Mercury Drug Co., Inc. and Mariano Que vs. Court of Industrial Relations and Nardo Dayao

The acceptance of termination pay and the execution of a clearance renouncing all claims do not divest a laborer of the right to prosecute the employer for unfair labor practice, such waiver of labor rights being contrary to public policy and therefore null and void. Corollarily, laches and estoppel, being affirmative defenses, must be alleged in the answer or they are deemed renounced, and the findings of fact of the Court of Industrial Relations, when supported by substantial evidence, are conclusive and binding on the Supreme Court.

Petitioner Mercury Drug Co., Inc. is a service enterprise, and petitioner Mariano Que was its president and general manager. Private respondent Nardo Dayao entered its employ on February 13, 1956 as a driver, was later assigned as delivery man and then as checker, and was last promoted to assistant chief checker in the checking department at a monthly salary of P225.00. The existing labor organization in the company, the Mercury Drug Company, Inc. Employees' Association, had as its presidents persons occupying managerial and high confidential positions, and its then president, Apolinario Ranin, declined to act on Dayao's request for additional compensation for work rendered on Sundays and holidays. The employment relationship was governed by the Industrial Peace Act (R.A. No. 875), the Eight-Hour Labor Law, and the Termination Pay Law (R.A. No. 1052, as amended by R.A. No. 1787), with the 1935 and 1973 Constitutions both guaranteeing protection to labor and the rights of workers to self-organization and security of tenure.

Petitioner Mercury Drug Co., Inc. was a service enterprise, and petitioner Mariano Que served as its president and general manager. Private respondent Nardo Dayao was employed by the corporation on February 13, 1956, originally as a driver, later assigned as delivery man, then as checker, and finally promoted to the position of assistant chief checker in the checking department at a salary of P225.00 a month, a position he held until his separation on April 10, 1961. His appointment as checker fixed his annual compensation at P2,400.00, "which includes the additional compensation for work on Sundays and legal holidays," and required him to perform work every day of the year — eight hours on regular days and all special holidays with 25% additional compensation, four hours on every other Sunday of the month, and four hours on all legal holidays — with 25% additional compensation per hour for any work performed in excess of those hours.

Days before April 10, 1961, Dayao urged petitioners to pay overtime pay, criticized the employees' association for failing to protect the welfare of the employees by not securing such additional compensation, and campaigned among his co-employees to organize another labor union. His efforts to organize a separate union began in February 1961, after he had repeatedly approached Que for the payment of additional compensation for the four hours of work rendered on Sundays and legal holidays, and after the president of the existing association, Apolinario Ranin, told him that nothing could be done about his request. Among the employees he convinced to join the planned union were Josias Fideras, Nestor Talampas, Armando de Leon, Aladdin Dimagmaliw, and Rogelio Orbeta.

On April 10, 1961, Que summoned Dayao to the office and inquired why he was organizing a new union despite the existence of an existing labor organization in the company. According to Dayao, he replied that he did so because the company had not been paying the minimum wage and had not been paying for the four hours of work rendered on Sundays and special holidays, to which Que responded, "Ah ganoon pala. So you are organizing a new union, if that is so, from now on I do not like to see you any more in this office and you can no longer enter the service or work in the company, I don't like unionist." Several minutes later, Que brought out an amount of money and a piece of paper which Dayao was asked to sign. Dayao protested that he could not sign the paper because he was not resigning, but Que retorted that whether he signed or not he could no longer work, so he had better sign. After reflecting that he would be laid off either way and would then have no money, Dayao signed the paper and received P562.50, the separation pay of fifteen days for every year of service covered by a cash voucher. He likewise received P140.58 representing his salary for a certain period and signed a clearance stating that he had no claims of whatever kind and nature against petitioners.

Petitioners presented a different account. Que testified that Dayao had quarreled with the president of their union, that Dayao even had his head swollen, and that Dayao had threatened to kill Ranin, prompting Que to call both to the office to discuss the matter; because they could not be pacified and he did not want a scandal in the office, he requested that they resign and both agreed. Que claimed the quarrel occurred on Saturday, April 8, 1961, at the Apollo Restaurant, not in the office or premises of the corporation. Jacinto Concepcion, personnel manager and acting paymaster, testified that on Monday, April 10, 1961, upon Que's instruction, he prepared the cash voucher and the corresponding check for P562.50, which was delivered to Dayao after the latter signed the voucher, and that Dayao also received P140.58 and signed the clearance. Concepcion, however, admitted having no personal knowledge of the alleged quarrel except from what Que told him on April 10, 1961. Romualdo Reyes, secretary and legal counsel of the corporation, testified that Dayao had earlier consulted him about the vale system of the association and asked his intercession for bigger vales, but he was not present at the April 10, 1961 conference and was likewise only informed by Que of what transpired. Dayao denied having quarreled with Ranin on any date before his dismissal, and Fideres and Talampas professed no knowledge of the alleged quarrel.

On April 25, 1963, exactly two years and fifteen days from his separation on April 10, 1961, Dayao filed a complaint for unfair labor practice against petitioners. The hearing officer found no clear and positive proof that a quarrel between Dayao and Ranin had actually occurred at the Apollo Restaurant on the night of April 8, 1961; Que's declaration that he "think" there was such a quarrel and that he again "think" Dayao would inflict bodily harm on Ranin was based only on surmise and belief, and the testimonies of Concepcion and Reyes on the incident were mere information received from Que, who was not a disinterested party. No investigation was conducted by Concepcion despite his admission that it was incumbent upon him to investigate troubles among employees, and Ranin, who could have corroborated Que, was not presented as a witness. Even granting that the quarrel occurred, the hearing officer found that it took place in a restaurant far from the company premises, did not prejudice the normal course of business, and had no bearing on Dayao's employment. The hearing officer likewise found it hard to believe that Dayao, a family man continuously in service for more than five years with successive promotions, would resign his only means of livelihood, and concluded that the receipt of the money and the execution of the documents were forced upon him. The Court of Industrial Relations affirmed these findings in toto.

• Validity of the Separation: Petitioners maintained that Dayao was separated from the service for cause because of his having created trouble with another employee who was also dismissed, and that even if he was separated for cause, he received compensation pay which relieved petitioners from whatever claim or claims he had against them.
• Laches and Estoppel: Petitioners relied on laches, aside from estoppel, to defeat Dayao's unfair labor practice charge, invoking these defenses for the first time only in their petition for review, taking a cue from the dissent of Judge Emiliano R. Tabigne of the Court of Industrial Relations.
• Sufficiency of the Evidence: Petitioners contended that the finding of fact that Dayao was dismissed because of his union activities, and that they were consequently guilty of unfair labor practice, was not substantiated by credible evidence.

• Unfair Labor Practice — Dismissal for Union Activities: Whether the finding of the Court of Industrial Relations that Nardo Dayao was dismissed from the service because of his union activities, and that petitioners were consequently guilty of unfair labor practice, is supported by substantial evidence.
• Waiver and Quitclaim: Whether Dayao's acceptance of separation pay and his signing of a clearance renouncing any other claim against petitioners bar the prosecution of the unfair labor practice charge.
• Laches and Estoppel: Whether laches and estoppel may defeat the unfair labor practice charge, and whether the filing of the charge two years and fifteen days after dismissal was within a reasonable period of time.
• Back Wages: Whether Dayao is entitled to back wages, and in what amount.

• Unfair Labor Practice — Dismissal for Union Activities: Yes. The finding that Dayao was dismissed because of his union activities is amply substantiated by credible evidence, and the findings of fact of the Court of Industrial Relations, when supported by substantial evidence, are conclusive and binding on the Supreme Court under Section 6 of R.A. No. 875.
• Waiver and Quitclaim: No. The waiver of the rights of labor contravenes public policy and is therefore null and void, and the acceptance of termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice.
• Laches and Estoppel: No. Laches, like estoppel, must be alleged as a defense in the answer, otherwise it is deemed renounced; and the lapse of two years and fifteen days from dismissal to the filing of the charge is not an unreasonable period of time under the circumstances.
• Back Wages: Yes, but reduced. Back wages equivalent to one year, eleven months, and fifteen days, without further disqualifications, are awarded, the period of delay in instituting the charge being deducted from the employer's liability.

• Unfair Labor Practice — Dismissal for Union Activities: The findings of fact of the Court of Industrial Relations, when supported by substantial evidence, are conclusive and binding on the Supreme Court, and had the respondent Court ignored the evidence adduced by petitioners, it would have been guilty of grave abuse of discretion warranting review. The hearing officer's report, affirmed in toto by the respondent Court as supported by the evidence and the law, established that on April 10, 1961, Que summoned Dayao and, upon learning that he was organizing a new union, told him that he did not like to see him anymore in the office and that he could no longer work in the company because Que did not like unionists. The report further established that Que brought out money and a paper which Dayao was compelled to sign under threat of dismissal regardless of whether he signed, and that Dayao's organizing efforts, corroborated by Fideres and Talampas, were motivated by the management's refusal to pay additional compensation for work on Sundays and holidays and by the association's failure to act on the employees' claims. Petitioners' version of a quarrel between Dayao and Ranin was rejected because there was no clear and positive proof of its occurrence, Que's testimony rested on surmise and belief, the testimonies of Concepcion and Reyes were hearsay derived from Que, no investigation was conducted by the personnel manager, and Ranin was not presented to corroborate Que despite being available. Even assuming the quarrel occurred, it took place in a restaurant far from the company premises, during no official working time, and could not have prejudiced the normal course of business, and the alleged resignation was incredible given Dayao's continuous service, successive promotions, and status as a family man dependent on his employment. Que never disclaimed knowledge of Dayao's union activity before April 10, 1961, and the evidence that he came to know of it before the discharge remained unassailed. The preponderance of evidence thus sustained the finding that petitioners interfered with Dayao's union activity and that his dismissal was discriminatory.

• Waiver and Quitclaim: The insistence that Dayao's acceptance of separation pay and signing of a renunciation of any other claim militates against the charge of unfair labor practice runs counter to the principle that such waiver of the rights of labor contravenes public policy and is therefore null and void, more so where the root cause of the union activities was the campaign for additional compensation for overtime pay under the Eight-Hour Labor Law, against which claim estoppel or laches is unavailing. Acceptance of termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice acts, much less does the signing of the clearance, considering the attendant circumstances surrounding its execution. As stated in Carino vs. ACCFA, employer and employee do not stand on the same footing; the employer drove the employee to the wall, and the latter had to get hold of money, finding himself in no position to resist what was preferred him, so that his acceptance was a case of adherence, not of choice. Renuntiatio non praesumitur. Dayao never relented in his claim; his filing was merely delayed and he is pressing it. Moreover, from the time he was employed as checker, he was made to waive his right to additional compensation for overtime pay under the appointment extended to him, which was clearly an exploitation of the employee who would be compelled to work more than eight hours on Sundays and legal holidays without additional compensation.

• Laches and Estoppel: An unfair labor practice charge with a prayer for reinstatement with back wages should be filed within a reasonable period of time, but laches, like estoppel, should also be alleged as a defense in the answer, otherwise it is considered renounced. Petitioners failed to expressly allege laches in their answer to the charge, in their memorandum, and in their motion for reconsideration of the decision of the Court of Industrial Relations, raising it only in their petition for review. On the merits, the lapse of two years and fifteen days from dismissal to the filing of the charge is not an unreasonable period of time under the circumstances. In the absence of any other specific legal provision, the statute of limitations prescribed by the Civil Code applies: Article 1146 requires an action upon an injury to the rights of the plaintiff to be instituted within four years; Article 1144 requires an action upon a contract to be filed within ten years; and Article 1149 requires all other actions whose periods are not fixed in the Civil Code or in other laws to be brought within five years from the time the right of action accrues. Whether the charge is based on an injury to Dayao's rights or falls under the category of all other actions for which no time limit is prescribed, the filing was well within either prescriptive period. The 1935 Constitution was solicitous for the welfare of labor, expressly providing that the State shall afford protection to labor and committing itself to the promotion of social justice to insure the well-being and economic security of all the people, while the 1973 Constitution expanded such guarantees and imposed upon the State the duty to assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. To sustain petitioners' position would be to deny these constitutional guarantees to Dayao.

• Back Wages: If the dismissal of Dayao was for just cause, there would have been no reason for petitioners to give him termination pay, because under the Termination Pay Law, Republic Act No. 1052, as amended by Republic Act No. 1787, an employee whose services are terminated for just cause is not entitled to termination pay. Even under that law, the alleged quarrel between Dayao and Ranin, the president of the labor union, in the presence of Que, is not one of the grounds justifying dismissal; it is not even analogous to serious misconduct or willful disobedience of the orders of the employer or its representative in connection with the work. At most, the quarrel was discourtesy not intended, considering that its origin was Ranin's failure to fight for overtime pay for services rendered on Sundays and holidays, and such discourtesy merits merely a reprimand or admonition, not outright dismissal, since it did not involve Dayao's efficiency or honesty. Dayao's five years and ten months of service, during which he was promoted from driver to delivery man, to checker, and finally to assistant chief checker at P225.00 a month, demonstrated his efficiency, competence, and trustworthiness. As to the amount, while the delay in the resolution of the case was not due to the parties, Dayao filed his charge with reinstatement and back wages about two years and fifteen days after his separation, and although this was within the prescriptive period, the period of delay in instituting the charge should be deducted from the employer's liability for back wages. To relieve the employee from proving his income during the period he was out of service and the employer from submitting counter-proofs, which may delay the execution of the decision, the employer should be directed to pay back wages equivalent to one year, eleven months, and fifteen days without further disqualifications. In fairness to the employer, he should not be compelled to reinstate an employee who is no longer physically fit for the job from which he was illegally ousted.

• Conclusiveness of the findings of fact of the Court of Industrial Relations — Findings of fact of the Court of Industrial Relations, when supported by substantial evidence, are conclusive and binding on the Supreme Court, pursuant to Section 6 of Republic Act No. 875. The Court applied this doctrine in refusing to disturb the hearing officer's findings, affirmed in toto by the respondent Court, that Dayao was dismissed because of his union activities; it added that had the respondent Court ignored the evidence adduced by petitioners, it would have been guilty of grave abuse of discretion warranting review.
• Non-waiver of labor rights; renuntiatio non praesumitur — A waiver of the rights of labor contravenes public policy and is therefore null and void, and the acceptance of termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. Waiver is not presumed. The Court applied the doctrine in holding that Dayao's receipt of P562.50 in separation pay and his signing of a clearance renouncing all claims did not bar his unfair labor practice charge, since employer and employee do not stand on the same footing and his acceptance was a case of adherence, not of choice.
• Laches and estoppel must be pleaded — Laches, like estoppel, must be alleged as a defense in the answer; otherwise, it is deemed renounced. The Court applied this doctrine in holding that petitioners, having raised laches and estoppel only in their petition for review and not in their answer, memorandum, or motion for reconsideration, had renounced these defenses.
• Prescriptive period for unfair labor practice charges — In the absence of any other specific legal provision, the periods fixed by the Civil Code govern: four years for an action upon an injury to the rights of the plaintiff (Article 1146), ten years for an action upon a contract (Article 1144), and five years for all other actions whose periods are not fixed in the Civil Code or in other laws (Article 1149). The Court applied the doctrine in holding that the filing of the charge two years and fifteen days after dismissal was well within either prescriptive period.
• Termination pay implies absence of just cause — Under the Termination Pay Law, Republic Act No. 1052, as amended by Republic Act No. 1787, an employee whose services are terminated for just cause is not entitled to termination pay. The Court applied the doctrine in reasoning that the very grant of separation pay to Dayao negated petitioners' claim that he was dismissed for a just cause.
• Fixed back wages without further deduction — To relieve the employee from proving his income during the period he was out of service and the employer from submitting counter-proofs, which may delay the execution of the decision, back wages may be fixed at a definite amount without further disqualifications or deductions. The Court applied this formula in awarding Dayao back wages equivalent to one year, eleven months, and fifteen days, after deducting the period of delay in instituting the charge from the employer's liability.

• "Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money preferred him. His, then, in a case of adherence, not of choice." — This passage, quoted from Carino vs. ACCFA, states the ratio decidendi for the holding that the acceptance of separation pay does not bar an unfair labor practice charge; it is the canonical formulation of the doctrine that economic necessity negates a voluntary waiver of labor rights.
• "Renuntiatio non praesumitur." — This maxim, invoked immediately after the Carino passage, supplies the controlling principle that waiver of labor rights is never presumed and must be established by clear proof.
• "It is true that unfair labor practice charge with the prayer for reinstatement with back wages should be filed within a reasonable period of time. But laches, like estoppel, should also be alleged as a defense in the answer, otherwise the same is considered renounced." — This passage decides the procedural issue on laches and estoppel, establishing that these affirmative defenses are waived if not pleaded in the answer.
• "In fairness to the employer, he should not be compelled to reinstate an employee who is no longer physically fit for the job from which he was illegally ousted." — This passage qualifies the relief of reinstatement, explaining why the Court conditioned Dayao's reinstatement upon certification of his physical fitness by a government physician.

• Carino vs. ACCFA, L-19808, Sept. 29, 1966, 18 SCRA 183, 190 — Controlling precedent quoted at length by the Court for the rule that the acceptance of benefits by a dismissed employee does not amount to estoppel, because employer and employee do not stand on the same footing and the employee's acceptance is a case of adherence, not of choice.
• Philippine Sugar Institute vs. CIR, et al., G.R. No. L-13475, Sept. 29, 1960 — Cited for the rule that acceptance of termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice acts.
• DMC vs. National Labor Union, 48 O.G. 2765 — Cited, together with Philippine Sugar Institute, for the same rule that acceptance of termination pay does not bar an unfair labor practice prosecution.
• Manila Terminal Co., Inc. vs. CIR, et al., 91 Phil. 625 — Cited for the proposition that estoppel or laches is unavailing against a laborer's claim for additional compensation for overtime pay under the Eight-Hour Labor Law.
• Phil. Fiber Processing Co., Inc. vs. CIR, L-29770, July 19, 1973, 52 SCRA 110, 114 — Cited as the lead authority for the rule that the findings of fact of the Court of Industrial Relations, when supported by substantial evidence, are conclusive and binding on the Supreme Court under Section 6 of R.A. No. 875.
• Bulakeña Rest. & Cat. vs. CIR, L-26796, May 25, 1972, 45 SCRA 87, 100; Compania Maritima vs. Compania Maritima Labor Union, L-29504, Feb. 29, 1972, 43 SCRA 464, 468; Cruz vs. Phil. Assn. of Free Labor Unions, L-26519, Oct. 29, 1971, 42 SCRA 68; Phil. Eng. Corp. vs. CIR, L-27880, Sept. 30, 1971, 41 SCRA 89; Castillo vs. CIR, L-26124, May 29, 1971, 39 SCRA 75, 83; Lakas ng Manggagawang Makabayan vs. CIR, L-32178, Dec. 28, 1970, 36 SCRA 600 — Cited collectively as supporting authority for the conclusiveness of the Court of Industrial Relations' findings of fact.
• Caltex Filipino, etc. vs. CIR, L-30632-33, Apr. 11, 1972 — Cited for the proposition that if the respondent Court ignored the evidence adduced by petitioners, it would be guilty of grave abuse of discretion warranting review of its findings of fact.
• Itogon Suyoc Mines, Inc. vs. Sangilo-Itogon Workers Union, 24 SCRA 873 (1968) — Cited in the separate opinion of Justice Teehankee for the observation that a general award of back wages tended to breed idleness on the part of a discharged employee who would "with folded arms, remain inactive in the expectation that a windfall would come to him."
• East Asiatic Co. Ltd. vs. CIR, 40 SCRA 521 (1971) — Cited in the separate opinion of Justice Teehankee for the rule that reinstatement should be immediately effected upon finality of the judgment without waiting for the computation and determination of back wages.

• Section 6, Republic Act No. 875 (Industrial Peace Act) — Provides that the findings of fact of the Court of Industrial Relations, when supported by substantial evidence, are conclusive and binding on the Supreme Court. Applied to sustain the finding that Dayao was dismissed because of his union activities.
• Section 5(a), Republic Act No. 875 (Industrial Peace Act) — Defines unfair labor practice acts, including interference with, restraint of, or coercion of employees in the exercise of their right to self-organization. Cited in connection with the holding that the acceptance of termination pay and the signing of a clearance did not bar the prosecution of the unfair labor practice charge.
• Article 1146, Civil Code of the Philippines — Requires an action upon an injury to the rights of the plaintiff to be instituted within four years. Applied as the prescriptive period governing the unfair labor practice charge, the filing of which two years and fifteen days after dismissal was well within the period.
• Article 1144, Civil Code of the Philippines — Requires an action upon a contract to be filed within ten years. Cited as an alternative prescriptive period within which the charge was likewise timely filed.
• Article 1149, Civil Code of the Philippines — Requires all other actions whose periods are not fixed in the Civil Code or in other laws to be brought within five years from the time the right of action accrues. Cited as a further alternative prescriptive period within which the charge was timely filed.
• Section 1, Republic Act No. 1052, as amended by Republic Act No. 1787 (Termination Pay Law) — Provides that an employee whose services are terminated for just cause is not entitled to termination pay. Applied to reason that the very grant of separation pay to Dayao negated petitioners' claim of a just-cause dismissal.
• Section 6, Article XIV, 1935 Constitution — Provides that the State shall afford protection to labor. Invoked to support the liberal treatment of Dayao's claim.
• Section 5, Article II, 1935 Constitution — Commits the State to the promotion of social justice to insure the well-being and economic security of all the people. Invoked alongside the labor protection clause.
• Section 9, Article II, 1973 Constitution — Imposes upon the State the duty to assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. Invoked to hold that denying Dayao relief would deny him these constitutional guarantees.

Makalintal, C.J., Zaldivar, Castro, Fernando, Barredo, Antonio, Esguerra, Fernandez, Muñoz Palma and Aquino, JJ., concur.

• Justice Teehankee (concurring and dissenting) — Concurred in the affirmance of the judgment finding petitioners guilty of unfair labor practice and ordering Dayao's reinstatement upon certification of his physical fitness, and particularly endorsed the new formula of awarding a fixed amount of back wages "without further qualifications," dispensing with the customary determination and deduction of the employee's earnings during the lay-off. He dissented, however, from the specific award of back wages equivalent to only one year, eleven months, and fifteen days, which he viewed as arbitrarily premised on granting back wages only for the remainder of the four-year prescriptive period after deducting the two years and fifteen days of delay in filing the complaint — a delay the majority itself found "not an unreasonable period of time under the circumstances" and which should therefore not prejudice the amount justly due. He proposed ground rules for implementing the new formula: an award of back wages equivalent to three years (where the case is not terminated sooner) should serve as the base figure without deduction, subject to deduction where there are mitigating circumstances in favor of the employer and subject to increase by way of exemplary damages where there are aggravating circumstances such as oppression or dilatory appeals on the employer's part. On the facts, he submitted that the minimum award should be at least the equivalent of the proposed base figure of three years pay, given the lack of merit in the employer's appeal and its stubborn insistence on depriving the employees of the extra compensation justly due them, and that employers should be put on notice as a deterrent that manifestly dilatory and unmeritorious appeals run the risk of exemplary and punitive damages. He further submitted that since the petition is dismissed, the reinstatement of Dayao upon a finding of physical fitness should be "without loss of seniority rights and other privileges appertaining thereto" to which he should have been entitled during the long period of his wrongful dismissal, as provided in the industrial court's judgment as affirmed.