Philippine Diamond Hotel and Resort, Inc. vs. Manila Diamond Hotel Employees Union

A union that is not the certified exclusive bargaining representative of the majority of employees in an appropriate bargaining unit cannot demand collective bargaining from the employer, and the employer's refusal to bargain with such union does not constitute unfair labor practice; a strike staged on such ground is illegal, and union officers who knowingly participate may be declared to have lost their employment status, while ordinary members may not be dismissed absent proof that they individually committed illegal acts during the strike.

The Manila Diamond Hotel Employees Union was registered with the Department of Labor and Employment on August 19, 1996, but its petition for certification election before the DOLE-NCR was denied for failure to comply with legal requirements under Section 2, Rule V, Book V of the Rules and Regulations Implementing the Labor Code, as it was seen to fragment the hotel's employees. The union thereafter sought to bargain collectively on behalf of its members only, despite not being certified as the exclusive bargaining representative. The hotel refused to recognize the union for collective bargaining purposes, prompting the union to file a notice of strike and eventually stage a strike on November 29, 1997.

The Manila Diamond Hotel Employees Union was registered with the Department of Labor and Employment on August 19, 1996. On November 11, 1996, the union filed a Petition for Certification Election before the DOLE-NCR seeking certification as the exclusive bargaining representative of its members. The DOLE-NCR denied the petition, finding that the union failed to comply with legal requirements under Section 2, Rule V, Book V of the Rules and Regulations Implementing the Labor Code and that it would fragment the hotel's employees.

On June 2, 1997, Francis Mendoza, one of the hotel's outlet cashiers, was discovered to have failed to remit the amount of P71,692.50 at the end of his May 31, 1997 duty. When directed to explain, Mendoza claimed that after accomplishing his daily cash remittance report, the union president Jose Leonardo B. Kimpo, also an outlet cashier, signed the same and dropped his remittances. Kimpo, when asked to explain why no administrative sanction should be imposed for violating the standard procedure for remitting cash collections, stated he was not aware of any such procedure. Mendoza was subsequently suspended for one week, it being the responsibility of the cashier to personally drop off his remittances in the presence of a witness. On July 14, 1997, Mendoza was reassigned to the hotel's Cost Control Department.

Through its president Kimpo, the union notified the hotel of its intention to negotiate a Collective Bargaining Agreement for its members by Notice to Bargain. The hotel, through its Human Resource Development Manager Mary Anne Mangalindan, advised the union that since it was not certified by the DOLE as the exclusive bargaining agent, it could not be recognized as such. The union clarified that it sought to bargain for its members only and declared that the hotel's refusal to bargain would prompt the union to engage in concerted activities to protect and assert its rights under the Labor Code. By notice to its members dated September 18, 1997, the union announced that its executive officers and directors had decided to go on strike in view of management's refusal to bargain collectively and called for a strike vote. The hotel issued a Final Reminder and Warning against the union's continuing misinformation campaign and activities.

The union filed a Notice of Strike on September 29, 1997 with the National Conciliation and Mediation Board, alleging unfair labor practice in that the hotel refused to bargain and rank-and-file employees were being harassed and prevented from joining the union. Conciliation conferences were conducted on October 6, 13, and 20, 1997, during which the union insisted on the adoption of a CBA for its members. On or about November 7, 1997, Kimpo filed a complaint for unfair labor practice against the hotel before the Arbitration Branch. In the conference held on November 20, 1997, the union demanded a consent election, to which the hotel interposed no objection provided the union followed the procedure under the law; the parties agreed to meet again on December 1, 1997.

In the early morning of November 29, 1997, however, the union suddenly went on strike. The following day, the National Union of Workers in the Hotel, Restaurant and Allied Industries joined the strike and openly extended support to the union. At about this time, hotel supervisors Vicente Agustin and Rowena Junio failed to report for work and were, along with another supervisor Mary Grace de Leon, seen participating in and supporting the strike. The hotel filed a petition for injunction before the NLRC on December 1, 1997. Mary Grace, who was directed to explain her participation, alleged she was merely trying to pacify the group; the hotel found her explanation arrogant and unsatisfactory and terminated her services on December 9, 1997. Agustin was also terminated. An NLRC representative who conducted an ocular inspection confirmed that the strikers obstructed the free ingress to and egress from the hotel. The NLRC issued a Temporary Restraining Order on December 8, 1998 directing the strikers to cease and desist from obstructing free ingress and egress. Despite service of the TRO, the strikers refused to dismantle the tent they had put up at the employee's entrance, prompting the hotel's security guards to dismantle it on December 10, 1997, during which rocks were thrown from the direction of a nearby construction site, resulting in physical injuries to some strikers and guards. Rowena Junio, whose services were terminated, filed a complaint for illegal dismissal on January 14, 1998. The hotel filed a petition to declare the strike illegal on January 28, 1998.

DOLE Secretary Cresenciano Trajano's conciliation efforts having failed, he issued an order on April 15, 1998 certifying the dispute to the NLRC for compulsory arbitration and directing the striking officers and members to return to work within 24 hours. On motion for reconsideration, Acting Secretary Jose Español, Jr. modified the order on April 30, 1998, directing the hotel to reinstate the strikers to its payroll and consolidating all related cases pending before different Labor Arbiters. The NLRC, by Resolution of November 19, 1999, declared the strike illegal, held that union officers and members who were reinstated to payroll had lost their employment status, and dismissed the complaints of Mary Grace, Agustin, Rowena, and the union's ULP complaint. On appeal, the Court of Appeals affirmed the NLRC's ruling that the strike was illegal and that union officers lost their employment status, and upheld the validity of the dismissal of Mary Grace, Agustin, and Rowena, but modified the NLRC ruling by ordering reinstatement with backwages of union members, finding that the hotel failed to establish by convincing and substantial evidence that the union members committed illegal acts, as the photographs presented did not name or identify the strikers who allegedly committed illegal acts.

• Liability for Backwages and Reinstatement: Petitioner argued that since the NLRC declared the strike illegal and that union officers and members had lost their employment status, petitioner should not be held liable to pay backwages to the members, nor could it be validly directed to reinstate them.
• Deviation from Established Doctrine: Petitioner faulted the Court of Appeals for ordering reinstatement and backwages of union members whose employment status had been declared lost by the NLRC, thereby deciding a question of substance not in accord with law and deviating from established doctrines long settled by consistent jurisprudence.

• Legality and Good Faith of the Strike: Respondent argued that the union members must be reinstated and paid full backwages because their strike was legal and done in good faith.
• Transformation into Legal Strike: Even assuming the strike started as illegal, respondent contended that the union's unconditional offer to return to work, coupled with the hotel's unfair labor practices during the strike, transformed the strike into a legal strike.
• Individual Liability Rule: Even assuming the strike was illegal, respondent argued that reinstatement and full backwages were consistent with the ruling in Telefunken Semiconductors Employees Union-FFW vs. Secretary, which states that the individual liability of each union officer and member determines whether strikers should be reinstated.
• Statutory Mandate: Even assuming the strike was illegal, respondent maintained that Article 264 of the Labor Code directs the reinstatement of and payment of full backwages to the respondents.

• Legality of the Strike: Whether the strike staged by the union was illegal.
• Reinstatement and Backwages of Union Members: Whether the Court of Appeals erred in ordering the reinstatement and payment of backwages of union members whose employment status was previously declared lost by the NLRC.
• Distinction Between Officers and Members: Whether union members who participated in an illegal strike may be dismissed without proof that they individually committed illegal acts during the strike.
• Entitlement to Backwages: Whether reinstated union members are entitled to backwages.

• Legality of the Strike: Yes, the strike was illegal. The union, not being the certified exclusive bargaining representative, could not demand collective bargaining; the hotel's refusal to bargain was not unfair labor practice, and the strike was attended by illegal acts such as obstruction of ingress and egress, violence, and intimidation.
• Reinstatement and Backwages of Union Members: The CA's order of reinstatement was modified. Only members who did not commit illegal acts should be reinstated, but without backwages. The case was remanded to the Labor Arbiter to identify which members committed illegal acts.
• Distinction Between Officers and Members: No, union members may not be dismissed for mere participation in an illegal strike. Unlike union officers, who may be dismissed for knowingly participating in an illegal strike, ordinary members must be proven to have committed illegal acts during the strike.
• Entitlement to Backwages: No, backwages shall not be awarded. The general rule is "no work, no pay" even in unfair labor practice strikes, and none of the recognized exceptions to the no-backwages rule was present in this case.

• Legality of the Strike: Article 255 of the Labor Code provides that only the labor organization designated or selected by the majority of employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees for purposes of collective bargaining. The union was admittedly not the exclusive representative of the majority of the hotel's employees and thus could not demand the right to bargain collectively. Its reliance on Article 242, a general provision on the rights of legitimate labor organizations, was misplaced, as Article 242(a) must be read in relation to Article 255. Allowing the union to bargain only for its members would fragment the bargaining unit and defeat the essence of collective bargaining, as non-union members would be economically impaired. The hotel's refusal to bargain therefore could not be considered unfair labor practice to justify the strike. The second ground alleged — that the hotel prevented or intimidated workers from joining the union — was discredited by the appellate court's finding that the union's allegations were general and unsubstantiated, the burden of proof being on the union to establish unfair labor practice by substantial evidence. The union staged the strike despite a conciliatory meeting still scheduled for December 1, 1997, and despite the pendency of cases involving the same grounds, violating Article 264 which proscribes staging a strike on the ground of ULP during the pendency of cases involving the same grounds. Photographs and the NLRC ocular inspection report showed that strikers blockaded the driveway to the hotel's entrances and exits, held noise barrage, threatened guests with bodily harm, and exploded firecrackers causing guests to panic, violating Article 264(e) of the Labor Code. Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal.

• Reinstatement and Backwages of Union Members: The appellate court found no convincing and substantial proof that the union members who participated in the illegal strike committed illegal acts, as the photographs presented did not name or identify the strikers who allegedly committed illegal acts. The Supreme Court found otherwise — the photographs showed that some of the workers-strikers indeed committed illegal acts, and the strikers were named in a list attached to petitioner's position paper filed with the NLRC. However, the list failed to specifically identify which individuals actually committed illegal acts. A remand to the Labor Arbiter was therefore necessary to determine the respective liabilities of the strikers listed by petitioner. Those proven to have committed illegal acts during the strike are deemed to have lost their employment, unless already readmitted, while those not clearly shown to have committed illegal acts should be reinstated.

• Distinction Between Officers and Members: Under paragraph 3, Article 264(a) of the Labor Code, 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. An ordinary striking worker, however, cannot be dismissed for mere participation in an illegal strike; there must be proof that he committed illegal acts during the strike. This distinction was applied: union officers were properly dismissed for staging and participating in the illegal strike, while union members required individualized proof of illegal acts.

• Entitlement to Backwages: The general rule is that backwages shall not be awarded in a strike on the principle that "a fair day's wage" accrues only for a "fair day's labor." Even in cases of ULP strikes, the award of backwages rests on the court's discretion and only in exceptional instances. J.P. Heilbronn Co. vs. National Labor Union instructs that if there is no work performed by the employee, there can be no wage or pay, unless the laborer was able, willing, and ready to work but was illegally locked out, dismissed, or suspended. In Cromwell Commercial Employees and Laborers Union (PTUC) vs. Court of Industrial Relations, the Court distinguished between employees discriminatorily dismissed for union activities — who were entitled to backpay — and employees who voluntarily went on strike as an act of protest against unfair labor practice — who were generally not entitled to backpay. Jurisprudence recognizes exceptions to the no-backwages rule: when employees were illegally locked out to compel them to strike; when the employer is guilty of the grossest form of ULP; when the employer committed discrimination in rehiring of strikers; or when workers who staged a voluntary ULP strike offered to return to work unconditionally but the employer refused to reinstate them. None of these or analogous instances was present. Respondent's reliance on Philippine Marine Officers' Guild vs. Compañia Maritima was unavailing, as that exception requires that the strike must be legal, which was not the case here. Reinstatement without backwages of striking members who did not commit illegal acts was thus sufficient. If reinstatement was no longer possible given the lapse of considerable time, separation pay of one month's salary for each year of service in lieu of reinstatement was in order.

• Exclusive Bargaining Representation (Article 255, Labor Code) — Only the labor organization designated or selected by the majority of employees in an appropriate collective bargaining unit is the exclusive representative of the employees for purposes of collective bargaining. A legitimate but uncertified union cannot demand collective bargaining from the employer, and the employer's refusal to bargain with such union does not constitute unfair labor practice. The Court applied this doctrine to hold that the hotel's refusal to bargain with the union, which was not the certified exclusive bargaining representative, was not ULP and could not justify the strike.

• Distinction Between Union Officers and Members in Illegal Strikes (Article 264(a), Labor Code) — A union officer who knowingly participates in an illegal strike may be declared to have lost his employment status. An ordinary striking worker, however, cannot be dismissed for mere participation in an illegal strike; there must be proof that the worker committed illegal acts during the strike. The Court applied this distinction to uphold the dismissal of union officers while requiring individualized proof of illegal acts before union members could be terminated.

• No-Backwages Rule in Strikes — The general rule is that backwages shall not be awarded in a strike, whether economic or ULP, on the principle of "a fair day's wage for a fair day's labor." If there is no work performed, there can be no wage or pay, unless the laborer was able, willing, and ready to work but was illegally locked out, dismissed, or suspended. The Court recognized several exceptions: (1) when employees were illegally locked out to compel them to strike; (2) when the employer is guilty of the grossest form of ULP; (3) when the employer committed discrimination in the rehiring of strikers; or (4) when workers who staged a voluntary ULP strike offered to return to work unconditionally but the employer refused to reinstate them. None of these exceptions was found present in this case.

• Illegality of Strike Means — Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal. The employment of violence, intimidation, restraint, or coercion in carrying out concerted activities injurious to property rights renders a strike illegal. Picketing or obstruction of free use of property, when accompanied by intimidation, threats, violence, and coercion constituting nuisance, likewise renders a strike illegal.

• "As the immediately quoted provision declares, only the labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit is the exclusive representative of the employees in such unit for the purpose of collective bargaining." — This passage articulates the controlling rule under Article 255 that only a majority-certified union may demand collective bargaining, forming the basis for the finding that the hotel's refusal to bargain was not ULP.

• "An ordinary striking worker cannot, thus be dismissed for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike, unlike a union officer who may be dismissed by mere knowingly participating in an illegal strike and/or committing an illegal act during a strike." — This passage states the canonical distinction between union officers and ordinary members in illegal strikes, a frequently cited formulation in labor jurisprudence.

• "If there is no work performed by the employee there can be no wage or pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended." — This quotation from J.P. Heilbronn Co. vs. National Labor Union, adopted by the Court, states the foundational "no work, no pay" principle governing backwages in strike cases.

• "Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal." — This passage establishes that the legality of a strike depends not only on its purpose but also on the lawfulness of the means employed, a principle central to the finding that the strike was illegal due to obstruction, violence, and intimidation.

• J.P. Heilbronn Co. vs. National Labor Union, 92 Phil. 575 (1953) — Followed. Established the "no work, no pay" principle governing backwages in strike cases, which the Court applied to deny backwages to reinstated union members.
• Cromwell Commercial Employees and Laborers Union (PTUC) vs. Court of Industrial Relations, 120 Phil. 918 (1964) — Followed. Distinguished between discriminatorily dismissed employees entitled to backpay and employees who voluntarily went on strike as protest against ULP who are generally not entitled to backpay.
• Philippine Marine Officers' Guild vs. Compañia Maritima, 22 SCRA 1113 (1968) — Distinguished. Recognized an exception to the no-backwages rule when workers unconditionally offer to return to work but the employer refuses reinstatement; however, the Court held this exception requires that the strike be legal, which was not the case here.
• Stamford Marketing Corp. vs. Julian, 423 SCRA 633 (2004) — Followed. Cited for the proposition that a union officer may be dismissed for knowingly participating in an illegal strike, while an ordinary worker requires proof of commission of illegal acts.
• Davao Free Workers Front vs. CIR, 60 SCRA 408 (1974) — Cited as an example of the "grossest form of ULP" exception to the no-backwages rule, which was found inapplicable in the present case.
• Philtranco Service Enterprises vs. Bureau of Labor Relations, 174 SCRA 388 (1989) — Followed. Cited for the policy favoring a single employer-wide bargaining unit to strengthen employees' bargaining power and avoid fragmentation.
• Gold City Integrated Port Service, Inc. vs. NLRC, 245 SCRA 627 (1995) — Followed. Cited for the rule on separation pay in lieu of reinstatement when reinstatement is no longer feasible.

• Article 255, Labor Code — Provides that only the labor organization designated or selected by the majority of employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees for purposes of collective bargaining. Applied to hold that the union, not being the certified exclusive bargaining representative, could not demand collective bargaining from the hotel.
• Article 242, Labor Code — A general provision on the rights of legitimate labor organizations, including the right to act as representative of their members for collective bargaining. The Court held that respondent's reliance on this provision was misplaced, as it must be read in relation to Article 255.
• Article 264, Labor Code — Governs illegal strikes and lockouts. Paragraph 3 of Article 264(a) provides that 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(e) prohibits obstruction of free ingress to or egress from the employer's premises. Applied to declare the strike illegal, to uphold the dismissal of union officers, and to require individualized proof of illegal acts before union members could be terminated.
• Section 3, Article XIII, 1987 Constitution — Guarantees the right of all workers to self-organization, collective bargaining, and peaceful concerted activities, including the right to strike in accordance with law. Cited to emphasize that the right to strike is not absolute and must be exercised in accordance with law.

Leonardo A. Quisumbing (Chairperson), Antonio T. Carpio, Dante O. Tinga, and Presbitero J. Velasco, Jr. concurred in the decision. No separate concurring opinions were filed.