Digitel Telecomm v Digitel Employees Union

SUMMARY:
Pending a petition for cancellation of the unions registration, Sec of Labor
ordered the parties to negotiate the CBA.
DOCTRINE:
Pendency of a petition for cancellation of union registration does
not preclude collective bargaining. If a certification election may still
be ordered despite the pendency of a petition to cancel the unions
registration, more so should the collective bargaining process continue
despite its pendency; The majority status of respondent union is not
affected by the pendency of the petition for cancellation pending against
it; unless the certificate of registration and its status as the certified
bargaining agent are revoked, the employer is duty bound to collectively
bargain with the union.

FACTS:
1994 Digitel Employees Union (Union) became the exclusive
bargaining agent of all rank and file employees of Digitel. It
commenced bargaining negotiations which resulted in a
bargaining deadlock. It threatened to go on strike but the acting
labor secretary then assumed jurisdiction and directed the
parties to execute a CBA.
o No CBA was forged, however. Some members of the
union left Digitel and the union became dormant.
2004 Digitel received from Esplana (who claimed to be
president of the union) a list of officers, CBA proposals and
ground rules. Digitel was reluctant to negotiate with the union
and required compliance with provisions of the unions
constitution and by-laws on membership and election of
officers.
Esplana and his group then filed a case for preventive
mediation with NCMB on Digitels violation of the duty to
bargain. Later they filed a notice of strike. After, Labor Sec Sto.
Tomas assumed jurisdiction over the case.
Pending the controversy, Digitel Service, Inc (Digiserv), an
enterprise engaged in call center servicing filed with DOLE an
establishment termination report stating that it will cease its
business operations. The closure affected at least 100
employees. 42 are members of the union.

Esplana and his group filed another notice of strike (for

union busting, illegal lock-out and violation of
assumption order). Secretary of Labor said the second
notice of strike was subsumed by the previous
Assumption Order.
Digitel sought to cancel the unions registration with BLR. This
was dismissed for lack of merit.
Sec of Labor ordered Digitel to commence CBA negotiation.
Digitel motioned for reconsideration saying that the petition for
cancellation of the unions certificate of registration is a
prejudicial question before DOLE could order the parties to
bargain collectively. MFR was denied.
ULP issue: it was dismissed by the NLRC but declared the
dismissal of 13 employees of Digiserve as illegal and order
reinstatement. Union manifested that out of the 42, only 13
remained because most had accepted separation pay.
CA upheld Sec of Labors order for Digitel to commence CBA
negotiations and emphasized that the pendency of a petition of
a petition for the cancellation of a unions registration does not
bar the holding of negotiations for a CBA. CA sustained finding
that Digiserv is a labor-only contractor. MFR denied.
o

2012 | Perez, J.
By: Cate Alegre

ISSUES/HELD:
WON pendency of a petition for cancellation of union registration
preclude collective bargaining. No.
RATIO:
The pendency of a petition for cancellation of union
registration doesnt preclude collective bargaining. In
Capitol Medical Center v. Trajano, the Court stated if a certification
election may still be ordered despite the pendency of a petition to
cancel the unions registration, more so should the collective
bargaining process continue despite its pendency; The majority
status of respondent union is not affected by the pendency of the
petition for cancellation pending against it; unless the certificate of
registration and its status as the certified bargaining agent are
revoked, the hospital is duty bound to collectively bargain with the
union.
Digiserv is a labor-only contractor. There is no showing that it
has substantial investment in the form of capital, equipment and
tools. NLRC didnt find substantial its authorized capital stock of

P1M. Only 250 thousand pesos of the authorized capital stock had
been subscribed and 62.5 thousand pesos had been paid up and
there was no increase in capitalization for the last 10 years.
Also, in its Amended of Articles for years 1994, 2001 and 2005, the
primary purpose of Digiserv is to provide manpower services. In PCI
Automation Center v NLRC, the Court stated that a legitimate job
contractor provides services while the labor-only contractor
provides only manpower. Digiserv doesnt exercise control over the
affected employees. It shared the same HR, Accounting, Audit and
Legal Departments with Digitel which manifested that it was Digitel
who exercised control over the performance over the affected
employees.
The affected employees were illegally dismissed. In addition
to finding that Digiserv is a labor-only contractor, records teem with
proof that its dismissed employees are in fact employees of Digitel.
Even before the incorporation of Digiserv, the affected employees
were already employed by Digitel as Traffic Operators, later
renamed as Customer Service Representatives.
The dismissed employees were undoubtedly retrenched 1 with the
closure of Digiserv. There was no good faith on the part of Digiserv
when it closed down. Prior to the cessation of Digiservs operations,
the Secretary of Labor had issued the first assumption order to
enjoin an impending strike. When Digiserv effected the dismissal of
the affected employees, the Union filed another notice of strike.
Significantly, the Secretary of Labor ordered that the second notice
of strike be subsumed by the previous assumption order. The
effects of the assumption order issued by the Secretary of Labor
1 Waterfront

Cebu City Hotel v. Jimenez: Elements of a valid retrenchment (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 reasonably imminent as perceived objectively and in good faith by the
employer; (2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment; (3) That the employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least month pay for every year of service,
whichever is higher; (4) That the employer exercises its prerogative to retrench
employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and (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 financial hardship for certain workers.
HERE: only the first 3 elements of a valid retrenchment had been satisfied.

are two-fold. It enjoins an impending strike on the part of the

employees and orders the employer to maintain the status quo.
There is no doubt that Digitel defied the assumption order by
abruptly closing down Digiserv.