GR 124957; (December, 1998) (Digest)
G.R. No. 124957 December 29, 1998
MASTER SHIRT CO., INC. and LILY ENG YAO, petitioners, vs. NLRC and MASTER SHIRT EMPLOYEES UNION-ANGLO, AND ITS MEMBERS, respondents.
FACTS
On July 17, 1993, the factory of petitioner Master Shirt Co., Inc. was totally razed by fire, forcing it to cease operations. Subsequently, on August 19, 1993, the company and the respondent union entered into an agreement before the National Conciliation and Mediation Board. The key terms stipulated that the company would endeavor to resume operations as soon as possible, and that if after six months no operations could be had, the workers would be paid corresponding separation benefits.
When the company failed to reopen after the six-month period, the union demanded payment of separation pay. The petitioners refused, contending they could not pay because they had not yet recovered their insurance claim for damages. This led the union to file a complaint for illegal dismissal and payment of separation pay. The Labor Arbiter dismissed the illegal dismissal complaint but ordered the payment of separation pay and attorney’s fees, citing the parties’ agreement. The National Labor Relations Commission affirmed this decision in toto.
ISSUE
Whether the NLRC acted with grave abuse of discretion in affirming the award of separation pay to the employees based on the agreement, despite the company’s failure to reopen due to the fire.
RULING
The Supreme Court dismissed the petition, finding no grave abuse of discretion by the NLRC. The legal logic is anchored on the binding nature of contractual agreements and the proper grounds for separation pay. The Court emphasized that the findings of fact by the NLRC, which affirmed the Labor Arbiter’s decision, are accorded respect and finality absent any capriciousness. Crucially, the basis for the award was not a finding of illegal dismissal but the enforceable agreement voluntarily entered into by the parties. The agreement constituted the law between them, obligating the company to pay separation benefits upon the non-fulfillment of the condition to resume operations within six months. Separation pay is not exclusively tied to illegal dismissal; it is also warranted in instances of business closure, as recognized by law and jurisprudence. The company’s inability to pay due to pending insurance claims does not absolve it from its contractual obligation to its employees. Therefore, the NLRC correctly upheld the award based on the clear and binding terms of the agreement between the employer and the union.