SECOND DIVISION

OCTOBER 4, 2017

G.R. No. 200499

SAN FERNANDO COCA-COLA RANK-AND-FILE UNION (SACORU), represented by its

President, ALFREDO R. MARAÑON, Petitioner
vs.
COCA-COLA BOTTLERS PHILIPPINES, INC. (CCBPI), Respondent

DECISION

CAGUIOA, J.:

Petitioner San Fernando Coca-Cola Rank and File Union (SACORU) filed a petition for
review1 on certiorari under Rule 45 of the Rules of Court assailing the Decision2 dated July 21, 2011
and Resolution3 dated February 2, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 115985.
The CA affirmed the Resolution4 dated March 16, 2010 of the National Labor Relations Commission·
(NLRC), Second Division, which dismissed SACORU's complaint against respondent Coca-Cola
Bottlers Philippines, Inc. (CCBPI) for unfair labor practice and declared the dismissal of 27 members
of SACORU for redundancy as valid.

Facts

The facts, as found by the CA, are:

On May 29, 2009, the private respondent company, Coca-Cola Bottlers Philippines.,
Inc. ("CCBPI") issued notices of termination to twenty seven (27) rank-and-file, regular employees
and members of the San Fernando Rank-and-File Union ("SACORU'), collectively referred to
as "union members", on the ground of redundancy due to the ceding out of two selling and
distribution systems, the Conventional Route System ("CRS') and Mini Bodega System ("MB") to
the Market Execution Partners ("MEPS''), better known as "Dealership System". The termination of
employment was made effective on June 30, 2009, but the union members were no longer required
to report for work as they were put on leave of absence with pay until the effectivity date of their
termination. The union members were also granted individual separation packages, which twenty-
two (22) of them accepted, but under protest.

To SACORU, the new, reorganized selling and distribution systems adopted and implemented by
CCBPI would result in the diminution of the union membership amounting to union busting and to a
violation of the Collective Bargaining Agreement (CBA) provision against contracting out of services
or outsourcing of regular positions; hence, they filed a Notice of Strike with the National Conciliation
and Mediation Board (NCMB) on June 3, 2009 on the ground of unfair labor practice, among others.
On June 11, 2009, SACORU conducted a strike vote where a majority decided on conducting a
strike.

On June 23, 2009, the then Secretary of the Department of Labor and Employment (DOLE),
Marianito D. Roque, assumed jurisdiction over the labor dispute by certifying for compulsory
arbitration the issues raised in the notice of strike. He ordered,
"WHEREFORE, premises considered, and pursuant to Article 263 (g) of the Labor Code of the
Philippines, as amended, this Office hereby CERTIFIES the labor dispute at COCA-COLA
BOTTLERS PHILIPPINES, INC. to the National Labor Relations Commission for compulsory
arbitration.

Accordingly, any intended strike or lockout or any concerted action is automatically enjoined. If one
has already taken place, all striking and locked out employees shall, within twenty-four (24) hours
from receipt of this Order, immediately return to work and the employer shall immediately resume
operations and re-admit all workers under the same terms and conditions prevailing before the
strike. The parties are likewise enjoined from committing any act that may further exacerbate the
situation."

Meanwhile, pending hearing of the certified case, SACORU filed a motion for execution of the
dispositive portion of the certification order praying that the dismissal of the union members not be
pushed through because it would violate the order of the DOLE Secretary not to commit any act that
would exacerbate the situation.

On August 26, 2009, however, the resolution of the motion for execution was ordered deferred and
suspended; instead, the issue was treated as an item to be resolved jointly with the main labor
dispute.

CCBPI, for its part, argued that the new business scheme is basically a management prerogative
designed to improve the system of selling and distributing products in order to reach more
consumers at a lesser cost with fewer manpower complement, but resulting in greater returns to
investment. CCBPI also contended that there was a need to improve its distribution system if it
wanted to remain viable and competitive in the business; that after a careful review and study of the
existing system of selling and distributing its products, it decided that the existing CRS and MB
systems be ceded out to the MEPs or better known as "Dealership System" because the enhanced
MEPs is a cost-effective and simplified scheme of distribution and selling company products; that
CCBPI, through the simplied system, would derive benefits such as: (a) lower cost to serve; (b)
fewer assets to manage; (c) zero capital infusion.

SACORU maintained that the termination of the 27 union members is a circumvention of the CBA
against the contracting out of regular job positions, and that the theory of redundancy as a ground
for termination is belied by the fact that the job positions are contracted out to a "third party
provider"; that the termination will seriously affect the union membership because out of 250
members, only 120 members will be left upon plan implementation that there is no redundancy
because the sales department still exists except that job positions will be contracted out to a sales
contractor using company equipment for the purpose of minimizing labor costs because contractual
employees do not enjoy CBA benefits; that the contractualization program of the company is illegal
because it will render the union inutile in protecting the rights of its members as there will be more
contractual employees than regular employees; and that the redundancy program will result in the
displacement of regular employees which is a clear case of union busting.

Further, CCBPI argued that in the new scheme of selling and distributing products through MEPs
or "Dealership [System]", which is a contract of sale arrangement, the ownership of the products is
transferred to the MEPs upon consummation of the sale and payment of the products; thus, the jobs
of the terminated union members will become redundant and they will have to be terminated as a
consequence; that the termination on the ground of redundancy was made in good faith, and fair and
reasonable criteria were determined to ascertain what positions were to be phased out being an
inherent management prerogative; that the terminated union members were in fact paid their
separation pay benefits when they were terminated; that they executed quitclaims and release; and
that the quitclaims and release being voluntarily signed by the terminated union members should be
declared valid and binding against them.5

The NLRC dismissed the complaint for unfair labor practice and declared as valid the dismissal of
the employees due to redundancy. The dispositive portion of the NLRC Resolution states:

WHEREFORE, in view of the foregoing, a Decision is hereby rendered ordering the dismissal of the
labor dispute between the Union and Coca-Cola Bottlers Company, Inc.

Accordingly, the charge of Unfair Labor Practice against the company is DISMISSED for lack of
merit and the dismissal of the twenty seven (27)

complainants due to redundancy is hereby declared valid. Likewise, the Union's Motion for Writ of
Execution is Denied for lack of merit.

SO ORDERED.6

With the NLRC's denial of its motion for reconsideration, SACO RU filed a petition for certiorari under
Rule 65 of the Rules of Court before the CA. The CA, however, dismissed the petition and found that
the NLRC did not commit grave abuse of discretion. The dispositive portion of the CA Decision
states:

WHEREFORE, the instant petition is DISMISSED.

IT IS SO ORDERED.7

SACORU moved for reconsideration of the CA Decision but this was denied. Hence, this petition.

Issues

a. Whether CCBPI validly implemented its redundancy program;

b. Whether CCBPI's implementation of the redundancy program was an unfair labor practice; and

c. Whether CCBPI should have enjoined the effectivity of the termination of the employment of the
27 affected union members when the DOLE Secretary assumed jurisdiction over their labor dispute.

The Court's Ruling

The petition is partly granted.

Although SACORU claims that its petition raises only questions of law, a careful examination of the
issues on the validity of the redundancy program and whether it constituted an unfair labor practice
shows that in resolving the issue, the Court would have to reexamine the NLRC and CA's evaluation
of the evidence that the parties presented, thus raising questions of fact.8 This cannot be done
following Montoya v. Trans med Manila Corp. 9 that only questions of law may be raised against the
CA decision and that the CA decision will be examined only using the prism of whether it correctly
determined the existence of grave abuse of discretion, thus:
Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA decision in the same context that
the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from
the prism of whether it correctly determined the presence or absence of grave abuse of discretion in
the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the
case was correct.xxx10

"[G]rave abuse of discretion may arise when a lower court or tribunal violates or contravenes the
Constitution, the law or existing jurisprudence."11 The Court further held in Banal III v.
Panganiban that:

By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be
so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined by or to act at all in contemplation of law.12

The reason for this limited review is anchored on the fact that the petition before the CA was
a certiorari petition under Rule 65; thus, even the CA did not have to assess and weigh the
sufficiency of evidence on which the NLRC based its decision. The CA only had to determine the
existence of grave abuse of discretion. As the Court held in Soriano, Jr. v. National Labor Relations
Commission: 13

As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court, the appellate court
does not assess and weigh the sufficiency of evidence upon which the Labor Arbiter and the NLRC
based their conclusion. The query in this proceeding is limited to the determination of whether or not
the NLRC acted without or in excess of its jurisdiction or with grave abuse of discretion in rendering
its decision. However, as an exception, the appellate court may examine and measure the factual
findings of the NLRC if the same are not supported by substantial evidence.14

Here, the Court finds that the CA was correct in its determination that the NLRC did not commit
grave abuse of discretion.

CCBPI's redundancy program is valid.

For there to be a valid implementation of a redundancy program, the following should be present:

(1) written notice served on both the employees and the Department of Labor and Employment at
least one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent
to at least one month pay or at least one month pay for every year of service, whichever is higher;
(3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished.15

The NLRC found the presence of all the foregoing when it ruled that the termination was due to a
scheme that CCBPI adopted and implemented which was an exercise of management
prerogative,16 and that there was no proof that it was exercised in a malicious or arbitrary
manner.17 Thus:

It appears that the termination was due to the scheme adopted and implemented by respondent
company in distributing and selling its products, to reach consumers at greater length with greater
profits, through MEPs or dealership system is basically an exercise of management prerogative. The
adoption of the scheme is basically a management prerogative and even if it cause the termination
of some twenty seven regular employees, it was not in violation of their right to self-organization
much more in violation of their right to security of tenure because the essential freedom to manage
business remains with management. x x x

Prior to the termination of the herein individual complainants, respondent company has made a
careful study of how to be more cost effective in operations and competitive in the business
recognizing in the process that its multi-layered distribution system has to be simplified. Thus, it was
determined that compared to other distribution schemes, the company incurs the lowest cost-to-
serve through Market Execution Partners (ME[P]s) or Dealership system. The CRS and Mini-Bodega
systems posted the highest in terms of cost-to-serve. Thus, the phasing out of the CRS and MB is
necessary which, however, resulted in the termination of the complainants as their positions have
become redundant. Be that as it may, respondent company complied with granting them benefits
that is more than what the law prescribes. They were duly notified of their termination from
employment thirty days prior to actual termination. x x x18

On the issue of CCBPI's violation of the CBA because of its engagement of an independent
contractor, the NLRC ruled that the implementation of a redundancy program is not destroyed by the
employer availing itself of the services of an independent contractor, thus:

In resolving this issue, We find the ruling in Asian Alcohol vs. NLRC, 305 SCRA 416, in parallel
application, where it was held that an employer's good faith in implementing a redundancy program
is not necessarily destroyed by availment of services of an independent contractor to replace the
services of the terminated employees. We have held previously that the reduction of the number of
workers in a company made necessary by the introduction of the services of an independent
contractor is justified when the latter is undertaken in order to effectuate more economic and efficient
methods of production. Likewise, in Maya Farms Employees Organization vs. NLRC, 239 SCRA
508, it was held that labor laws discourage interference with employer's judgment in the conduct of
his business. 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. As long as the
company's exercise of the same is in good faith to advance its interest and not for the purpose of
circumventing the rights of employees under the law or valid agreements, such exercise will be
upheld. For while this right is not absolute, the employees right to security of tenure does not give
him the vested right in his position as would deprive an employer of its prerogative to exercise his
right to maximize profits. (Abbot Laboratories, Phils. Inc. vs. NLRC, 154 SCRA 713).19

For its part, the CA ruled that the NLRC did not commit grave abuse of discretion, even as it still
reviewed the factual findings of the NLRC and arrived at the same conclusion as the NLRC. On
whether redundancy existed and the validity of CCBPI's implementation, the CA ruled that CCBPI
had valid grounds for implementing the redundancy program:

In the case at hand, CCBPI was able to prove its case that from the study it conducted, the previous
CRS and MB selling and distribution schemes generated the lowest volume contribution which thus
called for the redesigning and enhancement of the existing selling and distribution strategy; that such
study called for maximizing the use of the MEPs if the company is to retain its market
competitiveness and viability; that furthermore, based on the study, the company determined that the
MEPs will enable the CCBPI to "reach more" with fewer manpower and assets to manage; that it is
but a consequence of the new scheme that CCBPI had to implement a redundancy program
structured to downsize its manpower complement.20

The CA also agreed with the NLRC that CCBPI complied with the notice requirements for the
dismissal of the employees.21
Given the limited review in this petition, the Court cannot now reexamine the foregoing factual
findings of both the NLRC and CA that the redundancy program was valid.

As the CA found, the NLRC's factual findings were supported by substantial evidence and are in fact
in compliance with the law and jurisprudence. The CA therefore correctly determined that there was
no grave abuse of discretion on the part of the NLRC.

As stated earlier, the CA, even if it had no duty to re-examine the factual findings of the NLRC, still
reviewed them and, in doing so, arrived at the very same conclusion. These factual findings are
accorded not only great respect but also finality,22 and are therefore binding on the Court.

CCBPI did not commit an unfair labor practice.

The same principle of according finality to the factual findings of the NLRC and CA applies to the
determination of whether CCBPI committed an unfair labor practice. Again, the CA also correctly
ruled that the NLRC, with its findings supported by law and jurisprudence, did not commit grave
abuse of discretion.

In Zambrano v. Philippine Carpet Manufacturing Corp.,23 the Court stated:

Unfair labor practice refers to acts that violate the workers' right to organize. There should be no
dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers'
right to self-organization. Thus, an employer may only be held liable for unfair labor practice if it can
be shown that his acts affect in whatever manner the right of his employees to self-organize.24

To prove the existence of unfair labor practice, substantial evidence has to be presented.25

Here, the NLRC found that SACORU failed to provide the required substantial evidence, thus:

The union's charge of ULP against respondent company cannot be upheld. The union's mere
allegation of ULP is not evidence, it must be supported by substantial evidence.

Thus, the consequent dismissal of twenty seven (27) regular members of the complainant's union
due to redundancy is not per se an act of unfair labor practice amounting to union busting. For while,
the number of union membership was diminished due to the termination of herein union members, it
cannot safely be said that respondent company acted in bad faith in terminating their services
because the termination was not without a valid reason.26

The CA ruled similarly and found that SACORU failed to support its allegation that CCBPI committed
an unfair labor practice:

SACORU failed to proffer any proof that CCBPI acted in a malicious or arbitrarily manner in
implementing the redundancy program which· resulted in the dismissal of the 27 employees, and
that CCBPI engaged instead the services of independent contractors. As no credible, countervailing
evidence had been put forth by SACORU with which to challenge the validity of the redundancy
program implemented by CCBPI, the alleged unfair labor practice acts allegedly perpetrated against
union members may not be simply swallowed. SACORU was unable to prove its charge of unfair
labor practice and support its allegations that the termination of the union members was done with
the end-in-view of weakening union leadership and representation. There was no showing that the
redundancy program was motivated by ill will, bad faith or malice, or that it was conceived for the
purpose of interfering with the employees' right to self-organize.27
The Court accordingly affirms these findings of the NLRC and the CA that SACORU failed to present
any evidence to prove that the redundancy program interfered with their right to self-organize.

CCBPI violated the return-to-work order.

SACORU claims that CCBPI violated the doctrine in Metrolab Industries, Inc. v. Roldan-
Confesor, 28 when it dismissed the employees after the DOLE Secretary assumed jurisdiction over
the dispute. SACO RU argues that CCBPI should have enjoined the termination of the employees
which took effect on July 1, 2009 because the DOLE Secretary enjoined further acts that could
exacerbate the situation.29 On the other hand, CCBPI argued that the termination of the employment
was a certainty, from the time the notices of termination were issued,30 and the status quo prior to the
issuance of the assumption order included the impending termination of the employment of the 27
employees.31

Both the NLRC32 and CA33 ruled that Metrolab did not apply to the dispute because the employees
received the notice of dismissal prior to the assumption order of the DOLE Secretary, thus CCBPI
did not commit an act that exacerbated the dispute.

To the Court, the issue really is this: whether the status quo to be maintained after the DOLE
Secretary assumed jurisdiction means that the effectivity of the termination of employment of the 27
employees should have been enjoined. The Court rules in favor of SACO RU.

Pertinent to the resolution of this issue is Article 263 (g)34 of the Labor Code, which provides the
conditions for, and the effects of, the DOLE Secretary's assumption of jurisdiction over a dispute:

ARTICLE 263. Strikes, picketing, and lockouts. x x x

xxxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in
an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or certification
order. If one has already taken place at the time of assumption or certification, all striking or locked
out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike
or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure compliance with this provision as well as with such orders as he
may issue to enforce the same. (Emphasis and underscoring supplied.)

The powers given to the DOLE Secretary under Article 263 (g) is an exercise of police power with
the aim of promoting public good.35 In fact, the scope of the powers is limited to an industry
indispensable to the national interest as determined by the DOLE Secretary.36 Industries that are
indispensable to the national interest are those essential industries such as the generation or
distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries.37 And
following Article 263 (g), the effects of the assumption of jurisdiction are the following:

(a) the enjoining of an impending strike or lockout or its lifting, and

(b) an order for the workers to return to work immediately and for the employer to readmit all workers
under the same terms and conditions prevailing before the strike or lockout,38 or the return-to-work
order.

As the Court ruled in Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-
Associated Labor Union (TASLI-ALU) v. Court of Appeals39 :

When the Secretary exercises these powers, he is granted "great breadth of discretion" in order to
find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an
1âwphi1

impending strike or lockout or the lifting thereof if one has already taken place. Assumption of
jurisdiction over a labor dispute, or as in this case the certification of the same to the NLRC for
compulsory arbitration, always co-exists with an order for workers to return to work immediately and
for employers to readmit all workers under the same terms and conditions prevailing before the
strike or lockout.40

Of important consideration in this case is the return-to-work order, which the Court characterized
in Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance Telephone Co., Inc.,41 as
"interlocutory in nature, and is merely meant to maintain status quo while the main issue is being
threshed out in the proper forum."42 The status quo is simply the status of the employment of the
employees the day before the occurrence of the strike or lockout.43

Based on the foregoing, from the date the DOLE Secretary assumes jurisdiction over a dispute until
its resolution, the parties have the obligation to maintain the status quo while the main issue is being
threshed out in the proper forum - which could be with the DOLE Secretary or with the NLRC. This is
to avoid any disruption to the economy and to the industry of the employer - as this is the potential
effect of a strike or lockout in an industry indispensable to the national interest - while the DOLE
Secretary or the NLRC is resolving the dispute.

Since the union voted for the conduct of a strike on June 11, 2009, when the DOLE Secretary issued
the return-to-work order dated June 23, 2009,44 this means that the status quo was the employment
status of the employees on June 10, 2009. This status quo should have been maintained until the
NLRC resolved the dispute in its Resolution dated March 16, 2010, where the NLRC ruled that
CCBPI did not commit unfair labor practice and that the redundancy program was valid. This
Resolution then took the place of the return-to-work order of the DOLE Secretary and CCBPI no
longer had the duty to maintain the status quo after March 16, 2010.

Given this, the 27 employees are therefore entitled to backwages and other benefits from July 1,
2009 until March 16, 2010, and CCBPI should re-compute the separation pay that the 27 employees
are entitled taking into consideration that the termination of their employment shall be effective
beginning March 16, 2010.

WHEREFORE, premises considered, the petition for review is hereby PARTLY GRANTED. The
Decision of the Court of Appeals dated July 21, 2011 and Resolution dated February 2, 2012 are
hereby AFFIRMED as to the finding that respondent did not commit unfair labor practice and that the
redundancy program is valid. Respondent, however, is directed to pay the 27 employees backwages
from July 1, 2009 until March 16, 2010, and to re-compute their separation pay taking into
consideration that the termination of their employment is effective March 16, 2010.

SO ORDERED.
 SECOND DIVISION

April 19, 2017

G.R. No. 190389

MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS, Petitioner

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY INCORPORATED, Respondent

x-----------------------x

G.R. No. 190390

MANGAGAWA NG KOMUNIKASYON SA PILIPINAS, Petitioner,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY INCORPORATED, Respondent.

DECISION

LEONEN, J.:

An employer's declaration of redundancy becomes a valid and authorized cause for dismissal when
the employer proves by substantial evidence that the services of an employee are more than what is
reasonably demanded by the requirements of the business enterprise. 1

This resolves the Petition for Review on Certiorari2 filed by Manggagawa ng Komunikasyon sa
Pilipinas assailing the Court of Appeals' Decision3 dated August 28, 2008 and Resolution4 dated
November 24, 2009 in CA-G.R. SP No. 94365 and CA-G.R. SP No. 98975. CA-G.R. SP No. 94365
upheld the October 28, 20055 and January 31, 20066 Resolutions of the National Labor Relations
Commission in NLRC Certified Case No. 000232-03 (NLRC NCR NS 11-405-02 & 11-412-02). In
turn, CA-G.R. SP No. 98975 upheld the Secretary of Labor and Employment's August 11, 2006
Resolution7 and March 16, 2007 Order.8

On June 27, 2002, the labor organization Manggagawa ng Komunikasyon sa Pilipinas, which
represented the employees of Philippine Long Distance Telephone Company, filed a notice of strike
with the National Conciliation and Mediation Board. 9 Manggagawa ng Komunikasyon sa Pilipinas
charged Philippine Long Distance Telephone Company with unfair labor practice "for transferring
several employees of its Provisioning Support Division to Bicutan, Taguig." 10

The first notice of strike was amended twice by Manggagawa ng Komunikasyon sa Pilipinas. 11 On its
second amendment dated November 4, 2002, docketed as NCMB-NCR-NS No. 11-405-
02, 12 Manggagawa ng Komunikasyon sa Pilipinas accused Philippine Long Distance Telephone
Company of the following unfair labor practices:

UNFAIR LABOR PRACTICES, to wit:

 1. PLDT's abolition of the Provisioning Support Division. Such action, together with the
consequent redundancy of PSD employees and the farming out of the jobs to casuals and
contractuals, violates the duty to bargain collectively with MKP in good faith.

2. PLDT's unreasonable refusal to honor its commitment before this Honorable Office that it
will provide MKP its comprehensive plan/s with respect to personnel downsizing/
reorganization and closure of exchanges. Such refusal violates its duty to bargain collectively
with MKP in good faith.

3. PLDT's continued hiring of "contractual," "temporary," "project," and "casual" employees

for regular jobs performed by union members, resulting in the decimation of the union
membership and in the denial of the right to self-organization to the concerned employees. 13

On November 11, 2002, while the first notice of strike was pending, Manggagawa ng Komunikasyon
sa Pilipinas filed another notice of strike, 14 docketed as NCMB-NCR-NS No. 11-412-02, and
accused Philippine Long Distance Telephone Company of:

UNFAIR LABOR PRACTICES, to wit:

1. PLDT's alleged restructuring of its [Greater Metropolitan Manila] Operation Services December
31, 2002 and its closure of traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena,
Malolos and Tarlac Regional Operator Services effective December 31, 2002. These twin moves
unjustly imperil the job security of 503 of MKP's members and will substantially decimate the parties'
bargaining unit. And in the light of PLDT' s previous commitment before this Honorable Office that it
will provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and
closure of exchanges and of its more recent declaration that the Davao operator services will not be
closed, these moves are treacherous and are thus violative of PLDT's duty to bargain collectively
with MKP in good faith. That these moves were effected with PLOT paying only lip service to its
duties under Art. III, Section 8 of the parties' CBA do [sic] signifies PLDT's gross violation of said
CBA. 15

On December 23, 2002, Manggagawa ng Komunikasyon sa Pilipinas went on strike. 16

On December 31, 2002, Philippine Long Distance Telephone Company declared only 323
employees as redundant as it was able to redeploy 180 of the 503 affected employees to other
positions. 17

On January 2, 2003, the Secretary of Labor and Employment certified the labor dispute for
compulsory arbitration. 18 The dispositive portion of the Secretary of Labor and Employment's Order
read as follows:

WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office hereby CERTIFIES the labor
dispute at the Philippine Long Distance Telephone Company to the National Labor Relations
Commission (NLRC) for compulsory arbitration pursuant to Article 263 (g) of the Labor Code, as
amended.

Accordingly, the strike staged by the Union is hereby enjoined. All striking workers are hereby
directed to return to work within twenty four (24) hours from receipt of this Order, except those who
were terminated due to redundancy. The employer is hereby enjoined to accept the striking workers
under the same terms and conditions prevailing prior to the strike. The parties are likewise directed
to cease and desist from committing any act that might worsen the situation.
Let the entire records of the case be forwarded to the NLRC for its immediate and appropriate
action.

SO ORDERED. 19

Manggagawa ng Komunikasyon sa Pilipinas filed a Petition for Certiorari before the Court of
Appeals, challenging the Secretary of Labor and Employment's Order insofar as it created a
distinction among the striking workers in the return-to-work order. The petition was docketed as CA-
G.R. SP No. 76262.20

On November 25, 2003, the Court of Appeals granted the Petition for Certiorari, setting aside and
nullifying the Secretary of Labor and Employment's assailed Order.21

The Philippine Long Distance Telephone Company appealed the Court of Appeals' Decision to this
Court. The appeal was docketed as G.R. No. 162783.22

On July 14, 2005,23 this Court upheld the Court of Appeals' Decision, and directed Philippine Long
Distance Telephone Company to readmit all striking workers under the same terms and conditions
prevailing before the strike. This Court held:

As Article 263(g) is clear and unequivocal in stating that ALL striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit ALL
workers under the same terms and conditions prevailing before the strike or lockout, then the
unmistakable mandate must be followed by the Secretary.24

On October 28, 2005, the National Labor Relations Commission dismissed Manggagawa ng
Komunikasyon sa Pilipinas' charges of unfair labor practices against Philippine Long Distance
Telephone Company.25

The National Labor Relations Commission held that Philippine Long Distance Telephone Company's
redundancy program in 2002 was valid and did not constitute unfair legal practice. 26 The redundancy
program was due to the decline of subscribers for long distance calls and to fixed line services
produced by technological advances in the communications industry.27 The National Labor Relations
Commission ruled that the termination of employment of Philippine Long Distance Telephone
Company's employees due to redundancy was legal.28 The dispositive portion of the National Labor
Relations Commission's Resolution read:

WHEREFORE, premises considered, the Union[']s charge of unfair labor practice against PLDT is
ordered DISMISSED for lack of merit.

SO ORDERED.29

On January 31, 2006, the National Labor Relations Commission denied Manggagawa ng
Komunikasyon sa Pilipinas' motion for reconsideration. 30

On May 8, 2006, Manggagawa ng Komunikasyon sa Pilipinas filed a Petition for Certiorari31 with the
Court of Appeals. The petition was docketed as CA-G.R. SP No. 94365, and it assailed the National
Labor Relations Commission's resolutions, which upheld the validity of Philippine Long Distance
Telephone Company's redundancy program. 32
On August 11, 2006, the Secretary of Labor and Employment dismissed Manggagawa ng
Komunikasyon sa Pilipinas' Motion for Execution33 of this Court's July 14, 2005 Decision.34

On March 16, 2007, the Secretary of Labor and Employment denied35 Manggagawa ng
Komunikasyon sa Pilipinas' motion for reconsideration.36

On May 21, 2007, Manggagawa ng Komunikasyon sa Pilipinas filed a Petition for Certiorari37 before
the Court of Appeals, assailing the August 11, 2006 Resolution and March 16, 2007 Order of the
Secretary of Labor and Employment. The petition was docketed as CA-G.R. SP No. 98975.

The Court of Appeals consolidated CA-G.R. SP No. 94365 with CAG.R. SP No. 98975, and
dismissed Manggagawa ng Komunikasyon sa Pilipinas' appeals on August 28, 2008.38

For CA-G.R. SP No. 94365, the Court of Appeals ruled that the National Labor Relations
Commission did not commit grave abuse of discretion when it found that Philippine Long Distance
Telephone Company's declaration of redundancy was justified and valid, as the redundancy program
was based on substantial evidence.39

The Court of Appeals also found that Philippine Long Distance Telephone Company's 2002
declaration of redundancy "was not attended by [unfair labor practice] . . . [because it was]
transparent and forthright in its implementation of the redundancy program."40 Philippine Long
Distance Telephone Company also successfully redeployed 180 of the 503 affected employees to
other positions.41

As for CA-G.R. SP No. 98975, the Court of Appeals confirmed that its assailed order of
reinstatement indicated that all employees, even those declared separated effective December 31,
2002, should be reinstated pendentelite.42 However, the Court of Appeals stated that the order of
reinstatement became moot due to the National Labor Relations Commission's October 28, 2005
Decision, which upheld the validity of the dismissal of the employees affected by the redundancy
program.43

The Court of Appeals also denied Manggagawa ng Komunikasyon sa Pilipinas' prayer that:

[T]he affected employees should at least be paid their salaries during the period from January 3,
2003 (the working day immediately following the effectivity of their separation) to April 29, 2006 (the
date when the October 28, 2005 decision of the NLRC (declaring the employees' dismissal as valid)
became final and executory).44

The Court of Appeals compared the case to an illegal dismissal case where the Labor Arbiter found
for the employee and ordered the payroll reinstatement of the employee; however, the finding of
illegality was later reversed on appeal. 45

The dispositive portion of the Court of Appeals' Decision read:

WHEREFORE, the PETITIONS FOR CERTIORARI IN CA-G.R. SP Nos. 94365 and 98975 are
DISMISSED for lack of merit.

SO ORDERED.46 (Emphasis in the original)

On November 24, 2009, the Court of Appeals denied Manggagawa ng Komunikasyon sa Pilipinas'
motion for reconsideration.47
In its Petition for Review on Certiorari, Manggagawa ng Komunikasyon sa Pilipinas states that
employees in the Provisioning Support Division and in the Operator Services Section had their
positions declared redundant in 2002.48 Manggagawa ng Komunikasyon sa Pilipinas asserts that the
total number of rank-and-file positions actually declared redundant was 538, or 35 positions in the
Provisioning Support Division and 503 positions in the Operator Services Section.49

Manggagawa ng Komunikasyon sa Pilipinas maintains that Philippine Long Distance Telephone

Company failed to submit evidence in support of its declaration of redundancy of the 35 rank-and-file
employees in the Provisioning Support Division.50 It claimed that "[Philippine Long Distance
Telephone Company] only notified [the Department of Labor and Employment] of the 'closure of
traffic operations at Regional Operator Services affecting three hundred ninety-two (392) employees
and the restructuring of [Greater Metropolitan Manila] Operator Services affecting one hundred
eleven (111) employees."'51 Manggagawa ng Komunikasyon sa Pilipinas asserts that there was no
notice given regarding the closure of Philippine Long Distance Telephone Company's Provisioning
Support Division, and the termination of employment due to redundancy of the affected rank-and-file
employees. 52 It points out that the justifications for the redundancy put forth by Philippine Long
Distance Telephone Company "only pertained to the affected operator services positions and not the
affected [Provisioning Support Division] positions."53

Manggagawa ng Komunikasyon sa Pilipinas also maintains that the National Labor Relations
Commission committed grave abuse of discretion when it disallowed the written interrogatories that
Manggagawa ng Komunikasyon sa Pilipinas submitted.54

As for the issue of reinstatement pendente lite, Manggagawa ng Komunikasyon sa Pilipinas cites
Garcia v. Philippine Airlines, Inc. 55 to bolster its stand. It holds that an employee is entitled to
reinstatement or backwages pending appeal if the Labor Arbiter's finding of illegal dismissal is later
on reversed by the National Labor Relations Commission. 56

For its part, Philippine Long Distance Telephone Company claims that the validity of redundancy of
the affected Provisioning Support Division employees was only raised by Manggagawa ng
Komunikasyon sa Pilipinas for the first time on appeal. 57 Philippine Long Distance Telephone
Company asserts that the real issue in that case was whether Philippine Long Distance Telephone
Company was obligated to transfer the affected Provisioning Support Division employees, and not
whether their redundancies were valid.58 Philippine Long Distance Telephone Company maintains
that the affected Provisioning Support Division personnel were given the opportunity to apply for
another division, yet they chose not to. 59

Philippine Long Distance Telephone Company avers that Manggagawa ng Komunikasyon sa

Pilipinas' resort to interrogatories has been denied with finality by the Court of Appeals. 60 It also
claims that the National Labor Relations Commission's Rules of Procedure do not allow the use of
discovery proceedings; thus, Manggagawa ng Komunikasyon sa Pilipinas cannot assert that their
resort to interrogatories is a matter of procedural right. 61

Philippine Long Distance Telephone Company states that neither the Court of Appeals nor the
Supreme Court ordered the reinstatement of Manggagawa ng Komunikasyon sa Pilipinas' members,
since their decisions set aside Secretary of Labor and Employment's January 2, 2003 Order.62 The
order enjoined the striking workers to return to work, except those who were terminated due to
redundancy. 63 Philippine Long Distance Telephone Company asserts that "what controls execution
is the dispositive or decretal statement of the [d]ecision sought to be executed."64 Furthermore,
Philippine Long Distance Telephone Company maintains that the Court of Appeals correctly ruled
that the reinstatement of the excluded employees was rendered moot when the National Labor
Relations Commission upheld its redundancy program.65
Finally, Philippine Long Distance Telephone Company holds that Garcia is not applicable because
the case at bar does not involve a reinstatement award by a Labor Arbiter.66

We resolve the following issues:

First, whether the Court of Appeals committed grave abuse of discretion in upholding the validity of
Philippine Long Distance Telephone Company's 2002 redundancy program; and

Second, whether the return-to-work order of the Secretary of Labor and Employment was rendered
moot when the National Labor Relations Commission upheld the validity of the redundancy program.

The Petition is partly meritorious.

A petition for review on certiorari under Rule 45 is a mode of appeal where the issue is limited only
to questions of law. 67 In labor cases, a Rule 45 petition "can prosper only if the Court of Appeals ...
fails to correctly determine whether the National Labor Relations Commission committed grave
abuse of discretion."68

A court or tribunal is said to have acted with grave abuse of discretion when it capriciously acts or
whimsically exercises judgment to be "equivalent to lack of jurisdiction."69 Furthermore, the abuse of
discretion must be so flagrant to amount to a refusal to perform a duty or to act as provided by law. 70

Career Philippines Shipmanagement, Inc. v. Serna,71 citing Montoyav. Transmed, 72 provides the
parameters of judicial review for a labor case under Rule 45:

As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the
particular parameters of a Rule 45 appeal from the CA's Rule 65 decision on a labor case, as
follows:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the
review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it correctly
determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it. 73 (Emphasis in the original)

Justice Arturo D. Brion's dissent in AbbotLaboratories, Philippinesv. Alcaraz74 thereafter laid down
the guidelines to be followed in reviewing a petition for review under Rule 45:

If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition. If
grave abuse of discretion exists, then the CA must grant the petition and nullify the NLRC ruling,
entering at the same time the ruling that is justified under the evidence and the governing law, rules
and jurisprudence. In our Rule 45 review, this Court must deny the petition if it finds that the CA
correctly acted. 75 (Emphasis in the original)
We shall adopt these parameters in resolving the substantive issues in the Petition.

II

Redundancy is one of the authorized causes for the termination of employment provided for in
Article 298 76 of the Labor Code, as amended:

Article 298. Closure of Establishment and Reduction of Personnel. - The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at
least one (1) month before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation
of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

Wiltshire File Co. Inc. v. National Labor Relations Commission77 has explained that redundancy
exists when "the services of an employee are in excess of what is reasonably demanded by the
actual requirements of the enterprise."78

While a declaration of redundancy is ultimately a management decision in exercising its business

judgment, and the employer is not obligated to keep in its payroll more employees than are needed
for its day to-day operations, 79 management must not violate the law nor declare redundancy without
sufficient basis. 80

Asian Alcohol Corporation v. National Labor Relations Commission81 listed down the elements for the
valid implementation of a redundancy program:

For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department of Labor
and Employment at least one month prior to the intended date of retrenchment; (2) payment of
separation pay equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished. 82 (Citations omitted)

To establish good faith, the company must provide substantial proof that the services of the
employees are in excess of what is required of the company, and that fair and reasonable criteria
were used to determine the redundant positions. 83

In order to prove the validity of its redundancy program, Philippine Long Distance Telephone
Company has presented data on the decreasing volume of the received calls by the Operator
Services Center for the years 1996 to 2002:84

RECEIVED CALLS
 YEAR 108 109 TOTAL
1996 33,641,751 430,125,633 463,767,384
1997 34,834,800 318,942,573 353,777,373
1998 28,651,703 209,458,041 238,109,744
1999 24,797,870 212,363,846 237,161,716
2000 21,697,367 218,380,277 240,077,644
2001 15,773,988 158,310,276 174,084,264
2002 14,363,918 114,430,469 128,794,387

Philippine Long Distance Telephone Company has stated that "from f 1996 to 2002, the [t]otal
[d]emand of [c]alls dropped by 334,972,997 or a 72% reduction."85 It has attributed the reduction of
demand for operator-assisted 108/109 calls to "migration calls to direct distance dialing," and to
"more usage/substitution of text message over voice."86 It has added that "migration of calls from
landline to cell," competitors' eating into the Philippine Long Distance Telephone Company's market,
and "compliance with the regulatory requirement of local integration per province" likewise d
aggravated the situation.87

Philippine Long Distance Telephone Company claims that the pattern of decline with operator-
assisted calls has been consistent through the years, 88 and it has summarized the challenges
facing its long distance services as follows:

(a) international long distance revenues in 2001 stood at ₱11.4 billion; in 2002, this declined
to ₱10.6 billion (pg. 33, PLDT's Financial Statement and Annual Report; Annex "4-A") - a
decrease of ₱813 million. More drastically, this figure stood at ₱18.2 billion in 1997,
indicating that international long distance call revenue has declined to the tune of P8 billion in
five years!

(b) national long distance revenues in 2001 were ₱8 .3 88 billion in 2001; in 2002, this
declined to ₱7.6 billion (pg. 35, PLDT's Financial Statement and Annual Report; Annex ''4-
B") - a decrease of ₱719 million. As with international calls, there is a pattern on decline:
PLDT earned ₱10.6 billion from this service in 2000, so it is accurate to say that the
company has seen revenue from national long distance decline by more than a billion pesos
a year. 89

The National Labor Relations Commission has found that Philippine Long Distance Telephone
Company was able to discharge its burden of proving that its redundancy measures had substantial
basis:

Guided by the foregoing jurisprudence, it is evident that PLDT discharged the burden of proving that
the declaration or implementation of redundancy measures have basis. For one, PLDT experienced
a decline of subscribers, long distance calls, operated both local and abroad, has declined, landline
or fixed line services also declined. This decrease of the need of PLDT services resulted from the
advent of wireless telephone, of texting as means of communication, the use of direct dialing
including prepaid telesulit and teletipid measures introduced in the communication services. For
another, PLDT has a debt burden of ₱70 billion pesos and it cannot subsidize the salaries of
employees whose positions are redundant.90
The Court of Appeals echoed the findings of the National Labor Relations Commission regarding the
validity of Philippine Long Distance Telephone Company's redundancy measures:

We find that MKP demonstrated no such patent and gross evasion of a positive duty on the part of
the NLRC. On the contrary, the NLRC's finding that the 2002 redundancy declaration of PLDT was
justified and valid rested on substantial evidence, for the NLRC ostensibly based its finding on
established facts showing the decline of subscribers, the decline in long distance local and
international calls, and the decline in landline or fixed line services, constraining PLDT to declare
certain positions redundant. There could be no question that such factual circumstances were
traceable to "the advent of wireless telephone, of texting as a means of communication, the use of
direct dialing including prepaid telesulit and teletipid measures introduced in the communication
services."

As such, the NLRC did not commit any grave abuse of discretion when it regarded the technological
advancements resulting in less work for the redundated employees as justifying PLDT's declaration
of redundancy. 91

This Court sees no reason to depart from the findings of the Court of Appeals and of the National
Labor Relations Commission.

Philippine Long Distance Telephone Company's declaration of redundancy was backed by

substantial evidence showing a consistent decline for operator-assisted calls for both local and
international calls because of cheaper alternatives like direct dialing services, and the growth of
wireless communication. Thus, the National Labor Relations Commission did not commit grave
abuse of discretion when it upheld the validity of PLDT's redundancy program. Redundancy is
ultimately a management prerogative, and the wisdom or soundness of such business judgment is
not subject to discretionary review by labor tribunals or even this Court, as long as the law was
followed and malicious or arbitrary action was not shown.92

III

Nonetheless, there is a need to review the redundancy package awarded to the employees
terminated due to redundancy. For either redundancy or retrenchment, the law requires that the
employer give separation pay equivalent to at least one (1) month pay of the affected employee, or
at least one (1) month pay for every year of service, whichever is higher. The employer must also
serve a written notice on both the employees and the Department of Labor and Employment at least
one (1) month before the effective date of termination due to redundancy or retrenchment. 93

While we agree that Philippine Long Distance Telephone Company complied with the notice
requirement, the same cannot be said as regards the separation pay received by some of the
affected workers.

Philippine Long Distance Telephone Company claims that most employees who were declared
redundant received a very generous separation package or "as much as 2.75 months [worth of
salary] for every year of service, with the average separation package at [₱]586,580.27."94 However,
the records belie its claims as shown by the notice of termination of employment received by the
workers affected by the redundancy program:

November 25, 2002

MYRNA C. CASTRO
OPERATOR SERVICES-NORTH
Dear Ms. Castro:

After a thorough review of operations, Management has determined that there is a need to reduce its
manpower requirements considering technological, organization, and process developments. This
reduction is inevitable to ensure the company's survival in the long term.

Your position is one of those affected by such changes and developments. Thus, with much regret,
your service to the company will be considered completed by December 30, 2002.

In recognition of your loyalty and dedicated service, the company is granting a generous separation
pay package that will assist you in making the necessary adjustments to your new situation.

This separation package consists of your regular retirement benefits plus 75% of basic monthly pay
for every year of service, or a minimum of 175% of basic monthly pay for every year of service for
employees with less than 15 years of service.

Counseling service on financial options in the future will be available to assist you during your period
of adjustment.

We would like to take this opportunity to thank you for your service to the Company and wish you
well in all your future undertakings.

Very truly yours,

PHILIPPINE LONG DISTANCE TELEPHONE CO., INC

(signed)
ERLINDA S. KABIGTING95

(Emphasis supplied)

The notices of termination of employment96 signed by Erlinda S. Kabigting, Philippine Long

Distance Telephone Company Vice-President for Operator Services Section,97 provided two (2) types
of separation packages for the terminated workers. These were: (1) regular retirement benefits plus
75% basic monthly pay for every year of service for employees who had been with Philippine Long
Distance Telephone Company for more than 15 years; and (2) 175% of basic monthly pay for every
year of service for employees who had been with PLDT for less than 15 years.

When an employer declares redundancy, Article 298 of the Labor Code requires that the employer
provides a separation pay equivalent to at least one (1) month pay of the affected employee, or at
least one (1) month pay for every year of service, whichever is higher.98 In this case, Philippine
Long Distance Telephone Company claims that the terminated workers received a generous
separation package of about 2.75 months' worth of salary for every year of service. But it seems that
the retirement benefits of the terminated workers were added to the separation pay due them, hence
the large payout. This should not be the case.

Aquino v. National Labor Relations Commission99 differentiated between separation pay and
retirement benefits:

Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code,
which include retrenchment, and is computed at at least one month salary or at the rate of one-half
month salary for every month of service, whichever is higher. We have held that it is a statutory right
designed to provide the employee with the wherewithal during the period that he is looking for
another employment.

Retirement benefits, where not mandated by law, may be granted by agreement of the employees
and their employer or as a voluntary act on the part of the employer. Retirement benefits are
intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying
for his financial support, and are a form of reward for his loyalty and service to the
employer. 100 (Citation omitted)

Separation pay brought about by redundancy is a statutory right, and it is irrelevant that the
retirement benefits together with the separation pay given to the terminated workers resulted in a
total amount that appeared to be more than what is required by the law. The facts show that instead
of the legally required one (1) month salary for every year of service rendered, the terminated
workers who were with Philippine Long Distance Telephone Company for more than 15 years
received a separation pay of only 75% of their basic pay for every year of service, despite the clear
wording of the law.

The workers, who were terminated from employment as a result of redundancy, are entitled to the
separation pay due them under the law.

IV

Department of Labor and Employment Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas)
assumed jurisdiction over the labor dispute between Manggagawa ng Komunikasyon sa Pilipinas
and Philippine Long Distance Telephone Company pursuant to Article. 278(g)101 of the Labor Code.
She certified 102 the case to the National Labor Relations Commission for compulsory arbitration. This
return-to-work order from the Secretary of Labor and Employment aims to preserve the
status quoante103 while the validity of the redundancy program is being threshed out in the proper
forum.

In Telefunken Semiconductors Employees Union-FFW v. Secretary of Labor, 104 pending resolution of

the legality of the· strike, the Secretary of Labor and Employment directed the employer to accept all
the striking workers except the Union Officers, shop stewards, and those with pending criminal
charges. 105 This Court struck down the Secretary of Labor and Employment's order for being issued
with grave abuse of discretion, 106 and directed the employer to accept all the striking workers
without l qualifications.107

The ruling in Telefunken cannot be applied to the case at bar.

In Philippine Long Distance Telephone Co. Inc. v. Manggagawa ng Komunikasyon sa

Pilipinas, 108 which was promulgated on July 14, 2005, this Court struck down the return-to-work order
dated January 2, 2003 issued by Secretary Sto. Tomas for being tainted with grave abuse of
discretion. We ruled that the return-to-work order should have included all striking workers, and
should not have excluded the workers affected by the redundancy program. 109 However, barely three
(3) months after Philippine Long Distance Telephone Co. Inc. 's promulgation, the National Labor
Relations Commission in its October 28, 2005 Resolution 110 upheld the validity of Philippine Long
Distance Telephone Company's redundancy program. This resolution also dismissed the charges of
unfair labor practice, and illegal dismissal against Philippine Long Distance Telephone Company. 111

When petitioner filed its Motion for Execution112 on January 17, 2006 pursuant to this Court's ruling
in Philippine Long Distance Telephone Co. Inc., there was no longer any existing basis for the
return-to-work order. This was because the Secretary of Labor and Employment's return-to-work
order had been superseded by the National Labor Relations Commission's Resolution. Hence, the
Secretary of Labor and Employment did not err in dismissing the motion for execution on the ground
of mootness.

Petitioner cites Garcia v. Philippine Airlines113 to support its claim that the affected and striking
workers are entitled to reinstatement and backwages from January 2, 2003, when Secretary Sto.
Tomas directed the striking workers to return to work, up to April 29, 2006, when the National Labor
Relations Commission's Resolution upholding Philippine Long Distance Telephone Company's
redundancy program became final and executory. 114

Petitioner is mistaken.

Garcia upholds the prevailing doctrine that even if a Labor Arbiter's order of reinstatement is
reversed on appeal, the employer is obligated "to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court." 115

There is no order of reinstatement from a Labor Arbiter in the case at bar, instead, what is at issue is
the return-to-work order from the Secretary of Labor and Employment. An order of reinstatement is
different from a return-to-work order.

The award of reinstatement, including backwages, is awarded by a Labor Arbiter to an illegally

dismissed employee pursuant to Article 294116 of the Labor Code:

Article 294. Security of Tenure. - In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. (Emphasis supplied)

If actual reinstatement is no longer possible, the employee becomes entitled to separation pay in lieu
of reinstatement. 117

On the other hand, a return-to-work order is issued by the Secretary of Labor and Employment when
he or she assumes jurisdiction over a labor dispute in an industry that is considered indispensable to
the national interest. Article 278(g) of the Labor Code provides that the assumption and certification
of the Secretary of Labor and Employment shall automatically enjoin the intended or impending
strike. When a strike has already taken place at the time the Secretary of Labor and Employment
assumes jurisdiction over the labor dispute, all striking employees shall immediately return to work.
Moreover, the employer shall immediately resume operations, and readmit all workers under the
same terms and conditions prevailing before the strike.

Return-to-work and reinstatement orders are both immediately executory; however, a return-to-work
order is interlocutory in nature, and is merely meant to maintain status quo while the main issue is
being threshed out in the proper forum. In contrast, an order of reinstatement is a judgment on the
merits handed down by the Labor Arbiter pursuant to the original and exclusive jurisdiction provided
for under Article 224(a)118 of the Labor Code. Clearly, Garcia is not applicable in the case at bar, and
there is no basis to reinstate the employees who were terminated as a result of redundancy.

WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The Court of Appeals'
August 28, 2008 Decision and November 24, 2009 Resolution in CA-G.R. SP No. 94365 and CA-
G.R. SP No. 98975 are AFFIRMED with MODIFICATION. Private respondent Philippine Long
Distance Telephone Company, Inc. is DIRECTED to pay the workers affected by its 2002
redundancy program and who had been employed for more than fifteen (15) years prior to their
dismissal, the balance of the separation pay due them or a sum equivalent to twenty-five percent
(25%) of their basic monthly pay for every year of service with Philippine Long Distance Telephone
Company, Inc.

A legal interest of 6% per annum shall be imposed on the total judgment award from the finality of
this Decision until its full satisfaction.

SO ORDERED.

G.R. No. 195163

ERGONOMIC SYSTEMS PIIlLIPPINES, INC., PHILLP C. NG and MA. LOURMINDA O.

NG, Petitioners
vs.
EMERITO C. ENAJE, BENEDICTO P. ABELW, ALEX M MALA YLA Y, FRANCISCO Q. ENCABO,
JR., RICO SAMSON, ROWENA BETITIO, FELIPE N. CUSTOSA, JAIME A. JUATAN, LEOVINO J.
MULINTAPANG, NELSON L ONTE, EMILIANO P. RONE, ROLIETO LLAMAOO, AMORPIO R.
ADRIANO, JIMMY ALCANTARA, BERNARDO ANTONI, HERMINITO BEDRIJO, ROMEO
BELARMINO, YOLANDA CANOPIN, ALMELITO CUABO, RICARDO DEL PILAR, ELMER
DESQUITADO, WINEFREDO DESQUITADO, DEMETRIO DIAZ, ERICK ECRAELA, QUINTERO
ENRIQUEZ, CRISANTO FERNANDEZ, ROMMEL FWRES, NELSON FRIAS, PEDRITO GIRON,
DOMINADOR C. GUIMALDO, JR., AMBROSIO HENARES, TERENCIO HENARES, ALBERT
LACHICA, ALBERTO LORENW, JOEL MALAYLAY, SUSAN MALBAS, ROLANDO MAMARIL,
TEDDY MONTIBLE, FERNANDO OFALDA, RONNIE V. OLIVAY, RAUL PAGOWNG, WRENW
RANIEGO, AMADO V. SAMSON IV, ROEL P. SORIANO, JONA1HAN SUALIBIO, ESTEBAN
SUMICAO, JOSEPH TABADAY, EPIFANIO TABAREZ, REGIE TOTING, REYNALDO TOTING,
NORMAN VALENZUELA, ROLANDO YONSON, DIOSCORO BALAJADIA, NERRY BALINAS,
NOEL BALMEO, ARNALDO A. CASTRO, GERONCIO DELA CUEVA, ALBERTO GAPASIN,
JULIUS GENOVA, WRETO GRACILLA, JR., ROBERTO S. INGIENTE, ROQUE JO VEN,
PATERNO LINOGO, ISAGANI MASANGKA, ANGELITO MONTILLA, PECIFICO NIGPARANON,
NOBE SALVADOR, MANUEL OAVENGA, REYNADO ORTIZ, ROMEO QUINTANA, JERNALD
REMOTIN, REYNALDO ROBLESA, SAMUEL ROSALES, ROBERTO SANTOS, RONALDO M
SANTOS, ROCKY TALOWNG, EMILIO TONGA, BERNARDO VALDEZ, DANTE L VELASCO,
RENE V. VICENTE, JAIME BENTUCO, MARINO CACAO, CARLITO DELA CERNA,
CHRISTOPHER MASAGCA, CHRISTOPHER PALOMARES, ROLANDO PATOTOY, ASER
PESADO, JR., LEONIW RICAFORT, FELIX SANCHEZ and FRANCIS 0. ZANTUA, Respondents

DECISION

MARTIRES, J.:

This is a petition for review on certiorari assailing the Decision,1 dated 21 September 2010, and
Resolution,2 dated 14 January 2011, of the Court of Appeals (CA), in CA-G.R. SP No. 102802, which
affirmed with modification the decision,3 dated 31 October 2007, and resolution,4 dated 21 December
2007, of the National Labor Relations Commission (NLRC) in NLRC NCR No. RAB IV-01-16813-03-
L. The NLRC, in turn, affirmed the decision,5 dated 31 January 2005, of Labor Arbiter Generoso V.
Santos (LA) in NLRC NCR No. RAB IV-01-16813-03-L, a case for illegal dismissal and unfair labor
practice.
 THE FACTS

Respondents were union officers and members of Ergonomic System Employees Union-Workers
Alliance Trade Unions (local union). On 29 October 1999, the local union entered into a Collective
Bargaining Agreement (CBA)6 with petitioner Ergonomic Systems Philippines, Inc. (ESPJ),7 which
was valid for five (5) years or until October 2004. The local union, which was affiliated with Workers
Alliance Trade Unions-Trade Union Congress of the Philippines (Federation), was not independently
registered. Thus, on 15 November 2001, before the CBA expired, the union officers secured the
independent registration of the local union with the Regional Office of the Department of Labor and
Employment (DOLE). Later on, the union officers were charged before the Federation and
investigated for attending and participating in other union's seminars and activities using union
leaves without the knowledge and consent of the Federation and ESPI as well as in initiating and
conspiring in the disaffiliation before the freedom period.8

On 10 January 2002, the Federation rendered a decision9 finding respondents-union officers Emerito
C. Enaje, Benedicto P. Abello, Alex M. Malaylay, Francisco G. Encabo, Jr., Rico Samson, Rowena
Betitio, Felipe N. Custosa, Jaime A. Juatan, Leovino Mulintapang, Nelson L. Onte, Emiliano P.
Rone, and Rolieto Llamado guilty of disloyalty. They were penalized with immediate expulsion from
the Federation.10

On 11 January 2002, the Federation furnished ESPI with a copy of its decision against respondents-
union officers and recommended the termination of their employment by invoking Sections 2 and 3,
Article 2 of the CBA.11

ESPI notified respondents-union officers of the Federation's demand and gave them 48 hours to
explain. Except for Nelson Onte, Emiliano Rone, and Rico Samson, the rest of the officers refused to
receive the notices. Thereafter, on 20 February 2002, respondents-union officers were issued letters
of termination, which they again refused to receive. On 26 February 2002, ESPI submitted to the
DOLE a list of the dismissed employees. On the same day, the local union filed a notice of strike
with the National Conciliation and Mediation Board (NCMB). 12

From 21 February to 23 February 2002, the local union staged a series of noise barrage and "slow
down" activities. Meanwhile, on 22 February 2002, 40 union members identified as: Amorpio
Adriano, Jimmy Alcantara, Bernardo Antoni, Herminito Bedrijo, Romeo Belarmino, Yolanda Canopin,
Almelito Cuabo, Ricardo Del Pilar, Elmer Desquitado, Winefredo Desquitado, Demetrio Diaz, Erick
Ecraela, Quintero Enriquez, Crisanto Fernandez, Rommel Flores, Nelson Frias, Pedrito Geron,
Dominador Guimaldo, Ambrosio Henarez, Terencio Henares, Albert Lachica, Alberto Lorenzo, Joel
Malaylay, Susan Malbas, Rolando Manaril, Teddy Montible, Fernando Ofaldo, Ronie Olivay, Raul
Pagolong, Lorenzo Raniego, Amado Samson-Ty, Roel Soriano, Jonathan Sualibio, Esteban
Sumicao, Joseph Tabaday, Epifanio Tabarez, Regie Toting, Reynaldo Toting, Norman Valenzuela
and Rolando Y onson ref used to submit their Daily Production Reports (DPRs).

On 26 February 2002, 28 union members namely Dioscoro Balajadia, Nerry Balinas, Noel Balmeo,
Arnaldo Castro, Geroncio Dela Cueva, Alberto Gapasin, Julius Genova, Loreto Gracilla, Roberto
Ingiente, Jr., Roque Joven, Paterno Linogo, Isagani Masangka, Angelito Montilla, Pecifico
Nigparanon, Salvador Nobe, Manuel Oavenga, Reynaldo Ortiz, Romeo Quintana, Jernard Remotin,
Reynaldo Roblesa, Samuel Rosales, Roberto Santos, Ronaldo Santos, Rocky Talolong, Emilio
Tonga, Bernardo Valdez, Dante Velasco and Rene Vicente abandoned their work and held a
picket line outside the premises of ESPI.

Then, from 26 February 2002 to 2 March 2002, 10 union members, namely Jaime Bentuco, Marina
Cacao, Carlito Dela Cerna, Christopher Masagca, Christopher Palomares, Rolando Patotoy, Aser
Pesado, Jr., Leonilo Ricafort, Felix Sanchez and Francis Santua did not report for work without
official leave. The union members were required to submit their explanation why they should not be
sanctioned for their refusal to submit DPRs and abandonment of work, but they either refused to
receive the notices or received them under protest. Further, they did not submit their explanation as
required. Subsequently, for refusal to submit DPRs and for abandonment, respondents-union
members were issued letters of termination.13

On 27 January 2003, the respondents filed a complaint for illegal dismissal and unfair labor practice
against ESPI, Phillip C. Ng, and Ma. Lourminda O. Ng (petitioners). 14

The Labor Arbiter’s Ruling

In a decision, dated 31 January 2005, the LA held that the local union was the real party in interest
and the Federation was merely an agent in the CBA; thus, the union officers and members who
caused the implied disaffiliation did not violate the union security clause. Consequently, their
dismissal was unwarranted. Nevertheless, the LA ruled that since ESPI effected the dismissal in
response to the Federation's demand which appeared to be justified by a reading of the union
security clause, it would be unjust to hold ESPI liable for the normal consequences of illegal
dismissal.

The LA further opined that there was no ground for the dismissal of the union members because the
refusal to submit DPRs and failure to report for work were meant to protest the dismissal of their
officers, not to sever employer-employee relationship. He added that neither ESPI nor the
respondents were at fault for they were merely protecting their respective interests. In sum, the LA
ordered all the respondents to return to work but without back wages. The fallo reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the complainants to

report back to their former jobs within ten (10) days from receipt of this Decision and the respondent
company is in turn directed to accept them back but without back wages. In the event however, that
this is no longer possible, the respondent company is ordered to pay the complainants their
separation pay computed at one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months to be considered as one (1) whole year. The respondent is likewise ordered to
pay complainants attorney's fees equivalent to ten (10%) percent of the total thereof as attorney's
fees.

All other claims are dismissed for lack of merit.

SO ORDERED.15

Unconvinced, petitioners and respondents appealed before the NLRC.

The NLRC Ruling

In a decision, dated 31 October 2007, the NLRC affirmed the ruling of the LA. It adjudged that the
dismissal of the union officers was effected only in response to the demand of the Federation and to
comply with the union security clause under the CBA. The NLRC concluded that since there was no
disloyalty to the union, but only disaffiliation from the Federation which was a mere agent in the
CBA, the cause for the respondents' dismissal was non-existent. It disposed the case in this wise:
WHEREFORE, premises considered, the appeals separately filed by complainants and respondents
from the Decision of Labor Arbiter Generoso V. Santos dated January 31, 2005 are both
DISMISSED for lack of merit.

The appeal filed by complainants from the Order dated January 4, 2007 is likewise DISMISSED for
lack of merit.

The assailed Orders are hereby AFFIRMED.

SO ORDERED.16

Undeterred, petitioners and respondents moved for reconsideration. Their motions, however, were
denied by the NLRC in a resolution, dated 21 December 2007.

The CA Ruling

In its decision, dated 21 September 2010, the CA affirmed with modification the NLRC ruling. It held
that ESPI and the respondents acted in good faith when the former dismissed the latter and when
the latter, in turn, staged a strike without complying with the legal requirements. The CA, however,
pronounced that the concept of separation pay as an alternative to reinstatement holds true only in
cases wherein there is illegal dismissal, a fact which does not exist in this case. The dispositive
portion reads:

WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision of the Labor Arbiter, as
sustained by the National Labor Relations Commission, reverting the employer-employee position of
the parties to the status quo ante is AFFIRMED, with MODIFICATION, in that the provision on the
award of separation pay in lieu of reinstatement is deleted.

SO ORDERED.17

Aggrieved, petitioners and respondents moved for reconsideration but the same was denied by the
CA in a resolution, dated 14 January 2011.

Hence, this petition.

ISSUES

I. WHETHER THE FEDERATION MAY INVOKE THE UNION SECURITY CLAUSE IN DEMANDING
THE RESPONDENTS' DISMISSAL;

II. WHETHER THE STRIKE CONDUCTED BY THE RESPONDENTS COMPLIED WITH THE
LEGAL REQUIREMENTS;

III. WHETHER THE RESPONDENTS’ DISMISSAL FROM EMPLOYMENT WAS VALID.

The petitioners argue that the respondents failed to comply with two (2) of the procedural
requirements for a valid strike, i.e., taking of a strike vote and observance of the seven-day period
after submission of the strike vote report; that mere participation of union officers in the illegal strike
is a ground for termination of employment; that the union members committed illegal acts during the
strike which warranted their dismissal, i.e., obstruction of the free ingress to and egress from ESPI' s
premises and commission of acts of violence, coercion or intimidation; that the respondents are not
entitled to reinstatement or separation pay because they were validly dismissed from employment;
that the union members who unjustly refused to submit their DPRs and abandoned their work were
rightfully terminated because their acts constituted serious misconduct or willful disobedience of
lawful orders; and that reinstatement is no longer possible because the industrial building owned by
Ergo Contracts Philippines, Inc. was totally destroyed by fire on 6 February 2005.18

In their comment,19 the respondents counter that they were not legally terminated because the
grounds relied upon by the petitioners were nonexistent; that as ruled by the NLRC, they merely
disaffiliated from the Federation but they were not disloyal to the local union; that reinstatement is
not physically impossible because it was the industrial building owned by Ergo Contracts Philippines,
Inc. that was gutted down by fire, not that of ESPI; that even if the manufacturing plant of ESPI was
indeed destroyed by fire, the petitioners have other offices around the country where the
respondents may be reinstated; and that having failed to comply with the order to reinstate them and
having ceased operations, the petitioners must be ordered to pay their separation pay.

In their reply,20 the petitioners aver that the respondents violated the union security clause under the
CBA; that their termination was effected in response to the Federation's demand to dismiss them;
that they did not comply with the requisites of a valid strike; that they refused to submit their DPRs
and abandoned their work; and that the award of separation pay had no basis because the
respondents had been legally dismissed from their employment.

THE COURT’S RULING

Only the local union may

invoke the union security
clause in the CBA.

The controversy between ESPI and the respondents originated from the Federation’s act of expelling
the union officers and demanding their dismissal from ESPI. Thus, to arrive at a proper resolution of
this case, one question to be answered is whether the Federation may invoke the union security
clause in the CBA.

"Union security is a generic term, which is applied to and comprehends 'closed shop, "union shop,’
‘maintenance of membership,' or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. There is union
shop when all new regular employees are required to join the union within a certain period as a
condition for their continued employment. There is maintenance of membership shop when
employees, who are union members as of the effective date of the agreement, or who thereafter
become members, must maintain union membership as a condition for continued employment until
they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed
shop, on the other hand, may be defined as an enterprise in which, by agreement between the
employer and his employees or their representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the
employees in interest are a part."21

Before an employer terminates an employee pursuant to the union security clause, it needs to
determine and prove that: (1) the union security clause is applicable; (2) the union is requesting the
enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to
support the decision of the union to expel the employee from the union.22
In this case, the primordial requisite, i.e., the union is requesting the enforcement of the union
security provision in the CBA, is clearly lacking. Under the Labor Code, a chartered local union
acquires legal personality through the charter certificate issued by a duly registered federation or
national union and reported to the Regional Office.23 "A local union does not owe its existence to the
federation with which it is affiliated. It is a separate and distinct voluntary association owing its
creation to the will of its members. Mere affiliation does not divest the local union of its own
personality, neither does it give the mother federation the license to act independently of the local
union. It only gives rise to a contract of agency, where the former acts in representation of the latter.
Hence, local unions are considered principals while the federation is deemed to be merely their
agent."24

The union security clause in the CBA between ESPI and the local union provides:

SECTION 1. Union Shop. All regular, permanent employees covered by this Agreement who are
members of the UNION as of the date of effectivity of this Agreement as well as any employees who
shall subsequently become members of the UNION during the lifetime of this Agreement or any
extension, thereof, shall as a condition of continued employment, maintain their membership in the
UNION during the term of this Agreement or any extension thereof.

x x xx

SECTION 3. The COMPANY shall terminate the services of any concerned employee when so
requested by the UNION for any of the following reasons:

a. Voluntary Resignation from the Union during the term of this Agreement or any extension thereof;

b. Non-payment of membership fee, regular monthly dues, mutual aid benefit and other
assessments submitted by the UNION to the COMPANY;

c. Violation of the UNION Constitution and Bylaws. The UNION shall furnish the COMP ANY a copy
of their Constitution and Bylaws and any amendment thereafter.

d. Joining of another Union whose interest is adverse to the UNION, AWATU, during the lifetime of
this Agreement.

e. Other acts which are inimical to the interests of the UNION and AWATU.25

There is no doubt that the union referred to in the foregoing provisions is the Ergonomic Systems
Employees Union or the local union as provided in Article I of the CBA.26 A perusal of the CBA shows
that the local union, not the Federation, was recognized as the sole and exclusive collective
bargaining agent for all its workers and employees in all matters concerning wages, hours of work,
and other terms and conditions of employment. Consequently, only the union may invoke the union
security clause in case any of its members commits a violation thereof. Even assuming that the
union officers were disloyal to the Federation and committed acts inimical to its interest, such
circumstance did not give the Federation the prerogative to demand the union officers' dismissal
pursuant to the union security clause which, in the first place, only the union may rightfully invoke.
Certainly, it does not give the Federation the privilege to act independently of the local union. At
most, what the Federation could do is to refuse to recognize the local union as its affiliate and revoke
the charter certificate it issued to the latter. In fact, even if the local union itself disaffiliated from the
Federation, the latter still has no right to demand the dismissal from employment of the union officers
and members because concomitant to the union’s prerogative to affiliate with a federation is its right
to disaffiliate therefrom which the Court explained in Philippine Skylanders, Inc. v. NLRC,27 viz
The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by
case law. In the landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills,
Inc., we upheld the right of local unions to separate from their mother federation on the ground that
as separate and voluntary associations, local unions do not owe their creation and existence to the
national federation to which they are affiliated but, instead, to the will of their members. The sole
essence of affiliation is to increase, by collective action, the common bargaining power of local
unions for the effective enhancement and protection of their interests. Admittedly, there are times
when without succor and support local unions may find it hard, unaided by other support groups, to
secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own interests subject to
the restraints imposed by the constitution and bylaws of the national federation, and free also to
renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into
existence.28

In sum, the Federation could not demand the dismissal from employment of the union officers on the
basis of the union security clause found in the CBA between ESPI and the local union.

A strike is deemed illegal for

failure to take a strike vote and
to submit a report thereon to
the NCMB.

A strike is the most powerful weapon of workers in their struggle with management in the course of
setting their terms and conditions of employment. As such, it either breathes life to or destroys the
union and its members.29

Procedurally, for a strike to be valid, it must comply with Article 27830 of the Labor Code, which
requires that: (a) a notice of strike be filed with the NCMB 30 days before the intended date thereof,
or 15 days in case of unfair labor practice; (b) a strike vote be approved by a majority of the total
union membership in the bargaining unit concerned, obtained by secret ballot in a meeting called for
that purpose; and (c) a notice be given to the NCMB of the results of the voting at least seven days
before the intended strike. These requirements are mandatory, and the union's failure to comply
renders the strike illegal.31

The union filed a notice of strike on 20 February 2002.32 The strike commenced on 21 February
2002.33 The strike vote was taken on 2 April 200234 and the report thereon was submitted to the
NCMB on 4 April 2002.35 Indeed, the first requisite or the cooling-off period need not be observed
when the ground relied upon for the conduct of strike is unionbusting.36 Nevertheless, the second and
third requirements are still mandatory. In this case, it is apparent that the union conducted a strike
without seeking a strike vote and without submitting a report thereon to the DOLE. Thus, the strike
which commenced on 21 February 2002 was illegal.

Liabilities of union officers

and members

Article 279(a)37 of the Labor Code provides:

Art. 279. Prohibited activities. - (a) x x x

x x xx
Any union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status: Provided, That mere participation of a worker in a lawful strike shall not
constitute sufficient ground for termination of his employment, even if a replacement had been hired
by the employer during such lawful strike.

In the determination of the consequences of illegal strikes, the law makes a distinction between
union members and union officers. The services of an ordinary union member cannot be terminated
for mere participation in an illegal strike; proof must be adduced showing that he or she committed
illegal acts during the strike. A union officer, on the other hand, may be dismissed, not only when he
actually commits an illegal act during a strike, but also if he knowingly participates in an illegal
strike.38

In the present case, respondents-union officers stand to be dismissed as they conducted a strike
despite knowledge that a strike vote had not yet been approved by majority of the union and the
corresponding strike vote report had not been submitted to the NCMB.

With respect to respondents-union members, the petitioners merely alleged that they committed
illegal acts during the strike such as obstruction of ingress to and egress from the premises of ESPI
and execution of acts of violence and intimidation. There is, however, a dearth of evidence to prove
such claims. Hence, there is no basis to dismiss respondents-union members from employment on
the ground that they committed illegal acts during the strike.

Dismissed respondents-union
members are not entitled to
back wages.

While it is true that the award of back wages is a legal consequence of a finding of illegal dismissal,
in G & S Transport Corporation v. Infante, 39 the Court pronounced that the dismissed workers are
entitled only to reinstatement considering that they did not render work for the employer during the
strike, viz:

With respect to back wages, the principle of a "fair day's wage for a fair day's labor" remains
as the basic factor in determining the award thereof. 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, suspended or dismissed or otherwise illegally prevented from
working. While it was found that respondents expressed their intention to report back to work, the
latter exception cannot apply in this case. In Philippine Marine Officers' Guild v. Compania
Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees
Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a
situation that does not obtain in the case at bar.40 (emphases supplied)

Thus, in the case at bar, respondents-union members' reinstatement without back wages suffices for
the appropriate relief. Fairness and justice dictate that back wages be denied the employees who
participated in the illegal concerted activities to the great detriment of the employer.41

Nevertheless, separation pay is made an alternative relief in lieu of reinstatement in certain

circumstances, like: (a) when reinstatement can no longer be effected in view of the passage of a
long period of time or because of the realities of the situation; (b) reinstatement is inimical to the
employer's interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best
interests of the parties involved; (e) the employer is prejudiced by the workers' continued
employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained
relations between the employer and employee.42

Given the lapse of considerable time from the occurrence of the strike, the Court rules that the award
of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in
order. This relief strikes a balance between the respondents-union members who may not have
known that they were participating in an illegal strike but who, nevertheless, have rendered service
to the company for years prior to the illegal strike which caused a rift in their relations, and the
employer who definitely suffered losses on account of respondents-union members' failure to report
to work during the illegal strike.

WHEREFORE, the petition is PARTIALLY GRANTED. The 21 September 2010 Decision and 14
January 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 102802
are AFFIRMED with MODIFICATION in that petitioners are hereby ORDERED to pay each of the
above-named individual respondents, except union officers who are hereby declared validly
dismissed, separation pay equivalent to one (1) month salary for every year of service. Whatever
sums already received from petitioners under any release, waiver or quitclaim shall be deducted
from the total separation pay due to each of them.

SO ORDERED.

G.R. No. 226002, June 25, 2018

LINO A. FERNANDEZ, JR., Petitioner, v. MANILA ELECTRIC COMPANY

(MERALCO), Respondent.

DECISION

PERALTA, J.:

This resolves the petition for review on certiorari assailing the December 11, 2015
Decision1 and July 25, 2016 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
138212, which affirmed the Resolutions dated August 29, 20143 and October 20,
20144 of the National Labor Relations Commission (NLRC) denying the Verified Petition
filed by petitioner Lino A. Fernandez, Jr. (Fernandez) under Rule XII (Extraordinary
Remedies) of the 2011 NLRC Rules of Procedure, as amended (NLRC Rules).

Petitioner Fernandez was an employee of respondent Manila Electric Company

(MERALCO) from October 3, 1978 until his termination on September 14, 2000 for
allegedly participating in an illegal strike.5 As a result, he filed a case for illegal
dismissal. Contrary to the conclusion reached by the Labor Arbiter (LA) and the NLRC,
the CA, in CA-G.R. SP No. 95923, declared that Fernandez was illegally dismissed. The
dispositive portion of its January 30, 2007 Decision6 reads:

WHEREFORE, premises considered, the assailed Decision and Resolution of the

National Labor Relations Commission are, hereby, REVERSED and SET ASIDE for
having been issued with grave abuse of discretion amounting to lack or excess
of jurisdiction and a new one entered finding petitioner Lino A. Fernandez to
have been illegally dismissed.
Petitioner Lino Fernandez is found to have been illegally dismissed. Private respondent
Meralco is, hereby, ordered to REINSTATE Lino Fernandez to his former position,
without loss of seniority rights and other privileges appurtenant thereto, with full
backwages from the time of his dismissal until he is actually reinstated, or to pay him
separation pay if reinstatement is no longer feasible pursuant to existing jurisprudence
on the matter. No costs.

SO ORDERED.7
The CA ruling was sustained in Our Resolution8 dated January 16, 2008. With the denial
of the motion for reconsideration, the judgment became final and executory on May 26,
2008.9

During the execution proceedings, both parties filed several motions regarding the
inclusions to, and computation of, the monetary awards due to Fernandez. On the
bases of which, LA Marie Josephine C. Suarez summarized the issues for resolution as
follows:

1. Whether [Fernandez] is entitled to additional backwages despite receipt of

P3,307,362.05 monetary award covering the period from September 14,
2000 up to June 26, 2008;

2. Whether [Fernandez] is entitled to [P1,950,525.53] additional backwages

consisting, among others, of CBA salary increases, covering the period
from September 14, 2000 to June 26, 2008, and whether said
computation by Felix Dalisay of the Computation Unit and adopted by LA
Borbolla is correct;

3. Whether [Fernandez] is entitled to additional backwages starting January

31, 2009 when [MERALCO] [in its Motion to Declare Full Satisfaction of
Fernandez's Monetary Awards Granted by the Court of Appeals and
Supreme Court dated January 13, 2009] manifested that it was exercising
its option to pay [Fernandez's] separation pay instead of reinstatement;
and

4. Whether [Fernandez] should be reinstated.10

In the Order11 dated June 27, 2014, LA Suarez disposed the motions. Thus:
[MERALCO's] Motion to Declare Full Satisfaction of [Fernandez's] Monetary Awards
Granted in the. Decision. of the Court of Appeals and the Supreme Court dated January
13, 2009 is DENIED for lack of merit.

[Fernandez's]: [1] Urgent Motion to Require [MERALCO] to Reinstate [Fernandez] dated

December 16, 2008, [2] Motion for Recomputation of Backwages from September 14,
2000 to June 26, 2008 and Computation of 14th & 15th Month Pay and Attorney's Fees
dated October 17, 2012, and [3] Manifestation and Urgent Motion dated October 17,
2012 praying that he be allowed to collect only P490,104;10 out of the P2,123,277.80
garnished money per January 25, 2011 Alias Writ of Execution are DENIED for lack of
merit.

As to [Fernandez's] Urgent Motion to Release the Money to [Fernandez] dated April 4,

2011 in the sum of P2,125,277.00 representing P1,614,626.40 separation pay from
October 3, 1978 to January 31, 2009, P490,104.10 accrued salaries and benefits from
June 27, 2008 to January 31, 2009 and P20,547.30 execution fee, BANCO DE ORO is
ordered to release the garnished P2,125,277.00 to the NLRC Cashier, thru Sheriff
Manolito Manuel.

[Fernandez] is declared legally separated from employment effective January 31, 2009.

[MERALCO] is further ordered to pay [Fernandez] the sum of PESOS: ONE MILLION
NINE HUNDRED FIFTY THOUSAND FIVE HUNDRED TWENTY-FIVE & 53/100
[P1,950,525.53] representing additional backwages and benefits pursuant to the CBA
covering the period from September 14, 2000 to June 26, 2008, as computed by the
Computation Unit.

All other claims of the parties are DENIED for lack of merit.

SO ORDERED.12
On July 4, 2014, Fernandez received a copy of the June 27, 2014 Order.13 Prior to the
expiration of the 10-day reglementary period, he filed a Notice of Appeal and
Memorandum on Appeal14 on July 11, 2014. The appeal was limited to the following:
2.3.a. Findings of the Labor Arbiter that [Fernandez] was deemed separated from
employment effective [January 31, 2009] when [MERALCO] manifested in its "Motion to
Declare Full Satisfaction of [Fernandez's] Monetary Awards Granted in the Decision of
the Court of Appeals and Supreme Court" dated January 13, 2009 that they were
exercising their option to pay [Fernandez] separation pay in lieu of reinstatement.

2.3.b. Findings of the Labor Arbiter that [Fernandez] was not entitled to any retirement
pay/benefits.

2.3.c. Findings of the Labor Arbiter that [Fernandez] was not entitled to 14th month
pay, 15th month pay, rice and clothing allowance pursuant to the CBA and attorney's
fee.15
Realizing the procedural defect, Fernandez filed, on July 23, 2014, a Motion to Treat
Remedy Previously Filed As Verified Petition With Motion To Admit Original Copy Of The
Assailed Order As Part Thereof,16 alleging among others:
3. However, he entitled and treated the same as an Appeal (i.e., Notice of Appeal and
Memorandum of Appeal) instead of a Verified Petition.

4. Notably, his remedy was properly verified and certified (against non-forum shopping)
and the only technical issue/discrepancy therein is that it was entitled/treated as
"Notice of Appeal and Memorandum of Appeal" instead of a "Verified Petition."17
Despite his submissions, the appeal and motion were merely "NOTED WITHOUT
ACTION" in the July 30, 2014 Order of LA Suarez, who opined that these are prohibited
pleadings under Section 5 (i) and (j), Rule V of the NLRC Rules.18 After Fernandez
received a copy of the Order on August 14, 2014, he filed a Verified Petition19 on
August 26, 2014.

On August 29, 2014, the NLRC Fifth Division resolved to deny Fernandez's Verified
Petition.20 His motion for reconsideration was denied on October 20, 2014.21
Meantime, MERALCO also filed a Verified Petition22 to assail the June 27, 2014 Order.
On July 31, 2014, it was dismissed by the NLRC Fifth Division for insufficiency in form
and substance.23 A motion for reconsideration was filed.24 On October 31, 2014, the
Verified Petition was reinstated, but was denied for lack of merit.25

Fernandez elevated the case to the CA via a petition for certiorari,26 which was denied
for lack of merit. His motion for reconsideration27 suffered the same fate; hence, this
petition.

We grant.

The sole issue in Velasco v. Matsushita Electric Philippines Corp.28 was whether the
NLRC, in noting without action petitioner's Notice of Appeal from the Order issued by
the LA during the execution proceedings, committed grave abuse of discretion
amounting to lack or excess of jurisdiction. There, Velasco filed a Notice of Appeal
before the NLRC after the LA denied her Manifestation and Motion claiming that
Matsushita had not complied with the judgment in her favor. In ruling for Velasco, this
Court held:
Petitioner is correct in asserting that she is not bereft of reliefs from adverse orders
issued by the Labor Arbiter in connection with the execution of the judgment in her
favor. However, she failed to avail of the correct remedy.

Rule 5, Section 5 of the 2011 Rules of Procedure of the National Labor Relations
Commission explicitly provides that an appeal from an order issued by a Labor Arbiter
in the course of execution proceedings is a prohibited pleading.
SECTION 5. PROHIBITED PLEADINGS AND MOTIONS. - The following pleadings and
motions shall not be allowed and acted upon nor elevated to the Commission:

xxx xxx xxx

i) Appeal from orders issued by the Labor Arbiter in the course of execution
proceedings.
This is affirmed by Rule XII, Section 15 of the same Rules:
SECTION 15. NO APPEAL FROM THE ORDER OR RESOLUTION OF THE LABOR ARBITER
ARISING FROM EXECUTION PROCEEDINGS OR OTHER INCIDENTS. - Except by way of
a petition filed in accordance with this Rule, no appeal from the order or resolution
issued by the Labor Arbiter during the execution proceedings or in relation to incidents
other than a decision or disposition of the case on the merits, shall be allowed or acted
upon by the Commission.
Rule 12, Section 1 provides that, instead of an appeal, the proper remedy is a verified
petition to annul or modify the assailed order or resolution:
SECTION 1. VERIFIED PETITION. - A party aggrieved by any order or resolution of the
Labor Arbiter including those issued during execution proceedings may file a verified
petition to annul or modify such order or resolution. The petition may be accompanied
by an application for the issuance of a temporary restraining order and/or writ of
preliminary or permanent injunction to enjoin the Labor Arbiter, or any person acting
under his/her authority, to desist from enforcing said resolution or order.29
Nevertheless, while it was an error for petitioner to seek relief from the National Labor
Relations Commission through an appeal, it is in the better interest of justice that
petitioner be afforded the opportunity to avail herself of the reliefs that this Court itself,
in its November 23, 2009 ruling, found to be due to her.

It is a basic principle thatthe National Labor Relations Commission is "not bound by

strict rules of evidence and of procedure." Between two modes of action - first, one that
entails a liberal application of rules but affords full relief to an illegally dismissed
employee; and second, one that entails the strict application of procedural rules but the
possible loss of reliefs properly due to an illegally dismissed employee - the second
must be preferred. Thus, it is more appropriate for the National Labor Relations
Commission to have instead considered the appeal filed before it as a petition to modify
or annul.
Similarly, in the present case, the NLRC Rules of Procedure must be liberally applied so
as to prevent injustice and grave or irreparable damage or injury to an illegally
dismissed employee. The matter should be remanded to the NLRC for detennination of
the inclusions to, and the computation of, the monetary awards due to Fernandez.

Without prejudice to the factual findings of the NLRC and the power of review of the CA,
We take note of the following for guidance:

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled
to reinstatement as a matter of right.30 The award of separation pay is a mere
exception to the rule.31 It is made an alternative relief in lieu of reinstatement in
certain circumstances, like: (a) when reinstatement can no longer be effected in view of
the passage of a long period of time or because of the realities of the situation; (b)
reinstatement is inimical to the employer's interest; (c) reinstatement is no longer
feasible; (d) reinstatement does not serve the best interests of the parties involved; (e)
the employer is prejudiced by the workers' continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained relations between the
employer and employee.32

Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the
grossly unpalatable obligation of maintaining in its employ a worker it could no longer
trust.33

Nonetheless, the doctrine of strained relations shcmld not be used recklessly or applied
loosely nor be based on impression alone.34 It cannot be applied indiscriminately since
every labor dispute almost invariably results in "strained relations;" otherwise,
reinstatement can never be possible simply because some hostility is engendered
between the parties as a result of their disagreement.35 Strained relations must be
demonstrated as a fact.36 It must be adequately supported by substantial evidence
showing that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.37
As we have held, "[s]trained relations must be demonstrated as a fact. The doctrine of
strained relations should not be used recklessly or applied loosely nor be based on
impression alone" so as to deprive an illegally dismissed employee of his means of
livelihood and deny him reinstatement. Since the application of this doctrine will result
in the deprivation of employment despite the absence of just cause, the implementation
of the doctrine of strained relationship must be supplemented by the rule that the
existence of a strained relationship is for the employer to clearly establish and prove in
the manner it is called upon to prove the existence of a just cause; the degree of
hostility attendantto a litigation is not, by itself, sufficient proof of the existence of
strained relations that would rule out the possibility of reinstatement.38
Reinstatement cannot be barred especially when the employee has not indicated an
aversion to returning to work, or does not occupy a position of trust and confidence in,
or has no say in the operation of the employer's business.39

Here, Fernandez's intent and willingness to be reinstated to his former position is

evident as early as July 10, 2008 when he filed his Comment with Motion for Re-
computation of Monetary Award.40 He reiterated this on December 17, 2008 in his
Urgent Motion41 to require MERALCO to reinstate him and on January 21, 2009 in his
Comment/Opposition42 to MERALCO's motion to declare full satisfaction of his monetary
awards.

On January 13, 2009, or about three months before Fernandez reached the retirement
age of 60 years old in April 2009, MERALCO filed a Motion to Declare Full Satisfaction of
Complainant's.Monetary Awards Granted in the Decision of the Court of Appeals and the
Supreme Court,43 stating:
xxx [The] decision of the Court of Appeals as affirmed by the Supreme Court gave
[MERALCO] the options to reinstate [Fernandez] or pay his separation pay if
reinstatement is no longer feasible. Reinstatement of [Fernandez] to his former position
is not therefore mandatory.

This being the case, [MERALCO] [manifests] that [it is] exercising [its] option to
compensate [Fernandez] his separation pay instead of reinstating him to his fanner
position. The filing of the above-entitled case, which dragged for long period of time
severed the employee-employer relationship between [Fernandez] and [MERALCO].
Reinstatement therefore is no longer feasible.44
MERALCO conveniently claimed that the filing of the case, which had dragged for a long
period of time, severed the employee-employer relationship; hence, Fernandez's
reinstatement was no longer feasible. Later, it echoed the reasoning of LA Suarez by
contending that his alleged participation in the illegal strike definitely tainted the
relations of the parties.45

The bare allegations of MERALCO, which later on became the basis of a mere
presumption on the part of LA Suarez, appear to be without any factual basis. To
stress, strained relationship may be invoked only against employees whose positions
demand trust and confidence, or whose differences with their employer are of such
nature or degree as to preclude reinstatement.46 Here, the confidential relationship
between Fernandez, as a supervisory employee, and MERALCO has not been
established. For lack of evidence on record, it appears that his designation as a
Leadman47 was not a sensitive position as would require complete trust and confidence,
and where personal ill will would foreclose his reinstatement.

Backwages shall include the whole amount of salaries, plus all other benefits and
bonuses, and general increases, to which Fernandez would have been normally entitled
had he not been illegally dismissed.48 Unless there is/are valid ground/s for the
payment of separation pay in lieu of reinstatement, Fernandez's backwages should be
computed from the date when he was illegally dismissed on September 14, 2000, until
his retirement in April 2009.49 It shall be subject to legal interest of 12% per
annum from September 14, 2000 until June 30, 2013, and then to legal interest of 6%
interest per annum from July 1, 2013 until full satisfaction.50

In addition, subject to proof of entitlement,51 Fernandez must receive the retirement

benefits he should have received if he was not illegally dismissed.52 Even if he receives
a separation pay in lieu of reinstatement, he is not precluded to obtain retirement
benefits because both are not mutually exclusive:53
Retirement benefits are a form of reward for an employee's loyalty and service to an
employer and are earned under existing laws, CBAs, employment contracts and
company policies. On the other hand, separation pay is that amount which an employee
receives at the time of his severance from employment, designed to provide the
employee with the wherewithal during the period that he is looking for another
employment and is recoverable only in instances enumerated under Articles 283 and
284 [now 298 and 299] of the Labor Code or in illegal dismissal cases when
reinstatement is not feasible.54
On the issue of attorney's fees, We agree with LA Suarez that Fernandez is not entitled
thereto. It is an elementary principle of procedure that the resolution of the court in a
given issue, as embodied in the dispositive part of a decision or order, is the controlling
factor as to settlement of rights of the parties.55 The dispositive portion or the fallo is
the decisive resolution and is the subject of execution.56 Therefore, the writ of
execution must conform to the judgment to be executed, particularly with that which is
ordained or decreed in the dispositive portion of the decision, and adhere strictly to the
very essential particulars.57

In this case, the January 30, 2007 Decision of the CA, which does not grant attorney's
fees to Fernandez, already became final and executory on May 26, 2008. As such, it is
immutable and unalterable.58 Generally, it may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous
conclusion of law or fact.59 In opting not to file a petition before the Supreme Court
assailing the CA Decision, Fernandez is deemed to have acquiesced to the entirety of
the ruling. It cannot be convincingly argued that the petition filed by MERALCO also
inured to his benefit, for not only are their interests separate and distinct, but they are
completely in conflict with each other. Considering that the judgment on the issue of
attorney's fees is already final and executory against Fernandez who did not appeal,
then MERALCO already acquired a vested right by virtue thereof. Indeed, just as the
losing party has the privilege to file an appeal (or petition) within the prescribed period,
so does the winner also have the correlative right to enjoy the finality of the decision.60

Finally, as to Fernandez's alleged entitlement to longevity pay, 14th month and

15th month pay, and other benefits and allowances, the same are subject to evidentiary
support that must be ascertained and confirmed based on the applicable CBA/s,
employment contract, and company policies and practice.

WHEREFORE, the petition is GRANTED. The December 11, 2015 Decision and July 25,
2016 Resolution of the Court of Appeals in CA-G.R. SP No. 138212, which affirmed the
Resolutions dated August 29, 2014 and October 20, 2014 of the National Labor
Relations Commission, are REVERSED AND SET ASIDE. The appeal filed by petitioner
Lino A. Fernandez, Jr. before the NLRC is considered as a Verified Petition assailing the
June 27, 2014 Order of Labor Arbiter Marie Josephine C. Suarez. The case
is REMANDED to the NLRC for it to resolve the petition with reasonable dispatch.

SO ORDERED.

Carpio, (Senior Associate Justice Chairperson), Perlas-Bernabe, Caguioa, and Reyes,

Jr., JJ., concur.

Endnotes: