Paulino Ungos III

Lawyer | Law Professor | Author

Tag: separation pay

  • The Employee Rejected My Offer of Reinstatement

    On September 1, 2002, the employer hospital hired Antonina as a staff midwife. During her employment, the employer hospital also allowed her to study nursing simultaneously.

    Antonina alleged that on June 23, 2007, she requested permission to go on leave without pay from June 29, 2007 to September 15, 2007 as she needed to work as an affiliate, in compliance with a school requirement. The employer hospital approved the request on the same day and she was also included in the Schedule of Duty for the period September 16 to 30, 2007.

    Antonina stated that on September 19, 2007, the president of the employer hospital berated her for having been away from work for a long time. The next day, a supervisor relayed to Antonina the president’s instructions for her not to report for work anymore.

    Antonina thus filed a complaint against the employer hospital for illegal dismissal, with a prayer for payment of backwages and separation pay.

    The employer hospital denied dismissing Antonina. It claimed that the latter simply failed to report for work after June 28, 2007 for unspecified reasons.

    The Office of the Labor Arbiter ruled that Antonina was illegally dismissed from her job based on the following findings:

    • Antonina’s leave of absence was supported by a leave form and approval by the employer hospital.
    • Antonina was also found to have reported for work after September 15, 2007 and was included in the Schedule of Duty from September 16 to 30, 2007.
    • Antonina’s assertion that she was ordered not to report for work was credible.
    • Antonina filed her complaint for illegal dismissal within a reasonable period inconsistent with the employer hospital’s claim of abandonment.
    • Finally, Antonina was not accorded procedural due process in her dismissal from employment.

    The Office of the Labor Arbiter awarded Antonina full backwages, as well as separation pay, in lieu of reinstatement, because of strained relations between Antonina and the employer hospital.

    The National Labor Relations Commission affirmed the ruling of the Office of the Labor Arbiter.

    However, the Commission considered Antonina’s rejection of an alleged offer of reinstatement by the employer hospital during a hearing held on January 16, 2008. Thus, the Commission modified the computation of her backwages and separation pay by limiting it to the period of September 19, 2007 until January 16, 2008.

    The Court of Appeals reinstated the Decision of the Office of the Labor Arbiter. It found that the employer hospital’s offer of reinstatement was not supported by evidence and thus should not have been automatically factored in by the National Labor Relations Commission as a basis for modifying the reckoning point of the awards of backwages and separation pay.

    The Court of Appeals clarified that even if the alleged offer was made, the award of backwages and separation pay should be computed from the time Antonina’s compensation was withheld from her until the time of her actual reinstatement, and not only up to the time the offer of reinstatement was made, in accordance with Article 294 of the Labor Code of the Philippines. According to the Court of Appeals, a mere order for reinstatement issued by the Office of the Labor Arbiter is different from the actual restoration of an employee to his or her previous position.

    The Court of Appeals stated that in case of reinstatement, backwages and other monetary awards shall continue beyond the issuance of the Office of the Labor Arbiter’s ruling until such time the said reinstatement is actually complied with.

    The Court of Appeals further stated that if reinstatement is no longer feasible, backwages and separation pay must be computed up to the finality of the decision. Until actual receipt by the employee of the award of separation pay, the employer-employee relationship subsists and entitles the illegally dismissed employee to an award of backwages, and other benefits from the time of his or her actual dismissal until finality of the decision of the Office of the Labor Arbiter.

    The employer hospital elevated its case to the Supreme Court.

    How should the awards of Antonina be computed?

    The Supreme Court reiterated the settled rule that “[t]he twin reliefs that should be given to an illegally dismissed employee are full backwages and reinstatement. Backwages restore the lost income of an employee and is computed from the time compensation was withheld up to actual reinstatement. Anent reinstatement, only when it is not viable is separation pay given.”1Peak Ventures Corp. v. Heirs of Villareal, G.R. No. 184618, November 19, 2014.

    The Supreme Court then mentioned Session Delights Ice Cream and Fast Foods v. Court of Appeals,2G.R. No. 172149, February 8, 2010. where it held that a decision in a case involving illegal dismissal consists essentially of two components:

    The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal, as well as the awards of separation pay, in lieu of reinstatement, and backwages.

    The second part is the computation of the awards made.

    In the present case, the Supreme Court recognized that the illegality of Antonina’s dismissal from employment had already been settled in a ruling of the Court of Appeals in a separate case. Antonina was declared entitled to the reliefs of backwages and separation pay.

    Thus, the Supreme Court focused on the issue on the computation of Antonina’s backwages and separation pay.

    In this regard, the Court referred to Bani Rural Bank, Inc. v. De Guzman3Bani Rural Bank, Inc. v. De Guzman, G.R. No. 170904, November 13, 2013. in explaining the basis for the computation of backwages and separation pay. Said the Court:

    The computation of backwages depends on the final awards adjudged as a consequence of illegal dismissal, in that:

    First, when reinstatement is ordered, the general concept under Article [294] of the Labor Code, as amended, computes the backwages from the time of dismissal until the employee’s reinstatement. The computation of backwages (and similar benefits considered part of the backwages) can even continue beyond the decision of the [Office of the Labor Arbiter] or [National Labor Relations Commission] and ends only when the employee is actually reinstated.

    Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) or reinstatement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.

    Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a supervening event that makes the award of reinstatement no longer possible, backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.

    The Court said that the above computation of backwages, when separation pay is ordered, has been its consistent ruling.

    According to the Court, the finality of the decision becomes the reckoning point because in allowing separation pay, the final decision effectively declares that the employment relationship ended so that backwages and separation pay are to be computed up to that point.

    The Court determined that the second scenario squarely applies in the present case since the order of separation pay was decreed in lieu of reinstatement.

    Hence, the Court said, the employer-employee relationship of the employer hospital and Antonina would only be completely terminated upon the finality of the decision which ordered the payment of backwages and separation pay. It follows that the computation of Antonina’s backwages must be from the time of her illegal dismissal from employment on September 19, 2007 until the finality of the decision ordering the payment thereof. As for her separation pay, it should be computed at one month pay for every year of service reckoned from September 2, 2002 until the finality of the decision in her favor.

    The Court affirmed the ruling of the Court of Appeals which reinstated the Decision of the Office of the Labor Arbiter.

    Further reading:

    • Angono Medics Hospital, Inc. v. Agabin, G.R. No. 202542, December 9, 2020.

  • Get Out!

    Gil was hired as a booking salesman for Household Goods Patrons, Inc. (Household Goods) in July 2007. His duties and responsibilities included taking customer orders, collecting payments, and inspecting equipment.

    From May 2012 to August 2013, Gil faced several disciplinary proceedings due to unaccounted amounts, low sales outputs, unremitted collections, poor performance ratings for failing to meet sales targets, and late remittance of sales proceeds.

    Gil stated that on August 29, 2013, a Household Goods officer directed him to report to her office. Gil stated that he was told to resign because he was responsible for the company’s poor performance. Gil denied the accusation, claiming that he had previously been named Salesman of the Year. This enraged the officer of Household Goods, who ordered Gil to leave her office.

    Gil went on to say that the following day, an HR Supervisor of Household Goods asked for his resignation letter and presented him with a calculation of his final pay. Gil stated that, while he objected to the request, his efforts were futile, and he was ordered to surrender all documents and property.

    Household Goods, on the other hand, asserted that Gil was not fired. According to Household Goods, its officer did speak with Gil about his poor performance and unremitted collections, which it viewed as instances of theft and thus valid grounds for his immediate termination. Household Goods claimed to have taken into account Gil’s previous good sales performance as well as the stigma of being fired from his job. As a result, it offered Gil the option of simply resigning and not filing a criminal charge against him for the unremitted amounts. Gil never returned to work after this conversation, according to Household Goods.

    Was Gil illegally dismissed from employment?

    The Supreme Court ruled in the negative. According to the Court, there was no proof that Gil was dismissed from employment.

    The Court reiterated the settled rule that in illegal dismissal cases, before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to its legality or illegality.1Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, July 24, 2019

    The Court also stated that since an allegation is not evidence, it is elementary that a party alleging a critical fact must support his allegation with substantial evidence. Bare allegations of dismissal, when uncorroborated by the evidence on record, cannot be given credence. Moreover, the evidence to prove the fact of dismissal must be clear, positive and convincing.

    In the present case, the Court found that other than his allegation, Gil failed to present any proof that he was dismissed from employment. He failed to present any proof of dismissal or that he was prohibited from returning to work.

    The Court also found that, on the other hand, Household Goods was able to show that Gil was not dismissed from work. According to the Court, with his poor performance, Gil was only given the option to resign instead of being dismissed.

    The Court recognized the fact that giving such an option may be done at the discretion of the employer. According to the Court, a decision to give a graceful exit to an employee rather than to file an action for redress is perfectly within the discretion of an employer. It is not uncommon that an employee is permitted to resign to save face after the exposure of his/her malfeasance.

    In the present case, the Court found that Household Goods’ act of providing Gil the option to gracefully exit considering his prior good sales performance and out of compassion did not constitute dismissal, legal or illegal. The Court added that although Gil did not resign and take the separation pay offered to him, neither did Household Goods initiate disciplinary proceedings to terminate his employment.

    Could Gil be directed to report back to work?

    The Court discussed that generally, when there is no dismissal, the employee should go back to his work and the employer must then accept him because the employment relationship between them was never actually severed.

    Here, considering that Household Goods had from the outset offered to pay separation pay to Gil, and which even Gil himself did not dispute, and that more than seven years had passed since Gil reported for work on September 1, 2013, the Court deemed it just to award separation pay (equivalent to one month salary for every year of service, computed up to the time he stopped working, or until September 1, 2013) in lieu of the directive for him to return to work and for Household Goods to accept him.

    Further reading:

    • Jarabelo v. Household Goods Patrons, Inc., G.R. No. 223163, December 2, 2020.

  • I Skipped Work as I Felt Sick

    Laurence alleged that on September 3, 2007, he was hired by Verizon Communications Philippines, Inc. (Verizon) as network engineer.

    Laurence narrated that sometime in January 2012, his doctor diagnosed him with pulmonary tuberculosis and pneumonia for which he was recommended to isolate and rest for 60 days.

    Laurence informed his manager of his medical condition, and did not report for work from February 3, 2012 to recuperate from his illness. He went to Guimaras Island to quarantine himself and avoid the spread of his disease.

    On March 14, 2012, Laurence received a notice to explain. When he called his manager to ask why he was being made to explain, the latter answered that the employer already terminated his employment on March 12, 2012.

    Two weeks later, Laurence received a letter of termination from his employer, prompting him to file a complaint for illegal dismissal and damages against the latter.

    In his case, Laurence claimed to have been illegally dismissed and entitled to his money claims. He asserted that there was no just or authorized cause for his dismissal and that the employer failed to observe the requirements of due process. Laurence also claimed that he did not abandon his work since he was able to notify the employer of his illness and the need for medical treatment on isolation. According to Laurence, his absence is justified due to his sickness that needed a long rest and quarantine period to prevent the spread of the disease to his co-workers.

    For its part, the employer acknowledged that on February 3, 2012, Laurence notified his manager through text message on his absence. However, the employer pointed out that Laurence did not indicate the duration of his leave and no longer answered its manager’s phone calls. After more than a month of not hearing from Laurence, the employer sent its nurse, who was able to check on Laurence and serve him a notice requiring him to explain his unauthorized absence and why he should not be considered to have abandoned his work. It was only on March 14, 2012 that Laurence called his manager regarding the notice and explained that he had no cellphone reception in the place where he was. On the same day, Laurence sent an email in which he admitted his mistake, apologized for his unauthorized absence, and sought reconsideration of his dismissal. In view of Laurence’s admission, the employer terminated his employment on March 28, 2012.

    The employer further averred that Laurence was aware of its policies on attendance and absences. Nonetheless, he failed to notify the employer of the duration of his leave. The notice he gave to his manager was not enough because he did not mention the length of his absence and did not submit a medical certificate or medical test results. For the employer, his 38-day absence, as well as his admission, warranted his termination from employment.

    In its Decision dated February 11, 2013, the Office of the Labor Arbiter dismissed the complaint for lack of merit.

    According to the Office of the Labor Arbiter, Laurence, a Network Engineer whose presence was always expected by the employer in the worksite, went on prolonged absence without official leave for 38 consecutive days, without informing his manager or the employer about it and without even offering any reasonable explanation for his failure to inform the employer of his prolonged absences. For the Office of the Labor Arbiter, the employer cannot be faulted in applying its rule on unauthorized absences for 5 consecutive days, which carried a penalty of dismissal from employment.

    Aggrieved, Laurence appealed before the National Labor Relations Commission, pointing out that his prolonged absence was due to health reasons and he did not intend to abandon his work. Laurence thus insisted on his stand that no valid cause attended his dismissal from employment.

    The National Labor Relations Commission reversed the Office of the Labor Arbiter’s ruling and upheld Laurence’s stand that the employer failed to show just cause in terminating his employment. The Commission explained that the rules of the employer only mandates its employees to notify their manager 4 hours before taking a sick leave and to submit his/her medical certificate upon return. The Commission found that Laurence was able to notify his immediate manager through text message about his sickness and his leave on February 3, 2012. Since the Commission did not consider the absences of Laurence as unauthorized, his dismissal from employment was declared illegal.

    The employer filed a petition for certiorari before the Court of Appeals, but the latter upheld the Decision of the National Labor Relations Commission. The Court of Appeals added that the length of his absence is justified considering that pulmonary tuberculosis and pneumonia are commonly considered to be serious infectious diseases.

    The employer elevated its case to the Supreme Court and asserted that Laurence was validly dismissed because of his deliberate violation of the employer’s rules on unauthorized absences and excessive absenteeism. The employer stated that it validly exercised its management prerogative in applying its rules. Finally, it granted Laurence ample opportunity to be heard.

    Was Laurence validly dismissed from employment?

    The Supreme Court ruled in the negative, because Laurence was not found to have violated the employer’s rules on authorized and unauthorized absences.

    The Court reiterated prevailing principles in that the employer in an illegal dismissal case has the burden of proving that an employee’s dismissal from service was for a just or authorized cause. Otherwise, the employer’s failure shall result in a finding that the dismissal is unjustified.

    Record showed that the employer dismissed Laurence because of his alleged violation of its rules. Under such rules, the absence of an employee may be authorized or unauthorized. An authorized absence, due to sickness, requires that the employee send his manager notice 4 hours before his shift, with a reasonable description of his illness, and the submission of the employee’s proof of illness on his return date. On the other hand, the employee’s absence becomes unauthorized if the employee fails to notify his/her immediate superior, or if the employee fails to submit a medical certificate on his/her return date.

    However, the Supreme Court found that on February 3, 2012, Laurence sent his manager a text message, informing the latter that he will be absent because he was sick with pulmonary tuberculosis, a contagious disease, and was advised to take medication. It was also found that the manager did not deny having received this message from Laurence.

    The Supreme Court thus stated that the information given by Laurence was sufficient to properly apprise the employer of his condition. Furthermore, Laurence’s failure to submit proof of illness while he was on sick leave and to indicate a return date did not render his absence unauthorized. The Court added that Laurence was no longer given the opportunity to submit his medical certificate and other documents to prove his illness.

    With regard to the employer’s policy on excessive absenteeism, which prescribes dismissal as penalty, the Court ruled that the same was harsh.

    The Court mentioned that the Constitution looks with compassion on the working class and is intent on protecting their rights. A worker’s employment is property in a constitutional sense, and he/she cannot be deprived thereof without due process and unless the deprivation is commensurate to his/her acts and degree of moral depravity. While the right of an employer to terminate the services of an employee for a just or authorized cause is recognized, the dismissal must be made within the parameters of law and pursuant to the tenets of equity and fair play. An employer’s power to discipline his employees must not be exercised in an arbitrary manner as to erode the constitutional guarantee of security of tenure.

    The Court continued that although the power to dismiss employees is a formal prerogative of the employer, such power is not without limitations. The employer is bound to exercise caution in terminating the services of his employees and dismissals must not be arbitrary and capricious. Due process must be observed and employers should respect and protect the rights of their employees. To effect a valid dismissal, the law requires not only that there be just and valid cause; it must also be supported by evidence. There must be a reasonable proportionality between the offense and the penalty. Even when there exist some rules agreed upon between the employer and employee on the subject of dismissal, the same cannot preclude the State from inquiring on whether their rigid application would work too harshly on the employee. Dismissal, without doubt, is the ultimate penalty that can be meted to an employee. Hence, where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. The Court stressed that it will not hesitate to disregard a penalty that is manifestly disproportionate to the infraction committed.

    In the present case, the Court noted that since the employer raised Laurence’s violation of its rules, it is incumbent upon the employer to prove that Laurence clearly, voluntarily and intentionally committed the infraction. However, the Court found that Laurence’s absence from work was due to sickness and that he gave proper notification of his absence, which reason should have been given kind consideration by the employer. The Court remarked that an employee cannot anticipate when an illness may happen, thus, he may not be able to give prior notice or seek prior approval of his absence, but could only do so after the occurrence of the incident.

    The Court added that even assuming that Laurence was found to have deliberately violated the employer’s rules, the penalty of dismissal imposed upon him was too harsh and disproportionate to the wrongdoing committed. In this regard, the Court maintained that it is not bound by the employer’s rules, as well as the employer’s findings of violation and dismissal. It is settled that the law serves to equalize the unequal. The labor force is a special class that is constitutionally protected because of the inequality between capital and labor. This constitutional protection presupposes that the labor force is weak. However, the level of protection to labor should vary from case to case; otherwise, the State might appear to be too paternalistic in affording protection to labor.

    The Court also found that Laurence was not accorded procedural due process.

    The Court stated that to effect a valid dismissal on the ground of just cause, the employer is bound to observe procedural due process. Procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with 2 written notices before the termination of employment can be implemented:

    • the first apprises the employee of the particular acts or omission for which his dismissal is sought; and
    • the second informs the employee of the employer’s decision to dismiss him.

    In the present case, the Court found that the notices issued by the employer failed to observe the standards set forth in case law. The Court said that while the employer ostensibly afforded Laurence the opportunity to refute the charge of AWOL and abandonment against him, the employer deprived him of due process when he was not given ample time to prepare his defense and later on, when his explanation was not given consideration on the ground that it was submitted beyond the 48-hour period.

    What reliefs were granted to Laurence?

    In view of the finding of illegal dismissal, the Court upheld the grant of separation pay, but it deleted the award of backwages.

    With regard to reinstatement, the Court discussed that usually, reinstatement without loss of seniority rights and other privileges and full backwages are granted to illegally dismissed employees.

    However, if actual reinstatement is no longer possible, the employee becomes entitled to separation pay in lieu of reinstatement. Based on jurisprudence, reinstatement is not feasible:

    • in cases where the dismissed employee’s position is no longer available
    • the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; and
    • when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.

    In these instances, said the Court, separation pay is the alternative remedy to reinstatement in addition to the award of backwages. The payment of separation pay and reinstatement are exclusive remedies. Stated differently, the payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed.

    In the present case, the Court upheld the grant of separation pay in favor of Laurence since it was consistently found that he opted to receive separation pay instead of reinstatement.

    On the other hand, with regard to backwages, the Court elaborated that in labor cases, the Court is tasked with the delicate act of balancing the employee’s right to security of tenure against the employer’s right to freely exercise its management prerogatives. Even though it is basic in labor law that an illegally dismissed employee is entitled to reinstatement, or separation pay if reinstatement is not viable, and payment of full backwages, in some instances, the Court has carved out exceptions where the reinstatement of an employee was ordered without an award of backwages. This is on account of: (1) the fact that dismissal of the employee would be too harsh of a penalty; and (2) that the employer was in good faith in terminating the employment.

    The Court held that the employer is excused from paying backwages to Laurence because it considered the penalty of dismissal to be harsh. Although Laurence did not violate the employer’s rules on authorized and unauthorized absences since he was able to notify his immediate manager of his absence on February 3, 2012 because of his sickness, the Court found that he cannot be deemed entirely faultless. Aside from the text message he sent, he did nothing else to comply with the employer’s rules. He did not inform the employer that he would leave his residence nor leave any information on how he may be reached. On the other hand, his manager exerted efforts to contact Laurence, albeit to no avail. For such reasons, the Court held that no basis supported an award of backwages. Such award of backwages was thus deleted.

    Further reading:

    • Verizon Communications Philippines, Inc. v. Margin, G.R. No. 216599, September 16, 2020.

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  • Whole Again

    In this case, the Supreme Court noted the illegal dismissal case filed by Moreno, Francisco and Elmo against Lepanto Consolidated Mining Company.

    The record showed that the Office of the Labor Arbiter dismissed the complaint for lack of merit.

    In its Decision dated August 30, 2002, the National Labor Relations Commission reversed the Office of the Labor Arbiter’s Decision and declared Moreno, Francisco, and Elmo to have been illegally dismissed from employment. The Commission awarded them separation pay and backwages.

    The Court of Appeals (in CA-G.R. SP No. 75860) affirmed the Decision of the National Labor Relations Commission through its Decision dated November 7, 2003.

    The Supreme Court (in G.R. No. 163210) likewise affirmed the same. The Decision of the Supreme Court became final and executory on November 25, 2008.

    Following the finality of the Supreme Court Decision, the Office of the Labor Arbiter issued the corresponding writ of execution in the total amount of P897,412.95 covering the backwages and separation pay of Moreno, Francisco, and Elmo. Furthermore, the Office of the Labor Arbiter granted their motion praying the recomputation of this award, through an Order dated May 27, 2009, which increased the award to P2,602,856.21.

    Lepanto moved to quash the writ of execution, insisting that the computation should be reckoned from the date of dismissal up until the National Labor Relations Commission rendered its Decision dated August 30, 2002.

    Moreno, Francisco and Elmo soon moved for another recomputation of the monetary award to include the salary increases allegedly granted them per the Collective Bargaining Agreement (CBA) between Lepanto and its employees.

    In its Order dated September 2, 2009, the Office of the Labor Arbiter recalled his Order dated May 27, 2009 and further recomputed the award of backwages and separation pay to include the incremental salary increases pursuant to the CBA but only until November 7, 2003, the date when the Court of Appeals issued its Decision in CA-G.R. SP No. 75860.

    Moreno, Francisco, and Elmo assailed the Order and asserted that the cut-off date for the computation of the award was November 25, 2008 when the Supreme Court’s Decision became final and executory.

    Lepanto likewise assailed the Order and asserted that the cut-off date for the computation of the award was November 7, 2003, or the date of the Decision of the Court of Appeals.

    In its Decision dated October 30, 2009, National Labor Relations Commission directed the Labor Arbiter to compute the backwages and separation pay of Moreno, Francisco, and Elmo from the date they were illegally dismissed up to the finality of the Supreme Court’s Decision on November 25, 2008, including therein the mandated CBA salary increases.

    The Court of Appeals nullified the Decision of the National Labor Relations Commission and ordered the reinstatement of the Commission’s earlier Decision dated August 30, 2002, as well as the relevant Writ of Execution dated March 16, 2009. For the Court of Appeals, the computation of the National Labor Relations Commission in its earlier Decision became final and executory after the lapse of ten (10) days from the parties’ receipt thereof. The Court of Appeals added that the finality of this computation was not affected by the subsequent proceedings held before it and the Supreme Court and that the delayed enforcement of the Decision of the National Labor Relations Commission dated August 30, 2002 was not only attributable to Lepanto but also to Moreno, Francisco, and Elmo, who themselves appealed the case up to the Supreme Court.

    Moreno, Francisco, and Elmo thus elevated their case to the Supreme Court, asserting that the computation of their backwages and separation pay should be reckoned from the date they were illegally terminated until the finality of Supreme Court’s Decision in G.R. No. 163210 on November 25, 2008. They further asserted that the computation should include the salary increases granted under the CBA.

    What is the correct formula for computing the award of separation pay and backwages to Moreno, Francisco, and Elmo?

    Should these include salary increases granted by the CBA?

    The Supreme Court ruled that the award of separation pay and backwages for illegally dismissed employees should be computed from the time they were illegally dismissed until the finality of the decision ordering payment of their separation pay, in lieu of reinstatement.

    As to what exactly these awards ought to include, the Court categorized its previous rulings as follows:

    • The first category delves into the inclusion or non-inclusion in the award of salary increases and benefits, which are contingent on the fulfillment of certain conditions, such as merit increases based on performance, the company’s fiscal position, or management’s benevolent initiative. According to the Court, the ruling in these cases denied the inclusion of contingent salary increases in the computation of backwages for being mere expectancies.

    • On the other hand, the second category delves into guaranteed salary increases and benefits, which are granted by law, standard company policy, or CBA.

    However, the Court noted that those cases falling in the second category had opposing dispositions.

    Acknowledging its contradicting rulings in the award of backwages or separation pay owing to illegally dismissed employees and the consequent instability they have caused to labor law jurisprudence, the Court laid down the following rule to settle the matter:

    The award of backwages and/or separation pay due to illegally dismissed employees shall include all salary increases and benefits granted under the law and other government issuances, Collective Bargaining Agreements, employment contracts, established company policies and practices, and analogous sources which the employees would have been entitled to had they not been illegally dismissed. On the other hand, salary increases and other benefits which are contingent or dependent on variables such as an employee’s merit increase based on performance or longevity or the company’s financial status shall not be included in the award.

    On this point, the Court noted that Article 294 of the Labor Code of the Philippines grants illegally dismissed employees the right to full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time their compensation was withheld up to the time of their actual reinstatement.

    Furthermore, the Court equally noted that there is no provision in the Labor Code of the Philippines which mandates the exclusion of salary increases and benefits accruing to the dismissed employee.

    In this regard, the Court explained that the overarching purpose of the reliefs granted by law to illegally dismissed employees is to make the latter whole again. For the Court, it should ensure that illegally dismissed employees are whole again by awarding them the benefits to which they would have been entitled if not for the illegal termination of their employment.

    The Court stated that the ruling that the employees’ illegal dismissal literally allowed time to stand still for them because of their loss of employment and the resulting uncertainties from such an unfortunate event, does not sanction additionally punishing them for an act they have not been responsible for. The Court stressed that they, in fact, must be accorded justice and relief.

    The Court thus ordered Lepanto to pay Moreno, Francisco, and Elmo backwages and separation pay based on their salary rates at the time of their termination, inclusive of guaranteed salary increases and other benefits and bonuses which they were entitled to receive under the law and other government issuances, collective bargaining agreements, employment contracts, established company policies and practices, and analogous sources had they not been illegally dismissed.

    The award was computed from September 22, 2000, when they were illegally dismissed, up to November 25, 2008, when the Supreme Court’s Decision dated August 13, 2008 became final and executory.

    The Court added that the award shall exclude salary increases and other benefits or bonuses which are contingent or dependent on variables such as an employee’s merit increase based on performance or longevity or the company’s financial status.

    Further reading:

    • Dumapis v. Lepanto Consolidated Mining Co., G.R. No. 204060, 15 September 2020.

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  • But His Dismissal from Employment Was Harsh

    On 31 March 1992, the employee was hired as an able seaman by the employer on board one of its vessels. One of his primary duties entailed being a duty look-out during vessel navigation.

    In 2016, after serving for 24 years, the employee was dismissed from employment for his failure to call out and report instances of oil pilferage when he was on duty. According to the employer, the employee was undoubtedly aware of the oil pilferage, for he had a good vantage point from his post. Despite said pilferage, Cordero did not report the same to his employer.

    When the case reached the Court of Appeals, it affirmed the validity of the employee’s dismissal. However, it also awarded separation pay as a measure of compassionate justice since it found the penalty of dismissal too harsh.

    The issue determined by the Supreme Court was on the propriety of the award of separation pay for this validly-dismissed employee.

    The Supreme Court ruled that the award of separation pay was devoid of basis in fact and in law.

    According to the Court, jurisprudence dictates that as a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to a separation pay. In exceptional cases, however, separation pay has been granted to a legally dismissed employee as an act of “social justice” or on “equitable grounds.” In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee.1Manila Water Co. v. Del Rosario, G.R. No. 188747, January 29, 2014, 725 PHIL 513-525 It is stressed that separation pay shall be allowed as a measure of social justice only in the instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. A contrary rule would have the effect of rewarding rather than punishing the erring employee for his offense. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. Equity as an exceptional extenuating circumstance does not favor, nor may it be used to reward, the indolent or the wrongdoer for that matter. A party will not be allowed, in guise of equity, to benefit from his own fault.2Philippine Long Distance Telephone Co. v. National Labor Relations Commission, G.R. No. 80609, August 23, 1988, 247 PHIL 641-652 and Toyota Motor Phils. Corp. Workers Association v. National Labor Relations Commission, G.R. Nos. 158786, 158789 & 158798-99, October 19, 2007, 562 PHIL 759-817

    In the present case, the Court acknowledged that the dismissal of the employee was valid. It also found that his infractions involved moral turpitude and constituted serious misconduct. No basis thus supported the award of separation pay.

    The Court added that the employee’s long years of service did not serve to mitigate his offense and it should not be considered in meting out the appropriate penalty therefor. According to the Court, the infraction that he committed against his employer demonstrated the highest degree of ingratitude to an institution that has been the source of his livelihood for 24 years, constitutive of disloyalty and betrayal of the trust and confidence reposed upon him. The full trust and confidence reposed by the employer in him, coupled with the fact that he occupied a position that allowed him full access to its property, aggravated the offense.

    Further reading:

    • Herma Shipping and Transport Corp. v. Cordero, G.R. Nos. 244144 & 244210, January 27, 2020.

  • Your New Engagement with Us Terminated Your Previous Employment

    On 17 December 1997, Lailani started working for CML as an Assembly Production Operator. On 6 February 2012, she was dismissed by way of redundancy. She then signed a quitclaim indicating her position as QA Inspector Lead and received a certain amount as severance package. At the time of her dismissal, she was receiving a monthly salary of Php17,047.88.

    On 21 September 2012, Lailani accepted a job with the same employer, CML, for the position of QA Inspector Senior — a position under the QA Inspector Lead. The position had a basic monthly salary of Php10,835.86.

    On 20 April 2015, a first Absence Without Official Leave (AWOL) Notice was given to Lailani due to the latter’s absence from 16 to 18 April 2015. Lailani was directed to report for work on 21 April 2015. Due to Lailani’s continued absence, a second AWOL Notice and a third AWOL Notice were sent to her. As a result of her prolonged unexplained absence, Lailani’s employment was terminated on 11 May 2015. A Termination Letter dated 11 May 2015 was sent to Lailani informing her of the decision to sever her employment.

    Lailani filed a complaint for illegal dismissal against CML.

    In the Court of Appeals (CA), the dismissal of Lailani from employment on 6 February 2012 was affirmed to be illegal. With regard to the awards of separation pay and backwages, although the CA computed the said reliefs using Lailani’s original monthly salary of P17,047.88 for the period of 6 February 2012 to September 2012, the amount of Php10,835.86 was used in computing separation pay and backwages from September 2012 until 11 May 2015. The CA explained that Lailani’s employment in September 2012 constituted a new job because her first employment was effectively terminated on 6 February 2012. The CA added that Lailani’s execution of the employment contract in September 2012 was an acceptance of the lower salary.

    Was Lailani entitled to differentials in the awards of separation pay and backwages?

    The Supreme Court ruled that Lailani was entitled to salary differentials from the time she was re-hired in September 2012 up to the time she was validly dismissed on 11 May 2015.

    In pointing out the error of the CA, the Supreme Court cited Article 294 of the Labor Code of the Philippines, which states:

    Art. 294. Security of Tenure. — 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 of their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

    The Court explained that since the termination of Lailani’s employment on 6 February 2012 was illegal, Article 294 requires that she be given whatever she was previously entitled to. The Court stated that this did not only include Lailani’s reinstatement to her old position but also the amount of compensation previously received. According to the Court, when Lailani was “re-hired” in September 2012, she was actually reinstated. Thus, she should have been paid her basic monthly salary of Php17,047.88 instead of Php10,835.86. Accordingly, the Supreme Court awarded differential in the amount of Php6,212.02 from September 2012 until 11 May 2015

    Further reading:

    • Hapita v. Cypress Manufacturing Limited, G.R. No. 240512, January 27, 2020.

  • Demonstrated Litigiousness of the Parties

    On 6 June 1996, Papertech hired Katando as a machine operator in its office at Pasig City.

    On 14 December 2013, Katando received a memorandum from Papertech stating that due to urgency of business, she will be transferred to its Makati office. The memorandum stated that she will still be under the same employment terms and conditions but will be tasked to clean the area.

    Papertech issued a memorandum dated 6 February 2014 to Katando reiterating her transfer to its Makati office. Thereafter, Papertech issued a notice to Katando requiring her to explain within 48 hours why she refused to receive the 6 February 2014 memorandum. Katando submitted her explanation.

    Papertech issued another notice to Katando on 17 February 2014 directing her to explain why she should not be administratively charged for refusing to transfer to its Makati office. Despite submitting her explanation, Papertech issued a notice on 24 February 2014 dismissing Katando for her insubordination. Katando filed a complaint for illegal dismissal against Papertech and its officers.

    The Office of the Labor Arbiter held that no just cause attended Katando’s dismissal. Papertech failed to prove the existence of a legitimate urgency which justified her transfer to the Makati office. In fact, Papertech did not disprove a certification from the Makati City Business Permit Office that it is not a registered entity in Makati City.

    Thus, the Office of the Labor Arbiter ordered Papertech to pay Katando backwages. However, Katando’s prayer for reinstatement was not granted. Instead, Papertech was ordered to pay her separation pay. According to the Office of the Labor Arbiter, “[t]he filing of the instant case and the attempts of Papertech to transfer the complainant have brought about antipathy and antagonism between them, thereby resulting to strained relationship.”

    Katando partially appealed to the National Labor Relations Commission.

    The National Labor Relations Commission agreed with the Office of the Labor Arbiter that separation pay should be given to Katando in lieu of her reinstatement. Katando went to the Court of Appeals.

    The Court of Appeals granted Katando’s petition and ordered Papertech to immediately reinstate her to her previous position without loss of seniority rights in addition to the award of backwages.

    The Court of Appeals ruled that the doctrine of strained relations cannot apply to Katando as she is part of the rank and file workforce and does not occupy a managerial or key position in the company. She even asked for her reinstatement. In addition, there is no proof of strained relations between her and Papertech. The fact that Katando and Papertech had been involved in several cases (illegal dismissal in connection with a strike and illegal suspension which happened around 2008) is not sufficient because no strained relations should arise from a valid and legal act of asserting one’s right.

    Papertech filed a motion for reconsideration but it was denied by the Court of Appeals.

    Issue:

    Whether the Court of Appeals erred in ordering the reinstatement of Katando instead of granting her separation pay.

    Ruling:

    In this case, the Supreme Court explained the doctrine of strained relations, which contemplates a situation where a monetary award is to be paid to an employee as an alternative to a reinstatement that can no longer be effected.

    According to the Court, the following factors should be considered in applying the doctrine of strained relations:

    • The employee must occupy a position where he or she enjoys the trust and confidence of his or her employer;
    • 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;
    • It cannot be applied indiscriminately because some hostility is invariably engendered between the parties as a result of litigation; and
    • It cannot arise from a valid and legal act of asserting one’s right.

    The doctrine cannot apply when the employee:

    • has not indicated an aversion to returning to work;
    • does not occupy a position of trust and confidence; or
    • has no say in the operation of the employer’s business.

    Furthermore, strained relations between the parties must be proven as a fact.

    In the present case, the Court noted that Katando did not occupy a position of trust and confidence as a machine operator. However, the Court found it apt to apply the doctrine of strained relations.

    Although acknowledging that litigation between the parties per se should not bar the reinstatement of an employee, the Court found the present case was not the only case that involved Papertech and Katando. Papertech and Katando had been in conflict for more than 10 years. The length of time from the occurrence of the incident to its resolution and the demonstrated litigiousness of the parties showed that their relationship is strained. Protracted litigation between the parties here sufficiently demonstrated that their relationship was already strained.

    Papertech had not even bothered to appeal the ruling of the Labor Arbiter, and even stated that “in order not to prolong the proceedings, and for both parties to peacefully move on from this unwanted situation, Papertech is willing to pay the judgment award of separation pay.” The Court took this as a confirmation that Papertech no longer wanted Katando back as its employee.

    Moreover, what remained in the Pasig City premises of Papertech was its sales, marketing, and distribution operations since its manufacturing and production departments were transferred to the province. Consequently, the position held by Katando was abolished. Katando’s reinstatement as a machine operator in Papertech’s Pasig City premises was no longer possible.

    The Court awarded separation pay to Katando, being the only viable option under the circumstances.

    Further reading:

    • Papertech, Inc. v. Katando, G.R. No. 236020, January 8, 2020.

  • Filing a Strike Notice to Conceal the Illegality of the Strike

    Bigg’s, Inc. (Bigg’s) operates a restaurant chain with headquarters in Naga City, Camarines Sur.

    Bigg’s Employees Union (union) was formed by its employees and was granted a Certificate of Registration by the Department of Labor and Employment on January 30, 1996.

    Bigg’s Version of the Events

    Bigg’s claimed that on February 16, 1996, approximately fifty (50) union members staged an illegal “sit-down strike”1Sit-down is a form of strike where the strikers do not leave the workplace but merely establish themselves within the plant and stop production in its restaurant.

    Bigg’s stated that the union failed to file a notice of strike and conduct a strike vote. Bigg’s further stated that the union belatedly filed a notice of strike with the National Conciliation and Mediation Board on the same day of February 16, 1996 to cover up the illegality of the sit-down strike.

    Bigg’s also stated that it issued to the striking union members a memorandum which placed them under preventive suspension and required them to explain their actions within twenty four (24) hours from receipt of the same. Bigg’s claimed that since the union members did not comply with its order, it sent the said union members their employment termination letters on February 19, 1996.

    According to Bigg’s, it filed a complaint for illegal strike against the union members before the National Conciliation and Mediation Board.

    Union’s Version of the Events

    On the other hand, the union members accused Bigg’s of interfering with their union activities.

    They stated that in February 1996, Bigg’s asked them to withdraw their union membership under threat of losing their employment.

    They further stated that in the same month, Bigg’s dismissed two (2) employees from service due to their union membership.

    They also stated that on February 16, 1996, the union president and other union members, were prevented from entering Bigg’s premises.

    According to the union members, they filed a Notice of Strike with the National Conciliation and Mediation Board on the same day of February 16, 1996. When they attempted to return to work on the next day, they were instructed to obtain their respective memoranda from the main office in Naga City. They discovered that the memoranda informed them of their suspension from work for participating in a sit-down strike. Some union members tried to talk with Bigg’s management, but they were told not to report for work the next day.

    The union members thus filed a complaint for unfair labor practices, illegal dismissal, and damages against Bigg’s before the National Conciliation and Mediation Board.

    The National Conciliation and Mediation Board consolidated the two complaints and conducted mediation proceedings.

    When mediation reached an impasse, the union went on strike on March 5, 1996.

    Bigg’s claimed that during the strike on March 5, 1996, the union members:

    1) committed violence and disruptions;

    2) prevented ingress and egress of employees and customers to and from its premises;

    3) stopped Bigg’s vans from making deliveries;

    4) threw stones at the vans;

    5) injured the driver;

    6) damaged its vehicles and guardhouse; and

    7) discouraged people from going to Bigg’s Diner.

    The strike ceased when both parties agreed to compulsory arbitration.

    Were the strikes held on February 16, 1996 and March 5, 1996 illegal?

    The Supreme Court ruled that both strikes were illegal.

    Requirements of a Valid Strike

    The Court discussed established principles as follows:

    Strike, Concept

    A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.2Article 219 (formerly Article 212) (o) of the Labor Code of the Philippines.

    Procedural Requirements

    Article 2783Formerly Article 263 of the Labor Code of the Philippines, lays down the procedural requirements depending on the ground of the strike.4In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of 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-day cooling-off period shall not apply and the union may take action immediately.
    (d) The notice must be in accordance with such implementing rules and regulations as the Minister of Labor and Employment may promulgate.
    (e) During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout.
    (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 the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided.     This provision was further implemented by Department of Labor and Employment Order No. 40-035Amending the Implementing Rules of Book V of the Labor Code of the Philippines and Department of Labor and Employment Order No. 40-A-036Amending Section 5, Rule XXII of the Implementing Rules of Book V of the Labor Code of the Philippines (March 12, 2003). which amended Book V of the Implementing Rules of the Labor Code of the Philippines.

    Grounds

    The Labor Code of the Philippines and its implementing rules limit the grounds for a valid strike to:

    1) a bargaining deadlock in the course of collective bargaining, or

    2) the conduct of unfair labor practices by the employer.7Section 5. Grounds for strike or lockout. — A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practices. Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes or without first having filed a notice of strike or lockout or without the necessary strike or lockout vote having been obtained and reported to the Board. Neither will a strike be declared after assumption of jurisdiction by the Secretary or after certification of submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds or the strike or lockout.

    Who Can Declare a Strike

    Only a certified or duly recognized bargaining representative may declare a strike in case of a bargaining deadlock. However, in cases of unfair labor practices, the strike may be declared by any legitimate labor organization.8Section 6. Who May Declare a Strike or Lockout. — Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may declare a strike but only on grounds of unfair labor practices. (DO 40-03: Amending the Implementing Rules of Book V of the Labor Code of the Philippines, February 17, 2003).

    Strike Vote

    In both instances, the union must conduct a “strike vote” which requires that the actual strike is approved by majority of the total union membership in the bargaining unit concerned.

    Strike Vote Report

    The union is required to notify the regional branch of the National Conciliation and Mediation Board of the conduct of the strike vote at least twenty four (24) hours before the conduct of the voting. Thereafter, the union must furnish the National Conciliation and Mediation Board with the results of the voting at least seven (7) days before the intended strike or lockout.9Section 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 in a partnership 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 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 the 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, subject to the cooling-off period provided in this Rule. (DO 40-03)

    Jurisprudence teaches that this seven-day period has been referred to as the “seven-day strike ban”10CCBPI Postmix Workers Union v. National Labor Relations Commission, G.R. Nos. 114521 & 123491, November 27, 1998. or the “seven-day waiting period”11Lapanday Workers Union v. National Labor Relations Commission, G.R. Nos. 95494-97, September 7, 1995. and such period is intended to give the National Conciliation and Mediation Board an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.12Lapanday Workers Union v. National Labor Relations Commission, G.R. Nos. 95494-97, September 7, 1995.

    Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Bargaining Deadlock

    In a strike due to bargaining deadlocks, the union must file a notice of strike with the regional branch of the National Conciliation and Mediation Board at least 30 days before the intended date of the strike and serve a copy of the notice on the employer. This is the so-called “cooling-off period” when the parties may enter into compromise agreements to prevent the strike.

    Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Unfair Labor Practice

    In case of unfair labor practice, the period of notice is shortened to 15 days in that the union must file a notice of strike with the regional branch of the National Conciliation and Mediation Board at least 15 days before the intended date of the strike.

    In Cases of Union Busting

    In case of union busting, the “cooling-off period” does not apply 13but notice to strike still applies and the union may immediately conduct the strike after the strike vote and after submitting the results thereof to the regional arbitration branch of the National Conciliation and Mediation Board at least seven (7) days before the intended strike.14Section 7. Notice of Strike or Lockout. — In bargaining deadlocks, a notice of strike or lockout shall be filed with the regional branch of the Board at least thirty (30) days before the intended date thereof, a copy of said notice having been served on the other party concerned. In cases of unfair labor practice, the period of notice shall be fifteen (15) days. However, in case of unfair labor practice involving the dismissal from employment of any union officer 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 fifteen-day cooling-off period shall not apply and the union may take action immediately after the strike vote is conducted and the results thereof submitted to the appropriate regional branch of the Board. xxx xxx xxx 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 in a partnership 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 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 the 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 cooling-off period provided in this Rule. (DO 40-03).

    Strike Grounded on Unfair Labor Practice

    According to the Court, in a strike grounded on unfair labor practice, the following are the requirements:

    1) a strike declared by the duly certified bargaining agent or legitimate labor organization;

    2) the conduct of the strike vote in accordance with the notice and reportorial requirements to the National Conciliation and Mediation Board and subject to the seven-day waiting period; and

    3) the notice of strike filed with the National Conciliation and Mediation Board and copy furnished to the employer, subject to the 15-day cooling-off period. The Court restated that in cases of union busting, the 15-day cooling-off period shall not apply.

    The Union Conducted an Illegal Sit-down Strike on February 16, 1996

    A Sit-down Strike Occurred on February 16, 1996

    With regard to the first strike conducted by the union members on February 16, 1996, the Court found substantial evidence proving that the union staged a “sit-down strike.” Specifically, The Court considered the affidavits executed by certain Bigg’s employees deposing that the union members conducted a sit-down strike on February 16, 1996. These employees consistently narrated that in the morning of February 16, 1996, union members refused to do their jobs despite having directed to do so.

    Union Did Not File a Notice of Strike And Failed to Observe Cooling-off Period

    The Court further found that the union failed to file the requisite Notice of Strike and likewise failed to observe the cooling-off period. According to the Court, in an effort to legitimize the strike on February 16, 1996, the union filed a Notice of Strike on the same day. The Court said that this cannot be considered as compliance with the requirement, as the cooling-off period is mandatory. The cooling-off period is not merely a period during which the union and the employer must simply wait. The purpose of the cooling-off period is to allow the parties to negotiate and seek a peaceful settlement of their dispute to prevent the actual conduct of the strike. In other words, the Court said, there must be genuine efforts to amicably resolve the dispute.

    Ground of Unfair Labor Practice Was Not Proven

    Moreover, the Court found no proof that Bigg’s was guilty of unfair labor practice as defined under Article 25915Art. 259. (Formerly 248) Unfair Labor Practices of Employers. — It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (e) To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, That the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent; (f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (g) To violate the duty to bargain collectively as prescribed by this Code; (h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or (i) To violate a collective bargaining agreement. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. of the Labor Code of the Philippines to allow the union, a non-certified bargaining agent to initiate the strike.

    Union Busting Was Also Not Proven

    Likewise, the Court found that the union failed to prove the presence of union busting16To constitute union busting under Article 263 of the Labor Code,there must be: 1) a dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws; and 2) the existence of the union must be threatened by such dismissal. (Pilipino Telephone Corp. v. Pilipino Telephone Employees Association, G.R. Nos. 160058 &160094, June 22, 2007). to exempt it from compliance with the cooling-off period. The union did not present any substantial evidence to prove its allegations that union members were actually dismissed or threatened with dismissal for their union membership.

    For the Court, the union’s failure to comply with mandatory requirements rendered the strike on February 16, 1996 illegal.

    The Strike on March 5, 1996 Was Illegal Despite Compliance with Procedural Requirements

    With regard to the strike conducted on March 5, 1996, the Court found that the union complied with the procedural requirements of a valid strike. However, it was established that the striking union members committed acts of violence, aggression, vandalism, and blockage of the free passage to and from Bigg’s premises.

    Specifically, the Court considered an audio-video footage showing the union members’ acts of violence, aggression, and prevention of ingress to and egress from the premises of Bigg’s. Furthermore, it considered the undisputed facts that the union members:

    1) formed a human barricade and prevented delivery vehicles from passing through Bigg’s gates;

    2) placed three big stones along the gate entrance to keep the vehicles from exiting the premises; and

    3) flung stones at another van while it was on its way out of the area.

    Said the Court, while the law protects the right of workers to engage in concerted activities for the purpose of collective bargaining or to seek redress for unfair labor practices, this right must be exercised in accordance with the law, specifically Article 27917Formerly 264 (e) of the Labor Code of the Philippines which prohibits any person engaged in picketing from committing any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.

    For the Court, the strike conducted on March 5, 1996 was illegal.

    Were the union officers and members validly dismissed?

    The Court reiterated principles relating to Article 27918Formerly Article 264 (a), which states: x x x 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. of the Labor Code of the Philippines in that for union members, what is required is that they knowingly participated in the commission of illegal acts during the strike for there to be sufficient ground for termination of employment. For union officers, however, it suffices that they knowingly participated in an illegal strike.

    Dismissal of the Union President Valid

    In the present case, the Court, found that the union president not only knowingly participated, but also was the one who principally organized the two (2) illegal strikes on February 16, 1996 and March 5, 1996. For the Court, the dismissal of the union president and the other union officers after the illegal strike on February 16, 1996 as well as the March 5, 1996 strike was valid.

    Union Members Who Did Not Participate in Any Prohibited Act During the Strikes, Dismissal Invalid

    However, the Court clarified that as to the union members who did not participate in any prohibited act during the strikes, their dismissal was invalid.

    Awards

    Such employees were awarded separation pay as prayed for by Bigg’s. The Court said that considering that twenty three (23) years have passed since the dismissal of the union members on February 19, 1996, and bearing in mind Bigg’s manifestation that it could no longer trust the striking employees especially as it is in the food service industry, separation pay may be more appropriate in lieu of reinstatement.19Consistent with Philippine Diamond Hotel & Resort, Inc. v. Manila Diamond Hotel Employees Union, G.R. No. 158075, June 30, 2006 where the Court made the following discussion: Reinstatement without backwages of striking members of respondent who did not commit illegal acts would thus suffice under the circumstances of the case. If reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order.

    The relief of backwages was, however, not awarded said employees, consistent with jurisprudence which dictates that backwages are not granted to dismissed employees who participated in an illegal strike even if they are later reinstated.20In Escario v. National Labor Relations Commission (G.R. No. 160302, September 27, 2010), the Supreme Court held: Conformably with the long honored principle of a fair day’s wage for a fair day’s labor, employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike.

    Further reading:

    • Bigg’s, Inc. v. Boncacas, G.R. Nos. 200487 & 200636, March 6, 2019.

  • Extent of the Awards of Backwages and Separation Pay

    The workers of the Continuous Galvanizing Line department of the Philippine Steel Coating Corp. asserted that the awards of backwages and separation pay should not have been limited to the closure of the said department, but should have included the closure of Philippine Steel Coating Corporation’s entire business.

    The Supreme Court disagreed based on the principle that “an illegally dismissed employee’s entitlement to backwages and separation pay should be computed only up to the time that the said employee would have been expected to work with his/her employer had he/she not been illegally dismissed.” The Court said:

    In any event, petitioner’s claim that the judgment award should include the period after the closure of the Continuous Galvanizing Line (CGL) department until the closure of respondent Philippine Steel Coating Corporation’s (PhilSteel) entire business, lacks merit.

    It should be noted that petitioner never questioned the validity of the closure of PhilSteel’s CGL department. It only insists that the closure of the CGL department does not affect the computation of the period for the purpose of determining the retrenched employees’ monetary award because PhilSteel continued to operate until May 8, 2013.

    Petitioner should be reminded that an illegally dismissed employee’s entitlement to backwages and separation pay should be computed only up to the time that the said employee would have been expected to work with his/her employer had he/she not been illegally dismissed. Given that the validity of the CGL department’s closure is not disputed, the ten (10) retrenched employees assigned to the CGL department could not have been presumed to continue working for PhilSteel despite the valid closure of PhilSteel’s CGL department. There is nothing in the petition to show that the retrenched employees’ employments were not dependent on the operation of the CGL department in order to justify their claim of entitlement to backwages and separation pay until PhilSteel’s total closure on May 8, 2013. On the contrary, the retrenched employees were specifically referred to as “workers of the CGL line,” thereby showing that their employment was contingent on the existence of the CGL department. As such, the backwages and separation pay were properly computed only until the closure of the CGL department, or until August 2, 2012.

    Further Reading:

    • PhilSteel Workers Union-Olalia-KMU v. Philippine Steel Coating Corp., G.R. No. 241897, January 7, 2019.

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  • Supervening Events Made It Impossible for Me to Reinstate My Employee

    The Court noted Rogel’s illegal dismissal case (G.R. No. 196038), a case related to the present one, which awarded the reliefs of reinstatement and backwages to Rogel. The Court stated that the decision in such case became final and executory on March 30, 2012. Thereafter, during execution proceedings therein, Rogel was granted separation pay in lieu of reinstatement.

    Furthermore, the Court found that Consolidated Distillers of the Far East, Inc. (Consolidated Distillers), or Rogel’s employer, no longer questioned the propriety of the awards of separation pay and backwages, as it only took issue with their computation. Specifically, the Court found that Consolidated Distillers argued that it should only be liable for separation pay and backwages until the year 2007 in view of the execution of the Asset Purchase Agreement and the termination of the subsequent Service Agreement it had with Emperador Distillers, Inc. (Emperador Distillers). For Consolidated Distillers, these were supervening events that caused the impossibility of Rogel’s reinstatement, as his position became inexistent as of 2007, consistent with the ruling of the Court in Olympia Housing, Inc. v. Lapastora1G.R. No. 187691, January 13, 2016

    Should computation of separation pay and backwages be limited to the year 2007, as Consolidated Distillers had asserted?

    The Court ruled in the negative.

    The Court stated that Consolidated Distillers cannot find support in Olympia Housing because the ruling in that case was against its position.

    The Court explained that in Olympia Housing, the employer therein was able to prove in a separate labor case that it had closed its business and followed all statutory requirements arising from the closure of its business. Given this, the Court in Olympia Housing ruled that the employer was liable for backwages and separation pay only until the date of the closure of the business of the employer, even if this was prior to the Office of the Labor Arbiter’s decision finding illegal dismissal.

    However, the Court stressed that for Olympia Housing to apply, the employer must prove the closure of its business in full and complete compliance with all statutory requirements prior to the date of the finality of the award of backwages and separation pay. The statutory requirements referred to by the Court were:

    In the present case, Consolidated Distillers failed to show that it had closed its business in 2007 and that it had complied with all the statutory requirements for the closure.

    The Court found that Consolidated Distillers only alleged the execution of the Asset Purchase Agreement and the termination of the Service Agreement with Emperador Distillers. For the Court, these never meant that Consolidated Distillers had closed its business. The Court even found no evidence that in 2007, Consolidated Distillers had notified the Department of Labor and Employment or its employees of the closure of its business and the reason for its closure. There was also no showing that Rogel was affected by this purported closure of Consolidated Distillers’ business.

    The Court thus ruled that Consolidated Distillers was liable for backwages and separation pay until the finality of its decision.

    It applied its Decision in Bani Rural Bank, Inc. v. De Guzman,2G.R. No. 170904, November 13, 2013 since separation pay, in lieu of reinstatement, was awarded after the finality of the decision declaring illegal dismissal and during the execution proceedings because the employees therein manifested that they no longer wanted to be reinstated. The Supreme Court held therein that when there is a supervening event that renders reinstatement impossible, backwages is computed from the time of dismissal until the finality of the decision ordering separation pay. The Court explained that when there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other.

    In the present case, the Court found that the award of separation pay in lieu of reinstatement, was made subsequent to the finality of the decision in Rogel’s illegal dismissal case (G.R. No. 196038). The Court thus ruled that Consolidated Distillers could not evade its liability to Rogel for backwages and separation pay computed until the finality of the Court’s Decision which affirmed the order granting separation pay.

    Further reading:

    • Consolidated Distillers of the Far East, Inc. v. Zaragoza, G.R. No. 229302, June 20, 2018.