G.R. No. 127086 . August 22, 2002.
ARC-MEN FOOD INDUSTRIES CORPORATION and ARCADIO P. MENDOZA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), NICOLAS FAMOR, JR., JACQUELINE DOMEN, HELEN VERDIDA, MARIA TERESA VILLAFLORES, RODERICK MACANSANTOS, GEORGE DELA GENTE, JOSE GERRY VILLAFLORES, JEREMIAS TAYROS, OSCAR FAMOR, NOLI PAGLINAWAN, LUZ MINGLANA, MARY JANE ALMERO, MA. NESCIA OLOBAN, NARCISA VITUALLA, MARIVIC GERMAN, MARIQUITA SULLA, HILARIO CALAPIZ, ALICIA LICO, JOSE O. CIMAFRANCA, JR., DANILO PARUNGAO, ROSALINDA HUERBANA, EVELYN ELLAMIL, JUDITH MAHUSAY, PRECIOSISIMA U. BINGTAN, NORBERTO M. ENAD, and VIVIAN VERDIDA, respondents.

FACTS

Petitioner Arc-Men Food Industries Corporation (AMFIC) is a corporation engaged in producing and processing banana chips for export, with Arcadio P. Mendoza as its President. Private respondents were employees hired on various dates at AMFIC’s processing plant in Cagangohan, Panabo, Davao. On January 15, 1992, forty-seven employees, including the twenty-six private respondents, filed a letter-complaint for violation of labor standards with the DOLE. A DOLE representative inspected the premises on January 27, 1992. The employees alleged they were ordered to stop working to avoid being interviewed and were subsequently barred from entering company premises unless they signed waivers withdrawing their complaint. Twenty-one employees signed waivers and were allowed back to work. The remaining twenty-six private respondents were barred and considered themselves constructively dismissed as of January 28, 1992.
AMFIC contended that the plant operation was temporarily shut down due to a lack of raw materials from independent suppliers, necessary repairs to equipment, and unprofitability from unfair competition. It denied threatening or barring employees, stating they were not allowed to enter because there was no work. AMFIC alleged that when operations resumed on February 21, 1992, it sent formal written notices to the employees directing them to report for work on the third shift, but they ignored these notices, leading the company to conclude they had abandoned their jobs.
Private respondents filed a complaint for illegal constructive dismissal and various monetary claims before the Regional Arbitration Branch. The Executive Labor Arbiter found no illegal constructive dismissal, agreeing with AMFIC that a temporary shutdown was allowed under the Labor Code and that the employees failed to report for work when asked. She dismissed the illegal dismissal claim but ordered AMFIC to pay certain monetary benefits to some complainants.
On appeal, the NLRC found no constructive dismissal but also found that the employees did not abandon their work, as evidenced by their filing of a complaint. It initially ordered reinstatement without backwages. Upon AMFIC’s motion for reconsideration, the NLRC modified its resolution and ordered the payment of separation benefits in lieu of reinstatement. Petitioners filed this certiorari petition, arguing the NLRC committed grave abuse of discretion in ordering separation pay despite finding no illegal dismissal.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ordering the payment of separation benefits to private respondents despite its factual finding that there was no constructive or illegal dismissal.

RULING

Yes, the Supreme Court granted the petition. It held that the NLRC committed grave abuse of discretion. The Court affirmed the factual finding of both the Labor Arbiter and the NLRC that there was no constructive or illegal dismissal, as the temporary shutdown was justified and the employees failed to report for work when notified. The Court ruled that separation pay under Articles 283 and 284 of the Labor Code is required only in cases of termination due to authorized causes (installation of labor-saving devices, redundancy, retrenchment, closure/cessation of operation, or disease) or when the employee is illegally dismissed. Since there was a finding of no illegal dismissal and the cause was not one of the authorized causes warranting separation pay, the NLRC had no legal basis to award separation benefits. The Court reinstated the decision of the Executive Labor Arbiter in its entirety.