Title
Labor Congress of the Philippines vs. National Labor Relations Commission
Case
G.R. No. 123938
Decision Date
May 21, 1998
Petitioners, piece-rate employees, filed labor complaints against Empire Food Products for unfair labor practices, illegal dismissal, and underpayment. The Supreme Court ruled in their favor, declaring illegal dismissal, awarding back wages, separation pay, and statutory benefits, and remanding for exact computation.

Case Summary (G.R. No. 123938)

Petitioners

The petitioners are 99 employees who filed complaints for money claims, violations of labor standards, unfair labor practice (including illegal lockout/dismissal and union-busting), violation of a Memorandum of Agreement (MOA), underpayment of wages, and claims for actual, moral and exemplary damages. They also sought direct certification of LCP as their bargaining representative.

Respondents

Private respondents are Empire Food Products, Gonzalo Kehyeng and Evelyn Kehyeng. The NLRC is the public respondent on review of the labor adjudicators’ decisions.

Key Dates

Relevant dates included the Memorandum of Agreement signed October 23, 1990 (approved October 24, 1990 by Mediator Arbiter Antonio Cortez), a complaint filed January 23, 1991 (NLRC Case No. RAB-III-01-1964-91), an initial Labor Arbiter decision (April 14, 1992) directing reinstatement, an NLRC resolution (July 21, 1992) remanding for further proceedings, a Labor Arbiter decision dismissing the complaint (July 27, 1994), NLRC resolution affirming the dismissal (March 29, 1995), denial of reconsideration (October 31, 1995), and the Supreme Court decision granting the petition (May 21, 1998).

Applicable Law and Rules Cited

Primary sources and rules relied upon in the record include provisions of the Labor Code (including Article 279 as amended by R.A. No. 6715), implementing rules and Omnibus Rules Implementing the Labor Code (various Book and Rule provisions cited regarding notice of dismissal, holiday pay, overtime, exemption of certain categories), P.D. No. 851 and Memorandum Order No. 28 (13th month pay), and established jurisprudence addressing abandonment, burden of proof for dismissal, and status of piece-rate workers.

Memorandum of Agreement (MOA) and Certification

On October 23, 1990, petitioners (through LCP) and private respondents executed an MOA recognizing LCP as sole and exclusive bargaining agent for rank-and-file employees with respect to wages, hours and other terms and conditions of employment; agreeing to discuss pending NLRC issues during CBA negotiations; requiring wage adjustments, SSS registration, payroll deductions for union dues including agency fee, and mutual commitments to refrain from harassment and unfair labor practices pending negotiations. Mediator Arbiter Antonio Cortez approved the MOA on October 24, 1990 and certified LCP as bargaining agent for collective bargaining purposes.

Procedural History — Initial Labor Arbiter Action

After pleadings and hearings, Labor Arbiter Ariel C. Santos initially issued a decision (April 14, 1992) directing reinstatement of individual complainants (except those who had resigned and executed quitclaims/releases) based on the respondent’s failure to maintain payroll and other records, with admonitions against harassment and threats. The first decision therefore effectively recognized wrongful exclusion and ordered immediate reinstatement.

NLRC Remand for Further Proceedings

On appeal, the NLRC (July 21, 1992 resolution) found that the Labor Arbiter had committed errors in judgment and procedure, observed that the Labor Arbiter overlooked certain testimony and documentary evidence, and held that complainants should be afforded the opportunity to substantiate their claims fully. The NLRC remanded the case to the Labor Arbiter for further proceedings and explicitly directed the Labor Arbiter to include a proper dispositive portion after receiving and resolving evidence.

Labor Arbiter’s Reversed Finding and Dismissal

After further proceedings, Labor Arbiter Santos issued a new decision dated July 27, 1994 dismissing the complaint for utter lack of merit. The Labor Arbiter concluded that complainants failed to prove with definiteness and clarity the acts constituting unfair labor practice or harassment; found that the charge of illegal lockout lacked basis because respondents’ witness testified that complainants refused to report for work on January 21, 1991 (constituting abandonment); held that claims of underpayment were unsupported because petitioners were piece-rate (pakiao) workers whose compensation complied with minimum wage limitations; and denied claims for moral and exemplary damages for lack of proof of malice or bad faith.

NLRC Affirmation and Motion for Reconsideration

The NLRC, in its March 29, 1995 resolution, affirmed the Labor Arbiter’s July 27, 1994 decision in toto, sustaining the conclusions that: (a) evidence was insufficient to establish unfair labor practice and union-busting; (b) the October 23, 1990 MOA could not be enforced as an obligation within NLRC jurisdiction because certain provisions were resolutory conditions; (c) underpayment claims lacked basis given piece-rate pay subject to the minimum-wage rule; and (d) petitioners were not underpaid. The NLRC denied the petitioners’ motion for reconsideration on October 31, 1995.

Petition for Certiorari to the Supreme Court and Procedural Issue on Timeliness

Petitioners filed a special civil action for certiorari under Rule 65 seeking to set aside the NLRC resolution. Private respondents raised a procedural bar, contending the petition was filed late because petitioners admitted to receipt of the NLRC denial on December 13, 1995, and thus the filing deadline under Rule 45 should have been applied. Petitioners explained their counsel misapplied the reglementary period and urged substantial justice. The OSG sided with petitioners on the merits and questioned the Labor Arbiter’s unexplained reversal from reinstatement to dismissal.

Supreme Court’s Review Standard and Findings on Fact-Finding

The Supreme Court noted the general rule that factual findings of administrative agencies are binding but stressed that this case presented circumstances warranting closer scrutiny. The Court could not discern a compelling reason for the Labor Arbiter’s reversal from reinstatement to dismissal because substantially the same evidence was before him in both decisions. The NLRC had itself chastised the Labor Arbiter earlier for procedural and factual errors and remanded the case; the Court found that the Labor Arbiter did not heed the remand’s purpose. The Court concluded the NLRC’s resolution did not sufficiently discuss facts to meet the substantial-evidence standard.

Analysis on Abandonment and Burden of Proof

The Supreme Court agreed with the OSG that a single-day failure to report for work (as testified by a security guard about January 21, 1991) did not establish abandonment, which requires a clear, deliberate and unjustified refusal to resume employment. The Court cited established jurisprudence that one cannot abandon work and shortly thereafter pursue a complaint for illegal dismissal. The Court emphasized that the burden of proving just cause for dismissal, including abandonment, rests on the employer — a burden private respondents failed to discharge. The Court also noted the lack of procedural due process, specifically that private respondents did not serve written notice of dismissal as required by the implementing rules.

Status of Piece-Rate Workers and Entitlement to Benefits

The Supreme Court determined that petitioners, though paid on a piece-rate (pakiao) basis, were regular employees because: (1) their repacking work was necessary or desirable in respondents’ usual business (manufacture and sale of processed food); (2) they worked throughout the year rather than being project- or season-dependent; and (3) the length of their employment. Consequently, petitioners were entitled to statutory benefits ordinarily accorded regular employees. The Court held petitioners were entitled to holiday pay

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