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NORTH DAVAO MINING CORPORATION v. NLRC

## FACTS:

This case involves a petition for certiorari seeking to reverse and set aside the Resolutions of the National Labor Relations Commision (NLRC) in NLRC-CA No. M-001395-93. The petitioner, North Davao Mining Corporation, was forced to close its business due to huge business losses. On May 31, 1992, the company completely ceased its operations. The remaining employees were given separation pay equivalent to 12.5 days' pay for every year of service, but the company had previously been giving separation pay equivalent to 30 days' pay for every year of service. A complaint was filed by one of the separated employees, Wilfredo Guillema, and 271 others for additional separation pay, back wages, transportation allowance, hazard pay, housing allowance, food allowance, post-employment medical clearance, and future medical allowance. The labor arbiter ordered North Davao to pay the complainants certain monetary claims, which were affirmed by the NLRC. North Davao filed a petition seeking to reverse the decision of the NLRC. The main question before the Court is whether a company forced to close its business due to business losses is legally required to pay separation benefits to its employees at the time of closure in an amount equivalent to the separation pay paid to those who were separated when the company was still a going concern.

## ISSUES:

  1. Whether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure.

  2. Whether or not time spent by employees in collecting wages in a place other than the place of employment is compensable, despite being done during official time.

  3. Whether or not the employees are entitled to transportation expenses in the absence of evidence that these expenses were incurred by the employer.

## RULING:

  1. The employer is not legally required to pay separation benefits when the closure is due to serious business losses or financial reverses. Art. 283 of the Labor Code does not impose any obligation upon the employer to pay separation benefits under such circumstances.

  2. The time spent by employees traveling to collect their wages at a designated bank, which took about 2 1/2 hours per round trip and was not within official work hours, should be considered as compensable hours worked.

  3. The employees are entitled to transportation expenses since the employer did not provide any substantial evidence to contradict the claims of the employees. It was held that the employer's failure to pay wages at the workplace or provide transportation, particularly when the place of payment was considerably distant, justified compensation for additional transport costs.

## PRINCIPLES:

  1. No Obligation for Separation Pay Due to Business Losses: Under Art. 283 of the Labor Code, employers are not required to provide separation pay if the closure of the business was due to substantial losses.

  2. Compensability of Travel Time for Wage Collection: Time spent by employees traveling to collect their wages under conditions not within normal operations can be compensable as hours worked.

  3. Equal Treatment Under Company Policy: Employers are required to treat employees equally in terms of separation benefits unless differences are justifiably rational and lawful.

  4. Limitations of Corporate Liability: The national government, as a shareholder, is not directly responsible for the liabilities of the corporation unless specific conditions that pierce the corporate veil are met.

  5. Finality and Respect of Administrative Body Decisions: Decisions of specialized administrative bodies are generally accorded respect and finality if supported by substantial evidence, barring any indications of grave abuse of discretion or arbitrariness.