CARLOS CRUZ, PETITIONER, VS. PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), RESPONDENT.

Respondent Court of Industrial Relations, in its decision sought
to be reviewed in this petition, sustained the claim of respondent Philippine
Association of Free Labor Unions, hereinafter designated as the respondent
Union, that the sale of the Quality Container Factory was designed to avoid
bargaining collectively with it as the duly chosen representative of such
employees and thus constituted an unfair labor practice.  It therefore held vendors Catalina V. Tan and
Victor Tan^[1]
and vendee Carlos Cruz^[2]
liable for the reinstatement of the members of respondent Union
to their employment with full back wages. 
With such a finding of bad faith reached by respondent Court, which is
not for us to disregard, there is a heavy burden of persuasion that must be
borne by the party assailing a decision of an administrative tribunal.  A careful scrutiny of the arguments in the
respective briefs filed by petitioners in these two cases does not, for all
their plausibility, suffice to indicate that a different conclusion is called
for.  We affirm.

The background facts are set forth thus in the resolution of
respondent Court now before us: “It appears from the record that the
Quality Container Factory is a joint business venture of a husband and wife
team — [the Tan spouses] — employing hired-hands in the manufacture and sale of
tin cans. Sometime in January 1961 these workers formed a union, elected its
officers and had it registered with the Department of Labor.  Subsequently, on February 28, 1961 the
factory received from the complaining union a notice of its existence with an
attached set of collective bargaining proposal after a series of unreasonable
delay in dis­cussing or negotiating with complainant the possibility of
entering into a collective bargaining contract, a management-inspired petition
was later filed with this Court docketed as
Case No. 894-MC.  This
notwithstanding, and inspite of the protest lodged by
the petitioner Philippine Transport and General Workers Organization (PTGWO),
herein complainant Philippine Association of Free Labor Union (PAFLU) came out
by a clear majority and was declared as the winning collective bargaining representative
of the Quality Container Factory Workers.”^[3]
Then came this portion: “On June
14, 1963, after the issue of certification was decided by this
Court, complainant union proposed to continue the negotiations to possibly
finalize a collective bargaining contract with the management.  Less than a month thereafter, on July 11, 1963, the factory was how­ever
sold to respondent Carlos Cruz.  The
Trial Court while admitting the testimony of Mrs. [Tan] that she adequately
informed the buyer of the existence of the complainant union, * * *, in the
same way, sustained the testimony of Carlos Cruz that this matter was never
discussed in the preliminary talks prior to the sale of the factory.  Neither one nor the other could be telling
the truth.  It is not at all possible for
the Court to lend credence to the two narrations of facts one of which, on the
whole contradicts the other.  Of course,
the sale in all its phases is seemingly without flaw.  All its elements are anyway present to clothe
it with the taint of validity, except the motive, which undoubtedly was never
disclosed.”^[4]
It was noted in such a resolution: “This Court has in mind that there are
a number of causes why a business enterprise has to be sold.  There are so many factors to be considered,
say, losses are being heavily incurred or that the owners have tired of its so
many industrial problems and would therefore want to retreat to a less busier
corner.  A sale, under normal conditions,
may even be executed just for fun of it, and nobody would lift a finger against
its valid effects.  Oftentimes, however,
it is simulated to rid the management of mounting labor problems.”^[5]
After which came this observation on the part of respondent Court: “Under
the situation, there was no evidence presented which would somehow indicate
that business was lean, much less was it hinted that the former owners really
wanted to seek retirement from further engaging into the world of trade.  It could not be said that the sale was made
just for the sake of selling, or that the owners were branch­ing out into other
business fields.  There were none of
these reasons.”^[6]

It then ascertained what could be the possible motive for the
sale in this wise: “From the outset of the organization of complainant
union, the management considerably found a foe which it would not recognize for
reasons we do not know.  Evidence
strongly insinuated that the company supported a stand apparently adverse to
the sentiment of the workers.  In the
mentioned certification Case (894-MC) which is interrelated herein, the same
company claimed to have an existing collective bargaining contract with another
union but which was never produced before the Court.  That is why the dispute continued from there.  Evidence further hinted that during the pendency of the protest in the said certification case, the
company financed the presentation of witnesses to testify against the union * *
*.  The labor dispute was indeed at its
height, still mounting, at the same time when the alleged sale was made.  There was no other excuse that the Court
could exhaust under the prevaling conditions.  The sale was executed not for any other cause
but to rid the company of the current labor problems. (See Angat
Case) All phases of evidence pointed to it.”^[7]

It was not surprising therefore that the conclusion reached by it
was that the transaction was tainted by bad faith and that there was an unfair
labor practice. Thus: “But a buyer should not be allowed to reap and enjoy
all the profits of a sale without the corresponding responsibilities that are
attached to the industrial enterprise, specially so when the sale was executed
under dubious circumstances.  If it is so
the convenience of ridding the manage­ment of any labor problem is easily
facilitated by simulating a sale everytime the
laboring elements agitate the protection of their rights.  That is why under the present condition,
responsibility should be shared by both the buyer and the seller otherwise the
efforts of the workers would have been futile and fruitless, since they would
naturally face a blank wall after the sale. 
For how can they be reinstated to their former employment if the duty to
rehire them be limited to the seller? 
This seems impossible.  After all
respondent Carlos Cruz, was not at all free from the attending faults.  As was discussed earlier, Mrs. [Tan] made a
disclosure that he was made aware of the current labor problems.  It cannot be reasoned out that there was a
failure, much less can it be said that he is a buyer in good faith as far as
the workers are concerned.  Let all the
party respondents be liable, therefore.”^[8]

It is thus apparent that as noted at the outset the decision now
on review must be affirmed.  The
conclusion reached by respondent Court finds support in the law.  It would be a frustration of the statutory
scheme in the Industrial Peace Act^[9]
instituting a regime of free collective bargaining to hold otherwise.  The choice as to the bargaining
representative of the employees belongs to them alone.  In the language of the Act: “The labor
organization designated or selected for the purpose of collective bargaining by
the majority of the employees in an appropriate collective bargaining unit
shall be the exclusive representative of all the employees in such unit for the
purpose of collective bargaining in respect to rates of pay, wages, hours of
employ­ment, or other conditions of employment: * * *.^[10]

Petitioners, the Tan spouses, were thereafter called upon to
bargain collectively with respondent Union as such exclusive
representative.  There was a failure to
do so by them.  That was an unfair labor
practice,^[11]
compounded by another actuation amounting to discrimination in regard to tenure
or condition of employment against a labor union.^[12]
Apparently in an effort to avoid the legal consequences of such conduct frowned
upon by the law, the connivance of petitioner Cruz was elicited. Necessarily
the sale was attended with bad faith. Respondent Court was not blind to such an
attempt at evasion.  It refused to countenance
the resulting dismissal of the members of respondent Union.  It ordered the reinstatement.  Its decision far from being repugnant to law
is in conformity with it.  This certainly
cannot be one of those cases where the judgment arrived at by respondent Court
is to be ignored, much less set aside.

1. Its conclusion must be respected.  There is no justification for the principal
contention advanced in the ably-written briefs of both petitioners Tan and Cruz
that the conclusion of respondent Court that the sale was tainted by bad faith
should not be sustained.  The law has not
been ignored.  Far from it.  There is nothing offensive to the reason or
common sense in the verdict thus arrived at. 
More­over, as far back as 1940, it was already noted by Justice Laurel,
for a finding of respondent Court to lose its conclusive character, there must
be a showing of abuse of discretion.^[13]
As worded in the Industrial Peace Act, factual determinations of the Court of
Industrial Relations “if supported by substantial evidence on the record
shall be conclusive.”^[14]
It is to be noted further that it is not only findings of fact that are
ordinarily left undisturbed.  The
principle as to the recognition to be accorded the conclusion reached by
respondent Court goes further.  So it was
stressed in a relatively recent case, National Waterworks and Sewerage
Authority v. NWSA Consolidated Union:^[15]
“The controlling doctrine recognizes the wide discretion enjoyed by
respondent Court in ascertaining what actually did occur in labor disputes of
whatever sort.  Its conclusion once
reached is invariably accorded the seal of our acceptance.  Its disposition of a case before it usually
elicits assent from us.  It could happen
of course that we may fail to view matters similarly.  We have that power; it must be made use of
when warranted.  It does not occur often
though.  That is not merely so as to the
facts found.  The acceptance of its legal
conclusion reached is not a rare event either. This is merely to recognize that
on labor matters, its recognized expertise has well-nigh earned for its decrees
the title-deed to recognition, unless there be a rank failure to observe the
constitutional and statutory limitations which it must observe.”^[16]
It follows there­fore that the principal assignment of error of petitioners as
to the absence of bad faith appears to be without sufficient legal basis.

Support for the above conclusion comes from a leading case,
Philippine Land-Air-Sea Labor Union v. Sy Indong Co. Rice & Corn Mills,^[17]
the opinion being penned by the then Justice, now Chief Justice, Concepcion.  It
speaks for itself.  Thus: “Upon a
review of the record we are inclined to sustain the conclusion of the trial
judge.  Indeed, as set forth in His
Honor’s decision, and the Resolution appealed from does not deny it: ‘The
management, in making their union busting air-tight, dissolved their
partnership without any reason at all although its existence is for 20 years
per Article of Partnership of Ang Han Tiong & Company, doing business in the name of Sy Indong
Company * * *. Alfredo Que, in his testimony, alleged
that the Sy Indong Company
was bankrupt, but nowhere in the records was there any declaration of
bankruptcy made by a competent court pursuant to the provisions of the Code of
Commerce.  On the contrary, the manager,
Tan Chua Seng Tiong
declared that as manager of the Sy Indong Company, he owned P20,000.00 worth of shares and
that his shares of stocks increased a little when he withdrew it. * * * The
alleged bankruptcy, therefore, of the company as pictured by Alfredo Que is absurd.  Other­wise,
the manager could not have withdrawn with an increased shares in stocks if the
company was really bankrupt. ‘” The ensuing paragraph follows:
“Moreover, Sen Chiong
was organized on the very same day on which the assignment thereto of the assets
of Sy Indong in Tubod took place, and Ang Han Tiong the managing partner of Sy Indong is the same managing partner of Sen
Chiong.  Again,
Tiu E. Tec is, likewise a partner of both
enterprises.  These circumstances, when
considered in relation to the fact that the present unfair labor practice case
had been pending in the CIR for about 18 months prior to February 4, 1957, lead
to no other conclusion than that the organizers of Sen
Chiong were aware of said case when they established
the company and acquired the assets of Sy Indong in Tubod, and that they
either organized Sen. Chiong in an attempt to relieve
Sy Indong of the
consequences or effects of the present litigation, or acquired said assets
assuming the risk of having to bear the liabilities or part of the liabilities
that said litigation may eventually entail. 
In either case, the trial Judge was justified in rendering judgment
against Sen Chiong.”^[18]

2.  Necessarily then, the
alleged error assigned by petitioners, the Tan spouses, and petitioner Cruz that
respondent Court should not have ordered the reinstatement of the members of
complainant Union as well as the back wages to which they are entitled is
equally without foundation.  The language
of the Industrial Peace Act is un­equivocal. 
For respondent Court, according to the Industrial Peace Act, is called
upon to “take such affirmative action as will effectuate [its policies]
including reinstatement of employees with or without back pay.” Less than
two months ago, in East Asiatic Company, Ltd. v. Court of Industrial Relations.^[19]
this Court, through Justice Barredo, had occasion to
announce the applicable doctrine.  Thus:
It is the obligation of the employer to pay an illegally dismissed employee or
worker the whole amount of the salaries or wages, plus all other benefits and
bonuses and general increases, to which he would have been normally entitled
had he not been dismissed and had not stopped working, but it is the right, on
the other hand, of the employer to deduct from the total of these, the amount
equivalent to the salaries or wages the employee or worker would have earned in
his old employment on the corresponding days that he was actually gainfully
employed elsewhere with an equal or higher salary or wage, such that if his
salary or wage in his other employment was less, the employer may deduct only
what has been actually earned.”^[20]
There is thus a reconciliation of the principle that would hold an employer
liable for a defiance of the plain statutory command with the equitable concept
that he is not thereby precluded from reducing the financial liability
incumbent upon him by the deduction of whatever wages might have been earned by
the aggrieved employees.  The decision
now under review as thus construed is thus free from such alleged infirmity.

3.There is likewise an error assigned by petitioner Cruz that
labor contracts being in personam are not enforceable
against a transferee of an enterprise, there being no previous
employer-employee relationship existing between the new owner and the complaining
employees. Reliance is placed on our ruling in Visayan
Transportation Co. v. Java.^[21]
There is no need to inquire as to the applicability of such a decision in the
disposition of the present case. If the facts were otherwise and no bad faith
could be imputed to petitioner Cruz, then perhaps it would be in order to
ascertain whether it governs the situation. 
Without discounting therefore the criticism to which the Visayan Transportation Company case had been subjected
insofar as it would ignore the binding force of a collective bargaining
contract just because of the sale of the enterprise, when the vendee could be
looked upon as the successor­-in-interest of the vendor to whatever rights or
obligations could be transferred, it suffices to state that petitioner Cruz is
in the position of a tort-feasor, having been a party
likewise responsible for the damage inflicted on the members of respondent
Union and therefore cannot justly escape liability.  That would dispose of all the errors assigned
by petitioners in this appeal.

WHEREFORE, the decision of respondent Court of August 18,
1966 is affirmed.  The case is hereby
remanded to the Court of Industrial Relations for further proceedings in
conformity with this opinion. With costs against petitioners, the Tan spouses
as well as petitioner Carlos Cruz.

Concepcion, C.J., Reyes, Makalintal, Zaldivar, Barredo, Villamor, and Makasiar, JJ., concur.

Castro, J., did not take part.

Teehankee, J., reserves his vote.

^[1]
Petitioners in G.R. No. L-26525.

^[2]
Petitioner in G.R. No. L-26519.

^[3]
Appendix, Brief for petitioners, pp. 48-49.

^[4]
Ibid, p. 49.

^[5]
Ibid, pp. 49-50.

^[6]
Ibid, p. 50.

^[7]
Ibid, pp. 50-51.

^[8]
Ibid, pp. 51-52.

^[9]
Republic Act No. 875 (1953).

^[10]
Sec. 12, par. a, Rep. Act No. 875.

^[11]
According to Sec. 6, par. 6 of the Industrial Peace Act: “To refuse to
bargain collectively with the representatives of his employees subject to the
provisions of sections thirteen and fourteen.”

^[12]
According to Sec. 6, par. 4 of the Industrial Peace Act: “To discriminate
in regard to hire or tenure of employment or any term of condition of
employment to encourage or dis­courage membership in any labor organization:”

^[13]
Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940).  The cases that reiterate such a view are
collected in Phil. Educational Institution v. MLQSEA Faculty Asso., L-24019, Nov. 29, 1968, 26 SCRA 272.

^[14]
Section 6, Republic Act No. 875
(1953).

^[15]
G.R. No. L-28694-96, Feb. 28, 1969,
27 SCRA 227.

^[16]
Ibid, p. 237.

^[17]
G.R. No. L-18476, May 30, 1964,
11 SCRA 277.

^[18]
Ibid, pp. 283-284.  The following
decisions were cited: Majestic and Republic Theaters Employees’ Association v.
CIR, G.R. No. L-12607, February 28,
1962; Koppel v. A. L. Yatco, 43 Off. Gaz., 4604; Detective Bureau v. United Employees Welfare
Association, 98 Phil. 572 (1946).

^[19]
G.R. No. L-29068, August 31, 1971.

^[20]
Ibid.

^[21]
93 Phil. 962 (1953).