ALECO vs. ALEO

The Secretary of Labor has authority to award backwages in the exercise of its assumption jurisdiction under Article 278 [263] of the Labor Code, and such backwages are proper as satisfaction of the employer's obligation to actually reinstate and pay striking employees under a return-to-work order, computed from the date of the assumption order until the resolution of the labor dispute.

ALECO is an electric cooperative holding a franchise for the retail distribution of electricity for the province of Albay, while ALEO is the collective bargaining agent of ALECO's employees. The dispute between them concerns the terms on which ALECO's employees would be retained or separated as the cooperative pursued a rehabilitation strategy. Article 278 [263] of the Labor Code supplies the mechanism at the center of the case — the Secretary of Labor's power to assume jurisdiction over a labor dispute in an industry indispensable to the national interest.

ALECO is an electric cooperative holding a franchise for the retail distribution of electricity for the province of Albay, while ALEO is the collective bargaining agent of ALECO's employees. As reported by ALECO Finance Manager Atty. Lynne Rose Baroga during the Special General Membership Assembly held on March 24, 2012, ALECO was suffering from financial distress, with current payables to the Philippine Electricity Market Corporation already amounting to Php134 million, unpaid obligations to the National Grid Corporation of the Philippines, the Philippine Rural Electric Association, other suppliers and contractors, and its retirees aggregating Php87 million, and long-term obligations to these creditors of Php3.1 billion.

Efforts were undertaken to rehabilitate the struggling cooperative. ALECO pushed for Private Sector Participation as its rehabilitation strategy, while ALEO insisted on the Cooperative-to-Cooperative scheme. Under the PSP, the current employees of ALECO would be required to tender their courtesy resignation to give flexibility to the incoming private sector concessionaire, but would receive separation pay based on the existing CBA with ALEO and would have priority in rehiring based on the standards set by the concessionaire. In a letter dated April 8, 2013 addressed to Atty. Veronica S. Briones, NEA Project Supervisor for ALECO, Bishop Joel Z. Baylon, Chair of the Interim Board of Directors, and Reynaldo B. Reverente, OIC General Manager, ALEO President Dexter Brutas expressed grievance over the conditions set under the PSP. On April 15, 2013, ALEO sought preventive mediation before the NCMB, Regional Branch No. 5, for unfair labor practices. The parties failed to settle their differences, which constrained ALEO to file a notice of strike on April 25, 2013, and it conducted a strike vote on May 10, 17 and 20, 2013, with 217 out of 235 members voting for a strike.

In a referendum held on September 14, 2013 to determine the appropriate rehabilitation measure, the PSP was eventually chosen. In a public bidding held earlier, San Miguel Power Holdings Corporation emerged as the winning bidder and was awarded the concession under the PSP. Still, ALEO went on strike on September 23, 2013. With the PSP adopted, Notices of Retrenchment were served on all of ALECO's employees under Office Memorandum No. 216 dated October 23, 2013.

As the labor dispute continued without any of the parties yielding, ALECO, by virtue of Interim Board Resolution No. 2014-003, Series of 2014, and through a letter dated January 7, 2014 signed by Bishop Baylon, formally requested the Secretary of Labor to assume jurisdiction over the controversy. ALEO concurred with ALECO. The Secretary of Labor assumed jurisdiction on January 10, 2014 and correspondingly issued a Return-to-Work Order of even date, directing all striking employees who had not accepted separation benefits to immediately return to work within twenty-four hours from receipt and the employer to immediately resume all operations and readmit all workers under the same terms and conditions prevailing before the strike.

ALECO later claimed that it complied with the Assumption Order when it admitted the striking employees to its premises on January 14, 2014, a re-admission allegedly witnessed by the Regional Director of DOLE Region V and evidenced by attendance sheets signed by the returning employees and photographs taken that day. As ALEO pointed out, however, and as ALECO itself admitted, no actual work was given to the returning employees; they were merely confined in a room for over three weeks. Although ALECO 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 because of the parties' failure to agree on the figures. To date, the affected employees have not been paid their wages and benefits for the period they were supposed to be reinstated.

• Backwages Under Manggagawa ng Komunikasyon: ALECO argued that the award of backwages is not proper given the SC's pronouncement in Manggagawa ng Komunikasyon sa Pilipinas vs. PLDT that the award of reinstatement, including backwages, is given by a Labor Arbiter to an illegally dismissed employee.
• Compliance with the Return-to-Work Order: ALECO claimed that it complied with the return-to-work order as early as January 14, 2014, so it was erroneous for the Secretary of Labor and the CA to conclude that it failed to comply with the Assumption Order and to use that conclusion to justify the award of backwages.
• Computation Period: Alternatively, ALECO argued that the computation of backwages should only be limited to the period when the striking employees actually reported back to work, or until February 26, 2014, the date when the returning employees last reported for work.
• Base Amount: Citing Banco Filipino Savings and Mortgage Bank vs. Lazaro, ALECO maintained that the base amount for the computation of backwages and separation pay should correspond to the monthly compensation prevailing before the strike and the one prevailing before the retrenchment took effect, respectively.
• Inclusion of Three Groups of Employees: ALECO questioned the inclusion of three groups of employees in the award of backwages — those terminated for cause before the strike, those deemed separated before the strike in accordance with NEA Guidelines for joining the 2013 Barangay Elections, and those who did not join the strike and reported for work until December 31, 2013 — for being in excess of the Secretary of Labor's authority under Article 278 [263] of the Labor Code.
• Usurpation of Legislative Authority: ALECO argued that the Secretary of Labor usurped legislative authority when it disallowed all deductions to be made from the separation pay due to the employees.
• Delay in Resolution: ALECO lamented the failure of the Secretary of Labor to resolve the controversy within 30 days as provided in the Labor Code, which caused the backwages to accrue excessively, and stressed its inability to pay such amount in view of the cessation of the cooperative's operation.

• Backwages as Statutory Discipline: ALEO countered that the award of backwages is consistent with Section 278 263 of the Labor Code, which prescribes backwages, among others, as disciplinary action for non-compliance with any of the Secretary of Labor's orders.
• Accrual Until December 19, 2016: Relying on Bani Rural Bank, Inc. vs. De Guzman, ALEO claimed that the backwages should accrue until December 19, 2016.
• Improper Remedy: ALEO contended that the present Petition is not the proper remedy by which to challenge the January 17, 2018 Resolution of the Secretary of Labor.
• Validity of Retrenchment and Damages: ALEO challenged the August 10, 2018 Decision for affirming the validity of the retrenchment, as well as the denial of its claims for damages and attorney's fees.

• Propriety of the Remedy: Whether ALECO can assail the January 17, 2018 Resolution of the Secretary of Labor through the instant Petition, and if so, whether the computation of the monetary award used the correct base amount, whether the Resolution was correct in including the three groups of employees in the award of backwages, and whether it was correct in disallowing deductions from the separation pay.
• Finality of the Retrenchment Ruling: Whether ALEO can still challenge the validity of the retrenchment of ALECO's employees and raise anew its claims for damages and attorney's fees.
• Award of Backwages: Whether the CA erred in sustaining the Secretary of Labor's award of backwages.
• Period of Backwages: Whether the CA erred in reducing the period for which ALECO is liable for payment of backwages.

• Propriety of the Remedy: No. Decisions rendered by the Secretary of Labor under the Labor Code must be challenged through a petition for certiorari under Rule 65 before the CA; the present Petition is not the proper remedy. The January 17, 2018 Resolution, however, was issued relative to the execution of the April 29, 2016 Resolution, so its effectivity depends on the disposition of the present Petition.
• Finality of the Retrenchment Ruling: No. The April 29, 2016 Resolution, insofar as the validity of the retrenchment and the denial of damages and attorney's fees are concerned, is already final and may no longer be modified even by the SC under the doctrine of finality of judgment.
• Award of Backwages: No. The Secretary of Labor had authority to award backwages under Article 278 [263] of the Labor Code, and the award was proper as satisfaction of ALECO's obligation to actually reinstate and pay the employees covered by the Assumption Order.
• Period of Backwages: No. The CA correctly limited the computation of backwages from January 10, 2014 until April 29, 2016, consistent with San Fernando Coca-Cola Rank-and-File Union (SACORU) vs. Coca-Cola Bottlers Philippines, Inc. (CCBPI).

• Propriety of the Remedy: It is a long-standing rule that decisions rendered by the Secretary of Labor under the Labor Code, such as the January 17, 2018 Resolution, must be challenged through a petition for certiorari under Rule 65 before the CA. The present Petition is therefore not the proper remedy to assail that Resolution. Even so, because the January 17, 2018 Resolution was issued relative to the execution of the April 29, 2016 Resolution, which is the subject of the present appeal, the effectivity of the former depends on the disposition of the present Petition — that is, whether the April 29, 2016 Resolution will be reinstated; otherwise, the January 17, 2018 Resolution becomes moot. On ALEO's side, the CA correctly held that the April 29, 2016 Resolution, insofar as the validity of the retrenchment and the denial of damages and attorney's fees are concerned, is already final. Following the doctrine of finality of judgment, that Resolution may no longer be modified in these respects even by the SC, and none of the recognized exceptions to the doctrine obtains in this case.

• Finality of the Retrenchment Ruling: ALEO cannot assail the validity of the retrenchment of ALECO's employees, as well as the denial of its claims for damages and attorney's fees, through the present proceedings. As the CA correctly held, the Resolution dated April 29, 2016 is already final as to these matters. Under the doctrine of finality of judgment, that Resolution may no longer be modified in these respects even by the SC, and while there are exceptions to the doctrine, none of them obtain in this case.

• Award of Backwages: ALECO cannot fully rely on Manggagawa ng Komunikasyon sa Pilipinas vs. PLDT. In that case, the SC did not rule on the entitlement of employees to backwages for the period beginning from the issuance of the return-to-work order until the resolution of the dispute by the NLRC; the ruling was limited to the propriety of reinstating the employees even after the NLRC had declared their dismissal valid and even after that NLRC ruling had superseded the Secretary of Labor's return-to-work order, and the SC declared that there was no basis to reinstate employees who were terminated as a result of redundancy. That case does not altogether prohibit the award of backwages outside illegal dismissal cases. Here, the Secretary of Labor assumed jurisdiction on January 10, 2014 and issued a return-to-work order pursuant to Article 278 263 of the Labor Code. The effects of an assumption order are two-fold: it enjoins an impending strike on the part of the employees, and it orders the employer to maintain the status quo. Where a strike has already taken place, as here, the assumption order directs all striking workers to immediately return to work and mandates the employer to immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike. The status quo refers to that which was prevailing the day before the strike, and per SACORU vs. CCBPI, the return-to-work order is interlocutory in nature and is merely meant to maintain the status quo while the main issue is being threshed out in the proper forum; the directive to maintain the status quo extends only until the labor dispute has been resolved. The purpose is to avoid any disruption to the economy while the labor dispute is being resolved in the proper forum, minimizing if not totally averting damage to the national interest from any work stoppage or slow-down. Applied here, the status quo mandated by the Assumption Order extends from its issuance until the Secretary of Labor's resolution of the dispute on April 29, 2016. During this period, the striking employees should report back to work and the employer should readmit them under the same terms and conditions prevailing before the strike, an obligation that generally requires actual reinstatement. ALECO claims it complied when it admitted the striking employees to its premises on January 14, 2014, but as ALEO pointed out and ALECO admitted, no actual work was given to the returning employees; they were merely confined in a room for over three weeks. ALECO claimed it tendered salaries to those who reported back, but it also admitted that the employees refused to receive the amounts because of the parties' failure to agree on the figures. To date, the affected employees are still not paid their wages and benefits for the period they were supposed to be reinstated. The award of backwages is therefore proper — not as a penalty for non-compliance with the Assumption Order as ALEO argued, but as satisfaction of ALECO's obligation towards the employees covered by the Assumption Order. On January 10, 2014, the obligation of the employer to re-admit the striking employees and/or pay them their respective salaries and benefits arose, and there is no proof that the affected employees were in fact paid. Because of ALECO's failure to perform this obligation, and to give the affected employees what had become due to them as of January 10, 2014, backwages should be awarded. In illegal dismissal cases, backwages refer to the employee's supposed earnings had he or she not been illegally dismissed; as applied here, backwages correspond to the amount that ought to have been received by the affected employees if only they had been reinstated following the Assumption Order. This includes not only the employee's basic salary but also the regular allowances being received, such as the emergency living allowances and the 13th month pay mandated by law, as well as those granted under a CBA, if any.

• Period of Backwages: Consistent with San Fernando Coca-Cola Rank-and-File Union (SACORU) vs. Coca-Cola Bottlers Philippines, Inc. (CCBPI), the CA correctly limited the computation of backwages until April 29, 2016, the date the Secretary of Labor resolved the dispute between the parties. The directive to maintain the status quo extends only until the labor dispute has been resolved, and the Assumption Order's status quo period therefore ran from its issuance on January 10, 2014 until that resolution.

• Assumption of Jurisdiction by the Secretary of Labor — Under Article 278 263 of the Labor Code, the Secretary of Labor may assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and such assumption has the effect of automatically enjoining the intended or impending strike or lockout. The effects are two-fold: (a) it enjoins an impending strike on the part of the employees, and (b) it orders the employer to maintain the status quo.
• Effects of an Assumption Order Where a Strike Has Already Taken Place — Where a strike has already occurred, the assumption order (a) directs all striking workers to immediately return to work (a return-to-work order), and (b) mandates the employer to immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike. This obligation on the part of the employer generally requires actual reinstatement.
• Status Quo in Labor Disputes — The status quo to be maintained refers to the status of employment of the employees the day before the occurrence of the strike or lockout. It must be maintained from the date the Secretary of Labor assumes jurisdiction until the resolution of the dispute, whether by the Secretary or by the NLRC. The purpose is to avoid any disruption to the economy and to the industry of the employer while the dispute is being resolved, minimizing if not totally averting damage to the national interest from any work stoppage or slow-down.
• Backwages Outside Illegal Dismissal Cases — Backwages may be awarded even in the absence of illegal dismissal, as satisfaction of the employer's obligation to re-admit and/or pay striking employees under an assumption/return-to-work order. The award is not a penalty for non-compliance with the order but the performance of what has become due to the employees as of the date of the order. Backwages include not only the basic salary but also the regular allowances being received, such as emergency living allowances and the 13th month pay mandated by law, as well as those granted under a CBA.
• Finality of Judgment — A resolution of the Secretary of Labor that has become final may no longer be modified in the respects covered by its finality, even by the SC. The doctrine admits of exceptions, but none obtained in this case as to the validity of the retrenchment and the denial of damages and attorney's fees.
• Proper Remedy Against Secretary of Labor Decisions — Decisions rendered by the Secretary of Labor under the Labor Code must be challenged through a petition for certiorari under Rule 65 before the CA, not through a petition for review on certiorari before the SC.

• "The status quo to be maintained under Article 278 [263] of the Labor Code refers to that which was prevailing the day before the strike." — Fixes the reference point for the employment conditions the employer must preserve upon an assumption of jurisdiction.
• "It follows then, as also demonstrated by the Court in the above case, that the directive to maintain the status quo extends only until the labor dispute has been resolved." — Caps the period of the employer's obligation and supplies the cut-off for the backwages computation.
• "In consideration of the foregoing, the award of backwages is proper-not as a penalty for non-compliance with the Assumption Order as argued by ALEO-but as satisfaction of ALECO's obligation towards the employees covered by the Assumption Order." — States the ratio: backwages rest on the employer's unperformed obligation, not on a disciplinary theory.
• "To be sure, Manggagawa ng Komunikasyon sa Pilipinas v. PLDT does not altogether prohibit the award of backwages outside illegal dismissal cases." — Distinguishes the principal precedent ALECO relied on and clears the doctrinal space for the award.

• Manggagawa ng Komunikasyon sa Pilipinas vs. PLDT, G.R. No. 190389, April 19, 2017, 823 SCRA 598 — Distinguished; its ruling was limited to the propriety of reinstatement after the NLRC had declared the dismissal valid, and it does not prohibit backwages outside illegal dismissal cases.
• San Fernando Coca-Cola Rank-and-File Union (SACORU) vs. Coca-Cola Bottlers Philippines, Inc. (CCBPI), G.R. No. 200499, October 4, 2017, 842 SCRA 1 — Controlling precedent on the status quo period and the cut-off for backwages; followed.
• Digital Telecommunications Philippines, Inc. vs. Digitel Employees Union (DELI), G.R. Nos. 184903-04, October 10, 2012, 683 SCRA 466 — Cited for the two-fold effects of an assumption order.
• PHILTRANCO Service Enterprises, Inc. vs. Philtranco Workers Union-Association of Genuine Labor Organizations (PWU-AGLO), G.R. No. 180962, February 26, 2014, 717 SCRA 340 — Cited for the rule that Secretary of Labor decisions must be challenged through a Rule 65 petition before the CA.
• National Power Corporation vs. Delta P, Inc., G.R. No. 221709, October 16, 2019 — Cited for the doctrine of finality of judgment.
• L.T. Datu & Co., Inc. vs. National Labor Relations Commission, G.R. No. 113162, February 9, 1996, 253 SCRA 440 — Cited for the definition of backwages in illegal dismissal cases.
• United Coconut Chemicals, Inc. vs. Valmores, G.R. No. 201018, July 12, 2017, 831 SCRA 68 — Cited for the inclusion of regular allowances in the backwages computation.

• Article 278 263, Labor Code — Empowers the Secretary of Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, with the effect of automatically enjoining the intended or impending strike; where a strike has already taken place, all striking 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. Applied as the source of the Secretary of Labor's authority to issue the January 10, 2014 Assumption Order and Return-to-Work Order, and as the basis for the award of backwages as satisfaction of ALECO's obligation to readmit and pay the covered employees.
• Rule 65, Rules of Court — The remedy of certiorari before the CA, held to be the proper mode for challenging decisions rendered by the Secretary of Labor under the Labor Code; applied to hold that the present Petition was not the proper remedy to assail the January 17, 2018 Resolution.