Paulino Ungos III

Lawyer | Law Professor | Author

Tag: assumption order

  • But “Backwages” Is Awarded Only to an Illegally Dismissed Employee

    An electric cooperative holding a franchise for the retail distribution of electricity for the province of Albay had a labor organization, which also served as the collective bargaining agent of the electric cooperative’s employees.

    The electric cooperative suffered from financial distress. Thus, efforts were undertaken to rehabilitate it. A strategy that the electric cooperative pushed for was that of Private Sector Participation. Under such strategy, the current employees of the electric cooperative shall be required to tender their courtesy resignation to give flexibility to the incoming private sector concessionaire, but they shall receive separation pay based on the existing collective bargaining agreement with the labor organization and shall have priority in rehiring based on the standards set by the concessionaire.

    The labor organization expressed grievance over the conditions set under the Private Sector Participation strategy, which was why it sought preventive mediation for unfair labor practices before the regional branch of the National Conciliation and Mediation Board. The electric cooperative and the labor organization, however, failed to settle their differences, and this constrained the latter to decide to strike.

    Subsequently, the Private Sector Participation strategy was eventually chosen as the appropriate rehabilitation measure and a concession was awarded to a certain company.

    Still, the labor organization went on strike. Thereafter, notices of retrenchment were served on the labor organization’s employees.

    As the labor dispute continued, the electric cooperative and the labor organization formally requested the Secretary of the Department of Labor and Employment to assume jurisdiction over the controversy.

    The Secretary of the Department of Labor and Employment assumed jurisdiction on January 10, 2014 and correspondingly issued a Return-to-Work Order of even date.

    In a Resolution dated April 29, 2016, the Secretary of the Department of Labor and Employment upheld the validity of the retrenchment of the employees of the electric cooperative and ordered it to pay the retrenched employees their separation benefits in accordance with the collective bargaining agreement. It also ordered the electric cooperative to pay them backwages and other benefits computed from January 10, 2014 until the finality of the said Resolution.

    The Court of Appeals modified the said Resolution dated April 29, 2016 and fixed the period for computation of the backwages awarded by the Secretary of the Department of Labor and Employment from the date of the Return-to-Work Order on January 10, 2014 up to the issuance of the Resolution dated April 29, 2016.

    The electric cooperative argued before the Supreme Court that the Court of Appeals erred in sustaining the award of backwages because:

    • it complied with the Assumption Order as early as January 14, 2014;
    • “backwages” is awarded only to an illegally dismissed employee; and
    • if backwages were to be awarded, the same should accrue only until February 26, 2014, the date when the returning employees last reported for work, and not until April 29, 2016, or the date of the Secretary of the Department of Labor and Employment’s Resolution.

    Was the award of backwages proper?

    If proper, was the limit to the period of computing backwages until April 29, 2016 correct?

    The Court set forth relevant principles as follows:

    The effects of an assumption order issued by the Secretary of the Department of Labor and Employment under Article 2781Formerly Article 263. The provision states: Art. 278. Strikes, picketing, and lockouts. — x x x (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. x x x (Emphasis supplied.) (g) of the Labor Code of the Philippines are two-fold:

    • it enjoins an impending strike on the part of the employees, and
    • it orders the employer to maintain the status quo.2Digital Telecommunications Philippines, Inc. v. Digitel Employees Union, G.R. Nos. 184903-04, October 10, 2012.

    In cases where a strike has already taken place, the assumption order shall have the effect of:

    • directing all striking workers to immediately return to work; and
    • mandating the employer to immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike.

    The status quo to be maintained under law refers to that which was prevailing the day before the strike. Furthermore, this obligation on the part of the employer generally requires actual reinstatement.

    Jurisprudence3San Fernando Coca-Cola Rank-and-File Union v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 200499, October 4, 2017. teaches that the purpose of maintaining the status quo is to avoid any disruption to the economy while the labor dispute is being resolved in the proper forum. The objective is to minimize, if not totally avert, any damage that such labor dispute might cause upon the national interest by occasion of any work stoppage or slow-down. The directive to maintain the status quo extends only until the labor dispute has been resolved.

    1)

    In the present case, the Supreme Court ruled that the award of backwages was proper.

    The Court found that the Secretary of the Department of Labor and Employment assumed jurisdiction over the labor dispute between the parties on January 10, 2014 and issued a return-to-work order on even date under Article 278 (g) of the Labor Code of the Philippines.

    Although the electric cooperative claimed that it admitted the striking employees to its premises on January 14, 2014, the Court found that no actual work was given to the said employees. Instead, the Court discovered that the electric cooperative confined these employees in a room for over three weeks.

    Furthermore, although the electric cooperative claimed that it tendered the salaries of the employees who actually reported back for work, it also admitted that the employees refused to receive the amounts it supposedly tendered because of disagreement on the figures. The Court took this to mean that the affected employees were still not paid their wages and benefits for the period they were supposed to be reinstated.

    The Court thus affirmed the Secretary of the Department of Labor and Employment’s award of backwages.

    However, the Court clarified that backwages were not imposed as a penalty for non-compliance with the Assumption Order, but as satisfaction of the electric cooperative’s obligation towards the employees as contemplated under the Assumption Order. In other words, said backwages corresponded to the amount ought to have been received by the affected employees if only they had been reinstated following the Assumption Order.

    The Court further stated that an award of backwages outside illegal dismissal cases is not prohibited. According to the Court, even in the absence of illegal dismissal in this case, the Secretary of the Department of Labor and Employment had the authority to award and was not mistaken in awarding backwages.

    2)

    In this regard, the limitation of the computation of backwages until April 29, 2016 by the Court of Appeals was affirmed. The Supreme Court ruled that the status quo mandated by the Assumption Order extended from the date of its issuance until the Secretary of the Department of Labor and Employment’s resolution of the dispute between the parties on the said date of April 29, 2016.

    Further reading:

    • Albay Electric Cooperative, Inc. v. ALECO Labor Employees Organization, G.R. No. 241437, September 14, 2020.

  • Employment Status the Day Before the Occurrence of the Strike or Lockout

    The employer here found a need to improve its selling and distribution system if it wanted to remain viable and competitive in the business. Thus, it decided to implement a new cost-effective and simplified scheme of selling and distributing its products, that, in turn, led to a separation of twenty seven (27) rank-and-file, regular employees and union members on the ground of redundancy.

    The employer claimed that prior to the termination of employment, it had made a careful study of how to be more cost effective in operations and competitive in the business. It recognized in the process that its multi-layered selling and distribution system had to be simplified. Thus, it determined that the phasing out of said system was necessary which, however, resulted in the termination of employment of certain employees as their positions have become redundant.

    On May 29, 2009, the employer issued notices of termination to twenty seven (27) rank-and-file, regular employees and members of the union on the ground of redundancy due to the ceding out of its selling and distribution systems to the Market Execution Partners. The termination of their 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 termination. The union members were also granted individual separation packages, which many of them accepted, but under protest.

    The union asserted that the new selling and distribution system adopted and implemented by the employer would result in the diminution of the union membership amounting to union busting and to a violation of the Collective Bargaining Agreement provision against contracting out of services or outsourcing of regular positions. Thus, they filed a Notice of Strike with the National Conciliation and Mediation Board on June 3, 2009 on the ground of unfair labor practice, among others. On June 11, 2009, the union conducted a strike vote where a majority decided on conducting a strike.

    On June 23, 2009, the Secretary of the Department of Labor and Employment assumed jurisdiction over the labor dispute by certifying for compulsory arbitration to the National Labor Relations Commission the issues raised in the notice of strike. The Secretary also enjoined the parties from committing any act that may further exacerbate the situation.

    At this point, the union asserted that the employer should have enjoined the termination of employment which took effect on July 1, 2009. On the other hand, the employer contended that termination of employment was a certainty, from the time it issued the notices of termination and that the status quo prior to the issuance of the assumption order included the impending termination of the employment of the 27 employees.

    On March 16, 2010, the National Labor Relations Commission ruled that the employer implemented a valid redundancy program and that it did not commit unfair labor practice. The Commission further found no violation in the dismissal of the employees from employment because their respective notices of dismissal were received prior to the assumption order of the Secretary of the Department of Labor and Employment. The Commission found that the employer did not commit an act that exacerbated the dispute.

    The Court of Appeals affirmed the Decision of the National Labor Relations Commission.

    The Supreme Court, in turn, affirmed the validity of the employer’s redundancy program.

    One issue that reached the Supreme Court was whether the employer’s implementation of the redundancy program was an unfair labor practice.

    The other issue resolved by the Court was whether the employer should have enjoined the effectivity of the termination of the employment of the 27 affected union members when the Secretary of the Department of Labor and Employment assumed jurisdiction over their labor dispute.

    The Court reiterated prevailing jurisprudence in that unfair labor practice refers to acts that violate the workers’ right to organize. The Court stated that 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. To prove the existence of unfair labor practice, substantial evidence has to be presented.

    In the present case, the Court found that the union failed to substantiate its charge of unfair labor practice against the employer. According to the Court, the consequent termination of employment 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 the employment of union members, it cannot safely be said that the employer acted in bad faith in terminating their services because the termination was not without a valid reason. 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.

    The findings of the National Labor Relations Commission and the Court of Appeals on said issue were affirmed.

    However, the Court found that the employer violated the return-to-work order in that the status quo was not maintained after the Secretary of the Department of Labor and Employment had assumed jurisdiction over the dispute on June 23, 2009.

    In this regard, the Court relied on Article 278 [Formerly 263] (g) of the Labor Code of the Philippnines, which provides the conditions for, and the effects of, the assumption of jurisdiction by the Secretary of the Departent of Labor and Employment over a dispute.

    The Court explained that the powers given to the Secretary of the Department of Labor and Employment under Article 278 [Formerly 263] (g) is an exercise of police power with the aim of promoting public good. In fact, the scope of the powers is limited to an industry indispensable to the national interest as determined by the Secretary of the Department of Labor and Employment. 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. And following Article 263 (g), the effects of the assumption of jurisdiction are the following:

    • the enjoining of an impending strike or lockout or its lifting, and
    • 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, or the return-to-work order.

    The Court added that when the Secretary of the Department of Labor and Employment 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 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 National Labor Relations Commission 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.

    The Court then highlighted the significance of the return-to-work order, which is interlocutory, and is merely meant to maintain the status quo while the main issue is being threshed out in the proper forum. The Court stressed that the status quo is simply the status of the employment of the employees the day before the occurrence of the strike or lockout.

    According to the Court, from the date the Secretary of the Department of Labor and Employment 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 Secretary of the Department of Labor and Employment or with the National Labor Relations Commission. 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 Secretary of the Department of Labor and Employment or the National Labor Relations Commission is resolving the dispute.

    In the present case, the Court found that since the union voted for the conduct of a strike on June 11, 2009, when the Secretary of the Department of Labor and Employment issued the return-to-work order dated June 23, 2009, this meant that the status quo was the employment status of the employees on June 10, 2009. This status quo should have been maintained until the National Labor Relations Commission resolved the dispute in its Resolution dated March 16, 2010. For the Court, the said Resolution then took the place of the return-to-work order of the Secretary of the Department of Labor and Employment and the employer no longer had the duty to maintain the status quo after March 16, 2010.

    The Court accordingly awarded to the employees backwages and other benefits from July 1, 2009 until March 16, 2010, with a recomputation of their separation pay taking into consideration the termination of their employment beginning March 16, 2010.

    Further reading:

    • San Fernando Coca-Cola Rank-and-File Union v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 200499, October 4, 2017.

  • Defiance of Assumption/Certification Orders

    Once the Secretary of Labor assumes jurisdiction over a labor dispute, a strike, whether actual or intended, is automatically enjoined. If a strike has been declared, the strikers must return to work even if they filed a motion for reconsideration of the assumption order.1ARTICLE 278. (Formerly 263) Strikes, Picketing, and Lockouts. — x x x (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. x x x

    The moment a striker defies a return-to-work order, he is deemed to have abandoned his job. It is already in itself knowingly participating in an illegal act. Considering that an illegal act was committed, all strikers, whether union officers or plain members, may be declared to have lost their employment status.2ARTICLE 279. (Formerly 264) Prohibited Activities. — (a) x x x 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 x x x

    In this case, the Airline Pilots Association of the Philippines (ALPAP) filed a Notice of Strike on June 5, 1998 and staged a strike against the Philippine Airlines (PAL) on the same day at around 5:30 in the afternoon. The Secretary of the Department of Labor and Employment (DOLE) issued a Return-to-Work Order on 7 June 1998 after failing to to amicably settle the dispute between them. The said order stated:

    “WHEREFORE, FOREGOING PREMISES CONSIDERED, all striking officers and members of ALPAP are hereby ordered to return to work within twenty-four (24) hours from receipt of this Order and for PAL management to accept them under the same terms and conditions of employment prior to the strike.


    “Our directive to both parties to cease and desist from committing any and all acts that will exacerbate the situation is hereby reiterated.”

    ALPAP was served a copy of the Return-to-Work Order on 8 June 1998. Thus, the ALPAP strikers had 24 hours, or until 9 June 1998, to comply with said Order. However, the strikers only reported back to work on 26 June 1998. As a result of their defiance of the DOLE Secretary’s Return-to-Work Order, the strikers lost their employment status as of 9 June 1998.

    One pilot, Ruderico C. Baquiran, filed a complaint claiming that he was illegally dismissed from employment. The Supreme Court, however, disagreed for it found no evidence that he complied, or at least, attempted to comply with the Return-to-Work Order. Neither was there a showing that he reported back for work with the other ALPAP members on 26 June 1998. According to the Court, Baquiran cannot be in a better position than the other ALPAP members who belatedly reported for work on 26 June 1998 and were still deemed to have lost their employment. Baquiran simply abandoned his job.

    By contrast, the Court reached a different conclusion with regard to another pilot, Gladys L. Jadie, also a complainant in the illegal dismissal case. The Court found that Jadie was on maternity leave during the strike. She did not join the strike and could not be reasonably expected to report back for work by 9 June 1998 in compliance with the Return-to-Work Order. PAL’s act of terminating her employment was accordingly declared illegal.

    Further reading:

    • Rodriguez v. Philippine Airlines, Inc., G.R. Nos. 178501 & 178510, January 11, 2016.

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