Peñafrancia Tours v. Sarmiento

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision2 dated August 31, 2006. Since October 1993, until his alleged termination on October 30, 2002, respondent Joselito Sarmiento (Sarmiento) worked as a bus inspector of petitioner Peñafrancia Tours and Travel Transport, Inc. (petitioner), earning a daily wage of ₱198.00. In his complaint3 for illegal dismissal filed on November 26, 2002, Sarmiento prayed for his reinstatement, and charged petitioner with underpayment of wages; non-payment of overtime, holiday pay, premium pay for holiday and rest day, service incentive leave pay, 13th month pay, and separation pay; unfair labor practice; damages; and attorney's fees.

Meanwhile, respondent Ricardo Catimbang (Catimbang) also worked for petitioner as a bus inspector from February 1997 until his termination on October 30, 2002. He was also paid a daily wage of ₱198.00. He averred that petitioner was guilty of union-busting, and prayed for reinstatement with payment of full backwages, benefits, damages, and attorney's fees.4 Both Sarmiento and Catimbang (respondents) averred that they were required to work seven (7) days a week, and that they had no rest day and worked even during the holidays, except Good Friday, Christmas Eve, and New Year's Eve.

Sometime in the first week of October 2002, they received notices of termination on the ground of petitioner's alleged irreversible business losses. In the middle of October 2002, a meeting was called by petitioner's President and General Manager, Bonifacio Cu, wherein respondents were introduced to Alfredo Perez, the owner of ALPS Transportation, as the new owner of petitioner, having allegedly bought the same. On October 30, 2002, respondents received their last pay with a letter informing them that their application with the company had been held in abeyance.

Sarmiento was paid ₱26,730.00 as separation pay and ₱4,686.00 as 13th month pay; while Catimbang was paid ₱17,820.00 as separation pay and ₱4,851.00 as 13th month pay. Respondents, however, learned that, several days after their termination, Bonifacio Cu continued to operate petitioner bus company. Traversing the complaint, petitioner admitted that respondents were among its bus inspectors.

It asseverated, however, that due to severe business losses, petitioner made the painful decision to stop its operation and sell the business enterprise to the Perez family of ALPS Transportation. It alleged that due notice was given to the Department of Labor and Employment,5 and that all its employees were duly notified6 and were paid their corresponding separation pay, as well as their 13th month pay. The new owners maintained the business name of petitioner, and the management of petitioner was entrusted to the new owners in October 2002, with Edilberto Perez7 as Vice-President for Finance and Operations.

Subsequently, several memoranda were issued by Edilberto Perez in behalf of petitioner. Petitioner argued that the matter of rehiring respondents rested on the sound discretion of its new owners, and the latter could not be compelled to absorb petitioner's former employees since the same was not part of the deal. Petitioner alleged that respondents submitted their application for reemployment but, after evaluation, the new owners opted not to hire respondents.

While respondents' case for illegal dismissal was pending before the Labor Arbiter (LA), a notice8 was issued by Edilberto Perez to all employees of petitioner, stating that, effective February 11, 2003, the management of the company shall revert to its former President, Bonifacio Cu.

On February 28, 2003, Bonifacio Cu wrote Alfredo Perez relative to the latter's failure to comply with their agreement and the decision to rescind the sale involving petitioner.9 Thereafter, sometime in March 2003, Bonifacio Cu entered into a transaction, denominated as a "Deed of Sale with Assignment of Franchise (By Way of Dation in Payment)," with Southern Comfort Bus Co., Inc. (SCBC), represented by its President and General Manager, Willy Deterala.10 On July 31, 2003, the LA rendered a Joint Decision,11 the dispositive portion of which reads:

WHEREFORE, finding no substantial evidence to support the action of the complainants for illegal dismissal, the same is hereby ordered DISMISSED for lack of merit. Nonetheless, respondents PTTTI and Bonifacio L. Cu are hereby ordered to pay complainants with their established service incentive leave pay, equivalent to ₱2,750.00 each for three (3) years for 1999, 2000, and 2001.1avvphi1 All other claims are hereby DISMISSED for lack of merit. SO ORDERED. Aggrieved, respondents sought recourse from the National Labor Relations Commission (NLRC). On August 31, 2005, the NLRC rendered a decision12 in favor of respondents, finding that no sale of the business actually took place. Thus: WHEREFORE, as above-discussed, the appeal is given due course. Accordingly, the decision appealed from is REVERSED and SET ASIDE and a NEW ONE ENTERED ordering the respondents to reinstate Joselito P. Sarmiento and Ricardo Catimbang with full backwages. The amounts already received by complainants shall be deducted from the awards they are entitled computed as follows: Backwages from day after date of dismissal (Nov. 1, 2002) to cut off date (August 30, 2005) a. Salary: ₱198/day x 26 days/mo. x 34months = ₱175,032.00 b. 13th month pay ₱175,032 -:- 12 = 14,586.00 c. Service Incentive Leave Pay: ₱198 x 15 days = 2,970.00