Case Summary (G.R. No. 207900)
Petitioner and Respondent Positions
Petitioners contend that separation pay, accrued sick and vacation leave benefits, and 13th month pay vested by law and contract cannot be withheld pending vacatur of the premises, arguing “accountabilities” refer solely to work‐related items. Respondents maintain that possession of SMI property constitutes an “accountability” allowing lawful withholding of benefits under clearance procedures.
Key Dates
• September 1, 2003 – Memorandum of Agreement (MOA) between SMI and NAFLU acknowledging closure and granting “financial assistance less accountabilities.”
• October 10, 2003 – SMI ceases operations; termination effective.
• October 17, 2005 – Labor Arbiter decision ordering payment of benefits without condition.
• August 31, 2010 – NLRC decision holding benefits “in abeyance” pending turnover of lots.
• January 31, 2012 – Court of Appeals dismissal of petitioners’ certiorari.
• February 4, 2015 – Decision of the Supreme Court.
Applicable Law
• 1987 Philippine Constitution – Labor as a primary social economic force; prohibition against oppressive conduct by capital or labor.
• Labor Code (as amended):
– Art. 116: Prohibition on unlawful wage withholding.
– Art. 100: No diminution of existing benefits.
– Art. 113: Authorized deductions, including those by law or regulation.
– Art. 217: Jurisdiction of Labor Arbiters and NLRC over employer‐employee claims.
– Art. 283: Separation pay entitlement on closure not due to serious losses.
– Art. 291: Three‐year prescriptive period for money claims.
• Presidential Decree No. 851: 13th month pay statutory basis.
• Civil Code:
– Art. 1706: Permits withholding of wages for debts due.
– Art. 1947: Precarium bailment; owner may demand thing at will.
– Art. 2142: Principle against unjust enrichment.
Factual Background
SMI notified employees of its closure due to irreversible financial losses and executed an MOA with NAFLU, which:
- Stipulated no statutory separation pay entitlement under Art. 283.
- Provided for goodwill “financial assistance less accountabilities” at 12.625 days per year of service, disbursed January–December 2004.
- Committed to pay accrued leave benefits and 13th month pay, “less accountabilities,” conditional on no concerted action.
Post‐closure, SMI required returning uniforms, equipment, and vacating SMI Village before releasing benefits. Petitioners refused quitclaim agreements, prompting labor complaints.
Procedural History
- Labor Arbiter (October 2005) – Held that no condition to vacate appeared in the MOA; ordered unconditional payment of separation and accrued benefits with 12% interest.
- NLRC (August 2010) – Affirmed dismissals by settlement; reversed unconditional award and held benefits in abeyance pending property turnover. Removed interest award.
- Court of Appeals (January 2012) – Dismissed petitioners’ certiorari; agreed that lodging privilege was gratuitous and revocable; upheld NLRC’s abeyance and deletion of interest; recognized prior receipt of benefits by certain claimants.
- Supreme Court (February 2015) – Petition for review on certiorari.
Issues Presented
I. Whether withholding terminal benefits pending turnover of SMI property is lawful.
II. Whether petitioners remain entitled to 12% per annum interest on benefits.
III. Whether Teodora Mahilom’s retirement benefits claim is viable.
IV. Whether Carlito Damian may recover benefits already received.
Supreme Court Ruling
The petition is denied; the Court of Appeals decision is affirmed.
Rationale
- Jurisdiction: Labor tribunals may preliminarily decide property‐related issues when intertwined with employer‐employee claims under Art. 217. SMI’s demand for return of its lots is sufficiently connected to p
Case Syllabus (G.R. No. 207900)
Facts of the Case
- Petitioners were employees of Solid Mills, Inc. (SMI) and members of the National Federation of Labor Unions (NAFLU), their collective bargaining agent.
- SMI allowed petitioners and their families to occupy SMI Village, a company-owned property, “out of liberality and for the convenience of its employees,” subject to vacatur at the company’s discretion.
- In September 2003, SMI announced cessation of operations effective October 10, 2003, due to serious financial losses.
- A Memorandum of Agreement dated September 1, 2003 between SMI and NAFLU recognized the closure, denied statutory separation pay under Article 283 of the Labor Code (applicable only if losses were not “serious”), but granted “financial assistance less accountabilities” equivalent to 12.625 days’ pay per year of service, plus accrued sick leave, vacation leave, and 13th-month pay, paid in equal monthly installments.
- The agreement included a proviso that any “concerted action” by employees would result in withholding of the financial assistance.
Procedural History
- Petitioners were given individual notices to vacate SMI Village and were barred from reporting to work after October 10, 2003.
- SMI required petitioners to sign release and quitclaim memoranda—agreeing to vacate the village and allow demolition of their houses—as a condition for release of benefits. Petitioners refused.
- Petitioners filed complaints before the Labor Arbiter for non-payment of separation pay, accrued sick and vacation leave, and 13th-month pay.
- The Labor Arbiter rendered a decision on October 17, 2005 ordering SMI to pay separation pay, pro-rated 13th-month pay, and accrued leave benefits with 12% interest, and dismissed several individual complaints by amicable settlement or lack of interest.
- SMI appealed to the National Labor Relations Commission (NLRC), which on August 31, 2010 affirmed only the dismissal of nine individual complaints but reversed the award of benefits in paragraphs 1 and 2, holding petitioners’ monetary claims in abeyance “pending compliance of their accountabilities” by vacating the lots they occupied.
- Petitioners sought partial reconsideration, denied November 30, 2010, then filed a Rule 65 petition for certiorari with the Court of Appeals.
- On January 31, 2012, the Court of Appeals dismissed the petition, upholding NLRC’s holding of benefits in abeyance and deletion of interest, and rejecting claims of Teodora Mahilom (retirement benefits) and Carlito Damian (duplicate terminal benefits). A motion for reconsideration was denied on July 16, 2012.
Issues Presented
- Whether the Court of Appeals erred in holding peti