023. North Davao Mining Corp. vs. NLRC _ 112546 _ March 13, 1996 _ Panganiban, J

6/17/2015 NorthDavaoMiningCorp.vs.NLRC:112546:March13,1996:Panganiban,J.:EnBanc

http://sc.judiciary.gov.ph/jurisprudence/1996/mar1996/112546.htm 1/8

[Syllabus]

ENBANC

[G.R.No.112546.March13,1996]

NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATIONTRUST,petitioners,vs.NATIONALLABORRELATIONSCOMMISSION,LABOR ARBITER ANTONIO M. VILLANUEVA and WILFREDOGUILLEMA,respondents.

DECISIONPANGANIBAN,J.:

Is a company which is forced by huge business losses to close its business, legallyrequired to pay separation benefits to its employees at the time of its closure in an amountequivalenttotheseparationpaypaidtothosewhowereseparatedwhenthecompanywasstilla going concern? This is the main question brought before this Court in this petition forcertiorariunderRule65of theRevisedRulesofCourt,whichseekstoreverseandsetasidethe Resolutions dated July 29, 1993[1] and September 27, 1993[2] of the National LaborRelationsCommision[3](NLRC)inNLRCCANo.M00139593.

TheResolution dated July 29, 1993 affirmed in tow the decision of the Labor Arbiter inRAB11080067292andRAB11080071392orderingpetitionerstopaythecomplainantsthereincertainmonetaryclaims.

The Resolution dated September 27, 1993 denied themotion for reconsideration of thesaidJuly29,1993Resolution.

TheFacts

PetitionerNorthDavaoMiningCorporation (NorthDavao)was incorporated in1974asa100%privatelyownedcompany.Later,thePhilippineNationalBank(PNB)becamepartownerthereofasa resultofaconversion intoequityofaportionof loansobtainedbyNorthDavaofromsaidbank.OnJune30,1986,PNBtransferredallitsloanstoandequityinNorthDavaoinfavorof thenationalgovernmentwhich,byvirtueofProclamationNo.50datedDecember8,1986,laterturnedthemovertopetitionerAssetPrivatizationTrust(APT).AsofDecember31,1990 the national government held 81.8% of the common stock and 100% of the preferredstockofsaidcompany.[4]

RespondentWilfredoGuillemaisoneamongseveralemployeesofNorthDavaowhowereseparated by reason of the companys closure on May 31, 1992, and who were thecomplainantsinthecasesbeforetherespondentlaborarbiter.

OnMay 31, 1992, petitioner North Davao completely ceased operations due to serious



business reverses. From 1988 until its closure in 1992, North Davao suffered net lossesaveragingthreebillionpesos(P3,000,000,000.00)peryear,foreachofthefiveyearspriortoitsclosure.Alltold,asofDecember31,1991,orfivemonthspriortoitsclosure,itstotalliabilitieshadexceededitsassetsby20.392billionpesos,asshownbyitsfinancialstatementsauditedby the Commission on Audit. When it ceased operations, its remaining employees wereseparatedandgiven theequivalentof12.5dayspay foreveryyearofservice,computedontheirbasicmonthlypay, inaddition to thecommutation tocashof theirunusedvacationandsick leaves. However, it appears that, during the life of the petitioner corporation, from thebeginningof itsoperationsin1981until itsclosurein1992, ithadbeengivingseparationpayequivalenttothirty(30)dayspayforeveryyearofservice.Moreover,inasmuchastheregionwhereNorthDavaooperatedwasplaguedbyinsurgencyandotherpeaceandorderproblems,the employees had to collect their salaries at a bank in Tagum,Davao del Norte, some 58kilometers from their workplace and about 2 hours travel time by public transportation thisarrangementlastedfrom1981upto1990.

Subsequently,acomplaintwasfiledwithrespondent laborarbiterbyrespondentWilfredoGuillemaand271otherseperatedemployeesfor:(1)additionalseparationpayof17.5daysforevery year of service (2) back wages equivalent to two days a month (3) transportationallowance (4) hazard pay (5) housing allowance (6) food allowance (7) postemploymentmedicalclearanceand(8)futuremedicalallowance,allofwhichamountedtoP58,022,878.31ascomputedbyprivaterespondent.[5]

OnMay6, 1993, respondentLaborArbiter renderedadecisionorderingpetitionerNorthDavaotopaythecomplainantsthefollowing:

(a)Additionalseparationpayof17.5daysforeveryyearofservice

(b)Backwagesequivalenttotwo(2)daysamonthtimesthenumberofyearsofservicebutnottoexceedthree(3)years

(c)TransportationallowanceatP80amonthtimesthenumberofyearsofservicebutnottoexceedthree(3)years.

ThebenefitsawardedbyrespondentLaborArbiteramountedtoP10,240,517.75.Attorneysfeesequivalenttotenpercent(10%)thereofwerealsogranted.[6]

Onappeal,respondentNLRCaffirmedthedecisionintoto.PetitionerNorthDavaosmotionforreconsiderationwaslikewisedenied.Hence,thispetition.

ThePartiesSubmissionsandtheIssues

InaffirmingtheLaborArbitersdecision,respondentNLRCruledthatsince(NorthDavao)hasbeenpayingitsemployeesseparationpayequivalenttothirty(30)dayspayforeveryyearof service, knowing fully well that the law provides for a lesser separation pay, then suchcompanypolicyhasripenedintoanobligation,andtherefore,deprivingnowthehereinprivaterespondent and others similarly situated of the same benefits would be discriminatory.[7]QuotingfromBusinessdayInformationSystemsandServices.Inc.(BISSI)vs.NLRC.[8]itsaidthat petitioners may not pay separation benefits unequally for such discrimination breedsresentmentandillwillamongthosewhohavebeentreatedlessgenerouslythanothers.ItalsocitedAbella vs. NLRC,[9] as authority for saying that Art. 283 of the Labor Code protects



workersincaseoftheclosureoftheestablishment.To justify the award of two days a month in backwages and P80 per month of

transportationallowance,respondentCommissionruled:

AstotheappellantsclaimthatcomplainantsappealleestimespentincollectingtheirwagesatTagum,Davaoisnotcompensableallegedlybecauseitwasonofficialtimecannotbegivencredence.Noiotaofevidencehasbeenpresentedtobackupsaidcontention.Thesameistruewithappellantsassertionthattheclaimfortransportationexpensesiswithoutbasissincetheywereincurredbythecomplainants.Appellantsshouldhavesubmittedthepayrollstoprovethatcomplainantsappelleeswerenottheoneswhopersonallycollectedtheirwagesand/orthebus/jeeptripticketsorvoucherstoshowthatthecomplainantsappelleeswereprovidedwithfreetransportationasclaimed.

Petitioner,throughtheGovernmentCorporateCounsel,raisedthefollowinggroundsfortheallowanceofthepetition:

1.TheNLRCactedwithgraveabuseofdiscretioninaffirmingwithoutlegalbasistheawardofadditionalseparationpaytoprivaterespondentswhowereseparatedduetoseriousbusinesslossesonthepartofpetitioner.

2.TheNLRCactedwithgraveabuseofdiscretioninaffirmingwithoutsufficientfactualbasistheawardofbackwagesandtransportationexpensestoprivaterespondents.

3.Thereisnoappeal,noranyplain,speedyandadequateremedyintheordinarycourseofthelaw.

andthefollowingissues:

1.Whetherornotanemployerwhosebusinessoperationsceasedduetoseriousbusinesslossesorfinancialreversesisobligedtopayseparationpaytoitsemployeesseparatedbyreasonofsuchclosure.

2.Whetherornottimespentincollectingwagesinaplaceotherthantheplaceofemploymentiscompensablenotwithstandingthatthesameisdoneduringofficialtime.

3.Whetherornotprivaterespondentsareentitledtotransportationexpensesintheabsenceofevidencethattheseexpenseswereincurred.

TheFirstIssue:SeparationPay

Toresolvethisissue,itisnecessarytorevisittheprovisionoflawadvertedtobythepartiesintheirsubmissions,namelyArt.283oftheLaborCode,whichreadsasfollows:

Art.283.Closureofestablishmentandreductionofpersonnel.Theemployermayalsoterminatetheemploymentofanyemployeeduetotheinstallationoflaborsavingdevices,redundancy,retrenchmenttopreventlossesortheclosingorcessationofoperationoftheestablishmentorundertakingunlesstheclosingisforthepurposeofcircumventingtheprovisionsofthisTitle,byservingawrittennoticeontheworkersandtheMinistryofLaborandEmploymentatleastone(1)monthbeforetheintendeddatethereof.Incaseofterminationduetotheinstallationoflaborsavingdevicesorredundancy,theworkeraffectedtherebyshallbeentitledtoaseparationpayequivalenttoatleasthisone(1)monthpayortoatleastone(1)monthpayforeveryyearofservice,whicheverishigher.Incaseofretrenchmenttopreventlossesandincasesofclosuresorcessationofoperationsofestablishmentorundertakingnotdueto



seriousbusinesslossesorfinancialreverses,theseparationpayshallbeequivalenttoone(1)monthpayoratleastonehalf()monthpayforeveryyearofservice,whicheverishigher.Afractionofatleastsix(6)monthsshallbeconsideredone(1)wholeyear.(italicssupplied)

The underscored portion of Art. 283 governs the grant of seperation benefits in case ofclosures or cessation of operation of business establishmentsNOT due to serious businesslossesorfinancialreversesxxx.Where,however,theclosurewasduetobusinesslossesasin the instant case, inwhich the aggregate losses amounted to overP20 billion the LaborCodedoesnotimposeanyobligationupontheemployertopayseparationbenefits,forobviousreasons. There is no need to belabor this point. Even the public respondents, in theirComment[10]filedbytheSolicitorGeneral,impliedlyconcedethispoint.

However, respondents tenaciously insist on theawardof separationpay,anchoring theirclaimsolelyonpetitionerNorthDavaos longstandingpolicyofgivingseparationpaybenefitsequivalent to 30 days pay, which policy had been in force in the years prior to its closure.Respondentscontendthat,bydenyingthesameseparationbenefitstoprivaterespondentandtheothers similarly situated, petitioners discriminatedagainst them.They rely on thisCourtsruling inBusinessday Information Systems and Services, Inc. (BISSI) vs. NLRC, (supra). Insaid case, petitionerBISSI, after experiencing financial reverses, decidedas a retrenchmentmeasuretolayoffsomeemployeesonMay16,1988andgavethemseparationpayequivalentto onehalf () month pay for every year of service. BISSI retained some employees in anattempt to rehabilitate its business as a trading company. However, barely two and a halfmonths later, these remaining employees were likewise discharged because the companydecidedtoceasebusinessoperationsaltogether.Unliketheearlierterminatedemployees,thesecond batch received separation pay equivalent to a full months salary for every year ofservice, plus amidyear bonus.ThisCourt ruled that therewas impermissible discriminationagainsttheprivaterespondentsinthepaymentoftheirseparationbenefits.Thelawrequiresanemployer to extend equal treatment to its employees. It may not, in the guise of exercisingmanagementprerogatives,grantgreaterbenefitstosomeandlesstoothers.xxx

In resolving the present case, it bears keeping in mind at the outset that the factualcircumstancesofBISSIarequitedifferent from thecurrentcase.TheCourtnoted thatBISSIcontinuedtosufferlossesevenaftertheretrenchmentofthefirstbatchofemployeesclearly,business did not improve despite such drastic measure. That notwithstanding, when BISSIfinallyshutdown,itcouldwellaffordto(andactuallydid)payoffitsremainingemployeeswithMOREseparationbenefitsascomparedwith thoseearlier laidoffobviously, then, therewasno reason forBISSI to skimponseparationpay for the first batchofdischargedemployees.Thatitwasabletopayonemonthseparationbenefitforemployeesatthetimeofclosureofitsbusinessmeantthatitmusthavebeenalsoinapositiontopaythesameamounttothosewhowereseparatedpriortoclosure.Thatitdidnotdosowasawrongfulexerciseofmanagementprerogatives. That is why the Court correctly faulted it with impermissible discrimination.Clearly,itexerciseditsmanagementprerogativescontrarytogeneralprinciplesoffairplayandjustice.

In the instant case however, the companys practice of giving onemonths pay for everyyearofservicecouldnolongerbecontinuedpreciselybecausethecompanycouldnotafforditanymore. Itwas forced to closedownonaccountofaccumulated lossesofoverP20billion.ThiscouldnotbesaidofBISSI.InthecaseofNorthDavao,itgave30daysseparationpaytoitsemployeeswhenitwasstillagoingconcernevenifitwasalreadylosingheavily.Asagoingconcern, itscashflowcouldstillhavesustainedthepaymentofsuchseparationbenefits.Butwhen a business enterprise completely ceases operations, i.e., upon its death as a goingbusinessconcern,itsvitallifeblooditscashflowliterallydriesup.Therefore,thefactthatless



separationbenefitsweregrantedwhenthecompanyfinallymet itsbusinessdeathcannotbecharacterizedasdiscrimination.Suchactionwasdictatednotbyadiscriminatorymanagementoption but by its complete inability to continue its business life due to accumulated losses.Indeed,onecannotsqueezebloodoutofadrystone.Norwateroutofparchedland.

As already stated, Art. 283 of the Labor Code does not obligate an employer to payseparationbenefitswhentheclosureisduetolosses.Inthecasebeforeus,thebasisfortheclaimof theadditional separationbenefit of 17.5days is allegeddiscrimination, i.e., unequaltreatmentofemployees,whichisproscribedasanunfairlaborpracticebyArt.248(e)ofsaidCode.Underthefactsandcircumstancesofthepresentcase,thegrantofalesseramountofseparationpaytoprivaterespondentwasdone,notbyreasonofdiscrimination,butrather,outofsheerfinancialbankruptcyafactthatisnotcontrolledbymanagementprerogatives.Stateddifferently,thetotalcessationofoperationduetomindbogglinglosseswasasuperveningfactthatpreventedthecompanyfromcontinuingtograntthemoregenerousamountofseparationpay.ThefactthatNorthDavaoatthepointofitsforcedclosurevoluntarilypaidanyseparationbenefitsatallalthoughnotrequiredbylawand12.5daysworthatthat,shouldhaveelicitedadmirationinsteadofcondemnation.Buttorequireittocontinuebeinggenerouswhenitisnolongerinapositiontodosowouldcertainlybeundulyoppressive,unfairandmostrevoltingtotheconscience.AsthisCourtheldinManilaTrading&SupplyCo.vs.Zulueta,[11]andreiteratedinSanMiguelCorporationvs.NLRC[12]andlater, inAlliedBankingCorporationvs.Castro,[13](t)he law, in protecting the rights of the laborer, authorizes neither oppression nor selfdestructionoftheemployer.

At this juncture, we note that the Solicitor General in his Comment challenges thepetitionersassertionthatNorthDavao,havingcloseddown,nolongerhasthemeanstopayforthebenefits.TheSolicitorGeneralstressesthatNorthDavaowasamongtheassetstransferredbyPNBtothenationalgovernment,andthatbyvirtueofProclamationNo.50datedDecember8,1986,theAPTwasconstitutedtrusteeofthisgovernmentasset.Hethenconcludesthat(i)twould,therefore,beincongruoustodeclarethattheNationalGovernment,whichshouldalwaysbe presumed to be solvent, could not pay now private respondents money claims. Suchargumentation iscompletelymisplaced.Even if thenational governmentownedor controlled81.8%ofthecommonstockand100%ofthepreferredstockofNorthDavao,itremainsonlyastockholder thereof,andunderexisting lawsandprevailing jurisprudence,astockholderasaruleisnotdirectly,individuallyand/orpersonallyliablefortheindebtednessofthecorporation.TheobligationofNorthDavaocannotbeconsideredtheobligationofthenationalgovernment,hence,whetherthelatterbesolventornotisnotmaterialtotheinstantcase.Therespondentshavenotshownthatthiscaseconstitutesoneoftheinstanceswherethecorporateveilmaybepierced.[14] From another angle, the national government is not the employer of privaterespondentandhiscocomplainants,sothereisnoreasontoexpectanykindofbailoutbythenationalgovernmentunderexistinglawandjurisprudence.

TheSecondandThirdIssues:BackWagesandTransportationAllowance

Anent the award of back wages and transportation allowance, the issues raised inconnection therewith are factual, the determination of which is best left to the respondentNLRC.ItiswellsettledthatthisCourtisboundbythefindingsoffactoftheNLRC,solongassaidfindingsaresupportedbysubstantialevidence.[15]

AstheSolicitorGeneralpointedoutinhiscomment:



Itisundisputedthatbecauseofsecurityreasons,fromthetimeofitsoperations,petitionerNDMCmaintaineditspolicyofpayingitsworkersatabankinTagum,DavaodelNorte,whichusuallytooktheworkersabouttwoandahalf(21/2)hoursoftravelfromtheplaceofworkandsuchtraveltimeisnotofficial.

RecordsalsoshowthatonFebruary12,1992,whenaninspectionwasconductedbytheDepartmentofLaborandEmploymentatthepremisesofpetitionerNDMCatAmacan,Maco,DavaodelNorte,itwasfoundoutthatpetitionershadviolatedlaborstandardslaw,oneofwhichistheplaceofpaymentofwages(p.109,Vol.1,Record).

Section4,RuleVIII,BookIIIoftheOmnibusRulesImplementingtheLaborCodeprovidesthat:

Section4.Placeofpayment.(a)Asageneralrule,theplaceofpaymentshallbeatorneartheplaceofundertaking.Paymentinaplaceotherthantheworkplaceshallbepermissibleonlyunderthefollowingcircumstances:

(1)Whenpaymentcannotbeeffectedatorneartheplaceofworkbyreasonofthedeteriorationofpeaceandorderconditions,orbyreasonofactualorimpendingemergenciescausedbyfire,flood,epidemicorothercalamityrenderingpaymentthereatimpossible

(2)Whentheemployerprovidesfreetransportationtotheemployeesbackandforthand

(3)Underanyanalogouscircumstancesprovidedthatthetimespentbytheemployeesincollectingtheirwagesshallbeconsideredascompensablehoursworked.

(b)xxxxxxxxx.

(Italicssupplied)

Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record), the RegionalDirector,RegionalOfficeNo.XI,DepartmentofLaborandEmployment,DavaoCity,orderedpetitionerNDMC,amongothers,asfollows:

WHEREFORE,xxx.RespondentisfurtherorderedtopayitsworkerssalariesattheplantsiteatAmacan,NewLeyte,Maco,DavaodelNorteorwhenevernotpossible,throughthebankinTagum,DavaodelNorteasalreadybeenpracticedsubject,howevertotheprovisionsofSection4ofRuleVIII,BookIIIoftherulesimplementingtheLaborCodeasamended.

Thus,publicrespondentLaborArbiterAntonioM.Villanuevacorrectlyheldthat:

Fromtheevidenceonrecord,wefindthatthehoursspentbycomplainantsincollectingsalariesatabankinTagum,DavaodelNorteshallbeconsideredcompensablehoursworked.ConsideringfurtherthedistancebetweenAmacan,MacotoTagumwhichis2hoursbytravelandtherisksincommutingallthetimeincollectingcomplainantssalaries,wouldjustifythegrantingofbackwagesequivalenttotwo(2)daysinamonthasprayedfor.

Corollarytotheabovefindings,andforequitablereasons,welikewiseholdrespondentsliableforthetransportationexpensesincurredbycomplainantsatP40.00roundtripfareduringpaydays.

(p.10,Decisionp.207,Vol.1,Record)



Onthecontrary, itwillbepetitionersburdenordutytopresentevidenceofcomplianceofthe law on labor standards, rather than for private respondents to prove that they were notpaid/providedbypetitionersoftheirbackwagesandtransportationexpenses.

Otherthanthebaredenialsofpetitioners,theabovefindingsstandsuncontradicted.Indeedwe are not at liberty to set aside findings of facts of theNLRC, absent any capriciousness,arbitrariness,orabuseorcompletelackofbasis.InMayaFarmsEmployeesOrganizationsvs.NLRC,[16]weheld:

ThisCourthasconsistentlyruledthatfindingsoffactofadministrativeagenciesandquasijudicialbodieswhichhaveacquiredexpertisebecausetheirjurisdictionisconfinedtospecificmattersaregenerallyaccordednotonlyrespectbutevenfinalityandarebindinguponthisCourtunlessthereisashowingofgraveabuseofdiscretion,orwhereitisclearlyshownthattheywerearrivedatarbitrarilyorindisregardoftheevidenceonrecord.

WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution bySETTINGASIDEanddeleting theaward foradditionalseparationpayof17.5days foreveryyearofservice,andAFFIRMINGitinallotheraspects.Nocosts.

SOORDERED.Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,

Kapunan,Mendoza,Francisco,andHermosisima,JJ.,concur.

[1]Rollo,pp.3345.[2]Rollo,pp.5152.[3] FifthDivision,CagayandeOroCity, composedofComm.OscarN.AbelIa, ponente,Pres.Comm.MusibM.

BuatandComm.LeonG.Gonzaga,Jr.[4]Rollo.pp.35.70and100.[5]Rollo,p.98.[6]Rollo,pp.3334.[7]Rollo,p.42.[8]221SCRA9,12(April5,1993).[9]152SCRA141,145(July20,1987).[10]Rollo,pp.96118.[11]69Phil.485,486487(Jan.30,1940).[12]115SCRA329(July20,1982).[13]156SCRA789,800(December22,1987).[14]ThisCourthaspiercedtheveilofcorporatefictioninnumerouscaseswhereitwasused,amongothers,toavoid

ajudgmentcredit(SibagatTimberCorp.vs.Garcia,216SCRA470[December11,1992]TanBoonBee&Co.,Inc.vs.Jarencio,163SCRA205[June30,1988])toavoidinclusionofcorporateassetsaspartoftheestateofadecedent(Ceasevs.CA,93SCRA483[October18,1979]) toavoid liabilityarisingfromdebt(Arcillavs.CA,215SCRA120[October23,1992]PhilippineBankofCommunicationvs.CA,195SCRA567[March22,1991])orwhenmadeuseofasashieldtoperpetratefraudand/orconfuselegitimateissues(Jacintovs.CA,198SCRA211[June6,1991])ortopromoteunfairobjectivesorotherwisetoshieldthem



(Villanuevavs.Adre,172SCRA876[April27,1989]).[15]WyethSuacoLaboratories,Inc.vs.NationalLaborRelationsCommission,219SCRA356(March2,1993).[16]239SCRA508,512(December28,1994).

Documents

023. North Davao Mining Corp. vs. NLRC _ 112546 _ March 13, 1996 _ Panganiban, J