Title
Far Eastern University-Dr. Nicanor Reyes Medical Foundation vs. FEU-NRMF Employees Association
Case
G.R. No. 168632
Decision Date
Oct 16, 2006
Medical institution FEU-NRMF and union FEU-NRMFEA-AFW clashed over CBA negotiations, leading to a strike. SC ruled strike valid due to improper service of Assumption Order, upholding union rights.
labor dispute
strike
dismissal of union officers

Case Summary (G.R. No. 175949)

Factual Background

FEU-NRMF and the respondent union entered into a CBA in 1994, with an expiration date of 30 April 1996. Before the expiry, the respondent union sent a letter-proposal dated 21 March 1996 containing economic and non-economic proposals for the new CBA. On 8 May 1996, FEU-NRMF replied with a letter rejecting the union’s demands and stating it would maintain the provisions of the old CBA, explaining that it could not afford educational and death benefits, uniforms, longevity pay, meal allowance, and special pay due to financial constraints, although it assured it would seriously consider the proposal for salary increase.

Conciliation efforts before the NCMB-NCR failed due to the “unyielding stance” of both parties. As a result, on 6 August 1996, the respondent union filed a Notice of Strike on the ground of bargaining deadlock. A strike vote was conducted on 23 August 1996, and the results were submitted to the NCMB-NCR on 26 August 1996. After the expiration of the thirty-day cooling off period and the seven-day strike ban, the union staged the strike on 6 September 1996.

Before the strike commenced, on 4 September 1996, the respondent union offered a skeletal force of nursing and health personnel to man hospital operations during the strike. FEU-NRMF allegedly failed or refused to accept the offer. FEU-NRMF, on 29 August 1996, filed a petition before the NLRC for assumption of jurisdiction or certification of labor dispute, emphasizing that it operated a medical institution providing health care to patients. On 5 September 1996, the Secretary of Labor granted the petition and issued an Order assuming jurisdiction, prohibiting any strike or lockout whether actual or impending, and enjoining acts that might exacerbate the situation.

On 6 September 1996, the NLRC process server, Francisco Escuadra, certified that on 5 September 1996 at around 4:00 P.M. he attempted to serve the assumption order on union officers at the strike area, but no one was around, so he posted copies of the order at conspicuous places within the hospital premises. The union claimed it had no knowledge of the assumption order because it had been unable to receive a copy, and therefore continued holding the strike until 12 September 1996. On that date, the Secretary of Labor issued another order directing all striking employees to return to work and directing FEU-NRMF to accept them under the same terms and conditions prevailing before the strike. On 13 September 1996, the parties executed a Return to Work Agreement where the striking employees agreed to return and FEU-NRMF undertook to accept them status pro ante, and the striking employees resumed work.

FEU-NRMF thereafter filed a case before the NLRC, contending that the union had staged the strike in defiance of the assumption order, rendering it illegal. FEU-NRMF also alleged that the strike was conducted in a manner that endangered patients, specifically that striking employees barricaded hospital ingress and egress, preventing trucks with medicine and food from entering, and blocking an ambulance transporting a patient in critical condition. FEU-NRMF also alleged that patients were prevented from seeking medical assistance by the blockade. It sought a declaration of illegality, dismissal of the striking employees, decertification of the union, and damages.

The respondent union countered that FEU-NRMF had refused to bargain collectively despite alleged financial gains, amounting to surface bargaining. It argued that it complied with procedural requisites by filing a notice of strike and strike vote with the NCMB-NCR, observing the cooling off and strike ban periods. It also contended that FEU-NRMF refused the offered skeletal workforce. On the manner of strike conduct, the union maintained that the strike was peaceful and orderly, with employees merely sitting down outside the hospital with placards airing grievances. It further asserted that it did not defy any Secretary of Labor order because its officers and members never received a copy.

Labor Arbiter, NLRC, and Appellate Review

On 27 May 1998, the Labor Arbiter declared the strike illegal and dismissed the union officers. The Labor Arbiter held that the union officers conducted the strike in defiance of the assumption of jurisdiction order. The Labor Arbiter also denied decertification for lack of jurisdiction and denied damages for lack of sufficient evidence.

On appeal, the respondent union filed a Partial Appeal before the NLRC, asserting grave abuse of discretion in denying a formal trial and in holding the assumption order was properly served. On 23 September 2002, the NLRC issued a resolution affirming the Labor Arbiter in toto. The NLRC found, among others, that during NCMB-NCR conciliation, the union officers admitted knowledge that the Secretary of Labor issued an assumption order enjoining the strike they were conducting, and it thus treated the officers’ dismissal as warranted for “utter defiance.”

The union’s motion for reconsideration was denied on 30 June 2004 for failure to show the kind of palpable or patent errors required under the NLRC Revised Rules of Procedure. The union then elevated the matter to the Court of Appeals through a petition for certiorari under Rule 65, seeking to annul the NLRC resolutions.

On 22 March 2005, the Court of Appeals granted the petition, reversed, and set aside the NLRC resolutions in so far as they ruled on the illegality of the strike and loss of employment status of the individual petitioners. The Court of Appeals found that no valid personal service of the assumption order was effected that could bind the striking employees, and it also rejected the procedural basis for FEU-NRMF’s position as to service and the resulting adverse consequences. The Court of Appeals’ 22 June 2005 Resolution denied reconsideration.

Issues and the Crucial Determination

Before the Supreme Court, petitioners challenged the Court of Appeals’ reversal, raising issues on whether service of the assumption order was validly effected, whether the strike was illegal, and whether the dismissal of union officers was valid. The Supreme Court treated the crucial question as whether the assumption order was validly served by the process server so as to bind the union and render it liable for acts committed after the issuance of the order.

Legal Reasoning on the Validity of Service

The process server’s certification stated that he attempted personal service on 5 September 1996 at about 4:00 P.M., but union officials were not available to receive the order, so he posted copies in conspicuous places within the hospital. The Supreme Court ruled that, while the posting was evidently resorted to because the striking employees were not present at the strike area, the mode of service used was not sanctioned by either the NLRC Revised Rules of Procedure or the Rules of Court.

Under the NLRC Revised Rules of Procedure, service of notices and copies of orders is generally to be made personally by the bailiff or duly authorized public officer within the prescribed period, with registered mail as an alternative. The Court held that the assumption order was not a final judgment and thus the rules on service of decisions and final awards did not apply. The Court therefore applied the rules governing service of summons and orders. It emphasized that personal service is the proper mode in light of the urgent nature and the public policy underlying the injunction issued in an assumption order, which aims at immediate effect and receipt by the intended parties.

The Court further explained that substituted service must strictly comply with the procedural framework in the Rules of Court, and that failure to observe those requirements renders the substituted service and the proceedings taken thereafter void. The Court identified the infirmity: the process server merely posted copies of the order in conspicuous hospital locations. Such posting was not among the modes prescribed for personal or substituted service, and it was not reflected within the enumerated substitutes when personal service is impossible due to the absence of the party concerned. For that reason, the Court found that personal service was not achieved, substituted service was not validly undertaken, and posting alone did not satisfy the rigid requirement of service that fulfills the constitutional requirement of due process.

The Court stressed that employment is a property right and cannot be deprived without due process. Due process demanded that the respondent union be properly notified of the assumption order enjoining the strike and requiring return to work. It held that a clear and unmistakable proof of compliance with the rules on personal or substituted service must exist. In the absence of such proof, the union could not be adjudged to have defied the assumption order because it was not properly apprised of it.

Determination on Illegality of the Strike and Liability of Union Officers

Having ruled against the validity of service, the Supreme Court treated the strike as valid under the circumstances. It recognized, however, that even if procedural requirements for striking are satisfied, a strike may still be declared invalid where illegal means are employed. Here, it found no evidence supporting the allegations

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