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Pepsi-Cola Products v. Molon, Et Al.
Pepsi-Cola Products v. Molon, Et Al.
FACTS: ISSUE(S):
Pepsi is a domestic corporation engaged in the manufacturing, 1. WON Pepsi’s retrenchment program was valid? – YES
bottling and distribution of soft drink products. It operates plants all 2. WON Pepsi committed ULP in the form of union busting? - NO
over the Philippines, one of which is located in Sto. Niño, Tanauan,
Leyte (Tanauan Plant). HELD: Petition granted.
Among these employees were six (6) elected officers and twenty- Article 297 of the Labor Code: retrenchment is one of the authorized
nine (29) active members of the ALU, including herein respondents. causes to validly terminate an employment. To properly effect a
ALU filed a Notice of Strike before the National Conciliation and retrenchment, the employer must:
Mediation Board (NCMB) due to Pepsi’s alleged acts of union busting (a) serve a written notice both to the employees and to the DOLE
or unfair labor practice (ULP). at least one (1) month prior to the date of retrenchment; and
(b) pay the retrenched employees separation pay equivalent to
It claimed that Pepsi’s adoption of the retrenchment program was one (1) month pay or at least one-half (½) month pay for every
designed solely to bust their union so that come freedom period, year of service, whichever is higher.
Pepsi’s company union, the Leyte Pepsi-Cola Employees Union-
Union de Obreros de Filipinas (Obreros Union for short) ―which was The prerogative of an employer to retrench its employees must be
also the incumbent bargaining union at that time―would garner the exercised only as a last resort, considering that it will lead to the loss
majority vote to retain its exclusive bargaining status. of the employees’ livelihood. It is justified only when all other less
drastic means have been tried and found insufficient or inadequate.
ALU went on strike. So, Pepsi filed before the NLRC a petition to
declare the strike illegal with a prayer for the loss of employment The court provided the requirements for retrenchment:
status of union leaders and some union members. After the 1. the retrenchment is reasonably necessary and likely to prevent
compulsory arbitration, a return-to-work order was issued. business losses and done in good faith;
2. the employer served written notice both to the employees and
Pepsi and ALU settled their labor dispute by executing an Agreement the DOLE at least one month prior to the intended date of
(September 17, 1999) which stipulated: retrenchment;
1. that the union will receive 100% separation pay; 3. the employer pays the employees separation pay;
2. that this is without prejudice to the filing of the case by the 4. it is done in good faith for the advancement of its interest and
Union with the NLRC; not to defeat or circumvent the employees’ right to security of
3. that the Union undertakes to sign the Quitclaim but subject to tenure; and
the 2nd paragraph 5. the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the
They signed the quitclaim forms in September 1999 stating that employees.
Pepsi would be released and discharged from any action arising from
their employment. Nevertheless, respondents still filed separate Pepsi had validly implemented its retrenchment program:
complaints for illegal dismissal with the NLRC. 1) Pepsi complied with the requirements of substantial loss and
due notice to both the DOLE and the workers to be retrenched
NLRC: Pepsi not guilty for union busting or ULP and the and there was no evidence of abuse, arbitrariness or
retrenchment program valid. Declared ALU’s strike as illegal. It also capriciousness.
dismissed the complaints for illegal dismissal due to the quitclaims. 2) Respondents had already been paid their separation pay as
evidenced by their signed quitclaims.
By way of petition for certiorari, respondents argued that Pepsi’s 3) Pepsi’s Corporate Rightsizing Program was a company-wide
hiring of new employees as replacements right after retrenching 47 program which had already been implemented in its 5 other
workers negated the company’s claim for financial losses. plants which also retrenched members of the company union
(Obreras Union).
CA: reversed NLRC decision. Pepsi not in good faith and ruled the 4) Pepsi’s management exerted conscious efforts to incorporate
retrenchment was invalid. Pepsi is guilty of ULP in the form of union employee participation during the implementation of its
retrenchment program. Pepsi had initiated sit-downs with its
1 employees to review the criteria on which the selection of who
Retrenchment: the reduction of costs or spending in response to economic
to be retrenched would be based.
difficulty; the action of dismissing an employee from a job.
Consequently, given the general applicability of its retrenchment
program, Pepsi could not have intended to decimate ALU’s
membership, much less impinge upon its right to self-organization,
when it employed the same.