Facts:

The case involves Arc-Men Food Industries Corporation (AMFIC) and its President, Arcadio P. Mendoza, as petitioners against the National Labor Relations Commission (NLRC) and several private respondents, including Nicolas Famor, Jr. and others. The events leading to the case began on January 15, 1992, when forty-seven employees of AMFIC filed a letter-complaint with the Department of Labor and Employment (DOLE) alleging violations of the Labor Standards Law. Among these employees were twenty-six private respondents. Following the complaint, a DOLE representative conducted an inspection on January 27, 1992, but the employees claimed they were ordered to stop working to avoid interviews. Subsequently, they were barred from entering the premises unless they signed waivers to withdraw their complaints. Of the original complainants, twenty-one signed waivers and returned to work, while the remaining twenty-six considered themselves constructively dismissed as of January 28, 1992.

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Facts:

Background of the Case:

• Petitioner Arc-Men Food Industries Corporation (AMFIC) is a Philippine corporation engaged in the production and processing of banana chips for export. Arcadio P. Mendoza, the co-petitioner, is its President.
• AMFIC operated a processing plant in Cagangohan, Panabo, Davao, where private respondents were employed in various positions and wage rates.

Employee Complaints:

• On January 15, 1992, 47 employees filed a complaint with the Department of Labor and Employment (DOLE) for violations of labor standards, including underpayment of wages and non-payment of benefits.
• A DOLE representative inspected the premises on January 27, 1992. Employees alleged they were ordered to stop working to avoid being interviewed. They were barred from entering the premises unless they signed waivers withdrawing their complaints.
• 21 employees signed waivers and were allowed to return to work. The remaining 26 employees (private respondents) were barred from entering the premises and considered themselves constructively dismissed as of January 28, 1992.

AMFIC’s Defense:

• AMFIC claimed the plant was temporarily shut down due to a lack of raw materials, equipment repairs, and unprofitability caused by unfair competition.
• AMFIC denied threatening employees or barring them from work, stating there was simply no work available at the time.
• On February 21, 1992, AMFIC issued formal notices for employees to return to work, but the private respondents ignored these notices, leading AMFIC to conclude they had abandoned their jobs.

Labor Arbiter’s Decision:

• The Executive Labor Arbiter ruled there was no illegal dismissal, as the shutdown was temporary and allowed under the Labor Code. She found the employees failed to report for work when asked and were not entitled to separation pay.
• The Labor Arbiter ordered AMFIC to pay certain benefits (service incentive leave pay, holiday pay, and 13th month pay) to 23 complainants but dismissed other claims.

NLRC’s Ruling:

• The NLRC affirmed there was no constructive dismissal but disagreed that the employees had abandoned their jobs. It ordered reinstatement without backwages.
• Upon AMFIC’s motion for reconsideration, the NLRC modified its ruling, ordering payment of separation benefits instead of reinstatement.

Issue:

• (Unlock)

Ruling:

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Ratio:

1. No Constructive Dismissal: The Court upheld the findings of the Labor Arbiter and NLRC that there was no constructive dismissal. The temporary shutdown was due to valid reasons (lack of raw materials, equipment repairs, and unprofitability), which are allowed under the Labor Code.

2. Abandonment of Work: The employees’ failure to report for work after being formally notified constituted abandonment. Abandonment is a valid ground for forfeiting security of tenure under the Labor Code.

3. Separation Pay Not Warranted: Separation pay is only required under specific circumstances outlined in Articles 283 and 284 of the Labor Code (e.g., installation of labor-saving devices, redundancy, retrenchment, cessation of business, or health-related issues). None of these circumstances applied in this case.

4. NLRC’s Grave Abuse of Discretion: The NLRC overstepped its discretion by awarding separation pay based on equity and social justice. The Court emphasized that equity cannot override the clear provisions of the law, especially when there was no dismissal, legal or illegal.

5. Finality of Factual Findings: The Court reiterated that factual findings of quasi-judicial agencies like the NLRC are generally final and binding unless there is a showing of grave abuse of discretion or lack of jurisdiction. In this case, the NLRC’s decision to award separation pay was not supported by law or evidence.

Conclusion:

The Supreme Court nullified the NLRC’s resolutions and reinstated the Executive Labor Arbiter’s decision, ruling that the employees were not entitled to separation pay due to the absence of constructive dismissal and their abandonment of work. The Court emphasized that equity and social justice cannot justify awards that lack legal basis.