Nissan Motors Philippines, Inc. vs. Secretary of Labor and Employment

A union officer who knowingly participates in an illegal strike in defiance of an assumption of jurisdiction order may be dismissed, but an ordinary union member cannot be terminated for mere participation absent proof of illegal acts during the strike; the Secretary of Labor is authorized to temper the penalty for striking workers.

A collective bargaining deadlock between Nissan Motor Philippines, Inc. and its rank-and-file union, BANAL-NMPI-OLALIA-KMU, resulted in the filing of four notices of strike with the National Conciliation and Mediation Board. The first notice stemmed from the suspension of approximately 140 employees following a disruptive protest over the demand for early payment of the 13th-month pay. The second notice arose from a CBA deadlock involving economic and non-economic issues. Upon the company's petition, the Secretary of Labor and Employment assumed jurisdiction over the dispute on August 22, 2001, enjoining any strike, lockout, or slowdown. Despite this order, the union filed subsequent strike notices and engaged in a work slowdown and an actual strike, leading the company to dismiss union officers and members. Concurrently, the company suffered significant financial losses, impacting its capacity to meet the union's economic demands.

• CBA Deadlock and Strike Notices: A collective bargaining deadlock between Nissan Motor and the Union led to the filing of four notices of strike. The first notice (December 4, 2000) alleged unfair labor practice stemming from the suspension of 140 employees who demanded early payment of their 13th-month pay. The second notice (July 24, 2001) arose from a CBA deadlock.
• Assumption of Jurisdiction: On August 22, 2001, the DOLE Secretary assumed jurisdiction over the dispute, expressly enjoining any strike, lockout, or slowdown and directing the parties to cease acts exacerbating the situation.
• Work Slowdown and Strike: Despite the assumption order, the Union filed subsequent strike notices. Production data indicated a greater than 50% drop in output during the fourth week of July 2001, coinciding with the CBA deadlock and the second strike notice. The Union attributed the low production to the launch of a new product line, lack of parts, and forced leaves. The DOLE Secretary rejected these excuses, finding that a concerted work slowdown occurred. On October 1, 2001, the Union staged an actual strike, picketing and blocking company entrances and exits, necessitating the deputization of the PNP to secure the premises.
• Company's Disciplinary Actions: The Company dismissed 19 Union officers and 25 members for defying the assumption order by continuing the slowdown. The Company asserted that due process was observed by issuing notices to explain and notices of dismissal. The Union claimed the dismissals were effected without due process and constituted union busting.
• Company's Financial Condition: The Company presented audited financial statements showing net losses amounting to P1.490 Billion over four years (1997-2000) due to the Asian economic meltdown and limited market share. The Union's economic demands would cost P212 million (a 309.5% increase), while the Company's last offer was P35 million (a 52.5% increase).
• Contempt Incident: Union counsel filed a motion alleging that a CA Justice brought the case with him upon transfer to another division, lending credence to accusations of undue interest. The CA found the imputation baseless and malicious, citing counsel for indirect contempt.

• Dismissal of Striking Workers (Nissan Motor): Nissan Motor argued that all workers who defy an assumption of jurisdiction order lose their employment status, regardless of rank, and that the CA erred in affirming the reinstatement of the 140 rank-and-file members given the Secretary's finding of an illegal strike.
• Economic Awards (Nissan Motor): Nissan Motor contended that the CA erred in awarding economic benefits based on confidential unofficial proposals made during NCMB conciliation, and that the awards were unjustified given the company's confirmed financial distress.
• No Illegal Slowdown (Union): The Union maintained that no overt acts proved a concerted work slowdown or the individual participation of its members, attributing production drops to other factors.
• Due Process and Pari Delicto (Union): The Union argued that the en masse dismissal was effected without due process and that the principle of pari delicto applies because the Company also violated the assumption order by suspending employees and committing unfair labor practices.
• Reinstatement and Backwages (Union): The Union claimed that the 160 dismissed officers and members were entitled to reinstatement and full backwages.
• Contempt Citation (Union): Union counsel asserted that his remarks regarding the CA Justice's transfer of the case were made without malice and stemmed from ignorance of the CA's internal rules on case distribution.

• Validity of Slowdown Finding (Secretary of Labor): The Secretary of Labor maintained that production data and company evidence conclusively established a concerted work slowdown constituting an illegal strike in defiance of the assumption order.
• Distinction Between Officers and Members (Secretary of Labor): The Secretary argued that the law draws a distinction between union officers and ordinary members, authorizing the graduation of penalties and allowing the tempering of consequences for members who did not commit illegal acts.
• Due Process Observed (Nissan Motor): Nissan Motor asserted that due process was observed through the issuance of notices to explain and notices of dismissal to the erring employees.
• Propriety of Economic Awards (Secretary of Labor): The Secretary argued that the economic awards were within her authority to resolve the dispute and promote industrial peace.
• Contempt (Court of Appeals): The CA argued that counsel's imputation of undue interest against a sitting justice was baseless, malicious, and disrespectful, warranting the penalty for indirect contempt.

• Liability for Illegal Strike: Whether the Union engaged in an illegal work slowdown in defiance of the assumption of jurisdiction order and whether the Company's actions contributed to the volatile situation.
• Penalty for Union Officers vs. Members: Whether ordinary union members may be dismissed for mere participation in an illegal strike absent proof of illegal acts, and whether the Secretary of Labor may temper the penalty of dismissal.
• Due Process in Dismissal: Whether the Company observed procedural due process in dismissing the Union officers and members.
• Confidentiality of Conciliation Information: Whether the DOLE Secretary properly based economic awards on confidential information given during NCMB conciliation proceedings.
• Gratuity/Signing Bonus: Whether a gratuity bonus may be awarded in lieu of a signing bonus when the CBA was not concluded amicably and goodwill no longer exists.
• Contempt: Whether union counsel's remarks constituted indirect contempt.

• Liability for Illegal Strike: The factual determination of the DOLE Secretary, as affirmed by the CA, that the Union engaged in an illegal work slowdown and strike is binding. Production data showing a greater than 50% drop belied the Union's excuses. However, the Company was not entirely without fault, as its en masse suspension and dismissal of employees exacerbated the volatile situation despite the injunction against acts that would add fire to the dispute.
• Penalty for Union Officers vs. Members: The dismissal of union officers was sustained because they knowingly participated in the illegal strike. However, the dismissal of ordinary union members was recalled because mere participation in an illegal strike, without proof of the commission of illegal acts, does not warrant termination. The Secretary of Labor is authorized to temper the penalty, here imposing a one-month suspension, justified by the fact that the members reported for work (negating abandonment), merely followed orders, and did not commit illegal acts.
• Due Process in Dismissal: Due process was observed. Company records showed that erring employees were asked to explain their defiant attitude and warned of the consequences before their dismissal was declared and confirmed.
• Confidentiality of Conciliation Information: The DOLE Secretary abused her discretion in basing the salary increase awards on confidential information revealed by the NCMB Administrator, in violation of Article 233 of the Labor Code, which prohibits the use of privileged communications made during conciliation proceedings as evidence.
• Gratuity/Signing Bonus: The award of a gratuity bonus (P3,000.00) was deleted. A signing bonus is premised on goodwill, which was destroyed by the Union's illegal strike and slowdown. There is likewise no basis for converting a signing bonus into gratuity pay, as the latter was never an issue between the parties or part of the Union's demand.
• Contempt: The contempt citation was sustained. Ignorance of the CA's internal rules on case distribution does not excuse counsel's unwarranted and unfounded ascription of interest against a sitting justice, which constituted malicious and disparaging language unbecoming of an officer of the court.

• Distinction Between Union Officers and Members in Illegal Strikes — Under Article 264(a) of the Labor Code, a union officer who knowingly participates in an illegal strike may be declared to have lost employment status. In contrast, an ordinary striking worker or union member cannot be terminated for mere participation in an illegal strike; there must be proof that the member committed illegal acts during the strike. The responsibility of union officers as main players is greater than that of the members.
• Prerogative of the DOLE Secretary to Temper Penalties — The Secretary of Labor and Employment has the authority to temper the consequences of defiance to an assumption of jurisdiction order, such as by imposing suspension rather than dismissal on erring employees, especially where a less drastic penalty is warranted.
• Abandonment of Work — Abandonment means the deliberate, unjustified refusal of an employee to resume employment. The element of abandonment does not obtain when employees engaging in a work slowdown continue to report for work at their usual posts.
• Confidentiality of Conciliation Proceedings — Under Article 233 of the Labor Code, information and statements made at conciliation proceedings are privileged and shall not be used as evidence. Awards based on such confidential information are improper.

• "An ordinary striking worker or union member cannot, as a rule, be terminated for mere participation in an illegal strike; there must be proof that he committed illegal acts during the strike."
• "Where a penalty less punitive would suffice, an employee should not be sanctioned with a consequence so severe."
• "Information and statements made at conciliation proceedings shall be treated as privileged communication and shall not be used as evidence in the Commission."

• Solvic Industrial Corporation vs. NLRC — Followed. Cited for the principle that labor laws frown upon dismissal where a penalty less punitive would suffice.
• PAL vs. Brillantes — Followed. Cited to support the DOLE Secretary's prerogative to temper the penalty for striking workers and to justify leniency towards union members given the employer's own exacerbating acts.
• Union of Filipro Employees vs. Nestle Philippines, Inc., St. Scholastica’s College vs. Torres, Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals — Distinguished. These cases held that workers defying assumption orders may lose employment status, but they involved actual strikes resulting in work stoppage and complete abandonment of employment, unlike the present case where employees engaged in a slowdown and continued reporting for work.
• Association of Independent Union in the Philippines vs. NLRC — Followed. Cited for the holding that the responsibility of union officers in an illegal strike is greater than that of the members, justifying dismissal only for the former.
• Gold City Integrated Port Service, Inc. vs. NLRC — Followed. Reiterated the distinction between union officers and members regarding the penalty of loss of employment status for participating in an illegal strike.

• Article 263(g), Labor Code — Governs the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes in industries indispensable to national interest. The assumption automatically enjoins impending strikes or lockouts and requires striking employees to immediately return to work. Applied to sustain the finding that the Union's work slowdown and strike violated the assumption order.
• Article 264(a), Labor Code — Prohibits strikes or lockouts after the assumption of jurisdiction. Provides that a union officer who knowingly participates in an illegal strike and any worker or officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost employment status. Applied to justify the dismissal of union officers while protecting ordinary members who did not commit illegal acts.
• Article 233, Labor Code — Declares that information and statements made at conciliation proceedings are privileged communications and shall not be used as evidence. Applied to invalidate the DOLE Secretary's economic awards that were based on confidential information revealed by the NCMB Administrator.
• Article 263(c), Labor Code — Prescribes the cooling-off period before the intended date of a strike. Applied to show that the Union's slowdown during the cooling-off period was illegal and destroyed the goodwill necessary for a signing bonus.

Reynato S. Puno (Chairperson), Angelina Sandoval-Gutierrez, Renato C. Corona, Adolfo S. Azcuna