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11th Session LS

Notes: Substantive and Procedural due process a) Legality of the ground as provided under Art. 282;b) Legality of the manner of dismissal observance of the procedural

requirements. (due process).(Aurelio vs. NLRC, 221 SCRA 432 [1993]); Shoemart, vs. NLRC 176 SCRA385 [1989])

Post-Wenphil cases. (Wenphil Corp. Vs. NLRC G. R. No. 80587, Feb. 8, 1989.Reversed old doctrine that although dismissal is for just cause or authorized cause,failure to comply with the twin notice requirement would make dismissal illegal.

In Wenphhil this was abandoned. The dismissal was declared valid but theemployer was imposed a sanction like payment of amount equivalent to one monthsalary of employee.

Facts: Roberto Mallari was hired by petitioner on 18 January 1984 as a crewmember ot its Cubao Branch. At around 2:30 P.M. May 20, 1985 Mallari had analtercation with Job. Barrameda. Both were suspended the following morning. In theafternoon of the same day the operations manager issued a memorandumdismissing Mallari in accordance with the companys personnel manual.Memorandum was served on Mallari on 25 May 1985.

Private respondent filed a complaint for unfair labor practice, illegal suspension, andillegal dismissal. On Dec. 3, 1986, the labor arbiter dismissed the case.

Petitioner appealed to the NLRC. On October 16, 1987 NLRC set aside decision oflabor arbiter and ordered reinstatement of complainant to former position withoutloss of seniority and other related benefits and one year backwages withoutqualification and deduction.

Employer filed petition for certiorari with preliminary injunction/restraining order.Dec. 2, 1987 Court issued restraining order after requiring employer to post abond in the amount of PhP 20,000.00.

The main thrust of the petition is that under the Personnel Manual of petitioner which had been readand understood by private respondent, private respondent waived his right to the investigation. It isprovided therein that -

INVESTIGATION

If the offense is punishable with a penalty higher than suspension for fifteen (15)days, upon the request of the erring employee, there shall be convened aninvestigation board composed of the following

1. The Parlor Manager or Supervisor on duty when the incident occurred.

2. The General Manager or the Assistant Manager.

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The investigation board shall discuss the merits of the case and shall issue a ruling,which shall be final and conclusive. (p. 3, Personnel Manual: Emphasis supplied).

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The Court holds that the policy of ordering the reinstatement to the service of an employee withoutloss of seniority and the payment of his wages during the period of his separation until his actualreinstatement but not exceeding three (3) years without qualification or deduction, when it appearshe was not afforded due process, although his dismissal was found to be for just and authorizedcause in an appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be highly prejudicial to the interests of the employer to impose on him the servicesof an employee who has been shown to be guilty of the charges that warranted his dismissal fromemployment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable,remains in the service.

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However, the petitioner must nevertheless be held to account for failure to extend to privaterespondent his right to an investigation before causing his dismissal. The rule is explicit as abovediscussed. The dismissal of an employee must be for just or authorized cause and after due

process. 5 Petitioner committed an infraction of the second requirement. Thus, it must be imposed asanction for its failure to give a formal notice and conduct an investigation as required by law beforedismissing petitioner from employment. Considering the circumstances of this case petitioner mustindemnify the private respondent the amount of P1,000.00. The measure of this award depends onthe facts of each case and the gravity of the omission committed by the employer.

WHEREFORE, the petition is GRANTED. The questioned decision of the public respondent NLRCdated October 16, 1987 for the reinstatement with back wages of private respondent is REVERSED

AND SET ASIDE, and the decision of the labor arbiter dated December 3, 1986 dismissing thecomplaint is revived and affirmed, but with the modification that petitioner is ordered to indemnifyprivate respondent in the amount of P1,000.00. The restraining order issued by this Court onDecember 2, 1987 is hereby made permanent and the bond posted by petitioner is cancelled. Thisdecision is immediately executory.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Sarmiento, Grio-Aquino,Medialdea and Regalado, JJ., concur.

Separate Opinions

MELENCIO-HERRERA, J., concurring and dissenting:

I, too, share the majority view that private respondent is not entitled to reinstatement and backwagesfor having been terminated for cause.

Like Justice Cortes, however, it is my view that private respondent-employee has not been denieddue process. But even if petitioner-employer had failed to comply with the requirements ofinvestigation and hearing, I believe with Justice Padilla that it is not an indemnity that petitioner

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should be made to pay but rather separation pay in such amount as may be justified under thecircumstances of the case, not out of right, but to cushion the impact of his loss of employment. infact, this is the practice presently being followed by the National Labor Relations Commission.

PADILLA, J., concurring and dissenting:

I concur with the majority opinion that (1) the private respondent (employee) is not entitled toreinstatement and backwages as it was clearly found by the Labor Arbiter that he was guilty of gravemisconduct and insubordination and (2) the petitioner (employer) failed to comply with therequirements of administrative due process in not having given the employee, before his termination,the notice and hearing required by law.

I am of the view, however, that for the employer's omission he should be made to pay the separatedemployee a separation pay (instead of indemnity) in the amount of P1,000.00.

"Indemnity" may connote -

The obligation of a person to make good any loss or damage another has incurred or

may-incur by acting at his request or for his benefit.

That which is given to a person to prevent his suffering a damage. (Shurdut MillSupply Co. v. Central Azucarera del Danao, 44037-R, December 19, 1979; Cited inPhilippine Law Dictionary, 3rd Ed., F.B. Moreno, p. 463)

while "separation pay" is pay given to an employee on the occasion of his separation fromemployment in order to assuage even a little the effects of loss of employment.

CORTES, J., concurring and dissenting opinion:

I concur with the majority that a case for illegal dismissal has not been established. However, my

reading of the case reveals no denial of due process, hence there is no basis for the award of ONETHOUSAND PESOS (P1,000.00) as indemnity in favor of private respondent. On the other hand, ifthe P1,000.00 is imposed as a sanction in the form of administrative penalty for failure of petitionerto comply strictly with duly promulgated regulations implementing the Labor Code, the amount ifauthorized, should form part of the public funds of the government.

Failure to qualify as regular employee

a) International Catholic Migration Committee vs. NLRC, 169 SCRA 606[1989])

Abandonment as ground for termination to constitute a valid cause for termination

must be a deliberate unjustified refusal of the employee to resume his employment.(Nueva Ecija Electric Cooperative vs. Minister of Labor, 184 SCRA 25 [1990]),coupled with a clear absence of any intention of returning to his or her work (C.Planas Commercial vs. NLRC, 303 SCRA 49 [1999]).

It is settled that while probationary employees do not enjoy permanent status, they are accorded theconstitutional protection of security of tenure. They may only be terminated for just cause or whenthey fail to qualify as regular employees in accordance with reasonable standards made known tothem by the employer at the time of their engagement. 16 This constitutional protection, however,

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ends upon the expiration of the period provided for in their probationary contract of employment.Thereafter, the parties are free to renew the contract or not. 17

The petitioners themselves admit that upon their request the effective date of their separation wasdeferred from 13 June 1992 to 20 June 1992. The latter date apparently coincided with theexpiration of the six-month probationary period. This development has rendered moot the question

of whether there was a just cause of the dismissal of the petitioners other than Perla Cumpay andVirginia Etic.

A different conclusion would have to be reached with respect to Perla Cumpay and Virginia Etic.They were dismissed on 4 May 1992 for having allegedly abandoned their work. It is settled that toconstitute abandonment, there must be a clear and deliberate intent to discontinue onesemployment, without deliberate intent to discontinue one's employment, without any intention ofreturning. 18 In this case, the private respondent not only failed to prove such intent, it as well violatedthe due process rule in dismissal of employees. The requirements of lawful dismissal of anemployee by his employer are two-fold, viz., notice and hearing. 19 These requirements constitute theessential elements of due process. 20 These requirements not having been met with respect toCumpay and Etic, their dismissal was, consequently, illegal.

It results, therefore, that only petitioners Perla Cumpay and Virginia Etic were entitled toreinstatement and back wages. Nonetheless, considering that their probationary employment wouldhave similarly expired six months after commencement, reinstatement is no longer feasible.

WHEREFORE, the instant petition is partly GRANTED. The challenged resolutions of publicrespondent National Labor Relations Commission (Fifth Division) of 2 August 1993 and 14 October1993 in NLRC Case No. M-001378-93 are hereby MODIFIED; and as modified, private respondentSuper Mahogany Plywood Corporation is further ordered to pay petitioners Perla Cumpay andVirginia Etic their backwages corresponding to the period from 4 May 1992 up to the expiration oftheir probationary employment contracts.

No pronouncements as to costs in this instance.

Filing of a complaint for illegal dismissal negates employers theory ofabandonment. (Rizada vs. NLRC 315 SCRA 316 [1999])

We fully agree with the respondent courts ratiocination on the illegality of Vigans dismissal, to wit:15

"The basic issue is whether Vigans employment was terminated by illegal dismissal or byabandonment of work, and We hold that this was a case of illegal dismissal.

Shopworn is the rule on abandonment that the immediate filing of a case for illegal dismissal

negates the same. Mark that Vigan promptly filed this suit for illegal dismissal when her attempts toenter the premises of her workplace became futile and the efforts to bar and eject her becameunmistakable. In the more recent case of Rizada vs. NLRC (G.R. No. 96982, September 21, 1999),the Supreme Court reiterated anew the hoary rule that:

"To constitute abandonment two elements must concur (1) the failure to report for work or absencewithout valid or justifiable reason, and (2) a clear intention to sever the employer-employeerelationship, with the second element as the more determinative factor and being manifested bysome overt acts. Abandoning ones job means the deliberate, unjustified refusal of the employee to

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resume his employment and the burden of proof is on the employer to show a clear and deliberateintent on the part of the employee to discontinue employment.

Abandonment is a matter of intention and cannot be lightly inferred, much less legally presumedfrom certain equivocal acts. (Shin Industrial v. National Labor Relations Commission, 164 SCRA 8).

An employee who forthwith took steps to protest his dismissal cannot be said to have abandoned hiswork." (Toogue v. National Labor Relations Commission, 238 SCRA 241), as where the employeeimmediately filed a complaint for illegal dismissal to seek reinstatement (Tolong Aqua Culture Corp.,et al. V. National Labor Relations Commission, G.R. 122268, November 12, 1996) (emphasissupplied).

Note that in the instant case Vigan was even pleading to be allowed to work but she was preventedby the guards thereat upon the orders of Danilo Litonjua. These are disclosed by her letters(Annexes "F", "G", "K", "Q", "R" and "U", pp. 82, 83, 87, 93, 94 & 97, rollo), the entries in her timecards (Annexes "P", "S", "W" and "X", pp. 92, 95, 99 & 100, rollo) and her compliance when requiredto see a psychiatrist (Annex "H", p. 84, rollo). On the other hand there is complete silence from theLitonjuas on these matters, including on the collective manifesto of several employees against

Danilo Litonjua and his highhanded ways (Annex "I", p. 85). They chose to ignore material andtelling points. They even alleged that Vigan refused to comply with their request for her to havemedical examination (Comment, pp. 164-171, rollo and Memorandum for the Respondents, pp. 215-222, rollo), an unmitigated falsity in the face of clear proofs that she complied with their directive andwas given a clean bill of mental health by a reputable psychiatrist of their choice.

For emphasis, We shall quote with seeming triteness the dictum laid down in Mendoza vs. NLRC(supra) regarding the unflinching rule in illegal dismissal cases:

"that the employer bears the burden of proof. To establish a case of abandonment, theemployer must prove the employees deliberate and unjustified refusal to resumeemployment without any intention of returning. . .

mere absence from work, especially where the employee has been verbally told not toreport, cannot by itself constitute abandonment. To repeat, the employer has the burden ofproving overt acts on the employees part which demonstrate a desire or intention toabandon her work"

The NLRC had erred in shifting the onus probandi to Vigan in the charge of abandonment againsther, while the Litonjuas failed to discharge their burden. Though they may not have verbally toldVigan not to report for work but the act of ordering the guards not to let her in was just as clear anotice. Vigans plight was akin to that of the truck helper in the case of Masagana ConcreteProducts, et al. vs. NLRC (G.R. No. 106916, September 3, 1999) who was likewise prevented fromcoming to work.

While there was no formal termination of his services, Marias, was constructively dismissed whenhe was accused of tampering the "vale sheet" and prevented from returning to work. Constructivedismissal does not always involve forthright dismissal or diminution in rank, compensation, benefitand privileges. For an act of clear discrimination insensibility or disdain by an employer may becomeso unbearable on the part of the employee that it could foreclose any choice by him except to foregohis continued employment. In this case, Marias had to resign from his job because he wasprevented from returning back to work unless he admitted his mistake in writing and he was notgiven any opportunity to contest the charge against him. It is a rule often repeated thatunsubstantiated accusation without anything more are not synonymous with guilt and unless a clear,

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valid, just or authorized ground for dismissing an employee is established by the employer thedismissal shall be considered unfounded.

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An employee entitled to immediate reinstatement per Labor Arbiters order but

refuses the reinstatement, not deemed to have abandoned job. (Jardin Davis vs.NLRC, 225 SCRA 757 [1993])

When JDI filed its first petition forcertiorari(in G.R. No. 103720) with this Court on 14 February1992, assailing the 17 October 1991 decision of NLRC, it also raised, as an added argument on thealleged abandonment of work by Salutin, the fact that he was gainfully employedelsewhere. 13Considering that this matter was thus already taken up by the petitioner in its firstpetition forcertiorari, which this Court dismissed with finality, the petitioner should really now bebarred from invoking anew that issue in this present (second) petition.

Be that as it may, the same fate of dismissal is still inevitable. Although this Court is not a trier offacts, it may still wade through the records of a case if only to prevent any possible misgiving in its

ultimate disposition.14

The petitioner's evidence to establish Salutin's supposed abandonment ofwork is the certification of employment issued by King's Enterprises at the request of hereinpetitioner to the effect that Salutin had indeed been employed by Monsato Philippines, Inc., duringthe period from 01 September to 31 December 1991. Is this enough? What we have heretofore saidis this

For abandonment to constitute a valid cause for termination of employment, there mustbe a deliberate unjustified refusal of the employee to resume his employment. Thisrefusal must be clearly shown. Mere absence is not sufficient; it must be accompanied byovert acts pointing to the fact that the employee simply does not want to work anymore. 15

Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts.In this instance, however, certain uncontroverted facts show just exactly the opposite. Hence, Salutindid report, as directed, on 24 September 1991, but that he could not stay long because he was ailingat that time; he, although perhaps belatedly made, did seek medical consultation on 7 November1991, at the Corazon Locsin Montelibano Memorial Regional Hospital, for "peptic ulcer"; and on 11December 1991, he did, in fact, manifest his desire to assume his work with the petitioner.

This Court's resolution of 26 February 1992, denying the petition in G.R. No. 103720, became finaland executory on 19 June 1992. Respondent Salutin's interim employment, stressed by thepetitioner, did not stain the picture at all. Here, we second the well-considered view of NLRC, thus

The order of immediate reinstatement pending appeal, in cases of illegal dismissal isan ancillary relief under R.A. 6715 granted to a dismissed employee to cushion himand his family against the impact of economic dislocation or abrupt loss of earnings.

If the employee chooses not to report for work pending resolution of the case appeal,he foregoes such a temporary relief and is not paid of his salary. The finaldetermination of the rights and obligations respectively of the parties is the ultimateand final resolution of this Commission.

WHEREFORE, the petition is hereby DISMISSED. The questioned resolutions of the National LaborRelations Commission are AFFIRMED, and the temporary restraining order issued by this Court ishereby LIFTED.

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SO ORDERED.

Feliciano, Bidin, Romero and Melo, JJ., concur.

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When closure is due to serious business losses or financial reverses, financialbankruptcy, not obliged to pay separation pay. (North Davao Mining & DevelopmentCorporation vs. NLRC, 254 SCRA 721 [1996])

G.R. Nos. 178222-23 September 29, 2010

MANILA MINING CORP. EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERSCHAPTER, SAMUEL G. ZUIGA, in his capacity as President, Petitioners,vs.MANILA MINING CORP. and/or ARTEMIO F. DISINI, President, RENE F. CHANYUNGCO, (SVP-Treasurer), RODOLFO S. MIRANDA, (VP-Controller), VIRGILIO MEDINA (VP), ATTY.CRISANTO MARTINEZ (HRD), NIGEL TAMLYN (Resident Manager), BRYAN YAP (VP), FELIPE

YAP (Chairman of the Board), and the NATIONAL LABOR RELATIONS COMMISSION (FIRSTDIVISION), Respondents.

ARTICLE 283. Closure of establishment and reduction of personnel. - The employer may alsoterminate 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 theestablishment or undertaking unless the closing is for the purpose of circumventing the provisions ofthis Title, by serving a written notice on the workers and the Ministry of Labor and Employment atleast one (1) month before the intended date thereof. In case of termination due to the installation oflabor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation payequivalent 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 financialreverses, 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 beconsidered one (1) whole year.

Said provision is emphatic that an employee, who was dismissed due to cessation of businessoperation, is entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2)month pay for every year of service, whichever is higher. And it is jurisprudential that separation payshould also be paid to employees even if the closure or cessation of operations is not due tolosses.25ten.lihpwal

The Court is not impressed with the claim that actual severe financial losses exempt MMC frompaying separation benefits to complainants. In the first place, MMC did not appeal the decision of theCourt of Appeals which affirmed the NLRCs award of separation pay to complainants. MMCs failurehad the effect of making the awards final so that MMC could no longer seek any other affirmativerelief. In the second place, the non-issuance of a permit forced MMC to permanently cease itsbusiness operations, as confirmed by the Court of Appeals. Under Article 283, the employer canlawfully close shop anytime as long as cessation of or withdrawal from business operations is bonafide in character and not impelled by a motive to defeat or circumvent the tenurial rights ofemployees, and as long as he pays his employees their termination pay in the amountcorresponding to their length of service.26The cessation of operations, in the case at bar is of such

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nature. It was proven that MMC stopped its operations precisely due to failure to secure permit tooperate a tailings pond. Separation pay must nonetheless be given to the separated employees.

Finding no cogent reason to disturb its ruling, we affirm the Decision of the Court of Appeals.

BASED ON THE FOREGOING, the petition is DENIED. The Decision of the Court of Appealsis AFFIRMED. No costs.

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Burden of proof upon employer to show compliance with the twin requirements ofnotices and hearing. (Viola Cruz vs. NLRC, 324 SCRA770 [2000]) Farrol v. Court ofAppeals, 325 SCRA 331 [2000]}; Savellana vs. I.T. [International] Corporation, 356SCRA 451 [2001]

G.R. No. 110017 January 2, 1997 - RODOLFO FUENTES, et al., vs. NATIONAL LABORRELATIONS COMMISSION, 5TH DIVISION, CAGAYAN DE ORO CITY, AGUSAN PLANTATIONINC., AND/OR CHANG CHEE KONG, respondents.

BELLOSILLO, J.:

The State is bound under the Constitution to afford full protection to labor and whenconflicting interests of labor and capital are to be weighed on the scales of social

justice the heavier influence of the latter should be counterbalanced with thesympathy and compassion the law accords the less privileged workingman. This isonly fair if the worker is to be given the opportunity and the right to assert anddefend his cause not as a subordinate but as part of management with which hecan negotiate on even plane. Thus labor is not a mere employee of capital but itsactive and equal partner. 1

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On 31 October 1990 petitioners filed with the DOLE office in Cagayan de Oro City a complaint forillegal dismissal with prayer for reinstatement, backwages and damages against private respondentAgusan Plantation, Inc., and/or Chang Chee Kong. In their answer respondents denied theallegations of petitioners and contended that upon receipt of instructions from the head office inSingapore to implement retrenchment, private respondents conducted grievance conferences ormeetings with petitioners' representative labor organization, the Association of Trade Unions throughits national president Jorge Alegarbes, its local president and its board of directors. Privaterespondents also contended that the 30-day notices of termination were duly sent to petitioners.

We sustain petitioners. The ruling of the Labor Arbiter that there was no valid retrenchment is

correct. Article 283 of the Labor Code clearly states:

Art. 283. Closure of establishment and reduction of personnel. The employer may alsoterminate 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 theestablishment or undertaking unless the closing is for the purpose of circumventing theprovisions of the title, by serving a written notice on the workers and the Ministry of Laborand Employment at least one (1) month before the intended date thereof. In case oftermination due to the installation of labor-saving devices or redundancy, the worker affected

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thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or toat least one (1) month pay for every year of service, whichever is higher. In case ofretrenchment to prevent losses and in case of closure or cessation of operations ofestablishment or undertaking not due to serious business losses or financial reverses, theseparation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month payfor every year of service, whichever is higher. A fraction of at least six (6) months shall be

considered one (1) whole year.

Under Art. 283 therefore retrenchment may be valid only when the following requisites are met: (a) itis to prevent losses; (b) written notices were served on the workers and the Department of Laborand Employment (DOLE) at least one (1) month before the effective date of retrenchment; and, (c)separation pay is paid to the affected workers.

The closure of a business establishment is a ground for the termination of the services of anemployee unless the closing is for the purpose of circumventing pertinent provisions of the LaborCode. But while business reverses can be a just cause for terminating employees, they must besufficiently proved by the employer. 2

In the case before us, private respondents merely alleged in their answer and position paper thatafter their officials from the head office had visited the plantation respondent manager Chang CheeKong received a letter from the head office directing him to proceed immediately with the terminationof redundant workers and staff, and change the operations to contract system against directemployment. They also alleged that after five (5) years of operations, the return of investments ofrespondent company was meager; that the coup attempt in August 1987 as well as that ofDecember 1989 aggravated the floundering financial state of respondent company; that the financiallosses due to lack of capital funding resulted in the non-payment of long-overdue accounts; that theuntimely cut in the supply of fertilizers and manuring materials and equipment parts delayed thepayment of salaries and the implementation of weekly job rotations by the workers. Except for theseallegations, private respondents did not present any other documentary proof of their alleged losseswhich could have been easily proven in the financial statements which unfortunately were notshown.

There is no question that an employer may reduce its work force to prevent losses. However, theselosses must be serious, actual and real. 3 Otherwise, this ground for termination of employmentwould be susceptible to abuse by scheming employers who might be merely feigning losses in theirbusiness ventures in order to ease out employees. 4

Indeed, private respondents failed to prove their claim of business losses. What they submitted tothe Labor Arbiter were mere self-serving documents and allegations. Private respondents neveradduced evidence which would show clearly the extent of losses they suffered as a result of lack ofcapital funding, which failure is fatal to their cause.

As regards the requirement of notices of termination to the employees, it is undisputed that the

Notice of Retrenchment was submitted to the Department of Labor and Employment on 12September 1990.

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Culled from the above data, the termination of petitioners could not have validly taken effect eitheron 25 or 30 September 1990. The one-month notice of retrenchment filed with the DOLE and servedon the workers before the intended date thereof is mandatory. Private respondents failed to complywith this requisite. The earliest possible date of termination should be 12 October 1990 or one (1)

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month after notice was sent to DOLE unless the notice of termination was sent to the workers laterthan the notice to DOLE on 12 September 1990, in which case, the date of termination should be atleast one (1) month from the date of notice to the workers. Petitioners were terminated less than amonth after notice was sent to DOLE and to each of the workers.

We agree with the conclusion of the Labor Arbiter that the termination of the services of petitioners

was illegal as there was no valid retrenchment. Respondent NLRC committed grave abuse ofdiscretion in reversing the findings of the Labor Arbiter and ruling that there was substantialcompliance with the law. This Court firmly holds that measures should be strictly implemented toensure that such constitutional mandate on protection to labor is not rendered meaningless by anerroneous interpretation of applicable laws.

We uphold the monetary award of the Labor Arbiter for: (a) the balance of the separation paybenefits of petitioners equivalent to fifteen (15) days for every year of service after finding thatreinstatement is no longer feasible under the circumstances, and (b) the salary differentials forcomplainants who were relieved during the pendency of the case before the Labor Arbiter and fullback wages for the rest of the complainants. This is in accord with Art. 279 of the Labor Code asamended by R.A. 6715 under which petitioners who were unjustly dismissed from work shall be

entitled to full back wages inclusive of allowances and other benefits or their monetary equivalentcomputed from the time their compensation was withheld up to the date of this decision.

WHEREFORE, the Petition is GRANTED. The decision of the Labor Arbiter of 27 March 1992granting petitioners their claim for the balance of their separation pay benefits equivalent to fifteen(15) days for every year of service, and salary differentials for complainants who were relievedduring the pendency of the case before the Labor Arbiter, and full back wages for the rest of thecomplainants is REINSTATED. Consequently, the decision of the National Labor RelationsCommission dated 27 September 1992 is REVERSED and SET ASIDE.

SO ORDERED.

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C. PLANAS COMMERCIAL, a business entity engaged in merchandising and retailing of plasticproducts and fruits, was charged by respondent Ramil de los Reyes with illegal dismissal and non-payment of basic wages and certain monetary benefits.1 De los Reyes claimed that he startedworking as deliveryman of PLANAS in August 1988 and later tasked with selling fruits until 4 June1993 when he was allegedly dismissed.

On 15 April 1994 the Labor Arbiter found petitioners C. Planas Commercial (PLANAS hereon) andMarcial Cohu, its manager, to have illegally dismissed Ramil de los Reyes. Consequently, petitionerswere ordered to reinstate him with back wages and to pay him salary differentials, 13th month payand service incentive pay.2

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On appeal public respondent National Labor Relations Commission reversed and set aside thedecision of the Labor Arbiter which declared the dismissal of de los Reyes illegal as well as the grantto him of back wages and other monetary benefits, except salary differentials in the amount ofP36,342.80 which NLRC sustained. 3Since their motion for reconsideration was denied, 4petitionersfiled on 18 December 1995 the instant petition forcertiorariwith prayer for preliminary injunction.

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Responding to private respondent's claim, petitioners alleged that they did not dismiss Ramil de losReyes who was only their helper assigned to sell fruits in front of their stall in Divisoria; on thecontrary, they claimed he abandoned his work after PLANAS' manager, petitioner Marcial Cohu,confronted him regarding reports that whenever the former was not around he would sell the fruits attheir stall at a higher price then pocket the difference. According to Cohu, private respondentadmitted that the reports about his overpricing were true and that after his admission he did notreport for work anymore; instead, he tended the fruit stall of another employer. 8 Private respondentde los Reyes, in his Reply, 10 insisted that he was dismissed without any notice after he complainedabout his low salary. In fact, according to him, this practice of petitioners resulted in the filing of eight(8) labor cases against them by his co-employees. 11Moreover, de los Reyes maintained that

petitioners employed around thirty (30) persons in their wholesale/retail business.

To fortify their claim that de los Reyes abandoned his job and thus was not terminated, petitionersattached six (6) pictures to their Rejoinder12 showing private respondent at work in the stall of oneAling Conchita Paredes located at C. Planas, Divisoria, occupied by his new employer, a certainJimmy Chua a.k.a. Sionga, a fruit dealer.

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Exemption from minimum wage law.

Petitioners claim exemption under the aforestated law. However, the best proof that they could have

adduced was their approved application for exemption in accordance with applicable guidelinesissued by the Commission. Section 4, subpar. (c) of RA 6727 categorically provides:

Retail/service establish establishments regularly employing not more than ten (10)workers may be exempted from the applicability of this Act upon application with andas determined by the appropriate Regional Board in accordance with the applicablerules and regulations issued by the Commission.Whenever an application forexemption has been duly filed with the appropriate Regional Board, action on anycomplaint for alleged non-compliance with this Act shall be deferred pendingresolution of the application for exemption by the appropriate Regional Board. In theevent that applications for exemptions are not granted, employees shall receive theappropriate compensation due them as provided for by this Act plus interest of onepercent (1%) per month retroactive to the effectivity of this Act (emphasis supplied).

Extant in the records is the fact that petitioners had persistently raised the matter of their exemptionfrom any liability for underpayment without substantiating it by showing compliance with theaforecited provision of law. It bears stressing that the NLRC affirmed the Labor Arbiter's award ofsalary differentials due to underpayment on the ground that de los Reyes' claim therefor was noteven denied or rebutted by petitioners. 31

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Somehow, the NLRC abused its discretion in holding that private respondent simply abandoned hiswork after he was confronted by his employer through its manager with the reported overpricing ofthe fruits that he sold and his pocketing of the difference. The NLRC considered the pictures of delos Reyes while at work under a new employment as sufficient proof to substantiate petitioners'defense of abandonment.

We are more inclined to uphold the Labor Arbiter's findings on this issue of illegal dismissal. Fromthe NLRC's point of view, it would seem that the abandonment was triggered by the employer'scharges of overpricing and the unlawful taking of the excess amounts. However, apart from Cohu'splain allegation that he confronted de los Reyes regarding these charges, there is no evidence onrecord to prove the veracity of Cohu's claim. It is more likely that after de los Reyes complainedabout his low salary, he was no longer allowed to report for work, hence, was dismissed withoutcause and without the requisite written notice. Under the circumstances, it is more logical to supposethat de los Reyes never abandoned his job. In fact, he even presented his case before the LaborArbiter where he sought reinstatement. Our ruling in Sentinel Security Agency, Inc. v. NLRC 36 isrelevant

Abandonment, as a just and valid cause for termination, requires a deliberate and

unjustified refusal of an employee to resume his work, coupled with a clear absenceof any intention of returning to his or her work(cited cases omitted; emphasissupplied).

Thus, we sustain the Labor Arbiter's grant of back wages and order of reinstatement in favor of delos Reyes. Since de los Reyes was illegally dismissed on 4 June 1993 after the effectivity of RA No.6715 on 21 March 1989, he is entitled to full back wages, inclusive of allowances and other benefitscomputed from the date of his dismissal until he is actually reinstated. If reinstatement shall nolonger be feasible, he shall be entitled to separation pay in accordance with law.

Xxx

Abandonment and liability of principal/contractor.

G.R. No. 114316 January 26, 200 SECURITY AND CREDIT INVESTIGATION, INC. and VICENTE REYES,JR..,petitioners, vs.THE NATIONAL LABOR RELATIONS COMMISSION (First Division), FELICIANO MERCADO,EDGAR SOMOSOT and DANTE OLIVER and the COMMISSION ON HUMAN RIGHTS,

Private respondents Mercado, Somosot and Oliver were employed as security guards by petitioner and assigned tothe CHR which was petitioner's client. 1wphi1.nt

Sometime in February 1990, about eighteen (18) of petitioner's security guards detailed at the CHR, includingMercado, Somosot and Oliver, filed a complaint for money claims against petitioner. However, upon petitioner'srequest that the security guards withdraw the complaint, each of the complainants, except for Mercado, Somosot andOliver, signed a Release and Quitclaim in favor of petitioner.

Mercado averred that he was being pressured by petitioner to sign a Release and Quitclaim, so he went on leavefrom work on March 22, 1990. When he called petitioner's office on the afternoon of the same day to inquire about hiswork assignment, petitioner's officer-in-charge, Rogelio Vecido, informed him that he was not assigned anywherebecause he was suspended from work.

Somosot likewise claimed that on March 22, 1990, Mr. Igmedio Tomenio, petitioner's shift-in-charge at the CHR, triedto pressure him to sign a Release and Quitclaim but he refused. That afternoon, Somosot learned that he had beensuspended from work. When he attempted to report for work the next day, he was informed verbally that hisemployment was already terminated.

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The next day, March 23, 1990, Mercado and Somosot filed a complaint for illegal dismissal and underpayment ofwages, overtime pay, legal holiday pay, premium pay for holiday and rest day, 13th month pay, service incentiveleave benefits and night differential against petitioner. The case was docketed as NLRC-NCR Case No. 00-03-01791-90.

Like Mercado and Somosot, respondent Oliver asseverated that on March 27, 1990 he went to petitioner's office toreiterate his money claims and was forced by Mr. Reynaldo Dino, petitioner's operations manager, to sign a Release

and Quitclaim. Because of his refusal to sign the same, he was not given any new assignment by petitioner. He wasthus surprised to receive on March 29, 1990 a telegram from petitioner requiring him to explain his absence fromwork without leave from March 27, 1990. Subsequently, Oliver filed a complaint for illegal dismissal andunderpayment of backwages against petitioner, which case was docketed as NLRC-NCR Case No. 00-03-01886-90.

Upon motion of petitioner, the two cases were consolidated.

Meanwhile, on February 18, 1991, petitioner filed a third-party complaint against the CHR, claiming that its failure toeffect the increase in the minimum wage of respondent security guards from July 1, 1989 to March 31, 1990, was dueto the failure of the CHR to promptly pay the increases in the wage rates of said guards pursuant to Section 6 ofRepublic Act No. 67271 (R.A. 6727). The CHR approved payment of increased wage rates only from April 16, 1990.Petitioner claimed that under R.A. 6727, the CHR was mandated to pay increased wages to the security guardscommencing from July 1, 1989.

The CHR denied that it was obliged to pay the increase in the wage rates of the respondent guards. It averred thatR.A. 6727 is not applicable to it, because it had already been paying the respondent security guards more thanP100.00 a day even before the effectivity of said law. Its decision to increase the salaries of respondent guardseffective August 16, 1990 was due only to humanitarian reasons.

In his Decision dated November 18, 1991,2 the Labor Arbiter found that there was neither dismissal by petitioner ofthe respondent security guards nor abandonment of employment by the latter, and that the controversy resulted frommiscommunication and misapprehension of facts by the parties. The Labor Arbiter, however, ruled that there wasunderpayment of respondent guards' salaries, holiday pay, premium pay for holidays and rest days, overtime pay,13th month pay and service incentive leave benefits in the total amount of Forty Two Thousand Six Hundred ThirtyFive Pesos and Eighteen Centavos (P42,635.18). Of this amount, the CHR was ordered to reimburse petitioner anamount of Twenty Eight Thousand Five Hundred Pesos (P28,500.00).

Both the NLRC and the Labor Arbiter found no clear proof that petitioner had in fact dismissed respondent security

guards. Mercado based his claim of illegal dismissal only on the statement of officer-in-charge Mr. Vecido that he hadnot been assigned to any post. Similarly, Somosot relied merely on the verbal information relayed to him that he hadbeen terminated. Oliver's belief that he had been illegally dismissed was founded on the telegram from petitionerrequiring him to explain his absence without leave which he received on March 29, 1990. None of them exertedefforts to confirm from petitioner's office whether they had in fact been dismissed.

On issue of illegal dismissal/abandonment of work:

In the case ofIndophil Acrylic Manufacturing Corporation vs. NLRC,7where private respondent filed a complaint forillegal dismissal against his employer after he was prevented by the company guard from entering the companypremises on the ground that he had resigned, the Court, which held that private respondent was not illegallydismissed, stated:

x x x

The present case, which has lasted for almost four (4) years, could have been avoided had privaterespondent made previous inquiry regarding the veracity of Mr. Gaviola's instruction, and not simply relied

on the bare statement of the company guard. Private respondent should have been more vigilant of hisrights as an employee because at stake was not only his position but also his means of livelihood.

x x x

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Furthermore, petitioner denied the allegation that it terminated respondent security guards' employment without justcause and even alleged that respondent guards abandoned their employment. Thus, absent any showing of an overtor positive act proving that petitioner had dismissed Mercado, Somosot and Oliver, their claim of illegal dismissalcannot be sustained.8

xxx

On liability of principal/contractor.

The Labor Arbiter found that Mercado, Somosot and Oliver were not paid the minimum wage from January 1, 1988 toMarch 22, 1990. On the basis of this finding, he determined that respondent security guards incurred underpaymentsin their wages for the periods January 1, 1988 to August 31, 1988 and July 1, 1989 to March 22, 1990.12 However, henoted that there were no underpayments in their wages for the period September 1, 1988 to June 30, 1989.13 Thediscrepancy between the minimum wage prevailing for the periods concerned and the wages and other benefitsreceived by the security guards also served as the basis for the Labor Arbiter's computation of underpayments forovertime, 13th month and service incentive leave benefits.

However, in computing the underpayment for overtime, 13th month and service incentive leave benefits, the LaborArbiter erroneously included the period from September 1, 1988 to June 30, 1989 in spite of his finding that there wasno underpayment in wages during said period.

The period from September 1, 1988 to June 30, 1989 should thus be excluded in the computation of theunderpayments for overtime, 13th month and service incentive leave benefits of respondent security guards.Accordingly, there is a need to recompute the underpaid amounts due to the respondent security guards with respectto their overtime, 13th month and service incentive leave benefits in conformity with the evidence presented.

The Court also finds merit in petitioner's argument that the NLRC should not have reversed the Labor Arbiter's findingthat the CHR is liable for the payment of P28,500.00 representing the differentials of respondent security guards'wage, overtime, 13th month and service incentive leave benefits for the period July 1, 1989 to April 15, 1990.

The record shows that petitioner informed the CHR regarding the increase in the wages of the security guardseffective July 1, 1989, pursuant to R.A. 6727 which mandated a Twenty Five Peso (P25.00) increase in the dailywage rate in a Letter dated August 7, 1989.14 In its reply letter dated April 16, 1990, the CHR stated that it hadapproved the increase in the wages effective April 16, 1990.15

The CHR, however, maintains that it is not liable to pay increased wages to the security guards and claims that thereis a proviso in Section 4 of R.A. 672716 which exempts employees already receiving more than P100.00 daily fromreceiving the P25.00 increase required under said law. The CHR argues that since the security guards were receivingP103.56 daily for the year 1989, it was not required to pay them the P25.00 per day increase under R.A. 6727. TheCHR further asserts that its approved increase in the security guards' wages from April 16, 1990 was due only tohumanitarian reasons and was not an admission of any obligation to increase the same under R.A. 6727.17

It must be noted that both the Labor Arbiter and the NLRC found that there were discrepancies in the minimum wageprescribed under R.A. 6727 and what were actually received by respondent security guards from July 1, 1989. Therule is that the factual findings of the Labor Arbiter, when affirmed by the NLRC are accorded to great weight andrespect when supported by substantial evidence, and devoid of any unfairness and arbitrariness.18

Section 6 of R.A. 6727 imposes the liability for payment of the increase in wages on the principal which in this case isthe CHR, thus:

In case of contracts for construction projects and for security, janitorial and similarservices, theprescribed increases in the wage rates of the workers shall be borne by the principals or clients ofthe construction/service contractorsand the contract shall be deemed amended accordingly. In theevent however, that the principal or client fails to pay the prescribed wage rates, the construction/servicecontractor shall be jointly and severally liable with his principal or client. (Emphasis supplied.)

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It is thus clear that the CHR is the party liable for payment of the wage increase due to respondent security guards.While petitioner, as the contractor, is held solidarily liable for the payment of wages, including wage increases, asprescribed under the Labor Code,19 the obligation ultimately belongs to the CHR as principal. The Court in EagleSecurity Agency, Inc. vs. NLRC,20alsocited in Rabago vs. NLRC,21 and Spartan Security and Detective Agency vs.NLRC,22 ruled on this issue as follows:

The Wage Orders are explicit that payment of the increase are "to be borne" by the principal or

client. "To be borne", however, does not mean that the principal, PTSI in this case, would directly pay thesecurity guards the wage and allowance increases because there is no privity of contract between them.The security guards' contractual relationship is with their immediate employer, EAGLE. As an employer,EAGLE is tasked, among others, with the payment of their wages [See Article VII, Sec. 3 of the Contract forSecurity Services, Supra, and Bautista vs. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 665].

On the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the formeravailed of the security services provided by the latter. In return, the security agency collects from its clientpayment for its security services. This payment covers the wages for the security guards and also expensesfor their supervision and training, the guards' bonds, firearms with ammunitions, uniforms and otherequipments [sic], accessories, tools, materials and supplies necessary for the maintenance of a securityforce.

Premises considered, the security guards' immediate recourse for the payment of the increases is

with their direct employer, EAGLE. However, in order for the security agency to comply with the newwage and allowance rates it has to pay the security guards, the Wage Orders made specificprovision to amend existing contracts for security services by allowing the adjustment of theconsideration paid by the principal to the security agency concerned. What the Wage Orders require,therefore, is the amendment of the contract as to the consideration to cover the service contractor'spayment of the increase mandated. In the end therefore, the ultimate liability for the payment of theincreases rests with the principal (Emphasis supplied.).23

The Labor Arbiter was therefore correct in requiring the CHR to reimburse petitioner the amount of P28,500.00representing the unpaid wage increases of respondent security guards for the period July 1, 1989 to April 15, 1990.

Petitioner's Letter dated August 7, 1989 addressed to the CHR regarding the increase in wage rates of its securityguards pursuant to R.A. 6727 cannot be interpreted as a mere proposal for wage increases for its employees,because the wage increase referred to therein is one mandated by law, and as R.A. 6727 expressly provides in

Section 6 thereof existing contracts for security services between the service contractor and the principal are deemedamended by said law. There is, therefore, no merit in the NLRC's assertion that since the CHR agreed to increase thewages of respondent security guards only from April 16, 1990, it can only be held liable for wage increases from thatdate instead of from July 1, 1989.

WHEREFORE, the assailed decision of the NLRC in NLRC Case Nos. 00-03-01791-90 and 00-03-01886-90 ishereby affirmed with the MODIFICATION that the amounts corresponding to the underpayment of overtime, 13thmonth and service incentive leave benefits for the period September 1, 1988 to June 30, 1989 as determined by theLabor Arbiter be recomputed; and the ruling of the Labor Arbiter that the CHR is liable to reimburse petitioner in theamount of Twenty Eight Thousand Five Hundred Pesos (P28,500.00) representing the unpaid wage increases fromJuly 1, 1989 to April 15, 1990 due to respondents Mercado, Somosot and Oliver is hereby REINSTATED.

SO ORDERED.

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Documents

11th Session LS