G.R. No. 167291; January 12, 2011
PRINCE TRANSPORT, INC. and Mr. RENATO CLAROS, Petitioners, vs. DIOSDADO GARCIA, et al., Respondents.

FACTS

Respondents were employees of Prince Transport, Inc. (PTI), a passenger transport company, working as drivers, conductors, mechanics, inspectors, and one as Operations Manager. They received regular wages plus commissions. In October 1997, their commissions were reduced. This led them to hold meetings to discuss protecting their interests, which made PTI President Renato Claros suspect union formation and object to it. In December 1997, a denied request for a cash advance further demoralized employees. Respondents proceeded to form a union. To block this, PTI transferred all union members and sympathizers to a sub-company, Lubas Transport. Despite the transfer, respondents’ schedules, IDs, daily time records, tickets, reports, and salary claims were still handled by PTI. Later, Lubas’s operations deteriorated due to PTI’s refusal to maintain and repair its units, leading to a virtual stoppage of operations and respondents’ loss of employment. Respondents filed complaints for illegal dismissal, unfair labor practice, illegal deductions, and various monetary claims. Petitioners denied the allegations, contending respondents voluntarily transferred to Lubas, a separate entity, and that they were unaware of any union until served a summons for a certification election in June 1998. The Labor Arbiter dismissed the complaints against PTI, finding Lubas as the employer and guilty of illegal dismissal. The NLRC partially modified the Labor Arbiter’s decision by including two additional complainants and ordering a refund for one, but sustained the dismissal of claims against PTI. The Court of Appeals reversed the NLRC, finding petitioners guilty of unfair labor practice, declaring Lubas a mere instrumentality of PTI, and ordering reinstatement with backwages.

ISSUE

Whether the Court of Appeals erred in reversing the NLRC and finding petitioners guilty of unfair labor practice and liable for respondents’ illegal dismissal.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Court held that petitioners were guilty of unfair labor practice under Article 248(a) of the Labor Code for interfering with the employees’ right to self-organization. The transfer of union members to Lubas was a deliberate move to frustrate union formation, making Lubas a mere instrumentality, agent, or conduit of PTI, not a legitimate separate entity. The act of transferring employees to a different company to discourage union membership constitutes unfair labor practice. Furthermore, the subsequent cessation of Lubas’s operations, engineered by PTI’s refusal to maintain its units, amounted to a constructive dismissal of the employees. Thus, PTI and its president, Renato Claros, are solidarily liable for the illegal dismissal. The Court ordered the reinstatement of respondents to their former positions without loss of seniority rights and with full backwages, or separation pay if reinstatement is no longer feasible. The monetary awards granted by the Labor Arbiter and NLRC were also affirmed.