Reliance Surety & Insurance Co., Inc. vs. NLRC

Union officers who knowingly participate in an illegal strike conducted in bad faith—where the strike is not predicated on any actual unfair labor practice and violates mandatory procedural requirements under the Labor Code—are not entitled to reinstatement; dismissal is the proper and lawful penalty for such conduct.

The case arose from a workplace dispute involving Reliance Surety & Insurance Co., Inc. and its employees' union. The company implemented a change in the seating arrangement of its underwriting department personnel to minimize non-work-related conversations and improve productivity. Four union members protested the transfer, claiming it was intended to harass them as union members, leading to heated exchanges and alleged insubordination. Following their dismissal for misconduct, the union filed a notice of strike alleging unfair labor practices, and subsequently staged a strike before the scheduled conciliation conference, blocking ingress and egress to the company premises.

• On November 21, 1986, Reliance Surety & Insurance Co., Inc. implemented a change in the seating arrangement of personnel in its underwriting department to minimize personal conversations, telephone calls, and non-work-related visits that caused loss of productive time.
• Four employees affected by the rearrangement—Isagani Rubio, Rosalinda Macapagal, Glene Molina, and Severa Cansino—protested the transfer, claiming it was done without prior notice and was intended to harass them as union members.
• A heated discussion ensued between the employees and the department manager, during which the employees allegedly hurled insults (described as "unprintable") at the manager and supervisors.
• On February 3, 1987, the four employees were placed under preventive suspension due to the tense work atmosphere and their continued refusal to comply with the seating arrangement.
• On March 3, 1987, the company dismissed the four employees after investigation for misconduct, insubordination, and gross disrespect.
• On March 6, 1987, the Reliance Surety & Insurance Employees Union filed a complaint for illegal dismissal with the NLRC-NCR Arbitration Branch on behalf of the dismissed employees, which was later amended on April 7, 1987, to include charges of unfair labor practice.
• On March 12, 1987, while the illegal dismissal case was pending, the union filed a notice of strike with the DOLE, predicating the strike on alleged unfair labor practices including the dismissal of union officers, discrimination, and coercion.
• On March 13, 1987, the company received the notice of strike and a telegram from the DOLE scheduling an initial conciliation conference for March 17, 1987.
• On the morning of March 17, 1987, before the conciliation conference could take place, the union staged a strike and formed human barricades at the company premises, specifically at the lobby of the 8th floor where the office was located, effectively obstructing free ingress and egress and preventing officials and employees from performing their duties.
• During the strike, particularly on April 1, 1987, certain strikers harassed non-striking employees, called company officers names, and committed acts of violence, resulting in criminal charges being filed against them.
• The company identified the following union officers as having knowingly participated in the illegal strike: Rolando Tugade (president), Joseph Aying (vice-president), Isagani Rubio (treasurer), Glene Molina and Rosalinda Macapagal (secretaries), Froilan Garcia and Luz Monroy (Sergeants-at-arms), Orlando Calma (auditor), and Manolo Que (pro).
• Isagani Rubio accepted the sum of P2,448.80 "in full satisfaction of the Decision" of the Labor Arbiter, effectively accepting the legality of his dismissal.
• The NLRC found that the strike was illegal for failure to comply with the mandatory cooling-off period, the two-thirds vote requirement by secret ballot, and the seven-day submission requirement of the strike vote to the Department of Labor.

• The NLRC committed grave abuse of discretion in modifying the penalty from dismissal to reinstatement without backwages.
• The strike was indisputably illegal for violating multiple mandatory procedural requirements: (1) the fifteen-day cooling-off period; (2) the two-thirds required vote to strike conducted by secret ballot; (3) the submission of the strike vote results to the Department of Labor at least seven days prior to the strike; and (4) the twenty-four-hour notice of the meeting to declare a strike.
• The strike was accompanied by illegal acts, including the formation of human barricades obstructing ingress and egress, harassment of non-striking employees, verbal abuse of company officers, and acts of violence.
• The strike was not predicated on any actual, existing unfair labor practice; the change in seating arrangement was a valid exercise of management prerogative that did not constitute harassment or unfair labor practice.
• Reinstatement of union officers who knowingly participated in an illegal strike conducted in bad faith rewards illegal conduct and violates public policy.
• Isagani Rubio was estopped from seeking reinstatement after having accepted financial settlement in full satisfaction of the Labor Arbiter's decision.

• The union relied on Ferrer v. Court of Industrial Relations and Almira v. B.F. Goodrich Philippines, Inc. to support the proposition that reinstatement is the proper remedy even for illegal strikes, and that dismissal is too harsh a penalty.
• The union believed in good faith that the company was committing unfair labor practices in terminating union officers and members, and that the seating arrangement change was intended to intimidate union members.
• Citing Almira, the union argued that where a penalty less punitive would suffice, labor missteps should not be visited with consequences as severe as dismissal, considering the hardship unemployment brings to workers and their families.
• The union maintained that the sympathy of the court should be on the side of the laboring classes as mandated by the Constitution.

• Procedural Issues:
  • Whether the NLRC committed grave abuse of discretion in modifying the penalty for participating in an illegal strike from dismissal to reinstatement without backwages.
• Substantive Issues:
  • Whether union officers who knowingly participate in an illegal strike conducted in bad faith are entitled to reinstatement or are properly subject to dismissal.
  • Whether good faith remains a valid defense against the consequences of an illegal strike.
  • Whether the change in seating arrangement constituted unfair labor practice justifying the strike.

• Procedural:
  • The Supreme Court held that the NLRC committed grave abuse of discretion in ordering the reinstatement of union officers who participated in the illegal strike.
  • The Court found that the NLRC misapplied the precedents in Ferrer and Almira, which did not involve illegal strikes but rather "defective" strikes conducted in good faith.
  • The modification from dismissal to reinstatement constituted a reward for conduct characterized by "plain arrogance, pride, and cynicism," which public policy does not sanction.
• Substantive:
  • The Court distinguished between a "defective" strike and an "illegal" strike: a strike is merely defective when procedural requirements are violated but is conducted in good faith based on a reasonable belief that unfair labor practices exist; a strike is illegal when it lacks good faith and violates procedural requirements.
  • In Ferrer, the strike was defective (violated the thirty-day cooling-off period) but was carried out in good faith to offset what the strikers were warranted in believing were unfair labor practices; thus, reinstatement was ordered.
  • In Almira, the Court held that a violent strike alone does not justify dismissal, but the strike was still conducted in good faith.
  • In the present case, the strike was not only procedurally defective but was conducted in bad faith, as there was no actual unfair labor practice to justify it—the change in seating arrangement was a reasonable exercise of management prerogative that employees could not validly question.
  • Good faith remains a valid defense against claims of illegality, but no semblance of good faith existed in this case; the four-month-long strike was disproportionate to the grievance about "rearranging furniture."
  • The doctrine in Bacus v. Ople (that mere illegality does not justify wholesale dismissal of strikers impressed with good faith) does not apply to union officers who knowingly participated in an illegal strike conducted without good faith.
  • Isagani Rubio was estopped from claiming reinstatement after accepting financial settlement in full satisfaction of the Labor Arbiter's decision; he could not "have his cake and eat it too."
  • While the Constitution and general principles mandate sympathy for the laboring classes, the Court must ensure that results achieved in labor disputes are fair and in conformity with the rules.

• Test of Legality of Strike (Good Faith Doctrine) — The legality of a strike is determined not merely by procedural compliance but by the presence of good faith. A "defective" strike (procedural violations) committed in good faith based on a reasonable belief of unfair labor practice may warrant reinstatement, whereas an "illegal" strike conducted in bad faith (without reasonable basis and with procedural violations) warrants dismissal of participants, particularly union officers.
• Management Prerogative — Employers possess the inherent right to implement reasonable rules and regulations for the efficient operation of the business, including rearranging office furniture and seating arrangements to improve productivity, which does not constitute unfair labor practice or harassment absent evidence of anti-union animus.
• Estoppel in Labor Cases — An employee who accepts financial settlement or separation pay in full satisfaction of a judgment or decision is estopped from subsequently claiming reinstatement or questioning the legality of the dismissal.

• "The private respondents can not find sanctuary in the cases of Ferrer v. Court of Industrial Relations and Almira v. BF Goodrich Philippines, Inc., in which we affirmed reinstatement in spite of an 'illegal' strike."
• "What was involved in Ferrer was a defective strike, that is, one conducted in violation of the thirty-day 'cooling-off' period, but one carried out in good faith 'to offset what petitioners were warranted in believing in good faith to be unfair labor practices [committed by] Management.'"
• "The Court must not be understood to be abandoning the teachings of either Ferrer, Almira, or Bacus. The Court reiterates that good faith is still a valid defense against claims of illegality of a strike. We do find, however, not a semblance of good faith here, but rather, plain arrogance, pride, and cynicism of certain workers."
• "The Court is indeed at a loss how rearranging furniture, as it were, can justify a four-month-long strike."
• "He can not now insist on reinstatement after accepting the legality of his dismissal. He can not have his cake and eat it too."
• "As a general rule, the sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes sympathy but because of the one-sided relation between labor and capital. The Court must take care, however, that in the contest between labor and capital, the results achieved are fair and in conformity with the rules."

• Ferrer v. Court of Industrial Relations (17 SCRA 352) — Distinguished; involved a "defective" strike (violation of cooling-off period) conducted in good faith based on a reasonable belief of unfair labor practice, justifying reinstatement. The Court clarified that this was not an illegal strike.
• Almira v. B.F. Goodrich Philippines, Inc. (58 SCRA 120) — Distinguished; held that a violent strike alone does not make the action illegal so as to justify dismissal of strikers. The Court noted this case involved a strike conducted in good faith, not an illegal strike.
• Bacus v. Ople (132 SCRA 690) — Distinguished; held that mere finding of illegality attending a strike does not justify wholesale dismissal of strikers impressed with good faith. The Court limited this doctrine to rank-and-file strikers acting in good faith, not union officers knowingly participating in illegal strikes.

• Article 264 of the Labor Code (implied) — Governs the requirements for a valid strike, including the cooling-off period, strike vote by secret ballot, and notice requirements. The Court referenced the violation of these requirements as grounds for declaring the strike illegal.
• Article 263 of the Labor Code (implied) — Defines the grounds for strike (unfair labor practice) and the procedures for filing notice of strike.