G.R. No. L-29966 February 28, 1974
HERALD DELIVERY CARRIERS UNION (PAFLU) and PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), petitioners, vs. HERALD PUBLICATION, INC., respondent.

FACTS

Petitioners Herald Delivery Carriers Union and PAFLU filed an unfair labor practice case against respondent Herald Publications, Inc. The union had submitted written bargaining proposals on behalf of 90 delivery and carrier workers. Instead of engaging in negotiations, the employer unilaterally contracted out the delivery work to twelve independent contractors, leading to the separation of thirty-three union members. The employer also failed to submit a point-by-point reply to the bargaining proposals as required by law, merely asserting that the carriers were independent contractors and not employees, thereby evading its duty to bargain.
The Court of Industrial Relations (CIR) absolved the employer of the charge of refusal to bargain. The CIR acknowledged the employer’s claim that it was considering the new distribution system even before the union’s strike and found that both parties were not keen on meeting, partly because the same negotiators were involved in separate talks with a sister union. The CIR concluded that the employer did not display a strong aversion to bargaining, leading to the dismissal of the complaint.

ISSUE

Whether respondent Herald Publications, Inc. committed an unfair labor practice by refusing to bargain collectively in good faith with the petitioners’ union.

RULING

Yes, the Supreme Court reversed the CIR and found the respondent guilty of unfair labor practice. The legal logic centers on the statutory duty to bargain in good faith under the Industrial Peace Act ( Republic Act No. 875 ). This duty is a mutual obligation to meet, confer promptly, and negotiate with sincerity to reach an agreement. The Court emphasized that good faith bargaining is undermined by unilateral actions that affect terms and conditions of employment, such as contracting out work that is a mandatory subject of bargaining, without prior discussion with the union.
The employer’s failure to provide a substantive reply to the union’s proposals and its immediate resort to contracting out the work constituted a clear evasion of its statutory duty. The act of outsourcing, which resulted in the layoff of union members, was a fundamental change in employment conditions that required negotiation. The employer’s belated claim that the workers were independent contractors was a transparent attempt to avoid its bargaining obligations. The CIR erred in excusing this conduct; the law requires active and sincere efforts to negotiate, not passive indifference or unilateral implementation of changes.
Consequently, the Supreme Court set aside the CIR’s order. Respondent Herald Publications, Inc. was found guilty of unfair labor practice for not bargaining in good faith and was ordered to pay three months of back wages to the laid-off workers as a form of relief for the violation.