Title
Pepsi-Cola Products Philippines, Inc. vs. Molon
Case
G.R. No. 175002
Decision Date
Feb 18, 2013
Pepsi implemented a retrenchment program amid financial struggles, leading to a union strike. The Supreme Court upheld the retrenchment's validity, dismissed claims of union busting, and ruled quitclaims did not bar further legal action, reinstating one employee without backwages.

Case Digest (G.R. No. 76148)
Expanded Legal Reasoning Model

Facts:

  • Parties and Institutional Background
    • Pepsi-Cola Products Philippines, Inc. (“Pepsi”)
      • A domestic corporation engaged in manufacturing, bottling, and distribution of soft drinks.
      • Operates several plants nationwide, including the Tanauan Plant in Sto. NiAo, Tanauan, Leyte.
    • Respondents
      • Members of the Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU).
      • Rank-and-file employees at the Tanauan Plant; a duly registered and legitimate labor organization with the DOLE Regional Office No. 8.
  • Retrenchment Program and Preceding Events
    • Adoption of Corporate Rightsizing Program in 1999
      • Designed as a company-wide retrenchment scheme.
      • Initiated to address alleged business recession and prevent further losses.
    • Notice and Implementation Procedures
      • Pepsi sent a notice of retrenchment to the DOLE and to affected employees individually.
      • On July 13, 1999, Pepsi notified the DOLE of the first batch of 47 employees to be retrenched, which included six union officers and 29 active LEPCEU-ALU members.
  • Labor Dispute and Strike
    • Allegations Raised by the Union
      • LEPCEU-ALU alleged that the retrenchment program was a covert effort to bust their union in favor of the incumbent company union, LEPCEU-UOEF#49.
      • The union claimed that the program was initiated solely to lessen its membership and thereby affect its bargaining rights.
    • Strike and Petition to NLRC
      • On July 19, 1999, LEPCEU-ALU filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) due to alleged acts of union busting and unfair labor practices.
      • Pepsi, on July 27, 1999, filed a petition before the NLRC to have the strike declared illegal and sought the loss of employment status for selected union leaders and members.
      • A return-to-work order was issued, and one respondent (Saunder Santiago Remandaban III) was later challenged individually for his absence due to a medical emergency.
  • Settlement and Subsequent Actions
    • Agreement and Execution of Quitclaims
      • On September 17, 1999, Pepsi and LEPCEU-ALU executed an Agreement to settle the dispute arising from the retrenchment program.
        • Terms included that the union would receive 100% of the separation pay computed based on the employees’ basic salary, with the remaining 50% released by management after deductions.
        • A provision stated that benefits were released “without prejudice” to the Union’s right to file a case with the NLRC.
        • The union undertook to sign a quitclaim, subject to this reservation.
      • In September 1999, respondents (except Remandaban) signed individual release and quitclaim forms acknowledging receipt of separation pay and releasing Pepsi from further claims.
    • Filing of Separate Complaints
      • Despite the executed quitclaims, respondents later filed separate complaints for illegal dismissal with the NLRC.
  • Proceedings Before the NLRC, CA, and Petition for Certiorari
    • NLRC Ruling (September 11, 2002)
      • The NLRC rendered decisions in various consolidated cases, including:
        • Clearing Pepsi of union busting charges regarding union organization, as no design to bust was shown.
        • Declaring the strike illegal due to procedural deficiencies (e.g., failure to comply with the strike vote notice requirement).
        • Ordering the reinstatement of Remandaban without backwages for his failure to comply with the return-to-work order, given his justified absence due to medical reasons.
        • Dismissing complaints for illegal dismissal as the issue had been settled through the executed quitclaims.
    • CA’s Ruling and Reversal of NLRC Decision
      • On March 31, 2006, the Court of Appeals (CA) reversed the NLRC decision.
      • The CA ruled that:
        • Pepsi had acted in bad faith by singling out union members in the retrenchment.
        • The personnel selection criteria were unfair, and the hiring of replacement workers (26 replacements and 65 new employees) contradicted Pepsi’s claim of preventing further losses.
        • The executed quitclaims did not bar further litigation when read in conjunction with the settlement agreement.
        • LEPCEU-ALU’s strike was upheld as valid, given their right to self-organization.
      • Pepsi’s subsequent motion for reconsideration in September 2006 was denied.
    • Petition for Certiorari
      • Pepsi elevated the case by filing a petition for review on certiorari, challenging the CA’s reversal of the NLRC findings and alleging grave abuse of discretion.

Issues:

  • Authority and Review of Factual Determinations
    • Whether the CA had the authority to reverse the factual findings of the NLRC.
    • The extent to which the appellate court may re-examine evidence and make independent factual determinations in a special civil action for certiorari.
  • Validity of the Retrenchment
    • Whether Pepsi’s retrenchment program was valid under the requisites of substantial financial loss, notice, and proper payment of separation pay.
    • Whether the retrenchment criteria applied were fair and reasonable, and not motivated by a scheme to undermine union membership.
  • Allegation of Unfair Labor Practice (ULP) and Union Busting
    • Whether Pepsi committed ULP by dismissing employees to weaken or effectively bust the LEPCEU-ALU.
    • Whether the evidence showed that union membership influenced the selection of employees for retrenchment.
  • Effect of the Execution of Quitclaims
    • Whether the signing of the September 1999 quitclaims by respondents constituted a full and final settlement of all issues, thereby precluding further litigation.
  • Dismissal and Reinstatement of Respondent Remandaban
    • Whether Remandaban was illegally dismissed given his failure to report for work due to a medical emergency.
    • The appropriateness of ordering his reinstatement without backwages considering both his circumstances and Pepsi’s good faith.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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