THIRD DIVISION

G.R. No. 195163, December 13, 2017

ERGONOMIC SYSTEMS PHILIPPINES, INC., PHILLIP C. NG AND MA.

LOURMINDA O. NG, Petitioners, v. EMERITO C. ENAJE, BENEDICTO P. ABELLO,
ALEX M. MALAYLAY, FRANCISCO Q. ENCABO, JR., RICO SAMSON, ROWENA
BETITIO, FELIPE N. CUSTOSA, JAIME A. JUATAN, LEOVINO J. MULINTAPANG,
NELSON L. ONTE, EMILIANO P. RONE, ROLIETO LLAMADO, AMORPIO R.
ADRIANO, JIMMY ALCANTARA, BERNARDO ANTONI, HERMINITO BEDRIJO,
ROMEO BELARMINO, YOLANDA CANOPIN, ALMELITO CUABO, RICARDO DEL
PILAR, ELMER DESQUITADO, WINEFREDO DESQUITADO, DEMETRIO DIAZ,
ERICK ECRAELA, QUINTERO ENRIQUEZ, CRISANTO FERNANDEZ, ROMMEL
FLORES, NELSON FRIAS, PEDRITO GIRON, DOMINADOR C. GUIMALDO, JR.,
AMBROSIO HENARES, TERENCIO HENARES, ALBERT LACHICA, ALBERTO
LORENZO, JOEL MALAYLAY, SUSAN MALBAS, ROLANDO MAMARIL, TEDDY
MONTIBLE, FERNANDO OFALDA, RONNIE V. OLIVAY, RAUL PAGOLONG,
LORENZO RANIEGO, AMADO V. SAMSON IV, ROEL P. SORIANO, JONATHAN
SUALIBIO, ESTEBAN SUMICAO, JOSEPH TABADAY, EPIFANIO TABAREZ, REGIE
TOTING, REYNALDO TOTING, NORMAN VALENZUELA, ROLANDO YONSON,
DIOSCORO BALAJADIA, NERRY BALINAS, NOEL BALMEO, ARNALDO A. CASTRO,
GERONCIO DELA CUEVA, ALBERTO GAPASIN, JULIUS GENOVA, LORETO
GRACILLA, JR., ROBERTO S. INGIENTE, ROQUE JOVEN, PATERNO LINOGO,
ISAGANI MASANGKA, ANGELITO MONTILLA, PECIFICO NIGPARANON, NOBE
SALVADOR, MANUEL OAVENGA, REYNADO ORTIZ, ROMEO QUINTANA,
JERNALD REMOTIN, REYNALDO ROBLESA, SAMUEL ROSALES, ROBERTO
SANTOS, RONALDO M. SANTOS, ROCKY TALOLONG, EMILIO TONGA,
BERNARDO VALDEZ, DANTE L. VELASCO, RENE V. VICENTE, JAIME BENTUCO,
MARINO CACAO, CARLITO DELA CERNA, CHRISTOPHER MASAGCA,
CHRISTOPHER PALOMARES, ROLANDO PATOTOY, ASER PESADO, JR., LEONILO
RICAFORT, FELIX SANCHEZ AND FRANCIS O. ZANTUA, Respondents.

THE FACTS

Respondents were union officers and members of Ergonomic System Employees Union-
Workers Alliance Trade Unions  (local union). On 29 October 1999, the local union
entered into a Collective Bargaining Agreement (CBA)6 with petitioner Ergonomic
Systems Philippines, Inc. (ESPI),7 which was valid for five (5) years or until October
2004. The local union, which was affiliated with Workers Alliance Trade Unions-Trade
Union Congress of the Philippines  (Federation), was not independently registered. Thus,
on 15 November 2001, before the CBA expired, the union officers secured the
independent registration of the local union with the Regional Office of the Department
of Labor and Employment  (DOLE). Later on, the union officers were charged before the
Federation and investigated for attending and participating in other union's seminars
and activities using union leaves without the knowledge and consent of the Federation
and ESPI as well as in initiating and conspiring in the disaffiliation before the freedom
period.8

On 10 January 2002, the Federation rendered a decision9 finding respondents-union

officers Emerito C. Enaje, Benedicto P. Abello, Alex M. Malaylay, Francisco G. Encabo,
Jr., Rico Samson, Rowena Betitio, Felipe N. Custosa, Jaime A. Juatan, Leovino
Mulintapang, Nelson L. Onte, Emiliano P. Rone, and Rolieto Llamado guilty of disloyalty.
They were penalized with immediate expulsion from the Federation.10

On 11 January 2002, the Federation furnished ESPI with a copy of its decision against
respondents-union officers and recommended the termination of their employment by
invoking Sections 2 and 3, Article 2 of the CBA.11

ESPI notified respondents-union officers of the Federation's demand and gave them 48
hours to explain. Except for Nelson Onte, Emiliano Rone, and Rico Samson, the rest of
the officers refused to receive the notices. Thereafter, on 20 February 2002,
respondents-union officers were issued letters of termination, which they again refused
to receive. On 26 February 2002, ESPI submitted to the DOLE a list of the dismissed
employees. On the same day, the local union filed a notice of strike with the National
Conciliation and Mediation Board (NCMB).12

From 21 February to 23 February 2002, the local union staged a series of noise barrage
and "slow down" activities. Meanwhile, on 22 February 2002, 40 union members
refused to submit their Daily Production Reports (DPRs).

On 26 February 2002, 28 union members abandoned their work and held a picket
line outside the premises of ESPI.

Then, from 26 February 2002 to 2 March 2002, 10 union members did not report for
work without official leave. The union members were required to submit their
explanation why they should not be sanctioned for their refusal to submit DPRs and
abandonment of work, but they either refused to receive the notices or received them
under protest. Further, they did not submit their explanation as required. Subsequently,
for refusal to submit DPRs and for abandonment, respondents-union members were
issued letters of termination.13 On 27 January 2003, the respondents filed a complaint
for illegal dismissal and unfair labor practice against ESPI, Phillip C. Ng, and Ma.
Lourminda O. Ng (petitioners).14

The Labor Arbiter's Ruling

In a decision, dated 31 January 2005, the LA held that the local union was the real
party in interest and the Federation was merely an agent in the CBA; thus, the union
officers and members who caused the implied disaffiliation did not violate the union
security clause. Consequently, their dismissal was unwarranted.

The NLRC Ruling

In a decision, dated 31 October 2007, the NLRC affirmed the ruling of the LA.

The CA Ruling

In its decision, dated 21 September 2010, the CA affirmed with modification the NLRC
ruling. It held that ESPI and the respondents acted in good faith when the former
dismissed the latter and when the latter, in tum, staged a strike without complying with
the legal requirements.

Aggrieved, petitioners and respondents moved for reconsideration but the same was
denied by the CA in a resolution, dated 14 January 2011.

Hence, this petition.

ISSUES

I. WHETHER THE FEDERATION MAY INVOKE THE UNION SECURITY CLAUSE IN

DEMANDING THE RESPONDENTS' DISMISSAL;

II. WHETHER THE STRIKE CONDUCTED BY THE RESPONDENTS COMPLIED

WITH THE LEGAL REQUIREMENTS;

III. WHETHER THE RESPONDENTS' DISMISSAL FROM EMPLOYMENT WAS VALID.

THE COURT'S RULING

Only the local union may invoke the union security clause in the CBA.

Before an employer terminates an employee pursuant to the union security clause, it

needs to determine and prove that: (1) the union security clause is applicable; (2) the
union is requesting the enforcement of the union security provision in the
CBA; and (3) there is sufficient evidence to support the decision of the union to expel
the employee from the union.22

In this case, the primordial requisite, i.e., the union is requesting the enforcement of
the union security provision in the CBA, is clearly lacking. Under the Labor Code, a
chartered local union acquires legal personality through the charter certificate issued by
a duly registered federation or national union and reported to the Regional Office.23 "A
local union does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of its members.
Mere affiliation does not divest the local union of its own personality, neither does it
give the mother federation the license to act independently of the local union. It only
gives rise to a contract of agency, where the former acts in representation of the latter.
Hence, local unions are considered principals while the federation is deemed to be
merely their agent."24

A perusal of the CBA shows that the local union, not the Federation, was recognized as
the sole and exclusive collective bargaining agent for all its workers and employees in
all matters concerning wages, hours of work, and other terms and conditions of
employment. Consequently, only the union may invoke the union security clause
in case any of its members commits a violation thereof. Even assuming that the
union officers were disloyal to the Federation and committed acts inimical to its
interest, such circumstance did not give the Federation the prerogative to
demand the union officers' dismissal pursuant to the union security clause
which, in the first place, only the union may rightfully invoke. Certainly, it does not
give the Federation the privilege to act independently of the local union. At most, what
the Federation could do is to refuse to recognize the local union as its affiliate and
revoke the charter certificate it issued to the latter. In fact, even if the local union
itself disaffiliated from the Federation, the latter still has no right to demand
the dismissal from employment of the union officers and members because
concomitant to the union's prerogative to affiliate with a federation is its right
to disaffiliate therefrom which the Court explained in Philippine Skylanders,
Inc. v. NLRC,27viz:

In the landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills,
Inc., we upheld the right of local unions to separate from their mother
federation on the ground that as separate and voluntary associations, local
unions do not owe their creation and existence to the national federation to
which they are affiliated but, instead, to the will of their members. The sole
essence of affiliation is to increase, by collective action, the common bargaining power
of local unions for the effective enhancement and protection of their interests.
Admittedly, there are times when without succor and support local unions may find it
hard, unaided by other support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own
interests subject to the restraints imposed by the constitution and bylaws of the
national federation, and free also to renounce the affiliation upon the terms laid down in
the agreement which brought such affiliation into existence.28

In sum, the Federation could not demand the dismissal from employment of
the union officers on the basis of the union security clause found in the CBA
between ESPI and the local union.

A strike is deemed illegal for failure to take a strike vote and to submit a report thereon to
the NCMB.

Procedurally, for a strike to be valid, it must comply with Article 27830 of the Labor
Code, which requires that:

(a) a notice of strike be filed with the NCMB 30 days before the intended date thereof,
or 15 days in case of unfair labor practice;

(b) a strike vote be approved by a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in a meeting called for that
purpose; and

(c) a notice be given to the NCMB of the results of the voting at least seven days before
the intended strike. These requirements are mandatory, and the union's failure to
comply renders the strike illegal.31

20 February 2002 - The union filed a notice of strike.

21 February 2002 - The strike commenced on.

2 April 2002 - The strike vote was taken

4 April 2002 - the report thereon was submitted to the NCMB 

Indeed, the first requisite or the cooling-off period need not be observed when the
ground relied upon for the conduct of strike is union-busting.36 Nevertheless, the second
and third requirements are still mandatory. In this case, it is apparent that the union
conducted a strike without seeking a strike vote and without submitting a report
thereon to the DOLE. Thus, the strike which commenced on 21 February 2002 was
illegal.

Liabilities of union officers and members

Article 279(a)37 of the Labor Code provides:

Art. 279. Prohibited activities. - (a)

Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status: Provided, That mere
participation of a worker in a lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement had been hired by the employer
during such lawful strike.

In the determination of the consequences of illegal strikes, the law makes a distinction
between union members and union officers. The services of an ordinary union member
cannot be terminated for mere participation in an illegal strike; proof must be adduced
showing that he or she committed illegal acts during the strike. A union officer, on the
other hand, may be dismissed, not only when he actually commits an illegal act during
a strike, but also if he knowingly participates in an illegal strike.38

In the present case, respondents-union officers stand to be dismissed as they

conducted a strike despite knowledge that a strike vote had not yet been
approved by majority of the union and the corresponding strike vote report
had not been submitted to the NCMB.

With respect to respondents-union members, the petitioners merely alleged that they
committed illegal acts during the strike such as obstruction of ingress to and egress
from the premises of ESPI and execution of acts of violence and intimidation. There is,
however, a dearth of evidence to prove such claims. Hence, there is no basis to dismiss
respondents-union members from employment on the ground that they committed
illegal acts during the strike.

Dismissed respondents-union members are not entitled to back wages.

While it is true that the award of back wages is a legal consequence of a finding of
illegal dismissal, in  G & S Transport Corporation v. Infante,39 the Court pronounced that
the dismissed workers are entitled only to reinstatement considering that they did not
render work for the employer during the strike, viz:

With respect to back wages, the principle of a "fair day's wage for a fair day's
labor" remains as the basic factor in determining the award thereof. If there is
no work performed by the employee there can be no wage or pay unless, of course, the
laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed or otherwise illegally prevented from working. While it was found that
respondents expressed their intention to report back to work, the latter exception
cannot apply in this case. In Philippine Marine Officers' Guild v. Compañia Maritima, as
affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees
Union, the Court stressed that for this exception to apply, it is required that the
strike be legal, a situation that does not obtain in the case at bar.40 (emphases
supplied)

Thus, in the case at bar, respondents-union members' reinstatement without back

wages suffices for the appropriate relief. Fairness and justice dictate that back wages
be denied the employees who participated in the illegal concerted activities to the great
detriment of the employer.41

Nevertheless, separation pay is made an alternative relief in lieu of reinstatement in

certain circumstances, like: (a) when reinstatement can no longer be effected in view of
the passage of a long period of time or because of the realities of the situation; (b)
reinstatement is inimical to the employer's interest; (c) reinstatement is no longer
feasible; (d) reinstatement does not serve the best interests of the parties involved; (e)
the employer is prejudiced by the workers' continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained relations between the
employer and employee.42

Given the lapse of considerable time from the occurrence of the strike, the Court rules
that the award of separation pay of one (1) month salary for each year of service, in
lieu of reinstatement, is in order. This relief strikes a balance between the respondents-
union members who may not have known that they were participating in an illegal
strike but who, nevertheless, have rendered service to the company for years prior to
the illegal strike which caused a rift in their relations, and the employer who definitely
suffered losses on account of respondents-union members' failure to report to work
during the illegal strike.

WHEREFORE, the petition is PARTIALLY GRANTED. The 21 September 2010

Decision and 14 January 2011 Resolution of the Court of Appeals in CA-G.R. SP No.
102802 are AFFIRMED with MODIFICATION in that petitioners are
hereby ORDERED to pay each of the above-named individual respondents, except
union officers who are hereby declared validly dismissed, separation pay equivalent to
one (1) month salary for every year of service. Whatever sums already received from
petitioners under any release, waiver or quitclaim shall be deducted from the total
separation pay due to each of them.

SO ORDERED.
 BIGG'S INC., PETITIONER, v. JAY BONCACAS, THELMA DIVINA, ALLAN DY,
CHARVIE NEO, RICHARD SABATER, ARACELI ENRIQUEZ, MA. REBECCA SAN
JOSE, ALFREDO ODIAMAR, JR., MICHAEL MAPA, DANTE BAYTA, GLEN REBUSI,
RACHELLE MEA, ALBERT TINASAS, WILHELMN JARDINERO, * JUN LADABAN,
ARLENE COMIA, AND PURA SABATER, RESPONDENTS.

G.R. No. 200636, March 6, 2019

JUNNIE ARINES,** MARY JEAN SAN JUAN-REPUESTO, REYNALDO LIRIA,

EMMANUEL STA. ROSA, MENANDRO*** RAMOS, ARNOLD SARTE, SHEILA
RAYMUNDO-PONTE, MARILYN JANA, MARIANO AYCARDO, ROSENDO CHICA,
JOCELYN AYCARDO, JAY ARINES, ANTONIO MONSALVE, JOSELITO ENRIQUEZ,
SEGUNDINO CHICA, WINCESLAO LIRAG, LINA BARTOLOME-ODIAMAR, ANA
MARIE FRANCISCO-SATUR, CARMEN TEJERO-BAYTA, NORBERTO PASANO, AND
HEIRS OF EDWIN AYCARDO, REPRESENTED BY MARIA JOSEFA P. AYCARDO,
PETITIONERS, v. BIGG'S INCORPORATED, ARLENE ACABADO, TERESITA
AREJOLA, TERESA BUENAFLOR, CONSUELO BICHARA, AND MARICAR MANJON,
RESPONDENTS.

The Facts

The facts, as summarized from the records, are narrated below.

Bigg's, Inc. was the employer of Jay Boncacas , Junnie Arines, Mary Jean San Juan-
Repuesto, Meynardo Ramos, Sheila Raymundo-Ponte, Mariano Aycardo, Jay Arines,
Segundino Chica, Ana Marie Francisco-Satur, and Maria Josefa R. Aycardo (collectively,
union members). They are represented by their union president Boncacas. Bigg's is
represented by Arlene Acabado (Acabado) and Teresita Arejola (Arejola) who were the
personnel officer and general manager, respectively, of Bigg's at the time of filing of the
petitions.

Bigg's operates a chain of restaurants with principal place of business in Naga City,
Camarines Sur. Its employees formed a labor union named Bigg's Employees Union
(union) which was issued a Certificate of Registration by the Department of
Employment (DOLE) on January 30, 1996.

Both parties have contrasting versions of the incidents leading to the conflict between
the Bigg's management and the union members.

Bigg's alleges that on February 16, 1996, around 50 union members staged an illegal
"sit-down strike" in Bigg's restaurant. The union did not comply with the requirements
of sending Notice of Strike to the National Conciliation and Mediation Board (NCMB).
Neither did the union obtain the "strike vote" from its members. According to Bigg's,
the union belatedly filed a Notice of Strike with the NCMB on the same day to conceal
the illegality of the sit-down strike. Bigg's issued a memorandum to the striking union
members placing them under preventive suspension and requiring them to explain their
actions within 24 hours from notice. The union members did not comply with the
company's order. Thus, they were sent employment termination letters on February 19,
1996.4
On the other hand, the union members accuse Bigg's of interfering with union activities.
Allegedly, in February 1996, union members were asked to withdraw their membership
under threat of losing their employment. In the same month, employees Mariano
Aycardo and Marilyn Jana were dismissed from service purportedly due to their union
membership. On February 16, 1996, the day of the alleged sit-down strike, union
president Boncacas and other union members were prevented from entering the
premises of Bigg's. On the same day, they filed a Notice of Strike with the NCMB. They
attempted to return to work on February 17, 1996, but they were informed to obtain
their respective memoranda from the main office in Naga City. The memoranda
informed them of their suspension from work for participating in a sit-down strike.
Some union members tried to talk with the Bigg's management, but they were told not
to report for work the next day.5

The union members filed a complaint before the NCMB for unfair labor practices, illegal
dismissal, and damages, docketed as Sub RAB Case No. 05-03-00037-96. Bigg's also
filed a complaint before the NCMB for illegal strike against the union members docketed
as Sub RAB Case No. 05-03-00034-96.

Bigg's further alleges that during the strike on March 5, 1996, the union members were
disruptive and violent. They prevented ingress and egress of employees and customers
to and from the company's premises. They also stopped Bigg's vans from making
deliveries by throwing stones at the vans which caused injury to the driver as well as
damage to vehicles and to the guardhouse. They shouted at customers using
megaphones to prevent them from going to Bigg's Diner. The strike was later stopped
when both parties agreed to compulsory arbitration.7

Findings of the labor tribunals

After several conferences and hearings, and upon the filing of the parties' respective
position papers and memoranda, Labor Arbiter Rolando L. Bobis (LA) issued a Joint
Decision8 dated January 31, 2000.

The LA first noted that some union members manifested that they entered into a
settlement with Bigg's and executed Quitclaims and Releases.9 The LA also found that
there were union members who were contractual employees whose contracts with
Bigg's had ended prior to the controversy.10 Thus, said employees were removed as
parties.

On the issue of the illegality of the strikes, the LA ruled in favor of Bigg's. Under the
provisions of Articles 263 of the Labor Code and its implementing rules, for a strike to
enjoy the protection of law, the union must observe the following procedural
requirements: cralawred

1. A notice of strike with the required contents should be filed with the [DOLE],
specifically the regional branch of the [NCMB], copy furnished the employer;

2. A cooling-off period must be observed, i.e., a time gap is required to cool off

tempers between the filing of the notice and the actual execution of the strike;
 3. During the cooling-off period, the NCMB mediates and conciliates the parties.
They are not allowed to do any act that may disrupt or impede the early
settlement of the dispute;

4. Before a strike may actually be started, a strike vote should be taken by secret
balloting, with 24-hour prior notice to NCMB;

5. The result of the strike vote should be reported to the NCMB at least seven (7)
days before the intended strike or lockout, subject to the cooling off period.11

Thus, the LA ruled that the first strike conducted by the union members on February
16, 1996 was illegal for failure to comply with the above requirements. The union did
not furnish Bigg's a Notice of Strike and did not observe the cooling-off period.12

The second strike conducted on March 5, 1996, was likewise held illegal by the LA.
Although the union complied with the procedural requirements to conduct a valid strike,
the union members performed prohibited acts which rendered the strike illegal, such as
acts of violence, aggression, and obstruction of the free ingress and egress from
company premises. The LA found that union members prevented the ingress and egress
of Bigg's delivery vans by forming human barricades and throwing stones at the vans,
as well as putting big rocks along the road. It was also established that union members
were using megaphones to discourage customers from going to Bigg's, causing fear and
fright to its customers.13

As to the issue of illegal dismissal, the LA ruled that the dismissal from employment of
the union officers, Boncacas (president), Rey Liria (Liria) (vice president), Jean San
Juan (San Juan) (treasurer), and Junnie Arines (Arines) (secretary)14 was valid as it was
proven that they instigated and participated in the illegal strikes based on Article 279
(formerly Article 264) (a)15 of the Labor Code.16

While the dismissal of the union officers Boncacas, Liria, San Juan, and Arines was held
valid, as to the union members, the LA held that there was no evidence that they
knowingly participated in the illegal sit-down strike on February 16, 1996 or that they
committed illegal acts during the March 5, 1996 strike. Thus, Bigg's was ordered to
reinstate the following employees to their former positions:cralawred

1. Alfredo Odiamar, Jr. 9. Jun Ladaban

2. Albert Tinasas 10. Ma. Rebecca San Jose
3. Araceli Enriquez 11. Michael Mapa
4. Arlene Comia 12. Michael Valenzuela
5. Dante Bayta 13. Pura Sabater
6. Egino Palmera 14. Rachelle Mea
7. Glen Rebusi 15. Richard Sabater
8. Joseph A. Rull 16. Wilheim Jardenario.

On the allegation of unfair labor practice and union busting, the LA held that the union
members were unable to prove the same with substantial evidence. The union
members' prayer for moral and exemplary damages was consequently denied.17
On appeal, the NLRC reversed the LA Decision. In its Decision18 dated April 30, 2002
(NLRC's First Decision), the NLRC ruled that the strike on February 16,1996 was valid
because it was grounded on unfair labor practices committed by Bigg's. As such, the
union members were not bound to wait for 15 days from the filing of the Notice of
Strike before staging the same. The NLRC also ruled that there was no evidence to
establish that the union members displayed violence, coercion, or prevented the free
ingress to and egress from Bigg's premises during the March 5, 1996 strike.
chanRoblesvirtualLaw1ibrary

However, on motion for reconsideration (MR), the NLRC reversed its own ruling and
reinstated the LA Decision in its Decision dated October 22, 2002 (NLRC's Amended
Decision). The NLRC declared that there were material points which it had
unintentionally missed in its First Decision.20

The NLRC held that the two strikes staged by the union were illegal. As to the February
16, 1996 strike, there was no notice of strike filed with the NCMB. More significantly,
the union had not yet been qualified as the certified bargaining agent of Bigg's
employees. Thus, it could not, as a matter of right, stage a strike. The NLRC also held
that there was no conclusive proof of union busting or unfair labor practice.21

Regarding the March 5, 1996 strike, the NLRC held that audio-video footage was
presented showing the acts of violence, aggression, and prevention of ingress to and
egress from the premises of Bigg's. As well, during the hearings before the LA, counsel
for the union members stated that he was not contesting the allegation that some of
the union members had attempted to block the passage of Bigg's delivery vans.22 chanRoblesvirtualLaw1ibrary

Ruling of the Court of Appeals

Both parties elevated the case to the CA. In its Decision24 dated June 10, 2011, the CA
partially granted the union's appeal.

The CA overturned the findings of the NLRC as to the finding of a sit-down strike on
February 16, 1996. The CA held that Bigg's failed to adduce substantial evidence
showing that the union conducted a sit-down strike on February 16, 1996. Only one
representative of Bigg's, Carmen Manjon (corporate officer of Bigg's), attested that the
union members conducted a sit-down strike. Bigg's did not even bother to present
corroborative evidence to substantiate the allegation.25

On the other hand, the union clearly established that some of its members were barred
from entering the premises or threatened with dismissal by reason of their union
membership. This, said the CA, was a clear manifestation of unfair labor practice.26

With respect to the March 5, 1996 strike, the Court ruled that it was illegal for having
been conducted with violence and aggression. However, the CA clarified that a strike
need not always be declared by the duly certified bargaining representative. The
implementing rules of the Labor Code recognize the power of a legitimate labor
organization to conduct a strike in the absence of a certified or duly recognized
bargaining representative, provided that the reason therefor is unfair labor practice.
The CA held that a legitimate labor organization may take direct action and forego the
usual procedural requirements if the raison d'etre is unfair labor practice or dismissal of
its members which constitutes union busting.27

The CA further found that Bigg's was guilty of anti-unionism by preventing Boncacas
and other union members from entering the premises and firing other union members
on the same day when they opted to retain union membership. As of February 16,
1996, the union had been effectively busted. Thus, the CA held that it was no longer
necessary to file the requisite notice of strike.28

Nonetheless, the CA held that indeed, the strike held on March 5, 1996 was illegal as it
was marred by violence and restraint on the free passage and use of property of Biggs.
It was not disputed that the union members formed a human barricade and prevented
delivery vehicles from passing through Bigg's gates. They also placed three big stones
along the gate entrance to keep the vehicles from exiting the premises and flung stones
at another van while it was on its way out of the area.29

The dismissal of union officers Liria, San Juan, and Arines was upheld by the CA for
their illegal acts during the strike. However, the CA exonerated union president
Boncacas as it was not shown that he initiated or participated in any of the illegal acts
that characterized the strike as shown in the video evidence of the strike.30

The CA also held that Bigg's failed to prove that union members Maruja De Vera,
Thelma Divina, Allan Dy, Charvie Neo, Willy Oyarde, and Marlon Romero were
contractual employees.

Thus, the C A ordered the reinstatement of the following union members with payment
of backwages: cralawred

1. Alfredo Odiamar, Jr. 13. Ma. Rebecca San Jose

2. Albert Tinasas 14. Marlon Romero
3. Allan Dy 15. Maruja De Vera
4. Araceli Enriquez 16. Michael Mapa
5. Arlene Comia 17. Michael Valenzuela
6. Charvie Neo 18. Pura Sabater
7. Dante Bayta 19. Rachelle Mea
8. Glen Rebusi 20. Richard Sabater
9. Jay Boncacas 21. Thelma Divina
10. Joseph A. Rull 22. Wilheim Jardenario
11. Jun Ladaban 23. Willy Oyarde

Both parties filed their respective MRs.31

The union argued that union members Menandro Ramos, Lina Bartolome, Carmen
Tejero, Sheila Raymundo, and Gregorio Come32 should also be reinstated and their
names were just inadvertently omitted from the LA Decision.33
For its part, Bigg's alleged that Michael Mapa, Rachelle Mea, Richard Sabater, Albert
Tinasas, Alfredo Odiamar, Jr., Dante Bayta, and Glen Rebusi should be excluded in the
award as they had already entered into a settlement with Bigg's and signed Quitclaims
and Releases. Meanwhile, Maruja De Vera, Willie Oyarde, Marlon Romero, Michael
Valenzuela, Egino Palmar, and Joseph Rull should be excluded as well because they
were no longer listed as petitioners in the union's petition before the CA.34

The CA promulgated an Amended Decision35 on January 20, 2012. On the matter of the
union's assertion that some union members' names had been omitted, the CA held that
the exclusion of said names from the LA Decision was not unintentional as they were
found to have participated in the illegal strike and as such, ineligible for reinstatement.

On the issue of the Compromise Agreement36 executed by Michael Mapa, Rachelle Mea,

Joseph Rull, Richard Sabater, Araceli Enriquez, Albert Tinasas, Alfredo Odiamar, Jr.,
Dante Bayta, and Glen Rebusi, the CA held that the same was vague as it merely
indicated the payment received by the employees without any indication of whether it
constituted backwages or separation pay. Neither did it state that the said employees
waived their right to reinstatement if so decided by the court. The document also stated
that "this agreement shall be without prejudice to the case [titled Biggs, Incorporated
v. Bigg's Employees Union], Sub RAB Case No. 05-03-00034-96 and [the case
titled, Jay Boncacas et al. v. Biggs, Inc. et al.], Sub RAB Case No. 05-00037-96 now
pending before the [NLRC]." Thus, there was no relinquishment of the employees'
rights to pursue their case in spite of the agreement.

However, the CA held that it had not acquired jurisdiction over Maruja De Vera, Willie
Oyarde, Marlon Romero, Michael Valenzuela, Egino Palmar, and Joseph Rull as they
were not named as petitioners in the CA. Thus, they could not lawfully claim any benefit
from the decision rendered by the CA. Only the following union members/employees
remained entitled to the award: cralawred

1. Alfredo Odiamar, Jr. 10. Jun Ladaban

2. Albert Tinasas 11. Ma. Rebecca San Jose
3. Allan Dy 12. Michael Mapa
4. Araceli Enriquez 13. Pura Sabater
5. Arlene Comia 14. Rachelle Mea
6. Charvie Neo 15. Richard Sabater
7. Dante Bayta 16. Thelma Divina
8. Glen Rebusi 17. Wilheim Jardenario
9. Jay Boncacas

Issues

The issues for the Court's consideration are the following: cralawred

1. Whether the strikes held on February 16, 1996 and March 5, 1996 were illegal;

2. Whether the union officers and employees were validly dismissed; and,
 3. The proper award and parties to the case.

Ruling

Requirements of a valid strike

As defined under Article 219 (formerly Article 212) (o) of the Labor Code,
a  strike means any temporary stoppage of work by the concerted action of employees
as a result of an industrial or labor dispute.

Under Article 278 (formerly Article 263) of the Labor Code, there are different
procedural requirements depending on the ground of the strike: cralawred

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent
may file a notice of strike or the employer may file a notice of lockout with the Ministry
at least 30 days before the intended date thereof. In cases of unfair labor practice, the
period of notice shall be 15 days and in the absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed by any legitimate labor organization
in behalf of its members. However, in case of dismissal from employment of union
officers duly elected in accordance with the union constitution and by-laws, which may
constitute union busting where the existence of the union is threatened, the 15-day
cooling-off period shall not apply and the union may take action immediately.

(d) The notice must be in accordance with such implementing rules and regulations as
the Minister of Labor and Employment may promulgate.

(e) During the cooling-off period, it shall be the duty of the Ministry to exert all efforts
at mediation and conciliation to effect a voluntary settlement. Should the dispute
remain unsettled until the lapse of the requisite number of days from the mandatory
filing of the notice, the labor union may strike or the employer may declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. A decision to declare a lockout must be approved by
a majority of the board of directors of the corporation or association or of the partners
in a partnership, obtained by secret ballot in a meeting called for that purpose. The
decision shall be valid for the duration of the dispute based on substantially the same
grounds considered when the strike or lockout vote was taken. The Ministry may, at its
own initiative or upon the request of any affected party, supervise the conduct of the
secret balloting. In every case, the union or the employer shall furnish the Ministry the
results of the voting at least seven days before the intended strike or lockout, subject
to the cooling-off period herein provided.

This provision was further implemented by Department Order (DO) Order No. 40-03,
Amending the Implementing Rules of Book V of the Labor Code of the Philippines (IRR)
and DO 40-A-0347 which amended Section 5, Rule XXII of the IRR.
The Labor Code and the IRR limit the grounds for a valid strike to: (1) a bargaining
deadlock in the course of collective bargaining, or (2) the conduct of unfair labor
practices by the employer.48

Only a certified or duly recognized bargaining representative may declare a strike in

case of a bargaining deadlock. However, in cases of unfair labor practices, the strike
may be declared by any legitimate labor organization.49

In both instances, the union must conduct a "strike vote" which requires that the actual
strike is approved by majority of the total union membership in the bargaining unit
concerned. The union is required to notify the regional branch of the NCMB of the
conduct of the strike vote at least 24 hours before the conduct of the voting.
Thereafter, the union must furnish the NCMB with the results of the voting at least
seven days before the intended strike or lockout.50 This seven-day period has been
referred to as the "seven-day strike ban"51 or "seven-day waiting period."52

In Lapanday Workers Union v. National Labor Relations Commission,53 the Court

reasoned that the period is intended to give the NCMB an opportunity to verify whether
the projected strike really carries the imprimatur of the majority of the union
members.54 In a strike due to bargaining deadlocks, the union must file a notice of
strike or lockout with the regional branch of the NCMB at least 30 days before the
intended date of the strike and serve a copy of the notice on the employer. This is the
so-called "cooling-off period" when the parties may enter into compromise agreements
to prevent the strike. In case of unfair labor practice, the period of notice is shortened
to 15 days; in case of union busting, the "cooling-off period" does not apply and the
union may immediately conduct the strike after the strike vote and after submitting the
results thereof to the regional arbitration branch of the NCMB at least seven days
before the intended strike.55

Thus, in a strike grounded on unfair labor practice, the following are the
requirements: (1) the strike may be declared by the duly certified bargaining agent or
legitimate labor organization; (2) the conduct of the strike vote in accordance with the
notice and reportorial requirements to the NCMB and subject to the seven-day waiting
period; (3) notice of strike filed with the NCMB and copy furnished to the employer,
subject to the 15-day cooling-off period. In cases of union busting, the 15-day cooling-
off period shall not apply.

The union conducted an illegal sit-down strike on February 16, 1996

With regard to the first strike conducted by the union members on February 16, 1996
(first strike), the Court holds that the CA committed reversible error in overturning the
findings of the NLRC and LA.

Several employees of Bigg's executed affidavits deposing that the union members
conducted a sit-down strike on February 16, 1996.

The consistent and corroborative sworn declarations of Bigg's witnesses constitute

substantial evidence to prove that the union members committed a sit-down strike on
February 16, 1996. The quantum of proof necessary in labor cases is substantial
evidence, or such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.60 Thus, the CA committed reversible error in
overturning the findings of the NLRC and LA based on the CA's incorrect finding that
only one representative of Bigg's attested that there was a sit-down strike.

On this score, the Court reinstates and affirms the ruling of the NLRC, which had, for its
part, affirmed the findings of the LA that the union conducted an illegal sit-down strike
on February 16, 1996, for failure of the union to comply with the pre-requisites for a
valid strike.

The union did not file the requisite Notice of Strike and failed to observe the cooling-off
period. In an effort to legitimize the strike on February 16, 1996, the union filed a
Notice of Strike on the same day. This cannot be considered as compliance with the
requirement, as the cooling-off period is mandatory. The cooling-off period is not
merely a period during which the union and the employer must simply wait. The
purpose of the cooling-off period is to allow the parties to negotiate and seek a peaceful
settlement of their dispute to prevent the actual conduct of the strike. In other words,
there must be genuine efforts to amicably resolve the dispute.

Moreover, the Court affirms the findings of the labor tribunals that the union failed to
prove with substantial evidence that Bigg's was guilty of unfair labor practice as defined
under Article 25961 of the Labor Code to allow the union, a non-certified bargaining
agent to initiate the strike. Likewise, the union failed to prove that there was union
busting62 to exempt compliance with the cooling-off period. The union did not present
any substantial evidence to prove its allegations that union members were actually
dismissed or threatened with dismissal for their union membership.

In fine, the union's failure to comply with the mandatory requirements rendered the
strike on February 16, 1996 illegal.

The strike on March 5, 1996 was illegal; dismissal of union president valid

The Court upholds the consistent and uniform findings of the CA, NLRC, and LA on the
illegality of the strike on March 5, 1996, despite the compliance with the procedural
requirements of a valid strike. It was established that the striking union members
committed acts of violence, aggression, vandalism, and blockage of the free passage to
and from Bigg's premises.

While the law protects the right of workers to engage in concerted activities for the
purpose of collective bargaining or to seek redress for unfair labor practices, this right
must be exercised in accordance with the law. Article 279 (formerly 264) (e) of the
Labor Code provides: cralawred

No person engaged in picketing shall commit any act of violence, coercion or

intimidation or obstruct the free ingress to or egress from the employer's premises for
lawful purposes, or obstruct public thoroughfares.

Thus, in this matter, the CA correctly upheld the findings of the labor tribunals.
The Court, however, reverses the CA's findings that the union president Boncacas'
dismissal was invalid as he did not commit illegal acts during the March 5, 1996 strike.
The Labor Code provides for a stricter standard on union officers. Article 279 (formerly
Article 264) (a) provides: cralawred

x x x Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status: Provided, That mere participation
of a worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful
strike.

In Magdala Multipurpose & Livelihood Cooperative v. Kilusang Manggagawa ng

LGS,63 the Court summarized the above rule accordingly: cralawred

We now come to the proper sanctions for the conduct of union officers in an illegal
strike and for union members who committed illegal acts during a strike. The above-
cited Art. 264 of the Code presents a substantial distinction of the consequences of an
illegal strike between union officers and mere members of the union. For union officers,
knowingly participating in an illegal strike is a valid ground for termination of their
employment. But for union members who participated in a strike, their employment
may be terminated only if they committed prohibited and illegal acts during the strike
and there is substantial evidence or proof of their participation, i.e., that they are
clearly identified to have committed such prohibited and illegal acts.64
chanRoblesvirtualLaw1ibrary

Thus, for union members, what is required is that they knowing participated in the
commission of illegal acts during the strike for there to be sufficient ground for
termination of employment. For union officers, however, it suffices that they
knowingly participated in an illegal strike.

It must be noted that Boncacas not only knowingly participated but was the one who
principally organized two illegal strikes on February 16, 1996 and March 5, 1996. Thus,
the dismissal of Boncacas and the other union officers after the illegal strike on
February 16, 1996 as well as the March 5, 1996 strike was valid. However, as to the
union members who did not participate in any prohibited act during the strikes, their
dismissal was invalid.

The proper parties and applicability of the Decision

In their petition, the union members maintain that Menandro Ramos, Lina Bartolome,
Carmen Tejero, Sheila Raymundo, and Gregorio Come should also be reinstated as their
names were merely inadvertently omitted from the dispositive portion of the LA
Decision. There was also no finding in the LA Decision of their purported participation in
any illegal act, contrary to the ruling of the CA.

On this point, the Court finds for the union. Indeed, the LA Decision names the
following union officers as those who participated in the illegal strike on February 16,
1996 and March 5, 1996: Jay Boncacas, Rey Liria, Jean San Juan, and Junnie
Arines.65 The LA Decision also lists union member Gregorio Come as a participant in the
March 5, 1996 but did not state whether he knowingly participated in the commission of
prohibited acts during the strike. Neither did the LA declare that Menandro Ramos, Lina
Bartolome, Carmen Tejero, and Sheila Raymundo as having knowingly participated in
any illegal act during the March 5, 1996 strike. However, as pointed out by the union,
their names were omitted in the dispositive portion of the LA Decision without any
explanation. Absent any definite finding that said members willingly participated in any
illegal act, they should have been included in the award of reinstatement with
backwages by the LA.

With regard to the Compromise Agreement66 executed by Michael Mapa, Rachelle Mea,

Joseph Rull, Richard Sabater, Araceli Enriquez, Albert Tinasas, Alfredo Odiamar, Jr.,
Dante Bayta, and Glen Rebusi, the Court affirms the CA's Amended Decision. As held by
the CA, the agreement is vague as it was merely an acknowledgment of the receipt of
funds. It did not indicate whether the same constituted backwages or separation pay.
More significantly, the Compromise Agreement explicitly stated that "this agreement
shall be without prejudice to the case [titled Biggs, Incorporated v. Bigg's Employees
Union], Sub RAB Case No. 05-03-00034-96 and [the case titled, Jay Boncacas et al. v.
Biggs, Inc. et al.], Sub RAB Case No. 05-03-00037-96 now pending before the [NLRC]."
Thus, the signatories thereto clearly reserved their right to pursue the instant cases.

The CA also correctly ruled that Bigg's failed to prove that union members Maruja De
Vera, Thelma Divina, Allan Dy, Charvie Neo, Willy Oyarde, and Marlon Romero were
contractual employees. To substantiate its claim, Bigg's merely submitted the
memorandum67 addressed to said employees informing them of the termination of their
service contracts. Bigg's failed to submit the contracts themselves, which would have
supported its claim that said employees were contractual.

However, the Court also agrees with the CA's removal of the following names in its
Amended Decision: Maruja De Vera, Willie Oyarde, Marlon Romero, Michael Valenzuela,
Egino Palmar, and Joseph Rull. Their names were not included in the list of petitioners
in the union's petition for certiorar68 before the CA and neither were they signatories to
the Verification and Certification of Non-Forum Shopping.69 Thus, as it stands, the
following persons should have been included in the Amended CA Decision as regards its
order of reinstatement: cralawred

1. Alfredo Odiamar, Jr. 12. Pura Sabater

2. Albert Tinasas 13. Rachelle Mea
3. Allan Dy 14. Richard Sabater
4. Araceli Enriquez 15. Thelma Divina
5. Arlene Comia 16. Wilheim Jardenario
6. Charvie Neo 17. Menandro Ramos
7. Dante Bayta 18. Lina Bartolome
8. Glen Rebusi 19. Carmen Tejero
9. Jun Ladaban 20. Sheila Raymundo
10. Ma. Rebecca San Jose 21. Gregorio Come
11. Michael Mapa
However, the Court notes that of the five union members omitted from the LA Decision,
only Sheila Raymundo and Menandro Ramos joined in the instant petition. Thus, the
Decision of the Court shall only apply as to them In Municipality of Orion v.
Pereyra70 the Court held:

x x x[A] reversal as to parties appealing does not necessitate a reversal as to parties

not appealing, but that the judgment may be affirmed or left undisturbed as to them.
An exception to the rule exists, however, where a judgment cannot be reversed as to
the party appealing without affecting the rights of his co-debtor.71
chanRoblesvirtualLaw1ibrary

Thus, as Lina Bartolome, Carmen Tejero, and Gregorio Come no longer participated in
the instant petition, they are no longer parties and the Court cannot issue a judgment
as to them.

Lastly, the Court deletes the award of backwages in conformity with jurisprudence that
backwages are not granted to dismissed employees who participated in an illegal strike
even if they are later reinstated. In Escario v. NLRC72(Escario), the Court held:
cralawred

Conformably with the long honored principle of a fair day's wage for a fair day's labor,
employees dismissed for joining an illegal strike are not entitled to backwages for the
period of the strike even if they are reinstated by virtue of their being merely members
of the striking union who did not commit any illegal act during the strike.73
chanRoblesvirtualLaw1ibrary

In Philippine Diamond Hotel & Resort, Inc. v. Manila Diamond Hotel Employees
Union74 (Philippine Diamond Hotel & Resort, Inc.), the Court laid down the exceptions to
this rule: cralawred

Jurisprudential law, however, recognizes several exceptions to the "no backwages rule,"
to wit:

1. when the employees were illegally locked to thus compel them to stage a strike;

2. when the employer is guilty of the grossest form of ULP;

3. when the employer committed discrimination in the rehiring of strikers refusing to

readmit those against whom there were pending criminal cases while admitting non-
strikers who were also criminally charged in court;

4. or when the workers who staged a voluntary ULP strike offered to return to work
unconditionally but the employer refused to reinstate them. Not any of these or
analogous instances is, however, present in the instant case.

Respondent urges this Court to apply the exceptional rule enunciated in Philippine
Marine Officers' Guild v. Compañia Maritima and similar cases where the employees
unconditionally offered to return to work, it arguing that there was such an offer on its
part to return to work but the Hotel screened the returning strikers and refused to
readmit those whom it found to have perpetrated prohibited acts during the strike.
It must be stressed, however, that for the exception in Philippine Marine Officers'
Guild  to apply, it is required that the strike must be legal.75
chanRoblesvirtualLaw1ibrary

None of the exceptions mentioned above is existing in these cases and, as found by the
Court, both strikes conducted by the union were illegal. Thus, the listed employees are
not entitled to backwages despite the CA's order of reinstatement.

Separation pay in lieu of reinstatement

In certain cases, separation pay is awarded in lieu of reinstatement. The circumstances

were enumerated in Escario: cralawred

x x x (a) when reinstatement can no longer be effected in view of the passage of a long
period of time or because of the realities of the situation; (b) reinstatement is inimical
to the employer's interest; (c) reinstatement is no longer feasible; (d) reinstatement
does not serve the best interests of the parties involved; (e) the employer is prejudiced
by the workers' continued employment; (f) facts that make execution unjust or
inequitable have supervened; or (g) strained relations between the employer and
employee.76
chanRoblesvirtualLaw1ibrary

As prayed for by Bigg's, considering that 23 years have passed since the dismissal of
the union members on February 19, 1996,77 and bearing in mind Bigg's manifestation
that they could no longer trust the striking employees especially as the company is in
the food service industry,78 separation pay may be more appropriate in lieu of
reinstatement.

In Philippine Diamond Hotel & Resort, Inc., the Court made the following discussion: cralawred

Reinstatement without backwages of striking members of respondent who did not

commit illegal acts would thus suffice under the circumstances of the case. If
reinstatement is no longer possible, given the lapse of considerable time from the
occurrence of the strike, the award of separation pay of one (1) month salary for each
year of service, in lieu of reinstatement, is in order.79
chanRoblesvirtualLaw1ibrary

Thus, the Court adopts the above disquisition in this case. Finally, the monetary award
herein granted shall earn legal interest of 12% per annum from February 19, 1996, the
date of termination, until June 30, 2013 in line with the Court's ruling in Nacar v.
Gallery Frames80 and from July 1, 2013 until full satisfaction of the award, the interest
rate shall be at 6%.81

WHEREFORE, premises considered, the petitions in G.R. Nos. 200487 & 200636
are PARTIALLY GRANTED. The Court further RESOLVES to MODIFY the assailed
Decision dated June 10, 2011 and Amended Decision dated January 20, 2012 of the
Court of Appeals (CA) in CA-G.R. SP No. 78149, accordingly: cralawred

1. DECLARE the strike of February 16, 1996 illegal;

 2. DELETE the award of backwages;

3. GRANT separation pay in lieu of reinstatement at the rate of one (1) month pay
for every year of service from the time of dismissal on February 19, 1996 until
the finality of this Decision;

4. INCLUDE MENANDRO RAMOS and SHEILA RAYMUNDO in the award. The

complete list of employees ENTITLED to the award follows:

a. Alfredo Odiamar, Jr. k. Michael Mapa.

b. Albert Tinasas l. Pura Sabater
c. Allan Dy m. Rachelle Mea
d. Araceli Enriquez n. Richard Sabater
e. Arlene Comia o. Thelma Divina
f. Charvie Neo p. Wilheim Jardenario
g. Dante Bayta q. Menandro Ramos
h. Glen Rebusi r. Sheila Raymundo
i. Jun Ladaban
j. Ma. Rebecca San Jose

5. The monetary award shall earn legal interest of 12% per annum from February
19, 1996 until June 30, 2013. From July 1, 2013 until full satisfaction of the
award, the interest rate shall be at 6%.

6. REMAND THE CASE TO THE LABOR ARBITER FOR EXECUTION OF THE AWARD

AND COMPUTATION OF SEPARATION PAY.

SO ORDERED.

PHILIPPINE AIRLINES, INC., Petitioner

vs.
AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, SOTICO T. LLOREN, RONALDO V.
CUNANAN, LEONCIO H. MANARANG, JR., VICTOR N. AGUILAR, RODOLFO M. MEDINA,
RENATO A. FLESTADO, ROMEO L. LORENZO, WESLEY V. TATE, SALVADOR S. ARCEO, JR.,
MARIANO V. NAVARETTE, JR., WILLIAM Z. CENZON, LIBERATED. GUTIZA, MANUEL F.
FORONDA, ISMAEL C. LAPUS, JR., RAQUELITO L. CAMACHO, JOHN JOSEPH V. DE
GUZMAN, EFREN L. PATTUGALAN, JIMMY JESUS D. ARRANZA, PAUL DE LEON, ANTONIO
A. CAYABA, DIOSDADO S. JUAN, JR., ORLANDO A. DEL CASTILLO, DEOGRACIAS C.
CABALLERO, JR., and FLORENDO R. UMALI, Respondents

THE FACTS

The present case arose from a labor dispute between petitioner Philippine Airlines, Inc. (PAL) and
respondent Airline Pilots' Association of the Philippines (ALPAP), a duly registered labor
organization and the exclusive bargaining agent of all commercial pilots of PAL. On 9 December
1997, ALP AP filed with the Department of Labor and Employment (DOLE) a notice of strike alleging
that PAL committed unfair labor practice. On 23 December 1997, the Secretary of
DOLE (SOLE) assumed jurisdiction over the dispute and thereafter prohibited ALP AP from staging
a strike and committing any act that could exacerbate the dispute. 6

Despite the prohibition by the SOLE, ALPAP staged a strike on 5 June 1998. A return-to-work
order  was issued by the SOLE on 7 June 1998, but ALPAP defied the same and went on with their
7

strike. Consequently, on 1 June 1999, the SOLE issued a resolution  which declared the illegality of
8

the strike staged by ALPAP and the loss of employment status of the officers who participated in the
strike.

The SOLE's resolution was upheld by the CA in CA-G.R. SP No. 54880.  The matter was eventually
9

elevated to this Court in G.R. No. 152306. In a Resolution,  dated 10 April 2002, the Court dismissed
10

ALPAP's petition for failure to show that the CA committed grave abuse of discretion or a reversible
error. The resolution attained finality on 29 August 2002. 11

On 22 April 2003, or almost eight (8) months from the finality of the Court's 10 April 2002 Resolution,
PAL filed before the LA a complaint  for damages against ALPAP, as well as some of its officers and
12

members.

PAL alleged, among others, that on 6 June 1998, the second day of the illegal strike conducted by
ALPAP, its striking pilots abandoned three (3) PAL aircraft. Because of the deliberate and malicious
abandonment of the said flights, its passengers were stranded, and rendered PAL liable for violation
of its contract of carriage. Thus, PAL was compelled to incur expenses by way of hotel
accommodations, meals for the stranded passengers, airport parking fees, and other operational
expenses. PAL further alleged that its operation was crippled by the illegal strike resulting in several
losses from ticket refunds, extraordinary expenses to cope with the shutdown situation, and lost
income from the cancelled domestic and international flights. PAL claimed that, as a result of the
illegal strike, it suffered actual damages in the amount of ₱73l,078,988.59. PAL further prayed that it
be awarded ₱300,000,000.00 and ₱3,000,000.00 as exemplary damages and attorney's fees,
respectively.

The LA Ruling

In its decision, dated 22 April 2008, the LA dismissed PAL's complaint. It ruled that it had no
jurisdiction to resolve the issue on damages. It noted that the SOLE did not certify the controversy
for compulsory arbitration to the NLRC nor in any occasion did the parties agree to refer the same to
voluntary arbitration under Article 263(h) of the Labor Code. Hence, jurisdiction to resolve all issues
arising from the labor dispute, including the claim for damages arising from the illegal strike, was left
with the SOLE to the exclusion of all other fora.
The LA further ruled that PAL's cause of action had already been barred by prescription. It opined
that since the complaint was premised on the illegality of the strike held by the respondents, the
accrual of PAL's cause of action should be reckoned either on 5 June 1998, the first day of the
strike, or on 7 June 1998, when the respondents defied the SOLE's return-to-work order. Hence,
PAL's 22 April 2003 complaint was filed beyond the 3- year prescriptive period set forth in Article 291
of the Labor Code. The LA suggested, however, that PAL's cause of action may be treated as an
independent civil action in another forum.

The NLRC Ruling

In its resolution, dated 27 April 2009, the NLRC affirmed with modification the LA's 22 April 2008
decision. It ruled that labor tribunals have no jurisdiction over the claims interposed by PAL. It opined
that the reliefs prayed for by PAL should have been ventilated before the regular courts considering
that they are based on the tortuous acts allegedly committed by the respondents. It explained that
the airline pilots' refusal to fly their assigned aircrafts constitutes breach of contractual obligation
which is intrinsically a civil dispute. The dispositive portion of the resolution states:

WHEREFORE, except for the MODIFICATION that the phrase "for lack of merit" in the dispositive
portion is deleted therefrom, the appealed Decision is hereby AFFIRMED.

SO ORDERED. 14

PAL moved for reconsideration, but the same was denied by the NLRC in its resolution, dated 26
February 2010.

Unconvinced, PAL filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.

The CA Ruling

In its assailed Decision, dated 26 August 2011, the CA partially granted PAL's petition. It ruled that
while the NLRC correctly sustained the LA's dismissal of the complaint for lack of jurisdiction, it
declared that the NLRC gravely abused its discretion when it affirmed the LA's pronouncement that
PAL's cause of action had already prescribed.

The appellate court concurred with the NLRC's opinion that exclusive jurisdiction over PAL's claim
for damages lies with the regular courts and not with the SOLE. It ratiocinated that while Article
263(g) of the Labor Code vests in the SOLE the authority to resolve all questions and controversies
arising from a labor dispute over which it assumed jurisdiction, said authority must be interpreted to
cover only those causes of action which are based on labor laws. Stated differently, causes of action
based on an obligation or duty not provided under the labor laws are beyond the SOLE's jurisdiction.
It continued that only those issues that arise from the assumed labor dispute, which has a direct
causal connection to the employer-employee relationship between the parties, will fall under the
jurisdiction of the SOLE. It pointed out that the damages caused by the wilful acts of the striking
pilots in abandoning their aircraft are recoverable under civil law and are thus within the jurisdiction
of the regular courts.

Further, the appellate court held that PAL's cause of action accrued only on 29 August 2002, the
date when this Court's resolution sustaining the finding of the strike's illegality had attained finality.
The dispositive portion of the assailed decision reads:

THE ISSUE
WHETHER THE NLRC AND THE LABOR ARBITER HA VE JURISDICTION OVER PAL'S
CLAIMS AGAINST THE RESPONDENTS FOR DAMAGES INCURRED AS A CONSEQUENCE OF
THE LATTER'S ACTIONS DURING THE ILLEGAL STRIKE.

THE COURT'S RULING

The petition is partially meritorious.

Labor tribunals have jurisdiction

over actions for damages arising
from a labor strike.

Under Article 21 7 [now Article 224] of the Labor Code, as amended by Section 9 of R.A. No. 6715,
the LA and the NLRC have jurisdiction to resolve cases involving claims for damages arising from
employer-employee relationship, to wit:

ART. 217. Jurisdiction of Labor Arbiters and the Commission- (a) Except as otherwise provided
under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or nonagricultural:

1. Unfair labor practice cases;

4. Claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;

5. Cases arising from any violation of Article 264 of this Code including questions involving
the legality of strikes and lockouts; and

It is settled, however, that not every controversy or money claim by an employee against the
employer or vice-versa falls within the jurisdiction of the labor arbiter.  Intrinsically, civil disputes,
16

although involving the claim of an employer against its employees, are cognizable by regular
courts.17

To determine whether a claim for damages under paragraph 4 of Article 217 is properly cognizable
by the labor arbiter, jurisprudence has evolved the "reasonable connection rule" which essentially
states that the claim for damages must have reasonable causal connection with any of the claims
provided for in that article. A money claim by a worker against the employer or vice-versa is within
the exclusive jurisdiction of the labor arbiter only if there is a "reasonable causal connection"
between the claim asserted and employee-employer relations. Only if there is such a connection
with the other claims can the claim for damages be considered as arising from employer-employee
relations.  Absent such a link, the complaint will be cognizable by the regular courts.
18

The Court agrees with PAL that its claim for damages has reasonable connection with its employer-
employee relationship with the respondents. The claimed damages arose from the illegal strike and
acts committed during the same which were in turn closely related and intertwined with the
respondents' allegations of unfair labor practices against PAL. This could not even be disputed as
even the appellate court recognized this fact. In its 26 August 2011 Decision, the CA made the
following statements:
In Goodrich Employees Association v. Hon. Flores,  the Court stressed the rule that cases involving
21

unfair labor practices are within the jurisdiction of the Court of Industrial Relations (CIR), the labor
tribunal at that time. The Court further emphasized that where the subject matter is within the
exclusive jurisdiction of the CIR, it must be deemed to have jurisdiction over all incidental matters
connected to the main issue.

Thus, in Holganza v. Hon. Apostol,  the Court reaffirmed the exclusive jurisdiction of the labor
22

tribunal over actions for damages arising from labor controversies. In the said case, the Social
Security System (SSS) filed with the then Court of First Instance (CFI) of Rizal a complaint for
damages with writ of preliminary attachment against several of its employees. It alleged that it
sustained damages as a consequence of the picketing carried on by its striking employees during a
strike held against it. The striking employees moved for the dismissal of the complaint on the ground
of lack of jurisdiction, but the trial court denied the same. Eventually, the issue reached this Court
which opined that the trial court is devoid of any jurisdiction to entertain the said complaint for
damages. In so ruling, the Court declared that exclusive jurisdiction over disputes of this character
belonged to the then CIR. To hold otherwise would be to sanction split jurisdiction which is
obnoxious to the orderly administration of justice.

A similar controversy arose in Philippine Long Distance Telephone Company v. Free Telephone
Workers Union.  The Court reiterated the rule that regular courts are devoid of any jurisdiction over
23

claims for damages arising from a labor strike, thus:

It is clear from the records that the subject complaint for damages is intertwined with or deeply
rooted from the 1964 certified labor dispute between appellant and appellees. As can be gleaned
from the aforesaid complaint, appellant is claiming against appellees damages it allegedly sustained
as a consequence of the strikes declared by the appellees. It is therefore obvious in the light of the
established jurisprudence as aforestated that the lower court, Court of First Instance of Manila,
Branch XII, did not have jurisdiction over the aforesaid complaint for damages; hence, all the
proceedings taken therein are void for lack of jurisdiction.24

The rule stands even if the strike is illegal. In Antipolo Highway Lines Employees Union v. Hon.
Aquino.  Francisco De Jesus, the owner of Anti polo Highway Lines (AHL), instituted a complaint for
25

damages with injunction against AHL Employees Union (AHLEU) and its officers before the CFI of
Rizal. De Jesus alleged that AHLEU staged a strike and posted picket lines along AHL's compound,
thereby preventing its employees from performing their work and causing it to suffer losses and
damages from the non-operation of its buses. The Court ruled that the trial court lacked jurisdiction
over the complaints for damages and injunction because the illegal strike and picket which allegedly
caused damages to De Jesus were mere incidents of the labor dispute between the parties,

Indeed, the aforecited cases were decided by this Court under R.A. No. 875 or the Industrial Peace
Act. The Court is also not unmindful of the fact that R.A. No. 875 had been completely superseded in
1974 by Presidential Decree (P.D.) No. 442 or the Labor Code of the Philippines. Nevertheless, it
could not be denied that the underlying rationale for the rule finds application even with the effectivity
of the Labor Code. As in the Industrial Peace Act, splitting of jurisdiction is abhorred under the Labor
Code. 27

A case in point is National Federation of Labor v. Hon. Eisma,  decided by the Court under the
28

provisions of the Labor Code. In case, as in those cited, the employer, Zamboanga Wood Products,
Inc., filed, before the CFI of Zamboanga City, a complaint for damages against the officers and
members of the labor union. The employer alleged that it incurred damages because the union
officers and members blockaded the road leading to its manufacturing division, thus preventing
customers and suppliers free ingress to or egress from their premises. The labor union, however,
contended that jurisdiction over the controversy belongs to the labor arbiter because the acts
complained of were incidents of picketing by the defendants who were then on strike against the
employer.

The Court ruled in favor of the labor union and nullified the proceedings before the trial court. The
Court opined that the complaint for damages is deeply rooted in the labor dispute between the
parties and thus should be dismissed by the regular court for lack of jurisdiction. The Court stressed
that the wordings of Article 217 of the Labor Code is explicit and clear enough to mean that
exclusive jurisdiction over suits for damages arising from a strike belongs to the labor arbiter, thus:

Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter is
therein provided for explicitly. It means, it can only mean, that a court of first instance judge then, a
regional trial court judge now, certainly acts beyond the scope of the authority conferred on him by
law when he entertained the suit for damages, arising from picketing that accompanied a strike. That
was squarely within the express terms of the law. Any deviation cannot therefore be tolerated. So it
has been the constant ruling of this Court even prior to Lizarraga Hermanos v. Yap Tico, a 1913
decision. The ringing words of the ponencia of Justice Moreland still call for obedience. Thus, "The
first and fundamental duty of courts, in our judgment, is to apply the law. Construction and
interpretation come only after it has been demonstrated that application is impossible or inadequate
without them." It is so even after the lapse of sixty years.  [Citations omitted]
29

Jurisprudence dictates that where the plaintiffs cause of action for damages arose out of or was
necessarily intertwined with an alleged unfair labor practice, the jurisdiction is exclusively with the
labor tribunal. Likewise, where the damages separately claimed by the employer were allegedly
incurred as a consequence of strike or picketing of the union, such complaint for damages is deeply
rooted in the labor dispute between the parties and within the exclusive jurisdiction of the labor
arbiter. Consequently, the same should be dismissed by ordinary courts for lack of jurisdiction. 30

From the foregoing, it is clear that the regular courts do not have jurisdiction over PAL's claim of
damages, the same being intertwined with its labor dispute with the respondents over which the
SOLE had assumed jurisdiction. It is erroneous, therefore, for the CA to even suggest that PAL's
complaint should have been ventilated before the trial court.

A separate complaint for damages

runs counter to the rule against
split jurisdiction.

While there is merit in the contention that regular courts do not have jurisdiction over claims for
damages arising from a labor controversy, the Court opines that PAL could no longer recover the
alleged damages.

It must be recalled that the SOLE assumed jurisdiction over the labor dispute between PAL and the
respondents on 23 December 1997. In this regard, it is settled that the authority of the SOLE to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and controversies arising
therefrom.  It has also been opined that when the very reason for the SOLE's assumption of
31

jurisdiction is the declaration of strike, any issue regarding the strike is not merely incidental to but is
essentially involved in the labor dispute itself.
32

It bears emphasis, even at the risk of being repetitious, that it is beyond question that the issue on
damages is a controversy which arose from the labor dispute between the parties herein.
Consequently, when the SOLE assumed jurisdiction over the labor dispute, the claim for damages
was deemed included therein. Thus, the issue on damages was also deemed resolved when the
SOLE decided the main controversy in its 1 June 1999 resolution declaring the illegality of the strike
and the loss of employment status of the striking officers of ALP AP, as well as when the case was
finally settled by this Court in its 10 April 2002 Resolution in G.R. No. 152306. This is true even if the
respective resolutions of the SOLE, CA, and this Court were silent with respect to the damages.

To insist that PAL may recover the alleged damages through its complaint before the LA would be to
sanction a relitigation of the issue of damages separately from the main issue of the legality of the
strike from which it is intertwined. This runs counter to the proscription against split jurisdiction - the
very principle invoked by PAL.

Likewise, PAL's claim for damages is barred under the doctrine of immutability of final judgment.
Under the said doctrine, a decision that has acquired finality becomes immutable and unalterable,
and may no longer be modified in any respect, even if the modification is meant to correct erroneous
conclusions of fact and law, and whether it is made by the court that rendered it or by the Highest
Court of the land. Any act which violates this principle must immediately be struck down. 33

Whether the damages claimed by PAL are recoverable and to what extent would depend on the
evidence in the illegal strike case which had long attained finality.  PAL's recovery, therefore, would
34

entail a relitigation of the illegal strike case. The subject claim for damages would ultimately require
the modification of a final judgment. This cannot be done. The dismissal of the present petition as
well as the complaint for damages is therefore in order.

In any event, PAL only has itself to blame for this blunder.  It was already aware that it had sustained
1âшphi1

damages even before the SOLE issued its resolution. It must be remembered that the damages
allegedly sustained by PAL were incurred as a consequence of the acts committed by the
respondents on the second day of the strike on 6 June 1998, or almost a year prior to the issuance
of the SOLE's resolution. However, PAL did not assert its claim during the proceedings before the
SOLE and, instead, acted on it only after the decision on the main case attained finality. This is a
grave error on the part of PAL. 1aшphi1

The proper recourse for PAL should have been to assert its claim for damages before the SOLE
and, as aptly stated by the LA, to elevate the case to the CA when the SOLE failed to rule on the
matter of damages. The 22 April 2008 LA decision, therefore, deserves reinstatement insofar as it
dismissed PAL's 22 April 2003 complaint for lack of jurisdiction for the reason that the SOLE has
exclusive jurisdiction over the same. Thus, the Court quotes with approval the following
pronouncements by the LA:

The respondents maintain that the complainant simply slept on its rights when it failed to elevate the
matter of damages to the Court of Appeals. In this regard, we find the argument of the respondents
availing considering that upon the assumption of jurisdiction of the Secretary of Labor over the labor
disputes at PAL, all other issues had been subsumed therein including the claim for damages arising
from the strike. This is clear from the language of Article 263(g) of the Labor Code granting the
Secretary to order the "dismissal or loss of employment status or payment by the locking-out
employer of back wages, damages and other affirmative relief even criminal prosecution against
either or both."

xxx

There is no quarrel regarding the jurisdiction of labor arbiters to rule on the legality of strikes and
lock-outs under Article 217(a)(4) but this refers to strikes or lock-outs in establishments that are not
indispensable to national interest. However, if in his opinion the dispute affects industries imbued
with national interest, the Secretary of Labor who has the authority, may assume jurisdiction over the
dispute and may opt to hear the same until its final disposition as is obtaining at bar, or to certify the
same for compulsory arbitration to the NLRC, where it is the Commission that will hear and dispose
of the certified cases under Rule VIII of the Revised Rules of the NLRC. Even in voluntary
arbitration, should the disputants agree to submit the dispute to voluntary arbitration, the Voluntary
Arbitrator is not precluded from awarding damages.

As the issue on the illegality of the strikes of June 5, 1998 has already been passed upon by the
Secretary of Labor when he assumed jurisdiction to the exclusion of all others, all incidents arising
from the main issue of the legality of the strike are presumed to have been ruled upon because they
are deemed subsumed by the assumption by the Secretary of Labor. 35

In sum, the Court finds meritorious PAL's claim that the CA erred in its decision. Indeed, the CA
erred when it ruled that regular courts have jurisdiction to entertain claims for damages arising from
strike as the same violates the proscription against splitting of jurisdiction. The Court, however, also
finds that the LA was already divested of its jurisdiction to entertain PAL's claim for damages as such
issue was deemed included in the issue of legality of strike of which the SOLE had assumed
jurisdiction, pursuant to the rule against splitting of jurisdiction. Unfortunately, for PAL's failure to
raise the claim during the pendency of the illegal strike case before the SOLE, the same is deemed
waived.

WHEREFORE, the 26 August 2011 Decision and 5 January 2012 Resolution of the Court of
Appeals (CA) in CA-G.R. SP No. 113985 are SET ASIDE. The 22 April 2008 Decision of the Labor
Arbiter is REINSTATED insofar as it dismissed the 22 April 2003 Complaint filed by Philippine
Airlines, Inc. in NLRC NCR No. 04-04906-03 for lack of jurisdiction.

SO ORDERED.

THE HONGKONG & SHANGHAI BANKING CORPORATION EMPLOYEES UNION,

MA. DALISAY P. DELA CHICA, MARVILON B. MILITANTE, DAVID Z. ATANACIO,
JR., CARMINA C. RIVERA, MARIO T. FERMIN(T), ISABELO E. MOLO, RUSSEL M.
PALMA, IMELDA G. HERNANDEZ, VICENTE M. LLACUNA, JOSEFINA A.
ORTIGUERRO, MA. ASUNCION G. KIMSENG, MIGUEL R. SISON, RAUL P.
 GERONIMO, MARILOU E. CADENA, ANA N. TAMONTE, AVELINO Q. RELUCIO,
JORALYN R. GONGORA, CORAZON E. ALBOS, ANABELLA J. GONZALES, MA.
CORAZON Q. BALTAZAR, MARIA LUZ I. JIMENEZ, ELVIRA A. ORLINA, SAMUEL
B. ELLARMA, ROSARIO A. FLORES, EDITHA L. BROQUEZA, REBECCA T.
FAJARDO, MA. VICTORIA C. LUNA, MA. THERESA G. GALANG, BENIGNO V.
AMION, GERARDO J. DE LEON, ROWENA T. OCAMPO, MALOU P. DIZON, RUBEN
DE C. ATIENZA, MELO E. GABA, HERNAN B. CAMPOSANTO, NELIA D. M.
DERIADA, LOLITO L. HILIS, GRACE C. MABUNAY, FE ESPERANZA C. GERONG,
MANUEL E. HERRERA, JOSELITO J. GONZAGA, ULDARTCO D. PEDIDA,
ROSALINA JULIET B. LOQUELLANO, MARCIAL F. GONZAGA, MERCEDES R.
PAULE, JOSE TEODORO A. MOTUS, BLANCHE D. MOTUS, DAISY M. FAGUTAO,
ANTONIO A. DEL ROSARIO, EMMANUEL JUSTIN S. GREY, FRANCISCA DEL
MUNDO, JULIETA A. CRUZ, RODRIGO J. DURANO, CATALINA R. YEE,
MENANDRO CALIGAGAN, MAIDA M. SACRO MILITANTE, LEONILA M. PEREZ,
AND EMMA MATEO, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION
AND THE HONGKONG & SHANGHAI BANKING CORPORATION,
LTD., Respondents.

Antecedents

In the period material to this case, petitioner Hongkong & Shanghai Banking
Corporation Employees Union (Union) was the duly recognized collective bargaining
agent of the rank-and-file employees of respondent Hongkong & Shanghai Banking
Corporation (HSBC). A collective bargaining agreement (CBA) governed the relations
between the Union and its members, on one hand, and HSBC effective April 1, 1990
until March 31, 1993 for the non-representational (economic) aspect, and effective April
1, 1990 until March 31, 1995 for the representational aspect.5 The CBA included a
salary structure of the employees comprising of grade levels, entry level pay rates and
the individual pays depending on the length of service.6

On January 18, 1993, HSBC announced its implementation of a job evaluation program
(JEP) retroactive to January 1, 1993. The JEP consisted of a job designation per grade
level with the accompanying salary scale providing for the minimum and maximum pay
the employee could receive per salary level.7 By letter dated January 20, 1993,8 the
Union demanded the suspension of the JEP, which it labeled as an unfair labor practice
(ULP). In another letter dated January 22, 1993, the Union informed HSBC that it would
exercise its right to concerted action. On the same day of January 22, 1993, the Union
members started picketing during breaktime while wearing black hats and black bands
on their arms and other appendages.9 In its letter dated January 25, 1993, HSBC
responded by insisting that the JEP was an express recognition of its obligation under
the CBA.10 The Union's concerted activities persisted for 11 months,11 notwithstanding
that both sides had meanwhile started the re-negotiation of the economic provisions of
their CBA12 on March 5, 1993.13 The continued concerted actions impelled HSBC to
suspend the negotiations on March 19, 1993,14 and to issue memoranda, warnings and
reprimands to remind the members of the Union to comply with HSBC's Code of
Conduct.

Due to the sustained concerted actions, HSBC filed a complaint for ULP in the
Arbitration Branch of the National Labor Relations Commission (NLRC), docketed as
NLRC-NCR Case No. 00-04-02481-93. The Labor Arbiter's decision was appealed to the
NLRC whose disposition to remand the case to the Labor Arbiter for further proceedings
was in turn assailed. Ultimately, in G.R. No. 125038 entitled The Hongkong & Shanghai
Banking Corporation Employees Union v. National Labor Relations Commission and The
Hongkong & Shanghai Banking Corporation, Ltd., the Court affirmed the disposition of
the NLRC, and directed the remand of the case to the Labor Arbiter for further
proceedings.15

The Union conducted a strike vote on December 19, 1993 after HSBC accorded regular
status to Patrick King, the first person hired under the JEP. The majority of the
members of the Union voted in favor of a strike.16 The following day, the Union served
its letter on HSBC in protest of the continued implementation of the JEP, and insisted
that HSBC's modification of the salary structure under the JEP constituted ULP.

On December 22, 1993, at around 12:30 p.m., the Union's officers and members
walked out and gathered outside the premises of HSBC's offices on Ayala Avenue,
Makati and Ortigas Center, Pasig.17 According to HSBC, the Union members blocked the
entry and exit points of the bank premises, preventing the bank officers, including the
chief executive officer, from entering and/or leaving the premises.18 This prompted
HSBC to resort to a petition for habeas corpus on behalf of its officials and employees
thus prevented from leaving the premises, whom it airlifted on December 24, 1993 to
enable them to leave the bank premises.19

On December 24, 1993, HSBC filed its complaint to declare the strike illegal.20 The
HSBC also petitioned for injunction (with prayer for temporary restraining order
(TRO)/writ of prohibitory injunction) in the NLRC, which issued the TRO on January 6,
1994, and the writ of preliminary injunction on January 31, 1994.21 On November 22,
2001, the Court upheld the actions taken in that case in The Hongkong and Shanghai
Banking Corporation Employees Union v. National Labor Relations Commission and The
Hongkong and Shanghai Banking Corporation Limited.22

In the meantime, HSBC issued return-to-work notices to the striking employees on

December 22, 1993. Only 25 employees complied and returned to work. Due to the
continuing concerted actions, HSBC terminated the individual petitioners on December
27, 1993.23 The latter, undeterred, and angered by their separation from work,
continued their concerted activities.

Ruling of the Labor Arbiter

On August 2, 1998, Labor Arbiter (LA) Felipe P. Pati declared the strike illegal for failure
of the Union to file the notice of strike with the Department of Labor and Employment
(DOLE); to observe the cooling-off period; and to submit the results of the strike vote
to the National Conciliation and Mediation Board (NCMB) pursuant to Article 263 of
the Labor Code. He concluded that because of the illegality of the strike the Union
members and officers were deemed to have lost their employment status. Lie disposed
thusly:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

chanRoblesvirtualLawlibrary

1. The 22 December 1993 strike conducted by the union is hereby declared illegal;

2. The following Union officers and members who participated in the 22 December 1993
strike are hereby deemed to have lost their employment status as of that date.

3. The Union, its officers and members are hereby held jointly and severally liable to
pay the Bank the amount of P45,000.00 as actual damages.
All the other claims for moral and exemplary damages are denied for lack of merit.

Decision of the NLRC

On appeal, the NLRC modified the ruling of LA Pati, and pronounced the dismissal of the
18 Union members unlawful for failure of LISBC to accord procedural due process to
them, 

Judgment of the CA

On certiorari, the CA, through the assailed judgment promulgated on January 31,

2002,27 deleted the award of indemnity, but ordered HSBC to pay baekwages to the 18
employees in accordance with Serrano v. National Labor Relations Commission,28 to wit:

In Ruben Serrano v. NLRC and Isetcmn Department Store xxx, the Court ruled that an
employee who is dismissed, whether or not for just or authorized cause but without
prior notice of his termination, is entitled to full baekwages from the time he was
terminated until the decision in his case becomes final, when the dismissal was for
cause; and in case the dismissal was without just or valid cause, the backwages shall
be computed from the time of his dismissal until his actual reinstatement. In the case
at bar, where the requirement of notice and hearing was not complied with, the
aforecited doctrine laid down in the Serrano case applies.29

On motion for reconsideration, the CA reiterated its judgment, and denied HSBC's
motion to delete the award of backwages.30

Hence, this appeal by petition for review on  certiorari.

Pending the appeal, petitioners Elvira A. Orlina, Rosario A. Flores, Ma. Victoria C. Luna,
Malou Dizon, Fe Esperanza Gerong, Francisca del Mundo, and Ruben Atienza separately
presented motions to withdraw as petitioners herein by virtue of their having
individually executed compromise agreements/quitclaims with HSBC.31 The Court
granted all the motions to withdraw;32 hence, this adjudication relates only to the
remaining petitioners.

Issues

Two main issues to be resolved are, therefore, namely: (1) whether the strike
commenced on December 22, 1993 was lawfully conducted; and (2 whether the
petitioners were illegally dismissed.
Ruling of the Court

We PARTLY GRANT the petition for review on certiorari.

 I
Non-compliance with Article 263 of the
Labor Code renders a labor strike illegal

Article 263 of the Labor Code specifies the limitations on the exercise of the right to
strike, viz.:

Article 263. Strikes, picketing, and lockouts

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent
may file a notice of strike or the employers may file a notice of lockout with the
[Department] at least 30 days before the intended date thereof. In cases of unfair labor
practices, the period of notice shall be 15 days and in the absence of a duly certified or
recognized bargaining agent, the notice of strike may be filed by any legitimate labor
organization in behalf of its members. However, in case of dismissal from employment
of union officers duly elected in accordance with the union constitution and by-laws,
which may constitute union busting, where the existence of the union is threatened, the
15-day cooling off period shall not apply and the union may take action immediately.

(d) The notice must be in accordance with such implementing rules and regulations as
the [Secretary] of Labor and Employment may promulgate.

(e) During the cooling-off period, it shall be the duty of the [Department] to exert all
efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute
remain unsettled until the lapse of the requisite number of clays from the mandatory
filing of the notice, the labor union may strike or the employer may declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. A decision to declare a lockout must be approved by
a majority of the board of directors of the corporation or association or of the partners
in a partnership, obtained by secret ballot in a meeting called for that purpose. The
decision shall be valid for the duration of the dispute based on substantially the same
grounds considered when the strike or lockout vote was taken. The [Department] may,
at its own initiative or upon request of any affected party, supervise the conduct of the
secret balloting. In every case, the union or the employer shall furnish the
[Department] the results of the voting at least seven days before the intended strike or
lockout, subject to the cooling-off period herein provided.

xxxx

The procedural requirements for a valid strike are, therefore, the following, to wit: (1) a
notice of strike filed with the DOLE at least 30 days before the intended date thereof, or
15 days in case of ULP; (2) a strike vote approved by the majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in a meeting
called for that purpose; and (3) a notice of the results of the voting at least seven days
before the intended strike given to the DOLE. These requirements are mandatory, such
that non-compliance therewith by the union will render the strike illegal.41
We underscore that the language of the law itself unmistakably bears out the
mandatory character of the limitations it has prescribed, to wit:

Art. 264. Prohibited activities. - (a) No labor organization or employer shall

declare a strike or lockout without first having bargained collectively in accordance
with Title VII of this Book or without first having filed the notice required in the
preceding Article or without the necessary strike or lockout vote first having
been obtained and reported to the [Department], (emphasis supplied)

Accordingly, the petitioners' plea for the revisit of the doctrine to the effect that the
compliance with Article 263 was mandatory was entirely unwarranted. It is significant
to remind that the doctrine has not been established by judicial declaration but by
congressional enactment. Verba legis non est recedendum. The words of a statute,
when they are clear, plain and free from ambiguity, must be given their literal meaning
and must be applied without interpretation.45 Had the legislators' intention been to relax
this restriction on the right of labor to engage in concerted activities, they would have
stated so plainly and unequivocally.
II
Commission of unlawful acts during
the strike further rendered the same illegal

The contrary was undeniably true. The strike was far from orderly and peaceful. HSBC's
claim that from the time when the strike was commenced on December 22, 1993 the
petitioners had on several instances obstructed the ingress into and egress from its
offices in Makati and in Pasig was not competently disputed, and should thus be
accorded credence in the light of the records. We agree with HSBC, for all the
affidavits46 and testimonies of its witnesses,47 as well as the photographs48 and the
video recordings49 reviewed by LA Pati depicted the acts of obstruction, violence and
intimidation committed by the petitioners during their picketing. It was undeniable that
such acts of the strikers forced HSBC's officers to resort to unusual means of gaining
access into its premises at one point.50 In this connection, LA Pati even observed as
follows:

[I]t must be pointed out that the Bank has shown by clear and indubitable evidence
that most of the respondents have actually violated the prescription provided for in
paragraph (b) of Article 264 on free ingress and egress. The incident depicted in the
video footage of 05 January 1994, which has been viewed several times during the trial
and even privately, demonstrates beyond doubt that the picket was a non-moving,
stationary one - nothing less but a barricade. This office is more than
convinced that the respondents, at least on that day, have demonstrated an
abnormally high degree of hatred and anger at the Bank and its officers
(including the Bank's chief executive officer who fell to the ground as a result
of the pushing and shoving) leading them to do anything to carry out their
resolve not to let anymore inside the Bank. Additionally, as observed by this Labor
Arbiter, the tensed and disquieting relation between the parties became all the more
apparent during the actual hearings as clearly evident from the demeanor and
actuations of the respondents.51 (Emphasis supplied)

The situation during the strike actually went out of hand because of the petitioners'
illegal conduct, compelling HSBC to secure an injunction from the NLRC as well as to file
its petition for habeas corpus in the proper court in the interest of its trapped officers
and employees; and at one point to lease an helicopter to extract its employees and
officers from its premises on the eve of Christmas Day of 1993.

For sure, the petitioners could not justify their illegal strike by invoking the
constitutional right of labor to concerted actions. Although the Constitution recognized
and promoted their right to strike, they should still exercise the right within the bounds
of law.52 Those bounds had been well-defined and well-known. Specifically, Article
264(e) of the Labor Code expressly enjoined the striking workers engaged in picketing
from committing any act of violence, coercion or intimidation, or from obstructing the
free ingress into or egress from the employer's premises for lawful purposes, or from
obstructing public thoroughfares.53 The employment of prohibited means in carrying out
concerted actions injurious to the right to property of others could only render their
strike illegal. Moreover, their strike was rendered unlawful because their picketing
which constituted an obstruction to the free use of the employer's property or the
comfortable enjoyment of life or property, when accompanied by intimidation, threats,
violence, and coercion as to constitute nuisance, should be regulated.54 In fine, the
strike, even if justified as to its ends, could become illegal because of the means
employed, especially when the means came within the prohibitions under Article 264(e)
of the Labor Code:55

III
Good faith did not avail because of the
patent violation of Article 263 of the  Labor Code

We rule out good faith on the part of the petitioners.

The petitioners' disregard of the procedural requirements for conducting a valid strike
negated their claim of good faith. For their claim to be upheld, it was not enough for
them to believe that their employer was guilty of ULP, for they must also sufficiently
show that the strike was undertaken with a modicum of obeisance to the restrictions on
their exercise of the right to strike prior to and during its execution as prescribed by the
law. They did not establish their compliance with the requirements specifically for the
holding of the strike vote and the giving of the strike notice.56

IV
The finding on the illegal strike did not justify the
wholesale termination of the strikers from employment

The next issue to resolve is whether or not HSBC lawfully dismissed the petitioners for
joining the illegal strike.

As a general rule, the mere finding of the illegality of the strike does not justify the
wholesale termination of the strikers from their employment.59 To avoid rendering the
recognition of the workers' right to strike illusory, the responsibility for the illegal strike
is individual instead of collective.60 The last paragraph of Article 264(a) of the Labor
Code defines the norm for terminating the workers participating in an illegal strike, viz.:
Article 264. Prohibited Activities -xxx

xxxx

Any worker whose employment has been terminated as a consequence of any unlawful
lockout shall be entitled to reinstatement with full backwages. Any union officer who
knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status: Provided, That mere participation of
a worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful
strike, (emphasis supplied)

Conformably with Article 264, we need to distinguish between the officers and the
members of the union who participate in an illegal strike. The officers may be deemed
terminated from their employment upon a finding of their  knowing participation in the
illegal strike, but the members of the union shall suffer the same fate only if they are
shown to have knowingly participated in the commission of illegal acts during the strike.
Article 264 expressly requires that the officer must have knowingly participated in the
illegal strike. We have explained this essential element in Club Filipino, Inc. v.
Bautista,61 thusly:

Note that the verb "participates" is preceded by the adverb "knowingly." This reflects
the intent of the legislature to require "knowledge" as a condition sine qua non before a
union officer can be dismissed from employment for participating in an illegal strike.
The provision is worded in such a way as to make it very difficult for employers to
circumvent the law by arbitrarily dismissing employees in the guise of exercising
management prerogative. This is but one aspect of the State's constitutional and
statutory mandate to protect the rights of employees to self-organization.62

The petitioners assert that the CA erroneously affirmed the dismissal of Carmina Rivera
and Mario Fermin by virtue of their being officers of the Union despite lack of proof of
their having participated in the strike.

The assertion is partly correct.

In the case of Fermin, HSBC did not satisfactorily prove his presence during the strike,
much less identify him as among the strikers. In contrast, Union president Ma. Dalisay
dela Chica testified that Fermin was not around when the Union's Board met after the
strike vote to agree on the date of the strike.63 In that regard, Corazon Fermin, his
widow, confirmed the Union president's testimony by attesting that her husband had
been on leave from work prior to and during the strike because of his heart
condition.64 Although Corazon also attested that her husband had fully supported the
strike, his extending moral support for the strikers did not constitute sufficient proof of
his participation in the strike in the absence of a showing of any overt participation by
him in the illegal strike. The burden of proving the overt participation in the illegal
strike by Fermin solely belonged to HSBC, which did not discharge its burden.
Accordingly, Fermin, albeit an officer of the Union, should not be deemed to have lost
his employment status.
However, the dismissal of Rivera and of the rest of the Union's officers, namely: Ma.
Dalisay dela Chica, Marvilon Militante and David Atanacio, is upheld. Rivera admitted
joining the picket line on a few occasions.65 Dela Chica, the Union president, had
instigated and called for the strike on December 22, 1993.66 In addition, HSBC
identified Dela Chica67 and Militante68 as having actively participated in the strike. Their
responsibility as the officers of the Union who led the illegal strike was greater than the
responsibility of the members simply because the former had the duty to guide their
members to obey and respect the law.69 When said officers urged and made their
members violate the law, their dismissal became an appropriate penalty for their
unlawful act.70 The law granted to HSBC the option to dismiss the officers as a matter of
right and prerogative.71

Unlike the Union's officers, the ordinary striking members could not be terminated for
merely taking part in the illegal strike. Regardless of whether the strike was illegal or
not, the dismissal of the members could be upheld only upon proof that they had
committed illegal acts during the strike. They must be specifically identified because the
liability for the prohibited acts was determined on an individual basis.72 For that
purpose, substantial evidence available under the attendant circumstances justifying
the penalty of dismissal sufficed.73

We declare the illegality of the termination of the employment of the 18 members of

the Union for failure of HSBC to prove that they had committed illegal acts during the
strike. We also declare that Daisy Fagutao was unlawfully dismissed because HSBC did
not adduce substantial evidence establishing her presence and her commission of
unlawful acts during the strike.

We clarify that the 18 employees, including Fagutao and Union officer Fermin, were
illegally dismissed because of lack of any valid ground to dismiss them, and for
deprivation of procedural due process. Thus, we take exception to that portion of the
NLRC ruling that held:

We here note that all of the herein named respondents were terminated by complainant
for reasons other than their holding of an participation in the illegal strike. Specifically,
the grounds for their termination were enumerated in the notices of termination sent
out by complainant as follows: abandonment, insubordination and seriously hampering
operations. To Our mind, the complainant in the exercise of its management
prerogative, had every reason to discipline these respondents for their disregard of the
complainant's return-to-work order and for the damage sustained by reason thereof.
Although these 18 respondents did not commit any illegal act during the strike, We can
not simply ignore the fact that they nonetheless breached complainant's rules and
regulations and which acts serve as valid causes to terminate their employment. These
respondents took a risk when they refused to heed complainant's lawful order and
knowingly caused damage and prejudice to complainant's operations; they should be
prepared to take the consequences and be held accountable for their actions. Whether
or not complainant observed due process prior to the termination of these respondents
is however a totally different matter.74ChanRoblesVirtualawlibrary

We hold that said employees' right to exercise their right to concerted activities should
not be defeated by the directive of HSBC for them to report back to work. Any worker
who joined the strike did so precisely to assert or improve the terms and conditions of
his work.75 Otherwise, the mere expediency of issuing the return to work memorandum
could suffice to stifle the constitutional right of labor to concerted actions. Such practice
would vest in the employer the functions of a strike breaker,76 which is prohibited under
Article 264(c) of the Labor Code.

The petitioners' refusal to leave their cause against HSBC constituted neither
insubordination nor abandonment. For insubordination to exist, the order must be: (1)
reasonable and lawful; (2) sufficiently known to the employee; and (3) in connection to
his duties.77 None of these elements existed in this case.

As to abandonment, two requirements need to be established, namely: (1) the failure

to report for work or absence must be without valid or justifiable reason; and (2) there
must be a clear intention to sever the employer-employee relationship. The second
element is the more decisive factor and must be manifested by overt acts.78 In that
regard, the employer carries the burden of proof to show the employee's deliberate and
unjustified refusal to resume his employment without any intention of
returning.79 However, the petitioners unquestionably had no intention to sever the
employer-employee relationship because they would not have gone to the trouble of
joining the strike had their purpose been to abandon their employment.80

Moreover, we cannot subscribe to the view that the striking employees should be
dismissed for having seriously hampered and damaged HSBC's operations. In this
aspect of the case, HSBC did not discharge its burden to prove that the acts of the
employees constituted any of the just causes under the Labor Code or were prohibited
under the company's code of conduct as to warrant their dismissal.

V
Non-compliance with due process resulted
in illegal dismissal; the employer's liability
depended on the availing circumstances

While Article 264 authorizes the termination of the union officers and employees, it
does not remove from the employees their right to due process. Regardless of their
actions during the strike, the employees remain entitled to an opportunity to explain
their conduct and why they should not be penalized. In Suico v. National Labor
Relations Commission,81 we have reiterated the need for the employers to comply with
the twin-notice requirement despite the cause for the termination arising from the
commission of the acts prohibited by Article 264, thus:

Art. 277(b) in relation to Art. 264(a) and (e) recognizes the right to due process of all
workers, without distinction as to the cause of their termination. Where no distinction is
given, none is construed. Hence, the foregoing standards of due process apply to the
termination of employment of Suico, et al. even if the cause therefor was their
supposed involvement in strike-related violence prohibited under Art. 264 (a) and (e).82

Consequently, failure of the employer to accord due process to its employees prior to
their termination results in illegal dismissal.

The petitioners maintain that the CA applied the twin-notice requirement in favor of the
18 employees. HSBC disagrees, claiming instead that the award of backwages in favor
of said employees should be modified following Agabon.

We partially agree with both parties.

Article 277(b)83 of the Labor Code mandates compliance with the twin-notice

requirement in terminating an employee, viz.:

Article 277. Miscellaneous Provisions. -

xxxx

(b) Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and shall
afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires, in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment, x x x (Emphasis supplied)

In King of Kings Transport, Inc. v. Mamac,84 we have laid down the contents of the
notices to be served upon an employee prior to termination, as follows:

(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare adequately for
their defense. This should be construed as a period of at least five (5) calendar days
from receipt of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as basis for
the charge against the employees. A general description of the charge will not suffice.
Lastly,  the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being charged
against the employees.

xxxx

(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of
their employment.85 (Emphasis supplied)

HSBC admitted issuing two pro forma notices to the striking employees. The first
notice, sent on December 22, 1993, reads as follows:
Re: NOTICE OF RETURN TO WORK
__________________________________________________

On ___________________ at ________ o'clock in the morning/afternoon, you

"walked-out" by leaving your assigned work station without prior permission/leave
during work hours.

You arc hereby directed to report back for work at the start of banking hours on
the day immediately following knowledge or receipt of this notice. Should you
report for work no disciplinary action shall be imposed on you. Ibis is without prejudice
to any action the Bank may take against the Union.

Should you fail to report back for work within the period abovestated, the Bank shall be
forced to terminate your employment and take all appropriate measures to continue
serving its clients.86

As the notice indicates, HSBC did not fully apprise the strikers of the ground under
the Labor Code that they had supposedly violated. It also thereby deprived them the
ample opportunity to explain and justify their actions. Instead, it manifested therein its
firm resolve to impose the extreme penalty of termination should they not comply with
the order. Plainly, the tenor of the notice was short of the requirements of a valid first
notice.

The second notice was as follows:

Re: NOTICE OF TERMINATION

__________________________________________________________

On_________ , 1993, you and a majority of the rank-and-file staff "walked out" by
leaving your respective work stations without prior leave and failed to return.

You were directed to report back for work when a copy of the Bank's
Memorandum/Notice to Return to Work dated________________ 1993 was:

1. [ ] Posted on the Bank's premises on_______________

2. [ ] served on your (sic) personally on____________________.
3. [ ] delivered to your last known address on file with the Bank and received by you
(your representative) on

Despite being directed to return to work, you have failed to comply.

Your "walk-out" is an illegal act amounting to abandonment, insubordination, and

seriously hampering and damaging the bank's operations. Consequently, your
employment with the Bank is terminated effective ____________________, 1993.87

The second notice merely ratified the hasty and unilateral decision to terminate the
petitioners without the benefit of a notice and hearing. Hence, this notice should be
struck down for having violated the right of the affected employees to due process.

The failure by HSBC to strictly observe the twin-notice requirement resulted in the
illegal dismissal. However, the extent of its liability should depend on the distinct
circumstances of the employees.

HSBC should be held liable for two types of illegal dismissal — the first type was made
without both substantive and procedural due process, while the other was based on a
valid cause but lacked compliance with procedural due process. To the first type
belonged the dismissal of Fermin, Fagutao and the 18 employees initially identified by
the NLRC, while the second type included the rest of the petitioners.

HSBC maintains that the dismissed 18 employees should not be entitled to backwages
in conformity with Agabon.

We disagree. Agabon involved the second type of dismissal, not the first type to which
the 18 employees belonged. The rule for employees unlawfully terminated without
substantive and procedural due process is to entitle them to the reliefs provided under
Article 27988 of the Labor Code, that is, reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and other
benefits or their monetary equivalent computed from the time the compensation was
withheld up to the time of actual reinstatement. However, the award of baekwages is
subject to the settled policy that when employees voluntarily go on strike, no
baekwages during the strike shall be awarded.89

As regards reinstatement, the lapse of 22 years since the strike now warrants the
award of separation pay in lieu of reinstatement, the same to be equivalent of one (1)
month for every year of service.90 Accordingly, Fermin who did not participate in the
strike, should be paid full baekwages plus separation pay of one (1) month per year of
service, while petitioners Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba,
Nelia Deriada, Manuel Herrera, Rosalina Juliet Loquellano, Mercedes Paule, Blanche
Motus, Antonio del Rosario, Maida Militante and Daisy Fagutao, who admitted their
participation in the strike, were entitled to baekwages except during the period of the
strike, and to separation pay of one (1) month per year of service in lieu of
reinstatement.

In Agabon, we said that a dismissal based either on a just or authorized cause but
effected without due process should be upheld. The employer should be nonetheless
liable for non-compliance with procedural due process by paying indemnity in the form
of nominal damages amounting to P30,000.00.

In view of the non-observance of procedural due process by HSBC, the following

petitioners should be entitled to nominal damages of P30,000.00 each,91 namely: Ma.
Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina Rivera, Russel Palma,
Imelda Hernandez, Vicente Llacuna, Josefina A. Ortiguerro, Ma. Asuncion Kimseng,
Miguel R. Sison, Raul P. Geronimo, Marilou Cadena, Ana Tamonte, Avelino Relucio,
Joralyn Gongora, Corazon Albos, Anabella Gonzales, Ma. Corazon Baltazar, Maria Luz
Jimenez, Editha Broqueza, Ma. Theresa Galang, Benigno Amoin, Gerardo de Leon,
Rowena Ocampo, Hernan Camposanto, Lolito Hilis, Grace Mabunay, Joselito Gonzaga,
Uldarico Pedida, Marcial Gonzaga, Jose Teodoro Motus, Emmanuel Justin Grey, Julieta
Cruz, Rodrigo Durano, Catalina Yee, Menandro Caligagan, Leonila Perez, and Emma
Mateo.
ACCORDINGLY, the Court AFFIRMS the decision promulgated on January 31, 2002 in
CA-G.R. SP No. 56797 with MODIFICATION that respondent Hongkong & Shanghai
Banking Corporation (HSBC) shall pay:

1. Mario S. Fermin, full backwages and separation pay equivalent to one (1) month
per year of service in lieu of reinstatement;

2. Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba, Nelia Deriada,
Manuel Herrera, Rosalina Juliet Loquellano, Mercedes Paule, Blanche Motus,
Antonio del Rosario, Maida Militante and Daisy Fagutao, backwages except
during the period of the strike, and separation pay equivalent to one (1) month
per year of service in lieu of reinstatement; and

3. Ma. Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina Rivera,
Russel Palma, Imelda Hernandez, Vicente Llacuna, Josefina A. Ortiguerro, Ma.
Asuncion Kimseng, Miguel R. Sison, Raul P. Geronimo, Marilou Cadena, Ana
Tamonte, Avelino Relucio, Joralyn Gongora, Corazon Albos, Anabella Gonzales,
Ma. Corazon Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma. Theresa Galang,
Benigno Amion, Gerardo de Leon, Rowena Ocampo, Hernan Camposanto, Lolito
Hilis, Grace Mabunay, Joselito Gonzaga, Uldarico Pedida, Marcial Gonzaga, Jose
Teodoro Motus, Emmanuel Justin Grey, Julieta Cruz, Rodrigo Durano, Catalina
Yee, Menandro Caligagan, Leonila Perez and Emma Mateo, indemnity in the form
of nominal damages in the amount of P30,000.00 each.

No pronouncement as to costs.

SO ORDERED. cralawlawlibrary

MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE and SANLOR MOTORS

CORP., Petitioners,
vs.
KILUSANG MANGGAGAWA NG LGS, MAGDALA MULTIPURPOSE & LIVELIHOOD
CORPERATIVE (KMLMS) and UNION MEMBERS/ STRIKERS, namely: THOMAS PADULLON,
HERBERT BAUTISTA, ARIEL DADIA, AVELINO PARENAS, DENNIS MONTEALEGRE, SONNY
CONSTANTINO, SHANDY CONSTANTINO, JOSEPH PERNIA, PETER ALCOY, EDILBERTO
CERILLE, FERNANDO LEONOR, TEOTIMAR REGINIO, ALBERTO BAJETA, ALLAN MENESES,
RONEL FABUL, JESUS COMENDADOR, JERRY PERNIA, OSCAR RIVERA, LEO MELGAR,
ENRICO LAYGO, RICKY PALMERO, ROWELL GARCIA, LEOPITO MERANO, ALEJANDRO DE
LARA, JOEL GARCIA, BONIFACIO PEREDA, REMEGIO CONSTANTINO, DICKSON PILAPIL,
RANDY CORDANO, DARIUS PILAPIL, VENICE LUCERO, GREGORIO REANZARES, EULOGIO
REGINIO, MICHAEL JAVIER, DENNIS MOSQUERA, FREDDIE AZORES, ROGELIO CABRERA,
AURELIO TAGUINOD, OSCAR TAGUINOD, DEWELL PILAPIL, JOEL MAS-ING, EDUARDO
LOPEZ, GLICERIO REANZAREZ, JOSEPH FLORES,BUENATO CASAS, ROMEO AZAGRA,
ALFREDO ROSALES, ESTELITO BAJETA, PEDY GEMINA, FERNANDO VELASCO, ALBERTO
CANEZA, ALEJANDRO CERVANTES, ERICK CARVAJAL, RONALDO BERNADEZ, JERRY
COROSA, JAYSON COROSA, JAYSON JUANSON, SHELLY NAREZ, EDGARDO GARCIA,
ARIEL LLOSALA, ROMMEL ILAYA, RODRIGO PAULETE, MERVIN PANGUINTO, MARVIN
SENATIN, JAYSON RILLORA, RAFAEL SARMIENTO, FREDERICK PERMEJO, NICOLAS
BERNARDO, LEONCIO PAZ DE LEON, EDWARD DENNIS MANAHAN, ANTONIO BALDAGO,
ALEXANDER BAJETA, Respondents.

DECISION

VELASCO, JR., J.:

The Case

Petitioners Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp. assail and
seek the modification of the June 30, 2009 Decision1 and January 28, 2010 Resolution2 of the Court
of Appeals (CA) in CA-G.R. SP Nos. 88614 and 88645, which affirmed in toto the October 15, 2004
Decision3 of the National Labor Relations Commission (NLRC) in NLRC CA No. 040560-04 (NLRC
RAB IV-9-1265-02-R).

The Facts

Respondent Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative

(KMLMS) is the union operating in Magdala Multipurpose & Livelihood Cooperative and Sanlor
Motors Corp.

KMLMS filed a notice of strike on March 5, 2002 and conducted its strike-vote on April 8, 2002.
However, KMLMS only acquired legal personality when its registration as an independent labor
organization was granted on April 9, 2002 by the Department of Labor and Employment under
Registration No. RO-400-200204-UR-002.4 On April 19, 2002, it became officially affiliated as a local
chapter of the Pambansang Kaisahan ng Manggagawang Pilipino when its application was granted
by the Bureau of Labor Relations.5

Thereafter, on May 6, 2002, KMLMS––now a legitimate labor organization (LLO)––staged a strike

where several prohibited and illegal acts were committed by its participating members.

On the ground of lack of valid notice of strike, ineffective conduct of a strike-vote and commission of
prohibited and illegal acts, petitioners filed their Petition to Declare the Strike of May 6, 2002
Illegal6 before the NLRC Regional Arbitration Board (RAB) No. IV in Quezon City, docketed as NLRC
RAB IV-9-1265-02-R. In their petition, as well as their Position Paper,7 petitioners prayed, inter alia,
that the officers and members of respondent KMLMS who participated in the illegal strike and who
knowingly committed prohibited and illegal activities, respectively, be declared to have lost or
forfeited their employment status.

The Ruling of the Labor Arbiter

In her March 26, 2004 Decision,8 Executive Labor Arbiter Lita V. Aglibut (LA Aglibut) found the May
6, 2002 strike illegal and declared 41 workers to have lost their employment, the dispositive portion
reading:

WHEREFORE, this Office finds the strike conducted by the Kilusang Manggagawa ng LGS,
Magdala / Sanlor Motors-KMLMS, now known and registered as Kilusang [Manggagawa] Ng
LGS/Magdala Sanlor Motors Corporation – PKMP, illegal and the employment status of the following
workers are hereby declared forfeited: x x x.

All other claims are dismissed for lack of merit.

SO ORDERED.9

On the ground of non-compliance with the strict and mandatory requirements for a valid conduct of a
strike under Article 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus
Rules Implementing the Labor Code, LA Aglibut found the May 6, 2002 strike illegal and accordingly
dismissed all the 14 union officers of KMLMS. LA Aglibut likewise found 27 identified members of
KMLMS to have committed prohibited and illegal acts proscribed under Art. 264 of the Labor Code
and accordingly declared them to have forfeited their employment.

Both parties appealed the Decision of LA Aglibut before the NLRC.

The Ruling of the NLRC

On October 15, 2004, the NLRC rendered its Decision affirming with modification LA Aglibut’s
Decision by declaring an additional seven (7) union members to have forfeited their employment
status. The decretal portion reads:

WHEREFORE, premises considered, the decision appealed from is affirmed with modification in that
[said seven union members] are also declared to have lost their employment status for having
committed prohibited acts.

SO ORDERED.10

Unsatisfied, both parties again filed their respective appeals before the CA.

The Ruling of the CA

The CA rendered the assailed Decision on June 30, 2009 affirming in toto the NLRC Decision, the
fallo reading:

WHEREFORE, in view of the following disquisition, the respective petitions for certiorari in CA-G.R.
SP. No. 88614 and CA-G.R. SP. No. 88645 are hereby DISMISSED for lack of merit. Accordingly,
the assailed Decision, dated 15 October 2004, of the National Labor Relations Commission (NLRC)
in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R) is hereby AFFIRMED in toto.

SO ORDERED.11

Thus, petitioners have come to Us, praying for a partial modification of the assailed CA Decision by
declaring additional 7312 similarly erring KMLMS members to have lost their employment.

The Issues

A
THE COURT OF APPEALS ERRED IN REFUSING TO SIMILARLY DECLARE AS HAVING LOST
THEIR EMPLOYMENT STATUS THE REST OF THE UNION STRIKERS WHO HAVE
PARTICIPATED IN THE ILLEGAL STRIKE AND COMMITTED PROHIBITED/ILLEGAL ACTS, TO
THE PREJUDICE OF PETITIONERS[’] BUSINESS OPERATIONS.

THE COURT OF APPEALS ERRED IN REFUSING TO AWARD DAMAGES AND ATTORNEY’S

FEES AS A RESULT OF THE ILLEGAL STRIKE THAT NEARLY CRIPPLED THE BUSINESS
OPERATIONS OF PETITIONERS.13

The Court’s Ruling

The petition is partly meritorious.

First Issue: The May 6, 2002 Strike Was Illegal

There is no question that the May 6, 2002 strike was illegal, first, because when KMLMS filed the
notice of strike on March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not
legally represent the eventual union and its members. And second, similarly when KMLMS
conducted the strike-vote on April 8, 2002, there was still no union to speak of, since KMLMS only
acquired legal personality as an independent LLO only on April 9, 2002 or the day after it conducted
the strike-vote. These factual findings are undisputed and borne out by the records.

Consequently, the mandatory notice of strike and the conduct of the strike-vote report were
ineffective for having been filed and conducted before KMLMS acquired legal personality as an LLO,
violating Art. 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules
Implementing the Labor Code. The Labor Code provisos pertinently provide:

ART. 263. Strikes, Picketing and Lockouts. — (a) x x x

(c) In case of bargaining deadlocks, the duly certified or recognized bargaining agent may
file a notice of strike or the employer may file a notice of lockout with the Ministry at least 30
days before the intended date thereof. In case of unfair labor practice, the period of notice
shall be 15 days and in absence of a duly certified or recognized bargaining agent, the notice
of strike may be filed by any legitimate labor organization in behalf of its members. However,
in case of dismissal from employment of union officers duly elected in accordance with the
union constitution and by-laws, which may constitute union busting, where the existence of
the union is threatened, the 15-day cooling-off period shall not apply and the union may take
action immediately. (As amended by Executive Order No. 111, December 24, 1986.)

(d) The notice must be in accordance with such implementing rules and regulations as the
Ministry of Labor and Employment may promulgate.

xxxx

(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall
 be valid for the duration of the dispute based on substantially the same grounds considered
when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the
request of any affected party, supervise the conduct of the secret balloting. In every case,
the union or the employer shall furnish the Ministry the results of the voting at least seven
days before the intended strike or lockout, subject to the cooling-off period herein provided.
(As amended by Batas Pambansa Bilang 130, August 21, 1981 and further amended by
Executive Order No. 111, December 24, 1986.)

On the other hand, Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code likewise
pertinently provides:

RULE XXII
CONCILIATION, STRIKES AND LOCKOUTS

xxxx

SEC. 6. Who may declare a strike or lockout. — Any certified or duly recognized bargaining
representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. The
employer may declare a lockout in the same cases. In the absence of a certified or duly recognized
bargaining representative, any legitimate labor organization in the establishment may declare a
strike but only on grounds of unfair labor practice. (Emphasis supplied.)

It is, thus, clear that the filing of the notice of strike and the conduct of the strike-vote by KMLMS did
not comply with the aforequoted mandatory requirements of law and its implementing rules.
Consequently, the May 6, 2002 strike is illegal. As the Court held in Hotel Enterprises of the
Philippines, Inc. (HEPI) v. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the
Hotel and Restaurant and Allied Industries (SAMASAH-NUWHRAIN),14 these requirements are
mandatory and failure of a union to comply renders the strike illegal.

Striking KMLMS Members Committed Prohibited Acts

There is likewise no dispute that when the May 6, 2002 illegal strike was conducted, the members of
respondent KMLMS committed prohibited and illegal acts which doubly constituted the strike illegal.
This is the unanimous factual finding of the courts a quo which the Court accords finality, as
supported by evidence on record.

The proscribed acts during a strike are provided under Art. 264 of the Labor Code, thus:

ART. 264. Prohibited Activities. — (a) No Labor organization or employer shall declare a strike or
lockout without first having bargained collectively in accordance with Title VII of this Book or without
first having filed the notice required in the preceding Article or without the necessary strike or lockout
vote first having been obtained and reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister
or after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency of case involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence of any unlawful lockout shall
be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an
illegal strike and any worker or union officer who knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his employment status: Provided, That mere
participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful strike.

xxxx

(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct
public thoroughfares. (As amended by Batas Pambansa Bilang 227, June 1, 1982).

Here, the striking workers committed acts of (1) interference by obstructing the free ingress to or
egress from petitioners’ compound and (2) coercion and intimidation. As aptly pointed out by the
appellate court:

This is clear from the Police Blotter Certifications, including a Complaint for Grave Coercion,
Affidavits from several workers, including one from a proprietor, all of whom were prevented from
entering the company premises and doing their work or conducting their business, and the countless
photographs which show the striking workers blocking the gates of the company premises which
became the basis of the judgment of the Labor Arbiter and NLRC.15

Thus, We agree with the CA that the arguments of respondent KMLMS are bereft of merit as the
May 6, 2002 strike was properly declared an illegal strike and the prohibited and illegal acts
committed by union members during said strike were duly proved by substantial evidence on record.
Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.16

Proper Sanctions for the Illegal Strike

We now come to the proper sanctions for the conduct of union officers in an illegal strike and for
union members who committed illegal acts during a strike. The above-cited Art. 264 of the Code
presents a substantial distinction of the consequences of an illegal strike between union officers and
mere members of the union. For union officers, knowingly participating in an illegal strike is a valid
ground for termination of their employment. But for union members who participated in a strike, their
employment may be terminated only if they committed prohibited and illegal acts during the strike
and there is substantial evidence or proof of their participation, i.e., that they are clearly identified to
have committed such prohibited and illegal acts.

As earlier explained, the May 6, 2002 strike is illegal for non-compliance with provisions of law and
its implementing rules. Consequently, the termination of employment of the 14 union officers is
proper.

In the case of union members who participated in the May 6, 2002 strike and committed prohibited
and illegal acts of interference by obstructing the free ingress to or egress from petitioners’
compound, coercion and intimidation, the forfeiture of their employment is also proper.

LA Aglibut found 27 union members to have committed the illegal acts and properly declared the
forfeiture of their employment status. The NLRC found additional seven (7) union members
committing illegal acts and likewise declared the forfeiture of their employment status. Thus, a total
of 34 union members have been declared to have lost their employment due to their commission of
prohibited and illegal acts during the illegal strike of May 6, 2002. Petitioners, however, take
umbrage for the non-declaration of the forfeiture of employment of 72 other union members who
were similarly situated as the 34 union members whose employment was declared forfeited in
committing prohibited and illegal acts during the May 6, 2002 strike.

In affirming the NLRC Decision and refusing to declare the other strikers as dismissed, the appellate
court found that not all of the photographs in evidence sufficiently show the strikers committing illegal
acts and that the identification of said strikers is questionable considering that some were still
identified even when their faces were indiscernible from the photographs.

We, however, cannot agree with the appellate court’s view that there is no substantial proof of the
identity of the other 72 striking union members who committed prohibited and illegal activities. The
prohibited and illegal acts are undisputed. It is only the identity of the striking union workers who
committed said acts that is the crux of the partial modification prayed for by petitioners.

In the instant case, We have pored over the attachments to the pleadings of the parties and We find
that petitioners have substantially proved the identity of 72 other union members who committed
prohibited and illegal acts during the May 6, 2002 illegal strike, thus:

First, the photographs17 submitted by petitioners graphically depict and show the identities of the
union members who committed prohibited and illegal acts. Second, the identities of these union
members were substantially proved through the eyewitnesses18 of petitioners who personally knew
and recognized them as those who committed the prohibited and illegal acts. Thus, the identities of
these 72 other union members who participated in the strike and committed prohibited and illegal
acts are not only shown through the photographs, but are also sufficiently supported, as earlier cited,
by police blotter certifications,19 a criminal complaint for grave coercion,20 and affidavits of several
workers21 and a proprietor.22 As aptly pointed out by petitioners, while several union members were
penalized, other union members with them who are identifiable in the photographs and attested to by
witnesses were not so penalized. This must be corrected, for these other unpenalized union
members were similarly situated with those penalized in that they all committed the same prohibited
and illegal acts during the strike. Absent any exculpating circumstance, they must all suffer the same
fate with the statutorily provided consequence of termination of employment.

Thus, We find that there was patent misappreciation of evidence both by the LA and the NLRC, but it
was not corrected by the CA.

Second Issue: Damages and Attorney’s Fees

Anent the issue of the award of damages and attorney’s fees, We affirm the courts a quo’s uniform
findings and rulings that while petitioners prayed for damages and attorney’s fees, they failed to
substantiate their claims.

Indeed, the grant of damages and attorney’s fees requires factual, legal and equitable justification;
its basis cannot be left to speculation or conjecture.23 Petitioners simply bank their claims on the
Affidavit24 of Julito Sioson. The claim for actual damages for losses of PhP 10,000 daily or PhP
260,000 a month, as averred by Sioson, cannot be sustained by a mere affidavit of the owner
without being buttressed by other documentary evidence or unassailable substantiation. Even if
attested to in an affidavit, the amount claimed for actual damages is merely speculative at most. To
be recoverable, actual damages must not only be capable of proof, but must actually be proved with
reasonable degree of certainty. The Court cannot simply rely on speculation, conjecture, or
guesswork in determining the amount of damages.25 Without any factual basis, it cannot be granted.

That petitioners had to litigate on the occasion of the illegal strike does not necessarily mean that
attorney’s fees will automatically be granted. On one hand, in labor cases, attorney’s fees granted
under Art. 11126 of the Labor Code apply to unlawful withholding of wages, which indubitably does
not apply to the instant case. On the other hand, Art. 2208(2) of the Civil Code does not ipso facto
grant the award of damages in the form of attorney’s fees to a winning party, for the exercise of
protection of one’s right is not compensable.

Besides, jurisprudence instructs that for the award of attorney’s fees to be granted, there must be
factual, legal and equitable justification.27 As the Court held in Filipinas Broadcasting Network, Inc. v.
Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM):

It is an accepted doctrine that the award thereof as an item of damages is the exception rather than
the rule, and counsel’s fees are not to be awarded every time a party wins a suit. The power of the
court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and
equitable justification, without which the award is a conclusion without a premise, its basis being
improperly left to speculation and conjecture. In all events, the court must explicitly state in the text
of the decision, and not only in the decretal portion thereof, the legal reason for the award of
attorney’s fees.28

The fact that the courts a quo did not award attorney’s fees to petitioners persuasively shows that
they found no factual, legal and equitable justification for it. Neither do We find any.

WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. The assailed June 30, 2009
CA Decision in CA-G.R. SP Nos. 88614 and 88645 is AFFIRMED with MODIFICATION in that the
following additional 72 union members who committed prohibited and illegal acts during the May 6,
2002 strike are also declared to have forfeited their employment: Thomas Padullon, Herbert
Bautista, Ariel Dadia, Avelino Parenas, Dennis Montealegre, Sonny Constantino, Shandy
Constantino, Joseph Pernia, Peter Alcoy, Edilberto Cerille, Fernando Leonor, Teotimar Reginio,
Alberto Bajeta, Allan Meneses, Ronel Fabul, Jesus Comendador, Jerry Pernia, Oscar Rivera, Leo
Melgar, Enrico Laygo, Ricky Palmero, Rowell Garcia, Leopito Merano, Alejandro de Lara, Joel
Garcia, Bonifacio Pereda, Remegio Constantino, Dickson Pilapil, Randy Cordano, Aurelio Taguinod,
Oscar Taguinod, Dewell Pilapil, Joel Mas-ing, Eduardo Lopez, Glicerio Reanzarez, Joseph Flores,
Buenato Casas, Romeo Azagra, Alfredo Rosales, Estelito Bajeta, Pedy Gemina, Fernando Velasco,
Alberto Caneza, Alejandro Cervantes, Erick Carvajal, Ronaldo Bernadez, Jerry Corosa, Jayson
Corosa, Jayson Juanson, Shelly Narez, Alexander Bajeta, Edgardo Garcia, Ariel Llosala, Rommel
Ilaya, Rodrigo Paulete, Mervin Paquinto, Marvin Senatin, Jayson Rillora, Darius Pilapil, Venice
Lucero, Gregorio Reanzares, Eulogio Reginio, Michael Javier, Dennis Mosquera, Freddie Azores,
Rogelio Cabrera, Rafael Sarmiento, Frederick Permejo, Nicolas Bernardo, Leoncio Paz de Leon,
Edward Dennis Manahan and Antonio Baldago.

No pronouncement as to costs.

SO ORDERED.