Title
National Federation of Labor Union vs. Ople
Case
G.R. No. L-68661
Decision Date
Jul 22, 1986
A union accused Lawman Industrial of unfair labor practices, including a "run-away shop" to evade obligations. The Supreme Court ruled the company guilty, ordered reinstatement with backwages, and pierced the corporate veil to hold Libra/Dolphin Garments accountable.

Case Digest (G.R. No. L-68661)
Expanded Legal Reasoning Model

Facts:

  • Background of the Dispute
    • Petitioners: National Federation of Labor Union (NAFLU) and Teresita Lorenzo, et al.
    • Respondents: Hon. Minister Blas Ople (as Minister of Labor and Employment) and the private respondents, namely Lawman Industrial, Libra Garments, and Dolphin Garments Enterprises.
    • Nature of the controversy: Allegation that Lawman Industrial committed unfair labor practices which led to an irregular shutdown and subsequent denial of reinstatement and full backwages to the affected employees.
  • Chronology of Events
    • September 8, 1982: NAFLU filed a request for conciliation before the Bureau of Labor Relations regarding issues such as money claims, refusal to conclude a collective bargaining agreement, and management’s attempt at a run-away shop to bust the union.
    • Subsequent Conferences:
      • Multiple conferences were conducted by the Bureau of Labor Relations attempting to settle the dispute amicably.
      • Despite these efforts, management unilaterally declared a temporary shutdown on September 15, 1982.
    • Subsequent Developments:
      • September 23, 1982: The management of Lawman Industrial promised the union that operations would normalize effective January 1983.
      • October 11, 1982: With conciliation efforts exhausted, the union filed its notice of strike.
      • November 9, 1982: The firm offered a settlement of P200,000, which was rejected by the union as it was deemed a tactic to weaken the union and separate its members.
    • Further Proceedings:
      • Efforts to reconcile the dispute continued until January 6, 1983, with management citing poor business conditions as reasons for not resuming operations.
      • December 1982: The union filed a complaint for unfair labor practice (NAFLU v. Lawman) with the NLRC’s Metro Manila Branch.
      • March 17, 1983: The Ministry of Labor and Employment, responding to the extended shutdown, issued an order assuming jurisdiction over the dispute. This order directed the resumption of work by affected employees, mandated acceptance under the same previous terms and conditions, and provided protections regarding pending money claims and the prohibition of asset encumbrances.
    • Company’s Position and Subsequent Developments:
      • May 20, 1983: Lawman Industrial filed a motion for reconsideration, alleging financial losses as evidenced by its financial statements and asserting that its plants and buildings had been repossessed by Pioneer Texturizing Corporation due to nonpayment of rentals.
      • The company offered each affected employee a minimal separation pay of P328.95.
      • Further factual complexities emerged involving the relocation and rebranding of operations:
        • Machines were dismantled and transferred to another location, and the company resumed operations under the name Libra Garments.
        • Later, the name was changed to Dolphin Garments when the workers discovered the arrangement.
    • Order of the Ministry of Labor and Employment:
      • March 17, 1983 Order:
        • Assumed jurisdiction over the dispute pursuant to Article 264(g) of the Labor Code.
        • Directed the resumption of work by all affected employees under the same conditions prior to the shutdown.
        • Permitted payment of severance compensation, including unpaid wages, if operations could not resume.
        • Consolidated all pending cases, including NAFLU v. Lawman.
        • Prohibited any asset transfers or encumbrances without prior clearance.
        • Automatically enjoined strikes or lockouts.
      • July 31, 1984 Modified Order:
        • Directed private respondent to pay all accrued wages, benefits (including a one-month pay for failure to provide notice under Batas Pambansa Blg. 130), and separation pay for all dismissed employees (computed as one month’s pay or one-half month’s pay for every year of service, whichever is higher, computed up to January 1983).
        • Despite a finding of unfair labor practice by Lawman Industrial, the order did not reinstate employees because the company claimed to have ceased operations completely.
  • Allegations and Evidence Presented
    • Unfair Labor Practices:
      • Evidence indicated that Lawman Industrial engaged in bad faith bargaining by declaring a temporary shutdown (which was, in reality, an illegal lockout) and maintaining a run-away shop by transferring machines and later changing its corporate identity.
      • Failure to comply with due process and applicable notice requirements to both employees and the Labor Ministry.
    • Corporate Restructuring as an Evasion Tactic:
      • The changing of names from Lawman Industrial to Libra Garments and subsequently to Dolphin Garments was argued to be a deliberate act to shield the company from its obligations by using a corporate fiction.
      • The petitioners contested the company’s claim of financial losses, alleging that evidence (such as unexplained increases in direct labor and administrative expenses) suggested a different reality from the purported financial difficulties.
    • Outcome of Administrative Findings:
      • The Minister of Labor and Employment found the company guilty of unfair labor practice and delineated significant evidentiary support for the allegations.
      • The administrative findings stressed that the corporate veil should be pierced, given the deliberate and malicious design to avoid financial obligations to employees.

Issues:

  • Central Questions Raised
    • Whether the petitioners (employees represented by NAFLU) should be reinstated to their former positions despite the respondent company’s claim of having ceased operations.
    • Whether the ordering of reinstatement with full backwages (for a period not exceeding three years) is proper given the proven unfair labor practices conducted by Lawman Industrial.
  • Specific Points of Contention
    • The legality of the company’s actions in declaring a shutdown, engaging in run-away shop practices, and attempting to mask its liabilities through corporate restructuring (Libra Garments to Dolphin Garments).
    • The sufficiency of the administrative findings by the Ministry of Labor and Employment, particularly regarding the evidence of bad faith, fraud, and deceit.
    • The appropriate remedy for the unfair labor practices, especially whether the remedy of reinstatement with full backwages should apply even if the original corporate entity has effectively “closed” its operations.
  • Arguments Presented
    • Petitioners argued for mandatory reinstatement with full backwages and uninterrupted seniority rights based on established legal doctrines and precedents.
    • The private respondent contended that its financial losses justified the cessation of operations, thereby negating the need for reinstatement, and attempted to use corporate restructuring as a shield against its obligations.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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