527 Phil.

540

THIRD DIVISION
[ G.R. NO. 144315, July 17, 2006 ]
PHILCOM EMPLOYEES UNION, PETITIONER, VS. PHILIPPINE
GLOBAL COMMUNICATIONS AND PHILCOM CORPORATION,
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] to annul the Decision[2] dated 31 July
2000 of the Court of Appeals in CA-G.R. SP No. 53989. The Court of
Appeals affirmed the assailed portions of the 2 October 1998 and 27
November 1998 Orders of the Secretary of Labor and Employment in
OS-AJ-0022-97.
The Facts
The facts, as summarized by the Court of Appeals, are as follows:
Upon the expiration of the Collective Bargaining Agreement (CBA)
between petitioner Philcom Employees Union (PEU or union, for
brevity) and private respondent Philippine Global Communications,
Inc. (Philcom, Inc.) on June 30, 1997, the parties started negotiations
for the renewal of their CBA in July 1997. While negotiations were
ongoing, PEU filed on October 21, 1997 with the National Conciliation
and Mediation Board (NCMB) National Capital Region, a Notice of
Strike, docketed as NCMB-NCR-NS No. 10-435-97, due to perceived
unfair labor practice committed by the company (Annex 1,
Comment, p. 565, ibid.). In view of the filing of the Notice of Strike,
the company suspended negotiations on the CBA which moved the
union to file on November 4, 1997 another Notice of Strike, docketed
as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining
deadlock (Annex 2, Comment, p. 566, ibid.)

On November 11, 1997, at a conciliation conference held at the NCMBNCR office, the parties agreed to consolidate the two (2) Notices of
Strike filed by the union and to maintain the status quo during the
pendency of the proceedings (Annex 3, Comment, p. 567, ibid.).
On November 17, 1997, however, while the union and the company
officers and representatives were meeting, the remaining union
officers and members staged a strike at the company premises,
barricading the entrances and egresses thereof and setting up a
stationary picket at the main entrance of the building. The following
day, the company immediately filed a petition for the Secretary of
Labor and Employment to assume jurisdiction over the labor dispute in
accordance with Article 263(g) of the Labor Code.
On November 19, 1997, then Acting Labor Secretary Cresenciano B.
Trajano issued an Order assuming jurisdiction over the dispute,
enjoining any strike or lockout, whether threatened or actual, directing
the parties to cease and desist from committing any act that may
exacerbate the situation, directing the striking workers to return to
work within twenty-four (24) hours from receipt of the Secretarys
Order and for management to resume normal operations, as well as
accept the workers back under the same terms and conditions prior to
the strike. The parties were likewise required to submit their
respective position papers and evidence within ten (10) days from
receipt of said order (Annex 4, Comment, pp. 610-611, ibid.). On
November 28, 1997, a second order was issued reiterating the
previous directive to all striking employees to return to work
immediately.
On November 27, 1997, the union filed a Motion for Reconsideration
assailing, among others, the authority of then Acting Secretary
Trajano to assume jurisdiction over the labor dispute. Said motion was
denied in an Order dated January 7, 1998.
As directed, the parties submitted their respective position papers. In
its position paper, the union raised the issue of the alleged unfair labor
practice of the company hereunder enumerated as follows:
(a)
PABX transfer and contractualization of PABX service and
position;

(b)

Massive contractualization;

(c)

Flexible labor and additional work/function;

(d)

Disallowance of union leave intended for union seminar;

(e)
Misimplementation and/or non-implementation of employees
benefits like shoe allowance, rainboots, raincoats, OIC shift allowance,
P450.00 monthly allowance, driving allowance, motorcycle award and
full-time physician;
(f)
Non-payment, discrimination and/or deprivation of overtime,
restday work, waiting/stand by time and staff meetings;
(g)
CBA

Economic inducement by promotion during

negotiation;

(h)
Disinformation scheme, surveillance and interference with
union affairs;
(i)
Issuance of memorandum/notice to employees without giving
copy to union, change in work schedule at Traffic Records Section and
ITTO policies; and
(j) Inadequate transportation allowance, water and facilities.
(Annex A, Petition; pp. 110-182, ibid.)
The company, on the other hand, raised in its position paper the sole
issue of the illegality of the strike staged by the union (Annex B,
Petition; pp. 302-320, ibid.).
On the premise that public respondent Labor Secretary cannot rule on
the issue of the strike since there was no petition to declare the same
illegal, petitioner union filed on March 4, 1998 a Manifestation/Motion
to Strike Out Portions of & Attachments in Philcoms Position Paper for
being irrelevant, immaterial and impertinent to the issues assumed for
resolution (Annex C, Petition; pp. 330-333, ibid.).
In opposition to PEUs Manifestation/Motion, the company argued that
it was precisely due to the strike suddenly staged by the union on

November 17, 1997 that the dispute was assumed by the Labor
Secretary. Hence, the case would necessarily include the issue of the
legality of the strike (Opposition to PEUS Motion to Strike Out; Annex
F, Petition; pp. 389-393, ibid.).[3]
On 2 October 1998, the Secretary of Labor and Employment
(Secretary) issued the first assailed order. The pertinent parts of the
Order read:
Going now to the first issue at hand, a reading of the complaints
charged by the Union as unfair labor practices would reveal that these
are not so within the legal connotation of Article 248 of the Labor
Code. On the contrary, these complaints are actually mere grievances
which should have been processed through the grievance machinery or
voluntary arbitration outlined under the CBA. The issues of flexible
labor and additional functions, misimplementation or nonimplementation of employee benefits, non-payment of overtime and
other monetary claims and inadequate transportation allowance, are
all a matter of implementation or interpretation of the economic
provisions of the CBA subject to the grievance procedure.
Neither do these complaints amount to gross violations which, thus,
may be treated as unfair labor practices outside of the coverage of
Article 261. The Union failed to convincingly show that there is flagrant
and/or malicious refusal by the Company to comply with the economic
provisions stipulated in the CBA.
With respect to the charges of contractualization and economic
inducement, this Office is convinced that the acts of said company
qualify as a valid exercise of management prerogative. The act of the
Company in contracting out work or certain services being performed
by Union members should not be seen as an unfair labor practice act
per se. First, the charge of massive contractualization has not been
substantiated while the contractualization of the position of PABX
operator is an isolated instance. Secondly, in the latter case, there was
no proof that such contracting out interfered with, restrained or
coerced the employees in the exercise of their right to selforganization. Thus, it is not unfair labor practice to contract out work
for reason of reduction of labor cost through the acquisition of
automatic machines.
Likewise, the promotion of certain employees, who are incidentally

members of the Union, to managerial positions is a prerogative of

management. A promotion which is manifestly beneficial to an
employee should not give rise to a gratuitous speculation that such a
promotion was made simply to deprive the union of the membership of
the promoted employee (Bulletin Publishing Co. v. Sanchez, et. al.,
G.R. No. 74425, October 7, 1986).
There remains the issue on bargaining deadlock. The Company has
denied the existence of any impasse in its CBA negotiations with the
Union and instead maintains that it has been negotiating with the
latter in good faith until the strike was initiated. The Union, on the
other hand, contends otherwise and further prays that the remaining
CBA proposals of the Union be declared reasonable and equitable and
thus be ordered incorporated in the new CBA to be executed.
As pointed out by the Union, there are already thirty-seven (37) items
agreed upon by the parties during the CBA negotiations even before
these were suspended. Prior to this Offices assumption over the case,
the Company furnished the Union its improved CBA counter-proposal
on the matter of promotional and wage increases which however was
rejected by the Union as divisive. Even as the Union has submitted its
remaining CBA proposals for resolution, the Company remains silent
on the matter. In the absence of any basis, other than the Unions
position paper, on which this Office may make its determination of the
reasonableness and equitableness of these remaining CBA proposals,
this Office finds it proper to defer deciding on the matter and first
allow the Company to submit its position thereon.
We now come to the question of whether or not the strike staged by
the Union on November 17, 1997 is illegal. The Company claims it is,
having been held on grounds which are non-strikeable, during the
pendency of preventive mediation proceedings in the NCMB, after this
Office has assumed jurisdiction over the dispute, and with the strikers
committing prohibited and illegal acts. The Company further prays for
the termination of some 20 Union officers who were positively
identified to have initiated the alleged illegal strike. The Union, on the
other hand, refuses to submit this issue for resolution.
Considering the precipitous nature of the sanctions sought by the
Company, i.e., declaration of illegality of the strike and the
corresponding termination of the errant Union officers, this Office

deems it wise to defer the summary resolution of the same until both
parties have been afforded due process. The non-compliance of the
strikers with the return-to-work orders, while it may warrant dismissal,
is not by itself conclusive to hold the strikers liable. Moreover, the
Unions position on the alleged commission of illegal acts by the
strikers during the strike is still to be heard. Only after a full-blown
hearing may the respective liabilities of Union officers and members be
determined. The case of Telefunken Semiconductors Employees UnionFFW v. Secretary of Labor and Employment and Temic Telefunken
Micro-Electronics (Phils.), Inc. (G.R. No. 122743 and 127215,
December 12, 1997) is instructive on this point:
It may be true that the workers struck after the Secretary of Labor and
Employment had assumed jurisdiction over the case and that they
may have failed to immediately return to work even after the issuance
of a return-to-work order, making their continued strike illegal. For, a
return-to-work order is immediately effective and executory
notwithstanding the filing of a motion for reconsideration. But, the
liability of each of the union officers and the workers, if any, has yet to
be determined. xxx xxx xxx.[4]
The dispositive portion of the Order reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered
as follows:
The Unions Manifestation/Motion to Implead Philcom Corporation is
hereby granted. Let summons be issued to respondent Philcom
Corporation to appear before any hearing that may hereafter be
scheduled and to submit its position paper as may be required.
The Unions Manifestation/Motion to Strike Out Portions of and
Attachments in Philcoms Position Paper is hereby denied for lack of
merit.
The Unions charges of unfair labor practice against the Company are
hereby dismissed.
Pending resolution of the issues of illegal strike and bargaining
deadlock which are yet to be heard, all the striking workers are
directed to return to work within twenty-four (24) hours from receipt
of this Order and Philcom and/or Philcom Corporation are hereby

directed to unconditionally accept back to work all striking Union

officers and members under the same terms and conditions prior to
the strike. The parties are directed to cease and desist from
committing any acts that may aggravate the situation.
Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this
Department is hereby designated as the Hearing Officer to hear and
receive evidence on all matters and issues arising from the present
labor dispute and, thereafter, to submit a report/recommendation
within twenty (20) days from the termination of the proceedings.
The parties are further directed to file their respective position papers
with Atty. Lita V. Aglibut within ten (10) days from receipt of this
Order.
SO ORDERED.[5]
Philcom Corporation (Philcom) filed a motion for reconsideration.
Philcom prayed for reconsideration of the Order impleading it as partylitigant in the present case and directing it to accept back to work
unconditionally all the officers and members of the union who
participated in the strike.[6] Philcom also filed a Motion to Certify Labor
Dispute to the National Labor Relations Commission for Compulsory
Arbitration.[7]
For its part, Philcom Employees Union (PEU) filed a Motion for Partial
Reconsideration. PEU asked the Secretary to partially reconsider the
2 October 1998 Order insofar as it dismissed the unfair labor practices
charges against Philcom and included the illegal strike issue in the
labor dispute.[8]
The Secretary denied both motions for reconsideration of Philcom and
PEU in its assailed Order of 27 November 1998. The pertinent parts of
the Order read:
The question of whether or not Philcom Corporation should be
impleaded has been properly disposed of in the assailed Order. We
reiterate that neither the Company herein nor its predecessor was able
to convincingly establish that each is a separate entity in the absence
of any proof that there was indeed an actual closure and cessation of
the operations of the predecessor-company. We would have
accommodated the Company for a hearing on the matter had it been

willing and prepared to submit evidence to controvert the finding that

there was a mere merger. As it now stands, nothing on record would
prove that the two (2) companies are separate and distinct from each
other.
Having established that what took place was a mere merger, we
correspondingly conclude that the employer-employee relations
between the Company and the Union officers and members was never
severed. And in merger, the employees of the merged companies or
entities are deemed absorbed by the new company (Filipinas Port
Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991).
Considering that the Company failed miserably to adduce any evidence
to provide a basis for a contrary ruling, allegations to the effect that
employer-employee relations and positions previously occupied by the
workers no longer exist remain just that mere allegations.
Consequently, the Company cannot now exempt itself from compliance
with the Order. Neither can it successfully argue that the employees
were validly dismissed. As held in Telefunken Semiconductor
Employees Union-FFW v. Secretary of Labor and Employment (G.R.
Nos. 122743 and 122715, December 12, 1997), to exclude the
workers without first ascertaining the extent of their individual
participation in the strike or non-compliance with the return-to-work
orders will be tantamount to dismissal without due process of law.
With respect to the unfair labor practice charges against the Company,
we have carefully reviewed the records and found no reason to depart
from the findings previously rendered. The issues now being raised by
the Union are the same issues discussed and passed upon in our
earlier Order.
Finally, it is our determination that the issue of the legality of the
strike is well within the jurisdiction of this Office. The same has been
properly submitted and assumed jurisdiction by the Office for
resolution.[9]
The dispositive portion of the Order reads:
WHEREFORE, there being no merit in the remaining Motions for
Reconsideration filed by both parties, the same are hereby DENIED.
Our 2 October 1998 Order STANDS. To expedite the resolution of the
Motion to Certify Labor Dispute to the NLRC for Compulsory
Arbitration, Philcom Employees Union is hereby directed to submit its

Opposition thereto within ten (10) days from receipt of the copy of this
Order.
SO ORDERED.[10]
PEU filed with this Court a petition for certiorari and prohibition under
Rule 65 of the Rules of Court assailing the Secretarys Orders of
2
October 1998 and 27 November 1998. This Court, in accordance with
its Decision of 10 March 1999 in G.R. No. 123426 entitled National
Federation of Labor (NFL) vs. Hon. Bienvenido E. Laguesma,
Undersecretary of the Department of Labor and Employment, and
Alliance of Nationalist Genuine Labor Organization, Kilusang Mayo Uno
(ANGLO-KMU),[11] referred the case to the Court of Appeals.[12]
The Ruling of the Court of Appeals
On 31 July 2000, the Court of Appeals rendered judgment as follows:
WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED.
The assailed portions of the Orders of the Secretary of Labor and
Employment dated October 2, 1998 and November 27, 1998 are
AFFIRMED.
SO ORDERED.[13]
The Court of Appeals ruled that, contrary to PEUs view, the Secretary
could take cognizance of an issue, even only incidental to the labor
dispute, provided the issue must be involved in the labor dispute itself
or otherwise submitted to him for resolution.
The Court of Appeals pointed out that the Secretary assumed
jurisdiction over the labor dispute upon Philcoms petition as a
consequence of the strike that PEU had declared and not because of
the notices of strike that PEU filed with the National Conciliation and
Mediation Board (NCMB).
The Court of Appeals stated that the reason of the Secretarys
assumption of jurisdiction over the labor dispute was the staging of the
strike. Consequently, any issue regarding the strike is not merely
incidental to the labor dispute between PEU and Philcom, but also part
of the labor dispute itself. Thus, the Court of Appeals held that it was
proper for the Secretary to take cognizance of the issue on the legality
of the strike.

The Court of Appeals also ruled that for an employee to claim an unfair
labor practice by the employer, the employee must show that the act
charged as unfair labor practice falls under Article 248 of the Labor
Code. The Court of Appeals held that the acts enumerated in Article
248 relate to the workers right to self-organization. The Court of
Appeals stated that if the act complained of has nothing to do with the
acts enumerated in Article 248, there is no unfair labor practice.
The Court of Appeals held that Philcoms acts, which PEU complained
of as unfair labor practices, were not in any way related to the
workers right to self-organization under Article 248 of the Labor Code.
The Court of Appeals held that PEUs complaint constitutes an
enumeration of mere grievances which should have been threshed out
through the grievance machinery or voluntary arbitration outlined in
the Collective Bargaining Agreement (CBA).
The Court of Appeals also held that even if by Philcoms acts, Philcom
had violated the provisions of the CBA, still those acts do not
constitute unfair labor practices under Article 248 of the Labor Code.
The Court of Appeals held that PEU failed to show that those violations
were gross or that there was flagrant or malicious refusal on the part
of Philcom to comply with the economic provisions of the CBA.
The Court of Appeals stated that as of 21 March 1989, as held in PAL
vs. NLRC,[14] violations of CBAs will no longer be deemed unfair labor
practices, except those gross in character. Violations of CBAs, except
those gross in character, are mere grievances resolvable through the
appropriate grievance machinery or voluntary arbitration as provided
in the CBAs.
Hence, this petition.
The Issues
In assailing the Decision of the Court of Appeals, petitioner contends
that:
1. The Honorable Court of Appeals has failed to faithfully adhere
with the decisions of the Supreme Court when it affirmed the
order/resolution of the Secretary of Labor denying the Unions

Manifestation/Motion to Strike Out Portions of & Attachments in

Philcoms Position Paper and including the issue of illegal strike
notwithstanding the absence of any petition to declare the strike
illegal.
2. The Honorable Court of Appeals has decided a question of
substance in a way not in accord with law and jurisprudence
when it affirmed the order/resolution of the Secretary of Labor
dismissing the Unions charges of unfair labor practices.
3. The Honorable Court of Appeals has departed from the edict of
applicable law and jurisprudence when it failed to issue such
order mandating/directing the issuance of a writ of execution
directing the Company to unconditionally accept back to work the
Union officers and members under the same terms and
conditions prior to the strike and as well as to pay their
salaries/backwages and the monetary equivalent of their other
benefits from October 6, 1998 to date.[15]
The Ruling of the Court
The petition must fail.
PEU contends that the Secretary should not have taken cognizance of
the issue on the alleged illegal strike because it was not properly
submitted to the Secretary for resolution. PEU asserts that after
Philcom submitted its position paper where it raised the issue of the
legality of the strike, PEU immediately opposed the same by filing
its Manifestation/Motion to Strike Out Portions of and Attachments in
Philcoms Position Paper. PEU asserts that it stated in its
Manifestation/Motion that certain portions of Philcoms position paper
and some of its attachments were irrelevant, immaterial and
impertinent to the issues assumed for resolution. Thus, PEU asserts
that the Court of Appeals should not have affirmed the Secretarys
order denying PEUs Manifestation/Motion.
PEU also contends that, contrary to the findings of the Court of
Appeals, the Secretarys assumption of jurisdiction over the labor
dispute was based on the two notices of strike that PEU filed with the
NCMB. PEU asserts that only the issues on unfair labor practice and
bargaining deadlock should be resolved in the present case.

PEU insists that to include the issue on the legality of the strike despite
its opposition would convert the case into a petition to declare the
strike illegal.
PEUs contentions are untenable.
The Secretary properly took cognizance of the issue on the legality of
the strike. As the Court of Appeals correctly pointed out, since the very
reason of the Secretarys assumption of jurisdiction was PEUs
declaration of the strike, any issue regarding the strike is not merely
incidental to, but is essentially involved in, the labor dispute itself.
Article 263(g) of the Labor Code provides:
When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately
resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure the compliance with this provision
as well as with such orders as he may issue to enforce the same.
x x x x.
The powers granted to the Secretary under Article 263(g) of the Labor
Code have been characterized as an exercise of the police power of the
State, with the aim of promoting public good.[16] When the Secretary
exercises these powers, he is granted great breadth of
discretion in order to find a solution to a labor dispute. The
most obvious of these powers is the automatic enjoining of an
impending strike or lockout or its lifting if one has already taken
place.[17]

In this case, the Secretary assumed jurisdiction over the dispute

because it falls in an industry indispensable to the national interest. As
noted by the Secretary ?
[T]he Company has been a vital part of the telecommunications
industry for 73 years. It is particularly noted for its expertise and
dominance in the area of international telecommunications. Thus, it
performs a vital role in providing critical services indispensable to the
national interest. It is for this very reason that this Office strongly
opines that any concerted action, particularly a prolonged work
stoppage is fraught with dire consequences. Surely, the on-going
strike will adversely affect not only the livelihood of workers and their
dependents, but also the companys suppliers and dealers, both in the
public and private sectors who depend on the companys facilities in
the day-to-day operations of their businesses and commercial
transactions. The operational viability of the company is likewise
adversely affected, especially its expansion program for which it has
incurred debts in the approximate amount of P2 Billion. Any
prolonged work stoppage will also bring about substantial losses in
terms of lost tax revenue for the government and would surely pose a
serious set back in the companys modernization program.
At this critical time when government is working to sustain the
economic gains already achieved, it is the paramount concern of this
Office to avert any unnecessary work stoppage and, if one has already
occurred, to minimize its deleterious effect on the workers, the
company, the industry and national economy as a whole.[18]
It is of no moment that PEU never acquiesced to the submission for
resolution of the issue on the legality of the strike. PEU cannot prevent
resolution of the legality of the strike by merely refusing to submit the
issue for resolution. It is also immaterial that this issue, as PEU
asserts, was not properly submitted for resolution of the Secretary.
The authority of the Secretary to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all
questions and controversies arising from such labor dispute.
The power is plenary and discretionary in nature to enable him
to effectively and efficiently dispose of the dispute.[19]
Besides, it was upon Philcoms petition that the Secretary immediately

assumed jurisdiction over the labor dispute on 19 November

1997.[20] If petitioners notices of strike filed on 21 October and 4
November 1997 were what prompted the assumption of jurisdiction,
the Secretary would have issued the assumption order as early as
those dates.
Moreover, after an examination of the position paper[21] Philcom
submitted to the Secretary, we see no reason to strike out those
portions which PEU seek to expunge from the records. A careful study
of all the facts alleged, issues raised, and arguments presented in the
position paper leads us to hold that the portions PEU seek to expunge
are necessary in the resolution of the present case.
On the documents attached to Philcoms position paper, except for
Annexes MM-2 to MM-22 inclusive[22] which deal with the supposed
consolidation of Philippine Global Communications, Inc. and Philcom
Corporation, we find the other annexes relevant and material in the
resolution of the issues that have emerged in this case.
PEU also claims that Philcom has committed several unfair labor
practices. PEU asserts that there are factual and evidentiary bases
for the charge of unfair labor practices against Philcom.
On unfair labor practices of employers, Article 248 of the Labor Code
provides:
Unfair labor practices of employers. ? It shall be unlawful for an
employer to commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of
their right to self-organization;
(b) To require as a condition of employment that a person or an
employee shall not join a labor organization or shall withdraw from one
to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees
in the exercise of their rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including the

giving of financial or other support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. x x x
(f) To dismiss, discharge, or otherwise prejudice or discriminate
against an employee for having given or being about to give testimony
under this Code;
(g) To violate the duty to bargain collectively as prescribed by this
Code;
(h) To pay negotiation or attorneys fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining or
any other dispute; or
(i) To violate a collective bargaining agreement.
Unfair labor practice refers to acts that violate the workers right to
organize. The prohibited acts are related to the workers right to selforganization and to the observance of a CBA. Without that element,
the acts, no matter how unfair, are not unfair labor practices.[23] The
only exception is Article 248(f), which in any case is not one of the
acts specified in PEUs charge of unfair labor practice.
A review of the acts complained of as unfair labor practices of Philcom
convinces us that they do not fall under any of the prohibited acts
defined and enumerated in Article 248 of the Labor Code. The issues of
misimplementation or non-implementation of employee benefits, nonpayment of overtime and other monetary claims, inadequate
transportation allowance, water, and other facilities, are all a matter of
implementation or interpretation of the economic provisions of the CBA
between Philcom and PEU subject to the grievance procedure.
We find it pertinent to quote certain portions of the assailed Decision,
thus
A reading of private respondents justification for the acts complained
of would reveal that they were actually legitimate reasons and not in
anyway related to union busting. Hence, as to compelling employees
to render flexible labor and additional work without additional

compensation, it is the companys explanation that the employees

themselves voluntarily took on work pertaining to other assignments
but closely related to their job description when there was slack in the
business which caused them to be idle. This was the case of the
International Telephone Operators who tried telemarketing when they
found themselves with so much free time due to the slowdown in the
demand for international line services. With respect to the Senior
Combination Technician at the Cebu branch who was allegedly made to
do all around work, the same happened only once when the lineman
was absent and the linemans duty was his ultimate concern.
Moreover, the new assignment of the technicians at CTSS who were
promoted to QCE were based on the job description of QCE, while
those of the other technicians were merely temporary due to the
promotion of several technicians to QCE (pars. 9-12, Philcoms Reply
to PEUs Position Paper; Annex E, Petition; pp. 350-351, ibid.).
On the alleged misimplementation and/or non-implementation of
employees benefits, such as shoe allowance, rainboots, raincoats, OIC
shift allowance, P450.00 monthly allowance, driving allowance,
motorcycle award and full-time physician, the company gave the
following explanation which this Court finds plausible, to wit:
16.
The employees at CTSS were given One Thousand Pesos
(P1,000.00) cash or its equivalent in purchase orders because it was
their own demand that they be given the option to buy the pair of
leather boots they want. For the Cebu branch, the employees
themselves failed to include these benefits in the list of their demands
during the preparation of the budget for the year 1997 despite the
instruction given to them by the branch manager. According to the
employees, they were not aware that they were entitled to these
benefits. They thought that because they have been provided with two
vans to get to their respective assignments, these benefits are
available only to collectors, messengers and technicians in
motorcycles.
17. The P450.00 monthly allowance was provided by the CBA to be
given to counter clerks. However, the position of counter clerks had
been abolished in accordance with the reorganization plan undertaken
by the company in April 1995, with the full knowledge of the Union
membership. As a result of the abolition of the position of counter
clerks, there was no more reason for granting the subject allowance.

18.
The company more than satisfied the provision in the CBA to
engage the services of a physician and provided adequate medical
services. Aside from a part time physician who reports for duty
everyday, the company has secured the services of Prolab Diagnostics,
which has complete medical facilities and personnel, to serve the
medical needs of the employees. x x x
19.
The Union demands that a full-time physician to be assigned at
the Head Office. This practice, is not provided in the CBA and,
moreover is too costly to maintain. The medical services offered by
Prolab [D]iagnostics are even better and more comprehensive than
any full time physician can give. It places at the employees disposal
numerous specialists in various fields of medicine. It is beyond
understanding why the Union would insist on having a full-time
physician when they could avail of better services from Prolab
Diagnostics.
(Philcoms Reply to PEUs Position Paper, pp.352, 354, ibid.)
On the issue of non-payment, discrimination and/or deprivation of
overtime, restday work, waiting/stand by time and staff meeting
allowance, suffice it to state that there is nothing on record to prove
the same. Petitioner did not present evidence substantial enough to
support its claim.
As to the alleged inadequate transportation allowance and facilities,
the company posits that:
30.
The transportation allowances given to the Dasmarinas and
Pinugay employees are more than adequate to defray their daily
transportation cost. Hence, there is absolutely no justification for an
increase in the said allowance. In fact, said employees at Dasmarinas
and Pinugay, who are only residing in areas near their place of work,
are more privileged as they receive transportation expenses while the
rest of the company workers do not.
31.
As to the demand for clean drinking water, the company has
installed sufficient and potable water inside the Head Office even
before the strike was staged by the Union. Any person who visits the
Makati Head Office can attest to this fact.

(Philcoms Reply to PEUs Position Paper, p. 357, ibid.)

Anent the allegation of PABX transfer and contractualization of PABX
service and position, these were done in anticipation of the company
to switch to an automatic PABX machine which requires no operator.
This cannot be treated as ULP since management is at liberty, absent
any malice on its part, to abolish positions which it deems no longer
necessary (Arrieta vs. National Labor Relations Commission, 279 SCRA
326, 332). Besides, at the time the company hired a temporary
employee to man the machine during daytime, the subject position
was vacant while the assumption of the function by the company
guard during nighttime was only for a brief period.
With respect to the perceived massive contractualization of the
company, said charge cannot be considered as ULP since the hiring of
contractual workers did not threaten the security of tenure of regular
employees or union members. That only 160 employees out of 400
employees in the companys payroll were considered rank and file does
not of itself indicate unfair labor practice since this is but a company
prerogative in connection with its business concerns.
Likewise, the offer or promotions to a few union members is neither
unlawful nor an economic inducement. These offers were made in
accordance with the legitimate need of the company for the services of
these employees to fill positions left vacant by either retirement or
resignation of other employees. Besides, a promotion is part of the
career growth of employees found competent in their work. Thus, in
Bulletin Publishing Corporation vs. Sanchez (144 SCRA 628, 641), the
Supreme Court held that (T)he promotion of employees to managerial
or executive positions rests upon the discretion of management.
Managerial positions are offices which can only be held by persons who
have the trust of the corporation and its officers. It is the prerogative
of management to promote any individual working within the company
to a higher position. It should not be inhibited or prevented from doing
so. A promotion which is manifestly beneficial to an employee should
not give rise to a gratuitous speculation that such a promotion was
made simply to deprive the union of the membership of the promoted
employee, who after all appears to have accepted his promotion.
That the promotions were made near or around the time when CBA

negotiations were about to be held does not make the companys

action an unfair labor practice. As explained by the company, these
promotions were based on the availability of the position and the
qualification of the employees promoted (p. 6, Annex 4, Philcoms
Reply to PEUs Position Paper; p. 380, ibid.)
On the unions charge that management disallowed leave of union
officers and members to attend union seminar, this is belied by the
evidence submitted by the union itself. In a letter to PEUs President,
the company granted the leave of several union officers and members
to attend a seminar notwithstanding that its request to be given more
details about the affair was left unheeded by the union (Annex Y,
PEUs Position Paper; p. 222, ibid.). Those who were denied leave were
urgently needed for the operation of the company.
On the ULP issue of disinformation scheme, surveillance and
interference with union affairs, these are mere allegations unsupported
by facts. The charge of black propaganda allegedly committed by the
company when it supposedly posted two (2) letters addressed to the
Union President is totally baseless. Petitioner presents no proof that it
was the company which was behind the incident. On the purported
disallowance of union members to observe the July 27, 1997 CBA
meeting, the company explained that it only allowed one (1) employee
from ITTO, instead of two (2), as it would adversely affect the
operation of the group. It also took into consideration the fact that
ITTO members represent only 20% of the union. Other union members
from other departments of the company should have equal
representation (Annex "L, Position Paper for the Union; pp. 205-206,
ibid.). As to the alleged surveillance of the company guards during a
union seminar, We find the idea of sending guards to spy on a mere
union seminar quite preposterous. It is thus not likely for the company
which can gain nothing from it to waste its resources in such a
scheme.
On the issuance of memorandum/notice to employees without giving
copy to union, change in work schedule at Traffic Records Section and
ITTO policies, the company has sufficiently rebutted the same, thus:
27. The Union also whines about the failure of the company to furnish
copies of memoranda or notices sent to employees and change of work
schedules at the Traffic Records Section and ITTO policies. The CBA,

however, does not obligate the Company to give the Union a copy of
each and every memorandum or notice sent to employees. This would
be unreasonable and impractical. Neither did the Union demand that
they be furnished copies of the same. This is clearly a non-issue as
copies of all memoranda or notices issued by management are readily
available upon request by any employee or the Union.
28.
Contrary to the allegations of the Union, the rationale and
mechanics for the abolishment of the midnight schedule at the Traffic
Record Services had been thoroughly and adequately discussed with
the Unions President, Robert Benosa, and the staff of Traffic Record
Services in the meeting held on May 9, 1997. The midnight services
were abolished for purely economic reasons. The company realized
that the midnight work can be handled in the morning without
hampering normal operations. At the same time, the company will be
able to save on cost. For this objective, the employees concerned
agreed to create a manning and shifting schedule starting at 6:00 a.m.
up to 10:00 p.m., with each employee rendering only eight hours of
work every day without violating any provision of the labor laws or the
CBA.[24]
The Court has always respected a companys exercise of its
prerogative to devise means to improve its operations. Thus, we have
held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring,
work assignments, supervision and transfer of employees, working
methods, time, place and manner of work.[25]
This is so because the law on unfair labor practices is not intended to
deprive employers of their fundamental right to prescribe and enforce
such rules as they honestly believe to be necessary to the proper,
productive and profitable operation of their business.[26]
Even assuming arguendo that Philcom had violated some provisions in
the CBA, there was no showing that the same was a flagrant or
malicious refusal to comply with its economic provisions. The law
mandates that such violations should not be treated as unfair labor
practices.[27]
PEU also asserts that the Court of Appeals should have issued an order
directing the issuance of a writ of execution ordering Philcom to accept

back to work unconditionally the striking union officers and members

under the same terms and conditions prevailing before the strike. PEU
asserts that the union officers and members should be paid their
salaries or backwages and monetary equivalent of other benefits
beginning 6 October 1998 when PEU received a copy of the Secretarys
2 October 1998 return-to-work order.
PEU claims that even if the issue of illegal strike can be included in
the assailed orders and that the union officers and members have
been terminated as a result of the alleged illegal strike, still, the
Secretary has to rule on the illegality of the strike and the liability of
each striker. PEU asserts that the union officers and members should
first be accepted back to work because a return-to-work order is
immediately executory.[28]
We rule on the legality of the strike if only to put an end to this
protracted labor dispute. The facts necessary to resolve the legality of
the strike are not in dispute.
The strike and the strike activities that PEU had undertaken were
patently illegal for the following reasons:
1.
Philcom is engaged in a vital industry protected by Presidential
Decree No. 823 (PD 823), as amended by Presidential Decree No. 849,
from strikes and lockouts. PD 823, as amended, provides:
Sec. 1. It is the policy of the State to encourage free trade unionism
and free collective bargaining within the framework of compulsory and
voluntary arbitration. Therefore, all forms of strikes, picketings and
lockouts are hereby strictly prohibited in vital industries, such as in
public utilities, including transportation and communications, x x x.
(Emphasis supplied)
Enumerating the industries considered as vital, Letter of Instruction
No. 368 provides:
For the guidance of workers and employers, some of whom have been
led into filing notices of strikes and lockouts even in vital industries,
you are hereby instructed to consider the following as vital industries
and companies or firms under PD 823 as amended:
1. Public Utilities:

xxxx
B. Communications:
1) Wire or wireless telecommunications such as telephone,
telegraph, telex, and cable companies or firms; (Emphasis
supplied)
xxxx
It is therefore clear that the striking employees violated the no-strike
policy of the State in regard to vital industries.
2.
The Secretary had already assumed jurisdiction over the
dispute. Despite the issuance of the return-to-work orders dated
19 November and 28 November 1997, the striking employees
failed to return to work and continued with their strike.
Regardless of their motives, or the validity of their claims, the striking
employees should have ceased or desisted from all acts that would
undermine the authority given the Secretary under Article 263(g) of
the Labor Code. They could not defy the return-to-work orders by
citing Philcoms alleged unfair labor practices to justify such
defiance.[29]
PEU could not have validly anchored its defiance to the return-to-work
orders on the motion for reconsideration that it had filed on the
assumption of jurisdiction order. A return-to-work order is
immediately effective and executory despite the filing of a
motion for reconsideration. It must be strictly complied with
even during the pendency of any petition questioning its
validity.[30]
The records show that on 22 November 1997, Philcom published in
the Philippine Daily Inquirer a notice to striking employees to return to
work.[31] These employees did not report back to work but continued
their mass action. In fact, they lifted their picket lines only on 22
December 1997.[32] Philcom formally notified twice these employees to
explain in writing why they should not be dismissed for defying the
return-to-work order.[33] Philcom held administrative hearings on these
disciplinary cases.[34] Thereafter, Philcom dismissed these employees

for abandonment of work in defiance of the return-to-work order.[35]

A return-to-work order imposes a duty that must be discharged more
than it confers a right that may be waived. While the workers may
choose not to obey, they do so at the risk of severing their relationship
with their employer.[36]
The following provision of the Labor Code governs the effects of
defying a return-to-work order:
ART. 264. Prohibited activities. ? (a) x x x x
No strike or lockout shall be declared after assumption of
jurisdiction by the President or the Minister or after certification
or submission of the dispute to compulsory or voluntary arbitration or
during the pendency of cases involving the same grounds for the strike
or lockout x x x x
Any union officer who knowingly participates in illegal strike and any
worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to
have lost his employment status: Provided, That mere participation
of a worker in a lawful strike, shall not constitute sufficient ground for
termination of his employment, even if a replacement had been hired
by the employer during such lawful strike. (Emphasis supplied)
A strike undertaken despite the Secretarys issuance of an assumption
or certification order becomes a prohibited activity, and thus,
illegal, under Article 264(a) of the Labor Code. The union
officers who knowingly participate in the illegal strike are deemed to
have lost their employment status. The union members, including
union officers, who commit specific illegal acts or who knowingly defy a
return-to-work order are also deemed to have lost their employment
status.[37] Otherwise, the workers will simply refuse to return to their
work and cause a standstill in the company operations while retaining
the positions they refuse to discharge and preventing management to
fill up their positions.[38]
Hence, the failure of PEUs officers and members to comply
immediately with the return-to-work orders dated 19 November and
28 November 1997 cannot be condoned. Defiance of the return-towork orders of the Secretary constitutes a valid ground for

dismissal.[39]
3. PEU staged the strike using unlawful means and methods.
Even if the strike in the present case was not illegal per se, the strike
activities that PEU had undertaken, especially the establishment of
human barricades at all entrances to and egresses from the company
premises and the use of coercive methods to prevent company officials
and other personnel from leaving the company premises, were
definitely illegal.[40] PEU is deemed to have admitted that its officers
and members had committed these illegal acts, as it never disputed
Philcoms assertions of PEUs unlawful strike activities in all the
pleadings that PEU submitted to the Secretary and to this Court.
PEUs picketing officers and members prohibited other tenants at the
Philcom building from entering and leaving the premises. Leonida S.
Rabe, Country Manager of Societe Internationale De
Telecommunications Aeronautiques (SITA), a tenant at the Philcom
building, wrote two letters addressed to PEU President Roberto B.
Benosa. She told Benosa that PEUs act of obstructing the free ingress
to and egress from the company premises has badly disrupted normal
operations of their organization.[41]
The right to strike, while constitutionally recognized, is not without
legal constrictions. Article 264(e) of the Labor Code, on prohibited
activities, provides:
No person engaged in picketing shall commit any act of violence,
coercion or intimidation or obstruct the free ingress to or egress from
the employers premises for lawful purposes, or obstruct public
thoroughfares.
The Labor Code is emphatic against the use of violence, coercion, and
intimidation during a strike and to this end prohibits the obstruction of
free passage to and from the employers premises for lawful purposes.
A picketing labor union has no right to prevent employees of another
company from getting in and out of its rented premises, otherwise, it
will be held liable for damages for its acts against an innocent bystander.[42]
The sanction provided in Article 264(a) is so severe that any worker or
union officer who knowingly participates in the commission of illegal

acts during a strike may be declared to have lost his employment

status.[43]
By insisting on staging the prohibited strike and defiantly picketing
Philcoms premises to prevent the resumption of company operations,
the striking employees have forfeited their right to be readmitted.[44]
4. PEU declared the strike during the pendency of preventive
mediation proceedings at the NCMB.
On 17 November 1997, while a conciliation meeting was being held at
the NCMB in NCMB-NCR-NS 10-435-97, PEU went on strike. It should
be noted that in their meeting on 11 November 1997, both Philcom
and PEU were even advised to maintain the status quo.[45] Such
disregard of the mediation proceedings was a blatant violation of
Section 6, Book V, Rule XXII of the Omnibus Rules Implementing the
Labor Code, which explicitly obliges the parties to bargain collectively
in good faith and prohibits them from impeding or disrupting the
proceedings.[46] The relevant provision of the Implementing Rules
provides:
Section 6. Conciliation. ? x x x x
During the proceedings, the parties shall not do any act which may
disrupt or impede the early settlement of dispute. They are obliged, as
part of their duty, to bargain collectively in good faith, to participate
fully and promptly in the conciliation meetings called by the regional
branch of the Board. x x x x
Article 264(a) of the Labor Code also considers it a prohibited activity
to declare a strike during the pendency of cases involving the same
grounds for the same strike.
Lamentably, PEU defiantly proceeded with their strike during the
pendency of the conciliation proceedings.
5. PEU staged the strike in utter disregard of the grievance procedure
established in the CBA.
By PEUs own admission, the Unions complaints to the management
began in June 1997 even before the start of the 1997 CBA
renegotiations.[47] Their CBA expired on 30 June 1997.[48] PEU could

have just taken up their grievances in their negotiations for the new
CBA. This is what a Philcom officer had suggested to the Dasmarias
staff when the latter requested on 16 June 1997 for an increase in
transportation allowance.[49] In fact, when PEU declared the strike,
Philcom and PEU had already agreed on 37 items in their negotiations
for the new CBA.[50]
The bottom line is that PEU should have immediately resorted to the
grievance machinery provided for in the CBA.[51] In disregarding this
procedure, the union leaders who knowingly participated in the strike
have acted unreasonably. The law cannot interpose its hand to protect
them from the consequences of their illegal acts.[52]
A strike declared on the basis of grievances which have not been
submitted to the grievance committee as stipulated in the CBA of the
parties is premature and illegal.[53]
Having held the strike illegal and having found that PEUs officers and
members have committed illegal acts during the strike, we hold that
no writ of execution should issue for the return to work of PEU officers
who participated in the illegal strike, and PEU members who
committed illegal acts or who defied the return-to-work orders that the
Secretary issued on 19 November 1997 and 28 November 1997. The
issue of who participated in the illegal strike, committed illegal acts, or
defied the return-to-work orders is a question of fact that must be
resolved in the appropriate proceedings before the Secretary of Labor.
WHEREFORE, we DISMISS the petition and AFFIRM the Decision of
the Court of Appeals in CA-G.R. SP No. 53989, with
the MODIFICATION that the Secretary of Labor is directed to
determine who among the Philcom Employees Union officers
participated in the illegal strike, and who among the union members
committed illegal acts or defied the return-to-work orders of 19
November 1997 and 28 November 1997. No pronouncement as to
costs.
SO ORDERED.
Quisumbing, (Chairman), Carpio-Morales, Tinga, and Velasco, Jr.
JJ., concur

[1]

Under Rule 45 of the 1997 Rules of Civil Procedure.

[2]

Penned by Associate Justice Fermin A. Martin, Jr., with Associate

Justices Salvador J. Valdez, Jr. and Remedios S. Fernando,
concurring. Rollo, pp. 869-888.
[3]

Rollo, pp. 871-874.

[4]

Id. at 582-583.

[5]

Id. at 584.

[6]

Id. at 585-595.

[7]

Id. at 597-603.

[8]

Id. at 605-612.

[9]

Id. at 622-623.

[10]

[11]

Id. at 623.
364 Phil. 44 (1999).

[12]

Rollo, p. 637.

[13]

Id. at 887-888.

[14]
[15]

347 Phil. 602 (1997).

Rollo, pp. 52-53.

[16]

Manila Diamond Hotel Employees Union v. Court of Appeals, G.R.

No. 140518, 16 December 2004, 447 SCRA 97.
[17]

Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees

Union-Associated Labor Unions (Tasli-Alu) v. Court of Appeals, G.R.
No. 145428, 7 July 2004, 433 SCRA 610.
[18]

Rollo, pp. 691-692.

[19]

LMG Chemicals Corporation v. Secretary of the Department of

Labor and Employment, G.R. No. 127422, 17 April 2001, 356 SCRA
577; International Pharmaceuticals, Inc. v. Secretary of Labor, G.R.
Nos. 92981-83, 9 January 1992, 205 SCRA 59.
[20]

Rollo, p. 579.

[21]

Id. at 422-440.

[22]

Id. at 548-568.

[23]

Great Pacific Life Employees Union v. Great Pacific Life Assurance

Corporation, G.R. No. 126717, 11 February 1999, 303 SCRA 113;
Cesario A. Azucena, Jr., II The Labor Code with Comments and Cases
210 (5th ed. 2004) [The Labor Code with Comments and Cases].
[24]

Rollo, pp. 880-886.

[25]

Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, 25

November 2004, 444 SCRA 287; Benguet Electric Cooperative v.
Fianza, G.R. No. 158606, 9 March 2004, 425 SCRA 41.
[26]

II The Labor Code with Comments and Cases 214.

[27]

ART. 261, Labor Code. x x x Accordingly, violations of a

Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall
be resolved as grievances under the Collective Bargaining Agreement.
For purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with
the economic provisions of such agreement.
[28]

Rollo, pp. 110-112.

[29]

Allied Banking Corp. v. NLRC, G.R. No. 116128, 12 July 1996, 258
SCRA 724.
[30]

Telefunken Semiconductors Employees Union-FFW v. Sec. of Labor

and Employment, 347 Phil. 447 (1997); St. Scholasticas College v.
Torres, G.R. No. 100158, 29 June 1992, 210 SCRA 565.

[31]

Rollo, p. 444.

[32]

Id. at 35.

[33]

Id. at 1006.

[34]

Id. at 996.

[35]

Id. at 38-39.

[36]

Asian Transmission Corporation v. NLRC, G.R. No. 88725, 22

November 1989, 179 SCRA 582.
[37]

Grand Boulevard Hotel v. Genuine Labor Organization of Workers

in Hotel, Restaurant and Allied Industries (GLOWHRAIN), 454 Phil. 463
(2003).
[38]

St. Scholasticas College v. Torres, supra note 30.

[39]

Allied Banking Corp. v. NLRC, supra note 29.

[40]

Federation of Free Workers v. Inciong, G.R. No. 49983, 20 April

1992, 208 SCRA 157.
[41]

Rollo, pp. 445-448.

[42]

Liwayway Publications, Inc. v. Permanent Concrete Workers Union,

195 Phil. 51 (1981).
[43]

Great Pacific Life Employees Union v. Great Pacific Life Assurance

Corporation, supra note 23.
[44]

St. Scholasticas College v. Torres, supra note 30.

[45]

Rollo, p. 443.

[46]

San Miguel Corp. v. NLRC, 451 Phil. 514 (2003).

[47]

Rollo, p. 70.

[48]

Id. at 579.

[49]

Id. at 307.

[50]

Id. at 583.

[51]

Id. at 507-508.

[52]

Tiu v. NLRC, 343 Phil. 478 (1997).

[53]

II The Labor Code with Comments and Cases 443.

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