PHILIPPINE AMERICAN EMBROIDERIES, INC., ALBERT NASSER AND JACK NASSER, PETITIONERS, VS. EMBROIDERY & GARMENT WORKERS UNION, RESPONDENT.

This case originated with a complaint before the Court of
Industrial Relations (Case No. 1880-ULP) filed by Embroidery and Garments
Workers Union against Philip­pine American Embroideries, Inc.; Albert Nasser
and Jack Nasser, corporate President and Vice-President, respectively; and Kapisanan Ng Mga Manggagawa sa Phil-Am
Embroideries, Inc.  The complaint charged
unfair labor practice under section 4(a) (1), (4) and (6) of Republic Act No.
875.  The specific allegations are not
reproduced in the record before us, but the issues are set forth in the
decision of the trial Judge, Hon. Emiliano C. Tabigne, as follows: 
“(1) Did the respondents refuse to bargain with the complainant in
violation of Section 4(a) 6 of the Industrial Peace Act?  (2) Did the respondents commit interference
in the union activities or affairs of the members of the petitioner union?  (3) Did the respondents commit discrimination
against the members of the union affecting their tenure of employment?  (4) Did the respondents lock-out the employees
and/or workers especially the members of the petitioning union?” The trial
Judge ruled against the complainant on all these issues and dismissed the
complaint.  On motion for
reconsideration, how­ever, the Court en banc, by a divided vote,
resolved as fol­lows:

“IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court en
banc hereby:

1.  Finds the respondents
Philippine American Embroideries, Inc., Albert Nasser and Jack Nasser guilty of
unfair labor practice in violation of Sections 4 (a), subparagraphs (4) and
(6);

2.  Orders the reinstatement
of the members of complainant union (Exhibits “E”, “E-1” to
“E-51”) to their former or sub­stantially the same positions to any
de­partment of the company, with back wages from the date of their dismissals
up to the time they are actually taken into active employment, without loss of
any rights, benefits or privileges;

3.  Orders the company,
Albert Nasser and Jack Nasser to cease and desist from further committing such
other unfair labor practices;

4.  Dismisses the portion of
the com­plaint referring to the charge of company domination.

SO ORDERED.”

The foregoing resolution was penned by Presiding Judge Jose S.
Bautista and concurred in by Associate Judge Baltazar
M. Villanueva.  Associate
Judge Arsenio
I. Mar­tinez
concurred and dissented in a separate opinion, and Associate Judge Amando C. Bugayong concurred in
the result thereof.  Associate Judge Emiliano C. Tabigne maintained
his previous stand and filed a long dissent.

The case is now before us on petition for review by Philippine
American Embroideries, Inc., Albert Nasser and Jack Nasser, respondents below.

The resolution sought to be reviewed is based on a number of
facts referred to therein as “indubitable and non-controversial”, to
wit:

“1.  The respondent Philippine
American Embroideries, Inc. is a corporation managed by the Nasser
brothers; (Answer of respondent and p. 7, t.s.n.,
June 22, 1960)

“2.  Sometime in 1956 it
started its machine made department for scalloping handkerchiefs at 1132 Isaac Peral, Manila;
(Decision p. 5 and p. 8, t.s.n., June 6, 1960)

“3.  It has been the practice
to lay-off employees who could not fulfill their respective quotas.  (Decision, p. 11)

“4.  In the last week of
October, 1958, the complainant union was organized with a total membership of
about one hundred se­venty (170) among the workers in the machine made
department of respondent company; (Decision, p. 12 and Exhs.
“E”, “E-1” to “E-151”)

“5.  On October 31, 1958, the respond­ent
received a letter (Exhibit “B”) from the complainant union informing
the company of:

(a) its existence;

(b) its command of majority among the employees in the company; and

(c) its desire to bargain collectively with the management;

“6.  On November 3, 1958, the company
received the collective bargaining proposals (Exh.
“C”) embodying the usual terms and conditions of work like increase
of wages, security of employ­ment, and fringe benefits;

“7.  In the afternoon of
the same day, November 3, 1958,
the company through Albert Nasser, announced the closure of the Machine Made
Department, thereby dis­missing all the members of the complainant, and the
opening of a new department, the Knitting Gloves Department.

‘A   In the meeting of all the workers, I
announced to all the workers and officers the closure of the Machine
Made Department and the opening of the new department Knitting Gloves
Department and also the filling of their application so that they can join
again with the company.’ (pp. 31-32, t.s.n., June 22, 1960) (Underlining supplied)

At this juncture it must be noted that the closure of the Machine
Made Department at 1132 Isaac Peral, Manila,
did not mean the cessation of the business of making scalloped
handkerchiefs.  The company con­tinued
to make scalloped handkerchiefs by transferring the pieces of machinery
to various places in the provinces. 
(Direct testimony of Jack Nasser, pp. 8-9, t.s.n.,
June 6, 1960)

“8.  On November 15, 1958, the company
replied to the demand for collective bar­gaining (Exhs.
“B” and “C”) but asked the union to first prove its
majority before dealing with it as the bargaining agent of said unit.

‘With reference to your letter addressed to the Philippine American
Embroideries, Inc., dated November 3, 1958, and pur­suant to our conversations in
Re­gional Office No. 3 on November 10, 1958, I wish to inform you that it is
the desire of the Phil­ippine American Embroideries, Inc. that your union
should first obtain a certification from the Court of Industrial Rela­tions
that it represents the majority of the collective bargaining unit it seeks to
repre­sent, that is, all the employees of the Philippine American Em­broideries,
Inc. before dealing with you as the sole collective bargaining agent for the
said unit.  This request is made in view
of the fact that the Philippine American Embroideries, Inc. is of the belief
that your union does not represent the majority of all its employees.’ (Exh. ‘1’)

“9.  On November 26, 1958, the instant case
was filed against the company, Albert Nasser, Jack Nasser, President and
Vice-President, respectively, of the company and including the Kapisanang Manggagawa sa Phil-American Embroideries, Inc. and praying, among
others, for the disenfranchising of the Kapisanang Manggagawa sa Phil-American
Embroideries, Inc. for being a company-dominated union.” (Complaint, p. 5)

“10.  All the
respondents filed their respective answers; (Answer of company da­ted December
16, 1958 and Answer of res­pondent Union dated December 15, 1958.)

“11.  On April 4, 1959, the union members who
were dismissed reiterated their unconditional offer to work, in the fol­lowing
tenor:

‘In the conference between your Atty. Manuel O. Chan and the
Embroidery and Garment Workers Union, it is a matter of record that I
categorically stated the unconditional offer to work of each and every member
of the union.

‘Yesterday at the Court of Industrial Relations, the said Atty.
Chan informed us that there are openings at the Gloves Department of your
corporation.  The members of the union
have been trying here to find employment after their separation from your
company and, there­fore, the information conveyed is welcome.  In the name of each and every member of the
union and in their behalf I once more offer their services without any
condition.’ (Exh. ‘D’)

“12.  The company
refused the collective offer and instead insisted that the applica­tion be made
individually by the union members (Exh. ‘D-1’);

“13.  During the
numerous hearings, the respondent Kapisanang Manggagawa sa Phil-American
Embroideries, Inc., despite notices thereof, failed to appear in some hearings
until the case was submitted for decision; (Minutes of the hearings of December
3, 1960 and January 24, 1961).”

Petitioners do not dispute the facts above set forth, but aver
that the resolution fails to state and consider other facts likewise
indubitable and non-controversial, and indis­pensable for a just and legal
determination of the issues in­volved. 
These other facts, indeed, while related in the de­cision of the trial
Judge and elaborated upon in his dissent to the resolution of the Court en
banc, are not only unchallenged but appear to be borne out by the
record.

The first material finding in the resolution of the Court en
banc is that contained in number 3, to the effect that “it has been
the practice to lay off employees who could not fulfill their quotas.” The
statement is plain enough, but stripped of the other relevant facts and
circumstances it fails to picture the situation in proper perspective.  Those facts and circumstances are stated in
the decision of the trial Judge, thus:

“Regarding the alleged lock-out, the Court is also convinced
that there was no such lock-out as claimed. 
The principal witnesses for the complainant, Felicidad
Ros and Concepcion Rayala, testified as to the alleged incidents that led to
the laying-off of members of the complainant union.  They claimed that since the start of the
operation of the machine-made department in 1956, the company resorted to the
practice of laying-off workers, after giving them warnings of 15 days or one
month, for their failure to meet their quotas, and that only those who were
industrious and able to meet or fulfill their quotas, were not laid-off.  On this point Felicidad
Ros testified as follows:

‘Q.   Those who were given warning, who became
candidates for lay­ing off were given opportuni­ty to fulfill or make their
quota, were they not?

 A.   Yes,
sir.

 Q.  And
after making their quota or fulfilling their quota, they were not
laid-off.  Is it not?

 A.   Yes,
they were not laid off because they were able to meet the quota.  But for a certain period of fifteen (15) days
or one month when they were given warning.

 Q.  And
during that period of fifteen (15) days or one month when they were given time
to fulfill their quota and they were able to meet their quota, they were not
laid off?

 A.   Yes,
sir.

 Q.  The
others who were laid off were laid-off because they were unable to make their
quota.  Is that not a fact?

 A.   Yes,
sir.’

It is clear from the above testimony that
the practice of the company in laying-off workers started in 1956, and indeed,
the reasons therefor were justified for, as admitted
by Mrs. Ros, only those who were not industrious and
unable to fulfill their quotas were laid-off. 
Such practice was not motivated by the union activities and/or
affiliations of said workers.”

Relative to findings Nos. 4, 5 and 6 in the resolution under
review, the following additional facts found by the trial Judge In his decision
are relevant and material:  that since
the early part of 1958 the workers in the “machine-made” department
of petitioner company – the department making scalloped handkerchiefs – had
been informed by management about the losses incurred in its operation.  Witness Felicidad Ros so testified, and admitted on cross-examination that it
was precisely to avoid financial collapse and closure of the de­partment that
the employees were given quotas, and that the matter had been the subject of
conferences between manage­ment and representatives of said employees.  The unfavorable situation continued
nevertheless:  the financial statements
presented in evidence show a loss of P62,444.55 in 1957 and a loss of
P45,872.47 in 1958, or a total of P108,317.03.

In the light of these facts, significantly omitted in the
resolution of the Court en banc, the real reasons behind the
closure of the “machine-made” department and the formation of the
respondent union are brought into clearer focus.  The decision to close could not have been so
sudden as the resolution said it was: 
the adverse financial condition of that department had lasted almost two
years.  The testimony of Felicidad Ros in fact discloses
that the employees organized themselves by affiliating with the Embroidery and
Garment Workers’ Union “in order to prevent their
lay-off due to the cessation of work.”

‘Q.   But the fact remains that it was only in
October 1958 that you decided to organize a labor union by affiliating with the
Embroidery & Garment Workers’ Union?

 A.   Yes, sir.

 Q.  This was because, as you stated, you were afraid to be laid off?

 A.   Yes, sir, we were afraid.

 Q.  And
you thought that you can prevent the lay-off of you and your companions by
affiliating with the Embroidery & Garment Workers Union?

 A.   Yes, sir!  (t.s.n., pp. 17 and 18, September 4, 1959); p. 12, Annex “A”,
Petition).”

The respondent union was organized in the last week of October
1958.  Petitioner company was advised
thereof by letter on October 31, and received the union’s collective bargaining
proposals on the following November 3. 
The Court en banc found (finding No. 7, supra) that in the
afternoon of the same day, Nov. 3, the management announced the closure of the
“machine-made” department and the opening of a new one – the Knitting
Glove Department.  The employees who were
dis­missed by reason of the closure were told to file applications with the new
department.  The Court was of the
opinion, how­ever, that there was no bona-fide closure of the business because
the company “continued to make scalloped handkerchiefs by transferring the
pieces of machinery to various places in the provinces.” This apparently
was the basis of the Court’s conclusion that the real reason for the dismissal
of the employees in the “machine-made” department was their union
activities.

It is with respect to the finding that the company continued to
make scalloped handkerchiefs that there exists a divergence among the members
of the industrial Court.  The evidence is
that the machines were leased to independent contractors in the provinces; but
whether they turned out scalloped handkerchiefs or infant wear^[1]
with those machines is quite unimportant insofar as the charge of unfair labor
practice is concerned.  For it is a fact
that the “machine-made” department had been suffering financial
reverses in its operation; and it is also a fact that the employees had been
forewarned of its closure unless the situation improved, and that when such
closure became unavoidable the employees, without forming a local union of
their own, hurriedly affiliated themselves with respondent Embroidery and
Garment Workers Union as a means of preventing the loss of their jobs.

The following observations of the trial Judge, Hon. Emiliano C. Tabigne, in his
dissenting opinion are apropos:

“Even on the assumption that the
workers in the department were already members of a labor union at the inception
of the operation of the business in 1956, it cannot deter or prevent the
decision of respondent to close the business if to proceed any further will
only mean financial ruin or busi­ness collapse. 
What more in a case like the one at bar when it is distinct­ly shown
that the motive of the complain­ing witnesses to suddenly join the union, after
respondent company had already decided to close the department, was to prevent
respondent from proceeding with its decision to close and to secure for
themselves a continuing employment?  It
is very clear from the records that the decision to close the department was
for a justifiable and legitimate reason. 
To attribute the closing of the machine made depart­ment and the
consequential separation of the employees affected therein, to the affiliation
of the complaining witnesses to the complainant union is to subscribe to the
illegal mo­tive or purpose of the complainants and disregard entirely the
legitimate and legal ground which motivated respondent company in closing the
department, for I believe, no authority or law can stop an employer from
closing operation of its business when it is on the red, much less are the
employees empowered, by reason of their union affiliation or color, to compel
the company to continue operation just so to secure for them (laborers or
employees) continuous employment” (Pages 8-9, Tabigne,
J.-Dissenting, Annex “B” of Petition).”

The presentation of proposals for purposes of collective bargaining
on November 3, 1958 could not
have been the motive for the closure of the “machine-made” department
on the same day.  There was then no
existing labor dispute; indeed the company learned of the formation of the
union only three days before.  There was no
conceivable reason why such a drastic step as the complete cessation of
operations should be resorted to as a measure of retaliation against the
employees for their supposed union activities when there were yet no such
activities to speak off.

To be sure, there was a demand for collective bargain­ing
contained in the letter of November 3,
1958.  But the company did
not ignore it, or refuse to bargain at all. 
What it did was to ask the union to prove that it counted with a
majority of the employees, and to secure from the Court of Industrial Relations
a certification to that effect.  This was
not only the legally approved procedure, but was dictated by the fact that the
company had an existing collective bargaining agreement with another union,
namely, the “Kapisanang Manggagawa
sa Phil-American Embroideries, Inc.”

Finding Nos. 11 and 12 of the Court en banc are
that the employees who had lost their jobs unconditionally offered to work but
that the company refused their collective offer and insisted that they submit
their applications individually.  This,
according to the majority of the lower Court, constitu­ted unfair labor
practice.  The conclusion is
non-sequitur.  Unfair labor practice can
hardly be inferred from a willing­ness to accept applications for work.  The dissent of the trial Judge states the
matter quite clearly:

“Even with respect to Exhibit ‘D’ petitioner, which was also
marked Exhibit “2” for respondent company, a letter by the former to
the latter dated April 4, 1959, the complaining witnesses did not ask for
reinstatement to their former position in the Machine-Made Department which was
closed on November 3, 1958, but they only requested to be employed in the Knit­ting
Glove Department which is the newly created department of respondent company.  For clarity, the last paragraph of Exhibit
‘D’, petitioner, is quoted hereunder:

‘Lastly, may I be honored with a reply regarding your acceptance of
their services should there be vacancies in order that the same may be
immediate­ly transmitted to them.’

From the foregoing, it is an implied if not
an expressed admission by complainants, through their own counsel, that there
was no room or legal ground for reinstatement to the already de­funct
department from where they originally worked but that they only wanted to be
employed in the Knitting Glove Department of the respondent company, and while
jobs cannot be pro­mised to everybody, the complainants were advised to file
their correspond­ing applications and if they are found to be qualified, they may
be accommodated to fill any vacancy” (p. 15, Tabigne,
J.- Dissenting, Annex “B” of Petition).”

Considering all the undisputed facts, both as stated in
the resolution of the Court en banc and in the dissent thereto,
we are convinced that petitioner company was not guilty of unfair labor
practice as charged, and that the closure of its department where the members
of respondent union were employed was not an act of discrimination or a means
of dismissal but rather the result of continued losses in operations – a ground
that is entirely justified by law.

The resolution appealed from is reversed and set aside, and the
complaint is dismissed, with costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Castro,
Capistrano, Teehankee, and
Barredo, JJ., concur.

Fernando, J., did not take
part.

^[1]
Testimony of Inocencia D. Garcia, one of said
contractors.