Labor II

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

Labor II
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

Ÿ

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

Labor II
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

Jon Santos. was dismissed 6 months after being hired on the ground that his position had become redundant. Ysan Castillo. In this case. and in this case. The characterization of an employee’s services as no longer necessary or sustainable. feasibility studies/proposal. not the whole of it. The amount depends on the ground for the termination of employment. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. the firm amy choose to close all. Inc. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. provided that violation of law or arbitrary or malicious action is not shown. Anna Tetangco 4 . such as new staffing pattern. the losses expected must be substantial and not merely de minimis in extent. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. contrary to the ruling of the NLRC. 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. Jake Ng. a) preferred status. The employer has the burden of proving that the losses are Irah Burog. Issue: Was Tanjuan’s dismissal illegal? Held: No. Alpe Macalalad. Issue: Were the dismissals on the ground of redundancy valid? Held: No.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. b) efficiency and c) seniority.. and 4) the alleged losses. Ÿ Golden Thread Knitting Industries vs. For it to be valid. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. Retrenchment. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. Phil. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. 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. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. such as but not limited to. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. or a part of. In exercising its right to retrench emplooyees. temporary employee). Kristel Macatangay. if already incurred. the retrenchment must be reasonably necessary and like to effectively prevent such losses. Before any reduction of personnel becomes legal. Heidi Soria. however. 283(c) of the Labor Code. Dianne Miano. in contrast to redundancy. Evidence should have been presented to support this contention. a Recreational Manager of Sheraton Hotel in oman. is an exercise of business judgment on the part of the employer. Ÿ In selecting the employees to be dismissed. and therefore properly terminable. Monina Lagman. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. viability of the newly created positions. In this case.g. is an economic ground to reduce the number of employees. 2) the losses are actual or reasonably imminent. one of which was the illegal dismissal of some union members. a fair and reasonable criteria must be used.Selection of Employee Ÿ Panlilio vs. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. a Property Appraisal Specialist and a Department Officer-in-Charge. program. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. Prudencio Tanjuan. NLRC (Eds) Facts: Moises Panlilio. The fact alone that a mere portion of the business of an employer. Such appraisal was not done in the instant case. job description. Monette Mesa. and the imminent losses sought to be forestalled are substantiated. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. There was no substantial evidence to justify Panlilio’s dismissal on such ground. its business to avoid further losses or mitigate expenses. Edlyn Santiago. decreased volume of business or dropping of a line or service activity. b) efficiency. such as overhiring of workers. It is not enough for a company to merely declare that it has become overmanned. Charms Haw. such as but not limited to: a) less preferred status (e. 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. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. and c) seniority. much less was the company’s claim supported by any evidence. and the approval by the management of the restructuring. they were terminated due to retrenchment not redundancy. The company alleged redundancy in their position as defense for dismissing them. was one of those termininated. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses.

Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. which. and c) seniority. Monette Mesa. capricious and vindictive. if already incurred. Answer and hearing. NLRC (Eds) Facts: Due to mounting business losses. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. 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. and c) seniority. actual and real. Under Art. such as but not limited to a) preferred status. In this case. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. ?? 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. In this case. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. The employer shall Irah Burog. Here. In this case. There was also no proof that the program was designed to bust the union.Labor II serious. Golden Thread Knitting Industries v. Kristel Macatangay. Alpe Macalalad. 5. Charms Haw. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. However. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. private respondents. the notice shall be served at the worker's last known address. The law allows an employer to downsize his business to meet clear and continuing economic threats. such as but not limited to: a) less preferred status (e. Anna Tetangco 5 . contrary to the respondents’ claim. NLRC The absence of criteria. Edlyn Santiago. physical fitness. seniority. Monina Lagman. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. efficiency. Ysan Castillo. as long as the requirements under the law are complied with. guidelines.g. union and non-union members were treated alike. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. Notice of dismissal. whichever is higher. 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. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. Asian Alcohol v. never contested the veracity of the audited financial documents offered by Asian Alcohol. real and substantial losses. Retrenchment must be undertaken by the employer before losses are actually sustained. and that they were singled out for separation by reason of their active participation in the union. Issue: Were the private respondents illegally dismissed? Held: No. Besides. and financial hardship for certain workers. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. 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. 2. the audited financial statements submitted by the corp adequately supported their claim of actual. Heidi Soria. actual and real. temporary employee). It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. Dianne Miano. xxx xxx xxx Sec. age.Effect Asian Alcohol Corp vs. Some of the dismissed union members filed a suit for illegal dismissal. “retrenchment to prevent losses” is also allowed. Jake Ng. are not merely de minimis. b) efficiency. b) efficiency. Ÿ In selecting the employees to be dismissed. such as status. In cases of abandonment of work. but substantial. 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. 283 of the Labor Code. a fair and reasonable criteria must be used. or standard for selection of dismissed employees renders the dismissals whimsical. Jon Santos. and 5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. Lopez Sugar Corp vs. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. 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. The reduction of the number of workers in a company made necessary by the introduction of Hearing Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor Code" read as follows: Sec. NLRC Ÿ Employment of Independent Contractor. 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. serious.

It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel". The corp failed to adduce financial statements duly audited by independent external auditor. Jake Ng. 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. there are no allegations which the employee should refute and defend himself from. or seasonal fluctuations or during lulls occasioned by lack of orders. 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. Again. Where. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. (Wiltshire vs. Kristel Macatangay. 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. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. to require petitioner Wiltshire to hold a hearing. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. Heidi Soria. as in the instant case. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. It is essentially required that the alleged losses in business operations be proven. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. industrial depression. Anna Tetangco 6 . or of automation. Edlyn Santiago. NLRC) Defined FF Marine Corp vs. Dianne Miano. In such case. Retrenchment to prevent losses Irah Burog. to begin with. Ricardo Magno. was one of those terminated. at which private respondent would have had the right to be present. The losses expected should be substantial and not merely de minimis in extent. Monette Mesa. as such. The appropriate forum for such controversion would. 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. and expected imminent losses sought to be forestalled. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. Lead Electrician for the corp. NLRC(Charms) C. (Wiltshire vs. however. Charms Haw. Thus. imminence can be perceived objectively and in good faith by the employer. Monina Lagman. Such substantial loss apprehended must be reasonably imminent. 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. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. 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. must also be proved by sufficient and convincing evidence. (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". resorted to by management during periods of business recession. The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. 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. on the business and financial circumstances compelling retrenchment and resulting in redundancy. shortage of materials. whichever is higher. Alpe Macalalad. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination.Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. The ground for retrenchment availed of was not sufficiently and convincingly established. allege any malfeasance or non-feasance on the part of the employee. Alleged losses if already realized. Ysan Castillo. after less drastic means. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". Thus. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. Jon Santos.

JAT hired private respondent Jose F. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. NLRC (Charms) Facts: Francisco Ferrer. the union declared a strike. Held: No Illegal Dismissal.T General Services vs. cancelled its service agreement with a janitorial company. some of whom were officers and members of the petitioner union. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE. it was shown that. including private respondent. and that the condition of the company is not likely to improve in the near future. 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. in 1989. 4 "Retrenchment. Private respondent's "redundancy program. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise. 1 First. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). Held: No illegal dismissal. Ÿ As did the appellate court. the only evidence submitted to prove its alleged losses. There was substantial proof that the company was incurring substantial losses. requested its Internal Auditor. 1988. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent.000. and sold its equity in the Philippine Ÿ Irah Burog." while denominated as such.135. Jake Ng. 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. Edlyn Santiago. however. The closure of business operation by petitioners. Monette Mesa. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. Held: NO ILLEGAL DISMISSAL. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. Kristel Macatangay.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. resulted in the layoff of around 177 employees. Among these was a socalled "redundancy program. As in the case of retrenchment. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding.A. not to report for work starting on the first week of March 1998. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. 1995. F & B Department had been incurring substantial losses in the aggregate amount of P8.100. Both are mentioned in Art. Prior to the rendition of the decision of the Secretary of Labor and Employment. the sales of heavy equipment declined because of the Asian currency crisis. The shortfall increased to P9. Jon Santos. In the case at bar. then President of ACCI. Irene Campos-Ugalde. Ysan Castillo. JAT temporarily suspended its operations." on the other hand. in our view. which is allowed under Article 283 of the Labor Code. NLRC Facts: Sometime in April 1997. as implemented on March 1. Distinction Closure and Retrenchment Ÿ Ÿ J. As already stated. The affected employees were given separation pay equivalent to one month pay for every year of service.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. petitioners had notified private respondent and all other workers through written letters dated November 25. Charms Haw. contrary to the findings of the Labor Arbiter. Monina Lagman. it must be proven that the losses incurred are substantial and actual or reasonably imminent. her report showed that from1989 to 1993. the company losses were duly established by the financial statements presented by both parties. Heidi Soria. In October 1997. Anna Tetangco 7 . 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. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel.727. the Society leased a property in Tayuman to a fastfood outlet. It advised its employees. Dianne Miano. for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees. Ÿ Alabang Country Club vs. Coverage Philippine Tuberculosis Society vs. 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. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. Further. Consequently. JAT indefinitely closed shop effective May 1998.00." which. Alpe Macalalad. Consequently. the Society began to experience serious financial difficulties when it incurred a deficit of P2 million. this Court finds that the study report submitted by the internal auditor of petitioner. that the same increased through a period of time. NLRC (Charms) Facts: In the proceedings before the NLRC. for which they signed documents of waiver. 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.

Procedure Ÿ Mayop Hotel & Restaurant vs. Second. 2 The retrenchment is the subject of the present suit. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. Ysan Castillo. Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. Heidi Soria. the Rural Bank of Bangued dismissed three of its employees. Dianne Miano. Kristel Macatangay. namely. therefore. retrenchment as a measure adopted to stave off threats to its existence is available to it. 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. Petitioner presented to the NLRC the balance sheets. After all. Ÿ Although petitioner is a non-stock and non-profit organization. Paulino Balbalec. to our mind. financial statements. Things being equal. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. whether for profit or not.Labor II Long Distance Telephone Company (PLDT). to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. The operation of the restaurant was continued in its new location at Elizondo Street. We cannot. Monina Lagman. 1999. should invalidate the retrenchment. retaining a newly hired employee and dismissing one who had occupied the position for years. Alpe Macalalad. Jon Santos. a failure which. as such imminence can be perceived objectively and in good faith by the employer. Anna Tetangco 8 . negotiated with the Government Service Insurance System for the restructuring of its obligations. Charms Haw. for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses. the hotel operations of the business were suspended on March 31. 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. its implementation of the scheme rendered the retrenchment invalid. say that the finding of the NLRC is unsupported by substantial evidence. we are satisfied that respondent bank undertook the drastic act of cutting down its workforce in order to prevent imminent substantial loss to its business. Finally. even assuming arguendo that the cessation of employment on April 1997 was merely temporary. both the past and forthcoming. (2) The apprehended substantial losses must be reasonably imminent. 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. must be proven by sufficient and convincing evidence. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog." However. Moreover. even if the scheme should result in savings for the employer. Held: ILLEGALLY DISMISSED. and the reports of its external auditors for the years 1989 and 1990. Jake Ng. and implemented the retrenchment of one hundred sixteen (116) employees. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. is simply unconscionable and violative of the senior employee's tenurial rights. it withdrew from the Pag-Ibig Fund Program. Monette Mesa. in the development of the countryside through its loan portfolios and other services to the rural folk. 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. such as the respondent bank. Indeed. 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. obtained the waiver of personnel of their entitlement to wage differentials. Edlyn Santiago. 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." employer to prove economic or business losses with appropriate supporting evidence. pursuant to Article 286 of the Labor Code. NLRC (Charms) Facts: On June 30. Ÿ Balbalec vs. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. since he would be paying the newcomer a relatively smaller wage. it disapproved the overtime pay of supervisory and managerial employees. Legazpi City. While the closure of the hotel operations in April of 1997 may have been temporary. Held: ILLEGALLY DISMISSED. On the contrary. Legazpi City. 1989. Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. as the omission immediately makes the selection process unfair and unreasonable. (4) The losses. 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. and applied for exemption from minimum wage increases. we find substantial evidence that petitioners intended the termination to be permanent. 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. 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.

Jon Santos. Retrenchment is one of the authorized causes for the dismissal of employees. section heads. Abelgas (Charms) Facts: On January 20. the bonafide nature of the retrenchment would appear to be seriously in question. Ysan Castillo. 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. and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. and the expected imminent losses sought to be forestalled. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. supervisors and department heads. 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. frequent machinery breakdown.Standards Irah Burog. but more importantly. i. alleged losses if already realized. Monina Lagman. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE. 3) good faith in abolishing the redundant positions. the substantial loss apprehended must be reasonably imminent. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). 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. be reasonably necessary and likely to effectively prevent the expected losses. Edlyn Santiago. thirdly. The employer should have taken other measures prior or parallel to retrenchment to forestall losses. cut other costs other than labor costs. Lopez Sugar vs. These employees cannot forever be temporarily laid-off. 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. be a certain degree of urgency for the retrenchment. whichever is higher. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months.e. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. Kristel Macatangay. in other words. it is recognized under Article 283 of the Labor Code. as such imminence can be perceived objectively and in good faith by the employer. 1993 and of March 2. Alpe Macalalad. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. To remedy this situation or fill the hiatus. Monette Mesa. After six months. 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. but certainly not the least important. Jake Ng. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. it still has to accord its employees some relief in the form of severance pay. 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. 1993.. the losses expected should be substantial and not merely de minimis in extent. represented by Lim. it must. otherwise. The “loss” referred to in this provision cannot be of just any kind or amount. A memorandum was thereafter issued by EMCO. Anna Tetangco 9 . Secondly. addressed to all its foremen. EMCO. To determine whether the petitioners were validly retrenched or were illegally dismissed. Heidi Soria. Lastly. And even assuming that the closure was due to a reason beyond the control of the employer. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. There should. must Ÿ Requirements. the employees should either be recalled to work or permanently retrenched following the requirements of the law. Ÿ EMCO Plywood Corp vs. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents. Because of the consequential nature of retrenchment. a corporation engaged in the manufacture and export of ready-to-wear garments. 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. Dianne Miano. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. Charms Haw. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. low market demand and expiration of permit to operate its sawmill department. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers.Labor II Ÿ To say the least. Resorted to by employers to avoid or minimize business losses. then petitioners should have complied with the requirements of written notice. Franco Temporary Retrenchment Ÿ Sebugero vs.

as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. Heidi Soria. whichever is higher. 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. Federation of Free Workers(Heidi) Irah Burog. or if only expected. expected losses. Sto. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. Jon Santos. casual. must be proved by sufficient and convincing evidence. Petitioners failed to show any reasonable necessity for the retrenchment. Anna Tetangco 10 . Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment. if already incurred. vs. Kristel Macatangay. Edlyn Santiago. Held: Decision of CA affirmed. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. seniority. in order to give employees some time to prepare for the eventual loss of their jobs. and (d) the alleged losses. (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. Ÿ San Miguel Corp vs. efficiency. 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. SMC has thus proven substantial business reverses justifying retrenchment of its employees. 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. Amarilla (Jake) Facts: Blucor notified Amarilla. not de minimis. or the expected imminent losses sought to be forestalled. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the Nature of Loss Lopez Sugar vs. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant. Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. physical fitness. but substantial. Alpe Macalalad. Dianne Miano. actual and real. are not merely de minimis. are reasonably imminent as perceived objectively and in good faith by the employer. and (4) sufficient and convincing evidence prove the alleged losses. The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. The CA ruled that the dismissal was unjustified.” Ÿ Blucor Minerals Corp. including some of those who had been retrenched. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. regular or managerial employees). more than 100 new workers were hired. and 12 managers and supervisors were promoted. Ysan Castillo. whether they are temporary. Monina Lagman. and the expected imminent losses sought to be forestalled.. Charms Haw.e. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal. serious. 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. (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. such as status (i. For termination due to retrenchment to be valid. age. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union.Labor II be proved by sufficient and convincing evidence. Held: Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. (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. and financial hardship for certain workers. however. Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. Ÿ Philippine Carpet vs. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. Monette Mesa. Jake Ng. if already incurred. "on account of depressed business conditions brought about by the currency crisis in Southeast Asia. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. 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. if already incurred. After the retrenchment program was implemented. (2) the losses are actual or reasonably imminent. the Middle East war and the 9/11 incident in the United States of America.

the difficult question is determination of when. Alpe Macalalad. the company found no recourse but to shut down its outlets. the employer must prove serious business losses. To require an employer to be generous when it is no longer in a position to do so. in our view. JFSI shut down more outlets. thus petitioner cannot justify the nonpayment of separation pay. Jon Santos. Employer advised 110 casuals to report to its personnel office. Sto. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. Monette Mesa. since some. In 1997. that petitioners failed to present adequate proof of such losses. In the nature of things. In its ordinary connotation. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code. 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 Ÿ To justify retrenchment. To stem these serious losses. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. Jake Ng. Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. 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. he having suffered a net loss the prior year. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have. allegedly to prevent losses due to major economic problems. Dianne Miano.Labor II Fact: Employer. In other words. One month before the target closure date of its remaining outlets. Held: Apparently. unjust. indeed many. As a consequence. respondents had no option but to lay off employees and eventually close shop. materialized. NLRC (Jake) Facts: Petitioner SMJS had a contract with the U. in greater or lesser degree. that law may well be vulnerable to constitutional attack as taking property from one man to give to another. caused the retrenchment and retirement of a number of its employees. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses." Sliding Income Ÿ San Miguel Jeepney Service vs. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs.S. Joni’s Food Services (Jake) Facts: In the 1990s. Heidi Soria. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. "opted not to renew the existing contract nor bid on the new contract". Edlyn Santiago. Naval Base Facility located in San Miguel. leaving it with just three operating outlets at the end of 1998. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. Anna Tetangco 11 . 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. if such an intent were expressly written into the law. JFSI had 8 outlets for its coffee shop and restaurant business. JFSI sent notices of Irah Burog. in other words. petitioner Galace. owner and general manager of SMJS. 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. Carpet vs. Indeed. Ysan Castillo. Zambales. Charms Haw. and not because of serious business losses. petitioner did not renew his contract because of "sliding incomes". 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. the services of the complainants were terminated. or under what circumstances. When the said contract expired. San Antonio. Kristel Macatangay. Monina Lagman. Held: NLRC decision affirmed. to provide transportation services to personnel and dependents inside said facility. would be unduly oppressive. in fact. and unfair to the employer. Thus. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. in the carrying on of business operations. Ÿ As petitioners themselves admitted. It is not. not all business losses suffered by the employer would justify retrenchment under this article. faced with dropping sales. it shut down three of these shops to avert serious business losses. Phil. They that after the termination of the services of its members. it held. the remaining branches were also closed. as found by the Court of Appeals. what they Ÿ Cama vs. Thus. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. the employer becomes legally privileged to retrench and reduce the number of his employees. the possibility of incurring losses is constantly present. however. otherwise.

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. Ÿ Danzas International vs. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. In accordance with the CBA. much less serious business losses within the meaning of the law. sliding incomes are not necessarily losses. 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. Federation of Free Workers A comparative statement of revenue and expenses for two years. Bogo Medelin vs. 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. he would have been included among those who had been retrenched had he not been dismissed. 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. Essentially. Monette Mesa. Heidi Soria. Jon Santos. the payment of backwages should be computed up to February of 1998. Still. Otherwise. Held: The petitioner’s losses in 1997 and 1998 are not insignificant. Monina Lagman. 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. What the law speaks of is serious business losses or financial reverses. Ysan Castillo. Hence. 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. who Ÿ Composite Enterprises Inc. employees who were recently hired were the ones retrenched. Anna Tetangco 12 . the employer closing his business is obligated to pay his employees their separation pay. to which losses were allegedly traceable due to incorrect handling of sales. Jake Ng. they may be assailed as self-serving. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. Daguman (Jake) Facts: Petitioners aver that they were compelled to close the company’s brokerage department. the right of affected employees to separation pay is lost for obvious reasons. pursuant to the "last in first out policy" embedded in the CBA. Ÿ Ÿ Mitsubishi Motors vs. Dianne Miano. such ground for termination would be susceptible to abuse by scheming employers. Otherwise. Clearly. The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. Edlyn Santiago. Kristel Macatangay. Alpe Macalalad. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. although the more overriding consideration is. The petitioner posits that even if respondent Paras had become a regular employee by November 26. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. Parenthetically. is not conclusive proof of serious business losses. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. Considering that respondent Paras had just been regularized on November 24. Since the losses incurred must be substantial and actual or reasonably imminent. It is beyond cavil then. 1996. Otherwise. the petitioner concludes. good faith. vs. he would have been included in the first phase of its retrenchment program. in other words. Financial statements must be prepared and signed by independent auditors. 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.Labor II suffered were "sliding incomes". The termination of the 531 affected employees was made effective a month from receipt of the termination letter. that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. it is an essential requirement that alleged losses in business operations must be proven convincingly. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. or closure of the establishment because the brokerage department did not actually cease operations. Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. Charms Haw. decreasing gross revenues. Lopez Sugar vs. by itself. if the business losses that justify the closure of the establishment are duly proved. 1996. of course. 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. in order to prevent further losses which threatened the company’s viability.

Kristel Macatangay. I. heart enlargement. the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. UTI. Caparoso and Quindipan filed a case for illegal dismissal. In the absence of the required certification by a competent public health authority.T. attributing these to the Asian currency crisis. the notice is less than one month. 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. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Edlyn Santiago. otherwise. the condition of business losses is shown by audited financial documents like yearly balance sheets. Ÿ Worse. for the memorandum states that respondent’s contract of Irah Burog. After the expiration of his contract he was rehired (this extended for 5 contracts). He filed a week long leave and found that he had osteoarthritis. Ÿ As this Court stated in Triple Eight integrated Services. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees. He found that his employers were not remitting his SSS contributions. must be proved by sufficient and convincing evidence. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed. Moreover. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. 1997. He filed an illegal dismissal case. Heidi Soria. this Court has ruled against the validity of the employee?s dismissal. otherwise. Dianne Miano. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time. Monette Mesa. or if dismissed. and the expected imminent losses sought to be forestalled. Charms Haw. Ÿ To justify termination of employment under Article 283[24] of the Labor Code. or only three days later from the date of the Memorandum. and to the rehabilitation of Uniwide. Burden of Proof Ÿ Sy vs. it is not enough for a company to merely declare that it has implemented a retrenchment program. There is no evidence that it complied with the one-month notice requirement. the dismissal would be unjustified. it failed to prove that such document was ever served upon respondent and the DOLE. 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. profit and loss statements and annual income tax returns. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. While petitioner claims that it issued to respondent an October 30. Jake Ng. in general. In other words. that the dismissal was not illegal. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. When he was 59 years old. vs. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. and (d) the alleged losses. He filed for a month leave but SBT refused and it was during this that SBT terminated him. Ysan Castillo.. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp. Monina Lagman. Normally. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. failing which these can be assailed as self-serving documents. In the case at bar. This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. NLRC. Anna Tetangco 13 . Inc. if already incurred. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. The financial statements must be prepared and signed by independent auditors. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. employment is to expire on November 3. It is readily apparent that petitioner did not comply with any of the foregoing requirements. Alpe Macalalad. After the 5th. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. 1997 Memorandum of termination of employment. In the same case of Sevillana vs. (International) Corp. his employment contract was not renewed. 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. and (b) the cessation of business must be bona fide in character. Ÿ For retrenchment to be considered valid.Labor II deliverymen with Composite Enterprises. Jon Santos. in particular.

in other words. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. Following the provision of Article 283. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. but what the law requires is a written notice to the employees concerned. Records show that on December 3. more than substantially observed this requirement. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. 1998. Heidi Soria. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. Alpe Macalalad. In fact. these notices should have been served one month before. respondents implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees. 1998. Jake Ng. 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. and. The notice must be given at least 1 month in advance of the intended retrenchment. it was dissolved on January 27. Edlyn Santiago. it shifted its business from production to marketing and trading of Thai Petrochemical products. Monette Mesa. Federation of Free Workers corporate term from 50 years to 2 years and 7 months. 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. Monina Lagman. if he so desires. 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. As mandated by Article 283. When the required notices to the employees and to the DOLE are not given. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. Jon Santos. as correctly pointed out by the Labor Arbiter in his decision. Dianne Miano. Ÿ Anent the first requisite. The DOLE is the agency that will determine whether the planned retrenchment is justified & adequately supported by facts. Kristel Macatangay. Sebugero vs. the employer must notify him in writing of the decision to dismiss him. Due to economic slowdown. Petitioner National Bookstore. Anna Tetangco 14 . Ÿ Article 283 entails."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. Charms Haw. 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. stating clearly the reasons therefor. With respect to respondent TP Vinyl. the phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. Evidently. respondent TP Cement. 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. A written notice given to the DOLE is required by law. It is not. Ysan Castillo. Moreover. Thus. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes. Such requirement is mandatory. When effected Ÿ In its ordinary connotation. Cement Corp. (Kristel) Facts: Benedicto Cajucom was the VP – Legal Affairs of IPI Cement. shortened its Ÿ Irah Burog. 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. vs. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. if such an intent were expressly written into the law. But the burden imposed on petitioner National Bookstore does not stop here. actual losses need not set in prior to retrenchment. They were terminated for gross neglect of duty and loss of confidenc. only a situation where there is "retrenchment to prevent losses. GTI conveyed to the petitioners the impossibility of recalling them. Ymasa and Gabriel filed a case for illegal dismissal.Labor II suspicions. 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. or on November 30. respondents failed to comply with the one-month notice requirement.15 This is the situation in the case at bar. because this time their lay-off is to become permanent. 1998. the retrenchment is defective. among others. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. 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. having no viable projects. Clearly. Ÿ National Bookstore Inc. 1998. IPI Phils. (b) if the employer decides to terminate the services of the employee. including petitioner.

In sum.Labor II his employees under Art. The rehiring or re-employment does not negate the imminence of losses. More than a year after. (ITC) ITC employed 387 workers. Ÿ Ÿ Moreover. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work. Meris was the industrial service unit chief of Capitol Medical Center. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. whichever is higher. whichever is higher. 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. Monette Mesa. upheld was only the legality of the redundancy program and not the legality of its implementation. to avoid or minimize business losses. and as long as he pays his employees their termination pay in the amount corresponding to their length of service. Dianne Miano. vs. Dr. Alpe Macalalad. To save itself. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. the employer must sufficiently and convincingly prove its allegation of substantial losses. Anna Tetangco 15 . EMCO vs. The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. while it is true that the company hired or re-employed some of the dismissed workers. Meris (Kristel) Facts: Dr. Jon Santos. 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. This is to allow the employees to look for other employment. Heidi Soria. et al. managerial and staff positions were separated from employment. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. 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. Charms Haw.". Jake Ng. i. while under the second kind. 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. Ababon. no law can compel anybody to continue the same. 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. They also signed releases indicating their conformity with petitioner's redundancy program. Dr.e. received all the benefits due them under the Labor Code. Under the first kind. under Article 283 of the Labor Code. and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program. reportedly incurred huge operating losses. Meris received from Capitol’s president and chairman of the board. Kristel Macatangay. (b) the cessation of business must be bona fide in character. 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. unfair labor practice and damages. The employees. of Manila vs. 283. Clemente). Thelma Navarette-Clemente (Dr. They alleged.. among others. Edlyn Santiago. Just as no law forces anyone to go into business. Liability Ÿ Capitol Medical Center vs. a notice Irah Burog. Ababon (Kristel) Facts: Industrial Plywood Group Corp. Ysan Castillo. petitioner implemented a redundancy program wherein 177 employees occupying rank and file. Held: Private respondent's contention that what the Court in an earlier case. . 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. involving the same parties. petitioner was charged with unfair labor practice and illegal dismissal by private respondents. Abelgas Ÿ Industrial Timber Corp. IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. 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. (IPGC) leased a plywood plant to Industrial Timber Corp. Monina Lagman. it has been shown that such action was made only as company projects became available and that it was done in pursuance of the company's policy of giving preference to its former workers in the rehiring of project employees. which prompted private respondents to retrench. filed a complaint against ITC and IPGC for illegal dismissal. Re-Hiring Effect Atlantic Gulf and Pacific Co. 2) Written notice to the employees and to DOLE at least one month prior to the intended date of retrenchment. members of the AG&P United Rank and File Association.

no law can compel anybody to continue in it.Y. Sison. Meris not having been premised on a just or authorized cause. no law can compel anybody to continue the same. and to backwages. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement. Alpe Macalalad. however. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. Ÿ D. San was previously engaged in the business of manufacturing biscuits and other related products. 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. he is entitled to either reinstatement or separation pay if reinstatement is no longer viable. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. Reinstatement. 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. Clearly then. such exercise will be upheld. since private respondents cessation and closure of business was lawful. This fact negated the obligation to pay backwages.Y. 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. Monde. Instead private respondents were required to give separation pay which they already did. 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.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief. CA (Heidi) Facts: M. 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. 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. Sison decided to retire from business when she became sickly. there was no illegal dismissal to speak of. M. and full backwages from the time of his dismissal from April 30. whichever comes first. and such act would be tantamount to a taking of property without due process of law. The owner. Just as no law forces anyone to go into business. Monina Lagman. Finally. she announced her plan to close shop e. And the burden of proving such falls upon the employer. Dr. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. Accordingly. The records reveal that private respondents complied with the aforecited requirements. Anna Tetangco 16 . Heidi Soria. Edlyn Santiago. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. for any bona fide reason. 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. and that M. 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. Dianne Miano. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment.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. Charms Haw. as in the instant case. Jake Ng.” Ÿ The termination of the services of Dr. with a fraction of at least six (6) months being considered as one(1) year. Her health did not improve despite proper medical attention. The determination to cease operations is a prerogative of management which the State does not usually interfere with. Ruling: Explicit from Art. or one month pay. 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. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. Closing of Business. Macadams Metal Engineering vs.Y. In the general meeting of the workers. (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. 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 employer need only comply with the following requirements for a valid cessation of business operations. can lawfully close shop at anytime. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. Ÿ Just as no law forces anyone to go into business. fide in character. whichever is higher. Jon Santos. Monette Mesa. The announcement in advance was intended to give the workers ample time to look for alternative employment. Ysan Castillo. Kristel Macatangay. she declined to accept new projects and proceeded with the winding up of her business.

Capitol Medical Center vs. And the burden of proving such falls upon the employer. Heidi Soria.429.753. Dianne Miano. if already incurred. the Labor Code does not impose any obligation upon the employer to pay separation benefits. as long as he pays his employees their termination pay in the amount corresponding to their length of service. (b) the substantial losses apprehended must be reasonably imminent. One of the rights accorded an employer is the right to close an establishment or undertaking. Meris Work is a necessity that has economic significance deserving legal protection. Monina Lagman. 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. and (d) the alleged losses. In North Davao Mining Corporation v. the petitioners had not presented evidence to the contrary. 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. Jon Santos. P48. such exercise will be upheld. Edlyn Santiago.000.204. to wit: P65. Considering the losses suffered by private respondent. NLRC. 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. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners. must be proved by sufficient and convincing evidence. employers are also accorded rights and privileges to assure their selfdetermination and independence.89 in 1998. The social justice and protection to labor provisions in the Constitution dictate so. Kristel Macatangay.00. and reasonable Ÿ Irah Burog. . NLRC (Heidi) Facts: Victoria’s Milling Corp.Labor II Ÿ Cattista vs. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent. 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. Besides. It would. In a letter. And it posted the notice of closure on the corporate bulletin board. Clearly then. 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.000. Ysan Castillo. indeed. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127. 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. Although they may be broad and unlimited in scope. 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 . the closure then is due to serious business losses. it is logical for it to implement a retrenchment program to prevent further losses.480. Alpe Macalalad.97 in 1999." Where.65 in 1997. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses.389. management subsequently held a conference with all 13 field workers to explain to them the reason for this move. In any case. and of the various demand notices of payments from creditor banks. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. 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. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. 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. whichever was higher. nor did they establish that the closure was motivated by Galaxie’s anti-union stance. Anna Tetangco 17 . This mass of privileges comprises the so-called management prerogatives. . and the expected imminent losses sought to be forestalled. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. and P13. VMC's personnel reduction program was meant to reduce excessive labor costs in the company. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. as well as the computation of their termination pay. 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. On the other hand. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. Charms Haw.785. 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. Galaxie decided to close down its business operations. In view of such decision. Jake Ng. Petitioners received their termination pay or retirement pay under the pension plan. 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. Monette Mesa. Ÿ Galaxie Steel Workers Union vs.

not construable as resignation. Monette Mesa. In view of the impending transfer. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. the labor federation informed petitioner that the employees decided to continue working for petitioner. Cheniver gave its workers additional time within which to report to the new work place. 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. 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. Monina Lagman. Edlyn Santiago. 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. As public respondent observed. Dianne Miano. Earlier. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. Later on. 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. amounts to cessation of petitioner's business operations in Makati. Cheniver has to accord its employees some relief in the form of severance pay. Consequently. Charms Haw. hence. Resignation is inconsistent with the filing of the said complaint. they would be considered to have lost interest in their work and would be replaced. otherwise. 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.Labor II return of capital. 286. However. does not appear convincing. JAT General Services vs. Heidi Soria. Alpe Macalalad. Since the closure of petitioner's business is not on account of serious business losses. it would hire replacements. the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code. But even though the transfer was due to a reason beyond its control. Five days later. 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. NLRC that several employees namely. Resignation must be voluntary and made with the intention of relinquishing the office. 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. it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. not one reported for work at petitioner's new site. Ysan Castillo. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. This mass of privileges comprises the so-called management prerogatives. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. accompanied with an act of relinquishment. Anna Tetangco 18 . Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. Cheniver wrote its employees to report to the new location within 7 days. It appears Irah Burog. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. Ordinarily. That is its prerogative. 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. in our view. 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. Jon Santos. 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. Industrial Timber Corp vs. otherwise. Jake Ng. Kristel Macatangay. Nonetheless. thus the procedural requirement for terminating an employee does not come into play yet. Although they may be broad and unlimited in scope. Ÿ Broadly speaking. Suffice it to state that there is no termination of employment during the period of suspension. 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. The complete closure of business operation by petitioners. 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. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver. Now. One of the rights accorded an employer is the right to close an establishment or undertaking. whichever is higher. Indeed. Cheniver's contention that private respondents resigned from their jobs.

considering that it involves laying off employees for a period of six months. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. 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. Itr had a 3-year CBA covering from 1987 until 1990.286 Basis San Pedro Hospital of Digos vs. vs. considering that the dismissal of an employee from work involves not only the loss of his position but. The operations of the hospital having come to a grinding halt. petitioner had to establish the fact of its precarious financial health. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. organized Me-Shurn Workers Union-FSM. Despite the NCMB's call for a conciliation conference. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. Inc. is a charitable. CA Requisite Mc-Shurn Corp. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp.Labor II absence of serious business losses or financial reverses. 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. 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. but only 14 out of the 74 rank-and-file employees/union members acknowledged receipt thereof. Jon Santos. his means of livelihood. Anna Tetangco 19 . The last patient was consequently discharged. Monina Lagman. the hospital management considered the union actions as tantamount to a strike. simply to maintain the workers in employment. Heidi Soria. That would be a taking of property without due process of law. The same principle applies in temporary suspension of operations. on account of its alleged inability to meet the export quota required by the BOI. The union saturated petitioner's premises with streamers and picketed the hospital. Doctors began leaving the hospital and the number of patients dwindled. Even as the law is solicitous of the welfare of the employees. that its cessation of operation was really necessitated by its financial condition. the determination to cease operations is a management prerogative that the State does not usually interfere in. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. Jake Ng. Dianne Miano. NLRC Ÿ Temporary Cessation of Operation. Ÿ Ÿ Concededly. what is more important. by undertaking such suspension of operation. Indeed. as in this case. Similar notices were individually delivered to union members. Charms Haw. corporation. no business can be required to continue operating at a loss. it must also protect the right of an employer to exercise what is clearly a management prerogative. 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. there is substantial evidence that petitioners intended the Irah Burog. 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. 10 days later. The cessation of a company’s operations shortly after the organization of a labor union. J. and in the exercise of such management prerogative. Ysan Castillo. Held: To justify the closure of a business and the termination of the services of the concerned employees. as well as the resumption of business barely a month after. These acts constitute unfair labor practices. But where it is manifest that the closure is motivated not by a desire to avoid further losses. the employer may merge or consolidate its business with another. or its losses abated. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. Edlyn Santiago. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. and that said condition would probably be alleviated or improved. Alpe Macalalad. the evidence belies any claim that the lay-off of respondents was merely temporary. It is not enough to merely raise this issue nor to discuss it only in passing. the State is bound to intervene.T vs. Kristel Macatangay. with union. as long as he pays his employees their termination pay in the amount corresponding to their length of service. the law requires the employer to prove that it suffered substantial actual losses. In this instance. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Monette Mesa. nonstock. Espina vs. On the contrary.A. The union had a pending application for registration BLR.

vs. pursuant to Art. For as explicitly provided therein. are binding upon the parties.Labor II termination to be permanent. Inc. Also. which eventually led to his illegal constructive dismissal. not affect the employment relationship. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. 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. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. The quitclaims and releases. Mayon Hotel vs. San Pedro Hospital vs. Ÿ Verily." he does not receive any salary or financial benefit provided by law. However. as in this case. Assuming arguendo. Edlyn Santiago. Section 3. Inc. signed by the employees concerned as reasonable settlements. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. Anna Tetangco 20 . Pido was an employee of Cherubim Security and General Services. indeed. Alpe Macalalad. Due to the grim economic consequences to the employee. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. that said cessation of employment was merely temporary. His prolonged suspension. Mendoza. 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. Otherwise. His filing of a complaint for constructive dismissal. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. Kristel Macatangay. Jon Santos. owing to respondent’s neglect to conclude the investigation. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. due to non-payment of rentals. the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings. Jake Ng. Floating Status Irah Burog. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. Mc-Shurn Corp. several functions of its employees were declared redundant. in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause. In security services. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46. He was later on suspended following his argument with Alcantara. Effect on Employer-Employee Relationship Ÿ If a legitimate. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. Inc. it led to the termination of the services of the SMC employees at the Mandaue Brewery. Monina Lagman. 286. Charms Haw. Mabuhay F. Eventually. 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. Heidi Soria. the dismissal is deemed unjustified. NLRC (Dianne) Facts: Federito B. with more reason will an invalid and illegal suspension of operations. clearly indicates that he did not abandon his work. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . As a consequence. When a security guard is placed on a "floating status. Dianne Miano. had ripened to constructive dismissal. the petitioners admitted that there was indeed such delay. 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. Pido was constructively dismissed. Mc-Shurn Workers Union Ÿ Pido vs.38 caliber revolver service firearm and duty detail order had already expired. Monette Mesa. along with a prayer for reinstatement. Anent the delay of seven days in the filing with the Court of Appeals of the petition. Apropos this responsibility. 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. DISEASE. Justice Vicente V. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. 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. Ysan Castillo. through Mr. Digos E. Sy vs. Installation of Labor Savings Device Ÿ Abapo vs.284 Ÿ The requirement for a medical certificate cannot be dispensed with. Drilon (Dianne) Facts: Hotel Mabuhay. Held: The Supreme Court finds that. CA G. leased the premises belonging to Santiago Syjuco.

like Constitutional due process. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner. Agabon vs. Even if no hearing was conducted.. Sec. 2(d) 1. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco. Ysan Castillo. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner. Anna Tetangco 21 . Meanwhile. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. Hence.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. notices of termination were also sent to them informing them of the basis of their dismissal. In addition. Book VI. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law. Subsequently. They claimed that they were dismissed without just cause and without due process. Workers Assn. i. and the same can only be restricted by law through the exercise of police power. Jon Santos. Sec. they were both apprised of the particular acts or omissions constituting the charges against them. National Union of Workers in Hotel. Charms Haw. Jake Ng. 2(d).e.Nature and Requirements 277 (b). Kristel Macatangay. civil or administrative proceedings. They were also required to submit their written explanation within 12 hours from receipt of the reports. incurred absences without official leave and slept while on duty. the valid and authorized causes of employment termination under the Labor Code. employees and guests free access to and egress from said premises. Sundowner wrote a letter-complaint to Syjuco. In separate infraction reports. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. Had they found the 12-hour period too short. Procedural due process. is only to consider them for reemployment in the operation of the business in the same premises. Ÿ H. has two aspects: substantive. it was Syjuco who found Sundowner and persuaded it to lease said premises. Requirements Irah Burog. Heidi Soria. Dianne Miano. Solid Development Corp. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. vs. Further. he was dismissed for serious misconduct. However. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims. and its responsibility if at all. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner. the report also mentioned that Villena frequently violated company rules. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. Colcol was eventually dismissed for insubordination and poor work performance. 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. 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. Rule 1. Book VI. Monette Mesa. barricaded the entrance to the leased premises and denied Sundowner's officers. 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. labor contracts being in personam. and procedural. petitioners were given due process before they were dismissed. Alpe Macalalad. He was also required to submit a written explanation within 12 hours from receipt of the report. Thus. Rule 1. NLRC Essence of Due Process Solid Development Corp. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises. Edlyn Santiago. Ÿ The rule is that unless expressly assumed. Monina Lagman. loss of confidence and gross habitual neglect of duty.e. 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. As a general rule. i. Yet. Constitutional due process protects the individual from the government and assures him of his rights in criminal. Thereafter.. neither of them complied. He was also required to submit a written explanation within 12 hours from receipt of the report. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. In General Ÿ Due process under the Labor Code. Sundowner has no liability whatsoever to the employees of Mabuhay. In fine. thus binding only between the parties. they should have requested for an extension of time. the manner of dismissal. (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation.

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. they were both apprised of the particular acts or omissions constituting the charges against them. 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. Carag was not issued summons. Ÿ On the matter of due process. Finally. In this case. 1999. 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. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. 1991. Irah Burog. which were then returned due to insufficiency of funds. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. As such. 1999 and signed by the General Manager. they were given due process before they were dismissed. Time and again. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). 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. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. They gave their own "answer/explanation" to the charges. it is stressed that due process is simply an opportunity to Ÿ Carag vs. as reflected in the summary of tardiness and absences report. Thus. Held: Valiao’s dismissal from employment is valid and justified. on behalf of all of MAC's rank and file employees. 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. is complied with as long as there was an opportunity to be heard. or as applied to administrative proceedings. and not notified that the case was submitted for resolution. and not necessarily that an actual hearing was conducted. and eventually. not given an opportunity to present his evidence. They were represented by counsel during the investigation. Monina Lagman. What is frowned upon is the absolute lack of notice and hearing. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. Ÿ The essence of due process is simply an opportunity to be heard. Anna Tetangco 22 . 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. Monette Mesa. Ÿ Valiao vs.Labor II be heard. Charms Haw. Edlyn Santiago. not accorded a hearing. he received a suspension order without pay. Kristel Macatangay. In separate memoranda dated February 4. Alpe Macalalad. In fine. They participated in the investigation conducted at petitioner’s board room on February 13. He was re-assigned from one position to another which was due to his tardiness and absences. For an employee’s dismissal to be valid. Macaraeg was then the cashier who also took part in the illicit transactions." There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record.” Held: There exists a valid reason to dismiss both employees. Jon Santos. Heidi Soria. 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.m. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business. and to have reported late almost every day for the period November to December 1991. on the other hand. 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. Coop vs. Jake Ng. and breach of trust and confidence reposed on them by management. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. Proof beyond reasonable doubt of their misconduct is not required. 1999 at 11:30 a. and (2) the second informs the employee of the employer's decision to dismiss him. 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. A formal or trial-type hearing is not at all times and in all instances essential. 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. not ordered to submit a position paper. not accorded a conciliatory conference. informing them of the basis of their termination. The requirement of a hearing. A hearing was also set. Ysan Castillo. notices were sent to them on March 19. Central Pangasinan Elec. Dianne Miano.

Labor II
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

Labor II
(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

Labor II
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.[22] 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

above. National Semi-Conductor Distribution vs. 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. Magos countered it was necessary as sales were down. Even though petitioner in this case never admitted the accusations of dishonesty against him. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal. Ysan Castillo. perhaps. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. and private respondent should again be allowed to answer and be heard. (3) the dismissal is without just or authorized cause and there was no due process. Dianne Miano. 1995 was issued to respondent informing him of the management’s decision to terminate his services. respondent’s right to due process was not violated. Jon Santos. Position Paper Ÿ Shoppes Manila Inc. Ÿ What is most important is that before termination. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. Magos was later terminated. 1993 letter. he impliedly acknowledged his insubordination as shown in his petition. Monette Mesa. for an authorized cause under Article 283. 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. pursuant to Section 2. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. another notice about the decision of dismissal. (2) the dismissal is without just or authorized cause but due process was observed. which made a dishonest mark in his timecard by marking present on a day he is absent. pursuant to Section 6 above. Thus. 11 In the instant case. pursuant to Section 5 above. but chooses not to give his side of the Ÿ Lavador vs. an opportunity to explain one's side. Ÿ La Carlota Planters Assn Inc. “J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. Ÿ Procedurally. 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. Monina Lagman. but an accident happened later in his career which caused his dismissal. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. (1) if the dismissal is based on a just cause under Article 282. but it chose not to participate therein without any known justifiable cause. or as applied to administrative proceedings. Jake Ng. she was later promoted. Heidi Soria. Private respondent availed of this chance by submitting a written explanation. an employee must be given the twin requirements of due process-proper notice and hearing. vs. this does not give petitioners an outright license to terminate private respondent. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. Edlyn Santiago. By requiring him to submit a written explanation within 48 hours from receipt of the notice. Irah Burog. Ÿ The law requires the employer to afford his employee ample opportunity to be heard. Kristel Macatangay. Hearing Ÿ Magos vs. Caurdenetan Piece Workers Union vs. Alpe Macalalad. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal. Charms Haw. and due process was observed. the company gave him the opportunity to be heard in his defense. and adding therein. a notice of the decision to dismiss. He was later dismissed by petitioner due to dishonesty. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. 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. When they formed a union they were barred and were replaced with non-union members.Labor II December 13. or for health reasons under Article 284. should also be sent to private respondent. but when she was ate her new position she was charged with misappropriation was subsequently dismissed. Clearly. Anna Tetangco 26 . and thereafter. a hearing or an opportunity to be heard and after hearing or opportunity to be heard. vs. an inquiry why he did not give the explanation required in the January 4. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao. and (4) the dismissal is for just or authorized cause but due process was not observed. Due process is not violated where a person is given the opportunity to be heard. if after the said thirty-day period private respondent still did not give his explanation about the incident.

He refused the order on the ground that it was not related to his duties as Third Officer. were implicated in said incident. In termination cases. Anna Tetangco 27 . et al. Alpe Macalalad. Hence. 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. however.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping.Substantive. Monina Lagman. et al. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter. failed to explain and were terminated. stating clearly the reason therefore. These two notices would have sufficed had it not been for the existence of Systems Practice No. with supporting documents and their affidavits. a PLDT managerial employee. the procedural deficiency in the dismissal of Suico. where the rules of evidence apply with greater rigidity. that. the Master made several negative reports against him. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. There is nothing in the records showing that respondents complied with the two-notice requirement. Ÿ It should be emphasized. disappears when adduced in connection with labor cases. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. et al. 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. He alleged that because of his refusal to obey the order. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. if he so desires. The last notices informed Suico. set out in detail the nature and circumstances of the violations imputed to them. Notices from PLDT management were sent asking for an explanation of the said incident. Sadagnot alleged that when the order was issued. respondents repatriated him to the Philippines. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. Monette Mesa. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. Suico. the employer must notify him in writing of the decision to dismiss him. Jon Santos. the vessel's Master ordered him to perform Ÿ Irah Burog. the law requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code. Under Systems Practice No. 94-016. Ÿ In order to effect a valid dismissal. This option is part of their right to due process. PLDT is bound to comply with the Systems Practice. Kristel Macatangay. a deck work.Procedural Ÿ Suico vs. Jake Ng. whatever merit C. NLRC (Ysan) Facts: Fernando. 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. 94-016.F. 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. of the decision to terminate their employment and cited the evidence upon which the decision was based. et al. Cross Examination Ÿ CF Sharp Crew Management Inc. consistent with our ruling in Agabon. 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. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. exercised their option under Systems Practice No. In the course of his employment he misappropriated an amount sent by a seaman for his family. FAILURE OF DUE PROCESS Sadagnot vs. vs. Suico et al. Held: Apparently. 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. Zialcita (Jon) Facts: Zialcita was assigned as clerk of CF sharp. Held: Respondents failed to observe the necessary procedural safeguards. Suico et al. Effect of Failure. The first notices sent to Suico. Sharp’s argument might have in the context of ordinary civil actions. Charms Haw. PLDT complied with the two-notice requirement of due process. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. On 2 March 1996. hatch stripping. Edlyn Santiago.Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed. Espanola (Jon) Facts: C.and (b) the employee be afforded an opportunity to be heard and to defend himself. sustained injuries when strikers blocked her way to the premises of PLDT. (b) if the employer decides to terminate the services of the employee. Dianne Miano. Heidi Soria. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. if he so desires.

Ÿ The present rule is set forth in the Agabon v. Ubaldo. NLRC the new car plan were those of union officers Cerezo and de Guzman. Anna Tetangco 28 . et al. Platon. he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. was illegal. Roxas merely said he tried to report to the office. Consistent with San Miguel Corporation v. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog. Under the provisions of the said car plan. It did not narrate that it heard petitioner’s side. vs. he was served with a memorandum from LBC's Board Chairman. the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. The employee should be appraised of the particular acts and omissions for which the dismissal is sought. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. Edlyn Santiago. 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. NLRC. Ysan Castillo. Alpe Macalalad.. but petitioner did not allow him. inclusive of allowances. he was barred from entering the company’s premises. however. but did not receive a reply. Under the circumstances. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. Agabon vs.. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. Monette Mesa. Held: In the case at bar. Heidi Soria. Dianne Miano. Glaxxo-Wellcome Phils. Incidentally. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing.Labor II substantive bases thereof were never put in issue. Inc. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. As a result thereof. 2. While he was on leave. as well as the receipts for the Fundador Brandy giveaways. Held: Without a doubt. Both refused to surrender their vehicles and were thus sent notices of termination. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. In arriving at the decision to dismiss them. Ÿ In termination cases. Pursuant to the same. but merely holds the employer liable for damages for violating said notice of requirement. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. the failure to give the required notice does not invalidate the same. and. upon the other hand. nor did it show that petitioner was given notice of his dismissal. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list. Florido reluctantly complied with the order. Jake Ng. there was no necessity for an actual hearing. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. Failure to do so would necessarily mean that the dismissal was not justified. must be stiffer than that imposed in Wenphil. Where the dismissals are illegal. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. they were nonetheless given adequate opportunity to answer the charge. An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. Ÿ Verily. that where the dismissal is based on a just cause. He was being directed to go on vacation leave and consume all his remaining leave credits. He wrote a letter to the President of the company but he did not receive any reply. vs. he shall turn over all his accountabilities to an officer of the company. Glaxo took into consideration the explanations they had offered. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. Kristel Macatangay. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. which in fact they did. and in the meantime. Jon Santos. 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. Monina Lagman. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. vs. therefore. Charms Haw. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. He was then instructed to take a leave of absence for a month. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. Such sanctions. Ÿ Alladin Transit Corp. namely.

Gresones. this time with QC RTC. informed by the petitioner that he was considered resigned from his job. in fact. During that same occasion. scooping fine ore from the stockpile and loading it on his private cargo truck. In the case at bar. Phil. if to be considered at all. vs. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. 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. While the case filed in the Makati RTC was later dismissed without prejudice. Morales (Irah) Facts: On Dec. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. Azcor. instead of betrayed. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. Thus. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. Thereafter. Alpe Macalalad. 1146 of the Civil Code. 2001. said that Capulso resigned. Central Pangasinan vs. 2002. went to Victory's office to report for work. Mining Service Corp. PMSC has every right to dismiss Salvador. however. the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog. Prescription Period Ÿ Victory Liner Inc. Heidi Soria. which was granted by the RTC in Aug.000. et al. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. Kristel Macatangay. it was only at this time that the respondent's cause of action accrued. Race was confined again for further treatment of his fractured left leg at another hospital. Thus. respondent has proved by substantial evidence the charge of pilferage against petitioner. tried to convince the respondent to accept an amount of P50. Ÿ Salvador vs. Jake Ng. Morales filed a motion to dismiss his complaint without prejudice. Race (Ysan) Facts: While traversing Tarlac. He and his driver. Jon Santos. the petitioner. the fact that Salvador has been employed with the respondent for a long time. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. Macaraeg consolation for his dismissal but the latter rejected it. 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. NLRC (Irah) Facts: Four months after his dismissal. Moreover. Here. 1995. As a consequence thereof. Edlyn Santiago. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. Victory shouldered the doctor's professional fee and the operation. et al. Ÿ We reiterate that proof beyond reasonable doubt of the employee’s misconduct or dishonesty is not required to justify loss of confidence. Monette Mesa. Dianne Miano. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker.Labor II Degree Ÿ Art. PMSC’s Assistant Resident Manager for Administration. 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. It is settled that in illegal dismissal cases. His confinement therein lasted a month. It is sufficient that there is substantial basis for the loss of trust. the bus he was driving was bumped by a Dagupan-bound bus. still limping heavily. but was not allowed to resume work afterwards. pre-drafted with blank spaces for dates of effectivity. a language Capulso was not conversant. Held: To constitute resignation. Race. Race suffered a fractured left leg and was rushed to the hospital.00 as a Ÿ Atonio M. Charms Haw. One month after his release from the said hospital. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. Proof beyond reasonable doubt of their misconduct is not required. 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. medication and hospital expenses of the Race in the hospitals. Ysan Castillo. Morales filed anew a complaint for the collection of sum of money. Indeed. (Ysan) Facts: PMSC’s evidence disclose that Sawa. saw Salvador operating the company’s payloader. Anna Tetangco 29 . 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. Frustrated at the snail's pace of his case. Moreover. a managerial employee. should be taken against him. and were written in English. Held: In the case at bar. Monina Lagman. 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. the cause of action accrues from the time the employment of the worker was unjustly terminated. He was. Held: Antonio's invocation of prescription is misplaced. Ÿ Azcor Manufacturing vs. The complaint was thus filed well within the prescriptive period. in cases of this nature. was on his way back to his office in the plant. Consequently. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. On Sept.

or intent to abandon a lawful claim or cause of action. vs. G. and the liability did not abate as Irah Burog. Monette Mesa. NLRC (Irah) Facts: Vianney Abella. Rather. Morales's intention was to expedite the enforcement of his rights. the employer. and (c) must show that the employee has become unfit to continue working for the employer. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. Subsequently. (b) must relate to the performance of the employee's duties. filed a complaint for illegal dismissal against Marival. While generally an order of reinstatement carries with it an award of backwages. Offer to reinstate Ÿ Ranara vs. the acts complained of. His case remained pending before the CA for six long years. and to the payment of his full backwages. it must be stressed that not every case of illegal dismissal will automatically entail its grant. lack of interest. The wrong had been committed and the harm done.Twin Remedies Ÿ Marival Trading Inc. Notably. sincere or not. no action whatsoever was taken. who had been working as a driver with Oro Union Construction Supply. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. Chang's sincerity is suspect. the court may not only mitigate. formal or otherwise. Chang. We doubt if his offer would have been made if Ranara had not complained against him. Her remarks were neither insulting nor offensive. even moral and exemplary damages. as to sanction Abella’s unprofessional and disrespectful conduct. et al. 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 did so just the same. Alpe Macalalad.Labor II claim. under the circumstances they were done. Without cause and without any investigation. alleging that she was dismissed without just cause and due process. 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. Jake Ng. (a) it must be serious. Moreover. The prescriptive statutes serve to protect those who are diligent and vigilant. Kristel Macatangay. thus allowing the statute of limitations to bar any subsequent suit. Anna Tetangco 30 . Oro. and to his other benefits or their monetary equivalent. there must be a categorical showing that due to plaintiff's negligence. Monina Lagman. NLRC (Irah) Facts: Carlos Ranara. Ÿ Under Article 279 of the Labor Code. In this case. he felt frustrated at the snail's pace at which his case was moving. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time. When he protested his replacement. inaction.07 GENERAL RULE Nature and Remedies. to invite Ranara back to work in his store. offered to re-employ Ranara. At any rate. inclusive of allowances. he was even scolded for being "hard-headed" and not accepting his dismissal. Jon Santos. not those who sleep on their rights. thinking that the secretary had only spoken in jest. On the contrary. contending that it was Ranara who actually abandoned work when he stopped reporting. did not in any way pertain to Abella's duties as chemist/quality controller. But it does not simply mean a mere lapse of time. Understandably. Abella did not make false and malicious statements against her superior. he found that somebody else had been employed in his place. a result of Chang's repentance. the employer believed that Abella’s dismissal was based on a valid ground. filed a complaint for illegal dismissal and sought reinstatement with full back wages. Edlyn Santiago. in a belated gesture of good will. Her acts did not constitute serious misconduct as to justify her dismissal. SANCTIONS AND REMEDIES 14. This militates against the propriety of granting Abella backwages. Held: For misconduct or improper behavior to be a just cause or dismissal. These remedies give life to the worker’s constitutional right to security of tenure. 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. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued. Ranara was simply told that he should not report back for work the following day. denied the charges. As regards backwages. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. Heidi Soria. Dianne Miano. a chemist/quality controller at Marival Trading. but also absolve the employer from liability of backwages where good faith is evident. Ysan Castillo. In this case. Held: Petitioner was illegally dismissed without even the politeness of a proper notice. Charms Haw. it was only after the complaint had been filed that it occurred to Chang. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges.

Monina Lagman. Dianne Miano. Held: Cairlan was illegally dismissed. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. et al.C. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. et al. Cabatulan agreed and immediately went home. delivered a child. Held: Respondents Acuña. His suspension was subsequently extended. Great Southern. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. Ysan Castillo. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. wanted to see him. He was assured to be rehired. et al. they were transferred back home since their services were no longer needed. et al. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. Heidi Soria. Ÿ Where the dismissal is without just or authorized cause and there was no due process. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. filed a complaint for illegal dismissal against Lakpue. Kristel Macatangay. inclusive of allowances. which can hardly be considered a forbidden act or a dereliction of duty.Labor II Ÿ Pheschem Industrial Corp vs. Edlyn Santiago. Acuna (Irah) Facts: Respondents Acuña. voluntarily resigned from employment. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. vs. Before proceeding to the meeting place. which explains his repeated failure to report to work. Julio’s security aide. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. Julio offered him 5k should he agree to sign the resignation letter. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. an assistant cashier of Tropical Biological Phils. and payment of his full backwages.e. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business. Anna Tetangco 31 . which is a subsidiary of Lakpue. et al. Held: Moldez was illegally dismissed. the law intended reinstatement to be the general rule. Before the expiration of their contracts. Cabatulan passed by the premises of J. Ÿ Nueva Ecija Electric Corp. Rather. Eduardo Cairlan. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. inclusive of allowances. they were forced to resign or were summarily dismissed without just cause. were illegally dismissed. With regard to the charge of disobeying a memorandum. Jake Ng. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. They did not voluntarily quit their jobs. Jon Santos. Lourdes Belga. Clearly. An altercation ensued between Cabatulan and Alaan. without being informed of its reason. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. but eight months had already passed with no word from Pheschem. Belga (Irah) Facts: Ma. Cabatulan was informed that respondent Julio’s brother. Held: Yes. 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. Acuña. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. Ÿ Ÿ Cabatulan vs. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. a driver of NEECO. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. Trucking but was refused admission by Alaan who was armed with an armalite rifle. vs. Alpe Macalalad. Monette Mesa. 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.. inclusive of allowances. and other privileges and to his full backwages. Cabatulan refused to sign the same. They employed Cabatulan as operations manager and purchasing officer. Held: Belga was illegally dismissed. 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. et al. 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. and other benefits or their monetary equivalent. et al. Issue: W/N Cabatulan is entitled to backwages and separation pay. NLRC (Irah) Facts: Pablito Moldez. filed a complaint for illegal suspension and dismissal against Pheschem. Moldez alleged that he was at first suspended from work without pay for 7 days. denied the charges and averred that Acuña. Great Southern Maritime Services Corp vs. filed a complaint for illegal dismissal against NEECO. Charms Haw.

complainants' backwages accrued. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. Charms Haw. separation pay. Act No. illegal dismissal. Ysan Castillo. allowances and other benefits. therefore. 1989 were granted backwages up to three (3) years without deduction or qualification. moral and exemplary damages as well as night shift differential. even pending appeal. An illegally dismissed employee is entitled to two reliefs. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. Anna Tetangco 32 . NLRC (Anna) Facts: In May 1982. 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. 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. Kristel Macatangay. Dianne Miano. 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. Alpe Macalalad. Though there are specific circumstances where reinstatement is not a practicable remedy. namely: backwages and reinstatement. In fact. The respondents failed to comply with the order of reinstatement. or separation pay if reinstatement is no longer viable and backwages. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. respondents' services were terminated without the benefit of notice and hearing. distinct reliefs granted to one who was illegally dismissed from employment. Ÿ Under the existing law. Respondents filed a complaint for underpayment/nonpayment of salaries. as contained in the decision of the labor arbiter. 6715 on March 21. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. an illegally dismissed employee is entitled to either reinstatement. shall be immediately executory. These are separate and distinct from each other. and claims for 13th month pay. overtime pay. A more equitable settlement. Ÿ Triad Security vs. premium pay for holiday and rest day. Jake Ng. Heidi Soria. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. They posit the argument that with respondents' receipt of their separation pay. et al. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. Jon Santos." 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. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. Edlyn Santiago. Thus. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. private respondent Salazar was employed by Globe-Mackay as general systems analyst. However. hence. Under Article 223 of the Labor Code. illegal deductions. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. holiday pay. Monina Lagman. 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. according to petitioners. Upon learning of the complaint. while those illegally dismissed after. therefore. had already been fully satisfied. 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. were formerly employed by Triad Security as security guards. insofar as the reinstatement aspect is concerned. Backwages and separation pay are. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. Ortega (Anna) Facts: Respondents Ortega. ordered the payment of both. the payment of separation pay. if viable. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. Issue: W/N petitioner is still liable for backwages Held: Yes. Monette Mesa.Labor II to the effectivity of Rep. In effect. 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. The award of one does not preclude that of the other as this court had. Petitioners insist that their monetary obligation. and attorney's fees. 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. in proper cases. In this case. underpayment or nonpayment of allowance. 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. service incentive leave pay. 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.

However. to full backwages. to restore the dismissed employee to her status before she lost her job. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is. His services were terminated allegedly for disrespecting his superiors several times. Section 4." And. drill press operators. Jake Ng. Moldez) 14. at the time of his reinstatement." Here. to give her back the income lost during the period of unemployment. Edlyn Santiago. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. to offset the impending financial collapse.Labor II to inform her employer. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings. for the dictionary meaning of the word "reinstate" is "to restore to a state. she had every right. but is now held by the incumbent manager who replaced Luna. etc. Both remedies. Monina Lagman. . in the case at bar.e. Kristel Macatangay. much less a legal. from which one had been removed" and in the latter. Ysan Castillo. Rule 1. Book VI of the implementing Rules and Regulations of the Labor Code states. However. Held: In its generally accepted sense. lathemen. Although the position formerly held by the herein complainant is now held by another. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. Mercury Drug appealed with the NLRC which held that there was illegal dismissal. etc. her eventual separation from employment was not for cause. controlling stockholders. Anna Tetangco 33 . but as well. Also. corporate name. 13th month pay and damages. 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. Instead of submitting an explanation. Mercury Drug Corp (Anna). unless such position no longer exists. Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug. There being no evidence to show an authorized. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement." Ÿ Defined Ÿ Union of Supervisors v. Irah Burog. tinsmith and carpenters. Reinstatement pre-supposes that the previous position from which one had been removed still exists. It is the return to the position from which he was removed and assuming again the functions of the office already held. In the case. Jon Santos. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights." Held: By itself. looking to the past. Charms Haw.) of the old Republic Bank into the present Republic Planters Bank. Heidi Soria. the bank suffered from the danger of financial collapse." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. which she subsequently amended to include illegal dismissal. cause for the dismissal of private respondent. . Salazar was placed under preventive suspension for 1 month. Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. would perforce make her "whole. private respondent filed a complaint against petitioner for illegal suspension. Issue: W/N the new management is bound to reinstate the employees. but also gives substance and meaning to the protection accorded by the Constitution to labor. reinstatement is a restoration to a state from which one has been removed or separated. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice. reinstatement is not possible . there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin.08 REINSTATEMENT Employee Right Ÿ Quijano v. mostly welders. position. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. not only to be entitled to reinstatement. Alpe Macalalad. board membership. As a necessary consequence of change of corporate personality (i. the position previously held by the complainant Luna was not abolished. Monette Mesa. In providing foremost for the reinstatement of an illegally dismissed employee. The Court held that "there being no more positions in the machine shop to which the dismissed employee. The law mandates the reinstatement of an illegally dismissed employee to his former position. in the former. 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. reinstatement was erroneously ordered for the petitioner's shop was already closed. (Pheschem Industrial vs. the Labor Code not only recognizes the security of tenure granted by law to regular employees. vacation and sick leave benefits. condition. Dianne Miano. 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. to wit: "An employee who is separated from work without just cause should be reinstated to his former position. or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. could be returned.

but failed to furnish him written notice apprising him of the charges against him. v. . While the case was on appeal. Heidi Soria. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. the NLRC rendered its July 10. petitioner fought with the latter. The same can be remedied by payment of employee's full backwages from Irah Burog. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. the time of dismissal until the court ruling that he was dismissed for a valid cause. the law recognizes the fact that continued employment gives to a worker. embodied in the Civil Code. Others are simply an application of the Justinian precept. however. Edlyn Santiago." his illegally dismissed employee should just be given separation pay.Labor II Issue: W/N petitioner should be reinstated. the date he actually reported back to work. expedient or practical. In the case at bar. as where reinstatement would only exacerbate the tension and strained relations between the parties. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. it would be more prudent to order payment of separation pay instead of reinstatement. petitioner opted to reinstate respondent in the payroll effective August 23. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. Consequently. . He charged petitioner for illegal dismissal. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship." But it is equally true that "the law. petitioner was deprived of the opportunity to respond thereto. petitioner refused to drive for his employer's son. As the reinstatement aspect is immediately executory even pending appeal by the employer. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. especially to a lowly or menial laborer. Issue: W/N there was illegal dismissal. The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. It is not only because of the law's concern for the workingman. respondent fell short of the two-notice requirement in dismissing an employee. on March 26. Monette Mesa. There is. At one time. In giving an illegally dismissed employee the right to reinstatement. however. However. whatever missteps may be committed by labor ought not to be visited with a consequence so severe. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job. The Constitution bids the State to "afford full protection to labor. we have held that it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed. Ÿ Supreme Steel Corp. or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. Dianne Miano. 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. particularly where the illegally dismissed employee held a managerial or key position in the company. give everyone his due. his family to consider. 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. Jon Santos. Without ruling on the motion. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. and observe honesty and good faith toward one's fellowmen. Held: YES. Ysan Castillo. in protecting the rights of the laborer. [W]here a penalty less punitive would suffice. authorizes neither oppression nor self-destruction of the employer. . he was instructed to deliver bags of cement to Felix Hardware but delivered the same to one Eduardo Interior. Alpe Macalalad. Held: YES. an assurance of continuity in his source of income which a grant of separation pay could not provide. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. Held: Time and again. The CA reversed the NLRC decision. 2003 Decision reversing the Decision of the Labor Arbiter. At any rate. petitioner refused to pay respondent's salary. 282-283. not to render his act (dismissal or resignation. 282 (a) of the Labor Code. Such is the notice requirement in Arts. in addition. Respondent furnished petitioner a written notice of his dismissal. Monina Lagman. 2001. Not all notice requirements are requirements of due process. 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. Consequently. the case law developed that where reinstatement is not feasible. Over the years. 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. However. merely reinstated in the payroll. Anna Tetangco 34 . Some unscrupulous employers. Jake Ng. to act with justice. And when respondent engaged the services of another driver. as the case may be) void. 2003 (while petitioners' appeal in the NLRC was pending). starting June 2002. Charms Haw. Issue: W/N respondent should be reinstated. Kristel Macatangay. According to respondent. the omission does not render petitioner's dismissal invalid but merely ineffectual. and ordering the dismissal of the complaint. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. injuring him and a co-employee who was pacifying petitioner.

it should have paid his salary during the period of appeal before the NLRC. However. v. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. in violation of the PAL Code of Discipline. to put the two parties on relatively equal positions. 6715. even if he was instigated to take drugs. Branch No. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. 6715. Dianne Miano. The intent is to balance the scale of justice. since private respondent considered them separated from the service. Because of need. Monina Lagman. Davao City. causing untold hardships to the dismissed employee. She pledged it to another person who later sold the plan to another. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. Jake Ng. Josefina went to CAP to ask for help. In this case. Technicalities have no room in labor cases. Ÿ Article 223 (3rd paragraph) of the Labor Code. when petitioner SSPC opted for respondent's payroll reinstatement. XI. The reinstatement aspect of the Labor Arbiter's decision. Charms Haw. Thus. 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. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. 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. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. Petitioners question the decision of reinstatement because this was not raised in the pleadings. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. It should be made clear that when the law tilts the scale of justice in favor of labor. Monette Mesa. The rationale of the law has been explained in Aris (Phil. the Commission's failure. vs. and Section 2 of the NLRC Interim Rules on Appeals under RA No. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. the law itself has laid down a Irah Burog. NLRC. petitioners should not be deprived of their means of livelihood. Alpe Macalalad. He was dismissed from employment. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP. After hearing petitioner's explanation. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment.) Inc. THereafter. is immediately enforceable. all the equities of the case must be accorded their due weight. It was a mere procedural lapse which should not affect his substantive right to reinstatement. the burden of proving the just cause of dismissing an employee rests on the employer. Ysan Castillo. she did not transfer the plan in Josefina's name.Labor II acceptance of the view that under all circumstances of this case. Jon Santos. She availed of an educational plan from her employer. 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. the law would readily be circumvented. albeit under appeal. Nor is this to condone what had been done by them For all this while. Held: In termination cases. Issue: W/N petitioner is entitled for reinstatement. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. SC held that the dismissal was for a valid cause. Amending the Labor Code. Under Article 223 of the Labor Code. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. it is but a recognition of the inherent economic inequality between labor and management. Effect of failure to ask relief Ÿ General Baptist v. Edlyn Santiago. to timely act on the matter is a serious oversight for which it should be admonished. CAP decided to terminate petitioner. Anna Tetangco 35 . they had not been paid. or refusal. Kristel Macatangay. Pheschem Industrial Corp. Ÿ Panuncillo v. Heidi Soria. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. 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. 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. and his failure to do so would result in a finding that the dismissal is not justified.. an award or order of reinstatement is self-executory. otherwise. 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. Where a decision may be made to rest [on] informed judgment rather than rigid rules. as amended by Section 12 of Republic Act No. she sold the plan to Josefina.

strike. Anna Tetangco 36 . The SC ruled that the dismissal was illegal.. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. given the lapse of considerable time from the occurrence of the Irah Burog. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. Infante (Alpe) Facts: Respondents were drivers of G & S. There is logic in this reasoning of the NLRC. NLRC. The above-quoted rule enunciates reinstatement as the standard relief. Edlyn Santiago. Ad imposible tenetur. pending appeal. the State may authorize an immediate implementation. Jake Ng. the employee is not required to reimburse whatever salary he received for he is entitled to such.. with respect to decisions reinstating employees.. The SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed. Labor is an indispensable partner for the nation's progress and stability . 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. Monette Mesa. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. unless such position no longer exists at the time of his reinstatement.. a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family.. in lieu of reinstatement... In Roquero v.. he was not promoted to the position of captain. Inc. They were terminated for an allegedly illegal strike. Philippine Airlines. 33 Accordingly. the award of separation pay of 1 month salary for each year of service. In Association of Independent Unions in the Philippines v. On the other hand. Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. Dianne Miano. Alpe Macalalad. in lieu of reinstatement. the exclusive taxi concessionaire in NAIA." Ÿ PNOC-EDC v. Although petitioner did not comply with this writ of execution. 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. an award of separation pay equivalent to 1 month pay for every year of service. The law itself can not exact compliance with what is impossible. 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. If the position is no longer available for any other valid and justifiable reason. The SC held that Airphils is liable. v. v. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated.. 4. Then.. of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. once more. Kristel Macatangay. however. the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. Charms Haw. although temporarily since the appeal may be decided in favor of the appellant. 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. was deemed more practical and appropriate to all the parties concerned. However. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. Reinstatement to former position. more so if he actually rendered services during the period. Monina Lagman. which the Constitution also expressly affirms with equal intensity. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality. in this case. Ÿ If reinstatement is no longer possible. Ysan Castillo.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists. by and pursuant to the same power (police power). 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. Hence. is in order. Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . seventeen (17) years have elapsed since respondents were illegally dismissed. the law itself has determined a sufficiently overwhelming reason for its execution pending appeal . Heidi Soria. even if the order of reinstatement of the Labor Arbiter is reversed on appeal. damages and causes of action arising out of the instant case. After completing his training. In short. waiving “[a]ll other claims.Labor II compassionate policy which. Ÿ G & S Transport Corp. SEC. Jon Santos. 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. Ÿ Airphils Corp.

As the petitioner appears to have lost its trust in private respondent. of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. Charms Haw. Book VI. STRAINED RELATIONS Ÿ Pearl Buck Foundation v. Construing this provision. the petitioner must follow the laws which protect workers and uphold their security of tenure. Thus. 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. .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. Alpe Macalalad. Monina Lagman. NLRC (Alpe) Facts: Querimit. upon reaching sixty (60). 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. but still binds the Agency to provide them. . However. The SC affirmed the non-reinstatement. (latter) does not have to endure the continued service of . Sec. Anna Tetangco 37 . in lieu of reinstatement. But when they reported for work. Ÿ In such situation. and instead were told that they would be replaced “because [they] are already old. Querimit should be reinstated with backwages. "so that . . a case worker. Dianne Miano. the Board considered him terminated and paid his unused vacation leave and transportation expenses. Jon Santos. A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. 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. Heidi Soria. it would be an act of oppression to compel them to return to the status quo ante. NLRC (Alpe) Facts: Espejo worked as general manager for CISP. Ÿ There is likewise no basis for the NLRC ruling that Mrs. we held that an employee may retire. was terminated after borrowing money from the mother of one of her wards. (Union of Supervisors vs. Luna can still be reinstated because. There is also no abandonment. Sec. The dismissal was declared to be illegal but reinstatement was not awarded.” Issue: Was there an illegal dismissal? Held: Yes. Ÿ Commercial Motors Corp. although his previous position is now held by another. However. the petitioner's contention that Mrs. as an item of relief. However considering that petitioner has already reached the statutory retirement age of sixty (60). . agreement or policy an employee may be retired upon reaching the age of sixty (60) years." Ÿ Espejo v. they were not given new assignments. (the former) in whom it has lost confidence. v. 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. upon their reaching the retirement age. there is an unfilled position more or less of a similar nature as the one previously occupied. of Labor) situation where a peaceful relationship is not feasible. He was asking to be reinstated but this was denied. (the employee) can be spared the agony of having to work anew with . retirement pay or whatever else is provided under the CBA or employment contract. we agree with NLRC that petitioner is entitled only to backwages. however. Kristel Macatangay. . who in turn is not seeking reinstatement. Edlyn Santiago. He resigned but later withdrew his resignation. coupled w/ a clear absence of any intention of Irah Burog. and the . . or may be retired by his employer. of separation pay at the rate of one month's salary for every year of service. Ÿ It would seem. Monette Mesa. The relief and transfer order per se did not sever thte employment between the Agency and the complainants. . . There is moreover. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle. Ysan Castillo. (the employer) under an atmosphere of antipathy and antagonism. we cannot compel it to retain employees who commit violations of trust relationships. NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. which requires a deliberate and unjust refusal of an employee to resume his work. 13. NLRC therefore did not err in denying the reinstatement of petitioner. Jake Ng. The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. that the circumstances of this case render inappropriate Umlas' reinstatement to his former position. Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients.

but the NLF opposed the same. which they sought to enforce in the motion for execution was also their reinstatement. Ÿ As a necessary consequence for the illegal dismissal. However. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. reinstatement is no longer feasible. the complainants are entitled to reinstatement and backwages. That is human nature. hoping to obtain assistance. The latter do not pray for reinstatement. No supervening event rendering execution unjust can be considered. Jake Ng. Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. in fact. Dianne Miano. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. Otherwise. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. on the other hand. And it was NCF who caused a strain in the relation of the parties. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. The agency cannot reassign them to the Client.D. Charms Haw. antagonism is likely to have already caused a severe strain in the relationship between them. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. that they are so obnoxious to the person or business of the employer. Such refusal is indicative of strained relations. Monina Lagman. They reported to the Agency for reassignment several times but were not given any. though her contract does not require her to do so. There is no basis for the ruling of the NLRC. NCF stopped paying accrued salaries after three installments. the complainants. The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. should be such. Issue: Did the petitioners give up their claims for reinstatement? Held: No. Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. (Cabatulan v. Heidi Soria. For filing an LOA and not reporting to work that summer. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. Edlyn Santiago. teachers and personnel of the school. who in turn filed a complaint against the former for conducting an illegal strike. Thus. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. the employees moved for execution. was ordered to work during the summer. No strained relations should arise from a valid and legal act of asserting one’s right. about a month after Sibal’s termination. The subject of the compromise agreement was the reinstatement ordered by the ELA. MCCH decided to defer Irah Burog. He threatened to take drastic measures against her if she kept refusing to report for work the next summer. they refused to be reinstated. 176. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. for otherwise. which was part of her regular working program as a school nurse. Pending appeal. a school nurse at the Notre Dame of Greater Manila. Kristel Macatangay. separation pay is awarded in lieu of reinstatement. The school director claimed that the summer was the best time to update the students’ clinical records. neither was she compensated for the extra teaching job. after which the school served Sibal with a letter of termination effective immediately. 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. 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. The eventual replacement of Fr. Garcia for serious charges under P. Jon Santos. Therefore. she was not paid her vacation pay. which has recruited new security guards. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. backwages and damages against Naga College Foundation. Monette Mesa.Labor II returning to his or her work. The subject of the NLRC decision. moved for the ouster of the school director Fr. reinstatement. That complainants did not pray for reinstatement is not sufficient proof of abandonment. Ÿ Bascon v. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. refuse to accept other assignments. otherwise an employee who shall assert his right could be easily separated from the service. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC. Sibal filed a complaint for non-payment of compensation and vacation pay. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. Ysan Castillo. then entered into an agreement with NCF for reinstatement. backed by the Faculty Association. Howeer. and was also assigned to teach health during SY 1981-1982. and that she was not entitled to extra compensation for teaching. Buat) Ÿ Sibal v. Alpe Macalalad. tranquility which is an ideal atmosphere in every workplace. Anna Tetangco 38 .

Zenaida Uy. otherwise. Charms Haw. Heidi Soria. he filed for a 10-day emergency leave. He must therefore be paid separation pay of 1 month for every year of service instead. no strained relations should arise from a valid and legal act of asserting one’s right. The other involved parties have long been assigned in another area or are no longer connected with BPI. That is human nature. Neither can be construed as illegal acts. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). It has been almost a decade since the incident that led to Uy’s dismissal. is allowed. Ÿ Mere payment of severance pay. thereby using up all leaves he was entitled to for the year.. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Here. She also alleged sexual harrassment on the part of her Senior Manager. CA (Eds) Ÿ Irah Burog. an unjustly dismissed employee can never be reinstated. There now appears no basis for strained relations between the present management and Uy. Petitioners herein are nurse and nursing aide. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. MCCH issued a notice of investigation. Petitioners are entitled to reinstatement with full backwages. Anna Tetangco 39 . He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work. Here. He was told to report back for work. then an emergency leave. respectively. reinstatement is no longer possible. and thus. and that she could not transfer as there was no proper turnover of her accountabilities. Union members and officers staged mass actions inside the MCCH premises. Dianne Miano. But he is not entitled to reinstatement. Jake Ng. Jr. Dr. Before the expiration of the 12 day vacation leave.” This may be invoked against employees whose positions demand trust and confidence. especially in the light that the same was issued by his rival in the political arena. Kristel Macatangay. Otherwise. In order to be justly terminated. Ÿ Acesite Corp. the latter filed a notice of strike. 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. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. The medical certificate also proves that he was indisposed during the period in controversy. The principle of strained relations. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. Instead. cannot be applied indiscriminately. Monina Lagman.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA. which was denied. otherwise. Edlyn Santiago. whose position is one of trust and confidence.” and the phrase cannot be given an overarching interpretation. v. Issue: Was there illegal dismissal? Held: Yes. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Alpe Macalalad. he being in charge of the over-all security of the hotel. Sagum v. an ordinary striking worker must have participated in the commission of illegal acts during the strike. Uy refused. Ÿ In illegal dismissal cases. but he failed to do so. Besides. former teller of BPI. Branch to save on gas expenses. Petitioners denied receiving said orders. took a 4-day sick leave. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. She asked to be considered on leave since then. Upon being notified of the mass actions. and requested to be transferred to the Taft Ave. Gonzales was Chief of Security. Thus. and were subsequently terminated from employment. Mere allegation of strained relations to bar reinstatement is frowned upon. Laureano Gonzales. which she could not do so since she had been barred from entering the bank premises. who would not have helped him cover up his absences Ÿ BPI Employees Union v. 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. Jon Santos. then a 12-day vacation leave. have no prerogative in the operation of the business. Every labor dispute almost always result in “strained relations. which was not approved. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch. otherwise. Ysan Castillo. BPI (Eds) Facts: For shouting at her Senior Manager. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. There must be proof of such illegal acts. Monette Mesa. petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. then an order to desist from participating in the mass actions. 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. saying she would await the result of the grievance proceeding filed by her union. A complaint for illegal dismissal was filed. Issue: Was Gonzales illegally dismissed? Held: Yes. NLRC (Eds) Facts: Due to a severe stomach disorder. Leo Gonzales. or whose differences with their employer are of such nature or degree as to preclude reinstatement. however.

The finding by the CA of strained relations does not have any basis on the records. Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. On August 15. No. if feasible. Sagum’s dismissal was subsequently declared illegal. or separation pay. as evidenced by the subsequent judicial order releasing the articles seized during the search. Ÿ Employees illegally dismissed before March 21. Three days later. Number. Charms Haw. 1992. Jon Santos. The three year period wherein backwages are awarded must be included in the computation of separation pay. Monette Mesa. was being illegally manufactured. Here. de Jesus based her assigned work on a paper note posted by petitioners. As reviser/trimmer. Dianne Miano. argued and proven before the Labor Arbiter. Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. if reinstatement is no longer viable. de Jesus maintained that she merely committed a mistake in trimming P. 1992. 3853 allegedly required no trimming.NLRC (Charms) Facts: Private respondent Lourdes A. Sagum is correct that mere persistency in argument does not amount to proof. de Jesus is petitioners' reviser/trimmer since 1980. Edlyn Santiago. Anna Tetangco 40 . 3853 as it has the same style and design as P. was allegedly consistently being awarded majority of the printing contracts of IIEE. 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. No.. Alpe Macalalad. There are no hard facts upon which to base the application of the doctrine of strained relationship. an unjustly dismissed employee can never be reinstated. Reyes. 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. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes. Virgilio Reyes. not to mention the considerable length of time Reyes has been out of JDI’s employ. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. Inc. the principle of strained relations cannot be applied indiscriminately. One company. To protect labor's security of tenure.O. nonetheless. 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. and that such was being undertaken by JDI’s sales rep. who was the legal tenant of the apartment. 3853. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P.O. In her handwritten explanation. Heidi Soria. Ysan Castillo. Kristel Macatangay. filed a complaint for illegal dismissal against IIEE and its officers. they are entitled to either reinstatement.O. No. No. are entitled to backwages up to 3 years without deduction or qualification. Monina Lagman.O. a fraction of at least 6 months being considered as one whole year. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. In addition to backwages. DBR. Jake Ng. She was preventively suspended for 30 days. Moreover. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs. Reyes’ brother. packed and distributed. Every labor dispute almost always results in "strained relations. blended. Issue: Was there illegal dismissal? Held: Yes. Held: There was illegal dismissal. The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. terminated her from employment and sent her a notice of termination dated September 18. 1989. 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. especially where said employee holds a faithful and an untarnished twelveyear service record. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. de Jesus worked on P. otherwise. 3853 by trimming the cloths' ribs.O. Ÿ The existence of strained relations is a factual finding and should be initially raised. While an employer has the inherent right to discipline its employees.Labor II Facts: Marilyn Sagum. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. 279 of the Labor Code. reinstatement is not warranted. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils.O. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. The owner of said articles was Donato. 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. Petitioners' personnel department. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. but not for dishonesty or tampering. we have always held Irah Burog." and the phrase cannot be given an overarching interpretation. No. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v.

" from one of the balikbayan boxes inside the container yard. for some inexplicable reasons. 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. Edlyn Santiago. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. 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. the immediate execution of a reinstatement order. On 7 March 1990 Tanpiengco was assigned at Bodega I. on 28 October 1993. Monina Lagman. the employer has to inform the employee of his choice. The notification is based on practical considerations for without notice. The legislative intent is quite obvious." T-shirt valued at P100. 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. Heidi Soria. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. Container Services vs. Petitioner reported back to work but was prevented from entering the company premises. Monette Mesa. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. Thus. Ÿ Intl. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician. Kristel Macatangay. Negros Occidental. An award for reinstatement is self-executory. The fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation. 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. When it was time for him to clean himself he took his T-shirt which was hanging from a post.e. the NLRC failed to act on Tanpiengco's motion for the issuance of a writ to execute the Labor Arbiter's reinstatement order. he admitted to the investigating officer that he took the "Gesim Corp. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions. 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. Finding petitioner's explanation unsatisfactory. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. Falling to exercise the options in the alternative.00. i.. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory. Jon Santos. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp. Ÿ As a consequence of this. Held: The NLRC correctly labeled petitioner as a project employee. 1993. The reason is simple. but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. the employee has no way of knowing if he has to report for work or not. Dianne Miano. Jake Ng. even illegally. which he allegedly committed. On 30 April 1990. Alpe Macalalad. but they also ignored the due process requirement of the law.Labor II that this right must always be exercised humanely. private respondents. Anna Tetangco 41 . The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993. 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. 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.e. i. He was accosted by a security guard allegedly for behaving suspiciously. dishonesty and theft of property. In either instance. In the instant case. Held: There was illegal dismissal and therefore should be reinstated. tucked it at his waist and proceeded to the washroom. reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. meaning that it does not require a writ of execution much less a motion for its issuance. even pending appeal. 223 is clear that an award for Ÿ Kiamco vs. even if the employment contract signed by petitioner fixed the term of his employment. after a brief suspension. The provision of Art. the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. Tanpiengco has since then become a regular employee.. However. The Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco. On October 20. Ysan Castillo. According to petitioner. The Commission's inaction is a serious oversight for which it should be admonished. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages. An application for a writ of execution and its issuance could be delayed for numerous reasons. Charms Haw. to make an award of reinstatement immediately enforceable. Moreover. as maintained by petitioner.

is based simply on expectancy or his assumption that. Respondent Sadac theorized that he started with a monthly compensation of P12. Finally. on 10 August 1989. Book V of the Implementing Rules of the Labor Code. the amount of monetary award due respondent Sadac is P2. Alpe Macalalad. or by rightful expectation. The difference. private respondents should have retained his services until the actual completion of the project.00 or more than twice his original compensation. Per respondent Sadac’s computation. he posited. Heidi Soria. in a letter-petition to the Chairman of the Board of Directors. to the exclusion of the latter’s general salary increases and other claimed benefits which. however. and ultimately. qualify for the said increase later. petitioned for a change in leadership of the department. Ÿ Equitable Banking vs. and subsequently General Counsel thereof. Petitioner was specifically assigned to work in a particular project.59. In reaction thereto. 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. the Court had the opportunity to elucidate on the reason for the grant of backwages. including the general increases which he should have earned during the period of his illegal termination. Petitioner’s claim. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. 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.500. they held respondent Sadac’s dismissal illegal. it could terminate at any time the services of respondent Sadac. the total amount of the monetary award is P6. Kristel Macatangay.981. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. In several cases. Charms Haw. Anna Tetangco 42 .442. 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.00 in August 1981. Private respondents. thus. Jon Santos. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. when he was dismissed illegally. 26. Ysan Castillo. Jake Ng. his monthly compensation amounted to P29. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained.365. Consequently. Rule 138 of the Rules of Court. in the absence of any valid reason to terminate him. claiming that the association between the parties was one of a client-lawyer relationship. 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. inter alia. as in the case of one’s salary or wage. however. Edlyn Santiago. failed to show proof as to when the project was completed. Petitioner Bank disputed respondent Sadac’s computation. nine lawyers of petitioner Bank’s Legal Department. either by virtue of a lawful decree or order. accused respondent Sadac of abusive conduct. Rule XIV. 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. hence. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. we did not permit petitioner Bank to rely on Sec. Moreover.456. Irah Burog. As held by the Court of Appeals. Per its computation. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. 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.Labor II expiration thereof. therefore. On 9 November 1989. Pursuant thereto. As of November 1989. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. 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. were unsubstantiated. On 26 June 1989. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. After learning of the filing of the complaint. Therefore. and. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. 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. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. however. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. it maintained. In a previous SC decision. On the ground of lack of confidence in respondent Sadac. 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. as in the case of a wage increase under a wage order.98 only. Likewise.030. representing his backwages and other benefits. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. Monette Mesa. Dianne Miano. Monina Lagman. Such decision became final and executory. petitioner Bank be ordered forever released from liability under said judgment. petitioner Bank terminated the services of respondent Sadac. under the rules of client and lawyer relationship.

Anna Tetangco 43 . NLRC (Charms) Irah Burog.Purpose Ÿ Tomas Claudio Memorial College vs. NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. When private respondent became ill. 1991. they were. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. When private respondent reported for work. Accordingly. 1990. Monette Mesa. not merely probationary. Moreover. the Court held that petitioners are entitled to full backwages. she found out that her table. Moreover. It is not private compensation or damages. against herein petitioners before the Labor Arbiter. Nor is it a redress of a private right but. which pertain to compensation due the employee for services actually rendered before termination. private respondent invoked Article 283 of the Labor Code. Backwages. the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. etc. The NLRC reversed the decision of the Labor Arbiter. Theresa’s School vs. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. 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. the fact that the petitioners were allowed to continue working after the expiration of their employment contract was evidence of the necessity and desirability of their service to private respondent's business. Thus. Heidi Soria. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. rather. 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. Jake Ng. private respondent terminated petitioners' employment. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. Theresa's School of Novaliches Foundation. With the continuation of their employment beyond the original term. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. Nature . illegal dismissal. NLRC) Ÿ Viernes vs. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. the dismissal has been adjudged valid and lawful. Thus. Esther Reyes on a contract basis. On the other hand. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. 1991. petitioners separately filed complaints for illegal dismissal. 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. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. but awarded private respondent partial backwages. Dianne Miano. Backwages are generally granted on grounds of equity. Jon Santos. Monina Lagman. (General Baptist Bible College vs. Edlyn Santiago. Ysan Castillo. what was actually meant was unpaid salaries. on the other hand. therefore. Ÿ St. underpayment of wages and claim for indemnity against private respondent. Ÿ When the term "backwages" was used in the NLRC decision. 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 where. the employment of petitioners is no longer on a fixed term basis. refer to his supposed earnings had he not been illegally dismissed. but as regular employees. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. she went on a leave of absence with the approval by petitioner. Despite the expiration of their employment contract. On appeal. 1990. petitioners have become full-fledged regular employees. Charms Haw. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. Alpe Macalalad. entitled to be reinstated to their former position as regular employees. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. not on a probationary status. there is no vested right to salary increases. Kristel Macatangay. 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. According to the Court. It held that after October 31. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal. 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. The Labor Arbiter declared private respondent's dismissal as illegal and ordered her reinstated and paid full backwages and damages.Labor II In short. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. She instituted a complaint for unfair labor practice. The Labor Arbiter dismissed the complaints. She hired private respondent. petitioners were allowed by the private respondent to work until January 2. On January 3.

Juanon rendered a decision dismissing the complaint for lack of merit due to the absence of an employer-employee relationship between petitioner and private respondent. The 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. premium pay for holiday and rest day. sent a Memorandum to the private respondent informing him that his employment was already terminated. he is deemed to have opted for Irah Burog. 1996. It is a form of relief that restores the income lost by reason of unlawful dismissal. 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. Kristel Macatangay. 5251. allowances and damages. earn any income. 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.Labor II Facts: Sometime in 1983. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. In time. in the interim. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. 6425). Thus. earn any income. otherwise she would be unjustly enriching herself at the expense of the employer. The private respondent has not yet been convicted by final judgment in Criminal Case No. Indeed. 1996 up to July 5. he is presumed innocent until his guilt is proved beyond reasonable doubt. NLRC (Charms) Facts: In a complaint filed before the NLRC. underpayment of salary. respondent was detained from June 10. he was promoted as "Liaison Officer" of the school with the Department of Education. While it may be true that on June 11. The petitioner insists that backwages should not and cannot be awarded to the private respondent. The award of backwages is not conditioned on the employee’s ability or inability to. through its president. legal holiday pay. there can be no backwages even if she was denied due process. Alpe Macalalad. and from November 21. Dianne Miano. the private respondent was arrested by the Morong police authorities. 1996. non-payment of overtime pay. NLRC. On June 10. been entitled to reinstatement as a consequence of his illegal dismissal from employment. petitioner charged private respondent Emmanuel Lo with unfair labor practice. Conformably then with Article 279 of the Labor Code. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. the private respondent was detained in Criminal Case No. 1997 for violations of the Dangerous Drugs Act. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. It is not a private compensation or damages. 5137. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. The award of backwages is not conditioned on the employee's ability or inability to. 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. The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail. 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 violation of the Dangerous Drugs Act (Republic Act No. since it would include that period of time when the latter was in jail. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. without any warrant therefor. hence entitled to separation pay. but rejected the charge of unfair labor practice and dismissed. Monette Mesa. and non-payment of wages or commission and separation pay. 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. Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. The private respondent would thereby be enriching himself at the expense of the petitioner. where it held that when the employee's dismissal is for a just cause. Trinidad. Aladdin F. for lack of merit. Heidi Soria. Jake Ng. Ÿ The payment of backwages is generally granted on the ground of equity. likewise. inclusive of allowances. Jon Santos. Labor Arbiter Dennis D. 1996 until the judgment of the CA shall have become final and executory. by expressly asking for separation pay. Nor is it a redress of a private right. However. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. In the interim. Held: Grant of backwages proper. 1996 to February 17. A criminal complaint was later filed against him. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. Charms Haw. This is because the private. back wages. Ysan Castillo. in the interim. after appropriate proceedings. On 7 August 1992. Rizal. Petitioner would have. petitioner's other monetary claims. but is awarded in furtherance and effectuation of the public objective of the Labor Code. 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. Edlyn Santiago. Monina Lagman. the petitioner. illegal dismissal. Anna Tetangco 44 . 1996.

In the event that reinstatement is no longer possible. in the interest of substantial justice. These twin requirements of notice and hearing were undeniably absent in the case at bar. plumber. Dianne Miano. law and jurisprudence authorize a tribunal to consider errors. Rules of procedure are mere tools designed to facilitate the attainment of justice. and the filing of this case. Jake Ng. In other words. Charms Haw. Monina Lagman. who is legally entitled thereto having been illegally dismissed. as in this case. 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. Period. Anna Tetangco 45 . with respect to the activity in which they are employed. A contrary view would breed idleness. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages. although Dagui did not bring any appeal regarding the matter. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. The award of separation pay is in lieu of reinstatement and not of backwages. Alpe Macalalad. Likewise. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. amounts to a "plain error" which we may rectify in this petition. in mitigation of the damages that the dismissed respondents are entitled to. Both bear the Irah Burog. As regards separation pay. whether continuous or broken. To be reckoned for the former is the period of putative service. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. vs. Ysan Castillo. Jon Santos. even if they are not assigned as errors on appeal. And these. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. Monette Mesa. remain inactive in the expectation that a windfall would come to him. The Supreme Court is clothed with ample authority to review matters. Heidi Soria. Suddenly. an illegally dismissed employee is entitled to (1) either reinstatement. We are prompted to give out this last reminder because it is really unjust that a discharged employee should. the deduction should be made up to the time judgment becomes final.Labor II separation pay in lieu of reinstatement. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. Held: Yes to both. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. Besides.Computation Ÿ First. 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. They are separate and distinct from each other." Second. Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. 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. if viable. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter. the employer said "Wala ka nang trabaho mula ngayon. Dagui was dismissed. In this case. and (2) those who have rendered at least one year of service. however. beginning 1953 until 1982. and (3) clerical errors. (2) plain errors not specified. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. that is. carpenter." on the alleged ground that his work was unsatisfactory. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. although unassigned. Kristel Macatangay. Thus. separation pay is awarded to the employee. Ÿ The Court. with folded arms. 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. This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. and (2) backwages. without giving him any written notice informing the cause for his termination. or separation pay if reinstatement is no longer viable. it is conducive to lack of initiative on the part of a laborer. 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. Effect Failure to Order Ÿ Aurora Land etc. The jobs assigned to private respondent as maintenance man. No backwages were awarded. Edlyn Santiago. Should the laborer decide that it is preferable not to return to work. there is the "law's abhorrence for double compensation. There are two kinds of regular employees.

11 months and 15 days in the case at bar) "without further qualifications. Ÿ TEEHANKEE. 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. should be deducted from the liability of the employer to him for back wages. J. the period was based on the remainder of the 4 year prescriptive period). eleven months.. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms. (Mercury Drug vs. vs. 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. although within the prescriptive period. dissenting opinion:(Mercury Drug rule) I dissent. Alpe Macalalad. he dissents as to the period of computation. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period. Jon Santos. As to the amount of backwages. Co. On the other hand. J. 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. Edlyn Santiago. Anna Tetangco 46 . the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. 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. 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. is four years. generally led to long delays in the execution of the decision for back wages and reinstatement. the Court applies the precedent recently set in Mercury Drug. 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. Kristel Macatangay." that is to say. 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. Dianne Miano.As has been noted. Monette Mesa. As observed by the Court in another case. As aforestated. reasonable and mutually beneficial solution. from the specific result in the Ÿ *** Basically. 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. Heidi Soria. Monina Lagman. which may delay the execution of the decision. The period of delay in instituting this ULP charge with claim for reinstatement and back wages.. as noted in the main opinion. However. 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. however. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. CIR 1974) arbitrary procedures (in the Mercury case. 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. 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. Jake Ng. and fifteen days without further disqualifications. Charms Haw. He suggested that instead of Irah Burog.Labor II stamp of undesirability. Itogon-Suyoc vs. 1961. Such general awards. Rationale. Ysan Castillo. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. and obviates the twin evils of idleness on the part of the employee who would "with folded arms. 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.

Normally. supra. Charms Haw. and decision in this Court). 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. In addition. Thus. 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). Ysan Castillo. 1964 and its en banc resolution of February 25. 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. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). should be deducted therefrom. and that was. the law abhors double compensation. Only in one case was backpay a matter of right.g. Ÿ However. Hence. petitioners had the burden of proving that the termination of their services was legal. History of the different methods in the computation of backwages. Kristel Macatangay. Heidi Soria. the Industrial Peace Act. Jake Ng. 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.. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17. 11 months and 15 days . 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. All the private respondents. Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not. 1964 denying petitioner's motion for reconsideration. 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. except Roland Picart and Lucia Chan.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. Edlyn Santiago. 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. Thus. 875. in the opinion of the Court of Industrial Relations (CIR). 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. Consequently. Alpe Macalalad. NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. 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. they cannot be removed from their positions unless for cause. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer. a) The first labor relations law governing the award of backwages was Republic Act No. signed contracts of employment with petitioner for a fixed duration. In accordance with these provisions. Anna Tetangco 47 . 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. Here. 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. they were notified of petitioners' decision not to renew their contracts anymore. when it is considered that he pursued — with vigor his complaint after its filing on April 25. when an employer had declared a Ÿ Irah Burog. Monette Mesa. in ascertaining the total amount of backwages payable to them. As probationary employees. they are likewise protected by the security of tenure provision of the Constitution. Due to the expiration of private respondents' contracts and their poor performance as teachers. such was necessary to effectuate the policies of the Industrial Peace Act. The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts.. 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. Dianne Miano. oppression or dilatory appeals) on the employer's part.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. if any. Jon Santos. a case for illegal dismissal was filed. Monina Lagman. as stressed in East Asiatic Co. Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. there was no illegal dismissal. Ÿ Pines City Educational Center vs. etc.

among them. Heidi Soria. qualified the provision under P. 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. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. et al. Security of Tenure. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed.D.D. A survey of cases from 1974 until 1989.In order not to unduly delay the disposition of illegal dismissal cases. b) Mercury Drug rule. 6715 took effect. 279. as amended. in effect. above-quoted. Feati University (1974) and others. depending on several circumstances. backwages to be awarded to an illegally dismissed employee. 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. 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. Jon Santos. 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. No.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. the Court enforced the Mercury Drug rule and. and during the effectivity of P. when the amendatory law to P. 875. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. 442 was still the Mercury Drug rule. Monette Mesa. however. should not. R. Jake Ng. No. In sum. 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. Ysan Castillo. CIR. This notwithstanding. In an even later case (1987). the CIR increased or diminished the award of backpay. Inc. Its posture on the award of backwages. was expressed as follows: “ART. . 442) had taken effect. 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. 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. 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. amending the Labor Code.A. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. Edlyn Santiago. inclusive of allowances. Kristel Macatangay. v. 6715 took effect. (See Itogon-Suyoc case). Charms Haw. 6715. 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.D. was nonetheless followed in said case. the good faith of the employer. et al. among them. Thus. 442. as a general rule. 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. in the exercise of its jurisdiction. After the Labor Code (P. — . Republic Act No. supports this conclusion. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. — In case of regular employment. it became mandatory to award backwages to illegally dismissed regular employees. the employee's employment in other establishments during the period of illegal dismissal. 442 (the Labor Code of the Philippines). to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). 442. without qualification or deduction. No.. However. Alpe Macalalad. namely. No. Anna Tetangco 48 . 279.D. Act No. In labor cases decided during the effectivity of R.D. . This ruling was grounded upon considerations of expediency in the execution of the decision. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep. e) On 21 March 1989. No. 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. Dianne Miano.A No. (italics supplied). during the effectivity of P. 442 by limiting the award of backwages to three (3) years. Security of Tenure. Feati University Faculty Club (PAFLU) v.. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee.The proposal on the threeyear backwages was subsequently adopted in later cases. d) Then came Presidential Decree No. the rule generally applied by the Court after the promulgation of the Mercury Drug case." However. 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. this Court found occasion in the case of Mercury Drug Co." Under the abovequoted provision. Article 279 thereof states in part: “ART." (italics supplied) In accordance with the above provision. Monina Lagman. The Court deems it appropriate. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). the award of backwages equivalent to three (3) years.

it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls . 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. NLRC. as amended by Republic Act No. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance. where reinstatement is adjudged. during said periods." Thus.e. Respondent issued to petitioner a letter. as amended by Republic Act No. Kristel Macatangay. However. must be applied without attempted or strained interpretation. Clearly. a closer adherence to the legislative policy behind Rep. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Heidi Soria. which took effect just five (5) days after Soriano was promulgated. The underlying reason for this ruling is that the employee.Labor II during the period of his illegal dismissal. that a written notice is issued by the subject's immediate supervisor. 6715 points to "full backwages" as meaning exactly that. Charms Haw. Act No. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. inclusive of allowances. Gentallan. 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. and finally. Dianne Miano. Monette Mesa. Atienza. as confirmed by the head of office. 6715.All that the 1989 and 1991 medical certifications established is that. plain and free from ambiguity and. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. Act No. First. Alpe Macalalad. describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. However. therefore. that another notice is issued by the appointing authority or head of office. The clear legislative intent of the amendment in Rep. Jon Santos.1996 Ÿ Romagos vs. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. second. Ÿ However. 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. Bustamante vs. respondent sufficiently established that petitioner suffers from a mental disorder. 6715. It may appear that Article 279 of the Labor Code. third.. Rep. must still earn a living to support himself and family. that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. 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. 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. Issue: Whether there was proper procedure and substantial basis for MCWD to declare Romagos mentally unfit to work and drop her from the rolls. that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. Zip Venetian Blind and the later decision in 1989 of Soriano v. 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. 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. 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. In other words. However. Act No. 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. the following elements and process must obtain: first. Anna Tetangco 49 . requiring her to undergo psychiatric evaluation. Jake Ng. whether the Labor Arbiter correctly awarded full backwages to Timbal. i. 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. Such a doctrine is admittedly supported by the early case of National Labor Union v. while litigating the legality (illegality) of his dismissal. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule. the provision calling for "full backwages" to illegally dismissed employees is clear. Thus. petitioner was diagnosed to be suffering from Major Depression. but Ÿ Irah Burog. Monina Lagman. We now turn to the second issue raised. Edlyn Santiago. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. informing the subject of his separation from the service due to mental incapacity. before an officer or employee may be dropped from the rolls for mental incapacity. Ysan Castillo.

1995. Del Monte vs. Mere absence or failure to report for work. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. Hence. Standard Electric Employees Union (Jake) Facts: On July 31. Alpe Macalalad. Now. 1989. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. in contemplation of the law. 1995 cannot be deemed as an abandonment of his work. An illegally dismissed employee who.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. 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. NLRC (Jake) Facts: On January 5. On August 9. and (b) for committing rape. Charms Haw. Ysan Castillo. 1989 up to the time of her reinstatement. with the second element being the more determinative factor. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. Held: As regular employees. when respondent Javier was freed on May 24. never left his office. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. 1995. respondent E & R security agency hired petitioner Chona P.ð Standard Electric vs. The complainants further contended that they were coerced and intimidated into signing letters of resignation. 1989. 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. Jake Ng. Anna Tetangco 50 . Kristel Macatangay. Dianne Miano. 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. In the recent ruling of the Court. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position.Labor II perhaps Republic Act No. In the instant case. willful. Moreover. two requisites must concur: first. 1989. Abandonment as a just ground for dismissal requires clear. the reckoning point for the grant of backwages started therefrom. and second. 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. 1996 by virtue of the judgment of acquittal dated May 17. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. Edlyn Santiago. 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. 1995. with full backwages from the time she was placed under preventive suspension on October 27. 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. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. he was arrested and detained for the charge of rape upon complaint of his neighbor. and considering that they were illegally dismissed. 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. CA (Jake) Facts: The employees alleged that they were illegally dismissed. Jon Santos. Held: The amount of P 105.396. the private respondents should be reinstated. To constitute as such. Genalyn Barotilla. Monina Lagman. deliberate. Monette Mesa. even after notice to return. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. KPI thereby engaged in ULP. Ÿ Kay Products vs. is not tantamount to abandonment. 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. and unjustified refusal of the employee to resume his employment. hence. 1996. he immediately proceeded to the petitioner but was not accepted back to work. 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. He failed to notify the SEMC of the reason for his absences. On November 10. the employee must have failed to report for work or must have been absent without valid or justifiable reason. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. Saldiar (2007) Ÿ Torres vs. Heidi Soria. 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.# On November 27. we said that the rule enunciated in Pines Cityð no longer controls. Torres as a security guard. Javier failed to report for work. Held: Respondent Javier’s absence from August 9.

1999. 1995 to December 30. However. His employment was coterminous with the completion of the projects for which he had been hired. Held: These factual findings of the NLRC. Furthermore. Reinstatement of petitioners with backwages is thus called for. Charms Haw. The position of Vice-President continued to exist. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. And as far as Filomeno and Clarita Lantion are concerned.000. Anna Tetangco 51 . NLRC (Jake) Facts: On 10 November 1983. were not religiously followed. petitioners implemented Irah Burog. Filomeno's sister-in-law. he was already 64 years old. pursuant to our ruling in Agabon. that his work was not dependent on the completion or termination of any project. that since his work was not dependent on any project. Thus. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. his employment with the petitioner company was continuous and without interruption for the past ten years. cost-cutting measures resulting in the termination from the service of their employees. the general manager then of petitioner. 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. Ÿ We rule that the Court of Appeals erred in awarding him such backwages.Labor II Petitioner Filsystems. While petitioner Fuentes.00 as separation pay. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. a corporation engaged in construction business. he should be paid P160. Petitioner Clarita Lantion. Monina Lagman. On 25 March 1985. She was replaced by another faculty member.00. Alpe Macalalad. on June 12. therefore. Edlyn Santiago. with a monthly salary of P80. Finance. Benedicto was terminated from his position. Kristel Macatangay. in case of retrenchment to prevent losses. Ÿ Without a valid cause. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. Held: That retrenchment was proper. Benedicto (Jake) Facts: In 1993. Clarita's position was neither abolished. however. petitioner regularly submitted to the labor department reports of the termination of services of project workers. Inc. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. before the NLRC. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. 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). Monette Mesa. Under Article 283. dated 9 November 1983. and Management effective 1 June 1984. 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. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. Ysan Castillo. petitioner Filomeno Lantion received a letter. Jon Santos. Heidi Soria. respondent Obed Jose Meneses.000 plus 1% commission from collections of all advertising contracts consummated. the compulsory retirement age under the law. Petitioners were not rehired although they fall outside the exception provided. he was dismissed from his employment allegedly because he was a project employee. petitioners filed their Complaint against the University and its President. at that time the president of petitioner. 1989. confirmed by the CA. 1994 signed by Tomas Gomez III.. an authorized cause. the employment of project employees cannot be terminated prior to expiration. wife of Filomeno. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. Dianne Miano. Held: The dismissal of respondent from the service is by reason of retrenchment. Ÿ Intercontinental Broadcasting vs. Such compliance with the reportorial requirement confirms that respondent was a project employee. 1994. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Effect Inflation Ÿ Lantion vs. or from June 1. including respondent. In a letter dated October 11. The labor arbiter concluded that Benedicto was illegally dismissed. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. there can be no question. Otherwise. as marketing manager with a monthly compensation of P20.000.000. that on October 1. their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. was terminated as Secretary to the Legal Office on 21 November 1983. 1998. The conditions laid down. Reynaldo Benedicto was appointed by Ceferino Basilio. they shall be entitled to reinstatement with full back wages. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. which we fix at P20. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. Jake Ng. When Benedicto was illegally dismissed on October 11. Since he was employed by petitioners for four years.00. are binding on us since they are supported by substantial evidence. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects.

a traffic operator of the Philippine Long Distance Telephone Company. respondent company. 14. were immediately returned to the student-leaders for proper reimbursement to the students concerned. an offense involving moral turpitude . for equity finds no room for application where there is law. was accused by two complainants of having demanded and received from them the total amount of P3. Monette Mesa. Jon Santos. Investigated and heard." As a general rule. NLRC (Jake) Facts: Marilyn Abucay. Anna Tetangco 52 . but for the canvass of the price of the religious items as well. Petitioner's employment records show that respondent company. she was found guilty as charged and accordingly separated from the service. The fact that she has worked with the PLDT for more than a decade. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. it would be petitioner Salavarria. the fact that the same was approved or indorsed by petitioner. being ethical rather than jural and belonging to the sphere of morals than of law. If regarded as a justification for moderating the penalty of dismissal.00 as "severance pay" which is synonymous with "separation pay. on various dates. In PLDT v. Monina Lagman.Labor II inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities. Dianne Miano. the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay. after initial purchases were made. .800. equity considerations provide an exception. . FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs. Edlyn Santiago. Moreover. maintaining that he was responsible. regardless of who initiated the collections.. one of her students. After consideration of the evidence and arguments of the parties. Inc. who attested to the veracity of the former's assertion. petitioner relied principally on a letter written by Ÿ Gustilo vs. Ysan Castillo. Where the reason for the valid dismissal is. Gustilo. Ÿ Salavarria vs.00 in consideration of her promise to facilitate approval of their applications for telephone installation. the employer may not be required to give the dismissed employee separation pay. equity has been defined as justice outside law. if it is to be considered at all. 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. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. or financial assistance. Held: We hold that the grant of separation pay in the case at bar is unjustified. for example. made her "in effect the author of the project. on the ground of social justice. 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. was employed by Wyeth Philippines. or whatever other name it is called. as a pharmaceutical territory manager. habitual intoxication or an offense involving moral turpitude. Ÿ Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. 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. Heidi Soria. Further. an employee who is dismissed for cause is not entitled to any financial assistance. it will actually become a prize for disloyalty." Petitioner's infraction of a school policy warrants her dismissal. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. However. . Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. 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 private respondent has been dismissed for dishonesty. having been effected without just cause. She went to the Ministry of Labor and Employment claiming she had been illegally removed. the employer may not be required to give the dismissed Irah Burog. 10. 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. . In support of this claim. reprimanded and suspended him for habitually neglecting to submit his periodic reports. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. Redentor Salonga. .000. Hence. 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. Alpe Macalalad. Jake Ng. petitioner pleaded that she never misappropriated the money collected and whatever was left of it. petitioner. Charms Haw. It is grounded on the precepts of conscience and not on any sanction of positive law. not only for the collection of the contributions. like theft or illicit sexual relations with a fellow worker. Where the reason for the valid dismissal is. Kristel Macatangay. NLRC. Wyeth Philippines (Kristel) Facts: Alan D..

The union staged a strike. It is grounded on the precepts of conscience and not on any sanction of positive law. In our view. 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. that it would appear that he had served the company well. Charms Haw. working on board ship for almost 24 years. or whatever other name it is called. via the principle of "compassionate justice" for the working class. Jake Ng. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. Inc. on the ground of social justice.Labor II employee separation pay. he shall not be entitled to termination pay without prejudice to applicable collective bargaining agreement or voluntary employer policy or practice. the grant by the Court of separation benefits is hardly justifiable. that he had given to the company the best years of his youth. Kristel Macatangay. if supported by substantial evidence. and that he was not authorized to accept payment. 15 Separation pay in such case is granted to stand as a "measure of social justice.. 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. Although meriting termination of employment. however. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. (2) dishonest or unauthorized activity whether for personal gain or not. Inc. or financial assistance. Alpe Macalalad. with these special circumstances. Heidi Soria. Such findings. he preferred to stay home rather than risk further working in a ship at sea. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline. hence the retirement benefits he would receive would ease his financial burden. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. Dianne Miano. NLRC (Kristel) Facts: Dumaguete Cathedral College. Ÿ Pangasinan Electric Coop vs. He was dismissed from service. 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. and (3) defrauding others by using the name of the company. Hence. Moreover. Sedan sent a letter to petitioners applying for optional retirement." 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. These circumstances indubitably merit equitable concessions. for equity finds no room for application where there is law. Weighed on the scales of justice. being ethical rather than jural and belonging to the sphere of morals than of law. Equity has been defined as justice outside law. In this case. Rule I. we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. The fact that private Ÿ Eastern Shipping Lines vs. Ÿ Pinero vs. Equity considerations. 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. (CENPELCO). and certain acts tantamount to serious misconduct. namely: (1) unauthorized acceptance of payments for new connection. but that considering his age and health. Monina Lagman. and Irah Burog. that in those years there was not a single report of him transgressing any of the company rules and regulations. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer. he has no previous derogatory records. Piñero's infraction is not so reprehensible nor unscrupulous as to warrant complete disregard of his long years of service. that he denies receiving the telegram asking him to report back to work. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. 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. Monette Mesa. Sedan (Kristel) Facts: Petitioners hired on a per-voyage basis private respondent Dioscoro Sedan as 3rd marine engineer and oiler in one of the vessels owned by petitioners. In this instance. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. Anna Tetangco 53 . are accorded respect and even finality by this Court. citing as reason the death of his only daughter. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. Jon Santos. Ysan Castillo. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules.This was not granted despite several demands. an educational institution. NLRC (Kristel) Facts: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. provide an exception. Edlyn Santiago. 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 Section 7.

or whatever other name it is called. Soco vs. Nestle Philippines. for serious misconduct) is legally indefensible. NLRC (Kristel) Facts: Petitioner. vs. Ysan Castillo. Bulacan. declared a strike against the private respondent company. No. who was then the personnel and administrative manager of the company. vs. Jake Ng. Labor Code. Construction Corp vs. . Lariosa. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. NLRC.) Ÿ Chua vs. 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. At best it may mitigate the penalty but it certainly will not condone the offense. (2) redundancy. Filipro. 148 SCRA 526. for having physically assaulted and verbally abused. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. (Emphasis supplied. within full view and hearing of the other employees. as a janitor and later promoted to Leadsman. 80609. betrayal of the company. Where the reason for the valid dismissal is. Petitioner received a notice Irah Burog. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. in our view of this case. does not call for such award of benefits. 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. 148 SCRA 187. an accounts payable clerk. NLRC (Kristel) Facts: Union of Filipro Employees. It contravenes Rule 1. dismissed the private respondent Eduardo Malabanan. the employer may not be required to give the dismissed employee separation pay. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. of which petitioner Benito D. Mercantile Corp. 145 SCRA 123). 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. One truck. Jon Santos. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. Book VI of the Omnibus Rules Implementing the Labor Code. although the employee was lawfully dismissed. several of the striking employees threw stones at the trucks entering and leaving the company premises. (Articles 283 and 284. of the Philippines vs. where We held that: ". Anna Tetangco 54 . whose driver was rendered unconscious by a stone hitting him on the head. Dianne Miano. During the strike. Heidi Soria. 7. habitual intoxication or an offense involving moral turpitude.R. It placed the complainant under preventive suspension for thirty (30) days." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. of Davao. Chua was a member. like theft or illicit sexual relations with a fellow worker. he is not entitled to separation pay. . on the ground of social justice. and thereafter terminated his employment Ÿ It is true that in some earlier cases. August 23. 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. The company found him guilty of stealing or unauthorized taking of company property. . Monette Mesa. or financial assistance. having the main duty of removing and/or changing damaged flexbeams on the expressway. Edlyn Santiago. Not Allowed Ÿ Phil. Monina Lagman. 1988. like the workers who have tainted the cause of labor with the blemishes of their own character. for example. after due notice. Mariano Lopingco. and hearing. Both declared that the items were deposited there by Manreza and his companions. Kristel Macatangay. . Ÿ Eastern Paper Mills vs. a superior officer. Alpe Macalalad. The only cases when separation pay shall be paid. NLRC and Marilyn Bucay. 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. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. (3) retrenchment. Inc. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. Inc. 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. (4) cessation of the employer's business. 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. On May 24. investigation. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. and also in the house of Nene Enriquez. Sec. 1983. are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. G. Plaridel. Charms Haw. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. such gesture will actually become a prize for disloyalty. since his violation reflects a regrettable lack of loyalty and worse.

Anna Tetangco 55 . vacation leave. thus: Pursuant to the CBA. in addition to his full backwages. Unless annulled. whichever is higher. . as a contract governing the employer and the employees respecting the terms of employment. like theft or illicit sexual relations with a fellow worker. administer. workers affected would be entitled to termination pay as provided by the Labor Code. Sulpico Liner (Heidi) 14. The parties opted to be bound by the provisions of the Labor Code and not by company policy. and other benefits. Monette Mesa. 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. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. A contrary rule would. have the effect of rewarding rather than punishing the erring employee for his offense . 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. they should have rejected the CBA. In the case at bar. without the NFL initiating the revision thereof. hours of work and all other terms and conditions of employment in the bargaining unit. whichever is higher. a letter to DOLE. on the ground of social justice. accordingly. . antagonism has caused a severe strain in their relationship. 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. A fraction of at least 6 months shall be considered 1 whole year. specifically for planting rubber trees. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. develop. and improve the rubber plantations of ARCI as an agro-industrial development project. 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. Ÿ Irah Burog. Jon Santos. NFL was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in a rubber plantation. During the negotiations. Etcuban vs. habitual intoxication or an offense involving moral turpitude. respecting the terminations was sent by SDPI. Charms Haw. in relation to the Labor Code of the Philippines. Where the reason for the valid dismissal is. Dianne Miano. constituted serious misconduct on his part. Heidi Soria. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. 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.11 SEPARATION PAY When Alternative Ÿ Although Vital. Meanwhile. permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. should prevail. vs. or whatever other name it is called. Alpe Macalalad. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits. Ysan Castillo. unused sick leave and other benefits.Labor II of dismissal from private respondent for having participated in the illegal strike. Edlyn Santiago. which strike resulted in multiple deaths and extensive property damage. . CA (Heidi) Facts: SDPI was given the right to manage. the CBA. allowances. and other benefits which were all lumped in one Metrobank check. cultivate. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL. processing of and marketing of its products and providing technical expertise. petitioner's participation in the unlawful and violent strike. or financial assistance. who was illegally dismissed. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. the Comprehensive Agrarian Reform Law (CARL) took effect. During the effectivity of the FMA between ARCI and SDPI. is entitled to reinstatement. 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. Jake Ng. Vital) Ÿ National Federation of Labor vs. Kristel Macatangay. the employer may not be required to give the dismissed employee separation pay. the parties. Simultaneously. for example. Consequently. as the petitioner correctly argues. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. However. SDPI served formal notices of termination to all the employees of the plantation. 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. (Coca-cola Bottlers Phils. Monina Lagman.

1998. 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. the NLRC and the Court of Appeals. Monina Lagman. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. In Hinatuan Mining Corporation and/or the Manager v. On Aug. an employee who voluntarily resigns may not be granted separation pay. retirement is not also a ground for the grant of separation pay. Dianne Miano. 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. Consequently. there is an exception. 10. NLRC and Margo Batister. It also informed him of his immediate preventive suspension until further notice. separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. Hanford denied Joseph's request on the ground that under the Labor Code. Joseph (Heidi) Facts: On July 17. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement. the newly designated jefe de viaje of the ship. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. the general rule is that an employee who voluntarily resigns is not entitled to separation pay. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees." such as voluntary resignation. 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. (d) closing or cessation of business operations. On June 30. On Nov. "separation from the company without cause. Inasmuch as reason for which the petitioner was validly separated involves his integrity. Our ruling in Philippine National Construction vs. he filed a complaint against the respondent for illegal dismissal. Barely a week after the petitioner's preventive suspension and pending his administrative investigation. 2 which petitioner accepted the following day.Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. Later. (b) redundancy. 1994 for loss of trust and confidence. and those whose services are terminated due to suspension or cessation of operation. Under the Labor Code. among others. employees or workers who may be separated without cause. NLRC finds application here. 1978. 1998. Irah Burog. Moreover. as in this case. Monette Mesa. Kristel Macatangay. Hanford then paid Joseph her last salary. which is especially required for the position of purser. then he is entitled to a separation pay. 1978 until his dismissal on June 10. Ÿ In the instant case. Alpe Macalalad.. 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). Sometime in 1994. 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. respondent voluntarily tendered her resignation effective September 17. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. as in fact. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. Jake Ng. thus: "In the interpretation of an employer's program providing for separation benefits. it is very clear from the CBA that when an employee or worker voluntarily resigns due to." 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. If petitioners could be liberal to those employees who retired. in a surprise examination. discovered irregularities in the issuance of passage tickets. all doubts should be construed in favor of labor. that is. (c) retrenchment. 19. As aptly held by the Labor Arbiter. grant of separation pay. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years.00. Edlyn Santiago. the Court is constrained to deny the same. however. At the time of his dismissal. non-payment of overtime pay. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. After all. he is not worthy of compassion as to deserve at least separation pay for his length of service." Ÿ Hanford Phil. Jon Santos. we held that while it is true that under the Labor Code. Under the Code. Charms Haw. Ysan Castillo. Hanford hired Shirley Joseph as a sewer. 13th month pay and other monetary benefits with the regional arbitrator. Anna Tetangco 56 .000. 13th month pay and the cash conversion of her unused vacation and sick leave. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. 1998. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company. Heidi Soria. Anent the petitioner's request for separation pay. 1986. vs.

a reward or recompense for services performed. however. Therefore. but rather.". 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. unequal treatment of employees.. In the case before us. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical. Indeed. 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 . during the life of the petitioner corporation. petitioners discriminated against them. The law. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay. Art. its remaining employees were separated and given the equivalent of 12. or commission basis. Davao Del Norte. However. its vital lifeblood — its cashflow — literally dries up. or other method of calculating the Irah Burog. Alpe Macalalad. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. 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. "wage" is defined in letter (f) as the remuneration or earnings. Jon Santos. 248 (e) of said Code. "What exactly does the term connote?" We correlate Art. which policy had been in force in the years prior to its closure. unfair and most revolting to the conscience. 97 of the same Code on definition of terms. Edlyn Santiago. the employees had to collect their salaries at a bank in Tagum.e.5 days' pay for every year of service. Ÿ In case of retrenchment to prevent losses. However. Specifically. Under the facts and circumstances of the present case. authorizes neither oppression nor self-destruction of the employer. one cannot squeeze blood out of a dry stone. for obvious reasons. in addition to the commutation to cash of their unused vacation and sick leaves.. Heidi Soria.e. from the beginning of its operations in 1981 until its closure in 1992. in protecting the rights of the laborer.5-days' worth at that. it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. the basis for the claim of the additional separation benefit of 17. Dianne Miano. upon its death as a going business concern.e. computed on their basic monthly pay. Accordingly. by denying the same separation benefits to private respondents and the others similarly situated. they lodged a complaint for separation pay differentials. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation. out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. Monina Lagman. But when a business enterprise completely ceases operations. 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.5 days is alleged discrimination. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. i. 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. whichever is higher. In the case of North Davao. Moreover. Where. piece. Jake Ng. petitioners were given separation pay. it had been giving separation pay equivalent to 30 days' pay for every year of service. As a going concern. this arrangement lasted from 1981 up to 1990. Nor water out of parched land. which is proscribed as an unfair labor practice by Art. the grant of a lesser amount of separation pay to private respondent was done. Respondents contend that. it appears that.Labor II North Davao completely ceased operations in May 31. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive. managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. Since the law speaks of "pay. 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. capable of being expressed in terms of money. i.. however designated. Ysan Castillo. not by reason of discrimination. its cash flow could still have sustained the payment of such separation benefits. As already stated. Stated differently." Both words (as well as salary) generally refer to one and the same meaning. i. 283 with Art. Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof. whether fixed or ascertained on a time. the closure was due to business losses — as in the instant case. ." the question arises. . "Pay" is not defined therein but "wage. Anna Tetangco 57 . 1992 due to serious business reverses. Computation Ÿ Millares vs. Monette Mesa. should have elicited admiration instead of condemnation. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems. task. 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. When it ceased operations. Charms Haw. Ÿ Art. respondents tenaciously insist on the award of separation pay. Art. Kristel Macatangay.

Labor II same. not personally liable for their official acts. Ransom Labor Union-CCLU v. lodging or other facilities. In the case of the housing allowance. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. which held that since a corporation is an artificial person. Ysan Castillo. as determined by the Secretary of Labor and Employment. Jake Ng. On May 9. When an employer customarily furnishes his employee board. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. 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. in the guise of retrenchment. In a subsequent case. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award. AFP-MBAIEU which ruled that such quitclaims are against public policy and. corporate officers are as a GR. NLRC. Anent the issue on the quitclaims." In order to ascertain whether the subject allowances form part of petitioner's "wages. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU)." "Customary" is founded on long-established and constant practice connoting regularity. HMC. Conformably with our ruling in A." "board. or other facilities customarily furnished by the employer to the employee. Ÿ What the Court finds apropos is our disquisition in A. In this case Cathy Ng. Kristel Macatangay. it must have an officer who can be presumed to be the employer. Irah Burog. Anna Tetangco 58 . 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." we divide the discussion on the following — "customarily furnished. unfair labor practice and damages against HMC. the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. once a vacancy occurs in the company-provided housing accommodations. null and void. lodging. It cited the case of AFP Mutual Benefit Association. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. Effect of Acceptance Ÿ Anino vs." and. admittedly. (Bogo-Medellin vs. Jon Santos. Ransom. Publico was refused entry for work and later informed of her dismissal. On the other hand. 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. because a corp. Alpe Macalalad. being the "person acting in the interest of the employer. by legal fiction. of board. 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. vs. is included in "wage. Ÿ In termination cases. however. NLRC) Ÿ NYK Intl vs. the fair and reasonable value thereof. has a separate and distinct personality. Inc. NLRC (Heidi) Facts: Publico was a sewer of NYK. Complainants-petitioners then filed a complaint for illegal dismissal. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. The subject allowances do not form part of petitioners wages. Heidi Soria. C. a measure fully explained to all its employees. Publico went home early despite refusal of petitioner because she was not feeling well. lodging or other facilities. in the technical sense only. 1997." In other words the corporation. as determined by the Secretary of Labor. is the employer. there was no reason at all for petitioners to resort to the above cases. Charms Haw. Monette Mesa. she notified petitioner that she was still recovering from her sickness. Monina Lagman.C. Edlyn Santiago. The next day. is the manager of NYK. dismissed complainants-petitioners who are active leaders of the union. In the case at bar. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. 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. the employee concerned transfers to the company premises and his housing allowance is discontinued. or for services rendered or to be rendered and includes the fair and reasonable value. 1997. However. "fair and reasonable value as determined by the Secretary of Labor. More recently. Dianne Miano. Waivers and quitclaims are generally looked upon with disfavor. On May 7. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts. therefore.

because a corporation. NLRC) dismissal with prayer for damages and attorney's fees. Hence. Dianne Miano. petitioners were allowed by the private respondent to work until January 2. Tan’s real and personal property should not be burdened by such award. by legal fiction. private respondent invoked Article 283 of the Labor Code. private respondent terminated petitioners' employment. Therefore. (Collegio de San Juan de Letran-Calamba vs. (Acesite Corp. the business. Despite the expiration of their employment contract. Ysan Castillo. Ÿ The Supreme Court held that the respondent was illegally dismissed. this petition for certiorari. Timbol) Unless they have exceeded their authority. 1990. vs. The Labor Arbiter dismissed the complaints. bad faith or malice was not proven. nor did he hold Tan liable. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. Thus. it must be shown that the dismissal of the employee was attended to by bad faith. or confusing a legitimate issue. in her capacity as manager and responsible officer of NYK.00. where terminations of employment are done with malice or in bad faith. she was terminated. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position. or is done contrary to morals. Edlyn Santiago. Indeed. it does not necessarily establish bad faith. Thus. not personally liable for their official acts. good customs or public policy. corporate directors and officers are solidarily liable with the corporation. Villas) Ÿ Asia Pacific Chartering vs. The labor arbiter didn’t make any such finding. 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. To warrant award of moral damages. Kristel Macatangay. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. In cases of illegal dismissal. Anna Tetangco 59 . Heidi Soria. 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. Jon Santos. On the other hand. Monina Lagman. or was done in a manner contrary to morals. In determining the amount of moral damages recoverable. the alias writ of execution for said award should be directed only against the company and not against Tan.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. even though the latter was the General Manager. Monette Mesa. Charms Haw. hence. 1991. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Irah Burog. 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.’s fees because there is no showing that bad faith and malice attended her dismissal. petitioners separately filed complaints for 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. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent.000. (Tan vs. underpayment of wages and claim for indemnity against private respondent. However. Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. On January 3. The amount of exemplary damages awarded is accordingly reduced too to P250. On appeal. Ÿ 14. 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. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud. but by itself alone. however.00 which it finds reasonable. Here. this Court reduces the amount of moral damages awarded to P500. as a general rule. social and financial position of the offended party and the business or financial position of the offender are taken into account. Alpe Macalalad.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. evading an existing obligation. Jake Ng. or constituted an act opposite to labor. 1991. corporate officers are. with the company for the monetary award. Cathy Ng. A dismissal may be contrary to law. Her resultant sufferings thus entitle her to an award of moral damages. has a personality separate and distinct from its officers. Pursuant to prevailing jurisprudence. good customs or public policy. 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. or constitutes an act oppressive to labor. stockholders and members. either jointly or severally.000. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. 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.

in which the employer-employee relation is merely incidental. petitioners have become full-fledged regular employees. Kristel Macatangay. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. entitled to be reinstated to their former position as regular employees. Hence. The enforcement of this labor standard rests with the labor secretary. may be vindicated or recognized. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. nominal damages are adjudicated in order that a right of the plaintiff. but also damages under the Civil Code. Irah Burog. Moreover. Tolosa contracted a fever and in the succeeding 12 days. petitioner's claim for damages is not related to any other claim under Article 217. not on a probationary status. NLRC (Dianne) Facts: Petitioner was the widow of Capt. and in which the cause of action proceeds from a different source of obligation such as a tort. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. Thus. other labor statutes. Ysan Castillo. these relief must still be based on an action that has reasonable causal connection with matters. which does not grant or specify a claim or relief. Capt. to be the master of the Vessel named M/V Lady Dona. Ÿ As a rule. While in command of the vessel. other labor statutes. 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. affirmed by the Court of Appeals. Petitioner's action was recovery of damages based on a quasi-delict or tort. and other labor benefits that are generally cognized in labor disputes. overtime compensation or separation pay. however. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. they were. or collective bargaining agreements. Petitioner is actually suing shipmates Garate and Asis for gross negligence. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. Anna Tetangco 60 . and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Dianne Miano. According to the Court. other labor statutes. Virgilio Tolosa who was hired by Qwana-Kaiun. Tolosa. and the said shipmates have no employer-employee relations with Capt. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. 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. Asia Bulk. Held: The Supreme Court affirmed the appealed decision. Charms Haw. Jake Ng. transferred to the DOLE. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code. or collective bargaining agreements." In the present case. Alpe Macalalad. In other words. the Court held that petitioners are entitled to full backwages. which has been violated or invaded by the defendant. 1990. through its manning agent. This provision is only a safety and health standard under Book IV of the same Code. Jon Santos. Moreover. this appeal. Monette Mesa. When petitioner filed a complaint with the POEA. "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. Accordingly. Edlyn Santiago. not merely probationary. It is not the NLRC but the regular courts that have jurisdiction over actions for damages. NLRC. or collective bargaining agreements. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. the employer fails to comply with the requirements of due process. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. The loss of earning capacity is a relief or claim resulting from a quasi-delict or a similar cause within the realm of civil law. The NLRC. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. With the continuation of their employment beyond the original term. the employment of petitioners is no longer on a fixed term basis. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. Monina Lagman. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. but as regular employees. the Labor Arbiter ruled in her favor. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. Under Article 2221 of the Civil Code. 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. therefore. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. It held that after October 31. 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. in effecting such dismissal. Heidi Soria. 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. his health rapidly deteriorated resulting in his death.Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers.

or that the employer committed an act oppressive to labor to warrant an award for moral damages. Dr. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. Indeed. Alpe Macalalad. taking into special consideration the gravity of the due process violation of the employer. Dianne Miano. Calado. as in the instant case. Dr. Ÿ Ÿ Where the dismissal is for just cause. Petitioner Marilyn T. In the case at bar. there is less degree of discretion to award actual or compensatory damages. was effected in a wanton. Maquiling was indeed validly dismissed for just cause. However. Hence. oppressive or malevolent manner to warrant an award for exemplary damages. we are not convinced that private respondents acted in a wanton or oppressive manner.. or is done in a manner contrary to good morals. (Kay Products vs. Edward L. as well as moral damages in the amount of five hundred thousand pesos (P500. petitioner Dr. Edlyn Santiago.Labor II before the labor arbiter. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. Jr. The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute. Evidently.00) and exemplary damages in the amount of one hundred thousand pesos (P100. Maquiling was employed by respondent Philippine Tuberculosis Society. Jon Santos.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. (Acesite Corp. or was done in a manner contrary to morals. good customs or public policy. Inc. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code. Kristel Macatangay. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. taking into account the relevant circumstances. Held: After careful perusal of the factual backdrop of the case. Inc. the Supreme Court ruled that Dr." which we sought to deter in the Serrano ruling. Exemplary damages may be awarded if the dismissal is effected in a wanton.000. 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. Monina Lagman. (IIEE). fraud. Jr. Antonio S. It may be also argued that actual or compensatory damages may be recovered in employment termination cases. However. Amador C.000. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. Thus. then earning a monthly salary of thirteen thousand nine hundred pesos (P13.000. Anna Tetangco 61 . vs.00). Heidi Soria. Maquiling shall only be entitled to an award for nominal damages. Neither will an award for moral damages nor exemplary damages prosper. Monette Mesa. without her reinstatement forthcoming. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. Ysan Castillo. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. Exemplary damages may avail if the dismissal was effected in a wanton. Charms Haw.00 as moral damages and P5. the employer should indemnify the employee for the violation of his statutory rights. Dr. Barrientos. 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. Maquiling. good customs or public policy. in the alternative. the lack of statutory due process should not nullify the dismissal. The suspension of petitioner without prior investigation is akin to Irah Burog. oppressive or malevolent manner.. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. Mendoza. no doubt.000. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968. Maquiling. Sagum is another hapless employee whose dismissal was ruled to be illegal but. oppressive or malevolent manner. CA) Gonzales is not entitled to moral and exemplary damages. (PTS). 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. is still on the outside looking in. Herrera. or ineffectual. or render it illegal. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The dismissal. oppressive or malevolent manner as the private respondents were deprived of due process.900. The amount of such damages is addressed to the sound discretion of the court. On 8 June 1991. Jake Ng. pay later. and Fe M. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. good customs or public policy. the amount of P10. Maquiling filed a complaint against PTS for reinstatement or. The instant controversy fails to show that the dismissal of the employee was attended by bad faith. Such were not sufficiently proven.00 as exemplary damages are hereby awarded to each private respondent. Engrs.

it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. 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. who has served at least five (5) years in the said establishment. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. Lastly. He was placed under preventive suspension on October 16. Omnibus Rules Rule II Retirement Benefits SECTION 1. 1993. Alpe Macalalad. regardless of their position. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. 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. Inc. taking into account the relevant circumstances. 7. Act No. 1997. Edlyn Santiago. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. 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. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. At the very least. Retirement. 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. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. 1997. assigned to the accounting department. petitioner corporation. an employee upon reaching the age of sixty (60) years or more. SEC. On November 18. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. we do not find the articles published in private respondent institute's publication. Retail. 1997. Promoted.000. In case of retirement. Dianne Miano. . as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee. 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. This rule shall apply to all employees in the private sector. Charms Haw. Kristel Macatangay. Held: Considering the prevailing circumstances in the case at bar. a fraction of at least six (6) months being considered as one whole year. The amount of such damages is addressed to the sound discretion of the court. Unless the parties provide for broader inclusions. and auditor from 1990 to 1996. Monina Lagman. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. however. On June 11.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Monette Mesa. through an EXECOM meeting. Book VI. abusive language or any species of violence. petitioner did not even allege that there was use of force. This rule shall not apply to the following employees: Irah Burog. adopted a resolution terminating his employment effective October 16.00. the Supreme Court deemed it proper to fix the nominal damages at P30. latter under the Labor Code and its Implementing Rules. designation or status and irrespective of the method by which their wages are paid. he became its regular employee. As used herein. 7641 which took effect on Jan. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. 287. Jake Ng. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. Despite the presence of security guards. Heidi Soria. The Electrical Engineer. mental anguish or serious anxiety as the result of the actuations of the other party. Exemptions. General Statement on coverage. Jon Santos. Ysan Castillo. he became branch manager from 1981 to 1990.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. the term “Act” shall refer to Rep. Anna Tetangco 62 . Retirement ART. to be malicious as they were fact-based. 1997 but the suspension was rescinded and he was assigned as general auditor. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. After six months. It is not enough that one merely suffered sleepless nights. Rule II. 2. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. 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. Subsequently.

5. 5. including GOCC’s if they are covered by the Civil Service Law and its regulations. 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. 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. 3. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations. Alpe Macalalad. 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. c) One-twelfth of the 13th month pay due the employee. The term does not include cost of living allowance. as determined by the Secretary of Labor and Employment.The minimum length of service in an establishment or an with an employer of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations.1 In the absence of an applicable agreement or retirement plan.1 Optional retirement. 4.3 One-half month salary of employees who are paid by results. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture. task. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. SEC.4 Service requirement. 2. series of 1994) 2. but does not include the manufacture and/or processing of sugar. In case the employer’s contribution is less than the retirement benefits provided under this Rule. As used herein. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. 20. however. 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 culture of fish and other aquatic products in farms or ponds. b) The cash equivalent of not more than five (5) days of service incentive leave. No. further. compulsory retirement. For covered workers who are paid by results and do not have a fixed monthly rate. That if such benefits are less. Retirement benefits. Charms Haw.For the purpose of determining the minimum retirement pay due an employee under this Rule. pineapple. 4.Labor II 2. coconut. 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. (Deleted by D. the term “one-half month salary” shall include all the ff. 4.1 Employees of the National Government and its political subdivisions. Where there is no such plan or agreement referred to in the immediately preceding subsection. 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. 5. raising of livestock or poultry. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule.: a) 15 days salary of the employee based on his latest salary rate. an employee shall be retired upon reaching the age of sixty-five (65) years. 4. 3. This term refers to all farming activities in all its branches and it includes. Retirement under CBA/contract.2 Components of One-half (½) Month Salary. tobacco. a fraction of at least 6 months being considered as one whole year. whether such payments are fixed or ascertained on a time. 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. abaca. Dianne Miano.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. Jake Ng. whether optional or compulsory. Optional.2 In case of retirement under this section. 3. lodging. the employer shall pay the deficiency. among others. SEC. . service and agricultural establishment or operations regularly employing not more than ten (10) employees. cultivation. dairying. piece or commission basis. Ysan Castillo.2 Domestic helpers and persons in the personal service of another. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). the cultivations and tillage of the soil. subject to the provisions of Rule VII-A. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. 5. Edlyn Santiago. and includes the fair and reasonable value. Jon Santos. Monette Mesa. Heidi Soria. Monina Lagman. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog. production. 4.O.3 Employees of retail. aquatic or other farm products. Anna Tetangco 63 .In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. growing and harvesting of any agricultural or horticultural commodities.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. or other method of calculating the same. Kristel Macatangay.2 Compulsory retirement. 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. regular holidays and mandatory fulfillment of a military or civic duty. 3. of food.3 Upon retirement of an employee. and Provided. or other facilities customarily furnished by the employer to his employees. SEC. .

3. 3. Penal Provision. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. Order No. drifts. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. the terms “employee”. the employer shall pay the deficiency. 1993 when the Act went into force. Kristel Macatangay. SEC. SEC. Edlyn Santiago. . 4. 1986 are met. 6. holidays and mandatory fulfillment of a military or civic duty.2 Components of One-half (½) Month Salary.Labor II are paid by results. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. 7. a fraction of at least 6 months being considered as one whole year. 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. individual/collective agreements or employment practices or policies. Retirement benefits. divided by the number of actual working days in that particular period. 2. Effectivity. the term “one-half month salary” shall include all the ff. to wit: Pensions. 1 Coverage.1 Optional retirement. 288 of the Labor Code of the Philippines. SEC. 1. SEC. That if such benefits are less.For the purpose of determining the minimum retirement pay due an employee under this Rule.3 Service requirement. Violations thereof shall be subject to the penal provisions provided under Art. As used herein. 12-86 dated Aug. SEC. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. Exemption from tax. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. Monina Lagman. and Provided.: a) 15 days salary of the employee based on his latest salary rate. This rule took effect on January 7.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. SEC. SEC. Monette Mesa. 4.1 In the absence of an applicable employment contract. Charms Haw. Relations to agreements and regulations. .Pensions. 9 dated May 4. retirement and separation pay. further.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. This Rule shall apply to all underground mine employees as contemplated under RA No. supplements or payments as provided in existing laws. For these purpose. 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. 8. 2(b) item (1) of Revenue Regulations No. tunnels. if the following requirements are met: i) The benefit plan must be approved by the BIR. “employees”. Dianne Miano. any such employee may retire upon reaching the age of sixty (50) years or more if he has served for at least five (5) years as underground mine employee or in underground mine of the establishment.. 2. Where there is no such plan or agreement referred to in the immediately preceding subsection. 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.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. 3.2 Compulsory retirement. Ysan Castillo. raises. As used herein. 1998) SEC. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec. Heidi Soria. Anna Tetangco 64 . an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. Rule II-A (Dep. Jake Ng. retirement and separation pay constitute compensation subject to withholding.2 In case of retirement under this section. Optional Retirement and Compulsory Retirement 2. All rules and regulations. Jon Santos. 4.1 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. 3. 8558. 2. or “covered workers” shall mean underground mine employee/s. however. In case the employer’s contribution is less than the retirement benefits provided under this Rule. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. crosscuts. winzes. Alpe Macalalad. Retirement under CBA/contract. subject to the provisions of Section 4 hereof on the payment of retirement benefits. 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. 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. 9. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement. The term “Act” refers to RA 7641 as amended by RA 8558. 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.

b) The cash equivalent of five (5) days of service incentive leave. Effectivity. This rule took effect on March 2. SEC. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs. otherwise known as the Labor Code of the Philippines. "In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. of actual working period. Jake Ng. 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. Ysan Castillo. 1998. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. Approved: February 26. but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. Anna Tetangco 65 . Alpe Macalalad. 9. "In case of retirement. bargaining agreement or other applicable employment contract. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. who has served at least five (5) years in the said establishment. 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. That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. "An underground mining employee upon reaching the age of fifty (50) years or more. subject to the provisions of Rule VII-A.3 One-half month salary of employees who are paid by results. 442. "Unless the parties provide for broader inclusions. Philex sustained financial losses in its operations. Penal Provision. lodging. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex"). 1998 when the RA 8558 went into force. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. Exemption from tax. piece or commission basis. (Dianne) Facts: Petitioners Roberto Ariola. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. a fraction of at least six (6) months being considered as one whole year. 442. as determined by the Secretary of Labor and Employment. an employee upon reaching the age of sixty (60) years or more. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. The ADS is the twelve (12) month of their retirement. A workforce audit showed that Irah Burog. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. For covered workers who are paid by results and do not have a fixed monthly rate. whether such payments are fixed or ascertained on a time. Kristel Macatangay.Retirement. Relations to agreements and regulations. To save costs.Labor II hours." SECTION 2. c) One-twelfth of the 13th month pay due the employee. Franco Mallare. "Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices. 287. as amended. 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. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. Heidi Soria. of food. whichever comes earlier. is hereby amended to read as follows: "ART. Monette Mesa. Charms Haw. may retire and shall be entitled to all the retirement benefits provided for in this Article. 5.Article 287 of Presidential Decree No. however. or other method of calculating the same. 288 of the Labor Code of the Philippines. 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. SEC. All rules and regulations. "Retail. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. 1998 Published in Malaya and Manila Times on March 7. 15. SEC. 6. 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. and includes the fair and reasonable value. or other facilities customarily furnished by the employer to his employees. Edlyn Santiago. The term does not include cost of living allowance. Violations thereof shall be subject to the penal provisions provided under Art.01 Retirement REPUBLIC ACT NO. 4. individual/collective agreements or employment practices or policies. supplements or payments as provided in existing laws. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR. Jon Santos. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. AS AMENDED. SEC. Dianne Miano. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. task. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. who has served at least five (5) years as underground mine worker. In 1992. 8. Monina Lagman.

An independent auditor confirmed Philex's claim of financial losses. All of them signed Deeds of Release and Quitclaim in Philex's favor. Baguio City. we grant her separation pay in lieu of reinstatement. Monette Mesa. Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. the vouchers in question. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. respondent Reuters Limited. Stated conversely. Ÿ By themselves. as its local correspondent. petitioners. Petitioners are thus entitled to reinstatement with full backwages. Ÿ Retirement is the result of a bilateral act of the parties. Held: Petitioners' retrenchment was illegal. For this reason. petitioner. a voluntary agreement between the employer and the employee whereby the latter. 1992. Philex informed the Department of Labor and Employment ("DOLE"). respondent. Philex shall pay backwages as computed above plus. 1993. (Reuters). Alpe Macalalad. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. Heidi Soria.743. At this point. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. hired Marilyn Odchimar Gerlach. 287. Ysan Castillo. respondent was guilty of illegal dismissal. This ballooned to P283. reinstatement is out of the question. In the present case. Article 287 of the Labor Code provides: ART. 1993 up to her compulsory retirement age. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan. Thus. . Jake Ng. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958.173.Labor II Philex had 310 "excess positions. finding that Philex suffered an operational loss of P33. If reinstatement is no longer possible because the positions petitioners held no longer exist." Respondent required certain documents in connection with petitioner's impending retirement. Article 283 of the Labor Code governs retrenchment to prevent losses. 30 April 1993. Edlyn Santiago. Phils. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action. 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. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. On 29 April 1993. The following day. also known as the provision on Social Justice and Human Rights.” do not suffice brief exchange of letters between petitioner and respondent followed. On October 1. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. However. 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. 1982. 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. citing "company policy. of its plan to retrench 241 employees. Philex paid them separation pay. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. However. But respondent stood pat on its decision to retire her. On 14 May 1993. Anna Tetangco 66 . petitioner began working for respondent's university medical center as a nurse. separation pay equal to one-half month pay for every year of service. the amounts petitioners received as net separation pay should be deducted from their backwages. which allegedly evidence receipt of “retirement gratuities. after reaching a certain age agrees to sever his or her employment with the former. On 1 June 1993. Kristel Macatangay. with six other supervisors and 49 rank-and-file employees. By its express language. As already stated. leaving 241 positions for retrenchment. In a letter dated December 3. .000 in 1992." Philex re-assigned some of the employees belonging to this group while others took early retirement. 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. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. Jon Santos. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. in lieu of reinstatement. a company engaged in news dissemination with offices worldwide. Charms Haw. 1983. through its Human Resources Development Office. Thus. Dianne Miano. It is also for this reason that we modify the award of backwages in her favor." 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. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. Cordillera Administrative Region. . respondent Reuters implemented a Irah Burog. beyond Philex's projected loss of P187 million. to be computed from the time of her illegal dismissal on November 18. at which time she would be 57 years old. Monina Lagman.000 in 1993. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent.

It is this third type of retirement scheme which covers respondent's Plan. whichever is higher. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. — (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 . NCR. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. like the Social Security Act. respondent assigned petitioner as a journalist to Reuters Singapore. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. Consequently. and they received separation pay double that required by the Labor Code. 1991. and is computed at least one month salary or at the rate of one-half month salary for every year of service. Kristel Macatangay. Significantly. petitioner filed with the Office of the Labor Arbiter. Drilon. in the instant case. On January 23. 1984. respondent based petitioner's retirement benefits on its Plan and established policy. Inc. where not mandated by law. Anna Tetangco 67 . 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. she questioned the amount she received as well as her entitlement to a disturbance grant. She worked in Reuters Philippines up to December 23. 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. Edlyn Santiago. not on her notional salary. Jon Santos. The first type is compulsory and contributory in character. 1983. which is in accord with the above provision. Eventually. apprised her of the details of her forthcoming assignment. Monette Mesa. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. they demanded retirement benefits. both actual and notional. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. vs. Reuters' Eastern Region Staff Manager. Retirement benefits. invoking the retirement plan of the company which they said was contractual rather than statutory. It is very clear that from the very start of her first assignment overseas. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. Article 287 of the Labor Code reads: "Article 287. under the Plan. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Rachel Addison. were the petitioners still entitled to the retirement benefits? Held: Yes.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. . Heidi Soria. Jake Ng." Thus. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. Ÿ There are three kinds of retirement schemes. 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. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. which include retrenchment. In case of retirement. The computation was based on her notional salary. However. However. she opted not to contribute to the fund.04. 14. Nonetheless. The Plan is funded by the company. On March 1. Ÿ Retirement benefits. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog. Thereafter. contending that her retirement benefits must be computed on the basis of her actual salary abroad.228. petitioner received her retirement benefits under the Plan in the amount of P79. In fact. . Monina Lagman. the company's contribution to the fund is 10% of the basic monthly salary of each participant. Before leaving. 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. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. Issue: Having received the separation pay. 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. Charms Haw. Ysan Castillo. Dianne Miano." 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. (b) a collective bargaining or (c) other agreements. In Llora Motors. Retirement. 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. The third type is one that is voluntarily given by the employer. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. specifically that her home base will always be the Philippines. Alpe Macalalad. a money claim against respondent. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. provides: "Sec. Basis Ÿ Aquino vs. Section 14(a).

petitioner requested to be included in the retrenchment schedule. 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. Monina Lagman. 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. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive. the 5-year expansion program and the Integrated Steel Mill Project. be upheld. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art. The retirement plan is a binding agreement. We discern nothing from the record that would suggest that petitioner was coerced.Labor II life. it also behooves us to protect the sanctity of contracts that do Irah Burog. “E. PNOC acquired and took over the shipping business of LUSTEVECO. provided. Resignations and Terminations. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. the retirement plan is succinct in denying such benefits. When a manpower reduction was implemented. Here. corporation employed employees and of them was Divina Lopez. public order or public policy and must. ostensibly. 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. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. Ysan Castillo. While it is our duty to prevent the exploitation of employees. not being contrary to law. for the purpose of computing an employee’s retirement pay. intimidated or deceived into signing the Release and Undertaking. does not give petitioner the right to her claimed benefits. Gamogamo vs. Dianne Miano. Kristel Macatangay. There is.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. Since the retirement pay solely comes from PNOC’s funds. Monette Mesa. and are a form of reward for his loyalty and service to the employer. Subsequently. and (2) where the terms of settlement are unconscionable on their face. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No. 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. Alpe Macalalad. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. 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. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. 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. Jake Ng. morals. thus. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. Consequently. lessening the burden of worrying for his financial support. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. Anna Tetangco 68 . In addition. In the case at bar. We cannot presume that it forms an implicit part of either the CBA or the law. Afterwhich he was hired by LUSTEVECO. a private domestic corporation. It was turned down. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. especially where there are strong equitable considerations as in this case. good customs. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. after reaching a certain age. The provisions of the NSC's retirement plan which petitioner admitted applies to her. IV. there is no such provision. — No retirement benefits are payable in instances of resignations or terminations for a cause. B 2. Issue: whether. With the inclusion of the provision abovementioned in the retirement plan. Edlyn Santiago. therefore. however. When the corporation suffered losses. Charms Haw. Jon Santos. issued a memo announcing retrenchment and one of the affected employees was Lopez. 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. Heidi Soria. 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. 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. Interpretation Ÿ Lopez vs. agrees to sever his employment with the latter. Settled is the rule that not all quitclaims are per se invalid or against public policy.

No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay. what each actually received is a separation pay. Yet a serious mistake. and that is. the acting conservator of the petitioner expressed her objection to such plan. It is a fact that petitioners were involuntarily separated from service and thus. they are no longer entitled to retirement benefits. suffered substantial losses. Heidi Soria. pertaining to uniform allowance. 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. 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. which is the retirement age fixed by the Labor Code. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims. Accordingly and considering their Releases and Irah Burog. The same however. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners. Dianne Miano. Given such facts. Salomon vs. may be ascribed to the Commission. however. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company. amounting to grave abuse of discretion. Jake Ng. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited. Monina Lagman. However. Edlyn Santiago. because by the terms of those very same retirement plans invoked by him. specifically cited by him. Rationale Ÿ Producers Bank vs. It appears that when the private respondents sought the implementation of Section I. and there is no reason to invalidate their Releases and Quitclaims. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. 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. the retirement age of 65 applied only to employees in the U. Monette Mesa. the retirement age is 65 — is wrong. it is apparent that the amount is representative of all the claims of petitioners. The deadlock continued for at least six months when the private respondent. for as of that day. Ysan Castillo. petitioners instead of receiving their separation pay. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. under the law should give separation pay. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. Consequently. 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. and Nolasco's claim — that under MAI's retirement plans. As a result of said complaint. Anna Tetangco 69 . Private respondent thus. 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. its refusal.S. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. petitioner was placed by the Central Bank under a conservator for protecting its assets. and Puerto Rico. pursuant to the CBA. 1982. Here. Age Ÿ MAI Phils. The Court will not disturb this finding for upon review of the said quitclaims. he had already reached the age of 60 years. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. Alpe Macalalad. resulting in an impasse between the petitioner bank and the private respondent union. 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.A. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited. petitioners were separated from the service for cause. Article X thereof. Jon Santos. 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. under the law should be given separation pay. such interpretation cannot be made here. Charms Haw. NLRC (Monina) Facts: At the time the controversy started. Association of International Shipping Lines (Monina) Facts: When the Association of International Shipping Lines Inc. to resolve the issue.Labor II not contravene our law. vs. Kristel Macatangay. Article XI of the CBA regarding the retirement plan and Section 4.

they do not effect any sale of article at all. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. When the retired employees were requesting that their retirement benefits be granted. especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. the status of an employee entitled to the protection of the Labor Code. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. but more importantly by the fundamental law of the land.919. when an employee has retired but his benefits under the law or the CBA have not yet been given. Monina Lagman. however. The very essence of retirement is the termination of the employer-employee relationship. Dianne Miano. Sometime. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. Thus. Therefore. Reyes did not agree with the computation of the company and hence filed a complaint. he still retains. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. Hence. as well as an effective inducement for remaining with the corporation. and are a form of reward for his loyalty. Section 1 and Article X. The collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in the form of a commission. the basis in computing his retirement benefits is his latest salary rate of P10. he was excommunicated. if the employee is eligible. South Phil. one of which is the protection of the labor union. As such. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired. Accordingly. As correctly ruled by public respondent NLRC. its benefits are designed for those who have devoted their lives to the work of the SDA. 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. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. 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. for the purpose of prosecuting his claims. This negated the very concept of retirement. In fine. As was the practice of SDA. direct or necessary relation to the amount of work he actually performed. and these benefits shall terminate with the death of the beneficiary except in the presence of an eligible surviving spouse and/or children. Heidi Soria. Edlyn Santiago. 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. since these must be protected as though there had been no interruption of service. Charms Haw. Petitioner filed for optional retirement upon reaching the age of 60. in itself. 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. Brion was adjudged by the SDA in 1983 to be qualified for retirement. as a consequence of which no employee-employer relationship exists anymore between it and the employees. vests on him. as it were. Jon Santos. private respondent no longer had the personality to file the complaint for them. Issue: Petitioner asserts since the employees have retired. Here. Alpe Macalalad. the "overriding commissions" paid to him by Universal Robina Corp. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker.Labor II Article XI. Jake Ng. releasing him from the burden of worrying for his financial support. Kristel Macatangay. as embodied in the CBA. Anna Tetangco 70 . it is not the criterion which would entitle him to a commission. 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. the retirement of an employee does not. a continuing consideration for services rendered. under the SDA's retirement plan. Unit Managers are not salesmen. Monette Mesa. Held: Petitioner's contention in untenable. Ÿ Brion vs. and the Court cannot give its imprimatur for retirement. be recognized. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. but the actual sale transactions brought about by the individual efforts of the salesmen. to the point of being trite. affect his employment status especially when it involves all rights and benefits due to him. Brion was provided a monthly amount of retirement benefit. It is intended to help the employee enjoy the remaining years of his life. Ysan Castillo. they were not pleading for generosity but were merely demanding that their rights. what is also well-settled. Section 4 of the CBA. It bears repeating that apart from the nonimpairment clause. He eventually retired. However. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. must be met at the time of retirement at which juncture the right to retirement benefits. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division.

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. as amended. Under the Retirement Plan before us. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. Twenty years is a more than ideal length of service an employee can render to one employer. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. as amended. the last three (3) years of which must be continuous. the same being higher than what Article 283 of the Labor Code. 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. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. The CBA in the case at bar contains no such infirmities which must be stricken down. Edlyn Santiago. provides. Kristel Macatangay. on the other hand. Heidi Soria. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. it must have been convinced that Brion had devoted his life to the work of the SDA. Cruz however despite receiving separation pay asks for his retirement benefits. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. if the employee is eligible. vests in him. as amended. Phil. In those two instances. Charms Haw. is the result of a bilateral act of the parties. As we held in Cipriano and Aquino. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. Monette Mesa. Pursuant to the existing CBA. Article VI 12 of respondent’s Retirement Plan. While in all three cases. In other words. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. 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. in case of retrenchment or cessation of operations. Ÿ Llora Motors vs. 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.Labor II year. Ysan Castillo. Anna Tetangco 71 . whichever is higher. 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. Under Section 4. petitioners are not entitled to both separation pay and retirement benefits. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. Jon Santos. before a right to retirement benefits or pension vests in an employee. He now files a case for the collection of his retirement Irah Burog. one of which requires the retiree to devote his life to the service of the church even after retirement. Alpe Macalalad. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. and length of service. whichever is higher. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. Under Article 283 of the Labor Code. Ground Termination Cainta Catholic School v. age. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. 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. 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. Dianne Miano. Retirement. Jake Ng. or retirement benefits prescribed by the Retirement Plan. the employee to be terminated may be unwilling to part from service. 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. affected employees. 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. This is a condition precedent to his acquisition of rights.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. this Court will not hesitate to adopt the latter interpretation. Upon reaching 65 he stopped working. 15. The union filed a notice of strike and subsequently picketed in front of the school. Where two constructions of a retirement plan are possible. he must have met the stated conditions of eligibility with respect to the nature of employment. Monina Lagman. Here. 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.

releasing him from the burden of worrying for his financial support. 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. Monina Lagman. supra). NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service. is that Section 14 of Implementing Rule I. the purpose of which is to reward employees who have rendered satisfactory service to the company. The third type is one that is voluntarily given by the employer. Jake Ng. then payments under such retirement plan may be credited against the termination pay that is due. Gratuity. v. 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.Labor II benefits and ECOLA underpayments. Jon Santos. however. Ÿ What needs to be stressed. Respondent is not asking for retirement benefits due him under the Social Security Law. 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. contract or an established company policy. subject. benefit or bounty given to the worker. Catalina College vs. After being paid his cash deposit he executed a quitclaim. 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. He now files for monetary claims including his retirement benefits. Drilon.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. 91 SCRA 265 [1979]). Retirement benefits. and are a form of reward for his loyalty to the employer. is not intended to pay a worker for actual services rendered of for actual performance. Kristel Macatangay. granting him retirement benefits. 15. 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. on the other hand are intended to help the employee enjoy the remaining years of his life. Irah Burog. NLRC) 15. 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.. Llora in its answer contend that Alviar abandoned his work. to certain conditions. Charms Haw. like the Social Security Act.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. 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. 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. Inc. He does not claim that there is a collective bargaining agreement or other applicable. Anna Tetangco 72 . 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. therefore. Inc. v. Edlyn Santiago. Ÿ Ÿ As stressed in Llora Motors. Inc. however. GVM on the other hand denies having such liability. is for the legislature to remedy. in other words. 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. Ysan Castillo. The first type is compulsory and contributory in character. and an additional or consensual retirement plan exists. (Sta. Alpe Macalalad. It is a money. Ople. Heidi Soria. like Article 287 of the Labor Code. There are three kinds of retirement schemes. Monette Mesa. Thus. Dianne Miano.

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