Dumaog v. Coca-Cola Bottlers Phils., Inc.

FIRST DIVISION

[G.R. No. 226828. November 11, 2021.]

PABLEO A. DUMAOG, ANTONIO O. APASO III, ARNIE P. CAYABYAB, CRIS VINCENT A. GERMODO, CRISOSTOMO S. VALENTIN, DOMINGO S. ABATA, DONIMAR A. TORRES, EDUARDO C. CADALIN, EDWIN B. BIEN, ENRIQUE D. QUILLOSA, FRANCIS L. JOCSON, JEFFREY D. AZUELA, JEOMEBE A. CABASUG, JUAN M. MARETE, JR., NICOLAS I. ANTARAN, RAFFY D. CURATO, RAUL G. AZCUNA, ROBERT G. MATEO, RONALD N. BRAZIL, ROLDAN P. GULTIANO, SHERWIN R. MADREO, VINCENT M. BUSTAMANTE, AND VIRGILIO D. DUAT, JR., petitioners, vs.COCA-COLA BOTTLERS PHILS., INC., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedNovember 11, 2021which reads as follows: HTcADC

"G.R. No. 226828 (Pableo A. Dumaog, Antonio O. Apaso III, Arnie P. Cayabyab, Cris Vincent A. Germodo, Crisostomo S. Valentin, Domingo S. Abata, Donimar A. Torres, Eduardo C. Cadalin, Edwin B. Bien, Enrique D. Quillosa, Francis L. Jocson, Jeffrey D. Azuela, Jeomebe A. Cabasug, Juan M. Marete, Jr., Nicolas I. Antaran, Raffy D. Curato, Raul G. Azcuna, Robert G. Mateo, Ronald N. Brazil, Roldan P. Gultiano, Sherwin R. Madreo, Vincent M. Bustamante, and Virgilio D. Duat, Jr., petitioners, v. Coca-Cola Bottlers Phils., Inc., respondent).

This is a petition for review on certiorari assailing the October 22, 2015 Decision 1 and September 2, 2016 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 132033, which held that petitioners could no longer be reinstated by respondent, granted petitioners separation pay in lieu of reinstatement, and required petitioners to return the amounts they received as reinstatement wages pending appeal.

Antecedents

Petitioners herein are comprised of different groups of workers who were hired by Romac Services and Trading Co., Inc. (Romac) and Mirof Resources, Inc. (Mirof) as sales route helpers for the distribution of softdrink products of respondent Coca-Cola Bottlers Phils., Inc. (CCBPI). The various petitioners alleged that they were actually regular employees of CCBPI and filed three (3) separate complaints against CCBPI for illegal dismissal with the National Labor Relations Commission (NLRC). 3 CCBPI claimed that Romac and Mirof were independent contractors, and thus, no employer-employee relationship existed between the parties.

The complaints were consolidated and, in a Decision 4 dated February 28, 2012, Labor Arbiter Adolfo Babiano (LA Babiano) declared that petitioners were illegally dismissed and ordered their reinstatement. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered declaring complainants to be regular employees of Coca-cola Bottlers, Phils., Inc. and ordering the latter to reinstate complainants to their former positions with full backwages computed from the time of their dismissal x x x up to actual reinstatement, viz.:

xxx xxx xxx

 

TOTAL AWARD

P3,856,586.37

 

Respondents are further ordered to pay complainants attorney's fees equivalent to 10% of the total award or P385,658.63. 5

LA Babiano's decision was appealed to the NLRC. Pending said appeal, petitioners filed a motion for issuance of writ of execution with LA Babiano to oblige respondent to immediately reinstate them and pay them backwages. During pre-execution conference, CCBPI manifested that it had reorganized its Product Availability Group (PAG). CCBPI claimed that the positions formerly held by the petitioners had been abolished and their functions transferred to The Redsystem Company, Inc. (TRCI), making petitioners' physical reinstatement impossible. 6

Order of the Labor Arbiter

LA Babiano granted the execution pending appeal in an Order 7 dated March 7, 2013. He held that CCBPI failed to prove actual abolition of the petitioners' positions, and that CCBPI did not report petitioners' termination from the workforce due to redundancy or reduction of workforce. The dispositive portion of the order reads:

WHEREFORE, let a Writ of Execution be now issued for complainants' immediate reinstatement incorporating therein their accrued wages as computed by the Computation and Examination Unit.

SO ORDERED.8

Petition before the NLRC

Respondent filed a Petition 9 to annul the March 7, 2013 Order before the NLRC maintaining that petitioners' previous positions had been abolished, making their physical reinstatement impossible. CCBPI alleged that originally, finished products from its regional manufacturing plants passed through the PAG. The PAG was part of the logistics department which handled distribution of finished products to sales offices, along with other logistics-related operations. CCBPI posted negative figures in its operating income, prompting a review of its distribution channels. Eventually, it decided to focus on its core functions and expertise of sales and manufacturing, and to forego its remaining distribution/coordination under the PAG. 10

Respondent underwent reorganization, and as proof thereof, it presented Establishment Employment Reports (EERs) filed relative to the implementation of its redundancy program. Petitioners were sales route helpers who participated in delivery of CCBPI products, hence logistics related. And since CCBPI no longer distributes or hauls its products, there were no more positions in the organization to which petitioners may be reinstated. 11

The NLRC found the petition before it unmeritorious, dismissing the same in its May 27, 2013 Resolution. 12 Incidentally, the NLRC pointed out that while LA Babiano ordered petitioners' reinstatement, his February 28, 2012 Decision failed to contain a statement that the reinstatement aspect is immediately executory. Nevertheless, an award or order of reinstatement is self-executory. When there is an order of reinstatement, the employer has two options: 1) actual reinstatement of the employee to the position occupied prior to his/her illegal dismissal, under the same terms and conditions, or if such position is no longer available, to a substantially equivalent position; or 2) reinstatement of the employee in the payroll of the company, without requiring him to report back to work. The employer has the right to choose between the two options, and the duty to inform the employee of its choice.

The NLRC did not explicitly make any findings regarding the availability or non-availability of positions to which petitioners may be reinstated. It merely pointed out that CCBPI did not make any choice as between actual reinstatement or payroll reinstatement, instead opting to file the petition to annul the March 7, 2013 Order. Since it failed to exercise either of the two options, CCBPI could be compelled to pay the salaries of the employees.

Dissatisfied, CCBPI filed a petition for certiorari under Rule 65 of the Rules of Court before the CA on September 26, 2013.

Ruling of the CA

Disagreeing with the factual findings of the labor tribunal, the CA held that CCBPI indeed reorganized the PAG, resulting in the abolition of petitioners' positions and the separation of respondent's other regular employees on the ground of redundancy. Respondent presented EERs that it filed with the field offices of the Department of Labor and Employment (DOLE), showing the number of employees whose positions were declared redundant. Furthermore, there were no equivalent positions available to the petitioners. Due to such abolition and lack of equivalent positions, reinstatement, either actual or in payroll, is rendered impractical and impossible.

The CA pointed out this is not a situation where the employer refused to reinstate employees, but that it was unable to do so due to supervening events. Where reinstatement is no longer possible, separation pay may be given to the dismissed employee in lieu thereof.

The CA disagreed with petitioners' argument that TRCI was a mere in-house agency of the respondent. To determine whether TRCI was a mere alter ego of CCBPI and whether the corporate veil should be pierced, the CA applied the three-pronged test elucidated in Philippine National Bank v. Hydro Resources Contractors Corp. 13 It found that, aside from petitioners' allegation that CCBPI owned a majority of TRCI shares, there was no showing that respondent's officers controlled TRCI. Neither was there proof that respondent used TRCI to defraud or harm the petitioners.

The dispositive portion of the CA's Decision dated October 22, 2015 reads:

WHEREFORE, in view of the foregoing premises, the instant petition is hereby GRANTED. The assailed Resolution promulgated on May 27, 2013 of the National Labor Relations Commission [NLRC] (Third Division), in NLRC LER Case No. 04-100-13 (NLRC LAC No. 01-000204-12; NLRC NCR Case Nos. 06-0987-11, 06-09887-11, 07-10345-11), is ANNULLED and SET ASIDE.

In lieu of reinstatement, petitioner Coca-Cola Bottlers Philippines, Inc., is ordered to pay private respondents' separation pay of one month for every year of service, a fraction of at least six (6) months being considered as one whole year.

SO ORDERED.14

Petitioners filed a motion for reconsideration, while respondent filed a motion for clarificatory judgment. In a Resolution dated September 2, 2016, the CA denied the motion for reconsideration, finding that the issues raised therein merely reiterate matters already passed upon in the October 22, 2015 Decision. The appellate court further clarified that in annulling the NLRC's resolution, it necessarily follows that the March 7, 2013 Order of LA Babiano was likewise nullified and set aside, including all writs issued in connection thereto. Accordingly, respondent is entitled to recover whatever amounts it had paid to petitioners as reinstatement wages, less the corresponding separation pay due them. The dispositive portion of the CA resolution reads:

WHEREFORE, in view of the foregoing premises, private respondents' motion for reconsideration is hereby DENIED for lack of merit.

Private respondents are DIRECTED to return the amounts they received from petitioner Coca-Cola Bottlers Philippines, Inc., by way of reinstatement wages for the period of March 01, 2012 to February 28, 2014, less the separation pay due them as may be computed by the Computation and Examination Unit.

SO ORDERED.15

Petitioners come now to the Court, by way of petition for review on certiorari under Rule 45 of the Rules of Court.

Issues

The first issue for resolution is whether or not the CA erred in finding that reinstatement pending appeal has become impossible. Petitioners maintain that TRCI is a labor-only contractor and a mere alter ego of CCBPI to evade compliance with labor standard laws. CCBPI owns 99.2% of TRCI shares, and the remaining eight (8) shareholders only subscribed and paid for a combined eight shares of stock with a total value of P80,000.00 only. Thus, the numbers speak for themselves, and the CA erred in ruling that respondent had no control over TRCI. Moreover, as CCBPI invokes TRCI's status as a legitimate job contractor, it has the burden of presenting sufficient proof that TRCI has substantial capital, investment, and tools to operate as an independent contractor, and that it services clients other than CCBPI.

Second, assuming that reinstatement is indeed not possible, petitioners argue that they are not obliged to return the reinstatement wages they had already received. An order of reinstatement is immediately executory, and is not affected by an ongoing appeal. In the case of payroll reinstatement, even if the employer's appeal turns the tide in its favor, the reinstated employee has no duty to return or reimburse the salary he received during the period where the lower court's governing decision was for the employee's illegal dismissal. Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement. An order to refund the same would result in a favorable decision by the arbiter causing more harm than help to the employee.

In its comment, CCBPI maintained that it was physically impossible to reinstate the petitioners due to the abolition of the positions to which they may be assigned. CCBPI raised this ground not to avoid payment of reinstatement wages, but because it could not comply with the order for reinstatement pending appeal even if it wanted to do so.

The Court's Ruling

At the outset, it must be stressed that the resolution of this case revolves purely around the reliefs that petitioners are entitled to while the main labor case was pending appeal. We take judicial notice of G.R. Nos. 239947 and 239987-88 involving the same parties. This Court's First Division issued its Resolutions dated September 10, 2018 and November 18, 2020, which affirmed with finality the ruling of the CA in the main labor case. 16

Availability of positions for

In a petition for review on certiorari, only questions of law should be raised and not questions of fact. 17 The question of availability of positions to which petitioners may be reinstated is a question of fact, which is generally beyond the scope of judicial review of this Court under Rule 45 of the Rules of Court. This rule however, admits certain exceptions, such as when the findings of fact are conflicting. 18

Nevertheless, the Court agrees with the factual findings of the CA on this matter.

In finding that the positions of petitioners had not been abolished, LA Babiano pointed out that CCBPI failed to report petitioners' termination due to redundancy or reduction of workforce, unlike other CCBPI employees, whose terminations were reported. In direct opposition to such finding, the CA pointed out that respondent's reorganization of the PAG resulted in the abolition of certain positions on the ground of redundancy, including petitioners' former positions. Such reorganization was proven through EERs filed before the DOLE.

Dissonance between the two conflicting findings is apparently rooted in the fact that petitioners' names do not appear in the EERs submitted by CCBPI. This fact, however, does not negate the finding that the positions themselves were abolished. Indeed, such non-inclusion is but a logical consequence of CCBPI's stance that petitioners are not employees of CCBPI but of Romac and Mirof respectively. To have required CCBPI to submit petitioners' names as employees terminated due to redundancy would be tantamount to compelling it to admit that they were its regular employees.

Petitioners argue that the CA erred in ruling that TRCI is a legitimate job contractor and that respondent failed to satisfy its burden of proving TRCI's legitimate status as a contractor. However, nowhere in the challenged decision and resolution of the CA did it explicitly make any ruling regarding the status of TRCI as a job contractor. The legitimacy of TRCI as a contractor was not an issue in the labor cases below; to recall, the labor complaints initiated by petitioners claiming labor-only contracting was against CCBPI, Romac, and Mirof.

The CA merely stated that contracting out of services is a valid exercise of management prerogative, so long as it is motivated by good faith, and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious arbitrary actions. It found no reason to pierce the corporate veil between CCBPI and TRCI.

We agree.

Piercing the veil of corporate fiction may be allowed only if the following elements concur:

1) Control — not mere stock control, but complete domination — not only of finances, but of policy and business practice in respect to the transaction attacked, must have been such that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own;

2) Such control must have been used by the defendant to commit a fraud or a wrong, to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and an unjust act in contravention of plaintiffs legal right; and

3) The said control and breach of duty must have proximately caused the injury or unjust loss complained of. 19

Petitioners harp on the fact that 99.2% of TRCI's shares of stock were owned by CCBPI. Such allegation, by itself, is not enough to overturn the findings of the CA. Mere ownership by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding separate corporate personality. 20 The element of control requires that the subsidiary be completely under the control and domination of the parent. It examines the parent corporation's relationship with the subsidiary. 21 The CA noted that petitioners failed to show that the officers of CCBPI controlled TRCI. Indeed, there exists no allegation that there were interlocking directors or management between the two companies.

Neither can it be said that the outsourcing of logistics operations to TRCI proximately caused injury or unjust loss complained of, for the purposes of the instant petition. Where reinstatement is no longer possible or feasible, such as when the work or position formerly held by the employee simply no longer exists, separation pay can substitute for reinstatement. 22 The fact that petitioners' duties were taken over by TRCI affects the instant case only in that it is determinative of the remedy available to petitioners — separation pay in lieu of reinstatement.

The party alleging that a corporation is acting as a mere alter ego of another must clearly and convincingly establish that the separate and distinct personalities of the corporations were set up to justify a wrong, protect fraud, or perpetrate a deception. 23 This, as the CA correctly pointed out, petitioners failed to do.

Moreover, piercing the veil of corporate fiction is frowned upon and must be done with caution. This principle is basically applied only to determine established liability. 24 Here, the issue is not liability, but whether or not there are still positions to which petitioners may be reinstated.

Return of amounts received as

On the matter of reinstatement wages already received by the petitioners, We find for the petitioners and rule that the CA erred in ordering petitioners to return the same.

LA Babiano ordered, among others, the reinstatement of petitioners in his February 28, 2012 Decision. It is well-established that an order of reinstatement by a labor arbiter is immediately executory even pending appeal. In fact, this right is statutorily enshrined in the Labor Code:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. 25

In view thereof, petitioners were able to garnish during the course of the proceedings several sums from CCBPI's bank account representing reinstatement wages from March 1, 2012 to February 28, 2014, totaling P7,915,379.79, and the garnished amounts were eventually released in favor of petitioners. 26

It is settled that even if the order of reinstatement of the labor arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by a higher court. 27

The right to reinstatement pending appeal is a statutory embodiment of social justice principles; a reflection of a compassionate policy of the law which "vivifies and enhances the provisions of the 1987 Constitution on labor and the workingman." 28 It is "designed to stop x x x a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family." 29

Strictly speaking, the CA in CA-G.R. SP No. 132033 did not reverse the order of reinstatement embodied in LA Babiano's February 28, 2012 Decision. By allowing the payment of separation pay, it effectively affirmed petitioners right to reinstatement, but modified the award in light of CCBPI's inability to carry out the same. Nonetheless, jurisprudence that deals with the reversal of an order of reinstatement executed pending appeal, are guiding. In Roquero v. Philippine Airlines, Inc., 30 the Court categorically held that if an employee has been reinstated during the period of appeal and the reinstatement order is reversed, the employee is not required to reimburse whatever salary he received for he is entitled to such. 31

In justifying its directive to petitioners to refund the amounts received, the CA stated: "it is but just and proper for petitioner CCBPI to recover whatever amount it has paid to private respondents by way of reinstatement wages." However, the CA failed to state any legal basis for such a ruling.

In Garcia v. Philippine Airlines, Inc., 32 the Court found that there is a dearth of cases where an employee was required to refund salaries received on payroll reinstatement after the reinstatement was reversed on appeal. The only case where this had occurred was Genuino v. NLRC. 33 But Genuino appears to be stray ruling, and the reasoning behind it has been renounced in Garcia and other subsequent cases: 34

Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiter's decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement." 35 (underscoring in the original)

Social justice considerations allow an employee who was found to have not been illegally dismissed — and therefore ultimately not entitled to reinstatement — to retain the amounts received by him or her as reinstatement wages pending an appeal. What more in a case such as this, where the illegality of the employees' dismissal had already been affirmed with finality?

Verily, the CA erred in ordering petitioners to return the amounts received as reinstatement wages for the period of March 1, 2012 to February 28, 2014, and that portion of its September 2, 2016 Resolution directing petitioners to do so should be struck down.

WHEREFORE, the petition is hereby PARTIALLY GRANTED. The October 22, 2015 Decision of the Court of Appeals in CA-G.R. SP No. 132033 is hereby AFFIRMED. The September 2, 2016 Resolution of the Court of Appeals in CA-G.R. SP No. 132033 is hereby MODIFIED. The portion of said Resolution directing petitioners to return the amounts they received from Coca-Cola Bottlers Phils., Inc. by way of reinstatement wages for the period of March 1, 2012 to February 28, 2014 is hereby DELETED and SET ASIDE. aScITE

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 282-295; penned by Associate Justice Stephen C. Cruz with Associate Justices Jose C. Reyes, Jr. (retired Member of this Court) and Ramon Paul L. Hernando, (now a member of this Court), concurring.

2.Id. at 421-424.

3. NLRC NCR Case Nos. 06-09807-11; 06-09887-11; 07-10345-11.

4.Rollo, pp. 230-244.

5.Id. at 243-244.

6.Id. at 284.

7.Id. at 110-115.

8.Id. at 114-115.

9. Docketed as NLRC LER Case No. 04-100-13; id. at 79-101.

10.Id. at 69-70.

11.Id. at 70.

12.Id. at 66-74; penned by Commissioner Pablo C. Espiritu, Jr. with Presiding Commissioner Alex A. Lopez and Commissioner Gregorio O. Bilog, III, concurring.

13. 706 Phil. 297 (2013).

14.Rollo p. 295.

15.Id. at 423-424.

16. In CA-G.R. SP Nos. 138856, 139393, and 139406, the CA held that petitioners were regular employees of respondent CCBPI, and that the former were indeed illegally dismissed.

17.Republic v. Spouses Legaspi, G.R. No. 221995, October 3, 2018.

18.Ibon v. Genghis Khan Security Services, 811 Phil. 250, 256 (2017).

19.Maricalum Mining Corp. v. Florentino, 836 Phil. 655, 685 (2018).

20.Francisco v. Mejia, 415 Phil. 153, 170 (2001).

21.Philippine National Bank v. Hydro Resources Contractors Corp., supra note 13, at 311.

22.J' Marketing Corp. v. Iguiz, G.R. No. 211522, September 4, 2019.

23.Freyssinet Filipinas Corp. v. Lapuz, G.R. No. 226722, March 18, 2019.

24.Maricalum Mining Corp. v. Florentino, supra note 19, at 657-658.

25. Art. 229 [formerly Art. 223], paragraph 3, Labor Code of the Philippines.

26.Rollo, pp. 441-442 and 445.

27.Roquero v. Philippine Airlines, Inc., 449 Phil. 437, 446 (2003).

28.Aris (Phil.), Inc. v. NLRC, 277 Phil. 282, 292 (1991).

29.Id. at 294.

30.Supra note 27.

31.Id. at 446.

32. 596 Phil. 510 (2009).

33. 564 Phil. 315 (2007).

34. See also Magana v. Medicard Philippines, Inc., 653 Phil. 286 (2010); Islriz Trading/Victor Hugo Lu v. Capada, 656 Phil. 9 (2011); Pfizer, Inc. v. Veloso, 660 Phil. 434 (2011).

35.Garcia v. Philippine Airlines, Inc., supra note 32, at 538-539.