G.R. No. 241437 - Albay Electric Cooperative, Inc. vs. ALECO Labor Employees Organization

Case Summary (G.R. No. 241437)

Factual Background

ALECO is an electric cooperative holding a franchise for retail distribution of electricity in Albay province, and ALEO is the collective bargaining agent of ALECO’s employees. In March 2012 ALECO reported severe financial distress with substantial unpaid obligations amounting to hundreds of millions of pesos and long-term liabilities of approximately Php3.1 billion, prompting consideration of rehabilitation measures. Management favored Private Sector Participation (PSP) which required employees to tender courtesy resignations with separation pay under the existing collective bargaining agreement and priority in rehiring; the union advocated a Cooperative-to-Cooperative scheme. Tensions culminated in preventive mediation sought April 15, 2013, a strike notice filed April 25, 2013, strike votes in May 2013, a referendum on September 14, 2013 selecting PSP, and a strike that resumed on September 23, 2013. Notices of retrenchment were served by ALECO on October 23, 2013. By letter dated January 7, 2014 ALECO requested the Secretary of Labor to assume jurisdiction; the Secretary assumed jurisdiction and issued a Return-to-Work Order and Assumption Order on January 10, 2014.

Ruling of the Secretary of Labor

The Secretary of Labor issued a Resolution dated April 29, 2016 that upheld the validity of the retrenchment but ordered ALECO to pay accrued backwages and other benefits reckoned from January 10, 2014 until the finality of that Resolution and to pay separation benefits computed pursuant to the CBA. Both parties moved for reconsideration and the Secretary denied those motions in a Resolution dated December 2, 2016. Subsequent execution proceedings produced an execution Resolution dated January 17, 2018 which modified the period for payment of backwages to run from January 10, 2014 until December 19, 2016 and approved the sheriff’s computation for seventy-eight employees.

Proceedings in the Court of Appeals

ALECO filed a petition for certiorari under Rule 65, Rules of Court before the Court of Appeals challenging the Secretary’s April 29, 2016 Resolution and its denial of reconsideration. The Court of Appeals, in a Decision dated August 10, 2018, affirmed the Secretary’s April 29, 2016 and December 2, 2016 Resolutions but fixed the period for computation of backwages from January 10, 2014 up to the issuance of the Secretary’s Resolution dated April 29, 2016, and ordered interest at six percent per annum on all monetary awards as modified, computed from finality of the CA Decision until fully paid.

Issues Presented to the Supreme Court

The Supreme Court distilled the contested legal and procedural points as follows: whether ALECO could properly assail the January 17, 2018 execution Resolution by way of the present petition and, if so, whether the monetary computations employed the correct base amounts, whether three groups of employees were correctly included in the backwages award, and whether deductions from separation pay were correctly disallowed; whether ALEO could still challenge the validity of the retrenchment and seek damages and attorney’s fees in the present proceedings; whether the Court of Appeals erred in sustaining the award of backwages; and whether the CA erred in limiting the period of liability for backwages.

Parties’ Contentions

ALECO contended that backwages were improper in light of Manggagawa ng Komunikasyon sa Pilipinas v. PLDT and that any computation should be limited to the period when striking employees actually reported for work, asserting compliance with the Assumption Order as early as January 14, 2014. ALECO further argued that the base amounts for computation should correspond to pre-strike and pre-retrenchment compensation, challenged inclusion of three groups of employees in the award, and alleged usurpation of legislative authority by the Secretary when disallowing deductions from separation pay. ALEO defended the awards as consistent with Art. 278 [263] and maintained that backwages should accrue until December 19, 2016, citing Bani Rural Bank, Inc. v. De Guzman, and challenged ALECO’s procedural attempts to relitigate matters already final before the Secretary.

Legal Analysis and Reasoning

The Court held first that the January 17, 2018 execution Resolution was not properly attacked in this petition for review by certiorari because decisions of the Secretary under the Labor Code generally must be assailed by certiorari under Rule 65 before the Court of Appeals. The Court observed, however, that because the execution Resolution flows from the April 29, 2016 Resolution that is the subject of the present appeal, the fate of the execution Resolution depends on the outcome here; otherwise the execution Resolution would be moot. The Court likewise affirmed that ALEO could not revisit the final determinations on the validity of retrenchment and the denial of damages and attorney’s fees since those facets of the April 29, 2016 Resolution had become final and thus beyond modification under the doctrine of finality of judgment. On the merits, the Court rejected ALECO’s reliance on Manggagawa ng Komunikasyon sa Pilipinas v. PLDT as dispositive because that case addressed reinstatement following illegal dismissal and did not foreclose awards of backwages in contexts outside purely illegal dismissal rulings. The Court analyzed the effect of an Assumption Order under Art. 278 [263], noting the twofold effect of enjoining a strike or lockout and directing maintenance of the status quo, and explained that where a strike has already occurred the Assumption Order directs striking workers to return to work and the employer to readmit workers under the same terms and conditions prevailing before the strike. The Court applied the Court’s precedent in San Fernando Coca-Cola Rank-and-File Union (SACORU) v. Coca-Cola Bottlers Philippines,

Case Syllabus (G.R. No. 241437)

Parties and Procedural Posture

ALBAY ELECTRIC COOPERATIVE, INC. (ALECO) filed a Petition for Review on Certiorari assailing the Court of Appeals Decision dated August 10, 2018 and the Secretary of Labor Resolution dated January 17, 2018 in the enforcement of a labor award.
ALECO LABOR EMPLOYEES ORGANIZATION (ALEO) is the collective bargaining agent that declared and pursued a strike and invoked preventive mediation and subsequent proceedings before the Department of Labor and Employment.
The Secretary of Labor and Employment assumed jurisdiction on January 10, 2014 and issued a Return-to-Work Order on the same date pursuant to Article 278 [263] of the Labor Code.
The Secretary issued a Resolution dated April 29, 2016 finding retrenchment valid but ordering backwages and separation pay, and denied motions for reconsideration in a December 2, 2016 Resolution.
The Secretary issued a January 17, 2018 Resolution directing execution of the April 29, 2016 award with modification to limit backwages until December 19, 2016.
The Court of Appeals affirmed the Secretary's April 29, 2016 Resolution with modification on August 10, 2018 in CA-G.R. SP No. 149409 and fixed the backwages period until April 29, 2016.
ALBAY ELECTRIC COOPERATIVE, INC. (ALECO) filed the present petition before the Supreme Court under G.R. No. 241437 challenging the CA decision and aspects of the Secretary's execution resolution.

Key Facts

ALECO declared financial distress with payables exceeding Php 134 million to PEMC and aggregate obligations of Php 87 million to other creditors, and long-term obligations of Php 3.1 billion, which prompted rehabilitation efforts.
ALECO favored Private Sector Participation (PSP) for rehabilitation while ALEO insisted on a Cooperative-to-Cooperative (C2C) approach, creating an impasse that led to a strike.
ALEO conducted strike votes and proceeded with a strike on September 23, 2013 despite a September 14, 2013 referendum choosing PSP and the awarding of the concession to San Miguel Power Holdings Corporation.
ALECO served Notices of Retrenchment on employees by Office Memorandum No. 216 dated October 23, 2013.
ALECO and ALEO requested the Secretary of Labor to assume jurisdiction, and the Secretary issued a Return-to-Work Order on January 10, 2014 directing immediate return and readmission of striking employees who had not accepted separation benefits.
ALECO admitted employees to its premises on January 14, 2014 but gave no actual work and employees refused tendered salaries, which remained unpaid.

Rulings Below

The Secretary of Labor in the April 29, 2016 Resolution held the retrenchment valid but ordered ALECO to pay accrued backwages and separation benefits computed from January 10, 2014 until the finality of the Resolution.
The Secretary denied motions for reconsideration in a December 2, 2016 Resolution, rendered final certain aspects of the award including the validity of retrenchment and denial of damages and attorney's fees.
The Secretary issued the January 17, 2018 Resolution approving execution of the April 29, 2016 award with modification limiting backwages and other benefits to the period January 10, 2014 until December 19, 2016.