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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
The characterization of an employee’s services as no longer necessary or sustainable. Such appraisal was not done in the instant case. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. It is not enough for a company to merely declare that it has become overmanned. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. For it to be valid. its business to avoid further losses or mitigate expenses. in contrast to redundancy. The fact alone that a mere portion of the business of an employer. such as overhiring of workers. a fair and reasonable criteria must be used. the firm amy choose to close all. Before any reduction of personnel becomes legal. Edlyn Santiago. provided that violation of law or arbitrary or malicious action is not shown. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. 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. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. not the whole of it. Ÿ In selecting the employees to be dismissed. temporary employee). In exercising its right to retrench emplooyees. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. and the imminent losses sought to be forestalled are substantiated. was dismissed 6 months after being hired on the ground that his position had become redundant. decreased volume of business or dropping of a line or service activity. Monette Mesa. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. The employer has the burden of proving that the losses are Irah Burog. Dianne Miano. Inc. viability of the newly created positions. b) efficiency and c) seniority. such as but not limited to. Kristel Macatangay.Selection of Employee Ÿ Panlilio vs. or a part of. such as new staffing pattern. Jon Santos. a) preferred status. the losses expected must be substantial and not merely de minimis in extent. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Retrenchment. The amount depends on the ground for the termination of employment. 2) the losses are actual or reasonably imminent. was one of those termininated. job description. Ysan Castillo. Issue: Were the dismissals on the ground of redundancy valid? Held: No. Monina Lagman. one of which was the illegal dismissal of some union members. NLRC (Eds) Facts: Moises Panlilio. 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. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC.. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. and c) seniority. contrary to the ruling of the NLRC. if already incurred.g.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. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. Jake Ng. a Property Appraisal Specialist and a Department Officer-in-Charge. is an exercise of business judgment on the part of the employer. they were terminated due to retrenchment not redundancy. feasibility studies/proposal. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses. such as but not limited to: a) less preferred status (e. 283(c) of the Labor Code. Alpe Macalalad. b) efficiency. Phil. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. and therefore properly terminable. Ÿ Golden Thread Knitting Industries vs. In this case. There was no substantial evidence to justify Panlilio’s dismissal on such ground. the retrenchment must be reasonably necessary and like to effectively prevent such losses. much less was the company’s claim supported by any evidence. Anna Tetangco 4 . a Recreational Manager of Sheraton Hotel in oman. is an economic ground to reduce the number of employees. and 4) the alleged losses. Heidi Soria. Prudencio Tanjuan. Charms Haw. In this case. 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. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. however. The company alleged redundancy in their position as defense for dismissing them. program. and the approval by the management of the restructuring. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec. and in this case. Evidence should have been presented to support this contention. Issue: Was Tanjuan’s dismissal illegal? Held: No.
and c) seniority. such as but not limited to: a) less preferred status (e. which. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. never contested the veracity of the audited financial documents offered by Asian Alcohol. and that they were singled out for separation by reason of their active participation in the union. contrary to the respondents’ claim. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. There was also no proof that the program was designed to bust the union. and c) seniority. a fair and reasonable criteria must be used. In this case. In this case. The employer shall Irah Burog. In this case. xxx xxx xxx Sec. Jake Ng. guidelines. Jon Santos. 5. 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. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. However. capricious and vindictive. such as but not limited to a) preferred status. Lopez Sugar Corp vs. as long as the requirements under the law are complied with. Monina Lagman. private respondents. Alpe Macalalad. 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. whichever is higher. Asian Alcohol v. Heidi Soria. Edlyn Santiago. and 5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. 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. or standard for selection of dismissed employees renders the dismissals whimsical. and financial hardship for certain workers. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. but substantial. Retrenchment must be undertaken by the employer before losses are actually sustained. actual and real. 283 of the Labor Code. b) efficiency. actual and real. real and substantial losses. the audited financial statements submitted by the corp adequately supported their claim of actual. NLRC Ÿ Employment of Independent Contractor.Effect Asian Alcohol Corp vs. Answer and hearing. Ÿ In selecting the employees to be dismissed. are not merely de minimis. 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. “retrenchment to prevent losses” is also allowed. NLRC (Eds) Facts: Due to mounting business losses. if already incurred. Besides. union and non-union members were treated alike. 2. serious. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. b) efficiency. 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. Notice of dismissal. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer.g. Dianne Miano. seniority. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. Here. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. physical fitness. Golden Thread Knitting Industries v. temporary employee). Under Art.Labor II serious. Ysan Castillo. NLRC The absence of criteria. Kristel Macatangay. Issue: Were the private respondents illegally dismissed? Held: No. ?? 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. Monette Mesa. the notice shall be served at the worker's last known address. Anna Tetangco 5 . age. Charms Haw. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. Some of the dismissed union members filed a suit for illegal dismissal. efficiency. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. such as status. In cases of abandonment of work. The law allows an employer to downsize his business to meet clear and continuing economic threats. 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. 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.
Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". to require petitioner Wiltshire to hold a hearing. or of automation. b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. 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. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. Such substantial loss apprehended must be reasonably imminent. 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". or seasonal fluctuations or during lulls occasioned by lack of orders. Lead Electrician for the corp. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. must also be proved by sufficient and convincing evidence. Charms Haw. Again. industrial depression. as in the instant case. whichever is higher. allege any malfeasance or non-feasance on the part of the employee. as such. at which private respondent would have had the right to be present. (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". Retrenchment to prevent losses Irah Burog. 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. The appropriate forum for such controversion would. It is essentially required that the alleged losses in business operations be proven. Monette Mesa. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. resorted to by management during periods of business recession. The losses expected should be substantial and not merely de minimis in extent. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. NLRC) Defined FF Marine Corp vs. Alleged losses if already realized. (Wiltshire vs. NLRC(Charms) C. 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. Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. after less drastic means. on the business and financial circumstances compelling retrenchment and resulting in redundancy. Edlyn Santiago. to begin with. The corp failed to adduce financial statements duly audited by independent external auditor. 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. (Wiltshire vs. Jon Santos. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. The ground for retrenchment availed of was not sufficiently and convincingly established. imminence can be perceived objectively and in good faith by the employer. Dianne Miano. Thus. 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. and expected imminent losses sought to be forestalled. 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. Anna Tetangco 6 . Jake Ng. however. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. Alpe Macalalad. The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. In such case. Heidi Soria. Ysan Castillo. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. Thus. Where. shortage of materials. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. Ricardo Magno.Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. Kristel Macatangay. 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. there are no allegations which the employee should refute and defend himself from. Monina Lagman. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. was one of those terminated.
A. 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 Society began to experience serious financial difficulties when it incurred a deficit of P2 million. the union declared a strike.00. Alpe Macalalad. Ÿ As did the appellate court. In the case at bar. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). Ÿ Alabang Country Club vs. that the same increased through a period of time. ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. "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. Monette Mesa.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. F & B Department had been incurring substantial losses in the aggregate amount of P8. Kristel Macatangay. NLRC (Charms) Facts: Francisco Ferrer. Consequently. Charms Haw. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. Both are mentioned in Art. Jake Ng. and sold its equity in the Philippine Ÿ Irah Burog. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. Jon Santos. for which they signed documents of waiver. It advised its employees." which. then President of ACCI. Dianne Miano. Consequently. JAT hired private respondent Jose F. including private respondent. however. The closure of business operation by petitioners. the company losses were duly established by the financial statements presented by both parties. Held: No Illegal Dismissal. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers.000. Further. requested its Internal Auditor. Coverage Philippine Tuberculosis Society vs. not to report for work starting on the first week of March 1998. cancelled its service agreement with a janitorial company. 4 "Retrenchment. this Court finds that the study report submitted by the internal auditor of petitioner. Private respondent's "redundancy program.727. it must be proven that the losses incurred are substantial and actual or reasonably imminent. and that the condition of the company is not likely to improve in the near future. 1 First. Irene Campos-Ugalde. Monina Lagman. in our view. the sales of heavy equipment declined because of the Asian currency crisis. Anna Tetangco 7 ." on the other hand. 1995.135. 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.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. NLRC (Charms) Facts: In the proceedings before the NLRC. petitioners had notified private respondent and all other workers through written letters dated November 25. In October 1997. As already stated. the only evidence submitted to prove its alleged losses. The affected employees were given separation pay equivalent to one month pay for every year of service.T General Services vs. JAT indefinitely closed shop effective May 1998. 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. some of whom were officers and members of the petitioner union. Distinction Closure and Retrenchment Ÿ Ÿ J. which is allowed under Article 283 of the Labor Code. The shortfall increased to P9. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding. There was substantial proof that the company was incurring substantial losses. as implemented on March 1. Prior to the rendition of the decision of the Secretary of Labor and Employment. contrary to the findings of the Labor Arbiter. Heidi Soria. Held: No illegal dismissal. Edlyn Santiago. As in the case of retrenchment.100. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE." while denominated as such. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. in 1989. it was shown that. her report showed that from1989 to 1993. Held: NO ILLEGAL DISMISSAL. NLRC Facts: Sometime in April 1997. JAT temporarily suspended its operations. 1988. 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. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. Among these was a socalled "redundancy program. Ysan Castillo. the Society leased a property in Tayuman to a fastfood outlet. 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. resulted in the layoff of around 177 employees. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent.
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. We cannot. Ysan Castillo. Held: ILLEGALLY DISMISSED. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. as the omission immediately makes the selection process unfair and unreasonable. and implemented the retrenchment of one hundred sixteen (116) employees. pursuant to Article 286 of the Labor Code. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. negotiated with the Government Service Insurance System for the restructuring of its obligations. the Rural Bank of Bangued dismissed three of its employees. the hotel operations of the business were suspended on March 31. it disapproved the overtime pay of supervisory and managerial employees. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. Held: ILLEGALLY DISMISSED. namely. financial statements. to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. While the closure of the hotel operations in April of 1997 may have been temporary. Charms Haw. 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. After all. 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. 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. as such imminence can be perceived objectively and in good faith by the employer. it withdrew from the Pag-Ibig Fund Program. 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. Finally. Indeed. Heidi Soria. for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses. retaining a newly hired employee and dismissing one who had occupied the position for years. 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. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog. 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." However. 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. in the development of the countryside through its loan portfolios and other services to the rural folk. whether for profit or not." employer to prove economic or business losses with appropriate supporting 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. Dianne Miano. its implementation of the scheme rendered the retrenchment invalid.Labor II Long Distance Telephone Company (PLDT). a failure which. Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. Monina Lagman. to our mind. NLRC (Charms) Facts: On June 30. even if the scheme should result in savings for the employer. Paulino Balbalec. Petitioner presented to the NLRC the balance sheets. should invalidate the retrenchment. both the past and forthcoming. Edlyn Santiago. Second. Ÿ Although petitioner is a non-stock and non-profit organization. Moreover. Procedure Ÿ Mayop Hotel & Restaurant vs. therefore. Legazpi City. 1999. Monette Mesa. since he would be paying the newcomer a relatively smaller wage. must be proven by sufficient and convincing evidence. Legazpi City. Jon Santos. obtained the waiver of personnel of their entitlement to wage differentials. and the reports of its external auditors for the years 1989 and 1990. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. retrenchment as a measure adopted to stave off threats to its existence is available to it. Anna Tetangco 8 . 2 The retrenchment is the subject of the present suit. The operation of the restaurant was continued in its new location at Elizondo Street. 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. Ÿ Balbalec vs. Kristel Macatangay. Alpe Macalalad. On the contrary. 1989. Things being equal. is simply unconscionable and violative of the senior employee's tenurial rights. such as the respondent bank. say that the finding of the NLRC is unsupported by substantial evidence. and applied for exemption from minimum wage increases. (2) The apprehended substantial losses must be reasonably imminent. Jake Ng. we find substantial evidence that petitioners intended the termination to be permanent. Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. (4) The losses.
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. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE. the bonafide nature of the retrenchment would appear to be seriously in question. 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. And even assuming that the closure was due to a reason beyond the control of the employer. it still has to accord its employees some relief in the form of severance pay. supervisors and department heads. Because of the consequential nature of retrenchment. but certainly not the least important. A memorandum was thereafter issued by EMCO. the losses expected should be substantial and not merely de minimis in extent. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. the employees should either be recalled to work or permanently retrenched following the requirements of the law. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. must Ÿ Requirements. Alpe Macalalad. cut other costs other than labor costs. Dianne Miano. Kristel Macatangay. the substantial loss apprehended must be reasonably imminent. Monette Mesa. alleged losses if already realized. Jon Santos. Anna Tetangco 9 . addressed to all its foremen. Resorted to by employers to avoid or minimize business losses. then petitioners should have complied with the requirements of written notice. be a certain degree of urgency for the retrenchment.Standards Irah Burog. Ÿ EMCO Plywood Corp vs. To determine whether the petitioners were validly retrenched or were illegally dismissed. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months.. 3) good faith in abolishing the redundant positions. Ysan Castillo. Monina Lagman. and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers. Abelgas (Charms) Facts: On January 20. Lopez Sugar vs. 1993. Secondly. The employer should have taken other measures prior or parallel to retrenchment to forestall losses. Franco Temporary Retrenchment Ÿ Sebugero vs. thirdly. and the expected imminent losses sought to be forestalled. The “loss” referred to in this provision cannot be of just any kind or amount. Heidi Soria. a corporation engaged in the manufacture and export of ready-to-wear garments. After six months. as such imminence can be perceived objectively and in good faith by the employer. section heads. EMCO. Jake Ng. but more importantly. Charms Haw. it must. be reasonably necessary and likely to effectively prevent the expected losses. represented by Lim.Labor II Ÿ To say the least. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. 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. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. otherwise. 1993 and of March 2. Edlyn Santiago. 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. i. 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. it is recognized under Article 283 of the Labor Code. To remedy this situation or fill the hiatus. in other words. These employees cannot forever be temporarily laid-off. whichever is higher. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents.e. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. 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. frequent machinery breakdown. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. There should. Retrenchment is one of the authorized causes for the dismissal of employees. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. low market demand and expiration of permit to operate its sawmill department. 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. Lastly.
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. but substantial. Jon Santos. Federation of Free Workers(Heidi) Irah Burog. seniority. Sto. Monina Lagman. actual and real. however. regular or managerial employees). 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. Amarilla (Jake) Facts: Blucor notified Amarilla. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. or the expected imminent losses sought to be forestalled. After the retrenchment program was implemented. and 12 managers and supervisors were promoted. more than 100 new workers were hired. physical fitness. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant. whether they are temporary. and the expected imminent losses sought to be forestalled. including some of those who had been retrenched. if already incurred. Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. Ysan Castillo. not de minimis. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the Nature of Loss Lopez Sugar vs. if already incurred. or if only expected. as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. SMC has thus proven substantial business reverses justifying retrenchment of its employees. Anna Tetangco 10 . Dianne Miano. Held: Decision of CA affirmed. and financial hardship for certain workers. and (4) sufficient and convincing evidence prove the alleged losses. such as status (i.” Ÿ Blucor Minerals Corp. Edlyn Santiago. in order to give employees some time to prepare for the eventual loss of their jobs. and (d) the alleged losses.. the Middle East war and the 9/11 incident in the United States of America. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. 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. or that a fair and reasonable criteria had been used in selecting the employees to be retrenched. casual. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union. The CA ruled that the dismissal was unjustified. are not merely de minimis. "on account of depressed business conditions brought about by the currency crisis in Southeast Asia. Petitioners failed to show any reasonable necessity for the retrenchment. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal. whichever is higher. 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. (2) the losses are actual or reasonably imminent. must be proved by sufficient and convincing evidence. Heidi Soria. expected losses. if already incurred. Jake Ng. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. age. (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. 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. Charms Haw. Kristel Macatangay. Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. (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.Labor II be proved by sufficient and convincing evidence. For termination due to retrenchment to be valid. Ÿ Philippine Carpet vs. Alpe Macalalad. (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. Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment. vs. Ÿ San Miguel Corp vs. serious. are reasonably imminent as perceived objectively and in good faith by the employer. efficiency. Held: Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees.e. Monette Mesa.
Charms Haw. the employer must prove serious business losses. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. materialized. in the carrying on of business operations. Alpe Macalalad. faced with dropping sales. In other words. petitioner Galace. indeed many. As a consequence. thus petitioner cannot justify the nonpayment of separation pay. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. Naval Base Facility located in San Miguel. 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. Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. "opted not to renew the existing contract nor bid on the new contract". the difficult question is determination of when. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs. Joni’s Food Services (Jake) Facts: In the 1990s. not all business losses suffered by the employer would justify retrenchment under this article. as found by the Court of Appeals. if such an intent were expressly written into the law. Phil. that law may well be vulnerable to constitutional attack as taking property from one man to give to another. Heidi Soria. Dianne Miano. 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. In the nature of things. Ÿ As petitioners themselves admitted. it held. in our view. It is not. One month before the target closure date of its remaining outlets. Carpet vs. or under what circumstances. 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.Labor II Fact: Employer. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. They that after the termination of the services of its members. Zambales. When the said contract expired. Sto. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. Held: NLRC decision affirmed. the employer becomes legally privileged to retrench and reduce the number of his employees. Employer advised 110 casuals to report to its personnel office. since some. Thus. the services of the complainants were terminated.S. To require an employer to be generous when it is no longer in a position to do so. unjust. in fact. otherwise. what they Ÿ Cama vs. leaving it with just three operating outlets at the end of 1998." Sliding Income Ÿ San Miguel Jeepney Service vs. San Antonio. JFSI shut down more outlets. To stem these serious losses. JFSI sent notices of Irah Burog. Jake Ng. the possibility of incurring losses is constantly present. respondents had no option but to lay off employees and eventually close shop. in greater or lesser degree. to provide transportation services to personnel and dependents inside said facility. allegedly to prevent losses due to major economic problems. it shut down three of these shops to avert serious business losses. Edlyn Santiago. that petitioners failed to present adequate proof of such losses. In its ordinary connotation. Kristel Macatangay. JFSI had 8 outlets for its coffee shop and restaurant business. Monette Mesa. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. however. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. Ysan Castillo. petitioner did not renew his contract because of "sliding incomes". the company found no recourse but to shut down its outlets. and not because of serious business losses. Indeed. Jon Santos. Ÿ Ÿ To justify retrenchment. Anna Tetangco 11 . NLRC (Jake) Facts: Petitioner SMJS had a contract with the U. owner and general manager of SMJS. he having suffered a net loss the prior year. Monina Lagman. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code. and unfair to the employer. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. Held: Apparently. In 1997. caused the retrenchment and retirement of a number of its employees. 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. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. in other words. would be unduly oppressive. 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. Held: Respondents assert that the company was taking losses of such magnitude which left its survival or future existence in the dark. due to financial difficulties. Thus.
1996. 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. Bogo Medelin vs. Still. Clearly. by itself.Labor II suffered were "sliding incomes". 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. It is beyond cavil then. The petitioner posits that even if respondent Paras had become a regular employee by November 26. they may be assailed as self-serving. Ÿ Danzas International vs. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. 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. the employer closing his business is obligated to pay his employees their separation pay. Hence. it is an essential requirement that alleged losses in business operations must be proven convincingly. that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. Monina Lagman. The termination of the 531 affected employees was made effective a month from receipt of the termination letter. or closure of the establishment because the brokerage department did not actually cease operations. much less serious business losses within the meaning of the law. 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. Edlyn Santiago. 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. Heidi Soria. Essentially. Otherwise. Alpe Macalalad. sliding incomes are not necessarily losses. in other words. Parenthetically. In accordance with the CBA. Otherwise. he would have been included among those who had been retrenched had he not been dismissed. the payment of backwages should be computed up to February of 1998. Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. the right of affected employees to separation pay is lost for obvious reasons. Jake Ng. good faith. Kristel Macatangay. 1996. Since the losses incurred must be substantial and actual or reasonably imminent. Considering that respondent Paras had just been regularized on November 24. Lopez Sugar vs. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. although the more overriding consideration is. 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. pursuant to the "last in first out policy" embedded in the CBA. Ysan Castillo. Ÿ Ÿ Mitsubishi Motors vs. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. Otherwise. Monette Mesa. What the law speaks of is serious business losses or financial reverses. Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. Federation of Free Workers A comparative statement of revenue and expenses for two years. in order to prevent further losses which threatened the company’s viability. to which losses were allegedly traceable due to incorrect handling of sales. if the business losses that justify the closure of the establishment are duly proved. Jon Santos. such ground for termination would be susceptible to abuse by scheming employers. of course. Anna Tetangco 12 . The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. Charms Haw. decreasing gross revenues. 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. is not conclusive proof of serious business losses. who Ÿ Composite Enterprises Inc. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. Held: The petitioner’s losses in 1997 and 1998 are not insignificant. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. Dianne Miano. vs. Financial statements must be prepared and signed by independent auditors. 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. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. 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. the petitioner concludes. he would have been included in the first phase of its retrenchment program.
1997 Memorandum of termination of employment. Ysan Castillo. NLRC. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. profit and loss statements and annual income tax returns. In the absence of the required certification by a competent public health authority. employment is to expire on November 3. After the expiration of his contract he was rehired (this extended for 5 contracts). After the 5th. in general. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. In the case at bar. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. in particular. Edlyn Santiago. It is readily apparent that petitioner did not comply with any of the foregoing requirements. 1997. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. Inc. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time. otherwise. for the memorandum states that respondent’s contract of Irah Burog. Burden of Proof Ÿ Sy vs. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. otherwise. and to the rehabilitation of Uniwide. or only three days later from the date of the Memorandum. Ÿ Worse. In other words. He filed a week long leave and found that he had osteoarthritis. When he was 59 years old.T. Ÿ For retrenchment to be considered valid. Jake Ng. the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. The financial statements must be prepared and signed by independent auditors. Ÿ To justify termination of employment under Article 283 of the Labor Code. vs. Jon Santos. this Court has ruled against the validity of the employee?s dismissal. I. Monina Lagman.Labor II deliverymen with Composite Enterprises. or if dismissed. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed. Alpe Macalalad. This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. attributing these to the Asian currency crisis. There is no evidence that it complied with the one-month notice requirement. failing which these can be assailed as self-serving documents. it failed to prove that such document was ever served upon respondent and the DOLE. if already incurred. Charms Haw. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. it is not enough for a company to merely declare that it has implemented a retrenchment program. Caparoso and Quindipan filed a case for illegal dismissal. that the dismissal was not illegal. Normally. 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. (International) Corp. Heidi Soria. Ÿ As this Court stated in Triple Eight integrated Services. the dismissal would be unjustified. Dianne Miano. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees. UTI. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. While petitioner claims that it issued to respondent an October 30. 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 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 found that his employers were not remitting his SSS contributions. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. his employment contract was not renewed. He filed an illegal dismissal case. the condition of business losses is shown by audited financial documents like yearly balance sheets. must be proved by sufficient and convincing evidence. He filed for a month leave but SBT refused and it was during this that SBT terminated him. heart enlargement. Moreover. and (d) the alleged losses. In the same case of Sevillana vs. and (b) the cessation of business must be bona fide in character. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. Monette Mesa. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. the notice is less than one month. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. and the expected imminent losses sought to be forestalled. Anna Tetangco 13 . Kristel Macatangay.. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp.
and. In fact. Monina Lagman. The notice must be given at least 1 month in advance of the intended retrenchment. Thus. 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. in other words. stating clearly the reasons therefor. Ysan Castillo.Labor II suspicions. Cement Corp. GTI conveyed to the petitioners the impossibility of recalling them. The DOLE is the agency that will determine whether the planned retrenchment is justified & adequately supported by facts. as correctly pointed out by the Labor Arbiter in his decision. When effected Ÿ In its ordinary connotation. 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. 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. actual losses need not set in prior to retrenchment. 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. Charms Haw. It is not. Ÿ National Bookstore Inc. 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.15 This is the situation in the case at bar. Due to economic slowdown. Sebugero vs. including petitioner. With respect to respondent TP Vinyl. Ymasa and Gabriel filed a case for illegal dismissal. respondents implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. When the required notices to the employees and to the DOLE are not given. (b) if the employer decides to terminate the services of the employee. Jon Santos. A written notice given to the DOLE is required by law. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. more than substantially observed this requirement. it shifted its business from production to marketing and trading of Thai Petrochemical products. these notices should have been served one month before. respondents failed to comply with the one-month notice requirement. 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. Edlyn Santiago. Ÿ Article 283 entails. vs. the employer must notify him in writing of the decision to dismiss him. among others. Heidi Soria. it was dissolved on January 27. 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. 1998. 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. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. Moreover. As mandated by Article 283. Such requirement is mandatory. Alpe Macalalad. Records show that on December 3. Petitioner National Bookstore. if he so desires. respondent TP Cement. Evidently. 1998. Monette Mesa. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. only a situation where there is "retrenchment to prevent losses. Following the provision of Article 283. Clearly. Jake Ng. Ÿ Anent the first requisite. Kristel Macatangay. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. 1998. because this time their lay-off is to become permanent. IPI Phils. Dianne Miano. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes. if such an intent were expressly written into the law. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. (Kristel) Facts: Benedicto Cajucom was the VP – Legal Affairs of IPI Cement. shortened its Ÿ Irah Burog. Anna Tetangco 14 . 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. but what the law requires is a written notice to the employees concerned. They were terminated for gross neglect of duty and loss of confidenc. having no viable projects. 1998. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. the retrenchment is defective. Federation of Free Workers corporate term from 50 years to 2 years and 7 months. or on November 30."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. But the burden imposed on petitioner National Bookstore does not stop here.
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. 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. Under the first kind. Thelma Navarette-Clemente (Dr. Charms Haw. upheld was only the legality of the redundancy program and not the legality of its implementation. 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. 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. EMCO vs. Monina Lagman. Heidi Soria. and as long as he pays his employees their termination pay in the amount corresponding to their length of service. 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. vs. The employees. Re-Hiring Effect Atlantic Gulf and Pacific Co. while under the second kind. Clemente). and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program.e. whichever is higher. (IPGC) leased a plywood plant to Industrial Timber Corp. Monette Mesa. unfair labor practice and damages. involving the same parties. They also signed releases indicating their conformity with petitioner's redundancy program. IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant.. Dianne Miano. Jon Santos. to avoid or minimize business losses. Liability Ÿ Capitol Medical Center vs. 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. Ÿ Ÿ Moreover. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. members of the AG&P United Rank and File Association. Ababon. Abelgas Ÿ Industrial Timber Corp. They alleged. whichever is higher. Meris (Kristel) Facts: Dr. 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. To save itself. i. while it is true that the company hired or re-employed some of the dismissed workers. which prompted private respondents to retrench. (b) the cessation of business must be bona fide in character. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. no law can compel anybody to continue the same. .Labor II his employees under Art. Kristel Macatangay. under Article 283 of the Labor Code. the employer must sufficiently and convincingly prove its allegation of substantial losses. The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. Dr. Ysan Castillo. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. 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. 283. Held: Private respondent's contention that what the Court in an earlier case. Alpe Macalalad. (ITC) ITC employed 387 workers. Edlyn Santiago. of Manila vs. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. a notice Irah Burog. More than a year after. received all the benefits due them under the Labor Code. Anna Tetangco 15 . petitioner was charged with unfair labor practice and illegal dismissal by private respondents. reportedly incurred huge operating losses. petitioner implemented a redundancy program wherein 177 employees occupying rank and file. 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. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. among others. Meris was the industrial service unit chief of Capitol Medical Center. et al.". managerial and staff positions were separated from employment. filed a complaint against ITC and IPGC for illegal dismissal. In sum. The rehiring or re-employment does not negate the imminence of losses. Jake Ng. Dr. Just as no law forces anyone to go into business. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work. This is to allow the employees to look for other employment. Ababon (Kristel) Facts: Industrial Plywood Group Corp. Meris received from Capitol’s president and chairman of the board.
Ruling: Explicit from Art. he is entitled to either reinstatement or separation pay if reinstatement is no longer viable. 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. Edlyn Santiago. 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. San was previously engaged in the business of manufacturing biscuits and other related products. Charms Haw. 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. Meris not having been premised on a just or authorized cause. however. In the general meeting of the workers. there was no illegal dismissal to speak of. Monina Lagman. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. and such act would be tantamount to a taking of property without due process of law. as in the instant case. Kristel Macatangay. Clearly then. she announced her plan to close shop e. Heidi Soria. Just as no law forces anyone to go into business. Anna Tetangco 16 . 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. Dr. and to backwages. Accordingly. Finally. whichever comes first. The records reveal that private respondents complied with the aforecited requirements. Ysan Castillo. And the burden of proving such falls upon the employer. This fact negated the obligation to pay backwages. Jake Ng. 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. (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. Sison decided to retire from business when she became sickly.” Ÿ The termination of the services of Dr. 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. Closing of Business. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. since private respondents cessation and closure of business was lawful. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. whichever is higher. she declined to accept new projects and proceeded with the winding up of her business. The announcement in advance was intended to give the workers ample time to look for alternative employment. Jon Santos.283 Right Ÿ Espina vs. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment. 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. The employer need only comply with the following requirements for a valid cessation of business operations. Ÿ Just as no law forces anyone to go into business. no law can compel anybody to continue the same. Monde. 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. 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. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. Monette Mesa.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief.Y.Y. fide in character. Her health did not improve despite proper medical attention. Macadams Metal Engineering vs. and full backwages from the time of his dismissal from April 30. Dianne Miano.Y. Alpe Macalalad. such exercise will be upheld. M. The determination to cease operations is a prerogative of management which the State does not usually interfere with. can lawfully close shop at anytime. CA (Heidi) Facts: M. or one month pay. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment. Sison. Ÿ D. no law can compel anybody to continue in it. The owner. Instead private respondents were required to give separation pay which they already did. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. with a fraction of at least six (6) months being considered as one(1) year. 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. Reinstatement. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. for any bona fide reason. and that M. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement.
Anna Tetangco 17 . The social justice and protection to labor provisions in the Constitution dictate so. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127. and P13. 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. Dianne Miano. Monette Mesa. .785. Edlyn Santiago. the petitioners had not presented evidence to the contrary. Meris Work is a necessity that has economic significance deserving legal protection. 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. Besides. to wit: P65. management subsequently held a conference with all 13 field workers to explain to them the reason for this move. (b) the substantial losses apprehended must be reasonably imminent. such exercise will be upheld. Petitioners received their termination pay or retirement pay under the pension plan. 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 . Kristel Macatangay. employers are also accorded rights and privileges to assure their selfdetermination and independence. 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. as long as he pays his employees their termination pay in the amount corresponding to their length of service. 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. NLRC. 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.89 in 1998. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. nor did they establish that the closure was motivated by Galaxie’s anti-union stance. One of the rights accorded an employer is the right to close an establishment or undertaking. P48. Jon Santos. it is logical for it to implement a retrenchment program to prevent further losses. the closure then is due to serious business losses. must be proved by sufficient and convincing evidence. Considering the losses suffered by private respondent. as well as the computation of their termination pay. indeed. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character.00. And it posted the notice of closure on the corporate bulletin board. In North Davao Mining Corporation v. In a letter.389. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. Ÿ Galaxie Steel Workers Union vs.000. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners. 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. Monina Lagman.Labor II Ÿ Cattista vs. In view of such decision. 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. It would. if already incurred. and (d) the alleged losses. 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.429. and the expected imminent losses sought to be forestalled. Galaxie decided to close down its business operations. Ysan Castillo." Where. and of the various demand notices of payments from creditor banks. . 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. This mass of privileges comprises the so-called management prerogatives. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital.65 in 1997. and reasonable Ÿ Irah Burog. the Labor Code does not impose any obligation upon the employer to pay separation benefits. Although they may be broad and unlimited in scope. In any case.480. VMC's personnel reduction program was meant to reduce excessive labor costs in the company.753. 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.204.97 in 1999. On the other hand. Capitol Medical Center vs. Heidi Soria.000. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent. Jake Ng. 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. Clearly then. And the burden of proving such falls upon the employer. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. Alpe Macalalad. Charms Haw. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. NLRC (Heidi) Facts: Victoria’s Milling Corp. whichever was higher.
Heidi Soria. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. But even though the transfer was due to a reason beyond its control. 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. amounts to cessation of petitioner's business operations in Makati. Now. Edlyn Santiago.Labor II return of capital. The complete closure of business operation by petitioners. 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. 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. not one reported for work at petitioner's new site. Industrial Timber Corp vs. 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. Dianne Miano. 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. Cheniver gave its workers additional time within which to report to the new work place. One of the rights accorded an employer is the right to close an establishment or undertaking. accompanied with an act of relinquishment. 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. In view of the impending transfer. Resignation must be voluntary and made with the intention of relinquishing the office. Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. whichever is higher. NLRC (Heidi) Facts: Cheniver operates a printing business. 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. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. Jake Ng. Ÿ Broadly speaking. Monina Lagman. does not appear convincing. Consequently. Anna Tetangco 18 . That is its prerogative. Cheniver has to accord its employees some relief in the form of severance pay. Resignation is inconsistent with the filing of the said complaint. 286. thus the procedural requirement for terminating an employee does not come into play yet. Since the closure of petitioner's business is not on account of serious business losses. Five days later. However. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. Alpe Macalalad. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. otherwise. not construable as resignation. 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. Jon Santos. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver. Nonetheless. 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. it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. This mass of privileges comprises the so-called management prerogatives. Ysan Castillo. Cheniver's contention that private respondents resigned from their jobs. Earlier. Monette Mesa. 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. Suffice it to state that there is no termination of employment during the period of suspension. in our view. the labor federation informed petitioner that the employees decided to continue working for petitioner. Although they may be broad and unlimited in scope. it would hire replacements. Kristel Macatangay. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. 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. 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. otherwise. 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. hence. Charms Haw. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. JAT General Services vs. NLRC that several employees namely. they would be considered to have lost interest in their work and would be replaced. Cheniver wrote its employees to report to the new location within 7 days. Later on. Ordinarily. Indeed. As public respondent observed.
the State is bound to intervene. 10 days later. that its cessation of operation was really necessitated by its financial condition. his means of livelihood. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer.T vs.286 Basis San Pedro Hospital of Digos vs. Charms Haw. corporation. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. and in the exercise of such management prerogative. The last patient was consequently discharged. Alpe Macalalad. Despite the NCMB's call for a conciliation conference. The union had a pending application for registration BLR.A. there is substantial evidence that petitioners intended the Irah Burog. the employer may merge or consolidate its business with another. or its losses abated. the law requires the employer to prove that it suffered substantial actual losses. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations. no business can be required to continue operating at a loss. organized Me-Shurn Workers Union-FSM. 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. is a charitable. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. That would be a taking of property without due process of law. Inc. what is more important. the determination to cease operations is a management prerogative that the State does not usually interfere in. J. Monette Mesa. The same principle applies in temporary suspension of operations. But where it is manifest that the closure is motivated not by a desire to avoid further losses. petitioner had to establish the fact of its precarious financial health. it must also protect the right of an employer to exercise what is clearly a management prerogative. nonstock. 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. Jon Santos. Held: To justify the closure of a business and the termination of the services of the concerned employees. the evidence belies any claim that the lay-off of respondents was merely temporary. with union. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. on account of its alleged inability to meet the export quota required by the BOI. Indeed. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. Heidi Soria. Espina vs. vs. considering that the dismissal of an employee from work involves not only the loss of his position but. NLRC Ÿ Temporary Cessation of Operation. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. Doctors began leaving the hospital and the number of patients dwindled. considering that it involves laying off employees for a period of six months. 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. CA Requisite Mc-Shurn Corp. the hospital management considered the union actions as tantamount to a strike. Ysan Castillo. Anna Tetangco 19 . These acts constitute unfair labor practices. simply to maintain the workers in employment. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. Itr had a 3-year CBA covering from 1987 until 1990. Kristel Macatangay. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. The cessation of a company’s operations shortly after the organization of a labor union. and that said condition would probably be alleviated or improved. Even as the law is solicitous of the welfare of the employees. as well as the resumption of business barely a month after. Jake Ng. It is not enough to merely raise this issue nor to discuss it only in passing. On the contrary. by undertaking such suspension of operation. Edlyn Santiago. as in this case. In this instance. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. The operations of the hospital having come to a grinding halt. Monina Lagman. 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.Labor II absence of serious business losses or financial reverses. The union saturated petitioner's premises with streamers and picketed the hospital. Ÿ Ÿ Concededly. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. but only 14 out of the 74 rank-and-file employees/union members acknowledged receipt thereof. Similar notices were individually delivered to union members. as long as he pays his employees their termination pay in the amount corresponding to their length of service. Dianne Miano. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary.
286. Dianne Miano. Mabuhay F. Pido was an employee of Cherubim Security and General Services." he does not receive any salary or financial benefit provided by law. Inc. Anent the delay of seven days in the filing with the Court of Appeals of the petition. Edlyn Santiago. indeed. it led to the termination of the services of the SMC employees at the Mandaue Brewery. Eventually. Heidi Soria. Justice Vicente V.284 Ÿ The requirement for a medical certificate cannot be dispensed with. 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. Jake Ng. Floating Status Irah Burog. Effect on Employer-Employee Relationship Ÿ If a legitimate. 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. As a consequence. with more reason will an invalid and illegal suspension of operations. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. signed by the employees concerned as reasonable settlements. Assuming arguendo. When a security guard is placed on a "floating status. Also. pursuant to Art. NLRC (Dianne) Facts: Federito B. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. Charms Haw. Digos E. as in this case. San Pedro Hospital vs. 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. had ripened to constructive dismissal. Mendoza. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. clearly indicates that he did not abandon his work. Monina Lagman. For as explicitly provided therein. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. His prolonged suspension.38 caliber revolver service firearm and duty detail order had already expired. Jon Santos. Mayon Hotel vs. Section 3. Anna Tetangco 20 . He was later on suspended following his argument with Alcantara. Installation of Labor Savings Device Ÿ Abapo vs. Apropos this responsibility. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. CA G. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. Monette Mesa. Inc. due to non-payment of rentals. Sy vs. Pido was constructively dismissed. not affect the employment relationship. Ÿ Verily. Mc-Shurn Corp. In security services. Ysan Castillo. leased the premises belonging to Santiago Syjuco. Drilon (Dianne) Facts: Hotel Mabuhay. Inc. the petitioners admitted that there was indeed such delay. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. are binding upon the parties. Mc-Shurn Workers Union Ÿ Pido vs. 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. However. along with a prayer for reinstatement. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. vs. Due to the grim economic consequences to the employee. Otherwise. 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. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . the dismissal is deemed unjustified. through Mr. Kristel Macatangay. which eventually led to his illegal constructive dismissal. owing to respondent’s neglect to conclude the investigation. The quitclaims and releases. that said cessation of employment was merely temporary. several functions of its employees were declared redundant. Held: The Supreme Court finds that. Alpe Macalalad. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. 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. 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. DISEASE. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. His filing of a complaint for constructive dismissal. the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings.Labor II termination to be permanent.
like Constitutional due process. Rule 1. Ÿ The rule is that unless expressly assumed. Sundowner has no liability whatsoever to the employees of Mabuhay. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. they were both apprised of the particular acts or omissions constituting the charges against them. Alpe Macalalad. Thereafter. Agabon vs. He was also required to submit a written explanation within 12 hours from receipt of the report. and procedural. NLRC Essence of Due Process Solid Development Corp. employees and guests free access to and egress from said premises. Workers Assn. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. has two aspects: substantive. Book VI. Colcol was eventually dismissed for insubordination and poor work performance. petitioners were given due process before they were dismissed. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims. Jon Santos. National Union of Workers in Hotel. Charms Haw. i. notices of termination were also sent to them informing them of the basis of their dismissal. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. Dianne Miano. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. it was Syjuco who found Sundowner and persuaded it to lease said premises. and the same can only be restricted by law through the exercise of police power. (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation. is only to consider them for reemployment in the operation of the business in the same premises. they should have requested for an extension of time. Procedural due process. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law. Even if no hearing was conducted. As a general rule. the valid and authorized causes of employment termination under the Labor Code. They were also required to submit their written explanation within 12 hours from receipt of the reports. barricaded the entrance to the leased premises and denied Sundowner's officers. incurred absences without official leave and slept while on duty. Requirements Irah Burog. They claimed that they were dismissed without just cause and without due process. Sundowner wrote a letter-complaint to Syjuco. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. In addition. 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. In fine. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. 2(d) 1. Constitutional due process protects the individual from the government and assures him of his rights in criminal. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises. the manner of dismissal. Further. vs. In General Ÿ Due process under the Labor Code. Ÿ H. In separate infraction reports. Thus.e. i. Hence. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco. Meanwhile. Yet. Monette Mesa. 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. civil or administrative proceedings. thus binding only between the parties. Heidi Soria. labor contracts being in personam. 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. Sec. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. Solid Development Corp. Sec.. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner. he was dismissed for serious misconduct. However. Ysan Castillo. Anna Tetangco 21 . neither of them complied.Nature and Requirements 277 (b). Jake Ng. Subsequently. 2(d). Monina Lagman.e. and its responsibility if at all. Kristel Macatangay.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. Rule 1. the report also mentioned that Villena frequently violated company rules. 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. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees. Edlyn Santiago. He was also required to submit a written explanation within 12 hours from receipt of the report. Book VI. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner.. Had they found the 12-hour period too short.
and not necessarily that an actual hearing was conducted. notices were sent to them on March 19. Alpe Macalalad. Thus. Ÿ The essence of due process is simply an opportunity to be heard. In separate memoranda dated February 4. on the other hand. 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. Carag was not issued summons. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. Macaraeg was then the cashier who also took part in the illicit transactions. Anna Tetangco 22 . Jake Ng. it is stressed that due process is simply an opportunity to Ÿ Carag vs. 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. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. 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. In fine. Ÿ On the matter of due process. not accorded a conciliatory conference. In this case. 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. he received a suspension order without pay. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. The requirement of a hearing.” Held: There exists a valid reason to dismiss both employees. Irah Burog. Ysan Castillo. A hearing was also set. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. Coop vs. and not notified that the case was submitted for resolution. 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. on behalf of all of MAC's rank and file employees. Jon Santos. Ÿ Valiao vs. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. Heidi Soria. 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. they were both apprised of the particular acts or omissions constituting the charges against them. 1999. 1999 at 11:30 a. Monette Mesa.Labor II be heard. What is frowned upon is the absolute lack of notice and hearing. 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. For an employee’s dismissal to be valid. Proof beyond reasonable doubt of their misconduct is not required. not given an opportunity to present his evidence. which were then returned due to insufficiency of funds. 1991. informing them of the basis of their termination. They participated in the investigation conducted at petitioner’s board room on February 13. Finally. 1999 and signed by the General Manager." There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record. they were given due process before they were dismissed. not accorded a hearing. Edlyn Santiago. Held: Valiao’s dismissal from employment is valid and justified. and (2) the second informs the employee of the employer's decision to dismiss him. or as applied to administrative proceedings. Kristel Macatangay. is complied with as long as there was an opportunity to be heard.m. and breach of trust and confidence reposed on them by management. As such. and eventually. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). A formal or trial-type hearing is not at all times and in all instances essential. the results of which eventually led to their termination for “serious misconduct. Article 282(c) of the Labor Code allows an employer to dismiss employees for willful breach of trust or loss of confidence. Time and again. Monina Lagman. Central Pangasinan Elec. Dianne Miano. They were represented by counsel during the investigation. as reflected in the summary of tardiness and absences report. not ordered to submit a position paper. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business. Charms Haw. and to have reported late almost every day for the period November to December 1991. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. He was re-assigned from one position to another which was due to his tardiness and absences. 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. They gave their own "answer/explanation" to the charges. 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.
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
Dianne Miano. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal. pursuant to Section 6 above. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. Even though petitioner in this case never admitted the accusations of dishonesty against him. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. pursuant to Section 2. a notice of the decision to dismiss. Thus. 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. 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. Magos was later terminated. a hearing or an opportunity to be heard and after hearing or opportunity to be heard. (1) if the dismissal is based on a just cause under Article 282. an inquiry why he did not give the explanation required in the January 4. Edlyn Santiago. pursuant to Section 5 above. Due process is not violated where a person is given the opportunity to be heard. and due process was observed. vs. When they formed a union they were barred and were replaced with non-union members. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. Caurdenetan Piece Workers Union vs. (3) the dismissal is without just or authorized cause and there was no due process. Magos countered it was necessary as sales were down. Hearing Ÿ Magos vs. Anna Tetangco 26 . or for health reasons under Article 284. Heidi Soria. Ÿ What is most important is that before termination. National Semi-Conductor Distribution vs. Ÿ The law requires the employer to afford his employee ample opportunity to be heard. Jon Santos. and thereafter. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. an employee must be given the twin requirements of due process-proper notice and hearing. Ysan Castillo. or as applied to administrative proceedings. vs. and adding therein. for an authorized cause under Article 283. “J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. 1993 letter. and private respondent should again be allowed to answer and be heard. he impliedly acknowledged his insubordination as shown in his petition. she was later promoted. but chooses not to give his side of the Ÿ Lavador vs. 11 In the instant case. which made a dishonest mark in his timecard by marking present on a day he is absent. if after the said thirty-day period private respondent still did not give his explanation about the incident. Monette Mesa. should also be sent to private respondent. Charms Haw. (2) the dismissal is without just or authorized cause but due process was observed. Alpe Macalalad. Jake Ng. 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. By requiring him to submit a written explanation within 48 hours from receipt of the notice. He was later dismissed by petitioner due to dishonesty. above. Private respondent availed of this chance by submitting a written explanation. 1995 was issued to respondent informing him of the management’s decision to terminate his services. but it chose not to participate therein without any known justifiable cause. Kristel Macatangay. 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. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao.Labor II December 13. Ÿ Procedurally. the company gave him the opportunity to be heard in his defense. Ÿ La Carlota Planters Assn Inc. Position Paper Ÿ Shoppes Manila Inc. but when she was ate her new position she was charged with misappropriation was subsequently dismissed. this does not give petitioners an outright license to terminate private respondent. and (4) the dismissal is for just or authorized cause but due process was not observed. perhaps. another notice about the decision of dismissal. respondent’s right to due process was not violated. Monina Lagman. Irah Burog. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. but an accident happened later in his career which caused his dismissal. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. an opportunity to explain one's side. Clearly. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal.
Alpe Macalalad. of the decision to terminate their employment and cited the evidence upon which the decision was based. Held: Apparently. Suico. however. 94-016. a PLDT managerial employee. NLRC (Ysan) Facts: Fernando. a deck work. Monette Mesa. Sadagnot alleged that when the order was issued. 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. consistent with our ruling in Agabon. Espanola (Jon) Facts: C. He alleged that because of his refusal to obey the order. exercised their option under Systems Practice No. the vessel's Master ordered him to perform Ÿ Irah Burog. if he so desires. et al. There is nothing in the records showing that respondents complied with the two-notice requirement. Edlyn Santiago. The last notices informed Suico. disappears when adduced in connection with labor cases. On 2 March 1996. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. These two notices would have sufficed had it not been for the existence of Systems Practice No.and (b) the employee be afforded an opportunity to be heard and to defend himself. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter. Charms Haw. Heidi Soria. Notices from PLDT management were sent asking for an explanation of the said incident. Suico et al. Monina Lagman. Cross Examination Ÿ CF Sharp Crew Management Inc. Kristel Macatangay. 94-016. the Master made several negative reports against him. He refused the order on the ground that it was not related to his duties as Third Officer. that. Anna Tetangco 27 . (b) if the employer decides to terminate the services of the employee. 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. PLDT complied with the two-notice requirement of due process. PLDT is bound to comply with the Systems Practice. In termination cases.Substantive. This option is part of their right to due process. Hence. FAILURE OF DUE PROCESS Sadagnot vs. et al. whatever merit C. et al. stating clearly the reason therefore. 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. Ysan Castillo. Zialcita (Jon) Facts: Zialcita was assigned as clerk of CF sharp. with supporting documents and their affidavits. Under Systems Practice No. were implicated in said incident. if he so desires. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. Ÿ In order to effect a valid dismissal. In the course of his employment he misappropriated an amount sent by a seaman for his family. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. hatch stripping. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. the employer must notify him in writing of the decision to dismiss him. set out in detail the nature and circumstances of the violations imputed to them. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. failed to explain and were terminated. 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. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. sustained injuries when strikers blocked her way to the premises of PLDT. Suico et al. Held: Respondents failed to observe the necessary procedural safeguards. Ÿ It should be emphasized. 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. Effect of Failure. Jake Ng. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. respondents repatriated him to the Philippines. the procedural deficiency in the dismissal of Suico. the law requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code.F. Dianne Miano.Procedural Ÿ Suico vs. where the rules of evidence apply with greater rigidity.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. Jon Santos. et al. vs. Sharp’s argument might have in the context of ordinary civil actions. 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. The first notices sent to Suico.Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed.
vs. and. Dianne Miano. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. however. the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. It did not narrate that it heard petitioner’s side. must be stiffer than that imposed in Wenphil. Ubaldo. While he was on leave. upon the other hand. Platon. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. 2. Jake Ng. Both refused to surrender their vehicles and were thus sent notices of termination.. that where the dismissal is based on a just cause. but merely holds the employer liable for damages for violating said notice of requirement. Jon Santos. 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. therefore. Florido reluctantly complied with the order. the failure to give the required notice does not invalidate the same. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing. Ÿ In termination cases. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. vs. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. but did not receive a reply. Consistent with San Miguel Corporation v. Agabon vs. but petitioner did not allow him. Heidi Soria. He was being directed to go on vacation leave and consume all his remaining leave credits. Under the provisions of the said car plan. he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. The employee should be appraised of the particular acts and omissions for which the dismissal is sought. Ysan Castillo. NLRC the new car plan were those of union officers Cerezo and de Guzman. he shall turn over all his accountabilities to an officer of the company. et al. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog. there was no necessity for an actual hearing. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. Where the dismissals are illegal. and in the meantime. He wrote a letter to the President of the company but he did not receive any reply. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. was illegal. In arriving at the decision to dismiss them. Glaxo took into consideration the explanations they had offered. He was then instructed to take a leave of absence for a month. inclusive of allowances.. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. nor did it show that petitioner was given notice of his dismissal. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. they were nonetheless given adequate opportunity to answer the charge. he was served with a memorandum from LBC's Board Chairman. Charms Haw. Such sanctions. namely. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. Failure to do so would necessarily mean that the dismissal was not justified. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. Incidentally. as well as the receipts for the Fundador Brandy giveaways. As a result thereof. Held: Without a doubt. 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. Ÿ The present rule is set forth in the Agabon v. Inc. Monina Lagman. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. Pursuant to the same. Monette Mesa. An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. which in fact they did. Anna Tetangco 28 . Ÿ Verily. vs. Edlyn Santiago. Held: In the case at bar. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. NLRC. he was barred from entering the company’s premises. Glaxxo-Wellcome Phils. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. Roxas merely said he tried to report to the office. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list.Labor II substantive bases thereof were never put in issue. Ÿ Alladin Transit Corp. Kristel Macatangay. Alpe Macalalad. Under the circumstances.
still limping heavily. and were written in English. instead of betrayed. it must be unconditional and with the intent to operate as such. 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. Morales (Irah) Facts: On Dec. was on his way back to his office in the plant. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. Morales filed anew a complaint for the collection of sum of money. medication and hospital expenses of the Race in the hospitals. 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. 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. Mining Service Corp. saw Salvador operating the company’s payloader. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. PMSC has every right to dismiss Salvador. 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. 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.Labor II Degree Ÿ Art. the petitioner. Here. It is settled that in illegal dismissal cases. Charms Haw. which was granted by the RTC in Aug. a language Capulso was not conversant. went to Victory's office to report for work. Monina Lagman. He and his driver. Edlyn Santiago. if to be considered at all. Frustrated at the snail's pace of his case. During that same occasion. While the case filed in the Makati RTC was later dismissed without prejudice. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. Race was confined again for further treatment of his fractured left leg at another hospital. pre-drafted with blank spaces for dates of effectivity. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. Race. 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. should be taken against him. respondent has proved by substantial evidence the charge of pilferage against petitioner. Victory shouldered the doctor's professional fee and the operation. in fact. Prescription Period Ÿ Victory Liner Inc. Ÿ We reiterate that proof beyond reasonable doubt of the employee’s misconduct or dishonesty is not required to justify loss of confidence. however.000. Held: To constitute resignation. Moreover. (Ysan) Facts: PMSC’s evidence disclose that Sawa. this time with QC RTC.00 as a Ÿ Atonio M. Ÿ Azcor Manufacturing vs. a managerial employee. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. Race suffered a fractured left leg and was rushed to the hospital. Jake Ng. Thereafter. said that Capulso resigned. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. It is sufficient that there is substantial basis for the loss of trust. 1995. As a consequence thereof. vs. tried to convince the respondent to accept an amount of P50. 1146 of the Civil Code. Macaraeg consolation for his dismissal but the latter rejected it. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. Moreover. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. In the case at bar. Alpe Macalalad. in cases of this nature. Kristel Macatangay. Thus. One month after his release from the said hospital. Gresones. Dianne Miano. Proof beyond reasonable doubt of their misconduct is not required. 2002. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog. et al. The complaint was thus filed well within the prescriptive period. He was. Phil. Ysan Castillo. NLRC (Irah) Facts: Four months after his dismissal. Held: In the case at bar. On Sept. the bus he was driving was bumped by a Dagupan-bound bus. 2001. Race (Ysan) Facts: While traversing Tarlac. Thus. informed by the petitioner that he was considered resigned from his job. scooping fine ore from the stockpile and loading it on his private cargo truck. Consequently. Anna Tetangco 29 . Jon Santos. Central Pangasinan vs. Azcor. Indeed. Morales filed a motion to dismiss his complaint without prejudice. Heidi Soria. it was only at this time that the respondent's cause of action accrued. Monette Mesa. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. the fact that Salvador has been employed with the respondent for a long time. the cause of action accrues from the time the employment of the worker was unjustly terminated. Ÿ Salvador vs. but was not allowed to resume work afterwards. PMSC’s Assistant Resident Manager for Administration. et al. His confinement therein lasted a month. Held: Antonio's invocation of prescription is misplaced.
no action whatsoever was taken. he found that somebody else had been employed in his place. contending that it was Ranara who actually abandoned work when he stopped reporting. inaction. (b) must relate to the performance of the employee's duties. 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. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. When he protested his replacement. Monette Mesa. Charms Haw. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued.07 GENERAL RULE Nature and Remedies. Her acts did not constitute serious misconduct as to justify her dismissal. the court may not only mitigate. filed a complaint for illegal dismissal and sought reinstatement with full back wages. NLRC (Irah) Facts: Vianney Abella. Jake Ng. Subsequently. In this case. The wrong had been committed and the harm done. but also absolve the employer from liability of backwages where good faith is evident. offered to re-employ Ranara. filed a complaint for illegal dismissal against Marival. Ysan Castillo. 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. Kristel Macatangay. it must be stressed that not every case of illegal dismissal will automatically entail its grant. We doubt if his offer would have been made if Ranara had not complained against him. and the liability did not abate as Irah Burog. a result of Chang's repentance. (a) it must be serious. and (c) must show that the employee has become unfit to continue working for the employer. In this case. Rather. This militates against the propriety of granting Abella backwages. as to sanction Abella’s unprofessional and disrespectful conduct. Anna Tetangco 30 . vs. denied the charges. Oro. Held: Petitioner was illegally dismissed without even the politeness of a proper notice. he was even scolded for being "hard-headed" and not accepting his dismissal. Jon Santos. These remedies give life to the worker’s constitutional right to security of tenure. Ÿ Under Article 279 of the Labor Code. Notably. and to the payment of his full backwages. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time. Monina Lagman. a chemist/quality controller at Marival Trading. in a belated gesture of good will. While generally an order of reinstatement carries with it an award of backwages. At any rate. who had been working as a driver with Oro Union Construction Supply. Heidi Soria. formal or otherwise. 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. et al. to invite Ranara back to work in his store. Ranara was simply told that he should not report back for work the following day.Labor II claim. even moral and exemplary damages. Without cause and without any investigation. Her remarks were neither insulting nor offensive. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. and to his other benefits or their monetary equivalent. inclusive of allowances. or intent to abandon a lawful claim or cause of action. Understandably. His case remained pending before the CA for six long years. Alpe Macalalad. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges. it was only after the complaint had been filed that it occurred to Chang. thus allowing the statute of limitations to bar any subsequent suit. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. Abella did not make false and malicious statements against her superior. Held: For misconduct or improper behavior to be a just cause or dismissal. SANCTIONS AND REMEDIES 14. As regards backwages. sincere or not. thinking that the secretary had only spoken in jest. did not in any way pertain to Abella's duties as chemist/quality controller. alleging that she was dismissed without just cause and due process. Morales's intention was to expedite the enforcement of his rights. Chang. the acts complained of. G. under the circumstances they were done.Twin Remedies Ÿ Marival Trading Inc. Edlyn Santiago. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. But it does not simply mean a mere lapse of time. the employer believed that Abella’s dismissal was based on a valid ground. Chang's sincerity is suspect. On the contrary. When he did so just the same. The prescriptive statutes serve to protect those who are diligent and vigilant. lack of interest. NLRC (Irah) Facts: Carlos Ranara. he felt frustrated at the snail's pace at which his case was moving. there must be a categorical showing that due to plaintiff's negligence. the employer. Moreover. Offer to reinstate Ÿ Ranara vs. Dianne Miano. not those who sleep on their rights.
Rather. He was assured to be rehired.C. inclusive of allowances. NLRC (Irah) Facts: Pablito Moldez. Clearly. and other benefits or their monetary equivalent. Cabatulan agreed and immediately went home. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. Ÿ Ÿ Cabatulan vs. Charms Haw. Monette Mesa. Held: Belga was illegally dismissed. Anna Tetangco 31 . Great Southern. An altercation ensued between Cabatulan and Alaan. Eduardo Cairlan. Lourdes Belga. Acuña. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. Held: Yes. they were transferred back home since their services were no longer needed. Before proceeding to the meeting place. and other privileges and to his full backwages.e. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. Acuna (Irah) Facts: Respondents Acuña. They employed Cabatulan as operations manager and purchasing officer. et al. vs. Ysan Castillo. Great Southern Maritime Services Corp vs. et al. Held: Moldez was illegally dismissed. wanted to see him. et al. which is a subsidiary of Lakpue. Julio offered him 5k should he agree to sign the resignation letter. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. the law intended reinstatement to be the general rule. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. Jake Ng. voluntarily resigned from employment. filed a complaint for illegal suspension and dismissal against Pheschem. vs. filed a complaint for illegal dismissal against NEECO. Dianne Miano. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. Jon Santos. Moldez alleged that he was at first suspended from work without pay for 7 days. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. Edlyn Santiago. Held: Cairlan was illegally dismissed. which explains his repeated failure to report to work. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. an assistant cashier of Tropical Biological Phils. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. et al. Issue: W/N Cabatulan is entitled to backwages and separation pay. Heidi Soria.Labor II Ÿ Pheschem Industrial Corp vs. With regard to the charge of disobeying a memorandum. were illegally dismissed. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business. Cabatulan passed by the premises of J. filed a complaint for illegal dismissal against Lakpue. Trucking but was refused admission by Alaan who was armed with an armalite rifle. 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. they were forced to resign or were summarily dismissed without just cause. 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. Belga's absence for 16 days was justified considering that she had just Irah Burog. because of a disagreement in the purchase of some spare parts. et al. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. but eight months had already passed with no word from Pheschem. without being informed of its reason. denied the charges and averred that Acuña. Monina Lagman. His suspension was subsequently extended. Cabatulan was informed that respondent Julio’s brother. Held: Respondents Acuña. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. Before the expiration of their contracts. a driver of NEECO. 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. delivered a child. which can hardly be considered a forbidden act or a dereliction of duty. They did not voluntarily quit their jobs. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. inclusive of allowances. Alpe Macalalad. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte.. et al. et al. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. Julio’s security aide. and payment of his full backwages. Ÿ Where the dismissal is without just or authorized cause and there was no due process. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. Cabatulan refused to sign the same. Belga (Irah) Facts: Ma. inclusive of allowances. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. Ÿ Nueva Ecija Electric Corp. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. Kristel Macatangay.
hence. and attorney's fees. 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. et al. They posit the argument that with respondents' receipt of their separation pay. moral and exemplary damages as well as night shift differential. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. The respondents failed to comply with the order of reinstatement. 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. premium pay for holiday and rest day. Backwages and separation pay are. An illegally dismissed employee is entitled to two reliefs. 6715 on March 21. illegal deductions. Charms Haw. A more equitable settlement. overtime pay. 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. These are separate and distinct from each other. Monina Lagman. or separation pay if reinstatement is no longer viable and backwages. However. illegal dismissal. distinct reliefs granted to one who was illegally dismissed from employment. 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. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. Anna Tetangco 32 . 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. Kristel Macatangay. Ysan Castillo. 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. Edlyn Santiago. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. while those illegally dismissed after. separation pay. Jon Santos. service incentive leave pay. 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. In fact. according to petitioners. Act No. Ÿ Triad Security vs. ordered the payment of both.Labor II to the effectivity of Rep. as contained in the decision of the labor arbiter. namely: backwages and reinstatement. holiday pay. Petitioners insist that their monetary obligation." 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. In effect. complainants' backwages accrued. in proper cases. Respondents filed a complaint for underpayment/nonpayment of salaries. insofar as the reinstatement aspect is concerned. NLRC (Anna) Facts: In May 1982. even pending appeal. Ÿ Under the existing law. 1989 were granted backwages up to three (3) years without deduction or qualification. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. Upon learning of the complaint. Alpe Macalalad. had already been fully satisfied. Under Article 223 of the Labor Code. Though there are specific circumstances where reinstatement is not a practicable remedy. allowances and other benefits. therefore. underpayment or nonpayment of allowance. and claims for 13th month pay. were formerly employed by Triad Security as security guards. Thus. the payment of separation pay. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. therefore. shall be immediately executory. Ortega (Anna) Facts: Respondents Ortega. The award of one does not preclude that of the other as this court had. respondents' services were terminated without the benefit of notice and hearing. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. In this case. Heidi Soria. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. Jake Ng. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. 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. private respondent Salazar was employed by Globe-Mackay as general systems analyst. if viable. Issue: W/N petitioner is still liable for backwages Held: Yes. an illegally dismissed employee is entitled to either reinstatement. 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. Monette Mesa. Dianne Miano. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close.
Held: In its generally accepted sense. but is now held by the incumbent manager who replaced Luna. Jake Ng. unless such position no longer exists. The law mandates the reinstatement of an illegally dismissed employee to his former position. The Court held that "there being no more positions in the machine shop to which the dismissed employee. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. to full backwages. much less a legal. 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. looking to the past. Rule 1. but also gives substance and meaning to the protection accorded by the Constitution to labor.08 REINSTATEMENT Employee Right Ÿ Quijano v. to offset the impending financial collapse. board membership. position. Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug. condition. to give her back the income lost during the period of unemployment. In providing foremost for the reinstatement of an illegally dismissed employee. Edlyn Santiago. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Mercury Drug Corp (Anna). there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin." Here. controlling stockholders. Book VI of the implementing Rules and Regulations of the Labor Code states. in the former. would perforce make her "whole. However. reinstatement was erroneously ordered for the petitioner's shop was already closed. Heidi Soria. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement. mostly welders. Alpe Macalalad. . Ysan Castillo. Anna Tetangco 33 . for the dictionary meaning of the word "reinstate" is "to restore to a state. Monina Lagman. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. to restore the dismissed employee to her status before she lost her job. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. which she subsequently amended to include illegal dismissal. Although the position formerly held by the herein complainant is now held by another. Charms Haw. In the case. etc. Dianne Miano. Instead of submitting an explanation. It is the return to the position from which he was removed and assuming again the functions of the office already held. However. Jon Santos. but as well. There being no evidence to show an authorized. lathemen. she had every right. etc. Irah Burog. . her eventual separation from employment was not for cause. Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. not only to be entitled to reinstatement. could be returned." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee. Section 4. Issue: W/N the new management is bound to reinstate the employees. Reinstatement pre-supposes that the previous position from which one had been removed still exists. the position previously held by the complainant Luna was not abolished. drill press operators. the Labor Code not only recognizes the security of tenure granted by law to regular employees. Kristel Macatangay. 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 wit: "An employee who is separated from work without just cause should be reinstated to his former position. at the time of his reinstatement. in the case at bar. Also. Salazar was placed under preventive suspension for 1 month. reinstatement is not possible . 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.e.) of the old Republic Bank into the present Republic Planters Bank. vacation and sick leave benefits. 13th month pay and damages. corporate name. (Pheschem Industrial vs. from which one had been removed" and in the latter. His services were terminated allegedly for disrespecting his superiors several times." Ÿ Defined Ÿ Union of Supervisors v. As a necessary consequence of change of corporate personality (i." And. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings. Mercury Drug appealed with the NLRC which held that there was illegal dismissal. reinstatement is a restoration to a state from which one has been removed or separated. Both remedies. the bank suffered from the danger of financial collapse. private respondent filed a complaint against petitioner for illegal suspension. Moldez) 14. or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. tinsmith and carpenters. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice." Held: By itself.Labor II to inform her employer. Monette Mesa. cause for the dismissal of private respondent.
petitioner was deprived of the opportunity to respond thereto. petitioner fought with the latter. And when respondent engaged the services of another driver. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. Consequently. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. however.Labor II Issue: W/N petitioner should be reinstated. the case law developed that where reinstatement is not feasible. Such is the notice requirement in Arts. While the case was on appeal. respondent fell short of the two-notice requirement in dismissing an employee. 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. . Not all notice requirements are requirements of due process. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job. in addition. Jon Santos. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. an assurance of continuity in his source of income which a grant of separation pay could not provide. [W]here a penalty less punitive would suffice. Alpe Macalalad. petitioner refused to drive for his employer's son. Held: YES. Others are simply an application of the Justinian precept. the NLRC rendered its July 10. as the case may be) void. and observe honesty and good faith toward one's fellowmen. At one time. particularly where the illegally dismissed employee held a managerial or key position in the company. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. Anna Tetangco 34 . whatever missteps may be committed by labor ought not to be visited with a consequence so severe. Monette Mesa. The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. Issue: W/N there was illegal dismissal." his illegally dismissed employee should just be given separation pay. 2001. As the reinstatement aspect is immediately executory even pending appeal by the employer. especially to a lowly or menial laborer. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. authorizes neither oppression nor self-destruction of the employer. Jake Ng. . In giving an illegally dismissed employee the right to reinstatement. 2003 Decision reversing the Decision of the Labor Arbiter. starting June 2002. merely reinstated in the payroll. Charms Haw." But it is equally true that "the law. however. The same can be remedied by payment of employee's full backwages from Irah Burog. he was instructed to deliver bags of cement to Felix Hardware but delivered the same to one Eduardo Interior. 282-283. 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. Heidi Soria. and ordering the dismissal of the complaint. but failed to furnish him written notice apprising him of the charges against him. 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. the law recognizes the fact that continued employment gives to a worker. not to render his act (dismissal or resignation. Respondent furnished petitioner a written notice of his dismissal. v. . petitioner opted to reinstate respondent in the payroll effective August 23. on March 26. expedient or practical. Dianne Miano. In the case at bar. There is. Held: Time and again. 282 (a) of the Labor Code. embodied in the Civil Code. The CA reversed the NLRC decision. However. Issue: W/N respondent should be reinstated. He charged petitioner for illegal dismissal. 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. At any rate. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. petitioner refused to pay respondent's salary. give everyone his due. in protecting the rights of the laborer. Ÿ Supreme Steel Corp. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship. The Constitution bids the State to "afford full protection to labor. the time of dismissal until the court ruling that he was dismissed for a valid cause. However. Over the years. According to respondent. injuring him and a co-employee who was pacifying petitioner. as where reinstatement would only exacerbate the tension and strained relations between the parties. Kristel Macatangay. or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. Consequently. the date he actually reported back to work. it would be more prudent to order payment of separation pay instead of reinstatement. to act with justice. Held: YES. Monina Lagman. Edlyn Santiago. 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. his family to consider. Some unscrupulous employers. Without ruling on the motion. It is not only because of the law's concern for the workingman. the omission does not render petitioner's dismissal invalid but merely ineffectual. Ysan Castillo. 2003 (while petitioners' appeal in the NLRC was pending).
and Section 2 of the NLRC Interim Rules on Appeals under RA No. Held: In termination cases. 6715. the burden of proving the just cause of dismissing an employee rests on the employer. she sold the plan to Josefina. vs. Davao City. since private respondent considered them separated from the service. 6715. Amending the Labor Code. even if he was instigated to take drugs. is immediately enforceable. or refusal. otherwise. 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. Alpe Macalalad. Josefina went to CAP to ask for help. It was a mere procedural lapse which should not affect his substantive right to reinstatement. Petitioners question the decision of reinstatement because this was not raised in the pleadings. Monina Lagman. Ÿ Article 223 (3rd paragraph) of the Labor Code. Heidi Soria. as amended by Section 12 of Republic Act No. an award or order of reinstatement is self-executory. Because of need. Where a decision may be made to rest [on] informed judgment rather than rigid rules. After hearing petitioner's explanation. Jon Santos. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. The intent is to balance the scale of justice. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. The rationale of the law has been explained in Aris (Phil. Charms Haw. Ÿ Panuncillo v. Technicalities have no room in labor cases. albeit under appeal. the Commission's failure. NLRC. v. it should have paid his salary during the period of appeal before the NLRC. the law itself has laid down a Irah Burog. He was dismissed from employment. Issue: W/N petitioner is entitled for reinstatement. to put the two parties on relatively equal positions.) Inc. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. XI. Edlyn Santiago. SC held that the dismissal was for a valid cause. In this case. Kristel Macatangay. she did not transfer the plan in Josefina's name. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. Under Article 223 of the Labor Code. to timely act on the matter is a serious oversight for which it should be admonished. the law would readily be circumvented. The reinstatement aspect of the Labor Arbiter's decision. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. Ysan Castillo. petitioners should not be deprived of their means of livelihood. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. 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. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP. 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. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. 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. it is but a recognition of the inherent economic inequality between labor and management. She availed of an educational plan from her employer. CAP decided to terminate petitioner. It should be made clear that when the law tilts the scale of justice in favor of labor.Labor II acceptance of the view that under all circumstances of this case.. they had not been paid. THereafter. However. all the equities of the case must be accorded their due weight. causing untold hardships to the dismissed employee. Anna Tetangco 35 . in violation of the PAL Code of Discipline. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. Pheschem Industrial Corp. She pledged it to another person who later sold the plan to another. Monette Mesa. Jake Ng. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. Branch No. and his failure to do so would result in a finding that the dismissal is not justified. Thus. Nor is this to condone what had been done by them For all this while. when petitioner SSPC opted for respondent's payroll reinstatement. Dianne Miano. Effect of failure to ask relief Ÿ General Baptist v. 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. 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. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment.
.. The above-quoted rule enunciates reinstatement as the standard relief. After completing his training. Jake Ng. he was not promoted to the position of captain... The SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed. Anna Tetangco 36 . the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. Dianne Miano. SEC. the award of separation pay of 1 month salary for each year of service.. of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. Kristel Macatangay. Ysan Castillo.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists." Ÿ PNOC-EDC v. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. 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. 33 Accordingly. However. by and pursuant to the same power (police power). NLRC. There is logic in this reasoning of the NLRC. In Association of Independent Unions in the Philippines v. Ÿ Airphils Corp. Jon Santos. On the other hand. Ÿ If reinstatement is no longer possible. however. The law itself can not exact compliance with what is impossible. Hence. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. Edlyn Santiago. waiving “[a]ll other claims. vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . the law itself has determined a sufficiently overwhelming reason for its execution pending appeal . v. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. the State may authorize an immediate implementation. Ÿ G & S Transport Corp. Although petitioner did not comply with this writ of execution. Charms Haw. is in order. damages and causes of action arising out of the instant case. a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. v. Reinstatement to former position. even if the order of reinstatement of the Labor Arbiter is reversed on appeal. 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. Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. They were terminated for an allegedly illegal strike.Labor II compassionate policy which. Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. strike. in lieu of reinstatement. with respect to decisions reinstating employees. 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. Monette Mesa. given the lapse of considerable time from the occurrence of the Irah Burog. Infante (Alpe) Facts: Respondents were drivers of G & S. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. pending appeal. the employee is not required to reimburse whatever salary he received for he is entitled to such. Then.. 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. Monina Lagman. In Roquero v. an award of separation pay equivalent to 1 month pay for every year of service. was deemed more practical and appropriate to all the parties concerned. Labor is an indispensable partner for the nation's progress and stability . Philippine Airlines.. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. Ad imposible tenetur. Heidi Soria. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality.. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. Inc. Alpe Macalalad. In short. once more. unless such position no longer exists at the time of his reinstatement.. 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. although temporarily since the appeal may be decided in favor of the appellant. 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. seventeen (17) years have elapsed since respondents were illegally dismissed. which the Constitution also expressly affirms with equal intensity. in this case. 4. The SC held that Airphils is liable. in lieu of reinstatement. the exclusive taxi concessionaire in NAIA.. more so if he actually rendered services during the period. The SC ruled that the dismissal was illegal. If the position is no longer available for any other valid and justifiable reason. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated.
A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. the petitioner must follow the laws which protect workers and uphold their security of tenure. Dianne Miano. which requires a deliberate and unjust refusal of an employee to resume his work. (Union of Supervisors vs. Anna Tetangco 37 . Jake Ng. He resigned but later withdrew his resignation. (the employee) can be spared the agony of having to work anew with . . the Board considered him terminated and paid his unused vacation leave and transportation expenses. Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients. agreement or policy an employee may be retired upon reaching the age of sixty (60) years. STRAINED RELATIONS Ÿ Pearl Buck Foundation v. 13. Thus.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. although his previous position is now held by another. Monina Lagman. . 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. Charms Haw. He was asking to be reinstated but this was denied. and instead were told that they would be replaced “because [they] are already old. upon their reaching the retirement age. Luna can still be reinstated because. . Sec. we held that an employee may retire. but still binds the Agency to provide them. Ÿ There is likewise no basis for the NLRC ruling that Mrs. Ÿ Commercial Motors Corp. we agree with NLRC that petitioner is entitled only to backwages. as an item of relief. "so that . there is an unfilled position more or less of a similar nature as the one previously occupied. . Edlyn Santiago. of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. (latter) does not have to endure the continued service of . it would be an act of oppression to compel them to return to the status quo ante. 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. and the . The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. Ÿ It would seem. Heidi Soria. NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. Book VI. upon reaching sixty (60). However. a case worker. Ÿ In such situation. . 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. Construing this provision. Jon Santos. they were not given new assignments. coupled w/ a clear absence of any intention of Irah Burog. Monette Mesa. v. . . or may be retired by his employer. (the former) in whom it has lost confidence. the petitioner's contention that Mrs. But when they reported for work. NLRC (Alpe) Facts: Querimit. retirement pay or whatever else is provided under the CBA or employment contract. of separation pay at the rate of one month's salary for every year of service. However considering that petitioner has already reached the statutory retirement age of sixty (60). Alpe Macalalad. There is also no abandonment. Kristel Macatangay.” Issue: Was there an illegal dismissal? Held: Yes. was terminated after borrowing money from the mother of one of her wards. (the employer) under an atmosphere of antipathy and antagonism. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. Ysan Castillo. However. NLRC (Alpe) Facts: Espejo worked as general manager for CISP. Sec. we cannot compel it to retain employees who commit violations of trust relationships. As the petitioner appears to have lost its trust in private respondent. however. Querimit should be reinstated with backwages. The dismissal was declared to be illegal but reinstatement was not awarded. The SC affirmed the non-reinstatement. . 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. of Labor) situation where a peaceful relationship is not feasible. in lieu of reinstatement." Ÿ Espejo v. The relief and transfer order per se did not sever thte employment between the Agency and the complainants. NLRC therefore did not err in denying the reinstatement of petitioner. There is moreover. who in turn is not seeking reinstatement. that the circumstances of this case render inappropriate Umlas' reinstatement to his former position. We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle.
which they sought to enforce in the motion for execution was also their reinstatement. tranquility which is an ideal atmosphere in every workplace. backed by the Faculty Association. The subject of the NLRC decision. which has recruited new security guards. they refused to be reinstated. Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. Ysan Castillo. but the NLF opposed the same.Labor II returning to his or her work.D. who in turn filed a complaint against the former for conducting an illegal strike. Dianne Miano. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. in fact. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. Thus. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. Ÿ As a necessary consequence for the illegal dismissal. Howeer. Jon Santos. 176. Heidi Soria. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. and was also assigned to teach health during SY 1981-1982. which was part of her regular working program as a school nurse. reinstatement is no longer feasible. should be such. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC. He threatened to take drastic measures against her if she kept refusing to report for work the next summer. For filing an LOA and not reporting to work that summer. Buat) Ÿ Sibal v. That is human nature. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. hoping to obtain assistance. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. she was not paid her vacation pay. moved for the ouster of the school director Fr. The school director claimed that the summer was the best time to update the students’ clinical records. Edlyn Santiago. Alpe Macalalad. about a month after Sibal’s termination. Therefore. and that she was not entitled to extra compensation for teaching. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. Charms Haw. for otherwise. And it was NCF who caused a strain in the relation of the parties. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. Anna Tetangco 38 . Sibal filed a complaint for non-payment of compensation and vacation pay. refuse to accept other assignments. Issue: Did the petitioners give up their claims for reinstatement? Held: No. the complainants. reinstatement. the complainants are entitled to reinstatement and backwages. on the other hand. then entered into an agreement with NCF for reinstatement. 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. They reported to the Agency for reassignment several times but were not given any. Ÿ Bascon v. Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. MCCH decided to defer Irah Burog. Garcia for serious charges under P. The subject of the compromise agreement was the reinstatement ordered by the ELA. Otherwise. neither was she compensated for the extra teaching job. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. Monina Lagman. was ordered to work during the summer. The eventual replacement of Fr. the employees moved for execution. The latter do not pray for reinstatement. However. (Cabatulan v. No strained relations should arise from a valid and legal act of asserting one’s right. though her contract does not require her to do so. 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. otherwise an employee who shall assert his right could be easily separated from the service. Monette Mesa. The agency cannot reassign them to the Client. backwages and damages against Naga College Foundation. separation pay is awarded in lieu of reinstatement. There is no basis for the ruling of the NLRC. antagonism is likely to have already caused a severe strain in the relationship between them. a school nurse at the Notre Dame of Greater Manila. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. Pending appeal. No supervening event rendering execution unjust can be considered. That complainants did not pray for reinstatement is not sufficient proof of abandonment. NCF stopped paying accrued salaries after three installments. teachers and personnel of the school. Kristel Macatangay. Such refusal is indicative of strained relations. after which the school served Sibal with a letter of termination effective immediately. that they are so obnoxious to the person or business of the employer. Jake Ng.
then an emergency leave. BPI (Eds) Facts: For shouting at her Senior Manager. Jon Santos. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. Dianne Miano. Ÿ Acesite Corp. have no prerogative in the operation of the business. Charms Haw. took a 4-day sick leave. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. and thus. Issue: Was there illegal dismissal? Held: Yes. then a 12-day vacation leave. Branch to save on gas expenses. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Monette Mesa. Laureano Gonzales. Union members and officers staged mass actions inside the MCCH premises. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. he filed for a 10-day emergency leave. There now appears no basis for strained relations between the present management and Uy. Uy refused. Here. A complaint for illegal dismissal was filed. Jr. and requested to be transferred to the Taft Ave. 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. Thus. however. Issue: Was Gonzales illegally dismissed? Held: Yes. He was told to report back for work. thereby using up all leaves he was entitled to for the year. Zenaida Uy. Jake Ng. Sagum v. then an order to desist from participating in the mass actions. Before the expiration of the 12 day vacation leave. former teller of BPI. which was denied. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. Mere allegation of strained relations to bar reinstatement is frowned upon. otherwise. 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. CA (Eds) Ÿ Irah Burog. and that she could not transfer as there was no proper turnover of her accountabilities.. It has been almost a decade since the incident that led to Uy’s dismissal. and were subsequently terminated from employment. an unjustly dismissed employee can never be reinstated. or whose differences with their employer are of such nature or degree as to preclude reinstatement. v. cannot be applied indiscriminately. He must therefore be paid separation pay of 1 month for every year of service instead. Every labor dispute almost always result in “strained relations. NLRC (Eds) Facts: Due to a severe stomach disorder. Here. Edlyn Santiago. the latter filed a notice of strike. Dr. an ordinary striking worker must have participated in the commission of illegal acts during the strike. no strained relations should arise from a valid and legal act of asserting one’s right. who would not have helped him cover up his absences Ÿ BPI Employees Union v. Petitioners are entitled to reinstatement with full backwages. Ysan Castillo. Neither can be construed as illegal acts. is allowed. whose position is one of trust and confidence. Leo Gonzales. which was not approved. MCCH issued a notice of investigation. But he is not entitled to reinstatement.” and the phrase cannot be given an overarching interpretation. Petitioners herein are nurse and nursing aide. Upon being notified of the mass actions. respectively. which she could not do so since she had been barred from entering the bank premises. Ÿ Mere payment of severance pay. otherwise. She asked to be considered on leave since then. He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work. Alpe Macalalad. but he failed to do so. Petitioners denied receiving said orders. he being in charge of the over-all security of the hotel. She also alleged sexual harrassment on the part of her Senior Manager. Anna Tetangco 39 . Monina Lagman. especially in the light that the same was issued by his rival in the political arena. Besides. The other involved parties have long been assigned in another area or are no longer connected with BPI. petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. Heidi Soria. The medical certificate also proves that he was indisposed during the period in controversy. Kristel Macatangay. That is human nature. Instead. saying she would await the result of the grievance proceeding filed by her union. reinstatement is no longer possible. Otherwise.” This may be invoked against employees whose positions demand trust and confidence. Ÿ In illegal dismissal cases. In order to be justly terminated. The principle of strained relations. Gonzales was Chief of Security. 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. There must be proof of such illegal acts. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). otherwise.
Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. To protect labor's security of tenure. 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. Heidi Soria. 1992. packed and distributed. No.NLRC (Charms) Facts: Private respondent Lourdes A. especially where said employee holds a faithful and an untarnished twelveyear service record. 279 of the Labor Code. Ÿ The existence of strained relations is a factual finding and should be initially raised. There are no hard facts upon which to base the application of the doctrine of strained relationship. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. Virgilio Reyes. Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. we have always held Irah Burog. No." and the phrase cannot be given an overarching interpretation. was allegedly consistently being awarded majority of the printing contracts of IIEE. 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. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. Number. Anna Tetangco 40 .Labor II Facts: Marilyn Sagum. or separation pay. 1992. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs. Dianne Miano. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. de Jesus is petitioners' reviser/trimmer since 1980. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. 3853 as it has the same style and design as P.O. No. otherwise.. Reyes’ brother. Inc. 3853. Three days later. Monette Mesa. Issue: Was there illegal dismissal? Held: Yes. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v.O. Reyes. She was preventively suspended for 30 days. On August 15. Jon Santos. they are entitled to either reinstatement. as evidenced by the subsequent judicial order releasing the articles seized during the search. 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. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement.O. No. and that such was being undertaken by JDI’s sales rep. No. if reinstatement is no longer viable. but not for dishonesty or tampering. not to mention the considerable length of time Reyes has been out of JDI’s employ. Ÿ Employees illegally dismissed before March 21. de Jesus worked on P. The owner of said articles was Donato. 3853 allegedly required no trimming. Monina Lagman. One company. Kristel Macatangay. Jake Ng.O.O. a fraction of at least 6 months being considered as one whole year. The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. Alpe Macalalad. de Jesus maintained that she merely committed a mistake in trimming P. blended. 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. Edlyn Santiago. 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. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P. who was the legal tenant of the apartment. if feasible. Here. reinstatement is not warranted. Held: There was illegal dismissal. In her handwritten explanation. Petitioners' personnel department. Sagum’s dismissal was subsequently declared illegal. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. terminated her from employment and sent her a notice of termination dated September 18. the principle of strained relations cannot be applied indiscriminately. The finding by the CA of strained relations does not have any basis on the records. de Jesus based her assigned work on a paper note posted by petitioners. The three year period wherein backwages are awarded must be included in the computation of separation pay. In addition to backwages. As reviser/trimmer. DBR. are entitled to backwages up to 3 years without deduction or qualification. an unjustly dismissed employee can never be reinstated. argued and proven before the Labor Arbiter. 3853 by trimming the cloths' ribs. Charms Haw.O. was being illegally manufactured. filed a complaint for illegal dismissal against IIEE and its officers. Every labor dispute almost always results in "strained relations. Ysan Castillo. nonetheless. Sagum is correct that mere persistency in argument does not amount to proof. 1989. Moreover. While an employer has the inherent right to discipline its employees. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils.
Negros Occidental.. Thus. the employee has no way of knowing if he has to report for work or not. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. On 7 March 1990 Tanpiengco was assigned at Bodega I. Charms Haw. According to petitioner. 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. 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.00. An award for reinstatement is self-executory. The legislative intent is quite obvious. the immediate execution of a reinstatement order. 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. after a brief suspension. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. He was accosted by a security guard allegedly for behaving suspiciously. but they also ignored the due process requirement of the law. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. The fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime." T-shirt valued at P100. 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. The provision of Art. In either instance. 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 employer has to inform the employee of his choice. Held: The NLRC correctly labeled petitioner as a project employee. 223 is clear that an award for Ÿ Kiamco vs.Labor II that this right must always be exercised humanely. for some inexplicable reasons. The notification is based on practical considerations for without notice. Tanpiengco has since then become a regular employee. i. Finding petitioner's explanation unsatisfactory. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions. which he allegedly committed. Heidi Soria. reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. An application for a writ of execution and its issuance could be delayed for numerous reasons. dishonesty and theft of property. Ÿ Intl. Anna Tetangco 41 . Monina Lagman. Petitioner reported back to work but was prevented from entering the company premises. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. 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. private respondents. On October 20. but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. Edlyn Santiago.. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp. i. on 28 October 1993. When it was time for him to clean himself he took his T-shirt which was hanging from a post. The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory. tucked it at his waist and proceeded to the washroom. to make an award of reinstatement immediately enforceable. the NLRC failed to act on Tanpiengco's motion for the issuance of a writ to execute the Labor Arbiter's reinstatement order. even pending appeal. However." from one of the balikbayan boxes inside the container yard. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation. 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. Ysan Castillo. Falling to exercise the options in the alternative. Held: There was illegal dismissal and therefore should be reinstated. Dianne Miano. meaning that it does not require a writ of execution much less a motion for its issuance. Moreover. even illegally.e. Jake Ng. On 30 April 1990. 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. The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993. Kristel Macatangay. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. he admitted to the investigating officer that he took the "Gesim Corp. 1993. Jon Santos. as maintained by petitioner. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician. In the instant case. The Commission's inaction is a serious oversight for which it should be admonished. The reason is simple. Ÿ As a consequence of this. Alpe Macalalad.e. Container Services vs. even if the employment contract signed by petitioner fixed the term of his employment. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages. Monette Mesa. The Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco.
Pursuant thereto. Monina Lagman. in a letter-petition to the Chairman of the Board of Directors. we did not permit petitioner Bank to rely on Sec. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. 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. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits.Labor II expiration thereof. Kristel Macatangay. 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. either by virtue of a lawful decree or order. 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. accused respondent Sadac of abusive conduct. 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. Per respondent Sadac’s computation. Anna Tetangco 42 . Therefore. Respondent Sadac theorized that he started with a monthly compensation of P12. inter alia. is based simply on expectancy or his assumption that. Petitioner’s claim. In a previous SC decision. On 26 June 1989. it maintained. In reaction thereto. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. his monthly compensation amounted to P29. On the ground of lack of confidence in respondent Sadac. As held by the Court of Appeals.00 in August 1981.500. Moreover. Per its computation. 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. Monette Mesa. he posited. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. as in the case of a wage increase under a wage order. On 9 November 1989. Ysan Castillo.030. petitioner Bank be ordered forever released from liability under said judgment. 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. Such decision became final and executory. were unsubstantiated.442. and. claiming that the association between the parties was one of a client-lawyer relationship. however.00 or more than twice his original compensation. under the rules of client and lawyer relationship. Dianne Miano. failed to show proof as to when the project was completed. Consequently. After learning of the filing of the complaint. Heidi Soria. 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. qualify for the said increase later. private respondents should have retained his services until the actual completion of the project. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. Petitioner Bank disputed respondent Sadac’s computation. Jake Ng. however. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. Jon Santos.456.981. the amount of monetary award due respondent Sadac is P2. hence. therefore. 26. they held respondent Sadac’s dismissal illegal. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. and subsequently General Counsel thereof. when he was dismissed illegally. Edlyn Santiago. including the general increases which he should have earned during the period of his illegal termination. Book V of the Implementing Rules of the Labor Code. Ÿ Equitable Banking vs. to the exclusion of the latter’s general salary increases and other claimed benefits which. As of November 1989. nine lawyers of petitioner Bank’s Legal Department. the Court had the opportunity to elucidate on the reason for the grant of backwages. Alpe Macalalad.98 only. Rule 138 of the Rules of Court. Rule XIV. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. petitioned for a change in leadership of the department. In several cases. 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. 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. representing his backwages and other benefits. thus.59. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. Finally. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. on 10 August 1989. Petitioner was specifically assigned to work in a particular project. Charms Haw. the total amount of the monetary award is P6. Private respondents.365. Irah Burog. it could terminate at any time the services of respondent Sadac. petitioner Bank terminated the services of respondent Sadac. Likewise. as in the case of one’s salary or wage. The difference. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. however. or by rightful expectation. in the absence of any valid reason to terminate him.
The Labor Arbiter declared private respondent's dismissal as illegal and ordered her reinstated and paid full backwages and damages. NLRC) Ÿ Viernes vs. Heidi Soria. the employment of petitioners is no longer on a fixed term basis. they were. Anna Tetangco 43 . The NLRC reversed the decision of the Labor Arbiter. On January 3. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. According to the Court. On the other hand. 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. Monette Mesa. what was actually meant was unpaid salaries. the Court held that petitioners are entitled to full backwages. she found out that her table. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. against herein petitioners before the Labor Arbiter. Jon Santos. NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. It held that after October 31. 1990. etc. 1991. Theresa’s School vs. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. Nature . 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. But where. underpayment of wages and claim for indemnity against private respondent.Labor II In short. she went on a leave of absence with the approval by petitioner. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. When private respondent became ill. the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. She hired private respondent. The Labor Arbiter dismissed the complaints. therefore. petitioners have become full-fledged regular employees. Dianne Miano.Purpose Ÿ Tomas Claudio Memorial College vs. Theresa's School of Novaliches Foundation. rather. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. On appeal. Ysan Castillo. Ÿ St. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. 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. Charms Haw. Thus. NLRC (Charms) Irah Burog. entitled to be reinstated to their former position as regular employees. It is not private compensation or damages. Despite the expiration of their employment contract. Esther Reyes on a contract basis. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. (General Baptist Bible College vs. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. 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. refer to his supposed earnings had he not been illegally dismissed. 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. which pertain to compensation due the employee for services actually rendered before termination. Backwages are generally granted on grounds of equity. When private respondent reported for work. petitioners separately filed complaints for illegal dismissal. Backwages. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal. on the other hand. 1990. Thus. not on a probationary status. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. not merely probationary. illegal dismissal. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. Moreover. Ÿ When the term "backwages" was used in the NLRC decision. With the continuation of their employment beyond the original term. Moreover. there is no vested right to salary increases. Jake Ng. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. the dismissal has been adjudged valid and lawful. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. private respondent invoked Article 283 of the Labor Code. Accordingly. Nor is it a redress of a private right but. She instituted a complaint for unfair labor practice. Edlyn Santiago. Alpe Macalalad. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. Kristel Macatangay. 1991. Monina Lagman. 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. but awarded private respondent partial backwages. but as regular employees. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. private respondent terminated petitioners' employment. petitioners were allowed by the private respondent to work until January 2.
Kristel Macatangay. illegal dismissal. In the interim. The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail. Petitioner would have. Conformably then with Article 279 of the Labor Code. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. The private respondent has not yet been convicted by final judgment in Criminal Case No. underpayment of salary. The petitioner insists that backwages should not and cannot be awarded to the private respondent. 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. The award of backwages is not conditioned on the employee's ability or inability to. Dianne Miano. sent a Memorandum to the private respondent informing him that his employment was already terminated. allowances and damages. Rizal. Jon Santos. 1996 until the judgment of the CA shall have become final and executory. The private respondent would thereby be enriching himself at the expense of the petitioner. The award of backwages is not conditioned on the employee’s ability or inability to. 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. non-payment of overtime pay. the petitioner. he is presumed innocent until his guilt is proved beyond reasonable doubt. without any warrant therefor. 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. earn any income. 1996 to February 17. inclusive of allowances. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. where it held that when the employee's dismissal is for a just cause. However. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. Monette Mesa. for violation of the Dangerous Drugs Act (Republic Act No. he was promoted as "Liaison Officer" of the school with the Department of Education. Jake Ng. 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. for lack of merit. Trinidad. Indeed. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. but rejected the charge of unfair labor practice and dismissed. Aladdin F.Labor II Facts: Sometime in 1983. there can be no backwages even if she was denied due process. since it would include that period of time when the latter was in jail. Nor is it a redress of a private right. Charms Haw. after appropriate proceedings. legal holiday pay. likewise. This is because the private. On 7 August 1992. Held: Grant of backwages proper. NLRC. 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 private respondent was arrested by the Morong police authorities. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. 6425). Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. back wages. in the interim. by expressly asking for separation pay. Monina Lagman. 5137. and non-payment of wages or commission and separation pay. While it may be true that on June 11. 1996. In time. 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. 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. earn any income. the private respondent was detained in Criminal Case No. in the interim. premium pay for holiday and rest day. 5251. Heidi Soria. been entitled to reinstatement as a consequence of his illegal dismissal from employment. through its president. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. but is awarded in furtherance and effectuation of the public objective of the Labor Code. 1997 for violations of the Dangerous Drugs Act. It is not a private compensation or damages. Ysan Castillo. 1996. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. 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. A criminal complaint was later filed against him. hence entitled to separation pay. respondent was detained from June 10. Thus. On June 10. petitioner's other monetary claims. Edlyn Santiago. he is deemed to have opted for Irah Burog. 1996. otherwise she would be unjustly enriching herself at the expense of the employer. Labor Arbiter Dennis D. NLRC (Charms) Facts: In a complaint filed before the NLRC. 1996 up to July 5. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. petitioner charged private respondent Emmanuel Lo with unfair labor practice. Ÿ The payment of backwages is generally granted on the ground of equity. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. Anna Tetangco 44 . and from November 21. It is a form of relief that restores the income lost by reason of unlawful dismissal. Alpe Macalalad.
Likewise. plumber. it is conducive to lack of initiative on the part of a laborer. Ysan Castillo. Jake Ng. No backwages were awarded. Kristel Macatangay. however. 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. Monette Mesa. This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. Should the laborer decide that it is preferable not to return to work. there is the "law's abhorrence for double compensation. Ÿ The Court. if it finds that their consideration is necessary in arriving at a just decision of the case. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. 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. carpenter. Dianne Miano. In other words. A contrary view would breed idleness. with respect to the activity in which they are employed. the employer said "Wala ka nang trabaho mula ngayon. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. Both bear the Irah Burog. In this case. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. and the filing of this case. although Dagui did not bring any appeal regarding the matter.Computation Ÿ First. We are prompted to give out this last reminder because it is really unjust that a discharged employee should. law and jurisprudence authorize a tribunal to consider errors. In the event that reinstatement is no longer possible. As regards separation pay. amounts to a "plain error" which we may rectify in this petition. although unassigned. Held: Yes to both. Suddenly. Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. with folded arms. These twin requirements of notice and hearing were undeniably absent in the case at bar. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. Alpe Macalalad. Edlyn Santiago. Dagui was dismissed. remain inactive in the expectation that a windfall would come to him. an illegally dismissed employee is entitled to (1) either reinstatement. Jon Santos. Charms Haw. and (3) clerical errors. separation pay is awarded to the employee. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself." Second. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. that is. in mitigation of the damages that the dismissed respondents are entitled to. or separation pay if reinstatement is no longer viable. beginning 1953 until 1982. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. Besides. as in this case. The Supreme Court is clothed with ample authority to review matters. Monina Lagman. Thus. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. There are two kinds of regular employees. The award of separation pay is in lieu of reinstatement and not of backwages. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. and (2) those who have rendered at least one year of service. To be reckoned for the former is the period of putative service. the deduction should be made up to the time judgment becomes final. without giving him any written notice informing the cause for his termination. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages. in the interest of substantial justice. if viable. Period. Rules of procedure are mere tools designed to facilitate the attainment of justice. who is legally entitled thereto having been illegally dismissed. Heidi Soria. Effect Failure to Order Ÿ Aurora Land etc." on the alleged ground that his work was unsatisfactory. They are separate and distinct from each other. And these.Labor II separation pay in lieu of reinstatement. and (2) backwages. (2) plain errors not specified. 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. even if they are not assigned as errors on appeal. Anna Tetangco 45 . vs. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. whether continuous or broken. The jobs assigned to private respondent as maintenance man. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. 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.
Jon Santos. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment.Labor II stamp of undesirability. Ÿ TEEHANKEE. CIR 1974) arbitrary procedures (in the Mercury case. 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. Dianne Miano. 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. Charms Haw. and fifteen days without further disqualifications. The period of delay in instituting this ULP charge with claim for reinstatement and back wages. 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. 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. generally led to long delays in the execution of the decision for back wages and reinstatement. and obviates the twin evils of idleness on the part of the employee who would "with folded arms. Such general awards. Rationale. Anna Tetangco 46 .As has been noted. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. J. As aforestated. However. As to the amount of backwages. Monina Lagman. 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. Monette Mesa. 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. Justice Teehankee concurs in the ruling that there shouldn’t be a deduction of earnings elsewhere from the backwages awarded. however. is four years. Itogon-Suyoc vs. 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. dissenting opinion:(Mercury Drug rule) I dissent. the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms.. As observed by the Court in another case. 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. 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.. He suggested that instead of Irah Burog. Jake Ng. 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. from the specific result in the Ÿ *** Basically. eleven months. should be deducted from the liability of the employer to him for back wages. Ysan Castillo. he dissents as to the period of computation." that is to say. 11 months and 15 days in the case at bar) "without further qualifications. vs. 1961. although within the prescriptive period. Heidi Soria. On the other hand. J. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period. 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. 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. which may delay the execution of the decision. Alpe Macalalad. the period was based on the remainder of the 4 year prescriptive period). (Mercury Drug vs. the Court applies the precedent recently set in Mercury Drug. Kristel Macatangay. as noted in the main opinion. Edlyn Santiago. Co. reasonable and mutually beneficial solution.
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). Ÿ However. Heidi Soria. History of the different methods in the computation of backwages. Ysan Castillo. 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. 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. Monette Mesa. In addition. 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. and that was. 1964 denying petitioner's motion for reconsideration. Kristel Macatangay. All the private respondents. Charms Haw. when it is considered that he pursued — with vigor his complaint after its filing on April 25. etc. Jon Santos. Monina Lagman.. The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence.g. 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. Due to the expiration of private respondents' contracts and their poor performance as teachers. As probationary employees. Hence. Jake Ng. there was no illegal dismissal. 11 months and 15 days . Thus. the law abhors double compensation. backpay (the same as backwages) could be awarded where. 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. Normally. a) The first labor relations law governing the award of backwages was Republic Act No. they are likewise protected by the security of tenure provision of the Constitution.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. Ÿ Pines City Educational Center vs. Here. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts. 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. 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. when an employer had declared a Ÿ Irah Burog. Thus. Consequently. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer.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. they cannot be removed from their positions unless for cause. supra.. In accordance with these provisions. in the opinion of the Court of Industrial Relations (CIR). and decision in this Court). 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. Only in one case was backpay a matter of right. Alpe Macalalad. NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. a case for illegal dismissal was filed. 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. Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not. Anna Tetangco 47 . 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. Dianne Miano. Edlyn Santiago. as stressed in East Asiatic Co. should be deducted therefrom. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17. signed contracts of employment with petitioner for a fixed duration. except Roland Picart and Lucia Chan. oppression or dilatory appeals) on the employer's part. they were notified of petitioners' decision not to renew their contracts anymore. if any. 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. 875. such was necessary to effectuate the policies of the Industrial Peace Act. the Industrial Peace Act. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). petitioners had the burden of proving that the termination of their services was legal. 1964 and its en banc resolution of February 25. Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. in ascertaining the total amount of backwages payable to them.
(italics supplied). as a general rule.D. supports this conclusion. 442 by limiting the award of backwages to three (3) years. 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. was expressed as follows: “ART. the CIR increased or diminished the award of backpay.A No. However. 442 (the Labor Code of the Philippines). as amended. Dianne Miano. when the amendatory law to P. 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. 442. The Court deems it appropriate. A survey of cases from 1974 until 1989. in the exercise of its jurisdiction. 279. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. Act No. R. No.A. Security of Tenure. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug).D. Inc. Security of Tenure. the rule generally applied by the Court after the promulgation of the Mercury Drug case. 6715 took effect. should not.D. et al. Anna Tetangco 48 .D. d) Then came Presidential Decree No. 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. 6715. the Court enforced the Mercury Drug rule and. 875. 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.The proposal on the threeyear backwages was subsequently adopted in later cases. Ysan Castillo. 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. however. among them. No. Article 279 thereof states in part: “ART. above-quoted. In sum. Thus. was nonetheless followed in said case.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. 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. among them. et al.. during the effectivity of P. qualified the provision under P. in effect. the award of backwages equivalent to three (3) years. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. without qualification or deduction. namely. No. Republic Act No. After the Labor Code (P. This notwithstanding. (See Itogon-Suyoc case). Feati University Faculty Club (PAFLU) v. v. 442. . Alpe Macalalad. No. depending on several circumstances.D. Monette Mesa. No. 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. 6715 took effect." However. Charms Haw. e) On 21 March 1989. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. backwages to be awarded to an illegally dismissed employee. Edlyn Santiago." (italics supplied) In accordance with the above provision. — . be diminished or reduced by the earnings derived by him elsewhere Irah Burog. In labor cases decided during the effectivity of R. amending the Labor Code. CIR. Monina Lagman.In order not to unduly delay the disposition of illegal dismissal cases. 279. Kristel Macatangay. Jon Santos. 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. This ruling was grounded upon considerations of expediency in the execution of the decision. Heidi Soria. In an even later case (1987). 442 was still the Mercury Drug rule. this Court found occasion in the case of Mercury Drug Co. Its posture on the award of backwages. 442) had taken effect. the employee's employment in other establishments during the period of illegal dismissal. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). it became mandatory to award backwages to illegally dismissed regular employees. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee. — In case of regular employment. Jake Ng. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep. 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. inclusive of allowances. the good faith of the employer. and during the effectivity of P. 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. .." Under the abovequoted provision. Feati University (1974) and others. b) Mercury Drug rule. 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.
without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. requiring her to undergo psychiatric evaluation. must still earn a living to support himself and family. We now turn to the second issue raised. i. 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. 6715 points to "full backwages" as meaning exactly that. must be applied without attempted or strained interpretation. the provision calling for "full backwages" to illegally dismissed employees is clear. However. therefore. 6715. 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. Dianne Miano.e. Alpe Macalalad. as amended by Republic Act No. the following elements and process must obtain: first. before an officer or employee may be dropped from the rolls for mental incapacity. The clear legislative intent of the amendment in Rep.All that the 1989 and 1991 medical certifications established is that. Act No. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. but Ÿ Irah Burog. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance. However.. 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. while litigating the legality (illegality) of his dismissal. It may appear that Article 279 of the Labor Code. Ÿ However. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. 6715. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. Jake Ng. Atienza. Heidi Soria. petitioner was diagnosed to be suffering from Major Depression. Rep. Monina Lagman. that a written notice is issued by the subject's 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. Zip Venetian Blind and the later decision in 1989 of Soriano v. Edlyn Santiago. during said periods. Gentallan. The underlying reason for this ruling is that the employee. inclusive of allowances. Bustamante vs. However. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls . a closer adherence to the legislative policy behind Rep. 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. Issue: Whether there was proper procedure and substantial basis for MCWD to declare Romagos mentally unfit to work and drop her from the rolls. Kristel Macatangay. 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. NLRC." Thus. describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. 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. which took effect just five (5) days after Soriano was promulgated. Monette Mesa. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule.Labor II during the period of his illegal dismissal. as confirmed by the head of office. Charms Haw. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. that another notice is issued by the appointing authority or head of office. plain and free from ambiguity and. Thus. whether the Labor Arbiter correctly awarded full backwages to Timbal. Anna Tetangco 49 . First. Such a doctrine is admittedly supported by the early case of National Labor Union v. 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. informing the subject of his separation from the service due to mental incapacity. respondent sufficiently established that petitioner suffers from a mental disorder. 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. Ysan Castillo. In other words. Act No. Act No. third.1996 Ÿ Romagos vs. Clearly. as amended by Republic Act No. second. 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. and finally. Respondent issued to petitioner a letter. Jon Santos. that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. where reinstatement is adjudged.
Ÿ Kay Products vs. Monina Lagman. 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. respondent E & R security agency hired petitioner Chona P.396.00 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. Heidi Soria. 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. 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. The complainants further contended that they were coerced and intimidated into signing letters of resignation. In the instant case. Saldiar (2007) Ÿ Torres vs. Hence. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. he immediately proceeded to the petitioner but was not accepted back to work. CA (Jake) Facts: The employees alleged that they were illegally dismissed. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. the private respondents should be reinstated. 1995 cannot be deemed as an abandonment of his work. he was arrested and detained for the charge of rape upon complaint of his neighbor. Anna Tetangco 50 . and unjustified refusal of the employee to resume his employment. An illegally dismissed employee who. Abandonment as a just ground for dismissal requires clear. Kristel Macatangay. in contemplation of the law. two requisites must concur: first. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. and (b) for committing rape. 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. the employee must have failed to report for work or must have been absent without valid or justifiable reason. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. NLRC (Jake) Facts: On January 5. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. we said that the rule enunciated in Pines Cityð no longer controls. Now. He failed to notify the SEMC of the reason for his absences. 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. Moreover. Del Monte vs. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. 1996. Held: The amount of P 105. with full backwages from the time she was placed under preventive suspension on October 27. even after notice to return. 1996 by virtue of the judgment of acquittal dated May 17. Standard Electric Employees Union (Jake) Facts: On July 31. and considering that they were illegally dismissed. is not tantamount to abandonment. Genalyn Barotilla. 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. KPI thereby engaged in ULP. Edlyn Santiago. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. deliberate. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. In the recent ruling of the Court. Ysan Castillo. 1995. 1989. the reckoning point for the grant of backwages started therefrom. Dianne Miano. Jake Ng. 1989 up to the time of her reinstatement.Labor II perhaps Republic Act No. and second. Charms Haw. 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. Javier failed to report for work. 1995. hence. 1989. Jon Santos. To constitute as such. willful. when respondent Javier was freed on May 24. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. 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.# On November 27. Monette Mesa. Held: As regular employees. 1995.ð Standard Electric vs. with the second element being the more determinative factor. On November 10. Mere absence or failure to report for work. Alpe Macalalad. never left his office. On August 9. 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. 1989. Held: Respondent Javier’s absence from August 9. 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. Torres as a security guard.
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. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. 1995 to December 30. Benedicto (Jake) Facts: In 1993. Alpe Macalalad. the compulsory retirement age under the law. that on October 1.00 as separation pay. are binding on us since they are supported by substantial evidence. cost-cutting measures resulting in the termination from the service of their employees. Effect Inflation Ÿ Lantion vs. therefore. he was dismissed from his employment allegedly because he was a project employee. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. 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. Monina Lagman. they shall be entitled to reinstatement with full back wages. in case of retrenchment to prevent losses. In a letter dated October 11. were not religiously followed. 1994.00. he was already 64 years old. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. Thus. at that time the president of petitioner. as marketing manager with a monthly compensation of P20. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. Such compliance with the reportorial requirement confirms that respondent was a project employee. Held: The dismissal of respondent from the service is by reason of retrenchment. Otherwise. Heidi Soria. was terminated as Secretary to the Legal Office on 21 November 1983. their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. there can be no question. The conditions laid down. however. a corporation engaged in construction business.. And as far as Filomeno and Clarita Lantion are concerned. Filomeno's sister-in-law. His employment was coterminous with the completion of the projects for which he had been hired. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. an authorized cause. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. When Benedicto was illegally dismissed on October 11. Benedicto was terminated from his position. petitioner regularly submitted to the labor department reports of the termination of services of project workers. his employment with the petitioner company was continuous and without interruption for the past ten years. 1998. that his work was not dependent on the completion or termination of any project. on June 12. the general manager then of petitioner. However. pursuant to our ruling in Agabon. petitioners filed their Complaint against the University and its President. Petitioners were not rehired although they fall outside the exception provided. Since he was employed by petitioners for four years. The labor arbiter concluded that Benedicto was illegally dismissed. Under Article 283.000. he should be paid P160. Charms Haw. 1999. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Jake Ng. with a monthly salary of P80.000. before the NLRC. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. Edlyn Santiago. and Management effective 1 June 1984. petitioners implemented Irah Burog. Kristel Macatangay. or from June 1. Furthermore. the employment of project employees cannot be terminated prior to expiration. Clarita's position was neither abolished. 1989. The position of Vice-President continued to exist. While petitioner Fuentes.000. Held: These factual findings of the NLRC. wife of Filomeno. which we fix at P20. confirmed by the CA. Inc. 1994 signed by Tomas Gomez III.Labor II Petitioner Filsystems. She was replaced by another faculty member. Held: That retrenchment was proper. Ÿ Intercontinental Broadcasting vs. Monette Mesa. Ysan Castillo. Dianne Miano. Petitioner Clarita Lantion. Finance. NLRC (Jake) Facts: On 10 November 1983. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. Reynaldo Benedicto was appointed by Ceferino Basilio. On 25 March 1985. Ÿ Without a valid cause. including respondent. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. Jon Santos. that since his work was not dependent on any project. 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). Anna Tetangco 51 .00. dated 9 November 1983. petitioner Filomeno Lantion received a letter. respondent Obed Jose Meneses. Reinstatement of petitioners with backwages is thus called for. 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. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business.000 plus 1% commission from collections of all advertising contracts consummated.
the employer may not be required to give the dismissed Irah Burog. Investigated and heard. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. were immediately returned to the student-leaders for proper reimbursement to the students concerned. the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay. reprimanded and suspended him for habitually neglecting to submit his periodic reports.. an employee who is dismissed for cause is not entitled to any financial assistance. a traffic operator of the Philippine Long Distance Telephone Company. Gustilo. after initial purchases were made.00 as "severance pay" which is synonymous with "separation pay. if it is to be considered at all. . However. petitioner pleaded that she never misappropriated the money collected and whatever was left of it. Held: We hold that the grant of separation pay in the case at bar is unjustified. Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. 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. was employed by Wyeth Philippines. Where the reason for the valid dismissal is. Anna Tetangco 52 . maintaining that he was responsible. regardless of who initiated the collections. Kristel Macatangay. equity has been defined as justice outside law. It is grounded on the precepts of conscience and not on any sanction of positive law. for equity finds no room for application where there is law. She went to the Ministry of Labor and Employment claiming she had been illegally removed. Petitioner's employment records show that respondent company. made her "in effect the author of the project. as a pharmaceutical territory manager. 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. an offense involving moral turpitude .800. Ÿ Salavarria vs. Where the reason for the valid dismissal is. habitual intoxication or an offense involving moral turpitude. equity considerations provide an exception. on various dates. who attested to the veracity of the former's assertion. like theft or illicit sexual relations with a fellow worker. or whatever other name it is called. or financial assistance. 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. it will actually become a prize for disloyalty. Jake Ng. one of her students. If regarded as a justification for moderating the penalty of dismissal. After consideration of the evidence and arguments of the parties. Ysan Castillo. 10. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. the employer may not be required to give the dismissed employee separation pay. Dianne Miano. . NLRC (Jake) Facts: Marilyn Abucay. Inc. the fact that the same was approved or indorsed by petitioner. In PLDT v. 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. 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. Edlyn Santiago. Heidi Soria. Redentor Salonga. Jon Santos. for example. Monina Lagman." As a general rule. NLRC." Petitioner's infraction of a school policy warrants her dismissal.. FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs. petitioner. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. it would be petitioner Salavarria. she was found guilty as charged and accordingly separated from the service. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. 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. In support of this claim. Charms Haw. but for the canvass of the price of the religious items as well. Monette Mesa. Hence. Alpe Macalalad. not only for the collection of the contributions. petitioner relied principally on a letter written by Ÿ Gustilo vs.000. . The fact that she has worked with the PLDT for more than a decade. . The private respondent has been dismissed for dishonesty. was accused by two complainants of having demanded and received from them the total amount of P3. respondent company.Labor II inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities. Moreover. being ethical rather than jural and belonging to the sphere of morals than of law. . Further. 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. having been effected without just cause. 14. on the ground of social justice.00 in consideration of her promise to facilitate approval of their applications for telephone installation. Wyeth Philippines (Kristel) Facts: Alan D.
Rule I.This was not granted despite several demands. Ÿ Section 7. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. he preferred to stay home rather than risk further working in a ship at sea. and that he was not authorized to accept payment. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules. He was dismissed from service. NLRC (Kristel) Facts: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. for equity finds no room for application where there is law. that in those years there was not a single report of him transgressing any of the company rules and regulations. and (3) defrauding others by using the name of the company. that he denies receiving the telegram asking him to report back to work. Hence. Equity has been defined as justice outside law. Inc. Weighed on the scales of justice. Ÿ Pangasinan Electric Coop vs. 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. Such findings. Piñero's infraction is not so reprehensible nor unscrupulous as to warrant complete disregard of his long years of service. hence the retirement benefits he would receive would ease his financial burden. 15 Separation pay in such case is granted to stand as a "measure of social justice. It is grounded on the precepts of conscience and not on any sanction of positive law.Labor II employee separation pay. being ethical rather than jural and belonging to the sphere of morals than of law. he shall not be entitled to termination pay without prejudice to applicable collective bargaining agreement or voluntary employer policy or practice. In this instance. on the ground of social justice. an educational institution. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer. the grant by the Court of separation benefits is hardly justifiable. citing as reason the death of his only daughter. Jake Ng. that he had given to the company the best years of his youth. Charms Haw. 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 our view. Anna Tetangco 53 . Jon Santos. that it would appear that he had served the company well. (2) dishonest or unauthorized activity whether for personal gain or not. 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. working on board ship for almost 24 years. we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. 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. via the principle of "compassionate justice" for the working class. These circumstances indubitably merit equitable concessions. namely: (1) unauthorized acceptance of payments for new connection. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. Edlyn Santiago. however. are accorded respect and even finality by this Court. Monina Lagman. he has no previous derogatory records. 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. Although meriting termination of employment. and certain acts tantamount to serious misconduct. The fact that private Ÿ Eastern Shipping Lines vs. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. but that considering his age and health. Alpe Macalalad. and Irah Burog. Heidi Soria. and as an equitable concession. conscience and reason tip in favor of granting financial assistance to support him in the twilight of his life after long years of service. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. provide an exception. 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.. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline." 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. Inc. Ÿ Pinero vs. with these special circumstances.The union staged a strike. if supported by substantial evidence. Equity considerations. Kristel Macatangay. In this case. Ysan Castillo. Dianne Miano. (CENPELCO). or financial assistance. Monette Mesa. Moreover. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. NLRC (Kristel) Facts: Dumaguete Cathedral College. or whatever other name it is called. Sedan sent a letter to petitioners applying for optional retirement.
145 SCRA 123). 148 SCRA 187. No. It contravenes Rule 1. dismissed the private respondent Eduardo Malabanan.) . Inc. whose driver was rendered unconscious by a stone hitting him on the head. Lariosa. a superior officer. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. an accounts payable clerk. Book VI of the Omnibus Rules Implementing the Labor Code. like the workers who have tainted the cause of labor with the blemishes of their own character. At best it may mitigate the penalty but it certainly will not condone the offense. within full view and hearing of the other employees. (Emphasis supplied. or financial assistance. On May 24." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. investigation. Edlyn Santiago. . he is not entitled to separation pay. (4) cessation of the employer's business. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal.R. 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. several of the striking employees threw stones at the trucks entering and leaving the company premises. and also in the house of Nene Enriquez. (Articles 283 and 284. NLRC and Marilyn Bucay. Inc. Plaridel. Filipro. although the employee was lawfully dismissed. like theft or illicit sexual relations with a fellow worker. since his violation reflects a regrettable lack of loyalty and worse. Monina Lagman. having the main duty of removing and/or changing damaged flexbeams on the expressway. Ÿ Eastern Paper Mills vs. Where the reason for the valid dismissal is. G. where We held that: ". 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. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. declared a strike against the private respondent company. The company found him guilty of stealing or unauthorized taking of company property. Charms Haw. 1988. after due notice. . NLRC (Kristel) Facts: Petitioner. habitual intoxication or an offense involving moral turpitude. Monette Mesa. Alpe Macalalad. Labor Code. . Ysan Castillo. Chua was a member.) Ÿ Chua vs. 7. of Davao. 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. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. vs. One truck. NLRC. During the strike. (3) retrenchment. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. Heidi Soria. Soco vs. Mercantile Corp. Sec. for serious misconduct) is legally indefensible. (2) redundancy. Dianne Miano. such gesture will actually become a prize for disloyalty. Jake Ng. The only cases when separation pay shall be paid. of the Philippines vs. does not call for such award of benefits. or whatever other name it is called. NLRC (Kristel) Facts: Union of Filipro Employees. Petitioner received a notice Irah Burog. the employer may not be required to give the dismissed employee separation pay. and thereafter terminated his employment Ÿ It is true that in some earlier cases. in our view of this case. Bulacan. betrayal of the company. Jon Santos. 1983. 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. 80609. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. It placed the complainant under preventive suspension for thirty (30) days. on the ground of social justice. Construction Corp vs. who was then the personnel and administrative manager of the company. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. 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. Nestle Philippines. 148 SCRA 526. . for having physically assaulted and verbally abused. Not Allowed Ÿ Phil. as a janitor and later promoted to Leadsman. Mariano Lopingco. Kristel Macatangay. 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. vs. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. August 23. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. for example. of which petitioner Benito D. Anna Tetangco 54 . Both declared that the items were deposited there by Manreza and his companions. and hearing.
Kristel Macatangay. administer. Anna Tetangco 55 . permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. whichever is higher. Where the reason for the valid dismissal is. develop. cultivate. should prevail. without the NFL initiating the revision thereof. Consequently. or whatever other name it is called. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. 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. unused sick leave and other benefits. Charms Haw. Meanwhile. Monina Lagman.11 SEPARATION PAY When Alternative Ÿ Although Vital. Dianne Miano. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL. Simultaneously. CA (Heidi) Facts: SDPI was given the right to manage. Edlyn Santiago. . Unless annulled. have the effect of rewarding rather than punishing the erring employee for his offense . workers affected would be entitled to termination pay as provided by the Labor Code. as a contract governing the employer and the employees respecting the terms of employment. During the effectivity of the FMA between ARCI and SDPI. as the petitioner correctly argues. habitual intoxication or an offense involving moral turpitude. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. constituted serious misconduct on his part. However. in addition to his full backwages. the parties. Jon Santos. the CBA. A fraction of at least 6 months shall be considered 1 whole year. 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. antagonism has caused a severe strain in their relationship. the employer may not be required to give the dismissed employee separation pay. Alpe Macalalad. or financial assistance. Ÿ Irah Burog. Jake Ng. they should have rejected the CBA. hours of work and all other terms and conditions of employment in the bargaining unit. Monette Mesa. The parties opted to be bound by the provisions of the Labor Code and not by company policy. Etcuban vs. thus: Pursuant to the CBA. respecting the terminations was sent by SDPI. vacation leave. NFL was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in a rubber plantation. Ysan Castillo. and other benefits. Sulpico Liner (Heidi) 14. In the case at bar. specifically for planting rubber trees. 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. a letter to DOLE. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. which strike resulted in multiple deaths and extensive property damage. SDPI served formal notices of termination to all the employees of the plantation. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits. Heidi Soria. on the ground of social justice. who was illegally dismissed. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. like theft or illicit sexual relations with a fellow worker.Labor II of dismissal from private respondent for having participated in the illegal strike. 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. Vital) Ÿ National Federation of Labor vs. petitioner's participation in the unlawful and violent strike. each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. 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. and other benefits which were all lumped in one Metrobank check. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. whichever is higher. for example. . The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. and improve the rubber plantations of ARCI as an agro-industrial development project. vs. in relation to the Labor Code of the Philippines. processing of and marketing of its products and providing technical expertise. During the negotiations. . A contrary rule would. is entitled to reinstatement. (Coca-cola Bottlers Phils. 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. the Comprehensive Agrarian Reform Law (CARL) took effect. allowances. accordingly. 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.
Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. 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. Hanford denied Joseph's request on the ground that under the Labor Code. Monina Lagman. 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. it is very clear from the CBA that when an employee or worker voluntarily resigns due to. Jon Santos. as in fact. 1998. NLRC finds application here. In Hinatuan Mining Corporation and/or the Manager v. which is especially required for the position of purser. an employee who voluntarily resigns may not be granted separation pay. 19. On Aug. Heidi Soria. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. Edlyn Santiago. in a surprise examination. NLRC and Margo Batister. the NLRC and the Court of Appeals. employees or workers who may be separated without cause. Charms Haw. After all. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. he is not worthy of compassion as to deserve at least separation pay for his length of service. there is an exception. 1978 until his dismissal on June 10. Kristel Macatangay. Irah Burog. thus: "In the interpretation of an employer's program providing for separation benefits. Ysan Castillo. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years. 13th month pay and other monetary benefits with the regional arbitrator. among others. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees. he filed a complaint against the respondent for illegal dismissal. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. retirement is not also a ground for the grant of separation pay. we held that while it is true that under the Labor Code. Under the Labor Code. 1998. the newly designated jefe de viaje of the ship. Hanford then paid Joseph her last salary. the general rule is that an employee who voluntarily resigns is not entitled to separation pay. Sometime in 1994. that is. as in this case. 1998. 1978. Alpe Macalalad. non-payment of overtime pay. Jake Ng. 13th month pay and the cash conversion of her unused vacation and sick leave. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. If petitioners could be liberal to those employees who retired. respondent voluntarily tendered her resignation effective September 17. however. Under the Code. At the time of his dismissal. (d) closing or cessation of business operations." 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. Later. (b) redundancy.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. 2 which petitioner accepted the following day. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. the Court is constrained to deny the same. On Nov." such as voluntary resignation.00. 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). (c) retrenchment. grant of separation pay. 10. It also informed him of his immediate preventive suspension until further notice. On June 30. Ÿ In the instant case. Anent the petitioner's request for separation pay. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. Moreover. Hanford hired Shirley Joseph as a sewer. Inasmuch as reason for which the petitioner was validly separated involves his integrity. Our ruling in Philippine National Construction vs. Joseph (Heidi) Facts: On July 17. 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." Ÿ Hanford Phil.. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company. and those whose services are terminated due to suspension or cessation of operation. all doubts should be construed in favor of labor. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement. Dianne Miano. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. 1986. "separation from the company without cause. Barely a week after the petitioner's preventive suspension and pending his administrative investigation. Consequently. As aptly held by the Labor Arbiter. vs. discovered irregularities in the issuance of passage tickets. Monette Mesa. Anna Tetangco 56 . then he is entitled to a separation pay. 1994 for loss of trust and confidence.
Ÿ In case of retrenchment to prevent losses. 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. Under the facts and circumstances of the present case. it had been giving separation pay equivalent to 30 days' pay for every year of service. i. out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives." Both words (as well as salary) generally refer to one and the same meaning. 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 . Nor water out of parched land. one cannot squeeze blood out of a dry stone. i. Therefore. Alpe Macalalad. In the case of North Davao.". respondents tenaciously insist on the award of separation pay. task. 248 (e) of said Code. Jon Santos. unequal treatment of employees. But when a business enterprise completely ceases operations. However. . "What exactly does the term connote?" We correlate Art. should have elicited admiration instead of condemnation. computed on their basic monthly pay. the grant of a lesser amount of separation pay to private respondent was done. in protecting the rights of the laborer.e. . 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. The law. Since the law speaks of "pay. Ÿ Art. whichever is higher. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. but rather. 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. upon its death as a going business concern. Edlyn Santiago. petitioners were given separation pay. Anna Tetangco 57 . it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily." the question arises. they lodged a complaint for separation pay differentials. managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. As a going concern. "Pay" is not defined therein but "wage.5-days' worth at that. in addition to the commutation to cash of their unused vacation and sick leaves. 97 of the same Code on definition of terms. piece. not by reason of discrimination. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems. for obvious reasons. 1992 due to serious business reverses. however designated.5 days is alleged discrimination.Labor II North Davao completely ceased operations in May 31. during the life of the petitioner corporation. Where. the employees had to collect their salaries at a bank in Tagum. Respondents contend that. Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof. Davao Del Norte.. petitioners discriminated against them. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay. Ysan Castillo.e. a reward or recompense for services performed. 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. As already stated. its remaining employees were separated and given the equivalent of 12. Art. Dianne Miano. Monette Mesa. which is proscribed as an unfair labor practice by Art. the basis for the claim of the additional separation benefit of 17. authorizes neither oppression nor self-destruction of the employer.. When it ceased operations. or commission basis. this arrangement lasted from 1981 up to 1990. Specifically. capable of being expressed in terms of money. Moreover. Stated differently. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. However. Computation Ÿ Millares vs.. the closure was due to business losses — as in the instant case. or other method of calculating the Irah Burog. which policy had been in force in the years prior to its closure. "wage" is defined in letter (f) as the remuneration or earnings. its vital lifeblood — its cashflow — literally dries up. from the beginning of its operations in 1981 until its closure in 1992. i. Indeed. by denying the same separation benefits to private respondents and the others similarly situated. unfair and most revolting to the conscience. it appears that.5 days' pay for every year of service. 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. 283 with Art. Accordingly. Monina Lagman. however. Charms Haw. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive. In the case before us. Jake Ng. Art. Heidi Soria. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. whether fixed or ascertained on a time.e. its cash flow could still have sustained the payment of such separation benefits. Kristel Macatangay. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical.
which held that since a corporation is an artificial person. When an employer customarily furnishes his employee board." we divide the discussion on the following — "customarily furnished. once a vacancy occurs in the company-provided housing accommodations. In the case at bar. Dianne Miano. NLRC (Heidi) Facts: Publico was a sewer of NYK. 1997. 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. 1997. the employee concerned transfers to the company premises and his housing allowance is discontinued. has a separate and distinct personality. vs. the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. On May 7. It cited the case of AFP Mutual Benefit Association. 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. by legal fiction. being the "person acting in the interest of the employer. Heidi Soria. because a corp. in the guise of retrenchment. Inc. "fair and reasonable value as determined by the Secretary of Labor. 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. Jon Santos. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award. Edlyn Santiago. it must have an officer who can be presumed to be the employer. Ysan Castillo. However. corporate officers are as a GR. Ransom Labor Union-CCLU v. Publico was refused entry for work and later informed of her dismissal." In order to ascertain whether the subject allowances form part of petitioner's "wages. a measure fully explained to all its employees. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts. lodging or other facilities. On May 9. More recently. Waivers and quitclaims are generally looked upon with disfavor. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. Ransom. therefore. Ÿ What the Court finds apropos is our disquisition in A. the fair and reasonable value thereof. In the case of the housing allowance. Complainants-petitioners then filed a complaint for illegal dismissal. lodging or other facilities. 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. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done." In other words the corporation. dismissed complainants-petitioners who are active leaders of the union. Ÿ In termination cases." "board. In this case Cathy Ng. In a subsequent case. NLRC. AFP-MBAIEU which ruled that such quitclaims are against public policy and. as determined by the Secretary of Labor. The next day. is included in "wage. not personally liable for their official acts. Kristel Macatangay. 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. C. admittedly. Publico went home early despite refusal of petitioner because she was not feeling well. Anna Tetangco 58 . NLRC) Ÿ NYK Intl vs. is the employer.Labor II same. Effect of Acceptance Ÿ Anino vs. Alpe Macalalad." "Customary" is founded on long-established and constant practice connoting regularity." and. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU). she notified petitioner that she was still recovering from her sickness. HMC. of board. lodging. Jake Ng. Charms Haw. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. unfair labor practice and damages against HMC. Monette Mesa. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. however. (Bogo-Medellin vs. or for services rendered or to be rendered and includes the fair and reasonable value. The subject allowances do not form part of petitioners wages. or other facilities customarily furnished by the employer to the employee. Monina Lagman. On the other hand. there was no reason at all for petitioners to resort to the above cases. is the manager of NYK. Irah Burog. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. null and void.C. Conformably with our ruling in A. Anent the issue on the quitclaims. as determined by the Secretary of Labor and Employment. in the technical sense only.
social and financial position of the offended party and the business or financial position of the offender are taken into account. To warrant award of moral damages.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. bad faith or malice was not proven. evading an existing obligation.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. Jake Ng. However. Therefore. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position. underpayment of wages and claim for indemnity against private respondent. nor did he hold Tan liable. 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.00 which it finds reasonable. The amount of exemplary damages awarded is accordingly reduced too to P250. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. Thus. Monette Mesa. corporate directors and officers are solidarily liable with the corporation. Hence. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. good customs or public policy. or is done contrary to morals. Jon Santos. A dismissal may be contrary to law.00. Kristel Macatangay. she was terminated. stockholders and members. The Labor Arbiter dismissed the complaints. has a personality separate and distinct from its officers. either jointly or severally. On January 3. Heidi Soria. where terminations of employment are done with malice or in bad faith. or constituted an act opposite to labor. Dianne Miano. 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. Ÿ 14. 1991. Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis.’s fees because there is no showing that bad faith and malice attended her dismissal. Timbol) Unless they have exceeded their authority. Ÿ The Supreme Court held that the respondent was illegally dismissed. as a general rule. NLRC) dismissal with prayer for damages and attorney's fees. not personally liable for their official acts. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud. or constitutes an act oppressive to labor. 1991. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. Alpe Macalalad. 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. private respondent terminated petitioners' employment. petitioners separately filed complaints for illegal dismissal. even though the latter was the General Manager. Cathy Ng. or was done in a manner contrary to morals. the alias writ of execution for said award should be directed only against the company and not against Tan. vs. it must be shown that the dismissal of the employee was attended to by bad faith. Thus. Despite the expiration of their employment contract. Villas) Ÿ Asia Pacific Chartering vs. Irah Burog. however. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. good customs or public policy.000. 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. Her resultant sufferings thus entitle her to an award of moral damages. 1990. corporate officers are. Monina Lagman. or confusing a legitimate issue. (Collegio de San Juan de Letran-Calamba vs. this Court reduces the amount of moral damages awarded to P500. but by itself alone. petitioners were allowed by the private respondent to work until January 2. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent. In cases of illegal dismissal. 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. with the company for the monetary award. Ysan Castillo. Charms Haw. it does not necessarily establish bad faith. In determining the amount of moral damages recoverable. 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. because a corporation. Pursuant to prevailing jurisprudence.000. On the other hand. this petition for certiorari. The labor arbiter didn’t make any such finding. Edlyn Santiago. by legal fiction. hence. private respondent invoked Article 283 of the Labor Code. Anna Tetangco 59 . in her capacity as manager and responsible officer of NYK. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Here. Indeed. (Tan vs. On appeal. the business. 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. (Acesite Corp.
through its manning agent. petitioners have become full-fledged regular employees.Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers. 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. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. but also damages under the Civil Code. Tolosa contracted a fever and in the succeeding 12 days. 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. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. Ysan Castillo. Under Article 2221 of the Civil Code. Petitioner's action was recovery of damages based on a quasi-delict or tort. and the said shipmates have no employer-employee relations with Capt. the Labor Arbiter ruled in her favor. to be the master of the Vessel named M/V Lady Dona. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. Jake Ng. Tolosa. his health rapidly deteriorated resulting in his death. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. other labor statutes. Irah Burog. 1990. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. Heidi Soria. Kristel Macatangay. It held that after October 31. the Court held that petitioners are entitled to full backwages. Jon Santos. Alpe Macalalad. entitled to be reinstated to their former position as regular employees. Moreover. which has been violated or invaded by the defendant. Capt. While in command of the vessel. overtime compensation or separation pay. Held: The Supreme Court affirmed the appealed decision. Charms Haw. Asia Bulk. other labor statutes. "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. Ÿ As a rule. Monette Mesa. According to the Court. and in which the cause of action proceeds from a different source of obligation such as a tort. Accordingly. Dianne Miano. nominal damages are adjudicated in order that a right of the plaintiff. may be vindicated or recognized. other labor statutes." In the present case. 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. Thus. they were. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. The NLRC. in effecting such dismissal. or collective bargaining agreements. or collective bargaining agreements. the employer fails to comply with the requirements of due process. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. not on a probationary status. Edlyn Santiago. in which the employer-employee relation is merely incidental. This provision is only a safety and health standard under Book IV of the same Code. 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. NLRC (Dianne) Facts: Petitioner was the widow of Capt. The enforcement of this labor standard rests with the labor secretary. the employment of petitioners is no longer on a fixed term basis. these relief must still be based on an action that has reasonable causal connection with matters. Anna Tetangco 60 . When petitioner filed a complaint with the POEA. Petitioner is actually suing shipmates Garate and Asis for gross negligence. or collective bargaining agreements. however. petitioner's claim for damages is not related to any other claim under Article 217. but as regular employees. therefore. Moreover. which does not grant or specify a claim or relief. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. 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. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. this appeal. transferred to the DOLE. In other words. Monina Lagman. It is not the NLRC but the regular courts that have jurisdiction over actions for damages. not merely probationary. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. and other labor benefits that are generally cognized in labor disputes. With the continuation of their employment beyond the original term. NLRC. Virgilio Tolosa who was hired by Qwana-Kaiun. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. 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. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code. affirmed by the Court of Appeals. Hence.
Petitioner Marilyn T. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code. Hence. as in the instant case.00) and exemplary damages in the amount of one hundred thousand pesos (P100. 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. It may be also argued that actual or compensatory damages may be recovered in employment termination cases. 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. (PTS). oppressive or malevolent manner to warrant an award for exemplary damages. The dismissal.000.000. (Kay Products vs." which we sought to deter in the Serrano ruling. Inc. Held: After careful perusal of the factual backdrop of the case. and Fe M. as well as moral damages in the amount of five hundred thousand pesos (P500. petitioner Dr. the Supreme Court ruled that Dr.00 as moral damages and P5. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. Maquiling shall only be entitled to an award for nominal damages. Maquiling. Jake Ng. no doubt. However. Charms Haw. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute. Evidently. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968. is still on the outside looking in.000. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. Neither will an award for moral damages nor exemplary damages prosper. Engrs. The suspension of petitioner without prior investigation is akin to Irah Burog. good customs or public policy. The amount of such damages is addressed to the sound discretion of the court. Dr. Inc. Monette Mesa. Exemplary damages may be awarded if the dismissal is effected in a wanton. the amount of P10. Dr. Jon Santos. or that the employer committed an act oppressive to labor to warrant an award for moral damages. in the alternative. Sagum is another hapless employee whose dismissal was ruled to be illegal but. Amador C. Exemplary damages may avail if the dismissal was effected in a wanton. (IIEE). without her reinstatement forthcoming.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. or ineffectual. Mendoza. In the case at bar.. Ysan Castillo. good customs or public policy. Edward L. the employer should indemnify the employee for the violation of his statutory rights. Jr. Antonio S. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. 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.00).Labor II before the labor arbiter. Barrientos. vs. or is done in a manner contrary to good morals. taking into account the relevant circumstances. fraud. Such were not sufficiently proven. Indeed. Dr. Maquiling. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. Anna Tetangco 61 . Jr. pay later. Maquiling was employed by respondent Philippine Tuberculosis Society. Maquiling filed a complaint against PTS for reinstatement or. or render it illegal. Calado. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. good customs or public policy. Heidi Soria. was effected in a wanton. taking into special consideration the gravity of the due process violation of the employer. However. Herrera. Monina Lagman. Maquiling was indeed validly dismissed for just cause. CA) Gonzales is not entitled to moral and exemplary damages. 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. Edlyn Santiago. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. oppressive or malevolent manner.900. oppressive or malevolent manner. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case.000. we are not convinced that private respondents acted in a wanton or oppressive manner. The instant controversy fails to show that the dismissal of the employee was attended by bad faith. Alpe Macalalad. Thus. On 8 June 1991. the lack of statutory due process should not nullify the dismissal. there is less degree of discretion to award actual or compensatory damages. Kristel Macatangay. then earning a monthly salary of thirteen thousand nine hundred pesos (P13. or was done in a manner contrary to morals. Dianne Miano. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages..00 as exemplary damages are hereby awarded to each private respondent. oppressive or malevolent manner as the private respondents were deprived of due process. Ÿ Ÿ Where the dismissal is for just cause. (Acesite Corp.
At the very least. he became its regular employee. Retirement ART. taking into account the relevant circumstances. 7. Lastly. Unless the parties provide for broader inclusions. Book VI. It is not enough that one merely suffered sleepless nights. an employee upon reaching the age of sixty (60) years or more. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. and auditor from 1990 to 1996. Inc. 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.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Subsequently. 1993. General Statement on coverage. Retail. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee. Alpe Macalalad. Rule II. 287. petitioner did not even allege that there was use of force. After six months.00. Omnibus Rules Rule II Retirement Benefits SECTION 1. The Electrical Engineer. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. Dianne Miano. through an EXECOM meeting. 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. SEC. Heidi Soria. Ysan Castillo. As used herein. On June 11. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. mental anguish or serious anxiety as the result of the actuations of the other party. Monette Mesa. Act No. the term “Act” shall refer to Rep. except to those specifically exempted under Section 2 hereof. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. latter under the Labor Code and its Implementing Rules.000. Exemptions. The amount of such damages is addressed to the sound discretion of the court. This rule shall not apply to the following employees: Irah Burog. He was placed under preventive suspension on October 16. adopted a resolution terminating his employment effective October 16. Held: Considering the prevailing circumstances in the case at bar. On November 18. Retirement. designation or status and irrespective of the method by which their wages are paid. abusive language or any species of violence. 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. 2. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. we do not find the articles published in private respondent institute's publication. Charms Haw. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 7641 which took effect on Jan. 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. This rule shall apply to all employees in the private sector. Despite the presence of security guards. . Anna Tetangco 62 . 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. 1997. In case of retirement. a fraction of at least six (6) months being considered as one whole year. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. he became branch manager from 1981 to 1990. Promoted. Jake Ng.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. however. 1997. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. regardless of their position. the Supreme Court deemed it proper to fix the nominal damages at P30. Monina Lagman. assigned to the accounting department. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. petitioner corporation. 1997 but the suspension was rescinded and he was assigned as general auditor. 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. 1997. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. Jon Santos. Kristel Macatangay. to be malicious as they were fact-based. who has served at least five (5) years in the said establishment. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Edlyn Santiago.
Alpe Macalalad. among others. . No.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. the employer shall pay the deficiency. Edlyn Santiago.4 Service requirement. growing and harvesting of any agricultural or horticultural commodities. Ysan Castillo. the culture of fish and other aquatic products in farms or ponds. 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.Labor II 2.3 One-half month salary of employees who are paid by results.O. service and agricultural establishment or operations regularly employing not more than ten (10) employees.2 Components of One-half (½) Month Salary. For covered workers who are paid by results and do not have a fixed monthly rate. In case the employer’s contribution is less than the retirement benefits provided under this Rule.2 Compulsory retirement. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). SEC. and includes the fair and reasonable value. This term refers to all farming activities in all its branches and it includes. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog. 5. coconut. cultivation. subject to the provisions of Rule VII-A. Charms Haw. lodging. 4. SEC. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. abaca.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. 3. Kristel Macatangay. 4. raising of livestock or poultry.: a) 15 days salary of the employee based on his latest salary rate. 3.1 Optional retirement. 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. 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. SEC. including GOCC’s if they are covered by the Civil Service Law and its regulations. pineapple. Jon Santos. 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. or other method of calculating the same.3 Employees of retail. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. production. c) One-twelfth of the 13th month pay due the employee. . As used herein. 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. 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. Jake Ng. Dianne Miano. Monette Mesa. and Provided. piece or commission basis. 20. Heidi Soria. 5. (Deleted by D. 3. however. aquatic or other farm products. Retirement benefits. b) The cash equivalent of not more than five (5) days of service incentive leave.1 In the absence of an applicable agreement or retirement plan. series of 1994) 2. Monina Lagman. but does not include the manufacture and/or processing of sugar. an employee shall be retired upon reaching the age of sixty-five (65) years.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.3 Upon retirement of an employee. as determined by the Secretary of Labor and Employment. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. 3. 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. Retirement under CBA/contract. the term “one-half month salary” shall include all the ff. whether optional or compulsory. a fraction of at least 6 months being considered as one whole year.1 Employees of the National Government and its political subdivisions. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture.2 Domestic helpers and persons in the personal service of another. 4. whether such payments are fixed or ascertained on a time. dairying. 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. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations.For the purpose of determining the minimum retirement pay due an employee under this Rule. 2. the cultivations and tillage of the soil. task. tobacco. 4. 5. 4.2 In case of retirement under this section. Where there is no such plan or agreement referred to in the immediately preceding subsection.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. of food. regular holidays and mandatory fulfillment of a military or civic duty. That if such benefits are less. or other facilities customarily furnished by the employer to his employees. Optional. The term does not include cost of living allowance. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. Anna Tetangco 63 . compulsory retirement. further. 5.
raises.2 Components of One-half (½) Month Salary. drifts. That if such benefits are less. 2. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement. the terms “employee”. 8. individual/collective agreements or employment practices or policies. 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.Pensions. “employees”. Where there is no such plan or agreement referred to in the immediately preceding subsection. 3. Edlyn Santiago. Optional Retirement and Compulsory Retirement 2. SEC. and Provided. 4. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec. 8558.For the purpose of determining the minimum retirement pay due an employee under this Rule. In case the employer’s contribution is less than the retirement benefits provided under this Rule. or “covered workers” shall mean underground mine employee/s.3 Service requirement. Jake Ng. 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. 1998) SEC. 1. Jon Santos. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads.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. Retirement benefits. SEC. 1986 are met. Monette Mesa. if the following requirements are met: i) The benefit plan must be approved by the BIR. The term “Act” refers to RA 7641 as amended by RA 8558. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. Rule II-A (Dep. the employer shall pay the deficiency. 9. 9 dated May 4. subject to the provisions of Section 4 hereof on the payment of retirement benefits. tunnels. Kristel Macatangay. SEC. 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. 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. Dianne Miano. 7. Order No.2 Compulsory retirement. 6. holidays and mandatory fulfillment of a military or civic duty. This Rule shall apply to all underground mine employees as contemplated under RA No. 288 of the Labor Code of the Philippines. Alpe Macalalad. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. 4. This rule took effect on January 7. Anna Tetangco 64 . further. Violations thereof shall be subject to the penal provisions provided under Art. 2. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. retirement and separation pay constitute compensation subject to withholding. Effectivity. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. . .Labor II are paid by results. to wit: Pensions. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. Charms Haw. Relations to agreements and regulations.: a) 15 days salary of the employee based on his latest salary rate. Heidi Soria. a fraction of at least 6 months being considered as one whole year. 12-86 dated Aug. 4. divided by the number of actual working days in that particular period.1 Optional retirement. SEC.. 2(b) item (1) of Revenue Regulations No. 3.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. 1 Coverage. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. 2. SEC. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. Exemption from tax. Monina Lagman. SEC. Ysan Castillo. 1993 when the Act went into force. Retirement under CBA/contract. As used herein. winzes. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. however. supplements or payments as provided in existing laws. 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. retirement and separation pay. 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. Penal Provision. All rules and regulations.2 In case of retirement under this section. 3. the term “one-half month salary” shall include all the ff. For these purpose.1 In the absence of an applicable employment contract.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. 3. 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. As used herein. crosscuts. SEC.
That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. individual/collective agreements or employment practices or policies. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. an employee upon reaching the age of sixty (60) years or more. 442. Effectivity. Jon Santos. 15. otherwise known as the Labor Code of the Philippines. "Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices. Anna Tetangco 65 . Philex sustained financial losses in its operations. Monina Lagman. To save costs. bargaining agreement or other applicable employment contract. c) One-twelfth of the 13th month pay due the employee. subject to the provisions of Rule VII-A. "In case of retirement. For covered workers who are paid by results and do not have a fixed monthly rate. 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." SECTION 2. of actual working period. Dianne Miano. whether such payments are fixed or ascertained on a time. Charms Haw. The ADS is the twelve (12) month of their retirement. The term does not include cost of living allowance. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO.Article 287 of Presidential Decree No. may retire and shall be entitled to all the retirement benefits provided for in this Article. supplements or payments as provided in existing laws.Retirement. but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. Edlyn Santiago. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. or other method of calculating the same. Penal Provision. task. who has served at least five (5) years in the said establishment. 1998. Kristel Macatangay. "An underground mining employee upon reaching the age of fifty (50) years or more. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). Alpe Macalalad. of food. Monette Mesa. In 1992. 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 the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. 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. 4. Heidi Soria. 288 of the Labor Code of the Philippines.01 Retirement REPUBLIC ACT NO. however. or other facilities customarily furnished by the employer to his employees. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. piece or commission basis. 8. 9. A workforce audit showed that Irah Burog. 1998 Published in Malaya and Manila Times on March 7.3 One-half month salary of employees who are paid by results.Labor II hours. 1998 when the RA 8558 went into force. as determined by the Secretary of Labor and Employment. b) The cash equivalent of five (5) days of service incentive leave. 5. 287. Relations to agreements and regulations. as amended. 6. 442. lodging. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. 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. This rule took effect on March 2. SEC. whichever comes earlier. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR. Ysan Castillo. "Retail. who has served at least five (5) years as underground mine worker. Violations thereof shall be subject to the penal provisions provided under Art. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. All rules and regulations. (Dianne) Facts: Petitioners Roberto Ariola. SEC. Approved: February 26. and includes the fair and reasonable value. Jake Ng. is hereby amended to read as follows: "ART. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex"). Exemption from tax. SEC. a fraction of at least six (6) months being considered as one whole year. SEC. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. "Unless the parties provide for broader inclusions. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. Franco Mallare. AS AMENDED. 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. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs.
beyond Philex's projected loss of P187 million. . Petitioners are thus entitled to reinstatement with full backwages. through its Human Resources Development Office. citing "company policy. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. The following day.743. we grant her separation pay in lieu of reinstatement. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action. a company engaged in news dissemination with offices worldwide. By its express language. a voluntary agreement between the employer and the employee whereby the latter. also known as the provision on Social Justice and Human Rights. 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. Cordillera Administrative Region. Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. petitioners. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan. hired Marilyn Odchimar Gerlach. On October 1. However. For this reason. Alpe Macalalad. Thus. If reinstatement is no longer possible because the positions petitioners held no longer exist. with six other supervisors and 49 rank-and-file employees. An independent auditor confirmed Philex's claim of financial losses. in lieu of reinstatement. 1983. . Monina Lagman.000 in 1992. Held: Petitioners' retrenchment was illegal. This ballooned to P283. petitioner began working for respondent's university medical center as a nurse. On 29 April 1993. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958. separation pay equal to one-half month pay for every year of service. finding that Philex suffered an operational loss of P33. Thus.” do not suffice brief exchange of letters between petitioner and respondent followed. . It is also for this reason that we modify the award of backwages in her favor. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. On 14 May 1993. respondent Reuters implemented a Irah Burog. leaving 241 positions for retrenchment. Baguio City. 1993. respondent. But respondent stood pat on its decision to retire her. 287." Respondent required certain documents in connection with petitioner's impending retirement. at which time she would be 57 years old. Ysan Castillo. Charms Haw. Philex paid them separation pay. At this point. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. reinstatement is out of the question. the vouchers in question. Article 287 of the Labor Code provides: ART. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. of its plan to retrench 241 employees. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age.173. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. Ÿ Retirement is the result of a bilateral act of the parties. 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. Dianne Miano. Stated conversely. respondent Reuters Limited. Kristel Macatangay." 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. (Reuters). after reaching a certain age agrees to sever his or her employment with the former. All of them signed Deeds of Release and Quitclaim in Philex's favor. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. On 1 June 1993." Philex re-assigned some of the employees belonging to this group while others took early retirement. Philex shall pay backwages as computed above plus. As already stated. Heidi Soria.000 in 1993. petitioner. Monette Mesa. the amounts petitioners received as net separation pay should be deducted from their backwages. Philex informed the Department of Labor and Employment ("DOLE").Labor II Philex had 310 "excess positions. which allegedly evidence receipt of “retirement gratuities. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. 1993 up to her compulsory retirement age. respondent was guilty of illegal dismissal. 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. Anna Tetangco 66 . Edlyn Santiago. 1992. In the present case. Jake Ng. 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. Article 283 of the Labor Code governs retrenchment to prevent losses. to be computed from the time of her illegal dismissal on November 18. Phils. as its local correspondent. 30 April 1993. 1982. Ÿ By themselves. Jon Santos. However. In a letter dated December 3.
1984.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. provides: "Sec. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. 14. not on her notional salary. Monina Lagman. and they received separation pay double that required by the Labor Code. petitioner received her retirement benefits under the Plan in the amount of P79. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. the company's contribution to the fund is 10% of the basic monthly salary of each participant. Thereafter. they demanded retirement benefits. and is computed at least one month salary or at the rate of one-half month salary for every year of service. Issue: Having received the separation pay. The computation was based on her notional salary." Thus. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. 1983. NCR. a money claim against respondent. (b) a collective bargaining or (c) other agreements. Eventually. Rachel Addison. . The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. Monette Mesa. she opted not to contribute to the fund. Edlyn Santiago. The third type is one that is voluntarily given by the employer. were the petitioners still entitled to the retirement benefits? Held: Yes. Basis Ÿ Aquino vs. vs. It is this third type of retirement scheme which covers respondent's Plan. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. . apprised her of the details of her forthcoming assignment. — (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 . Section 14(a). where not mandated by law. Alpe Macalalad. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. Retirement benefits. Anna Tetangco 67 . in the instant case. Charms Haw. Kristel Macatangay.228. In fact. The first type is compulsory and contributory in character. It is very clear that from the very start of her first assignment overseas. 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. Petitioner was automatically covered by the Plan by reason of her age and length of service. 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. Before leaving. In Llora Motors. contending that her retirement benefits must be computed on the basis of her actual salary abroad. 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. Nonetheless. Ysan Castillo. 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. whichever is higher. However. Retirement. respondent assigned petitioner as a journalist to Reuters Singapore. which include retrenchment." 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 filed with the Office of the Labor Arbiter. which is in accord with the above provision. Inc. specifically that her home base will always be the Philippines. The Plan is funded by the company. However. under the Plan. both actual and notional. Significantly. On March 1. Jake Ng. Jon Santos. Ÿ There are three kinds of retirement schemes. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog. She worked in Reuters Philippines up to December 23.04. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. In case of retirement. like the Social Security Act. Heidi Soria. Consequently. invoking the retirement plan of the company which they said was contractual rather than statutory. 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. Dianne Miano. respondent based petitioner's retirement benefits on its Plan and established policy. Reuters' Eastern Region Staff Manager. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. On January 23. she questioned the amount she received as well as her entitlement to a disturbance grant. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. 1991. 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. Ÿ Retirement benefits. Article 287 of the Labor Code reads: "Article 287. Drilon.
While it is our duty to prevent the exploitation of employees. We cannot presume that it forms an implicit part of either the CBA or the law. PNOC acquired and took over the shipping business of LUSTEVECO. Anna Tetangco 68 . Ysan Castillo. and are a form of reward for his loyalty and service to the employer. Dianne Miano. When a manpower reduction was implemented. In the case at bar. Issue: whether. — No retirement benefits are payable in instances of resignations or terminations for a cause. In addition. the 5-year expansion program and the Integrated Steel Mill Project. When the corporation suffered losses. Gamogamo vs. Since the retirement pay solely comes from PNOC’s funds. 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. morals. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. thus. With the inclusion of the provision abovementioned in the retirement plan. 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. after reaching a certain age. intimidated or deceived into signing the Release and Undertaking. Jon Santos. The retirement plan is a binding agreement. lessening the burden of worrying for his financial support. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. petitioner requested to be included in the retrenchment schedule. Monina Lagman. the retirement plan is succinct in denying such benefits. it also behooves us to protect the sanctity of contracts that do Irah Burog. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. especially where there are strong equitable considerations as in this case. 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. 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. Jake Ng. The provisions of the NSC's retirement plan which petitioner admitted applies to her. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. public order or public policy and must. be upheld.Labor II life. Alpe Macalalad. Settled is the rule that not all quitclaims are per se invalid or against public policy. Afterwhich he was hired by LUSTEVECO. and (2) where the terms of settlement are unconscionable on their face. Charms Haw. for the purpose of computing an employee’s retirement pay. Consequently. Edlyn Santiago. Monette Mesa. “E. corporation employed employees and of them was Divina Lopez. there is no such provision. a private domestic corporation. B 2. not being contrary to law. then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. Kristel Macatangay. 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. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art. 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. We discern nothing from the record that would suggest that petitioner was coerced. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. provided. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. does not give petitioner the right to her claimed benefits. 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. ostensibly. Since retirement pay solely comes from company funds in this case. 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. however. therefore. Here. It was turned down. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. 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. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits. IV. good customs. Heidi Soria.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. issued a memo announcing retrenchment and one of the affected employees was Lopez. Interpretation Ÿ Lopez vs. There is. Subsequently. agrees to sever his employment with the latter.
the acting conservator of the petitioner expressed her objection to such plan. 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. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. under the law should be given separation pay. Consequently. the retirement age is 65 — is wrong. As a result of said complaint. Salomon vs. amounting to grave abuse of discretion. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. specifically cited by him. Charms Haw. however. under the law should give separation pay. the retirement age of 65 applied only to employees in the U. and there is no reason to invalidate their Releases and Quitclaims. Article XI of the CBA regarding the retirement plan and Section 4. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. NLRC (Monina) Facts: At the time the controversy started. The same however. petitioners instead of receiving their separation pay. Accordingly and considering their Releases and Irah Burog. and that is. pursuant to the CBA. vs. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. 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. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company. Association of International Shipping Lines (Monina) Facts: When the Association of International Shipping Lines Inc. 1982. 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. Yet a serious mistake. suffered substantial losses. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners. 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. Rationale Ÿ Producers Bank vs. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited. Heidi Soria. its refusal. resulting in an impasse between the petitioner bank and the private respondent union. 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. such interpretation cannot be made here.A. Monette Mesa. It appears that when the private respondents sought the implementation of Section I. he had already reached the age of 60 years. for as of that day. which is the retirement age fixed by the Labor Code. and Nolasco's claim — that under MAI's retirement plans. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. Anna Tetangco 69 . Monina Lagman. The deadlock continued for at least six months when the private respondent. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims. Ysan Castillo. Private respondent thus. 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. pertaining to uniform allowance. However. The Court will not disturb this finding for upon review of the said quitclaims. Edlyn Santiago. 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. No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay. and Puerto Rico. Jon Santos.Labor II not contravene our law. to resolve the issue. petitioners were separated from the service for cause.S. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. Given such facts. because by the terms of those very same retirement plans invoked by him. they are no longer entitled to retirement benefits. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited. Jake Ng. petitioner was placed by the Central Bank under a conservator for protecting its assets. Kristel Macatangay. Dianne Miano. Age Ÿ MAI Phils. Here. may be ascribed to the Commission. Alpe Macalalad. Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. Article X thereof. it is apparent that the amount is representative of all the claims of petitioners. It is a fact that petitioners were involuntarily separated from service and thus. what each actually received is a separation pay.
Accordingly. When the retired employees were requesting that their retirement benefits be granted. and the Court cannot give its imprimatur for retirement. Petitioner filed for optional retirement upon reaching the age of 60. Ysan Castillo. the retirement of an employee does not. however. he still retains. be recognized. Unit Managers are not salesmen. Therefore. However. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. one of which is the protection of the labor union. vests on him. direct or necessary relation to the amount of work he actually performed. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. Ÿ Brion vs. what is also well-settled. but the actual sale transactions brought about by the individual efforts of the salesmen. 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. Here. the status of an employee entitled to the protection of the Labor Code. for the purpose of prosecuting his claims. since these must be protected as though there had been no interruption of service. but more importantly by the fundamental law of the land. Sometime. private respondent no longer had the personality to file the complaint for them. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. South Phil. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. However. 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. Anna Tetangco 70 . Dianne Miano. and are a form of reward for his loyalty. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division. 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. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. the basis in computing his retirement benefits is his latest salary rate of P10. This negated the very concept of retirement. 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. Alpe Macalalad. Charms Haw. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. It is intended to help the employee enjoy the remaining years of his life. It bears repeating that apart from the nonimpairment clause. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired. under the SDA's retirement plan. 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. Section 1 and Article X. Brion was adjudged by the SDA in 1983 to be qualified for retirement. especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. as a consequence of which no employee-employer relationship exists anymore between it and the employees. its benefits are designed for those who have devoted their lives to the work of the SDA. Section 4 of the CBA. as embodied in the CBA. Jon Santos. 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. Issue: Petitioner asserts since the employees have retired. he was excommunicated. releasing him from the burden of worrying for his financial support.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. if the employee is eligible. they were not pleading for generosity but were merely demanding that their rights. Monette Mesa. Hence. to the point of being trite. Monina Lagman. As correctly ruled by public respondent NLRC. As such. must be met at the time of retirement at which juncture the right to retirement benefits.Labor II Article XI. affect his employment status especially when it involves all rights and benefits due to him. it is not the criterion which would entitle him to a commission. Reyes did not agree with the computation of the company and hence filed a complaint. The very essence of retirement is the termination of the employer-employee relationship. the "overriding commissions" paid to him by Universal Robina Corp.919. Thus. as it were. In fine. in itself. Kristel Macatangay. Edlyn Santiago. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. 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. Jake Ng. He eventually retired. a continuing consideration for services rendered. Brion was provided a monthly amount of retirement benefit. Heidi Soria. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. as well as an effective inducement for remaining with the corporation. Held: Petitioner's contention in untenable. when an employee has retired but his benefits under the law or the CBA have not yet been given. As was the practice of SDA.
are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. Kristel Macatangay. In those two instances. this Court will not hesitate to adopt the latter interpretation. or retirement benefits prescribed by the Retirement Plan. if the employee is eligible. provides. Twenty years is a more than ideal length of service an employee can render to one employer. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. 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. 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. the same being higher than what Article 283 of the Labor Code. before a right to retirement benefits or pension vests in an employee. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. Heidi Soria. 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. Monette Mesa. Pursuant to the existing CBA. as amended. on the other hand. Charms Haw. This is a condition precedent to his acquisition of rights. Retirement. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. 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. Under Article 283 of the Labor Code. Phil. vests in him. Ysan Castillo. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Under the Retirement Plan before us. one of which requires the retiree to devote his life to the service of the church even after retirement. age. Here. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. Ground Termination Cainta Catholic School v. and length of service. The CBA in the case at bar contains no such infirmities which must be stricken down. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. 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. 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. as amended. is the result of a bilateral act of the parties. it must have been convinced that Brion had devoted his life to the work of the SDA. Dianne Miano. The union filed a notice of strike and subsequently picketed in front of the school. whichever is higher. the last three (3) years of which must be continuous. Jon Santos. In other words. 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. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. Edlyn Santiago. Alpe Macalalad. While in all three cases. Cruz however despite receiving separation pay asks for his retirement benefits.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. 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. He now files a case for the collection of his retirement Irah Burog. Monina Lagman. affected employees. 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. Article VI 12 of respondent’s Retirement Plan. petitioners are not entitled to both separation pay and retirement benefits. Anna Tetangco 71 . in case of retrenchment or cessation of operations. Under Section 4. as amended. he must have met the stated conditions of eligibility with respect to the nature of employment. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. whichever is higher. Where two constructions of a retirement plan are possible. the employee to be terminated may be unwilling to part from service. Upon reaching 65 he stopped working. 15. As we held in Cipriano and Aquino.Labor II year. Ÿ Llora Motors vs. Jake Ng. 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.
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. 91 SCRA 265 ). Gratuity. the purpose of which is to reward employees who have rendered satisfactory service to the company. Charms Haw. Monette Mesa. in other words. He now files for monetary claims including his retirement benefits. subject. like the Social Security Act. releasing him from the burden of worrying for his financial support. is that Section 14 of Implementing Rule I. Catalina College vs. benefit or bounty given to the worker. Respondent is not asking for retirement benefits due him under the Social Security Law. Thus.. Irah Burog. Drilon. Inc. After being paid his cash deposit he executed a quitclaim. Kristel Macatangay. Retirement benefits. Ÿ Ÿ As stressed in Llora Motors. 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. GVM on the other hand denies having such liability. v. however. 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. Inc.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. NLRC) 15. contract or an established company policy. Ÿ What needs to be stressed. Jon Santos. Monina Lagman. (Sta. supra). There are three kinds of retirement schemes. Alpe Macalalad. Dianne Miano. 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. Ysan Castillo. It is a money. He does not claim that there is a collective bargaining agreement or other applicable. 15. Llora in its answer contend that Alviar abandoned his work. 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. Ople. therefore. v. is for the legislature to remedy. like Article 287 of the Labor Code. The third type is one that is voluntarily given by the employer. Edlyn Santiago. and are a form of reward for his loyalty to the employer. The first type is compulsory and contributory in character. Heidi Soria. is not intended to pay a worker for actual services rendered of for actual performance. 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. 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. Jake Ng. to certain conditions. on the other hand are intended to help the employee enjoy the remaining years of his life. NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service. and an additional or consensual retirement plan exists. 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.Labor II benefits and ECOLA underpayments. however. Anna Tetangco 72 . 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. 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.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. Inc. granting him retirement benefits.
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