Labrel Case 27

SUPREME COURT REPORTS ANNOTATED VOLUME 197 17/10/2018, 12)29 PM
452 SUPREME COURT REPORTS ANNOTATED

GTE Directories Corporation vs. Sanchez
*
G.R. No. 76219. May 27, 1991.
GTE DIRECTORIES CORPORATION, petitioner, vs. HON.

AUGUSTO S. SANCHEZ and GTE DIRECTORIES
CORPORATION EMPLOYEES UNION, respondents.
Labor Law; Deliberate disregard or disobedience of rules,

defiance o f management authority by the employees cannot be
countenanced, until and unless the rules or orders imposed by the
employers are declared to be illegal or improper by competent
authority, the employe e s ignore or disobey them at their peril.·To
sanction disregard or disobedience by employees of a rule or order
laid down by management, on the pleaded theory that the rule or
order is unreasonable, illegal, or otherwise irregular for one reason
or another, would be disastrous to the discipline and order that it is
in the interest of both the employer and his employees to preserve
and maintain in the working establishment and without which no
meaningful operation and progress is possible. Deliberate disregard
or disobedience of rules, defiance of
________________
* FIRST DIVISION.
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VOL. 197, MAY 27, 1991 453
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management authority cannot be countenanced. This is not to say

that the employees have no remedy against rules or orders they
regard as unjust or illegal. They may object thereto, ask to
negotiate thereon, bring proceedings for redress against the
employer before the Ministry of Labor. But until and unless the
rules or orders are declared to be illegal or improper by competent
authority, the employees ignore or disobey them at their peril. It is
impermissible to reverse the process: suspend enforcement of the
orders or rules until their legality or propriety shall have been
subject of negotiation, conciliation, or arbitration.
Same; Same; Strikes; The filing of the strike notice, and the
commencement of conciliation activities by the Bureau of Labor
Relations did not operate to make GTEÊs orders illegal and
unenforceable so as to excuse continued non-compliance therewith.·
When the strike notice was filed by the union, the chain of events
which culminated in the termination of the 14 salespersonsÊ
employment was already taking place, the series of defiant refusals
by said sales representatives to comply with GTEÊs requirement to
submit individual reports was already in progress. At that time, no
less than three (3) of the ultimate six (6) direct orders of the
employer for the submission of the reports had already been
disobeyed. The filing of the strike notice, and the commencement of
conciliation activities by the Bureau of Labor Relations did not
operate to make GTEÊs orders illegal or unenforceable so as to
excuse continued non-compliance therewith. It does not follow that
just because the employees or their union are unable to realize or
appreciate the desirability of their employersÊ policies or rules, the
latter were laid down to oppress the former and subvert legitimate
union activities. Indeed, the overt, direct, deliberate and continued
defiance and disregard by the employees of the authority of their
employer left the latter with no alternative except to impose
sanctions. The sanction of suspension having proved futile,
termination of employment was the only option left to the employer.
PETITION for certiorari to review the order of the

Department of Labor and Employment.
The facts are stated in the opinion of the Court.

Siguion Reyna, Montecillo & Ongsiako for petitioner.
Ignacio P. Lacsina for respondent Union.
NARVASA, J.:
GTE Directories Corporation (hereafter, simply GTE) i s a

for-
454

eign corporation engaged in the Philippines in the business

of publishing the PLDT (Philippine Long Distance
Telephone Company) telephone directories for Metro
Manila and several provinces.
The record shows that initially, the practice was for its
sales representatives to be given work assignments within
specific territories by the so-called „draw method.‰ These
sales territories were so plotted or mapped out as to have
„an equal number of advertisers as well as ** revenue **.‰
Within these territories, the sales representatives therein
assigned were given quotas; i.e., they had to „achieve a
certain amount of revenue or advertisements sold,
decreased, increased or cancelled within a given period of
time.‰
A territory was not fully released to the salesperson for
handling at one time, but assigned in increments or partial
releases of account. Now, increments were given by the so-
called „Grid System,‰ grids (divisions or sections) within
each territory usually numbering five (i.e., Grids I to V).
Each grid was assigned a fixed closing dated. At such
closing date, a salesperson should have achieved a certain
amount of the revenue target designated for his grid;
otherwise, he loses the forthcoming grid or forfeits the
remaining grids not yet received. The Grid System was
installed for the following reasons: (1) to give all
salespersons an opportunity to contact advertisers within a
reasonable period; (2) to assure GTE that it will get its
share of adverstising budget from clients as early as
possible; and (3) to ensure an even flow of work throughout
the company.
This practice was observed from 1980 until sometime in
June, 1984 when GTE realized that competition among
media for a share of the advertising revenue had become so
keen as to require quick reaction. GTE therefore launched
an aggressive campaign to get what it considered to be its

rightful share of the advertising budget of its clientele
before it could be allocated to other media (newspaper,
television, radio, etc.) It adopted a new strategy by which:
(1) all its sales representatives were required, as in the

past, to achieve specified revenue targets
(advertisements sold) within pre-determined
periods;
(2) in cases of cancelled revenue accounts or
advertisements, it required all its salespersons to
re-establish contact and renew
455
VOL. 197, MAY 27, 1991 455

the same within a fixed period;

(3) if the cancelled revenue accounts were not renewed
within the assigned period, said accounts were
declared, for a set period, OPEN TERRITORY to all
sales representatives including the one who
reported the cancellation;
(4) if not renewed during said open territory period,
said cancelled accounts were deemed no longer
„open territory,‰ and the same could be referred for
handling to contractual salespersons and/or outside
agencies.
A new „Sales Evaluation and Production Policy‰ was

thereafter drawn up. GTE informed all its sales
representatives of the new policy in a Memorandum dated
October 12, 1984. The new policy was regarded as an
improvement over the previous Sales Production Policy,
which solely considered quota attainment and handling in
the Sales Report for the purpose of evaluating performance.
It appears that the new policy did not sit well with the
union. It demanded that it be given 15 days „to raise
questions or objections to or to seek reconsideration of the
sales and administrative practices issued by the Company
on June 14, 1984.‰ This, GTE granted, and by letter dated

October 26, 1984, the union submitted its proposals for
„revisions, corrections and deletions of some policies
incorporated in the Sales Administrative Practices issued
on June 14, 1984 including the new policies recently
promulgated by Management.‰
GTE next formulated a new set of „Sales Administrative
Practices,‰ pursuant to which it issued on July 9, 1985, a
memorandum requiring all Premise Sales Representatives
(PSRs) to submit individual reports reflecting target
revenues as of deadlines, set at August 2, 1985. This was
superseded by another memorandum dated July 16, 1985,
revising the previous schedules on the basis of „the
consensus reached after several discussions with your
DSMs, as well as, most of you,‰ and pointing out that „the
amount required on the lst deadline (P30,000) ** has been
reduced further (to P20,000) having taken into
consideration that most of your accounts you have already
on hand are with your respective Âprep artists.Ê ‰
On August 5, 1985, GTEÊs Sales Manager sent another
Memorandum to „all premise sales personnel.‰ That
memorandum observed that most of them had omitted to
submit reports
456

regarding „the target of P20,000.00 revenue handled on **

(the) first Grid deadline of August 2, 1985‰
notwithstanding that „several consultations/discussions **
(had) been held with your DSMs, as well as yourselves in
different and separate occasions,‰ and „these
schedules/targets were drawn up by no less than you,
collectively,‰ and notwithstanding that „this has been a
practice of several years.‰ It closed with the expressed
expectation that the sales reports would be submitted „no
later than 2:00 P.M. reflecting P20,000.00 revenue handled,
as per memo re: Grid Deadlines dated July 16, 1985.‰
But as before, the sales representatives did not submit
the reports. Instead their union, GTE Directories
Corporation Employees Union (hereafter, simply the

union),
1
sent a letter to the Sales Manager dated August 5,
1985. The letter stated that in fact „only one out of
nineteen sales representatives met the P20,000 revenue
handled on our first grid deadline of August 2;‰ that the
schedule was not „drawn (up) as a result of an agreement
of all concerned‰ since GTE had failed to get „affirmative
responses‰ from „clustered groups of SRs;‰ that the union
could not „comprehend how cancelling non-cancelling
accounts help production;‰ and that its members would fail
„expectations of cancelling ** non-cancelling accounts‰
since it „would result to further reduction of our pay which
(they) believe is the purpose of your discriminate and
whimsical memo.‰
The following day, on August 6, 1985, the union filed in
behalf of the sales representatives, a notice of strike
grounded on alleged unfair labor practices of GTE
consisting of the following:
„1. Refusal to bargain on unjust sales policies

particularly on the failure to meet the 75% of the
average sales production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer;
and
4. Non-payment of eight daysÊ suspension pay
increase.‰
In due course, the Bureau of Labor Relations undertook to
_______________
1 The original was attached as Annex B of the Compliance dated Sept.

10, 1990 submitted by GTE through counsel (rollo, pp. 270, 273).
457
VOL. 197, MAY 27, 1991 457

conciliate the dispute.
On the same day, August 6, 1985, GTE sent still another

memorandum to sixteen (16) of its premise sales
representatives, this time through its Director for
Marketing & Sales, requiring submission of „individual
reports reflecting target revenues 2
as of grid deadlines **
not later than 4:00 P.M. **.‰ No compliance was made.
GTE thereupon suspended its sales representatives
„without pay effective August 12, 1985 for five (5) working
days‰ and warned them that their failure to submit the
requisite reports by August 19, 1985 would merit „more
drastic disciplinary actions.‰ Still, no sales representative
complied with the requirement to submit the reports („list
of accounts to be cancelled‰). So, by memorandum of the
Marketing Director dated August 19, 1985, all the sales
representatives concerned were suspended anew „effective
August 20, 1985 until you submit the ** (report).‰
Finally, GTE gave its sales representatives an
ultimatum. By memorandum dated August 23, 1985,
individually addressed to its sales representatives, GTE
required them, for the last time, to submit the required
reports („list of accounts to be cancelled‰) within twenty-
four (24) hours from receipt of the memorandum;
otherwise, they would be terminated „for cause.‰ Again not
one sales representatives submitted a report. Instead, on
August 29, 1985, the Union President sent an undated
letter to GTE (addressed to its Director for Marketing &
Sales) acknowledging receipt of the notice of their
suspension on August 19, 1985 in view of their „ Âcontinued
refusal to submit the list of accounts to be cancelled,Ê ‰
professing surprise at being „served with a contradictory
notice, giving us this time 24 hours to submit the required
list, without the suspension letter, which we consider as
still in force, being first recalled or withdrawn,‰ asking that
they be informed which of the two directives should be
followed, and reserving their „right to take such action
against you personally for your acts of harassment and
intimidation which are clearly designed to discourage our
legitimate union activities in protesting managementÊs
continious (sic)
_______________
2 Copies were attached as Annexes C, C-1 to C-15 of the Compliance

dated Sept. 10, 1990, supra (rollo, pp. 276-291).
458

unfair labor practices.‰

Consequently, by separate letters dated August 29, 1985
individually received, GTE terminated the employment of
the recalcitrant sales representatives, numbering fourteen,
with the undertaking to give them „separation pay, upon
proper clearance and submission of company documents,
material etc., in ** (their) possession.‰ Among those
dismissed were the unionÊs president and third vice
president, and several members of its board of directors.
On September 2, 1985, the union declared a strike in which
about 60 employees participated. During all this time,
conciliation efforts were being exerted by the Bureau of
Labor Relations, including attempts to prevent the
imposition of sanctions by GTE on its employees, and the
strike itself. When these proved futile, Acting Labor
Minister Vicente Leogardo, Jr. issued an Order dated
December 6, 1985 assuming jurisdiction over the dispute.
The order made the following disposition, to wit:
„WHEREFORE, this Office hereby assumes jurisdiction over the

labor dispute at G.T.E. Directories, pursuant to Article 264 (g) of the
Labor Code of the Philippines, as amended. Accordingly, all striking
workers including those who were dismissed during the conciliation
proceedings, except those who have already resigned, are hereby
directed to return to work and the management of G.T.E.
Directories to accept all returning employees under the same terms
and conditions prevailing previous to the strike notice and without
prejudice to the determination of the obligation and rights of the
parties or to the final outcome of this dispute. The Bureau of Labor
Relations is hereby directed to hear the dispute and submit its
recommendations within 15 days upon submission of the case for
resolution. All concerned including the military and police
authorities are hereby requested to assist in the implementation of
this Order.‰
The Acting Secretary opined that the dispute „adversely

affects the national interest,‰ because:
1) GTE, a „100% foreign owned‰ company, had, as

publisher of „PLDTÊs Metro Manila and provincial
directories * * * earned a total of P127,038,463
contributing close to P10 million in income tax
alone to the Philippine government,‰ and that
„major contribution to the national economy **
(was) being threatened because of the ** strike;‰
and
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VOL. 197, MAY 27, 1991 459

2) „top officers of the union were dismissed during the

conciliation process thereby compounding the
dispute,‰ Reconsideration of this Order was sought
by GTE by motion filed on December 16, 1985, on
the ground that·
1) „the basis for assumption of jurisdiction is belied by

the facts and records of the case and hence,
unwarranted;‰
2) „national interest is not adversely affected to
warrant assumption of jurisdiction by (the) Office of
the Minister of Labor and Employment;‰ and
3) „assumption of jurisdiction by the ** Minister **
without prior consultation with the parties violates
the companyÊs right to due process of law.‰
GTE however reiterated its previously declared „position

that with or without the order now being questioned, it will
accept all striking employees back to work except the
fourteen (14) premise sales representatives who were
dismissed for cause prior to the strike.‰
By Resolution of then Labor Minister Blas Ople dated
January 20, 1986, GTEÊs motion for reconsideration was
denied. The order noted inter alia that GTE had „accepted
back to work all the returning workers except fourteen (14)

whom it previously dismissed insistng that they were
legally dismissed for violation of company rules and,
therefore, are not included and may not be reinstated on
the basis of a return-to-work order,‰ and that „they were
dismissed for their alleged failure to comply with the
reportorial requirement under the Sales and
Administrative Practices in effect since 1981 but which for
the present is the subject of negotiations between the
parties.‰ The Order then·
1) adverted to the „general rule (that) promulgations

of company policies and regulations are basic
management prerogatives although the principle of
collective bargaining encompasses almost all
relations between the employer and its employees
which are best threshed out through negotiations,
** (and that) it is recognized that company policies
and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and
valid on the parties until finally revised or amended
unilaterally or preferably through negotiations or
by competent authorities;‰
460

2) affirmed the „recognized principle of law that

company policies and regulations are, unless shown
to be grossly oppressive or contrary to law,
generally binding (and) valid on the parties and
must be complied with until finally revised or
amended unilaterally or preferably through
negotiations or by competent authorities;‰ and
3) closed by pointing out that „as a basic principle, the
matter of the acceptability of company policies and
rules is a proper subject of collective negotiations
between the parties or arbitration if necessary.‰
In a clarificatory Order dated January 21, 1986, Minister

Ople reiterated the proposition that „promulgations of
company policies and regulations are basic management
prerogatives,‰ and that „unless shown to be grossly
oppressive or contrary to law,‰ they are „generally binding
and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably,
through negotiations or by competent authorities.‰
Adjudication of the dispute on the merits was made on
March 31, 1986 by Order of Minister OpleÊs successor,
Augusto Sanchez. The Order·
1) pointed out „that the issue central to the labor

dispute ** revolves around compliance with existing
company policies, rules and regulations specifically
the sales evaluation and production policy which
was amended by the October 12, 1984
memorandum and the grid schedule;‰
2) declared that because fourteen (14) sales
representatives·who after reinstatement pursuant
to the order of January 20, 1986 had been placed
„on forced leave with pay·„were actually dismissed
for failure to comply with the reporting
requirements under the ÂSales Administration
PracticesÊ which was (sic) then the subject of
negotiations between the parties at the Bureau of
Labor Relations,‰ it was only fair that they „be
reinstated ** with back wages since they were
terminated from employment based on a policy **
still being negotiated to avoid precisely a labor-
management dispute from arising‰ therefrom;‰
3) pronounced the unionÊs action relative to the
allegedly illegal dismisal of one Brian Pineda to be
„barred by extinctive prescription‰ in accordance
with the CBA then in force; and
4) on the foregoing premises adjudicated the dispute
as fol-
461
VOL. 197, MAY 27, 1991 461
lows:
„1. The union and management of G.T.E. Directories

Corporation are directed to negotiate and effect a
voluntary settlement on the questioned Grid
schedule, the Sales Evaluation and Production
Policy;
2. Management is ordered to reinstate the fourteen
(14) employees with full back wages from the time
they were dismissed up to the time that they were
on forced leave with pay.‰
Both the Union and GTE moved for reconsideration of the

Order.
The Union contended that:
1) GTE should have been adjudged guilty of unfair

labor practice and other unlawful acts;
2) its strike should have been declared lawful;
3) GTEÊs so-called „bottom-third‰ policy, as well as all
sales and administrative practices related thereto,
should have been held illegal; and
4) GTE should have been commanded: (a) to pay all
striking employees their usual salaries, allowances,
commission and other emoluments corresponding to
the period of their strike; (b) to release to its
employees the 8-days pay increase unlawfully
withheld from them; (c) to lift the suspension
imposed on Brian Pineda and restore to him the
pay withheld corresponding to the suspension
period; (d) to pay the sales representatives all their
lost income corresponding to the period of their
suspensions, and dismissal, including commissions
that they might have earned corresponding to their
one-week forced leave.
GTE, for its part, argued that the termination of the

employment of its fourteen (14) premise sales
representatives prior to the strike should have been
upheld. It also filed an opposition to the unionÊs motion for
reconsideration.
The motions were resolved in a „Decision‰ handed down
by Minister Sanchez on June 6, 1986. The Minister stated
that he saw no need to change his rulings as regards
PinedaÊs suspension, the question on GTEÊs sales and
administrative policies, and the matter of back wages.
However, as regards „the other issues raised by the union,‰
the Minister agreed „with the
462

company that these were not adequately threshed out in

the earlier proceedings ** (for) (w)hile it is true that the
union had already presented evidence to support its
contention, the company should be given the opportunity to
present its own evidence.‰ Accordingly, he directed the
Bureau of Labor Relations to hear said „other issues raised
by the union and to submit its findings and
recommendations thereon within 20 days from submission
of the case for decision.‰
Again GTE moved for reconsideration; again it was
rebuffed. The Labor Minister denied its motion by Order
dated October 1, 1986. In that order, the Minister, among
other things·
1) invoked Section 6, Rule XIII of the Rules and

Regulations Implementing the Labor Code,
pertinently reading as follows:
„During the proceedings, the parties shall not do any act which may
disrupt or impede the early settlement of the dispute. They are
obliged, as part of their duty to bargain collectively in good faith, to
participate fully and promptly in the conciliation proceedings called
by the Bureau or the Regional Office.‰,
and pointed out that „in dismissing 14 salesmen ** for

alleged violations of the reportorial requirements of its
sales policies which was then the subject of conciliation
proceedings between them, (GTE) acted evidently in bad
faith; hence the status quo prior to their dismissal must be

restored ** (and) their reinstatement with backwages is in
order up to the time they were on forced leave. **;‰
2) declared that because he had „ordered the parties to

negotiate and effect a voluntary settlement of the
questioned Grid Schedule, the Sales Evaluation and
Productions Policy, it would be unripe and
premature for us to rule on the legality or illegality
on the companyÊs sales policies at this instance;‰
3) opted, however, to himself resolve „the so-called
Âother issuesÊ ‰ which he had earlier directed the
Bureau of Labor Relations to first hear and resolve
(in the Decision of June 6, 1986, supra), i.e., GTEÊs
liability for unfair labor practice, the legality of the
strike and the strikersÊ right to be paid their wages
while on strike, his ruling thereon being as follows:
„While the company, in merely implementing its challenged sales

policies did not ipso facto commit an unfair labor practice, it did so
463
VOL. 197, MAY 27, 1991 463

when it in mala fide dismissed the fourteen salesmen, all union

members, while conciliation proceedings were being conducted on
disputes on its very same policies, especially at that time when a
strike notice was filed on the complaint of the union alleging that
said sales policies are being used to bust the union; thus
precipitating a lawful strike on the part of the latter. A strike is
legal if it was provoked by the employerÊs failure to abide by the
terms and conditions of its collective bargaining agreement with the
union, by the discrimination employed by it with regard to the hire
and tenure of employment, and the dismissal of employees due to
union activities as well as the companyÊs refusal to bargain
collectively in good faith (Cromwell Commercial Co., Inc. vs.
Cromwell Employees and Laborers Union, 19 SCRA 398). The same
rule applies if employer was guilty of bad faith delay in reinstating
them to their position (RCPI vs. Phil. Communications Electronics
& Electricity Workers Federation, 58 SCRA 762).
„While as a rule strikers are not entitled to backpay for the

strike period (J.P. Heilbronn Co. vs. NLU, 92 Phil. 575) strikers
may be properly awarded backwages where the strike was
precipitated by union busting activities of the employer (Davao Free
Workers, Front, et al. vs. CIR, 60 SCRA 408), as in the case at bar.
**.‰
The Minister accordingly annulled and set aside his order

for the Bureau of Labor Relations to conduct hearings on
said issues since he had already resolved them, and
affirmed his Order of March 31, 1986·‰directing Union
and Management to negotiate a voluntary settlement on
the company sales policies and reinstating the fourteen
employees with full backwages from the time they were
dismissed up to the time they were on forced leave with
pay‰·‰but with the modification that management **
(was) directed to give the striking workers strike duration
pay for the whole period of the strike less earnings.‰
GTE thereupon instituted the special civil action of
certiorari at bar praying for invalidation, because rendered
with grave abuse of discretion, of the Labor MinisterÊs
orders·
1) commanding „reinstatement of the fourteen

dismissed employees, and
2) „finding ** (it) guilty of unfair labor practice and
directing ** (it) to pay strike duration pay to
striking workers.‰
It seems to the Court that upon the undisputed facts on

record, GTE had cause to dismiss the fourteen (14) premise
sales representatives who had repeatedly and deliberately,
not
464

to say defiantly, refused to comply with its directive for

submission of individual reports on specified matters. The
record shows that GTE addressed no less than (six) written
official communications to said premise sales

representatives embodying this requirement, to wit:
1) Memorandum of July 9, 1985 pursuant to GTEÊs

„Sales Administrative Practices‰·superseded by a
memorandum dated July 16, 1985·requiring
submission of individual reports by August 2, 1985;
2) Memorandum of August 5, 1985, requiring
submission of the reports by 2:00 P.M.;
3) Memorandum of August 6, 1985, for submission of
requisite reports not later than 4:00 P.M. of that
day, with a warning of „appropriate disciplinary
action;‰
4) Letter of August 9, 1985 imposing suspension
without pay for five (5) working days and extending
the period for submission of reports to August 19,
1985;
5) Letter of August 19, 1985 suspending the sales
representatives until their submission of the
required reports;
6) Letter dated August 28, 1985 giving the sales
representatives „a last chance to comply with **
(the) directive within 24 hours from receipt **;‰
with warning that failure to comply would result in
termination of employment.
The only response of the sales representatives to these

formal directives were:
1) a letter by their Union to GTEÊs Sales Manager

dated August 5, 1985 in which the requirement was
criticized as not being the „result of an agreement
of all concerned,‰ and as incomprehensible,
„discriminate and whimsical;‰
2) a strike notice filed with the Ministry of Labor on
August 6, 1985; and
3) an undated letter sent to GTEÊs Director for
Marketing & Sales on August 29, 1985, drawing
attention to what it deemed contradictory
directives, and reserving the right to take action
against the manager for „acts of harassment and
intimidation ** clearly designed to discourage our

legitimate union activities in protesting
managementÊs continuous unfair labor practices.‰
The basic question then is whether or not the
effectivity of an employerÊs regulations and policies
is dependent upon the acceptance and consent of
the employees thereby sought to be
465
VOL. 197, MAY 27, 1991 465

bound; or otherwise stated, whether or not the unionÊs

objections to, or request for reconsideration of those
regulations orpolicies automatically suspend enforcement
thereof and excusethe employeesÊ refusal to comply with
the same.
This Court has already had occasion to rule upon a similar
issue. The issue was raised in a 1989 case, G.R. No. 53515,3
San Miguel Brewery Sales Force Union (PTGWO) v. Ople.
In that case, the facts were briefly as follows:
„In September 1979, the company introduced a marketing scheme

known as the ÂComplementary distribution systemÊ (CDS) whereby
its beer products were offered for sale directly to wholesalers
through San MiguelÊs sales offices.
The labor union (herein petitioner) filed a complaint for unfair
labor practice in the Ministry of Labor, with a notice of strike on the
ground that the CDS was contrary to the existing marketing
scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and wholesalers
had to buy beer products from them, not from the company. It was
alleged that the new marketing scheme violates ** (a provision) of
the collective bargaining agreement because the introduction of the
CDS would reduce the take-home pay of the salesmen and their
truck helpers for the company would be unfairly competing with
them.‰
The Labor Minister found nothing to suggest that the

employerÊs unilateral action of inaugurating a new sales
scheme „was designed to discourage union organization or
diminish its influence;‰ that on the contrary, it was „part of

its overall plan to improve efficiency and economy and at
the same time gain profit to the highest;‰ that the unionÊs
„conjecture that the new plan will sow dissatisfaction from
its rank is already a prejudgment of the planÊs viability and
effectiveness, ** like saying that the plan will not work out
to the workersÊ (benefit) and therefore management must
adopt a new system of marketing.‰ The Minister
accordingly dismissed the strike notice, although he
ordered a slight revision of the CDS, which the employer
evidently found acceptable.
This Court approved of the MinisterÊs findings, and
declared correct his holding that the CDS was „a valid
exercise of man-
_______________
3 170 SCRA 25-28.
466

4
agement prerogatives,‰ viz.:
„ÂExcept as limited by special laws, an employer is free to regulate,

according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work. *** (NLU vs. Insular La Yebana Co., 2
SCRA 924; Republic Savings Bank vs. CIR, 21 SCRA 226, 235.)Ê
(Perfecto V. Hernandez, Labor Relations Law, 1985 ed., p. 44.)
(Italics ours.)‰
The Court then5 closed its decision with the following

pronouncements:
„Every business enterprise endeavors to increase its profits. Inthe

process, it may adopt or devise means designed towards that goal.In
Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
Â* * * Even as the law is solicitous of the welfare of the

employees, it must also protect the right of an employer to exercise
what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its
purpose cannot be denied.Ê
So long as a companyÊs management prerogatives are exercised
in good faith for the advancement of the employerÊs interest and not
for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court
will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147;
Phil. American Embroideries vs. Embroidery and Garments
Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110).
***.‰
In the case at bar, it must thus be conceded that its

adoption of a new „Sales Evaluation and Production Policy‰
was within its management prerogative to regulate,
according to its own discretion and judgment, all aspects of
employment, including the manner, procedure and
processes by which particular work activities should be
done. There were, to be sure, objections presented by the
union, i.e, that the schedule had not been
_______________
4 At pp. 27-28.
5 At p. 28.
467
VOL. 197, MAY 27, 1991 467

„drawn (up) as a result of an agreement of all concerned,‰

that the new policy was incomprehensible, discriminatory
and whimsical, and „would result to further reduction‰ of
the sales representativesÊ compensation. There was, too,
the unionÊs accusation that GTE had committed unfair
labor practices, such as·
„1. Refusal to bargain on unjust sales policies

particularly on the failure to meet the 75% of the
average sales production for two consecutive years;

2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer;
and
4. Non-payment of eight daysÊ suspension pay
increase.‰
This Court fails to see, however, how these objections and

accusations justify the deliberate and obdurate refusal of
the sales representatives to obey the managementÊs simple
requirement for submission by all Premise Sales
Representatives (PSRs) of individual reports or memoranda
requiring reflecting target revenues·which is all that GTE
basically required·and which it addressed to the
employees concerned no less than six (6) times. The Court
fails to see how the existence of objections made by the
union justify the studied disregard, or wilful disobedience
by the sales representatives of direct orders of their
superior officers to submit reports. Surely, compliance with
their superiorsÊ directives could not have foreclosed their
demands for the revocation or revision of the new sales
policies or rules; there was nothing to prevent them from
submitting the requisite reports with the reservation to
seek such revocation or revision.
To sanction disregard or disobedience by employees of a
rule or order laid down by management, on the pleaded
theory that the rule or order is unreasonable, illegal, or
otherwise irregular for one reason or another, would be
disastrous to the discipline and order that it is in the
interest of both the employer and his employees to preserve
and maintain in the working establishment and without
which no meaningful operation and progress is possible.
Deliberate disregard or disobedience of rules, defiance of
management authority cannot be countenanced. This is not
to say that the employees have no remedy against rules or
orders they regard as unjust or illegal. They may object
thereto,
468
ask to negotiate thereon, bring proceedings for redress

against the employer before the Ministry of Labor. But
until and unless the rules or orders are declared to be
illegal or improper by competent authority, the employees
ignore or disobey them at their peril. It is impermissible to
reverse the process: suspend enforcement of the orders or
rules until their legality or propriety shall have been
subject of negotiation, conciliation, or arbitration.
These propositions were in fact adverted to in relation to
the dispute in question by then Minister Blas Ople in his
Order dated January 21, 1986, to the effect among others,
that „promulgations of company policies and regulations
are basic management prerogatives‰ and that it is a
„recognized principle of law that company policies and
regulations are, unless shown to be grossly oppressive or
contrary to law, generally binding (and) valid on the parties
and must be complied with until finally revised or amended
unilaterally or preferably through negotiations or by
competent authorities.‰
Minister Sanchez however found GTE to have „acted
evidently in bad faith‰ in firing its 14 salespersons „for
alleged violations of the reportorial requirements of its
sales policies which was then6 the subject of conciliation
proceedings between them;‰ and that „(w)hile the
company, in merely implementing its challenged sales
policies did not ipso facto commit an unfair labor practice,
it did so when it in mala fide dismissed the fourteen
salesmen, all union members, while conciliation
proceedings were being conducted on disputes on its very
same policies, especially at that time when a strike notice
was filed on the complaint of the union alleging that said
sales policies are being used to bust the union; thus
precipitating a lawful strike on the part of the latter.‰ No
other facts appear on record relevant to the issue of GTEÊs
dismissal of the 14 sales representatives. There is no proof
on record to demonstrate any underhanded motive on the
part of GTE in formulating and imposing the sales policies
in question, or requiring the submission of reports in line
therewith. What, in fine, appears to be the MinisterÊs thesis
is that an employer has the prerogative to lay
________________
6 SEE page 7, supra.
469
VOL. 197, MAY 27, 1991 469

down basic policies and rules applicable to its employees,

but may not exact compliance therewith, much less impose
sanctions on employees shown to have violated them, the
moment the propriety or feasibility of those policies and
rules, or their motivation, is challenged by the employees
and the latter file a strike notice with the Labor
Department·which is the situation in the case at bar.
When the strike notice was filed by the union, the chain
of events which culminated in the termination of the 14
sales personsÊ employment was already taking place, the
series of defiant refusals by said sales representatives to
comply with GTEÊs requirement to submit individual
reports was already in progress. At that time, no less than
three (3) of the ultimate six (6) direct orders of the
employer for the submission of the reports had already
been disobeyed. The filing of the strike notice, and the
commencement of conciliation activities by the Bureau of
Labor Relations did not operate to make GTEÊs orders
illegal or unenforceable so as to excuse continued
noncompliance therewith. It does not follow that just
because the employees or their union are unable to realize
or appreciate the desirability of their employersÊ policies or
rules, the latter were laid down to oppress the former and
subvert legitimate union activities. Indeed, the overt,
direct, deliberate and continued defiance and disregard by
the employees of the authority of their employer left the
latter with no alternative except to impose sanctions. The
sanction of suspension having proved futile, termination of
employment was the only option left to the employer.
To repeat, it would be dangerous doctrine indeed to
allow employees to refuse to comply with rules and
regulations, policies and procedures laid down by their
employer by the simple expedient of formally challenging
their reasonableness or the motives which inspired them,

or filing a strike notice with the Department of Labor and
Employment, or, what amounts to t h e same thing, to give
the employees the power to suspend compliance with
company rules or policies by requesting that they be first
subject of collective bargaining. It would be well nigh
impossible under these circumstances for any employer to
maintain discipline in its establishment. This is, of course,
intoler-
470

able. For common sense teaches, as 7

Mr. Justice Gregorio
Perfecto once had occasion to stress, that:
„Success of industries and public services is the foundation upon

which just wages may be paid. There cannot be success without
efficiency. There cannot be efficiency without discipline.
Consequently, when employees and laborers violate the rules of
discipline they jeopardize not only the interest of the employer but
also their own. In violating the rules of discipline they aim at killing
the hen that lays the golden eggs. Laborers who trample down the
rules set for an efficient service are, in effect, parties to a
conspiracy, not only against capital but also against labor. The high
interest of society and of the individuals demand that we should
require everybody to do his duty. That demand is addressed not only
to employer but also to employees.‰
Minister Sanchez decided the dispute in the exercise of the

jurisdiction assumed by his predecessor
8
in accordance with
Article 263 (g) of the Labor Code, providing in part as
follows:
„(g) When in his opinion there exists a labor dispute causing or

likely to cause strikes or lockouts adversely affecting the national
interest, such as may occur in but not limited to public utilities,
companies engaged in the generation or distribution of energy,
banks, hospitals, and export-oriented industries, including those
within export processing zones, the Minister of Labor and
Employment shall assume jurisdiction over the dispute and decide

it or certify the same to the Commission for compulsory arbitration.
**.‰
Even that assumption of jurisdiction is open to question.

The production and publication of telephone directories,
which is the principal activity of GTE, can scarcely be
described as an industry affecting the national interest.
GTE is a publishing firm chiefly dependent on the
marketing and sale of advertising space for its not
inconsiderable revenues. Its services, while of value, cannot
be deemed to be in the same category of such
_______________
7 Batangas Transportation Co. v. Bagong Pagkakaisa of the Employees

and Laborers of the Batangas Trans. Co., 7 Phil. 108, 112 (1949).
8 Order dated Dec. 6, 1985 by Acting Labor Minister Vicente Leogardo,
Jr.: SEE p. 4, supra.
471
VOL. 197, MAY 27, 1991 471

Torillo vs. Leogardo, Jr.
essential activities as „the generation or distribution of

energy‰ or those undertaken by „banks, hospitals, and
export-oriented industries.‰ It cannot be regarded as
playing as vital a role in communication as other mass
media. The small number of employees involved in the
dispute, the employerÊs payment of „P10 million in income
tax alone to the Philippine government,‰ and the fact that
the „top officers of the union were dismissed during the
conciliation process,‰ obviously do not suffice to make the
dispute in the case at bar one „adversely affecting the
national interest.‰
WHEREFORE, the petiton is GRANTED, and as prayed
for, the Order dated October 1, 1986 of the public
respondent is NULLIFIED and SET ASIDE.
SO ORDERED.
Gancayco, Griño-Aquino and Medialdea, JJ.,
concur.
Cruz, J., No part. Related to one of the counsel.
Petition granted. Order nullified and set aside.
Note.·The right to dismiss or otherwise imposed

disciplinary sanctions upon an employee for just and valid
cause, pertains in the first place to the employer.
(Richardson vs. Demetriou, 142 SCRA 505.)
··o0o··
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SUPREME COURT REPORTS ANNOTATED VOLUME 197 17/10/2018, 12)29 PM

452 SUPREME COURT REPORTS ANNOTATED

GTE DIRECTORIES CORPORATION, petitioner, vs. HON.

Labor Law; Deliberate disregard or disobedience of rules,

VOL. 197, MAY 27, 1991 453

GTE Directories Corporation vs. Sanchez

management authority cannot be countenanced. This is not to say

PETITION for certiorari to review the order of the

The facts are stated in the opinion of the Court.

GTE Directories Corporation (hereafter, simply GTE) i s a

454 SUPREME COURT REPORTS ANNOTATED

eign corporation engaged in the Philippines in the business

an aggressive campaign to get what it considered to be its

(1) all its sales representatives were required, as in the

VOL. 197, MAY 27, 1991 455

the same within a fixed period;

A new „Sales Evaluation and Production Policy‰ was

on June 14, 1984.‰ This, GTE granted, and by letter dated

456 SUPREME COURT REPORTS ANNOTATED

regarding „the target of P20,000.00 revenue handled on **

Corporation Employees Union (hereafter, simply the

„1. Refusal to bargain on unjust sales policies

In due course, the Bureau of Labor Relations undertook to

1 The original was attached as Annex B of the Compliance dated Sept.

VOL. 197, MAY 27, 1991 457

conciliate the dispute.

On the same day, August 6, 1985, GTE sent still another

2 Copies were attached as Annexes C, C-1 to C-15 of the Compliance

458 SUPREME COURT REPORTS ANNOTATED

unfair labor practices.‰

„WHEREFORE, this Office hereby assumes jurisdiction over the

The Acting Secretary opined that the dispute „adversely

1) GTE, a „100% foreign owned‰ company, had, as

VOL. 197, MAY 27, 1991 459

2) „top officers of the union were dismissed during the

1) „the basis for assumption of jurisdiction is belied by

GTE however reiterated its previously declared „position

back to work all the returning workers except fourteen (14)

1) adverted to the „general rule (that) promulgations

460 SUPREME COURT REPORTS ANNOTATED

2) affirmed the „recognized principle of law that

In a clarificatory Order dated January 21, 1986, Minister

1) pointed out „that the issue central to the labor

VOL. 197, MAY 27, 1991 461

GTE Directories Corporation vs. Sanchez

„1. The union and management of G.T.E. Directories

Both the Union and GTE moved for reconsideration of the

1) GTE should have been adjudged guilty of unfair

GTE, for its part, argued that the termination of the

462 SUPREME COURT REPORTS ANNOTATED

company that these were not adequately threshed out in

1) invoked Section 6, Rule XIII of the Rules and

and pointed out that „in dismissing 14 salesmen ** for

faith; hence the status quo prior to their dismissal must be

2) declared that because he had „ordered the parties to

„While the company, in merely implementing its challenged sales

VOL. 197, MAY 27, 1991 463

when it in mala fide dismissed the fourteen salesmen, all union

„While as a rule strikers are not entitled to backpay for the

The Minister accordingly annulled and set aside his order