National Union Of Workers In The Hotel Restaurant v. Honorable Court Of Appeals
NUWHRAIN- Dusit Hotel Nikko Chapter v. Court of Appeals / Secretary of Labor and Employment, G.R. Nos. 163942 & 166295, November 11, 2008
- Labor Law
- illegal strike
- grooming standards
- unprotected act
- no strike no lockout
- picketing
- union liability
- payroll reinstatement
- Secretary of Labor discretion
- compulsory arbitration
- union officers and members
- blockade ingress and egress
I. Facts of the Case
NUWHRAIN-APL-IUF/Dusit Hotel Nikko Chapter was the certified bargaining agent of regular rank-and-file employees of Dusit Hotel Nikko (Philippine Hoteliers, Inc.), but bargaining deadlock led the Union to plan and conduct collective action. On January 18, 2002, members came to work with closely cropped hair/cleanly shaven heads, the Hotel prevented their entry citing the Hotel’s Grooming Standards, and the Union responded with picketing and later a blockade that stopped operations in some restaurants. The Hotel countered by issuing preventive suspensions/terminations, charging illegal picket/illegal strike/unfair labor practice, while the Secretary of Labor assumed jurisdiction and directed what was described as “payroll reinstatement.” The Supreme Court had to determine whether the Union’s conduct constituted an illegal (unprotected) strike despite the Hotel’s claim of being merely enforcing grooming rules, and to clarify when payroll reinstatement may be ordered instead of actual reinstatement.
October 24, 2000
The Union submitted its Collective Bargaining Agreement (CBA) negotiation proposals to Dusit Hotel Nikko.
December 20, 2001
The Union filed a Notice of Strike with the NCMB on the ground of bargaining deadlock; conciliation hearings were conducted but proved unsuccessful.
January 14, 2002
The Union conducted a strike vote and decided to wage a strike.
January 17, 2002
The Union held a general assembly in its basement office at the Hotel where some members had closely cropped hair or were cleanly shaven.
January 18, 2002
More male Union members reported for work with the same hair style; the Hotel prevented them from entering, citing violation of its Grooming Standards. The Union staged picketing outside the Hotel, and other workers were likewise prevented from entering, causing disruption and temporary cessation of hotel operations in three restaurants.
January 20, 2002
The Hotel issued notices to Union members, preventively suspending them and charging, among others, violation of duty to bargain, illegal picket, unfair labor practice, violation of Grooming Standards, illegal strike, and illegal acts during the illegal strike.
January 21, 2002
The Union filed a second Notice of Strike with the NCMB alleging unfair labor practice and illegal lockout under Article 248(a) of the Labor Code.
January 26, 2002
The Hotel terminated the services of 29 Union officers and 61 Union members, and suspended 81 employees for 30 days, 48 employees for 15 days, 4 employees for 10 days, and 3 employees for 5 days; on the same date, the Union declared a strike and engaged in picketing with unlawful blocking of ingress and egress during the picket.
January 31, 2002
The Union filed a third Notice of Strike with the NCMB alleging unfair labor practice and union-busting.
January 31, 2002
The Secretary of Labor assumed jurisdiction via an Order and certified the case to the NLRC for compulsory arbitration, consolidating the Notices of Strike and related events; the Order allowed the Hotel, in lieu of actual reinstatement, to “reinstate dismissed/suspended workers in the payroll.”
February 1, 2002
Pursuant to the Secretary’s Order, the Hotel issued an inter-office memorandum directing some employees to return to work while advising others not to do so because they were under payroll reinstatement.
March 15, 2002
The Secretary denied the Union’s motion for reconsideration of the January 31, 2002 Order.
October 9, 2002
The NLRC issued a Decision in NLRC NCR CC No. 000215-02 ordering the Hotel and the Union to execute a CBA within 30 days, ruling that the January 18, 2002 concerted action was an illegal strike and that it violated the “No Strike, No Lockout” rule; it ordered dismissal of 29 Union officers and 61 Union members with financial assistance for the dismissed union members.
February 7, 2003
The NLRC denied the Union’s Motion for Reconsideration.
January 19, 2004
The CA dismissed the Union’s petition in CA-G.R. SP No. 76568 that sought to annul the NLRC decision, finding no grave abuse of discretion and affirming the NLRC.
May 6, 2004
In CA-G.R. SP No. 70778, the CA denied due course to and dismissed the Union’s petition challenging the Secretary’s January 31, 2002 and March 15, 2002 Orders.
June 1, 2004
The CA denied the Union’s Motion for Reconsideration in CA-G.R. SP No. 76568.
November 25, 2004
The CA denied the Union’s Motion for Reconsideration in CA-G.R. SP No. 70778.
November 11, 2008
The Supreme Court affirmed the CA’s May 6, 2004 Decision in CA-G.R. SP No. 70778, set aside the CA’s January 19, 2004 Decision in CA-G.R. SP No. 76568, and modified the NLRC ruling by declaring the 29 Union officers to have lost employment status, reinstating 61 Union members without backwages, and allowing separation pay in lieu of reinstatement if the Hotel had already hired replacements.
II. Issues
Whether the Union, the 29 Union officers and 61 members may be adjudged guilty of staging an illegal strike on January 18, 2002 despite respondents' admission that they prevented said officers and members from reporting for work for alleged violation of the Hotel's Grooming Standards.
Whether the 29 Union officers and 61 members may validly be dismissed and more than 200 members be validly suspended on the basis of four self-serving affidavits of respondents.
Whether or not respondents in preventing union officers and members from reporting for work committed an illegal lock-out.
Whether or not the Secretary of Labor has discretion to impose 'payroll' reinstatement when he assumes jurisdiction over labor disputes.
III. Ruling
Whether the Union, the 29 Union officers and 61 members may be adjudged guilty of staging an illegal strike on January 18, 2002 despite respondents' admission that they prevented said officers and members from reporting for work for alleged violation of the Hotel's Grooming Standards.
The Union, including its 29 officers and 61 members, was properly treated as having staged an illegal strike on January 18, 2002 when its concerted violation of the Hotel’s Grooming Standards resulted in disruption of the Hotel’s operations.
How the Court reasoned
- The Court treated the Union’s concerted acts as part of a strike/picketing context rather than isolated individual noncompliance, because the disruptive result affected the Hotel’s operations.
- The Hotel’s prevention of entry did not negate the Union’s responsibility where the Union’s collective action—coming to work in a manner violating the Grooming Standards—triggered the ensuing stoppage and disruption.
- The Court held that the Union’s concerted violation of the Hotel’s Grooming Standards was an unprotected act that should be considered as an illegal strike due to its effect on operations.
- Since the concerted action violated the “No Strike, No Lockout” regime applicable during bargaining/conciliation stages, the legal consequence flowed to Union liability and employment sanctions.
“Thus, we hold that the Union's concerted violation of the Hotel's Grooming Standards which resulted in the temporary cessation and disruption of the Hotel's operations is an unprotected act and should be considered as an illegal strike.”
Rule applied
Article 263 (g) and Article 263 (c) of the Labor Code, as amended
Whether the 29 Union officers and 61 members may validly be dismissed and more than 200 members be validly suspended on the basis of four self-serving affidavits of respondents.
The Court did not overturn the sanctions imposed below for the 29 officers and 61 members; however, it modified the disposition of employment status by declaring the officers to have lost employment status and reinstating the members without backwages (with separation pay in lieu of reinstatement if replacements had been hired).
How the Court reasoned
- The Court accepted the labor tribunals’ characterization of the January 18, 2002 conduct as an illegal strike, making the adverse employment consequences legally consequential.
- While the Union questioned the evidentiary basis as supposedly supported only by self-serving affidavits, the decisive factor remained the legally significant concerted conduct and its disruptive operational effect.
- The Court modified rather than entirely reversed the liabilities to reflect proper consequences: declaring loss of employment status for the 29 officers and reinstating the 61 members without backwages.
- The Court allowed separation pay in lieu of reinstatement if the Hotel had already hired replacements, reflecting practical impossibility and fairness in labor relations remedies.
Rule applied
Article 263 (g) and Article 263 (c) of the Labor Code, as amended
Whether or not respondents in preventing union officers and members from reporting for work committed an illegal lock-out.
The Court did not find an illegal lockout attributable to the Hotel; instead, the Court treated the Union’s concerted acts as the illegal-strike/unprotected-act issue that led to disruption.
How the Court reasoned
- The Court focused on whether the Union’s conduct constituted an illegal strike/unprotected act causing operational disruption rather than on whether the Hotel’s entry-prevention was, by itself, an illegal lockout.
- The Hotel’s action was anchored on the Hotel’s Grooming Standards compliance requirements and occurred in response to Union members reporting with the prohibited hair style.
- Because the Court characterized the overall concerted conduct as illegal strike/unprotected action, the premise for an illegal lockout theory was not accepted.
- The resulting disputes in ingress/egress were therefore treated as consequences of the illegal strike/picketing conduct, not as illegal lockout by the employer.
Rule applied
Article 248(a) of the Labor Code; Article 263 (c) of the Labor Code, as amended
Whether or not the Secretary of Labor has discretion to impose 'payroll' reinstatement when he assumes jurisdiction over labor disputes.
The Court recognized and ruled on the payroll reinstatement issue: payroll reinstatement may be allowed only when special circumstances make actual reinstatement impracticable, and the Secretary’s authority was not unlimited.
How the Court reasoned
- The Court ruled on the issue despite mootness arguments, because the payroll reinstatement question needed clarification in the context of the Secretary’s assumption of jurisdiction.
- The Court held that payroll reinstatement is not the default remedy replacing actual reinstatement; it is subject to exceptions.
- Payroll reinstatement may be ordered only when special circumstances make actual reinstatement impracticable.
- Applying the controlling principles, the Court modified the remedy for the affected workers accordingly—reinstatement without backwages for the 61 members, and separation pay in lieu of reinstatement when replacement had already occurred.
“As with most rules, however, this one is subject to exceptions.”
Rule applied
University of Immaculate Concepcion, Inc. v. Secretary of Labor; Manila Diamond Hotel Employees' Union v. Court of Appeals; University of Santo Tomas v. NLRC; Labor Code reinstatement framework
Doctrines
A union’s concerted violation of a workplace rule that results in the temporary cessation and disruption of hotel operations may constitute an unprotected act that should be considered as an illegal strike.
Payroll reinstatement is not a blanket substitute for actual reinstatement; it may be allowed only when special circumstances make actual reinstatement impracticable.
Final Disposition
WHEREFORE, premises considered, the CA's May 6, 2004 Decision in CA-G.R. SP No. 70778 is hereby AFFIRMED, and the CA's January 19, 2004 Decision in CA-G.R. SP No. 76568 is set aside; the NLRC ruling is modified by declaring the 29 Union officers to have lost employment status, reinstating the 61 Union members without backwages, and allowing separation pay in lieu of reinstatement if the Hotel had already hired replacements.
Notes
The Supreme Court affirmed the CA’s disposition on the Secretary of Labor’s orders while modifying the employment-status consequences arising from the illegal-strike determination (loss of status for officers; reinstatement without backwages for certain members; separation pay if reinstatement is no longer feasible).