PILIPINO TELEPHONE G.R. No.

160058
CORPORATION,
Petitioner,

- versus -
PILIPINO TELEPHONE EMPLOYEES
ASSOCIATION (PILTEA), PELAGIO S.
BRIONES II, GEORGE L. DE LEON,
LECEL M. FIDEL, AUGUSTO C.
FRANCISCO, OLIVER B. ANTONIO,
RONALDO B. CORONEL,
CHRISTOPHER L. HERRERA and
GEM TORRES,
Respondents.
x-----------------------------x

PILIPINO TELEPHONE EMPLOYEES G.R. No. 160094

ASSOCIATION (PILTEA), PELAGIO S.
BRIONES II, GEORGE L. DE LEON, Present:
and GEM TORRES,
Petitioners, PUNO, C.J.,
Chairperson,
SANDOVAL-GUTIERREZ,
- versus - CORONA,
AZCUNA, and
GARCIA, JJ.

NATIONAL LABOR RELATIONS

COMMISSION and PILIPINO Promulgated:
TELEPHONE CORPORATION,
Respondents. June 22, 2007
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

PUNO, C.J.:

At bar are two consolidated petitions seeking review of the decision[1] and
resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 59799 which
modified the decision[3]of the National Labor Relations Commission (NLRC) by
affirming the illegality of the strike conducted by Pilipino Telephone Employees
Association (the Union) but reducing the penalty against union
officers Pelagio S. Briones II, George De Leon, Lecel M. Fidel and Gem Torres
from dismissal to suspension for six (6) months.

First, we unfurl the facts.

The Collective Bargaining Agreement (CBA) between the Union and Pilipino
Telephone Corporation (the Company) was due to expire on December 31,
1997. On October 30, 1997, the Union submitted to the Company its proposals for
the renegotiation of the non-representation aspects of their CBA. As there was a
standstill on several issues, the parties submitted their dispute to the National
Conciliation and Mediation Board (NCMB) for preventive mediation.[4] The
conciliation proceedings before the NCMB failed.

On July 13, 1998, the Union filed a Notice of Strike[5] with the NCMB for unfair
labor practice due to the alleged acts of "restraint and coercion of union members
and interference with their right to self-organization" committed by the Companys
Revenue Assurance Department (RAD) Manager Rosales and its Call Center
Department Manager, Manny Alegado, to wit:
1. Requiring employees to execute undated resignation letters prior to
regularization as a condition for continued employment.

2. Preventing employees from displaying Union flags and CBA's slogans.

3. Prohibiting employees from conducting and preventing employees from

participating in Union activities.

4. Requiring employees to render forced overtime to prevent them from

attending Union meetings and activities after office hours.

5. Using vulgar and insulting language such as

"Kahit sa puwet n'yo isaksak ang mga banderang yan!"

6. Threatening employees who join concerted Union activities with disciplinary

action.

7. Discouraging employees from participating in Union activities by branding the

activities illegal and prohibited by law.

8. Abuse of Company Rules and Regulations to prevent the free exercise by

the Union and its members of their right to self organization and free expression
(e.g. issuing show cause memos for refusal to render overtime and vandalism).
 9. Utilizing security guards to harass employees who participate in Union
activities by requiring the guards to take down the names of employees who
participate in the Union activities.[6]

The Company filed a petition for Consolidated Assumption of Jurisdiction with the
Office of the Secretary of Labor. On August 14, 1998, then
Secretary Bienvenido E. Laguesma issued an Order, the dispositive portion of
which states:
WHEREFORE, premises considered, this Office hereby assumes jurisdiction
over the entire labor dispute at Pilipino Telephone Corporation pursuant to Art.
263(g) of the Labor Code, as amended.

Accordingly, any strike or lockout, whether actual or intended, is hereby

enjoined.

Furthermore, the parties are likewise directed to cease and desist from
committing any or all acts that might exacerbate the situation.

To expedite the resolution of the dispute, the parties are hereby directed to file
their respective position papers and documentary evidence within TEN (10) days
from receipt of this Order.

SO ORDERED.[7] (Emphases supplied.)

On September 4, 1998, the Union filed a second Notice of Strike[8] with the
NCMB on the grounds of: a) union busting, for the alleged refusal of the Company
to turn over union funds; and b) the mass promotion of union members during the
CBA negotiation, allegedly aimed at excluding them from the bargaining unit
during the CBA negotiation.On the same day, the Union went on strike.

On September 9, 1998, Secretary Laguesma directed the striking Union officers

and members to return to work within twenty-four (24) hours from receipt of the
Order and for the Company to accept all strikers under the same terms and
conditions of employment prior to the strike. The Union and its members
complied.

On December 7, 1998, the Company filed with the NLRC a petition [9] to
declare the Union's September 4, 1998 strike illegal. On August 16, 1999, Labor
Arbiter AlimanD. Mangandog issued a decision, the dispositive portion of which
states:
WHEREFORE, premises considered, the September 4, 1998 strike conducted by
PILTEA is declared illegal.
 Accordingly, the following union officers of PILTEL/MKP, namely: George de
Leon, Pelagio S. Briones, Nelson C. Pineda, Rolando U. Sta. Ana, Elna E.
Escalante, Gem P. Torres, Ma. Rica D. Hilotin, Gerald Joseph
P. Tayas, Lecel M. Fidel and Jose Rudylin R. Gamboa are declared to have lost
their employment status.

While the following members, namely: Romeo Anonuevo,

Jonathan Molaer, Cris Herrera, Edgar Alan Aquino, Aris Ablis, Dorothy Zulieta,
Ronald Cornel, Arnel Garcia, Ranelio Mendoza, Oliver Antonio,
Alvin Usman, Augusto Francisco, Celia Mogol and Erlinda Madrid are hereby
suspended for six (6) months without pay.

SO ORDERED.[10]

The Labor Arbiter found the strike illegal for having been conducted in
defiance of Secretary Laguesma's August 14, 1998 assumption order and for non-
compliance with the procedural requirements for the conduct of a strike under the
Labor Code and its implementing rules. The Labor Arbiter
cited Scholastica's College v. Ruben Torres[11]which ruled that a strike
undertaken despite the issuance of an assumption or certification order by the
Secretary of Labor is a prohibited activity, hence, illegal under Article 264 of the
Labor Code. He found that the grounds relied upon by the Union in its second
notice of strike were substantially the same as those set forth in its first notice of
strike.Moreover, he held that the Company's alleged refusal to turn over the
checked-off union dues was not a strikeable issue as it was not a gross and blatant
violation of the economic provisions of the CBA. He also held that the mass
promotion of the Union's members was not tantamount to dismissal, hence, did not
constitute union busting. The staging of the strike was likewise found to suffer
from fatal procedural defects, to wit: a) the notice of strike was filed on the same
day that the strike was conducted; b) the fifteen (15)-day cooling-off period was
not observed; c) the Union failed to conduct a strike vote within the time
prescribed by law; and d) the result of the strike vote was not furnished to the
NCMB at least seven (7) days prior to the intended strike. Certain illegal acts were
likewise found to have been committed during the strike, among which were the
following: 1) striker Manny Costales prevented the Company's
Director, Lilibeth Pasa, from entering the Bankers Centre Building; 2) union
officers Judilyn Gamboa and Rolly Sta. Ana physically blocked the front entrance
of the same building; 3) striker Aris Ablis drove a company vehicle and used it to
block the driveway of PILTEL Centre II, thus, the cars inside the building were
prevented from going out. The tires
of said company vehicle were found deflated the following day; 4) strikers
Dorothy Zulieta and Ronald Cornel prevented the Warehousing Manager assigned
at the PILTEL Metropolitan Warehouse from going out of his office; 5) the
strikers, led by Nelson Pineda, blocked the Detachment Supervisor of Protection
Specialists and the uniformed company guards from delivering food to the non-
striking employees trapped inside PILTEL Call Center at the Manila Memorial
Park Building; 6) in General Santos City, some union members tied the entrance
doors of the PILTEL Building and tied the company vehicles together; 7)
Fe Carandang, Estrella Anonical, Zaldy Logos and Jovencio Laderasblocked the
main entrance of the Boac, Marinduque office of the Company; 8) strikers Edna
Carrion, Celia Mogol, Erlinda Madrid, Raul Montalan, Rolly Miraflor, Zaldy de
Chavez and Dina Madla of the Company's office in Boac, Marinduque were also
heard telling the Company's clients not to transact business with the company; and
9) strikers Zaldy Logos, Rizaldy de Chavez,
Raul Montalan, Rolly Milaflor and Jovencio Laderas were seen preventing the free
ingress and egress of the Company's office premises in Boac, Marinduque. The
Labor Arbiter ruled that since the September 4, 1998 strike was illegal, the Union
officers were deemed to have lost their employment status. He further ruled that
the illegal acts committed during the strike were not serious enough to merit the
dismissal of the erring Union members as they were merely acting at the order of
their leaders. Hence, the erring union members were merely suspended for six (6)
months.

On appeal, the NLRC affirmed the decision of the Labor

Arbiter in toto.[12] The Union, its dismissed officers and its suspended members
filed a motion for reconsideration, to no avail.[13]

The Union, its officers Briones, De Leon, Fidel and Torres, and its members
Francisco, Antonio, Coronel and Herrera filed a Petition for Certiorari under Rule
65 of the Rules of Court with the CA, attributing grave abuse of discretion
amounting to excess of jurisdiction on the part of the NLRC. [14] On September 20,
2002, the CA modified the ruling of the NLRC as follows:
WHEREFORE, the assailed decision of the NLRC dated February 29, 2000 is
MODIFIED. Petitioners Pelagio S. Briones, George L. De Leon, Lecel M. Fidel
and Gem Torres shall be suspended for six (6) months without pay instead of
being dismissed. If already dismissed, petitioners shall be reinstated back to their
former positions, or, if already filled, then to any other equal positions and shall
be entitled to backwages computed from date of dismissal until date of actual
reinstatement less the pay for the six (6) months suspension they were supposed
to serve. The suspension of petitioners Augusto C. Francisco, Oliver
B. Antonio, Ronaldo B. Coronel and Christopher L. Herrera for six (6) months
without pay and the finding of illegality of the September 4, 1998 strike
STANDS.
 SO ORDERED.[15]

Both parties filed their respective partial motions for reconsideration - the company
assailed the CA decision decreasing the penalty of the union officers while
the Union and its dismissed officers assailed the decision declaring the strike
illegal. Both motions were denied.[16]

Hence, the instant petitions.

In G.R. No. 160058, the Company raises the issue of:

[WHETHER] THE ASSAILED 20 SEPTEMBER 2002 DECISION AND 17
SEPTEMBER 2003 RESOLUTION OF THE COURT OF APPEALS ARE
CONTRARY TO LAW AND JURISPRUDENCE.[17]

It prays that the September 20, 2002 Decision and September 17, 2003
Resolution of the CA be reversed in part and judgment be rendered
affirming in toto the February 29, 2000 Decision of the NLRC.

In G.R. No. 160094, the Union and Union officers Briones, De Leon and Torres
raise the issue of:
[WHETHER] THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN UPHOLDING NLRCS FINDING THAT THE 4
SEPTEMBER 1998 STRIKE HELD BY PILTEA WAS ILLEGAL AS IT IS
NOT IN ACCORDANCE WITH EXISTING LAW OR JURISPRUDENCE.[18]

They pray that this Court modify the September 20, 2002 Decision and
September 17, 2003 Resolution of the CA and: a) declare the Union's September 4,
1998 strike as legal; b) nullify the six-month suspension imposed on Briones, De
Leon and Torres; and c) order the Company to pay them backwages covering the
period of their suspension.

The twin issues to be resolved are: a) the legality of the Union's strike and
b) the penalty to be imposed on the Union officers, if any.

First, the legality of the strike.

The Union and its officers maintain that their September 4, 1998 strike was
legal. They allege that the Company was guilty of union busting in promoting a
substantial number of Union members and officers to positions outside the
bargaining unit during the period of CBA negotiations. Allegedly, said Union
members and officers maintained the same jobs and duties despite their promotion.
They also capitalize on the CAs finding that the company was guilty of unfair
labor practice in refusing to turn over the deducted contingency fees of the union
members to the union. Citing Bacus v. Ople,[19] Panay Electric Company v.
NLRC[20] and PNOC Dockyard and Engineering Corporation v.
NLRC,[21] they contend that this finding of unfair labor practice precludes the CA
from ruling that the strike was illegal and that the Union was in bad faith in
conducting the strike.

These arguments do not sway.

Article 263 of the Labor Code, as amended by Republic Act (R.A.) No.
6715,[22] and Rule XXII, Book V of the Omnibus Rules Implementing the Labor
Code outline the following procedural requirements for a valid strike:
1) A notice of strike, with the required contents, should be filed with the
DOLE, specifically the Regional Branch of the NCMB, copy furnished the
employer of the union;
2) A cooling-off period must be observed between the filing of notice and
the actual execution of the strike thirty (30) days in case of bargaining deadlock
and fifteen (15) days in case of unfair labor practice. However, in the case of
union busting where the unions existence is threatened, the cooling-off period
need not be observed.
xxx xxx xxx
4) Before a strike is actually commenced, a strike vote should be taken by
secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a
strike requires the secret-ballot approval of majority of the total union
membership in the bargaining unit concerned.
5) The result of the strike vote should be reported to the NCMB at least
seven (7) days before the intended strike or lockout, subject to the cooling-off
period.[23]

It is settled that these requirements are mandatory in nature and failure to

comply therewith renders the strike illegal.[24]

In the case at bar, the Union staged the strike on the same day that it filed its
second notice of strike. The Union violated the seven-day strike ban. This
requirement should be observed to give the Department of Labor and Employment
(DOLE) an opportunity to verify whether the projected strike really carries the
approval of the majority of the union members. [25]
Moreover, we agree with the CA that there was no union busting which
would warrant the non-observance of the cooling-off period. To constitute union
busting under Article 263 of the Labor Code, there must be: 1) a dismissal from
employment of union officers duly elected in accordance with the union
constitution and by-laws; and 2) the existence of the union must be threatened by
such dismissal. In the case at bar, the second notice of strike filed by
the Union merely assailed the mass promotion of its officers and members during
the CBA negotiations. Surely, promotion is different from dismissal. As observed
by the Labor Arbiter:
x x x Neither does that (sic) PILTELs promotion of some members of
respondent union constitutes (sic) union busting which could be a valid subject
of strike because they were not being dismissed. In fact, these promoted
employees did not personally come forward to protest their promotion vis--vis
their alleged option to remain in the union bargaining unit of the rank and
filers.[26]

This is consistent with our ruling in Bulletin Publishing Corporation v.

Sanchez[27] that a promotion which is manifestly beneficial to an employee should
not give rise to a gratuitous speculation that it was made to deprive the union of
the membership of the benefited employee.

The contention of the Union and its officers that the finding of unfair labor
practice by the CA precludes the ruling that the strike was illegal is
unmeritorious. The refusal of the Company to turn over the deducted contingency
funds to the union does not justify the disregard of the mandatory seven-day strike
ban and the 15-day cooling-off period.

The Unions reliance on Bacus v. Ople,[28] Panay Electric Company v.

NLRC[29] and PNOC Dockyard and Engineering Corporation v. NLRC[30] is
likewise unavailing.

Nowhere in Panay Electric Company and PNOC Dockyard and

Engineering Corporation did the Court rule that the procedural requirements for
a valid strike may be dispensed with if the striking workers believed in good faith
that the company was committing acts of unfair labor practice. In both cases, the
striking union members complied with the procedural requirements for a valid
strike. It is correct that this Court, in Bacus, held that "a strike staged by the
workers inspired by good faith does not automatically make the same illegal," but
said case was decided before the effectivity of R.A. No. 6715 on March 21,
1989. We have ruled that with the enactment of R.A. No. 6715, the requirements
as to the filing of a notice of strike, strike vote, and notice given to the DOLE are
mandatory in nature.[31]
 Moreover, we agree with the NLRC that the subject strike defied the
assumption order of the Secretary of Labor. The NLRC correctly affirmed the
Labor Arbiter that the second notice of strike was based on substantially the same
grounds as the first notice of strike. The Union and its officers and members
alleged that the mass promotion of the union officers and members and the non-
remittance of the deducted contingency fees were the reasons for their concerted
activities which annoyed the Companys RAD Manager and made him commit acts
of unfair labor practice, eventually leading to the Unions filing of the first notice of
strike. Clearly then, the issues which were made as grounds for the second notice
of strike, viz, the mass promotion of the union members and officers and the non-
remittance of the deducted contingency fees, were already existing when the
Secretary of Labor assumed jurisdiction over the entire labor dispute between the
Company and the Union on August 14, 1998.

Article 264 of the Labor Code provides:

Art. 264. Prohibited activities.x x x

No strike or lockout shall be declared after assumption of jurisdiction by

the President or the Secretary or after certification or submission of the dispute to
compulsory or voluntary arbitration or during the pendency of cases involving
the same grounds for the strike or lockout.

Having settled that the subject strike was illegal, we shall now determine the
proper penalty to be imposed on the union officers who knowingly participated in
the strike.

Both the Labor Arbiter and the NLRC imposed the penalty of dismissal on
the striking union officers after finding that: a) the strike was illegal for having
been conducted in defiance of Secretary Laguesma's August 14, 1998 Order of
assumption of jurisdiction and for non-compliance with the procedural
requirements for the conduct of a strike under the Labor Code and its
implementing rules; b) the grounds relied upon by the Union in its second notice
of strike were substantially the same as those set forth in its first notice of strike; c)
the Company's alleged refusal to turn over the checked-off union dues was not
a strikeable issue as it was not a gross and blatant violation of the economic
provisions of the CBA; d) the mass promotion of the Union's members was also
not tantamount to dismissal, hence, did not constitute union busting; and e) certain
illegal acts were found to have been committed during the strike.
 On the other hand, the CA reduced the penalty of the union officers from
dismissal to suspension for six months after finding that the "supreme penalty of
dismissal" imposed on union officers Briones, De Leon, Fidel and Torres was "so
harsh" considering that the Union did not defy the Secretary of Labor's Assumption
Order and that the Company did not have "clean hands" when it filed the instant
case for having committed an unfair labor practice by refusing to turn over the
union dues to the Union.

We find that the CA committed a reversible error in modifying the rulings of

the Labor Arbiter and the NLRC.

For a petition for certiorari under Rule 65 of the Rules of Court to prosper,
the tribunal, board or officer exercising judicial or quasi-judicial functions must be
proven to have acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction. [32] Grave abuse of
discretion has been defined as a capricious and whimsical exercise of judgment as
is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough, it must
be so grave as when the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and must be so patent and so gross as to
amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law.[33]

We note that although the CA modified the ruling of the NLRC, nowhere in
its decision did it attribute grave abuse of discretion to the NLRC. And rightly so.

Article 264 of the Labor Code further provides:

Art. 264. Prohibited activities. x x x

Any workers whose employment has been terminated as a consequence

of an unlawful lockout shall be entitled to reinstatement with full back
wages. Any union officer who knowingly participates in 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. x x x

We have explained the meaning of this provision as follows:

The effects of illegal strikes, as outlined in Article 264 of the Labor
Code, make a distinction between ordinary workers and union officers who
participate therein. Under established jurisprudence, a union officer may be
terminated from employment for knowingly participating in an illegal strike. The
fate of union members is different. Mere participation in an illegal strike is not a
 sufficient ground for termination of the services of the union members. The
Labor Code protects ordinary, rank-and-file union members who participated in
such a strike from losing their jobs provided that they did not commit illegal acts
during the strike.[34]

In Gold City Integrated Port Service, Inc. v. NLRC,[35] the Court held
that "[t]he law, in using the word may, grants the employer the option of
declaring a union officer who participated in an illegal strike as having lost
his employment." Thus, in a number of cases,[36] proof that an employee who
knowingly participated in an illegal strike is a union officer was enough to warrant
his dismissal from employment.

This rule was relaxed in the case of PAL v. Brillantes[37] where the Court
"invoke[d] its judicial prerogative to resolve disputes in a way to render to each
interested party the most judicious solution, and in the ultimate scheme, a
resolution of a dispute tending to preserve the greater order of society." In said
case, the Court dismissed the petition of PAL seeking the termination from
employment of certain Union members and officers who staged a strike in
violation of the Secretary of Labor's return-to-work order. The Court found that
both parties contributed to the volatile atmosphere that emerged despite the
Secretary of Labor's status quo order as PAL terminated en masse the employment
of 183 union officers and members. It noted the finding of the Acting Secretary of
Labor that PAL "did not come to this office with 'clean hands' in seeking the
termination of the officers and members of PALEA who participated in the 16
June 1994 strike."[38]

This Court exercised this judicial prerogative sparingly in Nissan Motors

Philippines, Inc. v. Secretary of Labor.[39] In said case, the Court also found
Nissan equally guilty of exacerbating the situation after the assumption order of the
Secretary for suspending a substantial number of Union officers and members with
threat of eventual dismissal and perceived illegal lockout and union
busting. However, while it affirmed the ruling of the Secretary of Labor
suspending the union members who participated in the illegal strike, the Court
sustained the dismissal of the union officers, viz:
While the employer is authorized to declare a union officer who
participated in an illegal strike as having lost his employment, his/its option is not
as wide with respect to union members or workers for the law itself draws a line
and makes a distinction between union officers and members/ordinary workers.
An ordinary striking worker or union member cannot, as a rule, be terminated for
mere participation in an illegal strike; there must be proof that he committed
illegal acts during the strike.[40]
 The Court further explained the reason:
x x x Thus in Association of Independent Union in the Philippines vs.
NLRC,[41] we held that the responsibility of union officers, as main players in
an illegal strike, is greater than that of the members and, therefore, limiting
the penalty of dismissal only for the former for participation in an illegal strike is
in order. Of the same tenor, albeit formulated a bit differently is our holding in
Gold City Integrated Port Service, Inc. vs. NLRC.[42] (Emphasis supplied.)

In the case at bar, we do not find any reason to deviate from our rulings
in Gold City Integrated Port Service, Inc. and Nissan Motors Philippines,
Inc. It bears emphasis that the strike staged by the Union in the
instant case was illegal for its procedural infirmities and for defiance of the
Secretarys assumption order. The CA, the NLRC and the Labor Arbiter were
unanimous in finding that bad faith existed in the conduct of the subject strike. The
relevant portion of the CA Decision states:
x x x We cannot go to the extent of ascribing good faith to the means
taken in conducting the strike. The requirement of the law is simple, that
is1. Give a Notice of Strike; 2.Observe the cooling period; 3. Observe the
mandatory seven day strike ban; 3. If the act is union busting, then the union may
strike doing away with the cooling-off period, subject only to the seven-day
strike ban. To be lawful, a strike must simply have a lawful purpose and should
be executed through lawful means. Here, the union cannot claim good faith in
the conduct of the strike because, as can be gleaned from the findings of the
Labor Arbiter, this was an extensively coordinated strike having been
conducted all through out the offices of PILTEL all over the
country. Evidently, the strike was planned. Verily, they cannot now come to
court hiding behind the shield of good faith. Be that as it may, petitioners claim
good faith only in so far as their grounds for the strike but not on the conduct of
the strike. Consequently, they still had to comply with the procedural
requirements for a strike, which, in this case, they failed to do so.[43]

Thus, in imposing the penalty of dismissal, the NLRC correctly held:

x x x the point We wish to stress is that the [open, blatant] and willful
defiance by the respondents of the Order emanating from the Secretary of Labor
and Employment in this labor dispute only goes to show that the respondents
have little or no regard at all for lawful orders from duly constituted
authorities. For what their officers and members have suffered they have no one
else to blame.[44]

It cannot be overemphasized that strike, as the most preeminent economic

weapon of the workers to force management to agree to an equitable sharing of the
joint product of labor and capital, exert some disquieting effects not only on the
relationship between labor and management, but also on the general peace and
progress of society and
economic well-being of the State.[45] This weapon is so critical that the law
imposes the supreme penalty of dismissal on union officers who irresponsibly
participate in an illegal strike and union members who commit unlawful acts
during a strike. The responsibility of the union officers, as main players in an
illegal strike, is greater than that of the members as the union officers have the duty
to guide their members to respect the law.[46] The policy of the state is not to
tolerate actions directed at the destabilization of the social order, where the
relationship between labor and management has been endangered by abuse of one
partys bargaining prerogative, to the extent of disregarding not only the direct
order of the government to maintain the status quo, but the welfare of the entire
workforce though they may not be involved in the dispute. The grave penalty of
dismissal imposed on the guilty parties is a natural consequence, considering the
interest of public welfare.[47]

IN VIEW WHEREOF, the petition in G.R. No. 160094 is DENIED. The

petition in G.R. No. 160058 is GRANTED. The Decision and Resolution of the
CA in CA-G.R. SP No. 59799 dated September 20, 2002 and September 17, 2003,
respectively, are REVERSED and the Decision and Resolution of the NLRC dated
February 29, 2000 and April 28, 2000, respectively, are REINSTATED.

SO ORDERED.

G.R. No. 175002 February 18, 2013

PEPSI-COLA PRODUCTS PHILIPPINES, INC., Petitioner,

vs.
ANECITO MOLON, AUGUSTO TECSON, JONATHAN VILLONES, BIENVENIDO LAGARTOS,
JAIME CADION, EDUARDO TROYO, RODULFO MENDIGO, AURELIO MORALITA,
ESTANISLAO MARTINEZ, REYNALDO VASQUEZ, ORLANDO GUANTERO, EUTROPIO
MERCADO, FRANCISCO GABON, ROLANDO ARANDIA, REYNALDO TALBO, ANTONIO
DEVARAS, HONORATO ABARCA, SALVADOR MAQUILAN, REYNALDO ANDUYAN, VICENTE
CINCO, FELIX RAPIZ, ROBERTO CATAROS, ROMEO DOROTAN, RODOLFO ARROPE,
DANILO CASILAN, and SAUNDER SANTIAGO REMANDABAN III, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this Petition for Review on Certiorari1 are the March 31, 2006 Decision2 and September
18, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. S.P. No. 82354 which reversed and
set aside the September 11, 2002 Decision4 of the National Labor Relations Commission (NLRC) in
NLRC Certified Case No. V-000001-2000.5 The assailed CA issuances declared the illegality of
respondents’ retrenchment as well as held petitioner guilty of unfair labor practice (ULP), among
others.

The Facts
Petitioner Pepsi-Cola Products Philippines, Inc. (Pepsi) is a domestic corporation engaged in the
manufacturing, bottling and distribution of soft drink products. In view of its business, Pepsi operates
plants all over the Philippines, one of which is located in Sto. Niño, Tanauan, Leyte (Tanauan Plant).

Respondents, on the other hand, are members of the Leyte Pepsi-Cola Employees Union-
Associated Labor Union (LEPCEU-ALU), a legitimate labor organization composed of rank-and-file
employees in Pepsi's Tanauan Plant, duly registered with the Department of Labor and Employment
(DOLE) Regional Office No. 8.6

In 1999, Pepsi adopted a company-wide retrenchment program denominated as Corporate

Rightsizing Program.7To commence with its program, it sent a notice of retrenchment to the
DOLE8 as well as individual notices to the affected employees informing them of their termination
from work.9 Subsequently, on July 13, 1999, Pepsi notified the DOLE of the initial batch of forty-
seven (47) workers to be retrenched.10 Among these employees were six (6) elected officers and
twenty-nine (29) active members of the LEPCEU-ALU, including herein respondents.11

On July 19, 1999, LEPCEU-ALU filed a Notice of Strike before the National Conciliation and
Mediation Board (NCMB) due to Pepsi’s alleged acts of union busting/ULP.12 It claimed that Pepsi’s
adoption of the retrenchment program was designed solely to bust their union so that come freedom
period, Pepsi’s company union, the Leyte Pepsi-Cola Employees Union-Union de Obreros de
Filipinas #49 (LEPCEU-UOEF#49) – which was also the incumbent bargaining union at that time –
would garner the majority vote to retain its exclusive bargaining status.13Hence, on July 23, 1999,
LEPCEU-ALU went on strike.14

On July 27, 1999, Pepsi filed before the NLRC a petition to declare the strike illegal with a prayer for
the loss of employment status of union leaders and some union members.15 On even date, then
DOLE Secretary Bienvenido A. Laguesma certified the labor dispute to the NLRC for compulsory
arbitration.16 A return-to-work order was also issued.17

Incidentally, one of the respondents, respondent Saunder Santiago Remandaban III (Remandaban),
failed to report for work within twenty-four (24) hours from receipt of the said order. Because of this,
he was served with a notice of loss of employment status (dated July 30, 1999) which he challenged
before the NLRC, asserting that his absence on that day was justified because he had to consult a
physician regarding the persistent and excruciating pain of the inner side of his right foot.18

Eventually, Pepsi and LEPCEU-ALU agreed to settle their labor dispute arising from the company’s
retrenchment program and thus, executed the Agreement dated September 17, 1999 which
contained the following stipulations:

1. The union will receive 100% of the separation pay based on the employees’ basic salary
and the remaining 50% shall be released by Management after the necessary deductions
are made from the concerned employees;

2. Both parties agree that the release of these benefits is without prejudice to the filing of the
case by the Union with the National Labor Relations Commission;

3. The Union undertakes to sign the Quitclaim but subject to the 2nd paragraph of this
Agreement.19

Pursuant thereto, respondents signed individual release and quitclaim forms in September 1999
(September 1999 quitclaims)20 stating that Pepsi would be released and discharged from any action
arising from their employment. Notwithstanding the foregoing, respondents21 still filed separate
complaints for illegal dismissal with the NLRC.22

The NLRC Ruling

On September 11, 2002, the NLRC rendered a Decision23 in NLRC Certified Case No. V-000001-
2000. Among the cases subsumed and consolidated therein are the following with the pertinent
dispositions involving herein respondents:

(1) In NCMB RBVIII-NS-0710-99 and NCMB-RBVIIINS-07-14-99, the NLRC absolved Pepsi

of the charge of union busting/ULP as it was not shown that it (Pepsi) had any design to bust
the union;24
 (2) In NLRC Case No. 7-0301-99, the NLRC declared LEPCEU-ALU’s July 23, 1999 strike
as illegal for having been conducted without legal authority since LEPCEU-ALU was not the
certified bargaining agent of the company. It was also observed that LEPCEU-ALU failed to
comply with the seven (7)-day strike vote notice requirement. However, the NLRC denied
Pepsi’s prayer to declare loss of employment status of the union officers and members who
participated in the strike for its failure to sufficiently establish the identity of the culpable
union officers as well as their illegal acts;25

(3) In NLRC RAB VIII Case No. 9-0459-00, the NLRC ordered Pepsi to reinstate
Remandaban to his former position without loss of seniority rights but without backwages
considering the lack of evidence showing that he willfully intended to disregard the July 27,
1999 return-to-work order;26

and

(4) In NLRC RAB VIII Case Nos. 9-0432-99 to 9-0458-99, the NLRC dismissed
respondents’ complaints for illegal dismissal for having been finally settled by the parties
through the execution of quitclaim documents by the respondents in favor of Pepsi.27

Respondents moved for reconsideration, mainly alleging that the NLRC erred when it declared that
Pepsi’s retrenchment program was valid.28 The motion was, however, denied by the NLRC in its
Resolution dated September 15, 2003.29

Aggrieved, respondents filed a petition for certiorari before the CA,30 imputing grave abuse of
discretion on the part of the NLRC when it upheld the validity of their retrenchment. They argued that
the fact that Pepsi hired new employees as replacements right after retrenching forty-seven (47) of
its workers negated the latter’s claim of financial losses.31 In any event, the evidence was inadequate
to prove that Pepsi did suffer from any economic or financial loss to legitimize its conduct of
retrenchment.32

In opposition, Pepsi pointed out that the respondents failed to assail the NLRC’s finding that the
controversy was not about the validity of the retrenchment program but only about the underlying
conflict regarding the selection of the employees to be retrenched;33 hence, the latter fact should only
remain at issue. Further, it claimed that its financial/business losses were sufficiently substantiated
by the audited financial statements and other related evidence it submitted.34

The CA Ruling

On March 31, 2006, the CA issued a Decision35 which reversed and set aside the NLRC’s ruling.

It observed that Pepsi could not have been in good faith when it retrenched the respondents given
that they were chosen because of their union membership with LEPCEU-ALU. In this accord, it ruled
that the subject retrenchment was invalid because there was no showing that Pepsi employed fair
and reasonable criteria in ascertaining who among its employees would be retrenched.36

Moreover, the CA held that Pepsi was guilty of ULP in the form of union busting as its retrenchment
scheme only served to defeat LEPCEUALU’s right to self-organization. It also pointed out that the
fact that Pepsi hired twenty-six (26) replacements and sixty-five (65) new employees right after they
were retrenched contravenes Pepsi’s claim that the retrenchment was necessary to prevent further
losses.37

Further, the CA pronounced that the respondents’ signing of the individual release and quitclaims did
not have the effect of settling all issues between them and Pepsi considering that the same should
have been read in conjunction with the September 17, 1999 Agreement.38

Finally, the CA upheld the validity of LEPCEU-ALU’s July 23, 1999 strike, ruling that LEPCEU-ALU
"was sure to be the certified collective bargaining agent in the event that a certification election will
be conducted" and thus, was authorized to conduct the aforesaid strike.39 It added that there was no
need for LEPCEU-ALU to comply with the fifteen (15) day cooling off period requirement given that
the July 23, 1999 strike was conducted on account of union busting.40 In support thereof, the CA
noted41 that in a related case involving the same retrenchment incident affecting, however, other
members of LEPCEU-ALU – entitled "George C. Beraya, Arsenio B. Mercado, Romulo A. Orongan,
Pio V. Dado and Primo C. Palana v. Pepsi Cola Products Philippines, Inc. (PCPPI), Pres. Jorge G.
Sevilla and Area GM Edgar D. Del Mar" (Beraya)42 – the NLRC issued a Decision dated November
24, 200343 finding Pepsi guilty of union busting/ULP. Notably, in Beraya, the NLRC ruled that Pepsi’s
retrenchment program and the consequent dismissal of the retrenched employees were valid.44

Dissatisfied with the CA’s ruling, Pepsi moved for reconsideration which was, however, denied by
the CA in its September 18, 2006 Resolution.45 Hence, the instant petition.

Issues Before the Court

As culled from the records, the following issues have been raised for the Court’s resolution: (1)
whether the CA may reverse the factual findings of the NLRC; (2) whether respondents’
retrenchment was valid; (3) whether Pepsi committed ULP in the form of union busting; (4) whether
respondents’ execution of quitclaims amounted to a final settlement of the case; and (5) whether
Remandaban was illegally dismissed.

The Court’s Ruling

The petition is meritorious.

A. Appellate Court’s Evaluation

of the NLRC’s Findings

Pepsi contends that the CA erred in evaluating and examining anew the evidence and in making its
own finding of facts when the findings of the NLRC have been fully supported by substantial
evidence. It therefore claims that the validity of the corporate rightsizing program, integrity and
binding effect of the executed quitclaims as well as the issues relating to union busting and ULP
constitute factual matters which have already been resolved by the NLRC and are now beyond the
authority of the CA to pass upon on certiorari.

In contrast, respondents aver that the CA was clothed with ample authority to review the factual
findings and conclusions of the NLRC, especially in this case where the latter misappreciated the
factual circumstances and misapplied the law.

Pepsi’s arguments are untenable.

Parenthetically, in a special civil action for certiorari, the CA is authorized to make its own factual
determination when it finds that the NLRC gravely abused its discretion in overlooking or
disregarding evidence which are material to the controversy. The Court, in turn, has the same
authority to sift through the factual findings of both the CA and the NLRC in the event of their conflict.
Thus, in Plastimer Industrial Corporation v. Gopo,46 the Court explained:

In a special civil action for certiorari, the Court of Appeals has ample authority to make its own
factual determination. Thus, the Court of Appeals can grant a petition for certiorari when it finds that
the NLRC committed grave abuse of discretion by disregarding evidence material to the controversy.
To make this finding, the Court of Appeals necessarily has to look at the evidence and make its own
factual determination. In the same manner, this Court is not precluded from reviewing the factual
issues when there are conflicting findings by the Labor Arbiter, the NLRC and the Court of Appeals.
x x x x (Citations omitted.)

In this light, given the conflicting findings of the CA and NLRC in this case, the Court finds it
necessary to examine the same in order to resolve the substantive issues.

Separately, it must be pointed out that the CA erred in resolving the issues pertaining to LEPCEU-
ALU’s July 23, 1999 strike in its March 31, 2006 Decision47 and September 18, 2006 Resolution48 (in
CA-G.R. SP No. 82354) considering that the parties therein – now, the respondents in this case – do
not have any legal interest in the said issue. To be clear, NLRCRAB VIII Case Nos. 9-0432-99 to 9-
0458-99 are the cases which involve herein respondents; their concern in those cases was the
illegality of their retrenchment. On the other hand, the strike issue was threshed out in RAB Case
No. VIII-7-0301-99 which involved other members of LEPCEU-ALU. Although all these cases were
subsumed under NLRC Certified Case No. V-000001-2000, the legality of the July 23, 1999 strike
was not raised by the respondents in NLRC-RAB VIII Case Nos. 9-0432-99 to 9-0458-99. In view of
these incidents, given that the CA has taken cognizance of a matter (i.e., the legality of the strike)
where the parties (i.e., respondents) are devoid of any legal interest, the Court sees no reason to
perpetuate the misstep and delve upon the same.

B. Validity of Retrenchment

Retrenchment is defined as the termination of employment initiated by the employer through no fault
of the employee and without prejudice to the latter, resorted by management during periods of
business recession, industrial depression or seasonal fluctuations or during lulls over shortage of
materials. It is a reduction in manpower, a measure utilized by an employer to minimize business
losses incurred in the operation of its business.49

Under Article 297 of the Labor Code,50 retrenchment is one of the authorized causes to validly
terminate an employment. It reads:

ART. 297. 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 closure 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 to 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. (Emphasis supplied.)

As may be gleaned from the afore-cited provision, to properly effect a retrenchment, the employer
must: (a) serve a written notice both to the employees and to the DOLE at least one (1) month prior
to the intended date of retrenchment; and (b) pay the retrenched employees separation pay
equivalent to one (1) month pay or at least one-half (½) month pay for every year of service,
whichever is higher.

Essentially, the prerogative of an employer to retrench its employees must be exercised only as a
last resort, considering that it will lead to the loss of the employees' livelihood. It is justified only when
all other less drastic means have been tried and found insufficient or inadequate.51 Corollary thereto,
the employer must prove the requirements for a valid retrenchment by clear and convincing
evidence; otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning losses or reverses in their business ventures in order to
ease out employees.52 These requirements are:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;

(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security
of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.53

In due regard of these requisites, the Court observes that Pepsi had validly implemented its
retrenchment program:
(1) Records disclose that both the CA and the NLRC had already determined that Pepsi complied
with the requirements of substantial loss and due notice to both the DOLE and the workers to be
retrenched. The pertinent portion of the CA’s March 31, 2006 Decision reads:

In the present action, the NLRC held that PEPSI-COLA’s financial statements are substantial
evidence which carry great credibility and reliability viewed in light of the financial crisis that hit the
country which saw multinational corporations closing shops and walking away, or adapting [sic] their
own corporate rightsizing program. Since these findings are supported by evidence submitted before
the NLRC, we resolve to respect the same. x x x x The notice requirement was also complied with
by PEPSI-COLA when it served notice of the corporate rightsizing program to the DOLE and to the
fourteen (14) employees who will be affected thereby at least one (1) month prior to the date of
retrenchment. (Citations omitted)54

It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness, the findings
of fact by the NLRC, especially when affirmed by the CA – as in this case – are binding and
conclusive upon the Court.55 Thus, given that there lies no discretionary abuse with respect to the
foregoing findings, the Court sees no reason to deviate from the same.

(2) Records also show that the respondents had already been paid the requisite separation pay as
evidenced by the September 1999 quitclaims signed by them. Effectively, the said quitclaims
serve inter alia the purpose of acknowledging receipt of their respective separation
pays.56 Appositely, respondents never questioned that separation pay arising from their
retrenchment was indeed paid by Pepsi to them. As such, the foregoing fact is now deemed
conclusive.

(3) Contrary to the CA’s observation that Pepsi had singled out members of the LEPCEU-ALU in
implementing its retrenchment program,57 records reveal that the members of the company union
(i.e., LEPCEUUOEF#49) were likewise among those retrenched.58

Also, as aptly pointed out by the NLRC, Pepsi’s Corporate Rightsizing Program was a company-
wide program which had already been implemented in its other plants in Bacolod, Iloilo, Davao,
General Santos and Zamboanga.59Consequently, given the general applicability of its retrenchment
program, Pepsi could not have intended to decimate LEPCEUALU’s membership, much less
impinge upon its right to self-organization, when it employed the same.

In fact, it is apropos to mention that Pepsi and its employees entered into a collective bargaining
agreement on October 17, 1995 which contained a union shop clause requiring membership in
LEPCEU-UOEF#49, the incumbent bargaining union, as a condition for continued employment. In
this regard, Pepsi had all the reasons to assume that all employees in the bargaining unit were all
members of LEPCEU-UOEF#49; otherwise, the latter would have already lost their employment. In
other words, Pepsi need not implement a retrenchment program just to get rid of LEPCEU-ALU
members considering that the union shop clause already gave it ample justification to terminate
them. It is then hardly believable that union affiliations were even considered by Pepsi in the
selection of the employees to be retrenched.60

Moreover, it must be underscored that Pepsi’s management exerted conscious efforts to incorporate
employee participation during the implementation of its retrenchment program. Records indicate that
Pepsi had initiated sit-downs with its employees to review the criteria on which the selection of who
to be retrenched would be based. This is evidenced by the report of NCMB Region VIII Director
Juanito Geonzon which states that "[Pepsi’s] [m]anagement conceded on the proposal to review the
criteria and to sit down for more positive steps to resolve the issue."61

Lastly, the allegation that the retrenchment program was a mere subterfuge to dismiss the
respondents considering Pepsi’s subsequent hiring of replacement workers cannot be given
credence for lack of sufficient evidence to support the same.

Verily, the foregoing incidents clearly negate the claim that the retrenchment was undertaken by
Pepsi in bad faith.

(5) On the final requirement of fair and reasonable criteria for determining who would or would not be
dismissed, records indicate that Pepsi did proceed to implement its rightsizing program based on fair
and reasonable criteria recommended by the company supervisors.62
Therefore, as all the requisites for a valid retrenchment are extant, the Court finds Pepsi’s rightsizing
program and the consequent dismissal of respondents in accord with law.

At this juncture, it is noteworthy to mention that in the related case of Beraya – which involved the
same retrenchment incident affecting the respondents, although litigated by other LEPCEU-ALU
employees – the NLRC in a Decision dated November 24, 2003 had already pronounced that
Pepsi’s retrenchment program was valid.63Subsequently, the petitioners in Beraya elevated the case
via petition for certiorari to the CA64 which was, however, denied in a Decision dated November 28,
2006.65 They appealed the said ruling to the Court66 which was equally denied through the
Resolutions dated April 24, 200867 and August 4, 2008.68 The fact that the validity of the same Pepsi
retrenchment program had already been passed upon and thereafter sustained in a related case,
albeit involving different parties, behooves the Court to accord a similar disposition and thus, finally
uphold the legality of the said program altogether.

C. Union Busting and ULP

Under Article 276(c) of the Labor Code, there is union busting when the existence of the union is
threatened by the employer’s act of dismissing the former’s officers who have been duly-elected in
accordance with its constitution and by-laws.69

On the other hand, the term unfair labor practice refers to that gamut of offenses defined in the
Labor Code70 which, at their core, violates the constitutional right of workers and employees to self-
organization,71 with the sole exception of Article 257(f) (previously Article 248[f]).72 As explained in
the case of Philcom Employees Union v. Philippine Global Communications:73

Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited
acts are related to the workers' right to selforganization and to the observance of a CBA. Without
that element, the acts, no matter how unfair, are not unfair labor practices. The only exception is
Article 248(f) [now Article 257(f)]. (Emphasis and underscoring supplied)

Mindful of their nature, the Court finds it difficult to attribute any act of union busting or ULP on the
part of Pepsi considering that it retrenched its employees in good faith. As earlier discussed, Pepsi
tried to sit-down with its employees to arrive at mutually beneficial criteria which would have been
adopted for their intended retrenchment. In the same vein, Pepsi’s cooperation during the NCMB-
supervised conciliation conferences can also be gleaned from the records. Furthermore, the fact that
Pepsi’s rightsizing program was implemented on a company-wide basis dilutes respondents’ claim
that Pepsi’s retrenchment scheme was calculated to stymie its union activities, much less diminish
its constituency. Therefore, absent any perceived threat to LEPCEU-ALU’s existence or a violation
of respondents’ right to self-organization – as demonstrated by the foregoing actuations –Pepsi
cannot be said to have committed union busting or ULP in this case.

D. Execution of Quitclaims

A waiver or quitclaim is a valid and binding agreement between the parties, provided that it
constitutes a credible and reasonable settlement and the one accomplishing it has done so
voluntarily and with a full understanding of its import.74 The applicable provision is Article 232 of the
Labor Code which reads in part:

ART. 232. Compromise Agreements. — Any compromise settlement, including those involving labor
standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final and binding upon the parties. x x x
(Emphasis and underscoring supplied)

In Olaybar v. National Labor Relations Commission,75 the Court, recognizing the conclusiveness of
compromise settlements as a means to end labor disputes, held that Article 2037 of the Civil Code,
which provides that "[a] compromise has upon the parties the effect and authority of res judicata,"
applies suppletorily to labor cases even if the compromise is not judicially approved.76

In the present case, Pepsi claims that respondents have long been precluded from filing cases
before the NLRC to assail their retrenchment due to their execution of the September 1999
quitclaims. In this regard, Pepsi advances the position that all issues arising from the foregoing must
now be considered as conclusively settled by the parties.
The Court is unconvinced.

As correctly observed by the CA, the September 1999 quitclaims must be read in conjunction with
the September 17, 1999 Agreement, to wit:

2. Both parties agree that the release of these benefits is without prejudice to the filing of the
case by the Union with the National Labor Relations Commission;

3. The Union undertakes to sign the Quitclaim but subject to the 2nd paragraph of this
Agreement. x x x (Emphasis and underscoring supplied)77

The language of the September 17, 1999 Agreement is straightforward. The use of the term
"subject" in the 3rd clause of the said agreement clearly means that the signing of the quitclaim
documents was without prejudice to the filing of a case with the NLRC. Hence, when respondents
signed the September 1999 quitclaims, they did so with the reasonable impression that that they
were not precluded from instituting a subsequent action with the NLRC. Accordingly, it cannot be
said that the signing of the September 1999 quitclaims was tantamount to a full and final settlement
between Pepsi and respondents.

E. Dismissal of Remandaban

An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if

reinstatement is no longer viable, and backwages.78 In certain cases, however, the Court has
ordered the reinstatement of the employee without backwages considering the fact that (1) the
dismissal of the employee would be too harsh a penalty; and (2) the employer was in good faith in
terminating the employee. For instance, in the case of Cruz v. Minister of Labor and
Employment79 the Court ruled as follows:

The Court is convinced that petitioner's guilt was substantially established. Nevertheless, we agree
1âwphi1

with respondent Minister's order of reinstating petitioner without backwages instead of dismissal
which may be too drastic. Denial of backwages would sufficiently penalize her for her
infractions. The bank officials acted in good faith. They should be exempt from the burden of paying
backwages. The good faith of the employer, when clear under the circumstances, may
preclude or diminish recovery of backwages. Only employees discriminately dismissed are
entitled to backpay. x x x (Emphasis and underscoring supplied)

Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission,80 the
Court pronounced that "the ends of social and compassionate justice would therefore be served if
private respondent is reinstated but without backwages in view of petitioner's good faith." The factual
similarity of these cases to Remandaban’s situation deems it appropriate to render the same
disposition.

As may be gathered from the September 11, 2002 NLRC Decision, while Remandaban was remiss
in properly informing Pepsi of his intended absence, the NLRC ruled that the penalty of dismissal
would have been too harsh for his infractions considering that his failure to report to work was clearly
prompted by a medical emergency and not by any intention to defy the July 27, 1999 return-to-work
order.81 On the other hand, Pepsi's good faith is supported by the NLRC's finding that "the return-to-
work-order of the Secretary was taken lightly by .Remandaban."82 In this regard, considering
Remandaban 's ostensible dereliction of the said order, Pepsi could not be blamed for sending him a
notice of termination and eventually proceeding to dismiss him. At any rate, it must be hoted that
while Pepsi impleaded Remandaban as party to the case, it failed to challenge the NLRC ruling
ordering his reinstateme:ot to his former position without backwages. As such, the foregoing issue is
now settled with finality.

All told, the NLRC's directive to reinstate Remandaban without backwages is upheld.

WHEREFORE, the petition is GRANTED. The assailed March 31, 2006 Decision and September 18,
2006 Resolution of the Court of Appeals in CA-G.R. S.P. No. 82354 are
hereby REVERSED and SET ASIDE. Accordingly, the September 11, 2002 Decision of the National
Labor Relations Commission is hereby REINSTATED insofar as (1) it dismissed subsumed cases
NLRC-RAB VIII Case Nos. 9-0432-99 to 9-0458-99 and; (2) ordered the reinstatement of respondent
Saunder Santiago Remandaban III without loss of seniority rights but without backwages in NLRC-
RAB VIII Case No. 9-0459-99.
SO ORDERED.