Milan v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioners were employees of Solid Mills, Inc. (Solid Mills) and, along with their families, were allowed to occupy SMI Village, a property owned by Solid Mills, as a privilege granted out of liberality and for their convenience, on the condition that they would vacate the premises anytime the Company deems fit. In September 2003, Solid Mills informed its employees of its cessation of operations effective October 10, 2003, due to serious business losses. A memorandum of agreement was executed between Solid Mills and the National Federation of Labor Unions (NAFLU), the employees' collective bargaining agent, acknowledging the company's financial losses and the cessation of operations. The agreement stipulated separation pay less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay. Solid Mills filed its termination report and subsequently sent notices to petitioners to vacate SMI Village. Petitioners were prevented from reporting for work and were required to sign a memorandum of agreement with release and quitclaim before their benefits would be released, which included vacating SMI Village and agreeing to the demolition of houses constructed therein. Petitioners refused to sign and demanded payment of their benefits. Procedural History: Petitioners filed complaints before the Labor Arbiter for non-payment of separation pay, accrued sick and vacation leaves, and 13th month pay. The Labor Arbiter ruled in favor of the petitioners, finding that Solid Mills illegally withheld their benefits and separation pay, and that their possession of the property was a civil issue outside the Labor Arbiter's jurisdiction. Solid Mills appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's decision regarding some complainants but reversed the rulings for others, holding their monetary claims in abeyance pending compliance with their accountabilities by turning over the subject lots they occupied at SMI Village. The NLRC reasoned that Solid Mills was justified in withholding benefits due to petitioners' failure to vacate its property, as the privilege to occupy was tied to their employment. Petitioners filed a motion for partial reconsideration, which was denied. They then filed a petition for certiorari before the Court of Appeals (CA), which dismissed their petition, ruling that Solid Mills' act of allowing employees to occupy its property was a liberality that could be revoked at its discretion, and that the cessation of the employer-employee relationship removed any reason for them to stay. The CA also noted that Teodora Mahilom's claim for retirement pay was not included in her complaint and was raised for the first time on appeal, and that Carlito Damian had already received his benefits. The Petition: Petitioners filed a petition for review on certiorari before the Supreme Court, raising issues regarding the CA's ruling that payment of monetary claims should be held in abeyance pending compliance with accountabilities, the deletion of interest, and the denial of claims for Teodora Mahilom and Carlito Damian. They argued that the memorandum of agreement did not state that benefits would be paid only upon return of possession, that "accountabilities" should not include possession of property, and that the NLRC and CA had no jurisdiction to declare their act of withholding possession illegal.
Issue(s)
Whether the Court of Appeals committed reversible error when it ruled that payment of the monetary claims of petitioners should be held in abeyance pending compliance of their accountabilities to respondent Solid Mills by turning over the subject lots they respectively occupy at SMI Village. Whether the Court of Appeals committed reversible error when it upheld the ruling of the NLRC deleting the interest of 12% per annum imposed by the Labor Arbiter. Whether the Court of Appeals committed reversible error when it upheld the ruling of the NLRC denying the claim of Teodora Mahilom for payment of retirement benefits despite lack of any evidence that she received the same. Whether petitioner Carlito Damian is entitled to his monetary benefits from respondent Solid Mills.
Ruling
The petition is DENIED. The Court of Appeals' decision is AFFIRMED.
Ratio Decidendi
On the issue of holding payment of monetary claims in abeyance pending compliance with accountabilities: The Supreme Court affirmed the ruling of the Court of Appeals and the NLRC, holding that the NLRC has jurisdiction to preliminarily determine issues related to rights arising from an employer-employee relationship, including claims over property held by employees. The Court reiterated that requiring clearance before the release of last payments is a standard procedure to ensure the return of employer properties. The agreement between Solid Mills and NAFLU stipulated that benefits would be released "less accountabilities." The Court interpreted "accountabilities" in its ordinary sense to mean obligation or debt, which includes the obligation to return company property occupied by employees by virtue of their employment. The privilege to occupy the property was granted out of liberality and was tied to the employer-employee relationship, thus the return of the property became an obligation upon cessation of employment. The Court cited Article 1706 of the Civil Code, which allows withholding of wages except for a debt due, and Article 2142 on quasi-contracts to prevent unjust enrichment. Therefore, Solid Mills was justified in withholding benefits due to the petitioners' existing debt or liability in failing to return its property. On the issue of deleting the 12% interest: The Supreme Court upheld the deletion of the 12% interest. The Court reasoned that since Solid Mills was justified in withholding the monetary claims due to the petitioners' failure to return its property, the imposition of interest was improper. The withholding of payment was not an act of reneging on obligations but a condition for the employees to return properties belonging to the employer. This action was consistent with the equitable principle that no one should be unjustly enriched at the expense of another. Therefore, the removal of the award of interest was proper because the benefits were legitimately withheld by Solid Mills. On the claim of Teodora Mahilom for retirement benefits: The Supreme Court affirmed the ruling of the Court of Appeals and the NLRC that Teodora Mahilom is not entitled to separation benefits. Both lower tribunals found that she had already retired long before Solid Mills' closure and had received her retirement benefits. The Supreme Court, as a rule, does not interfere with factual findings of lower tribunals, especially when affirmed by the Court of Appeals. Furthermore, the Court noted that Teodora Mahilom's claim for retirement benefits was not included in her complaint filed before the Labor Arbiter, and thus, it could not be raised for the first time on appeal. The Court also pointed out that the claim was asserted long after the three-year prescriptive period provided in Article 291 of the Labor Code. On the claim of Carlito Damian for monetary benefits: The Supreme Court upheld the ruling of the NLRC and the Court of Appeals that Carlito Damian is not entitled to claim terminal benefits again, as both tribunals found that he had already received them. The fact that his house in SMI Village had not yet been demolished was not evidence that he did not receive his benefits. Both lower courts found that he had executed an affidavit stating that he had already received the benefits. Absent any showing that the NLRC and CA misconstrued these facts, the Supreme Court will not reverse these findings. The Court emphasized that it would be unjust for Carlito Damian to receive monetary benefits again when he had already admitted to receiving them.
Main Doctrine
An employer is allowed to withhold terminal pay and benefits pending the employee's return of its properties, as the obligation to return company property constitutes an "accountability" within the contemplation of the agreement between the employer and the union, and the employer has the right to demand the return of its property at will when possession was given out of liberality.