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OTHER CAUSES. BUSINESS RELATED CAUSES Recognition of Right- Business Related Causes/ Protection Ÿ Agabon vs. NLRC (Monette) Facts: Agabon was dismissed for abandonment of work (subcontracting for another company). The court held that the cause for the dismissal was valid but the company failed to follow notice requirements. The company reasoned that it would be useless because the Agabons did not reside there anymore. Held: This is not a valid excuse because the twin notice requirements are mandatory. The dismissal is upheld but the company should be held liable for nominal damages, for the violation of his right to statutory due process. Ÿ The law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. where terminated due to massive retrenchment of the company to forestall serious business losses and/or closure of operations. Issue: When, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of employees? Held: The ff. are general standards in terms of which the acts of petitioner employer must be appraised: Firstly, the losses expected should be substantial and not merely de minimis in extent. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. Thirdly, must be reasonably necessary and likely to effectively prevent the expected losses. Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. Ÿ To impart operational meaning to the constitutional policy of providing “full protection” to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means – e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.
Ÿ Uichico vs. NLRC (Monette) Facts: The case is an illegal dismissal case filed by workers of Crispa, Inc. who were terminated on the ground of retrenchment due to alleged serious business losses suffered by the company. Held: The Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, are not credible. This is not the kind of sufficient and convincing evidence necessary to discharge the burden of proof required to establish the alleged losses suffered by Crispa. The corporate directors and officers of Crispa are solidarily liable with the corporation for the termination of employment done with malice or in bad faith. In this case, it is undisputed that they have a direct hand in the illegal dismissal of respondent employees. Ÿ The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, "the right of enterprises to reasonable returns of investment and to expansion and growth.
Business Services of the Future Today vs. CA (Monette) Facts: The employee was terminated on the ground of severe business losses. The employers believe, however, that since the employee was also a stockholder, there was no need to notify DOLE of the closure since as stockholder, he was presumed to have taken part in the decision to close the business. Held: Notice of closure to the DOLE is mandatory. It allows the DOLE to ascertain whether the closure and/or dismissals were done in good faith and not a pretext for evading obligations to the employees. This requirement protects the workers’ right to security of tenure. Failure to comply with this requirement taints the dismissal. An exceptions is when the employee consented to his retrenchment, the required prior notice to the DOLE is not necessary as the employee thereby acknowledges the existence of a valid cause for termination of his employment. However, there is no evidence to show that the employee consented to his dismissal and for these reasons the petitioners should have submitted a written notice of BSFTI’s closure to the DOLE. The NLRC and the Court of Appeals were unanimous in finding that the closure was bona fide. As in the case of Agabon, nominal damages were awarded to vindicate employee’s right to due process. Ÿ A. Installation of Labor Saving Devices- 283
Ÿ Filipinas vs. Gatbalayan (Monette) Facts: Another illegal dismissal case by the workers who
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 1
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. B. Redundancy- 283 (above) Business Judgment Ÿ Wiltshire File vs. NLRC (Monette) Facts: Ong was dismissed because of serious business losses. In the termination letter, the ground alleged was redundancy of the position. Ong countered that there could be no redundancy because nobody except himself, in the company was then performing the same duties. Held: Dismissal was valid. The losses were proven by the company and most importantly, company finally closed its doors and terminated all its operations. SC considered that finally shutting down business operations constitutes strong confirmatory evidence of financial distress. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. That no other person was holding the same position that employee held, does not show that his position had not become redundant. Ÿ The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. Ÿ Asufrin vs. San Miguel Corp (Monette) Facts: An illegal dismissal case which stemmed from SMC’s new marketing system known as the "pre-selling scheme". As a consequence, all positions of route sales and warehouse personnel were declared redundant. Held: Dismissal was invalid. In selecting employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. In the case at bar, no criterion whatsoever was adopted by the employee. Furthermore, SMC has not shown how the cessation of the employees’ services would contribute to the ways and means of improving efficiency and cutting distribution overhead and other related costs. Ÿ In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy.
Ÿ Soriano Jr. vs. NLRC (Monette) Facts: PLDT utilized high technology equipment in its operation such as computers and digital switches which necessarily resulted in the reduction of the demand for the services of a Switchman. Held: Dismissal was valid. PLDT submitted the relevant documents attesting redundancy of employing switchmen and it has also paid separation pay to the dismissed workers. Ÿ PLDT, as employer, has the recognized right and prerogative to select the persons to be hired and to designate the work as well as the employee or employees to perform it. This includes the right of the PLDT to determine the employees to be retained or discharged and who among the applicants are qualified and competent for a vacant position. The rationale for this principle is that respondent PLDT is in the best position to ascertain what is proper for the advancement of its interest. Thus, this Court cannot interfere in the wisdom and soundness of the PLDT’s decision as to who among the Switchmen should be retained or discharged or who should be transferred to vacant positions, as long as such was made in good faith and not for the purpose of curbing the rights of an employee. Financial loss Ÿ Ecareal vs. NLRC (Monette) Facts: Escareal’s position as Pollution Control and Safety
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 2
Manager was declared redundant. Held: Illegal dismissal. Philippine Refining Company (PRC)had no valid and acceptable basis to declare the position redundant as the same may not be considered superfluous. Ÿ If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC’s hiring frsh graduates for various positions. Besides, there would seem no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRCs net profits has steadily increased. While concededly, Art. 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of an employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company is suffering from business losses merely provides stronger justification for the termination. Law Required Position Position of Pollution Control and Safety Manager is required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise. Escareal vs. NLRC When Redundancy Ÿ Lopez Sugar Corp vs. Franco (Eds) Facts: Lopez Sugar Corp. issued a Memorandum for the adoption of a special retirement program for selected supervisory and middle level managers, allegedly due to over-staffing and duplication of functions. Private respondents, all supervisory employees of the Corp who organized a labor union which was currently undergoing CBA negotiations with the corp, were included in its coverage and terminated from employment. Issue: Was the termination of respondents by virtue of the special retirement program valid? Held: No. The corp illegally dismissed the private respondents by including them in its special retirement program, thus debilitating the union, rendering it pliant by decapacitating its leadership. The so-called “downsizing of the departments based on the SGV Study Report was a farce—capricious and arbitrary. No standard, criteria or guidelines for the selection of the dismissed employoees was made known to them, and all that they were told was that they had been selected for termination. Ÿ Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line or phasing out of a service activity priorly undertaken by the business. Tierra International Construction Corp. vs. NLRC (Eds) Facts: Isidro Olivar, a shift supervisor for shipping company FEBROE, was dismissed from service and repatriated to the Philippines 6 months before his contract expired. Ground for dismissal: promotion of economy, efficiency and profitability in operations, and reduction of personnel whose positions are redundant or surplusage and/or reassignment of personnel to other available useful positions. Issue: Was the termination of Olivar for a just and valid cause? Held: Yes. Olivar’s position was deleted due to a decrease in scope of work assigned to FEBROE’s Base Operating Support Contract. Unfortunately, there were no other available positions for which he could qualify. Other positions were also abolished, including both U.S. and Third Country Nations positions, showing that he was not singled out and his termination was not arbitrary or malicious. Ÿ Ÿ Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position(s) may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The law does not make any distinction between a technical and a nontechnical position for purposes of determining the validity of termination due to redundancy. Neither does the law nor the stipulations of the employment contract here involved require that junior employees should first be terminated. In redundancy, what is looked into is the position itself, the nature of the services performed by the employees and the necessity of such position.
Ÿ Edge Apparel vs. NLRC (Eds) Facts: Edge Apparel, Inc. dismissed some of its employees pursuant to a retrenchment program. Upon advice of the DOLE Regional Director, they received the separation pay benefits offered, but they still filed a complaint for illegal dismissal, alleging that the retrenchment program was a mere subterfuge used to give a semblance of regularity and validity to the dismissal.
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 3
and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. in contrast to redundancy. 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. Kristel Macatangay. There was no substantial evidence to justify Panlilio’s dismissal on such ground. was dismissed 6 months after being hired on the ground that his position had become redundant. In this case. program. job description. a) preferred status. Prudencio Tanjuan. 2) the losses are actual or reasonably imminent. Jake Ng. is an economic ground to reduce the number of employees. a Property Appraisal Specialist and a Department Officer-in-Charge. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. Charms Haw. The company alleged redundancy in their position as defense for dismissing them. the retrenchment must be reasonably necessary and like to effectively prevent such losses. however. Ÿ Golden Thread Knitting Industries vs. provided that violation of law or arbitrary or malicious action is not shown. It is not enough for a company to merely declare that it has become overmanned. Issue: Was Tanjuan’s dismissal illegal? Held: No. issued a Board Resolution for the bank’s reorganization via retrenchment of employees and realignment of functions and positions for the purpose of preventing further serious losses. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. and c) seniority. such as overhiring of workers. The employer has the burden of proving that the losses are Irah Burog. Anna Tetangco 4 . is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec. such as new staffing pattern. Before any reduction of personnel becomes legal. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses. 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. Dianne Miano. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. not the whole of it. Ysan Castillo. NLRC (Eds) Facts: Moises Panlilio. viability of the newly created positions. b) efficiency. one of which was the illegal dismissal of some union members. is an exercise of business judgment on the part of the employer. In this case. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. Monette Mesa. if already incurred. Monina Lagman. decreased volume of business or dropping of a line or service activity. such as but not limited to: a) less preferred status (e. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. The amount depends on the ground for the termination of employment. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. a Recreational Manager of Sheraton Hotel in oman. and therefore properly terminable. The fact alone that a mere portion of the business of an employer. 283(c) of the Labor Code. Heidi Soria. Edlyn Santiago. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. its business to avoid further losses or mitigate expenses. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant.Selection of Employee Ÿ Panlilio vs. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. In exercising its right to retrench emplooyees. Evidence should have been presented to support this contention. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. Ÿ In selecting the employees to be dismissed. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. Alpe Macalalad. such as but not limited to. For it to be valid. and 4) the alleged losses. Phil. temporary employee). Retrenchment. and in this case. The characterization of an employee’s services as no longer necessary or sustainable. contrary to the ruling of the NLRC. much less was the company’s claim supported by any evidence. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. Issue: Were the dismissals on the ground of redundancy valid? Held: No. b) efficiency and c) seniority. feasibility studies/proposal. Jon Santos. Such appraisal was not done in the instant case. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary.g.. they were terminated due to retrenchment not redundancy. a fair and reasonable criteria must be used. and the approval by the management of the restructuring.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. Inc. or a part of. and the imminent losses sought to be forestalled are substantiated. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. the losses expected must be substantial and not merely de minimis in extent. the firm amy choose to close all. was one of those termininated.
Monina Lagman. Kristel Macatangay. actual and real. actual and real. The law allows an employer to downsize his business to meet clear and continuing economic threats. private respondents. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. In this case. Jon Santos. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. Alpe Macalalad. Ÿ In selecting the employees to be dismissed. However. 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. temporary employee). Charms Haw.Labor II serious. Edlyn Santiago. serious. such as but not limited to: a) less preferred status (e. guidelines. 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. age. or standard for selection of dismissed employees renders the dismissals whimsical. xxx xxx xxx Sec. and c) seniority. Some of the dismissed union members filed a suit for illegal dismissal. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. NLRC Ÿ Employment of Independent Contractor. “retrenchment to prevent losses” is also allowed. 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. and c) seniority. 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. 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. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. There was also no proof that the program was designed to bust the union. real and substantial losses. Golden Thread Knitting Industries v. Issue: Were the private respondents illegally dismissed? Held: No. b) efficiency. In this case. seniority. 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. Heidi Soria. b) efficiency. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. the audited financial statements submitted by the corp adequately supported their claim of actual. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. 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. if already incurred. the notice shall be served at the worker's last known address. Anna Tetangco 5 . The reduction of the number of workers in a company made necessary by the introduction of Hearing Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor Code" read as follows: Sec. Asian Alcohol v. are not merely de minimis. as long as the requirements under the law are complied with. Ysan Castillo. efficiency. such as but not limited to a) preferred status. Here. Monette Mesa. NLRC (Eds) Facts: Due to mounting business losses. capricious and vindictive. such as status. contrary to the respondents’ claim. ?? 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. Answer and hearing. Besides. NLRC The absence of criteria. In this case. Under Art. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Dianne Miano.Effect Asian Alcohol Corp vs. but substantial. a fair and reasonable criteria must be used. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. physical fitness. never contested the veracity of the audited financial documents offered by Asian Alcohol. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. Procedure Requirement Ÿ Retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. The employer shall Irah Burog. Jake Ng. union and non-union members were treated alike. In cases of abandonment of work. and financial hardship for certain workers. 2. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. which. whichever is higher. 5. Notice of dismissal. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice.g. 283 of the Labor Code.
Kristel Macatangay. or of automation. resorted to by management during periods of business recession. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. Again. Retrenchment to prevent losses Irah Burog. 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. to require petitioner Wiltshire to hold a hearing. (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". The corp failed to adduce financial statements duly audited by independent external auditor. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. after less drastic means. In such case. Such substantial loss apprehended must be reasonably imminent. 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. The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. Where. Alleged losses if already realized. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. Alpe Macalalad.Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. industrial depression. and expected imminent losses sought to be forestalled. or seasonal fluctuations or during lulls occasioned by lack of orders. Dianne Miano. Heidi Soria. as in the instant case. The appropriate forum for such controversion would. allege any malfeasance or non-feasance on the part of the employee. whichever is higher. They had already clsoed down their dry docking and ship repair division and their dredging services were heavily affected by the economic slowdown being experienced by the construction industry. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. on the business and financial circumstances compelling retrenchment and resulting in redundancy. Thus. The losses expected should be substantial and not merely de minimis in extent. NLRC(Charms) C. however. 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 appears to us no need for an investigation and hearing to be conducted by the employer who does not. shortage of materials. Charms Haw. to begin with. (Wiltshire vs. 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. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. Monina Lagman. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. Ysan Castillo. NLRC) Defined FF Marine Corp vs. at which private respondent would have had the right to be present. 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. 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. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. Edlyn Santiago. 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". Jon Santos. The ground for retrenchment availed of was not sufficiently and convincingly established. (Wiltshire vs. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. there are no allegations which the employee should refute and defend himself from. Ricardo Magno. was one of those terminated. Thus. It is essentially required that the alleged losses in business operations be proven. Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. imminence can be perceived objectively and in good faith by the employer. as such. Anna Tetangco 6 . Jake Ng. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. Monette Mesa. must also be proved by sufficient and convincing evidence. Lead Electrician for the corp.
the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. Irene Campos-Ugalde. including private respondent. Ysan Castillo. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding.A. 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. NLRC (Charms) Facts: Francisco Ferrer." on the other hand. JAT hired private respondent Jose F. F & B Department had been incurring substantial losses in the aggregate amount of P8. the Society leased a property in Tayuman to a fastfood outlet. Both are mentioned in Art. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. Dianne Miano. and sold its equity in the Philippine Ÿ Irah Burog. that the same increased through a period of time. which is allowed under Article 283 of the Labor Code. Among these was a socalled "redundancy program. 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. Ÿ Alabang Country Club vs. cancelled its service agreement with a janitorial company. petitioners had notified private respondent and all other workers through written letters dated November 25.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. Kristel Macatangay. resulted in the layoff of around 177 employees. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. some of whom were officers and members of the petitioner union. The affected employees were given separation pay equivalent to one month pay for every year of service. Charms Haw. The shortfall increased to P9. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE. the union declared a strike. There was substantial proof that the company was incurring substantial losses. It advised its employees. Distinction Closure and Retrenchment Ÿ Ÿ J." while denominated as such. NLRC (Charms) Facts: In the proceedings before the NLRC. it was shown that. Alpe Macalalad.135. the sales of heavy equipment declined because of the Asian currency crisis. Heidi Soria. the company losses were duly established by the financial statements presented by both parties. for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees. Prior to the rendition of the decision of the Secretary of Labor and Employment. then President of ACCI. Jake Ng. 1988. the Society began to experience serious financial difficulties when it incurred a deficit of P2 million. not to report for work starting on the first week of March 1998.T General Services vs. requested its Internal Auditor. JAT indefinitely closed shop effective May 1998. in our view. Held: NO ILLEGAL DISMISSAL. Further. Ÿ As did the appellate court. 1995. NLRC Facts: Sometime in April 1997. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. it must be proven that the losses incurred are substantial and actual or reasonably imminent. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. JAT temporarily suspended its operations. In the case at bar. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. As in the case of retrenchment. her report showed that from1989 to 1993.100.00. Consequently. however. 1 First. 4 "Retrenchment. 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. Held: No Illegal Dismissal. Jon Santos. as implemented on March 1. Held: No illegal dismissal. Consequently. 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. Edlyn Santiago." which. Anna Tetangco 7 . this Court finds that the study report submitted by the internal auditor of petitioner. for which they signed documents of waiver. Monina Lagman. 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. In October 1997.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. Monette Mesa. Coverage Philippine Tuberculosis Society vs. As already stated. The closure of business operation by petitioners. and that the condition of the company is not likely to improve in the near future. Private respondent's "redundancy program.000. contrary to the findings of the Labor Arbiter. the only evidence submitted to prove its alleged losses. in 1989.727. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise.
since he would be paying the newcomer a relatively smaller wage. Charms Haw. therefore. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. NLRC (Charms) Facts: On June 30. we find substantial evidence that petitioners intended the termination to be permanent. the hotel operations of the business were suspended on March 31. Kristel Macatangay. such as the respondent bank. 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. its implementation of the scheme rendered the retrenchment invalid. Ÿ Although petitioner is a non-stock and non-profit organization. say that the finding of the NLRC is unsupported by substantial evidence. Jake Ng. a failure which. 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. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. Heidi Soria. Indeed. Alpe Macalalad. even if the scheme should result in savings for the employer. namely. retaining a newly hired employee and dismissing one who had occupied the position for years. financial statements. as the omission immediately makes the selection process unfair and unreasonable. 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. 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. to our mind. 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. Second.Labor II Long Distance Telephone Company (PLDT). Anna Tetangco 8 . 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. retrenchment as a measure adopted to stave off threats to its existence is available to it. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. The operation of the restaurant was continued in its new location at Elizondo Street. Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses. Monina Lagman. 2 The retrenchment is the subject of the present suit. Legazpi City. Held: ILLEGALLY DISMISSED. 1989. Edlyn Santiago. Legazpi City. and implemented the retrenchment of one hundred sixteen (116) employees. Paulino Balbalec. and applied for exemption from minimum wage increases. Petitioner presented to the NLRC the balance sheets. (2) The apprehended substantial losses must be reasonably imminent. we hold that the evidence on record belie any claim of petitioners that the lay-off of respondents on that same date was merely temporary. as such imminence can be perceived objectively and in good faith by the employer. it withdrew from the Pag-Ibig Fund Program. to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. it disapproved the overtime pay of supervisory and managerial employees." employer to prove economic or business losses with appropriate supporting evidence. We cannot. must be proven by sufficient and convincing evidence. Procedure Ÿ Mayop Hotel & Restaurant vs. Held: ILLEGALLY DISMISSED. obtained the waiver of personnel of their entitlement to wage differentials. and the reports of its external auditors for the years 1989 and 1990. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog. the Rural Bank of Bangued dismissed three of its employees. Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. Dianne Miano. Monette Mesa. Ÿ Balbalec vs. After all. 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. Jon Santos. Finally. in the development of the countryside through its loan portfolios and other services to the rural folk. is simply unconscionable and violative of the senior employee's tenurial rights. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. 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. negotiated with the Government Service Insurance System for the restructuring of its obligations. 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. Ysan Castillo. (4) The losses. whether for profit or not. should invalidate the retrenchment." However. even assuming arguendo that the cessation of employment on April 1997 was merely temporary. Things being equal. pursuant to Article 286 of the Labor Code. both the past and forthcoming. While the closure of the hotel operations in April of 1997 may have been temporary. 1999. On the contrary. Moreover.
. but more importantly. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. 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. but certainly not the least important. whichever is higher. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. Anna Tetangco 9 . and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. After six months. represented by Lim.Standards Irah Burog. Monette Mesa. section heads.e. a corporation engaged in the manufacture and export of ready-to-wear garments. The “loss” referred to in this provision cannot be of just any kind or amount. frequent machinery breakdown. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. A memorandum was thereafter issued by EMCO. Because of the consequential nature of retrenchment. and the expected imminent losses sought to be forestalled. Kristel Macatangay. otherwise. Franco Temporary Retrenchment Ÿ Sebugero vs. 1993. then petitioners should have complied with the requirements of written notice. There should. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE. 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. The employer should have taken other measures prior or parallel to retrenchment to forestall losses. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. it still has to accord its employees some relief in the form of severance pay. Jon Santos. Ÿ EMCO Plywood Corp vs. EMCO. the bonafide nature of the retrenchment would appear to be seriously in question. the losses expected should be substantial and not merely de minimis in extent. the substantial loss apprehended must be reasonably imminent. addressed to all its foremen. Jake Ng. Secondly. Charms Haw. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. Abelgas (Charms) Facts: On January 20. i.Labor II Ÿ To say the least. the employees should either be recalled to work or permanently retrenched following the requirements of the law. These employees cannot forever be temporarily laid-off. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). Resorted to by employers to avoid or minimize business losses. supervisors and department heads. in other words. 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. To remedy this situation or fill the hiatus. must Ÿ Requirements. Monina Lagman. be reasonably necessary and likely to effectively prevent the expected losses. Alpe Macalalad. Retrenchment is one of the authorized causes for the dismissal of employees. Lastly. 3) good faith in abolishing the redundant positions. Heidi Soria. Lopez Sugar vs. 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. Dianne Miano. 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. 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. alleged losses if already realized. 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. be a certain degree of urgency for the retrenchment. And even assuming that the closure was due to a reason beyond the control of the employer. as such imminence can be perceived objectively and in good faith by the employer. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers. Edlyn Santiago. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. it must. cut other costs other than labor costs. low market demand and expiration of permit to operate its sawmill department. 1993 and of March 2. thirdly. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. To determine whether the petitioners were validly retrenched or were illegally dismissed. it is recognized under Article 283 of the Labor Code.
(2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. the Middle East war and the 9/11 incident in the United States of America. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the Nature of Loss Lopez Sugar vs. or the expected imminent losses sought to be forestalled. and financial hardship for certain workers. Monette Mesa. Dianne Miano. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. however. SMC has thus proven substantial business reverses justifying retrenchment of its employees. and (4) sufficient and convincing evidence prove the alleged losses. seniority. including some of those who had been retrenched. or that a fair and reasonable criteria had been used in selecting the employees to be retrenched. efficiency. (2) the losses are actual or reasonably imminent. Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. in order to give employees some time to prepare for the eventual loss of their jobs. must be proved by sufficient and convincing evidence. whether they are temporary. regular or managerial employees). actual and real. Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. more than 100 new workers were hired. Alpe Macalalad. Kristel Macatangay. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union. as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. Anna Tetangco 10 . physical fitness. After the retrenchment program was implemented. Jake Ng. and (d) the alleged losses. Federation of Free Workers(Heidi) Irah Burog. age. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure. Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment. 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. whichever is higher. Sto. and 12 managers and supervisors were promoted. are reasonably imminent as perceived objectively and in good faith by the employer. Held: Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees.e. (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. Petitioners failed to show any reasonable necessity for the retrenchment. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. Edlyn Santiago. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Charms Haw. but substantial. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. expected losses. For termination due to retrenchment to be valid. The CA ruled that the dismissal was unjustified. 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. not de minimis. if already incurred. if already incurred. or if only expected. if already incurred. Ysan Castillo. Ÿ Philippine Carpet vs. The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. such as status (i. are not merely de minimis. Held: Decision of CA affirmed. Jon Santos. casual. 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. 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. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal. Monina Lagman.” Ÿ Blucor Minerals Corp.. Heidi Soria. vs.Labor II be proved by sufficient and convincing evidence. serious. Amarilla (Jake) Facts: Blucor notified Amarilla. "on account of depressed business conditions brought about by the currency crisis in Southeast Asia. and the expected imminent losses sought to be forestalled. 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. Ÿ San Miguel Corp vs.
petitioner Galace. In 1997. petitioner did not renew his contract because of "sliding incomes". to provide transportation services to personnel and dependents inside said facility. caused the retrenchment and retirement of a number of its employees. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. San Antonio. Phil. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. Heidi Soria. Ÿ As petitioners themselves admitted. In the nature of things. would be unduly oppressive. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. and not because of serious business losses. Thus. materialized. Edlyn Santiago. One month before the target closure date of its remaining outlets. the employer becomes legally privileged to retrench and reduce the number of his employees. Jake Ng. Carpet vs. Charms Haw. the possibility of incurring losses is constantly present. the remaining branches were also closed. JFSI had 8 outlets for its coffee shop and restaurant business. 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. if such an intent were expressly written into the law. unjust. in other words. Jon Santos. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs. Ysan Castillo. that law may well be vulnerable to constitutional attack as taking property from one man to give to another. Naval Base Facility located in San Miguel. They that after the termination of the services of its members. Monina Lagman. the company found no recourse but to shut down its outlets. Dianne Miano. Indeed. Held: Apparently. and unfair to the employer. "opted not to renew the existing contract nor bid on the new contract". in the carrying on of business operations. it held. 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. or under what circumstances. the employer must prove serious business losses. since some. As a consequence. allegedly to prevent losses due to major economic problems. owner and general manager of SMJS. in fact. Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. in our view. what they Ÿ Cama vs. not all business losses suffered by the employer would justify retrenchment under this article. To require an employer to be generous when it is no longer in a position to do so. Employer advised 110 casuals to report to its personnel office. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. that petitioners failed to present adequate proof of such losses. Kristel Macatangay. JFSI sent notices of Irah Burog. Joni’s Food Services (Jake) Facts: In the 1990s. faced with dropping sales. In its ordinary connotation. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. In other words. due to financial difficulties. however. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. the difficult question is determination of when. Anna Tetangco 11 . thus petitioner cannot justify the nonpayment of separation pay. Held: Respondents assert that the company was taking losses of such magnitude which left its survival or future existence in the dark. 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. When the said contract expired. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have." Sliding Income Ÿ San Miguel Jeepney Service vs. Ÿ Ÿ To justify retrenchment. JFSI shut down more outlets. as found by the Court of Appeals. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code. Held: NLRC decision affirmed. NLRC (Jake) Facts: Petitioner SMJS had a contract with the U.Labor II Fact: Employer. It is not. respondents had no option but to lay off employees and eventually close shop. Zambales. it shut down three of these shops to avert serious business losses. leaving it with just three operating outlets at the end of 1998. in greater or lesser degree. 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.S. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. To stem these serious losses. Thus. Alpe Macalalad. Monette Mesa. Sto. otherwise. indeed many. he having suffered a net loss the prior year. the services of the complainants were terminated.
is not conclusive proof of serious business losses. employees who were recently hired were the ones retrenched. The termination of the 531 affected employees was made effective a month from receipt of the termination letter. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. Daguman (Jake) Facts: Petitioners aver that they were compelled to close the company’s brokerage department. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. Heidi Soria. 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. Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. the right of affected employees to separation pay is lost for obvious reasons. vs. The petitioner posits that even if respondent Paras had become a regular employee by November 26. in order to prevent further losses which threatened the company’s viability. Kristel Macatangay. it is an essential requirement that alleged losses in business operations must be proven convincingly. good faith. or closure of the establishment because the brokerage department did not actually cease operations. It is beyond cavil then. 1996. decreasing gross revenues. of course. Anna Tetangco 12 . 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. Considering that respondent Paras had just been regularized on November 24. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. who Ÿ Composite Enterprises Inc. What the law speaks of is serious business losses or financial reverses. Ÿ Ÿ Mitsubishi Motors vs. Otherwise. the petitioner concludes. Jake Ng. Otherwise. Ÿ Danzas International vs. the employer closing his business is obligated to pay his employees their separation pay. although the more overriding consideration is. Federation of Free Workers A comparative statement of revenue and expenses for two years.Labor II suffered were "sliding incomes". that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. Parenthetically. the payment of backwages should be computed up to February of 1998. such ground for termination would be susceptible to abuse by scheming employers. Clearly. Monette Mesa. 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. 1996. he would have been included among those who had been retrenched had he not been dismissed. 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. by itself. Still. Charms Haw. Dianne Miano. The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. Jon Santos. sliding incomes are not necessarily losses. much less serious business losses within the meaning of the law. Otherwise. they may be assailed as self-serving. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. Since the losses incurred must be substantial and actual or reasonably imminent. to which losses were allegedly traceable due to incorrect handling of sales. Lopez Sugar vs. 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. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. 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. Essentially. In accordance with the CBA. Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. 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. Ysan Castillo. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. Financial statements must be prepared and signed by independent auditors. Alpe Macalalad. pursuant to the "last in first out policy" embedded in the CBA. if the business losses that justify the closure of the establishment are duly proved. he would have been included in the first phase of its retrenchment program. Hence. Held: The petitioner’s losses in 1997 and 1998 are not insignificant. Monina Lagman. 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. in other words. Edlyn Santiago.
profit and loss statements and annual income tax returns. 1997. Edlyn Santiago. the condition of business losses is shown by audited financial documents like yearly balance sheets. this Court has ruled against the validity of the employee?s dismissal. UTI. NLRC. Caparoso and Quindipan filed a case for illegal dismissal. otherwise. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time. 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. the notice is less than one month. This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. When he was 59 years old. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. (International) Corp. employment is to expire on November 3. the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. Ÿ To justify termination of employment under Article 283 of the Labor Code. and the expected imminent losses sought to be forestalled. Monette Mesa. Alpe Macalalad. Ÿ For retrenchment to be considered valid. it is not enough for a company to merely declare that it has implemented a retrenchment program. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. He found that his employers were not remitting his SSS contributions. In other words. There is no evidence that it complied with the one-month notice requirement. in general. Dianne Miano. It is readily apparent that petitioner did not comply with any of the foregoing requirements. I. He filed a week long leave and found that he had osteoarthritis. 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. In the same case of Sevillana vs. or only three days later from the date of the Memorandum. Ÿ Worse. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp. After the expiration of his contract he was rehired (this extended for 5 contracts). failing which these can be assailed as self-serving documents. Burden of Proof Ÿ Sy vs. and to the rehabilitation of Uniwide. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. the dismissal would be unjustified. for the memorandum states that respondent’s contract of Irah Burog. and (d) the alleged losses. Ÿ As this Court stated in Triple Eight integrated Services. his employment contract was not renewed. otherwise. Kristel Macatangay. Moreover. Heidi Soria. In the absence of the required certification by a competent public health authority.Labor II deliverymen with Composite Enterprises. He filed an illegal dismissal case. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. heart enlargement. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. Inc. Charms Haw. attributing these to the Asian currency crisis. must be proved by sufficient and convincing evidence. or if dismissed. While petitioner claims that it issued to respondent an October 30. After the 5th. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. Anna Tetangco 13 . and (b) the cessation of business must be bona fide in character. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. vs. 1997 Memorandum of termination of employment..T. 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. Normally. Jake Ng. it failed to prove that such document was ever served upon respondent and the DOLE. that the dismissal was not illegal. Ysan Castillo. if already incurred. In the case at bar. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. The financial statements must be prepared and signed by independent auditors. He filed for a month leave but SBT refused and it was during this that SBT terminated him. Monina Lagman. Jon Santos. in particular.
Such requirement is mandatory. Ysan Castillo. in other words. Heidi Soria. Sebugero vs. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes.Labor II suspicions. (b) if the employer decides to terminate the services of the employee. Monina Lagman. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. Following the provision of Article 283. respondents implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees. Cement Corp. 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. respondents failed to comply with the one-month notice requirement. Thus. 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. if he so desires. these notices should have been served one month before. including petitioner. Moreover. if such an intent were expressly written into the law. the employer must notify him in writing of the decision to dismiss him. Jake Ng. IPI Phils. among others. A written notice given to the DOLE is required by law. Federation of Free Workers corporate term from 50 years to 2 years and 7 months. it was dissolved on January 27. vs. respondent TP Cement. As mandated by Article 283. Clearly. 1998. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. The DOLE is the agency that will determine whether the planned retrenchment is justified & adequately supported by facts. GTI conveyed to the petitioners the impossibility of recalling them. But the burden imposed on petitioner National Bookstore does not stop here. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. the retrenchment is defective. Petitioner National Bookstore. It must also show with convincing evidence that the dismissal was based on any of the just or authorized causes provided by law for termination of employment by an employer. Ÿ National Bookstore Inc. 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. They were terminated for gross neglect of duty and loss of confidenc. and. it shifted its business from production to marketing and trading of Thai Petrochemical products. Dianne Miano. With respect to respondent TP Vinyl. as correctly pointed out by the Labor Arbiter in his decision. having no viable projects. 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. only a situation where there is "retrenchment to prevent losses. Charms Haw. actual losses need not set in prior to retrenchment. 1998. Records show that on December 3. In fact. It is not."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. 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. Ymasa and Gabriel filed a case for illegal dismissal. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. but what the law requires is a written notice to the employees concerned. Evidently. Ÿ Article 283 entails. because this time their lay-off is to become permanent. 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. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. 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. (Kristel) Facts: Benedicto Cajucom was the VP – Legal Affairs of IPI Cement. 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. Ÿ Anent the first requisite. Kristel Macatangay. Alpe Macalalad. Monette Mesa. 1998. When effected Ÿ In its ordinary connotation. Due to economic slowdown. Jon Santos. 1998. more than substantially observed this requirement. The notice must be given at least 1 month in advance of the intended retrenchment. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. When the required notices to the employees and to the DOLE are not given. or on November 30. Anna Tetangco 14 . Edlyn Santiago. shortened its Ÿ Irah Burog. stating clearly the reasons therefor.15 This is the situation in the case at bar.
Re-Hiring Effect Atlantic Gulf and Pacific Co.e. the employer must sufficiently and convincingly prove its allegation of substantial losses. The rehiring or re-employment does not negate the imminence of losses. Monette Mesa. 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.Labor II his employees under Art. Dr. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. Ysan Castillo. and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program. 2) Written notice to the employees and to DOLE at least one month prior to the intended date of retrenchment. Ÿ Ÿ Moreover. More than a year after. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. 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. . IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant. The employees. 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. Meris received from Capitol’s president and chairman of the board. Kristel Macatangay. which prompted private respondents to retrench. (ITC) ITC employed 387 workers. EMCO vs. reportedly incurred huge operating losses. Ababon. Edlyn Santiago.. In sum. Held: Private respondent's contention that what the Court in an earlier case. Heidi Soria. Meris (Kristel) Facts: Dr. upheld was only the legality of the redundancy program and not the legality of its implementation. Dianne Miano. 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. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. Meris was the industrial service unit chief of Capitol Medical Center. no law can compel anybody to continue the same. Liability Ÿ Capitol Medical Center vs. under Article 283 of the Labor Code. while it is true that the company hired or re-employed some of the dismissed workers. (b) the cessation of business must be bona fide in character. and (c) payment to the employees of termination pay amounting to one month pay or at least one-half month pay for every year of service. To save itself. 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. Jake Ng. involving the same parties. managerial and staff positions were separated from employment. They also signed releases indicating their conformity with petitioner's redundancy program. while under the second kind. petitioner was charged with unfair labor practice and illegal dismissal by private respondents. Clemente). et al. Monina Lagman. Alpe Macalalad. Thelma Navarette-Clemente (Dr. Jon Santos. They alleged. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work. Abelgas Ÿ Industrial Timber Corp. (IPGC) leased a plywood plant to Industrial Timber Corp. among others. whichever is higher. 283. and as long as he pays his employees their termination pay in the amount corresponding to their length of service. Anna Tetangco 15 . The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. Just as no law forces anyone to go into business.". filed a complaint against ITC and IPGC for illegal dismissal. Charms Haw. vs. received all the benefits due them under the Labor Code. This is to allow the employees to look for other employment. to avoid or minimize business losses. i. 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. a notice Irah Burog. Ababon (Kristel) Facts: Industrial Plywood Group Corp. Dr. whichever is higher. It would be stretching the intent and spirit of the law if a court interferes with management's prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment. Under the first kind. members of the AG&P United Rank and File Association. of Manila vs. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. unfair labor practice and damages. 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. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. petitioner implemented a redundancy program wherein 177 employees occupying rank and file.
Alpe Macalalad. since private respondents cessation and closure of business was lawful. Just as no law forces anyone to go into business. can lawfully close shop at anytime. whichever is higher. and to backwages. Charms Haw. 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. San was previously engaged in the business of manufacturing biscuits and other related products. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. there was no illegal dismissal to speak of. 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. she declined to accept new projects and proceeded with the winding up of her business. 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. Dianne Miano. The announcement in advance was intended to give the workers ample time to look for alternative employment. 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. Meris not having been premised on a just or authorized cause. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. Heidi Soria. as in the instant case. The right to close the operations of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers. Accordingly. fide in character. Kristel Macatangay. Ÿ Just as no law forces anyone to go into business. such exercise will be upheld. Macadams Metal Engineering vs. Monde.283 Right Ÿ Espina vs. CA (Heidi) Facts: M. In the general meeting of the workers. Instead private respondents were required to give separation pay which they already did.Y. Finally. and such act would be tantamount to a taking of property without due process of law. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. The records reveal that private respondents complied with the aforecited requirements. Jon Santos. for any bona fide reason. (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. And the burden of proving such falls upon the employer. Anna Tetangco 16 . Dr. Clearly then. Closing of Business. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment. the right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. This fact negated the obligation to pay backwages. no law can compel anybody to continue in it. whichever comes first. with a fraction of at least six (6) months being considered as one(1) year. Monette Mesa. Edlyn Santiago. Ruling: Explicit from Art. M. 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. 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. or one month pay.” Ÿ The termination of the services of Dr. Monina Lagman. Her health did not improve despite proper medical attention. Ysan Castillo. The employer need only comply with the following requirements for a valid cessation of business operations. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. Ÿ D. she announced her plan to close shop e. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. The owner. and full backwages from the time of his dismissal from April 30. he is entitled to either reinstatement or separation pay if reinstatement is no longer viable. Jake Ng.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief. The determination to cease operations is a prerogative of management which the State does not usually interfere with.Y. 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.Y. Sison decided to retire from business when she became sickly. Reinstatement. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment. Sison. no law can compel anybody to continue the same. and that M. however. 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.
NLRC (Heidi) Facts: Galaxie Steel Corporation is a corporation engaged in the business of manufacturing and sale of re-bars and steel billets which are used primarily in the construction of high-rise buildings. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127. Charms Haw.65 in 1997. This mass of privileges comprises the so-called management prerogatives. Jake Ng. 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. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. 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. employers are also accorded rights and privileges to assure their selfdetermination and independence. One of the rights accorded an employer is the right to close an establishment or undertaking. such exercise will be upheld. And the burden of proving such falls upon the employer. 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. Ysan Castillo. In view of such decision. whichever was higher. as well as the computation of their termination pay. if already incurred. VMC's personnel reduction program was meant to reduce excessive labor costs in the company. The social justice and protection to labor provisions in the Constitution dictate so. Kristel Macatangay. (b) the substantial losses apprehended must be reasonably imminent. Galaxie decided to close down its business operations. and the expected imminent losses sought to be forestalled. In a letter. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. On the other hand. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners.000. Clearly then. Heidi Soria." Where. 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. to wit: P65. NLRC. And it posted the notice of closure on the corporate bulletin board. P48. 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. Petitioners received their termination pay or retirement pay under the pension plan. 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. Although they may be broad and unlimited in scope.785. Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses. indeed. Edlyn Santiago. NLRC (Heidi) Facts: Victoria’s Milling Corp.89 in 1998.97 in 1999. In North Davao Mining Corporation v. Meris Work is a necessity that has economic significance deserving legal protection. the petitioners had not presented evidence to the contrary. 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. as long as he pays his employees their termination pay in the amount corresponding to their length of service. . nor did they establish that the closure was motivated by Galaxie’s anti-union stance. Anna Tetangco 17 . It would. Capitol Medical Center vs. Alpe Macalalad. and (d) the alleged losses. Monina Lagman.000. it is logical for it to implement a retrenchment program to prevent further losses. . this Court held that Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses . the closure then is due to serious business losses. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. In any case.429. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses.480. Jon Santos. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses.753.Labor II Ÿ Cattista vs.204. Monette Mesa. the Labor Code does not impose any obligation upon the employer to pay separation benefits. 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. decided to permanently stop and close its sugarcane operations in Hacienda Binanlutan "due to low sugar prices which affected the viability and profitability of said hacienda" and convert it instead into an ipil-ipil plantation. and of the various demand notices of payments from creditor banks. Ÿ Galaxie Steel Workers Union vs. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. and reasonable Ÿ Irah Burog. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent.389. management subsequently held a conference with all 13 field workers to explain to them the reason for this move.00. Dianne Miano. must be proved by sufficient and convincing evidence. Considering the losses suffered by private respondent. and P13. Besides.
not construable as resignation. 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. One of the rights accorded an employer is the right to close an establishment or undertaking. 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. Cheniver gave its workers additional time within which to report to the new work place.Labor II return of capital. does not appear convincing. Kristel Macatangay. NLRC that several employees namely. 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. Jake Ng. Nonetheless. Industrial Timber Corp vs. 286. thus the procedural requirement for terminating an employee does not come into play yet. That is its prerogative. the labor federation informed petitioner that the employees decided to continue working for petitioner. Resignation is inconsistent with the filing of the said complaint. it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. The complete closure of business operation by petitioners. amounts to cessation of petitioner's business operations in Makati. accompanied with an act of relinquishment. otherwise. However. Five days later. hence. 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. it would hire replacements. Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. Ysan Castillo. otherwise. 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. Anna Tetangco 18 . 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. 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. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. Heidi Soria. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. Now. not one reported for work at petitioner's new site. Consequently. Cheniver has to accord its employees some relief in the form of severance pay. It appears Irah Burog. in our view. Cheniver's contention that private respondents resigned from their jobs. This mass of privileges comprises the so-called management prerogatives. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. the subsequent transfer of petitioner to another place hardly accessible to its workers resulted in the latter's untimely separation from the service not to their own liking. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. 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. Since the closure of petitioner's business is not on account of serious business losses. Resignation must be voluntary and made with the intention of relinquishing the office. 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. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. JAT General Services vs. Ordinarily. Earlier. Ÿ Broadly speaking. Indeed. Cheniver wrote its employees to report to the new location within 7 days. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. Although they may be broad and unlimited in scope. Edlyn Santiago. Monina Lagman. petitioner shall give private respondents separation pay equivalent to at least one (1) month or one-half (1/2) month pay for every year of service. Jon Santos. But even though the transfer was due to a reason beyond its control. Dianne Miano. they would be considered to have lost interest in their work and would be replaced. Suffice it to state that there is no termination of employment during the period of suspension. 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 decision to permanently close business was arrived at after a suspension of operation for several months precipitated by a slowdown in sales without any prospects of improving. In view of the impending transfer. NLRC (Heidi) Facts: Cheniver operates a printing business. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. Charms Haw. Later on. As public respondent observed. whichever is higher. Alpe Macalalad. Monette Mesa.
Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. no business can be required to continue operating at a loss. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. 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. Inc. The last patient was consequently discharged. Ÿ Ÿ Concededly. Charms Haw. Edlyn Santiago. The union had a pending application for registration BLR. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. Dianne Miano. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. by undertaking such suspension of operation. Held: To justify the closure of a business and the termination of the services of the concerned employees. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. That would be a taking of property without due process of law. the evidence belies any claim that the lay-off of respondents was merely temporary. and that said condition would probably be alleviated or improved. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. Ysan Castillo. J. the employer may merge or consolidate its business with another.Labor II absence of serious business losses or financial reverses. the determination to cease operations is a management prerogative that the State does not usually interfere in. NLRC Ÿ Temporary Cessation of Operation. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. nonstock. and in the exercise of such management prerogative. simply to maintain the workers in employment. considering that the dismissal of an employee from work involves not only the loss of his position but. with union. but only 14 out of the 74 rank-and-file employees/union members acknowledged receipt thereof. Alpe Macalalad. that its cessation of operation was really necessitated by its financial condition. Doctors began leaving the hospital and the number of patients dwindled. These acts constitute unfair labor practices. petitioner had to establish the fact of its precarious financial health. it must also protect the right of an employer to exercise what is clearly a management prerogative. on account of its alleged inability to meet the export quota required by the BOI. considering that it involves laying off employees for a period of six months. 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. is a charitable. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Indeed. Heidi Soria. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. It is not enough to merely raise this issue nor to discuss it only in passing. CA Requisite Mc-Shurn Corp. as long as he pays his employees their termination pay in the amount corresponding to their length of service. as well as the resumption of business barely a month after. the State is bound to intervene. Jake Ng. Itr had a 3-year CBA covering from 1987 until 1990. Kristel Macatangay.A. Espina vs. corporation. Monette Mesa. Monina Lagman. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. 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. or its losses abated. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. 10 days later. The operations of the hospital having come to a grinding halt. 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. Even as the law is solicitous of the welfare of the employees.T vs. vs. there is substantial evidence that petitioners intended the Irah Burog. the law requires the employer to prove that it suffered substantial actual losses. Similar notices were individually delivered to union members. On the contrary. as in this case. organized Me-Shurn Workers Union-FSM. Jon Santos. Despite the NCMB's call for a conciliation conference. The cessation of a company’s operations shortly after the organization of a labor union. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. what is more important. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations. The same principle applies in temporary suspension of operations. In this instance.286 Basis San Pedro Hospital of Digos vs. the hospital management considered the union actions as tantamount to a strike. The union saturated petitioner's premises with streamers and picketed the hospital. his means of livelihood. Anna Tetangco 19 . But where it is manifest that the closure is motivated not by a desire to avoid further losses.
that said cessation of employment was merely temporary. Eventually. Inc. which eventually led to his illegal constructive dismissal. along with a prayer for reinstatement. due to non-payment of rentals. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. Assuming arguendo. had ripened to constructive dismissal. CA G. Mabuhay F." he does not receive any salary or financial benefit provided by law. the dismissal is deemed unjustified. Monina Lagman. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. through Mr. Pido was an employee of Cherubim Security and General Services. When a security guard is placed on a "floating status. Ÿ Verily. Sy vs. Jake Ng. Section 3. Digos E. 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. NLRC (Dianne) Facts: Federito B. as in this case. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings. Anna Tetangco 20 . His filing of a complaint for constructive dismissal. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. DISEASE. Monette Mesa. with more reason will an invalid and illegal suspension of operations. leased the premises belonging to Santiago Syjuco. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. As a consequence. Effect on Employer-Employee Relationship Ÿ If a legitimate. 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. 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. Mc-Shurn Corp. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. 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. Charms Haw. The quitclaims and releases. clearly indicates that he did not abandon his work. Kristel Macatangay. Also. pursuant to Art. Apropos this responsibility.284 Ÿ The requirement for a medical certificate cannot be dispensed with. Mc-Shurn Workers Union Ÿ Pido vs. 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. Floating Status Irah Burog. Anent the delay of seven days in the filing with the Court of Appeals of the petition. Mayon Hotel vs. Justice Vicente V. Installation of Labor Savings Device Ÿ Abapo vs. Held: The Supreme Court finds that. signed by the employees concerned as reasonable settlements. it led to the termination of the services of the SMC employees at the Mandaue Brewery. 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. Inc. Alpe Macalalad. Otherwise. Due to the grim economic consequences to the employee. the petitioners admitted that there was indeed such delay. He was later on suspended following his argument with Alcantara. Inc. Jon Santos. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. For as explicitly provided therein. indeed. Mendoza. several functions of its employees were declared redundant.Labor II termination to be permanent. Pido was constructively dismissed. not affect the employment relationship. 286. Ysan Castillo. Drilon (Dianne) Facts: Hotel Mabuhay. Heidi Soria. Edlyn Santiago. However. are binding upon the parties. vs. 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.38 caliber revolver service firearm and duty detail order had already expired. 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. owing to respondent’s neglect to conclude the investigation. His prolonged suspension. San Pedro Hospital vs. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. Dianne Miano. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court.
barricaded the entrance to the leased premises and denied Sundowner's officers. vs. Had they found the 12-hour period too short. In separate infraction reports. Ÿ H. He was also required to submit a written explanation within 12 hours from receipt of the report. there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. Sec. Further. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner. Alpe Macalalad. the report also mentioned that Villena frequently violated company rules. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Procedural due process. and procedural. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims. notices of termination were also sent to them informing them of the basis of their dismissal. Jake Ng. labor contracts being in personam. the manner of dismissal. Dianne Miano. Heidi Soria. Yet. and the same can only be restricted by law through the exercise of police power. Book VI. Monina Lagman. Sec. Jon Santos. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees.e. Subsequently. They claimed that they were dismissed without just cause and without due process. (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation. Kristel Macatangay. Ÿ The rule is that unless expressly assumed. Sundowner has no liability whatsoever to the employees of Mabuhay.. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. Workers Assn. Colcol was eventually dismissed for insubordination and poor work performance. In addition. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. is only to consider them for reemployment in the operation of the business in the same premises. 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. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. petitioners were given due process before they were dismissed.Nature and Requirements 277 (b). Monette Mesa. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. As a general rule.. Constitutional due process protects the individual from the government and assures him of his rights in criminal. Rule 1. He was also required to submit a written explanation within 12 hours from receipt of the report. it was Syjuco who found Sundowner and persuaded it to lease said premises. civil or administrative proceedings. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner. NLRC Essence of Due Process Solid Development Corp. They were also required to submit their written explanation within 12 hours from receipt of the reports. Anna Tetangco 21 . Solid Development Corp.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. incurred absences without official leave and slept while on duty. Charms Haw. In General Ÿ Due process under the Labor Code. Thereafter. Ysan Castillo. he was dismissed for serious misconduct. has two aspects: substantive. the valid and authorized causes of employment termination under the Labor Code. In fine. Even if no hearing was conducted. Agabon vs. Book VI. 2(d) 1.e. Edlyn Santiago. Meanwhile. like Constitutional due process. they were both apprised of the particular acts or omissions constituting the charges against them. employees and guests free access to and egress from said premises. 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. they should have requested for an extension of time. Sundowner wrote a letter-complaint to Syjuco. Thus. Rule 1. and its responsibility if at all. 2(d). neither of them complied. i. 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. thus binding only between the parties. i. loss of confidence and gross habitual neglect of duty. However. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. National Union of Workers in Hotel. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. Requirements Irah Burog. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco. Hence. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises.
Jon Santos.m. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). 1999. In this case. In separate memoranda dated February 4. Time and again. not accorded a hearing. and eventually. They were represented by counsel during the investigation. Kristel Macatangay. For an employee’s dismissal to be valid. Heidi Soria. 1999 at 11:30 a. Ysan Castillo. Central Pangasinan Elec. and (2) the second informs the employee of the employer's decision to dismiss him. Jake Ng. Ÿ The essence of due process is simply an opportunity to be heard. Monette Mesa. Irah Burog. Charms Haw. and breach of trust and confidence reposed on them by management. Held: Valiao’s dismissal from employment is valid and justified. 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. 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. and not notified that the case was submitted for resolution. In fine. it being sufficient that there is some basis for the same or that the employer has reasonable ground to believe that they are responsible for the misconduct and their participation therein rendered them unworthy of the trust and confidence demanded of their position. 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. Macaraeg was then the cashier who also took part in the illicit transactions. Article 282(c) of the Labor Code allows an employer to dismiss employees for willful breach of trust or loss of confidence. as reflected in the summary of tardiness and absences report. Coop vs. 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. Ÿ Valiao vs. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. Carag was not issued summons. They gave their own "answer/explanation" to the charges. informing them of the basis of their termination. he received a suspension order without pay. A hearing was also set. on behalf of all of MAC's rank and file employees. Monina Lagman. 1991." There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record. it is stressed that due process is simply an opportunity to Ÿ Carag vs. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business. As such. They participated in the investigation conducted at petitioner’s board room on February 13. 1999 and signed by the General Manager. the results of which eventually led to their termination for “serious misconduct. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. not given an opportunity to present his evidence. Anna Tetangco 22 . The requirement of a hearing. Finally. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. A formal or trial-type hearing is not at all times and in all instances essential. not accorded a conciliatory conference. on the other hand. and not necessarily that an actual hearing was conducted. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. 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. or as applied to administrative proceedings. Ÿ On the matter of due process. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag.” Held: There exists a valid reason to dismiss both employees. is complied with as long as there was an opportunity to be heard. Dianne Miano. notices were sent to them on March 19. 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. which were then returned due to insufficiency of funds. 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. He was re-assigned from one position to another which was due to his tardiness and absences. and to have reported late almost every day for the period November to December 1991. they were given due process before they were dismissed. Proof beyond reasonable doubt of their misconduct is not required. they were both apprised of the particular acts or omissions constituting the charges against them. not ordered to submit a position paper. Edlyn Santiago. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. Thus. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. What is frowned upon is the absolute lack of notice and hearing. 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.Labor II be heard. Alpe Macalalad.
Ÿ The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. Where, as in this case, sufficient opportunity to be heard either through oral arguments or position paper and other pleadings is not accorded a party to a case, there is undoubtedly a denial of due process. Ÿ King of Kings Transport Inc. vs. Mamac (Monina) Facts: Mamac was employed as a bus conductor. He was terminated form work because of irregularities (fraud) he caused like declaring sold tickets as returned tickets causing the bus company to lose income. Mamac received a letter then terminating him from his work. The lower courts affirmed the dismissal but ordered the bus company to pay full backwages for violation of the twin notice requirement and 13th month pay. Held: Notice requirements were not followed by the bus company. The respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In addition, no hearing was also conducted. Therefore as held in the case of Agabon vs. NLRC, noncompliace with the due process requirements entitles the employee to receive nominal damages. To clarify, the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. Ÿ (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.
Right to Counsel Ÿ Salaw vs. NLRC (Monina) Facts: Espero Santos Salawa was employed as a credit investigator-appraiser. His duties included inspecting, investigating, appraising, and identifying the company’s foreclosed assets giving valuation to its real properties mortgaged to the respondents. The Criminal Investigation Service of the Philippine Constabulary extracted from the petitioner without the assistance of counsel a Sworn Statement which made it appear that petitioner in cahoots with a co-employee, sold 20 sewing machines and electric generators which had been foreclosed by the respondent bank and divided the proceeds thereof in equal shares. When petitioner signified his readiness to appear before the PDIC, private respondent sent him a letter stating that he is requested to come without counsel or representative. The petitioner was terminated for alleged serious misconduct or willful disobedience and fraud or willful breach of the trust reposed on him. Held: Salaw was denied the assistance of counsel hence violated due process of law. It is true that administrative and quasi-judicial bodies are not bound by the technical rules of procedure in the adjudication of cases. However, the right to counsel, a very basic requirement of substantive due process, has to be observed. Indeed, the right to counsel and to due process of law are two of the fundamental rights guaranteed by the constitution to any person under investigation, be the proceeding administrative, civil or criminal. Significantly, the dismissal of the petitioner from his employment was characterized by undue haste and the admission by petitioner which was extracted without counsel cannot be used as evidence against petitioner. Notice Ÿ It is clear that there was an utter absence of opportunity to be heard at the arbitration level, as the procedure adopted by the Labor Arbiter virtually prevented private respondents from explaining matters fully and presenting their side of the controversy. They had no chance whatsoever to at least acquaint the Labor Arbiter with whatever defenses they might have to the charge that they illegally dismissed Carag. In fact, private respondents presented their position paper and documentary evidence only for the first time on appeal to the NLRC. Carag vs. NLRC
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 23
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. Collegio de San Juan de Letran Calamba vs. Villas (Monina) Facts: Belen Villas was employed as high school teacher. She applied for a study leave. It was granted but there were conditions imposed by the school where she was working that she needs to submit certification that she really studied. However, the first semester where she was on leave, her masteral studies did not push through and instead took up a course on the Old Testament. During the second semester, she already started his masteral studies. The President of the school where she was working alleged that her failure to enroll during the first semester was a violation of the conditions of the study leave. Hence, she was dismissed. Held: We affirm the findings of the Court of Appeals that there was no violation of the conditions of the study leave grant. Thus, respondent could not be charged with serious misconduct warranting her dismissal as a teacher in petitioner School. Petitioner has failed to convince us that the three alleged violations of the study leave grant constituted serious misconduct which justified the termination of respondent’s employment. Ÿ Ÿ Petitioner also failed to comply with the procedural requirements for a valid dismissal. As earlier noted, the law requires the employer to give the worker to be dismissed two written notices before terminating his employment. Considering that these notices are mandatory, the absence of one renders any management decision to terminate null and void. Petitioner failed to give respondent the first notice which should have informed the latter of the former’s intention to dismiss her. The next letter from the petitioner, dated June 3, 1996, already informed respondent that she was considered resigned effective schoolyear 1996-1997. These letters did not comply with the requirements of the law that the first written notice must apprise the employee that his termination is being considered due to a certain act or omission. These letters merely required petitioner to submit proof of her studies and respondent could not have reasonably inferred from them that her dismissal was being considered by the petitioner. The fact that there was a hearing conducted by the grievance committee pursuant to the collective bargaining agreement did not work in petitioner’s favor because this was done after petitioner had informed respondent that she was already considered resigned from her teaching job. Besides, the rights of an employee to be informed of his proposed dismissal are personal to him and, therefore, the notice to the union was not notice to the employee. Ÿ Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. Agabon vs. NLRC
Ÿ Sta. Catalina College vs. NLRC (Monina) Facts: Hilaria was hired as an elementary teacher at the petitioner school in 1955 until 1970. In 1970, she applied for and was granted a 1 year leave of absence without pay on account of the illness of her mother. In the meantime, she was employed as a teacher at another school. In 1982, she applied anew at petitioner school. During the commencement exercise of petitioner school she was awarded a plaque of appreciation for 30 years of service. When she reached the compulsory retirement age of 65, petitioner school pegged her retirement benefits only from her service on 1982-1997. Hilaria then filed a complaint for non-payment of retirement benefits. Held: Hilaria abandoned her work. Hilaria cannot be credited for her services in 1955-1970 in the determination of her retirement benefits. For, after her one year leave of absence expired in 1971 without her requesting for extension thereof as in fact she had not been heard from until she resurfaced in 1982 when she reapplied with petitioner school, she abandoned her teaching position as in fact she was employed elsewhere in the interim and effectively relinquished the retirement benefits accumulated during the said period. Abandonment of work being a just cause for terminating the services of Hilaria, petitioner school was under no obligation to serve a written notice to her. Two Notice Rule Ÿ Caingat vs. NLRC (Monina) Facts: Petitioner became the General Manager of Sta. Lucia Realty Development sister companies both organized to service the malls and subdivisions owned by Sta. Lucia. He was allowed to use 10% of the total payroll of Sta.Lucia’s sister company to defray operating expenses. However, the Finance Manager discovered that petitioner deposited company funds in the latter’s personal account and used the funds to pay his credit
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 24
card purchases, trip abroads, etc. Without conducting an investigation, the sister company filed a complaint in court while petitioner filed with the Labor Arbiter a complaint for illegal dismissal. Held: Nonetheless, while dismissal may truly be justified by loss of confidence, we agree with the Labor Arbiter and NLRC that management failed to observe fully the procedural requirement of due process for the termination of petitioner’s employment. Ÿ In this case, the respondents only sent the first notice, gleaned from the June 20, 1996 memorandum. There was no second notice. Neither the public notice in the Philippine Daily Inquirer, a newspaper of general circulation, nor the demand letter could constitute substantial compliance. What the public notice did was to inform the public that petitioner was already separated as of June 20, 1996, the same day he was suspended. never gave respondent Galay an opportunity to explain herself, hence denying her due process. In sum, we find that Galay was illegally dismissed, because petitioners failed to show adequately that a valid cause for terminating respondent exists, and because petitioners failed to comply with the twin requirement of notice and hearing. Ÿ Genuino Ice Co. vs. Magpantay (Monina) Facts: Alfonso Magpantay (respondent) was employed as a machine operator with Genuino Ice Company, Inc. (petitioner) from March 1988 to December 1995. Respondent filed against petitioner a complaint for illegal dismissal. In his Position Paper, respondent alleged that he was dismissed from service effective immediately by virtue of a memorandum, after which he was not allowed anymore to enter the company premises. Respondent bewailed that his termination from employment was done without due process. Petitioner countered that he was not illegally dismissed, since the dismissal was based on a valid ground, i.e., he led an illegal strike at petitioners sister company, Genuino Agro Industrial Development Corporation, which lasted from November 18 to 22, 1995, resulting in big operation losses on the latter?s part. Held: Due to his refusal to report to the Cavite plant, petitioner reiterated its order transferring respondent in its Memorandum, where respondent was also warned that his failure to report to the Cavite plant will be considered as an absence without leave (AWOL) and insubordination. Respondent was required to comply with the order within 24 hours from receipt, otherwise, disciplinary action will be imposed on respondent. Respondent replied with a request that he remain in the Otis plant since a transfer to the Cavite plant will entail additional expenditure and travel time on his part. Petitioner again wrote respondent inviting him to appear before the Plant Level Investigation on December 11, 1995 for the latter to be able to clarify his reasons for refusing the transfer. Finally, petitioner issued its Memorandum informing respondent of its decision to terminate his services. Ÿ Prior to the Memorandum, petitioner sent respondent several memoranda apprising him of the possible implications of his refusal to comply with the order of transfer. Thus, in its Memorandum dated November 24, 1995, petitioner notified respondent that his continued non-compliance with the order of transfer might bring about disciplinary action. Respondent replied to this memorandum, stating the reasons for his refusal. Petitioner sent another Memorandum asking respondent to appear for further clarification of his reasons for refusing the transfer. Despite the meeting, and since respondent, apparently, stubbornly refused to heed petitioner’s order, it was then that the Memorandum dated
Ÿ Heavylift Manila vs. CA (Monina) Facts: Heavylift thru a letter signed by its Finance Manager informed respondent of her low performance rating and the negative feedback from her team members regarding her work attitude. The letter also notified her that she was being relieved of her other functions except the development of the new access program. Subsequently, respondent was terminated for alleged loss of confidence. Held: An employee who cannot get along with his coemployees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee's attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer. However, we are not convinced that in the present case, petitioners have shown sufficiently clear and convincing evidence to justify Galay's termination. Ÿ In our view, neither does the February 23, 1999 letter constitute the required notice. The letter did not inform her of the specific acts complained of and their corresponding penalty. The law requires the employer to give the worker to be dismissed two written notices before terminating his employment, namely, (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him. Additionally, the letter
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 25
the company gave him the opportunity to be heard in his defense. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. Heidi Soria. an employee must be given the twin requirements of due process-proper notice and hearing. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. Ÿ What is most important is that before termination. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal. Dianne Miano.Labor II December 13. pursuant to Section 5 above. or for health reasons under Article 284. she was later promoted. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal. Magos was later terminated. He was later dismissed by petitioner due to dishonesty. and thereafter. vs. and private respondent should again be allowed to answer and be heard. Ÿ Procedurally. an inquiry why he did not give the explanation required in the January 4. and due process was observed. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. Jon Santos. Even though petitioner in this case never admitted the accusations of dishonesty against him. a notice of the decision to dismiss. if after the said thirty-day period private respondent still did not give his explanation about the incident. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. for an authorized cause under Article 283. a hearing or an opportunity to be heard and after hearing or opportunity to be heard. 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. Edlyn Santiago. respondent’s right to due process was not violated. Kristel Macatangay. By requiring him to submit a written explanation within 48 hours from receipt of the notice. Alpe Macalalad. Due process is not violated where a person is given the opportunity to be heard. Caurdenetan Piece Workers Union vs. pursuant to Section 6 above. but when she was ate her new position she was charged with misappropriation was subsequently dismissed. Charms Haw. Monina Lagman. (1) if the dismissal is based on a just cause under Article 282. Private respondent availed of this chance by submitting a written explanation. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. 11 In the instant case. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. perhaps. Magos countered it was necessary as sales were down. above. 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. Thus. When they formed a union they were barred and were replaced with non-union members. (3) the dismissal is without just or authorized cause and there was no due process. “J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. Hearing Ÿ Magos vs. Monette Mesa. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao. Anna Tetangco 26 . which made a dishonest mark in his timecard by marking present on a day he is absent. but an accident happened later in his career which caused his dismissal. another notice about the decision of dismissal. or as applied to administrative proceedings. Ysan Castillo. 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. he impliedly acknowledged his insubordination as shown in his petition. and (4) the dismissal is for just or authorized cause but due process was not observed. pursuant to Section 2. 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. should also be sent to private respondent. but it chose not to participate therein without any known justifiable cause. 1995 was issued to respondent informing him of the management’s decision to terminate his services. National Semi-Conductor Distribution vs. vs. Position Paper Ÿ Shoppes Manila Inc. and adding therein. (2) the dismissal is without just or authorized cause but due process was observed. Ÿ La Carlota Planters Assn Inc. Ÿ The law requires the employer to afford his employee ample opportunity to be heard. an opportunity to explain one's side. but chooses not to give his side of the Ÿ Lavador vs. Jake Ng. this does not give petitioners an outright license to terminate private respondent. Clearly. Irah Burog. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. 1993 letter.
Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed. 94-016. 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. Zialcita (Jon) Facts: Zialcita was assigned as clerk of CF sharp. Kristel Macatangay. stating clearly the reason therefore. 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. Held: Apparently. Dianne Miano. the vessel's Master ordered him to perform Ÿ Irah Burog. where the rules of evidence apply with greater rigidity. Sharp’s argument might have in the context of ordinary civil actions. These two notices would have sufficed had it not been for the existence of Systems Practice No. a deck work. Effect of Failure. On 2 March 1996. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. 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. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. PLDT is bound to comply with the Systems Practice. if he so desires.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping. NLRC (Ysan) Facts: Fernando. Anna Tetangco 27 . the procedural deficiency in the dismissal of Suico. Espanola (Jon) Facts: C. There is nothing in the records showing that respondents complied with the two-notice requirement. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. In termination cases. Held: Respondents failed to observe the necessary procedural safeguards. Under Systems Practice No. The last notices informed Suico. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. were implicated in said incident. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. (b) if the employer decides to terminate the services of the employee. Suico et al. 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. whatever merit C. if he so desires. sustained injuries when strikers blocked her way to the premises of PLDT. This option is part of their right to due process. He alleged that because of his refusal to obey the order. Edlyn Santiago. Jon Santos. Notices from PLDT management were sent asking for an explanation of the said incident. Monette Mesa. the employer must notify him in writing of the decision to dismiss him. Charms Haw. disappears when adduced in connection with labor cases. et al. Heidi Soria. Jake Ng.and (b) the employee be afforded an opportunity to be heard and to defend himself. hatch stripping. a PLDT managerial employee. Suico. PLDT complied with the two-notice requirement of due process. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. the Master made several negative reports against him.Substantive. 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. Hence. Alpe Macalalad. however. Ÿ In order to effect a valid dismissal. et al. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter.Procedural Ÿ Suico vs. that. Ÿ It should be emphasized. exercised their option under Systems Practice No. vs. respondents repatriated him to the Philippines.F. 94-016. Ysan Castillo. Monina Lagman. Sadagnot alleged that when the order was issued. consistent with our ruling in Agabon. the law requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code. failed to explain and were terminated. 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. Cross Examination Ÿ CF Sharp Crew Management Inc. et al. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. The first notices sent to Suico. FAILURE OF DUE PROCESS Sadagnot vs. set out in detail the nature and circumstances of the violations imputed to them. of the decision to terminate their employment and cited the evidence upon which the decision was based. Suico et al. with supporting documents and their affidavits. In the course of his employment he misappropriated an amount sent by a seaman for his family. et al. He refused the order on the ground that it was not related to his duties as Third Officer.
that where the dismissal is based on a just cause.Labor II substantive bases thereof were never put in issue. Ÿ Verily. they were nonetheless given adequate opportunity to answer the charge. Glaxxo-Wellcome Phils. NLRC the new car plan were those of union officers Cerezo and de Guzman. Heidi Soria. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. Roxas merely said he tried to report to the office. he was barred from entering the company’s premises. 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. there was no necessity for an actual hearing. Ÿ In termination cases. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. Jon Santos. Glaxo took into consideration the explanations they had offered. Ysan Castillo. Jake Ng. therefore. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. as well as the receipts for the Fundador Brandy giveaways. He was being directed to go on vacation leave and consume all his remaining leave credits. Alpe Macalalad. Ubaldo. Anna Tetangco 28 . and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. Under the circumstances. Charms Haw. he shall turn over all his accountabilities to an officer of the company. the failure to give the required notice does not invalidate the same. namely. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog. vs.. et al. Inc. Platon. He wrote a letter to the President of the company but he did not receive any reply. An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. While he was on leave. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. Held: In the case at bar. and. vs. Edlyn Santiago. Incidentally. Such sanctions. It did not narrate that it heard petitioner’s side. which in fact they did. In arriving at the decision to dismiss them. nor did it show that petitioner was given notice of his dismissal. Pursuant to the same. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. Both refused to surrender their vehicles and were thus sent notices of termination. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing. Agabon vs. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. however. he was served with a memorandum from LBC's Board Chairman. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. and in the meantime. Monina Lagman. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. Consistent with San Miguel Corporation v. Failure to do so would necessarily mean that the dismissal was not justified. Kristel Macatangay. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience.. Ÿ The present rule is set forth in the Agabon v. Held: Without a doubt. It is sufficient to show by substantial evidence that the employee is guilty of misconduct which makes the latter unworthy of the trust and confidence demanded by his position. The employee should be appraised of the particular acts and omissions for which the dismissal is sought. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. but petitioner did not allow him. vs. Where the dismissals are illegal. He was then instructed to take a leave of absence for a month. but did not receive a reply. he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. Under the provisions of the said car plan. NLRC. Florido reluctantly complied with the order. 2. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. Ÿ Alladin Transit Corp. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. Dianne Miano. was illegal. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. upon the other hand. but merely holds the employer liable for damages for violating said notice of requirement. must be stiffer than that imposed in Wenphil. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list. inclusive of allowances. the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. Monette Mesa. As a result thereof.
which was granted by the RTC in Aug. Proof beyond reasonable doubt of their misconduct is not required. Monina Lagman. While the case filed in the Makati RTC was later dismissed without prejudice. Kristel Macatangay. Charms Haw. informed by the petitioner that he was considered resigned from his job. if to be considered at all. During that same occasion. in fact. Thereafter. 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. tried to convince the respondent to accept an amount of P50. The complaint was thus filed well within the prescriptive period. Mining Service Corp. Morales filed a motion to dismiss his complaint without prejudice. He and his driver. et al. Here. the fact that Salvador has been employed with the respondent for a long time. the bus he was driving was bumped by a Dagupan-bound bus. One month after his release from the said hospital. As a consequence thereof. His confinement therein lasted a month. In the case at bar. Ÿ Azcor Manufacturing vs. Race suffered a fractured left leg and was rushed to the hospital. Consequently. a language Capulso was not conversant. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. PMSC has every right to dismiss Salvador. It is settled that in illegal dismissal cases. 1995. Morales (Irah) Facts: On Dec. Central Pangasinan vs. however. Race. 2001. medication and hospital expenses of the Race in the hospitals. a managerial employee. NLRC (Irah) Facts: Four months after his dismissal. said that Capulso resigned. Macaraeg consolation for his dismissal but the latter rejected it. 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. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. Jake Ng. Held: In the case at bar.000. in cases of this nature. should be taken against him. Monette Mesa. was on his way back to his office in the plant. Ÿ We reiterate that proof beyond reasonable doubt of the employee’s misconduct or dishonesty is not required to justify loss of confidence. PMSC’s Assistant Resident Manager for Administration. saw Salvador operating the company’s payloader. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. Ÿ Salvador vs. 2002. Heidi Soria. Race (Ysan) Facts: While traversing Tarlac. it was only at this time that the respondent's cause of action accrued. Anna Tetangco 29 . and were written in English. (Ysan) Facts: PMSC’s evidence disclose that Sawa. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. Thus. 1146 of the Civil Code. went to Victory's office to report for work. respondent has proved by substantial evidence the charge of pilferage against petitioner. the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog. It is sufficient that there is substantial basis for the loss of trust. instead of betrayed. He was. Held: To constitute resignation. scooping fine ore from the stockpile and loading it on his private cargo truck. Held: Antonio's invocation of prescription is misplaced. still limping heavily. Frustrated at the snail's pace of his case. On Sept. Thus. 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. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. Morales filed anew a complaint for the collection of sum of money. but was not allowed to resume work afterwards. Moreover. 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. it being sufficient that there is some basis for the same or that the employer has reasonable ground to believe that they are responsible for the misconduct and their participation therein rendered them unworthy of the trust and confidence demanded of their position. the cause of action accrues from the time the employment of the worker was unjustly terminated. Victory shouldered the doctor's professional fee and the operation. Gresones. Jon Santos. Prescription Period Ÿ Victory Liner Inc. Alpe Macalalad. Moreover. Phil.00 as a Ÿ Atonio M. it must be unconditional and with the intent to operate as such. this time with QC RTC. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. Dianne Miano. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. pre-drafted with blank spaces for dates of effectivity. vs.Labor II Degree Ÿ Art. Indeed. Edlyn Santiago. Azcor. Race was confined again for further treatment of his fractured left leg at another hospital. 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. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. the petitioner. Ysan Castillo. et al. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker.
not those who sleep on their rights. Her remarks were neither insulting nor offensive. Held: For misconduct or improper behavior to be a just cause or dismissal. he found that somebody else had been employed in his place. no action whatsoever was taken. Alpe Macalalad. and to the payment of his full backwages. who had been working as a driver with Oro Union Construction Supply. offered to re-employ Ranara. the employer believed that Abella’s dismissal was based on a valid ground. or intent to abandon a lawful claim or cause of action. Jake Ng. Understandably. (b) must relate to the performance of the employee's duties. In this case. Kristel Macatangay. Monette Mesa. the court may not only mitigate. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. and (c) must show that the employee has become unfit to continue working for the employer. to invite Ranara back to work in his store. (a) it must be serious. contending that it was Ranara who actually abandoned work when he stopped reporting. vs. in a belated gesture of good will. This militates against the propriety of granting Abella backwages. Anna Tetangco 30 . Held: Petitioner was illegally dismissed without even the politeness of a proper notice. it must be stressed that not every case of illegal dismissal will automatically entail its grant. et al. sincere or not. and the liability did not abate as Irah Burog. Offer to reinstate Ÿ Ranara vs. Chang. On the contrary.Twin Remedies Ÿ Marival Trading Inc. did not in any way pertain to Abella's duties as chemist/quality controller. a result of Chang's repentance. Subsequently. but also absolve the employer from liability of backwages where good faith is evident. 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. filed a complaint for illegal dismissal and sought reinstatement with full back wages. it was only after the complaint had been filed that it occurred to Chang. SANCTIONS AND REMEDIES 14. Without cause and without any investigation. In this case. the employer. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner.07 GENERAL RULE Nature and Remedies. These remedies give life to the worker’s constitutional right to security of tenure. His case remained pending before the CA for six long years. The prescriptive statutes serve to protect those who are diligent and vigilant. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges. NLRC (Irah) Facts: Carlos Ranara. he was even scolded for being "hard-headed" and not accepting his dismissal. the acts complained of. Charms Haw. Heidi Soria. inclusive of allowances. Ranara was simply told that he should not report back for work the following day. When he protested his replacement. inaction. Abella did not make false and malicious statements against her superior. As regards backwages. a chemist/quality controller at Marival Trading. as to sanction Abella’s unprofessional and disrespectful conduct. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. alleging that she was dismissed without just cause and due process. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued. and to his other benefits or their monetary equivalent. Monina Lagman. under the circumstances they were done. We doubt if his offer would have been made if Ranara had not complained against him. G. Edlyn Santiago. Ysan Castillo. Notably. Her acts did not constitute serious misconduct as to justify her dismissal.Labor II claim. he felt frustrated at the snail's pace at which his case was moving. When he did so just the same. At any rate. Dianne Miano. denied the charges. Moreover. Ÿ Under Article 279 of the Labor Code. thus allowing the statute of limitations to bar any subsequent suit. Oro. filed a complaint for illegal dismissal against Marival. Chang's sincerity is suspect. lack of interest. But it does not simply mean a mere lapse of time. The wrong had been committed and the harm done. thinking that the secretary had only spoken in jest. Morales's intention was to expedite the enforcement of his rights. Rather. formal or otherwise. Jon Santos. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time. NLRC (Irah) Facts: Vianney Abella. 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. While generally an order of reinstatement carries with it an award of backwages. 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. there must be a categorical showing that due to plaintiff's negligence. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. even moral and exemplary damages.
An altercation ensued between Cabatulan and Alaan. inclusive of allowances. which can hardly be considered a forbidden act or a dereliction of duty. they were transferred back home since their services were no longer needed. inclusive of allowances. and other privileges and to his full backwages. Trucking but was refused admission by Alaan who was armed with an armalite rifle. His suspension was subsequently extended. Jon Santos. wanted to see him. et al. With regard to the charge of disobeying a memorandum. Dianne Miano. Ÿ Nueva Ecija Electric Corp. 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. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. They did not voluntarily quit their jobs. Acuna (Irah) Facts: Respondents Acuña.C. and other benefits or their monetary equivalent. Before proceeding to the meeting place. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. Kristel Macatangay. an assistant cashier of Tropical Biological Phils. Ÿ Ÿ Cabatulan vs. were illegally dismissed. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. voluntarily resigned from employment. they were forced to resign or were summarily dismissed without just cause. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. denied the charges and averred that Acuña. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. Monette Mesa. because of a disagreement in the purchase of some spare parts. without being informed of its reason. et al. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. Held: Cairlan was illegally dismissed. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. Lourdes Belga. Jake Ng. Held: Respondents Acuña. et al. Moldez alleged that he was at first suspended from work without pay for 7 days. Julio’s security aide. Eduardo Cairlan. Acuña. Heidi Soria. Cabatulan was informed that respondent Julio’s brother.. Great Southern Maritime Services Corp vs. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. and payment of his full backwages. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. et al. Held: Belga was illegally dismissed.e. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. filed a complaint for illegal dismissal against Lakpue. delivered a child. inclusive of allowances. et al. Great Southern. which is a subsidiary of Lakpue. Held: Yes. et al. Anna Tetangco 31 . which explains his repeated failure to report to work. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. the law intended reinstatement to be the general rule. Cabatulan refused to sign the same. Ysan Castillo. Rather. vs. He was assured to be rehired. Julio offered him 5k should he agree to sign the resignation letter. Charms Haw. Ÿ Where the dismissal is without just or authorized cause and there was no due process. Belga's absence for 16 days was justified considering that she had just Irah Burog. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business. a driver of NEECO. Cabatulan passed by the premises of J. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. 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. filed a complaint for illegal suspension and dismissal against Pheschem. Belga (Irah) Facts: Ma.Labor II Ÿ Pheschem Industrial Corp vs. Before the expiration of their contracts. NLRC (Irah) Facts: Pablito Moldez. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. Issue: W/N Cabatulan is entitled to backwages and separation pay. Monina Lagman. Clearly. They employed Cabatulan as operations manager and purchasing officer. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. vs. et al. Alpe Macalalad. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. Edlyn Santiago. Cabatulan agreed and immediately went home. Held: Moldez was illegally dismissed. filed a complaint for illegal dismissal against NEECO. but eight months had already passed with no word from Pheschem.
overtime pay. separation pay. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. if viable. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. 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. In fact. An illegally dismissed employee is entitled to two reliefs. Heidi Soria. respondents' services were terminated without the benefit of notice and hearing. 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. Edlyn Santiago. allowances and other benefits. Backwages and separation pay are. ordered the payment of both. 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. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. 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. 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. Jon Santos. et al. The award of one does not preclude that of the other as this court had. as contained in the decision of the labor arbiter. Ysan Castillo. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. The respondents failed to comply with the order of reinstatement. The grant of separation pay does not impede an award for backwages as the latter represents the amount of earnings lost by reason of unjustified dismissal. Jake Ng. 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. These are separate and distinct from each other. therefore. They posit the argument that with respondents' receipt of their separation pay. complainants' backwages accrued. illegal dismissal. Act No. A more equitable settlement. even pending appeal. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. Monette Mesa. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. had already been fully satisfied. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. distinct reliefs granted to one who was illegally dismissed from employment." 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. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. private respondent Salazar was employed by Globe-Mackay as general systems analyst. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. 1989 were granted backwages up to three (3) years without deduction or qualification. Ÿ Triad Security vs. Under Article 223 of the Labor Code. insofar as the reinstatement aspect is concerned. Thus. and claims for 13th month pay. and attorney's fees. holiday pay. Issue: W/N petitioner is still liable for backwages Held: Yes. Alpe Macalalad. Dianne Miano. according to petitioners. 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. Monina Lagman. or separation pay if reinstatement is no longer viable and backwages. 6715 on March 21. NLRC (Anna) Facts: In May 1982. an illegally dismissed employee is entitled to either reinstatement. in proper cases. Upon learning of the complaint. the payment of separation pay. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. In effect. Charms Haw. In this case. illegal deductions. shall be immediately executory. were formerly employed by Triad Security as security guards. service incentive leave pay. Though there are specific circumstances where reinstatement is not a practicable remedy. 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. Kristel Macatangay. therefore. underpayment or nonpayment of allowance. hence. namely: backwages and reinstatement. premium pay for holiday and rest day. while those illegally dismissed after. Respondents filed a complaint for underpayment/nonpayment of salaries. Anna Tetangco 32 . However. Petitioners insist that their monetary obligation.Labor II to the effectivity of Rep. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. Ortega (Anna) Facts: Respondents Ortega. Ÿ Under the existing law. moral and exemplary damages as well as night shift differential.
Mercury Drug appealed with the NLRC which held that there was illegal dismissal. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. controlling stockholders. or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. to full backwages. As a necessary consequence of change of corporate personality (i. board membership. condition. There being no evidence to show an authorized. The Court held that "there being no more positions in the machine shop to which the dismissed employee." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee. at the time of his reinstatement. Moldez) 14. her eventual separation from employment was not for cause. Jake Ng. unless such position no longer exists." Held: By itself. (Pheschem Industrial vs. not only to be entitled to reinstatement. Monette Mesa. position. mostly welders. for the dictionary meaning of the word "reinstate" is "to restore to a state. there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin. to give her back the income lost during the period of unemployment. corporate name. . Kristel Macatangay. The law mandates the reinstatement of an illegally dismissed employee to his former position. to wit: "An employee who is separated from work without just cause should be reinstated to his former position. However. in the former. Heidi Soria.) of the old Republic Bank into the present Republic Planters Bank. etc. 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. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. Section 4. Dianne Miano. Edlyn Santiago. to offset the impending financial collapse. lathemen. reinstatement is not possible . Book VI of the implementing Rules and Regulations of the Labor Code states. which she subsequently amended to include illegal dismissal. .Labor II to inform her employer. Reinstatement pre-supposes that the previous position from which one had been removed still exists. Held: In its generally accepted sense. Rule 1. However. It is the return to the position from which he was removed and assuming again the functions of the office already held. etc. Irah Burog. Instead of submitting an explanation. reinstatement was erroneously ordered for the petitioner's shop was already closed. but as well.08 REINSTATEMENT Employee Right Ÿ Quijano v. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice. Charms Haw. could be returned. Anna Tetangco 33 . Jon Santos. vacation and sick leave benefits. Also. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is. looking to the past.e. 13th month pay and damages. Salazar was placed under preventive suspension for 1 month. the position previously held by the complainant Luna was not abolished. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement. His services were terminated allegedly for disrespecting his superiors several times. the bank suffered from the danger of financial collapse. in the case at bar. to restore the dismissed employee to her status before she lost her job. Both remedies. but also gives substance and meaning to the protection accorded by the Constitution to labor." Here. Monina Lagman. cause for the dismissal of private respondent. Ysan Castillo. but is now held by the incumbent manager who replaced Luna. Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug. reinstatement is a restoration to a state from which one has been removed or separated. In the case. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. the Labor Code not only recognizes the security of tenure granted by law to regular employees. In providing foremost for the reinstatement of an illegally dismissed employee. private respondent filed a complaint against petitioner for illegal suspension. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. would perforce make her "whole. Although the position formerly held by the herein complainant is now held by another. tinsmith and carpenters. Alpe Macalalad. Issue: W/N the new management is bound to reinstate the employees. Mercury Drug Corp (Anna). Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. drill press operators. much less a legal." And. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings." Ÿ Defined Ÿ Union of Supervisors v. from which one had been removed" and in the latter. she had every right. 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. 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.
or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. embodied in the Civil Code. v. 2001. particularly where the illegally dismissed employee held a managerial or key position in the company. Kristel Macatangay. Issue: W/N there was illegal dismissal. [W]here a penalty less punitive would suffice. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. Ÿ Supreme Steel Corp. as where reinstatement would only exacerbate the tension and strained relations between the parties. give everyone his due. respondent fell short of the two-notice requirement in dismissing an employee. However. starting June 2002. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. 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. the case law developed that where reinstatement is not feasible. Anna Tetangco 34 . 282 (a) of the Labor Code. 2003 Decision reversing the Decision of the Labor Arbiter. authorizes neither oppression nor self-destruction of the employer. Consequently. in addition. petitioner refused to drive for his employer's son. Charms Haw. however. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship. Respondent furnished petitioner a written notice of his dismissal. Dianne Miano. Without ruling on the motion. petitioner fought with the latter. And when respondent engaged the services of another driver. petitioner opted to reinstate respondent in the payroll effective August 23. his family to consider. Heidi Soria. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. especially to a lowly or menial laborer. injuring him and a co-employee who was pacifying petitioner. as the case may be) void. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job. Monette Mesa. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. Over the years. to act with justice. Edlyn Santiago. the omission does not render petitioner's dismissal invalid but merely ineffectual.Labor II Issue: W/N petitioner should be reinstated. whatever missteps may be committed by labor ought not to be visited with a consequence so severe. . However. Held: YES. At one time. . The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. 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. Monina Lagman. however." his illegally dismissed employee should just be given separation pay. petitioner was deprived of the opportunity to respond thereto. It is not only because of the law's concern for the workingman. 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. While the case was on appeal. on March 26. 2003 (while petitioners' appeal in the NLRC was pending). 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. At any rate. The same can be remedied by payment of employee's full backwages from Irah Burog. an assurance of continuity in his source of income which a grant of separation pay could not provide. He charged petitioner for illegal dismissal. Held: YES. Held: Time and again. in protecting the rights of the laborer. the NLRC rendered its July 10. Jake Ng. The CA reversed the NLRC decision. it would be more prudent to order payment of separation pay instead of reinstatement. the time of dismissal until the court ruling that he was dismissed for a valid cause. Issue: W/N respondent should be reinstated. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. Consequently. The Constitution bids the State to "afford full protection to labor. expedient or practical. 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. There is. Some unscrupulous employers. but failed to furnish him written notice apprising him of the charges against him. and observe honesty and good faith toward one's fellowmen. the law recognizes the fact that continued employment gives to a worker. Such is the notice requirement in Arts. . petitioner refused to pay respondent's salary. In giving an illegally dismissed employee the right to reinstatement. 282-283. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. Jon Santos. not to render his act (dismissal or resignation. Not all notice requirements are requirements of due process. the date he actually reported back to work. According to respondent. Others are simply an application of the Justinian precept. and ordering the dismissal of the complaint. Ysan Castillo. As the reinstatement aspect is immediately executory even pending appeal by the employer. merely reinstated in the payroll. Alpe Macalalad. he was instructed to deliver bags of cement to Felix Hardware but delivered the same to one Eduardo Interior. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. In the case at bar." But it is equally true that "the law.
Under Article 223 of the Labor Code. Josefina went to CAP to ask for help. and Section 2 of the NLRC Interim Rules on Appeals under RA No. In this case. the law itself has laid down a Irah Burog. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. SC held that the dismissal was for a valid cause. it is but a recognition of the inherent economic inequality between labor and management. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. is immediately enforceable. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. Ÿ Panuncillo v. Nor is this to condone what had been done by them For all this while. she sold the plan to Josefina. albeit under appeal. the Commission's failure. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment. XI. all the equities of the case must be accorded their due weight. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. as amended by Section 12 of Republic Act No. or refusal.Labor II acceptance of the view that under all circumstances of this case.. to put the two parties on relatively equal positions. Because of need. the law would readily be circumvented. Kristel Macatangay. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP. to timely act on the matter is a serious oversight for which it should be admonished. when petitioner SSPC opted for respondent's payroll reinstatement. 6715. Effect of failure to ask relief Ÿ General Baptist v. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. 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. However. Edlyn Santiago. The intent is to balance the scale of justice. Petitioners question the decision of reinstatement because this was not raised in the pleadings. He was dismissed from employment. 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. 6715. since private respondent considered them separated from the service. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. The rationale of the law has been explained in Aris (Phil. causing untold hardships to the dismissed employee. Charms Haw. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. Ysan Castillo. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. otherwise. Alpe Macalalad. 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. v. Ÿ Article 223 (3rd paragraph) of the Labor Code. Thus. and his failure to do so would result in a finding that the dismissal is not justified. Davao City. the burden of proving the just cause of dismissing an employee rests on the employer. She pledged it to another person who later sold the plan to another. they had not been paid. She availed of an educational plan from her employer. Held: In termination cases. even if he was instigated to take drugs. Issue: W/N petitioner is entitled for reinstatement. vs. Amending the Labor Code. Branch No. It should be made clear that when the law tilts the scale of justice in favor of labor. 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. an award or order of reinstatement is self-executory.) Inc. THereafter. 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. Jon Santos. NLRC. 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. CAP decided to terminate petitioner. Jake Ng. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. Technicalities have no room in labor cases. Anna Tetangco 35 . it should have paid his salary during the period of appeal before the NLRC. she did not transfer the plan in Josefina's name. Monina Lagman. The reinstatement aspect of the Labor Arbiter's decision. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. Heidi Soria. petitioners should not be deprived of their means of livelihood. Pheschem Industrial Corp. in violation of the PAL Code of Discipline. Dianne Miano. Monette Mesa. It was a mere procedural lapse which should not affect his substantive right to reinstatement. After hearing petitioner's explanation. Where a decision may be made to rest [on] informed judgment rather than rigid rules.
its intransigence made it liable nonetheless to the salaries of respondent pending appeal. Charms Haw. Ÿ G & S Transport Corp. strike. although temporarily since the appeal may be decided in favor of the appellant. in lieu of reinstatement.. Anna Tetangco 36 . However. 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.. damages and causes of action arising out of the instant case. The SC ruled that the dismissal was illegal. the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. in lieu of reinstatement. The SC held that Airphils is liable. in this case. Inc. Ad imposible tenetur. Philippine Airlines. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. which the Constitution also expressly affirms with equal intensity. vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. 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. unless such position no longer exists at the time of his reinstatement.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists. 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. Kristel Macatangay. Jake Ng. 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. the award of separation pay of 1 month salary for each year of service.. Ÿ Airphils Corp. Hence. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality. On the other hand. was deemed more practical and appropriate to all the parties concerned.. 4. 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. the law itself has determined a sufficiently overwhelming reason for its execution pending appeal . Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. more so if he actually rendered services during the period. 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. Then. he was not promoted to the position of captain. In short. Although petitioner did not comply with this writ of execution. There is logic in this reasoning of the NLRC. The law itself can not exact compliance with what is impossible. the employee is not required to reimburse whatever salary he received for he is entitled to such. Infante (Alpe) Facts: Respondents were drivers of G & S. NLRC.. of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. Ysan Castillo. waiving “[a]ll other claims. is in order. v. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated. with respect to decisions reinstating employees. the exclusive taxi concessionaire in NAIA. Monette Mesa. an award of separation pay equivalent to 1 month pay for every year of service. however. pending appeal. SEC. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. In Roquero v. They were terminated for an allegedly illegal strike. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above.... given the lapse of considerable time from the occurrence of the Irah Burog. Ÿ If reinstatement is no longer possible. 33 Accordingly.. The SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed.Labor II compassionate policy which. once more. After completing his training. Jon Santos. Edlyn Santiago. Heidi Soria. Alpe Macalalad. If the position is no longer available for any other valid and justifiable reason. Dianne Miano. The above-quoted rule enunciates reinstatement as the standard relief. by and pursuant to the same power (police power). Monina Lagman. seventeen (17) years have elapsed since respondents were illegally dismissed." Ÿ PNOC-EDC v. even if the order of reinstatement of the Labor Arbiter is reversed on appeal. a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. Labor is an indispensable partner for the nation's progress and stability .. Reinstatement to former position. In Association of Independent Unions in the Philippines v. v. the State may authorize an immediate implementation.
But when they reported for work. Construing this provision. Thus. we agree with NLRC that petitioner is entitled only to backwages. NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. retirement pay or whatever else is provided under the CBA or employment contract. upon reaching sixty (60). Monina Lagman. . 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. . Ysan Castillo. 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. and instead were told that they would be replaced “because [they] are already old. we held that an employee may retire. STRAINED RELATIONS Ÿ Pearl Buck Foundation v. NLRC (Alpe) Facts: Querimit. Dianne Miano. "so that . in lieu of reinstatement. . Sec. the petitioner must follow the laws which protect workers and uphold their security of tenure. of Labor) situation where a peaceful relationship is not feasible. was terminated after borrowing money from the mother of one of her wards. Ÿ It would seem. . Heidi Soria. A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. (Union of Supervisors vs. The dismissal was declared to be illegal but reinstatement was not awarded. He was asking to be reinstated but this was denied. . Ÿ Commercial Motors Corp. As the petitioner appears to have lost its trust in private respondent. who in turn is not seeking reinstatement. as an item of relief. However. Sec. However considering that petitioner has already reached the statutory retirement age of sixty (60). and the . coupled w/ a clear absence of any intention of Irah Burog. Jon Santos. NLRC (Alpe) Facts: Espejo worked as general manager for CISP." Ÿ Espejo v. 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. (the employee) can be spared the agony of having to work anew with . (latter) does not have to endure the continued service of . v. although his previous position is now held by another. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. upon their reaching the retirement age. Querimit should be reinstated with backwages. that the circumstances of this case render inappropriate Umlas' reinstatement to his former position. Monette Mesa. Ÿ In such situation. Ÿ There is likewise no basis for the NLRC ruling that Mrs. Kristel Macatangay. however. a case worker. NLRC therefore did not err in denying the reinstatement of petitioner.” Issue: Was there an illegal dismissal? Held: Yes.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. Edlyn Santiago. or may be retired by his employer. it would be an act of oppression to compel them to return to the status quo ante. There is moreover. Luna can still be reinstated because. . . He resigned but later withdrew his resignation. (the employer) under an atmosphere of antipathy and antagonism. Anna Tetangco 37 . 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. which requires a deliberate and unjust refusal of an employee to resume his work. Charms Haw. However. (the former) in whom it has lost confidence. We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle. The SC affirmed the non-reinstatement. Alpe Macalalad. The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients. . the Board considered him terminated and paid his unused vacation leave and transportation expenses. The relief and transfer order per se did not sever thte employment between the Agency and the complainants. agreement or policy an employee may be retired upon reaching the age of sixty (60) years. they were not given new assignments. of separation pay at the rate of one month's salary for every year of service. but still binds the Agency to provide them. of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. the petitioner's contention that Mrs. There is also no abandonment. Jake Ng. Book VI. there is an unfilled position more or less of a similar nature as the one previously occupied. 13. we cannot compel it to retain employees who commit violations of trust relationships.
the complainants are entitled to reinstatement and backwages. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. Charms Haw. (Cabatulan v. NCF stopped paying accrued salaries after three installments. However. was ordered to work during the summer. Otherwise. moved for the ouster of the school director Fr. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. Ÿ As a necessary consequence for the illegal dismissal. they refused to be reinstated. The agency cannot reassign them to the Client. Dianne Miano. No supervening event rendering execution unjust can be considered. Therefore. The latter do not pray for reinstatement. Kristel Macatangay. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. in fact. the employees moved for execution. MCCH decided to defer Irah Burog. Thus. Pending appeal. Anna Tetangco 38 . Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. Alpe Macalalad. teachers and personnel of the school. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. hoping to obtain assistance. backed by the Faculty Association. The subject of the compromise agreement was the reinstatement ordered by the ELA. Such refusal is indicative of strained relations. antagonism is likely to have already caused a severe strain in the relationship between them. Edlyn Santiago. which has recruited new security guards. about a month after Sibal’s termination. That complainants did not pray for reinstatement is not sufficient proof of abandonment. after which the school served Sibal with a letter of termination effective immediately. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. a school nurse at the Notre Dame of Greater Manila. neither was she compensated for the extra teaching job. Buat) Ÿ Sibal v. And it was NCF who caused a strain in the relation of the parties. reinstatement. Sibal filed a complaint for non-payment of compensation and vacation pay. 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.D. Monette Mesa. Ysan Castillo. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. That is human nature. who in turn filed a complaint against the former for conducting an illegal strike. then entered into an agreement with NCF for reinstatement. No strained relations should arise from a valid and legal act of asserting one’s right. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. The school director claimed that the summer was the best time to update the students’ clinical records. though her contract does not require her to do so. Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. For filing an LOA and not reporting to work that summer. backwages and damages against Naga College Foundation. He threatened to take drastic measures against her if she kept refusing to report for work the next summer. 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. and was also assigned to teach health during SY 1981-1982. 176. separation pay is awarded in lieu of reinstatement. Jake Ng. otherwise an employee who shall assert his right could be easily separated from the service. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. tranquility which is an ideal atmosphere in every workplace. They reported to the Agency for reassignment several times but were not given any. the complainants. for otherwise. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. The subject of the NLRC decision. and that she was not entitled to extra compensation for teaching. but the NLF opposed the same. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. she was not paid her vacation pay. refuse to accept other assignments. which they sought to enforce in the motion for execution was also their reinstatement. Heidi Soria. which was part of her regular working program as a school nurse. that they are so obnoxious to the person or business of the employer. Jon Santos. Garcia for serious charges under P. The eventual replacement of Fr. Monina Lagman. Issue: Did the petitioners give up their claims for reinstatement? Held: No. The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. There is no basis for the ruling of the NLRC. reinstatement is no longer feasible.Labor II returning to his or her work. should be such. on the other hand. Howeer. Ÿ Bascon v.
Petitioners are entitled to reinstatement with full backwages. or whose differences with their employer are of such nature or degree as to preclude reinstatement. and requested to be transferred to the Taft Ave. He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work. whose position is one of trust and confidence. Mere allegation of strained relations to bar reinstatement is frowned upon. Jon Santos. reinstatement is no longer possible. then an order to desist from participating in the mass actions. Ÿ Acesite Corp. and that she could not transfer as there was no proper turnover of her accountabilities. But he is not entitled to reinstatement. an unjustly dismissed employee can never be reinstated. he being in charge of the over-all security of the hotel. Jake Ng. the latter filed a notice of strike. Dianne Miano.. v. Issue: Was there illegal dismissal? Held: Yes. It has been almost a decade since the incident that led to Uy’s dismissal. Monette Mesa. Ÿ In illegal dismissal cases. Here. The other involved parties have long been assigned in another area or are no longer connected with BPI. an ordinary striking worker must have participated in the commission of illegal acts during the strike. Sagum v. There now appears no basis for strained relations between the present management and Uy. and were subsequently terminated from employment. The medical certificate also proves that he was indisposed during the period in controversy. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. respectively. otherwise. otherwise. Laureano Gonzales. Alpe Macalalad. Thus. he filed for a 10-day emergency leave. then a 12-day vacation leave. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. and thus. Before the expiration of the 12 day vacation leave. otherwise. cannot be applied indiscriminately. Gonzales was Chief of Security. Issue: Was Gonzales illegally dismissed? Held: Yes. saying she would await the result of the grievance proceeding filed by her union. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. In order to be justly terminated. is allowed. Petitioners herein are nurse and nursing aide. an employee who shall assert his right could be easily separated from the service by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. which she could not do so since she had been barred from entering the bank premises. Ysan Castillo. especially in the light that the same was issued by his rival in the political arena. NLRC (Eds) Facts: Due to a severe stomach disorder. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. Monina Lagman. Otherwise. which was denied. Leo Gonzales. Anna Tetangco 39 . petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. Dr. BPI (Eds) Facts: For shouting at her Senior Manager. which was not approved. Upon being notified of the mass actions. Uy refused. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch. Edlyn Santiago. Zenaida Uy. That is human nature. Heidi Soria. MCCH issued a notice of investigation. thereby using up all leaves he was entitled to for the year. He was told to report back for work. She asked to be considered on leave since then. Ÿ Mere payment of severance pay. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. have no prerogative in the operation of the business. She also alleged sexual harrassment on the part of her Senior Manager. A complaint for illegal dismissal was filed. no strained relations should arise from a valid and legal act of asserting one’s right. Neither can be construed as illegal acts. He must therefore be paid separation pay of 1 month for every year of service instead. Instead. however. Besides. 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. CA (Eds) Ÿ Irah Burog. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). Every labor dispute almost always result in “strained relations. Branch to save on gas expenses. took a 4-day sick leave. Union members and officers staged mass actions inside the MCCH premises. Kristel Macatangay. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. The principle of strained relations. then an emergency leave.” This may be invoked against employees whose positions demand trust and confidence. Jr. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. but he failed to do so. 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. who would not have helped him cover up his absences Ÿ BPI Employees Union v. Petitioners denied receiving said orders. There must be proof of such illegal acts. Here.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. Charms Haw.” and the phrase cannot be given an overarching interpretation. former teller of BPI.
Heidi Soria. a fraction of at least 6 months being considered as one whole year. 3853 as it has the same style and design as P. No. Charms Haw. DBR. de Jesus is petitioners' reviser/trimmer since 1980. Alpe Macalalad. While an employer has the inherent right to discipline its employees. Ÿ The existence of strained relations is a factual finding and should be initially raised. Reyes’ brother. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils. Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. reinstatement is not warranted. Anna Tetangco 40 . 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. 279 of the Labor Code. was allegedly consistently being awarded majority of the printing contracts of IIEE. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. The finding by the CA of strained relations does not have any basis on the records. In addition to backwages. No. de Jesus worked on P. Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. On August 15. Inc.O. Number. 3853 by trimming the cloths' ribs.O. 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. if reinstatement is no longer viable. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Monette Mesa. There are no hard facts upon which to base the application of the doctrine of strained relationship. The owner of said articles was Donato. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. Edlyn Santiago.Labor II Facts: Marilyn Sagum.NLRC (Charms) Facts: Private respondent Lourdes A. otherwise. She was preventively suspended for 30 days. as evidenced by the subsequent judicial order releasing the articles seized during the search. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P. Three days later.O. Sagum is correct that mere persistency in argument does not amount to proof.O. The three year period wherein backwages are awarded must be included in the computation of separation pay.. the principle of strained relations cannot be applied indiscriminately. No. 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. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v. nonetheless. blended. de Jesus received from petitioners' personnel manager a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P. 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. 3853 allegedly required no trimming. Reyes. Ysan Castillo. No. No. 1992. de Jesus maintained that she merely committed a mistake in trimming P. an unjustly dismissed employee can never be reinstated. In her handwritten explanation. but not for dishonesty or tampering. One company. we have always held Irah Burog. Kristel Macatangay. Monina Lagman. The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. argued and proven before the Labor Arbiter. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs." and the phrase cannot be given an overarching interpretation.O. was being illegally manufactured. 1989. they are entitled to either reinstatement. Ÿ Employees illegally dismissed before March 21. To protect labor's security of tenure. Petitioners' personnel department. Jon Santos. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes. Dianne Miano. Here. As reviser/trimmer. Held: There was illegal dismissal. or separation pay. especially where said employee holds a faithful and an untarnished twelveyear service record. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. Issue: Was there illegal dismissal? Held: Yes. Every labor dispute almost always results in "strained relations. Moreover. Jake Ng. who was the legal tenant of the apartment.O. filed a complaint for illegal dismissal against IIEE and its officers. packed and distributed. terminated her from employment and sent her a notice of termination dated September 18. and that such was being undertaken by JDI’s sales rep. Virgilio Reyes. de Jesus based her assigned work on a paper note posted by petitioners. 3853. Sagum’s dismissal was subsequently declared illegal. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. 1992. are entitled to backwages up to 3 years without deduction or qualification. not to mention the considerable length of time Reyes has been out of JDI’s employ. if feasible.
When it was time for him to clean himself he took his T-shirt which was hanging from a post. On 7 March 1990 Tanpiengco was assigned at Bodega I.. Thus. Jake Ng. even pending appeal. i. Moreover. The legislative intent is quite obvious. Jon Santos.e. private respondents. Negros Occidental. Ÿ As a consequence of this. Finding petitioner's explanation unsatisfactory. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation. Edlyn Santiago. even illegally. The notification is based on practical considerations for without notice. The Commission's inaction is a serious oversight for which it should be admonished. Monette Mesa. Monina Lagman. Charms Haw. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. Tanpiengco has since then become a regular employee. The provision of Art. The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory. Petitioner reported back to work but was prevented from entering the company premises." T-shirt valued at P100. An award for reinstatement is self-executory. the immediate execution of a reinstatement order. but they also ignored the due process requirement of the law. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp." from one of the balikbayan boxes inside the container yard. Anna Tetangco 41 . 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.e. 1993. tucked it at his waist and proceeded to the washroom. Held: There was illegal dismissal and therefore should be reinstated. meaning that it does not require a writ of execution much less a motion for its issuance. which he allegedly committed. 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. Ysan Castillo.00. Container Services vs. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages.. Held: The NLRC correctly labeled petitioner as a project employee. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. after a brief suspension. Heidi Soria.Labor II that this right must always be exercised humanely. The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993. the employer has to inform the employee of his choice. 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. the employee has no way of knowing if he has to report for work or not. Falling to exercise the options in the alternative. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. 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. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician. Ÿ Intl. i. reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. dishonesty and theft of property. On October 20. even if the employment contract signed by petitioner fixed the term of his employment. the NLRC failed to act on Tanpiengco's motion for the issuance of a writ to execute the Labor Arbiter's reinstatement order. The fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime. On 30 April 1990. he admitted to the investigating officer that he took the "Gesim Corp. However. According to petitioner. Kristel Macatangay. petitioner as the employer was duty-bound to choose forthwith whether to readmit Tanpiengco or to reinstate him in the payroll and to inform Tanpiengco of its choice to enable the latter to act accordingly. the 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. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions. Dianne Miano. An application for a writ of execution and its issuance could be delayed for numerous reasons. 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. Alpe Macalalad. The reason is simple. 223 is clear that an award for Ÿ Kiamco vs. The Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco. In the instant case. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. on 28 October 1993. to make an award of reinstatement immediately enforceable. He was accosted by a security guard allegedly for behaving suspiciously. for some inexplicable reasons. but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. as maintained by petitioner. In either instance. 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 Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. On the ground of lack of confidence in respondent Sadac. were unsubstantiated. 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. 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. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. Alpe Macalalad. and ultimately. to the exclusion of the latter’s general salary increases and other claimed benefits which. 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.442. on 10 August 1989. Rule 138 of the Rules of Court. claiming that the association between the parties was one of a client-lawyer relationship. 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. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. In a previous SC decision. Finally. either by virtue of a lawful decree or order. Therefore. or by rightful expectation. 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. is based simply on expectancy or his assumption that. On 26 June 1989. Petitioner Bank disputed respondent Sadac’s computation. therefore. the amount of monetary award due respondent Sadac is P2.456.365. Respondent Sadac theorized that he started with a monthly compensation of P12. Monina Lagman. Likewise. Monette Mesa. Private respondents. failed to show proof as to when the project was completed. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. however. under the rules of client and lawyer relationship.00 in August 1981. accused respondent Sadac of abusive conduct. petitioned for a change in leadership of the department. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. inter alia. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. representing his backwages and other benefits. in a letter-petition to the Chairman of the Board of Directors. it could terminate at any time the services of respondent Sadac. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. private respondents should have retained his services until the actual completion of the project. the Court had the opportunity to elucidate on the reason for the grant of backwages. In reaction thereto. hence. his monthly compensation amounted to P29. Heidi Soria. Per its computation. Charms Haw. Jake Ng. Anna Tetangco 42 . Irah Burog. Ysan Castillo. thus. in the absence of any valid reason to terminate him. including the general increases which he should have earned during the period of his illegal termination.030. 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. qualify for the said increase later. Book V of the Implementing Rules of the Labor Code. Petitioner’s claim. however.Labor II expiration thereof. the total amount of the monetary award is P6. Per respondent Sadac’s computation. Dianne Miano.98 only. as in the case of one’s salary or wage. As of November 1989.00 or more than twice his original compensation. Kristel Macatangay. petitioner Bank terminated the services of respondent Sadac. it maintained. In several cases. they held respondent Sadac’s dismissal illegal. Edlyn Santiago. Petitioner was specifically assigned to work in a particular project. and subsequently General Counsel thereof. 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. Consequently.981. and. 26. Such decision became final and executory. petitioner Bank be ordered forever released from liability under said judgment. Moreover.59. As held by the Court of Appeals. he posited. 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. nine lawyers of petitioner Bank’s Legal Department. The difference. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. as in the case of a wage increase under a wage order. After learning of the filing of the complaint. when he was dismissed illegally. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. Pursuant thereto. however. we did not permit petitioner Bank to rely on Sec. 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. Ÿ Equitable Banking vs.500. Rule XIV. Jon Santos. On 9 November 1989. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank.
The NLRC reversed the decision of the Labor Arbiter. 1990. On January 3. NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. 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. Nature . Moreover. underpayment of wages and claim for indemnity against private respondent. Anna Tetangco 43 . According to the Court. Jake Ng. there is no vested right to salary increases. On the other hand. which pertain to compensation due the employee for services actually rendered before termination. She hired private respondent. Charms Haw. She instituted a complaint for unfair labor practice. Monette Mesa. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. Backwages are generally granted on grounds of equity.Purpose Ÿ Tomas Claudio Memorial College vs. Alpe Macalalad. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. Thus. Ÿ St. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. on the other hand. 1991. 1990. Theresa’s School vs. When private respondent became ill. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. petitioners have become full-fledged regular employees. she went on a leave of absence with the approval by petitioner. Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former's unlawful act or bad faith. but as regular employees. But where. It held that after October 31. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. rather. Esther Reyes on a contract basis. Edlyn Santiago. 1991. the employment of petitioners is no longer on a fixed term basis. NLRC) Ÿ Viernes vs. Backwages. The Labor Arbiter dismissed the complaints. 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. the Court held that petitioners are entitled to full backwages. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. Kristel Macatangay. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. illegal dismissal. entitled to be reinstated to their former position as regular employees. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. 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 dismissal has been adjudged valid and lawful.Labor II In short. Theresa's School of Novaliches Foundation. Moreover. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. they were. what was actually meant was unpaid salaries. Monina Lagman. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal. Ysan Castillo. 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. It is not private compensation or damages. not on a probationary status. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. refer to his supposed earnings had he not been illegally dismissed. etc. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. therefore. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. not merely probationary. petitioners separately filed complaints for illegal dismissal. against herein petitioners before the Labor Arbiter. but awarded private respondent partial backwages. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. private respondent terminated petitioners' employment. Heidi Soria. 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. Accordingly. petitioners were allowed by the private respondent to work until January 2. private respondent invoked Article 283 of the Labor Code. Ÿ When the term "backwages" was used in the NLRC decision. Dianne Miano. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. When private respondent reported for work. NLRC (Charms) Irah Burog. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. she found out that her table. Despite the expiration of their employment contract. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. (General Baptist Bible College vs. Thus. With the continuation of their employment beyond the original term. Jon Santos. Nor is it a redress of a private right but. On appeal.
been entitled to reinstatement as a consequence of his illegal dismissal from employment. for lack of merit. Jake Ng. non-payment of overtime pay. he was promoted as "Liaison Officer" of the school with the Department of Education. allowances and damages. Alpe Macalalad. Held: Grant of backwages proper. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. Rizal. The private respondent would thereby be enriching himself at the expense of the petitioner. earn any income. by expressly asking for separation pay. NLRC. 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. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. 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. Conformably then with Article 279 of the Labor Code. for violation of the Dangerous Drugs Act (Republic Act No. NLRC (Charms) Facts: In a complaint filed before the NLRC. illegal dismissal. Petitioner would have. he is deemed to have opted for Irah Burog. through its president. 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. premium pay for holiday and rest day. 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. 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. hence entitled to separation pay. since it would include that period of time when the latter was in jail. On June 10. 1996. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. While it may be true that on June 11. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. 5137. the private respondent was arrested by the Morong police authorities. 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. petitioner charged private respondent Emmanuel Lo with unfair labor practice. and non-payment of wages or commission and separation pay. likewise. However. 1996. Monina Lagman. It is a form of relief that restores the income lost by reason of unlawful dismissal. there can be no backwages even if she was denied due process. The petitioner insists that backwages should not and cannot be awarded to the private respondent. respondent was detained from June 10. 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. Dianne Miano. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. but is awarded in furtherance and effectuation of the public objective of the Labor Code. Monette Mesa. legal holiday pay. underpayment of salary. In time. The award of backwages is not conditioned on the employee’s ability or inability to. Kristel Macatangay. This is because the private. back wages. Edlyn Santiago. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. Ÿ The payment of backwages is generally granted on the ground of equity. In the interim. The private respondent has not yet been convicted by final judgment in Criminal Case No. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. 6425). but rejected the charge of unfair labor practice and dismissed. Nor is it a redress of a private right. 1996. Indeed. earn any income. 1996 up to July 5. he is presumed innocent until his guilt is proved beyond reasonable doubt. Heidi Soria. the petitioner. It is not a private compensation or damages. petitioner's other monetary claims. Jon Santos. sent a Memorandum to the private respondent informing him that his employment was already terminated. The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail.Labor II Facts: Sometime in 1983. in the interim. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. after appropriate proceedings. Anna Tetangco 44 . Charms Haw. 1997 for violations of the Dangerous Drugs Act. The award of backwages is not conditioned on the employee's ability or inability to. Thus. Aladdin F. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. inclusive of allowances. Trinidad. On 7 August 1992. the private respondent was detained in Criminal Case No. otherwise she would be unjustly enriching herself at the expense of the employer. 1996 until the judgment of the CA shall have become final and executory. and from November 21. 5251. in the interim. Ysan Castillo. 1996 to February 17. where it held that when the employee's dismissal is for a just cause. 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. A criminal complaint was later filed against him. Labor Arbiter Dennis D. without any warrant therefor.
As regards separation pay. in the interest of substantial justice. Jake Ng. Monette Mesa. Suddenly. who is legally entitled thereto having been illegally dismissed. The Supreme Court is clothed with ample authority to review matters. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. 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. without giving him any written notice informing the cause for his termination. with folded arms. Besides. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. We are prompted to give out this last reminder because it is really unjust that a discharged employee should. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. These twin requirements of notice and hearing were undeniably absent in the case at bar. Dianne Miano. as in this case. although Dagui did not bring any appeal regarding the matter. Jon Santos. 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. A contrary view would breed idleness. if it finds that their consideration is necessary in arriving at a just decision of the case. the deduction should be made up to the time judgment becomes final. however. even if they are not assigned as errors on appeal. separation pay is awarded to the employee. Should the laborer decide that it is preferable not to return to work. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself.Computation Ÿ First. Dagui was dismissed. Heidi Soria. No backwages were awarded. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. the employer said "Wala ka nang trabaho mula ngayon. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages. Edlyn Santiago. plumber. Rules of procedure are mere tools designed to facilitate the attainment of justice. Period. Effect Failure to Order Ÿ Aurora Land etc. whether continuous or broken. They are separate and distinct from each other. Charms Haw. Ysan Castillo. and (2) those who have rendered at least one year of service. The award of separation pay is in lieu of reinstatement and not of backwages. remain inactive in the expectation that a windfall would come to him. or separation pay if reinstatement is no longer viable. There are two kinds of regular employees. Monina Lagman. in mitigation of the damages that the dismissed respondents are entitled to. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. 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. Anna Tetangco 45 . amounts to a "plain error" which we may rectify in this petition. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. beginning 1953 until 1982. an illegally dismissed employee is entitled to (1) either reinstatement. that is." Second. (2) plain errors not specified. Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. 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. there is the "law's abhorrence for double compensation. And these." on the alleged ground that his work was unsatisfactory. with respect to the activity in which they are employed. it is conducive to lack of initiative on the part of a laborer. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. Ÿ The Court. Held: Yes to both. Kristel Macatangay. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter.Labor II separation pay in lieu of reinstatement. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. Both bear the Irah Burog. if viable. and the filing of this case. and (2) backwages. The jobs assigned to private respondent as maintenance man. This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. Thus. law and jurisprudence authorize a tribunal to consider errors. carpenter. In this case. In other words. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. vs. and (3) clerical errors. Likewise. although unassigned. To be reckoned for the former is the period of putative service. Alpe Macalalad. In the event that reinstatement is no longer possible.
As observed by the Court in another case. Alpe Macalalad. 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 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. reasonable and mutually beneficial solution. 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. On the other hand. 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. it is to be noted that unscrupulous employers have with unrelenting attrition against their unwanted employees who successfully obtained judgments For reinstatement with back wages seized upon the further proceedings in the industrial court (to determine the actual earnings of their wrongfully dismissed employees for purposes of deduction from the back wages award) to bold unduly protracted and extended hearings for each and every employee found entitled to back wages and thereby practically render nugatory such judgments and force the employees to agree to unconscionable settlements of their judgment award. As to the amount of backwages. the period was based on the remainder of the 4 year prescriptive period). and thus obviate the twin evils of idleness on the part of the employees and attrition and undue delay in satisfying the award on the part of the employer is thus to be hailed as a realistic. dissenting opinion:(Mercury Drug rule) I dissent. which may delay the execution of the decision. Anna Tetangco 46 . (Mercury Drug vs. Ÿ TEEHANKEE. The period of delay in instituting this ULP charge with claim for reinstatement and back wages. Monina Lagman.Labor II stamp of undesirability. Jake Ng. Heidi Soria. and fifteen days without further disqualifications. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. Dianne Miano.. 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. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. Jon Santos. vs. Rationale. although within the prescriptive period. eleven months. 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. 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. Justice Teehankee concurs in the ruling that there shouldn’t be a deduction of earnings elsewhere from the backwages awarded. Kristel Macatangay. 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. generally led to long delays in the execution of the decision for back wages and reinstatement. from the specific result in the Ÿ *** Basically. Itogon-Suyoc vs. Such general awards. As aforestated. However. Charms Haw.As has been noted. is four years. CIR 1974) arbitrary procedures (in the Mercury case. should be deducted from the liability of the employer to him for back wages. as noted in the main opinion. however. Co. 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. 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.. Edlyn Santiago." that is to say. and obviates the twin evils of idleness on the part of the employee who would "with folded arms. he dissents as to the period of computation. the Court applies the precedent recently set in Mercury Drug. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms. He suggested that instead of Irah Burog. 11 months and 15 days in the case at bar) "without further qualifications. 1961. J. Ysan Castillo. J. Monette Mesa. the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period.
All the private respondents. 875. petitioners had the burden of proving that the termination of their services was legal. a case for illegal dismissal was filed. backpay (the same as backwages) could be awarded where. Only in one case was backpay a matter of right. Dianne Miano. As probationary employees.g. Hence. 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. Monina Lagman. 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. 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. signed contracts of employment with petitioner for a fixed duration. in ascertaining the total amount of backwages payable to them. if any. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. should be deducted therefrom. they run the risk of exemplary and punitive damages being assessed against them by way of an increased award of back wages to the wrongfully discharged employee(s) commensurate to the delay caused by the appeal process. Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not. there was no illegal dismissal. The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17. they cannot be removed from their positions unless for cause. 1964 denying petitioner's motion for reconsideration. 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. Ÿ Pines City Educational Center vs.. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer. 11 months and 15 days . Due to the expiration of private respondents' contracts and their poor performance as teachers. Alpe Macalalad. such was necessary to effectuate the policies of the Industrial Peace Act. etc. supra. they were notified of petitioners' decision not to renew their contracts anymore. they are likewise protected by the security of tenure provision of the Constitution. and that was. Edlyn Santiago. the law abhors double compensation. when an employer had declared a Ÿ Irah Burog. History of the different methods in the computation of backwages. the Industrial Peace Act. a) The first labor relations law governing the award of backwages was Republic Act No. 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.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. Monette Mesa. 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. Charms Haw. Here. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts. Jake Ng. Ÿ However. Heidi Soria. Anna Tetangco 47 . 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). as stressed in East Asiatic Co. oppression or dilatory appeals) on the employer's part. Ysan Castillo. In accordance with these provisions. 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. when it is considered that he pursued — with vigor his complaint after its filing on April 25.. 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. 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. except Roland Picart and Lucia Chan. Consequently. Jon Santos. Kristel Macatangay. subject to deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances (e. Normally. and decision in this Court). In addition. 1964 and its en banc resolution of February 25. Thus. NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. in the opinion of the Court of Industrial Relations (CIR).
6715 took effect. depending on several circumstances. 279. should not. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. d) Then came Presidential Decree No. A survey of cases from 1974 until 1989. After the Labor Code (P. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep.D." Under the abovequoted provision. however. No. 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. was expressed as follows: “ART. was nonetheless followed in said case. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. No. 442. among them. Thus. Feati University Faculty Club (PAFLU) v. during the effectivity of P. Ysan Castillo. 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 rule generally applied by the Court after the promulgation of the Mercury Drug case. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title.D. above-quoted. Act No. the CIR increased or diminished the award of backpay. the Court enforced the Mercury Drug rule and. 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. 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. This notwithstanding. Heidi Soria. No. 279. amending the Labor Code. Monette Mesa.A. in the exercise of its jurisdiction. In sum. this Court found occasion in the case of Mercury Drug Co.In order not to unduly delay the disposition of illegal dismissal cases. Security of Tenure. In labor cases decided during the effectivity of R. the good faith of the employer. Inc. . Jake Ng. 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. 442 was still the Mercury Drug rule. Charms Haw. Alpe Macalalad. e) On 21 March 1989. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee. 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. 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. Edlyn Santiago.A No. et al. Republic Act No.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. Jon Santos.. The Court deems it appropriate. However. No. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). 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. et al. (italics supplied).D. namely.D. among them. Article 279 thereof states in part: “ART. 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. b) Mercury Drug rule. (See Itogon-Suyoc case).." (italics supplied) In accordance with the above provision. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). Monina Lagman. No." However. — . 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. 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.The proposal on the threeyear backwages was subsequently adopted in later cases. In an even later case (1987). Kristel Macatangay. the employee's employment in other establishments during the period of illegal dismissal. as a general rule. in effect. Its posture on the award of backwages. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. Security of Tenure. it became mandatory to award backwages to illegally dismissed regular employees. R. as amended. 442) had taken effect. 6715 took effect. 6715. Dianne Miano. 442. 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. backwages to be awarded to an illegally dismissed employee. 442 (the Labor Code of the Philippines). This ruling was grounded upon considerations of expediency in the execution of the decision. the award of backwages equivalent to three (3) years. — In case of regular employment. . when the amendatory law to P. v. inclusive of allowances. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. Feati University (1974) and others. 875. 442 by limiting the award of backwages to three (3) years. supports this conclusion. qualified the provision under P. without qualification or deduction. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. CIR. Anna Tetangco 48 . and during the effectivity of P.
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. Jake Ng. Act No. Dianne Miano. where reinstatement is adjudged. and finally. i. must still earn a living to support himself and family. Ysan Castillo. Act No. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. Kristel Macatangay. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. Clearly. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. Anna Tetangco 49 . 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. However. In other words. the following elements and process must obtain: first. it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls . 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. 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.1996 Ÿ Romagos vs.. 6715. 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. However. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. 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. Such a doctrine is admittedly supported by the early case of National Labor Union v. the award of backwages and other monetary benefits should not be limited to 5 years and must therefore be modified in line with the recent case of Civil Service Commission v. plain and free from ambiguity and. Monina Lagman. second. the provision calling for "full backwages" to illegally dismissed employees is clear. as confirmed by the head of office. However. Rep. 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. before an officer or employee may be dropped from the rolls for mental incapacity. Charms Haw. Gentallan. that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. inclusive of allowances. respondent sufficiently established that petitioner suffers from a mental disorder. Thus. Edlyn Santiago. Atienza. whether the Labor Arbiter correctly awarded full backwages to Timbal. We now turn to the second issue raised. requiring her to undergo psychiatric evaluation. Zip Venetian Blind and the later decision in 1989 of Soriano v. Issue: Whether there was proper procedure and substantial basis for MCWD to declare Romagos mentally unfit to work and drop her from the rolls. 6715 points to "full backwages" as meaning exactly that. Respondent issued to petitioner a letter. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule. Heidi Soria. Ÿ However. as amended by Republic Act No. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance." Thus. must be applied without attempted or strained interpretation. third. NLRC. 6715. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. during said periods. Jon Santos. Monette Mesa. which took effect just five (5) days after Soriano was promulgated. that a written notice is issued by the subject's immediate supervisor.Labor II during the period of his illegal dismissal. First. as amended by Republic Act No. Bustamante vs.e. petitioner was diagnosed to be suffering from Major Depression. Act No. informing the subject of his separation from the service due to mental incapacity. a closer adherence to the legislative policy behind Rep. It may appear that Article 279 of the Labor Code. The underlying reason for this ruling is that the employee. The clear legislative intent of the amendment in Rep. Alpe Macalalad. while litigating the legality (illegality) of his dismissal. but Ÿ Irah Burog. therefore. that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. that another notice is issued by the appointing authority or head of office. 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.All that the 1989 and 1991 medical certifications established is that.
and considering that they were illegally dismissed. Held: As regular employees. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. we said that the rule enunciated in Pines Cityð no longer controls.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. Abandonment as a just ground for dismissal requires clear. and second. Dianne Miano. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. Held: The amount of P 105. Edlyn Santiago. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. Javier failed to report for work. he was arrested and detained for the charge of rape upon complaint of his neighbor. Jake Ng. Ÿ Kay Products vs. the reckoning point for the grant of backwages started therefrom. 1995 cannot be deemed as an abandonment of his work. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. 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. Mere absence or failure to report for work. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. Standard Electric Employees Union (Jake) Facts: On July 31. when respondent Javier was freed on May 24. Now. 1995.Labor II perhaps Republic Act No. He failed to notify the SEMC of the reason for his absences. willful. and unjustified refusal of the employee to resume his employment. 1996 by virtue of the judgment of acquittal dated May 17. CA (Jake) Facts: The employees alleged that they were illegally dismissed. is not tantamount to abandonment. Saldiar (2007) Ÿ Torres vs. Jon Santos. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. Hence. with the second element being the more determinative factor. he immediately proceeded to the petitioner but was not accepted back to work. In the instant case. Moreover. On November 10. 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. hence. deliberate. Anna Tetangco 50 . 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.396. NLRC (Jake) Facts: On January 5. Held: Respondent Javier’s absence from August 9. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. 1989 up to the time of her reinstatement. 1989. 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. in contemplation of the law. On August 9. Alpe Macalalad. the employee must have failed to report for work or must have been absent without valid or justifiable reason. 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. with full backwages from the time she was placed under preventive suspension on October 27. Heidi Soria. Genalyn Barotilla. Monette Mesa.# On November 27. the private respondents should be reinstated. Torres as a security guard. 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. 1989. The complainants further contended that they were coerced and intimidated into signing letters of resignation. 1995. respondent E & R security agency hired petitioner Chona P. and (b) for committing rape. two requisites must concur: first. Monina Lagman. In the recent ruling of the Court. even after notice to return. 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. 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. never left his office. To constitute as such. Charms Haw. Kristel Macatangay. An illegally dismissed employee who. 1996. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. 1995. 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. Ysan Castillo. KPI thereby engaged in ULP. Del Monte vs.ð Standard Electric vs. 1989. 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.
1999. Held: The dismissal of respondent from the service is by reason of retrenchment. respondent Obed Jose Meneses. Filomeno's sister-in-law. Reinstatement of petitioners with backwages is thus called for.Labor II Petitioner Filsystems. On 25 March 1985. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. Clarita's position was neither abolished. 1994 signed by Tomas Gomez III. with a monthly salary of P80. a corporation engaged in construction business. Dianne Miano. NLRC (Jake) Facts: On 10 November 1983. Effect Inflation Ÿ Lantion vs. Charms Haw..00 as separation pay. an authorized cause. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. his employment with the petitioner company was continuous and without interruption for the past ten years. 1998. Ysan Castillo. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. She was replaced by another faculty member. Kristel Macatangay.000 plus 1% commission from collections of all advertising contracts consummated. on June 12. as marketing manager with a monthly compensation of P20. Inc. petitioners implemented Irah Burog. pursuant to our ruling in Agabon. that his work was not dependent on the completion or termination of any project. the compulsory retirement age under the law. When Benedicto was illegally dismissed on October 11. His employment was coterminous with the completion of the projects for which he had been hired. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. therefore. Ÿ Without a valid cause. were not religiously followed. Monina Lagman. 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. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. and Management effective 1 June 1984. Finance. he should be paid P160. Otherwise. The conditions laid down. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. was terminated as Secretary to the Legal Office on 21 November 1983. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. Benedicto (Jake) Facts: In 1993. or from June 1. which we fix at P20. petitioner regularly submitted to the labor department reports of the termination of services of project workers.00. they shall be entitled to reinstatement with full back wages. 1989. that on October 1. dated 9 November 1983. the employment of project employees cannot be terminated prior to expiration. there can be no question. 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). Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. Under Article 283.00. Reynaldo Benedicto was appointed by Ceferino Basilio. however. he was already 64 years old. confirmed by the CA. in case of retrenchment to prevent losses. Jake Ng. 1995 to December 30. And as far as Filomeno and Clarita Lantion are concerned. Edlyn Santiago. wife of Filomeno.000. While petitioner Fuentes. that since his work was not dependent on any project.000. 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. 1994. The position of Vice-President continued to exist. petitioners filed their Complaint against the University and its President. cost-cutting measures resulting in the termination from the service of their employees. Monette Mesa. petitioner Filomeno Lantion received a letter. Petitioners were not rehired although they fall outside the exception provided. Furthermore. Ÿ Intercontinental Broadcasting vs. their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case.000. are binding on us since they are supported by substantial evidence. including respondent. 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. he was dismissed from his employment allegedly because he was a project employee. Benedicto was terminated from his position. Heidi Soria. Anna Tetangco 51 . Thus. the general manager then of petitioner. Such compliance with the reportorial requirement confirms that respondent was a project employee. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. Alpe Macalalad. Petitioner Clarita Lantion. Held: These factual findings of the NLRC. However. The labor arbiter concluded that Benedicto was illegally dismissed. In a letter dated October 11. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. Jon Santos. before the NLRC. Held: That retrenchment was proper. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. at that time the president of petitioner. Since he was employed by petitioners for four years.
" As a general rule. Held: We hold that the grant of separation pay in the case at bar is unjustified. FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs. who attested to the veracity of the former's assertion. 10. Where the reason for the valid dismissal is. the employer may not be required to give the dismissed Irah Burog. for equity finds no room for application where there is law. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. Ysan Castillo. if it is to be considered at all. habitual intoxication or an offense involving moral turpitude. She went to the Ministry of Labor and Employment claiming she had been illegally removed. was accused by two complainants of having demanded and received from them the total amount of P3. . she was found guilty as charged and accordingly separated from the service. Monina Lagman. regardless of who initiated the collections. but for the canvass of the price of the religious items as well. . petitioner. respondent company. or financial assistance. an offense involving moral turpitude . for example. it would be petitioner Salavarria. 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. 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. an employee who is dismissed for cause is not entitled to any financial assistance. Further. the fact that the same was approved or indorsed by petitioner. Redentor Salonga. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. reprimanded and suspended him for habitually neglecting to submit his periodic reports. . a traffic operator of the Philippine Long Distance Telephone Company. Inc. Hence. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. It is grounded on the precepts of conscience and not on any sanction of positive law. Kristel Macatangay. petitioner pleaded that she never misappropriated the money collected and whatever was left of it. Dianne Miano. Where the reason for the valid dismissal is. equity has been defined as justice outside law. If regarded as a justification for moderating the penalty of dismissal.800. Gustilo. Jon Santos. the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 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. or whatever other name it is called. Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. Petitioner's employment records show that respondent company. 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. . maintaining that he was responsible. Charms Haw. was employed by Wyeth Philippines. made her "in effect the author of the project. like theft or illicit sexual relations with a fellow worker. not only for the collection of the contributions. 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. it will actually become a prize for disloyalty. equity considerations provide an exception. NLRC (Jake) Facts: Marilyn Abucay. petitioner relied principally on a letter written by Ÿ Gustilo vs. Edlyn Santiago. The private respondent has been dismissed for dishonesty. Alpe Macalalad. However. In PLDT v. one of her students. Monette Mesa. NLRC. Heidi Soria. being ethical rather than jural and belonging to the sphere of morals than of law. after initial purchases were made. After consideration of the evidence and arguments of the parties. were immediately returned to the student-leaders for proper reimbursement to the students concerned. The fact that she has worked with the PLDT for more than a decade. 14. Investigated and heard. as a pharmaceutical territory manager.. Anna Tetangco 52 .Labor II inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities.000.00 as "severance pay" which is synonymous with "separation pay. 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. having been effected without just cause.. on various dates. the employer may not be required to give the dismissed employee separation pay. Jake Ng." Petitioner's infraction of a school policy warrants her dismissal. on the ground of social justice. 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. Ÿ Salavarria vs. Moreover. . In support of this claim. Wyeth Philippines (Kristel) Facts: Alan D.
In this case. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. on the ground of social justice." If the cause for the termination of employment cannot be considered as one of mere inefficiency or incompetence but an act that constitutes an utter disregard for the interest of the employer or a palpable breach of trust in him. Inc. Jake Ng. Such findings. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. that he had given to the company the best years of his youth. Although meriting termination of employment. but that considering his age and health. being ethical rather than jural and belonging to the sphere of morals than of law. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. are accorded respect and even finality by this Court. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer.. Weighed on the scales of justice. that he denies receiving the telegram asking him to report back to work.Labor II employee separation pay. however. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. Ÿ Pangasinan Electric Coop vs. that in those years there was not a single report of him transgressing any of the company rules and regulations. 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. via the principle of "compassionate justice" for the working class. with these special circumstances. The fact that private Ÿ Eastern Shipping Lines vs. Dianne Miano. Monina Lagman. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline. These circumstances indubitably merit equitable concessions. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. for equity finds no room for application where there is law. Jon Santos. In our view. Moreover. he preferred to stay home rather than risk further working in a ship at sea. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules. Hence. He was dismissed from service. (2) dishonest or unauthorized activity whether for personal gain or not. the grant by the Court of separation benefits is hardly justifiable. and certain acts tantamount to serious misconduct. or whatever other name it is called. hence the retirement benefits he would receive would ease his financial burden. Rule I. Ÿ Section 7. if supported by substantial evidence. Anna Tetangco 53 . 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. Equity considerations. Sedan sent a letter to petitioners applying for optional retirement. NLRC (Kristel) Facts: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. Edlyn Santiago. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. 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. NLRC (Kristel) Facts: Dumaguete Cathedral College. Heidi Soria. Monette Mesa. 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. or financial assistance. working on board ship for almost 24 years.The union staged a strike. Charms Haw. that it would appear that he had served the company well. Kristel Macatangay. (CENPELCO). and that he was not authorized to accept payment. he has no previous derogatory records. Ÿ Pinero vs. namely: (1) unauthorized acceptance of payments for new connection. and Irah Burog. citing as reason the death of his only daughter. and (3) defrauding others by using the name of the company. 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. provide an exception. and as an equitable concession. an educational institution. Equity has been defined as justice outside law. he shall not be entitled to termination pay without prejudice to applicable collective bargaining agreement or voluntary employer policy or practice. conscience and reason tip in favor of granting financial assistance to support him in the twilight of his life after long years of service. Piñero's infraction is not so reprehensible nor unscrupulous as to warrant complete disregard of his long years of service. In this instance. 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. Alpe Macalalad. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. Inc. 15 Separation pay in such case is granted to stand as a "measure of social justice. It is grounded on the precepts of conscience and not on any sanction of positive law.This was not granted despite several demands. Ysan Castillo.
are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. Chua was a member. betrayal of the company. August 23. It placed the complainant under preventive suspension for thirty (30) days. During the strike. The only cases when separation pay shall be paid. 80609. Mercantile Corp. NLRC. 7. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. One truck. for example. Both declared that the items were deposited there by Manreza and his companions. On May 24. and also in the house of Nene Enriquez. (2) redundancy. 145 SCRA 123). he is not entitled to separation pay. Charms Haw. It contravenes Rule 1. Labor Code. for serious misconduct) is legally indefensible. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. Monina Lagman. where We held that: ". Anna Tetangco 54 . G. or financial assistance. since his violation reflects a regrettable lack of loyalty and worse. after due notice. and hearing. (4) cessation of the employer's business. several of the striking employees threw stones at the trucks entering and leaving the company premises. for having physically assaulted and verbally abused. of Davao. . Social justice cannot be permitted to be the refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. vs. . Kristel Macatangay. No. Ysan Castillo. (Emphasis supplied. although the employee was lawfully dismissed. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. Inc. does not call for such award of benefits. Sec. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. Construction Corp vs. (3) retrenchment. a superior officer. NLRC (Kristel) Facts: Union of Filipro Employees. Lariosa. or whatever other name it is called. Edlyn Santiago. on the ground of social justice. Monette Mesa." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. Jake Ng. At best it may mitigate the penalty but it certainly will not condone the offense. Plaridel. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. such gesture will actually become a prize for disloyalty. dismissed the private respondent Eduardo Malabanan. 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. whose driver was rendered unconscious by a stone hitting him on the head. of the Philippines vs. in our view of this case. Dianne Miano. who was then the personnel and administrative manager of the company. Book VI of the Omnibus Rules Implementing the Labor Code. investigation. Bulacan. 148 SCRA 187. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. 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. Mariano Lopingco. 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. within full view and hearing of the other employees. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. . . like the workers who have tainted the cause of labor with the blemishes of their own character. and thereafter terminated his employment Ÿ It is true that in some earlier cases. Inc. of which petitioner Benito D. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. Nestle Philippines. 1983.) . Soco vs. Where the reason for the valid dismissal is. Jon Santos. declared a strike against the private respondent company.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal. an accounts payable clerk. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline. 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. Alpe Macalalad. NLRC (Kristel) Facts: Petitioner. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it.R. 148 SCRA 526. Filipro. the employer may not be required to give the dismissed employee separation pay. (Articles 283 and 284. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. The company found him guilty of stealing or unauthorized taking of company property. having the main duty of removing and/or changing damaged flexbeams on the expressway. Ÿ Eastern Paper Mills vs. NLRC and Marilyn Bucay. Heidi Soria. habitual intoxication or an offense involving moral turpitude.) Ÿ Chua vs. 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. like theft or illicit sexual relations with a fellow worker. Petitioner received a notice Irah Burog. vs. Not Allowed Ÿ Phil. as a janitor and later promoted to Leadsman. 1988.
Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL. allowances. as a contract governing the employer and the employees respecting the terms of employment. A fraction of at least 6 months shall be considered 1 whole year. Monina Lagman. workers affected would be entitled to termination pay as provided by the Labor Code. permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. petitioner's participation in the unlawful and violent strike. and other benefits.11 SEPARATION PAY When Alternative Ÿ Although Vital. CA (Heidi) Facts: SDPI was given the right to manage. is entitled to reinstatement. in relation to the Labor Code of the Philippines. Etcuban vs. constituted serious misconduct on his part. habitual intoxication or an offense involving moral turpitude. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. Sulpico Liner (Heidi) 14. . whichever is higher. processing of and marketing of its products and providing technical expertise. Ÿ Irah Burog. on the ground of social justice. each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. Meanwhile. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. a letter to DOLE. unused sick leave and other benefits. antagonism has caused a severe strain in their relationship. who was illegally dismissed. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. accordingly. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. administer. vacation leave. 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. Anna Tetangco 55 . Where the reason for the valid dismissal is. Jake Ng. the Comprehensive Agrarian Reform Law (CARL) took effect. cultivate. without the NFL initiating the revision thereof. However. Edlyn Santiago. . or financial assistance. Charms Haw. have the effect of rewarding rather than punishing the erring employee for his offense . SDPI served formal notices of termination to all the employees of the plantation. the employer may not be required to give the dismissed employee separation pay. In the case at bar. the parties. specifically for planting rubber trees. should prevail. The parties opted to be bound by the provisions of the Labor Code and not by company policy. NFL was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in a rubber plantation. in addition to his full backwages. develop. respecting the terminations was sent by SDPI. Dianne Miano. like theft or illicit sexual relations with a fellow worker. Simultaneously. as the petitioner correctly argues. and improve the rubber plantations of ARCI as an agro-industrial development project. Kristel Macatangay. (Coca-cola Bottlers Phils. which strike resulted in multiple deaths and extensive property damage. 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.Labor II of dismissal from private respondent for having participated in the illegal strike. the award of "financial assistance" was bereft of basis and would moreover render the finding by the Labor Arbiter and the NLRC of just or authorized cause for termination of petitioner's services merely illusory. Ysan Castillo. Ÿ We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. A 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. for example. Unless annulled. During the negotiations. Consequently. Alpe Macalalad. . hours of work and all other terms and conditions of employment in the bargaining unit. Jon Santos. vs. they should have rejected the CBA. 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. A contrary rule would. and other benefits which were all lumped in one Metrobank check. the CBA. thus: Pursuant to the CBA. Monette Mesa. During the effectivity of the FMA between ARCI and SDPI. or whatever other name it is called. Heidi Soria. Vital) Ÿ National Federation of Labor vs. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits. 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. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. whichever is higher.
among others. Under the Labor Code. Jon Santos. Heidi Soria. Ysan Castillo. the NLRC and the Court of Appeals. 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. the general rule is that an employee who voluntarily resigns is not entitled to separation pay.000. Inasmuch as reason for which the petitioner was validly separated involves his integrity. 1986. Kristel Macatangay. After all. he is not worthy of compassion as to deserve at least separation pay for his length of service. there is an exception. separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. 1994 for loss of trust and confidence. Ÿ In the instant case. (d) closing or cessation of business operations. the newly designated jefe de viaje of the ship. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. As aptly held by the Labor Arbiter. On June 30. Sometime in 1994. 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). vs. Irah Burog. "separation from the company without cause. (c) retrenchment. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years. it is very clear from the CBA that when an employee or worker voluntarily resigns due to. At the time of his dismissal. respondent voluntarily tendered her resignation effective September 17. as in fact." 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. 1998. In Hinatuan Mining Corporation and/or the Manager v. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. NLRC finds application here. 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. 19. which is especially required for the position of purser. that is. Later. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. non-payment of overtime pay. On Aug. however. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. It also informed him of his immediate preventive suspension until further notice. Monette Mesa. and those whose services are terminated due to suspension or cessation of operation. as in this case. (b) redundancy. 1998. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement.. Under the Code. Consequently.Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. all doubts should be construed in favor of labor. NLRC and Margo Batister. Hanford hired Shirley Joseph as a sewer. Barely a week after the petitioner's preventive suspension and pending his administrative investigation. 10. On Nov. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. If petitioners could be liberal to those employees who retired. 2 which petitioner accepted the following day. an employee who voluntarily resigns may not be granted separation pay. Anent the petitioner's request for separation pay. Jake Ng. 1998. Hanford denied Joseph's request on the ground that under the Labor Code. Joseph (Heidi) Facts: On July 17. Charms Haw. grant of separation pay. 13th month pay and the cash conversion of her unused vacation and sick leave. in a surprise examination. Anna Tetangco 56 . he filed a complaint against the respondent for illegal dismissal. retirement is not also a ground for the grant of separation pay. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees. discovered irregularities in the issuance of passage tickets. Our ruling in Philippine National Construction vs. Monina Lagman. we held that while it is true that under the Labor Code.00. employees or workers who may be separated without cause. then he is entitled to a separation pay." such as voluntary resignation. the Court is constrained to deny the same. 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. thus: "In the interpretation of an employer's program providing for separation benefits. Dianne Miano. Moreover. Edlyn Santiago." Ÿ Hanford Phil. 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. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. 13th month pay and other monetary benefits with the regional arbitrator. Alpe Macalalad. Hanford then paid Joseph her last salary. 1978 until his dismissal on June 10. 1978. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company.
unequal treatment of employees. However. its vital lifeblood — its cashflow — literally dries up. respondents tenaciously insist on the award of separation pay. during the life of the petitioner corporation. which policy had been in force in the years prior to its closure.e. upon its death as a going business concern. Art. piece. i. not by reason of discrimination. but rather.. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. "What exactly does the term connote?" We correlate Art. from the beginning of its operations in 1981 until its closure in 1992. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. should have elicited admiration instead of condemnation. 1992 due to serious business reverses. When it ceased operations. Accordingly. 97 of the same Code on definition of terms. whether fixed or ascertained on a time. "wage" is defined in letter (f) as the remuneration or earnings." Both words (as well as salary) generally refer to one and the same meaning. 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. Computation Ÿ Millares vs. Anna Tetangco 57 . whichever is higher. its remaining employees were separated and given the equivalent of 12. capable of being expressed in terms of money. Moreover.".e. this arrangement lasted from 1981 up to 1990. Therefore. Ysan Castillo. by denying the same separation benefits to private respondents and the others similarly situated. for obvious reasons. the grant of a lesser amount of separation pay to private respondent was done. . petitioners discriminated against them. In the case of North Davao." the question arises. Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof.5-days' worth at that. it appears that.. But when a business enterprise completely ceases operations. Stated differently. computed on their basic monthly pay. As a going concern. in protecting the rights of the laborer. 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. i. however designated. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all — although not required by law — and 12. As already stated. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay. Dianne Miano. in addition to the commutation to cash of their unused vacation and sick leaves. Under the facts and circumstances of the present case. Monette Mesa. they lodged a complaint for separation pay differentials. Jon Santos. the closure was due to business losses — as in the instant case.e. "Pay" is not defined therein but "wage. the employees had to collect their salaries at a bank in Tagum. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical. unfair and most revolting to the conscience. Specifically. petitioners were given separation pay. Ÿ In case of retrenchment to prevent losses. it had been giving separation pay equivalent to 30 days' pay for every year of service. Charms Haw. Jake Ng. Alpe Macalalad. its cash flow could still have sustained the payment of such separation benefits. which is proscribed as an unfair labor practice by Art. Heidi Soria. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems. Edlyn Santiago. Nor water out of parched land. a reward or recompense for services performed. The law. task. Since the law speaks of "pay. 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 . . out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation.Labor II North Davao completely ceased operations in May 31. it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. Kristel Macatangay.5 days' pay for every year of service. the basis for the claim of the additional separation benefit of 17. 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. Art. Where. However. 248 (e) of said Code. Monina Lagman.. Respondents contend that. or commission basis. one cannot squeeze blood out of a dry stone. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive. Ÿ Art. however. authorizes neither oppression nor self-destruction of the employer. Davao Del Norte. 283 with Art.5 days is alleged discrimination. or other method of calculating the Irah Burog. i. Indeed. in which the aggregate losses amounted to over P20 billion — the Labor Code does not impose any obligation upon the employer to pay separation benefits. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. In the case before us.
Anna Tetangco 58 . as determined by the Secretary of Labor and Employment. AFP-MBAIEU which ruled that such quitclaims are against public policy and. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts. Publico went home early despite refusal of petitioner because she was not feeling well. The next day. Anent the issue on the quitclaims. which held that since a corporation is an artificial person. The subject allowances do not form part of petitioners wages. On May 9. Heidi Soria. HMC. in the technical sense only. NLRC) Ÿ NYK Intl vs. once a vacancy occurs in the company-provided housing accommodations. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU). in the guise of retrenchment. of board. On the other hand. Ÿ In termination cases. the fair and reasonable value thereof. More recently. Monette Mesa. is the manager of NYK.C. Ransom Labor Union-CCLU v. Ransom. 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. is included in "wage. Jake Ng. 1997. null and void. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. dismissed complainants-petitioners who are active leaders of the union." "Customary" is founded on long-established and constant practice connoting regularity. by legal fiction. Charms Haw. Waivers and quitclaims are generally looked upon with disfavor. Ÿ What the Court finds apropos is our disquisition in A. being the "person acting in the interest of the employer. However. Edlyn Santiago. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. lodging or other facilities. vs. In a subsequent case. 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. C. Ysan Castillo. In the case of the housing allowance. Jon Santos. however. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. lodging." In other words the corporation. 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. In the case at bar. lodging or other facilities. Effect of Acceptance Ÿ Anino vs. corporate officers are as a GR. Conformably with our ruling in A. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. has a separate and distinct personality. "fair and reasonable value as determined by the Secretary of Labor. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. It cited the case of AFP Mutual Benefit Association. or other facilities customarily furnished by the employer to the employee. (Bogo-Medellin vs. Separation pay when awarded to an illegally dismissed employee in lieu of reinstatement or to a retrenched employee should be computed based not only on the basic salary but also on the regular allowances that the employee had been receiving. therefore. Inc. unfair labor practice and damages against HMC. NLRC. the employee concerned transfers to the company premises and his housing allowance is discontinued. admittedly. 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. Monina Lagman." "board. NLRC (Heidi) Facts: Publico was a sewer of NYK. there was no reason at all for petitioners to resort to the above cases. In this case Cathy Ng. not personally liable for their official acts. as determined by the Secretary of Labor. On May 7. is the employer. Alpe Macalalad. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. because a corp. or for services rendered or to be rendered and includes the fair and reasonable value. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award." and. the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer." In order to ascertain whether the subject allowances form part of petitioner's "wages. Kristel Macatangay. a measure fully explained to all its employees. it must have an officer who can be presumed to be the employer. Dianne Miano. she notified petitioner that she was still recovering from her sickness. Publico was refused entry for work and later informed of her dismissal. Complainants-petitioners then filed a complaint for illegal dismissal. 1997.Labor II same. Irah Burog." we divide the discussion on the following — "customarily furnished. When an employer customarily furnishes his employee board.
Indeed. corporate directors and officers are solidarily liable with the corporation. hence.000.00 which it finds reasonable. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud. (Collegio de San Juan de Letran-Calamba vs. vs. 1991. In cases of illegal dismissal. it must be shown that the dismissal of the employee was attended to by bad faith. 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. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position.00. The Labor Arbiter dismissed the complaints. either jointly or severally. because a corporation. Timbol) Unless they have exceeded their authority. Pursuant to prevailing jurisprudence. Tan’s real and personal property should not be burdened by such award. (Tan vs. but by itself alone. she was terminated. this Court reduces the amount of moral damages awarded to P500. the alias writ of execution for said award should be directed only against the company and not against Tan. nor did he hold Tan liable. 1990. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. has a personality separate and distinct from its officers. not personally liable for their official acts. petitioners were allowed by the private respondent to work until January 2.’s fees because there is no showing that bad faith and malice attended her dismissal. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent. private respondent terminated petitioners' employment. Thus. Jon Santos. 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. even though the latter was the General Manager. In determining the amount of moral damages recoverable. underpayment of wages and claim for indemnity against private respondent. Her resultant sufferings thus entitle her to an award of moral damages.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. 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 amount of exemplary damages awarded is accordingly reduced too to P250. or was done in a manner contrary to morals. or constitutes an act oppressive to labor. Jake Ng. Edlyn Santiago. or constituted an act opposite to labor. corporate officers are. stockholders and members. however. with the company for the monetary award. Heidi Soria.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. (Acesite Corp. or confusing a legitimate issue. by legal fiction. private respondent invoked Article 283 of the Labor Code. On appeal. However. good customs or public policy. To warrant award of moral damages. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Despite the expiration of their employment contract. bad faith or malice was not proven. as a general rule. good customs or public policy. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. 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. it does not necessarily establish bad faith. On January 3. Ÿ 14. Ysan Castillo. Villas) Ÿ Asia Pacific Chartering vs. Irah Burog. Hence. 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. Kristel Macatangay. this petition for certiorari. Thus. Monette Mesa. Cathy Ng. the business. The labor arbiter didn’t make any such finding. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. A dismissal may be contrary to law. 1991. Alpe Macalalad. Monina Lagman. where terminations of employment are done with malice or in bad faith.000. or is done contrary to morals. She claimed that respondent told her to tender her resignation as she was not the person whom Scandinavian Airline System (SAS) was looking for to handle the position of Sales Manager but that she refused. Ÿ The Supreme Court held that the respondent was illegally dismissed. Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. Therefore. social and financial position of the offended party and the business or financial position of the offender are taken into account. Dianne Miano. evading an existing obligation. Anna Tetangco 59 . 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. NLRC) dismissal with prayer for damages and attorney's fees. On the other hand. Charms Haw. Here. in her capacity as manager and responsible officer of NYK.
NLRC. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. other labor statutes. 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. Moreover. Monette Mesa. not on a probationary status. Tolosa. While in command of the vessel. and the said shipmates have no employer-employee relations with Capt. the Court held that petitioners are entitled to full backwages. Thus. NLRC (Dianne) Facts: Petitioner was the widow of Capt. to be the master of the Vessel named M/V Lady Dona. Asia Bulk. but as regular employees. 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. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. 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. in which the employer-employee relation is merely incidental. and in which the cause of action proceeds from a different source of obligation such as a tort. petitioners have become full-fledged regular employees. The NLRC. overtime compensation or separation pay. but also damages under the Civil Code. Virgilio Tolosa who was hired by Qwana-Kaiun. and other labor benefits that are generally cognized in labor disputes. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. Dianne Miano. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. This provision is only a safety and health standard under Book IV of the same Code. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. It held that after October 31. Heidi Soria. Kristel Macatangay. Petitioner's action was recovery of damages based on a quasi-delict or tort. which does not grant or specify a claim or relief. however. or collective bargaining agreements. 1990. Moreover." In the present case. The enforcement of this labor standard rests with the labor secretary. 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. this appeal. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. Ysan Castillo. Jon Santos. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. petitioner's claim for damages is not related to any other claim under Article 217. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. Anna Tetangco 60 . which has been violated or invaded by the defendant. Monina Lagman. With the continuation of their employment beyond the original term. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. Under Article 2221 of the Civil Code. other labor statutes. affirmed by the Court of Appeals. In other words. the Labor Arbiter ruled in her favor. 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. not merely probationary. other labor statutes. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor 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. Alpe Macalalad. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. Edlyn Santiago. Capt. or collective bargaining agreements. in effecting such dismissal. the employment of petitioners is no longer on a fixed term basis. According to the Court. Charms Haw. or collective bargaining agreements. Hence. Ÿ As a rule. Jake Ng. 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. through its manning agent. they were. may be vindicated or recognized. Held: The Supreme Court affirmed the appealed decision. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. therefore. Tolosa contracted a fever and in the succeeding 12 days.Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers. his health rapidly deteriorated resulting in his death. the employer fails to comply with the requirements of due process. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. Petitioner is actually suing shipmates Garate and Asis for gross negligence. Irah Burog. nominal damages are adjudicated in order that a right of the plaintiff. transferred to the DOLE. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. Accordingly. entitled to be reinstated to their former position as regular employees. these relief must still be based on an action that has reasonable causal connection with matters. It is not the NLRC but the regular courts that have jurisdiction over actions for damages.
Dr. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. Dr.900. the lack of statutory due process should not nullify the dismissal. or was done in a manner contrary to morals. good customs or public policy. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code. Maquiling. Heidi Soria.. Maquiling. good customs or public policy. oppressive or malevolent manner as the private respondents were deprived of due process. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. Dianne Miano. Petitioner Marilyn T. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr.00 as exemplary damages are hereby awarded to each private respondent. oppressive or malevolent manner to warrant an award for exemplary damages." which we sought to deter in the Serrano ruling.000. Such were not sufficiently proven. The suspension of petitioner without prior investigation is akin to Irah Burog. Calado. Monina Lagman. we are not convinced that private respondents acted in a wanton or oppressive manner. taking into account the relevant circumstances.. as in the instant case. Amador C. Ysan Castillo. In the case at bar. (Acesite Corp. Maquiling shall only be entitled to an award for nominal damages. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. in the alternative. Neither will an award for moral damages nor exemplary damages prosper. pay later. Antonio S. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. oppressive or malevolent manner. Herrera.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. (IIEE). The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. Mendoza. (Kay Products vs. the amount of P10. On 8 June 1991. CA) Gonzales is not entitled to moral and exemplary damages.00) and exemplary damages in the amount of one hundred thousand pesos (P100. the Supreme Court ruled that Dr. taking into special consideration the gravity of the due process violation of the employer. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968.Labor II before the labor arbiter. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages. or that the employer committed an act oppressive to labor to warrant an award for moral damages. (PTS). there is less degree of discretion to award actual or compensatory damages. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. It may be also argued that actual or compensatory damages may be recovered in employment termination cases. Dr. good customs or public policy. Indeed. Jr. Maquiling was indeed validly dismissed for just cause. no doubt. Edlyn Santiago.00). as well as moral damages in the amount of five hundred thousand pesos (P500. without her reinstatement forthcoming. The instant controversy fails to show that the dismissal of the employee was attended by bad faith. the employer should indemnify the employee for the violation of his statutory rights. 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.00 as moral damages and P5. 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. fraud. Held: After careful perusal of the factual backdrop of the case. or ineffectual. However. Inc. Charms Haw. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. petitioner Dr. or render it illegal. Thus. Maquiling was employed by respondent Philippine Tuberculosis Society. Jr. is still on the outside looking in. or is done in a manner contrary to good morals. Exemplary damages may avail if the dismissal was effected in a wanton. Exemplary damages may be awarded if the dismissal is effected in a wanton. Jake Ng. then earning a monthly salary of thirteen thousand nine hundred pesos (P13. Sagum is another hapless employee whose dismissal was ruled to be illegal but. Barrientos. Edward L. Kristel Macatangay. The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute. Ÿ Ÿ Where the dismissal is for just cause. Hence. Alpe Macalalad. However.000. 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. Monette Mesa. The amount of such damages is addressed to the sound discretion of the court.000. Evidently. was effected in a wanton. Inc. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. 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. Maquiling filed a complaint against PTS for reinstatement or.000. oppressive or malevolent manner. Engrs. vs. The dismissal. and Fe M. Jon Santos. Anna Tetangco 61 .
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. the term “Act” shall refer to Rep. petitioner did not even allege that there was use of force. Book VI. mental anguish or serious anxiety as the result of the actuations of the other party. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. Despite the presence of security guards. 7641 which took effect on Jan. SEC. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. Promoted. 1997. Held: Considering the prevailing circumstances in the case at bar.00. Jake Ng. however. the Supreme Court deemed it proper to fix the nominal damages at P30. 1997 but the suspension was rescinded and he was assigned as general auditor. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. Alpe Macalalad. we do not find the articles published in private respondent institute's publication. 1997. Monette Mesa. taking into account the relevant circumstances. Rule II. Lastly. Exemptions. adopted a resolution terminating his employment effective October 16. Subsequently. This rule shall apply to all employees in the private sector. 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. Monina Lagman.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Edlyn Santiago. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. Charms Haw. At the very least. After six months. Heidi Soria. he became its regular employee. Act No. Jon Santos. Unless the parties provide for broader inclusions. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. General Statement on coverage. regardless of their position. through an EXECOM meeting. . He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. designation or status and irrespective of the method by which their wages are paid. 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. 7. In case of retirement. he became branch manager from 1981 to 1990. 1993. It is not enough that one merely suffered sleepless nights. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. As used herein. 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. This rule shall not apply to the following employees: Irah Burog. 287. who has served at least five (5) years in the said establishment. Retirement ART. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. 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. Dianne Miano. an employee upon reaching the age of sixty (60) years or more. assigned to the accounting department. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. 2. The Electrical Engineer. 1997. Kristel Macatangay. Anna Tetangco 62 . and auditor from 1990 to 1996. The amount of such damages is addressed to the sound discretion of the court. Retail. Inc. a fraction of at least six (6) months being considered as one whole year. to be malicious as they were fact-based. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Retirement. Omnibus Rules Rule II Retirement Benefits SECTION 1. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. He was placed under preventive suspension on October 16. petitioner corporation. except to those specifically exempted under Section 2 hereof. latter under the Labor Code and its Implementing Rules. abusive language or any species of violence. Ysan Castillo.000. On June 11. On November 18.
3 Where both the employer and the employee contribute to a retirement fund in accordance with an individual/collective agreement or other applicable employment contract. 3. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog. Ysan Castillo. pineapple. 4. Optional. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees.2 Compulsory retirement. Jake Ng. Jon Santos. 5. a fraction of at least 6 months being considered as one whole year. including GOCC’s if they are covered by the Civil Service Law and its regulations. 4. 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. 5. SEC. cultivation. as determined by the Secretary of Labor and Employment. The term does not include cost of living allowance. That if such benefits are less. 2. 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. Charms Haw. the term “one-half month salary” shall include all the ff.For the purpose of determining the minimum retirement pay due an employee under this Rule. Edlyn Santiago. Heidi Soria. coconut. and Provided.3 Upon retirement of an employee. 3. growing and harvesting of any agricultural or horticultural commodities. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. among others. lodging. b) The cash equivalent of not more than five (5) days of service incentive leave. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. Monette Mesa.2 In case of retirement under this section. but does not include the manufacture and/or processing of sugar. regular holidays and mandatory fulfillment of a military or civic duty.2 Domestic helpers and persons in the personal service of another. . 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 cultivations and tillage of the soil. 5. SEC.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture.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. Alpe Macalalad. 20. the employer shall pay the deficiency.1 Employees of the National Government and its political subdivisions. or other facilities customarily furnished by the employer to his employees. .1 In the absence of an applicable agreement or retirement plan. aquatic or other farm products. Retirement benefits. however. and includes the fair and reasonable value. service and agricultural establishment or operations regularly employing not more than ten (10) employees. SEC.Labor II 2. 4. 4. raising of livestock or poultry. production. whether optional or compulsory.2 Components of One-half (½) Month Salary. further. Retirement under CBA/contract. 3. task. abaca. or other method of calculating the same. Monina Lagman.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. (Deleted by D. In case the employer’s contribution is less than the retirement benefits provided under this Rule. 5. 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. 4. Where there is no such plan or agreement referred to in the immediately preceding subsection. 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. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. an employee shall be retired upon reaching the age of sixty-five (65) years.: a) 15 days salary of the employee based on his latest salary rate.4 Service requirement. As used herein.3 One-half month salary of employees who are paid by results. subject to the provisions of Rule VII-A. whether such payments are fixed or ascertained on a time. compulsory retirement.1 Optional retirement. dairying. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations. Anna Tetangco 63 . the culture of fish and other aquatic products in farms or ponds. tobacco. 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. c) One-twelfth of the 13th month pay due the employee. No. Kristel Macatangay. 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. This term refers to all farming activities in all its branches and it includes. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. For covered workers who are paid by results and do not have a fixed monthly rate. of food. series of 1994) 2.3 Employees of retail. piece or commission basis. 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. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). 3. Dianne Miano.O.
For the purpose of determining the minimum retirement pay due an employee under this Rule. subject to the provisions of Section 4 hereof on the payment of retirement benefits. Optional Retirement and Compulsory Retirement 2. holidays and mandatory fulfillment of a military or civic duty. That if such benefits are less. however. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. All rules and regulations. SEC. Monette Mesa. 6. Retirement under CBA/contract. 3. 288 of the Labor Code of the Philippines. and Provided. retirement and separation pay constitute compensation subject to withholding. 1. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. Anna Tetangco 64 . “employees”.. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. drifts. Order No. Ysan Castillo.: a) 15 days salary of the employee based on his latest salary rate. SEC. raises.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. Effectivity.2 Components of One-half (½) Month Salary. . 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. 4. 1993 when the Act went into force. Where there is no such plan or agreement referred to in the immediately preceding subsection. 3. 12-86 dated Aug. Relations to agreements and regulations. The term “Act” refers to RA 7641 as amended by RA 8558. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement. individual/collective agreements or employment practices or policies. to wit: Pensions. or “covered workers” shall mean underground mine employee/s. 1986 are met. Kristel Macatangay. a fraction of at least 6 months being considered as one whole year. 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. Monina Lagman.1 Optional retirement. SEC. Exemption from tax. 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. 9 dated May 4. SEC. tunnels. 2. the terms “employee”. 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. 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. 4. 2. For these purpose. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years.Labor II are paid by results. 8558. 3. 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. As used herein. crosscuts. Charms Haw. 7. 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.2 In case of retirement under this section. SEC. supplements or payments as provided in existing laws. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. 9. Jon Santos. This rule took effect on January 7. SEC. Edlyn Santiago.2 Compulsory retirement. winzes. the term “one-half month salary” shall include all the ff. 8.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. . 2(b) item (1) of Revenue Regulations No.1 In the absence of an applicable employment contract.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.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. 2. if the following requirements are met: i) The benefit plan must be approved by the BIR. Rule II-A (Dep. 1 Coverage. Penal Provision. divided by the number of actual working days in that particular period. 3. Jake Ng. SEC. Dianne Miano. Violations thereof shall be subject to the penal provisions provided under Art. further. In case the employer’s contribution is less than the retirement benefits provided under this Rule.3 Service requirement. 4. Heidi Soria. Retirement benefits. retirement and separation pay. the employer shall pay the deficiency. 1998) SEC.Pensions. This Rule shall apply to all underground mine employees as contemplated under RA No. Alpe Macalalad. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. As used herein.
1998 when the RA 8558 went into force. Monette Mesa. Violations thereof shall be subject to the penal provisions provided under Art. Alpe Macalalad. is hereby amended to read as follows: "ART. (Dianne) Facts: Petitioners Roberto Ariola. who has served at least five (5) years in the said establishment. The term does not include cost of living allowance. of food. For covered workers who are paid by results and do not have a fixed monthly rate. In 1992. Philex sustained financial losses in its operations. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. "An underground mining employee upon reaching the age of fifty (50) years or more. 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. Franco Mallare. a fraction of at least six (6) months being considered as one whole year. piece or commission basis. as amended. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. AS AMENDED. 5.Article 287 of Presidential Decree No. Kristel Macatangay. Heidi Soria.Labor II hours. an employee upon reaching the age of sixty (60) years or more. whether such payments are fixed or ascertained on a time. bargaining agreement or other applicable employment contract. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR.3 One-half month salary of employees who are paid by results. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. may retire and shall be entitled to all the retirement benefits provided for in this Article. 288 of the Labor Code of the Philippines. of actual working period. subject to the provisions of Rule VII-A. Penal Provision. b) The cash equivalent of five (5) days of service incentive leave. "Unless the parties provide for broader inclusions. supplements or payments as provided in existing laws. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. Jake Ng. however. Anna Tetangco 65 . 1998. or other method of calculating the same. c) One-twelfth of the 13th month pay due the employee. A workforce audit showed that Irah Burog. Edlyn Santiago. otherwise known as the Labor Code of the Philippines. SEC. Exemption from tax. SEC. 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. 8. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. task. Dianne Miano. 4. 1998 Published in Malaya and Manila Times on March 7. 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." SECTION 2.Retirement. SEC.01 Retirement REPUBLIC ACT NO. SEC. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex"). but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. The ADS is the twelve (12) month of their retirement. "Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices. who has served at least five (5) years as underground mine worker. Approved: February 26. lodging. 442. To save costs. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. "Retail. 6. Charms Haw. or other facilities customarily furnished by the employer to his employees. "In case of retirement. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. as determined by the Secretary of Labor and Employment. 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. 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. whichever comes earlier. "In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. 442. 15. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs. individual/collective agreements or employment practices or policies. Monina Lagman. 287. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. All rules and regulations. Relations to agreements and regulations. 9. Effectivity. Ysan Castillo. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. Jon Santos. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). This rule took effect on March 2. and includes the fair and reasonable value.
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. which allegedly evidence receipt of “retirement gratuities. Ÿ By themselves. with six other supervisors and 49 rank-and-file employees. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. Monina Lagman. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958.743. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. In the present case. of its plan to retrench 241 employees. For this reason. On 14 May 1993. Petitioners are thus entitled to reinstatement with full backwages. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. Jon Santos. in lieu of reinstatement. respondent Reuters Limited. On 1 June 1993. finding that Philex suffered an operational loss of P33. Stated conversely. All of them signed Deeds of Release and Quitclaim in Philex's favor. Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. However. In a letter dated December 3. By its express language. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. . Baguio City. 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. Edlyn Santiago. a company engaged in news dissemination with offices worldwide. . 1992. at which time she would be 57 years old. Thus.Labor II Philex had 310 "excess positions. Anna Tetangco 66 . reinstatement is out of the question. beyond Philex's projected loss of P187 million. respondent.173. we grant her separation pay in lieu of reinstatement." 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. 1993. Philex informed the Department of Labor and Employment ("DOLE"). separation pay equal to one-half month pay for every year of service. Phils. petitioners. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. hired Marilyn Odchimar Gerlach. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. Dianne Miano. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. . the vouchers in question. respondent Reuters implemented a Irah Burog. However. 1982. citing "company policy. 287. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan. respondent was guilty of illegal dismissal. At this point. Held: Petitioners' retrenchment was illegal. as its local correspondent. Alpe Macalalad. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. It is also for this reason that we modify the award of backwages in her favor. 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. also known as the provision on Social Justice and Human Rights. Article 287 of the Labor Code provides: ART. after reaching a certain age agrees to sever his or her employment with the former.” do not suffice brief exchange of letters between petitioner and respondent followed.000 in 1993. (Reuters). As already stated. 30 April 1993. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. 1983. a voluntary agreement between the employer and the employee whereby the latter. Ysan Castillo. Heidi Soria. the amounts petitioners received as net separation pay should be deducted from their backwages. This ballooned to P283. On 29 April 1993. Charms Haw." Philex re-assigned some of the employees belonging to this group while others took early retirement. On October 1. to be computed from the time of her illegal dismissal on November 18. through its Human Resources Development Office. Kristel Macatangay. An independent auditor confirmed Philex's claim of financial losses. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action.000 in 1992. If reinstatement is no longer possible because the positions petitioners held no longer exist. Article 283 of the Labor Code governs retrenchment to prevent losses. petitioner. Cordillera Administrative Region. 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. Monette Mesa." Respondent required certain documents in connection with petitioner's impending retirement. Philex paid them separation pay. The following day. petitioner began working for respondent's university medical center as a nurse. Thus. Philex shall pay backwages as computed above plus. leaving 241 positions for retrenchment. But respondent stood pat on its decision to retire her. Ÿ Retirement is the result of a bilateral act of the parties. Jake Ng. 1993 up to her compulsory retirement age.
Petitioner was automatically covered by the Plan by reason of her age and length of service. It is this third type of retirement scheme which covers respondent's Plan. The third type is one that is voluntarily given by the employer. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. specifically that her home base will always be the Philippines. contending that her retirement benefits must be computed on the basis of her actual salary abroad. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. Anna Tetangco 67 . Thereafter. petitioner filed with the Office of the Labor Arbiter. not on her notional salary. 1983. Jon Santos. she questioned the amount she received as well as her entitlement to a disturbance grant. . Section 14(a). Alpe Macalalad. Ysan Castillo. Retirement. both actual and notional. and they received separation pay double that required by the Labor Code. Article 287 of the Labor Code reads: "Article 287. Eventually. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. In case of retirement. were the petitioners still entitled to the retirement benefits? Held: Yes. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog. respondent assigned petitioner as a journalist to Reuters Singapore. like the Social Security Act. under the Plan. Monina Lagman. 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. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. apprised her of the details of her forthcoming assignment. 1984. invoking the retirement plan of the company which they said was contractual rather than statutory. Charms Haw. Edlyn Santiago. Inc. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. Reuters' Eastern Region Staff Manager. 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. Heidi Soria. whichever is higher. In Llora Motors. Basis Ÿ Aquino vs. the company's contribution to the fund is 10% of the basic monthly salary of each participant. where not mandated by law. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. petitioner received her retirement benefits under the Plan in the amount of P79. — (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 . 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. Ÿ Retirement benefits. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. 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. Drilon. and is computed at least one month salary or at the rate of one-half month salary for every year of service. Issue: Having received the separation pay. Nonetheless. . On January 23.04. she opted not to contribute to the fund.228. The first type is compulsory and contributory in character. they demanded retirement benefits. Consequently. which include retrenchment. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. 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. Retirement benefits.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. Dianne Miano. Kristel Macatangay. Jake Ng. (b) a collective bargaining or (c) other agreements." 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. which is in accord with the above provision. 1991. 14. Monette Mesa. However. The Plan is funded by the company. in the instant case. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. provides: "Sec. a money claim against respondent. She worked in Reuters Philippines up to December 23. The computation was based on her notional salary." Thus. It is very clear that from the very start of her first assignment overseas. Rachel Addison. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. NCR. Significantly. In fact. Before leaving. Ÿ There are three kinds of retirement schemes. However. On March 1. vs. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. respondent based petitioner's retirement benefits on its Plan and established policy. 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.
Heidi Soria. Monette Mesa.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. Edlyn Santiago. thus. Ysan Castillo. Monina Lagman. and (2) where the terms of settlement are unconscionable on their face. good customs. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. Here. and are a form of reward for his loyalty and service to the employer. — No retirement benefits are payable in instances of resignations or terminations for a cause. 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. In addition. be upheld. Alpe Macalalad. 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. especially where there are strong equitable considerations as in this case. issued a memo announcing retrenchment and one of the affected employees was Lopez. There is. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. the 5-year expansion program and the Integrated Steel Mill Project. While it is our duty to prevent the exploitation of employees. With the inclusion of the provision abovementioned in the retirement plan. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. 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. a private domestic corporation. Since the retirement pay solely comes from PNOC’s funds. Charms Haw. petitioner requested to be included in the retrenchment schedule. Kristel Macatangay. for the purpose of computing an employee’s retirement pay. ostensibly. The retirement plan is a binding agreement. Interpretation Ÿ Lopez vs. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. Consequently. 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. IV. agrees to sever his employment with the latter. lessening the burden of worrying for his financial support. We cannot presume that it forms an implicit part of either the CBA or the law. Subsequently. 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. PNOC acquired and took over the shipping business of LUSTEVECO. intimidated or deceived into signing the Release and Undertaking. public order or public policy and must. does not give petitioner the right to her claimed benefits. 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. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. Jake Ng. Settled is the rule that not all quitclaims are per se invalid or against public policy.Labor II life. Afterwhich he was hired by LUSTEVECO. not being contrary to law. Gamogamo vs. corporation employed employees and of them was Divina Lopez. When the corporation suffered losses. Since retirement pay solely comes from company funds in this case. Jon Santos. 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. after reaching a certain age. therefore. the retirement plan is succinct in denying such benefits. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No. 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. The provisions of the NSC's retirement plan which petitioner admitted applies to her. it also behooves us to protect the sanctity of contracts that do Irah Burog. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. In the case at bar. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. “E. 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. Resignations and Terminations. there is no such provision. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. B 2. It was turned down. morals. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art. We discern nothing from the record that would suggest that petitioner was coerced. provided. When a manpower reduction was implemented. however. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive. Anna Tetangco 68 . Issue: whether. Dianne Miano. then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute.
Yet a serious mistake. resulting in an impasse between the petitioner bank and the private respondent union. Given such facts.Labor II not contravene our law.S. it is apparent that the amount is representative of all the claims of petitioners. vs. 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. Alpe Macalalad. Age Ÿ MAI Phils. Accordingly and considering their Releases and Irah Burog. Consequently. The deadlock continued for at least six months when the private respondent. 1982. However. Kristel Macatangay. Rationale Ÿ Producers Bank vs. they are no longer entitled to retirement benefits. however. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company. and Puerto Rico. Monette Mesa. 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. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. and that is. because by the terms of those very same retirement plans invoked by him. the retirement age of 65 applied only to employees in the U. Jake Ng. pertaining to uniform allowance. under the law should be given separation pay. No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. pursuant to the CBA. which is the retirement age fixed by the Labor Code. the acting conservator of the petitioner expressed her objection to such plan. 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. specifically cited by him. Monina Lagman. Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. It is a fact that petitioners were involuntarily separated from service and thus. petitioner was placed by the Central Bank under a conservator for protecting its assets. he had already reached the age of 60 years. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited.A. Article XI of the CBA regarding the retirement plan and Section 4. The Court will not disturb this finding for upon review of the said quitclaims. what each actually received is a separation pay. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. NLRC (Monina) Facts: At the time the controversy started. 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. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners. Heidi Soria. its refusal. Salomon vs. under the law should give separation pay. petitioners instead of receiving their separation pay. The same however. Private respondent thus. It appears that when the private respondents sought the implementation of Section I. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims. Edlyn Santiago. and there is no reason to invalidate their Releases and Quitclaims. Here. As a result of said complaint. may be ascribed to the Commission. suffered substantial losses. such interpretation cannot be made here. Anna Tetangco 69 . and Nolasco's claim — that under MAI's retirement plans. Dianne Miano. Article X thereof. petitioners were separated from the service for cause. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. amounting to grave abuse of discretion. for as of that day. 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. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. the retirement age is 65 — is wrong. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. Ysan Castillo. Charms Haw. Association of International Shipping Lines (Monina) Facts: When the Association of International Shipping Lines Inc. 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. Issue: whether the grant of “retirement benefits” to petitioners as shown in their quitclaims precludes their availment of retirement benefits pursuant to the CBA Held: A perusal of the provision of petitioners' CBA on retirement readily shows that the same is optional on the employees who have served private respondent company for at least 15 years. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. to resolve the issue. Jon Santos. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited.
direct or necessary relation to the amount of work he actually performed. private respondent no longer had the personality to file the complaint for them. However. as well as an effective inducement for remaining with the corporation. Unit Managers are not salesmen. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. However. what is also well-settled. It is intended to help the employee enjoy the remaining years of his life. Reyes did not agree with the computation of the company and hence filed a complaint. he still retains. 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. Brion was adjudged by the SDA in 1983 to be qualified for retirement.919. as a consequence of which no employee-employer relationship exists anymore between it and the employees. Ysan Castillo. for the purpose of prosecuting his claims. but the actual sale transactions brought about by the individual efforts of the salesmen. they do not effect any sale of article at all. must be met at the time of retirement at which juncture the right to retirement benefits. 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. and the Court cannot give its imprimatur for retirement. the retirement of an employee does not. South Phil. Petitioner filed for optional retirement upon reaching the age of 60. it is not the criterion which would entitle him to a commission. Section 1 and Article X. in itself. It bears repeating that apart from the nonimpairment clause. Jon Santos. the "overriding commissions" paid to him by Universal Robina Corp. a continuing consideration for services rendered.Labor II Article XI. The very essence of retirement is the termination of the employer-employee relationship. one of which is the protection of the labor union. In fine. Heidi Soria. as it were. affect his employment status especially when it involves all rights and benefits due to him. if the employee is eligible. Edlyn Santiago. its benefits are designed for those who have devoted their lives to the work of the SDA. Hence. As was the practice of SDA. Therefore. Section 4 of the CBA. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. but more importantly by the fundamental law of the land. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. as embodied in the CBA. Thus. Issue: Petitioner asserts since the employees have retired. Charms Haw. 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. Brion was provided a monthly amount of retirement benefit. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. Alpe Macalalad. especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code. 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. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. he was excommunicated. He eventually retired. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. Here. This negated the very concept of retirement. under the SDA's retirement plan. Accordingly. Sometime. 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. they were not pleading for generosity but were merely demanding that their rights. however. the basis in computing his retirement benefits is his latest salary rate of P10. and these benefits shall terminate with the death of the beneficiary except in the presence of an eligible surviving spouse and/or children. to the point of being trite. As such. Held: Petitioner's contention in untenable. releasing him from the burden of worrying for his financial support. Dianne Miano. As correctly ruled by public respondent NLRC. the status of an employee entitled to the protection of the Labor Code. Kristel Macatangay. be recognized. vests on him. Anna Tetangco 70 . Jake Ng. and are a form of reward for his loyalty. since these must be protected as though there had been no interruption of service. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. 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. Ÿ Brion vs. when an employee has retired but his benefits under the law or the CBA have not yet been given. When the retired employees were requesting that their retirement benefits be granted. Monina Lagman. Monette Mesa. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired.
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. The CBA in the case at bar contains no such infirmities which must be stricken down. Ysan Castillo. 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. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. whichever is higher. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. The union filed a notice of strike and subsequently picketed in front of the school. Pursuant to the existing CBA. 15. the employee to be terminated may be unwilling to part from service. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. Dianne Miano. Under Section 4. Ground Termination Cainta Catholic School v.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. or retirement benefits prescribed by the Retirement Plan. As we held in Cipriano and Aquino. whichever is higher. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. 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. the last three (3) years of which must be continuous. In those two instances. In other words. Monette Mesa. While in all three cases. petitioners are not entitled to both separation pay and retirement benefits. Phil. one of which requires the retiree to devote his life to the service of the church even after retirement. this Court will not hesitate to adopt the latter interpretation. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. Jake Ng. as amended. Anna Tetangco 71 . Heidi Soria. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. on the other hand. Where two constructions of a retirement plan are possible. Charms Haw. 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. as amended. Twenty years is a more than ideal length of service an employee can render to one employer. and length of service. affected employees. Monina Lagman. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. 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. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. Here. Under the Retirement Plan before us. 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. 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. Article VI 12 of respondent’s Retirement Plan.Labor II year. age. Under Article 283 of the Labor Code. vests in him. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. Jon Santos. Upon reaching 65 he stopped working. He now files a case for the collection of his retirement Irah Burog. he must have met the stated conditions of eligibility with respect to the nature of employment. Retirement. Alpe Macalalad. provides. Ÿ Llora Motors vs. Edlyn Santiago. the same being higher than what Article 283 of the Labor Code. it must have been convinced that Brion had devoted his life to the work of the SDA. before a right to retirement benefits or pension vests in an employee. Kristel Macatangay. in case of retrenchment or cessation of operations. as amended. 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. This is a condition precedent to his acquisition of rights. 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. if the employee is eligible. is the result of a bilateral act of the parties. Cruz however despite receiving separation pay asks for his retirement benefits. 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 other words.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. 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. and are a form of reward for his loyalty to the employer.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. 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. v. like Article 287 of the Labor Code. 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. Irah Burog. 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. Ÿ Ÿ As stressed in Llora Motors. Alpe Macalalad. Inc. granting him retirement benefits. Charms Haw. 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. 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. is not intended to pay a worker for actual services rendered of for actual performance. Anna Tetangco 72 . The third type is one that is voluntarily given by the employer. Ÿ What needs to be stressed. He now files for monetary claims including his retirement benefits. NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service. then payments under such retirement plan may be credited against the termination pay that is due. is for the legislature to remedy. subject. Heidi Soria. After being paid his cash deposit he executed a quitclaim. 91 SCRA 265 ). however. is that Section 14 of Implementing Rule I. The first type is compulsory and contributory in character. Jon Santos. like the Social Security Act. supra). Dianne Miano. to certain conditions. the purpose of which is to reward employees who have rendered satisfactory service to the company. Monina Lagman. 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. Llora in its answer contend that Alviar abandoned his work. contract or an established company policy. however. Catalina College vs. Edlyn Santiago. Retirement benefits. (Sta. NLRC) 15. Inc. Kristel Macatangay. There are three kinds of retirement schemes. Ysan Castillo.Labor II benefits and ECOLA underpayments. releasing him from the burden of worrying for his financial support. GVM on the other hand denies having such liability.. Thus. Gratuity. therefore. v. Respondent is not asking for retirement benefits due him under the Social Security Law. on the other hand are intended to help the employee enjoy the remaining years of his life. Ople. Monette Mesa. 15. benefit or bounty given to the worker. 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. It is a money. 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. 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. Jake Ng. He does not claim that there is a collective bargaining agreement or other applicable. Drilon. and an additional or consensual retirement plan exists. Inc.
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