SACORU vs. CCBPI

A validly implemented redundancy program does not constitute unfair labor practice absent proof of bad faith or interference with the right to self-organization; however, an employer must maintain the status quo and enforce the return-to-work order during the pendency of a labor dispute certified for compulsory arbitration by the DOLE Secretary.

SACORU is the rank-and-file union of CCBPI employees. CCBPI adopted a new selling and distribution system, ceding out its Conventional Route System (CRS) and Mini Bodega System (MB) to Market Execution Partners (MEPs) or dealers. This resulted in the redundancy of 27 regular employees who were members of SACORU. The dispute arose when these employees were terminated while the DOLE Secretary had assumed jurisdiction over the labor dispute.

San Fernando Coca-Cola Rank-and-File Union (SACORU) is the rank-and-file union of Coca-Cola Bottlers Philippines, Inc. (CCBPI). On May 29, 2009, CCBPI issued notices of termination to 27 regular employees who were members of SACORU. The termination was grounded on redundancy due to CCBPI's decision to phase out its Conventional Route System (CRS) and Mini Bodega System (MB) in favor of a dealership system involving Market Execution Partners (MEPs). The termination was made effective June 30, 2009, though the employees were placed on leave with pay until that date. Separation packages were offered, which 22 employees accepted under protest.

SACORU viewed the new distribution scheme as a circumvention of the Collective Bargaining Agreement (CBA) against outsourcing regular positions and as a form of union busting. On June 3, 2009, SACORU filed a Notice of Strike with the National Conciliation and Mediation Board, and on June 11, 2009, a majority voted to conduct a strike. On June 23, 2009, the Secretary of the Department of Labor and Employment (DOLE) assumed jurisdiction over the dispute and certified it to the National Labor Relations Commission (NLRC) for compulsory arbitration. The DOLE Secretary's order automatically enjoined any strike or lockout and directed the parties to maintain the status quo.

Despite the assumption of jurisdiction, CCBPI allowed the termination of the 27 employees to take effect on July 1, 2009. The NLRC subsequently dismissed SACORU's complaint for unfair labor practice and upheld the validity of the redundancy program. SACORU's petition for certiorari before the Court of Appeals was also dismissed, prompting the present petition.

• Validity of Redundancy: Petitioner maintained that the termination of the 27 union members circumvented the CBA against contracting out regular job positions and that the positions were not truly redundant since the sales department still existed, merely contracted out to a third-party provider.
• Unfair Labor Practice: Petitioner argued that the contractualization program was illegal and intended for union busting, as it would render the union inutile and displace regular employees, diminishing union membership from 250 to 120.
• Violation of Return-to-Work Order: Petitioner claimed that CCBPI violated the DOLE Secretary's assumption order by not enjoining the effectivity of the termination of the 27 employees, which exacerbated the situation.

• Management Prerogative: Respondent argued that the new business scheme was an exercise of management prerogative designed to improve the distribution system, reach more consumers at a lower cost with fewer manpower, and yield greater returns on investment.
• Validity of Redundancy: Respondent contended that the redundancy program was implemented in good faith using fair and reasonable criteria, that the employees were notified and paid separation pay, and that the executed quitclaims were valid and binding.
• No Violation of Return-to-Work Order: Respondent argued that the termination was a certainty from the time notices were issued and that the status quo prior to the assumption order included the impending termination.

• Validity of Redundancy: Whether CCBPI validly implemented its redundancy program.
• Unfair Labor Practice: Whether CCBPI's implementation of the redundancy program was an unfair labor practice.
• Return-to-Work Order: Whether CCBPI should have enjoined the effectivity of the termination of the 27 affected union members when the DOLE Secretary assumed jurisdiction over their labor dispute.

• Validity of Redundancy: Yes. The redundancy program was validly implemented as CCBPI complied with the requisite written notice, payment of separation pay, good faith, and fair and reasonable criteria.
• Unfair Labor Practice: No. CCBPI did not commit unfair labor practice because SACORU failed to present substantial evidence that the redundancy program was motivated by bad faith or interfered with the employees' right to self-organize.
• Return-to-Work Order: Yes. The status quo mandated by the DOLE Secretary's assumption of jurisdiction required CCBPI to enjoin the effectivity of the termination until the NLRC resolved the dispute.

• Validity of Redundancy: The validity of a redundancy program requires (1) written notice to employees and DOLE at least one month prior to retrenchment, (2) payment of separation pay, (3) good faith in abolishing positions, and (4) fair and reasonable criteria. The NLRC and CA found that CCBPI satisfied these requisites. CCBPI conducted a study showing that the CRS and MB systems were cost-ineffective and that the MEP dealership system would lower costs and improve competitiveness. The employees were notified and given separation pay. The Court's review was limited to determining grave abuse of discretion, and it found none, as the factual findings of the NLRC and CA were supported by substantial evidence and are binding.
• Unfair Labor Practice: Unfair labor practice refers to acts that violate workers' right to self-organize. An employer may only be held liable if its acts affect the right to self-organize, and substantial evidence must be presented. SACORU failed to provide substantial evidence that CCBPI acted with malice or bad faith or that the redundancy program was conceived to interfere with the right to self-organize. The mere diminution of union membership due to a valid redundancy program does not per se constitute unfair labor practice or union busting.
• Return-to-Work Order: Under Article 263(g) of the Labor Code, the DOLE Secretary's assumption of jurisdiction automatically enjoins an impending strike or lockout and mandates a return-to-work order to maintain the status quo. The status quo is the employment status of the employees the day before the occurrence of the strike or lockout. Since SACORU voted to strike on June 11, 2009, the status quo was the employment status on June 10, 2009. This status quo should have been maintained until the NLRC resolved the dispute on March 16, 2010. By allowing the termination to take effect on July 1, 2009, CCBPI violated the return-to-work order. The employees are entitled to backwages from July 1, 2009 to March 16, 2010, and their separation pay must be recomputed to reflect a termination date of March 16, 2010.

• Validity of Redundancy Program — A redundancy program is valid when (1) written notice is served on both the employees and DOLE at least one month prior to the intended date of retrenchment; (2) separation pay is paid equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) there is good faith in abolishing the redundant positions; and (4) fair and reasonable criteria are used in ascertaining what positions are to be declared redundant and abolished. The Court found all these present in CCBPI's implementation.
• Unfair Labor Practice — Unfair labor practice refers to acts that violate the workers' right to organize. An employer may only be held liable if it is shown that its acts affect the right of employees to self-organize, and substantial evidence must support the allegation. Mere diminution of union membership due to a valid redundancy does not amount to union busting absent proof of bad faith.
• Status Quo in Return-to-Work Orders — When the DOLE Secretary assumes jurisdiction over a labor dispute in an industry indispensable to the national interest, the parties must maintain the status quo, which is the employment status of the employees the day before the occurrence of the strike or lockout. This must be maintained until the dispute is resolved by the DOLE Secretary or NLRC.

• "When the Secretary exercises these powers, he is granted 'great breadth of discretion' in order to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout." — This passage defines the scope and effect of the DOLE Secretary's assumption of jurisdiction under Article 263(g) of the Labor Code.
• "The status quo is simply the status of the employment of the employees the day before the occurrence of the strike or lockout." — This defines the controlling doctrine on what constitutes the status quo that must be maintained during the pendency of a certified labor dispute.
• "For while, the number of union membership was diminished due to the termination of herein union members, it cannot safely be said that respondent company acted in bad faith in terminating their services because the termination was not without a valid reason." — This articulates the rationale for finding no unfair labor practice despite the reduction in union membership.

• Montoya vs. Transmed Manila Corp. — Cited to establish that only questions of law may be raised in a Rule 45 petition against a CA decision in a labor case, and that the CA decision is reviewed only for grave abuse of discretion by the NLRC.
• Asian Alcohol Corp. vs. National Labor Relations Commission — Cited for the four requisites of a valid redundancy program and the rule that an employer's good faith is not destroyed by availing of the services of an independent contractor.
• Zambrano vs. Philippine Carpet Manufacturing Corp. — Cited for the definition of unfair labor practice as acts that violate the workers' right to self-organize.
• Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor Union (TASLI-ALU) vs. Court of Appeals — Cited for the proposition that the DOLE Secretary's assumption of jurisdiction co-exists with a return-to-work order to maintain the status quo.
• Manggagawa ng Komunikasyon sa Pilipinas vs. Philippine Long Distance Telephone Co., Inc. — Cited to characterize the return-to-work order as interlocutory in nature, meant to maintain the status quo while the main issue is being resolved.

• Article 263(g), Labor Code of the Philippines — Governs the Secretary of Labor's power to assume jurisdiction over labor disputes in industries indispensable to the national interest. It was applied to determine that CCBPI was obligated to maintain the status quo and that the termination of employees during the pendency of the dispute violated the return-to-work order.

Antonio T. Carpio (Chairperson), Diosdado M. Peralta, Estela M. Perlas-Bernabe, Andres B. Reyes, Jr.