FIRST DIVISION warned to improve.

Petitioners aver that Galays attitude resulted to the decline

in the companys efficiency and productivity. Petitioners presented a
HEAVYLIFT MANILA, INC. and/or G.R. No. 154410 letter[4] dated February 23, 1999 and a notice of termination [5] dated August 16,
JOSEPHINE EVANGELIO, 1999.
Administrative & Finance Present: The Labor Arbiter found that Galay was illegally terminated for petitioners
Manager, AND CAPT. Davide, Jr., C.J., failure to prove that she violated any company regulation, and for failure to give
ROLANDO*TOLENTINO, (Chairman), the proper notice as required by law.[6]
Petitioners, Quisumbing, Petitioner appealed to the NLRC. The latter, however, denied the appeal for lack
Ynares-Santiago, of merit and affirmed the decision of the Labor Arbiter.[7] A motion for
Carpio, and reconsideration was subsequently filed but which was likewise denied.[8]
Azcuna, JJ. Petitioner elevated the case by certiorari to the Court of Appeals. But, petitioners
- versus - failed to: state the full names and actual addresses of all the petitioners; attach
the copies of all pleadings and supporting documents; properly verify the
petition; and certify against forum-shopping. For these procedural lapses, the
petition was dismissed.[9] Petitioners moved for reconsideration and attached a
THE COURT OF APPEALS, board resolution authorizing petitioner Tolentino to legally represent the
MA. DOTTIE GALAY and the Promulgated: company. Nonetheless, the Court of Appeals denied the motion for lack of
NATIONAL LABOR RELATIONS justifying circumstances, and because the attached board resolution was issued
COMMISSION, October 20, 2005 after the petition was filed.[10]
Respondents. Hence, the instant petition for certiorari alleging that
I. The Honorable Court of Appeals grossly erred in relying too much on form
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x rather than on the merits of the petition thereby denying petitioners of right to
DECISION due process.
QUISUMBING, J.: II. The NLRC acted in a whimsical, arbitrary and despotic manner with grave
Before us is a petition for certiorari assailing the Resolution[1] dated December abuse of discretion when it ruled that:
18, 2001 of the Court of Appeals in CA-G.R. SP No. 68072 denying the petition for a. Petitioners failed to submit substantial evidence that will prove petitioners
failure to comply with procedural rules, as well as the Decision[2] dated August had withdrawn their trust and confidence upon the respondent
30, 2001 and the Resolution[3] dated September 28, 2001 of the National Labor notwithstanding the admitted strained and irreconcilable relationship between
Relations Commission (NLRC) which affirmed the Labor Arbiters decision respondent Galay and petitioners.
finding petitioners guilty of illegal dismissal. b. The cause for terminating the employment of respondent by the petitioner
The factual antecedents of the case are as follows: appears foreign to the causes of terminating an employment either under loss
On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter of trust and confidence or under analogous causes.
signed by petitioner Josephine Evangelio, Administrative and Finance Manager c. The NLRC acted in a despotic manner when it
of Heavylift, informed respondent Ma. Dottie Galay, Heavylift Insurance and ruled that complainant is entitled
Provisions Assistant, of her low performance rating and the negative feedback to service incentive pay and
from her team members regarding her work attitude. The letter also notified her 13th month pay in the absence of
that she was being relieved of her other functions except the development of the any claim, prayer or evidence.
new Access program. III. It is a grave abuse of discretion on the part of the NLRC
Subsequently, on August 16, 1999, Galay was terminated for alleged loss of when it made it to appear that the right of worker
confidence. Thereafter, she filed with the Labor Arbiter a complaint for illegal for security of tenure is absolute.[11]
dismissal and nonpayment of service incentive leave and 13th month pay against Simply, the issues are (1) Were the petitioners denied due process with the Court
petitioners. of Appeals dismissal of the petition on technical grounds? (2) Is attitude problem
Before the labor arbiter, petitioners alleged that Galay had an attitude problem a valid ground for the termination of an employee? (3) If in the affirmative, was
and did not get along with her co-employees for which she was constantly this sufficiently proved? (4) Were the procedural requirements for an effectual

1
dismissal present? and (5) Were the awards of service incentive pay and
13th month pay proper?
Anent the first issue, petitioners posit that instead of denying outright their
petition on technicalities, the Court of Appeals should have given it due course.
Petitioners explain that only the name and address of petitioner Heavylift were
stated in the petition because it was the real party in interest, while the rest were
mere nominal parties. They also reasoned that it was not necessary to attach the
pleadings submitted to the Labor Arbiter as the arguments asserted therein were
sufficiently tackled and reiterated in the petition. Lastly, petitioners submit that
petitioner Tolentino was authorized by the Board of Directors as the legal
representative of the agency and its officers.
Respondent counters that strict adherence to the rules of procedure is required
to promote efficiency and orderliness. It adds that petitioners did not present
any persuasive reason for a liberal application of the Rules.
The Rules of Court require that the petition for certiorari shall be
verified,[12] contain the full names and actual addresses of all the petitioners and
respondents, accompanied by a certified true copy of the subject decision, order
or resolution and other documents relevant or pertinent thereto, and be
submitted with the certification of non-forum shopping signed by the
principal.[13]
We likewise have enunciated that the Rules of Court are designed for the proper
and prompt disposition of cases. In not a few instances, we relaxed the rigid
application of the rules to afford the parties opportunity to fully ventilate their
cases on the merits. In that way, the ends of justice would be better served.[14]
Additionally, verification of a pleading is a formal, not a jurisdictional requisite. It
is intended to secure an assurance that what are alleged in the pleading are true
and correct and not the product of the imagination or a matter of speculation,
and that the pleading is filed in good faith.[15]
The rule on certification against forum-shopping requires strict compliance. The
requirement underscores its mandatory nature such that it cannot be altogether
dispensed with. However, under justifiable circumstances, the Court does allow
substantial compliance.[16]
Further, we accept petitioners inadvertence to state the names and addresses of
the other petitioners as a minor defect. We also accept their explanation on their
failure to incorporate the Labor Arbiters decision.
Thus, mindful that the greater interest of justice would be served if the petition
is adjudicated on its merits,[17] we will proceed with the remaining issues, and
discuss them jointly.
Was there just cause in the termination of Galay?
Petitioners assert that it terminated Galay because she had an attitude problem.
This situation, according to petitioners, is analogous to loss of trust and
confidence. They aver that respondent did not deny the strained and
irreconcilable relationship between them, in effect, admitting the same. Further,
petitioners aver that having lost their trust and confidence on Galay, they could
2
no longer make her in-charge of the confidential Crew Information System which
accounts for the personnel, management and professional records of all the
employees of and seamen connected with the company. Lastly, petitioners
maintain that because of Galays attitude, the companys work atmosphere had
become very strained and had gravely affected the workers and their outputs.
Galays dismissal, according to petitioners, was merely an act of self-preservation.
Petitioners explained that they sent Galay a letter of notice dated February 23,
1999, apprising her of her low performance and her attitude problem, before the
letter of her termination dated August 16, 1999. Petitioners claim that the
company waited for six months, to give Galay a chance to undergo counseling
before dismissing her from the service.
Galay counters that petitioners failed to show a just and valid cause for her
termination, and that letters of notice and termination did not comply with the
twin requirement of notice and hearing. Galay argues that the letter dated
February 23, 1999 neither informed her of her infraction of any company rule
that warrants disciplinary action; nor required her to submit an explanation.
An employee who cannot get along with his co-employees is detrimental to the
company for he can upset and strain the working environment. Without the
necessary teamwork and synergy, the organization cannot function well. Thus,
management has the prerogative to take the necessary action to correct the
situation and protect its organization. When personal differences between
employees and management affect the work environment, the peace of the
company is affected. Thus, an employees attitude problem is a valid ground for
his termination.[18] It is a situation analogous to loss of trust and confidence that
must be duly proved by the employer. Similarly, compliance with the twin
requirement of notice and hearing must also be proven by the employer.
However, we are not convinced that in the present case, petitioners have shown
sufficiently clear and convincing evidence to justify Galays termination. Though
they are correct in saying that in this case, proof beyond reasonable doubt is not
required, still there must be substantial evidence to support the termination on
the ground of attitude.[19] The mere mention of negative feedback from her team
members, and the letter dated February 23, 1999, are not proof of her attitude
problem. Likewise, her failure to refute petitioners allegations of her negative
attitude does not amount to admission. Technical rules of procedure are not
binding in labor cases.[20] Besides, the burden of proof is not on the employee but
on the employer who must affirmatively show adequate evidence that the
dismissal was for justifiable cause.[21]
In our view, neither does the February 23, 1999 letter constitute the required
notice. The letter did not inform her of the specific acts complained of and their
corresponding penalty. The law requires the employer to give the worker to be
dismissed two written notices before terminating his employment, namely, (1) a
notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employers decision to dismiss him.[22] Additionally, the letter
never gave respondent Galay an opportunity to explain herself, hence denying
her due process.
In sum, we find that Galay was illegally dismissed, because petitioners failed to
show adequately that a valid cause for terminating respondent exists, and
because petitioners failed to comply with the twin requirement of notice and
hearing.
Apropos the award of service incentive pay and 13th month pay, we find that they
were properly prayed for by Galay. These were subsumed in the complaint and
under the position papers general prayer of such other relief as are just and
equitable under the law. Petitioners failed to present evidence that these benefits
were already paid. Moreover, this issue involves a question of fact which is not
proper in a petition for certiorari and the determinations of the Labor Arbiter
and the NLRC are afforded great weight and respect by the courts on these
matters, when these findings are supported by substantial evidence, and devoid
of any unfairness or arbitrariness. [23] Hence, their findings must be sustained.
WHEREFORE, the Decision dated September 16, 2000 of the Labor Arbiter in
NLRC NCR Case No. 00-08-08461-99 as well as Decision dated August 30, 2001
and the Resolution dated September 28, 2001 of the National Labor Relations
Commission in NLRC NCR CA No. 026466-2000 are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.
3
G.R. No. 100898
ALEX FERRER v. NLRC
MELO, J.:
The petition for certiorari before us seeks to annul and set aside: (a) the decision
dated June 20, 1991 of the Second Division of the National Labor Relations
Commission (NLRC) (Penned by Commissioner Rustico L. Diokno and concurred
in by Presiding Commissioner Edna Bonto-Perez and Commissioner Domingo H.
Zapanta) which affirmed in toto the decision of April 5, 1990 of Labor Arbiter
Eduardo J. Carpio dismissing the complaint for illegal dismissal and unfair labor
practice on the ground that both the company, and the union merely complied
with the collective bargaining agreement provision sanctioning the termination
of any employee who fails to retain membership in good standing with the union;
and (b) the NLRC resolution denying the motion for the reconsideration of said
decision (NLRC NCR Case No. 00-10-04855-89).
Petitioners were regular and permanent employees of the Occidental Foundry
Corporation (OFC) in Malanday, Valenzuela, Metro Manila which was under the
management of Hui Kam Chang. As piece workers, petitioners' earnings ranged
from P110 to P140 a day. They had been in the employ of OFC for about ten years
at the time of their dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry
Corporation-FFW (SAMAHAN) and the OFC entered into a collective bargaining
agreement (CBA) which would be effective for the three-year period between
October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui Kam
Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause
thus:
Section 1 - The company agrees that all permanent and regular factory workers
in the company who are members in good standing of the union or who
thereafter may become members, shall as a condition of continued employment,
maintain their membership in the union in good standing for the duration of the
agreement.
xxx x xx x xx
Section 3 - The parties agree that failure to retain membership in good standing
with the UNION shall be ground for the operation of paragraph 1 hereof and the
dismissal by the company of the aforesaid employee upon written request by the
union. The aforesaid request shall be accompanied by a verified carbon original
of the Board of (sic) Resolution by the UNION signed by at least a majority of its
officers/directors. (p. 562, Rollo.)
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the
Department of Labor and Employment (DOLE), a complaint for the expulsion
from SAMAHAN of the following officers: Genaro Capitle (president), Jesus
Tumagan (vice-president), Godofredo Pacheco (auditor), and Marcelino Pacheco
(board member) (Case No. NCR-00-M-89-11-01). The complaint was founded on
said officers' alleged inattentiveness to the economic demands of the workers.
However, on September 4, 1989, petitioners Diaz and Alex Ferrer withdrew the
petition (p. 590, Rollo).
On September 10, 1989, petitioners conducted a special election of officers of the
SAMAHAN (pp. 205 & 583, Rollo). Said election was, however, later questioned
by the FFW. Nonetheless, the elected set of officers tried to dissuade the OFC
from remitting union dues to the officers led by Capitle who were allied with the
FFW. Later, however, Romulo Erlano, one of the officers elected at the special
election, manifested to the DOLE that he was no longer objecting to the
remittance of union dues to the officers led by Capitle. Petitioners' move to stage
a strike based on economic demands was also later disowned by members of the
SAMAHAN.
The intraunion squabble came to a head when, on September 11, 1989, a
resolution expelling petitioners from the SAMAHAN was issued by the aforesaid
union officials headed by Capitle, together with board members George Ignas,
Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The following day,
Capitle sent OFC the following letter:
12 September 1989
Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in
our Collective Bargaining Agreement, I would like you to dismiss the following
employees on the ground of failure to retain membership in good standing:
1. Alex Ferrer
2. Gil de Guzman
4
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
Attached herewith is the verified carbon original of the Board Resolution of the
union signed by the majority of its officers/directors.
Thank you very much.
Very truly yours,
(Sgd.)
GENARO CAPITLE
President
(p. 66, Rollo.)
Although petitioners received this letter weeks after its date, it appears that on
that same date, they had learned about their dismissal from employment as
shown by the letter also dated September 13, 1989 which they sent the
Federation of Democratic Labor Unions (FEDLU). They volunteered therein to be
admitted as members of the FEDLU and requested that they be represented
("katawanin") by said federation before the DOLE in the complaint which they
intended to file against the union (SAMAHAN), the FFW and the company for
illegal dismissal, reinstatement, and other benefits in accordance with law (p. 74,
Rollo).
Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang
professing innocence of the charges levelled against them by the SAMAHAN and
the FFW and pleading that they be reinstated (pp. 69-73, Rollo). Their letters
appear to have elicited no response.
Thus, contending that their dismissal was without cause and in utter disregard
of their right to due process of law, petitioners, through the FEDLU, filed a
complaint for illegal dismissal and unfair labor practice before the NLRC against
Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the FFW), the
FFW, and the SAMAHAN officers headed by Capitle (p. 75, Rollo).
In due course, after the case was ventilated through position papers and other
documents, the labor arbiter rendered a decision dismissing petitioners'
complaint (pp. 79-89, Rollo). He found that in dismissing petitioners, OFC was
"merely complying with the mandatory provisions of the CBA - the law between
it and the union." He added:
To register compliance with the said covenant, all that is necessary is a written
request of the union requesting dismissal of the employees who have failed to
retain membership in good standing with the union. The matter or question,
therefore, of determining why and how did complainants fail to retain
membership in good standing is not for the company to inquire via formal
investigation. By having the request of the union, a legal presumption that the
request was born out of a formal inquiry by the union that subject employees
failed to retain membership in good standing, failed to exist. This means
generally that where a valid closed shop or similar agreement is in force with
respect to a particular bargaining unit as in the case a quo, the employer shall
refuse to employ any person unless he is a member of the majority union and the
employer shall dismiss employees who fail to retain their membership in the
majority union. This must be deemed a just cause recognized by law and
jurisprudence. The effect is discrimination to encourage membership in other
unions. (pp. 86-87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise
of legitimate management prerogative which cannot be considered as an unfair
labor practice. On whether the SAMAHAN and the FFW could be held liable for
illegal dismissal and unfair labor practice, the arbiter opined that since there was
no employer-employee relationship between petitioners and respondent unions,
the complaint against the latter has no factual and legal bases, because
petitioners "should not have confused expulsion from membership in the union
as one and the same incident to their subsequent employment termination."
Consequently, petitioners appealed to the NLRC on the grounds that there was
prima facie evidence of abuse of discretion on the part of the labor arbiter and
that he committed serious errors in his findings of facts.
On June 20, 1991, the NLRC rendered the herein questioned decision
affirming in toto the decision of the labor arbiter. Petitioners' motion for the
reconsideration of the NLRC decision having been denied, they resorted to the
instant petition for certiorari which presents the issue of whether or not
respondent Commission gravely abused its discretion in affirming the decision
of the labor arbiter which is allegedly in defiance of the elementary principles of
procedural due process as the petitioners were summarily dismissed from
employment without an investigation having been conducted by the OFC on the
veracity of the allegation of the SAMAHAN-FFW that they violated the CBA.
A CBA is the law between the company and the union and compliance therewith
is mandated by the express policy to give protection to labor. Said policy should
be given paramount consideration unless otherwise provided for by law
(Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for a
closed shop is a valid form of union security and it is not a restriction on the right
or freedom of association guaranteed by the Constitution (Lirag Textile Mills, Inc.
5
vs. Blanco, 109 SCRA 87 [1981]). However, in the implementation of the
provisions of the CBA, both parties thereto should see to it that no right is
violated or impaired. In the case at bar, while it is true that the CBA between OFC
and the SAMAHAN provided for the dismissal of employees who have not
maintained their membership in the union, the manner in which the dismissal
was enforced left much to be desired in terms of respect for the right of
petitioners to procedural due process.
In the first place, the union has a specific provision for the permanent or
temporary "expulsion" of its erring members in its constitution and by-laws
("saligang batas at alituntunin"). Under the heading membership and removal
("pag-aanib at pagtitiwalag"), it states:
Sec. 4. Ang sinumang kasapi ay maaring itwalag (sic)
ng Samahan pangsamantala o tuluyan sa pamamgitan (sic) ng tatlo't ikaapat
(3/4) na bahagi ng dami ng bilang ng Pamunuang Tagapagpaganap. Pagkaraan
lamang sa pandinig sa kanyang kaso. Batay sa sumusunod:
(a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran
ng Samahan.
(b) Sinumang gumawa ng mga bagay na maaaring ikabuwag ng Samahan.
(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o
Doctor's Certificate.
(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.
(e) Sinumang kasapi na natanggal sa kapisanan at gustong sumapi uli ay
magpapanibago ng bilang, mula sa taon ng kanyang pagsapi uli sa Samahan.
(Underscoring supplied; Ibid., p. 177).
No hearing ("pandinig") was ever conducted by the SAMAHAN to look into
petitioners' explanation of their moves to oust the union leadership under
Capitle, or their subsequent affiliation with FEDLU. While it is true that
petitioners' actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own
constitution and by-laws by giving petitioners an opportunity to air their side
and explain their moves. If, after an investigation the petitioners were found to
have violated union rules, then and only then should they be subjected to proper
disciplinary measures.
Here lies the distinction between the facts of this case and that of Cariño vs.
NLRC (185 SCRA 177 [1990]) upon which the Solicitor General heavily relies in
supporting the stand of petitioners. In Cariño, the erring union official was given
the chance to answer the complaints against him before an investigating
committee created for that purpose. On the other hand, herein petitioners were
not given even one opportunity to explain their side in the controversy. This
procedural lapse should not have been overlooked considering the union
security provision of the CBA.
What aggravated the situation in this case is the fact that OFC itself took for
granted that the SAMAHAN had actually conducted an inquiry and considered
the CBA provision for the closed shop as self-operating that, upon receipt of a
notice that some members of the SAMAHAN had failed to maintain their
membership in good standing in accordance with the CBA, it summarily
dismissed petitioners. To make matters worse, the labor arbiter and the NLRC
shared the same view in holding that "(t)he matter or question, therefore, of
determining why and how did complainants fail to retain membership in good
standing is not for the company to inquire via formal investigation" (pp. 87 &
135, Rollo). In this regard, the following words of my learned brother, Mr. Justice
Feliciano, in the Resolution in Cariño are apt:
4. Turning now to the involvement of the Company in the dismissal of
petitioner Cariño, we note that the Company upon being formally advised in
writing of the expulsion of petitioner Cariño from the Union, in turn simply
issued a termination letter to Cariño, the termination being made effective the
very next day. We believe that the Company should have given petitioner Cariño
an opportunity to explain his side of the controversy with the Union.
Notwithstanding the Union's Security Clause in the CBA, the Company should
have reasonably satisfied itself by its own inquiry that the Union had not been
merely acting arbitrarily and capriciously in impeaching and expelling petitioner
Cariño…
x x x warranted cases, it frowns upon arbitrariness as when employees are not
x x x
x x x done for it unduly exposed itself to a charge of unfair labor practice for
5. We conclude that the Company had failed to accord to petitioner Cariño the
latter's right to procedural due process. The right of an employee to be informed
of the charges against him and to reasonable opportunity to present his side in a
controversy with either the Company or his own Union, is not wiped away by a
Union Security Clause or a Union Shop Clause in a CBA. An employee is entitled
to be protected not only from a company which disregards his rights but also
from his own Union the leadership of which could yield to the temptation of swift
and arbitrary expulsion from membership and hence dismissal from his job. (pp.
186 & 189.)
The need for a company investigation is founded on the consistent ruling of this
Court that the twin requirements of notice and hearing which are essential
6
elements of due process must be met in employment-termination cases. The
employee concerned must be notified of the employer's intent to dismiss him and
of the reason or reasons for the proposed dismissal. The hearing affords the
employee an opportunity to answer the charge or charges against him and to
defend himself therefrom before dismissal is effected (Kwikway Engineering
Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202 SCRA 7 [1991]).
Observance to the letter of company rules on investigation of an employee about
to be dismissed is not mandatory. It is enough that there is due notice and
hearing before a decision to dismiss is made (Mendoza vs. NLRC, 195 SCRA 606
[1991]). But even if no hearing is conducted, the requirement of due process
would have been met where a chance to explain a party's side of the controversy
had been accorded him (Philippine Airlines, Inc. vs. NLRC, 198 SCRA 748 [1991]).
If an employee may be considered illegally dismissed because he was not
accorded fair investigation (Hellenic Philippine Shipping vs. Siete, 195 SCRA 179
[1991]), the more reason there is to strike down as an inexcusable and disdainful
rejection of due process a situation where there is no investigation at all
(See: Colegio del Sto. Niño vs. NLRC, 197 SCRA 611 [1991]; Artex Development
Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for the observance of an
employee's right to procedural due process in termination cases cannot be
overemphasized. After all, one's employment, profession, trade, or calling is a
"property right" and the wrongful interference therewith gives rise to an
actionable wrong (Callanta vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]).
Verily, a man's right to his labor is property within the meaning of constitutional
guarantees which he cannot be deprived of without due process (Batangas
Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).
While the law recognizes the right of an employer to dismiss employees in
accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651 [1990]). Thus, the
prerogatives of the OFC to dismiss petitioners should not have been whimsically
dismissing petitioners in line with the closed shop provision of the CBA, without
a proper hearing (Tropical Hut Employees' Union-CGW vs. Tropical Hut Food
Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co., Inc.
(BISCOM) vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700
[1983]). Neither can the manner of dismissal be considered within the ambit of
managerial prerogatives, for while termination of employment is traditionally
considered a management prerogative, it is not an absolute prerogative subject
as it is to limitations founded in law, the CBA, or general principles of fair play
and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Under Rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa
Blg. 130, the OFC and the SAMAHAN should solidarily indemnify petitioners for
the violation of their right to procedural due process (Great Pacific Life
Assurance Corporation vs. NLRC, 187 SCRA 694 [1990], citing Wenphil vs. NLRC,
170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be
imposed only where the termination of employment is justified and not when the
dismissal is illegal as in this case where the damages are in the form of back
wages.
As earlier discussed, petitioners' alleged act of sowing disunity among the
members of the SAMAHAN could have been ventilated and threshed out through
a grievance procedure within the union itself. But resort to such procedure was
not pursued. What actually happened in this case was that some members,
including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle
due to the latter's alleged inattention to petitioners' demands for the
implementation of the P25-wage increase which took effect on July 1, 1989. The
intraunion controversy was such that petitioners even requested the FFW to
intervene to facilitate the enforcement of the said wage increase (Petition, p. 54;
p. 55, Rollo).
Petitioners sought the help of the FEDLU only after they had learned of the
termination of their employment upon the recommendation of Capitle. Their
alleged application with federations other than the FFW (Labor Arbiter's
Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications denote that petitioners failed
to maintain in good standing their membership in the SAMAHAN. The SAMAHAN
is a different entity from FFW, the federation to which it belonged. Neither may
it be inferred that petitioners sought disaffiliation from the FFW for petitioners
had not formed a union distinct from that of the SAMAHAN. Parenthetically, the
right of a local union to disaffiliate from a federation in the absence of any
provision in the federation's constitution preventing disaffiliation of a local
union is legal (People's Industrial and Commercial Employees and Workers Org.
(FFW) vs. People's Industrial and Commercial Corp., 112 SCRA 440 [1982]). Such
right is consistent with the constitutional guarantee of freedom of association
(Tropical Hut Employees' Union-CGW vs. Tropical Hut Food Market, Inc., 181
SCRA 173 [1990]).
Hence, while petitioners' act of holding a special ejection to oust Capitle, et al.
may be considered as an act of sowing disunity among the SAMAHAN members,
and, perhaps, disloyalty to the union officials, which could have been dealt with
by the union as a disciplinary matter, it certainly cannot be considered as
constituting disloyalty to the union. Faced with a SAMAHAN leadership which
they had tried to remove as officials, it was but a natural act of self-preservation
that petitioners fled to the arms of the FEDLU after the union and the OFC had
tried to terminate their employment. Petitioners should not be made
accountable for such an act.
7
With the passage of Republic Act No. 6715 which took effect on March 21, 1989,
Article 279 of the Labor Code was amended to read as follows:
Security of Tenure. -- In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of
the National Labor Relations Commission, it would seem that the Mercury Drug
Rule (Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56 SCRA 694
[1974]) which limited the award of back wages of illegally dismissed workers to
three (3) years "without deduction or qualification" to obviate the need for
further proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages, allowances, and
other benefits for the entire period he was out of work subject to the rule
enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of
Industrial Relations, 40 SCRA 521 [1971]). Computation of full back wages and
presentation of proof as to income earned elsewhere by the illegally dismissed
employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant
with Section 3, Rule 8 of the 1990 new Rules of Procedure of the National Labor
Relations Commission.
Inasmuch as we have ascertained in the text of this discourse that the OFC
whimsically dismissed petitioners without proper hearing and has thus opened
OFC to a charge of unfair labor practice, it ineluctably follows that petitioners can
receive their back wages computed from the moment their compensation was
withheld after their dismissal in 1989 up to the date of actual reinstatement. In
such a scenario, the award of back wages can extend beyond the 3-year period
fixed by the Mercury Drug Rule depending, of course, on when the employer will
reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No.
6715, has made the employer bear a heavier burden than that pronounced in the
Mercury Drug Rule, but perhaps Republic Act No. 6715 was enacted precisely for
the employer to realize that the employee must be immediately restored to his
former position, and to impress the idea that immediate reinstatement is
tantamount to a cost-saving measure in terms of overhead expense plus
incremental productivity to the company which lies in the hands of the employer.

WHEREFORE, the decision appealed from is hereby SET ASIDE and private
respondents are hereby ordered to reinstate petitioners to their former or
equivalent positions without loss of seniority rights and with full back wages,
inclusive of allowances and other benefits or their monetary equivalent,
pursuant to Article 279 of the Labor Code, as amended by Republic Act. No. 6715.

SO ORDERED.