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AUTOMOTIVE ENGINE REBUILDERS, INC (AER) v.

PROGRESIBONG UNYON NG
MGA MANGGAGAWA SA AER
GR No. 160138, July 13, 2011

the company and signed quitclaims


Unyon's Version of facts

In 1998, the Unyon filed a petition for certification election before the Department
of Labor and Employment (DOLE) after organizing their employees union within
Uncontested Facts (background)
AER.

Automtive Engine Rebuilders, In (AER) is a company engaged in automotive

Suddenly, AER forced all of its employees to submit their urine samples for drug
engine repair and rebuilding business and otehr precision and engineering works
testing.

Progresibong Unyon Ng Mga Manggagagawa sa AER (Unyon) is the legitimate


Those who refused were threatened with dismissal.
labor union of the r and f employees of AER, formed in 1998

In 1999, the results of the drug test came out and the following employees were

AER accused the Unyon of illegal concerted activities (illegral strike, walkout,
found positive for illegal drugs: Froilan Madamba, Arnold Rodriguez, Roberto
etc.)
Caldeo, Roger Bilatcha, Ruperto Mariano, Edwin Fabian, and Nazario Madala

Unyon accused AER of ULP, illegal suspension, and illegal dismissal


("Madamba et al")

Thus, both filed complaint against each other before the NLRC

AER issued a memorandum suspending Madamba et al from work for violation of


Article D, Item 2 of the Employees handbook
Two versions of Facts:

Of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala
were allowed by AER to report back to work.
AER's Management's Version of facts

The other five (5) suspended employees were not admitted by AER without first

In 1999, eighteen (18) employees of AER, acting collectively and in concert,


submitting the required medical certificate attesting to their fitness to work.
suddenly and without reason staged a walkout and assembled illegally in the
While these other 5 employees were in the process of securing their
company premises.
respective medical certificates, however, they received a letter from AER

Despite managements plea for them to go back to work, the concerned


charging them with insubordination and absence without leave and directing
employees refused and, instead, walked out of the company premises
them to explain their acts in writing.

the concerned employees then proceeded to the office of the AER Performance
Despite their written explanation, AER refused to reinstate them.
and Service Center (AER-PSC) located on another street.

Meanwhile, AER has been moving out machines from the main building to the
Upon arrival, they collectively tried to cart away one (1) line boring machine
AERPSC compound
owned by AER out of the AER-PSC premises.
Unyon found out about this.
They also threatened and forced the company guards and some company
The Unyon, sensing that management was going to engage in a runaway
officers and personnel to open the gate of the AER-PSC compound.
shop, tried to prevent the transfer of the machines
They also urged the AER-PSC employees to likewise stop working.
this prompted AER to issue a memorandum accusing those involved of

The concerned employees occupied the AER-PSC premises for several hours,
gross insubordination, work stoppage and other offenses.
thus, disrupting the work of the other employees and AERs services to its clients.

Thereafter, the affected workers were denied entry into the AER premises by

The employees refused to stop their unlawful acts despite the intervention of the
order of management.
barangay officers.
Because of this, the affected workers staged a picket in front of company
They left the AER-PSC premises only when the police intervened and
premises hoping that management would accept them back to work.
negotiated with them.
When their picket proved futile, they filed a complaint for unfair labor practice,

Subsequently, the management issued a memorandum requiring the employees


illegal suspension and illegal dismissal.
who joined the illegal walkout to explain in writing why they should not be
disciplined administratively and dismissed for their unjustified and illegal acts.
LA Ruling

In response to the memorandum, the concerned employees submitted their

LA ruled in favor of the Unyon


written explanation which contained their admissions regarding their unjustified
directing AER to reinstate the concerned employees but without backwages
acts.
effective October 16, 2001.

Finding their explanation unsatisfactory, AER terminated the services of the


that the concerned employees were suspended from work without a valid
concerned employees.
cause and without due process.

Thereafter, the concerned employees started a wildcat strike, they


that there is no doubt that the hostile attitude of the management to its
barricaded company premises
workers and vice versa started when the workers began organizing
prevented the free ingress and egress of the other employees, officers,
themselves into a union.
clients, and visitors and the transportation of company equipments
because as soon as the management learned and received summons
tried to use force and inflict violence against the other employees.
regarding the petition for certification election filed by the employees,

Their wildcat strike stopped after the NLRC issued and served a temporary
they retaliated by causing the employees to submit themselves to drug
test.
restraining order (TRO).
that this is illegal suspension plain and simple.

In the meantime, six of the concerned employees, Macaranas et al, resigned from

Even if they were found positive for drugs, they should have been caused to
explain why they were found so.
there is not even a showing by the company that the performance of these
employees was already adversely affected by their use of drugs.
The LA further held that AER was guilty of illegal dismissal for refusing to
reinstate the five (5) employees unless they submit a medical certificate that they
were fit to work.
Firstly, AER has not even established that the five employees are sick of
ailments which are not curable within six months, a burden which rests upon
the employers
even granting that they were sick or drug addicts, the remedy is not dismissal
but to allow them to be on sick leave and be treated of their illness
if not cured within 6 months, that is the time that they may be separated
from employment but after payment of months salary for every year
of service by way of separation pay.
Nevertheless, the LA held that the concerned employees were not totally
without fault.
The concerted slowdown of work that they conducted in protesting their
illegal suspension was generally illegal and unjustifiable.
The LA, thus, ruled that both parties were in pari delicto and, therefore, must
suffer the consequences of the wrong they committed.

such test was not related to any union activity.


The union members were not singled out for said drug testing.
The complainants who tested positive for illegal drugs were validly suspended
under the company rules.
The Employees Handbook of Company Rules and Regulations prohibit
employees from reporting for work under the influence of intoxicating liquor
and drugs.
With the finding that the petitioners tested positive for illegal drugs, AER merely
exercised their management prerogative to require a medical certificate that said
employees were already fit to work before they can be admitted back to work.
Due to the failure of the affected petitioners to submit a medical certificate that
they are already fit to work, they were dismissed.
The employees act of not reporting for duty upon presentation of the medical
certificate that they are fit to work had the marks of willful disobedience giving
AER the right to terminate employment.
both parties were guilty of unfair labor practice.
the hostile attitude of AER towards its workers and vice-versa started when
the workers began organizing themselves into a union.
AER tried to have a runaway shop when it transferred some of its machinery
from the main building to the AER-PSC office located on another street on
the pretext that the main building was undergoing renovation.
AER also prevented its employees, even those who were excluded from its
complaint, from going back to work for allegedly staging an illegal strike.
On the other hand, the concerted work slowdown staged by the concerned
employees as a result of their alleged illegal suspension was unjustified.
Hence, both parties were found by the CA to be in pari delicto and must
bear the consequences of their own wrongdoing.
Thus, the affected employees are directed to be reinstated but without
backwages

NLRC Ruling on appeal by both parties:

modified the LA decision by setting aside the order of reinstatement as it


found no illegal dismissal

However, three (3) (Madamba, Mariano, and Caldeo) of the 18 employees were
validly suspended because they were found positive for illegal drugs in the drug
test conducted by AER.

in fact, the NLRC considered only these three employees because their
names were the only one commonly identified in the LA decision and in the
employees' position paper as those allegedly illegally suspended
AER's Arguments before the SC:
Management was just exercising its management prerogative in requiring

the reinstatement of those employees who tested positive for drugs and refused
them to submit a medical fit-to-work certificate before they could be admitted
to submit their respective medical certificate certifying that they were fit to work,
back to work.
violated AERs rules and regulations, and the law in general because it would
The drug test was found to be not discriminatory because all employees of
allow the sheltering of drug addicts in company premises.
AER were required to undergo the drug test. Neither was the drug test

the drug test that it conducted was not related to any union activity
related to any union activity.
because the test covered all employees.

the concerned employees had no valid basis in conducting a strike.


The drug test was part of company rules and guidelines designed to instill

Considering that the concerted activity was illegal, AER had the right to
discipline and good behavior among its employees as contained in its
immediately dismiss them.
Employees Manual Company Rules and Regulations.
it simply exercised its employers prerogative in requiring a medical
CA Ruling
certificate from the affected employees.

directed AER to reinstate the affected employees effective immediately but

the complaining employees, who did not report back to work despite their medical
without backwages, except those who were tested positive for illegal drugs and
certificate attesting that they were fit to work, committed willful disobedience.
have failed to submit their respective medical certificates.
complaining employees violated their agreement with the DOLE-National

The CA explained that there still remained 26 complaining employees and not just
Conciliation and Mediation Board (NCMB)
three (3) as claimed by the NLRC
the complaining employees are deemed to have lost their employment status

agreed with the NLRC on the legality and validity of the suspension.
when they engaged in unlawful activities such as abandonment of work,
Because the affected employees themselves have admitted that all of them
stoppage of work and the commission of attempted theft involving its boring
were ordered to give their urine samples for the drug test;
machine.
that the drug test was applicable to all the employees lends credence that
Hence, the termination of their employment was valid.

Issue: WON the complaining employees should be reinstated


Unyon's Arguments before the SC:

the dismissal of the affected employees was unlawful


lack of valid ground
lack of prior notice.

While some of the complainant employees tested positive for drugs, AER should
have, at least, required those affected employees to explain why they tested
positive for drugs
because it could be possible that the drug taken was a regulated drug for an
ailment and prescribed by a doctor.
Therefore, prior notice or due process was still necessary.

the penalty for testing positive for illegal drugs was only a 15-day suspension,
which was already served by the affected employees.

AER never imposed the policy of drug examination on its employees before the
union was organized.
Clearly, AER adopted a hostile attitude towards the workers when they
organized themselves into a union.

Of the 32 complaining employees in the illegal dismissal case against AER, only
18 were charged by AER with illegal strike.
AER should have admitted back to work those employees who were not
included in the charge.
There was no allegation either that those excluded were involved in the
January 28, 1999 incident.

the penalty of outright dismissal against the eighteen (18) employees charged
with illegal strike was grossly disproportionate to their offense.

there was enough proof that AER acted in bad faith and it was guilty of illegal
lock-out for preventing the affected employees from going back to work.
Hence, the complaining employees are entitled to backwages.

Held: The complaining employees should be reinstated without backwages. If


reinstatement is no longer feasible, the concerned employees should be given separation
pay up to the date set for their return in lieu of reinstatement.
Supreme Court Ruling:

Affirmed ruling of the CA favoring the reinstatement of all the complaining


employees including those who tested positive for illegal drugs, without
backwages.
neither party came to court with clean hands.
Both were in pari delicto.

AER claims that Unyon was guilty of staging an illegal strike while
Unyon claims that AER committed an illegal lockout.

AERs fault is obvious from the fact that a day after the union filed a petition for
certification election before the DOLE, it hit back by requiring all its employees to
undergo a compulsory drug test.
Although AER argues that the drug test was applied to all its employees, it
was silent as to whether the drug test was a regular company policy and
practice in their 35 years in the automotive engine repair and rebuilding
business.
it was, in fact, AERs first ever drug test of its employees immediately
implemented after the workers manifested their desire to organize
themselves into a union.
Indeed, the timing of the drug test was suspicious.

AER failed to show proof that the drug test conducted on its employees was
performed by an authorized drug testing center.
It did not mention how the tests were conducted and whether the proper
procedure was employed.
Section 36 of R.A. No. 9165 provides that drug tests shall be performed
only by authorized drug testing centers.
Moreover, Section 36 also prescribes that drug testing shall consist of
both the screening test and the confirmatory test. Section 36 of R.A.
No. 9165 reads:
SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any
government forensic laboratories or by any of the drug testing laboratories accredited and
monitored by the DOH to safeguard the quality of test results. The DOH shall take steps
in setting the price of the drug test with DOH accredited drug testing centers to further
reduce the cost of such drug test. The drug testing shall employ, among others, two (2)
testing methods, the screening test which will determine the positive result as well as the
type of drug used and the confirmatory test which will confirm a positive screening test. x x
x

Department Order No. 53-03 further provides:


Drug Testing Program for Officers and Employees
Drug testing shall conform with the procedures as prescribed by the Department of Health
(DOH) (www.doh.gov.ph). Only drug testing centers accredited by the DOH shall be
utilized. A list of accredited centers may be accessed through the OSHC website
(www.oshc.dole.gov.ph).

Drug testing shall consist of both the screening test and the confirmatory test; the latter to
be carried out should the screening test turn positive. The employee concerned must be
informed of the test results whether positive or negative.

Social Justice Society v. Dangerous Drugs Board:


As to the mechanics of the test, the law specifies that the procedure shall
employ two testing methods, i.e., the
screening test and the confirmatory test, doubtless to ensure as much
as possible the trustworthiness of the results.
But the more important consideration lies in the fact that the tests shall
be conducted by trained professionals in access-controlled laboratories
monitored by the Department of Health (DOH) to safeguard against
results tampering and to ensure an accurate chain of custody.
Furthermore, AER engaged in a runaway shop
it began pulling out machines from the main AER building to the AER-PSC
compound located on another street on the pretext that the main building
was undergoing renovation.
Certainly, the striking workers would have no reason to run and enter the
AER-PSC premises and to cause the return of the machines to the AER
building if they were not alarmed that AER was engaging in a runaway shop.
AER refused to admit back those employees who were not included in its
complaint against the union.
Thirty-two (32) employees filed a complaint for illegal dismissal, illegal
suspension and unfair labor practice against AER.
AER charged 18 employees with illegal strike.
AER should have reinstated the 14 employees excluded from its complaint.
Regarding AERs contention that the affected workers abandoned their jobs,
there is no convincing proof that they deliberately abandoned their jobs.
Besides, abandonment is totally inconsistent with the immediate filing of a
complaint for illegal dismissal.
In any event, the penalty of dismissal imposed by AER against the striking
employees, who, by the way, only staged a one day walkout, was too severe.
a mere finding of the illegality of a strike does not automatically warrant a
wholesale dismissal of the strikers from their employment and that a
premature or improvident strike should not be visited with a consequence so
severe as dismissal where a penalty less punitive would suffice (Tupas
Local Chapter No. 979 v. NLRC)
It must also be noted that there were no injuries during the brief walkout.
Neither was there proof that the striking workers inflicted harm or violence
upon the other employees.
In fact, the Police Memorandum reported no violent incidents and stated that
all parties involved incident were allowed to go home and the employees
involved were just given a stern warning.
To the Court, the complaining workers temporarily walked out of their jobs
because they strongly believed that management was committing an unfair labor
practice.
They had no intention of hurting anybody or steal company property.
Contrary to AERs assertion, the striking workers did not intend to steal the
line boring machine which they tried to cart away from the AER-PSC
compound
they just wanted to return it to the main AER building.

Like management, the union and the affected workers were also at fault
for resorting to a concerted work slowdown and walking out of their jobs of
protest for their illegal suspension.
to have forced their way to the AER-PSC premises to try to bring out the
boring machine.
Although the unions sudden work stoppage lasted a day, it surely caused
serious disturbance and tension within AERs premises and could have
adversely affected AERs clients and business in general.
since both AER and the union are at fault or in pari delicto, they should be
restored to their respective positions prior to the illegal strike and illegal lockout
(status quo)
Nonetheless, if reinstatement is no longer feasible, the concerned employees
should be given separation pay up to the date set for the return of the
complaining employees in lieu of reinstatement.

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