You are on page 1of 2



461 SCRA 272 (2005)

FACTS: Clarion Printing House (Clarion), a company owned by EYCO Group of

Companies (EYCO) hired Michelle Miclat (Miclat) as marketing assistant on a
probationary basis. During that time, she was not informed of the standards that
she should meet to qualify as a regular employee.

EYCO subsequently filed a petition for petition for suspension of payment as well as
an appointment of a rehabilitation receivership committee before SEC on the ground
that they are suffering financial difficulty. Pursuant to this, a retrenchment occurred,
thus terminating Miclat.

Conversely, Miclat filed a complaint for illegal dismissal before the NLRC. Miclat
contends that assuming her termination is necessary, it was not done in a proper
manner; there was no notice that was given to her. On the other hand, Clarion
contends that they are not liable for retrenching some employees because EYCO is
being placed under receivership, and a memorandum was given to employees,
hence they substantially complied with the notice requirement. NLRC rendered its
decision in favor of Miclat and found that she was illegally dismissed. On appeal, the
Court of Appeals held that Clarion failed to prove its ground for retrenchment as
well as compliance with the mandated procedure. It further ruled that Miclat should
be reinstated and paid backwages. Hence, this petition.

Issue: Whether or not Miclat was illegally dismissed

Held: It is likewise well-settled that for retrenchment to be justified, any claim of

actual or potential business losses must satisfy the following standards: (1) the
losses are substantial and not de minimis; (2) the losses are actual or reasonably
imminent; (3) the retrenchment is reasonably necessary and is likely to be effective
in preventing expected losses; and (4) the alleged losses, if already incurred, or the
expected imminent losses sought to be forestalled, are proven by sufficient and
convincing evidence.
From the provisions of P.D. No. 902-A, as amended, the appointment of a receiver or
management committee by the SEC presupposes a finding that, inter alia, a
company possesses sufficient property to cover all its debts but "foresees the
impossibility of meeting them when they respectively fall due" and "there is
imminent danger of dissipation, loss, wastage or destruction of assets of other
properties or paralization of business operations."

That the SEC, mandated by law to have regulatory functions over corporations,
partnerships or associations, appointed an interim receiver for the EYCO Group of
Companies on its petition in light of, as quoted above, the therein enumerated
"factors beyond the control and anticipation of the management" rendering it
unable to meet its obligation as they fall due, and thus resulting to "complications
and problems . . . to arise that would impair and affect [its] operations . . ." shows
that CLARION, together with the other member-companies of the EYCO Group of
Companies, was suffering business reverses justifying, among other things, the
retrenchment of its employees.

Email This


Share to Twitter

Share to Facebook

Share to Pinterest