Employees Union of Bayer Phils. vs. Bayer Philippines, Inc.

An employer commits unfair labor practice when it negotiates and signs a new CBA with a splinter union despite the existence of a valid and subsisting CBA with the duly certified exclusive bargaining agent, as such conduct constitutes a gross violation of the CBA per se — utter disregard of the very existence of the CBA — and does not require proof that the violation pertained to economic provisions.

Petitioner Employees Union of Bayer Philippines (EUBP) was the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines, and an affiliate of the Federation of Free Workers (FFW). A CBA was executed between EUBP and Bayer covering the period January 1, 1997 to December 31, 2001, following an arbitral award by the DOLE Secretary. During the CBA's lifetime, a splinter group led by respondent Avelina Remigio disaffiliated from FFW, reorganized as the Reformed Employees Union of Bayer Philippines (REUBP), and sought recognition from Bayer as the bargaining representative. The ensuing conflict between EUBP and REUBP over union dues and CBA administration gave rise to multiple proceedings before the DOLE, the NLRC, and the courts.

Petitioner Employees Union of Bayer Philippines (EUBP), headed by its president Juanito S. Facundo, was the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines and an affiliate of the Federation of Free Workers (FFW). In 1997, negotiations for a new CBA reached a deadlock after EUBP rejected Bayer's 9.9% wage-increase proposal, prompting a strike and the assumption of jurisdiction by the DOLE Secretary. The Secretary issued an arbitral award ordering execution of a CBA retroactive to January 1, 1997 and effective until December 31, 2001; the CBA was registered with the DOLE-NCR Industrial Relations Division on July 8, 1998.

In November 1997, while the dispute was pending, respondent Avelina Remigio and 27 other union members, without authority from union leaders, accepted Bayer's wage-increase proposal. EUBP's grievance committee reprimanded Remigio and her allies, widening the rift between Facundo's leadership and Remigio's group. On August 3, 1998, during a company-sponsored seminar, Remigio solicited signatures for a resolution to disaffiliate from FFW, rename the union as Reformed Employees Union of Bayer Philippines (REUBP), adopt a new constitution and by-laws, abolish existing officer positions and elect interim officers, and authorize REUBP to administer the CBA. The resolution was signed by 147 of 257 local union members, and a subsequent resolution affirmed it. Both groups sought recognition from Bayer and demanded remittance of union dues. Bayer declined to deal with either group and placed the collected dues in a trust account.

On September 15, 1998, EUBP filed a first ULP complaint against Bayer for non-remittance of union dues. Meanwhile, Facundo sent repeated requests for grievance conferences to discuss Bayer's failure to comply with the CBA, which went unheeded. On February 9, 1999, while the first ULP case was pending, Bayer turned over the collected union dues of ₱254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP. On December 14, 1999, petitioners filed a second ULP complaint against all respondents, later amended to charge organizing a company union, gross violation of the CBA, and violation of the duty to bargain. On the same date, REUBP and Bayer agreed to sign a new CBA. Petitioners sought a restraining order before the NLRC to prevent ratification of the new CBA, but the NLRC dismissed the motion on June 28, 2000, finding the matter to be an intra-union dispute.

On January 26, 2000, the DOLE Regional Director dismissed EUBP's expulsion case against Remigio's group and ordered a referendum to determine which group should be recognized as union officers. EUBP appealed to the BLR, which on June 16, 2000 reversed the Regional Director and ordered Bayer to respect the authority of EUBP's duly elected officers in administering the prevailing CBA. This ruling came too late, as Bayer had already signed a new CBA with REUBP on February 21, 2000, which was ratified by the majority of the bargaining unit. Labor Arbiter Gan dismissed the second ULP complaint on June 2, 2000 for lack of jurisdiction, characterizing the case as involving intra-union disputes under Article 226 of the Labor Code. The NLRC affirmed, and the Court of Appeals likewise sustained the dismissal, additionally holding that since petitioners admitted gross violations of the CBA, the BLR was divested of jurisdiction and the matter should have been referred to the grievance machinery and voluntary arbitrator rather than the Labor Arbiter.

• Unfair Labor Practice: Petitioners contended that the acts of Bayer, Lonishen, and Amistoso in abetting or assisting in the creation of another union constituted unfair labor practice under Article 248(d) of the Labor Code, that negotiating with the splinter union violated Bayer's duty to bargain collectively, and that Bayer's unjustified refusal to process EUBP's grievances and to recognize EUBP as the sole and exclusive bargaining agent were tantamount to unfair labor practice.
• Jurisdiction: Petitioners argued that the subject matter of their complaint pertained to unfair labor practice by the employer, which was within the jurisdiction of the Labor Arbiter and the NLRC, not an intra-union dispute cognizable by the BLR.
• Mootness: Petitioners implicitly contested respondents' assertion that the case had become moot and academic, maintaining their entitlement to relief for the violations committed during the CBA's lifetime.

• Gross Violation Requisites: Respondents Bayer, Lonishen, and Amistoso contended that no unfair labor practice existed because the requisites under Articles 248(1) and 261 of the Labor Code — namely, that the CBA violation be gross and pertain to economic provisions — were not satisfied.
• Jurisdiction: These respondents cited the Labor Arbiter's ruling that the issues should have been ventilated before voluntary arbitrators as provided in Article 261 of the Labor Code.
• Mootness: Bayer, Lonishen, and Amistoso argued that the case had become moot and academic following the lapse of the 1997-2001 CBA and their renegotiation with EUBP for a 2006-2007 CBA, asserting that negotiating with EUBP for the new CBA constituted recognition of EUBP as the certified bargaining agent.
• Real Party in Interest: Respondents Remigio and Villareal pointed out that the case against them should be dismissed as they were not real parties in interest in the ULP complaint against Bayer, and that no specific or material acts were imputed against them.

• Jurisdiction over the Second ULP Complaint: Whether the Labor Arbiter and the NLRC had jurisdiction over the second ULP complaint, or whether the case involved an intra-union dispute cognizable exclusively by the Bureau of Labor Relations.
• Unfair Labor Practice Liability: Whether the act of Bayer's management in dealing and negotiating with Remigio's splinter group despite a validly existing CBA with EUBP constituted unfair labor practice.
• Dismissal as Against Remigio and Villareal: Whether the complaint was properly dismissed as against respondents Remigio and Villareal.
• Mootness: Whether the case had become moot and academic due to the lapse of the 1997-2001 CBA and Bayer's subsequent renegotiation with EUBP for a 2006-2007 CBA.
• Damages: Whether petitioners were entitled to the damages prayed for.

• Jurisdiction over the Second ULP Complaint: Yes, as to Bayer, Lonishen, and Amistoso. The dismissal of the second ULP complaint was erroneous because the issue raised — whether the employer was liable for unfair labor practice in light of its existing CBA with EUBP — was within the jurisdiction of the Labor Arbiter and the NLRC, not the BLR, as it did not fall under any circumstance constituting an intra-union dispute.
• Unfair Labor Practice Liability: Yes. Bayer, Lonishen, and Amistoso were liable for unfair labor practice. An employer's negotiation with a splinter union despite a valid and existing CBA with the duly certified bargaining agent constitutes a gross violation of the CBA per se, requiring no proof that the violation pertained to economic provisions.
• Dismissal as Against Remigio and Villareal: Yes. The complaint was properly dismissed as against Remigio and Villareal, the issues against them being intra-union in character under Section 1(n) of DOLE Department Order No. 40-03, and thus outside the jurisdiction of the Labor Arbiter and the NLRC.
• Mootness: No. The case was not rendered moot by the lapse of the 1997-2001 CBA or Bayer's subsequent renegotiation with EUBP, as a legitimate labor organization does not abandon pending claims by returning to the negotiating table.
• Damages: Partially granted. Moral and exemplary damages were denied, a corporation or labor organization being an artificial person incapable of experiencing mental anguish. Nominal damages of ₱250,000.00 and attorney's fees of 10% of the monetary award were awarded, together with remittance of the collected union dues of ₱254,857.15.

• Jurisdiction over the Second ULP Complaint: The Court examined the enumeration of inter/intra-union disputes under Sections 1 and 2, Rule XI of DOLE Department Order No. 40-03 and found that none of the issues raised by petitioners fell under any of the enumerated circumstances. Petitioners did not seek a determination of whether the Facundo group or the Remigio group was the true set of union officers; rather, the issue was the validity of the employer's acts in light of the existing CBA with EUBP. The question of whether the employer was liable for unfair labor practice was within the jurisdiction of the Labor Arbiter and the NLRC. The dismissal of the second ULP complaint was therefore erroneous.

• Unfair Labor Practice Liability: Article 253 of the Labor Code mandates that neither party shall terminate or modify a CBA during its lifetime, and that both parties must keep the status quo and continue the terms and conditions of the existing agreement until a new agreement is reached. A CBA entered into by a duly certified bargaining agent and the employer becomes the law between them. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified exclusive bargaining agent, the employer indubitably abandons its recognition of the latter and terminates the entire CBA. While Silva vs. National Labor Relations Commission held that for a ULP case to be cognizable by the Labor Arbiter, the complaint must show prima facie both gross violation of the CBA and violation of its economic provisions, this requirement does not apply to violations that are gross per se, such as utter disregard of the very existence of the CBA itself. Respondents could not claim good faith, as they knew Facundo's group represented the duly elected officers of EUBP, were aware that the DOLE Secretary had recognized EUBP's mandate, and knew of the pendency of the intra-union dispute, yet still turned over union dues to REUBP and dealt with Remigio. The totality of their conduct reeked of anti-EUBP animus.

• Dismissal as Against Remigio and Villareal: The ULP complaint could not prosper against Remigio and Villareal because the issues against them essentially involved an intra-union dispute under Section 1(n) of DOLE Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC would necessarily have to touch on the propriety of their disaffiliation and the legality of the establishment of REUBP — issues outside their jurisdiction. The dismissal was therefore validly made, but only with respect to these two respondents.

• Mootness: A legitimate labor organization cannot be construed to have abandoned its pending claim against the employer by returning to the negotiating table to fulfill its duty to represent its members, absent an express waiver or compromise in subsequent negotiations. To hold otherwise would subject industrial peace to the precondition that previous claims must first be waived before negotiations may resume, contrary to the public policy of affording protection to labor and encouraging scheming employers to commit unlawful acts without fear of sanction. Bayer's subsequent recognition of EUBP for the 2006-2007 CBA did not obliterate the fact that management had withdrawn recognition of EUBP and supported REUBP during the implementation of the 1997-2001 CBA.

• Damages: As a general rule, a corporation — and by analogy a labor organization, being an artificial person — has no feelings, emotions, or senses and cannot experience physical suffering or mental anguish; moral damages were therefore denied. Exemplary damages were likewise denied, as Article 2234 of the Civil Code requires entitlement to moral, temperate, or compensatory damages before exemplary damages may be considered. However, nominal damages of ₱250,000.00 were awarded pursuant to Article 2221 of the Civil Code and the ruling in De La Salle University vs. De La Salle University Employees Association (DLSUEA-NAFTEU), to vindicate the violated right of petitioners. Attorney's fees of 10% of the monetary award were also deemed proper, along with remittance of the collected union dues of ₱254,857.15.

• CBA as Law Between Parties — A CBA entered into by a legitimate labor organization duly certified as the exclusive bargaining representative and the employer becomes the law between them, with the force and effect of law during its duration. Compliance with its terms and conditions is mandated by express policy of law to afford protection to labor and promote industrial peace. The Court applied this doctrine to hold that Bayer was behooved to observe the CBA's terms bearing on union dues and representation, and that its gross violation constituted unfair labor practice.

• Gross Violation of CBA Per Se — While Silva vs. NLRC requires that a ULP complaint based on CBA violation show both gross violation and violation of economic provisions for the Labor Arbiter to have jurisdiction, this requirement does not apply to violations that are gross per se — such as utter disregard of the very existence of the CBA itself. When an employer negotiates with a splinter union despite a valid and existing CBA with the duly certified bargaining agent, the employer abandons its recognition of the latter and terminates the entire CBA, constituting unfair labor practice without need to prove violation of economic provisions.

• Intra-Union Disputes — Intra-union disputes refer to conflicts between and among union members, including grievances arising from violation of rights and conditions of membership, violation of or disagreement over the union's constitution and by-laws, or disputes arising from chartering or disaffiliation. Under Sections 1 and 2, Rule XI of DOLE Department Order No. 40-03, these are cognizable by the BLR, not the Labor Arbiter or NLRC. The Court applied this to dismiss the complaint against Remigio and Villareal, as ruling on their acts would necessarily require adjudicating the propriety of disaffiliation and the legality of REUBP's establishment.

• Non-Abandonment of Claims by Resumption of Bargaining — A legitimate labor organization does not abandon its pending claim against the employer by returning to the negotiating table to fulfill its duty to represent its members, absent an express waiver or compromise. To hold otherwise would subject industrial peace to the precondition that previous claims must first be waived before negotiations may resume, contrary to public policy favoring labor protection.

• No Moral Damages for Juridical Persons — A corporation, and by analogy a labor organization, being an artificial person with no feelings, emotions, or senses, cannot experience physical suffering or mental anguish and therefore cannot be awarded moral damages. Exemplary damages are likewise unavailable absent entitlement to moral, temperate, or compensatory damages under Article 2234 of the Civil Code.

• "When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire CBA." — This passage articulates the ratio decidendi for finding Bayer liable for unfair labor practice, establishing that such conduct is a gross violation per se not requiring proof of violation of economic provisions.

• "A legitimate labor organization cannot be construed to have abandoned its pending claim against the management/employer by returning to the negotiating table to fulfill its duty to represent the interest of its members, except when the pending claim has been expressly waived or compromised in its subsequent negotiations with the management." — This passage defines the doctrine of non-abandonment of claims by resumption of bargaining, rejecting the mootness argument and protecting labor's right to pursue pending claims without forfeiting representation duties.

• "If such behavior would be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be honored or be relied upon." — This passage explains the policy rationale underlying the duty to bargain collectively under Article 253, emphasizing the centrality of CBA stability to industrial peace.

• Silva vs. National Labor Relations Commission, G.R. No. 110226, June 19, 1997, 274 SCRA 159 — Established the requirement that for a ULP case based on CBA violation to be cognizable by the Labor Arbiter, the complaint must show prima facie both gross violation of the CBA and violation of its economic provisions. The Court distinguished this case, holding that the Silva requirement does not apply to gross violations per se, such as utter disregard of the CBA's existence.

• De La Salle University vs. De La Salle University Employees Association (DLSUEA-NAFTEU), G.R. No. 177283, 584 SCRA 592 — Cited as basis for the award of nominal damages, recognizing that an employer's violation of a CBA entitles the aggrieved labor organization to nominal damages to vindicate its violated rights.

• Cebu Seamen's Association, Inc. vs. Ferrer-Calleja, 212 SCRA 51 — Cited by the Labor Arbiter for the proposition that when the issue calls for determination of which of two groups within a union is entitled to union dues, the NLRC cannot take cognizance. The Supreme Court's ruling confined this principle to the intra-union aspect of the dispute (Remigio and Villareal) while sustaining jurisdiction over the ULP claim against the employer.

• Flight Attendants and Stewards Association of the Philippines vs. Philippine Airlines, Inc., G.R. No. 178083, July 22, 2008, 559 SCRA 252 — Cited for the doctrine that a corporation, as an artificial person, cannot experience physical suffering or mental anguish and therefore cannot be awarded moral damages; applied by analogy to labor organizations.

• Del Monte Philippines, Inc. vs. Saldivar, G.R. No. 158620, October 11, 2006, 504 SCRA 192 — Cited in support of the principle that compliance with CBA terms is mandated by express policy of law primarily to afford protection to labor and promote industrial peace.

• Article 253, Labor Code — Provides that where a CBA exists, neither party shall terminate or modify it during its lifetime; either party may serve written notice to terminate or modify at least 60 days prior to expiration; both parties must keep the status quo and continue the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached. Applied to hold that Bayer's negotiation with REUBP during the CBA's lifetime violated this provision.

• Article 248, Labor Code — Defines unfair labor practices of employers, including Article 248(d) (to initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization) and Article 248(i) (to violate a collective bargaining agreement). Petitioners invoked Article 248(d); the Court found liability under the broader framework of gross CBA violation constituting ULP.

• Article 261, Labor Code — Provides that violations of a CBA, except those gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the CBA; defines gross violations as flagrant and/or malicious refusal to comply with the economic provisions of the agreement. The Court held this provision inapplicable to gross violations per se, such as utter disregard of the CBA's existence.

• Article 226, Labor Code — Grants the Bureau of Labor Relations and Labor Relations Divisions original and exclusive authority over inter-union and intra-union conflicts, except those arising from CBA interpretation or implementation. Applied by the Labor Arbiter and NLRC to dismiss the complaint; the Supreme Court held this provision did not apply to the ULP claim against the employer.

• Sections 1 and 2, Rule XI, DOLE Department Order No. 40-03, Series of 2003 — Enumerate circumstances constituting inter/intra-union disputes and other related labor relations disputes. Applied to determine that the issues against Bayer did not constitute an intra-union dispute, while the issues against Remigio and Villareal did under Section 1(n).

• Article 2221, Civil Code — Defines nominal damages as adjudicated to vindicate or recognize a violated right, not to indemnify for loss. Applied as basis for the ₱250,000.00 nominal damages award.

• Article 2234, Civil Code — Provides that exemplary damages may be considered only when the plaintiff is entitled to moral, temperate, or compensatory damages. Applied to deny exemplary damages, moral damages having been properly denied.

Conchita Carpio Morales (Chairperson), Arturo D. Brion, Lucas P. Bersamin, and Maria Lourdes P. A. Sereno concurred with the decision. No separate concurring opinions were noted.