Olisa vs. Escario

Employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if reinstated, provided they were mere union members who did not commit illegal acts during the strike; the applicable provision is the third paragraph of Article 264(a) of the Labor Code, not Article 279, and the governing principle is "a fair day's wage for a fair day's labor." Separation pay in lieu of reinstatement may be awarded at one month per year of service when reinstatement is no longer feasible due to the passage of a long period and the abolition of the positions held.

Petitioners were regular employees of respondent Pinakamasarap Corporation (PINA), a corporation engaged in manufacturing and selling food seasoning, and members of petitioner Malayang Samahan ng mga Manggagawa sa Balanced Foods (Union). The dispute arose within the framework of collective bargaining and labor relations under the Labor Code, specifically the provisions governing strikes, prohibited activities, and security of tenure. Tensions between PINA's management and the Union had escalated following the preventive suspension and termination of Union officers after a March 13, 1993 walkout, prompting the Union to file a notice of strike on the ground of union busting through constructive dismissal.

Petitioners were regular employees of respondent Pinakamasarap Corporation (PINA), a corporation engaged in manufacturing and selling food seasoning, and were members of petitioner Malayang Samahan ng mga Manggagawa sa Balanced Foods (Union). On March 13, 1993, at 8:30 in the morning, all the officers and some 200 members of the Union walked out of PINA's premises and proceeded to the barangay office to show support for Juanito Cañete, a Union officer charged with oral defamation by Aurora Manor, PINA's personnel manager, and Yolanda Fabella, Manor's secretary. The barangay proceedings resulted in a settlement, and the officers and members all returned to work thereafter.

As a result of the walkout, PINA preventively suspended all Union officers and terminated them after a month. On April 14, 1993, PINA filed a complaint for unfair labor practice and damages, which was assigned to Labor Arbiter Raul Aquino. On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty of union busting through the constructive dismissal of its officers. A strike vote was held on May 9, 1993, with a majority of 190 members voting to strike. The strike was held in the afternoon of June 15, 1993.

PINA retaliated by charging the petitioners with unfair labor practice and abandonment of work, citing violations of the collective bargaining agreement's provisions on strike, including sabotage by insertion of foreign matter in bottling, decreased production output by slowdown, serious misconduct and willful disobedience, disruption of the workplace, abandonment of work since June 28, 1993 despite individual notices to return, and picketing within company premises on June 15, 1993 that barred ingress and egress through threat and intimidation. On September 30, 1994, the NLRC issued a temporary restraining order enjoining the Union from barricading and obstructing PINA's premises, and on November 29, 1994, granted a writ of preliminary injunction.

Labor Arbiter Jose G. de Vera rendered a decision on August 18, 1998 declaring the strike illegal. On appeal, the NLRC sustained the illegality of the strike but reversed the finding of abandonment, reasoning that mere participation in an illegal strike by a union member does not mean loss of employment status unless the member committed illegal acts during the strike, and that there was no showing the employees deliberately refused to return to work. The NLRC ordered reinstatement without backwages, or in lieu of reinstatement, separation pay equivalent to one-half month per year of service. The Court of Appeals affirmed this ruling on August 18, 2003, applying the third paragraph of Article 264(a) rather than Article 279 of the Labor Code. PINA later manifested that reinstatement was no longer feasible because the petitioners had stayed away for more than fifteen years, its machines had been replaced, and the positions related to sales and distribution had been abolished.

• Entitlement to Full Backwages: Petitioners contended that they were entitled to full backwages from the date of dismissal until the date of actual reinstatement by virtue of their reinstatement, arguing that the finding of no abandonment equated to a finding of illegal dismissal in their favor.
• Applicability of Article 279: Petitioners submitted that Article 279 of the Labor Code, not the third paragraph of Article 264(a), was the applicable provision governing their entitlement to full backwages.
• Good Faith Strike: Petitioners claimed that the NLRC gravely abused its discretion in not declaring their strike as a good faith strike.
• CA Error: Petitioners insisted that the CA decided the question of backwages in a manner contrary to law and jurisprudence.

• Infeasibility of Reinstatement: Respondent PINA manifested that reinstatement would no longer be feasible because it would inflict disruption and oppression upon the employer, the petitioners had stayed away for more than fifteen years, its machines had depreciated and been replaced with newer ones, and it now sold goods through independent distributors, thereby abolishing positions related to sales and distribution.

• Applicable Provision: Whether Article 279 or the third paragraph of Article 264(a) of the Labor Code governs the entitlement to backwages of employees dismissed for participating in an illegal strike.
• Entitlement to Backwages: Whether employees who participated in an illegal strike but were ordered reinstated are entitled to backwages for the period of the strike.
• Amount of Separation Pay: Whether the appropriate amount of separation pay in lieu of reinstatement is one-half month or one month per year of service.

• Applicable Provision: No. Article 264(a), not Article 279, applies to employees terminated for participating in an illegal strike; Article 279 governs only unjust dismissals — those effected without just or authorized cause or without due process.
• Entitlement to Backwages: No. Employees who joined an illegal strike are not entitled to backwages for the strike period because they performed no work, consistent with the "fair day's wage for a fair day's labor" principle.
• Amount of Separation Pay: One month per year of service. Because nearly seventeen years had elapsed and the positions formerly held by the petitioners had ceased to exist, reinstatement was no longer feasible and separation pay of one month per year of service was the appropriate alternative relief.

• Applicable Provision: Article 279 of the Labor Code uses the phrase "unjustly dismissed," referring to a dismissal effected without observing due process — either substantive or procedural. Substantive due process requires the attendance of any of the just or authorized causes under Articles 278, 283, or 284; procedural due process demands compliance with the twin-notice requirement. The petitioners were not unjustly dismissed; they were terminated for joining a strike later declared illegal. The third paragraph of Article 264(a) contemplates two causes for dismissal — unlawful lockout and participation in an illegal strike — and authorizes full backwages only when termination is a consequence of an unlawful lockout. As to illegal strikes, the provision distinguishes between union officers, who knowingly participating are deemed to have lost employment status, and union members, who are more benignly treated if merely instigated or induced. The NLRC ordered reinstatement because the petitioners were rank-and-file workers misled by union officers into joining the illegal strike. Article 264(a), not Article 279, is therefore the applicable provision.

• Entitlement to Backwages: As a general rule, backwages indemnify a dismissed employee for loss of earnings during the period out of work, serving as a public reparation for illegal dismissal in violation of the Labor Code. However, backwages are not granted to employees participating in an illegal strike because they did not render work during that period. The principle of "a fair day's wage for a fair day's labor" remains the basic factor: if no work is performed, there can be no wage, unless the laborer was able, willing, and ready to work but was illegally locked out, suspended, dismissed, or otherwise illegally prevented from working. That exception requires the strike to be legal, which does not obtain here. The petitioners did not deny their participation in the June 15, 1993 strike and thus suffered no loss of earnings during their absence. Their reinstatement without backwages conforms to the policy that it is neither fair nor just for dismissed employees to litigate against their employer on the latter's time.

• Amount of Separation Pay: The right to reinstatement must include an alternative relief should a supervening event prevent reinstatement; otherwise the judgment favorable to the employee is reduced to a mere paper victory. Separation pay is granted in lieu of reinstatement when reinstatement is no longer feasible due to the passage of a long period, strained relations, abolition of positions, or other supervening circumstances. PINA manifested that reinstatement would cause disruption, that more than fifteen years had passed, that machines had been replaced, and that the positions formerly held had been abolished. The grant of separation pay is based on equity — justice outside law — and has been awarded as a measure of social justice even when dismissal was valid, so long as it was not due to serious misconduct or reflective of personal integrity. In G&S Transport Corporation vs. Infante, the Court awarded one month salary per year of service after seventeen years, and in Association of Independent Unions in the Philippines vs. NLRC, after eight years. Here, nearly seventeen years had elapsed and the positions had ceased to exist, making separation pay of one month per year of service the appropriate award.

• Fair Day's Wage for a Fair Day's Labor — The principle that an employee is entitled to wages only for work actually performed; if no work is rendered, no wage is due, unless the employee was ready, willing, and able to work but was illegally prevented from doing so (as by an illegal lockout, suspension, or dismissal). The Court applied this doctrine to deny backwages to employees who participated in an illegal strike, since they performed no work during the strike period and thus suffered no loss of earnings. The exception — that an illegally locked out or dismissed employee may recover backwages despite not working — requires that the strike itself be legal, a condition not met where the strike was declared illegal.

• Distinction Between Union Officers and Union Members in Illegal Strikes — Under the third paragraph of Article 264(a) of the Labor Code, a union officer who knowingly participates in an illegal strike may be declared to have lost employment status, while a union member who is merely instigated or induced to participate in an illegal strike is treated more benignly and may be reinstated, absent any finding that the member committed illegal acts during the strike. The Court applied this distinction to uphold the reinstatement of the petitioners as misled rank-and-file members while denying them backwages.

• Separation Pay in Lieu of Reinstatement — Separation pay may be awarded as alternative relief when reinstatement is no longer feasible due to circumstances such as the passage of a long period of time, abolition of positions, strained relations, or supervening events making execution unjust or inequitable. The amount is determined by equity and social justice considerations; where a long period has elapsed (e.g., eight to seventeen years in the cited precedents), one month per year of service is the appropriate measure.

• "Conformably with the long honored principle of a fair day's wage for a fair day's labor, employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike." — This is the opening statement of the decision and articulates the core ruling: the principle that bars backwages for striking employees despite their reinstatement.

• "With respect to backwages, the principle of a 'fair day's wage for a fair day's labor' remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working." — This quotation, drawn from G&S Transport Corporation vs. Infante and adopted by the Court, states the canonical formulation of the doctrine governing backwages in illegal strike cases.

• "That backwages are not granted to employees participating in an illegal strike simply accords with the reality that they do not render work for the employer during the period of the illegal strike." — This passage explains the ratio decidendi for denying backwages: the absence of work performed during the strike period, which is the factual basis for the "fair day's wage" principle.

• G&S Transport Corporation vs. Infante, G.R. No. 160303, September 13, 2007, 533 SCRA 288 — Followed. The Court relied on this case for the "fair day's wage for a fair day's labor" principle and for the award of separation pay equivalent to one month salary per year of service where a long period (seventeen years) had elapsed.

• Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) vs. Manila Diamond Hotel Employees Union, G.R. No. 158075, June 30, 2006, 494 SCRA 195 — Followed. The Court cited this case for the proposition that striking employees who did not render work during the strike are not entitled to backwages, and for the deletion of the backwages award.

• Association of Independent Unions in the Philippines vs. NLRC, G.R. No. 120505, March 25, 1999, 305 SCRA 219 — Followed. The Court relied on this case for awarding separation pay equivalent to one month salary per year of service where eight years had elapsed since the illegal strike.

• Stamford Marketing Corporation vs. Julian, G.R. No. 145496, February 24, 2004, 423 SCRA 633 — Cited. The Court referenced this case for the policy of reinstating rank-and-file workers misled into supporting illegal strikes absent any finding of illegal acts.

• BLTB vs. NLRC, 212 SCRA 794 — Cited. The NLRC relied on this case for the proposition that a worker who joins a strike does so to assert or improve terms and conditions of work, not to abandon employment.

• Article 279, Labor Code — Provides that an employee unjustly dismissed is entitled to reinstatement without loss of seniority rights and to full backwages inclusive of allowances and benefits. The Court held this provision inapplicable because it governs only unjust dismissals — those effected without just or authorized cause or without due process — whereas the petitioners were terminated for participating in an illegal strike.

• Article 264(a), Labor Code (third paragraph) — Provides that any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages; that any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost employment status; and that mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination. The Court held this provision applicable because it specifically addresses dismissals arising from participation in illegal strikes and distinguishes between union officers and union members.

• Articles 282, 283, and 284, Labor Code — Referenced as the substantive due process requirements for termination: just causes (Article 282), authorized causes including closure and reduction of personnel (Article 283), and disease as ground for termination (Article 284). The Court cited these provisions to explain the scope of Article 279's "unjustly dismissed" standard.

Conchita Carpio Morales (Chairperson), Diosdado M. Peralta, Martin S. Villarama, Jr., and Maria Lourdes P. A. Sereno concurred. No separate concurring opinions were written.