G.R. No. 86339 February 5, 1993
Arturo S. Lagniton, Sr., petitioner, vs. National Labor Relations Commission, Hon. Isabel P. Ortiguerra and Plum Federation, respondents.

FACTS

On August 18, 1986, private respondents (complainants) filed a complaint for illegal dismissal against petitioner Arturo S. Lagniton, Sr., proprietor of a shoe and leather manufacturing company. They prayed for reinstatement with back pay and payment of ECOLA, 13th month pay, and incentive leave pay. The complainants alleged that Lagniton notified them their services were no longer needed due to mechanization, but they continued reporting for work until they were definitively told on August 11, 1986, that they were dismissed and warned not to return. In defense, Lagniton argued that complainant Generoso Ambrosio was a subcontractor, not an employee, and even if considered an employee, his dismissal was valid due to poor workmanship. Regarding the other complainants, Lagniton claimed they were not dismissed but abandoned their work by not reporting starting August 11, 1986. The Labor Arbiter ruled that Ambrosio was a regular employee, as his work was necessary to the business and performed under the company’s supervision and control, and that all complainants were illegally dismissed, not having abandoned their work. The Arbiter ordered the payment of separation pay, ECOLA, and 13th month pay. The NLRC affirmed this decision in toto. In the petition before the Supreme Court, Lagniton, while no longer challenging Ambrosio’s employee status, maintained that the complainants were not dismissed but walked out, and denied threatening them. He also pointed out that he had offered reinstatement during the proceedings, which the complainants refused, preferring separation pay. Additionally, Lagniton contested the award of ECOLA, arguing that the complainants, being piece-rate workers earning an average of P1,000 a week, were not entitled as the benefit under P.D. 1634 applied only to those earning less than P1,500 a month.

ISSUE

1. Whether the public respondents (NLRC and Labor Arbiter) committed grave abuse of discretion in finding that the private respondents were illegally dismissed and entitled to separation pay.
2. Whether the complainants, having prayed for reinstatement in their complaint, can opt for separation pay instead.
3. Whether the complainants are entitled to Emergency Cost of Living Allowance (ECOLA).

RULING

The Supreme Court DISMISSED the petition, affirming the decisions of the Labor Arbiter and the NLRC.
1. On the issue of illegal dismissal, the Court held that the factual findings of the public respondents are final, absent a showing of grave abuse of discretion. The Court noted that the complaint was filed only seven days after the alleged abandonment on August 11, 1986, which belied the claim of abandonment. Given the hardship of the times, it was unlikely the complainants would simply leave their work without securing other employment, and no evidence of such transfer was presented. Since abandonment was not established, the dismissal was illegal for lack of notice and hearing, as the complainants were summarily told not to report for work. They are therefore entitled to reinstatement under Article 279 of the Labor Code.
2. On the issue of separation pay versus reinstatement, the Court held that although the complainants initially prayed for reinstatement, the public respondents correctly ordered separation pay instead because relations between the parties had become so strained that reinstatement would only exacerbate animosities. Granting separation pay was in the interest of industrial peace.
3. On the issue of ECOLA, the Court accepted the factual finding of the NLRC that the complainants, on average, received less than P1,500 a month. While the petitioner pointed to a peak income of P1,000 a week, the Court noted that during lean seasons, their earnings were about P350 a week or P55 a day. Therefore, they fell under the coverage of P.D. 1634, which grants ECOLA to workers earning not more than P1,500 a month.