G.R. No. L-10263, December 17, 1957
ASSOCIATION OF DRUGSTORE EMPLOYEES, petitioner, vs. ARSENIO MARTINEZ, ET AL., respondents.

FACTS

This is an appeal by certiorari from a decision of the Court of Industrial Relations (CIR). The case is an incidental proceeding (Case No. 949-V(8)) to a main labor dispute between Farmacia Oro and the Association of Drugstore Employees. The employer filed a motion seeking authority to close three of its stores (Taft Avenue, Legarda, and Rizal Avenue branches) and lay off the personnel there, citing heavy financial losses. The Union opposed, alleging the layoffs were discriminatory and part of a scheme to prejudice Union members, as transfers of personnel between branches were made without regard to seniority. The Union later filed an urgent motion after the management closed the Rizal and Taft Avenue branches, praying for an examination of the company’s books, reinstatement with back wages based on seniority, and contempt charges. The Union eventually withdrew its demand for a financial examination, effectively admitting the employer’s right to close the stores, but maintained its opposition to the layoff procedure for violating the seniority rule established in a prior partial CIR decision in the main case (No. 549-V). The CIR, by majority decision, granted the employer authority to close the two branches and lay off the personnel, finding the transfers were made in the honest exercise of management prerogative without discriminatory intent. The Union’s motion for reconsideration was denied.

ISSUE

Whether the employer violated the seniority rule, which was part of a contract fixing terms and conditions of work freely entered into by the parties and made the basis of a final CIR award, when it laid off employees from the closed branches without applying that seniority rule across the entire company.

RULING

The Supreme Court dismissed the petition and affirmed the CIR decision. The Court held that the seniority rule established in the prior partial decision was merely a declaration of how seniority should be determined for crediting purposes and could not be invoked in this case. The petitioner Union had acknowledged the employer’s right to close the stores and lay off personnel. The CIR found as a fact that the transfers of employees to the branches later closed were made pursuant to the employer’s management prerogative and not as a discriminatory scheme to ease out Union members. Since this finding of fact—that there was no discriminatory intent—is conclusive and not subject to review, the sole issue raised by the Union could not be sustained. The fact that some senior employees were laid off due to the closure of their assigned branches did not, in itself, constitute a violation of the seniority agreement or prove discrimination, as the layoff was a direct consequence of the cessation of business in those specific stores.
DISSENTING OPINION (Reyes, J.B.L., with Paras, C.J., concurring):
The dissent argued that the seniority rule violation was directly involved. Since employees were rotated among branches and should be considered employees of the corporation as a whole, any layoff due to necessary closures should have been conducted according to the stipulated seniority rule, retaining the oldest employees company-wide. Treating branches as separate units only for layoff purposes allowed for potential discrimination, as the company could assign disliked employees to branches slated for closure. The fact that nine senior employees were among those laid off supported the minority CIR judges’ view that discrimination was intended and should not be sanctioned.