FINDLAY MILLAR TIMBER COMPANY, PETITIONER, VS. PLASLU AND COURT OF INDUSTRIAL RELATIONS, ETC., RESPONDENTS.

Two cases for unfair labor practice were filed before the Court of Industrial
Relations by some employees and laborers of Findlay Millar Timber Company which
were affiliated with the Philippine Land-Air-Sea Labor Union, referred to herein
as PLASLU, for short, against said company and some of its principal officials.
One was filed on August 15, 1955, docketed as Case No. 41-ULP-Cebu, relating to
the alleged dismissal of 60 employees as a result of some discriminatory acts,
and another was filed on June 28, 1956, docketed as Case No. 6-ULP-MIN, covering
alleged dismissal of 29 employees named in the complaint. The theory of both
complaints is that the company and its corespondent officials, individually or
collectively, interfered with, restrained, or coerced the PLASLU’s affiliates or
members who complained in the exercise of their right to self-organization by
inquiring into their union affiliation and activities, by convincing them to
withdraw from their union or join another as a condition for continued
employment with the company, by threatening them with dismissal if they did not
resign from their union, by discriminating against them through the application
of the rotation system, and reducing them to part-time work as compared to those
who resigned their union affiliation and joined another who were continued on
full-time basis.

The company and its co-respondents denied the commission of unfair labor
practices. Among other things, they emphasized that many of the complainants
were in fact no longer working in the company in March and August, 1955; that
the complainants ceased to work of their own choice or desire because of the
inadequacy of working days assigned to them by reason of the operation of the
rotation system which made the complainants prefer not to work any more, or make
living elsewhere, or devote their time to their own farms. In other words, the
respondents indicated that the dismissal, lay-off, and rotation complained of,
were justified by the circumstances then prevailing, to wit: the burning of the
sawmill of the company, inadequate work business reverses and financial
difficulties, and the labor-saving devices that were resorted to in order to
lower the cost of production and continue uninterruptedly the work of the
company. They also called attention to the closed shop agreement entered into
between the company and the Western Lanao Labor Union (WELLU) in order to
apprise the industrial court of the latter’s activities relative thereto.

The two cases were assigned to Judge Jose S. Bautista for the reception of
evidence, who thereafter rendered decision dismissing the charges. His Honor
found that the lay-off or separation of complainants was justified under the
closed shop agreement entered into between the company and the Western Lanao
Labor Union (WELLU) even if some of them voluntarily abandoned their employment
in view of the rotation system adopted by the company because of financial
difficulties.

The complainants filed a motion for reconsideration, which was vigorously
opposed by respondents, in support of which both submitted lengthy and
well-reasoned arguments, and on January 6, 1961, the industrial court en
banc reversed the decision of the trial judge stating in its dispositive
part: “the decision of the Trial Court is set aside, and those who were
dismissed through the alleged closed-shop be reinstated and paid their back
wages accordingly, it being apparent that it was the Company that dismissed them
and not prompted by, or the blame traced to, the union.”

The company interposed the present petition for review.

The questions which in our opinion need to be discussed in this instance
which are decisive of the issues raised in the petition for review may be boiled
down to the following: whether respondent court erred (1) in incorrectly
assuming that the complainants were dismissed by reason of the closed shop
provision contained in the collective bargaining agreement entered into between
the company and the WELLU; (2) in overruling the trial judge’s views on the
legal effects of said closed shop agreement; (3) in disregarding the finding of
the trial judge that the PLASLU was organized for the purpose of defeating the
closed shop provision agreed upon and in not finding that complainants took
advantage of the activities of the WELLU to build up their cases of unfair labor
practice against the company and its co-respondents; and (4) in not holding that
only the grievances of complainants who testified should be determined and
failure of those who failed to appear constitute an abandonment of their own
grievances.

The contention that respondent court erred in incorrectly assuming without
foundation in fact that the complainants were dismissed by reason of the closed
shop provision contained in the collective bargaining agreement entered into
between the company and the WELLU is untenable, for the trial judge has
precisely predicated his ruling on dismissal on the finding that the
complainants were separated on the strength of said closed shop provision by
making it applicable not only to those to be employed in the future but also to
those who are already in the service of the company. This can clearly be gleaned
from the decision of the trial judge. In fact the main issue considered by the
trial judge in connection with the charges filed by complainants was whether the
closed shop agreement which was entered into between the parties was valid and,
if so, whether its effects should be made applicable to both old and new
employees. The judge then went on to discuss the different elements that must
concur for the establishment of a valid collective bargaining agreement as to
which, after considering that all the requisite elements were present, reached
the conclusion that the collective bargaining agreement in question was valid,
it appearing that the WELLU had in its membership the greatest number of
laborers and employees in the company, and that there was no proof that it was a
company-dominated union, while on the other hand, the WELLU was the one selected
to be their bargaining unit representative by the majority of the laborers and
employees as required by law. The trial judge then proceeded to make an analysis
of the provisions of the closed shop and from their tenor as well as from
precedents obtaining in the United States on the matter, he held that said
closed shop clause is not only legal but applicable to old and new employees.
And, among the many authorities he has cited, he quoted the following from
Rothenberg: “A ‘closed shop’ may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives, no
person may be employed in any or certain agreed departments of the enterprise
unless he or she is, becomes, and for the duration of the agreement, remains
a member in good standing of a union entirely comprised of or of which the
employees in interest are a part” (Rothenberg on Labor Relations, p. 48; italics
supplied).

Indeed, according to the trial judge, this is what can be inferred from the
clause on the closed shop appearing in the collective bargaining agreement, for,
among other things, said clause says, “The Employer agrees to employ none but
members in good standings of the Union * * * and to hire and order any or all
regular and extra employees who shall be needed * * *.” Clearly, these terms,
liberally interpreted, cover both employees who are actually in the service as
well as those that may be hired in the future. And this liberal interpretation,
in the light of American precedents, led the trial judge to conclude: “With
this, therefore, as the facts that actually transpired and the wordings in the
closed-shop contract between the management and the contracting union, WELLU, it
is clear that the contract is valid and that if affects both new and old
employees.” He consequently held that the separation of the complainants was
justified and dismissed the charges.

It is true that the trial judge, in passing, also mentioned the fact that as
a consequence of the retrenchment policy adopted by the company as a result of
the burning of its sawmill on May 22, 1953, it was compelled to adopt a rotation
system in the employment of its laborers in an effort to continue all of them in
the service even at a reduced work which eventually led some to abandon their
job in order to find employment elsewhere; but the trial judge only considered
such circumstance as an additional ground for dismissal of the charges, the main
ground being the operation and effect of the closed Shop clause contained in the
bargaining agreement. The respondent court, therefore, was justified in
concentrating its discussion on the validity, scope and extent of the closed
shop provision in disregard of other factual evidence extent in the
record.

We see no error in the action of respondent court in may be in accord
with American law and jurisprudence, as the time they were expresed, no longer
hold water today for jurisdiction. It may be true that the trial judge’s views
they run counter to decisions recently rendered by this Court. Thus, in the case
of Freeman Shirt Manufacturing Co., Inc., et al. vs. Court of Industrial
Relations, et al., 110 Phil., 963, this Court said:^[1]

“The closed-shop agreement authorized under sec. 4 subsec. a (4) of the
Industrial Peace Act above quoted should however, apply only to persons to be
hired or to employees who are not yet members of any labor organization. It is
inapplicable to those already in the service who are members of another union.
To hold otherwise, i.e., that the employees in a company who are members of a
minority union may be compelled to disaffiliate from their union and join the
majority or contracting union, would render nugatory the right of all employees
to self-organization and to form, join or assist labor organization of their own
choosing, a right guaranteed by the Industrial Peace Act (sec. 3, Rep. Act No.
875) as well as by the Constitution (Art. III, sec. 1[6].”

Considering that the views expressed by respondent court on the legal effect
of a closed shop clause are in line with the view expressed by this Court in the
Freeman case, supra, we cannot but conclude that the trial judge erred in
his interpretation of the closed shop in question which served as a
justification for the separation of the complainants herein. This justifies the
action taken by respondent court in overruling the trial judge’s views on the
matter.

It should, however, be observed that the employer, petitioner herein, cannot
be blamed if in its interpretation of the closed shop provision was led to apply
its effects not only to future employees but also to those who were already in
the service considering not only the ambiguous terms into which the same is
couched but also the meaning of a closed shop as understood in American
jurisdiction, and, therefore, it is fair to presume that before the promulgation
of our decision in the Freeman case the employer acted having in mind the closed
shop as construed in the United States after whose statutes our Republic Act No.
875 was patterned, for authorities abound insinuating that in the application of
law of American origin the rulings of the Supreme Court of the United States
construing similar provisions are considered of persuasive effect and may be
followed as authority.^[2] So, it is fair
to presume, we repeat, that when petitioner separated the complainants because
of their refusal to disaffiliate themselves from the PLASLU and join the WELLU
which has a collective bargaining agreement with the employer, it merely acted
in pursuance of the terms of the closed shop clause in the light of American
jurisprudence thereby justifying its claim that it has acted on the matter not
without justification. It is, therefore, fair to conclude that the employer had
acted in good faith. In reaching this view, this Court holds the opinion that
while complainants are entitled to reinstatement on the theory that their
separation was based upon a mistaken interpretation of the closed shop
provision, they are not however entitled to back wages because their separation
was effected in good faith.

Having reached the foregoing conclusion, we do not deem it necessary to
discuss the other issues raised by petitioner in its brief.

Wherefore, the decision of respondent court which is in the form of
resolution issued on January 6, 1961 is modified in the sense that those who
were dismissed improperly as foresaid should be reinstated but without back
wages. No pronouncement as to costs.

Bengzon, C. J., Padilla, Labrador, Concepcion, Reyes, J. B. L., Paredes,
Dizon, and Makalintal, JJ., concur.

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[1] See also Local 7, Press & Printing
Free Workers (FFW), et al. vs. Hon. Judge Emiliano Tabigne, et al., 110 Phil.
275.

[2] Ibañez de Aldecoa vs. Hongkong &
Shanghai Bank, 30 Phil., 228; Cuyugan vs. Santos, 34 Phil., 100; Cerezo vs.
Atlantic, Gulf & Pacific Co., 33 Phil., 426.