ROYAL UNDERGARMENT CORPORATION OF THE PHILIPPINES, PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS, ROYAL UNDERGARMENT WORKERS UNION (PTGWO) AND ANTONIO CRUZ, RESPONDENTS.

Royal Undergarment Corporation of the Philippines versus Court of Industrial Relations

The Case

This is a petition for review on certiorari brought by Royal Undergarment Corporation of the Philippines against the defunct Court of Industrial Relations, the Royal Undergarment Workers Union affiliated with the Philippine Transport and General Workers Organization, and Antonio Cruz. The corporation asks the Supreme Court to reverse the industrial court's judgment finding it guilty of unfair labor practice and ordering the reinstatement of Cruz with backwages. The case matters because it shows how the Court weighs an employer's stated ground for dismissal against the surrounding circumstances, and because it fixes the doctrine on backwages without deduction and without qualification.

Procedural History

Antonio Cruz filed a complaint for unfair labor practice against the corporation with the Court of Industrial Relations. The hearing examiner rendered findings, and on January 21, 1974 the industrial court affirmed those findings and rendered its decision, declaring the corporation guilty of unfair labor practice, ordering it to cease and desist, to reinstate Cruz to his former or equivalent position without loss of seniority and other privileges, and to pay him backwages including all benefits attached to his position from the date of dismissal up to November 17, 1969. The corporation then came to the Supreme Court by petition for review on certiorari, assigning three errors: that the industrial court gravely misapprehended the facts in holding that it was Cruz's union activities that caused his dismissal; that it likewise misapprehended the facts in not holding that the dismissal was for cause under the Termination Pay Law and in accordance with management prerogative; and that, assuming unfair labor practice, the industrial court erred in awarding full backwages without deducting the income Cruz earned during that period.

Facts

Antonio Cruz was employed by the corporation in 1957 as an electrician. Sometime in December 1961 he was elected president of the Royal Undergarment Workers Union, a legitimate labor organization that became affiliated with the Philippine Transport and General Workers Organization. On December 14, 1961, the union, represented by the national secretary of the federation and by Cruz as union president, sent collective bargaining proposals to the corporation. On the very next day, December 15, 1961, the corporation, through its personnel manager, terminated Cruz allegedly on the basis of his record and after careful analysis and deliberation. His wife, Felicidad Cruz, who was also an employee, was likewise terminated. The union then called a strike in the first week of January 1962.

On January 10, 1962, the union and the corporation entered into a Return-to-Work Agreement through the conciliation efforts of the Department of Labor. Under that agreement the union entrusted to management the settlement of its complaint for the two employees, with reinstatement for both to follow when the union shall have been chosen as the collective bargaining agent in a consent election. The records do not disclose the results of the election, but Cruz and his wife were subsequently re-employed and reinstated, indicating the union's victory. On March 31, 1962, the union and the corporation entered into a collective bargaining agreement containing a grievance procedure, which was applied on several occasions with Cruz's active participation as union president.

Sometime in November 1962, the federation urged its member unions to stage a nationwide strike, and Cruz campaigned among the members to join it. On the night of November 28, 1962, within the company premises, Cruz approached three supervisors. They claimed that Cruz, under the influence of liquor, said to them, "Ikaw, Ikaw, Ikaw - - - mga hayop kayo. Bibigyan ko kayo ng isang linggong taning sa buhay ninyo ipapapatay ko kayo," and that he challenged another co-employee. Cruz and his witnesses denied this and claimed he had merely asked them, as a favor, to join the nationwide strike and to use their influence. The three employees executed an affidavit the next day. On November 30, 1962, the general manager placed Cruz on preventive suspension effective December 3, 1962 for threatening the lives of four employees and for having been reported under the influence of liquor. Upon the request of Cruz and the federation, the corporation conducted a conference in the nature of an investigation. On December 13, 1962, the corporation dismissed Cruz for being under the influence of liquor on November 28, 1962 and for having threatened the lives of four co-employees.

Issues

• Whether or not the industrial court gravely misapprehended the facts in holding that it was Cruz's union activities that caused his dismissal.
• Whether or not the dismissal of Cruz was for cause under the Termination Pay Law and in accordance with management prerogative.
• Whether or not the industrial court erred in awarding full backwages without deducting the income Cruz earned elsewhere during the period of his lay-off.

Applicable Provisions

Section 3 of Republic Act No. 875, the Industrial Peace Act, as amended, provides:

Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection.

This guarantees the right of Cruz and his co-employees to organize and to engage in concerted activities, which the corporation may not penalize.

Section 4, paragraph a, subparagraph 4 of the same law provides:

It shall be unfair labor practice for an employer to discriminate in regard to tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.

This is the provision under which the corporation's dismissal of Cruz was measured, since a dismissal prompted by union activity discriminates in regard to tenure of employment.

Ruling

On the first issue, the Court accorded respect to the findings of the industrial court and held that the totality of the evidence supported the conclusion that Cruz had been unjustly dismissed by reason of his union activities. The charge that he was under the influence of liquor and had threatened the lives of co-employees was too flimsy to merit serious consideration. The Court relied on the undisputed facts that Cruz, as union president, was known for his aggressive and militant union activities; that he and his wife had been previously dismissed on the ground of active participation in union affairs; that they were re-employed only pursuant to the express terms of the Return-to-Work Agreement when the union won the consent election; and that Cruz was dismissed a second time in the course of his campaign among union members to join the nationwide strike.

On the second issue, the Court held that the dismissal was not for cause. It laid down the governing principle in these words:

However, where the attendant circumstances, the history of the employer's past conduct and like considerations, coupled with an intimate connection between the employer's action and the union affiliations or activities of the particular employee or employees taken as a whole raise a suspicion as to the motivation for the employer's action, the failure of the employer to ascribe a valid reason therefor may justify an inference that his unexplained conduct in respect of the particular employee or employees was inspired by the latter's union membership or activities.

The Court also stressed that factual findings of the Court of Industrial Relations are conclusive in the absence of a showing that they have no support in the evidence, because that court is governed by the rule of substantial evidence rather than by the rule of preponderance of evidence as in ordinary civil cases.

On the third issue, the Court held that it is the judicial trend to fix a reasonable period for the payment of backwages, to avoid protracted delay in post-judgment hearings to prove the worker's earnings elsewhere. In view of the circumstances and equity of the case, Cruz should be reinstated and granted backwages corresponding to three years from the time he was dismissed on December 13, 1962, without deduction for his earnings elsewhere during his lay-off and without qualification of his backwages as thus fixed, that is, unqualified by any wage increases.

Doctrine

An employer may treat freely with an employee and is not obliged to support its actions with a reason. But where the attendant circumstances, the history of the employer's past conduct, and an intimate connection between the employer's action and the employee's union affiliations or activities raise a suspicion as to the employer's motivation, the failure to ascribe a valid reason may justify an inference that the action was inspired by the employee's union membership or activities. A dismissal so motivated is unfair labor practice under Section 4, paragraph a, subparagraph 4 of Republic Act No. 875, because it discriminates in regard to tenure of employment to discourage membership in a labor organization, in violation of the right to self-organization under Section 3. Factual findings of the Court of Industrial Relations are conclusive when supported by substantial evidence. Backwages may be fixed for a reasonable period, here three years from dismissal, without deduction for earnings elsewhere and without qualification by wage increases.

Disposition

The petition was denied and the decision of the Court of Industrial Relations was affirmed with modification: the corporation was directed to reinstate Antonio Cruz without loss of seniority rights and with backwages for three years from dismissal, without deduction and qualification, and if reinstatement is no longer possible, to pay him separation pay of one month for every year of service, with costs against the corporation.

Remember This

Memorize this line: where the circumstances and the employer's past conduct raise a suspicion of anti-union motive, the employer's failure to give a valid reason justifies the inference of unfair labor practice. Examiners use this case for the substantial evidence standard in labor cases and for the rule on backwages fixed for a reasonable period, without deduction and without qualification.