ISSUE: Whether the grant by management of profit sharing
WISE and CO
FACTS: The management issued a memorandum circular
introducing a profit sharing scheme for its managers and
supervisors the initial distribution. The respondent union
wrote petitioner asking for participation in this scheme but it
was denied by petitioner on the ground that it had to adhere
strictly to the CBA. Petitioner distributed the profit sharing
benefit not only to managers and supervisors but also to all
other rank and file employees not covered by the CBA. This
caused the respondent union to file a notice of strike alleging
that petitioner was guilty of ULP because the union members
were discriminated against in the grant of the profit sharing
benefits. Management refused to proceed with the CBA
negotiations unless the last notice of strike was first resolved.
The union agreed to postpone discussions on the profit
sharing demand until a new CBA was concluded. After a series
of conciliation conferences, the parties agreed to settle the
dispute through voluntary arbitration. The voluntary
arbitrator issued an award ordering petitioner to likewise
extend the benefits of the 1987 profit sharing scheme to the
members of respondent union. Hence, this petition.
benefits to its non-union member employees is
discriminatory against its workers who are union members.
HELD: NO. Under the CBA between the parties, there is a
clause where the employees are classified into those who are
members of the union and those who are not. The grant by
petitioner of profit sharing benefits to the employees
outside the “bargaining unit” falls under the ambit of its
managerial prerogative. It appears to have been done in
good faith and without ulterior motive. In the case of the
union members, they derive their benefits from the terms
and conditions of the CBA contract which constitute the law
between the contracting parties. Both the employer and the
union members are bound by such agreement. There can be
no discrimination committed by petitioner thereby as the
situation of the union employees are different and distinct
from the non-union employees. Indeed, discrimination per se
is not unlawful. There can be no discrimination where the
employees concerned are NOT similarly situated.
265 - E-SHURN CORPORATION v. ME-SHURN WORKERS
UNION
J. PANGANIBAN; January 11, 2005
Facts:
 The regular rank and file employees of Me-Shurn
Corporation organized Me-Shurn Workers Union-FSM,
an affiliate of the February Six Movement (FSM).
 Respondent union had a pending application for
registration with the BLR. Ten days later, Petitioner
Corporation started placing on forced leave all the rank
and file employees who were members of the union‘s
bargaining unit.
 Respondent union filed a Petition for Certification
Election with the Med-Arbitration Unit of the DOLE. The
corporation filed a comment stating that it would
temporarily lay off employees and cease operations, on
account of its alleged inability to meet the export
quota required by the Board of Investment.
 While the Petition was pending, 184 union members
allegedly submitted a retraction/withdrawal thereof.
The med-arbiter dismissed the Petition.
 DOLE Undersecretary granted the union‘s appeal and
ordered the holding of a certification election among
the rank and file employees of the corporation.
 Respondent union filed a Notice of Strike against
petitioner corporation on the ground of unfair labor
practice (illegal lockout and union busting). - Chou
Fang Kuen (alias Sammy Chou, the other petitioner
herein) and Raquel Lamayra (the Filipino administrative
manager of the corporation) imposed a precondition
for the resumption of operation and the rehiring of
laid off workers. He allegedly required the remaining
union officers to sign an Agreement containing a
guarantee that upon their return to work, no union or
labor organization would be organized. Instead, the
union officers were to serve as mediators between
labor and management.
 The union reorganized and elected a new set of
officers. Respondent Rosalina Cruz was elected
president. Thereafter, it filed two Complaints charging
petitioner corporation with unfair labor practice, illegal
dismissal, underpayment of wages and deficiency in
separation pay, for which they prayed for damages and
attorney‘s fees.
 The corporation countered that because of economic
reversals, it was compelled to close and cease its
operations to prevent serious business losses; that
under Article 283 of the Labor Code, it had the right to
do so; that in August 1998, it had paid its 342 laid off
employees separation pay and benefits in the total
amount of P1,682,863.88; and that by virtue of these
 payments, the cases had already become moot and
academic. It also averred that its resumption of
operations in September 1998 had been announced
and posted at the Bataan Export Processing Zone, and
that some of the former employees had reapplied.
Issue:
2. YES. The DOLE would not have entertained the Petition
1. WON the dismissal of the employees of petitioner
Meshurn Corporation is for an authorized cause.
2. WON the respondents can maintain a suit against
petitioners.
Held:
1. NO. The reason invoked by petitioners to justify the
cessation of corporate operations was alleged business
losses. Yet, other than generally referring to the
financial crisis in 1998 and to their supposed difficulty in
obtaining an export quota, interestingly, they never
presented any report on the financial operations of the
corporation during the period before its shutdown.
Neither did they submit any credible evidence to
substantiate their allegation of business losses. - Basic is
the rule in termination cases that the employer bears
the burden of showing that the dismissal was for a just
or authorized cause. Otherwise, the dismissal is
deemed unjustified.
Apropos this responsibility, petitioner corporation
should have presented clear and convincing evidence of
imminent economic or business reversals as a form of
affirmative defense in the proceedings before the labor
arbiter or, under justifiable circumstances, even on
appeal with the NLRC.
if the union were not a legitimate labor organization
within the meaning of the Labor Code. Under this Code,
in an unorganized establishment, only a legitimate
union may file a petition for certification election.
Hence, while it is not clear from the record whether
respondent union is a legitimate organization, we are
not readily inclined to believe otherwise, especially in
the light of the pro-labor policies enshrined in the
Constitution and the Labor Code.
Verily, the union has the requisite personality to sue in
its own name in order to challenge the unfair labor
practice committed by petitioners against it and its
members.
 It would be an unwarranted impairment of the right to
self-organization through formation of labor
associations if thereafter such collective entities would
be barred from instituting action in their representative
capacity.
Finally, in view of the discriminatory acts committed
by petitioners against respondent union prior to the
holding of the certification election-- acts that included
their immediate grant of exclusive recognition to
another union as a bargaining agent despite the
pending Petition for certification election -- the results
of that election cannot be said to constitute a
repudiation by the affected employees of the union‘s
right to represent them in the present case.
266 Complex Electronics v. NLRC
Facts:
- Complex Electronics is a subcontracting manufacturer
of electronic products, where its customers send job
orders, materials and even consign equipment to
Complex so that its employees can manufacture the
requests
- Complex Electronics decided to close down the
operations of its Lite-On Line products following a
failure to reduce its prices in Taiwan
- It promised the employees that retrenchment will not
occur until after 3/9/92; and give retrenchment pay
should termination occur equivalent to half a month for
every year of service
- The Union pushed for retrenchment pay of 1 month for
every year of service which the company refused
- The company filed a notice of closure with the DOLE
and the retrenchment of 97 employees
- The Union filed a notice of strike with the NCMB
- 2 days after, the Union conducted a strike vote which
resulted in a yes vote
- The company pulled out its machinery, equipment and
materials from the premises of Lite-On to another
company (Ionics) led by the same President, Lawrence
Qua
- The Union filed a complaint with the LA for ULP, illegal
lockout, money claims and damages
o Surprise pull out from the company premises
which resulted to the sudden closure of the
company was in violation of Sec 3 and 8, Rule
XIII, Book V LC, and the existing CBA
o Lawrence Qua is the president of both
companies; same set of directors
 o Business has not ceased at Complex but was
merely transferred to Ionics, a runaway shop
o Complex is a majority stockholder of Ionics
(1.2M capital subscription, compared to 800k of
the other stockholders combined)
- Complex argued it was compelled to cease operations:
o Since the notice of strike by the Union, there was
a significant decline in the quality and the
quantity of its products
o Delivery schedules were not met prompting the
customers to sue Complex
o The pullout was due to fear that the machinery,
equipment and materials would be rendered
inoperative and unproductive due to the
impending strike of workers
- Ionics countered:
o Separate juridical entity from Complex
o Although it admitted that Qua was its president
of both companies, it denied that he had stocks
with the company
- LA: Complex, Ionics and Qua are ordered to reinstate
531 employees of Lite-On; if not possible, separation
pay at 1 month per year of service; solidarily pay moral
damages; charge of slowdown strike filed by Complex
against Union is hereby dismissed for lack of merit
Issue(s):
w/n Ionics is merely a runaway shop
Held:
No. 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. It has been in existence since
July 5, 1984 (8 years prior to the dispute). 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. have expressed pull-out of business from respondent Complex
Mere ownership by a single stockholder or by another while most of the customer’s have not and, therefore, it is not
corporation of all or nearly all of the capital stock of a justified to close operation cannot be upheld. The
corporation is not of itself sufficient ground for disregarding determination to cease operation is a prerogative of
the separate corporate personality. management that is usually not interfered with by the State
as no employer can be required to continue operating at a loss
At first glance after reading the decision a quo, it would seem
simply to maintain the workers in employment. That would
that the closure of respondent’s operation is not
be taking of property without due process of law which the
justified. However, a deeper examination of the records along
employer has the right to resist.
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 267 NLRB v. General Electric Company
to circumvent the provisions of the Labor Code on
termination of employment. The closure of operation by 267 - NATIONAL LABOR RELATIONS BOARD, Petitioner,
Complex on April 7, 1992 was not without valid v. GENERAL ELECTRIC COMPANY, Respondent, and
reasons. Customers of respondent alarmed by the pending International Union of Electrical, Radio, and Machine
labor dispute and the imminent strike to be foisted by the Workers, AFL-CIO, Intervenor.
union, as shown by their strike vote, directed respondent
October 28, 1969
Complex to pull-out its equipment, machinery and materials
Waterman, Friendly, and Kaufman, CIRCUIT JUDGES. (US
to other safe bonded warehouse. Respondent being mere
Court of Appeals Second Circuit)
consignees of the equipment, machinery and materials were
without any recourse but to oblige the customers’
FACTS:
directive. The pull-out was effected on April 6, 1992. We can
NOTE: This case involves a complicated series of events
see here that Complex’s action, standing alone, will not result
between GE and the Union that spans for almost a decade
in illegal closure that would cause the illegal dismissal of the
that culminated in a charge of Unfair Labor Practice against
complainant workers. Hence, the Labor Arbiter’s conclusion
that since there were only 2 of respondent’s customers who
the former before the NLRB. This is the best
simplified/condensed version that I could come up with. 
 General Electric (the famous manufacturer of appliances
with factories all over the USA) employed 250,000 people
in 1960, 120,000 of which were unionized.
 The IUE (the Union) is an international union, affiliated
with the AFL-CIO, represented some 70,000 of the 120,000
unionized GE employees and was the largest single union
with whom GE dealt.
o There were hundreds of other unions that GE dealt with
but they were far smaller than the IUE.
 Before 1950, UE was the major union in GE. However, an
impasse in the negotiations with the company precipitated
a crippling strike and resulted in two things:
o IUE split off from UE when the latter was expelled from
the AFL-CIO for charges of communism.
o GE changed its approach and attitude towards
employee relations with a tactic called BOULWAREISM.
 GIST OF BOULWAREISM:
o Named after one of GE’s VPs, Lemuel Boulware, it is
based on the company’s belief that it was no longer
enough to act in a manner that it thought becoming for
a "good" employer; it had to insure that the employees
recognized and appreciated the Company's efforts in
their behalf.
o Threefold plan under the Boulwareism scheme:
 GE solicited comments from its local management
personnel on the desires of the work force, and the
type and level of benefits that they expected.
 Comments were then translated into specific
proposals, and their cost and effectiveness
researched, in order to formulate a "product" that
would be attractive to the employees, and within the
Company's means.
 GE took its "product"(a series of fully-formed
bargaining proposals) and "sold" it to its employees
and the general public through a veritable avalanche
of publicity (newsletters, ads, radio, TV, etc.) -> This
part was highly criticized.
o GE described its proposals as a "fair, firm offer (as
opposed to presenting outrageous proposals from
both sides)," characteristic of its desire to "do right
voluntarily," without the need for any union pressure or
strike because it would take all the facts into
consideration, and make that offer it thought right
under all the circumstances.
o Though willing to accept Union suggestions based on
facts the Company might have overlooked, once the
basic outlines of the proposal had been set, the mere
fact that the Union disagreed would be no ground for
change. -> FIRM basically meant take-it-or-leave-it on
 the part of GE because it no longer wanted to haggle
with the Union.
o As part of the Boulwareism approach, GE also
implemented a policy of guaranteeing uniformity
among unions, and between union and non-union
employees wherein all unions received substantially the
same offer, and unrepresented employees were assured
that they would gain nothing through representation
that they would not have had in any case.
 In 1955, GE and the IUE (through its GE Conference Board
as representative -> board was composed of delegates
from IUE locals; they were basically the national
negotiators of the Union) signed a 5 year CBA.
1960 NEGOTIATIONS:
 45 days before the expiration of the 1955 CBA,
negotiations resumed between GE and IUE for a 1960 CBA.
-> The events that transpired during these negotiations
gave rise to the specific charges of ULP against the
company.
 GE once more relied heavily on its Boulwareism approach.
 Specifically, there were 3 acts of GE pursuant to its
Boulwareism approach which IUE alleged as acts of Unfair
Labor Practice in violation of the National Labor Relations
Act during the 1960 negotiations:
1. UNILATERAL INSURANCE PROPOSAL
o Even before negotiations began, GE informed the Union
that it would unilaterally institute a personal accident
insurance proposal (in addition to the insurance already
provided by GE) which would go into effect before a
CBA was reached -> If the IUE objected, GE would not
offer the insurance to its members; it would, however,
make it available to other employees regardless of the
stand taken by the IUE.
2. REFUSAL TO FURNISH INFORMATION
o In essence, what happened was that during the pre-
negotiation period, GE was quite cooperative in aiding
the Union to secure information (presumably to guide it
in making its proposals).
o GE, in fact, submitted that it spent over $100,000 in
fulfilling Union requests because it sometimes had to
get the information needed from its various local plants.
-> Information requested commonly related to financial
status of the company, etc.
o However, once formal negotiations began, GE’s
attitude changed in that whenever the Union would
propose a particular benefit, Company negotiators
would label it as "astronomical," or "costly," and when
pressed by the Union for figures (relating to: (A) cost
per employee of proposed insurance benefits; (B) cost
per employee of proposed pension benefits; (C), (D)
number of employees likely to benefit from the
 Company's income extension aid (IEA) program; (E)
number of employees with 20 or 25 years of continuous
service) to back up their cost criticisms, would respond
with "we talk level of benefits, not costs."
3. BARGAINING DIRECTLY WITH LOCALS
o Before the 1960 negotiations, GE and the IUE had a
consistent pattern of national negotiations for over ten
years wherein the company recognized and dealt with
IUE-GE Conference Board as representative of all IUE
locals.
o However, once a strike became imminent during the
negotiations, GE abandoned this pattern, and dealt
separately with several of the IUE locals.
o It basically offered the local IUE chapters (in various
states all over the USA) better benefits and
protection if they would not participate in the strike
called upon by the national representatives of IUE.
 NLRB: held that GE was guilty of ULP
 GE filed a Petition for Review before the US Court of
Appeals Second Circuit
ISSUES:
WON GE was guilty of Unfair Labor Practice
HELD:
Yes, GE was guilty of Unfair Labor Practice and was lacking in
good faith during the negotiations.
RATIO:
1. UNILATERAL INSURANCE PROPOSAL – UNFAIR LABOR
PRACTICE
 According to the Court, it was wrong for GE to unilaterally
hold out the insurance proposal as an inducement on a
take-it-or-leave-it basis upon the union.
o It creates divisive tensions within the Union; employees
with hazardous occupations will favor the proposal,
while those with routine tasks will object. -> Whichever
way the Union moves, it loses ground with some part of
its constituency.
o Union democracy is not furthered by permitting the
Company to pick the Union apart piece by piece.
o The Court said that the same is also true where there
are both union and non-union employees. -> If the
Union refuses the benefit, then it may appear, at least
in the short run, to have disadvantaged its members
vis-à-vis nonmembers. Thus it may be forced to
sacrifice long-term goals to avoid short-term
dissatisfaction.
 In the context of this case, where the Company's tactics
seemed so clearly designed to show the employees that
the Union could win them nothing more than the Company
 was prepared to offer, it is even more apparent that a  According to the Court, the rationale for this stance is that
unilateral offer — over which the Union may not bargain if the purpose of collective bargaining is to promote the
— diminishes the rewards and the importance of the "rational exchange of facts and arguments" that will
bargaining at the end of the contract period. measurably increase the chance for amicable agreement,
o Thus, the Union's ability to function as a bargaining then sham discussions in which unsubstantiated reasons
representative is seriously impaired. -> Indeed, such are substituted for genuine arguments should be
conduct amounts to a declaration on the part of the anathema.
Company that not only the Union, but the process of  A union weighing wages against benefits, or one form of
collective bargaining itself may be dispensed with. benefit against another, should receive answers to its
 The Court said that, as laid down in the case of Equitable genuine non-burdensome requests for cost information.
Insurance Co., if an employer wishes to increase benefits -> If the Union were denied such data, it would be unable
during the term of a contract in favor of non-union to bargain intelligently, and arrive at sensible and reasoned
employees, he must be prepared to bargain with the decisions, particularly those involving reallocation of
union. benefits within GE's cost framework.
 The Court also rejected GE’s claim that some of the
2. REFUSAL TO FURNISH INFORMATION – UNFAIR LABOR information would have been difficult or expensive to
PRACTICE obtain in the form requested.
 The Court also found that GE’s vague responses to union o The Court found that GE had most of the information in
request for information was also unfair labor practice. some form that would have been useful to the Union,
 Citing NLRB v. Truitt, it said that “good-faith bargaining and easily could have either presented it in that form,
necessarily requires that claims made by either bargainer or at least advised the Union that it had other relevant
should be honest claims. This is true about an asserted information available.
inability to pay an increase in wages. If such an argument
is important enough to present in the give and take of 3. DIRECTLY BARGAINING WITH LOCALS
bargaining, it is important enough to require some sort of
proof of its accuracy."
 The Court said that GE committed an unfair labor practice  While GE may have believed that it was acting within its
when it went behind the backs of the national negotiators "rights" in offering a take-it-or-leave-it proposal, doing so
of IUE and offered separate peace settlements to locals. may still be some evidence of lack of good faith.
 Citing the case of Medo Supply vs. NLRB, the Court pointed o Given the effects of take-it-or-leave-it proposals on the
out that it did not even matter if it were the employee- Union, an inference may be made of the presence of
union members who first initiated the bypassing of anti-Union animus, and in conjunction with other
national negotiators. similar conduct could reasonably discern a pattern of
o Bargaining representatives of the union are exclusive. illegal activity designed primarily to subvert the Union.
 In this case, GE failed to respect the status of the IUE  The Court also found that during the negotiations GE
national negotiators as the exclusive bargaining occasionally took untenable and unreasonable positions
representative of the union members. and then defended them, with no apparent purpose other
than to avoid yielding to the Union.
4. OVERALL FAILURE TO BARGAIN IN GOOD FAITH  The Court also sustained the NLRB findings that when it
 The US CA sustained the NLRB’s finding that GE was guilty became apparent that IUE had to end its strike and
of unfair labor practice based on the totality of concede to GE's terms, the Company continued to display a
circumstances: stiff and unbending patriarchal posture hardly consistent
o a take-it-or-leave-it approach ("firm, fair offer") to with "common willingness among the parties to discuss
negotiations in general which emphasized both the freely and fully their respective claims and demands and,
powerlessness and uselessness of the Union to its when these are opposed, to justify them on reason. -> It
members, and insisted that IUE agree to the terms it proposed.
o a communications program that pictured the Company  The Court also rejected GE’s argument that it made so
as the true defender of the employees' interests, many concessions in the course of negotiations, even ones
further denigrating the Union, and sharply curbing the it was not obliged to make under the National Labor
Company's ability to change its own position. Relations Act, as a sign of good faith.
o On close examination, however, few of the alleged
concessions turn out to have a great deal of substance.
 All of these, become more meaningful when understood in
relation to GE’s aggressive publicity program (Boulware
approach)
o Through this, their "product" or "firm, fair offer" must
be marketed vigorously to the "consumers" or
employees, to convince them that the Company, and
not the Union, is their true representative.
o GE chose to rely "entirely" on its communications
program to the virtual exclusion of genuine
negotiations, which it sought to evade by any means
possible. -> The aim was to deal with the Union through
the employees, rather than with the employees through
the Union.
 While it is clear under the law that the NLRB is not to
control the substantive terms of a CBA, nonetheless the
parties must do more than meet.
o Citing the NLRB decision, the US CA said that the
"employer is obliged to make some reasonable effort in
some direction to compose his differences with the
union, if § 8(a) (5) of the National Labor Relations Act is
to be read as imposing any substantial obligation at all."
-> desire to reach agreement may mean different
things to different people, but in the context of a
meaningful and purposeful reading of section 8(a) (5)
it must mean more than a willingness to sign a piece of
paper.
o A pattern of conduct by which one party makes it
virtually impossible for him to respond to the other —
knowing that he is doing so deliberately — should be
condemned by the same rationale that prohibits
"going through the motions" with a "predetermined
resolve not to budge from an initial position."
Petition for Review DENIED.
Digested by: Lindsey Supremo Fabella
268 FASAP v. PAL
268 FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF
THE PHILIPPINES (FASAP), petitioner, vs. PHILIPPINE
AIRLINES, INC.,
PATRIA CHIONG and COURT OF APPEALS, respondents.
Ynares-Santiago, J.
Topic: ULP - Employer And Labor Organization Acts Violative
Of Right To Collective Bargaining – Violate CBA
FACTS: FASAP is the duly certified collective bargaining
representative of PAL flight attendants and stewards (PAL
cabin crew personnel). PAL retrenched 5000 of its employees,
including more than 1,400 of its cabin crew personnel, which
retrenchment scheme was allegedly for the purpose of
cutting costs and mitigating huge financial losses as a result
of a downturn in the airline industry brought about by the
Asian financial crisis. PAL claimed to have incurred about P90
billion in liabilities, while its assets stood at P85 billion.
In implementing the retrenchment scheme, PAL adopted
“Plan 14” (PAL’s fleet of aircraft was from 54 to 14, requiring
the services of only 654 cabin crew personnel). PAL admitted
that the retrenchment was wholly premised upon such
reduction in fleet and to the strike staged by PAL pilots, since
this action also translated into a reduction of flights. The
scheme resulted in savings of about P24 million per month,
which would greatly alleviate its financial crisis.
Prior to the full implementation of said program, FASAP and
PAL conducted a series of consultations and meetings and
explored all possibilities of cushioning the impact of the
impending reduction in cabin crew personnel. However, they
failed to agree on how the scheme would be implemented.
Thus, PAL unilaterally resolved to utilize the criteria set forth
in Sec. 112 of the PAL-FASAP CBA: that is, retrenchment shall
be based on the individual employee’s efficiency rating and
seniority.
PAL determined the efficiency ratings through an evaluation 2 days after PAL ceased its operations and sent notices of
of the employee’s overall performance for the year 1997 termination to its employees, the latter, through the PALEA
alone; their respective performance during the previous
years (whole duration of service with PAL) was not
considered. The factors taken into account on whether to
retrench, demote or retain the employee were: 1) the
existence of excess sick leaves; 2) crew member’s being
physically overweight; 3) seniority; and 4) previous
suspensions or warnings imposed.
While consultations between FASAP and PAL were ongoing,
PAL began implementing the program by initially terminating
the services of 140 probationary cabin attendants, only to
rehire them again later and their employment made
permanent and regular. 3 months later, however, PAL carried
out the retrenchment of its more than 1,400 cabin crew
personnel.
A month prior to said retrenchment, PAL was placed under
corporate rehabilitation and a rehabilitation plan was
approved by the SEC. Later, PAL, through its CEO Lucio Tan,
made an offer to transfer shares of stock to its employees
and 3 seats in its BOD on the condition that all the existing
CBAs with its employees would be suspended for 10 years,
but this was rejected by the employees. Thereafter, PAL
informed them that it was shutting down operations despite
the previous approval of its rehabilitation plan.
board, sought the intervention of then President Joseph retrenchment program being implemented. PAL filed a
Estrada. PALEA offered a 10-year moratorium on strikes and Motion to Dismiss.
similar actions and a waiver of some economic benefits in
Labor Arbiter: Denied motion to dismiss. Issued a writ of
the existing CBA. Lucio Tan rejected this counter-offer. The
preliminary injunction against PAL’s implementation of its
PALEA board again wrote the President proposing terms and
retrenchment program Ordered reinstatement of retrenched
conditions, which was later ratified by the PAL employees in
PAL employee-members of FASAP with payment of
a referendum. Thereafter, PAL resumed domestic operations
backwages, moral and exemplary damages and attorney’s
and then international flights as well.
fees.
5 months after the mass dismissal of the cabin crew
NLRC: Reversed LA. Also denied FASAP’s motion for
personnel, PAL began recalling to services those it had
reconsideration.
previously retrenched. PAL claims to have recalled 820 of the
retrenched cabin crew personnel. FASAP, however, claims that CA: Affirmed NLRC.
only 80 were recalled. PAL submitted a “stand-alone”
ISSUE: Whether PAL’s retrenchment scheme was justified. 
rehabilitation plan to the SEC by which it undertook a
YES!!!!
recovery on its own while keeping its options open for the
entry of a strategic partner in the future. Accordingly, it RATIO: The law recognizes the right of every business entity
submitted the plan with a proposed revised business and to reduce its work force if the same is made necessary by
financial restructuring plan which required the infusion of compelling economic factors which would endanger its
US$200 million in new equity into the airline. SEC approved existence or stability. Where appropriate and where
this plan and appointed a permanent rehabilitation receiver conditions are in accord with law and jurisprudence, the Court
for PAL. has authorized valid reductions in the work force to forestall
business losses, the hemorrhaging of capital, or even to
FASAP filed a complaint against PAL and Patria T. Chiong for
recognize an obvious reduction in the volume of business
ULP, illegal retrenchment with claims for reinstatement and
which has rendered certain employees redundant1.
payment of salaries, allowances and backwages of affected
1
FASAP members, damages with a prayer to enjoin the ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing
Nevertheless, while it is true that the exercise of said right is a
prerogative of management, there must be faithful
compliance with substantive and procedural requirements of
the law, for retrenchment strikes at the very heart of the
workers’ employment, the lifeblood upon which he and his
family owe their survival. Retrenchment is only a measure of
last resort, when other less drastic means have been tried
and found to be inadequate.
The burden falls upon the employer to prove economic or
business losses with sufficient supporting evidence. Failure to
prove these reverses or losses necessarily means that the
employee’s dismissal was justified. Any claim of actual or
potential business losses must satisfy certain established
standards, all of which must concur, before any reduction of
personnel becomes legal. PAL in this case complied with the
1st, 4th and 5th elements:
(1) That retrenchment is reasonably necessary and likely to
prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real,
or if only expected, are reasonably imminent as perceived
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (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.
objectively and in good faith by the employer;  Sliding
incomes or decreasing gross revenues are not necessarily
serious business losses within the meaning of the law. The
employer must show that its losses increased through a
period of time and that the condition of the company will not
likely improve in the near future, or that it expected no
abatement of its losses in the coming years. The employer
must exhaust all other means to avoid further losses without
retrenching its employees. Alleged losses if already realized,
and the expected imminent losses sought to be forestalled,
must be proved by sufficient and convincing evidence. Any
less would rendered would render too easy the abuse of this
ground for termination of services of employees. In this case,
PAL failed to substantiate its claim of actual and imminent
substantial losses which would justify the retrenchment of
more than 1,400 of its cabin crew personnel. Although the
Philippine economy was gravely affected by the Asian financial
crisis, it cannot be assumed that it had likewise brought PAL to
the brink of bankruptcy. The fact that PAL underwent
corporate rehabilitation does not automatically justify the
retrenchment of its cabin crew personnel. PAL was not even
aware of its actual financial position when it implemented its
retrenchment program. After cutting its fleet size to only 14, it
abandoned said plan and decided to retain 22 units of aircraft.
It retrenched more than what was necessary, but decided
later on to recall said employees. PAL’s assertion that its
finances were gravely compromised as a result of the Asian
financial crisis and the pilots’ strike lacks basis due to non-
presentation of its audited financial statements to prove
actual or imminent losses. The retrenchment scheme was
valid but the manner of its implementation cannot be upheld.
(2) That the employer served written notice both to the
employees and to the Department of Labor and Employment
at least one month prior to the intended date of
retrenchment;
(3) That the employer pays the retrenched employees
separation pay equivalent to one (1) month pay or at least
one-half (½) month pay for every year of service, whichever is
higher;
(4) That the employer exercises its prerogative to retrench
employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees’ right to
security of tenure; and,  Retrenchment to prevent losses is
an authorized cause for terminating employment and the
decision whether to resort to such move is a management
prerogative. However, the right of an employer to dismiss an
employee differs from and should not be confused with the
manner in which such right is exercised. It must not be
oppressive and abusive since affects one’s person and
property. It is incumbent for the employer, before putting into
effect any retrenchment process, to show by convincing
evidence that it was being wrecked by serious financial
problems. Security of tenure is a right guaranteed to
employees and workers by the Constitution and should not be
denied on the basis of mere speculation. There was bad faith
when PAL decided to retain 22 of its aircrafts, instead of
implementing Plan 14, which was what it had originally made
known to its employees. It offered no satisfactory explanation
why it abandoned Plan 14; instead, it justified its actions by
making it appear that it was due to its good corporate nature
that the decision to consider recalling employees was made. It
was capricious and arbitrary, considering that employees who
had long been working for PAL had lost their jobs, only to be
recalled but assigned to lower positions and some as new
hires, without due regard for their long years of service with
the airline. It rehired 140 probationary cabin attendants and
yet proceeded to terminate the services of its permanent
cabin crew personnel.
(5) That the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for
certain workers.  In the implementation of its retrenchment
scheme, PAL evaluated the cabin crew personnel’s
performance during the year preceding the retrenchment
based on rating variables found in the Performance Evaluation
Form of the Grooming and Appearance Handbook. PAL was
not obliged to consult FASAP regarding the standards it does not prove restraint or coercion in their right to organize.
would use in evaluating the performance of each cabin crew. Quitclaims executed as a result of the retrenchment program
However, the criteria utilized by PAL in the actual are annulled because they were not voluntary entered into;
retrenchment was not reasonable and fair. Employers are their consent was obtained by fraud or mistake, as volition
enjoined to adopt and observe fair and reasonable standards was clouded by a retrenchment program that was made
to effect retrenchment. Otherwise, abuse is a very distinct and without basis. PAL’s recall and rehire process of retrenched
real possibility. Based on the ICCD Masterank and Seniority employees was defective, following the illegality of the
1997 Ratings, there is retrenchment of cabin crew personnel retrenchment. Chiong cannot be held liable together with PAL,
due to “other reasons” which are not stated and shown to be as she was merely acting in accordance with her duties as a
for a valid cause. Moreover, the evaluation of each cabin corporate officer of PAL, unless she acted with evident malice
attendant’s efficiency rating is capricious and prejudicial as it and bad faith.
only considered the overall performance in the year 1997. PAL
virtually did away with the concept of seniority, loyalty and 269 PHILIPPINE AIRLINES, INC., vs.NLRC andPALEA (1997)
past efficiency, and treated all cabin attendants as if they were NARVASA, C.J.:
on equal footing, with no one more senior than the other.
Doctrine: Violations of the CBA, not GROSS in character not
The claim of ULP committed against FASAP is without basis. ULP, and not under the jurisdiction of the LA.
Article 261 provides that violations of a CBA, except those QUICK FACTS:
which are gross in character, shall no longer be treated as Over the course of negotiations between PAL and PALEA on
unfair labor practice and shall be resolved as grievances the terms and conditions of their CBAs, several Wage Orders
under the parties’ CBA. Moreover, “gross violations of CBA” have been issued. The parties signed a new CBA and PAL
under the same Article referred to flagrant and/or malicious furnished a copy of the implementing guidelines of a new
refusal to comply with the economic provisions of such PAYSCALE to PALEA. PALEA sent a COUNTER-PAYSCAL to PAL
agreement, which is not the issue in this case. with the request that the negotiating panel be convened
There is no union busting, oppression or harassment, etc. of saying the new payscale does not reflect the Wage Orders
FASAP’s officers, as the fact of their retrenchment or demotion already issued after the CBA. When PAL failed to act on
PALEA’s request, the former instituted a COMPLAINT for ULP.
After the case was filed, a few more Wage Orders were issued.
Both the LA and NLRC found the existence of a wage distortion
and order the parties to sit and discuss it with the end in view
that the payscale be adjusted. PAL thus appealed to the SC.
FACTS:
1. On February 23, 1979, when PAL and the union
representing its ground employees, the PAL Employees
Association (PALEA), agreed in writing that their current
CBA expiring on September 30, 1979 would be
extended for another year, or until September 30,
1980. It was PAL which proposed the extension, on the
plea that it was in no position to enter into a new CBA
because it had suffered severe financial losses from
devaluation, the fuel price increase, doubling of travel
tax, etc.; and PALEA consented to the extension
apparently because PAL then undertook to conduct a
Job Evaluation Program (JEP) which would be the basis
of a new pay scale to replace that negotiated in
1977 and retroact to November 1, 1978. The parties
also agreed that a negotiating panel consisting of six
members (three from PAL and three from PALEA) would
“see to it that in the implementation of the program,
internal equity in realignment of positions and
responsibility shall be achieved,” and thresh out such
problems as might arise in course of implementation.
2. PAL then drew up a pay scale which, being acceptable to
PALEA, was immediately implemented. Under it the
employees were categorized as supervisory and non-
supervisory.
3. Thereafter, a serious of enactments increasing the
minimum wage (and the mandatory emergency living
allowance) came into effect.
4. On May 14, 1981, the parties concluded negotiations
for a new CBA covering the period from October 1, 1980
to September 30, 1983. They agreed that: (1) there
would be across-the-board pay increases of P120 per
month for the first year (effective October 1, 1980),
none for the second year, and P105 per month for the
third year (effective October 1, 1982); and (2) “PAL shall
revise the present pay scale to be effective 1 Oct 1982
and its implementation shall be made after consultation
with the union.” These terms were set out in the
Minutes of the CBA negotiations of May 14, 1981. The
CBA was signed on May 18, 1981.
5. On October 18, 1982, PALEA president Mario Santos
addressed a letter to PAL (through Ismael Khan, PAL
Vice-President on Human Resources) remonstrating
that “after almost a month of its supposed
implementation and consultation with PALEA, PAL
management has not made any move or any action to
inform the union of its position on the provisions of the
 PAL-PALEA CBA.” Khan replied that PAL was “now in the
final process of pre-determining the cross section of
employees to be benefited by the revised payscale and
the various salary administration policies which need to
be established in order to minimize if not totally
eliminate possible pay distortions.”
6. On July 6, 1983, another Wage Order (No. 2) was issued
increasing the minimum daily wage by P1.00, and the
daily living allowance of those with a monthly salary of
less than P1,800.00, by P1.50 a day. Khan then wrote to
PALEA on August 8, 1983, advising that said Wage order
No. 2 was being implemented retroactive to July 1,
1983, that all employees were already properly slotted
under the new pay scale, and that the updated pay
scale would be sent under separate cover. And two
days later, a copy of the implementing guidelines of the
new pay scale was sent to PALEA.
7. By letter dated August 29, 1983, PALEA sent its
“Counter-Payscale” to PAL with the request that the
negotiating panel be convened. PALEA’s position was
that –a new payscale should be effected on October 1,
1982, the spirit and intent of which is to maintain
the P135.00 difference between the minimum rate of
the new Payscale and the minimum rate as provided by
law. The maintenance of the difference of the P135.00
between the minimum rates necessarily effect wage
distortions in the new Payscale, Necessarily, constants
for step grades 1 to 10 and jobs grades 1 to 10 for non-
supervisory personnel should likewise be
maintained. The same thing holds true for step grades 1
to 10 and job grades 1 to 5 for supervisory level.”
8. On November 7, 1983, still another Wage Order (No.3)
was issued, again increasing the minimum daily wage
by P1.00 and the daily living allowance under Wage
Order No. 2 by P1.50 daily.
9. Having received no word from PAL regarding its
“Counter Payscale” and request for immediate
convening of the negotiation panel to discuss the
matter, PALEA filed a complaint with the NLRC, dated
December 29, 1983, in which it accused PAL of unfair
labor practice (ULP), in reneging on the obligation
assumed on May 14, 1981 to consult the union
regarding implementation of the pay scale; and of
violating Wage Orders Nos. 2 and 3, in failing to cure the
wage distortions as therein mandated.
10.The case was, however, held in abeyance by agreement
of the parties, for the reason that negotiations were
then going on for a new CBA to cover the period from
1983 to 1986.
11.On April 15, 1985, the ULP case against PAL — abated
by the parties' agreement — was resumed on motion of
 PALEA, which presented a supplemental complaint
alleging additionally that PAL had also violated Wage
Orders Nos. 1, 4, 5 and 6, failed to furnish PALEA with
information relative to the new payscale, and
"compounded the wage distortions which had
accumulated."
12.In its position paper, PAL (1) denied violating its
undertaking to consult the union, arguing that the
letters of VP Ismael Khan to the union clearly evinced
efforts to comply therewith; (2) averred that "there is
no disparity or distortion in the wage structure or
payscale:" and (3) stressed that the salary increases in
the new CBA between it and PALEA, covering 1983-
1986, "effectively removed and cured whatever wage
distortions existed in the previous salary scale." In a
supplemental pleading, PAL also adverted to the fact
that the new CBA, "overwhelmingly ratified by the rank
and file employees," contained a reciprocal
waiver proviso rendering moot the wage distortion
issue.
13.The LA did not agree to respondent's (PAL's) contention
that the latest CBA cured or corrected the matter of
wage distortions and declared that there existed a wage
distortion and since the parties have evinced the desire
to seek a solution to this problem, they were directed to
seek a solution to this problem, to sit, within 5 days ISSUES:
from receipt of the Order and discuss the wage
distortions brought about by Presidential Decrees 1614,
1713, 1751, and 1123 and the Wage Order Nos. 1 to 6
as claimed for in the complaint with the end in view of
updating the payscale so as to cure or correct
distortions in the wages of the covered employees and
to apply the same effective October 1, 1982, pursuant
to the respondent's commitment during the CBA
negotiations on May 14, 1981.NLRC AFFIRMED LA.
14.PALEA contends that that its complaint essentially
accuses PAL of violating its duty to bargain collectively
— because it implemented the new payscale without
consulting it, and refused to convene the negotiation
panel to resolve their differences thereon — and is thus
really one for unfair labor practice under Article 248 (g)
of the Labor Code falling within the original and
exclusive jurisdiction of Labor Arbiters in accordance
with Article 217 of the same Code. It also theorizes that
PAL is in estoppel to challenge the jurisdiction of the
Labor Arbiter and the NLRC since it "never questioned
their jurisdiction in both the original and appellate
proceedings . . . (and) even attended conciliation
conferences with the end in view of amicably settling
the case," it having "by its actions, willingly agreed to
the arbitration by the NLRC."
 1. WON the LA had jurisdiction over the dispute? – NO character — and were considered mere grievances resolvable
2. WON violations of the CBA constitute ULP? – NO through the appropriate grievance machinery, or voluntary
arbitration provided in the CBA. Jurisdiction over such
HELD:
violations was withdrawn from the Labor Arbiters and vested
1. POWER OF LABOR ARBITER
in the voluntary arbitrator, the former (including the
It is true that under said Article 217, the Labor Arbiters Commission itself, its Regional Offices, and the Regional
possess "original and exclusive jurisdiction to hear and Directors of the DOLE) being in fact enjoined not to "entertain
decide" inter alia: unfair labor practice cases, and money disputes, grievances or matters under the exclusive and
claims such as those "involving wages, rates of pay, hours of original jurisdiction of the Voluntary Arbitrators or panel of
work." However, important changes in the law were effected Voluntary Arbitrators and . . (instead) immediately dispose
by Republic Act No. 6715, which was published in the Official and refer the same to the Grievance Machinery or Voluntary
Gazette on March 6, 1989 and took effect fifteen (15) days Arbitration provided in the Collective Bargaining Agreement."
thereafter, or on March 21, 1989. That Act explicitly excepted
3. NO ESTOPPEL, PAL NOT PRECLUDED FROM RAISING THE
from the Arbiters' competence, "cases arising from the
ISSUE OF JURISDICTION
interpretation or implementation of CBAs and those arising
PAL may not be regarded as precluded from impugning the
from the interpretation or enforcement of company personnel
jurisdiction of the Arbiter and the Commission because, at the
policies (which) shall be disposed of by the Labor Arbiter by
time that the proceedings were initiated before the former,
referring the same to the grievance machinery and voluntary
adjudged by him, and thereafter appealed to and resolved by
arbitration as may be provided in said agreements." This
the latter adversely to PAL, the law amending their jurisdiction
exclusionary provisois reflected in Article 261 of the Labor
(R.A. 6715) had not come into effect. As already observed, it
Code, as amended by said R.A. 6715, which treats of the
was only after PAL's MR of November 21, 1988 had been filed
original and exclusive "Jurisdiction of Voluntary Arbitrators or
and was awaiting resolution before the NLRC that said law
panel of Voluntary Arbitrators."
became effective, on March 21, 1989. Under the
2. VIOLATIONS OF CBAS NOT ULP (TOPIC)
circumstances, no estoppel of the right to question jurisdiction
Thus, as of March 21, 1989, violations of CBAS were no longer can be ascribed to PAL.
deemed unfair labor practices — except those gross in
Nor may the claim of breach of agreement on PAL'S part,
assuming the claim to be valid, an issue that the Court does
not regard as needful of resolution, be considered as being of
so gross a character as to constitute an exception to the
rule: i.e., that it should remain for adjudication before the
Labor Arbiter and not referred to a voluntary arbitration for
determination.
4. NOTWITHSTANDING LACK OF JURISDICTION, CASE WONT
BE DISMISSED 270 – 270 VISAYAN BICYCLE, MANUFACTURING CO. v.
This notwithstanding, and in view of the peculiar NATIONAL LABOR UNION (NLU)
circumstances just mentioned, the Court is not disposed to
dismiss the proceeding at bar on the ground of want of
jurisdiction of the subject matter. The parties have extensively,
even exhaustively, ventilated the issue of wage distortion
before the Labor Arbiter and respondent Commission: and so
much time has already elapsed since the initiation of the case
before the Labor Arbiter. It would serve no useful purpose to
have the same evidence and arguments adduced anew before
another arbitrator, this time a voluntary one, considering
particularly that the proceedings a quo were had for the most
part before the effectivity of R.A. 6715, and considering
specially that there is agreement from virtually all sides that
PAL and PALEA meet and confer on the wage distortions in
order to have them corrected (with the intervention of the
Socio-Economic Analyst of the NLRC), as well as a perceived
willingness on PAL's part to correct any wage distortions found
to exist. This appears to the Court to be the most expedient
option, as it is obvious that upon the relevant facts herein
narrated, PAL's insistence that the complaint against it be
dismissed cannot be granted, and the determination of the
precise mode and configuration of wage distortions and the
most feasible process of their correction are factual matters
requiring the expertise and experience of the NLRC officials.
FACTS: Workers in the Visayan Bicycle Manufacturing Co., Inc.
formed the Visayan Bicycle Employees and Workers Union
(VIBEMWU). VIBEMWU and the company signed a collective
bargaining agreement. It provided for union security, checkoff,
wage increases, fifteen days vacation leave and fifteen days
sick leave.
Felicisimo Rodiel was elected board member. Through its
executive board headed by Besana, acting as president,
VIBEMWU affiliated with the National Labor Union (NLU).
The national secretary of NLU informed the company of
VIBEMWU'S affiliation to NLU, and demanded enforcement of
the collective bargaining agreement. The company, however,
did not accede to the demand. VIBEMWU filed a notice to
strike.1äwphï1.ñët
The Department of Labor's Conciliation Service held several were hired only within that week. Besana and Rodiel were not
hearings on the union's demands and strike notice, but the shown to have previously figured in similar incidents before or
company still refused. to have violated company rules and regulations in their many
years with the company.
The company dismissed Besana and Rodiel after they figured,
on the same day, in a fight with two other employees, within The company did not investigate the incident, and its
the premises and during working hours. Alleging unfair labor manager, Co Hing, admitted that Besana was dismissed
practice, NLU, on behalf of VIBEMWU, as well as of Besana because he was a "hard-headed leader of the union". It was
and Rodiel, filed a complaint against the company in the Court this manager who had warned VIBEMWU'S officers
of Industrial Relations. responsible for the affiliation that if they will not withdraw
VIBEMWU from the NLU, he would take "steps in order to
The company answered it on May 23, 1,960. It stated that the dismiss them from work."
dismissal of Besana and Rodiel was due to violation of a
company rule that penalizes "Inciting or provoking a fight or No reason obtains to alter the conclusion that Besana and
fighting during working hours or on company premises". Rodiel were in reality dismissed because of their union
activities and not because of their violation of a company rule
The Court of Industrial Relations rendered a decision in favor against fights in the premises or during working hours.
of the complainant union. An unfair labor practice, according
to said decision, was committed by the company in dismissing Furthermore, the so-called violation of company rules having
Besana and Rodiel due to their union activities. been brought about by the company itself, thru the recent
employment of Saturnino Reyes and Silvestre Pacia who
ISSUES: Did the company's dismissal of Besana and Rodiel provoked the fight as above indicated, the same cannot be
constitute unfair labor practice regarded as a ground to punish the aforementioned
employees.
HELD: YES. IT WAS AN UNFAIR LABOR PRACTICE
Such being the case, the dismissal of Besana and Rodiel
RATIO” constituted unfair labor practice under Section 4(a) (1) and (4)
of Republic Act 875:
Record shows that Besana and Rodiel were provoked by
Saturnino Reyes and Silvestre Pacia into a pre-arranged fight SEC.4. Unfair Labor Practices. —
pursuant to a strategy of the company designed to provide an
appparently lawful cause for their dismissal. Reyes and Pacia
 (a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce
employees in the exercise of their rights
guaranteed in Section three;4
xxx xxx xxx
(4) To discriminate in regard to hire or tenure of
employment or any term or condition of employment
to encourage or discourage membership in any labor
organization: ... .
Since the only reason or basis for Besana and Rodiel's
dismissal was in fact their actuation as officers of VIBEMWU,
the dismissal is clearly discriminatory.
QUOTABLE QUOTES:
It is this inconsiderate act of power that makes a subordinate
a rebel; it is this malicious tactic that forces labor to dislike
management; this unjustifiable conduct that creates a gap
between management and labor; and this attitude that makes
the laborer hate the officials of the company to the detriment
of all efforts to harmonize management and labor for the
benefit of both as envisioned by the Industrial Peace Act. So
plain from the record is the bad faith that attended the
company's deliberate and calculated act of unfair labor
practice that we find in the present appeal an obvious attempt
to delay and carry on a pretense which this Court can ill afford
to let go without stern disapproval.
Rothenberg has this to say:
... it can be established that the true and basic
inspiration for the employer's act is derived from the
employee's union affiliations or activities, the
assignment by the employer or another reason,
whatever its semblance of validity, is unavailing. Thus, it
has been held that the facts disclosed that the
employer's acts in discharging employees were actually
prompted by the employers's improper interest in the
affected employee's improper interest in the affected
employee's union affiliations and activities, even though
the employer urged that his acts were predicated on
economic necessity, desire to give employment to more
needy persons, lack of work, cessation of operations,
refusal to work overtime, refusal of non-union
employees to work with union employees, seasonal lay-
off, libelous remarks against management, violationof
company rules. (Rothenberg on Labor Relations, pp.
400-401; emphasis supplied.)
271 CCLG G.E. GOCHANCGO WORKERS UNION v. NLRC
(Syllabus cites this case as Cochangco Workers Union v.
NLRC)
May 30, 1988
Sarmiento, J
Luciano, Noel Christian certification election. The Company refused to acknowledge
Prosecution and Prescriptive Period receipt.

PARTIES: The Company then preventively suspended the union officers

1. Petitioners: and members who attended the hearing on the common
a. CCLC E.G. GOCHANGCO WORKERS UNION (the ground of “abandonment of work on Feb. 27, 1980.” Their
Union) – a local chapter of Central Luzon Labor gate passes were confiscated by a Base Guard in Clark Air
Congress (CCLC), an LLO Base.
b. Co-Petitioners – individuals who were former
employees of private respondent; officers and FIRST CASE: The Union and the dismissed members filed a
members of the Union complaint for constructive lockout and ULP against the
2. Respondent – Gochangco, Inc. (the Company), a Company
corporation engaged in packing and crating, general - Alleging that the Company instigated the confiscation of
hauling, warehousing, and freight forwarding their gate passes to prevent them from performing their
duties
FACTS: A majority of the rank and file employees of the - Alleging that the Company did not pay them their OT
Company organized the Union as an affiliate of CCLC. The pay, 13th month pay, and other members.
Union then filed a petition for certification election.
MEANWHILE, the Company filed an application for clearance
CCLC National President wrote the general manager of the to dismiss the employees who were earlier preventively
Company informing him of the organization of the union and suspended.
requesting for a labor management conference.
SECOND CASE: One of the employees who was dismissed,
The Union then sent a written notice to the Company Ricardo Domingo, filed a complaint for ULP against the
requesting permission for certain member-officers and Company.
members of the union to attend the hearing of the petition for
MEANWHILE, the services of 9 more union members were NLRC DECISION: On appeal, the NLRC set aside the decision of
terminated by the Company on the ground that its contract the LA.
with the US Air Force had expired. 1. It also granted the application for clearance to
terminate the services of the employees
THIRD CASE: The employees who were dismissed above filed 2. MR denied
a complaint for illegal dismissal.
ISSUE: Basically, WON the Company was engaged in ULP
MEANWHILE, the Company filed with the MOLE a notice of
termination of contract together with a list of employees The SC is convinced that the Company is guilty of ULP
affected by the expiration of the contract, among them, the 39 - It is no coincidence that at the time of the suspension
individual petitioners in this case. and termination of the union members, petitioners
were in the midst of a certification election preliminary
CONSOLIDATION: All the cases were consolidated and to a labor management conference
assigned to LA Palumbarit.  This is within their right to do so
- Company deserves the strongest condemnation for
LA DECISION: The LA found in favor of the complainants ignoring the request for permission to attend to the
1. It ordered the reinstatement of all suspended/dismissed certification election hearing before the Med-Arb
employees (39 all in all) to their former positions  It is not only a strict arrogance, but a brazen
without loss of seniority rights and other privileges, interference of the right to self-organization
with full backwages, including cost of emergency living - The company suspended the petitioners on the ground
allowance from date of suspension/dismissal to actual of “abandonment of work” on the date which the pre-
reinstatement election conference has been scheduled
2. If reinstatement no longer possible due to closure of  This is a clear effort by management to punish
establishment, in addition to payment of full backwages petitioners for their union activities
and COLA, to pay their respective separation pay
SC was unconvinced by the company's pretenses that "[t]he employees of their employer whoentered into that
subsequent confiscation by the Americans of the contract.
complainants' passes is beyond the powers of management." - Even if there is a valid ground for dismissal, the same is
- To start with,those passes would not have been illegal for want of clearance as required under the Labor
confiscated had not management ordered the Code
suspension
- Base guards, by themselves, cannot bar legitimate The Court likewise rejects the claims of an alleged waiver by
employees without the proper sanction of management the petitioners of their economic demands, in the light of an
alleged order issued by the LA in connection with another
Since their suspension was illegal, their subsequent dismissal case involving thesame parties
is likewise illegal - In another case the LA found that: "Waiver of Claims,
- SC not persuaded by the Company’s argument that final Rights and Interest" was filed by
termination should be effected as the contract has abovenamedpetitioners stating, among otherthings,
expired that said petitioners are waiving their claims, rights
- Petitioners were regular employees andas such, their andinterests against the respondents.ACCORDINGLY, let
tenure did not end with the expiration of the contract the aboveentitledcases be DISMISSED in view of the
- There is no merit in the claim that the petitioners' terms waiver made by the petitioners.”
were coterminous with the duration of the contract. - The LA resolution refers to other cases, not the instant
 Thereis nothing in the records that would show that ULP case at bar
the petitioners were parties to that contract. - In any event, unfair labor practice cases are not, in
 It appears that the petitioners were in the employ of view of the public interest involved, subject to
the company long before that contract was compromises.
concluded. - Furthermore, these alleged waivers do not appear to
 They werenot contract workers whose work terms have been presented in the first instance. Theycannot
are tied to the agreement, but were, rather, regular be introduced for the first time on appeal.
DISPOSITIVE: Petition granted. NLRC reversed. The Company were already aware of the contemplated reduction of
is to reinstate the terminated workers, pay them backwages personnel by reason of abolition of some of its operations.
and damages.
CIR found AFP-MB guilty of having committed the unfair labor
practice acts. It however dismissed the case as to the 19
272 AFP Mutual Benefit Assication, Inc. v AFP-MBAI-EU complainants who executed quitclaims.
GUERRERO, J. May 17, 1980
ISSUES:
FACTS: 1. WoN AFP-MB Assn. is guilty of unfair labor practice for
These petitions arose from case filed in the CIR on December dismissing 34 of its employees by reason of the suspension
1970 for unfair labor practice against the AFP-MB Assn., for and/or abolition of some of its operations (YES)
the alleged illegal and discriminatory dismissals of 34 2. WoN trial court erred in dismissing the complaint against
individual complainants. individual complainants who executed "Quitclaim and
Complete Release (YES)
Complainants are employees of the AFP-MB Assn. and at the
same time members of the Union. Some of them became HELD / RATIO: WHEREFORE, IN VIEW OF ALL THE FOREGOING,
active in campaigning for more members of the Union and the decision of the Court of Industrial Relations is hereby
sent economic demands to the AFP-MB Assn. Conferences modified.
were held resulting into a CBA on June 1970. On July 1970, all
individual complainants were handed letters of dismissal. As a ISSUE 1: YES, guilty of ULP
result of such unfair labor practice acts, complainants
declared a strike. In the case at bar, it appears that the books of accounts and
other pertinent papers of the Association were ordered
The AFP-MB Assn. in its Answer alleged that the dismissal examined in order that the latter may be fully informed and
were due to lawful causes. As early as 1969, complainants guided as to the financial status of the Association, and the
Report submitted shows that the current or working capital
ratio of the respondent Association is more than the standard that the dismissal was entirely and exclusively motivated by
ratio. The alleged financial losses are belied by the fact that the employee's union activities or affiliations. It is enough to
in their Plantilla for 1971, salaries were increased. denounce the discharge if it established that the
discrimination motive was a contributing factor. This Court has
There is evidence which is substantial that the Association, in also said that if it can be established that the true and basic
entering into said collective bargaining contract, did not have inspiration for the employer's act is derived from the
the honest intention of complying with all the provisions employee's union affiliation or activities, the assignment by
thereof. The Board of Directors of the Association knew as the employer of another reason, whatever its semblance of
early as September, 1969 that the Office of the Insurance validity, is unavailing:
Commissioner would stop the grant of the Home Appliances
Loans, Salary Loans, Car Insurance Loans and Educational ISSUE 2: NO, dismissal improper
Loans.
No dispute that the 19 complainants executed under oath
The fact that the Association actually terminated the services documents entitled "Quitclaim and Complete Release".
of the individual complainants 12 days after the Thereafter, the complainants received, in different amounts
acknowledgment of the contract by the parties without based on their length of service, their separation benefits
referring the matter of phasing out or lay-off to the proper without protest and reservation.
labor management committee is not disputed by the
Association. In labor jurisprudence, it is well-established that quitclaims
and/or complete releases executed by the employees do not
In light of the evidence presented, We find that the estop them from pursuing their claims arising from the unfair
termination of employment of the individual complaints labor practice of the employer. The basic reason for this is that
constitutes unfair labor practice. such quitclaims and/or complete releases are against public
policy and, therefore, null and void. The acceptance of
It is not necessary to support a finding that a particular termination pay does not divest a laborer of the right to
discharge constitutes an unfair labor practice to demonstrate prosecute his employer for unfair labor practice acts.
 are concerned but rather their voluntary desistance and
Likewise, in Firestone Filipinas Employees Association vs. withdrawal from the case as party litigants which gave CIR no
Firestone Tire and Rubber Co. of the Philippines other alternative but to dismiss the complaint, is untenable.

What weakens the case for private respondent even more
is that as a matter of law the acceptance of the terms of
the alleged compromise including the benefits attributed
to it did not automatically negate the assertion of
whatever rights may be possessed by virtue of the
Industrial Peace Act. …The financial plight of the petitioner
is thus obvious. They are the people who without work
would find it difficult to know how their basic needs can be
met. They are likely to be family men, appalled by the
thought that they cannot even provide sufficiently for their
young ones… "Contrary to respondents' theory, the fact
that petitioners received their terminal pay cannot be
considered as a waiver of the right to question the
termination of their services." That was so under the 1935
Constitution. The present Constitution as already noted, is
much more liberal in its recognition of labor's dependence
on governmental efforts to assure that its welfare be truly
promoted.
The Association's argument that it is not the receipt of
separation pay and the execution of quitclaim documents
which compelled CIR to dismiss the complaint insofar as they We can clearly and positively declare, without hesitancy or
doubt, that unfair labor practice acts are beyond and outside
In the first place, the finding that the Association was guilty of
unfair labor practice is correct, as well as its Order for the
reinstatement of the 15 complainants who did not execute
quitclaims. But the dismissal of the complaint insofar as the
other 19 complainants is not warranted because their
desistance or withdrawal is not only voluntary but also illegal,
being contrary to public policy. And since the dismissal of the
employees constitutes an unfair labor practice, it is immaterial
whether some have executed quitclaims and releases or not.
Secondly, under Section 5 (2) of the Industrial Peace Act, RA
875, which provides:
(a) The Court shall have jurisdiction over the prevention of
unfair labor practices and is empowered to prevent any
person from engaging in any unfair labor practice. This
power shall be exclusive and shall not be affected by any
other means of adjustment or prevention that has been or
may be established by an agreement, code, law, or
otherwise,
the sphere of compromises such as quitclaims, release and FACTS: A majority of the rank and file employees of the
settlements. Company organized the Union as an affiliate of CCLC. The
Union then filed a petition for certification election.

273 CCLG G.E. GOCHANCGO WORKERS UNION v. NLRC CCLC National President wrote the general manager of the
Company informing him of the organization of the union and
(Syllabus cites this case as Cochangco Workers Union v. requesting for a labor management conference.
NLRC)
May 30, 1988 The Union then sent a written notice to the Company
Sarmiento, J requesting permission for certain member-officers and
Luciano, Noel Christian members of the union to attend the hearing of the petition for
Prosecution and Prescriptive Period certification election. The Company refused to acknowledge
receipt.
PARTIES:
3. Petitioners: The Company then preventively suspended the union officers
c. CCLC E.G. GOCHANGCO WORKERS UNION (the and members who attended the hearing on the common
Union) – a local chapter of Central Luzon Labor ground of “abandonment of work on Feb. 27, 1980.” Their
Congress (CCLC), an LLO gate passes were confiscated by a Base Guard in Clark Air
d. Co-Petitioners – individuals who were former Base.
employees of private respondent; officers and
members of the Union FIRST CASE: The Union and the dismissed members filed a
4. Respondent – Gochangco, Inc. (the Company), a complaint for constructive lockout and ULP against the
corporation engaged in packing and crating, general Company
hauling, warehousing, and freight forwarding - Alleging that the Company instigated the confiscation of
their gate passes to prevent them from performing their
duties
 - Alleging that the Company did not pay them their OT LA DECISION: The LA found in favor of the complainants
pay, 13th month pay, and other members.
MEANWHILE, the Company filed an application for clearance
to dismiss the employees who were earlier preventively
suspended.
SECOND CASE: One of the employees who was dismissed,
Ricardo Domingo, filed a complaint for ULP against the
Company.
3. It ordered the reinstatement of all suspended/dismissed
employees (39 all in all) to their former positions
without loss of seniority rights and other privileges,
with full backwages, including cost of emergency living
allowance from date of suspension/dismissal to actual
reinstatement
4. If reinstatement no longer possible due to closure of
establishment, in addition to payment of full backwages
and COLA, to pay their respective separation pay

MEANWHILE, the services of 9 more union members were NLRC DECISION: On appeal, the NLRC set aside the decision of
terminated by the Company on the ground that its contract the LA.
with the US Air Force had expired. 3. It also granted the application for clearance to
terminate the services of the employees
THIRD CASE: The employees who were dismissed above filed 4. MR denied
a complaint for illegal dismissal.
ISSUE: Basically, WON the Company was engaged in ULP
MEANWHILE, the Company filed with the MOLE a notice of
termination of contract together with a list of employees The SC is convinced that the Company is guilty of ULP
affected by the expiration of the contract, among them, the 39 - It is no coincidence that at the time of the suspension
individual petitioners in this case. and termination of the union members, petitioners
were in the midst of a certification election preliminary
CONSOLIDATION: All the cases were consolidated and to a labor management conference
assigned to LA Palumbarit.  This is within their right to do so
 - Company deserves the strongest condemnation for - Petitioners were regular employees and as such, their
ignoring the request for permission to attend to the tenure did not end with the expiration of the contract
certification election hearing before the Med-Arb - There is no merit in the claim that the petitioners' terms
 It is not only a strict arrogance, but a brazen were coterminous with the duration of the contract.
interference of the right to self-organization  There is nothing in the records that would show that
- The company suspended the petitioners on the ground the petitioners were parties to that contract.
of “abandonment of work” on the date which the pre-  It appears that the petitioners were in the employ of
election conference has been scheduled the company long before that contract was
 This is a clear effort by management to punish concluded.
petitioners for their union activities  They were not contract workers whose work terms
are tied to the agreement, but were, rather, regular
SC was unconvinced by the company's pretenses that "[t]he employees of their employer who entered into that
subsequent confiscation by the Americans of the contract.
complainants' passes is beyond the powers of management." - Even if there is a valid ground for dismissal, the same is
- To start with, those passes would not have been illegal for want of clearance as required under the Labor
confiscated had not management ordered the Code
suspension
- Base guards, by themselves, cannot bar legitimate The Court likewise rejects the claims of an alleged waiver by
employees without the proper sanction of management the petitioners of their economic demands, in the light of an
alleged order issued by the LA in connection with another
Since their suspension was illegal, their subsequent dismissal case involving the same parties
is likewise illegal - In another case the LA found that: "Waiver of Claims,
- SC not persuaded by the Company’s argument that final Rights and Interest" was filed by abovenamed
termination should be effected as the contract has petitioners stating, among other things, that said
expired petitioners are waiving their claims, rights and interests
against the respondents. ACCORDINGLY, let the above
 entitled cases be DISMISSED in view of the waiver made company impelled the unionto go on strike on 13 December
by the petitioners.” 1989 even as conciliation proceedings continued.
- The LA resolution refers to other cases, not the instant
The company petitioned DOLE Secretary Drilon to assume
ULP case at bar
jurisdiction over the ongoing dispute or certify it to the
- In any event, unfair labor practice cases are not, in
NLRC. Sec.Driloncertified the dispute to the NLRC for
view of the public interest involved, subject to
compulsory arbitration and issued a return-to-work order.
compromises.
However, thecertified case before the NLRC was dismissed on
- Furthermore, these alleged waivers do not appear to
13 February 1990 after both parties reached an agreement on
have been presented in the first instance. They cannot
19 January 1990where the company agreed to accept all
be introduced for the first time on appeal.
employees who, by then, had not yet returned to work.

DISPOSITIVE: Petition granted. NLRC reversed. The Company Subsequently, the union found out that8company buses were
is to reinstate the terminated workers, pay them backwages "converted" to Sultran Lines, 1 "became MCL," and another
and damages. "became SST Liner.” The union filed a case charging the
company with ULP, i.e., illegal lock-out. In answer, the
company filed a case which sought to declare as illegal the
274 Reformist Union of RB Liner Inc. v. NLRC union's 13 December 1989 strike.
27 January 1997 LA/ NLRC: The 13 December 1989 strike was illegal.
J. Davide ISSUE: WON the company can still challenge the legality of the
Reformist Union of RB Liner, Inc. (the union) is composed of 13 December 1989 strike. NO
drivers, conductors, and mechanics of RB Liner, Inc. (the RATIO: The company can no longer contest the legality of the
company). The union filed a notice of strike because of alleged strike held on 13 December 1989, as the company itself
acts of ULP committed by the company. Both sides attended sought compulsory arbitration to resolve that issue, through
conciliation hearings. Later, another alleged act of ULP by the its letter to the DOLE Secretary. The strike was settled when
the company and the union entered into an agreement on 19
January 1990 where the company agreed to accept all
employees who, by then, had not yet returned to work. By
acceding to this peaceful settlement brooked by the NLRC, the
company waived the issue of the illegality of the strike.The
very nature of compulsory arbitration makes the settlement
binding, for compulsory arbitration has been defined both as
"the process of settlement of labor disputes by a government
agency which has the authority to investigate and to make an
award which is binding on all the parties," and as mode of
arbitration where the parties are "compelled to accept the
resolution of their dispute through arbitration by the a 3 rd
party."
Hence, the legality of the strike could no longer be reviewed
by the LA/ NLRC, as this had already been resolved. The case
certified by the DOLE Secretary to the NLRC was dismissed
after the union and the company drew up the agreement
dated 19 January 1990. This conclusively disposed of the strike
issue.Art. 263 (i) provides that the decision in compulsory
arbitration proceedings shall be final and executory 10
calendar days after receipt thereof by the parties. The parties
were informed of the dismissal of the case on 14 February
1990. Hence, the NLRC decision had already become final and
executory before the company filed their complaint with the
LA on 13 July 1990.
The agreement entered into by both parties was in the nature
of a compromise agreement, i.e. "an agreement between two
or more persons, who, for preventing or putting an end to a
lawsuit, adjust their difficulties by mutual consent in the
manner which they agree on, and which everyone of them
prefers to the hope of gaining, balanced by the danger of
losing." Thus in the agreement, each party made concessions
in favor of the other to avoid a protracted litigation. While we
do not abandon the rule that ULP acts are beyond and outside
the sphere of compromises, the agreement herein was
voluntarily entered into and represents a reasonable
settlement, thus it binds the parties. On this score, Art. 227
(LC)provides:
Compromise agreements — Any compromise
settlement, including those involving labor standard
laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the
Department of Labor, shall be final and binding upon
the parties. The National Labor Relations Commission or
any court shall not assume jurisdiction over issues
involved therein except in case of non-compliance
thereof or if there is prima facieevidence that the
settlement was obtained through fraud,
misrepresentation or coercion.
The agreement in this case complies with the above Facts:
requisites. The company never alleged that the union did not
1. In this case, Fajardo, Marin, Guevarra, Baguisa
comply with the agreement. The binding effect of the
agreement is thus unimpaired. Also relevant is Art.2037 (Civil
Code), which gives compromise agreements the effect and
authority of res judicata upon the parties to the same, even
when without judicial approval.
The LA and the NLRC therefore erroneously reviewed an issue
which had already been laid to rest by the parties and which,
applying res judicata, they could no longer re-litigate.
RULING:WHEREFORE, the instant petition is GRANTED. The
2. On October 5, 1991 and February 28, 1992, the
assailed decision of the NLRCand LAare SET ASIDE.
275 – Nueva Ecija Electric Cooperative Inc. v. NLRC
NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I)
EMPLOYEES ASSOCIATION, PRESIDENT RODOLFO
JIMENEZ, and members, REYNALDO FAJARDO,
ERNESTO MARIN, EVER GUEVARRA, PETRONILO
BAGUISA, VICTORINO CARILLO,petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION,
NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I)
and PATRICIO DELA PEÑA, respondents.
and Carillo were permanent EEs of NEECO I
Employee’s Association. On February 7, 1987,
NEECO I’s Board of Directors adopted Policy # 3-
33, which set the guidelines for NEECO I’s
retirement benefits. Subsequently, all regular EEs
were ordered to accomplish Form 87, which were
applications for either retirement, resignation or
separation from service.
applications of Baguisa and Guevarra,
respectively, were “approved”. They were paid
appropriate separation pay. These events,
followed by the promotion of certain union
officers to supervisory positions, caused trouble
in the association, and these were considered as
“harassment” and circumvention of security of
tenure towards the union members. To
strengthen and neutralize the management’s
actions, the union held a “snap election” of
officers, wherein the petitions were elected to
different positions.
3. On March 3, 1992, the union passed a resolution
withdrawing the applications for retirement of all
of its members. However, on successive dates on
March-April 1992, Marin, Fajardo and Carillo
were compulsorily retired by management,
receiving separation pay under protest days after
they were compulsorily retired. Javate, on the
other hand, was terminated by management due
to allegations of misappropriation of funds and
dishonesty. As a result, he was not paid
separation/retirement benefits.
4. On March 29, 1992, petitioners instituted a
complaint for illegal dismissal and damages with
the NLRC in San Fernando, alleging that
management singled out for retirement from a
list of EEs who submitted retirement forms, those
who were current or past union officers and
action members of the association. Furthermore,
they claim that their acceptance of the money
offered by NEECO I did not constitute estoppel
nor waiver, as their acceptances were under
protest and without prejudice to their rights from
an illegal dismissal.
5. The LA decided in favor of the petitioners, finding
that NEECO was guilty of illegal dismissal and ULP,
and ordering NEECO to reinstate and pay
backwages to Fajardo, Marin, Guevarra, Baguisa,
Carillo and Javate.
6. NEECO elevated its case to the NLRC, posting a
surety bond on January 5, 1993. Petitioners
responded by filing an omnibus motion to dismiss
on the ground of late appeal, claiming that the
bond was filed too late, and was insufficient to
cover moral and exemplary damages, attorney’s
fees and costs of litigation.
7. The Commission modified the decision by
deleting moral and exemplary damages, as well
as applying the retirement benefits received by
the petitioners to the backwages that they may
receive. NEECO I reinstated the petitioners
pending appeal, while Javate withdrew his
complaint and opted to receive his retirement
benefits.
Issues
1. WON appeal was perfected by NEECO’s filing of
supersedeas bond 1 day too late?YES, Court decided
 to relax rules re: filing of bond due to substantial
compliance.
2. WON moral and exemplary damages were properly
awarded to the petitioners. YES, however Court
modified LA ruling as it was deemed too excessive.
2. The Court first discussed that the rules promulgated
Held:
1. The Court stated that, while Art. 223 (229 new) of
the Labor Code states that LA decisions are final and
executory unless appealed within 10 calendar days
from receipt, and upon perfection of appeal through
a cash/surety bond, the rules may be relaxed in
order to resolve controversies on the merits,
specifically when there are special meritorious
circumstances and issues. Substantial compliance
with the rules may result in the relaxation of the
requirement of posting a supersedeas bond for the
perfection of an appeal.
The Court noted that the LA’s decision was issued on
December 21, 1992, and NEECO filed their appeal on
December 28, 1992, barely 7 days from receipt. The
bonding company issued the bond dated January 4,
1993, which was also the last day for filing the
appeal. It was, however, only forwarded to the NLRC
on the following day (January 5, 1993), only a day
late. On that consideration, and in keeping with the
“holiday season”, the Court decided to ease the
rules.
by the NLRC held that the amount of the cash/surety
bond was originally “exclusive of moral and
exemplary damages”. This was later deleted but then
restored in 1993.
It was noted, however, that while the NLRC deleted
the clause “excluding moral and exemplary damages
from the bond” in the determination of the bond
amount, the Commission may still reduce the
amount of the bond in meritorious cases, and upon
motion of the appellant, citing the case of Cosico Jr.
vs. NLRC. Unreasonable and excessive bond amounts
were held by the Court to be oppressive and unjust,
since it would effect a deprivation of the right of a
party to appeal.
The Court also stressed that the petitioners were
also paid retirement benefits, and that NEECO I also
had sufficient assets to claim for damages, hence the
lack of need for excessive bonds.
This, however, did not preclude the Court from
deciding that moral and exemplary damages are
properly awarded to the petitioners. The Court
stated that, in order to warrant an award of moral
damages, it must be shown that the dismissal of the
employee was attended to
(a) by bad faith, or
(b) constituted an act oppressive to labor, or was
(c) done in a manner contrary to morals, good
customs or public policy.
In ruling for the petitioners, the LA found that there
was indeed ULP committed by NEECO I, as
established by Policy 3-33 and the subsequent filing
of applications for retirement/resignation, pointing
to a forced retirement – tantamount to illegal
dismissal tainted by ULP.
Unfair labor practices violate the constitutional
rights of workers and employees to self-
organization, are inimical to the legitimate interests
of both labor and management, including their right
to bargain collectively and otherwise deal with each
other in an atmosphere of freedom and mutual
respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management
relations. Therefore, the Court found it proper to
impose moral and exemplary damages.
However, the Court found the amount of damages to
be too excessive, taking into consideration the
business, social and financial position of offended
and offending parties. Seeing that NEECO I as a
cooperative promotes the welfare of its own
members, and that economic benefits filter in/
trickle down to its members, the Court decided to
reduce moral damages to only PHP 10,000.00 to
each petitioner. NEECO’s payment of exemplary
damages was also reduced to PHP 5,000.00 per
petitioner, as per Articles 2229 and 2232 of the Civil
Code.
276 PCSO v. Quadra, 1982 On the basis of this decision, the petitioners terminated the
employment of Quadra. However, the Commissioner
CIR found petitioners guilty of ULP against respondent union reconsidered his original decision and changed the penalty to
Association of Sweepstakes Staff Personnel and Supervisors one of reprimand with a warning. The PCSO board reinstated
and ordered reinstatement of Geronimo Quadra to his Quadra to his former position as Chief legal Officer. Quadra
position with full backwages. has since left the PCSO and is now a Commissioner in the
The alleged ULP acts committed by petitioners were the NLRC.
refusal to bargain collectively and unjustified dismissal of
Quadra from his employment in the PCSO due to union The SC finds no reason to disturb the CIR's finding that the
activities. petitioners committed acts of discrimination. Discriminatory
acts under the applicable law are not limited to hiring or
WON Quadra violated civil service rules being counsel against tenure but extend to terms and conditions of employment.
PCSO The discrimination does not have to be against a specific
WON Quadra’s dismissal was justified employee or against employees in the general sense that the
WON PCSO committed discriminatory acts against union petitioners want the law to be construed. An employer can
discriminate in favor of a union, even if it were not company
First and second issues are moot and academic. In another dominated, that discriminatory acts can be effected against a
case, SC ruled that Quadra was performing supervisory union itself. Since the PCSO extended privileges and
functions and must cease to be a member of the union. As concessions to the PCSS Union while denying the same
union president and authorized representative, Quadra led privileges and concessions to the respondent union at a time
many strikes and filed various cases against PCSO. For one when neither union had been recognized as sole bargaining
appearance, Quadra was charged before the Civil Service representative, the CIR did not err in finding discrimination.
Commission with violating Civil Service Rules and Regulations.
The Commissioner sustained the charge of unauthorized
practice of law and found Quadra guilty of "misconduct
and/or conduct prejudicial to the best interest of the service."
277. Geronimo Quadra v. CA and the PCSO (CIR) a complaint for unfair labor practice against
31 July 2006 respondent PCSO and its officers. (Note: this is the case
J. Puno | 2nd Division in digest 276)
Facts:

1. Geronimo Q. Quadra was the Chief Legal Officer of
PCSO when he organized and actively participated in
the activities of Philippine Charity Sweepstakes
Employees Association (CUGCO), an organization
composed of the rank and file employees of PCSO, and
then later, the Association of Sweepstakes Staff
Personnel and Supervisors (CUGCO) (ASSPS [CUGCO])
4. 3/16/1967: During the pendency of the earlier case in
2. 4/1964: Quadra was administratively charged before
the CSC with violation of Civil Service Law and Rules for
neglect of duty and misconduct and/or conduct
prejudicial to the interest of the service.
11/19/1966: CIR Decision issued finding PCSO guilty of
ULP for having committed discrimination against the
union and for having dismissed petitioner due to his
union activities. It ordered the reinstatement with full
backwages and with all the rights and privileges
pertaining to said position.
the SC, Quadra filed with the CIR a "Petition for
Damages" praying for moral and exemplary damages in
connection with the ULP case.

7/14/1965: CSC Decision rendered finding petitioner PCSO moved to dismiss. Grounds:
guilty of the charges and recommending the penalty of
 the CIR has no jurisdiction to award moral and
dismissal.
exemplary damages
 the cause of action is barred by prior judgment, it
appearing that two complaints are brought for
7/15/1965: PCSO GM, Ignacio Diaz, sent Quadra a letter
different parts of a single cause of action
of dismissal
 the petition states no valid cause of action
3. Quadra filed MR of the CSC Decision and ASSPS
(CUGCO), filed with the Court of Industrial Relations
 4/25/1980: LA Decision rendered awarding P1.6M for
moral and exemplary damages to Quadra. (CIR was
abolished while the case was pending). NLRC affirmed
LA Decision. CA reversed NLRC holding that there was
no basis for the grant of moral and exemplary damages
to PCSO as his dismissal was not tainted with bad faith
and based on the CSC Decision. It also ruled that there
the petition amounted to splitting of COA.
Issues:
1. W/N the award for moral and exemplary damages to
Quadra is proper. YES
2. W/N there was a splitting of cause of Action. NO
Ratio:
1. A dismissed employee is entitled to moral damages
when the dismissal is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a
manner contrary to good morals, good customs or
public policy. Exemplary damages may be awarded if
the dismissal is effected in a wanton, oppressive or
malevolent manner. In this case, Quadra was
deliberately dismissed from the service by reason of his
active involvement in the activities of the union groups
of both the rank and file and the supervisory employees
of PCSO, which unions he himself organized and
headed. PCSO immediately served on Quadra a letter
of dismissal even before the Quadra could move for a
reconsideration of the decision of the CSC. PCSO may
not impute to the CSC the responsibility for petitioner's
illegal dismissal as it was respondent PCSO that first
filed the administrative charge against him. As found by
the CIR, petitioner's dismissal constituted ULP. It was
done to interfere with, restrain or coerce employees in
the exercise of their right to self-organization.
ULP violate the constitutional rights of workers and
employees to self-organization, are inimical to the
legitimate interests of both labor and management,
including their right to bargain collectively and
otherwise deal with each other in an atmosphere of
freedom and mutual respect; and disrupt industrial
peace and hinder the promotion of healthy and stable
labor-management relations. As the conscience of the
government, it is the Court's sworn duty to ensure that
none trifles with labor rights.For this reason, we find it
proper in this case to impose moral and exemplary
damages on private respondent. (Nueva Ecija I Electric
Cooperative, Inc. (NEECO I) Employees Association, et
al. v. NLRC, et al.,)
2. The filing of a petition for damages before the CIR did
not constitute splitting of cause of action under the
Revised Rules of Court. Splitting a cause of action is the
act of dividing a single cause of action, claim or demand
into two or more parts, and bringing suit for one of such
parts only, intending to reserve the rest for another
separate action. The purpose of the rule is to avoid
harassment and vexation to the defendant and avoid
multiplicity of suits.

The prevailing rule at the time that the action for unfair
labor practice and illegal dismissal was filed and tried
before the CIR was that said court had no jurisdiction
over claims for damages. Hence, petitioner, at that time,
could not raise the issue of damages in the proceedings.
However, on January 27, 1967, the Supreme Court
rendered its ruling in Rheem of the Philippines, Inc., et
al. v. Ferrer, et al.13 upholding the jurisdiction of the
CIR over claims for damages incidental to an employee's
illegal dismissal. Petitioner properly filed his claim for
damages after the declaration by the Court and before
the ruling on their case became final. Such filing could
not be considered as splitting of cause of action.