LUIS DE OCAMPO, JR., JOSE RODRIGO, EUGENIO ESQUEJO, VICTORINO TABERNERO, RIZALO DALIVA, FRANCISCO ACOSTA AND 87 OTHERS LISTED IN ANNEX “A” HEREOF, PETITIONERS, VS. NATIONAL LABO…

De Ocampo versus National Labor Relations Commission

The Case

This is a labor case about the consequences of an illegal strike and the fate of project workers whose contracts had expired while the project they were working on was still unfinished. Luis de Ocampo, Jr. and many other dismissed workers, joined by their union, challenged before the Supreme Court the decision of the National Labor Relations Commission that upheld their dismissal and treated their separation as a mere expiration of contracts. The case matters because it draws the line between leaders and followers in an illegal strike, and because it refuses to let an employer use the expiration of a project contract as a cover for retaliation against workers who complain and strike.

Procedural History

The individual workers first filed a complaint for illegal dismissal with the labor arbiter after their services were terminated. The employer, Makati Development Corporation, separately filed applications for clearance to terminate the employment of the striking workers it had preventively suspended. Labor Arbiter Apolinar Sevilla denied the applications for clearance and directed the company to reinstate the complainants with two months back wages each. The company appealed to the National Labor Relations Commission, which modified the arbiter's decision: it granted the clearance to dismiss the union officers, held the project employees severed by the expiration of their contracts, and ordered reinstatement without back wages of the regular employees who were not union officers, with separation pay at their option. The workers then came to the Supreme Court by petition, faulting the Commission for grave abuse of discretion.

Facts

On September 30, 1980, the services of 65 employees of Makati Development Corporation were terminated on the ground that their contracts had expired. The next day, the dismissed employees filed a complaint for illegal dismissal. On October 8, 1980, their union, the Philippine Transport and General Workers Association, filed a notice of strike on grounds of union busting, subcontracting of projects that could have been assigned to the dismissed employees, and unfair labor practice. On October 14, 1980, the union declared a strike and set up picket lines around the company premises.

On November 4, 1980, the company asked the Bureau of Labor Relations to declare the strike illegal and to restrain the workers from continuing it. On the same day and in the days that followed, the company filed applications for clearance to terminate the employment of 90 striking workers whom it had meanwhile preventively suspended. Of these workers, 74 were project employees under contracts with fixed terms.

The labor arbiter ruled for the workers, but the Commission modified the ruling on appeal. The record showed that although the contracts of the project workers had expired, the project itself was still ongoing and still required their services. Their work had not been unsatisfactory, and in past projects the company had retained workers until completion, which explains the long years of service many of them had. The Commission's modified decision is what the workers brought to the Supreme Court.

Issues

• Whether or not the motion for reconsideration of the Commission's decision was filed out of time.
• Whether or not the strike was illegal.
• Whether or not the separation of the project employees was justified by the expiration of their contracts.

Applicable Provisions

Section 9 of Rule X of the Revised Rules of the National Labor Relations Commission, on motions for reconsideration, provides:

Section 9. Motions for reconsideration. Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision, with proof of service that a copy of the same has been furnished, within the aforesaid reglementary period, the adverse party and provided further, that only one such motion shall be entertained.

This rule governs the timeliness of the motion for reconsideration, but the Court held it was not yet in force when the Commission rendered its decision in 1984.

Section 1 of Presidential Decree Number 823, as amended by Presidential Decree Number 849, on the policy on strikes, provides:

It is the policy of the state to encourage free trade unionism and free collective bargaining within the framework of compulsory and voluntary arbitration. Therefore all forms of strikes, picketing and lockout are hereby strictly prohibited in vital industries such as in public utilities, including transportation and communication, companies engaged in the manufacture or processing as well as in the distribution of fuel gas, gasoline and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products for export, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges.

This provision supplies the policy that limited and discouraged strikes at the time, and it frames the Court's ruling that the strike was illegal.

The same Section 1 continues:

However, any legitimate labor union may strike and any employer may lockout in establishments not covered by General Order No. 5 only on grounds of unresolved economic issues in collective bargaining, in which case the union or the employer shall file a notice with the Bureau of Labor Relations at least 30 days before the intended strike or lockout.

This is the provision the Court applied to hold that the strike was based on a prohibited ground and was declared before the cooling-off period had lapsed.

Ruling

On the first issue, the Court held that the motion for reconsideration was filed on time. The rule invoked by the Commission took effect only on November 29, 1986, after publication, and so was not yet in force when the decision was rendered in 1984. The reglementary period then was fifteen days, and the copy of the decision was received by the petitioner only on June 13, 1984. The motion was filed on June 26, 1984, only 13 days after receipt, and therefore within the period.

On the second issue, the Court held that the strike was illegal under the law then in force. It was based not on unresolved economic issues, which was the only ground allowed at that time, but on union busting, subcontracting, and unfair labor practice. It was also declared only six days after the notice of strike, before the thirty-day cooling-off period had lapsed. The Court ruled that the leaders of the illegal strike were correctly punished with dismissal, because they instigated the strike even if they knew or should have known it was illegal. The followers, other than the contract workers, were properly ordered reinstated, considering their lesser degree of responsibility, but without back wages, since they should not be compensated for services not rendered during the illegal strike.

On the third issue, the Court held that the separation of the project employees was not justified. It stressed the rule that contract workers are not considered regular employees, since their services are needed only when there are projects to be undertaken. But that rule did not apply here, because although the contracts had expired, the project was still ongoing and still required the workers' services, and there was no showing that their work was unsatisfactory. The Court found that the real reason for the termination was the complaint the project workers had filed and their participation in the strike. Their services were discontinued not because of the expiration of their contracts, which had not prevented their retention or rehiring before, but to retaliate against them and replace them with more tractable employees.

The Court also relied on Policy Instruction Number 20 of the Department of Labor, which provides that project employees are not entitled to separation pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the projects in which they had been employed by a particular construction company. Read liberally in favor of labor, the rule entitles project employees to separation pay if the projects they are working on have not yet been completed when their services are terminated, even if their contracts have expired, on the theory that such contracts would have been renewed anyway because their services were still needed.

Doctrine

First, the leaders of an illegal strike may be dismissed, because they instigated the strike even if they knew or should have known it was illegal, while the followers may be reinstated but without back wages, since they should not be compensated for services not rendered during the illegal strike.

Second, contract workers are not considered regular employees, their services being needed only when there are projects to be undertaken, because it would be unjust to keep them on the payroll while they do nothing but wait for another project.

Third, that rule does not apply where the project is still ongoing and still requires the workers' services at the time of termination; in that case, the expiration of the contract is not a valid ground, and termination for having filed a complaint and joined a strike is retaliation.

Fourth, under Policy Instruction Number 20, project employees are entitled to separation pay if the projects they are working on have not yet been completed when their services are terminated, even if their contracts have expired, computed at one month for every year of service up to the time of the completion of the project.

Disposition

The Supreme Court affirmed the decision of the National Labor Relations Commission but modified it by declaring that the contract workers were illegally separated before the expiration of the project they were working on, and are therefore entitled to separation pay equivalent to one month salary for every year of service, with no costs.

Remember This

The single line worth memorizing is that the expiration of a project contract does not justify separation while the project is still ongoing and the workers' services are still needed, for that is retaliation, and the workers are entitled to separation pay. Examiners like to use this case on the distinction between leaders and followers in an illegal strike, on the reinstatement of followers without back wages, and on the separation pay of project employees whose contracts expire before project completion.