PEOPLE’S BANK AND TRUST COMPANY, NOW BANK OF THE PHILIPPINE ISLANDS, AND VICENTE C. AQUINO, PETITIONERS, VS. PEOPLE’S BANK AND TRUST COMPANY EMPLOYEES UNION AND COURT OF INDUSTR…

People's Bank and Trust Company versus People's Bank and Trust Company Employees Union

The Case

This is a labor case about a bank that cut sixty-five employees loose and called it economy, while the union said it was union-busting. The People's Bank and Trust Company, later the Bank of the Philippine Islands, together with its president Vicente C. Aquino, faced a complaint for unfair labor practice filed by the People's Bank and Trust Company Employees Union before the Court of Industrial Relations. The case matters because it fixes the rule that retrenchment is a measure of last resort, justified only by actual business reverses, and that separation pay does not cure a dismissal tainted by anti-union motive.

Procedural History

The Acting Assistant Chief Prosecutor of the Court of Industrial Relations filed the complaint for unfair labor practice against the Bank and Aquino. A Hearing Examiner of the Court of Industrial Relations received the evidence of both parties and submitted a report finding the Bank guilty of unfair labor practice and recommending reinstatement. The Court of Industrial Relations, sitting en banc, issued a per curiam Resolution adopting the findings and holding the Bank liable. The Bank then came to the Supreme Court on petitions for review on certiorari of that Resolution.

Facts

On May 4, 1967, the Bank and the Union entered into a collective bargaining agreement. That contract recognized the prerogative of the Bank to hire and dismiss employees, but it also carried a no-strike clause and a grievance machinery. On February 21, 1969, the Union asked the Bank to adjust and increase the employees' wages as provided in that agreement. The request was withheld by then President Roman Azanza from the Executive Committee and the Board, and was furnished to the directors only after he resigned on March 6, 1969.

In February 1969 the Bank decided that it had excess personnel at its Head Office and resolved to reduce its staff as a measure of economy. It invited union officers to meetings of its Executive Committee to inform them of the decision and to ask for a list of employees recommended for separation. The Union expressed the view that the separation was reasonable but refused to submit a list. On March 31, 1969, the Bank separated sixty-five employees, fifty-one of whom were union members and officers, giving them separation pay and the money value of unused vacation leaves.

The Union filed a notice of strike on March 28, 1969 and struck on April 8, 1969. Conciliation conferences at the Bureau of Labor Relations followed. The Bank sent the Director of Labor Relations a letter dated May 2, 1969 giving absent employees until May 8, 1969 to report for work or be considered as having abandoned their employment, and that letter was published in leading newspapers on May 8, 1969 itself. The strikers lifted their picket and made an unconditional offer to return to work on May 20, 1969, but the Bank rejected the offer, saying its present employees were enough and that the strikers had abandoned their work. Yet the Bank had hired thirty-four new employees and rehired non-union members who reported for work about a year after the strike.

Issues

• Whether or not the Bank committed unfair labor practice in laying off the sixty-five employees, the lay-off being a retrenchment genuinely compelled by business reverses rather than a device to bust the union.
• Whether or not the grant of separation pay to the laid-off employees barred them from questioning the legality of the lay-off.
• Whether or not the strike declared by the Union was illegal, and whether or not the strikers who made an unconditional offer to return to work were entitled to reinstatement.

Applicable Provisions

Section 4, subsections 1, 2, 4 and 5 of Republic Act Number 875 defines unfair labor practice on the part of an employer, and the complaint charged the Bank under these grounds:

It shall be unfair labor practice for an employer to interfere with, restrain or coerce employees in the exercise of their rights guaranteed in section three hereof; to require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization; and to dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Act.

These are the very acts the Court of Industrial Relations found the Bank to have committed against the Union and its members.

Section 5, subsection b of Republic Act Number 875 is the provision under which the complaint was filed:

The Court of Industrial Relations shall have jurisdiction over the subject matter of any unfair labor practice case filed with it, and shall investigate and try the same and enter its findings and order therein.

This is the jurisdictional anchor of the proceedings before the Court of Industrial Relations.

Ruling

On the first issue, the Court upheld the finding that the lay-off was motivated by a desire to bust the Union and to escape the obligations of the collective bargaining agreement. The Hearing Examiner found that the Bank was earning substantial profits in the ten years before the retrenchment, and that retrenchment is permissible only where the employer is compelled by business reverses and economic reverses. The Court quoted with approval the rule from the Insular Lumber case:

Petitioner was making profits even before the retrenchment program was launched with the reduction in the labor force by 25% and the introduction of mechanization or modernization in its operations, it is difficult to see how petitioner could be headed for financial disaster.

The Court also noted that the Bank hired thirty-four new employees after the strike and rehired non-union members, which showed that there was no genuine excess of personnel.

On the second issue, the Court held that acceptance of separation pay did not amount to estoppel, quoting the Cariño doctrine:

Acceptance of these benefits (separation pay and terminal leave benefits) would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because out of job, he had to face the harsh necessities of life. He has found himself in no position to resist money proferred. His, then is a case of adherence, not of choice.

On the third issue, the Court held that the strike was a protest against unfair labor practice acts, and that the strikers who made an unconditional offer to return to work could not be treated as having abandoned their employment. The Bank's publication of its return-to-work letter on the very deadline was a tactical threat, not a justification for dismissal.

Doctrine

Retrenchment is a measure of last resort, permissible only where the employer is compelled by business reverses and economic reverses, and not where the employer is earning substantial profits. A lay-off carried out to bust a union and to escape the obligations of a collective bargaining agreement is unfair labor practice under Section 4 of Republic Act Number 875. Acceptance of separation pay does not estop an employee from questioning the legality of the dismissal, because employer and employee do not stand on the same footing. Employees who strike in protest against unfair labor practice acts and who make an unconditional offer to return to work are entitled to reinstatement.

Disposition

The Supreme Court denied the petitions and affirmed the Resolution of the Court of Industrial Relations holding the Bank liable for unfair labor practice and ordering the reinstatement of the dismissed employees.

Remember This

Retrenchment to save on costs is valid only when the employer is actually losing money, not when it is earning profits and simply wants to rid itself of a union. Examiners use this case to test the requisites of valid retrenchment and the rule that separation pay does not bar a claim for illegal dismissal.