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G.R. No. 112546 March 13, 1996 NORTH DAVAO MINING CORPORATION and ASS T PRIVATI!

ATION TR"ST, petitioners, vs. NATIONA# #A$OR R #ATIONS COMMISSION, #A$OR AR$IT R ANTONIO M. VI##AN" VA and %I#&R DO G"I## MA, respondents. Is a company which is forced by huge business losses to close its business, legally required to pay separation benefits to its employees at the time of its closure in an amount equivalent to the separation pay paid to those who were separated when the company was still a going concern? This is the main question brought before this Court in this petition for certiorari under Rule 6 of the Revised Rules of Court, which see!s to reverse and set aside the Resolutions dated "uly #$, %$$& 1 and 'eptember #(, %$$& 2 of the )ational *abor Relations Commission 3+)*RC, in )*RC C- )o. ./00%&$ $&. The Resolution dated "uly #$, %$$& affirmed in toto the decision of the *abor -rbiter in R-1/%%/02/006(#/$# and R-1/%%/02/00(%&/$# ordering petitioners to pay the complainants therein certain monetary claims. The Resolution dated 'eptember #(, %$$& denied the motion for reconsideration of the said "uly #$, %$$& Resolution. The Facts 3etitioner )orth 4avao .ining Corporation +)orth 4avao, was incorporated in %$(5 as a %006 privately/owned company. *ater, the 3hilippine )ational 1an! +3)1, became part owner thereof as a result of a conversion into equity of a portion of loans obtained by )orth 4avao from said ban!. 7n "une &0, %$26, 3)1 transferred all its loans to and equity in )orth 4avao in favor of the national government which, by virtue of 3roclamation )o. 0 dated 4ecember 2, %$26, later turned them over to petitioner -sset 3rivati8ation Trust +-3T,. -s of 4ecember &%, %$$0 the national government hold 2%.26 of the common stoc! and %006 of the preferred stoc! of said company. 4 Respondent 9ilfredo :uillema is one among several employees of )orth 4avao who were separated by reason of the company;s closure on .ay &%, %$$#, and who were the complainants in the cases before the respondent labor arbiter. 7n .ay &%, %$$#, petitioner )orth 4avao completely ceased operations due to serious business reverses. <rom %$22 until its closure in %$$#, )orth 4avao suffered net losses averaging three billion pesos +3&,000,000,000.00, per year, for each of the five years prior to its closure. -ll told, as of 4ecember &%, %$$%, or five months prior to its closure, its total liabilities had e=ceeded its assets by #0,&$# billion pesos, as shown by its financial statements audited by the Commission on -udit. 9hen it ceased operations, its remaining employees were separated and given the equivalent of %#. days; pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sic! leaves. >owever, it appears that, during the life of the petitioner corporation, from the beginning of its operations in %$2% until its closure in %$$#, it had been giving separation pay equivalent to thirty +&0, days; pay for every year of service. .oreover, inasmuch as the region where )orth 4avao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a ban! in Tagum, 4avao del )orte, some 2 !ilometers from their wor!place and about # %?# hours; travel time by public transportation@ this arrangement lasted from %$2% up to %$$0. 'ubsequently, a complaint was filed with respondent *abor -rbiter by respondent 9ilfredo :uillema and #(% other separated employees forA +%, additional separation pay of %(. days for every year of service@ +#, bac! wages equivalent to two days a month@ +&, transportation allowance@ +5, ha8ard pay@ + , housing allowance@ +6, food allowance@ +(, post/employment medical clearance@ and +2, future medical allowance, all of which amounted to 3 2,0##,2(2.&% as computed by private respondent. 5 7n .ay 6, %$$&, respondent *abor -rbiter rendered a decision ordering petitioner )orth 4avao to pay the complainants the followingA +a, -dditional separation pay of %(. every year of service@ days for

+c, Transportation allowance at 320 a month times the number of years of service but not to e=ceed three +&, years. The benefits awarded by respondent *abor -rbiter amounted to 3%0,#50, %(.( . -ttorney;s fees equivalent to ten percent +%06, thereof were also granted. 6 7n appeal, respondent )*RC affirmed the decision in toto. 3etitioner )orth 4avao;s motion for reconsideration was li!ewise denied. >ence, this petition. The Parties' Submissions and the Issues In affirming the *abor -rbiter;s decision, respondent )*RC ruled that Bsince +)orth 4avao, has been paying its employees separation pay equivalent to thirty +&0, days pay for every year of service,B !nowing fully well that the law provides for a lesser separation pay, then such company policy Bhas ripened into an obligation,B and therefore, depriving now the herein private respondent and others similarly situated of the same benefits would be discriminatory. ' Cuoting from Businessday Information Systems and Services, Inc . (BISSI) vs. NLR , ( it said that petitioners Bmay not pay separation benefits unequally for such discrimination breeds resentment and ill/will among those who have been treated less generously than others.B It also cited !be""a vs. NLR , 9 as authority for saying that -rt. #2& of the *abor Code protects wor!ers in case of closure of the establishment. To Dustify the award of two days a month in bac!wages and 320 per month of transportation allowance, respondent Commission ruledA -s to the appellants; claim that complainants/ appellees; time spent in collecting their wages at Tagum, 4avao is not compensable allegedly because it was on official time can not be given credence. )o iota of evidence has been presented to bac! up said contention. The same is true with appellants; assertion that the claim for transportation e=penses is without basis since they were incurred by the complainants. -ppellants should have submitted the payrolls to prove that complainants appellees were not the ones who personally collected their wages and?or the bus?Deep trip tic!ets or vouchers to show that the complainants/appellees were provided with free transportation as claimed. 3etitioner, through the :overnment Corporate Counsel, raised the following grounds for the allowance of the petitionA %. The )*RC acted with grave abuse of discretion in affirming without legal basis the award of additional separation pay to private respondents who were separated due to serious business losses on the part of petitioner. #. The )*RC acted with grave abuse of discretion in affirming without sufficient factual basis the award of bac!wages and transportation e=penses to private respondents. &. There is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of the law. and the following issuesA %. 9hether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure. #. 9hether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. &. 9hether or not private respondents are entitled to transportation e=penses in the absence of evidence that these e=penses were incurred. The First IssueA Se#aration Pay

+b, 1ac!wages equivalent to two +#, days a month times the number of years of service but not to e=ceed three +&, years@

To resolve this issue, it is necessary to revisit the provision of law adverted to by the parties in their submissions, namely, -rt. #2& of the *abor Code, which reads as followsA -rt. #2&. Closure of establishment and reduction of personnel. E The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or underta!ing unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the wor!ers and the .inistry of *abor and Fmployment at least one +%, month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the wor!er affected thereby shall be entitled to a separation pay equivalent to at least his one +%, month pay or to at least one +%, month pay for every year of service, whichever is higher. In case of retrenchment to #revent "osses and in cases of c"osures or cessation of o#erations of estab"ishment or underta$in% not due to serious business "osses or financia" reverses , the separation pay shall be equivalent to one +%, month pay or at least one/half +%?#, month pay for every year of service, whichever is higher. fraction of at least si= +6, months shall be considered one +%, whole year. +emphasis supplied, The underscored portion of -rt. #2& governs the grant of separation benefits Bin case of closures or cessation of operationB of business establishments B)7T due to serious business losses or financial reverses . . . B. 9here, however, the closure was due to business losses E as in the instant case, in which the aggregate losses amounted to over 3#0 billion E the *abor Code does not impose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. Fven the public respondents, in their Comment 1) filed by the 'olicitor :eneral, impliedly concede this point. >owever, respondents tenaciously insist on the award of separation pay, anchoring their claim solely on petitioner )orth 4avao;s long/ standing policy of giving separation pay benefits equivalent to &0/days; pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them. They rely on this Court;s ruling in Businessday Information Systems and Services, Inc . (BISSI) vs. NLR , +su#ra,. In said case, petitioner 1I''I, after e=periencing financial reverses, decided Bas a retrenchment measureB to lay/off some employees on .ay %6, %$22 and gave them separation pay equivalent to one/half +%?#, month pay for every year of service. 1I''I retained some employees in an attempt to rehabilitate its business as a trading company. >owever, barely two and a half months later, these remaining employees were li!ewise discharged because the company decided to cease business operations altogether. Gnli!e the earlier terminated employees, the second batch received separation pay equivalent to a full month;s salary for every year of service, plus a mid/ year bonus. This Court ruled that Bthere was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to e=tend equal treatment to its employees. It may not, in the guise of e=ercising management prerogatives, grant greater benefits to some and less to others. . . .B In resolving the present case, it bears !eeping in mind at the outset that the factual circumstances of BISSI are quite different from the current case. The Court noted that 1I''I continued to suffer losses even after the retrenchment of the first batch of employeesA clearly, business did not improve despite such drastic measure. That notwithstanding, when 1I''I finally shut down, it could well afford to +and actually did, pay off its remaining employees with .7RF separation benefits as compared with those earlier laid off@ obviously, then, there was no reason for 1I''I to s!imp on separation pay for the first batch of discharged employees. That it was able to pay one/month separation benefit for employees at the time of c"osure of its business meant that it must have been also in a position to pay the same amount to those who were separated #rior to c"osure. That it did not do so was a wrongful e=ercise of management prerogatives. That is why the Court correctly faulted it with Bimpermissible discrimination.B Clearly, it e=ercised its management prerogatives contrary to Bgeneral principles of fair play and Dustice.B In the instant case however, the company;s practice of giving one month;s pay for every year of service could no longer be continued

precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over 3#0 billion. This could not be said of 1I''I. In the case of )orth 4avao, it gave &0/days; separation pay to its employees when it was still a going concern even if it was already losing heavily. -s a going concern, its cash flow could still have sustained the payment of such separation benefits. 1ut when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood E its cashflow E literally dries up. Therefore, the fact that less separation benefits ware granted when the company finally met its business death cannot be characteri8ed as discrimination. 'uch action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squee8e blood out of a dry stone. )or water out of parched land. -s already stated, -rt. #2& of the *abor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of %(. days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by -rt. #52 +e, of said Code. Gnder the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial ban!ruptcy E a fact that is not controlled by management prerogatives. 'tated differently, the total cessation of operation due to mind/boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that )orth 4avao at the point of its forced closure voluntarily paid any separation benefits at all E although not required by law E and %#. /days worth at that, should have elicited admiration instead of condemnation. 1ut to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. -s this Court held in &ani"a Tradin% ' Su##"y o. vs. (u"ueta, 11 and reiterated inSan &i%ue" or#oration vs. NLR 12 and later, in !""ied Ban$in% or#oration vs. astro, 13 B+t,he law, in protecting the rights of the laborer, authori8es neither oppression nor self/destruction of the employer.B -t this Duncture, we note that the 'olicitor :eneral in his Comment challenges the petitioners; assertion that )orth 4avao, having closed down, no longer has the means to pay for the benefits. The 'olicitor :eneral stresses that )orth 4avao was among the assets transferred by 3)1 to the national government, and that by virtue of 3roclamation )o. 0 dated 4ecember 2, %$26, the -3T was constituted trustee of this government asset. >e then concludes that B+i,t would, therefore, be incongruous to declare that the )ational :overnment, which should always be presumed to be solvent, could not pay now private respondents; money claims.B 'uch argumentation is completely misplaced. Fven if the national government owned or controlled 2%.26 of the common stoc! and %006 of the preferred stoc! of )orth 4avao, it remains only a stoc!holder thereof, and under e=isting laws and prevailing Durisprudence, a stoc!holder as a rule is not directly, individually and?or personally liable for the indebtedness of the corporation. The obligation of )orth 4avao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced. 14 <rom another angle, the national government is not the employer of private respondent and his co/ complainants, so there is no reason to e=pect any !ind of bailout by the national government under e=isting law and Durisprudence. The Second and Third Bac$ )a%es and Trans#ortation !""o*ance IssuesA

-nent the award of bac! wages and transportation allowance, the issues raised in connection therewith are factual, the determination of which is best left to the respondent )*RC. It is well settled that this Court is bound by the findings of fact of the )*RC, so long as said findings are supported by substantial evidence 15. -s the 'olicitor :eneral pointed out in his commentA It is undisputed that because of security reasons, from the time of its operations, petitioner )4.C maintained its policy of paying its wor!ers at a ban! in Tagum, 4avao del )orte, which usually too! the wor!ers about two and a half +# %?#, hours of travel from the place of wor! and such travel time is not official. Records also show that on <ebruary %#, %$$#, when an inspection was conducted by the 4epartment of *abor and Fmployment at the premises of petitioner )4.C at -macan, .aco,

4avao del )orte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages +p. %0$, Hol. %, Record, 'ection 5, Rule HIII, 1oo! III of the 7mnibus Rules Implementing the *abor Code provides thatA 'ec. 5. 3lace of payment. E +a, -s a general rule, the place of payment shall be at or near the place of underta!ing. Payment in a #"ace other than the *or$#"ace sha"" be #ermissib"e on"y under the fo""o*in% circumstancesA +%, 9hen payment cannot be effected at or near the place of wor! by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible@ +#, )hen the em#"oyer #rovides free trans#ortation to the em#"oyees bac$ and forth @ and +&, Gnder any analogous circumstances@ provided that the time spent by the employees in collecting their wages shall be considered as compensable hours wor!ed. +b, === === === +Fmphasis supplied, -ccordingly, in his 7rder dated -pril %5, %$$# +p. %0$, Hol. %, Record,, the Regional 4irector, Regional 7ffice )o. II, 4epartment of *abor and Fmployment, 4avao City, ordered petitioner )4.C, among others, as followsA 9>FRF<7RF, . . . . Respondent is further ordered to pay its wor!ers salaries at the plantsite at -macan, )ew *eyte, .aco, 4avao del )orte or whenever not possible, through the ban! in Tagum, 4avao del )orte as already been practiced subDect, however to the provisions of 'ection 5 of Rule HIII, 1oo! III of the rules implementing the *abor Code as amended. Thus, public respondent *abor -rbiter -ntonio .. Hillanueva correctly held thatA <rom the evidence on record, we find that the hours spent by complainants in collecting salaries at a ban! in Tagum, 4avao del )orte shall be considered compensable hours wor!ed. Considering further the distance between -macan, .aco to Tagum which is # %?# hours by travel and the ris!s in commuting all the time in collecting complainants; salaries, would Dustify the granting of bac!wages equivalent to two +#, days in a month as prayed for. Corollary to the above findings, and for equitable reasons, we li!ewise hold respondents liable for the transportation e=penses incurred by complainants at 350.00 round trip fare during pay days.

+p. %0, 4ecision@ p. #0(, Hol. %, Record, 7n the contrary, it will be petitioners; burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid?provided by petitioners of their bac!wages and transportation e=penses. 7ther than the bare denials of petitioners, the above findings stand uncontradicted. Indeed we are not at liberty to set aside findings of facts of the )*RC, absent any capriciousness, arbitrariness, or abuse or complete lac! of basis. In &aya Farms +m#"oyees ,r%ani-ations vs. NLR , 16 , we heldA This Court has consistently ruled that findings of fact of administrative agencies ad quasi/Dudicial bodies which have acquired e=pertise because their Durisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. 9>FRF<7RF, Dudgment is hereby rendered .74I<JI): the assailed Resolution by 'FTTI): -'I4F and deleting the award for Badditional separation pay of %(. days for every year of serviceB, and -<<IR.I): it in all other aspects. )o costs. '7 7R4FRF4.