G.R. No. L-39514 July 27, 1988
ASUNCION BROS. & CO., INC., and JOSE ASUNCION, petitioners, vs. COURT OF INDUSTRIAL RELATIONS, JUAN B. CEPE, et al., respondents.

FACTS

The petitioners, Asuncion Bros. & Co., Inc. and its general manager Jose Asuncion, were charged with unfair labor practice before the Court of Industrial Relations (CIR). The complaint, filed by certain employees and their union, alleged that the company, through Asuncion, placed union members on a rotation basis and eventually dismissed them due to their union activities. The petitioners denied the accusations, asserting that the rotation and subsequent dismissals were due to legitimate business reasons, including the employees’ habitual absenteeism, tardiness, and “moonlighting” with other firms, which disrupted their integrated assembly line operations.
After proceedings before a Hearing Examiner, the CIR adopted the Examiner’s findings and recommendation, holding petitioners guilty of unfair labor practice. The CIR ordered the gradual reinstatement of the dismissed employees and awarded them six months of back wages. The petitioners appealed to the Supreme Court, arguing that the CIR had lost jurisdiction upon the promulgation of the Labor Code on May 1, 1974, and that its judgment was unsupported by evidence.

ISSUE

The primary issues were: (1) whether the CIR lost jurisdiction over the case upon the promulgation of the Labor Code; and (2) whether the CIR’s finding of unfair labor practice was supported by substantial evidence.

RULING

The Supreme Court reversed the CIR’s decision. On the jurisdictional issue, the Court ruled that the CIR retained jurisdiction. While the Labor Code was promulgated on May 1, 1974, its effectivity was set six months later on November 1, 1974. Furthermore, the transitory provision (Article 338) was amended to refer to the Code’s “effectivity,” not its “passage.” Therefore, the CIR’s decision rendered on June 27, 1974, was issued while it still had valid jurisdiction.
On the substantive issue, the Court found the CIR’s decision gravely erroneous. The CIR failed to consider material evidence presented by the petitioners, including testimonies from impartial witnesses and documentary proof showing that a majority of the complainants had secured employment elsewhere and that their dismissals were based on specific infractions of company rules. This evidence provided adequate justification for the termination of employment, refuting the claim that it was motivated by union activity.
Critically, the Court emphasized that the employees and their union had completely disregarded the grievance procedure mandated in their collective bargaining agreement (CBA). The CBA required that any grievance, including those related to work rotation or dismissal, be first submitted to a grievance committee and, if unresolved, to the Bureau of Labor Relations or arbitration. The complainants’ failure to exhaust this agreed-upon procedure constituted a violation of their duty to bargain collectively. The CBA was the law between the parties, and the refusal to follow its terms could itself constitute unfair labor practice by the union. Consequently, the petitioners were absolved from any liability for unfair labor practice.