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Petitioner Pepito Velasco (Velasco) is the owner-manager of Modern Furniture Manufacturing (Modern Furniture). Private respondent Ernesto Tayag was hired as a carpenter by Velasco and Modern Furniture in 1968, while his relatives, co-private respondents Antonio Tayag and Rodolfo Tayag, were hired in the same capacity in 1970. All three were paid on a piece-rate basis.
According to the Tayags, in 1998, Velasco and Modern Furniture started laying off workers due to business losses, albeit with the promise to the dismissed workers that they would be rehired should the business again prosper. Purportedly, Antonio and Ernesto Tayag were laid off in December of 1999, while Rodolfo Tayag was dismissed in May of 2000.3 All three filed complaints for illegal dismissal against Modern Furniture and Velasco with the National Labor Relations Commission, Regional Arbitration Branch No. III, based in San Fernando, Pampanga. The Tayags sought separation pay in lieu of reinstatement, as well as 13th month pay, holiday pay, overtime pay, and exemplary damages.
After the complaints of the Tayags were consolidated, Labor Arbiter Eduardo J. Carpio rendered a Decision dated 15 September 2000 dismissing the complaints for illegal dismissal. The Labor Arbiter reasoned that since Velasco and Modern Furniture had denied terminating the employees in the first place, the burden fell upon the Tayags to prove by substantial evidence that they were actually terminated.8 The Labor Arbiter concluded that the contentions of the Tayags of dismissal were unsubstantiated, and thus he dismissed the complaints.
On appeal, the NLRC set aside the Decision of the Labor Arbiter in its Resolution dated 26 March 2002.9 The NLRC held that the Labor Arbiter had misappreciated the facts of the case. It was noted that Velasco and Modern Furniture had admitted that since the Tayags were paid on a per piece basis, they were not required to go to the work place. In fact, the Tayags were only required to report for work when new job orders came in and they were called upon by Velasco and Modern Furniture.
The NLRC found that there was no instance from the evidence adduced wherein Velasco or Modern Furniture called upon the Tayags to report for work. From these facts, the NLRC concluded that the Tayags had not reported to the premises of Modern Furniture simply because they were not given any work, as in fact they had actually been dismissed. Thus, the NLRC did not agree with the contention that the Tayags had abandoned work, and concluded instead that they were entitled to separation pay in lieu of reinstatement. Nonetheless, the other monetary claims of the Tayags were dismissed for lack of merit.
Velasco filed a Petition for Certiorari and Prohibition with the Court of Appeals, assailing the Resolution of the NLRC. In a Decision12 dated 30 September 2003, the Court of Appeals sustained the NLRC and dismissed the petition. The appellate court agreed that it was Velasco, as employer, who had the burden to prove that the termination was for just or authorized causes, and that Velasco had failed to overcome such burden. The Court of Appeals also deemed the award of separation pay as proper, with the finding of illegal dismissal and separation pay being a proper alternative remedy should reinstatement be no longer possible.