THIRD DIVISION

G.R. No. 103560 July 6, 1995

GOLD CITY INTEGRATED PORT SERVICE, INC. (INPORT), petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Fifth Division) ADELO EBUNA, EMMANUEL
VALMORIDA, RODOLFO PEREZ, ROGER ZAGADO, MARCOS GANZAN, AND REY VALLE,
(WILFREDO DAHAN, ROGELIO VILLAFUERTE, WILFREDO AMPER, RICARDO ABA, YOLITO
AMBUS, FIDEL CALIO, VICENTE CAHATOL, SOTECO CUENCA, NICOLAS DALAGUAN,
BALBINO FAJARDO, ROLANDO JAMILA, RICARDO LAURETO, RUDY LAURETO, QUIRICO
LEJANIO, OSCAR LAPINIG, FELIPE LAURETE, JESUSTUDY OMISOL, ZOSIMO OMISOL,
PEDRO SUAREZ, SATURNINO SISIBAN and MANUEL YANEZ), respondents.

G.R. No. 103599 July 6, 1995

ADELO EBUNA, WILFREDO DAHAN, RICARDO LAURETO, REY VALLE, VICENTE CAHATOL,
MARCOS GANZAN, RODOLFO PEREZ, ROEL SAA, ROGELIO VILLAFUERTE, MANUEL
YANEZ, WILFREDO AMPER, QUIRECO LEJANO, EMMANUEL VALMORIA, ROLANDO
JAMILLA, NICOLAS DALAGUAN, BALBINO FAJARDO, PEDRO SUAREZ, ELPIDIO ESTROGA,
RUBEN PAJO, JESUSTODY OMISOL, RICARDO ABA, FIDEL CALIO, SATURNINO SESYBAN,
RUDY LAURETO, OSCAR LAPINIG, FELIPE LAURENTE, ROGER ZAGADO, SOTECO
CUENCA, FIDEL ESLIT, ZOSIMO OMISOL, ANGEL BERNIDO, and MICHAEL
YAGOTYOT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and GOLD CITY
INTEGRATED PORT SERVICES, INC. (INPORT), respondents.

ROMERO, J.:

Should separation pay and backwages be awarded by public respondent NLRC to participants of an
illegal strike? This is the core issue to be decided in these two petitions.

Gold City Integrated Port Service, Inc. (INPORT) filed a petition for certiorari against the National
Labor Relations Commission (NLRC) assailing the latter's decision in "Gold City Integrated Port
Services, Inc. v. Adelo Ebuna, et al." (NLRC RAB X Case No. 5-0405-85) with twenty-seven private
respondents (G.R. No. 103599). This petition has been consolidated with G.R. No. 103599 where
1

the petitioners are the private respondents in instant case and the private respondent is INPORT.
For the sake of clarity, INPORT shall be denominated in the case at bench as the petitioner and the
employees as private respondents.

Instant case arose from the following facts:

Early in the morning of April 30, 1985, petitioner's employees stopped working and gathered in a
mass action to express their grievances regarding wages, thirteenth month pay and hazard pay.
Said employees were all members of the Macajalar Labor Union — Federation of Free Workers
(MLU-FFW) with whom petitioner had an existing collective bargaining agreement.
Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan de Oro. The
strike paralyzed operations at said port.

On the same morning, the strikers filed individual notices of strike ("Kaugalingon nga Declarasyon sa
Pag-Welga") with the then Ministry of Labor and Employment.

With the failure of conciliation conferences between petitioner and the strikers, INPORT filed a
complaint before the Labor Arbiter for Illegal Strike with prayer for a restraining order/preliminary
injunction.

On May 7, 1985, the National Labor Relations Commission issued a temporary restraining order.
Thereafter, majority of the strikers returned to work, leaving herein private respondents who
continued their protest.2

Counsel for private respondents filed a manifestation that petitioner required prior screening
conducted by the MLU-FFW before the remaining strikers could be accepted back to work.

Meanwhile, counsel for the Macajalar Labor Union (MLU-FFW) filed a "Motion to Drop Most of the
Party Respondents From the Above Entitled Case." The 278 employees on whose behalf the motion
was filed, claimed that they were duped or tricked into signing the individual notices of strike. After
discovering this deception and verifying that the strike was staged by a minority of the union officers
and members and without the approval of, or consultation with, majority of the union members, they
immediately withdrew their notice of strike and returned to work.

The petitioner INPORT, not having interposed any objection, the Labor Arbiter, in his decision dated
July 23, 1985, granted their prayer to be excluded as respondents in the complaint for illegal strike.
Moreover, petitioner's complaint was directed against the 31 respondents who did not return to work
and continued with the strike.

For not having complied with the formal requirements in Article 264 of the Labor Code, the strike
3

staged by petitioner's workers on April 30, 1985 was found by the Labor Arbiter to be illegal. The
4

workers who participated in the illegal strike did not, however, lose their employment, since there
was no evidence that they participated in illegal acts. After noting that petitioner accepted the other
striking employees back to work, the Labor Arbiter held that the private respondents should similarly
be allowed to return to work without having to undergo the required screening to be undertaken by
their union (MLU-FFW).

As regards the six private respondents who were union officers, the Labor Arbiter ruled that they
could not have possibly been "duped or tricked" into signing the strike notice for they were active
participants in the conciliation meetings and were thus fully aware of what was going on. Hence, said
union officers should be accepted back to work after seeking reconsideration from herein petitioner. 5

The dispositive portion of the decision reads:

IN VIEW OF THE FOREGOING, it is hereby ordered that the strike undertaken by the
officers and majority union members of Macajalar Labor Union-FFW is ILLEGAL contrary to
Article 264 of the Labor Code, as amended. Our conclusion on the employment status of the
illegal strikers is subject to our discussion above.
6

Both petitioner and private respondents filed motions for reconsideration, which public respondent
NLRC treated as appeals. 7
On January 14, 1991, the NLRC affirmed with modification the Arbiter's decision. It held that the
8

concerted action by the workers was more of a "protest action" than a strike. Private respondents,
including the six union officers, should also be allowed to work unconditionally to avoid
discrimination. However, in view of the strained relations between the parties, separation pay was
awarded in lieu of reinstatement. The decretal portion of the Resolution reads:

WHEREFORE, the decision appealed from is Affirmed with modification in accordance with
the foregoing resolution. Complainant INPORT is hereby ordered, in lieu of reinstatement, to
pay respondents the equivalent of twelve (12) months salaries each as separation pay.
Complainant is further ordered to pay respondents two (2) years backwages based on their
last salaries, without qualification or deduction. The appeal of complainant INPORT
is Dismissed for lack of merit.9

Upon petitioner's motion for reconsideration, public respondent modified the above resolution on
December 12, 1991. 10

The Commission ruled that since private respondents were not actually terminated from service,
there was no basis for reinstatement. However, it awarded six months' salary as separation pay or
financial assistance in the nature of "equitable relief." The award for backwages was also deleted for
lack of factual and legal basis. In lieu of backwages, compensation equivalent to P1,000.00 was
given.

The dispositive portion of the assailed Resolution reads:

WHEREFORE, the resolution of January 14, 1991 is Modified reducing the award for
separation pay to six (6) months each in favor of respondents, inclusive of lawful benefits as
well as those granted under the CBA, if any, based on the latest salary of respondents, as
and by way of financial assistance while the award for backwages is Deleted and Set Aside.
In lieu thereof, respondents are granted compensation for their sudden loss of employment
in the sum of P1,000.00 each. The motion of respondents to implead PPA as third-party
respondent is Noted. Except for this modification the rest of the decision sought to be
reconsidered shall stand. 11

In the instant petitions for certiorari, petitioner alleges that public respondent Commission committed
grave abuse of discretion in awarding private respondents separation pay and backwages despite
the declaration that the strike was illegal.

On the other hand, private respondents, in their petition, assail the reduction of separation pay and
deletion of backwages by the NLRC as constituting grave abuse of discretion.

They also allege that the Resolution of January 14, 1991 could not be reconsidered after the
unreasonable length of time of eleven months.

Before proceeding with the principal issues raised by the parties, it is necessary to clarify public
respondent's statements concerning the strike staged by INPORT's employees.

In its resolution dated January 14, 1991, the NLRC held that the facts prevailing in the case at bench
require a relaxation of the rule that the formal requisites for a declaration of a strike are mandatory.
Furthermore, what the employees engaged in was more of a spontaneous protest action than a
strike.
12
Nevertheless, the Commission affirmed the Labor Arbiter's decision which declared the strike illegal.

A strike, considered as the most effective weapon of labor, is defined as any temporary stoppage
13

of work by the concerted action of employees as a result of an industrial or labor dispute. A labor
14

dispute includes any controversy or matter concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging the
terms and conditions of employment, regardless of whether or not the disputants stand in the
proximate relation of employers and employees. 15

Private respondents and their co-workers stopped working and held the mass action on April 30,
1985 to press for their wages and other benefits. What transpired then was clearly a strike, for the
cessation of work by concerted action resulted from a labor dispute.

The complaint before the Labor Arbiter involved the legality of said strike. The Arbiter correctly ruled
that the strike was illegal for failure to comply with the requirements of Article 264 (now Article 263)
paragraphs (c) and (f) of the Labor Code. 16

The individual notices of strike filed by the workers did not conform to the notice required by the law
to be filed since they were represented by a union (MLU-FFW) which even had an existing collective
bargaining agreement with INPORT.

Neither did the striking workers observe the strike vote by secret ballot, cooling-off period and
reporting requirements.

As we stated in the case of National Federation of Sugar Workers v. Ovejera, the language of the
17

law leaves no room for doubt that the cooling-off period and the seven-day strike ban after the strike-
vote report were intended to be mandatory. 18

Article 265 of the Labor Code reads, inter alia:

(i)t SHALL be unlawful for any labor organization . . . to declare a strike . . . without first
having filed the notice required in the preceding Article or without the necessary strike vote
first having been obtained and reported to the Ministry. (Emphasis ours)

In explaining the above provision, we said:

In requiring a strike notice and a cooling-off period, the avowed intent of the law is to
provide an opportunity for mediation and conciliation. It thus directs the MOLE to
exert all efforts at mediation and conciliation to effect a voluntary settlement' during
the cooling-off period. . . .

xxx xxx xxx

The cooling-off period and the 7-day strike ban after the filing of a strike-vote report,
as prescribed in Art. 264 of the Labor Code, are reasonable restrictions and their
imposition is essential to attain the legitimate policy objectives embodied in the law.
We hold that they constitute a valid exercise of the police power of the state. 19

From the foregoing, it is patent that the strike on April 30, 1985 was illegal for failure to
comply with the requirements of the law.
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of the Labor Code,
make a distinction between workers and union officers who participate therein.

A 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 their employment status. An ordinary striking worker cannot be terminated for
20

mere participation in an illegal strike. There must be proof that he committed illegal acts
during a strike. A union officer, on the other hand, may be terminated from work when he
knowingly participates in an illegal strike, and like other workers, when he commits an illegal
act during a strike.

In the case at bench, INPORT accepted the majority of the striking workers, including union
officers, back to work. Private respondents were left to continue with the strike after they
refused to submit to the "screening" required by the company. 21

The question to be resolved now is what these remaining strikers, considering the
circumstances of the case, are entitled to receive under the law, if any.

Are they entitled, as they claim, to reinstatement or separation pay and backwages?

In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the remaining workers
as well as to accept the remaining union officers after the latter sought reconsideration from
INPORT. 22

The NLRC on January 14, 1991, modified the above decision by ordering INPORT to pay
private respondents the equivalent of twelve months in salary as separation pay in lieu of
reinstatement and two years' backwages. 23

On reconsideration, public respondent modified its original award and reduced the
separation pay to six months, deleted the award for backwages and instead awarded
P1,000.00 as compensation for their sudden loss of employment. 24

Under the law, an employee is entitled to reinstatement and to his full backwages when he is
unjustly dismissed. 25

Reinstatement means restoration to a state or condition from which one had been removed
or separated. Reinstatement and backwages are separate and distinct reliefs given to an
illegally dismissed employee. 26

Separation pay is awarded when reinstatement is not possible, due, for instance, to strained
relations between employer and employee.

It is also given as a form of financial assistance when a worker is dismissed in cases such as
the installation of labor saving devices, redundancy, retrenchment to prevent losses, closing
or cessation of operation of the establishment, or in case the employee was found to have
been suffering from a disease such that his continued employment is prohibited by law. 27

Separation pay is a statutory right defined as the amount that an employee receives at the
time of his severance from the service and is designed to provide the employee with the
wherewithal during the period that he is looking for another employment. It is oriented
28
towards the immediate future, the transitional period the dismissed employee must undergo
before locating a replacement job. 29

Hence, an employee dismissed for causes other than those cited above is not entitled to
separation pay. Well-settled is it that separation pay shall be allowed only in those
30

instances where the employee is validly dismissed

for causes other than serious misconduct or those reflecting on his moral character. 31

Backwages, on the other hand, is a form of relief that restores the income that was lost by
reason of unlawful dismissal. 32

It is clear from the foregoing summary of legal provisions and jurisprudence that there must
generally be unjust or illegal dismissal from work, before reinstatement and backwages may
be granted. And in cases where reinstatement is not possible or when dismissal is due to
valid causes, separation pay may be granted.

Private respondents contend that they were terminated for failure to submit to the
controversial "screening" requirement.

Public respondent Commission took the opposite view and held:

As the evidence on record will show, respondents were not actually terminated from
the service. They were merely made to submit to a screening committee as a
prerequisite for readmission to work. While this condition was found not wholly
justified, the fact remains that respondents who are resistant to such procedure are
partly responsible for the delay in their readmission back to work. Thus, We find
justifiable basis in further modifying our resolution of January 14, 1991 in accordance
with the equities of the case.

We shall therefore recall the award for backwages for lack of factual and legal basis.
The award for separation pay shall likewise (be) reasonably reduced. Normally,
severance benefit is granted as an alternative remedy to reinstatement. And since
there is no dismissal to speak of, there is no basis for awarding reinstatement as a
legal remedy. In lieu thereof, We shall grant herein respondents separation pay as
and by way of financial assistance in the nature of an "equitable relief".
33

We find that private respondents were indeed dismissed when INPORT refused to accept
them back to work after the former refused to submit to the "screening" process.

Applying the law (Article 264 of the Labor Code) which makes a distinction, we differentiate
between the union members and the union officers among private respondents in granting
the reliefs prayed for.

Under Article 264 of the Labor Code, a worker merely participating in an illegal strike may not
be terminated from his employment. It is only when he commits illegal acts during a strike
that he may be declared to have lost his employment status. Since there appears no proof
that these union members committed illegal acts during the strike, they cannot be dismissed.
The striking union members among private respondents are thus entitled to reinstatement,
there being no just cause for their dismissal.
However, considering that a decade has already lapsed from the time the disputed strike
occurred, we find that to award separation pay in lieu of reinstatement would be more
practical and appropriate.

No backwages will be awarded to private respondent-union members as a penalty for their

participation in the illegal strike. Their continued participation in said strike, even after most of
their co-workers had returned to work, can hardly be rewarded by such an award.

The fate of private respondent-union officers is different. Their insistence on unconditional

reinstatement or separation pay and backwages is unwarranted and unjustified. For
knowingly participating in an illegal strike, the law mandates that a union officer may be
terminated from employment. 34

Notwithstanding the fact that INPORT previously accepted other union officers and that the
screening required by it was uncalled for, still it cannot be gainsaid that it possessed the right
and prerogative to terminate the union officers from service. The law, in using the word may,
grants the employer the option of declaring a union officer who participated in an illegal strike
as having lost his employment. 35

Moreover, an illegal strike which, more often than not, brings about unnecessary economic
disruption and chaos in the workplace should not be countenanced by a relaxation of the
sanctions prescribed by law.

The union officers are, therefore, not entitled to any relief.

However, the above disquisition is now considered moot and academic and cannot be
effected in view of a manifestation filed by INPORT dated May 15, 1987. In said36

Manifestation, it attached a Certification by the President of the Macajalar Labor Union

(MLU-FFW) to the effect that the private respondents/remaining strikers have ceased to be
members of said union. The MLU-FFW had an existing collective bargaining agreement with
INPORT containing a union security clause. Article 1, Section 2(b) of the CBA provides:

The corporation shall discharge, dismiss or terminate any employee who may be a
member of the Union but loses his good standing with the Union and or corporation,
upon proper notice of such fact made by the latter; provided, however, . . . after they
shall have received the regular appointment as a condition for his continued
employment with the corporation. . . . 37

Since private respondents (union members) are no longer members of the MLU, they cannot
be reinstated. In lieu of reinstatement, which was a proper remedy before May 1987 when
they were dismissed from the union, we award them separation pay. We find that to award
one month salary for every year of service until 1985, after April of which year they no longer
formed part of INPORT's productive work force partly through their own fault, is a fair
settlement.

Finally, there is no merit in INPORT's statement that a Resolution of the NLRC cannot be
modified upon reconsideration after the lapse of an unreasonable period of time. Under the
present circumstances, a period of eleven months is not an unreasonable length of time. The
Resolution of the public respondent dated January 14, 1991 did not acquire finality in view of
the timely filing of a motion for reconsideration. Hence, the Commission's modified
Resolution issued on December 12, 1991 is valid and in accordance with law.
In sum, reinstatement and backwages or, if no longer feasible, separation pay, can only be
granted if sufficient bases exist under the law, particularly after a showing of illegal dismissal.
However, while the union members may thus be entitled under the law to be reinstated or to
receive separation pay, their expulsion from the union in accordance with the collective
bargaining agreement renders the same impossible.

The NLRC's award of separation pay as "equitable relief" and P1,000.00 as compensation
should be deleted, these being incompatible with our findings detailed above.

WHEREFORE, from the foregoing premises, the petition in G.R. No. 103560 ("Gold City
Integrated Port Service Inc. v. National Labor Relations Commission, et al.") is GRANTED.
One month salary for each year of service until 1985 is awarded to private respondents who
were not union officers as separation pay. The petition in G.R. No. 103599 ("Adelo Ebuna, et
al. v. National Labor Relations Commission, et al.") is DISMISSED for lack of merit. No
costs.

SO ORDERED.

Feliciano, Melo, Vitug and Francisco, JJ., concur.

Footnotes

1 Namely, Adelo Ebuna, Wilfredo Dahan, Ricardo Laureto, Rey Valle,

Vicente Cahatol, Marcos Ganzan, Rodolfo Perez, Roel Saa, Rogelio
Villafuerte, Manuel Yanez, Wilfredo Amper, Quireco Lejano, Emmanuel
Valmoria, Rolando Jamilla, Nicolas Dalaguan, Balbino Fajardo, Pedro
Suarez, Elpidio Estroga, Ruben Pajo, Jesustody Omisol, Ricardo Aba, Fidel
Calio, Saturnino Sesyban, Rudy Laureto, Oscar Lapinig, Felipe Laurente,
Roger Zagado, Soteco Cuenca, Fidel Eslit, Zosimo Omisol, Angel Bernido
and Michael Yagotyot.

2 Of the thirty-one remaining strikers, four have already died, leaving the
twenty-seven respondents herein.

3 Now Article 263.

4 Decision of Executive Labor Arbiter Ildefonso O. Agbuya, dated July 23,

1985, NLRC RABX Case No. 5-0405-85. Rollo, p. 57.

5 Decision of the Labor Arbiter, p. 11; Rollo, p. 66.

6 Ibid., p. 66.

7 On May 20, 1987, petitioner filed a Manifestation to the effect that the 32
remaining striking employees have ceased to be members of the Macajalar
Labor Union — FFW, per Certification dated May 15, 1987 by the President
of MLU-FFW. Rollo, p. 84.
8 Resolution penned by Presiding Commissioner Musib M. Buat and
concurred in by Commissioner Leon G. Gonzaga, Jr., Commissioner Oscar
N. Abella, on leave. Rollo, p. 85.

9 Rollo, p. 105.

10 Penned by Presiding Commissioner Musib M. Buat, with Commissioners

Oscar N. Abella and Leon G. Gonzaga, Jr., concurring. Rollo, p. 119.

11 Rollo, p. 124.

12 Rollo, pp. 96-98.

13 Bisig ng Manggagawa sa Concrete Aggregates Inc. v. NLRC, G.R. No.

105090, September 16, 1993, 226 SCRA 499; Ilaw at Buklod ng
Manggagawa v. NLRC, G.R. No. 91980, June 27, 1991, 198 SCRA 586.

14 Labor Code, Article 212 (0).

15 Labor Code, Article 212 (1).

16 Article 264. Strikes, picketing, and lockouts. —

(c) In cases of bargaining deadlocks, the certified or duly recognized

bargaining representative may file a notice of strike . . . with the Ministry at
least thirty (30) days before the intended date thereof. In cases of unfair labor
practices, the period of strike shall be shortened to fifteen (15) days; and in
the absence of a duly certified or recognized bargaining representative, the
notice of strike may be filed by any legitimate labor organization in behalf of
its members.

xxx xxx xxx

(f) A decision to declare a strike must be approved by at least two-thirds (2/3)

of the total union membership in the bargaining unit concerned obtained by
secret ballot in meetings or referenda. . . . In every case, the union . . . shall
furnish the Ministry the results of the voting at least seven (7) days before the
intended strike . . . , subject to the cooling-off period herein provided.
(Emphasis supplied)

17 G.R. No. L-59743, May 31, 1982, 114 SCRA 354.

18 Ibid., p. 365.

19 Ibid., at p. 367.

20 Labor Code, Article 265 (now Article 264).

21 The screening was allegedly requested by the Macajalar Labor Union of

petitioner INPORT upon the belief that a competing union, the National
Federation of Labor, influenced its members into staging the strike. INPORT
points out that it agreed to the screening requirement because it merely
wanted to avoid further friction with the union (MLU-FFW). Rollo, pp. 120-
121.

22 Rollo, p. 66.

23 Rollo, p. 105.

24 Rollo, p. 124.

25 Labor Code, Article 279.

26 Torillo v. Leogardo, G.R. No. 77205, May 27, 1991, 197 SCRA 471;
Indophil Acrylic Mfg. Corp. v. NLRC, G.R. No. 96488, September 27, 1993,
226 SCRA 723.

27 Labor Code, Articles 283 and 284; Lemery Savings and Loan Bank v.
NLRC, G.R. No. 96439, January 27, 1992, 205 SCRA 492; Banco Filipino
Savings and Mortgage Bank v. NLRC, G.R. No. 82135, August 20, 1990, 188
SCRA 700.

28 A Prime Security Services Inc. v. NLRC, G.R. No. 93476, March 19, 1993,
220 SCRA 142 citing PLDT v. NLRC 164 SCRA 671, Del Castillo v. NLRC,
176 SCRA 229 and Cosmopolitan Funeral Homes v. Maalat, 187 SCRA 108;
Aquino v. NLRC, G.R. No. 87653, February 11, 1992, 206 SCRA 118.

29 Escareal v. NLRC, G.R. No. 99359, September 2, 1992, 213 SCRA 472.

30 Article 279 and 282; Rule 1, Section 7, Book VI, Omnibus Implementing
Rules of the Labor Code.

31 PLDT v. NLRC, G.R. No. L-80609, Aug. 23, 1988, 164 SCRA 671;
Sampaguita Garments Corp. v. NLRC, G.R. No. 102406, June 17, 1994, 233
SCRA 260; Cathedral School of Technology, G.R. No. 101483, October 13,
1991, 214 SCRA 551; Baguio Country Club v. NLRC, G.R. No. 102397,
September 4, 1992, 213 SCRA 664.

32 Escareal v. NLRC, 213 SCRA 472.

33 Rollo, p. 123.

34 Labor Code, Article 264.

35 Article 264.

(a) . . . 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 his employment
status: Provided, That mere participation of a worker in a lawful strike shall
not constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike
36 Rollo, p. 84.

37 Petition, p. 15; Rollo, p. 15.