026 Automotive Engine Rebuilders v.
Progresibong Unyon ng mga reinstatement is no longer feasible, the concerned employees should be given
Manggagawa sa AER (DAGUMAN)
July 13, 2011 | Mendoza, J. | Pari Delicto
PETITIONER: Automotive Engine Rebuilders
RESPONDENTS: Progresibong Unyon ng mga Manggagawa sa AER
SUMMARY: AER is an automotive engine repair company. Progresibong
Unyon is the legitimate labor union of AER’s rank and file employees. Both
parties filed a complaint against each other before the NLRC. AER filed a
complaint against Unyon and its 18 members for illegal concerted activities. It
likewise suspended 7 union members tested positive for illegal drugs.  AER
claims that Unyon was guilty of staging an illegal strike.
 On the other hand, Unyon  filed  a counter charge  accusing  AER  of  unfair
labor  practice,  illegal  suspension  and  illegal dismissal. Unyon claims that
AER committed an illegal lockout. The dispute arose a day after the union filed
a petition for certification election before the DOLE. At that time, AER required
all its employees to undergo a compulsory drug test. Employees who were
found positive for illegal drugs were suspended thereafter. In protest of the
alleged illegal suspension, the complaining workers staged a one day walkout.
Subsequently, AER dismissed concerned employees as penalty for the alleged
illegal strike. Likewise, AER had also pulled out machines from the main
building to the AER-PSC compound located on another street. Consequently,
protesting employees forced their way to the AER-PSC premises to try to bring
out the boring machine. On appeal, CA decided to order reinstatement of all
suspended employees without back wages.WoN the parties are in pari delicto?
YES. Both AER and Unyon are at fault or in pari delicto, thus, they should be
restored to their respective positions prior to the illegal strike and illegal
lockout. Nonetheless, if reinstatement is no longer feasible, the concerned
employees should be given separation pay up to the date set for the return of the
complaining employees in lieu of reinstatement. It cannot be disputed that both
parties filed charges against each other, blaming the other party for violating
labor laws. AER filed a complaint against Unyon and its 18 members for illegal
concerted activities. It likewise suspended 7 union members who tested positive
for illegal drugs. On the other hand, Unyon filed a countercharge accusing AER
of unfair labor practice, illegal suspension and illegal dismissal. In other words,
AER claims that Unyon was guilty of staging an illegal strike while Unyon
claims that AER committed an illegal lockout. In the case at bar, since both
AER and the union are at fault or in pari delicto, they should be restored to their
respective positions prior to the illegal strike and illegal lockout. Nonetheless, if
separation pay up to the date set for the return of the complaining employees in
lieu of reinstatement.
DOCTRINE: Both parties are in pari delicto and such situation warrants the
restoration of the status quo ante and bringing the parties back to the respective
positions before the illegal strike and illegal lockout through reinstatement.
This means that the contending parties must be brought back to their respective
positions before the controversy; that is, before the strike. Therefore, the order
reinstating the 114 employees is proper.
If reinstatement is no longer feasible, they should be given separation pay
computed up to the date set for the return of the employees in lieu of
reinstatement.
FACTS:
1. AER is a company engaged in the automotive engine repair and rebuilding
business and other precision and engineering works for more than 35 years.
Progresibong Unyon Ng Mga Manggagawa sa AER (Unyon) is the
legitimate labor union of the rank and file employees of AER which was
formed in the year 1998. Due to a dispute between the parties, both filed a
complaint against each other before the NLRC.  AER accused the Unyon of
illegal concerted activities (illegal strike, illegal walkout, illegal stoppage,
and unfair labor practice) while Unyon accused AER of unfair labor
practice, illegal suspension and illegal dismissal.
2. AER's Management's Version
On January 28, 1999, eighteen (18) employees of AER, acting collectively
and in concert, suddenly and without reason staged a walkout and
assembled illegally in the company premises.
Despite management's plea for them to go back to work, the concerned
 employees refused and, instead, walked out of the company premises and
proceeded to the office of the AER Performance and Service Center (AER-
PSC) located on another street. Upon arrival, they collectively tried to cart
away one (1) line boring machine owned by AER out of the AER-PSC
premises. They threatened and forced the company guards and some
company officers and personnel to open the gate of the AER-PSC
compound.  They also urged the AER-PSC employees to likewise stop
working.
The concerned employees occupied the AER-PSC premises for several
hours, thus, disrupting the work of the other employees and AER's services
to its clients. They refused to stop their unlawful acts despite the
intervention of the barangay officers. They left the AER-PSC premises only
when the police intervened and negotiated with them.
Subsequently, management issued a memorandum requiring the employees
who joined the illegal walkout to explain in writing why they should not be
disciplined administratively and dismissed for their unjustified and illegal
acts.
3. Unyon's Version
On December 22, 1998, Unyon filed a petition for certification election
before the Department of Labor and Employment (DOLE) after organizing
their employees’ union within AER. Resenting what they did, AER forced
all of its employees to submit their urine samples for drug testing. Those
who refused were threatened with dismissal.
On January 8, 1999, the results of the drug test came out and the following
employees were found positive for illegal drugs: Froilan Madamba, Arnold
Rodriguez, Roberto Caldeo, Roger Bilatcha, Ruperto Mariano, Edwin
Fabian, and Nazario Madala.
On January 12, 1999, AER issued a memorandum suspending these
employees from work for violation of Article D, Item 2 of the Employee's
handbook: Coming to work under the influence of intoxicating liquor or any
drug or drinking any alcoholic beverages on the premises on company time.
4. Out of the seven (7) suspended employees, only Edwin Fabian and Nazario
Madala were allowed by AER to report back to work. The other five (5)
suspended employees were not admitted by AER without first submitting
the required medical certificate attesting to their fitness to work.
5. While they were in the process of securing their respective medical
certificates, however, they were shocked to receive a letter from AER
charging them with insubordination and absence without leave and directing
them to explain their acts in writing. Despite their written explanation, AER
refused to reinstate them.
6. Meanwhile, Unyon found out that AER was moving out machines from the
main building to the AER-PSC compound located on another street.
Sensing that management was going to engage in a runaway shop, Unyon
tried to prevent the transfer of the machines which prompted AER to issue a
memorandum accusing those involved of gross insubordination, work
stoppage and other offenses.
7. On February 2, 1999, the affected workers were denied entry into the AER
premises by order of management. Because of this, the affected workers
staged a picket in front of company premises hoping that management
would accept them back to work. When their picket proved futile, they filed
a complaint for unfair labor practice, illegal suspension and illegal
dismissal.
8. Ruling of the Labor Arbiter
On August 9, 2001, the Labor Arbiter (LA) rendered a decision in favor of
Unyon by directing AER to reinstate the concerned employees but without
backwages effective October 16, 2001.
9. NLRC Ruling
On March 5, 2002, the NLRC issued a Resolution  modifying the LA
decision by setting aside the order of reinstatement as it found no illegal
dismissal.
The NLRC, however, considered only three (3)  out of the eighteen
 concerned employees, (18) namely: Froilan Madamba, Ruperto Mariano,
and Roberto Caldeo because their names were commonly identified in the
LA decision and in the concerned employees' position paper as those
employees who were allegedly illegally suspended.
It wrote that these three (3) employees were validly suspended because they
were found positive for illegal drugs in the drug test conducted by AER.
Management was just exercising its management prerogative in requiring
them to submit a medical fit-to-work certificate before they could be
admitted back to work.  The drug test was found to be not discriminatory
because all employees of AER were required to undergo the drug test.
Neither was the drug test related to any union activity.
Finally, the NLRC ruled that the concerned employees had no valid basis in
conducting a strike. Considering that the concerted activity was illegal,
AER had the right to immediately dismiss them.
10. The CA Ruling Ruling
Both parties were guilty of unfair labor practice. It stated that the hostile
attitude of AER towards its workers and vice-versa started when the
workers began organizing themselves into a union. AER tried to have a
runaway shop when it transferred some of its machinery from the main
building to the AER-PSC office located on another street on the pretext that
the main building was undergoing renovation. AER also prevented its
employees, even those who were excluded from its complaint, from going
back to work for allegedly staging an illegal strike. On the other hand, the
concerted work slowdown staged by the concerned employees as a result of
their alleged illegal suspension was unjustified. Hence, both parties were
found by the CA to be in pari delicto and must bear the consequences of
their own wrongdoing.
ISSUE/s:
1. WoN the doctrine of in pari delicto is proper? YES. It cannot be disputed
that both parties filed charges against each other, blaming the other party for
violating labor laws. AER filed a complaint against Unyon and its 18
members for illegal concerted activities. It likewise suspended 7 union
members who tested positive for illegal drugs. On the other hand, Unyon
filed a countercharge accusing AER of unfair labor practice, illegal
suspension and illegal dismissal. In other words, AER claims that Unyon
was guilty of staging an illegal strike while Unyon claims that AER
committed an illegal lockout
RULING: SC affirmed the CA decision. Petition is DENIED
RATIO:
1. The Court agrees with the ruling of the CA that there were 32 complaining
employees who filed and signed their complaint dated February 18, 1999
for unfair labor practice, illegal dismissal and illegal suspension. Out of the
32, six (6) undeniably resigned and signed waivers and quitclaims, leaving
26 remaining complainant employees. Thus, the Court adopts and affirms
the following CA ruling on this matter.
2. This Court likewise affirms the ruling of the CA favoring the reinstatement
of all the complaining employees including those who tested positive for
illegal drugs, without backwages.  The Court is in accord with the ruling
of the LA and the CA that neither party came to court with clean
hands.  Both were in pari delicto.
3. It cannot be disputed that both parties filed charges against each other,
blaming the other party for violating labor laws. AER filed a complaint
against Unyon and its 18 members for illegal concerted activities. It
likewise suspended 7 union members who tested positive for illegal drugs.
On the other hand, Unyon filed a countercharge accusing AER of unfair
labor practice, illegal suspension and illegal dismissal. In other words, AER
claims that Unyon was guilty of staging an illegal strike while Unyon
claims that AER committed an illegal lockout.
4. AER's fault is obvious from the fact that a day after the union filed a
petition for certification election before the DOLE, it hit back by requiring
all its employees to undergo a compulsory drug test. Although AER argues
that the drug test was applied to all its employees, it was silent as to whether
the drug test was a regular company policy and practice in their 35 years in
the automotive engine repair and rebuilding business. As the Court sees it, it
was AER's first ever drug test of its employees immediately implemented
after the workers manifested their desire to organize themselves into a
union. Indeed, the timing of the drug test was suspicious.
5. Moreover, AER failed to show proof that the drug test conducted on its
employees was performed by an authorized drug testing center. It did not
mention how the tests were conducted and whether the proper procedure
was employed. The case of Nacague v. Sulpicio Lines,  is instructive:
 Section 36 of R.A. No. 9165 provides that drug tests shall be performed
only by authorized drug testing centers.  Moreover, Section 36 also
prescribes that drug testing shall consist of both the screening test and
the confirmatory test. Section 36 of R.A. No. 9165 reads:
SEC. 36. Authorized Drug Testing.  Authorized drug testing shall be done by any
government forensic laboratories or by any of the drug testing laboratories accredited
and monitored by the DOH to safeguard the quality of test results.  The DOH shall take
steps in setting the price of the drug test with DOH accredited drug testing centers to further
reduce the cost of such drug test. The drug testing shall employ, among others, two (2)
testing methods, the screening test which will determine the positive result as well as the
type of drug used and the confirmatory test which will confirm a positive screening test. x
x x  (Emphases supplied)
6. Department Order No. 53-03 further provides: Drug Testing Program for
Officers and Employees. Drug testing shall conform with the procedures as
prescribed by the Department of Health (DOH) (www.doh.gov.ph). Only
drug testing centers accredited by the DOH shall be utilized.  A list of
accredited centers may be accessed through the OSHC website
(www.oshc.dole.gov.ph).
Drug testing shall consist of both the screening test and the
confirmatory test; the latter to be carried out should the screening test
turn positive.  The employee concerned must be informed of the test results
whether positive or negative.
7. In Social Justice Society v. Dangerous Drugs Board, we explained:
The law is clear that drug tests shall be performed only by authorized drug testing
centers.  fault for resorting to a concerted work slowdown and walking out of
8. Furthermore, AER engaged in a runaway shop when it began pulling
out machines from the main AER building to the AER-PSC compound
located on another street on the pretext that the main building was
undergoing renovation. Certainly, the striking workers would have no
reason to run and enter the AER-PSC premises and to cause the return of
the machines to the AER building if they were not alarmed that AER was
engaging in a runaway shop. AER committed another infraction when it
refused to admit back those employees who were not included in its
complaint against the union. Thirty-two (32) employees filed a complaint
for illegal dismissal, illegal suspension and unfair labor practice against
AER. AER charged 18 employees with illegal strike. AER should have
reinstated the 14 employees excluded from its complaint. Regarding AER's
contention that the affected workers abandoned their jobs, the Court has
thoroughly reviewed the records and found no convincing proof that they
deliberately abandoned their jobs. Besides, this Court has consistently
declared in a myriad of labor cases that abandonment is totally inconsistent
with the immediate filing of a complaint for illegal dismissal. In any event,
the penalty of dismissal imposed by AER against the striking employees,
who, by the way, only staged a one day walkout, was too severe. The
pronouncement in the case of Tupas Local Chapter No. 979 v. NLRC  is
worth reiterating:
  The said decision likewise is not in accordance with settled and authoritative doctrine and legal
principles that a mere finding of the illeÂgality of a strike does not automatically warrant a wholesale
dismissal of the strikers from their employment and that a premature or improvident strike should
not be visited with a consequence so severe as dismissal where a penalty less punitive would suffice. 
Numerous precedents to this effect have been cited and reaffirmed x x x.
9. To the Court's mind, the complaining workers temporarily walked out of
their jobs because they strongly believed that management was committing
an unfair labor practice. They had no intention of hurting anybody or steal
company property. Contrary to AER's assertion, the striking workers did not
intend to steal the line boring machine which they tried to cart away from
the AER-PSC compound; they just wanted to return it to the main AER
building.
10. Like management, the union and the affected workers were also at
their jobs of protest for their illegal suspension. It was also wrong for
them to have forced their way to the AER-PSC premises to try to bring
out the boring machine. The photos  shown by AER are enough proof that
the picketing employees prevented the entry and exit of non-participating
employees and possibly AER's clients. Although the union's sudden work
stoppage lasted a day, it surely caused serious disturbance and tension
within AER's premises and could have adversely affected AER's clients and
business in general.
11. The in pari delicto doctrine in labor cases is not novel to us. It has been
applied in the case of Philippines Inter-Fashion, Inc. v NLRC, [20] where the
Court held:
12. Both parties are in pari delicto and such situation warrants the
 restoration of the status quo ante and bringing the parties back to the
respective positions before the illegal strike and illegal lockout through
the reinstatement of the said 114 employees,
13. The findings show that both petitioner and the 114 strikers are in pari
delicto, a situation which warrants the maintenance of the status
quo. This means that the contending parties must be brought back to
their respective positions before the controversy; that is, before the
strike. Therefore, the order reinstating the 114 employees is proper.
14. Likewise, the in pari delicto doctrine was applied in the case of First City
Interlink Transportation Co. Inc. v The Honorable Secretary,  thus: As
both the employer and the employees were, in a sense, at fault or in
pari delicto, the nonreturning employees, provided they did not participate
in illegal acts; should be considered entitled to reinstatement. But since
reinstatement is no longer feasible, they should be given separation pay
computed up to March 8, 1988 (the date set for the return of the
employees) in lieu of reinstatement. [Emphases and underscoring
supplied]
15. In the case at bar, since both AER and the union are at fault or in pari
delicto, they should be restored to their respective positions prior to the
illegal strike and illegal lockout. Nonetheless, if reinstatement is no longer
feasible, the concerned employees should be given separation pay up to the
date set for the return of the complaining employees in lieu of
reinstatement.