General Santos Coca-Cola Plant Free Workers Union-Tupas vs. Coca-Cola Bottlers Phils., Inc.

Contracting out services or functions being performed by union members does not constitute unfair labor practice absent substantial evidence showing that such contracting out interfered with, restrained, or coerced employees in the exercise of their right to self-organization.

In the late 1990s, Coca-Cola Bottlers Phil., Inc. (CCBPI) faced declining profitability due to the Asian economic crisis, decreased sales, and heightened competition. To mitigate financial losses, CCBPI implemented an Early Retirement Program across its offices and plants. Concurrently, a head office directive mandated a freeze on all hiring for regular and temporary positions. The early retirements created vacancies in the production department of the CCBPI General Santos Plant (CCBPI Gen San), where members of the petitioner Union were employed. The Union sought to negotiate the filling of these vacancies with permanent employees, but no resolution was reached. Due to the hiring freeze, CCBPI Gen San engaged the services of JLBP Services Corporation, an independent labor and manpower agency, to fill the operational gaps.

• Economic Exigency and Early Retirement: CCBPI experienced significant financial decline in the late 1990s, prompting the implementation of three waves of an Early Retirement Program and a company-wide freeze on hiring for both regular and temporary positions.
• Vacancies and Hiring Freeze: The early retirements resulted in vacancies within the production department of CCBPI Gen San. The Union requested that these vacancies be filled with permanent employees, but negotiations with the Labor Management Committee failed due to the head office's freeze-hiring directive.
• Engagement of Contractor: To address the manpower shortage caused by the hiring freeze, CCBPI Gen San engaged JLBP Services Corporation, a company providing labor and manpower services.
• Union Action: The Union filed a Notice of Strike with the NCMB, alleging unfair labor practice and union busting due to the contracting out of services regularly performed by union members.
• Intervention by the Secretary of Labor: After failed conciliation, CCBPI filed a Petition for Assumption of Jurisdiction. The Secretary of Labor enjoined the strike and certified the dispute to the NLRC for compulsory arbitration.
• Adjudication: The NLRC ruled against the Union, finding JLBP an independent contractor and the contracting out a valid management prerogative, although erroneously attributing the action to the "Going-to-the-Market" (GTM) system rather than the hiring freeze. The CA affirmed the NLRC ruling, correcting the basis to the hiring freeze and finding no interference with the right to self-organization.

• Labor-Only Contracting: Petitioner argued that JLBP was not an independent contractor but a labor-only contractor, making CCBPI liable for its employees.
• Unfair Labor Practice / Union Busting: Petitioner maintained that the contracting out of jobs to JLBP constituted unfair labor practice aimed at union busting, as it involved services regularly performed by union members.
• Invalid Management Prerogative: Petitioner contended that the contracting out was not a valid exercise of management prerogative.

• Independent Contracting: Respondent countered that JLBP was a legitimate, independent contractor.
• Valid Management Prerogative: Respondent argued that the contracting out was a valid exercise of management prerogative to meet the business exigencies created by the head office's freeze-hiring directive.
• No Unfair Labor Practice: Respondent maintained that there was no unfair labor practice because the contracting out did not interfere with, restrain, or coerce employees in the exercise of their right to self-organization, and no union members were dismissed as a result.

• Jurisdiction under Rule 45: Whether the issues raised by petitioner involve questions of law reviewable under Rule 45 of the Rules of Court.
• Nature of Contracting: Whether JLBP is an independent contractor or a labor-only contractor.
• Unfair Labor Practice: Whether CCBPI's contracting out of jobs to JLBP amounted to unfair labor practice under Article 248(c) of the Labor Code.
• Management Prerogative: Whether the contracting out of jobs was a valid exercise of management prerogative.

• Jurisdiction under Rule 45: The issues presented are questions of fact, not law. Determining whether JLBP is an independent contractor, whether contracting out amounted to unfair labor practice, and whether it was a valid management prerogative requires a re-examination of evidence, which is beyond the scope of a Rule 45 petition.
• Nature of Contracting: JLBP was found to be a legitimate, independent contractor. The factual findings of the NLRC, an administrative agency with expertise in labor matters, are accorded respect and finality, especially when affirmed by the CA.
• Unfair Labor Practice: Unfair labor practice was not established. Article 248(c) of the Labor Code prohibits contracting out services performed by union members only when such contracting interferes with, restrains, or coerces employees in the exercise of their right to self-organization. The Union failed to adduce substantial evidence to prove that the contracting out resulted in the dismissal of members, prevented self-organization, led to the Union's demise, or that the Union was singled out.
• Management Prerogative: The contracting out was a valid exercise of management prerogative. Although the NLRC erroneously attributed the action to the GTM system, the CA correctly found that the contracting out was necessary to meet the business exigencies created by the head office's freeze-hiring directive.

• Factual Findings of Administrative Agencies — Factual findings of the NLRC, as an administrative agency deemed to have acquired expertise in matters within its jurisdiction, are generally accorded not only respect but finality, especially when such factual findings are affirmed by the Court of Appeals.
• Unfair Labor Practice in Contracting Out — Under Article 248(c) of the Labor Code, contracting out services or functions being performed by union members constitutes unfair labor practice only when such action interferes with, restrains, or coerces employees in the exercise of their right to self-organization. Without proof of interference with the right to self-organization, the acts, even if unfair, do not constitute unfair labor practice.
• Burden of Proof in Unfair Labor Practice — The party alleging unfair labor practice bears the burden of adducing substantial evidence to support the allegations.

• "Unfair labor practice refers to 'acts that violate the workers’ right to organize.' The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, even if unfair, are not unfair labor practices."

• Juaban v. Espina, G.R. No. 170049, March 14, 2008 — Cited to define the distinction between questions of law and questions of fact; a question of law exists when the issue can be resolved without reviewing the probative value of the evidence, while a question of fact requires re-evaluation of evidence.
• Rowell Industrial Corporation v. Court of Appeals, G.R. No. 167714, March 7, 2007 — Cited as authority for the doctrine that factual findings of the NLRC are accorded respect and finality, especially when affirmed by the Court of Appeals.
• Philcom Employees Union v. Philippine Global Communication, G.R. No. 144315, July 17, 2006 — Cited for the definition of unfair labor practice as acts violating the workers' right to organize, emphasizing that interference with self-organization is a necessary element.
• Tiu v. National Labor Relations Commission, 343 Phil. 478 (1997) — Cited for the rule that the burden of adducing substantial evidence to support allegations of unfair labor practice rests on the alleging party.

• Article 248(c), Labor Code — Prohibits employers from contracting out services or functions being performed by union members when such will interfere with, restrain, or coerce employees in the exercise of their right to self-organization. Applied to rule out unfair labor practice because the Union failed to prove that the contracting out interfered with the right to self-organization.
• Rule 45, Section 1, Revised Rules on Civil Procedure — Provides that only questions of law may be raised in a Petition for Review on Certiorari. Applied to dismiss the petition, as the issues raised required a re-examination of evidence and were therefore questions of fact.

Consuelo Ynares-Santiago (Chairperson), Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Diosdado M. Peralta.