G.R. No.

151378 March 28, 2005

JAKA Food Processing Corporation, petitioner,

vs.
Darwin Pacot, et al, respondents

FACTS:
That the respondents were terminated when the petitioner-company ceased to
operate due to financial straits. However, the company was not able to comply the
requirements stated in Article 283 of the Labour Code. The respondents filed a complaint
for illegal dismissal before the NRLC, as it favoured the respondents declaring them illegally
dismissed and ordered the petitioner to pay their full backwages, incentive leave pay and 13
month pay. Through the series of motions for reconsideration, the Court of Appeal modified
the NRLC decision favouring the respondents, ordering the company to pay full backwages.
Hence, this petition.

ISSUE:
Whether or not CA erred in its decision.

HELD:
Yes, but it is not the case of first impression.

The lack of the petitioner of statutory due process should not nullify the dismissal.
However, the employer should indemnify the employee for the violation of his statutory
rights. As to this violation, considering the circumstances, the court fix it at P30,000. In all
cases, business that closed and ceased to operate, the affected employees are entitled to
separation pay, EXCEPT when the business closed due to serious losses or financial reverses,
in which case, the right for separation pay of the affected employees is lost for this obvious
reasons. The CA erred in its order to pay respondents a full backwages.