Arellano University Employees and Workers Union vs. Court of Appeals

Under Article 264 of the Labor Code, union officers who knowingly participate in an illegal strike may be declared to have lost their employment status by mere participation therein; however, ordinary workers or union members may only be declared to have lost their employment status if they knowingly participated in the commission of illegal acts during the strike, and not merely by participating in the strike itself.

The case arose from labor disputes between Arellano University, Inc. and its rank-and-file employees represented by the Arellano University Employees and Workers Union. The disputes involved allegations of unfair labor practices, including interference in union activities, union busting, contracting out of services, violations of collective bargaining agreement provisions regarding union dues and benefits, and disputes over the proper divisor for computing daily wages. The situation was complicated by intra-union conflicts, including a petition for audit of union funds filed by union members against their officers.

• The Arellano University Employees and Workers Union (Union), the exclusive bargaining representative of approximately 380 rank-and-file employees of Arellano University, Inc. (University), filed two Notices of Strike with the National Conciliation and Mediation Board (NCMB) on December 12, 1997 and July 16, 1998, charging the University with Unfair Labor Practices including interference in union activities, union busting, contracting out services, violation of CBA provisions regarding union dues and death benefits, and non-implementation of the retirement plan.
• On December 15, 1997, a majority of Union members filed a petition for audit of union funds against the Union officers before the DOLE Regional Director, alleging irregularities in the handling of union funds amounting to P481,117.28.
• On March 11, 1998, the DOLE Regional Director directed Union officers to call a general membership meeting to render accounting of union funds.
• On March 11, 1998, then DOLE Secretary Cresenciano B. Trajano certified the first Notice of Strike for compulsory arbitration to the NLRC, which assigned the case to Labor Arbiter Cristeta D. Tamayo; settlement conferences were held on July 3, 1998, July 17, 1998, and August 11, 1998, but no settlement was reached.
• On August 5, 1998, DOLE Secretary Bienvenido E. Laguesma certified the second Notice of Strike for compulsory arbitration and simultaneously issued a Return-to-Work Order directing strikers to return to work within twenty-four (24) hours.
• The Union staged a strike on August 5, 1998, which continued until August 7, 1998 at approximately 3:00 p.m., despite the Return-to-Work Order having been served on the Union on August 6, 1998.
• The University filed a petition to declare the strike illegal (NLRC-NCR Case No. 00-08-06897-98) on August 24, 1998, which was consolidated with the pending ULP cases and an interpleader case regarding check-off deductions.
• The NLRC, in its Decision dated October 12, 1998, declared the strike illegal and ordered the loss of employment status of all individual respondents (strikers), finding that they knowingly defied the Return-to-Work Order.
• The University submitted photographs showing strikers picketing outside the university premises but failed to identify the specific individuals shown in the photographs.
• The NLRC also ruled that there was no ULP committed by the University in withholding union dues and death benefits, as the University acted in good faith upon the written request of several union members, and that the University's use of 314 days as divisor for computing daily wages (instead of 365 days) was correct and did not constitute diminution of benefits.

• The University violated the Collective Bargaining Agreement by withholding union dues and death benefits, constituting unfair labor practice.
• The strike was valid and legal, and the NLRC erred in declaring it illegal.
• The dismissal of all strikers, including ordinary union members, was improper and excessive.
• Substantial justice should prevail over procedural technicalities, and the Rules should be liberally construed to secure a just disposition of the case.
• The petition for certiorari with the Court of Appeals should be deemed filed on time considering the amended Section 4 of Rule 65.

• The University withheld union dues and death benefits upon the written request of union members who had grievances against the Union and its officers, and deposited the amounts with the DOLE for proper disposition; this constituted good faith compliance with the CBA and did not amount to ULP.
• The strike was illegal because the Union knowingly defied the DOLE Secretary's Return-to-Work Order dated August 5, 1998.
• All strikers, including union officers and members, should be dismissed for participating in an illegal strike.
• The petition for certiorari filed with the Court of Appeals was filed six days beyond the reglementary period under Section 4, Rule 65 of the 1997 Rules of Civil Procedure, as amended by the July 21, 1998 Resolution.

• Procedural: Whether the petition for certiorari filed with the Supreme Court was filed within the reglementary period under Section 4, Rule 65 of the 1997 Rules of Civil Procedure, as amended by A.M. No. 00-2-03-SC, and whether the amendment should be given retroactive application.
• Substantive Issues:
  1. Whether the strike staged by the Union on August 5-7, 1998 was illegal for knowingly defying the DOLE Secretary's Return-to-Work Order.
  2. Whether the dismissal of all strikers (both union officers and ordinary members) was proper under Article 264 of the Labor Code.
  3. Whether the University committed unfair labor practice by withholding union dues and death benefits, and by using 314 days as the divisor in computing daily wages.

• Procedural: The Supreme Court gave retroactive application to the amendment of Section 4, Rule 65 via A.M. No. 00-2-03-SC (effective September 1, 2000), which provides for a 60-day period to file a petition for certiorari from notice of the denial of a motion for reconsideration. The Court held that remedial statutes or modes of procedure, which do not create new rights or take away vested rights but only operate in furtherance of the remedy, are applicable to actions pending and undetermined at the time of their passage. Rather than remand the case to the Court of Appeals, the Supreme Court opted to decide the petition on the merits to forestall further delay.
• Substantive:
  1. The strike was declared illegal because the Union knowingly defied the DOLE Secretary's Return-to-Work Order dated August 5, 1998, which was served on August 6, 1998, yet the Union lifted the strike only on August 7, 1998 at approximately 3:00 p.m.
  2. Regarding the dismissal of strikers, the Court distinguished between union officers and ordinary members under Article 264 of the Labor Code. Union officers who knowingly participate in an illegal strike may be dismissed by mere participation. However, ordinary workers or union members may only be dismissed if they knowingly participated in the commission of illegal acts during the strike; mere participation in an illegal strike is insufficient for dismissal. The University failed to meet the "substantiality of evidence test" because it did not identify the specific workers shown in the photographs of the picket line. Consequently, the dismissal of the seven named union members (Monico Calma, Constancio Bayhonan, Bernardo Sable, Nestor Brinosa, Nanji Macarampat, Eduardo Florague, and Diony S. Lumanta) was set aside, and they were ordered reinstated without backwages, or granted separation pay of one month for every year of service if reinstatement was no longer possible. The dismissal of the union officers was affirmed.
  3. The University did not commit unfair labor practice in withholding union dues and death benefits because it acted in good faith upon the written request of union members and in compliance with the CBA provisions requiring individual check-off authorizations. The use of 314 days as divisor for computing daily wages was correct because Sundays are un-worked and unpaid rest days, while regular and special holidays are paid days, consistent with the "no work, no pay" principle.

• Retroactive Application of Remedial Statutes — Remedial statutes or modes of procedure that do not create new rights or take away vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing, do not come within the purview of the general rule against retroactive operation of statutes. They are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense and to that extent.
• Distinction Between Union Officers and Members in Illegal Strikes — Under Article 264 of the Labor Code, union officers who knowingly participate in an illegal strike may be declared to have lost their employment status by mere participation. In contrast, ordinary workers or union members may only be declared to have lost their employment status if they knowingly participated in the commission of illegal acts during the strike, not merely by participating in the strike itself.
• Substantial Evidence Test in Dismissal Cases — In dismissal cases involving strikers, the employer must meet the substantiality of evidence test by specifically identifying the employees who committed illegal acts during the strike; general allegations or photographs without identification of specific individuals are insufficient to warrant dismissal of ordinary union members.

• "Any union officer who knowingly participates in an 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" — Article 264 of the Labor Code, as quoted and interpreted by the Court.
• "Under the immediately quoted provision, an ordinary striking worker may not be declared to have lost his employment status by mere participation in an illegal strike. There must be proof that he knowingly participated in the commission of illegal acts during the strike."
• "The rule is settled that remedial statutes or modes of procedure, which do not create new rights or take away vested rights but only operate in furtherance of the remedy or confirmation of rights already existing, do not come within the purview of the general rule against the retroactive operation of statutes."

• Borja v. Court of Appeals — Cited for the principle that certiorari cannot be used as a substitute for lost appeal; basis for treating the petition as one for review under Rule 45.
• Association of Independent Unions in the Philippines v. NLRC — Cited for the "substantiality of evidence test" applicable in dismissal cases, requiring specific identification of employees who committed illegal acts.
• Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union and Maranaw Hotels and Resort Corporation v. NLRC — Cited for the doctrine on separation pay equivalent to one month for every year of service when reinstatement is no longer possible.
• Ramatek Philippines, Inc. v. De los Reyes, Pobre v. Court of Appeals, PCI Leasing and Finance, Inc. v. Go Ko, Santiago v. Bergensen D.Y. Philippines, Embassy of the Islamic Republic of Iran v. FOP Corporation, San Luis v. Court of Appeals, Serrano v. Court of Appeals, Pfizer, Inc. v. Galan, and Unity Fishing Development Corp. v. Court of Appeals — Cited as precedents for the retroactive application of the amended Section 4 of Rule 65.

• Article 264 of the Labor Code — Governs the consequences of illegal strikes and the distinction between the liability of union officers and ordinary members; provides that union officers who knowingly participate in illegal strikes and workers/union officers who knowingly participate in illegal acts during strikes may lose employment status.
• Article 261 of the Labor Code — Defines gross violation of the CBA as flagrant and/or malicious refusal to comply with the economic provisions thereof, which is required to constitute unfair labor practice.
• Section 4, Rule 65 of the 1997 Rules of Civil Procedure (as amended by Supreme Court En Banc Resolution dated July 21, 1998 and A.M. No. 00-2-03-SC) — Prescribes the 60-day period for filing petitions for certiorari from notice of judgment or denial of motion for reconsideration.
• Article IV, Sections 1 and 2 of the Collective Bargaining Agreement — Provisions regarding check-off of union dues requiring individual check-off authorizations prior to deduction from salaries.