[With resolution of March 29, 1962]

It appears that on
December 2, 1952, the San Carlos Milling, hereinafter referred to as
the Company, concluded a collective bargaining agreement with the
Allied Workers Association of the Philippines, hereinafter called AWA
for short, a legitimate organization of workers employed in the
company. Included in said contract was a union shop agreement the
details of which shall be later discussed. Sometime, after, another
labor union, the Philippine-Land-Air-Sea Labor Union, PLASLU for short,
was also organized in the Company. Sinforoso Kyamko, an employee in the
Company and member of the AWA, appears to have joined this second
union, and thereafter, actively campaigned for it to gain membership
among the workers. Having received reports of Kyamko’s activities for
the PLASLU, the Board of Directors of AWA, on December 13, 1955, passed
a resolution to investigate all members of AWA, San Carlos Chapter, who
had committed acts of disloyalty to the association. Upon complaint
against and investigation of Kyamko for disloyalty, in which the latter
was present and given opportunity to defend himself, the AWA found him
guilty of disloyalty and expelled him from the association on December
26, 1955. Upon demand of the AWA, Kyamko was dismissed by the Company
on February 18, 1956, pursuant to the union shop provisions of the
contract of December 12, 1952.

On March 5, 1956, the PLASLU
asked for the reinstatement of Kyamko (and another employee with whose
dismissal, found by the Court of Industrial Relations to have been for
cause, we are not concerned since there is no appeal therefrom), at the
same time petitioning for better terms and conditions of employment,
with a warning that the PLASLU will conduct a strike if the Company
failed to act on the demands within 30 days (Appendix “C”, Memo for
appellant). When the Company refused to entertain the demands, the
PLASLU declared a strike on April 12, 1956, in which 149 of its members
joined. The strikers offered to return to work on April 27, 1956, but
were refused reinstatement by the Company. Antecedently, it may be
pertinent to state that on November 28, 1955, it appears that the
PLASLU informed the Company of its organization among the latter’s
workers, and that it intended to demand a certification election. On
December 2, 1955, the PLASLU filed in court a petition for
certification election, which at the time of the strike, was admittedly
pending.

The first issue before us is whether the Company’s
dismissal of Kyamko pursuant to its union shop agreement with the AWA
was legally justified. Parenthetically, it should be stated that among
the causes for the strike, only the dismissal of Kyamko was found by
the Court of Industrial Relations to be an unfair labor practice act
committed by the Company. In return, the legality of Kyamko’s dismissal
depends on whether, when he was dismissed, there was an effective union
shop agreement between the AWA and the Company which authorized the
latter to discharge him from his employment.

The PLASLU
contends that there was no longer any Such agreement; that the contract
between the AWA and the Company, on December 12, 1952, was only for
three (3) years, or, only up to December 11, 1955; that this was never
renewed, despite the agreement dated July 14, 1955, which allegedly
renewed it; that consequently, the dismissal of Kyamko on February 18,
1956, was illegal and founded on no other reason than has membership
in, and activities for, the PLASLU. On the other hand, the Company
contends that though the contract of December 12, 1952 provided for a
duration of three (3) years, said contract was, by its terms,
self-renewing, unless otherwise agreed; that furthermore, on July 14,
1955, the parties executed another agreement renewing the contract of
December 12, 1952 for another period of three (3) years; that
therefore, Kyamko was legally dismissed in pursuance of the union shop
provision in said collective bargaining contract. The court below
concluded that the contract was not renewed.

The pertinent portion of the December 12, 1955 contract reads—

“11. That the duration of this agreement shall be for three (3) years from December 12, 1952, and automatically renewable thereafter unless the parties hereto agree and decide otherwise.” (Italics supplied),

which subject as reiterated in the document dated July 14, 1955, as follows:—

“11. The parties further record their complete understanding and agreement to effect a renewal for another three years
of the Collective Bargaining and Union Shop Agreement entered into
between them on December 12, 1952 upon its expiration on December 11,
1955.” (Italics supplied)

We think
it clear from the above that the contract of December 12 was renewed by
the parties. Only a very strained and hair-splitting reasoning could
sustain that by the above provisions, the parties still did not
actually renew the contract in question. Indeed, this is the only
logical explanation for the use of the word “automatically” to modify
“renewable”. Buttressing this interpretation, the phrase “unless the
parties hereto agree and decide otherwise” can only mean that the
parties did not intend to accomplish another positive act to continue
the contract beyond its expiry date. Whatever doubt remains is
dispelled when the parties, on July 14, 1955, expressly signified their
agreement to renew the contract for a period of another three (3)
years. From the strict grammatical point of view, the contention that
“renewable” and “to effect a renewal” do not mean actual renewal may be
justified. But we are here concerned, not so much with strict adherence
to grammatical construction as with the intent of the parties reflected
in the agreement itself. And a construction that will unduly hamper the
renewal of labor contracts appears undesirable.

Be that as
it may, does the union shop agreement on December 12, 1952, by its
terms, authorize the dismissal of Kyamko under the attendant
circumstances? The pertinent portions of the union shop agreement are:

“4. * * * New
employees and laborers hired who are not members of the Workers
Association will be on temporary status and the employer agrees that
before they will be considered regular employees and laborers, they
have to become members of the Allied Workers Association of the
Philippines or the Allied Workers Association of the Philippines, San
Carlos Chapter within 30 days from the date of employment and if they
refuse to affiliate with the said labor organization within this time,
they will be immediately dismissed by the employer. After a laborer or employee is hired pursuant to this arrangement,
and he resigns later from the Workers Association or is expelled from
it due to acts committed by him contrary to the By-Laws, rules and
regulations of the Workers Association, the management, upon advice of
the Workers Association, shall dismiss the said laborer or employee. *
* *.” (Italics supplied).

“5. Employees and laborers presently working
in any department or section of the factory or mill of the Employer,
including those who are working by piece jobs or “pakiao” system, who are not members of the Workers Association shall hereby be declared as temporary employees and laborers and shall be given thirty (30) days time from the date of this agreement within which to join or affiliate with the Workers Association, and if they refuse to do so their positions will be declared vacant
and will be filled in the manner provided for in this agreement.
However, employees and laborers who have rendered ten (10) years
continuous service with the Employer may not he affected by this condition,
provided they are not members of, and will not join or affiliate with
other labor unions or associations, although they may join the Workers
Association, if they so desire. * * *.” (Italics supplied).

Carefully read, nothing in the above provisions authorizes the employer to dismiss old employees who, having joined the AWA, later ceased to be members of good standing herein. Quite explicit with respect to new
employees, the contract in paragraph 4 provides that they should join
the AWA within 30 days from employment, and that if, after joining,
they should later resign or be expelled from the contracting union, the
company shall immediately dismiss said employee. Paragraph 5, with
respect to workers already employed but who are not members of
the union, makes it obligatory for these workers to join within 30 days
from the agreement, on pain of dismissal. Expressly exempted from the
obligation to join or affiliate with the contracting union are
those who have rendered 10 years continuous service. Conspicuously
absent with respect to those already employed at the time of the
agreement is my provision making it a condition of continued employment
that an old worker should remain a member of good standing of the AWA.
Union shop, as with close shop provisions, should be strictly construed
against the existence of union shop. Sometimes harsh and onerous, such
provisions should not be extended beyond the explicit coverage of their
terms, and will not be deemed to authorize by implication the dismissal
of employees already working before the agreement was made (see
Confederated Sons of Labor vs. Anakan Lumber Co., 107 Phil., 915).

Here, Kyamko had been an employee of the Company since 1948, long
before the union shop established in the contract of December 12, 1952.
He was, therefore, an old employee on whom the particular union shop in
question did not impose the obligation to remain a member of good
standing in the AWA, as a condition of continued employment in the
company. It results that his dismissal-founded on a union shop
agreement which did not explicitly authorize such dismissal—was, in
legal effect, an unfair labor practice act prompted by his membership
and activities in the PLASLU. Consequently, the strike on April 12,
1956 was legally justified.

Even if it were assumed that
Kyamko’s dismissal was legally founded, this fact alone would not make
the strike illegal. A strike to secure better terms and conditions of
employment is a legitimate labor activity recognized by law (Radio
Operators Ass’n. of the Phil. vs. Phil. Marine Radio Officers
Ass’n., 102 Phil., 526), and its legality does not depend on the
reasonableness of the demands. If they cannot be granted, they should
be rejected, but without other reasons, the strike itself does not
become illegal (Caltex vs. PLO, 93 Phil., 295). Purely from the
perspective of the economic demands, the strike may even have been
premature, since the PLASLU itself had filed a petition for
certification election on December 2, 1955, which was still pending
when the strike was declared. Even so, this did not transpose the
strike into something illegal, especially since the economic aspects
were only one of the demands which precipitated the strike, as of which
the workers believed in good faith to be meritorious (see PECO vs. CIR, et al., L-7156, May 31, 1955; Radio Operators Ass’n. of the Phil. vs. Phil. Marine Radio Officers Ass’n., supra.)
Thus, regardless of Kyamko’s dismissal, the strike itself were merely
another legitimate exercise of what has now evolved as an
institutionalized factor of democratic growth. For this, no punishment
or reprisal should be due. Hence, when the strikers offered to return
to work on April 2, 1956, the employer had no right to have the
former’s participation in the strike counted against them. When the
Company refused to admit the strikers back for no valid reason shown it
was virtually applying a standard prohibited by law, i.e., the
participation in the strike which, as shown, was legal. Unfair Labor
practice acts may be committed by the employer against workers on
strike. A strike is not abandonment of employment, and workers do not
cease to be employed, in legal contemplation, simply because they
struck against their employer (see Francisco’s Labor Laws, Vol. 1, 3rd
Ed., p. 322; Sec. 2(d), R. A. 875).

The pendency of
the petition for certification election at the time the offer to return
to work was made, could not legally militate against the strikers’
readmission. That the result of the petition for certification election
would determine whether or not the employer would be legally bound to
bargain with the PLASLU on their economic demands is also beside the
point. The offer to return is not shown to have been conditioned upon a
commitment that the employer had to bargain with the PLASLU. If there
were any conditions attached, their proof was a matter of defense for
the company, since in the complaint in Case No. 3-ULP below, it was
alleged, unqualifiedly, that such offer was made. In fact, the company
claimed in the court below that no such offer was made, a theory which,
in good faith, should preclude it from suggesting that the offer to
return was conditional. The court below found, unqualifiedly, that
there was in fact an offer to return to work, and this finding is
binding upon us.

Finally, the union shop itself could not
have barred the striker’s readmission. It had but a limited coverage
which is not shown to have covered the strikers by its terms. Not only
this, but when the strikers offered to return, it does not appear that
they had already been expelled from the AWA in accordance with the
procedure laid down and followed with respect to Kyamko, nor that their
dismissal had been advised by said union to the Company. As for the
replacements, their positions should be deemed temporary, subject to
the outcome of the strike.

On last observation, however. The
strike was justified; the employer acted wrongfully in dismissing
Kyamko and in refusing reinstatement to the strikers. Still, as shown
by the circumstances on record, the employer acted in good faith, in
the belief that Kyamko’s dismissal was legally justified pursuant to
the union shop agreement. Considering the difficulty of the questions
involved, the Company should be given the benefit of its good faith, at
least with regard to back wages, which should be equitably reduced.

In view of the foregoing, the decision under appeal should be modified,
the back wages counted from April 27, 1956 up to their actual
reinstatement to be, as they hereby are, reduced to one-half. In all
other respects, the decision appealed from is affirmed. Without costs.

Bengzon, Acting C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, and Dizon, JJ., concur.

REYES, J. B. L., J.:

Both the employer, San Carlos Milling Co., Inc., and the intervenor,
Allied Workers Association of the Philippines (AWA), have petitioned
for the reconsideration and reversal of our main decision that affirmed
the Court of Industrial Relations’ finding of unfair labor practice and
ordered the reinstatement of Sinforoso Kyamko and the PLASLU union
strikers, with backpay.

It is first contended that the
spirit of the union shop agreement between the employer and the AWA
requires the old employees, already working when the contract was last
renewed in 1955, to maintain their membership in the AWA as a condition
to continued employment. We have already pointed out in our main
opinion that paragraph 4 of the union shop agreement expressly
prescribed that new employees should affiliate with the AWA and that
upon their refusal to do so, or their expulsion from the union, the
management would dismiss the employees upon the union’s advice. On the
other hand, paragraph 5, referring to those “presently working” at the
time of the agreement, classified the latter into two groups: (a) those
who had rendered 10 or more years continuous service were not compelled
to join the AWA, provided they did not join other unions; while (b)
those who had not rendered service for 10 years or more were only
required to join and affiliate with the AWA within 30 days under
penalty of dismissal. But with regard to the latter group of employees
(and Kyamko was one of them), the eon-tract did not expressly provide
for their dismissal in case of subsequent expulsion from the Union; and
this Court held that in the absence of such stipulation, Kyamko’s
subsequent expulsion from the AWA did not warrant his dismissal by the
employer.

In so ruling, this Court had adhered to the doctrine laid down in Confederated Sons of Labor vs. Anakan Lumber Co., 107 Phil., 915 (reiterated in ICAWO vs.
Central Pilar, L-17422, 28 Feb. 1962), that the dismissal, of laborers
for non-union membership must be expressly and unequivocally
stipulated, because:

“An undertaking of
this nature is so harsh that it must be strictly construed, and doubts
must be resolved against the existence of ‘closed shop’.” (Confed. Sons
of Labor vs. Anakan Lumber, supra).

The
discharge of Kyamko being patently unjustified, the supporting action
by the PLASLU members can not be deemed an illegal strike; hence,
participants therein could not be penalized by their discharge or by
refusal to reinstate them when they applied for readmission without
conditions.

Moreover, the renewal of the closed-shop
agreement with AWA, on 11 December 1955, must be understood as subject
to the outcome of the certification election that was subsequently won
by the PLASLU against the AWA (PLASLU vs. Court of Industrial
Relations, L-14656, November 29, 1960), because prior to such renewal,
the PLASLU already had given formal notice of its claim to majority
status on 28 November 1955, followed by a petition to the Court of
Industrial Relations for a certification election on 2 December 1955.
The employer was, therefore, aware, an renewing the closed-shop
contract with AWA, that the latter might turn out to be the proper
bargaining agency, and thereby acted at its risk in yielding to the
AWA’s demand for the discharge of Kyamko and of the strikers, for it
knew, or ought to know, that the union shop clauses could not be
enforceable if PLASLU won the right to be the proper collective
bargaining agency.

The good faith of the Company, however,
has been duly taken into account by us when we reduced to one half the
backpay of the laborers entitled to reinstatement, thereby apportioning
the prejudice equally between the employer and employees. To exempt
totally the Company from the payment of backpay would place the entire
burden of its error on the shoulders of the laborers improperly
discharged, contrary to all justice and equity. We see no reason for so
doing, specially considering that, as between the two parties, the
laborers were certainly the weaker in economic power and resources,
whereas the company enjoyed not only superior finances but also had
access to advice of eminent counsel.

As to the possibility
that payment at one time of the entire backpay ordered might inflict on
the employer Company an irretrievably crippling blow, we feel that this
matter should be properly addressed to the Court of Industrial
Relations, and not to us. That court possesses adequate machinery to
ascertain and pass upon the truth of the claim, to determine the
deductions to be made by reason of earnings of the laborers during the
pendency of the action, and to decide the manner in which the payment
or payments should be made. If the Company’s claim is correct, the
laborers themselves should be interested in devising ways whereby the
payment may be made without forcing the company to close its business
to their own prejudice.

The motions for reconsideration are
denied. Let the records be remanded to the court below for
determination of the amount and manner of payment of the back wages
conformably to this opinion.

Bengzon, Acting C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, and De Leon, JJ., concur.