PHILIPPINE ENGINEERING CORPORATION, PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS AND FREE LABOR UNION, RESPONDENTS.

Petition to review the decision, dated May 10, 1967, of the Court of Industrial
Relations (CIR for short), in its Case No. 3415-ULP, and its resolution en
banc dated July 6, 1967
denying the motion for reconsideration.

Petitioner, Philippine Engineering Corporation, a domes­tic
corporation engaged in the purchase, sale, installation and repair of
machineries, with offices at 1691 M. H. del Pilar, Malate, Manila, operated a machine shop at 888 Raon St., Quiapo, Manila, where
its marine and other departments, as well as the offices of the corporation and
the offices of its sister companies, were also located.  It had in its employ members of the
respondent Free Labor Union, a legi­timate labor organization, with which it
had a collective bargaining agreement, effective from January 1, 1960 to December 31, 1963.^[1]
After the expiry date of the agreement, the union through its officers and
members made re­peated representations with the management of the petition­er
for the execution of a new collective bargaining agree­ment.  The first request, a letter dated January 6, 1964, was answered by the
corporation on even date with the inform­ation that a draft of a new agreement
would soon be sent to the union.  No
draft having been received, the union once more in October, 1964, asked to
confer with management, but the request was denied by the President and General
Manager of petitioner.  In December, 1964
the union pre­sident Amado Cuison
talked to the President of petitioner by phone about the execution of a new
contract but the lat­ter answered that he was very busy.  Subsequent representa­tions were also of no
avail as the President of petitioner always asked for deferment of the
execution of the new labor agreement.

On February 1, 1965,
the employees in the machine shop of petitioner were served by management with
written notice that their services would be terminated within the month of
February, although the regular employees would still be paid for the period
from February 1, 1965 to March 31, 1965.  The union members then complained twice to
the Department of Labor, and on the occasion of the second complaint the rep­resentatives
and counsel of management told them, in the presence of the labor conciliator,
that the formal letter regarding the final decision on the closing of the
machine shop would not yet be released, so that there was nothing to be alarmed
at.  The conciliator told them that since
the corporation was not closing the shop there was no point to be
discussed.  The union members, therefore,
withdrew the case that they had filed in the Department of Labor.

In the meantime, the union members continued their ef­forts to
negotiate with the petitioner corporation for a new collective bargaining
agreement.

On May 31, 1965
the corporation closed the machine shop at Raon Street, dismantled the
machineries and transferred them, together with the equipment and tools, to its
bodega at Carpena Street.  Effective June 1, 1965, about 70% of the union members (about 57 of
them) were dismissed, but the re­maining 30% of the union members, mostly
mechanics and mecha­nic helpers, including union president Amado
Cuison, union adviser Francisco Sanga
and union board member Tomas Peña, were retained for
the maintenance of customers’ equipment. 
The corporation started selling its machineries that came from Raon Street, but continued
accepting machine jobs and service and repair works which it turned over, on a
sub-contract basis to other machine shops. 
Before and after the closure of the Raon
machine shop a number of employees and laborers had been, and were being, hired
by the corporation.

The respondent union, on behalf of its laid off 57 members,
through a complaint dated July 28, 1965, filed by the acting prosecutor of the
CIR, charged petitioner with unfair labor practice under Section 4(a), sub-para­graphs
1 and 4 or Rep. Act No. 875, for having discrimina­torily dismissed the 57
members of the union for no other reason than because of their membership and
activities in the union, and praying, among other things, their reinstate­ment
to their former positions with full back wages from the date of their dismissal
to the date of their actual reinstatement.

The corporation, in its answer, denied all the material averments
of the complaint and alleged, by way of special and affirmative defenses, that
the 57 subject em­ployees were dismissed for just and lawful cause upon prior
notice; that the machine shop wherein they used to work was closed; that the
court lacked jurisdiction over the complaint, there being no employer-employee
relationship between the complainants and the corporation, or that the case
simply involved the legality or illegality of the termination of the services
of the employees.

After trial, respondent CIR rendered a decision declaring
petitioner Philippine Engineering Corporation guilty of unfair labor practice
as charged, and ordering it to cease and desist from further committing acts of
unfair labor practice and to reinstate the complaining employees to their
former or equivalent positions with backwages for
three months, computed on the basis of the respective rates of wages that they
received on the date of their dismissal, without deduction, and without loss of
seniority and other privileges appertaining to their respective positions.

A motion for reconsideration having been denied by the CIR en
banc on July 6, 1967,
the instant petition for review was filed, to which respondent union filed an
answer dated October 23, 1967.^[2]
This answer upon request of said respondent is considered as its brief.^[3]

Petitioner, in its brief, contends that respondent CIR erred, and
gravely abused its discretion and/or acted without or in excess of
jurisdiction:

1.   
In not finding that petitioner’s machine shop
was closed due to financial losses and therefore due to legitimate cessation of
business;

2.   
In finding that the dismissal of some personnel
was due to union membership and union activities;

3.   
In not dismissing the charge of unfair labor
practice;

4.   
In ordering reinstatement of the dismissed
employees;

5.   
In awarding back wages; and

6.   
In not dismissing the case for lack of
jurisdiction.

1. Petitioner contends, in the first error assigned, that the CIR
committed error and gravely abused its dis­cretion in not finding that the
machine shop was closed due to financial losses, and in support of that
contention argues that the “evidence amply shows that the machine shop had
been losing money for at least two years before it was shut down for good on
May 31, 1965”; that the los­ses, with concrete figures, were made known to
the members of the respondent union through notices, circulars, letters and notes;^[4]
that the poor business was confirmed by manifold circumstances admitted by
witnesses, such as delays and partial payments of wages for years up to the
time the shop went out of business, the adoption of rota­tion system of work of
the laborers from 1958 to the time of the closure, the amount of arrears in the
payment of rentals for the shop buildings for about one year in the sum of
P125,747.61, the uncollected accounts of customers running to several hundred
thousand pesos, the inability to remit the monthly contributions to the Social
Security System from 1962 to 1966 totalling about
P120,000.00 and the loss of distributorship of several of its major pro­fitable
machinery lines; that, notwithstanding said evidence, the respondent CIR
minimized, contrary to the evidence, the effect or the rotation system by
saying that it was not put into effect because there was enough work and much
over­time; lessened the significance of the unpaid rentals by saying that
petitioner did not pay the rentals because the landlord failed to reduce the
same; speculated that the failure to remit the contributions to the Social
Security System was due to mismanagement; belittled the losses of the company
by stating that said losses were not conclusive as petitioner failed to present
its accountant as witness, and its statements of profit and loss; that, in the
light of said evidences of continuing losses of the shop, it should not be
difficult to conclude that the machine shop was closed due to financial
reverses, and that, consequent­ly, the subsequent dismissal of the members of
the respond­ent union was due to legitimate cessation of business.^[5]

Respondent union, in its answer, contends that the finding of the
CIR, on the basis of the evidence before it, that petitioner’s machine shop was
not closed due to finan­cial losses is a finding of fact which this Court may
not disturb on appeal.

After a careful study of the record, We can not sus­tain the
stand of petitioner.  Petitioner asserts
that the machine shop at Raon folded up because of
financial losses.  The CIR, however, did
not consider the evidence presented by petitioner sufficient to support that
assertion.  It is a settled doctrine of
this Court that matters touching on the weight and sufficiency of evidence^[6]
and on the credi­bility of witnesses^[7]
involve questions of fact, and the findings of the CIR on such matters are
conclusive upon this Court.

It can not be said that the CIR abused its discretion when it did
not consider petitioner’s evidence credible and sufficient.  We find that the testimonies of petitioner’s
witnesses, Antonio Tamparon and Gilbert Gullen, regarding the losses were not given credit by the
CIR because they failed to state specifically the amount of the alleged los­ses
in 1965 or 1964, and in prior years.  The
corporation, according to the CIR, did not present its books of account and its
statements of profit and loss which would clearly demonstrate the alleged
financial losses, nor did petition­er present its accountant or auditor to
testify on that matter.  The failure of
petitioner to present the best evidence in its possession, concluded the CIR,
gives rise to the presumption that there was suppression on its part of
evidence unfavorable to its interests.^[8]
This Court has ruled that the matters regarding the financial condi­tion of a
company to justify the closing of its business and whether a company is losing
in its operations are questions of fact.^[9]

2.  In the second error
assigned by petitioner, it contends that the trial court erred in finding that
the dismissal or some personnel was due to union membership and activity,
claiming that such finding is “patently con­trary to the evidence and
circumstances of record as fully discussed under the preceding first assignment
of error”.  Petitioner claims that
union activity could not have been the cause of the dismissal because 30% of
the members of the union were retained after the shop was closed, that the
finding of the CIR was based primarily on the biased tes­timonies of the
vice-president and the secretary of the union to the effect that they had been
pressing for a new collective bargaining agreement to replace the old one that
expired on December 31, 1963 but that petitioner deferred negotiations.  In short, petitioner claims that the dis­missal
of the 57 union members was based on justifiable grounds and not because they
were discriminated against due to their union membership and activity.

Again We find that the issue raised in the second assignment of
error involves questions or fact.  It is
evident upon reading the arguments of petitioner in its brief and the decision appealed
from that there is conflicting evidence regarding the cause of the
dismissal.  In this connection, the decision
states that “there is, however, variance in their respective assertions as
to the cause of dismissal from employment of the herein subject workers.”^[10]
To reach a finding on the cause of the dismissal, there must be an evaluation
of the conflicting evidence of the parties,^[11]
a determination of the weight and sufficiency of evidence, as well as the
credibility of witnesses, all or which, as this Court has held, involve
questions of fact.

All that this Court is called upon to do regarding this issue is
to find out whether the finding or fact of the CIR is supported by substantial
evidence in the record ­such relevant evidence as a reasonable mind may accept
as adequate to support the conclusion arrived at.

The CIR found that the dismissal of the 57 employees could not have
been due to the precarious financial con­dition of the shop, for there was
plenty of work at the time of their dismissal; that during the whole year of
1964, the employees in the machine shop rendered overtime work such that
additional employees, or casuals, were sometimes hired, and on January 5, 1964,
petitioner published in the Sunday Times that it “wanted ten diesel
installation and repair mechanics”; that petitioner at that time purchased
from Deutz Company $349,068.71 worth of spare parts;
that even after the closure of the shop, the corporation had been accepting
jobs, some of them big ones, hiring new employees and giving salary increases
to its new employees.^[12]

Contrary to petitioner’s claim, the trial court found that the
complaining employees were discriminatorily dis­missed, for after they asked
the management verbally and in writing for a new collective bargaining
agreement which would embody new rates of pay, terms and conditions of
employment, the corporation began issuing “pass around” notes
announcing the precarious financial condition and losses in the machine shop,
which notes were considered by the CIR as “a systematic approach intended
to dampen the enthusiasm of the union members”;^[13]
that after the closure of the shop, the corporation continued to accept job
orders and repair work which it subcontracted to other repair shops; that after
the dismissal of the complaining employees the corporation hired new employees
to perform its con­tracts, like the installation of escalators and construction
of air-conditioning units at the Shoe World, which job was finished in
September, 1965; that salary increases were given by petitioner to its
employees after the herein complaining workers were no longer in the service.^[14]

The fact that 30% of the union members were retained might indeed
show that “union membership and activity” was not the exclusive cause
for dismissal, but the CIR also found that “those who were retained in the
service upon the closure of the machine shop on May 31, 1965 were also dismissed
on October 31, 1965”, and after their dismissal, the corporation gave
promotions to its employees by way of salary increases.^[15]
But even if it be granted, for the sake of argument, that there was another
reason for the dismissal, such other reason would not help petitioner’s
cause.  It has been said, anent this
matter that:

“It is not necessary to support a find­ing that a particular
discharge constitutes an unfair labor practice to demonstrate that the
dismissal was entirely and exclusively motivated by the employee’s union
activities or affiliations.  It is enough
to denounce the discharge if it established that the dis­crimination motive was
a contributing factor.” (Rothenberg on Labor Relations, p. 415 citing Cupples Mfg. Co. vs. N.L.R.B., 106 F (2d) 100; N.L.R.B. vs.
Polson Logging Co., 136 F. (2d) 314; Carter Carburetor Corp. vs. N.L.R.B., 140
F. (2d) 714; Onan vs. N.L.R.B., 139 F. (2d) 728;
N.L.R.B. vs. Davies Co., 135 F. (2d) 179).

This Court has also said that if it can
be established that the true and basic inspiration for the employer’s act is
derived from the employee’s union affiliation or acti­vities, the assignment by
the employer of another reason, whatever its semblance of validity, is
unavailing.^[16]

3.  In the third error
assigned by petitioner, it con­tends that the CIR erred in not dismissing the
charge of unfair labor practice, arguing that the evidence required to prove a
charge of unfair labor practice should be proof beyond reasonable doubt — a
situation which does not ob­tain in the instant case.  This contention has no merit.  While this Court has held that complaints for
unfair labor practice are prosecuted as in complaints for criminal of­fenses^[17]
it did not declare that proceedings in cases of unfair labor practice should be
equated to prosecutions of offenses punishable under the Revised Penal Code
such that proof beyond reasonable doubt is required in order to make a finding
of guilt.^[18]
Section 5, paragraph (b) of the Industrial Peace Act (R.A. 875) in relation to
unfair labor practice cases partly provides as follows:

“xxx In any such proceeding, the rules of evidence prevailing
in courts of law or equity shall not be controlling and it is the spirit and
intention of this Act that the Court and its members and Hearing Examiners
shall use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or
procedure….”^[19]

The Industrial Peace Act does not provide for the quantum or
measure of evidence required in proceeding in cases of unfair labor
practice.  It does not require pre­ponderance
of evidence as in ordinary civil cases,^[20]
and much less proof beyond reasonable doubt. 
The Act re­quires only substantial evidence with respect to findings of
facts.  Thus Section 6 of the Act
provides:  “The find­ings of the
Court with respect to question of fact if supported by substantial evidence on
the record shall be conclusive.  The
appeal to the Supreme Court shall be limited to questions of law only.” To
issue an order re­quiring a person to cease and desist from an unfair labor
practice, and take further affirmative action as may be necessary, the
Industrial Peace Act requires only that the Court be of the opinion that an
unfair labor practice has been engaged in. 
This is clear from the pro­vision of its Section 5 paragraph (c) which,
in part, provides as follows:

“If, after investigation, the Court shall be of the opinion
that any person named in the complaint has engaged in or is engaging in any
unfair labor practice, then the Court shall state its findings of fact and
shall issue and cause to be served on such person an order requiring such
person to cease and desist from such unfair labor practice and take such
affirmative action as will effectuate the policies of this Act x x x.”

4.  In the fourth error
assigned by petitioner it con­tends that the CIR erred in ordering the
reinstatement of the dismissed employees. 
The petitioner argues that in the absence of unfair labor practice,
which has not been con­clusively shown in the instant case, the CIR could not
order reinstatement; and that even if it is shown that the em­ployer is guilty
of unfair labor practice, reinstatement can not be ordered of employees who are
no longer needed or there would be more employees than that required by the
economic operation of the business. The petitioner further argues that its shop
having been closed, machinery installa­tions dismantled and partly sold, it can
not reinstate the discharged employees, most of them being welders, drill press
operators, lathemen, tinsmith and carpenters.

We find merit in the stand of petitioner.  There is no doubt that employees who were
discriminatorily dismissed can be ordered reinstated by the CIR, with or
without backpay pursuant to Section 5(c) of the
Industrial Peace Act and the decisions of this Court.^[21]
Reinstatement refers to a restoration to a state from which one has been
removed, or a return to the position from which one was taken out.  Reinstatement presupposes that the pre­vious
position from which one had been removed still exists, or that there is an
unfilled position more or less of similar nature as the one previously occupied
by the employee.

In the instant case, as found by the CIR, the machine shop at Raon Street was closed, the machineries were dismantled and
transferred to the bodega at Carpena Street, and some
of the machineries were already sold. 
There being no more positions in the machine shop to which the dismissed
employees, mostly welders, drill press operators, lathemen,
tinsmith and carpenters, could be returned, reinstatement is not possible.  The CIR should not have ordered
reinstatement.  The law itself can not
exact compliance with what is impossible. 
“Ad imposible nemo
tenetur.”^[22]

5.  In the fifth error
assigned, the petitioner con­tends that the CIR erred in awarding back
wages.  In sup­port or its contention
petitioner argues that back wages can not extend beyond the closure of the
business, and in the instant case the machine shop was closed on May 31, 1965; and
that, assuming that the workers were entitled to back wages, any amount that
the discharge shop workers had earned during the period of their dismissal
should have been ordered deducted by the CIR.

We believe that no error has been committed by the CIR in
ordering the payment or three months back wages.  In the case of Sta. Cecilia Sawmills Inc. v.
CIR, et al., L-19273-74, May 25, 1964,^[23]
this Court ordered the employer to pay the dismissed employees their three
months backpay where reinstatement was possible by
way of penalty because it was shown that the employees were dis­missed without
just cause.

6.  In the sixth error
assigned, petitioner contends that the CIR should have dismissed the case for
lack of jurisdiction.  The petitioner
asserts that the evidence shows clearly that the case relates to the
termination of service under Rep. Act No. 1787, and it is one that is not
within the jurisdiction of the CIR because petitioner had disposed of his
business for economic reasons, and petitioner had an undeniable right to do
what it did even if it meant dismissing its employees.  On the other hand, respondent union contends
that, as shown in the decision of the CIR, petitioner did not insist on this
issue.  The respondent avers that
jurisdiction over the subject matter is determined by the allegations of the
complaint, and in the instant case, the complaint alleges unfair labor prac­tice
on the part of the petitioner.

 The stand of petitioner
can not be sustained.  It is the settled
rule that the jurisdiction of a court over the subject matter is determined by
the allegations in the complaint.^[24]
The complaint in the instant case alleges unfair labor practice on the part of
petitioner, who was the respondent in the court below, and the case involving
unfair labor practice is exclusively cognizable by the CIR pursuant to the
explicit provision of Sec. 5(a) of Republic Act 875, and as repeatedly held in
a long line of decisions of this Court.^[25]

IN VIEW OF THE FOREGOING, the decision of the CIR appealed
from is modified by eliminating therefrom the order
of reinstatement.  In all other respects
the said decision is affirmed.  No
pronouncement as to costs.

IT IS SO ORDERED.

Concepcion, C.J., Dizon,
Makalintal, Castro, Barredo,
Villamor, and Makasiar, JJ., concur.

Reyes, J.B.L., Fernando, and
Teehankee, JJ., no
part.

^[1]
Exhibit “A”.

^[2]
Record, pp. 49-72 and 82-87.

^[3]
Record, p. 91.

^[4]
Exhibits 14, 1, C, 15, 18, 4, and 5.

^[5]
Brief for petitioner, pp. 27-43.

^[6] Cuyugan v. Santos,
34 Phil. 100; Tolentino vs. Gonzales, 50 Phil.
558.

^[7] Rumbaoa v. Arzaga, 84
Phil. 812, 816; Sanchez v. Court of Industrial Relations, L-26932, March 28, 1969, 27 SCRA 490, 497.

^[8]
Section 5, par. (d), Rule 131 of the Rules of Court.  See also Moran Comments on the Rules of
Court, 1963 ed., Vol. 5, p. 12.

^[9] See
C. Chuan and Sons, Inc. vs. Nahag, et al., 95
Phil. 837, 841; Yellow Taxi and Pasay Transportation
Work­ers Union vs. Manila Yellow Taxicab Co., 80 Phil. 833, 837.

^[10]
Record, pp. 29-30.

^[11]
Perez vs. Mendoza, L-15744, Oct. 31, 1969; Rapatan,
et al., vs. Chicano, et al., L-13828, Feb. 25, 1960.

^[12]
Record, pp. 30-31, 43-46.

^[13]
Record, p. 41.

^[14]
Record, p. 47.

^[15]
Record, p. 47.

^[16] Visayan Bicycle Manufacturing Co., Inc. vs. NLU,
L-19997, May 19, 1965, 14
SCRA 5, 9.

^[17] Baguio Gold Mining v. Tabisola, L-15265, April
27, 1962; Malaya Workers Union
v. CIR, L-17880-81, April 23,
1963; Tanglaw ng
Paggawa v. CIR, L-24498, Sept. 21, 1968.

^[18]
Cano v. CIR, 109 Phil. Rep. 1086, 1090.

^[19]
See also Magdalena Estate Inc. v. Kapisanan ng mga Manggagawa,
etc., L-18336, May 31, 1963;
8 SCRA 237.

^[20]
Industrial, Commercial, Agricultural Workers Assn. v. Bautista, L-15639,
April 30, 1963; 7 SCRA 907,
911.

^[21]
Cromwell Commercial Employees and Laborers Union (PTUC) v. Court of
Industrial Relations, et al., L-19778, Sept. 30, 1964, 12 SCRA 124, 131, 134;
National Labor Union v. Insular-Yebana Tobacco
Corporation, L-15363, July 31, 1961, 2 SCRA 924; Luzon Stevedoring Corporation v.
Celorio, et al., L-22542, July 31, 1968, 24 SCRA 521;
Itogon-Suyoc Mines, Inc. v. Sañgilo-Itogon Workers Union, et al., L-24189, Aug. 30,
1968, 24 SCRA 873; Gonzalo Puyat & Sons, Inc. v.
Labayo, et al., L-22215, Jan. 30, 1969, 22 SCRA, 381.

^[22]
Philippine Educational Institution v. MLQSEA Faculty Association,
L-24019, Nov. 28, 1968, 26 SCRA 272, 279; Coronel,
et al. v. CIR, et al., L-22359, 22524-25, Aug. 30, 1968, 24 SCRA, 990,
999; San Miguel Brewery v. Santos, L-12682, Aug. 31, 1961, 2 SCRA 1081,
1089.

^[23]
11 SCRA 46.

^[24]
Security Bank Employees Union-NATU v Security Bank and Trust Co. L-28536,
April 30, 1968, 23 SCRA 503, 508; National Shipyards and Steel Corporation v.
CIR, L-21675, May 23, 1967, 20 SCRA 134; 139; Associated Labor Union v. Ramolete, L-23537, March 31, 1965, 13 SCRA 582.

^[25]
Eastern Paper Mills Employees Association-NATU v. Eastern Paper Mills,
L-23958, Sept. 28, 1968, 25 SCRA 234; Security Bank Employees Unico-NATU v. Security Bank and Trust Co., L-2853
April 30, 1968, 23 SCRA 503; Veterans Security Free Workers (FFW) v. Cloribel, L-26439, Jan. 30, 1970, 31 SCRA 297, 300.