Solidbank Corporation vs. Gamier

A strike undertaken despite the Secretary of Labor's assumption order is a prohibited activity under Article 264(a) of the Labor Code, but the law distinguishes between union officers and ordinary members: union officers may be validly terminated for knowingly participating in an illegal strike, while union members may not be dismissed for mere participation absent proof that they committed specific illegal acts during the strike.

Solidbank Corporation and the Solidbank Employees' Union were parties to a 1997–2001 Collective Bargaining Agreement whose economic provisions were due for renegotiation in October 1999. When negotiations reached an impasse, the Union declared a deadlock on December 22, 1999 and filed a Notice of Strike on December 29, 1999. Secretary of Labor Bienvenido E. Laguesma assumed jurisdiction over the labor dispute on January 18, 2000 pursuant to Article 263(g) of the Labor Code, directing the parties to cease and desist from any acts that might exacerbate the situation. He subsequently resolved all economic and non-economic issues on March 24, 2000, directing the parties to conclude their CBA for 2000 and 2001. Solidbank was later merged with First Metro Investment Corporation (FMIC), with Solidbank as the surviving corporation renamed FMIC, and ceased banking operations by August 31, 2000.

Solidbank Corporation and the Solidbank Employees' Union commenced renegotiation of the economic provisions of their 1997–2001 Collective Bargaining Agreement on November 17, 1999. When an agreement proved unlikely, the Union declared a deadlock on December 22, 1999 and filed a Notice of Strike on December 29, 1999. During the negotiations, some Union members staged a series of mass actions, prompting Secretary of Labor Bienvenido E. Laguesma to assume jurisdiction over the labor dispute on January 18, 2000 pursuant to Article 263(g) of the Labor Code, directing the parties to cease and desist from committing any and all acts that might exacerbate the situation. On March 24, 2000, Secretary Laguesma resolved all economic and non-economic issues, directing the parties to conclude their CBA for 2000 and 2001, dismissing the unfair labor practice charge against Solidbank, and directing the bank to recall show-cause memos issued to employees who participated in the mass actions.

Dissatisfied with the Secretary's ruling, the Union officers and members decided to protest by holding a rally in front of the DOLE office in Intramuros, Manila, simultaneous with the filing of their motion for reconsideration. On April 3, 2000, an overwhelming majority of employees — approximately 712, including those in provincial branches in Cebu, Iloilo, Bacolod, and Naga — joined a "mass leave" and "protest action" at the DOLE office and "boycotted regular work." The Union also picketed the bank's Head Office in Binondo on April 6, 2000, and the Paseo de Roxas branch on April 7, 2000. The concerted work abandonment lasted three days, from April 3 to 5, 2000, paralyzing Solidbank's banking operations: over-the-counter transactions were undermined, checks for clearing were delayed, and on-line transactions were hampered.

On the same day the boycott began, Solidbank President Deogracias N. Vistan issued a memorandum calling the employees' absence an illegal act and warning that they had put their jobs at risk. On April 5, 2000, Vistan issued another memorandum declaring the bank's willingness to take back employees who would report for work starting April 6, 2000, provided they were not among those who led, instigated, or coerced co-employees into participating. Of the 712 employees who joined the boycott, 513 returned to work and were accepted. The remaining 199, including herein respondents, refused to comply and were issued show-cause memos directing them to explain within twenty-four hours why they should not be dismissed, and were placed under preventive suspension. The 199 employees were subsequently terminated. On various dates in June 2000, twenty-one of the individual respondents executed Release, Waiver and Quitclaim in favor of Solidbank.

Respondents Gamier, Condevillamar, Arriola, and De Guzman filed separate complaints for illegal dismissal on April 28, May 15, and May 29, 2000, respectively. The Union, joined by the 129 dismissed employees, filed a separate suit for illegal dismissal, unfair labor practice, and damages. Meanwhile, the Monetary Board approved Metrobank's acquisition of Solidbank's non-real estate assets on July 28, 2000, and Solidbank was merged with FMIC, with Solidbank as the surviving corporation renamed FMIC. Solidbank ceased banking operations by August 31, 2000 after surrendering its expanded banking license to the Bangko Sentral ng Pilipinas.

• Nature of the Mass Action: Petitioners argued that the CA erred in holding that the mass action of April 3, 2000 was not a strike, considering it had all the elements of a strike and respondents judicially admitted it was a strike. The CA's characterization of the mass action as an exercise of freedom of expression was erroneous because such constitutional right is not absolute and subject to well-defined exceptions, and the Secretary's January 18, 2000 Order was a valid exercise of police power.
• Damage to Bank Operations: Petitioners assailed the CA for not considering the damage and prejudice caused to the bank and its clients, asserting that the mass actions crippled banking operations — over-the-counter transactions were undermined, checks for clearing were delayed, and on-line transactions were hampered, causing inestimable damage to the nationwide ATM network.
• Validity of Dismissal: Petitioners maintained that the dismissal of respondents was not illegal in view of the illegal strike conducted in violation of the Secretary's assumption order, as consistently ruled by the Court in prior cases.
• Reinstatement and Solidary Liability: Even assuming the termination was illegal, petitioners contended the CA erred in ordering reinstatement and holding Solidbank, FMIC, and Metrobank solidarily liable.
• Forum Shopping: Petitioners argued the CA erred in not finding respondents guilty of forum shopping, asserting that respondents' claim of ignorance of the Union's separate complaint was unbelievable under the circumstances.
• Separation Pay: Petitioners contended that respondents were not entitled to separation pay even if the dismissal was valid because they committed serious misconduct in defying the Secretary's assumption order, constituting a just cause under Article 282.
• Quitclaims: Petitioners argued the CA erred in disregarding the Release, Waiver and Quitclaim executed by twenty-one individual respondents who entered into a compromise agreement with Solidbank.
• Scope of CA Review (G.R. No. 159461): Petitioners contended that the CA erred in ruling on the illegality of the dismissal of Gamier, Condevillamar, Arriola, and De Guzman, as this was not an issue raised in the petition for certiorari before the appellate court; the only issue raised was the propriety of the award of separation pay by the NLRC.

• Nature of the Mass Action: Whether the protest rally and concerted work abandonment/boycott staged by the respondents violated the Order dated January 18, 2000 of the Secretary of Labor.
• Validity of Termination: Whether the respondents were validly terminated.
• Entitlement to Separation Pay: Whether the respondents are entitled to separation pay or financial assistance.

• Nature of the Mass Action: Yes. The concerted mass actions — the protest rally at the DOLE office, the picketing of bank branches, and the three-day work boycott by 712 employees — constituted a strike under Article 212(o) of the Labor Code and violated the Secretary of Labor's January 18, 2000 assumption order, which directed the parties to cease and desist from any acts that might exacerbate the situation.
• Validity of Termination: As to union officers, yes — their termination was valid, as they knowingly participated in the illegal strike and could not invoke good faith. As to union members, no — mere participation in an illegal strike is not sufficient ground for termination absent proof that the member committed specific illegal acts during the strike, which petitioners failed to adduce.
• Entitlement to Separation Pay: Union members are entitled to separation pay of one month's salary per year of service in lieu of reinstatement, but not backwages, as the strike was illegal. Union officers are not entitled to separation pay, having been validly dismissed. Amounts already received under any release, waiver, or quitclaim shall be deducted from the separation pay due.

• Nature of the Mass Action: Article 212(o) of the Labor Code defines strike as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute, and the term expressly encompasses not only concerted work stoppages but also mass leaves, slowdowns, sit-downs, and similar activities. The fact that the employees did not use the conventional term "strike" is inconsequential, as the substance of the situation controls. The concerted actions were not limited to the protest rally at the DOLE office on April 3, 2000; the Union also picketed the Head Office and Paseo de Roxas branch, and approximately 712 employees boycotted and absented themselves from work for three continuous days, virtually paralyzing the bank's operations. Because these mass actions stemmed from a bargaining deadlock and an assumption order had already been issued, the concerted work abandonment was the result of a labor dispute. The Court distinguished Philippine Blooming Mills Employees Organization vs. Philippine Blooming Mills Co., Inc., relied upon by the Union, on the ground that there was no labor dispute in that case, whereas here an ongoing labor dispute existed. The Secretary's January 18, 2000 directive to refrain from "any and all acts that might exacerbate the situation" certainly included concerted actions. Article 264(a) prohibits any strike after assumption of jurisdiction by the Secretary, and also prohibits declaring a strike during the pendency of cases involving the same grounds. Since both parties had pending motions for reconsideration of the March 24, 2000 Order when the mass actions were conducted on April 3 to 6, 2000, respondents knowingly violated the prohibition. Whether the pressure was directed against the employer or the Secretary of Labor was immaterial; all elements of a strike were present.

• Validity of Termination: Article 264(a) of the Labor Code makes a critical distinction between union officers and union members. A union officer who knowingly participates in an illegal strike may be declared to have lost employment status; the employer possesses the right and prerogative to terminate union officers. However, a worker who merely participates in an illegal strike may not be terminated; only a worker or union officer who commits illegal acts during a strike may be declared to have lost employment status. The responsibility of union officers as main players in an illegal strike is greater than that of members, justifying dismissal only for the former. As to the union officer respondents, their termination was valid because they were fully aware that proceedings before the Secretary of Labor were still pending — they themselves filed a motion for reconsideration — and thus could not invoke good faith. As to the union member respondents, petitioners failed to adduce substantial evidence that each member committed specific illegal acts during the strike. Petitioners merely pointed to the members' admitted participation in the mass actions, which they knew to be illegal. However, the illegal acts contemplated by law — shouting slanderous and scurrilous words, using obscene language, forming human cordons, blocking approaches, perpetrating violence and coercion, threatening non-striking employees — were not proven. Liability for prohibited acts must be determined on an individual basis, and the striker must be identified. Absent a clear showing that the union members committed such specific illegal acts, their dismissal was unjustified.

• Entitlement to Separation Pay: The award of backwages is a legal consequence of a finding of illegal dismissal, but the principle of "a fair day's wage for a fair day's labor" governs: if there is no work performed, there can be no wage unless the employee was ready, willing, and able to work but was illegally prevented from working. This exception requires that the strike be legal, which does not obtain here. Reinstatement without backwages would suffice as appropriate relief, but reinstatement is no longer possible given the lapse of considerable time and the fact that Solidbank had long ceased banking operations. Accordingly, separation pay of one month's salary for each year of service, in lieu of reinstatement, was awarded. For the twenty-one respondents who executed quitclaims, amounts already received were to be deducted. Petitioners' argument that the union members' knowing participation constituted serious misconduct under Article 282 was rejected, because the Labor Code protects an ordinary rank-and-file union member from losing his job for mere participation in an illegal strike, provided he did not commit an illegal act during the strike. Petitioners did not adduce substantial proof of violence, intimidation, coercion, or obstruction under Article 264(e). On solidary liability, Metrobank could not be held solidarily liable because there was no showing it was the successor-in-interest of Solidbank; FMIC, as the surviving corporation, remained solely liable. Individual petitioners Vistan and Mendoza were not personally liable because bad faith was not proven; bad faith is never presumed and imports a dishonest purpose or conscious doing of wrong, which respondents failed to demonstrate.

• 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 validly terminated from employment, while an ordinary union member may not be terminated for mere participation in an illegal strike. The employer must prove that the union member committed specific illegal acts during the strike — such as violence, coercion, intimidation, or obstruction — to justify dismissal. Liability for prohibited acts during a strike is determined on an individual basis, and the striker must be identified, though proof beyond reasonable doubt is not required; substantial evidence suffices.

• Definition of Strike Under Article 212(o) — Strike is defined as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. The term encompasses not only concerted work stoppages but also slowdowns, mass leaves, sit-downs, attempts to damage or sabotage plant equipment, and similar activities. The fact that the conventional term "strike" was not used is inconsequential; the substance of the situation, not its appearance, is controlling.

• Prohibition on Strikes During Assumption of Jurisdiction — Once the Secretary of Labor assumes jurisdiction over a labor dispute, a strike undertaken despite the assumption order is a prohibited activity and thus illegal. Article 264(a) also prohibits declaring a strike during the pendency of cases involving the same grounds for the strike. The coercive processes of a strike or lockout must not interfere with the Secretary's assumed jurisdiction.

• Backwages in Cases of Illegal Strike — The principle of "a fair day's wage for a fair day's labor" applies: if no work was performed, there can be no wage, unless the employee was ready, willing, and able to work but was illegally prevented from working. This exception requires that the strike be legal; where the strike was illegal, reinstated employees are not entitled to backwages.

• Separate Corporate Personality in Labor Cases — A corporation possesses a personality separate and distinct from its officers and stockholders. Mere ownership by a single stockholder or another corporation of all or nearly all of the capital stock is not sufficient ground for disregarding the separate corporate personality. Corporate directors and officers may be held solidarily liable with the corporation for termination of employees only when done with malice or bad faith, which is never presumed and imports a dishonest purpose or conscious doing of wrong.

• "The fact that the conventional term 'strike' was not used by the striking employees to describe their common course of action is inconsequential, since the substance of the situation, and not its appearance, will be deemed to be controlling." — This passage articulates the Court's interpretive approach to concerted employee actions, establishing that the legal character of a mass action is determined by its substance rather than the label employees assign to it.

• "The foregoing shows that the law makes a distinction between union officers and members. For knowingly participating in an illegal strike or participating in the commission of illegal acts during a strike, the law provides that a union officer may be terminated from employment. x x x However, a worker merely participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status." — This is the canonical formulation of the distinction between union officers and members under Article 264(a), a frequently cited principle in Philippine labor jurisprudence on illegal strikes.

• "While it was found that respondents expressed their intention to report back to work, the latter exception cannot apply in this case. In Philippine Marine Officers' Guild vs. Compañia Maritima, as affirmed in Philippine Diamond Hotel and Resort vs. Manila Diamond Hotel Employees Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar." — This passage establishes that backwages are not available to employees who participated in an illegal strike, even if they expressed willingness to return to work, because the "ready, willing, and able" exception presupposes a lawful strike.

• "Bad faith does not simply connote bad judgment or negligence -- it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill-will that partakes of the nature of fraud." — This is a standard definition of bad faith in the context of corporate officer liability, applied here to reject the imposition of personal liability on bank officers Vistan and Mendoza absent proof of malice or dishonest purpose.

• Toyota Motor Phils. Corp. Workers Association (TMPCWA) vs. National Labor Relations Commission, G.R. Nos. 158786 & 158789, October 19, 2007 — Controlling precedent followed. The Court relied on this case to reject the Union's argument that protest rallies at the DOLE and BLR offices were legitimate exercises of the right to assemble, holding that where an ongoing labor dispute exists, mass actions shrouded as demonstrations are in reality illegal strikes. The Court distinguished Philippine Blooming Mills Employees Organization on the ground that no labor dispute existed in that case.

• Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals, G.R. Nos. 143013-14, December 18, 2000 — Cited for the proposition that once the Secretary of Labor assumes jurisdiction over a labor dispute, such jurisdiction should not be interfered with by the coercive processes of a strike, and a strike undertaken despite an assumption order is a prohibited activity.

• G & S Transport Corporation vs. Infante, G.R. No. 160303, September 13, 2007 — Followed on the issue of backwages. The Court relied on this case to hold that employees who participated in an illegal strike are not entitled to backwages under the "fair day's wage for a fair day's labor" principle, because the exception requiring the strike to be legal does not apply.

• Philippine Blooming Mills Employees Organization vs. Philippine Blooming Mills Co., Inc. — Distinguished. The Union relied on this case to argue that the protest was directed at the government, not the employer. The Court distinguished it on the ground that there was no labor dispute in Philippine Blooming Mills, whereas in the present case an ongoing labor dispute existed.

• Steel Corporation of the Philippines vs. SCP Employees Union-National Federation of Labor Unions, G.R. Nos. 169829-30, April 16, 2008 — Cited for the rule that the employer possesses the right and prerogative to terminate union officers who participated in an illegal strike.

• Nissan Motors Philippines, Inc. vs. Secretary of Labor and Employment, G.R. Nos. 158190-91, 158276 and 158283, June 21, 2006 — Cited for the principle that the responsibility of union officers as main players in an illegal strike is greater than that of members, justifying dismissal only for the former.

• Article 212(o), Labor Code — Defines "strike" as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute, including slowdowns, mass leaves, sit-downs, and similar activities. Applied to characterize the employees' three-day work boycott and protest rally as a strike, notwithstanding the absence of the conventional label.

• Article 264(a), Labor Code — Prohibits any strike or lockout after assumption of jurisdiction by the President or the Secretary of Labor, or during the pendency of cases involving the same grounds. Also distinguishes between union officers (who may be terminated for knowingly participating in an illegal strike) and ordinary workers (who may not be terminated for mere participation, but only for committing illegal acts during a strike). Applied to hold the strike illegal and to differentiate the termination consequences for officers versus members.

• Article 264(e), Labor Code — Prohibits acts of violence, coercion, intimidation, or obstruction of free ingress and egress and public thoroughfares during picketing. Applied to determine that petitioners failed to prove the union members committed any of these prohibited acts, rendering their dismissal unjustified.

• Article 263(g), Labor Code — Authorizes the Secretary of Labor to assume jurisdiction over labor disputes in industries indispensable to the national interest. Applied as the statutory basis for Secretary Laguesma's January 18, 2000 assumption order and the consequent prohibition on strikes.

• Article 282, Labor Code — Governs termination for just causes, including serious misconduct. Petitioners invoked it to argue that the union members' knowing participation in the illegal strike constituted serious misconduct; the Court rejected this argument, holding that the Labor Code protects ordinary union members from dismissal for mere participation in an illegal strike.

• Section 31, Corporation Code — Governs the liability of directors, trustees, or officers for corporate debts, requiring willful and knowing assent to patently unlawful acts, gross negligence, or bad faith. Applied to hold that individual petitioners Vistan and Mendoza were not personally liable for the separation pay adjudged against Solidbank, absent proof of malice or bad faith.

Justice Conchita Carpio Morales (Chairperson), Justice Arturo D. Brion, Justice Lucas P. Bersamin, and Justice Maria Lourdes P. A. Sereno concurred in the decision. No separate concurring opinions were noted.