EMPLOYEES & LABORERS COOPERATIVE ASSOCIATION, DOMINGO BARTOLOME, EMILIO VISTA, RICARDO ALINEA AND FELIPE BICOMONG (MANAGERS), PETITIONERS, VS. NATIONAL UNION OF RESTAURANT WORKE…

Respondent herein, the National Union of Restaurant Workers, (PLUM), filed a
complaint in the Court of Industrial Relations against the Employees &
Laborers, Cooperative Association, Domingo Bartolome, Emilio Vista, Ricardo
Alinea and Felipe Bicomong (Managers), petitioners herein, charging the latter
with unfair labor practice, among which were failure to pay minimum wages,
irregular payment of salaries, employment of nonunion men, unjustified charges
for meals, rotation of Workers and dismissals. They prayed that respondents
desist from the above unfair practices, stop rotation work, reinstate dismissed
members, etc. In answer respondents alleged that the rotation of work among the
complaining members of complainant union and the termination of their employment
was caused by financial difficulties encountered by the cooperative
association, which eventually led to its dissolution.

Various hearings were had before the court’s examiner. The case was
submitted for decision and on June 9, 1961, Judge Arsenio Martinez of the Court
of Industrial Relations rendered judgment finding that the respondents,
petitioner’s herein, did not commit any acts amounting to unfair labor practice,
that the rotation of work among the employees and the termination of their
employment was “not motivated by an intent to discriminate but the result of a
legitimate closure of its business and respondent association was within its
rights to close operations in the face of mounting financial losses.” However,
the employees were granted separation pay for each of the complainants,
thus:

“* * * However, respondent association is hereby ordered to pay each
complainant one-half (1/2) month pay for every year of service, it appearing that
complainants termination of services were for a lust cause and respondent
cooperative association failed to give one-month advance notice to complainants
before their separation in accordance with Republic Act No. 1052, as amended by
Republic Act 1787.”

Respondents moved for reconsideration but the motion was denied. Hence, this
petition for certiorari. In this Court they, petitioners herein, present the
following issues:

“There are five issues which petitioner wishes to raise in this appeal and
they all involve purely questions of law. They are as follows:

“1. The ruling ordering petitioner cooperative association to pay separation
pay to each of complainants is manifestly erroneous and inconsistent with the
findings in this case;

“2. The Court of Industrial Relations has no jurisdiction over claims for
separation pay;

“3. The power of the Court of Industrial Relations in an unfair labor
practice case is either to grant relief or dismiss the complaint;

“4. The Court of Industrial Relations cannot order payment of separation pay
as it is not one of the issues raised in. the pleadings and litigated in this
case; and

“5. The ruling ordering petitioner cooperative association to pay separation
pay is dearly contrary to law.”

The most important issue raised in this appeal refers to the ruling of the
court below awarding separation pay to each of the claimants, petitioners in
this appeal arguing that said grant of separation pay is contrary to the
provisions of Republic Act No. 1052 as amended by Republic Act 1787, which in
part provides:

“SECTION 1. In cases of employment, without a definite period, in a
commercial, industrial, or agricultural establishment or enterprise, the
employer or the employee may terminate at any time the employment with just
cause; or without just cause in the case of an employee by serving written
notice on the employer at least one month in advance, or in the case of an
employer, by serving such notice to the employee at least one month in advance
or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.

* * * * * * *

“The following are just causes for terminating an employment without a
definite period:

“1. By the employer –

“a. The closing or cessation of operation of the establishment or
enterprise, unless the closing is for the purpose of defeating the intention of
this law;”

* * * * * * *

From the above quoted provisions it can be stated that when an employment is
terminated for a just cause as above defined, because of the losses incurred by
the business, the employee whose services are terminated or dispensed with is
not entitled to a separation pay as expressly provided in section 1 of the Act.
This conclusion is evident from a comparison of the original provisions of
Republic Act 1052 and those of the amendatory Act No. 1787. Under the original
Act No. 1052 while the employer is given the right to terminate an employment
without serving notice to the employee one month in advance, this separation
entitles the employee to one month pay from the date of the termination of his
employment. But under Section 1 as amended by Republic Act 1787, when the
termination is for the just cause stated in par. l(a) such as closing because
of financial losses, the employment may be terminated. In this case no provision
exists for the payment of separation, pay. When it is not for a jast cause it is
made the obligation of the employer to return the employee to his former job and
his failure (of the employer) to do so renders him liable for damages. So that
with the approval of Republic Act 1787 and of the changes introduced therein, an
employer now has the right to terminate the employment of his employee at any
time for a just cause, in such case without any obligation on his part to the
month’s compensation originally granted in Section 1 of Republic Act No. 1052.
Republic Act 1787 however goes further by providing that an employer may not
terminate an employment for a cause not just, otherwise, he is responsible to
the employee for damages.

In the discussions in the Senate of the bill which was passed into Republic
Act No. 1787, the very issue now submitted to this Court.was passed upon or
clarified in the answer given by Senator Montano to Senator Tañada in the
discussion. The original paragraph (a) of section 1 considered as a just cause
the closing of the business because of force majeure. By the interpolations of
Senator Tañada it was suggested that “if a business enterprise loses, becomes
bankrupt, there is no other recourse but to close the business,” in which ease
there would be a just cause for the termination of the employment. This idea was
finally approved and now appears to be the one embodied in paragraph 1,
subparagraph (a) of section 1 of Republic Act 1787. (The discussion appears
in Morabe’s The Law On Dismissal, p. 72.)

Considering, that the ruling, above set forth is favorable to the
petitioners, the consideration of the other questions raised in this appeal
becomes unnecessary.

Considering, therefore, that separation pay computable at the rate of
one-half (1/2) month’s pay for each year of service was granted notwithstanding
the fact that the termination of the employment was based on a just cause, we
find that the writ should be granted, that the order granting separation pay as
above indicated should be reversed and the complaint dismissed. Without
costs.

Bengzon, C. J., Padilla, Bautista Angelo, Concepcion, Reyes, J. B. L.,
Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.