SONEDCO WORKERS FREE LABOR UNION

v.

UNIVERSAL ROBINA CORPORATION, SUGAR DIVISION-SOUTHERN NEGROS

DEVELOPMENT CORPORATION (SONEDCO)

G.R. No. 220383 July 5, 2017

( LEONEN, J.)

DOCTRINE:

Generally, a wage increase not included in the Collective Bargaining Agreement is not
demandable. However, if it was withheld by the employer as part of its unfair labor practice
against the union members, this benefit should be granted.

FACTS:

In 2007, while there was no Collective Bargaining Agreement in effect, URC-SONEDCO offered,
among other benefits, a ₱l6.00/day wage increase to their employees. To receive the benefits,
employees had to sign a waiver that said: "In the event that a subsequent CBA is negotiated
between the Management and Union, the new CBA shall only be effective on January 1, 2008."
Realizing that the waiver was an unfair labor practice(ULP), some members of SONEDCO
Workers Free Labor Union refused to sign.

URC-SONEDCO offered the same arrangement in 2008 extending an additional ₱l6.00/day

wage increase to employees who would agree that any CBA negotiated for that year would only
be effective on January 1, 2009. Several members of SONEDCO Workers Free Labor Union
again refused to waive their rights. Consequently, they did not receive the wage increase
amounting to a total of ₱32.00/day, beginning 2009.

In 2009, SONEDCO and its members who refused to sign the 2007 and 2008 waivers filed a
complaint for ULP against URC-SONEDCO on the ground of interference to the employees'
right to self-organization, collective bargaining, and concerted action.

Both the NLRC and the CA found URC-SONEDCO not guilty of ULP but nonetheless, ordered
URC-SONEDCO to give petitioners the same benefits their co-workers received in 2007 and
2008. However, SONEDCO Workers Free Labor Union's claim for the 2009 wage increase was
denied. Since a new CBA was already in effect by 2009, this CBA governed the relationship
between the management and the union.

As there was no provision in the existing CBA regarding wage increase of [ ₱]16.00 per day, the
NLRC was correct in ruling that it cannot further impose private respondents to pay petitioners
the subject wage increase for the year 2009 and onwards.

ISSUE:

Should the ₱32.00/day wage increase beginning January 1, 2009 to present be awarded to
petitioners

RULING:

YES.
The Court already granted the wage increases for 2007 and 2008 in its October 5, 2016
Decision. Thus, the only wage increase in issue here is the continuing wage increase of
₱32.00/day starting 2009.

Generally, the Collective Bargaining Agreement controls the relationship between the parties.
Any benefit not included in it is not demandable. However, in light of the peculiar circumstances
in this case, the requested wage increase should be granted.

The wage increase was integrated in the salary of those who signed the waivers. When the
affiants waived their rights, respondent rewarded them with a ₱32.00/day wage increase that
continues to this day. The respondent company granted this benefit to its employees to induce
them to waive their collective bargaining rights. This Court has declared this an unfair labor
practice. Accordingly, it is illegal to continue denying the petitioners the wage increase that was
granted to employees who signed the waivers. To rule otherwise will perpetuate the
discrimination against petitioners. All the consequences of the unfair labor practice must be
addressed.

The grant of the ₱32.00/day wage increase is not an additional benefit outside the Collective
Bargaining Agreement of 2009. By granting this increase to petitioners, this Court is eliminating
the discrimination against them, which was a result of respondent's unfair labor practice.
 DEVELOPMENT ACADEMY OF THE PHILIPPINES v. CHAIRPERSON MA.
GRACIA M. PULIDO TAN, et al.

G.R. No. 203072, October 18, 2016 EN BANC

(LEONEN, J.)

DOCTRINE:

Under Republic Act No. 6758, otherwise known as the Compensation and Position Classification
Act of 1989, "all allowances are deemed included in the standardized salary."However, certain
specified allowances are permitted to be given in addition to standardized salaries "due to the
unique nature of the office and of the work performed by the employee." Without a showing of
any such uniqueness, additional financial awards cannot be sanctioned and the Commission on
Audit would be right to have them disallowed. Still, even in the event of a disallowance, the
approving officers and recipients incur no liability to refund for as long as they acted in good
faith.

FACTS:

In 2007, the Commission on Audit (COA) issued Notice of Disallowance No. DAP-06-001-(04)
disallowing the amount of P4,862,845.71 representing Development Academy of the
Philippines' (petitioner) payment of Financial Performance Award to its employees "for want of
legal basis" and for several deficiencies.

In calendar year 2002, the petitioner obligated P3,613,998.72 for the grant of Financial
Performance Award to its officers and employees. In effect, the Financial Performance Award
was made available to the petitioner's employees en masse.

On post-audit, Corporate Auditor Ignacio I. Alfonso issued Audit Observation Memorandum

No. 05-00313 dated March 8, 2005 and noted the following:

(1) That an excess of P1,277,976.65 was paid, relative to the amount obligated in calendar year
2002 (i.e., P3,613,998.72), "which is eight (8%) percent of the annual basic salaries of
employees;" and that this excess amount was sourced from the 10% service charges paid by the
Development Academy of the Philippines' clients, which service charges must — in accordance
with the DAP Service Charge Scheme - be distributed only to employees in the DAP Conference
Center, Tagaytay, as well as to some employees based in Pasig City;

(2) That the payment made in 2004 included some employees not included in the payroll, which
was attached to the obligation made in calendar year 2002, and that there was no document
supporting these additional employees' entitlement to the award;

(3) That there was no computation sheet for the award to each employee, which should have
been "attached to the vouchers to facilitate validation of the correctness of the amount paid";

(4) That there was no legal basis for the payment and release of the MANCOM Fee and Star
Award, and that there were also no computation sheets attached to the vouchers prepared for
these;18

(5) That the award was made without the approval and/or confirmation of the Development
Academy of the Philippines' Board of Trustees and Executive Committee, considering that its
Charter "specifically provides that . . . the President of the Academy is tasked to submit for
consideration of the Board of Trustees and the Executive Committee the policies and measures
which he believes to be necessary to carry out the purpose of the Academy";

(6) That Letter of Invitation-based staff were not entitled to the Financial Performance Award;
and

(7) That in calendar year 2004, another obligation for the award was made in the amount of
P2,335,664.00

Acting on this Audit Observation Memorandum, the COA issued Notice of Disallowance No.
DAP-06-001-(04) disallowing the payment of P4,862,845.71, representing the petitioner's
payment of the Financial Performance Award to its employees "for want of legal basis" and for
deficiencies. It also identified several liable persons including all officers and employees who
received the Financial Performance Award.

The petitioner asserted that there was ample legal basis for the Financial Performance Award.
Specifically, it cited:

First, P.D. No. 807, Civil Service Decree of the Philippines (the Civil Service Decree), Section
3327 of which provides for the Employee Suggestions and Incentive Award System (ESIAS);

Second, Rule X, Section 528 of the Omnibus Rules Implementing Book V of the Administrative
Code of 1987; and

Third, Rule V, Sections 229 and 330 of the Implementing Rules and Regulations of Republic Act
No. 6713.31

In its assailed Decision No. 2012-119,43 the COA affirmed Notice of Disallowance No. DAP-06-
001-(04) noting that notwithstanding petitioner's specific responses to each of the eight (8)
deficiencies, it remained that there was no legal authority for the Financial Performance Award:
"the grant of [Financial Performance Award] from its inception was not valid, and therefore,
created no legal obligation and right."

ISSUE:

Is petitioner's payment of the Financial Performance Award to its employees legally authoriozed
in this case?

RULING:

NO.

Republic Act No. 6758 "was passed to standardize salary rates among government personnel
and do away with multiple allowances and other incentive packages and the resulting
differences in compensation among them."

Precisely for the purpose of standardization, "the general rule is that all allowances are deemed
included in the standardized salary." However, R.A. No. 6758's standardized salary rates and
guidelines in Section 9 "do not take into consideration the peculiar characteristics of each
government office where performance of the same work may entail different necessary expenses
for the employee." It is in recognition of these peculiarities that, through Section 12 of R.A. No.
6758, certain specified allowances are permitted to be given, on top of or in addition to
standardized salaries.
Existing additional compensation of any national government official or employee paid from
local funds of a local government unit shall be absorbed into the basic salary of said official or
employee and shall be paid by the National Government.

Thus, the key consideration for allowances and other incentive packages to be deemed
exceptional and permissible under Section 12 is a showing that they "are given to government
employees of certain offices due to the unique nature of the office and of the work performed by
the employee."

Petitioner has not shown that its Financial Performance Award, as obligated and paid for
calendar year 2002, is an exceptional incentive package sanctioned by Section 12 of R.A. No.
6758. Petitioner has neither alleged nor established that it (as an office) or the work done by
each of its employee-recipients is of such a "unique nature" that a deviation from Republic Act
No. 6758's standardization must be resorted to. On the contrary, it justifies the award by
claiming its employee's "collective effort for the furtherance of [its] mandate."
 THE PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION v. UNOCAL
PHILIPPINES, INC. (NOW KNOWN AS CHEVRON GEOTHERMAL PHILIPPINES
HOLDINGS, INC.)

G.R. No. 190187, September 28, 2016 SECOND DIVISION

(LEONEN, J.)

DOCTRINE:

The merger of a corporation with another does not operate to dismiss the employees of the
corporation absorbed by the surviving corporation. This is in keeping with the nature and effects
of a merger as provided under law and the constitutional policy protecting the rights of labor.
The employment of the absorbed employees subsists. Necessarily, these absorbed employees are
not entitled to separation pay on account of such merger in the absence of any other ground for
its award.

FACTS:

Philippine Geothermal, Inc. Employees Union is a legitimate labor union that stands as the
bargaining agent of the rank-and-file employees of Unocal Philippines.

Unocal Philippines, formerly known as Philippine Geothermal, Inc., is a foreign corporation

incorporated under the laws of the State of California, U.S.A., licensed to do business in the
Philippines for the "exploration and development of geothermal resources as alternative sources
of energy." It is a wholly owned subsidiary of Union Oil Company of California (Unocal
California), which, in turn, is a wholly owned subsidiary of Union Oil Corporation (Unocal
Corporation). Unocal Philippines operates two (2) geothermal steam fields in Tiwi, Albay and
Makiling, Banahaw, Laguna, owned by the National Power Corporation.

On April 4, 2005, Unocal Corporation executed an Agreement and Plan of Merger (Merger
Agreement) with Chevron Texaco Corporation (Chevron) and Blue Merger Sub, Inc. (Blue
Merger). Blue Merger is a wholly owned subsidiary of Chevron.10 Under the Merger Agreement,
Unocal Corporation merged with Blue Merger, and Blue Merger became the surviving
corporation. Chevron then became the parent corporation of the merged corporations: After the
merger, Blue Merger, as the surviving corporation, changed its name to Unocal Corporation.

On January 31, 2006, Unocal Philippines executed a Collective Bargaining Agreement (CBA)
with the Union.

However, on October 20, 2006, the Union wrote Unocal Philippines asking for the separation
benefits provided for under the CBA. According to the Union, the Merger Agreement of Unocal
Corporation, Blue Merger, and Chevron resulted in the closure and cessation of operations of
Unocal Philippines and the implied dismissal of its employees.

Unocal Philippines refused the Union's request and asserted that the employee-members were
not terminated and that the merger did not result in its closure or the cessation of its operations.

As Unocal Philippines and the Union were unable to agree, they decided to submit the matter to
the Department of Labor and Employment's Administrative Intervention for Dispute Avoidance
Program. However, they were unable to arrive at "a mutually acceptable agreement."
The Secretary of Labor found that the merger resulted in new contracts and a new employer for
the Union's members. The new contracts allegedly required the employees' consent; otherwise,
there was no employment contract to speak of. Thus, the Secretary of Labor awarded the Union
separation pay under the Collective Bargaining Agreement.

ISSUES:

1. Did the Merger Agreement executed by Unocal Corporation, Blue Merger, and Chevron
resulted in the implied dismissal of petitioner's members

2. Are the petitioner's members entitled to separation benefits

RULING:

1. NO.

A merger is a consolidation of two or more corporations, which results in one or more

corporations being absorbed into one surviving corporation. The separate existence of the
absorbed corporation ceases, and the surviving corporation "retains its identity and takes over
the rights, privileges, franchises, properties, claims, liabilities and obligations of the absorbed
corporation(s)."

Nonetheless, if respondent is indeed a party to the merger, the merger still does not result in the
dismissal of its employees.

In Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions

in BPI Unibank has ruled that the surviving corporation automatically assumes the employment
contracts of the absorbed corporation, such that the absorbed corporation's employees become
part of the manpower complement of the surviving corporation.

To reiterate, Section 80 of the Corporation Code provides that the surviving corporation shall
possess all the rights, privileges, properties, and receivables due of the absorbed corporation.
Moreover, all interests of, belonging to, or due to the absorbed corporation "shall be taken and
deemed to be transferred to and vested in such surviving or consolidated corporation without
further act or deed." The surviving corporation likewise acquires all the liabilities and
obligations of the absorbed corporation as if it had itself incurred these liabilities or obligations.

This acquisition of all assets, interests, and liabilities of the absorbed corporation necessarily
includes the rights and obligations of the absorbed corporation under its employment contracts.
Consequently, the surviving corporation becomes bound by the employment contracts entered
into by the absorbed corporation. These employment contracts are not terminated. They subsist
unless their termination is allowed by law.

The merger of two corporations does not authorize the surviving corporation to terminate the
employees of the absorbed corporation in the absence of just or authorized causes as provided in
Articles 282 and 283 of the Labor Code. . . . Once an employee becomes permanent, he is
protected by the security of tenure clause in the Constitution, and he can be terminated only for
just or authorized causes as provided by law.

The merger of Unocal Corporation with Blue Merger and Chevron does not result in an implied
termination of the employment of petitioner's members. Assuming respondent is a party to the
merger, its employment contracts are deemed to subsist and continue by "the combined
operation of the Corporation Code and the Labor Code under the backdrop of the labor and
social justice provisions of the Constitution."
2. NO

Separation benefits are not granted to petitioner by law in case of voluntary resignation, or by
any contract it entered into with respondent.

Redundancy, for purposes of our Labor Code, exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as overhiring of workers, decreased volume of
business, or dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise. The employer has no legal obligation to keep in its payroll more
employees than are necessary for the operation of its business.

Retrenchment, on the other hand, is the reduction of personnel to save on costs on salaries and
wages due to a considerable decline in the volume of business. Cessation and closure of business
contemplates the stopping of business operations of the employer whether on the employer's
prerogative or on account of severe business losses.

None of these instances are present here. The terms do not provide that a merger is one of the
instances where petitioner may claim separation benefits for its members. Neither can these
circumstances be interpreted as to contemplate a merger with another corporation. In any case,
if title parties intended that petitioner ought to be granted separation pay in case of a merger, it
should have been explicitly provided for in the contract. Absent this express intention, petitioner
cannot claim separation pay.

On the contention that petitioner must be awarded the separation pay in the interest of social
justice, this Court has held that this award is granted only under the following exceptional cases:
(1) the dismissal of the employee was not for serious misconduct; and (2) it did not reflect on the
moral character of the employee.

In this case, there is no dismissal of the employees on account of the merger. Petitioner does not
deny that respondent actually continued its normal course of operations after the merger, and
that its members, as employees, resumed their work with their tenure, salaries, wages, and other
benefits intact. Petitioner was even able to execute with respondent, after the merger, the
Collective Bargaining Agreement from which it anchors its claims. Given these circumstances,
petitioner is not entitled to separation pay. Although the policy of the state is to rule in favor of
labor in light of the social justice provisions under the Constitution, this Court cannot unduly
trample upon the rights of management, which are likewise entitled to respect in the interest of
fair play.
 NAPOLEON S. RONQUILLO, JR., ET AL., v. NATIONAL ELECTRIFICATION
ADMINISTRATION, EDITA S. BUENO, ET AL.

G.R. No. 172593, April 20, 2016 SECOND DIVISION

(LEONEN, J.)

DOCTRINE:

Under Republic Act No. 6758, the Cost of Living Allowance (COLA) has been integrated into the
standardized salary rates of government workers. Its back payment to the former employees of
the National Electrification Administration is, therefore, unauthorized.

FACTS:

To provide the country's total electrification on an area coverage basis, the National
Electrification Administration (NEA) was established as a government agency which later
became a public corporation under Presidential Decree No. 269.

Petitioners Ronquillo, Jr., et al. are former employees of NEA. Before July 1, 1989, NEA paid its
employees their COLA equivalent to 40% of their basic pay, in addition to their basic pay and
other allowances.

On July 1, 1989, Republic Act No. 6758, otherwise known as the Compensation and Position
Classification Act of 1989, became the new salary standardization law applicable to all
government officials and employees.

Section 12of R.A. No. 6758 provides that, as a general rule, all allowances are already included in
the new standardized salary rates. Thus, NEA discontinued paying the COLA of its employees
from July 1, 1989.

Pursuant to R.A. No. 6758, the Department of Budget and Management issued Corporate
Compensation Circular No. 10 which states that allowances given on top of basic salary shall be
"discontinued without qualification." Otherwise, payment of these allowances constitutes an
"illegal disbursement of public funds." But this was struck down because it lacked publication
and the employees were not given the opportunity to be heard.

After Corporate Compensation Circular No. 10 was ruled as ineffective and unenforceable,
several government agencies began giving back pays to their employees. The back pay consisted
of the allowances that had been discontinued.

The Department of Budget and Management re-issued and published Corporate Compensation
Circular No. 10, which became effective on March 16, 1999.23 NEA paid the COLA of its
employees for the period of July 1, 1989 until July 15, 1999.

On November 12, 2001, the Department of Budget and Management issued Budget Circular
2001-0325 stating that the COLA, among others, is already deemed integrated in the basic
salary. Payment of the COLA is, therefore, unauthorized.

In 2001, Congress passed Republic Act No. 9136, otherwise known as the Electric Power
Industry Reform Act of 2001 (EPIRA), which provides for a framework to restructure the power
industry.
Under Section 63 of the EPIRA, national government employees who would be displaced or
separated from services due to the restructuring of the power industry are entitled to separation
pay.

The reorganization of NEA affected the employment of Ronquillo, Jr., et al. more than half of
them chose early retirement, while the rest were dismissed from work. Ronquillo, Jr., et al. were
given separation pay, the total amount of which excludes the balance of their COLA. Edgardo T.
Guiriba affirmed the position that NEA employees were no longer entitled to the payment of the
COLA after Corporate Compensation Circular No. 10 was finally published.

The Regional Trial Court denied the Petition for lack of merit. In their Petition for Review on
Certiorari, Ronquillo, Jr., et al. claim that they "have acquired a vested right over" the payment
of the COLA, and that its non-payment is equivalent to diminution of pay.

ISSUE:

Are the petitioners Ronquillo, Jr., et al. entitled to the payment of the COLA after the effectivity
of Republic Act No. 6758 and Corporate Compensation Circular No. 10.

RULING:

NO

R.A. No. 6758 and its implementing rules, Corporate Compensation Circular No. 10, have
already included the COLA in the government worker's standardized salary rates.

Section 12 of Republic Act No. 6758 states the general rule on integration. That is to say, all
allowances are generally integrated into the government employee's standardized salary rates:

Section 12. Consolidation of Allowances and Compensation. - All allowances, except for
representation and transportation allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad; and such other additional
compensation not otherwise specified herein as may be determined by the DBM, shall be
deemed included in the standardized salary rates herein prescribed. Such other additional
compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989
not integrated into the standardized salary rates shall continue to be authorized. (Emphasis
supplied)

By exception, Section 12 provides for seven (7) types of allowances that do not form part of basic
pay, or non-integrated allowances. All other allowances, save for these items, are deemed
included in the government employee's standardized salary. These are as follows:

(1) representation and transportation allowances (RATA);

(2) clothing and laundry allowances;

(3) subsistence allowance of marine officers and crew on board government vessels;

(4) subsistence allowance of hospital personnel;

(5) hazard pay;

(6) allowances of foreign service personnel stationed abroad; and

(7) such other additional compensation not otherwise specified in Section 12 as may be
determined by the Department of Budget and Management.

In National Tobacco Administration v. Commission on Audit, this Court has held that these
enumerated exceptions "have one thing in common — they belong to one category of privilege
called allowances which are usually granted to officials and employees of the government to
defray or reimburse the expenses incurred in the performance of their official functions."

The six (6) non-integrated allowances have clearly omitted the COLA. This is because the COLA
is not an allowance that seeks to reimburse expenses incurred in the fulfillment of the
government worker's official functions. Rather, as this Court has ruled in Gutierrez, et al. v.
Department of Budget and Management, et al., the COLA is meant to cover for the government
employee's rising cost of living:

As defined, cost of living refers to "the level of prices relating to a range of everyday items" or
"the cost of purchasing those goods and services which are included in an accepted standard
level of consumption." Based on this premise, COLA is a benefit intended to cover increases in
the cost of living. Thus, it is and should be integrated into the standardized salary rates.

The second sentence of Section 12 plainly provides that its application is subject to two (2)
conditions: that the recipients must be incumbents when Republic Act No. 6758 took effect, and
that the additional compensation must not have been integrated into their standardized salary
rates. The second condition is not true of the COLA.

The COLA falls under "all allowances" referred to in the first sentence of Section 12: "All
allowances shall be deemed included in the standardized salary rates herein prescribed."
Nothing in the exceptions found in Section 12 mentions the COLA.
 REPUBLIC OF THE PHILIPPINES REPRESENTED BY PRIVATIZATION AND
MANAGEMENT OFFICE v. NATIONAL LABOR RELATIONS COMMISSION (THIRD
DIVISION) AND NACUSIP/BISUDECO CHAPTER/GEORGE EMATA, et al.

G.R. No. 174747, March 09, 2016 SECOND DIVISION

(LEONEN, J.)

DOCTRINE:

Under Proclamation No. 50, Series of 1986, no employer-employee relationship is created by the
acquisition of Asset Privatization Trust (now Privatization and Management Office) of
government assets for privatization. It is not obliged to pay for any money claims arising from
employer-employee relations except when it voluntarily holds itself liable to pay. These money
claims, however, must be filed within the three-year period under Article 2912 of the Labor
Code. Once liability is determined, a separate money claim must be brought before the
Commission on Audit, unless the funds to be used have already been previously appropriated
and disbursed.

FACTS:

Asset Privatization Trust was a government entity created under Proclamation No. 50 for the
purpose of conserving, provisionally managing, and disposing of assets that have been identified
for privatization or disposition. NACUSIP/BISUDECO Chapter is the exclusive bargaining agent
for the rank-and-file employees of Bicolandia Sugar Development Corporation(Bicolandia), a
corporation engaged in milling and producing sugar. Since the 1980s, Bicolandia Sugar
Development Corporation had been incurring heavy losses. It obtained loans from Philippine
Sugar Corporation and Philippine National Bank, secured by its assets and properties.

Under Proclamation No. 50, the Deed of Transfer and the Trust Agreement, Philippine National
Bank ceded its rights and interests over Bicolandia's loans to the government through Asset
Privatization Trust.

On November 18, 1988, Bicolandia, with the conformity of Asset Privatization Trust, entered
into a Supervision and Financing Agreement with Philippine Sugar Corporation for the latter to
operate and manage the mill until August 31, 1992.

Due to Bicolandia Sugar Development Corporation's continued failure to pay its loan
obligations, Asset Privatization Trust filed a Petition for Extrajudicial Foreclosure of
Bicolandia's mortgaged properties. There being no other qualified bidder, Asset Privatization
Trust was issued a certificate of sale upon payment of P1,725,063,044.00.

On December 15, 1990, NACUSIP/BISUDECO Chapter and Bicolandia entered into a Collective
Bargaining Agreement to be in effect until December 15, 1996. Asset Privatization Trust and
Philippine Sugar Corporation were also joined as parties.

Sometime in 1992, the Asset Privatization Trust decided to sell the assets and properties of
Bicolandia On September 1, 1992, it issued a Notice of Termination to Bicolandia's employees,
advising them that their services would be terminated within 30 days. NASUCIP/BISUDECO
Chapter received the Notice under protest.

After the employees' dismissal from service, Bicolandia's assets and properties were sold to Bicol
Agro-Industrial Producers Cooperative, Incorporated-Peñafrancia Sugar Mill.
As a result, several members of the NACUSIP/BISUDECO Chapter filed a Complaint charging
Asset Privatization Trust, Bicolandia, Philippine Sugar Corporation, and Bicol Agro-Industrial
Producers Cooperative, Incorporated-Peñafrancia Sugar Mill with unfair labor practice(ULP),
union busting, and claims for labor standard benefits.

ISSUE:

Was there an employer-employee relationship between petitioner Privatization and

Management Office (then Asset Privatization Trust) and private respondents
NACUSIP/BISUDECO Chapter employees

RULING:

NONE.

When Philippine National Bank ceded its rights and interests over Bicolandia's loan to
petitioner in 1987, it merely transferred its rights and interests over Bicolandia's outstanding
loan obligations. The transfer was not for the purpose of continuing Bicolandia's business. Thus,
petitioner never became the substitute employer of Bicolandia's employees. It would not have
been liable for any money claim arising from an employer-employee relationship.

Pursuant to its mandate under Proclamation No. 50, petitioner provisionally took possession of
assets and properties only for the purpose of privatization or disposition. Its interest over
Bicolandia was not the latter's continued business operations.

The issue of petitioner's role in the money claims of Bicolandia Sugar Development
Corporation's employees was already settled in Barayoga v. Asset Privatization Trust.

In Barayoga, this Court held that the Asset Privatization Trust could not be held liable for any
money claims arising from an employer-employee relationship. Asset Privatization Trust, being
a mere transferee of Bicolandia's assets for the purpose of conservation, never became the
union's employer. Hence, it could not be liable for their money claims.

The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were
not all automatically assumed by APT as purchaser of the foreclosed properties at the auction
sale. Any assumption of liability must be specifically and categorically agreed upon. In
Sundowner Development Corp. v. Drilon, the Court ruled that, unless expressly assumed, labor
contracts like collective bargaining agreements are not enforceable against the transferee of an
enterprise. Labor contracts are in personam and thus binding only between the parties.

No succession of employment rights and obligations can be said to have taken place between the
two. Between the employees of BISUDECO and APT, there is no privity of contract that would
make the latter a substitute employer that should be burdened with the obligations of the
corporation. To rule otherwise would result in unduly imposing upon APT an unwarranted
assumption of accounts not contemplated in Proclamation No. 50 or in the Deed of Transfer
between the national government and PNB.
 PHILIPPINE AIRLINES, INC. v. ISAGANI DAWAL, et al.

G.R. No. 173921, February 24, 2016 SECOND DIVISION

(LEONEN, J.)

DOCTRINE:

The employer has the burden of proving that the dismissal of its employees is with a valid and
authorized cause. The employer's failure to discharge this burden makes the dismissal illegal.

FACTS:

On September 1, 2000, PAL severed the employment of Isagani Dawal (Dawal), Lorna
Concepcion (Concepcion), and Bonifacio Sinobago (Sinobago). Dawal served as Chief
Storekeeper, Concepcion as Master Avionics Mechanic A, and Sinobago as Aircraft Master "A"
Mechanic. Until their dismissal from work, they were regular rank-and-file employees of PAL
and "bona fide members" of the Philippine Airlines Employees' Association (PALEA).

PAL implemented a massive retrenchment program on June 15, 1998 grounding such action on
the Asian Financial Crisis that devalued peso against dollar. It affected PAL's five-year re-
fleeting program as a means of expansion.

A year after, PAL President and Chief Operating Officer Avelino L. Zapanta allegedly wrote to
PALEA, informing the latter of the "new management's plan to sell" the Maintenance and
Engineering Department. The Rehabilitation Plan stated that PAL's "non-core activities have the
potential to be sold off." These included the Catering and the Maintenance and Engineering
Departments.

Under the spin-off program, several PAL employees doing purely maintenance and
engineering-related tasks, whose work would be absorbed by Lufthansa were to be retrenched
from work.

After signing a Release, Waiver, and Quitclaim, Dawal, Concepcion, Sinobago, and other
affected employees were given generous separation packages less their outstanding obligations
or accountabilities. PAL also offered work for the employees who were not absorbed by
Lufthansa.

On July 20, 2000, PAL issued a Notice of Separation to all the affected employees, containing
either of the following letters: (1) offer of new employment from Lufthansa, should it choose to
hire the affected employees; or (2) PAL's offer of employment for a lower rank or job grade and
for a lesser salary, should Lufthansa not choose to hire the affected employees.

On September 1, 2000, in light of the spin-off of PAL's Maintenance and Engineering

Department and the scheduled start of operations of Lufthansa, all affected employees were
relieved from their positions.

When PAL spun off the engineering and maintenance facilities, it also created a new engineering
department, called the Technical Services Department, allegedly "in compliance with aviation
regulations requiring airline companies to maintain an engineering department."

PALEA and Dawal, et al. filed before the Labor Arbiter a Complaint for unfair labor practices
and illegal dismissal.
ISSUE:

Was the termination of Isagani Dawal, Lorna Concepcion, and Bonifacio Sinobago on the
ground of redundancy and retrenchment valid?

RULING:

As to Concepciona and Sinobago, it was valid but as to Dawal, it was invalid for failure to comply
with the notice requirement.

The employer has the burden to prove the factual and legal basis for the termination of its
employees. Failure to do so inevitably results in a finding that the dismissal is unjustified.

Under Article 298, for there to be a valid termination of work based on an authorized cause,
several procedural and substantive requirements must be complied with.

For either redundancy or retrenchment, the law requires that the employer give separation pay
to the affected employees. The employer must also serve a written notice on both the employees
and the Department of Labor and Employment at least one (1) month before the intended date
of redundancy or retrenchment.

In this case, that PAL provided for separation pay "over and above the amount provided under
the Labor Code" is uncontested by the parties. The only issues raised on procedure are PAL's
alleged failure to follow the 30-day prior notice and the supposed lack of hearing prior to
dismissal.

PAL has shown proof of service on Concepcion and Sinobago within the required period.
Meanwhile, the Department of Labor and Employment received the Notice of Termination and
PAL's list of affected employees on July 24, 2000. The termination of their services was effective
on September 1, 2000, thereby fulfilling the 30-day prior notice.

The same is not true for Dawal since the records show that Dawal received the Notice of
Separation 29 days short of what the law requires.

As a rule, hearing is an unnecessary condition in determining the legality of dismissal due to

redundancy or retrenchment. PAL's dismissal of Dawal, et al.'s services did not arise from their
fault or negligence otherwise, this would have compelled them to be heard to disprove the
allegations.

There is no right to be heard in dismissal for an authorized cause. In terminating the employees'
services due to the installment of labor-saving devices, redundancy, retrenchment to prevent
losses, or closure of business, the employer has no obligation to provide the employees the
opportunity to disprove the business and financial reasons for termination.

Where there is no allegation of employee misconduct or negligence that amounts to a just cause
for dismissal under Article 282of the Labor Code, the employee concerned has no right to be
heard prior to their dismissal.