On Philippines Electronics Co.,
requiring it to lower its price by 10%.
Consequently, a meeting was held between Complex and the personnel of the
Lite-On Production Line. Complex informed its Lite-On personnel that such request of
lowering their selling price by 10% was not feasible as they were already incurring
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losses at the present prices of their products. Under such circumstances, Complex
regretfully informed the employees that it was left with no alternative but to close down
the operations of the Lite-On Line.
The Union, on the other hand, pushed for a retrenchment pay equivalent to one
(1) month salary for every year of service, which Complex refused.
Complex filed a notice of closure of the Lite-On Line with the Department of Labor and
Employment (DOLE) and the retrenchment of the ninety-seven (97) affected
employees.
The Union filed a notice of strike with the National Conciliation and Mediation
Board (NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote
which resulted in a "yes" vote.
In the evening of April 6, 1992, the machinery, equipment and materials being
used for production at Complex were pulled-out from the company premises and
transferred to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna. The
following day, a total closure of company operation was effected at Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC
for unfair labor practice, illegal closure/illegal lockout, money claims for vacation leave,
sick leave, unpaid wages, 13th month pay, damages and attorney's fees. The Union
alleged that the pull-out of the machinery, equipment and materials from the company
premises, which resulted to the sudden closure of the company was in violation of the
Labor Code of the Philippines and the existing CBA. Ionics was impleaded as a party
defendant because the officers and management personnel of Complex were also
holding office at Ionics with Lawrence Qua as the President of both companies.
Complex, on the other hand, averred that since the time the Union filed its notice
of strike, there was a significant decline in the quantity and quality of the products in all
of the production lines. The delivery schedules were not met prompting the customers
to lodge complaints against them. Fearful that the machinery, equipment and materials
would be rendered inoperative and unproductive due to the impending strike of the
workers, the customers ordered their pull-out and transfer to Ionics. Thus, Complex was
compelled to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and
had been in existence since July 5, 1984 or eight (8) years before the labor dispute
arose at Complex. Like Complex, it was also engaged in the semi-conductor business
where the machinery, equipment and materials were consigned to them by their
customers. While admitting that Lawrence Qua, the President of Complex was also the
President of Ionics, the latter denied having Qua as their owner since he had no
recorded subscription of P1,200,000.00 in Ionics as claimed by the Union. Ionics further
argued that the hiring of some displaced workers of Complex was an exercise of
management prerogatives. Likewise, the transfer of the machinery, equipment and
materials from Complex was the decision of the owners who were common customers
of Complex and Ionics.
The Labor Arbiter rendered a decision ordering respondent Complex and/or
Ionics and/or Lawrence Qua, to reinstate the 531 employees to their former position
with all the rights, privileges and benefits appertaining thereto, and to pay said
complainants-employees the aggregate backwages and to such further backwages until
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their actual reinstatement. In the event reinstatement is no longer feasible for reasons
not attributable to the complainants, said respondents are also liable to pay
complainants-employees their separation pay to be computed at the rate of one (1)
month pay for every year of service, a fraction of at least six (6) months to be
considered as one whole year.
Separate appeals were filed by Complex, Ionics and Lawrence Qua before the
respondent NLRC which rendered the questioned decision setting aside the order of LA
and a new one entered ordering respondent Complex Electronics Corporation to pay
531 complainants equivalent to one month pay in lieu of notice and separation pay
equivalent to one month pay for every year of service and a fraction of six months
considered as one whole year.
ISSUES:
1. Whether or not Ionics and Complex are one and the same and thus constituted a run
away shop;
2. Whether or not there is illegal dismissal;
3. Whether or not Qua is personally liable; and
4. Whether or not respondent NLRC erred in ordering Complex to pay the Union one
(1) month pay as indemnity for failure to give notice to its employees at least thirty
(30) days before such closure
HELD:
1. A runaway shop is defined as an industrial plant moved by its owners from one
location to another to escape union labor regulations or state laws, but the term is also
used to describe a plant removed to a new location in order to discriminate against
employees at the old plant because of their union activities. It is one wherein the
employer moves its business to another location or it temporarily closes its business for
anti-union purposes. A runaway shop in this sense, is a relocation motivated by anti-
union animus rather than for business reasons. In this case, however, Ionics was not set
up merely for the purpose of transferring the business of Complex. At the time the labor
dispute arose at Complex, Ionics was already existing as an independent company. As
earlier mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be
said that the temporary closure in Complex and its subsequent transfer of business to
Ionics was for anti-union purposes. The Union failed to show that the primary reason for
the closure of the establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or
single stockholder is not a sufficient ground for disregarding separate corporate
personalities.
Likewise, in Del Rosario vs. National Labor Relations Commission, the Court stated
that substantial identity of the incorporators of two corporations does not necessarily
imply that there was fraud committed to justify piercing the veil of corporate fiction.
The basic rule is still that which can be deduced from the Courts
pronouncement in Sunio vs. National Labor Relations Commission, thus:
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xxx.. Mere ownership by a single stockholder or by another corporation of all
or nearly all of the capital stock of a corporation is not of itself sufficient ground for
disregarding the separate corporate personality.
Ionics may be engaged in the same business as that of Complex, but this fact alone
is not enough reason to pierce the veil of corporate fiction of the corporation. Well-
settled is the rule that a corporation has a personality separate and distinct from that of
its officers and stockholders. This fiction of corporate entity can only be disregarded in
certain cases such as when it is used to defeat public convenience, justify wrong,
protect fraud, or defend crime.
To disregard said separate juridical personality of a corporation, the wrongdoing
must be clearly and convincingly established.
2. We, likewise, disagree with the Union that there was in this case an illegal
lockout/illegal dismissal. Lockout is the temporary refusal of employer to furnish work as
a result of an industrial or labor dispute. It may be manifested by the employer's act of
excluding employees who are union members. In the present case, there was a
complete cessation of the business operations at Complex not because of the labor
dispute. It should be recalled that, before the labor dispute, Complex had already
informed the employees that they would be closing the Lite-On Line. The employees,
however, demanded for a separation pay equivalent to one (1) month salary for every
year of service which Complex refused to give. When Complex filed a notice of closure
of its Lite-On Line, the employees filed a notice of strike which greatly alarmed the
customers of Complex and this led to the pull-out of their equipment, machinery and
materials from Complex. Thus, without the much needed equipment, Complex was
unable to continue its business. It was left with no other choice except to shut down the
entire business. The closure, therefore, was not motivated by the union activities of the
employees, but rather by necessity since it can no longer engage in production without
the much needed materials, equipment and machinery.
At first glance after reading the decision a quo, it would seem that the closure of
respondent's operation is not justified. However, a deeper examination of the records
along with the evidence, would show that the closure, although it was done abruptly as
there was no compliance with the 30-day prior notice requirement, said closure was not
intended to circumvent the provisions of the Labor Code on termination of employment.
The closure of operation by Complex on April 7, 1992 was not without valid reasons.
Customers of respondent alarmed by the pending labor dispute and the imminent strike
to be foisted by the union, as shown by their strike vote, directed respondent Complex
to pull-out its equipment, machinery and materials to other safe bonded warehouse.
Respondent being mere consignees of the equipment, machinery and materials were
without any recourse but to oblige the customers' directive. The pull-out was effected on
April 6, 1992. We can see here that Complex's action, standing alone, will not result in
illegal closure that would cause the illegal dismissal of the complainant workers. Hence,
the Labor Arbiter's conclusion that since there were only two (2) of respondent's
customers who have expressed pull-out of business from respondent Complex while
most of the customer's have not and, therefore, it is not justified to close operation
cannot be upheld. The determination to cease operation is a
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prerogative of management that is usually not interfered with by the State as no
employer can be required to continue operating at a loss simply to maintain the workers
in employment. That would be taking of property without due process of law which the
employer has the right to resist. (Columbia Development Corp. vs. Minister of Labor and
Employment, 146 SCRA 42).
3. Going now to the issue of personal liability of Lawrence Qua, it is settled that in
the absence of malice or bad faith, a stockholder or an officer of a corporation cannot be
made personally liable for corporate liabilities. In the present case, while it may be true
that the equipment, materials and machinery were pulled-out of Complex and
transferred to Ionics during the night, their action was sufficiently explained by Lawrence
Qua in his Comment to the petition filed by the Union. We quote:
The fact that the pull-out of the machinery, equipment and materials was effected
during nighttime is not per se an indicia of bad faith on the part of respondent
Qua since he had no other recourse, and the same was dictated by the prevailing
mood of unrest as the laborers were already vandalizing the equipment, bent on
picketing the company premises and threats to lock out the company officers
were being made. Such acts of respondent Qua were, in fact, made pursuant to
the demands of Complex's customers who were already alarmed by the pending
labor dispute and imminent strike to be stage by the laborers, to have their
equipment, machinery and materials pull out of Complex. As such, these acts
were merely done pursuant to his official functions and were not, in any way,
made with evident bad faith.
We perceive no intention on the part of Lawrence Qua and the other officers of
Complex to defraud the employees and the Union. They were compelled to act upon the
instructions of their customers who were the real owners of the equipment, materials
and machinery. The prevailing labor unrest permeating within the premises of Complex
left the officers with no other choice but to pull them out of Complex at night to prevent
their destruction. Thus, we see no reason to declare Lawrence Qua personally liable to
the Union.
Anent the award of damages, we are inclined to agree with the NLRC that there
is no basis for such award.
4. The purpose of the notice requirement is to enable the proper authorities to

determine after hearing whether such closure is being done in good faith, i.e., for bona
fide business reasons, or whether, to the contrary, the closure is being resorted to as a
means of evading compliance with the just obligations of the employer to the employees
affected.
While the law acknowledges the management prerogative of closing the

business, it does not, however, allow the business establishment to disregard the
requirements of the law. The case of Magnolia Dairy Products v. NLRC is quite
emphatic about this:
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The law authorizes an employer, like the herein petitioners, to terminate the
employment of any employee due to the installation of labor saving devices. The
installation of these devices is a management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of discretion, arbitrariness, or
maliciousness on the part of management, as in this case. Nonetheless, this did
not excuse petitioner from complying with the required written notice to the
employee and to the Department of Labor and Employment (DOLE) at least one
month before the intended date of termination. This procedure enables an
employee to contest the reality or good faith character of the asserted ground for
the termination of his services before the DOLE.
The failure of petitioner to serve the written notice to private respondent and to
the DOLE, however, does not ipso facto make private respondent's termination
from service illegal so as to entitle her to reinstatement and payment of
backwages. If at all, her termination from service is merely defective because it
was not tainted with bad faith or arbitrariness and was due to a valid cause.
The well settled rule is that the employer shall be sanctioned for non-compliance
with the requirements of, or for failure to observe due process in terminating from
service its employee. In Wenphil Corp. v. NLRC, we sanctioned the employer for this
failure by ordering it to indemnify the employee the amount of P1,000.00. Similarly, we
imposed the same amount as indemnification in Rubberworld (Phils.), Inc. v. NLRC,
and, Aurelio v. NLRC and Alhambra Industries, Inc. v. NLRC. Subsequently, the sum of
P5,000.00 was awarded to an employee in Worldwide Papermills, Inc. v. NLRC, and
P2,000.00 in Sebuguero, et al., v. NLRC, et al. Recently, the sum of P5,000.00 was
again imposed as indemnify against the employer. We see no valid and cogent reason
why petitioner should not be likewise sanctioned for its failure to serve the mandatory
written notice. Under the attendant facts, we find the amount of P5,000.00, to be just
and reasonable.
We, therefore, find no grave abuse of discretion on the part of the NLRC in
ordering Complex to pay one (1) month salary by way of indemnity. It must be borne in
mind that what is at stake is the means of livelihood of the workers so they are at least
entitled to be formally informed of the management decisions regarding their
employment.
Complex, likewise, maintains that it is not liable for the payment of separation
pay since Article 283 of the Labor Code awards separation pay only in cases of closure
not due to serious business reversals.In this case, the closure of Complex was brought
about by the losses being suffered by the corporation.
We disagree.
Article 283 further provides:

x x x. 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
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losses and in case of 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 (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
It is settled that in case of closures or cessation of operation of business

establishments not due to serious business losses or financial reverses, the employees
are always given separation benefits.
In the instant case, notwithstanding the financial losses suffered by Complex,
such was, however, not the main reason for its closure. Complex admitted in its petition
that the main reason for the cessation of the operations was the pull-out of the
materials, equipment and machinery from the premises of the corporation as dictated by
its customers. It was actually still capable of continuing the business but opted to close
down to prevent further losses. Under the facts and circumstances of the case, we find
no grave abuse of discretion on the part of the public respondent in awarding the
employees one (1) month pay for every year of service as termination pay.
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7. STANDARD CHARTERED BANK v HON. CONFESOR v NLRC
G.R. No. 114974, June 16, 2004
DOCTRINES:
1. Article 248(a) of the Labor Code, considers it an unfair labor practice when an
employer interferes, restrains or coerces employees in the exercise of their right to
self-organization or the right to form association. The right to self-organization
necessarily includes the right to collective bargaining.
2. Parenthetically, if an employer interferes in the selection of its negotiators or coerces
the Union to exclude from its panel of negotiators a representative of the Union, and
if it can be inferred that the employer adopted the said act to yield adverse effects on
the free exercise to right to self-organization or on the right to collective bargaining of
the employees, ULP under Article 248(a) in connection with Article 243 of the Labor
Code is committed.
3. In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion. In the case at bar, the Union bases its claim of interference
on the alleged suggestions of Diokno to exclude Umali from the Unions negotiating
panel.
4. Surface bargaining is defined as going through the motions of negotiating without
any legal intent to reach an agreement. The resolution of surface bargaining
allegations never presents an easy issue. The determination of whether a party has
engaged in unlawful surface bargaining is usually a difficult one because it involves,
at bottom, a question of the intent of the party in question, and usually such intent
can only be inferred from the totality of the challenged party’s conduct both at and
away from the bargaining table. It involves the question of whether an employer’s
conduct demonstrates an unwillingness to bargain in good faith or is merely hard
bargaining.
FACTS:
Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation
doing business in the Philippines. The exclusive bargaining agent of the rank and file
employees of the Bank is the Standard Chartered Bank Employees Union (the Union,
for brevity).
In August of 1990, the Bank and the Union signed a five-year collective bargaining
agreement (CBA) with a provision to renegotiate the terms thereof on the third year.
Prior to the expiration of the three-year period but within the sixty-day freedom period,
the Union initiated the negotiations. On February 18, 1993, the Union, through its
President, Eddie L. Divinagracia, sent a letter containing its proposals covering political
provisions and thirty-four (34) economic provisions. Included therein was a list of the
names of the members of the Unions negotiating panel.
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter
H. Harris, took note of the Unions proposals. The Bank attached its counter-proposal to
the non-economic provisions proposed by the Union. The Bank posited that it would be
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in a better position to present its counter-proposals on the economic items after the
Union had presented its justifications for the economic proposals. The Bank, likewise,
listed the members of its negotiating panel. The parties agreed to set meetings to settle
their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia,
suggested to the Banks Human Resource Manager and head of the negotiating panel,
Cielito Diokno, that the bank lawyers should be excluded from the negotiating team. The
Bank acceded. Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the
President of the National Union of Bank Employees (NUBE), the federation to which the
Union was affiliated, be excluded from the Unions negotiating panel. However, Umali
was retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules for the negotiation.
Diokno suggested that the negotiation be kept a family affair. The proposed non-
economic provisions of the CBA were discussed first. Even during the final reading of
the non-economic provisions on May 4, 1993, there were still provisions on which the
Union and the Bank could not agree. Temporarily, the notation DEFERRED was placed
therein. Towards the end of the meeting, the Union manifested that the same should be
changed to DEADLOCKED to indicate that such items remained unresolved. Both
parties agreed to place the notation DEFERRED/DEADLOCKED.
On May 18, 1993, the negotiation for economic provisions commenced. A
presentation of the basis of the Unions economic proposals was made. The next
meeting, the Bank made a similar presentation. Towards the end of the Banks
presentation, Umali requested the Bank to validate the Unions guestimates, especially
the figures for the rank and file staff. In the succeeding meetings, Umali chided the Bank
for the insufficiency of its counter-proposal on the provisions on salary increase, group
hospitalization, death assistance and dental benefits. He reminded the Bank, how the
Union got what it wanted in 1987, and stated that if need be, the Union would go
through the same route to get what it wanted.
Upon the Banks insistence, the parties agreed to tackle the economic package item
by item. Upon the Unions suggestion, the Bank indicated which provisions it would
accept, reject, retain and agree to discuss. The Bank suggested that the Union prioritize
its economic proposals, considering that many of such economic provisions remained
unresolved. The Union, however, demanded that the Bank make a revised itemized
proposal.
In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank
would not make the necessary revisions on its counter-proposal, it would be best to
seek a third party assistance. After the break, the Bank presented its revised counter-
proposal.
Diokno stated that, in order for the Bank to make a better offer, the Union should
clearly identify what it wanted to be included in the total economic package. Umali
replied that it was impossible to do so because the Banks counter-proposal was
unacceptable. He furthered asserted that it would have been easier to bargain if the
atmosphere was the same as before, where both panels trusted each other. Diokno
requested the Union panel to refrain from involving personalities and to instead focus on
the negotiation. He suggested that in order to break the impasse, the Union should
prioritize the items it wanted to iron out. Divinagracia stated that the Bank should make
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the first move and make a list of items it wanted to be included in the economic
package. Except for the provisions on signing bonus and uniforms, the Union and the
Bank failed to agree on the remaining economic provisions of the CBA. The Union
declared a deadlock and filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-
NS-06-380-93.
On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP)
and Damages before the Arbitration Branch of the National Labor Relations
Commission (NLRC) in Manila against the Union on June 28, 1993.The Bank alleged
that the Union violated its duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded sky high economic demands, indicative of
blue-sky bargaining. Further, the Union violated its no strike- no lockout clause
by filing a notice of strike before the NCMB. Considering that the filing of notice of
strike was an illegal act, the Union officers should be dismissed. Finally, the Bank
alleged that as a consequence of the illegal act, the Bank suffered nominal and actual
damages and was forced to litigate and hire the services of the lawyer.
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R.
Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order assuming
jurisdiction over the labor dispute at the Bank. The complaint for ULP filed by the Bank
before the NLRC was consolidated with the complaint over which the SOLE assumed
jurisdiction.
After the parties submitted their respective position papers, the SOLE issued an
Order on October 29, 1993, the dispositive portion of which is herein quoted:
WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank
Employees Union NUBE are hereby ordered to execute a collective bargaining
agreement incorporating the dispositions contained herein. The CBA shall be
retroactive to 01 April 1993 and shall remain effective for two years thereafter, or until
such time as a new CBA has superseded it. All provisions in the expired CBA not
expressly modified or not passed upon herein are deemed retained while all new
provisions which are being demanded by either party are deemed denied, but without
prejudice to such agreements as the parties may have arrived at in the meantime.
The Banks charge for unfair labor practice which it originally filed with the NLRC
as NLRC-NCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is
dismissed for lack of merit. On the other hand, the Unions charge for unfair labor
practice is similarly dismissed.
The SOLE dismissed the charges of ULP of both the Union and the Bank,
explaining that both parties failed to substantiate their claims. Dissatisfied, the Union
filed a motion for reconsideration with clarification, while the Bank filed a motion for
reconsideration. On December 16, 1993, the SOLE issued a Resolution denying the
motions. The Union filed a second motion for reconsideration, which was, likewise,
denied on February 10, 1994.
On March 22, 1994, the Bank and the Union signed the CBA. Immediately
thereafter, the wage increase was effected and the signing bonuses based on the
increased wage were distributed to the employees covered by the CBA.
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On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the
Rules of Procedure alleging that the SOLE committed grave abuse of discretion in
finding that there is no ULP in the case at bar.
ISSUE:
Whether or not there is ULP committed by the bank
HELD:
There is no ULP committed by the bank
Arguments of the Union

The Union pointed out that the public respondent failed to rule on the ULP
charges arising from the Banks surface bargaining. The Union contended that the Bank
merely went through the motions of collective bargaining without the intent to reach an
agreement, and made bad faith proposals when it announced that the parties should
begin from a clean slate. It argued that the Bank opened the political provisions up for
grabs, which had the effect of diminishing or obliterating the gains that the Union had
made. The Union also accused the Bank of refusing to disclose material and necessary
data, even after a request was made by the Union to validate its guestimates.
The petitioner asserts that the private respondent committed ULP, i.e.,
interference in the selection of the Unions negotiating panel, when Cielito Diokno, the
Banks Human Resource Manager, suggested to the Unions President Eddie L.
Divinagracia that Jose P. Umali, Jr., President of the NUBE, be excluded from the
Unions negotiating panel. In support of its claim, Divinagracia executed an affidavit,
stating that prior to the commencement of the negotiation, Diokno approached him and
suggested the exclusion of Umali from the Unions negotiating panel, and that during the
first meeting, Diokno stated that the negotiation be kept a family affair.
Ruling of the Court

Article 248(a) of the Labor Code, considers it an unfair labor practice when an
employer interferes, restrains or coerces employees in the exercise of their right to self-
organization or the right to form association. The right to self-organization necessarily
includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or
coerces the Union to exclude from its panel of negotiators a representative of the Union,
and if it can be inferred that the employer adopted the said act to yield adverse effects
on the free exercise to right to self-organization or on the right to collective bargaining of
the employees, ULP under Article 248(a) in connection with Article 243 of the Labor
Code is committed.
In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim.Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion. In the case at bar, the Union bases its claim of interference on the
alleged suggestions of Diokno to exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that the
suggestion made by Diokno to Divinagracia is an anti-union conduct from which it can
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be inferred that the Bank consciously adopted such act to yield adverse effects on the
free exercise of the right to self-organization and collective bargaining of the employees,
especially considering that such was undertaken previous to the commencement of the
negotiation and simultaneously with Divinagracias suggestion that the bank lawyers be
excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process, with
the inclusion of Umali in the Unions negotiating panel, the negotiations pushed through.
The complaint was made only on August 16, 1993 after a deadlock was declared by the
Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation
occurred after the arguments and differences over the economic provisions became
heated and the parties had become frustrated. It happened after the parties started to
involve personalities. As the public respondent noted, passions may rise, and as a
result, suggestions given under less adversarial situations may be colored with
unintended meanings. Such is what appears to have happened in this case.
The Duty to Bargain Collectively

If at all, the suggestion made by Diokno to Divinagracia should be construed as part
of the normal relations and innocent communications, which are all part of the friendly
relations between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP
under Article 248(g) when it engaged in surface bargaining. It alleged that the Bank just
went through the motions of bargaining without any intent of reaching an agreement, as
evident in the Banks counter-proposals. It explained that of the 34 economic provisions
it made, the Bank only made 6 economic counterproposals.Further, as borne by the
minutes of the meetings, the Bank, after indicating the economic provisions it had
rejected, accepted, retained or were open for discussion, refused to make a list of items
it agreed to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating without
any legal intent to reach an agreement. The resolution of surface bargaining allegations
never presents an easy issue. The determination of whether a party has engaged in
unlawful surface bargaining is usually a difficult one because it involves, at bottom, a
question of the intent of the party in question, and usually such intent can only be
inferred from the totality of the challenged party’s conduct both at and away from the
bargaining table. It involves the question of whether an employers conduct
demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that
the Bank had any intention of violating its duty to bargain with the Union. Records show
that after the Union sent its proposal to the Bank on February 17, 1993, the latter replied
with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set
for the settlement of their differences. The minutes of the meetings show that both the
Bank and the Union exchanged economic and non-economic proposals and counter-
proposals.
The Union has not been able to show that the Bank had done acts, both at and
away from the bargaining table, which tend to show that it did not want to reach an
agreement with the Union or to settle the differences between it and
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the Union. Admittedly, the parties were not able to agree and reached a deadlock.
However, it is herein emphasized that the duty to bargain does not compel either party
to agree to a proposal or require the making of a concession. Hence, the parties failure
to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The
inference that respondents did not refuse to bargain collectively with the complaining
union because they accepted some of the demands while they refused the others even
leaving open other demands for future discussion is correct, especially so when those
demands were discussed at a meeting called by respondents themselves precisely in
view of the letter sent by the union on April 29, 1960.
In view of the finding of lack of ULP based on Article 248(g), the accusation that the
Bank made bad faith provisions has no leg to stand on. The records show that the
Banks counter-proposals on the non-economic provisions or political provisions did not
put up for grabs the entire work of the Union and its predecessors. As can be gleaned
from the Banks counter-proposal, there were many provisions which it proposed to be
retained. The revisions on the other provisions were made after the parties had come to
an agreement. Far from buttressing the Unions claim that the Bank made bad-faith
proposals on the non-economic provisions, all these, on the contrary, disprove such
allegations.
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8. KIOK LOY doing business under the name and style SWEDEN ICE
CREAM PLANT vs. NLRC and PAMBANSANG KILUSAN NG PAGGAWA
(KILUSAN) G.R. No. L-54334, January 22, 1986
DOCTRINES:
Unfair labor practice is committed when it is shown that the respondent employer, after
having been served with a written bargaining proposal by the petitioning Union, did not
even bother to submit an answer or reply to the said proposal.
FACTS:
The Pambansang Kilusang Paggawa, a legitimate late labor federation, won and
was subsequently certified in a resolution by the Bureau of Labor Relations as the sole
and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream
Plant.
The Union furnished the Company with two copies of its proposed collective
bargaining agreement. At the same time, it requested the Company for its counter
proposals. Both requests were ignored and remained unacted upon by the Company.
Thereafter, the Union filed a "Notice of Strike", with the Bureau of Labor Relations (BLR)
on ground of unresolved economic issues in collective bargaining.
Conciliation proceedings then followed during the thirty-day statutory cooling-off
period. But all attempts towards an amicable settlement failed.
The case was brought to the National Labor Relations Commission (NLRC) for
compulsory arbitration pursuant to Presidential Decree No. 823, as amended. But the
Company requested for a lot of postponements. NLRC ruled that respondent Sweden
Ice Cream is guilty of unjustified refusal to bargain, in violation of Section (g) Article 248
(now Article 249), of P.D. 442, as amended.
ISSUE: Whether the Company is guilty of unfair labor practice for refusal to bargain
HELD: Yes. Petition dismissed for lack of merit.

Collective bargaining is one of the democratic frameworks under the New Labor
Code, designed to stabilize the relation between labor and management and to create a
climate of sound and stable industrial peace. It is a mutual responsibility of the employer
and the Union and is characterized as a legal obligation.
Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an
employer to refuse "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
grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.
The mechanics of collective bargaining are set in motion only when the following
jurisdictional preconditions are present, namely,
(1) possession of the status of majority representation of the employees'
representative in accordance with any of the means of selection or designation
provided for by the Labor Code;
(2) proof of majority representation; and
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(3) a demand to bargain under Article 251, par. (a) of the New Labor Code.
A Company's refusal to make counter proposal if considered in relation to the entire

bargaining process, may indicate bad faith since the Union's request for a counter
proposal is left unanswered. Besides, petitioner Company's approach and attitude-
stalling the negotiation by a series of postponements, non-appearance at the hearing
conducted, and undue delay in submitting its financial statements, lead to no other
conclusion except that it is unwilling to negotiate and reach an agreement with the
Union.
A Company's refusal to make counter proposal if considered in relation to the entire
bargaining process, may indicate bad faith since the Union's request for a counter
proposal is left unanswered. Besides, petitioner Company's approach and attitude-
stalling the negotiation by a series of postponements, non-appearance at the hearing
conducted, and undue delay in submitting its financial statements, lead to no other
conclusion except that it is unwilling to negotiate and reach an agreement with the
Union.
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9. DIVINE WORD UNIVERSITY OF TACLOBAN vs. SECRETARY OF LABOR
G.R. No. 91915 September 11, 1992
DOCTRINES:
1. “Once an employer has filed a petition for certification election, its active role ceases
and it becomes a mere bystander. Any uncalled-for concern on the part of the
employer may give rise to the suspicion that it is batting for a company union.”
2. “In the absence of a Collective Bargaining Agreement, an employer who is

requested to bargain may collectively may file a petition for certification election any
time except upon a clear showing that one of these two instances exists: (a) the
petition is filed within one year from the date of issuance of a final certification
election result or (b) when a bargaining deadlock had been submitted to conciliation
or arbitration or had become the subject of a valid notice of strike or lockout.
However such right vested upon the employer may be withheld upon clear showing
of bad faith bargaining.”
3. A "deadlock" is defined as the "counteraction of things producing entire stoppage: a

state of inaction or of neutralization caused by the opposition of persons or of
factions (as in government or a voting body): standstill." There is a deadlock when
there is a "complete blocking or stoppage resulting from the action of equal and
opposed forces; as, the deadlock of a jury or legislature." The word is synonymous
with the word impasse which, within the meaning of the American federal labor laws,
"presupposes reasonable effort at good faith bargaining which, despite noble
intentions, does not conclude in agreement between the parties."
FACTS:
On September 6, 1984, Med-Arbiter Elorcha certified the Divine Word University
Employees Union (DWUEU) as the sole and exclusive bargaining agent of the Divine
Word University (University). DWUEU submitted its collective bargaining proposals. The
University replied and requested a preliminary conference to be held on May 28, 1985.
However, two days before the scheduled conference or on May 26, 1985, DWUEU’s
resigned vice-president wrote a letter addressed to the University unilaterally
withdrawing the CBA proposals. Consequently, the preliminary conference was
cancelled.
After almost three years, or on March 11, 1988, DWUEU, which had by then
affiliated with the Associated Labor Union, requested a conference with the University
for the purpose of continuing the collective bargaining negotiations. Not having heard
from the University, DWUEU-ALU sent a follow-up letter reiterating its request for a
conference. Despite the letter, the University persisted in maintaining silence.
On April 25, 1988, DWUEU-ALU filed with the NCMB a notice of strike on the
grounds of bargaining deadlock and unfair labor practice acts. The conferences which
were held after the filing of the notice of strike led to the conclusion of an agreement
between the University and DWUEU-ALU on May 10, 1888, among others, that the
Union will submit their CBA proposals on Friday, May 13, 1988 for whatever action
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management will take. However, it turned out that an hour before the May 10, 1988
agreement was concluded, the University had filed a petition for certification election
with the Region VIII office of the Department of Labor and Employment.
Med-Arbiter Rodolfo S. Milado, acting on the University’s petition for certification
election, issued an Order directing the conduct of a certification election to be
participated in by DWUEU-ALU and "no union," after he found the petition to be "well-
supported in fact and in law." Said Order prompted the DWUEU-ALU to file with the
Secretary of Labor an urgent motion seeking to enjoin Milado from further acting on the
matter of the certification election which the Secretary granted. Thus, the Secretary of
Labor resolved the issues finding that a bargaining deadlock exists. The University filed
a motion for the reconsideration of said Order. It was opposed by the DWUEU-ALU. The
motion for the reconsideration was denied. Hence, the University had recourse to
instant petition.
ISSUE:
Is the Secretary of Labor correct in its finding that there was a bargaining deadlock?
HELD:
No, there is no bargaining deadlock. The provisions of the Labor Code make it plain that
in the absence of a collective bargaining agreement, an employer who is requested to
bargain collectively may file a petition for certification election any time except upon a
clear showing that one of these two instances exists: (a) the petition is filed within one
year from the date of issuance of a final certification election result or (b) when a
bargaining deadlock had been submitted to conciliation or arbitration or had become the
subject of a valid notice of strike or lockout.
A "deadlock" is defined as the "counteraction of things producing entire stoppage:
a state of inaction or of neutralization caused by the opposition of persons or of factions
(as in government or a voting body): standstill." There is a deadlock when there is a
"complete blocking or stoppage resulting from the action of equal and opposed forces;
as, the deadlock of a jury or legislature." The word is synonymous with the word
impasse which, within the meaning of the American federal labor laws, "presupposes
reasonable effort at good faith bargaining which, despite noble intentions, does not
conclude in agreement between the parties."
A thorough study of the records reveals that there was no "reasonable effort at
good faith bargaining" specially on the part of the University. Its indifferent attitude
towards collective bargaining inevitably resulted in the failure of the parties to arrive at
an agreement. As it was evident that unilateral moves were being undertaken only by
the DWUEU-ALU, there was no "counteraction" of forces or an impasse to speak of.
While collective bargaining should be initiated by the union, there is a corresponding
responsibility on the part of the employer to respond in some manner to such acts.
However, the court cannot grant petitioner’s petition. While the Court recognizes
that technically, the University has the right to file the petition for certification election as
there was no bargaining deadlock to speak of, to grant its prayer that the herein
assailed Orders be annulled would put an unjustified premium on bad faith bargaining.
Hence, petitioner’s contention that the DWUEU-ALU’s proposals may not be unilaterally
imposed on it on the ground that a collective bargaining agreement is a contract
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wherein the consent of both parties is indispensable is devoid of merit. A similar
argument had already been disregarded in the case of Kiok Loy v. NLRC, where we
upheld the order of the NLRC declaring the union’s draft CBA proposal as the collective
agreement which should govern the relationship between the parties. That being the
case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its inaction which
bespeak its insincerity, it has forfeited whatever rights it could have asserted as an
employer.
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10. JACKBILT INDUSTRIES INC v JACKBILT EMPLOYEES WORKERS UNION-
NAFLU-KMU
G.R. Nos. 171618-19, March 20, 2009
DOCTRINES:
1. Article 264(e) of the Labor Code prohibits any person engaged in picketing from
obstructing the free ingress to and egress from the employer’s premises. Since
respondent was found in the NLRC decision to have prevented the free entry into
and exit of vehicles from petitioner’s compound, respondent’s officers and
employees clearly committed illegal acts in the course of the strike.
2. The use of unlawful means in the course of a strike renders such strike illegal.
FACTS:
Due to the adverse effects of the Asian economic crisis on the construction
industry beginning 1997, Jackbilt Industries, Inc. (petitioner) decided to temporarily stop
its business of producing concrete hollow blocks, compelling most of its employees to
go on leave for six months.
Jackbilt Employees Workers Union (respondent) immediately protested the
temporary shutdown. Respondent claimed that petitioner halted production to avoid its
duty to bargain collectively because its CBA with petitioner was expiring during the
period of the shutdown. The shutdown was allegedly motivated by anti-union
sentiments. Respondent went on strike. Its officers and members picketed petitioner’s
main gates and deliberately prevented persons and vehicles from going into and out of
the compound.
Petitioner filed a petition for injunction with a prayer for the issuance of a TRO in
the NLRC. It sought to enjoin respondent from obstructing free entry to and exit from its
production facility. NLRC issued a TRO directing the respondents to refrain from
preventing access to petitioner’s property.
Respondent union violated the said TRO. Union members, on various occasions,
stopped and inspected private vehicles entering and exiting petitioner’s production
facility. NLRC ordered the issuance of a writ of preliminary injunction.
Petitioner sent individual memoranda to the officers and members of respondent who
participated in the strike ordering them to explain why they should not be dismissed for
committing illegal acts in the course of a strike. Respondent ignored petitioner’s
memoranda despite the extensions granted. Petitioner dismissed the concerned officers
and members and barred them from entering its premises.
Respondent filed complaints for illegal lockout, runaway shop and damages,
ULP, illegal dismissal and attorney’s fees, and refusal to bargain on behalf of its officers
and members against petitioner and its corporate officers. It argued that there was no
basis for the temporary partial shutdown as it was undertaken by petitioner to avoid its
duty to bargain collectively.
Petitioner asserted that because respondent conducted a strike without
observing the procedural requirements the strike was illegal. Petitioner argued that it
validly dismissed respondent’s officers and employees for committing illegal acts in the
course of a strike based on the NLRC decision.
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Labor Arbiter: Dismissed the complaints for illegal lockout and unfair labor
practice for lack of merit. However, because petitioner did not file a petition to declare
the strike illegal before terminating respondent’s officers and employees, it was found
guilty of illegal dismissal.
NLRC: On appeal, modified the LA decision and held that only petitioner should
be liable for monetary awards granted to respondent’s officers and members.
Petitioner assailed the said NLRC decision via a petition for certiorari in the CA. It
asserted that the NLRC committed grave abuse of discretion in disregarding former
decision wherein respondent’s officers and employees were found to have committed
illegal acts in the course of the strike. In view thereof and pursuant to Article 264(a)(3),
petitioner validly terminated respondent’s officers and employees.
CA: Dismissed the petition but modified the former NLRC decision. Because
most of affected employees were union members, the CA held that the temporary
shutdown was moved by anti-union sentiments. Petitioner was therefore guilty of ULP
and was ordered to pay respondent’s officers and employee’s backwages and
separation pay of one month salary for every year of credited service.
ISSUE:
Whether the filing of a petition with the LA to declare a strike illegal is a condition sine
qua non for the valid termination of employees who commit an illegal act in the course
of such strike?
HELD:
No, the filing of a petition with the LA to declare a strike illegal is not a condition sine
qua non for the valid termination of employees who committed an illegal act in the
course of such strike.
Article 264(e) of the Labor Code prohibits any person engaged in picketing from
obstructing the free ingress to and egress from the employer’s premises. Since
respondent was found in the NLRC decision to have prevented the free entry into and
exit of vehicles from petitioner’s compound, respondent’s officers and employees clearly
committed illegal acts in the course of the strike.
The use of unlawful means in the course of a strike renders such strike illegal.
Therefore, pursuant to the principle of conclusiveness of judgment, the strike was ipso
facto illegal. The filing of a petition to declare the strike illegal was thus unnecessary.
The Court upheld the legality of the dismissal of respondent’s officers and employees.
Article 264 of the Labor Code further provides that an employer may terminate
employees found to have committed illegal acts in the course of a strike. Petitioner
clearly had the legal right to terminate respondent’s officers and employees.

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LABOR LAW REVIEW

IV. LABOR RELATIONS LAW

3. Bargaining Agent and Certification Election

4. Union Security Arrangements

7. Strikes & Lockouts

According to the petitioner, to effectively market its products, the Company

3. The act of non-compliance with the procedure on withdrawal is premised on purely

In the absence of enforceable provisions in the federation's constitution

2. Illegal. Unfair Labor Practice.

1. RIGHT TO SELF-ORGANIZATION AND UNION MEMBERSHIP. —

2. UNION ELECTION DISTINGUISHED FROM CERTIFICATION ELECTION;

3. UNION'S CONSTITUTION AND BY LAWS. — The importance of a union's

Union Election v. Certification Election

2. Registration based on false and fraudulent statements and documents confer no

Third Division of the respondent Commission: affirmed the Decision of the

ISSUE: Whether or not the retrenchment is valid.

ART. 249. Unfair labor practices of employers. — It shall be

3. Lockout is the temporary refusal of employer to furnish work as a result of an

4. The purpose of the notice requirement is to enable the proper authorities to

While the law acknowledges the management prerogative of closing the

Article 283 further provides:

It is settled that in case of closures or cessation of operation of business

Arguments of the Union

Ruling of the Court

The Duty to Bargain Collectively

HELD: Yes. Petition dismissed for lack of merit.

A Company's refusal to make counter proposal if considered in relation to the entire

2. “In the absence of a Collective Bargaining Agreement, an employer who is

3. A "deadlock" is defined as the "counteraction of things producing entire stoppage: a

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