Philippine Steam Navigation Co. vs. Philippine Officers Guild

Where a strike is the consequence of the employer's unfair labor practice, the striking employees are entitled to reinstatement as a matter of right, even if the employer has hired others to take their places for the purpose of continuing operations. An employer may interrogate its employees about union affiliation only for a legitimate purpose and with assurance that no reprisals will follow; otherwise the interrogation risks being found an unfair labor practice where the circumstances restrain or interfere with the right to self-organization.

PHILSTEAM was a domestic corporation engaged in inter-island shipping with head offices in Cebu City; PMOG, affiliated with the Federation of Free Workers, and CSA were the two labor unions that represented some of its officers in 1954. Congress had passed Republic Act 875, the Industrial Peace Act, effective June 17, 1953, to place labor and capital on equal footing as partners in industry, carrying out the 1935 Constitution's mandate that the State regulate the relation between labor and capital to achieve social justice.

In 1954 PHILSTEAM operated 16 vessels with 8 officers to a vessel, or a total of 128 officers, some of whom were represented by PMOG and others by CSA. On June 15, 1954 PMOG sent PHILSTEAM a set of demands with a request for collective bargaining, which PHILSTEAM received on June 18, 1954. On June 29, 1954 PHILSTEAM transmitted its answer requiring PMOG first to prove that it represented a majority of PHILSTEAM's employees before its demands would be considered, and on that same date PHILSTEAM began interrogating and investigating its captains, deck officers, and engineers to find out directly from them whether they had joined PMOG or authorized it to represent them. PMOG replied insisting that PHILSTEAM consider its requests and demands first before requiring proof of majority representation, and PHILSTEAM received that reply on July 6, 1954.

On July 17, 1954 PMOG filed a notice of intention to strike, stating as reasons PHILSTEAM's alleged refusal to bargain and unspecified unfair labor practices. The Department of Labor brought the parties to a conference on July 30, 1954 without success. CSA had meanwhile transmitted its own set of demands, and on August 16, 1954 PHILSTEAM met CSA, recognized it as representing the majority of its employees, and proceeded to consider CSA's demands. Another conference at the Department of Labor on August 17, 1954 likewise failed. On August 24, 1954 PHILSTEAM and CSA signed a collective bargaining agreement, and on the same date PMOG declared a strike against PHILSTEAM, simultaneously striking against Compania Maritima and Madrigal Shipping as well. Around 46 PHILSTEAM officers joined the strike; 15 later returned to work, leaving 31 officers on strike, and Pier 4 of the North Harbor of the Port of Manila, where PHILSTEAM vessels docked, was among the areas picketed. A final conference at the Department of Labor on October 7, 1954 still failed to bring the parties to an agreement.

On January 14, 1955 the President certified the dispute among the shipping companies and their employees to the CIR as involving national interest, pursuant to Section 10 of Republic Act 875. The CIR held preliminary conferences and on January 18, 1955 issued a return-to-work order, which was not enforced in view of an injunction issued by the SC in another case. Several formal complaints were thereafter docketed, including Case 6-IPA (the certified dispute), Case 617-ULP filed by PMOG against Maritima and others, Case 618-ULP filed by PMOG against PHILSTEAM and CSA, Case 646-ULP filed by PMOG against Madrigal Shipping, Case 672-ULP filed by the Marine Officers Association of the Philippines against PMOG, and Case 1002-ULP filed by PHILSTEAM against PMOG. A joint trial was held.

On the unfair labor practice charge, the record showed that PHILSTEAM's purchasing agent Santiago Beliso told Luis Feliciano on August 6, 1954 that PMOG was a "money-asking union," that "all the members of the FFW are low people," and that CSA "is a good union"; Beliso had been authorized by inter-island manager Fernando Guerrero to assist in the investigation of PMOG membership, and the remarks were made in the presence of office manager Ernesto Mañeru and pier superintendent Jose Perez, who did nothing to disavow them. PHILSTEAM later explained that the investigation of its officers was meant merely to ascertain for itself whether a duty to bargain collectively with PMOG existed, a step it claimed was justified by PMOG's refusal to furnish proof of majority representation. Engine officer Eugenio Obispo testified that he signed up with CSA after being intimidated by Beliso in July 1954, but his testimony was rejected, partly because he falsely stated that Beliso was an Assistant Manager of PHILSTEAM. It was also established, through PHILSTEAM's own witnesses, that pier superintendent Valeriano Teves told Diosdado Capilitan, a PMOG member, that joining CSA would not affect his PMOG affiliation.

The CIR found that there was no proof as to which union — PMOG, CSA, or any other — represented the majority of PHILSTEAM's employees, and for lack of a showing that CSA represented the majority it declared the PHILSTEAM-CSA collective bargaining agreement null and void, stating that the parties were welcome to file a petition for certification election to settle the point. It further found that the alleged threats and violence on the part of PMOG strikers were not sufficiently established, a matter PHILSTEAM no longer pressed on appeal.

• Absence of Unfair Labor Practice: PHILSTEAM argued that it did not commit acts constituting unfair labor practice, maintaining that its investigation of its officers as to their PMOG membership and authority to represent them was undertaken merely to ascertain for itself the existence of a duty to bargain collectively with PMOG, a step it claimed was justified by PMOG's refusal to furnish proof of majority representation.
• Illegality of the Strike: PHILSTEAM contended that PMOG's strike was illegal because its purpose was illegal, having been staged to compel PHILSTEAM to bargain collectively with it notwithstanding that it was a minority union.
• Forfeiture of Reinstatement: PHILSTEAM argued that reinstatement was forfeited due to the failure of the strike to paralyze the company's business and the failure of the employees to offer to return to work voluntarily and without any condition.
• Inconsistent Findings: PHILSTEAM asserted that the CIR was inconsistent in finding that Beliso was made to appear by PHILSTEAM's supervisory officials as acting for them, as testified to by Feliciano, when the same court rejected a testimony to that effect by Obispo.

• Unfair Labor Practice: Whether PHILSTEAM committed unfair labor practice in interrogating and investigating its captains, deck officers, and engineers to determine whether they had authorized PMOG to represent them for collective bargaining.
• Legality of the Strike: Whether PMOG's strike was illegal for having been staged to compel PHILSTEAM to bargain collectively with a minority union.
• Reinstatement: Whether the striking employees were entitled to reinstatement notwithstanding that PHILSTEAM had hired others to take their places and that the strikers had not offered to return to work voluntarily and without condition.

• Unfair Labor Practice: Yes. PHILSTEAM interfered with, restrained, and coerced its employees in the exercise of their right to self-organization through the interrogation of its officers, the vilification of PMOG, and its pier superintendent's solicitation for CSA, in violation of Section 4(a)(1) of Republic Act 875.
• Legality of the Strike: No. The strike was not illegal; it was staged in retaliation against PHILSTEAM's unfair labor practice rather than to undermine the PHILSTEAM-CSA agreement, and PMOG was never shown to be a minority union.
• Reinstatement: Yes. Reinstatement follows as a matter of right where the strike was the consequence of the employer's unfair labor practice, notwithstanding that the employer hired others to take the place of the strikers.

• Unfair Labor Practice: PHILSTEAM admitted that it initiated and carried out an investigation of its officers as to their PMOG membership and whether they had authorized PMOG to represent them. Its asserted reason — to ascertain the existence of a duty to bargain — cannot be sustained, because the record shows the investigation was started on June 29, 1954, the very day PHILSTEAM sent its request for proof of majority representation, while PHILSTEAM knew of PMOG's refusal to furnish that proof only on July 6, 1954, when it received PMOG's reply letter; the refusal therefore had nothing to do with the decision to investigate. An employer is not denied the privilege of interrogating its employees as to union affiliation, provided the interrogation is for a legitimate purpose and assurance is given that no reprisals will be taken against unionists, but any employer who engages in interrogation does so with notice that it risks a finding of unfair labor practice if the circumstances restrain or interfere with the employees' right to self-organization. The CIR found that PHILSTEAM's interrogation in fact interfered with, restrained, and coerced the employees, and that finding is one of fact, fully supported by substantial evidence, and cannot be reversed. The subjection of employees to a series of questionings regarding union membership or activities in such a way as to hamper the exercise of free choice constitutes unfair labor practice. On the vilification charge, Beliso's remarks were made in the presence of office manager Mañeru and pier superintendent Perez, supervisory officials who did nothing to disavow his conduct as not intended to represent PHILSTEAM's opinion, so that PHILSTEAM made it appear that Beliso was speaking for the company; PHILSTEAM thereby interfered with Feliciano's right to self-organization. There is no inconsistency with the rejection of Obispo's testimony: Obispo referred to a different incident in which there was no showing that Beliso acted in the presence and with the apparent approval of high supervisory officials, and Obispo's credibility was put in doubt because he falsely stated that Beliso was an Assistant Manager. Finally, pier superintendent Teves helped bring about the affiliation of Capilitan, a PMOG member, with CSA by telling him that joining CSA would not affect his PMOG affiliation; while an isolated remark may be a harmless expression of opinion, in the circumstances it amounted to support of CSA's membership solicitation drive and encouraged membership in the competing union.
• Legality of the Strike: The premise that PMOG is a minority union is inaccurate, for the CIR precisely found that there was no proof as to which union — PMOG, CSA, or any other — represented the majority of PHILSTEAM's employees, and for lack of a showing that CSA represented the majority it declared the PHILSTEAM-CSA collective bargaining agreement null and void, leaving the parties free to file a petition for certification election. PMOG's strike was in retaliation to PHILSTEAM's unfair labor practice rather than an attempt to undermine the PHILSTEAM-CSA agreement, since that agreement was signed only on August 24, 1954 while PMOG filed its notice of strike as early as July 17, 1954, and PHILSTEAM's unfair labor practice, consisting in its interference with the employees' right to self-organization, started on June 29, 1954; the notice of strike in fact mentioned company unfair labor practices as the reason for the intended strike. The strike was therefore for a lawful purpose and justified.
• Reinstatement: Striking employees are entitled to reinstatement, whether or not the strike was the consequence of the employer's unfair labor practice, unless, where the strike was not the consequence of any unfair labor practice, the employer has hired others to take the place of the strikers and has promised them continued employment. The present strike was the consequence of PHILSTEAM's unfair labor practice, so reinstatement of the strikers who have not found substantially equivalent employment elsewhere follows as a matter of right, notwithstanding that the employer hired others to take their places for the purpose of continuing the operation of the business. The failure of the strike to paralyze the company's business is no obstacle, since even if the employer hires replacements and thereby avoids paralysis, it is bound to reinstate the strikers where the strike was against an unfair labor practice on its part. As to a voluntary offer to return to work without condition, that matter is relevant only to the question of payment of back wages in addition to reinstatement; since no back wages were awarded and the union did not appeal, the question is not in point.

• Employer Interrogation of Employees on Union Affiliation — An employer is not denied the privilege of interrogating its employees as to their union affiliation, provided (a) the interrogation is for a legitimate purpose and (b) assurance is given by the employer that no reprisals will be taken against unionists. Any employer who engages in interrogation, however, does so with notice that it risks a finding of unfair labor practice if the circumstances are such that the interrogation restrains or interferes with the employees' right to self-organization. PHILSTEAM's investigation failed the first condition: it began on June 29, 1954, the same day PHILSTEAM asked for proof of majority representation, and before it knew of PMOG's refusal on July 6, 1954, so the refusal could not have supplied the legitimate purpose claimed.
• Series of Questionings as Unfair Labor Practice — Subjection by the company of its employees to a series of questionings regarding their membership in the union or their union activities, in such a way as to hamper the exercise of free choice on their part, constitutes unfair labor practice. PHILSTEAM's interrogation of its captains, deck officers, and engineers fell squarely under this rule.
• Vilification of a Union and Support of a Rival Union as Interference — Remarks by a company official disparaging one union and promoting another, made in the presence of higher supervisory officials who do not disavow them, are attributable to the company and interfere with the employees' right to self-organization. PHILSTEAM's purchasing agent called PMOG a "money-asking union," called FFW members "low people," and praised CSA, before an employee and in the presence of the office manager and pier superintendent, who said nothing.
• Solicitation for a Competing Union by a Supervisory Employee — A statement by a pier superintendent to a union member that joining the competing union would not affect his existing affiliation is not a harmless isolated remark where, in context, it amounts to support of the competing union's membership solicitation drive and in effect encourages membership in it.
• Reinstatement of Strikers — Striking employees are entitled to reinstatement whether or not the strike was the consequence of the employer's unfair labor practice, unless, where the strike was not the consequence of any unfair labor practice, the employer has hired others to take the place of the strikers and has promised them continued employment. Where the strike is the consequence of the employer's unfair labor practice, reinstatement follows as a matter of right even if replacements were hired to continue operations.
• Voluntary Offer to Return to Work — The offer to return to work voluntarily and without condition is relevant only to the question of payment of back wages in addition to reinstatement, not to the right to reinstatement itself.

• "An employer is not denied the privilege of interrogating its employees as to their union affiliation, provided the same is for a legitimate purpose and assurance is given by the employer that no reprisals would be taken against unionists." — States the two conditions that make employer interrogation permissible, the first of which PHILSTEAM failed to satisfy.
• "The rule in this jurisdiction is that subjection by the company of its employees to a series of questionings regarding their membership in the union or their union activities, in such a way as to hamper the exercise of free choice on their part, constitutes unfair labor practice." — The canonical formulation of the doctrine applied to PHILSTEAM's investigation of its 128 officers.
• "The present strike was the consequence of PHILSTEAM's unfair labor practice. Reinstatement of the strikers, who have not found substantially equivalent employment elsewhere, therefore follows as a matter of right, notwithstanding that the employer has hired others to take the place of the strikers for the purpose of continuing the operation of the plant or the business of the industry." — The ratio decidendi on the reinstatement issue, squarely rejecting the replacement defense.
• "As to the matter of a voluntary offer to return to work without any condition the same is relevant only to the question of payment of back wages in addition to reinstatement." — Limits the significance of a voluntary offer to return, which PHILSTEAM raised as a ground for forfeiture of reinstatement.

• Blue Flash Express Co., Inc., 109 NLRB 591 — Cited for the rule that employer interrogation of employees on union affiliation is permitted only for a legitimate purpose and with assurance of no reprisals, but carries the risk of an unfair labor practice finding where it restrains or interferes with self-organization.
• Scoty's Department Store vs. Micaller, 52 O.G. 5119 — Cited as the controlling local rule that a series of questionings on union membership or activities, in such a way as to hamper free choice, constitutes unfair labor practice.
• Cromwell Commercial Employees and Laborers Union (PTUG) vs. C.I.R., et al., L-19778, September 30, 1964 — Controlling precedent on reinstatement of strikers, followed in holding that reinstatement is a matter of right where the strike was the consequence of the employer's unfair labor practice.

• Section 4(a)(1), Republic Act 875 — Defines unfair labor practice to include interference with, restraint of, or coercion of employees in the exercise of their right to self-organization; the basis for the finding against PHILSTEAM for its interrogation, vilification of PMOG, and solicitation for CSA.
• Section 3, Republic Act 875 — Guarantees employees the right to self-organization; cited in the CIR's cease-and-desist order, which the SC affirmed.
• Section 10, Republic Act 875 — Authorizes the President to certify a dispute involving national interest to the CIR; the route by which the dispute in Case 6-IPA reached the CIR.
• Article II, Section 5 and Article XIV, Section 6, 1935 Constitution — Cited as the constitutional basis for State regulation of the relation between labor and capital to achieve social justice, the policy implemented by the Industrial Peace Act.