Professional Documents
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Industrial Timber Corp Vs Ababon
Industrial Timber Corp Vs Ababon
x ---------------------------------------------------- x
- versus -
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
Before us are two petitions for review under Rule 45 of the Rules of Court. G.R. No.
164518 assails the October 21, 2002 Decision of the Court of Appeals, in CA-GR.
[1]
SP No. 51966, which set aside the May 24, 1995 Decision of the National Labor
[2]
Relations Commission (NLRC), as well as the July 16, 2004 Resolution denying its [3]
motion for reconsideration. G.R. No. 164965 assails only the July 16, 2004
Resolution of the Court of Appeals which denied their partial motion for
reconsideration. These cases were consolidated because they arose out of the same
facts set forth below.
On March 16, 1990, ITC notified the Department of Labor and Employment (DOLE)
and its workers that effective March 19, 1990 it will undergo a no plant operation
due to lack of raw materials and will resume only after it can secure logs for milling.
[5]
Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990
and its intention not to renew the same.
On June 26, 1990, ITC notified the DOLE and its workers of the plants
shutdown due to the non-renewal of anti-pollution permit that expired in April
1990. This fact and the alleged lack of logs for milling constrained ITC to lay off
[6]
all its workers until further notice. This was followed by a final notice of closure or
cessation of business operations on August 17, 1990 with an advice for all the
workers to collect the benefits due them under the law and CBA. [7]
On October 15, 1990, IPGC took over the plywood plant after it was issued a
Wood Processing Plant Permit No. WPR-1004-081791-042, which included the
[8]
This prompted Virgilio Ababon, et al. to file a complaint against ITC and
IPGC for illegal dismissal, unfair labor practice and damages. They alleged, among
others, that the cessation of ITCs operation was intended to bust the union and that
both corporations are one and the same entity being controlled by one owner.
On January 20, 1992, after requiring both parties to submit their respective
position papers, Labor Arbiter Irving A. Petilla rendered a decision which refused to
pierce the veil of corporate fiction for lack of evidence to prove that it was used to
perpetuate fraud or illegal act; upheld the validity of the closure; and ordered ITC to
pay separation pay of month for every year of service. The dispositive portion of the
decision reads:
All other claims of complainants are hereby ordered DISMISSED for want
of merit.
SO ORDERED.[9]
Ababon, et al. appealed to the NLRC. On May 20, 1993, the NLRC set aside the
decision of the Labor Arbiter and ordered the reinstatement of the employees to their
former positions, and the payment of full back wages, damages and attorneys fees. [10]
ITC and IPGC filed a Motion for Reconsideration through JRS, a private courier, on
June 24, 1993. However, it was dismissed for being filed out of time having been
[11]
filed only on the date of actual receipt by the NLRC on June 29, 1993, three days
after the last day of the reglamentary period. Thus, they filed a Petition for Relief
[12]
from Resolution, which was treated as a second motion for reconsideration by the
[13]
NLRC and dismissed for lack of merit in a Resolution dated September 29, 1994. [14]
From said dismissal, petitioners filed a Notice of Appeal with the Supreme
Court. Subsequently, they filed a Motion for Reconsideration/Second Petition for
[15]
On December 7, 1994, the Supreme Court dismissed the Notice of Appeal for
being a wrong mode of appeal from the NLRC decision. On the other hand, the
[17]
NLRC granted the Second Petition for Relief and set aside all its prior decision and
resolutions. The dispositive portion of the May 24, 1995 decision reads:
WHEREFORE, the decision of this Commission dated May 10, 1993 and its
subsequent resolutions dated June 22, 1994 and September 29, 1994 are Set Aside
and Vacated. Accordingly, the appeal of complainants is Dismissed for lack of
merit and the decision of the Labor Arbiter dated January 20, 1992 is Reinstated
and hereby Affirmed.
SO ORDERED.[18]
On October 2, 1995, Virgilio Ababon, et al. filed a Petition for Certiorari with the
Supreme Court, which was docketed as G.R. No. 121977. However, pursuant to [19]
our ruling in St. Martins Funeral Home v. NLRC, we referred the petition to the
Court of Appeals for appropriate action and disposition. [20]
On October 21, 2002, the Court of Appeals rendered a decision setting aside the May
24, 1995 decision of the NLRC and reinstated its May 20, 1993 decision and
September 29, 1993 resolution, thus:
WHEREFORE, the petition is GRANTED. The decision dated May 24, 1995 of
the National Labor Relations Commission is ANNULLED and SET ASIDE, with
the result that its decision dated May 20, 1993 and resolution dated September 29,
1994 are REINSTATED.
SO ORDERED.[21]
Both parties filed their respective motions for reconsideration which were denied,
hence, the present consolidated petitions for review based on the following assigned
errors:
ITC and IPGC contend that the Court of Appeals erred in reversing the May 24,
1995 decision of the NLRC since its May 20, 1993 decision had become immutable
for their failure to file motion for reconsideration within the reglementary period.
While they admit filing their motion for reconsideration out of time due to excusable
negligence of their counsels secretary, however, they advance that the Court of
Appeals should have relaxed the rules of technicality in the paramount interest of
justice, as it had done so in favor of the employees, and ruled on the merits of the
case; after all, the delay was just three days.
Ordinarily, once a judgment has become final and executory, it can no longer
be disturbed, altered or modified. However, this rule admits of exceptions in cases
of special and exceptional nature as we held in Industrial Timber Corporation v.
National Labor Relations Commission: [24]
It is true that after a judgment has become final and executory, it can no
longer be modified or otherwise disturbed. However, this principle admits of
exceptions, as where facts and circumstances transpire which render its execution
impossible or unjust and it therefore becomes necessary, in the interest of justice,
to direct its modification in order to harmonize the disposition with the prevailing
circumstances.
Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the
exercise of its appellate powers, correct, amend, or waive any error, defect or
irregularity whether in substance or in form. Further, Article 221 of the same code
provides that in any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its
members and the Labor Arbiters shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process. [26]
Also, the rule under Section 14 of Rule VII of the New Rules of Procedure of the
NLRC that a motion for reconsideration of any order, resolution or decision of the
Commission shall not be entertained except when based on palpable or patent
errors, provided that the motion is under oath and filed within 10 calendar days
from receipt of the order, resolution or decision should not be interpreted as to
sacrifice substantial justice to technicality. It should be borne in mind that the real
purpose behind the limitation of the period is to forestall or avoid an unreasonable
delay in the administration of justice, from which the NLRC absolved ITC and IPGC
because the filing of their motion for reconsideration three days later than the
prescribed period was due to excusable negligence. Indeed, the Court has the power
to except a particular case from the operation of the rule whenever the purposes of
justice requires it because what should guide judicial action is that a party is given
the fullest opportunity to establish the merits of his action or defense rather than for
him to lose life, honor, or property on mere technicalities. [27]
We now come to the main issues of whether Ababon, et al. were illegally dismissed
due to the closure of ITCs business; and whether they are entitled to separation pay,
backwages, and other monetary awards.
A reading of the foregoing law shows that a partial or total closure or cessation of
operations of establishment or undertaking may either be due to serious business
losses or financial reverses or otherwise. Under the first kind, the employer must
sufficiently and convincingly prove its allegation of substantial losses, while under
[29]
the second kind, the employer can lawfully close shop anytime as long as cessation
[30]
of or withdrawal from business operations was bona fide in character and not
impelled by a motive to defeat or circumvent the tenurial rights of employees, and [31]
as long as he pays his employees their termination pay in the amount corresponding
to their length of service. Just as no law forces anyone to go into business, no law
[32]
can compel anybody to continue the same. It would be stretching the intent and spirit
of the law if a court interferes with management's prerogative to close or cease its
business operations just because the business is not suffering from any loss or
because of the desire to provide the workers continued employment. [33]
In sum, under Article 283 of the Labor Code, three requirements are necessary
for a valid cessation of business operations: (a) service of a written notice to the
employees and to the DOLE at least one month before the intended date thereof; (b)
the cessation of business must be bona fide in character; and (c) payment to the
employees of termination pay amounting to one month pay or at least one-half month
pay for every year of service, whichever is higher.
In these consolidated cases, we find that ITCs closure or cessation of business
was done in good faith and for valid reasons.
The records reveal that the decision to permanently close business operations was
arrived at after a suspension of operation for several months precipitated by lack of
raw materials used for milling operations, the expiration of the anti-pollution permit
in April 1990, and the termination of the lease contract with IPGC in August 1990
over the plywood plant at Agusan, Pequeo, Butuan City. We quote with approval the
observation of the Labor Arbiter:
As borne out from the records, respondent ITC actually underwent no plant
operation since 19 March 1990 due to lack of log supply. This fact is admitted by
complainants (Minutes of hearing, 28 October 1991). Since then several subsequent
incidents prevented respondent ITC to resume its business operations e.g.
expiration and non-renewal of the wood processing plant permit, anti-pollution
permit, and the lease contract on the plywood plant. Without the raw materials
respondent ITC has nothing to produce. Without the permits it cannot lawfully
operate the plant. And without the contract of lease respondent ITC has no option
but to cease operation and turn over the plant to the lessor.[34] (Emphasis supplied)
Moreover, the lack of raw materials used for milling operations was affirmed
in Industrial Timber Corporation v. National Labor Relations Commission as one [35]
of the reasons for the valid closure of ITCs Butuan Logs Plant in 1989. In said case,
we upheld the management prerogative to close the plant as the only remedy
available in order to prevent imminent heavy losses on account of high production
costs, erratic supply of raw materials, depressed prices and poor market conditions
for its wood products.
that the non-renewal of petitioner corporations lease contract and its consequent
closure and cessation of operations may be considered an event beyond petitioners
control, in the nature of a force majeure situation. As such, it amounts to an
authorized cause for termination of the private respondents.
Having established that ITCs closure of the plywood plant was done in good
faith and that it was due to causes beyond its control, the conclusion is inevitable
that said closure is valid. Consequently, Ababon, et al. could not have been illegally
dismissed to be entitled to full backwages. Thus, we find it no longer necessary to
discuss the issue regarding the computation of their backwages. However, they are
entitled to separation pay equivalent to one month pay or at least one-half month pay
for every year of service, whichever is higher.
Although the closure was done in good faith and for valid reasons, we find that ITC
did not comply with the notice requirement. While an employer is under no
obligation to conduct hearings before effecting termination of employment due to
authorized cause, however, the law requires that it must notify the DOLE and its
[37]
In the case at bar, ITC notified its employees and the DOLE of the no plant operation
on March 16, 1990 due to lack of raw materials. This was followed by a shut down
notice dated June 26, 1990 due to the expiration of the anti-pollution permit.
However, this shutdown was only temporary as ITC assured its employees that they
could return to work once the renewal is acted upon by the DENR. On August 17,
1990, the ITC sent its employees a final notice of closure or cessation of business
operations to take effect on the same day it was released. We find that this falls short
of the notice requirement for termination of employment due to authorized cause
considering that the DOLE was not furnished and the notice should have been
furnished both the employees and the DOLE at least one month before the intended
date of closure.
Where the dismissal is based on an authorized cause under Article 283 of the Labor
Code but the employer failed to comply with the notice requirement, the sanction
should be stiff as the dismissal process was initiated by the employers exercise of
his management prerogative, as opposed to a dismissal based on a just cause under
Article 282 with the same procedural infirmity where the sanction to be imposed
upon the employer should be tempered as the dismissal process was, in effect,
initiated by an act imputable to the employee.
[39]
In light of the factual circumstances of the cases at bar, we deem it wise and
reasonable to award P50,000.00 to each employee as nominal damages.
WHEREFORE, in view of the foregoing, the October 21, 2002 Decision of the
Court of Appeals in CA-GR. SP No. 51966, which set aside the May 24, 1995
Decision of the NLRC, as well as the July 16, 2004 Resolution denying ITCs motion
for reconsideration, are hereby REVERSED. The May 24, 1995 Decision of the
NLRC reinstating the decision of the Labor Arbiter finding the closure or cessation
of ITCs business valid, is AFFIRMED with the MODIFICATIONS that ITC is
ordered to pay separation pay equivalent to one month pay or to at least one-half
month pay for every year of service, whichever is higher, and P50,000.00 as nominal
damages to each employee.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice
MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
Chief Justice
[1]
Rollo (G.R. No. 164518), pp. 41-52. Penned by Associate Justice Edgardo P. Cruz and concurred in by Associate
Justices Oswaldo D. Agcaoili and Amelita G. Tolentino.
[2]
Id. at 85-101. Penned by Commissioner Musib M. Buat and concurred in by Leon G. Gonzaga, Jr. Commissioner
Oscar N. Abella, dissented.
[3]
Id. at 53-54.
[4]
CA rollo, pp. 130-131.
[5]
Id. at 121.
[6]
Id. at 122.
[7]
Id. at 123.
[8]
Id. at 124.
[9]
Rollo (G.R. No. 164518), p. 68.
[10]
Id. at 83-84. Penned by Commissioner Oscar N. Abella and concurred in by Commissioners Leon G. Gonzaga, Jr.
and Musib M. Buat.
[11]
CA rollo, pp. 214-222.
[12]
Id. at 223-225.
[13]
Id. at 227-235.
[14]
Id. at 236-240.
[15]
Id. at 256-259, docketed as G.R. No. 117825.
[16]
Id. at 241.
[17]
Id. at 260.
[18]
Rollo (G.R. No. 164518), p. 100.
[19]
CA rollo, pp. 4-26.
[20]
Id. at 610.
[21]
Rollo (G.R. No. 164518), p. 52.
[22]
Id. at 21.
[23]
Rollo (G.R. No. 164965), p. 22.
[24]
G.R. No. 111985, June 30, 1994, 233 SCRA 597, 601.
[25]
Rollo (G.R. No. 164518), p. 93.
[26]
See Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005, 458 SCRA 609, 628.
[27]
Philippine Commercial Industrial Bank v. Cabrera, G.R. No. 160368, March 31, 2005, 454 SCRA 792, 801.
[28]
Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, September 16, 2005, SC E-Library.
[29]
Alabang Country Club, Inc. v. National Labor Relations Commission, G.R. No. 157611, August 9, 2005, SC E-
Library.
[30]
Id.
[31]
Danzas Intercontinental, Inc. v. Daguman, G.R. No. 154368, April 15, 2005, 456 SCRA 382, 393.
[32]
Capitol Medical Center, Inc. v. Meris, supra note 28.
[33]
Alabang Country Club, Inc. v. NLRC, supra note 29.
[34]
Rollo (G.R. No. 164518), p. 64.
[35]
339 Phil. 395, 401, 404-405 (1997).
[36]
328 Phil. 756, 771 (1996).
[37]
See Wiltshire File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249, February 7, 1991, 193 SCRA
665, 676.
[38]
G.R. No. 147756, August 9, 2005, SC E-Library.
[39]
San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005, 461 SCRA 392, 431.