Me-Shurn Corporation and Sammy Chou v.

Me-Shurn Workers MSWU and Rosalina Cruz

FACTS
 The regular rank-and-file employees of Me-Shurn Corporation organized Me-Shurn Workers Union-FSM
(MSWU), an affiliate of February Six Movement (FSM). MSWU had a pending application for registration
with BLR.
o MSWU then filed a Petition for Certification Election with the Med-Arbitration and instead of filing
an answer to the PCE, the corporation filed a comment stating that it would temporarily lay-off
employees and cease operations due to its inability to meet export quota required by the Board
of Investment.
o Pending PCE, 184 union members allegedly submitted retraction/withdrawal. As a
consequence, MA dismissed the PCE.
 On August 4, 1998, MSWU filed a Notice of Strike against corporation on the ground of ULP (illegal lockout
and union busting). In September 1998, the corporation resumed operations, but Chou Fang Kuen (alias
Sammy Chou) and Raquel Lamayra (Filipino administrative manager of the corporation) imposed the
following conditions:
o Required remaining union officers to sign an agreement containing a guarantee that upon return
to work, no union or labor organization would be organized
o Instead, union officers were to serve as mediators between labor and management.
 On November 5, 1998 (bday ni Mrs. Dulay), MSWU reorganized and elected a new set of officers and
Rosalina Cruz was elected President. It then filed two Complaints for unfair labor practice, illegal dismissal,
underpayment of wages and deficiency in separation pay. The cases were assigned to LA Henry Isorena
for compulsory arbitration.
 In its answer, the corporation argued that:
o It was compelled to close and cease operations to prevent serious business losses. Under Art
283 of LC, it had the right to close and cease operations.
o In August 1998, it paid its 342 laid off employees separation pay and benefits amounting to
P1,682,863.88. By virtue of these payments, the cases had already become moot and
academic.
o Resumption of operations in September 1009 had been announced and posted at the Bataan
Export Processing Zone, and that some of the former employees had reapplied.
o It questioned the legality of the representation of MSWU, alleging that it was Me-Shurn
Independent Employees Union (Independent Union) that was recognized as the SEBA of the
rank-and-file employees and that one that had concluded a CBA with the corporation in May
1999.
o Hence, holding of CE had become moot and academic.
 Me-Shurn Workers MSWU contested the legality of the formation of Independent Union and its recognition
as the SEBA of the employees. The pendency of the representation issue before DOLE had barred the
alleged recognition of Independent Union.
o LA: dismissed MSWU’s complaints for lack of merit. The actual and expected losses justified the
closure of petitioner corporation and the dismissal of its employees. The voluntary acceptance
of separation pay by the workers precluded them from questioning the validity of their dismissal.
The claim for separation pay lacked factual basis.
o NLRC: reversed in favor of MSWU and ordered backwages; the corporation is guilty of ULP.
The closure of the corporation shortly after MSWU had been organized, as well as the dismissal
of the employees, had been effected under false pretenses. The true reason was to bar the
formation of MSWU.
o CA: ruled in favor of MSWU; dismissed petition of corporation
 Corporation: MSWU’s personality to represent the affected employees had already been
repudiated by the workers themselves in the CE conducted by DOLE on September 7,
2000.
MSWU – 1
No Union – 135
Spoiled – 2
Challenged – 52
 Total Vote Cast - 190
o Corporation failed to submit sufficient proof of business losses
o It had wanted merely to abort or frustrate the formation of MSWU.
o The burden of proving that the dismissal of the employees was for a valid or authorized cause
rested on the employer.
o CA affirmed MSWU’s legal personality to represent the employees – registration was not a
prerequisite to the right of a labor organization to litigate; and the cases may be treated as
representative suits, with MSWU acting for the benefit of all its members.

ISSUES + RULING
Was there illegal dismissal? YES.
 Corporation failed to substantiate its claim of business losses. Other than generally referring to the financial
crisis in 1998 and to their supposed difficulty in obtaining an export quota, it never presented any report on
the financial operations of the corporation during the period before its shutdown. It did not submit any
credible evidence to substantiate their allegation of business losses
o Employer bears the burden of showing that the dismissal was for a just or authorized cause.
Otherwise, the dismissal is deemed unjustified. It should have presented clear and convincing
evidence of imminent economic or business reversals as a form of affirmative defense in the
proceedings before LA or NLRC.
o It is only now that the corporation have belatedly submitted its income tax returns from 1996 to
1999 as proof of alleged continues losses during those years.
o It is already barred from introducing fresh defenses and facts at the appellate stage. These are
questions of fact that must be proven in lower courts. It must now bear the consequence of its
neglect.
o Even if we admit these additional pieces of evidence, the circumstances surround the cessation
of operations reveal the doubtful character of its supposed financial reason.
 The following factors strongly give credence to the contention of MSWU that the real reason behind the
corporation’s shutdown was the formation of their union:
o First, Their claim is belied by their resumption of operations barely a month after the corporation
supposedly folded up.
 They attribute their loss mainly to failure in obtaining an export quota from Garments and
Textile Export Board (GTEB), but the corporation resumed its business without first
obtaining an export quota from the GTEB.
 These export quotas pertain only to business with companies in the US and do not
preclude the corporation from exporting its products to other countries. The business
that corporation engaged in did not depend entirely on exports to the US.
o Second, Statements of Income and Deficit for the years 1996 and 1997 show that at the
beginning of 1996, the corporation had a deficit of P2,474,505. Yet, the closure was effected
only after more than a year from such year-end deficit; that is, in the middle of 1998, shortly
after the formation of the union.
 The evidence show that by the end of 1997, it had a net income of P1,816,397.
 Corporation had not satisfactorily explained why the workers dismissal was effected only
after the formation of MSWU in September 1998. When employees succeeded in
organizing a union, they were all placed on forced leave without any valid notice due to
lack of quota.
o Third, as a condition for rehiring the employees, the union officers were made to sign an
agreement that they would not form any union upon their return to work. This is contrary to law.
o Fourth, notwithstanding a PCE filed by MSWU, the corporation recognized a newly formed
union and hastily signed a CBA.
o Fifth, corporation was not able to prove their allegation that some of the employees contracts
had expired even before the cessation of operations. This is inconsistent with its claim that all
342 employees were paid their separation pay plus accrued benefits in August 1998.
o Sixth, proper written notices were not sent to DOLE and the employees at least one month prior
the effectivity date of termination as required under the LC. The notice to DOLE is mandatory to
 enable authorities to ascertain whether the closure and/or dismissals were being done in good
faith and not to evade compliance with obligations to employees.

Does MSWU have the legal personality to maintain a suit against the corporation? YES.
 It filed a PCE, which was granted on appeal. A CE was also held. DOLE would not have entertained the
petition if the union were not a legitimate labor organization within the meaning of the LC.
o Under the LC, in an unorganized establishment, only a legitimate union may file PCE.
o It is not clear from the record whether MSWU is a legitimate organization, but the Court is not
inclined to believe otherwise, in light of the pro-labor policies enshrined in the Constitution and LC.
o In view of the discriminatory acts committed by the corporation against MSWU prior to the holding
of CE, the results of the elections cannot be said to constitute a repudiation of the affected
employees of the unions right to represent them in the present case.