Visayas Community Medical Center vs. Yballe

A union member who participates in an illegal strike but commits no illegal act during the strike is illegally dismissed and entitled to separation pay in lieu of reinstatement, but is not entitled to back wages, because the principle of "a fair day's wage for a fair day's labor" precludes compensation for work not performed, and the exception for employees illegally locked out or prevented from working applies only when the strike is legal.

Respondents Erma Yballe, Nelia Angel, Eleuteria Cortez, and Evelyn Ong were employed as staff nurses (Ong and Angel) and midwives (Yballe and Cortez) by petitioner Visayas Community Medical Center (VCMC), formerly Metro Cebu Community Hospital, Inc. (MCCHI), a non-stock, non-profit corporation operating a tertiary hospital owned by the United Church of Christ in the Philippines. The National Federation of Labor (NFL) was the exclusive bargaining representative of the rank-and-file employees, and the local affiliate NAMA-MCCH-NFL became embroiled in a dispute with the federation over collective bargaining negotiations, leading to a strike by union members despite NAMA-MCCH-NFL's lack of registration as a legitimate labor organization.

Respondents Erma Yballe, Eleuteria Cortez, Nelia Angel, and Evelyn Ong were hired as staff nurses (Ong and Angel) and midwives (Yballe and Cortez) by petitioner Visayas Community Medical Center (VCMC), formerly Metro Cebu Community Hospital, Inc. (MCCHI), a non-stock, non-profit corporation operating a tertiary hospital in Cebu owned by the United Church of Christ in the Philippines. The National Federation of Labor (NFL) served as the exclusive bargaining representative of the rank-and-file employees. In December 1995, Perla Nava, president of the local affiliate NAMA-MCCH-NFL, wrote to the hospital administrator expressing the union's desire to renew the Collective Bargaining Agreement (CBA), but MCCHI returned the proposal, requiring Nava to first secure the endorsement of NFL's legal counsel. A conflict ensued between the federation and its local affiliate, leading MCCHI to temporarily suspend the collection of union fees and attempt to take over the union office, which Nava's group resisted.

On February 27, 1996, several union members led by Nava launched concerted protest activities, including wearing black and red armbands, marching around the hospital premises, and putting up placards and streamers. NFL's legal counsel disowned these activities as unauthorized. MCCHI directed the union officers to submit written explanations within 48 hours and placed them under preventive suspension. The union officers denied any work stoppage, explaining that the armbands were merely a sign of protest. DOLE Regional Office No. 7 subsequently issued certifications stating that NAMA-MCCH-NFL was not a registered labor organization. MCCHI sent individual notices to union members requiring them to explain why they should not be terminated for supporting illegal concerted activities by an unregistered union. On March 18, 1996, respondents and other union members submitted a collective reply, contending that the armbands were worn to protest MCCHI's refusal to bargain and that MCCHI could not question the union's legal personality.

Despite the DOLE certifications and the NLRC's denial of their Notice of Strike for lack of legal personality, Nava's group conducted a strike vote on April 2, 1996. The scheduled investigations did not proceed because the striking employees insisted on attending only as a group. MCCHI sent termination letters to union leaders and members who participated in the strike and picketing activities on March 30, 1996, and dismissed more than 100 striking employees in April 1996. The striking employees intensified their protest, blocking ingress and egress to the hospital, displaying placards reading "Please proceed to another hospital" and "we are on protest," and committing acts of intimidation and harassment. MCCHI suffered heavy losses due to low patient admission and suppliers' refusal to deliver on credit. MCCHI obtained a permanent injunction from the NLRC on September 18, 1996, and the Cebu City Government ordered the demolition of picketing structures as public nuisances on August 27, 1996.

Thereafter, the terminated employees, including respondents, filed complaints for illegal dismissal and unfair labor practice. Executive Labor Arbiter Belarmino, in his August 4, 1999 decision, dismissed the unfair labor practice claim, upheld the termination of the seven union officers who led the illegal strike, but found that ordinary NAMA members deserved different treatment, citing the rule that union members cannot be held liable for an illegal strike solely on the basis of membership or an affirmative vote authorizing it. He ordered reinstatement without back wages but, given that replacements had been hired and strained relations existed, awarded separation pay of one-half month per year of service. On appeal, the NLRC initially deferred resolution on respondents' case pending a possible compromise, but after settlement failed, the NLRC declared all complainants validly dismissed and deleted the separation pay award, finding them guilty of insubordination for persisting in illegal concerted activities despite knowledge that NAMA-MCCH-NFL was not a legitimate labor organization. The Court of Appeals reversed the NLRC, finding that respondents' participation was limited to wearing armbands and declaring their dismissal invalid for lack of evidence of illegal acts during the strike, ordering reinstatement and full back wages.

• Change of Theory on Appeal: Petitioner contended that respondents surreptitiously changed their position from admitting participation in the illegal strike before the NLRC to denying participation and claiming mere wearing of armbands before the CA, which should not be sanctioned.
• Receipt of Notices: Petitioner stressed that respondents signed the March 18, 1996 collective reply to the notices sent by petitioner regarding illegal concerted activities, proving receipt of said notices.
• Acknowledgment of Union Leadership: Petitioner argued that respondents acknowledged Perla Nava as their union leader, belied by their belated attempt to distance themselves from the Nava group who led the illegal strike.
• Failure to Deny Participation: Petitioner pointed out that respondents did not deny their participation in the illegal strike in their motion for reconsideration of the NLRC Decision dated March 12, 2003, but instead justified their resort to the strike due to the prevailing labor dispute.
• Entitlement to Back Wages: Petitioner maintained that dismissed employees who participated in an illegal strike are not entitled to back wages, citing Philippine Diamond Hotel and Resort, Inc. vs. Manila Diamond Hotel Employees Union, G & S Transport Corporation vs. Infante, Philippine Marine Officers' Guild vs. Compañia Maritima, and Escario vs. National Labor Relations Commission.

• Non-Participation in Illegal Acts: Respondents maintained that there was no iota of evidence that they took part in the illegal strike conducted by the Nava group or committed illegal acts such as blocking ingress and egress to the hospital premises.
• Lockout Rather Than Strike: Respondents claimed they were never involved in work stoppage but were instead locked out by petitioner, as hospital security personnel prevented them from entering the hospital upon petitioner's instructions.
• Consistent Non-Participation: Respondents asserted they consistently manifested their non-participation in the illegal strike before the regional arbitration branch, NLRC, and the CA, and argued there was absolutely no reason to delete the awards of back wages and separation pay in lieu of reinstatement.
• Entitlement to Back Wages and Damages: Respondents argued that since the December 7, 2011 Decision in the consolidated cases already declared the dismissal of union members as illegal and awarded separation pay and attorney's fees, they were entitled to back wages and damages.

• Validity of Dismissal: Whether respondents, as mere union members, were illegally dismissed for participating in an illegal strike conducted by an unregistered labor organization.
• Entitlement to Back Wages: Whether respondents are entitled to back wages despite having participated in an illegal strike.
• Appropriate Relief: Whether separation pay in lieu of reinstatement is the appropriate relief for respondents under the circumstances.

• Validity of Dismissal: Yes. Respondents were illegally dismissed because, as mere union members, they could not be terminated for mere participation in an illegal strike absent proof of illegal acts committed during the strike.
• Entitlement to Back Wages: No. Back wages were properly deleted because the "fair day's wage for a fair day's labor" principle bars compensation for work not performed during an illegal strike, and the exception for employees illegally prevented from working applies only when the strike is legal.
• Appropriate Relief: Yes. Separation pay equivalent to one month pay per year of service was the appropriate relief in lieu of reinstatement, given the lapse of 15 years, strained relations, and the hiring of replacements.

• Validity of Dismissal: Article 264(a) of the Labor Code distinguishes between union officers and ordinary union members. A union officer may be terminated for knowingly participating in an illegal strike, while an ordinary worker may be terminated only if he commits illegal acts during a strike. The NLRC and Labor Arbiter found that respondents actively supported the concerted protest activities, signed the collective reply manifesting that the mass actions were to protest management's refusal to negotiate, refused to appear in investigations, and failed to heed petitioner's final directive to desist. However, there was no evidence that respondents committed any illegal act during the strike. The CA found their participation limited to wearing armbands. Since mere participation in an illegal strike, without commission of illegal acts, does not warrant termination of an ordinary union member, the dismissal was invalid. Respondents' attempt to dissociate themselves from the Nava group was unpersuasive, as their motion for reconsideration before the NLRC no longer denied participation in the strike but justified it on the basis of the prevailing labor dispute. Nevertheless, the legal distinction between members and officers protected respondents from termination.

• Entitlement to Back Wages: The principle of "a fair day's wage for a fair day's labor" remains the basic factor in determining the award of back wages. If no work was performed, there can be no wage unless the employee was able, willing, and ready to work but was illegally locked out, suspended, dismissed, or otherwise illegally prevented from working. However, as stressed in Philippine Marine Officers' Guild vs. Compañia Maritima, affirmed in Philippine Diamond Hotel and Resort vs. Manila Diamond Hotel Employees Union and G & S Transport Corporation vs. Infante, this exception requires that the strike be legal—a condition not met here, as the strike was conducted by NAMA-MCCH-NFL, which was not a legitimate labor organization. Respondents did not work during the illegal strike and cannot be compensated for that period. The CA erred in awarding full back wages.

• Appropriate Relief: The alternative relief for union members dismissed for participating in an illegal strike is separation pay in lieu of reinstatement under circumstances including: (a) when reinstatement can no longer be effected due to passage of time or realities of the situation; (b) reinstatement is inimical to the employer's interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties; (e) the employer is prejudiced by the workers' continued employment; (f) facts making execution unjust or inequitable have supervened; or (g) strained relations between employer and employee. In the December 7, 2011 Decision, the Court held that 15 years had lapsed, strained relations had ensued, replacements had been hired, and many petitioners were employed elsewhere, old, sickly, or incapacitated, making separation pay without back wages the appropriate relief. The same circumstances applied to respondents.

• Distinction Between Union Officers and Union 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; the employer has the option to terminate a union officer for such participation. In contrast, an ordinary union member may not be terminated for mere participation in an illegal strike; termination is warranted only if the member commits illegal acts during the strike. The Court applied this distinction to hold that respondents, as mere union members who committed no illegal acts, were illegally dismissed.

• "Fair Day's Wage for a Fair Day's Labor" Principle — Back wages are granted to indemnify a dismissed employee for loss of earnings during the period out of work, premised on the principle that if no work was performed, no wage is due, unless the employee was able, willing, and ready to work but was illegally locked out, suspended, dismissed, or otherwise illegally prevented from working. This exception applies only when the strike is legal. The Court applied this principle to deny back wages to respondents who participated in an illegal strike and did not work during that period.

• Separation Pay in Lieu of Reinstatement — Separation pay may be awarded in lieu of reinstatement when reinstatement is no longer feasible due to: (a) passage of a long period of time or realities of the situation; (b) reinstatement inimical to the employer's interest; (c) reinstatement no longer feasible; (d) reinstatement does not serve the best interests of the parties; (e) employer prejudiced by continued employment; (f) facts making execution unjust or inequitable have supervened; or (g) strained relations between employer and employee. The Court applied this doctrine given the lapse of 15 years, strained relations, hiring of replacements, and the age or condition of many dismissed employees.

• "The law makes a distinction between union members and union officers. 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 passage articulates the controlling distinction in Article 264(a) between ordinary union members and union officers regarding liability for participation in an illegal strike, and is the ratio decidendi for the ruling that respondents were illegally dismissed.

• "With respect to backwages, the principle of a 'fair day's wage for a fair day's labor' remains as the basic factor in determining the award thereof. 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, suspended or dismissed or otherwise illegally prevented from working." — This quotation from G & S Transport Corporation vs. Infante, adopted by the Court, states the canonical formulation of the rule denying back wages to employees who participated in an illegal strike and did not work.

• "Considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or otherwise incapacitated, separation pay without back wages is the appropriate relief." — This passage from the December 7, 2011 Decision in the consolidated cases sets out the factual basis for awarding separation pay in lieu of reinstatement, applied by the Court to respondents in the present case.

• Abaria vs. National Labor Relations Commission, G.R. Nos. 154113, 187778, 187861, 196156, December 7, 2011, 661 SCRA 686 — Controlling precedent from the consolidated cases involving the same employer and labor dispute. The Court applied its ruling that the mass termination of union members who participated in the illegal strike was illegal, that separation pay of one month per year of service was appropriate in lieu of reinstatement, and that back wages were properly denied.

• G & S Transport Corporation vs. Infante, 559 Phil. 701 (2007) — Followed. The Court quoted this case for the "fair day's wage for a fair day's labor" principle and the rule that the exception for employees illegally prevented from working requires that the strike be legal.

• Philippine Marine Officers' Guild vs. Compañia Maritima, 131 Phil. 218 (1968) — Followed. Cited as the origin of the rule that the exception to the "no work, no pay" principle requires that the strike be legal, as affirmed in subsequent cases.

• Philippine Diamond Hotel and Resort, Inc. vs. Manila Diamond Hotel Employees Union, 526 Phil. 679 (2006) — Followed. Affirmed the rule from Philippine Marine Officers' Guild that back wages are not available to employees who participated in an illegal strike.

• Escario vs. National Labor Relations Commission (Third Division), G.R. No. 160302, September 27, 2010, 631 SCRA 261 — Followed. Cited for the doctrine on back wages as indemnification for loss of earnings and for the enumerated circumstances warranting separation pay in lieu of reinstatement.

• Bascon vs. CA, 466 Phil. 719 (2004) — Cited by the CA. The CA relied on this case to declare respondents' termination invalid in the absence of evidence of illegal acts during the strike; the Supreme Court sustained this ruling on the validity of dismissal but reversed the back wage award.

• Sta. Rosa Coca-Cola Plant Employees Union vs. Coca-Cola Bottlers Phils., Inc., 541 Phil. 421 (2007) — Followed. Cited for the distinction between union officers and union members regarding termination for participation in an illegal strike.

• Article 264(a), Labor Code — 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 employment status. The Court applied this provision to distinguish between union officers (who may be terminated for knowingly participating in an illegal strike) and ordinary union members (who may be terminated only if they commit illegal acts during the strike), holding that respondents, as mere members who committed no illegal acts, were illegally dismissed.

• Article 4, Labor Code — States that doubts in the interpretation and implementation of laws shall be resolved in favor of labor. The Labor Arbiter invoked this provision in awarding separation pay to ordinary union members whose participation in the illegal strike was doubtful, being merely followers swayed by their leaders.

Teresita J. Leonardo-De Castro (Acting Chairperson), Lucas P. Bersamin, Mariano C. del Castillo, and Marvic Mario Victor F. Leonen concurred.