G.R. No. 73721. March 30, 1987
AHS/PHILIPPINES EMPLOYEES UNION
FERNAN, J.:
Assailed in this petition for certiorari with prayer
for a writ of preliminary injunction is the decision dated December 27, 1985 of
the National Labor Relations Commission [NLRC] in NCR-9-3217-84 entitled,
“AHS/Philippines, Inc., Complainant-Appellee, versus AHS/Philippines
Employees Union [FFW], B.A. Aganon, D.T. Guilles, E.G. Sulit and E.C. Rodriguez,
Respondents-Appellants,” which affirmed the labor arbiter’s decision
declaring the strike held by petitioners as illegal, but with the modification
that individual petitioners be reinstated to their former positions, or paid
separation pay or the economic package offered by the company, if reinstatement
is impossible.[1]
Petitioner
AHS/Philippines Employees Union [FFW] was the recognized collective bargaining
agent of the rank-and-file employees of private respondent AHS/Philippines Inc.,
a company engaged in the sale of hospital and laboratory equipment and Berna and
Pharmaton products. A collective bargaining agreement [CBA] was concluded
between the parties for the period commencing December 1, 1981 to November 30,
1984.
On July 26, 1984, petitioner union filed a notice of strike with
the Bureau of Labor Relations, listing as ground therefor unfair labor practice
consisting in: 1] diminution of benefits, 2] union busting, 3] illegal
termination and 4] harassment.[2] A
second notice of strike was thereafter filed on August 3, 1984 on substantially
the same grounds and the additional charges of refusal to bargain, violation of
the CBA and dismissal of union officers and members.[3]
On August 15, 1984, petitioner
union struck. A picket was staged at private respondent company’s premises at
Pasong Tamo in Makati.
When the conciliation meetings conducted by the
Bureau of Labor Relations proved unavailing, private respondent company filed a
petition to declare the strike illegal.[4] After issues had been joined with
petitioner union’s submission of its position paper, hearings ensued before
Labor Arbiter Virginia Son.
On March 26, 1985, Labor Arbiter Son rendered
a decision declaring the strike staged by petitioner union illegal and ordering
the lifting of the picket established in the premises of private respondent
company. All the officers of the union who joined and were responsible for the
declaration of said strike were deemed to have lost their employment status,
while the other non-officer employees who sympathized and joined the strike were
ordered reinstated to their former or equivalent positions without strike
duration pay, or paid separation pay or the economic package offered by the
company, whichever is higher, in case reinstatement was not possible.[5]
Dissatisfied, petitioners appealed
the labor arbiter’s ruling to the NLRC en banc, which rendered the
assailed decision. Hence, this petition.
On July 30, 1986, after public
and private respondents had submitted their respective comments to the petition,
the Court resolved to dismiss the petition for lack of merit.[6] A motion for reconsideration filed by
union president Lorenzo Leones and vice-president Ernesto Ilagan[7] was denied on September 8, 1986.[8] Upon receipt of the notice of said denial,
petitioners forthwith filed a motion with leave of Court to allow petitioners to
file last or final motion for reconsideration, on the ground, among others, that
the first motion for reconsideration was filed by the aforesaid union officers
without the assistance of counsel.[9] The
motion was opposed by private respondent company.[10]
Pending action on this motion, the
Kilusang Mayo Uno [KMU] staged a picket in front of the P. Faura gate of this
Court on October 27, 1986 in protest of the dismissal by the Court of the
petition at bar. Reacting to the circular signed by Nick Elman of the KMU
distributed to the public during the picket, respondent company filed a motion
to cite petitioners, the KMU and Nick Elman in contempt of court. The alleged
contemptors, upon being required, submitted their joint comment on the contempt
charge,[11] to which respondent company
filed a reply.[12]
Meanwhile, the
case was heard on November 10, 1986,[13]
after which the Court resolved to require the parties to file their respective
memoranda within 20 days.[14] The parties
complied with this order.
In a manifestation dated December 2, 1986,
counsel for private respondent company informed the Court that in January 1987,
private respondent would close its operations in the Philippines because of the
continuing losses being sustained by its Philippine operations and the
uncertainty of business recovery in the immediate future.[15] Petitioners filed a counter-manifestation
and motion for early resolution.[16]
Because petitioners submitted a
supplemental memorandum, the Court required private respondent company to file
its own supplemental memorandum in reply to petitioners’ supplemental
memorandum. After private respondent had done so, the Court resolved to set
aside its resolutions of July 30 and September 8, 1986 and to give due course to
the petition.
In concluding that the strike declared by petitioners was
illegal for being based on trivial grounds, public respondent NLRC ruled on the
issues alleged in the notice of strike in this wise:
1. On the dismissal
of fourteen [14] rank and file employees
by respondent company, which according to petitioner union triggered the first
notice of strike, the NLRC, while conceding that these employees had rendered
service to respondent company for more than six [1] months when they were
dismissed and that they performed activities which were usually necessary or
desirable in the usual business of respondent company, took note that their
services were engaged under a contract entered into by respondent company with a
placement agency and that petitioner union never demanded that they be converted
into regular employees nor instituted any grievance or complaint in behalf of
said employees until some of them wrote petitioner union for assistance after
their dismissal. On the basis of these observations, respondent NLRC concluded
that petitioner union had no personality to represent said employees as their
category as regular employees eligible for membership in the union under the
terms of the CBA has not yet been finally determined at grievance or by final
judgment and the assistance sought by them did not vest petitioner union with
the legal personality to represent them, much less use their dismissal as a
ground to strike.[17]
2] With
respect to the increase in the area sales quota of the union president and
vice-president, the NLRC found the increase justified by the change in the sales
organization in January 1984, whereby each field representative, instead of
carrying both Berna and Pharmaton products, would concentrate only on either
one. It further observed that it was only after six [6] months after the plan
had been in operation and when the union president failed to meet his quota that
said union president filed his grievance; that the grievance was being threshed
out in accordance with the grievance procedure outlined in the CBA and that any
delay in the resolution thereof was not entirely attributable to the company.
Moreover, respondent NLRC found the setting of the area sales quota not to be
ill-motivated nor related to the president’s union activities. Hence, it
concluded that the union president’s grievance was not a valid ground for a
strike.[18]
3] As regards the
non-implementation of the yearly increase in per diems and allowances,
public respondent concurred with the observation of the Labor Arbiter that there
was no such provision in the CBA so that said issue could not be a proper ground
for the notice of strike or the strike itself.[19]
4] Likewise not considered by the
NLRC as a valid ground for strike was the failure of respondent company to
provide space for a union office as stipulated under Art. XV, Section 1 of the
CBA. The NLRC attributed such failure to the complacency exhibited by
petitioner union in not taking up the matter again with respondent company after
petitioner union rejected the set of rules drawn up by respondent company with
respect to the use of the office in accordance with the CBA provision that the
use of such office would be subject to any rules and regulations to be agreed
upon by both union and company.[20]
5] Anent the recall by respondent
company of the cars assigned to the field representatives, the NLRC found no
violation of the CBA nor any unfair labor practice to have been committed by
respondent company by reason thereof. Referring to Art. XIV, Sec. 2 of the CBA
which granted to the assignee of a car to be disposed of the first priority to
purchase the car at fifty [50] percent of the appraised market value, the NLRC
found no indication that the cars were to be disposed of and therefore the CBA
provision invoked by petitioner union had not come into operation. This being
the case, such recall could not be a ground for a strike.[21]
6] The dismissal of 31 employees
of respondent company’s Pharmaceutical Division, the additional ground cited in
the second notice of strike, was found by the NLRC to have been dictated by the
change in the marketing strategy of Berna and Pharmaton products and not for the
purpose of union-busting. Respondent NLRC gave credence to respondent company’s
claim that as early as October 1983, its operations had been seriously affected
by the suspension of trade and foreign credit facilities, which situation grew
worse in early 1984 when its suppliers of Berna and Pharmaton products insisted
on a cash L/C basis or full guarantee by the mother company. As respondent
company could not comply with these requirements, it decided to strengthen its
other division, the HML Division, which sold hospital and laboratory equipment
bought from the parent company. It posted a job-opening notice for 7 to 10
medical representatives and one field supervisor for the HML Division. Amelita
Calderon, a member of petitioner union applied for the position of medical
representative, but was rejected for lack of the necessary educational
attainment and unwillingness to accept provincial assignments.
When the
economic crisis continued until midyear of 1984, respondent company decided to
change its marketing strategy for the Berna and Pharmaton products to ensure the
whole company’s viability. Instead of ethical selling through the field
representatives, it was decided to shift to the over-the-counter [OTC] method
and to appoint Zuellig Pharma as national distributor. As this move would
result in the abolition of the Pharmaceutical Division, the union president was
advised on July 26, 1984 of the impending dissolution of said division and was
asked to suggest ways and means by which the termination could be effected in
the smoothest manner possible and with least pain. When on August 1, 1984, the
union president categorically stated to the company president that the union
would oppose any termination at all costs, respondent company decided to proceed
with the announcement of the termination by serving notice on the same day to
the 31 employees of the Pharmaceutical Division, said termination to take effect
immediately upon service thereof. In lieu of the 30-day notice required by law,
the employees were paid one month’s salary. Fifteen accepted their
termination.
Petitioners seek reversal of the above-cited NLRC findings
and conclusions on the following grounds:
A. THE ASSAILED DECISION WHOLLY DISREGARDED VIOLATIONS BY
THE COMPANY OF ART. 284 OF THE LABOR CODE AS WELL AS THE STIPULATED PROCEDURES
GOVERNING DISMISSALS IN THE PARTIES’ COLLECTIVE BARGAINING AGREEMENT;B.
THE NLRC ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THAT THE
DISMISSAL OF THE FOURTEEN [14]
EMPLOYEES ON JULY 26, 1984 WAS NOT A PROPER GROUND FOR A STRIKE DESPITE
CONFERMENT BY LAW OF REGULAR STATUS TO THEIR EMPLOYMENT;C. THE NLRC
GRAVELY ERRED IN HOLDING THAT THE QUADRUPLING OF THE UNION PRESIDENT’S AREA
SALES QUOTA WAS NOT AN ACT OF DISCRIMINATION AND HENCE NOT A VALID GROUND FOR
STRIKE; and,D. THE COMMISSION ACTED CAPRICIOUSLY, UNREASONABLY AND
WITHOUT LEGAL BASIS WHEN IT RULED THAT THE CLOSURE OF THE PHARMACEUTICAL
DIVISION AND THE SUBSEQUENT TRANSFER OF ITS DISTRIBUTION FUNCTIONS TO ANOTHER
COMPANY IS NOT AN UNFAIR LABOR PRACTICE.
Grounds A and B cited by petitioners are interrelated and will
be discussed jointly.
Concededly, retrenchment to prevent losses is
considered a just cause for terminating employment[22] and the decision whether to resort to
such move or not is a management prerogative.[23] Basic, however, in human relations is the
precept that “every person must, in the exercise of his rights, and in the
performance of his duties, act with justice, give everyone his due and observe
honesty and good faith.”[24] Thus, in the
case of Remerco Garments Manufacturing v. Minister of Labor and Employment,
et al.,[25] We stated that:
“Basically, the right of an employer to dismiss an employee
differs from and should not be confused with the manner in which such right is
exercised. It must not be oppressive and abusive since it affects one’s person
and property.”
Due perhaps to the fact that private respondent company
presented a legally tenable ground for dismissing the 31 employees of its
Pharmaceutical Division, both the labor arbiter and respondent NLRC totally
missed the point petitioners were trying to drive home, i.e. that the
manner by which the retrenchment was effected by respondent company ran counter
to both law and the collective bargaining agreement.
Art. 284 of the
Labor Code of the Philippines, as amended by Sec. 15 of Batas Pambansa Blg. 130,
provides:
“Art. 284. Closure of establishment and reduction of
personnel. — The employer may also terminate the employment of any employee due
to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses, or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one [1] month before the intended date
thereof. x x x In case of retrenchment to prevent losses and in cases of
closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be
equivalent to one [1] month or at least one-half [½] month pay for every year of
service, whichever is higher. A fraction of at least six [1] months shall be
considered one [1]whole year.”
In the case at bar, respondent company offered to pay the 31
dismissed employees one month salary in lieu of the one [1] month
written notice required by law. This practice was allowed under the Termination
Pay Laws[26] whereby if the employee is
dismissed on the basis of just cause, the employer is not required to serve
advance written notice based on the number of years the employee has served the
employer, nor is the employer required to grant termination pay. It is only
where the dismissal is without just cause that the employer must serve timely
notice on the employee, otherwise the employer is obliged to pay the required
termination compensation, except where other applicable statutes provide a
different remedy.[27] Otherwise stated,
it was the employer’s failure to serve notice upon the employee, not the cause
for the dismissal, that rendered the employer answerable for terminal pay.[28] Thus, notice may effectively be
substituted by payment of the termination pay.
Under the New Labor Code,
however, even if the dismissal is based on a just cause under Art. 284, the
one-month written notice to both the affected employee and the Minister of Labor
is required, on top of the separation pay. Hence, unlike in the old termination
pay laws, payment of a month’s salary cannot be considered substantial
compliance with the provisions of Art. 284 of the Labor Code. Since the
dismissal of the 31 employees of the Pharmaceutical Division of respondent
company was effected in violation of the above-cited provision, the same is
illegal.
Needless to say, in the absence of a showing that the illegal
dismissal was dictated by anti-union motives, the same does not constitute an
unfair labor practice as would be a valid ground for a strike. The remedy is an
action for reinstatement with backwages and damages. Nevertheless, We take this
actuation of respondent company as evidence of the abusive and oppressive manner
by which the retrenchment was effected. And while the lack of proper notice
could not be a ground for a strike, this does not mean that the strike staged by
petitioner union was illegal because it was likewise grounded on a violation by
respondent company of the CBA, enumerated as an unfair labor practice under Art.
249 [i] of the Labor Code.
Appearing on record is the testimony of
Carlito V. Santos, Controller of respondent company that the “principal strategy
to shift to one distributor came as early as July.”[29] Inspite of this, petitioner union was
never consulted on the matter as provided under Section 4, Article VIII of the
CBA as follows:
“Section 4. Consultations on Lay-Offs and
Terminations.
a] the COMPANY agrees that whenever it will
lay-off or terminate any covered employee for economic or other reasons, the
UNION shall be consulted prior to such lay off/termination.”[30]
Verily, union president Lorenzo Leones was told by respondent
company’s president and managing director, Constancio V. Halili, Jr. on July 25,
1984 about the impending closure, but contrary to the NLRC’s assessment, said
notice cannot be taken as a substantial compliance with the above-cited CBA
provision. The July 25, 1984 meeting was called by Halili for the purpose of
discussing Leones’ grievance over the latter’s increase in area sales quota.
The information about the closure was a mere “by the way” or an “incidentally”,
a lip service, which does not constitute compliance in good faith of the CBA
provision on consultation.
It appears that paying lip service to the CBA
is a practice resorted to by respondent company. Thus, it posted for two days a
job-opening notice for 7-10 field representatives and one supervisor in the HML
Division as required by the CBA, but without disclosing that the Pharmaceutical
Division was about to be dissolved. Feeling secure in their positions, the
field representatives in the Pharmaceutical Division would naturally be
uninterested in applying for the same position in the other division.
Furthermore, respondent company listed educational requirements calculated to
disqualify would-be applicants from the Pharmaceutical Division who were mostly
commerce graduates, but eventually hired applicants who did not possess the
required educational attainment.
Another evidence that respondent company
intended to terminate the 31 employees of the Pharmaceutical Division without
prior consultation with petitioner union is the recall of the cars assigned to
the field representatives. Two memoranda dated July 23 and 24 addressed to the
HML Division and the Pharmaceutical Division, respectively, were sent out,
directing the field representatives to turn-over their respective cars for
inspection at the nearby Cressida Motors. The memorandum to the HML Division
indicated July 26, 1984 as the date of release of the cars to the field
representatives, while that to the Pharmaceutical Division merely mentioned
“cut-off dates this July.”[31] The reason
given by respondent company for the recall was that estimates of car maintenance
and repair costs were to be reported by Carlito Santos to its Regional Office in
Australia. This is obviously an afterthought because the testimony of said
Carlito Santos was that he left for Sydney, Australia on July 24, 1984 and
stayed there only for three [3] days or
until July 27, 1984.[32] While the recall
of the cars per se did not constitute a violation of Section 2, Article XIV of
the CBA on the car purchase option, We consider the same as an indicia of the
blatant disregard by private respondent company of the CBA provision on
consultation.
In the same manner that We found the dismissal of the 31
employees of the Pharmaceutical Division in itself not to be constitutive of an
unfair labor practice, so must the dismissal of the 14 rank-and-file employees
be characterized. In the first instance it is not disputed that these employees
were hired by respondent company thru a placement agency. In the absence of any
evidence that the placement agency did not have substantial capital or
investment in the form of tools, equipment machineries, work premises, among
others, We cannot conclude that the arrangement between respondent company and
said placement agency was “Labor-only” contracting as to make respondent company
the direct employer of these 14 employees.[33] In the second place, even if such
conclusion is reached and the 14 employees be deemed regular employees of
respondent company, their dismissal, not having been shown in the least manner
to be connected with union affiliation or activities cannot be considered an
unfair labor practice, and therefore, not a valid ground for a strike.
We
agree with petitioners that respondent NLRC gravely abused its discretion in
concluding that the increase in the area sales quota of union president Leones
was not an act of discrimination. The NLRC found the increase in the area sales
quota justified by the change in the sales organization. It, however,
overlooked a very important and crucial factor: that unlike the other field
representatives whose quotas were increased by an average of 98%, that of the
union president and vice-president were increased 400% and 300%, respectively.
No valid explanation was advanced by respondent company for such marked
difference. Considered in the light of the anti-union attitude exhibited by
respondent company in transferring union president Leones from the main office
in Manila to Cebu when the union was still being organized, and which act was
found by the NLRC as constituting unfair labor practice and union-busting in
connection with the application for clearance to terminate Leones filed by
respondent company,[34] the uneven
application of its marketing plan by respondent company is patently an act of
discrimination, considered as an unfair labor practice under Art. 249[e] of the
Labor Code.
“It has previously been indicated that an employer may
treat freely with an employee and is not obliged to support his actions with a
reason or purpose. However, where the attendant circumstances, the history of
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 therefore 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. While the presence of
this mere suspicion neither takes the place of evidence that the employer’s
conduct was improperly motivated nor dispenses with the requirement of proof of
the fact, such suspicion, when coupled with other facts which in themselves,
might have been inadequate to support an adverse finding against the employer,
may suffice to sustain a finding that the employer’s action violated the
prohibition of the Act.”[35]
The contempt charge against petitioner union, KMU and Nick
Elman was predicated mainly on the statement appearing in the circular
apparently authored by Nick Elman, to wit:
“It is an open secret, that most of the Supreme Court
Justices belong to the upper privileged class and some of them belonged at one
time or another, to law firms that serve the interest of giant transnational
corporations as corporate counsels and retainers and this ruling merely
confirmed the perceived apparent pro-multinational, pro-capital, anti-labor,
anti-union and anti-strike posture of personalities in the Supreme
Court.”[36]
and on the fact that at the time the picket was staged, the
case was still sub judice.
Oliveros v. Villaluz, 57 SCRA 163, is
but one of the numerous authorities enunciating the principle that “the power to
punish for contempt should be used sparingly, with caution, deliberation and
with due regard to the provisions of the law and the constitutional rights of
the individual.” On this basis, We clear the alleged contemptors of the charge
against them.
To our mind, the statements complained of are mere
expressions of opinion intended not so much to bring the Court in disrepute as
to advance the cause of labor. It must be noted that the picket was staged only
eight [8] months after the EDSA
Revolution which saw the ouster of the past dispensation and the restoration of
the basic rights to the people. Freedom of speech, much repressed during the
previous regime, had only begun to take wings again. Taken against this
background, We understand the overzealousness demonstrated by the KMU and Nick
Elman in exercising their freedom of speech and expression and are inclined to
give more weight to said constitutional rights than to the Court’s inherent
power to preserve its dignity to which the power to punish for contempt
appertains.
Although the picket was staged when the motion for leave to
file a final and last motion for reconsideration was still pending action by the
Court, the KMU and Nick Elman, not being parties to the case, were unaware of
such fact. They believed the case to have been finally disposed of in view of
the final denial of the first motion for reconsideration. On the other hand,
there is no sufficient proof that petitioner union had participated in the
picket nor in the preparation of the circular under
consideration.
WHEREFORE, the petition is hereby
granted. The decision of the NLRC dated December 27, 1985 in NCR-9-3217-84 is
set aside and the strike staged by petitioner union is declared to be legal.
Respondent company AHS/Philippines, Inc. is hereby found guilty of unfair labor
practices. Since reinstatement of individual petitioners is no longer possible
in view of the cessation of its operations in the Philippines, respondent
company is ordered to pay said individual petitioners, except E.C. Rodriguez,
backwages from August 15, 1984 until Respondent company’s closure as well as the
separation pay mandated under Art. 284 of the labor Code. Furthermore,
respondent company is hereby ordered to pay the fifteen [15] employees of the Pharmaceutical Division
who did not accept their termination, back-wages from August 1, 1984 until
Respondent company’s closure and the economic package being offered by
respondent company as stated in its letters of termination.
The contempt
charge against petitioner union, KMU and Nick Elman is
dismissed.
SO ORDERED.
Gutierrez, Jr., Paras, Padilla, Bidin, and Cortes,
JJ., concur.
[1] Annex “A”, Petition, pp. 50-51,
Rollo
[2] Annex “D”,
Supplemental Memorandum of the Petitioners, p. 285, Rollo
[3] Annex “D-2”, Supplemental Memo, p. 287,
Rollo
[4] Annex “H”,
Supplemental Memo, p. 292, Rollo.
[5] p. 24, Rollo
[6] p. 104, Rollo
[7] p. 105, Rollo
[8] p. 131, Rollo
[9] p. 133, Rollo
[10] p. 157, Rollo
[11] p. 193, Rollo
[12] p. 313, Rollo
[13] p. 144, Rollo
[14] p. 165, Rollo
[15] p. 191, Rollo
[16] p. 309, Rollo
[17] pp. 36-37, Rollo
[18] pp. 37-40, rollo
[19] pp. 40-41, Rollo
[20] pp. 41-42, Rollo
[21] pp. 42-44, Rollo
[22] Art. 284, Labor Code of the
Philippines
[23] Special
Events & Central Shipping Office Workers Union vs. San Miguel
Corporation, 122 SCRA 557
[24] Art. 19, Civil Code of the
Philippines
[25] 135 SCRA
167
[26] R.A. 1052 and R.A.
1787
[27] Pepito v. Secretary
of Labor, 122 SCRA 834
[28]
Phil. Refining Co., Inc. v. Garcia, et al., 18 SCRA 107
[29] t.s.n. of 12-12-84 Hearing Page
17
[30] Exh. “C”, p. 19, NLRC
Records
[31] Annex B, Reply to
Position Paper, NLRC Records
[32]
T.s.n., 12-12-84 Hearing, p. 54
[33] Art. 106, Labor Code
[34] pp. 116-117, Rollo
[35] Rothenberg on Labor Relations, pp.
401-402
[36] p. 155,
Rollo