Diaz, Aurora M.

HRST 32

MERCURY DRUG CO. v. CIR

GR No. L-23357, April 30, 1974

FELIX MAKASIAR

I. Caption
Petitioners Mercury Drug Co., Inc. and Mariano Que, as manager, seek the
reversal of the decision of respondent Court of Industrial Relations dated
January 17, 1964 and its order dated February 25, 1964 denying
petitioners' motion for reconsideration of the said decision.

II. Fact
The fact is that complainant herein was given the separation pay and told to
leave the service of the corporation because of his union activities. It has
been shown that his efforts and representations made to respondent Que for
the payment of overtime compensation and for the excess hours of work
rendered on Sundays and holidays were of no avail. According to the
respondents, such claims are not tenable because they are fully covered by
the contracts of employment. But, as the records will indicate, Dayao
believed otherwise and his stand was shared by the other employees, like
Josias Fideres and Ernesto Talampas. An examination of the employment
or appointment paper of Nardo Dayao, dated October 30, 1959 (Exh. 'B',
also Exh. '2') would show that the contents thereof may be subject to
interpretation, more particularly with respect to whether the employee is
entitled to overtime or additional compensation to the '4 hours work on
every Sunday of the month' and '4 hours work on all legal holidays,' or that
the same is included in the basic pa. But the Court refrains from passing
on the matter because that is not the issue in this case. What is important
to slate is the fact that the management had received same requests from
the employees for clarification on whether they should be given additional
compensation for four hours work on Sundays and holidays. Thus,
Concepcion declared.
III. Issue/s
The insistence on the part of petitioners that the acceptance by private
respondent Dayao of a separation pay and his signing a renunciation of any
other claim against herein petitioners, militates against the charge of unfair
labor practice gets into the teeth of the principle that such waiver of the
rights of labor contravenes public policy and therefore null and void, more
so in this case when the root cause of the union activities of Dayao was
precisely motivated by his campaign for additional compensation for
overtime pay under the Eight-Hour Labor Law, against which claim estoppel
or laches is unavailing (see Manila Terminal Co., Inc. vs. CIR, et. al., 91
Phil. 625); because acceptance of termination pay does not divest a laborer
of the right to prosecute his employer for unfair labor practice acts (Carino
vs. ACCFA, L-19808, Sept. 29, 1966, 18 SCRA 183, 190; DMC vs. National
Labor Union, 48 O.G. 2765; Phil. Sugar Institute vs. CIR, et. al., L-13475,
Sept. 29, 1960). As Mr. Justice Conrado Sanchez, speaking for the Court in
the Carino case, supra, stated: "Acceptance of those benefits would not
amount to estoppel. The reason is plain. Employer and employee, obviously,
do not stand on the same footing. The employer drove the employee to the
wall. The latter must have to get hold of money. Because, out of job, he had
to face the harsh necessities of life. He thus found himself in no position to
resist money preferred him. His, then, in a case of adherence, not of choice.
One thing sure, however, is that petitioners did not relent on their claim.
They pressed it. They are deemed not to have waived any of their rights.
Renuntiatio non praesumitur."

IV. Ruling
It is true that unfair labor practice charge with the prayer for reinstatement
with back wages should be filed within a reasonable period of time. But
laches, like estoppel, should also be alleged as a defense in the answer,
otherwise the same is considered renounced. Petitioners failed to expressly
allege the same in their answer to the ULP charge, in their memorandum
and in their motion for reconsideration of the CIR decision.

However, the lapse of two years and 15 days from the dismissal from the
service to the filing of the ULP charge is not an unreasonable period of time
under the circumstances.

In this respect, the statute of limitations prescribed by the Civil Code of the
Philippines should apply in the absence of any other specific legal provision.
Article 1146 of the Civil Code of the Philippines directs that the action upon
 an injury to the rights of the plaintiff must be instituted within four years.
An action upon a contract should be filed within 10 years (Art. 1144, CCP).
All other actions whose periods are not fixed in the Civil Code or in other
laws must be brought within five years from the time the right of action
accrues (Art. 1149, CCP). Whether the ULP charge is based on an injury to
the rights of Dayao or placed under the category of all other actions for
which no law prescribes the time limit for their institution, the filing by
respondent Dayao of the ULP charge against herein petitioners was well
within either the prescriptive period. It should be stressed that the 1935
Constitution has been very solicitous for the welfare of labor and expressly
stated that the State shall afford protection to labor (Sec. 6, Art. XIV, 1935
Constitution) and expressly committed itself to the promotion of social
justice to insure the well-being and economic security of all the people (Sec.
5, Art. II, 1935 Constitution). The 1973 Constitution expanded such
guarantees and imposes upon the State the duty to "assure the rights of
workers to self-organization, collective bargaining, security of tenure, and
just and humane conditions of work," after stipulating that the State "shall
promote full employment and equality in employment, insure equal work
opportunities regardless of sex, race or creed" (Sec. 9, Art. II, 1973
Constitution). WE would be denying such constitutional guarantees to
herein private respondent Dayao, if the position of herein petitioners were
sustained.

V. Concurring and Dissenting Opinions

This new principle formally adopted by the Court now in fixing the amount
of back wages at a reasonable level without qualification and deduction so
as to relieve the employees from proving their earnings during their lay-offs
and the employer from submitting counter-proofs, and thus obviate the twin
evils of idleness on the part of the employees and attrition and undue delay
in satisfying the award on the part of the employer is thus to be hailed as a
realistic, reasonable and mutually beneficial solution.

I dissent, however, from the specific result in the judgment at bar of

awarding respondent back wages only in an amount equivalent to 1 year, 11
months and 15 days — which is apparently premised arbitrarily on granting
respondent back wages only for the remainder of the four-year prescriptive
period after deducting the 2 years and 15 days delay incurred by
respondent after his discharge in filing his complaint for unfair labor
practice and reinstatement. The very same opinion found that such delay "is
not an unreasonable period of time under the circumstances" and it should
follow that such delay should in no manner prejudice the amount of the
back wages award justly due respondent — particularly, when it is
considered that he pursued with vigor his complaint after its filing on April
25, 1963 and obtained favorable judgment in the industrial court within a
year as per said court's decision of January 17, 1964 and its en banc
resolution of February 25, 1964 denying petitioner's motion for
reconsideration.

I believe that some ground rules should be laid down in implementing the
new formula now adopted of granting a fixed back wages award without
further qualification and deduction of earnings during the lay-off so as to
expedite the immediate execution of judgment in satisfaction of the award
and for reinstatement of the wrongfully dismissed employee(s) (whose
reinstatement, as stressed in East Asiatic Co., supra,4 should be
immediately effected upon finality of the judgment without waiting for the
computation and determination of the back wages). Normally, the trial of the
case and resolution of the appeal should be given preference and terminated
within a period of three years (one year for trial and decision in the
industrial court and two years for briefs, etc., and decision in this Court).
 ALEX FERRER VS. NLRC

G.R. NO. 100898 JULY 5, 1993

MELO, J.:

I. CAPTION

Separation Pay. An employee lawfully dismissed for a just cause is not

entitled to any separation pay; while an employee separated for an
authorized cause is entitled to separation pay in accordance with the rates
prescribed by law. (Chan. The Labor Code of the Philippines Annotated –
Volume II).

Art. 298. [283] Closure of Establishment and Reduction of Personnel. – 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
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least
one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered
as one (1) whole year.
In case the CBA or company policy provides for a higher separation pay, the
same must be followed instead of the one provided in Article 283. (Chan. The
Labor Code of the Philippines Annotated – Volume II).

Art. 299. [284] Disease as a Ground of Termination – An employer may

terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or
is prejudicial to his health as well as to the health of his co-
employees: Provided, That he is paid separation pay equivalent to at least
one (1) month salary or to one-half (1/2) month salary for every year of
service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.

II. FACTS
Petitioners Ferrer and others were regular and permanent employees of the
Occidental Foundry Corporation (OFC). They had been in the employee of
OFC for about ten years at the time of their dismissal in 1989.
On May 6, 1989, petitioner Ferrer and companions filed with the
Department of Labor and Employment a complaint seeking the expulsion
from SAMAHAN of its officers headed by president Capitle. The complaint
was founded on the said officers' alleged lack of attention to the economic
demands of the workers. However, on September 4, 1989, petitioners Diaz
and Ferrer withdrew the petition.
On September 10, 1989, petitioners conducted a special election of officers
of the SAMAHAN. FFW, to which SAMAHAN was affiliated, questioned the
election. Nonetheless, the elected set of officers tried to dissuade the OFC
from remitting union dues to the officers led by Capitle.
The intra-union squabble came to a head when, on September 11, 1989, the
union officials headed by Capitle expelled Ferrer, et al. from the union
Thereafter, on various dates, petitioners sent individual letters to the
Company professing innocence of the charges levelled against them by the
SAMAHAN and the FFW and pleading that they be reinstated. Their letters
elicited no response.
Thus, contending that their dismissal was without cause and in utter
disregard of their right to due process of law, petitioners through the
FEDLU, filed a complaint for illegal dismissal and unfair labor practice
before the NLRC against Hui Kam Chang, OFC, M.S. Velasco (as
representative of the FFW), the FFW, and the SAMAHAN officers headed by
Capitle.
III. ISSUES

As earlier discussed, petitioners' alleged act of sowing disunity among the

members of the SAMAHAN could have been ventilated and threshed out
through a grievance procedure within the union itself. But resort to such
procedure was not pursued. What actually happened in this case was that
some members, including petitioners, tried to unseat the SAMAHAN
leadership headed by Capitle due to the latter's alleged inattention to
petitioners' demands for the implementation of the P25-wage increase which
took effect on July 1, 1989. The intraunion controversy was such that
petitioners even requested the FFW to intervene to facilitate the enforcement
of the said wage increase (Petition, p. 54; p. 55, Rollo).

Petitioners sought the help of the FEDLU only after they had learned of the
termination of their employment upon the recommendation of Capitle. Their
alleged application with federations other than the FFW (Labor Arbiter's
Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to
the SAMAHAN, nor may the filing of such applications denote that
petitioners failed to maintain in good standing their membership in the
SAMAHAN. The SAMAHAN is a different entity from FFW, the federation to
which it belonged. Neither may it, be inferred that petitioners
sought disaffiliation from the FFW for petitioners had not formed a union
distinct from that of the SAMAHAN. Parenthetically, the right of a local
union to disaffiliate from a federation in the absence of any provision in the
federation's constitution preventing disaffiliation of a local union is legal
(People's Industrial and Commercial Employees and Worker's Org. (FFW) vs.
People's Industrial and Commercial Corp., 112 SCRA 440 (1982]). Such
right is consistent with the constitutional guarantee of freedom of
association (Tropical Hut Employees Union-CGW vs. Tropical Hut Food
Market, Inc., 181 SCRA 173 [1990]). virtual law library With the passage of
Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of
the Labor Code was amended to read as follows:

Security of Tenure. - In cases of regular employment, the employer shall not

terminate the services of an employee except for a just cause or when
authorized by this Title. 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 back wages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

IV. RULING

In the first place, the union has a specific provision for the permanent or
temporary "expulsion" of its erring members in its constitution and by-laws
("saligang batas at alituntunin"). Under the heading Membership and
Removal ("pag-aanib at pagtitiwalag"), it states:

SEC. 4. Ang sinumang kasapi ay maaring itwalag (sic) ng Samahan

pangsamantala o tuluyan sa pamamgitan (sic) ng tatlo't ikaapat (3/4) na
bahagi ng dami ng bilang ng Pamunuang Tagapapaganap. Pagkaraan
lamang sa pandinig sa kanyang kaso. Batay sa sumusunod:

a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa

patakaran ng Samahan
 b) Sinumang gumawa ng mga bagay na maaring ikabuwag ng Samahan.

c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit

o Doctor's Certificate.

d) Hindi pagbibigay ng abuloy na itinadhana ng Samahan.

e) Sinumang kasapi na natanggal sa kapisanan at gustong sumapi uli

ay magpapanibago ng bilang, mula sa taon ng kanyang pagsapi uli sa
Samahan.

No hearing ("pandinig") was ever conducted by the SAMAHAN to look into

petitioners' explanation of their moves to oust the union leadership under
Capitle, or their subsequent affiliation with FEDLU. While it is true that
petitioner’s' actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own
constitution and by-laws by giving petitioners an opportunity to air their side
and explain their moves. If, after an investigation the petitioners were found
to have violated union rules, then and only then should they be subjected to
proper disciplinary measures.

V. CONCURRING AND DISSENTING OPINIONS

Employers may lawfully and effectively reduce their personnel by offering

resignation benefits through a Voluntary Resignation Program where
employees are afforded the right to voluntarily terminate the employment
relationship. If made in good faith, such as scheme should be considered a
valid form of terminating employment. Consequently, the employer need not
comply with the requirement under Article 283 of the Labor Code that
notice be sent to the Department of Labor and Employment at least a month
prior to the effectivity of the termination of employment. The reason is that
by applying to voluntarily resign, the employee thereby acknowledges the
existence of a valid cause for terminating his employment. (Dole Philippines
Inc. v. NLRC, G.R. No. 120009, Sept. 13, 2001; International Hardware, Inc.
v. NLRC, G.R. No. 80770, Aug. 10, 1989.)

The amount of separation pay that should be paid in lieu of reinstatement is

not provided in the Labor Code or its implementing rules. Jurisprudence,
however, dictates that the following should be included in its computation:

1. The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of services, whichever is higher, a fraction
of at least six (6) months being considered as one (1) whole year. (Sec.
4[b], Rule I, Book VI, Rules to Implement the Labor Code).
2. Allowances that the employee has been receiving on a regular basis.
(Planters Products, Inc. v. NLRC, G.R. No. 78524, Jan. 20, 1989).
While this case was submitted for decision on March 29, 1965, the delay in
its resolution is not due to the parties. However, it should be noted that
private respondent Dayao filed his ULP charge with reinstatement and back
wages about two years and fifteen days after his separation on April 10,
1961. As afforested, the shortest prescriptive period for the filing of all other
actions for which the statute of limitations does not fix a period, is four
years. The period of delay in instituting this ULP charge with claim for
reinstatement and back wages, although within the prescriptive period,
should be deducted from the liability of the employer to him for back wages.
In order that the employee however should be relieved from proving his
income during the period he was out of the service and the employer from
submitting counter-proofs, which may delay the execution of the decision,
the employer in the case at bar should be directed to pay private
respondent Dayao back wages equivalent to one year, eleven months, and
fifteen days without further disqualifications.
 BUSTAMANTE ET AL VS. NLRC

G.R. NO. 111651 MARCH 15, 1996

PADILLA, J.:

I. Caption
The focal issue therefore in this case is whether or not petitioners are
entitled to backwages after a finding by the NLRC itself that they had become
regular employees after serving for more than one (1) year of broken or non-
continuous service as probationary employees.

II. Fact
Respondent company is engaged in the business of producing high grade
bananas in its plantation in Davao del Norte. Petitioners Paulino Bantayan,
Fernando Bustamante, Mario Sumonod and Osmalik Bustamante were
employed as laborers and harvesters while petitioner Sabu Lamaran was
employed as a laborer and sprayer in respondent company’s plantation. All
the petitioners signed contracts of employment for a period of six (6) months
from 2 January 1990 to 2 July 1990, but they had started working sometime
in September 1989. Previously, they were hired to do the same work for
periods lasting a month or more, from 1985 to 1989. Before the contracts of
employment expired on 2 July 1990, petitioners’ employments were
terminated on 25 June 1990 on the ground of poor performance on account
of age, as not one of them was allegedly below forty (40) years old. Petitioners
filed a complaint for illegal dismissal.

III. Issue/s
Whether or not private respondent exercises its power to terminate in good
faith so as to make the award of backwages improper in this case

IV. Ruling
We do not sustain public respondent’s theory that private respondent should
not be made to compensate petitioners for backwages because its
termination of their employment was not made in bad faith. The act of hiring
and re-hiring the petitioners over a period of time without considering them
as regular employees evidences bad faith on the part of private respondent.
The public respondent made a finding to this effect when it stated that the
subsequent rehiring of petitioners on a probationary status “clearly appears
to be a convenient subterfuge on the part of management to prevent
complainants (petitioners) from becoming regular employees.

V. CONCURRING AND DISSENTING OPINIONS

In the case at bar, there is no valid cause for dismissal. The employees
(petitioners) have not performed any act to warrant termination of their
employment. Consequently, petitioners are entitled to their full backwages
and other benefits from the time their compensation was withheld from them
up to the time of their actual reinstatement.