Labor Relations Cases 2

G.R. No. 147080. April 26, 2005.* CAPITOL MEDICAL CENTER, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION., respondents. Labor Law; Strikes; Strike Vote; Although the second paragraph of Section 10, Rule XXII of the Omnibus Rules of the NLRC is not provided for in the Labor Code of the Philippines, nevertheless, the same was incorporated in the Omnibus Rules Implementing the Labor Code and has the force and effect of law.We agree with the petitioner that the respondent Union failed to comply with the second paragraph of Section 10, Rule XXII of the Omnibus Rules of the NLRC which reads: Section 10. Strike or lockout vote.A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called for the purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer, corporation or association or the partners obtained by a secret ballot in a meeting called for the purpose. The regional branch of the Board may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the regional branch of the Board and notice of meetings referred to in the preceding paragraph at least twenty-four (24) hours before such meetings as well as the results of the voting at least seven (7) days before the intended strike or lockout, subject to the coolingoff period provided in this Rule. Although the second paragraph of Section 10 of the said Rule is not provided in the Labor Code of the Philippines, nevertheless, the same was incorporated in the Omnibus Rules Implementing the Labor Code and has the force and effect of law. Same; Same; Same; Aside from the mandatory notices embedded in Article 263, pars. (c) and (f) of the Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least 24 hours prior to such meeting.Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least twenty-four (24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the meeting of the union members for the conduct of a strike vote, the NCMB would be unable to supervise the holding of the same, if and when it decides to exercise its power of supervision. In National Federation of Labor v. NLRC, the Court enumerated the notices required by Article 263 of the Labor Code and the Implementing Rules, which include the 24-hour prior notice to the NCMB: 1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional Branch of the NCMB, copy furnished the employer of the union; 2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice. However, in the case of union busting where the unions existence is threatened, the cooling-off period need not be observed . . . 4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-ballot approval of majority of the total union membership in the bargaining unit concerned. 5) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended strike or lockout, subject to the cooling-off period. Same; Same; Same; The failure of a union to comply with the requirement of the giving of notice to the National Conciliation and Mediation Board (NCMB) at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal. The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a strike vote; (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the employer, to supervise the strike vote, to give it
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ample time to prepare for the deployment of the requisite personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the unions decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal. Same; Same; Same; No labor union shall declare a strike unless supported by a majority vote of the members of the union obtained by secret ballot in a meeting called for that purposethe requirement is mandatory and the failure of a union to comply therewith renders the strike illegal.Conformably to Article 264 of the Labor Code of the Philippines and Section 7, Rule XXII of the Omnibus Rules Implementing the Labor Code, no labor organization shall declare a strike unless supported by a majority vote of the members of the union obtained by secret ballot in a meeting called for that purpose. The requirement is mandatory and the failure of a union to comply therewith renders the strike illegal. The union is thus mandated to allege and prove compliance with the requirements of the law. Same; Same; Same; Evidence; Witnesses; Affidavits; The bare fact that some portions of the employee affidavits stating that no secret balloting took place are similarly worded does not constitute substantial evidence that the employer forced, intimidated or coerced the affiants to execute the same.The allegations in the foregoing affidavits belie the claim of the respondents and the finding of the NLRC that a secret balloting took place on November 10, 1997 in front of the hospital at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. The respondents failed to prove the existence of a parking lot in front of the hospital other than the parking lot across from it. Indeed, 17 of those who purportedly voted in a secret voting executed their separate affidavits that no secret balloting took place on November 10, 1997, and that even if they were not members of the respondent Union, were asked to vote and to sign attendance papers. The respondents failed to adduce substantial evidence that the said affiants were coerced into executing the said affidavits. The bare fact that some portions of the said affidavits are similarly worded does not constitute substantial evidence that the petitioner forced, intimidated or coerced the affiants to execute the same. PETITION for review on certiorari of the decision and resolution of the Court of Appeals. The facts are stated in the opinion of the Court. Samson S. Alcantara for petitioner. Edgar R. Martir for private respondents. DECISION CALLEJO, SR., J.: This is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 57500 and its Resolution denying the motion for reconsideration thereof. The Antecedents2 Whether the respondent Capitol Medical Center Employees Association-Alliance of Filipino Workers (the Union, for brevity) was the exclusive bargaining agent of the rank-and-file employees of the petitioner Capitol Medical Center, Inc. had been the bone of contention between the Union and the petitioner. The petitioners refusal to negotiate for a collective bargaining agreement (CBA) resulted in a union-led strike on April 15, 1993.
The Union had to contend with another union the Capitol Medical Center Alliance of Concerned Employees (CMC-ACE) which demanded for a certification election among the rank-and-file employees of the petitioner. Med-Arbiter Brigida Fadrigon granted the petition, and the matter was appealed to the Secretary of Labor and Employment (SOLE). Undersecretary Bienvenido E. Laguesma rendered a Resolution on November 18, 1994 granting the appeal. He, likewise, denied the motion filed by the petitioner and the CMC-ACE. The latter thereafter brought the matter to the Court which rendered judgment on February 4, 1997 affirming the resolution of Undersecretary Laguesma, thus: 1. Dismissing the petition for certification election filed by the Capitol Medical Center Alliance of Concerned Employees-United Filipino Services Workers for lack of merit; and 2. Directing the management of the Capitol Medical Center to negotiate a CBA with the Capitol Medical Center Employees Association-Alliance of Filipino Workers, the certified bargaining agent of the rank-and-file employees.3 The decision of the Court became final and executory. Thereafter, in a Letter dated October 3, 1997 addressed to Dr. Thelma N. Clemente, the President and Director of the petitioner, the Union requested for a meeting to discuss matters pertaining to a negotiation for a CBA, conformably with the decision of the Court.4 However, in a Letter to the Union dated October 10, 1997, Dr. Clemente rejected the proposed meeting, on her claim that it was a violation of Republic Act No. 6713 and that the Union was not a legitimate one. On October 15, 1997, the petitioner filed a Petition for the Cancellation of the Unions Certificate of Registration with the Department of Labor and Employment (DOLE) on the following grounds: 3) Respondent has failed for several years to submit annually its annual financial statements and other documents as required by law. For this reason, respondent has long lost its legal personality as a union. 4) Respondent also engaged in a strike which has been declared illegal by the National Labor Relations Commission.5 Apparently unaware of the petition, the Union reiterated its proposal for CBA negotiations in a Letter dated October 16, 1997 and suggested the date, time and place of the initial meeting. The Union further reiterated its plea in another Letter6 dated October 28, 1997, to no avail. Instead of filing a motion with the SOLE for the enforcement of the resolutions of Undersecretary Laguesma as affirmed by this Court, the Union filed a Notice of Strike on October 29, 1997 with the National Conciliation and Mediation Board (NCMB), serving a copy thereof to the petitioner. The Union alleged as grounds for the projected strike the following acts of the petitioner: (a) refusal to bargain; (b) coercion on employees; and (c) interference/ restraint to self-organization.7 A series of conferences was conducted before the NCMB (National Capital Region), but no agreement was reached. On November 6, 1997, the petitioner even filed a Letter with the Board requesting that the notice of strike be dismissed;8 the Union had apparently failed to furnish the Regional Branch of the NCMB with a copy of a notice of the meeting where the strike vote was conducted. On November 20, 1997, the Union submitted to the NCMB the minutes9 of the alleged strike vote purportedly held on November 10, 1997 at the parking lot in front of the petitioners premises, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. It appears
that 178 out of the 300 union members participated therein, and the results were as follows: 156 members voted to strike; 14 members cast negative votes; and eight votes were spoiled.10 On November 28, 1997, the officers and members of the Union staged a strike. Subsequently, on December 1, 1997, the Union filed an ex parte motion with the DOLE, praying for its assumption of jurisdiction over the dispute. The Union likewise prayed for the imposition of appropriate legal sanctions, not limited to contempt and other penalties, against the hospital director/president and other responsible corporate officers for their continuous refusal, in bad faith, to bargain collectively with the Union, to adjudge the same hospital director/president and other corporate officers guilty of unfair labor practices, and for other just, equitable and expeditious reliefs in the premises.11 On December 4, 1997, the SOLE issued an Order, assuming jurisdiction over the ongoing labor dispute. The decretal portion of the order reads: WHEREFORE, this Office now assumes jurisdiction over the labor disputes at Capitol Medical Center pursuant to Article 263(g) of the Labor Code, as amended. Consequently, all striking workers are directed to return to work within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties are directed to cease and desist from committing any act that may exacerbate the situation. Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-proposals leading to the conclusion of the collective bargaining agreements in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court. SO ORDERED.12 In obedience to the order of the SOLE, the officers and members of the Union stopped their strike and returned to work. For its part, the petitioner filed a petition13 to declare the strike illegal with the National Labor Relations Commission (NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In its position paper, the petitioner appended the affidavit of Erwin Barbacena, the overseer of the property across the hospital which was being used as a parking lot, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. Also included were the affidavits of Simon J. Tingzon and Reggie B. Barawid, the petitioners security guards assigned in front of the hospital premises. They attested to the fact that no secret balloting took place at the said parking lot from 6:00 a.m. to 7:00 p.m. of November 10, 1997.14 The petitioner also appended the affidavit of Henry V. Vera Cruz, who alleged that he was a member of the Union and had discovered that signatures on the Statements of Cash Receipt Over Disbursement submitted by the Union to the DOLE purporting to be his were not his genuine signatures;15the affidavits of 17 of its employees, who declared that no formal voting was held by the members of the Union on the said date, were also submitted. The latter employees also declared that they were not members of any union, and yet were asked to sign documents purporting to be a strike vote attendance and unnumbered strike vote ballots on different dates from November 8 to 11, 1997. In their position paper, the respondents appended the joint affidavit of the Union president and those members who alleged that they had cast their votes during the strike vote held on November 10, 1997.16
In the meantime, on September 30, 1998, the Regional Director of the DOLE rendered a Decision denying the petition for the cancellation of the respondent Unions certificate of registration. The decision was affirmed by the Director of the Bureau of Labor Relations on December 29, 1998. In a parallel development, Labor Arbiter Facundo L. Leda rendered a Decision on December 23, 1998 in NLRC NCR Case No. 00-12-08644-97 in favor of the petitioner, and declared the strike staged by the respondents illegal. The fallo of the decision reads: 1. Declaring as illegal the strike staged by the respondents from November 28, 1997 to December 5, 1997; 2. Declaring respondent Jaime Ibabao, in his capacity as union president, the other union officers, and respondents Ronald Q. Centeno, Michael Eustaquio and Henry Vera Cruz to have lost their employment status with petitioner; and 3. Ordering the above respondents to pay, jointly and severally, petitioner the amount of Two Hundred Thousand Pesos (P200,000.00) by way of damages.17 The Labor Arbiter ruled that no voting had taken place on November 10, 1997; moreover, no notice of such voting was furnished to the NCMB at least twenty-four (24) hours prior to the intended holding of the strike vote. According to the Labor Arbiter, the affidavits of the petitioners 17 employees who alleged that no strike vote was taken, and supported by the affidavit of the overseer of the parking lot and the security guards, must prevail as against the minutes of the strike vote presented by the respondents. The Labor Arbiter also held that in light of Article 263(9) of the Labor Code, the respondent Union should have filed a motion for a writ of execution of the resolution of Undersecretary Laguesma which was affirmed by this Court instead of staging a strike. The respondents appealed the decision to the NLRC which rendered a Decision18 on June 14, 1999, granting their appeal and reversing the decision of the Labor Arbiter. The NLRC also denied the petitioners petition to declare the strike illegal. In resolving the issue of whether the union members held a strike vote on November 10, 1997, the NLRC ruled as follows: We find untenable the Labor Arbiters finding that no actual strike voting took place on November 10, 1997, claiming that this is supported by the affidavit of Erwin Barbacena, the overseer of the parking lot across the hospital, and the sworn statements of nineteen (19) ( sic) union members. While it is true that no strike voting took place in the parking lot which he is overseeing, it does not mean that no strike voting ever took place at all because the same was conducted in the parking lot immediately/directly fronting, not across, the hospital building (Annexes "1-J," "1-K" to "1-K-6"). Further, it is apparent that the nineteen (19) (sic) hospital employees, who recanted their participation in the strike voting, did so involuntarily for fear of loss of employment, considering that their Affidavits are uniform and pro forma (Annexes "H-2" to "H-19").19 The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9, Series of 1997, absent a showing that the NCMB decided to supervise the conduct of a secret balloting and informed the union of the said decision, or that any such request was made by any of the parties who would be affected by the secret balloting and to which the NCMB agreed, the respondents were not mandated to furnish the NCMB with such notice before the strike vote was conducted.20 The petitioner filed a motion for the reconsideration of the decision, but the NLRC denied the said motion on September 30, 1999.21
The petitioner filed a petition for certiorari with the CA assailing the decision and resolution of the NLRC on the following allegation: PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, ACTED CAPRICIOUSLY, AND CONTRAVENED THE LAW AND ESTABLISHED JURISPRUDENCE IN REVERSING THE LABOR ARBITERS DECISION DATED DECEMBER 23, 1998 (ANNEX "E") AND IN UPHOLDING THE LEGALITY OF THE STRIKE STAGED BY PRIVATE RESPONDENTS FROM NOVEMBER 28, 1997 TO DECEMBER 5, 1997.22 On September 29, 2000, the CA rendered judgment dismissing the petition and affirming the assailed decision and resolution of the NLRC. The petitioner filed the instant petition for review on certiorari under Rule 45 of the Rules of Court on the following ground: THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE NLRCS FINDING THAT RESPONDENTS COMPLIED WITH THE LEGAL REQUIREMENTS FOR STAGING THE SUBJECT STRIKE.23 The petitioner asserts that the NLRC and the CA erred in holding that the submission of a notice of a strike vote to the Regional Branch of the NCMB as required by Section 7, Rule XXII of the Omnibus Rules Implementing the Labor Code, is merely directory and not mandatory. The use of the word "shall" in the rules, the petitioner avers, indubitably indicates the mandatory nature of the respondent Unions duty to submit the said notice of strike vote. The petitioner contends that the CA erred in affirming the decision of the NLRC which declared that the respondents complied with all the requirements for a lawful strike. The petitioner insists that, as gleaned from the affidavits of the 17 union members and that of the overseer, and contrary to the joint affidavit of the officers and some union members, no meeting was held and no secret balloting was conducted on November 10, 1997. The petitioner faults the CA and the NLRC for holding that a meeting for a strike vote was held on the said date by the respondents, despite the fact that the NLRC did not conduct an ocular inspection of the area where the respondents members allegedly held the voting. The petitioner also points out that it adduced documentary evidence in the form of affidavits executed by 17 members of the respondent union which remained unrebutted. The petitioner also posits that the CA and the NLRC erred in reversing the finding of the Labor Arbiter; furthermore, there was no need for the respondent union to stage a strike on November 28, 1997 because it had filed an urgent motion with the DOLE for the enforcement and execution of the decision of this Court in G.R. No. 118915. The petition is meritorious. We agree with the petitioner that the respondent Union failed to comply with the second paragraph of Section 10, Rule XXII of the Omnibus Rules of the NLRC which reads: Section 10. Strike or lockout vote. A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called for the purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer, corporation or association or the partners obtained by a secret ballot in a meeting called for the purpose.
The regional branch of the Board may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the regional branch of the Board and notice of meetings referred to in the preceding paragraph at least twenty-four (24) hours before such meetings as well as the results of the voting at least seven (7) days before the intended strike or lockout, subject to the coolingoff period provided in this Rule. Although the second paragraph of Section 10 of the said Rule is not provided in the Labor Code of the Philippines, nevertheless, the same was incorporated in the Omnibus Rules Implementing the Labor Code and has the force and effect of law.24 Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least twenty-four (24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the meeting of the union members for the conduct of a strike vote, the NCMB would be unable to supervise the holding of the same, if and when it decides to exercise its power of supervision. In National Federation of Labor v. NLRC,25 the Court enumerated the notices required by Article 263 of the Labor Code and the Implementing Rules, which include the 24-hour prior notice to the NCMB: 1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional Branch of the NCMB, copy furnished the employer of the union; 2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice. However, in the case of union busting where the unions existence is threatened, the cooling-off period need not be observed. 4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-ballot approval of majority of the total union membership in the bargaining unit concerned. 5) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended strike or lockout, subject to the cooling-off period. A union is mandated to notify the NCMB of an impending dispute in a particular bargaining unit via a notice of strike. Thereafter, the NCMB, through its conciliator-mediators, shall call the parties to a conference at the soonest possible time in order to actively assist them in exploring all possibilities for amicable settlement. In the event of the failure in the conciliation/mediation proceedings, the parties shall be encouraged to submit their dispute for voluntary arbitration. However, if the parties refuse, the union may hold a strike vote, and if the requisite number of votes is obtained, a strike may ensue. The purpose of the strike vote is to ensure that the decision to strike broadly rests with the majority of the union members in general and not with a mere minority, and at the same time, discourage wildcat strikes, union bossism and even corruption.26 A strike vote report submitted to the NCMB at least seven days prior to the intended date of strike ensures that a strike vote was, indeed, taken. In the event that the report is false, the seven-day period affords the members an opportunity to take the appropriate remedy before it is too late. 27 The 15 to 30 day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator,28 while the seven-day strike ban is intended to give the DOLE an
opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.29 The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a strike vote; (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the employer, to supervise the strike vote, to give it ample time to prepare for the deployment of the requisite personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the unions decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal. In this case, the respondent Union failed to comply with the 24-hour prior notice requirement to the NCMB before it conducted the alleged strike vote meeting on November 10, 1997. As a result, the petitioner complained that no strike vote meeting ever took place and averred that the strike staged by the respondent union was illegal. Conformably to Article 264 of the Labor Code of the Philippines30 and Section 7, Rule XXII of the Omnibus Rules Implementing the Labor Code,31 no labor organization shall declare a strike unless supported by a majority vote of the members of the union obtained by secret ballot in a meeting called for that purpose. The requirement is mandatory and the failure of a union to comply therewith renders the strike illegal.32 The union is thus mandated to allege and prove compliance with the requirements of the law. In the present case, there is a divergence between the factual findings of the Labor Arbiter, on the one hand, and the NLRC and the CA, on the other, in that the Labor Arbiter found and declared in his decision that no secret voting ever took place in the parking lot fronting the hospital on November 10, 1997 by and among the 300 members of the respondent Union. Erwin Barbacena, the overseer of the only parking lot fronting the hospital, and security guards Simon Tingzon and Reggie Barawid, declared in their respective affidavits that no secret voting ever took place on November 10, 1997; 17 employees of the petitioner also denied in their respective statements that they were not members of the respondent Union, and were asked to merely sign attendance papers and unnumbered votes. The NLRC and the CA declared in their respective decisions that the affidavits of the petitioners 17 employees had no probative weight because the said employees merely executed their affidavits out of fear of losing their jobs. The NLRC and the CA anchored their conclusion on their finding that the affidavits of the employees were uniform and pro forma. We agree with the finding of the Labor Arbiter that no secret balloting to strike was conducted by the respondent Union on November 10, 1997 at the parking lot in front of the hospital, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. This can be gleaned from the affidavit of Barbacena and the joint affidavit of Tingzon and Barawid, respectively: 1. That I am working as an overseer of a parking lot owned by Mrs. Madelaine Dionisio and located right in front of the Capitol Medical Center, specifically at the corner of Scout Magbanua Street and Panay Avenue, Quezon City;
2. That on November 10, 1997, during my entire tour of duty from 6:00 a.m. to 6:00 p.m., no voting or election was conducted in the aforementioned parking space for employees of the Capitol Medical Center and/or their guests, or by any other group for that matter.33 1. That I, Simon J. Tingzon, am a security officer of Veterans Philippine Scout Security Agency (hereinafter referred to as VPSSA), assigned, since July 1997 up to the present, as Security Detachment Commander at Capitol Medical Center (hereinafter referred to as CMC) located at Scout Magbanua corner Panay Avenue, Quezon City; 2. That my (Tingzon) functions as such include over-all in charge of security of all buildings and properties of CMC, and roving in the entire premises including the parking lots of all the buildings of CMC; 3. That I, Reggie B. Barawid, am a security guard of VPSSA, assigned, since June 1997 up to the present, as security guard at CMC; 4. That my (Barawid) functions as such include access control of all persons coming in and out of CMCs buildings and properties. I also sometimes guard the parking areas of CMC; 5. That on November 10, 1997, both of us were on duty at CMC from 7:00 a.m. to 7:00 p.m., with me (Barawid) assigned at the main door of the CMCs Main Building along Scout Magbanua St.; 6. That on said date, during our entire tour of duty, there was no voting or election conducted in any of the four parking spaces for CMC personnel and guests.34 The allegations in the foregoing affidavits belie the claim of the respondents and the finding of the NLRC that a secret balloting took place on November 10, 1997 in front of the hospital at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. The respondents failed to prove the existence of a parking lot in front of the hospital other than the parking lot across from it. Indeed, 17 of those who purportedly voted in a secret voting executed their separate affidavits that no secret balloting took place on November 10, 1997, and that even if they were not members of the respondent Union, were asked to vote and to sign attendance papers. The respondents failed to adduce substantial evidence that the said affiants were coerced into executing the said affidavits. The bare fact that some portions of the said affidavits are similarly worded does not constitute substantial evidence that the petitioner forced, intimidated or coerced the affiants to execute the same. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of Appeals and NLRC are SET ASIDE AND REVERSED. The Decision of the Labor Arbiter is REINSTATED. No costs. SO ORDERED. G.R. No. 128632. August 5, 1999.* MSF TIRE AND RUBBER, INC., petitioner, vs. COURT OF APPEALS and PHILTREAD TIRE WORKERS UNION, respondents. Remedial Law; Actions; Forum-Shopping; Forum-shopping is the institution of two (2) cases or more actions or proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition; Instances where there is forum-shopping. Forum-shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes. As held in Executive Secretary v. Gordon: Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping(1) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another, or (2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he deliberately splits appeals in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or (3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court. Same; Injunctions; Labor Law; Innocent bystander rule stated in Philippine Association of Free Labor Unions (PAFLU) v. Cloribel.Petitioner asserts that its status as an innocent bystander with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtreads. In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, this Court, through Justice J.B.L. Reyes, stated the innocent bystander rule as follows: The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or innocent bystanders if it appears that the inevit able result of its exercise is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitutes an invasion of their rights. Same; Same; Same; Same; An innocent bystander, who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from and without any connection whatever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof.An innocent bystander, who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. For instance, in PAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental fact that they are the banks landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete Workers Union, this Court ruled that Liwayway was an innocent bystander and thus entitled to enjoin the unions strike because Liwayways only connection with the employer company was the fact that both were situated in the same premises. PETITION for review on certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
Rene V. Sarmiento for respondent Union. MENDOZA, J.: Petitioner seeks a review of the decision1 of the Court of Appeals, dated March 20, 1997, which set aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioner's application for a writ of preliminary injunction. The facts are as follows: A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent, Philtread Tire Workers' Union (Union), as a result of which the Union filed on May 27, 1994 a notice of strike in the National Conciliation and Mediation Board National Capital Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for violation of the provisions of the collective bargaining agreement. This was followed by picketing and the holding of assemblies by the Union outside the gate of Philtread's plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994. In an order, dated September 4, 1994,2 then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking and Philtread from locking out members of the Union. On December 9, 1994, during the pendency of the labor dispute, entered into a Memorandum of Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum of Agreement, Philtread's plant and equipment would be sold to a new company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was located would be sold to another company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre. This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked the Union to desist from picketing outside its plant and to remove the banners, streamers, and tent which it had placed outside the plant's fence. As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for injunction with damages against the Union and the latter's officers and directors before the Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95770. On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a mere "alter ego" of Philtread, was not an "innocent bystander." After petitioner made its offer of evidence as well as the submission of the parties' respective memoranda, the trial court, in an order, dated March 25, 1996, denied petitioner's application for injunction and dismissed the complaint. However, on petitioner's motion, the trial court, on July 2, 1996, reconsidered its order, and granted an injunction. Its order read:3 Considering all that has been stated, the motion for reconsideration is granted. The Order dated March 25, 1996 is reconsideration and set aside. Plaintiff's complaint is reinstated and defendant's motion to dismiss is DENIED.
As regards plaintiff's application for the issuance of a writ of preliminary injunction, the Court finds that the plaintiff has established a clear and sustaining right to the injunctive relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by reason of the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of preliminary injunction issue ordering the defendants and any other persons acting with them and/or on their behalf to desist immediately from conducting their assembly in the area immediately outside the plaintiff's plant at Km. 21 East Service Road, South Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners, streamers, posters and placards, and/or tents/shanties or any other structure, on the fence of, and/or along the sidewalk outside, the said plant premises until further from this Court. SO ORDERED.4 Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the Court of Appeals. On March 20, 1997, the appellate court rendered a decision granting the Union's petition and ordering the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner makes the following arguments in support of its petition: a. The Court of Appeals erred in not summarily dismissing the Union's petition for its false certification of non-forum shopping and the Union's failure to file a motion for reconsideration before going up to the Court of Appeals on a petition for certiorari. b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged grounds that MSF did not have a clear and unmistakable right to entitle it to a writ of preliminary injunction. c. The Court of Appeals' pronouncement that it has not touched upon the issue of whether or not private respondent is a mere innocent bystander to the labor dispute between Philtread and the Union or upon the issue of whether or not private respondent is a mere dummy or continuity of Philtread is contrary to its own conclusions in the body of the decision, which conclusions are erroneous. d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on Philtread's remaining operations in the country and allowed the Union to exercise its right to communicate the facts of its labor dispute within MSF's premises, given the percentage of interest Philtread has in both MSF and the corporation which owns the land bearing said plant. The issues are (1) whether the Union's failure to disclose the pendency of NCMB-NCR-NS-05167-96 in its certification of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the "innocent bystander" rule. First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.5 It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes.6 As held in Executive Secretary v.Gordon:7
Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping (1) whenever as a result of an adverse decision one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another, or (2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he deliberately splits appeals "in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or (3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court. In determining whether or not there is forum-shopping, what is important is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.8 Petitioner asserts that the Court of Appeals should have dismissed the Union's petition for review on the ground that the certification of non-forum shopping was false and perjurious as a result of the Union's failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties and pending before the National Conciliation and Mediation Board. The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties.9 It was petitioner which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was forced to file a petition for review before the Court of Appeals. We cannot understand why petitioner should complain that no mention of the pendency of the arbitration case before the labor department was made in the certificate of non-forum shopping attached to the Union's petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked by petitioner's action in seeking injunction from the trial court when it could have obtained the same relief from the Secretary of Labor. Indeed, by focusing on the Union's certification before the appellate court, petitioner failed to notice that its own certification before the lower court suffered from the same omission for which it faults the Union. Although the body of petitioner's complaint mentions NCMB-NCRNS-05-167-96, its own certification is silent concerning this matter.10 It is not in keeping with the requirements of fairness for petitioner to demand strict application of the prohibition against forum-shopping, when it, too, is guilty of the same omission. Second. Petitioner asserts that its status as an "innocent bystander" with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtread's. In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, J.B.L. Reyes, stated the "innocent bystander" rule as follows:
11
this Court, through Justice
The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or "innocent bystanders" if it appears that the inevitable result of its is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. In one case decided by this Court, we upheld a trial court's injunction prohibiting the union from blocking the entrance to a feed mill located within the compound of a flour mill with which the union had a dispute. Although sustained on a different ground, no connection was found between the two mills owned by two different corporations other than their being situated in the same premises. It is to be noted that in the instances cited, peaceful picketing has not been totally banned but merely regulated. And in one American case, a picket by a labor union in front of a motion picture theater with which the union had a labor dispute was enjoined by the court from being extended in front of the main entrance of the building housing the theater wherein other stores operated by third persons were located.12 (Emphasis added) Thus, an "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. For instance, inPAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental fact that they are the bank's landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete Workers Union,13 this Court ruled that Liwayway was an "innocent bystander" and thus entitled to enjoin the union's strike because Liwayway's only connection with the employer company was the fact that both were situated in the same premises. In the case at bar, petitioner cannot be said not to have such on to the dispute. As correctly observed by the appellate court: Coming now to the case before us, we find that the "negotiation, contract of sale, and the post transaction" between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same working conditions; same machinery, tools, and equipment; and manufacture the same products as Philtread, lead us to safely conclude that private respondent's personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close
links with Philtread, we find no clear and unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it prayed for below. xxx xxx xxx
We stress that in so ruling, we have not touched on the issue of . . . whether or not private is a mere dummy or continuation of Philtread . . . .14 Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud, defend crime, or where the corporation is used as a mere alter-ego or business conduit,15 it is not these standards but those of the "innocent bystander" rule which govern whether or not petitioner is to an injunctive writ. Since petitioner is not an "innocent bystander", the trial court's order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the order is null and void.16 WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED.1wphi1.nt SO ORDERED. Sarmiento vs. Tuico Nos. L-75271-73. June 27, 1988.* Labor; Unfair Labor Practice; Authority of the NLRC to issue the return-to-work order found in Article 264(g) of the Labor Code as amended by B.P. Blg. 227.It is contended by the ATC that the NLRC had no jurisdiction in issuing the return-to-work order and that in any case the same should be annulled for being oppressive and violative of due process. The question of competence is easily resolved. The authority for the order is found in Article 264(g) of the Labor Code, as amended by B.P. Blg. 227. Same; Same; Same; MOLE acted correctly in certifying the labor dispute to the NLRC; The return-to-work order was equally valid as a statutory part and parcel of the certification order issued by the MOLE.There can be no question that the MOLE acted correctly in certifying the labor dispute to the NLRC, given the predictable prejudice the strike might cause not only to the parties but more especially to the national interest. Affirming this fact, we conclude that the return-to-work order was equally valid as a statutory part and parcel of the certification order issued by the MOLE on November 24, 1986. The law itself provides that such assumption or certification shall have the effect of automatically enjoining the intended or impending strike. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The challenged order of the NLRC was actually only an implementation of the above provision of the Labor Code and a reiteration of the directive earlier issued by the MOLE in its own assumption order of September 9, 1986. Same; Same; Same; Return-to-work order is to prevent impairment of the national interest.It must be stressed that while one purpose of the return-to-work order is to protect the workers who might otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to prevent impairment of the national interest in case the operations of the company are disrupted by a refusal of the strikers to return to work as directed. In the instant case, stoppage of work in the firm will be hurtful not only to both the employer and the employees. More particularly, it is the national economy that will suffer because of the
resultant reduction in our export earnings and our dollar reserves, not to mention possible cancellation of the contracts of the company with foreign importers. It was particularly for the purpose of avoiding such a development that the labor dispute was certified to the NLRC, with the return-to-work order following as a matter of course under the law. Same; Same; Same; Same; Emphasis is given that the return-to-work order not so much confers a right as it imposes a duty and while as a right it may be waived, it must be discharged as a duty even against the workers will; Order not considered violative of the right against involuntary servitude.It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the workers will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest. That is the real reason such return can be compelled. So imperative is the order in fact that it is not even considered violative of the right against involuntary servitude, as this Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills. The worker can of course give up his work, thus severing his ties with the company, if he does not want to obey the order; but the order must be obeyed if he wants to retain his work even if his inclination is to strike. Same; Same; Same; Same; By their own acts, petitioners are deemed to have abandoned their employment and cannot now demand the right to return thereto by virtue of the very order they have defied.The records show that the return-to-work order was first issued on June 3, 1986, and was reiterated on June 13, 1986. The strike was declared thereafter, if we go by the criminal complaints in G.R. Nos. 75271-73, where the alleged acts are claimed to have been done on June 9, 1986, and July 15, 1986. These dates are not denied. In fact, the petitioners argue in their pleadings that they were engaged only in peaceful picketing, which would signify that they had not on those dates returned to work as required and had decided instead to ignore the said order. By their own acts, they are deemed to have abandoned their employment and cannot now demand the right to return thereto by virtue of the very order they have defied. Same; Same; Same; Same; It is not correct to say that the return-to-work order may be enforced only if the strike is legal and may be disregarded if the strike is illegal.One other point that must be underscored is that the return-to-work order is issued pending the determination of the legality or illegality of the strike. It is not correct to say that it may be enforced only if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to maintain the status quo while the determination is being made. Otherwise, the workers who contend that their strike is legal can refuse to return to their work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill. Worse, they will also claim payment for work not done, on the ground that they are still legally employed although actually engaged in activities inimical to their employers interest. This is like eating ones cake and having it too, and at the expense of the management. Such an unfair situation surely was not contemplated by our labor laws and cannot be justified under the social justice policy, which is a policy of fairness to both labor and management. Neither can this unseemly arrangement be sustained under the due process clause as the order, if thus interpreted, would be plainly oppressive and arbitrary. Same; Same; Same; Same; Same; Only those workers who complied with the order should benefit.Accordingly, the Court holds that the return-to-work order should benefit only those workers who complied therewith and, regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid for work they have actually performed. Conversely, those workers who refused to obey the said order and instead waged the restrained strike are not entitled to be paid for work not done or to reinstatement to the positions they have abandoned by their refusal to return thereto as ordered.
Criminal Procedure; Injunction; The case at bar is an exception to the general rule that the prosecution of criminal offenses is not subject to injunction.Turning now to the second issue, we hold that while as a general rule the prosecution of criminal offenses is not subject to injunction, the exception must apply in the case at bar. The suspension of proceedings in the criminal complaints filed before the municipal court of Calamba, Laguna, is justified on the ground of prematurity as there is no question that the acts complained of are connected with the compulsory arbitration proceedings still pending in the NLRC. The first two complaints, as expressly captioned, are for violation of Art. 265, par. 2, in relation to Art. 273, of the Labor Code of the Philippines, and the third complaint relates to the alleged acts of coercion committed by the defendants in blocking access to the premises of the ATC. Two of the criminal complaints were filed by the personnel administrative officer of the ATC although he vigorously if not convincingly insists that he was acting in his personal capacity. Same; Same; Same; The three criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC.In view of this, the three criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC, conformably to the policy embodied in Circular No. 15, series of 1982, and Circular No. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of B.P. Blg. 227. These circulars, briefly stated, require fiscals and other government prosecutors to first secure the clearance of the Ministry of Labor and/or the Office of the President before taking cognizance of complaints for preliminary investigation and the filing in court of the corresponding informations of cases arising out of or related to a labor dispute, including allegations of violence, coercion, physical injuries, assault upon a person in authority and other similar acts of intimidation obstructing the free ingress to and egress from a factory or place of operation of the machines of such factory, or the employers premises. It does not appear from the record that such clearance was obtained, conformably to the procedure laid down to attain the industrial peace which is the primordial objective of this law, before the three criminal cases were filed. PETITION for certiorari to review the order of the National Labor Relations Commission. The facts are stated in the opinion of the Court. Jose C. Espinas for petitioners in G.R. Nos. 75271-73. Augusto Gatmaytan for petitioner ATC. Emilio C. Capulong, Jr. for private respondents in G.R. Nos. 75271-73. CRUZ, J.: Two basic questions are presented in these cases, to wit: 1. Whether or not a return-to-work order may be validly issued by the National Labor Relations Commission pending determination of the legality of the strike; and 2. Whether or not, pending such determination, the criminal prosecution of certain persons involved in the said strike may be validly restrained. The first issue was submitted to the Court in G.R. No. 77567, to which we gave due course on July 1, 1987. 1 The case arose when on May 7, 1986, petitioner Asian Transmission Corporation terminated the services of Catalino Sarmiento, vice-president of the Bisig ng Asian Transmission Labor Union (BATU), for allegedly carrying a deadly weapon in the company premises. 2 As a result, the BATU filed a notice of strike on May 26, 1986, claiming that the ATC had committed an unfair labor practice. 3 The conciliatory conference held on June 5,
1986, failed to settle the dispute. The ATC then filed a petition asking the Ministry of Labor and Employment to assume jurisdiction over the matter or certify the same to the NLRC for compulsory arbitration. 4 Noting that the impending strike would prejudice the national interest as well as the welfare of some 350 workers and their families, the MOLE issued an order on June 3, 1986, certifying the labor dispute to the NLRC. 5 At the same time, it enjoined the management from locking out its employees and the union from declaring a strike or similar concerted action. This order was reiterated on June 13, 1986, upon the representation of the ATC that some 40 workers had declared a strike and were picketing the company premises. 6 Proceedings could not continue in the NLRC, however, because of the acceptance by President Aquino of the resignations of eight of its members, leaving only the vice-chairman in office. 7 For this reason, the MOLE, on September 9, 1986, set aside the orders of June 9 and 13, 1986, and directly assumed jurisdiction of the dispute, at the same time enjoining the company to accept all returning workers. 8 This order was itself set aside on November 24,1986, upon motion of both the BATU and the ATC in view of the appointment of new commissioners in the NLRC. The MOLE then returned the case to the respondent NLRC and directed it to expeditiously resolve all issues relating to the dispute, "adding that the union and the striking workers are ordered to return to work immediately." 9 Conformably, the NLRC issued on January 13, 1987 the following resolution, which it affirmed in its resolution of February 12, 1987, denying the motion for reconsideration: CERTIFIED CASE No. NCR-NS-5-214-86, entitled Asian Transmission Corporation, Petitioner versus Bisig ng Asian Transmission Labor Union (BATU), et al., Respondents.-Considering that the petitioner, despite the order dated 24 November 1986 of the Acting Minister, "to accept all the returning workers" continues to defy the directive insofar as 44 of the workers are concerned, the Commission, sitting en banc, resolved to order the petitioner to accept the said workers, or, to reinstate them on payroll immediately upon receipt of the resolution. It is these orders of January 13 and February 12, 1987, that are challenged by the ATC in this petition for certiorari and are the subject of the temporary restraining order issued by this Court on March 23, 1987. 10 The second issue was raised in G.R. Nos. 75271-73, which we have consolidated with the firstmentioned petition because of the Identity of their factual antecedents. This issue was provoked by three criminal complaints filed against the petitioning workers in the municipal trial court of Calamba, Laguna, two by the personnel administrative officer of the ATC and the third by the Philippine Constabulary. The first two complaints, filed on July 11 and July 15, 1986, were for "Violation of Article 265, par. 1, in relation to Article 273 of the Labor Code of the Philippines."11 The third, filed on July 17, 1986, was for coercion. 12 In all three complaints, the defendants were charged with staging an illegal strike, barricading the gates of the ATC plant and preventing the workers through intimidation, harassment and force from reporting for work. Acting on Criminal Case No. 15984, Judge Orlando Tuico issued a warrant of arrest against the petitioners and committed 72 of them to jail although he later ordered the release of 61 of them to the custody of the municipal mayor of Calamba, Laguna. 13 The petitioners had earlier moved for the lifting of the warrant of arrest and the referral of the coercion charge to the NLRC and, later, for the dismissal of Criminal Cases Nos. 15973 and 15981 on the ground that they came under the primary jurisdiction of the NLRC. 14 As the judge had not ruled on these motions, the petitioners came to this Court in this petition for certiorari and prohibition. On August 12, 1986, we issued a temporary restraining order to prevent Judge Tuico from enforcing the warrant of arrest and further proceeding with the case. 15 This order was reiterated on September 21, 1987, "to relieve tensions that might prevent an amicable settlement of the dispute between the parties in the compulsory
arbitration proceedings now going on in the Department of Labor," and made to apply to Judge Paterno Lustre, who had succeeded Judge Tuico. 16 That is the background. Now to the merits. It is contended by the ATC that the NLRC had no jurisdiction in issuing the return-to-work order and that in any case the same should be annulled for being oppressive and violative of due process. The question of competence is easily resolved. The authority for the order is found in Article 264(g) of the Labor Code, as amended by B.P. Blg. 227, which provides as follows: When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely affecting the national interest, such as may occur in but not limited to public utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and export- oriented industries, including those within export processing zones, the Minister of Labor and Employment shall assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Minister may seek the assistance of law-enforcement agencies to ensure compliance with this provision as well as such orders as he may issue to enforce the same. The justification of the MOLE for such order was embodied therein, thus: Asian Transmission Corporation is an export-oriented enterprise and its annual export amounts to 90% of its sales generating more than twelve (12) million dollars per year. The corporation employs three hundred fifty (350) workers with a total monthly take home pay or approximately P1,300,000.00 a month. Any disruption of company operations will cause the delay of shipments of export finished products which have been previously committed to customers abroad, thereby seriously hampering the economic recovery program which is being pursued by the government. It wig also affect gravely the livelihood of three hundred fifty (350) families who will be deprived of their incomes. This Office is therefore of the opinion that a strike or any disruption in the normal operation of the company will adversely affect the national interest. It is in the interest of both labor and management that the dispute be certified for compulsory arbitration to National Labor Relations Commission. WHEREFORE, this Office hereby certifies the labor dispute to the National Labor Relations Commission in accordance with Article 264(g) of the Labor Code, as amended. In line with this Certification, the management is enjoined from locking out its employees and the union from declaring a strike, or any concerted action which will disrupt the harmonious labor-management relations at the company. 17
There can be no question that the MOLE acted correctly in certifying the labor dispute to the NLRC, given the predictable prejudice the strike might cause not only to the parties but more especially to the national interest. Affirming this fact, we conclude that the return-to-work order was equally valid as a statutory part and parcel of the certification order issued by the MOLE on November 24, 1986. The law itself provides that "such assumption or certification shall have the effect of automatically enjoining the intended or impending strike. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout." The challenged order of the NLRC was actually only an implementation of the above provision of the Labor Code and a reiteration of the directive earlier issued by the MOLE in its own assumption order of September 9, 1986. It must be stressed that while one purpose of the return-to-work order is to protect the workers who might otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to prevent impairment of the national interest in case the operations of the company are disrupted by a refusal of the strikers to return to work as directed. In the instant case, stoppage of work in the firm will be hurtful not only to both the employer and the employees. More particularly, it is the national economy that will suffer because of the resultant reduction in our export earnings and our dollar reserves, not to mention possible cancellation of the contracts of the company with foreign importers. It was particularly for the purpose of avoiding such a development that the labor dispute was certified to the NLRC, with the return-to-work order following as a matter of course under the law. It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest. That is the real reason such return can be compelled. So imperative is the order in fact that it is not even considered violative of the right against involuntary servitude, as this Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills. 18 The worker can of course give up his work, thus severing his ties with the company, if he does not want to obey the order; but the order must be obeyed if he wants to retain his work even if his inclination is to strike. If the worker refuses to obey the return-to-work order, can it be said that he is just suspending the enjoyment of a right and he is entitled to assert it later as and when he sees fit? In the meantime is the management required to keep his position open, unable to employ replacement to perform the work the reluctant striker is unwilling to resume because he is still manning the picket lines? While the ATC has manifested its willingness to accept most of the workers, and has in fact already done so, it has balked at the demand of the remaining workers to be also allowed to return to work. 19 Its reason is that these persons, instead of complying with the return-towork order, as most of the workers have done, insisted on staging the restrained strike and defiantly picketed the company premises to prevent the resumption of operations. By so doing, the ATC submits, these strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced. The Court agrees. The records show that the return-to-work order was first issued on June 3, 1986, and was reiterated on June 13, 1986. The strike was declared thereafter, if we go by the criminal
complaints in G.R. Nos. 75271-73, where the alleged acts are claimed to have been done on June 9,1986, and July 15,1986. These dates are not denied. In fact, the petitioners argue in their pleadings that they were engaged only in peaceful picketing, 20 which would signify that they had not on those dates returned to work as required and had decided instead to ignore the said order. By their own acts, they are deemed to have abandoned their employment and cannot now demand the right to return thereto by virtue of the very order they have defied. One other point that must be underscored is that the return-to-work order is issued pending the determination of the legality or illegality of the strike. It is not correct to say that it may be enforced only if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to maintain the status quo while the determination is being made. Otherwise, the workers who contend that their strike is legal can refuse to return to their work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill. Worse, they win also claim payment for work not done, on the ground that they are still legally employed although actually engaged in activities inimical to their employer's interest. This is like eating one's cake and having it too, and at the expense of the management. Such an unfair situation surely was not contemplated by our labor laws and cannot be justified under the social justice policy, which is a policy of fairness to both labor and management. Neither can this unseemly arrangement be sustained under the due process clause as the order, if thus interpreted, would be plainly oppressive and arbitrary. Accordingly, the Court holds that the return-to-work order should benefit only those workers who complied therewith and, regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid for work they have actually performed. Conversely, those workers who refused to obey the said order and instead waged the restrained strike are not entitled to be paid for work not done or to reinstatement to the positions they have abandoned by their refusal to return thereto as ordered. Turning now to the second issue, we hold that while as a general rule the prosecution of criminal offenses is not subject to injunction, the exception must apply in the case at bar. The suspension of proceedings in the criminal complaints filed before the municipal court of Calamba, Laguna, is justified on the ground of prematurity as there is no question that the acts complained of are connected with the compulsory arbitration proceedings still pending in the NLRC. The first two complaints, as expressly captioned, are for "violation of Art. 265, par. 2, in relation to Art. 273, of the Labor Code of the Philippines," and the third complaint relates to the alleged acts of coercion committed by the defendants in blocking access to the premises of the ATC. Two of the criminal complaints were filed by the personnel administrative officer of the ATC although he vigorously if not convincingly insists that he was acting in his personal capacity. In view of this, the three criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC, conformably to the policy embodied in Circular No. 15, series of 1982, and Circular No. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of B.P. Blg. 227. 21 These circulars, briefly stated, require fiscals and other government prosecutors to first secure the clearance of the Ministry of Labor and/or the Office of the President "before taking cognizance of complaints for preliminary investigation and the filing in court of the corresponding informations of cases arising out of or related to a labor dispute," including "allegations of violence, coercion, physical injuries, assault upon a person in authority and other similar acts of intimidation obstructing the free ingress to and egress from a factory or place of operation of the machines of such
factory, or the employer's premises." It does not appear from the record that such clearance was obtained, conformably to the procedure laid down "to attain the industrial peace which is the primordial objectives of this law," before the three criminal cases were filed. The Court makes no findings on the merits of the labor dispute and the criminal cases against the workers as these are not in issue in the petitions before it. What it can only express at this point is the prayerful hope that these disagreements will be eventually resolved with justice to all parties and in that spirit of mutual accommodation that should always characterize the relations between the workers and their employer. Labor and management are indispensable partners in the common endeavor for individual dignity and national prosperity. There is no reason why they cannot pursue these goals with open hands rather than clenched fists, striving with rather than against each other, that they may together speed the dawning of a richer day for all in this amiable land of ours. WHEREFORE, judgment is hereby rendered as follows: 1. In G.R. No. 77567, the petition is DENIED and the challenged Orders of the NLRC dated January 13, 1986, and February 12, 1986, are AFFIRMED as above interpreted. The temporary restraining order dated March 23, 1987, is LIFTED. 2. In G.R. Nos. 75271-73, the temporary restraining order of August 12,1986, and September 21, 1986, are CONTINUED IN FORCE until completion of the compulsory arbitration proceedings in the NLRC. No costs. It is so ordered. Lapanday Workers Union vs. National LaborRelations Commission G.R. Nos. 95494-97. September 7, 1995.* Labor Law; Strikes; Strike, Defined; Our laws regulate the exercise of strikes within reasons by balancing the interests of labor and management together with the overarching public interest.A strike is any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. It is the most preeminent of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. Undeniably, strikes exert some disquieting effects not only on the relationship between labor and management but also on the general peace and progress of society. Our laws thus regulate their exercise within reasons by balancing the interests of labor and management together with the overarching public interest. Same; Same; Among the limitations on the exercise of the right of strike are the procedural steps to be followed before staging a strike, which steps are mandatory in character.Some of the limitations on the exercise of the right of strike are provided for in paragraphs (c) and (f) of Article 263 of the Labor Code, as amended, supra. They provide for the procedural steps to be followed before staging a strikefiling of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) v. Overseas, et al., we ruled that these steps are mandatory in character. Same; Same; Strike is a weapon that can either breathe life to or destroy the union and its members in their struggle with management for a more equitable due of their laborsthe decision to wield the weapon of strike must, therefore, rest on a rational basis.The seven (7) day waiting period is intended to give the Department of Labor and Employment an opportunity to verify whether the projected strike really carries the imprimatur of the majority
of the union members. The need for assurance that majority of the union members support the strike cannot be gainsaid. Strike is usually the last weapon of labor to compel capital to concede to its bargaining demands or to defend itself against unfair labor practices of management. It is a weapon that can either breathe life to or destroy the union and its members in their struggle with management for a more equitable due of their labors. The decision to wield the weapon of strike must, therefore, rest on a rational basis, free from emotionalism, unswayed by the tempers and tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should not, however, be antithetical to the public welfare. Thus, our laws require the decision to strike to be the consensus of the majority for while the majority is not infallible, still, it is the best hedge against haste and error. In addition, a majority vote assures the union it will go to war against management with the strength derived from unity and hence, with better chance to succeed. Same; Same; Illegal Strikes; The penalty of dismissal for participating in an illegal strike is limited only to the leaders.We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of the illegal strike, especially the officers of the union who served as its major players. They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on strike, including its procedure. They cannot violate the law which ironically was cast to promote their interest. Same; Same; Same; Part of our benign consideration for labor is the policy of reinstating rankand-file workers who were merely misled in supporting illegal strikesbut they should not be compensated for services skipped during the illegal strike.We, likewise, agree with the public respondent that the union members who were merely instigated to participate in the illegal strike should be treated differently from their leaders. Part of our benign consideration for labor is the policy of reinstating rank-and-file workers who were merely misled in supporting illegal strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they should not be compensated for services skipped during the illegal strike. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. Florante E. Garcia for petitioners. J.V. Yap Law Office for private respondents. PUNO, J.: Petitioner Lapanday Agricultural Workers' Union (Union for brevity) and petitioners-workers of Lapanday Agricultural and Development Corporation and CADECO Agro Development Philippines, Inc., seek to reverse the consolidated Decision dated August 29, 1990, 1rendered by public respondent National Labor Relations Commision, declaring their strike illegal and ordering the dismissal of their leaders. The background of the case: Private respondents are sister companies engaged in the production of bananas. Their agricultural establishments are located in Davao City. On the other hand, petitioner Lapanday Workers' Union (Union) is the duly certified bargaining agent of the rank and file employees of private respondents. The Union is affiliated with the KMU-ANGLO. The other petitioners are all members of the Union.
The records show that petitioner Union has a collective bargaining agreement with private respondents, covering the period from December 5, 1985 to November 30, 1988. A few months before the expiration of their CBA, private respondents initiated certain management policies which disrupted the relationship of the parties. First, on August 1, 1988, private respondents contracted Philippine Eagle Protectors and Security Agency, Inc., to provide security services for their business premises located in Lapanday, Bandug, Callawa, Davao City, and Guising, Davao Del Sur. Their contract also called for the protection of the lives and limbs of private respondents' officers, employees and guests within company premises. The Union branded the security guards posted within the company premises as private respondents' "goons" and "special forces." It also accused the guards of intimidating and harassing their members. Second, private respondents conducted seminars on Human Development and Industrial Relations (HDIR) for their managerial and supervisory employees and, later, the rank-andfilers, to promote their social education and economic growth. Among the topics discussed in the seminar were the mission statement of the company, corporate values, and the Philippine political spectrum. The Union claimed that the module on the Philippine political spectrum lumped the ANGLO (Alliance of Nationalist and Genuine Labor Organization), with other outlawed labor organizations such as the National Democratic Front or other leftist groups. These issues were discussed during a labor-management meeting held on August 2, 1988. The labor group was represented by the Union, through its President, petitioner Arquilao Bacolod, and its legal counsel. After private respondents explained the issues, the Union agreed to allow its members to attend the HDIR seminar for the rank-and-filers. Nevertheless, on August 19 and 20, the Union directed its members not to attend the seminars scheduled on said dates. Earlier on, or on August 6, 1988, the Union, led by petitioners Arquilao Bacolod and Rene Arao, picketed the premises of the Philippine Eagle Protectors to show their displeasure on the hiring of the guards. Worse still, the Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and Mediation Board (NCMB). It accused the company of unfair labor practices consisting of coercion of employees, intimidation of union members and union-busting. 2 These were the same issues raised by the Union during the August 2, 1988 labor-management meeting. On August 29, 1988, the NCMB called a conciliation conference. The conference yielded the following agreement: (1) Union officers, including the officials of KMU-ANGLO, and the Executive Director of the NCMB would attend the HDIR seminar on September 5, 1988; and (2) A committee shall convene on September 10, 1989, to establish guidelines governing the guards. The Union officials did attend the September 5, 1988 seminar. While they no longer objected to the continuation of the seminar, they reiterated their demand for the deletion of the discussion pertaining to the KMU-ANGLO. With the apparent settlement of their differences, private respondents notified the NCMB that there were no more bases for the notice of strike. An unfortunate event brake the peace of the parties. On September 8, 1988, Danilo Martinez, a member of the Board of Directors of the Union, was gunned down in his house in the presence
of his wife and children. The gunman was later identified as Eledio Samson, an alleged member of the new security forces of private respondents. On September 9, 1988, the day after the killing, most of the members of the Union refused to report for work. They returned to work the following day but they did not comply with the "quota system" adopted by the management to bolster production output. Allegedly, the Union instructed the workers to reduce their production to thirty per cent (30%). Private respondents charged the Union with economic sabotage through slowdown. On September 14, 1988, Private respondents filed separate charges against the Union and its members for illegal strike, unfair labor practice and damages, with prayer for injunction. These cases were docketed as Case Nos. RAB-11-09-00612-888 and RAB No. 11-09-00613-88 before Labor Arbiter Antonio Villanueva. On September 17, 1988, petitioners skipped work to pay their last respect to the slain Danilo Martinez who was laid to rest. Again, on September 23, 1988, petitioners did not report for work. Instead, they proceeded to private respondents' office at Lanang, carrying placards and posters which called for the removal of the security guards, the ouster of certain management officials, and the approval of their mass leave application. Their mass action did not succeed. In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor Rodrigo Duterte intervened. Dialogues were held on September 27 and 29, 1988 at the City Mayor's Office. Again, the dialogues proved fruitless as private respondents refused to withdraw the cases they earlier filed with public respondent. On October 3, 1988, a strike vote was canducted among the members of the Union and those in favor of the strike won overwhelming support from the workers. The result of the strike vote was then submitted to the NCMB on October 10, 1988. Two days later, or on Ootober 12, 1988, the Union struck. On the bases of the foregoing facts, Labor Arbiter Antonio Villanueva ruled that the Onion staged an illegal strike. The dispositlve portion of the Decision, dated December 12, 1988, states: COMFORMABLY WITH ALL THE FOREGOING, judgment is hereby rendered: a) Declaring the strike staged by respondents (petitioners) to be illegal; b) Declaring the employees listed as respondents in the complaint and those mentioned in page 21 to have lost their employment status with complainants Lapanday Agricultural and Development Corporation and Cadeco Agro Development Philippines, Inc.; and c) Ordering respondents (petitioners in this case) to desist from further committing an illegal strike. Petitioners appealed the Villanueva decision to public respondent NLRC. It also appears that on December 6, 1988, or before the promulgation of the decision of Arbiter Villanueva, the Union, together with Tomas Basco and 25 other workers, filed a complaint for unfair labor practice and illegal suspension against LADECO. The case was docketed as Case No. RAB-11-12-00780-88. On even date, another complaint for unfair labor practice and illegal
dismissal was filed by the Union, together with Arquilao Bacolod and 58 other complainants. This was docketed as Case No. RAB-11-12-00779-88. These two (2) cases were heard by Labor Arbiter Newton Sancho. Before the NLRC could resolve the appeal taken on the Villanueva decision in Case Nos. RAB11-09-00612-88 and RAB-11-09-00613-88, Labor Arbiter Sancho rendered a decision in the two (2) cases filed by the Union against private respondents LADECO and CADECO (Case Nos. RAB-11-12-00779-88 and RAB-11-12-00780-88). The Sancho decision, dated October 18, 1989, declared LADECO and CADECO guilty of unfair labor practices and illegal dismissal and ordered the reinstatement of the dismissed employees of private reapondents, with backwages and other benefits. Significantly, the Sancho decision considered the refusal of the workers to report for work on September 9, 1988, justified by the circumstance then prevailing, the killing of Danilo Martinez on September 8,1988. Private respondents appealed the Sancho decision, claiming, among others, that labor arbiter Sancho erred in passing upon the legality of the strike staged by petitioners since said issue had already been passed upon by the Regional Arbitration Branch and was still on appeal before the NLRC. Considering that the four (4) cases before it arose from the same set of facts and involved substantially the same issues, the NLRC rendered a consolidated decision, promulgated August 29, 1990, upholding the Villanueva decision in Case Nos. RAB-11-09-00612-88 and RAB-1109-00613-88. The dispositive portion of the assailed NLRC decision states: WHEREFORE, premises considered, a new judgment is entered in the four consolidated and above-captioned cases as follows: 1. The strike staged by the Lapanday Agricultural Workers Union is hereby declared to be (sic) illegal; 2. As a consequence thereof, the following employees-union officers are declared to have lost their employment status with Lapanday Agricultural Development Corporation and CADECO Agro Development Philippines, to wit: Arguilao Bacolod, Jose Erad, Fernando Hernando, Eldie Estrella, Cerelo Dayag, Lucino Magadan, Rene Arao, Eduardo Poquita, Juanito Gahum, Emilio Magno, Perlito Lisondra, Gregorio Albaron, Abraham Baylon, Dionosio Trocio, Tomas Basco and Rosario Sinday; 3. However, the individual respondents (union members), being merely rankand-file employees and who merely joined the strike declared as illegal, are ordered reinstated but without backwages, the period they were out of work is deemed the penalty for the illegal strike they staged; 4. Ordering Lapanday Workers' Union, its leaders and members, to desist from further committing an illegal strike; and 5. Dismissing the complaint for unfair labor practice, illegal suspension and illegal dismissal filed by the Lapanday Workers Union (LWU)-ANGLO and its members, for lack of merit. SO ORDERED. Petitioners fileds motion for reconsideration. It did not prosper. Hence, the petition.
Petitioners now claim that public respondent NLRC gravely abused its discretion in: a) declaring that their activities, from September 9, 1988 to October 12, 1988, were strike activities; and b) declaring that the strike staged on October 12, 1988 was illegal. The critical issue is the legality of the strike held on October 12, 1988. The applicable laws are Articles 263 and 264 of the Labor Code, as amended by E.O. No. 111, dated December 24, 1986. 3 Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides: (c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file anotice of strike or the employer may file, notice of lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor practice, the notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15-daycooling-off period shall not apply and the union may take action immediately. xxx xxx xxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven (7) days before the intended strike or lockout subject to the cooling-off period herein provided. Article 264 of the same Code reads: Art. 264. Prohibited activities. (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. xxx xxx xxx . . . . Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided that mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (emphasis ours).
A strike is "any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute." 4 It is the most preeminent of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. Undeniably, strikes exert some disquieting effects not only on the relationship between labor and management but also on the general peace and progress of society. Our laws thus regulate their exercise within reasons by balancing the interests of labor and management together with the overarching public interest. Some of the limitations on the exercise of the right of strike are provided for in paragraphs (c) and (f) of Article 263 of the Labor Code, as amended, supra. They Provide for the procedural steps to be followed before staging a strike filing of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) vs. Overseas, et al., 5 we ruled that these steps are mandatory in character, thus: If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not the waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter discussed) far which the filing of the strike notice and strike-vote report is required cannot be achieved. . . . xxx xxx xxx So too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General . . . The submission of the report gives assurance that a strike vote has been taken and that, if the report concerning it is false, the majority of the members can take appropriate remedy before it is too late. The seven (7) day waiting period is intended to give the Department of Labor and Employment an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members. The need for assurance that majority of the union members support the strike cannot be gainsaid. Strike is usually the last weapon of labor to compel capital to concede to its bargaining demands or to defend itself against unfair labor practices of management. It is a weapon that can either breathe life to or destroy the union and its members in their struggle with management for a more equitable due of their labors. The decision to wield the weapon of strike must, therefore, rest on a rational basis, free from emotionalism, unswayed by the tempers and tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should not, however, be antithetical to the public welfare. Thus, our laws require the decision to strike to be the consensus of the majority for while the majority is not infallible, still, it is the best hedge against haste and error. In addition, a majority vote assures the union it will go to war against management with the strength derived from unity and hence, with better chance to succeed. InBatangas Laguna Tayabas Bus Company vs. NLRC, 6 we held: xxx xxx xxx The right to strike is one of the rights recognized and guaranteed by the Constitution as an instrument of labor for its protection against exploitation by management. By virtue of this right, the workers are able to press their demands for better terms of employment with more energy and persuasiveness, poising the threat to strike as their reaction to employer's intransigence. The
strike is indeed a powerful weapon of the working class. But precisely because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the workers' own hands. Thus, it must be declared only after the most thoughtful consultation among them, conducted in the only way allowed, that is, peacefully, and in every case conformably to reasonable regulation. Any violation of the legal requirements and strictures, . . . will render the strike illegal, to the detriment of the very workers it is supposed to protect. Every war must be lawfully waged. A labor dispute demands no less observance of the rules, for the benefit of all concerned. Applying the law to the case at bar, we rule that strike conducted by the union on October 12, 1988 is plainly illegal as it was held within th seven (7) day waiting period provided for by paragraph (f), Article 263 of the Labor Code, as amended. The haste in holding the strike prevented the Department of Labor and Employment from verifying whether it carried the approval of the majority of the union members. It set to naught an important policy consideration of our law on strike. Considering this finding, we need not exhaustively rule on the legality of the work stoppage conducted by the union and some of their members on September 9 and 23, 1988. Suffice to state, that the ruling of the public respondent on the matter is supported by substantial evidence. We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of the illegal strike. especially the officers of the union who served as its major players. They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on strike, including its procedure. They cannot violate the law which ironically was cast to promote their interest. We, likewise, agree with the public respondent that the union members who were merely instigated to participate in the illegal strike should be treated differently from their leaders. Part of our benign consideration for labor is the policy of reinstating rank-and-file workers who were merely misled in supporting illegal strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they should not be compensated for services skipped during the illegal strike. IN VIEW WHEREOF, the petition is dismissed for failure to show grave abuse of discretion on the part of the public respondent. Costs against the petitioners. SO ORDERED. Stamford Marketing Corp. vs. Julian G.R. No. 145496. February 24, 2004.* Labor Law; Dismissals; Strike; The right to strike while constitutionally recognized, is not without legal restrictions; Procedural steps to be followed before a strike may be staged; These requirements are mandatory, meaning, non-compliance therewith makes the strike illegal. Indeed, the right to strike, while constitutionally recognized, is not without legal restrictions. The Labor Code regulates the exercise of said right by balancing the interests of labor and management in the light of the overarching public interest. Thus, paragraphs (c) and (f) of Article 263 mandate the following procedural steps to be followed before a strike may be staged: filing of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment. It bears stressing that these requirements are mandatory, meaning, non-compliance therewith makes the strike illegal. The evident intention of the law in requiring the strike notice and strike-vote report is to reasonably regulate the
right to strike, which is essential to the attainment of legitimate policy objectives embodied in the law. Same; Same; Same; Knowingly participating in an illegal strike is a valid ground for termination from employment of a union officer; Mere participation in an illegal strike is not a sufficient ground for termination of the services of the union members provided that he did not commit an illegal act during the strike.Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes a distinction between union officers and members who participated thereon. Thus, knowingly participating in an illegal strike is a valid ground for termination from employment of a union officer. The law, however, treats differently mere union members. Mere participation in an illegal strike is not a sufficient ground for termination of the services of the union members. The Labor Code protects an ordinary, rank-and-file union member who participated in such a strike from losing his job, provided that he did not commit an illegal act during the strike. Thus, absent any clear, substantial and convincing proof of illegal acts committed during an illegal strike, an ordinary striking worker or employee may not be terminated from work. Same; Same; Same; Abandonment; It is established that an employee who forthwith takes steps to protest his layoff cannot be said to have abandoned his work.On this point, we affirm the findings of the appellate court that Julian and Tejada did not abandon their employment. Petitioners utterly failed to show proof that Julian and Tejada had the intent to abandon their work and sever their employment relationship with petitioners. It is established that an employee who forthwith takes steps to protest his layoff cannot be said to have abandoned his work. Same; Same; Same; As in other termination cases, union officers must be given the required notices for terminating an employment.With respect to union officers, however, there is no dispute they could be dismissed for participating in an illegal strike. Union officers are dutybound to guide their members to respect the law. Nonetheless, as in other termination cases, union officers must be given the required notices for terminating an employment, i.e., notice of hearing to enable them to present their side, and notice of termination, should their explanation prove unsatisfactory. Nothing in Article 264 of the Labor Code authorizes an immediate dismissal of a union officer for participating in an illegal strike. The act of dismissal is not intended to happen ipso facto but rather as an option that can be exercised by the employer and after compliance with the notice requirements for terminating an employee. In this case, petitioners did not give the required notices to the union officers. Same; Same; Same; The dismissals per se are not invalid but only ineffectual in accordance with Serrano v. National Labor Relations Commission.We must stress, however, the dismissals per se are not invalid but only ineffectual in accordance with Serrano v. National Labor Relations Commission. In said case, we held that (1) the employers failure to comply with the notice requirement does not constitute denial of due process, but mere failure to observe a procedure for termination of employment which makes the termination merely ineffectual, and (2) the dismissal shall be upheld but the employer must be sanctioned for noncompliance with the prescribed procedure. PETITION for review on certiorari of the decision and resolution of the Court of Appeals. The facts are stated in the opinion of the Court. The Law Firm of Chan, Robles & Associates for petitioners. Raul E. Espinosa for private respondents.
DECISION
QUISUMBING, J.: For review on certiorari is the Court of Appeals Decision,1 dated April 26, 2000, in CA-G.R. SP No. 53169, as well as its Resolution,2 dated October 11, 2000, denying the petitioners Motion for Reconsideration. The Court of Appeals modified the Resolution,3 dated August 27, 1998, of the National Labor Relations Commission (NLRC)-First Division which, in turn, dismissed the petitioners appeal from the decision of Labor Arbiter Ramon Valentin C. Reyes in three (3) consolidated cases, namely: (1) Josephine Julian, et al. vs. Stamford Marketing Corp. (NLRC NCR Case No. 00-1108124-94); (2) Philippine Agricultural, Commercial and Industrial Workers Union, et al. vs. GSP Manufacturing Corp., et al. (NLRC NCR Case No. 00-03-02114-95); and (3) Lucita Casero, et al. vs. GSP Manufacturing Corp., et al. (NLRC NCR Case No. 00-0110437-95). The instant controversy stemmed from a letter sent by Zoilo V. De La Cruz, Jr., president of the Philippine Agricultural, Commercial and Industrial Workers Union (PACIWU-TUCP), on November 2, 1994, to Rosario A. Apacible, the treasurer and general manager of herein petitioners Stamford Marketing Corporation, GSP Manufacturing Corporation, Giorgio Antonio Marketing Corporation, Clementine Marketing Corporation, and Ultimate Concept Phils., Inc. Said letter advised Apacible that the rank-and-file employees of the aforementioned companies had formed the Apacible Enterprise Employees Union-PACIWU-TUCP. The union demanded that management recognize its existence. Shortly thereafter, discord reared its ugly head, and rancor came hard on its wake. Josephine Julian, et al. NLRC NCR Case No. 00-11-08124-94 vs. Stamford Marketing Corp.
On November 9, 1994, or just a day after Apacible received the letter of PACIWU-TUCP, herein private respondents Josephine Julian, president of the newly organized labor union; Jacinta Tejada, and Jecina Burabod, board member and member of the said union, respectively, were effectively dismissed from employment. Without further ado, the three dismissed employees filed suit with the Labor Arbiter. In their Complaint, the three dismissed employees alleged that petitioners had not paid them their overtime pay, holiday pay/premiums, rest day premium, 13th month pay for the year 1994, salaries for services actually rendered, and that illegal deduction had been made without their consent from their salaries for a cash bond. For its part, herein petitioner Stamford alleged that private respondent Julian was a supervising employee at the Patricks Boutique at Shoemart (SM) Northmall. In October 1994, when she was four (4) to five (5) months pregnant, the management of SM Northmall asked her to go on maternity leave, pursuant to company policy. Julian was then directed to report at Stamfords Head Office for reassignment. She was also asked to submit a medical certificate to enable the company to approximate her delivery date. Julian, however, allegedly failed to comply with these directives and instead, ceased to report for work without having given notice. Stamford then allegedly asked Tejada to take over Julians position, but the former inexplicably
refused to comply with the management directive. Instead, like Julian, she abandoned her work with nary a notice or an explanation. As to Burabod, petitioner Giorgio Antonio Boutique (Giorgio) averred that she was employed as one of its sales clerks at its SM Northmall branch. When directed to report to the Giorgio branch at Robinsons Galleria, she defiantly questioned the validity of the directive and refused to comply. Like Julian and Tejada, she then ceased to report for work without giving notice. Philippine Agricultural, Commercial and Industrial Workers Union, et al. vs. GSP Manufacturing Corp. NLRC NCR Case No. 00-03-02114-95 On March 17, 1995, PACIWU-TUCP, filed on behalf of fifty (50) employees allegedly illegally dismissed for union membership by the petitioners, a Complaint before the Arbitration Branch of NLRC, Metro Manila. PACIWU-TUCP charged petitioners herein with unfair labor practice. The Complaint alleged that when Apacible received the letter of PACIWU-TUCP, management began to harass the members of the local chapter, a move which culminated in their outright dismissal from employment, without any just or lawful cause. It was a clear case of unionbusting, averred PACIWU-TUCP. GSP Manufacturing Corporation (GSP) denied the unions averments. It claimed that it had verified with the Bureau of Labor Relations (BLR) whether a labor organization with the name Apacible Enterprises Employees Union was duly registered. It was informed that no such labor organization was registered either as a local chapter of PACIWU or of the Trade Union Congress of the Philippines (TUCP). GSP claimed that after unsuccessfully misrepresenting themselves, herein private respondents then started making unjustified demands, abandoned their work, and staged an illegal strike from November 1994 up to the filing of the Complaints. Petitioners then asked the private respondents to lift their picket and return to work, but were only met with a cold refusal. Lucita Casero, et al. vs. NLRC NCR Case No. 00-01-10437-95 GSP Manufacturing Corp., et al.
This separate case was also filed by the dismissed union members (complainants in NLRC NCR Case No. 00-03-02114-95), against the petitioners herein for payment of their monetary claims. The dismissed employees demanded the payment of (1) salary differentials due to underpayment of wages; (2) unpaid salaries/wages for work actually rendered; (3) 13th month pay for 1994; (4) cash equivalent of the service incentive leave; and (5) illegal deductions from their salaries for cash bonds. Petitioner corporations, however, maintained that they have been paying complainants the wages/salaries mandated by law and that the complaint should be dismissed in view of the execution of quitclaims and waivers by the private respondents. The Labor Arbiter ordered the three cases consolidated as the issues were interrelated and the respondent corporations were under one management. After due proceedings, Labor Arbiter Ramon Valentin C. Reyes rendered a decision, the decretal portion of which reads as follows: WHEREFORE, premises all considered, judgment is hereby rendered in the respective cases as follows:
A. NLRC NCR CASE NO. 00-11-08124-94 1. Holding the respondent guilty of unfair labor practice, and declaring complainants dismissals illegal; 2. Ordering respondent to reinstate complainants to their former positions without loss of seniority rights and other benefits; 3. Ordering the respondent to pay complainants their backwages from the date of their termination up to the date of this decision; 4. Ordering the respondent to pay complainants their unpaid salaries, overtime pay, holiday and rest day premium, unpaid 13th month pay and reimbursement of the cash deposit deducted by the respondent from the salaries of complainants. B. NLRC NCR CASE NO. 00-03-02114-95 1. Declaring the strike conducted by complainants to be illegal; 2. Declaring the officers of the union to have lost their employment status, and thus terminating their employment with respondent companies; 3. Ordering the reinstatement of the complainants who are only members of the union to their former positions with respondent companies, without backwages, except individual complainants Cristeta De Luna, Luzviminda Recones, Eden Revilla, and Jinky Dellosa. C. NLRC NCR CASE NO. 00-01-104314-95 1. Ordering respondents to pay individual complainants: a. salary differentials resulting from underpayment of wages b. unpaid salaries/wages for work actually rendered; c. 13th month pay for the year 1994; d. cash equivalent of the service incentive leave; e. illegal deductions in the form of cash deposits all in accordance complainants. with the computation submitted by the individual
2. Dismissing the complaint with regard to complainants Cristeta De Luna, Luzviminda Recones, Eden Revilla, and Jinky Dellosa. All other claims are dismissed for lack of merit.
The Research and Information Division, this Commission, is hereby directed to effect the necessary computation which shall form part of this Decision. SO ORDERED.5 Labor Arbiter Reyes ruled the reassignment and transfer of complainants in NLRC NCR Case No. 00-11-08124-94 as unfair labor practice, it being management interference in the complainants formation and membership of union. He held that the protested reassignments and transfers were highly suspicious, having been made right after management was informed about the formation of the union. Such timing could not have been pure coincidence. The Labor Arbiter also found that petitioners herein failed to substantiate their claim that private respondents had abandoned their employment. He pointed out that the complainants filing of a case immediately after their alleged dismissal militated against any claim of abandonment. Moreover, petitioners did not furnish complainants with written notices of dismissal. As to the unpaid wages and other monetary benefits claimed by private respondents herein, the Labor Arbiter ruled that as petitioners herein did not present proof of their payment, there is presumption of non-payment. Finally, Labor Arbiter Reyes found the cash deposit of P2,000.00 unauthorized and illegal, without any showing that the same was necessary and recognized in the business. In NLRC NCR Case No. 00-03-02114-95, it was duly established that the employees union was not registered with the Bureau of Labor Relations. Hence, private respondents had engaged in an illegal strike since the right to strike maybe availed of only by a legitimate labor organization. Labor Arbiter Reyes upheld the dismissal of the union officers for leading and participating in an illegal strike, but ruled the dismissal of the union members to be improper since they acted in good faith in the belief that their actions were within the bounds of law. In NLRC NCR Case No. 00-01-10437-95, the Labor Arbiter found petitioners liable for salary differentials and other monetary claims for petitioners failure to sufficiently prove that it had paid the same to complainants as required by law. He likewise ordered the return of the cash deposits to complainants, citing the same reasons as in NLRC NCR Case No. 00-11-08124-94. Petitioners herein seasonably appealed the decision of Labor Arbiter Reyes. Subsequently, the NLRC affirmed the decision in NLRC NCR Case Nos. 00-11-08124-94 and 00-01-10437-95. However, the NLRC set aside the judgment with respect to NLRC NCR Case No. 00-03-0211495 and ordered the remand of the case for further proceedings, in view of the various factual issues involved. The NLRC ruling reads: WHEREFORE, finding the appeal unmeritorious, the same is hereby DISMISSED. ACCORDINGLY, we hereby set aside the ruling in NLRC NCR CASE NO. 00-03-0211495 as we order the same remanded for further proceedings in view of the nature of the issues involved being purely factual in character. The awards in NLRC NCR CASE NO. 00-11-08-08124-94 and NLRC NCR CASE NO. 00-01-10437-95 are hereby AFFIRMED. SO ORDERED.6 Meanwhile, on May 14, 1996, petitioners herein filed a Petition to Declare the Strike Illegal against their striking employees, docketed as NLRC NCR Case No. 05-03064-96 and raffled off to Labor Arbiter Arthur L. Amansec. On September 2, 1998, Labor Arbiter Amansec decided NLRC NCR Case No. 05-03064-96, as follows:
WHEREFORE, judgment is hereby made finding the strike conducted by the respondents from December 1, 1994 up to May 14, 1996 illegal and concomitantly, ordering respondents who are established to have knowingly participated to have committed an illegal act to have lost their employment status. Other claims for lack of merit are ordered DISMISSED. SO ORDERED.7 In declaring the strike illegal, Labor Arbiter Amansec noted that: (1) no prior notice to strike had been filed; (2) no strike vote had been taken among the union members; and (3) the issue involved was non-strikeable, i.e., a demand for salary increases. Petitioners then moved for reconsideration of the NLRC ruling, citing the ruling in NLRC NCR Case No. 05-03064-96 to support their position that respondents herein had conducted an illegal strike and were liable for unlawful acts. On March 12, 1999, the NLRC resolved to partly grant the Motion for Reconsideration, thus: WHEREFORE, prescinding from the foregoing premises, the Motion for Reconsideration is partly given due course, in that the issues raised in NLRC NCR CASE No. 00-0302114-95 is hereby declared to have been rendered academic. The rest of the dispositions in the questioned resolution remains. SO ORDERED.8 Unwilling to let the matter rest there, petitioners then filed a special civil action for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 53169. The Court of Appeals considered the following issues in resolving the petition, to wit: (a) the validity of the respondents dismissal and entitlement to backwages, (b) the validity of the Release, waiver and quitclaim executed by some of the respondents, and (c) the validity of the claims for non-payment of salaries, overtime pay, holiday pay, premium pay, etc. On April 26, 2000, the appellate court disposed of CA-G.R. SP No. 53169 as follows: WHEREFORE, premises studiedly considered, the Petition is partly given due course as the 12 March 1999 Resolution of the NLRC is hereby modified as follows: 1. In lieu of reinstatement, private respondents Josephine Julian, Jacinta Tejada, and the rest of the officers of the Union shall be given separation pay at the rate of one month pay for every year of service, with a fraction of at least six months of service considered as one year, computed from the time they were first employed until December 10, 1994; 2. Ordering petitioner corporations to reinstate, without loss of seniority, Jacina Burabod and the rest of the Union members; plus payment of backwages; The rest of the dispositions in the two (2) challenged resolutions remains. SO ORDERED.9
The appellate court brushed aside petitioners theory that the illegality of strike makes the respondents dismissal legal. It stressed that while the strike was illegal, marked as it was with violence and for non-compliance with the requirements of the Labor Code, nonetheless, Julian, Tejada, and Burabod (complainants in NLRC NCR Case No. 00-11-08124-94) were dismissed prior to the staging of the strike. Said dismissal constitutes unfair labor practice. Moreover, said dismissal was done without valid cause and due process. Thus, the complainants in NLRC NCR Case No. 00-11-08124-94 are entitled to reinstatement and backwages, although separation pay may be given in lieu of reinstatement due to strained relations with petitioners. The appellate court also ruled that the quitclaims relied upon by petitioners herein are void, having been executed under duress. Finally, the Court of Appeals affirmed the finding of the NLRC that petitioners had failed to support their claim of having paid herein respondents their money claims, because belated evidence presented by petitioners is bereft of any probative value. Petitioners timely moved for reconsideration, but the appellate court denied said motion. Hence, this petition alleging that the Court of Appeals committed palpable and reversible errorS of law when: I IT ORDERED THE RESPONDENTS, WHO ARE UNION MEMBERS, BE REINSTATED AND BE PAID BACKWAGES, DESPITE THE FACT THAT IT CATEGORICALLY HELD THAT UNLAWFUL ACTS ATTENDED THE STAGING OF THE ILLEGAL STRIKE IN CONTRAVENTION OF THE CLEAR MANDATE OF ARTICLE 264(a) OF THE LABOR CODE. II IT AWARDED BACKWAGES TO THE RESPONDENTS, WHO ARE UNION MEMBERS, DESPITE THE FACT THAT THE ISSUE OF WHETHER OR NOT THE SAID UNION MEMBERS ARE ENTITTLED TO BACKWAGES HAVE BEEN ANSWERED IN THE NEGATIVE BY THE DECISION DATED 15 APRIL 1996, PROMULGATED BY THE HONORABLE LABOR ARBITER A QUO VALENTIN C. REYES AND SUCH RULING HAD ATTAINED FINALITY. III IT AWARDED SEPARATION PAY AND BACKWAGES TO THE RESPONDENTS WHO ARE OFFICERS OF THE UNION, NAMELY: ADELAIDA LUMOD, LUCITA CASERO, MYRNA RAGASA, FELY MORALES, ELEN SUEDE, FELY VALENCIA AND VIOLETA ARRIOLA, DESPITE THE FACT THAT IT WAS HELD IN THE DECISION DATED 15 APRIL 1996 PROMULGATED BY THE HONORABLE LABOR ARBITER A QUO VALENTIN C. REYES THAT THE AFORENAMED UNION OFFICERS HAVE LOST THEIR EMPLOYMENT STATUS BY STAGING AN ILLEGAL STRIKE AND SUCH RULING HAD ATTAINED FINALITY. IV IT HELD THAT RESPONDENTS JULIAN, TEJADA AND BURABOD WERE ILLEGALLY DISMISSED. V IT FAILED TO UPHOLD THE VALIDITY OF THE RELEASE, WAIVER AND QUITCLAIM EXECUTED BY THE RESPONDENTS CONCERNED. VI IT REFUSED TO GIVE PROBATIVE VALUE ON THE DOCUMENTARY EVIDENCE SUBMITTED BY HEREIN PETITIONERS.10 VOLUMINOUS
In our view, considering the assigned errors, the following are the relevant issues for our resolution:
1. Whether the respondents union officers and members were validly and legally dismissed from employment considering the illegality of the strike; 2. Whether the respondents union officers and members are entitled to backwages, separation pay and reinstatement, respectively. On the first issue, petitioners argue that respondents were legally dismissed, pursuant to Article 26411 of the Labor Code in view of the determination by the Labor Arbiter that the strike conducted by respondents are illegal and that illegal acts attended the mass action. The respondents counter that the determination of the illegality of strike is inconsequential as the conclusion by the appellate court on the illegality of dismissal was based on the petitioners non-compliance with the due process requirements on terminating employees, which had nothing to do with the legality of the strike. Some elaboration on the legality of the strike is needed, though briefly. In ruling the strike illegal, the NLRC observed that: While the right to strike is specifically granted by law, it is a remedy which can only be availed of by a legitimate labor organization. Absent a showing as to the legitimate status of the labor organization, said strike would have to be considered as illegal. A review of the records of this case does not show that the local union to which complainants belong to has complied with these basic requirements necessary to clothe the union with a legitimate status. In fact, and as respondents claim, there is no record with the BLR that the union complainants belong to have complied with the aforementioned requirements. This Office then has no recourse but to consider the union of complainants as not being a legitimate labor organization. It then follows that the strike conducted by complainants on respondent companies is illegal, as the right to strike is afforded only to a legitimate labor organization.12 Indeed, the right to strike, while constitutionally recognized, is not without legal restrictions.13 The Labor Code regulates the exercise of said right by balancing the interests of labor and management in the light of the overarching public interest. Thus, paragraphs (c) and (f) of Article 26314 mandate the following procedural steps to be followed before a strike may be staged: filing of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment.15 It bears stressing that these requirements are mandatory, meaning, non-compliance therewith makes the strike illegal. The evident intention of the law in requiring the strike notice and strike-vote report is to reasonably regulate the right to strike, which is essential to the attainment of legitimate policy objectives embodied in the law.16 In the instant case, we find no reason to disagree with the findings of the NLRC that the strike conducted by the respondent union is illegal. First, it has not been shown to the satisfaction of this Court that said union is a legitimate labor organization, entitled under Article 263 (c) to file a notice of strike on behalf of its members. Second, the other requirements under Article 263 (c) and (f) were not complied with by the striking union. On this matter, the record is bare of any showing to the contrary. Hence, what is left for this Court to do is to determine the effects of the illegality of the strike on respondents union officers and members, specifically (a) whether such would justify their dismissal from employment, and (b) whether they ceased to be entitled to the monetary awards and other appropriate reliefs and remedies.
Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes a distinction between union officers and members who participated thereon. Thus, knowingly participating in an illegal strike is a valid ground for termination from employment of a union officer. The law, however, treats differently mere union members. Mere participation in an illegal strike is not a sufficient ground for termination of the services of the union members. The Labor Code protects an ordinary, rank-and-file union member who participated in such a strike from losing his job, provided that he did not commit an illegal act during the strike.17 Thus, absent any clear, substantial and convincing proof of illegal acts committed during an illegal strike, an ordinary striking worker or employee may not be terminated from work.18 Recourse to the records show that the following respondents were the officers of the union, namely: Josephine C. Julian (President), Adelaida Lomod (Vice President), Lucita Casero (Secretary), Myrna Ragasa (Treasurer), Filomena Morales (Auditor), Elena Suede (Board Member), Jacinta Tejada (Board Member), Felipa Valencia (Board Member) and Violeta Arriola (P.R.O.).19 Before us, petitioners insist that these employees were legally terminated for their participation in an illegal strike and moreover, Julian and Tejada were validly dismissed for abandoning their jobs after refusing to comply with transfer and reassignment orders. While holding the strike illegal, the Court of Appeals nonetheless still ruled that the union officers and members were illegally dismissed for non-observance of due process requirements and union busting by management. It likewise gave no credence to the charge of abandonment against Julian and Tejada. Thus, it awarded separation pay in lieu of reinstatement to all union officers including respondents Julian and Tejada and affirmed all other monetary awards by the Labor Arbiter including backwages. On this point, we affirm the findings of the appellate court that Julian and Tejada did not abandon their employment. Petitioners utterly failed to show proof that Julian and Tejada had the intent to abandon their work and sever their employment relationship with petitioners. It is established that an employee who forthwith takes steps to protest his layoff cannot be said to have abandoned his work.20 However, we cannot sustain the appellate courts ruling that the dismissal of Julian and Tejada was tantamount to unfair labor practice. There is simply nothing on record to show that Julian and Tejada were discouraged or prohibited from joining any union. Hence, the petitioners cannot be held liable for unfair labor practice. With respect to union officers, however, there is no dispute they could be dismissed for participating in an illegal strike. Union officers are duty- bound to guide their members to respect the law.21 Nonetheless, as in other termination cases, union officers must be given the required notices for terminating an employment, i.e., notice of hearing to enable them to present their side, and notice of termination, should their explanation prove unsatisfactory. Nothing in Article 264 of the Labor Code authorizes an immediate dismissal of a union officer for participating in an illegal strike. The act of dismissal is not intended to happen ipso facto but rather as an option that can be exercised by the employer and after compliance with the notice requirements for terminating an employee. In this case, petitioners did not give the required notices to the union officers. We must stress, however, the dismissals per se are not invalid but only ineffectual in accordance with Serrano v. National Labor Relations Commission.22 In said case, we held that (1) the employers failure to comply with the notice requirement does not constitute denial of due process, but mere failure to observe a procedure for termination of employment which makes the termination merely ineffectual,23 and (2) the dismissal shall be upheld but the employer must be sanctioned for non-compliance with the prescribed procedure.24 As to the reliefs to be afforded, Serrano decreed that:
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with Art. 283 If the employees separation is without cause, instead of being given separation pay, he should be reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been laid off without written notice at least 30 days in advance. On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not be reinstated. However, he must be paid backwages from the time his employment was terminated until it is determined that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders the termination of his employment without legal effect.25 Admittedly, Serrano does not touch on the termination of an employee who is a mere union member, due to participation in an illegal strike. But it is settled that an employee who is a mere union member does not lose his employment status by mere participation allegedly in an illegal strike. If he is terminated, he is entitled to reinstatement. Moreover, where the employee, whether a union member or officer, is not given any notice for termination such as in this case, he is entitled to be paid backwages from the date of his invalid termination until the final judgment of the case. In the present case, we affirm the appellate courts ruling that the union members who are parties herein were illegally dismissed and thus, entitled to reinstatement and payment of backwages for lack of sufficient evidence that they engaged in illegal acts during the strike. They were in good faith in believing that their actions were within the bounds of the law, since such were meant only to secure economic benefits for themselves so as to improve their standard of living. Besides, it is not the business of this Court to determine whether the acts committed by them are illegal, for review of factual issues is not proper in this petition. Review of labor cases elevated to this Court on a petition for review on certiorari is confined merely to questions of law, and not of fact, as factual findings generally are conclusive on this Court.26 For the same reasons, we likewise affirm the Court of Appeals in upholding the findings of both the NLRC and the Labor Arbiter regarding the validity or invalidity of quitclaims and the award of other monetary claims. Questions on whether the quitclaims were voluntarily executed or not are factual in nature. Thus, petitioners appeal for us to re-examine certain pieces of documentary evidence concerning monetary claims cannot now be entertained. Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. It is not our function to assess and evaluate the evidence all over again, particularly where the findings of both the Arbiter and the Court of Appeals coincide.27 WHEREFORE, the assailed Decision of the Court of Appeals, dated April 26, 2000 and its Resolution of October 11, 2000, in CA-G.R. SP No. 53169 are AFFIRMED with MODIFICATION. Dismissal of the union officers is declared NOT INVALID, and the award of separation pay to said union officers is hereby DELETED. However, as a sanction for non-compliance with notice
requirements for lawful termination by the petitioners, backwages are AWARDED to the union officers computed from the time they were dismissed until the final entry of judgment of this case. The rest of the dispositions of the Court of Appeals in its Decision of April 26, 2000, in CA-G.R. SP No. 53169, are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED. St. Scholastica's College vs. Torres G.R. No. 100158. June 29, 1992.* Labor Law; Jurisdiction; Strike; Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, the same must be involved in the labor dispute itself or otherwise submitted to him for resolution. Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, therefore, the same must be involved in the labor dispute itself, or otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary of Labor and Employment, supra, and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment, supra, will apply. Same; Same; Same; A return-to-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration.Article 263 (g) of the Labor Code provides that if a strike has already taken place at the time of assumption, all striking x x x employees shall immediately return to work. This means that by its very terms, a return-towork order is immediately effective and executory notwithstanding the filing of a motion for reconsideration (University of Sto. Tomas v. NLRC). It must be strictly complied with even during the pendency of any petition questioning its validity (Union of Filipro Employees v. Nestl Philippines, Inc., supra). After all, the assumption and/or certification order is issued in the exercise of respondent SECRETARYs compulsive power of arbitration and, until set aside, must therefore be immediately complied with. Same; Same; Same; The assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes involving academic institutions upheld in Philippine School of Business Administration vs. Noriel.Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes involving academic institutions was already upheld in Philippine School of Business Administration v. Noriel. Same; Same; Same; Any worker or union officer who knowingly participates in a strike defying a return-to-work order may consequently be declared to have lost his employment status.The respective liabilities of striking union officers and members who failed to immediately comply with the return-to-work order is outlined in Art. 264 of the Labor Code which provides that any declaration of a strike or lockout after the Secretary of Labor and Employment has assumed jurisdiction over the labor dispute is considered an illegal act. Any worker or union officer who knowingly participates in a strike defying a return-to-work order may, consequently, be declared to have lost his employment status. Same; Same; Same; By insisting on staging the restrained strike and defiantly picketing the company premises to prevent the resumption of operations, strikers have forfeited their right to be readmitted, having abandoned their positions and so could be validly replaced.Thus, we held in Sarmiento v. Tuico, supra, that by insisting on staging the restrained strike and defiantly picketing the company premises to prevent the resumption of operations, the strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced.
PETITION for certiorari to review the order and resolution of the Secretary of Labor and Employment. The facts are stated in the opinion of the Court. Ernesto R. Arellano for private respondent. William T. Chua for petitioner. BELLOSILLO, J.: The principal issue to be resolved in this recourse is whether striking union members terminated for abandonment of work after failing to comply with return-to-work orders of the Secretary of Labor and Employment (SECRETARY, for brevity) should by law be reinstated. On 20 July 1990, petitioner St. Scholastica's College (COLLEGE, for brevity) and private respondent Samahan ng Manggagawang Pang-Edukasyon sa Sta. Eskolastika-NAFTEU (UNION, for brevity) initiated negotiations for a first-ever collective bargaining agreement. A deadlock in the negotiations prompted the UNION to file on 4 October 1990 a Notice of Strike with the Department of Labor and Employment (DEPARTMENT, for brevity), docketed as NCMB-NCR-NS-10-826. On 5 November 1990, the UNION declared a strike which paralyzed the operations of the COLLEGE. Affecting as it did the interest of the students, public respondent SECRETARY immediately assumed jurisdiction over the labor dispute and issued on the same day, 5 November 1990, a return-to-work order. The following day, 6 November 1990, instead of returning to work, the UNION filed a motion for reconsideration of the return-to-work order questioning inter alia the assumption of jurisdiction by the SECRETARY over the labor dispute. On 9 November 1990, the COLLEGE sent individual letters to the striking employees enjoining them to return to work not later than 8:00 o'clock A.M. of 12 November 1990 and, at the same time, giving notice to some twenty-three (23) workers that their return would be without prejudice to the filing of appropriate charges against them. In response, the UNION presented a list of (6) demands to the COLLEGE in a dialogue conducted on 11 November 1990. The most important of these demands was the unconditional acceptance back to work of the striking employees. But these were flatly rejected. Likewise, on 9 November 1990, respondent SECRETARY denied reconsideration of his returnto-work order and sternly warned the striking employees to comply with its terms. On 12 November 1990, the UNION received the Order. Thereafter, particularly on 14 and 15 November 1990, the parties held conciliation meetings before the National Conciliation and Mediation Board where the UNION pruned down its demands to three (3), viz.: that striking employees be reinstated under the same terms and conditions before the strike; that no retaliatory or disciplinary action be taken against them; and, that CBA negotiations be continued. However, these efforts proved futile as the COLLEGE remained steadfast in its position that any return-to-work offer should be unconditional. On 16 November 1990, the COLLEGE manifested to respondent SECRETARY that the UNION continued to defy his return-to-work order of 5 November 1990 so that "appropriate steps under the said circumstances" may be undertaken by him. 1
On 23 November 1990, the COLLEGE mailed individual notices of termination to the striking employees, which were received on 26 November 1990, or later. The UNION officers and members then tried to return to work but were no longer accepted by the COLLEGE. On 5 December 1990, a Complaint for Illegal Strike was filed against the UNION, its officers and several of its members before the National Labor Relations Commission (NLRC), docketed as NLRC Case No. 00-12-06256-90. The UNION moved for the enforcement of the return-to-work order before respondent SECRETARY, citing "selective acceptance of returning strikers" by the COLLEGE. It also sought dismissal of the complaint. Since then, no further hearings were conducted. Respondent SECRETARY required the parties to submit their respective position papers. The COLLEGE prayed that respondent SECRETARY uphold the dismissal of the employees who defied his return-to-work order. On 12 April 1991, respondent SECRETARY issued the assailed Order which, inter alia, directed the reinstatement of striking UNION members, premised on his finding that no violent or otherwise illegal act accompanied the conduct of the strike and that a fledgling UNION like private respondent was "naturally expected to exhibit unbridled if inexperienced enthusiasm, in asserting its existence". 2 Nevertheless, the aforesaid Order held UNION officers responsible for the violation of the return-to-work orders of 5 and 9 November 1990 and, correspondingly, sustained their termination. Both parties moved for partial reconsideration of the Order, with petitioner COLLEGE questioning the wisdom of the reinstatement of striking UNION members, and private respondent UNION, the dismissal of its officers. On 31 May 1991, in a Resolution, respondent SECRETARY denied both motions. Hence, this Petition for Certiorari, with Prayer for the Issuance of a Temporary Restraining Order. On 26 June 1991, We restrained the SECRETARY from enforcing his assailed Orders insofar as they directed the reinstatement of the striking workers previously terminated. Petitioner questions the assumption by respondent SECRETARY of jurisdiction to decide on termination disputes, maintaining that such jurisdiction is vested instead in the Labor Arbiter pursuant to Art. 217 of the Labor Code, thus Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, the following cases involving all workers, whether agricultural or non-agricultural: . . . 2. Termination disputes . . . 5. Cases arising from any violation of Article 264 of this Code, including questions on the legality of strikes and lock-outs . . . In support of its position, petitioner invokes Our ruling in PAL v. Secretary of Labor and Employment 3 where We held: The labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary measures against its guilty employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the strike but
not the company's right to take action against union officers who participated in the illegal strike and committed illegal acts. Petitioner further contends that following the doctrine laid down in Sarmiento v. Tuico 4 and Union of Filipro Employees v. Nestle Philippines, Inc., 5 workers who refuse to obey a return-to-work order are not entitled to be paid for work not done, or to reinstatement to the positions they have abandoned of their refusal to return thereto as ordered. Taking a contrary stand, private respondent UNION pleads for reinstatement of its dismissed officers considering that the act of the UNION in continuing with its picket was never characterized as a "brazen disregard of successive legal orders", which was readily apparent in Union Filipro Employees v. Nestle Philippines, Inc., supra, nor was it a willful refusal to return to work, which was the basis of the ruling in Sarmiento v. Tuico, supra. The failure of UNION officers and members to immediately comply with the return-to-work orders was not because they wanted to defy said orders; rather, they held the view that academic institutions were not industries indispensable to the national interest. When respondent SECRETARY denied their motion for reconsideration, however, the UNION intimated that efforts were immediately initiated to fashion out a reasonable return-to-work agreement with the COLLEGE, albeit, if failed. The issue on whether respondent SECRETARY has the power to assume jurisdiction over a labor dispute and its incidental controversies, causing or likely to cause a strike or lockout in an industry indispensable to the national interest, was already settled in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment. 6 Therein, We ruled that: . . . [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction. And rightly so, for, as found in the aforesaid case, Article 217 of the Labor Code did contemplate of exceptions thereto where the SECRETARY is authorized to assume jurisdiction over a labor dispute otherwise belonging exclusively to the Labor Arbiter. This is readily evident from its opening proviso reading "(e)xcept as otherwise provided under this Code . . . Previously, We held that Article 263 (g) of the Labor Code was broad enough to give the Secretary of Labor and Employment the power to take jurisdiction over an issue involving unfair labor practice. 7 At first glance, the rulings above stated seem to run counter to that of PAL v. Secretary of Labor and Employment, supra, which was cited by petitioner. But the conflict is only apparent, not real. To recall, We ruled in the latter case that the jurisdiction of the Secretary of Labor and Employment in assumption and/or certification cases is limited to the issues that are involved in the disputes or to those that are submitted to him for resolution. The seeming difference is, however, reconcilable. Since the matter on the legality or illegality of the strike was never submitted to him for resolution, he was thus found to have exceeded his jurisdiction when he restrained the employer from taking disciplinary action against employees who staged an illegal strike.
Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, therefore, the same must be involved in the labor disputed itself, or otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary or Labor and Employment, supra, and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment, supra, will apply. The submission of an incidental issue of a labor dispute, in assumption and/or certification cases, to the Secretary of Labor and Employment for his resolution is thus one of the instances referred to whereby the latter may exercise concurrent jurisdiction together with the Labor Arbiters. In the instant petition, the COLLEGE in its Manifestation, dated 16 November 1990, asked the "Secretary of Labor to take the appropriate steps under the said circumstances." It likewise prayed in its position paper that respondent SECRETARY uphold its termination of the striking employees. Upon the other hand, the UNION questioned the termination of its officers and members before respondent SECRETARY by moving for the enforcement of the return-to-work orders. There is no dispute then that the issue on the legality of the termination of striking employees was properly submitted to respondent SECRETARY for resolution. Such an interpretation will be in consonance with the intention of our labor authorities to provide workers immediate access to their rights and benefits without being inconvenienced by the arbitration and litigation process that prove to be not only nerve-wracking, but financially burdensome in the long run. Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. For, labor laws are meant to promote, not defeat, social justice (Maternity Children's Hospital v. Hon. Secretary of Labor ). 8 After all, Art. 4 of the Labor Code does state that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. We now come to the more pivotal question of whether striking union members, terminated for abandonment of work after failing to comply strictly with a return-to-work order, should be reinstated. We quote hereunder the pertinent provisions of law which govern the effects of defying a return-to-work order: 1. Article 263 (g) of the Labor Code Art. 263. Strikes, picketing, and lockouts. . . . (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same . . . (as amended by Sec. 27, R.A. 6715; emphasis supplied). 2. Article 264, same Labor Code Art. 264. Prohibited activities. (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout . . . (emphasis supplied). Any worker whose employment has been terminated as consequence of an unlawful lockout shall be entitled to reinstatement with full back wages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike . . . (emphasis supplied). 3. Section 6, Rule IX, of the New Rules of Procedure of the NLRC (which took effect on 31 August 1990) Sec. 6. Effects of Defiance. Non-compliance with the certification order of the Secretary of Labor and Employment or a return to work order of the Commission shall be considered an illegal act committed in the course of the strike or lockout and shall authorize the Secretary of Labor and Employment or the Commission, as the case may be, to enforce the same under pain or loss of employment status or entitlement to full employment benefits from the locking-out employer or backwages, damages and/or other positive and/or affirmative reliefs, even to criminal prosecution against the liable parties . . . (emphasis supplied). Private respondent UNION maintains that the reason they failed to immediately comply with the return-to-work order of 5 November 1990 was because they questioned the assumption of jurisdiction of respondent SECRETARY. They were of the impression that being an academic institution, the school could not be considered an industry indispensable to national interest, and that pending resolution of the issue, they were under no obligation to immediately return to work. This position of the UNION is simply flawed. Article 263 (g) of the Labor Code provides that if a strike has already taken place at the time of assumption, "all striking . . . employees shall immediately return to work." This means that by its very terms, a return-to-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration (University of Sto. Tomas v. NLRC). 9 It must be strictly complied with even during the pendency of any petition questioning its validity ( Union of Filipro Employees v. Nestle Philippines, Inc., supra). After all, the assumption and/or certification order is issued in the exercise of
respondent SECRETARY's compulsive power of arbitration and, until set aside, must therefore be immediately complied with. The rationale for this rule is explained in University of Sto. Tomas v. NLRC, supra, citing Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 10 thus To say that its (return-to-work order) effectivity must wait affirmance in a motion for reconsideration is not only to emasculate it but indeed to defeat its import, for by then the deadline fixed for the return to work would, in the ordinary course, have already passed and hence can no longer be affirmed insofar as the time element is concerned. Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes involving academic institutions was already upheld in Philippine School of Business Administration v. Noriel 11 where We ruled thus: There is no doubt that the on-going labor dispute at the school adversely affects the national interest. The school is a duly registered educational institution of higher learning with more or less 9,000 students. The on-going work stoppage at the school unduly prejudices the students and will entail great loss in terms of time, effort and money to all concerned. More important, it is not amiss to mention that the school is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth. Respondent UNION's failure to immediately comply with the return-to-work order of 5 November 1990, therefore, cannot be condoned. The respective liabilities of striking union officers and members who failed to immediately comply with the return-to-work order is outlined in Art. 264 of the Labor Code which provides that any declaration of a strike or lockout after the Secretary of Labor and Employment has assumed jurisdiction over the labor dispute is considered an illegal. act. Any worker or union officer who knowingly participates in a strike defying a return-to-work order may, consequently, "be declared to have lost his employment status." Section 6 Rule IX, of the New Rules of Procedure of the NLRC, which provides the penalties for defying a certification order of the Secretary of Labor or a return-to-work order of the Commission, also reiterates the same penalty. It specifically states that non-compliance with the aforesaid orders, which is considered an illegal act, "shall authorize the Secretary of Labor and Employment or the Commission . . . to enforce the same under pain of loss of employment status." Under the Labor Code, assumption and/or certification orders are similarly treated. Thus, we held in Sarmiento v. Tuico, supra, that by insisting on staging the restrained strike and defiantly picketing the company premises to prevent the resumption of operations, the strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced. We recently reiterated this stance in Federation of Free Workers v. Inciong, cited Union of Filipro Employees v. Nestle Philippines, Inc., supra, thus
12
wherein we
A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as amended . . .
The union officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act. Despite knowledge of the ruling in Sarmiento v. Tuico, supra, records of the case reveal that private respondent UNION opted to defy not only the return-to-work order of 5 November 1990 but also that of 9 November 1990. While they claim that after receiving copy of the Order of 9 November 1990 initiatives were immediately undertaken to fashion out a return-to-work agreement with management, still, the unrebutted evidence remains that the striking union officers and members tried to return to work only eleven (11) days after the conciliation meetings ended in failure, or twenty (20) days after they received copy of the first return-to-work order on 5 November 1990. The sympathy of the Court which, as a rule, is on the side of the laboring classes ( Reliance Surety & Insurance Co., Inc. v. NLRC), 13 cannot be extended to the striking union officers and members in the instant petition. There was willful disobedience not only to one but two returnto-work orders. Considering that the UNION consisted mainly of teachers, who are supposed to be well-lettered and well-informed, the Court cannot overlook the plain arrogance and pride displayed by the UNION in this labor dispute. Despite containing threats of disciplinary action against some union officers and members who actively participated in the strike, the letter dated 9 November 1990 sent by the COLLEGE enjoining the union officers and members to return to work on 12 November 1990 presented the workers an opportunity to return to work under the same terms and conditions or prior to the strike. Yet, the UNION decided to ignore the same. The COLLEGE, correspondingly, had every right to terminate the services of those who chose to disregard the return-to-work orders issued by respondent SECRETARY in order to protect the interests of its students who form part of the youth of the land. Lastly, the UNION officers and members also argue that the doctrine laid down in Sarmiento v. Tuico, supra, and Union of Filipro Employees v. Nestle, Philippines, Inc., supra, cannot be made applicable to them because in the latter two cases, workers defied the return-to-work orders for more than five (5) months. Their defiance of the return-to-work order, it is said, did not last more than a month. Again, this line of argument must be rejected. It is clear from the provisions above quoted that from the moment a worker defies a return-to-work order, he is deemed to have abandoned his job. It is already in itself knowingly participating in an illegal act. Otherwise, the worker will just simply refuse to return to his work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill (Sarmiento v. Tuico, supra). Suffice it to say, in Federation of Free Workers v. Inciong, supra, the workers were terminated from work after defying the return-to-work order for only nine (9) days. It is indeed inconceivable that an employee, despite a return-to-work order, will be allowed in the interim to stand akimbo and wait until five (5) orders shall have been issued for their return before they report back to work. This is absurd. In fine, respondent SECRETARY gravely abused his discretion when he ordered the reinstatement of striking union members who refused to report back to work after he issued two (2) return-to-work orders, which in itself is knowingly participating in an illegal act. The Order in question is, certainly, contrary to existing law and jurisprudence. WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order of 12 April 1991 and the Resolution 31 May 1991 both issued by respondent Secretary of Labor and Employment are SET ASIDE insofar as they order the reinstatement of striking union members terminated
by petitioner, and the temporary restraining order We issued on June 26, 1991, is made permanent. No costs. SO ORDERED. San Miguel Corporation vs. National Labor Relations Commission G.R. No. 119293. June 10, 2003.* Labor Law; Labor Code; Injunction; No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code.Article 254 of the Labor Code provides that no temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code expressly confers upon the NLRC the power to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party x x x. The second exception, on the other hand, is when the labor organization or the employer engages in any of the prohibited activities enumerated in Article 264. Same; Same; Same; The coercive measure of injunction may also be used to restrain an actual or threatened unlawful strike; It is the legal duty and obligation of the NLRC to enjoin a partial strike staged in violation of the law.Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain an actual or threatened unlawful strike. In the case of San Miguel Corporation v. NLRC, where the same issue of NLRCs duty to enjoin an unlawful strike was raised, we ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC we held that it is the legal duty and obligation of the NLRC to enjoin a partial strike staged in violation of the law. Failure to issue promptly an injunction by the public respondent was likewise held therein to be an abuse of discretion. Same; Same; Strikes; A strike is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment; One of the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike with the NCMB; This requirement has been held to be mandatory and the lack of which shall render a strike illegal.In the case at bar, petitioner sought a permanent injunction to enjoin the respondents strike. A strike is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. However, to be valid, a strike must be pursued within legal bounds. One of the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes, this requirement has been held to be mandatory, the lack of which shall render a strike illegal. Same; Same; Same; Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. Respondent however resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. As we said long ago: Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they
provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and Prohibition. The facts are stated in the opinion of the Court. Office of the General Counsel for petitioner SMC. Potenciano A. Flores, Jr. for private respondent. DECISION AZCUNA, J.: Before us is a petition for certiorari and prohibition seeking to set aside the decision of the Second Division of the National Labor Relations Commission (NLRC) in Injunction Case No. 00468-94 dated November 29, 1994,[1] and its resolution dated February 1, 1995[2] denying petitioners motion for reconsideration. Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa (IBM), exclusive bargaining agent of petitioners daily-paid rank and file employees, executed a Collective Bargaining Agreement (CBA) under which they agreed to submit all disputes to grievance and arbitration proceedings. The CBA also included a mutually enforceable no-strike no-lockout agreement. The pertinent provisions of the said CBA are quoted hereunder: ARTICLE IV GRIEVANCE MACHINERY Section 1. - The parties hereto agree on the principle that all disputes between labor and management may be solved through friendly negotiation;. . . that an open conflict in any form involves losses to the parties, and that, therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of the foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of grievances so as to (1) provide an opportunity for discussion of any request or complaint and (2) establish procedure for the processing and settlement of grievances. xxx xxx xxx
ARTICLE V ARBITRATION Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY and the UNION and/or the workers involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations arising during the effectivity of this Agreement or any renewal thereof, shall be settled by arbitration through a Committee in accordance with the procedure established in this Article. No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article IV shall be presented for arbitration until all the steps of the grievance procedure are exhausted. xxx xxx xxx
ARTICLE VI STRIKES AND WORK STOPPAGES Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down
strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of this Agreement. Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so long as the procedure outlined in Article IV hereof is followed by the UNION.[3] On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as NCMB-NCRNS-04-180-94, against petitioner for allegedly committing: (1) illegal dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being performed by union members, (5) labor-only contracting, (6) harassment of union officers and members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair labor practice.[4] The next day, IBM filed another notice of strike, this time through its president Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only contracting, (3) violation of CBA, (4) dismissal of union officers and members, and (5) other acts of unfair labor practice. This was docketed as NCMB-NCR-NS-04-182-94.[5] The Galvez group subsequently requested the NCMB to consolidate its notice of strike with that of the Colomeda group,[6] to which the latter opposed, alleging Galvezs lack of authority in filing the same.[7] Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to Dismiss, on the grounds that the notices raised non-strikeable issues and that they affected four corporations which are separate and distinct from each other.[8] After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real issues involved are non-strikeable. Hence on May 2, 1994, he issued separate letter-orders to both union groups, converting their notices of strike into preventive mediation. The said letterorders, in part, read: During the conciliation meetings, it was clearly established that the real issues involved are illegal dismissal, labor only contracting and internal union disputes, which affect not only the interest of the San Miguel Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC. Considering that San Miguel Corporation is the only impleaded employer-respondent, and considering further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies in order to evolve voluntary settlement of the disputes. . . .[9] (Emphasis supplied) On May 16, 1994, while separate preventive mediation conferences were ongoing, the Colomeda group filed with the NCMB a notice of holding a strike vote. Petitioner opposed by filing a Manifestation and Motion to Declare Notice of Strike Vote Illegal,[10] invoking the case of PAL v. Drilon,[11] which held that no strike could be legally declared during the pendency of preventive mediation. NCMB Director Ubaldo in response issued another letter to the Colomeda Group reiterating the conversion of the notice of strike into a case of preventive mediation and emphasizing the findings that the grounds raised center only on an intra-union conflict, which is not strikeable, thus: xxx xxx xxx
A perusal of the records of the case clearly shows that the basic point to be resolved entails the question of as to who between the two (2) groups shall represent the workers for collective bargaining purposes, which has been the subject of a Petition for Interpleader case pending resolution before the Office of the Secretary of Labor and Employment. Similarly, the other issues raised which have been discussed by the parties at the plant level, are ancillary issues to the main question, that is, the union leadership...[12] (Emphasis supplied) Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds were set forth therein, including discrimination, coercion of employees, illegal lockout and illegal closure.[13] The NCMB however found these grounds to be mere amplifications of those alleged in the first notice that the group filed. It therefore ordered the consolidation of the second notice with the preceding one that was earlier reduced to preventive mediation.[14] On the same date, the group likewise notified the NCMB of its intention to hold a strike vote on May 27, 1994. On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote, which favored the holding of a strike.[15] In reply, NCMB issued a letter again advising them that by virtue of the PAL v. Drilon ruling, their notice of strike is deemed not to have been filed, consequently invalidating any subsequent strike for lack of compliance with the notice requirement.[16] Despite this and the pendency of the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The strike paralyzed the operations of petitioner, causing it losses allegedly worth P29.98 million in daily lost production.[17] Two days after the declaration of strike, or on June 6, 1994, petitioner filed with public respondent NLRC an amended Petition for Injunction with Prayer for the Issuance of Temporary Restraining Order, Free Ingress and Egress Order and Deputization Order.[18] After due hearing and ocular inspection, the NLRC on June 13, 1994 resolved to issue a temporary restraining order (TRO) directing free ingress to and egress from petitioners plants, without prejudice to the unions right to peaceful picketing and continuous hearings on the injunction case.[19] To minimize further damage to itself, petitioner on June 16, 1994, entered into a Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting of the picket lines and resumption of work in exchange of good faith talks between the management and the labor management committees. The MOA, signed in the presence of Department of Labor and Employment (DOLE) officials, expressly stated that cases filed in relation to their dispute will continue and will not be affected in any manner whatsoever by the agreement.[20] The picket lines ended and work was then resumed. Respondent thereafter moved to reconsider the issuance of the TRO, and sought to dismiss the injunction case in view of the cessation of its picketing activities as a result of the signed MOA. It argued that the case had become moot and academic there being no more prohibited activities to restrain, be they actual or threatened.[21] Petitioner, however, opposed and submitted copies of flyers being circulated by IBM, as proof of the unions alleged threat to revive the strike.[22] The NLRC did not rule on the opposition to the TRO and allowed it to lapse. On November 29, 1994, the NLRC issued the challenged decision, denying the petition for injunction for lack of factual basis. It found that the circumstances at the time did not constitute or no longer constituted an actual or threatened commission of unlawful acts.[23] It likewise denied petitioners motion for reconsideration in its resolution dated February 1, 1995.[24] Hence, this petition. Aggrieved by public respondents denial of a permanent injunction, petitioner contends that: A.
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY INJUNCTION, THE PARTIES RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION AND NOT TO STRIKE. B. THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. C. THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER THE LAPSE OF THE TRO.[25] We find for the petitioner. Article 254 of the Labor Code provides that no temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code expressly confers upon the NLRC the power to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party x x x. The second exception, on the other hand, is when the labor organization or the employer engages in any of the prohibited activities enumerated in Article 264. Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain an actual or threatened unlawful strike. In the case of San Miguel Corporation v. NLRC,[26] where the same issue of NLRCs duty to enjoin an unlawful strike was raised, we ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC,[27] we held that it is the legal duty and obligation of the NLRC to enjoin a partial strike staged in violation of the law. Failure promptly to issue an injunction by the public respondent was likewise held therein to be an abuse of discretion. In the case at bar, petitioner sought a permanent injunction to enjoin the respondents strike. A strike is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. However, to be valid, a strike must be pursued within legal bounds.[28] One of the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes,[29] this requirement has been held to be mandatory, the lack of which shall render a strike illegal.[30] In the present case, NCMB converted IBMs notices into preventive mediation as it found that the real issues raised are non-strikeable. Such order is in pursuance of the NCMBs duty to exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably,[31]and in line with the state policy of favoring voluntary modes of settling labor disputes.[32] In accordance with the Implementing Rules of the Labor Code, the said conversion has the effect of dismissing the notices of strike filed by respondent.[33] A case in point is PAL v.
Drilon,[34] where we declared a strike illegal for lack of a valid notice of strike, in view of the NCMBs conversion of the notice therein into a preventive mediation case. We ruled, thus: The NCMB had declared the notice of strike as appropriate for preventive mediation. The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During the pendency of preventive mediation proceedings no strike could be legally declared... The strike which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by the petitioner as an ambush. (Emphasis supplied) Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB ordered the preventive mediation on May 2, 1994, respondent had thereupon lost the notices of strike it had filed. Subsequently, however, it still defiantly proceeded with the strike while mediation was ongoing, and notwithstanding the letter-advisories of NCMB warning it of its lack of notice of strike. In the case of NUWHRAIN v. NLRC,[35]where the petitioner-union therein similarly defied a prohibition by the NCMB, we said: Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not ULP, hence not strikeable. The refusal of the petitioners to heed said proscription of the NCMB is reflective of bad faith. Such disregard of the mediation proceedings was a blatant violation of the Implementing Rules, which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings.[36] The NCMB having no coercive powers of injunction, petitioner sought recourse from the public respondent. The NLRC issued a TRO only for free ingress to and egress from petitioners plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike, and five months after came out with a decision summarily rejecting petitioners cited jurisprudence in this wise: Complainants scholarly and impressive arguments, formidably supported by a long line of jurisprudence cannot however be appropriately considered in the favorable resolution of the instant case for the complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not similarly situated and the remedy sought for were different.[37] Unfortunately, the NLRC decision stated no reason to substantiate the above conclusion. Public respondent, in its decision, moreover ruled that there was a lack of factual basis in issuing the injunction. Contrary to the NLRCs finding, we find that at the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM-NCR Council which led the union. These flyers categorically declared: Ipaalala nyo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line.[38] These flyers were not denied by respondent, and were dated June 19, 1994, just a day after the unions manifestation with the NLRC that there existed no threat of commission of prohibited activities. Moreover, it bears stressing that Article 264(a) of the Labor Code[39] explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. Clearly, public respondent should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike.
Also noteworthy is public respondents disregard of petitioners argument pointing out the unions failure to observe the CBA provisions on grievance and arbitration. In the case of San Miguel Corp. v. NLRC,[40] we ruled that the union therein violated the mandatory provisions of the CBA when it filed a notice of strike without availing of the remedies prescribed therein. Thus we held: x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for not complying with the grievance procedure provided in the collective bargaining agreement. . . (Citations omitted) As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent however resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. As we said long ago: Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.[41] As to petitioners allegation of violation of the no-strike provision in the CBA, jurisprudence has enunciated that such clauses only bar strikes which are economic in nature, but not strikes grounded on unfair labor practices.[42] The notices filed in the case at bar alleged unfair labor practices, the initial determination of which would entail fact-finding that is best left for the labor arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike dispenses with the need to discuss this issue. We cannot sanction the respondent-unions brazen disregard of legal requirements imposed purposely to carry out the state policy of promoting voluntary modes of settling disputes. The states commitment to enforce mutual compliance therewith to foster industrial peace is affirmed by no less than our Constitution.[43] Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But misuse of these instruments can be the subject of judicial intervention to forestall grave injury to a business enterprise.[44] WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private respondent are hereby directed to submit the issues raised in the dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as prescribed in their CBA, if necessary. No pronouncement as to costs. SO ORDERED.
Globe-Mackay Cable and Radio Corporation vs. NLRC G.R. No. 82511. March 3, 1992.* Labor Laws; Preventive suspension.On the matter of preventive suspension, we find for petitioner GMCR. The investigative findings of Mr. Maramara, which pointed to Delfin Saldivars acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely associated with Saldivar. The suspension of Salazar was further impelled by the discovery of the missing Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension was the proper remedial recourse available to the
company pending Salazars investigation. By itself, preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the companys property pending investigation of any alleged malfeasance or misfeasance committed by the employee. Same; Dismissals; Employees illegally dismissed entitled to reinstatement and full backwages.To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but as well, to full backwages. The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the word reinstate is to restore to a state, condition, position, etc. from which one had been removed and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her whole. Same; Same; Statutory construction; Plain-meaning rule.In the case at bar, the law is on the side of private respondent. In the first place, the wording of the Labor Code is clear and unambiguous: An employee who is unjustly dismissed from work shall be entitled to reinstatement . . . and to his full backwages . . . Under the principles of statutory construction, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute. Verba legis non est recedendum, or from the words of a statute there should be no departure. Neither does the provision admit of any qualification. If in the wisdom of the Court, there may be a ground or grounds for nonapplication of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. Same; Same; Principle of strained relations.Obviously, the principle of strained relations cannot be applied indiscriminately. Otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. Besides, no strained relations should arise from a valid and legal act of asserting ones right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. PETITION for review from the resolution of the National Labor Relations Commission. The facts are stated in the opinion of the Court. Castillo, Laman, Tan & Pantaleon for petitioner. Gerardo S. Alansalon for private respondent. ROMERO, J.:
For private respondent Imelda L. Salazar, it would seem that her close association with Delfin Saldivar would mean the loss of her job. In May 1982, private respondent was employed by Globe-Mackay Cable and Radio Corporation (GMCR) as general systems analyst. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's activities. The report dated September 25, 1984 prepared by the company's internal auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier of petitioner often recommended by Saldivar. The report also disclosed that Saldivar had taken petitioner's missing Fedders airconditioning unit for his own personal use without authorization and also connived with Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR filed an action for replevin against Saldivar. 1 It likewise appeared in the course of Maramara's investigation that Imelda Salazar violated company reglations by involving herself in transactions conflicting with the company's interests. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her employer. Consequently, in a letter dated October 8, 1984, petitioner company placed private respondent Salazar under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days within which to, explain her side. But instead of submitting an explanations three (3) days later or on October 12, 1984 private respondent filed a complaint against petitioner for illegal suspension, which she subsequently amended to include illegal dismissal, vacation and sick leave benefits, 13th month pay and damages, after petitioner notified her in writing that effective November 8, 1984, she was considered dismissed "in view of (her) inability to refute and disprove these findings. 2 After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered petitioner company to reinstate private respondent to her former or equivalent position and to pay her full backwages and other benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay private respondent moral damages of P50,000.00. 3 On appeal, public respondent National Labor Relations, Commission in the questioned resolution dated December 29, 1987 affirmed the aforesaid decision with respect to the reinstatement of private respondent but limited the backwages to a period of two (2) years and deleted the award for moral damages. 4 Hence, this petition assailing the Labor Tribunal for having committed grave abuse of discretion in holding that the suspension and subsequent dismissal of private respondent were illegal and in ordering her reinstatement with two (2) years' backwages. On the matter of preventive suspension, we find for petitioner GMCR. The inestigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely, associated with Saldivar. The suspension of Salazar was further impelled by th.e discovery of the missing Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension
was the proper remedial recourse available to the company pending Salazar's investigation. By itself, preventive suspension does, not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company's property pending investigation any alleged malfeasance or misfeasance committed by the employee. 5 Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when she was promptly suspended. If at all, the fault, lay with private respondent when she ignored petitioner's memorandum of October 8, 1984 "giving her ample opportunity to present (her) side to the Management." Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to evaluate her side of the controversy. But while we agree with the propriety of Salazar's preventive suspension, we hold that her eventual separation from employment was not for cause. What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the victim who has not merely lost her job which, under settled Jurisprudence, is a property right of which a person is not to be deprived without due process, but also the compensation that should have accrued to her during the period when she was unemployed? Art. 279 of the Labor Code, as amended, provides: Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 6 (Emphasis supplied) Corollary thereto are the following provisions of the Implementing Rules and Regulations of the Labor Code: Sec. 2. Security of Tenure. In cases of regular employments, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws. Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall by entitled to reinstatement without loss of seniority rights and to backwages." 7 (Emphasis supplied) Before proceeding any furthers, it needs must be recalled that the present Constitution has gone further than the 1973 Charter in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Given the pro-poor orientation of several articulate Commissioners of the Constitutional Commission of 1986, it was not surprising that a whole new Article emerged on Social Justice and Human Rights designed, among other things, to "protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good."8 Proof of the priority accorded to labor is that it leads the other areas of concern in the Article on Social Justice,viz., Labor ranks ahead of such topics as Agrarian and Natural Resources Reform, Urban Land Roform and Housing, Health, Women, Role and Rights of Poople's Organizations and Human Rights. 9
The opening paragraphs on Labor states The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled tosecurity of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits is may be provided by law. 10 (Emphasis supplied) Compare this with the sole.provision on Labor in the 1973 Constitution under the Article an Declaration of Principles and State Policies that provides: Sec. 9. The state shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employers. The State shall ensure the rights of workers to self-organization, collective baegaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration. 11 To be sure, both Charters recognize "security of tenure" as one of the rights of labor which the State is mandated to protect. But there is no gainsaying the fact that the intent of the framers of the present Constitution was to give primacy to the rights of labor and afford the sector "full protection," at least greater protection than heretofore accorded them, regardless of the geographical location of the workers and whether they are organized or not. It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who substantially contributed to the present formulation of the protection to labor provision and proposed that the same be incorporated in the Article on Social Justice and not just in the Article on Declaration of Principles and State Policies "in the light of the special importance that we are giving now to social justice and the necessity of emphasizing the scope and role of social justice in national development." 12 If we have taken pains to delve into the background of the labor provisions in our Constitution and the Labor Code, it is but to stress that the right of an employee not to be dismissed from his job except for a just or authorized cause provided by law has assumed greater importance under the 1987 Constitution with the singular prominence labor enjoys under the article on Social Justice. And this transcendent policy has been translated into law in the Labor Code. Under its terms, where a case of unlawful or unauthorized dismissal has been proved by the aggrieved employee, or on the other hand, the employer whose duty it is to prove the lawfulness or justness of his act of dismissal has failed to do so, then the remedies provided in Article 279 should find, application. Consonant with this liberalized stance vis-a-vis labor, the legislature even went further by enacting Republic Act No. 6715 which took effect on March 2, 1989 that amended said Article to remove any possible ambiguity that jurisprudence may have generated which watered down the constitutional intent to grant to labor "full protection."13 To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but ay well, to full backwages." 14
The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the word "reinstate" is "to restore to a state, conditione positions etc. from which one had been removed" 15 and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her "whole." Sadly, the avowed intent of the law has at times been thwarted when reinstatement has not been forthcoming and the hapless dismissed employee finds himself on the outside looking in. Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of the case and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage of time (22 years of litigation) or because of the realities of the situation; 16 or that it would be "inimical to the employer's interest; " 17 or that reinstatement may no longer be feasible; 18 or, that it will not serve the best interests of the parties involved; 19 or that the company would be prejudiced by the workers' continued employment; 20 or that it will not serve any prudent purpose as when supervening facts have transpired which make execution on that score unjust or inequitable 21 or, to an increasing extent, due to the resultant atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable estrangement" between the employer and the employee. 22 In lieu of reinstatement, the Court has variously ordered the payment of backwages and separation pay 23 or solely separation pay. 24 In the case at bar, the law is on the side of private respondent. In the first place the wording of the Labor Code is clear and unambiguous: "An employee who is unjustly dismissed from work shall be entitled to reinstatement. . . . and to his full backwages. . . ." 25 Under the principlesof statutory construction, if a statute is clears plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by, the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. 26 The legislature is presumed to know the meaning of the words, to:have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute. 27 Verba legis non est recedendum, or from the words of a statute there should be no departure. Neither does the provision admit of any qualification. If in the wisdom of the Court, there may be a ground or grounds for non-application of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. A few examples, will suffice to illustrate the Court's application of the above principles: where the employee is a Vice-President for Marketing and as such, enjoys the full trust and confidence of top management; 28 or is the Officer-In-Charge of the extension office of the bank where he works; 29 or is an organizer of a union who was in a position to sabotage the union's efforts to organize the workers in commercial and industrial establishments; 30 or is a warehouseman of a non-profit organization whose primary purpose is to facilitate and maximize voluntary gifts. by foreign individuals and organizations to the Philippines; 31 or is a manager of its Energy Equipment Sales. 32
Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwisey reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. 33 Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. 34 Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. On the other hand, has she betrayed any confidence reposed in her by engaging in transactions that may have created conflict of interest situations? Petitioner GMCR points out that as a matter of company policy, it prohibits its employees from involving themselves with any company that has business dealings with GMCR. Consequently, when private respondent Salazar signed as a witness to the partnership papers of Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she was deemed to have placed. herself in an untenable position as far as petitioner was concerned. However, on close scrutiny, we agree with public respondent that such a circumstance did not create a conflict of interests situation. As a systems analyst, Salazar was very far removed from operations involving the procurement of supplies. Salazar's duties revolved around the development of systems and analysis of designs on a continuing basis. In other words, Salazar did not occupy a position of trust relative to the approval and purchase of supplies and company assets. In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we have held countless times, while loss of confidence or breach of trust is a valid ground for terminations it must rest an some basis which must be convincingly established. 35 An employee who not be dismissed on mere presumptions and suppositions. Petitioner's allegation that since Salazar and Saldivar lived together in the same apartment, it "presumed reasonably that complainant's sympathy would be with Saldivar" and its averment that Saldivar's investigation although unverified, was probably true, do not pass this Court's test. 36 While we should not condone the acts of disloyalty of an employee, neither should we dismiss him on the basis of suspicion derived from speculative inferences. To rely on the Maramara report as a basis for Salazar's dismissal would be most inequitous because the bulk of the findings centered principally oh her friend's alleged thievery and anomalous transactions as technical operations' support manager. Said report merely insinuated that in view of Salazar's special relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities. Direct evidence implicating private respondent is wanting from the records. It is also worth emphasizing that the Maramara report came out after Saldivar had already resigned from GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute management's findings, the report remained obviously one-sided. Since the main evidence obtained by petitioner dealt principally on the alleged culpability of Saldivar, without his having had a chance to voice his side in view of his prior resignation, stringent examination should have been carried out to ascertain whether or not there existed independent legal grounds to
hold Salatar answerable as well and, thereby, justify her dismissal. Finding none, from the records, we find her to have been unlawfully dismissed. WHEREFORE, the assailed resolution of public respondent National Labor Relations Commission dated December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is ordered to REINSTATE private respondent Imelda Salazar and to pay her backwages equivalent to her salary for a period of two (2) years only. This decision is immediately executory. SO ORDERED. Bustamante vs. National Labor Relations Commission G.R. No. 111651. November 28, 1996.* Labor Law; Backwages; Court has applied different methods in the computation of backwages.This Court has, over the years, applied different methods in the computation of backwages. The first labor relations law governing the award of backwages was Republic Act No. 875, the Industrial Peace Act, approved on 17 June 1953. Same; Same; Backpay could be awarded where in the opinion of the Court of lndustrial Relations such was necessary to effectuate the policies of the Industrial Peace Act.In accordance with these provisions, backpay (the same as backwages) could be awarded where, in the opinion of the Court of Industrial Relations (CIR), such was necessary to effectuate the policies of the Industrial Peace Act. Only in one case was backpay a matter of right, and that was, when an employer had declared a lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. Same; Same; CIR also had the implied power of mitigating the backpay where backpay was allowed.As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee, it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. Thus, in the exercise of its jurisdiction, the CIR increased or diminished the award of backpay, depending on several circumstances, among them, the good faith of the employer, the employee's employment in other establishments during the period of illegal dismissal, or the probability that the employee could have realized net earnings from outside employment if he had exercised due diligence to search for outside employment. Same; Same; Court ruled in the case of Mercury Drug Co., Inc., et al. v. CIR, et al. that a fixed amount of backwages without qualifications should be awarded to an illegally dismissed employee.From this ruling came the burden of disposing of an illegal dismissal case on its merits and of determining whether or not the computation of the award of backwages is correct. In order not to unduly delay the disposition of illegal dismissal cases, this Court found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et al. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). This ruling was grounded upon considerations of expediency in the execution of the decision. Same; Same; Under P.D. No. 442 it became mandatory to award backwages to illegally dismissed regular employees.Under the abovequoted provision, it became mandatory to award backwages to illegally dismissed regular employees. The law specifically declared that the award of backwages was to be computed from the time compensation was withheld from the employee up to the time of his reinstatement. This notwithstanding, the rule generally applied by the Court after the promulgation of the Mercury Drug case, and during the effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of cases from 1974 until
1989, when the amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect, supports this conclusion. Same; Same; Court declared in a later case that the general principle is that an employee is entitled to receive as backwages all the amounts he may have received from the date of his dismissal up to the time of his reinstatement.In the case of New Manila Candy Workers Union (Naconwa-Paflu) v, CIR (1978), or after the Labor Code (P.D. No. 442) had taken effect, the Court still followed the Mercury Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere by the employee during the period of illegal dismissal. In an even later case (1987) the Court declared that the general principle is that an employee is entitled to receive as backwages all the amounts he may have received from the date of his dismissal up to the time of his reinstatement. However, in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level, the award of backwages equivalent to three (3) years, without qualification or deduction, was nonetheless followed in said case. Same; Same; Any decision or order granting backwages in excess of three (3) years is null and void as to the excess.In a more direct approach to the rule on the award of backwages, this Court declared in the 1990 case of Medado v. Court of Appeals that "any decision or ordergranting backwages in excess of three (3) years is null and void as to the excess." Same; Same; Court qualified the provision under P.D. No. 442 by limiting the award of backwages to three (3) years.In sum, during the effectivity of P.D. 442, the Court enforced the Mercury Drug rule and, in effect, qualified the provision under P.D. No. 442 by limiting the award of backwages to three (3) years. Same; Same; Backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal.The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of backwages as enunciated in said Pines City Educational Center case, by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from back-wages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo est. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the resolution of the Court. Lucilo V. Pocot for petitioners. J.V. Yap Law Office for private respondent. PADILLA, J.:p
This petition for certiorari seeks to reverse the 3 May 1993 resolution of the National Labor Relations Commission (NLRC) which set aside its earlier resolution dated 8 March 1993 and deleted the award of backwages in favor of petitioners. The focal issue therefore in this case is whether or not petitioners are entitled to backwages after a finding by the NLRC itself that they had become regular employees after serving for more than one (1) year of broken or non-continuous service as probationary employees. The facts are not in dispute. Respondent company is engaged in the business of producing high grade bananas in its plantation in Davao del Norte. Petitioners Paulino Bantayan, Fernando Bustamante, Mario Sumonod and Osmalik Bustamante were employed as laborers and harvesters while petitioner Sabu Lamaran was employed as a laborer and sprayer in respondent company's plantation. All the petitioners signed contracts of employment for a period of six (6) months from 2 January 1990 to 2 July 1990, but they had started working sometime in September 1989. Previously, they were hired to do the same work for periods lasting a month or more, from 1985 to 1989. Before the contracts of employment expired on 2 July 1990, petitioners' employments were terminated on 25 June 1990 on the ground of poor performance on account of age, as not one of them was allegedly below forty (40) years old. Petitioners filed a complaint for illegal dismissal before the Regional Arbitration Branch, Branch XI of the NLRC in Davao City. On 26 April 1991, the labor arbiter rendered judgment in favor of petitioners, thus WHEREFORE, judgment is hereby rendered: 1. Declaring the dismissal of the complainants as illegal; 2. Ordering respondent Evergreen Farms, Inc. to immediately reinstate complainants to their former position with six (6) months backwages computed as follows (26.17 x P79.00 per day equals P2,067.43 x 6 months equals P12,404.58 times 5 complainants equals Sixty Two Thousand Four Hundred Four & 58/100 (P62,404.58) PESOS. However, if reinstatement is no longer feasible an additional one (1) month salary shall be awarded as a form of separation pay; 3. The claims for underpayment of wages is hereby dismissed for lack of merit. SO ORDERED. 1 On 8 March 1993, public respondent dismissed the appeal of private respondent company for lack of merit Private respondent filed a motion for reconsideration dated 1 April 1993. Acting on said motion, public respondent issued a second resolution on 3 May 1993 affirming its earlier resolution on illegal dismissal but deleting the award of backwages on the ground that the termination of petitioners' employments "was the result of the latter's (private respondent) mistaken interpretation of the law and that the same was therefore not necessarily attended by bad faith, nor arbitrariness, . . .". 2 In their present petition, petitioners argue that the public respondent gravely abused its discretion in rendering the second resolution which removed the award of backwages in their favor. We rule in favor of petitioners.
It is undisputed that petitioners were illegally dismissed from employment. Article 280 of the Labor Code states: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fired for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph:Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. This provision draws a line between regular and casual employment, a distinction however often abused by employers. The provision enumerates two (2) kinds of employees, the regular employees and the casual employees. The regular employees consist of the following: 1) those engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and 2) those who have rendered at least one year of service whether such service is continuous or broken. The law distinguishes between the two (2) kinds of employees to protect the interests of labor. Thus, in the case ofBaguio Country Club Corporation vs. NLRC, 3 the Court declared: "Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient . . . ". In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of work they were hired to perform in September 1989. Both the labor arbiter and the respondent NLRC agree that petitioners were employees engaged to perform activities necessary in the usual business of the employer. As laborers, harvesters or sprayers in an agricultural establishment which produces high grade bananas, petitioners' tasks are indispensable to the year-round operations of respondent company. This belies the theory of respondent company that the employment of petitioners was terminated due to the expiration of their probationary period in June 1990. If at all significant, the contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular employees and to evade paying them the benefits attached to such status. Some of the petitioners were hired as far back as 1985, although the hiring was not continuous. They were hired and re-hired in a span of from two to four years to do the same type of work which conclusively shows the necessity of petitioners' service to the respondent company's business. Petitioners have, therefore, become regular employees after performing activities which are necessary in the usual business of their employer. But, even assuming that the activities of petitioners in respondent company's plantation were not necessary or desirable to its business, we affirm the public respondent's finding that all of the complainants
(petitioners) have rendered non-continuous or broken service for more than one (1) year and are consequently considered regular employees. 4 We do not sustain public respondent's theory that private respondent should not be made to compensate petitioners for backwages because its termination of their employment was not made in bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent. The public respondent made a finding to this effect when it stated that the subsequent rehiring of petitioners on a probationary status "clearly appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners) from becoming regular employees." 5 Reliance by public respondent on the case of Manila Electric Company vs. NLRC 6 is misplaced. In that case, the Court ordered the reinstatement of an employee, without backwages because, although there was a valid cause for dismissal, the penalty was too severe for an employee who had rendered service for an uninterrupted period of twenty (20) years with two commendations for honesty. In the case at bar, there is no valid cause for dismissal. The employees (petitioners) have not performed any act to warrant termination of their employment. Consequently, petitioners are entitled to their full backwages and other benefits from the time their compensation was withheld from them up to the time of their actual reinstatement. WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May 1993 is modified in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be paid to petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement is no longer feasible, a one-month salary shall be paid the petitioners as ordered in the labor arbiter's decision; in addition to the adjudged backwages. SO ORDERED. Agabon vs. National Labor Relations Commission G.R. No. 158693. November 17, 2004.* Labor Law; Administrative Law; If the factual findings of the NLRC and the Labor Arbiter are conflicting, the reviewing court may delve into the records and examine for itself the questioned findings.It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals. However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings. Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a just cause. They had abandoned their employment and were already working for another employer. Same; Dismissal of Employees; To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. Same; Same; Abandonment; Words and Phrases; Abandonment is the deliberate and unjustified refusal of an employee to resume his employmentit is a form of neglect of duty, hence, a just cause for termination of employment by the employer.Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employeremployee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. Same; Same; Same; Moonlighting; Subcontracting for another company clearly shows the intention to sever the employer-employee relationship; The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him. Same; Same; The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. Same; Same; Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees.Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Same; Same; Due Process; Notice Requirement; Procedurally, (1) if the dismissal is based on a just cause under Article 282 of the Labor Code, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment, and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation; Failure to observe due process in a dismissal for just or authorized cause does not invalidate the dismissal but makes the employer liable for non-compliance with the procedural requirements of due
process.Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. Same; Same; Same; Same; The fact that the employee may not be residing in the address indicated in the employers records does not excuse the employer from sending the notices to the employees last known address.The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. Thus, it should be held liable for non compliance with the procedural requirements of due process. Same; Same; Same; Same; The Court believes that the ruling in Serrano v. National Labor Relations Commission, 323 SCRA 445 (2000), did not consider the full meaning of Article 279 of the Labor Code which provision means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law and that payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed; The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted the Court to revisit the doctrine.The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states: ART. 279. Security of Tenure.In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly
dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. Same; Same; Same; Constitutional Law; The Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history.To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just. It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Same; Same; Same; Same; Statutory due process should be differentiated from failure to comply with constitutional due processconstitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing.Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. Breaches of these due process requirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. Same; Same; Same; The better rule is to abandon the Serrano doctrine and to follow Wenphil v. National Labor Relations Commission, 170 SCRA 69 (1989), by holding that the dismissal was for just cause but imposing sanctions on the employer, which sanctions, however, must be stiffer than that imposed in Wenphil.After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. Same; Same; Same; The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employersthe commitment of this Court to the cause of labor does not prevent it from sustaining the employer when it is in the right.The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us
from sustaining the employer when it is in the right, as in this case. Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. Same; Same; Social Justice; An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitutionsocial justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life; Social justice is not based on rigid formulas set in stoneit has to allow for changing times and circumstances.An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the greatest good to the greatest number. This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances. Same; Same; Due Process; The violation of an employees right to statutory due process by the employer warrants the payment of indemnity in the form of nominal damages, the amount of which is addressed to the sound discretion of the court, taking into account the relevant circumstances.The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Same; Evidence; Payment; Burden of Proof; As a general rule, one who pleads payment has the burden of proving iteven where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment.We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documentswhich will show that overtime, differentials, service incentive leave and other claims of workers have been paidare not in the possession of the worker but in the custody and absolute control of the employer. Same; Wages; Thirteenth Month Pay; The 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code from which the employer is prohibited under Article 113 from making any deductions without the employees knowledge and consent.Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 1 3th month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already
receiving the same so as to further protect the level of real wages from the ravages of worldwide inflation. Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit: (f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee . . . from which an employer is prohibited under Article 113 of the same Code from making any deductions without the employees knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. [Agabon vs. National Labor Relations Commission, 442 SCRA 573(2004)] PETITION for review on certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Public Attorneys Office for petitioners. Nestor P. Ricolcol for private respondents. DECISION YNARES-SANTIAGO, J.: This petition for review seeks to reverse the decision1 of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00. Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 19922 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states: WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of: 1. Jenny M. Agabon - P56, 231.93 2. Virgilio C. Agabon - 56, 231.93 and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabon's 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR. SO ORDERED.4 On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.5 Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads: WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioner's money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00. SO ORDERED.6 Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.7 Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.8 Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work.9 In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondent's manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.10 It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals.11 However, if the
factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.12 Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners' dismissal was for a just cause. They had abandoned their employment and were already working for another employer. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.13 Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter's representative in connection with the employee's work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.14 It is a form of neglect of duty, hence, a just cause for termination of employment by the employer.15 For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.16 In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.17 In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from work without leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were absent because they were already working in another company. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct19 and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.20 After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and (c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employee's last known address. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee's last known address.21 Thus, it should be held liable for non-compliance with the procedural requirements of due process. A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission.22 Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,23 we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and awarding backwages "may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe."24 We further held that: Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.25 The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule. On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states: ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just.26 It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10.27 Breaches of these due process requirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the omission committed by the employer.
In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorney's fees. Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission,30 which opinion he reiterated in Serrano, stated: C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x.31 After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as in this case.32 Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor selfdestruction of the employer.33
It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."34 This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances. Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labormanagement relations and dispense justice with an even hand in every case: We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike, according to the mandate of the law.35 Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.36 The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now, pay later," which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.37 As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employee's one month salary. This indemnity is
intended not to penalize the employer but to vindicate or recognize the employee's right to statutory due process which was violated by the employer.39 The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.40 Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners' holiday pay, service incentive leave pay and 13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners' money claims. Private respondent is liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer.41 In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed.42 Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same43 so as "to further protect the level of real wages from the ravages of world-wide inflation."44 Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit: (f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee"
from which an employer is prohibited under Article 11345 of the same Code from making any deductions without the employee's knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00. WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process. No costs. SO ORDERED. Jaka Food Processing Corporation vs. Pacot G.R. No. 151378. March 28, 2005.* Labor Law; Dismissals; Distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283.A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separa tion pay. PETITION for review on certiorari of the decision and resolution of the Court of Appeals. The facts are stated in the opinion of the Court. Carlo Llanes Navarro for petitioner. Villegas, Belarmino, Mijares & Associates for respondents.
DECISION GARCIA, J.: Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CAG.R. SP. No. 59847, to wit: 1. Decision dated 16 November 2001,1 reversing and setting aside an earlier decision of the National Labor Relations Commission (NLRC); and 2. Resolution dated 8 January 2002,2 denying petitioners motion for reconsideration. The material facts may be briefly stated, as follows: Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was "in dire financial straits". It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. In time, respondents separately filed with the regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager, Rosana Castelo. After due proceedings, the Labor Arbiter rendered a decision3 declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. More specifically the decision dispositively reads: WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants and ordering respondents to reinstate them to their positions with full backwages which as of July 30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13th month pay as alluded in the above computation. If complainants could not be reinstated, respondents are ordered to pay them separation pay equivalent to one month salary for very (sic) year of service. SO ORDERED. Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,4 affirmed in toto that of the Labor Arbiter. JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another decision dated January 28, 2000,5 this time modifying its earlier decision, thus:
WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages, service incentive leave pay. Each of the complainants-appellees shall be entitled to a separation pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of the complainants-appellees the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the retrenchment. SO ORDERED. Their motion for reconsideration having been denied by the NLRC in its resolution of April 28, 2000,6 respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No. 59847. As stated at the outset hereof, the Court of Appeals, in a decision dated November 16, 2000, applying the doctrine laid down by this Court in Serrano vs. NLRC,7 reversed and set aside the NLRCs decision of January 28, 2000, thus: WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission is REVERSEDand SET ASIDE and another one entered ordering respondent JAKA Foods Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final. SO ORDERED. This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in its resolution of January 8, 2002. Hence, JAKAs present recourse, submitting, for our consideration, the following issues: "I. WHETHER OR NOT THE COURT BACKWAGES TO RESPONDENTS. OF APPEALS CORRECTLY AWARDED FULL
II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO RESPONDENTS". As we see it, there is only one question that requires resolution, i.e. what are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employers compliance with the notice requirement under the Labor Code. This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC,8 we had the opportunity to resolve a similar question. Therein, we found that the employees committed a grave offense, i.e.,abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of the dismissal despite non-compliance with the notice requirement of the Labor Code. However, we required the employer to pay the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory due process, thus:
"Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. xxx xxx xxx The violation of petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules," (Emphasis supplied). The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code. At this point, we note that there are divergent implications of a dismissal for just cause under Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other. A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay.9 For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the authorized causes under Article 283. Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under
Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative. The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents employment. As aptly found by the NLRC: "A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or 94.11% of the stockholders [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders equity, thus a capital deficiency or impairment of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the stockholders equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew by more than 47%. The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainantsappellees failed to dispute. The losses incurred by the respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondent-appellants audited financial statement. Having established the loss incurred by the respondent-appellant corporation, it necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore logical for the corporation to implement a retrenchment program to prevent further losses."10 Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding of the NLRC which, incidentally, was also affirmed by the Court of Appeals. It is, therefore, established that there was ground for respondents dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00. We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. This is because in Reahs Corporation vs. NLRC,11 we made the following declaration: "The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons. xxx". (Emphasis supplied)
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to pay each of the respondents the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process. SO ORDERED. Phil. Long Distance Telephone Co. vs. NLRC No. L-80609. August 23, 1988.* Labor; Illegal Dismissal; Separation Pay; Rule in the Labor Code that a person dismissed for cause is not entitled to separation pay; Exception is based upon equity considerations; Definition and concept of equity.The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law. Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Same; Same; Same; Grant of separation pay is not merely based on equity but on the provisions of the Constitution on the promotion of social justice and protection of the rights of the workers.Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. Same; Same; Same; Award of separation pay distinguished; Grant of separation pay to the dismissed employee is just where the separation was due to valid but inequitous causes as failure to comply with work standards; Grant of award is based on the social justice policy even if separation is for cause.There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employees fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause.
Same; Same; Same; Where the cause of separation is more serious than mere inefficiency, the award is not justified.But where the cause of the separation is more serious that mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipt of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. Same; Same; Same; Henceforth, separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character; Where the reason for the valid dismissal is habitual insubordination or an offense involving moral turpitude, the employer may not be required to give the dismissed employee separation pay or financial assistance.We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, of financial assistance, or whatever other name it is called, on the ground of social justice. Same; Same; Same; Same; Same; A contrary rule would have the effect of rewarding rather than punishing the erring employee for his offense.A contrary rule would, as the petitioner correctly argues, have the effect of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. Same; Same; Same; Same; Same; The policy of social justice is not intended to countenance wrongdoing.The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be the refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. Same; Same; Same; Same; Same; Grant of separation pay to the private respondent who has been dismissed for dishonesty, is justified; Reason.Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is, to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the
penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. Same; Same; Same; Same; Same; Separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service. The Court also rules that the separation pay, if found due under the circumstance of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee. PETITION to the resolution of the National Labor Relations Commission. The facts are stated in the opinion of the Court. Nicanor G. Nuevas for petitioner. CRUZ, J.: The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent. Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from the service. 2 She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's decision declared: WHEREFORE, the instant complaint is dismissed for lack of merit. Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outhide the premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be given one month pay for every year of service as financial assistance. 3 Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the abovequoted award as having been made with grave abuse of discretion. In its challenged resolution of September 22, 1987, the NLRC said: ... Anent the award of separation pay as financial assistance in complainant's favor, We find the same to be equitable, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. While we do not in any way approve of complainants (private respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor. 5
The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. In the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring corruption. For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years. In support of this position, the Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate justice. As the Court put it in the Firestone case: In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However, considering that Lariosa had worked with the company for eleven years with no known previous bad record, the ends of social and compassionate justice would be served if he is paid full separation pay but not reinstatement without backwages by the NLRC. In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service with the company. In Soco, the employee was also legally separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month separation pay for every year of his 18-year service. Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her failure to account for certain funds but she was awarded separation pay equivalent to one-half month's salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated labor unrest among the workers and had serious differences with them, among other grounds, but he was still granted three months separation pay corresponding to his 3year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed three employees who had been dismissed after they were found guilty of misappropriating company funds. The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. 13 The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging to the sphere of morals than of law. 15 It is grounded on the precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the
expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub- topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded separation pay notnvithstanding that the first cause was certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was two months separation pay for 2 years service. In Firestone, the emplovee was allowed full separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month separation pay for every year of her 15year service. It would seem then that length of service is not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal. The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve
such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee. 17
WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is AFFIRMED in totoexcept for the grant of separation pay in the form of financial assistance, which is hereby DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered. G.R. Nos. 180849 and 187143. November 16, 2011.*
PHILIPPINE NATIONAL BANK, petitioner, vs. DAN PADAO, respondent. Labor Law; The Labor Code declares as policy that the State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers.The Labor Code declares as policy that the State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. Same; Termination of Employment; In cases of regular employment, the employer is prohibited from terminating the services of an employee except for a just or authorized cause.In cases of regular employment, the employer is prohibited from terminating the services of an employee except for a just or authorized cause. Such just causes for which an employer may terminate an employee are enumerated in Article 282 of the Labor Code. Same; Same; Gross Negligence; Gross negligence connotes want of care in the performance of ones duties, while habitual neglect implies repeated failure to perform ones duties for a period of time, depending on the circumstances.Gross negligence connotes want of care in the performance of ones duties, while habitual neglect implies repeated failure to perform ones duties for a period of time, depending on the circumstances. Gross negligence has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. PETITIONS for review on certiorari of the decisions and resolutions of the Court of Appeals. The facts are stated in the opinion of the Court. France Evan L. Dandoy II for petitioner. Young, Co, Pajaran & Associates for respondent. DECISION MENDOZA, J.: These are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. In G.R. No. 180849, petitioner Philippine National Bank (PNB) seeks the reversal of the December 14, 2006 Decision1 and October 2, 2007 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 76584, which upheld the ruling of the National Labor Relations Commission, Cagayan de Oro City (NLRC) in its October 30, 2002 Resolution,3 reversing the June 21, 2001
Decision4 of the Executive Labor Arbiter (ELA) which found the dismissal of respondent Dan Padao (Padao) valid. In G.R. No. 187143, PNB seeks the reversal of the December 9, 2008 Decision5 and February 24, 2009 Resolution6 of the CA in CA-G.R. SP No. 00945, which allowed the execution of the October 30, 2002 NLRC Resolution. THE FACTS A. G.R. No. 180849 On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City Branch. He was later designated as a credit investigator in an acting capacity on November 9, 1993. On March 23, 1995, he was appointed regular Credit Investigator III, and was ultimately promoted to the position of Loan and Credit Officer IV. Sometime in 1994, PNB became embroiled in a scandal involving "behest loans." A certain Sih Wat Kai complained to the Provincial Office of the Commission on Audit (COA) of Zamboanga del Norte that anomalous loans were being granted by its officers: Assistant Vice President (AVP) and Branch Manager Aurelio De Guzman (AVP de Guzman), Assistant Department Manager and Cashier Olson Sala (Sala), and Loans and Senior Credit Investigator Primitivo Virtudazo (Virtudazo). The questionable loans were reportedly being extended to select bank clients, among them Joseph Liong, Danilo Dangcalan, Jacinto Salac, Catherine Opulentisima, and Virgie Pango. The expos triggered the conduct of separate investigations by the COA and PNBs Internal Audit Department (IAD) from January to August 1995. Both investigations confirmed that the collateral provided in numerous loan accommodations were grossly over-appraised. The credit standing of the loan applicants was also fabricated, allowing them to obtain larger loan portfolios from PNB. These borrowers eventually defaulted on the payment of their loans, causing PNB to suffer millions in losses. In August 1995, Credit Investigators Rolando Palomares (Palomares) and Cayo Dagpin (Dagpin) were administratively charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the Best Interest of the Service, and violation of Republic Act (R.A.) No. 3019 (Anti-Graft and Corrupt Practices Act), in connection with an anomalous loan granted to the spouses, Jaime and Allyn Lim (the Lims). These charges, however, were later ordered dropped by PNB, citing its findings that Dagpin and Palomares signed the Inspection and Appraisal Report (IAR) and the Credit Inspection Report (CIR) in support of the Lims loan application in good faith, and upon the instruction of their superior officers. PNB also considered using Dagpin and Palomares as prosecution witnesses against AVP de Guzman, Loan Division Chief Melindo Bidad (Bidad) and Sala. The following month, September 1995, administrative charges for Grave Misconduct, Gross Neglect of Duty and Gross Violations of Bank Rules and Regulations and criminal cases for violation of R.A. No. 3019 were filed against AVP de Guzman, Sala, Virtudazo, and Bidad. Consequently, they were all dismissed from the service by PNB in November 1996. Later, Virtudazo was ordered reinstated. On June 14, 1996, Padao and Division Chief Wilma Velasco (Velasco) were similarly administratively charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the Best Interest of the Service, and violation of R.A. No. 3019.
The case against Padao was grounded on his having allegedly presented a deceptively positive status of the business, credit standing/rating and financial capability of loan applicants Reynaldo and Luzvilla Baluma and eleven (11) others. It was later found that either said borrowers businesses were inadequate to meet their loan obligations, or that the projects they sought to be financed did not exist. Padao was also accused of having over-appraised the collateral of the spouses Gardito and Alma Ajero, the spouses Ibaba, and Rolly Pango. On January 10, 1997, after due investigation, PNB found Padao guilty of gross and habitual neglect of duty and ordered him dismissed from the bank. Padao appealed to the banks Board of Directors. On January 20, 1997, Velasco was also held guilty of the offenses charged against her, and was similarly meted the penalty of dismissal. Her motion for reconsideration, however, was later granted by the bank, and she was reinstated. On October 11, 1999, after almost three (3) years of inaction on the part of the Board, Padao instituted a complaint7 against PNB and its then AVP, Napoleon Matienzo (Matienzo), with the Labor Arbitration Branch of the NLRC Regional Arbitration Branch (RAB) No. IX in Zamboanga City for 1] Reinstatement; 2] Backwages; 3] Illegal Dismissal; and 4] Treachery/Bad Faith and Palpable Discrimination in the Treatment of Employees with administrative cases. The case was docketed as RAB 09-04-00098-01. In a Decision dated June 21, 2001, the ELA found Padaos dismissal valid. Despite the finding of legality, the ELA still awarded separation pay of one-half (1/2) months pay for every year of service, citing PLDT v. NLRC & Abucay.8 The ELA held that in view of the peculiar conditions attendant to Padaos dismissal, there being no clear conclusive showing of moral turpitude, Padao should not be left without any remedy. Padao appealed to the NLRC, which, in its Resolution9 dated October 30, 2002, reversed and set aside the ELA Decision and declared Padaos dismissal to be illegal. He was thereby ordered reinstated to his previous position without loss of seniority rights and PNB was ordered to pay him full backwages and attorneys fees equivalent to ten percent (10%) of the total monetary award. PNBs Motion for Reconsideration10 was denied by the NLRC in its Resolution11 dated December 27, 2002. Aggrieved, PNB filed a petition for certiorari12 with the CA but it was dismissed in a Decision13 dated December 14, 2006. PNB moved for reconsideration14 but the motion was denied in the CA Resolution15 dated October 2, 2007. B. G.R. No. 187143 During the pendency of G.R. No. 180849 before the Court, the NLRC issued an entry of judgment on September 22, 2003, certifying that on February 28, 2003, its October 30, 2002 Resolution had become final and executory.16 On December 5, 2003, Padao filed a Motion for Execution of the NLRC Resolution dated October 30, 2002. This was granted by the ELA on April 22, 2004. On May 4, 2004, PNB and AVP Matienzo sought reconsideration of the ELAs Order based on the following grounds: (1) the October 30, 2003 Resolution was inexistent and, thus, could not become final and executory; and (2) Padaos motion for execution was granted without hearing.
Acting thereon, the ELA denied PNBs motion for reconsideration on the ground that motions for reconsideration of an order are prohibited under Section 19, Rule V of the NLRC Rules of Procedure. Thus, Padao filed his Motion to Admit Computation17 dated July 14, 2004. In its Comment,18 PNB alleged that the computation was grossly exaggerated and without basis, and prayed for a period of thirty (30) days within which to submit its counter-computation since the same would come from its head office in Pasay City. On September 22, 2004, the ELA issued the Order19 granting Padaos Motion to Admit Computation. The order cited PNBs failure to submit its counter-computation within the two extended periods (totaling forty days), which the ELA construed as a waiver to submit the same. Thus, the ELA ordered the issuance of a writ of execution for the payment of backwages due to Padao in the amount of P 2,589,236.21. In a motion20 dated September 29, 2004, PNB sought reconsideration of the order with an attached counter-computation. The ELA denied the same in its Order21 dated October 20, 2004 on the ground that the motions for reconsideration of orders and decisions of the Labor Arbiter are prohibited under Section 19, Rule V of the NLRC Rules of Procedure. The ELA further stated that PNB had been given more than ample opportunity to submit its own computation in this case, and the belatedly submitted counter-computation of claims could not be considered. Thus, a writ of execution22 was issued on October 21, 2004. On November 11, 2004 and January 19, 2005, PNB filed its Motion to Quash Writ of Execution and its Motion to Dissolve Alias Writ of Execution, respectively. Both were denied by the ELA in an Order23 dated February 8, 2005. On February 18, 2005, PNB filed a Notice of Appeal with Memorandum on Appeal24 with the NLRC. On September 20, 2005, however, the NLRC issued a Resolution25 dismissing the banks appeal. PNBs Motion for Reconsideration26 was also denied in the December 21, 2005 Resolution.27 Thus, on March 7, 2006, PNB filed a Petition for Certiorari28 with the CA, assailing the findings of ELA Plagata and the NLRC. In a Decision29 dated December 9, 2008, the CA dismissed the petition, and later denied PNBs motion for reconsideration on February 24, 2009. ISSUES In G.R. No. 180849, PNB presents the following Assignment of Errors:30 A. THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THE POSITION OF A CREDIT INVESTIGATOR IS ONE IMBUED WITH [THE] TRUST AND CONFIDENCE OF THE EMPLOYER. B. THE COURT OF APPEALS ERRED IN TREATING THE ACT OF FALSIFYING THE CREDIT AND APPRAISAL REPORTS AND THAT OF MERELY AFFIXING ONES SIGNATURE IN A FALSE REPORT PREPARED BY ANOTHER AS ONE AND THE SAME DEGREE OF MISCONDUCT WHICH WARRANTS THE SAME PENALTY. In G.R. No. 187143, PNB presents the following Assignment of Errors:31
THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN THEY INVARIABLY IGNORED PNBS COUNTER-COMPUTATION AND MERELY RELIED ON RESPONDENT DAN PADAOS SELF-SERVING COMPUTATION OF HIS MONEY AWARD. THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN THEY ACCEPTED THE COMPUTATION OF RESPONDENT PADAO WITHOUT REQUIRING PROOF TO SUPPORT THE SAME. In G.R. No. 180849, PNB argues that the position of a credit investigator is one reposed with trust and confidence, such that its holder may be validly dismissed based on loss of trust and confidence. In disciplining employees, the employer has the right to exercise discretion in determining the individual liability of each erring employee and in imposing a penalty commensurate with the degree of participation of each. PNB further contends that the findings of the CA are not in accordance with the evidence on record, thus, necessitating a review of the facts of the present case by this Court.32 On the other hand, Padao counters that local bank policies implemented by the highestranking branch officials such as the assistant vice-president/branch manager, assistant manager/cashier, chief of the loans division and legal counsel, are presumed to be sanctioned and approved by the bank, and a subordinate employee should not be faulted for his reliance thereon. He argues that a person who acts in obedience to an order issued by a superior for some lawful purpose cannot be held liable. PNB is bound by the acts of its senior officers and he, like his fellow credit investigators, having acted in good faith in affixing his signature on the reports based on the instruction, order and directive of senior local bank officials, should not be held liable.33 Padao also claims that PNB cruelly betrayed him by charging and dismissing him after using him as a prosecution witness to secure the conviction of the senior bank officials, that he was never part of the conspiracy, and that he did not derive any benefit from the scheme.34 The Courts Ruling In the 1987 Constitution, provisions on social justice and the protection of labor underscore the importance and economic significance of labor. Article II, Section 18 characterizes labor as a "primary social economic force," and as such, the State is bound to "protect the rights of workers and promote their welfare." Moreover, workers are "entitled to security of tenure, humane conditions of work, and a living wage."35 The Labor Code declares as policy that the State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and humane conditions of work.36 While it is an employers basic right to freely select or discharge its employees, if only as a measure of self-protection against acts inimical to its interest,37 the law sets the valid grounds for termination as well as the proper procedure to be followed when terminating the services of an employee.38 Thus, in cases of regular employment, the employer is prohibited from terminating the services of an employee except for a just or authorized cause.39 Such just causes for which an employer may terminate an employee are enumerated in Article 282 of the Labor Code:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate family member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. Further, due process requires that employers follow the procedure set by the Labor Code: Art. 277. Miscellaneous provisions. xxx b. Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989) xxx In this case, Padao was dismissed by PNB for gross and habitual neglect of duties under Article 282 (b) of the Labor Code. Gross negligence connotes want of care in the performance of ones duties, while habitual neglect implies repeated failure to perform ones duties for a period of time, depending on the circumstances.40 Gross negligence has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.41 In the case at bench, Padao was accused of having presented a fraudulently positive evaluation of the business, credit standing/rating and financial capability of Reynaldo and Luzvilla Baluma and eleven other loan applicants.42Some businesses were eventually found not to exist at all, while in other transactions, the financial status of the borrowers simply could not
support the grant of loans in the approved amounts.43 Moreover, Padao over-appraised the collateral of spouses Gardito and Alma Ajero, and that of spouses Ihaba and Rolly Pango.44 The role that a credit investigator plays in the conduct of a banks business cannot be overestimated. The amount of loans to be extended by a bank depends upon the report of the credit investigator on the collateral being offered. If a loan is not fairly secured, the bank is at the mercy of the borrower who may just opt to have the collateral foreclosed. If the scheme is repeated a hundredfold, it may lead to the collapse of the bank. In the case of Sawadjaan v. Court of Appeals,45 the Court stressed the crucial role that a credit investigator or an appraiser plays. Thus: Petitioner himself admits that the position of appraiser/inspector is "one of the most serious [and] sensitive job[s] in the banking operations." He should have been aware that accepting such a designation, he is obliged to perform the task at hand by the exercise of more than ordinary prudence. As appraiser/investigator, the petitioner was expected to conduct an ocular inspection of the properties offered by CAMEC as collaterals and check the copies of the certificates of title against those on file with the Registry of Deeds. Not only did he fail to conduct these routine checks, but he also deliberately misrepresented in his appraisal report that after reviewing the documents and conducting a site inspection, he found the CAMEC loan application to be in order. Despite the number of pleadings he has filed, he has failed to offer an alternative explanation for his actions. [Emphasis supplied] In fact, banks are mandated to exercise more care and prudence in dealing with registered lands: [B]anks are cautioned to exercise more care and prudence in dealing even with registered lands, than private individuals, "for their business is one affected with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act of negligence which amounts to lack of good faith by which they would be denied the protective mantle of the land registration statute Act 496, extended only to purchasers for value and in good faith, as well as to mortgagees of the same character and description. It is for this reason that banks before approving a loan send representatives to the premises of the land offered as collateral and investigate who are the true owners thereof.46 Padaos repeated failure to discharge his duties as a credit investigator of the bank amounted to gross and habitual neglect of duties under Article 282 (b) of the Labor Code. He not only failed to perform what he was employed to do, but also did so repetitively and habitually, causing millions of pesos in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty of dismissal, which it deemed appropriate given the circumstances. The CA was correct in stating that when the violation of company policy or breach of company rules and regulations is tolerated by management, it cannot serve as a basis for termination.47 Such ruling, however, does not apply here. The principle only applies when the breach or violation is one which neither amounts to nor involves fraud or illegal activities. In such a case, one cannot evade liability or culpability based on obedience to the corporate chain of command. Padao cited Llosa-Tan v. Silahis International Hotel,48 where the "violation" of corporate policy was held not per se fraudulent or illegal. Moreover, the said "violation" was done in compliance with the apparent lawful orders of the concerned employees superiors. Managementsanctioned deviations in the said case did not amount to fraud or illegal activities. If anything, it merely represented flawed policy implementation.
In sharp contrast, Padao, in affixing his signature on the fraudulent reports, attested to the falsehoods contained therein. Moreover, by doing so, he repeatedly failed to perform his duties as a credit investigator. Further, even Article 11(6) of the Revised Penal Code requires that any person, who acts in obedience to an order issued by a superior does so for some lawful purpose in order for such person not to incur criminal liability. The succeeding article exempts from criminal liability any person who acts under the compulsion of an irresistible force (Article 12, paragraph 6) or under the impulse of an uncontrollable fear of an equal or greater injury (Article 12, paragraph 7). Assuming solely for the sake of argument that these principles apply by analogy, even an extremely liberal interpretation of these justifying or exempting circumstances will not allow Padao to escape liability. Also, had Padao wanted immunity in exchange for his testimony as a prosecution witness, he should have demanded that there be a written agreement. Without it, his claim is self-serving and unreliable. That there is no proof that Padao derived any benefit from the scheme is immaterial.49 What is crucial is that his gross and habitual negligence caused great damage to his employer. Padao was aware that there was something irregular about the practices being implemented by his superiors, but he went along with, became part of, and participated in the scheme. It does not speak well for a person to apparently blindly follow his superiors, particularly when, with the exercise of ordinary diligence, one would be able to determine that what he or she was being ordered to do was highly irregular, if not illegal, and would, and did, work to the great disadvantage of his or her employer. PNB, as an employer, has the basic right to freely select and discharge employees (subject to the Labor Code requirements on substantive and procedural due process), if only as a measure of self-protection against acts inimical to its interests.50 It has the authority to impose what penalty it deems sufficient or commensurate to an employees offense. Having satisfied the requirements of procedural and substantive due process, it is thus left to the discretion of the employer to impose such sanction as it sees befitting based on the circumstances. Finally, Padao claims that he should be accorded the same treatment as his co-employees.51 As the ELA, however, correctly observed: [A]s pointed out by the respondents, the case of the complainant was different, and his culpability, much more than his aforementioned co-employees.1wphi1 In the case of Palomares and Dagpin, they were involved in only one case of over-appraisal of collateral in the loan account of the spouses Jaime Lim and Allyn Tan (Respondents Comments, p. 1), but in the case of complainant, his over-appraisals involved three (3) loan accounts and amounting to P 9,537,759.00 (Ibid.), not to mention that he also submitted falsified Credit Investigation Reports for the loan accounts of seven (7) other borrowers of PNB (Ibid., pp. 1-2). xxx The number of over-appraisals (3) and falsified credit investigation reports (7) or countersigned by the complainant indicates habituality, or the propensity to do the same. The best that can be said of his acts is the lack of moral strength to resist the repeated commission of illegal or prohibited acts in loan transactions. He thus cannot interpose undue pressure or coercion exerted upon [him] by his superiors, to absolve himself of liability for his signing or
countersigning the aforementioned falsified reports. It may have been allowable or justifiable for him to give in to one anomalous loan transaction report, but definitely not for ten (10) loan accounts. It is axiomatic that obedience to ones superiors extends only to lawful orders, not to unlawful orders calling for unauthorized, prohibited or immoral acts to be done. In the case of Wilma Velasco, PNB did not pursue legal action and even discontinued the administrative case filed against her because, according to PNB, she appeared to have been the victim of the misrepresentations and falsifications of the credit investigation and appraisal reports of the complainant upon which she had to reply in acting on loan applications filed with the PNB and for which such reports were made. She was not obliged to conduct a separate or personal appraisal of the properties offered as collaterals, or separate credit investigations of the borrowers of PNB. These functions pertained to PNB inspectors/credit investigators, like the complainant. Unfortunately, the latter was derelict in the performance of those duties, if he did not deliberately misuse or abuse such duties. As can be seen, therefore, the complainant and Wilma Velasco did not stand on the same footing relative to their involvement or participation in the anomalous loan transactions earlier mentioned. Therefore, PNB cannot be faulted for freeing her from liability and punishment, while dismissing the complainant from service. [Emphases supplied] Given the above ruling of the Court in G.R. No. 180849, the ruling of the CA in CA-G.R. SP No. 00945, an action stemming from the execution of the decision in said case, must perforce be reversed. However, Padao is not entitled to financial assistance. In Toyota Motor Phils. Corp. Workers Association v. NLRC,52 the Court reaffirmed the general rule that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character. These five grounds are just causes for dismissal as provided in Article 282 of the Labor Code. In Central Philippine Bandag Retreaders, Inc. v. Diasnes,53 cited in Quiambao v. Manila Electric Company,54 we discussed the parameters of awarding separation pay to dismissed employees as a measure of financial assistance: To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employees dismissal is based on serious misconduct or willful disobedience;gross and habitual neglect of duty; fraud or willfull breach of trust; or commission of a crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction dismissal of employees. They must be judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautions in awarding financial assistance to the undeserving and those who are unworthy of the liberality of the law.55 [Emphasis original. Underscoring supplied] Clearly, given the Courts findings, Padao is not entitled to financial assistance.1avvphi1 WHEREFORE, the petitions in G.R. No. 180849 and G.R. No. 187143 are GRANTED. In G.R. No. 180849, the December 14, 2006 Decision and the October 2, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 76584 are REVERSED and SET ASIDE.
In G.R. No. 187143, the December 9, 2008 Decision and the February 24, 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 00945 are REVERSED and SET ASIDE. The June 21, 2001 Decision of the Executive Labor Arbiter is hereby ordered REINSTATED, with theMODIFICATION that the award of financial assistance is DELETED. SO ORDERED.
G.R. No. 152048.
April 7, 2009.*
FELIX B. PEREZ and AMANTE G. DORIA, petitioners, vs. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, respondents. Labor Law; Termination of Employment; Loss of Trust and Confidence; Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee.Without undermining the importance of a shipping order or request, we find respondents evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted. Other than their bare allegations and the fact that such documents came into petitioners hands at some point, respondents should have provided evidence of petitioners functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners because it was never proven that petitioners alone had control of or access to these documents. Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee. Same; Same; Same; Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination; Loss of confidence should not be simulated.Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination. However, in General Bank and Trust Co. v. CA, 135 SCRA 569 (1985), we said: [L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. Same; Same; Same; Two Notice Requirement for Terminating Employees.Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employers decision to dismiss the employee. Same; Same; The opportunity to be heard afforded by law to the employee is qualified by the word ample which ordinarily means considerably more than adequate or sufficient.Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given ample opportunity to be heard and to defend himself. Thus, the opportunity to be heard afforded by law to the employee is qualified by the word ample which ordinarily means considerably more than adequate or sufficient. In this regard, the phrase ample opportunity to be heard can be reasonably interpreted as extensive enough to cover actual
hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b). Same; Same; Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement in termination of employment; The ample opportunity to be heard standard is neither synonymous nor similar to a formal hearing.Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The ample opportunity to be heard standard is neither synonymous nor similar to a formal hearing. To confine the employees right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation. Same; Same; While a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process.Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed substantially, not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. Same; Due Process; To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings.A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase ample opportunity to be heard may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial type hearing, although preferred, is not absolutely necessary to satisfy the employees right to be heard. Same; Same; Guiding Principles in Connection with the Hearing Requirement in Dismissal Cases.The following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the ample opportunity to be heard standard in the Labor Code prevails over the hearing or conference requirement in the implementing rules and regulations. DECISION CORONA, J.: Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&Ts Shipping Section, Materials Management Group.
Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section, respondents formed a special audit team to investigate the matter. It was discovered that the Shipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration and superimposition. On September 3, 1993, petitioners were placed on preventive suspension for 30 days for their alleged involvement in the anomaly.1 Their suspension was extended for 15 days twice: first on October 3, 19932 and second on October 18, 1993.3 On October 29, 1993, a memorandum with the following tenor was issued by respondents: In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy attached) and the subsequent filing of criminal charges against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified company documents.4 (emphasis supplied) On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal.5 They alleged that they were dismissed on November 8, 1993, the date they received the above-mentioned memorandum. The labor arbiter found that the 30-day extension of petitioners suspension and their subsequent dismissal were both illegal. He ordered respondents to pay petitioners their salaries during their 30-day illegal suspension, as well as to reinstate them with backwages and 13th month pay. The National Labor Relations Commission (NLRC) reversed the decision of the labor arbiter. It ruled that petitioners were dismissed for just cause, that they were accorded due process and that they were illegally suspended for only 15 days (without stating the reason for the reduction of the period of petitioners illegal suspension).6 Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002 decision,7 the CA affirmed the NLRC decision insofar as petitioners illegal suspension for 15 days and dismissal for just cause were concerned. However, it found that petitioners were dismissed without due process. Petitioners now seek a reversal of the CA decision. They contend that there was no just cause for their dismissal, that they were not accorded due process and that they were illegally suspended for 30 days. We rule in favor of petitioners. Respondents Failed to Prove Just Cause and to Observe Due Process The CA, in upholding the NLRCs decision, reasoned that there was sufficient basis for respondents to lose their confidence in petitioners8 for allegedly tampering with the shipping documents. Respondents emphasized the importance of a shipping order or request, as it was the basis of their liability to a cargo forwarder.9 We disagree.
Without undermining the importance of a shipping order or request, we find respondents evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted.10 Other than their bare allegations and the fact that such documents came into petitioners hands at some point, respondents should have provided evidence of petitioners functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners because it was never proven that petitioners alone had control of or access to these documents. Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee.11 Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination.12 However, in General Bank and Trust Co. v. CA,13 we said: [L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security of tenure that employees enjoy under the Constitution and the Labor Code. The employers evidence must clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made to rest.14 It must be adequately proven by substantial evidence.15 Respondents failed to discharge this burden. Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee.16 Petitioners were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily separated from work and served notices of termination in total disregard of their rights to due process and security of tenure. The labor arbiter and the CA correctly found that respondents failed to comply with the two-notice requirement for terminating employees. Petitioners likewise contended that due process was not observed in the absence of a hearing in which they could have explained their side and refuted the evidence against them. There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires: ART. 277. Miscellaneous provisions. x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. (emphasis supplied) The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him:17 Section 2. Security of Tenure. x x x (d) In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. (iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (emphasis supplied) Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled? At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative regulations implementing it.18 The authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute.19 As such, it cannot amend the law either by abridging or expanding its scope.20 Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be heard afforded by law to the employee is qualified by the word "ample" which ordinarily means "considerably more than adequate or sufficient."21 In this regard, the phrase "ample opportunity to be heard" can be reasonably interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).
Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The "ample opportunity to be heard" standard is neither synonymous nor similar to a formal hearing. To confine the employees right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The "very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation."22 The standard for the hearing requirement, ample opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit. Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed "substantially," not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employees right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof. A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy.23 "To be heard" does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. 24 Therefore, while the phrase "ample opportunity to be heard" may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal "trialtype" hearing, although preferred, is not absolutely necessary to satisfy the employees right to be heard. This Court has consistently ruled that the due process requirement in cases of termination of employment does not require an actual or formal hearing. Thus, we categorically declared in Skippers United Pacific, Inc. v. Maguad:25 The Labor Code does not, of course, require a formal or trial type proceeding before an erring employee may be dismissed. (emphasis supplied) In Autobus Workers Union v. NLRC,26 we ruled: The twin requirements of notice and hearing constitute the essential elements of due process. Due process of law simply means giving opportunity to be heard before judgment is rendered. In fact, there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard. xxxxxxxxx
A formal trial-type hearing is not even essential to due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. This type of hearing is not even mandatory in cases of complaints lodged before the Labor Arbiter. (emphasis supplied) In Solid Development Corporation Workers Association v. Solid Development Corporation,27 we had the occasion to state: [W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting the charges against them. They were also required to submit their written explanation within 12 hours from receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they should have requested for an extension of time. Further, notices of termination were also sent to them informing them of the basis of their dismissal. In fine, petitioners were given due process before they were dismissed. Even if no hearing was conducted, the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. (emphasis supplied) Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC28 is of similar import: That the investigations conducted by petitioner may not be considered formal or recorded hearings or investigations is immaterial. A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy. It is deemed sufficient for the employer to follow the natural sequence of notice, hearing and judgment. The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written. After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes29 or where company rules or practice requires an actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point of law.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code without unduly restricting the language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that "[a]ll doubts in the implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations shall be resolved in favor of labor." In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing rules and regulations. Petitioners Were Illegally Suspended for 30 Days An employee may be validly suspended by the employer for just cause provided by law. Such suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages during the extended period.30 In this case, petitioners contended that they were not paid during the two 15-day extensions, or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary. Thus, we uphold the ruling of the labor arbiter on this point. Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.31 In this case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution.32 Fourteen years have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any prudent or practical purpose.33 WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 29, 2002 in CA-G.R. SP No. 50536 finding that petitioners Felix B. Perez and Amante G. Doria were not illegally dismissed but were not accorded due process and were illegally suspended for 15 days, is SET ASIDE. The decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 11-06930-93 is hereby AFFIRMED with the MODIFICATIONthat petitioners should be paid their separation pay in lieu of reinstatement.
SO ORDERED. Chiang Kai Shek College vs. Court of Appeals G.R. No. 152988. August 24, 2004.* Labor Law; Security of Tenure; Requisites for a Private School Teacher to Acquire a Permanent Status of Employment and Therefore Entitled to a Security of Tenure; The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due notice and hearing.Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such service must have been satisfactory. Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due notice and hearing. Same; Dismissal; Definition of Constructive Dismissal.Case law defines constructive dismissal as a cessation from work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. Same; Remedial Law; Distinction Between Legal and Factual Issues.Basic is the distinction between legal and factual issues. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation. PETITION for review on certiorari of the decision and resolution of the Court of Appeals. The facts are stated in the opinion of the Court. Salvador B. Lao for petitioners. Manuel P. Roxas, Jr. for respondent D. Belo. DECISION
DAVIDE, JR., C.J.: Assailed in this petition is the decision1 of 12 October 2001, as well as the resolution2 of 11 April 2002, of the Court Appeals in CA-G.R. SP No. 59996, which affirmed the decision3 of 29 February 2000 of the National Labor Relations Commission (NLRC) declaring that Diana P. Belo was illegally dismissed as a teacher of petitioner Chiang Kai Shek College (CKSC). The controversy began on 8 June 1992, when Ms. Belo, a teacher of CKSC since 1977, applied for a leave of absence for the school year 1992-1993 because her children of tender age had
no yaya to take care of them. The then principal, Mrs. Joan Sy Cotio, approved her application. However, on 15 June 1992, Ms. Belo received a letter dated 9 June 1992 of Mr. Chien Yin Shao, President of CKSC, informing her of the schools existing policy; thus: Regarding your letter of request for leave of absence dated June 8, 1992, we would like to inform you of the existing policy of our school: (1) We could not assure you of any teaching load should you decide to return in the future. (2) Only teachers in service may enjoy the privilege and benefits provided by our school. Hence, your children are no longer entitled to free tuition starting school year 19921993.4 Ms. Belo, nonetheless, took her leave of absence. On 8 July 1992, she learned that Laurence, one of her three children studying at the CKSC, was sent out of the examination room because his tuition fees were not paid. This embarrassing incident impelled Ms. Belo to pay, allegedly under protest, all the school fees of her children.5 In May 1993, after her one-year leave of absence, Ms. Belo presented herself to Ms. Cotio and signified her readiness to teach for the incoming school year 1993-1994. She was, however, denied and not accepted by Ms. Cotio. She then relayed the denial to Mr. Chien on 17 May 1993. On 21 July 1993, she received the reply of Mr. Chien dated 1 July 1993 informing her that her confirmation to teach was filed late and that there was no available teaching load for her because as early as April 21 of that year, the school had already hired non-permanent teachers.6 Adversely affected by the development, Ms. Belo filed with the Labor Arbitration Office a complaint for illegal dismissal; non-payment of salaries, 13th month pay, living allowance, teacher's day pay; loss of income; and moral damages. In his decision7 of 18 October 1995, Labor Arbiter Donato G. Quinto, Jr., dismissed the complaint, reasoning that Ms. Belo was not dismissed but that there was simply no available teaching load for her. When in May 1993 she signified her intention to teach, the school had already acted on the applications or re-applications to teach of probationary teachers. The schools policies, which were articulated in Mr. Chiens letter of 9 June 1992 to Ms. Belo, were management prerogatives which did not amount to her dismissal. Said policies were also the consequences of her leave of absence and were not even questioned by her. The Labor Arbiter thus offered a Solomonic solution by directing the petitioners to give her a teaching load in the ensuing year 1996-1997 and the succeeding years without loss of seniority rights.8 On appeal9 by the private respondent, the NLRC reversed the decision of the Labor Arbiter. It considered as misplaced the Labor Arbiters utter reliance on Mr. Chiens letter to Ms. Belo enunciating the questioned school policies. It reasoned that if the school policy was to extend free tuition fees to children of teachers in school, then the petitioners must have considered her "already not in school or summarily dismissed or separated the very moment [she] applied for leave," for, otherwise, her children would have been granted that privilege. Thus, it directed the petitioners to immediately reinstate Ms. Belo to her former position with full back wages from the time of her dismissal up to her actual reinstatement. It, however, dismissed Ms. Belo's prayer for moral and exemplary damages and attorney's fees for lack of evidence that the petitioners acted in bad faith and malice.
Their motion for reconsideration having been denied,10 the petitioners filed a petition for certiorari with the Court of Appeals contending that the NLRC gravely abused its discretion amounting to lack of jurisdiction in (a) overturning the factual determination of the Labor Arbiter despite the fact that Ms. Belo stated in her Notice of Appeal that she was appealing only on a pure question of law; (b) holding that Ms. Belo was constructively dismissed by the petitioners despite the uncontroverted evidence that she was not illegally dismissed; and (c) granting Ms. Belo monetary awards. On 12 October 2001, the Court of Appeals found that far from abusing its discretion, the NLRC acted correctly when it ascertained that Ms. Belo was constructively dismissed. It declared as illegal, for being violative of Ms. Belos right to security of tenure, the school policy that a teacher who goes on leave cannot be assured of a teaching load. The school should have set aside a teaching load for her after the expiration of her leave of absence. It would have been a different story, one indeed ripe for termination of her employment, had Ms. Belo failed to report for work. As for the schools contention that the NLRC was barred from resolving factual issues because of Ms. Belo's statement that she was appealing the case on a pure question of law, the Court of Appeals declared that such statement was a simple mistake in terminology, which is insufficient to deny an employee of her rights under the law. In its resolution dated 11 April 2002, the Court of Appeals denied the motion for reconsideration for lack of merit. Hence, on 11 June 2002,11 petitioner CKSC and its president Mr. Chien filed the present petition. They claim that the Court of Appeals erred in affirming the NLRC decision which reversed the factual findings of the Labor Arbiter even if the said findings were amply supported by clear and uncontroverted evidence and had already attained finality, as Ms. Belo had appealed merely on a question of law. The Court of Appeals also erred in upholding the NLRC decision which failed to point out specifically the alleged particular portions of the records of the case, parties respective position papers, and pleadings, much less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that there was a "clear case of constructive dismissal." The NLRC decision is in complete violation of Section 14, Article VIII of the Constitution, which provides: "No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the laws on which it is based." Likewise, the Court of Appeals has not only completely and arbitrarily ignored and disregarded the facts and issues raised as an issue before it, but also decided on the illegality of the schools policy, which was never raised before it or in any of the forums below. Anent the free tuition fee benefit extended to children of teachers in service in petitioner school, the same is a privilege granted not by law, but voluntarily by the said school. Hence, the petitioner school could determine the conditions under which said privilege may be enjoyed, such as, that only teachers in actual service can enjoy the privilege. Amidst the convolution of issues proffered by the petitioners, the only issue that needs to be determined and on which hinges the resolution of the other issues is whether the Court of Appeals erred in affirming the NLRC decision that Ms. Belo was constructively, nay, illegally dismissed and is, therefore, entitled to reinstatement and back wages. It must be noted at the outset that Ms. Belo had been a full-time teacher in petitioner CKSC continuously for fifteen years or since 1977 until she took a leave of absence for the school year 1992-1993. Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such service must have been satisfactory.12
Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due notice and hearing.13 We agree with the Court of Appeals that the NLRC did not commit any grave abuse of discretion in finding that Ms. Belo was constructively dismissed when the petitioners, in implementing their policies, effectively barred her from teaching for the school year 1993-1994. The three policies are (1) the non-assurance of a teaching load to a teacher who took a leave of absence; (2) the hiring of non-permanent teachers in April to whom teaching loads were already assigned when Ms. Belo signified in May 1993 her intention to teach; and (3) the nonapplicability to children of teachers on leave of the free tuition fee benefits extended to children of teachers in service. Case law defines constructive dismissal as a cessation from work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.14 When in the school year 1992-1993, the petitioners already applied to Ms. Belos children the policy of extending free tuition fee benefits only to children of teachers in service, Ms. Belo was clearly discriminated by them. True, the policy was made known to Ms. Belo in a letter dated 9 June 1992, but, this only additionally and succinctly reinforced the clear case of discrimination. Notably, petitioners statements of policies dated 13 March 1992 for the school year 1992-1993 did not include that policy; thus: To : All Teachers and Staff of Chiang Kai Shek College From : The President Pursuant to laws, rules and regulations promulgated by the proper government authorities of the Philippines, the following procedure are hereby issued for proper compliance of all concerned: 1. All teachers and staff who have rendered satisfactory service for a period of more than three (3) full consecutive years (e.g. those who started working in June, 1988 or before) are considered permanent employees and therefore need not re-apply for the forthcoming school year 1992-1993. 2. However, should any teacher or staff of permanent status wish to resign or to retire after this school year 1991-1992, he/she must file his/her written resignation or retirement application on or before March 28, 1992, so that the school will have sufficient time to make the necessary adjustments. Failure to file formal application on the part of the permanent employee shall be construed as consent to work for another school year. 3. All probationary employees (e.g. those who started working after June, 1988) who wish to continue their services in our school shall re-apply. Reapplications must be submitted on or before March 28, 1992. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai Shek College in the coming school year 1992-1993.
4. All reapplications shall be acted upon and the decision of the administration will be conveyed to the employees concerned on or before April 21, 1992. 15 It can be argued that the extension of free tuition fees to children of teachers in service was an informal policy or custom. If it were so, there would have been no need to include this policy in the schools written statement of policies dated 12 March 1993, which reads: To : All Teachers and Staff of Chiang Kai Shek College From : The Office of the President Pursuant to laws, rules and regulations promulgated by the proper government authorities of the Philippines, the following procedure are hereby issued for proper compliance of all concerned: 1. All teachers and staff who have rendered satisfactory service for a period of more than three (3) full consecutive years (e.g. those who started working in June, 1989 or before) are considered permanent employees and therefore need not re-apply for the forthcoming school year 1993-1994. 2. However, should any teacher or staff of permanent status wish to resign, to retire, or to take a leave of absence after this school year 1992-1993, he/she must file his/her written application on or before March 27, 1993, so that the school will have sufficient time to make the necessary adjustments. Failure to file formal application on the part of the permanent employee shall be construed as consent to work for another school year. In accordance with our school policy, employees not in service are not entitled to any benefit extended by our school. 3. All probationary employees (e.g. those who started working after June 1989) who wish to continue their services in our school shall re-apply. Reapplications must be submitted on or before March 27, 1993. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai Shek College in the coming school year 1993-1994. 4. All reapplications shall be acted upon and the decision of the administration will be conveyed to the employees concerned on or before April 21, 1993.16 A cursory analysis of the petitioners statements of policies dated 13 March 1992 and 12 March 1993 reveals that the lists of policies are essentially the same. Both are addressed to all teachers and staff of petitioner school. However, the policy "that employees not in service are not entitled to any benefit extended by the school" was not listed in the written statement of policies dated 13 March 1992. The policy made its maiden appearance in petitioners statement of policies one year after or on 12 March 1993. It was, therefore, the policy of extending free tuition fees to children of teachers of the school, whether on service or on leave, which existed as a matter of custom and practice. That is why the school modified the privilege in written form. Thus, when the petitioners retroactively applied the modified written policy to Ms. Belo, they considered her already a teacher not in service. The NLRC was correct when it reasoned as follows: "[I]f the school policy is to extend free tuition fees to children of teachers in school, then respondents [petitioners herein] have considered [Ms. Belo] already not in school or summarily dismissed or separated the very moment the latter applied for leave. Otherwise,
[her] children should have been granted the on-going privileges and benefits on free tuition fees, among others." Ms. Belo was definitely singled out in the implementation of a future policy. This is grossly unfair and unjust. The petitioners did not take heed of the principle enshrined in our labor laws that policies should be adequately known to the employees and uniformly implemented to the body of employees as a whole and not in isolation. The continued employment of Ms. Belo was also rendered unlikely by the insistence of the petitioners in implementing the alleged policy that a teacher who goes on leave for one year is not assured of a teaching load. While this alleged policy was mentioned in Mr. Chiens letter of 9 June 1992, it was not included in the schools written statement of policies dated 13 March 1992. Hence, it was then a non-existent policy. When a non-existent policy is implemented and, in this case, only to Ms. Belo, it constitutes a clear case of discrimination. Even if the policy of non-assurance of a teaching load existed as a matter of practice and custom, it still glaringly contradicts petitioners written statement of policies dated 12 March 1993. Crystal clear therefrom is the fact that only permanent teachers who wished "to resign, to retire, or to take a leave of absence after the school year 1992-1993 must file their written application in March 1993." Those who failed to file an application were expressly considered by the school as consenting to teach for the succeeding school year. Additionally, the petitioners did not require permanent teachers with satisfactory service to re-apply. It, therefore, blows our mind why the petitioners would require Ms. Belo, a permanent teacher since 1977 with a satisfactory service record, to signify her intention to teach in March 1993. Plainly, the petitioners violated their avowed policies. Since Ms. Belo was not retiring, resigning or filing another leave of absence after the school year 1992-1993, the petitioners should have considered her as consenting to teach for the incoming school year 1993-1994. In fact, they should not have required her to re-apply to teach. In accordance with the written statement of policies dated 12 March 1993, only probationary teachers are required by the petitioners to reapply in March. Failure of probationary teachers to re-apply in March is an indication of their lack of interest to teach again at the school. Petitioners invocation of the third policy that of giving teaching assignments to probationary teachers in April to justify their refusal to provide Ms. Belo a teaching load is, therefore, a lame excuse that rings of untruth and dishonesty. Patently clear is the illegal manner by which the petitioners eased out Ms. Belo from the teaching corps. Thus, the Court of Appeals justification in upholding the NLRC ruling attains an added judicial and logical sting: When respondent Belo reported for work after the termination of her one-year leave of absence, it was obligatory for petitioner school to give her a teaching load. It was improper for petitioner school to farm out subjects of respondent Belo to provisionary [sic] teacher [sic]. The petitioner school should have assumed that respondent Belo was returning for work after the expiration of her leave. It would have been a different story, if after the start of classes, respondent Belo failed to report for work, then the school had a right to institute the necessary proceeding for the termination of her employment.17 Likewise, we do not find merit in petitioners assertion that the Court of Appeals should not have passed upon the illegality of the school policy of non-assurance of a teaching load, since the alleged illegality was never raised as an issue before the respondent court or in the forums
below. As pointed out by the private respondent, that policy was part of the defense invoked by the petitioners in the Arbiter level, in the NLRC, and in the respondent court to the charge of illegal dismissal; and, hence, it must necessarily be passed upon and scrutinized. Besides, that policy is intimately intertwined with the main issue of whether Ms. Belo was illegally dismissed. We reject petitioners contention that "the NLRC decision failed to point out specifically the alleged particular portions of the records of the case, parties respective position papers, and pleadings, much less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that there is a clear case of constructive dismissal." In fact, the NLRC considered the same policies that the petitioners insist as their bases for maintaining that Ms. Belo was not dismissed. It seems that the petitioners could only be persuaded if the reviewing bodies unearthed a document that explicitly states that Ms. Belo was being constructively dismissed. This phantom paper chase unveils the unsubstantiated and contrived claim of the petitioners. They need only to look, for example, at the letter dated 9 June 1992 to Ms. Belo. The "policies" therein stated are discernibly non-existent, or if existing as a matter of custom they grossly transgressed petitioners formal written policies dated 13 March 1992 and 12 March 1993. Clear, therefore, is the fact that the written formal policies apply to all teachers and staff except Ms. Belo. Hence, there is no need to belabor the point that the NLRC decision clearly complied with the requirement expressed under Section 14, Article VIII of the Constitution. The decision speaks for itself. Suffice it is to say, this case is an exception to the general rule that the factual findings and conclusions of the Labor Arbiter are accorded weight and respect on appeal, and even finality. For one thing, the findings of the NLRC and the Labor Arbiter are contrary to each other; hence, the reviewing court may delve into the records and examine for itself the questioned findings.18 Further, we do not find merit in petitioners claim that Ms. Belos judicial admission that she was appealing on a "pure question of law" precludes the review and reversal of the Labor Arbiters factual finding that she was not illegally dismissed. Such claim is belied by the Notice of Appeal itself,19 wherein Ms. Belo declared that she was appealing the decision of the Labor Arbiter to the NLRC "on a pure question of law and for being contrary to law and jurisprudence applicable [to] the case and the evidence on record, and rendered with grave abuse of discretion."20 Oddly, even the petitioners themselves maintain that to prove grave abuse of discretion, "it is necessary to bring out questions of fact." Thus, in their own justification in resorting to both Rules 45 and 65 of the Rules of Court for the review and the nullification of the decision of the Court of Appeals, they contend: Clearly, petitioners remedy is two-fold under Rule 45 and 65. Under Rule 45, only questions of law may be raised. Perhaps, respondents can now understand why petitioners have used both Rules 45 and 65. And this is simply because by invoking said two rules, they are not limited to raising questions of law, but they can raise both questions of fact and law. To show that grave abuse of discretion has been committed under Rule 65, it is necessary to bring out questions of fact, which was precisely done in the issues raised in page 2 of the petition.21 Indeed, Ms. Belo questioned the legality of her dismissal and the denial of her monetary claims, as well as her claim for damages. Both are essentially factual issues, since their determination
necessitates an evaluation of proof and not only a consideration of the applicable statutory and case laws. Basic is the distinction between legal and factual issues. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.22 More importantly, the Labor Arbiters conclusions are baseless, bereft of any rational basis, unsupported by evidence on record, and glaringly erroneous. The decisions of the NLRC and the Court of Appeals are the ones in harmony with the evidence on record. In sum, we are convinced that Ms. Belo was unceremoniously and constructively dismissed by the petitioners without just cause and without observing the twin requirements of due process, i.e., due notice and hearing, in violation of the tenets of equity and fair play. Ms. Belo is, therefore, entitled to reinstatement and back wages in accordance with the questioned Court of Appeals and NLRC decisions. the petition is DENIED. The decision of 12 October 2001 and resolution of 11 April 2002 of the Court of Appeals in CA-GR. SP No. 59996 are hereby AFFIRMED. Costs against the petitioners. SO ORDERED. Viernes vs. National Labor Relations Commission G.R. No. 108405. April 4, 2003.* Labor Law; Illegal Dismissal; Reinstatement; Words and Phrases; Reinstatement means restoration to a state or condition from which one had been removed or separated. Reinstatement means restoration to a state or condition from which one had been removed or separated. In case of probationary employment, Article 281 of the Labor Code requires the employer to make known to his employee at the time of the latters engagement of the reasonable standards under which he may qualify as a regular employee. Same; Same; Regular Employees; A regular employee is one who is engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, or a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed.The principle we have enunciated in Brent applies only with respect to fixed term employments. While it is true that petitioners were initially employed on a fixed term basis as their employment contracts were only for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in the same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. After October 31, 1990, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment relationship of petitioners and private respondent is thereby totally changed. Petitioners have attained the status of regular employees. Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform activities which are necessary or desirable in the usual business or
trade of the employer, or a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. Same; Same; Same.Clearly therefrom, there are two separate instances whereby it can be determined that an employment is regular: (1) The particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; or (2) if the employee has been performing the job for at least a year. Same; Same; Same; With the continuation of their employment beyond the original term, petitioners, have become full-fledged regular employees. The fact alone, that petitioners rendered service for a period of less than six months does not make their employment status as probationary.Herein petitioners fall under the first category. They were engaged to perform activities that are necessary to the usual business of private respondent. We agree with the labor arbiters pronouncement that the job of a meter reader is necessary to the business of private respondent because unless a meter reader records the electric consumption of the subscribing public, there could not be a valid basis for billing the customers of private respondent. The fact that the petitioners were allowed to continue working after the expiration of their employment contract is evidence of the necessity and desirability of their service to private respondents business. In addition, during the preliminary hearing of the case on February 4, 1991, private respondent even offered to enter into another temporary employment contract with petitioners. This only proves private respondents need for the services of herein petitioners. With the continuation of their employment beyond the original term, petitioners have become full-fledged regular employees. The fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Same; Same; Same; Since petitioners are already regular employees at the time of their illegal dismissal from employment, they are entitled to be reinstated to their former position as regular employees, not merely probationary.Since petitioners are already regular employees at the time of their illegal dismissal from employment, they are entitled to be reinstated to their former position as regular employees, not merely probationary. Same; Same; Same; An illegally dismissed employee is entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.As to the second issue, Article 279 of the Labor Code, as amended by R.A. No. 6715, which took effect on March 21, 1989, provides that an illegally dismissed employee is entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Since petitioners were employed on October 8, 1990, the amended provisions of Article 279 of the Labor Code shall apply to the present case. Hence, it was patently erroneous, tantamount to grave abuse of discretion on the part of the public respondent in limiting to one year the backwages awarded to petitioners. Same; Same; Same; An employer becomes liable to pay indemnity to an employee who has been dismissed if, in effecting such dismissal, the employer fails or comply with the requirements of due process.With respect to the third issue, an employer becomes liable to pay indemnity to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The indemnity is in the form of nominal damages intended not to penalize the employer but to vindicate or recognize the employees right to procedural due process which was violated by the employer. Under Article 2221 of the Civil Code, nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Same; Same; Same; Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. On the other hand, the award of indemnity is meant to vindicate or recognize the right of an employee to due process which has been violated by the em-ployer.We do not agree with the ruling of the NLRC that indemnity is incompatible with the award of backwages. These two awards are based on different considerations. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. On the other hand, the award of indemnity, as we have earlier held, is meant to vindicate or recognize the right of an employee to due process which has been violated by the employer. Same; Same; Same; In effecting the dismissal of petitioners from their employment, private respondent failed to comply with the provisions of Article 283 of the Labor Code which requires an employer to serve a notice of dismissal upon the employees sought to be terminated and to the Department of Labor, at least one month before the intended date of termi-nation.In the present case, the private respondent, in effecting the dismissal of petitioners from their employment, failed to comply with the provisions of Article 283 of the Labor Code which requires an employer to serve a notice of dismissal upon the employees sought to be terminated and to the Department of Labor, at least one month before the intended date of termination. Petitioners were served notice on January 3, 1991 terminating their services, effective December 29, 1990, or retroactively, in contravention of Article 283. This renders the private respondent liable to pay indemnity to petitioners. Same; Same; Same; Rule VIII of the New Rules of Procedure of the NLRC provides that should there be a motion for reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be executed after ten calendar days from receipt of the resolution on such motion.As to the last issue, Article 223 of the Labor Code is plain and clear that the decision of the NLRC shall be final and executory after ten (10) calendar days from receipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules of Procedure of the NLRC provides that should there be a motion for reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be executory after ten calendar days from receipt of the resolution on such motion. Same; Same; Same; Since the Rules allow the filing of a motion for reconsideration of a decision of the NLC, it simply follows that the ten-day period provided under Article 223 of the Labor Code should be reckoned from the date of receipt by the parties of the resolution on such motion.We find nothing inconsistent or contradictory between Article 223 of the Labor Code and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecited provision of the NLRC Rules of Procedure merely provides for situations where a motion for reconsideration is filed. Since the Rules allow the filing of a motion for reconsideration of a decision of the NLRC, it simply follows that the ten-day period provided under Article 223 of the Labor Code should be reckoned from the date of receipt by the parties of the resolution on such motion. In the case at bar, petitioners received the resolution of the NLRC denying their motion for reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that the questioned decision became executory. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. Nellie M. Olairez for petitioners. Bustamante, Minas and Associates for private respondents. AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari seeking to annul the decision promulgated by the National Labor Relations Commission (NLRC) on July 2, 1992 in NLRC CA No. L-000384-92,1 and its resolution dated September 24, 1992 denying petitioners motion for reconsideration. The factual background of this case, as summarized by the Labor Arbiter, is as follows: Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of wages and claim for indemnity pay against a common respondent, the Benguet Electric Cooperative, Inc., (BENECO for short) represented by its Acting General Manager, Gerardo P. Versoza. Complainants services as meter readers were contracted for hardly a months duration, or from October 8 to 31, 1990. Their employment contracts, couched in identical terms, read: You are hereby appointed as METER READER (APPRENTICE) under BENECONEA Management with compensation at the rate of SIXTY-SIX PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from October 08 to 31, 1990. x x x. (Annex B, Complainants Joint Position Paper) The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or until January 2, 1991. On January 3, 1991, they were each served their identical notices of termination dated December 29, 1990. The same read: Please be informed that effective at the close of office hours of December 31, 1990, your services with the BENECO will be terminated. Your termination has nothing to do with your performance. Rather, it is because we have to retrench on personnel as we are already overstaffed. x x x. (Annex C, CJPP) On the same date, the complainants filed separate complaints for illegal dismissal. And following the amendment of said complaints, they submitted their joint position paper on April 4, 1991. Respondent filed its position paper on April 2, 1991. It is the contention of the complainants that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. On the other hand, the respondent invokes Article 283 of the Labor Code in defense of the questioned dismissal.2 On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered: 1. Dismissing the complaints for illegal dismissal filed by the complainants for lack of merit. However in view of the offer of the respondent to enter into another temporary employment contract with the complainants, the respondent is directed to so extend such contract to each complainant, with the exception of Jaime Viernes, and to pay each the amount of P2,590.50, which represents a months salary, as indemnity for its failure to give complainants the 30-day notice mandated under Article 283 of the Labor
Code; or, at the option of the complainants, to pay each financial assistance in the amount of P5,000.00 and the P2,590.50 above-mentioned. 2. Respondent is also ordered: A. To pay complainants the amount representing underpayment of their wages: a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco Bayuga, Arthur Oribello, Buenaventura de Guzman, Jr., Robert Ordoo, Bernard Jularbal and Leodel Soriano, P1,994.25 each; b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each. B. To extend to complainant Jaime Viernes an appointment as regular employee for the position of meter reader, the job he held prior to his termination, and to pay him P2,590.50 as indemnity, plus the underpayment of his wages as above stated. C. To pay P7,000.00 as and for attorneys fees. No damages. SO ORDERED.3 Aggrieved by the Labor Arbiters decision, the complainants and the respondent filed their respective appeals to the NLRC. On July 2, 1992, the NLRC modified its judgment, to wit: WHEREFORE, premises considered, judgment is hereby rendered modifying the appealed decision by declaring complainants dismissal illegal, thus ordering their reinstatement to their former position as meter readers or to any equivalent position with payment of backwages limited to one year and deleting the award of indemnity and attorneys fees. The award of underpayment of wages is hereby AFFIRMED. SO ORDERED.4 On August 27, 1992, complainants filed a Motion for Clarification and Partial Reconsideration.5 On September 24, 1992, the NLRC issued a resolution denying the complainants motion for reconsideration.6 Hence, complainants filed herein petition. Private respondent BENECO filed its Comment; the Office of the Solicitor General (OSG) filed a Manifestation and Motion in Lieu of Comment; public respondent NLRC filed its own Comment; and petitioners filed their Manifestation and Motion In Lieu of Consolidated Reply. Public respondent NLRC, herein petitioners, and private respondent filed their respective memoranda, and the OSG, its Manifestation in 1994. Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs. NLRC,7 to wit:
in the decision in the case of St. Martin Funeral Homes vs. National Labor Relations Commission, G.R. No. 130866, promulgated on September 16, 1998, this Court pronounced that petitions for certiorari relating to NLRC decisions must be filed directly with the Court of Appeals, and labor cases pending before this Court should be referred to the appellate court for proper disposition. However, in cases where the Memoranda of both parties have been filed with this Court prior to the promulgation of the St. Martin decision, the Court generally opts to take the case itself for its final disposition.8 and considering that the parties have filed their respective memoranda as of 1994, we opt to resolve the issues raised in the present petition. The parties raised the following issues: 1. Whether the respondent NLRC committed grave abuse of discretion in ordering the reinstatement of petitioners to their former position as meter readers on probationary status in spite of its finding that they are regular employees under Article 280 of the Labor Code. 2. Whether the respondent NLRC committed grave abuse of discretion in limiting the backwages of petitioners to one year only in spite of its finding that they were illegally dismissed, which is contrary to the mandate of full backwages until actual reinstatement but not to exceed three years. 3. Whether the respondent NLRC committed grave abuse of discretion in deleting the award of indemnity pay which had become final because it was not appealed and in deleting the award of attorneys fees because of the absence of a trial-type hearing. 4. Whether the mandate of immediately executory on the reinstatement aspect even pending appeal as provided in the decision of Labor Arbiters equally applies in the decision of the National Labor Relations Commission even pending appeal, by means of a motion for reconsideration of the order reinstating a dismissed employee or pending appeal because the case is elevated on certiorari before the Supreme Court.9 We find the petition partly meritorious. As to the first issue: We sustain petitioners claim that they should be reinstated to their former position as meter readers, not on a probationary status, but as regular employees. Reinstatement means restoration to a state or condition from which one had been removed or separated.10 In case of probationary employment, Article 281 of the Labor Code requires the employer to make known to his employee at the time of the latters engagement of the reasonable standards under which he may qualify as a regular employee. A review of the records shows that petitioners have never been probationary employees. There is nothing in the letter of appointment, to indicate that their employment as meter readers was on a probationary basis. It was not shown that petitioners were informed by the private respondent, at the time of the latters employment, of the reasonable standards under which they could qualify as regular employees. Instead, petitioners were initially engaged to perform their job for a limited duration, their employment being fixed for a definite period, from October 8 to 31, 1990. Private respondents reliance on the case of Brent School, Inc. vs. Zamora,11 wherein we held as follows:
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.12 is misplaced. The principle we have enunciated in Brent applies only with respect to fixed term employments. While it is true that petitioners were initially employed on a fixed term basis as their employment contracts were only for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in the same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. After October 31, 1990, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment relationship of petitioners and private respondent is thereby totally changed. Petitioners have attained the status of regular employees. Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, or a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. In De Leon vs. NLRC,13 and Abasolo vs. NLRC,14 we laid down the test in determining regular employment, to wit: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.15 Clearly therefrom, there are two separate instances whereby it can be determined that an employment is regular: (1) The particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; or (2) if the employee has been performing the job for at least a year. Herein petitioners fall under the first category. They were engaged to perform activities that are necessary to the usual business of private respondent. We agree with the labor arbiters pronouncement that the job of a meter reader is necessary to the business of private
respondent because unless a meter reader records the electric consumption of the subscribing public, there could not be a valid basis for billing the customers of private respondent. The fact that the petitioners were allowed to continue working after the expiration of their employment contract is evidence of the necessity and desirability of their service to private respondents business. In addition, during the preliminary hearing of the case on February 4, 1991, private respondent even offered to enter into another temporary employment contract with petitioners. This only proves private respondents need for the services of herein petitioners. With the continuation of their employment beyond the original term, petitioners have become fullfledged regular employees. The fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Since petitioners are already regular employees at the time of their illegal dismissal from employment, they are entitled to be reinstated to their former position as regular employees, not merely probationary. As to the second issue, Article 279 of the Labor Code, as amended by R.A. No. 6715, which took effect on March 21, 1989, provides that an illegally dismissed employee is entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Since petitioners were employed on October 8, 1990, the amended provisions of Article 279 of the Labor Code shall apply to the present case. Hence, it was patently erroneous, tantamount to grave abuse of discretion on the part of the public respondent in limiting to one year the backwages awarded to petitioners. With respect to the third issue, an employer becomes liable to pay indemnity to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process.16 The indemnity is in the form of nominal damages intended not to penalize the employer but to vindicate or recognize the employees right to procedural due process which was violated by the employer.17 Under Article 2221 of the Civil Code, nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. We do not agree with the ruling of the NLRC that indemnity is incompatible with the award of backwages. These two awards are based on different considerations. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work.18 On the other hand, the award of indemnity, as we have earlier held, is meant to vindicate or recognize the right of an employee to due process which has been violated by the employer. In the present case, the private respondent, in effecting the dismissal of petitioners from their employment, failed to comply with the provisions of Article 283 of the Labor Code which requires an employer to serve a notice of dismissal upon the employees sought to be terminated and to the Department of Labor, at least one month before the intended date of termination. Petitioners were served notice on January 3, 1991 terminating their services, effective December 29, 1990, or retroactively, in contravention of Article 283. This renders the private respondent liable to pay indemnity to petitioners. Thus, we find that the NLRC committed grave abuse of discretion in deleting the award of indemnity. In Del Val vs. NLRC,19 we held that the award of indemnity ranges from P1,000.00 to P10,000.00 depending on the particular circumstances of each case. In the present case, the amount of indemnity awarded by the labor arbiter is P2,590.50, which is equivalent to petitioners one-month salary. We find no cogent reason to modify said award, for being just and reasonable.
As to the award of attorneys fees, the same is justified by the provisions of Article 111 of the Labor Code, to wit: Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorneys fees which exceed ten percent of the amount of wages recovered. As to the last issue, Article 223 of the Labor Code is plain and clear that the decision of the NLRC shall be final and executory after ten (10) calendar days from receipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules of Procedure of the NLRC provides that "should there be a motion for reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be executory after ten calendar days from receipt of the resolution on such motion." We find nothing inconsistent or contradictory between Article 223 of the Labor Code and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecited provision of the NLRC Rules of Procedure merely provides for situations where a motion for reconsideration is filed. Since the Rules allow the filing of a motion for reconsideration of a decision of the NLRC, it simply follows that the ten-day period provided under Article 223 of the Labor Code should be reckoned from the date of receipt by the parties of the resolution on such motion. In the case at bar, petitioners received the resolution of the NLRC denying their motion for reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that the questioned decision became executory. WHEREFORE, the petition is partially GRANTED. The decision of the National Labor Relations Commission dated July 2, 1992 is MODIFIED. Private respondent Benguet Electric Cooperative, Inc. (BENECO) is hereby ordered to reinstate petitioners to their former or substantially equivalent position as regular employees, without loss of seniority rights and other privileges appurtenant thereto, with full backwages from the time of their dismissal until they are actually reinstated. The amount of P2,590.50 awarded by the labor arbiter as indemnity to petitioners is REINSTATED. Private respondent is also ordered to pay attorneys fees in the amount of ten percent (10%) of the total monetary award due to the petitioners. In all other respects the assailed decision and resolution are AFFIRMED. Costs against private respondent BENECO. SO ORDERED. Rowell Industrial Corporation vs. Court of Appeals G.R. No. 167714. March 7, 2007.* Labor Law; Employer-Employee Relationship; Article 280 of the Labor Code, as amended, classifies employees into three categories, namely, (1) regular employees, (2) project employees, and (3) casual employees; Regular employees are classified into (a) regular employees by nature of work, and, (b) regular employees by years of service.Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees. Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service. The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year. Same; Same; Fixed-Term Employment; Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period.Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employees duties. What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected. Same; Same; Same; Guidelines.Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must, nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. Same; Same; Same; Contracts of Adhesion; Words and Phrases; A contract in which the terms prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion, an agreement in which the parties bargaining are not on equal footing, the weaker partys participation being reduced to the alternative to take it or leave it.Petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms are prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion. It is an agreement in which the parties bargaining are not on equal footing, the weaker partys participation being reduced to the alternative to take it or leave it. In the present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the fivemonth period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe signed the employment contract with a fixed term of five months willingly and with full knowledge of the impact thereof. Same; Same; Regular Employees; The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the employer.Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the
employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Same; Same; Same; Regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing.Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing. And in case of employees dismissal, the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripes summary dismissal, not being based on any of the just or authorized causes enumerated under Articles 282, 283, and 284 of the Labor Code, as amended, is illegal. PETITION for review on certiorari of the decision and resolution of the Court of Appeals. The facts are stated in the opinion of the Court. Nestor P. Ricolcol for petitioner. Allan S. Montao for private respondent. DECISION CHICO-NAZARIO, J.: This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to set aside the Decision1and Resolution2of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell Industrial Corp., and/or Edwin Tang vs. National Labor Relations Commission and Joel Taripe, dated 30 September 2004 and 1 April 2005, respectively, which affirmed the Resolutions3of the National Labor Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe with full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager and Vice President, from liability and computing the backwages of herein respondent Taripe based on the prevailing salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision4of the Labor Arbiter dated 29 September 2000, which dismissed respondent Taripe's complaint. Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on 8 November 1999 as a "rectangular power press machine operator" with a salary of P223.50 per day, until he was allegedly dismissed from his employment by the petitioner on 6 April 2000. The controversy of the present case arose from the following facts, as summarized by the NLRC and the Court of Appeals: On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended on [7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed him starting [8 November 1999] as power press machine operator, such position of which was occupied by [petitioner RIC's] regular employees and the functions of which were necessary to the latter's business. [Respondent Taripe] adds that upon employment, he was made to sign a document, which was not explained to him but which was
made a condition for him to be taken in and for which he was not furnished a copy. [Respondent Taripe] states that he was not extended full benefits granted under the law and the [Collective Bargaining Agreement] and that on [6 April 2000], while the case for regularization was pending, he was summarily dismissed from his job although he never violated any of the [petitioner RIC's] company rules and regulations. [Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose services were required due to the increase in the demand in packaging requirement of [its] clients for Christmas season and to build up stock levels during the early part of the following year; that on [6 March 2000], [respondent Taripe's] employment contract expired. [Petitioner RIC] avers that the information update for union members, which was allegedly filled up by [respondent Taripe] and submitted by the Union to [petitioner] company, it is stated therein that in the six (6) companies where [respondent Taripe] purportedly worked, the latter's reason for leaving was "finished contract," hence, [respondent Taripe] has knowledge about being employed by contract contrary to his allegation that the document he was signing was not explained to him. [Petitioner RIC] manifest[s] that all benefits, including those under the [Social Security System], were given to him on [12 May 2000].5 On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripe's Complaint based on a finding that he was a contractual employee whose contract merely expired. The dispositive portion of the said Decision reads, thus: WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are hereby ordered to pay [respondent Taripe] the sum of PHP5,811.00 or one month's salary as financial assistance and holiday pay in the sum of PHP894.00, as well as attorney's fees of 10% based on holiday pay (Article 110, Labor Code).6 Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC granted the appeal filed by respondent Taripe and declared that his employment with the petitioner was regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads as follows: WHEREFORE, premises considered, [herein respondent Taripe's] appeal is GRANTED. The Labor Arbiter's [D]ecision in the above-entitled case is hereby REVERSED. It is hereby declared that [respondent Taripe's] employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he was illegally dismissed therefrom. [Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly and severally pay him full backwages from the time he was illegally dismissed up to the date of his actual reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the award of P5,811.00 for financial assistance is deleted. The award for attorney's fees is hereby adjusted to ten percent (10%) of [respondent Taripe's] total monetary award.7 Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied in the Resolution of the NLRC dated 20 August 2002. Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure before the Court of Appeals with the following assignment of errors:
I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND IGNORED JURISPRUDENCE WHEN IT DECIDED THAT [RESPONDENT TARIPE] IS A REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED. II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY LIABLE FOR MONETARY CLAIMS OF [RESPONDEN TARIPE]. III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON AN ERRONEOUS WAGE RATE.8 The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of the NLRC dated 7 June 2002, with modifications. Thus, it disposed WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed, subject to the modification that [Edwin Tang] is exonerated from liability and the computation of backwages of [respondent Taripe] shall be based on P223.50, the last salary he received.9 A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was denied for lack of merit in a Resolution10of the Court of Appeals dated 1 April 2005. Hence, this Petition. Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed that respondent Taripe was a regular employee and was illegally dismissed. Petitioner RIC, in its Memorandum,11argues that the Court of Appeals had narrowly interpreted Article 280 of the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties. Petitioner RIC emphasizes that while an employee's status of employment is vested by law pursuant to Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1) those employments which have been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employment; and (2) when the work or services to be performed are seasonal; hence, the employment is for the duration of the season. Thus, there are certain forms of employment which entail the performance of usual and desirable functions and which exceed one year but do not necessarily qualify as regular employment under Article 280 of the Labor Code, as amended. The Petition is unmeritorious. A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue raised in the present case. In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was illegal, the Court of Appeals ratiocinated in this manner:
In determining the employment status of [herein respondent Taripe], reference must be made to Article 280 of the Labor Code, which provides: xxxx Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. [Respondent Taripe] belonged to the first category of regular employees. The purported contract of employment providing that [respondent Taripe] was hired as contractual employee for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was hired to perform the function of power press operator, a function necessary or desirable in [petitioner's] business of manufacturing tin cans. [Herein petitioner RIC's] contention that the four (4) months length of service of [respondent Taripe] did not grant him a regular status is inconsequential, considering that length of service assumes importance only when the activity in which the employee has been engaged to perform is not necessary or desirable to the usual business or trade of the employer. As aptly ruled by [the NLRC]: "In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been engaged to perform activities which are usually necessary or desirable in [petitioner RIC's] usual business or trade of manufacturing of tin cans for use in packaging of food, paint and others. We also find that [respondent Taripe] does not fall under any of the abovementioned exceptions. Other that (sic) [petitioner RIC's] bare allegation thereof, [it] failed to present any evidence to prove that he was employed for a fixed or specific project or undertaking the completion of which has been determined at the time of his engagement or that [respondent Taripe's] services are seasonal in nature and that his employment was for the duration of the season."12 Article 280 of the Labor Code, as amended, provides: ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. [Emphasis supplied] The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.13 Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service.14The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year.15 The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employee's duties.16What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected.17 In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the petitioner's company. Said contract of employment provides, among other things: 4. That my employment shall be contractual for the period of five (5) months which means that the end of the said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated for cause.18 Based on the said contract, respondent Taripe's employment with the petitioner is good only for a period of five months unless the said contract is renewed by mutual consent. And as claimed by petitioner RIC, respondent Taripe, along with its other contractual employees, was hired only to meet the increase in demand for packaging materials during the Christmas season and also to build up stock levels during the early part of the year. Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must, nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.19 In the present case, it cannot be denied that the employment contract signed by respondent Taripe did not mention that he was hired only for a specific undertaking, the completion of which had been determined at the time of his engagement. The said employment contract neither mentioned that respondent Taripe's services were seasonal in nature and that his employment was only for the duration of the Christmas season as purposely claimed by petitioner RIC. What was stipulated in the said contract was that respondent Taripe's employment was contractual for the period of five months.
Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such claim with any other evidence. Petitioner RIC did not present any evidence which might prove that respondent Taripe was employed for a fixed or specific project or that his services were seasonal in nature. Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms are prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion.20It is an agreement in which the parties bargaining are not on equal footing, the weaker party's participation being reduced to the alternative "to take it or leave it."21In the present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the five-month period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe signed the employment contract with a fixed term of five months willingly and with full knowledge of the impact thereof. With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. As a power press operator, a rank and file employee, he can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, "almost always, employees agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications."22 Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for a period of five months was a mere subterfuge to deny to the latter a regular status of employment. Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.23 Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed, respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers for "four liters rectangular tin cans," was holding a position which is necessary and desirable in the usual business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe was a regular employee of petitioner RIC by the nature of work he performed in the company. Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as amended, because it was not proven by petitioner RIC that he was employed only for a specific project or undertaking or his employment was merely seasonal. Similarly, the position and function of power press operator cannot be said to be merely seasonal. Such position cannot be considered as only needed for a specific project or undertaking because of the very nature of the business of petitioner RIC. Indeed, respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his employment unless there is just or authorized cause for his dismissal.
Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing.24And in case of employees' dismissal, the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripe's summary dismissal, not being based on any of the just or authorized causes enumerated under Articles 282, 25283,26and 28427of the Labor Code, as amended, is illegal. Before concluding, we once more underscore the settled precept that factual findings of the NLRC, having deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the Court of Appeals;28hence, such factual findings are binding on this Court. WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding herein respondent Taripe as a regular employee who had been illegally dismissed from employment by petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC. SO ORDERED. Cartagenas vs. Romago Electric Company, Inc. G.R. No. 82973.September 15, 1989.* Labor Law; Employer-Employee Relationship; Regular Employees; Project Employees; Petitioners are not regular employees but merely project employees considering that the duration of their employment is not permanent but is co-terminus with the projects to which they are assigned and from whose payrolls they are paid.As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from real estate developers and builders of buildings. Since its work depends on the availability of such contracts or projects, necessarily the duration of the employment of its work force is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer who, like them, depends on the availability of projects, if it would have to carry them as permanent employees and pay them wages even if there are no projects for them to work on. We hold, therefore, that the NLRC did not abuse its discretion in finding, based on substantial evidence in the records, that the petitioners are only project workers of the private respondent. Same; Findings of fact of labor officials are generally conclusive upon the Supreme Court when supported by substantial evidence.We find no reason to depart from the well-settled rule that findings of fact of labor officials are generally conclusive and binding upon this Court when supported by substantial evidence, as in this case (Edi-Staff Builders International, Inc. vs. Leogardo, Jr., 152 SCRA 453; Asiaworld Publishing House, Inc. vs. Ople, 152 SCRA 219; National Federation of Labor Union vs. Ople, 142 SCRA 124; Dangan vs. NLRC, 127 SCRA 706; Special Events & Central Shipping Office Workers Union vs. San Miguel Corp., 122 SCRA 557; Mamerto vs. Inciong, 118 SCRA 265; Phil. Labor Alliance Council vs. Bureau of Labor Relations, 75 SCRA 162). PETITION for certiorari to review the decision of the National Labor Relations Commission.
The facts are stated in the opinion of the Court. Isidro G. Pasana for petitioners. Constantino B. de Jesus & Associates for private respondent. GRINO-AQUIO, J.: he issue in this case is whether the petitioners are project employees of the private respondent Romago Electric Company, Inc., as found by the National Labor Relations Commission, or regular employees as found by the Labor Arbiter. The facts are recited in the decision of the NLRC as follows: Respondent Romago is a general contractor engaged in contracting and subcontracting of specific building construction projects or undertaking such as electrical, mechanical and civil engineering aspects in the repair of buildings and from other kindred services. Individual complainants are employed by the respondent in connection with particular construction projects and they are as follows: 1. Jesus N. Miraballes Project Assigned Period Covered L. Towers 4/23/79-2/26/80 Nat'l Bookstore 2/26/80-8/28/80 PNRC-MHQ Bldg. 8/29/80-9/09/80 A. Payumo's Res. 9/10/80 State Center 3/05/81-7/13/81 FEBTC Bldg. 7/14/81-9/21/81 SMC Complex 9/22/81-9/10/84 PNB Finance Complex 9/11/84-7/12/86 (Annexes 1 to 25, respondent's Position Paper) 2. Victor C. Monsod Project Assigned Period Covered MMRH Project 4/13/76-2/02/80 Manila Hotel 2/03/80-7/19/81
PNB Project 7/20/81-7/16/84 Manila Hotel 7/17/84-7/02/84 PNB Finance Center 10/3/84-7/12/86 (Annexes 30 to 41, Ibid) 3. Vicente Barroa Project Assigned Period Covered SMC Hoc. Project 7/5/82-1/21/85 PNB Finance Complex 1/22/85-7/12/86 (Annexes 42 to 47, Ibid) 4. Mario Cartagenas Project Assigned Period Covered PNB Finance Complex 3/26/82-7/12/86 (Annexes 52 to 54, Ibid) Effective July 12,1986, individual complainants and Lawrence Deguit were temporarily laid-off by virtue of a memorandum issued by the respondent. In said memorandum they were also informed that a meeting regarding the resumption of operation will be held on July 16, 1986 and that they will be notified as to when they will resume work. On July 28, 1986, complainants filed the instant case for illegal dismissal but before the respondent could receive a copy of the complaint and the notification and summons issued by the NLRC National Capital Region (actually received only on August 22, 1986, page 4, records) individual complainants re-applied with the respondent and were assigned to work with its project at RobinsonEDSA, specifically on the following dates, to wit: 1. Mirabelles and Monsod 2. Barroa 3. Cartagenas August 2/86 August 11/86 August 4/86 (Annexes 26 to 29-B; '39-4l'; 48 to 51 -B; '55 to 58-A', Ibid) In hiring the herein complainants to be assigned to a particular project they have to fill up an employment application form and are subjected to a pre-hiring examination. If evaluated to be qualified they sign at the end portion of their employment application form that:
AGREEMENT I hereby agree to the foregoing conditions and accept my employment for a fixed period and from the above mentioned Project/Assignment only. The conditions of employment to which the complainant agreed are mentioned in the right upper portion of the same page of said application form, an example of which reads: Assigned to Position Effectivity Salary Conditions Approved: FEBTC Project G.P. FORMOSO
Electrician 7-14-81 P18.50/day & allowance Hired for above project only Signed Personnel Manager 7/14/81 Date (Employment Application Form of MIRABALLES JESUS NIEVA dated July 14,1981, Annex 16; 16-A and 16-B, Ibid) Thereafter the hired employee is given by the respondent an assignment slip, an example of which reads: ASSIGNMENT SLIP DATE: July 14, 1981 Engr. C.A. Castro Project In-Charge FEFTC Name of Project The bearer, Mr. Jesus N. Miraballes will work under you as electrician effective 14 July 81. His employment will terminate upon completion/stoppage of the project or terminated earlier for cause. Signed
GUDIOSO PLATA Chief Engineer CONFORME: SGD. JESUS N. MIRABALLES (Assignment slip of Jesus N. Miraballes, Annex 17, Ibid.) xxx xxx xxx ... Respondent introduced documentary exhibits that the complainant have invariably been issued appointment from project to projects and were issued notice of temporary lay-off when the PNB Finance Center project was suspended due to lack of funds and that when work was available particularly respondent's project at Robinson-EDSA they were rehired and assigned to this project. (pp. 16-19; 21-22, Rollo.) The NLRC held that the complainants were project employees because their appointments were "co-terminus with the phase or item of work assigned to them in said project," It held further: The fact that the complainants worked for the respondent under different project employment contracts for so many years could not be made a basis to consider them as regular employees for they remain project employees regardless of the number of projects in which they have worked. (p. 22, Rollo.) Article 280 of the Labor Code provides: ART. 280. Regular and Casual Employment.- The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists (Emphasis supplied). (p. 46, Rollo.) As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from real estate developers and builders of buildings. Since its work depends on the availability of such contracts or "projects," necessarily the duration of the employment of its work force is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer who, like them, depends on the availability of projects, if it would have to carry them as
permanent employees and pay them wages even if there are no projects for them to work on. We hold, therefore, that the NLRC did not abuse its discretion in finding, based on substantial evidence in the records, that the petitioners are only project workers of the private respondent. This case is similar to Sandoval Shipyards, Inc. vs. NLRC, 136 SCRA 675 (1985), where we held: We feel that there is merit in the contention of the applicant corporation. To our mind, the employment of the employees concerned were fixed for a specific project or undertaking. For the nature of the business the corporation is engaged into is one which will not allow it to employ workers for an indefinite period. "It is significant to note that the corporation does not construct vessels for sale or otherwise which will demand continuous productions of ships and will need permanent or regular workers. It merely accepts contracts for shipbuilding or for repair of vessels from third parties and, only, on occasion when it has work contract of this nature that it hires workers to do the job which, needless to say, lasts only for less than a year or longer. The completion of their work or project automatically terminates their employment, in which case, the employer is, under the law, only obliged to render a report on the termination of the employment. (P. 48, Rollo.) Petitioners' invocation of the resolution of this Court in Romago Electric Company, Inc, vs. Romago Electric United Workers Union-Christian Labor Organization, (REWU-CLOP), et al., G.R. No. 79774, February 1, 1988, where this Court dismissed the petition, is not well taken. As pointed out by the public respondent, the issue in that case was whether the members of the union may properly participate in the holding of a certification election. Since the petitioners in their complaint for illegal dismissal dated July 28, 1986 (Annex A of petition) averred that they do not belong to any union, the ruling in Romago vs, REWU-CLOP may not apply to them. In their Reply to the public respondents' Comment in this case, they disclosed that they are members and officers of a new union which they organized on March 13, 1988 (pp. 62-63, Rollo). That supervening fact, however, has no relevance to this case. We find no reason to depart from the well-settled rule that findings of fact of labor officials are generally conclusive and binding upon this Court when supported by substantial evidence, as in this case (Edi-Staff Builders International, Inc. vs, Leogardo, Jr., 152 SCRA 453; Asiaworld Publishing House, Inc. vs. Ople, 152 SCRA 219; National Federation of Labor Union vs. Ople, 143 SCRA 124; Dangan vs. NLRC, 127 SCRA 706; Special Events & Central Shipping Office Workers Union vs. San Miguel Corp., 122 SCRA 557; Mamerto vs. Inciong, 118 SCRA 265; Phil. Labor Alliance Council vs. Bureau of Labor Relations, 75 SCRA 162). WHEREFORE, the petition for certiorari is dismissed for lack of merit. No costs. SO ORDERED Mercado, Sr. vs. NLRC G.R. No. 79869. September 5, 1991.* Labor Law; Evidence; Administrative decision in matters within the executives jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud or error of law.The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the Government is that the findings of fact made therein are respected, so long as they are
supported by substantial evidence, even if not overwhelming or preponderant; that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence; that the administrative decision in matters within the executives jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud, or error of law. Same; Same; Same; Findings of the Labor Arbiter in this case are ably supported by evidence.A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission. Same; Regular employee, definition of.The first paragraph answers the question of who are regular employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. Same; Who are deemed casual employees.The second paragraph of Art. 280 demarcates as casual employees, all other employees who do not fall under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those casual employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Same; Project employee, definition of.A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season, as in the present case. Same; Same; Petitioners being project employees or to use the correct term seasonal employees, their employment legally ends upon completion of the project or the season. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. PETITION for certiorari to review the decision of the National Labor Relations Commission. The facts are stated in the opinion of the Court. Servillano S. Santillan for petitioners. Luis R. Mauricio for private respondents. [Mercado, Sr. vs. NLRC, 201 SCRA 332(1991)] PADILLA, J.:p Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission (NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the award of financial assistance to petitioners, and the resolution of the respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration.
This petition originated from a complaint for illegal dismissal, underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Nio Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations Commission in San Fernando, Pampanga. 1 Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment; and that, during the period of their employment, petitioners received the following daily wages: From 1962-1963 1963-1965 1965-1967 1967-1970 1970-1973 1973-1975 1975-1978 1978-1979 P1.50 P2.00 P3.00 P4.00 P5.00 P5.00 P6.00 P7.00
Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar cane production, after which they would be free to render services to other farm owners who need their services. 2 The other private respondents denied having any relationship whatsoever with the petitioners and state that they were merely registered owners of the land in question included as correspondents in this case. 3 The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farm workers and therefore entitled to the benefits which they pray for. And corollary to this, whether or not said petitioners were illegally dismissed by private respondents. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners were not regular and permanent workers of the private respondents, for the nature of the terms and conditions of their hiring reveal that they were required to perform phases of agricultural work for a definite period of time after which their services would be available to any other farm owner. 4 Respondent Labor Arbiter deemed petitioners' contention of working twelve (12) hours a day the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar cane does not entail a whole year as reported in the findings of the Chief of the NLRC Special Task Force. 5 Even the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as casuals, on an "on and off"
basis, thus, it was within the prerogative of private respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work had been completed by them. 6 Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that petitioners were never regularly employed by private respondent Aurora Cruz but were, on-and-off hired to work and render services when needed, thus adding further support to the conclusion that petitioners were not regular and permanent employees of private respondent Aurora Cruz. 8 Respondent Labor Arbiter further held that only money claims from years 1976-1977, 19771978 and 1978-1979 may be properly considered since all the other money claims have prescribed for having accrued beyond the three (3) year period prescribed by law. 9 On grounds of equity, however, respondent Labor Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution of his complaint against private respondent. 10 Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners questioned respondent Labor Arbiter's finding that they were not regular and permanent employees of private respondent Aurora Cruz while private respondents questioned the award of financial assistance granted by respondent Labor Arbiter. The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the modification of the deletion of the award for financial assistance to petitioners. The dispositive portion of the decision of the NLRC reads: WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in that the award of P10,000.00 financial assistance should be deleted. The said Decision is affirmed in all other aspects. SO ORDERED.
11
Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987. 12 In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that petitioners are not regular and permanent employees of private respondents based on the terms and conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor Code. 13 They submit that petitioners' employment, even assuming said employment were seasonal, continued for so many years such that, by express provision of Article 280 of the Labor Code as amended, petitioners have become regular and permanent employees. 14 Moreover, they argue that Policy Instruction No. 12 15 of the Department of Labor and Employment clearly lends support to this contention, when it states:
PD 830 has defined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. If not, then the employment is casual. Employment for a definite period which exceeds one (1) year shall be considered re for the duration of the definite period. This concept of re and casual employment is designed to put an end to casual employment in regular jobs which has been abused by many employers to prevent so-called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. This new concept should be strictly enforced to give meaning to the constitutional guarantee of employment tenure. 16 Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as casual workers since they have been doing all phases of agricultural work for so many years, activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane production business of the private respondents. 17 In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and, therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should be given great weight. 18 Furthermore, they contend that the arguments used by petitioners in questioning the decision of the Labor Arbiter were based on matters which were not offered as evidence in the case heard before the regional office of the then Ministry of Labor but rather in the case before the Social Security Commission, also between the same parties. 19 Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has long been settled that findings of fact of administrative agencies if supported by substantial evidence are entitled to great weight. 20 Moreover, it argues that petitioners cannot be deemed to be permanent and regular employees since they fall under the exception stated in Article 280 of the Labor Code, which reads: The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, exceptwhere the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 21 (emphasis supplied) The Court resolved to give due course to the petition and required the parties to submit their respective memoranda after which the case was deemed submitted for decision. The petition is not impressed with merit. The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the Government is that the findings of fact made therein are respected, so long as
they are supported by substantial evidence, even if not overwhelming or preponderant; 22 that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence; 23 that the administrative decision in matters within the executive's jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud, or error of law. 24 The questioned decision of the Labor Arbiter reads: Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both parties, it is our well-discerned opinion that the petitioners are not regular and permanent workers of the respondents. The very nature of the terms and conditions of their hiring reveal that the petitioners were required to perform p of cultural work for a definite period, after which their services are available to any farm owner. We cannot share the arguments of the petitioners that they worked continuously the whole year round for twelve hours a day. This, we feel, is an exaggeration which does not deserve any serious consideration inasmuch as the plan of rice and sugar cane does not entail a whole year operation, the area in question being comparatively small. It is noteworthy that the findings of the Chief of the Special Task Force of the Regional Office are similar to this. In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent Aurora Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be sustained, more specially their complaint for illegal dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work has been completed by them. We are of the opinion that the real cause which triggered the filing of this complaint by the petitioners who are related to one another, either by consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979, according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside, petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with respondent Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were never regularly employed by respondent Aurora Cruz but were on-and-off hired to work to render services when needed. 25 A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission. The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in their case presents an opportunity to clarify the afore-mentioned provision of law. Article 280 of the Labor Code reads in full:
Article 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph answers the question of who are employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season 26 as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit. The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. 27 Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or to other sections thereof. 28 The only exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole. 29 Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is
applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. 30 WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs. SO ORDERED. Abasolo vs. National Labor Relations Commission G.R. No. 118475. November 29, 2000.* Labor Law; Classification of Employment; Nature of ones employment does not depend solely on the will or word of the employer nor on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employers nature of business and the duration and scope of work to be done.The nature of ones employment does not depend solely on the will or word of the employer. Nor on the procedure for hiring and the manner of designating the employee, but on the nature, of the activities to be performed by the employee, considering the employers nature of business and the duration and scope of work to be done. Same; Same; Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during offseason are not separated from service in said period but are merely considered on leave until re-employed.In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCOs business, serve as badges of regular employment. Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. Sycip, Salazar, Hernandez & Gatmaitan for petitioners. Froilan M. Bacungan & Associates for private respondents. DECISION DE LEON, JR., J.: Before us is a petition for certiorari seeking to annul two Resolutions of the National Labor Relations Commission (NLRC), Third Division, dated July 6, 1994[1] and September 23, 1994[2],
in its affirmance of the Decision[3] of Labor Arbiter Ricardo N. Olairez dated December 29, 1993 dismissing petitioners consolidated complaint for separation pay for lack of merit. The facts are as follows: Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its by-products. Tobacco season starts sometime in October of every year when tobacco farmers germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in mid-February. Then, the farmers sell the harvested tobacco leaves to redrying plants or do the redrying themselves. The redrying plant of LUTORCO receives tobacco for redrying at the end of February and starts redrying in March until August or September. Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCOs tobacco operations. New signboards were posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their respective applications for employment with TABACALERA. Petitioners were caught unaware of the sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners. On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch No. 1, San Fernando, La Union a complaint[4] for separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover to TABACALERA. Other equally affected employees filed two additional complaints[5], also for separation pay, which were consolidated with the first complaint. Private respondent corporation raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence of capital and operating funds caused by losses incurred from 1990 to 1992 and absence of operating funds for 1993, coupled with adverse financial conditions and downfall of prices.[6] It alleged further that LUTORCO entered into an agreement with TABACALERA to take over LUTORCOs tobacco operations for the year 1993 in the hope of recovering from its serious business losses in the succeeding tobacco seasons and to create a continuing source of income for the petitioners.[7] Lastly, it manifested that LUTORCO, in good faith and with sincerity, is willing to grant reasonable and adjusted amounts to the petitioners, as financial assistance, if and when LUTORCO could recover from its financial crisis.[8] On December 29, 1993, Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the complaint for lack of merit. In upholding private respondent LUTORCOs position, the Labor Arbiter declared that the petitioners are not entitled to the benefits under Article 283[9] of the Labor Code since LUTORCO ceased to operate due to serious business losses and, furthermore, TABACALERA, the new employer of the petitioner has assumed the seniority rights of the petitioners and other employment liabilities of the LUTORCO.[10] Petitioners appealed[11] then the decision of the Labor Arbiter to the public respondent NLRC where it was assigned to the Third Division. In its Opposition to Appeal[12] dated February 5, 1994 private respondent LUTORCO presented new allegations and a different stand for denying separation pay. It alleged that LUTORCO never ceased to operate but continues to operate even after TABACALERA took over the operations of its redrying plaint in Aringay, La Union. Petitioners were not terminated from employment but petitioners instead refused to work with TABACALERA, despite the notice to petitioners to return to work in view of LUTORCOs need for workers at its Agoo plant which
had approximately 300,000 kilos of Virginia tobacco for processing and redrying. Furthermore, petitioners are not entitled to separation pay because petitioners are seasonal workers. Adopting these arguments of private respondent, the NLRC, in a Resolution[13] dated July 6, 1994, affirmed the dismissal of the consolidated complaints for separation pay. Public respondent held that petitioners are not entitled to the protection of Article 283 of the Labor Code providing for separation pay since there was no closure of establishment or termination of services to speak of. It declared that there was no dismissal but a non-hiring due mainly to [petitioners] own volition.[14] Moreover, the benefits of Article 283 of the Labor Code apply only to regular employees, not seasonal workers like petitioners.[15] Inasmuch as public respondent in its Resolution[16] dated September 23, 1994 denied petitioners motion for reconsideration, petitioners now assail the correctness of the NLRCs resolution via the instant petition. Petitioners anchor their petition on the following grounds, to wit: I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT THERE WAS NO DISMISSAL OR TERMINATION OF SERVICES.
II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT PETITIONERS WERE NOT REGULAR EMPLOYEES. III. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN NOT AWARDING SEPARATION PAY TO THE PETITIONERS. Petitioners vigorously maintain that they are regular workers of respondent LUTORCO since they worked continuously for many years with LUTORCO, some of them even for over 20 years, and that they performed functions necessary and desirable in the usual business of LUTORCO.[17] According to them, the fact that some of them work only during the tobacco season does not affect their status as regular workers since they have been repeatedly called back to work for every season, year after year.[18] Thus, petitioners take exception to the factual findings and conclusions of the NLRC, stressing that the conclusions of the NLRC were based solely on the new theory advanced by private respondent LUTORCO only on appeal, that is, that it was only LUTORCOs tobacco re-drying operation that was sold, and hence, diametrically opposed to its theory before the Labor Arbiter, i.e., that it is the entire company (LUTORCO) itself that was sold. Private respondent LUTORCO, on the other hand, insists that petitioners employment was not terminated; that it never ceased to operate, and that it was petitioners themselves who severed their employer-employee relationship when they chose employment with TABACALERA because petitioners found more stability working with TABACALERA than with LUTORCO.[19] It likewise insists that petitioners are seasonal workers since almost all of petitioners never continuously worked in LUTORCO for any given year[20] and they were required to reapply every year to determine who among them shall be given work for the season. To support its argument that petitioners are seasonal workers, private respondent LUTORCO cites the case of Mercado, Sr. v. NLRC[21] wherein this Court held that the employment of [seasonal workers] legally ends upon the completion of the xxx season. Clearly, the crux of the dispute boils down to two issues, namely, (a) whether petitioners employment with LUTORCO was terminated, and (b) whether petitioners are regular or seasonal workers, as defined by law. Both issues are clearly factual in nature as they involved appreciation of evidence presented before the NLRC whose finding of facts and conclusions thereon are entitled to respect and finality in the absence of proof that they were arrived at arbitrarily or capriciously.[22] In the instant case, however, cogent reasons exist to apply the exception, to wit:
First, upon a thorough review, the records speak of a sale to TABACALERA in 1993 under conditions evidently so concealed that petitioners were not formally notified of the impending sale of LUTORCOs tobacco re-drying operations to TABACALERA and its attendant consequences with respect to their continued employment status under TABACALERA. They came to know of the fact of that sale only when TABACALERA took over the said tobacco redrying operations. Thus, under those circumstances, the employment of petitioners with respondent LUTORCO was technically terminated when TABACALERA took over LUTORCOs tobacco re-drying operations in 1993.[23] Moreover, private respondent LUTORCOs allegation that TABACALERA assured the seniority rights of petitioners deserves scant consideration inasmuch as the same is not supported by documentary evidence nor was it confirmed by TABACALERA. Besides, there is no law requiring that the purchaser of an entire company should absorb the employees of the selling company. The most that the purchasing company can do, for reasons of public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in its judgment are necessary in the continued operation of the business establishment. In the instant case, the petitioner employees were clearly required to file new applications for employment. In reality then, they were hired as new employees of TABACALERA. Second, private respondent LUTORCOs contention that petitioners themselves severed the employer-employee relationship by choosing to work with TABACALERA is bereft of merit considering that its offer to return to work was made more as an afterthought when private respondent LUTORCO later realized it still had tobacco leaves for processing and redrying. The fact that petitioners ultimately chose to work with TABACALERA is not adverse to petitioners cause. To equate the more stable work with TABACALERA and the temporary work with LUTORCO is illogical. Petitioners untimely separation in LUTORCO was not of their own making and therefore, not construable as resignation therefrom inasmuch as resignation must be voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment.[24] Third, the test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC,[25] in which this Court held: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists. Thus, the nature of ones employment does not depend solely on the will or word of the employer. Nor on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employers nature of business and the duration and scope of work to be done.[26] In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCOs business, serve as badges of regular employment.[27] Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases[28] this Court has already settled that seasonal
workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until reemployed. Private respondents reliance on the case of Mercardo v. NLRC is misplaced considering that since in said case of Mercado, although the respondent company therein consistently availed of the services of the petitioners therein from year to year, it was clear that petitioners therein were not in respondent companys regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to contract their services to work for other farm owners, as in fact they did. Thus, the Court ruled in that case that their employment would naturally end upon the completion of each project or phase of farm work for which they have been contracted. All the foregoing considered, the public respondent NLRC in the case at bar erred in its total affirmance of the dismissal of the consolidated complaint, for separation pay, against private respondents LUTORCO and See Lin Chan considering that petitioners are regular seasonal employees entitled to the benefits of Article 283 of the Labor Code which applies to closures or cessation of an establishment or undertaking, whether it be a complete or partial cessation or closure of business operation.[29] In the case of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC[30] this Court, when faced with the question of whether the separation pay of a seasonal worker, who works for only a fraction of a year, should be equated with the separation pay of a regular worker, resolved that question in this wise: The amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code provides different definitions as to what constitutes one year of service, Book Six[31] does not specifically define one year of service for purposes of computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be considered one whole year. Applying this case at bar, we hold that the amount of separation pay which respondent members xxx should receive is one-half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year. Thus, in the said case, the employees were awarded separation pay equivalent to one (1) month, or to one-half (1/2) month pay for every year they rendered service, whichever is higher, provided they rendered service for at least six (6) months in a given year. As explained in the text of the decision in the said case, month pay shall be understood as average monthly pay during the last season they worked.[32] An award of ten percent (10%) of the total amount due petitioners as attorneys fees is legally and morally justifiable under Art. 111 of the Labor Code,[33] Sec. 8, Rule VIII, Book III of its Implementing Rules,[34] and par. 7, Art. 2208[35] of the Civil Code.[36] WHEREFORE, the petition is hereby GRANTED, and the assailed Resolutions dated July 6, 1994 and September 23, 1994 of public respondent NLRC are REVERSED and SET ASIDE. Private respondent La Union Tobacco Redrying Corporation is ORDERED: (a) to pay petitioners separation pay equivalent to one (1) month, or one-half (1/2) month pay for each year that they rendered service, whichever is higher, provided that they rendered service for at least six (6) months in a given year, and; (b) to pay ten percent (10%) of the total amount due to petitioners, as and for attorneys fees. Consequently, public respondent NLRC is ORDERED to COMPUTE the total amount of separation pay which each petitioner who has rendered service to private respondent LUTORCO for at least six (6) months in a given year is entitled to receive in accordance with this decision, and to submit its compliance thereon within forty-five (45) days from notice of this decision. SO ORDERED.
Hacienda Fatima vs. National Federation of Sugarcane Workers-Food and General Trade G.R. No. 149440. January 28, 2003.* Labor Law; Employment; Regular Employee; Definition.[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. x x x x x x x x x x x x [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the x x x season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed. Same; Same; Same; Dismissals; The burden is on the employer to prove that the termination was for a valid and authorized cause.Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause. In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees. Same; Appeals; Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality.We uphold the CAs affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court. Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis. PETITION for review on certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Teodoro V. Cortes for petitioners. Yap Law Offices for private respondents. PANGANIBAN, J.: Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have served them for several years already. Hence, they are regular not seasonal employees.
The Case Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads: "WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED." 2 On the other hand, the National Labor Relations Commission (NLRC) Decision, by the CA, disposed in this wise:
3
upheld
"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed. Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4 The Facts The facts are summarized in the NLRC Decision as follows: "Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants' persistence and dogged determination in going back to work. "Indeed, it would appear that respondents did not look with favor workers' having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that: 'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days. 'b) The management will give priority to the women workers who are members of the union in case work relative . . . or amount[ing] to gahit and [dipol] arises. 'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week. 'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority. However, in case the said workforce would not be enough, the management can hire additional workers to supplement them.
'e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and 'f) The union will immediately lift the picket upon signing of this agreement.' "However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. "Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides: 'Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members; 'Whereas parties to the present dispute agree to settle the case amicably once and for all; 'Now therefore, in the interest of both labor and management, parties herein agree as follows: '1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers; '2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990; '3. That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be; '4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration; '5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)" "Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:
'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th month pay. The following are deemed not considered employees: 1. Luisa Rombo 2. Ramona Rombo 3. Bobong Abrega 4. Boboy Silva 'The name Orencio Rombo shall be verified in the 1990 payroll. 'The following employees shall be reinstated immediately upon availability of work: 1. Jose Dagle 2. Rico Dagle 3. Ricardo Dagle 4. Jesus Silva 5. Fernando Silva 6. Ernesto Tejares 7. Alejandro Tejares 8. Gaudioso Rombo 9. Martin Alas-as Jr. 10. Cresensio Abrega 11. Ariston Eruela Sr. 12. Ariston Eruela Jr.'
"When respondents again reneged on its commitment; complainants filed the present complaint. "But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of 'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted) Ruling of the Court of Appeals The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case is "replete with complainants' persistence and dogged determination in going back to work." 6 The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice. Hence this Petition. Issues
7
Petitioners raise the following issues for the Court's consideration: "A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year. "B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, . . . "C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages." 8 Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first issue and Item C as the second. The Court's Ruling The Petition has no merit. First Issue: Regular Employment At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court. Contrary to petitioners' contention, the CA did not err when it held that respondents were regular employees. Article 280 of the Labor Code, as amended, states: "Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue while such activity exist." (Italics supplied) For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. In Abasolo v. National Labor Relations Commission,
13
the Court issued this clarification:
"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: "The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. xxx xxx xxx
". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the . . . season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but merely considered on leave until re-employed." 14 The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after which their services would be available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latter's regular employees for their respective tasks. Petitioners' eventual refusal to use their services even if they were ready, able and willing to perform their usual duties whenever these were available and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter. The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise of a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who were union
members were effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code. "Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees. Second Issue: Unfair Labor Practice The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows: "Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their haciendaa clear interference in the right of the workers to self-organization." 17 We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20 The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages."21 WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED. Philippine Village Hotel vs. NLRC G.R. No. 105033. February 28, 1994.* Labor Law; Regular and Casual Employees; Contracts with a fixed or specific period valid.An examination of the contents of the private respondents contracts of employment shows that indeed private respondents voluntarily and knowingly agreed to be employed only for a period of one (1) month or from February 1, 1989 to March 1, 1989. The fact that private respondents were required to render services usually necessary or desirable in the operation of petitioners business for the duration of the one (1) month dry-run operation period does not in any way impair the validity of the contractual nature of private respondents contracts of employment which specifically stipulated that the employment of the private respondents was only for one (1) month.
Same; Same; Same; Words and Phrases; Day Certain and Period, defined.In upholding the validity of a contract of employment with a fixed or specific period, we have held that the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when. The term period was further defined to be the length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length or the period from one fixed date to another fixed date. Same; Same; Validly terminated employees are not deemed to continue their regular employment status if they are subsequently reemployed.In the instant case, private respondents were validly terminated by the petitioner when the latter had to close its business due to financial losses. Following the directives of the NLRC to give priority in hiring private respondents should it resume its business, petitioner hired private respondents during their one (1) month dryrun operation. However, this does not mean that private respondents were deemed to have continued their regular employment status, which they enjoyed before their aforementioned termination due to petitioners financial losses. Besides, the previous decision of the public respondent NLRC in Case No. 8-3277-86 finding the termination of private respondents employment to be valid has long become final and executory. Public respondent NLRC cannot anymore argue that the temporary cessation of the petitioners operation due to financial reverses merely suspended private respondents employment. The employee-employer relationship had come to an end when the employer had closed its business and ceased operations. The hiring of new employees when it reopened after three (3) years is valid and to be expected. The prior employment which was terminated cannot be joined or tacked to the new employment for purposes of security of tenure. Same; Same; While it is true that security of tenure is a constitutionally guaranteed right of the employees, it does not, however, mean perpetual employment for the employee.While it is true that security of tenure is a constitutionally guaranteed right of the employees it does not, however, mean perpetual employment for the employee because our law, while affording protection to the employee, does not authorize oppression or destruction of an employer. It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latters will, this is servitude. If the employee can compel the employer to give him work against the employers will, this is oppression. PETITION for certiorari to annul and set aside a decision of the National Labor Relations Commission. The facts are stated in the opinion of the Court. Ponce Enrile, Cayetano, Reyes Manalastas for petitioner. Tupaz & Associates and Alfredo L. Bentulan for private respondents. NOCON, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court with a prayer for the issuance of a temporary restraining order to annul and set aside the decision 1 promulgated November 7, 1991 by the National Labor Relations Commission (NLRC) of Manila reversing the decision dated December 19, 1989 of the Labor Arbiter Cornelio L. Linsangan. It appears on record that private respondents Juanito Acuin, Mamerta Mangubat, Raul Sonon, Elgar Pemis, Orlando Paraguison, Ferdinand Velasco, Mike Astulero, Magno Decalso, Nenita Orosea, Jose Timing, Antonio Manalili, Rodelio Queria and Reynaldo Santos were employees of petitioner Philippine Village Hotel. However, on May 19, 1986, petitioner had to close and totally discontinue its operations due to serious financial and business reverses resulting in the termination of the services of its employees. Thereafter, the Philippine Village Hotel Employees and Workers Union filed against petitioner a complaint for separation pay, unfair labor practice and illegal lock-out. On May 27, 1987, the Labor Arbiter issued and Order finding the losses suffered by petitioner to be actual, genuine and of such magnitude as to validly terminate the services of private respondents but directed petitioner "to give priority to the complainants (herein private respondents) in [the] hiring of personnel should they resume their business operations in the future." 2 On appeal, the NLRC affirmed the validity of the closure of petitioner but ordered petitioner to pay private respondent separation pay at the rate of 1/2 month pay every year of service. However, there is nothing in the records to show that private respondents received their separation pay as the decision of the NLRC remained unenforced as of this date. On February 1, 1989, petitioner decided to have a one (1) month dry-run operation to ascertain the feasibility of resuming its business operations. In order to carry out its dry-run operation, petitioner hired casual workers, including private respondents, for a one (1) month period, or from February 1, 1989 to March 1, 1989, as evidenced by the latter's Contract of Employment. 3 After evaluating the individual performance of all the employees and upon the lapse of the contractual one-month period or on March 2, 1989, petitioner terminated the services of private respondents. On April 6, 1989, private respondents and Tupas Local Chapter No. 1362 filed a complaint against petitioner for illegal dismissal and unfair labor practice with the NLRC-NCR Arbitration Branch in NLRC Case No. 00-04-01665-89. On December 19, 1989, the Labor Arbiter rendered a decision, the dispositive portion of which reads, as follows: WHEREFORE, finding the above-entitled complaint to be without factual and legal basis, judgment is hereby rendered dismissing the same. 4 Thereafter, private respondents appealed to the public respondent NLRC. On November 7, 1991, public NLRC reversed the decision of the Labor Arbiter, the dispositive portion of which reads as follows:
WHEREFORE, under the premises, let the decision appealed from be, as it is hereby reversed, and a new judgment rendered, hereby ordering the respondent Philippine Village Hotel to reinstate the above-named complainants to their former or substantially equivalent positions without loss of seniority rights plus full backwages from the time they were actually dismissed on 02 March 1989 up to the time of their actual reinstatement, but which period of time should not exceed three (3) years. The complaint for unfair labor practice is hereby dismissed for lack of adequate factual basis. 5 On March 5, 1992, petitioners Motion for Reconsideration was denied for lack of merit. Hence, this petition alleging grave abuse of discretion on the part of the public respondent NLRC in finding that private respondents are regular employees of petitioner considering that the latter's services were already previously terminated in 1986 and that their employment contracts specifically provided only for a temporary one-month period of employment. The petition is impressed with merit. An examination of the contents of the private respondents' contracts of employment shows that indeed private respondents voluntarily and knowingly agreed to be employed only for a period of one (1) month or from February 1, 1989 to March 1, 1989. The fact that private respondents were required to render services usually necessary or desirable in the operation of petitioner's business for the duration of the one (1) month dry-run operation period does not in any way impair the validity of the contractual nature of private respondents' contracts of employment which specifically stipulated that the employment of the private respondents was only for one (1) month. In upholding the validity of a contract of employment with a fixed or specific period, we have held that the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but theday certain agreed upon by the parties for the commencement and termination of their employment relationship, aday certain being understood to be that which must necessarily come, although it may not be known when. The term period was further defined to be the length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length or the period from one fixed date to another fixed date. 6 This ruling is only in consonance with Article 280 of the Labor Code which provides: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph:Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. Inasmuch as private respondents' contracts of employment categorically provided a fixed period and their termination had already been agreed upon at the time of their engagement, private respondents' employment was one with a specific period or day certain agreed upon by the parties. In Philippine National Oil Company-Energy Development Corporation vs. NLRC, 7 we held that: As can be gleaned from the said case (Brent School, Inc. vs. Zamora, 181 SCRA 702), the two guidelines by which fixed contracts of employments can be said NOT to circumvent security of tenure, are either: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter." In the instant case, private respondents were validly terminated by the petitioner when the latter had to close its business due to financial losses. Following the directives of the NLRC to give priority in hiring private respondents should it resume its business, petitioner hired private respondents during their one (1) month dry-run operation. However, this does not mean that private respondents were deemed to have continued their regular employment status, which they had enjoyed before their aforementioned termination due to petitioner's financial losses. As stated by the Labor Arbiter in his decision: It should be borne in mind that when complainants were first terminated as a result of the company's cessation from operation in May, 1986 the employeremployee relationship between the parties herein was totally and completely severed. Such being the case, respondent acted well within its discretion when in rehiring the complainants (herein private respondents) it made them casual and for a specific period. The complainants are no better than the new employees of respondent (petitioner) for the matter of what status or designation to be given them exclusively rests in the discretion of management. 8 Besides, the previous decision of the public respondent NLRC in Case No. 8-3277-86 finding the termination of private respondents' employment to be valid has long become final and executory. Public respondent NLRC cannot anymore argue that the temporary cessation of the petitioner's operation due to financial reverses merely suspended private respondents' employment. The employee-employer relationship had come to an end when the employer had closed its business and ceased operations. The hiring of new employees when it re-opened after three (3) years is valid and to be expected. The prior employment which was terminated cannot be joined or tacked to the new employment for purposes of security of tenure. While it is true that security of tenure is a constitutionally guaranteed right of the employees, it does not, however, mean perpetual employment for the employee because our law, while affording protection to the employee, does not authorize oppression or destruction of an employer. It is well settled that the employer has the right or is at liberty to choose who will be
hired and who will be denied employment. The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression. 9 Thus, public respondent NLRC had indubitably committed grave abuse of discretion when it modified the final decision of the NLRC Case No. 8-3277-86 which remain unenforced as of this date. Private respondents' remedy is to file a motion for execution, if it is still within the reglementary 5-year period, or to file an action to enforce said decision. (Article 224(a), Labor Code) WHEREFORE, this petition for certiorari is GRANTED and the questioned of the public respondent NLRC is hereby SET ASIDE thereby dismissing the complaint against petitioner. SO ORDERED. Jaka Food Processing Corporation vs. Pacot G.R. No. 151378. March 28, 2005.* Labor Law; Dismissals; Distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283.A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separa tion pay. PETITION for review on certiorari of the decision and resolution of the Court of Appeals. The facts are stated in the opinion of the Court. Carlo Llanes Navarro for petitioner. Villegas, Belarmino, Mijares & Associates for respondents. DECISION GARCIA, J.: Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. SP. No. 59847, to wit:
1. 2.
Decision dated 16 November 2001,[1] reversing and setting aside an earlier decision of the National Labor Relations Commission (NLRC); and Resolution dated reconsideration. 8 January 2002,[2] denying petitioners motion for
The material facts may be briefly stated, as follows: Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was in dire financial straits. It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. In time, respondents separately filed with the regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager, Rosana Castelo. After due proceedings, the Labor Arbiter rendered a decision[3] declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. More specifically the decision dispositively reads: WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants and ordering respondents to reinstate them to their positions with full backwages which as of July 30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13th month pay as alluded in the above computation. If complainants could not be reinstated, respondents are ordered to pay them separation pay equivalent to one month salary for very (sic) year of service. SO ORDERED. Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,[4] affirmed in toto that of the Labor Arbiter. JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another decision dated January 28, 2000,[5] this time modifying its earlier decision, thus: WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages, service incentive leave pay. Each of the complainants-appellees shall be entitled to a separation pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of the complainants-appellees the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the retrenchment. SO ORDERED.
Their motion for reconsideration having been denied by the NLRC in its resolution of April 28, 2000,[6] respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No. 59847. As stated at the outset hereof, the Court of Appeals, in a decision dated November 16, 2000, applying the doctrine laid down by this Court inSerrano vs. NLRC,[7] reversed and set aside the NLRCs decision of January 28, 2000, thus: WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission is REVERSED and SET ASIDE and another one entered ordering respondent JAKA Foods Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final. SO ORDERED. This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in its resolution of January 8, 2002. Hence, JAKAs present recourse, submitting, for our consideration, the following issues: I. II. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED FULL BACKWAGES TO RESPONDENTS. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO RESPONDENTS.
As we see it, there is only one question that requires resolution, i.e. what are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employers compliance with the notice requirement under the Labor Code. This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC,[8] we had the opportunity to resolve a similar question. Therein, we found that the employees committed a grave offense, i.e., abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of the dismissal despite non-compliance with the notice requirement of the Labor Code. However, we required the employer to pay the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory due process, thus: Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. xxx xxx xxx
The violation of petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules, (Emphasis supplied). The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code. At this point, we note that there are divergent implications of a dismissal for just cause under Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other. A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article necessarily imply delinquency or culpability on the part of the employee. dismissal process is initiated by the employers exercise of his prerogative, i.e. when the employer opts to install labor saving devices, when cease business operations or when, as in this case, he undertakes to retrenchment program. 283 does not Instead, the management he decides to implement a
The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay.[9] For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the authorized causes under Article 283. Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative. The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents employment. As aptly found by the NLRC: A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or 94.11% of the stockholders [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders equity, thus a capital deficiency or impairment of equity ensued. In 1998, the
deficit grew to P355,794,897.00 or 177% of the stockholders equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew by more than 47%. The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainantsappellees failed to dispute. The losses incurred by the respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondent-appellants audited financial statement. Having established the loss incurred by the respondent-appellant corporation, it necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore logical for the corporation to implement a retrenchment program to prevent further losses.[10] Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding of the NLRC which, incidentally, was also affirmed by the Court of Appeals. It is, therefore, established that there was ground for respondents dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00. We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. This is because in Reahs Corporation vs. NLRC,[11] we made the following declaration: The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons. xxx. (Emphasis supplied) WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to pay each of the respondents the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process. SO ORDERED.
G.R. No. 119842. August 30, 1996.* Guerrero vs. NLRC Labor Law; Dismissals; The right to terminate the services of employees to obviate or minimize business losses may not be exercised arbitrarily or whimsically.The law gives an employer
the right to terminate the services of its employees to obviate or to minimize business losses. This right, however, may not be exercised arbitrarily or whimsically. Same; Same; Retrenchment; Requisites for a Valid Retrenchment.The requisites for valid retrenchment under the foregoing provision are: (1) necessity of the retrenchment to prevent losses and proof of such losses; (2) written notice to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year of service, whichever is higher. Same; Same; Same; Same; Respondent company did not satisfy the legal requirements for a valid retrenchment.Considering the circumstances in the case at bar, we find that respondent company did not satisfy the legal requirements for valid retrenchment. Same; Same; Same; To justify the employees termination of service, the losses must be serious, actual and real and they must be supported by sufficient and convincing evidence. First, respondent company did not present sufficient evidence to prove the extent of its losses. To justify the employees termination of service, the losses must be serious, actual and real, and they must be supported by sufficient and convincing evidence. The burden of proof rests on the employer. Respondent company alleged that the strike paralyzed its operations and resulted in the withdrawal of its clients orders. Respondent company, however, failed to prove its claim with competent evidence which would show that it was indeed suffering from business losses so serious as would necessitate retrenchment or reduction of personnel. Same; Same; Same; The rule is that not every loss incurred or expected to be incurred by a company will justify retrenchment.We reject respondent companys contention that it was not necessary to present proof of severity of the losses it sustained since petitioners were aware of the strike and its adverse effects on the companys operations. The rule is that not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses. Same; Same; Same; Retrenchment is justified only when all other less drastic means have been tried and found insufficient. Second, respondent company failed to prove that retrenchment was necessary to prevent further losses. There is no showing in this case that respondent company has taken other measures to abate the losses it sustained because of the strike. Retrenchment must be exercised only as a last resort, considering that it will lead to the loss of the employees livelihood. Retrenchment is justified only when all other less drastic means have been tried and found insufficient. Same; Same; Benefits; Employees who receive their separation pay are not barred from contesting the legality of their dismissal. Finally, petitioners availment of the financial assistance given by respondent company did not estop them from questioning.the legality of their separation from the company. When respondent company made the offer, petitioners were made to believe that the company would cease to operate for an indefinite period of time. Hence, petitioners were constrained to accept whatever relief the respondent company offered at that time. In De Leon vs. NLRC, we held that employees who receive their sep aration pay are not barred from contesting the legality of their dismissal. The acceptance of those benefits (will) not amount to estoppel. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court.
Ariel R. Subia for petitioners. Quisumbing, Torres & Evangelista for private respondents. PUNO, J.:p This an original action for certiorari under Rule 65 of the Revised Rules of Court to annual the Decision of respondent National Labor Relations Commission (NLRC) 1 dismissing petitioners complaint for illegal dismissal against R.O.H. Auto Products Phils., Inc. and its president, Goeff Kemp. The petitioners are former employees of respondent R.O.H. Auto Products Phils., Inc. a corporation engaged in the manufacture of automotive steel wheels. On March 24, 1992, members of the union in respondent company went on strike. The petitioners, however, did not participate in the strike. Respondent company allegedly sustained huge losses as the strike virtually paralyzed its operations. To prevent further losses, respondent proposed on April 22, 1992 to the nonstriking employees a "financial assistance" in exchange for their resignation. Respondent company, nevertheless, assured them priority in hiring when positions of equal stature and compensation become available. On April 24, 1992, the petitioners availed of respondent company's offer. They signed individual Quitclaim and Release deeds upon receipt of their separation pay. On May 3, 1992, the strike ended. The operations in respondent company resumed and all the striking employees returned to their posts. The petitioners offered to re-assume their former positions but respondent company refused to admit them. They filed separate complaint for illegal dismissal. In a consolidated Decision dated June 29, 1993, Labor Arbiter Geobel A. Bartolabac dismissed the complaints for lack of merit, viz: WHEREFORE, premises considered, the above-entitled cases are now hereby dismissed for lack of merit. Respondents (sic) R.O.H. Auto Products Phils. Inc., is, however, ordered to pay each complainant an additional financial assistance equivalent to their one month salary. 2 This was affirmed by the NLRC in its Decision dated March 10, 1995. Hence, this petition. The issue is whether petitioners were illegally dismissed. We rule in the affirmative. The law gives an employer the right to terminate the services of its employees to obviate or to minimize business losses. This right, however, may not be exercised arbitrarily or whimsically. Article 283 of the Labor Code lays down the conditions for the exercise of right, thus:
3
Art. 283. 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 prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to separation pay equivalent to at least his one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (emphasis supplied) The requisites for valid retrenchment under the foregoing provision are: (1) necessity of the retrenchment to prevent losses and proof of such losses; (2) written notice to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year of service, whichever is higher. 4 Considering the circumstances in the case at bar, we find that respondent company did not satisfy the legal requirements for valid retrenchment. First, respondent company did not present sufficient evidence to prove the extent of its losses. To justify the employees termination of service, the losses must be serious, actual and real, and they must be supported by sufficient and convincing evidence. 5 The burden of proof rests of the employer. 6 Respondent company alleged that the strike paralyzed its operations and resulted in the withdrawal of its clients' orders. Respondent company, however, failed to prove its claim with competent evidence which would show that it was indeed suffering from business losses so serious as would necessitate retrenchment or reduction of personnel. 7 As we held in Lopez Sugar Corporation vs. Federation of Free Workers: 8 Lastly but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. In Garcia v.National Labor Relations Commission, the Court said: . . . But it is essentially required that the alleged losses in business operations must be prove[n]. Otherwise, said ground for termination would be susceptible to abuse by scheming employers who might be merely feigning business losses or reverses in their business ventures in order to ease out employees.
We reject respondent company's contention that it was not necessary to present proof of severity of the losses it sustained since petitioners were aware of the strike and its adverse effects on the company's operations. The rule is that not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses. 9 Second, respondent company failed to prove that retrenchment was necessary to prevent further losses. There is no showing in this case that respondent company has taken other measures to abate the losses it sustained because of the strike. Retrenchment must be exercised only as a last resort, considering that it will lead to the loss of the employees livelihood. Retrenchment is justified only when all other less drastic means have been tried and found insufficient. 10 Respondent company did not also follow the proper procedure for retrenchment under Article 283. It did not give written notices to both the petitioners and the Department of Labor and Employment at least one (1) month prior to the retrenchment. Its purpose is to enable the proper authorities to ascertain whether retrenchment is being done in good faith and is not just a pretext for evading compliance with the just obligations of the employer to the affected employees. 11 This requirements is mandatory 12 as it is intended to protect the workers right to security of tenure. The payment of "one (1) month salary in lieu of the notice" which was included in petitioners separation pay cannot be considered as sufficient compliance with the requirement of the law. 13 Finally, petitioners availment of the "financial assistance" given by respondent company did not estop them from questioning the legality of their separation from the company. When respondent company made the offer, petitioners were made to believe that the company would cease to operate for an indefinite period of time. Hence, petitioners were constrained to accept whatever relief the respondent company offered at that time. In De Leon vs.NLRC, 14 we held that "employees who receive their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those benefits (will) not amount to estoppel." IN VIEW WHEREOF, the assailed Decision is REVERSED and SET ASIDE. Respondents R.O.H. Auto Products Phils., Inc. and Goeff Kemp are hereby ordered to REINSTATE the petitioners without loss of seniority rights and with full backwages minus the amount received by them as "financial assistance" upon their separation. 15 No costs. SO ORDERED.
Mac Adams Metal Engineering Workers Union-Independent vs. Mac Adams Metal Engineering G.R. No. 141615. October 24, 2003.* Labor Law; Management Prerogatives; Closure or Cessation of Business Operations; Closure or cessation of business operations is allowed even if the business is not undergoing economic lossesjust as no law forces anyone to go into business, no law can compel anybody to continue in it.Explicit from the above provision is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop at anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the managements prerogative
to close or cease its business operations, just because said business operation or undertaking is not suffering from any loss or simply to provide the workers continued employment. Same; Same; Same; Requisites.The employer need only comply with the following requirements for a valid cessation of business operations: (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof; (b) the cessation of or withdrawal from business operations must be bona fide in character and (c) payment of termination pay equivalent to at least one-half month pay for each year of service, or one month pay, whichever is higher. Same; Administrative Law; Evidence; The Supreme Court is bound, in principle, by the factual findings of administrative officials, if supported by substantial evidence.The labor arbiter, the NLRC and the Court of Appeals were unanimous in their findings that private respondents closure of business was bona fide and that private respondents did not engage in the operation of run-away shops. We have always held that we are bound, in principle, by the factual findings of administrative officials, if supported by substantial evidence. Their factual findings are entitled not only to great weight and respect but even finality, unless petitioners are able to show that the labor arbiter and the NLRC arbitrarily disregarded the evidence before them or misapprehended evidence of such nature as to compel a contrary conclusion if properly appreciated. We find no cogent reason to depart from the rule. Same; Where the employers cessation and closure of business is lawful, there is no illegal dismissal to speak of.Finally, since private respondents cessation and closure of business was lawful, there was no illegal dismissal to speak of. This fact negated the obligation to pay backwages. Instead private respondents were required to give separation pay, which they already did, to all their regular employees except petitioners Rolando Cortes, Herminigildo Justo, Guillermo Macaraeg, Felixberto Mirana, Arsenio Ortiz, Manuel Pranada, Ruben Saringan and Ramon Seraspi who refused to accept their separation pay. PETITION for review on certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Flores, Saladero, Bunao Law Office for petitioners. Franklyn Canto for respondents. Alexander Gironella for MVS-HERB. DECISION CORONA, J.: Assailed in this petition for review on certiorari filed by Mac Adams Metal Engineering Workers Union-Independent (MAMEWU) and 38 employees of private respondents Mac Adams Metal and Engineering (MAME) and GBS Engineering Services (GBS), is the decision1 dated July 9, 1999 of the Court of Appeals affirming the decision2 of the National Labor Relations Commission (NLRC) which, in turn, upheld the findings of the labor arbiter.3 The present controversy stemmed from two separate complaints: the first complaint, filed on November 9, 1993 by petitioner MAMEWU and its president, petitioner Mario A. Garcia, for and in behalf of 29 other petitioners, charged private respondents MAME and GBS with unfair labor
practices (ULP) committed through union busting and illegal closure, and illegal dismissal. The second complaint, filed on November 9, 1993 by the last eight petitioners led by Halim Roldan, alleged that aside from ULP and illegal dismissal, private respondents were likewise liable for non-payment of premium pay for holidays and rest days, night differential pay and 13th month pay. Insisting that the closure of MAME and GBS was illegal as it was calculated to bust their union, petitioners claimed that MAME and GBS continued doing business under new business names, i.e., MBS Machine and Industrial Supply (MBS) and MVS Heavy Equipment Rental and Builders (MVS). Thus, MBS and MVS were impleaded as respondents in the complaint for allegedly being run-away shops of MAME and GBS. In both complaints, petitioners prayed for alternative reliefs for reinstatement with backwages and/or separation pay. In their answer, private respondent spouses Geronimo and Lydia V. Sison, proprietors of GBS and MAME respectively, denied petitioners allegations. Explaining the closure of MAME and GBS, private respondents narrated that respondent Lydia V. Sison decided to retire from business when she became sickly in 1988. Her health did not improve despite proper medical attention. In the general meeting of the workers held sometime in July 1992, she announced her plan to close shop effective early 1993. The announcement in advance was intended to give the workers ample time to look for alternative employment. Accordingly, she declined to accept new projects and proceeded with the winding up of her business. After the July 1992 workers general meeting, some employees formed a union ostensibly for the purpose of making representations with the management to reconsider its decision to cease business operations or, at least, see to it that all benefits due the affected employees would be paid. In the course of negotiations with the management, the union leadership demanded separation pay computed at 45 days for every year of service, a proposal private respondents rejected. As it turned out, even before respondent Lydia V. Sison could formally notify the employees and the concerned government agencies of the intended closure and cessation of her business, MAMEWU and its members started resorting to concerted activities such as work slowdown, picketing, refusal to report for work and ultimately, strikes. Meanwhile, the workers of GBS joined in the concerted activities in sympathy with the striking employees of MAME. As a consequence, GBS was also forced to close and cease its business operations. For their part, MBS and MVS denied being run-away shops of MAME and GBS. Private respondent Geronimo B. Sison admitted being a part-owner of MBS which, he maintained, was an entirely separate and distinct business enterprise from MAME and GBS. MBS was engaged in manufacturing carton boxes and other allied products. On the other hand, MAME and GBS were both engaged in the businesses of machine shop operations, fabrication and construction. Private respondent Dominic Sison, son of private respondent spouses Geronimo and Lydia V. Sison, claimed that he was the sole proprietor of MVS. He denied that MVS was a run-away shop of his parents. On the contrary, MVS was a legitimate business outfit engaged in leasing out heavy equipment. With an initial capital of P 1M, MVS used to rent from respondent MAME some of its heavy equipment which MVS, in turn, offered for lease to others. Sometime in May 1994, respondent Dominic Sison obtained an P 8M loan from the PNB and, with the fresh capital, he branched out into the construction business. Hence, MVS was an entirely separate and distinct business entity with a capital of its own, completely different personnel
complement, equipment, machineries and implements, and whose clients were different from those of MAME and GBS. On June 20, 1997, the labor arbiter rendered a decision declaring that the closure of business of MAME and GBS was legitimate, having been done in good faith and in accordance with law. Hence, no unfair labor practice or illegal dismissal was committed: xxx All told, finding the charge of unfair labor practice to be bereft of any factual basis, but on the contrary, the evidence amply shows that the closure of respondent MAME and GBS was legitimately and validly carried out in compliance with the legal mandates and in good faith, it necessarily follows that the charge of illegal dismissal may not be upheld. The labor arbiter further ruled that only 16 out the 38 petitioners were regular employees. The rest were hired on a contractual basis and therefore not entitled to separation pay. On appeal to the NLRC, the assailed decision of the labor arbiter was affirmed. Aggrieved, petitioners filed a petition for review before the Court of Appeals questioning the decision of the NLRC. On July 9, 1999, the Court of Appeals rendered a decision affirming the findings of both the labor arbiter and the NLRC that there was a legitimate and bona fide closure and cessation of business by MAME and GBS. The appellate court, however, modified the assailed decision and declared the second group of petitioners, led by Halim Roldan, as regular employees also entitled to separation pay. Petitioners are now before us imputing the following errors to the Court of Appeals: I THE PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR OF LAW IN NOT AWARDING BACKWAGES TO PETITIONERS DESPITE THE FACT THAT THEIR DISMISSAL FROM WORK WAS TAINTED WITH VIOLATION OF THEIR RIGHT TO DUE PROCESS. II THE PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR OF LAW IN NOT HOLDING THAT RESPONDENTS MAME AND GBS WERE GUILTY OF UNION BUSTING IN CLOSING THEIR OPERATIONS IN BAD FAITH. III PUBLIC RESPONDENT COMMITTED A SERIOUS LEGAL ERROR IN NOT HOLDING THAT RESPONDENTS WERE GUILTY OF ENGAGING IN A RUN-AWAY SHOP. IV PUBLIC RESPONDENT LEGALLY ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS GERONIMO AND LYDIA SISONS ACTS OF INTERROGATING EMPLOYEES WHO HAD JOINED THE UNION CONSTITUTED UNFAIR LABOR PRACTICE.4
The foregoing assignments of error boil down to the lone issue of whether the closure of private respondents business was done in good faith and for legitimate business reasons. The applicable law is Article 283 of the Labor Code which provides: ART. 283. 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 prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination 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 closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least onehalf (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Explicit from the above provision is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop at anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the managements prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss5 or simply to provide the workers continued employment. The employer need only comply with the following requirements for a valid cessation of business operations. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof; (b) the cessation of or withdrawal from business operations must be bona fide in character and (c) payment of termination pay equivalent to at least one-half month pay for each year of service, or one month pay, whichever is higher.6 The records reveal that private respondents complied with the aforecited requirements. MAMEs employees were adequately informed of the intended business closure and a written notice to the Regional Director of the Department of Labor and Employment (DOLE) was filed by private respondents, informing the DOLE that except for winding-up operations, MAME will be closed effective March 8, 1993. Similar notices were served by Lydia V. Sison to the Social Security System (SSS), Bureau of Internal Revenue (BIR), Department of Trade and Industry (DTI) and the Municipal Licensing Division of Antipolo, Rizal. Thus, the licenses and registration of respondent MAME with the SSS, the Municipality of Antipolo, Rizal and the DTI were subsequently canceled and/or withdrawn. In the case of respondent GBS, the employees were likewise sufficiently informed and formal notices were served on the appropriate government offices, namely, DOLE, DTI, BIR, SSS, and the Municipality of Antipolo Rizal at least one month prior to March 8, 1993. The labor arbiter, the NLRC and the Court of Appeals were unanimous in their findings that private respondents closure of business was bona fide and that private respondents did not engage in the operation of run-away shops. We have always held that we are bound, in principle, by the factual findings of administrative officials, if supported by substantial evidence. Their factual findings are entitled not only to great weight and respect but even finality, unless petitioners are able to show that the labor arbiter and the NLRC arbitrarily
disregarded the evidence before them or misapprehended evidence of such nature as to compel a contrary conclusion if properly appreciated. We find no cogent reason to depart from the rule. Finally, since private respondents cessation and closure of business was lawful, there was no illegal dismissal to speak of. This fact negated the obligation to pay backwages. Instead private respondents were required to give separation pay, which they already did, to all their regular employees except petitioners Rolando Cortes, Herminigildo Justo, Guillermo Macaraeg, Felixberto Mirana, Arsenio Ortiz, Manuel Pranada, Ruben Saringan and Ramon Seraspi who refused to accept their separation pay. We conclude that petitioners have failed to show any reversible error on the part of the Court of Appeals in rendering the assailed decision. WHEREFORE, the petition is hereby DENIED. SO ORDERED.
North Davao Mining Corporation vs. NLRC G.R. No. 112546. March 13, 1996.* Labor Law; Termination; Separation Pay; Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses.As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcya fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at allalthough not required by lawand 12.5 days worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. Same; Same; Same; The law in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer.As this Court held in Manila Trading & Supply Co. vs. Zulueta, and reiterated in San Miguel Corporation vs. NLRC and later, in Allied Banking Corporation vs. Castro, (t)he law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. Corporation Law; Stockholders Liability; A stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation.Even if the national
government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stock-holder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced. Labor Law; National Labor Relations Commission; Finality of Findings of Facts; The Supreme Court is bound by the findings of fact of the National Labor Relations Commission as long as the findings are supported by substantial evidence.Anent the award of back wages and transportation allowance, the issues raised in connection therewith are factual, the determination of which is best left to the respondent NLRC. It is well settled that this Court is bound by the findings of fact of the NLRC, so long as said findings are supported by substantial evidence. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. The Government Corporate Counsel for petitioners. Rolando P. Aranas for private respondents. PANGANIBAN, J.:p Is a company which is forced by huge business losses to close its business, legally required to pay separation benefits to its employees at the time of its closure in an amount equivalent to the separation pay paid to those who were separated when the company was still a going concern? This is the main question brought before this Court in this petition for certiorari under Rule 65 of the Revised Rules of Court, which seeks to reverse and set aside the Resolutions dated July 29, 1993 1 and September 27, 1993 2 of the National Labor Relations Commission 3(NLRC) in NLRC CA No. M-00139593. The Resolution dated July 29, 1993 affirmed in toto the decision of the Labor Arbiter in RAB11-08-00672-92 and RAB-11-08-00713-92 ordering petitioners to pay the complainants therein certain monetary claims. The Resolution dated September 27, 1993 denied the motion for reconsideration of the said July 29, 1993 Resolution. The Facts Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the national government hold 81.8% of the common stock and 100% of the preferred stock of said company.4
Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the company's closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos (P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31, 1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20,392 billion pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days' pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days' pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent Labor Arbiter by respondent Wilfredo Guillema and 271 other separated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent. 5 On May 6, 1993, respondent Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complainants the following: (a) Additional separation pay of 17.5 days for every year of service; (b) Backwages equivalent to two (2) days a month times the number of years of service but not to exceed three (3) years; (c) Transportation allowance at P80 a month times the number of years of service but not to exceed three (3) years. The benefits awarded by respondent Labor Arbiter amounted to P10,240,517.75. Attorney's fees equivalent to ten percent (10%) thereof were also granted. 6 On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davao's motion for reconsideration was likewise denied. Hence, this petition. The Parties' Submissions and the Issues In affirming the Labor Arbiter's decision, respondent NLRC ruled that "since (North Davao) has been paying its employees separation pay equivalent to thirty (30) days pay for every year of service," knowing fully well that the law provides for a lesser separation pay, then such company policy "has ripened into an obligation," and therefore, depriving now the herein private respondent and others similarly situated of the same benefits would be discriminatory. 7 Quoting from Businessday Information Systems and Services, Inc. (BISSI) vs. NLRC, 8 it said that petitioners "may not pay separation benefits unequally for such
discrimination breeds resentment and ill-will among those who have been treated less generously than others." It also cited Abella vs. NLRC, 9 as authority for saying that Art. 283 of the Labor Code protects workers in case of closure of the establishment. To justify the award of two days a month in backwages and P80 per month of transportation allowance, respondent Commission ruled: As to the appellants' claim that complainants-appellees' time spent in collecting their wages at Tagum, Davao is not compensable allegedly because it was on official time can not be given credence. No iota of evidence has been presented to back up said contention. The same is true with appellants' assertion that the claim for transportation expenses is without basis since they were incurred by the complainants. Appellants should have submitted the payrolls to prove that complainants appellees were not the ones who personally collected their wages and/or the bus/jeep trip tickets or vouchers to show that the complainantsappellees were provided with free transportation as claimed. Petitioner, through the Government Corporate Counsel, raised the following grounds for the allowance of the petition: 1. The NLRC acted with grave abuse of discretion in affirming without legal basis the award of additional separation pay to private respondents who were separated due to serious business losses on the part of petitioner. 2. The NLRC acted with grave abuse of discretion in affirming without sufficient factual basis the award of backwages and transportation expenses to private respondents. 3. There is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of the law. and the following issues: 1. Whether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure. 2. Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. 3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred. The First Issue: Separation Pay To resolve this issue, it is necessary to revisit the provision of law adverted to by the parties in their submissions, namely, Art. 283 of the Labor Code, which reads as follows: Art. 283. 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 prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination 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 closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (emphasis supplied) The underscored portion of Art. 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses . . . ". Where, however, the closure was due to business losses as in the instant case, in which the aggregate losses amounted to over P20 billion the Labor Code does not impose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. Even the public respondents, in their Comment 10 filed by the Solicitor General, impliedly concede this point. However, respondents tenaciously insist on the award of separation pay, anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them. They rely on this Court's ruling in Businessday Information Systems and Services, Inc. (BISSI) vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial reverses, decided "as a retrenchment measure" to lay-off some employees on May 16, 1988 and gave them separation pay equivalent to one-half (1/2) month pay for every year of service. BISSI retained some employees in an attempt to rehabilitate its business as a trading company. However, barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether. Unlike the earlier terminated employees, the second batch received separation pay equivalent to a full month's salary for every year of service, plus a mid-year bonus. This Court ruled that "there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. . . ." In resolving the present case, it bears keeping in mind at the outset that the factual circumstances of BISSI are quite different from the current case. The Court noted that BISSI continued to suffer losses even after the retrenchment of the first batch of employees: clearly, business did not improve despite such drastic measure. That notwithstanding, when BISSI finally shut down, it could well afford to (and actually did) pay off its remaining employees with MORE separation benefits as compared with those earlier laid off; obviously, then, there was no reason for BISSI to skimp on separation pay for the first batch of discharged employees. That it was able to pay one-month separation benefit for employees at the time of closure of its business meant that it must have been also in a position to pay the same amount to those who were separated prior to closure. That it did not do so was a wrongful exercise of management prerogatives. That is why the Court correctly faulted it with "impermissible discrimination." Clearly, it exercised its management prerogatives contrary to "general principles of fair play and justice."
In the instant case however, the company's practice of giving one month's pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. This could not be said of BISSI. In the case of North Davao, it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood its cashflow literally dries up. Therefore, the fact that less separation benefits ware granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land. As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy a fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all although not required by law and 12.5-days worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. As this Court held in Manila Trading & Supply Co. vs. Zulueta, 11 and reiterated inSan Miguel Corporation vs. NLRC 12 and later, in Allied Banking Corporation vs. Castro, 13 "(t)he law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer." At this juncture, we note that the Solicitor General in his Comment challenges the petitioners' assertion that North Davao, having closed down, no longer has the means to pay for the benefits. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that "(i)t would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents' money claims." Such argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced. 14 From another angle, the national government is not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence. The Second and Back Wages and Transportation Allowance Third Issues:
Anent the award of back wages and transportation allowance, the issues raised in connection therewith are factual, the determination of which is best left to the respondent NLRC. It is well settled that this Court is bound by the findings of fact of the NLRC, so long as said findings are supported by substantial evidence 15. As the Solicitor General pointed out in his comment: It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12, 1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages (p. 109, Vol. 1, Record) Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Sec. 4. Place of payment. (a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. (b) xxx xxx xxx (Emphasis supplied) Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record), the Regional Director, Regional Office No. XI, Department of Labor and Employment, Davao City, ordered petitioner NDMC, among others, as follows: WHEREFORE, . . . . Respondent is further ordered to pay its workers salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte or whenever not possible, through the bank in Tagum, Davao del Norte as already been practiced subject, however to the provisions of Section 4 of Rule VIII, Book III of the rules implementing the Labor Code as amended.
Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly held that: From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 1/2 hours by travel and the risks in commuting all the time in collecting complainants' salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days. (p. 10, Decision; p. 207, Vol. 1, Record) On the contrary, it will be petitioners' burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their backwages and transportation expenses. Other than the bare denials of petitioners, the above findings stand uncontradicted. Indeed we are not at liberty to set aside findings of facts of the NLRC, absent any capriciousness, arbitrariness, or abuse or complete lack of basis. In Maya Farms Employees Organizations vs. NLRC, 16 , we held: This Court has consistently ruled that findings of fact of administrative agencies ad quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by SETTING ASIDE and deleting the award for "additional separation pay of 17.5 days for every year of service", and AFFIRMING it in all other aspects. No costs. SO ORDERED. National Federation of Labor vs. NLRC G.R. No. 127718. March 2, 2000.* Labor Law; Separation Pay; Agrarian Reform; An employer is not liable to pay separation pay where the cessation of its operation is caused by the compulsory acquisition by the government of its land for purposes of agrarian reform.It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of personnel as contemplated under the aforesaid article. When
the Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench. Same; Same; Same; Closure of Establishment; Statutory Construction; The closure of establishment contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the employer to close the business establishment as may be gleaned from the use of the word mayit does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees. Even assuming, arguendo, that the situation in this case were a closure of the business establishment called Patalon Coconut Estate of private respondents, still the petitioners/employees are not entitled to separation pay. The closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the employer to close the business establishment as may be gleaned from the wording of the said legal provision that The employer may also terminate the employment of any employee due to . . . . The use of the word may, in a statute, denotes that it is directory in nature and generally permissive only. The plain meaning ruie or verba legis in statutory construction is thus applicable in this case. Where the words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees. Same; Same; Same; Same; Where the closure of the establishment was due to the act of the government of acquiring the land to benefit the employees by making them agrarian lot beneficiaries, they are not entitled to separation pay.As earlier stated, the Patalon Coconut Estate was closed down because a large portion of the said estate was acquired by the DAR pursuant to the CARP. Hence, the closure of the Patalon Coconut Estate was not effected voluntarily by private respondents who even filed a petition to have said estate exempted from the coverage of RA 6657. Unfortunately, their petition was denied by the Department of Agrarian Reform. Since the closure was due to the act of the government to benefit the petitioners, as members of the Patalon Estate Agrarian Reform Association, by making them agrarian lot beneficiaries of said estate, the petitioners are not entitled to separation pay. The termination of their employment was not caused by the private respondents. The blame, if any, for the termination of petitioners employment can even be laid upon the petitioner-employees themselves inasmuch as they formed themselves into a cooperative, PEARA, ultimately to take over, as agrarian lot beneficiaries, of private respondents landed estate pursuant to RA 6657. The resulting closure of the business establishment, Patalon Coconut Estate, when it was placed under CARP, occurred through no fault of the private respondents. Same; Protection to Labor; Rule of Law; Although the Constitution provides for protection to labor, capital and management must also be protected under a regime of justice and the rule of law.While the Constitution provides that the State x x x shall protect the rights of workers and promote their welfare, that constitutional policy of providing full protection to labor is not intended to oppress or destroy capital and management. Thus, the capital and management sectors must also be protected under a regime of justice and the rule of law. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. Felizardo V. Cataluna, Jr. for petitioners.
Go & Go Law Offices for private respondents. DE LEON, JR., J.: Before us is a special civil action for certiorari to set aside and annul two (2) resolutions of the National Labor Relations Commission1 promulgated on April 24, 19962 and August 29, 19963 denying the award of separation pay to petitioners.1wphi1.nt The pertinent facts are as follows: Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate labor organization duly registered with the Department of Labor and Employment. They were employed by private respondents Charlie Reith and Susie Galle Reith, general manager and owner, respectively, of the 354-hectare Patalon Coconut Estate located at Patalon, Zamboanga City. Patalon Coconut Estate was engaged in growing agricultural products and in raising livestock. In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all covered agricultural lands for distribution to qualified farmer beneficiaries under the socalled Comprehensive Agrarian Reform Programme (CARP). Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian Reform Association (PEARA), a cooperative accredited by the Department of Agrarian Reform (DAR), of which petitioners are members and co-owners. As a result of this acquisition, private respondents shut down the operation of the Patalon Coconut Estate and the employment of the petitioners was severed on July 31, 1994. Petitioners did not receive any separation pay. On August 1, 1994, the cooperative took over the estate. A certain Abelardo Sangadan informed respondents of such takeover via a letter which was received by the respondents on July 26, 1994. Being beneficiaries of the Patalon Coconut Estate pursuant to the CARP, the petitioners became part-owners of the land.4 On April 25, 1995, petitioners filed individual complaints before the Regional Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC) in Zamboanga City, praying for their reinstatement with full backwages on the ground that they were illegally dismissed. The petitioners were represented by their labor organization, the NFL. On December 12, 1995, the RAB rendered a decision, the dispositive portion of which provides: WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing complainants' charge for illegal dismissal for lack of merit, but ordering respondents thru [sic] its owner-manager or its duly authorized representative to pay complainants' separation pay in view of the latter's cessation of operations or forced sale, and for 13th month differential pay in the amount, as follows, for: Names Separation 13th Mo. Pay Diff. Total Pay
Abelardo Sangadan Luciano Ramos Nestor Tilasan Gregorio Tilasan Joaquin Garcia Rogelio Sabaitan
P23,879.06 None 43,605.24 19,726.18 25,955.50 7,267.54 21,798.00 P711.25 401.46 None 1,211.25 1,211.25 63.10 911.25 None 477.35 1,011.25 611.25 1,011.25 1,011.25 1,211.25 392.50 None 1,211.25 861.25 1,011.25 849.65
P23,879.06 44,316.49 20,127.64 25,955.50 8,478.79 23,009.25 26,018.60 6,102.35 7,267.54 8,783.01 5,164.13 7,928.79 17,622.77 3,087.69 4,325.91 15,965.80 15,573.30 26,128.53 7,090.57 17,622.77 36,149.13
Castro Leonardo, Jr. 25,955.50 Pilardo Potenciano Ronillo Potenciano Jovencio Bartolome Santiago Sabaitan Juanito Concerman George Tumilas Patrocinio Domingo Avelino Francisco Meliton Sangadan Alexander Geronimo Joaquin Geronimo Ramil Macaso Lamberto Joven Cristino Garina 5,191.10 7,267.54 8,305.76 4,152.88 7,267.54 16,611.52 2,076.44 3,114.66 15,573.30 15,573.00 24,917.28 6,229.32 16,611.62 35,299.48
Sammy Gantaan Nacial Ustalan Edwin Ustalan Roland Potenciano Rody Concerman Elmer Domingo Aranquez Sangada Unding Boleng Eduardo Boleng Roberto Paneo Henry Sangadan Total Benefits
14,535.08 38,414.14 7,267.54 5,191.10 7,267.54 3,114.66 45,681.68 31,146.60 35,299.48 23,876.06 16,611.52
961.25 79.95 1,011.25 911.25 691.25 1,211.25 711.25 None 759.30 911.25 1,011.25
15,496.33 38,494.09 8,278.79 6,102.35 7,958.79 4,325.91 46,392.93 31,146.60 36,058.78 24,787.31 17,622.77 P586,774.22
FURTHER, complainants' claim for Muslim Holiday overtime pay and rest day pay should be dismissed for lack of merit, too.5 Appeal was taken by private respondents to public respondent NLRC.6 On April 24, 1996, the NLRC issued a resolution, the dispositive portion of which provides: WHEREFORE, the decision appealed from is hereby modified in favor of the following findings: 1) Respondents are not guilty of illegally dismissing complainants. Respondents' cessation of operation was not due to a unilateral action on their part resulting in the cutting off of the employment relationship between the parties. The severance of employer-employee relationship between the parties came about INVOLUNTARILY, as a result of an act of the State. Consequently, complainants are not entitled to any separation pay. 2) The award of 13th month pay differential is, however, Set Aside. Any award of 13th month pay differentials to complainants should be computed strictly based on their reduced pay, equivalent to six (6) hours work, Monday to Friday,
pursuant to what the parties agreed in the November 18, 1991 Compromise Agreement. SO ORDERED.7 Petitioners filed a motion for reconsideration which was denied by the NLRC in its resolution8 dated August 29, 1996. Hence, this petition. The issue is whether or not an employer that was compelled to cease its operation because of the compulsory acquisition by the government of its land for purposes of agrarian reform, is liable to pay separation pay to its affected employees. The petition is bereft of merit. Petitioners contend that they are entitled to separation pay citing Article 283 of the Labor Code which reads: Art. 283. 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 prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination 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 closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel.1wphi1 The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of personnel as contemplated under the aforesaid article. When the Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench. Even assuming, arguendo, that the situation in this case were a closure of the business establishment called Patalon Coconut Estate of private respondents, still the petitioners/employees are not entitled to separation pay. The closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the employer to close the business establishment as may be gleaned from the wording of the said legal provision that "The employer may also terminate the employment of any employee due to. . .".9 The use of the word "may," in a statute, denotes that it is directory in nature and generally permissive only. 10 The "plain meaning rule" or verba legis in statutory construction is thus applicable in this case. Where the words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. 11
In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees. As earlier stated, the Patalon Coconut Estate was closed down because a large portion of the said estate was acquired by the DAR pursuant to the CARP. Hence, the closure of the Patalon Coconut Estate was not effected voluntarily by private respondents who even filed a petition to have said estate exempted from the coverage of RA 6657. Unfortunately, their petition was denied by the Department of Agrarian Reform. Since the closure was due to the act of the government to benefit the petitioners, as members of the Patalon Estate Agrarian Reform Association, by making them agrarian lot beneficiaries of said estate, the petitioners are not entitled to separation pay. The termination of their employment was not caused by the private respondents. The blame, if any, for the termination of petitioners' employment can even be laid upon the petitioner-employees themselves inasmuch as they formed themselves into a cooperative, PEARA, ultimately to take over, as agrarian lot beneficiaries, of private respondents' landed estate pursuant to RA 6657. The resulting closure of the business establishment, Patalon Coconut Estate, when it was placed under CARP, occurred through no fault of the private respondents. While the Constitution provides that "the State . . . shall protect the rights of workers and promote their welfare", that constitutional policy of providing full protection to labor is not intended to oppress or destroy capital and management. Thus, the capital and management sectors must also be protected under a regime of justice and the rule of law. WHEREFORE, the petition is DISMISSED. The Resolutions of the National Labor Relations Commission dated April 24, 1996 and August 29, 1996 are hereby AFFIRMED. No costs.1wphi1.nt SO ORDERED. Callanta vs. Carnation Philippines, Inc. No. L-70615. October 28, 1986.* Labor Law; Ilegal Dismissal; Dismissal with out just cause of an employee from his employment, a violation of the Labor Code, but which does not amount to an offense under said Code; Offense, concept of.Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does Hot amount to an offense as understood under Article 291 of the Labor Coda In its broad sense, an offense is an illegal act which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty similar to those imposed by law for the punishment of a crime. It is in this sense that a general penalty clause is provided under Article 289 of the Labor Code which provides that x x x any violation of the provisions of this Code declared to be unlawful or penal in nature shall be punished with a fine of not iess than One Thousand Pesos [1,000.00] nor more than Ten Thousand Pesos [10,000.00], or imprisonment of not less than three [3] months nor more than three [3] years, or both such fine and imprisonment at the discretion of the court. Same; Same; Same; Termination of an employment with out just cause, not an unlawful practice; Reason.The confusion arises over the use of the term illegal dismissal which creates the impression that termination of an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of commission of any of the prohibited activities during strikes or lockouts under Article 265, unfair labor practices under Articles
248, 249 and 250 and illegal recruitment activities under Article 38, among others, which the Code itself deelares to be unlawfai, termination of an employment without just or valid cause is not categorized as an unlawful practice. Same; Same; Same; Reliefs principally sought by an employee illegally dismissed from employmentBesides, the reliefs principally sought by an employee who was illegally dismissed from his employment are reinstatement to his former position without loss of seniority rights and privileges, if any, backwages and damages, in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be ordered, with or without backwages. Same; Same; Same; Same; Reinstatement and backwages; Award of one, not a condition precedent to an award of the other; Backwages may be ordered without ordering reinstatementWhile ordinarily, reinstatement is a concomitant of backwages, the two are not necessarily complements, nor is the award of one a condition precedent to an award of the other. And, in proper cases, backwages may be awarded without ordering reinstatement. In either case, no penalty of fine nor imprisonment is imposed on the employer upon a finding of illegality in the dismissal. Same; Same; Same; Same; Backwages, not the principal cause of action in an illegal dismissal case, but the unlawful deprivation of ones employment committed by the empfoyer; Award of backwages, nature and concept of.It is true that the backwages sought by an illegally dismissed employee may be considered, by reason of its practical effect, as a money claim. However, it is not the principal cause of action in an illegal dismissal case but the unlawful deprivation of ones employment committed by the employer in violation of the right of an employee. Backwages is merely one of the reliefs which an iiiegaiiy dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the employer. The award thereof is not private compensation or damages but is in furtherance and effectuation of the public objectives of the Labor Code. Even though the practical effect is the enrichment of the individual, the award of backwages is not in redress of a private right, but, rather, is in the nature of a command upon the employer to make public reparation for his violation of the Labor Code. Same; Same; Prescription: Action for illegal dismissal prescribes in 4 years under the Civil Code; Action for damages due to separation from employment for alleged unjustifiable causes is one for injury to plaintiffand must be brought within 4 years.The case of Valencia vs. Cebu Portland Cement, et al, 106 PhiL 732, a 1959 case cited by petitioner, is applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this Court had occasion to hold that an action for damages involving a plaintiff separated from his employment for alleged unjustifiable causes is one for injury to the rights of the plaintiff, and must be brought within four [4] years. In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M. Fernando, sustained the stand of the Soiicitor General that the period of prescription mentioned under Article 281, now Article 292, of the Labor Code, refers to and is limited to money claims, all other cases of injury to rights of a workingman being governed by the Civil Code. Accordingly, this Court ruled that petitioner Marciana Santos, who sought reinstatement, had four [4] years within which to file her complaint for the injury to her rights as provided under Article 1146 of the Civil Code. Same; Same; Same; Four-year prescriptive period under Art. 1146 of the Civil Code applies by way of supplement to the Labor CodeIndeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under Article 1146 of the New Civil Code, applies by way of supplement, in the instant case. Same; Same; Same; Constitutional Law; Due Process; Property Right; Ones employment, profession, trade or calling, a property right; Right considered to be property within the
constitutionat pro~ tection of due process of law.It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that ones employment, profession, trade or calling is a property right, and the wrongful interferenee therewith is an actionable wrong. The right is considered to be property within the protection of a constitutional guaranty of due process of law. Same; Same; Same; Same; Action to contest legality ofones arbitrary dismissal constitutes an action predicated upon an injury to the rights of plaintiff under Art. 1146 of the Civil Code Clearly then, when one is arbitrarily and unjustly deprived of his job or means of iivelihood, the action instituted to contest the legality of ones dismissal frorn employment constitutes, in essence, an action predicated upon an injury to the rights of the plaintiff, as eontemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years. Same; Same; Same; Same; Strict application of Arts. 291 and292 of the Labor Code providing for a 3-year prescriptive period does not destroy enforcement of fundamental rights ofemployees; Articles 291 and 292 go to matters of remedy, not destruction of the fundamental right; Statute of limitations extinguish the remedy only.Even on the assumption that an action for illegal dismissal falls under the category of offenses or money claims under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive period, still, a strict application of said provisions will not destroy the enforcement of fundamental rights of the employees. As a statutory provision on limitations of actions, Articles 291 and 292 go to matters of remedy and not to the destruction of fundamental rights. As a general rule, a statute of limitation extinguishes the remedy only. Although the remedy to enforce a right may be barred, that right may be enf orced by some other available remedy which is not barred. Same; Same; Same; Same; Delay of complainant in filing case for illegal dismissal, with justifiable cause.More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal with the Regional office No. X, MOLE on July 5,1982. Same; Same; Alleged shortage of accountabilities of complainant should have been impartially investigated with due regard for due process; Outright dismissal too severe a penalty, for first offense.Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of actions. It did not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once and for all the issue of the legality of the dismissal, We find that petitioner, who has continuously served respondent Carnation for five [5] years was, under the attendant circumstances, arbitrarily dismissed from his employment. The alleged shortage in his accountabilities should have been impartially investigated with all due regard for due process in view of the admitted enmity between petitioner and E.L. Corsino, respondents auditor. Absent such an impartial investigation, the alleged shortage should not have been attended with such a drastic consequence as termination of the employment relationship. Outright ciisriiissal was too severe a penaity for a first offense, considering that the alleged shortage was explained to respondents Auditor, E.L. Corsino, in accordance with respondents accounting and auditing policies. Same; Same; Dismissal based on loss of trust and confidence arising from alleged misconduct of employee, not to be used as a shield to dismiss an employee arbitrarily; Reason. Admittedly, loss of trust and confidence arising from the same alleged misconduct is sufficient ground for dismissing an employee from his employment despite the dismissal of the crime case. However, it must not be indiscriminately used as a shield to dismiss an employee arbitrarily. For, who can stop the employer frorn filing all the charges in the books for the
simple exercise of it, and then hide behind the pretext of loss of confidence which can be proved by mere preponderance of evidence. Same; Same; Reinstatement of employee cannot be enforced due to supervening event; No law requiring a purchasing corporation to absorb the employees of the selling corporation; Award of backwages to 3 years.We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We are strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the reinstatement of petitioner to his former position without loss of seniority rights and privileges, a supervening event, which petitioner mentioned in his motion for early decision dated January 6,1986 that is, FILIPRO, Inc.,'s taking over the business of Carnation, has legally rendered the order of reinstatement difficult to enforce, unless there is an express agreement on assumption of iiabilities by the purchasing corporation, FILIPRO, Inc. Besides, there is no law requiring that the purchasing corporation shouid absorb the empioyees of the seiling corporation. In any case, the very concept of social justice dictates that petitioner shall be entitled to backwages of three [3] years. PETITION for certiorari to review the decision of the National Labor Relations Commission. The facts are stated in the opinion of the Court. Danilo L. Pilapil for petitioner. FERNAN, J.: The issue raised in this petition for certiorari is whether or not an action for illegal dismissal prescribes in three [3] years pursuant to Articles 291 and 292 of the Labor Code which provide: Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three [3] years. xxx xxx xxx Art. 292. Money Claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. xxx xxx xxx Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. [Carnation, for brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [51 years later or on June 1, 1979, respondent Carnation filed with the Regional Office No. X of the Ministry of Labor and Employment [MOLE], an application for clearance to terminate the employment of Virgilio Callanta on the alleged grounds of serious misconduct and misappropriation of company funds amounting to P12,000.00, more or less. Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said clearance application, petitioner Virgilio Callanta's employment with Carnation was terminated effective June 1, 1979.
On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional Office No. X, a complaint for illegal dismissal with claims for reinstatement, backwages, and damages against respondent Carnation. In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of petitioner's complaint alleging that the same is barred by prescription for having been filed more than three [3] years after the date of Callanta's dismissal. On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of Callanta's employment to be without valid cause. Respondent Carnation was therefore ordered to reinstate Virgilio Callanta to his former position with backwages of one [1] year without qualification including all fringe benefits provided for by law and company policy, within ten [10] days from receipt of the decision. It was likewise provided that failure on the part of respondent to comply with the decision shall entitle complainant to full backwages and all fringe benefits without loss of seniority rights. On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations Commission [NLRC] which in a decision dated February 25, 1985, 1 set aside the decision of the Labor Arbiter. It declared the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed. Thus: Records show that Virgilio Callanta was dismissed from his employment with respondent company effective June 1, 1979; and that on 5 July 1982, he filed the instant complaint against respondent for: Unlawful Dismissal with Backwages, etc. The provisions of the Labor Code applicable are: Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three [3] years. Art. 292. Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal" and "Backwages, etc." have already prescribed, the complaint therefore having been filed beyond the three-year period from accrual date. With this finding, there is no need to discuss the other issues raised in the appeal. WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET ASIDE and another one entered, dismissing the complaint. SO ORDERED. Hence, this petition, which We gave due course in the resolution dated September 18, 1985. 2 Petitioner contends that since the Labor Code is silent as to the prescriptive period of an action for illegal dismissal with claims for reinstatement, backwages and damages, the applicable law,
by way of supplement, is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive period for an action predicated upon "an injury to the rights of the plaintiff" considering that an action for illegal dismissal is neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291 and 292, respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a more serious violation of the rights of an employee as it deprives him of his means of livelihood; thus, it should correspondingly have a prescriptive period longer than the three 13] years provided for in "money claims." Public respondent, on the other hand, counters with the arguments that a case for illegal dismissal falls under the general category of "offenses penalized under this Code and the rules and regulations pursuant thereto" provided under Article 291 or a money claim under Article 292, so that petitioner's complaint for illegal dismissal filed on July 5, 1982, or three [3] years, one [1] month and five [5] days after his alleged dismissal on June 1, 1979, was filed beyond the three-year prescriptive period as provided under Articles 291 and 292 of the Labor Code, hence, barred by prescription; that while it is admittedly a more serious offense as it involves an employee's means of livelihood, there is no logic in assuming that it has a longer prescriptive period, as naturally, one who is truly aggrieved would immediately seek the redress of his grievance; that assuming arguendo that the law does not provide for a prescriptive period for the enforcement of petitioner's right, it is nevertheless beyond dispute that the said right has already lapsed into a stale demand; and that considering the seriousness of the act committed by petitioner, private respondent was justified in terminating the employment. We find for petitioner. Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an "offense" as understood under Article 291 of the Labor Code. In its broad sense, an offense is an illegal act which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty similar to those imposed by law for the punishment of a crime. 3 It is in this sense that a general penalty clause is provided under Article 289 of the Labor Code which provides that "... any violation of the provisions of this code declared to be unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos [P1,000.00] nor more than Ten Thousand Pesos [10,000.00], or imprisonment of not less than three [3] months nor more than three [3] years, or both such fine and imprisonment at the discretion of the court." [Emphasis supplied.] The confusion arises over the use of the term "illegal dismissal" which creates the impression that termination of an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of commission of any of the probihited activities during strikes or lockouts under Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under Article 38, among others, which the Code itself declares to be unlawful, termination of an employment without just or valid cause is not categorized as an unlawful practice. Besides, the reliefs principally sought by an employee who was illegally dismissed from his employment are reinstatement to his former position without loss of seniority rights and privileges, if any, backwages and damages, in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be ordered, with or without backwages. While ordinarily, reinstatement is a concomitant of backwages, the two are not necessarily complements, nor is the award of one a condition precedent to an award of the other. 4 And, in proper cases, backwages may be awarded without ordering reinstatement . In either case, no penalty of fine nor improsonment is imposed on the employer upon a finding of illegality in the dismissal. By the very nature of the reliefs sought, therefore, an action for illegal dismissal cannot be generally categorized as an "offense" as used under Article 291 of the Labor Code, which
according to public respondent, must be brought within the period of three[3] years from the time the cause of action accrued, otherwise, the same is forever barred. It is true that the "backwwages" sought by an illegally dismissed employee may be considered, by reason of its practical effect, as a "money claim." However, it is not the principal cause of action in an illegal dismissal case but the unlawful deprivation of the one's employment committed by the employer in violation of the right of an employee. Backwages is merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the employer. The award thereof is not private compensation or damages 5but is in furtherance and effectuation of the public objectives of the Labor Code. 6 even though the practical effect is the enrichment of the individual, the award of backwages is not inredness of a private right, but, rather, is in the nature of a command upon the employer to make public reparation for his violation of the Labor Code. 7 The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this Court had occasion to hold that an action for damages involving a plaintiff seperated from his employment for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be brought within four [4] years. 8 In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M. Fernando, sustained the sand of the Solicitor General that the period of prescription mentioned under Article 281, now Article 292, of the Labor Code, refers to and "is limited to money claims, an other cases of injury to rights of a workingman being governed by the Civil Code." Accordingly, this Court ruled that petitioner Marciana Santos, who sought reinstatement, had four [4] years within which to file her complaint for the injury to her rights as provided under Article 1146 of the Civil Code. Indeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under Article 1146 of the New Civil Code, applies by way of supplement, in the instant case, to wit: Art. 1146. The following actions must be instituted within four years. [1] Upon an injury to the lights of the plaintiff. xxx xxx xxx [Emphasis supplied] As this Court stated in Bondoc us. People's Bank and Trust Co., 9 when a person has no property, his job may possibly be his only possession or means of livelihood, hence, he should be protected against any arbitrary and unjust deprivation of his job. Unemployment, said the Court in Almira vs. B.F. Goodrich Philippines, 10 brings "untold hardships and sorrows on those dependent on the wage earners. The misery and pain attendant on the loss of jobs thus could be avoided if there be acceptance of the view that under all the circumstances of this case, petitioners should not be deprived of their means of livelihood." It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that one's employment, profession, trade or calling is a "property right," and the wrongful interference therewith is an actionable wrong. 11 The right is considered to be property within the protection of a constitutional guaranty of due process of law. 12 Clearly
then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years. In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3] years, one [1] month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979 which is well within the four [4]-year prescriptive period under Article 1146 of the New Civil Code. Even on the assumption that an action for illegal dismissal falls under the category of "offenses" or "money claims" under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive period, still, a strict application of said provisions will not destroy the enforcement of fundamental rights of the employees. As a statutory provision on limitations of actions, Articles 291 and 292 go to matters of remedy and not to the destruction of fundamental rights. 13 As a general rule, a statute of limitation extinguishes the remedy only. Although the remedy to enforce a right may be barred, that right may be enforced by some other available remedy which is not barred. 14 More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal with the Regional Office No. X, MOLE on July 5, 1982. Laches will not in that sense strengthen the cause of public respondent. Besides, it is deemed waived as it was never alleged before the Labor Arbiter nor the NLRC. Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of actions. It did not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once and for all the issue of the legality of the dismissal, We find that petitioner, who has continuously served respondent Carnation for five [5] years was, under the attendant circumstances, arbitrarily dismissed from his employment. The alleged shortage in his accountabilities should have been impartially investigated with all due regard for due process in view of the admitted enmity between petitioner and E.L. Corsino, respondent's auditor. 15 Absent such an impartial investigation, the alleged shortage should not have been attended with such a drastic consequence as termination of the employment relationship. Outright dismissal was too severe a penalty for a first offense, considering that the alleged shortage was explained to respondent's Auditor, E.L. Corsino, in accordance with respondent's accounting and auditing policies. The indecent haste of his dismissal from employment was, in fact, aggravated by the filing of the estafa charge against petitioner with the City Fiscal of Butuan City on June 22, 1981, or two [2] years after his questioned dismissal. After the case had remained pending for five [5] years, the Regional Trial Court of Agusan del Norte and Butuan City, Branch V finally dismissed the same provisionally in an order dated February 21, 1986 for failure of the prosecution's principal witness to appear in court. Admittedly, loss of trust and confidence arising from the same alleged misconduct is sufficient ground for dismissing an employee from his employment despite the dismissal of the criminal case. 16 However, it must not be indiscriminately used as a shield to dismiss an employee arbitrarily. 17 For, who can stop the employer from filing all the charges in the books for the simple exercise of it, and then hide behind the pretext of loss of confidence which can be proved by mere preponderance of evidence. We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We are strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the
reinstatement of petitioner to his former position without loss of seniority rights and privileges, a supervening event, which petitioner mentioned in his motion for early decision dated January 6, 1986 18 that is, FILIPRO, Inc.'s taking over the business of Carnation, has legally rendered the order of reinstatement difficult to enforce, unless there is an express agreement on assumption of liabilities 19 by the purchasing corporation, FILIPRO, Inc. Besides, there is no law requiring that the purchasing corporation should absorb the employees of the selling corporation. 20 In any case, the very concept of social justice dictates that petitioner shall be entitled to backwages of three [3] years. 21 WHEREFORE, respondent Carnation Philippines, Inc. is hereby ordered to pay petitioner Virgilio Callanta backwages for three [3] years without qualification and deduction. This decision is immediately executory. No costs. SO ORDERED.

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G.R. No. 147080. April 26, 2005.* CAPITOL MEDICAL CENTER, INC., petitioner, vs.

this Court, through Justice

G.R. No. 152048.

the Court issued this clarification:

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