CASE DIGEST: SKM Art Craft v. Bauca

G.R. No. 171282 : November 27, 2013

SKM ART CRAFT CORPORATION, Petitioner, v. EFREN BAUCA, PATRICIO OLMILLA ZALDY ESCALARES, PEDRITO OLMILLA PEDRO BERAY, DANILO SOLDE, NOEL P ALARCA, JULIUS CESAR MIGUELA, OCTAVIO OBIAS, ARVIN ABINES, RADDY TERENCIO FE RANIDO, EDNAMANSUETO SANDRO RODRIGUEZ RENATO TANGO, HERMOGENES OBIAS, DOMINGO LAROCO DANTE AQUINO, ARMANDO VILLA, ROGELIO DELOS REYES, NOMER MANAGO, ANTONIO BALUDCAL and LUDIVICO STA. CLARA, Respondents.

FACTS:

The 23 respondents in G.R. No. 171282 were employed by petitioner SKM Art Craft Corporation which is engaged in the handicraft business. On April 18, 2000, a fire occurred at petitioners premises in Intramuros, Manila. The estimated damage wasP22 million. Petitioner informed respondents that it will suspend its operations for six months, effective May 9, 2000.

On May 16, 2000, only eight days after receiving notice of the suspension of petitioners operations, the 23 respondents (and other co-workers) filed a complaint for illegal dismissal. They alleged that there was discrimination in choosing the workers to be laid off and that petitioner had discovered that most of them were members of a newly-organized union.

Petitioner denied the claim of illegal dismissal and said that Article 286of the Labor Code allows the bona fide suspension of a business or undertaking for a period not exceeding six months. Petitioner claimed that the fire cost it millions in losses and that it is impossible to resume its normal operations for a significant period of time.

The Labor Arbiter ruled that respondents were illegally dismissed and ordered petitioner to reinstate them and pay them back wages. Further, ruled that the fire that burned a part of petitioners premises may validate the suspension of respondents employment, but the suspension must not exceed six months.

The National Labor Relations Commission (NLRC) set aside the Labor Arbiters Decision and ruled that there was no illegal dismissal. The NLRC ordered that respondents be reinstated to their former positions but it deleted the award of back wages.

The complaint as to Nomer Manago, Ludivico Sta. Clara and Antonio Baludcud are dismissed as said complainants have already executed quitclaims and releases.

The NLRC denied the parties motions for reconsideration.

The CA considered the merits of the petition for certiorari filed by respondents and the conflicting findings of the Labor Arbiter and the NLRC as justification for its decision to decide the case on the merits even if only nine of the respondents had signed the verification and certification against forum shopping attached to the petition.

In the assailed Decision, the CA set aside the NLRC Decision and Resolution and reinstated the Labor Arbiters Decision. The CA ruled that petitioner failed to prove that its suspension of operations is bona fide. The CA also noted that petitioners manifestation that it is willing to admit the respondents if they return to work was belatedly made after almost one year from the expiration of the suspension of operations.

The CA also held that the NLRC committed grave abuse of discretion in dismissing the complaints of Nomer Manago, Ludivico Sta. Clara and Antonio Baludcal since the Release, Waiver and Quitclaims executed by them pertain to another case.

ISSUES:

Whether the CA gravely erred in not summarily dismissing the CA petition insofar as Patricio Olmilla [et al., or those who did not sign the verification and certification against forum shopping, are concerned.

Whether or not the respondents were illegally dismissed.


HELD: The decision of the Court of Appeals is reversed.

REMEDIAL LAW verification


We hold that the verification signed by nine of the respondents substantially complied with the verification requirement since respondents share a common interest and cause of action in the case. The apparent merit of respondents CA petition and the conflicting findings of the Labor Arbiter and the NLRC also justified the CAs decision to rule on the merits of the case.

In Altres v. Empleo, G.R. No. 180986, December 10, 2008we also ruled that the verification requirement is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct, as in this case.

LABOR LAW - illegal dismissal

The Labor Arbiter and the CA are correct that respondents were illegally dismissed since they were not recalled after six months, after the bona fide suspension of petitioners operations.

Petitioners suspension of operations is valid because the fire caused substantial losses to petitioner and damaged its factory. However, petitioner has proven that its suspension of operations is bona fide contrary to the findings of the CA. The list of materials burned was not the only evidence submitted by petitioner. It was corroborated by pictures and the fire investigation report, and they constitute substantial evidence of petitioners losses.

Under Article 286 of the Labor Code, the bona fide suspension of the operations of a business or undertaking for a period not exceeding six months shall not terminate employment.

The NLRC correctly noted that the complaint for illegal dismissal filed by respondents was premature since it was filed only eight days after petitioner announced that it will suspend its operations for six months. In Nippon Housing Phil., Inc. v. Leynes, G.R. No. 177816, August 3, 2011, a complaint for illegal dismissal filed prior to the lapse of said six months is generally considered as prematurely filed.

We stress that under Article 286 of the Labor Code, the employment will not be deemed terminated if the bona fide suspension of operations does not exceed six months. But if the suspension of operations exceeds six months, the employment will be considered terminated. In Valdez v. NLRC, 349 Phil. 760. By the same token and applying said rule by analogy, if the employee was forced to remain without work or assignment for a period exceeding six months, then he is in effect constructively dismissed.

The SC agree with the CA in setting aside the NLRC Decision and Resolution and in reinstating the Labor Arbiters Decision. Hence, the respondents were illegally dismissed. The CA and Labor Arbiters Decisions will now be subject to the settlement agreements entered into by petitioner and almost all of the respondents.