G.R. No. 160138 - Automative Engine Rebuilders, Inc. vs. Progresibong Unyon ng mga Manggagawa sa AER

The case involves a labor dispute between Automotive Engine Rebuilders, Inc. (AER) and its employees, represented by Progresibong Unyon Ng Mga Manggagawa Sa AER (Unyon).
Multiple parties are involved, including several individual employees and union members, with petitions consolidated under two G.R. numbers (G.R. Nos. 160138 and 160192).
The central controversy revolves around allegations of unfair labor practices, illegal dismissal, illegal suspension, and illegal strike activities.

On February 18, 1999, thirty-two (32) employees filed a complaint against AER accusing it of unfair labor practices, illegal dismissal, illegal suspension, and running a "run-away shop."

The complaint sought reinstatement; full backwages; payment of wages during suspension; and moral, exemplary damages, plus attorney’s fees.
Out of the 32 employees, six resigned and executed waivers and quitclaims.

A separate earlier complaint was filed by AER against eighteen (18) union members alleging illegal concerted activities, including illegal strike, abandonment of work, and other misconduct.

AER charged these 18 employees with offenses including unlawful strike and other forms of misconduct worth disciplinary sanctions such as dismissal.

On August 9, 2001, after submission of respective position papers, the Labor Arbiter (LA) ruled in favor of the Unyon by directing the reinstatement of the concerned employees—albeit without backwages effective October 16, 2001.
Both parties subsequently filed appeals with the National Labor Relations Commission (NLRC).

On March 5, 2002, the NLRC modified the LA decision by setting aside the order of reinstatement, ruling that there was no valid basis for illegal dismissal and that the employees had no grounds for striking.

The Unyon filed a motion for reconsideration on April 19, 2002, insisting on the reinstatement of employees, including those not charged with illegal strike by AER.
The case moved to the Court of Appeals (CA), which on June 27, 2003, granted the petition directing the immediate reinstatement of the petitioners without backwages, except those who were suspended for testing positive for illegal drugs and failing to submit required medical certificates.
On October 1, 2003, the CA further ruled on the motion for partial reconsideration by ordering the reinstatement of all suspended employees without backwages.
Dissatisfied with the CA decisions, both parties filed consolidated petitions before the Supreme Court, where the July 13, 2011 decision denied the petitions, reaffirming reinstatement without backwages but allowing for separation pay if reinstatement was not feasible.

The Unyon filed a Motion for Partial Reconsideration questioning the July 13, 2011 decision on the ground that fourteen (14) employees—who were excluded from AER’s charge of illegal strike—should have been awarded backwages along with reinstatement.
The Court’s review determined that although fourteen workers were not charged with illegal strike, only nine (9) of them met the procedural requirement by signing the union’s Membership Resolution authorizing representation by the union president.

The five (5) employees who failed to sign the Membership Resolution were thereby ineligible for the relief sought.

Consequently, the Court modified the July 13, 2011 decision to grant relief only to the nine qualifying employees, entitling them to reinstatement with backwages and interest at 6% per annum, which would increase to 12% per annum after finality of the judgment.

Whether the Court erred in its July 13, 2011 decision by not awarding backwages to certain employees, particularly those excluded from AER’s charge of illegal strike.

The issue focuses on the treatment of the fourteen (14) excluded employees and whether they should be granted both reinstatement and backwages.

Whether the procedural requirement of signing the Membership Resolution sufficiently determined the entitlement to the relief being sought.

This involves assessing if the failure of five (5) employees to sign disqualifies them from the Unyon’s claims for backwages and reinstatement.

Whether the application of the in pari delicto doctrine, which holds that both parties being at fault must bear the consequences of their actions, is appropriate in this context.

The examination of fault on both sides, considering that AER and the employees engaged in reciprocal unlawful acts.

Whether the remedy of reinstatement with backwages plus interest, as modified by the Court, is a proper and equitable solution for the employees affected by the illegal suspension and alleged unfair labor practice.