G.R. No. L-45344, February 20, 1984
Arrastre Security Association TUPAS, Agustin Tibo and 350 Individual Members, Petitioners, vs. Hon. Blas F. Ople, National Labor Relations Commission, Guacods Marine Inc., E. Razon Inc., and Acting Deputy Customs Commissioner Pedro Mendoza, Respondents.

FACTS

The petitioners are members of the Arrastre Security Association (ASA), a union of security employees at the Manila South Harbor. They were employed under collective bargaining agreements with arrastre contractors Guacods Marine Terminal and E. Razon, Inc. In October 1972, following Proclamation No. 1081 (Martial Law), the Philippine Constabulary issued a directive requiring all company guards to secure a professional license, necessitating a certification of employment from their employer. Both respondent corporations refused to issue the required certifications, initially disputing the existence of an employer-employee relationship, though they later acknowledged it during conciliation conferences. Subsequently, the Acting Deputy Commissioner of Customs, citing national security under Martial Law, issued a memorandum directing the Customs Metropolitan Police Service to take over the security functions previously performed by the ASA members, effectively displacing them.
The petitioners filed an unfair labor practice case, alleging union busting and seeking reinstatement with full backwages. The Ad Hoc National Labor Relations Commission found the respondents guilty of unfair labor practice for refusing the certification but considered the petitioners as merely temporarily laid off without pay due to the government takeover. The Secretary of Labor affirmed this, denying backwages but ordering the provision of financial assistance equivalent to one month’s salary, reasoning that the layoff was caused by a sovereign act of the state.

ISSUE

Whether the petitioners are entitled to reinstatement with full backwages or, alternatively, to separation pay, despite their layoff being precipitated by a government directive under Martial Law.

RULING

The Supreme Court dismissed the petition, upholding the denial of reinstatement and backwages but modifying the award to grant separation pay. The legal logic is anchored on the principle that an employer cannot be held liable for backwages when the cessation of employment is directly caused by a sovereign act of the state, constituting a fortuitous event beyond the employer’s control. The Court found that the displacement of the security guards was due to the lawful order of the Deputy Customs Commissioner, acting under Martial Law authority to deploy government forces for security in the customs zone. This was an exercise of police power for national security, which effectively suspended the employers’ control over the work area.
Consequently, the respondents’ refusal to issue employment certifications, while an unfair labor practice, did not proximately cause the loss of employment; the direct cause was the government takeover. Therefore, imposing backwages on the employers for a period of forced idleness they did not instigate would be unjust. However, considering the equities and the termination being akin to a redundancy due to cessation of operations, the Court ruled the petitioners were entitled to separation pay under their CBA or the Labor Code, whichever is more beneficial, modifying the Labor Secretary’s order of mere financial assistance. The constitutional challenge to certain labor provisions was deemed unnecessary to resolve the case.