This case underscores the principle that only unions certified as the exclusive bargaining representative can compel employers to negotiate a collective bargaining agreement. The Supreme Court affirmed that a strike based on an employer’s refusal to bargain with an uncertified union is illegal. While union officers participating in an illegal strike may lose employment status, the fate of ordinary members hinges on proof of individual illegal acts during the strike; if such acts are unproven, reinstatement may be warranted.

Diamond Hotel Strike: Can a Union Demand Bargaining Rights Without Certification?

In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union, the Supreme Court addressed the legality of a strike staged by the Manila Diamond Hotel Employees Union (the union). The core issue was whether the hotel had a duty to bargain with the union, which was not the certified exclusive bargaining representative of the employees. The union argued that it could bargain on behalf of its members, and the hotel’s refusal constituted unfair labor practice (ULP), justifying the strike. The hotel countered that only a certified union could demand collective bargaining and that the strike was illegal due to procedural violations and unlawful acts.

The Supreme Court examined the relevant provisions of the Labor Code, particularly Article 255, which states:

ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS’ PARTICIPATION IN POLICY AND DECISION-MAKING

The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making process of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor management councils shall be elected by at least the majority of all employees in said establishment.

The Court emphasized that only a labor organization designated or selected by the majority of employees in an appropriate bargaining unit is the exclusive representative for collective bargaining. Since the union was not the exclusive representative, it could not compel the hotel to bargain. The Court rejected the union’s argument that it could bargain solely for its members, echoing the appellate court’s concern that such an arrangement would fragment the workforce and undermine the purpose of collective bargaining.

Building on this principle, the Court addressed the union’s claim of ULP. The union argued that the hotel’s refusal to bargain and alleged harassment of union members justified the strike. The Court found these claims unsubstantiated. The burden of proof rested on the union to prove these allegations with substantial evidence, which it failed to do. Furthermore, the Court noted that a conciliation meeting was scheduled, during which the union could have presented additional evidence. Thus, the strike was deemed illegal from the outset, since the unfair labor practice was unsubstantiated.

The Court also found that the union violated Article 264 of the Labor Code, which prohibits strikes based on ULP during the pendency of cases involving the same grounds. Moreover, evidence, including photographs and an ocular inspection report, revealed that the strikers obstructed access to the hotel, violating Article 264(e), which prohibits obstructing the free ingress to or egress from the employer’s premises.

ART. 264 (e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.

The Court emphasized that the right to strike is not absolute and must be exercised in accordance with the law. Illegal means, such as violence, intimidation, or obstruction, render a strike illegal, even if the purpose is valid. As the appellate court correctly ruled, union officers who knowingly participate in an illegal strike may lose their employment status, as per Article 264(a) of the Labor Code.

However, the Court differentiated between union officers and ordinary striking workers. While union officers may be dismissed for merely participating in an illegal strike, ordinary workers must be proven to have committed illegal acts during the strike to warrant dismissal. The appellate court found insufficient evidence to prove that the striking members committed illegal acts. The Supreme Court disagreed, noting that photographs showed workers obstructing access to the hotel. However, the Court acknowledged that the list of strikers did not specifically identify who committed illegal acts, thus necessitating a remand to the Labor Arbiter to determine individual liabilities.

Finally, the Court addressed the issue of backwages. The general rule is that backwages are not awarded during an economic strike since wages are tied to labor. Even in ULP strikes, backwages are discretionary and awarded only in exceptional cases. The Court cited J.P. Heilbronn Co. v. National Labor Union:

When in case of strikes, and according to the C[ourt of] I[ndustrial] R[elations] even if the strike is legal, strikers may not collect their wages during the days they did not go to work, for the same reasons if not more, laborers who voluntarily absent themselves from work to attend the hearing of a case in which they seek to prove and establish their demands against the company, the legality and propriety of which demands is not yet known, should lose their pay during the period of such absence from work. The age-old rule governing the relation between labor and capital or management and employee is that of a ‘fair day’s wage for a fair day’s labor.’ If there is no work performed by the employee there can be no wage or pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer’s time.

The Court distinguished between employees discriminatorily dismissed for union activities and those who voluntarily strike. While discriminatorily dismissed employees are entitled to backpay, those who strike voluntarily are generally not. The Court recognized exceptions to this rule, such as illegal lockouts or gross ULP by the employer, but found none applicable in this case.

The Court also clarified that for the exception in Philippine Marine Officers’ Guild v. Compañia Maritima to apply (unconditional offer to return to work), the strike must be legal. Consequently, the Court ordered reinstatement without backwages for striking members who did not commit illegal acts. If reinstatement is no longer feasible, separation pay of one month’s salary for each year of service was deemed appropriate.

FAQs

What was the key issue in this case?	The central question was whether an employer is obligated to bargain with a union that is not the certified exclusive bargaining representative of its employees. The case also examined the legality of the strike initiated by the uncertified union based on the employer’s refusal to bargain.
What is an exclusive bargaining representative?	Under Article 255 of the Labor Code, an exclusive bargaining representative is the labor organization selected by the majority of employees in a bargaining unit. Only this organization has the right to bargain collectively with the employer on behalf of the employees.
Can a union bargain for its members only if it is not the exclusive representative?	The Supreme Court ruled that allowing a non-exclusive union to bargain for its members only would fragment the workforce. This would undermine the purpose of collective bargaining, which is to ensure uniform terms and conditions of employment for all employees in the bargaining unit.
What constitutes an illegal strike?	A strike can be declared illegal for several reasons, including violating procedural requirements, pursuing unlawful objectives, or employing illegal means. Specifically, Article 264(e) prohibits obstructing access to the employer’s premises.
What is the consequence for union officers who participate in an illegal strike?	Under Article 264(a) of the Labor Code, any union officer who knowingly participates in an illegal strike may be declared to have lost their employment status. This is a more severe penalty than that applied to ordinary striking workers.
What must be proven for an ordinary striking worker to be dismissed?	To justify the dismissal of an ordinary striking worker, the employer must present evidence that the worker committed illegal acts during the strike. Mere participation in an illegal strike is not sufficient for dismissal; there must be proof of individual misconduct.
Are strikers entitled to backwages during an illegal strike?	Generally, strikers are not entitled to backwages for the period they were on strike, based on the principle of “no work, no pay.” There are limited exceptions, such as when the employer is guilty of gross unfair labor practice, but these did not apply in this case.
What is the remedy for striking workers who did not commit illegal acts during an illegal strike?	The Supreme Court ordered that striking members of the union who did not commit illegal acts should be reinstated without backwages. If reinstatement is no longer feasible, they should be granted separation pay equivalent to one month’s salary for each year of service.

The Supreme Court’s decision in this case clarifies the obligations of employers and the limitations on unions’ right to strike. It emphasizes the importance of certification as the exclusive bargaining representative and reinforces the principle that strikes must be conducted lawfully. By differentiating between union officers and ordinary members, the Court seeks to balance the rights of workers with the need to maintain order in labor relations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union, G.R. No. 158075, June 30, 2006