G.R. No. 160138 & G.R. No. 160192, July 13, 2011
AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES T. INDUCIL, JOCELYN T. INDUCIL and MA. CONCEPCION I. DONATO, Petitioners, vs. PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, ET AL., Respondents.

(Consolidated with)
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, ET AL., Petitioners, vs. AUTOMOTIVE ENGINE REBUILDERS, INC., and ANTONIO T. INDUCIL, Respondents.

FACTS

Automotive Engine Rebuilders, Inc. (AER) and the Progresibong Unyon ng mga Manggagawa sa AER (Unyon) filed reciprocal complaints before the NLRC. AER accused Unyon members of illegal concerted activities (strike, walkout, stoppage) and unfair labor practice. Unyon accused AER of unfair labor practice, illegal suspension, and illegal dismissal.
According to AER, on January 28, 1999, 18 employees staged an illegal walkout, assembled on company premises, refused to return to work, proceeded to another AER facility (AER-PSC), and attempted to cart away a line boring machine, disrupting operations until police intervention. Management issued a memorandum requiring them to explain, found their explanations unsatisfactory, and terminated their services. Later, on February 22, 1999, they commenced a wildcat strike, barricaded premises, and prevented ingress/egress until an NLRC TRO stopped it. Six employees subsequently resigned and signed quitclaims.
According to Unyon, after it filed a petition for certification election in December 1998, AER retaliated by forcing employees to undergo drug testing. On January 8, 1999, seven employees tested positive. On January 12, 1999, AER suspended them under a company rule prohibiting coming to work under the influence of drugs. Of the seven, only two were allowed back; the other five (Froilan Madamba, Arnold Rodriguez, Roberto Caldeo, Roger Belatcha, and Ruperto Mariano) were not readmitted unless they submitted a medical certificate of fitness. While securing these, they were charged with insubordination and absence without leave. Unyon, suspecting AER was moving machinery to engage in a “runaway shop,” tried to prevent the transfer, leading AER to issue another memorandum accusing them of gross insubordination. On February 2, 1999, the affected workers were denied entry, prompting them to picket and file a complaint.
The Labor Arbiter ruled in favor of Unyon, finding the suspension of the five employees illegal for lack of valid cause and due process, and that AER’s refusal to reinstate them without a medical certificate constituted illegal dismissal. However, the LA also found the employees’ subsequent concerted slowdown illegal. Holding both parties in pari delicto, the LA ordered reinstatement without backwages. Both parties appealed to the NLRC, which affirmed the LA’s decision. The Court of Appeals, in its Amended Decision, modified the NLRC resolution by ordering the immediate reinstatement of all suspended employees without backwages.

ISSUE

Whether the Court of Appeals erred in affirming the findings of the Labor Arbiter and the NLRC that the suspension and dismissal of the employees were illegal, and in ordering their reinstatement without backwages.

RULING

The Supreme Court DENIED the petitions and AFFIRMED the Amended Decision of the Court of Appeals.
The Court found no merit in AER’s arguments. It upheld the consistent findings of the Labor Arbiter, NLRC, and Court of Appeals that the suspension of the five employees (Madamba, Rodriguez, Caldeo, Belatcha, and Mariano) was illegal. The suspension was based solely on a positive drug test result without giving the employees an opportunity to explain, such as the possibility that the drugs were taken under medical prescription. The company failed to prove that the drug use adversely affected their work performance. The Court emphasized that doubts should be resolved in favor of labor. Furthermore, AER’s subsequent refusal to reinstate them unless they presented a medical certificate amounted to illegal dismissal, as the proper procedure for dealing with illness (if proven) would be placement on sick leave, not dismissal.
The Court also rejected AER’s claim that the employees were guilty of illegal strike or walkout. It noted that the employees’ actions on January 28, 1999, were a spontaneous reaction to AER’s illegal act of barring them from work after their illegal suspension. Their gathering was a protest against this unfair labor practice, not a premeditated strike. The Court cited jurisprudence that a strike is not illegal if it is a defensive measure against an employer’s unfair labor practice.
Regarding the wildcat strike in February 1999, the Court agreed with the lower tribunals that the employees committed an illegal work stoppage by barricading the premises. However, it sustained the finding that both parties were in pari delicto (in equal fault). AER committed an unfair labor practice through illegal suspension and dismissal, which provoked the employees’ illegal acts. Consequently, the penalty of reinstatement without backwages was appropriate.
The Court also found no merit in the procedural issues raised and affirmed the dismissal of the complaints against the individual petitioners (the Inducils and Donato) for lack of evidence showing they acted with malice or in bad faith in their corporate roles.
The dispositive portion ordered the reinstatement of the concerned employees without backwages. If reinstatement was no longer feasible, they were to be given separation pay in lieu thereof.