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Case Digest in Labor II


1.  Complex Electronics Employees Association vs. NLRC
GR. No. 121315. July 19, 1999


Complex Electronics Corporation was engaged in the manufacture of electronic products. It was actually a subcontractor of electronic products where its customers gave their job orders, sent their own materials and consigned their equipment to it.

The rank and file workers of Complex were organized into a union known as the Complex Electronics Employees Association

Complex received a facsimile message from Lite-On Philippines Electronics Co., requiring it to lower its price by 10%. Complex informed its Lite-On personnel that such request of lowering their selling price by 10% was not feasible as they were already incurring losses at the present prices of their products.Complex regretfully informed the employees that it was left with no alternative but to close down the operations of the Lite-On Line

retrenchment will not take place until after 1 month

try to prolong the work for as many people as possible for as long as it can

retrenchment pay as provided for by law i.e. half a month for every year of service in accordance with Article 283 of the Labor Code of Philippines.

Complex filed a notice of closure of the Lite-On Line with the Department of Labor and Employment (DOLE) and the retrenchment of the ninety-seven (97) affected employees.

 Union filed a notice of strike with the National Conciliation and Mediation Board

 In the evening of April 6, 1992, the machinery, equipment and materials being used for production at Complex were pulled-out from the company premises and transferred to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna.

Fearful that the machinery, equipment and materials would be rendered inoperative and unproductive due to the impending strike of the workers, the customers ordered their pull-out and transfer to Ionics

Complex was compelled to cease operationsIonics contended that it was an entity separate and distinct from Complex and had been in existence since July 5, 1984 or eight (8) years before the labor dispute arose at Complex. Like Complex, it was also engaged in the semi-conductor business where the machinery, equipment and materials were consigned to them by their customers

President of Complex was also the President of Ionics, the latter denied having Qua as their owner since he had no recorded subscription of P1,200,00.00 in Ionics as claimed by the Union. Ionics further argued that the hiring of some displaced workers of Complex was an exercise of management prerogatives.

complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair labor practice, illegal closure/illegal lockout, money claims for vacation leave, sick leave, unpaid wages, 13th month pay, damages and attorney's fees. The Union alleged that the pull-out of the machinery, equipment and materials from the company premises, which resulted to the sudden closure of the company was in violation of Section 3 and 8, Rule XIII, Book V of the Labor Code of the Philippines  and the existing CBA

Labor Arbiter: reinstate the 531 above-listed employees to their former position; charge of slowdown strike filed by respondent Complex against the union is hereby dismissed for lack of merit.

NLRC: pay 531 complainants equivalent to one month pay in lieu of notice and separation pay equivalent to one month pay for every year of service and a fraction of six months considered as one whole year.

Issue: Whether or not there is a ULP.

Ruling. 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

·         relocation motivated by anti-union animus rather than for business reasons

·         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.

·         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.

No illegal lockout/illegal dismissal

·         closure, therefore, was not motivated by the union activities of the employees, but rather by necessity since it can no longer engage in production without the much needed materials, equipment and machinery.

·         The determination to cease operation is a prerogative of management that is usually not interfered with by the State as no employer can be required to continue operating at a loss simply to maintain the workers in employment.

·               personal liability of Lawrence Qua- absence of malice or bad faith, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities.

·               We see no valid and cogent reason why petitioner should not be likewise sanctioned for its failure to serve the mandatory written notice. Under the attendant facts, we find the amount of P5,000.00, to be just and reasonable.


2. Oceanic Air Products Inc., vs. CIR
 GR. No. L-18704. January 31, 1963


Complainant union was organized on April 25, 1958 and registered in the Department of labor on May 5, 1958, while respondent union was organized on May 2, 1958 and registered in the said office on June 16, 1958. On June 12, 1958, complainant union sent by registered mail a letter to the president of respondent company containing several demands for the improvement of the working conditions of the employees of said company. Management did not answer said letter of complainant union.

On July 3, 1958, after Mr. Suy, the production manager, received another copy of the letter of demands of complainant union, Mr. Narciso Chan, the president of respondent company dismissed Jorge de Guia, president of complainant union; Cosme Laureano, vice-president; Domingo Nanong, secretary-treasurer; Nemesio de Guia, board member; Bonifacio Baligasay, board member, Leon Acebar and Salvador Gajudo, members of said union. The other officers, Maximo Benedicto, auditor, Federico Pineda and Adelaido Zaragoza disaffiliated from complainant union and joined respondent union.

In their answers, respondent union denied the material allegations of the prosecutor's complaint, while respondent company also denied the material allegations of said complaint, and averred that both Leon Acebar and Salvador Gajudo would have been dismissed a long time ago for laziness, insubordination and sleeping while on duty but were given all the chances to reform but continued to do so; that respondent company admitted the dismissal by its president Narciso Chan on July 3, 1958 of Jorge de Guia, Bonifacio Balignasay, Cosme Laureano, Domingo Nanong, Nemesio de Guia, Salvador Gajudo and Leon Acebar because the firm was losing, besides the fact that their services were unsatisfactory; that two months before July 3, 1958 they were given warnings to reform themselves and at the same time to look for other places to go as the firm was losing and at the time of their dismissal one month separation pay was offered to each and every one of them.


Whether the dismissal will tantamount to ULP


Lower Court: To dismiss its employees especially the officers and members of complainant union who are militant and dynamic after the organization of the same is something that smacks of unfair labor practice. In labor parlance that is union-busting. If respondent company dismissed said complainants before the organization of complainant union, there would have been neither misgivings nor suspicion as to its ulterior motives. But when its management dismissed said complainants after the organization of their union and after they had sent a letter of demands for the improvement of the working conditions of the employees of the company, that is the legendary last straw that broke the camel's back. In fine, respondent company is guilty of union-busting.

We are fully in agreement with this conclusion.


3. AHS/Philippines Employee Union vs. NLRC
GR. No. 73721. March 30, 1987



Petitioner AHS/Philippines Employees Union [FFW] was the recognized collective bargaining agent of the rank-and-file employees of private respondent AHS/Philippines Inc., a company engaged in the sale of hospital and laboratory equipment and Berna and Pharmaton products. A collective bargaining agreement [CBA] was concluded between the parties for the period commencing December 1, 1981 to November 30, 1984.

On July 26, 1984, Petitioner union filed a notice of strike with the Bureau of Labor Relations, listing as ground therefor unfair labor practice consisting in: 1] diminution of benefits, 2] union busting, 3] illegal termination and 4] harassment. 2 A second notice of strike was thereafter filed on August 3, 1984 on substantially the same grounds and the additional charges of refusal to bargain, violation of the CBA and dismissal of union officers and members. 

petitioner union struck. A picket was staged at private respondent company’s premises at Pasong Tamo in Makati.

When the conciliation meetings conducted by the Bureau of Labor Relations proved unavailing, private respondent company filed a petition to declare the strike illegal. 4 After issues had been joined with petitioner union’s submission of its position paper, hearings ensued before Labor Arbiter.

LA rendered a decision declaring the strike staged by petitioner union illegal and ordering the lifting of the picket established in the premises of private respondent company. All the officers of the union who joined and were responsible for the declaration of said strike were deemed to have lost their employment status, while the other non-officer employees who symphathized and joined the strike were ordered reinstated to their former or equivalent positions without strike duration pay, or paid separation pay or the economic package offered by the company, whichever is higher, in case reinstatement was not possible.

Dissatisfied, petitioners appealed the labor arbiter’s ruling to the NLRC. Dismissed


Whether or not the the petitioner is illegally dismissed tainted with anti-unionism


Concededly, retrenchment to prevent losses is considered a just cause for terminating employment 22 and the decision whether to resort to such move or not is a management prerogative. 23 Basic, however, in human relations is the precept that "every person must, in the exercise of his rights, and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith." 

"Basically, 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 it affects one’s person and property."

In the case at bar, respondent company offered to pay the 31 dismissed employees one month salary in lieu of the one [1] month written notice required by law. This practice was allowed under the Termination Pay Laws 26 whereby if the employee is dismissed on the basis of just cause, the employer is not required to serve advance written notice based on the number of years the employee has served the employer, nor is the employer required to grant termination pay. It is only where the dismissal is without just cause that the employer must serve timely notice on the employee, otherwise the employer is obliged to pay the required termination compensation, except where other applicable statutes provide a different remedy. 27 Otherwise stated, it was the employer’s failure to serve notice upon the employee, not the cause for the dismissal, that rendered the employer answerable for terminal pay. 28 Thus, notice may effectively be substituted by payment of the termination pay.

Under the New Labor Code, however, even if the dismissal is based on a just cause under Art. 284, the one-month written notice to both the affected employee and the Minister of Labor is required, on top of the separation pay. Hence, unlike in the old termination pay laws, payment of a month’s salary cannot be considered substantial compliance with the provisions of Art. 284 of the Labor Code. Since the dismissal of the 31 employees of the Pharmaceutical Division of respondent company was effected in violation of the above-cited provision, the same is illegal.

Needless to say, in the absence of a showing that the illegal dismissal was dictated by anti-union motives, the same does not constitute an unfair labor practice as would be a valid ground for a strike. The remedy is an action for reinstatement with backwages and damages. Nevertheless, We take this actuation of respondent company as evidence of the abusive and oppressive manner by which the retrenchment was effected. And while the lack of proper notice could not be a ground for a strike, this does not mean that the strike staged by petitioner union was illegal because it was likewise grounded on a violation by respondent company of the CBA, enumerated as an unfair labor practice under Art. 249 [i] of the Labor Code.

4. Bataan Shipyard and Engineering Co., Inc. vs. NLRC
G.R. No. 78604 May 9, 1988


Petitioner Bataan Shipyard & Engineering Co., Inc. (BASECO) is a corporate entity duly organized under the laws of the Philippines. Its principal office is in Port Area, Manila. On the other hand, private respondent National Federation of Labor Unions (NAFLU) is a labor organization registered with the Department of Labor and Employment. The Company has around a thousand employees in its payroll and more than a hundred of them belong to the said labor organization.

The Company filed with the herein respondent National Labor Relations Commission an application for the retrenchment of 285 of its employees on the ground that the firm had been incurring heavy losses. In the meantime, some employees who had been on sick leave earlier were considered retrenched. All of those so retrenched happen to be officers and members of the NAFLU.


Whether or not the action to retrenched employee tantamount to ULP


It is not disputed that the retrenchment undertaken by the Company is valid. However, the manner in which this prerogative is exercised should not be tainted with abuse of discretion. Labor is a person's means of livelihood. He cannot be deprived of his labor or work without due process of law.  Retrenchment very heart of one's employment. While the right of strikes at the very heart of an employer to dismiss an employee is conceded in a valid retrenchment, the right differs from and should not be confused with the manner in which such right is exercised. It should not be oppressive and abusive since it affects one's person and property.  Due process of law demands nothing less.

Under the circumstances obtaining in this case, We are inclined to believe that the Company had indeed been discriminatory in selecting the employees who were to be retrenched. All of the retrenched employees are officers and members of the NAFLU. The record of the case is bereft of any satisfactory explanation from the Company regarding this situation. As such, the action taken by the firm becomes highly suspect. It leads Us to conclude that the firm had been discriminating against membership in the NAFLU, an act which amounts to interference in the employees' exercise of their right of self-organization. Under Article 249 of the Labor Code of the Philippines, such interference is considered an act of unfair labor Practice on the part of the Company, to wit —

ART. 249. Unfair labor practices of employers. — It shall be unlawful for an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self- organization.;

xxx xxx xxx


5. Phil Am Cigar and Cigarette Factory Workers Independent Union vs. Phil AM & Cigar Cigarette Manufacturing Co.
G.R. No. L-18364. February 28, 1963.


If the dismissal of an employee due to the filing of unfair labor practice charge against the employer is an undue restraint of the freedom to prefer charges for violations of the labor laws, the dismissal of his brother owing to the non-withdrawal of the charges of the former would be a greater and more effective restraint upon said freedom, and, hence, constitutes an unfair labor practice under Section 4 (a) (5), in relation to Section 4 (a) (4) of Republic Act No. 875.


Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers Independent Union (NLU), from a decision of the Court of Industrial Relations dismissing a complaint of said petitioner for unfair labor practice, and ordering respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. to reinstate Apolonio San Jose, within five (5) days from notice of said decision, without backpay.

The Court of Industrial Relations found "that the moving cause of Apolonio’s dismissal was the refusal of his brother Francisco San Jose, to withdraw his charge of unfair labor practice against the company. But" — it added —" be that is it may, it cannot constitute an actionable offense under the Act." Seemingly believing that, since the one dismissed by reason of said charge of unfair labor practice was, not the complainant therein, Francisco San Jose, but his brother Apolonio San Jose, the latter’s dismissal does not constitute another unfair labor practice under Section 4(a) (5) of Republic Act No. 875 , which provides that:

"(a) It shall be unfair labor practice for an employer:chanrob1es virtual 1aw library

x       x       x

"(5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony under this Act."


Whether the actions of dismissal of Apolonio tantamount to ULP.


Yes. if the dismissal of an employee due to the filing by him of said charges would be and is an undue restraint upon said freedom, the dismissal of his brother owing to the non-withdrawal of the charges of the former, would be and constitute as much a restraint upon the same freedom. In fact, it may be greater and more effective restraint thereto. Indeed, a complainant may be willing to risk the hazards of a possible and even probable retaliatory action by the employer in the form of a dismissal or another discriminatory act against him personally, considering that nobody is perfect, that everybody commits mistakes and that there is always a possibility that the employer may find in the records of any employee, particularly if he has long been in the service, some act or omission constituting a fault or negligence which may be an excuse for such dismissal or discrimination. Yet, such complainant may not withstand the pressure that would result if his brother or another member of his immediate family were threatened with such action unless the charges in question were withdrawn.

it is a well settled rule of law that what is prohibited to be done directly shall not be allowed to be accomplished indirectly. Thus in the Matter of Quidnick Dye Works Inc. and Federation of Dyers, Finishers, Printers and Bleachers of America (2 NLRB 963) it was held that the dismissal of a laborer on account of union activities of his brother constituted an unfair labor practice.

"The discharge of relatives of an employee who has himself been discriminately discharged, for no other reason than the relation, is itself a discriminatory discharge, in violation of Sec. 8 (3) of the Act.  X x x where the evidence indicated that the sole reason for the dismissal of a female employee was that she was the wife of an employee who has been discharged. It was held that the discharge under the circumstances was discriminatory and a violation of the Act, even though discharged female employee was not herself a member of any union. 


6. Cainta Caholic School et. al. v. Cainta Catholic School Employees Union
G.R. NO. 151021.May 4, 2006


On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School (School) and the Cainta Catholic School Employees Union (Union) effective 1 January 1986 to 31 May 1989.

Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From this time, the Union became inactive.

It was only in 10 September 1993 that the Union held an election of officers,

the School retired Llagas and Javier, who had rendered more than twenty (20) years of continuous service, pursuant to Section 2, Article X of the CBA, to wit:

An employee may be retired, either upon application by the employee himself or by the decision of the Director of the School, upon reaching the age of sixty (60) or after having rendered at

least twenty (20) years of service to the School the last three (3) years of which must be continuous.

Three (3) days later, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB).

On 8 November 1993, the Union struck and picketed the School's entrances.


Whether or not the school is guilty of ULP by invoking the compulsory retirement pursuant to CBA upon the attempt to reactivate the union.


Yes. It is not difficult to see the anti-union bias of the school. One of the first acts of private respondent Msgr. Balbago immediately after his assumption of office as school director was to ask for a moratorium on all union activities. With the union in inactive status, the school felt secure and comfortable but when the union reactivated, the school became apprehensive and reacted by retiring the union's two topmost officers by invoking the provisions of the CBA. When the union furnished the school, through counsel, a copy of a proposed CBA on 3 November 1993, the school in a cavalier fashion ignored it on the pretext that the union no longer enjoyed the majority status among the employees x x x

The appellate court concluded that the retirement of the two (2) union officers was clearly to bust the reactivated union.

Having established that the School committed unfair labor practice, the Court of Appeals declared that the "no-strike, no-lockout clause" in the CBA was not violated when the union members staged a strike from 8 to 12 November 1993.  It further held that minor disorders or isolated incidents of perceived coercion attending the strike do not categorize it as illegal:


Nonetheless, the premise warrants considering whether management may be precluded from retiring an employee whom it is entitled to retire upon a determination that the true cause for compulsory retirement is the employee's union activities.

The law and this Court frowns upon unfair labor practices by management, including so-called union-busting. Such illegal practices will not be sustained by the Court, even if guised under ostensibly legal premises. But with respect to an active unionized employee who claims having lost his/her job for union activities, there are different considerations presented if the termination is justified under just or authorized cause under the Labor Code; and if separation from service is effected through the exercise of a duly accorded management prerogative to retire an employee. There is perhaps a greater imperative to recognize the management prerogative on retirement than the prerogative to dismiss employees for just or authorized causes. For one, there is a greater subjectivity, not to mention factual dispute, attached to the concepts of just or authorized cause than retirement which normally contemplates merely the attainment of a certain age or a certain number of years in the service. It would be easier for management desirous to eliminate pesky union members to abuse the prerogative of termination for such purpose since the determination of just or authorized cause is rarely a simplistic question, but involves facts highly prone to dispute and subjective interpretation.


7. BPI vs. BPI Employees et.al.,
G.R. No. 164301 : October 19, 2011

Facts: Bank of the Philippine Islands (BPI) moves for reconsideration of the Supreme Court’s Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust Company (FEBTC) “absorbed” by BPI pursuant to the two banks’ merger in 2000 were covered by the Union Shop Clause in the then existing collective bargaining agreement (CBA) of BPI with respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union).

The Union Shop Clause involved in the controversy provided in part, thus: “New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment.”

In seeking the reversal of August 10, 2010 Decision, petitioner insists that FEBTC employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a consequence of the merger.


Issue: Whether or not the “absorbed” FEBTC employees fell within the definition of “new employees” under the Union Shop Clause.

Ruling: Yes. Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had been the employer of the latter’s employees from the beginning it must be emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of the merger by the SEC.

In other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of discipline and control over them only arose with the effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to render service to BPI and their right to receive benefits from the latter also arose upon the effectivity of the merger.

Hence, what is material is that all of these legal consequences of the merger took place during the life of an existing and valid CBA between BPI and the Union wherein they have mutually consented to include a Union Shop Clause.


8. Manalang et.al., vs. Artex Development Co.
G.R. No. L-20432.October 30, 1967


Facts:  After due trial, Presiding Judge Bautista rendered judgment finding that the petitioners were not aware of the existence of the collective bargaining agreement, much less of its closed-shop provision, and holding, in consequence that they were not bound by it. The decision observed that the provision in question was "merely a cloak to cover the discriminatory dismissal of the complaints, due to their union activities in forming another union, which the company did not like." The Company was ordered to reinstate the petitioners, with back wages from the date of their dismissal and "all the rights and privileges formerly appertaining thereto". The BBLU was ordered to readmit them to active membership therein.


Whether or not the union members are bound to the closed-shop stipulation in the CBA despite their unawareness.


Even if the union members were unaware of the closed-shop stipulation in the CBA, they are bound by it. Neither their ignorance of, nor their dissatisfaction with its terms and conditions would justify breach thereof or the formation by them of a union of their own. This is so because a union member who is employed under an agreement between the union and his employer is bound by the provisions thereof since it is a joint and several contract of the members of the union entered into by the union as their agent.

9. Tanduay Distillery Labor Union vs. NLRC
GR. No. L-75037. April 30, 1987

Facts: On March 11,1980, Tanduay Distillery, Inc. (TDI) and Tanduay Distillery Labor Union (TDLU) entered into a Collective Bargaining Agreement (CBA) for three (3) years from July 1,1979 to June 30,1982. The CBA contained a union security clause, which provided: "All workers who are or may during the effectivity of this Contract, become members of the union in accordance with its Constitution and By-Laws shall, as a condition of their continued employment, maintain membership in good standing in the union for the duration of the agreement." In October 1980, while the CBA was still in effect, a number of TDLU members joined another union, the Kaisahan ng Manggagawang Pilipino (KAMPIL) and organized its local chapter in TDI. Soon thereafter, KAMPIL filed a petition for certification election to determine union representation in TDI. TDLU required those who disaffiliated to explain why TDLU should not be punished for "disloyalty" to the TDLU. At the same time TDLU created a committee to investigate its erring members. All of the latter were given a chance to explain their side. Thereafter, the TDLU, upon recommendation of the Committee, expelled the disaffiliating members from TDLU and demanded that TDI terminate their employment since they had lost their membership with TDLU. Acting on said request, TDI terminated the employment of the disaffiliating union members.

Issue: Whether or not TDI was justified in terminating private respondent's employment based on TDLU's demand to enforce the union security clause of the CBA

Ruling: The employer did nothing but to put in force their agreement when it separated the disaffiliating union members upon the recommendation of the union. Such a stipulation is not only necessary to maintain loyalty and preserve the integrity of the union but is allowed by the Magna Carta of Labor when it provided mat while it is recognized that an employee shall have the right to self-organization, it is at the same time postulated that such rights shall not injure the right of the labor organization to prescribe its own rules with respect to the acquisition or retention of membership therein.

This provision is an indirect restriction on the right of an employee to self-organization. It is a solemn pronouncement of a policy that while an employee is given the right to join a labor organization, such right should only be asserted in a manner that will not spell the destruction of the same organization. The law requires loyalty to the union on the part of its members in order to obtain to the full extent its cohesion and integrity. There is nothing improper in the disputed provisions of the collective bargaining agreement entered into between the parties. Having ratified that CBA and being then members of the TDLU, the private respondents owe fealty and are required under the Union Security clause to maintain their membership in good standing with it during the term thereof, a requirement which ceases to be binding only during the 60-day freedom period immediately preceding the expiration of the CBA. In Villar vs. Indong (121 SCRA 444), we held that "petitioners, although entitled to disaffiliation from their union and to form a new organization of their own, must, however, suffer the consequences of their separation from the union under the security clause of the CBA."

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