G.R. No. 112661 . May 30, 2001.
SIMEON DE LEON, et al., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), and FORTUNE TOBACCO CORPORATION and/or MAGNUM INTEGRATED SERVICES, INC. (formerly FORTUNE INTEGRATED SERVICES, INC.), respondents.

FACTS

On August 23, 1980, Fortune Tobacco Corporation (FTC) and Fortune Integrated Services, Inc. (FISI) entered into a contract for security services, with petitioners engaged as security guards under this contract. On February 1, 1991, FISI’s incorporators and stockholders sold all shares to new stockholders, and FISI’s corporate name was changed to Magnum Integrated Services, Inc. (MISI). On October 15, 1991, FTC terminated the security services contract, displacing 582 security guards, including petitioners. FTC engaged two other security agencies. Petitioners, through the Fortune Tobacco Labor Union, sent a Notice of Strike and later picketed FTC’s premises. On November 29, 1991, petitioners filed a complaint for illegal dismissal, unfair labor practice, and refund of cash bond. The Labor Arbiter ruled in favor of petitioners, applying the “single employer” principle and finding FTC and FISI/MISI guilty of union busting and illegal dismissal. The NLRC reversed this decision, holding that no employer-employee relationship existed between petitioners and FTC, and that petitioners were not dismissed but placed on floating status due to the contract termination.

ISSUE

1. Whether petitioners were illegally dismissed.
2. Whether respondents are guilty of unfair labor practice.
3. Whether petitioners are entitled to a refund of their cash bond.

RULING

The Supreme Court granted the petition, set aside the NLRC resolutions, and ordered respondents to pay petitioners full backwages and reinstate them without loss of seniority rights and privileges, or award separation pay if reinstatement is no longer feasible.
1. On illegal dismissal: The Court found that petitioners were illegally dismissed. The termination of the security services contract did not sever the employer-employee relationship between petitioners and FISI/MISI. FISI/MISI failed to show it exerted efforts to assign petitioners to other posts, and their failure to do so for more than six months constituted constructive dismissal.
2. On unfair labor practice: The Court found respondents guilty of unfair labor practice under Article 248(a) of the Labor Code. The timing of the contract termination immediately after the union’s formation and the sale of FISI shares, coupled with the lack of a valid reason for termination, indicated a scheme to interfere with the employees’ right to self-organization.
3. On refund of cash bond: The Court affirmed the Labor Arbiter’s order for a refund, as the deduction and withholding of the cash bond were illegal.
The Court rejected the NLRC’s application of the “single employer” doctrine, noting it was not necessary to resolve the case. It held that FISI/MISI remained the employer liable for illegal dismissal and unfair labor practice.