HSBC Employees Union vs. NLRC

G.R. No. 156635, January 11, 2016


Hongkong & Shanghai Banking Corporation Employees Union (Union) was the duly recognized collective bargaining agent of the rank-and-file employees of respondent Hongkong & Shanghai Banking Corporation (HSBC).

On January 18, 1993, HSBC announced its implementation of a job evaluation program (JEP) retroactive to January 1, 1993. The JEP consisted of a job designation per grade level with the accompanying salary scale providing for the minimum and maximum pay the employee could receive per salary level. By letter dated January 20, 1993, the Union demanded the suspension of the JEP, which it labeled as an unfair labor practice (ULP).

Another letter dated January 22, 1993, the Union informed HSBC that it would exercise its right to concerted action. On the same day of January 22, 1993, the Union members started picketing during breaktime while wearing black hats and black bands on their arms and other appendages. In its letter dated January 25, 1993, HSBC responded by insisting that the JEP was an express recognition of its obligation under the CBA. The Union’s concerted activities persisted for 11 months, notwithstanding that both sides had meanwhile started the re-negotiation of the economic provisions of their CBA. The continued concerted actions impelled HSBC to suspend the negotiations and to issue memoranda, warnings and reprimands to remind the members of the Union to comply with HSBC’s Code of Conduct. HSBC filed a complaint for ULP in the Arbitration Branch of the National Labor Relations Commission (NLRC).

The Union conducted a strike vote on December 19, 1993 after HSBC accorded regular status to Patrick King, the first person hired under the JEP. The majority of the members of the Union voted in favor of a strike. The following day, the Union served its letter on HSBC in protest of the continued implementation of the JEP, and insisted that HSBC’s modification of the salary structure under the JEP constituted ULP. On December 22, 1993, at around 12:30 p.m., the Union’s officers and members walked out and gathered outside the premises of HSBC’s offices on Ayala Avenue, Makati and Ortigas Center, Pasig. According to HSBC, the Union members blocked the entry and exit points of the bank premises, preventing the bank officers, including the chief executive officer, from entering and/or leaving the premises. This prompted HSBC to resort to a petition for habeas corpus on behalf of its officials and employees thus prevented from leaving the premises, whom it airlifted on December 24, 1993 to enable them to leave the bank premises. On December 24, 1993, HSBC filed its complaint to declare the strike illegal The HSBC also petitioned for injunction (with prayer for temporary restraining order (TRO)/writ of prohibitory injunction) in the NLRC, which issued the TRO on January 6, 1994, and the writ of preliminary injunction on January 31, 1994.

HSBC issued return-to-work notices to the striking employees. Only 25 employees complied and returned to work. Due to the continuing concerted actions, HSBC terminated the individual petitioners. The latter, undeterred, and angered by their separation from work, continued their concerted activities.

LA Ruling:

Labor Arbiter (LA) declared the strike illegal for failure of the Union to file the notice of strike with the Department of Labor and Employment (DOLE); to observe the cooling-off period; and to submit the results of the strike vote to the National Conciliation and Mediation Board (NCMB) pursuant to Article 263 of the Labor Code. He concluded that because of the illegality of the strike the Union members and officers were deemed to have lost their employment status.

NLRC Ruling:

On appeal, the NLRC modified the ruling of LA Pati, and pronounced the dismissal of the 18 Union members unlawful for failure of HSBC to accord procedural due process. The MR was denied.

CA Ruling:

The CA deleted the award of indemnity, but ordered HSBC to pay backwages to the 18 employees. On motion for reconsideration, the CA reiterated its judgment, and denied HSBC’s motion to delete the award of backwages.


Whether the strike was legally conducted

Whether the dismissal was valid

Supreme Court Ruling:

The SC held that the strike was illegal.

The procedural requirements for a valid strike are, therefore, the following, to wit: (1) a notice of strike filed with the DOLE at least 30 days before the intended date thereof, or 15 days in case of ULP; (2) a strike vote approved by the majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and (3) a notice of the results of the voting at least seven days before the intended strike given to the DOLE. These requirements are mandatory, such that non-compliance therewith by the union will render the strike illegal.

The petitioners neither filed the notice of strike with the DOLE, nor observed the cooling-off period, nor submitted the result of the strike vote. Moreover, although the strike vote was conducted, the same was done by open, not secret, balloting, in blatant violation of Article 263 and Section 7, Rule XIII of the Omnibus Rules Implementing the Labor Code. It is not amiss to observe that the evident intention of the requirements for the strike-notice and the strike-vote report is to reasonably regulate the right to strike for the attainment of the legitimate policy objectives embodied in the law. As such, the petitioners committed a prohibited activity under Article 264(a) of the Labor Code, and rendered their strike illegal.

The strike was far from orderly and peaceful. HSBC’s claim that from the time when the strike was commenced the petitioners had on several instances obstructed the ingress into and egress from its offices in Makati and in Pasig was not competently disputed, and should thus be accorded credence in the light of the records. We agree with HSBC, for all the affidavits and testimonies of its witnesses, as well as the photographs and the video recordings reviewed by LA Pati depicted the acts of obstruction, violence and intimidation committed by the petitioners during their picketing. It was undeniable that such acts of the strikers forced HSBC’s officers to resort to unusual means of gaining access into its premises at one point by leasing a helicopter to extract its officers and employes.

The petitioners’ disregard of the procedural requirements for conducting a valid strike negated their claim of good faith. For their claim to be upheld, it was not enough for them to believe that their employer was guilty of ULP, for they must also sufficiently show that the strike was undertaken with a modicum of obeisance to the restrictions on their exercise of the right to strike prior to and during its execution as prescribed by the law. They did not establish their compliance with the   requirements specifically for the holding of the strike vote and the giving of the strike notice.

As a general rule, the mere finding of the illegality of the strike does not justify the wholesale termination of the strikers from their employment. To avoid rendering the recognition of the workers’ right to strike illusory, the responsibility for the illegal strike is individual instead of collective. The last paragraph of Article 264(a) of the Labor Code defines the norm for terminating the workers participating in an illegal strike.

The officers may be deemed terminated from their employment upon a finding of their knowing participation in the illegal strike, but the members of the union shall suffer the same fate only if they are shown to have knowingly participated in the commission of illegal acts during the strike. Article 264 expressly requires that the officer must have “knowingly participated” in the illegal strike.

Thus, officers who did not knowingly participate should not be deemed to have lost employment status. The dismissal of officers who did was upheld. The dismissal of the union members who merely participated but did not commit illegal acts in an illegal strike was found illegal.

While Article 264 authorizes the termination of the union officers and employees, it does not remove from the employees their right to due process. Regardless of their actions during the strike, the employees remain entitled to an opportunity to explain their conduct and why they should not be penalized. Consequently, failure of the employer to accord due process to its employees prior to their termination results in illegal dismissal.

The failure by HSBC to strictly observe the twin-notice requirement resulted in the illegal dismissal. HSBC should be held liable for two types of illegal dismissal -the first type was made without both substantive and procedural due process, while the other was based on a valid cause but lacked compliance with procedural due process. To the first type belonged the dismissal of Fermin, Fagutao and the 18 employees initially identified by the NLRC, while the second type included the rest of the petitioners.

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