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RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.175002February18,2013
PEPSICOLAPRODUCTSPHILIPPINES,INC.,Petitioner,
vs.
ANECITOMOLON,AUGUSTOTECSON,JONATHANVILLONES,BIENVENIDOLAGARTOS,JAIMECADION,
EDUARDO TROYO, RODULFO MENDIGO, AURELIO MORALITA, ESTANISLAO MARTINEZ, REYNALDO
VASQUEZ, ORLANDO GUANTERO, EUTROPIO MERCADO, FRANCISCO GABON, ROLANDO ARANDIA,
REYNALDO TALBO, ANTONIO DEVARAS, HONORATO ABARCA, SALVADOR MAQUILAN, REYNALDO
ANDUYAN,VICENTECINCO,FELIXRAPIZ,ROBERTOCATAROS,ROMEODOROTAN,RODOLFOARROPE,
DANILOCASILAN,andSAUNDERSANTIAGOREMANDABANIII,Respondents.
DECISION
PERLASBERNABE,J.:
Assailed in this Petition for Review on Certiorari1 are the March 31, 2006 Decision2 and September 18, 2006
Resolution3oftheCourtofAppeals(CA)inCAG.R.S.P.No.82354whichreversedandsetasidetheSeptember
11,2002Decision4oftheNationalLaborRelationsCommission(NLRC)inNLRCCertifiedCaseNo.V000001
2000.5TheassailedCAissuancesdeclaredtheillegalityofrespondentsretrenchmentaswellasheldpetitioner
guiltyofunfairlaborpractice(ULP),amongothers.
TheFacts
PetitionerPepsiColaProductsPhilippines,Inc.(Pepsi)isadomesticcorporationengagedinthemanufacturing,
bottling and distribution of soft drink products. In view of its business, Pepsi operates plants all over the
Philippines,oneofwhichislocatedinSto.Nio,Tanauan,Leyte(TanauanPlant).
Respondents, on the other hand, are members of the Leyte PepsiCola Employees UnionAssociated Labor
Union(LEPCEUALU),alegitimatelabororganizationcomposedofrankandfileemployeesinPepsi'sTanauan
Plant,dulyregisteredwiththeDepartmentofLaborandEmployment(DOLE)RegionalOfficeNo.8.6
In1999,PepsiadoptedacompanywideretrenchmentprogramdenominatedasCorporateRightsizingProgram.7
Tocommencewithitsprogram,itsentanoticeofretrenchmenttotheDOLE8aswellasindividualnoticestothe
affectedemployeesinformingthemoftheirterminationfromwork.9Subsequently,onJuly13,1999,Pepsinotified
theDOLEoftheinitialbatchoffortyseven(47)workerstoberetrenched.10Amongtheseemployeesweresix(6)
electedofficersandtwentynine(29)activemembersoftheLEPCEUALU,includinghereinrespondents.11
On July 19, 1999, LEPCEUALU filed a Notice of Strike before the National Conciliation and Mediation Board
(NCMB)duetoPepsisallegedactsofunionbusting/ULP.12ItclaimedthatPepsisadoptionoftheretrenchment
programwasdesignedsolelytobusttheirunionsothatcomefreedomperiod,Pepsiscompanyunion,theLeyte
PepsiCola Employees UnionUnion de Obreros de Filipinas #49 (LEPCEUUOEF#49) which was also the
incumbent bargaining union at that time would garner the majority vote to retain its exclusive bargaining
status.13Hence,onJuly23,1999,LEPCEUALUwentonstrike.14
OnJuly27,1999,PepsifiledbeforetheNLRCapetitiontodeclarethestrikeillegalwithaprayerforthelossof
employment status of union leaders and some union members.15 On even date, then DOLE Secretary
Bienvenido A. Laguesma certified the labor dispute to the NLRC for compulsory arbitration.16 A returntowork

orderwasalsoissued.17
Incidentally, one of the respondents, respondent Saunder Santiago Remandaban III (Remandaban), failed to
reportforworkwithintwentyfour(24)hoursfromreceiptofthesaidorder.Becauseofthis,hewasservedwitha
noticeoflossofemploymentstatus(datedJuly30,1999)whichhechallengedbeforetheNLRC,assertingthat
his absence on that day was justified because he had to consult a physician regarding the persistent and
excruciatingpainoftheinnersideofhisrightfoot.18
Eventually,PepsiandLEPCEUALUagreedtosettletheirlabordisputearisingfromthecompanysretrenchment
programandthus,executedtheAgreementdatedSeptember17,1999whichcontainedthefollowingstipulations:
1. The union will receive 100% of the separation pay based on the employees basic salary and the
remaining 50% shall be released by Management after the necessary deductions are made from the
concernedemployees
2.Bothpartiesagreethatthereleaseofthesebenefitsiswithoutprejudicetothefilingofthecasebythe
UnionwiththeNationalLaborRelationsCommission
3.TheUnionundertakestosigntheQuitclaimbutsubjecttothe2ndparagraphofthisAgreement.19
Pursuant thereto, respondents signed individual release and quitclaim forms in September 1999 (September
1999 quitclaims)20 stating that Pepsi would be released and discharged from any action arising from their
employment.Notwithstandingtheforegoing,respondents21stillfiledseparatecomplaintsforillegaldismissalwith
theNLRC.22
TheNLRCRuling
OnSeptember11,2002,theNLRCrenderedaDecision23inNLRCCertifiedCaseNo.V0000012000.Among
the cases subsumed and consolidated therein are the following with the pertinent dispositions involving herein
respondents:
(1)InNCMBRBVIIINS071099andNCMBRBVIIINS071499,theNLRCabsolvedPepsiofthecharge
ofunionbusting/ULPasitwasnotshownthatit(Pepsi)hadanydesigntobusttheunion24
(2) In NLRC Case No. 7030199, the NLRC declared LEPCEUALUs July 23, 1999 strike as illegal for
havingbeenconductedwithoutlegalauthoritysinceLEPCEUALUwasnotthecertifiedbargainingagentof
the company. It was also observed that LEPCEUALU failed to comply with the seven (7)day strike vote
noticerequirement.However,theNLRCdeniedPepsisprayertodeclarelossofemploymentstatusofthe
unionofficersandmemberswhoparticipatedinthestrikeforitsfailuretosufficientlyestablishtheidentityof
theculpableunionofficersaswellastheirillegalacts25
(3) In NLRC RAB VIII Case No. 9045900, the NLRC ordered Pepsi to reinstate Remandaban to his
former position without loss of seniority rights but without backwages considering the lack of evidence
showingthathewillfullyintendedtodisregardtheJuly27,1999returntoworkorder26
and
(4)InNLRC RAB VIII Case Nos. 9043299 to9045899, the NLRC dismissed respondents complaints
for illegal dismissal for having been finally settled by the parties through the execution of quitclaim
documentsbytherespondentsinfavorofPepsi.27
Respondents moved for reconsideration, mainly alleging that the NLRC erred when it declared that Pepsis
retrenchment program was valid.28 The motion was, however, denied by the NLRC in its Resolution dated
September15,2003.29
Aggrieved,respondentsfiledapetitionforcertioraribeforetheCA,30 imputing grave abuse of discretion on the
partoftheNLRCwhenitupheldthevalidityoftheirretrenchment.TheyarguedthatthefactthatPepsihirednew
employees as replacements right after retrenching fortyseven (47) of its workers negated the latters claim of
financiallosses.31Inanyevent,theevidencewasinadequatetoprovethatPepsididsufferfromanyeconomicor
financiallosstolegitimizeitsconductofretrenchment.32

Inopposition,PepsipointedoutthattherespondentsfailedtoassailtheNLRCsfindingthatthecontroversywas
notaboutthevalidityoftheretrenchmentprogrambutonlyabouttheunderlyingconflictregardingtheselectionof
theemployeestoberetrenched33hence,thelatterfactshouldonlyremainatissue.Further,itclaimedthatits
financial/business losses were sufficiently substantiated by the audited financial statements and other related
evidenceitsubmitted.34
TheCARuling
OnMarch31,2006,theCAissuedaDecision35whichreversedandsetasidetheNLRCsruling.
ItobservedthatPepsicouldnothavebeeningoodfaithwhenitretrenchedtherespondentsgiventhattheywere
chosen because of their union membership with LEPCEUALU. In this accord, it ruled that the subject
retrenchment was invalid because there was no showing that Pepsi employed fair and reasonable criteria in
ascertainingwhoamongitsemployeeswouldberetrenched.36
Moreover,theCAheldthatPepsiwasguiltyofULPintheformofunionbustingasitsretrenchmentschemeonly
servedtodefeatLEPCEUALUsrighttoselforganization.ItalsopointedoutthatthefactthatPepsihiredtwenty
six (26) replacements and sixtyfive (65) new employees right after they were retrenched contravenes Pepsis
claimthattheretrenchmentwasnecessarytopreventfurtherlosses.37
Further,theCApronouncedthattherespondentssigningoftheindividualreleaseandquitclaimsdidnothavethe
effect of settling all issues between them and Pepsi considering that the same should have been read in
conjunctionwiththeSeptember17,1999Agreement.38
Finally,theCAupheldthevalidityofLEPCEUALUsJuly23,1999strike,rulingthatLEPCEUALU"wassuretobe
thecertifiedcollectivebargainingagentintheeventthatacertificationelectionwillbeconducted"andthus,was
authorizedtoconducttheaforesaidstrike.39ItaddedthattherewasnoneedforLEPCEUALUtocomplywiththe
fifteen (15) day cooling off period requirement given that the July 23, 1999 strike was conducted on account of
union busting.40 In support thereof, the CA noted41 that in a related case involving the same retrenchment
incidentaffecting,however,othermembersofLEPCEUALUentitled"GeorgeC.Beraya,ArsenioB.Mercado,
Romulo A. Orongan, Pio V. Dado and Primo C. Palana v. Pepsi Cola Products Philippines, Inc. (PCPPI), Pres.
JorgeG.SevillaandAreaGMEdgarD.DelMar"(Beraya)42theNLRCissuedaDecisiondatedNovember24,
200343 finding Pepsi guilty of union busting/ULP. Notably, in Beraya, the NLRC ruled that Pepsis retrenchment
programandtheconsequentdismissaloftheretrenchedemployeeswerevalid.44
Dissatisfied with the CAs ruling, Pepsi moved for reconsideration which was, however, denied by the CA in its
September18,2006Resolution.45Hence,theinstantpetition.
IssuesBeforetheCourt
Asculledfromtherecords,thefollowingissueshavebeenraisedfortheCourtsresolution:(1)whethertheCA
may reverse the factual findings of the NLRC (2) whether respondents retrenchment was valid (3) whether
PepsicommittedULPintheformofunionbusting(4)whetherrespondentsexecutionofquitclaimsamountedto
afinalsettlementofthecaseand(5)whetherRemandabanwasillegallydismissed.
TheCourtsRuling
Thepetitionismeritorious.
A.AppellateCourtsEvaluation
oftheNLRCsFindings
PepsicontendsthattheCAerredinevaluatingandexamininganewtheevidenceandinmakingitsownfindingof
facts when the findings of the NLRC have been fully supported by substantial evidence. It therefore claims that
thevalidityofthecorporaterightsizingprogram,integrityandbindingeffectoftheexecutedquitclaimsaswellas
theissuesrelatingtounionbustingandULPconstitutefactualmatterswhichhavealreadybeenresolvedbythe
NLRCandarenowbeyondtheauthorityoftheCAtopassupononcertiorari.
In contrast, respondents aver that the CA was clothed with ample authority to review the factual findings and
conclusions of the NLRC, especially in this case where the latter misappreciated the factual circumstances and
misappliedthelaw.

Pepsisargumentsareuntenable.
Parenthetically,inaspecialcivilactionforcertiorari, the CA is authorized to make its own factual determination
when it finds that the NLRC gravely abused its discretion in overlooking or disregarding evidence which are
materialtothecontroversy.TheCourt,inturn,hasthesameauthoritytosiftthroughthefactualfindingsofboth
theCAandtheNLRCintheeventoftheirconflict.Thus,inPlastimerIndustrialCorporationv.Gopo,46theCourt
explained:
In a special civil action for certiorari, the Court of Appeals has ample authority to make its own factual
determination.Thus,theCourtofAppealscangrantapetitionforcertiorariwhenitfindsthattheNLRCcommitted
graveabuseofdiscretionbydisregardingevidencematerialtothecontroversy.Tomakethisfinding,theCourtof
Appealsnecessarilyhastolookattheevidenceandmakeitsownfactualdetermination.Inthesamemanner,this
CourtisnotprecludedfromreviewingthefactualissueswhenthereareconflictingfindingsbytheLaborArbiter,
theNLRCandtheCourtofAppeals.xxxx(Citationsomitted.)
Inthislight,giventheconflictingfindingsoftheCAandNLRCinthiscase,theCourtfindsitnecessarytoexamine
thesameinordertoresolvethesubstantiveissues.
Separately,itmustbepointedoutthattheCAerredinresolvingtheissuespertainingtoLEPCEUALUsJuly23,
1999strikeinitsMarch31,2006Decision47andSeptember18,2006Resolution48(inCAG.R.SPNo.82354)
consideringthatthepartiesthereinnow,therespondentsinthiscasedonothaveanylegalinterestinthesaid
issue. To be clear, NLRCRAB VIII Case Nos. 9043299 to 9045899 are the cases which involve herein
respondentstheirconcerninthosecaseswastheillegalityoftheirretrenchment.Ontheotherhand,thestrike
issue was threshed out in RAB Case No. VIII7030199 which involved other members of LEPCEUALU.
AlthoughallthesecasesweresubsumedunderNLRCCertifiedCaseNo.V0000012000,thelegalityoftheJuly
23,1999strikewasnotraisedbytherespondentsinNLRCRABVIIICaseNos.9043299to9045899.Inview
oftheseincidents,giventhattheCAhastakencognizanceofamatter(i.e.,thelegalityofthestrike)wherethe
parties(i.e., respondents) are devoid of any legal interest, the Court sees no reason to perpetuate the misstep
anddelveuponthesame.
B.ValidityofRetrenchment
Retrenchment is defined as the termination of employment initiated by the employer through no fault of the
employee and without prejudice to the latter, resorted by management during periods of business recession,
industrial depression or seasonal fluctuations or during lulls over shortage of materials. It is a reduction in
manpower, a measure utilized by an employer to minimize business losses incurred in the operation of its
business.49
Under Article 297 of the Labor Code,50 retrenchment is one of the authorized causes to validly terminate an
employment.Itreads:
ART. 297. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to
preventlossesortheclosingorcessationofoperationoftheestablishmentorundertakingunlesstheclosingis
for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the
MinistryofLaborandEmploymentatleastone(1)monthbeforetheintendeddatethereof.Incaseoftermination
due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the
separationpayshallbeequivalenttoone(1)monthpayortoatleastonehalf(1/2)monthpayforeveryyearof
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
(Emphasissupplied.)
Asmaybegleanedfromtheaforecitedprovision,toproperlyeffectaretrenchment,theemployermust:(a)serve
a written notice both to the employees and to the DOLE at least one (1) month prior to the intended date of
retrenchmentand(b)paytheretrenchedemployeesseparationpayequivalenttoone(1)monthpayoratleast
onehalf()monthpayforeveryyearofservice,whicheverishigher.
Essentially, the prerogative of an employer to retrench its employees must be exercised only as a last resort,
considering that it will lead to the loss of the employees' livelihood. It is justified only when all other less drastic
means have been tried and found insufficient or inadequate.51 Corollary thereto, the employer must prove the

requirements for a valid retrenchment by clear and convincing evidence otherwise, said ground for termination
wouldbesusceptibletoabusebyschemingemployerswhomightbemerelyfeigninglossesorreversesintheir
businessventuresinordertoeaseoutemployees.52Theserequirementsare:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonablyimminentasperceivedobjectivelyandingoodfaithbytheemployer
(2) That the employer served written notice both to the employees and to the Department of Labor and
Employmentatleastonemonthpriortotheintendeddateofretrenchment
(3)Thattheemployerpaystheretrenchedemployeesseparationpayequivalenttoone(1)monthpayorat
leastonehalf()monthpayforeveryyearofservice,whicheverishigher
(4)Thattheemployerexercisesitsprerogativetoretrenchemployeesingoodfaithfortheadvancementof
itsinterestandnottodefeatorcircumventtheemployeesrighttosecurityoftenureand
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and
financialhardshipforcertainworkers.53
In due regard of these requisites, the Court observes that Pepsi had validly implemented its retrenchment
program:
(1) Records disclose that both the CA and the NLRC had already determined that Pepsi complied with the
requirements of substantial loss and due notice to both the DOLE and the workers to be retrenched. The
pertinentportionoftheCAsMarch31,2006Decisionreads:
Inthepresentaction,theNLRCheldthatPEPSICOLAsfinancialstatementsaresubstantialevidencewhichcarry
great credibility and reliability viewed in light of the financial crisis that hit the country which saw multinational
corporations closing shops and walking away, or adapting [sic] their own corporate rightsizing program. Since
these findings are supported by evidence submitted before the NLRC, we resolve to respect the same. x x x x
ThenoticerequirementwasalsocompliedwithbyPEPSICOLAwhenitservednoticeofthecorporaterightsizing
program to the DOLE and to the fourteen (14) employees who will be affected thereby at least one (1) month
priortothedateofretrenchment.(Citationsomitted)54
Itisaxiomaticthatabsentanyclearshowingofabuse,arbitrarinessorcapriciousness,thefindingsoffactbythe
NLRC,especiallywhenaffirmedbytheCAasinthiscasearebindingandconclusiveupontheCourt.55Thus,
given that there lies no discretionary abuse with respect to the foregoing findings, the Court sees no reason to
deviatefromthesame.
(2)Recordsalsoshowthattherespondentshadalreadybeenpaidtherequisiteseparationpayasevidencedby
the September 1999 quitclaims signed by them. Effectively, the said quitclaims serve inter alia the purpose of
acknowledging receipt of their respective separation pays.56 Appositely, respondents never questioned that
separationpayarisingfromtheirretrenchmentwasindeedpaidbyPepsitothem.Assuch,theforegoingfactis
nowdeemedconclusive.
(3)ContrarytotheCAsobservationthatPepsihadsingledoutmembersoftheLEPCEUALUinimplementingits
retrenchmentprogram,57recordsrevealthatthemembersofthecompanyunion(i.e.,LEPCEUUOEF#49)were
likewiseamongthoseretrenched.58
Also, as aptly pointed out by the NLRC, Pepsis Corporate Rightsizing Program was a companywide program
which had already been implemented in its other plants in Bacolod, Iloilo, Davao, General Santos and
Zamboanga.59 Consequently, given the general applicability of its retrenchment program, Pepsi could not have
intendedtodecimateLEPCEUALUsmembership,muchlessimpingeuponitsrighttoselforganization,whenit
employedthesame.
Infact,itisapropostomentionthatPepsianditsemployeesenteredintoacollectivebargainingagreementon
October 17, 1995 which contained a union shop clause requiring membership in LEPCEUUOEF#49, the
incumbentbargainingunion,asaconditionforcontinuedemployment.Inthisregard,Pepsihadallthereasonsto
assume that all employees in the bargaining unit were all members of LEPCEUUOEF#49 otherwise, the latter
wouldhavealreadylosttheiremployment.Inotherwords,Pepsineednotimplementaretrenchmentprogramjust

togetridofLEPCEUALUmembersconsideringthattheunionshopclausealreadygaveitamplejustificationto
terminatethem.ItisthenhardlybelievablethatunionaffiliationswereevenconsideredbyPepsiintheselectionof
theemployeestoberetrenched.60
Moreover, it must be underscored that Pepsis management exerted conscious efforts to incorporate employee
participationduringtheimplementationofitsretrenchmentprogram.RecordsindicatethatPepsihadinitiatedsit
downswithitsemployeestoreviewthecriteriaonwhichtheselectionofwhotoberetrenchedwouldbebased.
This is evidenced by the report of NCMB Region VIII Director Juanito Geonzon which states that "[Pepsis]
[m]anagementconcededontheproposaltoreviewthecriteriaandtositdownformorepositivestepstoresolve
theissue."61
Lastly, the allegation that the retrenchment program was a mere subterfuge to dismiss the respondents
considering Pepsis subsequent hiring of replacement workers cannot be given credence for lack of sufficient
evidencetosupportthesame.
Verily, the foregoing incidents clearly negate the claim that the retrenchment was undertaken by Pepsi in bad
faith.
(5)Onthefinalrequirementoffairandreasonablecriteriafordeterminingwhowouldorwouldnotbedismissed,
recordsindicatethatPepsididproceedtoimplementitsrightsizingprogrambasedonfairandreasonablecriteria
recommendedbythecompanysupervisors.62
Therefore,asalltherequisitesforavalidretrenchmentareextant,theCourtfindsPepsisrightsizingprogramand
theconsequentdismissalofrespondentsinaccordwithlaw.
At this juncture, it is noteworthy to mention that in the related case of Beraya which involved the same
retrenchmentincidentaffectingtherespondents,althoughlitigatedbyotherLEPCEUALUemployeestheNLRC
inaDecisiondatedNovember24,2003hadalreadypronouncedthatPepsisretrenchmentprogramwasvalid.63
Subsequently, the petitioners in Beraya elevated the case via petition for certiorari to the CA64 which was,
however,deniedinaDecisiondatedNovember28,2006.65TheyappealedthesaidrulingtotheCourt66which
was equally denied through the Resolutions dated April 24, 200867 and August 4, 2008.68 The fact that the
validity of the same Pepsi retrenchment program had already been passed upon and thereafter sustained in a
relatedcase,albeitinvolvingdifferentparties,behoovestheCourttoaccordasimilardispositionandthus,finally
upholdthelegalityofthesaidprogramaltogether.
C.UnionBustingandULP
UnderArticle276(c)oftheLaborCode,thereisunionbustingwhentheexistenceoftheunionisthreatenedby
the employers act of dismissing the formers officers who have been dulyelected in accordance with its
constitutionandbylaws.69
On the other hand, the term unfair labor practice refers to that gamut of offenses defined in the Labor Code70
which,attheircore,violatestheconstitutionalrightofworkersandemployeestoselforganization,71withthesole
exceptionofArticle257(f)(previouslyArticle248[f]).72AsexplainedinthecaseofPhilcom Employees Union v.
PhilippineGlobalCommunications:73
Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are
relatedtotheworkers'righttoselforganizationandtotheobservanceofaCBA.Withoutthatelement,theacts,no
matter how unfair, are not unfair labor practices. The only exception is Article 248(f) [now Article 257(f)].
(Emphasisandunderscoringsupplied)
Mindfuloftheirnature,theCourtfindsitdifficulttoattributeanyactofunionbustingorULPonthepartofPepsi
considering that it retrenched its employees in good faith. As earlier discussed, Pepsi tried to sitdown with its
employees to arrive at mutually beneficial criteria which would have been adopted for their intended
retrenchment. In the same vein, Pepsis cooperation during the NCMBsupervised conciliation conferences can
alsobegleanedfromtherecords.Furthermore,thefactthatPepsisrightsizingprogramwasimplementedona
companywide basis dilutes respondents claim that Pepsis retrenchment scheme was calculated to stymie its
union activities, much less diminish its constituency. Therefore, absent any perceived threat to LEPCEUALUs
existenceoraviolationofrespondentsrighttoselforganizationasdemonstratedbytheforegoingactuations
PepsicannotbesaidtohavecommittedunionbustingorULPinthiscase.

D.ExecutionofQuitclaims
Awaiverorquitclaimisavalidandbindingagreementbetweentheparties,providedthatitconstitutesacredible
andreasonablesettlementandtheoneaccomplishingithasdonesovoluntarilyandwithafullunderstandingof
itsimport.74TheapplicableprovisionisArticle232oftheLaborCodewhichreadsinpart:
ART. 232. Compromise Agreements. Any compromise settlement, including those involving labor standard
laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the
DepartmentofLabor,shallbefinalandbindingupontheparties.xxx(Emphasisandunderscoringsupplied)
InOlaybarv.NationalLaborRelationsCommission,75theCourt,recognizingtheconclusivenessofcompromise
settlements as a means to end labor disputes, held that Article 2037 of the Civil Code, which provides that "[a]
compromisehasuponthepartiestheeffectandauthorityofresjudicata,"appliessuppletorilytolaborcaseseven
ifthecompromiseisnotjudiciallyapproved.76
Inthepresentcase,PepsiclaimsthatrespondentshavelongbeenprecludedfromfilingcasesbeforetheNLRC
to assail their retrenchment due to their execution of the September 1999 quitclaims. In this regard, Pepsi
advancesthepositionthatallissuesarisingfromtheforegoingmustnowbeconsideredasconclusivelysettledby
theparties.
TheCourtisunconvinced.
AscorrectlyobservedbytheCA,theSeptember1999quitclaimsmustbereadinconjunctionwiththeSeptember
17,1999Agreement,towit:
2.Bothpartiesagreethatthereleaseofthesebenefitsiswithout prejudice to the filing of the case by the
UnionwiththeNationalLaborRelationsCommission
3.TheUnionundertakestosigntheQuitclaimbutsubjecttothe2ndparagraphof this Agreement. x x x
(Emphasisandunderscoringsupplied)77
ThelanguageoftheSeptember17,1999Agreementisstraightforward.Theuseoftheterm"subject"inthe3rd
clauseofthesaidagreementclearlymeansthatthesigningofthequitclaimdocumentswaswithoutprejudiceto
thefilingofacasewiththeNLRC.Hence,whenrespondentssignedtheSeptember1999quitclaims,theydidso
with the reasonable impression that that they were not precluded from instituting a subsequent action with the
NLRC.Accordingly,itcannotbesaidthatthesigningoftheSeptember1999quitclaimswastantamounttoafull
andfinalsettlementbetweenPepsiandrespondents.
E.DismissalofRemandaban
Anillegallydismissedemployeeisentitledtoeitherreinstatement,ifviable,orseparationpayifreinstatementis
no longer viable, and backwages.78 In certain cases, however, the Court has ordered the reinstatement of the
employee without backwages considering the fact that (1) the dismissal of the employee would be too harsh a
penaltyand(2)theemployerwasingoodfaithinterminatingtheemployee.Forinstance,inthecaseofCruzv.
MinisterofLaborandEmployment79theCourtruledasfollows:
The Court is convinced that petitioner's guilt was substantially established. Nevertheless, we agree with
respondentMinister'sorderofreinstatingpetitionerwithoutbackwagesinsteadofdismissalwhichmaybetoo
drastic.Denialofbackwageswouldsufficientlypenalizeherforherinfractions.Thebankofficialsactedin
good faith. They should be exempt from the burden of paying backwages. The good faith of the employer,
when clear under the circumstances, may preclude or diminish recovery of backwages. Only employees
discriminatelydismissedareentitledtobackpay.xxx(Emphasisandunderscoringsupplied)
1 w p h i1

Likewise, in the case of ItogonSuyoc Mines, Inc. v. National Labor Relations Commission,80 the Court
pronouncedthat"theendsofsocialandcompassionatejusticewouldthereforebeservedifprivaterespondentis
reinstated but without backwages in view of petitioner's good faith." The factual similarity of these cases to
Remandabanssituationdeemsitappropriatetorenderthesamedisposition.
As may be gathered from the September 11, 2002 NLRC Decision, while Remandaban was remiss in properly
informingPepsiofhisintendedabsence,theNLRCruledthatthepenaltyofdismissalwouldhavebeentooharsh
forhisinfractionsconsideringthathisfailuretoreporttoworkwasclearlypromptedbyamedicalemergencyand
not by any intention to defy the July 27, 1999 returntowork order.81 On the other hand, Pepsi's good faith is

supported by the NLRC's finding that "the returntoworkorder of the Secretary was taken lightly by
.Remandaban."82Inthisregard,consideringRemandaban'sostensiblederelictionofthesaidorder,Pepsicould
not be blamed for sending him a notice of termination and eventually proceeding to dismiss him. At any rate, it
must be hoted that while Pepsi impleaded Remandaban as party to the case, it failed to challenge the NLRC
rulingorderinghisreinstateme:ottohisformerpositionwithoutbackwages.Assuch,theforegoingissueisnow
settledwithfinality.
Alltold,theNLRC'sdirectivetoreinstateRemandabanwithoutbackwagesisupheld.
WHEREFORE, the petition is GRANTED. The assailed March 31, 2006 Decision and September 18, 2006
Resolution of the Court of Appeals in CAG.R. S.P. No. 82354 are hereby REVERSED and SET ASIDE.
Accordingly, the September 11, 2002 Decision of the National Labor Relations Commission is hereby
REINSTATED insofar as (1) it dismissed subsumed cases NLRCRAB VIII Case Nos. 9043299 to 9045899
and (2) ordered the reinstatement of respondent Saunder Santiago Remandaban III without loss of seniority
rightsbutwithoutbackwagesinNLRCRABVIIICaseNo.9045999.
SOORDERED.
ESTELAM.PERLASBERNABE
AssociateJustice
WECONCUR:
ANTONIOT.CARPIO
AssociateJustice
Chairperson
ANTONIOD.BRION
AssociateJustice

MARIANOC.DELCASTILLO
AssociateJustice
JOSEPORTUGALPEREZ
AssociateJustice
ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt'sDivision.
ANTONIOT.CARPIO
AssociateJustice
Chairperson,ThirdDivision
CERTIFICATION
I certify that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt'sDivision.
MARIALOURDESP.A.SERENO
ChiefJustice

Footnotes
1Rollo,pp.353.
2Id.at5570.PennedbyAssociateJusticePampioA.Abarintos,withAssociateJusticesEnricoA.Lazanas

andApolinarioD.Bruselas,Jr.,concurring.
3Id.at7273.PennedbyAssociateJusticePampioA.Abarintos,withAssociateJusticesAgustinS.Dizon

andPriscillaBaltazarPadilla,concurring.
4CArollo,pp.103136.PennedbyPresidingCommissionerIreneaE.Ceniza,withCommissionerOscarS.

Uy,concurringandCommissionerEdgardoM.Enerlan,dissenting.
5 Id. at 103104. Certified Case In Re: Labor Dispute at PepsiCola Products Philippines, Inc. NLRC

Certified Case No. V0000012000 (NCR CC No. 00017199), NCMBRBVIIINS071099 and NCMB
RBVIIINS071499.SubsumedCases:(1)RABCaseNo.VIII7030199(For:IllegalStrikeUnderArticle
217oftheLaborCode)(2)NLRCInjunctionCaseNo.V00001399(3)RABCaseNo.VIII9043299to
9056099and(4)RABCaseNo.VIII9045999ConsolidatedCases:
(1)RABCaseNo.VIII0302462000to0302592000and(2)NLRCInjunctionCaseNo.V0000032001.
6Id.at44.RegisteredonFebruary25,1997,withRegistrationNumberR08009702UR63.
7Rollo,p.56.
8NLRCrecords,pp.439440.ThroughaletterdatedJune28,1999sentbyEduardoT.Dabbay,General

ManageroftheTanauanPlant.
9Rollo,p.56.
10Id.
11NLRCrecords,p.44.
12CArollo,p.107.
13Rollo,p.56.
14CArollo,p.110.DocketedasNCMBRBVIIINS071099.
15Id.at110,112.DocketedasRABCaseNo.VIII7030199.
16Id.at104.Seealsorollo,p.57.
17Rollo,p.57.
18CArollo,p.113114.DocketedasRABCaseNo.VIII9045999.
19Rollo,pp.501502.
20Id.at360407.Annexes"AtoWW"ofpetitionersFebruary1,2011Memorandum.
21WiththeexceptionofRemandabanwhodidnotexecuteanyreleaseandquitclaimdocumentandfileda

separatecomplaintbasedondifferentgrounds.
22 CA rollo, pp. 114. These were docketed as NLRCRAB VIII Case Nos. 9043299 to 9045899 and

subsequentlysubsumedunderNLRCCertifiedCaseNo.V0000012000.
23Id.at103136.
24Id.at106110
25Id.at110113.
26Id.at113114.
27Id.at117120.
28Id.at14a17.
29Id.at1419

30Thepetition(Id.at58)wasinitiallydismissedduetoproceduralflawsthroughtheCAsMarch19,2004

Resolution(Id.at5354).RespondentsthereafterfiledaMotionforReconsiderationWithPrayerToSubmit
SupplementalBriefInSupportofPetitionForCertiorariandWithFormalAppearanceofCounsel(Id.at66
97)whichwasgrantedbytheCAinitsAugust17,2004Resolution(Id.at240242).
31Id.at74.
32Id.at7677.
33Id.at330331
34Id.at334338.
35Rollo,pp.5570
36Id.at6465.
37Id.at6768.
38Id.at6567.
39Id.at61.
40Id.at6162.
41Id.at62.
42DocketedasNLRCCaseNo.V0001152002.
43NLRCrecords,pp.743748.
44Id.at748.
45Rollo,pp.at7273.
46G.R.No.183390,February16,2011,643SCRA502,509.
47Rollo,pp.5570.
48Id.at7273.
49 Philippine Carpet Employees Association v. Secretary of Labor and Employment, G.R. No. 168719,

February 22, 2006, 483 SCRA 128, 143, citing Trendline Employees AssociationSouthern Philippines
FederationofLaborv.NLRC,338Phil.681,688(1997).
50RenumberedpursuanttoRepublicActNo.10151.
51Supranote46,at144,citingGuerrerov.NLRC,329Phil.1069,1076(1996)andSomervilleStainless

SteelCorporationv.NLRC,350Phil.859,870(1998).
52Id.
53Id.at144145,citingAsianAlcoholCorporationv.NLRC,364Phil.912,926927(1999).
54Rollo,p.64.
55SeeAcevedov.AdvanstarCompany,Inc.,G.R.No.157656,November11,2005,474SCRA656,664.
56Rollo,pp.360407.

57 Id. at 64. The CA disposed as follows "Gleaned from the records, the members of the LEPCEUALU

weresingledouttoberetrenched.Notethatmembersoftheotherrivaluniondidnotfileanycasebefore
theLaborArbiterandtheNLRC.ThisscenariocreatesasuspicioninthemindoftheCourtandbolstersour
findingthatindeed,themembersoftheLEPCEUALUwereamongthosechosentoberetrenchedbecause
oftheirunionmembership.xxxx"
58 NLRC records, pp. 4344. Among the fortyseven (47) employees retrenched only thirtyfive (35)

belongedtoLEPCEUALU.
59CArollo,p.107.
60Id.at107108
61Id.at109.
62Id.at110.
63NLRCrecords,p.748.
64DocketedasCAG.R.SPNo.84383.
65Rollo,pp.517533.PennedbyAssociateJusticePriscillaBaltazarPadilla,withAssociateJusticesIsaias

P.DicdicanandRomeoF.Barza,concurring.
66DocketedasG.R.No.181694(GeorgeC.Beraya,etal.v.PepsiColaProductsPhils.,Inc.).
67Rollo,p.539.
68Id.at540.
69Article276(c)oftheLaborCodeprovidesinpart:

(c)Incasesofbargainingdeadlocks,thedulycertifiedorrecognizedbargainingagentmayfileanoticeof
strikeortheemployermayfileanoticeoflockoutwiththeDepartmentatleastthirty(30)daysbeforethe
intendeddatethereof.Incasesofunfairlaborpractice,theperiodofnoticeshallbefifteen(15)daysandin
the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any
legitimatelabororganizationinbehalfofitsmembers.Howeverincaseofdismissalfromemploymentof
union officers duly elected in accordance with the union constitution and bylaws, which may
constitute union busting where the existence of the union is threatened, the 15day coolingoff
periodshallnotapplyandtheunionmaytakeactionimmediately.(Emphasissupplied.)
70 Art. 257 of the Labor Code enumerates the unfair labor practices by employers, while Art. 258

enumeratestheunfairlaborpracticesoflabororganizations.
71Article256oftheLaborCodeprovidesinpart:

ART. 256. Concept of Unfair Labor Practice and Procedure for Prosecution Thereof. Unfair labor
practicesviolatetheconstitutionalrightofworkersandemployeestoselforganization,areinimical
to the legitimate interests of both labor and management, including their right to bargain collectively
and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labormanagement relations. Consequently, unfair
laborpracticesarenotonlyviolationsofthecivilrightsofbothlaborandmanagementbutarealsocriminal
offensesagainsttheStatewhichshallbesubjecttoprosecutionandpunishmentashereinprovided.xxxx
(Emphasissupplied.)
72(f)Todismiss,discharge,orotherwiseprejudiceordiscriminateagainstanemployeeforhavinggivenor

beingabouttogivetestimonyunderthisCodexxx.
73PhilcomEmployeesUnionv.PhilippineGlobalCommunications,G.R.No.144315,July17,2006citing

Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, G.R. No. 126717, 11
February1999,303SCRA113andCesarioA.Azucena,Jr.,IITheLaborCodewithCommentsandCases

210(5thed.2004).
74AlabangCountryClub,Inc.v.NLRC,G.R.No.157611,August9,2005,466SCRA329,346,citingWack

WackGolfandCountryClubv.NLRC,G.R.No.149793,April15,2005,456SCRA280.
75Olaybarv.NLRC,G.R.No.108713,October28,1994,237SCRA819.
76JPhilMarine,Inc.v.NLRC,G.R.No.175366,August11,2008,561SCRA675,680,citingOlaybar at

823824.
77Rollo,p.501.
78Macaserov.SouthernIndustrialGasesPhilippines,G.R.No.178524,January30,2009,577SCRA500,

507,citingMt.CarmelCollegev.Resuena,G.R.No.173076,October10,2007,535SCRA518,541.
79Cruzv.MinisterofLaborandEmployment,G.R.No.L56591,January17,1983,120SCRA15,20.
80ItogonSuyocMines,Inc.v.NLRC,G.R.No.L54280,September30,1982,117SCRA523,529.
81CArollo,p.I14.
82Id.
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