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OTHER CAUSES. BUSINESS RELATED CAUSES Recognition of Right- Business Related Causes/ Protection Ÿ Agabon vs. NLRC (Monette) Facts: Agabon was dismissed for abandonment of work (subcontracting for another company). The court held that the cause for the dismissal was valid but the company failed to follow notice requirements. The company reasoned that it would be useless because the Agabons did not reside there anymore. Held: This is not a valid excuse because the twin notice requirements are mandatory. The dismissal is upheld but the company should be held liable for nominal damages, for the violation of his right to statutory due process. Ÿ The law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. where terminated due to massive retrenchment of the company to forestall serious business losses and/or closure of operations. Issue: When, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of employees? Held: The ff. are general standards in terms of which the acts of petitioner employer must be appraised: Firstly, the losses expected should be substantial and not merely de minimis in extent. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. Thirdly, must be reasonably necessary and likely to effectively prevent the expected losses. Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. Ÿ To impart operational meaning to the constitutional policy of providing “full protection” to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means – e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.
Ÿ Uichico vs. NLRC (Monette) Facts: The case is an illegal dismissal case filed by workers of Crispa, Inc. who were terminated on the ground of retrenchment due to alleged serious business losses suffered by the company. Held: The Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, are not credible. This is not the kind of sufficient and convincing evidence necessary to discharge the burden of proof required to establish the alleged losses suffered by Crispa. The corporate directors and officers of Crispa are solidarily liable with the corporation for the termination of employment done with malice or in bad faith. In this case, it is undisputed that they have a direct hand in the illegal dismissal of respondent employees. Ÿ The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, "the right of enterprises to reasonable returns of investment and to expansion and growth.
Business Services of the Future Today vs. CA (Monette) Facts: The employee was terminated on the ground of severe business losses. The employers believe, however, that since the employee was also a stockholder, there was no need to notify DOLE of the closure since as stockholder, he was presumed to have taken part in the decision to close the business. Held: Notice of closure to the DOLE is mandatory. It allows the DOLE to ascertain whether the closure and/or dismissals were done in good faith and not a pretext for evading obligations to the employees. This requirement protects the workers’ right to security of tenure. Failure to comply with this requirement taints the dismissal. An exceptions is when the employee consented to his retrenchment, the required prior notice to the DOLE is not necessary as the employee thereby acknowledges the existence of a valid cause for termination of his employment. However, there is no evidence to show that the employee consented to his dismissal and for these reasons the petitioners should have submitted a written notice of BSFTI’s closure to the DOLE. The NLRC and the Court of Appeals were unanimous in finding that the closure was bona fide. As in the case of Agabon, nominal damages were awarded to vindicate employee’s right to due process. Ÿ A. Installation of Labor Saving Devices- 283
Ÿ Filipinas vs. Gatbalayan (Monette) Facts: Another illegal dismissal case by the workers who
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 1
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. B. Redundancy- 283 (above) Business Judgment Ÿ Wiltshire File vs. NLRC (Monette) Facts: Ong was dismissed because of serious business losses. In the termination letter, the ground alleged was redundancy of the position. Ong countered that there could be no redundancy because nobody except himself, in the company was then performing the same duties. Held: Dismissal was valid. The losses were proven by the company and most importantly, company finally closed its doors and terminated all its operations. SC considered that finally shutting down business operations constitutes strong confirmatory evidence of financial distress. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. That no other person was holding the same position that employee held, does not show that his position had not become redundant. Ÿ The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. Ÿ Asufrin vs. San Miguel Corp (Monette) Facts: An illegal dismissal case which stemmed from SMC’s new marketing system known as the "pre-selling scheme". As a consequence, all positions of route sales and warehouse personnel were declared redundant. Held: Dismissal was invalid. In selecting employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. In the case at bar, no criterion whatsoever was adopted by the employee. Furthermore, SMC has not shown how the cessation of the employees’ services would contribute to the ways and means of improving efficiency and cutting distribution overhead and other related costs. Ÿ In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy.
Ÿ Soriano Jr. vs. NLRC (Monette) Facts: PLDT utilized high technology equipment in its operation such as computers and digital switches which necessarily resulted in the reduction of the demand for the services of a Switchman. Held: Dismissal was valid. PLDT submitted the relevant documents attesting redundancy of employing switchmen and it has also paid separation pay to the dismissed workers. Ÿ PLDT, as employer, has the recognized right and prerogative to select the persons to be hired and to designate the work as well as the employee or employees to perform it. This includes the right of the PLDT to determine the employees to be retained or discharged and who among the applicants are qualified and competent for a vacant position. The rationale for this principle is that respondent PLDT is in the best position to ascertain what is proper for the advancement of its interest. Thus, this Court cannot interfere in the wisdom and soundness of the PLDT’s decision as to who among the Switchmen should be retained or discharged or who should be transferred to vacant positions, as long as such was made in good faith and not for the purpose of curbing the rights of an employee. Financial loss Ÿ Ecareal vs. NLRC (Monette) Facts: Escareal’s position as Pollution Control and Safety
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 2
Manager was declared redundant. Held: Illegal dismissal. Philippine Refining Company (PRC)had no valid and acceptable basis to declare the position redundant as the same may not be considered superfluous. Ÿ If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC’s hiring frsh graduates for various positions. Besides, there would seem no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRCs net profits has steadily increased. While concededly, Art. 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of an employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company is suffering from business losses merely provides stronger justification for the termination. Law Required Position Position of Pollution Control and Safety Manager is required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise. Escareal vs. NLRC When Redundancy Ÿ Lopez Sugar Corp vs. Franco (Eds) Facts: Lopez Sugar Corp. issued a Memorandum for the adoption of a special retirement program for selected supervisory and middle level managers, allegedly due to over-staffing and duplication of functions. Private respondents, all supervisory employees of the Corp who organized a labor union which was currently undergoing CBA negotiations with the corp, were included in its coverage and terminated from employment. Issue: Was the termination of respondents by virtue of the special retirement program valid? Held: No. The corp illegally dismissed the private respondents by including them in its special retirement program, thus debilitating the union, rendering it pliant by decapacitating its leadership. The so-called “downsizing of the departments based on the SGV Study Report was a farce—capricious and arbitrary. No standard, criteria or guidelines for the selection of the dismissed employoees was made known to them, and all that they were told was that they had been selected for termination. Ÿ Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line or phasing out of a service activity priorly undertaken by the business. Tierra International Construction Corp. vs. NLRC (Eds) Facts: Isidro Olivar, a shift supervisor for shipping company FEBROE, was dismissed from service and repatriated to the Philippines 6 months before his contract expired. Ground for dismissal: promotion of economy, efficiency and profitability in operations, and reduction of personnel whose positions are redundant or surplusage and/or reassignment of personnel to other available useful positions. Issue: Was the termination of Olivar for a just and valid cause? Held: Yes. Olivar’s position was deleted due to a decrease in scope of work assigned to FEBROE’s Base Operating Support Contract. Unfortunately, there were no other available positions for which he could qualify. Other positions were also abolished, including both U.S. and Third Country Nations positions, showing that he was not singled out and his termination was not arbitrary or malicious. Ÿ Ÿ Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position(s) may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The law does not make any distinction between a technical and a nontechnical position for purposes of determining the validity of termination due to redundancy. Neither does the law nor the stipulations of the employment contract here involved require that junior employees should first be terminated. In redundancy, what is looked into is the position itself, the nature of the services performed by the employees and the necessity of such position.
Ÿ Edge Apparel vs. NLRC (Eds) Facts: Edge Apparel, Inc. dismissed some of its employees pursuant to a retrenchment program. Upon advice of the DOLE Regional Director, they received the separation pay benefits offered, but they still filed a complaint for illegal dismissal, alleging that the retrenchment program was a mere subterfuge used to give a semblance of regularity and validity to the dismissal.
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 3
Ysan Castillo. temporary employee). the retrenchment must be reasonably necessary and like to effectively prevent such losses. Issue: Were the dismissals on the ground of redundancy valid? Held: No. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. Charms Haw. Dianne Miano. The amount depends on the ground for the termination of employment. the losses expected must be substantial and not merely de minimis in extent. Ÿ Redundancy exists where the services of an employee are in excess of what would reasonably be demanded by the actual requirements of the enterprise. such as but not limited to: a) less preferred status (e. Jake Ng. such as but not limited to. Edlyn Santiago. In this case. Such appraisal was not done in the instant case. Jon Santos. Monina Lagman. or a part of. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses.. job description. Monette Mesa. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. In exercising its right to retrench emplooyees. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. Retrenchment. contrary to the ruling of the NLRC. b) efficiency. Phil. and 4) the alleged losses. and the approval by the management of the restructuring. The characterization of an employee’s services as no longer necessary or sustainable. is an exercise of business judgment on the part of the employer. issued a Board Resolution for the bank’s reorganization via retrenchment of employees and realignment of functions and positions for the purpose of preventing further serious losses. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. Evidence should have been presented to support this contention. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. The company alleged redundancy in their position as defense for dismissing them. decreased volume of business or dropping of a line or service activity. Ÿ Golden Thread Knitting Industries vs. such as overhiring of workers. 2) the losses are actual or reasonably imminent. a Property Appraisal Specialist and a Department Officer-in-Charge. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. viability of the newly created positions. however. Before any reduction of personnel becomes legal. a Recreational Manager of Sheraton Hotel in oman. a) preferred status. and in this case. one of which was the illegal dismissal of some union members. such as new staffing pattern. In this case.Labor II Issue: What is the amount of the separation pay due to the respondents? Held: They are only entitled to severance compensation equivalent to ½ month pay for every year of service. It is not enough for a company to allege that the employee’s position became redundant and that there was restructuring of the staff at the Health Club of the Oman Sheraton Hotel. they were terminated due to retrenchment not redundancy. 283(c) of the Labor Code.Selection of Employee Ÿ Panlilio vs. NLRC (Eds) Facts: Moises Panlilio. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. was dismissed 6 months after being hired on the ground that his position had become redundant. provided that violation of law or arbitrary or malicious action is not shown. The employer has the burden of proving that the losses are Irah Burog. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. feasibility studies/proposal. For it to be valid. Anna Tetangco 4 . the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. and the imminent losses sought to be forestalled are substantiated. The fact alone that a mere portion of the business of an employer. its business to avoid further losses or mitigate expenses. and therefore properly terminable. There was no substantial evidence to justify Panlilio’s dismissal on such ground. was one of those termininated. Heidi Soria. Inc. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. Kristel Macatangay. Prudencio Tanjuan. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. a fair and reasonable criteria must be used. Alpe Macalalad. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. much less was the company’s claim supported by any evidence. Issue: Was Tanjuan’s dismissal illegal? Held: No. and c) seniority. Ÿ In selecting the employees to be dismissed. It is not enough for a company to merely declare that it has become overmanned. is an economic ground to reduce the number of employees. if already incurred.g. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. the firm amy choose to close all. b) efficiency and c) seniority. not the whole of it. in contrast to redundancy. program. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec.
In this case. Ÿ In selecting the employees to be dismissed. 3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service. Notice of dismissal. Jake Ng. physical fitness. There was also no proof that the program was designed to bust the union. union and non-union members were treated alike. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. seniority. Lopez Sugar Corp vs. In cases of abandonment of work. no proof was offered to show that the management acted in a malicious or arbitrary manner in engaging the services of an independent contractor to operate the Laura wells. Answer and hearing. “retrenchment to prevent losses” is also allowed. age. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. b) efficiency.Effect Asian Alcohol Corp vs. serious. efficiency. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. and c) seniority. such as but not limited to a) preferred status.g. Ysan Castillo. real and substantial losses. b) efficiency. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. Anna Tetangco 5 . management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. 5. Dianne Miano. the audited financial statements submitted by the corp adequately supported their claim of actual. Heidi Soria. Charms Haw. Here. 2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. Procedure Requirement Ÿ Retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. the notice shall be served at the worker's last known address. whichever is higher. Besides. NLRC (Eds) Facts: Due to mounting business losses. actual and real. a fair and reasonable criteria must be used. The employer shall Irah Burog. private respondents. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. capricious and vindictive. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. and c) seniority. NLRC Ÿ Employment of Independent Contractor. Asian Alcohol v. xxx xxx xxx Sec. However. never contested the veracity of the audited financial documents offered by Asian Alcohol. The law allows an employer to downsize his business to meet clear and continuing economic threats. such as but not limited to: a) less preferred status (e. 283 of the Labor Code. 4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure. Alpe Macalalad. as long as the requirements under the law are complied with. Kristel Macatangay. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. or standard for selection of dismissed employees renders the dismissals whimsical. Jon Santos. Issue: Were the private respondents illegally dismissed? Held: No. In this case. actual and real. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. Ÿ An employer’s good faith in implementing a redundancy program is not necessarily destroyed by the availment of the services of an independent contractor to replace the services of the terminated employees. temporary employee). if already incurred. Monette Mesa. and financial hardship for certain workers. Under Art. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. Retrenchment must be undertaken by the employer before losses are actually sustained. such as status. are not merely de minimis. Edlyn Santiago. but substantial. Some of the dismissed union members filed a suit for illegal dismissal. which. and 5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. Golden Thread Knitting Industries v. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. guidelines. In this case. 2. ?? Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. Monina Lagman. The reduction of the number of workers in a company made necessary by the introduction of Hearing Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor Code" read as follows: Sec. NLRC The absence of criteria. and that they were singled out for separation by reason of their active participation in the union.Labor II serious. contrary to the respondents’ claim.
on the business and financial circumstances compelling retrenchment and resulting in redundancy. Heidi Soria. The losses expected should be substantial and not merely de minimis in extent. Jon Santos. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. Alpe Macalalad. as such. to begin with. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. Charms Haw. NLRC(Charms) C. Jake Ng. The appropriate forum for such controversion would. The corp failed to adduce financial statements duly audited by independent external auditor. however. They had already clsoed down their dry docking and ship repair division and their dredging services were heavily affected by the economic slowdown being experienced by the construction industry. Monette Mesa. industrial depression. shortage of materials. Thus. is legally required to give a written notice not only to the employee but also to the Department of Labor and Employment at least one month before effectivity date of the termination. Where. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. The ground for retrenchment availed of was not sufficiently and convincingly established. Ysan Castillo. resorted to by management during periods of business recession. allege any malfeasance or non-feasance on the part of the employee. after less drastic means. In such case. It is essentially required that the alleged losses in business operations be proven. The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. Retrenchment to prevent losses Irah Burog. Edlyn Santiago. (Wiltshire vs. must also be proved by sufficient and convincing evidence. Again. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. whichever is higher. Alleged losses if already realized. and expected imminent losses sought to be forestalled. It is such allegations by the employer and any counter-allegations that the employee may wish to make that need to be heard before dismissal is effected. there are no allegations which the employee should refute and defend himself from. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. (emphasis supplied) We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular acts or omissions constituting the ground for his dismissal". Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. Kristel Macatangay. or of automation. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. (Wiltshire vs. b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel". the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. or seasonal fluctuations or during lulls occasioned by lack of orders. Monina Lagman. as in the instant case. Anna Tetangco 6 .Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. Section 5 may be seen to envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article 282 of the Labor Code. Lead Electrician for the corp. Such substantial loss apprehended must be reasonably imminent. NLRC (Eds) Facts: FF Marine Corp filed with DOLE notice of a retrenchment program to curb serious business reverses brought about by the Asian economic crisis. NLRC) Defined FF Marine Corp vs. Ricardo Magno. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. imminence can be perceived objectively and in good faith by the employer. Venue of Complaint Ÿ This is not to say that the employee may not contest the reality or good faith character of the retrenchment or redundancy asserted as grounds for termination of services. at which private respondent would have had the right to be present. Thus. was one of those terminated. a requirement which is obviously applicable where the ground for dismissal is the commission of some act or omission falling within Article 282 of the Labor Code. Dianne Miano. to require petitioner Wiltshire to hold a hearing. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven.
as implemented on March 1. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. Distinction Closure and Retrenchment Ÿ Ÿ J. 1988." while denominated as such. this Court finds that individual respondents were dismissed on the ground of closure or cessation of an undertaking not due to serious business losses or financial reverses. cancelled its service agreement with a janitorial company. her report showed that from1989 to 1993. 4 "Retrenchment. for which they signed documents of waiver. and sold its equity in the Philippine Ÿ Irah Burog. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding. Monette Mesa. and that the condition of the company is not likely to improve in the near future. contrary to the findings of the Labor Arbiter.100.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. this Court finds that the study report submitted by the internal auditor of petitioner. resulted in the layoff of around 177 employees. however. Irene Campos-Ugalde. The affected employees were given separation pay equivalent to one month pay for every year of service. Held: No Illegal Dismissal. Further. including private respondent. Consequently. It advised its employees. The decision to permanently close business operations was arrived at after a suspension of operation for several months precipitated by a slowdown in sales without any prospects of improving. As in the case of retrenchment. Dianne Miano. In the case at bar. 1995. is self-serving and falls short of the stringent requirement of the law that the employer prove sufficiently and convincingly its allegation of substantial losses.00. requested its Internal Auditor. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). NLRC (Charms) Facts: In the proceedings before the NLRC. As already stated. some of whom were officers and members of the petitioner union. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. Held: No illegal dismissal. ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. The shortfall increased to P9. Heidi Soria. Edlyn Santiago. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise. and that they would be paid separation pay equivalent to one hundred twenty five (125%) percent of their monthly salary for every year of service.A. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. it was shown that. JAT indefinitely closed shop effective May 1998. the Society began to experience serious financial difficulties when it incurred a deficit of P2 million. Prior to the rendition of the decision of the Secretary of Labor and Employment." on the other hand. which is allowed under Article 283 of the Labor Code. JAT hired private respondent Jose F. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business.135. There was substantial proof that the company was incurring substantial losses.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. Among these was a socalled "redundancy program. Jon Santos. Ysan Castillo. the company losses were duly established by the financial statements presented by both parties. Alpe Macalalad. Held: NO ILLEGAL DISMISSAL. in 1989. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses." which. not to report for work starting on the first week of March 1998. the sales of heavy equipment declined because of the Asian currency crisis. Charms Haw. Both are mentioned in Art. the Labor Code recognizes retrenchment as one of the authorized causes for terminating the employer-employee relationship and the decision to retrench or not to retrench is a management prerogative. Kristel Macatangay. F & B Department had been incurring substantial losses in the aggregate amount of P8. petitioners had notified private respondent and all other workers through written letters dated November 25. Jake Ng.000. 1 First. the Society leased a property in Tayuman to a fastfood outlet. Consequently. JAT temporarily suspended its operations.727. for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees. the union declared a strike. the only evidence submitted to prove its alleged losses. Monina Lagman. NLRC Facts: Sometime in April 1997. it must be proven that the losses incurred are substantial and actual or reasonably imminent. then President of ACCI. Anna Tetangco 7 . that the same increased through a period of time. Ÿ As did the appellate court. in our view. The closure of business operation by petitioners.T General Services vs. Coverage Philippine Tuberculosis Society vs. Private respondent's "redundancy program. NLRC (Charms) Facts: Francisco Ferrer. Ÿ Alabang Country Club vs. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. In October 1997.
Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. Jake Ng. the Rural Bank of Bangued dismissed three of its employees. since he would be paying the newcomer a relatively smaller wage. Heidi Soria. Article 278 of the Labor Code states that the fiscal measures recognized therein which an employer may validly adopt apply to "all establishments or undertakings. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. Ÿ Although petitioner is a non-stock and non-profit organization. must be proven by sufficient and convincing evidence. Charms Haw. is simply unconscionable and violative of the senior employee's tenurial rights. both the past and forthcoming. Edlyn Santiago. and implemented the retrenchment of one hundred sixteen (116) employees." However. Anna Tetangco 8 . retaining a newly hired employee and dismissing one who had occupied the position for years. we find substantial evidence that petitioners intended the termination to be permanent. Alpe Macalalad. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. it disapproved the overtime pay of supervisory and managerial employees. Legazpi City.Labor II Long Distance Telephone Company (PLDT). While courts must be constantly vigilant in validating claims of business losses to prevent unscrupulous employers from feigning such losses in order to dismiss their personnel. retrenchment as a measure adopted to stave off threats to its existence is available to it. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. Ÿ Balbalec vs. there is substantial evidence in the record to support the NLRC's finding that the Society suffered financial distress as a result of growing deficits which were not likely to abate. even assuming arguendo that the cessation of employment on April 1997 was merely temporary. Paulino Balbalec. as such imminence can be perceived objectively and in good faith by the employer. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog. Juan Bolante and Rolando Beleno (herein petitioners) alleging that its workforce was being retrenched for losses suffered by respondent bank during the years 1984-1988. the hotel operations of the business were suspended on March 31. While the closure of the hotel operations in April of 1997 may have been temporary. therefore. Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. On the contrary. Monette Mesa." employer to prove economic or business losses with appropriate supporting evidence. we are satisfied that respondent bank undertook the drastic act of cutting down its workforce in order to prevent imminent substantial loss to its business. Held: ILLEGALLY DISMISSED. namely. NLRC ruled: We noted with concern that the criteria used by the Society failed to consider the seniority factor in choosing those to be retrenched. to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. Dianne Miano. Held: ILLEGALLY DISMISSED. not every asserted potential loss is sufficient legal warrant for a reduction of personnel and the evidence adduced in support of a claim of actual or potential business losses should satisfy certain established standards. Second. whether for profit or not. to our mind. it withdrew from the Pag-Ibig Fund Program. 2 The retrenchment is the subject of the present suit. Moreover. 1989. Things being equal. Monina Lagman. financial statements. negotiated with the Government Service Insurance System for the restructuring of its obligations. Legazpi City. such as the respondent bank. Procedure Ÿ Mayop Hotel & Restaurant vs. a failure which. Ysan Castillo. (2) The apprehended substantial losses must be reasonably imminent. 1999. Adora (Charms) Facts: Due to the expiration and non-renewal of the lease contract for the rented space occupied by the said hotel and restaurant at Rizal Street. (4) The losses. and the reports of its external auditors for the years 1989 and 1990. Jon Santos. The operation of the restaurant was continued in its new location at Elizondo Street. its implementation of the scheme rendered the retrenchment invalid. Finally. should invalidate the retrenchment. for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses. Indeed. After all. even if the scheme should result in savings for the employer. we hold that the evidence on record belie any claim of petitioners that the lay-off of respondents on that same date was merely temporary. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. NLRC (Charms) Facts: On June 30. in the development of the countryside through its loan portfolios and other services to the rural folk. We cannot. pursuant to Article 286 of the Labor Code. obtained the waiver of personnel of their entitlement to wage differentials. say that the finding of the NLRC is unsupported by substantial evidence. Held: Article 283 not only contemplates the termination of employment of workers or employees to minimize established business losses but also to prevent impending losses. Petitioner presented to the NLRC the balance sheets. and applied for exemption from minimum wage increases. Kristel Macatangay. as the omission immediately makes the selection process unfair and unreasonable.
addressed to all its foremen. 1993. the substantial loss apprehended must be reasonably imminent.e. And even assuming that the closure was due to a reason beyond the control of the employer. Ÿ There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. i. The “loss” referred to in this provision cannot be of just any kind or amount. 3) good faith in abolishing the redundant positions. Lopez Sugar vs. Resorted to by employers to avoid or minimize business losses. it must.Labor II Ÿ To say the least. frequent machinery breakdown. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. Monette Mesa. Jon Santos. supervisors and department heads. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. alleged losses if already realized. in other words. After six months. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. Anna Tetangco 9 . cut other costs other than labor costs. Retrenchment is one of the authorized causes for the dismissal of employees. Charms Haw. otherwise. a corporation engaged in the manufacture and export of ready-to-wear garments. represented by Lim. Dianne Miano. Lastly. it still has to accord its employees some relief in the form of severance pay.. 1993 and of March 2. Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the employees concerned. section heads. thirdly. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. Heidi Soria. it is recognized under Article 283 of the Labor Code. and the expected imminent losses sought to be forestalled. Because of the consequential nature of retrenchment. There should. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). then petitioners should have complied with the requirements of written notice. whichever is higher. must Ÿ Requirements. and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Jake Ng.Standards Irah Burog. These employees cannot forever be temporarily laid-off. we must determine whether there was compliance with the law regarding a valid retrenchment at anytime within the six month-period that they were temporarily laid-off. EMCO. Ysan Castillo. A memorandum was thereafter issued by EMCO. Franco Temporary Retrenchment Ÿ Sebugero vs. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents. be reasonably necessary and likely to effectively prevent the expected losses. Kristel Macatangay. Abelgas (Charms) Facts: On January 20. be a certain degree of urgency for the retrenchment. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. the losses expected should be substantial and not merely de minimis in extent. Alpe Macalalad. but more importantly. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers. Monina Lagman. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. To remedy this situation or fill the hiatus. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. as such imminence can be perceived objectively and in good faith by the employer. but certainly not the least important. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income. Edlyn Santiago. the bonafide nature of the retrenchment would appear to be seriously in question. Ÿ The employer must comply with the following requisites to ensure the validity of the implementation of a redundancy program: 1) a written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment. To determine whether the petitioners were validly retrenched or were illegally dismissed. Secondly. who were given "temporary lay-off" notices by the latter on 22 January 1991 due to alleged lack of work and heavy losses caused by the cancellation of orders from abroad and by the garments embargo of 1990. Ÿ EMCO Plywood Corp vs. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE. The employer should have taken other measures prior or parallel to retrenchment to forestall losses. the employees should either be recalled to work or permanently retrenched following the requirements of the law. Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. low market demand and expiration of permit to operate its sawmill department.
such as status (i. however. but substantial. whether they are temporary. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least one-half month pay for every year of service. Heidi Soria. seniority. Held: Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. casual. whichever is higher. the Middle East war and the 9/11 incident in the United States of America. Ÿ Philippine Carpet vs. Edlyn Santiago. if already incurred. and financial hardship for certain workers. are not merely de minimis. Charms Haw. Kristel Macatangay. and (4) sufficient and convincing evidence prove the alleged losses. Federation of Free Workers(Heidi) Irah Burog. or if only expected. Held: Company losses were duly established by audited financial documents showing that the aquaculture operations of SMC’s Agribusiness Division accumulated losses resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. Monette Mesa. Anna Tetangco 10 . The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment. or that a fair and reasonable criteria had been used in selecting the employees to be retrenched. For termination due to retrenchment to be valid. expected losses. if already incurred. (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure.. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. more than 100 new workers were hired. After the retrenchment program was implemented. Dianne Miano. Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. must be proved by sufficient and convincing evidence. Jake Ng. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. and (d) the alleged losses. SMC has thus proven substantial business reverses justifying retrenchment of its employees. the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at least one month before the actual date of the retrenchment. and the expected imminent losses sought to be forestalled. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the Nature of Loss Lopez Sugar vs. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. Sto. regular or managerial employees). physical fitness. actual and real. Alpe Macalalad. or the expected imminent losses sought to be forestalled. Aballa (Jake) Facts: Private respondents filed a Complaint# for illegal dismissal following SMC’s closure of its Bacolod Shrimp Processing Plant which resulted in the termination of their services. Jon Santos. as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. and 12 managers and supervisors were promoted. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. (2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. in order to give employees some time to prepare for the eventual loss of their jobs. The CA ruled that the dismissal was unjustified. including some of those who had been retrenched. Petitioners failed to show any reasonable necessity for the retrenchment. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. Ysan Castillo. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal.Labor II be proved by sufficient and convincing evidence. efficiency. if already incurred. (2) the losses are actual or reasonably imminent.e. Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. Ÿ San Miguel Corp vs. vs. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union. Monina Lagman. are reasonably imminent as perceived objectively and in good faith by the employer. not de minimis. Amarilla (Jake) Facts: Blucor notified Amarilla. age. "on account of depressed business conditions brought about by the currency crisis in Southeast Asia. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant.” Ÿ Blucor Minerals Corp. Held: Decision of CA affirmed. serious. Ÿ For retrenchment to be considered valid the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent.
it held. JFSI sent notices of Irah Burog. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. Joni’s Food Services (Jake) Facts: In the 1990s. if such an intent were expressly written into the law. and unfair to the employer. unjust. would be unduly oppressive. in our view. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. materialized. allegedly to prevent losses due to major economic problems. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. In 1997. what they Ÿ Cama vs. petitioner did not renew his contract because of "sliding incomes". indeed many. since some. When the said contract expired. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. Naval Base Facility located in San Miguel. the services of the complainants were terminated. faced with dropping sales. In the nature of things. Charms Haw. that petitioners failed to present adequate proof of such losses. petitioner Galace. Thus. due to financial difficulties. as found by the Court of Appeals. the remaining branches were also closed. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have. Sto. in fact. caused the retrenchment and retirement of a number of its employees. Phil. Dianne Miano. the company found no recourse but to shut down its outlets. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. Employer reasoned that the calling of 110 casuals was for the purpose of organizing a pool of extra workers which could be tapped whenever there were temporary vacancies by reason of leaves of absence of regular workers. Held: Respondents assert that the company was taking losses of such magnitude which left its survival or future existence in the dark. Ysan Castillo. One month before the target closure date of its remaining outlets. To require an employer to be generous when it is no longer in a position to do so. NLRC (Jake) Facts: Petitioner SMJS had a contract with the U. thus petitioner cannot justify the nonpayment of separation pay. that law may well be vulnerable to constitutional attack as taking property from one man to give to another.Labor II Fact: Employer. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code. not all business losses suffered by the employer would justify retrenchment under this article. in greater or lesser degree. otherwise. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. They that after the termination of the services of its members." Sliding Income Ÿ San Miguel Jeepney Service vs. Heidi Soria. however. Ÿ Ÿ To justify retrenchment. Alpe Macalalad. Held: NLRC decision affirmed. Monette Mesa. he having suffered a net loss the prior year. it shut down three of these shops to avert serious business losses. Edlyn Santiago. the possibility of incurring losses is constantly present. or under what circumstances. the employer must prove serious business losses. Monina Lagman. In other words. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs. As a consequence. Held: Apparently. Jake Ng. San Antonio. Carpet vs. "opted not to renew the existing contract nor bid on the new contract".S. to provide transportation services to personnel and dependents inside said facility. in the carrying on of business operations. Indeed. Ÿ As petitioners themselves admitted. respondents had no option but to lay off employees and eventually close shop. the difficult question is determination of when. In its ordinary connotation. the phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. in other words. Zambales. the employer becomes legally privileged to retrench and reduce the number of his employees. Kristel Macatangay. Ÿ It is only in instances of "retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses" that employees whose employment has been terminated as a result are entitled to separation pay. Employer advised 110 casuals to report to its personnel office. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. Thus. To stem these serious losses. The workers claimed that the terminations undertaken by employer were violative of the security of tenure of its members and were intended to "bust" the union and hence constituted an unfair labor practice. It is not. and not because of serious business losses. JFSI shut down more outlets. Anna Tetangco 11 . leaving it with just three operating outlets at the end of 1998. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. Jon Santos. owner and general manager of SMJS. JFSI had 8 outlets for its coffee shop and restaurant business.
Ÿ Ÿ Mitsubishi Motors vs. it is necessary that the employer show that the losses increased through a period of time and that the condition of the company is not likely to improve in the near future. he would have been included among those who had been retrenched had he not been dismissed. Held: The petitioner’s losses in 1997 and 1998 are not insignificant. Monette Mesa. it is an essential requirement that alleged losses in business operations must be proven convincingly. Ÿ Danzas International vs. the employer closing his business is obligated to pay his employees their separation pay. to which losses were allegedly traceable due to incorrect handling of sales. The petitioner posits that even if respondent Paras had become a regular employee by November 26. sliding incomes are not necessarily losses. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. vs. Dianne Miano. who Ÿ Composite Enterprises Inc.Labor II suffered were "sliding incomes". Parenthetically. Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. 1996. What the law speaks of is serious business losses or financial reverses. although the more overriding consideration is. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. Edlyn Santiago. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. Clearly. Ÿ The condition of business losses justifying retrenchment is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. is not conclusive proof of serious business losses. The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. The employer must prove that the cessation of or withdrawal from business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees. in order to prevent further losses which threatened the company’s viability. petitioners invoke a blend of retrenchment to prevent losses and closure of a section of the company’s business to justify the termination of private respondents. Anna Tetangco 12 . Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. Charms Haw. in other words. the right of affected employees to separation pay is lost for obvious reasons. or closure of the establishment because the brokerage department did not actually cease operations. Jon Santos. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. Lopez Sugar vs. Since the losses incurred must be substantial and actual or reasonably imminent. Alpe Macalalad. good faith. Kristel Macatangay. Monina Lagman. by itself. the payment of backwages should be computed up to February of 1998. 1996. if the business losses that justify the closure of the establishment are duly proved. Federation of Free Workers A comparative statement of revenue and expenses for two years. The records show that the petitioner informed the Department of Labor and Employment of its plight and intention to retrench employees as a result of the shutdown of its plants. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. decreasing gross revenues. Still. Jake Ng. It is beyond cavil then. of course. Hence. Otherwise. Otherwise. the petitioner concludes. Daguman (Jake) Facts: Petitioners aver that they were compelled to close the company’s brokerage department. employees who were recently hired were the ones retrenched. Essentially. he would have been included in the first phase of its retrenchment program. Heidi Soria. Considering that respondent Paras had just been regularized on November 24. Ysan Castillo. that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. they may be assailed as self-serving. such ground for termination would be susceptible to abuse by scheming employers. pursuant to the "last in first out policy" embedded in the CBA. Bogo Medelin vs. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. The termination of the 531 affected employees was made effective a month from receipt of the termination letter. The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. Otherwise. The same evidence is generally required when the termination of employees is by reason of closure of the establishment or a division thereof for economic reasons. In accordance with the CBA. much less serious business losses within the meaning of the law. Financial statements must be prepared and signed by independent auditors.
He filed an illegal dismissal case. Monette Mesa. In the case at bar. Heidi Soria. Ÿ As this Court stated in Triple Eight integrated Services. for the memorandum states that respondent’s contract of Irah Burog. While petitioner claims that it issued to respondent an October 30. the condition of business losses is shown by audited financial documents like yearly balance sheets. and the expected imminent losses sought to be forestalled. Charms Haw. in general. (International) Corp. the dismissal would be unjustified. The financial statements must be prepared and signed by independent auditors. failing which these can be assailed as self-serving documents. or only three days later from the date of the Memorandum. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. in particular. the notice is less than one month. profit and loss statements and annual income tax returns. and to the rehabilitation of Uniwide. it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee?s illness and thus defeat the public policy in the protection of labor. or if dismissed. heart enlargement. if already incurred. Caparoso and Quindipan filed a case for illegal dismissal. Alpe Macalalad. Anna Tetangco 13 . Petitioner did not present any such document where it could have demonstrated how the 1997 Asian financial currency crisis or the rehabilitation of Uniwide adversely and significantly affected the viability of its business. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed. and (b) the cessation of business must be bona fide in character. must be proved by sufficient and convincing evidence. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent.T. his employment contract was not renewed. NLRC. Ÿ To justify termination of employment under Article 283 of the Labor Code. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. and (d) the alleged losses. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. In the same case of Sevillana vs. The best evidence of reversal of fortune is audited financial and income statements which detail the extent and pattern of business losses suffered by the employer. He filed a week long leave and found that he had osteoarthritis. It is readily apparent that petitioner did not comply with any of the foregoing requirements. Moreover. Normally. UTI. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. Jon Santos. otherwise. it is not enough for a company to merely declare that it has implemented a retrenchment program. attributing these to the Asian currency crisis. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. Dianne Miano. This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. 1997. Edlyn Santiago. Inc. After the 5th. it failed to prove that such document was ever served upon respondent and the DOLE. He filed for a month leave but SBT refused and it was during this that SBT terminated him. He found that his employers were not remitting his SSS contributions. In the absence of the required certification by a competent public health authority. Monina Lagman. In other words. After the expiration of his contract he was rehired (this extended for 5 contracts). this Court has ruled against the validity of the employee?s dismissal. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer.. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. otherwise. Ÿ For retrenchment to be considered valid. that the dismissal was not illegal. Ysan Castillo. Jake Ng. 1997 Memorandum of termination of employment. employment is to expire on November 3. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees. Burden of Proof Ÿ Sy vs. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp. Kristel Macatangay. vs. I. Ÿ Worse. There is no evidence that it complied with the one-month notice requirement. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time.Labor II deliverymen with Composite Enterprises. When he was 59 years old.
Procedure (For both retrenchment and redundancy) Ÿ Petitioners were given notice of the temporary layoff but there is no evidence of compliance with the notice of requirement. it shifted its business from production to marketing and trading of Thai Petrochemical products. The notice must be given at least 1 month in advance of the intended retrenchment. actual losses need not set in prior to retrenchment. That petitioners were already on temporary lay-off at the time the notice should have been given is not an excuse to forego the written notice. Jake Ng."14 The phrase "to prevent losses" means that retrenchment or termination from the service of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. having no viable projects. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. Monette Mesa. on 29 August 1992 petitioner National Bookstore sent another written notice to private respondents informing them of its decision to terminate their services setting forth the reasons therefor. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. stating clearly the reasons therefor.15 This is the situation in the case at bar. When the required notices to the employees and to the DOLE are not given. as correctly pointed out by the Labor Arbiter in his decision. or on November 30. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. if such an intent were expressly written into the law. respondent TP Cement. (b) if the employer decides to terminate the services of the employee. Cement Corp. It is not. Ÿ Anent the first requisite. Sebugero vs. including petitioner. Charms Haw. in other words. (Kristel) Facts: Benedicto Cajucom was the VP – Legal Affairs of IPI Cement. Ymasa and Gabriel filed a case for illegal dismissal. Moreover. With respect to respondent TP Vinyl. the phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. GTI conveyed to the petitioners the impossibility of recalling them. Ysan Castillo. the retrenchment is defective. Petitioner National Bookstore. Kristel Macatangay. Ÿ National Bookstore Inc. Records show that on December 3. but what the law requires is a written notice to the employees concerned. Heidi Soria. if he so desires. shortened its Ÿ Irah Burog. among others.Labor II suspicions. and. A written notice given to the DOLE is required by law. In fact. Federation of Free Workers corporate term from 50 years to 2 years and 7 months. Such requirement is mandatory. the employer must notify him in writing of the decision to dismiss him. When effected Ÿ In its ordinary connotation. 1998. They were terminated for gross neglect of duty and loss of confidenc. because this time their lay-off is to become permanent. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have in fact materialized. only a situation where there is "retrenchment to prevent losses. Due to economic slowdown. The DOLE is the agency that will determine whether the planned retrenchment is justified & adequately supported by facts. Ÿ Article 283 entails. respondents implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees. Anna Tetangco 14 . Monina Lagman. the employer must furnish the employee with two (2) written notices: (a) a written notice containing a statement of the cause for the termination to afford the employee ample opportunity to be heard and defend himself with the assistance of his representative. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. It must also show with convincing evidence that the dismissal was based on any of the just or authorized causes provided by law for termination of employment by an employer. 1998. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. Jon Santos. Evidently. 1998. more than substantially observed this requirement. the employer shall serve notice of retrenchment to prevent losses on the worker and the DOLE at least one month before the intended date thereof. Thus. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. Following the provision of Article 283. But the burden imposed on petitioner National Bookstore does not stop here. Clearly. This notice is essential because the right to retrench is not an absolute prerogative of an employer but is subject to the requirement of law that retrenchment be done to prevent losses. Alpe Macalalad. vs. IPI Phils. Edlyn Santiago. As mandated by Article 283. it was dissolved on January 27. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. Dianne Miano. respondents failed to comply with the one-month notice requirement. these notices should have been served one month before. 1998.
". Kristel Macatangay. Ÿ Ÿ Moreover. the employer must sufficiently and convincingly prove its allegation of substantial losses. Edlyn Santiago. and as long as he pays his employees their termination pay in the amount corresponding to their length of service. whichever is higher. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. et al. vs. reportedly incurred huge operating losses. Anna Tetangco 15 . members of the AG&P United Rank and File Association. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. Charms Haw.. Abelgas Ÿ Industrial Timber Corp. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work. IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant. whichever is higher. three requirements are necessary for a valid cessation of business operations: (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. (b) the cessation of business must be bona fide in character. Monette Mesa. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. Re-Hiring Effect Atlantic Gulf and Pacific Co. Monina Lagman. it has been shown that such action was made only as company projects became available and that it was done in pursuance of the company's policy of giving preference to its former workers in the rehiring of project employees. no law can compel anybody to continue the same. a notice Irah Burog. which prompted private respondents to retrench. It would be stretching the intent and spirit of the law if a court interferes with management's prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment. Alpe Macalalad. This is to allow the employees to look for other employment. The employees. among others. Dianne Miano. Ababon (Kristel) Facts: Industrial Plywood Group Corp.e. (IPGC) leased a plywood plant to Industrial Timber Corp. To save itself. Ababon. Heidi Soria. of Manila vs. The rehiring or re-employment does not negate the imminence of losses. Meris received from Capitol’s president and chairman of the board. managerial and staff positions were separated from employment. 283. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. Meris (Kristel) Facts: Dr. The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. Dr. Jon Santos. and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program. Jake Ng. They alleged. and (c) payment to the employees of termination pay amounting to one month pay or at least one-half month pay for every year of service. The Court even made an observation in said case that the program should have been more properly denominated as a "retrenchment" program because the reason for resorting to the dismissal by AG&P of its employees was economic in nature. under Article 283 of the Labor Code.Labor II his employees under Art. received all the benefits due them under the Labor Code. They also signed releases indicating their conformity with petitioner's redundancy program. the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees. . filed a complaint against ITC and IPGC for illegal dismissal. while it is true that the company hired or re-employed some of the dismissed workers. Ysan Castillo. Dr. that the cessation of ITC's operation was intended to bust the union and that both corporations are one and the same entity being controlled by one owner. to avoid or minimize business losses. (ITC) ITC employed 387 workers. upheld was only the legality of the redundancy program and not the legality of its implementation. In sum. i. Thelma Navarette-Clemente (Dr. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. petitioner implemented a redundancy program wherein 177 employees occupying rank and file. EMCO vs. Under the first kind. Held: Private respondent's contention that what the Court in an earlier case. while under the second kind. involving the same parties. Liability Ÿ Capitol Medical Center vs. 2) Written notice to the employees and to DOLE at least one month prior to the intended date of retrenchment. ITC notified the DOLE and its workers of the plant's shutdown due to the non-renewal of anti-pollution permit that expired in April 1990 and alleged lack of logs for milling. petitioner was charged with unfair labor practice and illegal dismissal by private respondents. Just as no law forces anyone to go into business. Clemente). Meris was the industrial service unit chief of Capitol Medical Center. Ÿ A reading of the foregoing law shows that a partial or total closure or cessation of operations of establishment or undertaking may either be due to serious business losses or financial reverses or otherwise. unfair labor practice and damages. More than a year after.
Ÿ D. Dr. since private respondents cessation and closure of business was lawful. however. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss or simply to provide the workers continued employment. and such act would be tantamount to a taking of property without due process of law. It informed the DOLE and Union of the closure or cessation of business operations as a result of the intended sale of the business and all the assets to Monde as the termination of the services of the employees. he is entitled to either reinstatement or separation pay if reinstatement is no longer viable. Ruling: Explicit from Art. and full backwages from the time of his dismissal from April 30. as in the instant case. with a fraction of at least six (6) months being considered as one(1) year. the right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. Ÿ Just as no law forces anyone to go into business. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. Alpe Macalalad. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. there was no illegal dismissal to speak of. The records reveal that private respondents complied with the aforecited requirements. whichever comes first. It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere in management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. no law can compel anybody to continue the same. Reinstatement. and to backwages. Monette Mesa.283 Right Ÿ Espina vs. the only limitation being that the closure must not be for the purpose of circumventing the provisions on terminations of employment embodied in the Labor Code. Sison decided to retire from business when she became sickly. Heidi Soria. Closing of Business. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment. This fact negated the obligation to pay backwages. This was “in view of the almost extinct demand for direct medical services by the private and semi-government corporations in providing health care for their employees. Jon Santos. Ysan Castillo. Monina Lagman. and that M. The announcement in advance was intended to give the workers ample time to look for alternative employment. Finally. Monde. CA (Heidi) Facts: M. fide in character. Just as no law forces anyone to go into business. she declined to accept new projects and proceeded with the winding up of her business.Y. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. Charms Haw.” Ÿ The termination of the services of Dr. Edlyn Santiago.Y. Her health did not improve despite proper medical attention. Dianne Miano. The owner. can lawfully close shop at anytime. for any bona fide reason.Y. no law can compel anybody to continue in it.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief. In the general meeting of the workers. San was previously engaged in the business of manufacturing biscuits and other related products. Meris not having been premised on a just or authorized cause. And the burden of proving such falls upon the employer. or one month pay. San and the Union signed a MOA embodying the agreement that the existing CBA shall cease to be effective and shall in no way be binding upon the buyer. The employer need only comply with the following requirements for a valid cessation of business operations. The right to close the operations of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers. Accordingly. Clearly then. Instead private respondents were required to give separation pay which they already did. Kristel Macatangay. Anna Tetangco 16 . Macadams Metal Engineering vs. (b) the cessation of or withdrawal from business operations must be bona fide in character and (c) payment of termination pay equivalent to at least onehalf month pay for each year of service. is not feasible in case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists. whichever is higher. Jake Ng. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment. such exercise will be upheld. As long as the company’s exercise of the same is in good faith to advance its interest and not for the purpose of circumventing the rights of employees under the law or a valid agreement. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. she announced her plan to close shop e. The determination to cease operations is a prerogative of management which the State does not usually interfere with. Sison. M.
NLRC (Heidi) Facts: Galaxie Steel Corporation is a corporation engaged in the business of manufacturing and sale of re-bars and steel billets which are used primarily in the construction of high-rise buildings. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127. NLRC. to wit: P65. NLRC (Heidi) Facts: Victoria’s Milling Corp.000. It would. Monette Mesa. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital.429. Although they may be broad and unlimited in scope. such exercise will be upheld. .480. each of the 13 petitioners was formally informed of private respondent's decision to close and stop sugarcane operations and the reason for such closure. Ÿ Galaxie Steel Workers Union vs. Besides. . The right to close the operation of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. the Labor Code does not impose any obligation upon the employer to pay separation benefits. must be proved by sufficient and convincing evidence. In view of such decision.97 in 1999. and reasonable Ÿ Irah Burog. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. This mass of privileges comprises the so-called management prerogatives. As long as the company’s exercise of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement. decided to permanently stop and close its sugarcane operations in Hacienda Binanlutan "due to low sugar prices which affected the viability and profitability of said hacienda" and convert it instead into an ipil-ipil plantation. and the expected imminent losses sought to be forestalled. Edlyn Santiago. (b) the substantial losses apprehended must be reasonably imminent. indeed. Meris Work is a necessity that has economic significance deserving legal protection. Jon Santos. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. and of the various demand notices of payments from creditor banks." Where. as long as he pays his employees their termination pay in the amount corresponding to their length of service. whichever was higher. Petitioners received their termination pay or retirement pay under the pension plan. it is logical for it to implement a retrenchment program to prevent further losses. this Court held that Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses . Capitol Medical Center vs. Galaxie decided to close down its business operations. be stretching the intent and spirit of the law if we were to unjustly interfere in management's prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss. And it posted the notice of closure on the corporate bulletin board. nor did they establish that the closure was motivated by Galaxie’s anti-union stance.00. if already incurred. P48. Charms Haw. Monina Lagman. Ruling: The NLRC’s finding on the legality of the closure should be upheld for it is supported by substantial evidence consisting of the audited financial statements showing that Galaxie continuously incurred losses from 1997 up to mid-1999. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. On the other hand. employers are also accorded rights and privileges to assure their selfdetermination and independence. VMC's personnel reduction program was meant to reduce excessive labor costs in the company.Labor II Ÿ Cattista vs. Heidi Soria. In any case. Dianne Miano. Jake Ng. the closure then is due to serious business losses. Considering the losses suffered by private respondent. the State has the right to determine whether an employer’s privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. In North Davao Mining Corporation v. Alpe Macalalad. Kristel Macatangay. the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code. And the burden of proving such falls upon the employer. management subsequently held a conference with all 13 field workers to explain to them the reason for this move. and P13. One of the rights accorded an employer is the right to close an establishment or undertaking. as well as the computation of their termination pay. In a letter. and (d) the alleged losses.000.65 in 1997.204. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent.753. Ysan Castillo. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners.389. The social justice and protection to labor provisions in the Constitution dictate so. the petitioners had not presented evidence to the contrary.785. Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. the right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer.89 in 1998. Clearly then. Anna Tetangco 17 .
it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. Resignation must be voluntary and made with the intention of relinquishing the office. Ordinarily. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. amounts to cessation of petitioner's business operations in Makati. Indeed. Anna Tetangco 18 . One of the rights accorded an employer is the right to close an establishment or undertaking. the State has the right to determine whether an employer's privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. But even though the transfer was due to a reason beyond its control. Cheniver has to accord its employees some relief in the form of severance pay. hence. The complete closure of business operation by petitioners. does not appear convincing. Industrial Timber Corp vs. It appears Irah Burog. let it be noted that the termination of employment by reason of closure or cessation of business is authorized under Article 283 of the Labor Code. However. Ysan Castillo. This mass of privileges comprises the so-called management prerogatives. Five days later. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. Since the closure of petitioner's business is not on account of serious business losses. Monina Lagman. And the phrase "closure or cessation not due to serious business losses or financial reverses" recognizes the right of the employer to close or cease its business operations or undertaking even in the Ÿ Cheniver Deco Print vs. Charms Haw. NLRC that several employees namely. JAT General Services vs. In view of the impending transfer. Monette Mesa. it would hire replacements. the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code. It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company's business. 286. the subsequent transfer of petitioner to another place hardly accessible to its workers resulted in the latter's untimely separation from the service not to their own liking. Kristel Macatangay. Later on. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. Ÿ Broadly speaking. Ababon Extent/Degree of Partial Closure Ÿ We need not belabor the issue of notice requirement for a suspension of operation of business under Art. they would be considered to have lost interest in their work and would be replaced. Now. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. Dianne Miano. The decision to permanently close business was arrived at after a suspension of operation for several months precipitated by a slowdown in sales without any prospects of improving. petitioner shall give private respondents separation pay equivalent to at least one (1) month or one-half (1/2) month pay for every year of service. Although they may be broad and unlimited in scope. That is its prerogative. accompanied with an act of relinquishment. Cheniver wrote its employees to report to the new location within 7 days. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver. otherwise. NLRC (Heidi) Facts: Cheniver operates a printing business. the labor federation informed petitioner that the employees decided to continue working for petitioner. otherwise. Nonetheless. the local authorities also took action to force out Cheniver from Makati because of the alleged hazards petitioner's plant posed to the residents nearby. Edlyn Santiago. Cheniver's contention that private respondents resigned from their jobs. not construable as resignation. whichever is higher. As public respondent observed. Consequently. thus the procedural requirement for terminating an employee does not come into play yet. Heidi Soria. Jake Ng. Cheniver gave its workers additional time within which to report to the new work place. not one reported for work at petitioner's new site. Resignation is inconsistent with the filing of the said complaint. Jon Santos.Labor II return of capital. in our view. There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the lease contract on the premises it occupied. Cheniver decided to relocate its business in view of the expiration of the lease contract on the premises it occupied in Makati and the refusal of the lessor to renew the same. Earlier. the closing of a warehouse facility and the termination of the services of employees there assigned is a matter that is left to the determination of the employer in the good faith exercise of its management prerogatives. Alpe Macalalad. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. Suffice it to state that there is no termination of employment during the period of suspension.
Espina vs. the determination to cease operations is a management prerogative that the State does not usually interfere in. there is substantial evidence that petitioners intended the Irah Burog. 10 days later. the law requires the employer to prove that it suffered substantial actual losses. On the contrary. organized Me-Shurn Workers Union-FSM. The union had a pending application for registration BLR. It has been ruled that an employer may adopt policies or changes or adjustments in the operations to insure profit to itself or protect the investments of its stockholders. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients.A. Dianne Miano.286 Basis San Pedro Hospital of Digos vs. on account of its alleged inability to meet the export quota required by the BOI. as in this case. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. as long as he pays his employees their termination pay in the amount corresponding to their length of service. That would be a taking of property without due process of law. with union. Charms Haw. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations. considering that the dismissal of an employee from work involves not only the loss of his position but. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. vs. or its losses abated. Similar notices were individually delivered to union members. Inc. and that said condition would probably be alleviated or improved. As long as the company’s exercise of the same is in good faith and not for the purpose of defeating/circumventing the rights of the employees under the law or a valid agreement such exercise will be upheld. and in the exercise of such management prerogative. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. Ysan Castillo. petitioner had to establish the fact of its precarious financial health. simply to maintain the workers in employment. corporation. NLRC Ÿ Temporary Cessation of Operation. it must also protect the right of an employer to exercise what is clearly a management prerogative. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Edlyn Santiago. as well as the resumption of business barely a month after. Kristel Macatangay.T vs. CA Requisite Mc-Shurn Corp. The last patient was consequently discharged. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. the State is bound to intervene. that its cessation of operation was really necessitated by its financial condition. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. The cessation of a company’s operations shortly after the organization of a labor union. what is more important. Held: To justify the closure of a business and the termination of the services of the concerned employees. the hospital management considered the union actions as tantamount to a strike. The operations of the hospital having come to a grinding halt. no business can be required to continue operating at a loss. J. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. Itr had a 3-year CBA covering from 1987 until 1990. Monina Lagman.Labor II absence of serious business losses or financial reverses. Heidi Soria. Jake Ng. Doctors began leaving the hospital and the number of patients dwindled. These acts constitute unfair labor practices. considering that it involves laying off employees for a period of six months. Alpe Macalalad. Despite the NCMB's call for a conciliation conference. nonstock. Jon Santos. his means of livelihood. The same principle applies in temporary suspension of operations. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. Even as the law is solicitous of the welfare of the employees. Monette Mesa. Indeed. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. It is a hornbook rule that employers who contemplate terminating the services of their workers must base their decisions on more than just flimsy excuses. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. the employer may merge or consolidate its business with another. but only 14 out of the 74 rank-and-file employees/union members acknowledged receipt thereof. the evidence belies any claim that the lay-off of respondents was merely temporary. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. It is not enough to merely raise this issue nor to discuss it only in passing. is a charitable. Anna Tetangco 19 . by undertaking such suspension of operation. or sell or dispose all or substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the process. In this instance. But where it is manifest that the closure is motivated not by a desire to avoid further losses. The union saturated petitioner's premises with streamers and picketed the hospital. Ÿ Ÿ Concededly.
Charms Haw. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. Edlyn Santiago. Due to the grim economic consequences to the employee. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. Apropos this responsibility. due to non-payment of rentals. signed by the employees concerned as reasonable settlements. are binding upon the parties. Anent the delay of seven days in the filing with the Court of Appeals of the petition. Heidi Soria. Inc. Also. it led to the termination of the services of the SMC employees at the Mandaue Brewery. Mc-Shurn Workers Union Ÿ Pido vs. The quitclaims and releases. Mc-Shurn Corp. Inc. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. which eventually led to his illegal constructive dismissal. Adona Ÿ Basic is the rule in termination cases that the employer bears the burden of showing that the dismissal was for a just or authorized cause. Alpe Macalalad. CA (Dianne) Facts: SMC conducted a modernization program wherein it brought into the Mandaue plant high-speed machines to be used in the manufacture of its beer. Installation of Labor Savings Device Ÿ Abapo vs. along with a prayer for reinstatement. Mendoza. Mabuhay offered to amicably settle the case by surrendering the premises to Syjuco and to sell its assets and personal property to any interested party. Mayon Hotel vs. When a security guard is placed on a "floating status. Held: The Supreme Court finds that. Justice Vicente V. Floating Status Irah Burog. San Pedro Hospital vs." he does not receive any salary or financial benefit provided by law. NLRC (Dianne) Facts: Federito B.Labor II termination to be permanent. He was later on suspended following his argument with Alcantara. For as explicitly provided therein.38 caliber revolver service firearm and duty detail order had already expired. Pido was constructively dismissed. Effect on Employer-Employee Relationship Ÿ If a legitimate. several functions of its employees were declared redundant. in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. Otherwise. that said cessation of employment was merely temporary. leased the premises belonging to Santiago Syjuco. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. Mabuhay F. Monette Mesa. the petitioners admitted that there was indeed such delay. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . His prolonged suspension. As a consequence. 286. Ysan Castillo. pursuant to Art. Ÿ Verily. DISEASE. Anna Tetangco 20 . vs. However. with more reason will an invalid and illegal suspension of operations. this happens when the security agency’s clients which do not renew their contracts are more than those that do and the new ones that the agency gets. Monina Lagman. Inc. Eventually. Sy vs. the dismissal is deemed unjustified.284 Ÿ The requirement for a medical certificate cannot be dispensed with. Jon Santos. Drilon (Dianne) Facts: Hotel Mabuhay. Section 3. through Mr. clearly indicates that he did not abandon his work. Assuming arguendo. Jake Ng. CA G. In security services. had ripened to constructive dismissal. His filing of a complaint for constructive dismissal. as in this case. Pido was an employee of Cherubim Security and General Services. the employer should bear the burden of proving that there are no posts available to which the employee temporarily out of work can be assigned. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46. not affect the employment relationship. Digos E. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. indeed. Kristel Macatangay. Dianne Miano. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. owing to respondent’s neglect to conclude the investigation. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. otherwise it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy in the protection of labor. the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings.
the valid and authorized causes of employment termination under the Labor Code. In separate infraction reports.. In fine.e. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. is only to consider them for reemployment in the operation of the business in the same premises. Rule 1. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. neither of them complied. Sundowner has no liability whatsoever to the employees of Mabuhay. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. they were both apprised of the particular acts or omissions constituting the charges against them. Sec. Thereafter. Subsequently. Requirements Irah Burog. Rule 1. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises. and the same can only be restricted by law through the exercise of police power. Had they found the 12-hour period too short. and its responsibility if at all. i. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner. Yet. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. Even if no hearing was conducted. Charms Haw. loss of confidence and gross habitual neglect of duty. while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. notices of termination were also sent to them informing them of the basis of their dismissal. they should have requested for an extension of time. labor contracts being in personam. Monette Mesa. incurred absences without official leave and slept while on duty. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. Workers Assn. barricaded the entrance to the leased premises and denied Sundowner's officers. Agabon vs. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. i.. They were also required to submit their written explanation within 12 hours from receipt of the reports. Book VI. employees and guests free access to and egress from said premises. As a general rule. civil or administrative proceedings. Ysan Castillo. (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation. Ÿ H. the report also mentioned that Villena frequently violated company rules. Dianne Miano. Jake Ng. 2(d). and procedural. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them as protected under our Constitution. Procedural due process. He was also required to submit a written explanation within 12 hours from receipt of the report. In General Ÿ Due process under the Labor Code. Kristel Macatangay. 2(d) 1. NLRC Essence of Due Process Solid Development Corp. In addition. Alpe Macalalad. They claimed that they were dismissed without just cause and without due process. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. Ÿ The rule is that unless expressly assumed. Heidi Soria. Sec. Further. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner. Anna Tetangco 21 .e. it was Syjuco who found Sundowner and persuaded it to lease said premises. has two aspects: substantive. Sundowner wrote a letter-complaint to Syjuco. National Union of Workers in Hotel. Jon Santos. the manner of dismissal. like Constitutional due process. he was dismissed for serious misconduct. Edlyn Santiago. He was also required to submit a written explanation within 12 hours from receipt of the report. thus binding only between the parties. However. there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. vs. Hence. Monina Lagman. Book VI. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. Colcol was eventually dismissed for insubordination and poor work performance. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco.Nature and Requirements 277 (b). Meanwhile. Constitutional due process protects the individual from the government and assures him of his rights in criminal. Solid Development Corp. although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employees of the seller of such assets or enterprise. Thus. petitioners were given due process before they were dismissed.
De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. A memorandum was then given to them placing them under preventive suspension and requiring them to explain in writing within fortyeight (48) hours why they misappropriated cooperative funds. For an employee’s dismissal to be valid. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. Coop vs. 1999. 1999 at 11:30 a. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business." There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record. not ordered to submit a position paper.Labor II be heard. Central Pangasinan Elec. notices were sent to them on March 19. informing them of the basis of their termination. Heidi Soria. Finally. Jon Santos. not accorded a hearing. Ÿ Valiao vs. The requirement of a hearing. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought. Anna Tetangco 22 . As such. Kristel Macatangay. Held: Valiao’s dismissal from employment is valid and justified. Time and again. is complied with as long as there was an opportunity to be heard. they were given due process before they were dismissed. They gave their own "answer/explanation" to the charges. they were both apprised of the particular acts or omissions constituting the charges against them. it is stressed that due process is simply an opportunity to Ÿ Carag vs. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. Proof beyond reasonable doubt of their misconduct is not required.” Held: There exists a valid reason to dismiss both employees. 1991. In this case. on behalf of all of MAC's rank and file employees. and not necessarily that an actual hearing was conducted. Carag was not issued summons. Ÿ The essence of due process is simply an opportunity to be heard. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). Ysan Castillo. which showed him to have been absent or late for work from a minimum of seven (7) to a maximum of seventy-five (75) minutes for the period March to October 31. a notice of termination was sent to him informing him of his termination from the service for serious misconduct and gross and habitual neglect of duty. Thus. 1999 and signed by the General Manager. well-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. Article 282(c) of the Labor Code allows an employer to dismiss employees for willful breach of trust or loss of confidence. as reflected in the summary of tardiness and absences report. Macaraeg was then the cashier who also took part in the illicit transactions. Alpe Macalalad. Held: The manner in which the case was decided by the Labor Arbiter left much to be desired in terms of respect for the right of private respondents to due process. on the other hand. not given an opportunity to present his evidence.m. A hearing was also set. Edlyn Santiago. and eventually. or as applied to administrative proceedings. and (2) the second informs the employee of the employer's decision to dismiss him. and to have reported late almost every day for the period November to December 1991. Dianne Miano. the results of which eventually led to their termination for “serious misconduct. What is frowned upon is the absolute lack of notice and hearing. Irah Burog. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all times and in all instances essential. and breach of trust and confidence reposed on them by management. he received a suspension order without pay. Charms Haw. They were represented by counsel during the investigation. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. Ÿ On the matter of due process. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. In fine. it being sufficient that there is some basis for the same or that the employer has reasonable ground to believe that they are responsible for the misconduct and their participation therein rendered them unworthy of the trust and confidence demanded of their position. The Court of Appeals held that "the records reveal that petitioner was afforded the twin requirements of notice and hearing and was likewise given the opportunity to defend himself before the investigating committee. as the due process requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. They participated in the investigation conducted at petitioner’s board room on February 13. Jake Ng. He was re-assigned from one position to another which was due to his tardiness and absences. In separate memoranda dated February 4. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. Monette Mesa. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. and not notified that the case was submitted for resolution. not accorded a conciliatory conference. which were then returned due to insufficiency of funds. Monina Lagman.
Ÿ The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. Where, as in this case, sufficient opportunity to be heard either through oral arguments or position paper and other pleadings is not accorded a party to a case, there is undoubtedly a denial of due process. Ÿ King of Kings Transport Inc. vs. Mamac (Monina) Facts: Mamac was employed as a bus conductor. He was terminated form work because of irregularities (fraud) he caused like declaring sold tickets as returned tickets causing the bus company to lose income. Mamac received a letter then terminating him from his work. The lower courts affirmed the dismissal but ordered the bus company to pay full backwages for violation of the twin notice requirement and 13th month pay. Held: Notice requirements were not followed by the bus company. The respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In addition, no hearing was also conducted. Therefore as held in the case of Agabon vs. NLRC, noncompliace with the due process requirements entitles the employee to receive nominal damages. To clarify, the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. Ÿ (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.
Right to Counsel Ÿ Salaw vs. NLRC (Monina) Facts: Espero Santos Salawa was employed as a credit investigator-appraiser. His duties included inspecting, investigating, appraising, and identifying the company’s foreclosed assets giving valuation to its real properties mortgaged to the respondents. The Criminal Investigation Service of the Philippine Constabulary extracted from the petitioner without the assistance of counsel a Sworn Statement which made it appear that petitioner in cahoots with a co-employee, sold 20 sewing machines and electric generators which had been foreclosed by the respondent bank and divided the proceeds thereof in equal shares. When petitioner signified his readiness to appear before the PDIC, private respondent sent him a letter stating that he is requested to come without counsel or representative. The petitioner was terminated for alleged serious misconduct or willful disobedience and fraud or willful breach of the trust reposed on him. Held: Salaw was denied the assistance of counsel hence violated due process of law. It is true that administrative and quasi-judicial bodies are not bound by the technical rules of procedure in the adjudication of cases. However, the right to counsel, a very basic requirement of substantive due process, has to be observed. Indeed, the right to counsel and to due process of law are two of the fundamental rights guaranteed by the constitution to any person under investigation, be the proceeding administrative, civil or criminal. Significantly, the dismissal of the petitioner from his employment was characterized by undue haste and the admission by petitioner which was extracted without counsel cannot be used as evidence against petitioner. Notice Ÿ It is clear that there was an utter absence of opportunity to be heard at the arbitration level, as the procedure adopted by the Labor Arbiter virtually prevented private respondents from explaining matters fully and presenting their side of the controversy. They had no chance whatsoever to at least acquaint the Labor Arbiter with whatever defenses they might have to the charge that they illegally dismissed Carag. In fact, private respondents presented their position paper and documentary evidence only for the first time on appeal to the NLRC. Carag vs. NLRC
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 23
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. Collegio de San Juan de Letran Calamba vs. Villas (Monina) Facts: Belen Villas was employed as high school teacher. She applied for a study leave. It was granted but there were conditions imposed by the school where she was working that she needs to submit certification that she really studied. However, the first semester where she was on leave, her masteral studies did not push through and instead took up a course on the Old Testament. During the second semester, she already started his masteral studies. The President of the school where she was working alleged that her failure to enroll during the first semester was a violation of the conditions of the study leave. Hence, she was dismissed. Held: We affirm the findings of the Court of Appeals that there was no violation of the conditions of the study leave grant. Thus, respondent could not be charged with serious misconduct warranting her dismissal as a teacher in petitioner School. Petitioner has failed to convince us that the three alleged violations of the study leave grant constituted serious misconduct which justified the termination of respondent’s employment. Ÿ Ÿ Petitioner also failed to comply with the procedural requirements for a valid dismissal. As earlier noted, the law requires the employer to give the worker to be dismissed two written notices before terminating his employment. Considering that these notices are mandatory, the absence of one renders any management decision to terminate null and void. Petitioner failed to give respondent the first notice which should have informed the latter of the former’s intention to dismiss her. The next letter from the petitioner, dated June 3, 1996, already informed respondent that she was considered resigned effective schoolyear 1996-1997. These letters did not comply with the requirements of the law that the first written notice must apprise the employee that his termination is being considered due to a certain act or omission. These letters merely required petitioner to submit proof of her studies and respondent could not have reasonably inferred from them that her dismissal was being considered by the petitioner. The fact that there was a hearing conducted by the grievance committee pursuant to the collective bargaining agreement did not work in petitioner’s favor because this was done after petitioner had informed respondent that she was already considered resigned from her teaching job. Besides, the rights of an employee to be informed of his proposed dismissal are personal to him and, therefore, the notice to the union was not notice to the employee. Ÿ Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. Agabon vs. NLRC
Ÿ Sta. Catalina College vs. NLRC (Monina) Facts: Hilaria was hired as an elementary teacher at the petitioner school in 1955 until 1970. In 1970, she applied for and was granted a 1 year leave of absence without pay on account of the illness of her mother. In the meantime, she was employed as a teacher at another school. In 1982, she applied anew at petitioner school. During the commencement exercise of petitioner school she was awarded a plaque of appreciation for 30 years of service. When she reached the compulsory retirement age of 65, petitioner school pegged her retirement benefits only from her service on 1982-1997. Hilaria then filed a complaint for non-payment of retirement benefits. Held: Hilaria abandoned her work. Hilaria cannot be credited for her services in 1955-1970 in the determination of her retirement benefits. For, after her one year leave of absence expired in 1971 without her requesting for extension thereof as in fact she had not been heard from until she resurfaced in 1982 when she reapplied with petitioner school, she abandoned her teaching position as in fact she was employed elsewhere in the interim and effectively relinquished the retirement benefits accumulated during the said period. Abandonment of work being a just cause for terminating the services of Hilaria, petitioner school was under no obligation to serve a written notice to her. Two Notice Rule Ÿ Caingat vs. NLRC (Monina) Facts: Petitioner became the General Manager of Sta. Lucia Realty Development sister companies both organized to service the malls and subdivisions owned by Sta. Lucia. He was allowed to use 10% of the total payroll of Sta.Lucia’s sister company to defray operating expenses. However, the Finance Manager discovered that petitioner deposited company funds in the latter’s personal account and used the funds to pay his credit
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 24
card purchases, trip abroads, etc. Without conducting an investigation, the sister company filed a complaint in court while petitioner filed with the Labor Arbiter a complaint for illegal dismissal. Held: Nonetheless, while dismissal may truly be justified by loss of confidence, we agree with the Labor Arbiter and NLRC that management failed to observe fully the procedural requirement of due process for the termination of petitioner’s employment. Ÿ In this case, the respondents only sent the first notice, gleaned from the June 20, 1996 memorandum. There was no second notice. Neither the public notice in the Philippine Daily Inquirer, a newspaper of general circulation, nor the demand letter could constitute substantial compliance. What the public notice did was to inform the public that petitioner was already separated as of June 20, 1996, the same day he was suspended. never gave respondent Galay an opportunity to explain herself, hence denying her due process. In sum, we find that Galay was illegally dismissed, because petitioners failed to show adequately that a valid cause for terminating respondent exists, and because petitioners failed to comply with the twin requirement of notice and hearing. Ÿ Genuino Ice Co. vs. Magpantay (Monina) Facts: Alfonso Magpantay (respondent) was employed as a machine operator with Genuino Ice Company, Inc. (petitioner) from March 1988 to December 1995. Respondent filed against petitioner a complaint for illegal dismissal. In his Position Paper, respondent alleged that he was dismissed from service effective immediately by virtue of a memorandum, after which he was not allowed anymore to enter the company premises. Respondent bewailed that his termination from employment was done without due process. Petitioner countered that he was not illegally dismissed, since the dismissal was based on a valid ground, i.e., he led an illegal strike at petitioners sister company, Genuino Agro Industrial Development Corporation, which lasted from November 18 to 22, 1995, resulting in big operation losses on the latter?s part. Held: Due to his refusal to report to the Cavite plant, petitioner reiterated its order transferring respondent in its Memorandum, where respondent was also warned that his failure to report to the Cavite plant will be considered as an absence without leave (AWOL) and insubordination. Respondent was required to comply with the order within 24 hours from receipt, otherwise, disciplinary action will be imposed on respondent. Respondent replied with a request that he remain in the Otis plant since a transfer to the Cavite plant will entail additional expenditure and travel time on his part. Petitioner again wrote respondent inviting him to appear before the Plant Level Investigation on December 11, 1995 for the latter to be able to clarify his reasons for refusing the transfer. Finally, petitioner issued its Memorandum informing respondent of its decision to terminate his services. Ÿ Prior to the Memorandum, petitioner sent respondent several memoranda apprising him of the possible implications of his refusal to comply with the order of transfer. Thus, in its Memorandum dated November 24, 1995, petitioner notified respondent that his continued non-compliance with the order of transfer might bring about disciplinary action. Respondent replied to this memorandum, stating the reasons for his refusal. Petitioner sent another Memorandum asking respondent to appear for further clarification of his reasons for refusing the transfer. Despite the meeting, and since respondent, apparently, stubbornly refused to heed petitioner’s order, it was then that the Memorandum dated
Ÿ Heavylift Manila vs. CA (Monina) Facts: Heavylift thru a letter signed by its Finance Manager informed respondent of her low performance rating and the negative feedback from her team members regarding her work attitude. The letter also notified her that she was being relieved of her other functions except the development of the new access program. Subsequently, respondent was terminated for alleged loss of confidence. Held: An employee who cannot get along with his coemployees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee's attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer. However, we are not convinced that in the present case, petitioners have shown sufficiently clear and convincing evidence to justify Galay's termination. Ÿ In our view, neither does the February 23, 1999 letter constitute the required notice. The letter did not inform her of the specific acts complained of and their corresponding penalty. The law requires the employer to give the worker to be dismissed two written notices before terminating his employment, namely, (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him. Additionally, the letter
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 25
“J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. Jake Ng. he impliedly acknowledged his insubordination as shown in his petition. Clearly. Ÿ What is most important is that before termination. which made a dishonest mark in his timecard by marking present on a day he is absent. Private respondent availed of this chance by submitting a written explanation. Anna Tetangco 26 . Irah Burog. the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought. National Semi-Conductor Distribution vs. By requiring him to submit a written explanation within 48 hours from receipt of the notice. perhaps. a notice of the decision to dismiss. she was later promoted. Thus. Even though petitioner in this case never admitted the accusations of dishonesty against him. 1995 was issued to respondent informing him of the management’s decision to terminate his services. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao. Monette Mesa. Edlyn Santiago. and private respondent should again be allowed to answer and be heard. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. Position Paper Ÿ Shoppes Manila Inc. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. Magos was later terminated. Monina Lagman. Ÿ The law requires the employer to afford his employee ample opportunity to be heard. an opportunity to explain one's side. and thereafter. Kristel Macatangay. (2) the dismissal is without just or authorized cause but due process was observed. Heidi Soria. The phrase "ample opportunity" mentioned in the above-cited provision is meant every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. (3) the dismissal is without just or authorized cause and there was no due process. and adding therein.Labor II December 13. another notice about the decision of dismissal. or as applied to administrative proceedings. an employee must be given the twin requirements of due process-proper notice and hearing. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. above. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal. When they formed a union they were barred and were replaced with non-union members. but an accident happened later in his career which caused his dismissal. Caurdenetan Piece Workers Union vs. The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. and due process was observed. Due process is not violated where a person is given the opportunity to be heard. Magos countered it was necessary as sales were down. Jon Santos. Ysan Castillo. and (4) the dismissal is for just or authorized cause but due process was not observed. Dianne Miano. pursuant to Section 2. (1) if the dismissal is based on a just cause under Article 282. He was later dismissed by petitioner due to dishonesty. this does not give petitioners an outright license to terminate private respondent. but chooses not to give his side of the Ÿ Lavador vs. vs. pursuant to Section 5 above. Ÿ La Carlota Planters Assn Inc. Charms Haw. 11 In the instant case. for an authorized cause under Article 283. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. Alpe Macalalad. an inquiry why he did not give the explanation required in the January 4. but when she was ate her new position she was charged with misappropriation was subsequently dismissed. but it chose not to participate therein without any known justifiable cause. the company gave him the opportunity to be heard in his defense. or for health reasons under Article 284. Hearing Ÿ Magos vs. respondent’s right to due process was not violated. should also be sent to private respondent. a hearing or an opportunity to be heard and after hearing or opportunity to be heard. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal. pursuant to Section 6 above. 1993 letter. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. Ÿ Procedurally. if after the said thirty-day period private respondent still did not give his explanation about the incident. vs.
Under Systems Practice No. Sadagnot alleged that when the order was issued. This option is part of their right to due process. These two notices would have sufficed had it not been for the existence of Systems Practice No. Suico et al. were implicated in said incident. however. Monette Mesa. He refused the order on the ground that it was not related to his duties as Third Officer. Heidi Soria. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. the law requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code.Procedural Ÿ Suico vs.Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed. with supporting documents and their affidavits. if he so desires. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter. Dianne Miano. The last notices informed Suico. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. respondents repatriated him to the Philippines. The first notices sent to Suico. a deck work. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party.F. that. Edlyn Santiago. Ysan Castillo. consistent with our ruling in Agabon. the employer must notify him in writing of the decision to dismiss him. Monina Lagman. et al. Espanola (Jon) Facts: C. et al. stating clearly the reason therefore. et al. On 2 March 1996.and (b) the employee be afforded an opportunity to be heard and to defend himself. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. Zialcita (Jon) Facts: Zialcita was assigned as clerk of CF sharp. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. disappears when adduced in connection with labor cases. PLDT complied with the two-notice requirement of due process. PLDT is bound to comply with the Systems Practice. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. Held: Apparently. et al. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. Ÿ In order to effect a valid dismissal. the procedural deficiency in the dismissal of Suico. whatever merit C. Anna Tetangco 27 . the vessel's Master ordered him to perform Ÿ Irah Burog. In termination cases. Hence. failed to explain and were terminated. Cross Examination Ÿ CF Sharp Crew Management Inc. Charms Haw. Ÿ Jurisprudence is replete with rulings that administrative bodies are not bound by the technical niceties of law and procedure and the rules obtaining in the courts of law. set out in detail the nature and circumstances of the violations imputed to them. of the decision to terminate their employment and cited the evidence upon which the decision was based. He alleged that because of his refusal to obey the order. PLDT granted its employee the alternative of either filing a written answer to the charges or requesting for opportunity to be heard and defend himself with the assistance of his counsel or union representative. 94-016 by requesting that a formal hearing be conducted and that they be given copies of sworn statements and other pertinent documents to enable them to prepare for the hearing. Held: Respondents failed to observe the necessary procedural safeguards. the Master made several negative reports against him. The petitioner had failed to show that it had complied with the two-notice requirement: (a) a written notice containing a statement of the cause for the termination to afford the employee ample opportunity to be heard and defend himself with the assistance of his representative.Substantive. NLRC (Ysan) Facts: Fernando. Suico et al. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. Jake Ng. Sharp’s argument might have in the context of ordinary civil actions. FAILURE OF DUE PROCESS Sadagnot vs. hatch stripping. the employer must furnish the employee with two written notices before termination of employment can be legally effected: (a) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought. There is nothing in the records showing that respondents complied with the two-notice requirement. vs. exercised their option under Systems Practice No. Jon Santos. In the course of his employment he misappropriated an amount sent by a seaman for his family. 94-016. Alpe Macalalad. where the rules of evidence apply with greater rigidity. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. 94-016. Kristel Macatangay.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping. Ÿ It should be emphasized. It is sufficient that the documents submitted by the parties have a bearing on the issue at hand and support the positions taken by them. if he so desires. Effect of Failure. Suico. (b) if the employer decides to terminate the services of the employee. a PLDT managerial employee. sustained injuries when strikers blocked her way to the premises of PLDT. Notices from PLDT management were sent asking for an explanation of the said incident.
As a result thereof. Ÿ The present rule is set forth in the Agabon v. Held: In the case at bar. He was being directed to go on vacation leave and consume all his remaining leave credits. but did not receive a reply. they were nonetheless given adequate opportunity to answer the charge. he was served with a memorandum from LBC's Board Chairman. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list. vs. however. as well as the receipts for the Fundador Brandy giveaways. Anna Tetangco 28 . the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. which in fact they did. Ÿ Alladin Transit Corp. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. NLRC the new car plan were those of union officers Cerezo and de Guzman. He was then instructed to take a leave of absence for a month. Glaxxo-Wellcome Phils. Agabon vs. was illegal. he shall turn over all his accountabilities to an officer of the company. Inc. must be stiffer than that imposed in Wenphil. upon the other hand. It did not narrate that it heard petitioner’s side. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. et al. Where the dismissals are illegal. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. Florido reluctantly complied with the order. Jake Ng. Ÿ Verily. Ÿ In termination cases. Kristel Macatangay. He wrote a letter to the President of the company but he did not receive any reply. vs. The employee should be appraised of the particular acts and omissions for which the dismissal is sought. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. was summoned by the Chairman to explain the receipts prepared and signed by respondent for the liquidation of cash advances in connection with the purchase of the hams. he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. that where the dismissal is based on a just cause. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. Ysan Castillo. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. he was barred from entering the company’s premises. It is sufficient to show by substantial evidence that the employee is guilty of misconduct which makes the latter unworthy of the trust and confidence demanded by his position. Incidentally. vs. Jon Santos. Monette Mesa. Under the circumstances. therefore. Such sanctions. nor did it show that petitioner was given notice of his dismissal. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. Edlyn Santiago.. Alpe Macalalad. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. In arriving at the decision to dismiss them. Held: Without a doubt. Roxas merely said he tried to report to the office. there was no necessity for an actual hearing. Ubaldo. An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. Pursuant to the same. namely. Monina Lagman. Heidi Soria. NLRC. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience.. 2. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. Both refused to surrender their vehicles and were thus sent notices of termination. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing. and in the meantime. the failure to give the required notice does not invalidate the same. Platon. Charms Haw. but merely holds the employer liable for damages for violating said notice of requirement. inclusive of allowances. Under the provisions of the said car plan. but petitioner did not allow him. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. Consistent with San Miguel Corporation v. and. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. Glaxo took into consideration the explanations they had offered. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog.Labor II substantive bases thereof were never put in issue. While he was on leave. Dianne Miano. Failure to do so would necessarily mean that the dismissal was not justified.
informed by the petitioner that he was considered resigned from his job. if to be considered at all. 1146 of the Civil Code. a managerial employee. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. it must be unconditional and with the intent to operate as such. Held: Antonio's invocation of prescription is misplaced. Gresones. Moreover. Ÿ Azcor Manufacturing vs. Indeed. the four-year prescriptive period shall be counted and computed from the date of the employee's dismissal up to the date of the filing of complaint for unlawful termination of employment. tried to convince the respondent to accept an amount of P50. Morales filed a motion to dismiss his complaint without prejudice. Race. the fact that Capulso signified his desire to resume work and actively pursued his case for illegal dismissal negated any intent to relinquish his job. He and his driver. the bus he was driving was bumped by a Dagupan-bound bus. saw Salvador operating the company’s payloader. the petitioner. Held: The respondent must be considered as unjustly terminated from work in January 1998 since this was the first time he was informed by the petitioner that he was deemed resigned from his work. et al. Charms Haw. Alpe Macalalad. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. 2001. the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog. While the case filed in the Makati RTC was later dismissed without prejudice. Proof beyond reasonable doubt of their misconduct is not required. His confinement therein lasted a month. Ysan Castillo. medication and hospital expenses of the Race in the hospitals. Heidi Soria. Monina Lagman. it was only at this time that the respondent's cause of action accrued. a language Capulso was not conversant. Azcor. Ÿ SC held that the lapse of four months before Capulso instituted the complaint was understandable because he refrained from jeopardizing his chances to continue employment. Consequently. the fact that Salvador has been employed with the respondent for a long time. and were written in English.00 as a Ÿ Atonio M. On Sept. Race (Ysan) Facts: While traversing Tarlac. Race was confined again for further treatment of his fractured left leg at another hospital.Labor II Degree Ÿ Art. It is sufficient that there is substantial basis for the loss of trust. During that same occasion. it being sufficient that there is some basis for the same or that the employer has reasonable ground to believe that they are responsible for the misconduct and their participation therein rendered them unworthy of the trust and confidence demanded of their position. (Ysan) Facts: PMSC’s evidence disclose that Sawa. Dianne Miano. Kristel Macatangay. Thus. Held: In the case at bar. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. et al. As a consequence thereof. Mining Service Corp. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. Victory shouldered the doctor's professional fee and the operation. Macaraeg consolation for his dismissal but the latter rejected it. in fact. Jon Santos. instead of betrayed. which was granted by the RTC in Aug. an action for reinstatement by reason of illegal dismissal is one based on an injury which may be brought within four (4) years from the time of dismissal pursuant to Art. The complaint was thus filed well within the prescriptive period. was on his way back to his office in the plant. Anna Tetangco 29 . pre-drafted with blank spaces for dates of effectivity. PMSC’s Assistant Resident Manager for Administration. Jake Ng. Monette Mesa. Edlyn Santiago. It is settled that in illegal dismissal cases.000. in cases of this nature. PMSC has every right to dismiss Salvador. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. scooping fine ore from the stockpile and loading it on his private cargo truck. Phil. 1995. this time with QC RTC. Thereafter. went to Victory's office to report for work. still limping heavily. Ÿ Salvador vs. said that Capulso resigned. Morales filed anew a complaint for the collection of sum of money. vs. Ÿ We reiterate that proof beyond reasonable doubt of the employee’s misconduct or dishonesty is not required to justify loss of confidence. He was. Held: To constitute resignation. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. Here. In the case at bar. Moreover. Prescription Period Ÿ Victory Liner Inc. One month after his release from the said hospital. Thus. the cause of action accrues from the time the employment of the worker was unjustly terminated. Central Pangasinan vs. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. but was not allowed to resume work afterwards. 2002. should be taken against him. respondent has proved by substantial evidence the charge of pilferage against petitioner. Frustrated at the snail's pace of his case. Race suffered a fractured left leg and was rushed to the hospital. NLRC (Irah) Facts: Four months after his dismissal. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. however. Morales (Irah) Facts: On Dec.
did not in any way pertain to Abella's duties as chemist/quality controller. (b) must relate to the performance of the employee's duties.Twin Remedies Ÿ Marival Trading Inc. offered to re-employ Ranara.07 GENERAL RULE Nature and Remedies. Anna Tetangco 30 . even moral and exemplary damages. it was only after the complaint had been filed that it occurred to Chang. These remedies give life to the worker’s constitutional right to security of tenure. a result of Chang's repentance. Held: For misconduct or improper behavior to be a just cause or dismissal. Her acts did not constitute serious misconduct as to justify her dismissal. G. Ranara was simply told that he should not report back for work the following day. inaction. In this case. and the liability did not abate as Irah Burog. Abella did not make false and malicious statements against her superior. Alpe Macalalad. Charms Haw. the employer believed that Abella’s dismissal was based on a valid ground. But it does not simply mean a mere lapse of time. NLRC (Irah) Facts: Vianney Abella. Chang. he found that somebody else had been employed in his place. denied the charges. and (c) must show that the employee has become unfit to continue working for the employer. lack of interest. inclusive of allowances. Morales's intention was to expedite the enforcement of his rights. Without cause and without any investigation. On the contrary. When he protested his replacement. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued. formal or otherwise. filed a complaint for illegal dismissal and sought reinstatement with full back wages. Her remarks were neither insulting nor offensive. it must be stressed that not every case of illegal dismissal will automatically entail its grant. Subsequently. to invite Ranara back to work in his store. not those who sleep on their rights. Understandably. The prescriptive statutes serve to protect those who are diligent and vigilant. Kristel Macatangay. Offer to reinstate Ÿ Ranara vs. Ÿ Under Article 279 of the Labor Code. thus surprising the parties or their representatives when the facts have become obscure from the lapse of time or the defective memory or death or removal of the witnesses. The wrong had been committed and the harm done. alleging that she was dismissed without just cause and due process. filed a complaint for illegal dismissal against Marival. in a belated gesture of good will. Oro. he felt frustrated at the snail's pace at which his case was moving. the acts complained of. as to sanction Abella’s unprofessional and disrespectful conduct. Edlyn Santiago. Abella claimed that she merely went inside the room to retrieve her things and only accidentally dropped her bag and did not intend to disrupt the meeting. In this case. Monina Lagman. thinking that the secretary had only spoken in jest. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time. NLRC (Irah) Facts: Carlos Ranara. there must be a categorical showing that due to plaintiff's negligence. a chemist/quality controller at Marival Trading. As regards backwages. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. under the circumstances they were done. Held: Petitioner was illegally dismissed without even the politeness of a proper notice. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. contending that it was Ranara who actually abandoned work when he stopped reporting. Notably. the employer. SANCTIONS AND REMEDIES 14. Dianne Miano. and to the payment of his full backwages. but also absolve the employer from liability of backwages where good faith is evident. This militates against the propriety of granting Abella backwages. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges. vs. et al. no action whatsoever was taken. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. Abella allegedly disrupted a staff meeting by banging folders and forcefully throwing her bag (allegedly because she was angry about the rearrangement of her table and things without her permission) and even refused to leave when asked to do so. the court may not only mitigate. he was even scolded for being "hard-headed" and not accepting his dismissal. We doubt if his offer would have been made if Ranara had not complained against him. Chang's sincerity is suspect. When he did so just the same. and to his other benefits or their monetary equivalent. While generally an order of reinstatement carries with it an award of backwages. At any rate. Monette Mesa. computed from the time his compensation was withheld from him up to the time of his actual reinstatement.Labor II claim. Ysan Castillo. Heidi Soria. Jake Ng. sincere or not. Rather. Moreover. who had been working as a driver with Oro Union Construction Supply. or intent to abandon a lawful claim or cause of action. Jon Santos. His case remained pending before the CA for six long years. (a) it must be serious. thus allowing the statute of limitations to bar any subsequent suit.
His suspension was subsequently extended. Julio offered him 5k should he agree to sign the resignation letter. Alpe Macalalad. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. Held: Belga was illegally dismissed. they were forced to resign or were summarily dismissed without just cause. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. Ÿ Nueva Ecija Electric Corp. which can hardly be considered a forbidden act or a dereliction of duty. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. Ÿ Ÿ Cabatulan vs. and payment of his full backwages. inclusive of allowances. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. Cabatulan agreed and immediately went home. and other benefits or their monetary equivalent. Issue: W/N Cabatulan is entitled to backwages and separation pay. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. Cabatulan was informed that respondent Julio’s brother. Julio’s security aide. the law intended reinstatement to be the general rule. They employed Cabatulan as operations manager and purchasing officer. Cabatulan passed by the premises of J. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. An altercation ensued between Cabatulan and Alaan. Jake Ng. Great Southern Maritime Services Corp vs. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. Rather. et al. Anna Tetangco 31 . Cabatulan refused to sign the same. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. filed a complaint for illegal dismissal against NEECO. Moldez alleged that he was at first suspended from work without pay for 7 days. et al. inclusive of allowances. which is a subsidiary of Lakpue. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. Held: Yes. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. Lourdes Belga. Eduardo Cairlan. Article 279 of the Labor Code mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. which explains his repeated failure to report to work. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. et al. voluntarily resigned from employment. but eight months had already passed with no word from Pheschem. filed a complaint for illegal suspension and dismissal against Pheschem. wanted to see him. Held: Respondents Acuña.e. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. Great Southern. et al. et al. delivered a child.. because of a disagreement in the purchase of some spare parts. Heidi Soria. Held: Cairlan was illegally dismissed. Before the expiration of their contracts. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. Before proceeding to the meeting place. Monina Lagman. NLRC (Irah) Facts: Pablito Moldez. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. Ÿ Where the dismissal is without just or authorized cause and there was no due process. were illegally dismissed.Labor II Ÿ Pheschem Industrial Corp vs. Dianne Miano. With regard to the charge of disobeying a memorandum. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. Acuna (Irah) Facts: Respondents Acuña. Edlyn Santiago. vs. Acuña. inclusive of allowances.C. et al. an assistant cashier of Tropical Biological Phils. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business. Monette Mesa. vs. Jon Santos. Belga (Irah) Facts: Ma. Charms Haw. Held: Moldez was illegally dismissed. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Clearly. et al. filed a complaint for illegal dismissal against Lakpue. they were transferred back home since their services were no longer needed. They did not voluntarily quit their jobs. denied the charges and averred that Acuña. Ysan Castillo. He was assured to be rehired. such was given to Belga two days before she had given work thus making it physically impossible for her to report for work and explain her absence. Trucking but was refused admission by Alaan who was armed with an armalite rifle. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. and other privileges and to his full backwages. a driver of NEECO. Kristel Macatangay. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. Belga's absence for 16 days was justified considering that she had just Irah Burog. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. without being informed of its reason.
were formerly employed by Triad Security as security guards.Labor II to the effectivity of Rep. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. holiday pay. The respondents failed to comply with the order of reinstatement. therefore. Kristel Macatangay. Monina Lagman. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. private respondent Salazar was employed by Globe-Mackay as general systems analyst. Ysan Castillo. therefore. The records of the case reveal that the decision ordered the respondents to reinstate the complainants to their former job as security guards and decreed that respondents shall pay to the complainants further backwages as they accrue until the order of reinstatement is complied with. Act No. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. service incentive leave pay. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. the labor arbiter ordered the reinstatement of respondents and the payment of their backwages until their actual reinstatement and in case reinstatement is no longer viable. insofar as the reinstatement aspect is concerned. Issue: W/N petitioner is still liable for backwages Held: Yes. Charms Haw. Thus. The award of one does not preclude that of the other as this court had. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. namely: backwages and reinstatement. A more equitable settlement. would be an award of separation pay equivalent to at least one month pay for every year of service in addition to his full backwages. Jon Santos. Anna Tetangco 32 . However. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. Ortega (Anna) Facts: Respondents Ortega. even pending appeal. Jake Ng. and attorney's fees. moral and exemplary damages as well as night shift differential. They posit the argument that with respondents' receipt of their separation pay. ordered the payment of both. Petitioners insist that their monetary obligation. Monette Mesa. and claims for 13th month pay. according to petitioners. Dianne Miano. NLRC (Anna) Facts: In May 1982. Alpe Macalalad. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. Ÿ Triad Security vs. allowances and other benefits. Backwages and separation pay are. Respondents filed a complaint for underpayment/nonpayment of salaries. 6715 on March 21. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. 1989 were granted backwages up to three (3) years without deduction or qualification. overtime pay. the payment of separation pay. illegal dismissal. were granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. Heidi Soria. distinct reliefs granted to one who was illegally dismissed from employment. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. respondents' services were terminated without the benefit of notice and hearing. The grant of separation pay does not impede an award for backwages as the latter represents the amount of earnings lost by reason of unjustified dismissal. as contained in the decision of the labor arbiter. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. et al. An illegally dismissed employee is entitled to two reliefs. Under Article 223 of the Labor Code. Though there are specific circumstances where reinstatement is not a practicable remedy. In effect. shall be immediately executory. These are separate and distinct from each other. while those illegally dismissed after. Upon learning of the complaint. In this case. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. Separation pay is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is seeking another employment. In fact. premium pay for holiday and rest day. in proper cases. Ÿ Under the existing law. It must be stressed that the petitioner was charged by the respondent spouses with qualified theft and was even coerced into withdrawing the labor case against them. underpayment or nonpayment of allowance. illegal deductions. No other conclusion may be deduced other than the categorical fact that antagonism already caused a severe strain in the relationship between the respondent spouses and petitioner. had already been fully satisfied. hence." The same provision of the law gives the employer the option of either admitting the employee back to work under the same terms and conditions prevailing before his dismissal or separation from employment or the employer may choose to merely reinstate the employee to the payroll. separation pay. if viable. as when the relations between the employer and employee have been so severely strained that it is no longer fitting to order reinstatement or when the employee decides not to be reinstated. Edlyn Santiago. an illegally dismissed employee is entitled to either reinstatement. complainants' backwages accrued. or separation pay if reinstatement is no longer viable and backwages.
could be returned. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice. looking to the past. there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin. the bank suffered from the danger of financial collapse. Jon Santos. there is every reason for the Republic Planters Bank to reinstate him because there is an "unfilled position more or less of a similar nature as the one previously occupied by the employee. she had every right. reinstatement is not possible . but is now held by the incumbent manager who replaced Luna. (Pheschem Industrial vs. However. but also gives substance and meaning to the protection accorded by the Constitution to labor. to give her back the income lost during the period of unemployment. corporate name. In providing foremost for the reinstatement of an illegally dismissed employee. much less a legal.e. cause for the dismissal of private respondent. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. controlling stockholders. The law mandates the reinstatement of an illegally dismissed employee to his former position. Mercury Drug appealed with the NLRC which held that there was illegal dismissal. Held: In its generally accepted sense. in the former. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. Ysan Castillo. Jake Ng. would perforce make her "whole. for the dictionary meaning of the word "reinstate" is "to restore to a state. There being no evidence to show an authorized. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement. drill press operators. . Monette Mesa. or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. to full backwages. Mercury Drug Corp (Anna). Edlyn Santiago. lathemen. etc. Salazar was placed under preventive suspension for 1 month. Alpe Macalalad. Although the position formerly held by the herein complainant is now held by another. which she subsequently amended to include illegal dismissal. The Court held that "there being no more positions in the machine shop to which the dismissed employee.Labor II to inform her employer. Anna Tetangco 33 . etc. at the time of his reinstatement." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee.) of the old Republic Bank into the present Republic Planters Bank. from which one had been removed" and in the latter. to restore the dismissed employee to her status before she lost her job. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. Moldez) 14. In the case. His services were terminated allegedly for disrespecting his superiors several times. Kristel Macatangay. Monina Lagman. Irah Burog. not only to be entitled to reinstatement. mostly welders. . the position previously held by the complainant Luna was not abolished. Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug. Dianne Miano." Held: By itself. board membership. Despite the widespread restructuring and reorganization following the substantial change in the corporate structure of the former Republic Bank into the present Republic Planters Bank. 13th month pay and damages. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. Issue: W/N the new management is bound to reinstate the employees. Section 4. Reinstatement pre-supposes that the previous position from which one had been removed still exists. It is the return to the position from which he was removed and assuming again the functions of the office already held. tinsmith and carpenters. vacation and sick leave benefits.08 REINSTATEMENT Employee Right Ÿ Quijano v. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Rule 1. reinstatement is a restoration to a state from which one has been removed or separated. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is." Here. Instead of submitting an explanation. but as well. Such disciplinary measure is resorted to for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. to offset the impending financial collapse. Charms Haw. Heidi Soria. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings." And. private respondent filed a complaint against petitioner for illegal suspension. condition. Both remedies. the Labor Code not only recognizes the security of tenure granted by law to regular employees. reinstatement was erroneously ordered for the petitioner's shop was already closed. position. Book VI of the implementing Rules and Regulations of the Labor Code states. unless such position no longer exists." Ÿ Defined Ÿ Union of Supervisors v. to wit: "An employee who is separated from work without just cause should be reinstated to his former position. in the case at bar. Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. However. her eventual separation from employment was not for cause. Also. As a necessary consequence of change of corporate personality (i.
as where reinstatement would only exacerbate the tension and strained relations between the parties. Some unscrupulous employers. petitioner refused to drive for his employer's son. Issue: W/N respondent should be reinstated. Charms Haw. Victory Ricemill (Anna) Facts: Petitioner was truck driver of Victory Ricemill when his services were terminated for notorious acts of insubordination and attempt to kill a fellow employee. on March 26. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. an assurance of continuity in his source of income which a grant of separation pay could not provide. Others are simply an application of the Justinian precept. expedient or practical. 2003 Decision reversing the Decision of the Labor Arbiter. however. to act with justice. authorizes neither oppression nor self-destruction of the employer. And when respondent engaged the services of another driver. embodied in the Civil Code. 2003 (while petitioners' appeal in the NLRC was pending). . The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. Respondent furnished petitioner a written notice of his dismissal. The Constitution bids the State to "afford full protection to labor. we have held that it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed. the date he actually reported back to work. starting June 2002. respondent fell short of the two-notice requirement in dismissing an employee. Ysan Castillo. Not all notice requirements are requirements of due process. He charged petitioner for illegal dismissal. Monette Mesa. However. not to render his act (dismissal or resignation. . the time of dismissal until the court ruling that he was dismissed for a valid cause. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. 282-283. his family to consider. the omission does not render petitioner's dismissal invalid but merely ineffectual. Issue: W/N there was illegal dismissal. the case law developed that where reinstatement is not feasible. petitioner was deprived of the opportunity to respond thereto. The consequence of the failure either of the employer or the employee to live up to this precept is to make him liable in damages. Held: Time and again. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship. While the case was on appeal. 282 (a) of the Labor Code. It is not only because of the law's concern for the workingman. Over the years. The same can be remedied by payment of employee's full backwages from Irah Burog. Jake Ng. especially to a lowly or menial laborer. Consequently. [W]here a penalty less punitive would suffice. Dianne Miano. . Edlyn Santiago. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. Consequently. merely reinstated in the payroll. As the reinstatement aspect is immediately executory even pending appeal by the employer. or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. injuring him and a co-employee who was pacifying petitioner. as the case may be) void. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job. and observe honesty and good faith toward one's fellowmen. In the case at bar. Ÿ Supreme Steel Corp. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. Jon Santos." his illegally dismissed employee should just be given separation pay. have taken advantage of the overgrowth of this doctrine of "strained relations" by using it as a cover to get rid of its employees and thus defeat their right to job security. At any rate. 2001.Labor II Issue: W/N petitioner should be reinstated. And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his interest to do so. The CA reversed the NLRC decision. v. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. At one time. however. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. Monina Lagman. whatever missteps may be committed by labor ought not to be visited with a consequence so severe. Anna Tetangco 34 . Such is the notice requirement in Arts. he was instructed to deliver bags of cement to Felix Hardware but delivered the same to one Eduardo Interior. Held: YES. the NLRC rendered its July 10. Alpe Macalalad. and ordering the dismissal of the complaint. petitioner opted to reinstate respondent in the payroll effective August 23. There is. Heidi Soria. petitioner fought with the latter. the law recognizes the fact that continued employment gives to a worker. Without ruling on the motion. According to respondent. but failed to furnish him written notice apprising him of the charges against him." But it is equally true that "the law. particularly where the illegally dismissed employee held a managerial or key position in the company. Kristel Macatangay. petitioner refused to pay respondent's salary. in protecting the rights of the laborer. In giving an illegally dismissed employee the right to reinstatement. However. it would be more prudent to order payment of separation pay instead of reinstatement. give everyone his due. Held: YES. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. in addition.
otherwise. the burden of proving the just cause of dismissing an employee rests on the employer. as amended by Section 12 of Republic Act No. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment. It was a mere procedural lapse which should not affect his substantive right to reinstatement. He was dismissed from employment. petitioners should not be deprived of their means of livelihood. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. The intent is to balance the scale of justice. she sold the plan to Josefina. Charms Haw. Heidi Soria. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer. In this case. Ysan Castillo. it should have paid his salary during the period of appeal before the NLRC. the Commission's failure. vs. Respondent’s omission to pray for reinstatement in his position paper before the labor arbiter cannot be considered as an implied waiver to be reinstated.. v. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. Anna Tetangco 35 .) Inc. Where a decision may be made to rest [on] informed judgment rather than rigid rules. since private respondent considered them separated from the service. Petitioners question the decision of reinstatement because this was not raised in the pleadings. Under Article 223 of the Labor Code. they had not been paid. Ÿ Panuncillo v. Amending the Labor Code. an award or order of reinstatement is self-executory. Jake Ng. and his failure to do so would result in a finding that the dismissal is not justified. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. 6715. CAP decided to terminate petitioner. NLRC. The reinstatement aspect of the Labor Arbiter's decision. Ÿ Article 223 (3rd paragraph) of the Labor Code. Ÿ Basa's failure to specifically pray for the relief of reinstatement in a complaint which he personally prepared and signed using a standard form prepared by the NLRC Regional Arbitration. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. causing untold hardships to the dismissed employee. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. 6715. in violation of the PAL Code of Discipline. is immediately enforceable. Dianne Miano. the law itself has laid down a Irah Burog. albeit under appeal. Kristel Macatangay. it should not be overlooked that the benefits accorded to labor do not include compelling an employer to retain the services of an employee who has been shown to be a gross liability to the employer. XI. While it is true that compassion and human consideration should guide the disposition of cases involving termination of employment since it affects one's source or means of livelihood. Jon Santos. The rationale of the law has been explained in Aris (Phil. Pheschem Industrial Corp. Branch No. or refusal. Issue: W/N petitioner is entitled for reinstatement. Thus. Because of need. She availed of an educational plan from her employer. However. when petitioner SSPC opted for respondent's payroll reinstatement. the law would readily be circumvented. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. SC held that the dismissal was for a valid cause. she did not transfer the plan in Josefina's name. Held: In termination cases. Monette Mesa. Technicalities have no room in labor cases. It is a settled principle that technicalities have no place in labor cases as rules of procedure are designed primarily to give substance and meaning to the objectives of the Labor Code to accord protection to labor. even if he was instigated to take drugs. to put the two parties on relatively equal positions. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. Effect of failure to ask relief Ÿ General Baptist v. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP. She pledged it to another person who later sold the plan to another.Labor II acceptance of the view that under all circumstances of this case. Josefina went to CAP to ask for help. all the equities of the case must be accorded their due weight. After hearing petitioner's explanation. Nor is this to condone what had been done by them For all this while. it is but a recognition of the inherent economic inequality between labor and management. Monina Lagman. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. Davao City. It should be made clear that when the law tilts the scale of justice in favor of labor. and Section 2 of the NLRC Interim Rules on Appeals under RA No. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. Alpe Macalalad. THereafter. Edlyn Santiago. to timely act on the matter is a serious oversight for which it should be admonished.
an award of separation pay equivalent to 1 month pay for every year of service.. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality.. Ÿ If reinstatement is no longer possible. Ad imposible tenetur. Edlyn Santiago. Monette Mesa. he was not promoted to the position of captain. Then.. in lieu of reinstatement. Heidi Soria. is in order. the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. NLRC. Anna Tetangco 36 . strike... Infante (Alpe) Facts: Respondents were drivers of G & S. seventeen (17) years have elapsed since respondents were illegally dismissed. however. SEC. once more. The law itself can not exact compliance with what is impossible. However. v. Monina Lagman. unless such position no longer exists at the time of his reinstatement. These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force. in lieu of reinstatement. The above-quoted rule enunciates reinstatement as the standard relief. Philippine Airlines..Labor II compassionate policy which. The SC ruled that the dismissal was illegal. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated. pending appeal. a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. the SC resolved the same issue as follows: [T]echnicalities have no room in labor cases where the Rules of Court are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not to defeat them. In Association of Independent Unions in the Philippines v. There is logic in this reasoning of the NLRC." Ÿ PNOC-EDC v. it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. Alpe Macalalad. Jake Ng. more so if he actually rendered services during the period. Charms Haw. the State may authorize an immediate implementation.. In Roquero v. the exclusive taxi concessionaire in NAIA. After completing his training. Inc. of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. the employee is not required to reimburse whatever salary he received for he is entitled to such. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. In short. The SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. Dianne Miano. was deemed more practical and appropriate to all the parties concerned. Hence.. Ysan Castillo. waiving “[a]ll other claims. On the other hand. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. Ÿ G & S Transport Corp. the law itself has determined a sufficiently overwhelming reason for its execution pending appeal . although temporarily since the appeal may be decided in favor of the appellant.. Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. damages and causes of action arising out of the instant case. Kristel Macatangay. the award of separation pay of 1 month salary for each year of service. Ÿ The premise of the award of unpaid salary to respondent is that prior to the reversal by the NLRC of the decision of the Labor Arbiter. Jon Santos.. They were terminated for an allegedly illegal strike. by and pursuant to the same power (police power). If the position is no longer available for any other valid and justifiable reason. v. Labor is an indispensable partner for the nation's progress and stability . vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . Reinstatement to former position. with respect to decisions reinstating employees. 33 Accordingly. Ÿ Airphils Corp. in this case. Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. even if the order of reinstatement of the Labor Arbiter is reversed on appeal. He then filed a Complaint with the Labor Arbiter and argued that the act of APC of withholding his promotion rendered his continued employment with it oppressive and unjust and that Airphils must be held liable for constructive dismissal. which the Constitution also expressly affirms with equal intensity.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists. 4. Although petitioner did not comply with this writ of execution. The SC held that Airphils is liable. an employee who is separated from his employment on a false or nonexistent cause is entitled to be reinstated to his former position because the separation is illegal. given the lapse of considerable time from the occurrence of the Irah Burog.
as an item of relief. of Labor) situation where a peaceful relationship is not feasible. . However considering that petitioner has already reached the statutory retirement age of sixty (60). The relief and transfer order per se did not sever thte employment between the Agency and the complainants. (the former) in whom it has lost confidence. Querimit should be reinstated with backwages. coupled w/ a clear absence of any intention of Irah Burog. v. Edlyn Santiago. Ÿ It would seem. and the . Sec. the petitioner must follow the laws which protect workers and uphold their security of tenure.Labor II Exceptions Business Conditions Ÿ The position of branch manager is one of trust and confidence and therefore the incumbent manager who has won the trust and confidence of the new management by reason of his capability and probity should not be dismissed in favor of one whose competence & integrity the management has not yet tested." Ÿ Espejo v. We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle. The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. . Anna Tetangco 37 . who in turn is not seeking reinstatement. Kristel Macatangay. . (Union of Supervisors vs. . Ÿ There is likewise no basis for the NLRC ruling that Mrs. Monina Lagman. Sec. However. upon reaching sixty (60). NLRC (Alpe) Facts: Espejo worked as general manager for CISP. NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. an employee held to be illegally dismissed cannot be reinstated if he had already reached the age of sixty (60) years at the time of his second complaint (pressing for reinstatement) before the Labor Arbiter's Office. agreement or policy an employee may be retired upon reaching the age of sixty (60) years. Construing this provision. (the employee) can be spared the agony of having to work anew with . Ysan Castillo. .” Issue: Was there an illegal dismissal? Held: Yes. Ÿ Commercial Motors Corp. (latter) does not have to endure the continued service of . in lieu of reinstatement. was terminated after borrowing money from the mother of one of her wards. . The dismissal was declared to be illegal but reinstatement was not awarded. and instead were told that they would be replaced “because [they] are already old. it would be an act of oppression to compel them to return to the status quo ante. Jon Santos. however. But when they reported for work. However. He resigned but later withdrew his resignation. Thus. (the employer) under an atmosphere of antipathy and antagonism. we agree with NLRC that petitioner is entitled only to backwages. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. we held that an employee may retire. Monette Mesa. retirement pay or whatever else is provided under the CBA or employment contract. Heidi Soria. Book VI. Luna can still be reinstated because. or may be retired by his employer. Dianne Miano. . although his previous position is now held by another. the petitioner's contention that Mrs. Charms Haw. NLRC (Alpe) Facts: Querimit. A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. they were not given new assignments. The SC held that she should neither be reinstated nor given backwages because her violation was against the prudence required in her work in the foundation. which requires a deliberate and unjust refusal of an employee to resume his work. the Board considered him terminated and paid his unused vacation leave and transportation expenses. Alpe Macalalad. but still binds the Agency to provide them. NLRC (Eds) Facts: Pursuant to a renewal of a security services contract with Phil-Am Life with a request for the replacement of all security guards in Phil-Am’s offices in certain cities. of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. There is moreover. Querimit in effect waived her right and cannot insist on a literally strict interpretation of procedural due process because she refused to submit herself to an investigation. we cannot compel it to retain employees who commit violations of trust relationships. "so that . upon their reaching the retirement age. There is also no abandonment. As the petitioner appears to have lost its trust in private respondent. Ÿ In such situation. NLRC therefore did not err in denying the reinstatement of petitioner. STRAINED RELATIONS Ÿ Pearl Buck Foundation v. The SC affirmed the non-reinstatement. 13. there is an unfilled position more or less of a similar nature as the one previously occupied. He was asking to be reinstated but this was denied. . Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients. a case worker. of separation pay at the rate of one month's salary for every year of service. Jake Ng. that the circumstances of this case render inappropriate Umlas' reinstatement to his former position.
Jon Santos. The subject of the NLRC decision. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. NCF stopped paying accrued salaries after three installments. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. The agency cannot reassign them to the Client. hoping to obtain assistance.D. The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. Pending appeal. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. the complainants are entitled to reinstatement and backwages. backed by the Faculty Association. Such refusal is indicative of strained relations. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. (Cabatulan v. They reported to the Agency for reassignment several times but were not given any. the employees moved for execution. they refused to be reinstated. The latter do not pray for reinstatement. which was part of her regular working program as a school nurse. Jake Ng. No supervening event rendering execution unjust can be considered. Thus. who in turn filed a complaint against the former for conducting an illegal strike. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. And it was NCF who caused a strain in the relation of the parties. and that she was not entitled to extra compensation for teaching. which has recruited new security guards. The eventual replacement of Fr. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. That is human nature. For filing an LOA and not reporting to work that summer. after which the school served Sibal with a letter of termination effective immediately. Charms Haw. Buat) Ÿ Sibal v. Ÿ Bascon v. she was not paid her vacation pay. Monina Lagman. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. Therefore. though her contract does not require her to do so. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. Anna Tetangco 38 . Howeer. about a month after Sibal’s termination. separation pay is awarded in lieu of reinstatement. refuse to accept other assignments. No strained relations should arise from a valid and legal act of asserting one’s right. MCCH decided to defer Irah Burog. an employee who shall assert his/her right could be easily separated from the service by merely paying his/her separation pay on the pretext that his/her relationship with his/her employer had already become strained… Strained relations. That complainants did not pray for reinstatement is not sufficient proof of abandonment. reinstatement is no longer feasible. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Ysan Castillo. Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. a school nurse at the Notre Dame of Greater Manila. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. and was also assigned to teach health during SY 1981-1982. moved for the ouster of the school director Fr.Labor II returning to his or her work. Issue: Did the petitioners give up their claims for reinstatement? Held: No. Alpe Macalalad. Edlyn Santiago. However. the complainants. He threatened to take drastic measures against her if she kept refusing to report for work the next summer. neither was she compensated for the extra teaching job. then entered into an agreement with NCF for reinstatement. teachers and personnel of the school. backwages and damages against Naga College Foundation. that they are so obnoxious to the person or business of the employer. Garcia for serious charges under P. 176. should be such. Monette Mesa. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC. The school director claimed that the summer was the best time to update the students’ clinical records. Heidi Soria. Dianne Miano. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. which they sought to enforce in the motion for execution was also their reinstatement. but the NLF opposed the same. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. The subject of the compromise agreement was the reinstatement ordered by the ELA. was ordered to work during the summer. Kristel Macatangay. for otherwise. on the other hand. otherwise an employee who shall assert his right could be easily separated from the service. Sibal filed a complaint for non-payment of compensation and vacation pay. reinstatement. in fact. tranquility which is an ideal atmosphere in every workplace. Otherwise. Ÿ As a necessary consequence for the illegal dismissal. antagonism is likely to have already caused a severe strain in the relationship between them. There is no basis for the ruling of the NLRC. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. Petitioners resorted to the NLRC because they were frustrated at the undue delay in the resolution of their motions by the ELA and turned to NLRC.
Monette Mesa. whose position is one of trust and confidence. She also alleged sexual harrassment on the part of her Senior Manager. She asked to be considered on leave since then. an unjustly dismissed employee can never be reinstated. Here. Ÿ Mere payment of severance pay. then a 12-day vacation leave. Jr. Besides. Before the expiration of the 12 day vacation leave. Mere allegation of strained relations to bar reinstatement is frowned upon. otherwise. Here. Instead. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch. respectively. There must be proof of such illegal acts. He was told to report back for work.. Heidi Soria. Ÿ Acesite Corp. an ordinary striking worker must have participated in the commission of illegal acts during the strike. Alpe Macalalad. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. however. then an order to desist from participating in the mass actions.” and the phrase cannot be given an overarching interpretation. They cannot also be considered as willful disobedience as they are not characterized by a perverse mental attitude on the part of petitioners in disobeying their employer’s order. Petitioners denied receiving said orders. Edlyn Santiago. It has been almost a decade since the incident that led to Uy’s dismissal. Issue: Was Gonzales illegally dismissed? Held: Yes. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. and thus. NLRC (Eds) Facts: Due to a severe stomach disorder. Charms Haw. Thus. otherwise. Neither can be construed as illegal acts. have no prerogative in the operation of the business. an employee who shall assert his right could be easily separated from the service by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. which was not approved. Otherwise. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). Dr. or whose differences with their employer are of such nature or degree as to preclude reinstatement. Kristel Macatangay. CA (Eds) Ÿ Irah Burog. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. he being in charge of the over-all security of the hotel.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA. reinstatement is no longer possible. Petitioners herein are nurse and nursing aide. no strained relations should arise from a valid and legal act of asserting one’s right. In order to be justly terminated. The other involved parties have long been assigned in another area or are no longer connected with BPI. Monina Lagman. Issue: Was there illegal dismissal? Held: Yes. v. Anna Tetangco 39 . Leo Gonzales. There now appears no basis for strained relations between the present management and Uy. petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. and that she could not transfer as there was no proper turnover of her accountabilities. He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work. Dianne Miano. cannot be applied indiscriminately. and were subsequently terminated from employment. former teller of BPI. Uy refused. the latter filed a notice of strike. Ÿ In illegal dismissal cases. but he failed to do so. Ysan Castillo. who would not have helped him cover up his absences Ÿ BPI Employees Union v. saying she would await the result of the grievance proceeding filed by her union. Ÿ The doctrine of “strained relations” is inapplicable to a situation where the employee has no say in the operation of the employer’s business. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. thereby using up all leaves he was entitled to for the year. otherwise. He must therefore be paid separation pay of 1 month for every year of service instead. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation.” This may be invoked against employees whose positions demand trust and confidence. The principle of strained relations. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. Sagum v. Every labor dispute almost always result in “strained relations. Jon Santos. MCCH issued a notice of investigation. Laureano Gonzales. took a 4-day sick leave. Upon being notified of the mass actions. Union members and officers staged mass actions inside the MCCH premises. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. BPI (Eds) Facts: For shouting at her Senior Manager. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Gonzales was Chief of Security. A complaint for illegal dismissal was filed. Zenaida Uy. which she could not do so since she had been barred from entering the bank premises. and requested to be transferred to the Taft Ave. which was denied. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. he filed for a 10-day emergency leave. Petitioners are entitled to reinstatement with full backwages. Jake Ng. especially in the light that the same was issued by his rival in the political arena. But he is not entitled to reinstatement. The medical certificate also proves that he was indisposed during the period in controversy. Branch to save on gas expenses. is allowed. then an emergency leave. That is human nature.
are entitled to backwages up to 3 years without deduction or qualification. de Jesus worked on P. and that such was being undertaken by JDI’s sales rep. Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. She was preventively suspended for 30 days. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC." and the phrase cannot be given an overarching interpretation. The owner of said articles was Donato. Issue: Was there illegal dismissal? Held: Yes. reinstatement is not warranted. 3853.. No. de Jesus is petitioners' reviser/trimmer since 1980. 279 of the Labor Code. blended. while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. The finding by the CA of strained relations does not have any basis on the records. an unjustly dismissed employee can never be reinstated. and to deny an employee’s right to be reinstated on the basis of the mere consistency of the employer’s stand that the dismissal was for cause is to make a mockery of the right of reinstatement under Art. as evidenced by the subsequent judicial order releasing the articles seized during the search. Ysan Castillo. the principle of strained relations cannot be applied indiscriminately. otherwise. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P. a fraction of at least 6 months being considered as one whole year. Dianne Miano. packed and distributed. On August 15. especially where said employee holds a faithful and an untarnished twelveyear service record. Three days later. No. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. de Jesus based her assigned work on a paper note posted by petitioners. One company. argued and proven before the Labor Arbiter. Number.O. 3853 as it has the same style and design as P.O. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. Sagum is correct that mere persistency in argument does not amount to proof. 1992. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs. Ÿ Employees illegally dismissed before March 21. then terminated for gross negligence and loss of trust and confidence for alleged anomalies concerning the bidding of the printing of Part I of the Philippine Electrical Code. not to mention the considerable length of time Reyes has been out of JDI’s employ. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming that the same work was to be done with P. In addition to backwages. Jon Santos.O. There are no hard facts upon which to base the application of the doctrine of strained relationship. 1992.O. de Jesus received from petitioners' personnel manager a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P. While an employer has the inherent right to discipline its employees. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. Heidi Soria. Here. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. Every labor dispute almost always results in "strained relations. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. but not for dishonesty or tampering. filed a complaint for illegal dismissal against IIEE and its officers. terminated her from employment and sent her a notice of termination dated September 18. Alpe Macalalad. Sagum’s dismissal was subsequently declared illegal. As reviser/trimmer. Anna Tetangco 40 . The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. de Jesus maintained that she merely committed a mistake in trimming P.O. we have always held Irah Burog. 3853 allegedly required no trimming. The three year period wherein backwages are awarded must be included in the computation of separation pay. Monette Mesa. To protect labor's security of tenure. who was the legal tenant of the apartment. Virgilio Reyes. Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. In her handwritten explanation. Monina Lagman. Kristel Macatangay. Edlyn Santiago. if feasible. or separation pay. 1989. if reinstatement is no longer viable.NLRC (Charms) Facts: Private respondent Lourdes A.O.Labor II Facts: Marilyn Sagum. Ÿ The existence of strained relations is a factual finding and should be initially raised. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes. Held: There was illegal dismissal. No. 3853 by trimming the cloths' ribs. Petitioners' personnel department. nonetheless. Jake Ng. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v. Inc. Moreover. Reyes’ brother. was allegedly consistently being awarded majority of the printing contracts of IIEE. was being illegally manufactured. they are entitled to either reinstatement. No. No. Charms Haw. DBR. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils. Reyes.
The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory. Negros Occidental. the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. Tanpiengco has since then become a regular employee. The Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco. i. reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993. Ÿ Intl. Moreover. after a brief suspension. The rights of an employee to reinstatement and to grant of back wages do not depend on the status of his employment prior to his dismissal but rather to the legality and validity of his termination. Jake Ng. On October 20. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions.e. petitioner must pay the salary of Tanpiengco which automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. On 30 April 1990. He was accosted by a security guard allegedly for behaving suspiciously. Jon Santos. meaning that it does not require a writ of execution much less a motion for its issuance." T-shirt valued at P100. Kristel Macatangay. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. In either instance. tucked it at his waist and proceeded to the washroom. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. petitioner as the employer was duty-bound to choose forthwith whether to readmit Tanpiengco or to reinstate him in the payroll and to inform Tanpiengco of its choice to enable the latter to act accordingly. Dianne Miano. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. Anna Tetangco 41 . as maintained by petitioner. Held: The NLRC correctly labeled petitioner as a project employee. dishonesty and theft of property. Falling to exercise the options in the alternative. i. The provision of Art. The fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime. 1993. which he allegedly committed. even illegally. When it was time for him to clean himself he took his T-shirt which was hanging from a post. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages. Edlyn Santiago. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician. An award for reinstatement is self-executory. Ÿ As a consequence of this. However. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223. but they also ignored the due process requirement of the law. even pending appeal. The notification is based on practical considerations for without notice. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. he admitted to the investigating officer that he took the "Gesim Corp. All the three employment contracts signed by him stipulated that he was employed by private respondents to work in their Geothermal Agro-Industrial Demonstration Plant Project in Valencia. Alpe Macalalad. but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. the NLRC failed to act on Tanpiengco's motion for the issuance of a writ to execute the Labor Arbiter's reinstatement order. Held: There was illegal dismissal and therefore should be reinstated. An application for a writ of execution and its issuance could be delayed for numerous reasons. to make an award of reinstatement immediately enforceable. on 28 October 1993. 223 is clear that an award for Ÿ Kiamco vs.00.. Ysan Castillo.Labor II that this right must always be exercised humanely." from one of the balikbayan boxes inside the container yard. Heidi Soria. Thus. the employee has no way of knowing if he has to report for work or not. The reason is simple. Container Services vs. for some inexplicable reasons. In the instant case. Finding petitioner's explanation unsatisfactory. The legislative intent is quite obvious. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction.. Monette Mesa. even if the employment contract signed by petitioner fixed the term of his employment. Petitioner reported back to work but was prevented from entering the company premises. the employer has to inform the employee of his choice. the immediate execution of a reinstatement order. Charms Haw. private respondents did not conduct any investigation contending that it was not necessary since petitioner had ceased to be an employee ipso facto upon the expiration of his employment contract on 30 November 1993. According to petitioner. Monina Lagman.e. private respondents. The Commission's inaction is a serious oversight for which it should be admonished. On 7 March 1990 Tanpiengco was assigned at Bodega I.
the amount of monetary award due respondent Sadac is P2. petitioner Bank terminated the services of respondent Sadac. either by virtue of a lawful decree or order. In reaction thereto. Petitioner’s claim. when he was dismissed illegally. Heidi Soria. in the absence of any valid reason to terminate him. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. Alpe Macalalad. it maintained. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. petitioner Bank be ordered forever released from liability under said judgment.59. his monthly compensation amounted to P29. he posited.98 only. Respondent Sadac theorized that he started with a monthly compensation of P12. As of November 1989. The outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment. representing his backwages and other benefits. Consequently. Pursuant thereto. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. the Court had the opportunity to elucidate on the reason for the grant of backwages. were unsubstantiated. thus. however. hence. Jake Ng. Per its computation. it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. Anna Tetangco 42 . On the ground of lack of confidence in respondent Sadac. inter alia. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. private respondents should have retained his services until the actual completion of the project. The difference. as in the case of one’s salary or wage. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. the total amount of the monetary award is P6. they held respondent Sadac’s dismissal illegal. or by rightful expectation. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. as in the case of a wage increase under a wage order. and. As held by the Court of Appeals. in a letter-petition to the Chairman of the Board of Directors. however. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. Monette Mesa. petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. under the rules of client and lawyer relationship. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. nine lawyers of petitioner Bank’s Legal Department. failed to show proof as to when the project was completed. It was similarly found that petitioner Bank disregarded the procedural requirements in terminating respondent Sadac’s employment as so required by Section 2 and Section 5. Petitioner was specifically assigned to work in a particular project. Irah Burog. Private respondents. the mere fact that petitioner had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and. claiming that the association between the parties was one of a client-lawyer relationship. we did not permit petitioner Bank to rely on Sec. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. Edlyn Santiago.030. Rule XIV. inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under the law. it could terminate at any time the services of respondent Sadac. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased.442. Jon Santos. On 26 June 1989. Rule 138 of the Rules of Court. Ysan Castillo. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. Such decision became final and executory. Petitioner Bank disputed respondent Sadac’s computation. In a previous SC decision.00 or more than twice his original compensation. Therefore. petitioned for a change in leadership of the department. however. Kristel Macatangay. including the general increases which he should have earned during the period of his illegal termination. Charms Haw.981. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work.00 in August 1981. on 10 August 1989.456. After learning of the filing of the complaint. Likewise.Labor II expiration thereof. accused respondent Sadac of abusive conduct. Moreover.365. Held: Are annual general increases in basic salary deemed component in the computation of full backwages? The weight of authority leans in petitioner Bank’s favor and against respondent Sadac’s claim for the inclusion of general increases in the computation of his backwages. to the exclusion of the latter’s general salary increases and other claimed benefits which. Finally. Monina Lagman. The base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employee’s dismissal. 26. is based simply on expectancy or his assumption that. In several cases. and ultimately. They said that the existence of the employer-employee relationship between petitioner Bank and respondent Sadac had been duly established bringing the case within the coverage of the Labor Code. therefore. Dianne Miano. and subsequently General Counsel thereof.500. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. qualify for the said increase later. Ÿ Equitable Banking vs. Book V of the Implementing Rules of the Labor Code. Per respondent Sadac’s computation. On 9 November 1989.
not on a probationary status. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. Charms Haw. Nor is it a redress of a private right but. 1990. illegal dismissal. Jake Ng.Labor II In short. Esther Reyes on a contract basis. That respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. Accordingly. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. She hired private respondent. Ysan Castillo. Ÿ St. refer to his supposed earnings had he not been illegally dismissed. Moreover. Monette Mesa. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. they were. Theresa's School of Novaliches Foundation. Edlyn Santiago. But where. etc. petitioners were allowed by the private respondent to work until January 2. Backwages are generally granted on grounds of equity. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former's unlawful act or bad faith. underpayment of wages and claim for indemnity against private respondent. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. there is no vested right to salary increases. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. With the continuation of their employment beyond the original term. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. Moreover. Nature . not merely probationary. 1990. but awarded private respondent partial backwages. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. Thus. Ÿ When the term "backwages" was used in the NLRC decision. Dianne Miano. Anna Tetangco 43 . on the other hand. 1991. what was actually meant was unpaid salaries. Jon Santos. she found out that her table. NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. NLRC (Charms) Irah Burog. private respondent invoked Article 283 of the Labor Code. On the other hand. NLRC) Ÿ Viernes vs. (General Baptist Bible College vs. According to the Court. therefore. The Labor Arbiter declared private respondent's dismissal as illegal and ordered her reinstated and paid full backwages and damages. the Court held that petitioners are entitled to full backwages. the fact that the petitioners were allowed to continue working after the expiration of their employment contract was evidence of the necessity and desirability of their service to private respondent's business. Thus. On January 3. When private respondent reported for work. Monina Lagman. ordered their reinstatement to their former position or to any equivalent position with payment of backwages limited to one year and deleted the award of indemnity and attorney's fees. She instituted a complaint for unfair labor practice. Backwages. 1991. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. Petitioners contended that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. It held that after October 31. against herein petitioners before the Labor Arbiter. rather. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. It is not private compensation or damages. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. the dismissal has been adjudged valid and lawful. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. Despite the expiration of their employment contract. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. petitioners separately filed complaints for illegal dismissal. When private respondent became ill. entitled to be reinstated to their former position as regular employees. inclusive of allowances and to their other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement.Purpose Ÿ Tomas Claudio Memorial College vs. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Alpe Macalalad. Heidi Soria. but as regular employees. The NLRC reversed the decision of the Labor Arbiter. Kristel Macatangay. which pertain to compensation due the employee for services actually rendered before termination. petitioners have become full-fledged regular employees. The Labor Arbiter dismissed the complaints. On appeal. the employment of petitioners is no longer on a fixed term basis. the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. private respondent terminated petitioners' employment. Theresa’s School vs. she went on a leave of absence with the approval by petitioner.
there can be no backwages even if she was denied due process. The private respondent has not yet been convicted by final judgment in Criminal Case No. respondent was detained from June 10. been entitled to reinstatement as a consequence of his illegal dismissal from employment. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. Edlyn Santiago. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. inclusive of allowances. The petitioner insists that backwages should not and cannot be awarded to the private respondent. he was promoted as "Liaison Officer" of the school with the Department of Education. Indeed. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. Held: The issue is whether the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed petitioner's claim for separation pay. and non-payment of wages or commission and separation pay. the petitioner. hence entitled to separation pay. otherwise she would be unjustly enriching herself at the expense of the employer. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. However. A criminal complaint was later filed against him.Labor II Facts: Sometime in 1983. allowances and damages. likewise. 1996 to February 17. where it held that when the employee's dismissal is for a just cause. Anna Tetangco 44 . The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail. sent a Memorandum to the private respondent informing him that his employment was already terminated. premium pay for holiday and rest day. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. It is a form of relief that restores the income lost by reason of unlawful dismissal. Petitioner would have. for lack of merit. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. Labor Arbiter Dennis D. On 7 August 1992. The award of backwages is not conditioned on the employee’s ability or inability to. but is awarded in furtherance and effectuation of the public objective of the Labor Code. Kristel Macatangay. On June 10. without any warrant therefor. Thus. 1996. Held: Grant of backwages proper. 5251. Trinidad. he is presumed innocent until his guilt is proved beyond reasonable doubt. through its president. back wages. 1996 until the judgment of the CA shall have become final and executory. This is because the private. petitioner charged private respondent Emmanuel Lo with unfair labor practice. he is deemed to have opted for Irah Burog. Monette Mesa. Conformably then with Article 279 of the Labor Code. but rejected the charge of unfair labor practice and dismissed. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. Aladdin F. 5137. Ÿ The payment of backwages is generally granted on the ground of equity. earn any income. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. non-payment of overtime pay. but it is rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former’s unlawful act or bad faith. In the interim. The private respondent would thereby be enriching himself at the expense of the petitioner. by expressly asking for separation pay. Charms Haw. earn any income. While it may be true that on June 11. 1996 up to July 5. legal holiday pay. Dianne Miano. 6425). the private respondent was arrested by the Morong police authorities. Alpe Macalalad. petitioner's other monetary claims. Ysan Castillo. In time. 1996. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. Jon Santos. The grant thereof is intended to restore the earnings that would have accrued to the dismissed employee during the period of dismissal until it is determined that the termination of employment is for a just cause. The award of backwages is not conditioned on the employee's ability or inability to. The issue is whether the CA committed a grave abuse of discretion amounting to excess or lack of jurisdiction when it modified the decision of the NLRC and ordered the petitioner to pay backwages to the private respondent. Jake Ng. for violation of the Dangerous Drugs Act (Republic Act No. and from November 21. the failure to claim back wages in a complaint for illegal dismissal has been held to be a mere procedural lapse which cannot defeat a right granted under substantive law. illegal dismissal. Rizal. Juanon rendered a decision dismissing the complaint for lack of merit due to the absence of an employer-employee relationship between petitioner and private respondent. The petitioner avers that the CA acted with grave abuse of discretion amounting to excess or lack of jurisdiction when the CA ordered the petitioner to pay backwages to the private respondent from June 13. underpayment of salary. in the interim. in the interim. the private respondent was detained in Criminal Case No. NLRC (Charms) Facts: In a complaint filed before the NLRC. Monina Lagman. Nor is it a redress of a private right. after appropriate proceedings. 1996. 1997 for violations of the Dangerous Drugs Act. NLRC. Heidi Soria. since it would include that period of time when the latter was in jail. It is not a private compensation or damages. he is entitled to an award of back wages since the Article expressly mandates that an employee who is unjustly dismissed from work shall be entitle to reinstatement without loss of seniority rights and other privileges and to full back wages.
Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself. with respect to the activity in which they are employed. Alpe Macalalad. And these. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. Jon Santos. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. and (3) clerical errors. amounts to a "plain error" which we may rectify in this petition. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. Ÿ The Court. although Dagui did not bring any appeal regarding the matter. This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. In other words. could have been done only after the finality of this decision affirming the finding of the labor arbiter and the NLRC that petitioner was illegally dismissed from his employment by private respondent. Both bear the Irah Burog. (2) plain errors not specified. and (2) those who have rendered at least one year of service. There are two kinds of regular employees. Dagui was dismissed. They are separate and distinct from each other. Monina Lagman. it is conducive to lack of initiative on the part of a laborer. Rules of procedure are mere tools designed to facilitate the attainment of justice. Monette Mesa. Heidi Soria. The Supreme Court is clothed with ample authority to review matters. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. While as a general rule a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below. law and jurisprudence authorize a tribunal to consider errors. the deduction should be made up to the time judgment becomes final. NLRC (Monette) Facts: Honorio Dagui was hired by the Tanjangcos to take charge of the maintenance and repair of the Tanjangco apartments and residential buildings in 1953 until 1982. there is the "law's abhorrence for double compensation. with folded arms. Should the laborer decide that it is preferable not to return to work. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages." on the alleged ground that his work was unsatisfactory. In the event that reinstatement is no longer possible. whether continuous or broken.Labor II separation pay in lieu of reinstatement. although unassigned. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter. in mitigation of the damages that the dismissed respondents are entitled to. In this case. if viable. and (2) backwages. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. remain inactive in the expectation that a windfall would come to him. or separation pay if reinstatement is no longer viable. an illegally dismissed employee is entitled to (1) either reinstatement. separation pay is awarded to the employee. Likewise. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. vs. Anna Tetangco 45 . Period. Held: Yes to both. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. Dianne Miano. Kristel Macatangay. the employer said "Wala ka nang trabaho mula ngayon. Thus. Ysan Castillo. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. beginning 1953 until 1982. however. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. in the interest of substantial justice. No backwages were awarded. Besides. Suddenly. We are prompted to give out this last reminder because it is really unjust that a discharged employee should. As regards separation pay. To be deducted from the back wages accruing to each of the laborers to be reinstated is the total amount of earnings obtained by him from other employment(s) from the date of dismissal to the date of reinstatement.Computation Ÿ First. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. plumber. A contrary view would breed idleness. who is legally entitled thereto having been illegally dismissed. even if they are not assigned as errors on appeal. and the filing of this case. These twin requirements of notice and hearing were undeniably absent in the case at bar. if it finds that their consideration is necessary in arriving at a just decision of the case. Charms Haw. as in this case. The award of separation pay is in lieu of reinstatement and not of backwages. Effect Failure to Order Ÿ Aurora Land etc. that is. carpenter. The jobs assigned to private respondent as maintenance man. Jake Ng. Edlyn Santiago. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. To be reckoned for the former is the period of putative service." Second. without giving him any written notice informing the cause for his termination.
Jake Ng. and fifteen days without further disqualifications. which may delay the execution of the decision." that is to say. remain inactive in the expectation that a windfall would come to him" and therefore directed that "in mitigation of the damages that the dismissed respondents (employees) are entitled to.As has been noted. however. CIR 1974) arbitrary procedures (in the Mercury case. As to the amount of backwages. However. Justice Teehankee concurs in the ruling that there shouldn’t be a deduction of earnings elsewhere from the backwages awarded.. The period of delay in instituting this ULP charge with claim for reinstatement and back wages. He suggested that instead of Irah Burog. Such general awards. it is to be noted that unscrupulous employers have with unrelenting attrition against their unwanted employees who successfully obtained judgments For reinstatement with back wages seized upon the further proceedings in the industrial court (to determine the actual earnings of their wrongfully dismissed employees for purposes of deduction from the back wages award) to bold unduly protracted and extended hearings for each and every employee found entitled to back wages and thereby practically render nugatory such judgments and force the employees to agree to unconscionable settlements of their judgment award. As aforestated. Monina Lagman. is four years. remain inactive in the expectation that a windfall would come to him" and attrition and protracted delay in satisfying such award on the part of unscrupulous employers who have seized upon the further proceedings to determine the actual earnings of the wrongfully dismissed or laid-off employees to hold unduly extended hearings for each and every employee awarded backwages and thereby render practically nugatory such award and compel the employees to agree to unconscionable settlements of their backwages award in order to satisfy their dire need. although within the prescriptive period. the period was based on the remainder of the 4 year prescriptive period). and thus obviate the twin evils of idleness on the part of the employees and attrition and undue delay in satisfying the award on the part of the employer is thus to be hailed as a realistic. Ysan Castillo. vs. the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. from the specific result in the Ÿ *** Basically. Jon Santos.Labor II stamp of undesirability. Ÿ TEEHANKEE. In order that the employee however should be relieved from proving his income during the period he was out of the service and the employer from submitting counter-proofs. Edlyn Santiago. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms. 11 months and 15 days in the case at bar) "without further qualifications. Dianne Miano. Anna Tetangco 46 . On the other hand. the Court applies the precedent recently set in Mercury Drug. CIR of fixing the amount of backwages to a just and reasonable level without qualification or deduction so as to avoid protracted delay in the execution of the award for backwages due to extended hearings and unavoidable delays and difficulties encountered in determining the earnings of the laid-off employees ordered to be reinstated with backwages during the pendency of the case for purposes of deducting the same from the gross backwages awarded. and obviates the twin evils of idleness on the part of the employee who would "with folded arms. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. J. Itogon-Suyoc vs. eleven months.. due to protracted hearings and unavoidable delays and difficulties encountered in determining the earnings of the laid-off employees during the pendency of the case. Heidi Soria. Rationale. Charms Haw. generally led to long delays in the execution of the decision for back wages and reinstatement. should be deducted from the liability of the employer to him for back wages. concurring opinion: (Mercury Drug rule) I particularly endorse the new formula reached by the Court in ordering that respondent be paid a fixed amount of back wages (equivalent to 1 year. Monette Mesa. 1961. he dissents as to the period of computation. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. As observed by the Court in another case. this formula of awarding reasonable net backwages without deduction or qualification relieves the employees from proving or disproving their earnings during their lay-off and the employers from submitting counterproofs. Co. (Mercury Drug vs. reasonable and mutually beneficial solution. dissenting opinion:(Mercury Drug rule) I dissent. without having to determine and deduct earnings from the general award of back wages from date of unlawful dismissal until actual reinstatement heretofore customarily made in such unfair labor practice and reinstatement cases. Alpe Macalalad. Sangilo1968 Ÿ It should be noted that private respondent Dayao filed his ULP charge with reinstatement and back wages about two years and fifteen days after his separation on April 10. Kristel Macatangay. as noted in the main opinion. This new principle formally adopted by the Court now in fixing the amount of back wages at a reasonable level without qualification and deduction so as to relieve the employees from proving their earnings during their layoffs and the employer from submitting counter-proofs. J.
Edlyn Santiago. Ysan Castillo. Kristel Macatangay. when it is considered that he pursued — with vigor his complaint after its filing on April 25. such was necessary to effectuate the policies of the Industrial Peace Act. I believe that some ground rules should be laid down in implementing the new formula now adopted of granting a fixed back wages award without further qualification and deduction of earnings during the lay-off so as to expedite the immediate execution of judgment in satisfaction of the award and for reinstatement of the wrongfully dismissed employee(s) (whose reinstatement. there was no illegal dismissal. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17. 1964 denying petitioner's motion for reconsideration. Due to the expiration of private respondents' contracts and their poor performance as teachers. Anna Tetangco 47 . they cannot be removed from their positions unless for cause. if any. subject to deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances (e. I submit that the minimum award to which respondent is entitled should be at the very least the equivalent of the proposed base figure of three years pay. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). As probationary employees. in the opinion of the Court of Industrial Relations (CIR). and decision in this Court). the law abhors double compensation. With respect to private respondents who did not sign any contract fixing the periods of their employment nor to have knowingly and voluntarily agreed upon fixed periods of employment. Alpe Macalalad. the trial of the case and resolution of the appeal should be given preference and terminated within a period of three years (one year for trial and decision in the industrial court and two years for briefs. backpay (the same as backwages) could be awarded where.g. Monette Mesa. Jon Santos.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not. and that was. Charms Haw. The very same opinion found that such delay "is not an unreasonable period of time under the circumstances" and it should follow that such delay should in no manner prejudice the amount of the back wages award justly due respondent — particularly. as stressed in East Asiatic Co. Hence. Normally.. Thus. All the private respondents. except Roland Picart and Lucia Chan. should be deducted therefrom. they are likewise protected by the security of tenure provision of the Constitution. 11 months and 15 days . where resolution of the case on appeal was delayed without fault of the parties but the facts and circumstances clearly show the lack of merit in the appeal taken by the employerpetitioner and its stubborn insistence on depriving respondent and his co-employees of the extra compensation for Sunday and holiday work justly due them. in ascertaining the total amount of backwages payable to them. Monina Lagman. The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence. they were notified of petitioners' decision not to renew their contracts anymore. In addition. Ÿ Pines City Educational Center vs.. History of the different methods in the computation of backwages. Thus. Consequently. Dianne Miano. etc. we go back to the rule prior to the Mercury Drug rule that the total amount derived from employment elsewhere by the employee from the date of dismissal up to the date of reinstatement.which is apparently premised arbitrarily on granting respondent back wages only for the remainder of the four-year prescriptive period after deducting the 2 years and 15 days delay incurred by respondent after his discharge in filing his complaint for unfair labor practice and reinstatement. the Industrial Peace Act. Employers should be put on notice as a deterrent that if they pursue manifestly dilatory and unmeritorious appeals and thus delay satisfaction of the judgment justly due their employee(s). In accordance with these provisions. 1964 and its en banc resolution of February 25. 875. NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. Only in one case was backpay a matter of right. Heidi Soria. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts. There is absolutely nothing in the record which will show that the complainants were afforded even an iota of chance to refute allegations that the complainants did not meet the reasonable standards and criteria set by the school. Jake Ng. oppression or dilatory appeals) on the employer's part. signed contracts of employment with petitioner for a fixed duration. Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer. a case for illegal dismissal was filed. a) The first labor relations law governing the award of backwages was Republic Act No. supra. petitioners had the burden of proving that the termination of their services was legal. an award of back wages equivalent to three years (where the case is not terminated sooner) should serve as the base figure for such awards without deduction. Here. they run the risk of exemplary and punitive damages being assessed against them by way of an increased award of back wages to the wrongfully discharged employee(s) commensurate to the delay caused by the appeal process. Ÿ However. when an employer had declared a Ÿ Irah Burog.
Thus. Ysan Castillo. Charms Haw. the Court still followed the Mercury Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere by the employee during the period of illegal dismissal. this Court acknowledged and upheld the CIR's authority to deduct any amount from the employee's backwages including the discretion to reduce such award of backwages by whatever earnings were obtained by the employee elsewhere during the period of his illegal dismissal. as a general rule. This ruling was grounded upon considerations of expediency in the execution of the decision. or the probability that the employee could have realized net earnings from outside employment if he had exercised due diligence to search for outside employment. Anna Tetangco 48 . 442) had taken effect. The Court deems it appropriate. the good faith of the employer. A survey of cases from 1974 until 1989. After the Labor Code (P. should not." However. backwages to be awarded to an illegally dismissed employee. (See Itogon-Suyoc case). 442 (the Labor Code of the Philippines). was nonetheless followed in said case. and to his other benefits or their monetary equivalent computed from the time his compensation is withheld from him up to the time of his actual reinstatement. 279. Monette Mesa.D. . Heidi Soria. No. during the effectivity of P." (italics supplied) In accordance with the above provision. the rule generally applied by the Court after the promulgation of the Mercury Drug case. This notwithstanding. supports this conclusion. qualified the provision under P. amending the Labor Code. 875. this Court found occasion in the case of Mercury Drug Co. 11 months and 15 days which represented the remainder of the prescriptive period after deducting the period corresponding to the delay incurred by the employee in filing the complaint for unfair labor practice and reinstatement. 6715. Security of Tenure. 442 by limiting the award of backwages to three (3) years. Article 279 thereof states in part: “ART. when the amendatory law to P. in the exercise of its jurisdiction. In an even later case (1987). An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his backwages computed from the time his compensation was withheld from him up to the time of his reinstatement. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. the Court declared that the general principle is that an employee is entitled to receive as backwages all the amounts he may have received from the date of his dismissal up to the time of his reinstatement. No.The proposal on the threeyear backwages was subsequently adopted in later cases. Monina Lagman. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. e) On 21 March 1989. namely. the CIR increased or diminished the award of backpay. 442. However. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep. as amended. et al.A No.. Jon Santos. an illegally dismissed employee is entitled to his full backwages from the time his compensation was withheld from him (which as a rule is from the time of his illegal dismissal) up to the time of his actual reinstatement. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages.. v. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. among them. The law specifically declared that the award of backwages was to be computed from the time compensation was withheld from the employee up to the time of his reinstatement. reasonable and mutually beneficial solution" and "thus obviates the twin evils of idleness on the part of the employees and attrition and undue delay in satisfying the award on the part of the employer. 442 was still the Mercury Drug rule.A. inclusive of allowances. d) Then came Presidential Decree No. depending on several circumstances. among them. From this ruling came the burden of disposing of an illegal dismissal case on its merits and of determining whether or not the computation of the award of backwages is correct. Kristel Macatangay. 6715 took effect. 279. — In case of regular employment. without qualification or deduction. No. .D. Republic Act No. Dianne Miano.D. — . Inc. 442. in effect. Edlyn Santiago. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee. Alpe Macalalad. was expressed as follows: “ART. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. et al. (italics supplied). Jake Ng." Under the abovequoted provision.D.In order not to unduly delay the disposition of illegal dismissal cases. the Court enforced the Mercury Drug rule and. CIR. In labor cases decided during the effectivity of R. however.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. above-quoted. Act No. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. and during the effectivity of P. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). In sum. 6715 took effect. Security of Tenure. the employee's employment in other establishments during the period of illegal dismissal. it became mandatory to award backwages to illegally dismissed regular employees. No. the award of backwages equivalent to three (3) years. b) Mercury Drug rule. Feati University Faculty Club (PAFLU) v. Its posture on the award of backwages. Feati University (1974) and others. R. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). No.D.
First. the following elements and process must obtain: first. We held in said case that an illegally dismissed government employee who is later ordered reinstated is entitled to backwages and other monetary benefits from the time of her illegal dismissal up to her reinstatement. requiring her to undergo psychiatric evaluation. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule. Bustamante vs. We now turn to the second issue raised. while litigating the legality (illegality) of his dismissal. as amended by Republic Act No. Jake Ng. whether the Labor Arbiter correctly awarded full backwages to Timbal. Del Monte cites a jurisprudential rule that an employer who acted in good faith in dismissing employees on the basis of a closed-shop provision may not be penalized even if the dismissal were illegal. the award of backwages and other monetary benefits should not be limited to 5 years and must therefore be modified in line with the recent case of Civil Service Commission v. Gentallan. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages." Thus. informing the subject of his separation from the service due to mental incapacity. as confirmed by the head of office.. Ysan Castillo. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. The clear legislative intent of the amendment in Rep. Heidi Soria. where reinstatement is adjudged. during said periods. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance. respondent sufficiently established that petitioner suffers from a mental disorder.1996 Ÿ Romagos vs. Ÿ However. 6715. plain and free from ambiguity and. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Monette Mesa. Charms Haw. as amended by Republic Act No. the factual bases relied upon by respondent in declaring petitioner mentally unfit to work appear inadequate as they failed to comply with the elements and processes of the law. Act No. However. inclusive of allowances. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. the provision calling for "full backwages" to illegally dismissed employees is clear. third.Labor II during the period of his illegal dismissal.e. must still earn a living to support himself and family. which took effect just five (5) days after Soriano was promulgated. Edlyn Santiago. before an officer or employee may be dropped from the rolls for mental incapacity. Such a doctrine is admittedly supported by the early case of National Labor Union v. Monina Lagman. Thus. while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. but Ÿ Irah Burog. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. 6715. Dianne Miano. and finally. Respondent issued to petitioner a letter. The underlying reason for this ruling is that the employee. Act No. Zip Venetian Blind and the later decision in 1989 of Soriano v. describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. It is now provided in the Labor Code that "[a]n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. However. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. therefore. the award of backwages and other benefits continues beyond the date of the labor arbiter's decision ordering reinstatement and extends up to the time said order of reinstatement is actually carried out. Anna Tetangco 49 . Issue: Whether there was proper procedure and substantial basis for MCWD to declare Romagos mentally unfit to work and drop her from the rolls.All that the 1989 and 1991 medical certifications established is that. Kristel Macatangay. that a written notice is issued by the subject's immediate supervisor. second. 6715 points to "full backwages" as meaning exactly that. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. a closer adherence to the legislative policy behind Rep. Alpe Macalalad. that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. Act No. Rep. It may appear that Article 279 of the Labor Code. it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls . This is only fair and just because an employee who is reinstated after having been illegally dismissed is considered as not having left her office and should be given the corresponding compensation at the time of her reinstatement. i. that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. must be applied without attempted or strained interpretation. Clearly. NLRC. Atienza. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. that another notice is issued by the appointing authority or head of office. In other words. However. Jon Santos. petitioner was diagnosed to be suffering from Major Depression.
396. when respondent Javier was freed on May 24. and unjustified refusal of the employee to resume his employment. is not tantamount to abandonment. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. To constitute as such. He failed to notify the SEMC of the reason for his absences. Monette Mesa. 1995. Hence. Jon Santos. 1989. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. In the instant case. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. CA (Jake) Facts: The employees alleged that they were illegally dismissed. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. 1989. the rule is that back wages awarded to an illegally dismissed employee shall not be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. NLRC (Jake) Facts: On January 5. Anna Tetangco 50 . the private respondents should be reinstated. Ysan Castillo. Monina Lagman. should be granted the compensation which rightfully belongs to him from the moment he was unduly deprived of it up to the time it was restored to him. 1995. Dianne Miano. An illegally dismissed employee who. two requisites must concur: first. and to impress the idea that immediate reinstatement is tantamount to a cost-saving measure in terms of overhead expense plus incremental productivity to the company which lies in the hands of the employer. Moreover. 1989. with the second element being the more determinative factor. 1996 by virtue of the judgment of acquittal dated May 17. Ÿ Kay Products vs. Held: Respondent Javier’s absence from August 9. Jake Ng. petitioner received a letter from the agency informing her that she was re-assigned and required to report at the respondent's Manila office for further instructions. Mere absence or failure to report for work. willful. never left his office. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. Ÿ The respondent agency's contention that there has been a change in the situation of the parties making execution inequitable because petitioner accepted employment from another agency without resigning from it is patently without merit. The complainants further contended that they were coerced and intimidated into signing letters of resignation. the reckoning point for the grant of backwages started therefrom. On November 10. hence. we said that the rule enunciated in Pines Cityð no longer controls. the backwages to be awarded should not be diminished or reduced by earnings derived by the illegally dismissed employee elsewhere during the term of his illegal dismissal. The SEMC denied Javier’s request and issued a Memorandum terminating his employment for (a) having been absent without leave (AWOL) for more than fifteen days from July 31. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. Heidi Soria. On August 9. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. Del Monte vs. he was arrested and detained for the charge of rape upon complaint of his neighbor. Standard Electric Employees Union (Jake) Facts: On July 31. Genalyn Barotilla. Alpe Macalalad. The Labor Arbiter declared the dismissal of the complainant not in accordance with law.00 representing the sum total of the salary differentials and back wages awarded to petitioner has been garnished from the account of respondent agency with the Philippine National Bank (PNB) with no opposition or resistance and it is the ministerial duty of the Labor Arbiter to release the money to petitioner. 1995.# On November 27. Kristel Macatangay. 1995 cannot be deemed as an abandonment of his work. and considering that they were illegally dismissed. Abandonment as a just ground for dismissal requires clear. with full backwages from the time she was placed under preventive suspension on October 27. Now. and second. Ÿ Illegally dismissed employees are entitled to backwages plus other benefits computed from the time compensation was withheld up to the time of actual reinstatement. Javier failed to report for work. Edlyn Santiago. 1989 up to the time of her reinstatement. there must have been a clear intention on the part of the employee to sever the employer-employee relationship as manifested by some overt acts. KPI thereby engaged in ULP. deliberate. respondent E & R security agency hired petitioner Chona P. the employee must have failed to report for work or must have been absent without valid or justifiable reason.ð Standard Electric vs. Saldiar (2007) Ÿ Torres vs. Held: As regular employees. the private respondents are entitled to security of tenure provided under the labor laws and may only be validly terminated from service upon compliance with the legal requisites for dismissal Filipino Pre-Fabricated Buildings Systems vs. even after notice to return. In the recent ruling of the Court.Labor II perhaps Republic Act No. Held: The amount of P 105. 1996. and (b) for committing rape. Torres as a security guard. he immediately proceeded to the petitioner but was not accepted back to work. in contemplation of the law. Charms Haw. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal.
00. Dianne Miano. petitioner Filomeno Lantion received a letter. His employment was coterminous with the completion of the projects for which he had been hired. his employment with the petitioner company was continuous and without interruption for the past ten years. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. Ÿ Intercontinental Broadcasting vs. 1999. But due process was not observed as the required notices were not sent to respondent and the DOLE one month prior to the effectivity of his termination.Labor II Petitioner Filsystems. Benedicto (Jake) Facts: In 1993. However. Held: These factual findings of the NLRC. Under Article 283. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Reynaldo Benedicto was appointed by Ceferino Basilio. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. Petitioners were not rehired although they fall outside the exception provided. While petitioner Fuentes. The position of Vice-President continued to exist. Heidi Soria.00. and Management effective 1 June 1984. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. And as far as Filomeno and Clarita Lantion are concerned. they shall be entitled to reinstatement with full back wages. On 25 March 1985. When Benedicto was illegally dismissed on October 11. The labor arbiter concluded that Benedicto was illegally dismissed. cost-cutting measures resulting in the termination from the service of their employees. are binding on us since they are supported by substantial evidence. Benedicto was terminated from his position. respondent is entitled to an award of separation pay equivalent to one-half (1/2) month’s pay for every year of service (with a fraction of at least six months considered one whole year). an authorized cause. Monina Lagman. Held: The dismissal of respondent from the service is by reason of retrenchment. Alpe Macalalad.000. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. in case of retrenchment to prevent losses. 1994.000. respondent Obed Jose Meneses. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. were not religiously followed. dated 9 November 1983. 1995 to December 30. She was replaced by another faculty member. that his work was not dependent on the completion or termination of any project. confirmed by the CA. the employment of project employees cannot be terminated prior to expiration. Anna Tetangco 51 . their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. Monette Mesa. at that time the president of petitioner.000 plus 1% commission from collections of all advertising contracts consummated. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. In a letter dated October 11. including respondent. before the NLRC.000. Inc. Thus. The conditions laid down. Ÿ Without a valid cause. Effect Inflation Ÿ Lantion vs. Ysan Castillo. Petitioner Clarita Lantion. 1998. that since his work was not dependent on any project. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. Jake Ng. NLRC (Jake) Facts: On 10 November 1983. Otherwise. Charms Haw. the compulsory retirement age under the law. he should be paid P160. petitioners filed their Complaint against the University and its President. petitioners implemented Irah Burog. Clarita's position was neither abolished. he was dismissed from his employment allegedly because he was a project employee. was terminated as Secretary to the Legal Office on 21 November 1983. that on October 1. Finance. Edlyn Santiago. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. pursuant to our ruling in Agabon. the employees shall be entitled only to full back wages from the date of the termination of their employment until the actual completion of the project or work. Furthermore. petitioner regularly submitted to the labor department reports of the termination of services of project workers. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. 1989. however. 1994 signed by Tomas Gomez III.. Such compliance with the reportorial requirement confirms that respondent was a project employee. Since he was employed by petitioners for four years. or from June 1. which we fix at P20. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. there can be no question. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. therefore. Filomeno's sister-in-law. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. Reinstatement of petitioners with backwages is thus called for. Jon Santos. he was already 64 years old. on June 12. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. Held: That retrenchment was proper. as marketing manager with a monthly compensation of P20. the general manager then of petitioner. a corporation engaged in construction business. Kristel Macatangay. wife of Filomeno.00 as separation pay. with a monthly salary of P80.
an employee who is dismissed for cause is not entitled to any financial assistance. respondent company. Held: We hold that the grant of separation pay in the case at bar is unjustified. like theft or illicit sexual relations with a fellow worker.00 in consideration of her promise to facilitate approval of their applications for telephone installation. being ethical rather than jural and belonging to the sphere of morals than of law. was employed by Wyeth Philippines. Redentor Salonga. a traffic operator of the Philippine Long Distance Telephone Company. should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. was accused by two complainants of having demanded and received from them the total amount of P3. petitioner relied principally on a letter written by Ÿ Gustilo vs. Dianne Miano. on the ground of social justice." Petitioner's infraction of a school policy warrants her dismissal. Charms Haw. or whatever other name it is called. for equity finds no room for application where there is law. If regarded as a justification for moderating the penalty of dismissal. she was found guilty as charged and accordingly separated from the service. who attested to the veracity of the former's assertion. In support of this claim. Monina Lagman. on various dates. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.000. The records show that she had been meted put a two-week suspension in 1988 for having solicited contributions without the requisite school approval with a final warning that commission of a similar offense shall warrant the imposition of a more severe penalty. or financial assistance. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. Wyeth Philippines (Kristel) Facts: Alan D. the employer may not be required to give the dismissed employee separation pay. but for the canvass of the price of the religious items as well. Monette Mesa. Gustilo. reprimanded and suspended him for habitually neglecting to submit his periodic reports. Where the reason for the valid dismissal is. Anna Tetangco 52 . . Heidi Soria. FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs.. maintaining that he was responsible. 14. Alpe Macalalad. Ÿ We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character." As a general rule. made her "in effect the author of the project. habitual intoxication or an offense involving moral turpitude. Ÿ Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. She went to the Ministry of Labor and Employment claiming she had been illegally removed. having been effected without just cause. .00 as "severance pay" which is synonymous with "separation pay. . Further. After consideration of the evidence and arguments of the parties. the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. It is grounded on the precepts of conscience and not on any sanction of positive law. regardless of who initiated the collections. it would be petitioner Salavarria. . if it is to be considered at all. NLRC (Jake) Facts: Marilyn Abucay. . Where the reason for the valid dismissal is. Ÿ Salavarria vs. Ysan Castillo. petitioner. the fact that the same was approved or indorsed by petitioner. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. The private respondent has been dismissed for dishonesty. for example. Jon Santos. Jake Ng. equity considerations provide an exception. In PLDT v. However. one of her students.Labor II inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities. on the premise that the solicitation of funds necessary to purchase the religious articles was initiated by the students and that her participation therein was merely limited to approving the same. 10. Hence. equity has been defined as justice outside law. it was held that the grant of separation pay is not merely based on equity but on the provisions of the Constitution regarding the promotion of social justice and protection of the rights of the workers. Kristel Macatangay. it will actually become a prize for disloyalty. after initial purchases were made. But we find that petitioner's infraction of the school policy neither amounted to serious misconduct nor reflected that of a morally depraved person as may warrant the denial of separation pay to her. petitioner pleaded that she never misappropriated the money collected and whatever was left of it. the employer may not be required to give the dismissed Irah Burog. Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. The fact that she has worked with the PLDT for more than a decade. Petitioner's employment records show that respondent company.800. Moreover. were immediately returned to the student-leaders for proper reimbursement to the students concerned. Investigated and heard.. an offense involving moral turpitude . as a pharmaceutical territory manager. not only for the collection of the contributions. Inc. NLRC. Edlyn Santiago.
we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. Hence. conscience and reason tip in favor of granting financial assistance to support him in the twilight of his life after long years of service. Anna Tetangco 53 . Moreover. Book VI of the Omnibus Rules Implementing the Labor Code provides that when the employee is dismissed for any of the just causes under Article 282 13 of the Labor Code. or financial assistance. namely: (1) unauthorized acceptance of payments for new connection. that in those years there was not a single report of him transgressing any of the company rules and regulations. or whatever other name it is called. and Irah Burog. he has no previous derogatory records. if supported by substantial evidence. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. and (3) defrauding others by using the name of the company. and as an equitable concession. our attention has been called to the following circumstances : that private respondent joined the company when he was a young man of 25 years and stayed on until he was 48 years old. Piñero's infraction is not so reprehensible nor unscrupulous as to warrant complete disregard of his long years of service. NLRC (Kristel) Facts: Dumaguete Cathedral College. provide an exception. working on board ship for almost 24 years. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. on the ground of social justice. Jake Ng. Kristel Macatangay. Dianne Miano. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. Edlyn Santiago. Ÿ Pinero vs. Monette Mesa. Monina Lagman. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. It is grounded on the precepts of conscience and not on any sanction of positive law. In our view. Inc. In this instance. but that considering his age and health. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. via the principle of "compassionate justice" for the working class. Alpe Macalalad." If the cause for the termination of employment cannot be considered as one of mere inefficiency or incompetence but an act that constitutes an utter disregard for the interest of the employer or a palpable breach of trust in him. Ÿ Section 7. and certain acts tantamount to serious misconduct. Weighed on the scales of justice. are accorded respect and even finality by this Court. Charms Haw. Ÿ The rule is that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. He was dismissed from service. being ethical rather than jural and belonging to the sphere of morals than of law. that it would appear that he had served the company well. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules. Sedan (Kristel) Facts: Petitioners hired on a per-voyage basis private respondent Dioscoro Sedan as 3rd marine engineer and oiler in one of the vessels owned by petitioners. In this case. hence the retirement benefits he would receive would ease his financial burden. Sedan sent a letter to petitioners applying for optional retirement. Inc. The fact that private Ÿ Eastern Shipping Lines vs. NLRC (Kristel) Facts: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. that he denies receiving the telegram asking him to report back to work. These circumstances indubitably merit equitable concessions. Such findings. and that he was not authorized to accept payment. he preferred to stay home rather than risk further working in a ship at sea.The union staged a strike. however. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. the grant by the Court of separation benefits is hardly justifiable.. with these special circumstances. Heidi Soria. Equity has been defined as justice outside law. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer. Jon Santos. Although meriting termination of employment. an educational institution.This was not granted despite several demands. Although long years of service might generally be considered for the award of separation benefits or some form of financial assistance to mitigate the effects of termination. Rule I. that he had given to the company the best years of his youth. he shall not be entitled to termination pay without prejudice to applicable collective bargaining agreement or voluntary employer policy or practice. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline. for equity finds no room for application where there is law. 15 Separation pay in such case is granted to stand as a "measure of social justice. 14 Separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. (2) dishonest or unauthorized activity whether for personal gain or not. citing as reason the death of his only daughter. (CENPELCO). Equity considerations. Ysan Castillo.Labor II employee separation pay. Ÿ Pangasinan Electric Coop vs.
80609. (Emphasis supplied. does not call for such award of benefits. in our view of this case. of Davao. (2) redundancy. Not Allowed Ÿ Phil. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. Construction Corp vs. on the ground of social justice. Ysan Castillo. Mercantile Corp. NLRC (Kristel) Facts: Petitioner. We held that employees dismissed for cause are nevertheless entitled to separation pay on the ground of social and compassionate justice (Firestone Tire & Rubber Co. Labor Code. It placed the complainant under preventive suspension for thirty (30) days. 148 SCRA 526. or whatever other name it is called. and hearing. Filipro. for example. Bulacan.) . Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. One truck.) Ÿ Chua vs. On May 24. Lariosa. Dianne Miano. 7. Monette Mesa.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal. Anna Tetangco 54 . dismissed the private respondent Eduardo Malabanan. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. of which petitioner Benito D. Nestle Philippines. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. betrayal of the company. Plaridel. . within full view and hearing of the other employees. having the main duty of removing and/or changing damaged flexbeams on the expressway. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline. Ÿ Eastern Paper Mills vs. G. Kristel Macatangay. . whose driver was rendered unconscious by a stone hitting him on the head. henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. It contravenes Rule 1. who was then the personnel and administrative manager of the company. NLRC (Kristel) Facts: Union of Filipro Employees. Alpe Macalalad. several of the striking employees threw stones at the trucks entering and leaving the company premises. investigation. where We held that: ". since his violation reflects a regrettable lack of loyalty and worse. a superior officer. Both declared that the items were deposited there by Manreza and his companions. for having physically assaulted and verbally abused. . Book VI of the Omnibus Rules Implementing the Labor Code. Charms Haw. During the strike. (3) retrenchment.R. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. although the employee was lawfully dismissed. Petitioner received a notice Irah Burog. August 23. are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. 1983. Inc. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. for serious misconduct) is legally indefensible. declared a strike against the private respondent company. an accounts payable clerk. 1988. of the Philippines vs. Inc. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. Jon Santos." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. Social justice cannot be permitted to be the refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. vs. Soco vs. or financial assistance. and thereafter terminated his employment Ÿ It is true that in some earlier cases. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. like theft or illicit sexual relations with a fellow worker. habitual intoxication or an offense involving moral turpitude. No. 148 SCRA 187. Where the reason for the valid dismissal is. Chua was a member. and also in the house of Nene Enriquez. Mariano Lopingco. 145 SCRA 123). the employer may not be required to give the dismissed employee separation pay. like the workers who have tainted the cause of labor with the blemishes of their own character. (4) cessation of the employer's business. Edlyn Santiago. Monina Lagman. Jake Ng. The company found him guilty of stealing or unauthorized taking of company property. NLRC and Marilyn Bucay. . or (5) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees. he is not entitled to separation pay. At best it may mitigate the penalty but it certainly will not condone the offense. NLRC. (Articles 283 and 284. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. Heidi Soria. The only cases when separation pay shall be paid. as a janitor and later promoted to Leadsman. Sec. after due notice. vs. such gesture will actually become a prize for disloyalty. The reason for the assault was private respondent's resentment at being suspected of having stolen an ash tray from Lopingco's office and being questioned about the matter by the security office.
Vital) Ÿ National Federation of Labor vs. the CBA. which strike resulted in multiple deaths and extensive property damage. in addition to his full backwages. processing of and marketing of its products and providing technical expertise. specifically for planting rubber trees. vacation leave. hours of work and all other terms and conditions of employment in the bargaining unit. the parties. for example. Anna Tetangco 55 . they should have rejected the CBA. Unless annulled. SDPI served formal notices of termination to all the employees of the plantation. Monina Lagman. The employees of the private respondent who were members of the NFL ratified the CBA which had been in force and effect for 3 years before the closure of the plantation. Ysan Castillo. NFL was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in a rubber plantation. who was illegally dismissed. A more equitable disposition would be an award of separation pay equivalent to at least one month or one month pay for every year of service. the employer may not be required to give the dismissed employee separation pay. accordingly. or financial assistance. Etcuban vs.Labor II of dismissal from private respondent for having participated in the illegal strike. The parties did not incorporate in the CBA a specific provision providing that employees terminated from employment due to the closure of business operations would be entitled to separation pay equivalent to one-month pay for every year of service. Ÿ Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business insolvency should be paid separation pay equivalent to 1-month pay or to at least 1/2 month pay for every year of service. as a contract governing the employer and the employees respecting the terms of employment. and improve the rubber plantations of ARCI as an agro-industrial development project. Jake Ng. constituted serious misconduct on his part. and other benefits. . Simultaneously. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. and other benefits which were all lumped in one Metrobank check. thus: Pursuant to the CBA. respecting the terminations was sent by SDPI. cultivate. Kristel Macatangay. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. A contrary rule would. permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. workers affected would be entitled to termination pay as provided by the Labor Code. . like theft or illicit sexual relations with a fellow worker. or whatever other name it is called. Consequently. Meanwhile. Ÿ We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. whichever is higher. Edlyn Santiago. whichever is higher. without the NFL initiating the revision thereof. unused sick leave and other benefits. (Coca-cola Bottlers Phils. . allowances. However. A fraction of at least 6 months shall be considered 1 whole year. Monette Mesa. develop. is entitled to reinstatement. should prevail. antagonism has caused a severe strain in their relationship. on the ground of social justice. Heidi Soria. petitioner's participation in the unlawful and violent strike. the award of "financial assistance" was bereft of basis and would moreover render the finding by the Labor Arbiter and the NLRC of just or authorized cause for termination of petitioner's services merely illusory. administer. The petitioners simultaneously executed individual "Release and Quitclaim" following the explanation to them by executive labor of the nature and legal effects of the said quitclaims. in relation to the Labor Code of the Philippines. Jon Santos. Sulpico Liner (Heidi) 14. The parties opted to be bound by the provisions of the Labor Code and not by company policy. Alpe Macalalad. During the negotiations. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits. habitual intoxication or an offense involving moral turpitude. Charms Haw. as the petitioner correctly argues. each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. Ÿ Irah Burog. In the case at bar. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. CA (Heidi) Facts: SDPI was given the right to manage. Dianne Miano. have the effect of rewarding rather than punishing the erring employee for his offense . During the effectivity of the FMA between ARCI and SDPI.11 SEPARATION PAY When Alternative Ÿ Although Vital. Where the reason for the valid dismissal is. the Comprehensive Agrarian Reform Law (CARL) took effect. a letter to DOLE. vs. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL.
NLRC and Margo Batister.000. 4 Joseph sent a letter to Hanford requesting payment of her separation pay pursuant to CBA which provides that Hanford shall give termination pay to those who voluntarily resigned due to the following reasons: reduction of personnel. thus: "In the interpretation of an employer's program providing for separation benefits. Hanford denied Joseph's request on the ground that under the Labor Code. as in this case. retirement is not also a ground for the grant of separation pay. Irah Burog. all doubts should be construed in favor of labor. respondent voluntarily tendered her resignation effective September 17. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. PNB became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. Consequently. among others. 1978. Edlyn Santiago. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. 13th month pay and the cash conversion of her unused vacation and sick leave. Ysan Castillo. (c) retrenchment. grant of separation pay." instructing him to forthwith report to the main office and to explain in writing why no disciplinary action should be meted on him or to submit himself to an investigation. the newly designated jefe de viaje of the ship. Jon Santos. The memorandum warned Ectuban that his failure to comply with the aforementioned instructions would be construed as a waiver of his right to be heard. Under the Labor Code. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. Our ruling in Philippine National Construction vs. Moreover. an employee who voluntarily resigns may not be granted separation pay. the general rule is that an employee who voluntarily resigns is not entitled to separation pay. 1998. non-payment of overtime pay. Hanford then paid Joseph her last salary. Later." such as voluntary resignation. then he is entitled to a separation pay. Dianne Miano. Anent the petitioner's request for separation pay. the NLRC and the Court of Appeals. Sometime in 1994. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. 1986. At the time of his dismissal. 13th month pay and other monetary benefits with the regional arbitrator. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement. (b) redundancy. that is. After all. we held that while it is true that under the Labor Code. there is an exception. If petitioners could be liberal to those employees who retired.. Kristel Macatangay. Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees. Jake Ng. Barely a week after the petitioner's preventive suspension and pending his administrative investigation. Ÿ In the instant case. vs." Ÿ Hanford Phil. On Nov. 1998. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. (d) closing or cessation of business operations. as in fact. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company. in a surprise examination.00. Hanford hired Shirley Joseph as a sewer. discovered irregularities in the issuance of passage tickets. NLRC finds application here. Charms Haw. PNB transferred all its loans to and equity in North Davao in favor of the national government which later turned them over to petitioner Asset Privatization Trust (APT). which is especially required for the position of purser. 1978 until his dismissal on June 10. 19. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years. he filed a complaint against the respondent for illegal dismissal. 1998. In Hinatuan Mining Corporation and/or the Manager v. "separation from the company without cause.Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. Alpe Macalalad. 1994 for loss of trust and confidence. Inasmuch as reason for which the petitioner was validly separated involves his integrity. 10. It also informed him of his immediate preventive suspension until further notice. Under the Code. As aptly held by the Labor Arbiter. Monina Lagman. the Court is constrained to deny the same. Monette Mesa. however. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. 2 which petitioner accepted the following day. On June 30. and those whose services are terminated due to suspension or cessation of operation. On Aug. Heidi Soria. it is very clear from the CBA that when an employee or worker voluntarily resigns due to. Joseph (Heidi) Facts: On July 17. Anna Tetangco 56 . employees or workers who may be separated without cause. he is not worthy of compassion as to deserve at least separation pay for his length of service. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible.
Dianne Miano. Edlyn Santiago. in protecting the rights of the laborer." the question arises. Art. Jon Santos. the grant of a lesser amount of separation pay to private respondent was done. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. Nor water out of parched land. out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. but rather. unequal treatment of employees. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay.Labor II North Davao completely ceased operations in May 31. its cash flow could still have sustained the payment of such separation benefits. They were retrenched by respondent when it suffered a major financial setback brought about by the joint impact of restrictive government regulations on logging and the economic crisis. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation. The law. computed on their basic monthly pay. it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily." Both words (as well as salary) generally refer to one and the same meaning. Monina Lagman. However. in addition to the commutation to cash of their unused vacation and sick leaves. the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay.. Accordingly. Respondents contend that. the basis for the claim of the additional separation benefit of 17. As a going concern. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems. whichever is higher. its remaining employees were separated and given the equivalent of 12. one cannot squeeze blood out of a dry stone. this arrangement lasted from 1981 up to 1990. whether fixed or ascertained on a time. respondents tenaciously insist on the award of separation pay. however designated. it had been giving separation pay equivalent to 30 days' pay for every year of service. or other method of calculating the Irah Burog. during the life of the petitioner corporation. Indeed. Charms Haw. .. piece. the employees had to collect their salaries at a bank in Tagum. Therefore. Under the facts and circumstances of the present case.e. .5-days' worth at that.e. "Pay" is not defined therein but "wage. Moreover. Kristel Macatangay. 97 of the same Code on definition of terms. As already stated. it appears that. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all — although not required by law — and 12. unfair and most revolting to the conscience. by denying the same separation benefits to private respondents and the others similarly situated. task. Monette Mesa. i. managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. Specifically.5 days is alleged discrimination. petitioners discriminated against them. 283 with Art. When it ceased operations. Ÿ In case of retrenchment to prevent losses. Art. its vital lifeblood — its cashflow — literally dries up. However. Heidi Soria. in which the aggregate losses amounted to over P20 billion — the Labor Code does not impose any obligation upon the employer to pay separation benefits. not by reason of discrimination. Ysan Castillo. In the case before us. 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses . Since the law speaks of "pay. however. for obvious reasons. 248 (e) of said Code. 283 of the the Labor Code imposes on the employer an obligation to grant to the affected employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service.. Anna Tetangco 57 . which policy had been in force in the years prior to its closure. the closure was due to business losses — as in the instant case. i. "What exactly does the term connote?" We correlate Art.e. or commission basis. capable of being expressed in terms of money. a reward or recompense for services performed. should have elicited admiration instead of condemnation. Davao Del Norte. i. from the beginning of its operations in 1981 until its closure in 1992. upon its death as a going business concern. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. 1992 due to serious business reverses. "wage" is defined in letter (f) as the remuneration or earnings.". Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof. authorizes neither oppression nor self-destruction of the employer. Jake Ng. Ÿ Art. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. they lodged a complaint for separation pay differentials. petitioners were given separation pay. which is proscribed as an unfair labor practice by Art. Where.5 days' pay for every year of service. Computation Ÿ Millares vs. In the case of North Davao. Alpe Macalalad. But when a business enterprise completely ceases operations. Stated differently.
the Supreme Court cited the recognized and accepted doctrine that a dismissed employee who has accepted separation pay is not necessarily estopped from challenging the validity of his dismissal. and that the waivers/quitclaims freely and voluntarily executed by petitioners constituted valid contracts since they were awarded benefits far greater than those provided by law. is the employer. lodging or other facilities. Kristel Macatangay. HMC. NLRC) Ÿ NYK Intl vs. C. has a separate and distinct personality.C. however. once a vacancy occurs in the company-provided housing accommodations. the fair and reasonable value thereof. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. (Bogo-Medellin vs. Charms Haw. Ÿ In termination cases. Conformably with our ruling in A. in the technical sense only. admittedly. In the case at bar. Publico was refused entry for work and later informed of her dismissal." and. the employee concerned transfers to the company premises and his housing allowance is discontinued. Monina Lagman. corporate officers are as a GR." In other words the corporation.Labor II same. Ransom. of board. Ysan Castillo. there was no reason at all for petitioners to resort to the above cases. Waivers and quitclaims are generally looked upon with disfavor. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. 1997. as determined by the Secretary of Labor and Employment. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award. not personally liable for their official acts." we divide the discussion on the following — "customarily furnished. When an employer customarily furnishes his employee board. Monette Mesa. Dianne Miano. is the manager of NYK. or for services rendered or to be rendered and includes the fair and reasonable value. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. The subject allowances do not form part of petitioners wages. Publico went home early despite refusal of petitioner because she was not feeling well. Heidi Soria. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. In a subsequent case. null and void. lodging. Anna Tetangco 58 . as determined by the Secretary of Labor." "Customary" is founded on long-established and constant practice connoting regularity. Effect of Acceptance Ÿ Anino vs. Separation pay when awarded to an illegally dismissed employee in lieu of reinstatement or to a retrenched employee should be computed based not only on the basic salary but also on the regular allowances that the employee had been receiving. On the other hand. In the case of the housing allowance. or other facilities customarily furnished by the employer to the employee. Anent the issue on the quitclaims. AFP-MBAIEU which ruled that such quitclaims are against public policy and. Jon Santos. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. therefore. a measure fully explained to all its employees. It cited the case of AFP Mutual Benefit Association. being the "person acting in the interest of the employer." In order to ascertain whether the subject allowances form part of petitioner's "wages. because a corp. is included in "wage. NLRC (Heidi) Facts: Publico was a sewer of NYK. However. by legal fiction. On May 9. vs. in the guise of retrenchment. Alpe Macalalad. On May 7. dismissed complainants-petitioners who are active leaders of the union. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. unfair labor practice and damages against HMC. she notified petitioner that she was still recovering from her sickness. Inc. Irah Burog. a corporation and its president were directed by this Court to jointly and severally reinstate the illegally dismissed employees to their former positions and to pay the monetary awards. "fair and reasonable value as determined by the Secretary of Labor. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. lodging or other facilities. Complainants-petitioners then filed a complaint for illegal dismissal. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts. Ransom Labor Union-CCLU v. Jake Ng. Edlyn Santiago. Ÿ What the Court finds apropos is our disquisition in A. the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. In this case Cathy Ng. it must have an officer who can be presumed to be the employer. 1997. More recently. which held that since a corporation is an artificial person. The next day. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU)." "board. NLRC.
corporate officers are. bad faith or malice was not proven. or constituted an act opposite to labor. social and financial position of the offended party and the business or financial position of the offender are taken into account. Her resultant sufferings thus entitle her to an award of moral damages. Thus. Farolan filed a complaint for illegal Ÿ Viernes vs NLRC (Dianne) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. it does not necessarily establish bad faith. she was terminated. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. 1991. corporate directors and officers are solidarily liable with the corporation. Kristel Macatangay. Despite the expiration of their employment contract. where terminations of employment are done with malice or in bad faith.000. (Acesite Corp. Irah Burog. The amount of exemplary damages awarded is accordingly reduced too to P250. Heidi Soria. because a corporation. this Court reduces the amount of moral damages awarded to P500. by legal fiction. (Collegio de San Juan de Letran-Calamba vs. Pursuant to prevailing jurisprudence. Jon Santos. Thus. In determining the amount of moral damages recoverable. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. petitioners were allowed by the private respondent to work until January 2. evading an existing obligation.00 which it finds reasonable. 1990.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. Here. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent. in her capacity as manager and responsible officer of NYK. Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer.00. good customs or public policy. Ÿ The Supreme Court held that the respondent was illegally dismissed. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. not personally liable for their official acts. Charms Haw. The labor arbiter didn’t make any such finding. stockholders and members. even though the latter was the General Manager. or was done in a manner contrary to morals. private respondent invoked Article 283 of the Labor Code. private respondent terminated petitioners' employment. the alias writ of execution for said award should be directed only against the company and not against Tan. On the other hand.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. or is done contrary to morals. Villas) Ÿ Asia Pacific Chartering vs. with the company for the monetary award. The Labor Arbiter dismissed the complaints. In cases of illegal dismissal. NLRC) dismissal with prayer for damages and attorney's fees. but by itself alone. Monina Lagman. Dianne Miano. Monette Mesa. or confusing a legitimate issue.’s fees because there is no showing that bad faith and malice attended her dismissal. However. Ysan Castillo. this petition for certiorari. Jake Ng. 1991.000. Timbol) Unless they have exceeded their authority. Tan’s real and personal property should not be burdened by such award. Ÿ WON Tan acted with malice/bad faith in ordering Timbal’s suspension is a question of fact submitted by the parties to the labor arbiter for resolution. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Farolan (Heidi) Facts: APC terminated the employment of Farolan on ground of loss of trust and confidence in her managerial and marketing capabilities due to the company's alleged dismal performance during her term of office as SAS Sales Manager. good customs or public policy. either jointly or severally. it must be shown that the dismissal of the employee was attended to by bad faith. On January 3. She claimed that respondent told her to tender her resignation as she was not the person whom Scandinavian Airline System (SAS) was looking for to handle the position of Sales Manager but that she refused. vs. hence. as a general rule. Indeed. ordered their reinstatement to their former position or to any equivalent position with payment of backwages limited to one year and deleted the award of indemnity and attorney's fees. however. or constitutes an act oppressive to labor. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position. Cathy Ng. Hence. Alpe Macalalad. On appeal. Therefore. nor did he hold Tan liable. petitioners separately filed complaints for illegal dismissal. A dismissal may be contrary to law. underpayment of wages and claim for indemnity against private respondent. Anna Tetangco 59 . Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. Petitioners contended that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. Edlyn Santiago. Ÿ 14. the business. (Tan vs. has a personality separate and distinct from its officers. To warrant award of moral damages.
Dianne Miano. This provision is only a safety and health standard under Book IV of the same Code. Petitioner is actually suing shipmates Garate and Asis for gross negligence. While in command of the vessel. With the continuation of their employment beyond the original term. Anna Tetangco 60 . It is not the NLRC but the regular courts that have jurisdiction over actions for damages. they were. however. the Labor Arbiter ruled in her favor." In the present case. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. these relief must still be based on an action that has reasonable causal connection with matters. and other labor benefits that are generally cognized in labor disputes. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. in effecting such dismissal.Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers. entitled to be reinstated to their former position as regular employees. this appeal. through its manning agent. Moreover. transferred to the DOLE. Jon Santos. or collective bargaining agreements. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. Monina Lagman. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. the fact that the petitioners were allowed to continue working after the expiration of their employment contract was evidence of the necessity and desirability of their service to private respondent's business. Edlyn Santiago. Charms Haw. but also damages under the Civil Code. overtime compensation or separation pay. petitioners have become full-fledged regular employees. may be vindicated or recognized. NLRC. Under Article 2221 of the Civil Code. Hence. the employer fails to comply with the requirements of due process. The loss of earning capacity is a relief or claim resulting from a quasi-delict or a similar cause within the realm of civil law. The NLRC. the employment of petitioners is no longer on a fixed term basis. The indemnity is in the form of nominal damages intended not to penalize the employer but to vindicate or recognize the employee's right to procedural due process which was violated by the employer. the Court held that petitioners are entitled to full backwages. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code. which has been violated or invaded by the defendant. inclusive of allowances and to their other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement. Heidi Soria. Ysan Castillo. In other words. and in which the cause of action proceeds from a different source of obligation such as a tort. but as regular employees. Monette Mesa. his health rapidly deteriorated resulting in his death. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. Asia Bulk. not on a probationary status. When petitioner filed a complaint with the POEA. Tolosa. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. labor arbiters and the National Labor Relations Commission have no power or authority to grant reliefs from claims that do not arise from employer-employee relations. Alpe Macalalad. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. Accordingly. which does not grant or specify a claim or relief. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. affirmed by the Court of Appeals. "Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. in which the employer-employee relation is merely incidental. 1990. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. other labor statutes. or collective bargaining agreements. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. Thus. Ÿ As a rule. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. The enforcement of this labor standard rests with the labor secretary. Virgilio Tolosa who was hired by Qwana-Kaiun. or collective bargaining agreements. not merely probationary. therefore. Since petitioner's claim for damages is predicated on a quasi-delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217. to be the master of the Vessel named M/V Lady Dona. petitioner's claim for damages is not related to any other claim under Article 217. and the said shipmates have no employer-employee relations with Capt. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. Tolosa contracted a fever and in the succeeding 12 days. nominal damages are adjudicated in order that a right of the plaintiff. other labor statutes. Irah Burog. other labor statutes. Petitioner's action was recovery of damages based on a quasi-delict or tort. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. According to the Court. It held that after October 31. Kristel Macatangay. Capt. NLRC (Dianne) Facts: Petitioner was the widow of Capt. Jake Ng. Held: The Supreme Court affirmed the appealed decision. Moreover.
Calado. The dismissal." which we sought to deter in the Serrano ruling. (Acesite Corp.000. good customs or public policy. The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute. Herrera. Jr. CA) Gonzales is not entitled to moral and exemplary damages. Kristel Macatangay. Maquiling. The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. we are not convinced that private respondents acted in a wanton or oppressive manner. Petitioner Marilyn T. as in the instant case. there is less degree of discretion to award actual or compensatory damages. Maquiling filed a complaint against PTS for reinstatement or. NLRC) Ÿ Ÿ Sagum vs CA (Dianne) Facts: The instant case arose from the complaint of petitioner for illegal dismissal against private respondents Institute of Integrated Electrical Engineers of the Philippines. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code.00). Monette Mesa. Barrientos. Evidently. the employer should indemnify the employee for the violation of his statutory rights.00 as exemplary damages are hereby awarded to each private respondent.00 as moral damages and P5.000. Engrs. Bad faith on the part of petitioners may be gleaned from the fact that they transferred the private respondents to two employment agencies just so they could evade their legal responsibility as employers to accord them the status and benefits of regular employees under the Labor Code. Ysan Castillo. (PTS).900. Dr. Sagum is another hapless employee whose dismissal was ruled to be illegal but. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. Jake Ng. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. and Fe M.Labor II before the labor arbiter. fraud. or was done in a manner contrary to morals. no doubt.00) and exemplary damages in the amount of one hundred thousand pesos (P100. Dianne Miano. Moral damages are recoverable only where the dismissal of the employees was attended by bad faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to morals. the lack of statutory due process should not nullify the dismissal. Exemplary damages may be awarded if the dismissal is effected in a wanton. as well as moral damages in the amount of five hundred thousand pesos (P500. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. The instant controversy fails to show that the dismissal of the employee was attended by bad faith. or render it illegal. vs. the Supreme Court ruled that Dr. Antonio S. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968. Heidi Soria. Monina Lagman. was effected in a wanton. oppressive or malevolent manner to warrant an award for exemplary damages. In the case at bar. Edward L.. petitioner Dr.000. Held: After careful perusal of the factual backdrop of the case. or that the employer committed an act oppressive to labor to warrant an award for moral damages. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. Ÿ Ÿ Where the dismissal is for just cause. (IIEE). Inc. Maquiling was indeed validly dismissed for just cause. The suspension of petitioner without prior investigation is akin to Irah Burog.. without her reinstatement forthcoming. in the alternative. Alpe Macalalad. oppressive or malevolent manner.000. Maquiling was employed by respondent Philippine Tuberculosis Society. Edlyn Santiago. is still on the outside looking in. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. Anna Tetangco 61 . Neither will an award for moral damages nor exemplary damages prosper. or ineffectual. the amount of P10. However. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. Jr. Indeed. taking into special consideration the gravity of the due process violation of the employer. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. Dr. good customs or public policy. Jon Santos. Dr. taking into account the relevant circumstances. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. then earning a monthly salary of thirteen thousand nine hundred pesos (P13. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages. (Kay Products vs.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. Such were not sufficiently proven. oppressive or malevolent manner as the private respondents were deprived of due process. Exemplary damages may avail if the dismissal was effected in a wanton. oppressive or malevolent manner. or is done in a manner contrary to good morals. Amador C. Maquiling. Maquiling shall only be entitled to an award for nominal damages. good customs or public policy. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. Inc. pay later. Mendoza. Hence. On 8 June 1991. Thus. The amount of such damages is addressed to the sound discretion of the court. Charms Haw. It may be also argued that actual or compensatory damages may be recovered in employment termination cases. However.
It is not enough that one merely suffered sleepless nights. Omnibus Rules Rule II Retirement Benefits SECTION 1. Subsequently. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. Heidi Soria. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. the term ‘one-half (1/2) month salary’ shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. In case of retirement. General Statement on coverage. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Inc. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. to be malicious as they were fact-based. Nominal Damages Central Luzon Conference Corporation of SeventhDay Adventist Church vs CA (Dianne) Facts: Respondent Federico Cabanit was a sales representative of petitioner Central Luzon Conference Corporation of Seventh-Day Adventist Church.00. 287. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. On November 18. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. . designation or status and irrespective of the method by which their wages are paid. He was placed under preventive suspension on October 16. Exemptions. regardless of their position. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. petitioner corporation. he became branch manager from 1981 to 1990. Dianne Miano. mental anguish or serious anxiety as the result of the actuations of the other party. Lastly. petitioner did not even allege that there was use of force. abusive language or any species of violence. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. The amount of such damages is addressed to the sound discretion of the court. 7641 which took effect on Jan. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. Rule II. 1997 but the suspension was rescinded and he was assigned as general auditor. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. Retirement ART. 1993. Retail. Monina Lagman. Charms Haw. Despite the presence of security guards. 1997. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. adopted a resolution terminating his employment effective October 16. After six months. Kristel Macatangay. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee. Jake Ng. assigned to the accounting department. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. At the very least. Anna Tetangco 62 . except to those specifically exempted under Section 2 hereof. however. who has served at least five (5) years in the said establishment. the Supreme Court deemed it proper to fix the nominal damages at P30. SEC. 2. a fraction of at least six (6) months being considered as one whole year. he became its regular employee. 1997. Monette Mesa. and auditor from 1990 to 1996.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. Nor can the posting of security guards inside the petitioner's room while the on-the-spot accounting was being conducted and the inspection of her bag and personal effects in the presence of her subordinates be characterized as oppressive. Ysan Castillo. 1997. This rule shall not apply to the following employees: Irah Burog. an employee upon reaching the age of sixty (60) years or more. through an EXECOM meeting. 7. taking into account the relevant circumstances. Promoted. Held: Considering the prevailing circumstances in the case at bar. Alpe Macalalad. latter under the Labor Code and its Implementing Rules. As used herein. Retirement. we do not find the articles published in private respondent institute's publication. Book VI. This rule shall apply to all employees in the private sector. On June 11. Jon Santos. Ÿ The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided. The Electrical Engineer.000. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. Edlyn Santiago. Act No. Unless the parties provide for broader inclusions. the term “Act” shall refer to Rep.
pineapple. raising of livestock or poultry. Charms Haw. further. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. and includes the fair and reasonable value. an employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every year of service. The term does not include cost of living allowance. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture. Anna Tetangco 63 . Ysan Castillo.1 Employees of the National Government and its political subdivisions. Jake Ng. the culture of fish and other aquatic products in farms or ponds. SEC.2 Components of One-half (½) Month Salary. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. compulsory retirement.1 Any employee may retire or be retired by his employer upon reaching the retirement age established in the CBA or other applicable employment contract or retirement plan subject to the provisions of Section 5 hereof on the payment of retirement benefits. 2. as determined by the Secretary of Labor and Employment.The minimum length of service in an establishment or an with an employer of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. b) “Service establishment” is one principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such. 3.2 Compulsory retirement. 4. piece or commission basis. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations. 3. 5. dairying.3 One-half month salary of employees who are paid by results. Where there is no such plan or agreement referred to in the immediately preceding subsection. tobacco. whether optional or compulsory.For the purpose of determining the minimum retirement pay due an employee under this Rule.3 Employees of retail. 5. (Deleted by D. Retirement benefits. the employer shall pay the difference b/w the amount due the employer under this Rule and that provided under the collective/individual agreement or retirement plan. service and agricultural establishment or operations regularly employing not more than ten (10) employees. .1 In the absence of an applicable agreement or retirement plan. task. an employee may retire upon reaching the age of sixty (60) years or more if he has served for at least five (5) years in said establishment. but does not include the manufacture and/or processing of sugar. 4. Heidi Soria. 4. 4. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog. whether such payments are fixed or ascertained on a time. the term “one-half month salary” shall include all the ff. 5. of food. 20.: a) 15 days salary of the employee based on his latest salary rate. aquatic or other farm products.4 Service requirement. As used herein. 5. Monette Mesa. SEC. c) One-twelfth of the 13th month pay due the employee. 3.O. Optional.Labor II 2. Retirement under CBA/contract. the cultivations and tillage of the soil. however. 4. In case the employer’s contribution is less than the retirement benefits provided under this Rule. a fraction of at least 6 months being considered as one whole year. the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any CBA and other agreements: Provided. abaca. cultivation. Jon Santos.3 Upon retirement of an employee. Edlyn Santiago. growing and harvesting of any agricultural or horticultural commodities. Dianne Miano. No. . This term refers to all farming activities in all its branches and it includes. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. d) All other benefits that the employer and employee may agree upon that should be included in the computation of the employee’s retirement pay. Monina Lagman. That if such benefits are less. Alpe Macalalad. As used in this subsection: a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or household use. an employee shall be retired upon reaching the age of sixty-five (65) years.2 Domestic helpers and persons in the personal service of another. the basis for determination of the salary for 15 days shall be their average daily salary (ADS).3 Where both the employer and the employee contribute to a retirement fund in accordance with an individual/collective agreement or other applicable employment contract.1 Optional retirement. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. Kristel Macatangay.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. the employer’s total contribution thereto shall not be less than the total retirement benefits to which the employee would have been entitled had there been no such retirement fund. series of 1994) 2.2 In case of retirement under this section. lodging. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. For covered workers who are paid by results and do not have a fixed monthly rate. 3. production. or other method of calculating the same. and Provided. SEC. including GOCC’s if they are covered by the Civil Service Law and its regulations. regular holidays and mandatory fulfillment of a military or civic duty. coconut. or other facilities customarily furnished by the employer to his employees. among others. subject to the provisions of Rule VII-A. b) The cash equivalent of not more than five (5) days of service incentive leave. the employer shall pay the deficiency.
4. 3. however. Heidi Soria. further. 2. Order No. 6.: a) 15 days salary of the employee based on his latest salary rate. drifts. retirement and separation pay constitute compensation subject to withholding. 1993 when the Act went into force. In case the employer’s contribution is less than the retirement benefits provided under this Rule. SEC. 1 Coverage. Violations thereof shall be subject to the penal provisions provided under Art. 1986 are met. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. As used herein.. Ysan Castillo. the employer shall pay the deficiency. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. Kristel Macatangay. retirement and separation pay. if the following requirements are met: i) The benefit plan must be approved by the BIR. an underground mine employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every year of service. Jake Ng. SEC. 9. 3. “employees”.1 Any underground mine employee may retire or be retired by his employer upon reaching the retirement age established in the CBA or other applicable employment contract. 4. 1998) SEC. Rule II-A (Dep. Anna Tetangco 64 . Dianne Miano. The term “Act” refers to RA 7641 as amended by RA 8558. Retirement benefits. supplements or payments as provided in existing laws.For the purpose of determining the minimum retirement pay due an employee under this Rule. Charms Haw. 12-86 dated Aug. Jon Santos. SEC.Pensions. individual/collective agreements or employment practices or policies. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. subject to the provisions of Section 4 hereof on the payment of retirement benefits. holidays and mandatory fulfillment of a military or civic duty. . 288 of the Labor Code of the Philippines. the term “one-half month salary” shall include all the ff. tunnels. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. the terms “employee”. Monina Lagman. and Provided. SEC. 9 dated May 4.2 Compulsory retirement.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. ii) The retiring official or employee must have been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of retirement. Penal Provision. SEC. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. Edlyn Santiago. divided by the number of actual working days in that particular period. 4. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. the underground mine employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any CBA and other agreements: Provided. Effectivity. Monette Mesa.1 Optional retirement. 7. any such employee may retire upon reaching the age of sixty (50) years or more if he has served for at least five (5) years as underground mine employee or in underground mine of the establishment. 2(b) item (1) of Revenue Regulations No. or “covered workers” shall mean underground mine employee/s. to wit: Pensions. the employer shall pay the difference b/w the amount due the employer under this Rule and that provided under the CBA or other applicable employment contract. 8558. 2. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. 2. As used herein. Relations to agreements and regulations. Retirement under CBA/contract. This rule took effect on January 7. That if such benefits are less.1 In the absence of an applicable employment contract. crosscuts.Labor II are paid by results. Optional Retirement and Compulsory Retirement 2.2 Components of One-half (½) Month Salary. 1.2 In case of retirement under this section. This Rule shall apply to all underground mine employees as contemplated under RA No. For these purpose.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. raises. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. All rules and regulations. 8. winzes. SEC. the employer’s total contribution thereto shall not be less than the total retirement benefits to which the employee would have been entitled had there been no such retirement fund. SEC. Where there is no such plan or agreement referred to in the immediately preceding subsection. Exemption from tax. 3. . 3. Alpe Macalalad. and iii) The retiring official/employee shall not have previously availed of the privilege under the retirement benefit plan of the same or another employer.3 Service requirement. a fraction of at least 6 months being considered as one whole year.
Dianne Miano. 4. 8. whether such payments are fixed or ascertained on a time. however. AS AMENDED. Monette Mesa. 5. 9. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. SEC. Jon Santos. piece or commission basis. an employee upon reaching the age of sixty (60) years or more. 1998 when the RA 8558 went into force. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. Penal Provision. That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. 442. bargaining agreement or other applicable employment contract. Relations to agreements and regulations. This rule took effect on March 2. "In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Kristel Macatangay. SEC. of actual working period.Article 287 of Presidential Decree No. Ysan Castillo. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). 6. Monina Lagman. "Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. subject to the provisions of Rule VII-A.Labor II hours. To save costs. and includes the fair and reasonable value. 442. In 1992. may retire and shall be entitled to all the retirement benefits provided for in this Article. as determined by the Secretary of Labor and Employment. d) All other benefits that the employer and employee may agree upon that should be included in the computation of the employee’s retirement pay. is hereby amended to read as follows: "ART.01 Retirement REPUBLIC ACT NO. Franco Mallare. as amended. For covered workers who are paid by results and do not have a fixed monthly rate. the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided. A workforce audit showed that Irah Burog. who has served at least five (5) years in the said establishment. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR. Alpe Macalalad. Violations thereof shall be subject to the penal provisions provided under Art. 1998 Published in Malaya and Manila Times on March 7. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. (Dianne) Facts: Petitioners Roberto Ariola. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs. SEC. 288 of the Labor Code of the Philippines. whichever comes earlier. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national papers of general circulation. Heidi Soria. or other facilities customarily furnished by the employer to his employees. 287." SECTION 2. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex"). policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. c) One-twelfth of the 13th month pay due the employee. but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. The term does not include cost of living allowance.Retirement. Exemption from tax. Edlyn Santiago. "Unless the parties provide for broader inclusions. Philex sustained financial losses in its operations. "Retail. or other method of calculating the same. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. of food. "In case of retirement. Jake Ng. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES BY REDUCING THE RETIREMENT AGE OF UNDERGROUND MINE WORKERS FROM SIXTY (60) TO FIFTY (50) SECTION 1. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 1998. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. Approved: February 26. lodging. 15. a fraction of at least six (6) months being considered as one whole year. Anna Tetangco 65 . supplements or payments as provided in existing laws. who has served at least five (5) years as underground mine worker. SEC. task. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. b) The cash equivalent of five (5) days of service incentive leave.3 One-half month salary of employees who are paid by results. "An underground mining employee upon reaching the age of fifty (50) years or more. The ADS is the twelve (12) month of their retirement. Charms Haw. All rules and regulations. Effectivity. individual/collective agreements or employment practices or policies. otherwise known as the Labor Code of the Philippines.
(Reuters). Heidi Soria. to be computed from the time of her illegal dismissal on November 18." Respondent required certain documents in connection with petitioner's impending retirement. Jake Ng. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan. However. respondent Reuters implemented a Irah Burog. On October 1. finding that Philex suffered an operational loss of P33. However. It is also for this reason that we modify the award of backwages in her favor. This ballooned to P283. Edlyn Santiago. Monette Mesa. On 14 May 1993. Ÿ Retirement is the result of a bilateral act of the parties. The following day.Labor II Philex had 310 "excess positions. . Philex and the labor union representing the rank-and-file employees signed a Memorandum of Agreement ("rank-and-file's MOA") prescribing the criteria for retrenchment. In a letter dated December 3. Held: Petitioners' retrenchment was illegal. Philex paid them separation pay. respondent. the amounts petitioners received as net separation pay should be deducted from their backwages. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. citing "company policy. If reinstatement is no longer possible because the positions petitioners held no longer exist. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993." Held: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure. also known as the provision on Social Justice and Human Rights.” do not suffice brief exchange of letters between petitioner and respondent followed. after reaching a certain age agrees to sever his or her employment with the former. On 29 April 1993. respondent was guilty of illegal dismissal.000 in 1993. Dianne Miano. Anna Tetangco 66 . 1983. petitioners. Kristel Macatangay.743. Article 283 of the Labor Code governs retrenchment to prevent losses. 30 April 1993. Ÿ By themselves." Philex re-assigned some of the employees belonging to this group while others took early retirement. reinstatement is out of the question. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. For this reason. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958. respondent Reuters Limited. a company engaged in news dissemination with offices worldwide. through its Human Resources Development Office. Alpe Macalalad. Philex shall pay backwages as computed above plus. petitioner. employees are free to accept the employer's offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented by the employer. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. Thus. Philex informed the Department of Labor and Employment ("DOLE"). 287. Jon Santos. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. Petitioners are thus entitled to reinstatement with full backwages. separation pay equal to one-half month pay for every year of service.000 in 1992. as its local correspondent. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. This was pursuant to respondent's retirement plan for its employees which provided that its members could be automatically retired "upon reaching the age of 65 or after 35 years of uninterrupted service to the university. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action. All of them signed Deeds of Release and Quitclaim in Philex's favor. Charms Haw. Stated conversely. 1993. in lieu of reinstatement. An independent auditor confirmed Philex's claim of financial losses. of its plan to retrench 241 employees. 1982. On 1 June 1993. At this point. leaving 241 positions for retrenchment. beyond Philex's projected loss of P187 million. Phils. Ysan Castillo. petitioner began working for respondent's university medical center as a nurse. Monina Lagman. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. Article 287 of the Labor Code provides: ART. a voluntary agreement between the employer and the employee whereby the latter. at which time she would be 57 years old.173. Cordillera Administrative Region. As already stated. 1992. Baguio City. Thus. hired Marilyn Odchimar Gerlach. But respondent stood pat on its decision to retire her. with six other supervisors and 49 rank-and-file employees. we grant her separation pay in lieu of reinstatement. . Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. 1993 up to her compulsory retirement age. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. which allegedly evidence receipt of “retirement gratuities. . In the present case. the vouchers in question. By its express language. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years.
Monina Lagman. Alpe Macalalad. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. The third type is one that is voluntarily given by the employer. 1984. Ÿ Retirement benefits. Jake Ng. Basis Ÿ Aquino vs. In fact." The first paragraph of the above provisions deals with the retirement age of an employee established in (a) a collective bargaining agreement or (b) other applicable employment contract. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. she questioned the amount she received as well as her entitlement to a disturbance grant. Retirement benefits. vs. 1983. petitioner filed with the Office of the Labor Arbiter. invoking the retirement plan of the company which they said was contractual rather than statutory. were the petitioners still entitled to the retirement benefits? Held: Yes. respondent was able to prove that it has been its practice worldwide that the notional salary of an employee is its basis in computing its contribution to the retirement plan for a local employee detailed abroad. a money claim against respondent. However. The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing law. Monette Mesa. Article 287 of the Labor Code reads: "Article 287. under the Plan. where not mandated by law. the company's contribution to the fund is 10% of the basic monthly salary of each participant. Drilon. However.04. the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements. Section 14(a). apprised her of the details of her forthcoming assignment. It is this third type of retirement scheme which covers respondent's Plan.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. respondent assigned petitioner as a journalist to Reuters Singapore. provides: "Sec. Rachel Addison. contending that her retirement benefits must be computed on the basis of her actual salary abroad.228. in the instant case. . NCR. she opted not to contribute to the fund. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. We have held that it is a statutory right designed to provide the employee with the wherewithal during the period that he is looking for another employment. (b) a collective bargaining or (c) other agreements. Reuters' Eastern Region Staff Manager. The first type is compulsory and contributory in character. like the Social Security Act. which include retrenchment. Anna Tetangco 67 . Kristel Macatangay. Petitioner was automatically covered by the Plan by reason of her age and length of service. Dianne Miano. 14. She worked in Reuters Philippines up to December 23. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. Respondent also informed petitioner of the amount of her notional Philippine salary whenever she was transferred to her next overseas assignment or when there were increases in her salary. Before leaving. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. Edlyn Santiago. respondent based petitioner's retirement benefits on its Plan and established policy. 1991. and they received separation pay double that required by the Labor Code. which is in accord with the above provision. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. — (a) An employee who is retired pursuant to a bona fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein . specifically that her home base will always be the Philippines. Issue: Having received the separation pay. Retirement. not on her notional salary. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. petitioner received her retirement benefits under the Plan in the amount of P79. Jon Santos. Ysan Castillo. The computation was based on her notional salary. Eventually. The Plan is funded by the company. Significantly. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. Thereafter. Inc. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. they demanded retirement benefits. Charms Haw. both actual and notional. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. In Llora Motors. On January 23. Consequently. . In case of retirement. On March 1." Thus. It is very clear that from the very start of her first assignment overseas. whichever is higher. Ÿ There are three kinds of retirement schemes. it was held that Article 287 does not in itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. and is computed at least one month salary or at the rate of one-half month salary for every year of service. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. Heidi Soria. Nonetheless. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog.
it also behooves us to protect the sanctity of contracts that do Irah Burog. prior service rendered in a government agency can be tacked in and added to the creditable service later acquired in a government-owned and controlled corporation without the original charter Held: No. Dianne Miano. Subsequently. Ysan Castillo. B 2.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. There is. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive. Since the retirement pay solely comes from PNOC’s funds. Here. for the purpose of computing an employee’s retirement pay. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. however. public order or public policy and must. Kristel Macatangay. When a manpower reduction was implemented. or 3 shall be deemed to have opted to avail of such early retirement and paid the applicable and corresponding retirement pay/benefit provided therein. Jon Santos. With the inclusion of the provision abovementioned in the retirement plan. It was turned down. and (2) where the terms of settlement are unconscionable on their face. lessening the burden of worrying for his financial support. Monette Mesa. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. In addition. thus. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. Consequently. Edlyn Santiago. provided. Charms Haw. morals. Since retirement pay solely comes from company funds in this case. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits.Labor II life. be upheld. Afterwhich he was hired by LUSTEVECO. IV. intimidated or deceived into signing the Release and Undertaking. We cannot uphold petitioner’s contention that his 14 years of service with the DOH should be considered because his last 2 employers were GOCC’s and fall under the Civil Service Law. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. Issue: whether. after reaching a certain age. good customs. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No. While it is our duty to prevent the exploitation of employees. a private domestic corporation. — No retirement benefits are payable in instances of resignations or terminations for a cause. not being contrary to law. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art. therefore. ostensibly. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. Gamogamo vs. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. especially where there are strong equitable considerations as in this case. the totalization principle in RA 7699 cannot be availed of because it is resorted to only when retiree does not qualify for benefits in either or both the SSS and GSIS. Settled is the rule that not all quitclaims are per se invalid or against public policy. In the case at bar. If there is no provision contained in the collective bargaining agreement to the effect that benefits received under the Termination Pay Law shall preclude the employee from receiving other benefits from the agreement. We discern nothing from the record that would suggest that petitioner was coerced. issued a memo announcing retrenchment and one of the affected employees was Lopez. Resignations and Terminations. When he was about to retire petitioner filed a complaint for the full payment of his retirement benefits and for an accumulated service of 32 years to the government. Neither are we convinced that the Ÿ consideration for the quitclaim is unconscionable because it is actually the full amount of the retirement benefit provided for in the company's retirement plan. We cannot presume that it forms an implicit part of either the CBA or the law. Anna Tetangco 68 . agrees to sever his employment with the latter. corporation employed employees and of them was Divina Lopez. petitioner requested to be included in the retrenchment schedule. Alpe Macalalad. the retirement plan is succinct in denying such benefits. “E. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. Separation pay arising from a forced termination of employment and benefits given as a contractual right due to many years of faithful service are not necessarily antagonistic to each other. The provisions of the NSC's retirement plan which petitioner admitted applies to her. there is no such provision. PNOC acquired and took over the shipping business of LUSTEVECO. Issues: whether Lopez is entitled to retirement benefits even though at the time of the retrenchment she has not yet reached the mandatory retirement age. Jake Ng. Monina Lagman. and are a form of reward for his loyalty and service to the employer. does not give petitioner the right to her claimed benefits. When the corporation suffered losses. The retirement plan is a binding agreement. Heidi Soria. Interpretation Ÿ Lopez vs. the 5-year expansion program and the Integrated Steel Mill Project.
Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. Here. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited. they are no longer entitled to retirement benefits. Alpe Macalalad. Age Ÿ MAI Phils. However. what each actually received is a separation pay. Article X thereof. however. Yet a serious mistake. Jake Ng. Jon Santos. It is a fact that petitioners were involuntarily separated from service and thus. Given such facts. Petitioners then filed with the Labor Arbiter a complaint for payment of retirement benefits because they alleged that what each received was a separation pay and not retirement benefits. Kristel Macatangay. pursuant to the CBA. resulting in an impasse between the petitioner bank and the private respondent union. under the law should be given separation pay. petitioners were separated from the service for cause. specifically cited by him. Ysan Castillo. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims. Anna Tetangco 69 . and there is no reason to invalidate their Releases and Quitclaims. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. because by the terms of those very same retirement plans invoked by him. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company. may be ascribed to the Commission. The Court will not disturb this finding for upon review of the said quitclaims. its refusal. Dianne Miano.A. No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay. suffered substantial losses. such interpretation cannot be made in this case in light of the clear lack of consensual and statutory basis of the grant of retirement benefits to petitioner. which is the retirement age fixed by the Labor Code. Salomon vs. and Nolasco's claim — that under MAI's retirement plans. the retirement age is 65 — is wrong. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. The same however. The NLRC and the Labor Arbiter ruled that the amount received by petitioners as shown in their quitclaims represent all the retirement benefits due them. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. As a result of said complaint. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners. It appears that when the private respondents sought the implementation of Section I. NLRC (Monina) Facts: At the time the controversy started. pertaining to uniform allowance. it is worthy to note that the company failed to comply to such judgment by arguing that there is no substantially equivalent position anymore and instead offered to give separation pay in accordance with law. petitioners instead of receiving their separation pay. such interpretation cannot be made here. Issue: whether the grant of “retirement benefits” to petitioners as shown in their quitclaims precludes their availment of retirement benefits pursuant to the CBA Held: A perusal of the provision of petitioners' CBA on retirement readily shows that the same is optional on the employees who have served private respondent company for at least 15 years. Consequently. the retirement age of 65 applied only to employees in the U. 1982. Private respondent thus. it is apparent that the amount is representative of all the claims of petitioners. Monina Lagman. Article XI of the CBA regarding the retirement plan and Section 4. and Puerto Rico. Accordingly and considering their Releases and Irah Burog. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. Heidi Soria. under the law should give separation pay. for as of that day. amounting to grave abuse of discretion. the acting conservator of the petitioner expressed her objection to such plan. vs. Association of International Shipping Lines (Monina) Facts: When the Association of International Shipping Lines Inc. The deadlock continued for at least six months when the private respondent. Charms Haw. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. and that is. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. Edlyn Santiago. petitioner was placed by the Central Bank under a conservator for protecting its assets.Labor II not contravene our law. Rationale Ÿ Producers Bank vs. he had already reached the age of 60 years. Monette Mesa.S. to resolve the issue. Issue: whether the CBA can still be implemented Held: Prescinding from the rationalization that a conservator cannot rescind a valid and existing contract and that the CBA is the law between the contracting parties. or neglect to consider the fact — again quite plain from the record and to which MAI had adverted more than once — that the matter of Nolasco's reinstatement had become moot and academic at the time that he filed his second action before the labor arbiters' office against MAI on August 16.
as well as an effective inducement for remaining with the corporation. what is also well-settled. As such. However. Brion was adjudged by the SDA in 1983 to be qualified for retirement. Issue: whether or not the average monthly sales commission should be included in the computation of his retirement benefits and 13th month pay Held: No Irah Burog. Reyes did not agree with the computation of the company and hence filed a complaint. It bears repeating that apart from the nonimpairment clause. the "overriding commissions" paid to him by Universal Robina Corp.Labor II Article XI. When the retired employees were requesting that their retirement benefits be granted. Issue: Petitioner asserts since the employees have retired. Therefore. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. the retirement of an employee does not. it is not the criterion which would entitle him to a commission. he was excommunicated. South Phil. the SDA insisted that an employee must devote his life to the work of the SDA even after retirement in order to continue enjoying retirement benefits. under the SDA's retirement plan. to the point of being trite. Section 4 of the CBA. the status of an employee entitled to the protection of the Labor Code. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. Dianne Miano. In fine. as a consequence of which no employee-employer relationship exists anymore between it and the employees. a continuing consideration for services rendered. Monette Mesa. Monina Lagman. for the purpose of prosecuting his claims. Issue: Must the conditions for eligibility for retirement be met only at the time of retirement or are these conditions continuing ones which must be complied with even after one has retired? Held: The Court found for petitioner Brion. Petitioner filed for optional retirement upon reaching the age of 60. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. and the Court cannot give its imprimatur for retirement. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. Ysan Castillo. especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code. Anna Tetangco 70 . Alpe Macalalad. Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees to sever his employment with the former. when an employee has retired but his benefits under the law or the CBA have not yet been given. vests on him. Charms Haw. He eventually retired. and are a form of reward for his loyalty. but more importantly by the fundamental law of the land. Edlyn Santiago. As was the practice of SDA. Jake Ng. private respondent no longer had the personality to file the complaint for them. Unit Managers are not salesmen. be recognized. but the actual sale transactions brought about by the individual efforts of the salesmen.919. since these must be protected as though there had been no interruption of service. direct or necessary relation to the amount of work he actually performed. However. Brion was provided a monthly amount of retirement benefit. As correctly ruled by public respondent NLRC. if the employee is eligible. Section 1 and Article X. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired. Hence. affect his employment status especially when it involves all rights and benefits due to him. one of which is the protection of the labor union. Held: Petitioner's contention in untenable. as it were. as embodied in the CBA. Thus. they were not pleading for generosity but were merely demanding that their rights. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. This negated the very concept of retirement. Jon Santos. Kristel Macatangay. the basis in computing his retirement benefits is his latest salary rate of P10. must be met at the time of retirement at which juncture the right to retirement benefits. he still retains. It is intended to help the employee enjoy the remaining years of his life. releasing him from the burden of worrying for his financial support. its benefits are designed for those who have devoted their lives to the work of the SDA. The collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in the form of a commission. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. Brion got into an argument with another pastor of SDA culminating in the establishment of a new religious group and enticing other SDA members to join. in itself.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. and these benefits shall terminate with the death of the beneficiary except in the presence of an eligible surviving spouse and/or children. they do not effect any sale of article at all. Sometime. The very essence of retirement is the termination of the employer-employee relationship. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. Here. however. Heidi Soria. Ÿ Brion vs. Accordingly.
Retirement is a different specie of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. The union filed a notice of strike and subsequently picketed in front of the school. Dianne Miano. Ÿ Llora Motors vs. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. 15. whichever is higher. Upon reaching 65 he stopped working. it must have been convinced that Brion had devoted his life to the work of the SDA. We rule that the conditions of eligibility for retirement must be met at the time of retirement at which juncture the right to retirement benefits or pension. Drilon (Oreo) Facts: Alviar began working for Llora motors as a truck driver in which his salary is computed on a per trip basis plus ECOLA. Phil. whichever is higher. vests in him. before a right to retirement benefits or pension vests in an employee. Kristel Macatangay. Heidi Soria. age. as amended. Under Section 4. the employee to be terminated may be unwilling to part from service. Charms Haw. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. the same being higher than what Article 283 of the Labor Code. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. affected employees. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. Jake Ng. Ysan Castillo. the employees are entitled to a retirement pay equivalent to one and a half (1 ½) months pay for every year of service computed on the basis of their basic monthly salary at the time of retirement. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. While in all three cases. Edlyn Santiago.Labor II year. Jon Santos. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. Under Article 283 of the Labor Code. petitioners are not entitled to both separation pay and retirement benefits. Here. Ground Termination Cainta Catholic School v. Monette Mesa. as amended. Brion's excommunication and "disfellowship" was misplaced considering that he had already a vested right to receive the retirement benefits and the same is not a ground for termination of the retirement. a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. After the election of union officers the school retired some of its official who rendered atleast 20 years of service as stated in the CBA. this Court will not hesitate to adopt the latter interpretation. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. provides. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. As we held in Cipriano and Aquino. Anna Tetangco 71 . In those two instances. or retirement benefits prescribed by the Retirement Plan. 25 the School has the option to retire an employee upon reaching the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. He now files a case for the collection of his retirement Irah Burog. as amended. It has been held that "pension and retirement plans create a contractual obligation in which the promise to pay benefits is made in consideration of the continued faithful service of the employee for the requisite period. In other words. Twenty years is a more than ideal length of service an employee can render to one employer. and length of service. Where two constructions of a retirement plan are possible. Under the Retirement Plan before us. Article VI 12 of respondent’s Retirement Plan. In the years 1993 and 1994 it suffered substantial business losses which forced it to adopt a streamlining program that caused the closing of some of its branches and laying off some of its workers among them is Cruz. Retirement. the last three (3) years of which must be continuous. The CBA in the case at bar contains no such infirmities which must be stricken down. Cruz however despite receiving separation pay asks for his retirement benefits. Pursuant to the existing CBA. he must have met the stated conditions of eligibility with respect to the nature of employment. if the employee is eligible. and the other of which sanctions the severance by the retiree of his employment thereto at retirement.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. Alpe Macalalad. is the result of a bilateral act of the parties. on the other hand. one of which requires the retiree to devote his life to the service of the church even after retirement. This is a condition precedent to his acquisition of rights. in case of retrenchment or cessation of operations. Monina Lagman.
Catalina College vs. supra). Monina Lagman. NLRC) 15. on the other hand are intended to help the employee enjoy the remaining years of his life. It is a money. does not purport to require "termination pay" to be paid to an employee who may want to retire but for whom no additional retirement plan had been set up by prior agreement with the employer. Inc. After being paid his cash deposit he executed a quitclaim. benefit or bounty given to the worker. Monette Mesa. The third type is one that is voluntarily given by the employer. The asymmetry in the law in granting separation pay to employees who have served the company for at least one year but denying retirement benefits to those who have reached retirement age in the absence of agreements granting the same. then payments under such retirement plan may be credited against the termination pay that is due. What Section 14 of Implementing Rule I may be seen to be saying is that where termination pay is otherwise payable to an employee under an applicable provision of the Labor Code. 15. Irah Burog. Ÿ Ÿ As stressed in Llora Motors. 91 SCRA 265 ). v. (Sta. Retirement benefits. Ÿ What needs to be stressed. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits (Allied Investigation Bureau. Drilon. Section 14 itself speaks of an employee "who is retired pursuant to a bona-fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy. Jon Santos. the purpose of which is to reward employees who have rendered satisfactory service to the company. Edlyn Santiago. is that Section 14 of Implementing Rule I.Labor II benefits and ECOLA underpayments.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. Inc. Jake Ng. Thus. Ysan Castillo. subject. He now files for monetary claims including his retirement benefits. These conditions are: (a) that payments under the additional retirement plan cannot have the effect of reducing the amount of termination pay due and payable to less than one-half (1/2) month's salary for every year of service. Dianne Miano.04 BENEFITS AND GRATUITY Ÿ Gratuity pay is paid to the beneficiary for past services or favors rendered purely out of the generosity of the giver/grantor. releasing him from the burden of worrying for his financial support. and are a form of reward for his loyalty to the employer. GVM on the other hand denies having such liability. There are three kinds of retirement schemes.. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them (Llora Motors. granting him retirement benefits. and (b) the employee cannot be made to contribute to the termination pay that he is entitled to receive under some provision of the Labor Code. v. The first type is compulsory and contributory in character. Alpe Macalalad. is for the legislature to remedy. Llora in its answer contend that Alviar abandoned his work. Gratuity. Respondent is not asking for retirement benefits due him under the Social Security Law. in other words. Heidi Soria. NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service. Kristel Macatangay. Ople. contract or an established company policy. however. however. the employee is entitled to the full amount of his termination pay plus at least the return of his own contributions to the additional retirement plan. Article 287 does not in itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. Inc. is not intended to pay a worker for actual services rendered of for actual performance. like the Social Security Act. He does not claim that there is a collective bargaining agreement or other applicable. Charms Haw. Anna Tetangco 72 . like Article 287 of the Labor Code. therefore. to certain conditions. and an additional or consensual retirement plan exists.
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