Title
Royal Undergarment Corporation of the Philippines vs. Court of Industrial Relations
Case
G.R. No. 39040
Decision Date
Jun 6, 1990
Cruz, a union leader, was dismissed twice by Royal Undergarment Corp. The Supreme Court ruled his termination was unfair labor practice, ordering reinstatement with backwages, citing union-related motives and insufficient grounds for dismissal.
unfair labor practice
unjust dismissal
employee

Case Summary (G.R. No. 39040)

Factual Background

Respondent Antonio Cruz was first elected RUWU president in December 1961. On December 14, 1961, the RUWU-PTGWO, represented by the PTGWO National Secretary and Cruz as RUWU president, submitted collective bargaining proposals to petitioner. On the next day, December 15, 1961, petitioner, through its personnel manager, terminated Cruz’s employment allegedly after analyzing his record. Cruz’s wife, Felicidad Cruz, who was also employed by petitioner, was likewise terminated.

RUWU called a strike during the first week of January 1962. Through the conciliation efforts of the Department of Labor, on January 10, 1962 the parties entered into a Return-to-Work Agreement. The agreement provided that, for the two employees Antonio Cruz and his wife, the union would entrust the settlement of its complaint to management, with reinstatement for both employees to be granted when RUWU-PTGWO would have been chosen as the collective bargaining agent at a consent election held on company premises. The record did not show the outcome of the consent election, but petitioner later re-employed and reinstated both Cruz and his wife, reflecting RUWU-PTGWO’s victory in that election.

On March 31, 1962, RUWU-PTGWO and petitioner concluded a collective bargaining agreement containing a grievance procedure. That procedure was used on multiple occasions involving suspensions of union members, with Cruz participating actively as union president.

In November 1962, PTGWO urged its member unions to stage a nationwide strike. Cruz campaigned among RUWU members to join the strike. On November 28, 1962, around 11:00 p.m., within petitioner’s premises, Cruz approached three co-employees who served as company supervisors—Camaguin, Dayadante, and Gaspar. These supervisors claimed that Cruz, allegedly under the influence of liquor, uttered threatening remarks and said he would give them a week to live. They also alleged Cruz challenged another co-employee to a fight.

Cruz and his witnesses denied the accusation. They testified that Cruz actually told the supervisors that he knew they were strong and, if the nationwide strike would proceed the following day, they should join and use their strength in support of the strike. Immediately thereafter, the supervisors went to petitioner’s personnel officer and executed an affidavit on November 29, 1962 concerning the incident.

On November 30, 1962, petitioner placed Cruz on preventive suspension effective December 3, 1962, citing threats to the lives of four employees and his reported intoxication, both allegedly contrary to company rules. Upon Cruz’s and PTGWO’s request, petitioner held a conference described as an investigation. On December 13, 1962, petitioner dismissed Cruz for being under the influence of liquor during the November 28 incident and for threatening the lives of four co-employees.

Unfair Labor Practice Complaint and CIR Decision

Cruz filed a complaint for unfair labor practice with the Court of Industrial Relations. On January 21, 1974, the Court of Industrial Relations affirmed the hearing examiner’s findings and ruled that petitioner committed unfair labor practice. It ordered petitioner to cease and desist from such acts and to reinstate Cruz to his former or equivalent position without loss of seniority and other privileges, and to pay him backwages from the date of dismissal up to November 17, 1969.

The Court of Industrial Relations reasoned that Cruz’s union activities were undisputed. It emphasized his active involvement after he became RUWU president and his urging of members to join the planned nationwide strike through PTGWO. It also found an apparent “antipathy” on petitioner’s part toward Cruz. It noted that when RUWU sent collective bargaining proposals represented by Cruz, both Cruz and his wife were dismissed one day later, with petitioner allegedly offering no specific reasons other than that Cruz’s record was “carefully analyzed.” It further highlighted the peculiar arrangement in the Return-to-Work Agreement, where reinstatement depended on RUWU’s success in a consent election, which the Court treated as revealing animosity tied to Cruz’s union identity.

The Court of Industrial Relations also scrutinized the second dismissal in December 1962. It found the evidence of Cruz’s alleged intoxication based solely on the reports of the three supervisors claimed to have been threatened. The Court considered the source “biased,” noting that none of these witnesses supplied details of motivation for the alleged threats and that none filed criminal charges. It concluded that the incident was exaggerated to provide a pretext for dismissal and that the inducing cause of Cruz’s dismissal was petitioner’s antipathy toward his union activity rather than misconduct.

Petitioner’s Assignments of Error and Arguments

Petitioner sought reversal and assigned multiple errors. It argued first that the Court of Industrial Relations committed grave misapprehension of fact in holding that union activities caused Cruz’s dismissal. It maintained that petitioner did not interfere with or prevent union activities and had even allowed active unionism inside the company. It further contended that Cruz’s dismissal was not impelled by union participation but solely by infractions of company rules, specifically serious threats, challenging another employee to a fight, and intoxication while on duty. It also invoked Management prerogative and argued that the dismissal was for cause under Rep. Act No. 1052, as amended.

For its third assigned error, petitioner argued that, even assuming unfair labor practice, the Court of Industrial Relations erred in awarding full backwages without deducting what Cruz allegedly earned elsewhere during the period of lay-off.

The Parties’ Contentions on Causation and the Strength of Evidence

Petitioner anchored its defense on the claim that it disciplined Cruz for alleged violent threats and intoxication, supported by the affidavits and testimony of the supervisors, and framed the proceedings as a legitimate application of company rules. It insisted that there was no interference with or discriminatory discouragement of union membership, and that its actions were responsive to alleged workplace misconduct.

Cruz and RUWU, through the Court of Industrial Relations’ findings, relied on the surrounding circumstances. They emphasized the sequence of events showing a pattern: dismissal of Cruz and his wife shortly after the filing of collective bargaining proposals; the Return-to-Work Agreement’s reinstatement contingency tied to union success; and the second dismissal occurring during Cruz’s campaign to join the nationwide strike. They also contested the credibility and seriousness of the alleged threatening remarks, pointing to the lack of criminal charges and the absence of evidence regarding the witnesses’ motivation.

Legal Basis and Reasoning of the Court

The Court held that Section 3 of Republic Act No. 875 (Industrial Peace Act) recognized employees’ right to self-organization, including the right “to form, join or assist labor organizations” for collective bargaining and to engage in concerted activities for mutual aid or protection. It further underscored Section 4(a)(4), which makes it unfair labor practice for an employer to discriminate in regard to tenure or any term or condition of employment to encourage or discourage membership in any labor organization.

In applying these statutory principles, the Court deferred to the Court of Industrial Relations’ findings. It found that the totality of evidence supported the conclusion that Cruz was unjustly dismissed because of his union activities. It reasoned that petitioner’s charge of intoxication and threats was too flimsy to merit serious consideration. It treated as undisputed that Cruz, as RUWU president, was known for aggressive and militant union activism; that Cruz and his wife had been previously dismissed due to their active participation in union affairs; that reinstatement followed only because of the express terms of the Return-to-Work Agreement after RUWU-PTGWO won in the consent election; and that Cruz was dismissed again while campaigning among union members to join the nationwide strike in which RUWU was involved.

The Court then explained the evidentiary logic for inferring union motivation in discrimination cases. It acknowledged a general principle that an employer may treat with an employee freely and need not justify action with a reason. However, it stated that when the circumstances, the employer’s prior conduct, and the intimate connection between the employer’s action and the employee’s union affiliation or activities raise suspicion as to the employer’s motivation, the employer’s failure to ascribe a valid reason may justify an inference that the unexplained conduct was inspired by the employee’s union membership or activities. It cited the reasoning from Rothenberg on Labor Relations, as quoted in San Miguel Brewery, Inc., et al. v. Santos, et al., No. L-12682, August 31, 1961, 2 SCRA 1081.

As to review of factual findings, the Court reiterated that findings of the Court of Industrial Relations are conclusive absent a showing that they lack support in the record. It stated that the industrial court is governed by the rule of substantial evidence, not by the preponderance standard used in ordinary civil cases. It referenced Sanchez v. Court of Industrial Relations, L-19000, July 31, 1963, 8 SCRA 654; and Industrial Commercial Agricultural Workers Organization v. Bautista, L-15639, April 30, 1963, 7 SCRA 907. Consequently, it declined to revisit the factual conclusions that were supported by evidence.

Backwages: Modification of the Period and Conditions

The Court addressed petitioner’s third assigned error on backwages. It explained that there is a judicial trend to fix a reasonable period for payment of backwages. This practice was aimed at avoiding protracted post-judgment hearin

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