Insular Life Assurance Co., Ltd. Employees Association-NATU vs. Insular Life Assurance Co., Ltd.

An employer commits unfair labor practice under the Industrial Peace Act when, during a lawful strike and while a union serves as the certified bargaining representative, it sends individual letters to striking employees containing promises of special benefits or threats of replacement to induce them to abandon the strike and return to work, as such acts constitute illegal individual bargaining, strike-breaking, and interference with the employees' right to collective bargaining; employees dismissed as a result of such ULP are entitled to reinstatement with back wages computed from the date of the employer's refusal to reinstate.

The case arose from a labor dispute during the 1957-1958 collective bargaining negotiations between three labor unions affiliated with the National Association of Trade Unions (NATU) and their employers, the Insular Life Assurance Co., Ltd. and the FGU Insurance Group. The dispute was set against the backdrop of the unions' recent disaffiliation from the Federation of Free Workers (FFW), the employers' hiring of the unions' former legal counsels into key management positions, and a deadlock over union security clauses. The conflict escalated into a strike, during which the employers engaged in tactics that the Court ultimately characterized as a comprehensive scheme to destroy unionism within the companies.

• The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group Workers & Employees Association-NATU, and Insular Life Building Employees Association-NATU (the Unions) were formerly affiliated with the Federation of Free Workers (FFW) before disaffiliating to join the National Association of Trade Unions (NATU).
• Two former lawyers of the Unions, Felipe Enaje and Ramon Garcia, left the FFW and were subsequently hired by the Companies; Garcia became assistant corporate secretary and legal assistant with a P900 monthly salary (P600 more than his FFW salary), while Enaje became personnel manager and chairman of the Companies' negotiating panel in collective bargaining with the Unions.
• In September 1957, the Unions submitted proposals for modified renewal of their collective bargaining agreements, with the parties agreeing to make benefits retroactive to October 1, 1957.
• Negotiations stalled over the union shop demand; the Companies refused to make counter-proposals unless the Unions first dropped this demand, promising money benefits only if the demand was abandoned.
• After the Unions dropped the union shop demand in April 1958, the Companies still refused to make counter-proposals and instead demanded that the Unions submit a "workable formula" justifying their economic demands based on the Companies' financial position.
• During the pendency of conciliation conferences, the Companies reclassified eighty-seven (87) unionists as supervisors without increase in salary or responsibility, effectively compelling them to resign from the Unions.
• On May 20, 1958, the Unions went on strike and picketed the Insular Life Building at Plaza Moraga.
• On May 21, 1958, the Companies, through respondent Jose M. Olbes, sent individual registered special delivery letters (Exhibit A) to each striker, promising "comfortable cots," "free coffee and occasional movies," overtime pay, and arrangements for their families if they returned to work voluntarily.
• On May 23, 1958, management personnel, including Garcia and Vicente Abella, attempted to break through the picket lines, resulting in injuries to both picketers and management men; the Companies subsequently filed criminal charges against the strikers and obtained a writ of preliminary injunction from the Court of First Instance on May 31, 1958.
• On the same day the injunction was issued, the Companies sent another individual letter (Exhibit B) to the strikers, stating that positions could not be held open for long and threatening that if they did not report for work by June 2, 1958, they would be replaced.
• On June 2, 1958, the strikers reported back for work, but the Companies required them to secure clearances from the City Fiscal's Office and undergo screening by a management committee that included Enaje and Garcia.
• The screening committee initially refused readmission to 63 strikers with pending criminal charges, while immediately readmitting non-strikers who faced identical pending charges without requiring clearances.
• After most strikers secured clearances, the Companies still refused to readmit thirty-four (34) union officials and active members, alleging they committed "acts inimical to the interest of the respondents," without specifying the acts; twenty-four were later dismissed retroactively as of June 2, 1958, with separation pay, while ten were never formally dismissed but were not readmitted.
• The Unions filed a complaint for unfair labor practice on July 29, 1958, charging interference with concerted action and discrimination in readmission.

• The Companies committed unfair labor practice by sending individual letters (Exhibits A and B) directly to strikers, bypassing the Unions as the certified bargaining representatives, which constituted illegal individual bargaining and interference with the right to collective bargaining.
• The Companies discriminated against striking union members in the matter of readmission after the strike by requiring clearances from the fiscal's office for strikers while immediately readmitting non-strikers with similar pending criminal charges, and by singling out active union officials for refusal.
• The Companies violated due process by dismissing union officials and members without investigation and without giving them an opportunity to present their side regarding activities undertaken in the legitimate exercise of the right to strike.
• The dismissed employees were entitled to reinstatement with full back wages from June 2, 1958, to the date of actual reinstatement because the strike was caused by the Companies' unfair labor practices and the subsequent refusal to reinstate was discriminatory.

• The sending of letters Exhibits A and B constituted a legitimate exercise of freedom of speech protected by the Constitution, not unfair labor practice.
• The strike was an economic strike based on a deadlock in collective bargaining, not caused by unfair labor practices, and therefore the Companies had the right to hire replacements and refuse reinstatement.
• The refusal to readmit certain strikers was based on their commission of acts inimical to the Companies' interests, including pending criminal charges for misconduct during the picket line incidents, and not on their union membership or activity.
• The dismissal of employees was justified under Republic Act 1052, which allows termination upon payment of separation pay, and the acceptance of such pay by the employees constituted a valid waiver of their right to reinstatement.
• The Court of Industrial Relations' factual findings were supported by substantial evidence and should not be disturbed on certiorari.

• Procedural Issues:
  • Whether the Supreme Court could review the factual findings of the Court of Industrial Relations in a certiorari proceeding.
  • Whether the respondent Judge of the Court of Industrial Relations and counsel for the Companies should be cited for contempt for allegedly misquoting a Supreme Court decision in the lower court's decision and brief.
• Substantive Issues:
  • Whether the Companies committed unfair labor practice by individually bargaining with striking employees through the letters marked Exhibits A and B.
  • Whether the Companies committed unfair labor practice by discriminating against striking union members in the readmission of employees after the strike.
  • Whether the Companies committed unfair labor practice by dismissing union officials and members without investigation and opportunity to be heard.
  • Whether the dismissed employees are entitled to reinstatement with back wages, and from what date such back wages should be computed.

• Procedural:
  • The Supreme Court is not precluded from reviewing the factual findings of the Court of Industrial Relations when such findings are not supported by substantial and credible proof, as the Court is authorized to "dig deeper" into the factual milieu in certiorari proceedings under Rule 65.
  • The request to cite the respondent Judge and counsel for contempt is denied; the misquotation of the Supreme Court decision in Lopez, Sr., et al. v. Chronicle Publication Employees Ass'n was due to clerical ineptitude rather than a deliberate attempt to mislead, but the Judge and counsel are admonished to be more careful in citing jurisprudence verbatim in the future.
• Substantive:
  • Individual Bargaining as ULP: The Companies committed unfair labor practice under Section 4(a)(1) of Republic Act 875 by sending individual letters to strikers containing promises of benefits (Exhibit A) and threats of replacement (Exhibit B), bypassing the Unions as the certified bargaining representatives. Individual solicitation of employees during a strike undermines the union's status as the exclusive bargaining agent and constitutes interference with the right to collective bargaining; such acts are not protected by free speech because they contain promises of benefits and threats of reprisal.
  • Totality of Conduct: The letters must be evaluated under the "totality of conduct doctrine," which requires assessing the culpability of the employer's remarks against the background of collateral circumstances, including the hiring of former union lawyers into management, the reclassification of employees to compel resignation from unions, and the refusal to bargain in good faith. These circumstances reveal a scheme to break the strike and destroy unionism.
  • Discrimination in Readmission: The Companies committed unfair labor practice under Section 4(a)(4) of Republic Act 875 by discriminating against strikers in the readmission process. Non-strikers with pending criminal charges were immediately readmitted without clearances, while strikers with identical charges were required to secure clearances and were subsequently refused readmission based on their union activity and militancy. Delegating the screening power to employees hostile to the strikers (Garcia and Abella) also constituted discrimination.
  • Dismissal Without Due Process: The dismissal of union officials and members without prior investigation and opportunity to present their side constituted unfair labor practice. The grounds cited—"acts inimical to the interest"—were merely the criminal charges that were subsequently dismissed, and the alleged abandonment of work was contradicted by evidence that the employees reported for duty on June 2, 1958.
  • Reinstatement and Back Wages: Because the strike was induced by the Companies' unfair labor practices, the dismissed employees are entitled to reinstatement to their former or comparable positions with back wages. Back wages are computed from June 2, 1958 (the date of the discriminatory refusal to reinstate), not from the start of the strike, subject to deduction for earnings obtained elsewhere during the period of dismissal to prevent unjust enrichment.

• Individual Bargaining as Unfair Labor Practice — Defined as the act of an employer negotiating or attempting to negotiate with employees individually during a strike, bypassing the certified union as the exclusive bargaining representative. This constitutes interference with the right to collective bargaining under Section 4(a)(1) of the Industrial Peace Act because it tends to undermine concerted activity and is equivalent to strike-breaking or union-busting.
• Totality of Conduct Doctrine — A principle requiring that the culpability of an employer's remarks or actions be evaluated not only on their intrinsic implications but also appraised against the background of and in conjunction with collateral circumstances, such as the history of the employer's labor relations, anti-union bias, and connection with an established plan of coercion or interference.
• Discrimination in Rehiring — The principle that an employer commits unfair labor practice when it refuses to reinstate strikers while reinstating non-strikers who are similarly situated (e.g., having pending criminal charges), or when it delegates the power of reinstatement to employees hostile to the strikers, or when it differentiates between active and less active unionists based on their militancy.
• Limitation on Free Speech in Labor Relations — The constitutional protection of free speech does not extend to employer expressions that contain promises of benefits, threats of reprisal, or coercion directed at employees to abandon their union or strike, as such expressions constitute unfair labor practice.
• Reinstatement with Back Pay in ULP-Induced Strikes — Where a strike is induced or provoked by an employer's unfair labor practices, strikers who are discriminatorily dismissed or refused reinstatement are entitled to reinstatement with back wages computed from the date of the discriminatory act (refusal to reinstate), not from the commencement of the strike, subject to mitigation of damages for earnings elsewhere.

• "The act of an employer in notifying absent employees individually during a strike following unproductive efforts at collective bargaining that the plant would be operated the next day and that their jobs were open for them should they want to come in has been held to be an unfair labor practice, as an active interference with the right of collective bargaining through dealing with the employees individually instead of through their collective bargaining representatives."
• "Indeed, it is an unfair labor practice for an employer operating under a collective bargaining agreement to negotiate or to attempt to negotiate with his employees individually in connection with changes in the agreement. And the basis of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative."
• "The free speech protection under the Constitution is inapplicable where the expression of opinion by the employer or his agent contains a promise of benefit, or threats, or reprisal."
• "Interference constituting unfair labor practice will not cease to be such simply because it was susceptible of being thwarted or resisted, or that it did not proximately cause the result intended. For success of purpose is not, and should not, be the criterion in determining whether or not a prohibited act constitutes unfair labor practice."
• "Delayed reinstatement is a form of discrimination in rehiring, as is having the machinery of reinstatement in the hands of employees hostile to the strikers."

• NLRB v. Montgomery Ward & Co. — Cited as precedent that individual notification to employees during a strike constitutes unfair labor practice as interference with collective bargaining.
• Melo Photo Supply Corporation v. National Labor Relations Board — Cited for the principle that the employer remains obligated to bargain with the union even during a strike, making individual bargaining prohibited.
• NLRB v. Clearfield Cheese Co., Inc. — Cited for the rule that employer speech containing promises of benefits is not protected by free speech provisions.
• Cromwell Commercial Employees and Laborers Union v. Court of Industrial Relations — Cited for the doctrine on computation of back wages for discriminatorily dismissed employees (from date of discriminatory act, not start of strike).
• Philippine Air Lines, Inc. v. Philippine Air Lines Employees Association — Cited for the principle that dismissal of only the leaders of a strike constitutes discrimination and unfair labor practice.
• Republic Steel Corp. v. NLRB — Cited for the rule that minor disorders and violence incidental to a strike do not deprive strikers of the right to reinstatement.
• NLRB v. Mackay Radio & Telegraph Co. — Cited for the principle that failure to report for work immediately after a strike does not constitute abandonment barring reinstatement if the employer discriminates in rehiring.

• Republic Act No. 875 (Industrial Peace Act), Section 4(a)(1) — Prohibits employer interference with, restraint, or coercion of employees in the exercise of their right to self-organization and collective bargaining; cited as the statutory basis for finding individual bargaining to be unfair labor practice.
• Republic Act No. 875 (Industrial Peace Act), Section 4(a)(4) — Prohibits discrimination against employees to encourage or discourage membership in any labor organization; cited as the basis for finding discriminatory readmission practices to be unfair labor practice.
• Republic Act No. 875 (Industrial Peace Act), Section 9(a)(5) — Guarantees the right of striking employees to give publicity to the facts involved in any labor dispute; cited to protect unionists' right to discuss employer expenditures during the dispute.
• Republic Act No. 1052 — Governs termination of employment by notice or payment; cited and distinguished to hold that it cannot justify dismissals prohibited by law, such as those for union activities.

• N/A (Justice Zaldivar took no part)