G.R. No. 103560 & 103599, July 6, 1995
Gold City Integrated Port Service, Inc. (INPORT) vs. National Labor Relations Commission, et al. (Consolidated Cases)

FACTS

Petitioner INPORT, engaged in stevedoring and arrastre services, filed a complaint for illegal strike after its employees, members of the Macajalar Labor Union-FFW, staged a work stoppage on April 30, 1985, to protest grievances regarding wages and benefits. The strikers filed individual notices of strike on the same morning. Conciliation failed, and INPORT secured a temporary restraining order. Most strikers returned to work, but 31 respondents continued the protest. The Labor Arbiter declared the strike illegal for non-compliance with the formal requirements under Article 264 of the Labor Code, such as the strike vote and notice. However, finding no evidence of illegal acts during the strike, the Arbiter held the participants did not lose their employment status and ordered their reinstatement, rejecting INPORT’s requirement for prior union screening.
The NLRC affirmed but modified the decision. It characterized the action as a “protest action” but upheld its illegality. Due to strained relations, the NLRC awarded separation pay in lieu of reinstatement and additionally granted two years of backwages. Upon INPORT’s motion, the NLRC deleted the award of backwages but retained the separation pay. Both parties elevated the case to the Supreme Court via certiorari.

ISSUE

Whether the participating employees in an illegal strike are entitled to separation pay and backwages.

RULING

The Supreme Court ruled that the employees are not entitled to separation pay or backwages. The legal logic is anchored on the consequences of an illegal strike and the nature of the remedies sought. First, the strike was correctly declared illegal due to the absence of the mandatory strike vote and notice, which are essential for a valid strike. Second, while the law provides that mere participation in an illegal strike does not automatically result in loss of employment status, the right to reinstatement presupposes that the employer refuses to accept the employees back to work. Here, the Labor Arbiter’s order for unconditional reinstatement was not appealed by INPORT and thus became final. Since the employees were never dismissed, there was no illegal termination to justify an award of backwages.
Third, separation pay is granted only in instances of termination due to authorized causes under Articles 283 and 284 of the Labor Code, or as a measure of social justice in cases of illegal dismissal where reinstatement is not feasible. Separation pay cannot be awarded where, as here, the employees were not dismissed and the employer was willing to reinstate them following the Arbiter’s final order. The strained relations cited by the NLRC did not legally justify the award, as the employees’ own illegal act precipitated the situation. The Court emphasized that granting separation pay under these circumstances would unjustly reward the employees for their own wrongdoing.